<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 2, 1999
---------------------------
MC INFORMATICS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
California 0-21819 94-3165144
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer)
incorporation or organization) Identification No.)
18881 Von Karman Avenue, Suite 100
Irvine, California 92612
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (949) 261-7100
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
The required financial statements of the business acquired are
filed with this report as pages F-1 through F-14 following the
signature page.
1
<PAGE>
(b) Pro forma financial information.
The required pro forma financial information of the business
acquired is set forth below.
The accompanying pro forma condensed statements of operations illustrate
the effect of the merger with MCIF on the Company's results of operations. The
pro forma condensed statements of operations for the year ended December 31,
1998 and the three months ended March 31, 1999 are based on historical
statements of operations of the Company and MCIF for those periods. The pro
forma condensed statements of operations assume the merger took place on January
1, 1998 and 1999.
The pro forma condensed statements of operations are not intended to be
indicative of the results of operations which actually would have been realized
had the merger occurred at the times assumed, nor of the future results of
operations of the combined entities. The accompanying pro forma condensed
statements of operations should be read in connection with the historical
financial statements and notes of the Company and MCIF.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
The Company MCIF Pro Forma Pro Forma
(Formerly, Adjustments Combined
HealthDesk
Corporation)
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ - $3,716,585 $ 3,716,585
Direct Expenses - 2,529,959 2,529,959
----------------------------- -----------
Gross Profit 1,186,626 1,186,626
Operating Expenses
Selling, General & Administrative (382,008) (1,309,601) (1,691,609)
Amortization of Goodwill 685,200(1) (685,200)
Other income (expense):
Interest Income 69,107 69,107
Interest expense (30,985) (30,985)
Non-cash financing cost associated
with convertible preferred stock (864,000) (864,000)
----------------------------- -----------
Loss before provision for income taxes (1,176,901) (153,960) (2,016,061)
Provision for income taxes 800 3,800 4,600
----------------------------- -----------
Loss from continuing operations $(1,177,701) $ (157,760) (2,020,661)
============================= ===========
Loss per share information (2):
Basic and diluted loss per share from
continuing operations $ (0.27) $ (0.19)
=========== ===========
Weighted average number of shares of
common stock, basic and diluted 5,736,544 12,672,527
=========== ===========
</TABLE>
2
<PAGE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended March 31, 1999
---------------------------------
<TABLE>
<CAPTION>
The Company MCIF(4) Pro Forma Pro Forma
(Formerly, Adjustments Combined
HealthDesk
Corporation)(3)
-----------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 711,477 $1,256,673 $ 1,968,150
Direct Expenses 450,779 786,215 1,236,994
------------------------ -----------
Gross Profit 260,698 470,458 731,156
Operating Expenses
Selling, General & Administrative (308,595) (526,235) (834,830)
Amortization of Goodwill (57,100) 114,200 (171,300)(1)
Other income (expense):
Non-cash financing cost associated
with convertible preferred stock (367,500) (367,500)
------------------------ -----------
Loss before provision for income taxes (472,497) (55,777) (642,474)
Provision for income taxes 600 - 600
------------------------ -----------
Loss from continuing operations $ (473,097) $ (55,777) (643,074)
======================== ===========
Loss per share information (2):
Basic and diluted loss per share from
continuing operations $ (0.05) $ (0.04)
========== ===========
Weighted average number of shares of
common stock, basic and diluted 8,840,475 14,378,075
========== ===========
</TABLE>
(1) Goodwill is estimated to have a useful life of ten years and is amortized
using the straight-line method. The Pro Forma Condensed Statements of
Operations for the year ended December 31, 1998 and the three months ended
March 31, 1999, reflect twelve and three months amortization for those
periods, respectively.
