<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT ON FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Selfcare, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 0-20871 04-3164127
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
</TABLE>
200 Prospect St., Waltham, Massachusetts 02154
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (781) 647-3900
Not Applicable
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
------------
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
February 18, 1998, as set forth in the pages attached hereto:
There are 21 pages in this Report.
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
CAN-AM CARE CORPORATION
Report of Independent Accountants
Balance Sheet as of May 31, 1997 and December 31,
1997 (unaudited)
Statements of Income and Retained Earnings for the
year ended May 31, 1997 and the seven months ended
December 31, 1996 and 1997 (unaudited)
Statements of Cash Flows for the year ended May 31,
1997 and the seven months ended December 31, 1996 and
1997 (unaudited)
Notes to Financial Statements
(b) Pro Forma Financial Information.
SELFCARE, INC.
Overview
Unaudited Pro Forma Combined Condensed Balance Sheet
as of December 31, 1997
Notes to Pro Forma Combined Condensed Balance Sheet
as of December 31, 1997
Unaudited Pro Forma Combined Condensed Statement of
Operations for the Year Ended December 31, 1997
Notes to Pro Forma Combined Condensed Statement of
Operations for the Year Ended December 31, 1997
Page 2 of 21
<PAGE> 3
(c) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
2.1* Stock Purchase Agreement, dated as of February 18, 1998, by and among
Selfcare, Inc., Selfcare Consumer Products, Inc., Can-Am Care Corporation
and the Stockholders party thereto.
2.2* List of Schedules omitted from the Stock Purchase Agreement.
</TABLE>
* Filed previously with Current Report on Form 8-K of Selfcare, Inc.
dated February 18, 1998.
Page 3 of 21
<PAGE> 4
CAN-AM CARE CORPORATION
FINANCIAL STATEMENTS
MAY 31, 1997
TOGETHER WITH AUDITORS' REPORT
4 of 21
<PAGE> 5
AUDITORS' REPORT
To the Shareholders of
Can-Am Care Corporation:
We have audited the balance sheet of CAN-AM CARE CORPORATION as of May 31, 1997
and the statements of income and retained earnings and cash flows for the year
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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an 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 well
as evaluating the overall financial statement presentation. In our opinion,
these financial statements present fairly, in all material respects, the
financial position of the Company as of May 31, 1997 and the results of its
operations and the changes in its financial position for the year then ended, in
accordance with generally accepted accounting principles in the United States.
Montreal, Canada Arthur Andersen & Cie
August 13, 1997 General Partnership
Except note 10 which is Chartered Accountants
as of March 6, 1998
5 of 21
<PAGE> 6
CAN-AM CARE CORPORATION
BALANCE SHEETS
(IN U.S. DOLLARS)
ASSETS
<TABLE>
<CAPTION>
May 31, December
1997 31, 1997
---- --------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ -- $ 708,177
Accounts receivable, net of allowance for doubtful
accounts of $10,000 ($9,290 as of December 31,
1997) (Note 9) 2,356,948 1,789,602
Inventory 2,857,186 3,637,926
Income taxes receivable 113,521 --
Prepaid expenses 224,374 135,306
---------- ----------
5,552,029 6,271,011
DEFERRED ACQUISITION COSTS (Note 10) -- 200,000
FURNITURE AND FIXTURES, net of accumulated
depreciation of $30,119 ($33,119 as of December 23,231 21,998
---------- ----------
31, 1997) -- --
$5,575,260 $6,493,009
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank indebtedness (Note 3) $ 639,246 $ --
Accounts payable 2,117,281 1,929,816
Accrued acquisition costs -- 200,000
Accounts payable - related party (Note 4) 2,416,353 2,856,850
Income taxes payable -- 412,501
---------- ----------
5,172,880 5,399,167
---------- ----------
COMMITMENT AND CONTINGENCY (Notes 4 and 5)
SHAREHOLDERS' EQUITY
Common stock, no par value
200 shares authorized, issued and outstanding 200 200
Retained earnings 402,180 1,093,642
---------- ----------
402,380 1,093,842
---------- ----------
$5,575,260 $6,493,009
