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) JANUARY 10, 1997
COMPSCRIPT, INC.
(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
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code (561) 994-8585
-----------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Audited Financial Statements of Medical Services Consortium,
Inc. for the year ended December 31, 1996 and 1995.
(b) CompScript, Inc. and Subsidiaries Pro Forma Consolidated
Condensed Balance Sheet at December 31, 1996 (Unaudited);
Pro Forma Consolidated Condensed Statement of Operations Year
Ended December 31, 1996 (Unaudited).
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.
COMPSCRIPT, INC.
By: /S/ BRIAN A. KAHAN
-------------------------------
Brian A. Kahan
Chief Executive Officer
DATED: March 26, 1997
3
<PAGE>
FORM 8-K/A
ITEM 7(a)
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
MEDICAL SERVICES CONSORTIUM, INC.
YEARS ENDED DECEMBER 31, 1996 AND 1995
COMPSCRIPT, INC.
BOCA RATON, FLORIDA
<PAGE>
COMPSCRIPT, INC.
BOCA RATON, FLORIDA
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
MEDICAL SERVICES CONSORTIUM, INC.
YEARS ENDED DECEMBER 31, 1996 AND 1995
Form 8-K -Item 7(a)
List of Financial Statements
The following financial statements of Medical Services Consortium, Inc. are
included in Item 7(a):
Balance Sheet--December 31, 1996
Statements of Operations--Years ended December 31, 1996 and 1995
Statements of Shareholders' Deficit--Years ended December 31, 1996 and 1995
Statements of Cash Flows--Years ended December 31, 1996 and 1995
Notes to Financial Statements--December 31, 1996
F-1
<PAGE>
Report of Independent Certified Public Accountants
The Board of Directors
and Shareholders
Medical Services Consortium, Inc.
We have audited the balance sheet of Medical Services Consortium, Inc. as of
December 31, 1996, and the statements of operations, shareholders' deficit and
cash flows for each of the two years in the period ended December 31, 1996.
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 audits 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 audits provide 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 Medical Services Consortium,
Inc. as of December 31, 1996 and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
-----------------
Ernst & Young LLP
West Palm Beach, Florida
January 24, 1997
F-2
<PAGE>
Medical Services Consortium, Inc.
Balance Sheet
December 31, 1996
ASSETS
Current assets:
Cash and cash equivalents $ 413,071
Accounts receivable, net of allowances of $118,000 1,691,219
Inventory 311,189
Prepaid expenses 28,420
Current portion of notes receivable 25,788
----------
Total current assets 2,469,687
Property and equipment, net 182,747
Other assets:
Notes receivable, net of current portion 192,428
Other assets 55,431
----------
Total assets $2,900,293
==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $1,434,574
Accrued salaries and benefits 182,361
Accrued expenses 117,450
Distributions payable 53,560
Current portion of capital lease obligations 47,704
Current portion of notes payable 116,600
Current portion of notes payable to shareholders 400,414
----------
Total current liabilities 2,352,663
Long-term debt, net of current portion:
Capital lease obligations 36,004
Notes payable 332,034
Notes payable to shareholders 500,000
----------
Total long-term debt, net of current portion 868,038
----------
Total liabilities 3,220,701
Shareholders' deficit:
Common stock, $5 par value--100 shares
authorized, 48 shares issued and 240
outstanding in 1996
Additional paid-in capital 99,760
Accumulated deficit (420,408)
----------
Total shareholders' deficit (320,408)
----------
Total liabilities and shareholders' deficit $2,900,293
==========
SEE ACCOMPANYING NOTES.
F-3
<PAGE>
Medical Services Consortium, Inc.
Statements of Operations
YEAR ENDED DECEMBER 31
1996 1995
----------------------
Sales $8,577,551 $6,558,177
Cost of sales 4,990,540 3,851,337
----------------------
Gross profit 3,587,011 2,706,840
Selling, general and administrative expenses 2,817,653 2,687,668
Contract termination settlement - 363,959
Provision for doubtful accounts 123,283 79,289
Merger costs 59,000 -
----------------------
Total operating expenses 2,999,936 3,130,916
----------------------
Operating income (loss) 587,075 (424,076)
Other:
Interest income 18,362 3,179
Interest expense 56,872 68,807
Interest expense on notes payable to shareholders 70,691 52,790
----------------------
Net income (loss) $ 477,874 $ (542,494)
======================
Pro forma data (unaudited):
Historical income (loss) before income taxes $ 477,874 $ (542,494)
Pro forma income tax (expense) benefit (191,600) 193,000
----------------------
Pro forma net income (loss) $ 286,274 $ (349,494)
======================
F-4
<PAGE>
Medical Services Consortium, Inc.
