<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) December 31, 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
------------
Not Applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
December 31, 1996 and 1995 Audited Financial Statements of Software
Manufacturing Group, Inc. are attached hereto.
November 30, 1997 Unaudited Financial Statements of OPMS (formerly
Software Manufacturing Group, Inc.) a division of HALIS, Inc. are
attached hereto.
(b) Pro Forma Financial Information.
Infocure Corporation Pro Forma Condensed Consolidated Financial
Statements (Unaudited) are attached hereto.
<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: March 16, 1998 by: /s/ Frederick L. Fine
--------------------------------
Frederick L. Fine
Chief Executive Officer, President
<PAGE>
INDEX TO FINANCIAL STATEMENTS
InfoCure Corporation
Form 8-K/A
December 31, 1996 and 1995 Audited Financial Statements of Software
Manufacturing Group, Inc.
- --------------------------------------------------------------------------------
Report of Independent Certified Public Accountants ......................... F-2
Balance Sheet .............................................................. F-3
Statements of Operations ................................................... F-4
Statements of Changes in Stockholders' Deficit ............................. F-5
Statements of Cash Flows ................................................... F-6
Notes to Financial Statements .............................................. F-7
November 30, 1997 Unaudited Financial Statements of OPMS (formerly Software
Manufacturing Group, Inc.) a division of HALIS, Inc.
- --------------------------------------------------------------------------------
Balance Sheet ............................................................. F-15
Statements of Operations .................................................. F-16
Statements of Cash Flows .................................................. F-17
Notes to Financial Statements ............................................. F-18
InfoCure Corporation Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
Pro Forma Condensed Consolidated Balance Sheet ............................ F-19
Pro Forma Condensed Consolidated Statements of Operations
For the year ended January 31, 1997 .................................. F-20
For the nine months ended October 31, 1997............................ F-21
Notes to Pro Forma Condensed Consolidated Financial Statements............. F-22
F-1
<PAGE>
Report of Independent Certified Public Accountant
To the Board of Directors
Software Manufacturing Group, Inc.
We have audited the accompanying balance sheet of Software Manufacturing Group,
Inc. as of December 31, 1996, and the related statements of operations, changes
in stockholders' deficit and cash flows for the years ended December 31, 1996
and 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Software Manufacturing Group,
Inc. at December 31, 1996, and the results of its operations and its cash flows
for the years ended December 31, 1996 and 1995 in conformity with generally
accepted accounting principles.
Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
March 5, 1997
F-2
<PAGE>
Software Manufacturing Group, Inc.
Balance Sheet
December 31, 1996
<TABLE>
<CAPTION>
ASSETS
------
Current assets
- --------------
<S> <C>
Cash and cash equivalents..................................................$ 97,784
Receivables, less allowance for doubtful
accounts of $15,052....................................................... 272,071
Prepaid expenses........................................................... 13,297
-----------
Total current assets............................................... 383,152
-----------
Property and equipment, at cost
- -------------------------------
Computer equipment......................................................... 391,789
Office furniture and equipment............................................. 151,970
-----------
543,759
Less accumulated depreciation.............................................. (392,251)
-----------
151,508
-----------
Other assets
- ------------
Deposits................................................................... 7,267
Capitalized software development costs,
net of accumulated amortization of $27,782................................ 138,810
Other...................................................................... 1,150
-----------
147,227
-----------
$ 681,887
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities
- -------------------
Line-of-credit payable................................................... $ 200,000
Current portion of long-term debt........................................ 70,694
Current portion of capital lease obligations............................. 16,248
Note payable - related party............................................. 260,000
Accounts payable......................................................... 153,803
Accrued expenses......................................................... 118,512
Deferred revenue......................................................... 506,591
Customer deposits and prepayments........................................ 124,355
------------
Total current liabilities.............................................. 1,450,203
------------
Long-term liabilities
- ---------------------
Long-term debt, less current portion..................................... 266,535
Capital lease obligations, less current portion.......................... 35,185
-----------
301,720
------------
Stockholders' deficit
- ---------------------
Common stock, $1.00 par value,
100,000 shares authorized; 4,000 shares
issued and outstanding............................................... 4,000
Additional paid-in capital............................................... 9,250
Accumulated deficit...................................................... (1,083,286)
------------
(1,070,036)
------------
$ 681,887
============
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
Software Manufacturing Group, Inc.
