<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[Mark One]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
Commission File Number: 001-12799
INFOCURE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 58-2271614
(State or other Jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
2970 CLAIRMONT ROAD
Suite 950 30329
ATLANTA, GEORGIA (Zip Code)
(Address of principal executive offices)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 633-0046
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes[x] No [_]
The number of shares of the issuer's class of capital stock as of December 12,
1997, the latest practicable date, is as follows: 5,736,937 shares of Common
Stock, $.001 par value.
<PAGE>
INFOCURE CORPORATION
FORM 10-Q
FOR THE
QUARTER ENDED OCTOBER 31, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
Item 1. Financial Statements Number
------
<S> <C>
Consolidated Balance Sheets............................................. 1
October 31, 1997 (unaudited) and January 31, 1997
Consolidated Statements of Operation (unaudited)........................ 2
Three months ended October 31, 1997 and 1996
Nine months ended October 31, 1997 and 1996
Consolidated Statements of Cash Flows (unaudited)....................... 3
Nine months ended October 31, 1997 and 1996
Notes to Consolidated Financial Statements.............................. 4
Item 2. Management's Discussion and Analysis of Financial Condition and....... 6
Results of Operations
PART II. OTHER INFORMATION
Item 5. Other Information........................................................ 9
Item 6. Exhibits and Reports on Form 8-K ........................................ 9
Signatures............................................................... 10
</TABLE>
-i-
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INFOCURE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
OCTOBER 31, January 31,
ASSETS 1997 1997
------------------- -------------------
<S> <C> <C>
Current Assets: (UNAUDITED)
Cash...................................................................... $ 901,474 $ 198,735
Accounts and notes receivable, net of allowance of $156,828 and $35,000... 2,352,933 318,405
Inventory................................................................. 313,268 --
Prepaid expenses and other current assets................................. 994,429 62,364
Total current assets....................................................... 4,562,104 579,504
Property and equipment, net of depreciation of $659,362 and $588,205...... 998,559 94,157
Goodwill, net of amortization of $353,388 and $21,408..................... 16,860,173 2,015,309
Deferred acquisition costs................................................ 189,488 521,871
Capitalized software, net of amortization of $788,735 and $657,115........ 1,460,019 41,252
Deferred tax asset........................................................ 905,300 871,000
Other assets.............................................................. 195,626 59,137
------------------- -------------------
Total assets............................................................... $ 25,171,269 $ 4,182,230
=================== ===================
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable.......................................................... $ 929,106 $ 483,730
Accrued expenses.......................................................... 1,472,901 358,671
Deferred revenue.......................................................... 2,327,979 814,383
Current portion of long-term debt......................................... 1,256,291 49,529
Total current liabilities.................................................. 5,986,277 1,706,313
Long-term debt, less current portion....................................... 5,509,913 698,252
Note payable to stockholder................................................ -- 94,500
Note payable -- other...................................................... -- 1,511,533
------------------- -------------------
Total liabilities........................................................ 11,496,190 4,010,598
------------------- -------------------
Stockholders' equity:
Common stock, $.001 par value, 15,000,000 shares authorized ; 5,736,937
issued and outstanding................................................... 5,737 54,965
Treasury stock and accrued stock repurchase, at cost...................... -- (165,000)
Stock purchase warrant.................................................... -- 80,000
Additional paid-in capital................................................ 16,528,500 3,452,453
Accumulated deficit....................................................... (2,859,158) (3,250,786)
------------------- -------------------
Total stockholders' equity................................................. 13,675,079 171,632
------------------- -------------------
Total liabilities and stockholders' equity................................. $ 25,171,269 $ 4,182,230
=================== ===================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-1-
<PAGE>
INFOCURE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
OCTOBER 31 OCTOBER 31
------------------------------------ --------------------------------------
1997 1996 1997 1996
-------------- ------------------ ---------------- -----------------
<S> <C> <C> <C> <C>
Revenues:
Systems and software revenues............. $3,078,213 $ 136,210 $4,836,049 $ 590,812
Maintenance and support................... 2,869,340 338,386 4,866,720 1,068,859
-------------- ------------------ ---------------- -----------------
Total revenues........................... 5,947,553 474,596 9,702,769 1,659,671
Cost of revenues........................... 1,474,086 55,050 2,629,857 299,075
