<PAGE> 1
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 15, 1996
ACCUMED INTERNATIONAL, INC.
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-20652 36-4054899
--------------- ----------- ------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
900 N. Franklin Street, Suite 401, Chicago, Illinois 60610
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 642-9200
____________________________________________________________
(Former name or former address, if changed since last report)
________________________________________________________________________________
<PAGE> 2
Item 7. Financial Statements and Exhibits
(a) Financial Information of Businesses Acquired:
The following financial statements are filed herewith:
Oncometrics Imaging Corp.:
1. Auditors' Report
2. Balance Sheets as of August 31, 1995, December 31, 1995, May
31, 1996 and September 30, 1996 (unaudited)
3. Statements of Operations and Deficit for the twelve months
ended August 1995; four months ended December 31, 1995;
five months ended May 31, 1996 and the four months ended
September 30, 1996 (unaudited).
4. Statement of Changes in Financial Position for the 12 months
ended August 31, 1995, the four months ended December 31, 1995,
the five months ended May 31, 1996 and the four months ended
September 30, 1996 (unaudited).
5. Notes to financial statements.
Radco Ventures, Inc.
1. Independent Auditors' Report.
2. Balance Sheet as of September 30, 1996.
3. Statement of Operations for the period from March 6, 1996
(date of incorporation) through September 30, 1996.
4. Statement of Stockholders' Equity (Deficit) for the period
from March 6, 1996 (date of incorporation) through September
30, 1996.
5. Statement of Cash Flows for the period from March 6, 1996
(date of incorporation) through September 30, 1996.
6. Notes to the financial statements.
(b) Pro Forma Financial Information:
The following pro forma financial information is filed herewith:
AccuMed International, Inc. and its subsidiaries.
1. Pro Forma Condensed Combining Balance Sheet as of September
30, 1996.
2. Pro Forma Condensed Combining Statements of Operations for the
nine months ended September 30, 1996.
2
<PAGE> 3
3. Pro Forma Condensed Combining Statements of Operations for the
three months ended December 31, 1995.
4. Notes to Pro Forma Condensed Combining Financial Statements.
(c) Exhibits:
The following exhibits are filed herewith.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG.
3
<PAGE> 4
AUDITORS' REPORT
The Board of Directors
Oncometrics Imaging Corp.
We have audited the balance sheets of the AIC division of Xillix Technologies
Corp. as at August 31, 1995 and December 31, 1995 and Oncometrics Imaging Corp.
at May 31, 1996 and the statements of operations and deficit and changes in
financial position for the periods then ended. 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance 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 will as evaluating the overall financial
statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Division and the Company as at August
31, 1995, December 31, 1995, and May 31, 1996 and the results of its operations
and changes in its financial position for the periods then ended in accordance
with generally accepted accounting principles. As required by the Company Act
(British Columbia), we report that, in our opinion, these principles have been
applied on a basis consistent with that of the preceding year.
Generally accepted accounting principles in Canada vary in certain significant
respects from generally accepted accounting principles in the United States.
As indicated in note 12 there are no material differences which affect the
results of operations in each of the periods and shareholders' deficiency as of
August 31, 1995, December 31, 1995 and May 31, 1996.
/s/ KPMG
Chartered Accountants
Vancouver, Canada
July 18, 1996
4
<PAGE> 5
ONCOMETRICS IMAGING CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS AUGUST 31, DECEMBER 31, MAY 31, SEPTEMBER 30,
1995 1995 1996 1996
(UNAUDITED)
---------- ------------ ------- -------------
<S> <C> <C> <C> <C>
Current assets
Cash $ $ - $ 18,006 $ 33,893
Accounts receivable 37,818 222,576 35,960 66,199
Inventories 147,592 80,249 138,050 150,483
Other - - 5,438 45,058
--------- --------- --------- ---------
Total current assets 185,410 302,825 197,454 295,633
--------- --------- --------- ---------
Capital assets, net 244,916 238,197 236,847 236,104
--------- --------- --------- ---------
430,326 541,022 434,301 531,737
========= ========= ========= =========
LIABILITIES AND EQUITY (DEFICIENCY)
Current liabilities
Accounts payable and accrued liabilities 45,600 22,700 105,962 152,018
Current portion of long-term debt - 10,000 10,000 -
--------- --------- --------- ---------
45,600 32,700 115,962 152,018
--------- --------- --------- ---------
--------- --------- --------- ---------
Long term debt 318,338 308,338 308,338 307,726
--------- --------- --------- ---------
Equity (Deficiency)
Share capital - - 199,984 199,984
Xillix divisional equity, net of operating loss 66,388 199,984 - -
Xillix capital contributions - - 302,374 794,349
--------- --------- --------- ---------
66,388 199,984 502,358 994,333
--------- --------- --------- ---------
(Deficit) Profit - - (492,357) (922,341)
--------- --------- --------- ---------
66,388 199,984 10,001 71,992
--------- --------- --------- ---------
$ 430,326 $ 541,022 $ 434,301 $ 531,737
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
ONCOMETRICS IMMAGING CORP.
