SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 23, 1995
UCI MEDICAL AFFILIATES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-13265 59-2225346
(COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
6168 ST. ANDREWS ROAD, COLUMBIA, SC 29210
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(803) 772-8840
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
(FORMER NAME OF FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
THIS DOCUMENT CONTAINS A TOTAL OF 64 PAGES. THE EXHIBIT INDEX IS SET FORTH
ON SEQUENTIALLY NUMBERED PAGE 22 .
1
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to the terms of an Asset Purchase Agreement dated June 23,
1995 and executed August 23, 1995 (the "Contract") by and between Peter G.
Manos, M.D. ( the "Seller") and UCI Medical Affiliates of South Carolina, Inc.,
a South Carolina corporation (the "Company") and the wholly-owned subsidiary of
UCI Medical Affiliates, Inc., a Delaware corporation ("UCI"), the Company has
acquired certain assets of (including patient list and goodwill) associated with
the medical practice owned and operated by the Seller in Greenville, South
Carolina for a purchase price of $729,861, consisting of a $350,000 Promissory
Note ( the "Note"); 100,000 shares of common stock of "UCI" and the assumption
of approximately $67,361 of the Seller's trade accounts payable. The
consideration paid by the Company in connection with this acquisition was
determined by arms-length negotiations between the Company and the Seller.
The practice operated by the Seller was one at which medical conditions
not involving an immediate threat to life were treated on an outpatient basis.
Currently, the Company expects to continue the operations of the practice in
substantially the same manner as they were conducted prior to the acquisition,
at one of the Company's locations.
The Note bears interest at an annual rate of 9 percent payable monthly
in arrears to the Seller.
All descriptions of the Asset Purchase Agreement and the Note noted
herein are qualified in their entirety by reference to such documents filed as
Exhibits to this Current Report on Form 8-K.
ITEM 5. OTHER EVENTS
The Company wishes to release unaudited earnings of $52,007 for
the month ending August 31, 1995 and $30,271 for the month ending July 31,
1995.
2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The financial statements for Summit Medical Center, the
business acquired by the wholly-owned subsidiary of the Company, are
included in this report beginning on sequentially number page 4.
(B) PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information for Surfside Medical
Center, the business acquired by the wholly-owned subsidiary of the
Company, is included in this report following the financial information
included herein in response to Item 7 (a) above.
(C) EXHIBITS.
Exhibit 2 Asset Purchase Agreement dated June 23, 1995 and executed August 23, 1995 by
and between Peter G. Manos, M.D. and UCI Medical Affiliates of South Carolina, Inc.
Exhibit 10.1 Promissory Note dated July 1, 1995 and executed August 23, 1995 given by UCI Medical
Affiliates of South Carolina, Inc. to Peter G. Manos, MD.
3
UCI Medical Affiliates, Inc.
CONTENTS
Page
Summit Medical Center Financial Statements as of December 31,
1994........................................................................................1-8
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at September 30, 1994.................................................... 9
Notes to Combining Balance Sheet......................................................................10
Combining Statement of Operations and Accumulated Deficit
for year ended September 30, 1994.............................................................11
Notes to Combining Statement of Operations.......................................................12
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at June 30, 1995.........................................................13
Notes to Combining Balance Sheet.................................................................14
Combining Statement of Operations and Accumulated Deficit
for nine months ended June 30, 1995...........................................................15
Notes to Combining Statement of Operations.......................................................16
4
SCOTT & HOLLOWAY, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Accountants
Board of Directors
UCI Medical Affiliates, Inc.
We have audited the accompanying balance sheets of Summit Medical Center as of
December 31, 1994 and 1993 and the related statements of operations,
proprietor's capital, and cash flows for the years then ended. These financial
statements are the responsibility of the Proprietor's management. Our
responsibility is to express an opinion on this financial statement 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 financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements 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 Summit Medical Center as of
December 31, 1994 and 1993 and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles.
The financial statements have been prepared solely from the accounts of Summit
Medical Center and do not include the personal accounts of the proprietor or
those of any other operations in which he may be engaged.
(Signature of Scott & Holloway, L.L.P.)
