SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K/A-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):
August 15, 1996
________________________________
THE COMPANY DOCTOR
(Exact name of registrant as specified in its charter)
Delaware 1-14150 72-1234136
(State of Incorporation)(Commission File No.) (I.R.S. Employer
Identification No.)
Suite 1800
5215 North O'Connor
Irving, Texas 75039
(Address of principal executive offices)
(214) 401-8300
(Registrant's telephone number, including area code)
ITEM 7. Financial Statements and Exhibits
(a) In accordance with Item 7(a)(1), the Registrant is filing the required
financial statements of the Subsidiary as an amendment to the Form 8-K.
(b) It was impracticable to provide the pro forma financial information
relative to the Subsidiary at the time of filing the Form 8-K. In
accordance with Item 7(b)(2), the Registrant hereby files the required
financial statements as an amendment to the Form 8-K.
(c) The following exhibits are furnished herewith in accordance with the
provisions of Item 601 of Regulation S-K:
Reg. S-K
Exhibit No. Description Item No.
* 2.3 Asset Purchase Agreement by and between C.A.
Riser, M.D. and The Company Doctor including
Security Agreement 2
*2.4 Asset Purchase Agreement by and between C.A.
Riser, M.D. and Donald F. Angle, M.D., P.A.,
including Secured Promissory Note and Security
Agreement 2
- -99.3 Financial statements of subsidiary 99
- -99.4 Pro forma financial statements 99
* Previously filed.
- - Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
THE COMPANY DOCTOR
Date: September 12, 1996 By: /s/ Fred G. Parrish
Fred G. Parrish, Chief Operating Officer
EXHIBIT INDEX
Exhibit No. Description Page No.
*2.3 Asset Purchase Agreement by and between C.A.
Riser, M.D. and The Company Doctor, including
Security Agreement N/A
*2.4 Asset Purchase Agreement by and between C.A.
Riser, M.D. and Donald F. Angle, M.D., P.A.,
including Secured Promissory Note and Security
Agreement N/A
- -99.3 Financial Statement of Practice F-1 to F-9
- -99.4 Pro Forma Financial Statements
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
AND
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
Attached are the historical audited financial statements of
Occupational and Family Medicine for the acquisition of Occupational and
Family Medicine by The Company Doctor. The following unaudited pro forma
combined financial statements reflect three acquisitions by the Company
Doctor in its current reporting period. The unaudited pro forma
combined financial statements should be read in conjunction with the
attached historical financial statements of Occupational and Family Medicine
and the historical financial statements of Montfort Insurance Company included
in the Company's Form 8-K/A filed September 12, 1996.
The following unaudited pro forma combined statement of operations
for the year ended June 30, 1996 and the unaudited pro forma combined
balance sheet as of June 30, 1996 give effect to the business
combination of The Company Doctor and Subsidiaries and Montfort
Insurance Company (effective June 30, 1996), Occupational and Family
Medicine (effective May 9, 1996), and Doyle M. Sharp, M.D., P.A.
(effective February 6, 1996) (the "Acquired Companies"), including the
related pro forma adjustments described in the notes thereto. The
transaction between The Company Doctor and Subsidiaries and the
Acquired Companies has been accounted for as a combination of
companies under the purchase method. The unaudited pro forma
statement of operations include the business combination of The
Company Doctor and Subsidiaries and the Acquired Companies and have
been prepared as if the transactions occurred on July 1, 1995. The
unaudited pro forma balance sheet has been prepared as if the
proposed transactions occurred June 30, 1996. These pro forma
statements are not necessarily indicative of the results of
operations or the financial positions as they may be in the future or
as they might have been had the transactions become effective on the
above mentioned date.
The unaudited pro forma adjustments for the Company's acquisition of
Occupational and Family Medicine result in recording net goodwill of
$1,403,500, recording the cash purchase price of $300,000, 68,293
shares of $.01 par value common stock issued and valued at $700,000,
notes payable issued of $750,000 and the elimination of equity of
the predecessor company of $375,538. Additionally, the unaudited pro
forma adjustments affected pro forma net income as a result of a
$39,361 adjustment for additional doctors' compensation, $70,750
amortization of goodwill, $18,000 reduction in interest income as a
result of cash paid in conjunction with the acquisition, and $100,000
of income tax expense using a 34% tax rate.
