<PAGE>
FORM 8K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant to Section 12,13, or 15(d) of the
Securities Exchange Act of 1934
LUKENS MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, or exhibits or other portions of its current report on Form 8-K
dated March 12, 1996, as set forth in the pages attached hereto:
1. Item 7(a) is being amended to include historical financial statements of
the acquired business.
2. Item 7(b) is being amended to include the pro forma financial statements
with respect to the acquisition of the specified product lines of Ulster
Scientific, Incorporated, effective March 12, 1996.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
LUKENS MEDICAL CORPORATION
By:
---------------------------------------------
Robert S. Huffstodt
President and Chief Executive Officer
Date:
-------------------------------------------
<PAGE>
STATEMENT OF ASSETS
ACQUIRED AND LIABILITIES ASSUMED
AS OF MARCH 5, 1996, AND
STATEMENT OF REVENUES AND EXPENSES
AS OF DECEMBER 31, 1995
ULSTER SCIENTIFIC, INCORPORATED
<PAGE>
Report of Independent Public Accountants
To the Board of Directors and Stockholders of
Ulster Scientific, Incorporated
We have audited the accompanying Statement of Assets Acquired and Liabilities
Assumed of Ulster Scientific, Incorporated as of March 5, 1996, and the related
Statement of Revenues and Expenses for the year ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our 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 assets acquired and liabilities assumed as of March
5, 1996, and the results of operations of the product lines sold to Lukens
Medical Corporation for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
Neff & Company LLP
Albuquerque, New Mexico
May 2, 1996
<PAGE>
ULSTER SCIENTIFIC, INCORPORATED
STATEMENT OF ASSETS ACQUIRED AND
LIABILITIES ASSUMED
As of March 5, 1996
<TABLE>
<CAPTION>
ASSETS ACQUIRED (Note 1)
<S> <C>
Inventory:
Lancets $ 43,800
Bask Kits 6,660
Dispettes 9,536
--------
Total inventory acquired $ 59,996
Fixtures and equipment:
Fixtures 8,847
Label printer 475
Computers/equipment 3,868
Molds, dies, artwork and plates 4,500
Miscellaneous 310
--------
Total fixtures and equipment 18,000
--------
Total assets acquired $ 77,996
========
LIABILITIES ASSUMED (Note 2)
Accounts payable to suppliers:
Guest Medical $250,000
Delta Machine and Tool 17,511
Preferred Medical Products 9,477
Urbach, Kahn & Werlin 22,576
Howell Packaging 8,052
Palco Laboratories 8,210
Vancore, DeBenedictus 3,390
--------
Total liabilities assumed $319,216
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ULSTER SCIENTIFIC, INCORPORATED
STATEMENT OF REVENUES AND EXPENSES
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Net sales (Note 3) $ 3,822,495
Cost of goods sold (Note 3) (2,745,830)
-----------
Gross profit 1,076,665
Selling expenses (Note 3) (555,473)
General and administrative expenses (Note 3) (1,035,185)
-----------
Operating loss (513,993)
Other income (expenses) (Note 3):
Gain on sale of securities 1,685
Interest income 75
Interest expense (127,230)
Miscellaneous income 15,479
-----------
Net loss $ (623,984)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ULSTER SCIENTIFIC, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization. Ulster Scientific, Inc. (the Company) is a wholesale distributor
of medical and scientific supplies and equipment. The Company extends credit to
customers, primarily in the medical supply industry. The Company has sold
certain product lines to Lukens Medical Corporation (Lukens) as of March 5,
1996, and as a result of the sale the format for these statements has been
established.
Basis of Accounting. The Company uses the accrual method of accounting which
recognizes income when it is earned and expenses as they are incurred.
Pervasiveness of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Inventory Acquired. Inventory acquired is stated at its fair market value as of
March 5, 1996.
Fixed Assets Acquired. Fixed assets acquired are stated at fair market value as
of March 5, 1996.
NOTE 2. LIABILITIES ASSUMED
Amounts listed represent all amounts owing to the suppliers named with the
exception of an additional $17,011 owing to Delta Machine and Tool, which is
payable by the Company within 30 days of the date of the sale of the product
lines to Lukens. There are additional payables to Guest Medical which the
Company is to satisfy and to which Lukens is aware.
NOTE 3. REVENUES AND EXPENSES
The Statement of Revenues and Expenses reflects the results of operations for
only the product lines which have been sold to Lukens. The Company's revenues
and direct costs relating to the pipettor product line, which was not sold are
not presented. All costs which could be directly attributed to the sold product
lines such as advertising, legal, consulting, and bad debt expenses are
included, while the Company's historical indirect and corporate costs (sales,
general and administrative expenses) have been allocated to the product lines
sold based upon their percent of sales (81.03%) for the year.
<PAGE>
ULSTER SCIENTIFIC, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. MAJOR CUSTOMERS
Sales to one customer were approximately 30 percent of the net sales for the
year ended December 31, 1995.
