1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Filed Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 27, 1996
--------------------
LIFEQUEST MEDICAL, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-20532 74-2559866
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
9601 McAllister Freeway, Suite 1120, San Antonio, Texas 78216
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (210) 366-2100
----------------
Not Applicable
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(Former name or former address, if changed since last report)
2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
Klein Medical, Inc.
Page
Number
------
1. Report of Independent Public Accountants 3
2. Balance Sheets as of December 31, 1995, and September 30, 1996 (Unaudited)
4
3. Statements of Operations for the Year Ended December 31, 1995, and the
Nine Months Ended September 30, 1996 (Unaudited) 5
4. Statements of Stockholders' Equity for the Year Ended December 31, 1995,
and the Nine Months Ended September 30, 1996 (Unaudited) 6
5. Statements of Cash Flows for the Year Ended December 31, 1995, and the
Nine Months Ended September 30, 1996 (Unaudited) 7
6. Notes to Financial Statements 8
(b) Pro Forma Financial Information.
1. Pro Forma Financial Statements Introduction 12
2. Pro Forma Condensed Balance Sheet as of December 31, 1995,
and September 30, 1996 (Unaudited) 13-14
3. Pro Forma Condensed Statement of Operations for the Year
Ended December 31, 1995, and the Nine Months Ended
September 30, 1996 (Unaudited) 15-16
4. Notes to Pro Forma Condensed Financial Statements 17
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
LifeQuest Medical, Inc.:
We have audited the accompanying balance sheet of Klein Medical, Inc. (a Texas
corporation), as of December 31, 1995, and the related statements of
operations, stockholder's 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 Klein Medical, Inc., as of
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/ ARTHUR ANDERSEN LLP
San Antonio, Texas
January 21, 1997
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KLEIN MEDICAL, INC.
BALANCE SHEETS
December 31, September 30,
ASSETS 1995 1996
------------ -------------
(Unaudited)
CURRENT ASSETS:
Cash $ 8,150 $ 41,512
Accounts receivable, net 273,719 394,287
Account receivable from related party 2,726 --
Inventory 225,247 327,208
--------- ---------
Total current assets 509,842 763,007
--------- ---------
PROPERTY AND EQUIPMENT:
Property and equipment 129,456 138,323
Less- Accumulated depreciation (41,026) (62,026)
--------- ---------
Total property and equipment 88,430 76,297
--------- ---------
Total assets $ 598,272 $ 839,304
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion-
Long-term debt $ 4,066 $ 3,290
Capital lease obligations 2,078 2,742
Accounts payable 346,023 467,083
Accounts payable, related party -- 481
Accrued expenses 25,417 27,400
--------- ---------
Total current liabilities 377,584 500,996
LONG-TERM DEBT, less current portion 13,578 10,603
CAPITAL LEASE OBLIGATIONS, less current portion 2,205 --
--------- ---------
Total liabilities 393,367 511,599
--------- ---------
STOCKHOLDER'S EQUITY:
Common stock, $1 par value; 1,000 shares authorized;
1,000 shares issued and outstanding 1,000 1,000
Retained earnings 203,905 326,705
--------- ---------
Total stockholder's equity 204,905 327,705
--------- ---------
Total liabilities and stockholder's equity $ 598,272 $ 839,304
========= =========
The accompanying notes are an integral part of these statements.
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KLEIN MEDICAL, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 (UNAUDITED)
For the For the Nine
Year Ended Months Ended
December 31, September 30,
1995 1996
---------- ----------
(Unaudited)
REVENUE:
Net sales $2,750,858 $2,229,277
---------- ----------
COSTS AND EXPENSES:
Cost of sales 2,196,876 1,776,669
Selling, general and administrative 532,911 307,603
Interest 466 1,205
Depreciation 17,575 21,000
---------- ----------
2,747,828 2,106,477
---------- ----------
NET INCOME BEFORE INCOME TAXES 3,030 122,800
---------- ----------
INCOME TAXES -- --
---------- ----------
NET INCOME $ 3,030 $ 122,800
========== ==========
NET INCOME PER SHARE OF COMMON STOCK $ 3.03 $ 122.80
========== ==========
The accompanying notes are an integral part of these statements.
