<PAGE>
================================================================================
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: August 15, 1996
COMMUNITY MEDICAL TRANSPORT, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in charter)
Delaware 0-24640 13-3507464
- ---------------- --------------------- -----------------
(State or Other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) Number)
45 Morris Street, Yonkers, New York 10705
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 963-6666
---------------
================================================================================
<PAGE>
Item 7. Financial Statements, Pro-Forma Information and Exhibits
(a) Financial Statements of Hudvalco, Inc., Subsidiary
and Affiliates
(i) (A) Report of Independent Auditors.
(B) Consolidated and Combined Balance
Sheet as at December 31, 1995.
(C) Consolidated and Combined Statements
of Operations for the years ended
December 31, 1995 and December 31,
1994.
(D) Consolidated and Combined Statements
of Changes in Stockholders' Equity
for the years ended December 31,
1995 and December 31, 1994.
(E) Consolidated and Combined Statements
of Cash Flows for the years ended
December 31, 1995 and December 31,
1994.
(F) Notes to the Financial Statements.
(ii) (A) Combined Balance Sheet as at
June 30, 1996 (unaudited).
(B) Combined Statement of Operations
and Retained Earnings for the six
months ended June 30, 1996 (unaudited).
(C) Combined Statement of Cash Flows
for the six months ended June 30, 1996
(unaudited).
(D) Notes to the Financial Statements.
(b) Pro Forma Financial Statements of Registrant
(i) Pro-Forma Consolidated Balance Sheet as of June
30, 1996.
(ii) Pro-Forma Consolidated Statement of Income for
the six months ended June 30, 1996.
(iii) Pro-Forma Consolidated Statement of Income for
the year ended December 31, 1995.
(iv) Notes to Pro-Forma Consolidated Financial
Statements
(c) Exhibit
(i) Asset Purchase Agreement, dated as of February
28, 1996, among Registrant, Alan McGeorge, Harvey
H. McGeorge Co., Inc. and Hudvalco, Inc.*
(ii) Amendment, dated as of August 12, 1996, among
Registrant, Alan McGeorge, Harvey H. McGeorge
Co., Inc. and Hudvalco, Inc.*
(iii) Ninety Day Promissory Note, dated as of August
15, 1996, between Registrant and Alan McGeorge,
as attorney on his own behalf and on behalf of
Hudvalco, Inc. and Harvey H. McGeorge Co., Inc.*
(iv) Consent of Richard A. Eisner & Company, LLP
- ---------------
* Previously filed with this Current Report
2
<PAGE>
FINANCIAL STATEMENT INDEX
(a) Financial Statements of Hudvalco, Inc., Subsidiary
and Affiliates
Page
----
(i) (A) Report of Independent Auditors. 4
(B) Consolidated and Combined Balance
Sheet as at December 31, 1995. 5
(C) Consolidated and Combined Statements
of Operations for the years ended
December 31, 1995 and December 31,
1994. 6
(D) Consolidated and Combined Statements
of Changes in Stockholders' Equity
for the years ended December 31,
1995 and December 31, 1994. 7
(E) Consolidated and Combined Statements
of Cash Flows for the years ended
December 31, 1995 and December 31,
1994. 8
(F) Notes to the Financial Statements. 9
(ii) (A) Combined Balance Sheet as at
June 30, 1996 (unaudited). 21
(B) Combined Statement of Operations
and Retained Earnings for the six
months ended June 30, 1996 (unaudited). 22
(C) Combined Statement of Cash Flows
for the six months ended June 30, 1996
(unaudited). 23
(D) Notes to the Financial Statements. 24
(b) Pro Forma Financial Statements of Registrant
(i) Pro-Forma Consolidated Balance Sheet as of June
30, 1996. 27
(ii) Pro-Forma Consolidated Statement of Income for
the six months ended June 30, 1996. 29
(iii) Pro-Forma Consolidated Statement of Income for
the year ended December 31, 1995. 30
(iv) Notes to Pro-Forma Consolidated Financial
Statements 31
3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Stockholders
Hudvalco, Inc. and combined affiliates
We have audited the accompanying consolidated and combined balance
sheet of Hudvalco, Inc., subsidiary and affiliates as at December 31, 1995 and
the related consolidated and combined statements of operations, changes in
stockholders' equity and cash flows for each of the years in the two-year period
ended December 31, 1995. These consolidated and combined 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 consolidated and combined financial statements
enumerated above present fairly, in all material respects, the consolidated and
combined financial position of Hudvalco, Inc., subsidiary and affiliates at
December 31, 1995, and results of their operations and their cash flows for each
of the years in the two-year period ended December 31, 1995, in conformity with
generally accepted accounting principles.
Richard A. Eisner LLP
New York, New York
April 30, 1996
4
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
CONSOLIDATED AND COMBINED BALANCE SHEET
AS AT DECEMBER 31, 1995
A S S E T S
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . $ 21,000
Accounts receivable, net of allowance for doubtful
accounts of $2,079,000 . . . . . . . . . . . . . . . . 3,111,000
Due from related parties . . . . . . . . . . . . . . . . 20,000
Prepaid expenses and other current assets. . . . . . . . 154,000
----------
Total current assets. . . . . . . . . . . . . . . 3,306,000
----------
Property and equipment, net of accumulated depreciation
of $1,151,000. . . . . . . . . . . . . . . . . . . . . . 1,161,000
----------
Other assets:
Intangible assets, net of accumulated amortization
of $65,000 . . . . . . . . . . . . . . . . . . . . . . 284,000
Loan origination costs, net of accumulated
amortization of $5,000 . . . . . . . . . . . . . . . . 11,000
Security deposits. . . . . . . . . . . . . . . . . . . . 9,000
----------
304,000
----------
T O T A L . . . . . . . . . . . . . . . . . . . . $4,771,000
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable - vendor. . . . . . . . . . . . . . . . . . $ 53,000
Current maturities of long-term debt . . . . . . . . . . 386,000
Current maturities of capital lease obligations. . . . . 55,000
Accounts payable and accrued expenses. . . . . . . . . . 294,000
Accrued payroll and related taxes. . . . . . . . . . . . 372,000
Payroll tax settlement . . . . . . . . . . . . . . . . . 199,000
Deferred taxes . . . . . . . . . . . . . . . . . . . . . 179,000
----------
Total current liabilities . . . . . . . . . . . . 1,538,000
----------
Long-term liabilities:
Long-term debt, less current maturities. . . . . . . . . 1,163,000
Capital lease obligations, less current maturities . . . 6,000
Due to related party . . . . . . . . . . . . . . . . . . 184,000
----------
1,353,000
----------
Total liabilities . . . . . . . . . . . . . . . . 2,891,000
----------
Stockholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . 6,000
Retained earnings. . . . . . . . . . . . . . . . . . . . 1,960,000
Note receivable - stockholder. . . . . . . . . . . . . . (86,000)
-----------
Total stockholders' equity. . . . . . . . . . . . 1,880,000
----------
T O T A L . . . . . . . . . . . . . . . . . . . . $4,771,000
==========
The accompanying notes to financial statements
are an integral part hereof.
