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 Report (Date of earliest event reported) AUGUST 19, 1996
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COMPSCRIPT, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 0-20594 65-0506539
- ----------------------------- ---------------- ------------------
(State or other jurisdiction (Commission File (IRS Employer
or incorporation) Number) Identification No.)
1225 BROKEN SOUND PARKWAY N.W., SUITE A, BOCA RATON, FLORIDA 33487
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code 561) 994-8585
----------------
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(Former name or former address, if changed since last report)
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Securx for the year ended December 31, 1995.
(b) Compscript, Inc. and Subsidiaries Pro Forma Consolidated Condensed
Balance Sheet at December 31, 1995 and at June 30, 1996 (Unaudited);
Pro Forma Consolidated Condensed Statement of Operations Year Ended
December 31, 1995 and Six Months Ended June 30, 1996 (Unaudited).
2
<PAGE>
SECURx Inc.
FINANCIAL STATEMENTS FROM INCEPTION
JUNE 27, 1995 TO DECEMBER 31, 1995
AND INDEPENDENT ACCOUNTANT'S REPORT
<PAGE>
INDEPENDENT ACCOUNTANT'S REPORT
To the Stockholders and
Board of Directors of
SECURx, Inc.
We have audited the accompanying balance sheet of SECURx, Inc.(an Ohio
Corporation), as of December 31, 1995, and the related statements of loss,
stockholders' equity (deficit), and cash flows from inception June 27, 1995 to
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 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 SECURx, Inc. as of
December 31, 1995, and the results of its operations, and cash flows from
inception June 27, 1995 to December 31, 1995 in conformity with generally
accepted accounting principles.
/s/ PRIJATEL & KOSS
---------------
Prijatel & Koss
August 6, 1996
<PAGE>
SECURx, INC.
BALANCE SHEET
DECEMBER 31, 1995
ASSETS
CURRENT ASSETS:
Cash $ 51,174
Accounts receivable
less allowance for doubtful
accounts of $2,500 256,033
Inventory 204,763
Prepaid expenses 8,000
--------
Total Current Assets $ 519,970
PROPERTY AND EQUIPMENT:
Machinery and equipment 92,022
Furniture and fixtures 9,124
Capitalized telephone lease 8,394
--------
Total Fixed Assets 109,540
Less accumulated depreciation (17,270)
--------
Net Property and Equipment 92,270
OTHER ASSETS:
Customer list 204,530
Acquisition costs 10,000
Less accumulated amortization (18,044)
Deposits 4,136
Employee receivable 134
--------
Total Other Assets 200,756
---------
Total Assets $ 812,996
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
SECURx , INC.
BALANCE SHEET
DECEMBER 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note Payable Southwind Health $ 281,400
Accounts Payable - Trade 523,539
Accounts Payable - Other 13,348
Accrued Expenses Payable 36,290
Corporate Taxes Payable 5,400
Payroll Taxes Payable 7,701
Sales Tax Payable 1,850
Capitalized Lease-Current 2,470
---------
Total Current Liabilitie $ 871,998
NONCURRENT LIABILITIES:
Capitalized Lease-Noncurrent 1,417
STOCKHOLDERS' EQUITIY (DEFICIT):
Common Stock, no par value, $150
stated value, authorized 850
shares, issued and outstanding
500 shares 75,000
Retained Earnings (Deficit) (135,419)
---------
Total Stockholders' Deficit (60,419)
---------
Total Liabilities and Stockholders'
Equity $ 812,996
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
SECURx, INC.
STATEMENT OF LOSS
FROM INCEPTION JUNE 27,1995 TO DECEMBER 31, 1995
NET SALES $ 2,467,251
COST OF GOODS SOLD 2,166,933
-----------
GROSS MARGIN 300,318
OPERATING EXPENSES:
Selling and administrative expenses $ 389,515
Depreciation and amortization 35,314
---------
Total Operating Expenses 424,829
LOSS FROM OPERATIONS (124,511)
INTEREST EXPENSE 10,908
-----------
LOSS BEFORE INCOME TAXES (135,419)
PROVISION FOR INCOME TAXES 0
-----------
NET LOSS $ ( 135,419)
===========
LOSS PER SHARE $ ( 270.84)
===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
SECURx, INC.
