SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A#2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 23, 1996
Medcross, Inc.
(Exact name of registrant as specified in its charter)
Florida 0-17973 59-2291344
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3227 Bennet Street North, St. Petersburg, Florida 33713
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (813) 521-1793
(Former name or former address, if changed since last report.)
1
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Item 7. Financial Statements, Proforma Financial Information, and Exhibits.
Page
(a) Financial Statements of Businesses Acquired. 2/
(b) Proforma Financial Information. 19
(c) Exhibits.
2(a) Stock Purchase Agreement dated February 13, 1996, by and
among Medcross, Inc., ILINK, Ltd., and Gnet Enterprises,
Inc. 1/
2(b) Escrow Agreement dated February 21, 1996, by and among
Medcross, Inc., ILINK, Ltd., and DeMartino, Finkelstein,
Rosen & Virga. 1/
2(c) Form of Promissory Note. 1/
99 Press Release dated February 23, 1996. 1/
- -----------------------
1/ Previously filed with the Company's current report on Form 8-K, filed
on March 11, 1996 (File No. 0-17973).
2/ Previously filed with the Company's current report on Form 8-K, filed
on May 10, 1996 (File No. 0-17973).
2
<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.
MEDCROSS, INC.
By: /S/ Henry Y.L. Toh
Henry Y.L. Toh
President, CEO, Acting CFO
Date June 20, 1996
3
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Item 7. Financial Statements, Proforma Financial Information, and Exhibits.
(b) Proforma Financial Information.
Pro Forma Condensed Combined Financial Statement
(Unaudited)
Medcross, Inc.
and
I-Link Worldwide Inc.
19
<PAGE>
<TABLE>
<CAPTION>
MEDCROSS, INC. AND I-LINK WORLDWIDE INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(Unaudited)
December 31, 1995
--------------------------------------------------------------
Pro Forma
I-Link Adjustment
Medcross Worldwide Increase Pro Forma
Assets Inc. Inc. (Decrease) Combined
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Current
Cash and cash equivalents $ 79,316 $ 7,437 $ 845,000 $ 931,753
Accounts receivable 921,793 - - 921,793
Inventory 829,988 - - 829,988
Prepaid expenses 87,253 - - 87,253
--------- --------- --------- ----------
Total current assets 1,918,350 7,437 845,000 2,770,787
--------- --------- --------- ----------
Property and equipment, net 1,620,157 181,973 - 1,802,130
--------- --------- --------- ----------
Intangible assets, net 535,468 223,677 2,645,712 3,404,857
Investment in unconsolidated subsidiary 6,250 - - 6,250
Other assets 66,638 12,335 205,000 78,973
--------- --------- --------- ----------
Total assets $ 4,146,863 $ 425,422 $ 3,695,712 $ 8,267,997
========= ========= ========= ==========
Liabilities and Stockholders' Equity (Capital Deficit)
Current liabilities
Accounts payable and accrued expenses $ 615,373 $ 1,050,397 $ - $ 1,665,770
Accounts payable - related parties - 73,450 - 73,450
Advance deposits received 233,728 - - 233,728
Note payable - related party 88,000 669,500 - 757,500
Note payable - other 400,000 53,482 1,050,000 1,503,482
Current portion of long-term debt 702,447 - - 702,447
Current portion of long-term debt -
related parties 39,230 - - 39,230
Current obligations under capital lease 155,145 83,252 - 238,397
Accrued royalty fees - 345,000 - 345,000
--------- --------- --------- ----------
Total current liabilities 2,233,923 2,275,081 1,050,000 5,559,004
--------- --------- --------- ----------
Long-term debt - related parties 87,682 - - 87,682
Capital lease obligations - 30,156 - 30,156
Minority interest in consolidated
subsidiaries 370,092 - - 370,092
Stockholders' Equity (Capital Deficit)
Preferred stock 2,075,000 - ( 400,000) 1,675,000
Common stock 12,622 1 16,651 29,274
Additional paid-in capital 3,428,854 - 3,183,348 6,612,202
Deficit (4,061,310) (1,879,816) ( 154,287) ( 6,095,413)
--------- --------- --------- ----------
Total stockholders' equity
(capital deficit) 1,455,166 (1,879,815) 2,645,712 2,221,063
Total liabilities and stockholders' --------- --------- --------- ----------
equity (capital deficit) $ 4,146,863 $ 425,422 $ 3,695,712 $ 8,267,997
========= ========= ========= ==========
See note to unaudited pro forma condensed combined financial statements.