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KLEIN MEDICAL, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 (UNAUDITED)
Total
Common Stock Retained Stockholders'
Shares Amount Earnings Equity
------ ------ -------- ------------
BALANCE, December 31, 1994 1,000 $ 1,000 $200,875 $201,875
Net income -- -- 3,030 3,030
----- -------- -------- --------
BALANCE, December 31, 1995 1,000 1,000 203,905 204,905
Net income (Unaudited) -- -- 122,800 122,800
----- -------- -------- --------
BALANCE, September 30, 1996 (Unaudited) 1,000 $ 1,000 $326,705 $327,705
===== ======== ======== ========
The accompanying notes are an integral part of these statements.
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KLEIN MEDICAL, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 (UNAUDITED)
For the For the Nine
Year Ended Months Ended
December 31, September 30,
1995 1996
------------ --------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,030 $ 122,800
Adjustments to reconcile net income to net cash provided by
operating activities-
Depreciation 17,575 21,000
Gain on disposal of fixed assets (1,332)
(Increase) decrease in current assets-
Accounts receivable 6,150 (120,568)
Account receivable, related party (752) 2,726
Inventory (119,095) (101,961)
Increase (decrease) in current liabilities-
Accounts payable 173,317 121,060
Accrued expenses (74,245) 1,983
Accounts payable, related party -- 481
--------- ---------
Net cash provided by operating activities 4,648 47,521
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (54,219) (8,867)
Proceeds from dispositions of property and equipment 9,018 --
--------- ---------
Net cash used in investing activities (45,201) (8,867)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan 16,919 --
Repayments on notes payable to a bank (4,400) (3,751)
Principal payments on capital leases (1,904) (1,541)
--------- ---------
Net cash provided by (used in) financing activities 10,615 (5,292)
--------- ---------
NET (DECREASE) INCREASE IN CASH (29,938) 33,362
CASH, beginning of period 38,088 8,150
--------- ---------
CASH, end of period $ 8,150 $ 41,512
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for income taxes $ -- $ --
========= =========
Cash paid during the year for interest $ 466 $ 1,205
========= =========
The accompanying notes are an integral part of these statements.
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KLEIN MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, AND SEPTEMBER 30, 1996 (UNAUDITED)
1. BUSINESS:
Klein Medical, Inc. (the Company), was incorporated December 28, 1992, under
the laws of the State of Texas. The Company distributes and markets instruments
used in minimally invasive surgical procedures. The Company primarily
distributes these products in Texas, New Mexico and Tennessee.
In November 1996, the Company was merged with and into Klein Medical
Acquisition Co., a subsidiary of LifeQuest Medical, Inc. The surviving
corporation to this merger took the name of Klein Medical, Inc. (Klein). See
Note 7.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Revenue Recognition
Operating revenues are recognized upon the shipment of products to the
customer.
Inventory
Inventory consists of finished goods which are stated at the lower of cost
(determined on a first-in, first-out basis) or market.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided utilizing
straight-line and accelerated methods over the estimated useful lives of the
respective assets primarily over five years.
Additions and improvements that extend the useful life of the asset are
capitalized. Repairs and maintenance expenditures are charged to expense as
incurred. Upon sales or retirement of property and equipment, the related cost
and accumulated depreciation are eliminated from the accounts and the resulting
gain or loss is recorded.
Provision For Income Taxes
The Company was a subchapter S-corporation for income tax purposes and,
therefore, did not pay any U.S. federal income taxes.
Earnings Per Share
There are no dilutive common stock equivalents outstanding and the weighted
average number of common shares used in computing earnings per share is 1,000
shares.
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Impact of Recently Issued Accounting Standards
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 (SFAS No. 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company adopted SFAS No. 121 in
the first quarter of 1996. The adoption of SFAS No. 121 did not have a material
effect on the Company's financial position or results of operations.