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6 of 21
<PAGE> 7
CAN-AM CARE CORPORATION
STATEMENTS OF INCOME AND RETAINED EARNINGS
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
For the seven months ended
For the year December 31,
ended May 31, ------------------------------
1997 1996 1997
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
NET PRODUCT SALES $25,929,022 $16,634,513 $12,727,549
COST OF SALES (Note 4) 17,906,025 11,586,102 8,329,804
----------- ----------- -----------
GROSS PROFIT 8,022,997 5,048,411 4,397,745
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 4) 7,900,370 4,838,752 3,221,878
----------- ----------- -----------
OPERATING INCOME 122,627 209,659 1,175,867
OTHER INCOME
Interest 14,631 6,519 7,236
Licensing revenue -- -- 20,000
----------- ----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 137,258 216,178 1,203,103
CURRENT PROVISION FOR INCOME TAXES 57,628 87,000 511,641
----------- ----------- -----------
NET INCOME 79,630 129,178 691,462
RETAINED EARNINGS, BEGINNING OF PERIOD 322,550 322,550 402,180
----------- ----------- -----------
RETAINED EARNINGS, END OF PERIOD $ 402,180 $ 451,728 $ 1,093,642
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7 of 21
<PAGE> 8
CAN-AM CARE CORPORATION
STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
For the seven months ended
For the December 31,
year ended ------------------------------
May 31, 1997 1996 1997
------------ ------------- ------------
(unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 79,630 $ 129,178 $ 691,462
Adjustments to reconcile net income to net cash used in
operating activities
Depreciation 4,346 2,535 3,000
Changes in assets and liabilities
Accounts receivable 25,343 96,434 567,346
Inventory 223,888 (694,579) (780,740)
Prepaid expenses (167,710) (58,894) 89,068
Accounts payable 24,545 1,690,719 (187,465)
Accrued acquisition costs - - 200,000
Accounts payable - related party (27,698) 1,235,291 440,497
Income taxes payable (101,000) (14,000) 526,022
-------- ------------ -------------
61,344 2,386,684 1,549,190
-------- ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and fixtures (11,691) (4,651) (1,767)
Change in deferred acquisition costs - - (200,000)
-------- ------------ -------------
(11,691) (4,651) (201,767)
-------- ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of bank indebtedness (49,653) (688,899) (639,246)
-------- ------------ -------------
INCREASE IN CASH - 1,693,134 708,177
CASH, BEGINNING OF PERIOD - - -
-------- ------------ -------------
CASH, END OF PERIOD $ - $ 1,693,134 $ 708,177
======== ============ =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ - $ - $ -
======== ============ =============
Cash paid for income taxes $ 278,969 $ 210,369 $ -
======== ============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8 of 21
<PAGE> 9
CAN-AM CARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(IN U.S. DOLLARS, INCLUDES DATA APPLICABLE TO UNAUDITED PERIODS)
1. STATUTES OF INCORPORATION AND NATURE OF ACTIVITIES
Can-Am Care Corporation (the "Company") was incorporated in 1982 to conduct
operations as a distributor of medical and surgical supplies to medical
organizations, wholesalers and retailers throughout the United States. The
Company has a warehouse located in the United States and administrative
facilities located in Canada.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Inventory
Inventory is stated at the lower of cost, (determined on a first-in,
first-out basis) and market (determined on a net realizable basis) and
consisted of the following as of May 31, 1997 and December 31, 1997:
<TABLE>
<CAPTION>
May 31, December 31,
1997 1997
---- ----
<S> <C> <C>
Raw materials $ 122,694 $ 154,974
Samples 237,790 332,846
Finished goods 2,496,702 3,150,106
--------- ---------
$2,857,186 $3,637,926
========== ==========
</TABLE>
b) Furniture and fixtures
Furniture and fixtures are recorded at cost less accumulated
depreciation. Depreciation is provided for on a declining balance
method using a rate of 20%. Additions during a year are depreciated at
one half of the rate.
c) Revenue recognition
Product revenue is recognized when products are shipped to customers,
at which time title is transferred. Upon shipment, the Company also
reserves for estimated returns.
