MEDICAL MANAGER CORP, S-1/A, 1996-11-21

MEDICAL MANAGER CORP
S-1/A, 1996-11-21
COMPUTER INTEGRATED SYSTEMS DESIGN

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 21, 1996

REGISTRATION NO. 333-13101

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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT

NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------

MEDICAL MANAGER CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7373 59-3396629
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification Number)
organization)
</TABLE>

3001 NORTH ROCKY POINT DRIVE -- SUITE 100
TAMPA, FLORIDA 33607
(813) 287-2990
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------------
JOHN H. KANG
PRESIDENT
MEDICAL MANAGER CORPORATION
3001 NORTH ROCKY POINT DRIVE -- SUITE 100
TAMPA, FLORIDA 33607
(813) 287-2990
(Name and address, including zip code, and telephone
number, including area code, of agent for service)
---------------------

Copies to:

<TABLE>
<S> <C>
Christopher T. Jensen, Esq. Peter J. Romeo, Esq.
Morgan, Lewis & Bockius LLP Michael C. Williams, Esq.
101 Park Avenue Hogan & Hartson L.L.P.
New York, New York 10178 555 Thirteenth Street, NW
(212) 309-6000 Washington, DC 20004
(202) 637-5600
</TABLE>

---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED NOVEMBER 21, 1996

PROSPECTUS

, 1996

5,000,000 SHARES

MEDICAL MANAGER CORPORATION

COMMON STOCK

All of the 5,000,000 shares of Common Stock offered hereby are being sold
by Medical Manager Corporation. Prior to this offering, there has been no public
market for the Common Stock. It is currently estimated that the initial public
offering price will be between $14.00 and $16.00 per share. See "Underwriting"
for a discussion of the factors considered in determining the initial public
offering price.

The Common Stock has been authorized for quotation on the Nasdaq National
Market under the symbol "MMGR," subject to notice of issuance.

SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN THE COMMON STOCK.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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- -------------------------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Per Share......................... $ $ $
Total(3).......................... $ $ $
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</TABLE>

(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.

(2) Before deducting expenses payable by the Company estimated at $ .

(3) The Company has granted to the Underwriters an option, exercisable within 30
days hereof, to purchase up to an aggregate of 750,000 additional shares of
Common Stock at the Price to the Public less Underwriting Discounts and
Commissions, for the purpose of covering over-allotments, if any. If the
Underwriters exercise such option in full, the total Price to the Public,
Underwriting Discounts and Commissions and Proceeds to the Company will be
$ , $ and $ , respectively. See "Underwriting."

The shares of Common Stock are being offered by the several Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain prior conditions, including the right of the Underwriters to
reject orders in whole or in part. It is expected that delivery of such shares
will be made in New York, New York, on or about , 1996.

DONALDSON, LUFKIN & JENRETTE DEAN WITTER REYNOLDS INC.
SECURITIES CORPORATION
<PAGE> 3

[CHART LISTING FEATURES OF THE MEDICAL MANAGER CORE APPLICATION AND OTHER
MODULES]

THE COMPANY INTENDS TO FURNISH ITS STOCKHOLDERS WITH ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS AUDITED BY INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS AND WITH QUARTERLY REPORTS CONTAINING UNAUDITED SUMMARY FINANCIAL
INFORMATION FOR EACH OF THE FIRST THREE QUARTERS OF EACH FISCAL YEAR.
---------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
---------------------

THE COMPANY OWNS OR OTHERWISE HAS RIGHTS TO TRADEMARKS AND TRADE NAMES THAT
IT USES IN CONJUNCTION WITH THE SALE AND LICENSING OF ITS PRODUCTS. THE MEDICAL
MANAGER(@) TRADEMARK MENTIONED IN THIS PROSPECTUS IS OWNED BY THE COMPANY. OTHER
TRADEMARKS OR TRADE NAMES REFERRED TO IN THIS PROSPECTUS ARE THE PROPERTY OF
THEIR RESPECTIVE OWNERS.
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the historical and pro
forma financial statements, including the notes thereto, appearing elsewhere in
this Prospectus. Simultaneously with the closing of this Offering, Medical
Manager Corporation ("MMC") will acquire, in separate transactions (the
"Mergers") in exchange for cash and shares of its Common Stock, five businesses
(each, a "Founding Company" and, collectively, the "Founding Companies")
involved in one or more aspects of the development, sale and support of The
Medical Manager practice management system. Unless otherwise indicated, all
references to the "Company" herein include MMC and the Founding Companies, and
references herein to "MMC" mean Medical Manager Corporation prior to the
consummation of the Mergers. Unless otherwise indicated, all share, per share
and financial data set forth herein (i) have been adjusted to give effect to all
of the Mergers; and (ii) assume no exercise of the Underwriters' over-allotment
option.

THE COMPANY

The Company is a leading provider of comprehensive physician practice
management systems to independent physicians, physician groups, management
service organizations ("MSOs"), independent practice associations ("IPAs"),
managed care organizations and other providers of health care services in the
United States. The Company develops, markets and supports The Medical Manager
practice management system, which addresses the financial, administrative,
clinical and practice management needs of physicians. The Company's system has
been implemented in a wide variety of practice settings from small physician
groups to multi-provider IPAs and MSOs and enables physicians and their
administrative staffs to efficiently manage their practices while delivering
quality patient care in a constantly changing health care environment. Since the
development of The Medical Manager in 1982, the Company's installed base has
grown to over 22,500 client sites with over 100,000 physicians, representing
more than 80 practice specialities, making it the most widely installed
physician practice management system in the United States.

Based on industry sources, there are over 650,000 physicians in more than
140,000 medical practices in the United States. Increasing economic and
regulatory pressures and the growth of managed care organizations have
significantly expanded the demand for all physicians to produce, maintain and
utilize better practice information while controlling costs. As a result, the
Company believes approximately 70% of physician practices now use some computer
system for all or a portion of their information processing requirements.

The Company's strategy is to integrate its research and development, sales,
marketing and support resources and to build upon its leadership position as the
most widely utilized physician practice management system. Key elements of this
strategy include: (i) capitalizing on the Company's national market presence and
the synergies to be created by the Mergers; (ii) consolidating and rationalizing
the existing national network of independent dealers for The Medical Manager
system; (iii) increasing penetration of MSOs and other large physician groups;
(iv) cross-selling existing and new products and services to its installed
client base; and (v) expanding the Company's offering of health care information
products and services.

The Company has entered into agreements to acquire, simultaneously with the
consummation of this Offering, the five Founding Companies. These five entities
include: (i) Personalized Programming, Inc. ("PPI"), the developer of The
Medical Manager practice management system; (ii) Systems Plus, Inc. ("SPI"), the
"master" distributor for The Medical Manager, which coordinates the sales,
support and training activities of approximately 180 independent dealers and
implements national marketing strategies; (iii) National Medical Systems, Inc.
("NMS"), a national dealer for The Medical Manager; (iv) RTI Business Systems,
Inc. ("RTI"), a regional dealer serving the Northeastern region of the United
States; and (v) Systems Management, Inc. ("SMI"), a regional dealer serving the
Midwestern region of the United States. The vertical integration of these five
entities will bring together the research and development, sales, marketing and
support resources for The Medical Manager in one entity covering the entire
United States.

3
<PAGE> 5

Although the five Founding Companies have not previously operated as a
single entity, they have successfully worked together for many years. PPI has
been expanding and improving The Medical Manager system since developing it in
1982, SPI has been the master distributor of The Medical Manager since 1982 and
NMS, RTI and SMI have been selling and supporting The Medical Manager as
independent dealers since 1994, 1988 and 1987, respectively.

The Company expects to realize significant benefits as a result of the
Mergers. The Company anticipates achieving economies of scale and scope with
respect to customer service, research and development, sales and marketing,
administrative functions and purchasing. The Mergers also will allow the Company
both to establish a national accounts group capable of assisting regional
dealers in marketing to, and addressing the support needs of, large health care
provider organizations and to establish resource centers, supported by
centralized corporate and regional operations, including help desks, EDI
departments and advanced technical and programming personnel. This structure is
expected to result in greater overall consistency and a higher level of client
support and service.

THE OFFERING

Common Stock offered by the
Company............................. 5,000,000 shares

Common Stock to be outstanding after
this Offering....................... 18,000,000 shares(1)

Use of Proceeds..................... To pay the cash portion of the purchase
price for the Founding Companies and
for working capital and other general
corporate purposes, including future
acquisitions. See "Use of Proceeds."

Nasdaq National Market symbol....... MMGR
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(1) Includes 13,000,000 shares of Common Stock to be issued in connection with
the Mergers, but excludes 1,081,666 shares of Common Stock subject to
options to be granted in connection with this Offering at an exercise price
equal to the initial public offering price. See "The Company -- Summary of
the Terms of the Mergers," "Management -- 1996 Long-Term Incentive Plan"
and "-- 1996 Non-Employee Directors' Stock Plan."

RISK FACTORS

The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors."

4
<PAGE> 6

SUMMARY PRO FORMA COMBINED FINANCIAL DATA

MMC will acquire the Founding Companies simultaneously with and as a
condition to the consummation of this Offering. For financial statement
presentation purposes, PPI has been identified as the accounting acquiror. The
following summary unaudited pro forma combined financial data present certain
data for the Company, as adjusted for (i) the effects of the Mergers on an
historical basis; (ii) the effects of certain pro forma adjustments to the
historical financial statements; and (iii) the consummation of this Offering.
See "Selected Financial Data" and the Unaudited Pro Forma Combined Financial
Statements and the notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PRO FORMA
------------------------------------
NINE MONTHS
YEAR ENDED ENDED SEPTEMBER 30,
DECEMBER 31, -------------------
1995 1995 1996
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Revenue.................................................. $ 36,312 $25,844 $29,699
Cost of revenue.......................................... 14,928 10,590 12,567
----------- -------- --------
--- ---
Gross profit............................................. 21,384 15,254 17,132
Selling, general and administrative expenses(2).......... 9,005 6,221 7,114
Research and development expenses........................ 2,123 1,558 2,395
Depreciation and amortization............................ 812 585 871
----------- -------- --------
--- ---
Income from operations................................... 9,444 6,890 6,752
Other income (expense) net............................... (24) 0 0
Income before income taxes............................... 9,420 6,890 6,752
Income taxes............................................. 3,627 2,653 2,600
----------- -------- --------
--- ---
Net income............................................... $ 5,793 $ 4,237 $ 4,152
=========== =========== ===========
Net income per share..................................... $ 0.32 $ 0.24 $ 0.23
=========== =========== ===========
Pro forma weighted average shares outstanding............ 18,000 18,000 18,000
=========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
-----------------------------
PRO FORMA(1) AS ADJUSTED(3)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................................ $ 30,332 $ 37,582
Working capital.................................................. 29,105 36,355
Total assets..................................................... 43,814 51,064
Total debt....................................................... -- --
Stockholders' equity............................................. 37,113 44,363
</TABLE>

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(1) The pro forma combined statements of operations and the pro forma balance
sheet assume that the Mergers were closed on January 1 of each period
presented and as of September 30, 1996, respectively. These results are not
necessarily indicative of the results the Company would have obtained or of
the Company's future results. The pro forma combined financial information
contained in these statements (i) is based on preliminary estimates,
available information and certain assumptions that management deems
appropriate; and (ii) should be read in conjunction with the other
financial statements and notes thereto included elsewhere in this
Prospectus.

(2) The pro forma combined statements of operations include the effect of
certain reductions in salary and benefits to the owners and employees of
two of the Founding Companies to which they have agreed prospectively, as
follows: for fiscal 1995, $682,000; and for the nine months ended September
30, 1995, $292,000 and September 30, 1996, $743,000. Additionally, the pro
forma combined statements include the effect of certain assets distributed
to and certain expenses assumed by the owners of certain of the Founding
Companies.

(3) Gives effect to the receipt and application of an estimated $67.5 million of
the net proceeds of this Offering. See "Use of Proceeds."

5
<PAGE> 7

SUMMARY INDIVIDUAL FOUNDING COMPANY FINANCIAL DATA

The following table presents summary data for each of the individual
Founding Companies for the three most recent years as well as the most recent
interim period and comparative period of the prior year, as applicable. See the
financial statements of each of the Founding Companies, the related notes
thereto and the other information relating to the Founding Companies contained
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- ---------------------------
1993 1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
PPI:
Revenue............................. $ 6,890 $ 9,617 $11,020 $ 8,347 $ 8,487
Gross profit........................ 6,080 8,250 9,438 7,069 7,231
Selling, general and administrative
expenses......................... 982 1,184 1,350 908 1,041
Research and development expenses... 1,040 1,502 2,024 1,484 1,935
SPI:
Revenue............................. $10,836 $13,501 $15,179 $10,954 $12,203
Gross profit........................ 3,723 5,182 6,078 4,258 4,776
Selling, general and administrative
expenses......................... 2,472 3,023 3,345 2,357 2,921
RTI:
Revenue............................. $ 3,047 $ 4,327 $ 4,954 $ 3,353 $ 4,379
Gross profit........................ 505 1,751 2,253 1,260 1,606
Selling, general and administrative
expenses......................... 925 1,711 2,269 1,313 1,741
NMS(1):
Revenue............................. -- $ 241 $ 2,131 $ 1,591 $ 4,100
Gross profit (loss)................. -- (62) 406 334 1,157
Selling, general and administrative
expenses......................... -- 201 396 250 1,069
Research and development expenses... -- -- -- -- 410
SMI:
Revenue............................. $ 1,744 $ 2,129 $ 2,717 $ 1,738 $ 2,947
Gross profit........................ 414 473 486 277 711
Selling, general and administrative
expenses......................... 314 371 426 323 377
</TABLE>

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(1) Information relating to 1994 is for the four months ended December 31, 1994.

6
<PAGE> 8

THE COMPANY

MMC was founded in July 1996 to bring together the research and
development, sales, marketing and support resources for The Medical Manager, a
leading physician practice management system for independent physicians,
physician groups, MSOs, IPAs, managed care organizations and other providers of
health care services in the United States. Simultaneously with the closing of
this Offering, MMC will acquire in the Mergers the five Founding Companies,
which will become separate, wholly-owned subsidiaries of MMC.

FOUNDING COMPANIES

PERSONALIZED PROGRAMMING, INC.

PPI was founded in 1981 and is the developer of The Medical Manager
practice management system. Its progressive and innovative approach to computer
programming has made it a leader in the health care information industry. PPI's
research and development staff works closely with its installed client base and
academic institutions to ensure that the product reflects the latest
technologies, changes in health care industry practices and modifications to
state and federal governmental regulations. PPI pioneered electronic claims
submission software as well as electronic data interfaces that allow a direct
interchange of data with hospitals, laboratories, pharmacies and other health
care providers. PPI representatives serve on the President's Workgroup for
Electronic Data Interchange and the American National Standards Institute ("ANSI
X12") committee. Its research and development facility is located in Alachua,
Florida. Michael A. Singer, the founder of PPI, has been employed by PPI since
its inception and will sign a five-year employment agreement with the Company
under which he will both become Chairman of the Board and Chief Executive
Officer of the Company following the consummation of this Offering and continue
in his present position with PPI.

SYSTEMS PLUS, INC.

SPI was founded in 1980 and is principally responsible for sales and
marketing of The Medical Manager. SPI coordinates the sales, support and
training activities of approximately 180 independent dealers. It markets
products, conducts user and dealer training programs, provides technical support
and performs quality assurance testing of The Medical Manager software prior to
general release. SPI also conducts market research, develops arrangements with
providers of complementary products and services, and directs national
advertising, press and media relations. SPI represents The Medical Manager at
major regional and national trade shows and hosts user events such as Basic and
Advanced Training Seminars and its annual MSO Users Conference. SPI is based in
Mountain View, California. Richard W. Mehrlich, the President of SPI, has been
employed by SPI since its inception and will sign a five-year employment
agreement with the Company under which he will become Executive Vice President
of Sales and Marketing of the Company following the consummation of this
Offering and continue in his present position with SPI.

NATIONAL MEDICAL SYSTEMS, INC.

NMS was founded in 1994 and is a national dealer for The Medical Manager
system. Based in Tampa, Florida, NMS maintains six offices located in various
regions of the United States that market, install and support The Medical
Manager and related hardware and software. NMS has entered into a Management
Services Agreement and Option Agreement (the "Agreements"), effective as of
September 1, 1996, with the Medical Manager Division (the "Division") of Medix,
Inc. ("Medix"), a wholly-owned subsidiary of Blue Cross and Blue Shield of New
Jersey, Inc. The Agreements provide for NMS to manage the Division, which is an
independent dealer of a private label physician practice management system
licensed from PPI, until December 31, 1996 or the date of its purchase by NMS,
if earlier. The Agreements provide for NMS to acquire the Division by December
31, 1996 for $3.2 million. If the sale to NMS is not completed by such date, the
Agreements provide for NMS to pay Medix $960,000 as liquidated damages. John H.
Kang, the President of NMS, has been employed by NMS for two years and will sign
a five-year employment agreement with the

7
<PAGE> 9

Company under which he will become President of the Company following the
consummation of this Offering and continue in his present position with NMS.

RTI BUSINESS SYSTEMS, INC.

RTI was founded in 1988 and is a regional dealer for The Medical Manager
system in the Northeastern region of the United States. It is based in Albany,
New York. Henry W. Holbrook, President and Director of Sales and Marketing of
RTI, has been with RTI since its inception and will sign a five-year employment
agreement with the Company under which he will both become Vice
President -- Northeast Region of the Company following the consummation of this
Offering and continue in his present position with RTI.

SYSTEMS MANAGEMENT, INC.

SMI was founded in 1987 and is a regional dealer for The Medical Manager
system in the Midwestern region of the United States. Its headquarters are in
South Bend, Indiana. Thomas P. Liddell, a founder of SMI, has been employed by
SMI since its inception and will sign a five-year employment agreement with the
Company under which he will both become Vice President -- Midwest Region of the
Company following the consummation of this Offering and continue in his present
position with SMI.

SUMMARY OF THE TERMS OF THE MERGERS

Discussions regarding the Mergers and this Offering were begun in early
1996 by NMS with PPI and SPI. Terms for PPI and SPI were determined by
arm's-length negotiations between representatives of NMS and each of PPI and
SPI, with valuations based primarily on pro forma earnings as compared to
comparable companies. Consideration also was given to other assets, such as
intellectual property owned by PPI and SPI and dealer contracts. NMS's terms
were negotiated with PPI and SPI based on the number of NMS client sites, its
national client base, its commitment for capital funding described below, its
planned acquisitions and its role as promoter for the proposed transactions.

In order to obtain a revenue base that would be expected of a publicly-held
company, other dealers were considered for the proposed transactions.
Representatives of NMS negotiated with other major dealers in the spring and
summer of 1996. As of July 31, 1996, RTI and SMI had agreed to participate as
Founding Companies. Terms for RTI and SMI were negotiated between
representatives of each of them and NMS with valuations based on revenues,
number of client sites and pro forma EBITDA.

The cash amounts payable to stockholders of the Founding Companies
generally were structured to approximate 30% of the aggregate consideration
payable. Stockholders of NMS will be receiving all of their consideration in
shares of Common Stock of the Company as the valuation of NMS was based in part
on the contribution of cash through the commitment for capital funding described
below.

The aggregate consideration to be paid by MMC to acquire the Founding
Companies is approximately $255.3 million, consisting of cash and shares of
Common Stock. The following table sets forth the consideration to be paid for
each Founding Company:

<TABLE>
<CAPTION>
COMMON
CASH STOCK(1) TOTAL
(IN THOUSANDS)
<S> <C> <C> <C>
PPI..................................................... $45,000 $ 95,550 $140,550
SPI..................................................... 12,000 33,150 45,150
RTI..................................................... 2,250 5,250 7,500
NMS..................................................... 0 58,353 58,353
SMI..................................................... 1,000 2,697 3,697
-------- --------- ---------
Total......................................... $60,250 $195,000 $255,250
======== ========= =========
</TABLE>

- ---------------

(1) Represents the aggregate cash value of the shares of Common Stock issuable
as consideration, based upon an assumed initial public offering price of
$15.00 per share. The owners of the Founding Companies will receive certain
registration rights applicable to the shares of Common Stock to be received
by them in the Mergers. See "Certain Transactions" and "Shares Eligible for
Future Sale."

8
<PAGE> 10

Upon consummation of the Mergers, each of the Founding Companies will
become a wholly-owned subsidiary of the Company.

In addition, the stockholders of NMS are obligated, on or prior to the
consummation of this Offering, (i) to cause a capital contribution estimated at
$32.2 million to be made to NMS (the "Estimated Capital Contribution"); (ii) to
pay down all indebtedness (approximately $3.1 million as of September 30, 1996)
of NMS (other than trade payables); and (iii) to pay to NMS $3.2 million,
representing the anticipated purchase price of an independent dealer to be
acquired by NMS, for an estimated total capital contribution of $37.9 million.
In the event that all or part of such capital contribution is not invested in
NMS, the aggregate number of shares of Common Stock of the Company to be
received by the stockholders of NMS pursuant to their merger agreement with the
Company (3,890,175) will be reduced by a number of shares equal to the shortfall
divided by the initial offering price of the Company's Common Stock to the
public. The Estimated Capital Contribution is based upon an estimated initial
public offering price of $15.00 and will be reduced or increased proportionately
to the extent such initial public offering price is below or above $15.00,
respectively. In addition, for purposes of determining if the Estimated Capital
Contribution has been met, the stockholders of NMS may include in the
computation of the Estimated Capital Contribution computation a credit of up to
12% for any fees, discounts and placement expenses actually incurred on any sale
of equity to meet such requirement. No assurance can be given that the
conditions to the closing of all the Mergers will be satisfied or waived or that
each Merger will close.

The following table sets forth the number of shares of Common Stock to be
received by the stockholders of each of the Founding Companies in connection
with the Mergers and their respective percentage ownership of the Common Stock
to be outstanding immediately following the Mergers and this Offering, assuming
an initial public offering price of $15.00 and assuming that all of the
Estimated Capital Contribution is invested in NMS or, in the alternative, that
none of the Estimated Capital Contribution is invested in NMS:

<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK COMMON STOCK
ASSUMING ESTIMATED ASSUMING ESTIMATED
CAPITAL CONTRIBUTION PERCENTAGE CAPITAL CONTRIBUTION PERCENTAGE
IS INVESTED OWNERSHIP IS NOT INVESTED OWNERSHIP
<S> <C> <C> <C> <C>
PPI............................. 6,370,000 35.4% 6,370,000 40.2%
SPI............................. 2,210,000 12.3% 2,210,000 13.9%
RTI............................. 350,000 1.9% 350,000 2.2%
NMS............................. 3,890,175 21.6% 1,743,508 11.0%
SMI............................. 179,825 0.9% 179,825 1.1%
</TABLE>

The discussion of the Mergers and this Offering in the remainder of this
Prospectus assumes that all of the Estimated Capital Contribution is invested in
NMS.

For additional information regarding the Mergers, including payments to be
made to principals of the Founding Companies who will become officers,
directors, key employees or holders of more than 5% of the Company's Common
Stock, see "Certain Transactions." For further information concerning the
employment agreements to be entered into by certain officers of the Founding
Companies, see "Management -- Executive Compensation."

Medical Manager Corporation is a Delaware corporation. Its executive
offices are located at 3001 North Rocky Point Drive, Suite 100, Tampa, Florida,
and its telephone number at that address is (813) 287-2990.

9
<PAGE> 11

RISK FACTORS

Prospective investors should carefully consider the factors set forth
below, as well as the other information contained in this Prospectus, in
evaluating an investment in the Common Stock offered hereby.

ABSENCE OF COMBINED OPERATING HISTORY

MMC was founded in July 1996 but has conducted no operations and generated
no revenue to date. MMC has entered into agreements to acquire the Founding
Companies simultaneously with the closing of this Offering. The Founding
Companies have been operating as separate independent entities, and there can be
no assurance that the Company will be able to successfully integrate the
operations of these businesses or institute the necessary Company-wide systems
and procedures to successfully manage the combined enterprise on a profitable
basis. The Company's management group has been assembled only recently, and
there can be no assurance that the management group will be able to successfully
manage the combined entity or effectively implement the Company's internal
growth strategy and acquisition program or that such strategy will be
successful. The pro forma financial results of the Company cover periods when
the Founding Companies and MMC were not under common control or management and,
therefore, may not be indicative of the Company's future financial or operating
results. The inability of the Company to successfully integrate the Founding
Companies would have a material adverse effect on the Company's results of
operations, financial condition or business and would negatively impact the
Company's ability to acquire dealers or otherwise execute its acquisition
strategy. See "Business -- Business Strategy" and "Management."

RISKS ASSOCIATED WITH ACQUISITION STRATEGY

As part of its growth strategy, the Company intends to acquire additional
independent dealers of The Medical Manager physician practice management system
and complementary technologies. Increased competition for acquisition candidates
among the independent dealers may develop, in which event there may be fewer
acquisition opportunities available to the Company as well as higher acquisition
prices. There can be no assurance that the Company will be able to identify,
acquire or profitably integrate and manage additional dealers or complementary
technologies, if any, into the Company without substantial costs, delays or
other operational or financial problems. Further, acquisitions involve a number
of special risks, including possible adverse effects on the Company's operating
results, diversion of management's attention, failure to retain key acquired
personnel, amortization of acquired intangible assets and risks associated with
unanticipated events or liabilities, some or all of which could have a material
adverse effect on the Company's results of operations, financial condition or
business. Customer dissatisfaction or performance problems at a single acquired
company could have an adverse effect on the reputation of the Company and render
ineffective the Company's national sales and marketing initiative. In addition,
there can be no assurance that the Founding Companies or other dealers or
complementary technologies acquired in the future will achieve anticipated
revenue and earnings. There also can be no assurance that the existing dealer
network will be receptive to the Company's acquisition program or that dealers
who are not acquired by the Company will adhere to the Company's marketing,
training, support and pricing directives, thereby impairing the Company's plans
to rationalize its distribution network. See "Business -- Business Strategy."

POSSIBLE NEED FOR ACQUISITION FINANCING

The Company currently intends to finance future acquisitions by using
shares of its Common Stock for all or a substantial portion of the consideration
to be paid. In the event that its Common Stock does not maintain a sufficient
market value, or potential acquisition candidates are otherwise unwilling to
accept Common Stock as part of the consideration for the sale of their
businesses, the Company may be required to utilize more of its cash resources,
if available, in order to initiate and maintain its acquisition program. If the
Company does not have sufficient cash resources, its growth could be limited
unless it is able to obtain additional capital through debt or equity
financings. The Company will seek to obtain one or more commitments to provide
it with a line of credit of approximately $30 million. There can be no assurance
that the Company will be able to obtain any or all the financing it will need on
terms it deems acceptable. See "Use of Proceeds" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

10
<PAGE> 12

DEPENDENCE ON PRINCIPAL PRODUCTS

The Company currently derives a significant percentage of its revenue from
sales of The Medical Manager core system. As a result, any event adversely
affecting sales of its core product could have a material adverse effect on the
Company's results of operations, financial condition or business. Although the
Company, on a pro forma basis, has experienced increasing annual sales, revenue
associated with existing products could decline as a result of several factors,
including price competition and sales practices. There can be no assurance that
the Company will continue to be successful in marketing its current products or
any new or enhanced products. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -- Research and
Development."

DEPENDENCE ON PROPRIETARY SOFTWARE

The Company's success is dependent to a significant extent on its ability
to protect the proprietary and confidential aspects of its software technology.
The Company's software technology is not patented and existing copyright laws
offer only limited practical protection. The Company relies on a combination of
trade secret, copyright and trademark laws, license agreements, nondisclosure
and other contractual provisions and technical measures to establish and protect
its proprietary rights in its products. There can be no assurance that the legal
protections afforded to the Company or the steps taken by the Company will be
adequate to prevent misappropriation of the Company's technology. In addition,
these protections do not prevent independent third-party development of
competitive products or services. The Company believes that its products,
trademarks and other proprietary rights do not infringe upon the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not assert infringement claims against the Company in the future or that
any such assertion will not require the Company to enter into a license
agreement or royalty arrangement with the party asserting the claim. As
competing health care information systems increase in complexity and overall
capabilities and the functionality of these systems further overlap, providers
of such systems may become increasingly subject to infringement claims.
Responding to and defending any such claims may distract the attention of the
Company's management and otherwise have a material adverse effect on the
Company's results of operations, financial condition or business. See
"Business -- Proprietary Rights and Licenses."

RISKS RELATED TO TECHNOLOGICAL CHANGE AND NEW PRODUCT DEVELOPMENT

The market for the Company's products is characterized by rapid change and
technological advances requiring ongoing expenditures for research and
development and the timely introduction of new products and enhancements of
existing products. The Company's future success will depend in part upon its
ability to enhance its current products, to respond effectively to technological
changes, to sell additional products to its existing client base and to
introduce new products and technologies that address the increasingly
sophisticated needs of its clients. The Company will devote significant
resources to the development of enhancements to its existing products and the
migration of existing products to new software platforms. There can be no
assurance that the Company will successfully complete the development of new
products or the migration of products to new platforms or that the Company's
current or future products will satisfy the needs of the market for practice
management systems. Further, there can be no assurance that products or
technologies developed by others will not adversely affect the Company's
competitive position or render its products or technologies noncompetitive or
obsolete. See "Business -- Research and Development."

QUALITY ASSURANCE AND PRODUCT ACCEPTANCE CONCERNS

Health care providers demand the highest level of reliability and quality
from their information systems. Although the Company devotes substantial
resources to meeting these demands, its products may, from time to time, contain
errors. Such errors may result in loss of, or delay in, market acceptance of its
products. Delays or difficulties associated with new product introductions or
product enhancements could have a material adverse effect on the Company's
results of operations, financial condition or business. See "Business --
Research and Development" and " -- Competition."

11
<PAGE> 13

COMPETITION

The market for practice management systems such as The Medical Manager is
highly competitive. The Company's competitors vary in size and in the scope and
breadth of the products and services that they offer. The Company competes with
different companies in each of its target markets. Many of the Company's
competitors have greater financial, development, technical, marketing and sales
resources than the Company. In addition, other entities not currently offering
products and services similar to those offered by the Company, including claims
processing organizations, hospitals, third-party administrators, insurers,
health care organizations and others, may enter certain markets in which the
Company competes. There can be no assurance that future competition will not
have a material adverse effect on the Company's results of operations, financial
condition or business. See "Business -- Competition."

RISK OF PRODUCT-RELATED CLAIMS

Certain of the Company's products provide applications that relate to
financial records, patient medical records and treatment plans. Any failure of
the Company's products to provide accurate, confidential and timely information
could result in product liability or breach of contract claims against the
Company by its clients, their patients or others. The Company's products manage
and report on financial data, and any errors in such financial data could result
in liability to the Company. In addition, because the Company's products
facilitate electronic claims submissions, any resulting loss of financial data
could result in liability to the Company. The Company intends, following this
Offering, to maintain insurance to protect against claims associated with the
use of its products, but there can be no assurance that such insurance coverage
will be available or, if available, will adequately cover any claim asserted
against the Company. A successful claim brought against the Company in excess of
its insurance coverage could have a material adverse effect on the Company's
results of operations, financial condition or business. Even unsuccessful claims
could result in the expenditure of funds in litigation, as well as diversion of
management time and resources. There can be no assurance that the Company will
not be subject to product liability or breach of contract claims, that such
claims will not result in liability in excess of its insurance coverage, that
the Company's insurance will cover such claims or that appropriate insurance
will continue to be available to the Company in the future at commercially
reasonable rates.

DEPENDENCE ON KEY PERSONNEL

The Company's operations are dependent on the continued efforts of the
executive officers and the senior management of the Founding Companies.
Furthermore, the Company will likely be dependent on the senior management of
any businesses acquired in the future. If any of these persons becomes unable or
unwilling to continue in his or her role with the Company, or if the Company is
unable to attract and retain other qualified employees, the Company's business
or prospects could be adversely affected. Although the Company will enter into
an employment agreement, which will include confidentiality and non-compete
provisions, with each of the Company's executive officers, there can be no
assurance that any individual will continue in his present capacity with the
Company for any particular period of time. The success of the Company is also
dependent to a significant degree on its ability to attract, motivate and retain
highly skilled sales, marketing and technical personnel, including software
programmers and systems architects skilled in the computer language with which
the Company's products operate. Competition for such personnel in the software
and information services industries is intense. The loss of key personnel or the
inability to hire or retain qualified personnel could have a material adverse
effect on the Company's results of operations, financial condition or business.
Although the Company has been successful to date in attracting and retaining
skilled personnel, there can be no assurance that the Company will continue to
be successful in attracting and retaining the personnel it requires to
successfully develop new and enhanced products and to continue to grow and
operate profitably. See "Business -- Employees" and "Management."

UNCERTAINTY IN HEALTH CARE INDUSTRY; GOVERNMENT HEALTH CARE REFORM PROPOSALS

The health care industry in the United States is subject to changing
political, economic and regulatory influences that may affect the procurement
practices and operations of health care organizations. The

12
<PAGE> 14

Company's products are designed to function within the structure of the health
care financing and reimbursement system currently being used in the United
States. During the past several years, the health care industry has been subject
to increasing levels of government regulation of, among other things,
reimbursement rates and certain capital expenditures. From time to time, certain
proposals to reform the health care system have been considered by Congress.
These proposals, if enacted, may increase government involvement in health care,
lower reimbursement rates and otherwise change the operating environment for the
Company's clients. Health care organizations may react to these proposals and
the uncertainty surrounding such proposals by curtailing or deferring
investments, including those for the Company's products and services. The
Company cannot predict with any certainty what impact, if any, such proposals or
health care reforms might have on its results of operations, financial condition
or business.

RISKS ASSOCIATED WITH GOVERNMENT REGULATION

The U.S. Food and Drug Administration (the "FDA") has jurisdiction under
the 1976 Medical Device Amendments to the Federal Food, Drug, and Cosmetic Act
(the "FDC Act") to regulate computer products and software as medical devices if
they are intended for use in the diagnosis, cure, mitigation, treatment or
prevention of disease in humans. The FDA has issued a draft policy statement
under which manufacturers of medical image storage devices and related software
are required to submit to the FDA premarket notification applications and
otherwise comply with the requirements of the FDC Act applicable to medical
devices. Recently, FDA officials expressed an intention to initiate agency
rulemaking to exempt certain medical image management devices from premarket
notification procedures, but there can be no assurance that such an exemption
actually will be adopted and, if so, that the rulemaking will apply to the
Company's product.

It is unclear to what extent The Medical Manager, when marketed with a
graphical image capability, would be deemed under the draft policy statement to
be a medical device subject to FDA regulation. As a precaution, the Company has
decided to submit to the FDA an application under Section 510(k) of the FDC Act
to market The Medical Manager with a graphical image capability. Prior to this
decision, a small number of The Medical Manager systems possessing a graphical
image capability were sold. Although the Company believes that enforcement
action by the FDA relating to the prior sales is unlikely due to the nature of
the product and the small number of sales, there can be no assurance that the
FDA will not take such action. Enforcement action can consist of warning
letters, refusal to approve or clear products, revocation of approvals or
clearances previously granted, civil penalties, product seizures, injunctions,
recalls, operating restrictions and criminal prosecutions. Any enforcement
action by the FDA, any refusal by it to grant clearance of the Section 510(k)
application, or any substantial delay by the FDA in granting such clearance
could have a material adverse effect on the Company's results of operations,
financial condition or business. See "Business -- Government Regulation."

CONTROL BY EXISTING MANAGEMENT AND STOCKHOLDERS

Following the completion of the Mergers and this Offering, the Company's
directors, executive officers and holders of more than 5% of the Common Stock,
will beneficially own approximately 66.4% of the outstanding shares of Common
Stock (63.8% if the Underwriters' over-allotment option is exercised in full).
Although these persons do not presently have any agreements or understandings to
act in concert, any such agreement or understanding would allow them to continue
to exercise control over the Company's affairs, to elect the entire Board of
Directors and to control the disposition of any matter submitted to a vote of
stockholders. See "Principal Stockholders."

SUBSTANTIAL PROCEEDS OF OFFERING PAYABLE TO AFFILIATES

Approximately $60.3 million, representing approximately 89.3%, of the net
proceeds of this Offering (or approximately 77.3% of the net proceeds of this
Offering, if the Underwriters' over-allotment option is exercised in full) will
be paid as the cash portion of the purchase price for the Founding Companies.
Approximately $60.3 million of the purchase price will be paid directly or
indirectly to stockholders of the Founding Companies who will become directors,
officers or holders of more than 5% of the Common Stock. Proceeds available for
working capital and other uses by the Company will be approximately $7.2
million,

13
<PAGE> 15

representing 10.7% of the net proceeds of this Offering (or $17.7 million,
representing 22.7% of the net proceeds of this Offering, if the Underwriters'
over-allotment option is exercised in full). See "Use of Proceeds" and "Certain
Transactions."

BENEFITS OF THE OFFERING TO STOCKHOLDERS OF THE FOUNDING COMPANIES

As a result of this Offering and the public market for the Common Stock
that will be created thereby, there will be a significant increase in the value
of the investment of the stockholders of the Founding Companies in the Company.
Based on the combined pro forma stockholders' equity of the Founding Companies,
as adjusted to reflect the aggregate payment of $60.3 million in cash to the
stockholders of the Founding Companies in connection with the Mergers, the
stockholders of the Founding Companies will have paid an average price of $2.21
per share of Common Stock to be received by them in connection with the Mergers.
Accordingly, based on an assumed initial public offering price of $15.00 per
share, the stockholders of the Founding Companies will realize an immediate gain
in the value of their investment of $12.79 per share of Common Stock. See "The
Company -- Summary of the Terms of the Mergers," "Dilution" and "Certain
Transactions."

POTENTIAL ADVERSE MARKET IMPACT OF SHARES ELIGIBLE FOR FUTURE SALE

The market price of the Common Stock may be adversely affected by the sale,
or availability for sale, of substantial amounts of the Common Stock in the
public market following this Offering. The 5,000,000 shares being sold in this
Offering will be freely tradable unless acquired by affiliates of the Company.
Simultaneously with the closing of this Offering, the stockholders of the
Founding Companies will receive, in the aggregate, 13,000,000 shares of Common
Stock as a portion of the consideration for the sale of their businesses to the
Company. These shares have not been registered under the Securities Act of 1933,
as amended (the "Securities Act"), and, therefore, may not be sold unless
registered under the Securities Act or sold pursuant to an exemption from
registration, such as the exemption provided by Rule 144. Furthermore, the
stockholders who will receive these shares have agreed with MMC not to sell,
transfer or otherwise dispose of any of these shares for two years following
consummation of this Offering, subject to reduction in the event the two-year
"holding" period for restricted securities under Rule 144 is reduced by the
Securities and Exchange Commission (the "Commission"). However, the stockholders
who will receive these shares also have certain demand and piggyback
registration rights with respect to these shares. The Company plans to register
an additional 5,000,000 shares of its Common Stock under the Securities Act
within 90 days after completion of this Offering for use by the Company as
consideration for future acquisitions. Upon such registration, these shares will
generally be freely tradable after issuance, unless acquired by parties to the
acquisition or affiliates thereof, other than the issuer, in which case they may
be sold pursuant to Rule 145 under the Securities Act. In addition, resale of
these shares may be contractually restricted. The registration rights described
above will not apply to the registration statement to be filed with respect to
these 5,000,000 additional shares. See "Shares Eligible for Future Sale."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this Offering, there has been no public market for the Common
Stock and there can be no assurance that an active trading market will develop
and continue subsequent to this Offering or that the market price of the Common
Stock will not decline below the initial public offering price. The initial
public offering price for the Common Stock will be determined by negotiation
among the Company and the Representatives of the Underwriters and may bear no
relationship to the price at which the Common Stock will trade after this
Offering. See "Underwriting" for the factors to be considered in determining the
initial public offering price. The Common Stock has been authorized for
quotation on the Nasdaq National Market, subject to notice of issuance. After
this Offering, the market price of the Common Stock may be subject to
significant fluctuations in response to numerous factors, including variations
in the annual or quarterly financial results of the Company or its competitors,
changes by financial research analysts in their estimates of the earnings of the
Company, conditions in the economy in general or in the health care or
technology sectors in particular, announcements of technological innovations or
new products or services by the Company or its

14
<PAGE> 16

competitors, proprietary rights development, unfavorable publicity or changes in
applicable laws and regulations (or judicial or administrative interpretations
thereof) affecting the Company or the health care or technology sectors.
Moreover, from time to time, the stock market experiences significant price and
volume volatility that may affect the market price of the Common Stock for
reasons unrelated to the Company's performance.

IMMEDIATE AND SUBSTANTIAL DILUTION

The purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution in the pro forma net tangible book value of
their shares of $12.84 per share. In the event the Company issues additional
Common Stock in the future, including shares issued in connection with future
acquisitions, purchasers of Common Stock in this Offering may experience further
dilution. See "Dilution."

ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS

The Board of Directors of the Company is empowered to issue preferred stock
in one or more series without stockholder action. The existence of this
"blank-check" preferred stock could render more difficult or discourage an
attempt to obtain control of the Company by means of a tender offer, merger,
proxy contest or otherwise. In addition, the Company's Certificate of
Incorporation (the "Certificate of Incorporation") provides for a classified
Board of Directors, which may also have the effect of inhibiting or delaying a
change in control of the Company. Certain provisions of the Delaware General
Corporation Law may also discourage takeover attempts that have not been
approved by the Board of Directors. The Company's By-laws contain other
provisions that may have an anti-takeover effect. See "Management -- Directors
and Executive Officers," "Principal Stockholders" and "Description of Capital
Stock."

15
<PAGE> 17

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 5,000,000 shares of
Common Stock offered hereby, after deducting underwriting discounts and
estimated offering expenses, are estimated to be approximately $67.5 million
($77.6 million if the Underwriters' over-allotment option is exercised in full).

Of the net proceeds, $60.3 million will be used to pay the cash portion of
the purchase price for the Founding Companies, which will be paid directly or
indirectly to former stockholders of the Founding Companies who will become
officers, directors, key employees or holders of more than 5% of the Common
Stock of the Company.

The approximately $7.2 million of remaining net proceeds will be used for
working capital and for general corporate purposes, which are expected to
include future acquisitions. The Company currently has no binding agreements to
effect any acquisitions. Pending such uses, the net proceeds will be invested in
short-term, interest-bearing, investment grade securities.

The Company intends to obtain a line of credit of approximately $30 million
to be used for working capital and other general corporate purposes, including
future acquisitions. There can be no assurance that any line of credit will be
obtained or that, if obtained, it will be on terms that are favorable to the
Company. See "Risk Factors -- Risks Related to Acquisition Financing" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

DIVIDEND POLICY

The Company intends to retain all of its earnings, if any, to finance the
expansion of its business and for general corporate purposes, including future
acquisitions, and does not anticipate paying any cash dividends on its Common
Stock for the foreseeable future. In addition, in the event the Company is
successful in obtaining one or more lines of credit, it is likely that any such
facility will include restrictions on the ability of the Company to pay
dividends without the consent of the lender.

16
<PAGE> 18

CAPITALIZATION

The following table sets forth the long-term obligations and capitalization
at September 30, 1996 of (i) the Company on a pro forma basis to give effect to
the Mergers; and (ii) the Company on a pro forma as adjusted basis to give
effect to the Mergers, this Offering and the application of the estimated net
proceeds therefrom. See "Use of Proceeds" and "Selected Financial Data." This
table should be read in conjunction with the Unaudited Pro Forma Combined
Financial Statements of the Company and the related notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
------------------------------
PRO FORMA AS ADJUSTED(2)
(IN THOUSANDS)
<S> <C> <C>
Long-term obligations, including current maturities...... $ -- $ --
======== ===========
Stockholders' equity:
Preferred Stock: $0.01 par value, 500,000 shares
authorized; none issued or outstanding.............. -- --
Common Stock: $0.01 par value, 50,000,000 shares
authorized; 13,000,000 shares issued and
outstanding, pro forma; and 18,000,000 shares issued
and outstanding, pro forma as adjusted(1)........... $ 130 $ 180
Additional paid-in capital............................. 36,983 44,183
--------- --------------
Total stockholders' equity.......................... 37,113 44,363
--------- --------------
Total capitalization........................... $37,113 $ 44,363
======== ===========
</TABLE>

- ---------------

(1) Excludes 1,081,666 shares of Common Stock subject to options to be granted
in connection with this Offering at an exercise price equal to the initial
public offering price. See "Management -- 1996 Long-Term Incentive Plan"
and "-- 1996 Non-Employee Directors' Stock Plan."
(2) Gives effect to the receipt and application of an estimated $67.5 million of
the net proceeds of this Offering. See "Use of Proceeds."

17
<PAGE> 19

DILUTION

The pro forma deficit in net tangible book value of the Company as of
September 30, 1996 was approximately $(28.7) million, or approximately $(2.21)
per share of Common Stock, after giving effect to the Mergers. The deficit in
pro forma net tangible book value per share represents the amount by which the
Company's pro forma total liabilities, as adjusted for the payment of $60.3
million in cash to the stockholders of the Founding Companies, exceeds the
Company's pro forma net tangible assets, divided by the number of shares of
Common Stock to be outstanding after giving effect to the Mergers. After giving
effect to the sale of the 5,000,000 shares of Common Stock offered hereby, and
after deducting underwriting discounts and commissions and estimated offering
expenses payable by the Company, the Company's pro forma net tangible book value
at September 30, 1996 would have been approximately $38.8 million, or
approximately $2.16 per share, based on an assumed initial public offering price
of $15.00 per share. This represents an immediate increase in pro forma net
tangible book value of approximately $4.37 per share to existing stockholders
and an immediate dilution of approximately $12.84 per share to new investors
purchasing the shares in this Offering. The following table illustrates this pro
forma dilution on a per share basis:

<TABLE>
<S> <C> <C>
Assumed initial public offering price(1)...................... $ 15.00
Pro forma (deficit) in net tangible book value before this
Offering................................................. $ (2.21)
Increase attributable to new investors...................... 4.37
----------
Pro forma net tangible book value after this Offering......... 2.16
----------
Dilution in net tangible book value to new investors.......... $ 12.84
==========
</TABLE>

The following table sets forth, on a pro forma basis to give effect to the
Mergers as of September 30, 1996, the number of shares of Common Stock purchased
from the Company, the total consideration paid and the average price per share
paid by existing stockholders and the new investors purchasing shares of Common
Stock from the Company in this Offering (before deducting underwriting discounts
and commissions and estimated offering expenses):

<TABLE>
<CAPTION>
AVERAGE PRICE
SHARES PURCHASED TOTAL CONSIDERATION PER SHARE
-------------------- ----------------------
NUMBER PERCENT AMOUNT PERCENT
<S> <C> <C> <C> <C> <C>
Existing stockholders(2)......... 13,000,000 72.2% $(28,739,000) (62.1)% $ (2.21)
New investors.................... 5,000,000 27.8 75,000,000 162.1 15.00
---------- ------- ------------ -------
Total.................. 18,000,000 100.0% $ 46,261,000 100.0%
========= ====== =========== ======
</TABLE>

- ---------------

(1) Before deducting underwriting discounts and commissions and offering
expenses to be paid by the Company.

(2) Total consideration for existing stockholders represents the combined pro
forma stockholders' equity, including the stockholders of the Founding
Companies, before this Offering, adjusted to reflect the payment of $60.3
million in cash to the stockholders of the Founding Companies as part of
the consideration for the Mergers. See "Use of Proceeds," "Capitalization"
and "Certain Transactions."

18
<PAGE> 20

SELECTED FINANCIAL DATA

MMC will acquire the Founding Companies simultaneously with and as a
condition to the consummation of this Offering. For financial statement
presentation purposes, PPI has been identified as the accounting acquiror. The
following selected historical financial data of PPI at December 31, 1994 and
1995 and for the years ended December 31, 1993, 1994 and 1995 have been derived
from the audited financial statements of PPI included elsewhere in this
Prospectus. The following selected historical financial data for PPI at December
31, 1991, 1992 and 1993 and for the years ended December 31, 1991 and 1992 have
been derived from unaudited financial statements of PPI, which have been
prepared on the same basis as the audited financial statements and, in the
opinion of PPI, reflect all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of such data. The following
summary unaudited pro forma financial data present certain data for the Company,
as adjusted for (i) the effects of the Mergers on an historical basis; (ii) the
effects of certain pro forma adjustments to the historical financial statements;
and (iii) the consummation of this Offering. See the Unaudited Pro Forma
Financial Combined Statements and the notes included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------- ---------------------------
1991 1992 1993 1994 1995 1995 1996
(UNAUDITED) (IN THOUSANDS) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
PPI STATEMENT OF OPERATIONS
DATA:
Revenue.................. $ 7,042 $ 8,377 $6,890 $9,617 $11,020 $8,347 $8,487
Cost of revenue.......... 1,009 1,187 810 1,367 1,582 1,278 1,256
---------- ---------- ------ ------ ------- ------ ------
Gross profit............. 6,033 7,190 6,080 8,250 9,438 7,069 7,231
Selling, general and
administrative
expenses.............. 657 745 982 1,184 1,350 908 1,041
Research and development
expenses.............. 716 878 1,040 1,502 2,024 1,484 1,935
Depreciation and
amortization.......... 29 21 105 197 226 140 189
---------- ---------- ------ ------ ------- ------ ------
Income from operations... 4,631 5,546 3,953 5,367 5,838 4,537 4,066
Other income............. 160 110 173 55 108 143 83
Income before income
taxes................. 4,791 5,656 4,126 5,422 5,946 4,680 4,149
Income taxes............. 0 0 0 0 0 0 0
---------- ---------- ------ ------ ------- ------ ------
Net income............... $ 4,791 $ 5,656 $4,126 $5,422 $ 5,946 $4,680 $4,149
========== ========== ====== ====== ======= ====== ======
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, AT
------------------------------------------------ SEPTEMBER 30,
1991 1992 1993 1994 1995 1996
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
PPI BALANCE SHEET DATA:
Working capital................... $ 1,455 $ 1,527 $ 778 $2,009 $1,921 $ 3,057
Total assets...................... 1,865 3,097 3,253 4,716 5,819 5,189
Total debt........................ -- -- -- -- -- --
Stockholder's equity.............. 1,509 2,479 2,582 3,827 4,763 3,501
</TABLE>

19
<PAGE> 21

- ---------------

(3) Gives effect to the receipt and application of an estimated $67.5 million of
the net proceeds of this Offering. See "Use of Proceeds."

20
<PAGE> 22

SELECTED INDIVIDUAL FOUNDING COMPANY FINANCIAL DATA

The following table presents selected financial data for each of the
individual Founding Companies for the three most recent years as well as the
most recent interim period and comparative period of the prior year, as
applicable. See the financial statements of each of the Founding Companies, the
related notes thereto and the other information relating to the Founding
Companies contained elsewhere in this Prospectus.

<TABLE>
<CAPTION> NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
--------------------------- -------------------------
1993 1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
PPI:
Revenue..................................... $ 6,890 $ 9,617 $11,020 $ 8,347 $ 8,487
Gross profit................................ 6,080 8,250 9,438 7,069 7,231
Selling, general and administrative
expenses................................. 982 1,184 1,350 908 1,041
Research and development expenses........... 1,040 1,502 2,024 1,484 1,935
SPI:
Revenue..................................... $10,836 $13,501 $15,179 $10,954 $12,203
Gross profit................................ 3,723 5,182 6,078 4,258 4,776
Selling, general and administrative
expenses................................. 2,472 3,023 3,345 2,357 2,921
RTI:
Revenue..................................... $ 3,047 $ 4,327 $ 4,954 $ 3,353 $ 4,379
Gross profit................................ 505 1,751 2,253 1,260 1,606
Selling, general and administrative
expenses................................. 925 1,711 2,269 1,313 1,741
NMS(1):
Revenue..................................... -- $ 241 $ 2,131 $ 1,591 $ 4,100
Gross profit (loss)......................... -- (62) 406 334 1,157
Selling, general and administrative
expenses................................. -- 201 396 250 1,069
Research and development expenses........... -- -- -- -- 410
SMI:
Revenue..................................... $ 1,744 $ 2,129 $ 2,717 $ 1,738 $ 2,947
Gross profit................................ 414 473 486 277 711
Selling, general and administrative
expenses................................. 314 371 426 323 377
</TABLE>

- ---------------
(1) Information relating to 1994 is for the four months ended December 31, 1994.