In accordance with SFAS No. 121, the Company reviews the carrying amount of its
property and equipment and related depreciation on an annual basis for
impairment by reviewing undiscounted cash flow projections. Impairment loss is
recognized based upon the amount that the carrying amount of the assets exceed
fair value. Fair value is determined based upon the present value of estimated
expected future cash flows using a discount rate commensurate with the risks
involved. Based on its review, the Company believes no impairment has occurred.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company 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 may differ from those estimates.
3. CONCENTRATION OF RISK:
Credit Risk
The Company's accounts receivable are from various hospitals, clinics and
practicing surgeons. Based on the Company's evaluation of the collectibility of
these accounts receivable, approximately $6,984 in bad debt expense was
recognized in 1995 and $0 for the nine months ended September 30, 1996. The
allowance for doubtful accounts totaled $6,984 at December 31, 1995, and
September 30, 1996. The Company's management believes that the remainder of the
receivables outstanding are collectible and, thus, believes the Company's
exposure to credit risk related to the remaining accounts receivable is
minimized. The Company's accounts receivable are generally not collateralized.
Supplier
The Company had two suppliers which accounted for 42 percent and 39 percent of
purchases for the year ended December 31, 1995, and 40 percent and 35 percent
for the nine months ended September 30, 1996. See Note 7.
4. RELATED-PARTY TRANSACTIONS:
At December 31, 1995, the Company advanced $2,726 to the sole stockholder. No
interest was accrued on this balance. As of September 30, 1996, this balance
had been repaid. At September 30, 1996, the Company owed the sole stockholder
$481.
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5. LONG-TERM DEBT:
The Company had the following notes payable at December 31, 1995, and September
30, 1996:
December 31, September 30,
1995 1996
--------- ---------
(Unaudited)
Secured note payable for a vehicle loan, bearing interest at
6.9 percent, principal and interest due monthly. This note was
paid in full subsequent to December 31, 1995 $ 725 $ --
Secured note payable for a vehicle loan, bearing interest at 8.75 percent,
principal and interest due monthly with a maturity
date of February 9, 2000 16,919 13,893
--------- ---------
Total notes payable 17,644 13,893
Less- Current portion 4,066 3,290
--------- ---------
$ 13,578 $ 10,603
========= =========
The carrying amount of the debt approximates the fair value of the debt. This
determination is based on management's estimate of the fair value at which such
instruments could be sold or obtained in an unrelated third-party transaction.
6. LEASES:
The Company has financed the acquisition of certain office equipment through
the use of a commercial lease arrangement. The lease is secured by the related
equipment.
Included in property and equipment in the accompanying balance sheet are the
following assets held under capital leases:
December 31, September 30,
1995 1996
--------- ---------
(Unaudited)
Equipment $ 6,638 $ 6,638
Less- Accumulated depreciation (2,765) (3,896)
--------- ---------
Assets held under capital lease, net $ 3,873 $ 2,742
========= =========
The lease expires October 1997 and requires monthly payments of approximately
$198.
Minimum future lease payments under capital leases expiring subsequent to
December 31, 1995, are:
Year ending December 31-
1996 $ 2,371
1997 2,303
--------
Total minimum lease payments 4,674
Less- Amount representing interest (391)
Present value of net minimum lease payments $ 4,283
========
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Minimum future lease payments under capital leases expiring subsequent to
September 30, 1996, are:
Period ending September 30-
1997 $ 2,371
1998 525
-------
Total minimum lease payments 2,896
Less- Amount representing interest (154)
Present value of net minimum lease payments $ 2,742
=======
The Company's operating lease agreement for its facilities has expired. The
Company has continued to lease the facilities on a month-to-month basis. Rent
expense totaled approximately $20,000 for the year ended December 31, 1995, and
approximately $15,000 for the nine months ended September 30, 1996.
7. SUBSEQUENT EVENTS:
In November 1996, the Company was merged with and into Klein Medical
Acquisition Co., a subsidiary of LifeQuest Medical, Inc. (LifeQuest). The
surviving corporation to this merger took the name of Klein Medical, Inc. The
merger was accomplished through exchanging all of the outstanding stock of the
Company for 600,000 shares of LifeQuest common stock. The transaction was
recorded using the pooling-of-interests method of accounting.
