<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 8, 1999
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 500 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>
Contents
--------
Page
Item 5: Other Events............................................... 2
Item 7: Financial Statements and Exhibits.......................... 2
Signatures.......................................................... 3
<PAGE>
Item 5. Other Events.
On February 8, 1999, InfoCure Corporation ("InfoCure") has entered into
a merger agreement with OMSystems, Inc. ("Orthotrac"), an Atlanta, Georgia based
provider of practice management systems for orthodontists, in a transaction
intended to be accounted for as a "pooling of interests". InfoCure will issue to
the former shareholders of Orthotrac 1,144,000 shares of Infocure's common stock
in connection with the merger. The merger is scheduled to close on or about
February 12, 1999.
InfoCure is making this Current Report on Form 8-K solely as a source
of information for its stockholders. The acquisition of OMSystems, Inc. did not
give rise to any requirement to file audited financial statements pursuant to
Rule 3-05(b)(2)(i) of Regulation S-X in that none of the conditions specified in
the definition of "significant subsidiary" in Rule 1-02(w) of Regulation S-X
exceeds 20%.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
Audited Financial Statements of OMSystems, Inc. for the year ended
December 31, 1998 are attached hereto.
(b) Exhibits
The following exhibits are filed herewith:
Exhibit Description
99.1 Press release dated January 8, 1999
<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 8, 1999 by: /s/ Frederick L. Fine
---------------------
Frederick L. Fine
President/CEO
<PAGE>
<TABLE>
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 2
FINANCIAL STATEMENTS
Balance sheet 3
Statement of operations 4
Statement of changes in stockholders' equity 5
Statement of cash flows 6
Notes to financial statements 7-13
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
OMSystems, Inc.
Atlanta, Georgia
We have audited the accompanying balance sheet of OMSystems, Inc. (the
"Company") as of December 31, 1998, and the related statements of operations,
changes in stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of OMSystems, Inc. at December 31,
1998, and the results of its operations and its cash flows for the year ended
December 31, 1998 in conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
February 5, 1999
2
<PAGE>
OMSYSTEMS, INC.
BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
CURRENT
<S> <C>
Cash and cash equivalents $ 517,071
Accounts receivable, net of allowance for doubtful accounts
of $35,000 (Note 4) 1,630,580
Inventory (Note 4) 1,006,287
Prepaid expenses 147,608
Total current assets 3,301,546
Property and equipment at cost, net of accumulated
depreciation (Note 2) 1,035,428
$ 4,336,974
- ------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 75,404
Accrued expenses (Note 3) 455,864
Customer deposits 529,235
Unearned revenue 1,064,687
Current portion of capital lease obligation (Note 5) 114,000
Total current liabilities 2,239,190
Capital lease obligation (Note 5) 1,195,013
Total liabilities 3,434,203
Commitments (Notes 4, 5, and 6)
Stockholders' equity (Note 8)
Common stock, $0.01 par value, 10,000 shares authorized and
outstanding 100
Paid-in capital 6,390,900
Accumulated deficit (5,488,229)
Total stockholders' equity 902,771
$ 4,336,974
- ------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the financial statements.
3
<PAGE>
OMSYSTEMS, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Revenue
-------
<S> <C>
Systems and software sales $10,439,541
Maintenance, support and other 4,512,440
- ------------------------------------------------------------------------------------------------------------
Total revenue 14,951,981
- ------------------------------------------------------------------------------------------------------------
Operating expenses
------------------
Cost of hardware and other items purchased for resale 3,901,778
Selling, general and administrative expenses 7,592,800
Compensatory stock options 6,390,000
Officer's salaries 153,089
Depreciation 136,560
- ------------------------------------------------------------------------------------------------------------
Total operating expenses 18,174,227
- ------------------------------------------------------------------------------------------------------------
Loss from operations (3,222,246)
--------------------
OTHER EXPENSE (INCOME)
Interest expense 136,588
Other income (63,204)
- ------------------------------------------------------------------------------------------------------------
NET LOSS $(3,295,630)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE>
OMSYSTEMS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Common Stock
------------
--------------------------------------
Shares Par Value Paid in Capital Deficit
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, at December 31, 1997 10,000 $100 $ 900 $ 196,667
Distributions - - - (2,389,266)
Compensatory stock options - - 6,390,000 -
Net loss - - - (3,295,630)
- -----------------------------------------------------------------------------------------------------------------
BALANCE, at December 31, 1998 10,000 $100 $6,390,900 $(5,488,229)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the financial statements.