Columbia, South Carolina
July 19, 1995
250 Berryhill Road (bullet) Suite 125 (bullet) Columbia (bullet) South Carolina
(bullet) 29210 (bullet) Telephone (803) 731-0880 (bullet) Facsimile
(803) 731-2166
5
Summit Medical Center
Balance Sheets
December 31,
1994 1993
--------- --------
ASSETS
Current assets:
Cash and cash equivalents ............................ $ 52,313 $ 22,458
Accounts receivable, net ............................. 113,400 58,220
Medical supplies inventory ........................... 8,129 5,768
-------- --------
Total current assets ............................ 173,842 86,446
Office and medical equipment, net ........................ 84,069 90,688
-------- --------
Total assets .................................... $257,911 $177,134
======== ========
LIABILITIES AND PROPRIETOR'S EQUITY
Current liabilities:
Current portion of capital lease payable ............. $ 21,961 $ 17,461
Accrued expenses ..................................... 2,309 6,890
-------- --------
Total current liabilities ....................... 24,270 24,351
Long-term portion of capital leases payable .............. 45,400 67,361
-------- --------
Total liabilities ............................... 69,670 91,712
-------- --------
Proprietor's equity ...................................... 188,241 85,422
-------- --------
Total liabilities and proprietor's equity ....... $257,911 $177,134
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
Summit Medical Center
Statements of Operations and Changes in Proprietor's Equity
For the years ended December 31,
1994 1993
--------- ---------
Net medical revenue ............................ $ 541,699 $ 423,406
Operating costs ................................ 128,680 108,721
--------- ---------
Operating margin ...................... 413,019 314,685
General and administrative expenses ............ 131,914 128,021
Depreciation and amortization .................. 12,449 11,867
--------- ---------
Income from operations ................ 268,656 174,797
Interest expense ............................... 20,837 19,800
--------- ---------
Net income ............................ 247,819 154,997
Proprietor's equity, beginning of year ......... 85,422 30,425
Proprietor's draws ............................. (145,000) (100,000)
--------- ---------
Proprietor's equity, end of year ............... $ 188,241 $ 85,422
========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
Summit Medical Center
Statements of Cash Flows
For the years ended December 31,
1994 1993
--------- ---------
OPERATING ACTIVITIES:
Net income ............................................ $ 247,819 $ 154,997
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization ..................... 12,449 11,867
Changes in operating assets and liabilities:
Accounts receivable ............................... (55,180) (41,383)
Medical supplies inventory ........................ (2,361) 4,682
Accrued expenses .................................. (4,581) 2,025
--------- ---------
Cash provided by operating activities ........ 198,146 132,188
INVESTING ACTIVITIES:
Purchases of property and equipment ................... (5,830) (3,477)
--------- ---------
Cash used by investing activities ............ (5,830) (3,477)
FINANCING ACTIVITIES:
Proprietor draws ...................................... (145,000) (100,000)
Payments on capital leases ............................ (17,461) (12,424)
--------- ---------
Cash used in financing activities ............ (162,461) (112,424)
Net increase in cash and cash equivalents ............. 29,855 16,287
Cash and cash equivalents, beginning of year .......... 22,458 6,171
========= =========
Cash and cash equivalents, end of year ................ $ 52,313 $ 22,458
========= =========
Supplemental cash flow information:
Cash paid for interest ............................ $ 20,837 $ 19,800
========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
Summit Medical Center
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Peter G. Manos, MD is the sole proprietor of Summit Medical Center (the
"Company") located in Greenville, South Carolina. The Company operates a family
practice medical center that provides treatments on an outpatient basis for
medical conditions not involving an immediate threat to life.
The financial statements have been prepared solely from the accounts of the
Company and do not include the personal accounts of Peter G. Manos, MD or those
of any other activities in which he may be engaged.
ACCOUNTS RECEIVABLE
Accounts receivable represent amounts due from patients, employers and various
third-party payors. Provisions for uncollectable amounts are made based on
management's estimates of future collectibility and historical payment
percentages.
MEDICAL SUPPLIES INVENTORY
Inventory consists of medical, radiology and laboratory supplies and are carried
at the lower of average cost or market.
OFFICE AND MEDICAL EQUIPMENT
Depreciation for financial reporting purposes is provided principally by the
straight-line method over the estimated useful lives of the assets, ranging from
five to ten years.
Maintenance, repairs and minor renewals are charged to expense. Major renewals
or betterments, which prolong the life of the assets, are capitalized.
Upon disposal of depreciable property, the asset accounts are reduced by the
related cost and accumulated depreciation. The resulting gains and losses are
reflected in the statements of operations.
9
Summit Medical Center
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Net income from the Company is combined with the income and expenses of the
proprietor from other sources and reported in the proprietor's individual
federal and state income tax returns. The Company is not a taxpaying entity for
purposes of federal and state income taxation, accordingly, provisions for
income taxes have not been recorded in the Company's financial statements.