The merger agreement also provides a compensation agreement with the sole
stockholder of the Company to act as chief executive officer and president of
the surviving corporation, Klein, through December 31, 1999. The agreement
provides for base compensation of $125,000 per year, additional performance
based compensation and participation in all employee benefits provided by
LifeQuest. In addition, LifeQuest and the sole stockholder have entered into a
nonqualified stock option agreement pursuant to which LifeQuest has granted to
the sole stockholder nonqualified stock options to receive up to 60,000 shares
of common stock, $.001 par value, of LifeQuest as specified in the agreement.
Effective January 1, 1997, Klein entered into a settlement agreement with a
supplier which accounted for 42 percent of purchases for the year ended
December 31, 1995. The settlement agreement called for the termination of the
distribution agreement dated October 6, 1994, between the Company and the
supplier. Specifically, Klein and any affiliated companies are prohibited from
selling, marketing or otherwise distributing certain of the suppliers' products
or competing products within the territory covered by the original distribution
agreement for a period of six months from January 1, 1997, to June 30, 1997.
The supplier will pay to Klein the sum of $250,000 over this six-month period.
Management does not believe this will significantly impact the financial
position or results of operations.
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LIFEQUEST MEDICAL, INC., AND SUBSIDIARIES
PRO FORMA CONDENSED FINANCIAL STATEMENTS
INTRODUCTION
The following unaudited condensed financial statements include the accounts of
LifeQuest Medical, Inc., and subsidiaries, a Delaware corporation (LifeQuest).
All significant intercompany accounts and transactions have been eliminated in
consolidation. The condensed financial statements of the Company have been
adjusted to reflect the effects of the Company's merger of Klein Medical, Inc.
(a Texas corporation), with and into Klein Medical Acquisition Co. (a Nevada
corporation), a wholly owned subsidiary of LifeQuest. Klein Medical, Inc., was
acquired through the issuance of 600,000 shares of LifeQuest common stock. The
transaction was recorded using the pooling-of interests method of accounting.
The merger was completed in November 1996.
The Klein Medical, Inc., column in the following condensed financial statements
reflects the premerger balance sheet and income statement accounts.
The pro forma condensed financial statements have been adjusted to reflect the
combining of the separate entities' stockholders' equities.
The pro forma condensed income statement does not include material nonrecurring
charges which resulted directly from the merger and which will be included in
the income of the Company within the 12 months succeeding the merger.
The pro forma financial statements do not include pro forma adjustments for
income taxes due to the NOL carryforwards available to LifeQuest.
The pro forma condensed financial statements assume the above-described merger
occurred as of January 1, 1995, for the condensed statements of operations and
as of December 31, 1995, for the condensed balance sheet. Additionally, pro
forma condensed statements are presented for the most recent interim period of
September 30, 1996.
In the opinion of management, all adjustments necessary to present fairly the
pro forma condensed financial statements have been made.
These pro forma condensed financial statements should be read in conjunction
with the historical financial statements and notes thereto for the fiscal year
ended December 31, 1995, included in the Company's Form 10-K and subsequently
adjusted to reflect the pro forma effects of the pooling of G.M. Engineering,
Inc., as reported in the Form 8-K/A dated April 22, 1996. The pro forma
condensed statements of operations are not necessarily indicative of what
actual results of operations would have been had the transactions occurred at
the beginning of the respective periods nor do they purport to indicate the
results of future operations of the Company.