STATEMENTS OF OPERATIONS AND DEFICIT
<TABLE>
<CAPTION>
TWELVE MONTHS FOUR MONTHS FIVE MONTHS FOUR MONTHS
ENDED ENDED ENDED ENDED
AUGUST 31, 1995 DECEMBER 31, 1995 MAY 31, 1996 SEPTEMBER 30, 1996
(UNAUDITED)
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Product sales $ 220,862 $ 198,845 $ 7,012 $ 6,431
Interest income - - 1,554 647
Other income - - - 24,759
-----------------------------------------------------------------
220,862 198,845 8,566 31,837
Cost and expense
Cost of sales 183,927 119,325 4,297 5,719
Marketing, sales and support - - 82,062 18,636
Research and development 1,290,188 300,853 283,522 315,124
General and administrative - - 100,435 97,107
General and administrative
allocation from parent company 235,826 60,320 - -
Depreciation and amortization 71,840 23,680 30,607 25,235
-----------------------------------------------------------------
1,781,781 504,178 500,923 461,821
-----------------------------------------------------------------
Loss for the period $1,560,919 $ 305,333 $ 492,357 $ 429,984
============================
Deficit, beginning of period -
----------------------------
Deficit, end of period $ 492,357 $ 922,341
============================
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
ONCOMETRICS IMAGING CORP.
STATEMENTS OF CHANGES IN FINANCIAL POSITION
<TABLE>
<CAPTION>
TWELVE MONTHS FOUR MONTHS FIVE MONTHS FOUR MONTHS
ENDED ENDED ENDED ENDED
AUGUST 31, 1995 DECEMBER 31, 1995 MAY 31, 1996 SEPTEMBER 30, 1996
(UNAUDITED)
--------------- ----------------- ------------ ------------------
<S> <C> <C> <C> <C>
Cash provided by (used in):
Operations:
Loss for the period $(1,560,919) $ (305,333) $ (492,357) $ (429,984)
Depreciation and aortization an item not
involving cash 71,840 23,680 30,607 35,100
----------- ----------- ----------- -----------
(1,489,079) (281,653) (461,750) (394,884)
Changes in non-cash operating working capital:
Accounts receivable (37,818) (184,758) 186,616 (30,239)
Inventories (147,592) 67,343 (57,801) (12,433)
Other current assets - - (5,438) (39,620)
Accounts payable and accured liabilities 45,600 22,900 83,262 36,056
----------- ----------- ----------- -----------
(1,628,889) (421,968) (255,111) (441,120)
----------- ----------- ----------- -----------
Financing
Increase in equity 1,627,307 438,929 302,374 491,975
Increase in long-term debt 318,338 - - -
----------- ----------- ----------- -----------
1,945,645 438,929 302,374 491,975
----------- ----------- ----------- -----------
Investments
Purchase of capital assets, net $ (316,756) $ (16,961) $ (29,257) (34,968)
----------- ----------- ----------- -----------
Increase in cash - - 18,006 15,887
Cash, beginning of period - - - 18,006
=========== =========== =========== ===========
Cash, end of period $ - $ - $ 18,006 $ 33,893
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 8
ONCOMETRICS IMAGING CORP.
NOTES TO FINANCIAL STATEMENTS
1. FORMATION AND OPERATIONS:
A division of Xillix Technologies Inc. ("Xillix") has specialized in
the research and development of Automated Image Cytometry equipment ("AIC
Division")
In contemplation of raising additional capital for the AIC division,
Oncometrics Imaging Corp. (the "Company") was formed as a wholly-owned
subsidiary of Xillix in October 1995. Effective January 1, 1996 the operations
of the AIC Division were transferred to the Company. The net assets of the AIC
Division were transferred on January 20, 1996 in consideration of shares of the
Company. The value assigned to the shares was equal to the historical value of
net assets transferred.
The accompanying financial statements include the accounts of the
Company for the period January 1, 1996 to May 31, 1996 and the accounts for the
AIC Division for the year ended August 31, 1995 and the four months ended
December 31, 1995.
The financial statements for the year ended August 31, 1995 and four
months ended December 31, 1995 include an allocation of the overhead of Xillix
applicable to the AIC Division, based on proportionate wages.
Interim Financial Statements:
The financial statements as of September 30, 1996 are unaudited. In
the opinion of management, the unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position and results of operations
for such periods. Results of operations for interim periods are not
necessarily indicative of results that will be achieved for the entire year.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared by management in
accordance with generally accepted accounting principles in Canada (Canadian
GAAP) and presented in Canadian dollars. These financial statements also
conform, in all material respects, with those accounting principles that are
generally accepted in the United States (US GAAP), except for these matters
referred to in note 12.