CASH EQUIVALENTS
The Company considers all short-term debt investments with a maturity of three
months or less at the date of acquisition to be cash equivalents.
FAIR VALUE OF FINANCIAL INVESTMENTS
The fair value of accounts receivable and accrued expenses payable are estimated
by management to approximate their respective carrying values.
2. OFFICE AND MEDICAL EQUIPMENT
Property and equipment of continuing operations consists of the following at
December 31:
1994 1993
------------------- --------------------
Medical equipment $ 81,971 $ 81,971
Office equipment 29,779 23,949
------------------- --------------------
111,750 105,920
Less, accumulated depreciation 27,681 15,232
------------------- --------------------
$ 84,069 $ 90,688
=================== ====================
At December 31, 1994 and 1993, the cost of equipment under capital leases was
$101,410 and accumulated amortization thereon was $26,060 and $14,698,
respectively. Amortization of assets under capital lease is reported in
depreciation and amortization.
10
Summit Medical Center
Notes to Financial Statements
3. DESCRIPTION OF LEASING ARRANGEMENTS
The Company leases certain medical and office equipment under capital leases
expiring at various dates through 1997. At the end of the lease terms, the
Company is generally transferred title to the leased equipment or, in some
cases, the payment of a fee representing residual value is required.
The following is a schedule by years of the future minimum lease payments under
capital leases together with the present value of the net minimum lease payments
as of December 31, 1994:
Year ending December 31,
1995.......................................... $34,342
1996.......................................... 33,118
1997.......................................... 20,038
-------
Total minimum lease payments .......... 87,498
Less: amounts representing interest ........... 20,137
-------
Present value of minimum lease payments 67,361
Current portion of capital lease payable ....... 21,961
=======
Non-current portion of capital leases payable .. $45,400
=======
The Company leases office space under an operating lease expiring in June, 1995.
The Company does not intend to renew its lease on the office spaces. Total
rental expense was $15,600 and $15,600 for the years ended December 31, 1994 and
1993, respectively.
4. RELATED PARTY TRANSACTIONS
Peter G. Manos, MD, the sole proprietor, participates in the medical activities
of the Company. All payments for services and benefits to Peter G. Manos, MD are
recorded as proprietor draws in the financial statements.
11
Summit Medical Center
Notes to Financial Statements
5. CONCENTRATION OF CREDIT RISK
In the normal course of providing health care services, the Company extends
credit to patients without requiring collateral. Each individual's ability to
pay balances due the Company is assessed and reserves are established to provide
for management's estimate of uncollectable balances. Future revenues of the
Company are largely dependent on third-party payors and include Medicare and
private insurance companies. The amount of loss the Company would incur in the
event of non-payment by the counter party is the national amount of the patient
billing.
6. SUBSEQUENT EVENT
In July, 1995, UCI Medical Affiliates of South Carolina, Inc. ("UCI") entered
into a definitive agreement to acquire all the office and medical equipment and
substantially all the Company's tangible personal property (including patient
lists and goodwill) for $729,861 consisting of $312,500 in restricted common
stock of UCI, the assumption of certain lease liabilities and a 27 month
Promissory Note for $350,000. The Promissory Note bears interest at nine (9)
percent.
As a condition of the above transaction, Peter G. Manos, MD entered into a 10
year employment agreement with UCI.
12
UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
September 30, 1994
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of September 30, 1994 per the
Company's Annual Report and Summit Medical Center as of December 31, 1994
appearing in item 7a of this filing. The information has been prepared to
reflect the acquisition by UCI Medical Affiliates, Inc. of Summit Medical Center
after giving effect to the pro forma adjustments described in Note 1. This
statement should be read in conjunction with each entity's financial statements
and footnotes.