5
<PAGE>
OMSYSTEMS, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C>
OPERATING ACTIVITIES
Net loss $(3,295,630)
Adjustments to reconcile net loss to cash provided by
operating activities:
Depreciation 136,560
Compensatory stock options 6,390,000
(Increase) in:
Accounts receivable (414,180)
Inventory (241,403)
Prepaid expenses (80,556)
Increase (decrease) in:
Accounts payable (266,137)
Customer deposits 162,613
Unearned revenue 169,695
Accrued expenses 60,120
- ------------------------------------------------------------------------------------------------------
Cash provided by operating activities 2,621,082
- ------------------------------------------------------------------------------------------------------
INVESTING ACTIVITY
Purchase of property and equipment (22,284)
- ------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Distributions (2,389,266)
Repayment of capital lease obligation (103,412)
- ------------------------------------------------------------------------------------------------------
Cash used by financing activities (2,492,678)
- ------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 106,120
CASH AND CASH EQUIVALENTS, beginning 410,951
- ------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, ending $ 517,071
- ------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the financial statements.
6
<PAGE>
OMSYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF DESCRIPTION OF BUSINESS
SIGNIFICANT
ACCOUNTING OMSystems, Inc. (the "Company") develops, markets,
POLICIES installs and services computer software for the
medical industry. The Company also markets computer
hardware and supplies.
REVENUE RECOGNITION
Revenue from the sale of systems is recognized when
the system has been installed and when the related
client training has been completed. Amounts billed in
advance of installation and pending completion of
remaining significant obligations are deferred.
Revenue from support and maintenance contracts is
recognized as the services are performed ratably over
the contract period. Revenue from other services is
recognized as they are provided.
Inventory
---------
Inventory is valued at the lower of cost, which is
determined using primarily the specific identification
method, or market value. Inventory includes hardware
and replacement parts.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost.
Depreciation is computed over the estimated useful
life of the assets using accelerated methods.
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
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
The Company markets its products and services
primarily to healthcare providers. As a result, the
Company may be exposed to credit risk resulting from
factors impacting that industry. The company markets
its products throughout the United States. This
geographic diversity reduces the concentration of
credit risk which may arise from the resultant
accounts receivable.
7
<PAGE>
OMSYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
INCOME TAXES
The Company is an S Corporation for income tax
purposes and, consequently, the stockholders include
the taxable income or loss of the Company on their
individual income tax returns. Accordingly, there is
no provision for income taxes on the financial
statements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is the amount
at which the instrument could be exchanged in a
current transaction between willing parties. The
carrying amounts of the Company's financial
instruments included in the accompanying balance
sheets are not materially different from their fair
values as of December 31, 1998.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments
with maturity dates of three months or less from the
date of purchase to be cash equivalents.
Capitalized Software and Other Assets
-------------------------------------
Software development costs are expensed as incurred
prior to establishing the technological feasibility of
a product. For the period between the establishment of
technological feasibility and the time a product is
available for general release, such costs are
capitalized. Capitalized software costs are amortized
using he straight-line method over the estimated lives
of the related products.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS")
No. 130, Reporting Comprehensive Income, is effective
for all fiscal quarters of fiscal years beginning
after December 15, 1997 and was adopted by the Company
as of January 1, 1998. This statement establishes
standards for reporting and display of comprehensive
income and its components in a full set of general-
purpose financial statements. This statement requires
that all items that are required to be recognized
under accounting standards as components of
comprehensive income be reported in a financial
statement that is displayed with the same prominence
as other financial statements. This new pronouncement
did not have an effect on the Company's financial
statements when adopted.
8
<PAGE>
OMSYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, effective for
fiscal years beginning after December 15, 1997,
establishes standards for reporting information about
operating segments in annual financial statements and
interim financial reports issued to shareholders.
Generally, certain financial information is required
to be reported on the basis that is used internally
for evaluating performance of and allocation of
resources to operating segments. The Company has
addressed the requirements of SFAS No. 131 and
determined there is no material impact on the
financial statements.
Statement of Position 97-2, Software Revenue
Recognition, is effective for fiscal years beginning
after December 15, 1997 and was adopted by the Company
as of January 1, 1998. This statement provides
guidance on applying generally accepted accounting
principles in recognizing revenue on software
transactions and establishes certain criteria for
revenue recognition. This new pronouncement did not
have a material effect on the Company's financial
statements when adopted.
SFAS 133, Accounting for Derivative Instruments and
Hedging Activities, effective for all fiscal quarters
of fiscal years beginning after June 15, 1999,
requires companies to recognize all derivatives
contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If
certain conditions are met, a derivative may be
specifically designated as a hedge, the objective of
which is to match the timing of gain or loss
recognition on the hedging derivative with the
recognition of (i) the changes in the fair value of
the hedged asset or liability that are attributable to
the hedged risk or (ii) the earnings effect of the
hedged forecasted transaction. For a derivative not
designated as a hedging instrument, the gain or loss
is recognized in income in the period of change.
