SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
December 1, 2003
----------------
Date of Report
(Date of Earliest Event Reported)
OMNI MEDICAL HOLDINGS, INC.
---------------------------
(Exact Name of Registrant as Specified in its Charter)
Utah 0-26177 87-0425275
---- ------- ----------
(State or other (Commission File No.) (IRS Employer I.D. No.)
Jurisdiction)
1107 Mt. Rushmore Road, Suite 2
Rapid City, South Dakota 57701
-------------------------------
(Address of Principal Executive Offices)
(605) 718-0380
--------------
Registrant's Telephone Number
Not Applicable
--------------
(Former Name or Former Address if changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
On November 23, 2003, Omni Medical Holdings, Inc. (the "Company")
signed an Asset Purchase Agreement, which was deemed to have been completed as
of December 1, 2003, by and between McCoy Business Services, Inc., a Kentucky
corporation ("McCoy"), and the Company, and whereby the Company purchased all
of McCoy's tangible assets related to medical transcription services provided
by McCoy and assumed McCoy's lease for its principal office space. The
consideration for this transaction was $360,000,with $120,000 having been
paid at closing and $240,000 to be paid in eight quarterly payments of $30,000
each, with an earnout provision, which is described fully in the Asset
Purchase Agreement.
The purchase price was allocated $60,000 for equipment, furniture
and other depreciable assets; $240,000 for a related Covenant Not to Compete
of Marlene McCoy, McCoy's principal stockholder and director and executive
officer, who was also given a two year Employment Agreement; and $60,000 as
goodwill. A complete list of the equipment acquired and the Employment
Agreement are respectively Exhibits A and C to the Asset Purchase Agreement.
The consideration paid was negotiated "arms length," and the
directors of the Company determined that the consideration for the purchase
was reasonable, under these circumstances.
No director, executive officer or five percent or more stockholder
of the Company had any direct or indirect interest in McCoy prior to the
completion of the Asset Purchase Agreement.
For more information regarding this transaction, see the Asset
Purchase Agreement and related Exhibits attached hereto and incorporated
herein by reference. See Item 7 of this Current Report.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
---------
(a) Financial Statements of Businesses Acquired.
McCoy Business Services for the years ended December 31, 2002
and 2001, and the period ended September 30, 2003
Financial Statements
MCCOY BUSINESS SERVICES
Years ended December 31, 2002 and 2001
and period ended September 30, 2003 (Unaudited)
MCCOY BUSINESS SERVICES
Table of Contents
Independent Auditor's Report 1
Financial Statements
Balance Sheets
as of December 31, 2002 and 2001 2
Statements of Operations
for the years ended December 31, 2002 and 2001 3
Statements of Changes in Stockholder's Equity
for the years ended December 31, 2002 and 2001 4
Statements of Cash Flows
for the years ended December 31, 2002 and 2001 5
Notes to Financial Statements 6
Interim Financial Statements (Unaudited)
Independent Auditor's Report on Supplementary Information 10
Balance Sheets
as of September 30, 2003 (Unaudited) and December 31, 2002 11
Statements of Operations
for the nine months ended September 30, 2003 and 2002
(Unaudited) 12
Statements of Cash Flows
for the nine months ended September 30, 2003 and 2002
(Unaudited) 13
Notes to Interim Financial Statements (Unaudited) 14
Carpenter, Mountjoy & Bressler [letterhead]
INDEPENDENT AUDITOR'S REPORT
To the Stockholder of
McCoy Business Services
Louisville, Kentucky
We have audited the accompanying balance sheets of McCoy Business Services, a
division of McCoy's Business Services, Inc., (see Note A) as of December 31,
2002 and 2001, and the related statements of operations, changes in
stockholder's equity, and cash flows for the years then ended. These
financial statements are the responsibility of McCoy Business Services'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McCoy Business Services as of
December 31, 2002 and 2001, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
/S/Carpenter, Mountjoy & Bressler
Louisville, Kentucky
January 15, 2003
MCCOY BUSINESS SERVICES
BALANCE SHEETS
December 31
2002 2001
ASSETS