21
<PAGE> 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial
statements of each of the Founding Companies and the related notes thereto and
"Selected Financial Data" appearing elsewhere in this Prospectus.

OVERVIEW

The Company is a leading provider of comprehensive physician management
systems to independent physicians, physician groups, MSOs, IPAs, managed care
organizations and other providers of health care services in the United States.
The Company's revenue is derived primarily from the licensing of various
software products, including its core product, The Medical Manager, the
provision of services and the sale of hardware. The Company's primary focus is
on the sale of value-added products and services, while hardware is sold
primarily in response to customer demand. Since the development of The Medical
Manager in 1982, the Company's installed base has grown to over 22,500 client
sites with over 100,000 physicians, representing more than 80 practice
specialities, making it the most widely installed physician practice management
software in the United States.

The Company derives revenue from systems sales, software licensing and
maintenance and other services. Systems sales include sales of physician
practice management systems to new customers and sales of system upgrades and
add-ons to existing customers. Systems sales to new customers include software
licensing, hardware, installation, training, 90 days of software maintenance and
varying periods of hardware maintenance, depending on the warranty of the
manufacturer. System upgrades include software licensing, hardware, installation
and training. System add-ons include additional software licensing, peripheral
hardware and installation. Cost of system sales reflects primarily the cost of
The Medical Manager software, associated hardware, operating systems and
salaries, related benefits, travel and allocations of other overhead costs.

Software license revenue principally represents the licensing of software
to independent dealers for resale. Cost of software license revenue principally
includes the costs of media, duplication, technical documentation and delivery
and allocations of other overhead costs.

Maintenance and other services revenue includes software and hardware
maintenance contracts, training, programming and sales of additional peripheral
hardware. Software maintenance represents revenue derived from maintenance
agreements, providing customers with updates and enhancements developed by the
Company and access to the Company's toll-free telephone support centers.
Hardware maintenance represents revenue derived from maintenance agreements for
repairs and preventative maintenance to the hardware. Both hardware and software
maintenance are optional to the customer for smaller installations and required
for MSO and larger installations. Cost of maintenance contracts revenue reflects
primarily salaries and related benefits, travel and allocations of other
overhead costs.

The Company recognizes systems revenue in accordance with the provisions of
AICPA Statement of Position No. 91-1 "Software Revenue Recognition." Revenue
from support and maintenance contracts is recognized as the services are
performed ratably over the contract period, which typically does not exceed one
year. Revenue from other services is recognized as the services are provided.
Certain expenses are allocated between the cost of sales for systems, software
license and maintenance and other based upon management's estimates.

Selling, general and administrative consist primarily of marketing and
advertising, salaries and related benefits, professional fees, administrative
costs and allocations of other overhead costs.

Research and development expenses represent salaries and related benefits
expenses and allocations of other overhead costs associated with research and
development activities. Software development costs are included in research and
development and are expensed as incurred. Statement of Financial Accounting
Standards No. 86 requires the capitalization of certain software development
costs once technological feasibility is established. The capitalized cost is
then amortized over the estimated product life. The period

22
<PAGE> 24

between achieving technological feasibility and the general availability of such
software has been short and software development costs qualifying for
capitalization have been insignificant.

The Company has entered into agreements to acquire, simultaneously with the
consummation of this Offering, the five Founding Companies: PPI, SPI, NMS, RTI
and SMI. The Founding Companies have been managed throughout the periods
presented as independent private companies, and, as such, their results of
operations reflect different tax structures (S corporations and C corporations),
which have influenced, among other things, their historical levels of owners'
compensation. Certain owners and certain key employees have agreed to reductions
in their compensation and benefits pursuant to employment agreements entered
into in connection with the Mergers.

MMC, which has conducted no operations to date, intends to integrate these
businesses, their operations and administrative functions over a period of time.
This integration process may present opportunities to reduce costs through the
elimination of duplicative functions and through economies of scale, but may
necessitate additional costs and expenditures for corporate management and
administration, corporate expenses related to being a public company, systems
integration and facilities expansion. These various costs and potential cost
savings may make historical operating results not comparable to, or indicative
of, future performance. Accordingly, neither the anticipated savings nor the
anticipated costs have been included in the unaudited pro forma financial data
presented herein.

Accounting for the acquisition will be subject to the procedures specified
in Staff Accounting Bulletin No. 97. As such, PPI has been identified as the
acquiring entity for financial statement presentation purposes. See "-- Results
of Operations -- The Combined Founding Companies."

RESULTS OF OPERATIONS -- PERSONALIZED PROGRAMMING, INC.

Founded in 1981, PPI is the developer of The Medical Manager practice
management system. Its progressive and innovative approach to
computer-programming has made it a leader in the health care information
industry. The following table sets forth certain selected financial information
for the period presented:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------- -------------------------------
1993 1994 1995 1995 1996
(IN THOUSANDS) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Systems.................................. $ 694 10.0% $1,014 10.5% $ 1,018 9.2% $ 751 9.0% $ 566 6.7%
Software license......................... 4,840 70.3 6,328 65.8 7,529 68.3 5,771 69.1 6,055 71.3
Maintenance and other.................... 1,356 19.7 2,275 23.7 2,473 22.5 1,825 21.9 1,866 22.0
------ ----- ------ ----- ------- ----- ------ ----- ------ -----
Total revenue.......................... 6,890 100.0 9,617 100.0 11,020 100.0 8,347 100.0 8,487 100.0
------ ----- ------ ----- ------- ----- ------ ----- ------ -----
Cost of revenue:
Systems.................................. 572 8.3 752 7.8 704 6.4 487 5.8 553 6.5
Software license......................... 63 0.9 381 4.0 651 5.9 600 7.2 381 4.5
Maintenance and other.................... 175 2.6 235 2.4 227 2.1 191 2.3 322 3.8
------ ----- ------ ----- ------- ----- ------ ----- ------ -----
Total cost of revenue.................. 810 11.8 1,368 14.2 1,582 14.4 1,278 15.3 1,256 14.8
------ ----- ------ ----- ------- ----- ------ ----- ------ -----
Gross margin....................... 6,080 88.2 8,249 85.8 9,438 85.6 7,069 84.7 7,231 85.2
------ ----- ------ ----- ------- ----- ------ ----- ------ -----
Operating expenses:
Selling, general and administrative...... 982 14.2 1,184 12.3 1,351 12.3 908 10.9 1,041 12.3
Research and development................. 1,040 15.1 1,502 15.6 2,024 18.4 1,484 17.8 1,935 22.8
Depreciation and amortization............ 105 1.5 196 2.0 226 2.0 140 1.6 189 2.2
------ ----- ------ ----- ------- ----- ------ ----- ------ -----
Total operating expenses............... 2,127 30.8 2,882 29.9 3,601 32.7 2,532 30.3 3,165 37.3
------ ----- ------ ----- ------- ----- ------ ----- ------ -----
Income from operations............. 3,953 57.4 5,367 55.9 5,837 52.9 4,537 54.4 4,066 47.9
Other income (expense):
Interest income.......................... 92 1.3 70 0.6 136 1.2 143 1.7 83 1.0
Other.................................... 81 1.2 (15) (0.1) (27) (0.2) 0 0
------ ----- ------ ----- ------- ----- ------ ----- ------ -----
Net income......................... $4,126 59.9% $5,422 56.4% $ 5,946 53.9% $4,680 56.1% $4,149 48.9%
====== ===== ====== ===== ======= ===== ====== ===== ====== =====
</TABLE>

23
<PAGE> 25

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

Revenue. PPI's total revenue for the nine months ended September 30, 1996
increased to $8.5 million from $8.3 million for the corresponding period in
1995, an increase of $0.2 million or 1.7%. Revenue from systems for the nine
months ended September 30, 1996 decreased to $0.6 million (6.7% of total
revenue) from $0.8 million (9.0% of total revenue) for the corresponding period
in 1995, a decrease of $0.2 million or 24.6%. The decrease was primarily due to
turnover in sales personnel. Revenue from software license for the nine months
ended September 30, 1996 increased to $6.1 million (71.3% of total revenue) from
$5.8 million (69.1% of total revenue) for the corresponding period in 1995, an
increase of $0.3 million or 4.9%. The increase was primarily due to increased
sales of systems to MSOs, which typically generate greater revenue per system
sold than do systems sold to individual practices. Revenue from maintenance and
other sources for the nine months ended September 30, 1996 was essentially
unchanged from the prior year's period at approximately $1.9 million (22.0% of
total revenue in 1996 compared to 21.9% in 1995).

Cost of revenue. The total cost of revenue for the nine months ended
September 30, 1996 was essentially unchanged at $1.3 million. The slight growth
in revenue resulted in a modest increase in gross margin to 85.2% for the nine
months ended September 30, 1996 from 84.7% for the corresponding period in 1995.
Cost of revenue for systems for the nine months ended September 30, 1996
increased to $0.6 million from $0.5 million for the corresponding period in
1995, an increase of $0.1 million or 13.6%. The increase was primarily
attributable to an increase in equipment cost. Cost of revenue for software
license for the nine months ended September 30, 1996 decreased to $0.4 million
from $0.6 million for the corresponding period in 1995, a decrease of $0.2
million or 36.5%. The decrease was primarily due to reduced software royalties
to SPI. Cost of revenue for maintenance and other sources for the nine months
ended September 30, 1996 increased to $0.3 million from $0.2 million for the
corresponding period in 1995, an increase of $0.1 million or 68.6%. The increase
was primarily due to increased cost associated with an annual training and
information seminar held by PPI for its dealers, due to the relocation to a
costlier site for the seminar.

Selling, general and administrative expenses. Selling general and
administrative expenses for the nine months ended September 30, 1996 increased
to $1.0 million (12.3% of total revenue) from $0.9 million (10.9% of total
revenue) for the corresponding period in 1995, an increase of $0.1 million or
14.6%. The increase was primarily attributable to an increase in occupancy costs
for the office facilities distributed in March 1996 to PPI's stockholder and
leased back to PPI and increased professional fees indirectly related to the
Mergers.

Research and development expenses. Research and development expenses
("R&D") for the nine months ended September 30, 1996 increased to $1.9 million
(22.8% of total revenue) from $1.5 million (17.8% of total revenue) for the
corresponding period in 1995, an increase of $0.4 million or 30.4%. The increase
was due to an approximate 40% increase in R&D personnel hired to support
development activity relating to: (i) a new release of The Medical Manager
incorporating an advanced appointment scheduler and other enhancements; (ii)
graphical user interface and relational database technologies for use in future
versions of The Medical Manager; (iii) an electronic medical records module; and
(iv) a module for use in the management of multiple physician practices. Certain
of these initiatives were begun in previous periods, but required additional
resources as they reached more advanced stages of development. Although the
Company believes that the increase in staffing levels and the development of
these initiatives are essential to the continued success of The Medical Manager,
they are not expected to yield any immediate revenue to PPI.

Other income. Other income for the nine months ended September 30, 1996
decreased to $83,593 from $142,843 for the corresponding period in 1995. This
decrease was primarily the result of a decrease in investment income.

YEARS ENDED DECEMBER 31, 1995 AND 1994

Revenue. PPI's total revenue for 1995 increased to $11.0 million from $9.6
million for 1994, an increase of $1.4 million or 14.6%. Revenue from software
license for 1995 increased to $7.5 million (68.3% of total revenue) from $6.3
million (65.8% of total revenue) for 1994, an increase of $1.2 million or 19.0%.
The increase was primarily due to increased sales to MSOs, which typically
generate greater revenue per system

24
<PAGE> 26

sold than do systems sold to individual practices, as well as a release of a new
version of The Medical Manager and the availability of a new module for use in
managed care. Revenue from system sales for 1995 was essentially unchanged at
$1.0 million (9.2% of total revenue for 1995 compared to 10.5% in 1994) from
1994. Revenue from maintenance and other sources for 1995 increased to $2.5
million (22.4% of total revenue) from $2.3 million (23.7% of total revenue) for
1994, an increase of $0.2 million or 8.7%.

Cost of revenue. The total cost of revenue increased in 1995 to $1.6
million from $1.4 million in 1994, an increase of 15.6%, but remained
essentially unchanged as a percentage of total revenue (approximately 14%).
Gross margin decreased slightly to 85.6% in 1995 from 85.8% in 1994. Cost of
revenue for systems for 1995 decreased to $0.7 from $0.8 for 1994, a decrease of
$0.1 million or 6.4%. The decrease was primarily due to a decrease in equipment
cost. Cost of revenue for software license for 1995 increased to $0.7 million
from $0.4 in 1994, an increase of $0.3 million or 70.9%. The increase was
primarily due to a change in the sales mix towards sales requiring royalty
payments to SPI. The requirement to make such payments will be eliminated with
the Mergers. Cost of revenue for maintenance and other sources for 1995 was
essentially unchanged at $0.2 million from the prior year.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased to $1.4 million in 1995 from $1.2 million in
1994, an increase of $0.2 million or 14.0%, but were essentially unchanged as a
percentage of total revenue (12.3%).

Research and development expenses. Research and development expenses for
1995 increased to $2.0 million (18.4% of total revenue) from $1.5 million (15.6%
of total revenue) for 1994, an increase of $0.5 million or 34.8%. The increase
was due to an approximate 35% increase in R&D personnel hired to support
development activity relating to: (i) a new release of The Medical Manager
incorporating an advanced appointment scheduler and other enhancements; (ii) a
module for use in the management of multiple physician practices; and (iii) an
electronic medical records module. Certain of these initiatives were begun in
previous periods, but required additional resources as they reached more
advanced stages of development.

Other income. Other income for 1995 increased to $108,470 from $54,853 for
1994. This increase was primarily the result of an increase in interest income
in 1995.

YEARS ENDED DECEMBER 31, 1994 AND 1993

Revenue. PPI's total revenue for 1994 increased to $9.6 million from $6.9
million for 1993, an increase of $2.7 million or 39.6%. Revenue from software
license for 1994 increased to $6.3 million (65.8% of total revenue) from $4.8
million in 1993 (70.3% of total revenue), an increase of $1.5 million or 30.7%.
Revenue from system sales for 1994 increased to $1.0 million (10.5% of total
revenue) from $0.7 million (10.1% of total revenue), an increase of $0.3 million
or 46.1%. Revenue from maintenance and other sources for 1994 increased to $2.3
million (23.7% of total revenue) from $1.4 million (19.7% of total revenue) for
1993, an increase of $0.9 million or 67.8%. These increases were primarily due
to sales postponed by customers to 1994 due to concerns regarding the impact of
proposed health care legislation.

Cost of revenue. The total cost of revenue for 1995 increased to $1.4
million from $0.8 million in 1994, an increase of 68.9%. The growth in cost of
revenue resulted in a moderate decline in gross margin to 85.8% in 1994 from
88.2% in 1993. Cost of revenue for systems for 1994 increased to $0.8 million
from $0.6 million in 1993, an increase of $0.2 million or 31.5%. This increase
was due primarily to increased systems sales and was partially offset by a
decrease in the cost of equipment. Cost of revenue for software license for 1994
increased to $0.4 million from $0.1 million in 1993, an increase of $0.3 million
or 504.8%. The increase was primarily due to an increase in revenue from
software license and sales requiring royalty payments to SPI that will not be
necessary following the Mergers. Cost of revenue for maintenance and other was
essentially unchanged at $0.2 million.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased to $1.2 million in 1994 from $1.0 million in
1993, an increase of $0.2 million or 20.5%, but decreased moderately as a
percentage of total revenue.

25
<PAGE> 27

Research and development expenses. Research and development expenses for
1994 increased to $1.5 million (15.6% of total revenue) from $1.0 million (15.1%
of total revenue) for 1994, an increase of $0.5 million or 44.4%. The increase
was due to an approximate 63% increase in R&D personnel hired to support the
development of a new version of The Medical Manager incorporating additional
core and office management applications, which was released in June 1995.

Other income. Other income for 1994 decreased to $54,853 from $172,994 in
1993. The decrease was primarily the result of a decrease in interest income and
other commissions income.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth selected information from PPI's statements
of cash flows:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED SEPTEMBER
DECEMBER 31, 30,
--------------------- ---------------
1993 1994 1995 1995 1996
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net cash provided by operations.................. $ 5.1 $ 5.3 $ 6.2 $ 5.1 $ 4.7
Net cash used in investing activities............ (1.0) (0.2) (1.2) (1.1) (0.2)
Net cash used in financing activities............ (4.0) (4.1) (5.1) (2.5) (2.7)
----- ----- ----- ---- -----
Net increase (decrease) in cash and cash
equivalents.................................... $ 0.1 $ 1.0 $(0.1) $ 1.5 $ 1.8
===== ===== ===== ==== =====
</TABLE>

PPI has historically funded its operations with cash flows from operations.
From 1993 through the nine months ended September 30, 1996, PPI generated $21.3
million in cash from operations. Substantially all of the cash generated from
operations was generated by net income plus depreciation and amortization, with
little change in non-cash working capital. During this same period, cash used in
investing activities totaled $2.6 million and was primarily used for the
acquisition of additional office facilities and computer and other equipment.
Cash used in financing activities during this period consisted of S corporation
distributions to PPI's stockholder. In addition, prior to the consummation of
the Mergers, PPI will make distributions to its stockholder in respect of its
estimated S corporation Accumulated Adjustment Account (the "AAA Account")
(currently estimated to be approximately $3.9 million) as of the date of the
closing.

As of September 30, 1996, PPI had a working capital surplus of $3.1 million
and no long-term debt outstanding. While there can be no assurance, management
of PPI believes that PPI has adequate cash flow from operations to fund its
operations through the fourth quarter of 1997.

RESULTS OF OPERATIONS -- THE COMBINED FOUNDING COMPANIES

The Combined Founding Companies' Statement of Operations data for the years
ended December 31, 1993, 1994 and 1995 and for the nine months ended September
30, 1995 and 1996 do not purport to present the results of operations of the
combined Founding Companies in accordance with generally accepted accounting
principles. Instead, they represent merely a summation of revenue, cost of
revenue, gross profit, SG&A and R&D of the individual Founding Companies, on a
historical basis, after the elimination of intercompany revenue and expense, and
exclude the effects of pro forma adjustments, such as the adjustment to
compensation-related expenses reflecting the implementation of the employment
agreements to be entered into by certain members of management. This data will
not be comparable to and may not be indicative of the Company's post-combination
results of operations.

26
<PAGE> 28

The following table sets forth certain selected unaudited combined
financial information on a historical basis, excluding the effects of pro forma
adjustments, for the periods presented.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------ -----------------------------------
1993 1994 1995 1995 1996
(IN THOUSANDS) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Systems......................... $ 3,108 17.0% $ 4,333 17.9% $ 7,106 24.3% $ 4,142 20.1% $ 7,129 26.9%
Software license................ 9,552 52.2 12,215 50.5 13,319 45.5 9,846 47.7 10,559 39.9
Maintenance and other........... 5,624 30.8 7,636 31.6 8,862 30.2 6,652 32.2 8,782 33.2
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total revenue................. 18,284 100.0 24,184 100.0 29,287 100.0 20,640 100.0 26,470 100.0
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Cost of revenue:
Systems......................... 2,113 11.6 1,990 8.2 2,914 10.0 1,317 6.4 4,084 15.4
Software license................ 1,818 9.9 2,532 10.5 2,278 7.8 1,857 9.0 1,577 6.0
Maintenance and other........... 3,632 19.9 4,067 16.8 5,434 18.5 4,268 20.7 5,328 20.1
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total cost of revenue......... 7,563 41.4 8,589 35.5 10,626 36.3 7,442 36.1 10,989 41.5
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Gross margin.............. 10,721 58.6 15,595 64.5 18,661 63.7 13,198 63.9 15,481 58.5
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Operating expenses:
Selling, general and
administrative................ 4,692 25.7 6,490 26.8 7,785 26.6 5,151 25.0 7,149 27.0
Research and development........ 1,040 5.7 1,502 6.2 2,024 6.9 1,484 7.2 2,345 8.8
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

Revenue. The Company's total revenue for the nine months ended September
30, 1996 increased to $26.5 million from $20.6 million for the corresponding
period in 1995, an increase of $5.9 million or 28.2%. Revenue from systems for
the nine months ended September 30, 1996 increased to $7.1 million (26.9% of
total revenue) from $4.1 million (20.1% of total revenue) for the corresponding
period in 1995, an increase of $3.0 million or 72.1%. The increase was primarily
due to increased sales to MSOs, which typically generate greater revenue per
system sold than do systems sold to individual practices and from additional
system sales resulting from the acquisition in January 1996 of GBP With
Excellence, Inc. ("GBP"), a dealer for The Medical Manager serving the state of
Florida. Revenue from software license for the nine months ended September 30,
1996 increased to $10.6 million (39.9% of total revenue) from $9.8 million
(47.7% of total revenue) for the corresponding period in 1995, an increase of
$0.8 million or 7.2%. The increase was due primarily to increased sales to MSOs.
Revenue from maintenance and other sources for the nine months ended September
30, 1996 increased to $8.8 million (33.2% of total revenue) from $6.7 million
(32.2% of total revenue) for the corresponding period in 1995, an increase of
$2.1 million or 32.0%. The increase was primarily a result of sales of
additional maintenance contracts due to continued growth in the Company's
installed base and the acquisition of GBP.

Cost of Revenue. The total cost of revenue for the nine months ended
September 30, 1996 increased to $11.0 million from $7.4 million for the
corresponding period in 1995, an increase of $3.6 million or 47.7%. The growth
in cost of revenue resulted in a decline in gross margin to 58.5% for the nine
months ended September 30, 1996 from 63.9% for the corresponding period in 1995.
Cost of revenue for systems for the nine months ended September 30, 1996
increased to $4.1 million from $1.3 million for the corresponding period in
1995, an increase of $2.8 million or 210.1%. The increase was due principally to
cost inefficiencies associated with the integration of GBP into the Company's
distribution network. The Company does not believe that these inefficiencies
will continue in the future. This was partially offset by a substantial increase
in sales to MSOs, which carry lower unit costs than sales to individual
practices. Cost of revenue for software license for the nine months ended
September 30, 1996 decreased to $1.6 million from $1.9 million for the
corresponding period in 1995, a decrease of $0.3 million or 15.1%. The decrease
was primarily due to greater allocation of overhead to cost of revenue for
systems and maintenance and other sources as revenue increased for these
components at a rate greater than that for software license. Cost of revenue for
maintenance and other sources for the nine months ended September 30, 1996
increased to $5.3 million from $4.3 million for the corresponding period in
1995, an increase of $1.0 million or 24.8%. The increase was due principally to
cost inefficiencies associated with the integration of GBP into the Company's
distribution network.

27
<PAGE> 29

Selling, general and administrative expenses. Selling, general and
administrative expenses increased to $7.1 million for the nine months ended
September 30, 1996 (27.0% of total revenue) from $5.2 million (25.0% of total
revenue) for the corresponding period in 1995, an increase of $1.9 million or
38.8%. The increase was due primarily to an increase of $0.4 million of
additional owners' compensation at RTI, $0.3 million of indirect transaction
costs at NMS, increased selling commissions and other costs from increased
revenue and the hiring of additional administrative and operational personnel in
anticipation of the Mergers.

Research and development. R&D for the nine months ended September 30, 1996
increased to $2.3 million (8.8% of total revenue) from $1.5 million (7.2% of
total revenue) for the corresponding period in 1995, an increase of $0.8 million
or 58.0%. The increase was due to an approximate 50% increase in R&D personnel
hired to support development activity relating to: (i) a new release of The
Medical Manager incorporating an advanced appointment scheduler and other
enhancements; (ii) graphical user interface and relational database technologies
for use in future versions of The Medical Manager; (iii) an electronic medical
records module; (iv) a module for use in the management of multiple physician
practices; and (v) a module for use in claims adjudication. Certain of these
initiatives were begun in previous periods, but required additional resources as
they reached more advanced stages of development.

YEARS ENDED DECEMBER 31, 1995 AND 1994

Revenue. The Company's total revenue for 1995 increased to $29.3 million
from $24.2 million for 1994, an increase of $5.1 million or 21.1%. Revenue from
systems sales for 1995 increased to $7.1 million (24.3% of total revenue) from
$4.3 million (17.9% of total revenue) for 1994, an increase of $2.8 million or
64.0.%. The increase was primarily due to increased sales to MSOs. Revenue for
software license for 1995 increased to $13.3 million (45.5% of total revenue)
from $12.2 million (50.5% of total revenue) for 1994, an increase of $1.1
million or 9.0%. The increase was primarily due to increased sales of systems to
MSOs. Revenue from maintenance and other sources for 1995 increased to $8.0
million (30.2% of total revenue) from $7.6 million (31.6% of total revenue) for
1994, an increase of $1.3 million or 16.1%. The increase was primarily a result
from inclusion of operations of NMS for a full year.

Cost of revenue. The total cost of revenue for 1995 increased to $10.6
million from $8.6 million in 1994, an increase of $2.0 million or 23.7%.Cost of
revenue for systems for 1995 increased to $2.9 million from $2.0 million in
1994, an increase of $0.9 million or 46.4%. The increase was primarily due to
increased revenue and was partially offset by a substantial increase in sales to
MSOs. Cost of revenue for software license for 1995 decreased slightly to $2.3
million from $2.5 million in 1994, a decrease of $0.2 million or 10.0%. The
decrease was primarily due to greater allocation of overhead to cost of revenue
for systems and maintenance and other sources as revenue increased for these
components at a rate greater than that for software license. Cost of revenue for
maintenance and other sources for 1995 increased to $5.4 million from $4.1
million in 1994, an increase of $1.3 million or 33.6%. The increase was
primarily due to the new initiatives for centralized support desk services. The
growth in the cost of revenue resulted in a modest decline in gross margin to
63.7% for 1995 from 64.5% in 1994. The decline in gross margin was principally
due to the Company's decision to hire additional employees to implement new
initiatives in professional and technical services, including centralized
support desk and project managers for large system installations. The Company
does not, however, expect to recognize additional revenue from certain of these
services until future periods.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased to $7.8 million for 1995 from $6.5 million for
1994, an increase of $1.3 million or 20.0%, but were essentially unchanged as a
percentage of total revenue (27.0%).

Research and development expenses. Research and development expenses for
1995 increased to $2.0 million (6.9% of total revenue) from $1.5 million (6.2%
of total revenue) for 1994, an increase of $0.5 million or 34.8%. The increase
was due to an approximate 35% increase in R&D personnel hired to support
development activity relating to: (i) a new release of The Medical Manager
incorporating an advanced appointment scheduler and other enhancements; (ii) a
module for use in the management of multiple physician practices; and (iii) an
electronic medical records module. Although the Company believes that the

28
<PAGE> 30

increase in staffing levels and the development of these initiatives are
essential to the continued success of The Medical Manager, they are not expected
to yield any immediate revenue to the Company.

YEARS ENDED DECEMBER 31, 1994 AND 1993

Revenue. The Company's total revenue for 1994 increased to $24.2 million
from $18.3 million for 1993, an increase of $5.9 million or 32.3%. The increase
was primarily due to sales postponed by customers to 1994 due to concerns in
1993 regarding the impact of proposed health care legislation. Revenue from
software license for 1994 increased to $12.2 million (50.5% of total revenue)
from $9.6 million (52.2% of total revenue) for 1993, an increase of $2.7 million
or 27.9%. Revenue from system sales for 1994 increased to $4.3 million (17.9% of
total revenue) from $3.1 million (17.0% of total revenue) for 1993, an increase
of $1.3 million or 39.4%. Revenue from maintenance and other sources for 1994
increased to $7.6 million (31.6% of total revenue) from $5.6 million (30.8% of
total revenue) for 1993, an increase of $2.0 million or 35.8%.

Cost of revenue. The total cost of revenue for 1994 increased to $8.6
million from $7.6 million in 1993, an increase of $1.0 million or 32.2%. The
reduced growth in the cost of revenue resulted in an increase in gross margin to
64.5% for 1994 from 58.6% in 1993. Cost of revenue for systems for 1994
decreased to $2.0 million from $2.1 million in 1993, a decrease of $0.1 million
or 5.8%. The decrease was primarily due to a decrease in equipment costs for
system sales. Cost of software license for 1994 increased to $2.5 million from
$1.8 million in 1993, a decrease of $0.7 million or 39.3%. Cost of revenue for
maintenance and other sources for 1994 increased to $4.1 million from $3.6
million in 1993, an increase of $0.5 million or 12.0%. The increase in the cost
of software license and maintenance and other sources was primarily due to
increased revenue and was partially offset by non-recurring costs in 1993
associated with an inventory write-down in the amount of $0.3 million and a
legal settlement requiring the buy out of a non-competition agreement by the
founders of RTI in the amount of $0.4 million. These costs did not recur in
1994.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased to $6.5 million for 1994 (26.8% of total
revenue) from $4.7 million (25.7% of total revenue) for 1993, an increase of
$1.8 million or 38.3%. The increase was due primarily to an increase in RTI
owner compensation of $0.5 million.

Research and development expenses. Research and development expenses for
1994 increased to $1.5 million (6.2% of total revenue) from $1.0 million (5.7%
of total revenue) for 1993, an increase of $0.5 million or 44.4%. The increase
was due to an approximate 60% increase in R&D personnel hired to support the
development of a new version of The Medical Manager incorporating additional
core and office management applications, which was released in June 1995.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth certain selected unaudited combined
statements of cash flow information on an historical basis, excluding the
effects of pro forma adjustments, for the periods presented:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- ---------------
1993 1994 1995 1995 1996
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net cash provided by operations............ $ 5.0 $ 7.0 $ 9.2 $ 7.9 $ 6.5
Net cash used in investing activities...... (0.7) (0.2) (2.3) (1.9) (0.3)
Net cash used in financing activities...... (4.3) (5.5) (6.8) (3.9) (3.7)
----- ----- ----- ----- -----
Net increase in cash and cash
equivalents......................... $ 0.0 $ 1.3 $ 0.1 $ 2.1 $ 2.5
===== ===== ===== ===== =====
</TABLE>

29
<PAGE> 31

On a combined basis, for the period from 1993 through the nine months ended
September 30, 1996, the Founding Companies generated $27.7 million in net cash
from operating activities. Substantially all of the net cash generated by
operating activities resulted from net income plus depreciation and
amortization, with little change in non-cash working capital. During this same
period, cash used in investing activities totaled $3.5 million and was primarily
used for the acquisition of dealer operations and net purchases of investments.
Cash used in financing activities during this period consisted primarily of S
corporation distributions to PPI's stockholder and SPI's stockholder.

On the closing of this Offering, the Company intends to repay an aggregate
of $1.5 million in outstanding indebtedness and other obligations of the
Founding Companies. In addition, prior to the consummation of the Mergers, PPI
and SPI will make distributions to their stockholders in respect of their
estimated S corporation AAA Account as of the date of closing. These
distributions relating to the AAA Account (approximately $5.0 million as of
September 30, 1996) are expected to be funded primarily through cash and
investments provided by operating activities. See "Certain Transactions."

The Company anticipates that its cash flow from operations will provide
cash in excess of the Company's normal working capital needs and planned capital
expenditures for property and equipment. On a combined basis, the Founding
Companies made capital expenditures of $1.2 million and $1.1 million during 1995
and the nine months ended September 30, 1996, respectively.

The Company intends to focus on the continued consolidation and
rationalization of The Medical Manager dealer network. As such, the Company's
dealer acquisition strategy will target dealerships with strong presences in key
markets and demonstrated expertise with The Medical Manager product line. The
timing, size or success of any acquisition effort and the associated potential
capital commitments are unpredictable. The Company expects to fund future
acquisitions through a combination of working capital, cash flow from operations
and issuances of additional equity.

The Company intends to obtain a line of credit of approximately $30 million
to be used for working capital and other general corporate purposes, including
future acquisitions, prior to the consummation of this Offering. There can be no
assurance that any line of credit will be obtained or that, if obtained, it will
be on terms that are favorable to the Company. See "Risk Factors -- Risks
Related to Acquisition Financing" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

IMPACT OF INFLATION

Due to the relatively low levels of inflation experienced in recent years,
inflation did not have a significant effect on the results of operations of the
combined Founding Companies for the periods presented.

30
<PAGE> 32

BUSINESS

The Company is a leading provider of comprehensive physician practice
management systems to independent physicians, physician groups, MSOs, IPAs,
managed care organizations and other providers of health care services in the
United States. The Company develops, markets and supports The Medical Manager
practice management system, which addresses the financial and administrative,
clinical and practice management needs of physicians. The Company's system has
been implemented in a wide variety of practice settings, from small physician
groups to multi-provider IPAs and MSOs, and enables physicians and their
administrative staffs to efficiently manage their practices while delivering
quality patient care in a constantly changing health care environment. Since the
development of The Medical Manager in 1982, the Company's installed base has
grown to over 22,500 client sites and over 100,000 physicians, representing more
than 80 practice specialities, making it the most widely installed physician
practice management system in the United States.

The Company has entered into agreements to acquire, simultaneously with the
consummation of this Offering, the five Founding Companies. These five entities
include: (i) PPI, the developer of The Medical Manager practice management
system; (ii) SPI, the "master" distributor for The Medical Manager, which
coordinates the sales, support and training activities of approximately 180
independent dealers and implements national marketing strategies; (iii) NMS, a
national dealer for The Medical Manager; (iv) RTI, a regional dealer serving the
Northeastern region of the United States; and (v) SMI, a regional dealer serving
the Midwestern region of the United States. The vertical integration of these
five entities will bring together the research and development, sales and
support efforts for The Medical Manager in one entity covering the entire United
States. Although the five Founding Companies have not previously operated as a
single entity, they have successfully worked together for many years. PPI has
been expanding and improving The Medical Manager system since developing it in
1982, SPI has been the master distributor of The Medical Manager since 1982 and
NMS, RTI and SMI have been selling and supporting The Medical Manager as
independent dealers since 1994, 1988 and 1987, respectively.

INDUSTRY OVERVIEW

Over the past decade, health care costs in the United States have risen
faster than the overall rate of inflation. According to the U.S. Health Care
Financing Administration, health care expenditures have increased from less than
$250 billion, or approximately 9% of U.S. gross domestic product, in 1980 to
almost $1 trillion, or approximately 14% of U.S. gross domestic product, in
1994. This increase has resulted in broad pressures to reduce costs without
sacrificing the quality of care and has caused significant changes in the health
care industry. While reimbursement for health care has historically been based
on a fee-for-service model of payment, managed care organizations and other
payors are increasingly utilizing alternative reimbursement models that shift
the financial risk of delivering health care from payors to health care
providers, including discounted fee schedules, single payment based on
diagnosis, capitation and other risk sharing arrangements.

The ongoing pressure to contain health care costs and the growing
administrative burdens placed on medical practices have caused physicians to
join together in group practices to share administrative costs and achieve
economies of scale. In addition, other providers and payors are buying and/or
managing physician practices and transforming them into integrated delivery
systems. The Company believes the movement toward group practices has
accelerated the trend toward automation as group practices require the greater
efficiency and productivity of more powerful practice management systems. This
general increase in the size and complexity of medical practices has created a
greater need for analysis of data and production of timely management
information reports that allow physicians, other providers of medical care and
payors to reach informed conclusions regarding the quality and appropriateness
of various procedures and practices.

The expansion in the number of managed care and third-party payor
organizations, as well as additional governmental regulation and the change in
reimbursement models, have greatly increased the complexity of pricing
practices, billing procedures and reimbursement policies impacting medical
practices. Practice management systems help providers reduce the costs and
improve the quality of delivering health care services

31
<PAGE> 33

by automating patient care information systems and administrative processes,
ensuring timely access to relevant information, streamlining the storage and
retrieval of information, and efficiently matching patient needs with available
resources. While early systems concentrated principally on patient billing and
collection activities, systems are now available that record and store clinical
information, automate the processing of insurance and third-party payor claims
and integrate the operations of physician practices with larger health care
organizations such as hospitals, HMOs and management service organizations.

BUSINESS STRATEGY

The Company's strategy is to integrate its research and development,
marketing, sales and support resources and to build upon its leadership position
as the most widely utilized physician practice management system. Key elements
of this strategy include:

Capitalizing on New Corporate Structure. As a result of the Mergers,
the Company expects to achieve significant benefits through a national
market presence, centralized client support and the implementation of a
national retail pricing structure. While the Founding Companies have worked
together successfully for many years, the consummation of this Offering and
the completion of the Mergers will create a vertically integrated entity
that will have greater financial strength and stability than the individual
Founding Companies and that will compete more effectively on national,
regional and local levels. In addition, the Company expects to achieve
significant cost savings as a result of the consolidation of many of the
administrative functions currently handled separately by each of the
Founding Companies. The Mergers will also allow the Company to further
develop its Enterprise Business Group, a national accounts group that
assists regional dealers in marketing to, and addressing the support needs
of, larger provider organizations such as MSOs, IPAs, and managed care
organizations. The Company plans to establish local and regional resource
centers, supported by centralized corporate and regional operations,
including help desks, EDI departments and advanced technical and
programming personnel. The Company expects this structure to result in
greater overall consistency and a higher level of client support.

Consolidating and Rationalizing the Distribution Network. The Company
intends to consolidate and rationalize The Medical Manager distribution
network. Prior to the 1990s, when independent physician practices were most
prevalent, the local focus of The Medical Manager independent dealer
network effectively addressed the practice management needs of the market.
However, due to the numerous trends in the health care industry toward
improved efficiency and cost containment, physicians have been forced to
consolidate into larger practice organizations. To meet the needs of these
larger groups, this Company believes it is necessary to adopt and implement
a product distribution strategy that includes the acquisition of dealers in
major medical communities and large metropolitan markets. These dealers
should enable the Company to market more effectively to larger customers
while assisting the remaining independent dealers in conducting their
marketing activities. The Company also intends to further standardize the
sales and support practices of the independent dealers in order to ensure
that The Medical Manager is sold and supported on a consistent and
effective basis. See "-- Distribution Network."

Increasing Penetration of Management Service Organizations and Other
Large Physician Groups. The Company seeks to increase its sales of
enterprise-wide systems, products and services to MSOs and large physician
groups. As trends in the health care marketplace continue to drive
physician affiliations, the Company believes there is significant
opportunity to increase its share of this rapidly growing segment of the
practice management market. In order to capitalize on these opportunities,
the Company has established the Enterprise Business Group to coordinate
large group sales and support in conjunction with local and regional
dealers. In addition, the Company has enhanced the functionality of The
Medical Manager to deliver increasingly comprehensive physician practice
management services in enterprise-wide settings. The Company believes that
through these efforts it can significantly increase its share of this
market segment.

32
<PAGE> 34

Cross-Selling Products and Services to Existing Client Base. The
Company intends to aggressively cross-sell additional products and services
to its existing client base. A majority of the Company's existing clients
do not currently use The Medical Manager's entire suite of products and
services. Because of its substantial installed base of over 22,500 sites,
as well as the modular, integrated product design of The Medical Manager,
the Company intends to target many of its customers as candidates for
cross-selling opportunities, including system upgrades, additional software
application modules, services such as hardware and software maintenance,
system and process planning, project management, custom programming and EDI
capabilities.

Continuing Development of New Products, Product Enhancements and
Services. The Company intends to continue its leadership role in the
development and introduction of new products, product enhancements and
services for the physician practice marketplace. To do so, the Company
intends to continue to commit significant financial and human resources to
its research and development efforts. A key focus of the Company's research
and development efforts is the further enhancement of The Medical Manager's
ability to operate within a variety of integrated delivery environments.
The Company's strategic development initiatives include advanced systems,
such as a version of The Medical Manager incorporating relational
databases, a graphical user interface and enhanced client-server
applications. The Company develops new products, product enhancements and
services with input from its physician-clients. For 1995 and the first six
months of 1996, the Company's pro forma expenses for research and
development were $2.1 million and $1.5 million, respectively, representing
5.8% and 7.6% of the Company's pro forma revenue for those periods.

PRODUCTS

The Medical Manager is an integrated practice management system
encompassing patient care, clinical, financial and management applications. Due
to its scalable design, The Medical Manager is a cost-effective solution in a
stand-alone or enterprise-wide environment. The Medical Manager is designed to
operate on a wide range of hardware platforms, from Intel-based computer systems
for small and medium sized practices, to RISC-based systems, such as the IBM
RS/6000 and Hewlett-Packard 9000, for larger practices. Its modular, fully
integrated product portfolio allows clients to add incremental capabilities to
existing information systems while preserving and minimizing the need for
capital investments. The latest version of The Medical Manager software is year
2000 enabled.

The pricing of The Medical Manager system is a function of the number of
modules purchased, the number of users per site, the number of practices, the
operating system and the complexity of the installation. Hardware support and
services are priced separately from software products and are typically
coordinated by the dealer.

The Medical Manager system provides to physician practices a broad range of
patient care and practice management features, including:

CORE APPLICATION

The Medical Manager Core Application includes base financial, clinical and
practice management functions.

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- --------------------------- ----------------------------------------------------------------
<S> <C>
The Medical Manager Provides accounts receivable, insurance billing, basic
appointment scheduling and recalls, clinical history, financial
history, referral of physician information, encounter form
tracking, e-mail, office notes, hospital rounds and over 150
standard reports.
</TABLE>

33
<PAGE> 35

OFFICE MANAGEMENT

The Medical Manager Office Management application automates the essential
administrative tasks of a physician practice.

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- --------------------------- ----------------------------------------------------------------
<S> <C>
Automated Collections Maintains notes, promise to pay dates, budget payments, next
action to be taken indicators and prints collection letters;
automates "tickler" system to alert the user when an account
needs attention.
Chart and X-Ray Locator Tracks the location of a patient's medical and X-ray charts.
Advanced Billing Handles sophisticated billing needs, including the necessary
collapsing and sorting of charge items into revenue codes for
UB92 billing purposes; also used for the specialized reporting
needs for Workers' Compensation First Report of Injury.
Custom Report Writer Provides access to all data elements of The Medical Manager;
allows for the creation of user defined custom reports.
Multiple Resource Includes multi-resource display, search and posting of scheduled
Scheduling appointments; coordinates the utilization of exam rooms and
equipment and schedules of teams of physicians, nurses,
therapists and others whose services are needed within a
specific time sequence of one another.
Patient Flow Tracking Allows patient encounters to be tracked from the time the
patient makes the appointment, through encounters in the waiting
room, examination rooms, labs and other areas; reports on time
and resource utilization.
</TABLE>

DEVELOPMENT TOOLS

Development Tools allow data to be accessed and manipulated, adding
flexibility to the system and allowing for customization to meet specialized
needs.

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- --------------------------- ----------------------------------------------------------------
<S> <C>
Data Merge A proprietary 4GL type language that allows the Company, dealers
and other qualified programmers to customize functions and
features of The Medical Manager without changing source code;
also supports the exchange of data between The Medical Manager
and hospital, lab, pharmacy and other medical management
systems.
</TABLE>

ELECTRONIC CONNECTIVITY

Electronic Connectivity supports the electronic submission of claims to
payors, and allows for the open exchange of information between various medical
institutions as well as the transfer of administrative transactions to support
managed care.

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- --------------------------- ----------------------------------------------------------------
<S> <C>
Hospital Information Link A Data Merge tool that allows hospital interfaces to be written
to local hospital requirements.
HL7 Connectivity Engine Allows users to provide real time demographic and encounter
information to hospitals and other organizations (referred to as
"Remotes") and queries the Remote's master patient index in
order to retrieve data on existing patients; also allows the
Remote to automatically advise the user site of patient
admissions and discharges, changes to inpatient/outpatient
status and changes to patient demographic information.
</TABLE>

34
<PAGE> 36

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- --------------------------- ----------------------------------------------------------------
<S> <C>
Electronic Data Interchange An interface that provides state of the art connectivity for
immediate access to various insurance providers, third-party
connectivity networks and other outside facilities; features
include pre-authorization status, benefit eligibility, referral
verification and rosters, as well as credit card and check
approval.
Electronic Claims Supports direct electronic submission of claims to Medicare,
Medicaid, commercial carriers and clearinghouses; expedites
insurance payment turnaround time; verifies claims for accuracy
and reports on submitted claims that have been accepted or
rejected; provides a complete audit trail and reports to ensure
that claims have been processed properly; supports NSF and ANSI
national standards.
Electronic Remittance Used in combination with the Electronic Claims Module to
electronically download Explanation of Benefits ("EOBs") from
Medicare or other claim centers and to post directly into
patients' accounts, thereby saving a substantial amount of data
entry time and preventing keying errors.
</TABLE>

MANAGED CARE APPLICATIONS

Managed Care applications allow physicians to contain costs and deliver a
higher quality of care in the capitated environments.

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- --------------------------- ----------------------------------------------------------------
<S> <C>
Managed Care In addition to the managed care features offered in the base
system, supports the full functions required to track incoming
as well as outgoing referrals to facilities and specialists;
maintains membership eligibility lists, capitation payment
posting, contract management (including number of visits,
allowable time period, procedures and diagnosis treatment plan)
and reporting.
Claims Adjudication Fully integrated with the Managed Care module, provides full
risk management capabilities, including the processing of
received claims, comparing the claim against authorized services
to determine amounts due, generating checks for payments and
producing an EOB; also provides advanced features in the form of
claims repricing, bundling of services, and provider
credentialing.
</TABLE>

CLINICAL APPLICATIONS

The Medical Manager Clinical application developments provide
fully-integrated components of a patient's medical record that contain the
functionality and knowledge bases required in today's practices.

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- --------------------------- ----------------------------------------------------------------
<S> <C>
Quality Care Guidelines Automates the process of tracking both the curative and
preventative services the practice has specified that it wishes
to perform; provides reports on physician compliance with
recommended care guidelines that are based on the patient's age,
sex, diagnoses and other key health factors and are
automatically printed with the patient's encounter form. The
guidelines are derived from U.S. Preventative Healthcare
Guidelines or other clinical knowledge bases and reflect the
practice's own suggested intervals of exams, tests, injections
and other procedures specific to the individual patient.
Laboratory Interface Electronically downloads test requests and patient demographics
to a laboratory, and electronically transfers results directly
into the patient's file in The Medical Manager.
</TABLE>

35
<PAGE> 37

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- --------------------------- ----------------------------------------------------------------
<S> <C>
Prescription Writer Provides a full set of tools for managing both the clinical and
administrative aspects of the prescription process; provides for
extensive interaction checking, patient information printouts
and prescription history on the drugs being prescribed;
administratively reduces physician and staff time spent
preparing and issuing prescriptions.
Pharmacy Interface Offers a direct electronic link to transfer prescriptions and
handle authorization requests between the Prescription Writer
module and the pharmacy.
Image Management Computerizes the storage and retrieval of patient photos, X-rays
and documents.
Voice Dictation Through The Medical Manager's link with Kurzweil Applied
Intelligence software, enables the physician to dictate, edit
and print patient charts and reports; pulls and stores patient
and physician information from the patient file into the chart
via a single, spoken command.
View Patient Chart Brings a snapshot of the patient's medical records to a single
screen and then gives the user instant access to almost any
desired level of underlying detail; allows the screen to be used
for valuable side-by-side analysis of chart data.
Medical Records Designed to provide maximum flexibility and speed in creating,
storing and retrieving whatever medical information the practice
wishes to maintain on each patient, fully integrated with the
product's clinical history, this application addresses the four
fundamental issues concerning medical records: creation and
maintenance of medical records, simultaneous access to patient
records, remote access and data for analysis. Includes patient
encounter knowledge base and generates automated progress notes.
</TABLE>

MSO ENTERPRISE SYSTEM

The MSO Enterprise system addresses the needs of the MSO market by
providing enterprise-wide solutions for the management of integrated provider
networks.

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- --------------------------- ----------------------------------------------------------------
<S> <C>
MSO Enterprise Manager Provides the MSO or multi-practice environment with central
administration of multiple practices, enterprise-wide roll-up
reports, a master patient index for automatic synchronization of
demographic data-updates and remote access across multiple
systems.
</TABLE>

DIALYSIS VERTICAL MARKET OPTION

The Medical Manager Dialysis Vertical Market Option expedites the
repetitive process of posting dialysis patients' weekly treatments.

<TABLE>
<CAPTION>
PRODUCT DESCRIPTION
- --------------------------- ----------------------------------------------------------------
<S> <C>
Dialysis Calendar Posting Using a calendar posting screen, automates and reduces the
repetitive, recurring posting dictated by dialysis treatment.
</TABLE>

CLIENT SERVICES

The Company's Client Services Division provides a wide range of services to
the entire client base to ensure customer satisfaction and maximize the utility
of The Medical Manager system. These services include both fundamental and
value-added services as described below:

Implementation Services. These services include planning, design and
installation of software, hardware and network solutions for stand-alone
practices to enterprise-wide environments. To ensure

36
<PAGE> 38

customer satisfaction, the Company utilizes a team approach involving
technical and professional staff members who have a broad array of
technical and business expertise. This team approach includes project
engineering, business redesign and practice staff re-education. A client
relationship manager, part of the team from the outset, works with the
client throughout the life of the contract.

Support Services. A critical element in assuring proper use of and
satisfaction with the Company's products involves ongoing support services
provided to the end-users. The Company provides to its clients continuing
software and hardware support under agreements that typically have a one
year term. These agreements provide for general support via help desks,
error corrections to software, remote diagnostics and on-site hardware and
software technicians. Support services are provided during normal business
hours and can be expanded to include seven days a week, 24 hour coverage.
As of November 15, 1996, the Company had 165 full-time employees devoted to
providing support services to its customer base.

Value-Added Services. The Company advises its enterprise-wide clients
on how best to bring together disparate physician practices into an
integrated health care delivery network. The Company works in partnership
with its client's clinical and administrative management in the areas of
patient and workflow redesign, job function review and re-education,
standardization consultation, project engineering, timeline and resource
management and ongoing relationship management. The Company and many of its
independent dealers maintain substantial resources capable of providing
custom programming solutions for a broad range of client requests. Many of
these solutions may be generated at the regional and local levels using the
Company's Data Merge language, which allows modification to be made without
changing source code.

Training and Continuing Education. The Company believes initial and
continuing education are key components in ensuring customer satisfaction
and retention and, accordingly, has devoted significant resources to its
Educational Services Division. Because the Medical Manager has been in use
for 14 years, a substantial amount of experience and expertise has been
gained by the Company's training staff in optimizing methodology and
curriculum to achieve the best results. As of November 15, 1996, the
Company had 13 full-time employees in its Education Services Division.
Training methods include classroom and computer-based training, on-site
visits for system setup and review and video training tapes available on
selected modules. The Company also assists its clients in developing their
own training staff, materials and guidelines. Continuing education
programs, a quarterly newsletter and user group conferences are sponsored
by the Company, providing the user with valuable information as well as an
opportunity for the Company to demonstrate new enhancements and features of
the product. The Company makes available to clients extensive user
documentation and reference manuals including, among others, installation
guides, advanced system manuals, a custom report writer manual and an MSO
implementation workbook.

SALES AND MARKETING

The Company sells its products and services nationally through a direct
sales organization consisting of 57 sales personnel, as well as through its
independent dealer network of approximately 180 dealers. This distribution
effort is responsible for sales to new clients, ranging in size from solo
practitioners to enterprise-wide clients, and follow-on sales of upgrades and
enhancements to existing clients. To enhance the effectiveness of its selling
effort, the Company provides its sales force and independent dealer network with
(i) comprehensive training in the Company's products and services; (ii)
marketing materials; and (iii) on-going support.

Small and medium-sized sales, routinely handled by the direct sales force
and independent dealers, generally involve a sales cycle of 30 to 60 days.
Larger sales, managed by the Enterprise Business Group, typically involve a
Request For Proposal process which lengthens the sales cycle to 60 to 90 days or
longer. The Company does not provide its customers with contractual rights to
return its products. Hardware and software maintenance agreements are generally
renewed on an annual basis. Standard payment terms are 50% due upon system order
with the balance due upon completion of system installation.

