-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KHJy9xNZ3hCGxA9/PxCVpW5eJbH6Pu6+rK0WqETEzNATsqdiJO+dipkKd3v1ro+/ VWduuZ22KZQ9jS9h9Vg4Kw== 0000892493-97-000014.txt : 19970731 0000892493-97-000014.hdr.sgml : 19970731 ACCESSION NUMBER: 0000892493-97-000014 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970628 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970730 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUIMED INC CENTRAL INDEX KEY: 0000892493 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 251668112 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-27456 FILM NUMBER: 97648007 BUSINESS ADDRESS: STREET 1: 2171 SANDY DRIVE CITY: STATE COLLEGE STATE: PA ZIP: 16803 BUSINESS PHONE: (814) 238-0375 MAIL ADDRESS: STREET 1: 2171 SANDY DRIVE CITY: STATE COLLEGE STATE: PA ZIP: 16803 FORMER COMPANY: FORMER CONFORMED NAME: EQUIVISION INC DATE OF NAME CHANGE: 19930804 8-K/A 1 United States 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): May 13, 1997 -------------- EQUIMED, INC. - ----------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-27456 25-1668112 - --------------------------- ------------ ------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 2171 Sandy Drive State College, Pennsylvania 16803 - ------------------------------------ ----------------------- (Address of principal executive (Zip Code) offices) (814) 238-0375 - ----------------------------------------------------------------- (Registrant's telephone number, including area code) N/A - ----------------------------------------------------------------- (Former name or former address, if changed since last report) 2 ITEM 5: OTHER EVENTS On May 13, 1997 EquiMed, Inc. (the "Registrant") consummated the acquisitions of a group of management services companies from Douglas R. Colkitt, M.D., the Chairman and Chief Executive Officer of the Registrant ("Colkitt"). In the transactions, the Registrant acquired all of the capital stock of Russell Data Services, Inc., a Nevada corporation; Billing Services, Inc., a Delaware corporation; Trident International Accounting, Inc., a Delaware corporation; and Tiger Communications International Ltd., a Nevada corporation, as well as 80 percent of the issued and outstanding stock of Nittany Decisions Services Private Limited, an Indian company (the "Acquired Companies"). The acquired stock represents all of the interests previously owned by Colkitt with respect to the Acquired Companies. The acquisitions were effective as of April 1, 1997. The Acquired Companies provide outsourcing of accounting, billing, data processing, collections and other administrative services, including medical and legal transcription services to companies in the healthcare and law related industries. The assets of the Acquired Companies consist of data processing equipment located in the United States and in Madras, India, as well as linking satellite telecommunications equipment and contracts. The financial statements of Russell Data Services, Inc. ("Russell") and the pro forma financial information of all of the Acquired Companies are being filed to comply with Rules 3-05(b)(2)(ii) and 11 of Regulation S-X. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of business acquired: (i) Financial Statements of Russell as of December 31, 1996 and March 31, 1997 (unaudited) together with Manually Signed Report of Independent Public Accountants dated July 15, 1997. (b) Pro forma financial information: (i) Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 1997 of the Registrant and the Acquired Companies. (ii) The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1996 of the Registrant and the Acquired Companies. 3 (iii) Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended March 31, 1997 of the Registrant and the Acquired Companies. (c) Exhibits: 2.1 Stock Purchase Agreement dated as of April 1, 1997 by and among the Registrant, Russell and Colkitt* 23.1 Consent of Independent Public Accountants - -------------------------- * Filed previously 4 Report of Independent Auditors To the Board of Directors and Stockholder Russell Data Services, Inc. We have audited the accompanying balance sheet of Russell Data Services, Inc. as of December 31, 1996, and the related statements of operations, capital deficiency 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 Russell