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LIFEQUEST MEDICAL, INC., AND SUBSIDIARIES
PRO FORMA CONDENSED BALANCE SHEET
DECEMBER 31, 1995
(Unaudited)
Pro Forma
LifeQuest Balance
Medical, Klein Sheet,
Inc., and Medical, Pro Forma December 31,
Subsidiaries Inc. Adjustments 1995
------------ ------------ -------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 317,915 $ 8,150 $ 326,065
Short-term investments 4,817,221 -- 4,817,221
Interest receivable 95,655 -- 95,655
Accounts receivable 100,395 276,445 376,840
Inventory 23,643 225,247 248,890
Other current assets 98,968 -- 98,968
------------ ------------ ------------
Total current assets 5,453,797 509,842 5,963,639
------------ ------------ ------------
PROPERTY AND EQUIPMENT, net 227,314 88,430 315,744
------------ ------------ ------------
INTANGIBLE ASSETS 427,273 -- 427,273
------------ ------------ ------------
Total assets $ 6,108,384 $ 598,272 $ 6,706,656
------------ ------------ ------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations $ 167,553 $ 6,144 $ 173,697
Accounts payable 432,510 346,023 778,533
Accrued expenses 32,730 25,417 58,147
Due to stockholder 27,599 -- 27,599
------------ ------------ ------------
Total current liabilities 660,392 377,584 1,037,976
------------ ------------ ------------
LONG-TERM OBLIGATIONS, less current portion
228,451 15,783 244,234
------------ ------------ ------------
MINORITY INTEREST 141,364 -- 141,364
------------ ------------ ------------
STOCKHOLDERS' EQUITY:
Common stock 3,754 1,000 (400)(a) 4,354
Additional paid-in capital 17,640,456 -- 400 (a) 17,640,856
(Accumulated deficit) retained earnings (12,566,033) 203,905 ( 12,362,128)
------------ ------------ ------------
Total stockholders' equity 5,078,177 204,905 5,283,082
------------ ------------ ------------
Total liabilities and stockholders' equity $ 6,108,384 $ 598,272 $ 6,706,656
============ ============ ============
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LIFEQUEST MEDICAL, INC., AND SUBSIDIARIES
PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
Pro Forma
LifeQuest Balance
Medical, Klein Sheet,
Inc., and Medical, Pro Forma September 30,
Subsidiaries Inc. Adjustments 1996
-------------- --------- ------------ --------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 199,221 $ 41,512 $ 240,733
Short-term investments 3,406,733 - 3,406,733
Interest receivable 93,800 - 125,318
Accounts receivable 125,318 394,287 488,087
Inventory 156,889 327,208 484,097
Other current assets 19,660 - 19,660
-------------- --------- --------------
Total current assets 4,001,621 763,007 4,764,628
-------------- --------- --------------
PROPERTY AND EQUIPMENT, net 326,383 76,297 402,680
-------------- --------- --------------
INTANGIBLE ASSETS 427,273 - 427,273
-------------- --------- --------------
Total assets $ 4,755,277 $ 839,304 $ 5,594,581
============== ========= ==============
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations $ 707,894 $ 6,032 $ 713,926
Accounts payable 36,469 467,083 503,552
Accrued expenses 17,296 27,400 44,696
Due to stockholder 15,952 481 16,433
-------------- --------- --------------
Total current liabilities 777,611 500,996 1,278,607
-------------- --------- --------------
LONG-TERM OBLIGATIONS, less current
portion
- 10,603 10,603
-------------- --------- --------------
MINORITY INTEREST 125,447 - 125,447
-------------- --------- --------------
STOCKHOLDERS' EQUITY:
Common stock 3,793 1,000 (400)(a) 4,393
Additional paid-in capital 17,671,359 - 400 (a) 17,671,759
(Accumulated deficit) retained earnings (13,822,933) 326,705 (13,496,228)
-------------- --------- --------------
Total stockholders' equity 3,852,219 327,705 4,179,924
-------------- --------- --------------
Total liabilities and stockholders' equity $ 4,755,277 $ 839,304 $ 5,594,581
============== ========= ==============
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LIFEQUEST MEDICAL, INC., AND SUBSIDIARIES