-------------- ------------------ ---------------- -----------------
Gross margin............................... 4,473,467 419,546 7,072,912 1,360,596
Expenses:
Salaries and operating expenses........... 3,329,977 556,553 5,629,949 1,573,935
Depreciation and amortization............. 395,283 18,659 593,624 54,890
-------------- ------------------ ---------------- -----------------
Total expenses........................... 3,725,260 575,212 6,223,573 1,628,825
-------------- ------------------ ---------------- -----------------
Income from operations..................... 748,207 (155,666) 849,339 (268,229)
Interest expense........................... (57,587) (17,179) (184,975) (60,680)
Other income, net.......................... 40,809 2,439 50,264 3,433
-------------- ------------------ ---------------- -----------------
Income (loss) before income taxes.......... 731,429 (170,406) 714,628 (325,476)
Provision for income taxes................. 329,000 -- 323,000 --
-------------- ------------------ ---------------- -----------------
Income (loss).............................. $ 402,429 $(170,406) $ 391,628 $ (325,476)
============== ================== ================ =================
Earnings per share:........................ $0.07 $0.00 $0.10
============== ================== ================
Weighted average number of shares.......... 5,683,149 4,076,962
============== ================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-2-
<PAGE>
INFOCURE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED OCTOBER 31,
------------------------------------------
1997 1996
------------------ ------------------
<S> <C> <C>
Cash provided by (used for) operating activities:
Net income (loss)....................................................... $ 391,628 $(325,476)
Adjustments to reconcile net income (loss) to net cash provided by
(used for) operating activities:
Depreciation and amortization......................................... 593,624 54,890
Changes in current assets and liabilities, net of effects of
acquisitions:
Accounts and notes receivable......................................... (658,422) (38,354)
Inventory............................................................. 118,219 --
Prepaid expenses and other assets..................................... 82,739 (34,454)
Accounts payable and accrued expenses................................. (1,071,181) (226,964)
Deferred revenue...................................................... (583,890) (67,297)
------------------- ------------------
Total cash provided by (used for) operating activities.............. (1,127,283) (637,655)
------------------ ------------------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
Property and equipment expenditures................................... (54,102) (10,419)
Cash paid for deferred acquisition costs.............................. (865,908) (107,903)
Expenditures for software development costs........................... (124,015) (24,474)
Cash paid for acquisitions............................................ (6,972,410) --
------------------- ------------------
Total cash provided by (used for) investing activities.............. (8,016,435) (142,796)
------------------- ------------------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Proceeds from issuance of common stock - IPO.......................... 6,153,607 --
Proceeds from issuance of common stock................................ 280,000 648,343
Net proceeds (repayment) of long term debt............................ 3,587,106 65,422
Net increase (decrease) in shareholder loans.......................... (174,256) --
------------------ ------------------
Total cash provided by (used for) financing activities.............. 9,846,457 713,765
------------------ ------------------
Net increase (decrease) in cash.......................................... 702,739 (66,686)
Beginning, cash and cash equivalents..................................... 198,735 249,698
------------------ ------------------
Ending, cash and cash equivalents........................................ $ 901,474 $ 183,012
================== ==================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-3-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The information presented at October 31, 1997 and 1996 and for the periods
then ended is unaudited, but includes all adjustments, consisting only of normal
recurring adjustments, which the management of InfoCure Corporation ("InfoCure"
and together with InfoCure subsidiaries the "Company") believes to be necessary
for a fair presentation of the financial condition, results of operations and
cash flows for the periods presented. Historical results are not indicative of
the results to be expected in the future. Certain information in footnote
disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission (the "Commission"). The consolidated financial statements, notes
thereto and other information should be read in conjunction with the historical
and pro forma consolidated financial statements and related notes thereto
contained in the Company's Registration Statement on Form SB-2 filed with the
Commission on December 27, 1996 (Commission File No. 33-18923) and as amended on
February 24, 1997, March 14, 1997 and July 10, 1997.
InfoCure was formed on December 3, 1996 to acquire certain healthcare
practice management systems. On July 10, 1997, the Company completed the
contemporaneous acquisition of (i) American MedCare Corporation ("AMC") (the
parent of International Computer Solutions, Inc. ("ICS"), Health Care Division,
Inc. ("HCD") and Millard-Wayne, Inc. ("Millard-Wayne"), (ii) DR Software, Inc.;
(iii) KComp Management Systems, Inc. ("KComp"); and (iv) Rovak, Inc. ("Rovak").