9 of 21
<PAGE> 10
CAN-AM CARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(IN U.S. DOLLARS, INCLUDES DATA APPLICABLE TO UNAUDITED PERIODS)
d) Income taxes
The Company provides for income taxes in accordance with the provisions
of SFAS No. 109, Accounting for Income Taxes. There are no material
differences between the financial statement and tax basis of assets and
liabilities and, accordingly, there is no deferred tax asset,
liability, or provision.
The Company's effective income tax rate approximates the combined
federal and state income tax rate.
e) Interim financial statements
The accompanying balance sheet as of December 31, 1997 and the
statements of operations and cash flows for the seven months ended
December 31, 1996 and 1997 are unaudited but, in the opinion of
management, include all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of results for these
interim periods. The results of operations for the seven months ended
December 31, 1997 are not necessarily indicative of results to be
expected for any annual period, including the Company's newly-adopted
calendar year ending December 31, 1998.
f) Use of estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingencies at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period.
10 of 21
<PAGE> 11
CAN-AM CARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(IN U.S. DOLLARS, INCLUDES DATA APPLICABLE TO UNAUDITED PERIODS)
3. CREDIT FACILITY AGREEMENT
In December 1996, the Company together with a related party (see Note 4)
entered into a credit facility agreement with a bank. This revolving demand
facility allows the companies to borrow up to the greater of $5,000,000 CDN
(or the U.S. dollar equivalent of $3,495,281) and 80% of eligible accounts
receivable, as defined, providing that the aggregate undrawn face amount of
outstanding standby letters of credit and letters of guarantee does not
exceed $200,000 CDN (or the U.S. dollar equivalent of $139,811). Borrowings
bear interest at the bank's prime rate of 6% and other credit balances
(letters of credit, letters of guarantee) bear interest at the bank's prime
rate of 6% plus 4%. The companies have pledged accounts receivable and
inventory as collateral. The credit facility requires the companies to meet
certain financial covenants, as defined. As of May 31, 1997 and December
31, 1997, both companies were in compliance with these covenants.
4. RELATED PARTY TRANSACTIONS
These financial statements include balances and transactions with a
Canadian enterprise whose owners are also owners or immediate family
members of the Company. The transactions have been recorded at the exchange
amount which is the amount of consideration established and agreed to by
the related parties.
<TABLE>
<CAPTION>
For the seven months ended
For the December 31,
year ended ------------------------------
May 31, 1997 1996 1997
------------ ---------- ----------
<S> <C> <C> <C>
Accounts payable - related party $ 2,416,353 $3,460,947 $2,856,850
Purchases 3,370,640 2,385,056 2,223,383
Management fees 914,000 587,000 -
Rent 39,000 24,000 44,800
</TABLE>
As of May 31, 1997 and December 31, 1997, the Company shared the credit
facility agreement referred to in Note 3 with this related party. As a
result the Company guarantees the borrowings of the related party. As of
May 31, 1997, the Company had guaranteed letters of credit of the related
party equal to $127,333, which expired on June 30, 1997. As of December 31,
1997, no amounts were due under this credit facility by either entity.
The Company rents administrative facilities in Canada from this related
party on a tenancy at will basis.
11 of 21
<PAGE> 12
CAN-AM CARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(IN U.S. DOLLARS, INCLUDES DATA APPLICABLE TO UNAUDITED PERIODS)
5. COMMITMENT
The Company is a party to an exclusive agreement to purchase and market
certain products throughout the United States through December 31, 2002.
Under the terms of the agreement, the Company is required to purchase
minimum quantities from the manufacturer at stated prices, as defined in
the Exclusive Distribution Agreement and the amendments thereto. The future
minimum annual payments (based on a calendar year-end) under this agreement
are approximately:
<TABLE>
<CAPTION>
<S> <C> <C>
1998 $ 8,300,000
1999 9,300,000
2000 10,500,000
2001 12,000,000
2002 13,500,000
-----------
$53,600,000
===========
</TABLE>
The Company purchased $8,332,000 of goods from this manufacturer for the
year ended May 31, 1997 ($5,253,000 for the seven months ended December 31,
1996 and $5,416,000 for the seven months ended December 31, 1997).
6. CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS
SFAS No. 105, Disclosure of Information about Financial Instruments with
Off-Balance Sheet Risk and Financial Instruments with Concentration of
Credit Risk, requires disclosure of any significant off-balance sheet and
credit risk concentrations. The Company has no significant off-balance
sheet concentration of credit risk such as foreign exchange contracts,
options contracts or other foreign hedging arrangements. The Company
maintains the majority of its cash balances with established financial
institutions. Financial instruments that subject the Company to credit risk
consist primarily of trade accounts receivable. As of May 31, 1997 the
Company has two customers that account for 31% of accounts receivable (34%
as of December 31, 1997). For the year ended May 31, 1997, one customer
accounted for 16% of sales (15% for the seven months ended December 31,
1996 and 1997).
7. FINANCIAL INSTRUMENTS
The Company does not have any derivative or other financial instruments as
defined by SFAS No. 119, Disclosure About Derivative Financial Instruments
and Fair Value of Financial Instruments.
12 of 21
<PAGE> 13
CAN-AM CARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(IN U.S. DOLLARS, INCLUDES DATA APPLICABLE TO UNAUDITED PERIODS)
SFAS No. 107, Disclosure About Fair Value of Financial Instruments,
requires disclosure of an estimate of the fair value of certain financial
instruments. The Company's financial instruments consist of cash, accounts
receivable and accounts payable. The estimated fair value of these
financial instruments approximates their carrying value as of May 31, 1997
and December 31, 1997. The estimated fair values have been determined
through information obtained from market sources and management estimates.
8. FINANCIAL INFORMATION BY GEOGRAPHIC AREA
Substantially all of the net product sales, net income and identifiable
assets of the Company relate to operations in the United States.
9. VALUATION AND QUALIFYING ACCOUNTS
The following table sets forth activity in the Company's accounts
receivable reserve account:
<TABLE>
<CAPTION>
Seven
Year months
ended ended
May 31, December 31,
1997 1997
---- ----
<S> <C> <C>
Allowance for doubtful accounts, beginning of period $ 14,663 $ 10,000
Add: provision for bad debts 10,000 -
Less: uncollectible accounts written off 14,663 710
--------- ---------
Allowance for doubtful accounts, end of period $ 10,000 $ 9,290
========= =========
</TABLE>
10. SALE OF THE COMPANY
On February 18, 1998, a U.S. publicly traded company purchased all of the
Company's outstanding stock for total consideration of $26,200,000 in cash,
stock and notes. Both the number of shares and principal value of the notes
are subject to adjustment in certain circumstances, as defined. The Company
has accrued and capitalized $200,000 related to acquisition costs (such as
professional fees) that the acquirer has agreed to pay as a part of the
acquisition.
13 of 21
<PAGE> 14
SELFCARE, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
OVERVIEW
In October 1996, the Company acquired a 57.1% direct and indirect equity
interest in Orgenics as a result of the conversion of the Debenture and cash
payments of approximately $7,000,000. In addition, the Company granted options
to purchase 85,800 shares of Common Stock having a fair market value of
$1,056,000 and incurred direct acquisition costs of $100,000. Throughout 1997,
the Company acquired additional shares of Orgenics for approximately $8,417,000
in cash and 73,747 shares of Common Stock (with a fair value of $873,000, net of
treasury stock repurchases), resulting in 99.8% ownership interest in Orgenics.
The portion of the purchase price allocated to goodwill and other intangible
assets relates primarily to acquired technology, trade names and goodwill and
will be amortized on a straight-line basis over their estimated useful lives of
five years. The portion of the purchase price allocated to in-process research
and development projects that had not reached technological feasibility and did
not have a future alternative use was charged to expense as of the acquisition
date on a pro rata basis. The amount allocated to in-process research and
development projects represents the estimated fair value related to these
projects determined by an independent appraisal. Proven valuation procedures and
techniques were used in determining the fair market value of each intangible
asset. To bring these projects to technological feasibility, high-risk
development and testing issues will need to be resolved which will require
substantial additional effort and testing.