Data Services, Inc. at December 31, 1996 and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Atlanta, Georgia July 15, 1997 /s/ Ernst & Young LLP 5 Russell Data Services, Inc. Balance Sheets ASSETS Current assets: Cash and cash equivalents $ 16,754 $ 16,829 Amounts due from affiliates 1,390,640 941,570 -------------- ------------- 1,407,394 958,399 Furniture and equipment (net of accumulated depreciation of $805 at December 31,1996 and $1,204 at March 31, 1997) 7,145 6,747 ------------- ------------- Total assets $ 1,414,539 $ 965,146 LIABILITIES AND CAPITAL DEFICIENCY Current liabilities: Accounts payable and accrued liabilities $ 89,296 $ 36,570 Amounts due to affiliates 503,851 2,007,683 Note payable to National Medical Financial Services Corporation 3,344,174 2,344,174 ------------- ------------ 3,937,321 4,388,427 Capital deficiency: Common stock, no par value, 2,500 shares authorized and 100 shares issued and outstanding 100 100 Retained deficit (2,522,882) (3,423,381) ------------- ------------ (2,522,782) (3,423,281) ------------- ------------ Total liabilities and capital deficiency $ 1,414,539 $ 965,146
December 31, March 31, 1996 1997 --------- --------- (unaudited)
See accompanying notes. 6 Russell Data Services, Inc. Statements of Operations Revenues $ 6,233,692 $ 1,379,950 $ 1,640,943 Contract services 3,684,036 815,965 1,006,660 ----------- ----------- ----------- $ 2,549,656 $ 563,985 $ 634,283 Loss on advances and note receivable 4,624,758 47,218 249,133 Selling, general and administrative expense 172,607 43,652 16,258 - Interest expense 84,070 - 52,060 ----------- ----------- ----------- Net (loss) income $(2,331,779) $ 473,115 $ 316,832 =========== =========== ===========
Year ended Three months ended December 31, March 31 1996 1996 1997 ------------ ----------- ---------- (unaudited)
See accompanying notes. 7 Russell Data Services, Inc. Statement of Capital Deficiency Balance at December 31, 1995 100 $100 $ 1,806,263 $ 1,806,363 Net loss - - (2,331,779) (2,331,779) Cash and deemed distributions to Dr. Colkitt and affiliates - - (1,997,366) (1,997,366) --- ---- ----------- ----------- Balance at December 31, 1996 100 $100 $(2,522,882) $(2,522,782) Net income (unaudited) - - 316,832 316,832 Cash and deemed distributions to Dr. Colkitt and affiliates (unaudited) - - (1,217,331) (1,217,331) --- ---- ----------- ----------- Balance at March 31, 1997 (unaudited) 100 $100 $(3,423,381) $(3,423,281) === ==== =========== ===========
Common Stock -------------------- Retained Shares Amount Deficit Total ---------- -------- ----------- -----------
See accompanying notes. 8 Russell Data Services, Inc. Statements of Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income $ (2,331,779) $ 473,115 $ 316,832 Adjustments to reconcile net (loss) income to cash provided by operating activities: Depreciation 805 - 398 Loss on note receivable 3,344,174 - - Changes in operating assets and liabilities: Amounts due from affiliates 604,421 183,479 449,070 Accounts payable and accrued expenses 13,322 (65,850) (52,726) Amounts due to affiliates 358,973 142,315 398,546 ------------- ----------- ------------ Net cash provided by operating activities 1,989,916 733,059 1,112,120 INVESTING ACTIVITIES Purchases of furniture and equipment (7,950) - - ------------- ----------- ------------ Net cash used in investing activities (7,950) - - FINANCING ACTIVITIES Borrowings from EquiMed, Inc. for repayment of note payable - - 1,105,286 Repayment of note payable - - (1,000,000) Distributions to owner (1,997,366) (756,616) (1,217,331) -------------- ----------- ------------ Net cash used in financing activities (1,997,366) (756,616) (1,112,045) ------------- ----------- ------------ Net (decrease) increase in cash and cash equivalents (15,400) (23,557) 75 Cash and cash equivalents, beginning of period 32,154 32,154 16,754 ------------- ----------- ------------ Cash and cash equivalents, end of period $ 16,754 $ 8,597 $ 16,829
Year ended Three months ended December 31, March 31 1996 1996 1997 --------- ------------ ------------- (unaudited)