Current Assets
Cash and equivalents $ 81,819 $ 125,167
Accounts receivable 88,982 63,154
--------- ---------
Total current assets 170,801 188,321
Property, Plant & Equipment
Office furniture and fixtures 11,268 11,268
Medical equipment 60,100 44,677
--------- ---------
71,368 55,945
Less accumulated depreciation 17,002 7,775
--------- ---------
54,366 48,170
--------- ---------
$ 225,167 $ 236,491
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts payable $ 19,775 $ 14,222
Deferred income taxes 25,020 18,921
Accrued expenses 24,645 12,966
Due to related party 5,888 48,359
--------- ---------
Total current liabilities 75,328 94,468
--------- ---------
Deferred Income Taxes 8,233 4,971
Stockholder's Equity
Common stock, no par value, 2,000 shares
authorized, 100 shares issued and outstanding 100 100
Retained earnings 141,506 136,952
--------- ---------
141,606 137,052
--------- ---------
$ 225,167 $ 236,491
========= =========
See accompanying independent auditor's report
and notes to financial statements
2
MCCOY BUSINESS SERVICES
STATEMENTS OF OPERATIONS
Year ended December 31
2002 2001
Revenue $ 675,194 $ 551,237
Expenses
Contract transcription 345,399 284,948
Salaries and wages 147,193 128,726
Employee benefits 25,090 21,838
Auto reimbursement and courier 21,835 10,903
Taxes 13,214 14,486
Bad debt expense - 58,691
Other general and administrative 110,952 52,572
--------- ---------
Total expenses 663,683 572,164
--------- ---------
Income (loss) from operations 11,511 (20,927)
Other income (expense) 308 (11,594)
--------- ---------
Income (loss) before income taxes 11,819 (32,521)
Income tax expense (benefit) 7,265 (4,209)
--------- ---------
Net Income (Loss) $ 4,554 $ (28,312)
========= =========
See accompanying independent auditor's report
and notes to financial statements
3
MCCOY BUSINESS SERVICES
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
Years ended December 31, 2002 and 2001
Common Retained
Stock Earnings Total
Balance, January 1, 2001 $ 100 $ 165,264 $ 165,364
Net loss - (28,312) (28,312)
----- --------- ---------
Balance, December 31, 2001 100 136,952 137,052
Net income - 4,554 4,554
----- --------- ---------
Balance, December 31, 2002 $ 100 $ 141,506 $ 141,606
===== ========= =========
See accompanying independent auditor's report
and notes to financial statements
4
MCCOY BUSINESS SERVICES
STATEMENTS OF CASH FLOWS
Year ended December 31
2002 2001
Cash Flows From Operating Activities
Net income (loss) $ 4,554 $ (28,312)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation 9,227 7,775
Deferred income taxes 9,361 4,430
Loss on sale of investments - 15,512
Change in operating assets and liabilities:
Accounts receivable (25,828) (4,830)
Accounts payable 5,553 8,340
Accrued expenses 11,679 (22,465)
-------- ---------
Total adjustments 9,992 8,762
-------- ---------
Net cash provided by (used in) operating activities 14,546 (19,550)
Cash Flows From Investing Activities
Purchase of fixed assets (15,423) (31,890)
Proceeds from sale of investments - 45,673
-------- ---------
Net cash provided by (used in) investing activities (15,423) 13,783
Cash Flows From Financing Activities
Net activity from related party (42,471) 57,960
-------- ---------
Net cash provided by (used in) financing activities (42,471) 57,960
-------- ---------
Net Increase (Decrease) in Cash (43,348) 52,193
Cash, Beginning of Year 125,167 72,974
-------- ---------
Cash, End of Year $ 81,819 $ 125,167
======== =========
See accompanying independent auditor's report
and notes to financial statements
5
MCCOY BUSINESS SERVICES
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
NOTE A--DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Business: McCoy's Business Services, Inc. (the Company) is located in
Louisville, Kentucky and primarily operates two divisions. (Effective
December 10, 2003, the Company changed its name to McCoy Financial Services,
Inc.) McCoy Business Services (McCoy Business) provides medical transcription
services to medical practitioners. McCoy Financial Services (McCoy Financial)
provides a wide range of financial services primarily focused at individual
customers.
Basis of Presentation: In 2003, the tangible assets of McCoy Business were
acquired by Omni Medical Services, Inc. (Omni) (See Note G). Accordingly, the
financial statements presented are for the McCoy Business division only.