(2) Pro forma loss per share from continuing operations is based on the
weighted average number of shares of common stock outstanding during the
periods after giving pro forma effect to the issuance of common stock to
MCIF in connection with the merger as of the beginning of the respective
periods and the assumed conversion of preferred stock to common stock
immediately upon the issuance of the preferred stock. Options and warrants
to purchase common stock were excluded in the calculation of the pro forma
loss per share, as their effect would be antidilutive.
(3) Includes the results of operations for MCIF from March 2, 1999 through
March 31, 1999.
(4) Includes the results of operations for MCIF from January 1, 1999 through
March 1, 1999.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MC Informatics, Inc.
May 17, 1999 By: /s/ JEFFERY L. POLLARD
-----------------------
Jeffrey L. Pollard
Chief Financial Officer
5
<PAGE>
MC Informatics, Inc.
Index to Financial Statements
Year Ended December 31, 1998
and for the Period from April 14, 1997 (Inception)
to December 31, 1997
Report of Independent Certified Public Accountants (BDO Seidman, LLP) F-2
Report of Independent Certified Public Accountants (Schubert & Company) F-3
Balance Sheets F-4
Statements of Operations F-5
Statements of Stockholders' and Members' Deficit F-6
Statements of Cash Flows F-7
Notes to Financial Statements F-9
F-1
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
MC Informatics, Inc.
Irvine, California
We have audited the accompanying balance sheet of MC Informatics, Inc. (formerly
MC Informatics, LLC) as of December 31, 1998, and the related statements of
operations, stockholders' and members' 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 MC Informatics, Inc. at
December 31, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ BDO Seidman, LLP
- ------------------------------
BDO Seidman, LLP
Orange County, California
May 5, 1999
F-2
<PAGE>
Report of Independent Certified Public Accountant
To the Members
MC Informatics, LLC
Fountain Valley, California
I have audited the accompanying balance sheet of MC Informatics, LLC, a
California limited liability company, as of December 31, 1997, and the related
statements of operations, members' deficit and cash flows for the period from
April 14, 1997, inception, through December 31, 1997. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of MC Informatics, LLC as of December
31, 1997, and the results of its operations and its cash flows for the period
from April 14, 1997, inception, through December 31, 1997 in conformity with
generally accepted accounting principles.
/s/ ALLAN C. SCHUBERT
- --------------------------
Allan C. Schubert
Orange County, California
July 21, 1998
F-3
<PAGE>
MC Informatics Inc.
Balance Sheets
December 31, 1998 and 1997
________________________________________________________________________________
<TABLE>
<CAPTION>
1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 17,730 $ -
Accounts receivable, net of allowance for doubtful
accounts of $38,597 in 1998 966,786 116,504
Prepaid expenses and other current assets 61,033 3,772
- -------------------------------------------------------------------------------
Total current assets 1,045,549 120,276
Property and equipment, net of accumulated depreciation
of $2,657 in 1998 and $108 in 1997 17,261 892
Other assets, net of accumulated amortization of $10,944
in 1998 and $3,994 in 1997 24,424 18,006
- -------------------------------------------------------------------------------
$1,087,234 $139,174
===============================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of notes payable to related $ 773,819 $ -
parties (Note 2)
Notes payable (Note 3) 12,500 40,000
Accounts payable 222,556 73,643
Accrued compensation 126,544 74,054
Customer deposits 70,000 -
Deferred revenue 52,824 -
Other accrued expenses 64,140 3,866
- -------------------------------------------------------------------------------
Total current liabilities 1,322,383 191,563
Notes payable to related parties, net of current
portion (Note 2) 15,000 40,000
- -------------------------------------------------------------------------------
Total liabilities 1,337,383 231,563
- -------------------------------------------------------------------------------
Commitments and Contingencies (Notes 4 and 6)
Subsequent Events (Note 7)
Members' deficit - (92,389)
Stockholders' deficit:
Common stock, no par value; 1,374,356 shares
authorized; 1,000,000 shares issued and outstanding 70,000 -
Accumulated deficit (320,149) -
- -------------------------------------------------------------------------------
Total stockholders' and members' deficit (250,149) (92,389)
- -------------------------------------------------------------------------------
$1,087,234 $139,174
===============================================================================
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
MC Informatics, Inc.