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To address the more complex needs of larger potential clients, the Company
has formed the Enterprise Business Group consisting of nine members. The Group
coordinates the Company's sales effort for large clients (such as MSOs, IPAs and
managed care organizations) and assists in the implementation of systems and the
maintenance of ongoing client relationships. Many of the independent dealers are
experienced in selling to and supporting enterprise wide clients. The Company
intends to continue to utilize the Enterprise Business Group to assist local and
regional dealers in these efforts. At the enterprise-wide client level,
relationship managers work with the client throughout the contract term to keep
informed of customer expectations and help ensure customer satisfaction.

The Company generates sales leads through referrals from customers and
management consultants, responses to requests for proposals, strategic alliances
with complementary companies, the Company's Internet web sites and associated
links, industry seminars, trade shows, direct telephone and mail campaigns and
advertisements in trade journals.

In order to capitalize on opportunities to cross-sell its products and
services to existing clients, the Company maintains contacts with its clients at
the local, regional and national levels through electronic mail links on its
Internet web sites, monthly and quarterly newsletters, technical updates,
product release bulletins, user meetings, training seminars, industry
conferences and market-specific seminars, such as its MSO User Conference. The
Company also works with certain of its client base on the selection,
implementation, use and benefits derived from the product and publishes these as
Client Profiles, providing both the client and the Company with market exposure
and the opportunity to share successes.

An educational license of The Medical Manager physician practice management
system has been utilized to teach office automation within the medical field for
more than eight years. The system has been installed in vocational schools,
junior colleges and universities nationwide. Delmar Publishers Inc., one of the
leading educational textbook publishers in the country, markets a student
textbook and instructor's manual for courses that teach computer skills in the
medical field, using The Medical Manager. Since 1988, more than 400 site
licenses of the educational version have been sold.

DISTRIBUTION NETWORK

Prior to the 1990s, when independent physician practices were most
prevalent, the local focus of independent dealers effectively addressed the
practice management needs of the market. However, due to the numerous trends in
the health care industry focusing attention on the delivery of high quality and
cost effective care (as well as the need to demonstrate such quality and
effectiveness), individual physicians and small group practices have been forced
to pool their resources in order to compete effectively. As a result, large
physician organizations have become much more prevalent in the medical
marketplace. To keep pace with the increasingly sophisticated practice
management needs of these larger groups, the independent dealers for The Medical
Manager have been consolidating in order to build the necessary technical,
service and support resources.

The Company believes that a fundamental and unique strength of The Medical
Manager is its nationwide dealer network, which currently includes approximately
180 dealer organizations. As a result of the many years of selling and
supporting The Medical Manager product line, the personnel in the Company's
dealer network represent a valuable resource. The Company believes that the
continued consolidation and rationalization of the dealers for The Medical
Manager is a necessary response to changes in the physician marketplace. The
Company's strategy for its dealer network includes the acquisition of dealers in
strategic markets as well as the rationalization of the remaining independent
dealers in order to ensure that The Medical Manager is sold and supported on a
consistent and effective basis throughout the dealer network.

Dealer Acquisitions. The Company believes that it must have representation
in all major medical communities and metropolitan markets throughout the
country. As a result, the Company's dealer acquisition strategy will focus on
acquiring dealerships that have both a strong presence in key markets and
demonstrated expertise with The Medical Manager product line.

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Rationalization of Independent Dealers. The Company intends to continue to
use its existing network of independent dealers as an integral part of its
distribution network for The Medical Manager. The Company will work with its
independent dealers to institute a program to standardize hardware
configurations, client training programs and service levels developed by the
Company. The Company will also provide services to the independent dealers, many
of which are unable to provide such resources as independent entities. Such
services include: (i) dealer training; (ii) help desks; (iii) advanced technical
services, such as custom programming services; and (iv) sales support for large
systems sales from the Enterprise Business Group.

RESEARCH AND DEVELOPMENT

The Company seeks to meet the needs of its clients by continuing to develop
new products and enhancements of existing products. Accordingly, the Company
believes that continued leadership in the practice management systems industry
will require significant additional commitments of resources to research and
development. The Company maintains its research and development campus in
Alachua, Florida, where development of The Medical Manager began over 14 years
ago. As of November 15, 1996, the Company had 50 employees engaged primarily in
its research and development efforts. Pro forma research and development
expenses for 1995 and the first six months of 1996 were $2.1 million and $1.5
million, respectively, and represented 5.8% and 7.6% of pro forma revenue.

The Company's research and development activities involve Company personnel
as well as physicians, physician groups practice staff and leading health care
institutions. A key goal of current research and development efforts involves
adapting The Medical Manager system to operate more effectively within
integrated delivery environments. To achieve this goal, the Company is pursuing
a strategic development initiative directed toward the development of advanced
health care information systems that include a relational database, graphical
user interfaces and enhanced client-server applications. The Company's current
research and development efforts continue the tradition of The Medical Manager
of being a consistent leader in product innovation, as indicated by the
following:

- In 1982, The Medical Manager was first installed.

- In 1985, The Medical Manager released its electronic claims form module.

- In 1987, The Medical Manager became the first practice management system
to perform electronic claims submission in all 50 states.

- In 1988, The Medical Manager released its Report Writer Module.

- In 1990, The Medical Manager released its Data Merge 4GL language module
allowing unlimited customization within The Medical Manager without
changing the source code.

- In January 1991, The Medical Manager released its Electronic Remittance
module.

- In June 1991, The Medical Manager became the first practice management
system to incorporate EDI with electronic interchange partners.

- In 1992, The Medical Manager became the first practice management system
to introduce electronic interfaces to laboratory systems.

- In 1994, The Medical Manager announced its Managed Care Module.

- In January 1995, The Medical Manager released its Quality Care Guidelines
module.

- In October 1995, The Medical Manager released an integrated Claims
Adjudication System.

- In November 1995, The Medical Manager announced its MSO Enterprise
Manager.

- In April 1996, The Medical Manager announced its prototype HL7
Connectivity Engine.

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Current focus areas for new product development and enhancement include the
following:

ENTERPRISE SYSTEM

The Company intends to develop an increasing number of automation tools to
support the growing number of integrated health care delivery systems across the
nation. Developments within The Medical Manager's MSO Enterprise System are
expected to include enterprise appointment and resource scheduling and
enterprise communications. In addition, further developments in The Medical
Manager's connectivity engines should continue to promote the open exchange of
information between medical institutions.

MANAGED CARE

Physicians realize that sophisticated health care automation systems are
required to support managed care, compete for capitated contracts and contain
healthcare costs while providing effective, high quality care. Development
efforts within the Managed Care module are expected to result in a product that
provides referral outcome reporting that can perform outcome analysis across
multiple practices within the provider network. As managed care matures, new
markets will be created that require the support of automation. Development
efforts within the Managed Care module will be designed to support the evolving
subcapitation market by allowing primary care groups to receive the total
capitation from a payor and allocate the capitation payment among contracted
specialists for services they have provided.

CLINICAL APPLICATIONS

The Company recognizes that improvements in the technology that supports
the gathering, storing, retrieving and reporting of clinical data and the
creation of a sophisticated computerized patient record system are critical to
the enhancement and improvement of health care delivery across the nation. As a
result, the Company is engaged in efforts to rapidly develop fully-integrated
components of a computerized patient record containing functionality and
knowledge bases that support the way physicians provide health care services.
Research and analysis of various input technologies and devices continue with
the goal of providing physicians with usable tools that will allow them to
effectively gather and use clinical data at the point-of-care.

GRAPHICAL USER INTERFACE

The Company's graphical user interface is currently under development. The
Company's development efforts are intended to produce a product that will
support users opting to install technology to support a Windows environment, as
well as the Company's current installed base, which has a sizeable investment in
hardware that supports character based applications.

PROPRIETARY RIGHTS AND LICENSES

The Company relies on a combination of trade secret, copyright and
trademark laws, license agreements, nondisclosure and other contractual
provisions and technical measures to establish and protect its proprietary
rights in its products. The Company distributes its products under software
license agreements that grant clients a nonexclusive, nontransferable license to
the Company's products and contain terms and conditions prohibiting the
unauthorized reproduction or transfer of the Company's products. In addition,
the Company attempts to protect its trade secrets and other proprietary
information through agreements with employees and consultants. Substantially all
current employees involved in product development have signed an assignment of
inventions agreement. There can be no assurance that the legal protections
afforded to the Company or the precautions taken by the Company will be adequate
to prevent misappropriation of the Company's technology. In addition, these
protections do not prevent independent third-party development of functionally
equivalent or superior technologies, products or services. Any infringement or
misappropriation of the Company's proprietary software could disadvantage the
Company in its efforts to attract and retain new clients in a highly competitive
market and could cause the Company to lose revenues or incur substantial
litigation expense. The Company believes that, due to the rapid pace of
innovation within the software industry, factors such as the technological and
creative skills of its personnel and ongoing reliable product maintenance and
support are more important in establishing and maintaining a leadership position
within the industry than are the various legal protections afforded to its
technology.

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GOVERNMENT REGULATION

The FDA has jurisdiction under the FDC Act to regulate computer products
and software as medical devices if they are intended for use in the diagnosis,
cure, mitigation, treatment or prevention of disease in humans. The FDA has
issued a draft policy statement relating to picture archiving and communications
systems that requires manufacturers of medical image storage devices and related
software to submit to the FDA premarket notification applications and otherwise
comply with the requirements of the FDC Act applicable to medical devices. The
FDA generally completes its review of applications submitted under Section
510(k) of the FDC Act within four to 12 months, although additional time may be
necessary to resolve significant safety and efficacy issues. Such devices are
subject to the FDC Act's general and special controls, including those relating
to good manufacturing practices and adverse experience reporting.

In order to obtain FDA clearance of a Section 510(k) premarket notification
application, a manufacturer of a device must show that the device is
substantially equivalent to a device for which the FDA has not required the
submission of a premarket approval ("PMA") application. If the FDA determines
that a device for which clearance is being sought is not "substantially
equivalent" to a legally marketed device, a PMA application is required in order
to ship or sell the device commercially in the United States. Such an
application requires extensive testing and other data to demonstrate the safety
and effectiveness of the device, and generally is subject to a lengthy review by
the FDA that often takes two years or more to complete.

It is unclear to what extent The Medical Manager, when marketed with a
graphical image capability, would be subject to FDA regulation as a medical
device. Recently, FDA officials expressed an intention to initiate agency
rulemaking to exempt certain medical image management devices from premarket
notification procedures. Because of the uncertain regulatory status of the
Company's product and the absence of any assurance that the FDA actually will
adopt an exemption that applies to the Company's product. The Company decided to
take the cautious approach of submitting to the FDA a Section 510(k) premarket
notification application to market The Medical Manager with a graphical image
capability.

Prior to the decision to submit a Section 510(k) application, a small
number of The Medical Manager systems possessing a graphical image capability
were sold. While there can be no assurance that the FDA will not take
enforcement action with respect to these prior sales, the Company believes that
such action is unlikely due to the nature of the product and the small number of
units sold with a graphical image capability. Enforcement action can consist of
warning letters, refusal to approve or clear products, revocation of approvals
or clearances previously granted, civil penalties, product seizures,
injunctions, recalls, operating restrictions and criminal prosecutions. Any
enforcement action by the FDA, any refusal by the FDA to grant clearance of the
Section 510(k) application, or any substantial delay by the FDA in granting such
clearance, could have a material adverse effect on the Company's results of
operations, financial condition or business.

COMPETITION

The market for physician practice management systems and services is highly
competitive. The Company believes that the principal competitive factors in this
market include the functionality and price of the practice management system,
the support provided to system users, ongoing research and development efforts
and the national presence and financial stability of the seller. The industry is
fragmented and includes numerous competitors. The Company believes its principal
competitive advantages are the product's substantial installed client base, open
system design and advanced features and capabilities, as well as the Company's
focus on customer support and training programs and its network of dealers. The
Company's principal competitors include other physician practice management
system companies, local software companies and other companies that provide
information systems to health care providers. Certain of the Company's
competitors have greater financial, development, technical, marketing and sales
resources than the Company. In addition, as the market for the Company's
products develops, additional competitors may enter the market and competition
may intensify.

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EMPLOYEES

At November 15, 1996, the Company employed 348 full-time and five part-time
employees. No employees are covered by any collective bargaining agreements. The
Company considers its relationships with its employees to be good.

FACILITIES

The Company's principal corporate offices are located at 3001 North Rocky
Point Drive East, Tampa, Florida. The Company's research and support facilities
are located in Alachua, Florida. The Company also maintains national sales and
support offices in Mountain View, California, and has 17 additional offices in
various regions of the country.

The Company leases all of its properties (an aggregate of 107,413 square
feet) with remaining terms between one and five years. The Company believes that
its facilities are adequate for its current needs and that suitable additional
space will be available as required. See "Certain Transactions" and Note 4 of
Notes to the Company's Unaudited Pro Forma Combined Financial Statements for
information regarding the Company's obligations under its lease agreements.

LEGAL PROCEEDINGS

The Company is, from time to time, a party to litigation arising in the
normal course of its business. The Company is not aware of any pending claims or
threatened claims which, if adversely determined, might materially affect the
Company's results of operations, financial condition or business.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning each of the
Company's current directors, executive officers and those persons who will
become directors and executive officers in connection with this Offering.

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Michael A. Singer.................. 49 Chairman of the Board; Chief Executive Officer(1)
John H. Kang....................... 33 President; Director
Richard W. Mehrlich................ 48 Executive Vice President -- Sales and Marketing;
Director(1)
Wayne Burks........................ 49 Vice President, Treasurer and Chief Financial
Officer; Director(2)
Ricardo A. Salas................... 32 Director(2)
Frederick B. Karl, Jr.............. 42 Vice President, General Counsel and Secretary(1)
Thomas P. Liddell.................. 34 Vice President -- Midwest Region(1)
Henry W. Holbrook.................. 42 Vice President, Sales -- Northeast Region(1)
</TABLE>

- ---------------

(1) Appointment will become effective upon the consummation of this Offering.
(2) Messrs. Burks and Salas will resign as directors and Mr. Salas will resign
as Vice President and Secretary of the Company, effective upon the
consummation of this Offering.

Michael A. Singer will serve as Chairman of the Board and Chief Executive
Officer of the Company, effective upon the consummation of this Offering. Mr.
Singer is the founder of PPI and the principal inventor of The Medical Manager
software program. From PPI's inception in 1981, he has been the sole
shareholder, a director and the President and Chief Executive Officer. Mr.
Singer received a B.A. in Business Administration from the University of Florida
in 1969, and a Masters degree in Economics from the University of Florida in
1971.

John H. Kang has been the President and a director of the Company since
July 1996. He is the founder of NMS and has served as its President since its
inception in 1994. In 1987, Mr. Kang founded J. Holdsworth Capital Ltd., a
private investment firm, and is currently its President. He has been a director
of Amorphous Technologies International, a company engaged in the research and
development and manufacture of metal alloy, since May 1995. Mr. Kang also has
been a director of Nutcracker Snacks, Inc., a manufacturer of snack foods, since
December 1988. From June 1988 to September 1996, Mr. Kang was the Chairman and a
director of Clayton Group, Inc., a distributor of waterworks materials. Mr. Kang
received an A.B. in Economics from Harvard College in 1985.

Richard W. Mehrlich will serve as Executive Vice President -- Sales and
Marketing and will be a director of the Company, effective upon the consummation
of this Offering. Mr. Mehrlich is the founder and a director of SPI, and has
been President and Chief Executive Officer of SPI since its inception in 1980.
Mr. Mehrlich's previous sales and marketing experience includes serving as
Director of Marketing for Dynabyte Corporation, a microcomputer hardware
manufacturer, and as a regional sales representative for Texas Instruments,
Component Sales Division. Mr. Mehrlich received a degree in Electrical
Engineering from the Milwaukee School of Engineering in 1970.

Wayne Burks has been the Vice President, Treasurer and Chief Financial
Officer and a director of the Company since July 1996. He has served as Vice
President and Chief Financial Officer of NMS since 1995. Previously, Mr. Burks
was a partner with Coopers & Lybrand L.L.P. from 1981. He will serve as Chief
Financial Officer of the Company following the consummation of this Offering.
Mr. Burks received a B.S. in Accounting and Business Administration from Troy
State University, Alabama in 1969. He is a member of the American and Florida
Institute of Certified Public Accountants.

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<PAGE> 45

Ricardo A. Salas has been Vice President, Secretary and a director of the
Company since July 1996. He has served as a Vice President of NMS since its
inception in 1994. Since 1987, Mr. Salas has been a Vice President of J.
Holdsworth Capital Ltd., a private investment firm. He also has been a director
of Amorphous Technologies International, a company engaged in the research and
development and manufacture of metal alloy, since May 1995. Mr. Salas has been a
director of Nutcracker Snacks, Inc., a manufacturer of snack foods, since
December 1988. From June 1988 to September 1996, Mr. Salas was a director of
Clayton Group, Inc., a distributor of waterworks materials. Mr. Salas received
an A.B. in Economics from Harvard College in 1986.

Frederick B. Karl, Jr. will serve as Vice President, General Counsel and
Secretary of the Company, effective upon the consummation of this Offering. Mr.
Karl has been the General Counsel of PPI since 1988, and also has served as a
Vice President of PPI since 1990. He provided legal services to PPI from 1984
through 1988 while he was in private practice. Mr. Karl received a B.A. from
Florida State University in 1977 and a J.D. from the University of Florida
College of Law in 1981.

Thomas P. Liddell will serve as Vice President -- Midwest Region, effective
upon the consummation of this Offering. Mr. Liddell founded SMI in 1987 and is
presently responsible for its Marketing, Finance and Administration. Prior to
1987, he was employed by Holy Cross Health System, where he developed software
systems to support national group purchasing and coordinated Hospital ADT and
Clinical Systems selection. Mr. Liddell received a B.S. from Indiana University
in 1985.

Henry W. Holbrook will serve as Vice President, Sales -- Northeast Region
of the Company, effective upon the consummation of this Offering. Mr. Holbrook
is a co-founder, President and Director of Sales and Marketing of RTI, and has
been with RTI since its inception in 1988. Prior to founding RTI, he was Sales
Manager and then Branch Manager of the Hartford, Connecticut office of Contel
Business Systems, Inc. from 1978 to 1988. Mr. Holbrook received a B.S. from
Thomas College in 1978.

BOARD OF DIRECTORS

Board Classification. Effective upon the consummation of this Offering,
the Board of Directors will be divided into three classes, with directors
serving staggered three-year terms, expiring at the annual meeting of
stockholders in 1997, 1998 and 1999, respectively. At each annual meeting of
stockholders, one class of directors will be elected for a full term of three
years to succeed that class of directors whose terms are expiring.

Board Committees. The Board of Directors has established an Audit
Committee and a Compensation Committee, effective upon the consummation of this
Offering. The Audit Committee and the Compensation Committee are expected to
consist solely of outside directors.

Director Compensation. Directors who are also employees of the Company or
one of its subsidiaries will not receive additional compensation for serving as
directors. Under the compensation policy to become effective upon the
consummation of this Offering, non-employee directors will receive an annual
retainer of $2,000 and fees for attending each meeting of the Board and any
Board committee of $1,000. Such cash fees may, at the election of the director,
be paid instead in the form of shares of Common Stock or be deferred in the form
of "deferred shares" under the Company's 1996 Non-Employee Directors' Stock
Plan. In addition, under such plan, each non-employee director will
automatically receive an option to acquire a specified number of shares of
Common Stock (currently 10,000 shares) upon such person's initial election as a
director, and, subject to a limited exception, an annual option to acquire a
specified number of shares (currently 5,000 shares) at each annual meeting of
the Company's stockholders thereafter at which such director is re-elected or
remains a director. See "-- 1996 Non-Employee Directors' Stock Plan." Directors
also will be reimbursed for out-of-pocket expenses incurred in attending
meetings of the Board of Directors or committees thereof, in their capacity as
directors. The Board will periodically review and may revise the compensation
policies for non-employee directors.

Officers. All officers serve at the discretion of the Board of Directors.

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The Company expects to add three additional directors to its Board within
30 days after the date of this Prospectus, none of whom will be either a current
or former employee of the Company.

EXECUTIVE COMPENSATION

The Company was incorporated in July 1996, has conducted no operations and
generated no revenue to date and has not paid any of its executive officers
compensation since its formation.

Each of Messrs. Singer, Kang, Mehrlich, Burks, Holbrook and Liddell will
enter into an employment agreement with the Company providing for an annual base
salary of $150,000 and a bonus to be determined annually pursuant to an
incentive bonus plan to be established by the Company. Each employment agreement
will be for a term of five years. Effective as of the expiration of such initial
five-year term and as of each anniversary date thereof, the term shall be
extended automatically for an additional 12-month period on the same terms and
conditions existing at the time of renewal unless, not later than two months
prior to each such respective date, the Company shall have given notice to the
employee that the term shall not be so extended. Each of these agreements will
provide that, in the event of a termination of employment by the Company without
cause (other than upon the death or disability of the employee) or by the
employee for good reason (including a notice of termination by such employee
following a change of control of the Company, as defined in the agreement), the
employee shall be entitled to severance payments equal to the employee's base
salary as in effect immediately prior to such termination over the longer of the
then-remaining term or 24 months (the "Severance Period"). The employee will
also be entitled to coverage under the group medical care, disability and life
insurance benefit plans or arrangements in which the employee is participating
at the time of termination, for the continuation of the Severance Period,
provided the employee does not have comparable substitute coverage from another
employer. Each employment agreement will contain a covenant not to compete with
the Company during the period of employment, as well as during the Severance
Period, without the prior approval of the Board.

1996 LONG-TERM INCENTIVE PLAN

In September 1996, the Board of Directors and the Company's stockholders
approved the Company's 1996 Long-Term Incentive Plan (the "Plan"). The maximum
number of shares of Common Stock that may be subject to outstanding awards may
not exceed the greater of two million shares or 10% of the aggregate number of
shares of Common Stock outstanding. Awards may be settled in cash, shares, other
awards or other property, as determined by the Committee. The number of shares
reserved or deliverable under the Plan and the annual per-participant limit is
subject to adjustment in the event of stock splits, stock dividends and other
extraordinary corporate events.

The purpose of the Plan is to provide executive officers (including
directors who also serve as executive officers), key employees, consultants and
other service providers with additional incentives by increasing their ownership
interests in the Company. Individual awards under the Plan may take the form of
one or more of: (i) either incentive stock options ("ISOs") or non-qualified
stock options ("NQSOs"); (ii) stock appreciation rights ("SARs"); (iii)
restricted or deferred stock; (iv) dividend equivalents; (v) bonus shares and
awards in lieu of Company obligations to pay cash compensation; and (vi) other
awards the value of which is based in whole or in part upon the value of the
Common Stock. Upon a change of control of the Company (as defined in the Plan),
certain conditions and restrictions relating to an award with respect to the
exercisability or settlement of such award will be accelerated.

The Compensation Committee will administer the Plan and generally select
the individuals who will receive awards and the terms and conditions of those
awards (including exercise prices, vesting and forfeiture conditions,
performance conditions and periods during which awards will remain outstanding).
The number of shares deliverable upon exercise of ISOs is limited to 500,000,
and the number of shares deliverable as non-performance based restricted stock
and deferred stock, is limited to 500,000. Shares of Common Stock that are
attributable to awards that have expired, terminated or been canceled or
forfeited or otherwise terminate without delivery of shares are available for
issuance or use in connection with future awards. The Plan also provides that no
participant may be granted in any calendar year awards settleable by delivery of
more than

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<PAGE> 47

250,000 shares, and limits payments under cash-settled awards in any calendar
year to an amount equal to the fair market value of that number of shares.

The Company generally will be entitled to a tax deduction equal to the
amount of compensation realized by a participant through awards under the Plan,
except (i) no deduction is permitted in connection with ISOs if the participant
holds the shares acquired upon exercise for the required holding periods; and
(ii) deductions for some awards could be limited under the $1 million
deductibility cap of Section 162(m) of the Internal Revenue Code. This
limitation, however, should not apply to awards granted under a plan during a
grace period of up to three years following this Offering, and should not apply
to certain options, SARs and performance-based awards granted thereafter if the
Company complies with certain requirements under Section 162(m).

The Plan will remain in effect until terminated by the Board of Directors.
The Plan may be amended by the Board of Directors without the consent of the
stockholders of the Company, except that any amendment, although effective when
made, will be subject to stockholder approval if required by any Federal or
state law or regulation or by the rules of any stock exchange or automated
quotation system on which the Common Stock may then be listed or quoted.

In connection with this Offering, NQSOs to purchase a total of 1,081,666
shares of Common Stock of the Company will be granted as follows: 140,000 shares
to Mr. Karl, and 33,333 shares to Mr. Holbrook. In addition, options to purchase
approximately 908,333 shares will be granted to the employees of the Founding
Companies. Each of the foregoing options will have an exercise price equal to
the initial public offering price per share in this Offering. These options will
vest as to 25% each on the date that is six months, 18 months, 30 months and 42
months after the consummation of this Offering, and will expire on the earlier
of 10 years after the date of grant or three months after termination of
employment.

1996 NON-EMPLOYEE DIRECTORS' STOCK PLAN

The Company's 1996 Non-Employee Directors' Stock Plan (the "Directors'
Plan"), which was adopted by the Board of Directors and approved by the
Company's stockholders in September 1996, provides for (i) the automatic grant
to each non-employee director serving at the commencement of this Offering of an
initial option to purchase 10,000 shares; and thereafter (ii) the automatic
grant to each non-employee director of an initial option to purchase 10,000
shares upon such person's initial election as a director. In addition, the
Directors' Plan provides for an automatic annual grant to each non-employee
director of an option to purchase 5,000 shares at each annual meeting of
stockholders following this Offering; provided, however, that a director will
not be granted an annual option if he or she was granted an initial option
during the preceding three months. The number of shares to be subject to initial
or annual options granted after the first annual meeting of stockholders
following this Offering may be altered by the Board of Directors. A total of
250,000 shares are reserved for issuance under the Directors' Plan. The number
of shares reserved, as well as the number to be subject to automatically granted
options, will be adjusted in the event of stock splits, stocks dividends and
other extraordinary corporate events.

Options granted under the Directors' Plan will have an exercise price per
share equal to the fair market value of a share at the date of grant. The
options to be granted to the non-employee directors of the Company in connection
with this Offering will have an exercise price equal to the initial public
offering price per share in this Offering. Options will expire at the earlier of
10 years after the date of grant or one year after termination of service as a
director. Options will become exercisable one year after the date of grant,
subject to acceleration by the Board of Directors, and will be forfeited upon
termination of service as a director for reasons other than death or disability
unless the director served for at least 11 months after the date of grant or the
option was otherwise exercisable at the date of termination. In addition, the
Directors' Plan permits non-employee directors to elect to receive, in lieu of
cash directors' fees, shares or credits representing "deferred shares" to be
settled at future dates, as elected by the director. The number of shares or
deferred shares received will be equal to the number of shares which, at the
date the fees would otherwise be payable, will have an aggregate fair market
value equal to the amount of such fees. Each "deferred share" will be settled by
delivery of a share of Common Stock at such time as may have been elected by the
director prior to the deferral.

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<PAGE> 48

CERTAIN TRANSACTIONS

ORGANIZATION OF THE COMPANY

Simultaneously with the closing of this Offering, MMC will acquire by
merger all of the issued and outstanding stock of the five Founding Companies,
at which time each Founding Company will become a wholly-owned subsidiary of the
Company. The aggregate consideration to be paid by MMC in the Mergers is
approximately $255.3 million, consisting of approximately $60.3 million in cash
and 13,000,000 shares of Common Stock. The factors considered by the Company in
determining the consideration to be paid included, among others, the historical
operating results, the net worth, the amount and type of indebtedness and the
future prospects of the Founding Companies. Immediately prior to the Mergers,
certain of the Founding Companies will make distributions of approximately $5.0
million, representing S corporation earnings previously taxed to their
respective stockholders. Also, prior to the Mergers, certain of the Founding
Companies will distribute to their respective stockholders approximately
$284,000 in net book value of assets and approximately $193,000 of related
liabilities.

The closing of each Merger is subject to a minimum price requirement for
the Common Stock sold in this Offering and to certain other conditions. These
conditions include, among others, the accuracy on the closing date of the
representations and warranties made by the Founding Companies, their principal
stockholders and by the Company; the performance of each of their respective
covenants included in the merger agreements; and the nonexistence of a material
adverse change in the results of operations, financial condition or business of
the Company. In addition, the stockholders of NMS are obligated on or prior to
the consummation of this Offering, (i) to cause a capital contribution estimated
at $32.2 million to be made to NMS; (ii) to pay down all indebtedness
(approximately $3.1 million as of September 30, 1996) of NMS (other than trade
payables); and (iii) to pay to NMS $3.2 million, representing the anticipated
purchase price of an independent dealer to be acquired by NMS, for an estimated
total capital contribution of $37.9 million. See "The Company -- Summary of the
Terms of the Mergers."

There can be no assurance that the conditions of the Mergers will be
satisfied or waived or that the merger agreements will not be terminated prior
to consummation. If any of the Mergers is terminated for any reason, the Company
likely will not consummate this Offering on the terms described herein.

Pursuant to the agreements to be entered into in connection with the
Mergers, the stockholders of the Founding Companies have agreed not to compete
with the Company for five years, commencing on the date of consummation of this
Offering.

The aggregate consideration paid by MMC for each of the Founding Companies
is as follows: PPI: $140.5 million, consisting of $45.0 million to be paid in
cash and 6,370,000 shares of Common Stock; SPI: $45.1 million, consisting of
$12.0 million to be paid in cash and 2,210,000 shares of Common Stock; NMS:
$58.4 million, consisting of 3,890,125 shares of Common Stock; RTI: $7.5
million, consisting of $2.2 million to be paid in cash and 350,000 shares of
Common Stock; and SMI: $3.7 million, consisting of $1.0 million to be paid in
cash and 179,825 shares of Common Stock.

In connection with the Mergers, and as consideration for their interests in
the Founding Companies, certain executive officers, directors and holders of
more than 5% of the outstanding shares of Common Stock of the Company will
receive, directly or indirectly, cash and shares of Common Stock of the Company
as follows: Mr. Singer -- $45.0 million and 6,370,000 shares of Common Stock;
Mr. Kang -- 1,456,178 shares of Common Stock; Mr. Mehrlich -- $12.0 million and
2,210,000 shares of Common Stock; Mr. Burks -- 203,490 shares of Common Stock;
Mr. Salas -- 1,456,178 shares of Common Stock; Mr. Thomas Liddell -- $0.5
million and 89,913 shares of Common Stock; and Mr. Holbrook -- $1.1 million and
175,000 shares of Common Stock. See "The Company -- Summary of the Terms of the
Mergers."

CERTAIN INDEBTEDNESS

Certain of the Founding Companies have incurred indebtedness that has been
personally guaranteed by their respective stockholders. At September 30, 1996,
the aggregate amount of indebtedness of these Founding

47
<PAGE> 49

Companies that was subject to personal guarantees was approximately $2.0
million. The Company intends to repay substantially all of such indebtedness in
connection with the consummation of the Mergers and to use its best efforts to
have the personal guarantees of the balance of this indebtedness released within
120 days after the closing of this Offering and, in the event that any guarantee
cannot be released, to repay the balance of such indebtedness. The Company will
also repay all of the indebtedness owed to Messrs. Kang, Salas and Burks, which
aggregated $50,000 as of September 30, 1996 and is estimated to be approximately
$650,000 as of the consummation of the Mergers.

REAL ESTATE AND OTHER TRANSACTIONS

PPI leases property in Alachua, Florida that is owned by a company
controlled by Mr. Singer and a member of his family. PPI is responsible for all
real estate taxes, insurance and maintenance relating to the property. The term
of the lease is through March 31, 1999 and provides for two one year extensions
in favor of PPI. The lease commenced on April 1, 1996 and provides for annual
rentals of approximately $320,000. The Company believes that the rent for such
property does not exceed the fair market rental thereof.

Certain property owned by SMI with a net book value of $283,000 as of
September 30, 1996 has been distributed to an entity controlled by the
stockholders of SMI and will be leased to the Company. The lease will be for a
term of five years with three renewal options for five years each and will
provide for annual rent of approximately $69,300. SMI will be responsible for
all real estate taxes, insurance and maintenance. The Company believes that the
rent for such property does not exceed the fair market rental thereof.

Mr. Mehrlich owns a 90% interest in Professional Management Systems, Inc.
("PMSI"), an independent dealer for The Medical Manager system in the greater
Chicago, Illinois area. He acquired the interest in February 1996. SPI
recognized revenue, primarily from software license, from PMSI totaling
approximately $243,000, $190,000 and $154,000 for 1995 and for the nine months
ended September 30, 1995 and 1996, respectively. Such transactions are done on
an arm's-length basis.

COMPANY POLICY

In the future, the Company intends that any transactions with executive
officers, directors and holders of more than 5% of the Common Stock (including
any transactions with respect to PMSI) will be approved by a majority of the
Board of Directors, including a majority of the disinterested members of the
Board of Directors.

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<PAGE> 50

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company, after giving effect to the Mergers
and this Offering, by (i) each person known to beneficially own more than 5% of
the outstanding shares of Common Stock; (ii) each of the Company's directors and
persons who have consented to be named as directors ("named directors"); (iii)
each named executive officer; and (iv) all executive officers, directors and
named directors as a group. All persons listed have an address in care of the
Company's principal executive offices and have sole voting and investment power
with respect to their shares unless otherwise indicated.

<TABLE>
<CAPTION>
PERCENT OF
OWNERSHIP
----------
NUMBER OF SHARES AFTER
NAME BENEFICIALLY OWNED OFFERING
<S> <C> <C>
Michael A. Singer................................................ 6,370,000 35.4%
John H. Kang..................................................... 1,456,178 8.1
Richard W. Mehrlich.............................................. 2,210,000 12.3
Ricardo A. Salas................................................. 1,456,178 8.1
Wayne Burks...................................................... 203,490 1.1
Henry W. Holbrook................................................ 175,000 1.0
Thomas P. Liddell................................................ 89,913 *
Frederick B. Karl, Jr............................................ -- *
All executive officers, directors and persons to be named as
directors as a group (8 persons)............................... 11,960,759 66.4%
</TABLE>

- ---------------

* less than 1.0%

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock, par value $0.01 per share, and 500,000 shares of undesignated
preferred stock, par value $0.01 per share (the "Preferred Stock"). After giving
effect to the Mergers and the completion of this Offering, the Company will have
outstanding 18,000,000 shares of Common Stock (18,750,000 shares if the
Underwriters' over-allotment option is exercised in full) and no shares of
Preferred Stock designated or issued.

The following statements are brief summaries of certain provisions with
respect to the Company's capital stock contained in its Certificate of
Incorporation and By-laws, copies of which have been filed as exhibits to the
Registration Statement. The following is qualified in its entirety by reference
thereto.

COMMON STOCK

The holders of shares of Common Stock are entitled to one vote for each
share held of record on all matters voted upon by stockholders, including the
election of directors. The Certificate of Incorporation does not provide for
cumulative voting, and, accordingly, the holders of a majority of the shares of
Common Stock entitled to vote in any election of directors may elect all of the
directors standing for election. Subject to the rights of any then outstanding
shares of Preferred Stock, the holders of the Common Stock are entitled to such
dividends as may be declared in the discretion of the Board of Directors out of
funds legally available therefor. Holders of Common Stock are entitled to share
ratably in the net assets of the Company upon liquidation after payment or
provision for all liabilities and any preferential liquidation rights of any
Preferred Stock then outstanding. The holders of shares of Common Stock have no
preemptive rights to purchase shares of stock of the Company. Shares of Common
Stock are not subject to any redemption provisions and are not convertible into
any other securities of the Company. All outstanding shares of Common Stock are,
and the shares of

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<PAGE> 51

Common Stock to be issued pursuant to this Offering will be upon payment
therefor, fully paid and nonassessable.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "MMGR," subject to notice of issuance.

PREFERRED STOCK

The Preferred Stock may be issued from time to time by the Board of
Directors in one or more series. Subject to the provisions of the Company's
Certificate of Incorporation and limitations prescribed by law, the Board of
Directors is expressly authorized to adopt resolutions to issue the shares, to
fix the number of shares and to change the number of shares constituting any
series and to provide for or change the voting powers, designations, preferences
and relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof, including dividend rights (including
whether dividends are cumulative), dividend rates, terms of redemption
(including sinking fund provisions), redemption prices, conversion rights and
liquidation preferences of the shares constituting any series of the Preferred
Stock, in each case without any further action or vote by the stockholders. The
Company has no current plans to issue any shares of Preferred Stock.

One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of the Company's management.
The issuance of shares of the Preferred Stock pursuant to the Board of
Directors' authority described above may adversely affect the rights of the
holders of Common Stock. For example, Preferred Stock issued by the Company may
rank prior to the Common Stock as to dividend rights, liquidation preference or
both, may have full or limited voting rights and may be convertible into shares
of Common Stock. Accordingly, the issuance of shares of Preferred Stock may
discourage bids for the Common Stock or may otherwise adversely affect the
market price of the Common Stock.

STATUTORY BUSINESS COMBINATION PROVISION

Upon consummation of this Offering, the Company will be subject to the
provisions of Section 203 ("Section 203") of the Delaware General Corporation
Law ("DGCL"). Section 203 provides, with certain exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations with
a person or an affiliate or associate of such person who is an "interested
stockholder" for a period of three years from the date that such person became
an interested stockholder unless: (i) the transaction resulting in a person
becoming an interested stockholder, or the business combination, is approved by
the Board of Directors of the corporation before the person becomes an
interested stockholder; (ii) the interested stockholder acquired 85% or more of
the outstanding voting stock of the corporation in the same transaction that
makes such person an interested stockholder (excluding shares owned by persons
who are both officers and directors of the corporation, and shares held by
certain employee stock ownership plans); or (iii) on or after the date the
person becomes an interested stockholder, the business combination is approved
by the corporation's board of directors and by the holders of at least 66% of
the corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. Under Section 203, an
"interested stockholder" is defined as any person who is (i) the owner of 15% or
more of the outstanding voting stock of the corporation or (ii) an affiliate or
associate of the corporation and who was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an interested stockholder.

The Company's stockholders, by adopting an amendment to the Certificate of
Incorporation, may elect not to be governed by Section 203, which election would
be effective 12 months after such adoption. The provisions of Section 203 could
delay or frustrate a change in control of the Company, deny stockholders the
receipt of a premium on their Common Stock and have an adverse effect on the
Common Stock. The provisions also could discourage, impede or prevent a merger
or tender offer, even if such event would be favorable to the interests of
stockholders.

50
<PAGE> 52

LIMITATION ON DIRECTORS' LIABILITIES AND INDEMNIFICATION

Limitation on Liability. Pursuant to the Company's Certificate of
Incorporation and as permitted by Section 102(b)(7) of the DGCL, directors of
the Company are not liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty, except for liability in connection with a
breach of duty of loyalty, for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, for dividend
payments or stock repurchases that are illegal under Delaware law or for any
transaction in which a director has derived an improper personal benefit.

Indemnification. To the maximum extent permitted by law, the Certificate of
Incorporation provides for mandatory indemnification of directors and officers
of the Company against any expense, liability and loss to which they become
subject, or which they may incur as a result of having been a director or
officer of the Company. In addition, the Company must advance or reimburse
directors and officers for expenses incurred by them in connection with certain
claims.

POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF THE CERTIFICATE OF
INCORPORATION AND BY-LAWS

The Certificate of Incorporation and By-laws of the Company contain
provisions that could have an anti-takeover effect. The provisions are intended
to enhance the likelihood of continuity and stability in the composition of the
Board of Directors and in the policies formulated by the Board of Directors.
These provisions also are intended to help ensure that the Board of Directors,
if confronted by an unsolicited proposal from a third party which has acquired a
block of stock of the Company, will have sufficient time to review the proposal
and appropriate alternatives to the proposal and to act in what it believes to
be the best interest of the stockholders.

The following is a summary of such provisions included in the Certificate
of Incorporation and By-laws of the Company. The Board of Directors has no
current plans to formulate or effect additional measures that could have an
antitakeover effect.

Classified Board of Directors. The Certificate of Incorporation provides
for a Board of Directors divided into three classes of directors serving
staggered three-year terms. The classification of directors has the effect of
making it more difficult for stockholders to change the composition of the Board
of Directors in a relatively short period of time. At least two annual meetings
of stockholders, instead of one, generally will be required to effect a change
in a majority of the Board of Directors. Such a delay may help ensure that the
Board of Directors and the stockholders, if confronted with an unsolicited
proposal by a stockholder attempting to force a stock repurchase at a premium
above market, a proxy contest or an extraordinary corporate transaction, will
have sufficient time to review the proposal and appropriate alternatives to the
proposal and to act in what it believes to be the best interest of the
stockholders. Directors, if any, elected by holders of preferred stock voting as
a class, will not be classified as aforesaid. Moreover, under Delaware law, in
the case of a corporation having a classified board, stockholders may remove a
director only for cause. This provision will preclude a stockholder from
removing incumbent directors without cause.

Advance Notice Requirements for Director Nominees. The By-laws establish
an advance notice procedure with regard to the nomination of candidates for
election as directors at any meeting of stockholders called for the election of
directors. The procedure provides that a notice relating to the nomination of
directors must be timely given in writing to the Secretary of the Company prior
to the meeting. To be timely, notice relating to the nomination of directors
must be delivered not less than 90 days prior to any annual meeting or 10 days
following notice to the stockholder of any special meeting called for the
election of directors.

Notice to the Company from a stockholder who proposes to nominate a person
at a meeting for election as a director must be accompanied by each proposed
nominee's written consent and contain the name, address and principal occupation
of each proposed nominee and other information that may be required under the
proxy rules of the Commission. Such notice must also contain the total number of
shares of capital stock of the Company that will be voted for each of the
proposed nominees, the name and address of the notifying stockholder and the
number of shares of capital stock of the Company owned by the notifying
stockholder.

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<PAGE> 53

The presiding officer of a meeting of stockholders may determine that a
person is not nominated in accordance with the nomination procedure, in which
case such person's nomination will be disregarded. Nothing in the nomination
procedure will preclude discussion by any stockholder of any nomination properly
made or brought before any meeting called for the election of directors in
accordance with the above-mentioned procedures.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is American Stock
Transfer and Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Mergers and completion of this Offering, the
Company will have outstanding 18,000,000 shares of Common Stock. The 5,000,000
shares sold in this Offering (plus any additional shares sold upon exercise of
the Underwriters' over-allotment option) will be freely tradable without
restriction unless acquired by affiliates of the Company. None of the remaining
13,000,000 outstanding shares of Common Stock have been registered under the
Securities Act, which means that they may be resold publicly only upon
registration under the Securities Act or in compliance with an exemption from
the registration requirements of the Securities Act, including the exemption
provided by Rule 144 thereunder.

In general, under Rule 144 as currently in effect, if two years have
elapsed since the later of the date of the acquisition of restricted shares of
Common Stock from either the Company or any affiliate of the Company, the
acquiror or subsequent holder thereof may sell, within any three-month period
commencing 90 days after the date of this Prospectus, a number of shares that
does not exceed the greater of 1% of the then outstanding shares of the Common
Stock, or the average weekly trading volume of the Common Stock on the Nasdaq
National Market during the four calendar weeks preceding the date on which
notice of the proposed sale is sent to the Commission. Sales under Rule 144 are
also subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. If three years
have elapsed since the later of the date of the acquisition of restricted shares
of Common Stock from the Company or any affiliate of the Company, a person who
is not deemed to have been an affiliate of the Company at any time for 90 days
preceding a sale would be entitled to sell such shares under Rule 144 without
regard to the volume limitations, manner of sale provisions or notice
requirements.

The Company and its executive officers, directors and certain stockholders
who will beneficially own 11,960,759 shares in the aggregate upon the
consummation of this Offering have agreed not to sell or otherwise dispose of
any shares of Common Stock for a period of 180 days after the date of this
Prospectus without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation, except that the Company may issue Common Stock in
connection with acquisitions or in connection with the Plan and the Directors'
Plan (collectively, the "Plans"). See "Underwriting." In addition, the
stockholders of the Founding Companies and the Company's executive officers,
certain directors and certain stockholders have agreed with the Company that
they will not sell any of their shares for a period of two years after the
closing of this Offering. If the two-year "holding" period for restricted
securities under Rule 144 described above is reduced by the Commission, this
two-year restriction on sales of Common Stock will be correspondingly reduced.

In connection with the Mergers, the Company has agreed to provide certain
registration rights with respect to the Common Stock issued to the stockholders
of the Founding Companies. The registration rights provide for a single demand
registration right, exercisable by the holders of a majority of the shares of
Common Stock subject to the registration rights, pursuant to which the Company
will file a registration statement under the Securities Act to register the sale
of shares by those requesting stockholders and any other holders of Common Stock
subject to the registration rights who desire to sell pursuant to such
registration statement. The demand request may not be made until the expiration
of two years after the closing of this Offering. Subject to certain conditions
and limitations, the registration rights also provide the holders of Common
Stock subject to the registration rights with the right to participate in
registrations by the Company of its equity securities in underwritten offerings,
subject to certain exceptions. In addition, Mr. Singer has been

52
<PAGE> 54

granted an additional separate demand registration right with respect to the
shares of Common Stock received by him in connection with the Mergers,
exercisable commencing two years after the closing of this Offering.

In the case of each of the registration rights described above, the Company
is generally required to pay the costs associated with such an offering other
than underwriting discounts and commissions attributable to the shares sold on
behalf of the selling stockholders.

Within 90 days after the closing of this Offering, the Company intends to
register 5,000,000 shares of its Common Stock under the Securities Act for use
by the Company in connection with future acquisitions. Upon such registration,
these shares will generally be freely tradable after their issuance unless
acquired by parties to the transaction or affiliates thereof, other than the
issuer, in which case they may be sold pursuant to Rule 145 under the Securities
Act. Rule 145 permits, in part, such persons to resell immediately securities
acquired in transactions covered under the Rule, provided such securities are
resold in accordance with the public information requirements, volume
limitations and manner of sale requirements of Rule 144. If a period of two
years has elapsed since the date such securities were acquired in such
transaction and if the issuer meets the public information requirements of Rule
144, Rule 145 permits a person who is not an affiliate of the issuer to freely
resell such securities. In some instances, the Company may contractually
restrict the sale of shares issued in connection with future acquisitions. The
registration rights described above do not apply to the registration statement
relating to these 5,000,000 shares.

In addition to the shares described above, 2,000,000 shares of Common Stock
have been reserved for issuance upon exercise of options that may be granted
under the Plans. The Company intends to file one or more registration statements
on Form S-8 under the Securities Act with respect to such shares of Common
Stock. Shares of Common Stock covered by such registration statements will be
freely tradable by holders who are not affiliates of the Company and, subject to
the volume and other limitations of Rule 144, by holders who are affiliates of
the Company.

Prior to this Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that the sale of
shares or the availability of shares for sale will have on the market price for
the Common Stock prevailing from time to time. Nevertheless, sales, or the
availability for sale of, substantial amounts of the Common Stock in the public
market could adversely affect prevailing market prices and the ability of the
Company to raise equity capital in the future.

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<PAGE> 55

UNDERWRITING

Subject to the terms and certain conditions contained in the Underwriting
Agreement, the underwriters named below (the "Underwriters"), for whom
Donaldson, Lufkin & Jenrette Securities Corporation and Dean Witter Reynolds
Inc. are acting as representatives (collectively, the "Representatives"), have
severally agreed to purchase from the Company an aggregate of 5,000,000 shares
of Common Stock. The number of shares of Common Stock that each Underwriter has
agreed to purchase is set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation...................
Dean Witter Reynolds Inc..............................................
-----------
Total....................................................... 5,000,000
===========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by counsel
and to certain other conditions. The Underwriters are obligated to take and pay
for all the shares of Common Stock offered hereby (other than the shares of the
Common Stock covered by the over-allotment option described below) if any are
taken.

Prior to this Offering, there has been no established trading market for
the Common Stock. The initial price to the public for the Common Stock offered
hereby will be determined by negotiations between the Company and the
Representatives. The factors to be considered in determining the initial price
to the public are expected to include the history of and the prospects for the
industry in which the Company competes, the past and present operations of the
Company, the historical results of operations of the Company, the prospects for
future earnings of the Company, the recent market prices of securities of
generally comparable companies, and the general condition of the securities
markets at the time of this Offering.

The Underwriting Agreement contains covenants of indemnity among the
Underwriters and the Company against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.

The Underwriters have advised the Company that they propose to offer the
shares of Common Stock to the public initially at the price to the public set
forth on the cover page of this Prospectus and to certain dealers (who may
include the Underwriters) at such price less a concession not to exceed $
per share. The Underwriters may allow, and such dealers may reallow, discounts
not in excess of $ per share to any other Underwriter and certain other
dealers. After this Offering, the prices and concessions and reallowances to
dealers may be changed by the Underwriters. The Common Stock is offered subject
to receipt and acceptance by the Underwriters and to certain other conditions,
including the right to reject orders in whole or in part.

The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to an aggregate of 750,000
additional shares of Common Stock at the initial public offering price less
underwriting discounts and commissions, solely to cover over-allotments. To the
extent that the Underwriters exercise such option, each of the Underwriters will
be committed, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number of shares set forth opposite
such Underwriter's name in the preceding table bears to the total number of
shares offered.

Subject to certain exceptions, the Company and certain of its directors,
executive officers, and holders of more than 5% of the Company's Common Stock
who are expected to be the holders of 11,960,759 shares of Common Stock upon the
consummation of this Offering have agreed not to offer, sell, contract to sell
or otherwise dispose of any shares of Common Stock or any securities convertible
or exchangeable into any shares of Common Stock prior to the expiration of 180
days from the date of this Prospectus, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. See "Shares Eligible for
Future Sale."

The Underwriters do not intend to confirm sales of shares of Common Stock
to accounts over which they exercise discretionary authority.

54
<PAGE> 56

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered by this
Prospectus will be passed upon for the Company by Morgan, Lewis & Bockius LLP,
New York, New York. Certain legal matters related to this Offering will be
passed upon for the Underwriters by Hogan & Hartson L.L.P., Washington, D.C.

EXPERTS

The audited historical financial statements as indicated in the index on
pages F-1 and F-2 of this Prospectus have been audited by Coopers & Lybrand
L.L.P., independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said reports.

ADDITIONAL INFORMATION

The Company has filed with the Commission, Washington, D.C., a Registration
Statement on Form S-1 with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information pertaining to the Company and the shares of Common Stock offered
hereby, reference is made to such Registration Statement, including the
exhibits, financial statements and schedules filed therewith. Statements
contained in this Prospectus as to the contents of any contract or any other
document are not necessarily complete, and, in each instance, reference is made
to the copy of such contract or document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. The Registration Statement, including the exhibits and schedules
thereto, may be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza Building, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and its regional offices located at 7
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such materials can be obtained from the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains an Internet web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically.
The address of such Internet web site is http://www.sec.gov.

