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):
September 20, 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)
(972) 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 Item
No. Description No.
*2.10 Stock Purchase Agreement by and
among Robert G. Duchouquette, M.D.,
P.A., Robert G. Duchouquette, M.D.
and The Physician Group, P.A.,
including Note, Pledge Agreement
and Security Agreement 2
*2.11 Stock Purchase Agreement by and
between Robert G. Duchouquette,
M.D. and the Company 2
*2.12 Registration Rights Agreement by
and between Robert G. Duchouquette,
M.D. and the Company 2
o99.7 Financial Statements of Beltline
North Medical Clinic 99
o99.8 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: December 20, 1996 By: /s/ Fred G. Parrish
Fred G. Parrish, Chief
Operating Officer
EXHIBIT INDEX
Exhibit
No. Description Page
*2.10 Stock Purchase Agreement by and
among Robert G. Duchouquette, M.D.,
P.A., Robert G. Duchouquette, M.D.
and The Physician Group, P.A.,
including Note, Pledge Agreement
and Security Agreement N/A
*2.11 Stock Purchase Agreement by and
between Robert G. Duchouquette,
M.D. and the Company N/A
*2.12 Stock Purchase Agreement by and
between Robert G. Duchouquette,
M.D. and the Company N/A
o99.3 Financial Statements of Doctor's
Inn, Incorporated F-7
o99.4 Pro Forma Financial Statements
F-1
F - 1
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
AND
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
Attached are the historical audited financial statements of Beltline
North Medical Clinic for the acquisition of Beltline North Medical
Clinic 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 Beltline North Medical
Clinic.
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 Beltline North
Medical Clinic (effective July 1, 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 include the business combination of The
Company Doctor and Subsidiaries and the Acquired Company and have
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 Beltline
North Medical Clinic for the year ended January 31, 1996.
Unaudited Pro Forma Combined Balance Sheet
June 30, 1996
<TABLE>
<CAPTION>
The Beltline
Company North Pro Forma
Doctor and Medical ProForma Adjustments Combined
Subsidiaries Clinic Total Debit Credit Total
<S> <C> <C> <C> <C> <C> <C>
Current assets
Cash and cash $ 5,636,433 $ 36,112 $5,672,545 $843,750(C) $4,828,795
equivalents
Restricted cash 500,000 - 500,000 500,000
Short-term 1,250,357 - 1,250,000 1,250,357
investments
Accounts receivable
Trade, less
allowance for
doubtful accounts
of $175,000 1,097,308 120,365 1,217,673 1,217,673
Related parties 113,117 - 113,117 113,117
Other 85,348 - 85,348 85,348
Prepaid expenses 97,767 18,063 115,830 6,409(B) 109,421
Total current 8,780,330 174,539 8,954,870 8,104,711
assets
Property and 1,536,898 65,000 1,601,898 1,601,898
equipment
Less accumulated
depreciation and
amortization (659,394) 2,992 662,386 662,386
877,504 62,008 939,512 939,512
Intangibles, net 1,688,314 - 1,688,314 2,023,221(C) 3,711,535
Other assets 563,406 - 563,406 563,406
Investments 1,630,453 - 1,630,453 1,630,453
Total other 3,882,173 - 3,882,173 5,905,394
assets
Total assets $13,540,007 $236,548 $13,776,555 $14,949,617
Liabilities and
Stockholders'
Equity
Current Liabilities
Notes payable $ 1,271,357 $ - $ 1,271,357 843,750(C) $ 2,115,107
Current maturities
of capital
lease
obligations 52,501 - 52,501 52,501
Accounts payable
and accrued
expenses 338,077 3,360 341,437 341,437
Due to seller 987,010 - 987,010 987,010
Total current
liabilities 2,648,945 3,360 2,652,305 3,496,055
Claims payable 1,743,107 - 1,743,107 1,743,107
Long-term capital
lease obligation 79,644 - 79,644 79,644
Total
