<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 26, 1997
-----------------
INFOCURE CORPORATION
------------------------------------------------------------------
(exact name of registrant as specified in chapter)
Delaware 001-12799 58-2271614
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1765 The Exchange, Suite 450, Atlanta, GA 30339
- --------------------------------------------------------------------------------
(Address of principal executive office) (zip code)
Registrant's telephone number, including area code: 770-221-9990
------------
Former Address
--------------
(2970 Clairmont Rd, Suite 950, Atlanta, GA 30329)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
September 30, 1997 and December 31, 1996 Audited Financial Statements
of Professional On-Line Computer, Inc. are attached hereto.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Condensed Consolidated Financial Statements are
attached hereto.
-2-
<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 thereunto duly authorized.
INFOCURE CORPORATION
(Registrant)
Date: February 9, 1998 by: /s/ Frederick L. Fine
-------------------------
Frederick L. Fine
Chief Executive Officer, President
3
<PAGE>
INDEX TO FINANCIAL STATEMENTS
InfoCure Corporation
Form 8-K/A
September 30, 1997 and December 31, 1996 Audited Financial Statements of
Professional On-Line Compunter, Inc.
- --------------------------------------------------------------------------------
Report of Independent Certified Public Accountants ..........................F-2
Balance Sheets ..............................................................F-3
Statements of Income and Retained Earnings ..................................F-5
Statements of Cash Flows ....................................................F-6
Notes to Financial Statements ...............................................F-7
InfoCure Corporation Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
Pro Forma Condensed Consolidated Statements of Operations
For the nine months ended October 31, 1997 ............................F-14
For the year ended January 31, 1997 ...................................F-15
Notes to Pro Forma Condensed Consolidated Financial Statements .............F-16
F-1
<PAGE>
Report of Independent Certified Public Accountants
To the Board of Directors
Professional On-Line Computer, Inc.
Saginaw, Michigan
We have audited the accompanying balance sheets of Professional On-Line
Computer, Inc. as of September 30, 1997 and December 31, 1996, and the related
statements of income and retained earnings, and cash flows for the nine months
ended September 30, 1997 and year ended December 31, 1996. 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 Professional On-Line Computer,
Inc. as of September 30, 1997 and December 31, 1996, and the results of its
operations and its cash flows nine months ended September 30, 1997 and year
ended December 31, 1996 in conformity with generally accepted accounting
principles.
BDO SEIDMAN, LLP
Atlanta, Georgia
October 17, 1997
F-2
<PAGE>
Professional On-Line Computer, Inc.
Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Assets
Current Assets
Cash and equivalents $ 384,361 $ 380,177
Accounts receivable
Trade, net of allowance for doubtful
accounts of $80,000 in 1997 and 1996 608,133 1,156,724
Related parties 147,879 131,307
Prepaid expenses 28,467 42,687
Other current assets 14,211 12,925
----------- -----------
Total Current Assets 1,183,051 1,723,820
Property and Equipment, net of
accumulated depreciation and amortization 138,856 157,494
----------- -----------
$ 1,321,907 $ 1,881,314
----------- -----------
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
Professional On-Line Computer, Inc.
Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
--------------- --------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable
Trade $ 63,805 $ 344,291
Related party 50,003 62,295
Accrued expenses
Compensation and payroll taxes 52,359 34,176
Other taxes 18,959 32,120
Interest - 74,993
Other 34,246 30,042
Deferred revenue 141,060 107,621
Customer deposits 68,813 68,813
Covenant not to compete - 405,007
Current portion of notes payable to stockholders 62,738 167,605
Current portion of capital lease obligations 25,478 88,974
---------- ----------
Total Current Liabilities 517,461 1,415,937
Notes Payable Stockholders, less current portion 332,365 111,593
Capital Lease Obligations, less current portion 30,999 3,595
---------- ----------
Total Liabilities 880,825 1,531,125
---------- ----------
Commitments and Contingencies
Stockholders' Equity
Common stock, $1.00 par, 500 shares authorized,
issued and outstanding 500 500
Additional paid-in capital 1,000 1,000
Retained earnings 439,582 348,689
---------- ----------
Total Stockholders' Equity 441,082 350,189
---------- ----------
$1,321,907 $1,881,314
---------- ----------
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
Professional On-Line Computer, Inc.
