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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 6, 2000
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HealthGrades.com, Inc.
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(Exact Name of Registrant Specified in Charter)
Delaware 0-22019 62-1623449
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(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification No.)
44 Union Boulevard, Suite 600
Lakewood, Colorado 80228
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 716-0041
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Item 5. Other Events
On March 6, 2000, HealthGrades.com, Inc. ("the Company") distributed a letter to
its stockholders, addressing a proposed financing by Essex Woodlands Health
Ventures Fund IV, L.P., Invesco Private Capital, Inc., Punk Ziegel & Company
Investors LLC ("Punk Ziegel"), an affiliate of Punk Ziegel, and some executive
officers of HealthGrades.com, Inc. Additionally, the Company issued a press
release regarding the proposed financing on March 7, 2000. A copy of the letter
and the press release are attached to this filing as Exhibit 99.1 and 99.2
respectively, and are incorporated herein by reference.
Item 7. Exhibits
99.1 Letter to Stockholders dated March 3, 2000
99.2 Press Release dated March 7, 2000
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SIGNATURE
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.
HEALTHGRADES.COM, INC.
(Registrant)
By: /s/ D. Paul Davis
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D. Paul Davis
Executive Vice President of
Finance/Chief Financial Officer
Dated: March 7, 2000
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
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99.1 Letter to Stockholders dated March 3, 2000
99.2 Press Release dated March 7, 2000
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EXHIBIT 99.1
March 3, 2000
Dear Stockholder:
In our previous letter to you dated February 4, 2000, we advised you that
HealthGrades.Com ("HealthGrades") expected to complete an equity financing
transaction (the "Original Financing Transaction") pursuant to which: (i) Essex
Woodlands Health Ventures Fund IV, L.P. ("Essex"), would invest $5 million in
HealthGrades in exchange for 2.5 million shares of our common stock and five
year warrants to purchase 875,000 shares of our common stock at an exercise
price of $4.00 per share; and (ii) certain executive officers of HealthGrades
would convert $3.2 million in notes issued to them in connection with a loan
they made to us in December 1999 for 1,600,000 shares of common stock and five
year warrants to purchase 560,000 shares of common stock at an exercise price of
$4.00 per share. In that letter, HealthGrades explained that the consummation of
the Original Financing Transaction was subject to certain conditions, including
a restructuring of HealthGrades debt under its existing credit facilities.
Unfortunately, HealthGrades has learned that its lenders are not willing to
agree to the required amendments to its credit facilities.
After further discussion with Essex and other potential investors, HealthGrades
has entered into a new agreement for a revised financing transaction (the
"Revised Financing Transaction") with certain investors under which: (i) INVESCO
Private Capital, Inc. will invest $8.43 million in exchange for 4,215,000
million shares of common stock and five year warrants to purchase 1,475,250
shares of common stock; (ii) Essex will invest a total of $6 million in exchange
for 3 million shares of common stock and five year warrants to purchase
1,050,000 shares of common stock; (iii) Punk, Ziegal & Company L.L.C. and an
affiliate will invest a total of $370,000 in exchange for 185,000 shares of
common stock and five year warrants to purchase 64,750 shares of common stock;
and (iv) the executive officers will convert their notes in exchange for the
same consideration as they were to receive in the Original Financing
Transaction. Each of the warrants issued to the investors will have an exercise
price of $4.00 per share. In addition, a five year warrant to purchase 150,000
shares of common stock will be issued to Triton Capital, Inc. for financial
advisory services at an exercise price equal to 120% of the closing bid price of
the common stock of HealthGrades on the closing date of the Revised Financing
Transaction. Consummation of the Revised Financing Transaction is subject to
certain closing conditions. Please note that the Revised Financing Transaction
replaces and is not in addition to the Original Financing Transaction.
Under Nasdaq rules, the Revised Financing Transaction would normally require
stockholder approval before completing the transaction. However, because the
delay involved in securing stockholder approval would seriously jeopardize our
financial viability, we have asked Nasdaq to approve our reliance on an
exception to the stockholder approval requirements. Our Audit Committee has
approved our reliance on the exception, and Nasdaq is permitting us to proceed
in reliance on the exception.
The securities to be issued in the transaction will not be registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the United
States absent registration or an applicable exemption from the registration
requirements. In addition, please note that this letter contains forward-looking
statements addressing the anticipated Revised Financing Transaction and the
nature of the investments by the investors mentioned above,
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including some of our executive officers. Actual results may differ materially
from those described in such forward looking statements due to several factors,
including the failure of HealthGrades to satisfy closing conditions applicable
to it or the occurrence of events that delay or prevent the closing of the
financing.
Sincerely,
/s/ Kerry R. Hicks
Kerry R. Hicks, CEO
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EXHIBIT 99.2
PRESS RELEASE
HEALTHGRADES.COM, INC. ANNOUNCES REVISED FINANCING
Increases Proposed Financing to $18 Million
LAKEWOOD, CO - March 7, 2000 - HealthGrades.com, Inc. (Nasdaq - HGRD) today
stated that its previously announced agreement relating to a proposed investment
in its securities by Essex Woodlands Health Ventures Fund IV, L.P. ("Essex") and
others has been superceded by a new agreement under which HealthGrades will
raise $18 million. Under the terms of the new agreement, INVESCO Private
Capital, Inc. will invest $8.43 million and will receive 4,215,000 shares of
HealthGrades common stock and warrants to purchase 1,475,250 shares of common
stock. Essex will invest $6 million and will receive 3,000,000 shares of common
stock and warrants to purchase 1,050,000 shares of common stock. Punk, Ziegal &
Company L.L.C. and an affiliate will invest a total of $370,000 and will receive
185,000 shares of common stock and warrants to purchase 64,750 shares of common
stock. Finally, certain executive officers of HealthGrades will cancel $3.2
million in indebtedness owed to them by HealthGrades and will receive 1.6
million shares of common stock and warrants to purchase 560,000 shares of common
stock. Each of the warrants issued to the investors will have a five year term
and an exercise price of $4.00 per share. In addition, a warrant to purchase
150,000 shares of common stock will be issued to Triton Capital, Inc. for
financial advisory services at an exercise price equal to 120% of the closing
bid price of the common stock of HealthGrades on the closing date of the
transaction. Consummation of the transaction is subject to certain closing
conditions.
In connection with the proposed financing, Nasdaq has approved HealthGrades'
request for an exemption to Nasdaq's shareholder approval requirement.
The securities to be issued in the transaction will not be registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the United
States absent registration or an applicable exemption from the registration
requirements.
This press release contains forward-looking statements addressing the
anticipated completion of the proposed financing and the nature of the
investments by the investors mentioned above and some of HealthGrades' executive
officers. Actual results may differ materially from those described in such
forward looking statements due to several factors, including the failure of
HealthGrades.com to satisfy the closing conditions or the occurrence of events
that delay or prevent the closing of the transaction.