AMC owned ICS for all of the accounting periods presented herein. AMC acquired
HCD effective December 3, 1996 and Millard-Wayne effective July 10, 1997. The
foregoing companies are referred to herein as the "Founding Companies".
In October and November 1997, InfoCure acquired all of the capital stock of
SoftEasy, Inc. ("SoftEasy"), certain health care assets and assumed health care
liabilities of Commercial Computers, Inc. ("CCI") and all of the assets, subject
to the assumption of certain liabilities, of Professional On-Line Computers,
Inc. ("POLCI"). These three acquisitions are referred to herein as the "Recent
Acquisitions." For certain accounting purposes, the consummation of each of
these acquisitions occurred effective as of October 1, 1997.
Prior to the acquisition of the Founding Companies, InfoCure conducted no
significant operations and generated no revenue. Accordingly, AMC has been
identified as the accounting acquiror, and the AMC acquisition was accounted for
as a combination at historical cost for accounting purposes. The acquisitions
of the remaining Founding Companies and the Recent Acquisitions were accounted
for as purchases at estimated fair value for accounting purposes.
The consolidated balance sheets as of January 31, 1997 are inclusive of AMC
and its subsidiaries, ICS and HCD. The consolidated balance sheets as of
October 31, 1997 are inclusive of all of the Founding Companies and Recent
Acquisitions. The consolidated statements of operations for the three months
and nine months ended October 31, 1996 are inclusive of AMC and its subsidiary,
ICS. The consolidated statements of operations for the three months ended
October 31, 1997 are inclusive of the Founding Companies for the entire period
presented and the Recent Acquisitions from and after October 1, 1997. The
consolidated statements of operations for the nine months ended October 31, 1997
are inclusive of (i) AMC and its subsidiaries, ICS and HCD for the entire period
presented; (ii) Millard-Wayne, Rovak, DR Software and KComp from and after July
10, 1997 and (iii) SoftEasy, CCI and POLCI from and after October 1, 1997.
Property and equipment are assigned lives of three to five years. The
allocation of goodwill of the consideration in excess of net value for
acquisitions recognizes the value ascribed to the ongoing business and the
revenue potential for existing future products and services. Goodwill is being
amortized over 15 years. Software costs represent the intangible asset
associated with enhancements and new modules for existing products. Such costs
are capitalized when technological feasibility is determined and are amortized
over a four year life.
-4-
<PAGE>
NOTE 2. BUSINESS ACQUISITIONS
During the quarter ended October 31, 1997, InfoCure acquired certain net
assets and liabilities of POLCI, CCI and SoftEasy. The total consideration of
the net assets acquired and liabilities assumed were as follows:
<TABLE>
<S> <C>
Cash........................................... $ 305,361
Accounts receivable............................ 467,459
Other receivables.............................. 11,295
Inventory...................................... 49,626
Prepaid expenses............................... 50,806
Property and equipment......................... 287,745
Other intangibles.............................. 141,584
Goodwill....................................... 4,828,136
---------------
Total assets................................. 6,142,012
---------------
Deferred revenue............................... 373,487
Accrued expenses............................... 141,362
Accounts payable............................... 145,182
Lease payable.................................. 56,477
Shareholders payables.......................... 260,742
Customer deposits.............................. 68,813
---------------
Total liabilities............................ 1,046,063
---------------
Net assets................................. $5,095,949
===============
</TABLE>
The following unaudited pro forma information presents the net revenues,
net income and earnings per share of the Company as if the acquisitions of the
Founding Companies and the Recent Acquisitions had occurred as of February 1,
1996. The pro forma information is not necessarily indicative of actual results
if such acquisitions occurred as of February 1, 1996, nor is it indicative of
results of operations which may be realized in future periods. The pro forma
amounts give effect to appropriate adjustments for the fair value of the net
assets acquired, operating expenses not assumed as part of the acquisitions,
amortization of goodwill, interest expense, and income taxes.
<TABLE>
<CAPTION>
PRO FORMA
---------------------------------------------------------------------------------------
Three Months Ended October 31, Nine Months Ended October 31,
----------------------------------------- ------------------------------------------
1997 1996 1997 1996
------------------ ----------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Net revenue........................ $6,904,270 $6,616,969 $18,719,422 $19,393,908
Net income......................... 454,755 359,701 1,101,425 982,027
Earnings per share................. $ 0.08 $ 0.06 $ 0.19 $ 0.17
</TABLE>
NOTE 4. COMMON STOCK AND EARNINGS PER SHARE
Common stock issued and outstanding reflects shares issued in the Company's
initial public offering completed effective July 10, 1997, and shares issued to
effect the acquisitions of the Founding Businesses and the Recent Acquisitions.