UCI Medical
Affiliates, Summit Medical Pro Forma Pro Forma
Inc Center Adjustments Combined
----------- ----------- ----------- -----------
ASSETS
Cash and cash equivalents .................................. $ 210,286 $ 52,313 $ (52,313)(b) $ 95,886
(114,400)(a)
Accounts receivable - net .................................. 1,508,514 113,400 (113,400)(b) 1,508,514
Medical supplies inventory ................................. 217,076 8,129 -- 225,205
Deferred taxes ............................................. 491,543 -- -- 491,543
Prepaids and other assets .................................. 111,149 -- -- 111,149
Goodwill ................................................... 2,651,245 -- 595,153 (c) 3,246,398
Property, plant and
equipment, net .......................................... 1,098,310 84,069 -- 1,182,379
Deferred taxes ............................................. 120,639 -- -- 120,639
Other assets ............................................... 265,531 -- -- 265,531
=========== =========== =========== ===========
Total assets ...................................... $ 6,674,293 $ 257,911 $ 315,040 $ 7,247,244
=========== =========== =========== ===========
LIABILITIES
Current portion - long-term
debt .................................................... $ 542,564 $ -- $ 131,341(d) $ 673,905
Current portion - capital
lease ................................................... -- 21,961 -- 21,961
Accounts payable ........................................... 467,371 -- -- 467,371
Accrued payroll ............................................ 204,601 -- -- 204,601
Other accrued liabilities .................................. 458,782 2,309 (2,309)(b) 458,782
Accrued payroll taxes ...................................... 103,011 -- 103,011
Long-term debt - net of
current ................................................. 2,295,197 -- 163,081 (d) 2,458,278
Capital lease - net of
current ................................................. -- 45,400 -- 45,400
Proprietor's equity ........................................ -- 188,241 (188,241)(e) --
Common stock ............................................... 131,109 -- 5,000 (f) 136,109
Paid-in capital ............................................ 7,728,554 -- 307,500 (f) 8,036,054
Accumulated deficit ........................................ (5,256,896) -- (101,332)(e) (5,358,228)
=========== =========== =========== ===========
Total liabilities ................................. $ 6,674,293 $ 257,911 $ 315,040 $ 7,247,244
=========== =========== =========== ===========
13
UCI Medical Affiliates, Inc.
Notes to Pro Forma Combining Balance Sheet
September 30, 1994
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Summit Medical Center by UCI Medical Affiliates, Inc. for an
aggregate price of $729,861. The purchase occurred on August 25, 1995. The
combining balance sheet reflects the year ended September 30, 1994. Pro forma
adjustments are made to reflect:
(a.) A net increase as a result of the following:
$ 145,000 partner draws not required
15,600 decrease in rent payments
(200,000) increase in physician salaries
(75,000) three cash payments before closing
-------------------
$ (114,400)
===================
(b.) Proprietor's cash ($52,313), accounts receivable ($113,400) and
accrued expenses ($2,309) were not acquired.
(c.) Excess of acquisition cost over the values of net assets acquired
(goodwill) less one year's amortization. ($637,663 goodwill less
$42,510 amortization)
(d.) Issuance of long-term debt necessary to complete the
acquisition less the first year's principal payments. ($275,000
loan plus $19,422 interest less $131,341 principal reduction)
(e.) Changes in proprietor's deficit as a result of adjustments on pro forma
statement of operations.
(f.) Issuance of 100,000 restricted common shares valued at $312,500
based on a per-share value of $3.125.
14
UCI Medical Affiliates, Inc.
Pro Forma Statement of Operations and Accumulated Deficit
for the year ended September 30, 1994
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
as of September 30, 1994 per the Company's Annual Report and Summit Medical
Center as of December 31, 1994 appearing in item 7a of this filing. The
information has been prepared to reflect the acquisition by UCI Medical
Affiliates, Inc. of Summit Medical Center after giving effect to the pro forma
adjustments described in Note 1. This statement should be read in conjunction
with each entity's financial statements and footnotes.