Statements of Operations
Year Ended December 31, 1998 and
For the Period from April 14, 1997 (Inception) to December 31, 1997
________________________________________________________________________________
<TABLE>
<CAPTION>
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Revenues (Note 1) $3,716,585 $ 681,332
Direct expenses 2,529,959 261,618
- --------------------------------------------------------------------------------
Gross profit 1,186,626 419,714
General and administrative expenses 1,309,601 580,506
- --------------------------------------------------------------------------------
Loss from operations (122,975) (160,792)
Interest expense (30,985) (1,597)
- --------------------------------------------------------------------------------
Loss before income taxes (153,960) (162,389)
Provision for income taxes 3,800 -
- --------------------------------------------------------------------------------
Net loss $ (157,760) $(162,389)
================================================================================
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
MC Informatics, Inc.
Statements of Stockholders' and Members' Deficit
________________________________________________________________________________
<TABLE>
<CAPTION>
Members' Equity
(Deficit) Common Stock
--------------- -------------------- Accumulated
Amount Shares Amount Deficit Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, April 14, 1997 (Inception) $ - - $ - $ - $ -
Members' capital contributions 70,000 - - - 70,000
Net loss (162,389) - - - (162,389)
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 (92,389) - - - (92,389)
Net income, January 1 through June 22, 1998 72,189(1) - - - 72,189
Conversion of LLC to S-corporation 20,200 1,000,000 70,000 (90,200) -
Net loss, June 23 through December 31, 1998 - - - (229,949)(1) (229,949)
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 $ - 1,000,000 $70,000 $(320,149) $(250,149)
======================================================================================================================
</TABLE>
(1) The total net loss for the year ended December 31, 1998 was $157,760.
See accompanying notes to financial statements.
F-6
<PAGE>
MC Informatics, Inc.
Statements of Cash Flows
Year Ended December 31, 1998 and
For the Period From April 14, 1997 (Inception) to December 31, 1997
________________________________________________________________________________
<TABLE>
<CAPTION>
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(157,760) $(162,389)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 9,499 4,102
Provision for doubtful accounts 38,597 -
Changes in assets and liabilities:
Accounts receivable (888,879) (116,504)
Prepaid and other current assets (57,261) (3,772)
Other assets (13,368) -
Accounts payable 148,913 73,643
Accrued compensation 52,490 74,054
Customer deposits 70,000 -
Deferred revenue 52,824 -
Other accrued expenses 60,274 3,866
- --------------------------------------------------------------------------------
Net cash used in operating activities (684,671) (127,000)
- --------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (18,918) (1,000)
Purchase of intangible assets - (22,000)
- --------------------------------------------------------------------------------
Net cash used in investing activities (18,918) (23,000)
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from notes payable to related party 848,819 40,000
Repayments of notes payable to related party (100,000) -
Proceeds from notes payable 50,000 40,000
Repayment of notes payable (77,500) -
Members' capital contributions - 70,000
- --------------------------------------------------------------------------------
Net cash provided by financing activities 721,319 150,000
- --------------------------------------------------------------------------------
</TABLE>
F-7
<PAGE>
MC Informatics, Inc.
Statements of Cash Flows (Continued)
Year Ended December 31, 1998 and
For the Period From April 14, 1997 (Inception) to December 31, 1997
________________________________________________________________________________
<TABLE>
<CAPTION>
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Net increase in cash 17,730 -
Cash, beginning of period - -
- --------------------------------------------------------------------------------
Cash, end of period $ 17,730 $ -
================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 15,893 $ 31
Income taxes $ 1,920 $ -
================================================================================
</TABLE>
See accompanying notes to financial statements.