The pro forma combined statement of operations for the year ended
June 30, 1996 includes the results of operations of The Company
Doctor and Subsidiaries for the year ended June 30, 1996 and
Occupational and Family Medicine, Montfort Insurance Company, and Doyle
M. Sharp, M.D., P.A. for the year ended December 31, 1995.
Unaudited Pro Forma Combined Balance Sheet
June 30, 1996
<TABLE>
<CAPTION>
The
Company Doyle M. Occupational Montfort
Doctor and Sharp, and Family Insurance Combined
Subsidiaries M.D., P.A. Medicine Company Total
<S> <C> <C> <C> <C> <C>
Current assets
Cash and cash
equivalents $4,452,009 $ 45,368 $ 38,998 $1,100,058 $5,636,433
Restricted cash 500,000 - - - 500,000
Short-term
investments 251,016 - - 999,341 1,250,357
Accounts
receivable
Trade, less
allowance
for doubtful
accounts of
$105,000 703,223 52,184 341,901 - 1,097,308
Related parties113,117 - - 1,500,000 1,613,117
Other 66,429 - - 18,919 85,348
Prepaid expenses 93,398 1,238 3,131 - 97,767
Total current
assets 6,179,192 98,790 384,030 3,618,318 10,280,330
Property and
equipment 1,426,839 2,002 108,057 - 1,536,898
Less accumulated
depreciation and
amortization (591,982) (355) (67,057) - (659,394)
834,857 1,647 41,000 - 877,504
Other assets
Intangibles,
net 1,500,000 - - - 1,500,000
Other assets 237,983 1,260 - 324,163 563,406
Investments 1,630,453 - - - 1,630,453
Total other
assets 3,368,436 1,260 - 324,163 3,693,859
Total assets $10,382,485 $101,697 $425,030 $3,942,481 $14,851,693
* Excluding the acquisitions effective before June 30, 1996.
Continued on the following page.
</TABLE>
<TABLE>
<CAPTION> Pro forma
Combined Pro forma Combined
Total Adjustments Total
<S> <C> <C> <C>
Current assets
Cash and cash
equivalents $5,636,433 $(987,010) (C) $4,649,423
Restricted cash 500,000 500,000
Short-term investments 1,250,357 1,250,357
Accounts receivable
Trade, less allowance
for doubtful accounts
of $105,000 1,097,308 1,097,308
Related parties 1,613,117 (1,500,000) (B) 113,117
Other 85,348 85,348
Prepaid expenses 97,767 97,767
Total current assets 10,280,330 7,793,320
Property and equipment 1,536,898 1,536,898
Less accumulated depreciation
and amortization (659,394) (659,394)
877,504 877,504
Other assets
Intangibles, net 1,500,000 (1,500,000) (A) 1,688,314
1,700,014 (C)
(11,700) (D)
Other assets 563,406 563,406
Investments 1,630,453 1,630,453
Total other assets 3,693,859 3,882,173
Total assets 14,851,693 (2,298,696) 12,552,997
Continued on the following page.
Unaudited Pro Forma Combined Balance Sheet
June 30, 1996
</TABLE>
<TABLE>
<CAPTION>
Continued from previous page.
The Occupational
Company Doyle M. and Montfort
Doctor and Sharp, Family Insurance Combined
Subsidiaries* M.D.,P.A. Medicine Company Total
<S> <C> <C> <C> <C> <C>
Liabilities and
Stockholders' Equity
Current liabilities
Notes payable $ 521,357 - - - $521,357
Current maturities of
capital lease
obligations 52,501 - - - 52,501
Accounts payable and
accrued expenses 255,489 20,732 49,492 12,364 338,077
Claims payable - - - 1,743,107 1,743,107
Due to related
party 1,500,000 - - - 1,500,000
Total current
liabilities 2,329,347 20,732 49,492 1,755,471 4,155,042
Capital lease
obligations, net of
current maturities 79,644 - - - 79,644
Total
liabilities 2,408,991 20,732 49,492 1,755,471 4,234,686
Stockholders' equity
Preferred stock - - - - -
Common stock 45,564 1,000 - 370,000 416,564
Additional paid-in
capital 9,284,356 - 31,608 5,432,323 14,748,287
(Accumulated deficit)
retained
earnings (1,356,426) 79,965 343,930 (3,615,313)(4,547,844)
Total stockholders'
equity 7,973,494 80,965 375,538 2,187,010 10,617,007
Total $ 10,382,485 $101,697 $425,030 $3,942,481 $14,851,693
</TABLE>
* Excluding the acquisitions effective before June 30, 1996.
Continued on following page.