See accompanying notes. 9 Russell Data Services, Inc. Notes to Financial Statements December 31, 1996 and March 31, 1996 (unaudited) and 1997 (unaudited) 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Russell Data Services, Inc. (the "Company") was incorporated in October 1994. The Company markets billing, accounts receivable and collections services, as well as certain accounting services. The Company derives all of its revenue from National Medical Financial Services Corporation ("NMFS"), a public company primarily owned and controlled by Dr. Douglas Colkitt, the president and sole stockholder of the Company, which subjects the Company's related party receivable and revenue to concentration of credit risk. The Company generally does not require collateral against its receivables. The Company has excess current liabilities over current assets and a deficit in capital as of December 31, 1996. Included in current liabilities is a short-term note due to NMFS in the amount of $3,344,174 (see Note 3). On May 13, 1997, the Company was acquired by EquiMed, Inc. ("EquiMed") (see Note 4), a public company primarily owned by Dr. Colkitt. Dr. Colkitt is the Chairman of the Board of Directors, Chief Executive Officer, and President of Equimed. EquiMed has agreed to provide funds as necessary to the Company to pay the note due to NMFS as payments of principal and interest are required during 1997. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in accordance 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 inevitably will differ from those estimates and such differences may be material to the financial statements. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts reported in the balance sheets for cash, amounts due from affiliates, accounts payable and accrued liabilities, and amounts due to affiliates approximate their fair values. The fair value of the Company's note payable approximates the reported amount in the balance sheet as its interest rate approximates the market rate for similar debt instruments. 10 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CASH AND CASH EQUIVALENTS Cash equivalents include investments in highly liquid instruments with a maturity of three months or less at the date of purchase. FURNITURE AND EQUIPMENT Furniture and equipment is stated at cost. Depreciation is computed using the straight-line method over estimated useful lives of five to seven years. INCOME TAXES The Company has elected an S-corporation status for federal and state income tax reporting purposes. There are no material differences between financial and income tax reporting which would give rise to deferred income taxes at December 31, 1996. REVENUE RECOGNITION Fees for the Company's services are based primarily on a percentage of net billings of patient accounts, and revenue is recognized as such billings are performed. CASH MANAGEMENT As part of the owner's cash management strategy, available cash generated by the Company is generally transferred from the Company to other affiliates of Dr. Colkitt. Such transfers have been treated as deemed distributions. In addition, when the Company requires cash for operations, cash is generally transferred from other affiliates of Dr. Colkitt. These cash transfers are recorded on the Company's books as amounts due to or from affiliates. No interest income or expense is applied to these receivables and payables. The Company has been a net provider of cash to other affiliates of Dr. Colkitt. As it is not the owner's intention to repay or request repayment of certain of these amounts, such amounts have been reflected as deemed distributions and are, therefore, not included in the accompanying balance sheet. 11 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) UNAUDITED INTERIM FINANCIAL STATEMENTS The unaudited interim financial statements as of March 31, 1997 and for the three months ended March 31, 1996 and 1997 have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three month periods ended March 31, 1996 and 1997 are not necessarily indicative of the results that may be expected for the years ending December 31, 1996 and 1997. 