liabilities 4,471,696 3,360 4,475,056 5,318,806
Stockholders' equity
Preferred stock - - - -
Common stock 46,765 100 46,865 100(A) 634(C) 47,399
Additional
paid-in
capital 10,255,346 900 10,256,246 900(A) 561,866(C) 10,817,212
(Accumulated deficit) retained
earnings (1,233,800) 232,188 (1,001,612) 232,188(A) (1,233,800)
Total stockholder's
equity 9,068,311 233,188 9,630,499 9,630,811
Total liabilities and stockholder's
equity $13,540,007 $236,548 $13,776,555 $14,949,617
</TABLE>
Unaudited Pro Forma Combined Statement of Operations
For the Year Ended June 30, 1996
<TABLE>
<CAPTION>
Beltline
The Company North
Doctor and Medical
Subsidiaries Clinic
June 30, January 31, Combined ProForma
1996 1996 Total Adjustments Total
<S> <C> <C> <C> <C> <C>
Revenues $ 4,193,906 $1,129,624 $5,323,530 $5,323,530
Cost of services
provided 1,433,170 611,717 2,044,887 (206,382) (D) 1,838,505
General and administrative
expenses 2,536,751 490,504 3,027,255 101,300 (E) 3,073,955
(54,600) (F)
Marketing expenses 94,964 3,405 98,369 98,369
Development and
acquisition costs 202,468 - 202,468 202,468
4,267,353 1,105,626 5,372,979 5,213,297
(Loss) income from
operations (73,447) 23,998 (49,449) 110,233
Other income (expense)
Interest income 139,082 2,637 141,719 (51,000) (G) 90,719
Interest expense (82,665) - (82,665) (44,240) (H) (126,905)
56,417 2,637 59,054 (36,186)
Net (loss) income before
income taxes (17,030) 26,635 9,605 74,047
Income taxes 100,000 (7,000) 93,000 (68,000) (I) 25,000
Net income $82,970 $19,635 $102,605 $49,047
Net income per share $.01
Weighted average shares
outstanding $4,155,155
</TABLE>
Notes to Unaudited Pro Forma Combined Financial Statements
In September 1996, the Company acquired Beltline North Medical Clinic
(Beltline) in Dallas, 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 $ 844,000
Notes payable issued 844,000
Common stock 562,000
Total $2,250,000
</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 $ 168,000
Property and equipment 62,000
Liabilities assumed (3,000)
Total $ 227,000
</TABLE>
The preliminary excess purchase price over net assets acquired of
$2,023,000 has been allocated to goodwill.
(A) To eliminate the equity of the acquired company.
(B) To eliminate prepaid taxes not acquired by TCD.
(C) To record (i) the issuance of 63,380 shares of common stock
(ii), the cash purchase price of $843,750, (iii) the note
payable issued of $843,750 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
$2,023,000 over the estimated useful life of twenty years.
Notes to Unaudited Pro Forma Combined Financial Statements
(F) To eliminate excess rent paid by the predecessor company for
equipment.
(G) To eliminate interest income at approximately 6% on cash paid
per the terms of the acquisition.
(H) To record interest expense on the note payable issued in
conjunction with the acquisition.
(I) To record income taxes at 34% of pro forma net income.
BELTLINE NORTH MEDICAL CLINIC
Table of Contents
Independent Auditors' Report F-7
Financial Statements
Balance Sheets F-8
Statements of Operations F-9
Statement of Stockholders' Equity F-10
Statements of Cash Flows F-11
Notes to Financial Statements F-12
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Beltline North Medical Clinic
Dallas, Texas
We have audited the balance sheet of Beltline North Medical Clinic as
of January 31, 1996 and the related statements of operations,
stockholder's equity, and cash flows for the years ended January 31,
1996 and 1995. 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 Beltline
North Medical Clinic as of January 31, 1996, and the results of its
operations and its cash flows for the years ended January 31, 1996
and 1995 in conformity with generally accepted accounting principles.
