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 28, 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 Practice 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.
*2.8 Asset Purchase Agreement by and
among Jim W. Czewski, D.O., and The
Company Doctor 2
*2.9 Stock Purchase Agreement by and
among Northside Family Medical
Clinic, P.A., Jim W. Czewski, D.O.,
and the Physicians Group 2
o99.3 Financial Statements of Northside
Family Medical Clinic, P.A.
99
o99.4 Pro Forma Financial Statements
99
* Previously filed.
o 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: November 12, 1996 By: /s/ Fred G. Parrish
Fred G. Parrish, Chief Operating Officer
NORTHSIDE FAMILY MEDICAL CLINIC, P.A.
Table of Contents
Independent Auditors' Report F-2
Financial Statements
Balance Sheets F-3
Statements of Operations F-4
Statement of Stockholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholder
Northside Family Medical Clinic, P.A.
Fort Worth, Texas
We have audited the balance sheet of Northside Family Medical Clinic,
P.A. as of December 31, 1995 and the related statements of income,
stockholder's equity, and cash flows for the years ended December 31,
1995 and 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Northside
Family Medical Clinic, P.A. 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
October 1, 1996
Denver, Colorado
Balance Sheets
<TABLE>
<CAPTION>
December 31, August 31,
1995 1996
(Unaudited)
Assets
<S> <C> <C>
Current assets
Cash $ 34,956 $ 34,194
Accounts receivable, less allowance for
doubtful accounts of $92,000 (December
31, 1995) and $84,000 (August 31, 1996 199,140 193,590
unaudited)
Total current assets 234,096 227,784
Property and equipment (Note 2) 77,753 83,967
Less accumulated depreciation and (49,307) (56,570)
amortization
28,446 27,397
Total assets $ 262,542 $ 255,181
Liabilities and Stockholder's Equity
Current liabilities
Current maturities of capital lease $ 6,042 $ 7,243
obligations (Note 3)
Accounts payable - trade 6,237 8,294
Accrued payroll 5,055 16,524
Accrued pension plan liability (Note 4) 46,981 -
Accrued income tax - 4,000
Deferred tax liability 28,000 23,000
Total current liabilities 92,315 59,061
Capital lease obligations, net of
current maturities (Note 3) 3,453 3,511
Total liabilities 95,768 62,572
Commitments (Note 3)
Stockholder's equity
Common stock; $1.00 par value; 100,000
shares authorized; 1,000 shares issued 1,000 1,000
and outstanding
Retained earnings 165,774 191,609
Total stockholder's equity 166,774 192,609
Total liabilities and stockholder's $ 262,542 $ 255,181
equity
</TABLE>
Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended For the Eight Months Ended
December 31, August 31,
1994 1995 1995 1996
(Unaudited)
<S> <C> <C> <C> <C>
Revenues $715,949 $749,158 $457,656 $538,615
Cost of services 414,711 464,390 249,809 277,159
provided
General and
administrative
expenses 285,389 330,723 218,573 235,357
700,100 795,113 468,382 512,516
Income (loss) from 15,849 (45,955) (10,726) 26,099
operations
Other expenses
Interest expense, net 9,950 2,637 1,807 1,264
Net income (loss) before
income taxes 5,899 (48,592) (12,533) 24,835
Provision for income tax
benefit (expense) (3,000) 7,000 4,000 1,000
Net income (loss) $ 2,899 $(41,592) $(8,533) $ 25,835
</TABLE>
Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Total
Common Stock Retained Stockholders'
Shares Amount Earnings Equity
<S> <C> <C> <C> <C>
Balance, December 31, 1993 1,000 $1,000 $207,050 $208,050
Net income - - 2,899 2,899
Balance, December 31, 1994 1,000 1,000 209,949 210,949
Shareholder distributions - - (2,583) (2,583)
Net (loss) - - (41,592) (41,592)
Balance, December 31, 1995 1,000 1,000 165,774 166,774
Net income (unaudited) - - 25,835 25,835
Balance, August 31, 1996 1,000 $1,000 $191,609 $192,609
(unaudited)
</TABLE>
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended For the Eight Months Ended
December 31, August 31,
1994 1995 1995 1996
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating
activities
Net income (loss) $ 2,899 $(41,592) $ (8,533) $ 25,835
Adjustments to reconcile
net income (loss) to net
cash (used in) provided
by operating activities -
Depreciation and 9,648 11,608 7,747 7,263
amortization
Deferred taxes 3,000 (7,000) (4,000) (5,000)