Statements of Income and Retained Earnings
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Revenues
System and software sales $ 602,874 $1,274,462
Maintenance and services 1,951,977 2,398,977
Other 14,648 28,505
---------- ----------
Total Revenues 2,569,499 3,701,944
---------- ----------
Operating Costs and Expenses
Personnel 856,527 1,220,583
Cost of services 421,458 580,172
Cost of hardware and software sales 137,208 574,364
Depreciation and amortization 93,658 492,056
Other selling, general and administrative 625,448 745,822
---------- ----------
Total Operating Costs and Expenses 2,134,299 3,612,997
---------- ----------
Income From Operations 435,200 88,947
---------- ----------
Other Income (Expense)
Interest income 36,649 39,397
Gain on sale of assets 11,411 24,592
Interest expense (177,945) (54,275)
---------- ----------
Total Other Income (Expense) (129,885) 9,714
---------- ----------
Net Income 305,315 98,661
Retained Earnings, beginning of period 348,689 250,028
Distributions (214,422) -
---------- ----------
Retained Earnings, end of period $ 439,582 $ 348,689
---------- ----------
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
Professional On-Line Computer, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 305,315 $ 98,661
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 93,658 492,056
Gain on sale of property and equipment (11,411) (24,592)
Changes in current assets and liabilities:
Accounts receivable 532,019 (641,078)
Prepaid expenses and other current assets 12,934 21,024
Accounts payable (292,778) 282,882
Accrued expenses (65,767) 11,928
Deferred revenue 33,439 28,023
--------- ---------
Net Cash Provided By Operating Activities 607,409 268,904
--------- ---------
Cash Flows From Investing Activities
Proceeds from sale of property and equipment 14,302 26,397
Purchase of property and equipment (13,068) (6,200)
--------- ---------
Net Cash Provided By Investing Activities 1,234 20,197
--------- ---------
Cash Flows From Financing Activities
Increase (decrease) in loans from stockholders 115,905 (252,263)
Payments on debt and capital lease obligations (505,942) (219,605)
Distributions (214,422) -
--------- ---------
Net Cash Used In Financing Activities (604,459) (471,868)
--------- ---------
Net Change in Cash 4,184 (182,767)
Cash and equivalent, at beginning of period 380,177 562,944
--------- ---------
Cash and equivalents, at end of period $ 384,361 $ 380,177
--------- ---------
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
Professional On-Line Computer, Inc.
Notes to Financial Statements
1. Summary of Description of Business
Significant
Accounting Professional On-Line Computer, Inc. (the "Company")
Policies develops, sells, installs and services computer software
for the medical industry throughout the midwest United
States. The Company also sells computer hardware and
supplies. Costs of sales and services are included in
operating costs and expenses.
Revenue Recognition
Revenue from sales of hardware and software is
recognized when products are delivered. Revenue from
maintenance and support service contracts is recognized
ratably over the contract period. Deferred revenues
include the unearned portion of all maintenance
agreements. Revenue from other services is recorded when
the service is performed.
Cash Equivalents
Cash equivalents are short-term, highly liquid
investments consisting of money market funds.
Property and Equipment
Property and equipment are stated at cost. Depreciation
is computed over the estimated useful life of the
assets using straight-line methods. Gains and losses
arising from disposal of property and equipment are
included in income.
Capitalized Software Development Costs
Certain costs incurred in the internal development of
computer software and costs of purchased computer
software, which is to be licensed, sold, or otherwise
marketed, are capitalized and amortized on a straight-
line basis over the expected useful life of the
individual software products (generally four years).