Historically, the Company has not entered into
derivative contracts either to hedge existing risks or
for speculative purposes. Accordingly, the adoption of
the new standard on January 1, 2000 will not affect
its financial statements.
9
<PAGE>
OMSYSTEMS, INC
NOTES TO FINANCIAL STATEMENTS
2. PROPERTY AND Property and equipment consists of the following:
EQUIPMENT
<TABLE>
<CAPTION>
Estimated
Useful
Life (years) 1998
------------------------------------------------------------------------
<S> <C> <C> <C>
Capitalized leasehold 15 $1,871,020
Automobiles 5 55,063
Furniture, fixtures, and
equipment 5 423,663
------------------------------------------------------------------------
2,349,746
Less accumulated
depreciation 1,314,318
------------------------------------------------------------------------
$1,035,428
------------------------------------------------------------------------
3. ACCRUED EXPENSES Accrued expenses consisted of the following:
1998
------------------------------------------------------------------------
Commissions $ 246,969
Payroll taxes 189,779
Other 19,116
------------------------------------------------------------------------
$ 455,864
------------------------------------------------------------------------
</TABLE>
4. LINE OF CREDIT In June 1998, the Company entered into a line of
credit agreement with a bank with a maximum
available credit amount of $500,000, which is
collateralized by inventory and accounts
receivable. The line bears interest at the bank's
prime rate (8.0% at December 31, 1998). Borrowings
under the line of credit exceeding $250,000 are
guaranteed by the two shareholders of the Company.
As of December 31, 1998, there were no borrowings
under the line of credit.
10
<PAGE>
OMSYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
5. CAPITAL LEASE In 1991, the Company entered into a lease agreement
OBLIGATION for real property with an entity controlled by the
two shareholders of the Company and certain family
members. For accounting purposes this agreement is
considered a capital lease. The capital lease
obligation has an imputed interest rate of 10% per
annum, monthly payments of approximately $20,000 and
expires in December 2006.
Future minimum payments on the capital lease
obligation are as follows:
<TABLE>
<CAPTION>
Year Amount
-----------------------------------------------------
<S> <C>
1999 $ 240,000
2000 240,000
2001 240,000
2002 240,000
2003 240,000
Thereafter 720,000
-----------------------------------------------------
Total minimum lease payments 1,920,000
Less amount representing interest 610,987
-----------------------------------------------------
Present value of net minimum lease
payments 1,309,013
Less current portion 114,000
-----------------------------------------------------
$1,195,013
-----------------------------------------------------
</TABLE>
6. EMPLOYEE BENEFIT PLAN The Company maintains a 401(k) profit sharing plan
for its employees who have completed one year of
service and attained the age of 21. In addition to
the amount deferred by each employee, the company
may make a discretionary contribution to each
participant according to a formula based upon the
participant's annual compensation and age. The
Company has contributed approximately $22,000 to the
plan for the year ended December 31, 1998.
7. RELATED PARTY The President of the Company serves on the Board of
TRANSACTIONS Directors of a bank at which the Company maintains
an account.
11
<PAGE>
OMSYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
The Company leases its facilities, including
building and land, from an entity controlled by the
two shareholders of the Company and certain family
members. Lease payments aggregate approximately
$240,000 per year. This lease expires December 31,
2006.
8. STOCKHOLDERS' EQUITY STOCK COMPENSATION PLANS
In 1988 the Company, through its shareholders,
issued Stock Option Agreements which provide for the
granting of options to purchase shares of common
stock of the Company by certain employees. The
shares subject to purchase under the plan are held
by existing shareholders. The options are
exercisable upon the occurrence of certain events
including the sale of substantially all of the
Company's assets, a merger involving the Company, or
a more than 50% ownership change of the Company. The
Company applies Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees and
related interpretations in accounting for the Plan.
Compensation cost has been recognized for the
options in an amount equal to the difference between
the fair value of the shares and the strike price of
the options.
As the date on which the options become exercisable
is dependent on future events, variable plan
accounting is considered appropriate. Expense under
a variable stock option plan is ultimately measured
by the fair value of the shares at the date they are
earned. Since preliminary negotiations for the
Company's planned merger (See footnote 11) began in
December 1998, the Company has recognized in 1998
$6,390,000 as compensation expense for its options.