55
<PAGE> 57

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Unaudited Pro Forma Combined Financial Statements
Basis of Presentation............................................................... F-3
Pro Forma Combined Balance Sheet as of September 30, 1996 (unaudited)............... F-4
Pro Forma Combined Statements of Operations for the Year Ended December 31, 1995
(unaudited)...................................................................... F-5
Pro Forma Combined Statements of Operations for the Six Months Ended September 30,
1995 (unaudited)................................................................. F-6
Pro Forma Combined Statements of Operations for the Six Months Ended September 30,
1996 (unaudited)................................................................. F-7
Notes to Unaudited Pro Forma Combined Financial Statements.......................... F-8
Historical Financial Statements
Medical Manager Corporation
Report of Independent Accountants................................................ F-14
Balance Sheet.................................................................... F-15
Notes to Balance Sheet........................................................... F-16
Personalized Programming, Inc.
Report of Independent Accountants................................................ F-18
Balance Sheets................................................................... F-19
Statements of Operations......................................................... F-20
Statements of Changes in Stockholder's Equity.................................... F-21
Statements of Cash Flows......................................................... F-22
Notes to Financial Statements.................................................... F-23
Systems Plus, Inc.
Report of Independent Accountants................................................ F-27
Combined Balance Sheets.......................................................... F-28
Combined Statements of Operations................................................ F-29
Combined Statements of Changes in Stockholder's Equity........................... F-30
Combined Statements of Cash Flows................................................ F-31
Notes to Combined Financial Statements........................................... F-32
RTI Business Systems, Inc.
Report of Independent Accountants................................................ F-37
Balance Sheets................................................................... F-38
Statements of Operations and Accumulated Deficit................................. F-39
Statements of Cash Flows......................................................... F-40
Notes to Financial Statements.................................................... F-41
National Medical Systems, Inc.
Report of Independent Accountants................................................ F-45
Consolidated Balance Sheets...................................................... F-46
Consolidated Statements of Operations............................................ F-47
Consolidated Statements of Changes in Stockholder's Deficit...................... F-48
Consolidated Statements of Cash Flows............................................ F-49
Notes to Consolidated Financial Statements....................................... F-50
</TABLE>

F-1
<PAGE> 58

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Systems Management, Inc.
Report of Independent Accountants................................................ F-56
Balance Sheets................................................................... F-57
Statements of Operations......................................................... F-58
Statements of Changes in Stockholders' Equity.................................... F-59
Statements of Cash Flows......................................................... F-60
Notes to Financial Statements.................................................... F-61
GBP With Excellence, Inc.
Report of Independent Accountants................................................ F-65
Balance Sheet.................................................................... F-66
Statements of Operations and Accumulated Deficit................................. F-67
Statements of Cash Flows......................................................... F-68
Notes to Financial Statements.................................................... F-69
Medical Manager Division
Report of Independent Accountants................................................ F-71
Financial Position............................................................... F-72
Statements of Operations......................................................... F-73
Statements of Cash Flows......................................................... F-74
Notes to Financial Statements.................................................... F-75
</TABLE>

F-2
<PAGE> 59

MEDICAL MANAGER CORPORATION AND FOUNDING COMPANIES

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

BASIS OF PRESENTATION
(UNAUDITED)

The following unaudited pro forma combined financial statements give effect
to the acquisition by Medical Manager Corporation ("MMC") of substantially all
of the net assets of (a) Personalized Programming, Inc. ("PPI"), Systems Plus,
Inc. ("SPI"), RTI Business Systems, Inc. ("RTI"), National Medical Systems, Inc.
("NMS") and Systems Management, Inc. ("SMI") (together, the "Founding
Companies"). MMC and the Founding Companies are hereinafter referred to as the
"Company." These acquisitions (the "Mergers") will occur simultaneously with the
closing of MMC's initial public offering (this "Offering") and will be accounted
for as a combination of the Founding Companies at historical cost for accounting
purposes. PPI, one of the Founding Companies, has been identified as the
acquiror for financial statement presentation purposes. In addition, NMS will
acquire the Medical Manager Division of Medix, Inc. The stockholders of NMS are
obligated to contribute $37.9 million of additional capital on or prior to the
consummation of this Offering. The unaudited pro forma combined financial
statements also give effect to the issuance of Common Stock by MMC to the
stockholders of the Founding Companies upon the consummation of the Mergers.
These statements are based on historical financial statements of the Founding
Companies included elsewhere in this Prospectus and the estimates and
assumptions set forth below and in the notes to the Unaudited Pro Forma Combined
Financial Statements of the Company.

The unaudited pro forma combined balance sheet gives effect to the Mergers
and this Offering as if they had occurred on September 30, 1996. The unaudited
pro forma combined statements of operations give effect to these transactions as
if they had occurred at the beginning of each period presented.

The pro forma adjustments are based on preliminary estimates, available
information and certain assumptions that management deems appropriate. The
unaudited pro forma combined financial data presented herein do not purport to
represent what the Company's financial position or results of operations would
have actually been had such events occurred at the beginning of the periods
presented, as assumed, or to project the Company's financial position or results
of operations for any future period or the future results of the Founding
Companies. The unaudited pro forma combined financial statements should be read
in conjunction with the other financial statements and notes thereto included
elsewhere in this Prospectus. Also see "Risk Factors" included elsewhere herein.

F-3
<PAGE> 60

MEDICAL MANAGER AND FOUNDING COMPANIES

PRO FORMA COMBINED BALANCE SHEET(1)

SEPTEMBER 30, 1996

(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
PPI SPI RTI NMS SMI ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents................................ $2,977 $ 0 $ 84 $ 10 $ 455 $ 3,526
Investments.............................................. 202 0 0 0 0 202
Accounts receivable...................................... 1,324 1,262 174 934 248 $ (702) 3,240
Inventory................................................ 109 82 164 122 189 666
Prepaid expenses and other current assets................ 132 198 16 56 15 417
Deferred income taxes.................................... 0 0 262 0 0 262
------ ------ ------ ------- ------ ----- -------
Total current assets............................... 4,744 1,542 700 1,122 907 (702) 8,313
PROPERTY AND EQUIPMENT, net................................ 444 599 533 356 147 2,079
GOODWILL AND OTHER INTANGIBLES, net........................ 0 0 0 2,693 99 2,792
OTHER ASSETS............................................... 0 986 0 520 0 1,506
------ ------ ------ ------- ------ ----- -------
Total assets....................................... $5,188 $3,127 $ 1,233 $ 4,691 $1,153 $ (702) $14,690
====== ====== ====== ======= ====== ===== =======
CURRENT LIABILITIES
Current maturities of long-term obligations.............. $ 0 $ 625 $ 514 $ 1,322 $ 104 $ 2,565
Accounts payable and accrued liabilities................. 575 1,365 566 774 192 $ (702) 2,770
Customer deposits and deferred maintenance revenue....... 1,112 190 630 729 505 3,166
Income taxes payable..................................... 0 16 147 0 0 163
------ ------ ------ ------- ------ ----- -------
Total current liabilities.......................... 1,687 2,196 1,857 2,825 801 (702) 8,664
LONG-TERM OBLIGATIONS, net of current maturities........... 0 0 140 729 230 1,099
SUBORDINATED NOTES PAYABLE................................. 0 0 0 1,065 0 1,065
------ ------ ------ ------- ------ ----- -------
Total liabilities.................................. 1,687 2,196 1,997 4,619 1,031 (702) 10,828
------ ------ ------ ------- ------ ----- -------
REDEEMABLE PREFERRED STOCK................................. 0 0 0 500 0 500
STOCKHOLDERS' EQUITY
Common stock............................................. 0 28 102 69 16 215
Additional paid-in capital............................... 8 0 0 790 0 798
Retained earnings (deficit).............................. 3,493 903 (866) (1,287) 106 2,349
------ ------ ------ ------- ------ ----- -------
Total stockholders' equity......................... 3,501 931 (764) (428) 122 3,362
------ ------ ------ ------- ------ ----- -------
Total liabilities and stockholders' equity......... $5,188 $3,127 $ 1,233 $ 4,691 $1,153 $ (702) $14,690
====== ====== ====== ======= ====== ===== =======

<CAPTION>
PRO FORMA POST-MERGER AS
ADJUSTMENT PRO FORMA ADJUSTMENTS ADJUSTED
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents................................ $ 26,806 $30,332 $ 7,250 $37,582
Investments.............................................. (202) 0 0
Accounts receivable...................................... 382 3,622 3,622
Inventory................................................ 192 858 858
Prepaid expenses and other current assets................ 315 732 732
Deferred income taxes.................................... 0 262 262
------- ------- ------- -------
Total current assets............................... 27,493 35,806 7,250 43,056
PROPERTY AND EQUIPMENT, net................................ 103 2,182 2,182
GOODWILL AND OTHER INTANGIBLES, net........................ 2,810 5,602 5,602
OTHER ASSETS............................................... (1,282) 224 224
------- ------- ------- -------
Total assets....................................... $ 29,124 $43,814 $ 7,250 $51,064
======= ======= ======= =======
CURRENT LIABILITIES
Current maturities of long-term obligations.............. $ (2,565) 0 $ 0
Accounts payable and accrued liabilities................. 0 2,770 2,770
Customer deposits and deferred maintenance revenue....... 602 3,768 3,768
Income taxes payable..................................... 0 163 163
------- ------- ------- -------
Total current liabilities.......................... (1,963) 6,701 6,701
LONG-TERM OBLIGATIONS, net of current maturities........... (1,099) 0 0
SUBORDINATED NOTES PAYABLE................................. (1,065) 0 0
------- ------- ------- -------
Total liabilities.................................. (4,127) 6,701 6,701
------- ------- ------- -------
REDEEMABLE PREFERRED STOCK................................. (500) 0 0
STOCKHOLDERS' EQUITY
Common stock............................................. (85) 130 $ 50 180
Additional paid-in capital............................... 36,185 36,983 7,200 44,183
Retained earnings (deficit).............................. (2,349) 0 0
------- ------- ------- -------
Total stockholders' equity......................... 33,751 37,113 7,250 44,363
------- ------- ------- -------
Total liabilities and stockholders' equity......... $ 29,124 $43,814 $ 7,250 $51,064
======= ======= ======= =======
</TABLE>

- ---------------

(1) Pro forma amounts for Medical Manager Corporation have not been included as
such amounts are insignificant.

See accompanying notes to unaudited pro forma combined financial statements.

F-4
<PAGE> 61

MEDICAL MANAGER AND FOUNDING COMPANIES

PRO FORMA COMBINED STATEMENTS OF OPERATIONS(1)
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
PPI SPI RTI NMS(2) SMI ELIMINATIONS TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
Systems................................................... $ 1,018 $ 766 $2,712 $3,588 $1,094 $ 0 $ 9,178
Software license.......................................... 7,529 12,503 0 0 0 (6,713) 13,319
Maintenance and other..................................... 2,473 1,910 2,241 5,568 1,623 0 13,815
------- ------- ------ ------ ------ ------- -------
Total revenue....................................... 11,020 15,179 4,953 9,156 2,717 (6,713) 36,312
------- ------- ------ ------ ------ ------- -------
Cost of revenue
Systems................................................... 704 441 1,486 2,764 517 (1,363) 4,549
Software license.......................................... 651 6,978 0 0 0 (5,350) 2,279
Maintenance and other..................................... 227 1,682 1,215 3,300 1,714 0 8,138
------- ------- ------ ------ ------ ------- -------
Total costs of revenue.............................. 1,582 9,101 2,701 6,064 2,231 (6,713) 14,966
------- ------- ------ ------ ------ ------- -------
Gross margin........................................ 9,438 6,078 2,252 3,092 486 $ 0 21,346
------- ------- ------ ------ ------ ------- -------
Operating expenses
Selling, general and administrative....................... 1,351 3,345 2,269 2,132 426 9,523
Research and development.................................. 2,024 0 0 0 0 2,024
Depreciation and amortization............................. 226 102 58 493 32 911
------- ------- ------ ------ ------ ------- -------
Total operating
expenses.......................................... 3,601 3,447 2,327 2,625 458 12,458
------- ------- ------ ------ ------ ------- -------
Income (loss) from operations....................... 5,837 2,631 (75) 467 28 8,888
Other income (expense)
Interest expense.......................................... 0 (37) (33) (109 ) (23) (202)
Interest income........................................... 136 88 0 0 0 224
Other..................................................... (27) 169 3 0 0 145
------- ------- ------ ------ ------ ------- -------
Income (loss) before income
taxes..................................................... 5,946 2,851 (105) 358 5 9,055
Income taxes................................................ 0 53 0 0 0 53
------- ------- ------ ------ ------ ------- -------
Net income (loss)................................... $ 5,946 $ 2,798 $ (105) $ 358 $ 5 $ 9,002
======= ======= ====== ====== ====== ======= =======
Pro Forma income per share..................................
Shares used in computing pro forma income per share.........

<CAPTION>
PRO FORMA
ADJUSTMENTS
----------------------------------------
(j) (k) (l) (m) (n) PRO FORMA
<S> <C> <C> <C> <C> <C> <C>
Revenue
Systems................................................... $ 9,178
Software license.......................................... 13,319
Maintenance and other..................................... 13,815
----- ----- ---- ----- ------- -------
Total revenue....................................... 36,312
----- ----- ---- ----- ------- -------
Cost of revenue
Systems................................................... $ (47) $ 35 4,537
Software license.......................................... (27) 11 2,263
Maintenance and other..................................... (51) 41 8,128
----- ----- ---- ----- ------- -------
Total costs of revenue.............................. (125) 87 14,928
----- ----- ---- ----- ------- -------
Gross margin........................................ 125 (87) 21,384
----- ----- ---- ----- ------- -------
Operating expenses
Selling, general and administrative....................... (557) 39 9,005
Research and development.................................. 99 2,123
Depreciation and amortization............................. (99) 812
----- ----- ---- ----- ------- -------
Total operating
expenses.......................................... (557) 39 11,940
----- ----- ---- ----- ------- -------
Income (loss) from operations....................... 682 (126) 9,444
Other income (expense)
Interest expense.......................................... 19 $183 0
Interest income........................................... $(224) 0
Other..................................................... (169) (24)
----- ----- ---- ----- ------- -------
Income (loss) before income
taxes..................................................... 682 (107) 183 (393) 9,420
Income taxes................................................ $ 3,574 3,627
----- ----- ---- ----- ------- -------
Net income (loss)................................... $ 682 $(107) $183 $(393) $(3,574) $ 5,793
===== ===== ==== ===== ======= =======
Pro Forma income per share.................................. $ 0.32
=======
Shares used in computing pro forma income per share......... 18,000(o)
=======
</TABLE>

- ------------------

(1) Pro forma amounts for Medical Manager Corporation have not been included as
such amounts are insignificant.
(2) NMS is presented on a pro forma basis to include acquisitions of GBP and
Medix as if each had occurred on January 1, 1995.

See accompanying notes to unaudited pro forma combined financial statements.

F-5
<PAGE> 62

MEDICAL MANAGER AND FOUNDING COMPANIES

PRO FORMA COMBINED STATEMENTS OF OPERATIONS(1)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995

(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
----------------------
PPI SPI RTI NMS(2) SMI ELIMINATIONS TOTAL (I) (J) (K)
------ ------ ------ ------ ------ ------------ ------- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue
Systems.......................... $ 751 $ 139 $1,617 $2,849 $ 523 $ 0 $ 5,879
Software license................. 5,771 9,350 0 0 0 (5,275) 9,846
Maintenance and other............ 1,825 1,465 1,736 3,946 1,215 (68) 10,119
------ ------ ------ ------ ------ ------- -------
Total revenue............. 8,347 10,954 3,353 6,795 1,738 (5,343) 25,844
------ ------ ------ ------ ------ ------- -------
Cost of revenue
Systems.......................... 487 136 1,010 2,083 282 (1,426) 2,572 $ (3) $ 26
Software license................. 600 5,174 0 0 0 (3,917) 1,857 (19) 7
Maintenance and other............ 191 1,386 1,083 2,294 1,179 0 6,133 (16) 33
------ ------ ------ ------ ------ ------- ------- ---- ---
Total costs of revenue.... 1,278 6,696 2,093 4,377 1,461 (5,343) 10,562 (38) 66
------ ------ ------ ------ ------ ------- ------- ---- ---
Gross margin.............. 7,069 4,258 1,260 2,418 277 15,282 38 (66)
------ ------ ------ ------ ------ ---- ---
Operating expenses
Selling, general and
administrative................. 908 2,357 1,313 1,542 323 6,443 (254) 32
Research and development......... 1,484 0 0 0 0 1,484 74
Depreciation and amortization.... 140 77 44 297 27 585
------ ------ ------ ------ ------ ---- ---
Total operating
expenses................ 2,532 2,434 1,357 1,839 350 8,512 (254) 106
------ ------ ------ ------ ------ ---- ---
Income (loss) from
operations.............. 4,537 1,824 (97) 579 (73) 6,770 292 (172)
Other income (expense)
Interest expense................. 0 (31) (24) (41 ) (8) (104) $104
Interest income.................. 143 63 206
Other............................ 0 176 176
--
------ ------ ------ ------ ------ ---- ---
Income (loss) before income
taxes............................ 4,680 2,032 (121) 538 (81) 7,048 292 (172) 104
Income taxes....................... 0 60 0 0 0 60
--
------ ------ ------ ------ ------ ---- ---
Net income (loss)......... $4,680 $1,972 $ (121) $ 538 $ (81) $ 6,988 $ 292 $(172) $104
====== ====== ====== ====== ====== ==== === ==
Pro forma income per share.........
Shares used in computing pro forma
income per share.................

PRO FORMA
ADJUSTMENTS
----------------
(L) (M) PRO FORMA
----- ------- ---------
<S> <C> <C> <C>
Revenue
Systems.......................... $ 5,879
Software license................. 9,846
Maintenance and other............ 10,119

Total revenue............. 25,844

Cost of revenue
Systems.......................... 2,595
Software license................. 1,845
Maintenance and other............ 6,150

Total costs of revenue.... 10,590

Gross margin.............. 15,254

Operating expenses
Selling, general and
administrative................. 6,221
Research and development......... 1,558
Depreciation and amortization.... 585

Total operating
expenses................ 8,364

Income (loss) from
operations.............. 6,890
Other income (expense)
Interest expense................. 0
Interest income.................. $(206) 0
Other............................ (176) 0

-----
Income (loss) before income
taxes............................ (382) 6,890
Income taxes....................... $ 2,593 2,653

----- ------ -------
Net income (loss)......... $(382) $(2,593) $ 4,237
===== ====== =======
Pro forma income per share......... $ 0.24
=======
Shares used in computing pro forma
income per share................. 18,000(o)
=======
</TABLE>

- ---------------

(1) Pro forma amounts for Medical Manager Corporation have not been included as
such amounts are insignificant.
(2) NMS is presented on a pro forma basis to include the acquisitions of GBP and
Medix as if each had occurred on January 1, 1995.

See accompanying notes to unaudited pro forma combined financial statements.

F-6
<PAGE> 63

MEDICAL MANAGER AND FOUNDING COMPANIES

PRO FORMA COMBINED STATEMENTS OF OPERATIONS(1)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996

(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
--------------------
PPI SPI RTI NMS(2) SMI ELIMINATIONS TOTAL (I) (J) (K)
------ ------ ------ ------ ------ ------------ ------- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue
Systems............................ $ 566 $ 827 $1,804 $2,708 $1,502 $ 0 $ 7,407
Software license................... 6,055 10,132 0 0 0 (5,628) 10,559
Maintenance and other.............. 1,866 1,244 2,575 4,621 1,445 (18) 11,733
------ ------ ------ ------ ------ ------- -------
Total revenue............... 8,487 12,203 4,379 7,329 2,947 (5,646) 29,699
------ ------ ------ ------ ------ ------- -------
Cost of revenue
Systems............................ 553 648 1,252 1,891 1,192 (1,291) 4,245 $ (29) $ 31
Software license................... 381 5,551 0 0 0 (4,355) 1,577 (34) 4
Maintenance and other.............. 322 1,228 1,521 2,675 1,044 0 6,790 (42) 25
------ ------ ------ ------ ------ ------- ------- ----- -----
Total costs of revenue...... 1,256 7,427 2,773 4,566 2,236 (5,646) 12,612 (105) 60
------ ------ ------ ------ ------ ------- ------- ----- -----
Gross margin.............. 7,231 4,776 1,606 2,763 711 17,087 105 (60)
------ ------ ------ ------ ------ ------- ----- -----
Operating expenses
Selling, general and
administrative................... 1,041 2,921 1,741 1,650 377 7,730 (638) 22
Research and development........... 1,935 0 0 410 0 2,345 50
Depreciation and amortization...... 189 117 68 450 47 871
------ ------ ------ ------ ------ ------- ----- -----
Total operating expenses.... 3,165 3,038 1,809 2,510 424 10,946 (638) 72
------ ------ ------ ------ ------ ------- ----- -----
Income (loss) from
operations.............. 4,066 1,738 (203) 253 287 6,141 743 (132)
Other income (expense)
Interest expense................... 0 (12) (34) (130 ) (16) (192) $192
Interest income.................... 83 48 0 0 131
Other.............................. 0 240 0 0 240
------ ------ ------ ------ ------ ------- ----- ----- ----
Income (loss) before income taxes.... 4,149 2,014 (237) 123 271 6,320 743 (132) 192
Income taxes......................... 0 36 0 0 0 36
------ ------ ------ ------ ------ -------
Net income(loss)............ $4,149 $1,978 $ (237) $ 123 $ 271 $ 6,284 $ 743 $(132) $192
====== ====== ====== ====== ====== ======= ===== ===== ====
Pro forma income per share.......................................................................................................
Shares used in computing pro forma income per share..............................................................................

<CAPTION>
PRO FORMA
ADJUSTMENTS
---------------
(L) (M) PRO FORMA
----- ------- ---------
<S> <C> <C> <C>
Revenue
Systems............................ $ 7,407
Software license................... 10,559
Maintenance and other.............. 11,733
-------
Total revenue............... 29,699
-------
Cost of revenue
Systems............................ 4,247
Software license................... 1,547
Maintenance and other.............. 6,773
-------
Total costs of revenue...... 12,567
-------
Gross margin.............. 17,132
-------
Operating expenses
Selling, general and
administrative................... 7,114
Research and development........... 2,395
Depreciation and amortization...... 871
-------
Total operating expenses.... 10,380
-------
Income (loss) from
operations.............. 6,752
Other income (expense)
Interest expense................... 0
Interest income.................... $(131) 0
Other.............................. (240) 0
----- -------
Income (loss) before income taxes.... (371) 6,752
Income taxes......................... $ 2,564 2,600
------- -------
Net income(loss)............ $(371) $(2,564) $ 4,152
===== ======= =======
Pro forma income per share.............................. $ 0.23
=======
Shares used in computing pro forma income per share..... 18,000(o)
=======
</TABLE>

- ---------------

(1) Pro forma amounts for Medical Manager Corporation have not been included as
such amounts are insignificant.
(2) NMS is presented on a pro forma basis to include the acquisition of Medix as
if it had occurred on January 1, 1996.

See accompanying notes to unaudited pro forma combined financial statements.

F-7
<PAGE> 64

MEDICAL MANAGER CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)

1. MEDICAL MANAGER CORPORATION BACKGROUND:

Medical Manager Corporation ("MMC") was formed to bring together the
research, development, service and support and sales and marketing efforts for
The Medical Manager, a comprehensive physician practice management system, in
one entity serving the United States. MMC has conducted no operations to date
and will acquire the Founding Companies simultaneously with the consummation of
this Offering.

2. HISTORICAL FINANCIAL STATEMENTS:

The historical financial statements represent the financial position and
results of operations of all the Founding Companies and were derived from the
respective financial statements where indicated. All Founding Companies have a
December 31 year-end or they have been converted to a December 31 year-end. The
audited historical financial statements included elsewhere in this Prospectus
have been included in accordance with Securities and Exchange Commission (the
"SEC") Staff Accounting Bulletin No. 80. Eliminations are for intercompany
transactions.

3. ACQUISITION OF FOUNDING COMPANIES;

Concurrent with the closing of this Offering, MMC will acquire
substantially all of the net assets of the Founding Companies. The Mergers will
be accounted for as a combination of the Founding Companies at historical cost
for accounting purposes, with PPI being treated as the acquiror.

The following table sets forth for each Founding Company the consideration
(in thousands) to be paid to its common stockholders (i) in cash; and (ii) in
shares of common stock of MMC:

<TABLE>
<CAPTION>
COMMON STOCK
-------------------
FAIR VALUE
CASH SHARES OF SHARES
------- ------ ----------
<S> <C> <C> <C>
PPI....................................................... $45,000 6,370 $ 95,550
SPI....................................................... 12,000 2,210 33,150
RTI....................................................... 2,250 350 5,250
NMS....................................................... -- 3,890 58,353
SMI....................................................... 1,000 180 2,697
------ ------ --------
Total........................................... $60,250 13,000 $ 195,000
====== ====== ========
</TABLE>

4. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS:

(a) Records additional capital contribution by NMS.

(b) Records the distribution of PPI's Accumulated Adjustment Account.

(d) Records the purchase of Medix by NMS.

(e) Records the conversion of NMS preferred stock and notes payable to
common stock and exercise of warrants for NMS.

(f) Records the repayment of debt obligations and other pro forma
adjustments.

(g) Records the proceeds from the issuance of 5,000,000 shares of MMC
Common Stock, net of estimated offering costs of $7,500,000 (based on an assumed
initial public offering price of $15 per share, the midpoint of the estimated
price range). Offering costs primarily consist of underwriting discounts and
commissions, legal fees, accounting fees and printing expenses.

The holders of 13.0 million shares of Common Stock issued in partial
payment of the Mergers have agreed not to offer, sell or otherwise dispose of
any of those shares for a period of two years after this Offering (or for such
shorter period as the SEC may prescribe as the holding period for restricted
securities under Rule 144(d)).

F-8
<PAGE> 65

MEDICAL MANAGER CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS: -- (CONTINUED)

(h) Records the cash portion to be paid to the stockholders of the Founding
Companies in connection with the Mergers.

5. UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS:

(i) Adjusts compensation expense to the level the stockholders of certain
of the Founding Companies have agreed to receive subsequent to the Mergers.

(j) Adjusts for the effects of assets distributed to and the costs of
certain building leases executed by MMC with the stockholders of PPI and SMI.

(k) Records change in interest expense for pro forma adjustments to debt.

(m) Records pro forma change in interest and dividend income and realized
gains (losses) on investments for pro forma adjustments to cash and investments.

(n) Records the incremental provision for federal and state income taxes
relating to the compensation differential, S corporation income and other pro
forma adjustments.

(o) The number of shares estimated to be outstanding on completion of this
Offering includes the following:

<TABLE>
<S> <C>
Outstanding...................................................... 3
Issued at Initial Public Offering................................ 5,000,000
Issued to acquire Founding Companies............................. 12,999,997
Shares assumed issued from Long-Term Incentive Plan.............. 1,081,666
Shares assumed repurchased from proceeds from shares assumed
issued from Long-Term Incentive Plan........................... (1,081,666)
----------
Shares estimated to be outstanding............................... 18,000,000
=========
</TABLE>

6. NMS AND AFFILIATES PRO FORMA COMBINED STATEMENTS OF OPERATIONS:

The following statements sets forth the pro forma combination of NMS's
operations with those of Medix in 1995 and 1996 and GBP in 1995. Pro forma
adjustments for NMS and GBP relate to contractual salary amounts. Pro forma
adjustments for Medix relate to adjustments of expenses for payroll, occupancy
costs, administrative and other operating costs as provided for by NMS's
management services agreement with Medix's parent company.

F-9
<PAGE> 66

MEDICAL MANAGER CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The following tables summarize the unaudited pro forma combined balance
sheet adjustments:

<TABLE>
<CAPTION>
PRO FORMA BALANCE SHEET
ADJUSTMENTS (A) (B) (C) (D) (E) (F) TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents...................... $ 37,853 $ (2,977) $ $ $ 91 $(8,161) $ 26,806
Investments.................................... (202) (202)
Accounts receivable............................ 382 382
Inventory...................................... 192 192
Prepaid expenses and other current assets...... 315 315
Property and equipment, net.................... 103 103
Goodwill and other intangibles................. 2,810 2,810
Other assets................................... (782) (500) (1,282)
Current maturities of long term
obligations.................................. (821) (111) (2,700) 6,197 2,565
Customer deposits and deferred maintenance..... (602) (602)
Long-term obligations.......................... 200 899 1,099
Subordinated notes payable..................... 1,065 1,065
Redeemable preferred stock..................... 500 500
Common stock................................... (13) 98 85
Additional paid-in capital..................... (37,853) 507 (778) 1,939 (36,185)
Retained earnings.............................. 3,493 893 (2,037) 2,349
-------- -------- ----- ------- ----- ------- --------
$ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
======== ======== ===== ------- ----- ------- --------

</TABLE>

<TABLE>
<CAPTION>
POST-MERGER BALANCE SHEET
ADJUSTMENTS (G) (H) TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents...................... $ 67,500 $(60,250) $ 7,250
Investments.................................... 0
Accounts receivable............................ 0
Inventory...................................... 0
Prepaid expenses and other current assets...... 0
Property and equipment, net.................... 0
Goodwill and other intangibles................. 0
Other assets................................... 0
Current maturities of long term debt........... 0
Customer deposits and deferred
maintenance.................................. 0
Long-term debt, net of current maturities...... 0
Subordinated notes payable..................... 0
Redeemable preferred stock..................... 0
Common stock................................... (50) (50)
Additional paid-in capital..................... (67,450) 60,250 (7,200)
Marketable securities valuation................ 0
Retained earnings.............................. 0
-------- -------- ----- ------- ----- ------- -------
$ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
======== ======== ===== ======= ===== ======= =======
</TABLE>

F-10
<PAGE> 67

NMS AND AFFILIATES

PRO FORMA COMBINED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1995

(IN THOUSANDS)

(UNAUDITED)

<TABLE>
<CAPTION>
NMS MEDIX
------------------------------------- -------------------------------------
PRO PRO
FORMA PRO FORMA PRO
HISTORICAL ADJUSTMENTS FORMA HISTORICAL ADJUSTMENTS FORMA
---------- ----------- ------ ---------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Systems........................................ $1,516 $1,516 $ 520 $ 520
Maintenance and other.......................... 615 615 3,944 3,944
------ ------ ------ ------
Total revenue............................ 2,131 2,131 4,464 4,464
------ ------ ------ ------
Cost of revenue
Systems........................................ 1,129 1,129 361 361
Maintenance and other.......................... 596 596 2,829 $ (686) 2,143
------ ------ ------ ------ ------
Total costs of revenue................... 1,725 1,725 3,190 686 2,504
------ ------ ------ ------ ------
Gross margin............................. 406 406 1,274 686 1,960
------ ------ ------ ------ ------
Operating expenses
Selling, general and administrative............ 395 $ 300 695 1,189 (453) 736
Depreciation and amortization.................. 197 197 90 113 203
------ ----- ------ ------ ------ ------
Total operating
expenses............................... 592 300 892 1,279 (340) 939
------ ----- ------ ------ ------ ------
Income (loss) from operations............ (186) (300) (486) (5) 1,026 1,021
Other income (expense)
Interest expense............................... (28) (28) (60) 60
Interest income................................ 15 (15)
------ ----- ------ ------ ------ ------
Income (loss) before income
taxes.......................................... (214) (300) (514) (50) 1,071 1,021
Income taxes (benefit)........................... (10) 10 0
------ ----- ------ ------ ------ ------
Net income (loss)........................ $ (214) $ (300) $ (514) $ (40) $ 1,061 $1,021
====== ===== ====== ====== ====== ======

<CAPTION>
GBP
-------------------------------------
PRO
FORMA PRO
HISTORICAL ADJUSTMENTS FORMA TOTAL
---------- ----------- ------ ------
<S> <C> <C> <C> <C>
Revenue
Systems........................................ $1,552 $1,552 $3,588
Maintenance and other.......................... 1,009 1,009 5,568
------ ------ ------
Total revenue............................ 2,561 2,561 9,156
------ ------ ------
Cost of revenue
Systems........................................ 1,274 1,274 2,764
Maintenance and other.......................... 561 561 3,300
------ ------ ------
Total costs of revenue................... 1,835 1,835 6,064
------ ------ ------
Gross margin............................. 726 726 3,092
------ ------ ------
Operating expenses
Selling, general and administrative............ 752 $ (51) 701 2,132
Depreciation and amortization.................. 22 71 93 493
------ ---- ------ ------
Total operating
expenses............................... 774 20 794 2,625
------ ---- ------ ------
Income (loss) from operations............ (48) (20) (68) 467
Other income (expense)
Interest expense............................... (31) (50) (81) (109)
Interest income................................
------ ------ ------
Income (loss) before income
taxes.......................................... (79) (149) 358
Income taxes (benefit)........................... 0 0 0
------ ---- ------ ------
Net income (loss)........................ $ (79) $ (70) $ (149) $ 358
====== ==== ====== ======
</TABLE>

F-11
<PAGE> 68

NMS AND AFFILIATES

PRO FORMA COMBINED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995

(IN THOUSANDS)

(UNAUDITED)

<TABLE>
<CAPTION>
NMS MEDIX GBP
--------------------------------- --------------------------------- ----------
PRO FORMA PRO PRO FORMA PRO
HISTORICAL ADJUSTMENTS FORMA HISTORICAL ADJUSTMENTS FORMA HISTORICAL
---------- ----------- ------ ---------- ----------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
Systems............................... $1,112 $1,112 $ 472 $ 472 $1,265
Maintenance and other................. 479 479 2,925 2,925 542
------ ------ ------ ------ ------
Total revenue................. 1,591 1,591 3,397 3,397 1,807
------ ------ ------ ------ ------
Cost of revenue
Systems............................... 828 828 368 $ (16) 352 903
Maintenance and other................. 429 429 2,080 (581) 1,499 366
------ ------ ------ ------ ------
Total costs of revenue........ 1,257 1,257 2,448 (597) 1,851 1,269
------ ------ ------ ------ ------
Gross margin.................. 334 334 949 597 1,546 538
------ ------ ------ ----- ------ ------
Operating expenses
Selling, general and administrative... 250 $ 225 475 862 (357) 505 612
Depreciation and amortization......... 134 134 56 92 148 15
------ ----- ------ ------ ----- ------ ------
Total operating expenses...... 384 225 609 918 (265) 653 627
------ ----- ------ ------ ----- ------ ------
Income (loss) from
operations.................. (50) (225) (275) 31 862 893 (89)
Other income (expense)
Interest expense...................... (19) (19) (58) 58 (22)
Interest income....................... 13 (13)
------ ----- ------ ------ ----- ------ ------
Income (loss) before income taxes....... (69) (225) (294) (14) 907 893 (111)
Income taxes (benefit).................. 0 (3) 3
------ ----- ------ ------ ----- ------ ------
Net income (loss)............. $ (69) $(225) $ (294) $ (11) $ 904 $ 893 $ (111)
====== ===== ====== ====== ===== ====== ======

GPB
--------------------
PRO FORMA PRO
ADJUSTMENTS FORMA TOTAL
----------- ------ ------
<S> <C> <C> <C>
Revenue
Systems............................... $1,265 $2,849
Maintenance and other................. 542 3,946
------ ------
Total revenue................. 1,807 6,795
------ ------
Cost of revenue
Systems............................... 903 2,083
Maintenance and other................. 366 2,294
------ ------
Total costs of revenue........ 1,269 4,377
------ ------
Gross margin.................. 538 2,418
------ ------
Operating expenses
Selling, general and administrative... $ (50) 562 1,542
Depreciation and amortization......... 15 297
----- ------ ------
Total operating expenses...... (50) 577 1,839
----- ------ ------
Income (loss) from
operations.................. 50 (39) 579
Other income (expense)
Interest expense...................... (22) (41)
Interest income.......................
----- ------ ------
Income (loss) before income taxes....... 50 (61) 538
Income taxes (benefit)..................
----- ------ ------
Net income (loss)............. $ 50 $ (61) $ 538
===== ====== ======
</TABLE>

- ------------------

F-12
<PAGE> 69

NMS AND AFFILIATES

PRO FORMA COMBINED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996

(IN THOUSANDS)

(UNAUDITED)

<TABLE>
<CAPTION>
MEDIX
---------------------------------
PRO
NMS FORMA PRO
HISTORICAL HISTORICAL ADJUSTMENTS FORMA TOTAL
---------- ---------- ----------- ------ ------
<S> <C> <C> <C> <C> <C>
Revenue
Systems........................................ $2,430 $ 278 $ 278 $2,708
Maintenance and other.......................... 1,670 2,951 2,951 4,621
------ ------ ------ ------
Total revenue.......................... 4,100 3,229 3,229 7,329
------ ------ ------ ------
Cost of revenue
Systems........................................ 1,731 195 $ (35) 160 1,891
Maintenance and other.......................... 1,212 1,934 (471) 1,463 2,675
------ ------ ----- ------ ------
Total costs of revenue................. 2,943 2,129 (506) 1,623 4,566
------ ------ ----- ------ ------
Gross margin........................... 1,157 1,100 506 1,606 2,763
------ ------ ----- ------ ------
Operating expenses
Selling, general and administrative............ 1,069 899 (318) 581 1,650
Research and development....................... 410 0 0 0 410
Depreciation and amortization.................. 294 65 91 156 450
------ ------ ----- ------ ------
Total operating expenses............... 1,773 964 (227) 737 2,510
------ ------ ----- ------ ------
Income (loss) from operations.......... (616) 136 733 869 253
Other income (expense)
Interest expense............................... (130) (41) 41 (130)
Interest income................................ 11 (11)
------ ------ ----- ------ ------
Income (loss) before income taxes................ (746) 106 763 869 123
Income taxes..................................... 37 (37)
------ ------ ----- ------ ------
Net income (loss)...................... $ (746) $ 69 $ 800 $ 869 123
====== ====== ===== ====== ======
</TABLE>

F-13
<PAGE> 70

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Medical Manager Corporation

We have audited the accompanying balance sheet of Medical Manager
Corporation as of July 31, 1996. This balance sheet is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
balance sheet 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 balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Medical Manager Corporation as of
July 31, 1996 in conformity with generally accepted accounting principles.

As discussed in Notes 1 and 4 to the balance sheet, the Company was formed
in July 1996 and has entered into definitive agreements for the acquisition of
substantially all the net assets of Personalized Programming, Inc., Systems
Plus, Inc. and Systems Plus Distribution, Inc., RTI Business Systems, Inc.,
National Medical Systems, Inc. and Systems Management, Inc. in connection with
an initial public offering of its common stock.

COOPERS & LYBRAND L.L.P.

Tampa, Florida
September 27, 1996

F-14
<PAGE> 71

MEDICAL MANAGER CORPORATION

BALANCE SHEET
JULY 31, 1996

<TABLE>
<S> <C>
ASSETS
Cash.......................................................................... $100
====
LIABILITIES AND STOCKHOLDERS' EQUITY
Commitments and Contingencies (Note 4)........................................
STOCKHOLDERS' EQUITY
Preferred Stock, 500,000 shares authorized, none issued and outstanding.......
Common Stock, $0.01 par value, 50,000,000 shares authorized, 3 issued and
outstanding.................................................................
Additional paid in capital.................................................... 100
----
$100
====
</TABLE>

See accompanying notes to balance sheet.

F-15
<PAGE> 72

MEDICAL MANAGER CORPORATION

NOTES TO BALANCE SHEET

1. ORGANIZATION AND OPERATIONS:

Medical Manager Corporation ("MMC") was formed in July 1996 to bring
together the research and development, sales, marketing and support resources
for The Medical Manager, a leading physician practice management system for
independent physicians, physician groups, MSO's, IPA's, management care
organizations and other providers of health care services in the United States.
MMC intends to acquire five companies (the "Founding Companies"), including the
developer of The Medical Manager, the master distributor of The Medical Manager
and three of the national dealers for The Medical Manager (the "Mergers");
complete an initial public offering (the "Offering") of its common stock and,
subsequent to the Offering, continue to acquire, through mergers or purchase,
other dealers to expand its national and regional operations. MMC plans to file
a registration statement on Form S-1 in September 1996 for the sale of its
common stock.

MMC's primary asset at July 31, 1996 was cash. MMC has not conducted any
operations, and all activities to date relating to the Mergers and the Offering
have been conducted by National Medical Systems, Inc. ("NMS"), one of the
companies to be acquired in the Mergers. Cash of $100 results from the initial
capitalization of MMC. There is no assurance that the Acquisitions discussed
below will be completed and that MMC will be able to generate future operating
revenue. MMC is dependent upon the Offering to fund the Mergers and future
operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Income Taxes. Income taxes are provided under the liability method
considering the tax effects of transactions reported in the financial statements
that are different from the tax returns. Deferred tax assets or liabilities
represent the future tax consequences of those differences, which will either be
taxable or deductible when the underlying assets or liabilities are recovered or
settled. MMC provides a valuation allowance against deferred tax assets if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reported periods. Actual results could differ from those estimates; however,
management does not believe these differences would have a material effect on
operating results.

New Accounting Pronouncements. Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets to be
Disposed Of," is effective for years beginning after December 15, 1995. This
statement requires that long-lived assets and certain intangibles to be held and
used by MMC be reviewed for impairments. This pronouncement is not expected to
have a material impact on the financial position of MMC.

SFAS No. 123, "Accounting for Stock-Based Compensation," will be effective
for MMC. SFAS No. 123 permits, but does not require, a fair-value based method
of accounting for employee stock option plans which results in compensation
expense recognition when stock options are granted. As permitted by SFAS No.
123, MMC will provide pro forma disclosure of net income and earnings per share,
as applicable, in the notes to future consolidated financial statements.

3. STOCK OPTIONS:

MMC has approved the 1996 Incentive Plan (the "Plan"), which provides for
the granting or awarding of stock options and stock appreciation rights to
non-employee directors, officers and other key employees

F-16
<PAGE> 73

(including officers of the Founding Companies). The number of shares authorized
and reserved for issuance under the Plan is limited to the greater of 2,000,000
shares or 10% of the number of shares of Common Stock outstanding at the time of
the grant. The options will have an exercise price equal to the initial public
offering price and will vest as to 25% each on the date that is six months, 18
months, 30 months and 42 months after the consummation of the Offering, and will
expire on the earlier of 10 years after the date of the grant or three months
after termination of employment.

4. COMMITMENTS AND CONTINGENCIES:

As discussed in Note 1, MMC has entered into definitive agreements with the
Founding Companies providing for the acquisition by MMC of Personalized
Programming, Inc. ("PPI"), Systems Plus, Inc. and Systems Plus Distribution,
Inc. ("SPI"), RTI Business Systems, Inc. ("RTI"), National Medical Systems, Inc.
("NMS") and Systems Management, Inc. ("SMI"). The Mergers will be accounted for
as a net book value purchase of the Founding Companies at historical cost for
accounting purposes, with PPI being treated as the acquiror.

The following table sets forth for each Founding Company the consideration
to be paid to its common stockholders (i) in cash and (ii) in shares of common
stock of MMC (in thousands):

<TABLE>
<CAPTION>
COMMON STOCK
----------------------
FAIR VALUE
CASH SHARES OF SHARES
------- ------- ----------
<S> <C> <C> <C>
PPI.................................................. $45,000 6,370 $ 95,550
SPI.................................................. 12,000 2,210 33,150
RTI.................................................. 2,250 350 5,250
NMS.................................................. -- 3,890 58,353
SMI.................................................. 1,000 180 2,697
------- ------- --------
$60,250 13,000 $ 195,000
======= ======= ========
</TABLE>

F-17
<PAGE> 74

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Personalized Programming, Inc.

We have audited the accompanying balance sheets of Personalized
Programming, Inc. as of December 31, 1994 and 1995 and the related statements of
operations, changes in stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1995. 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 audits.

We conducted our audits 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 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 Personalized Programming,
Inc. as of December 31, 1994 and 1995 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.

As discussed in Note 8 to the financial statements, in July 1996 the
Company and its stockholder entered into a definitive agreement with Medical
Manager Corporation (MMC) providing for the merger of the Company with a
subsidiary of MMC.

COOPERS & LYBRAND L.L.P.

Tampa, Florida
August 23, 1996

F-18
<PAGE> 75

PERSONALIZED PROGRAMMING, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, 1996
1994 1995 (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.............................. $1,308,844 $1,166,679 $ 2,977,039
Investments............................................ 255,962 355,414 202,488
Accounts receivable.................................... 1,272,374 1,383,849 1,323,792
Inventory.............................................. 0 0 109,127
Prepaid expenses and other current assets.............. 61,194 71,039 132,051
---------- ---------- ----------
Total current assets........................... 2,898,374 2,976,981 4,744,497
PROPERTY AND EQUIPMENT, net.............................. 1,817,798 2,842,315 444,343
---------- ---------- ----------
Total assets................................... $4,716,172 $5,819,296 $ 5,188,840
========== ========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities............... $ 337,106 $ 474,783 $ 575,388
Customer deposits and deferred maintenance revenue..... 551,793 581,357 1,111,983
---------- ---------- ----------
Total current liabilities...................... 888,899 1,056,140 1,687,371
---------- ---------- ----------
Commitments and contingencies (Notes 5 and 8)
STOCKHOLDER'S EQUITY
Common stock $0.10 par value, 1,000 shares authorized,
issued and outstanding.............................. 100 100 100
Additional paid-in capital............................. 8,035 8,035 8,035
Unrealized gain (loss) on investments.................. (95,014) 2,085 0
Retained earnings...................................... 3,914,152 4,752,936 3,493,334
---------- ---------- ----------
Total stockholder's equity..................... 3,827,273 4,763,156 3,501,469
---------- ---------- ----------
Total liabilities and stockholder's equity..... $4,716,172 $5,819,296 $ 5,188,840
========== ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-19
<PAGE> 76

PERSONALIZED PROGRAMMING, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------- ------------------------
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue
Systems........................... $ 693,964 $1,013,675 $ 1,017,993 $ 750,739 $ 566,011
Software license.................. 4,840,055 6,327,994 7,528,997 5,771,264 6,055,033
Maintenance and other............. 1,355,726 2,275,515 2,472,704 1,825,222 1,865,514
------------ ------------ ------------ ---------- ----------
Total revenue.................. 6,889,745 9,617,184 11,019,694 8,347,225 8,486,558
------------ ------------ ------------ ---------- ----------
Cost of revenue
Systems........................... 571,735 751,643 703,755 487,160 553,233
Software license.................. 63,675 380,877 650,460 600,158 380,855
Maintenance and other............. 174,820 235,012 227,435 190,584 321,683
------------ ------------ ------------ ---------- ----------
Total costs of revenue......... 810,230 1,367,532 1,581,650 1,277,902 1,255,771
------------ ------------ ------------ ---------- ----------
Gross margin.............. 6,079,515 8,249,652 9,438,044 7,069,323 7,230,787
------------ ------------ ------------ ---------- ----------
Operating expenses
Selling, general and
administrative................. 982,373 1,184,097 1,350,427 907,917 1,040,812
Research and development.......... 1,039,971 1,501,605 2,024,252 1,484,176 1,934,956
Depreciation and amortization..... 104,475 196,547 226,167 139,636 189,477
------------ ------------ ------------ ---------- ----------
Total operating expenses....... 2,126,819 2,882,249 3,600,846 2,531,729 3,165,245
------------ ------------ ------------ ---------- ----------
Income from operations.... 3,952,696 5,367,403 5,837,198 4,537,594 4,065,542
Other income (expense)
Interest and dividend income...... 91,612 69,950 136,020 142,843 83,593
Other............................. 81,382 (15,097) (27,550)
------------ ------------ ------------ ---------- ----------
Net income................ $4,125,690 $5,422,256 $ 5,945,668 $4,680,437 $ 4,149,135
============ ============ ============ ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-20
<PAGE> 77

PERSONALIZED PROGRAMMING, INC.

STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL UNREALIZED
--------------- PAID IN GAIN (LOSS) RETAINED
SHARES AMOUNT CAPITAL ON INVESTMENT EARNINGS TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 1993.......... 1,000 $100 $8,035 $ (49,775) $ 2,520,860 $ 2,479,220
Net income..................... 4,125,690 4,125,690
Dividends...................... (3,985,000) (3,985,000)
Change in unrealized (loss) on
investments................. (37,850) (37,850)
----- ---- ----- -------- ---------- ----------
Balance December 31, 1993........ 1,000 100 8,035 (87,625) 2,661,550 2,582,060
Net income..................... 5,422,256 5,422,256
Dividends...................... (4,169,654) (4,169,654)
Change in unrealized (loss) on
investments................. (7,389) (7,389)
----- ---- ----- -------- ---------- ----------
Balance December 31, 1994........ 1,000 100 8,035 (95,014) 3,914,152 3,827,273
Net income..................... 5,945,668 5,945,668
Dividends...................... (5,106,884) (5,106,884)
Change in unrealized (loss) on
investments................. 97,099 97,099
----- ---- ----- -------- ---------- ----------
Balance December 31, 1995........ 1,000 100 8,035 2,085 4,752,936 4,763,156
Net income..................... 4,149,135 4,149,135
Dividends...................... (5,408,737) (5,408,737)
Change in unrealized gain on
investments................. (2,085) (2,085)
----- ---- ----- -------- ---------- ----------
Balance September 30, 1996
(unaudited).................... 1,000 $100 $8,035 $ 0 $ 3,493,334 $ 3,501,469
===== ==== ===== ======== ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-21
<PAGE> 78

PERSONALIZED PROGRAMMING, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------------------ ------------------------
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income........................................ $ 4,125,690 $ 5,422,256 $ 5,945,668 $4,680,437 $4,149,135
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 104,475 196,547 226,167 139,636 189,477
Gain on sale of property and equipment.......... 0 0 0 0 (3,309)
Realized (gains) losses on marketable
securities.................................... 0 39,183 3,082 (62,813 ) 26
Changes in assets and liabilities
Accounts receivable............................. 873,687 (635,245 ) (111,475 ) (314,147 ) 60,057
Prepaid expenses and other current assets....... (36,757 ) 62,710 (9,845 ) (22,500 ) (61,014)
Accounts payable and accrued liabilities........ (59,347 ) 101,965 137,677 330,267 (8,522)
Customer deposits and deferred maintenance
revenue....................................... 112,218 115,813 29,564 371,745 328,140
Income taxes payable............................ (10,729 ) 0 0 --
----- ---- ------ -------- -----------
Net cash provided by operating activities... 5,109,237 5,303,229 6,220,838 5,122,625 4,653,990
----- ---- ------ -------- -----------
Cash flow from investing activities:
Purchases of investments.......................... (6,232,076 ) (150,433 ) (247,595 ) (147,305 ) (50,543)
Proceeds from the sale of investments............. 6,204,571 190,489 242,160 133,919 100,264
Purchases of property and equipment............... (969,767 ) (210,644 ) (1,250,684 ) (1,070,207 ) (255,531)
Proceeds on sale of property and equipment........ 8,900 0 0 0 25,690
----- ---- ------ -------- -----------
Net cash used in investing activities....... (988,372 ) (170,588 ) (1,256,119 ) (1,083,593 ) (180,120)
----- ---- ------ -------- -----------
Cash flow from financing activities:
Dividends......................................... (3,985,000 ) (4,169,654 ) (5,106,884 ) (2,512,387 ) (2,663,510)
----- ---- ------ -------- -----------
Net cash used in financing activities....... (3,985,000 ) (4,169,654 ) (5,106,884 ) (2,512,387 ) (2,663,510)
----- ---- ------ -------- -----------
Net change in cash and cash equivalents..... 135,865 962,987 (142,165 ) 1,526,645 1,810,360
Cash and cash equivalents:
Beginning of period............................... 209,992 345,857 1,308,844 1,308,844 1,166,679
----- ---- ------ -------- -----------
End of period..................................... $ 345,857 $ 1,308,844 $ 1,166,679 $2,835,489 $2,977,039
===== ==== ====== ======== ===========
Non-cash dividends.................................. $ 0 $ 0 $ 0 $ 0 $2,747,312
===== ==== ====== ======== ===========
</TABLE>

See accompanying notes to financial statements.

F-22
<PAGE> 79

PERSONALIZED PROGRAMMING, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS:

Personalized Programming, Inc. is the developer of The Medical Manager
physician practice management system that is sold through a master distributor
and by direct sales to certain other dealers to clients throughout the United
States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information. The financial statements of the Company as
of September 30, 1996 and 1995 and for the nine months then ended are unaudited.
All adjustments and accruals (consisting only of normal recurring adjustments)
have been recorded that, in the opinion of management, are necessary for a fair
presentation. Results of operations for the interim periods are not necessarily
indicative of the results for the full year.

Revenue Recognition. Revenue from software license is recognized upon sale
and shipment. Revenue from the sale of systems is recognized when the system has
been installed and the related client training has been completed. Amounts
billed in advance of installation and pending completion of remaining
significant obligations are deferred. Revenue from support and maintenance
contracts is recognized as the services are performed ratably over the contract
period, which typically does not exceed one year. Revenue from other services
are recognized as they are provided. Certain expenses are allocated between the
cost of sales for systems, software license and maintenance and other based upon
revenue, which basis management believes to be reasonable.

Concentration of Credit Risk. Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of
accounts receivable. With the exception of approximately $749,000, $708,000 and
$702,000 in receivables from a significant customer at December 31, 1994 and
1995 and September 30, 1996, respectively (See Note 8), the Company's credit
concentrations are limited due to the wide variety of customers in the health
care industry and the geographic areas into which the Company's systems and
services are sold.