On February 19, 1997, the Company paid $36 million to acquire the Nutritional
Supplement Lines from American Home Products Corporation (AHP), through $30
million of bank debt and a $6 million note to AHP. Purchase price was allocated
to trade names, goodwill and other intangible assets, and the Company is
amortizing such assets over their estimated useful lives of 25 years.
On February 19, 1998, the Company purchased all of the outstanding stock of
Can-Am Care Corporation (Can-Am), a distributor of certain diabetes-related home
health care products. The aggregate purchase price of $27,900,000 consisted of
the following: $13,600,000 in cash (funded through bank debt), 1,108,333 shares
of the Company's stock with a fair value of $10,600,000, a $2,000,000
subordinated note payable by the Company and estimated closing costs of
approximately $1,700,000. The Company estimates that approximately $26,900,000
of the purchase price will be allocated to goodwill. The Company plans to
amortize this goodwill over its estimated useful life of 25 years.
14 of 21
<PAGE> 15
SELFCARE, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
The following unaudited pro forma combined condensed financial statements give
effect to the proposed transactions described above. The unaudited pro forma
combined condensed statements combine the historical consolidated balance sheets
of the Company and Can-Am as of December 31, 1997 and combine the historical
consolidated statements of operations of the Company and Can-Am for the year
ended December 31, 1997 and the statement of revenue and expenses of the
Nutritional Supplement Lines from January 1, 1997 through February 19, 1997 (the
acquisition date) and reflect the reversal of the minority interest in Orgenics
loss as if the Company had increased its ownership of Orgenics to 99.8% as of
January 1, 1997. The unaudited pro forma combined condensed financial statements
do not purport to be indicative of the results which would actually have been
reported if the transactions described above had been effected at those dates or
which may be reported in the future. These unaudited pro forma combined
condensed financial statements should be read in conjunction with the
accompanying notes and the respective historical financial statements.
15 of 21
<PAGE> 16
SELFCARE, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
ACTUAL PRO FORMA
COMBINED
THE COMPANY CAN-AM ADJUSTMENTS COMPANY
----------- ------ ----------- -------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 15,669,898 $ 708,177 $ 1,400,000(1) $ 17,778,075
Accounts receivable 7,232,755 1,789,602 -- 9,022,357
Inventories 5,344,531 3,637,926 -- 8,982,457
Note receivable 4,979,232 -- -- 4,979,232
Prepaid and other current assets 1,452,855 135,306 -- 1,588,161
------------- ------------- ------------- -------------
Total current assets 34,679,271 6,271,011 1,400,000 42,350,282
------------- ------------- ------------- -------------
PROPERTY AND EQUIPMENT, NET 10,508,032 21,998 -- 10,530,030
INVESTMENTS IN AFFILIATED COMPANIES 3,405,609 -- -- 3,405,609
LOAN TO AFFILIATED COMPANY 742,105 -- -- 742,105
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 43,393,263 -- 26,806,158(2) 70,199,421
OTHER ASSETS 3,035,414 200,000 (200,000)(2) 3,035,414
------------- ------------- ------------- -------------
$ 95,763,694 $ 6,493,009 $ 28,006,158 $ 130,262,861
============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes payable $ 20,426,511 $ -- $ -- $ 20,426,511
Accounts payable 6,079,242 1,929,816 -- 8,009,058
Accounts payable--related party -- 2,856,850 -- 2,856,850
Income tax payable -- 412,501 -- 412,501
Accrued expenses and other current
liabilities 8,251,021 200,000 1,500,000(1) 9,951,021
Current portion of deferred revenue 2,204,159 -- -- 2,204,159
------------- ------------- ------------- -------------
Total current liabilities 36,960,933 5,399,167 1,500,000 43,860,100
------------- ------------- ------------- -------------
LONG-TERM LIABILITIES:
Deferred revenue, net of current portion 2,674,971 -- -- 2,674,971