Effective January 1, 2002, the Company began to separately account for the two
operating divisions. Accordingly, no allocation of accounts was necessary in
2002. Prior to this time, the Company had not separately accounted for these
two divisions. Therefore, management has specifically identified accounts
directly related to McCoy Business for purposes of these financial statements.
Overhead expenses were shared by the two divisions and have been allocated
evenly between the divisions, which is management's best estimate. The
Company also had a coffee shop operation during 2001, which was accounted for
separately. Therefore, it is not included in these financial statements.
NOTE B--BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimates: Management uses estimates and assumptions in preparing these
financial statements in accordance with accounting principles generally
accepted in the United States of America. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenues and expenses.
Actual results could vary from the estimates that were used.
Accounts Receivable: McCoy Business grants credit to its customers, generally
without collateral. McCoy Business considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful accounts is required. If
amounts become uncollectible, they will be charged to operations when that
determination is made.
Property and Equipment: Property and equipment are carried at cost and are
being depreciated on a straight-line basis over the estimated useful lives of
the assets, which range from 5 to 7 years.
Statement of Cash Flows: For purposes of the statement of cash flows, McCoy
Business considers all short-term investments with a maturity of three months
or less to be cash equivalents. Cash paid by the Company as a whole for taxes
was $3,680 and $6,737 for the years ended December 31, 2002 and 2001,
respectively.
Concentration of Credit Risk: McCoy Business maintains cash balances at a
local bank. The cash account is insured by FDIC up to $100,000. Cash
balances did not exceed insured limits in both years ended December 31, 2002
and 2001.
Revenue Recognition: Revenue is recognized at the time when the services are
performed.
Continued
6
MCCOY BUSINESS SERVICES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
December 31, 2002 and 2001
NOTE B--BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--
CONTINUED
Advertising Costs: McCoy Business expenses advertising as incurred.
Advertising expense was $2,798 and $3,616 for the years ended December 31,
2002 and 2001, respectively.
Income Taxes: Deferred taxes are provided for temporary differences in
reporting certain transactions for financial and tax purposes, principally
relating to differences in accounting for transactions on the accrual basis
versus the cash basis and depreciation of fixed assets.
NOTE C--INCOME TAXES
As previously discussed, McCoy Business is a division of the Company.
Therefore, their results of operations combined with the total Company
operations determine the tax position of the Company as a whole. For purposes
of these financial statements, the tax provision for McCoy Business has been
calculated on a stand alone basis. Significant components of McCoy Business'
net deferred tax assets (liability) as of December 31 are as follows:
2002 2001
Deferred tax assets (liabilities):
Tax over book depreciation $ (8,233) $ (4,971)
Cash to accrual (cash basis taxpayer) (25,020) (18,921)
-------- ---------
Net deferred tax assets (liabilities) $(33,253) $ (23,892)
======== =========
The significant components of income tax expense (benefit) are as follows:
Current:
Federal $ (1,640) $ (6,876)
State (456) (1,763)
Deferred 9,361 4,430
-------- ---------
$ 7,265 $ (4,209)
======== =========
NOTE D--COMMITMENTS
McCoy Business leases its operating facility under an operating lease
agreement. Total rental expense was approximately $22,800 and $8,100 for the
years ended December 31, 2002 and 2001, respectively. McCoy Business is
responsible for real estate taxes, insurance, utilities and maintenance of the
property. The lease was personally guaranteed by the stockholder. As part of
the asset purchase agreement (see Note G), the lease obligation was assumed by
Omni Medical Services, Inc.
Continued
7
MCCOY BUSINESS SERVICES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
December 31, 2002 and 2001
NOTE D--COMMITMENTS--CONTINUED
Future minimum rental payments under the lease as of December 31, 2002 are as
follows:
2003 $ 22,517
2004 22,517
2005 22,517
----------
$ 67,551
==========
NOTE--RELATED PARTY
The due to/from related party relates primarily to amounts resulting from the
allocation of expenses between McCoy Business and McCoy Financial.
As discussed in Note A, the Company had a previous coffee shop operation.
McCoy Business had advanced funds to this operation. During 2001, the coffee
shop was sold and the outstanding advances due to McCoy Business of $58,691
were deemed uncollectible and charged to bad debt expense.