Change in assets and
liabilities -
Accounts receivable (24,711) 59,367 87,807 5,550
Checks written in
excess of bank
balance (1,793) - - -
Accounts payable 1,730 (3,307) 128 2,057
Accrued expenses 1,811 46,769 (5,267) (31,512)
(10,315) 107,437 86,415 (21,642)
Net cash (used in)
provided by
operating
activities (7,416) 65,845 77,882 4,193
Cash flows from investing
activities
Purchases of property and (4,100) (2,953) (2,053) (559)
equipment
Net cash used in
investing
activities (4,100) (2,953) (2,053) (559)
Cash flows from financing
activities
Payment on equipment (5,711) (8,126) (5,978) (4,396)
leases
Proceeds from note
payable 19,930 - - -
Payments on notes payable - (19,930) (8,134) -
Distributions to
shareholders - (2,583) (2,583) -
Net cash provided by
(used in) financing
activities 14,219 (30,639) (16,695) (4,396)
Cash increase (decrease) 2,703 32,253 59,134 (762)
Cash - beginning of year - 2,703 2,703 34,956
Cash - end of year $ 2,703 $34,956 $ 61,837 $34,194
</TABLE>
Supplemental disclosure of cash flow information
Cash paid during the period for interest was $2,331, $2,637,
$1,807, and $1,264 for December 31, 1994 and 1995, and the
eight months ended August 31, 1995 and 1996 (unaudited),
respectively.
Purchase of medical and office equipment through capital leases
for December 31, 1994 and 1995, and the eight months ended
August 31, 1995 and 1996 (unaudited) was $16,758, $0, $0, and
$5,655, respectively.
Note 1 - Summary of Significant Accounting Policies
Nature of Business and Organization
Northside Family Medical Clinic, P.A. (the Company) provides
industrial/occupational medical and related services to employees and
prospective employees of subscribing businesses and various other
medical services to individuals in the Fort Worth, Texas area.
Interim Financial Statements (Unaudited)
In the opinion of the Northside Family Medical Clinic, P.A., 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 August 31, 1996 and
the results of its operations and changes in cash flows for the eight
months ended August 31, 1996 and 1995. The results of operations for
the eight months ended August 31, 1996 and 1995 are not necessarily
indicative of the results to be expected for a full year.
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 office which is
located in Fort Worth, Texas.
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.
Revenue Recognition
Revenue is recognized when services are rendered at the net
realizable amounts expected to be received from payors, patients and
others.
Note 1 - Summary of Significant Accounting Policies (continued)
Fair Value of Financial Instruments
The carrying amounts of financial instruments including cash,
receivables, accounts payable and accrued expenses approximated fair
values as of December 31, 1995 and August 31, 1996, because of the
relatively short maturity of these instruments.
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.
Income Taxes
The Company calculates and records the amount of taxes payable or
refundable currently or in future years for temporary differences
between the financial statement basis and income tax basis based on
the current enacted tax laws.
Temporary differences are differences between the tax basis of assets
and liabilities and their reported amounts in the financial
statements that will result in taxable or deductible amounts in
future years.
Note 2 - Property and Equipment
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31, August 31,
1995 1996
(Unaudited)
<S> <C> <C>
Medical equipment $ 57,596 $ 57,596
Furniture, fixtures, and equipment 16,769 22,983
Leasehold improvements 3,388 3,388
77,753 83,967
Less accumulated depreciation and (49,307) (56,570)
amortization
$ 28,446 $ 27,397
</TABLE>
Note 3 - Commitments
The term of the Company's lease on its present operating facility
extends through March, 1997 at the rate of $2,000 per month. The
lease requires the tenant to pay for all insurance, maintenance and
taxes. The Company also leases office and medical equipment under
capital leases which require monthly payments ranging from $205 to
$605 including interest and expire between June 1997 and March 1999.
These assets have a net book value of $11,732 at December 31, 1995.