8
<PAGE> 9
(a) Basis of presentation:
These financial statements are prepared for inclusion in a SEC filing
statement for purposes of funding the acquisition of a 66.67% equity interest
of Oncometrics Imaging Corp. pursuant to a letter of intent dated July 3, 1996.
The financial statements have been prepared on the basis which assumes
the realization of assets and settlement of liabilities in the normal course of
business. The ability of the Company to continue its planned course of action
is dependent upon continued financial support from its parent company and upon
additional financing and obtaining future profitable operations.
(b) Inventories:
Inventories are included at the lower of average cost and net
realizable value.
(c) Capital assets:
Capital assets are stated at cost. Depreciation is provided using the
following methods and annual rates:
<TABLE>
<CAPTION>
Asset Basic Rate
--------------------------------------------------- ----------------- ----
<S> <C> <C>
Computer and laboratory equipment declining-balance 30%
Furniture and office equipment declining-balance 20%
Demonstration equipment straight-line over 3 years
Leasehold improvements straight-line over 5 years
Intellectual property and patents straight-line over 17 years
</TABLE>
(d) Research and development costs:
Research and development (R&D) costs are expensed as incurred.
Research and related government assistance is accounted for using the cost
reduction method and is credited against R&D expenditures.
(e) Estimates:
Preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that effect 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 revenue and
expenses during the period. Actual results could differ from these estimates.
9
<PAGE> 10
3. INVENTORIES:
Inventories comprises finished goods of $ nil (August 31, 1995 -
$70,000; December 31, 1995 -$ nil) and materials of $138,050 (August 31, 1995 -
$77,592; December 31, 1995 - $80,249).
4. CAPITAL ASSETS:
<TABLE>
<CAPTION>
AUGUST 31, DECEMBER 31, MAY 31,
1995 1995 1996
--------- ----------- ------
<S> <C> <C> <C>
Computer and laboratory equipment $194,130 $207,891 $221,811
Furniture and office equipment 1,923 7,923 11,339
Demonstration equipment 107,562 108,623 108,623
Leasehold improvements - - 3,883
Intellectual property and patents 121,901 124,040 132,078
-------- -------- --------
431,516 448,477 477,734
Less accumulated depreciation and amortization 186,600 210,280 240,887
-------- -------- --------
$244,916 $238,197 $236,847
======== ======== ========
</TABLE>
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
Accrued liabilities include a warranty reserve of $9,120 (August 31,
1995 - $20,000: December 31, 1995 - $10,000) and accrued salary and vacation
pay of $ nil (August 31, 1995 - $25,600; - December 31, 1995 - $ nil).
6. LONG-TERM DEBT:
Long-term debt consists of repayable contribution from the Wester
Economic Diversification Program which was assumed from Xillix Technologies
Corp. ("Xillix") and is still in the name of Xillix as follows:
<TABLE>
<CAPTION>
AUGUST 31, DECEMBER 31, MAY 31,
1995 1995 1996
--------- ----------- ------
<S> <C> <C> <C>
Balance assumed $318,338 $318,338 $318,338
Less current portion - 10,000 1,000
-------- -------- --------
$318,338 $308,338 $308,338
======== ======== ========
</TABLE>
The Western Diversification construction does not bear interest. This
is repayable in semi-annual contributions commencing January 31, 1994.
Repayments are based on future sales of the ACCESS device.
10
<PAGE> 11
The estimated aggregate maximum repayments for each of each of the
five years subsequent to December 31, 1995 are as follows:
<TABLE>
<S> <C>
1996......................................................................................................$ 10,000
1997...................................................................................................... 100,000
1998...................................................................................................... 100,000
1999...................................................................................................... 100,000
2000...................................................................................................... 8,338
</TABLE>
7. SHARE CAPITAL:
(a) Authorized:
The authorized share capital of the Company consists of 50,000,000
common shares without par value.
(b) Issued:
<TABLE>
<CAPTION>
AUGUST 31, DECEMBER 31, MAY 31,
1995 1995 1996
---------- ------------ -------
<S> <C> <C> <C>
1,775,000 (1- December 31, 1995) common shares $ N/A $ - $ 199,984
</TABLE>
8. DIVISIONAL EQUITY:
The divisional equity at December 31, 1995 and August 31, 1995
represents the sum of cash contributions, plus the net assets of the division
less the divisional loss.
9. XILLIX CAPITAL CONTRIBUTION
This represents loans by Xillix to the Company which will be converted
to shares.
10. INCOME TAXES:
As at May 31, 1996 the Company has non-capital losses for income tax
purposes of approximately $256,000 available to reduce taxes of future years,
which expire in 2000. The Company also has Scientific Research Experimental
Development Expenditures of approximately $214,000 at May 31, 1996.
No recognition has been given in these financial statements to the
potential future tax benefits which may arise from claiming these losses and
Scientific Research and Experimental Development Expenditures.