Statements of Shareholders' Deficit
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------- PAID-IN ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT DEFICIT
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1995 48 $240 $99,760 $(270,228) $(170,228)
Net loss - - - (542,494) (542,494)
---------------------------------------------------------
Balance at December 31, 1995 48 240 99,760 (812,722) (712,722)
Net income - - - 477,874 477,874
Distribution to
shareholders - - - (85,560) (85,560)
---------------------------------------------------------
Balance at December 31, 1996 48 $240 $99,760 $(420,408) $(320,408)
=========================================================
</TABLE>
SEE ACCOMPANYING NOTES.
F-5
<PAGE>
Medical Services Consortium, Inc.
Statements of Cash Flows
YEAR ENDED DECEMBER 31
1996 1995
-----------------------
OPERATING ACTIVITIES
Net income (loss) $ 477,874 $(542,494)
Adjustments to reconcile net income (loss) to net
cash (used) provided by operating activities:
Contract termination settlement -- 363,959
Depreciation and amortization of leasehold
improvements 92,812 75,178
Provision for doubtful accounts 123,283 79,289
Changes in operating assets and liabilities:
Accounts receivable (677,221) (343,871)
Inventory 12,529 (66,210)
Prepaid expenses 30,928 (49,785)
Other assets (6,877) 19,423
Accounts payable 371,932 289,813
Accrued salaries and benefits 81,380 42,982
Accrued shareholders salaries (480,243) 294,470
Accrued expenses (27,274) 72,360
-----------------------
Net cash (used) provided by operating activities (877) 235,114
INVESTING ACTIVITIES
Purchase of property and equipment (25,109) (29,440)
Proceeds from sale of equipment -- 15,544
Payments received on notes receivable 21,225 --
-----------------------
Net cash used in investing activities (3,884) (13,896)
FINANCING ACTIVITIES
Distribution to shareholders (32,000) --
Payments on capital lease obligations (49,312) (39,755)
Payments on notes payable (115,382) (88,107)
Proceeds from notes payable to shareholders 400,414 --
-----------------------
Net cash provided (used) by financing activities 203,720 (127,862)
-----------------------
Net increase in cash and cash equivalents 198,959 93,356
Cash and cash equivalents at beginning of year 214,112 120,756
-----------------------
Cash and cash equivalents at end of year $ 413,071 $ 214,112
=======================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 132,361 $ 120,027
=======================
NONCASH INVESTING AND FINANCING ACTIVITIES
Distributions payable $ 53,560 $ --
=======================
Conversion of accounts receivable to a note
receivable $ 239,441 $ --
=======================
Fixed assets acquired under capital lease $ 44,245 $ 72,433
=======================
SEE ACCOMPANYING NOTES.
F-6
<PAGE>
Medical Services Consortium, Inc.
Notes to Financial Statements
December 31, 1996
1. ORGANIZATION
Medical Services Consortium, Inc. (the Company) was incorporated under the laws
of the State of Florida on June 29, 1992, for the purpose of supplying
prescription pharmaceuticals, consulting, enteral and parental therapies, and
home health care services to long-term and alternate care providers.
On January 10, 1997, the Company was acquired, in a business combination
accounted for as a pooling-of-interests, by CompScript, Inc. (CompScript). In
connection with the transaction, the shareholders of the Company exchanged all
of the Company's outstanding common stock for 1.4 million shares of CompScript's
common stock and the Company was merged into CompScript. Through December 31,
1996, the Company incurred approximately $59,000 in expenses associated with the
transaction.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of
three months or less, when acquired, 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, and market represents the lower of replacement cost
or estimated net realizable value.
CONCENTRATION OF CREDIT RISK
The Company's customers are primarily long-term and alternate care providers in
South Florida. The Company directly bills its customers or third-party payers,
which are primarily Medicaid and private insurers. Credit is extended based on
an evaluation of the customer's financial condition, and collateral is not
required. Credit losses are provided for in the financial statements and
consistently have been within management's expectations.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation of equipment and
amortization of leasehold improvements is computed using the MACRS
(double-declining balance) method over the estimated useful lives of the related
assets, ranging from five to seven years. Expenditures for maintenance and
repairs are charged to expense as incurred.
F-7
<PAGE>
Medical Services Consortium, Inc.