Future minimum lease payments for capital lease obligations are as
follows at December 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
Year ending December31,
1996 $7,272
1997 3,636
Thereafter -
Total minimum lease payments 10,908
Less amounts representing (1,413)
interest
Present value of minimum lease 9,495
payments
Less current maturities (6,042)
$3,453
</TABLE>
Note 4 - Defined Contribution Profit-Sharing Plan
In December 1995, the Company adopted a defined contribution profit
sharing plan. Under the terms of the plan, the Company may make
discretionary contributions to the Plan to be allocated among all
eligible employees as defined in the plan document. For the year
ended December 31, 1995, management approved a contribution of
$46,981. There was no contribution approved for the period ended
August 31, 1996.
Note 5 - Income Taxes
Deferred taxes result from accrued basis accounting utilized for
financial statement purposes and cash basis accounting used for tax
purposes and depreciation for tax purposes in excess of depreciation
for financial reporting purposes. The Company had a deferred tax
liability of $28,000 as of December 31, 1995 and $23,000 at August 31, 1996
(unaudited).
Note 5 - Income Taxes (continued)
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
For the Years Ended For the Years Ended
December 31, August 31,
1994 1995 1995 1996
<S> <C> <C> <C> <C>
Current tax provision
Federal $ - $ - $ - $ 4,000
Deferred tax provision
Federal 3,000 (7,000) (4,000) (5,000)
$ 3,000 $(7,000) $ (4,000) $ (1,000)
</TABLE>
Note 6 - Sale of Assets - Subsequent Event
In August 1996, the Company's stockholder sold all of his common
stock of the Company in exchange for 300,000 cash, 48,205 shares of common stock
of The Company Doctor (TCD), and a $200,000 promissory note with
interest at 9.25%, due in equal monthly installments of principal and
interest, through February 1998.
F - 1
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
AND
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
Attached are the historical audited financial statements of Northside
Family Medical Clinic, P.A. for the acquisition of Northside Family
Medical Clinic, P.A. by The Company Doctor. The following unaudited
pro forma combined financial statements reflects the acquisition 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 Northside Family
Medical Clinic, P.A.
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 Northside
Family Medical Clinic, P.A. (effective August 21, 1996) (the
"Acquired Company"), including the related pro forma adjustments
described in the notes thereto. The transaction between The Company
Doctor and Subsidiaries and the Acquired Company has been accounted
for as a combination of companies under the purchase method. The
unaudited pro forma statement of operations includes the business
combination of The Company Doctor and Subsidiaries and the Acquired
Company and has been prepared as if the transaction occurred on
July 1, 1995. The unaudited pro forma balance sheet has been
prepared as if the transaction 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 transaction become effective on the
above mentioned date.
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
Northside Family Medical Clinic, P.A. for the year ended December 31,
1995.
Unaudited Pro Forma Combined Balance Sheet
June 30, 1996
<TABLE>
<CAPTION>
Northside
The Family Pro Forma Adjustments
Company Medical Pro Forma Adjustments Pro Forma
Doctor and Clinic, Combined Pro Forma Adjustments Combined
Subsidiaries P.A. Total Debit Credit Total
<S> <C> <C> <C> <C> <C> <C>
Current assets
Cash and
cash
equivalents $5,636,433 $ 34,956 $ 5,671,389 $300,000(C) $5,371,389
Restricted cash 500,000 - 500,000 500,000
Short-term 1,250,357 - 1,250,357
investments
Accounts
receivable
Trade, less
allowance for
doubtful
accounts 1,097,308 199,140 1,296,448 1,296,448
of $197,000
Related parties 113,117 - 113,117 113,117
Other 85,348 - 85,348 85,348
Prepaid expenses 97,767 - 97,767 97,767
Total current 8,780,330 234,096 9,014,426 8,714,426
assets
Property and 1,536,898 77,753 1,614,651 1,614,651
equipment