NOTE F--RETIREMENT PLAN
The Company has a defined contribution retirement plan that covers
substantially all employees, including those of McCoy Business. The plan also
contains a deferred-salary arrangement under a Simple IRA. Under the
deferred-salary arrangement, employees can contribute up to $7,000 for 2002
and $6,500 for 2001. Company may match up to the first 3% of the gross pay.
All contributions are required per the plan adopted by the employer under IRS
5304-Simple. Contributions paid to the plans and charged to operations
amounted to $1,378 for 2002 and $1,997 for 2001.
NOTE G--SUBSEQUENT EVENT
Effective December 1, 2003, McCoy Business was acquired in an asset purchase
agreement by Omni Medical Services, Inc., (Omni) a corporation based in South
Dakota. Omni agreed to purchase the tangible assets related to and used in
the operation of the business related to medical transcription services, and
all existing contracts and proposals with all of McCoy Business' medical
transcription clients. In connection with the agreement, a covenant not to
compete for a period of two years and a twenty-four month employment agreement
to assist in the transition of the business were both entered with the owner
of McCoy Business.
The total purchase price under the agreement was $360,000. The purchase price
of the acquisition has been allocated based on the fair value of all
identifiable assets at the date of acquisition. The purchase price exceeded
the fair value of the identifiable assets by $60,000.
Continued
8
MCCOY BUSINESS SERVICES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
December 31, 2002 and 2001
NOTE--SUBSEQUENT EVENT--CONTINUED
The purchase price allocation for this acquisition was as follows:
Equipment, furniture and other depreciable assets $ 60,000
Non-competition agreement 240,000
Goodwill 60,000
------------
$ 360,000
============
The acquisition was for $120,000 in cash with the remaining balance of
$240,000 to be paid in eight quarterly installments of $30,000 subject to
certain earn-out provisions.
9
INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Carpenter, Mountjoy & Bressler [letterhead]
INDEPENDENT AUDITOR'S REPORT ON ADDITIONAL INFORMATION
To the Stockholder of
McCoy Business Services
Louisville, Kentucky
Our report on our audit of the basic financial statements of McCoy Business
Services, a division of McCoy's Business Services, Inc. for 2002 and 2001
appears on page 1. That audit was conducted for the purpose of forming an
opinion on the basic financial statements taken as a whole. The balance sheet
as of September 30, 2003, the statements of operations and cash flows for the
periods ended September 30, 2003 and 2002 and the applicable footnotes for
these statements on pages 11 through 15 are presented for purposes of
additional analysis and are not a required part of the basic financial
statements. Such information has not been subjected to the auditing
procedures applied in the audit of the basic financial statements and,
accordingly, we express no opinion on them.
/s/Carpenter, Mountjoy & Bressler
Louisville, Kentucky
January 15, 2003
MCCOY BUSINESS SERVICES
BALANCE SHEETS
September 30 December 31
2003 2002
ASSETS (Unaudited)
Current Assets
Cash and equivalents $ 45,253 $ 81,819
Accounts receivable 79,303 88,982
Prepaid expenses 4,577 -
Due from related party 7,374 -
----------- ----------
Total current assets 136,507 170,801
Property, Plant & Equipment
Office furniture and fixtures 11,268 11,268
Medical equipment 90,031 60,100
----------- ----------
101,299 71,368
Less accumulated depreciation 25,383 17,002
----------- ----------
75,916 54,366
----------- ----------
$ 212,423 $ 225,167
=========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable $ 37,398 $ 19,775
Deferred income taxes 22,799 25,020
Accrued expenses 5,039 24,645
Due to related party - 5,888
----------- ----------
Total current liabilities 65,236 75,328
----------- ----------
Deferred Income Taxes 8,934 8,233
Stockholder's Equity
Common stock, no par value, 2,000 shares
authorized, 100 shares issued and outstanding 100 100
Retained earnings 138,153 141,506
----------- ----------
138,253 141,606
----------- ----------
$ 212,423 $ 225,167
=========== ==========
See accompanying notes to interim
financial statements (unaudited)
11
MCCOY BUSINESS SERVICES
STATEMENTS OF OPERATIONS
(Unaudited)
Nine months ended September 30
2003 2002
Revenue $ 476,095 $ 514,507
Expenses
Contract transcription 250,811 266,929
Salaries and wages 118,437 108,929
Employee benefits 18,963 20,085