<TABLE>
<CAPTION>
Pro forma
Combined Pro Forma Combined
Total Adjustments Total
<S> <C> <C> <C>
Liabilities and
Stockholders' equity
Current liabilities
Notes payable $521,357 (750,000) (C) 1,271,357
Current maturities of
capital lease obligations 52,501 52,501
Accounts payable and
accrued expenses 338,077 338,077
Claims payable 1,743,107 1,743,107
Due to related party 1,500,000 1,500,000 (B) -
Total current liabilities 4,155,042 3,405,042
Capital lease obligations,
net of current maturities 79,644 79,644
Total liabilities 4,234,686 3,484,686
Stockholders' equity
Preferred stock - -
Common stock 416,564 371,000 (A) 46,765
(1,201) (C)
Additional paid-in capital 14,748,287 5,463,931 (A) 10,255,346
(970,990) (C)
(Accumulated deficit)
retained earnings (4,547,844) (3,191,418) (A) (1,233,800)
(122,626) (E)
Total stockholders'
equity 10,617,007 9,068,311
Total 14,851,693 2,298,696 12,552,997
Unaudited Pro Forma Combined Statement of Operations
June 30, 1996
</TABLE>
<TABLE>
<CAPTION>
The Company Doyle M. Occupational Montfort
Doctor and Sharp and Family Insurance Combined
Subsidiaries M.D.,P.A. Medicine Company Total
<S> <C> <C> <C> <C> <C>
Revenues $4,193,906 $ 319,977 $ 1,212,880 $ - $5,726,763
Cost of
services
provided 1,328,229 - 231,094 - 1,559,323
General and
administrative
expenses 2,641,692 317,726 555,686 168,103 3,683,207
Marketing
expenses 94,964 - 2,955 - 97,919
Development
and
acquisition
costs 202,468 - - - 202,468
4,267,353 317,726 789,735 168,103 5,542,917
(Loss) income
from
operations (73,447) 2,251 423,145 (168,103) 183,846
Other income
(expense)
Interest
income 139,082 - - 162,314 301,396
Interest
expense (82,665) - - - (82,665)
56,417 - - 162,314 218,731
Net (loss)
income before
income tax
benefit (17,030) 2,251 423,145 (5,789) 402,577
Income tax
(expense)
benefit 100,000 (1,000) - - 99,000
Net income
(loss) $ 82,970 $ 1,251 $ 423,145 $ (5,789) $ 501,577
(loss)
Net income
per share
Weighted
average
shares
outstanding
Continued on following page.
Pro forma
Combined Pro forma Combined
Total Adjustments Total
Revenues $5,726,763 $5,726,763
Cost of services provided 1,559,323 39,361 (F) 1,598,684
General and administrative
expenses 3,683,207 70,750 (G) 3,753,957
Marketing expenses 97,919 97,919
Development and
acquisition costs 202,468 202,468
5,542,917 5,653,028
(Loss) income from operations 183,846 73,735
Other income (expense)
Interest income 301,396 (18,000) (H) 283,396
Interest expense (82,665) (82,665)
218,731 200,731
Net (loss) income before
income tax benefit 402,577 274,466
Income tax (expense)
benefit 99,000 (192,000) (I) (93,000)
Net income (loss) 501,577 (320,111) 181,466
Net income per share .04
Weighted average shares
outstanding 4,148,970
Notes to Unaudited Pro Forma Combined Financial Statements
In February and May of 1996, the Company entered into agreements to
purchase Doyle M. Sharp, M.D. P.A. (Sharp) in Lancaster and
Occupational and Family Medicine (OFM) in Baytown, respectively.
Additionally, in June 1996, the Company acquired Montfort Insurance
Company (Montfort).
The acquisitions will be accounted for under the purchase method of
accounting applying the provisions of Accounting Principles Board
Opinion No. 16 ("APB 16"). Pursuant to the requirements of APB 16,
the aggregate purchase price, based on fair values, will be allocated
to the tangible and intangible assets and liabilities assumed based
on their estimated fair value at the date of the consummation of the
acquisitions. The estimated aggregate purchase price to be allocated
to the assets acquired and liabilities assumed on the acquisitions
are as follows:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cash paid (including acquisition costs) for assets
acquired and liabilities assumed $1,093,000
Notes payable issued 750,000
Common stock 972,000
Total $2,815,000
</TABLE>
The allocation of the purchase price for purposes of the pro forma
financial information has been estimated as follows:
<TABLE>
<CAPTION>
<S> <C>
Current assets $2,562,000
Property and equipment 376,000
Identifiable intangibles 3,000
Liabilities assumed (1,826,000)
Total $1,115,000
</TABLE>
The preliminary excess purchase price over net assets acquired of
$1,700,000 has been allocated to goodwill.