11
<PAGE> 12
11. EXPORT SALES:
The Company's division had export sales in the following geographic
regions:
<TABLE>
<CAPTION>
TWELVE MONTHS FOUR MONTHS FIVE MONTHS
ENDED ENDED ENDED
AUGUST 31, DECEMBER 31, MAY 31,
1995 1995 1996
-------- -------- --------
<S> <C> <C> <C>
United States $148,453 $ 8,190 $ 4,326
Europe 2,428 129,675 2,186
-------- -------- --------
$150,881 $137,865 $ 6,512
======== ======== ========
</TABLE>
12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES:
In February 1992, the Financial Accounting Standards Board issued
Statement No. 109, "Accounting for Income Taxes". Statement 109 changed the
method companies used to account for income taxes from the deferral method to
the asset and liability method. This statement is effective for fiscal years
beginning after December 15, 1992. The Company has determined that the
adoption of Statement 109 does not result in a material effect on the net
deferred income tax position of the Company as any deferred tax assets
initially recognized are fully offset by a valuation allowance as at December
31, 1995.
13. SUBSEQUENT EVENT (UNAUDITED):
Pursuant to the share Purchase Agreement dated as of August 16, 1996,
a related party acquired two-thirds equity interest in the Company for
aggregate consideration of $4.0 million in cash on October 15, 1996. Of the
consideration $2.0 million was paid to Xillix Technologies Corp. The remaining
$2.0 million was paid to the Company in consideration for 1,000,000 newly
issued shares of the Company's stock pursuant to the Subscription Agreement
between the related party and the Company dated as of August 16, 1996.
12
<PAGE> 13
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Radco Ventures, Inc.:
We have audited the accompanying balance sheet of Radco Ventures, Inc. (a
development stage enterprise) as of September 30, 1996 and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
period from March 6, 1996 (date of incorporation) through September 30, 1996.
These financial statements are the responsibility of Radco Ventures, Inc.
management. Our responsibility is to express and 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 will 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 Radco Ventures, Inc. (a
development stage enterprise) as of September 30, 1996, and the results of its
operations and its cash flows for the period from March 6, 1996 (date of
incorporation) through September 30, 1996 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that Radco
Ventures, Inc. will continue as a going concern. As discussed in note 2 to the
financial statements, Radco Ventures, Inc. has suffered recurring losses from
operations, has a net stockholders' deficit, and negative working capital that
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
December 6, 1996
13
<PAGE> 14
RADCO VENTURES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
SEPTEMBER 30, 1996
<TABLE>
<S> <C>
ASSETS
------
Current Assets
Cash and cash equivalents $ 18,094
Note receivable from affiliate 775,000
-----------
Total current assets 793,094
-----------
793,094
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------------
Current liabilities
Accounts payable 1,583
Accrued interest 67,761
Due to affiliate 191,000
Notes payable 1,187,500
-----------
Total current liabilities 1,447,844
-----------
Stockholders' equity (deficit)
Common stock, $0.01 par value, 1,000,000 shares 5,000
authorized, 500,000 shares issued and outstanding
at September 30, 1996
Additional paid-in capital 57,500
Deficit accumulated during development stage (717,250)
-----------
Total stockholders' equity (deficit) (654,750)
-----------
$ 793,094
===========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 15
RADCO VENTURES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
FOR PERIOD FROM MARCH 6, 1996
(DATE OF INCORPORATION)
THROUGH SEPTEMBER 30, 1996
<TABLE>
<S> <C>
Operating expenses:
General and administrative $ 217,075
Research and development 432,650
Sales and marketing 10,000
---------
Total operating expenses 659,725
---------
Operating loss (659,725)
---------
Other income (expense):
Interest income 10,146
Interest expense (67,671)
---------
Total other income (expense) (57,525)
---------
Loss before income taxes (717,250)
---------
Income tax expense -
---------
Net loss $(717,250)
=========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 16
RADCO VENTURES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR PERIOD FROM MARCH 6, 1996
(DATE OF INCORPORATION)
THROUGH SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Deficit
Accumulated
Common stock During
---------------------- Paid-in Development
Shares Amount Capital Stage Total
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issue of common stock on March 6, 1996 500,000 $ 5,000 $ 57,500 $ 62,500
Net loss
- - - (717,250) $(717,250)
- ------------------------------------------------------------------------------------------------------------------
Balances at September 30, 1996 500,000 $ 5,000 $ 57,500 $(717,250) $(654,750)
==================================================================================================================
</TABLE>
See accompanying notes to financial statements
16
<PAGE> 17
RADCO VENTURES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
FOR PERIOD FROM MARCH 6, 1996
(DATE OF INCORPORATION)
THROUGH SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Operating activities
<S> <C>
Net loss $ (717,250)
Adjustments to reconcile net loss to net
cash used in operating activities:
Changes in operating assets and liabilities:
Notes receivable from affiliate (775,000)
Accounts payable 1,583
Due to affiliate 191,000
Accrued interest 67,761
-----------
Net cash used in operating activities (1,231,906)
-----------
Financing activities:
Proceeds from issuance of stock and notes payable 1,250,000
-----------
Net cash provided by financing activities 1,250,000
-----------
Net increase in cash and cash equivalents 18,094
Cash and cash equivalents at beginning of period -
-----------
Cash and cash equivalents at end of period $ 18,094
===========
</TABLE>
See accompanying notes to financial statements.