- 5 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
Year Ended
December 31,
----------------------------
1995 1994
------------ ----------
Net revenue ...................................... $ 9,448,000 $ 7,986,000
----------- -----------
Operating expenses:
Salaries and benefits ......................... 5,774,000 5,075,000
Fleet maintenance ............................. 508,000 655,000
Insurance ..................................... 226,000 226,000
Rent .......................................... 174,000 180,000
Depreciation and amortization ................. 465,000 393,000
----------- -----------
T o t a l .............................. 7,147,000 6,529,000
----------- -----------
Gross profit ..................................... 2,301,000 1,457,000
Selling, general and administrative expenses ..... 1,413,000 1,311,000
----------- -----------
Income from operations ........................... 888,000 146,000
Other income (expense) ........................... 18,000 (4,000)
Interest expense, net ............................ (200,000) (144,000)
----------- -----------
Income (loss) before taxes ....................... 706,000 (2,000)
Provision (benefit) for income taxes (Note G) ... (399,000) 51,000
----------- -----------
NET INCOME (LOSS) - HISTORICAL ................... $ 1,105,000 $ (53,000)
=========== ===========
Pro forma (Note G):
Income before taxes . . . . . . . . . . . . $ 706,000
Pro forma income tax provision. . . . . . . 298,000
----------
PRO FORMA NET INCOME. . . . . . . . . . . . $ 408,000
==========
The accompanying notes to financial statements
are an integral part hereof.
- 6 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
CONSOLIDATED AND COMBINED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accounts Total
Common Retained Receivable - Stockholders'
Stock Earnings Stockholder Equity
----- -------- ----------- ------
<S> <C> <C> <C> <C>
Balance - January 1, 1994 . . . . . $5,000 $ 823,000 $ 828,000
Net (loss). . . . . . . . . . . . . (53,000) (53,000)
------- ----------- ----------
Balance - December 31, 1994 . . . . 5,000 770,000 775,000
Purchase of wholly-owned subsidiary
by sole stockholder. . . . . . . 1,000 85,000 $(86,000) - 0 -
Net income. . . . . . . . . . . . . 1,105,000 1,105,000
------- ----------- --------- ----------
BALANCE - DECEMBER 31, 1995 . . . . $6,000 $1,960,000 $(86,000) $1,880,000
======= ========== ========= ==========
</TABLE>
The accompanying notes to financial statements
are an integral part hereof.
- 7 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
Year Ended
December 31,
---------------------------
1995 1994
----------- ------------
Cash flows from operating activities:
Net income (loss) ......................... $ 1,105,000 $ (53,000)
Adjustments to reconcile net income
(loss) to net cash and cash equivalents
provided by operating activities:
Depreciation and amortization ......... 465,000 393,000
Deferred income taxes ................. (405,000) 34,000
Changes in:
Accounts receivable ................. (1,401,000) 28,000
Other receivables ................... (14,000) (7,000)
Prepaid expenses and other
current assets .................... 82,000 (108,000)
Security deposits ................... 3,000 (6,000)
Accounts payable and accrued expenses 143,000 (1,000)
Accrued payroll and related taxes ... 346,000 (92,000)
----------- -----------
Net cash and cash equivalents
provided by operating
activities .................... 324,000 188,000
----------- -----------
Cash flows from investing activities:
Purchase of equipment ..................... (10,000) (771,000)
Acquisition of subsidiary ................. (50,000)
----------- -----------
Net cash and cash equivalents
(used in) investing activities (10,000) (821,000)
----------- -----------
Cash flows from financing activities:
(Repayment) of capital lease obligations .. (88,000) (14,000)
Borrowing (repayment) of promissory note .. (5,000) 58,000
Payment of loan origination costs ......... (17,000)
Borrowing (repayment) of long-term debt,
net ..................................... (336,000) 521,000
----------- -----------
Net cash and cash equivalents
provided by (used in) financing
activities .................... (429,000) 548,000
----------- -----------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS .. (115,000) (85,000)
Cash and cash equivalents - beginning of
year ...................................... 136,000 221,000
----------- -----------
CASH AND CASH EQUIVALENTS - END OF YEAR ...... $ 21,000 $ 136,000
=========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the year:
Interest .............................. $ 196,000 $ 149,000
Taxes ................................. 3,000 9,000
Acquisitions:
Net book value of noncash assets
acquired including intangibles ...... 504,000
Long-term debt and capital lease
obligations assumed ................. (504,000)
The accompanying notes to financial statements
are an integral part hereof.
- 8 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - Organization and Basis of Presentation:
The accompanying financial statements include the accounts of Hudvalco,
Inc. d/b/a/ Hudson Valley Ambulance, its consolidated subsidiary,
Richards/Decker Operating Company, Inc. and combined affiliates, Hudson Valley
Medtex, Inc., Clove Professional Services, Inc., Richards/Decker Payroll
Company, Inc. and Consolidated Collections, Inc. (collectively, the "Company").
Intercompany balances and transactions have been eliminated in
consolidation and combination.
The Company provides emergency and nonemergency ambulance
transportation of patients who require basic medical care or supervision during
transport to and from hospitals, nursing homes and other health care facilities.
Also, the Company provides "911" emergency and general transport ambulance
service in the lower Hudson Valley region of New York State.
The Company derives the majority of its revenue from reimbursement by
third-party payers, particularly Medicare and Medicaid, typically invoicing and
collecting payments directly from the third-party payer.
Reimbursement can be influenced by the financial instability of private
third-party payers and the budget pressures and cost shifting by governmental
payers. A reduction in coverage or reimbursement rates by third-party payers
could have a material adverse effect on the Company's results of operations.
The Company, like other Medicaid and Medicare providers, is subject to
governmental audits of its Medicaid and Medicare reimbursement claims. As
providers of services under the Medicaid and Medicare programs, the Company is
also subject to the Medicaid and Medicare fraud and abuse laws and requirements
for documenting medical necessity for government payers. Medicare claims
submissions processed during the four-year period ended December 31, 1994 were
audited by a Medicare intermediary. The audit identified a tentative overpayment
of $2,900,000. The Company has responded to the preliminary findings by
presenting documentation as requested by the intermediary. Management believes
that the outcome will not have a material effect on the financial statements.