F-8
<PAGE>
MC Informatics, Inc.
Notes to Financial Statements
________________________________________________________________________________
1. Summary of Business and Organization
Significant
Accounting MC Informatics, Inc. (the "Company") was incorporated in
Policies California on June 22, 1998. The Company is the successor to
a California limited liability company formed on April 14,
1997. The Company provides management and technical services
to the healthcare information industry, specializing in
facility management, outsourcing, and system integration and
consulting.
Effective June 22, 1998, the members of the limited
liability company converted their membership interest to
shares of the Company's common stock.
Revenue Recognition
The Company recognizes revenue when services are rendered.
Payments received from customers in advance of services have
been deferred until earned and recorded as deferred revenue
in the accompanying financial statements.
Property and Equipment
Property and equipment are recorded at cost. The Company
provides for depreciation of property and equipment
utilizing the straight-line method over their estimated
useful lives of up to seven years.
Intangible Assets
Intangible assets are carried at cost less accumulated
amortization which is calculated on a straight-line basis
over their estimated useful lives of up to five years.
F-9
<PAGE>
MC Informatics, Inc.
Notes to Financial Statements
________________________________________________________________________________
1. Summary of Long Lived Assets
Significant
Accounting The Company reviews the carrying amount of its long-lived
Policies assets and identifiable intangible assets for possible
(Continued) impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be
recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset
to future undiscounted net cash flows expected to be
generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds
the fair value of the assets. Assets to be disposed of are
reported at the lower of their carrying amount or fair value
less costs to sell.
Income Taxes
Commencing June 22, 1998 upon the Company's conversion from
a limited liability company ("LLC") to an S-corporation
under the provisions of Section 1362 of the Internal Revenue
Code, the Company has elected to be taxed as an
S-corporation. Accordingly, the Company has not provided for
any income taxes, except certain state franchise taxes,
since the liability is that of the individual stockholders.
Upon conversion to an S-corporation, income taxes are
accounted for using the asset and liability method. This
method generally provides that deferred tax assets and
liabilities be recognized for temporary differences between
the financial reporting basis and the tax basis of the
Company's assets and liabilities. A valuation allowance is
required to reduce the potential deferred tax asset when it
is more likely than not that all or some portion of the
potential deferred tax asset will not be realized. The
impact on deferred taxes of changes in tax rates and laws,
if any, are applied to the years during which temporary
differences are expected to be settled and reflected in the
financial statements in the period of enactment. Deferred
income taxes are insignificant to the accompanying financial
statements.
F-10
<PAGE>
MC Informatics, Inc.
Notes to Financial Statements
________________________________________________________________________________
1. Summary of Prior to the Company's conversion to an S-corporation from
Significant an LLC, no liability for income taxes was recorded for
Accounting Federal or state purposes since the LLC was recognized as a
Policies partnership for income tax purposes. Accordingly, all
(Continued) profits, losses and credits of the Company through June 22,
1998 were the responsibility of the LLC members and were
recognized on their respective income tax returns.
Concentration of Credit Risk
Credit is extended for all customers based upon an
evaluation of the customer's financial condition and credit
history and generally the Company does not require
collateral. Credit losses are provided for in the financial
statements and consistently have been within management's
expectations.
The Company had revenues from two customers which accounted
for approximately 39% and 18%, respectively, of revenues for
the year ended December 31, 1998. The accounts receivable
balance from these customers aggregated approximately
$566,000 at December 31, 1998.
The Company had revenues from four customers which accounted
for 26%, 22%, 16% and 15%, respectively, of revenues for the
period from April 14, 1997 (inception) through December 31,
1997. The accounts receivable from these customers
aggregated approximately $68,500 at December 31, 1997.
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 revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
F-11
<PAGE>
MC Informatics, Inc.
Notes to Financial Statements
________________________________________________________________________________
1. Summary of Reclassifications
Significant
Accounting Certain reclassifications have been made to the prior year
Policies financial statements to be consistent with the 1998
(Continued) presentation.