Cash and Cash Equivalents. For purposes of the statement of cash flows,
the Company considers all highly liquid investments with maturity dates of three
months or less when purchased to be cash equivalents.

Investments. The Company follows Statement of Financial Accounting
Standards ("SFAS") No. 115, Accounting for Certain Investments in Debt and
Equity Securities, which requires fair value accounting for debt and equity
securities. The Company classifies its investments as available for sale, which
requires that they be recorded at fair market value with gross unrealized
holding gains and losses treated as a separate component of stockholder's
equity.

Property and Equipment. Property and equipment are stated at cost.
Additions and major renewals are capitalized. Repairs and maintenance are
charged to expense as incurred. Upon disposal, the related cost and accumulated
depreciation are removed from the accounts, with the resulting gain or loss
included in income. Depreciation is provided principally on accelerated methods
over the estimated useful lives of the assets. Amortization of leasehold
improvements is provided for over the shorter of the estimated service life of
the leased asset or the lease term using the straight-line method.

Research and Development. Software development costs are included in
research and development and are expensed as incurred. SFAS No. 86, "Accounting
for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed,"
requires the capitalization of certain software development costs once
technological feasibility is established. The capitalized cost is then amortized
over the estimated product life. To date, the period between achieving
technological feasibility and the general availability of such software has been
short and software development costs qualifying for capitalization have been
insignificant.

F-23
<PAGE> 80

PERSONALIZED PROGRAMMING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
Income Taxes. The Company has elected S corporation status, as defined by
the Internal Revenue Code, whereby the Company is not subject to taxation for
federal purposes. Instead, the taxable income of the S corporation is included
in the individual income tax return of the Company's single stockholder for
federal income tax purposes. Accordingly, a provision for income taxes has not
been reflected in the financial statements. The Company's S corporation status
will terminate with the effective date of the Merger discussed in Note 8.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reported period. Actual results could differ from those estimates; however,
management does not believe these differences would have a material effect on
operating results.

New Accounting Pronouncements. SFAS No. 121, Accounting for the Impairment
of Long Lived Assets and for Long Lived Assets to be Disposed Of, is effective
for years beginning after December 15, 1995. This Statement requires that
long-lived assets and certain intangibles to be held and used by the Company be
reviewed for impairment. This pronouncement is not expected to have a material
impact on the financial statements of the Company.

Reclassifications. Certain prior year amounts have been reclassified to
conform to 1996 presentations.

3. INVESTMENTS:

Investments held consisted of the following:

<TABLE>
<CAPTION>
GROSS UNREALIZED
------------------ FAIR MARKET
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
SEPTEMBER 30, 1996
Marketable equity securities.................. $202,488 $ $ $ 202,488
======== ======== ======== ========
DECEMBER 31, 1995
------------------------------------------
Marketable equity securities.................. $253,120 $17,824 $ 15,530 $ 255,414
Fixed income securities....................... 100,209 209 100,000
-------- -------- -------- --------
$353,329 $17,824 $ 15,739 $ 355,414
======== ======== ======== ========
DECEMBER 31, 1994
------------------------------------------
Marketable equity securities.................. $350,976 $10,687 $105,701 $ 255,962
======== ======== ======== ========
</TABLE>

F-24
<PAGE> 81

PERSONALIZED PROGRAMMING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- SEPTEMBER 30,
1994 1995 1996
<S> <C> <C> <C>
Land and improvements............................. $ 760,467 $ 856,748
Building.......................................... 857,896 1,784,932
Furniture and equipment........................... 326,959 446,234 $ 527,845
Computers......................................... 270,809 374,800 509,511
Leasehold improvements............................ 42,359 46,460 19,810
---------- ---------- ---------
2,258,490 3,509,174 1,057,166
Less accumulated depreciation and amortization.... (440,692) (666,859) (612,823)
---------- ---------- ---------
$1,817,798 $2,842,315 $ 444,343
========== ========== =========
</TABLE>

5. COMMITMENTS AND CONTINGENCIES:

The Company leases its office facilities under an operating lease from an
entity owned by the Company's stockholder. Such facilities were distributed to
the stockholder in March 1996 at their fair value. The lease provides for two
one year renewals. Future minimum rental commitments under the noncancelable
operating lease are approximately as follows:

<TABLE>
<CAPTION>
TWELVE MONTHS ENDING SEPTEMBER 30:
<S> <C>
1997....................................................... $320,000
1998....................................................... 320,000
1999....................................................... 160,000
--------
Total............................................ $800,000
========
</TABLE>

Rent expense for the nine months ended September 30, 1996 was approximately
$170,000.

6. RETIREMENT PLANS:

The Company has a non-contributory profit sharing plan covering
substantially all full-time employees. Contributions are made at the discretion
of the Board of Directors. Total expense amounted to approximately $186,400,
$246,300 and $265,700 for 1993, 1994 and 1995 and $199,300 (unaudited) for the
nine months ended September 30, 1995, respectively. There was no contribution
for the nine months ended September 30, 1996.

7. SIGNIFICANT CUSTOMER:

Revenue from one customer comprised 52%, 48%, 47%, 47% and 49% (unaudited)
of the Company's revenue for 1993, 1994 and 1995 and for the nine months ended
September 30, 1995 and 1996, respectively.

8. SUBSEQUENT EVENTS:

In July 1996, the Company and its stockholder entered into a definitive
agreement with Medical Manager Corporation ("MMC") providing for the Merger of
the Company with a subsidiary of MMC. All outstanding shares of the Company's
common stock will be exchanged for cash and shares of MMC's common stock
concurrent with the consummation of the initial public offering of the common
stock of MMC.

F-25
<PAGE> 82

PERSONALIZED PROGRAMMING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

In connection with the Merger, the Company will elect to terminate its S
corporation status and will be required to effect the asset and liability method
of accounting for deferred income taxes. Under this method, deferred tax assets
and liabilities are established based on the differences between financial
statement and income tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse. Had the
Company elected to terminate its S Corporation status immediately prior to
September 30, 1996, the Company would have been required to establish a deferred
tax asset of approximately $325,000 related primarily to the use of different
methods of accounting for deferred revenue for tax and financial reporting
purposes. Also, the Company will dividend certain assets to the stockholder,
consisting primarily of cash and investments, in an amount equal to the balance
in the Company's S corporation Accumulated Adjustment Account. Had the estimated
balance of the Accumulated Adjustment Account of $4,000,000 at September 30,
1996 been distributed and recorded as of that date, the effect on the
accompanying balance sheet would be a decrease of $3,180,000 in assets, an
increase of $820,000 in notes payable and a decrease of $4,000,000 in
stockholder's equity.

Revenue from other companies which have also entered into definitive
agreements with MMC totaled approximately $3,617,000, $4,741,000, $5,568,000,
$4,507,000 and $4,722,000 for 1993, 1994 and 1995 and for the nine months ended
September 30, 1995 (unaudited) and 1996, respectively. Such amounts include the
significant customer discussed in Note 2.

F-26
<PAGE> 83

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Systems Plus, Inc. and Systems Plus Distribution, Inc.

We have audited the accompanying combined balance sheets of Systems Plus,
Inc. and Systems Plus Distribution, Inc. as of December 31, 1994 and 1995 and
the related combined statements of operations, changes in stockholder's equity
and cash flows for each of the three years in the period ended December 31,
1995. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Systems
Plus, Inc. and Systems Plus Distribution, Inc. as of December 31, 1994 and 1995
and the combined results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.

As discussed in Note 10 to the combined financial statements, in July 1996
the Companies and their stockholder entered into a definitive agreement with
Medical Manager Corporation (MMC) providing for the merger of the Companies with
subsidiaries of MMC.

COOPERS & LYBRAND L.L.P.

Tampa, Florida
August 28, 1996

F-27
<PAGE> 84

SYSTEMS PLUS, INC. AND SYSTEMS PLUS DISTRIBUTION, INC.

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.............................. $ 286,389 $ 597,606 $ 0
Investments............................................ 1,184,628 1,793,420 0
Accounts receivable.................................... 1,394,759 1,479,740 1,262,046
Inventory.............................................. 125,000 199,439 82,000
Prepaid expenses and other current assets.............. 235,450 198,930 197,456
------------ ------------ -------------
Total current assets........................... 3,226,226 4,269,135 1,541,502
PROPERTY AND EQUIPMENT, net.............................. 237,375 421,238 598,830
OTHER ASSETS............................................. 498,679 422,312 986,019
------------ ------------ -------------
Total assets................................... $3,962,280 $5,112,685 $ 3,126,351
========== ========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Notes payable.......................................... $ 536,354 $ 504,159 $ 625,000
Accounts payable and accrued liabilities............... 860,256 947,063 1,364,751
Customer deposits and deferred maintenance revenue..... 42,811 117,677 189,836
Income taxes payable................................... 31,624 5,450 15,948
------------ ------------ -------------
Total current liabilities...................... 1,471,045 1,574,349 2,195,535
------------ ------------ -------------
Commitments and contingencies (Notes 7 and 10)
STOCKHOLDER'S EQUITY
Common stock........................................... 28,000 28,000 28,000
Unrealized loss on investments......................... (220,585) (8,341) 0
Retained earnings...................................... 2,683,820 3,518,677 902,816
------------ ------------ -------------
Total stockholder's equity..................... 2,491,235 3,538,336 930,816
------------ ------------ -------------
Total liabilities and stockholder's equity..... $3,962,280 $5,112,685 $ 3,126,351
========== ========== ==========
</TABLE>

See accompanying notes to combined financial statements.

F-28
<PAGE> 85

SYSTEMS PLUS, INC. AND SYSTEMS PLUS DISTRIBUTION, INC.

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue
Systems....................... $ 159,143 $ 300,253 $ 766,037 $ 139,547 $ 827,462
Software license.............. 8,944,307 11,518,566 12,502,491 9,349,804 10,131,760
Maintenance and other......... 1,732,276 1,681,941 1,910,430 1,464,708 1,243,634
----------- ----------- ----------- ----------- -----------
Total revenue......... 10,835,726 13,500,760 15,178,958 10,954,059 12,202,856
----------- ----------- ----------- ----------- -----------
Cost of revenue
Systems....................... 290,239 209,521 440,588 135,673 648,366
Software license.............. 5,371,347 6,832,020 6,977,948 5,174,094 5,551,150
Maintenance and other......... 1,450,877 1,277,082 1,682,022 1,386,544 1,227,743
----------- ----------- ----------- ----------- -----------
Total costs of
revenue............. 7,112,463 8,318,623 9,100,558 6,696,311 7,427,259
----------- ----------- ----------- ----------- -----------
Gross margin........ 3,723,263 5,182,137 6,078,400 4,257,748 4,775,597
----------- ----------- ----------- ----------- -----------
Operating expenses
Selling, general and
administrative............. 2,471,567 3,022,941 3,345,004 2,356,887 2,920,452
Depreciation and
amortization............... 89,486 76,015 102,309 76,732 117,253
----------- ----------- ----------- ----------- -----------
Total operating
expenses............ 2,561,053 3,098,956 3,447,313 2,433,619 3,037,705
----------- ----------- ----------- ----------- -----------
Income from
operations....... 1,162,210 2,083,181 2,631,087 1,824,129 1,737,892
Other income (expense)
Interest expense.............. (25,572) (44,969) (37,385) (30,870) (12,259)
Interest and dividend
income..................... 17,780 54,031 88,457 62,674 48,209
Gain (loss) on investments and
other...................... 187,536 (16,731) 169,498 176,406 240,340
----------- ----------- ----------- ----------- -----------
Income before income taxes...... 1,341,954 2,075,512 2,851,657 2,032,339 2,014,182
Income taxes.................... 34,955 50,125 53,300 60,798 35,772
----------- ----------- ----------- ----------- -----------
Net income.......... $ 1,306,999 $ 2,025,387 $ 2,798,357 $ 1,971,541 $ 1,978,410
=========== =========== =========== =========== ===========
</TABLE>

See accompanying notes to combined financial statements.

F-29
<PAGE> 86

SYSTEMS PLUS, INC. AND SYSTEMS PLUS DISTRIBUTION, INC.

COMBINED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
COMMON
STOCK UNREALIZED
------- GAIN (LOSS) RETAINED
AMOUNT ON INVESTMENTS EARNINGS TOTAL
<S> <C> <C> <C> <C>
Balance January 1, 1993........................ $28,000 $ (59,474) $ 962,434 $ 930,960
Net income................................... 1,306,999 1,306,999
Dividends.................................... (640,000) (640,000)
Change in unrealized loss on investments..... 20,232 20,232
------- --------- ----------- -----------
Balance December 31, 1993...................... 28,000 (39,242) 1,629,433 1,618,191
Net income................................... 2,025,387 2,025,387
Dividends.................................... (971,000) (971,000)
Change in unrealized loss on investments..... (181,343) (181,343)
------- --------- ----------- -----------
Balance December 31, 1994...................... 28,000 (220,585) 2,683,820 2,491,235
Net income................................... 2,798,357 2,798,357
Dividends.................................... (1,963,500) (1,963,500)
Change in unrealized loss on investments..... 212,244 212,244
------- --------- ----------- -----------
Balance December 31, 1995...................... 28,000 (8,341) 3,518,677 3,538,336
Net income................................... 1,978,410 1,978,410
Dividends.................................... (4,594,271) (4,594,271)
Change in unrealized gain on investments..... 8,341 8,341
------- --------- ----------- -----------
Balance September 30, 1996 (unaudited)......... $28,000 $ 0 $ 902,816 $ 930,816
======= ========= =========== ===========
</TABLE>

See accompanying notes to combined financial statements.

F-30
<PAGE> 87

SYSTEMS PLUS, INC. AND SYSTEMS PLUS DISTRIBUTION, INC.

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER
YEARS ENDED DECEMBER 31, 30,
--------------------------------------- ----------------------------
1993 1994 1995 1995(UNAUDITED) 1996
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................ $ 1,306,999 $ 2,025,387 $ 2,798,357 $ 1,971,541 $ 1,978,410
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization....... 89,486 76,015 102,309 76,732 117,253
(Gain) loss on sale of property and
equipment......................... 2,200 994 (1,374) (1,374 ) (415)
Realized gains on investments....... (326,745) (208,406) (541,416) (383,641 ) (448,158)
Realized losses on investments...... 137,009 224,143 373,292 200,468 208,233
Changes in assets and liabilities:
Accounts receivable................. (122,215) (529,520) 19,033 269,780 299,769
Inventory........................... (48,879) 99,109 (74,439) (45,000 ) 117,439
Prepaid expenses and other current
assets............................ 165,496 (183,069) 8,873 (4,783 ) (644,308)
Accounts payable and accrued
liabilities....................... (1,790,912) 110,661 86,807 258,085 417,688
Customer deposits and deferred
maintenance revenue............... 29,266 (2,677) 74,866 395,852 72,159
Income taxes payable................ (11,603) 23,023 (26,174) (1,676 ) 10,498
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities......... (569,898) 1,635,660 2,820,134 2,735,984 2,128,568
----------- ----------- ----------- ----------- -----------
Cash flow from investing activities:
Purchases of investments.............. (5,837,730) (6,800,249) (11,268,708) (7,625,731 ) (8,694,966)
Proceeds from the sale of
investments......................... 6,485,016 6,836,814 11,027,950 7,628,644 9,945,924
Purchases of property and equipment... (45,795) (100,817) (306,894) (186,330 ) (296,840)
Proceeds on sale of property and
equipment........................... 0 0 22,096 22,096 2,410
Proceeds from investment
margin accounts..................... 6,573,612 7,516,828 10,614,724 7,197,015 9,841,701
Payments on investment
margin accounts..................... (6,845,885) (7,242,266) (10,634,585) (7,445,197 ) (10,345,860)
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
investing activities......... 329,218 210,310 (545,417) (409,503 ) 452,369
----------- ----------- ----------- ----------- -----------
Cash flow from financing activities:
Proceeds from short-term
obligations......................... 1,393,000 1,962,000 0 0 1,465,000
Payment on short-term obligations..... (1,368,000) (1,987,000) 0 0 (840,000)
Cash overdraft........................ 563,581 (563,581) 0 0 0
Dividends............................. (640,000) (971,000) (1,963,500) (1,793,500 ) (3,803,543)
----------- ----------- ----------- ----------- -----------
Net cash used in financing
activities................... (51,419) (1,559,581) (1,963,500) (1,793,500 ) (3,178,543)
Net change in cash and cash
equivalents.................. (292,099) 286,389 311,217 532,981 (597,606)
Cash and cash equivalents:
Beginning of period................... 292,099 0 286,389 286,389 597,606
----------- ----------- ----------- ----------- -----------
End of period......................... $ 0 $ 286,389 $ 597,606 $ 819,370 $ 0
=========== =========== =========== =========== ===========
Non-cash dividends...................... $ 0 $ 0 $ 0 $ 0 $ 790,728
=========== =========== =========== =========== ===========
Cash paid during the period for
Interest.............................. $ 25,072 $ 44,315 $ 37,465
=========== =========== ===========
Income taxes.......................... $ 63,097 10,563 85,574
=========== =========== ===========
</TABLE>

See accompanying notes to combined financial statements.

F-31
<PAGE> 88

SYSTEMS PLUS, INC. AND SYSTEMS PLUS DISTRIBUTION, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS:

Systems Plus, Inc. and its combined affiliate (the "Company") is the master
distributor for The Medical Manager physician practice management system that is
sold to an independent dealers' network throughout the United States. The
Company purchases substantially all of its software from Personalized
Programming, Inc. ("PPI"), the developer of The Medical Manager, under a license
and master distributor agreement.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information. The financial statements of the Company as
of September 30, 1995 and for the nine months then ended are unaudited. All
adjustments and accruals (consisting only of normal recurring adjustments) have
been recorded that, in the opinion of management, are necessary for a fair
presentation. Results of operations for the interim periods are not necessarily
indicative of the results for the full year.

Principles of Combination. The financial statements include the accounts
of Systems Plus, Inc. ("SPI") and its sister company, Systems Plus Distribution,
Inc. ("SPDI"), which is affiliated through common ownership and management. All
material intercompany accounts and transactions have been eliminated.

Concentration of Credit Risk. Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of
accounts receivable. The Company's credit concentrations are limited due to the
wide variety of customers in the health care industry and geographic areas into
which the Company's systems and services are sold.

Cash and Cash Equivalents. For purposes of the statement of cash flows the
Company considers all highly liquid investments with maturity dates of three
months or less when purchased to be cash equivalents.

Inventory. Inventory primarily consists of purchased software packages,
peripheral computer equipment and replacement parts. Inventory cost is accounted
for on the first-in, first-out basis and reported at the lower of cost or
market.

Property and Equipment. Property and equipment are stated at cost.
Additions and major renewals are capitalized. Repairs and maintenance are
charged to expense as incurred. Upon disposal, the related cost and accumulated
depreciation are removed from the accounts, with the resulting gain or loss
included in income. Depreciation is provided on the straight line and
accelerated methods over the estimated useful lives of the assets. Amortization
of leasehold improvements is provided for over the shorter of the estimated
service life of the leased asset or the lease term using the straight-line
method.

F-32
<PAGE> 89

SYSTEMS PLUS, INC. AND SYSTEMS PLUS DISTRIBUTION, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

Income Taxes. SPI has elected to be taxed as an S corporation and SPDI is
taxed as a C corporation under the provisions of the Internal Revenue Code of
1986. SPI is not subject to taxation at the federal level. Instead, the taxable
income of SPI is included in the individual income tax return of that company's
single stockholder for federal income tax purposes. The provision for income
taxes in the combined statements of operations represents SPDI's provision for
federal income taxes and the provision for state income taxes for both SPI and
SPDI. The Company utilizes the asset and liability method of accounting for
deferred federal and state income taxes for SPDI taxed as a regular corporation
and to account for state income taxes for SPI taxed as an S corporation for
Federal tax purposes, but taxed as a regular corporation for certain state
income tax purposes. Under this method, deferred tax assets and liabilities are
established based on the differences between financial statement and income tax
basis of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse. Other assets are comprised
primarily of federal income tax deposits for fiscal year S corporation purposes.

SPI's S corporation election will terminate with the effective date of the
Merger discussed in Note 10.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reported period. Actual results could differ from those estimates; however,
management does not believe these differences would have a material effect on
operating results.

Reclassifications. Certain prior year amounts have been reclassified to
conform to 1996 presentations.

3. INVESTMENTS:

Investments held consisted of the following:

<TABLE>
<CAPTION>
FAIR MARKET
COST GAINS LOSSES VALUE
GROSS UNREALIZED
------------------
DECEMBER 31, 1995
------------------
<S> <C> <C> <C> <C>
Marketable equity securities................ $1,801,761 $19,629 $ 27,970 $ 1,793,420
========= ======= ======== =========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1994
------------------
<S> <C> <C> <C> <C>
Marketable equity securities................ $1,405,213 $ 3,038 $223,623 $ 1,184,628
========= ======= ======== =========
</TABLE>

During the nine months ended September 30, 1996, investments of $790,728
were distributed to the stockholder at their fair value as a non-cash dividend.

F-33
<PAGE> 90

SYSTEMS PLUS, INC. AND SYSTEMS PLUS DISTRIBUTION, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1994 1995 1996
<S> <C> <C> <C>
Furniture and equipment............................ $ 314,168 $ 497,877 $ 613,411
Computers.......................................... 335,632 435,700 543,501
Leasehold improvements............................. 0 0 70,845
--------- --------- -------------
649,800 933,577 1,227,757
Less accumulated depreciation and amortization..... (412,425) (512,339) (628,927)
--------- --------- -------------
$ 237,375 $ 421,238 $ 598,830
========= ========= ==========
</TABLE>

5. NOTES PAYABLE:

Notes payable at December 31, 1995 and 1994 consisted of the margin account
borrowings collateralized by investments, with interest generally at prime rate.

The Company has a $750,000 revolving line of credit that was available at
September 30, 1996. The line of credit agreement provides for interest at prime
plus 1/2% and is collateralized by receivables, inventory, fixed assets,
general intangibles and personally guaranteed by the stockholder. There was
$625,000 outstanding under the line at September 30, 1996.

The carrying value approximates fair market value due to the short-term
nature of the debt.

6. INCOME TAXES:

Income taxes consisted of the following:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------- -------------------------
1993 1994 1995 1995(UNAUDITED) 1996
<S> <C> <C> <C> <C> <C>
Current
Federal.............. $ 6,000
State................ $34,955 $50,125 47,300 $60,798 $35,772
------- ------- ------- ------- -------
$34,955 $50,125 $53,300 $60,798 $35,772
======= ======= ======= ======= =======
</TABLE>

The following table summarizes the principal differences between income
taxes at the federal statutory rate and the effective income tax amounts
reflected in the financial statements:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------- -----------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
Statutory tax.......... $ 456,000 $ 706,000 $ 970,000 $ 691,000 $ 685,000
State income tax, net
of federal benefit... 34,955 50,125 47,300 60,798 35,772
Effect of graduated
rate brackets........ (6,000)
Effect of S corporation
income not subject to
federal income tax... (456,000) (706,000) (958,000) (691,000) (685,000)
--------- --------- --------- --------- ---------
$34,955... $ 50,125 $ 53,300 $ 60,798 $ 35,772
========= ========= ========= ========= =========
</TABLE>

F-34
<PAGE> 91

SYSTEMS PLUS, INC. AND SYSTEMS PLUS DISTRIBUTION, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES -- (CONTINUED)
The Company was examined by the California Franchise Tax Board for tax
years ended in 1992 through 1995. The Company has reviewed various matters that
are under consideration and believes that it has adequately provided for any
liability that may result from this examination. In the opinion of management,
any liability that may arise from prior periods as a result of the examination
will not have a material effect on the Company's financial position or results
of operations.

7. COMMITMENTS AND CONTINGENCIES:

The Company leases its office facilities under operating leases having
remaining terms ranging from one to five years. Future minimum rental
commitments under noncancelable operating leases are approximately as follows:

<TABLE>
<CAPTION>
TWELVE MONTHS ENDING SEPTEMBER 30:
<S> <C>
1997............................................................. $201,000
1998............................................................. 131,000
1999............................................................. 117,000
2000............................................................. 117,000
2001............................................................. 39,000
--------
Total.................................................. $605,000
========
</TABLE>

Rent expense was approximately $141,000, $133,000, $134,000, $101,000 and
$186,000 for 1993, 1994 and 1995 and for the nine months ended September 30,
1995 (unaudited) and 1996 (unaudited), respectively.

8. STOCKHOLDER'S EQUITY:

The common stock ownership of the companies are as follows:

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1994
AND
1995 AND SEPTEMBER 30,
1996
--------------------------
SHARES SHARES
AUTHORIZED OUTSTANDING
<S> <C> <C>
Systems Plus, Inc. .................................. 1,000,000 500,000
Systems Plus Distribution, Inc. ..................... 1,000,000 50,000
</TABLE>

F-35
<PAGE> 92

SYSTEMS PLUS, INC. AND SYSTEMS PLUS DISTRIBUTION, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

9. RELATED PARTY TRANSACTIONS:

The Company's stockholder acquired a controlling interest in a Medical
Manager dealer in the greater Chicago, Illinois area in February 1996. Revenue,
primarily from software license, from this dealer was approximately $243,000,
$190,000 and $154,000 for 1995 and for the nine months ended September 30, 1995
and 1996, respectively. Such transactions are done on an arm's-length basis.

10. SUBSEQUENT EVENTS:

In July 1996, the Company and its stockholder entered into a definitive
agreement with Medical Manager Corporation ("MMC") providing for the Merger of
the Company with subsidiaries of MMC. All outstanding shares of the Company's
common stock will be exchanged for cash and shares of MMC's common stock
concurrent with the consummation of the initial public offering of the common
stock of MMC.

In connection with the Merger, SPI will elect to terminate its S
corporation status and will be required to effect the asset and liability method
of accounting for deferred income taxes. Under this method, deferred tax assets
and liabilities are established based on the differences between financial
statement and income tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse. Had SPI
elected to terminate its S corporation status immediately prior to September 30,
1996, the Company would have been required to establish a deferred tax liability
of approximately $40,000 related primarily to the use of the cash method of
accounting for income tax purposes. Also, the Company will dividend certain
assets to the stockholder, consisting primarily of cash, investments and other
assets, in an amount equal to the balance in the Company's S corporation
Accumulated Adjustment Account. Had the estimated balance of the Accumulated
Adjustment Account at September 30, 1996 of $893,000 been distributed and
recorded as of that date, the effect on the accompanying balance sheet would be
an increase of $893,000 in notes payable and a decrease of $893,000 in
stockholder's equity.

Revenue from four other companies which have also entered into definitive
merger agreements with MMC totaled approximately $616,000, $891,000, $1,145,000,
$836,000 and $924,000 for 1993, 1994 and 1995 and for the nine months ended
September 30, 1995 and 1996 (unaudited), respectively.

Purchases of software from Personalized Programming, Inc., which has also
entered into a definitive merger agreement with MMC, totaled approximately
$3,617,000, $4,681,000, $5,350,000, $3,917,000 and $4,355,000 for 1993, 1994 and
1995 and for the nine months ended September 30, 1995 (unaudited) and 1996
(unaudited), respectively.

F-36
<PAGE> 93

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
RTI Business Systems, Inc.

We have audited the accompanying balance sheets of RTI Business Systems,
Inc. as of December 31, 1994 and 1995 and June 30, 1996 and the related
statements of operations and accumulated deficit and cash flows for each of the
three years in the period ended December 31, 1995. 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 audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of RTI Business Systems, Inc.
as of December 31, 1994 and 1995 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.

As discussed in Note 8 to the financial statements, in July 1996 the
Company and its stockholders entered into a definitive agreement with Medical
Manager Corporation (MMC) providing for the merger of the Company with a
subsidiary of MMC.

COOPERS & LYBRAND L.L.P.

Tampa, Florida
August 28, 1996

F-37
<PAGE> 94

RTI BUSINESS SYSTEMS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER
DECEMBER 31, DECEMBER 31, 30,
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............................... $ 25,349 $ 28,851 $ 83,712
Accounts receivable..................................... 236,802 347,725 173,871
Inventory............................................... 0 29,274 163,681
Prepaid expenses and other current assets............... 26,453 20,437 16,500
Deferred income taxes................................... 108,982 212,456 262,456
-------- ---------- ----------
Total current assets............................ 397,586 638,743 700,220
PROPERTY AND EQUIPMENT, net............................... 143,895 335,951 533,023
-------- ---------- ----------
Total assets.................................... $ 541,481 $ 974,694 $1,233,243
======== ========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Current maturities of long-term obligations............. $ 156,934 $ 282,460 $ 513,891
Accounts payable and accrued liabilities................ 391,619 355,947 565,965
Customer deposits and deferred maintenance revenue...... 307,464 530,066 630,294
Income taxes payable.................................... 103,608 233,097 146,904
-------- ---------- ----------
Total current liabilities....................... 959,625 1,401,570 1,857,054
LONG-TERM OBLIGATIONS, net of current maturities.......... 3,895 99,950 140,045
-------- ---------- ----------
Total liabilities............................... 963,520 1,501,520 1,997,099
-------- ---------- ----------
Commitments and Contingencies (Notes 6 and 8)
STOCKHOLDERS' DEFICIT
Common stock, no par value, 200 shares authorized,
issued and outstanding............................... 102,000 102,000 102,000
Accumulated deficit..................................... (524,039) (628,826) (865,856)
-------- ---------- ----------
Total stockholders' deficit..................... (422,039) (526,826) (763,856)
-------- ---------- ----------
Total liabilities and stockholders' deficit..... $ 541,481 $ 974,694 $1,233,243
======== ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-38
<PAGE> 95

RTI BUSINESS SYSTEMS, INC.

STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ -----------------------
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue
Systems............................ $1,645,102 $2,242,200 $2,712,211 $1,617,456 $1,803,593
Maintenance and other.............. 1,401,533 2,085,244 2,241,440 1,735,875 2,574,904
---------- ---------- ---------- ---------- ----------
Total revenue.............. 3,046,635 4,327,444 4,953,651 3,353,331 4,378,497
---------- ---------- ---------- ---------- ----------
Cost of revenue
Systems............................ 1,372,675 1,334,929 1,486,156 1,009,354 1,251,550
Maintenance and other.............. 1,169,441 1,241,483 1,214,985 1,083,252 1,521,235
---------- ---------- ---------- ---------- ----------
Total costs of revenue..... 2,542,116 2,576,412 2,701,142 2,092,606 2,772,785
---------- ---------- ---------- ---------- ----------
Gross margin.......... 504,519 1,751,032 2,252,509 1,260,725 1,605,712
---------- ---------- ---------- ---------- ----------
Operating expenses
Selling, general and
administrative.................. 925,189 1,710,987 2,268,533 1,313,132 1,740,565
Depreciation and amortization...... 55,434 46,777 58,057 43,585 68,054
---------- ---------- ---------- ---------- ----------
Total operating expenses........ 980,623 1,757,764 2,326,590 1,356,717 1,808,619
---------- ---------- ---------- ---------- ----------
Income (loss) from
operations............... (476,104) (6,732) (74,081) (95,992) (202,907)
Other income (expense)
Interest expense................... (32,928) (19,988) (33,326) (23,859) (34,123)
Other.............................. 0 (27,746) 2,620 0
---------- ---------- ---------- ---------- ----------
Net income (loss).......... (509,032) (54,466) (104,787) (119,851) (237,030)
---------- ---------- ---------- ---------- ----------
Retained earnings (accumulated
deficit):
Beginning of period................ 39,459 (469,573) (524,039) (524,039) (628,826)
---------- ---------- ---------- ---------- ----------
End of period...................... $ (469,573) $ (524,039) $ (628,826) $ (643,890) $ (865,856)
========== ========== ========== ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-39
<PAGE> 96

RTI BUSINESS SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------ -------------------------
1993 1994 1995 1995(UNAUDITED)1996
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................... $ (509,032) $ (54,466) $ (104,787) $ (119,851) $(237,030)
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 55,434 46,777 58,057 43,585 68,054
Deferred income taxes................ (51,642) (57,340) (103,474) (77,606) (50,000)
Loss on sale of property and
equipment.......................... 0 27,746 13,110 13,110 0
Changes in assets and liabilities:
Accounts receivable.................. 66,795 (160,167) (110,923) (193,474) 173,854
Inventory............................ 121,998 0 (29,274) (10,069) (134,407)
Prepaid expenses and other current
assets............................. 12,170 (16,009) 6,016 10,333 3,936
Accounts payable and accrued
liabilities........................ 16,864 245,366 (35,672) 48,811 210,018
Customer deposits and deferred
maintenance revenue................ 517,699 (97,275) 222,602 172,086 100,228
Income taxes payable................. 50,000 53,152 129,489 66,760 (86,193)
--------- --------- --------- --------- ---------
Net cash provided by (used in)
operating activities.......... 280,286 (12,216) 45,144 (46,315) 48,460
--------- --------- --------- --------- ---------
Cash flow from investing activities:
Purchases of property and equipment.... (51,055) (73,540) (226,023) (116,781) (243,680)
Proceeds on sale of property and
equipment............................ 0 50,963 0
--------- --------- --------- --------- ---------
Net cash used in investing
activities.................... (51,055) (22,577) (226,023) (116,781) (243,680)
--------- --------- --------- --------- ---------
Cash flow from financing activities:
Proceeds from issuance of long-term
obligations.......................... 100,000 200,000 365,000 215,000 288,847
Payment on short-term and long-term
obligations.......................... (421,333) (189,169) (180,619) (25,829) (38,766)
Capital contributions.................. 100,000 0 0
--------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities.......... (221,333) 10,831 184,381 189,171 250,081
--------- --------- --------- --------- ---------
Net change in cash and cash
equivalents............................ 7,898 (23,962) 3,502 26,075 54,861
Cash and cash equivalents:
Beginning of period.................... 41,413 49,311 25,349 25,349 28,851
--------- --------- --------- --------- ---------
End of period.......................... $ 49,311 $ 25,349 $ 28,851 $ 51,424 $ 83,712
========= ========= ========= ========= =========
Cash paid during the period for
Interest............................... $ 32,928 $ 19,988 $ 33,326
========= ========= =========
Income taxes........................... $ 456 $ 731 $ 10,846
========= ========= =========
</TABLE>

See accompanying notes to financial statements.

F-40
<PAGE> 97

RTI BUSINESS SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS:

RTI Business Systems, Inc. (the "Company") is an independent dealer for The
Medical Manager physician practice management system that is sold to clients
primarily in the upstate New York and New England areas of the United States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information. The financial statements of the Company as
of September 30, 1996 and 1995 and for the six months then ended are unaudited.
All adjustments and accruals (consisting only of normal recurring adjustments)
have been recorded that, in the opinion of management, are necessary for a fair
presentation. Results of operations for the interim periods are not necessarily
indicative of the results for the full year.

Revenue Recognition. Revenue from the sale of systems is recognized when
the system has been installed and the related client training has been
completed. Amounts billed in advance of installation and pending completion of
remaining significant obligations are deferred. Revenue from support and
maintenance contracts is recognized as the services are performed ratably over
the contract period, which typically does not exceed one year. Revenue from
other services are recognized as they are provided. Certain expenses are
allocated between the cost of sales for systems and maintenance and other based
upon revenue, which basis management believes to be reasonable.

Concentration of Credit Risk. Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of
accounts receivable. The Company's credit concentrations are limited due to the
wide variety of customers in the health care industry and the geographic areas
into which the Company's systems and services are sold.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reported period. Actual results could differ from those estimates; however,
management does not believe these differences would have a material effect on
operating results.

New Accounting Pronouncements. Statement of Financial Accounting Standards
("SFAS") No. 121, Accounting for the Impairment of Long Lived Assets and for
Long Lived Assets to be Disposed Of, is effective for years beginning after
December 15, 1995. This Statement requires that long-lived assets and certain
intangibles to be held and used by the Company be reviewed for impairment. This
pronouncement is not expected to have a material impact on the financial
statements of the Company.

Reclassifications. Certain prior year amounts have been reclassified to
conform to 1996 presentations.

F-41
<PAGE> 98

RTI BUSINESS SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- SEPTEMBER 30,
1994 1995 1996
<S> <C> <C> <C>
Furniture and equipment...................... $113,028 $252,978 $ 276,626
Computers.................................... 0 0 169,831
Vehicles..................................... 203,960 290,903 345,125
-------- -------- --------
316,988 543,881 791,582
Less accumulated depreciation................ (173,093) (207,930) (258,559)
-------- -------- --------
$143,895 $335,951 $ 533,023
======== ======== ========
</TABLE>

4. LONG TERM OBLIGATIONS:

Long term obligations consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1994 1995 1996
<S> <C> <C> <C>
Term note payable, bearing interest at prime plus
1% (9 1/4% at September 30, 1996), with monthly
payments of $2,085 plus interest through
October 1999, collateralized by accounts
receivable, inventory and equipment and
guaranteed by stockholders. The note contains
certain financial restrictions and covenants as
defined........................................ $ 95,830 $ 74,650
Term notes payable, bearing interest at prime
plus 1%, with various monthly payments totaling
approximately $3,350 plus interest due through
August 2001, collateralized by accounts
receivable, inventory and property and
equipment and guaranteed by stockholders....... $ 25,829 36,580 179,286
Revolving line of credit, interest payable
monthly at prime plus 3/4% (9% at September
30, 1996), principal due on demand, maturity
date of October, 1996, collateralized by
accounts receivable, inventory and equipment
and guaranteed by stockholders................. 135,000 250,000 400,000
-------- -------- ---------
Total.................................. 160,829 382,410 653,936
Less portion due within one year....... 156,934 282,460 513,891
-------- -------- ---------
Long term obligations, net of current
maturities........................... $ 3,895 $ 99,950 $ 140,045
======== ======== =========
</TABLE>

Annual maturities of long-term debt for the four years subsequent to
September 30, 1997 are as follows:

The carrying value approximates fair market value due to the short-term
nature of the debt.

F-42
<PAGE> 99

RTI BUSINESS SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES:

Income taxes consisted of the following:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- -------------------
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current
Federal....................... $ 46,623 $ 51,115 $ 92,261 $ 85,461 $ 45,000
State......................... 5,019 6,225 11,213 11,606 5,000
------- ------- -------- ------- -------
51,642 57,340 103,474 97,067 50,000
------- ------- -------- ------- -------
Deferred
Federal....................... (46,623) (51,115) (92,261) (85,461) (45,000)
State......................... (5,019) (6,225) (11,213) (11,606) (5,000)
------- ------- -------- ------- -------
(51,642) (57,340) (103,474) (97,067) (50,000)
------- ------- -------- ------- -------
$ 0 $ 0 $ 0 $ 0 $ 0
======= ======= ======== ======= =======
</TABLE>

The significant components of the net deferred tax asset consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1994 1995 1996
<S> <C> <C> <C>
Bad debts.......................................... $ 17,000 $ 21,000 $ 14,000
Deferred revenue................................... 125,000 230,000 321,000
Inventory valuations............................... 64,000 34,000
Loss carryforwards................................. 80,000
Other.............................................. 20,982 41,456 456
--------- --------- --------
226,982 326,456 415,456
Valuation allowance................................ (118,000) (114,000) (153,000)
--------- --------- --------
Net deferred tax asset............................. $ 108,982 $ 212,456 $ 262,456
========= ========= ========
</TABLE>

The Company provides a valuation allowance against deferred tax assets if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized. At September 30, 1996,
the Company established a valuation allowance of $49,000. This results in a
decrease in the valuation allowance from December 31, 1995 of $65,000.

The following table summarizes the principal differences between income
taxes at the federal statutory rate and the effective income tax amounts
reflected in the financial statements:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------- ----------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
Statutory tax (benefit)......... $(173,000) $ (19,000) $ (36,000) $(41,000) $(82,000)
State taxes, net of federal
benefit....................... (20,000) (2,000) (4,000) (5,000) (9,000)
Effect of graduated tax
brackets...................... (1,000) (6,000) (11,000) -- --
Tax contingency................. 50,000 50,000 50,000 50,000 50,000
Change in valuation allowance... 142,000 (24,000) (4,000) (4,000) 39,000
Other........................... 2,000 1,000 5,000 0 2,000
--------- -------- -------- -------- --------
$ 0 $ 0 $ 0 $ 0 $ 0
========= ======== ======== ======== ========
</TABLE>

F-43
<PAGE> 100

RTI BUSINESS SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES: -- (CONTINUED)

At September 30, 1996, the Company had an estimated net operating loss
carryforward of approximately $211,000, the use of which is limited to the
Company's future taxable income. The estimated net operating loss will expire in
the year 2012.

The Company is currently under examination by the Internal Revenue Service
for tax years ended in 1993 and 1994. The Company has reviewed various matters
that are under consideration and believes that is has adequately provided for
any liability that may result from this examination. In the opinion of
management, any liability that may arise from prior periods as a result of the
examination will not have a material effect on the Company's financial position
or results of operations.

6. COMMITMENTS AND CONTINGENCIES:

The Company leases its office facilities under operating leases. Future
minimum rental commitments under the noncancelable operating leases are
approximately as follows:

<TABLE>
<CAPTION>
TWELVE MONTHS ENDING SEPTEMBER 30:
<S> <C>
1997........................................................... $ 335,000
1998........................................................... 251,000
1999........................................................... 223,000
2000........................................................... 246,000
2001........................................................... 236,000
--------
Total................................................ $1,291,000
========
</TABLE>

Rent expense was approximately $139,000, $240,000, $187,000, $124,000 and
$163,000 for 1993, 1994 and 1995 and for the nine months ended September 30,
1995 and 1996 (unaudited), respectively.

7. RETIREMENT PLANS:

The Company has a non-contributory profit sharing plan covering
substantially all full-time employees effective January 1995. The Company
contributes a matching 25% of the first six percent of employee contributions.
Contributions are made at the discretion of the Board of Directors. Total
expense amounted to approximately $19,000 for 1995 and $14,000 and $18,000 for
the nine months ended September 30, 1995 (unaudited) and 1996, respectively.

8. SUBSEQUENT EVENTS:

Purchases of software from one of the other companies which have also
entered into definitive merger agreements with MMC totaled approximately
$265,000, $275,000, $371,000, $228,000 and $314,000 for 1993, 1994 and 1995 and
for the nine months ended September 30, 1995 and 1996 (unaudited), respectively.

F-44
<PAGE> 101

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
National Medical Systems, Inc.

We have audited the accompanying consolidated balance sheets of National
Medical Systems, Inc. as of December 31, 1994 and 1995 and the related
consolidated statements of operations, changes in stockholders' deficit and cash
flows for the four months ended December 31, 1994 and the year ended December
31, 1995. 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 audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
National Medical Systems, Inc. as of December 31, 1994 and 1995 and the
consolidated results of its operations and its cash flows for the four months
ended December 31, 1994, the year ended December 31, 1995 in conformity with
generally accepted accounting principles.

As discussed in Note 11 to the financial statements, in July 1996 the
Company and its stockholders entered into a definitive agreement with Medical
Manager Corporation (MMC) providing for the merger of the Company with a
subsidiary of MMC.

COOPERS & LYBRAND L.L.P.

Tampa, Florida
September 10, 1996

F-45
<PAGE> 102

NATIONAL MEDICAL SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................ $ 0 $ 0 $ 9,568
Accounts receivable...................................... 66,271 223,446 933,878
Inventory................................................ 51,280 73,925 122,061
Prepaid expenses and other current assets................ 182 12,000 56,001
--------- -------- --------
Total current assets............................. 117,733 309,371 1,121,508
PROPERTY AND EQUIPMENT, net................................ 85,615 199,797 355,969
GOODWILL AND OTHER INTANGIBLES, net........................ 211,609 80,201 2,693,303
OTHER ASSETS............................................... 3,586 5,184 520,028
--------- -------- --------
Total............................................ $ 418,543 $ 594,553 $ 4,690,808
========= ======== ========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Current maturities of long-term obligations.............. $ 74,930 $ 261,580 $ 1,322,528
Accounts payable and accrued liabilities................. 113,174 184,214 773,909
Customer deposits and deferred maintenance revenue....... 220,627 338,075 729,031
--------- -------- --------
Total current liabilities........................ 408,731 783,869 2,825,468
LONG-TERM OBLIGATIONS, net of current maturities........... 76,860 40,768 729,220
SUBORDINATED NOTES PAYABLE................................. 0 0 1,065,018
--------- -------- --------
Total liabilities................................ 485,591 824,637 4,619,706
--------- -------- --------
Redeemable preferred stock................................. 0 0 500,000
--------- -------- --------
Commitments and contingencies (Notes 10 and 11)............
STOCKHOLDERS' DEFICIT
Common stock, $0.01 par value, 25,000,000 shares
authorized............................................ 56,570 62,566 68,566
Additional paid-in capital............................... 203,430 248,503 790,003
Accumulated deficit...................................... (327,048) (541,153) (1,287,467)
--------- -------- --------
Total stockholders' deficit...................... (67,048) (230,084) (428,898)
--------- -------- --------
Total............................................ $ 418,543 $ 594,553 $ 4,690,808
========= ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-46
<PAGE> 103

NATIONAL MEDICAL SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOUR MONTHS NINE MONTHS ENDED
ENDED YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, --------------------------
1994 1995 1995(UNAUDITED) 1996
<S> <C> <C> <C> <C>
Revenue
Systems................................... $ 155,771 $1,516,022 $1,112,299 $2,429,572
Maintenance and other..................... 85,337 614,487 478,851 1,670,485
--------- ---------- --------- ----------
Total revenue..................... 241,108 2,130,509 1,591,150 4,100,057
--------- ---------- --------- ----------
Cost of revenue
Systems................................... 147,490 1,129,059 828,212 1,730,825
Maintenance and other..................... 155,655 595,692 429,071 1,212,510
--------- ---------- --------- ----------
Total costs of revenue............ 303,145 1,724,751 1,257,283 2,943,335
--------- ---------- --------- ----------
Gross margin (loss)............... (62,037) 405,758 333,867 1,156,722
--------- ---------- --------- ----------
Operating expenses
Selling, general and administrative....... 201,254 395,523 249,714 1,068,842
Research and development.................. 0 0 0 409,425
Depreciation and amortization............. 60,113 196,838 134,425 294,243
--------- ---------- --------- ----------
Total operating expenses.......... 261,367 592,361 384,139 1,772,510
--------- ---------- --------- ----------
Loss from operations.............. (323,404) (186,603) (50,272) (615,788)
Other expense
Interest expense.......................... (3,644) (27,502) (18,468) (130,526)
--------- ---------- --------- ----------
Net loss.......................... $ (327,048) $ (214,105) $ (68,740) $ (746,314)
========= ========== ========= ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-47
<PAGE> 104

NATIONAL MEDICAL SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------- PAID IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C> <C>
Formation of company..................... 5,657,000 $56,570 $ 203,430 $ 260,000
Net loss................................. $ (327,048) (327,048)
--------- ------- -------- --------- -----------
Balance December 31, 1994................ 5,657,000 56,570 203,430 (327,048) (67,048)
Capital contributions.................... 45,000 45,000
Stock issued for compensation............ 599,642 5,997 73 6,069
Net loss................................. (214,105) (214,105)
--------- ------- -------- --------- -----------
Balance December 31, 1995................ 6,256,642 62,566 248,503 (541,153) (230,084)
Stock issued for acquisition............. 600,000 6,000 54,000 60,000
Warrants issued.......................... 20,000 20,000
Capital contributions.................... 467,500 467,500
Net loss................................. (746,314) (746,314)
--------- ------- -------- --------- -----------
Balance September 30, 1996 (unaudited)... 6,856,642 $68,566 $ 790,003 $(1,287,467) $(428,898)
========= ======= ======== ========= ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-48
<PAGE> 105

NATIONAL MEDICAL SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOUR MONTHS NINE MONTHS ENDED
ENDED YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -----------------------
1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss..................................... $ (327,048) $ (214,105) $ (68,740) $ (746,314)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............. 60,113 196,838 134,425 294,243
Stock issued for compensation............. 0 6,069
Changes in assets and liabilities, net of
effects from acquisitions:
Accounts receivable....................... (66,271) (157,175) (224,825) (365,815)
Inventory................................. (51,280) (22,645) (120,402) (28,769)
Prepaid expenses and other assets......... (3,768) (13,416) (1,443) (47,579)
Accounts payable and accrued
liabilities............................. 113,174 71,040 174,382 (21,221)
Customer deposits and deferred maintenance
revenue................................. 220,627 117,448 46,743 195,768
--------- --------- --------- -----------
Net cash provided by (used in)
operating activities............... (54,453) (15,946) (59,860) (719,687)
--------- --------- --------- -----------
Cash flow from investing activities:
Purchases of property and equipment.......... (32,670) (152,183) (131,419) (102,594)
Payments for acquisitions made, net of assets
acquired.................................. (150,000) 0 (575,778)
Payment of deposit for acquisition........... 0 0 0 (500,000)
--------- --------- --------- -----------
Net cash used in investing
activities......................... (182,670) (152,183) (131,419) (1,178,372)
--------- --------- --------- -----------
Cash flow from financing activities:
Proceeds from issuance of long-term
obligations............................... 0 200,000 196,471 575,425
Proceeds from issuance of subordinated
long-term obligations..................... 0 0 1,357,518
Payment on short-term and long-term
obligations............................... (22,877) (76,871) (50,192) (1,012,816)
Proceeds from issuance of redeemable
preferred stock........................... 0 0 500,000
Capital contributions........................ 260,000 45,000 45,000 487,500
--------- --------- --------- -----------
Net cash provided by financing
activities......................... 237,123 168,129 191,280 1,907,627
--------- --------- --------- -----------
Net change in cash and cash
equivalents........................ 0 0 0 9,568
Cash and cash equivalents:
Beginning of period.......................... 0 0 0 0
--------- --------- --------- -----------
End of period................................ $ 0 $ 0 $ 0 $ 9,568
========= ========= ========= ===========
Cash paid for interest:........................ $ 3,645 $ 27,502
========= =========
Details of acquisitions:
Fair value of assets......................... $ 150,000 0 $ 0 $ 3,196,881
Liabilities assumed.......................... 0 0 0 (1,457,354)
Less common stock and debt issued............ 0 0 0 (1,129,139)
--------- --------- --------- -----------
Cash paid.................................... 150,000 0 0 610,388
Less cash acquired........................... 0 0 0 (34,610)
--------- --------- --------- -----------
Net cash paid for acquisitions............... $ 150,000 0 $ 0 $ 575,778
========= ========= ========= ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-49
<PAGE> 106

NATIONAL MEDICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS:

National Medical Systems, Inc. ("NMS") and Preferred System Solutions, Inc.
(collectively, the "Company") are independent dealers for The Medical Manager
physician practice management system that is sold to clients in the Southeast,
Midwest and Southwest parts of the United States. NMS commenced operations in
September 1994.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation. The financial statements include the accounts
of NMS and its wholly owned subsidiary, Preferred System Solutions, Inc., since
its acquisition in March 1996. All material intercompany accounts and
transactions have been eliminated.

Revenue Recognition. Revenue from the sale of systems is recognized when
the system has been installed and the related client training has been
completed. Amounts billed in advance of installation and pending completion of
remaining significant obligations are deferred. Revenue from support and
maintenance contracts is recognized as the services are performed ratably over
the contract period, which typically does not exceed one year. Revenue from
other services is recognized as the services are provided. Certain expenses are
allocated between the cost of sales for systems and maintenance and other based
upon revenue, which basis management believes to be reasonable.

Concentration of Credit Risk. Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of
accounts receivable. The Company's credit concentrations are limited due to the
wide variety of customers in the health care industry and the geographic areas
into which the Company's systems and services are sold.

Inventory. Inventory primarily consists of computers, peripheral equipment
and replacement parts. Inventory cost is accounted for on the first-in,
first-out basis and reported at the lower of cost or market.

Goodwill and Other Intangibles. Goodwill and other intangibles consist of
covenants not to compete and goodwill arising from business acquisitions. These
intangible assets are being amortized over periods ranging from two to 20 years.

Research and Development. Software development costs are included in
research and development and are expensed as incurred. Statement of Financial
Accounting Standards ("SFAS") No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed," requires the capitalization
of certain software development costs once technological feasibility is
established. The capitalized cost is then amortized over the estimated product
life. To date, the period between achieving technological feasibility and the
general availability of such software has been short and software development
costs qualifying for capitalization have been insignificant.