(continued)
- 9 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE B) - Significant Accounting Policies:
Significant accounting policies in the preparation of the financial
statements are as follows:
[1] Cash and cash equivalents:
The Company considers all highly liquid investments with an
original maturity of three months or less to be cash equivalents. These
investments consist primarily of mutual funds which invest in United States
governmental securities.
[2] Revenue recognition:
Revenue is recognized on date of transportation. Revenue is
reported at the realizable amount from patients, third party payers and others
under contractual arrangements.
[3] Allowance for doubtful accounts:
The allowance for doubtful accounts represents an estimate for
uncollectible amounts, principally relating to receivables outstanding greater
than 120 days.
Management's determination of the collectibility of accounts
receivable is based on ongoing evaluations of accounts outstanding combining
historical experience and current economic conditions.
[4] Property, equipment and leasehold improvements:
Property, equipment and leasehold improvements are stated at
cost. The Company computes depreciation and amortization using straight-line
methods for both financial and tax reporting purposes. The estimated useful
lives for substantially all of the assets are 5 - 7 years.
[5] Intangible assets:
Intangible assets consist of goodwill, licenses, covenants not
to compete and customer lists. The goodwill is being amortized on a
straight-line basis over forty years. The licenses are being amortized on a
straight-line basis through expiration date. The covenants not to compete are
being amortized over the term of the agreement. The customer lists are being
amortized using the straight-line method over the period of expected benefit of
five years. Intangible assets are evaluated periodically, and adjusted if
necessary, if events and circumstances indicate that a permanent decline in
value below the carrying amount has occurred.
(continued)
- 10 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE B) - Significant Accounting Policies: (continued)
[6] Loan origination costs:
Loan origination costs are being amortized over the terms of
the notes on a straight-line basis.
[7] Income taxes:
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes" which requires the use of the "liability method" of accounting.
Deferred tax liabilities and assets prior to "S" corporation election, see
below, are determined based on the difference between the financial statement
and tax bases of assets and liabilities, using enacted tax rates in effect for
the year in which the differences are expected to reverse. The Company's
deferred tax liability results from recognition of income on the accrual basis
of accounting for financial reporting and on the cash basis of accounting for
income tax reporting purposes. Current income taxes are based on the year's
income taxable for federal and state income tax reporting purposes.
The Company filed consolidated federal income tax returns and
individual state income tax returns for the years ended December 31, 1994 and
December 31, 1995 except that Hudvalco, Inc. filed a separate "S" corporation
return for 1995.
Effective January 1, 1995, Hudvalco, Inc. elected and the
stockholders consented, under the applicable provisions of the Internal Revenue
Code, to report its income for federal corporate tax purposes as an "S"
corporation. Accordingly, all federal and state income taxes will be the
responsibility of the stockholders and therefore no deferred taxes have been
recorded as of December 31, 1995. Based on the approval of the "S" corporation
election, in accordance with SFAS 109, the Company recorded an income tax
benefit of approximately $511,000. The stockholder may withdraw post-election
earnings of $417,000 without any further tax consequences to him.
[8] 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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.
(continued)
- 11 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE B) - Significant Accounting Policies: (continued)
[9] Recently issued accounting pronouncements:
The Company believes that SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
issued by the Financial Accounting Standards Board will not have a material
impact on the Company's financial position and results of operations.
(NOTE C) - Acquisitions:
The Company acquired the operations of two ambulance service providers
during the year ended December 31, 1994. This transaction was recorded under the
purchase method of accounting, and accordingly, the purchased assets and assumed
liabilities were recorded at their estimated fair values at the acquisition
date, however, their 1994 operations are included in the accompanying financial
statements for the full year.
The aggregate purchase price of the operations acquired consists of the
following:
Cash. . . . . . . . . . . . . . . $ 50,000
Notes payable . . . . . . . . . . 275,000
Assumption of debt. . . . . . . . 208,000
Assumption of liabilities . . . . 21,000
--------
T o t a l . . . . . . . $554,000
========
The fair value of the assets purchased has been allocated as follows:
Property and equipment. . . . . . $327,000
Intangibles . . . . . . . . . . . 227,000
--------
T o t a l . . . . . . . $554,000
========
(continued)
- 12 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE D) - Property, Equipment and Leaseholds:
Property, equipment and leaseholds consist of the following:
Ambulances and other vehicles. . . . . . $1,533,000
Computer system and equipment. . . . . . 177,000
Communications equipment . . . . . . . . 97,000
Medical equipment. . . . . . . . . . . . 485,000
Leasehold improvements and furniture
and fixtures. . . . . . . . . . . . . 20,000
---------
2,312,000
Less accumulated depreciation. . . . . . 1,151,000
---------
$1,161,000
==========
(NOTE E) - Notes Payable and Long-Term Debt:
[1] Note payable - vendor:
The Company executed a note to purchase medical equipment from
a vendor in June 1994. The agreement provided for payment in six monthly
installments at an interest rate of 8%. The Company renegotiated terms on the
loan and subsequently agreed to revised terms with the vendor, whereby the
remaining balance due would be paid in monthly installments of $2,000 including
interest at 9.5%. The balance of the new note at December 31, 1995 is $53,000
and is scheduled to be completely paid off in June 1998.
(continued)
- 13 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE E) - Notes Payable and Long-Term Debt: (continued)
[2] Long-term debt:
Long-term debt consists of the following:
Notes payable to bank collateralized by
substantially all the assets of the Company
and guaranteed by an officer and a related
corporation, refinanced in January 1996 to
provide for monthly installments of $22,000,
plus interest at prime plus 1.5%, through
February 2000, payments commence March 1996. $1,070,000
Note payable to bank collateralized by
ambulances, payable in monthly installments
of $1,771, plus interest at prime plus 1.5%,
through September 1996 . . . . . . . . . . . 18,000
Note payable to credit company collateralized
by unexpired insurance premiums, payable in
monthly installments of $8,276, including
interest at 8.41%, through September 1996. . 90,000
Note payable to various banks and institutions
collateralized by ambulances, payable in
monthly installments ranging from $375 to
$2,391, including interest at variable and
fixed rates ranging from 10.25% to 12.25%,
maturing from April 1996 through January
1997 . . . . . . . . . . . . . . . . . . . . 11,000
Notes payable to former owners of acquired
ambulance companies, payable in monthly
installments of $6,000 including interest
at 6% - 8%, through August 1998 - August
2004 . . . . . . . . . . . . . . . . . . . . 360,000
---------
1,549,000
Less current maturities . . . . . . . . . . . . 386,000
---------
$1,163,000
==========
(continued)
- 14 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE E) - Notes Payable and Long-Term Debt: (continued)
[2] Long-term debt: (continued)
Principal maturities are as follows:
Year Ending
December 31,
------------
1996. . . . . . . . . . . . . . . . . $ 386,000
1997. . . . . . . . . . . . . . . . . 321,000
1998. . . . . . . . . . . . . . . . . 315,000
1999. . . . . . . . . . . . . . . . . 304,000
2000. . . . . . . . . . . . . . . . . 105,000
Thereafter. . . . . . . . . . . . . . 118,000
----------
$1,549,000
==========
As part of certain loan agreements, the Company has agreed to comply
with certain covenants and restrictions. These consist primarily of reporting
requirements, administrative requirements and certain financial ratios.