Statements of Operations
For the Years Ended December 31,
<TABLE>
<CAPTION>
1996 1995
----------------- -----------------
<S> <C> <C>
System sales and services....................................... $ 2,923,629 $ 3,461,832
----------------- -----------------
Costs and expenses
- ------------------
Cost of sales................................................ 1,102,388 1,262,409
Selling, general and administrative.......................... 2,108,094 2,198,804
Research and development..................................... 312,430 211,342
----------------- -----------------
3,522,912 3,672,555
----------------- -----------------
Operating loss........................................... (599,283) (210,723)
----------------- -----------------
Other income (expense)
- ----------------------
Miscellaneous income......................................... 53,999 63,887
Interest income.............................................. 731 1,268
Interest expense............................................. (83,360) (20,729)
Loss on disposal of property and equipment................... (77,468) (14,050)
(106,098) 30,376
----------------- -----------------
Net loss........................................................ $ (705,381) $ (180,347)
================= =================
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
Software Manufacturing Group, Inc.
Statements of Changes in Stockholders' Deficit
For the Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
Additional
Common Paid-In Accumulated
Stock Capital Deficit Total
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Balances, December 31, 1994 $4,000 $9,250 $ (197,558) $ (184,308)
Net loss - - (180,347) (180,347)
---------------- ---------------- ---------------- ----------------
Balances, December 31, 1995 4,000 9,250 (377,905) (364,655)
Net loss - - (705,381) (705,381)
---------------- ---------------- ---------------- ----------------
Balances, December 31, 1996 $4,000 $9,250 $(1,083,286) $(1,070,036)
================ ================ ================ ================
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
Software Manufacturing Group, Inc.
Statements of Cash Flows
For the Years Ended December 31,
<TABLE>
<CAPTION>
1996 1995
------------------- -------------------
Cash flows from operating activities
- ------------------------------------
<S> <C> <C>
Net loss............................................................. $(705,381) $(180,347)
------------------- -------------------
Adjustments to reconcile net loss to net cash
used by operating activities
Depreciation and amortization...................................... 130,071 93,722
Loss on sale of property and equipment............................. 77,468 14,050
Bad debt........................................................... 12,000 -
Inventory reserve.................................................. 20,000 -
Changes in assets and liabilities
Decrease (increase) in receivables............................... 56,220 (16,399)
Decrease (increase) in inventory................................. 143,087 (58,780)
Increase in prepaid expenses..................................... (3,663) (9,634)
Decrease (increase) in deposits.................................. 1,355 (1,712)
Increase in other assets......................................... - (4,504)
Increase (decrease) in accounts payable.......................... (62,377) 85,201
Increase (decrease) in accrued expenses.......................... 4,320 (38,395)
Increase (decrease) in deferred revenue.......................... (46,404) 73,127
Increase (decrease) in customer deposits......................... 102,794 (9,498)
------------------- -------------------
Total adjustments............................................... 434,871 127,178
------------------- -------------------
Net cash used by operating activities.......................... (270,510) (53,169)
------------------- -------------------
Cash flows from investing activities
- ------------------------------------
Purchase of property and equipment................................... (82,157) (192,592)
Proceeds from sale of equipment and furniture........................ 13,395 -
Increase in software development costs............................... (47,849) (118,723)
------------------- -------------------
Net cash used by investing activities............................... (116,611) (311,315)
------------------- -------------------
Cash flows from financing activities
- ------------------------------------
Proceeds from note payable - related party........................... 205,000 100,000
Payments on notes payable - related party............................ (45,000) -
Proceeds from issuance of long-term debt............................. 7,923 445,680
Principal payments on long-term debt................................. (70,604) (151,995)
Proceeds from line-of-credit......................................... 200,000 75,679
Principal payments on line-of-credit................................. - (75,679)
Principal payments on capital lease obligations...................... (15,097) (5,790)
------------------- -------------------
Net cash provided by financing activities........................... 282,132 387,895
------------------- -------------------
Net increase (decrease) in cash and cash equivalents.................. (104,989) 23,411
Cash and cash equivalents, beginning of year.......................... 202,773 179,362
-------------------------------------------
Cash and cash equivalents, end of year................................ $ 97,784 $ 202,773
=================== ===================
</TABLE>
NONCASH INVESTING ACTIVITIES
In 1995, capital lease obligations of $72,320 were incurred when the Company
entered into a lease for new equipment.