Development costs include detailed design, prototyping,
coding, testing, documentation, production and quality
assurance. Such costs are capitalized once the product's
technological feasibility is established and
amortization commences after the product is available
for general release. Amortization of capitalized
software development costs for the year ended December
31, 1996, was approximately $267,000. As of December 31,
1996, all capitalized software development costs have
been fully amortized.
F-7
<PAGE>
Professional On-Line Computer, Inc.
Notes to Financial Statements
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.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash, cash
equivalents and accounts receivable. At times such cash and
equivalents in banks are in excess of the respective financial
institution's FDIC insurance limit. The Company attempts to minimize
accounts receivable credit risk by reviewing all customers' credit
history before extending credit and by monitoring customers' credit
exposure on a continuing basis. The Company established an allowance
for possible losses on accounts receivable, when necessary, based upon
factors surrounding the credit risk of specific customers, historical
trends and other information.
New Accounting Pronouncements
Statement of Financial Accounting Standards ("SAFS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" was adopted in 1996.
This statement required that long-lived assets, including certain
intangibles, held and used by the Company be reviewed for potential
impairment. This new pronouncement did not have a material effect on
the Company's financial statements when adopted.
SFAS No. 130, "Reporting Comprehensive Income" is effective for years
beginning after December 15, 1997. This statement establishes
standards for reporting and display of comprehensive income, its
components and accumulated balances. This pronouncement is not
expected to have a material impact on the Company's financial
statements when adopted.
F-8
<PAGE>
Professional On-Line Computer, Inc.
Notes to Financial Statements
SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" is effective for
years beginning after December 15, 1997. This statement
establishes standards for the way that public business
enterprises report information about operating segments
in annual financial statements. It also establishes
standards for related disclosures about products and
services, geographic areas, and major customers. This
pronouncement is not expected to have a material impact
on the Company's financial statements when adopted.
Interim Results
Results of operations and cash flows for the nine month
period are not necessarily indicative of what results of
operations and cash flows will be for an entire year.
2. Property and
Equipment Property and equipment consists of the following:
<TABLE>
<CAPTION>
Estimated September 30, December 31,
Useful Life 1997 1996
------------ --------------- --------------
<S> <C> <C> <C>
Computer equipment 3 $346,791 $435,260
Equipment under capital 3 490,346 425,503
lease
Furniture and fixtures 3 7,338 18,383
Leasehold improvements 3 2,215 2,215
--------- ---------
846,690 881,361
Less accumulated
depreciation and
amortization 707,834 723,867
--------- ---------
$138,856 $157,494
--------- ---------
</TABLE>
Depreciation expense, including that on equipment under
capital lease, was $93,658 and $225,473 for the nine
months ended September 30, 1997 and year ended December
31, 1996, respectively. Accumulated depreciation on the
equipment under capital leases was $411,691 and $359,916
at September 30, 1997 and December 31, 1996,
respectively.
F-9
<PAGE>
Professional On-Line Computer, Inc.
Notes to Financial Statements
3. Note Payable During 1997 the Company entered into an installment note
Stockholders payable with one of the stockholders. The outstanding
balance on the note was $395,103 as of September 30,
1997. The note is payable in monthly installments of
$8,898 including interest at 12% until paid in full. The
note is collateralized by the assets of the Company.
At December 31, 1996, the Company had one unsecured
installment note payable outstanding with each of the
two stockholders of the Company. The outstanding balance
on these notes totalled $279,198 at December 31, 1996.
The notes were payable in monthly installments totalling
$16,000 including interest at 10% until paid in full.
Both notes were paid in full during 1997.
The aggregate maturities are as follows:
Year Amount
---- ------
1998 $ 62,738
1999 70,694
2000 79,660
2001 89,763
2002 92,248
4. Covenant Not In connection with the stockholders purchase of the
to Compete Company in 1990, the Company entered into a covenant not
to compete agreement with the former stockholders. The
total liability amounted to $800,000 (including interest
imputed at 9%) to be paid in annual installments of
$160,000, including interest, through March 1995.