(NOTE F) - Capital Lease Obligations:
The Company leases certain ambulances and equipment under capital
leases. The future minimum lease payments under the capital leases and the net
present value of the future minimum lease payments are as follows:
Year Ending
December 31,
------------
1996 . . . . . . . . . . . . . . . . $59,000
1997 . . . . . . . . . . . . . . . . 6,000
-------
Total minimum lease payments . . . . 65,000
Less amount representing interest. . 4,000
-------
Present value of minimum lease
payments. . . . . . . . . . . . . 61,000
Less current maturities. . . . . . . 55,000
-------
Capital lease obligations, less
current maturities. . . . . . . . $ 6,000
=======
(continued)
- 15 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE F) - Capital Lease Obligations: (continued)
The capitalized cost is included in property and equipment in the
accompanying financial statements as follows:
Ambulances and other vehicles . . . . . $ 98,000
Computer system and equipment . . . . . 61,000
Medical equipment . . . . . . . . . . . 88,000
Communication equipment . . . . . . . . 32,000
--------
279,000
Less accumulated depreciation . . . . . 254,000
--------
$ 25,000
========
Depreciation expense for the capitalized property was $55,960 and
$50,238 for December 31, 1995 and December 31, 1994, respectively.
(NOTE G) - Income Taxes:
The pro forma net income in the accompanying statements of income
includes a pro forma adjustment for income taxes which would have been provided
had Hudvalco, Inc. been subject to tax.
Provision for income taxes (benefits) consists of the following:
Year Ended
December 31,
--------------------
1995 1994
-------- ---------
Current:
Federal. . . . . . . . . . $(404,000) $ (98,000)
State. . . . . . . . . . . (104,000) (24,000)
---------- ----------
Total current . . . $(508,000) $(122,000)
========= =========
Deferred:
Federal. . . . . . . . . . $ 81,000 $ 140,000
State. . . . . . . . . . . 28,000 33,000
---------- ---------
Total deferred. . . $ 109,000 $ 173,000
========== =========
Total:
Federal. . . . . . . . . . $(323,000) $ 42,000
State. . . . . . . . . . . (76,000) 9,000
---------- ---------
Total (benefit)
provision for
income taxes. . . $(399,000) $ 51,000
========== =========
(continued)
- 16 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE G) - Income Taxes: (continued)
Significant components of the pro forma provision for income taxes at
December 31, 1995 are as follows:
Current:
State. . . . . . . . . . . . . . . $ 3,000
-------
Deferred:
Federal. . . . . . . . . . . . . . 223,000
State. . . . . . . . . . . . . . . 72,000
-------
Total deferred. . . . . . . 295,000
-------
Total provision for income
taxes . . . . . . . . . . $298,000
========
The pro forma provision for income taxes represents the estimated
income taxes that would have been reported by the Company had Hudvalco, Inc.
been subject to income taxes for the year ended December 31, 1995. Additionally,
the income tax benefit of approximately $511,000 has been recorded to reverse
deferred taxes which had been recorded while the Company was being taxed as a
"C" corporation.
The differences between the statutory federal income tax rate of 34%
and income taxes reported in the statements of operations are as follows:
Year Ended
December 31,
---------------------
1995 1994
---------- --------
Income tax provision at 34%. . . . . . $ 240,000 $(1,000)
State taxes, net of federal
benefit . . . . . . . . . . . . . . 20,000 16,000
Tax benefit arising from
termination of "C"
corporation status. . . . . . . . . (511,000)
Tax on "S" corp. income at 34% . . . . (142,000)
Nondeductible items . . . . . . . . . 36,000
Other. . . . . . . . . . . . . . . . . (6,000)
--------- -------
$(399,000) $51,000
========= =======
(continued)
- 17 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE G) - Income Taxes: (continued)
The differences between the statutory federal income tax rate of 34%
and pro forma income taxes reported in the statement of operations for the year
ended December 31, 1995 are as follows:
Income tax provision at 34% . . . . . . . $240,000
State taxes, net of federal benefit . . . 49,000
Other . . . . . . . . . . . . . . . . . . 9,000
--------
$298,000
========
The amount of the Company's deferred tax liability (not recorded in the
historical balance sheet at December 31, 1995) had Hudvalco, Inc. been subject
to income taxes would have been approximately $894,000 at December 31, 1995.
(NOTE H) - Related Party Transactions:
[1] Sale of subsidiary:
On January 1, 1995, the Company and its president executed a
stock purchase option agreement whereby the president purchased the subsidiary,
Richard/Decker Operating Company, Inc., from the Company for an $86,000
promissory note bearing interest at 8% payable in 10 annual installments
commencing in 1996.
[2] Rental expense:
The Company rents its office and service facility from
companies owned by an officer on a month-to-month basis. Rental expense was
$96,000 and $94,000 for December 31, 1995 and December 31, 1994, respectively.
[3] Professional fees:
The Company retains an officer and an affiliated partnership
for legal representation and other professional services. The fees charged for
these services are $ - 0 - and $14,000 for December 31, 1995 and December 31,
1994, respectively.
(continued)
- 18 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE I) - Common Stock:
Common stock of the combined entities at December 31, 1994 consists of
the following:
Shares
-----------------
To Be Stated
Authorized Issued Value
---------- ------ -----
Hudvalco, Inc. - common stock, no
par value . . . . . . . . . . . 200 100 $1,000
Hudson Valley Medtex, Inc. -
common stock, no par value. . . 200 100 1,000
Clove Professional Services,
Inc. - common stock, no par
value . . . . . . . . . . . . . 200 100 1,000
Richards/Decker Payroll Company,
Inc. - common stock, no par
value . . . . . . . . . . . . . 200 100 1,000
Consolidated Collections,
Inc. - common stock, no par
value . . . . . . . . . . . . . 200 100 1,000
Richards/Decker Operating Company,
Inc. - common stock, no par
value . . . . . . . . . . . . . 200 100 1,000
------
$6,000
======
(NOTE J) - Payroll Taxes:
The Company was delinquent in remitting payroll taxes to the federal
government. As a result, the Company has accrued taxes, penalties and interest
of approximately $199,000 as of December 31, 1995. Subsequent to December 31,
1995, the Company entered into a settlement agreement with the federal
government which provides for monthly payments of $17,000 commencing in January
1996.