/s/ Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
December 12, 1996
Denver, Colorado
BELTLINE NORTH MEDICAL CLINIC
Balance Sheets
<TABLE>
<CAPTION>
January 31, September 30,
1996 1996
(Unaudited)
<S> <C> <C>
Assets
Current assets
Cash $ 30,937 $ 36,112
Accounts receivable, less allowance for
doubtful accounts of $70,000 151,061 120,365
Other current assets 12,454 18,063
Total current assets 194,452 174,539
Property and equipment, net (Note 2) - 62,008
Total assets $194,452 $236,548
Liabilities and Stockholder's Equity
Current liabilities
Accounts payable and accrued expenses $ 23,406 $ 3,360
Deferred tax liability (Note 3) 26,000 -
Total current liabilities 49,406 3,360
Commitments (Note 5)
Stockholder's equity
Common stock; $.10 par value; 1,000,000
shares authorized; 1,000 shares issued
and outstanding 100 100
Additional paid-in capital 900 900
Retained earnings 144,046 232,188
Total stockholder's equity 145,046 232,188
Total liabilities and stockholder's
equity $194,452 $236,548
</TABLE>
BELTLINE NORTH MEDICAL CLINIC
Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended For the Eight Months
January 31, September 30,
1995 1996 1995 1996
(Unaudited)
<S> <C> <C> <C> <C>
Revenues $1,019,405 $1,129,624 $ 808,615 $ 733,828
Cost of services
provided 642,445 611,717 407,811 311,557
General and
administrative expenses 463,160 490,504 263,980 333,321
Marketing expenses 11,603 3,405 2,270 1,887
1,117,208 1,105,626 647,061 646,765
(Loss) income from
operations (97,803) 23,998 134,554 87,063
Other income 1,129 2,637 1,757 1,079
Net (loss) income before
income taxes (96,674) 26,635 136,311 88,142
Income taxes (Note 3) (24,000) 7,000 34,000 -
Net (loss) income $(72,674) $19,635 $102,311 $88,142
</TABLE>
BELTLINE NORTH MEDICAL CLINIC
Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
<S> <C> <C> <C> <C> <C>
Balance
January 31, 1994 1,000 $100 $900 $197,085 $198,085
Net loss - - - (72,674) (72,674)
Balance
January 31, 1995 1,000 100 900 124,411 125,411
Net income - - - 19,635 19,635
Balance
January 31, 1996 1,000 100 900 144,046 145,046
Net income
(unaudited) - - - 88,142 88,142
Balance
September 30, 1996 1,000 $100 $900 $232,188 $233,188
</TABLE>
BELTLINE NORTH MEDICAL CLINIC
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended For the Eight Months Ended
January 31, September 30,
1995 1996 1995 1996
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating
activities
Net (loss) income $(72,674) $19,635 $102,311 $88,142
Adjustments to reconcile
net (loss) income to net
cash (used in) provided
by operating activities -
Depreciation and
amortization - - - 2,992
Deferred taxes (24,000) 7,000 34,000 (26,000)
Change in assets and
liabilities -
Accounts receivable 72,920 (2,290) 5,281 30,696
Prepaid expenses (13,998) 1,544 8,043 (5,609)
Accounts payable and
accrued expenses (11,843) (14,324) (23,165) (20,046)
23,079 (8,070) 24,159 (17,967)
Net cash (used in)
provided by operating
activities (49,595) 11,565 126,470 70,175
Cash flows from investing activities
Purchases of property and - - - (65,000)
Net cash used in investing
activities - - - (65,000)
Cash (decrease) increase (49,595) 11,565 126,470 5,175
Cash - beginning of year 68,967 19,372 19,372 30,937
Cash - end of year $19,372 $30,937 $145,842 $36,112
</TABLE>
Supplemental disclosures of cash flow information
Cash paid for income taxes during the years ended January 31,
1996 and 1995 and during the eight months ended September 30,
1996 and 1995 (unaudited) was $800, $0, $6,409, and $800,
respectively.
BELTLINE NORTH MEDICAL CLINIC
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Nature of Business and Organization
Beltline North Medical Clinic (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 North Dallas, Texas area
including Carrolton, Addison and Farmers Branch.
Interim Financial Statements (Unaudited)
In the opinion of the Company, 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 September 30, 1996 and the results of its
operations and changes in cash flows for the eight months ended
September 30, 1996 and 1995. The results of operations for the eight
months ended September 30, 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.