3. RELATED PARTY TRANSACTIONS Since October 1, 1994, the Company has contracted with NMFS (the "NMFS Contract") to provide billing, accounts receivable, and collection services for the clients of NMFS which are typically medical providers. The NMFS Contract provides for NMFS to pay the Company 70% of all revenues collected by NMFS for the performance of such services. The NMFS Contract is scheduled to expire September 30, 2004. Under terms of the NMFS Contract, NMFS is permitted to contract with providers of services to companies other than the Company and the Company is permitted to provide its service to companies other than NMFS, provided that the Company is obligated to service for NMFS all client contracts which are priced not less than 80% of the industry standard for similar contracts. The NMFS Contract contains an arbitration procedure to be followed in the event that any dispute arises between the parties under the contract. For the year ended December 31, 1996 and the three month periods ended March 31, 1996 and 1997, all of the Company's revenue was from services provided to NMFS. The Company, in connection with its contract with NMFS, derived approximately 25%, 30% and 23% of its revenues from EquiMed for the year ended December 31, 1996 and for the three month periods ended March 31, 1996 and 1997, respectively. EquiMed has contracted with NMFS to provide billing and accounting services for EquiMed's oncology division. 12 3. RELATED PARTY TRANSACTIONS (CONTINUED) On May 1, 1996, NMFS entered into a transaction with First United Equities Corporation ("First United"), a broker-dealer registered with the Securities and Exchange Commission. First United is the principal market maker in NFMS's Common Stock. Pursuant to the transaction, NMFS loaned $5,200,000 through a series of advances evidenced by a promissory note bearing interest at 10% to First United. Such note was due and payable on demand with seven days notice. The note was collateralized by the guarantees of the principals of First United. On May 29, 1996, First United repaid $2,000,000 to NMFS. On October 1, 1996, the Company assumed the remaining balance of the note and accrued interest of approximately $3,344,000 due from First United in exchange for an unsecured note due to NMFS. The note due to NMFS also bears interest at 10% and establishes a payment schedule of $1,000,000 each at January 15, April 15 and July 15, 1997 plus interest thereon with the remaining balance and interest thereon due on September 15, 1997. Accrued interest on the note due NMFS approximated $84,070 and $31,470 as of December 31, 1996 and March 31, 1997, respectively and is included in accounts payable and accrued liabilities on the accompanying balance sheets. As of July 15, 1997, the Company has not made the payments which were due to NMFS on April 15, 1997 and July 15, 1997. NMFS has not demanded payment. EquiMed has agreed to provide funds as necessary to the Company to pay the note due to NMFS as payments of principal and interest are required (see Note 1). The Company has reflected a loss of approximately $3,844,000 for the year ended December 31, 1996 relating to note receivable of approximately $3,344,000 and other cash advances of approximately $500,000 due from First United. Effective October 1, 1994, the Company has contracted with Billing Services, Inc. ("BSI"), an entity owned and controlled by Dr. Colkitt. Pursuant to the contract with BSI (the "BSI Contract"), BSI is to provide to the Company, on a non-exclusive basis, certain specified billing and collection services for a fee equal to BSI's operating costs plus two and one-half percent (2-1/2%). The BSI Contract is for a term of ten years. Under the terms of the BSI Contract, the Company is permitted to contract with providers of service other than BSI and BSI is permitted to provide its services to companies other than the Company. BSI has contracted with Nittany Decisions Private Limited, a company located in Madras, India which is 80% owned by Dr. Colkitt, to perform the billing services relating to the BSI Contract. For the year ended December 31, 1996 and the three month periods ended March 31, 1996 and 1997 the Company incurred $1,245,500, $312,000 and $330,000, respectively for services provided by BSI. 13 3. RELATED PARTY TRANSACTIONS (CONTINUED) Effective January 1, 1996, the Company has contracted with Trident International Accounting, Inc. ("Trident"), an entity owned and controlled by Dr. Colkitt. Pursuant to the contract with Trident (the "Trident Contract"), Trident is to provide to the Company, on a non-exclusive basis, certain specified accounting services for a fee of 17-1/2% of net revenues to be received by the Company for services billed to Trident. These services were performed by BSI