2. Notes Payable Notes payable to related parties consist of the following:
to Related
Parties 1998 1997
------------------------------------------------------------
Unsecured notes payable to director and
officer; bearing interest at 10%;
principal and interest due on various
dates through July 2002. $ 77,000 $ 40,000
Unsecured notes payable to certain
directors and officers; bearing interest
at 8.5%; payable on demand, and if no
demand is made, then principal and
interest is due on various dates through
December 1999. 711,819 -
------------------------------------------------------------
788,819 40,000
Current portion 773,819 -
------------------------------------------------------------
$ 15,000 $ 40,000
============================================================
Future minimum debt maturities of notes payable to related
parties are $773,819 in 1999 and $15,000 in 2002. Interest
incurred on notes payable to related parties was $30,385 and
$833 during the year ended December 31, 1998 and the period
from April 14, 1997 (inception) to December 31, 1997,
respectively.
F-12
<PAGE>
MC Informatics, Inc.
Notes to Financial Statements
________________________________________________________________________________
3. Notes In July 1998, the Company borrowed $50,000 from an
Payable individual. The unsecured note payable bore interest at 10%.
The outstanding balance at December 31, 1998 was repaid in
January 1999.
In October 1997, the Company borrowed $40,000 from an
individual. The unsecured note payable bore interest at 10%
and was repaid during 1998.
4. Commitments The Company leases its office facilities under an operating
lease, on a month-to-month basis. Rental expense amounted to
approximately $16,000 for the year ended December 31, 1998
and $4,500 for the period from April 14, 1997 (inception)
through December 31, 1997.
5. Profit The Company established a profit sharing plan on September
Sharing 1, 1997, which is qualified under Section 401(k) of the
Plan Internal Revenue Code. Any employee who has attained the age
21 and has completed three months of service is eligible to
participate. Employees may contribute to the plan subject to
the limits of Section 401(k) of the Internal Revenue Code.
The Company may contribute to the profit sharing on behalf
of the employees at the Company's discretion. There were no
Company contributions to the plan during 1998 and 1997.
6. Year 2000 Like other companies, the Company could be adversely
(Unaudited) affected if its computer systems or the systems of its
suppliers or customers do not properly process and calculate
date-related information and data from the period
surrounding and including January 1, 2000. This is commonly
known as the "Year 2000" issue. Additionally, this issue
could impact non-computer systems and devices such as
production equipment, elevators, etc. At this time, because
of the complexities involved in the issue, management cannot
provide assurances that the Year 2000 issue will not have an
impact on the Company's operations.
F-13
<PAGE>
MC Informatics, Inc.
Notes to Financial Statements
________________________________________________________________________________
7. Subsequent Stock Option Plan
Events
In February 1999, the Company adopted the 1999 Stock Option
Plan (the "Plan") under which eligible employees can receive
options to purchase shares of the Company's common stock at
a price generally not less than 100% of the fair value of
the common stock on the date of the grant. The Plan allows
for the issuance of a maximum of 374,356 shares of the
Company's common stock. The options granted under the Plan
are exercisable over a maximum term of ten years from the
date of grant.
In February 1999, the Company granted options to purchase
354,724 shares of common stock at $1 per share, which is at
a discount to the market. The options vest over five years.
Merger
On March 2, 1999, the Company was merged with and into a
wholly-owned subsidiary of HealthDesk Corporation
("HealthDesk") through the exchange of all the outstanding
shares of the Company's common stock for 5,645,230 shares of
common stock of HealthDesk, pursuant to an agreement dated
August 18, 1998.
The merger is intended to qualify as a reorganization under
Section 368(a) of the Internal Revenue Code. The continuing
operations of the combined entity will be substantially that
of the Company. In connection with the merger, HealthDesk
changed its name to MC Informatics, Inc.
F-14
