<PAGE> 1
INFOCURE CORPORATION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[MARK ONE]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER: 001-12799
INFOCURE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 58-2271614
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1765 THE EXCHANGE
SUITE 200
ATLANTA, GEORGIA 30339
(Address of principal executive offices) (Zip Code)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 221-9990
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of outstanding shares of the issuer's class of capital stock as of
July 31, 2000 is as follows: 34,181,727 shares of
Common Stock, $.001 par value.
<PAGE> 2
FORM 10-Q
FOR THE
QUARTER ENDED JUNE 30, 2000
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS................................................ 2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................... 10
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........
14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS................................................... 16
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS........................... 16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES..................................... 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................. 16
ITEM 5. OTHER INFORMATION................................................... 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................... 16
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFOCURE CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- -----------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current (Note 1):
Cash and cash equivalents $ 15,339 $ 16,836
Accounts receivable-trade, net of allowance of $3,270 and $4,296 23,364 39,331
Other receivables 1,263 819
Inventory, net 4,376 4,428
Refundable income taxes 256 3,256
Deferred tax assets 4,053 2,843
Prepaid expenses and other current assets 1,800 1,376
--------- ---------
Total current assets 50,451 68,889
Property and equipment, net of accumulated depreciation of $10,022
and $9,708 27,298 24,064
Intangible assets, net of accumulated amortization of $33,496 and
$16,013 (Note 3) 109,756 111,860
Deferred tax assets 24,603 12,963
Other assets 3,806 2,728
--------- ---------
$ 215,914 $ 220,504
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,222 $ 1,222
Accounts payable 4,388 10,161
Accrued expenses 12,228 15,306
Accrued restructuring costs (Note 5) 1,970 2,534
Deferred revenue and customer deposits 14,501 12,979
Current portion of long-term debt (Note 6) 406 694
--------- ---------
Total current liabilities 34,715 42,896
Long-term debt, less current portion (Note 6) 59,901 41,178
Other liabilities 963 1,091
--------- ---------
Total liabilities 95,579 85,165
Commitments and contingencies
Convertible, redeemable subsidiary preferred stock issuable 10,000 --
--------- ---------
Stockholders' equity (Note 7):
Common stock $0.001 par value, 200,000,000 authorized,
33,959,814 and 32,327,099 outstanding 34 32
Additional paid-in capital 202,603 189,837
Notes receivable-Stockholders (12,175) --
Accumulated deficit (80,127) (54,530)
--------- ---------
Total stockholders' equity 110,335 135,339
--------- ---------
$ 215,914 $ 220,504
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
INFOCURE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
---------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue (Note 2):
Systems and software $ 7,300 $25,893 $ 17,484 $ 49,779
Maintenance, support and services 26,904 26,708 52,439 51,814
-------- ------- --------- --------
Total revenue 34,204 52,601 69,923 101,593
-------- ------- --------- --------
Operating expense:
Hardware and other items purchased for resale 8,973 13,415 16,896 24,368
Selling, general and administrative (excluding
compensatory stock awards) 29,208 24,853 56,819 49,096
Research and development 4,400 3,775 9,309 8,034
Depreciation and amortization (Note 3) 11,692 2,592 21,742 5,030
Restructuring and other charges (Note 5) 412 218 1,616 836
Loss (gain) on disposal of fixed assets 68 -- (530) --
-------- ------- --------- --------
Total operating expense 54,753 44,853 105,852 87,364
-------- ------- --------- --------
Operating (loss) income (20,549) 7,748 (35,929) 14,229
