UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934.
DYNAMIC ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 33-55254-03 87-0473323
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
7373 North Scottsdale Road, Suite B-150
Scottsdale, Arizona 85253
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 483-8700
AMENDMENT NO. 5
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its CURRENT REPORT on Form 8-K dated
August 27, 1996 as set forth in the pages attached hereto:
Audited financial statements as of November 30, 1996 for Genesis Health
Management Corporation including complete auditor's opinion, part of which
was accidentally not included in original filing
Pro forma information as of September 30, 1996 and December 31, 1995.
<PAGE>
Signature
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.
Dynamic Associates, Inc.
Date: February 20, 1997 /s/ Logan B. Anderson
----------------------- ---------------------
Logan B. Anderson, Secretary/Treasurer
<PAGE>
GENESIS HEALTH MANAGEMENT CORPORATION
FINANCIAL STATEMENTS
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1996
<PAGE>
Dewey L. Simonton
Certified Public Accountant 820 Jordan, Suite 390
Shreveport, LA 71101
(318)221-5353
To the Board of Directors and Stockholders
of Genesis Health Management Corporation
I have audited the accompanying balance sheet of Genesis Health Management
Corporation (a Louisiana corporation) as of November 30, 1996, and the related
statements of operation and retained earnings,and cash flows for the eleven
months then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Genesis Health Management
Corporation as of November 30, 1996, and the results of its operations and its
cash flows for the eleven months ended November 30, 1996, in conformity with
generally accepted accounting principles.
Dewey L. Simonton
Certified Public Accountant
February 4, 1997
<PAGE>
Genesis Health Management Corporation
Balance Sheet
November 30, 1996
ASSETS
Current Assets
Cash $ 166,416
Accounts receivable 1,294,000
Prepaid assets 39,320
Other receivables 122,887
---------
Total Current Assets 1,622,623
---------
Property and Equipment
Leasehold improvements 16,492
Transportation equipment 95,136
Furniture and fixtures 87,976
---------
199,604
Less accumulated depreciation (42,243)
---------
Total Property and Equipment 157,361
---------
Other assets
Security deposits 410
---------
Total Other Assets 410
---------
Total Assets $ 1,780,394
=========
3
<PAGE>
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable - trade $ 190,737
Notes payable 150,000
Current portion - long term debt 25,439
Accrued expenses 250,549
Withheld & accrued payroll tax 15,918
---------
Total Current Liabilities 632,643
---------
Long Term Liabilities
Notes Payable 37,525
---------
Total Long Term Liabilities 37,525
---------
Total Liabilities 670,168
---------
Stockholders Equity
Common Stock (No Par 10,000 shares
authorized 10,000 issued) 1,000
Retained earnings 1,109,226
---------
Total Stockholders Equity 1,110,226
---------
Total Liabilities & Equity $ 1,780,394
=========
<PAGE>
Genesis Health Management Corporation
Statement of Operations and Retained Earnings
For the eleven months ended November 30, 1996
Revenue
Fees $ 8,555,860
---------
Total Revenue 8,555,860
Operating Expenses
Bad debts 692,500
Repairs and maintenance 36,105
Amortization 782
Rents 91,421
Utilities 93,122
Wages and salaries 3,021,207
Travel and entertainment 362,606
Depreciation expense 46,876
Insurance 152,557
Advertising 24,410
Legal and accounting 46,479
Payroll taxes 235,958
Dues and subscriptions 9,985
Auto and truck expense 20,294
Contributions 8,575
Other operating expenses 1,253,543
---------
Total Operating Expenses 6,096,420
---------
Income from operations 2,459,440
---------
Other (Income) & Expense
Interest expense 15,561
Interest income (427)
---------
Total Other (Income) Expense 15,134
---------
Net Income 2,444,306
Retained Earnings - Beginning of Period 114,920
Less Distributions (1,450,000)
---------
Retained Earnings - End of Period $ 1,109,226
=========
5
<PAGE>
Genesis Health Management Corporation
Statement of Cash Flows
For the eleven months ended November 30, 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 2,444,305
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciations expense 46,876
Loss (gain) on disposal equipment 14,253
Change in accounts receivable (704,500)
Change in prepaid expenses (22,682)
Change in other receivables (115,392)
Change in other assets (210)
Change in accounts payable 31,068
Change in accrued expenses 176,107
Change in accrued income tax (46,544)
Change in payroll taxes (59,436)
---------
Total Adjustments (680,460)
---------
Net Cash Provided (Used) by Operating Activities 1,763,845
Cash Flows from Investment Activities
Investment in equipment (122,097)
Sale of equipment 151,429
---------
Net Cash Provided (Used) by Investing Activities 29,332
Cash Flows From Financing
Debt reduction (355,707)
Distributions paid (1,450,000)
---------
Net Cash Provided (Used) by Financing Activities (1,805,707)
---------
Net Increase (Decrease) in Cash (12,530)
Cash at Beginning of Period 178,946
---------
Cash at End of Period $ 166,416
=========
Supplemental Disclosures
Interest Paid $ 15,561
========
6
<PAGE>
Genesis Health Management Corporation
Notes to Financial Statement
For the period ended November 30, 1996
Nature of Business
Genesis Health Management Corporation, a Louisiana corporation, manages the
operation of geropsychiatric units for various hospitals located in the states
of Louisiana, Arkansas, Mississippi and Tennessee. Genesis Health Management
Corporation contracts for three to five years.