Notes payable, net of current portion 39,476,074 -- 2,000,000(1) 56,476,074
15,000,000(1)
------------- ------------- ------------- -------------
Total long-term liabilities 42,151,045 -- 17,000,000 59,151,045
------------- ------------- ------------- -------------
MINORITY INTEREST IN SUBSIDIARY 70,496 -- 70,496
------------- ------------- ------------- -------------
MANDATORILY REDEEMABLE PREFERRED STOCK OF
A SUBSIDIARY 1,868,027 -- -- 1,868,027
------------- ------------- ------------- -------------
SERIES B CONVERTIBLE PREFERRED STOCK 9,272,508 -- -- 9,272,508
------------- ------------- ------------- -------------
STOCKHOLDERS' EQUITY:
Series A Preferred Stock -- --
Common Stock 9,681 200 (200)(2) 10,789
1,108(1)
Additional paid-in capital 75,753,699 -- 10,598,892(1) 86,352,591
Treasury stock, at cost (211,460) -- -- (211,460)
Retained (deficit) earnings (70,183,506) 1,093,642 (1,093,642)(2) (70,183,506)
Cumulative translation adjustment 72,271 -- -- 72,271
------------- ------------- ------------- -------------
Total stockholders' equity 5,440,685 1,093,842 9,506,158 16,040,685
------------- ------------- ------------- -------------
$ 95,763,694 $ 6,493,009 $ 28,006,158 $ 130,262,861
============= ============= ============= =============
</TABLE>
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<PAGE> 17
SELFCARE, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1997
The accompanying unaudited pro forma combined condensed balance sheet as of
December 31, 1997 has been prepared by combining the historical results of the
Company and Can-Am and reflects the following pro forma adjustments:
(1) Reflects the payment of consideration in connection with the
acquisition of Can-Am, in the form of $13,600,000 in bank debt,
1,108,333 shares of Company Common Stock with a fair value of
$10,600,000, issuance of a $2,000,000 note to Can-Am
shareholders and estimated closing costs of $1,700,000, plus an
additional $1,400,000 in bank debt to fund payment of
transaction-related costs
(2) Reflects allocation of the purchase price to the assets and
liabilities acquired and goodwill and the elimination of the
Can-Am equity accounts
17 of 21
<PAGE> 18
SELFCARE, INC. AND SUBSIDIARIES
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
COMBINED
THE COMPANY CAN-AM AHP(1) ADJUSTMENTS COMPANY
----------- ------ ------ ----------- -------
<S> <C> <C> <C> <C> <C>
Net product sales $ 50,891,221 $ 22,019,574 $ 2,583,023 $ -- $ 75,493,818
Grants and other revenue 1,359,150 -- -- -- 1,359,150
------------ ------------ ------------ ------------ ------------
Net revenue 52,250,371 22,019,574 2,583,023 -- 76,852,968
Cost of sales 26,277,645 14,649,727 920,341 272,839(4) 42,120,552
------------ ------------ ------------ ------------ ------------
Gross profit 25,972,726 7,369,847 1,662,682 272,839 34,732,416
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES:
Research and development 15,632,789 -- 14,103 -- 15,646,892
Charge for in-process research and
development 3,303,300 -- -- (3,303,300)(7) --
Selling, general and administrative 25,636,823 6,452,852 582,002 (945,835)(4) 33,298,467
1,339,292(2)
233,333(5)
Noncash compensation charge 167,938 -- -- -- 167,938
------------ ------------ ------------ ------------ ------------
Total operating expenses 44,740,850 6,452,852 596,105 (2,676,510) 49,113,297
------------ ------------ ------------ ------------ ------------
Operating income (loss) (18,768,124) 916,995 1,066,577 2,403,671 (14,380,881)
INTEREST EXPENSE, INCLUDING NONCASH
INTEREST RELATING TO ISSUANCE OF
WARRANTS AND AMORTIZATION OF ORIGINAL
ISSUE DISCOUNT (5,486,835) -- -- (378,559)(3) (5,865,394)
INTEREST AND OTHER INCOME, NET 579,973 35,603 26,456 -- 642,032
EQUITY IN NET LOSS OF AFFILIATE (327,000) -- -- -- (327,000)
------------ ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY INTEREST AND
DIVIDENDS AND ACCRETION ON PREFERRED
STOCK OF SUBSIDIARY (24,001,986) 952,598 1,093,033 2,025,112 (19,931,243)
MINORITY INTEREST IN SUBSIDIARY'S LOSS 181,017 -- -- (181,017)(6) --