prior to January 1, 1996. The Trident Contract is for a term of ten years. Under the terms of the Trident Contract, the Company is permitted to contract with providers of service other than Trident and Trident is permitted to provide its services to companies other than the Company. Trident has contracted with Nittany Decisions Private Limited, a company located in Madras, India which is 80% owned by Dr. Colkitt, to perform the accounting services relating to the Trident Contract. For the year ended December 31, 1996 and the three month periods ended March 31, 1996 and 1997 the Company incurred $273,600, $67,600 and $68,000, respectively, for services provided by Trident. Effective July 1, 1995 the Company has contracted with Asterino & Associates, Inc. ("Asterino"), an entity owned and controlled by Dr. Colkitt. Pursuant to the contract with Asterino (the "Asterino Contract"), Asterino is to provide to the Company, on a non-exclusive basis, certain specified accounting services for a fee of 70% of net revenues to be received by the Company for services billed to Asterino. The Asterino Contract is for a term of ten years. Under the terms of the Asterino Contract, the Company is permitted to contract with providers of service other than Asterino and Asterino is permitted to provide its services to companies other than the Company. For the year ended December 31, 1996 and the three month period ended March 31, 1996 and 1997 the Company incurred $874,000, $212,000, and $213,000, respectively, for services provided by Asterino. 14 3. RELATED PARTY TRANSACTIONS (CONTINUED) The Company maintains contracts with Medical Business Services of Nevada, Inc. ("MBS") and Rapier Investments, Ltd.("Rapier"), companies owned by a shareholder and former chief executive officer of NMFS. Pursuant to these contracts with MBS and Rapier (the "MBS and Rapier Contracts"), MBS and Rapier are to provide to the Company, on a non-exclusive basis, certain specified accounting services for a fee of 70% of net revenues to be received by the Company for services billed to MBS and Rapier. The MBS and Rapier Contracts are for a term of ten years. Under the terms of the MBS and Rapier Contracts, the Company is permitted to contract with providers of service other than MBS and Rapier and MBS and Rapier are permitted to provide their services to companies other than the Company. For the year ended December 31, 1996 and the three month periods ended March 31, 1996 and 1997, the Company incurred $783,300, $137,400, and $222,000, respectively, for services provided by MBS. In addition, for the year ended December 31, 1996 and the three month periods ended March 31, 1996 and 1997, the Company incurred $507,600, $87,000, and $174,000, respectively, for services provided by Rapier. The Company had advanced to MBS and Rapier approximately $781,000 and $249,000 as of December 31, 1996 and March 31, 1997 in excess of amounts due based on the MBS and Rapier Contracts. The Company has reflected a loss of approximately $781,000, $47,000 and $249,000 during the year ended December 31, 1996 and the three- month periods ended March 31, 1996 and 1997, respectively, relating to these advances as they have been deemed to be uncollectible. The Company is currently reviewing its contractual relationships with MBS and Rapier. Amounts due from affiliates consists of the following as of December 31, 1996 and March 31, 1997: National Medical Financial Services Corporation $ 1,057,181 $ 522,889 Asterino & Associates, Inc. 333,459 418,681 ------------- ------------- $ 1,390,640 $ 941,570 ============= =============
December 31, 1996 March 31, 1997 ----------------- -------------- (unaudited)
15 3. RELATED PARTY TRANSACTIONS (CONTINUED) Amounts due to affiliates consists of the following as of December 31, 1996 and March 31, 1997: Billing Services, Inc. $ 422,205 $ 752,671 Trident International Accounting, Inc. 81,646 149,726 EquiMed, Inc. - 1,105,286 ------------ ------------ $ 503,851 $ 2,007,683
December 31, 1996 March 31, 1997 ------------------ -------------- (unaudited)