See accompanying notes to financial statements
F-6
<PAGE>
Software Manufacturing Group, Inc.
Notes to Financial Statements
December 31, 1996 and 1995
<TABLE>
<S> <C> <C>
A. Summary of Nature of Operations
Significant
Accounting Software Manufacturing Group, Inc., a Georgia corporation,
Policies develops, licenses, and supports computer software for use by
othodontic practices within North America. The Company also
provides training for the software and offers service contracts
which include technical telephone support and software updates.
Revenue Recognition
Revenue consists primarily of licensing fees, sales of related
computer hardware, and post contract customer support. The
Company accounts for such revenue in accordance with the
American Institute of Certified Public Accountants' (AICPA)
Statement of Position 91-1, Software Revenue Recognition, as
follows:
License revenue - Revenue from the sale of software
licenses is recognized after
shipment of the product and
fulfillment of acceptance terms,
provided no significant
obligations remain and collection
of resulting receivable is deemed
probable.
Support contract - Ratably over the life of the
contract from the effective date.
Installation, training and
education - When the services are provided.
Hardware - Upon shipment of computer
equipment to the customer,
provided no significant
obligations remain and collection
of resulting receivable is deemed
probable.
Cash and Cash Equivalents
The Company classifies all highly liquid instruments with
maturities of ninety days or less as cash equivalents.
</TABLE>
F-7
<PAGE>
Software Manufacturing Group, Inc.
Notes to Financial Statements
December 31, 1996 and 1995
<TABLE>
<S> <C> <C>
A. Summary of Property and Equipment
Significant
Accounting Property and equipment is carried at cost. Expenditures for
Policies (continued) maintenance and repairs are expensed currently, while renewals
and betterments that materially extend the life of an asset are
capitalized. The cost of assets sold, retired, or otherwise
disposed of, and the related allowance for depreciation, are
eliminated from the accounts, and any resulting gain or loss
is included in operations.
Depreciation is provided using the straight-line method based
on the estimated useful lives of the assets which are as
follows:
Computer equipment 5 years
Office furniture and equipment 5-7 years
Software Development Costs
In accordance with Statement of Financial Accounting Standards
No. 86, Accounting for the Costs of Computer Software to be
Sold, Leased, or Otherwise Marketed, research and development
costs incurred prior to the attainment of technological and
marketing feasibility of products are charged to operations.
Thereafter, the Company capitalizes the direct costs and
associated allocated overhead incurred in the development of
products, until the point of market release of such products,
wherein costs incurred are again charged to operations.
Capitalized costs are amortized over a period of five years,
the estimated product life, on a straight line basis, and
amortization commenced when the product became available for
market release. Unamortized costs are carried at the lower of
book value or net realizable value.
Income Taxes
The Company had elected to be treated as an S corporation
pursuant to the Internal Revenue Code for federal and state
income tax purposes. The income of an S corporation is taxable
and distributable to the individual stockholders of a
corporation without further tax consequences to the Company.
As discussed further in Note C, the Company ceased to be an S
corporation subsequent to year end upon consummation of a
merger with another company.
</TABLE>
F-8
<PAGE>
Software Manufacturing Group, Inc.
Notes to Financial Statements
December 31, 1996 and 1995
<TABLE>
<S> <C> <C> <C>
A. Summary of Use of Estimates
Significant
Accounting The preparation of financial statements in conformity with generally
Policies (continued) accepted accounting principles required management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, and disclosures including the allowance for doubtful
accounts, inventory reserve, useful lives and recoverability of long
term assets. Actual amounts could differ from those estimates. Any
adjustments applied to estimated amounts are recognized in the year in
which such adjustments are determined.