Auto reimbursement and courier 14,266 16,485
Taxes 9,942 9,015
Other general and administrative 68,839 87,941
-------- ----------
Total expenses 481,258 509,384
-------- ----------
Income (loss) from operations (5,163) 5,123
Other income (expense) 77 255
-------- ----------
Income (loss) before income taxes (5,086) 5,378
Income tax expense (benefit) (1,733) 11,397
-------- ----------
Net Loss $ (3,353) $ (6,019)
======== ==========
See accompanying notes to interim
financial statements (unaudited)
12
MCCOY BUSINESS SERVICES
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30
2003 2002
Cash Flows From Operating Activities
Net loss $ (3,353) $ (6,019)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation 8,381 6,678
Deferred income tax (1,520) 19,941
Change in operating assets and liabilities:
Accounts receivable 9,679 (53,653)
Accounts payable 17,623 6,398
Prepaid expenses (4,577) -
Accrued expenses (19,606) (9,224)
-------- --------
Total adjustments 9,980 (29,860)
-------- --------
Net cash provided by (used in) operating activities 6,627 (35,879)
Cash Flows From Investing Activities
Purchase of fixed assets (29,931) (15,423)
-------- --------
Net cash used in investing activities (29,931) (15,423)
Cash Flows From Financing Activities
Net activity from related party (13,262) (17,996)
-------- --------
Net cash used in investing activities (13,262) (17,996)
-------- --------
Net Decrease in Cash (36,566) (69,298)
Cash, Beginning of Year 81,819 125,167
-------- --------
Cash, End of Year $ 45,253 $ 55,869
======== ========
See accompanying notes to interim
financial statements (unaudited)
13
MCCOY BUSINESS SERVICES
NOTES TO INTERIM FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2003
NOTE A--DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Business: McCoy's Business Services, Inc. is located in Louisville, Kentucky
and primarily operates two divisions. (Effective December 10, 2003, the
Company changed its name to McCoy Financial Services, Inc.) McCoy Business
Services (McCoy Business) provides medical transcription services to medical
practitioners. McCoy Financial Services (McCoy Financial) provides a wide
range of financial services primarily focused at individual customers.
Basis of Presentation: The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. McCoy
Business Services' business is generally not subject to seasonal variations.
Operating results for the nine-month period ended September 30, 2003, are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2003.
In 2003, the tangible assets of McCoy Business were acquired by Omni Medical
Services, Inc. (Omni) (See Note B). Accordingly, the financial statements
presented are for the McCoy Business division only. Effective January 1,
2002, the Company began to separately account for the two operating divisions.
Accordingly, no allocation of accounts was necessary in the preparation of the
interim financial statements.
For further information, refer to the financial statements and footnotes
thereto for the year ended December 31, 2002, included on pages 2-9.
NOTE B--SUBSEQUENT EVENT
Effective December 1, 2003, McCoy Business was acquired in an asset purchase
agreement by Omni Medical Services, Inc., (Omni) a corporation based in South
Dakota. Omni agreed to purchase the tangible assets related to and used in
the operation of the business related to medical transcription services, and
all existing contracts and proposals with all of McCoy Business' medical
transcription clients. In connection with the agreement, a covenant not to
compete for a period of two years and a twenty-four month employment agreement
to assist in the transition of the business were both entered with the owner
of McCoy Business.
The total purchase price under the agreement was $360,000. The purchase price
of the acquisition has been allocated based on the fair value of all
identifiable assets at the date of acquisition. The purchase price exceeded
the fair value of the identifiable assets by $60,000.
Continued
14
MCCOY BUSINESS SERVICES
NOTES TO INTERIM FINANCIAL STATEMENTS (UNAUDITED)--CONTINUED
NOTE B--SUBSEQUENT EVENT--CONTINUED
The purchase price allocation for this acquisition was as follows:
Equipment, furniture and other depreciable assets $ 60,000
Non-competition agreement 240,000
Goodwill 60,000
--------
$360,000
========
The acquisition was for $120,000 in cash with the remaining balance of
$240,000 to be paid in eight quarterly installments of $30,000 subject to
certain earn-out provisions.
15
(b) Pro Forma Financial Information.