17
<PAGE> 18
RADCO VENTURES, INC.
(a development stage enterprise)
Notes to Financial Statements
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Radco Ventures, Inc. (the "Company") was formed for the purpose of developing a
diagnostic microbiology test panel and automated reading instrument. The
Company was formed and incorporated in Delaware on March 6, 1996.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments with
maturities less than three months.
Research and Development Costs
The Company expensed all research and development costs in the period incurred.
Accrual based accounting
The Company's financial statements have been prepared on the accrual basis.
Use of Estimates
Management of Company has made a number of estimates and assumptions relating
to the reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these financial statements in conformity with
generally accepted accounting policies. Actual results could differ from those
estimates.
(2) BASIS OF PRESENTATION
The financial statements have been prepared in accordance with the
provisions of Statement of Financial Accounting Standards No. 7, "Accounting
and Reporting by Development Stage Enterprises," which requires development
stage enterprises to employ the same accounting principles as operating
companies.
The accompanying financial statements have been prepared on a
going-concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
financial statements, the Company has suffered recurring losses totaling
$717,250 since inception, has a working capital deficit of $654,750, and net
18
<PAGE> 19
stockholders' deficit of $654,750 as of September 30, 1996. These factors,
among others, may indicate that the Company will be unable to continue as a
going concern. The Company's continuation as a going concern is dependent upon
its ability to generate sufficient cash flow to meet its obligations on a
timely basis, continued financial support from its stockholders, and ultimately
to attain successful operations. Management is currently involved in selling
the Company (see note 5).
(3) RELATED PARTY TRANSACTIONS
The Company entered into an agreement to loan AccuMed International, Inc.
$775,000 in July, 1996 and received as consideration a non-negotiable
interest-free promissory note with maturity date of July 21, 1997. The note is
recorded as note receivable from affiliate in the September 30, 1996 balance
sheet. The Company also recorded a payable due to affiliate in the balance
sheet at September 30, 1996 for $191,000 related to operating expenses paid on
behalf of the Company by the same related party. Radco and AccuMed
International, Inc. entered into a Research and Development Services Agreement
dated March 15, 1996 to provide services in connection with the development of
a diagnosetic microbiology test panel and automated reading instrument. In
March 1996, AccuMed International, Inc. and Radco aslo entered into an
Administration and Facilities Service Agreement pursuant to which AccuMed
International, Inc. provided laboratory facilities and administrative services
to Radco in consideration of specified cash payments.
(4) PRIVATE PLACEMENT
In March 1996, the Company was capitalized through a private placement of units
consisting of an aggregate of 400,000 shares of the Company's common stock,
notes payable in the aggregate principal amount of approximately $1.2 million
(bearing interest at a rate of 10% per annum), and warrants to purchase an
aggregate of 687,500 shares of the related party's common stock with a weighted
average exercise price of $3.73 per share. In consideration for the issuance
of such warrants, the related party received 10% of the Company's outstanding
stock.
(5) SUBSEQUENT EVENT
Pursuant to the Stock Purchase Agreement dated as of August 15, 1996 among the
related party, the Company, and the selling stockholders, the related party
acquired all of the outstanding shares (not then owned) of the Company and
retired all non-negotiable promissory notes recorded by the Company on October
15, 1996. The notes were settled for $1,327,410 plus accrued interest payable.
19
<PAGE> 20
PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
The accompanying pro forma condensed combining financial statements reflects
the acquisition of a 66% interest in Oncometrics Imaging Corp. (Oncometrics)
by AccuMed International, Inc. (AccuMed International) (formerly Alamar
Biosciences, Inc.) the acquisition of the remaining 90% interest in Radco
Ventures, Inc. (Radco), the merger of AccuMed International and AccuMed Inc.
(AccuMed), and the purchase of certain assets and assumption of certain
liabilities from Sensititre US and Sensititre Ltd. by AccuMed.
The pro forma condensed combining balance sheet as of September 30,
1996 assumes that the acquisition of the 66% interest in Oncometrics and the
acquisition of the remaining 90% interest in Radco occurred on September 30,
1996. The pro forma condensed combining statements of operations for the nine
months ended September 30, 1996 and for the three months ended December 31,
1995 assume that the acquisition of the 66% interest in Oncometrics occurred on
October 1, 1995. In addition, the pro forma condensed combining statements of
operations for the three months ended December 31, 1995 assume that the merger
of AccuMed International with AccuMed and the purchase of Sensititre US and
Sensititre Ltd. occurred on October 1, 1995. The condensed combining statement
of operations for the three months ended December 31, 1995, does not reflect
results of operations for Radco since it was incorporated on March 6, 1996.