<PAGE>
LUKENS MEDICAL CORPORATION
AND
ULSTER SCIENTIFIC, INCORPORATED
Unaudited Pro Forma Combined Financial Statements
The unaudited pro forma combined financial statements presented on the following
pages are based on the historical financial statements of Lukens Medical
Corporation (Lukens) and Ulster Scientific, Incorporated (Ulster), and reflect
the pro forma effects of Lukens, acquisition of Ulster. The acquisition has
been accounted for as a purchase transaction with the purchase price being
allocated to the assets acquired based on their respective fair market values at
the date of acquisition. The pro forma adjustments have been applied to the
historical balance sheet and consolidated statements of operations for Lukens
and the statement of assets acquired and liabilities assumed as of March 5,
1996, and the statement of revenues and expenses for Ulster for the year ended
December 31, 1995, and reflect the acquisition of Ulster as if it had occurred
on January 1, 1995. The pro forma adjustments are based upon available
information and certain assumptions management believes are reasonable.
The unaudited pro forma combined financial statements should be read in
conjunction with the historical financial statements and notes of Lukens and
Ulster. This pro forma information is not necessarily indicative of the results
of operations of Lukens as if the transaction has occurred at the beginning of
the period, or of the results of future operations, nor do they reflect expense
reductions (other than those described in the notes to the pro forma combined
financial statements) and other changes that might have resulted from management
of Lukens and Ulster throughout the indicated period.
<PAGE>
LUKENS MEDICAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
December 31, 1995
<TABLE>
<CAPTION>
ASSETS
Lukens
Medical Ulster Pro Forma
Corporation Scientific Adjustments Pro Forma
As Reported Incorporated Dr(Cr) Total
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 39,049 - - 39,049
Accounts receivable, net of
allowance of $5,790 1,269,211 - - 1,269,211
Inventory 3,849,051 59,996 (59,996)/1/
59,996 /1/ 3,909,047
Prepaid expenses 23,456 - - 23,456
---------------------------------------------------------------------------------
Total current assets 5,180,767 59,996 - 5,240,763
Land, building and equipment,
net 1,710,633 18,000 (18,000)/1/
18,000 /1/ 1,728,633
Intangible assets, net of accu-
mulated amortization 469,408 - 490,000 /1/ 959,408
Other assets 97,980 - - 97,980
---------------------------------------------------------------------------------
Total assets $7,458,788 77,996 490,000 8,026,784
=================================================================================
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
Lukens
Medical Ulster Pro Forma
Corporation Scientific Adjustments Pro Forma
As Reported Incorporated Dr(Cr) Total
<S> <C> <C> <C> <C>
Current liabilities:
Accounts payable $ 665,080 319,216 (319,216)/1/
19,996 /1/
148,000 /1/ 833,076
Accrued payroll 20,029 - - 20,029
Accrued liabilities 91,410 - - 91,410
Current maturities of long-
term debt 357,095 - - 357,095
Current maturities of obli-
gations under capital
leases 19,380 - - 19,380
--------------------------------------------------------------------------------
Total current liabilities 1,152,994 319,216 (151,220)/1/ 1,320,990
Long-term debt, excluding current
maturities 79,979 - - 79,979
Stockholder payable 650,000 - 400,000/1/ 1,050,000
Obligations under capital leases,
excluding current maturities 37,227 - - 37,227
--------------------------------------------------------------------------------
Total liabilities 1,920,200 319,216 248,780/1/ 2,488,196
Stockholders' equity:
Common stock $.01 par value,
authorized 20,000,000 shares;
issued and outstanding
2,611,418 shares 26,115 - - 26,115
Additional paid-in capital 16,938,696 - - 16,938,696
Accumulated deficit (11,426,223) - - (11,426,223)
--------------------------------------------------------------------------------
Total stockholders'
equity 5,538,588 - - 5,538,588
--------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 7,458,788 319,216 248,780 8,026,784
================================================================================
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE>
LUKENS MEDICAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Lukens
Medical Ulster Pro Forma
Corporation Scientific Adjustments Pro Forma
As Reported Incorporated Dr(Cr) Total
<S> <C> <C> <C> <C>
Net sales 4,883,288 3,822,495 - 8,705,783
Cost of sales 3,436,553 2,745,830 (165,646)/2/ 6,016,737
--------------------------------------------------------------------------------
Gross profit 1,446,735 1,076,665 165,646 2,689,046
--------------------------------------------------------------------------------
Selling expenses 364,906 555,473 (122,449)/3/ 797,930
General and administrative
expenses 813,574 1,035,185 (715,013)/3/ 1,133,746
Research and development
expenses 138,450 - - 138,450
--------------------------------------------------------------------------------
Total operating expenses 1,316,930 1,590,658 (837,462) 2,070,126
--------------------------------------------------------------------------------
Earnings (loss) from
operations 129,805 (513,993) 1,003,108 618,920
Other income (expense):
Interest income 18,133 75 (75)/4/ 18,133
Interest expense (209,424) (127,230) 127,230 /5/
(32,032)/5/ (241,456)
Gain on sale of building 150,721 - - 150,721