F-50
<PAGE> 107

NATIONAL MEDICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
Income Taxes. Income taxes are provided under the liability method
considering the tax effects of transactions reported in the financial statements
that are different from the tax return. The deferred tax assets and liabilities
represent the future tax consequences of those differences, which will be either
taxable or deductible when the underlying assets or liabilities are recovered or
settled. Deferred tax assets are reduced by a valuation allowance for the
estimated amounts of tax benefits not likely to be realized.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reported period. Actual results could differ from those estimates; however,
management does not believe these differences would have a material effect on
operating results.

Reclassifications. Certain prior year amounts have been reclassified to
conform to 1996 presentations.

3. ACQUISITIONS:

During the nine months ended September 30, 1996, the Company made two
acquisitions set forth below, each of which has been accounted for as a
purchase. The consolidated financial statements include the operating results of
each business from the date of acquisition.

The Company acquired substantially all of the business assets of GBP With
Excellence, Inc., a Medical Manager independent dealer in central Florida. Total
consideration was $2,321,000, of which approximately $1,825,000 has been
assigned to excess of purchase price over net assets of the business acquired as
goodwill, which is being amortized on a straight-line basis over 20 years.

On the basis of the pro forma consolidation of the results of operations as
if the acquisition had taken place at the beginning of 1995 rather than in
January 1996, consolidated net sales would have been $4,691,000 for 1995 and the
consolidated pro forma net loss would have been approximately $663,000. Such pro
forma amounts are not necessarily indicative of what the actual consolidated
results of operations might have been if the acquisition had been effective at
the beginning of 1995.

The Company also acquired Preferred System Solutions, Inc., a Medical
Manager independent dealer in Oklahoma and Kansas. Total consideration was
$50,000 and 600,000 shares of the Company's common stock valued at $60,000 by
independent appraisal for purposes of accounting for the transaction. The excess
of the purchase price over the net liabilities assumed was approximately
$718,000 and has been recorded as goodwill, which is being amortized on a
straight-line basis over 20 years. Pro forma results of operations have not been
presented because the effects of this acquisition were not significant.

F-51
<PAGE> 108

NATIONAL MEDICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1994 1995 1996
<S> <C> <C> <C>
Furniture and equipment.......................... $ 35,074 $ 88,282 $ 94,799
Computers........................................ 66,937 191,813 544,653
-------- -------- --------
102,011 280,095 639,452
Less accumulated depreciation.................... (16,397) (80,298) (283,483)
-------- -------- --------
$ 85,615 $199,797 $ 355,969
======== ======== ========
</TABLE>

Depreciation expense was approximately $16,400, $65,700, $35,500 and
$85,500 for 1994 and 1995 and for the nine months ended September 30, 1995 and
1996 (unaudited), respectively.

5. LONG TERM OBLIGATIONS:

Long term obligations consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1994 1995 1996
<S> <C> <C> <C>
Revolving line of credit, $500,000 available principal,
monthly interest at prime plus 1%, (9 1/4% at September 30,
1996) principal due on demand, collateralized by accounts
receivable and other assets, guaranteed by two of the
Company's stockholders..................................... $ 491,140
Revolving line of credit, monthly interest at prime plus 2%
(10 1/4% at September 30, 1996), principal due on demand,
collateralized by accounts receivable and other assets,
guaranteed by two of the Company's stockholders............ 30,270
Note payable, interest at prime plus 1% (9 1/4% at September
30, 1996), collateralized by certain assets, guaranteed by
two of the Company's stockholders, $1,800 monthly interest
and principal payments through 2000........................ 63,212
Notes payable due on demand, interest at 12% annually
unsecured, $200,000 convertible into 320,000 shares of
common stock of the Company, interest payable monthly...... $200,000 300,000
Note payable, monthly payments of $4,057 with interest at 9%,
balloon payment of $202,070 due 1998, unsecured, guaranteed
by two of the Company's stockholders....................... 0 241,169
Note payable, monthly interest at 8%, principal due in two
equal annual installments, guaranteed by two of the
Company's stockholders, $5,100 monthly interest and
principal payment.......................................... 0 599,141
Note payable, annual interest at 8%, due $40,000 in 1997 and
$40,000 in 1998, unsecured................................. 0 80,000
</TABLE>

F-52
<PAGE> 109

NATIONAL MEDICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1994 1995 1996
5. LONG TERM OBLIGATIONS: -- (CONTINUED)
<S> <C> <C> <C>
Note payable to stockholder, due on demand, monthly interest
at prime plus 1/2% (8 3/4% at September 30, 1996),
unsecured.................................................. 0 50,000
Non-compete agreements due in various monthly amounts through
1998....................................................... $ 92,290 36,916 100,000
Various installments notes, payable monthly, interest at
8%-10%, collateralized by certain assets................... 59,500 65,432 96,816
-------- -------- -------------
Total.............................................. 151,790 302,348 2,051,748
Less portion due within one year................... 74,930 261,580 1,322,528
-------- -------- -------------
Long term obligations, net of current maturities... $ 76,860 $ 40,768 $ 729,220
======== ======== ==========
</TABLE>

Annual maturities of long-term obligations for the four years subsequent to
September 30, 1997 are as follows:

The carrying value approximates fair market value due to the short-term
nature of the debt.

6. SUBORDINATED NOTES PAYABLE:

Subordinated notes payable as of September 30, 1996 totaling $1,065,018,
with interest at 8%, are due in February 1998.

In conjunction with the issuance of the subordinated notes payable, the
Company also issued warrants to acquire 560,000 shares of the Company's common
stock for $.10 per share and up to an additional 350,000 shares if the
subordinated notes were not repaid by such date. The warrants were valued at
$20,000.

Included above are primary and additional warrants to purchase 700,000
shares of NMS common stock issued in January, 1996 to two of the Company's
principal stockholders in conjunction with the issuance of subordinated
promissory notes totaling $467,500. These promissory notes were subsequently
contributed as additional paid in capital by the stockholders with the warrants
remaining in effect.

7. REDEEMABLE PREFERRED STOCK:

During the nine months ended September 30, 1996 the Company issued 100,000
shares of convertible redeemable preferred stock with a par value of $1.00 for
$500,000. The preferred stock carries a dividend rate of 8% from and after
January 1, 1997. The holders may request the Company to redeem the stock at the
stated value on or after January 1, 1997. The preferred stock is convertible
into common stock of the Company on a one for one share basis. In the event of a
change in control of the Company prior to January 1, 1997, the holders of the
preferred stock have the right to request the preferred be redeemed or be
converted into 85,000 shares of common stock of any entity which controls the
Company.

8. STOCKHOLDERS' EQUITY:

In January 1996, the Company's Articles of Incorporation were amended to
increase the authorized common stock of the Company from 10,000 shares to
25,000,000 shares. In addition, a 5,657 for 1 split of the Company's common
stock was effected, increasing the number of issued and outstanding shares of
common

F-53
<PAGE> 110

NATIONAL MEDICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. STOCKHOLDERS' EQUITY -- (CONTINUED)
stock to 6,256,642. All share information has been restated to give retroactive
effect to the stock split for all periods presented.

9. INCOME TAXES:

The tax effected amounts of temporary differences consisted of the
following:

<TABLE>
<CAPTION>
FOUR MONTHS NINE MONTHS ENDED
ENDED YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, ----------------------
1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C>
Current
Deferred tax assets
Deferred revenue.................... $ 57,350 $ 48,840 $ 50,690 $ 126,540
Inventory........................... 21,460 21,460
Bad debts........................... 1,577 22,200 11,937 21,090
Valuation allowance................. (58,927) (92,500) (62,627) (169,090)
------------ ------------ -------- -----------
Total current deferred tax
asset........................ $ 0 $ 0 $ 0 $ 0
========== ========== ======== =========
Non-current
Deferred tax asset
Net operating loss.................. $ 40,700 $ 55,870 $ 42,205 $ 227,150
Other assets........................ 16,923 47,360 36,718 65,490
Valuation allowance................. (57,623) (103,230) (78,923) (292,640)
------------ ------------ -------- -----------
Total non-current deferred
tax asset.................... $ 0 $ 0 $ 0 $ 0
========== ========== ======== =========
</TABLE>

The Company provides a valuation allowance against deferred tax assets if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized. At September 30, 1996,
the Company established a valuation allowance of $390,350. The result is an
increase in the valuation allowance from December 31, 1995 of $194,620.

The following table summarizes the principal differences between income tax
benefits at the Federal statutory rate and the effective income tax amounts
reflected in the financial statements.

<TABLE>
<CAPTION>
FOUR MONTHS NINE MONTHS ENDED
ENDED YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, ------------------------
1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C>
Statutory tax benefit.................. $ (111,196) $ (72,796) $(23,000) $(254,000)
State taxes............................ (9,811) (6,423) (2,000) (22,000)
Permanent differences.................. 925 1,203
Other.................................. 3,533 (1,164) 0 10,000
Changes in valuation allowance......... 116,550 79,180 25,000 266,000
------------ ------------ -------- -----------
$ 0 $ 0 $ 0 $ 0
========== ========== ======== =========
</TABLE>

As of September 30, 1996 and December 31, 1995, the Company had net
operating losses of approximately $620,000 and $151,000, respectively. These
amounts expire between the years 2009 and 2011.

F-54
<PAGE> 111

NATIONAL MEDICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. COMMITMENTS AND CONTINGENCIES:

The Company leases its office facilities and certain furniture and
equipment under operating leases having terms ranging from one to five years.
The leases contain up to two five year renewals.

Future minimum rental commitments under noncancelable operating leases are
approximately as follows:

<TABLE>
<CAPTION>
TWELVE MONTHS ENDING SEPTEMBER 30:
<S> <C>
1997............................................................ $173,000
1998............................................................ 138,000
1999............................................................ 96,000
2000............................................................ 36,000
2001............................................................ 7,000
--------
Total...................................................... $450,000
========
</TABLE>

Rent expense was approximately $22,000, $82,000, $70,000 and $140,000 for
1994 and 1995 and for the nine months ended September 30, 1995 and 1996
(unaudited), respectively.

11. SUBSEQUENT EVENTS:

In July 1996, the Company and certain of its stockholders entered into a
definitive agreement with Medical Manager Corporation ("MMC") providing for the
Merger of the Company with a subsidiary of MMC. All outstanding shares of the
Company's common stock will be exchanged for shares of MMC's common stock
concurrent with the consummation of the initial public offering (IPO) of the
common stock of MMC.

The stockholders of the Company are obligated, on or prior to the
consummation of the IPO (i) to cause a capital contribution estimated at $32.2
million to be made to the Company; (ii) to pay down certain indebtedness
(approximately $3.1 million as of September 30, 1996) of the Company; (iii) and
to pay to the Company $3.2 million, for an estimated total capital contribution
of $37.9 million. In the event that all or part of the capital contribution is
not invested in the Company, the common stock of MMC to be received by the
Company's stockholders pursuant to the merger will be reduced.

Purchases of software from two of the other companies which have also
entered into definitive merger agreements with MMC totaled approximately
$60,000, $400,000, $152,000 and $592,000 for 1994 and 1995 and for the nine
months ended September 30, 1995 and 1996 (unaudited), respectively.

The Company has entered into a Management Services Agreement and Option
Agreement (the "Agreements") effective as of September 1, 1996, for the Medical
Manager Division (the "Division") of Medix, Inc., a wholly, owned subsidiary of
Blue Cross and Blue Shield of New Jersey, Inc. The Agreements provide for the
Company to manage the Division, which is an independent dealer of a private
label physician practice management system licensed from the developer of The
Medical Manager, until December 31, 1996 or the date of its purchase by NMS, if
earlier. The Agreements provide for NMS to acquire the Division by December 31,
1996 for $3,200,000. In connection with the Agreements, the Company made a
nonrefundable payment of $500,000 that will be applied against the purchase
price. If the sale to NMS is not completed by such date, the Agreements provide
for NMS to pay Medix an additional $460,000 in liquidation damages. The $500,000
payment is included in other assets at September 30, 1996.

F-55
<PAGE> 112

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Systems Management, Inc.

We have audited the accompanying balance sheets of Systems Management, Inc.
as of December 31, 1994 and 1995 and the related statements of operations,
changes in stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1995. 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 audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Systems Management, Inc. as
of December 31, 1994 and 1995 and June 30, 1996 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.

As discussed in Note 7 to the financial statements, in July 1996 the
Company and its stockholders entered into a definitive agreement with Medical
Manager Corporation (MMC) providing for the merger of the Company with a
subsidiary of MMC.

COOPERS & LYBRAND L.L.P.

Tampa, Florida
August 30, 1996

F-56
<PAGE> 113

SYSTEMS MANAGEMENT, INC.

BALANCE SHEETS

DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.............................. $178,911 $ 187,609 $ 455,390
Accounts receivable.................................... 167,214 276,366 248,077
Inventory.............................................. 109,018 183,835 188,526
Prepaid expenses and other current assets.............. 4,361 29,122 15,000
-------- ---------- ----------
Total current assets........................... 459,504 676,932 906,993
PROPERTY AND EQUIPMENT, net.............................. 272,139 419,101 146,782
GOODWILL................................................. 0 0 98,750
-------- ---------- ----------
Total assets................................... $731,643 $1,096,033 $ 1,152,525
======== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations............ $ 22,885 $ 50,118 $ 104,040
Accounts payable and accrued liabilities............... 177,645 223,349 191,938
Customer deposits and deferred maintenance revenue..... 157,213 424,656 504,963
-------- ---------- ----------
Total current liabilities...................... 357,743 698,123 800,941
LONG-TERM OBLIGATIONS, net of current maturities......... 154,310 212,767 229,941
-------- ---------- ----------
Total liabilities.............................. 512,053 910,890 1,030,882
-------- ---------- ----------
Commitments and contingencies (Notes 6 and 7)
STOCKHOLDERS' EQUITY
Common stock, no par value, 100 shares authorized...... 15,485 15,485 15,485
Retained earnings...................................... 204,105 169,658 106,158
-------- ---------- ----------
Total stockholders' equity..................... 219,590 185,143 121,643
-------- ---------- ----------
Total liabilities and stockholders' equity..... $731,643 $1,096,033 $ 1,152,525
======== ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-57
<PAGE> 114

SYSTEMS MANAGEMENT, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ -----------------------
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue
Systems............................ $ 610,179 $ 621,258 $1,094,127 $ 523,295 $1,502,339
Maintenance and other.............. 1,134,307 1,507,640 1,622,742 1,214,912 1,445,130
---------- ---------- ---------- ---------- ----------
Total revenue.............. 1,744,486 2,128,898 2,716,869 1,738,207 2,947,469
---------- ---------- ---------- ---------- ----------
Cost of revenue
Systems............................ 493,611 497,560 516,997 282,367 1,192,576
Maintenance and other.............. 836,634 1,158,147 1,714,203 1,179,031 1,043,893
---------- ---------- ---------- ---------- ----------
Total costs of revenue..... 1,330,245 1,655,707 2,231,200 1,461,398 2,236,469
---------- ---------- ---------- ---------- ----------
Gross margin............. 414,241 473,191 485,669 276,809 711,000
---------- ---------- ---------- ---------- ----------
Operating expenses
Selling, general and
administrative.................. 313,510 371,037 425,509 323,455 377,104
Depreciation and amortization...... 25,229 26,217 31,828 26,864 46,890
---------- ---------- ---------- ---------- ----------
Total operating expenses... 338,739 397,254 457,337 350,319 423,994
---------- ---------- ---------- ---------- ----------
Income (loss) from
operations............ 75,502 75,937 28,332 (73,510) 287,006
Interest expense..................... (4,134) (6,426) (23,279) (7,530) (16,174)
---------- ---------- ---------- ---------- ----------
Net income................. $ 71,368 $ 69,511 $ 5,053 $ (81,040) $ 270,832
========== ========== ========== ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-58
<PAGE> 115

SYSTEMS MANAGEMENT, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON
STOCK
------- RETAINED
AMOUNT EARNINGS TOTAL
<S> <C> <C> <C>
Balance January 1, 1993........................................ $15,485 $ 98,719 $ 114,204
Net income................................................... 71,368 71,368
Dividends.................................................... (13,523) (13,523)
------- -------- --------
Balance December 31, 1993...................................... 15,485 156,564 172,049
Net income................................................... 69,511 69,511
Dividends.................................................... (21,970) (21,970)
------- -------- --------
Balance December 31, 1994...................................... 15,485 204,105 219,590
Net income................................................... 5,053 5,053
Dividends.................................................... (39,500) (39,500)
------- -------- --------
Balance December 31, 1995...................................... 15,485 169,658 185,143
Net income................................................... 270,832 270,832
Dividends.................................................... (334,332) (334,332)
------- -------- --------
Balance September 30, 1996 (unaudited)......................... $15,485 $ 106,158 $ 121,643
======= ======== ========
</TABLE>

See accompanying notes to financial statements.

F-59
<PAGE> 116

SYSTEMS MANAGEMENT, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------- -----------------------
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................. $ 71,368 $ 69,511 $ 5,053 $ (81,040) $ 270,832
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............... 25,229 26,217 31,828 26,864 46,890
Changes in assets and liabilities, net of
effects from acquisition:
Accounts receivable......................... 20,333 (52,123) (109,152) (42,876) 28,289
Inventory................................... 88,461 (54,341) (74,817) (100,239) (4,691)
Prepaid expenses and other assets........... 4,407 1,187 (24,761) 149 14,122
Accounts payable and accrued liabilities.... 19,069 70,527 45,704 1,856 (31,411)
Customer deposits and deferred maintenance
revenue................................... (81,333) 29,403 267,443 292,161 80,307
-------- --------- --------- --------- --------
Net cash provided by operating
activities........................... 147,534 90,381 141,298 96,875 404,338
-------- --------- --------- --------- --------
Cash flow from investing activities:
Purchases of property and equipment........... (34,035) (33,486) (80,995) (178,382) (155,853)
-------- --------- --------- --------- --------
Net cash used in investing
activities........................... (34,035) (33,486) (80,995) (178,382) (155,853)
-------- --------- --------- --------- --------
Cash flow from financing activities:
Proceeds from issuance of long-term
obligations................................. 24,532 26,000 85,000 0 96,600
Payment on short-term and long-term
obligations................................. (52,914) (61,106) (97,105) 87,302 (25,504)
Dividends..................................... (13,523) (21,970) (39,500) (22,000) (51,800)
-------- --------- --------- --------- --------
Net cash provided by (used in)
financing activities................. (41,905) (57,076) (51,605) 65,302 19,296
-------- --------- --------- --------- --------
Net change in cash and cash equivalents......... 71,594 (181) 8,698 (16,205) 267,781
Cash and cash equivalents:
Beginning of period........................... 107,498 179,092 178,911 178,911 187,609
-------- --------- --------- --------- --------
End of period................................. $179,092 $ 178,911 $ 187,609 $ 162,706 $ 455,390
======== ========= ========= ========= ========
Cash paid for interest:......................... $ 4,134 $ 6,425 $ 23,280
======== ========= =========
Non-cash dividends.............................. $ 0 $ 0 $ 0 $ 0 $ 282,532
======== ========= ========= ========= ========
Details of acquisitions:
Fair value of assets.......................... $ 11,500 $ 165,500 $ 97,795 $ 97,795
Less debt issued.............................. (11,500) (165,500) (97,795) (97,795)
-------- --------- --------- ---------
Net cash paid for acquisitions................ $ 0 $ 0 $ 0 $ 0
======== ========= ========= =========
</TABLE>

See accompanying notes to financial statements.

F-60
<PAGE> 117

SYSTEMS MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS:

Systems Management, Inc. (the "Company") is an independent dealer for The
Medical Manager physician practice management system that is sold to clients
primarily in northern Indiana, Ohio and adjacent areas of the Midwestern United
States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Revenue Recognition. Revenue from the sale of systems is recognized when
the system has been installed and the related client training has been
completed. Amounts billed in advance of installation and pending completion of
remaining significant obligations are deferred. Revenue from support and
maintenance contracts is recognized as the services are performed ratably over
the contract period, which typically does not exceed one year. Revenue from
other services is recognized as the services are provided. Certain expenses are
allocated between the cost of sales for systems and maintenance and other based
upon revenue, which basis management believes to be reasonable.

Concentration of Credit Risk. Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of
accounts receivable. The Company's credit concentrations are limited due to the
wide variety of customers in the health care industry and the geographic areas
into which the Company's systems and services are sold.

Income Taxes. The Company has elected S corporation status, as defined by
the Internal Revenue Code, whereby the Company is not subject to taxation for
federal purposes. Instead, the taxable income of the S corporation is included
in the individual income tax return of the Company's single stockholder for
federal income tax purposes. Accordingly, a provision for income taxes has not
been reflected in the financial statements. The Company's S corporation status
will terminate with the effective date of the Merger discussed in Note 7.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reported period. Actual results could differ from those estimates; however,
management does not believe these differences would have a material effect on
operating results.

F-61
<PAGE> 118

SYSTEMS MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
for years beginning after December 15, 1995. This Statement requires that
long-lived assets and certain intangibles to be held and used by the Company be
reviewed for impairment. This pronouncement is not expected to have a material
impact on the financial statements of the Company.

Reclassifications. Certain prior year amounts have been reclassified to
conform to 1996 presentations.

3. ACQUISITION:

On June 28, 1996, the Company acquired certain assets from an independent
dealer for The Medical Manager physician practice management system. Pro forma
results of operations have not been presented because the effects of this
acquisition were not significant. The acquisition has been accounted for as a
purchase with the excess of the purchase price over the fair value of the assets
acquired, approximately $100,000, accounted for as goodwill. The goodwill is
being amortized on the straight-line basis over 20 years.

4. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER
------------------- 30,
1994 1995 1996
<S> <C> <C> <C>
Land and improvements................................. $ 41,265 $ 41,265 $ 1,686
Building.............................................. 151,152 249,844 0
Furniture and equipment............................... 75,741 119,660 174,414
Vehicles.............................................. 65,568 101,338 101,338
-------- -------- ---------
333,726 512,107 277,438
Less accumulated depreciation......................... (61,587) (93,006) (130,656)
-------- -------- ---------
$272,139 $419,101 $ 146,782
======== ======== =========
</TABLE>

F-62
<PAGE> 119

SYSTEMS MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. LONG TERM OBLIGATIONS:

Long term obligations consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER
------------------- 30,
1994 1995 1996
<S> <C> <C> <C>
Revolving lines of credit, interest monthly at prime plus 1/2%
(8 3/4% at September 30, 1996), due on demand, scheduled
maturity of June 1997, collateralized by substantially all of
the Company's assets, $93,400 available at September 30,
1996. ....................................................... $ 13,039 $ 29,194 $ 56,600
Mortgage note payable, bearing interest at the bank's base rate
plus 1% (9 1/4% at September 30, 1996), with monthly
principal and interest payments of $2,057 (adjusted
periodically) through December 1999, with a balloon payment,
including all unpaid principal and interest, due December
1999. Collateralized by all of the Company's assets. ........ 143,500 195,386 191,187
Various notes payable, bearing interest at rates ranging from
6.42% to 11.50%, with various monthly payments of $391, with
maturity dates through 2000; collateralized by certain
Company vehicles. ........................................... 20,656 38,305 26,194
Promissory note payable, unsecured, bearing interest at 9% due
monthly. Principal reductions of $10,000, $30,000 and $30,000
are due in September 1996, January 1997 and January 1998,
respectively;................................................ 0 0 60,000
-------- -------- --------
Total................................................ 177,195 262,885 333,981
Less portion due within one year..................... 22,885 50,118 104,040
-------- -------- --------
Long term obligations, net of current maturities..... $154,310 $212,767 $229,941
======== ======== ========
</TABLE>

Annual maturities of long-term obligations for the three years subsequent
to September 30, 1997 are as follows:

6. COMMITMENTS AND CONTINGENCIES:

In conjunction with the Merger discussed in Note 7, the Company distributed
land and a building with a net book value of approximately $283,000 as of
September 30, 1996 to the stockholders as a non-cash dividend and entered into
an operating lease for use of the facilities. The lease contains three options
for renewal for a period of five years each beginning in November 1996 for an
annual rate of $69,300.

Rent expense was approximately $40,000, $44,000, $9,000, $6,000 and $11,000
for 1993, 1994, 1995 and for the nine months ended September 30, 1995 and 1996
(unaudited), respectively.

7. SUBSEQUENT EVENTS:

In July 1996, the Company and its stockholders entered into a definitive
agreement with Medical Manager Corporation ("MMC") providing for the Merger of
the Company with a subsidiary of MMC. All outstanding shares of the Company's
common stock will be exchanged for cash and shares of MMC's common stock
concurrent with the consummation of the initial public offering of the common
stock of MMC. In addition, in connection with the merger, the Company will elect
to terminate its S corporation status and will be required to effect the asset
and liability method of accounting for deferred income taxes. Under this method,
deferred tax assets and liabilities are established based on the differences
between financial statement

F-63
<PAGE> 120

SYSTEMS MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. SUBSEQUENT EVENTS: -- (CONTINUED)

and income tax bases of assets and liabilities using enacted tax rates in effect
for the year in which the differences are expected to reverse. Had the Company
elected to terminate its S corporation status immediately prior to September 30,
1996, the Company would have been required to establish a deferred tax asset of
approximately $90,000 related primarily to the use of different methods of
accounting for deferred revenue for tax and financial reporting purposes.

Purchases of software from one of the other companies which have also
entered into definitive merger agreements with MMC totaled approximately
$87,000, $169,000, $230,000, $192,000 and $224,000 for 1993, 1994 and 1995 and
for the nine months ended September 30, 1995 and 1996 (unaudited), respectively.

F-64
<PAGE> 121

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
GBP With Excellence, Inc.
and
National Medical Systems, Inc.

We have audited the accompanying balance sheet of GBP With Excellence, Inc.
as of December 31, 1995 and the related statements of operations and accumulated
deficit 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 GBP With Excellence, Inc. as
of December 31, 1995 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

As discussed in Note 1 to the financial statements, on January 29, 1996,
substantially all of the assets of GBP With Excellence, Inc. were sold to
National Medical Systems, Inc., pursuant to an asset purchase agreement dated
January 12, 1996.

COOPERS & LYBRAND L.L.P.

Tampa, Florida
September 10, 1996

F-65
<PAGE> 122

GBP WITH EXCELLENCE, INC.

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31, 1995
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................................................. $ 24,381
Accounts receivable........................................................ 60,328
Inventory.................................................................. 6,096
Prepaid expenses and other current assets.................................. 2,298
-----------
Total current assets............................................... 93,103
PROPERTY AND EQUIPMENT, net.................................................. 19,417
OTHER ASSETS................................................................. 6,160
-----------
Total assets....................................................... $ 118,680
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Current maturities of long-term obligations................................ $ 353,403
Accounts payable and accrued liabilities................................... 214,763
Customer deposits and deferred maintenance revenue......................... 305,286
-----------
Total current liabilities.......................................... 873,452
LONG-TERM OBLIGATIONS, net of current maturities............................. 29,147
-----------
Total liabilities.................................................. 902,599
-----------
Commitments and contingencies (Note 5)
STOCKHOLDERS' DEFICIT
Common stock, $1.00 par value, 1,000 shares authorized, issued and
outstanding............................................................. 1,000
Additional paid-in capital................................................. 233,433
Accumulated deficit........................................................ (1,018,352)
-----------
Total stockholders' deficit........................................ (783,919)
-----------
Total liabilities and stockholders' deficit........................ $ 118,680
===========
</TABLE>

See accompanying notes to financial statements.

F-66
<PAGE> 123

GBP WITH EXCELLENCE, INC.

STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1995
(UNAUDITED)
<S> <C> <C>
Revenue
Systems.................................................. $ 1,551,807 $ 1,265,307
Maintenance and other.................................... 1,009,026 542,274
----------- -----------
Total revenues........................................ 2,560,833 1,807,581
----------- -----------
Cost of revenue
Systems.................................................. 1,274,165 903,300
Maintenance and other.................................... 560,852 366,150
----------- -----------
Total costs of revenue................................ 1,835,017 1,269,450
----------- -----------
Gross margin..................................... 725,816 538,131
----------- -----------
Operating expenses
Selling, general and administrative...................... 752,114 611,839
Depreciation expense..................................... 21,957 15,300
----------- -----------
Total operating expenses.............................. 774,071 627,139
----------- -----------
Loss from operations............................. (48,255) (89,008)
Interest expense........................................... (31,259) (21,692)
----------- -----------
Net loss................................................... (79,514) (110,700)
Accumulated deficit
Beginning of period...................................... (938,838) (938,838)
----------- -----------
End of period............................................ $(1,018,352) $(1,049,538)
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-67
<PAGE> 124

GBP WITH EXCELLENCE, INC.

STATEMENTS OF CASH FLOWS

YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1995
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss................................................. $ (79,514) $(110,700)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.......................................... 21,957 15,300
Changes in assets and liabilities
Accounts receivable................................... 121,567 120,965
Inventory............................................. 75,295 61,960
Prepaid expenses and other current assets............. (2,091) 2,177
Accounts payable and accrued liabilities.............. (14,014) (49,410)
Customer deposits and deferred maintenance revenue.... (253,303) (184,468)
--------- ---------
Net cash used in operating activities.................... (130,103) (144,176)
Cash flow from investing activities:
Purchases of property and equipment...................... (6,178) (37,148)
--------- ---------
Net cash used in investing activities.................... (6,178) (37,148)
Cash flow from financing activities:
Proceeds from issuance of long-term obligations.......... 87,715 135,652
Payment on short-term and long-term obligations.......... (60,813) (82,895)
--------- ---------
Net cash provided by financing activities................ 26,902 52,757
--------- ---------
Net change in cash and cash equivalents.................... (109,379) (128,567)
Cash and cash equivalents:
Beginning of period...................................... 133,760 133,760
--------- ---------
End of period............................................ $ 24,381 $ 5,193
========= =========
Cash paid for interest................................... $ 31,259
=========
</TABLE>

See accompanying notes to financial statements.

F-68
<PAGE> 125

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND OPERATIONS:

GBP With Excellence, Inc. (the "Company") was an independent dealer for The
Medical Manager physician practice management system that is sold to clients
primarily in Central Florida. In January 1996, substantially all of the
Company's operating assets were sold to National Medical Systems, Inc.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information. The financial statements of the Company as
of July 1995, and for the six months then ended, are unaudited. All adjustments
and accruals (consisting only of normal recurring adjustments) have been
recorded that, in the opinion of management, are necessary for a fair
presentation. Results of operations for the interim period are not necessarily
indicative of the results for the full year.

Revenue Recognition. Revenue from the sale of systems is recognized when
the system has been installed and the related client training has been
completed. Amounts billed in advance of installation and pending completion of
remaining significant obligations are deferred. Revenue from support and
maintenance contracts is recognized as the services are performed ratably over
the contract period, which typically does not exceed one year. Revenue from
other services is recognized as the services are provided. Certain expenses are
allocated between the cost of sales for systems and maintenance and other based
upon revenue, which basis management believes to be reasonable.

Concentration of Credit Risk. Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of
accounts receivable. The Company's credit concentrations are limited due to the
wide variety of customers and the geographic areas into which the Company's
systems and services are sold.

Income Taxes. The Company has elected S corporation status, as defined by
the Internal Revenue Code of 1986, whereby the Company is not subject to
taxation for federal purposes. Instead, the taxable income or loss of the S
corporation is included in the individual income tax returns of the Company's
stockholders for federal income tax purposes.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reported period. Actual results could differ from those estimates; however,
management does not believe these differences would have a material effect on
operating results.

F-69
<PAGE> 126

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following at December 31, 1995:

<TABLE>
<S> <C>
Furniture and equipment.......................................... $ 92,302
Computers........................................................ 57,040
-------
149,342
Less accumulated depreciation.......................... (129,925)
-------
$ 19,417
=======
</TABLE>

4. NOTES PAYABLE:

Notes payable consisted of the following at December 31, 1995:

<TABLE>
<S> <C>
Revolving line of credit, $100,000 available principal, monthly
interest at prime plus 1% (9 1/4% at December 31, 1995),
principal due on demand, collateralized by accounts receivable
and other assets, guaranteed by the Company's stockholders.... $ 65,716
Note payable, monthly payments of $4,057 with interest at 9%,
balloon payment of $202,070 due 1998, unsecured............... 260,666
Note payable, monthly payments of $507 with interest at 9%,
balloon payment of $25,259 due 1998, unsecured................ 32,584
Note payable, monthly payments of $997 with interest at 10%, due
1996, unsecured............................................... 5,814
Note payable, monthly payments of $1,015 with interest at 10%,
due 1997, unsecured........................................... 17,770
-------
Total................................................. 382,550
Less portion due within one year...................... 353,403
-------
Long term obligations, net of current maturities...... $ 29,147
=======
</TABLE>

The carrying value approximates fair market value due to the short-term
nature of the debt.

5. COMMITMENTS AND CONTINGENCIES:

The Company leases its office facilities under operating leases. Future
minimum rental commitments under noncancelable operating leases were
approximately as follows:

<TABLE>
<S> <C>
Years ending December 31:
1996......................................................... $ 43,000
1997......................................................... 44,000
1998......................................................... 15,000
--------
Total................................................... $102,000
========
</TABLE>

Rent expense was approximately $51,000 and $38,000 for 1995 and for the
nine months ended September 30, 1995 (unaudited).

F-70
<PAGE> 127

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Medix, Inc.
and
National Medical Systems, Inc.

We have audited the accompanying statements of financial position of
Medical Manager Division of Medix, Inc. as of December 31, 1994 and 1995 and the
related statements of operations and cash flows for each of the years 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 audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Medical Manager Division of
Medix, Inc. as of December 31, 1994 and 1995 and the results of its operations
and its cash flows for each of the years then ended in conformity with generally
accepted accounting principles.

As discussed in Note 1 to the financial statements, effective September 1,
1996, Medical Manager Division's management was taken over by National Medical
Systems, Inc., pursuant to a management services agreement and option to
purchase agreement, both dated September 1, 1996.

COOPERS & LYBRAND L.L.P.

Tampa, Florida
September 1, 1996

F-71
<PAGE> 128

MEDICAL MANAGER DIVISION

FINANCIAL POSITION

<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1995 SEPTEMBER 30, 1996
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS
Accounts receivable..................... $ 781,707 $ 417,584 $382,100
Inventory............................... 251,102 210,929 191,786
Prepaid expenses and other current
assets............................... 0 341,670 314,650
---------- ---------- --------
Total current assets............ 1,032,809 970,183 888,536
PROPERTY AND EQUIPMENT, net............... 183,178 152,804 102,682
---------- ---------- --------
Total assets.................... $ 1,215,987 $ 1,122,987 $991,218
========== ========== ========
LIABILITIES AND DIVISIONAL EQUITY
CURRENT LIABILITIES
Customer deposits and deferred
maintenance revenue.................. $ 488,618 $ 657,984 $601,886
---------- ---------- --------
Total liabilities............... 488,618 657,984 601,886
---------- ---------- --------
Commitments and contingencies (Note 5)
DIVISIONAL EQUITY
Divisional equity....................... 727,369 465,003 389,332
---------- ---------- --------
Total divisional equity......... 727,369 465,003 389,332
---------- ---------- --------
Total liabilities and divisional
equity........................ $ 1,215,987 $ 1,122,987 $991,218
========== ========== ========
</TABLE>

See accompanying notes to financial statements.

F-72
<PAGE> 129

MEDICAL MANAGER DIVISION

STATEMENTS OF OPERATIONS

NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- -------------------------
1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenue
Systems................................. $2,405,039 $ 519,959 $ 472,455 $ 278,121
Maintenance and other................... 3,463,369 3,943,654 2,924,426 2,950,479
---------- ---------- ---------- ----------
Total revenues....................... 5,868,408 4,463,613 3,396,881 3,228,600
---------- ---------- ---------- ----------
Cost of revenue
Systems................................. 1,602,664 360,676 367,471 194,789
Maintenance and other................... 2,728,861 2,828,966 2,080,117 1,934,033
---------- ---------- ---------- ----------
Total costs of revenue............... 4,331,525 3,189,642 2,447,588 2,128,822
---------- ---------- ---------- ----------
Gross margin....................... 1,536,883 1,273,971 949,293 1,099,778
---------- ---------- ---------- ----------
Operating expenses
Selling, general and administrative..... 1,235,313 1,188,753 862,102 898,899
Depreciation and amortization........... 99,394 90,192 56,378 64,760
---------- ---------- ---------- ----------
Total operating expenses............. 1,334,707 1,278,945 918,480 963,659
---------- ---------- ---------- ----------
Income (loss) from operations...... 202,176 (4,974) 30,813 136,119
Other income (expense)
Interest expense........................ (58,818) (59,720) (57,796) (40,437)
Interest income......................... 26,167 15,154 12,723 10,779
---------- ---------- ---------- ----------
Income (loss) before income taxes......... 169,525 (49,540) (14,260) 106,461
Income taxes (benefit).................... 59,334 (9,908) (2,852) 37,261
---------- ---------- ---------- ----------
Net income (loss).................. $ 110,191 $ (39,632) $ (11,408) $ 69,200
========== ========== ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-73
<PAGE> 130

MEDICAL MANAGER DIVISION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER NINE MONTHS ENDED SEPTEMBER
31, 30,
----------------------- ---------------------------
1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................ $ 110,191 $ (39,632) $ (11,408) $ 69,200
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization......... 99,394 90,192 56,378 64,760
Changes in assets and liabilities, net of
effects from acquisitions:
Accounts receivable................... (31,483) 364,123 363,518 35,484
Inventory............................. (36,371) 40,173 (7,255) 19,143
Prepaid expenses and other current
assets.............................. 87,575 (341,670) (344,775) 27,020
Customer deposits and deferred
maintenance revenue................. 101,406 169,366 228,758 (56,098)
--------- --------- --------- ---------
Net cash provided by operating
activities.......................... 330,712 282,552 285,216 159,509
Cash flow from investing activities:
Purchases of property and equipment... (128,325) (59,818) (40,302) (14,638)
--------- --------- --------- ---------
Net cash used in investing
activities.......................... (128,325) (59,818) (40,302) (14,638)
Cash flow from financing activities:
Net remittances to Medix, Inc......... (202,387) (222,734) (244,914) (144,871)
--------- --------- --------- ---------
Net cash used in financing
activities.......................... (202,387) (222,734) (244,914) (144,871)
--------- --------- --------- ---------
Net change in cash and cash equivalents.... $ 0 $ 0 $ 0 $ 0
========= ========= ========= =========
</TABLE>

See accompanying notes to financial statements.

F-74
<PAGE> 131

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION:

Medical Manager Division (the "Division"), a wholly-owned division of
Medix, Inc. ("Medix"), whose parent is Blue Cross and Blue Shield of New Jersey,
Inc. (BCBSNJ), markets and supports "The System by Medix," a private label
physician practice management system, to clients primarily in New Jersey and New
York. The system is licensed from Personalized Programming, Inc., the developer
of the system.

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles. Effective September 1, 1996, Medix
entered into a management services agreement and an option agreement with
National Medical Systems, Inc. ("NMS") that provides for NMS to manage the
Division pending its sale to NMS.

BCBSNJ provides certain services to, and incurs certain costs on behalf of,
its subsidiaries and divisions. These costs, which include office space,
employee benefit and executive compensation programs, retirement savings and
health plans, treasury, accounting, data processing, legal, administrative and
business insurance, are allocated to BCBSNJ's subsidiaries, including Medix and
ultimately to the Division, on a pro-rata basis based on applicable allocation
statistics that include square footage occupied, number of employees and data
processing usage. Liabilities related to the benefit plans described above are
not fully reflected in the statement of financial position. Interest income and
expense are also allocated. As such, these financial statements are not
necessarily indicative of the financial position or the results of operations
had the Division been operated as an unaffiliated company. However, management
believes that with respect to expenses, the amounts reflected in the statements
of operation are not less than the amounts the Division would have incurred had
the Division been an unaffiliated company in those periods, and the allocation
process is reasonable.

These financial statements present the results of operations for the years
ended December 31, 1994 and 1995 and for the unaudited six months ended June 30,
1995 and 1996 and the financial position at December 31, 1994 and 1995 and June
30, 1996 (unaudited). The effects of the pending purchase by NMS, including
purchase accounting by the acquiror, have not been reflected in these financial
statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information. The financial statements of the Division as
of September 30, 1995 and 1996, and for the nine months then ended, are
unaudited. All adjustments and accruals (consisting only of normal recurring
adjustments) have been recorded, which, in the opinion of management, are
necessary for a fair presentation. Results of operations for the interim periods
are not necessarily indicative of the results for the full year.

Revenue Recognition. Revenue from the sale of systems is recognized when
the system has been installed and the related client training has been
completed. Amounts billed in advance of installation and pending completion of
remaining significant obligations are deferred. Revenue from support and
maintenance contracts is recognized as the services are performed ratably over
the contract period, which typically does not exceed one year. Revenue from
other services are recognized as they are provided. Certain expenses are
allocated between the cost of sales for systems and maintenance and other based
upon revenue which management believes to be a reasonable basis.

Concentration of Credit Risk. Financial instruments that potentially
subject the Division to concentrations of credit risk consist principally of
accounts receivable. The Division's credit concentrations are limited due to the
wide variety of customers and the geographic areas into which the Division's
systems and services are sold.

Cash and Cash Equivalents. For purposes of the statement of cash flows,
the Division considers all highly liquid investments with maturity dates of
three months or less when purchased to be cash equivalents.

F-75
<PAGE> 132

NOTES TO FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
Property and Equipment. Property and equipment are stated at cost.
Additions and major renewals are capitalized. Repairs and maintenance are
charged to expense as incurred. Upon disposal, the related cost and accumulated
depreciation are removed from the accounts, with the resulting gain or loss
included in income. Depreciation is provided on accelerated methods over the
estimated useful lives of the assets.

Income Taxes. The Division participates in the consolidated federal income
tax return of BCBSNJ. Under terms of an agreement between Medix and BCBSNJ,
income tax provisions are allocated at 35% of income before income taxes and
income tax benefits at 20% of loss before income taxes for financial reporting
purposes. The Division's current income taxes payable or receivable are included
in divisional equity in the accompanying statements of financial position.

Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reported period. Actual results could differ from those estimates; however,
management does not believe these differences would have a material effect on
operating results.

New Accounting Pronouncements. Statements of Financial Accounting
Standards ("SFAS") No. 121, Accounting for the Impairment of Long Lived Assets
and for Long Lived Assets to be Disposed Of, is effective for years beginning
after December 15, 1995. This Statement requires that long-lived assets and
certain intangibles to be held and used by the Company be reviewed for
impairment. This pronouncement is not expected to have a material impact on the
financial statements of the Company.

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- SEPTEMBER 30,
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
Property and equipment consisted of the following:
Furniture and equipment................................... $1,105,744 $ 679,500 $ 683,999
Less accumulated depreciation........................ (922,566) (526,696) (581,317)
--------- -------- --------
$ 183,178 $ 152,804 $ 102,682
========= ======== ========
</TABLE>

4. DIVISIONAL EQUITY:

Divisional equity reflects the historical activity between the Division and
Medix. An analysis of the changes in divisional equity is as follows:

<TABLE>
<S> <C>
Balance January 1, 1994.................................................. $ 819,565
Net income............................................................... 110,191
Net remittances to Medix................................................. (202,387)
---------
Balance December 31, 1994................................................ 727,369
Net loss................................................................. (39,632)
Net remittances to Medix................................................. (222,734)
---------
Balance December 31, 1995................................................ 465,003
Net income............................................................... 69,200
Net remittances to Medix................................................. (144,871)
---------
Balance September 30, 1996............................................... $ 389,332
=========
</TABLE>

F-76
<PAGE> 133

NOTES TO FINANCIAL STATEMENTS

5. COMMITMENTS AND CONTINGENCIES:

Medix leases its office facilities, including those utilized by the
Division, from BCBSNJ under the terms of an operating lease that expires in
December 1998. In conjunction with the purchase by NMS, operations of the
Division will be moved to another location. The Division will not be responsible
for obligations under the existing lease after the relocation.

Rent expense allocated to the Division totaled $145,000, $155,000, $100,000
and $89,000 for 1994 and 1995 and the unaudited nine months ended September 30,
1995 and 1996, respectively.

F-77
<PAGE> 134

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF
THE PROSPECTUS.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 3
The Company........................... 7
Risk Factors.......................... 10
Use of Proceeds....................... 15
Dividend Policy....................... 15
Capitalization........................ 16
Dilution.............................. 17
Selected Financial Data............... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 21
Business.............................. 29
Management............................ 41
Certain Transactions.................. 45
Principal Stockholders................ 47
Description of Capital Stock.......... 47
Shares Eligible For Future Sale....... 50
Underwriting.......................... 52
Legal Matters......................... 53
Experts............................... 53
Additional Information................ 53
Index to Financial Statements......... F-1
</TABLE>

------------------------

Until , 1996 (25 days from the date of this Prospectus), all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligations of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

5,000,000 SHARES
MEDICAL MANAGER CORPORATION
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

DEAN WITTER REYNOLDS INC.
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 135

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the expenses (other than underwriting
compensation expected to be incurred) in connection with this Offering. All of
such amounts (except the SEC Registration Fee, the Nasdaq National Market
Listing Fee and the NASD Filing Fee) are estimated.

<TABLE>
<S> <C>
SEC Registration Fee................................................... $31,724.14
Nasdaq National Market Listing Fee..................................... 50,000
NASD Filing Fee........................................................ 9,700
Blue Sky Fees and Expenses............................................. *
Printing and Engraving Costs........................................... *
Legal Fees and Expenses................................................ *
Accounting Fees and Expenses........................................... *
Transfer Agent and Registrar Fees and Expenses......................... *
Miscellaneous.......................................................... *
----------
Total........................................................ $ *
==========
</TABLE>

- ---------------

* To be furnished by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's By-laws provide that the Company shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL"), as amended from time to time, indemnify all persons whom it may
indemnify pursuant thereto.

Section 145 of the DGCL permits a corporation, under specified
circumstances, to indemnify its directors, officers, employees or agents against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlements actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by third parties by reason of the fact that
they were or are directors, officers, employees or agents of the corporation, if
such directors, officers, employees or agents acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agents in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnity for such expenses despite
such adjudication of liability.

Article Seven of the Company's Certificate of Incorporation provides that
the Company's directors will not be personally liable to the Company or its
stockholders for monetary damages resulting from breaches of their fiduciary
duty as directors except (a) for any breach of the duty of loyalty to the
Company or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the DGCL, which makes directors liable for unlawful dividends or
unlawful stock repurchases or redemptions, or (d) for transactions from which
directors derive improper personal benefit.

Section 7 of the Underwriting Agreement filed as Exhibit 1.1 provides that
the Underwriters named therein will indemnify and hold harmless the Company and
each director, officer or controlling person of the Company from and against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). Section 7 of such Underwriting Agreement also
provides that such Underwriters will contribute to certain liabilities of such
persons under the Securities Act.

II-1
<PAGE> 136

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following information relates to securities of the Company issued or
sold by the Company within the past three years which were not registered under
the Securities Act:

In July 1996, the Company sold one share of Common Stock to each of
John H. Kang, Ricardo A. Salas and Wayne Burks at a price of $1.00 per
share.

Simultaneously with the completion of this Offering, the Company will issue
13,000,000 shares of its Common Stock in connection with the Mergers of the five
Founding Companies.

Each of these transactions was effected without registration of the
relevant security under the Securities Act in reliance upon the exemption
provided by Section 4(2) of, and/or Regulation D under, the Securities Act for
transactions not involving a public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement**
2.1 -- Agreement and Plan of Reorganization, dated as of September 30, 1996, by and among
the Company, Personalized Programming, Inc., PPI Acquisition I Corp. and the
Stockholder named therein*
2.2 -- Agreement and Plan of Reorganization, dated as of September 30, 1996, by and among
the Company, Systems Plus, Inc., Systems Plus Distribution, Inc., SPI Acquisition I
Corp., SPDI Acquisition I Corp. and the Stockholder named therein*
2.3 -- Agreement and Plan of Reorganization, dated as of September 30, 1996, by and among
the Company, National Medical Systems, Inc., NMS Acquisition I Corp. and the
Stockholders named therein*
2.4 -- Agreement and Plan of Reorganization, dated as of September 30, 1996, by and among
the Company, RTI Business Systems, Inc., RTI Acquisition I Corp. and the
Stockholders named therein*
2.5 -- Agreement and Plan of Reorganization, dated as of September 30, 1996, by and among
the Company, Systems Management, Inc., SMI Acquisition I Corp. and the Stockholders
named therein*
3.1 -- Certificate of Incorporation of the Company*
3.2 -- By-laws of the Company
4 -- Form of certificate evidencing ownership of Common Stock of the Company
5 -- Opinion of Morgan, Lewis & Bockius LLP
10.1 -- 1996 Long-Term Incentive Plan of the Company*
10.2 -- 1996 Non-Employee Directors' Stock Plan of the Company*
10.3 -- Form of Employment Agreement between the Company and Michael A. Singer*
10.4 -- Form of Employment Agreement between the Company and Richard W. Mehrlich*
10.5 -- Form of Employment Agreement between the Company and John H. Kang*
10.6 -- Form of Employment Agreement between the Company and Frederick B. Karl, Jr.*
10.7 -- Form of Employment Agreement between the Company and Wayne Burks*
10.8 -- Form of Employment Agreement between the Company and Henry W. Holbrook*
10.9 -- Form of Employment Agreement between the Company and Thomas P. Liddell*
10.10 -- Lease between PPI Holding Company, Inc. and Personalized Programming, Inc., dated
March 12, 1996, as amended
10.11 -- Form of Lease between Liddell, L.L.C. and Systems Management, Inc.**
10.12 -- Master License Agreement between Personalized Programming, Inc. and Systems Plus,
Inc. dated November 15, 1982, together with eight addenda thereto*
</TABLE>

II-2
<PAGE> 137

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <C> <S>
10.13 -- Management Services Agreement and Option Agreement, dated as of September 1, 1996,
between Medix, Inc. and National Medical Systems, Inc.
21 -- List of subsidiaries of the Company*
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2 -- Consent of Morgan, Lewis & Bockius LLP (contained in Exhibit 5.1)
23.3 -- Consent of Michael A. Singer to be named as a director*
23.4 -- Consent of Richard W. Mehrlich to be named as a director*
24 -- Powers of Attorney*
27 -- Financial Data Schedule (for SEC use only)*
</TABLE>

- ---------------

* Previously filed.

** To be filed by amendment.

(b) Financial Statement Schedules

None

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes as follows:

(1) The undersigned will provide to the underwriters at the closing
specified in the underwriting agreement certificates in such denominations
and registered in such names as required by the underwriters to permit
prompt delivery to each purchaser.

(2) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance on Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it is declared effective.

(3) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and this Offering of such securities at that time shall be
the initial bona fide offering thereof.

(4) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 14,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-3
<PAGE> 138

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tampa,
Florida, on the 21st day of November, 1996.