</TABLE>
20
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<TABLE>
<CAPTION>
MEDCROSS, INC. AND I-LINK WORLDWIDE, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(Unaudited)
For the Year Ended
December 31, 1995
-------------------------------------------------------------
Pro Forma
I-Link Adjustment
Medcross Worldwide Increase Pro Forma
Inc. Inc. (Decrease) Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net operating revenue $ 3,122,953 $ 229,721 $ - $ 3,352,674
--------- --------- --------- ---------
Expenses:
Cost of sales 154,481 55,201 - 209,682
Salaries and benefits 1,123,340 118,908 185,000 1,427,248
Repairs and maintenance 309,255 - - 309,255
Network expense - 565,831 - 565,831
Provision for doubtful accounts 365,093 - - 365,093
Advertising - 366,844 - 366,844
Depreciation and amortization 465,020 54,613 3,119,633 3,639,266
Other operating expenses 1,199,519 492,309 - 1,691,828
--------- --------- --------- ---------
Operating loss ( 493,755) (1,423,985) (3,304,633) (5,222,373)
--------- --------- --------- ---------
Interest expense ( 160,423) ( 20,661) - ( 181,084)
Interest income 10,717 - - 10,717
Gain on sale of interest in
unconsolidated subsidiary 20,500 - - 20,500
Other income (expense) 58,612 ( 1,573) - 57,039
--------- --------- --------- ---------
Loss before minority interest in
net income of consolidated
subsidiaries ( 564,349) (1,446,219) (3,304,633) (5,315,201)
Minority interest in net income of
consolidated subsidiaries 12,440 - - 12,440
--------- --------- --------- ---------
Net loss $( 551,909) $(1,446,219) $(3,304,633) $(5,302,761)
========= ========= ========= =========
Net loss per share after prefered dividends $( .39) $( 1.28)
========= =========
Weighted average common shares
outstanding 1,756,540 2,378,891 4,135,431
========= ========= =========
See note to unaudited pro forma condensed combined financial statements.
</TABLE>
21
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MEDCROSS, INC. AND I-LINK WORLDWIDE, INC.
NOTES TO THE PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - Basis of Preparation
The unaudited pro forma condensed combined balance sheet as a December 31, 1995
and the unaudited pro forma condensed combined statements of operation for the
year ended December 31, 1995 give effect to the acquisition of 100% of the
outstanding common stock of I-Link Worldwide, Inc. by Medcross, Inc. (the
"Company") as if the acquisition, accounted for as a purpose, had occurred on
the balance sheet date with respect to the balance sheet and at the beginning
of 1995, with respect to the statements of operations. During 1996, the assets
and liabilities of ILINK, Ltd. ("ILINK"), were transferred to I-Link Worldwide,
Inc. at their historical basis. I-Link Worldwide, Inc. had no activity prior to
this transaction.
The pro forma financial statements have been prepared based upon the financial
statements of the Company and ILINK as of and for the year ended December 31,
1995. These pro forma financial statements may not be indicative of the results
that actually would have occurred if the combination had been in effect on the
dates indicated or which may be obtained in the future. The pro forma
adjustments are based upon certain estimates which may change as additional
infromation becomes available. The pro forma financial statements should be
read in conjunction with the audited financial statements of the Company and
ILINK.
NOTE 2 - Pro Forma Adjustments
<TABLE>
<CAPTION>
A. The following pro forma adjustment reflects the purchase of all of the
outstanding common stock of I-Link Worldwide, Inc. by the Company in
return for the issuance of 1,400,000 shares of common stock of the Company
to the stockholder of I-Link Worldwide, Inc.