OMNI MEDICAL HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Effective December 1, 2003, Omni Medical Holdings, Inc. ("OMH"), through its
wholly-owned subsidiary, Omni Medical Services, Inc., ("OMS"), completed an
asset purchase agreement with McCoy Business Services, Inc. ("McCoy"), a
corporation based in the state of Kentucky and a provider of medical
transcription services. The aggregate purchase price was $360,000 including
$120,000 payable at closing, and $240,000 payable in eight equal quarterly
installments beginning on February 29, 2004. The $240,000 quarterly payments
are subject to an earn-out provision to be calculated based on the amount by
which revenues for each quarter are greater or less than a baseline amount.
The accompanying unaudited pro forma consolidated statements of operations for
the year ended March 31, 2003 and the six months ended September 30, 2003,
give effect to the asset purchase agreement as if it had been consummated on
April 1, 2002. The unaudited pro forma consolidated statements of operations
do not purport to be indicative of the results of operation that actually
would have occurred had the transactions been consummated on April 1, 2002 or
2003, or to project the Company's financial operations to any future period.
The accompanying unaudited pro forma consolidated balance sheet as of
September 30, 2003 gives effect to the asset purchase agreement as of that
date.
The unaudited pro forma consolidated financial statements should be read in
conjunction with the historical financial statements of the Company, as well
as those of McCoy Business Services, Inc.
OMNI MEDICAL HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2003
Historical Pro Forma
Omni Medical Adjustments
Holdings, Inc. (See Note 2) Pro Forma
-------------- ------------ ---------
Assets
Current assets:
Cash $ 27,912 $ (27,912)A $ 0
Accounts Receivable 230,215 230,215
Prepaid assets 6,654 0 6,654
---------- ---------- --------
Total current assets 264,781 (27,912) 236,869
Property and equipment, net 214,695 76,243 A 290,938
Deferred financing costs 25,000 25,000
Goodwill 36,000 36,000
Intangible assets 314,114 300,000 A 614,114
---------- ---------- --------
Total assets $ 854,590 $ 348,331 $1,202,921
========== ========== ==========
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 85,837 $ $ 85,837
Accrued expenses 36,446 92,088 A 128,534
Notes payable, current portion 473,991 128,122 A 602,113
---------- ----------- ----------
Total current liabilities 596,274 220,210 816,484
Note payable, net of current portion 147,228 128,121 A 275,349
---------- ----------- ----------
Total liabilities 743,502 348,331 1,091,833
---------- ----------- ----------
Minority Interest 20,482 - 20,482
Shareholders' equity:
Common stock 10,761 10,761
Common stock to be issued 4,147 4,147
Additional paid-in capital 1,629,005 1,629,005
Deferred compensation expense (35,105) (35,105)
Accumulated deficit (1,518,202) (1,518,202)
----------- ----------- ----------
Total shareholders' equity 90,606 - 90,606
----------- ----------- ----------
Total liabilities and
shareholders' equity $ 854,590 $ 348,331 $1,202,921
=========== =========== ==========
See the accompanying notes to the unaudited pro forma financial statements.
OMNI MEDICAL HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2003
Historical Pro Forma
Omni Medical McCoy Business Adjustments Consolidated
Holdings, Inc. Services, Inc. (See Note 2) Pro Forma
-------------- -------------- ----------- -----------
Revenues $ 96,462 $ 675,194 $ $ 771,656
Cost of sales 0 477,873 477,873
--------- --------- ---------- -----------
Gross profit 96,462 197,321 0 293,783
General and
administrative expenses 230,031 185,810 90,000 B 505,841
--------- ---------- ---------- -----------
Loss from operations (133,569) 11,511 (90,000) (212,058)
Other income (expense):
Interest income 28,627 308 28,935
Interest expense (11,879) - (12,000)C (23,879)
--------- ---------- ---------- -----------
16,748 308 (12,000) 5,056
Net loss continuing
operations (116,821) 11,819 (102,000) (207,002)
Loss from discontinued
operations (386,361) 0 (386,361)
--------- ---------- ---------- -----------
Net loss $(503,182) $ 11,819 $ (102,000) $ (593,363)
========= ========== ========== ===========
Loss per share basic
and diluted:
Continuing operations $ (0.01) $ - $ (0.01)
Discontinued operations (0.02) (0.02)
--------- ---------- -----------
$ (0.03) $ - $ (0.03)
Weighted average number
of common shares
outstanding 19,730,921