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
Pro Forma
LifeQuest Statement of
Medical, Klein Operations,
Inc., and Medical, Pro Forma December 31,
Subsidiaries Inc. Adjustments 1995
------------- ------------ ---------------- -------------
REVENUES:
Sales, net of discounts $ 935,320 $ 2,750,858 $ 3,686,178
Investment income 346,585 - 346,585
------------- ------------ -------------
Total revenues 1,281,905 2,750,858 4,032,763
------------- ------------ -------------
COSTS AND EXPENSES:
Cost of sales 729,604 2,196,876 2,926,480
Research and development 729,000 - 729,000
Selling, general and administrative 2,056,660 532,911 2,589,571
Interest 49,563 466 50,029
Depreciation 143,888 17,575 161,463
------------- ------------ -------------
Total costs and expenses 3,708,715 2,747,828 6,456,543
------------- ------------ -------------
NET INCOME (LOSS) BEFORE MINORITY INTEREST,
OTHER INCOME AND INCOME TAXES
(2,426,810) 3,030 (2,423,780)
OTHER INCOME 558 - 558
MINORITY INTEREST IN NET LOSS OF CONSOLIDATED
SUBSIDIARY 138,751 - 138,751
------------- ------------ -------------
NET INCOME (LOSS) BEFORE INCOME
TAXES (2,287,501) 3,030 (2,284,471)
INCOME TAXES 800 - 800
------------- ------------ -------------
NET INCOME (LOSS) $ (2,288,301) $ 3,030 $ (2,285,271)
============= ============ =============
NET INCOME (LOSS) PER SHARE $ (.61) $ (.52)
============= =============
WEIGHTED AVERAGE SHARE OUTSTANDING 3,754,835 4,354,835
============= =============
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LIFEQUEST MEDICAL, INC., AND SUBSIDIARIES
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
Pro Forma
LifeQuest Statement of
Medical, Klein Operations,
Inc., and Medical, Pro Forma September 30,
Subsidiaries Inc. Adjustments 1996
------------- ------------ ---------------- -------------
REVENUES:
Sales, net of discounts $ 662,193 $ 2,229,277 $ 2,891,470
------------- ------------ -------------
Total revenues 662,193 2,229,277 2,891,470
------------- ------------ -------------
COSTS AND EXPENSES:
Cost of sales 393,355 1,776,669 2,170,024
Research and development 278,752 - 278,752
Selling, general and administrative 1,197,543 307,603 1,505,146
Interest 40,863 1,205 42,068
Depreciation 78,929 21,000 99,929
------------- ------------ -------------
Total costs and expenses 1,989,442 2,106,477 4,095,919
------------- ------------ -------------
NET INCOME (LOSS) BEFORE MINORITY INTEREST,
OTHER INCOME AND INCOME TAXES
(1,327,249) 122,800 (1,204,449)
OTHER INCOME 169,808 - 169,808
MERGER AND ACQUISITION COSTS (115,375) - (115,375)
MINORITY INTEREST IN NET LOSS OF CONSOLIDATED
SUBSIDIARY 15,916 - 15,916
------------- ------------ -------------
NET INCOME (LOSS) BEFORE INCOME TAXES
(1,256,900) 122,800 (1,134,100)
INCOME TAXES - - -
------------- ------------ -------------
NET INCOME (LOSS) $ (1,256,900) $ 122,800 $ (1,134,100)
============= ============ =============
NET INCOME (LOSS) PER SHARE BEFORE
EXTRAORDINARY ITEM $ (.33) $ (.26)
============= =============
WEIGHTED AVERAGE SHARE OUTSTANDING 3,786,140 4,386,140
============= =============
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LIFEQUEST MEDICAL, INC., AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Unaudited)
PRO FORMA BALANCE SHEET AND STATEMENT
OF OPERATIONS ADJUSTMENTS:
- -------------------------------------
(a) This adjustment reflects the combining of the separate entities'
stockholders' equities. Upon completion of the merger, the 1,000 shares of
Klein Medical, Inc., stock were canceled and 600,000 shares of LifeQuest
Medical, Inc., stock were issued.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
LIFEQUEST MEDICAL, INC.
By /s/ Randall K. Boatright
-------------------------------------------
Randall K. Boatright
Vice President and Chief Financial Officer
(Principal Accounting Officer)
DATE: February 6, 1997
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