The weighted average outstanding share computations used in the pro forma
earnings per share computation for the respective periods reflect the respective
time periods for which the shares issued were outstanding. Shares authorized,
issued and outstanding and earnings per share for periods prior to July 10, 1997
(the effective date of the acquisition of the Founding Businesses), are not
considered meaningful, and have not been presented.
NOTE 5. CASH FLOW STATEMENT
The financial statements for the quarter ended October 31, 1997 reflect
approximately $600,000 in Common Stock issued in connection with the Recent
Acquisitions of SoftEasy and POLCI.
-5-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Certain information discussed in this report constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
including without limitation the following statements: (i) the Company's
anticipation that maintenance and support revenues will generally increase as a
percentage of total revenues over the long-term; (ii) the Company's intention to
increase its sales and marketing expenditures in future periods; (iii) the
Company's expectation of additional capital investments during 1998; (iv) the
Company's belief that its operating cash flow, combined with availability of
funds under its line of credit facility, will be sufficient to fund the
Company's working capital requirements through at least 1998; and (v) the
Company intention to seek additional sources of financing. The Company notes
that a variety of risk factors could cause the Company's actual results and
experience to differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements. Reference is
made in particular to the discussion set forth below in this report and set
forth in the Company's Registration Statement on Form SB-2 (File No. 333-18923)
which was declared effective by the Securities and Exchange Commission on July
10, 1997.
Historical Consolidated Results of Operations
Revenues. Total revenues for the three months ended October 31, 1997 were
$5.9 million compared to total revenues of $475,000 for the three months ended
October 31, 1996. Total revenues for the nine months ended October 31, 1997
were $9.7 million compared to total revenues of $1.7 million for the nine months
ended October 31, 1996. These increases in total revenues primarily reflect the
completion of the acquisition of the Founding Businesses effective July 10, 1997
and the Subsequent Acquisitions effective October 1, 1997. Revenues for periods
prior to July 10, 1997 include only revenues of the Company's predecessor, AMC,
and its consolidated subsidiaries. Systems and software revenues were $3.1
million for the three months ended October 31, 1997, or 51.8% of total revenues,
while maintenance and support revenues were $2.9 million, or 48.2% of total
revenues for the same period. For the nine months ended October 31, 1997,
systems and software revenues were $4.8 million, or 49.8% of total revenues,
while maintenance and support revenues were $4.9 million, or 50.2% of total
revenues. The Company anticipates that maintenance and support revenues will
generally increase as a percentage of total revenues over the long-term if the
Company is able to continue to expand and retain its installed customer base.
Cost of Revenues. For the three months ended October 31, 1997, cost of
revenues were $1.5 million, or 24.8% of total revenues, compared to $55,050, or
11.6% of total revenues, for the three months ended October 31, 1996. For the
nine months ended October 31, 1997, cost of revenues were $2.6 million, or 27.1%
of total revenues, compared to $299,075, or 18.0% of total revenues, for the
nine months ended October 31, 1996. The dollar volume increase in cost of
revenues reflects primarily the increase in total costs resulting from the
acquisition of the Founding Businesses and the Subsequent Acquisitions. The
increase in cost of revenues as a percentage of total revenues reflects
primarily changes in gross margin associated with the different businesses
included in these acquisitions.
Gross Margin. Gross margin increased to $4.5 million, or 75.2% of total
revenues, for the three months ended October 31, 1997 compared to $420,000, or
88.4% of total revenues, for the three months ended October 31, 1996. For the
nine months ended October 31, 1997, gross margin increased to $7.1 million, or
72.9% of total revenues, compared to $1.4 million, or 82.0% of total revenues,
for the nine months ended October 31, 1996. The decreases as a percentage of
total revenues primarily reflect a change in the mix of products and services
sold as a result of the Company's completion of its recent acquisitions.