STATEMENT OF CASH FLOWS
FROM INCEPTION JUNE 27, 1995 TO DECEMBER 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $( 135,419)
---------
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and amortization 35,314
Changes in assets and liabilities:
Accounts receivable ( 23,487)
Inventories ( 28,238)
Other current assets ( 5,052)
Accounts payable ( 12,441)
Accrued expenses and other
current liabilities 40,634
---------
Total Adjustments 48,794
---------
Net Cash Used by Operating Activities ( 128,689)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment to purchase assets ( 105,000)
Acquisition costs ( 10,000)
Deposits ( 500)
Advances to employees ( 134)
---------
Net Cash Used by Investing Activities ( 115,634)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans from stockholders 221,400
Proceeds from sales of common stock 75,000
Payments of installment loans ( 903)
---------
Net Cash Provided by Financing Activities 295,497
---------
NET (INCREASE) IN CASH AND CASH EQUIVALENTS 51,174
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 0
---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 51,174
=========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 343
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
SECURx, INC.
STATEMENT OF STOCKHOLDERS'EQUITY
FROM INCEPTION JUNE 27, 1995 TO DECEMBER 31, 1995
COMMON STOCK RETAINED
--------------------- EARNINGS
SHARES AMOUNT (DEFICIT) TOTAL
------ ------- --------- -----
Balance June 27, 1995 0 $ 0 $ 0 $ 0
Issuance of Common
Stock for cash 500 75,000 75,000
Net Loss (135,419) (135,419)
--- ------ -------- --------
Balance December 31, 1995 500 75,000 $(135,419) $( 60,419)
=== ====== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
SECURx, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1- SUMMARY, OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS - SECURx, Inc. (the "Company") was incorporated in the
State of Ohio June 27, 1995, primarily to sell and distribute prescription
drugs to the general public through corporate sponsored benefit plans of
employers in the northeastern part of the United States.
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 and
disclosure of contingent 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.
STATEMENT OF CASH FLOWS - The Compny considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
INVENTORIES - Inventories are stated at the lower of cost or market. Cost
is determined by the first-in, first-out method.
PROPERTY, EGUIPMENT, DEPRECIATION AND AMORTIZATION - Property and equipment
are stated at cost and include expenditures for major betterments and
renewals. Expenditures for maintenance and repairs are charged to income as
incurred. The Company follows the policy of providing for depreciation and
amortization generally on the double-declining balance and straight-line
methods by charges to income at rates based upon the estimated useful lives
of 3 to 7 years for equipment, 5 to 7 years for furniture and fixtures and
telephone capitalized lease, and 5 for customer lists and acquisition
costs.
ACCOUNTING FOR INCOME TAXES - The Company adopted FASB Statement,
Accounting for Income Taxes, which requires an asset and liability
approach to financial accounting and reporting for income taxes. Deferred
income tax assets and liabilities are computed annually for differences
between the financial statement and tax basis of assets and liabilities
that will result in taxable or deductible amounts in the future based on
enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances
are established when necessary to reduce deferred tax assets to the amount
expected to be realized. Income tax expense is the tax payable or
refundable for the period plus or minus the change during the period in
deferred tax assets and liabilities.
REVENUE RECOGNITION - Revenues are recognized at the time the prescription
is shipped.
<PAGE>
SECURx, INC.
NOTES TO FINANCIAL STATEMENTS
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying value of cash
and equivalents, receivables, accounts payable and accrued expenses are
estimated to approximate fair value because of the short-term maturity of
these items. The carrying value of notes payable and long-term debt also
approximates fair value due to the comparability of stated rates of
interest to current market rates and their relative maturities.