B. Software Development
Costs Years ended December 31, 1 9 9 6 1 9 9 5
---------------- --------------------
Balances, beginning of year $118,723 $ -0-
Amounts capitalized 47,849 118,723
Amortization (27,762) -0-
---------------- --------------------
Balances, end of year $138,810 $ 118,723
================ ====================
Research and development costs
incurred $360,279 $ 330,065
Less amounts capitalized (47,849) (118,723)
---------------- --------------------
Research and development
charged to expense $312,430 $ 211,342
================ ====================
No amortization of capitalized research and development costs was
provided during 1995 as market release of the product did not occur
until February 1996.
C. Subsequent Event Merger Agreement
On January 24, 1997, the shareholders of the Company effected a merger
with HALIS, Inc. (HALIS) whereby the Company was merged into a
subsidiary of HALIS in a transaction accounted for as a purchase by
HALIS. It is the opinion of management and legal counsel that this
transaction qualifies as a tax-free reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986.
</TABLE>
F-9
<PAGE>
Software Manufacturing Group, Inc.
Notes to Financial Statements
December 31, 1996 and 1995
<TABLE>
<S> <C> <C>
C. Subsequent Event Merger Agreement (continued)
All 4,000 issued and outstanding shares were exchanged by the
shareholders in consideration for 3,072,000 of HALIS's shares.
Additionally, contingent merger consideration may be paid in the
form of HALIS common stock, based upon certain, specified
operating results for the year ended December 31, 1997.
The merger agreement included an employment agreement included an
employment agreement with the president of the Company which
expires in January 1999 and provides for a base salary of
$192,000 plus certain variable incentive compensation.
As a subsidiary of HALIS, a publicly traded company, the Company
will no longer be treated as an S corporation for income tax
purposes.
The Company issued its stock in payment of the Company's $260,000
liability to a majority shareholder (Note J) upon closing.
Other
Two shareholders of the Company personally assumed the amounts
due under the long-term debt and line-of-credit to Fidelity
National Bank in January 1997. Both instruments were paid in
full and closed in February 1997. The balances at December 31,
1996 of the long-term debt and line-of-credit were $337,229 and
$200,000, respectively.
D. Receivables Receivables as of December 31, 1996 consist of the following:
Trade $266,156
Other 20,967
-----------------
287,123
Allowance for doubtful accounts (15,052)
-----------------
$272,071
=================
</TABLE>
F-10
<PAGE>
Software Manufacturing Group, Inc.
Notes to Financial Statements
December 31, 1996 and 1995
<TABLE>
<CAPTION>
<S> <C> <C>
E. Long-Term Debt The Company has the following note payable:
Fidelity National Bank- Secured note payable in the original amount
of $400,000, at prime plus 2% per annum, with monthly payments in
the amount of $8,500 which include interest. The note was
originally due December 28, 2000. Fidelity National Bank has a
blanket lien on the assets of the Company.
Maturities of the note payable as of December 31, 1996 are as
follows:
December 31, Amount
--------------------------------- -----------------
1997............................. $ 70,694
1998............................. 78,290
1999............................. 86,703
2000............................. 101,542
-----------------
$337,229
=================
As discussed in Note C, this note was paid in full subsequent to
year end.
F. Line-of-Credit The Company has a $200,000 revolving line-of-credit with Fidelity
National Bank, of which $200,000 was owed at December 31, 1996.
Bank advances on the credit line are payable on demand and carry an
interest rate of prime plus 2% per annum. The credit line is
secured by substantially all corporate assets. As discussed in
Note C, this instrument was paid in full subsequent to year end.
G. Capital Leases The Company leases equipment under two capital leases. The
Payable economic substance of the leases is that the Company is financing
the acquisition of the assets through the leases, and, accordingly,
they are recorded in the Company's assets and liabilities. The
leases contain a bargain purchase option at the end of the lease
term.