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
Revenues from sales of most pharmaceuticals and all consulting services are
recognized when products are shipped or services are provided. For some
pharmaceuticals that are located at the customers' facilities, revenues are
recognized when the product is dispensed to the patient. Revenues are recorded
net of adjustments and allowances resulting from the difference between
established rates for the products and services and amounts reimbursable by
government-sponsored health care programs (primarily Medicaid) and private
insurance carriers.
ADVERTISING COSTS
The Company expenses advertising costs as incurred. Advertising expense totaled
approximately $21,000 and $8,000 in 1996 and 1995, respectively.
INCOME TAXES
The Company is taxed under the provisions of Subchapter S of the Internal
Revenue Code, which generally provides that in lieu of corporate taxes, the
shareholders shall be taxed on the Company's taxable income in accordance with
their ownership interests. As a result, the accompanying financial statements
include no provision for income taxes.
As a result of the acquisition of the Company by CompScript, the Company will no
longer qualify as a Subchapter S corporation and will be subject to corporate
income taxes. Accordingly, for informational purposes, the statements of
operations include pro forma adjustments (unaudited) for income tax expense
which would have been recorded if the Company had been a taxable corporation,
based on the laws in effect during those periods.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
F-8
<PAGE>
Medical Services Consortium, Inc.
Notes to Financial Statements (continued)
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1996 consists of the following:
Furniture and equipment $225,047
Equipment under capital leases 201,350
Leasehold improvements 31,686
--------
458,083
Less accumulated depreciation (275,336)
========
$182,747
========
4. NOTES PAYABLE
Notes Payable consist of the following:
$300,000 revolving credit arrangement with a bank,
interest at prime plus 2.00% (10.25% at
December 31, 1996), collateralized by
substantially all of the assets of the Company.
Monthly payments of $3,572 plus accrued interest
are payable monthly, with a final balloon
payment of $89,252, plus accrued interest due on
September 1, 2000. $239,276
$300,000 unsecured promissory note, interest at
prime plus 1.00% (9.25% at December 31, 1996),
principal and interest payable monthly through
August 1, 1998. 209,358
--------
448,634
Less current portion (116,600)
--------
$332,034
========
In July 1995, the Company entered into the $300,000 unsecured note payable in
connection with a settlement agreed to upon the early termination of a prior
contract with business consultants to provide sales and marketing services to
the Company. In connection with the settlement, approximately $364,000,
including the forgiveness of a $64,000 account receivable from an affiliate of
the business consultants, has been recorded as contract termination settlement
expense in the 1995 statement of operations. On January 15, 1997, CompScript
paid the outstanding balance on this note payable.
F-9
<PAGE>
Medical Services Consortium, Inc.
Notes to Financial Statements (continued)
4. NOTES PAYABLE (CONTINUED)
On January 3, 1997, the Company entered into a new credit arrangement (New
Credit Arrangement) with a bank which contains a line-of-credit facility and a
term loan. The line-of-credit facility and term loan mature on January 3, 1998,
are collateralized by substantially all of the assets of the Company and permit
borrowings up to $500,000 and $200,000, respectively. Interest on the line of
credit is payable monthly at prime plus 1%, with the entire principal due at
maturity. Interest on the term loan is payable monthly at a fixed interest rate
of 9.5%. Principle payments of $4,200 are due monthly with the remaining
outstanding balance due on January 3, 1998. On January 3, 1997, the Company
borrowed $150,000 on the New Credit Arrangement and transferred the existing
balance of the Company's previous revolving credit arrangement to the New Credit
Arrangement. On January 10, 1997, CompScript paid the outstanding balance on
this New Credit Arrangement.
Notes payable mature as follows:
1997 $116,600
1998 178,486
1999 42,864
2000 110,684
--------
$448,634
========
5. NOTES PAYABLE TO SHAREHOLDERS
Notes payable to shareholders consist of the following:
<TABLE>
<CAPTION>
<S> <C>
$300,000 promissory note payable to a director and shareholder, interest
at prime plus 6.00% (14.25% at December 31, 1996), collateralized by
the accounts receivable of the Company. Interest is due monthly through
January 1, 2001 and principal is due on January 1, 2001. $300,000
$200,000 unsecured promissory note payable to a director and shareholder,
interest at a fixed rate of 8%. Interest is due monthly through January
1, 2001 and principal is due on January 1, 2001. 200,000
$400,414 unsecured promissory notes payable to certain officers and
shareholders of the Company, interest at a fixed rate of 7%.