Other, net (121,508) 17,164 (17,164)/6/
(126,000)/6/ (247,508)
--------------------------------------------------------------------------------
Total other expense, net (162,078) (109,991) (48,041) (320,110)
--------------------------------------------------------------------------------
(Loss) before income taxes
and extraordinary item (32,273) (623,984) 955,067 298,810
--------------------------------------------------------------------------------
Income taxes - - -/7/ -
Extraordinary gain on extinguish-
ment of debt 233,240 - - 233,240
--------------------------------------------------------------------------------
Net earnings (loss) $ 200,967 (623,984) 955,067 532,050
================================================================================
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE>
LUKENS MEDICAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS (CONTINUED)
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Lukens
Medical Ulster Pro Forma
Corporation Scientific Adjustments Pro Forma
As Reported Incorporated Dr(Cr) Total
<S> <C> <C> <C> <C>
Weighted average number of
common and common equi-
valent shares
outstanding:
Primary 2,611,418 - - 2,611,418
Fully diluted 2,743,659 - - 2,743,659
Net earnings (loss) per
common
and common equivalent
share-
primary:
(Loss) before
extraordinary
item $ (.0124) - - .1144
Extraordinary gain .0894 - - .0894
--------------------------------------------------------------------------------
Net earnings (loss) $ .0770 - - .2038
================================================================================
Net earnings (loss) per
common
and common equivalent
share-
fully diluted:
(Loss) before
extraordinary
item $ (.0118) - - .1089
Extraordinary gain .0850 - - .0850
--------------------------------------------------------------------------------
Net earnings (loss) $ .0732 - - .1939
================================================================================
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
<PAGE>
LUKENS MEDICAL CORPORATION AND
ULSTER SCIENTIFIC, INCORPORATED
NOTES TO UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
Pro forma adjustments to give effect to the acquisition of Ulster Scientific,
Incorporated (Ulster) by Lukens Medical Corporation (Company) are summarized as
follows:
1. On March 5, 1996, the Company completed an acquisition of three product lines
from Ulster, a New York corporation. The Company paid $40,000 cash, assumed
approximately $320,000 in supplier liabilities, and agreed to terms on a
consulting and royalty contract with minimum payments of $90,000 per year for
the next eight years. The Company also purchased approximately $60,000 in
inventory from Ulster at closing. The cash payments of $60,000 and $40,000
were both made to Ulster's bank and reduced amounts owed by Ulster to the
bank. In addition, the Company issued warrants to the seller for 200,000
shares with an exercise price of $3.00 each, which were anti-dilutive at
December 31, 1995 and contingent on future product sales and transfer of
ownership of the FDA approvals to Lukens. A major stockholder loaned the
Company $400,000 for the Ulster purchase.
2. Cost of sales was reduced due to merged synergies which will allow the
Company to better utilize and leverage its existing infrastructure. The
elimination of approximately $166,000 is related to nonrecurring costs as a
result of the acquisition. They primarily represent depreciation expense
based on Ulster's asset cost, overhead cost eliminations, salary reductions,
and product cost reduction due to streamlined purchasing strategies and
batched sterilization runs with existing product lines.
3. Certain selling and certain general and administrative expenses in the amount
of $122,449 and $723,026, respectively, were eliminated from the pro forma
statements of operations. The Company expects to utilize its existing
infrastructure to eliminate the need for several salaried positions, and
therefore, more costs and related expenses have been reduced from their pre-
acquisition levels. Additionally, amortization expense relating to acquired
intangible assets in the amount of $62,000 has been added to general and
administrative expense.
4. Interest income of $75 has been eliminated in this pro forma as excess cash
will be used to optionally manage the balance of leveraged assets.
5. Interest expense of $32,000 relating to the financing of this acquisition has
been recorded for the year ended December 31, 1995. Interest expense of
$127,000 incurred by Ulster has been eliminated, as it relates to debts which
are not to be assumed by the Company.
<PAGE>
LUKENS MEDICAL CORPORATION AND
ULSTER SCIENTIFIC, INCORPORATED
NOTES TO UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS (CONTINUED)
6. Other expense of $126,000 relating to minimum royalty commitments to the
former owner has been recorded in the pro forma. Other nonrecurring expense
of $25,000 incurred by Ulster has been eliminated.
7. Because of the usage of net operating loss carryforwards by the Company,
there is no income tax payable/provision at December 31, 1995.
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF NEFF & COMPANY LLP APPEARS HERE]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Form 8-K/A of our report, dated
May 2, 1996, on our audit of the financial statements of Ulster Scientific,
Incorporated.
NEFF & COMPANY LLP
Albuquerque, New Mexico
May 16, 1996