Less accumulated
depreciation (659,394) (49,307) (708,701) (708,701)
and amortization
877,504 28,446 905,950 905,950
Other assets 563,406 - 563,406 563,406
Intangibles,
net 1,688,314 - 1,688,314 756,245(C) 2,444,559
Investments 1,630,453 - 1,630,453 1,630,453
Total other 3,882,173 - 3,882,173 4,638,418
assets
Total assets $13,540,007 $262,542 $13,802,549 $14,258,794
Liabilities and
Stockholders'
Equity
Current
liabilities
Notes payable $1,271,357 $ - $1,271,357 $200,000 $ 1,471,357
Current maturities
of capital lease 52,501 6,042 58,543 58,543
obligations
Accounts payable
and accrued 338,077 86,273 424,350 $46,981(B) 377,369
expenses
Due to seller 987,010 - 987,010 987,010
Total current 2,648,945 92,315 2,741,260 2,894,279
liabilities
Claims payable 1,743,107 - 1,743,107 1,743,107
Long-term capital 79,644 3,453 83,097 83,097
lease obligations
Total 4,471,696 95,768 4,567,464 4,720,483
liabilities
Stockholders'
equity
Preferred stock - - - -
Common stock 46,765 1,000 47,765 1,000(A) 482(C) 47,247
Additional 10,255,346 - 10,255,346 469,518(C) 10,724,864
paid-in capital
(Accumulated
deficit)
retained (1,233,800) 165,774 (1,068,026) 165,774(A) (1,233,800)
earnings
Total 9,068,311 166,774 9,235,085 9,538,311
stockholders'
equity
Total liabilities
and
stockholders' $13,540,007 $262,542 $13,802,549 $14,258,794
equity
</TABLE>
Unaudited Pro Forma Combined Statement of Operations
June 30, 1996
<TABLE>
<CAPTION>
Northside
Family
The Company Medical Clinic
Doctor and P.A. Pro Forma
Subsidiaries December 31, Combined Pro Forma Combined
June 30, 1996 1995 Total Adjustments Total
<S> <C> <C> <C> <C> <C>
Revenues $4,193,906 $ 749,158 $ 4,943,064 $4,943,064
Cost of services 1,433,170 464,390 1,897,560 (12,000)(D) 1,885,560
provided
General and 2,536,751 330,723 2,867,474 37,850(E) 2,858,343
administrative
expenses
(46,981)(F)
Marketing expenses 94,964 - 94,964 94,964
Development and 202,468 - 202,468 202,468
acquisition costs
4,267,353 795,113 5,062,466 5,041,335
Loss from operations (73,447) (45,955) (119,402) (98,271)
Other income
(expense)
Interest income 139,082 - 139,082 (18,000)(G) 121,082
Interest expense (82,665) (2,637) (85,302) (13,500)(H) (98,802)
56,417 (2,637) (53,780) 22,280
Net loss before (17,030) (48,592) (65,622) (75,991)
income taxes
Income benefit 100,000 - 100,000 (72,000)(I 28,000
Net loss $ 82,970 $ (48,592) $ 34,378 $ (47,991)
Net loss per share $ (.01)
Weighted average 4,139,980
shares outstanding
</TABLE>
Notes to Unaudited Pro Forma Combined Financial Statements
In August 1996, the Company acquired Northside Family Medical Clinic,
P.A. in Fort Worth, Texas. The acquisition 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 acquisition. The estimated aggregate
purchase price to be allocated to the assets acquired and liabilities
assumed on the acquisition is as follows:
<TABLE>
<CAPTION>
<S> <C>
Cash paid for assets acquired and liabilities assumed $ 300,000
Notes payable issued 200,000
Common stock 470,000
Total $ 970,000
</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 $ 234,000
Property and equipment 28,000
Liabilities assumed (49,000)
Total $ 213,000
</TABLE>
The preliminary excess purchase price over net assets acquired of
$757,000 has been allocated to goodwill.
(A) To eliminate the equity of the acquired company.
(B) To eliminate the accrued pension costs not assumed by TCD.
(C) To record (i) the issuance of 48,205 shares of common stock
(ii), the cash purchase price of $300,000, (iii) the notes
payable issued totaling $200,000 and (iv) the excess of purchase
price over net assets.
(D) To adjust for excess compensation paid to the doctor throughout
the year.
(E) To record amortization of the excess purchase price of $757,000
over the estimated useful life of twenty years.
Notes to Unaudited Pro Forma Combined Financial Statements
(F) To eliminate current year pension expense.
(G) To eliminate interest income at approximately 6% on cash paid
per the terms of the acquisition.
(H) To record interest expense on the notes payable issued in
conjunction with the acquisitions.
(I) To record deferred income tax benefit at 34% of pro forma net
income.