(NOTE K) - Concentration of Risk:
Revenues from principal sources are as follows as of December 31, 1995:
Medicaid and Medicare. . . . . . . . 60%
Private insurance and other
nongovernment sources. . . . . . . 40
---
T o t a l. . . . . . . . . 100%
===
At December 31, 1995, 47% of accounts receivable was due from Medicaid
and Medicare, 15% from private insurance and 38% from private payors and other
nongovernment agencies.
- 19 -
<PAGE>
HUDVALCO, INC., SUBSIDIARY AND AFFILIATES
NOTES TO FINANCIAL STATEMENTS
(NOTE L) - Sale of Business:
On February 28, 1996, an asset purchase agreement was signed between
the Company and its stockholders and Community Medical Transport, Inc.
("Community"), a company providing ambulance and ambulette service in the New
York metropolitan area, providing for the sale of substantially all the
Company's physical assets and/or common stock in exchange for cash and common
stock of Community. Closing of the transaction is subject to certain conditions
including, among other things, Community's ability to arrange appropriate
financing.
- 20 -
<PAGE>
HUDVALCO, INC., AND AFFILIATES
COMBINED BALANCE SHEET
June 30, 1996
Assets
Current
Cash and cash equivalents $ 135,954
Accounts receivable, net of allowance for doubtful
accounts of $2,257,361 3,357,612
Loans receivable 23,480
Due from related parties 18,736
Prepaid expenses and other 132,063
-----------
Total current assets 3,667,845
-----------
Property and equipment, net of accumulated
depreciation of $1,314,221 981,508
-----------
Other assets
Intangible assets, net of accumulated
amortization of $81,699 267,521
Loan origination costs, net of accumulated
amortization of $7,244 19,856
Security deposits 14,237
-----------
301,614
-----------
Total assets $ 4,950,967
===========
Liabilities and stockholders' equity
Liabilities
Current
Note payable - vendor $ 61,685
Current maturities of long-term debt 326,175
Current maturities of capital lease obligations 22,456
Accounts payable and accrued expenses 529,352
Accrued payroll and related taxes 134,713
Payroll tax settlement 281,304
Deferred taxes 269,532
-----------
Total current liabilities 1,625,217
-----------
Long-term liabilities
Long-term debt, less current maturities 1,002,884
Due to related party 183,971
-----------
1,186,855
-----------
Total liabilities 2,812,072
-----------
Stockholders' equity
Common stock 6,000
Retained earnings 2,218,895
Note receivable - stockholder (86,000)
-----------
Total stockholders' equity 2,138,895
-----------
Total liabilities and stockholders' equity $ 4,950,967
===========
- 21 -
<PAGE>
HUDVALCO, INC., AND AFFILIATES
COMBINED STATEMENT OF OPERATIONS
AND RETAINED EARNINGS
Six Months Ended June 30, 1996
Net revenue $ 4,293,056
-----------
Operating expenses
Salaries and benefits 2,192,799
Fleet maintenance 233,594
Insurance 111,871
Rent 86,642
Depreciation and amortization 212,811
-----------
Total operating expenses 2,837,717
-----------
Gross profit 1,455,339
Selling, general and administrative expenses 1,029,402
-----------
Income from operations 425,937
Other deduction
Interest expense, net of investment income (73,147)
-----------
Income before provision for
income taxes 352,790
-----------
Provision for income taxes
Current 3,153
Deferred 90,672
-----------
Total provision for income taxes 93,825
-----------
Net income 258,965
Retained earnings - beginning of year 1,959,930
-----------
Retained earnings - end of period $ 2,218,895
===========
- 22 -
<PAGE>
HUDVALCO, INC., AND AFFILIATES
COMBINED STATEMENT OF CASH FLOWS
Six Months Ended June 30, 1996
Cash flows from operating activities
Net income $ 258,965
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 212,811
Deferred income taxes 90,672
Increase (decrease) in cash flows from
changes in operating assets and liabilities
Accounts receivable (246,946)
Loans receivable (1,690)
Prepaid expenses and other 1,733
Security deposits (4,843)
Accounts payable 236,614
Accrued expenses and taxes (236,446)
Payroll tax settlement 81,353
-----------
Net cash provided by operating activities 392,223
-----------
Cash flows from investing activities
Purchase of equipment (18,539)
-----------
Cash flows from financing activities
Payment of loan origination costs (10,500)
Borrowing on note payable - vendor 8,337
Repayment of long-term debt, net (213,739)
Repayment of capital lease obligations, net (43,690)
-----------
Net cash used in financing activities (259,592)
-----------
Net increase in cash and cash equivalents 114,092
Cash and cash equivalents - beginning of year 21,862
-----------
Cash and cash equivalents - end of period $ 135,954
===========
Supplemental disclosure of cash flow information Cash paid:
Interest $ 73,948
Income taxes 2,345
- 23 -
<PAGE>
HUDVALCO, INC., AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1996
Note 1 - Organization and basis of presentation
- ------------------------------------------------
The accompanying financial statements include the accounts of Hudvalco, Inc.
d/b/a Hudson Valley Ambulance, and combined affiliates, Richards/Decker
Operating Company, Inc., Hudson Valley Medtex, Inc., Clove Professional
Services, Inc., Richards/Decker Payroll Company, Inc., and Consolidated
Collections, Inc. (collectively, the "Company").
Common stock of the combined entities at June 30, 1996, consists of the
following:
Hudvalco, Inc. - common stock, no par value; 200 shares
authorized; 100 shares issued and outstanding. $ 1,000
Richards/Decker Operating Company, Inc. - common stock,
no par value; 200 shares authorized; 100 shares issued and
outstanding. 1,000
Hudson Valley Medtex, Inc. - common stock, no par value;
200 shares authorized; 100 shares issued and outstanding. 1,000
Clove Professional Services, Inc. - common stock, no par
value; 200 shares authorized; 100 shares issued and
outstanding. 1,000
Richards/Decker Payroll Company, Inc. - common stock, no
par value; 200 shares authorized; 100 shares issued and
outstanding. 1,000
Consolidated Collections, Inc. - common stock, no par
value; 200 shares authorized; 100 shares issued and
outstanding. 1,000
-------
$ 6,000
=======
Intercompany balances and transactions have been eliminated in combination.
The Company provides emergency and nonemergency ambulance transportation of
patients who require basic medical care or supervision during transport to and
from hospitals, nursing homes and other health care facilities. Also, the
Company provides "911" emergency and general transport ambulance service in the
lower Hudson Valley region of New York State.