4. SUBSEQUENT EVENTS In February 1997, EquiMed advanced approximately $1,105,000 to the Company to enable the Company to pay the scheduled payment of principal and interest on the Company's note payable to NMFS (see Note 3). On May 13, 1997, EquiMed acquired the Company in a series of related transactions with Nittany Decisions Services Private Limited, Trident International Accounting, Inc., Billing Services, Inc., and Tiger Communications International Ltd. for approximately $6,000,000 in cash and a potential earnout up to $9,300,000 payable in EquiMed's common stock. Tiger Communications International Ltd. is wholly owned by Dr. Colkitt and provides communication services to BSI and Trident. 16 EQUIMED, INC. AND RUSSELL DATA SERVICES, INC. PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma financial information includes the unaudited pro forma balance sheet as of March 31, 1997 as if the acquisition of Russell Data Services, Inc. ("Russell"), Trident International Accounting, Inc. ("Trident"), Billing Services, Inc. ("BSI"), Tiger Communications International, Ltd. ("Tiger"), and Nittany Decisions Services Private Limited ("Nittany") (collectively, the "Acquired Companies") had occurred on that date, and includes the unaudited pro forma statement of operations for the year ended December 31, 1996 and for the three months ended March 31, 1997 as if the acquisition of the Acquired Companies had occurred as of January 1, 1996. These pro forma statements do not necessarily reflect the results of operations as they would have been if the Company had completed the acquisition on the dates indicated above. This unaudited pro forma information should be read in conjunction with the separate financial statements and notes of EquiMed and Russell. The unaudited pro forma statement of operations for the year ended December 31, 1996 also has been adjusted to remove the operations related to EquiMed's ophthalmology division due to EquiMed's sale of this division during 1996. 17 EQUIMED, INC. AND RUSSELL DATA SERVICES, INC. PRO FORMA BALANCE SHEET AS OF MARCH 31, 1997 (000'S) ASSETS Current assets: Cash & cash equivalents $ 12,841 $ 16 $ (3,490)(A) $ 9,367 $ 350 $ (2,510) (B) $ 7,207 Accounts receivable, net 7,830 - - 7,830 3 - 7,833 Receivables from affiliates 16,586 942 (1,105) (C) 16,423 975 (1,340) (D) 16,058 Deferred income taxes 3,529 - - 3,529 - - 3,529 Prepaid expenses and other current assets 2,345 - - 2,345 1,047 - 3,392 -------- -------- -------- --------- --------- --------- --------- Total current assets 43,131 958 (4,595) 39,494 2,375 (3,850) 38,019 Property and equipment, net 23,361 7 - 23,368 560 - 23,928 Advances to principal stockholder 2,286 - - 2,286 - - 2,286 Management agreements, net of accumulated amortization 14,480 - - 14,480 - - 14,480 Other assets, net 930 - - 930 - - 930 -------- --------- -------- --------- --------- --------- --------- Total assets $ 84,188 $ 965 $ (4,595) $ 80,558 $ 2,935 $ (3,850) $ 79,643 ======== ========= ======== ========= ========= ========= ========= LIABILITIES AND CAPITAL DEFICIENCY Current liabilities: Accounts payable 2,334 36 - 2,370 400 - 2,770 Accrued salaries and contractual fees 3,407 - - 3,407 79 - 3,486 Other accrued expenses 6,295 - - 6,295 8 - 6,303 Income taxes payable 9,273 - - 9,273 - - 9,273 Payable to affiliates 6,933 2,008 (1,105) (C) 7,836 1,416 (1,340) (D) 7,912 Current portion of long-term debt 2,342 2,344 - 4,686 - - 4,686 Current portion of obligations under capital leases: Related parties 317 - - 317 - - 317 Other 2,680 - - 2,680 - - 2,680 -------- --------- -------- --------- --------- --------- --------- Total current liabilities 33,581 4,388 (1,105) 36,864 1,903 (1,340) 37,427 Long-term debt 7,609 - - 7,609 - - 7,609 Obligations under capital leases: Related parties 1,397 - - 1,397 - - 1,397 Other 5,484 - - 5,484 - - 5,484 Deferred income taxes 771 - - 771 - - 771 Minority interest 1,765 - - 1,765 - - 1,765 Stockholder's equity: Common stock 3 - - 3 88 - 91 Less: treasury stock (3,611) - - (3,611) - - (3,611) Additional paid in capital 81,600 - - 81,600 - - 81,600 Partner's capital 657 - - 657 2,455 - 3,112 Retained deficit (45,068) (3,423) (3,490) (A) (51,981) (1,511) (2,510) (B) (56,002) -------- --------- -------- --------- --------- --------- --------- Total stockholders' equity 33,581 (3,423) (3,490) 26,668 1,032 (2,510) 25,190 -------- --------- -------- --------- --------- --------- --------- Total liabilities and stockholders' equity $ 84,188 $ 965 $ (4,595) $ 80,558 $ 2,935 $ (3,850) $ 79,643 ======== ========= ======== ========= ========= ========= =========