(A) To eliminate the equity of the acquired companies and the
investment in Montfort.
(B) To eliminate accrued capital contribution from TCD to Montfort.
(C) To record (i) the issuance of 119,339 shares of common stock
(ii), the cash purchase price of $987,010, (iii) the notes
payable issued totaling $750,000 and (iv) the excess of
purchase price over net assets.
(D) To record amortization of goodwill in OFM from May 8, 1996
effective date to June 30, 1996.
(E) To record income from effective date of acquisition to June 30,
1996 for Sharp, OFM, and Montfort.
(F) To adjust for additional compensation for the doctors.
(G) To record amortization of the excess purchase price of
$1,410,000 (OFM) over the estimated useful life of twenty years.
(H) To eliminate interest income at approximately 6% on cash paid
per the terms of the acquisition.
(I) To record income taxes at 34% of pro forma net income.
Table of Contents
Page
Independent Auditors' Report F-2
Financial Statements
Balance Sheets F-3
Statements of Income F-4
Statement of Owners' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
INDEPENDENT AUDITORS' REPORT
To the Owner
Occupational and Family Medicine
Baytown, Texas
We have audited the balance sheet of Occupational and Family Medicine
(a sole proprietorship) as of December 31, 1995 and the related
statements of operations, owner's equity, and cash flows for the
years ended December 31, 1995 and 1994. These financial statements
are the responsibility of the owner. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Occupational and Family Medicine as of December 31, 1995, and the
results of its operations and its cash flows for the years ended
December 31, 1995 and 1994 in conformity with generally accepted
accounting principles.
/s/ Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
July 19, 1996
Denver, Colorado
Balance Sheets
<TABLE>
<CAPTION>
December 31, April 30,
1995 1996
(Unaudited)
<S> <C> <C>
Assets
Current assets
Cash $ 29,415 $64,401
Accounts receivable, less allowance for
doubtful accounts of $84,000 and $80,000
at December 31, 1995 and April 30, 1996, 304,076 337,542
respectively
Accounts receivable - other - 2,906
Total current assets 333,491 404,849
Property and equipment (Note 2) 108,057 108,057
Less accumulated depreciation and (59,844) (64,665)
amortization
48,213 43,392
Total assets $ 381,704 $ 448,241
Liabilities and Owner's Equity
Current liabilities
Accounts payable - trade $ 19,174 $ 28,969
Accrued expenses 23,063 18,703
Total current liabilities 42,237 47,672
Commitments (Note 3)
Owner's equity
Owner's equity 339,467 400,569
Total liabilities and owner's equity $ 381,704 $ 448,241
Statements of Income
</TABLE>
<TABLE>
<CAPTION>
For the Years Ended For the Four Months Ended
December 31, April 30,
1994 1995 1995 1996
(Unaudited)
<S> <C> <C> <C> <C>
Revenues $ 845,222 $ 1,212,880 $ 465,550 $ 416,828
Cost of services provided 130,718 231,094 66,842 65,450
General and administrative 504,062 555,686 225,229 183,250
expenses
Marketing expenses 3,667 2,955 1,028 333
638,447 789,735 293,099 249,033
Net income before pro
adjustments 206,775 423,145 172,451 167,795
Pro forma adjustment -
provision for income taxes 70,304 143,869 58,633 57,050
Pro forma net income $ 136,471 $ 279,276 $ 113,818 $ 110,745
Statement of Owner's Equity
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Balance, December 31, 1993 $ 288,432
Contributions -
Distributions (271,277)
Net income for the year 206,775
Balance, December 31, 1994 223,930
Contributions 7,291
Distributions (314,899)
Net income for the year 423,145
Balance, December 31, 1995 339,467
Contributions (unaudited) -
Distributions (unaudited) (106,693)
Net income for period (unaudited) 167,795
Balance, April 30, 1996 (unaudited) $ 400,569
Statements of Cash Flows
</TABLE>
<TABLE>
<CAPTION>
For the Years Ended For the Four Months Ended
December 31, April 30,
1994 1995 1995 1996
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating
activities
Net income $ 206,775 $ 423,145 $ 172,451 $ 167,795
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation and 1,247 14,465 3,413 4,821
amortization
Change in assets and
liabilities
Accounts receivable 8,765 (94,214) (92,244) (36,372)
Accounts payable 1,938 7,236 (2,171) 9,795
Accrued expenses (296) (3,395) (5,157) (4,360)
11,654 (75,908) (96,159) (26,116)
Net cash provided by
operating activities 218,429 347,237 76,292 141,679
Cash flows from investing
activities
Purchases of property and - (27,445) - -
equipment
Net cash used in
investing activities - (27,445) - -
Cash flows from financing
activities
Owner's distributions (271,277) (314,899) (23,898) (106,693)
Owner's contribution - 7,291 7,291 -
Net cash used in
financing activities (271,277) (307,608) (16,607) (106,693)
Cash (decrease) increase (52,848) 12,184 59,685 34,986
Cash - beginning of year 70,079 17,231 17,231 29,415
Cash - end of year $ 17,231 $ 29,415 $ 76,916 $ 64,401
Note 1 - Summary of Significant Accounting Policies
Nature of Business and Organization
Occupational and Family Medicine, a sole proprietorship, (the
Company) provides industrial/occupational medical and related
services to employees and prospective employees of subscribing
businesses in the Baytown, Texas area.
