<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 31, 1996
SUMMIT MEDICAL SYSTEMS, INC.
----------------------------
(Exact name of registrant as specified in its charter)
Minnesota 0-26390 41-1545493
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
10900 Red Circle Drive, Minnetonka, Minnesota 55343
--------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 939-2200
--------------------
<PAGE>
The undersigned registrant hereby amends its Current Report on Form 8-
K, for an event which occurred on December 31, 1996.
Item 2. Acquisition or Disposition of Assets.
This item has not been amended from the registrant's Current Report on
Form 8-K, dated December 31, 1996 and has been included herein for
convenience of reference only.
On December 31, 1996, Summit Medical Systems, Inc. ("Summit") acquired
C. L. McIntosh & Associates, Inc. ("CLM") pursuant to an Agreement and
Plan of Merger among Summit, CLM Acquisition Corp., a wholly owned
subsidiary of Summit ("Merger Subsidiary") and CLM, under which Merger
Subsidiary was merged with and into CLM, with CLM as the surviving
corporation (the "Merger"). As a result of the Merger, CLM became a
wholly owned subsidiary of Summit. In connection with the Merger, 100
issued and outstanding shares of common stock of CLM were exchanged for
976,453 shares of common stock of Summit ("Summit Common Stock"). The
number of shares of Summit Common Stock issued in the Merger equaled
the quotient of $7,000,000 divided by the average of the closing price
per share of Summit Common Stock from the Nasdaq National Market during
the period of December 13, 1996 through December 27, 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired
Report of Independent Auditors, dated December 5, 1996, except for
Note 7, as to which the date is December 31, 1996 (previously
filed on March 14, 1997, as an amendment to the registrant's
Current Report on Form 8-K, dated December 31, 1996, and included
herein for convenience of reference only).
The audited financial statements of CLM for the fiscal year ended
December 31, 1995 (previously filed on March 14, 1997, as an
amendment to the registrant's Current Report on Form 8-K, dated
December 31, 1996, and included herein for convenience of
reference only).
Unaudited financial statements of CLM including statements of
financial position as of September 30, 1996, and statements of
operations and cash flows for the nine months ended September 30,
1996 and 1995.
(b) Pro Forma Condensed Financial Information
Unaudited pro forma condensed results of operations of Summit for
the year ended December 31, 1995 and the nine months ended
September 30, 1996 as if the acquisition had been completed at the
beginning of the respective periods.
Unaudited pro forma condensed statement of financial position of
Summit as if the acquisition had occurred on September 30, 1996.
<PAGE>
(c) Exhibits
Exhibit No. Description Method
of Filing
2 Agreement and Plan of Merger (1)
by and among Summit Medical
Systems, Inc., CLM Acquisition
Corp. and C.L. McIntosh &
Associates, Inc.
23.1 Consent of Ernst & Young LLP. Filed herewith
99.1 Audited Financial Statements of Filed herewith
C.L. McIntosh & Associates, Inc.
for the fiscal year ended
December 31, 1995.
99.2 Unaudited financial statements of Filed herewith
CLM including statements of financial
position as of September 30, 1996
and statements of operations and cash
flows for the nine months ended
September 30, 1996 and 1995.
99.3 Unaudited pro forma condensed results Filed herewith
of operations of Summit for the
year ended December 31, 1995 and nine
months ended September 30, 1996
as if the acquisition had been
completed at the beginning of the
respective periods.
Unaudited pro forma condensed statement
of financial position of Summit as if
the acquisition had occurred on
September 30, 1996.
(1) Incorporated by reference to the Registrants's Current Report on Form 8-K,
dated December 31, 1996.
-2-
<PAGE>
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.
Date: April 22, 1997 SUMMIT MEDICAL SYSTEMS, INC.
/s/ Kevin R. Green
-------------------------------------
Kevin R. Green
President and Chief Executive Officer
-3-
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Item
2 Agreement and Plan of Merger by and among *
Summit Medical Systems, Inc., CLM Acquisition
Corp. and C.L. McIntosh & Associates, Inc.