After two installments, the Company ceased making
payments as the Company believed the former stockholders
were engaging in activities that were in violation of
the agreement. This matter was resolved in August 1997
to the detriment of the Company. As a result, the
Company paid in full the principal and interest
outstanding on this note. Additionally, the Company was
required to pay approximately $178,000 in additional
costs which it expensed during 1997.
F-10
<PAGE>
Professional On-Line Computer, Inc.
Notes to Financial Statements
5. Related Party The Company's stockholders are owners in several companies
Transactions that conduct business with the Company. The balance due
from (to) related companies are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
<S> <C> <C>
Net Med, Inc. $ 141,584 $ 130,862
PICI, Inc. 6,295 445
---------- ----------
$ 147,879 $ 131,307
---------- ----------
Pro Con 400, Inc. $ (50,003) $ (62,295)
---------- ----------
</TABLE>
A summary of significant income and expense transactions
between related companies which are included in the
statements of operations are as follows:
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31,1997
<S> <C> <C>
Consulting Services From
Pro Con 400, Inc. $ 55,763 $ 118,718
---------- ----------
Programming Revenue To
Net Med, Inc. $ 10,673 $ 130,724
---------- ----------
</TABLE>
F-11
<PAGE>
Professional On-Line Computer, Inc.
Notes to Financial Statements
6. Leases The Company leases certain equipment under capital
leases expiring at various dates through March 2000.
Future minimum lease payments as of September 30, 1997
are as follows:
Year Amount
---- ------
1998 $ 40,173
1999 19,661
2000 11,195
--------
Total minimum lease payments 71,029
Less amount representing interest 14,552
--------
Present value of net minimum lease payments 56,477
Less current portion 25,478
--------
Long-term portion $ 30,999
--------
The Company is obligated under terms of operating leases
for its office facilities, certain equipment and
vehicles expiring at various dates through September
2000. Future minimum payments under these operating
leases as of September 30, 1997 are as follows:
Year Amount
---- ------
1998 $112,753
1999 109,598
2000 4,236
--------
$226,587
--------
Rent expense was approximately $85,000 and $124,000 for
the nine months ended September 30, 1997 and year ended
December 31, 1996, respectively.
F-12
<PAGE>
Professional On-Line Computer, Inc.
Notes to Financial Statements
7. Employee The Company maintains a 401(k) plan for its eligible
Benefit Plan employees. In addition to the amount deferred by each
employee, the Company matches 25% of the first four
percent of employee contributions. Expense related to
this plan was $4,020 and $4,806 for the nine months
ended September 30, 1998 and year ended December 31,
1996, respectively.
8. Income Taxes The Company has elected to be taxed as an "S"
Corporation under the provisions of Subchapter S of the
Internal Revenue Code. As such, the profits of the
Company are taxed on the individual income tax returns
of the stockholders. Accordingly, no provisions for
income taxes has been made in the accompanying financial
statements.
9. Major Two customers, each individually accounting for at least
Customers 10% of total revenues, accounted for 25% of total
revenues in 1997 and one customer accounted for 20% of
total revenues in 1996.
10. Supplemental Nine Months Ended Year Ended
Disclosures of Cash September 30, December 31,
Flow Information 1997 1996
----------------- ------------
Cash paid for
interest $ 252,940 $ 58,350
---------- ----------
Non-Cash Investing Activities
The Company entered into capital lease obligations
totalling $64,843 for new equipment during the nine
months ended September 30, 1997 and $38,749 for the year
ended December 31, 1996.
11. Subsequent The Company has entered into negotiations with the
Event InfoCure Corporation ("InfoCure"), whereby InfoCure
would acquire substantially all of the assets and
assumes certain liabilities of the Company in exchange
for an estimated $3,000,000 cash and $500,000 in the
form of common stock of InfoCure. An additional $750,000
in the form of common stock of InfoCure would be
contingently issuable upon meeting certain gross profit
criteria for the two twelve month periods following the
consummation of the transaction. The sale is expected to
occur in the fourth quarter of 1997.