Salaries and Operating Expenses. Salaries and operating expenses include
sales and marketing expenses, administrative expenses, and product development
expenses. Sales and marketing expenses includes salaries, variable commissions
and bonuses for the sales force, advertisement and promotional marketing
materials, travel and telephone charges. Administrative expenses include
salaries for administrative personnel, rents, telephone charges, insurance, and
other administrative expenses. Salaries and operating expenses increased to
$3.3 million, or 56.0% of total revenues; for the three months ended October 31,
1997 compared to $556,553, or 117.3% of total
-6-
<PAGE>
revenues, for the three months ended October 31, 1996. For the nine months ended
October 31, 1997, salaries and operating expenses increased to $5.6 million, or
58.0% of total revenues, compared to $1.6 million, or 94.8% of total revenues,
for the nine months ended October 31, 1996. The dollar volume increase in
salaries and operating expenses reflects primarily the increases in expenditures
for marketing, and administrative personnel and other selling and administrative
costs which support the significantly expanded business associated with the
Company's recent acquisitions. The Company intends to increase its sales and
marketing expenditures in future periods in order to continue to promote the
Company's broad range of product offerings. The decrease as a percentage of
total revenues reflects the increased efficiencies associated with expansion of
the Company's business base. Product development expense consists of personnel
costs incurred to conduct the Company's product development effort. Management
believes that significant continuing investments in product development are
required to compete effectively in the Company's industry. As a consequence, the
Company has increased, and intends to continue to increase, expenditures on
product development primarily through the employment of additional development
personnel and the acquisition of related computing systems, software and tools
for those personnel.
Depreciation and Amortization. Depreciation and amortization expenses were
$395,283, or 6.6% of total revenues, for the three months ended October 31, 1997
compared to $18,659, or 3.9% of total revenues, for the three months ended
October 31, 1996. For the nine months ended October 31, 1997, depreciation and
amortization expense increased to $593,624, or 6.1% of total revenues, compared
to $54,890, or 3.3% of total revenues, for the nine months ended October 31,
1996. Increased depreciation and amortization expense represents primarily the
significant increase in goodwill due to the acquisition of the Founding
Businesses and Subsequent Acquisitions. The Company expects additional capital
investments during 1998 as it continues to develop the infrastructure needed to
support increased levels of operations.
Income from Operations. Income from operations was $748,207 for the three
months ended October 31, 1997 as compared to the loss from operations of
$155,666 for the three months ended October 31, 1996. For the nine months ended
October 31, 1997, income from operations was $849,339 as compared to a loss from
operations of $268,229 for the nine months ended October 31, 1996. The
significant increase in income from operations for each of these periods
represent primarily the profitable results of operations of businesses included
in the Company's recent acquisitions, as well as efficiencies realized by the
Company from a larger install customer base and higher total revenues.
Interest Expense. Interest expense increased to $58,000 for the three
months ended October 31, 1997, as compared to $17,000 for the three months ended
October 31, 1996. For the nine months ended October 31, 1997, interest expense
increased to $185,000 as compared to $61,000 for the nine months ended October
31, 1996. The increases in interest expense generally reflect increase in
indebtedness incurred to complete the Company's recent acquisitions.
Provision for Income Taxes. The provision for income taxes was $329,000
for the three months ended October 31, 1997 and $323,000 for the nine months
ended October 31, 1997. This represents an effective income tax rate of
approximately 45.0%. No provision for income taxes was reported for the three
months or nine months ended October 31, 1996, reflecting the Company's losses
for those respective periods.
LIQUIDITY AND CAPITAL RESOURCES
At October 31, 1997, the Company had total cash and cash equivalents of
$901,474 and a working capital deficit of $1.4 million. During the nine months
ended October 31, 1997, the Company used $1.1 million of cash for operating
activities, representing principally increases in accounts receivable and
reductions in accounts payable and accrued expenses, slightly offset by a net
income of $391,628 and non-cash depreciation and amortization expenses of
$593,624. During this period, cash used for investing activities was $8.0
million, representing primarily cash used for acquisitions of $7.0 million and
deferred acquisition costs of $865,908. During the nine months ended October
31, 1997, the Company generated cash from financing activities of $9.8 million,
including $6.1 million net proceeds from the Company's initial public offering
and $3.6 million net proceeds from long-term debt.
-7-
<PAGE>
In November 1997, the Company closed a secured line of credit, with an
aggregate availability of $10.0 million, with FINOVA Capital to be used
primarily for acquisition purposes and working capital. The term of the line of
credit is five years. The credit facility bears interest at the rate of 10.5%
per annum. As of December 10, 1997, the outstanding balance under this facility
was $5.3 million.