Interest is due monthly through December 31, 1997 and principal is due
on December 31, 1997. 400,000
--------
900,414
Less current portion (400,414)
--------
$500,000
========
</TABLE>
F-10
<PAGE>
Medical Services Consortium, Inc.
Notes to Financial Statements (continued)
5. NOTES PAYABLE TO SHAREHOLDERS (CONTINUED)
Notes payable to shareholders mature as follows:
1997 $400,414
2001 500,000
--------
$900,414
========
6. FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
CASH AND CASH EQUIVALENTS: The carrying amount reported in the balance sheet
for cash and cash equivalents approximates its fair value.
NOTE RECEIVABLE: The fair value of the Company's note receivable from a customer
is estimated using discounted cash flow analysis, based on discount rates at
which similar notes would be made under current conditions, commensurate with
the credit and interest rate risks involved.
NOTES PAYABLE: The fair values of the Company's notes payable are estimated
using discounted cash flow analysis, based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements.
The carrying amounts and fair values of the Company's financial instruments at
December 31, 1996 are as follows:
CARRYING FAIR
AMOUNT VALUE
--------------------
Note receivable $218,216 $218,216
Notes payable 448,634 453,909
Notes payable to shareholders 900,414 941,213
F-11
<PAGE>
Medical Services Consortium, Inc.
Notes to Financial Statements (continued)
7. CAPITAL LEASES
The Company leases certain equipment under long-term capital leases. Future
obligations are as follows:
Year ending December 31,
1997 $ 60,630
1998 34,552
1999 11,895
---------
107,077
Less interest (23,369)
---------
83,708
Less current portion (47,704)
---------
$ 36,004
=========
8. SHAREHOLDERS' DEFICIT
Effective June 28, 1996, the Board of Directors of the Company declared a
12-for-5 stock split. The accompanying financial statements have been
retroactively restated to reflect this stock split as of January 1, 1995.
During 1996, the Board of Directors declared a $85,560 distribution to
shareholders, of which $32,000 was paid prior to December 31, 1996. The
remaining balance of $53,560 is shown as distributions payable on the balance
sheet.
9. LEASE COMMITMENTS
The Company has various operating leases, primarily relating to office and
warehouse facilities. The leases have various renewal options and escalation
clauses as defined in the lease agreements. Total rent expense for the years
ended December 31, 1996 and 1995 amounted to $80,714 and $69,867 , respectively.
Approximate future minimum annual rentals under noncancelable operating leases
with initial or remaining terms in excess of one year are:
1997 $178,597
1998 180,827
1999 136,731
2000 140,594
2001 146,218
--------
$782,967
========
F-12
<PAGE>
Medical Services Consortium, Inc.
Notes to Financial Statements (continued)
10. PROFIT SHARING PLAN
Effective January 1, 1995, the Company established the Medical Services
Consortium, Inc. 401(k) Plan (the Plan), a deferred profit sharing savings plan
that covers all employees of the Company that are at least 21 years old and who
have been employed by the Company at least 6 months. Under the Plan,
participating employees may defer up to 15% of their pre-tax salary before
reduction each year. The Company may make contributions to the Plan at the
Company's discretion. Contributions vest over a six year period. The Company did
not make any contributions to the Plan for the fiscal years ended December 31,
1996 and 1995.
F-13
<PAGE>
COMPSCRIPT INC. AND SUBSIDIARIES
INTRODUCTION TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
On January 10, 1997, CompScript, Inc. ("CompScript" or the "Company")
consummated a Stock Purchase Agreement with the shareholders of Medical Services
Consortium, Inc. ("MSC"), a Florida corporation (the "Stock Purchase
Agreement"). Under the Stock Purchase Agreement, CompScript acquired all the
issued and outstanding shares of MSC in exchange for 1,400,000 shares of
CompScript's Common Stock.