23.1 Consent of Ernst & Young LLP.
99.1 Audited Financial Statements of C.L. McIntosh
& Associates, Inc. for the fiscal year ended
December 31, 1995.
99.2 Unaudited financial statements of CLM including
statements of financial position as of September
30, 1996 and statements of operations and cash
flows for the nine months ended September 30,
1996 and 1995.
99.3 Unaudited pro forma condensed results of operations
of Summit for the year ended December 31, 1995
and nine months ended September 30, 1996 as
if the acquisition had been completed at the
beginning of the respective periods.
Unaudited pro forma condensed statement of financial
position of Summit as if the acquisition had occurred
on September 30, 1996.
* Incorporated by reference to the Registrants's Current Report
on Form 8-K, dated December 31, 1996.
-4-
<PAGE>
Exhibit 23.1
Consent of Ernst & Young LLP
We consent to the incorporation by reference of our report dated December 5,
1996, except Note 7, as to which the date is December 31, 1996, with respect
to the financial statements of C.L. McIntosh & Associates, Inc. included in
this Form 8-K/A for Summit Medical Systems, Inc., in the Registration
Statement (Form S-8 No. 33-80927) pertaining to the 1993 Stock Option Plan,
1995 Employee Stock Purchase Plan and the 1995 Non-Employee Director Stock
Option Plan of Summit Medical Systems, Inc.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
April 22, 1997
-5-
<PAGE>
Exhibit 99.1
C.L. McIntosh & Associates, Inc.
Financial Statements
Year ended December 31, 1995
Contents
Report of Independent Auditors............................................. 1
Financial Statements
Statement of Financial Position............................................ 2
Statement of Operations.................................................... 4
Statement of Changes in Shareholders' Equity............................... 5
Statement of Cash Flows.................................................... 6
Notes to Financial Statements.............................................. 7
-6-
<PAGE>
Report of Independent Auditors
Board of Directors
C.L. McIntosh & Associates, Inc.
We have audited the statement of financial position of C.L. McIntosh &
Associates, Inc. as of December 31, 1995, and the related statements of
operations, changes in shareholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform 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 audit provides 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 C.L. McIntosh & Associates,
Inc. at December 31, 1995, and the results of its operations and its cash flows
for the year then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 5, 1996, except for Note 7, as to
which the date is December 31, 1996
1
<PAGE>
C.L. McIntosh & Associates, Inc.
Statement of Financial Position
December 31, 1995
<TABLE>
<CAPTION>
Assets
<S> <C>
Current Assets:
Cash $ 166,605
Accounts receivable 937,036
Prepaid insurance 3,999
----------
Total current assets 1,107,640
Fixed assets:
Computer equipment 98,013
Office furniture and fixtures 171,892
Leasehold improvements 24,899
Accumulated depreciation (196,785)
----------
98,019
Other assets:
Security deposits 8,484
----------
Total assets $1,214,143
==========
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Liabilities and shareholders' equity
Current liabilities
<S> <C>
Accounts payable $ 84,000
Accrued expenses payable 28,321
Current portion of long-term debt 10,814
Client retainers 87,142
Accrued salaries 104,542
Accrued bonus payroll 37,239
Accrued profit sharing 90,000
Short-term debt 80,000
----------
Total current liabilities 522,058
Long-term liabilities
Long-term debt 18,953
Less current portion (10,814)
----------
8,139
Shareholder's equity
Common Stock 100
Retained earnings 683,846
----------
Total shareholders' equity 683,946
----------
Total liabilities and shareholders' equity $1,214,143
==========
</TABLE>
See accompanying notes.
3
<PAGE>
C.L. McIntosh & Associates, Inc.
Statement of Operations
Year ended December 31, 1995
<TABLE>
<CAPTION>
Revenue
<S> <C>
Service fees $3,985,534
Cost of sales 2,230,719
----------
Gross profit 1,664,815
Operating expenses
Selling and marketing 257,623
General and administration 900,562
----------
Total operating expenses 1,158,185
----------
Income from operations 506,630
Interest expense, net (12,046)
----------
Net income $ 494,584
==========
</TABLE>
See accompanying notes
4
<PAGE>
C.L. McIntosh & Associates, Inc.