The following is an analysis of the leased assets included in
property and equipment:
1996
-----------------
Office furniture and equipment $ 72,320
Less accumulated depreciation (30,111)
-----------------
$ 42,209
=================
</TABLE>
F-11
<PAGE>
Software Manufacturing Group, Inc.
Notes to Financial Statements
December 31, 1996 and 1995
<TABLE>
<S> <C> <C>
G. Capital Leases The following is a schedule by year of future minimum payments
Payable (continued) required under the leases together with their present value as
of December 31, 1996:
December 31, Amount
------------ -----------
1997 $ 23,113
1998 23,968
1999 13,698
2000 3,425
----------
Total minimum lease payments 64,204
Less amount representing interest (12,771)
----------
Present value of minimum lease payments 51,433
Less amounts currently payable (16,248)
----------
Long-term portion $ 35,185
==========
H. Commitments And The Company does not have a secured interest in its accounts
Contingencies receivable; however it does have legal recourse for defaulted
amounts. There were no significant receivables from any
single customer at December 31, 1996.
The Company maintains all of its cash deposits at three
financial depository institutions. The amount of the
accounting loss due to credit risk the Company would incur if
the financial depository institution failed would be the cash
deposits in excess of the $100,000 amount per depositor that
is federally insured. The amount at risk totalled $18,350 at
December 31, 1996.
Operating Leases
The Company leases office space and equipment under several
operating agreements. Rent expense for the office space and
equipment totalled $129,836 and $112,580 for the years ended
December 31, 1996 and 1995, respectively.
</TABLE>
F-12
<PAGE>
Software Manufacturing Group, Inc.
Notes to Financial Statements
December 31, 1996 and 1995
<TABLE>
<CAPTION>
H. Commitments And Operating Leases (continued)
Contingencies
At December 31, 1996, future minimum lease payments under
non-cancellable leases having remaining terms in excess of one
year are as follows:
December 31, Amount
------------ --------
<S> <C>
1997 $ 117,056
1998 117,052
1999 6,498
--------------------
$ 240,606
====================
Employee Benefit Plan
The Company sponsors an age-based profit-sharing plan for all
employees who meet certain eligibility requirements. The Company
may elect to make discretionary contributions. Employees are
subjected to a five-year vesting schedule. The Company made no
contributions to the plan during the previous two fiscal years.
Litigation
The Company is defendant in a number of claims relating to matters
arising in the ordinary course of business. Management contends
that the Company has no liability under these claims. The amount
of liability, if any, from the claims cannot be determined with
certainty; however, management is of the opinion that the outcome
of the claims will not have a material adverse impact on the
financial position. Due to uncertainties in the settlement
process, it is at least reasonably possible that management's
estimate of the outcome will change within the next year.
I. Supplemental Supplemental information required by Statement of Financial
Disclosures of Cash Accounting Standards No. 95, relative to the statement of cash
Flow Information flows, is as follows:
1996 1995
---------------- ----------------
Interest paid $81,766 $20,729
================ ================
</TABLE>
F-13
<PAGE>
Software Manufacturing Group, Inc.
Notes to Financial Statements
December 31, 1996 and 1995
<TABLE>
<S> <C>
J. Note Payable - The Company has an unsecured note payable to a majority
Related Party shareholder of the Company as of December 31, 1996 in the
amount of $260,000. The note is due on demand and interest is
being accrued at 8% per annum. Total interest paid during
1996 was $14,770. Interest incurred but not paid at December
31, 1995 was $3,627. In connection with the merger agreement,
the Company issued its stock in payment of this liability to
this shareholder subsequent to year end (Note C).
Amount due to a partnership which shares common ownership was
$842 at December 31, 1996.
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
OPMS
(formerly Software Manufacturing Group, Inc.)
(a division of HALIS, Inc.)