The Company derives the majority of its revenue from reimbursement by
third-party payers, particularly Medicare and Medicaid, typically invoicing and
collecting payments directly from the third-party payer.
Reimbursement can be influenced by the financial instability of private
third-party payers and the budget pressures and cost shifting by governmental
payers. A reduction in coverage or reimbursement rates by third-party payers
could have a material adverse effect on the Company's results of operations.
- 24 -
<PAGE>
HUDVALCO, INC., AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1996
Note 1 - Organization and basis of presentation (continued)
- -----------------------------------------------------------
The accompanying unaudited combined financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly they do not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of Management, all adjustments (consisting of normal
and recurring adjustments) considered necessary for a fair presentation of the
Companies financial position, results of operations and cash flows have been
included.
The results of operations and cash flows for the six months ended June 30, 1996
are not necessarily indicative of the results that may be expected for the full
year ended 1996.
Note 2 - Summary of significant accounting policies
- ---------------------------------------------------
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. These investments consist primarily
of mutual funds which invest in United States governmental securities.
Revenue recognition
Revenue is recognized on date of transportation. Revenue is reported at the
realizable amount from patients, third-party payers, and others under
contractual arrangements.
Allowance for doubtful accounts
Management's determination of the collectibility of accounts receivable is based
on ongoing evaluations of accounts outstanding combining historical experience
and current economic conditions.
Property, equipment and depreciation
Property and equipment are stated at cost. Depreciation and amortization is
primarily calculated using straight-line methods for both financial and tax
reporting purposes. The estimated useful lives for substantially all of the
assets are 5 - 7 years.
Intangible assets
Intangible assets consist of goodwill, licenses, covenants not to compete, and
customer lists. The goodwill is being amortized over forty years using the
straight-line method. The licenses are being amortized on a straight-line basis
through expiration date. The covenants not to compete are being amortized over
the term of the agreement. The customer lists are being amortized on a
straight-line method over the period of expected benefit of five years.
Loan origination costs
Financing costs are being amortized over the terms of the notes on a
straight-line basis.
- 25 -
<PAGE>
HUDVALCO, INC., AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1996
Note 2 - Summary of significant accounting policies (continued)
- ---------------------------------------------------------------
Income taxes
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" which requires the
use of the "liability method" of accounting for income taxes. Accordingly,
deferred tax liabilities and assets are determined based on the difference
between the financial statement and tax bases of assets and liabilities, using
enacted tax rates in effect for the year in which the differences are expected
to reverse. The Company's deferred taxes result from recognition of income on
the cash method of accounting for income tax reporting purposes. Current income
taxes are based on the year's income taxable for Federal and State income tax
reporting purposes.
Effective January 1, 1995, Hudvalco, Inc. elected and the stockholder consented,
under the applicable provisions of the Internal Revenue Code to report its
income for federal corporate tax purposes as an "S" Corporation. Accordingly,
all federal income taxes will be the responsibility of the stockholder. Similar
provisions apply for the State of New York.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
- 26 -
<PAGE>
COMMUNITY MEDICAL TRANSPORT INC.,
ELITE AMBULANCE AND MEDICAL COACH, INC. AND HUDVALCO., INC.
PRO-FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
Pro-Forma
Community Medical Elite Ambulance Hudvalco, Inc. Elimination's
Transport, Inc. Medical Coach, Inc. Elite Ambulance
CURRENT ASSETS: Historical Historical Historical See Note A
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash $ 329,000 $ 22,950 $ 135,954 ($ 22,950)
Short Term Investments 3,560,000
Accounts Receivable - Net 2,646,000 101,351 3,357,612 (101,351)
Due From Related Parties 18,736
Prepaid Expenses and Other Current Assets 1,209,000 30,338 155,543 (30,338)
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 7,744,000 154,639 3,667,845 (154,639)
Property & Equipment - Net 1,948,000 133,139 981,508 (133,139)
Customer Lists - Net 783,000
Licenses _ Net 513,000
Intangible Assets - Net 267,521
other Assets 1,205,000 25 19,856 (25)
Goodwill - Net 686,000
Security Deposits 14,237
--------------------------------------------------------------------------------
TOTAL ASSETS $12,879,000 $ 287,803 $ 4,950,967 ($ 287,803)
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Pro-Forma
Elimination's Adjustments Adjustments
Hudvalco, Inc. From Elite Ambulance Total
See Note A & Hudvalco, Inc. Ref Ref
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash ($135,954) $12,000 (B-2) $341,000
Short Term Investments (3,000,000)(B-1) $5,896,000(C)
(3,059,529)(B-1)
(379,788)(B-2) 3,016,683
Accounts Receivable - Net (3,357,612) 101,000 (B-2) 2,747,000
Due From Related Parties (18,736)
Prepaid Expenses and Other Current Assets (155,543) 10,000 (B-2) 1,219,000
-------------------------------------------------------------------------------
TOTAL CURRENT ASSETS (3,667,845) (6,316,317) 5,896,000 7,323,683
Property & Equipment - Net (981,508) 150,000 (B-2) 3,116,492
1,018,492 (B-1)
Customer Lists - Net 177,070 (B-2) 2,953,906
1,993,836 (B-1)
Licenses _ Net 513,000
Intangible Assets - Net (267,521)
other Assets (19,856) 1,205,000
Goodwill - Net 359,506 (B-2) 5,033,178
3,987,672 (B-1)
Security Deposits (14,237) 0
-------------------------------------------------------------------------------
TOTAL ASSETS ($4,950,967) $1,370,259 $5,896,000 $20,145,259
-------------------------------------------------------------------------------
</TABLE>
See (A), (B-1),(B-2), (C) accompanying notes.
- 27 -
<PAGE>
COMMUNITY MEDICAL TRANSPORT INC.,
ELITE AMBULANCE AND MEDICAL COACH, INC. AND HUDVALCO., INC.