F-13
<PAGE>
InfoCure Corporation
Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended October 31, 1997
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Acquisition
of Founding Pro Forma
InfoCure Businesses Adjustments [1] Subtotal
--------------- ---------------- ----------------- --------------
<S> <C> <C> <C> <C>
Revenues 9,703 5,189 0 14,892
Cost of revenues 2,630 1,568 0 4,198
-------------------------------------------------------------------------
Gross profit 7,073 3,621 0 10,694
Operating expenses 6,224 3,161 (360) 9,025
-------------------------------------------------------------------------
Operating income 849 460 360 1,669
Other expense (income) 134 71 (156) 49
-------------------------------------------------------------------------
Income before taxes 715 389 516 1,620
Taxes (benefit) 323 175 253 751
-------------------------------------------------------------------------
Net income $ 392 $ 214 $ 263 $ 869
=========================================================================
<CAPTION>
Acquisition Other Pro Forma
of POLCI Acquisitions Adjustments Total
--------------- ---------------- ----------------- --------------
<S> <C> <C> <C> <C>
Revenues 2,284 1,543 0 18,719
Cost of revenues 497 391 0 5,086
-------------------------------------------------------------------------
Gross profit 1,787 1,152 0 13,633
Operating expenses 1,405 968 (104)[A] 11,294
-------------------------------------------------------------------------
Operating income 382 184 104 2,339
Other expense (income) 114 (2) 176 [B] 337
-------------------------------------------------------------------------
Income before taxes 268 186 (72) 2,002
Taxes (benefit) 0 0 150 [C] 901
-------------------------------------------------------------------------
Net income $ 268 $ 186 $ (222) $ 1,101
=========================================================================
Pro forma income per share $ 0.19
==============
Shares used in computing pro forma income per share 5,737
==============
</TABLE>
See notes to pro forma condensed consolidated financial statements.
F-14
<PAGE>
InfoCure Corporation
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended January 31, 1997
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
AMC Acquisition
(Predecessor of Founding Pro Forma
Company) Businesses Adjustments [1] Subtotal
----------------- ----------------- ----------------- ------------
<S> <C> <C> <C> <C>
Revenues 2,495 16,611 0 19,106
Cost of revenues 475 5,181 0 5,656
-------------------------------------------------------------------------
Gross profit 2,020 11,430 0 13,450
Operating expenses 2,580 10,793 (1,918) 11,455
-------------------------------------------------------------------------
Operating income (560) 637 1,918 1,995
Other expense (income) 77 209 (254) 32
-------------------------------------------------------------------------
Income before taxes (637) 428 2,172 1,963
Taxes (benefit) (891) 173 1,656 938
-------------------------------------------------------------------------
Net income $ 254 $ 255 $ 516 $ 1,025
=========================================================================
<CAPTION>
Acquisition Other Pro Forma
of POLCI Acquisitions Adjustments Total
----------------- ----------------- ----------------- ------------
<S> <C> <C> <C> <C>
Revenues 3,702 2,746 0 25,554
Cost of revenues 1,155 820 0 7,631
-------------------------------------------------------------------------
Gross profit 2,547 1,926 0 17,923
Operating expenses 2,458 1,654 (417)[A] 15,150
-------------------------------------------------------------------------
Operating income 89 272 417 2,773
Other expense (income) (10) 0 440 [B] 462
-------------------------------------------------------------------------
Income before taxes 99 272 (23) 2,311
Taxes (benefit) 0 0 152 [C] 1,090
-------------------------------------------------------------------------
Net income $ 99 $ 272 $ (175) $ 1,221
=========================================================================
Pro forma income per share $ 0.21
============
Shares used in computing pro forma income per share 5,737
============
</TABLE>
See notes to pro forma condensed consolidated financial statements.