UCI Medical
Affiliates, Summit Medical Pro Forma Pro Forma
Inc. Center Adjustments Combined
------------ --------------- --------------- -------------
Revenue ........................................ $ 12,540,040 $ 541,699 $ -- $ 13,081,739
Operating costs ................................ 11,880,508 128,680 200,000 (a) 12,209,188
------------ ------------ ------------ ------------
Operating margin ............................... 659,532 413,019 (200,000) 872,551
General and administrative
expenses .................................... 74,698 131,914 (15,600)(c) 191,012
Depreciation and
amortization ................................ 319,554 12,449 42,510 (b) 374,513
------------ ------------ ------------ ------------
Income from operations ......................... 265,280 268,656 (226,910) 307,026
Interest ....................................... 164,182 20,837 19,422 (d) 204,441
Loss on equipment .............................. 68,892 -- -- 68,892
------------ ------------ ------------ ------------
Income before income tax ....................... 32,206 247,819 (246,332) 33,693
Benefit for income taxes ....................... 612,182 -- -- 612,182
------------ ------------ ------------ ------------
Net income ..................................... 644,388 247,819 (246,332) 645,875
Accumulated deficit -
beginning of year ........................... (5,901,284) 85,422 -- (5,815,862)
Proprietor draws less
contributions ............................... -- (145,000) (145,000)(e) --
------------ ------------ ------------ ------------
Accumulated deficit - end
of year ..................................... $ (5,256,896) $ 188,241 $ (101,332) $ (5,169,987)
============ ============ ============ ============
Earnings per common and common equivalent share:
Net income ................................. $ .28 (f) $ .27
============ ============ ============ ============
Weighted average shares of
common stock outstanding..................... 2,324,241 (f) 2,424,241
============ ============ ============ ============
15
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Statement of
Operations and Accumulated Deficit for
the year ended September 30, 1994
(Unaudited)
1. The above statement gives effect to the following pro forma adjustments
necessary to reflect the acquisition outlined in Note 1 to the pro forma balance
sheet:
(a) Additional physician salary based on employment contract between the
Summit Medical Center owner and UCI Medical Affiliates, Inc.
(b) Addition for amortization of goodwill on a straight line basis over 15
years.
(c) Rent expense decrease because the lease on office space occupied by
Summit Medical Center was not renewed
(d) Additional interest charges on the $275,000 debt issued estimated 9%
(e) Proprietor draws not present under new contract
(f) Not applicable, organization was a sole proprietorship
16
UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
June 30, 1995
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of June 30, 1995 per the Form
10QSB and Summit Medical Center as of December 31, 1994 appearing in item 7a of
this filing. This information has been prepared to reflect the acquisition by
UCI Medical Affiliates, Inc. of Summit Medical Center after giving effect to the
pro forma adjustments described in Note 1. This statement should be read in
conjunction with each entity's financial statements and footnotes.
UCI Medical
Affiliates, Summit Medical Pro Forma Pro Forma
Inc. Center Adjustments Combined
--------------- --------------- -------------- --------------
ASSETS
Cash and cash
equivalents ............. $ -- $ 52,313 $ (52,313)(b) $ --
Accounts receivable
- net ................... 2,069,758 113,400 (113,400)(b) 2,069,758
Medical supplies
inventory ............... 249,089 8,129 -- 257,218
Deferred taxes ............ 491,543 -- -- 491,543
Prepaids and other
assets .................. 211,726 -- -- 211,726
Property, plant and
equipment, net ......... 2,338,426 84,069 -- 2,422,495
Deferred taxes ............ 120,639 -- -- 120,639
Goodwill, net ............. 2,964,066 -- 605,780 (c) 3,569,846
Other assets .............. 258,485 -- -- 258,485
=========== =========== =========== ===========
Total assets ..... $ 8,703,732 $ 257,911 $ 440,067 $ 9,401,710
=========== =========== =========== ===========
LIABILITIES
Current portion - long-term
debt ................... $ 1,013,241 $ -- $ 131,341 (d) $ 1,144,582
Current portion - capital
lease .................. -- 21,961 -- 21,961
Accounts payable .......... 1,312,800 -- 114,400 (a) 1,427,200
Accrued salary ............ 262,323 -- -- 262,323
Other accrued
liabilities ............. 420,326 2,309 (2,309)(b) 420,326
Long-term debt - net of ... --
current ................ 2,845,435 148,375(d) 2,983,265
Capital lease - net of
current ................ -- 45,400 -- 45,400
Proprietor's equity ....... -- 188,241 (188,241)(e) --
Common stock .............. 170,108 -- 5,000 (f) 175,108
Paid-in capital ........... 9,380,556 -- 307,500 (f) 9,688,056
Accumulated deficit ....... (6,701,057) -- (75,999)(e) (6,766,511)
=========== =========== =========== ===========
Total liabilities.... $ 8,703,732 $ 257,911 $ 440,067 $ 9,401,710
=========== =========== =========== ===========
17
UCI Medical Affiliates, Inc.
Notes to Pro Forma Combining Balance Sheet
June 30, 1995
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Summit Medical Center by UCI Medical Affiliates, Inc. for an
aggregate price of $729,861. Pro forma adjustments are made to reflect:
(a) A net increase as a result of the following:
$ 145,000 partner draws not required
15,600 decrease in rent payments
(200,000) increase in physician salaries
(75,000) three cash payments before closing
-------------------
$ (114,400)
===================
(b.) Proprietor's cash ($52,313), accounts receivable ($113,400) and
accrued expenses ($2,309) were not acquired.