MEDICAL MANAGER CORPORATION

By: /s/ JOHN H. KANG
----------------------------------
John H. Kang
President

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------- ------------------
<C> <S> <C>
/s/ JOHN H. KANG President and Director November 21, 1996
- --------------------------------------------- (Principal Executive
John H. Kang Officer)

/s/ WAYNE BURKS Vice President, Chief November 21, 1996
- --------------------------------------------- Financial Officer and
Wayne Burks Director (Principal
Financial and Accounting
Officer)

/s/ RICARDO A. SALAS Vice President, Secretary November 21, 1996
- --------------------------------------------- and Director
Ricardo A. Salas
</TABLE>

II-4
<PAGE> 139

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBITS NUMBERED PAGE
- ------ ---------------------------------------------------------------------- -------------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement**......................................
2.1 -- Agreement and Plan of Reorganization, dated as of September 30, 1996,
by and among the Company, Personalized Programming, Inc., PPI
Acquisition I Corp. and the Stockholder named therein*................
2.2 -- Agreement and Plan of Reorganization, dated as of September 30, 1996,
by and among the Company, Systems Plus, Inc., Systems Plus
Distribution, Inc., SPI Acquisition I Corp., SPDI Acquisition I Corp.
and the Stockholder named therein*....................................
2.3 -- Agreement and Plan of Reorganization, dated as of September 30, 1996,
by and among the Company, National Medical Systems, Inc., NMS
Acquisition I Corp. and the Stockholders named therein*...............
2.4 -- Agreement and Plan of Reorganization, dated as of September 30, 1996,
by and among the Company, RTI Business Systems, Inc., RTI Acquisition
I Corp. and the Stockholders named therein*...........................
2.5 -- Agreement and Plan of Reorganization, dated as of September 30, 1996,
by and among the Company, Systems Management, Inc., SMI Acquisition I
Corp. and the Stockholders named therein*.............................
3.1 -- Certificate of Incorporation of the Company*..........................
3.2 -- By-laws of the Company................................................
4 -- Form of certificate evidencing ownership of Common Stock of the
Company...............................................................
5 -- Opinion of Morgan, Lewis & Bockius LLP................................
10.1 -- 1996 Long-Term Incentive Plan of the Company*.........................
10.2 -- 1996 Non-Employee Directors' Stock Plan of the Company*...............
10.3 -- Form of Employment Agreement between the Company and Michael A.
Singer*...............................................................
10.4 -- Form of Employment Agreement between the Company and Richard W.
Mehrlich*.............................................................
10.5 -- Form of Employment Agreement between the Company and John H. Kang*....
10.6 -- Form of Employment Agreement between the Company and Frederick B.
Karl, Jr.*............................................................
10.7 -- Form of Employment Agreement between the Company and Wayne Burks*.....
10.8 -- Form of Employment Agreement between the Company and Henry W.
Holbrook*.............................................................
10.9 -- Form of Employment Agreement between the Company and Thomas P.
Liddell*..............................................................
10.10 -- Lease between PPI Holding Company, Inc. and Personalized Programming,
Inc., dated March 12, 1996, as amended................................
10.11 -- Form of Lease between Liddell, L.L.C. and Systems Management,
Inc.**................................................................
10.12 -- Master License Agreement between Personalized Programming, Inc. and
Systems Plus, Inc. dated November 15, 1982, together with eight
addenda thereto*......................................................
10.13 -- Management Services Agreement and Option Agreement, dated as of
September 1, 1996, between Medix, Inc. and National Medical Systems,
Inc...................................................................
21 -- List of subsidiaries of the Company*..................................
23.1 -- Consent of Coopers & Lybrand L.L.P....................................
23.2 -- Consent of Morgan, Lewis & Bockius LLP (contained in Exhibit 5.1).....
23.3 -- Consent of Michael A. Singer to be named as a director*...............
</TABLE>

<PAGE> 140

<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBITS NUMBERED PAGE
- ------ ---------------------------------------------------------------------- -------------
<C> <C> <S> <C>
23.4 -- Consent of Richard W. Mehrlich to be named as a director*.............
24 -- Powers of Attorney*...................................................
27 -- Financial Data Schedule*..............................................
</TABLE>

- ---------------

* Previously filed.

** To be filed by amendment.

<PAGE> 1
Exhibit 3.2

BY-LAWS

MEDICAL MANAGER CORPORATION

ARTICLE I

Stockholders

SECTION 1. Annual Meeting. The annual meeting of the stockholders
of the Corporation shall be held on such date, at such time and at such place
within or without the State of Delaware as may be designated by the Board of
Directors, for the purpose of electing Directors and for the transaction of
such other business as may be properly brought before the meeting.

SECTION 2. Special Meetings. Except as otherwise provided in the
Certificate of Incorporation, a special meeting of the stockholders of the
Corporation may be called at any time by the Board of Directors, the Chairman
of the Board, the Chief Executive Officer or the President. Any special
meeting of the stockholders shall be held on such date, at such time and at
such place within or without the State of Delaware as the Board of Directors or
the officer calling the meeting may designate. At a special meeting of the
stockholders, no business shall be transacted and no corporate action shall be
taken other than that stated in the notice of the meeting unless all of the
stockholders are present in person or by proxy, in which case any and all
business may be transacted at the meeting even though the meeting is held
without notice.

<PAGE> 2

SECTION 3. Notice of Meetings. Except as otherwise provided in
these By-Laws or by law, a written notice of each meeting of the stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder of the Corporation entitled to vote at
such meeting at his or her address as it appears on the records of the
Corporation. The notice shall state the place, date and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called.

SECTION 4. Quorum. At any meeting of the stockholders, the
holders of a majority in number of the total outstanding shares of stock of the
Corporation entitled to vote at such meeting, present in person or represented
by proxy, shall constitute a quorum of the stockholders for all purposes,
unless the representation of a larger number of shares shall be required by
law, by the Certificate of Incorporation or by these By-Laws, in which case the
representation of the number of shares so required shall constitute a quorum;
provided that at any meeting of the stockholders at which the holders of any
class of stock of the Corporation shall be entitled to vote separately as a
class, the holders of a majority in number of the total outstanding shares of
such class, present in person or represented by proxy, shall constitute a
quorum for purposes of such class vote unless the representation of a larger
number of shares of such class shall be required by law, by the Certificate of
Incorporation or by these By-Laws.

SECTION 5. Adjourned Meetings. Whether or not a quorum shall be
present in person or represented at any meeting of the stockholders, the
holders of a majority in number of

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<PAGE> 3

the shares of stock of the Corporation present in person or represented by
proxy and entitled to vote at such meeting may adjourn from time to time;
provided, however, that if the holders of any class of stock of the Corporation
are entitled to vote separately as a class upon any matter at such meeting, any
adjournment of the meeting in respect of action by such class upon such matter
shall be determined by the holders of a majority of the shares of such class
present in person or represented by proxy and entitled to vote at such meeting.
When a meeting is adjourned to another time or place, notice need not be given
of the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting the
stockholders, or the holder of any class of stock entitled to vote separately
as a class, as the case may be, may transact any business which might have been
transacted by them at the original meeting. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting.

SECTION 6. Organization. The Chairman of the Board, or, in his
absence, the Chief Executive Officer, or, in their absence, the President, or,
in the absence of the Chairman of the Board, the Chief Executive Officer and
the President, a Vice President shall call all meetings of the stockholders to
order, and shall act as Chairman of such meetings. In the absence of the
Chairman of the Board, the Chief Executive Officer, the President and all of
the Vice Presidents, the holders of a majority in number of the shares of stock
of the Corporation present in person or represented by proxy and entitled to
vote at such meeting shall elect a Chairman.

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The Secretary of the Corporation shall act as Secretary of all
meetings of the stockholders; but in the absence of the Secretary, the Chairman
may appoint any person to act as Secretary of the meeting. It shall be the
duty of the Secretary to prepare and make, at least ten days before every
meeting of stockholders, a complete list of stockholders entitled to vote at
such meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held,
for the ten days next preceding the meeting, to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, and shall be produced and kept at the time and place of the meeting
during the whole time thereof and subject to the inspection of any stockholder
who may be present.

SECTION 7. Voting. Except as otherwise provided in the
Certificate of Incorporation or by law, each stockholder shall be entitled to
one vote for each share of the capital stock of the Corporation registered in
the name of such stockholder upon the books of the Corporation. Each
stockholder entitled to vote at a meeting of stockholders or to express consent
or dissent to corporate action in writing without a meeting may authorize
another person or persons to act for him or her by proxy, but no such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. When directed by the presiding officer or upon
the demand of any stockholder, the vote upon any matter before a meeting of
stockholders shall be by ballot. Except as otherwise provided by law or by the
Certificate of Incorporation,

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Directors shall be elected by a plurality of the votes cast at a meeting of
stockholders by the stockholders entitled to vote in the election and, whenever
any corporate action, other than the election of Directors is to be taken, it
shall be authorized by a majority of the votes cast at a meeting of
stockholders by the stockholders entitled to vote thereon.

Shares of the capital stock of the Corporation belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly
or indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes.

SECTION 8. Inspectors. When required by law or directed by the
presiding officer or upon the demand of any stockholder entitled to vote, but
not otherwise, the polls shall be opened and closed, the proxies and ballots
shall be received and taken in charge, and all questions touching the
qualification of voters, the validity of proxies and the acceptance or
rejection of votes shall be decided at any meeting of the stockholders by two
or more Inspectors who may be appointed by the Board of Directors before the
meeting, or if not so appointed, shall be appointed by the presiding officer at
the meeting. If any person so appointed fails to appear or act, the vacancy
may be filled by appointment in like manner.

SECTION 9. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required to
be taken or which may be taken at any annual or special meeting of the
stockholders of the Corporation, may be taken without a

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meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking
of any such corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.

ARTICLE II

Board of Directors

SECTION 1. Number, Classification and Tenure. The powers of the
Corporation shall be exercised by or under the authority of, and the business
and affairs of the Corporation shall be managed under the direction of, the
Board of Directors. The Board of Directors shall be divided into three classes
as provided in the Certificate of Incorporation. Each Director shall hold
office for the full term for which such Director is elected and until such
Director's successor shall have been duly elected and qualified or until his
earlier death or resignation or removal in accordance with the Certificate of
Incorporation or these By-Laws.

Within the limits specified in the Certificate of Incorporation,
the number of Directors that shall constitute the whole Board of Directors
shall be fixed by, and may be increased or decreased from time to time by, the
Board of Directors. Except as provided in the Certificate of Incorporation of
the Corporation, newly created directorships resulting from any increase in the
number of Directors and any vacancies on the Board of Directors resulting from
death,

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resignation, disqualification, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining Directors then in office, even
though less than a quorum of the Board of Directors. Any Director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of Directors in which the new directorship was
created or the vacancy occurred and until such Director's successor shall have
been elected and qualified or until his earlier death, resignation or removal.
No decrease in the number of Directors constituting the Board of Directors
shall shorten the term of any incumbent director.

SECTION 2. Qualifications. Directors need not be residents of the
State of Delaware or stockholders of the Corporation.

SECTION 3. Nomination of Directors. Subject to such rights of the
holders of one or more outstanding series of Preferred Stock of the Corporation
to elect one or more Directors in case of arrearages in the payment of
dividends or other defaults or in other cases as shall be prescribed in the
Certificate of Incorporation or in the resolutions of the Board of Directors
providing for the establishment of any such series, only persons who are
nominated in accordance with the procedures set forth in this Section 3 shall
be eligible for election as, and to serve as, Directors. Nominations of
persons for election to the Board of Directors may be made at a meeting of the
stockholders at which Directors are to be elected (i) by or at the direction of
the Board of Directors or (ii) by any stockholder of the Corporation who is a
stockholder of record at the time of the giving of such stockholder's notice
provided for in this Section 3, who shall be entitled to vote at such meeting
in the election of Directors and who complies with the

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requirements of this Section 3. Such nominations, other than those made by or
at the direction of the Board of Directors, shall be preceded by timely advance
notice in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice shall be delivered to, or mailed and received at, the
principal executive offices of the Corporation (i) with respect to an election
to be held at the annual meeting of the stockholders of the Corporation, not
later than the close of business on the 90th day prior to the first anniversary
of the preceding year's annual meeting; provided, however, that with respect to
the annual meeting of stockholders to be held in 1997 or in the event that the
date of the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the stockholder to be timely must be so
delivered not later than the close of business on the later of the 90th day
prior to such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made by the Corporation; and
(ii) with respect to an election to be held at a special meeting of
stockholders of the Corporation for the election of Directors, not later than
the close of business on the 10th day following the day on which notice of the
date of the special meeting was mailed to stockholders of the Corporation as
provided in Article 1, Section 3 hereof or public disclosure of the date of the
special meeting was made, whichever first occurs. Any such stockholder's
notice to the Secretary of the Corporation shall set forth (x) as to each
person whom the stockholder proposes to nominate for election or re-election as
a Director, (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, (iii) the
number of shares of each class of capital stock of the Corporation beneficially
owned by such person, (iv) the written consent of such person to having such
persons's name placed in nomination at the meeting and to serve as a Director
if elected and

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<PAGE> 9

(v) any other information relating to such person that is required to be
disclosed in solicitations of proxies for election of Directors, or is
otherwise required, pursuant to Regulation 14A under the Exchange Act, and (y)
as to the stockholder giving the notice, (i) the name and address, as they
appear on the Corporation's books, of such stockholder and (ii) the number of
shares of each class of voting stock of the Corporation which are then
beneficially owned by such stockholder. The presiding officer of the meeting
of stockholders shall determine whether the requirements of this Section 3 have
been met with respect to any nomination or intended nomination. If the
presiding officer determines that any nomination was not made in accordance
with the requirements of this Section 3, he shall so declare at the meeting and
the defective nomination shall be disregarded. Notwithstanding the foregoing
provisions of this Section 3, a stockholder shall also comply with all
applicable requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this Section 3.

SECTION 4. Removal, Vacancies and Additional Directors. Except as
otherwise provided in the Certificate of Incorporation, the stockholders may,
at any special meeting the notice of which shall state that it is called for
that purpose, remove, with or without cause, any Director and fill the vacancy;
provided that whenever any Director shall have been elected by the holders of
any class of stock of the Corporation voting separately as a class under the
provisions of the Certificate of Incorporation, such Director may be removed
and the vacancy filled only by the holders of that class of stock voting
separately as a class. Except as otherwise provided in the Certificate of
Incorporation, vacancies caused by any such removal and not filled by the
stockholders at the meeting at which such removal shall have been made, or any
vacancy caused

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by the death or resignation of any Director or for any other reason, and any
newly created directorship resulting from any increase in the authorized number
of Directors, may be filled by the affirmative vote of a majority of the
Directors then in office, although less than a quorum, and any Director so
elected to fill any such vacancy or newly created directorship shall hold
office until his or her successor is elected and qualified or until his or her
earlier resignation or removal.

When one or more Directors shall resign effective at a future date,
a majority of the Directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective,
and each Director so chosen shall hold office as herein provided in connection
with the filling of other vacancies.

SECTION 5. Place of Meeting. The Board of Directors may hold its
meetings in such place or places in the State of Delaware or outside the State
of Delaware as the Board from time to time shall determine.

SECTION 6. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as the Board from time to time
by resolution shall determine. No notice shall be required for any regular
meeting of the Board of Directors; but a copy of every resolution fixing or
changing the time or place of regular meetings shall be mailed to every
Director at least five days before the first meeting held in pursuance thereof.

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SECTION 7. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by direction of the Chairman of the
Board, the President or by any two of the Directors then in office.

Notice of the day, hour and place of holding of each special
meeting shall be given by mailing the same at least two days before the meeting
or by causing the same to be transmitted by facsimile, telegram or telephone at
least one day before the meeting to each Director. Unless otherwise indicated
in the notice thereof, any and all business other than an amendment of these
By-Laws may be transacted at any special meeting, and an amendment of these
By-Laws may be acted upon if the notice of the meeting shall have stated that
the amendment of these By-Laws is one of the purposes of the meeting. At any
meeting at which every Director shall be present, even though without any
notice, any business may be transacted, including the amendment of these
By-Laws.

SECTION 8. Quorum. Subject to the provisions of Section 4 of this
Article II, a majority of the members of the Board of Directors in office (but,
unless the Board shall consist solely of one Director, in no case less than
one- third of the total number of Directors nor less than two Directors) shall
constitute a quorum for the transaction of business and the vote of the
majority of the Directors present at any meeting of the Board of Directors at
which a quorum is present shall be the act of the Board of Directors. If at
any meeting of the Board there is less than a quorum present, a majority of
those present may adjourn the meeting from time to time.

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SECTION 9. Organization. The Chairman of the Board, or, in his
absence, the President shall preside at all meetings of the Board of Directors.
In the absence of both the Chairman of the Board and the President, a Chairman
shall be elected from the Directors present. The Secretary of the Corporation
shall act as Secretary of all meetings of the Directors; but in the absence of
the Secretary, the Chairman may appoint any person to act as Secretary of the
meeting.

SECTION 10. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the Directors of the Corporation. The
Board may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided by resolution passed by a majority of the
whole Board, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and the affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting
an agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the

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stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending these By-Laws; and unless such resolution, these By-laws, or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.

SECTION 11. Conference Telephone Meetings. Unless otherwise
restricted by the Certificate of Incorporation or by these By-Laws, the members
of the Board of Directors or any committee designated by the Board, may
participate in a meeting of the Board or such committee, as the case may be, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.

SECTION 12. Consent of Directors or Committee in Lieu of Meeting.
Unless otherwise restricted by the Certificate of Incorporation or by these
By-Laws, any action required or permitted to be taken at any meeting of the
Board Directors, or of any committee thereof, may be taken without a meeting if
all members of the Board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings
of the Board or committee, as the case may be.

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ARTICLE III

Officers

SECTION 1. Officers. The officers of the Corporation shall be a
Chairman of the Board, a Chief Executive Officer, a President, one or more
Vice Presidents, a Secretary and a Treasurer, and such additional officers, if
any, as shall be elected by the Board of Directors pursuant to the provisions
of Section 7 of this Article III. The Chairman of the Board, the President,
the Chief Executive Officer, one or more Vice Presidents, the Secretary and the
Treasurer shall be elected by the Board of Directors at its first meeting after
each annual meeting of the stockholders. The failure to hold such election
shall not of itself terminate the term of office of any officer. All officers
shall hold office at the pleasure of the Board of Directors. Any officer may
resign at any time upon written notice to the Corporation. Officers may, but
need not, be Directors. Any number of offices may be held by the same person.

All officers, agents and employees shall be subject to removal,
with or without cause, at any time by the Board of Directors. The removal of
an officer without cause shall be without prejudice to his or her contract
rights, if any. The election or appointment of an officer shall not of itself
create contract rights. All agents and employees other than officers elected
by the Board of Directors shall also be subject to removal, with or without
cause, at any time by the officers appointing them.

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Any vacancy caused by the death, resignation or removal of any
officer, or otherwise, may be filled by the Board of Directors, and any officer
so elected shall hold office at the pleasure of the Board of Directors.

In addition to the powers and duties of the officers of the
Corporation as set forth in these By-Laws, the officers shall have such
authority and shall perform such duties as from time to time may be determined
by the Board of Directors.

SECTION 2. Powers and Duties of the Chairman of the Board. The
Chairman of the Board shall preside at all meetings of the stockholders and at
all meetings of the Board of Directors and shall have such other powers and
perform such other duties as may from time to time be assigned by these By-Laws
or by the Board of Directors.

SECTION 3. Powers and Duties of the Chief Executive Officer. The
Chief Executive Officer shall be the chief executive officer of the
Corporation, have general charge and control of all the Corporation's business
and affairs and, subject to the control of the Board of Directors, shall have
all powers and shall perform all duties incident to the office of Chief
Executive Officer. In the absence of the Chairman of the Board, the Chief
Executive Officer shall preside at all meetings of the stockholders and at all
meetings of the Board of Directors. In addition, the Chief Executive Officer
shall have such other powers and perform such other duties as may from time to
time be assigned by these By-Laws or by the Board of Directors.

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SECTION 4. Powers and Duties of the President. The President
shall, subject to the control of the Board of Directors, have all powers and
shall perform all duties incident to the office of President. In the absence
of the Chairman of the Board and the Chief Executive Officer, the President
shall preside at all meetings of the stockholders and at all meetings of the
Board of Directors. In the absence of the Chief Executive Officer, the
President shall be the chief executive officer of the Corporation, have
general charge and control of all the Corporation's business and affairs and
shall have such other powers and perform such other duties as may from time to
time be assigned by these By- Laws or by the Board of Directors.

SECTION 5. Powers and Duties of the Vice Presidents. Each Vice
President shall have all powers and shall perform all duties incident to the
office of Vice President and shall have such other powers and perform such
other duties as may from time to time be assigned by these By-Laws or by the
Board of Directors, the Chairman of the Board, the Chief Executive Officer or
the President.

SECTION 6. Powers and Duties of the Secretary. The Secretary
shall keep the minutes of all meetings of the Board of Directors and the
minutes of all meetings of the stockholders in books provided for that purpose.
The Secretary shall attend to the giving or serving of all notices of the
Corporation; shall have custody of the corporate seal of the Corporation and
shall affix the same to such documents and other papers as the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
President shall

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authorize and direct; shall have charge of the stock certificate books,
transfer books and stock ledgers and such other books and papers as the Board
of Directors, the Chairman of the Board, the Chief Executive Officer or the
President shall direct, all of which shall at all reasonable times be open to
the examination of any Director, upon application, at the office of the
Corporation during business hours. The Secretary shall have all powers and
shall perform all duties incident to the office of Secretary and shall also
have such other powers and shall perform such other duties as may from time to
time be assigned by these By-Laws or by the Board of Directors, the Chairman of
the Board, the Chief Executive Officer or the President.

SECTION 7. Powers and Duties of the Treasurer. The Treasurer
shall have custody of, and when proper shall pay out, disburse or otherwise
dispose of, all funds and securities of the Corporation. The Treasurer may
endorse on behalf of the Corporation for collection checks, notes and other
obligations and shall deposit the same to the credit of the Corporation in such
bank or banks or depositary or depositaries as the Board of Directors may
designate; shall sign all receipts and vouchers for payments made to the
Corporation; shall enter or cause to be entered regularly in the books of the
Corporation kept for the purpose full and accurate accounts of all moneys
received or paid or otherwise disposed of and whenever required by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
President shall render statements of such accounts. The Treasurer shall, at all
reasonable times, exhibit the books and accounts to any Director of the
Corporation upon application at the office of the Corporation during business
hours; and shall have all powers and shall perform all duties incident of the
office of Treasurer and shall also have such other powers and shall perform
such other duties as

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may from time to time be assigned by these By-Laws or by the Board of Directors,
the Chairman of the Board, the Chief Executive Officer or the President.

SECTION 8. Additional Officers. The Board of Directors may from
time to time elect such other officers (who may but need not be Directors),
including a Controller, Assistant Treasurers, Assistant Secretaries and
Assistant Controllers, as the Board may deem advisable and such officers shall
have such authority and shall perform such duties as may from time to time be
assigned by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer or the President.

The Board of Directors may from time to time by resolution delegate
to any Assistant Treasurer or Assistant Treasurers any of the powers or duties
herein assigned to the Treasurer; and may similarly delegate to any Assistant
Secretary or Assistant Secretaries any of the powers or duties herein assigned
to the Secretary.

SECTION 9. Giving of Bond by Officers. All officers of the
Corporation, if required to do so by the Board of Directors, shall furnish
bonds to the Corporation for the faithful performance of their duties, in such
penalties and with such conditions and security as the Board shall require.

SECTION 10. Voting Upon Stocks. Unless otherwise ordered by the
Board of Directors, the Chairman of the Board, the Chief Executive Officer, the
President or any Vice

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President shall have full power and authority on behalf of the Corporation to
attend and to act and to vote, or in the name of the Corporation to execute
proxies to vote, at any meeting of stockholders of any corporation in which the
Corporation may hold stock, and at any such meeting shall possess and may
exercise, in person or by proxy, any and all rights, powers and privileges
incident to the ownership of such stock. The Board of Directors may from time
to time, by resolution, confer like powers upon any other person or persons.

SECTION 11. Compensation of Officers. The officers of the
Corporation shall be entitled to receive such compensation for their services
as shall from time to time be determined by the Board of Directors.

ARTICLE IV

Indemnification of Directors and Officers

Section 1. Nature of Indemnity. The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was or has agreed to become a Director or officer of the Corporation, or
is or was serving or has agreed to serve at the request of the Corporation as a
Director or officer of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party or
is threatened to be made a party to such an action, suit or proceeding by

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reason of the fact that he or she is or was or has agreed to become an employee
or agent of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person or on his or her behalf in
connection with such action, suit or proceeding and any appeal therefrom, if
the person acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful; except that in the case of an action
or suit by or in the right of the Corporation to procure a judgment in its
favor (1) such indemnification shall be limited to expenses (including
attorneys' fees) actually and reasonably incurred by such person in the defense
or settlement of such action or suit, and (2) no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent
that the Delaware Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
Delaware Court of Chancery or such other court shall deem proper.

The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably

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believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.

Section 2. Successful Defense. To the extent that a Director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Section 1 of this Article IV or in defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.

Section 3. Determination that Indemnification is Proper. Any
indemnification of a Director or officer of the Corporation under Section 1 of
this Article IV (unless ordered by a court) shall be made by the Corporation
unless a determination is made that indemnification of the Director or officer
is not proper in the circumstances because he or she has not met the applicable
standard of conduct set forth in Section 1. Any indemnification of an employee
or agent of the Corporation under Section 1 (unless ordered by a court) may be
made by the Corporation upon a determination that indemnification of the
employee or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Section 1. Any such determination
shall be made (1) by the Board of Directors by a majority vote of a quorum
consisting of Directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested Directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.

-21-
<PAGE> 22

Section 4. Advance Payment of Expenses. Unless the Board of
Directors otherwise determines in a specific case, expenses incurred by a
Director or officer in defending a civil or criminal action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
the Director or officer to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Corporation
as authorized in this Article IV. Such expenses incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the Board
of Directors deems appropriate. The Board of Directors may authorize the
Corporation's legal counsel to represent such Director, officer, employee or
agent in any action, suit or proceeding, whether or not the Corporation is a
party to such action, suit or proceeding.

Section 5. Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each Director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware General Corporation Law are in effect and any repeal
or modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit, or proceeding previously or thereafter brought or threatened based in
whole or in part upon any such state of facts. Such a contract right may not
be modified retroactively without the consent of such Director, officer,
employee or agent.

-22-
<PAGE> 23

The indemnification provided by this Article IV shall not be deemed
exclusive of any other rights to which a person indemnified may be entitled
under any by-law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his or her official capacity and as to action
in another capacity while holding such office, and shall continue as to a
person who has ceased to be a Director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person. The Corporation may enter into an agreement with any of its Directors,
officers, employees or agents providing for indemnification and advancement of
expenses, including attorneys fees, that may change, enhance, qualify or limit
any right to indemnification or advancement of expenses created by this Article
IV.

Section 6. Severability. If this Article IV or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each Director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgment, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article IV that shall not have been invalidated and to the
fullest extent permitted by applicable law.

Section 7. Subrogation. In the event of payment of
indemnification to a person described in Section 1 of this Article IV, the
Corporation shall be subrogated to the extent of such payment to any right of
recovery such person may have and such person, as a condition of

-23-
<PAGE> 24

receiving indemnification from the Corporation, shall execute all documents and
do all things that the Corporation may deem necessary or desirable to perfect
such right of recovery, including the execution of such documents necessary to
enable the Corporation effectively to enforce any such recovery.

Section 8. No Duplication of Payments. The Corporation shall not
be liable under this Article IV to make any payment in connection with any
claim made against a person described in Section 1 of this Article IV to the
extent such person has otherwise received payment (under any insurance policy,
by-law or otherwise) of the amounts otherwise payable as indemnity hereunder.

ARTICLE V

Stock-Seal-Fiscal Year

SECTION 1. Certificates For Shares of Stock. The certificates for
shares of stock of the Corporation shall be in such form, not inconsistent with
the Certificate of Incorporation, as shall be approved by the Board of
Directors. All certificates shall be signed by the Chairman of the Board, the
Chief Executive Officer, the President or a Vice President and by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and shall
not be valid unless so signed.

-24-
<PAGE> 25

In case any officer or officers who shall have signed any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates had not
ceased to be such officer or officers of the Corporation.

All certificates for shares of stock shall be consecutively
numbered as the same are issued. The name of the person owning the shares
represented thereby with the number of such shares and the date of issue
thereof shall be entered on the books of the Corporation.

Except as hereinafter provided, all certificates surrendered to the
Corporation for transfer shall be cancelled, and no new certificates shall be
issued until former certificates for the same number of shares have been
surrendered and cancelled.

SECTION 2. Lost, Stolen or Destroyed Certificates. Whenever a
person owning a certificate for shares of stock of the Corporation alleges that
it has been lost, stolen or destroyed, he or she shall file in the office of
the Corporation an affidavit setting forth, to the best of his or her knowledge
and belief, the time, place and circumstances of the loss, theft or
destruction, and, if required by the Board of Directors, a bond of indemnity or
other indemnification sufficient in the opinion of the Board of Directors to
indemnify the Corporation and its agents against any claim that may be made
against it or them on account of the alleged loss, theft or destruction of

-25-
<PAGE> 26

any such certificate or the issuance of a new certificate in replacement
therefor. Thereupon the Corporation may cause to be issued to such person a new
certificate in replacement for the certificate alleged to have been lost,
stolen or destroyed. Upon the stub of every new certificate so issued shall be
noted the fact of such issue and the number, date and the name of the
registered owner of the lost, stolen or destroyed certificate in lieu of which
the new certificate is issued.

SECTION 3. Transfer of Shares. Shares of stock of the Corporation
shall be transferred on the books of the Corporation by the holder thereof, in
person or by his or her attorney duly authorized in writing, upon surrender and
cancellation of certificates for the number of shares of stock to be
transferred, except as provided in Section 2 of this Article IV.

SECTION 4. Regulations. The Board of Directors shall have power
and authority to make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation.

SECTION 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting or to receive payment of any dividend or
other distribution or allotment of any rights, or to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, as the case may be, the Board of Directors may fix, in
advance, a record date, which shall not be (i) more than sixty (60) nor less
than ten (10) days before the date of such meeting, or (ii)

-26-
<PAGE> 27

in the case of corporate action to be taken by consent in writing without a
meeting, prior to, or more than ten (10) days after, the date upon which the
resolution fixing the record date is adopted by the Board of Directors, or
(iii) more than sixty (60) days prior to any other action.

If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held; the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is delivered to
the Corporation; and the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.

SECTION 6. Dividends. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors shall have power to
declare and pay dividends upon shares of stock of the Corporation, but only out
of funds available for the payment of dividends as provided by law.

Subject to the provisions of the Certificate of Incorporation, any
dividends declared upon the stock of the Corporation shall be payable on such
date or dates as the Board of Directors

-27-
<PAGE> 28

shall determine. If the date fixed for the payment of any dividend shall in
any year fall upon a legal holiday, then the dividend payable on such date
shall be paid on the next day not a legal holiday.

SECTION 7. Corporate Seal. The Board of Directors shall provide a
suitable seal, containing the name of the Corporation, which seal shall be kept
in the custody of the Secretary. A duplicate of the seal may be kept and be
used by any officer of the Corporation designated by the Board of Directors,
the Chairman of the Board, the Chief Executive Officer or the President.

SECTION 8. Fiscal Year. The fiscal year of the Corporation shall
be such fiscal year as the Board of Directors from time to time by resolution
shall determine.

ARTICLE VI

Miscellaneous Provisions.

SECTION 1. Checks, Notes, Etc. All checks, drafts, bills of
exchange, acceptances, notes or other obligations or orders for the payment of
money shall be signed and, if so required by the Board of Directors,
countersigned by such officers of the Corporation and/or other persons as the
Board of Directors from time to time shall designate.

Checks, drafts, bills of exchange, acceptances, notes, obligations
and orders for the payment of money made payable to the Corporation may be
endorsed for deposit to the credit of

-28-
<PAGE> 29

the Corporation with a duly authorized depository by the Treasurer and/or such
other officers or persons as the Board of Directors from time to time may
designate.

SECTION 2. Loans. No loans and no renewals of any loans shall be
contracted on behalf of the Corporation except as authorized by the Board of
Directors. When authorized to do so, any officer or agent of the Corporation
may effect loans and advances for the Corporation from any bank, trust company
or other institution or from any firm, corporation or individual, and for such
loans and advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Corporation. When authorized so to do,
any officer or agent of the Corporation may pledge, hypothecate or transfer, as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Corporation, any and all stocks, securities and other
personal property at any time held by the Corporation, and to that end may
endorse, assign and deliver the same. Such authority may be general or
confined to specific instances.

SECTION 3. Contracts. Except as otherwise provided in these
By-Laws or by law or as otherwise directed by the Board of Directors, the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President shall be authorized to execute and deliver, in the name and on behalf
of the Corporation, all agreements, bonds, contracts, deeds, mortgages, and
other instruments, either for the Corporation's own account or in a fiduciary
or other capacity, and the seal of the Corporation, if appropriate, shall be
affixed thereto by any of such officers or the Secretary or an Assistant
Secretary. The Board of Directors, the Chairman of the Board, the Chief
Executive Officer, the President or any Vice President designated by the Board
of

-29-
<PAGE> 30

Directors may authorize any other officer, employee or agent to execute and
deliver, in the name and on behalf of the Corporation, agreements, bonds,
contracts, deeds, mortgages, and other instruments, either for the
Corporation's own account or in a fiduciary or other capacity, and, if
appropriate, to affix the seal of the Corporation thereto. The grant of such
authority by the Board or any such officer may be general or confined to
specific instances.

SECTION 4. Waivers of Notice. Whenever any notice whatever is
required to be given by law, by the Certificate of Incorporation or by these
By-Laws to any person or persons, a waiver thereof in writing, signed by the
person or persons entitled to the notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.

SECTION 5. Offices Outside of Delaware. Except as otherwise
required by the laws of the State of Delaware, the Corporation may have an
office or offices and keep its books, documents and papers outside of the State
of Delaware at such place or places as from time to time may be determined by
the Board of Directors, the Chairman of the Board, the Chief Executive Officer
or the President.

ARTICLE VII

Amendments

These By-Laws and any amendment thereof may be altered, amended or
repealed, or new By-Laws may be adopted, by the Board of Directors at any
regular or special meeting by the

-30-

<PAGE> 31

affirmative vote of a majority of all of the members of the Board, provided in
the case of any special meeting at which all of the members of the Board are
not present, that the notice of such meeting shall have stated that the
amendment of these By-Laws was one of the purposes of the meeting; but these
By-Laws and any amendment thereof may be altered, amended or repealed or new
By-Laws may be adopted by the holders of a majority of the total outstanding
stock of the Corporation entitled to vote at any annual meeting or at any
special meeting, provided, in the case of any special meeting, that notice of
such proposed alteration, amendment, repeal or adoption is included in the
notice of the meeting.

-31-

<PAGE> 1
Exhibit 4

<TABLE>

<S> <C> <C>
[LOGO]

NUMBER SHARES

MMC

MEDICAL MANAGER CORPORATION

COMMON STOCK SEE REVERSE FOR CERTAIN DEFINITIONS

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 58461C 10 3

THIS CERTIFIES that

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE OF $.01 PER SHARE OF

MEDICAL MANAGER CORPORATION

(hereinafter called the "Corporation") transferable on the books of the Corporation by the holder in person or by his duly
authorized attorney, upon the surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby
are issued and shall be held subject to the provisions of the Certificate of Incorporation and the By-Laws of the Corporation and
any amendments thereto (copies of which are on file with the Transfer Agent), to all of which the holder by acceptance hereof
assents.
This Certificate is not valid until countersigned by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated:

/s/ Ricardo A. Salas [SEAL] /s/ John Kang

SECRETARY PRESIDENT

</TABLE>

COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR

AUTHORIZED SIGNATURE

<PAGE> 2
MEDICAL MANAGER CORPORATION

Upon written request of the recordholder of this Certificate to the
Corporation at its principal place of business or registered office, a full
statement of the powers, designations, preferences, and relative,
participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations, or restrictions of such
preferences and/or rights will be furnished without charge.

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>

<S> <C>

TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ........... Custodian ...........
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act .............................
tenants in common (State)

Additional abbreviations may also be used though not in the above list.

</TABLE>

For value received, ______________________, hereby sell, assign and transfer
unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

- -------------------------------------
| |
| |
- -------------------------------------

- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
shares
- ------------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
- ----------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated
--------------------------

-----------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THIS
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed:

By
---------------------------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.

<PAGE> 1
Exhibit 5

[LETTERHEAD OF MORGAN, LEWIS & BOCKIUS LLP]

November 19, 1996

Medical Manager Corporation
3001 North Rocky Point Drive - Suite 100
Tampa, Florida 33607

Re: Issuance of Shares Pursuant to
Registration Statement on Form S-1

Ladies and Gentlemen:

We have acted as counsel to Medical Manager Corporation, a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), of a Registration Statement on Form S-1 (the "Registration
Statement") relating to the public offering by the Company of an aggregate of
5,750,000 shares (including 750,000 shares subject to an over-allotment option
granted by the Company to the underwriters) (collectively the "Shares") of the
Company's Common Stock, par value $.01 per share.

In so acting, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of the Certificate of Incorporation
of the Company, the By-Laws of the Company and such other documents, records,
certificates and other instruments as in our judgment are necessary or
appropriate for purposes of this opinion.

Based on the foregoing, we are of the opinion that the Shares have
been duly authorized by the Company and, when issued and paid for as
contemplated by the Registration Statement, will be duly and validly issued and
fully paid and non-assessable.

We render this opinion as members of the Bar of the State of New York
and express no opinion as to any law other than the General Corporation Law of
the State of Delaware.
<PAGE> 2

Medical Manager Corporation
November 19, 1996
Page 2

We consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement. In giving this consent, we do not
admit that we are acting within the category of persons whose consent is
required under Section 7 of the Act.

Very truly yours,

/s/ MORGAN, LEWIS & BOCKIUS LLP

<PAGE> 1
Exhibit 10.10

COMMERCIAL LEASE

THIS LEASE AGREEMENT, made and entered into this 12th day of March 1996,
between PPI HOLDING COMPANY, INC., a Florida corporation, hereinafter referred
to as the Lessor, and PERSONALIZED PROGRAMMING, INC., a Florida corporation,
hereinafter referred to as the Lessee.

WITNESSETH:

The Lessor hereby lets to the Lessee, and the Lessee hereby leases from
the Lessor, real property located in Alachua County, Florida, hereinafter
referred to as the "premises", more particularly described in Exhibit A
attached hereto and made part hereof, subject to the terms and provisions
hereinafter set forth.

1. Term. The term of this Lease shall be three (3) years, commencing
on April 1, 1996, and ending on March 31, 1999, both dates inclusive, unless
sooner terminated or extended as herein provided.

2. Rent. The Lessee shall pay to the Lessor the annual rent of Three
Hundred Twenty Thousand Two Hundred Eighty and 00/100 Dollars ($320,280.00)
(based on $10.00 per square foot, i.e., 32,028 square feet x $10.00 =
$320,280.00) as follows: Lessee shall pay to Lessor equal monthly installments
of Twenty-six Thousand Six Hundred Ninety and 00/100 Dollars ($26,690.00) each,
plus applicable state sales tax, in advance and without demand beginning April
1, 1996 and continuing through March 31, 1999. The rent shall be payable at
such place as the Lessor shall designate in writing.

1
<PAGE> 2
3. Net Rent. It is the intention of the Lessor and the Lessee that
the rent herein specified shall be net to the Lessor throughout the term of
this Lease, except as may be otherwise specifically provided in this Lease.

4. Utilities. The Lessee shall pay for all utilities furnished to the
premises, such as gas, electricity, and water and sewer service, all of which
shall be separately metered, and shall make all necessary utilities deposits.
Lessor shall not be responsible or liable for any interruption or failure of
utility service.

5. Insurance on Premises. Lessee shall be responsible for obtaining
fire and casualty insurance on the Premises in an amount not less than eighty
(80) percent of its full insurable value. Lessor shall be named as an insured
in such policies, and shall deliver appropriate evidence to Lessor annually as
proof that adequate insurance is in force. The policy shall require
notification of Lessor in the event of termination of the policy.

6. Licenses. Lessee shall be responsible for obtaining and
maintaining at its expense all licenses necessary and required for the
operation of the business or businesses conducted by the Lessee on the
premises.

7. Permitted Use and Compliance with Law. The Lessee shall not use
or permit the premises to be used for any illegal or improper purpose or permit
any disturbance, noise or annoyance whatsoever detrimental to the premises or
to adjoining properties or their occupants. The Lessee shall, at its own
expense, comply with all requirements of law and with all ordinances,
regulations and orders of any State, County, or other public authority
affecting the premises.

8. Lessor's Non-Liability and Lessee's Indemnification for Personal
Injury. Lessor shall not be liable to Lessee or its agents or employees or any
other person in the Leased

<PAGE> 3
Premises by Lessee's consent, invitation or license, express or implied, for
any damage to property or injury to or death of any person sustained by reason
of the condition of the Leased Premises or any part thereof, or arising from
the bursting or leaking of any water, gas, sewer or steam pipes, or due to any
act or neglect of a co-tenant or other occupant of the Premises or other person
therein, or due to any casualty or accident in or about the Premises,
irrespective of the cause of such damage or injury and whether or not caused, or
alleged to be caused, in whole or in part, by the joint or several negligence,
breach of contract, breach of warranty, or other breach of duty on the part of
Lessor, its agents or employees. No such occurrence shall be deemed to be an
actual or constructive eviction from the Leased Premises or result in an
abatement of rental. Lessee agrees to indemnify, hold harmless, and defend
Lessor from and against any losses, liabilities, damages, deficiencies,
demands, claims, and judgments, arising out of or related to any casualty or
accident as described above.

9. Right of Entry; Safeguarding. The Lessor and its representatives
may enter the leased property at any reasonable time for the purpose of
inspecting and exhibiting the premises, or to make repairs Lessor deems
appropriate.

10. Assignment and Subletting. The Lessee shall not assign this Lease
nor sublet or suffer or permit the premises or any part thereof to be used by
others without the prior written consent of the Lessor in each instance. Any
consent by the Lessor to any act of assignment or subletting shall be held to
apply only to the specific transaction thereby authorized. In the event of
default by the Lessee, the Lessor is hereby authorized to collect rents from
any undertenant or occupant who may be in possession of said premises or any
portion thereof, and, in such event, the Lessor shall apply the net amount so
received by it to the rent herein reserved.

3
<PAGE> 4
11. Surrender of Premises. On the last day of the term of this Lease
or on other termination thereof, the Lessee shall peaceably and quietly leave,
surrender, and yield up to the Lessor all and singular and demised premises, in
good order and repair, reasonable wear and tear and unavoidable casualty
excepted, together with all alterations, additions and improvements.

12. Alterations and Additions. Subject to the provisions set forth
below, and so long as Lessee is not in default, Lessee may at Lessee's expense
make non-structural alterations and additions to the premises (such as trade
fixtures, additional floor and wall coverings, additional lighting fixtures,
etc.) as Lessee deems necessary or desirable for the conduct of Lessee's
business, if and to the extent that they do not impair structural soundness,
and do not diminish the value of the premises, and are made in a good and
first-class workmanlike manner under skilled and competent supervision.

13. Permits. In making any alteration or addition, Lessee shall
obtain all applicable governmental permits and authorizations, and shall comply
fully with all applicable laws, ordinances, and governmental regulations, and
with all applicable requirements of insurers issuing insurance with respect to
the premises, and shall see that any additional hazard relating to construction
of the alteration or addition is fully covered by comprehensive liability
insurance for the protection of Lessor.

14. Attorneys' Fees. If at any time it shall be necessary for either
party to institute suit, or to retain an attorney to enforce the provisions of
this Lease, then the prevailing party shall be entitled to collect from the
other party all reasonable attorneys' fees, expenses, and other charges
incurred in so doing.

4
<PAGE> 5
15. Option to Renew. At the expiration of the original term specified
above, if this Lease shall then be in full force and effect and the Lessee
shall have fully performed all of its terms and conditions, the Lessee shall
have the option to renew this Lease for two (2) additional periods of one (1)
year each (the "renewal terms"), such option to be exercised in writing by the
Lessee not later than sixty (60) days prior to the expiration of the original
term or of the first renewal term. The annual rent for each renewal term shall
be an amount equal to the base annual rental for the preceding year as
increased by the ratio which the Consumer Price Index for the last preceding
calendar year bears to the Consumer Price Index for the year 1996. "Consumer
Price Index" is defined as the index designated "Consumer Price Index - U.S.
average on all items and commodity groups with 1967 equal to 100", as published
by the Bureau of Labor Statistics of the United States Department of Labor. The
additional annual rental in excess of the base annual rental due for each
renewal term by application of this formula shall be payable in equal monthly
installments along with one-twelfth (1/12th) of the base annual rental, said
additional payments to commence retroactively the first day of the lease year
in question, provided that Lessor shall provide Lessee with a statement of the
additional annual amount due and the method of computation of same. It is the
intention of this provision that the annual rental to be paid for each lease
year shall be adjusted upward so that the rental paid for each lease year shall
produce the same income compared to the cost of living which the base annual
rental would have produced in the year of 1996. If said Consumer Price Index
shall in the meantime be abolished, the rental shall be increased by the method
of computing the purchasing value of the dollar which may be established and
published as a substitute for the said Consumer Price Index, so that the
nearest equivalent basis

5
<PAGE> 6
for determining the cost of living shall be used for establishing the annual
rental to be paid during each subsequent lease year.

16. Notices. Any notice which either party to this Lease is required
to send to the other under any statutes, decision, or rule of law, or under any
provision of this Lease, or which either desires to send or give to the other,
shall be in writing any may be served personally or be enclosed in a sealed,
post-paid envelope and be sent by registered or certified United States mail,
to the last known address of the party to whom the notice is being given.
Such notice shall be deemed given as of the date delivered, if served
personally, or as of the date when deposited in any post office box regularly
maintained by the United States postal service, if mailed.

17. Successors and Assigns. The terms, covenants, conditions,
provisions and agreements contained in this Lease shall in every case apply to,
be binding upon, and inure to the benefit of the parties herein and their
respective successors and assigns; it being agreed, however, that no assignment
in violation of the provisions of this Lease shall vest any right or title in
or to this Lease or to the leasehold estate thereby created.

18. Partial Invalidity. If any term or provision of this Lease or the
application thereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Lease or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby and such term
and provision of this Lease shall be valid and be enforced to the fullest
extent permitted by law.

19. Estoppel Letters. At any time, and from time to time, upon not
less than fifteen (15) days prior written request by either party, the
receiving party shall execute, acknowledge,

6
<PAGE> 7
and deliver to the requesting party a statement in writing certifying whether
this Lease is unmodified and in full force and effect (or if there have been
modifications that the same is in full force and effect as modified) stating the
modifications and the dates to which the annual rent and other charges have
been paid and stating whether or not to the best knowledge of the signer of the
certificate, the requesting party is in default in performance of any other
covenants, agreements, or condition contained in this Lease and, if so,
specifying each such default of which the signer may have knowledge. It is
intended that any such statement furnished by the receiving party may be relied
upon by the requesting party or by any other person or persons having a valid
interest therein.

20. Landlord-Tenant Relationship. Nothing herein contained shall be
deemed or construed by the parties hereto, nor by any third party, as creating
the relationship of principal and agent or of partnership or of joint venture
between the parties hereto, it being understood and agreed that neither the
method of computation of rent nor any other provision contained herein, nor
any acts of the parties hereto, shall be deemed to create any relationship
between the parties hereto other than the relationship of Lessor and Lessee.

21. Cumulative Rights. The various rights, powers, options, elections
privileges and remedies of each party, whether provided for in the special
clauses or elsewhere in this Lease, or whether provided by law or equity, are
cumulative and no one of them shall be construed as being exclusive or
restrictive of any other.

22. Non-Waiver. No waiver of any covenants or condition of this Lease
by either party shall be deemed to imply or constitute a further waiver of the
same covenants or condition or any other covenants or condition of this Lease.

7
<PAGE> 8
23. Construction of Language. The terms "Lease," "Lease Agreement,"
or "Agreement" shall be inclusive of each other, also to include renewals,
extensions, or modifications of the Lease. Words of any gender used in this
Lease shall be held to include any other gender, and words in the singular shall
be held to include the plural and the plural to include the singular when the
sense requires. The paragraph headings and titles are not a part of this Lease
and shall have no effect upon the construction or interpretation of any part
hereof.

24. Entire Agreement. This Lease contains and embodies the entire
agreement of the parties hereto, and no representations, inducements, or
agreements, oral or otherwise, between the parties not contained and embodied
herein shall be of any force or effect, and that same may not be modified,
changed or terminated, in whole or in part, orally or in any other manner than
by an agreement in writing duly signed by all of the parties hereto.

IN WITNESS WHEREOF, Lessee and Lessor have caused this instrument to be
executed as of the date first above written, by their respective officers or
parties thereunto duly authorized.

WITNESSES: PERSONALIZED PROGRAMMING, INC.,
a Florida corporation

/s/ Sandra L. Plumb By: /s/ Michael A. Singer
- -------------------------------- -------------------------------

- --------------------------------
AS TO LESSEE "LESSEE"

<PAGE> 9
PPI HOLDING COMPANY, INC., a Florida
corporation

/s/ Sandra L. Plumb By: Michael A. Singer
- --------------------------------- -----------------------------------

- ---------------------------------
As to Lessor "LESSOR"

9
<PAGE> 10
DESCRIPTION

Lot 6 of "Whole Life Conservation Estates", a Planned Unit Development,
situated in Section 18, Township 8 South, Range 19 East, City of Alachua,
Alachua County, Florida, said tract of land being more particularly described
as follows:

Commence at a concrete monument at the southwest corner of said Section 18 for
a Point of Reference; thence run North 00 deg. 52 min. 29 sec. West, along the
west line of said Section 18, a distance of 1309.40 feet to a concrete
monument; thence run North 00 deg. 37 min. 51 sec. West, a distance of 18.80
feet to a concrete monument (No. I.D.) located at the southwest corner of
Woodland Oaks South Subdivision, a subdivision as per plat recorded in Plat
Book "J", page 72 of the Public Records of Alachua County, Florida; thence run
North 00 deg. 52 min. 52 sec. West, along the west line of said subdivision and
the west line of Woodland Oaks Subdivision, a subdivision as per plat recorded
in Plat Book "J", page 71 of said Public Records, a distance of 1386.22 feet to
a concrete monument (PLS 1772) found at the northwest corner of said Woodland
Oaks Subdivision; thence run North 89 deg. 20 min. 48 sec. East, along the
northerly line of said subdivision, a distance of 1165.89 feet to an
intersection of said northerly subdivision line with the easterly right-of-way
line of Woodland Drive (an 80 foot, non-dedicated right-of-way); thence run
North 00 deg. 53 min. 33 sec. West, along said easterly right-of-way line, a
distance of 2124.30 feet to an intersection of said easterly right-of-way line
with the southerly right-of-way line of County Road N.W. 22 (an 80 foot
right-of-way also known as N.W. 156th Avenue); thence run North 79 deg. 05 min.
20 sec. East, along said southerly right-of-way line a distance of 478.99 feet
to a found iron pipe (PLS 3456); thence run South 02 deg. 20 min. 55 sec. West,
a distance of 828.25 feet to a found concrete monument (PLS 3456); thence run
North 89 deg. 06 min. 17 sec. East, a distance of 671.55 feet to a found
concrete monument (PLS 3456); thence run North 00 deg. 54 min. 18 sec. West, a
distance of 986.29 feet to a found concrete monument (PLS 3456) located on the
aforementioned southerly right-of-way line of County Road NW-22; thence run
North 65 deg. 00 min. 43 sec. East, along the southerly line, a distance of
229.40 feet to a rebar and cap (PLS 3973) found at the beginning of a curve
concave to the southeast, said curve having a radius of 914.95 feet, a total
central angle of 24 deg. 23 min. 43 sec. and a chord bearing and distance of
North 77 deg. 12 min. 45 sec. East, 386.63 feet, respectively; thence run
northeasterly along said curve and said right-of-way line, an arc distance of
389.56 feet to a found rebar and cap (PLS 3973); thence run North 89 deg. 24
min. 26 sec. East along said southerly right-of-way line, a distance of 528.95
feet to a found concrete monument (No. I.D.); thence run South 00 deg. 33 min.
14 sec. East, a distance of 1249.39 feet to a set concrete monument (LB 4665)
located at the POINT OF BEGINNING; thence run North 89 deg. 08 min. 33 sec.
East, a distance of 1048.01 feet to a set concrete monument (LB 4665); thence
run South 00 deg. 26 min.
<PAGE> 11
ADDENDUM TO COMMERCIAL LEASE

THIS ADDENDUM, made and entered into as of March 12, 1996, supplements and
amends the Commercial Lease between PPI HOLDING COMPANY, INC., ("Lessor") and
PERSONALIZED PROGRAMMING, INC. ("Lessee"), dated March 12, 1996 (hereinafter
the "Original Agreement").