Statement of Changes in Shareholders' Equity
Year ended December 31, 1995
<TABLE>
<CAPTION>
Common Stock Retained
Shares Amount Earnings Total
----------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1994 100 $100 $219,976 $220,076
Shareholder distributions (30,714) (30,714)
Net income for the year 494,584 494,584
----------------------------------------
Balance at December 31, 1995 100 $100 $683,846 $683,946
========================================
</TABLE>
See accompanying notes.
5
<PAGE>
C.L. McIntosh & Associates, Inc.
Statement of Cash Flows
Year ended December 31, 1995
<TABLE>
<CAPTION>
Operating Activities
<S> <C>
Net income $ 494,584
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 53,062
Changes in operating assets and liabilities
Accounts receivable (421,527)
Prepaid insurance (3,999)
Security deposits 1,188
Accounts payable (42,581)
Accrued expenses payable 1,086
Client retainers 82,258
Accrued bonus payable 37,239
Accrued salaries 10,626
Accrued profit sharing 32,200
----------
Net cash provided by operating activities 244,136
Investing activities
Purchases of fixed assets (31,672)
----------
Net cash used in investing activities (31,672)
Financing activities
Payments on short-term and long-term debt (49,819)
Distributions to shareholders (30,714)
----------
Net cash used in financing activities (80,533)
----------
Increase in cash 131,931
Cash at beginning of year 34,674
----------
Cash at end of year $166,605
==========
</TABLE>
See accompanying notes
6
<PAGE>
C.L. McIntosh & Associates, Inc.
Notes to Financial Statements
December 31, 1995
1. Description of Business
The Company provides a full range of medical and regulatory affairs services for
clients throughout the United States, Western Europe, Israel and Japan. Services
include regulatory strategic planning and implementation; clinical research and
study management; statistical design, analysis, and interpretation; regulatory
submissions and compliance; and training and education.
2. Summary of Significant Accounting Policies
Revenue Recognition
The Company recognizes revenue from consulting services over the period in
which consulting services are performed.
Equipment and Fixtures
Equipment and fixtures are stated at cost. The Company provides for depreciation
using accelerated methods at rates designed to amortize the cost of equipment
and fixtures over their estimated useful lives of seven to thirty-one and a half
years.
Income Taxes
The Company is a Subchapter S Corporation for income tax purposes. Accordingly,
taxable income and other items of tax consequence are passed through directly to
the respective shareholders.
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 amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
7
<PAGE>
C.L. McIntosh & Associates, Inc.
Notes to Financial Statements (continued)
3. SHORT-TERM DEBT
The Company's balance on its line of credit at December 31, 1995 was $80,000,
the entirety of which is due on May 1, 1996, along with unpaid accrued interest
of one percent over the bank's prime rate (8.5% at December 31, 1995). The
weighted-average interest rate on the borrowings in fiscal 1995 was 9.75%.
4. LONG-TERM DEBT
<TABLE>
<CAPTION>
<S> <C>
Note payable, interest at 10% payable monthly, secured by accounts
receivable, principal due September 15, 1997 $15,420
Note payable, interest at 10% payable monthly, secured by accounts
receivable, principal due June 30, 1997 3,533
Total long-term debt 18,953
Less current portion 10,814
-------
Long-term debt, net of current portion $ 8,139
=======
Required payments of principal on long-term debt for the years following December 31, 1995 are summarized as
follows:
1996 $10,814
1997 8,139
-------
$18,953
=======
</TABLE>
Interest paid during fiscal year 1995 totaled $12,682
8
<PAGE>
C.L. McIntosh & Associates, Inc.
Notes to Financial Statements (continued)
5. Leases
The Company leases its office space, certain office equipment and vehicles under
operating leases. The office lease expires September 1998, and the remaining
leases expire at various times in 1996 and 1997. Future minimum lease payments
under the leases at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Fiscal year
<S> <C>
1996 $ 241,809
1997 236,017
1998 240,486
1999 245,112
2000 248,983
Thereafter 105,276
----------
$1,317,683
==========
</TABLE>
Rent expense for the year ended December 31, 1995 was $120,414.