Interim Financial Statements (Unaudited)
In the opinion of the management of Occupational and Family Medicine,
the accompanying unaudited financial statements contain all
adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial position of the Company at April 30,
1996 and the results of its operations and changes in cash flows for
the four months ended April 30, 1995 and 1996. The results of
operations for the three months ended April 30, 1995 and 1996 are not
necessarily indicative of the results to be expected for a full year.
Fair Value of Financial Instruments
The carrying amounts of financial instruments including cash,
accounts receivable, accounts payable and accrued expenses
approximated fair value as of December 31, 1995 and April 30, 1996
(unaudited) because of the relatively short maturity of these
instruments.
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 liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Accounts Receivable
In the normal course of business, the Company extends unsecured
credit to virtually all of its customers related to providing
industrial/occupational medical and related services. All customers
are located in close proximity to the Company's offices which is
located in the Baytown, Texas area.
Because of the credit risk involved, management has provided an
allowance for doubtful accounts which reflects its opinion of amounts
which will eventually become uncollectible. In the event of complete
non-performance by the Company's customers, the maximum exposure to
the Company is the outstanding accounts receivable balance at the
date of non-performance.
Note 1 - Summary of Significant Accounting Policies (continued)
Property and Equipment Property and Equipment
Property and equipment are stated at cost. Depreciation is computed
on the straight-line method over the estimated useful lives of the
assets which is five to seven years.
Revenue Recognition
Revenue is recognized when services are rendered at the net
realizable amounts expected to be received from payors, patients and
others. Management believes there are no material claims,
retroactive adjustments, or disputes with any third party payors
other than included in the allowance for doubtful accounts.
Income Taxes
The Company currently operates as a sole proprietorship. As such, no
provision for income taxes for the Company has been provided in the
accompanying financial statements as any income or loss is included
on the income tax returns of the proprietor. The pro forma tax
provision and net income, assuming a 34% tax rate, discloses the tax
expense incurred had the Company been a C-Corporation subject to
federal income taxes.
Note 2 - Property and Equipment
Property and equipment consist of the following:
</TABLE>
<TABLE>
<CAPTION>
December 31, April 30,
1995 1996
(Unaudited)
<S> <C> <C>
Medical equipment $ 51,759 $ 51,759
Furniture, fixtures, and equipment 13,079 13,079
Office equipment 43,219 43,219
108,057 108,057
Less accumulated depreciation and (59,844) (64,665)
amortization
$ 48,213 $ 43,392
</TABLE>
Note 3 - Operating Leases
Leases
The Company leases medical equipment under noncancellable operating
leases, expiring through May 1998. Future minimum lease payments for
the remaining terms of the leases are as follows:
<TABLE>
<CAPTION>
<S> <C>
Year ending December 31,
1996 $ 8,076
1997 8,076
1998 3,365
$19,517
</TABLE>
Rent expense for operating leases for the years ended December 31,
1994 and 1995 and the three months ended April 30, 1995 and 1996
(unaudited) were $0, $4,711, $0 and $2,019, respectively.
Note 4 - Sale of Assets - Subsequent Event
Effective May 8, 1996, the Company sold substantially all of its
assets in exchange for common stock of The Company Doctor valued at
$700,000, a $750,000 promissory note with interest at 9.5% due in
April 1997, and cash of $300,000.