Cash
The Company maintains cash in depository accounts which, at times,
may exceed FDIC insurance limits.
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 the North Dallas, 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.
Income Taxes
Prior to February 1, 1996, the Company recorded income taxes based on
its determination of the amounts of taxes payable or refundable
currently or in future years based on the current enacted tax laws.
On February 1, 1996, the Company elected to be taxed under Subchapter
S of the Internal Revenue Code. Under these provisions, the Company
is not subject to income taxes as a separate entity. Income or loss
of the Company is required to be included in the income tax returns
of the stockholder.
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. The Company's temporary differences result primarily
from recording assets and liabilities on the accrual basis for
financial reporting purposes and the cash basis for income tax
purposes and net operating loss carryforwards.
Fair Value of Financial Instruments
The carrying amounts of financial instruments including cash,
receivables, accounts payable and accrued expenses approximated fair
value as of January 31, 1996 and September 30, 1996 (unaudited),
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.
Note 2 - Property and Equipment
At January 31, 1996, the Company had approximately $60,000 of fully
depreciated medical equipment and furniture and fixtures. During the
eight months ended September 30, 1996 (unaudited), the Company
acquired medical equipment and furniture and fixtures for $65,000 and
has recorded $2,992 of depreciation against the acquired assets.
Note 3 - Income Taxes
The provision for income taxes consists of the following at January
31, 1996:
<TABLE>
<CAPTION>
<S> <C>
Current provision
Federal $ -
State -
-
Deferred taxes
Federal 5,600
State 1,400
7,000
$ 7,000
</TABLE>
The Company has the following temporary differences which result in a
deferred tax liability at January 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
Allowance for credit loss $ 17,500
Accounts receivable and prepaids (58,100)
Accounts payable and accrued expenses 5,800
Net operating loss carryforward 8,800
$ (26,000)
</TABLE>
The Company elected to be taxed under Subchapter S of the Internal
Revenue Code as of February 1, 1996. As a result of the Subchapter S
election, the Company's current deferred tax liability at January 31,
1996 resulted in a $26,000 reduction to general and administrative
expenses in the accompanying September 30, 1996 statement of
operations.
At January 31, 1996, the Company has approximately $36,000 of net
operating loss carryforwards for income tax reporting purposes which
expire in 2010. Subsequent to January 31, 1996, as a result of the
sale of assets (Note 4), there will be a change in ownership which
could restrict the utilization of net operating loss carryforwards in
the future.
Note 4 - Sale of Stock - Subsequent Event
In September 1996, the Company's stockholder sold all of his common
stock of the Company in exchange for 63,380 shares of common stock of
The Company Doctor (TCD), a promissory note for $843,750 with
interest at 8.5%, due April 30, 1997 and $843,750 cash.
In conjunction with the acquisition, TCD entered into a lease
agreement with the seller of the Company to lease the clinic building
for ten years at approximately $96,000 per year.
Note 5 - Related Party Transactions
Prior to the sale of the Company, the Company leased its facility and
certain medical equipment and furniture and fixtures from companies
owned by its stockholder. Rent expense for the years ended January
31, 1996 and 1995 and the eight months ended September 30, 1996 and
1995 (unaudited) was approximately $145,600, $149,000, $83,000, and
$92,000, respectively.
Additionally, the Company acquired medical supplies from a company
owned by its sole stockholder of approximately $38,000, $0, $15,000
and $25,000 during the years ended January 31, 1996 and 1995 and the
eight months ended September 30, 1996 and 1995 (unaudited),
respectively.
Note 6 - Employee Benefit Plans
Simplified Employee Pension Plan
The Company maintained a defined contribution plan which is a
simplified employee pension plan (the "SEP Plan") through April 1996
when the plan was terminated. The expense related to the simplified
employee pension plan for the years ended January 31, 1996 and 1995
and the eight months ended September 30, 1996 and 1995 (unaudited)
was approximately $49,433, $39,577, $28,634, and $32,955,
respectively.