NOTE 2 - INVENTORIES
Inventories consist totally of finished goods $204,763
========
NOTE 3 - OTHER ASSETS
Other assets at December 31, 1995 are composed primarily of the following:
Customer list $204,530
========
Acquisition costs $ 10,000
========
These amounts resulted from the Company's acquisition of assets and
assumption of liabilities in July 1995. The amounts are being amortized
over five (5) years and amortization expense from inception June 27, 1995
to December 31, 1995 was $18,044. For income tax purposes, the customer
lists are being amortized over 15 years.
NOTE 4 - DEBT
Debt at December 31, 1995 consists of the following:
CURRENT NONCURRENT TOTAL
-------- ---------- --------
a. Demand loan (shareholders)
with interest rates at 10% $281,400 $281,400
b. Capitalized Lease - AT&T -
Telephone Equipment - with
interest at 18% 2,470 $ 1,417 3,887
-------- ------- --------
Total Debt $283,870 $ 1,417 $285,287
======== ======= ========
<PAGE>
SECURx, INC.
NOTES TO FINANCIAL STATEMENTS
a. The Company has a $281,400 demand loan with Southwind Health
Products, Inc. (a shareholder) with interest at 10%, which is
collateralized by the receivables, inventories, and equipment of
the company.
b. The Company has a capitalized lease with AT&T for telephone
equipment.
Future loan payments are required as follows:
Fiscal year ending December 31, 1996 $285,287
Thereafter 0
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company is obligated under a noncancellable lease for
transportation equipment that expires July 1997. The approximate
annual minimum lease payments as of December 31, 1995 are as follows:
$5,707 for l996
$3,329 for l997
The Company also paid $14,165 rent for office and warehouse space
during 1995. The monthly rent is $2,833 and the lease expires Februar
1997, with an option to renew for an additional three years at monthly
rent of $3,116.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company extends the privilege to its employees to purchase
prescription drugs from its pharmacy and the amount is not material.
NOTE 7 - INCOME TAXES
The Company has a loss carryforward of $123,741 that may be offset
against future taxable income. If not used, the carryforward will
expire in the year 2010. No recognition of any potential deferred tax
benefit has been recorded due to uncertainty of realization.
<PAGE>
SECURx, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - ACQUISITION OF BUSINESS FROM PREDECESSOR OPERATOR
In July 1995, the Company purchased $671,200 of assets from the
predecessor operator of the business by assuming liabilities of
$566,200, and paying $105,000 in cash.
NOTE 9 - SUBSEQUENT EVENTS
The Company had been named in a lawsuit brought against the
predecessor operator of the business by its minority stockholders.
Subsequently, the Company reached a settlement with the minority
stockholders of the predecessor, and obtained a release from the
lawsuit.
A former supplier of the predecessor operator of the business has
filed a lien against the inventory which had been purchased by SECURx,
Inc. from the predecessor. Action has been taken to satisfy the
obligation to the supplier and to remove the lien.
<PAGE>
COMPSCRIPT INC. AND SUBSIDIARIES
INTRODUCTION TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
The following pro forma condensed consolidated financial information
consists of a Pro Forma Condensed Consolidated Balance Sheet as of June 30,
1996 and Pro Forma Condensed Consolidated Statements of Operations for the six
months ended June 30, 1996 and for the year ended December 31, 1995
(collectively, the "Pro Forma Statements"). The Pro Forma Condensed
Consolidated Balance Sheet was prepared to give effect to the acquisition of
SECURx, Inc. (SECURx). The pro forma adjustments for purposes of the Pro Forma
Condensed Consolidated Balance Sheet presentation give effect to the
aquisition as if it had occurred on June 30, 1996.