Balance Sheet
November 30, 1997
Assets
<S> <C>
Current Assets:
Cash...............................................................$ 998
Accounts receivable - trade, net of allowance of $25,585........... 486,124
Other accounts receivable.......................................... 5,832
Prepaid expenses and other current assets.......................... 11,919
----------
Total current assets............................................... 504,873
Property and equipment, net of accumulated depreciation of $39,386.... 150,452
Goodwill, net of amortization of $476,253............................. 2,838,871
Capitalized software, net of amortization of $344,518................. 1,383,244
Other assets.......................................................... 8,417
----------
Total assets..........................................................$4,885,857
==========
Liabilities and Divisional Equity
Current liabilities:
Accounts payable...................................................$ 293,978
Accrued expenses................................................... 68,310
Deferred revenue................................................... 530,138
Current portion of long-term debt.................................. 19,580
----------
Total current liabilities.......................................... 912,006
Long-term debt, less current portion.................................. 17,337
Deferred revenue - noncurrent......................................... 102,800
----------
Total liabilities ................................................. 1,032,143
Divisional equity .................................................... 3,853,714
----------
Total liabilities and divisional equity...............................$4,885,857
==========
</TABLE>
F-15
<PAGE>
<TABLE>
<CAPTION>
OPMS
(formerly Software Manufacturing Group, Inc.)
(a division of HALIS, Inc.)
Statement of Operations
Period Ended November 30, 1997
<S> <C>
Net revenues ...............................................$ 3,736,344
Cost of revenues ........................................... 911,137
----------
Gross profit ............................................... 2,825,207
----------
Operating expenses:
Selling, general and administrative expenses ............ 2,205,994
Depreciation ............................................ 33,743
Amortization ............................................ 763,942
----------
Total operating expenses ............................. 3,003,679
----------
Gross operating (loss) ..................................... (178,472)
----------
Other expense (income):
Interest expense ........................................ 2,892
Other income ............................................ (3,955)
----------
Total other income ................................... (1,063)
----------
Net loss ...................................................$ (177,409)
==========
</TABLE>
F-16
<PAGE>
<TABLE>
<CAPTION>
OPMS
(formerly Software Manufacturing Group, Inc.)
(a division of HALIS, Inc.)
Statement of Cash Flows
Period Ended November 30, 1997
<S> <C>
Cash provided by (used in) operating activities
Net loss ......................................................................$ (177,409)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization .............................................. 797,685
Decrease (increase) in:
Accounts receivable...................................................... (214,053)
Other accounts receivable ............................................... (5,832)
Prepaid expenses and other current assets ............................... 1,378
Increase (decrease) in:
Accounts payable ........................................................ 140,175
Accrued expenses ........................................................ (50,202)
Deferred revenue ........................................................ 1,992
----------
Net cash provided by operating activities ..................................... 493,734
----------
Cash used in investing activities:
Additions to capitalized software development costs ........................... (27,762)
Net purchases of property and equipment ....................................... (39,838)
----------
Net cash used by investing activities ......................................... (67,600)
----------
Cash used in financing activities:
Payments on long-term debt (capital leases) ................................... (14,516)
Net advances to HALIS, Inc. ................................................... (508,414)
----------
Net cash used in financing activities ......................................... (522,930)
----------
Net decrease in cash ............................................................. (96,796)
Cash at beginning of period ...................................................... 97,784
----------
Cash at end of period ............................................................$ 988
==========
</TABLE>
F-17
<PAGE>
OPMS
(FORMERLY SOFTWARE MANUFACTURING GROUP, INC.)
(A DIVISION OF HALIS, INC.)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997
Note 1 - Basis of Presentation
OPMS, a division of HALIS, Inc. ("HALIS"), develops, markets and supports
computer software by orthodontic practices throughout the U. S. OPMS had
previously been owned and operated by Software Manufacturing Group, Inc. ("SMG")
prior to the merger of SMG into HALIS in June 1997. Accordingly, SMG is
considered a predecessor company with respect to the OPMS division.
Subject to an asset purchase agreement dated December 31, 1997, the OPMS
business unit was acquired by InfoCure Corporation.
The accompanying financial statements provide the unaudited information
regarding the financial position, results of operations and cash flows of the
OPMS division as of November 30, 1997 and for the nine month period then ended.
The assets and liabilities are those specifically identifiable to OPMS. The
statement of operations includes allocations of HALIS general and administrative
expenses. Management believes that such allocations are reasonable, however,
these allocated amounts are not necessarily indicative of expenses that would
have been incurred by OPMS on a stand-alone basis.