NOW THEREFORE, Lessor and Lessee further agree as follows:

1. This Addendum modifies and amends the Original Agreement, revoking portions
in whole and in part and creating additional covenants. Wherever
discrepancies, modifications or revocations appear, the agreements contained in
this Addendum shall prevail, any language in the Original Agreement to the
contrary notwithstanding. In all other respects the terms and conditions set
forth in the Original Agreement shall continue in full force and effect.

2. Maintenance and Repairs.

(a) The Lessee shall pay for all sewage disposal services, water, gas,
heat, electric current and other utilities furnished it or consumed
by it, in or upon the leased premises at rates set by local public
utility as approved by the public authority having jurisdiction, and
will keep the interior of the leased premises and appurtenances,
including without limitation fixtures and appliances, as well as the
landscape, road, driveway, and parking lot, in good order and repair,
and in a clean, safe and healthy condition (exception, however, all
repairs made necessary by reason of fire or other unavoidable
casualty) at its own cost and expense. Lessor warrants that water,
sewer and electric power are available at the leased premises at the
beginning of Lessee's obligation to pay rent hereunder.

(b) Lessor shall maintain the roof, exterior walls and structural
components of the buildings upon the leased premises in good condition.

IN WITNESS WHEREOF, the parties hereto have executed this Addendum by a duly
authorized representative.

PPI Holding Company, Inc. Personalized Programming, Inc.

By: /s/ Michael A. Singer By: /s/ Michael A. Singer
-------------------------------- -------------------------------
Michael A. Singer, President Michael A. Singer, President
<PAGE> 12
Exhibit 10.10 (cont'd)

This First Amendment to Lease (this "Amendment") dated as of November
__, 1996, is made by and between PPI Holding Company, Inc., a Florida
corporation ("Lessor"), and Personalized Programming, Inc., a Florida
Corporation ("Lessee").

W I T N E S S E T H:

WHEREAS, Lessor and Lessee have heretofore entered into that certain
Commercial Lease dated as of March 12, 1996, which lease was supplemented by
that certain Addendum to Commercial Lease by and between Lessor and Lessee
dated as of March 12, 1996 (collectively, the "Lease"). Capitalized terms used
herein and not otherwise defined, shall have the meanings set forth in the
Lease; and

WHEREAS, Lessor and Lessee wish to amend the Lease as hereinafter
provided.

NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lessor and Lessee hereby agree that the Lease shall be amended as
follows:

1. The first sentence of Paragraph 15 is amended by deleting it in
its entirety and replacing it with the following sentence: "At the expiration
of the original term specified above, if this Lease shall then be in full force
and effect and the Lessor and Lessee shall have fully performed all of their
respective terms and conditions, the Lessor and the Lessee shall have the
option to renew this Lease by mutual consent for two (2) additional periods of
one (1) year each (the "renewal terms"), such option to be exercised in writing
by both the Lessor and the Lessee not later than sixty (60) days prior to the
expiration of the original term or of the first renewal term."

2. This Amendment may be executed in several counterparts, each of
which when executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute but one and the same Amendment.

3. This Amendment and the Lease shall in all respects be governed
by, and construed in accordance with, the laws of the State of Florida,
including all matters of construction, validity and performance.

4. This Amendment may not be modified orally, but only by a
writing executed by both the Lessor and the Lessee.

5. The covenants, conditions and agreements contained in this
Amendment shall bind and insure to the benefit of the Lessor and the Lessee and
their respective legal representatives, successors and assigns, and shall not
be enforceable by or inure to the benefit of any third party.

<PAGE> 13
6. Except as provided herein, all provisions, terms and conditions
of the Lease shall remain in full force and effect. As amended hereby, the
Lease is ratified and confirmed in all respects.

2
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.

PPI Holding Company, Inc.

By: /s/ Michael A. Singer
---------------------------------
Name: Michael A. Singer
Title: President

Personalized Programming, Inc.

By: /s/ Michael A. Singer
--------------------------------
Name: Michael A. Singer
Title: President

<PAGE> 1
EXHIBIT 10.13

MANAGEMENT SERVICES AGREEMENT

between

National Medical Systems, Inc.

and

MEDIX, Inc.
<PAGE> 2
MANAGEMENT SERVICES AGREEMENT

THIS MANAGEMENT SERVICES AGREEMENT dated effective as of September 1,
1996, is entered into between National Medical Systems, Inc., a Florida
corporation (the "Manager"), and MEDIX, Inc., a New Jersey corporation
("MEDIX").

W I T N E S S E T H:

WHEREAS, MEDIX is engaged in the business of developing, marketing,
installing, maintaining and servicing the "Medical Manager" office practice
management system under the private label "The System by MEDIX"(the "Business");
and

WHEREAS, the Manager, MEDIX and Blue Cross and Blue Shield of New
Jersey, Inc., a New Jersey health service corporation and the indirect parent of
MEDIX ("BCBSNJ"), are entering into an Option Agreement of even date herewith
(the "Option Agreement"), pursuant to which the Manager will have the right,
subject to the terms and conditions set forth in the Option Agreement, to
purchase certain assets of MEDIX used in connection with the Business and to
assume certain related liabilities; and

WHEREAS, MEDIX desires to engage the Manager to manage the Business
pending consummation of the transactions contemplated by the Option Agreement
and the Manager is willing to be so engaged to manage the Business, in
accordance with the terms and conditions set forth in this Agreement;

NOW , THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained in this Agreement, and in order to permit the
Manager to take over the management of the Business, it is hereby agreed as
follows:

1. Definitions.

a. For purposes of this Agreement, the following terms shall
have the meanings set forth below:

"Affiliate" of any Person (the "first person") shall mean any Person,
directly or indirectly, controlling, controlled by or under common control with
the first person. As used in the definition of "Affiliate", the term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person,
<PAGE> 3
whether through ownership of voting securities, by contract or otherwise.
Neither MEDIX nor the Manager is an Affiliate of the other.

"Agreement" shall mean this Management Services Agreement, including
all Schedules hereto, as it may be amended from time to time in accordance with
its terms.

"Arbitrator" shall mean any natural person who is a resident of the
United States and who is not an employee or Affiliate of any of the parties
hereto or of any Person which is an Affiliate of any such party. In the
selection and appointment of Arbitrators the parties each agree to act in good
faith to name persons with experience and expertise in the subject matter
involved.

"Effective Date" shall mean the effective date of this Agreement, set
forth in the introductory paragraph of this Agreement as the date as of which
this Agreement is entered into by the Manager and MEDIX.

"GAAP" shall mean U.S. generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, which are applicable
to the circumstances as of the date of determination. For purposes of this
Agreement, when GAAP permits the use of alternative accounting methods, the
choice of methods acceptable under GAAP shall be applied in a manner consistent
with the historic practices used by the Person to which the term applies.

"Include" and "including" shall mean include or including, as the case
may be, without any implied exclusion of other items.

"Manager" shall have the meaning given to it in the preamble.

"MEDIX" shall have the meaning given to it in the preamble.

"Person" shall mean any natural person, corporation, partnership or
other business structure recognized as a separate legal entity.

"Term" shall mean the period commencing on the Effective Date and
ending on the Termination Date.

"Termination Date" means the date on which this Agreement is terminated
in accordance with its terms.

2
<PAGE> 4
2. Appointment. MEDIX hereby appoints and engages the Manager as
MEDIX's sole and exclusive business manager of the Business, and the Manager
accepts such appointment and engagement on and subject to the terms and
conditions set forth in this Agreement. Subject to the limitations and
conditions set forth in this Agreement, the Manager, in such capacity, shall
have the authority and responsibility to direct, supervise and manage the
business operations of the Business on behalf of and for the account of MEDIX
and to take all actions related thereto.

3. Facilities Provided by MEDIX. MEDIX shall obtain and maintain such
facilities and shall provide such equipment and supplies as are reasonably
necessary for the proper and efficient operation of the Business, consistent
with past practice; provided, however, that, among certain other items, any
rental expense and related costs incurred by MEDIX for the office space being
utilized as of the date of this Agreement (and which will continue to be made
available for such use until December 31, 1996) shall not be deemed to be
expenses for purposes of calculating any payments required to be made under
Section 12 except as set forth in and to the extent permitted by Schedule I to
this Agreement. To the extent the Manager determines during the Term that any
additional or different facilities and/or equipment are reasonably necessary for
such purpose, whether or not consistent with past practice, the Manager shall
advise MEDIX in writing of the need for same, whereupon, unless objected to in
writing by MEDIX, MEDIX shall obtain and maintain such additional or different
facilities and/or equipment.

4. Manager's Duties. The Manager shall perform the following duties:
supervise and direct the general operations of the Business; operate the
Business reasonably efficiently and with proper economy; develop policies with
respect to the implementation of new features to the extent that the financial
obligations and resources of MEDIX permit; develop policies with respect to
marketing for the purpose of creating the greatest possible net income for the
Business; and stimulate the general business of the Business. In addition, the
Manager shall: (i) at the expense of MEDIX, arrange for the rental of
facilities, the purchase or leasing of equipment and the purchase of supplies;
at the expense of MEDIX, cause furniture, furnishings and equipment to be kept
in good repair; and, at the expense of MEDIX, arrange for necessary
replacements, improvements and changes to furniture, furnishings and equipment,
in each case as and to the extent contemplated by Section 3; (ii) cause to be
employed by and at the expense of MEDIX such personnel for the Business as are
reasonably determined by the Manager to be necessary for the conduct of the
Business, as and to the extent contemplated by Section 5; (iii) supervise and
arrange such billing and collection services as are reasonably determined by the
Manager to be necessary for the collection by MEDIX of income and other amounts
due in connection with the Business; (iv) supervise and arrange for the payment
by MEDIX of all expenses and other amounts payable by MEDIX in connection with
the Business; (v) supervise the placing of insurance at the expense of MEDIX on
the Business and its assets, as and to the extent contemplated by
Section 13; and (vi)

3
<PAGE> 5
perform such other acts as may be necessary and desirable in connection with the
satisfaction of its duties as hereinabove set forth. Anything to the contrary
set forth in this Section 4 notwithstanding, the Manager will not, without
obtaining the prior written consent of MEDIX (i) arrange for any additional
investments in inventory by MEDIX which results in total inventory at any time
in excess of $317,500, other than replacements for new sales, or (ii) arrange
for capital expenditures or commitments for capital expenditures for the account
of or otherwise binding on MEDIX in excess of $20,000 in the aggregate.

5. Employees. All personnel employed to perform services at the MEDIX
facilities, other than employees of the Manager who may visit the facilities of
MEDIX from time to time to provide assistance and other than employees of the
Manager who the Manager may, in its sole discretion, locate at MEDIX's
facilities, shall be the employees or independent contractors of MEDIX but shall
be supervised and/or directed by the Manager. The Manager shall make all hiring
and termination decisions, establish and pay (from MEDIX's funds) all wages,
salaries and compensation, determine staffing levels, individual work hours,
personnel policies and employee benefit programs for all of the MEDIX personnel
engaged in providing services for the Business; provided, however that all such
hiring and termination decisions and all such decisions regarding wages,
salaries and compensation, staffing levels, individual work hours, personnel
policies and employee benefits for MEDIX personnel engaged in providing services
for the Business shall be made in accordance with MEDIX policies, procedures and
programs in effect from time to time.

6. [Intentionally left blank].

7. [Intentionally left blank].

8. [Intentionally left blank].

9. [Intentionally left blank].

10. Bookkeeping and Accounting Services. The Manager shall perform all
bookkeeping and accounting services required for the operation of the Business,
including the maintenance, custody and supervision of the Business's business
records, ledgers and reports; the establishment, administration and
implementation of accounting procedures, controls and systems; the preparation
of the financial and management reports referenced in Section 11; implementation
and management of computer-based management information systems; and
implementation and management of records retrieval and confidentiality systems.

11. Financial and Management Reports. The Manager shall prepare and
furnish to MEDIX the following reports:

4
<PAGE> 6
a. Monthly and annual balance sheets and income statements for
MEDIX. All such statements shall be prepared on an accrual basis of accounting
in accordance with GAAP, with such exceptions thereto as are determined by the
Manager to be advisable; and

b. Any additional financial and management reports and
information that the Manager determines would assist MEDIX in evaluating its
productivity and services or are otherwise reasonably requested by MEDIX, but
then only to the extent such reports or information are being prepared regularly
by MEDIX in connection with its operation of the Business immediately prior to
the date of this Agreement.

The tax returns of MEDIX for any period shall be the responsibility of MEDIX,
although the Manager will reasonably cooperate with the person preparing such
returns.

12. Manager's Compensation. The Manager shall be compensated as
provided in this Section 12. In the event that the Adjusted Monthly Income
Statement (as hereinafter defined) for any month during the Term indicates a net
loss for the Business with respect to such month, then, subject to the provisos
contained in Sections 3 and 5, such income statement shall be accompanied by a
payment from the Manager to MEDIX of an amount equal to the amount of such loss.
In the event that the Adjusted Monthly Income Statement for any month during the
Term indicates net income for the Business with respect to such month, then
promptly after its receipt of such income statement, subject to the provisos
contained in the Sections 3 and 5, MEDIX shall pay to the Manager an amount
equal to the amount of such income. Except as otherwise expressly set forth in
this Agreement and particularly as otherwise contemplated by the definition of
Adjusted Monthly Income Statement set forth below in this Section , all
computations made pursuant to this Section 12 shall be made on an accrual basis
in accordance with GAAP. For these purposes, the Adjusted Monthly Income
Statement shall be the monthly income statement prepared and furnished by the
Manager pursuant to Section 11(a), but adjusted to reflect the limitations set
forth on Schedule I to this Agreement.

13. Insurance.

MEDIX shall be responsible for procuring and maintaining
insurance for the Business and shall name the Manager as an additional insured
under all such insurance. Such insurance shall include all insurance customarily
maintained by businesses similarly situated including, without limitation, the
following:

a. Comprehensive general liability insurance and fidelity
bonds (if determined by the Manager to be necessary) in amounts and with
coverages approved by the parties;

5
<PAGE> 7
b. Property insurance covering the premises, equipment and
supplies used in the conduct of the Business, in an amount and with coverages
approved by the parties; and

c. Such other insurance coverage as is determined by the
parties to be advisable.

14. [Intentionally left blank.]

15. Events of Default.

The following events shall each be a Default under this Agreement:

a. If either party fails to perform in any material respect
any material obligation required of it hereunder, and such default continues for
thirty (30) days after the giving of written notice by the non-defaulting party,
specifying the nature and extent of such default; provided, however, that if
such default is not cured within thirty (30) days, but is capable of being cured
within a reasonable period of time in excess of thirty (30) days, then a Default
shall not occur if the defaulting party commences the cure of such default
within the first 30-day period and thereafter diligently and in good faith
continues to cure such default until completion.

b. If either party (i) applies for or consents to the
appointment of a receiver, trustee or liquidator of all or a substantial part of
its assets, files a voluntary petition in bankruptcy or consents to an
involuntary petition, makes a general assignment for the benefit of its
creditors, files a petition or answer seeking reorganization or arrangement with
its creditors, or admits in writing its inability to pay its debts when due, or
(ii) suffers any order, judgment or decree to be entered by any court of
competent jurisdiction, adjudicating such party bankrupt or approving a petition
seeking its reorganization or the appointment of a receiver, trustee or
liquidator of such party or of all or a substantial part of its assets, and such
order, judgment or decree continues unstayed and in effect for ninety (90) days
after its entry, then the other party shall be entitled to terminate this
Agreement by delivering written notice of termination to such party.

16. Remedies Upon Default.

a. If MEDIX shall Default under this Agreement and such
Default is not cured by MEDIX as provided in Section 15, then at the option of
the Manager, the Manager shall be entitled to terminate this Agreement.

b. In the event that the Manager shall Default under this
Agreement and such Default shall not be cured as provided in Section 15, then at
the option of MEDIX,

6
<PAGE> 8
MEDIX shall be entitled to terminate this Agreement. If MEDIX elects to
terminate this Agreement, MEDIX shall have no further liability to the Manager
hereunder other than the liability to pay for such services rendered to MEDIX by
the Manager prior to the date of such termination.

17. Term. This Agreement shall commence on the Effective Date and,
unless earlier terminated pursuant to the terms hereof, shall continue until the
earlier of (i) December 31, 1996 and (ii) the date, if any, on which the closing
occurs under the Option Agreement. Except for termination upon Default as
described in Section 16 or termination upon expiration of the Term, this
Agreement shall not be terminated by either party for any reason whatsoever.

18. Effect of Termination. Notwithstanding any other provisions of this
Agreement, following the termination of this Agreement, this Agreement shall
remain in full force and effect with respect to events, actions, omissions or
occurrences which occurred prior to the termination of this Agreement. The
provisions of Sections 14, 19 and 21 through 25, and of this Section , shall
survive any such termination and shall not expire.

19. Indemnification.

a. MEDIX shall indemnify and hold harmless the Manager from damages for
injuries to persons or property resulting from any cause whatsoever in
connection with the operation of the Business, and at its own cost and expense,
to defend any action or proceeding against the Manager arising therefrom, except
as to circumstances where such damages are principally a result of the
negligence or malfeasance of the Manager or principally a result of the failure
of the Manager to fully and faithfully perform its duties hereunder. This
indemnification shall include, but not be limited to, all costs in defending
against the suit, attorneys' fees and any eventual settlement or judgment
amount, plus interest.

b. The Manager shall indemnify and hold harmless MEDIX from damages or
injuries to persons or property resulting from the negligence or malfeasance of
the Manager or from the failure of the Manager to fully and faithfully perform
its duties hereunder, and at its own cost and expense, to defend any action or
proceeding against MEDIX arising therefrom, except as to circumstances where
such damages are principally a result of the negligence or malfeasance of MEDIX
or principally a result of the failure of MEDIX to fully and faithfully perform
its duties hereunder. This indemnification shall include, but not be limited to,
all costs in defending against the suit, attorneys' fees and any eventual
judgment or settlement amount, plus interest.

20. Governing Law. This Agreement shall be construed, interpreted and
applied in accordance with the laws of the State of Florida applicable to
contracts entered into and wholly to be performed in Florida by Florida
residents.

7
<PAGE> 9
21. Dispute Resolution.

a. The parties desire to resolve disputes arising out of this
Agreement without litigation. Accordingly, except for action seeking temporary
restraining order or injunction related to the purposes of this Agreement, or
suit to compel compliance with this dispute resolution process, the parties
agree to use the following alternative dispute resolution procedure as their
sole remedy with respect to any controversy or claim arising out of or relating
to this Agreement or its breach.

b. At the written request of a party, each party will appoint
a knowledgeable, responsible representative to meet and negotiate in good faith
to resolve any dispute arising under this Agreement. The parties intend that
these negotiations be conducted by non-lawyer, business representatives. The
location, format, frequency, duration and conclusion of these discussions shall
be left to the discretion of the representatives. Upon agreement, the
representatives may utilize other alternative dispute resolution procedures such
as mediation to assist in the negotiations. Discussions and correspondence among
the representatives for purposes of these negotiations shall be treated as
confidential information developed for purposes of settlement, exempt from
discovery and production, which shall not be admissible in the arbitration
described below or in any lawsuit without the concurrence of all parties.
Documents identified in or provided with such communications, which are not
prepared for purposes of the negotiations, are not so exempted and may, if
otherwise admissible, be admitted in evidence in arbitration or lawsuit.

c. If the negotiations do not resolve the disputes within thirty (30)
days of the initial written request, the disputes shall be submitted to binding
arbitration by a single arbitrator pursuant to the Commercial Arbitration Rules
of the American Arbitration Association. A party may demand such arbitration in
accordance with the procedures set out in those rules. Discovery shall be
controlled by the arbitrator and shall be permitted to the extent set out in
this section. Each party may submit in writing to a party, and that party shall
so respond, to a maximum of any combination of thirty-five (none of which may
have subparts) of the following: interrogatories, demands to produce documents,
and requests for admission. Each party is also entitled to take the oral
deposition of one individual of another party. Additional discovery may be
permitted upon mutual agreement of the parties. The arbitration hearing shall
commence within sixty (60) days of the demand for arbitration. The arbitration
shall be held in Newark, New Jersey. The arbitrator shall control the scheduling
so as to process the matter expeditiously. The parties may submit written
briefs. The arbitrator shall rule on the dispute by issuing a written opinion
within thirty days after the close of the hearings. The times specified in this
section may be extended upon mutual agreement of the parties or by the
arbitrator upon a showing of good cause. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction.

8
<PAGE> 10
d. Each party shall bear its own costs of these procedures. A
party seeking discovery shall reimburse the responding party for the costs of
production of documents (to include search time and reproduction costs). The
parties shall equally split the fees of the arbitration and the arbitrator.

22. Confidential Information and Records.

a. MEDIX and the Manager agree that each will acquire certain
information and materials that are the confidential and proprietary information
of the other (the "Confidential Information"). MEDIX and the Manager each agree
not to disclose or use the Confidential Information of the other except in the
performance of this Agreement or with the prior, express, written consent of the
other. MEDIX and the Manager each agree to take all actions reasonably necessary
and satisfactory to the other to protect the confidentiality of the Confidential
Information of the other. MEDIX and the Manager each shall assume that all
information and materials exchanged are Confidential Information except that the
following shall not be considered Confidential Information:

(1) Information known to the disclosee prior to the date the
parties first contacted each other.

(2) Information in the public domain, through no act or
omission of the party to this Agreement required to keep such
information confidential.

(3) Information received from a third party with a legal or
contractual right to disclose such information.

(4) Information independently developed by the disclosee
without reference to the Confidential Information.

(5) Information disclosed without restriction pursuant to
judicial action or government regulation; provided, the party
proposing to disclose or use such Confidential Information has
notified the other party prior to such disclosure and
reasonably cooperates with the others in the event the other
party chooses to legally contest and avoid such disclosure.

b. All business records, information, software and systems of
the Manager relating to the provision of its services under this Agreement shall
remain the property of the Manager, and may be removed by the Manager from
supporting the Business upon any termination of this Agreement; provided,
however, that MEDIX shall be entitled upon reasonable written request, to access
such records and make copies or extracts thereof to the

9
<PAGE> 11
extent necessary to prosecute or defend against any tax or other liabilities
imposed on MEDIX by any governmental authority or other party.

c. Customer data in usable form and customer records shall
remain the property of MEDIX and shall be delivered by the Manager to MEDIX,
upon request, following any termination of this Agreement, other than
termination in connection with a closing under the Option Agreement.

d. Except as otherwise provided in this Agreement, the parties
shall safeguard all records maintained by them pursuant to this Agreement for a
period of time specified by the parties (no less than three years) from the date
of the last activity recorded in such records and, prior to destruction of any
such records, shall give the other party notice of such destruction and, if the
other party so elects and applicable Law so permits, shall deliver such records
to the other party in lieu of destroying them.

23. Assignment. Except for the Manager ability to assign pursuant to a
merger transaction, neither party shall have the right to assign its rights and
obligations hereunder without the prior written consent of the other party. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, and permitted successors
and assigns.

24. [Intentionally left blank].

25. Miscellaneous.

a. Amendment. This Agreement may be amended, modified or
supplemented but only in writing signed by each of the parties hereto.

b. Notices. Any notice, request, instruction or other document
to be given hereunder by a party hereto shall be in writing and shall be deemed
to have been given, (i) when received if given in person or by U.S. mail,
certified or registered mail, return receipt requested, postage prepaid, or (ii)
on the date of acknowledgment of receipt if sent by telex, facsimile or other
wire transmission or by overnight courier.

If to MEDIX, addressed as follows: MEDIX, Inc.
3 Penn Plaza East PP-16A
Newark, New Jersey 07105-2200
Attn: Michael R. McGarvey, M.D.
President and CEO

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<PAGE> 12
with a copy to: Blue Cross and Blue Shield of
New Jersey, Inc.
3 Penn Plaza East PP-16D
Newark, New Jersey 07105-2200
Attn: Susan Scholle Conner, Esq.
General Counsel

If to the Manager, addressed as follows: National Medical Systems, Inc.
3001 North Rocky Point Drive
Suite 100
Tampa, Florida 33607
Attn: John Kang, President

with a copy to: Trenam, Kemker, Scharf, Barkin,
Frye, O'Neill & Mullis, P.A.
P. O. Box 1102
Tampa, Florida 33601
Attn: Gary I. Teblum

or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.

c. Waivers. The failure of a party hereto at any time or times
to require performance of any provision hereof shall in no manner affect its
right at a later time to enforce the same. No waiver by a party of any condition
or of any breach of any term contained in this Agreement shall be effective
unless in writing, and no waiver in any one or more instances shall be deemed to
be a further or continuing waiver of any such condition or breach in other
instances or a waiver of any other condition or breach of any other term.

d. Counterparts. This Agreement may be executed simultaneously
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

e. Headings. The headings preceding the text of Sections of
this Agreement are for convenience only and shall not be deemed part of this
Agreement.

f. Further Assurances. Each party will, at the reasonable
request of any other party hereto, execute and deliver to such other party all
such further instruments,

11
<PAGE> 13
assignments, assurances and other documents, and take such actions as such other
party may reasonably request in connection with the carrying out of this
Agreement.

g. Remedies Cumulative. No remedy set forth in this Agreement
or otherwise conferred upon or reserved to any party shall be considered
exclusive of any other remedy available to any party, but the same shall be
distinct, separate and cumulative and may be exercised from time to time as
often as occasion may arise or as may be deemed expedient.

h. Construction. The language in all parts of this Agreement
shall be construed, in all cases, according to its fair meaning. The parties
acknowledge that each party and its counsel have reviewed and revised this
Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.

i. Authorized Persons. Whenever any consent, approval or
determination of a party is required pursuant to this Agreement, such consent,
approval or determination shall be rendered on behalf of the party by the person
or persons duly authorized to do so, which the other party shall be justified in
assuming means any officer of the party rendering such consent, approval or
determination, or such party's board of directors.

j. Severability. If any provision of this Agreement is or
becomes invalid. illegal or unenforceable in any respect, the validity, legally
and enforceability of the remaining provisions contained herein shall not be
affected thereby.

k. Entire Understanding. This Agreement, the Option Agreement
and the other agreements between the parties expressly contemplated hereby and
thereby set forth the entire agreement and understanding of the parties hereto
in respect to the transactions contemplated hereby and thereby and supersede all
prior agreements, arrangements and understandings relating to the subject matter
hereof and thereof and is not intended to confer upon any other person any
rights or remedies hereunder or thereunder. There have been no representations
or statements, oral or written, that have been relied on by any party hereto,
except those expressly set forth in this Agreement, the Option Agreement and
such other agreements.

l. Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of both parties and their respective legal
representatives, successors and permitted assigns.

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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

NATIONAL MEDICAL SYSTEMS, INC.

By: Wayne Burks
---------------------------------
Title: Chief Financial Officer
------------------------------

MEDIX, INC.

By: Michael R. McGarvey
------------------------------
Title: President and Chief Executive Officer
------------------------------

13
<PAGE> 15
OPTION AGREEMENT

This OPTION AGREEMENT is executed effective as of the 1st day of
September, 1996, by and between MEDIX, INC., a New Jersey corporation
("Seller"), BLUE CROSS AND BLUE SHIELD OF NEW JERSEY, INC., a New Jersey health
service corporation and the indirect parent of Seller ("BCBSNJ"), and NATIONAL
MEDICAL SYSTEMS, INC., a Florida corporation ("Buyer").

WHEREAS, Seller is the owner and operator of a business engaged in the
development, marketing, installation and servicing of the "Medical Manager"
office practice management system under the private label "The System by MEDIX"
(the "Business"); and

WHEREAS, Seller desires to grant and Buyer desires to acquire an option
to purchase certain of the assets used and useful in the conduct and operation
of the Business on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the above and of the mutual
promises and covenants contained herein, and other good and valuable
consideration, the parties, intending to be legally bound, agree as follows:

SECTION 1. OPTION TO PURCHASE ASSETS

a. In consideration of $100 and other good and valuable
consideration, the sufficiency of which is hereby acknowledged by Seller, Seller
hereby sells and grants to Buyer an exclusive option (the "Option") to purchase
all of the operating assets used by Seller in connection with the Business,
including but not limited to the distribution rights to a private label version
of The Medical Manager with fully paid up perpetual rights to market it under
the name "The System by
<PAGE> 16
MEDIX", customer lists, accounts receivable, service contracts, plant, property
and equipment, service department tools, spare parts, inventory, rights to
software programs and documentation including conversion and customized
programs, printed forms, signs, marketing material, rights to existing telephone
numbers, cash (after reflecting all outstanding uncleared items) in the sum of
$80,000 plus the amount of all deposits from customers/clients and/or others,
any other rights arising under deposits from customers/clients and/or others,
patents, patents pending, trade secrets, copyrights, trade names, trademarks,
logos, advertising work, contract rights, drawings, production computer and
related software and documentation, licenses, inventions, processes, books,
records, goodwill and other proprietary rights or tangible or intangible assets
used in connection with the Business (collectively, the "Business Assets"),
certain of which are identified in Exhibit 1.1(a), but excluding assets
identified in Exhibit 1.1(b) (the "Excluded Assets"), subject to the terms and
conditions set forth herein.

1.2 The purchase price for the Business Assets to be acquired
upon exercise, if any, of the Option (the "Purchase Price") shall be Three
Million, Two Hundred Thousand Dollars ($3,200,000).

1.3 The Option granted hereunder shall expire upon termination
of that certain Management Services Agreement of even date herewith (the
"Services Agreement") between Seller and Buyer. Subject to the preceding
sentence, Buyer may exercise the Option at any time on or after the date hereof
by delivering written notice of such exercise (the "Notice of Exercise") to
Buyer as provided in Section 8(e).

1.4 In the event that the Option is exercised as herein
provided, the parties shall, at a time and on a date on or prior to December 31,
1996 specified by Buyer in the Notice of Exercise

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<PAGE> 17
(not less than fifteen (15) nor more than twenty (20) days after the date of the
Notice of Exercise) (the "Closing Date"), take the actions hereinafter specified
to effect the sale by Seller of the Business Assets to Buyer (the "Closing"),
provided, (i) in the case of Buyer, that the conditions precedent to Buyer's
obligations set forth in Schedule 1.4(a) have been satisfied or waived on or
prior to the Closing Date and (ii) in the case of Seller, that the conditions
precedent to Seller's obligations set forth in Schedule 1.4(b) have been
satisfied on or prior to the Closing Date.

1.5 The Closing shall be held at the offices of Trenam,
Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, 101 East Kennedy Boulevard,
Tampa, Florida, or at such other place as the parties may agree.

1.6 At the Closing, Seller shall sell, convey, transfer and
deliver the Business Assets to Buyer, accompanied by such bills of sale,
instruments of assignment and other documents as may be necessary to evidence or
give effect to such sale, conveyance, transfer and delivery.

1.7 Subject to Section 2.1, Buyer shall pay to Seller at the
Closing, as partial consideration for the sale, conveyance, transfer and
delivery of the Business Assets, the Purchase Price. At the Closing, as
additional consideration for the sale, conveyance, transfer and delivery of the
Business Assets, Buyer shall assume and become obligated for, commencing and
effective from the Closing Date, the Assumed Liabilities, but shall not and does
not assume any Excluded Liabilities. The Excluded Liabilities shall remain the
sole obligation of Seller. For purposes of this Agreement, the term "Assumed
Liabilities" shall mean only (A) liabilities arising under assigned support and
maintenance agreements as then in effect, other than liabilities (i) existing as
of the Closing Date under such agreements as a result of actions taken or
omitted to be taken by MEDIX in the performance of such agreements (other than
the liability to provide support and maintenance for up

<PAGE> 18

to 12 months from the date hereof to Rahway Podiatry Group or Westway Podiatry
Group for no additional payment by Rahway Podiatry Group or Westway Podiatry
Group), or (ii) arising or that may arise under such agreements based on actions
taken or events that occurred on or prior to the date of this Agreement, and (B)
customer deposits, and the term "Excluded Liabilities" shall mean all
liabilities and obligations of Seller other than the Assumed Liabilities.

1.8 Buyer and Seller agree that the Purchase Price shall be
allocated among the Business Assets in such manner as the parties shall agree.
Neither party will take a position contrary to the manner so agreed for state or
federal income tax purposes, except to the extent required by Section 1060 of
the Internal Revenue Code of 1986, as amended.

SECTION 2. DEPOSIT

a. Upon the execution of this Agreement, Buyer shall deliver
to Seller $500,000 as a deposit towards the Purchase Price under the Option (the
"Deposit"), and the Deposit will continue to be held by Seller in accordance
with the provisions of this Section 2. Following exercise of the Option, and at
the Closing contemplated by and in accordance with the terms and conditions of
this Agreement, Seller shall be obligated to credit the amount of the Deposit
towards payment of the Purchase Price.

b. In the event that the Option terminates without Buyer
having exercised the Option or that Buyer, having exercised the Option, fails to
consummate the Closing as contemplated by Section 1.4, and provided that (i) the
reason that the Option has terminated is other than as the result of a
termination of the Services Agreement by Buyer following a Default thereunder by
Seller and (ii) all of the conditions precedent to Buyer's obligations set forth
in Schedule 1.4(a) are able to

4
<PAGE> 19
be satisfied within fifteen (15) days of such Option termination or on the
Closing Date, as the case may be (in each case, a "Termination Without Cause"),
then Seller shall be entitled to retain the Deposit, together with the
Additional Liquidated Damages Payment provided for in Section 3 hereof, to
compensate Seller for any and all damages arising by reason of Buyer's failure
to exercise the Option or consummate the Closing, as the case may be, it being
impossible to ascertain or accurately estimate the entire or exact cost, damage
or injury which Seller may have sustained by reason of such failure to exercise.
Such sum is agreed upon as liquidated damages for failure to exercise the Option
or consummate the Closing, as the case may be, and not as a penalty. The
retention of the Deposit and the Additional Liquidated Damages Payment shall
fully discharge all obligations of Buyer to Seller under this Agreement, at law,
at equity, or otherwise; and, Buyer shall have no further obligations of any
kind whatsoever to Seller.

c. In the event that the Option terminates or that Buyer,
having exercised the Option, fails to consummate the Closing as contemplated by
Section 1.4, in each case, other than under circumstances constituting a
Termination Without Cause, then Seller shall immediately return the Deposit to
Buyer.

SECTION 3. ADDITIONAL LIQUIDATED DAMAGES PAYMENT

In the event that the Option terminates or that Buyer, having exercised
the Option, fails to consummate the Closing as contemplated by Section 1.4, in
each case, under circumstances constituting a Termination Without Cause, then
Buyer shall pay to Seller and Seller shall be entitled to receive from Buyer, in
addition to the Deposit, an additional payment in the amount of $460,000 (the
"Additional Liquidated Damages Payment").

5
<PAGE> 20
SECTION 4. SPECIFIC PERFORMANCE

The parties agree that the Business Assets constitute unique
assets not readily available on the open market. For this reason, Seller
acknowledges that specific performance is an appropriate remedy for Buyer in the
event this Agreement is breached. The parties agree that the rights afforded by
the preceding sentence shall be in addition to any and all rights Buyer may have
at law or equity.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer as follows:

a. Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of New Jersey.

b. Seller has and will have upon the exercise of the Option
full corporate power and authority to enter into this Option Agreement and to
consummate the transactions contemplated hereby. This Agreement constitutes, and
any other instruments contemplated hereby when executed will constitute, the
legal, valid and binding obligations of Seller, enforceable in accordance with
their terms, except as may be affected by bankruptcy and insolvency laws and
court-applied equitable principles.

c. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the compliance with
the terms, conditions and provisions of this Agreement, with or without the
giving of notice or the passage of time, or both, will not: (i) contravene any
provision of Seller's Certificate of Incorporation or By-Laws; or (ii) subject
to receipt

6
<PAGE> 21
of any consents that may be necessary in connection with the sale of the
Business Assets and identified on Schedule 5.4(20) (all of which consents Seller
is confident that it will be able to obtain), conflict with or result in a
breach of or constitute a default under (i) any of the terms, conditions or
provisions of any indenture, mortgage, loan or credit agreement or any other
agreement or instrument to which Seller is a party or by which it or any of the
assets of Seller may be bound or affected, other than conflicts, breaches and
defaults which would not, individually or in the aggregate, have a material
adverse effect on the Business or the Business Assets, or (ii) any decree,
judgment or order of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign, or any applicable law,
ordinance, rule or regulations.

d. The representations and warranties set forth in Schedule
5.4 are true and correct in all material respects on the date hereof.

e. Neither Seller nor BCBSNJ has employed or retained any
broker, finder or agent, nor in any way otherwise become obligated for any
broker's, finder's, agent's or similar fee with respect to the transactions
contemplated by this Agreement.

f. No representation or warranty by Seller in this Agreement
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements contained herein, in light of the
circumstances under which they were made, not misleading.

SECTION 5A. REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller and BCBSNJ as follows:

7
<PAGE> 22
5A.1 Buyer is a corporation duly organized, validly existing
and in active status under the laws of the State of Florida and has the
corporate power and authority to carry on its business as it is now being
conducted.

5A.2 The execution and delivery of this Agreement by Buyer has
been duly authorized by the Board of Directors of Buyer and no further corporate
action is necessary on its part to make this Agreement valid and binding upon
Buyer and enforceable against Buyer in accordance with the terms hereof or to
carry out the actions contemplated hereby.

5A.3 No additional consent, approval or authorization is
required in connection with the execution or delivery of this Agreement by Buyer
or the consummation by Buyer of the transactions contemplated hereby.

5A.4 Buyer has not employed or retained any broker, finder or
agent, nor in any way otherwise become obligated for any broker's, finder's,
agent's or similar fee with respect to the transactions contemplated by this
Agreement.

SECTION 6. COVENANTS OF SELLER

a. Seller will perform all acts necessary to carry out the
transactions contemplated by this Agreement and will not, during the term of
this Agreement (i) create, incur, assume or guarantee any indebtedness,
obligations or liability or make any payments in respect thereto which would
interfere with, or prevent, Seller's transfer of the Business Assets to Buyer as
provided in Section 1.1 hereof; (ii) take any action which causes any of the
representations or warranties of Seller not to be true and complete as of the
Closing Date; (iii) perform or suffer any acts within its control inconsistent
with the grant of the Option to Buyer or the actions contemplated by this
Agreement;

8
<PAGE> 23
or (iv) enter into any agreement or grant any person or entity a right to
purchase all or substantially all of the assets of Seller. In furtherance of the
foregoing and by way of explanation and not by way of limitation, the Seller
will use its best efforts to secure all material consents and approvals that may
be necessary to carry out the transactions contemplated by this Agreement. In
this connection, "best efforts" will mean the efforts that a prudent person
desirous of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible ; provided, however, that
an obligation to use best efforts under this Agreement does not require Seller
to take actions that would result in a materially adverse change in the benefits
to Seller under this Agreement and from the transactions contemplated by this
Agreement and does not require that Seller make any payment to Personalized
Programming, Inc.

b. Seller will notify Buyer promptly of the threat of, or
commencement against itself or BCBSNJ of, any claim, suit, action, arbitration,
legal, administrative or other proceeding, or governmental investigation or tax
audit affecting the Business or Seller and will cooperate fully with Buyer in
taking any and all actions necessary or desirable to the consummation of the
transactions contemplated by this Agreement.

c. During the term of the Option and, assuming the Option is
exercised and the transactions contemplated hereby are consummated, for a period
ending the date which is two years following the date of this Agreement, neither
Seller nor any of its affiliates will (i) compete with Buyer in the sale of any
product or service offered or in development by Seller in connection with the
Business as of the date of this Agreement within a 100 mile radius from the
current offices of Seller or (ii) solicit the clients of Seller for products
and/or services offered by Seller in the Business or solicit the employees of
Seller for other employment opportunities. Whereas "The System by

9
<PAGE> 24
MEDIX" is presently a version of Personalized Programming, Inc.'s product widely
known as The Medical Manager, Seller agrees that this covenant shall apply to
The Medical Manager. Anything contained in this Section 6.c. notwithstanding,
any restriction on Seller or any of its affiliates otherwise hereby contemplated
shall be subject to (i) the right of BCBSNJ to continue to develop and implement
a community health information network (currently being developed and
implemented under the name "HANS") and (ii) BCBSNJ's right, through its HANS
line of business or otherwise, to develop and implement strategic initiatives
with EDI-USA and others with respect to electronic claims submissions.

d. In the event this Agreement is terminated as a result of a
breach by Seller, for a period ending two years after the date of this
Agreement, neither Seller nor any of its affiliates will (i) compete with Buyer
in the sale of any product or service offered or in development by Seller in
connection with the Business as of the date of this Agreement within a 100 mile
radius from the current offices of the Buyer (except that notwithstanding the
current offices of the Buyer, the geographical area in which Seller and its
affiliates may not compete shall not extend to any current customer of Seller or
to such area as is within a 200 mile radius from the current offices of Seller)
or (ii) solicit the clients of Buyer or solicit the employees of Buyer for other
employment opportunities. Whereas "The System by MEDIX" is presently a version
of Personalized Programming, Inc.'s product widely known as The Medical Manager,
Seller agrees that this covenant shall apply to The Medical Manager. Anything
contained in this Section 6.d. notwithstanding, any restriction on Seller or any
of its affiliates otherwise hereby contemplated shall be subject to (i) the
right of BCBSNJ to continue to develop and implement a community health
information network (currently being developed and implemented under the name
"HANS"), (ii) BCBSNJ's right, through its HANS line

10
<PAGE> 25
of business or otherwise, to develop and implement strategic initiatives with
EDI-USA and others with respect to electronic claims submissions and (iii)
receipt of any consents deemed necessary from Blue Cross Blue Shield of Delaware
("BCBSD") or Anthem Insurance Companies, Inc. ("Anthem") in connection with
transactions currently pending between BCBSNJ, on the one hand, and BCBSD and
Anthem, on the other hand.

e. Seller will cooperate fully with Buyer in taking any and
all actions necessary or desirable to the consummation of the transactions
contemplated by this Agreement.

SECTION 6A. COVENANTS OF BUYER

6A.1 Buyer will perform all acts necessary to carry out the
transactions contemplated by this Agreement.

6A.2 Buyer will cooperate fully with Seller in taking any and
all actions necessary or desirable to the consummation of the transactions
contemplated by this Agreement.

SECTION 7. FINANCIAL STATEMENTS

As a part of Buyer's due diligence, Buyer has determined that it may
need to arrange for (a) an audit of the financial statements of the Seller for
each of the calendar years in the three year period ended December 31, 1995 and
a possible restatement of such statements to assure compliance with generally
accepted accounting principles and Regulation S-X of the Securities and Exchange
Commission; and (b) the preparation of stub period financial statements for
periods from January 1, 1995 and thereafter and from January 1, 1996 and
thereafter which also need to be in compliance with generally accepted
accounting principles and Regulation S-X of the Securities and Exchange

11
<PAGE> 26
Commission. In this connection, Seller, at its own expense, agrees to provide
Buyer with such assistance and cooperation as may be reasonably required to
prepare and audit such statements, including without limitation gathering and
securing information that may be required by the auditors, providing access to
books and records and sending out letters to attorneys for audit letter
responses.

SECTION 7A. INDEMNIFICATION

7A.1 Seller agrees to indemnify and hold harmless Buyer in
respect of any and all claims, losses and expenses which may be incurred by
Buyer arising out of:

(i) any material breach by either Seller or the
Stockholder of any of the representations, warranties, covenants or agreements
made by either of them in this Agreement, the exhibits hereto or any document or
paper delivered in connection with the transactions contemplated hereby;

(ii) any attempt (whether or not successful) by any
person to cause or require Buyer to pay or discharge any debt, obligation,
liability or commitment of Seller not expressly assumed by Buyer; and

(iii) any action, suit, proceeding, assessment or
judgment arising out of or incident to any of the matters indemnified against in
this Section 7A.1 or Section 7A.2, including reasonable fees and disbursements
of counsel (before and at trial, in bankruptcy proceedings and in appellate
proceedings).

7A.2 In addition, Seller agrees to indemnify and hold harmless
Buyer in respect of any and all claims, losses and expenses (other than lost
future income) which may be incurred by

12
<PAGE> 27
Buyer arising out of the litigation, proceedings and administrative
investigations, whether pending or threatened, listed in Schedule 5.4(8).

7A.3 Buyer agrees to indemnify and hold harmless Seller and
the BCBSNJ in respect of any and all claims, losses and expenses which may be
incurred by Seller or the BCBSNJ arising out of:

(i) any material breach by Buyer of any of the
representations, warranties, covenants or agreements made by Buyer in this
Agreement, the exhibits hereto or any document or paper delivered in connection
with the transactions contemplated hereby;

(ii) any attempt (whether or not successful) by any
person to cause or require Seller or the Stockholder to pay or discharge any
debt, obligation, liability or commitment of Seller expressly assumed by Buyer;
and

(iii) any action, suit, proceeding, assessment or
judgment arising out of or incident to any of the matters indemnified against in
this Section 7A.2, including reasonable fees and disbursements of counsel
(before and at trial, in bankruptcy proceedings and in appellate proceedings).

7A.4 Whenever any claim shall arise for indemnification under
this Section 7A, Buyer, on the one hand, or Seller or the BCBSNJ, on the other
hand (as such the "Indemnified Party"), shall notify the other party or parties
(as such, the "Indemnifying Party") in writing by certified mail of the facts
constituting the basis for such claim. Such notice shall specify all facts known
to the Indemnified Party giving rise to such indemnification right and the
amount or an estimate of the amount of the liability arising therefrom. The
right to indemnification hereunder and the amount or the estimate amount
thereof, as set forth in such notice, shall be deemed agreed to by

13
<PAGE> 28
the Indemnifying Party unless, within 15 days after the receipt of such notice,
the Indemnified Party is notified in writing that the Indemnifying Party
disputes the right to indemnification as set forth or estimated in such notice.

7A.5 If the facts giving rise to any such indemnification
right shall involve any actual or threatened claim or demand by any third party
against the Indemnified Party or any possible claim by the Indemnified Party
against any third party, such claim by or against a third party shall be
referred to as a "Third-Party Claim". If the Indemnifying Party gives the
Indemnified Party an agreement in writing, in form and substance reasonably
satisfactory to counsel to the Indemnified Party confirming the agreement to
indemnify and save the Indemnified Party harmless from all costs and liability
arising from any Third-Party Claim, the Indemnifying Party may at its own
expense undertake full responsibility for the defense or prosecution of such
Third-Party Claim any may contest or settle it on such terms as it may choose.
If the Indemnifying Party fails to deliver such an agreement of indemnity to the
Indemnified Party:

(i) the Indemnifying Party at its own expense may
nevertheless participate with the Indemnified Party in the defense or
prosecution of the Third-Party Claim and in any and all settlement negotiations
relating thereto; and

(ii) the Indemnified Party may contest or settle the
Third-Party Claim on such terms as it may choose, although the Indemnified Party
shall not reach a settlement until it has consulted in good faith with the
Indemnifying Party.

Any such participation shall not relieve the Indemnifying Party of its
obligations to indemnify the Indemnified Party under this Section 7A.

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<PAGE> 29
7A.6 If by reason of any Third-Party Claim a lien, attachment,
garnishment or execution is placed upon any of the property or assets of the
Indemnified Party, the Indemnifying Party, if it desires to exercise its right
to defend or prosecute such suit, shall furnish a satisfactory indemnity bond to
obtain the prompt release of such lien, attachment, garnishment or execution.

7A.7 Each party to this Agreement shall provide access to its
counsel, accountants and other representatives during normal business hours to
all properties, personnel, books, tax records, contracts, commitments and such
other business records as may be necessary in connection with the resolution of
any claims or actions subject to this Section 7A and shall furnish to the other
party or parties, as the case may be, copies of all such documents (certified,
if requested) as may reasonably be requested in connection therewith.

7A.8 Buyer shall have the right to offset any amounts due it
from Seller under the provisions of this Section 7A or any other provision of
this Agreement, against any amounts that may be due hereunder or pursuant hereto
to Seller by Buyer.

SECTION 7B. GUARANTY

BCBSNJ absolutely and unconditionally guarantees to Buyer the due and
punctual performance and payment of all monies to be paid and all things to be
performed or observed by Seller pursuant to each and every covenant, condition,
representation and warranty of Seller contained in this Agreement and in any
document or instrument given by Seller in connection therewith.

SECTION 8. MISCELLANEOUS

a. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.

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b. No amendment, waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement will be effective unless
evidenced by an instrument in writing signed by the parties.

c. The headings are for convenience only and will not control
or affect the meaning or construction of the provisions of this Agreement.

d. The construction and performance of this Agreement will be
governed by the laws of the State of Florida.

e. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing and shall be
deemed to have been duly delivered on the date of personal delivery or the date
of receipt if sent by a private air express service (postage prepaid) or mailed
by registered or certified mail, postage prepaid and return receipt requested,
and shall be deemed to have been received on the date of personal delivery or on
the date set forth on the return receipt, to the following addresses or to such
other address as any party may request, in the case of Seller, by notifying
Buyer, and in the case of Buyer, by notifying Seller:

To Seller: MEDIX, Inc.
3 Penn Plaza East PP-16A
Newark, New Jersey 07105-2200
Attn: Michael R. McGarvey, M.D.
President and CEO
Telecopy: (201) 466-8288
Telephone: (201) 466-7300

To BCBSNJ: Blue Cross and Blue Shield of New Jersey, Inc.
3 Penn Plaza East PP-16A
Newark, New Jersey 07105-2200
Attn: Michael R. McGarvey, M.D.
Senior Vice President - Health Industry Services
Telecopy: (201) 466-8288
Telephone: (201) 466-7300

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To Buyer: National Medical Systems, Inc.
3001 N. Rocky Pointe Dr. E.
Suite 100
Tampa, Florida 33607
Attn: President
Telecopy: 813/289-6420
Telephone: 813/287-2990

f. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original but all of which together will
constitute one and the same instrument.

g. Buyer and Seller each agree that they will use their best
efforts to keep confidential (except for such disclosure to attorneys, bankers,
underwriters, investors, etc. as may be appropriate in the furtherance of this
transaction) all information of a confidential nature obtained in connection
with the transactions contemplated by this Agreement, and in the event that such
transactions are not consummated, each party will return to the other party such
documents and other material obtained from the other party in connection
therewith.

h. Buyer and Seller shall jointly prepare, and determine the
timing of, any press release or other announcement to the public relating to the
execution of this Agreement. No party hereto will issue any press release or
make any other public announcement relating to the transactions contemplated
hereby without the prior consent of the other party hereto, except that any
party may make any disclosure required to be made by it under applicable law if
it determines in good faith that it is appropriate to do so and gives prior
notice to the other party.

i. Each party shall bear all costs incurred by it in
connection with the transactions contemplated by this Agreement.

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j. Seller agrees that from the date hereof and during the time
period in which the Option is exercisable hereunder, or if the Option is
exercised, during the period prior to the Closing, it shall not offer or seek to
offer, or entertain or discuss any offer, to sell the Business or the Business
Assets, other than as contemplated under this Agreement, nor shall BCBSNJ offer,
to seek to offer, or entertain or discuss any offer to sell any of the capital
stock of Seller without the written consent of Buyer.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.

MEDIX, INC. NATIONAL MEDICAL SYSTEMS, INC.

By:/s/ Michael R. McGarvey By:/s/ Wayne Burks
------------------------------ -------------------------------
President and Chief CFO
Executive Officer

BLUE CROSS AND BLUE SHIELD OF
NEW JERSEY, INC.

By:/s/ Michael R. McGarvey
----------------------------------
Senior Vice President -
Health Industry Services

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 of our
reports dated August 23, 1996 on our audits of the financial statements of
Personalized Programming, Inc., dated August 28, 1996, on our audits of Systems
Plus, Inc. and Systems Plus Distribution, Inc., dated August 28, 1996, on our
audits of RTI Business Systems, Inc., dated August 30, 1996, on our audits of
Systems Management, Inc., dated September 1, 1996, on our audits of Medical
Manager Division of Medix, Inc., dated September 10, 1996, on our audits of
National Medical Systems, Inc., dated September 10, 1996, on our audit of GBP
with Excellence, Inc., and dated September 27, 1996, on our audit of Medical
Manager Corporation. We also consent to the reference to our firm under the
caption "Experts".

COOPERS & LYBRAND L.L.P.

Tampa, Florida
November 21, 1996