The following pro forma condensed consolidated financial information consists of
a Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1996 and Pro
Forma Condensed Consolidated Statement of Operations for the year ended December
31, 1996 (collectively, the "Pro Forma Statements"). The Pro Forma Condensed
Consolidated Balance Sheet was prepared to give effect to the acquisition of MSC
as if it occurred as of December 31, 1996. The Pro Forma Condensed Consolidated
Statement of Operations for the year ended December 31, 1996 gives effect to the
acquisition of MSC 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 pooling 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 or 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 BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1996
COMPSCRIPT, MEDICAL SERVICES PRO FORMA
INC. CONSORTIUM, INC. ADJ'S PRO FORMA
---- ---------------- ----- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 440,328 $ 413,071 $ -- $ 853,399
Accounts receivable, net 2,179,749 1,691,219 -- 3,870,968
Inventory 1,091,264 311,189 -- 1,402,453
Receivable from sale of
marketable securities 1,125,000 -- -- 1,125,000
Other current assets 663,726 54,208 -- 717,934
---------- ---------- --------- -----------
Total current assets 5,500,067 2,469,687 -- 7,969,754
Property and equipment - net 1,438,369 182,747 -- 1,621,116
Other assets 746,153 247,859 -- 994,012
---------- ---------- --------- -----------
Total Assets $7,684,589 $2,900,293 $ -- $10,584,882
========== ========== ========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,296,317 $1,434,574 $ -- $ 2,730,891
Accrued expenses 951,361 353,371 -- 1,304,732
Line of credit 674,693 -- -- 674,693
Current maturities of debt and
capitalized leases 255,958 564,718 -- 820,676
---------- ---------- --------- -----------
Total current liabilities 3,178,329 2,352,663 -- 5,530,992
Long- term debt and capitalized
leases 54,049 868,038 -- 922,087
---------- ---------- --------- -----------
Total Liabilities 3,232,378 3,220,701 -- 6,453,079
Minority interest in consolidated
subsidiary 222,628 -- -- 222,628
Shareholders' equity:
Common stock 1,091 240 (100)(A) 1,231
Additional paid - in capital 8,855,456 99,760 100 (A) 8,534,908
(420,408)(B)
Accumulated deficit (4,626,964) (420,408) 420,408 (B) (4,626,964)
---------- ---------- --------- -----------
Total shareholders' equity 4,229,583 (320,408) -- 3,909,175
---------- ---------- --------- -----------
Total liabilities and
shareholders' equity $7,684,589 $2,900,293 $ -- $10,584,882
========== ========== ========= ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPSCRIPT INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1996
CompScript, Medical Services Pro Forma
Inc. Consortium, Inc. Adj's Pro Forma
---- ---------------- ----- ---------
<S> <C> <C> <C> <C>
Sales $20,049,771 $8,577,551 $ -- $28,627,322
Cost of sales 12,846,113 4,990,540 -- 17,836,653
----------- ---------- -------- -----------
Gross profit 7,203,658 3,587,011 -- 10,790,669
Selling, general and
administrative expenses 7,984,824 2,817,653 (66,000)(C) 10,736,477
Provision for doubtful accounts 657,656 123,283 780,939
Merger related costs 875,223 59,000 -- 934,223
----------- ---------- -------- -----------
Operating (loss) income (2,314,045) 587,075 66,000 (1,660,970)
Other
Interest and other income 29,462 18,362 -- 47,824
Interest expense (113,759) (127,563) -- (241,322)
----------- ---------- -------- -----------
Income (loss) before income tax
benefit (2,398,342) 477,874 66,000 (1,854,468)
Income tax benefit (472,750) -- -- (D) (472,750)
----------- ---------- -------- -----------
Net income (loss) $(1,925,592) $ 477,874 $ 66,000 $(1,381,718)
=========== ========== ======== ===========
Net loss per share $ (0.20) $ (0.12)
=========== ===========
Weighted average common shares
and common stock equivalents
outstanding 9,841,648 11,241,648
=========== ===========
</TABLE>
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
(A) To reflect the exchange of 1,400,000 shares of Common Stock of
CompScript, Inc. for 100% of the issued and outstanding common shares of Medical
Services Consortium, Inc. (MSC) on January 10, 1997, in a transaction accounted
for as a pooling of interests.
(B) To properly allocate the accumulated deficit of MSC to additional
paid-in capital as MSC was previously taxed under the provisions of Subchapter S
of the Internal Revenue Code and accordingly was not subject to corporate income
taxes.
(C) To reflect the reduction in salaries and benefits paid to a former
majority shareholder during the pro forma period. The supplemental pro forma
presentation is shown solely as a result of changed circumstances that will
exist following consummation of the merger. No additional costs will be incurred
that offset the pro forma adjustment to compensation expense. This information
is necessary for investors to realistically assess the impact of the
combination.
(D) For the period January 1, 1996 through December 31, 1996 MSC was
taxed as a Subchapter S Corporation. As a result no provision for federal income
taxes was reflected in MSC's historical financial statement. No pro forma
adjustment has been made to reflect income tax expense on MSC's earnings, as if
MSC was subject to corporate income taxes, due to the fact that on a pro forma
consolidated basis the maximum amount of net operating loss carryback has
already been reflected in CompScript, Inc.'s 1996 income statement.