Pro Other Pro Forma As Acquired Forma Pro EquiMed Russell Adjustments Adjusted Companies Adjustments Forma ---------- -------- ---------- --------- --------- --------- ---------
See accompanying notes to unaudited pro forma balance sheet. 18 EQUIMED, INC. AND RUSSELL DATA SERVICES, INC. PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 (000'S, EXCEPT PER SHARE AMOUNTS) Net revenues $ 99,115 $ (42,250) (E) $ 56,865 $ 6,234 $ - $ 63,099 $ 2,731 $ (1,519) (G) $ 64,311 Costs and expenses: Professional expenses 26,479 (12,217) (E) 14,262 3,684 - 17,946 2,367 (1,519) (F) 18,794 Center operating expenses 42,422 (23,787) (E) 18,635 - - 18,635 1,298 - 19,933 General and administrative 8,755 (1,783) (E) 6,972 173 - 7,145 1,493 - 8,638 Depreciation and amortization 6,040 (3,224) (E) 2,816 - - 2,816 42 - 2,858 Interest expense: Related parties 643 - 643 - - 643 - - 643 Other 1,905 (1,279) (E) 626 84 - 710 - - 710 Loss on sale of receivables 640 - 640 - - 640 - - 640 Other income, net (723) 29 (E) (694) - - (694) 13 - (681) Loss on sale of division 31,112 (31,112) (E) - - - - - - - Loss on advances and note receivable - - - 4,625 - 4,625 - - 4,625 --------- --------- -------- -------- ------- --------- --------- -------- ---------- Total costs and expenses $ 117,273 $ (73,373) (E) $ 43,900 $ 8,566 $ - $ 52,466 5,213 (1,519) 56,160 --------- --------- -------- -------- ------- --------- --------- -------- ---------- Income (loss) before minority interest and income taxes (18,158) 31,123 (E) 12,965 (2,332) - 10,633 (2,482) - 8,151 Minority interest 1,171 - 1,171 - - 1,171 - - 1,171 --------- --------- -------- -------- ------- --------- --------- -------- ---------- Income (loss) before income taxes (19,329) 31,123 (E) 11,794 (2,332) - 9,462 (2,482) - 6,980 Provision (benefit) for income taxes 11,890 (5,456) (E) 6,434 - (932) (H) 5,502 - (894) (I) 4,608 --------- --------- -------- -------- ------- --------- --------- -------- ---------- Net income (loss) $ (31,219) $ 36,579 (E) $ 5,360 $ (2,332) $ 932 $ 3,960 $ (2,482) $ 894 $ 2,372 ========= ========= ======== ======== ======= ========= ========= ======== ========== Income (loss) per share (1.13) .09 ========= ========== Weighted average shares outstanding 27,577 27,577 ========= ==========
Historical Pro Other Pro EquiMed, Pro Forma As Forma As Acquired Forma Pro Inc. Ophthalmology Adjusted Russell Adjustments Adjusted Companies Adjustments Forma ---------- ----------- -------- -------- ----------- --------- -------- ----------- ----------
See accompanying notes to unaudited pro forma statement of operations 19 EQUIMED, INC. AND RUSSELL DATA SERVICES, INC. PRO FORMA STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 (000'S, EXCEPT PER SHARE AMOUNTS) Net revenues $ 17,707 $ 1,641 $ - $ 19,348 $ 832 $ (398) (G) $ 19,782 Costs and expenses: Professional expenses 3,621 1,007 - 4,628 774 (398) (F) 5,004 Central operating expenses 6,274 - - 6,274 763 - 7,037 General and administrative 1,632 16 - 1,648 - - 1,648 Depreciation and amortization 1,122 - - 1,122 17 - 1,139 Interest: Related parties 161 - - 161 - - 161 Other 412 52 - 464 - - 464 Loss on sale of receivables 127 - - 127 - - 127 Other income, net (89) - - (89) - - (89) Loss on advances and note receivable - 249 - 249 - - 249 ----------- ---------- ---------- ---------- --------- --------- ---------- Total costs and expenses $ 13,260 $ 1,324 $ - $ 14,584 $ 1,554 $ (398) $ 15,740 ----------- ---------- ---------- ---------- --------- --------- ---------- Income (loss) before minority interest and income taxes 4,447 317 - 4,764 (722) - 4,042 Minority interest 292 - - 292 - - 292 ----------- ---------- ---------- ---------- --------- --------- ---------- Income (loss) before income taxes 4,155 317 - 4,472 (722) - 3,750 Provision (benefit) for income taxes 1,352 - 127 (H) 1,479 - (280) (I) 1,199 ----------- ---------- ---------- ---------- --------- --------- ---------- Net income (loss) $ 2,803 $ 317 $ (127) $ 2,993 $ (722) $ 280 $ 2,551 =========== ========== ========== ========== ========= ========= ========== Loss per share .10 .09 =========== ========== Weighted average shares outstanding 28,035 28,035 =========== ==========
Historical Pro Other Pro EquiMed, Forma As Acquired Forma Pro Inc. Russell Adjustments Adjusted Companies Adjustments Forma ------------ ---------- ----------- ----------- ---------- ------------- ----------