The Company believes that its operating cash flow, combined with
availability of funds under its line of credit facility, will be sufficient to
fund the Company's working capital requirements through at least 1998, but will
not be sufficient to permit the Company to consummate all of the acquisitions
currently under negotiation or preliminary discussion. The Company's ability to
consummate future acquisitions will be determined by the Company's ability to
attain additional sources of capital. Consequently, the Company will seek
additional sources of financing, including borrowings and the sale of equity
and/or debt securities. The sale of equity securities, including securities
convertible into equity securities, may result in further dilution to existing
stockholders. No assurance can be given that additional sources of capital will
be available to the Company on terms acceptable to the Company, or at all.
Impact of New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, earnings per share ("SFAS 128"). This statement is effective for financial
statements issued for periods ending after December 15, 1997 and will require
companies to change the way they calculate earnings per share ("EPS"). Primary
EPS will be replaced by Basic EPS which excludes dilution and is calculated by
dividing income available to common stockholders by the weighted average number
of shares of common stock outstanding for the period. Fully Diluted EPS which
reflects the potential dilution that could occur if securities or other
contracts to issue common stock are exercised or converted into common stock or
could result in the issuance of common stock that would share in the Company's
earnings. In addition, SFAS 128 also requires dual presentation of Basic and
Diluted EPS on the face of the statement of operations for all of the entities
with complex capital structures and requires a reconciliation of the numerator
and denominator of the Basic EPS computation to the numerator and denominator of
the Diluted EPS computation. If SFAS 128 was adopted as of October 31, 1997,
the Company believes that it would not have had a material impact on the
Company's financial statements.
In October 1997, the American Institute of Certified Public Accountants
issued a Statement of Position 92-7 ("SOP 92-7"), software revenue recognition,
revising certain aspects of Statement of Position 91-1. SOP 92-7 will be
effective for transactions occurring in years after December 15, 1997. The
Company does not expect that SOP 92-7 will materially affect its revenue
recognition policies.
-8-
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not Applicable.
ITEM 2. CHANGE IN SECURITIES.
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 5. OTHER INFORMATION.
The Company continues to consider acquisitions and is in various stages of
discussions with potential acquisition candidates in the health care practice
management systems industry. As of December 1, 1997 the Company was a party to
non-binding letters of intent to acquire five privately held practice management
system vendors. There can be no assurance that the Company will be able to
obtain the required financing to complete these acquisitions or that the terms
established will not be materially modified.
In June 1996 the Company contracted with an investment banking financial
advisor to assist in the financial analysis of the target companies, and
development of a consolidation business plan. The advisors are also assisting
the Company in identifying financing alternatives. The Company has agreed to
pay the advisor a fee based upon the amount of any capital raised.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27. Financial Data Schedule (solely for use by the Securities and
Exchange Commission)
(b) Reports on Form 8-K
(i) A current report on Form 8-K was filed with the Securities and
Exchange Commission on August 27, 1997 in connection with the
acquisition by the Company of Commercial Computers, Inc. and SoftEasy
Software, Inc.
(ii) A current report on Form 8-K was filed with the Securities and
Exchange Commission on September 12, 1997 to report the hiring of
Richard A. Pedersen as national sales manager.
(iii) A current report on Form 8-K was filed with the Securities and
Exchange Commission on September 23, 1997 to announce its earnings for
the quarter ended July 31, 1997.
SIGNATURES
-9-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INFOCURE CORPORATION
Date: December 12, 1997 ___________________________________________
-----------------
Frederick L. Fine
President; Chief Executive Officer
(Principal Executive Officer) and Director
Date: December 12, 1997 ___________________________________________
-----------------
Michael E. Warren
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
-10-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THIRD
QUARTER 10Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 901
<SECURITIES> 0
<RECEIVABLES> 2,353
<ALLOWANCES> 157
<INVENTORY> 313
<CURRENT-ASSETS> 4,562
<PP&E> 999
<DEPRECIATION> 659
<TOTAL-ASSETS> 25,171
<CURRENT-LIABILITIES> 5,986
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,675
<SALES> 9,703
<TOTAL-REVENUES> 9,703
<CGS> 2,630
<TOTAL-COSTS> 2,630
<OTHER-EXPENSES> 5,630
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 185
<INCOME-PRETAX> 715
<INCOME-TAX> 323
<INCOME-CONTINUING> 715
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 392
<EPS-PRIMARY> .10
<EPS-DILUTED> 0
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