NOTE A - Summary of Significant Accounting Policies
------------------------------------------
This summary of significant accounting policies of Genesis Health Management
Corporation is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
Property and Equipment
Property and equipment are carried at cost. Depreciation of property and
equipment is provided using the straight-line method for financial reporting.
Estimated useful lives are as follows:
Years
Vehicle 5
Lease Improvement 7
Furniture and Fixtures 7
For federal tax purposes, depreciation is computed using the modified
accelerated cost recovery system.
Income Taxes
The Company has elected to be treated as a sub-s for tax purposes for the year
beginning, January 1, 1996, to November 30, 1996.
7
<PAGE>
Genesis Health Management Corporation
Notes to Financial Statements
November 30, 1996
NOTE B - Cash Concentration
------------------
The Company maintains cash balances in excess of the banks federally insured
limits. The Company tries to keep this partial risk at a minimum.
NOTE C - Allowance for Doubtful Accounts
-------------------------------
Accounts receivable are presented at net of allowance for doubtful accounts in
the amount of $ 739,925.00.
NOTE D - Property and Equipment
----------------------
Accumulated
Cost Depreciation
Vehicles $ 95,135 22,452
Lease Improvements 16,493 4,306
Furniture and Fixtures 87,976 15,485
-------- --------
199,604 42,243
======== ========
NOTE E - Long Term Debt
--------------
The Company finances certain equipment for various terms. The following is a
summary of long-term debt at November 30, 1996:
<TABLE>
<S> <C>
9.25% Note payable to bank in monthly installments of $ 660.88, plus
interest through February 21, 2000. $ 22,327
9.4% Note payable to a lending institution payable in monthly
installments of $ 927.22, plus interest through November 29, 1999. 28,988
11.5% Note payable to a lending institution payable in monthly
installments of $1,032.13, plus interest through November 6, 1997 11,649
-----------
62,964
Less: Current maturities included in current liabilities (25,439)
-----------
$ 37,525
===========
</TABLE>
Following are maturities of long-term debt.
1998 16,382
1999 17,978
2000 3,165
--------
$ 37,525
========
8
<PAGE>
Genesis Health Management Corporation
Notes to Financial Statements
November 30, 1996
NOTE F - 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 reported amounts of assets and liabilities and disclosure of
contingent assets and liablities 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.
NOTE G - Related Party Transactions
--------------------------
Gulf States Air, Inc. is an airplane charter service which has the same
ownership as Genesis Health Management Corporation. Genesis Health Management
Corporation has paid Gulf States Air, Inc. $ 156,761.00 for charter services.
The Company has paid $ 18,750.00 for prepaid charter services.
NOTE H - Leases
------
The Company is the lessee of equipment under operating leases expiring in
various years through 1998.
Minimum future rental payments under non-cancellable operating leases having
remaining terms in excess of one year as of November 30, 1996, for each of the
following years:
Years Ended Amount
1997 $ 126,475
1998 68,035
--------
Total mimimum future rental payments $ 194,510
========
The Company leases an aircraft from Gulf States Air, Inc. on a monthly basis,
but the lease payment is not determined until the end of each month. Future
payments are not determinable.
The following is rental expenses of operating leases incurred through November
30, 1996.