The Pro Forma Condensed Consolidated Statement of Operations for the year
ended December 31, 1995 gives effect to the acquisition of SECURx as if the
transaction had occurred on January 1, 1995, while the Pro Forma Condensed
Consolidated Statement of Income for the six months ended June 30, 1996, gives
effect to the acquisition of SECURx, as if the transaction had occurred on
January 1, 1996.
The pro forma adjustments to, or "reflected in" the Pro Forma Statements
are based on the historical results of the acquired business giving effect to
the transaction based on the method of accounting used to record the
acquisition and the assumptions and adjustments described in the accompanying
notes to the Pro Forma Statements.
The pro forma adjustments are based upon currently available information
and upon certain assumptions that management of the Company believes are
reasonable under the circumstances. The Pro Forma Statements do not purport to
be indicative of what the Company's financial position of results of operations
would actually have been if the aforementioned transaction in fact had occurred
on such date or at the beginning of the period indicated, or to project the
Company's financial position or results of operations at any future date or for
any future period.
<PAGE>
<TABLE>
<CAPTION>
COMPSCRIPT INC. AND SUBSIDIARIES
PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
PRO-FORMA PRO-
HISTORICAL SECURx ADJUSTMENTS FORMA
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
SALES $13,103,779 $ 2,467,251 $ - $15,571,030
COST OF SALES 6,617,375 2,166,933 - 8,784,308
---------- ---------- --------- ----------
GROSS PROFIT 6,486,404 300,318 - 6,786,722
---------- ---------- --------- ----------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 6,400,573 424,829 265,000 (B) 7,090,402
GOODWILL IMPAIRMENT CHARGE 3,636,362 - - 3,636,362
---------- ---------- --------- ----------
OPERATING LOSS (3,550,531) ( 124,511) ( 265,000) (3,940,042)
OTHER, net ( 13,788) ( 10,908) - ( 24,696)
---------- ---------- --------- ----------
INCOME BEFORE INCOME TAXES (3,586,319) ( 135,419) ( 265,000) (3,964,738)
PROVISION FOR INCOME TAXES ( 114,790) - (114,790)(E)
---------- ---------- --------- ----------
NET (LOSS) $(3,679,109) $( 135,419) $( 150,210) $(3,964,738)
========== ========== ========= ==========
NET LOSS PER SHARE $( 1.36) $( 1.35)
========== ==========
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES 2,706,190 2,946,690
========== ==========
</TABLE>
See Accompanying Notes
<PAGE>
<TABLE>
<CAPTION>
COMPSCRIPT INC. AND SUBSIDIARIES
PRO-FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
ASSETS
PRO-FORMA PRO-
HISTORICAL SECURx ADJUSTMENTS FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,291,037 $ 13,253 $ - $ 1,304,290
Accounts receivable, net 2,256,090 279,966 - 2,536,056
Inventory 654,339 154,763 - 809,102
Marketable securities available
for sale and other 1,213,963 1,320 - 1,215,283
----------- ----------- ----------- -----------
Total current assets 5,415,429 449,302 - 5,864,731
PROPERTY AND EQUIPMENT, net 965,247 82,436 - 1,047,683
OTHER ASSETS 255,475 180,168 - 435,643
----------- ----------- ----------- -----------
Total Assets $ 6,636,151 $ 711,906 $ - $ 7,348,057
=========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 724,350 $ 604,649 $ - $ 1,328,999
Accrued expenses 220,132 64,632 284,764
Current maturities of debt
and capitalized leases 300,567 1,295 301,862
----------- ----------- ----------- -----------
Total Current Liabilities 1,245,049 670,576 1,915,625
LONG TERM DEBT AND
CAPITALIZED LEASES 119,305 312,817 432,122
----------- ----------- ----------- -----------
Total Liabilities 1,364,354 983,393 2,347,747