PRO-FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
Pro-Forma
Community Medical Elite Ambulance Hudvalco, Inc. Elimination's
Transport, Inc. Medical Coach, Inc. Elite Ambulance
CURRENT LIABILITIES: Historical Historical Historical See Note A
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loan Payable $ 21,524 $ 61,685 ($ 21,524)
Accounts Payable and Accrued Expenses $ 1,060,000 105,921 528,956 (105,921)
Accrued Payroll and Related Taxes 134,713
Current Portion - Long Term debt 1,091,000 326,175
Current Portion - Capital Leases 7,000 7,366 22,456 (7,366)
Deferred Taxes 1,015,000 269,928
Payroll Tax Settlement 281,304
------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 3,173,000 134,811 1,625,217 (134,811)
------------------------------------------------------------------------------------
LONG TERM DEBT:
Long Term Debt 2,225,000 1,002,884
Capital Lease Obilgations 2,444 (2,444)
Due to Related Parties 183,971
------------------------------------------------------------------------------------
TOTAL LONG TERM DEBT 2,225,000 2,444 1,186,855 (2,444)
------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Preferred Stock
Common Stock 3,000 15,000 6,000 (15,000)
Capital in Excess of Par Value 6,649,000
Retained Earnings 829,000 135,548 2,218,895 (135,548)
Note Receivable Shareholder (86,000)
------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 7,481,000 150,548 2,138,895 (150,548)
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $ 12,879,000 $287,803 $4,950,967 ($287,803)
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Pro-Forma
Elimination's Adjustments Adjustments
Hudvalco, Inc. From Elite Ambulance Total
See Note A & Hudvalco, Inc.
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loan Payable ($61,685) $50,000(B-2) $50,000
Accounts Payable and Accrued Expenses (528,956) 1,060,000
Accrued Payroll and Related Taxes (134,713) 0
Current Portion - Long Term debt (326,175) 940,471(B-1) 2,031,471
Current Portion - Capital Leases (22,456) 7,000
Deferred Taxes (269,928) 1,015,000
Payroll Tax Settlement (281,304) 0
-------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES (1,625,217) 990,471 0 4,163,471
-------------------------------------------------------------------------------
LONG TERM DEBT:
Long Term Debt (1,002,884) 379,788(B-2) 2,604,788
Capital Lease Obilgations
Due to Related Parties (183,971)
-------------------------------------------------------------------------------
TOTAL LONG TERM DEBT (1,186,855) 379,788 2,604,788
-------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Preferred Stock 5,896,000(C) 5,896,000
Common Stock (6,000) 3,000
Capital in Excess of Par Value 6,649,000
Retained Earnings (2,218,895) 829,000
Note Receivable Shareholder 86,000
-------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (2,138,895) 5,896,000 13,377,000
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY ($4,950,967) $1,370,259 $5,896,000 $20,145,259
-------------------------------------------------------------------------------
</TABLE>
See (A), (B-1),(B-2), (C) accompanying notes.
- 28 -
<PAGE>
COMMUNITY MEDICAL TRANSPORT INC., ELITE AMBULANCE AND MEDICAL COACH, INC. ,
AND HUDVALCO, INC.
PRO-FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996
JUNE 30, 1996
( 000 OMITTED )
<TABLE>
<CAPTION>
Elite Hudvalco, Inc.
Community Medical Elite Ambulance Hudvalco, Inc. Pro-Forma Pro-Forma
Transport, Inc. Medical Coach, Inc. Adjustments Ref Adjustments Ref Total
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Revenue - Net $5,504 $1,396 $4,293 $0 $0 $11,193
OPERATING EXPENSES:
Salaries & Benefits 2,204 643 2,193 (42) (1) (125)(1) 4,873
Fleet Maintenance & Supplies 434 119 234 (12) (1) 775
Insurance 447 84 112 (21) (1) 622
Rent 78 15 87 (25) (1) 155
Depreciation & Amortization 138 45 213 (22) (4) 39 (4) 413
Provision For Doubtful Accounts 151 151
----------------------------------------------------------------------------------------------
OPERATING EXPENSES 3,301 906 2,990 (122) (86) 6,989
GROSS PROFIT 2,203 490 1,303 122 86 4,204
Selling, General and
Administration Expenses 1,524 429 878 2,831
----------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 679 61 425 122 86 1,373
Interest Income
(Expenses) - Net (76) (4) (73) 0 24 (2) (129)
----------------------------------------------------------------------------------------------
INCOME BEFORE PROVISIONS
FOR INCOME TAXES 603 57 352 122 110 1,244
Income Taxes - Historical 263 33 93 389
Pro Forma Income Taxes 0 (9) 58 52 (3) 43 (3) 144
----------------------------------------------------------------------------------------------
TOTAL INCOME TAXES 263 24 151 52 43 533
NET INCOME/PRO FORMA 340 33 201 70 67 711
----------------------------------------------------------------------------------------------
PRO FORMA NET INCOME
PER SHARE $0.10 $0.16
======== ======
Weighted Average Shares used in
Pro Forma Computation 3,556 (5) 5,592
======== ======
</TABLE>
See (1),(2),(3),(4), (5) accompanying notes.
- 29 -
<PAGE>
COMMUNITY MEDICAL TRANSPORT INC., ELITE AMBULANCE AND MEDICAL COACH, INC. ,
AND HUDVALCO, INC.
PRO-FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
( 000 OMITTED )
<TABLE>
<CAPTION>
Elite Hudvalco, Inc.
Community Medical Elite Ambulance Hudvalco, Inc. Pro-Forma Pro-Forma
Transport, Inc. Medical Coach, Inc. Adjustments Ref Adjustments Ref Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue - Net $6,653 $2,916 $9,448 $0 $0 $19,017
OPERATING EXPENSES:
Salaries & Benefits 2,571 1,269 5,774 (84)(1) (250)(1) 9,280
Fleet Maintenance & Supplies 520 246 508 (24)(1) 1,250
Insurance 536 225 226 (41)(1) 946
Rent 87 55 174 (50)(1) 266
Depreciation & Amortization 217 43 465 6 (4) 39 (4) 770
--------------------------------------------------------------------------------------------------
OPERATING EXPENSES 3,931 1,838 7,147 (193) (211) 12,512
GROSS PROFIT 2,722 1,078 2,301 193 211 6,505
Selling, General and
Administration Expenses 1,760 812 1,413 3,985
--------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 962 266 888 193 211 2,520
Interest Income
(Expenses) - Net 80 (13) (182) (26) (18)(2) (159)
--------------------------------------------------------------------------------------------------
INCOME BEFORE PROVISIONS
FOR INCOME TAXES 1,042 253 706 167 193 2,361
Income Taxes - Historical 450 96 (399) 0 0 147
Pro Forma Income Taxes 0 12 702 72 (3) 83 (3) 869
--------------------------------------------------------------------------------------------------
TOTAL INCOME TAXES 450 108 303 72 83 1,016
NET INCOME/PRO FORMA 592 145 403 95 110 1,345
--------------------------------------------------------------------------------------------------
PRO FORMA NET INCOME
PER SHARE $0.19 $0.27
====== =====
Weighted Average Shares used in
Pro Forma Computation 3,145 (5) 5,582
===== =====
</TABLE>
See (1),(2),(3),(4), (5) accompanying notes.
- 30 -
<PAGE>
Community Medical Transport, Inc.