6. Significant Customer
The Company sells a substantial portion of its product to one customer. During
1995, sales to this customer totaled $631,754. At December 31, 1995, the amount
due from this customer included in accounts receivable was $119,401.
7. Subsequent Events
The Company borrowed $150,000 on July 1, 1996 at a rate of 1% over the bank's
prime rate, collateralized by general assets of the Company due along with
accrued unpaid interest on July 1, 1997. Accrued interest payments are due
monthly.
Effective December 31, 1996, the Company merged with Summit Medical Systems,
Inc., through a pooling of interests in which all of the outstanding shares of
the Company's common stock were exchanged for 976,453 shares of the combined
entity's common stock.
9
<PAGE>
C.L. McIntosh & Associates, Inc.
Notes to Financial Statements (continued)
7. Subsequent Events (continued)
As a result of the transaction, pro forma income per share would be as follows:
<TABLE>
<CAPTION>
<S> <C>
Net income $ 494,584
Pro forma income tax expenses 197,800
---------
Pro forma net income $ 296,784
=========
Income per share of common stock $ 2,968
=========
Weighted average number of common shares outstanding 100
=========
</TABLE>
10
<PAGE>
Exhibit 99.2
C.L. McIntosh & Associates, Inc.
Statement of Financial Position
(Unaudited)
September 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Current assets:
Cash $ 210,516
Accounts receivable 832,514
Prepaid insurance 8,000
----------
Total current assets 1,051,030
Fixed assets:
Computer equipment 112,752
Office furniture and fixtures 225,303
Leasehold improvements 104,854
Accumulated depreciation (237,285)
----------
205,624
Other assets:
Security deposits 5,961
Total assets $1,262,615
==========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 166,405
Accrued expenses payable 34,742
Current portion of long-term debt 9,121
Client retainers 125,072
Accrued salaries 119,820
Accrued bonus payroll 6,831
Accrued profit sharing 67,500
Short-term debt 60,000
----------
Total current liabilities 589,491
Shareholders' equity:
Common Stock 100
Retained earnings 673,024
----------
Total shareholders' equity 673,124
----------
Total liabilities and shareholders' equity $1,262,615
==========
</TABLE>
<PAGE>
C.L. McIntosh & Associates, Inc.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------
1996 1995
---------- ----------
<S> <C> <C>
Revenue:
Service fees $2,713,933 $2,894,400
Cost of sales 1,514,232 1,796,310
---------- ----------
Gross profit 1,199,701 1,098,090
Operating expenses:
Selling and marketing 13,212 31,826
General and administrative 942,673 686,397
---------- ----------
Total operating expenses 955,885 718,223
---------- ----------
Income from operations 243,816 379,867
Interest expense, net (4,638) (9,516)
---------- ----------
Net income $ 239,178 $ 370,351
========== ==========
</TABLE>
<PAGE>
C.L. McIntosh & Associates, Inc.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------
1996 1995
--------- ----------
<S> <C> <C>
Operating activities
Net income $ 239,178 $ 370,351
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 40,500 56,000
Changes in operating assets and liabilities:
Accounts receivable 104,522 (437,774)
Prepaid insurance (4,001) (13,334)
Security deposits 2,523 (5,000)
Accounts payable 82,405 (29,342)
Accrued expenses payable 6,421 391
Client retainers 37,930 68,759
Accrued salaries 15,278 55,528
Accrued bonus payroll (30,408) 15,000
Accrued profit sharing (22,500) (1,550)
--------- ---------
Net cash provided by operating activities 471,848 79,029
Investing activities
Purchases of fixed assets (148,105) (24,149)
--------- ---------
Net cash used in investing activities (148,105) (24,149)
Financing activities
Payments on short-term and long-term debt (29,832) (27,652)
Distributions to shareholders (250,000) (19,715)
--------- ---------
Net cash used in financing activities (279,832) (47,367)
--------- ---------
Increase in cash 43,911 7,513
Cash at beginning of year 166,605 34,674
--------- ---------
Cash at end of year $ 210,516 $ 42,187
========= =========
</TABLE>
<PAGE>
Exhibit 99.3
SUMMIT MEDICAL SYSTEMS, INC.