DIVIDENDS AND ACCRETION ON MANDATORILY
REDEEMABLE PREFERRED STOCK OF
SUBSIDIARIES (114,099) -- -- -- (114,099)
------------ ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY
LOSS AND INCOME TAXES (23,935,068) 952,598 1,093,033 1,844,095 (20,045,342)
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF NOTES PAYABLE (579,354) -- -- -- (579,354)
------------ ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (24,514,422) 952,598 1,093,033 1,844,095 (20,624,696)
PROVISION FOR INCOME TAXES 195,872 374,798 203,152 (374,798)(8) 399,024
------------ ------------ ------------ ------------ ------------
Net income (loss) $(24,710,294) $ 577,800 $ 889,881 $ 2,218,893 $(21,023,720)
============ ============ ============ ============ ============
PRO FORMA NET LOSS PER SHARE:
Net loss per common share $ (3.36) $ (2.31)
============ ============
Weighted average common shares
outstanding 7,990,666 1,108,333(9) 9,098,999
============ ============ ============
</TABLE>
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<PAGE> 19
SELFCARE, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
The accompanying unaudited pro forma combined condensed statements of operations
has been prepared by combining the historical results of the Company, the
Nutritional Supplement Lines, Orgenics and Can-Am for the year ended December
31, 1997 and reflects the following pro forma adjustments:
(1) Represents the results of the Nutritional Supplement Lines for
the period from January 1, 1997 through February 19, 1997, the
acquisition date. After the acquisition date, the results of
the operations of the Nutritional Supplement Lines are included
in the Company's consolidated results.
(2) Represents amortization expense on goodwill and other
intangible assets for the Nutritional Supplement Lines (for the
period from January 1, 1997 to February 19, 1997) and Can-Am,
based on their estimated useful life of 25 years
(3) Represents estimated interest expense in connection with the
bank debt and note payable to Can-Am shareholders issued in
connection with the Can-Am Acquisition, assuming an average
interest rate of 9%
(4) Represents the reversal of certain Can-Am related management
salaries and related party production and administrative costs;
the computed pro forma adjustments represent the difference
between the expenses recorded in the historical financial
statements and the contractually agreed-upon amounts due
following the Can-Am Acquisition pursuant to management
services, employment and supply agreements executed
simultaneously with the closing of the Can-Am Acquisition
(5) Reflects amortization of deferred financing costs associated
with bank debt described above
(6) Represents the reversal of the minority interest in Orgenics'
loss
(7) Represents reversal of nonrecurring charges, in accordance with
Securities and Exchange Commission regulations; the Company has
recorded charges pertaining to the expensing of certain
in-process research and development acquired in connection with
the Orgenics Acquisition. Such charges were recorded as a part
of the purchase price allocation
(8) Represents reversal of Can-Am tax provision which would have
been offset by Company net operating loss carryforwards
(9) Represents the shares issued in connection with Cam-Am
Acquisition
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<PAGE> 20
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
SELFCARE, INC.
Date: May 4, 1998 By: /s/ Kenneth D. Legg
-------------------------------------
Kenneth D. Legg,
Vice-President and Secretary
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<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
2.1* Stock Purchase Agreement, dated as of February 18, 1998, by and among
Selfcare, Inc., Selfcare Consumer Products, Inc., Can-Am Care Corporation
and the Stockholders party thereto.
2.2* List of Schedules omitted from the Stock Purchase Agreement.
</TABLE>
* Filed previously with Current Report on Form 8-K of Selfcare, Inc.
dated February 18, 1998.
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