Notes to Pro-Forma Consolidated Financial Statement
Overview The Pro-Forma consolidated financial statements reflect the
acquisitions of vehicles, intangibles, other assets and certain
liabilities of the following two companies.
1) Hudvalco, Inc. ("Hudvalco") and Harvey H. McGeorge, Inc.
("HMM").
On August 15, 1996, a wholly-owned subsidiary, Century Ambulance
and Ambulette Inc., ("Century") of Community Medical Transport,
Inc. (The "Company") completed the purchase from Hudvalco, Inc.
("Hudvalco") and Harvey H. McGeorge, Inc. ("HMM") of ambulances
and certain other assets; including equipment and licenses of
the New York State Department of Health to operate an ambulance
business previously conducted by Hudvalco. The total
consideration for the acquisition was $7,000,000, subject to
certain adjustment, of which $3,000,000 was paid in cash,
approximately $940,000 consisted of the assumption of debt and
$3,059,529 consisted of a ninety-day (90) promissory note (the
"Note").
2) Elite Ambulance & Medical Coach, Inc. ("Elite")
On August 22, 1996 a wholly owned subsidiary, E.M.C.
Acquisitions Corp., ("E.M.C.") of the Company completed the
purchase from Elite of ambulettes and certain other assets,
including accounts receivable and a license to operate an
ambulette service in the State of New Jersey. The Consideration
for the acquisition was $759,576 of which half was paid in cash
at the closing and the balance pursuant to a one year note (the
"Note"). In connection with the acquisition, the Company assumed
certain debts, including bank indebtedness of approximately
$19,500.
The Pro-Forma consolidated financial information contained
herein represents certain events that have not occurred. They
are based on assumptions that may or may not be accurate and
should not be relied upon as indicative of the actual results
that may be obtained by the company in the future. No
representation or warranty of any kind is given with respect to
the accuracy of such Pro-Forma consolidated statements.
- 31 -
<PAGE>
Community Medical Transport, Inc.
Notes to Pro-Forma Consolidated Financial Statement
Balance sheet as of June 30, 1996
Note A Elimination
The acquired companies historical balance sheets have been
eliminated since the transactions were asset purchases.
Note B Recording of Acquisitions
1) Hudvalco was purchased for $7,000,000 which is allocated
approximately to tangible assets of $1,018,492 and intangible
assets consisting of goodwill of $3,987,672 and customer lists of
$1,993,836. The purchase was funded through $3,000,000 of Company
funds paid at closing and a purchase money note of $3,059,529 due
to the former owners of the acquired company and the assumption
of $940,471 of existing liabilities. The note has been assumed
paid within four months from the closing.
2) Elite was purchased for $759,576 which is allocated
approximately to accounts receivable of $101,000, cash of
$12,000, prepaid expense of $10,000, tangible assets of $150,000,
intangible assets consisting of goodwill of $359,506, customer
list of $177,070 and the assumption of certain liabilities
estimated at $50,000. The purchase was funded through $379,788 of
Company funds paid at closing and a purchase money note of
$379,788 due to the former owners of the acquired company. No
loan amortization has been assumed through the periods presented,
however, applicable interest expense has been recorded on the
Income Statement for December 31, 1995 and June 30, 1996.
Note C Recording of the Balance Sheet
The assumptions used to record the acquired companies balance
sheets as of June 30, 1996 are follows:
A) Balance sheet is recorded as if acquisition occurred on June
30, 1996 and was accounted for as a purchase.
B) In July and August of 1996 the Company sold 3,437.5 shares of
Series A Convertible Preferred Shares and 5,000 shares of Series
B Convertible Preferred Shares for net proceeds of approximately
$5,900,000. The sale of these shares has been given Pro-Forma
effect to June 30, 1996. The preferred shares are convertible
into shares of common stock at the lower of market value or $7.00
per share, and automatically convert on July 31, 1998.
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<PAGE>
Community Medical Transport, Inc.
Notes to Pro-Forma Consolidated Financial Statement
Income Statement
Year ended December 31, 1995
and The Six Months ended June 30, 1996
Note 1 Adjustments
Certain expenses would be eliminated when the acquired companies
are operated by the company. These expenses relate directly to
the respective companies former owner's salary and various other
incentives and benefits associated with their compensation and
the elimination of other expenses which will overlap in the
consolidation.
Note 2 Interest Expense and Interest Income
Interest expense has been increased to reflect the debt incurred
due to the acquisitions, net of a reduction related to
liabilities that are not assumed and therefore, eliminated. The
expense related to the money purchase note on Hudvalco's closing
has a duration of four months for purposes of interest expense.
The interest income recorded remains constant due to an increase
in funds from sale preferred stock which is offset by acquisition
outlays.
Note 3 Pro-Forma Income Taxes
Pro-Forma income taxes have been estimated at forty three
percent.
Note 4 Depreciation and Amortization
Tangible assets has an estimated life of seven years.
Depreciation is computed using the straight line method.
Amortization of goodwill has been recorded over twenty-five
years straight line. Amortization of customer lists has been
recorded over ten years straight line. The historical
depreciation and amortization has been adjusted to reflect the
change in basis recorded through the purchase.
Note 5 Earnings Per Share (EPS)
EPS reflects the conversion of series A & B preferred stock,
which are convertible at the lower of the market value or $7.00
per share. The outstanding shares used to calculate earnings per
share assumes the preferred shares were converted using the
ending market price on September 26, 1996 of $5.31.
The Treasury Stock Method has been utilized in the calculation.
Accordingly, pro forma net income has been increased by $186,000
in the six months ended June 30, 1996 for the reduction of
interest expense that would occur when debt is reduced with the
resulting excess proceeds from the assumed conversion of the
Company's outstanding warrants, options and convertible preferred
stock. Pro forma net income has been increased by $174,000 in the
year ended December 31, 1995 for the reduction of Interest
Expense and the increase in Interest Income that would occur when
debt is reduced and investing activities are increased with the
resulting excess proceeds from the assumed conversion of the
Company's outstanding warrants, options, and convertible
preferred stock.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: October 8, 1996 COMMUNITY MEDICAL TRANSPORT, INC.
(registrant)
By: /S/ Donald Panos
------------------------------------------
Donald Panos, Vice President
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<PAGE>
[LETTERHEAD OF RICHARD A. EISNER & COMPANY, LLP]
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Registration
Statement on Post Effective Amendment No. 3 on Form S-3 to Form SB-2 (File No.
33-80338) of our report dated April 30, 1996 relating to the financial
statements of Hudvalco, Inc., subsidiary and affiliates which appears in this
current report on Form 8K/A-1 of Community Medical Transport, Inc.
/s/ Richard A. Eisner & Company, LLP
- ------------------------------------
New York, New York
October 7, 1996