12
<PAGE>
The following table summarizes information relative
to the Company's options:
<TABLE>
<CAPTION>
Weighted-
Average
Exercise
Options Price
------- ---------
<S> <C> <C>
Outstanding at December 31,
1997 1618 $0.0005
Granted during the year ended
December 31, 1998 252 $0.0005
----
Outstanding at December 31,
1998 1870 $0.0005
Options exercisable at
December 31, 1998 0
----
</TABLE>
The weighted-average fair value of options granted
during the year ended December 31, 1998, was
estimated to be $3,400.
9. SUPPLEMENTAL DISCLOSURE For the year ended December 31, 1998, the Company
OF CASH FLOWS paid approximately $137,000 cash for interest.
10. YEAR 2000 ISSUES Like other companies, the Company could be adversely
(UNAUDITED) affected if the computer systems the Company, its
suppliers or customers use do not properly process
and calculate date-related information and data from
the period surrounding and including January 1,
2000. This is commonly known as the "Year 2000"
issue. Additionally, this issue could impact non-
computer systems and devices such as production
equipment, elevators, etc. At this time, because of
the complexities involved in the issue, management
cannot provide assurances that the Year 2000 issue
will not have an impact on the Company's operations.
11. SUBSEQUENT EVENT The Company has entered into discussions with
InfoCure Corporation ("InfoCure") regarding the
merger of the Company and InfoCure in a transaction
expected to be accounted for as a pooling of
interests. In the proposed transaction, the Company
would exchange all of its equity interests for
InfoCure common stock at an exchange rate of
approximately 114.4 shares for each of the Company's
shares. Under this scenario, the Company would
exchange all of its common stock shares for
approximately 1,144,000 InfoCure shares. This
transaction is expected to be completed in the first
quarter of 1999.
<PAGE>
EXHIBIT 99.1
INFOCURE ANNOUNCES AGREEMENT TO MERGE WITH OMSYSTEMS, INC.,
SUPPLIER OF ORTHOTRAC(R) PRACTICE MANAGEMENT SYSTEMS
FOR ORTHODONTISTS
Atlanta, GA -- February 8, 1999 -- InfoCure Corporation (Nasdaq: INCX) today
announced that OMSystems, Inc. (Orthotrac), an Atlanta, Ga. based provider of
practice management systems for orthodontists with revenues of approximately $15
million, has entered into a merger agreement with InfoCure in a "pooling of
interests" transaction. InfoCure will issue to the former shareholders of
Orthotrac 1,144,000 shares of common stock in connection with the merger.
Orthotrac's 1998 earnings before interest, taxes and depreciation, and before a
non-cash charge for compensatory stock options, were approximately $3.5 million.
The merger is scheduled to close on or about Friday, February 12, 1999.
Commenting on the acquisition, Frederick L. Fine, President & CEO of InfoCure
stated, "Orthotrac is the nation's largest supplier of orthodontic practice
management systems, and has recently begun an international distribution effort.
We look forward to the addition of Dr. Jim Davis and Reid Simmons as a part of
our executive management team, and believe that their contribution will be
significant as we continue to focus on the orthodontic practice specialty.
Orthotrac is complementary with our OPMS operation, currently the second largest
competitor in the orthodontic market."
James C. Davis, D.M.D., Chairman of Orthotrac commented, "We are excited to
bring our market leadership position from the last 19 years to InfoCure, an
organization that already understands the unique needs of orthodontists."
Reid W. Simmons, President of Orthotrac added, "For nearly the last two decades
Orthotrac has taken pride in providing superior technology and customer service
to our customer base of 1,300 orthodontic practices throughout the U.S. and in
10 countries worldwide."
InfoCure is a leading national provider of healthcare practice management
software products and services to targeted healthcare practice specialties,
including anesthesiology, dentistry, oral and maxillofacial surgery,
orthodontics, podiatry and radiology, as well as to larger general medical
practices. The Company's wide range of practice management software products
automate the administrative, financial and clinical information management
functions of both office-based, hospital-based and enterprisewide healthcare
practices. InfoCure provides its customers with ongoing software support,
training and electronic data interchange (EDI) services.
Certain statements in this release, including statements relating to the
accounting treatment of the ORTHOTRAC acquisition, are forward-looking.
Although InfoCure believes that its expectations are based on assumptions within
the knowledge of its business, there can be no assurance that actual results
will not differ materially from those stated or implied herein. A discussion of
certain risk factors that may cause results to differ from any forward-looking
statements made herein can be found in filings made by the Company with the
Securities and Exchange Commission, including the Company's Annual Report on
Form 10-KSB for the period ending December 31, 1997.
For further information contact:
Frederick L. Fine
President & CEO (770) 857-4547