Minimum Rentals $ 57,975
<PAGE>
Genesis Health Management Corporation
Notes to Financial Statements
November 30, 1996
NOTE I - Subsequent Events
-----------------
The Company's shareholders have sold all the outstanding common stock to Genesis
Acquisition Corporation effective December 1, 1996. This transaction will
terminate the sub-s election effective at November 30, 1996.
NOTE J - Advertising
-----------
The Company incurs no direct-response advertising. The advertising expense for
the period ended November 30, 1996, is $ 24,410.
NOTE K - Compensated Absences
--------------------
The Company accrues compensated absences. The cost for the period ended November
30, 1996, is $ 83,410.
9
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
BALANCE SHEET
September 30, 1996
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dynamic Genesis Adjustments Pro Forma
ASSETS
CURRENT ASSETS
<S> <C> <C> <C>
Cash $ 749,864 $ 433,652 $ $ 1,183,516
Marketable securities 103,219 0 103,219
Accounts receivable 582,492 1,386,900 1,969,392
Loans receivable - related parties 164,600 48,506 213,106
Loans receivable 0 21,994 21,994
Accrued interest 18,300 0 18,300
Inventory 858,462 0 858,462
Prepaid expense 6,262 21,942 28,204
Deferred tax benefit 61,000 0 61,000
--------------- ------------ --------------- --------------
TOTAL CURRENT ASSETS 2,544,199 1,912,994 4,457,193
EQUIPMENT 270,942 109,087 380,029
OTHER ASSETS
Note receivable 92,953 0 92,953
Investment 50,000 0 50,000
Goodwill 0 0 (1) 500,000
(2) 11,500,000 23,639,383
(3) 3,000,000
(4) 10,323,000
(5) 50,000
(6) (1,733,617)
Deposits 522,627 200 (1) (500,000) 22,827
Organization costs 940 0 940
--------------- ------------ --------------- --------------
666,520 200 23,139,383 23,806,103
--------------- ------------ --------------- --------------
$ 3,481,661 $ 2,022,281 $ 23,139,383 $ 28,643,325
=============== ============ =============== ==============
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements.
F-1
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
BALANCE SHEET (Continued)
September 30, 1996
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dynamic Genesis Adjustments Pro Forma
LIABILITIES & EQUITY
CURRENT LIABILITIES
<S> <C> <C> <C> <C> <C>
Accounts payable $ 293,727 $ 136,284 (5) $ 50,000 $ 480,011
Accrued expenses 117,117 113,272 230,389
Bridge loan 0 0 (3) 3,000,000 3,000,000
Current portion of long-term debt 55,530 0 55,530
Deferred income taxes 0 3,724 3,724
Income taxes payable 19,907 0 19,907
--------------- ------------ --------------- --------------
TOTAL CURRENT LIABILITIES 486,281 253,280 3,050,000 3,789,561
LONG-TERM DEBT 134,212 35,384 (2) 11,500,000 11,669,596
DEFERRED INCOME TAXES 57,000 0 57,000
--------------- ------------ --------------- --------------
TOTAL LIABILITIES 677,493 288,664 14,550,000 15,516,157
Minority interest in subsidiary 826,519 0 826,519
STOCKHOLDERS' EQUITY Common stock $.001 par value:
Authorized - 25,000,000 shares
Issued and outstanding 8,780,000
shares 8,780 1,000 (4) 3,100 11,880
(7) (1,000)
Additional paid-in capital 3,372,594 0 (4) 10,319,900 11,959,877
(6) (1,733,617)
(7) 1,000
Retained earnings (deficit) (1,078,725) 1,732,617 653,892
Stock subscription receivable (325,000) 0 (325,000)
--------------- ------------ --------------- --------------
TOTAL STOCKHOLDERS' EQUITY 1,977,649 1,733,617 8,589,383 12,300,649
--------------- ------------ --------------- --------------
$ 3,481,661 $ 2,022,281 $ 23,139,383 $ 28,643,325
=============== ============ =============== ==============
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements.