----------- ----------- ----------- -----------
MINORITY INTEREST IN
CONSOLIDATED SUBSIDIARY 218,064 - 218,064
----------- ----------- ----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $.0001 par value,
50,000,000 shares authorized,
10,607,852 shares outstanding
on a pro-forma basis 1,037 75,000 ( 74,981)(A) 1,056
265,000 (B)
Additional Paid In Capital 7,396,064 - 74,981 (A) 7,736,045
Accumulated Deficit (2,343,368) ( 346,487) ( 265,000)(B) (2,954,855)
----------- ----------- ----------- -----------
Total Shareholders' Equity 5,053,733 ( 271,487) - 4,782,246
----------- ----------- ----------- -----------
Total Liabilities and
Shareholders' Equity $ 6,636,151 $ 711,906 $ - $ 7,348,057
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes
<PAGE>
<TABLE>
<CAPTION>
COMPSCRIPT INC. AND SUBSIDIARIES
PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
PRO-FORMA PRO-
HISTORICAL SECURx ADJUSTMENTS FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SALES $ 7,636,645 $ 2,675,763 $ - $10,312,408
COST OF SALES 3,819,348 2,384,495 - 6,203,843
----------- ----------- ----------- -----------
GROSS PROFIT 3,817,297 291,268 - 4,108,565
----------- ----------- ----------- -----------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 3,390,465 487,907 - 3,878,372
----------- ----------- ----------- -----------
OPERATING INCOME 426,832 ( 196,639) - 230,193
OTHER, net ( 19,083) ( 14,429) ( 33,512)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 407,749 ( 211,068) - 196,681
PRO FORMA PROVISION FOR INCOME TAXES 152,906 - (78,168)(F) 74,738
MINORITY INTEREST IN NET LOSS
OF SUBSIDIARY 4,564 - 4,564
----------- ----------- ----------- -----------
PRO FORMA NET INCOME (LOSS) $ 259,407 $( 211,068) $ 78,168 $ 126,507
=========== =========== =========== ===========
PRO FORMA NET INCOME LOSS PER SHARE $ .05 $ .02
=========== ===========
PRO FORMA WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES 5,758,759 5,999,259
=========== ===========
</TABLE>
See Accompanying Notes
<PAGE>
COMPSCRIPT INC. AND SUBSIDIARIES
NOTES TO PRO-FORMA CONSOLIDATED
CONDENSED STATEMENTS
DECEMBER 31, 1995 AND JUNE 30, 1996
(UNAUDITED)
(A) Exchange of 187,500 shares of Common Stock of Compscript, Inc. for
100% of the issued and outstanding common shares of SECURx, Inc. in
connection with the acquisition of SECURx, Inc. on August 19, 1996, in
a transaction accounted for as a pooling of interests.
(B) Accrual of $171,000 of acquisition costs in connection with the
acquisition of SECURx, Inc. and $94,000 of additional acquisition costs
for Delta Pharmacy Services, Inc. (Delta) which was acquired by
Compscript, Inc. on May 31, 1996, in a transaction accounted for as a
pooling of interests.
(C) Represents the Company's historical unaudited financial position and
operating results as of and for the six months ended June 30, 1996 as
reported on Form 10-QSB. Includes the account balances of Delta.
(D) Pro-forma adjustment to record estimated federal and state income taxes
at a combined rate of 37.5%. Prior to May 31, 1996, Delta Pharmacy
Services, Inc. was taxed under the provisions of Subchapter S of the
Internal Revenue Code and, accordingly, was not subject to corporate
income taxes. The pro-forma information has been computed as if Delta
was subject to corporate income taxes at an assumed effective tax rate
of 37.5%.
(E) Pro-forma adjustment to reflect tax benefit of SECURx losses and
expenses of SECURx and Delta acquisitions.
(F) Pro-forma adjustment to reflect the tax benefit of SECURx losses.
<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.
COMPSCRIPT, INC.
By: /s/ BRIAN A. KAHAN
------------------------
Brian A. Kahan
Chief Executive Officer
DATED: November 4, 1996