The transactions have been accounted for using purchase accounting.
The pro forma adjustments are based on preliminary assumptions of the fair
value of the assets and liabilities are completed. Actual purchase accounting
adjustments may differ form the pro forma adjustments presented herein.
The respective Oncometrics financial results have been translated from
Canadian dollars to U.S. dollars using an exchange rate of .7391 for the three
months ended December 31, 1995 and .73495 for the nine months ended September
30, 1996 and .7342 as of September 30, 1996.
The pro forma condensed combining financial information is not
necessarily indicative of the results that actually would have occurred if the
acquisitions had been completed on the assumed dates nor are the statements
indicative of future combined financial position or earnings.
20
<PAGE> 21
ACCUMED INTERNATIONAL, INC.
PROFORMA CONDENSED COMBINING BALANCE SHEETS
AS OF SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS ACCUMED ONCOMETRICS RADCO ADJUSTMENTS PRO FORMA
- ------ ------- ----------- ----- ----------- ---------
<S> <C> <C> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 445,811 $ 24,884 $ 18,094 $ 2,000,000 (1) $ 2,488,789
Accounts receivable 1,427,781 48,603 - - 1,476,384
Prepaid expenses and deposits 238,381 - - - 238,381
Production inventory 1,566,539 110,485 - - 1,677,024
------------ -------- --------- ------------- -----------
Total current assets 3,678,512 183,972 18,094 2,000,000 5,880,578
------------ -------- --------- ------------- -----------
Fixed assets, net 1,308,310 173,348 - - 1,481,658
Intangible assets 4,288,673 - - 794,570 (2) 7,728,243
2,645,000 (1)
Other assets 731,491 33,081 775,000 (966,000) (8) 573,572
------------ -------- --------- ------------- -----------
10,006,986 390,401 793,094 4,473,570 15,664,051
============ ======== ========= ============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Accounts payable 2,896,440 111,612 1,583 - 3,009,635
Other current liabilities 896,369 - 258,761 (258,761) (8) 896,369
Due to Oncometrics Imaging Crop. 2,000,000 (1) 2,000,000
Due to Xillix Technologies Corp. - - - 2,000,000 (1) 2,000,000
Due to Radco Ventures, Inc - - - 1,395,081 (2) 1,395,081
Deferred revenue 45,644 - - - 45,644
Notes payable 1,312,497 - 1,187,500 (1,962,500) (2)(8) 537,497
Capital lease obligation due within one year 106,456 - - - 106,456
------------ -------- --------- ------------- -----------
Total current liabilities 5,257,406 111,612 1,447,844 3,173,820 9,990,682
------------ -------- --------- ------------- -----------
Long term portion of capital lease obligation 4,350 - - - 4,350
Deferred rent 14,025 - - 14,025
Long term debt - 225,933 - - 225,933
-
Minority interest - - - 697,856 (5) 697,856
Stockholders' equity -
Common stock 178,084 5,000 (5,000) (2) 178,084
Additional paid-in capital 33,351,069 57,500 (57,500) (2) 33,351,069
-
Cumulative transaction adjustment (2,236) (2,236)
Accumulated deficit (28,635,755) 52,856 (717,250) 664,394 (1)(2) (28,635,755)
------------ -------- ---------- --------------- -----------
4,891,162 52,856 (654,750) 601,894 4,891,162
Less treasury stock (159,957) (159,957)
------------ -------- ---------- --------------- -----------
Total stockholders' equity 4,731,205 52,856 (654,750) 601,894 4,731,205
------------ -------- ---------- --------------- -----------
Total Liabilities and stockholdeder's equity $ 10,006,986 $390,401 $ 793,094 $ 4,473,570 $15,664,051
============ ======== ========== =============== ===========
</TABLE>
See accompanying notes to the pro forma condensed combining financial
statements.
21
<PAGE> 22
ACCUMED INTERNATIONAL, INC.
PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS
FOR NINE MONTHS ENDING SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMED ONCOMETRICS RADCO ADJUSTMENT PRO FORMA
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales $ 3,668,150 $ 9,880 $ - $ - $ 3,678,030
Less cost of sales 2,054,122 7,361 - - 2,061,483
------------ ------------ ------------ ------------ ------------
Gross profit (loss) 1,614,028 2,519 - - 1,616,547
------------ ------------ ------------ ------------ ------------
Operating expenses:
General and administrative 2,874,079 74,008 217,075 81,000 (4) 3,246,162
Research and development 5,298,016 439,975 432,650 - 6,170,641
Sales, marketing and customer service 1,465,047 186,225 10,000 - 1,661,272
------------ ------------ ------------ ------------ ------------
Total operating expenses 9,637,142 700,208 659,725 81,000 11,078,075
------------ ------------ ------------ ------------ ------------
Operating loss (8,023,114) (697,689) (659,725) (81,000) (9,461,528)
------------ ------------ ------------ ------------ ------------
Other income (expense):
Interest income 15,796 - 10,146 - 25,942
Interest expense (450,628) - (67,671) - (518,299)
Other income 2,584,541 19,814 - - 2,604,355
Other expense - - - - -
------------ ------------ ------------ ------------ ------------
Total other income (expense) 2,149,709 19,814 (57,525) - 2,111,998
------------ ------------ ------------ ------------ ------------
Loss before income taxes (5,873,405) (677,875) (717,250) (81,000) (7,349,530)
Income tax expense 850 - - - 850
------------ ------------ ------------ ------------ ------------
Net loss before Minority interest (5,874,255) (677,875) (717,250) (81,000) (7,350,380)
------------ ------------ ------------ ------------ ------------
Minority interest - - - 250,429 (5) 250,429
------------ ------------ ------------ ------------ ------------
Net loss $ (5,874,255) $ (677,875) $ (717,250) $ 169,429 $ (7,099,951)
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to the pro forma condensed combining financial
statements.
22
<PAGE> 23
ACCUMED INTERNATIONAL, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBININB STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMED ONCOMETRICS
INTERNATIONAL, IMAGING
INC. ACCUMED INC. CORP. (A) ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales $ 100,130 $ 1,009,376 $ 146,959 $ (73,005)(6) $ 1,183,460
Cost of sales (338,730) (830,497) (88,189) 71,892 (7) $ (1,185,524)
------------ ------------ ------------ ------------ ------------
Gross profit (loss) (238,600) 178,879 58,770 (1,113) $ (2,064)
------------ ------------ ------------ ------------ ------------
Operating expenses:
General and administrative 1,418,797 758,066 49,759 27,000 (4) 2,253,622
Research and development 3,997,600 338,178 172,259 - 4,508,037
Sales and marketing 7,197 289,360 - - 296,557
------------ ------------ ------------ ------------ ------------
Total Operating expenses 5,423,594 1,385,604 222,018 27,000 7,058,216
------------ ------------ ------------ ------------ ------------
Operating loss (5,662,194) (1,206,725) (163,248) (28,113) (7,060,280)
Other income (expenses)
Interest income 4,748 - - - 4,748
Interest (expense) (10,862) (1,948) - - (12,810)
Other (72,929) - - - (72,929)
------------ ------------ ------------ ------------ ------------
Loss before income taxes and
minority interest (5,741,237) (1,208,673) (163,248) (28,113) (7,141,271)
Provision for income taxes 800 - - - 800
------------ ------------ ------------ ------------ ------------
Net loss before minority interest (5,742,037) (1,208,673) (163,248) (18,113) (7,132,071)
Minority interest - - - 65,000 (5) 65,000
------------ ------------ ------------ ------------ ------------
Net earnings (loss) $ (5,742,037) $ (1,208,673) $ (163,248) $ 36,887 $ (7,077,071)
============ ============ ============ ============ ============
Net loss per share $ (0.60)
============
Weighted average common shares
outstanding 11,742,980
============
</TABLE>
(A) Includes the three months ended December 31, 1995 for Oncometrics
See accompanying notes to the pro forma condensed combining financial statements
23
<PAGE> 24
ACCUMED INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
NOTE A - DESCRIPTION OF ACQUISITIONS
On December 29, 1995, AccuMed International (the "Company") (formerly
Alamar Biosciences, Inc.) acquired all of the common stock of AccuMed, which
included the recent acquisition of certain assets and assumption of certain
liabilities of Sensititre Ltd. by AccuMed. Pursuant to the terms of the merger
agreement, the Company issued 3,931,401 unconditional shares of common stock
valued at $4,422,826 and 237,840 warrants valued at $68,252. An additional
1,881,910 shares and 126,945 warrants were issued to AccuMed shareholders on
December 29, 1995, however, such shares and warrants are contingent and subject
to forfeitures if specified performance goals are not achieved by the merged
entity during the 24 months beginning January 1, 1996. In March 1996 the
contingency associated with 940,955 shares and 63,472 warrants was resolved
(performance goal achieved) resulting in contingent consideration of
$5,430,326. The remaining contingent consideration will be recorded when the
goals are achieved and will be computed based upon the stock price on such
date. The acquisition has been accounted for using the purchase method of
accounting.
On October 15, 1996, the Company acquired a 66% interest in
Oncometrics Imaging Corp. (Oncometrics), for approximately $4.0 million in
cash. The acquisition will be accounted for using the purchase method of
accounting and a portion of the purchase price will be charged to acquired
in-process research and development in the period in which the transaction is
consummated.
On October 15, 1996, the Company acquired the remaining 90% interest
in Radco Ventures, Inc. (Radco), for approximately $1.4 million in cash. The
acquisition will be accounted for using the purchase method of accounting and a
portion of the purchase price will be charged to acquired in-process research
and development in the period in which the transaction is consummated.