<S> <C>
Common stock (1,400,000 shares
issued at $.007 par with a
current market value of $2.00
per share) . . . . . . . . . . . . . . . . . . . . . $ 9,800
Additional paid-in capital . . . . . . . . . . . . . . 2,790,200
---------
Purchase price . . . . . . . . . . . . . . . . . . . . 2,800,000
Transaction costs . . . . . . . . . . . . . . . . . . . 116,000
---------
Total Acquistion Costs . . . . . . . . . . . . . . . . 2,916,000
Carrying amount of net liabilities acquired . . . . . . 1,879,815
---------
Excess (allocated to intangible assets) . . . . . . . . $ 4,795,815
=========
</TABLE>
The excess purchase price was allocated as follows:
<TABLE>
<CAPTION>
Amount Amortization Period
---------- ----------------------------------------
<S> <C> <S>
Subscriber list $ 323,100 12 months beginning on acquisition date
Purchased Research & Development 2,034,103 Immediated write-off
Patents 913,751 Period to be determined upon approval of
patents
Goodwill 1,524,861 24 months beginning on acquisition date
---------
$4,795,815
=========
</TABLE>
The allocation of the excess purchase price is a preliminary estimate
and is subject to adjustment pursuant to the availability of additional
information.
22
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MEDCROSS, INC. AND I-LINK WORLDWIDE INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
Under the terms of the stock purchase agreement, a further 1,600,000
shares of common stock of the Company will be released to the stockholders
of I-Link Worldwide, Inc. at such time as the Company receives gross
proceeds greater than or equal to $4,000,000 from the issuance of deby or
equity securities through one or more private or public offerings prior
to December 31, 1996. A further 1,000,000 shares of common stock of the
Company will be released at such time as the monthly revenue from the
ILINK business exceeds $1,000,000 or the number of subscribers serviced
by the business exceeds 100,000 one year from the date of receipt of the
above mentioned financing. At the time that these criteria are met,
additional adjustments will be recorded based upon the value of the shares
issued.
<TABLE>
<CAPTION>
B. The following pro forma adjustments are reflected in the pro forma
condensed combined statements of operations:
Year Ended
December 31
1995
<S> <C>
Additional compensation expense arising
from executive employment arrangements
entered into by I-Link Worldwide, Inc.
in January 1996. . . . . . . . . . . . . . . $ 185,000
Additional amortization of intangibles
of ILINK after purchase price allocation
and acquistion costs . . . . . . . . . . . . 3,119,633
---------
$3,654,244
$ 3,304,633
=========
</TABLE>
Intangible assets consist of unpatented technological know-how used in the
provision of a broad range of Internet services. The Company's
intangibles consist of costs related to the acquisition of ILINK. These
assets are amortized over periods ranging from 1 to 24 months for purposes
of this pro form presentation.
<TABLE>
<CAPTION>
C. The following pro form adjustments reflect the issuance of the $1,050,000
10% convertible promissory notes. The Notes are due and payable on the
earlier of August 31, 1996 or the closing of a debt or equity offering.
December 31
1995
<S> <C>
Cash . . . . . . . . . . . . . . . . . . . . . $ 845,000
Other Assets . . . . . . . . . . . . . . . . . 205,000
Notes payable. . . . . . . . . . . . . . . . . (1,050,000)
</TABLE>
<TABLE>
<CAPTION>
D. The following pro forma adjustment reflects the conversion of 40,000
shares of Class A Preferred Stock of the Company with a par value of $10
per share into 978,891 shares of common stock of the Company with a par
value of $.007 per share.
December 31
1995
<S> <C>
Class A Preferred Stock. . . . . . . . . . . . . $(400,000)
Common stock . . . . . . . . . . . . . . . . . . 6,852
Additional paid-in capital . . . . . . . . . . . 393,148
23
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</TABLE>