F-2
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
BALANCE SHEET
December 31, 1995
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dynamic Genesis Adjustments Pro Forma
ASSETS
CURRENT ASSETS
<S> <C> <C> <C> <C> <C>
Cash $ 959,843 $ 178,945 (2) $ (500,000) $ 638,788
Short-term commercial paper 329,157 0 329,157
Accounts receivable 810,825 589,500 1,400,325
Loans receivable - related parties 272,300 0 272,300
Loans receivable 0 7,494 7,494
Accrued interest 4,202 0 4,202
Inventory 588,803 0 588,803
Prepaid expense 4,523 16,639 21,162
Deferred tax benefit 53,000 0 53,000
--------------- ------------ --------------- --------------
TOTAL CURRENT ASSETS 3,022,653 792,578 (500,000) 3,315,231
EQUIPMENT 177,757 247,822 425,579
OTHER ASSETS
Goodwill 0 0 (2) 12,000,000 25,257,080
(3) 3,000,000
(4) 10,323,000
(5) 50,000
(6) (115,920)
Deposits 21,315 200 21,515
Organization costs 1,120 0 1,120
--------------- ------------ --------------- --------------
22,435 200 25,257,080 25,279,715
--------------- ------------ --------------- --------------
$ 3,222,845 $ 1,040,600 $ 24,757,080 $ 29,020,525
=============== ============ =============== ==============
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements.
F-3
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
(A Development Stage Company)
UNAUDITED CONSOLIDATED CONDENSED
BALANCE SHEET (Continued)
December 31, 1995
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dynamic Genesis Adjustments Pro Forma
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
<S> <C> <C> <C> <C> <C>
expenses $ 320,254 $ 309,466 (5) $ 50,000 $ 679,720
Bridge loan 220,000 0 (3) 3,000,000 3,220,000
Current portion of long-term debt 77,823 0 77,823
Income taxes payable 129,805 46,544 176,349
--------------- ------------ --------------- --------------
TOTAL CURRENT LIABILITIES 747,882 356,010 3,050,000 4,153,892
LONG-TERM DEBT 173,652 542,575 (2) 11,500,000 12,216,227
Loan from shareholders 0 26,095 26,095
DEFERRED INCOME TAXES 54,000 0 54,000
--------------- ------------ --------------- --------------
TOTAL LIABILITIES 975,534 924,680 14,550,000 16,450,214
Minority interest in subsidiary 775,389 0 775,389
STOCKHOLDERS' EQUITY
Common stock $.001 par value:
Authorized - 25,000,000 shares
Issued and outstanding 7,000,000
shares 7,000 1,000 (4) 3,100 10,100
(7) (1,000)
Additional paid-in capital 1,335,000 0 (4) 10,319,900 11,539,980
(6) (115,920)
(7) 1,000
Earnings (deficit) accumulated
during the development stage 129,922 114,920 244,842
--------------- ------------ --------------- --------------
TOTAL STOCKHOLDERS' EQUITY 1,471,922 115,920 10,207,080 11,794,922
--------------- ------------ --------------- --------------
$ 3,222,845 $ 1,040,600 $ 24,757,080 $ 29,020,525
=============== ============ =============== ==============
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements.
F-4
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS
Nine Months ended September 30, 1996
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dynamic Genesis Adjustments Pro Forma
<S> <C> <C> <C> <C>
Net Sales $ 2,374,162 $ 0 $ $ 2,374,162
Management fee income 0 6,235,860 6,235,860
Cost of sales 1,689,841 0 1,689,841
--------------- --------------- --------------- --------------
GROSS PROFIT 684,321 6,235,860 6,920,181
Selling and general and administrative
expenses 1,379,430 4,023,838 5,403,268
Research and development 425,039 0 425,039
--------------- --------------- --------------- --------------
1,804,469 4,023,838 5,828,307
--------------- --------------- --------------- --------------
NET OPERATING INCOME (LOSS) (1,120,148) 2,212,022 1,091,874
OTHER INCOME (EXPENSE)
Interest income 87,307 0 87,307
Interest expense (79,295) 0 (79,295)
Loss on sale of asset 0 (14,253) (14,253)
Miscellaneous income 11,548 426 11,974
Miscellaneous expense (4,430) 0 (4,430)
--------------- --------------- --------------- --------------
15,130 (13,827) 1,303
--------------- --------------- --------------- --------------
NET INCOME (LOSS)
BEFORE INCOME TAXES AND
MINORITY INTEREST (1,105,018) 2,198,195 1,093,177
INCOME TAX EXPENSE 52,500 1,284 53,784
--------------- --------------- --------------- --------------
NET INCOME (LOSS)
BEFORE MINORITY INTEREST (1,157,518) 2,196,911 1,039,393
MINORITY INTEREST (51,129) -0- (51,129)
--------------- --------------- --------------- --------------
NET INCOME (LOSS) $ (1,208,647) $ 2,196,911 $ 0 $ 988,264
=============== =============== =============== ==============
Net income (loss) per weighted
average share $ (.15) $ 219.69 $ .09
=============== =============== ==============
Weighted average number of common
shares used to compute net income
(loss) per weighted average share 7,869,877 10,000 10,969,877
=============== =============== ==============
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements.