24
<PAGE> 25
NOTE B - PRO FORMA ADJUSTMENTS
The following adjustments are reflected in the Pro Forma Condensed
Combining Financial Statements under the columns headed "Adjustments".
(1) Purchase Price Allocation - Oncometrics
To reflect the estimated allocation of the $4 million purchase price
associated with the acquisition of the 66% interest in Oncometrics. The
purchase price was paid from the net proceeds of the Offering and has been
reflected in the Pro Forma Condensed Combining Balance Sheet as Due to Xillix
Technologies Corp. and Oncometrics Imaging Corp. The allocation of the purchase
price represents and estimate of the fair value of the assets acquired and
liabilities assumed, includes approximately $1.6 million of acquired in-process
research and development and $1.1 million of purchased technology and reflects
the 33% minority interest holdings. The Pro Forma Condensed Combining Balance
Sheet reflects the estimated $1.6 million of acquired in-process research and
development as Intangible Assets. Such amount will be written off as a charge
to earnings in the period subsequent to the acquisition. The allocation is
subject to change and is not necessarily indicative of the ultimate purchase
price allocation.
(2) Purchase Price Allocation - Radco
To reflect the estimated allocation of the $1.4 million purchase price
associated with the acquisition of remaining 90% interest in Radco. The
purchase price was paid from the net proceeds of The Offering and has been
reflected in The Pro Forma Condensed Combining Balance Sheet as Due to Radco
Ventures, Inc. The allocation of the purchase price represents an estimate of
the fair value of the assets acquired and liabilities assumed and includes
approximately $795,000 acquired in-process research and development. The Pro
Forma Condensed Combining Balance Sheet reflects the estimated $795,000 of
acquired in-process research and development as Intangible Assets. Such amount
will be written off as a charge to earnings in the period subsequent to the
acquisition. The allocation is subject to change and is not necessarily
indicative of the ultimate purchase price allocation.
(3) Acquired In-Process Research and Development.
The estimated charges of approximately $1.6 million and $795,000 for
acquired in-process research and development relating to the Oncometrics and
Radco acquisitions, respectively, are not reflected in the accompanying Pro
Form Condensed Combining Statements of Operations. Such amounts will result in
a charge to earnings in the period subsequent to the acquisitions.
A charge for acquired in-process research and development relating to the
AccuMed acquisition in the amount of approximately $4.0 million has been
reflected in the historical financial results of AccuMed International in the
accompanying Pro Form Condensed Combining Statements of Operations for the
25
<PAGE> 26
three months ended December 31,1995. In addition, a charge of $3.5 million
relating to the allocation of purchase price to acquire in-process research and
development following the resolution of a portion of the contingency has been
reflected in the historical financial result of AccuMed International in the
accompanying Pro Form Condensed Combining Statements of Operations for the nine
months ended September 30, 1996.
(4) Amortization of Intangibles
To reflect the amortization of the excess of cost over net assets
acquired and purchased technology of Oncometrics using the straight-line
method over 10 years.
(5) To reflect the minority interest share (33%) of net loss of
Oncometrics Imaging Corp.
(6) To eliminate intercompany sales from AccuMed International Limited
(formerly Sensititre UK Ltd.) to AccuMed (formerly Sensititre U.S.)
(7) To eliminate intercompany profit from the cost of product sold from
AccuMed International Limited (formerly Sensititre UK Ltd.) to AccuMed
(formerly Sensititre U.S.)
(8) To eliminate intercompany receivables and payables between Radco
Ventures, Inc. and AccuMed International, Inc.
26
<PAGE> 27
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.
Dated: December 23 , 1996
ACCUMED INTERNATIONAL, INC.
By: /s/ LEONARD R. PRANGE
-----------------------------
Leonard R. Prange
Chief Financial Officer
and Corporate
Vice President
27
<PAGE> 28
EXHIBIT INDEX
No. Exhibit
23.1 Consent of KPMG Peat Marwick LLP.
23.1 Consent of KPMG.
28
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Radco Ventures, Inc.
We consent to the use of our report dated December 6, 1996 with respect to the
balance sheet of Radco Ventures, Inc. as of Secptember 30, 1996, and the
related statements of operations, stockholders' equity (deficit), and cash
flows for the period from March 6, 1996 (date of incorporation) through
September 30, 1996, included herein.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
December 23, 1996
<PAGE> 1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Oncometrics Imaging Corp.
We consent to the use of our report dated July 18, 1996 with respect to the
balance sheets of AIC Division of Xillix Technologies Corp., as of August 31,
1995, and December 31, 1995, and Oncometrics Imaging Corp. as of May 31, 1996,
and the related statements of operations and deficit and changes in financial
position for the period then ended, included herein.
/s/ KPMG
Chartered Accountants
Vancouver, British Columbia
December 23, 1996