The accompanying financial statements include all adjustments, consisting
primarily of normal recurring accruals, which management believes are necessary
for fair presentation of the financial position and results of operations as of
and for the period ended November 30, 1997. However, results of operations and
cash flows for the interim period are not necessarily indicative of the results
to be expected for the full year.
The financial statements of SMG, the predecessor to OPMS, as of December 31,
1996 and for the years ended December 31, 1996 and 1995 are included elsewhere
in this filing.
F-18
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Condensed Consolidated Balance Sheet
As of October 31, 1997
(in thousands)
(Unaudited)
Pro Forma
InfoCure OPMS Adjustments Combined
---------------------- ------------- ------------
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash $ 902 $ 1 $ (1)[A] $ 902
Accounts and notes receivable net of allowances 2,353 486 (34)[A] 2,805
Inventory 313 0 0 313
Prepaid expenses and other current assets 994 18 (7)[A] 1,005
----------- ---------- ------------- ------------
Total current assets 4,562 505 (42) 5,025
Property and equipment, net of depreciation 999 151 0 1,150
Goodwill, net of amortization 16,860 2,839 (1,143)[A] 18,556
Deferred acquisition costs 189 0 0 189
Capitalized software, net of amortization 1,460 1,383 (1,233)[A] 1,610
Deferred tax asset 905 0 0 905
Other assets 196 8 0 204
----------- ---------- ------------- ------------
Total assets $25,171 $4,886 $ (2,418) $27,639
=========== ========== ============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 929 $ 294 $ (294)[A] $ 929
Accrued expenses 1,473 68 (68)[A] 1,473
Deferred revenue 2,328 633 (48)[A] 2,913
Currrent portion of long-term debt 1,256 20 0 1,276
----------- ---------- ------------- ------------
Total current liabilities 5,986 1,015 (410) 6,591
Long-term debt, less current portion 5,510 17 0 5,527
Note payable--other - - 1,846 [B] 1,846
----------- ---------- ------------- ------------
Total liabilities 11,496 1,032 1,436 13,964
----------- ---------- ------------- ------------
Shareholders' equity
Common stock, $.001 par value - authorized
15,000,000 shares; 5,736,937 issued and outstanding 6 0 0 6
Additional paid-in capitial 16,528 0 0 16,528
Accumulated deficit (2,859) 0 0 (2,859)
Net assets of OPMS 0 3,854 (3,854)[A] 0
----------- ---------- ------------- ------------
Total shareholders' equity 13,675 3,854 (3,854) 13,675
----------- ---------- ------------- ------------
Total liabilities and shareholders' equity $25,171 $4,886 $ (2,418) $27,639
=========== ========== ============= ============
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
InfoCure Corporation
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended January 31, 1997
(in thousands, except per share data)
(Unaudited)
AMC Acquisition
(Predecessor of Founding Pro Forma
Company) Businesses Adjustments [1] Subtotal
------------------------- ------------ ----------
<S> <C> <C> <C> <C>
Revenues 2,495 23,059 0 25,554
Cost of revenues 475 7,156 0 7,631
---------- ---------- ---------- ----------
Gross profit 2,020 15,903 0 17,923
Operating expenses 2,580 14,905 (2,335) 15,150
---------- ---------- ---------- ----------
Operating income (560) 998 2,335 2,773
Other expense (income 77 199 186 462
---------- ---------- ---------- ----------
Income before taxes (637) 799 2,149 2,311
Taxes (benefit) (891) 173 1,808 1,090
---------- ---------- ---------- ----------
Net income $ 254 $ 626 $ 341 $ 1,221
========== ========== ========== ==========
Acquisition Pro Forma
of OPMS Adjustments Total
------------------------- ------------
Revenues 2,924 0 28,478
Cost of revenues 1,102 0 8,733
---------- ---------- -----------
Gross profit 1,822 0 19,745
Operating expenses 2,421 (152)[C] 17,419
---------- ---------- -----------
Operating income (599) 152 2,326
Other expense (income 106 (16)[D] 552
---------- ---------- -----------
Income before taxes (705) 168 1,774
Taxes (benefit) (275) 65 [E] 880
---------- ---------- -----------
Net income $ (430) $ 103 $ 894
========== ========== ===========
Pro forma income per share $ 0.16
===========
Shares used in computing pro forma income
per share 5,737
===========
See notes to pro forma condensed consolidated financial statements.