See accompanying notes to unaudited pro forma statement of operations. 20 EQUIMED, INC. AND RUSSELL DATA SERVICES, INC. NOTES TO PRO FORMA FINANCIAL STATEMENTS (000'S, EXCEPT SHARE AMOUNTS) PRO FORMA BALANCE SHEET ADJUSTMENTS The accompanying pro forma balance sheet as of March 31, 1997 gives effect to the acquisition of the Acquired Companies as if such transaction or event had occurred on March 31, 1997. Due to the common control of EquiMed and the Acquired Companies, the excess of purchase price over historical cost of the assets and liabilities has been reflected as a dividend. (A) To record the acquisition of Russell. Pursuant to this acquisition, EquiMed acquired certain assets and assumed certain liabilities in exchange for $3,490,000 in cash and a potential earn out of up to $9,300,000 payable in EquiMed Common Stock. The cash payment was funded through available cash. The historical cost of assets and liabilities of Russell acquired as of April 1, 1997 are as follows: Cash $ 16 Amounts due from affiliates 942 Furniture and equipment, net 7 Accounts payable and accrued liabilities (36) Amounts due to affiliates (2,008) Note payable to affiliate (2,344) --------- (3,423) Dividend 6,913 --------- Consideration paid in cash $ 3,490 =========
Net assets acquired Dollars (000's) ------------------- ---------------
(B) To record the acquisition of Trident, BSI, Tiger and Nittany (collectively the "Other Acquired Companies"). Pursuant to these acquisitions, EquiMed acquired certain assets and assumed certain liabilities in exchange for $2,510,000 in cash. The cash payment was funded through available cash. The historical cost of assets and liabilities of the Other Acquired Companies acquired as of April 1, 1997 are as follows: 21 Cash $ 350 Accounts receivable 3 Amounts due from affiliates 975 Prepaids and other current assets 1,047 Furniture and equipment, net 560 Accounts payable and accrued liabilities (487) Amounts due to affiliates (1,416) ---------- 1,032 Dividend 1,478 ---------- Consideration paid in cash $ 2,510 ==========
Net assets acquired Dollars (000's): ------------------- ----------------
(C) To remove amounts due to and amounts due from EquiMed and Russell. (D) To remove amounts due to and due from affiliates between EquiMed, Russell, BSI, Trident, Nittany, and Tiger. 22 Pro Forma Statement of Operations Adjustments The accompanying pro forma statements of operations for the year ended December 31, 1996 and for the three months ended March 31, 1997 assume that as of January 1, 1996, EquiMed had completed the sale of the Ophthalmology Division and the acquisition of the Acquired Companies. (E) To remove the operations of Ophthalmology Division sold effective October 31, 1996 and included in the operations of EquiMed. (F) To eliminate contract services expense recorded by Russell related to contractual services performed by entities included in Other Acquired Companies. (G) To eliminate revenue recorded by entities included in Other Acquired Companies related to contracts with Russell. (H) To adjust for the change in Russell's income tax status from an S Corporation to filing as part of a consolidated C Corporation. (I) To adjust for the change in the Other Acquired Companies' income tax status from S Corporations to filing as part of a consolidated C Corporation. 23 EXHIBIT INDEX 23.1 Consent of Independent Public Accountants 24 Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-01112) pertaining to the EquiVision, Inc. Stock Option Plan and all non-qualified stock options and in the Registration Statements and in the related prospectuses of EquiMed, Inc. (successor to EquiVision, Inc.) on Form S-3 (No. 333-01096 and No. 333-12595) and on Form S-4 (No. 333-12773) of our report dated July 15, 1997 related to the financial statements of Russell Data Services, Inc. included in this Current Report on Form 8-K/A filed with the Securities and Exchange Commission. ERNST & YOUNG LLP Atlanta, Georgia July 28, 1997 25 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 thereunto duly authorized. EQUIMED, INC. ---------------------------------------- (Registrant) July 28, 1997 /s/ Daniel L. Beckett ----------------------------------------- Daniel L. Beckett Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----