See the accompanying notes to the unaudited pro forma financial statements
OMNI MEDICAL HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2003
Historical Pro Forma
Omni Medical McCoy Business Adjustments Consolidated
Holdings, Inc. Services, Inc. (See Note 2) Pro Forma
-------------- -------------- ----------- -----------
Revenues $ 379,839 $ 317,397 $ $ 697,236
Cost of sales 204,474 238,269 442,744
--------- --------- ---------- -----------
Gross profit 175,365 79,127 - 254,492
General and
administrative expenses 312,949 82,569 45,000 B 440,519
--------- --------- ---------- -----------
Loss from operations (137,584) (3,442) (45,000) (186,026)
Other income (expense):
Interest income 260 51 311
Interest expense (17,978) 0 (6,000)C (23,978)
--------- --------- ---------- -----------
(17,718) 51 (6,000) (23,667)
Minority interest 3,402 0 3,402
Net loss continuing
operations (151,900) (3,391) (51,000) (206,291)
Loss from discontinued
operations (33,736) 0 (33,736)
--------- ---------- ---------- -----------
Net loss $(185,636) $ (3,391) $ (51,000) $ (240,027)
========= ========== ========== ===========
Loss per share basic
and diluted:
Continuing operations $ (0.01) $ - $ (0.01)
Discontinued operations - - -
--------- ---------- -----------
$ (0.01) $ $ (0.01)
========= ========== ===========
Weighted average
number of common
shares outstanding 14,420,323
See the accompanying notes to the unaudited pro forma financial statements
OMNI MEDICAL HOLDINS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. Description of the transaction:
Effective December 1, 2003, Omni Medical Holdings, Inc. ("OMH"), through its
wholly-owned subsidiary, Omni Medical Services, Inc., ("OMS"), completed an
asset purchase agreement with McCoy Business Services, Inc. ("McCoy"), a
corporation based in the state of Kentucky and a provider of medical
transcription services. The aggregate purchase price was $360,000 including
$120,000 payable at closing, and $240,000 payable in eight equal quarterly
installments beginning on February 29, 2004. The $240,000 quarterly payments
are subject to an earn-out provision to be calculated based on the amount by
which revenues for each quarter are greater or less than a baseline amount.
The estimated fair values of the assets acquired as of December 1, 2003 are as
follows: furniture and equipment, $60,000, intangible assets covenant not
to compete, customer list and trade name, $2400,000. A supplemental agreement
was signed concurrent with the asset purchase agreement, whereby OMS agreed to
purchase additional assets that were not included in the original agreement
for $16,243.35, payable in eight quarterly installments beginning February 29,
2004.
2. Description of the pro forma adjustments:
(a) To record OMS' purchase of the tangible and intangible assets from
McCoy and the associated debt
(b) To record the amortization of the intangible assets acquired from
the McCoy purchase over the estimated useful lives of the assets
(c) To record the interest expense incurred due to the debt obligation
of the McCoy purchase
3. Discontinued operations:
The historical information presented for Omni Medical Holdings, Inc. for the
year ended March 31, 2003 has been retroactively restated to reflect the May
1, 2003 disposition of a wholly-owned subsidiary as discontinued operations.
4. Difference in periods presented:
The Company's fiscal yearend is March 31. McCoy's fiscal yearend prior to the
acquisition was December 31. For purposes of the proforma financial
statements, McCoy's historical operating results for the year ended March 31,
2003 represent McCoy's operating results for the year ended December 31, 2002.
5. Income taxes
McCoy's results of operations for the year ended December 31, 2002 included
income tax expense. The proforma financial statements do not reflect the
income tax expense due to the net operating losses generated from Omni Medical
Holdings, Inc. as of March 31, 2003.
(c) Exhibits.
Exhibit
Number Description
------ -----------
10.1 Asset Purchase Agreement
Exhibit A-Asset List
Exhibit B-Customer List
Exhibit C-Employment Agreement
10.2 Promissory Note
Security Agreement
Bill of Sale and Assumption Agreement
Covenant Not to Compete
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Current Report to be signed on its
behalf by the undersigned hereunto duly authorized.
OMNI MEDICAL HOLDINGS, INC.
Date: 3/1/04 By /s/ Arthur D. Lyons
------ ------------------------
Arthur D. Lyons
Director and President