F-5
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS
Year ended December 31, 1995
<TABLE>
<CAPTION>
Pro Forma Consolidated
Dynamic Genesis Adjustments Pro Forma
<S> <C> <C> <C> <C>
Net Sales $ 3,723,013 $ 0 $ $ 3,723,013
Management fee income 0 3,832,188 3,832,188
Cost of sales 2,370,168 0 2,370,168
--------------- --------------- --------------- --------------
GROSS PROFIT 1,352,845 3,832,188 5,185,033
Selling and general and administrative
expenses 1,407,527 3,543,293 4,950,820
Bad debts 58,380 47,425 105,805
--------------- --------------- --------------- --------------
1,465,907 3,590,718 5,056,625
--------------- --------------- --------------- --------------
NET OPERATING INCOME (LOSS) (113,062) 241,470 128,408
OTHER INCOME (EXPENSE)
Interest income 28,543 24 28,567
Interest expense (24,579) (17,077) (41,656)
--------------- --------------- --------------- --------------
3,964 (17,053) (13,089)
--------------- --------------- --------------- --------------
NET INCOME (LOSS)
BEFORE INCOME TAXES AND
MINORITY INTEREST (109,098) 224,417 115,319
INCOME TAX EXPENSE 202,600 59,308 261,908
--------------- --------------- --------------- --------------
NET INCOME (LOSS)
BEFORE MINORITY INTEREST (311,698) 165,109 (146,589)
MINORITY INTEREST (153,885) 0 (153,885)
--------------- --------------- --------------- --------------
NET INCOME (LOSS) $ (465,583) $ 165,109 $ 0 $ (300,474)
=============== =============== =============== ==============
Net income (loss) per weighted
average share $ (.18) $ 16.51 $ (.05)
=============== =============== ==============
Weighted average number of common
shares used to compute net income
(loss) per weighted average share 2,641,213 10,000 5,741,213
=============== =============== ==============
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements.
F-6
<PAGE>
DYNAMIC ASSOCIATES, INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
The preceding pro forma consolidated condensed balance sheets have been derived
from the balance sheets of the Company and Genesis Health Management Corporation
("Genesis") at September 30, 1996 and December 31, 1995. The balance sheets
assume that the Company acquired 100% of the outstanding stock of Genesis on
January 1, 1995. The Balance Sheet column for December 31, 1995 labeled Dynamic
also assumes the Company had acquired 50% of the outstanding stock of P & H
Laboratories on January 1, 1995.
(1) Reflects the reclassification of a deposit to goodwill.
(2) Reflects $11,500,000 ($12,000,000 for 1995 pro forma) cash paid to
acquire 100% of the outstanding stock of Genesis and cash acquired by
issuance of convertible notes.
(3) Reflects issuance of $3,000,000 note payable for the balance of the
purchase price.
(4) Reflects the issuance of 3,000,000 restricted common shares as part of
purchase price at $3.33 per share and 100,000 restricted common shares
for a finder's fee at $3.33 per share.
(5) Reflects a commission due on the transaction.
(6) Reflects the reduction of goodwill by the net assets purchased at book
value.
(7) Eliminates common stock of subsidiary.
The preceding pro forma consolidated condensed statements of operations have
been derived from the statements of operations of the Company and Genesis as of
September 30, 1996 and December 31, 1995, and assumes the companies were
consolidated as of the beginning of each period presented. The Statement of
Operations column labeled Dynamic for 1995 assumes that Dynamic had acquired 50%
of the outstanding stock of P & H Laboratories on January 1, 1995.
Had the Company actually acquired Genesis on January 1, 1995 it would have had
sufficient net operating loss carryovers and amortization of goodwill to offset
the income of Genesis in 1996. Therefore no pro forma adjustments have been made
to income taxes payable or income tax expense.
F-7