</TABLE>
F-20
<PAGE>
<TABLE>
<CAPTION>
InfoCure Corporation
Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended October 31, 1997
(in thousands, except per share data)
(Unaudited)
Acquisition
of Founding
Businesses
and Other Pro Forma
InfoCure Acquisitions Adjustments[1] Subtotal
----------------------- ------------ ---------
<S> <C> <C> <C> <C>
Revenues 9,703 9,016 0 18,719
Cost of revenues 2,630 2,456 0 5,086
--------- --------- ----------- ---------
Gross profit 7,073 6,560 0 13,633
Operating expenses 6,224 5,534 (464) 11,294
--------- --------- ----------- ---------
Operating income 849 1,026 464 2,339
Other expense (income 134 183 20 337
--------- --------- ----------- ---------
Income before taxes 715 843 444 2,002
Taxes (benefit) 323 175 403 901
--------- --------- ----------- ---------
Net income $392 $668 $41 $1,101
========= ========= =========== =========
Acquisition Pro Forma
of OPMS Adjustments Total
----------- ------------ ----------
Revenues 3,236 0 21,955
Cost of revenues 784 0 5,870
--------- ---------- ---------
Gross profit 2,452 0 16,085
Operating expenses 2,672 (544)[C] 13,422
--------- ---------- ---------
Operating income (220) 544 2,663
Other expense (income 2 143 [D] 482
--------- ---------- ---------
Income before taxes (222) 401 2,181
Taxes (benefit) (87) 156 [E] 970
--------- ---------- ---------
Net income $ (135) $ 245 $ 1,211
========= ========== =========
Pro forma income per share $ 0.21
=========
Shares used in computing pro forma income
per share 5,737
=========
See notes to pro forma condensed consolidated financial statements.
</TABLE>
F-21
<PAGE>
INFOCURE CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED 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") (POLCI, SoftEasy and CCI are collectively referred to as
the "Other Acquisitions"); and the acquisition, effective December 1, 1997, of
the assets of Orthodontic Practice Management System ("OPMS"), formerly a
division of HALIS, Inc.
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; (ii) the respective
statements of operations for the Other Acquisitions for the year ended December
31, 1997 as described in the Company's Current Report on Form 8-K, as amended,
on file with the Commission and (iii) the statement of operations for Software
Manufacturing Group, Inc. ("SMG"), the predecessor of OPMS. 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); (ii) the respective statements of operations for the Other
Acquisitions for the approximate eight month period ended August 31, 1997 plus
the
F-22
<PAGE>
period from October 1, 1997 (date of acquisition) to October 31, 1997; and (iii)
the statement of operations for OPMS for the approximate nine month period ended
November 30, 1997.
The unaudited condensed consolidated pro forma balance sheet has been prepared
as if the acquisition of OPMS had been consummated as of October 31, 1997. The
acquisitions of the Founding Businesses and the Other Acquisitions had
previously been consummated as described in documents on file with the
Commission.
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. The pro forma adjustments with respect to the
Other Acquisitions are described in the Company's Current Report on
Form 8-K, as amended, also on file with the Commission.
[A] To record acquisition of certain assets subject to certain liabilities
and the allocation of the $1,845,465 purchase price on the basis of
the estimated fair values of the assets acquired and the liabilities
assumed. Management continues to study the allocation of purchase
prices; upon completion of such study, the allocation may change.
[B] To reflect anticipated funding under the Company's acquisition line of
credit for the OPMS purchase.
[C] 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 OPMS assets. Goodwill resulting from the acquisition will be
amortized over a 15 year period.
[D] To adjust interest expense to reflect the increase in debt in
connection with the acquisition.
[E] To adjust income tax expense.
F-23