PRO FORMA RESULTS OF ACQUISITION OF C.L. McINTOSH & ASSOCIATES, INC.
Effective December 31, 1996, the Company exchanged 976,453 shares of common
stock for all outstanding shares of common stock in a pooling of interests of
C.L. McIntosh & Associates, Inc., a health care consulting firm providing
services in the areas of Medicare and regulatory affairs.
Unaudited pro forma condensed results of operations of the Company for the year
ended December 31, 1995 and nine months ended September 30, 1996 as if the
acquisition had been completed at the beginning of the respective periods are:
<TABLE>
<CAPTION>
Summit C.L. McIntosh
Medical & Associates, Pro Forma Pro Forma
Systems, Inc. Inc. Adjustments Combined
------------- ---- ----------- --------
(Restated)
<S> <C> <C> <C> <C>
Year ended December 31, 1995:
Revenue $ 11,586,577 $3,895,534 $15,482,111
Cost of sales 3,713,394 2,230,719 5,944,113
------------ ---------- -----------
Gross profit 7,873,183 1,664,815 9,537,998
Operating expenses 17,978,261 1,158,185 19,136,446
------------ ---------- -----------
Income (loss) from operations (10,105,078) 506,630 (9,598,448)
Interest income, net 586,640 (12,046) 574,594
------------ ---------- -----------
Income (loss) before income taxes (9,518,438) 494,584 (9,023,854)
Income tax expense - - -
------------ ---------- -----------
Net income (loss) $ (9,518,438) $ 494,584 $(9,023,854)
============ ========== ===========
Net loss per share $ (1.70) $ (1.37)
------------ -----------
Weighted average shares outstanding 5,604,469 6,580,922
------------ -----------
Nine months ended
September 30, 1996:
Revenue $ 11,345,082 $2,713,933 $14,059,015
Cost of sales 3,940,604 1,514,232 5,454,836
------------ ---------- -----------
Gross profit 7,404,478 1,199,701 8,604,179
Operating expenses 11,086,036 955,885 12,041,921
------------ ---------- -----------
Income (loss) from operations (3,681,558) 243,816 (3,437,742)
Interest income, net 1,273,009 (4,638) 1,268,371
------------ ---------- -----------
Income (loss) before income taxes (2,408,549) 239,178 (2,169,371)
Income tax expense 17,805 - 17,805
------------ ---------- -----------
Net income (loss) $ (2,426,354) $ 239,178 $(2,187,176)
============ ========== ===========
Net loss per share $ (0.30) $ (0.24)
------------ -----------
Weighted average shares outstanding 8,111,590 9,088,043
------------ -----------
Pro forma adjustments to operations:
none
</TABLE>
1
<PAGE>
Unaudited pro forma condensed statement of financial position as if the
acquisition had occured September 30, 1996 would be:
<TABLE>
<CAPTION>
Summit C.L. McIntosh
Medical & Associates, Pro Forma Pro Forma
Systems, Inc. Inc. Adjustments Combined
------------- ---- ----------- --------
(Restated)
<S> <C> <C> <C> <C>
September 30, 1996:
Current assets $53,319,462 $1,051,030 $54,370,492
Equipment and fixtures, net 2,096,070 205,624 2,301,694
Other assets, net 98,297 5,961 104,258
----------- ---------- -----------
Total assets $55,513,829 $1,262,615 $56,776,444
=========== ========== ===========
Current liabilities $3,226,479 $589,491 $3,815,970
Long-term debt 30,878 - 30,878
Shareholders' equity 52,256,472 673,124 52,929,596
----------- ---------- -----------
Total liabilities and shareholders'
equity $52,287,350 $1,262,615 $56,776,444
=========== ========== ===========
Pro forma adjustments to financial position:
none
</TABLE>
2