(c.) Excess of acquisition cost over the values of net assets
acquired (goodwill) less one year's amortization. ($637,663
goodwill less $31,883 amortization)
(d.) Issuance of long-term debt necessary to complete the acquisition
less the first year's principal payments. ($275,000 loan plus
$14,566 interest less $131,341 principal reduction)
(e.) Changes in proprietor's deficit as a result of adjustments on pro forma
statement of operations.
(f.) Issuance of 100,000 restricted common shares valued at $312,500 based
on a per-share value of $3.125.
18
UCI Medical Affiliates, Inc.
Pro Forma Statement of Operations and Accumulated Deficit
for the nine months ended June 30, 1995
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
for the nine months ended June 30, 1995 and Summit Medical Center for the nine
months ended December 31, 1994. The information has been prepared to reflect the
acquisition by UCI Medical Affiliates, Inc. of Summit Medical Center after
giving effect to the pro forma adjustments described in Note 1. Information for
the nine months ended December 31, 1994 for Summit Medical Center is estimated
since Summit did not maintain its records on a basis consistent with UCI Medical
Affiliates, Inc. This statement should be read in conjunction with each entity's
financial statements and footnotes.
UCI Medical
Affiliates, Summit Medical Pro Forma Pro Forma
Inc. Center Adjustments Combined
--------------- -------------- --------------- -----------
Revenue ........................................ $ 12,825,971 $ 406,274 $ -- $ 13,232,245
Operating costs ................................ 13,518,719 96,510 150,000 (a) 13,765,229
------------ ------------ ------------ ------------
Operating margin ............................... (692,748) 309,764 (150,000) (532,984)
General and administrative
expenses .................................... 56,725 98,935 (11,700)(c) 143,960
Depreciation and
amortization ................................ 393,205 9,337 31,883 (b) 434,425
------------ ------------ ------------ ------------
Income from operations ......................... (1,142,678) 201,492 (170,183) (1,111,369)
Interest expense, net of
interest income ............................. 301,483 15,628 14,566 (d) 331,677
------------ ------------ ------------ ------------
Net income ..................................... (1,444,161) 185,864 (184,749) (1,443,046)
Accumulated deficit -
beginning of period ......................... (5,256,896) 121,672 -- (5,135,224)
Proprietor's draws ............................. -- (108,750) (108,750)(e) --
------------ ------------ ------------ ------------
Accumulated deficit - end
of period ................................... $ (6,701,057) $ 198,786 $ (75,999) $ (6,578,270)
============ ============ ============ ============
Earnings per common and common equivalent share:
Net income ................................. $ (.48) (f) $ (.46)
============ ============ ============ ============
Weighted average shares of
common stock outstanding..................... 3,031,478 (f) 3,131,478
============ ============ ============ ============
19
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Statement of
Operations and Accumulated Deficit for the
nine months ended June 31, 1995
(Unaudited)
1. The above statement gives effect to the following pro forma adjustments
necessary to reflect the acquisition outlined in Note 1 to the pro forma balance
sheet:
(a) Additional physician salary based on employment contract between the
Summit Medical Center owner and UCI Medical Affiliates, Inc.
(b) Addition for amortization of goodwill on a straight line basis over 40
years.
(c) Rent expense decrease because the lease on office space occupied by
Summit Medical Center was not renewed
(d) Additional interest charges on the $275,000 debt issued estimated 9%
(e) Proprietor draws not present under new contract
(f) Not applicable, organization was a sole proprietorship
2. UCI Medical Affiliates, Inc. has available net operating losses for federal
and state purposes, which may be applied against future taxable income.
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UCI MEDICAL AFFILIATES, INC.
Date: September 25, 1995 By: (Signature of M.F. McFarland, III)
M.F. McFarland, III
President
By: (Signature of Jerry F. Wells, Jr.)
Jerry F. Wells, Jr.
Chief Financial Officer
21
EXHIBIT INDEX
Sequentially
Numbered Page
Exhibit 2 Asset Purchase Agreement dated June 23, 1995
and executed August 23, 1995 by and between
Peter G. Manos, M.D. and UCI Medical Affiliates
of South Carolina, Inc. ..................................................................... 23
Exhibit 10.1 Promissory Note dated July 1, 1995 given by
and executed August 23, 1995 UCI Medical Affiliates
of South Carolina, Inc. to Peter G. Manos, M.D. ............................................... 60
22