F-15
<PAGE>
INFOCURE CORPORATION
Notes to Condensed Consolidated Pro Forma Financial Statements
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
InfoCure Corporation ("InfoCure" and together with InfoCure subsidiaries the
"Company") was formed on December 3, 1996 to acquire certain healthcare practice
management companies in order to offer a comprehensive array of healthcare
practice management systems. On July 10, 1997, contemporaneous with the closing
of the Company's initial public offering, the Company completed the acquisition
of (i) American MedCare Corporation ("AMC")(the "Predecessor Company")(the
parent of International Computer solutions, Health Care Division and Millard-
Wayne, Inc.); (ii) DR Software, Inc.; (iii) KComp Management Systems, Inc.; and
(iv) Rovak, Inc. AMC acquired Health Care Division effective December 3, 1996
and Millard-Wayne, Inc. effective July 10, 1997. The foregoing acquired
companies (except for AMC as the Predecessor Company) are referred to in the
condensed consolidated pro forma financial statements as the "Founding
Businesses".
The accompanying unaudited condensed consolidated pro forma financial statements
are presented to illustrate the effect on the Company's historical results of
operations of (i) the acquisition of the Founding Businesses as discussed above;
(ii) the acquisition, effective as of October 1, 1997, of the assets, subject to
the assumption of certain liabilities, of Professional On-Line Computers, Inc.
(POLCI"); and (iii) the acquisitions, effective as of October 1, 1997, of the
capital stock of SoftEasy, Inc. ("SoftEasy") and certain health care assets,
subject to the assumption of certain health care liabilities, of Commercial
Computers, Inc. ("CCI") (SoftEasy and CCI are collectively referred to as the
"Other Acquisitions"). The Company's historical balance sheet as of October 31,
1997, as previously filed with the Commission on Form 10-Q, includes the effects
of each of the foregoing acquisitions, accordingly, an unaudited condensed
consolidated pro forma balance sheet as of October 31, 1997 is not provided
herein.
The unaudited condensed consolidated pro forma statements of operations have
been prepared as if the acquisitions had been consummated at the beginning of
the respective periods presented. The pro forma statement of operations for the
year ended January 31, 1997 combines the Company's statement of operations for
that period with (i) the respective statements of operations for each of the
Founding Businesses for the periods as described in the Company's registration
statement on Form SB-2 on file with the Commission; and (ii) the respective
statements of operations for POLCI and the Other Acquisitions for the year ended
December 31, 1997. The pro forma statement of operations for the nine months
ended October 31, 1997 combines the Company's statement of operations for that
period with (i) the respective statements of operations for each of the Founding
Businesses for the approximate five and one-half month period from January 1,
1997; plus the period from July 10, 1997 (date of acquisition to October 31,
1997 (except for Health Care Division whose results of operations are included
for the nine months ended October 31, 1997); and (ii) the respective statements
of operations for POLCI and the Other Acquisitions for the approximate eight
month period ended August 31, 1997 plus the period from October 1, 1997 (date of
acquisition) to October 31, 1997.
F-16
<PAGE>
The pro forma adjustments described in Note 2 below are based on preliminary
estimates, available information and certain assumptions that management deems
appropriate. The unaudited pro forma condensed consolidated data presented
herein do not purport to represent what the Company's results of operations
would actually have been had such events occurred at the beginning of the
periods presented, as assumed, or to project the Company's results of operations
for any future period or the future results of the Company.
NOTE 2 - PRO FORMA ADJUSTMENTS
The pro forma adjustments to the condensed consolidated statements of operations
are as follows:
[1] The pro forma adjustments with respect to the Founding Businesses are
described in the Company's registration statement on Form SB-2 on
file with the Commission.
[A] To adjust costs and expenses to reflect the termination of certain
personnel and and the changes in the salaries of other personnel
specifically provided for in the acquisition and related agreements.
To adjust depreciation and amortization to reflect the adjusted bases
of POLCI, SoftEasy and CCI assets. Goodwill resulting from the
acquisitions will be amortized over a 15 year period.
[B] To adjust interest expense to reflect the increase in debt in
connection with the acquistions.
[C] To adjust income tax expense.
F-17