Interest expense and other, net 1,298 633 2,524 2,574
-------- ------- --------- --------
(Loss) income before income taxes (21,847) 7,115 (38,453) 11,655
(Benefit) provision for income taxes (7,431) 2,759 (12,856) 4,820
-------- ------- --------- --------
Net (loss) income before extraordinary item (14,416) 4,356 (25,597) 6,835
Extraordinary item - debt extinguishment cost, net
of income taxes -- 2,936 -- 2,936
-------- ------- --------- --------
Net (loss) income $(14,416) $ 1,420 $ (25,597) $ 3,899
======== ======= ========= ========
Net (loss) income per share before extraordinary item:
Basic $ (0.43) $ 0.15 $ (0.78) $ 0.28
======== ======= ========= ========
Diluted $ (0.43) $ 0.13 $ (0.78) $ 0.22
======== ======= ========= ========
Net (loss) income per share:
Basic $ (0.43) $ 0.05 $ (0.78) $ 0.16
======== ======= ========= ========
Diluted $ (0.43) $ 0.04 $ (0.78) $ 0.13
======== ======= ========= ========
Weighted average shares outstanding (Note 7):
Basic 33,267 28,215 32,889 24,637
======== ======= ========= ========
Diluted 33,267 32,863 32,889 30,442
======== ======= ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
INFOCURE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999
-------- --------
<S> <C> <C>
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:
Net (loss) income $(25,597) $ 3,899
Adjustments to reconcile net (loss) income to cash (used in)
provided by operating activities:
Extraordinary item - debt extinguishment cost -- 4,892
Restructuring and other charges (Note 5) 1,616 836
Depreciation and amortization 21,742 5,030
Allowance for doubtful accounts 798 334
Tax benefit from the exercise of options 228 --
Gain on disposal of fixed assets (530) --
Deferred taxes (12,869) 1,990
Changes in current assets and liabilities, net of acquisitions
Trade and other receivables 15,434 (8,860)
Refundable income taxes 3,000 --
Inventory, prepaid expenses and other assets (218) (268)
Accounts payable and accrued expenses (10,410) (2,912)
Deferred revenue and deposits 730 (3,453)
-------- --------
Cash (used in) provided by operating activities (6,076) 1,488
-------- --------
CASH USED IN INVESTING ACTIVITIES:
Cash paid for acquisitions (Note 4) (13,422) (13,768)
Property and equipment expenditures (5,487) (2,944)
Cash paid for other intangible assets (1,251) (2,439)
Other (1,169) 713
-------- --------
Cash used in investing activities (21,329) (18,438)
-------- --------
CASH PROVIDED BY FINANCING ACTIVITIES:
Proceeds from exercise of options 1,717 2,382
Proceeds from issuance of common stock -- 86,224
Proceeds from issuable stock of subsidiary (Note 7) 10,000 --
Issuance of notes to officers (Note 7) (5,238) --
Borrowings of long-term debt 20,185 12,000
Principal payments on short-term note payable -- (2,000)
Payment of loan costs -- (353)
Principal payments on long-term debt (756) (69,201)
-------- --------
Cash provided by financing activities 25,908 29,052
-------- --------
Net (decrease) increase in cash and cash equivalents (1,497) 12,102
Cash and cash equivalents, beginning of period 16,836 10,302
-------- --------
Cash and cash equivalents, end of period $ 15,339 $ 22,404
======== ========
NONCASH TRANSACTIONS:
Stock issued for acquisitions (Note 4) $ 2,386 $ --
Stock issued to settle obligations 1,500 --
Disposal of building under capital lease obligation (1,109) --
Stock issued to stockholders for notes receivable (Note 7) (6,937) --
ADDITIONAL CASH FLOW INFORMATION:
Interest paid $ 451 $ 4,230
Income taxes (refunded) paid (2,499) 430
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
The information presented at June 30, 2000, and for the periods ended
June 30, 2000 and 1999 is unaudited, however, in the opinion of management,
includes all normal recurring adjustments necessary for a fair presentation of
the consolidated financial position, results of operations and cash flows of
InfoCure Corporation ("InfoCure" and together with InfoCure's subsidiaries, the
"Company") for the periods presented. Historical results may not be indicative
of the results to be expected in the future. Certain information in footnote
disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles ("GAAP") have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission (the "Commission"). The consolidated financial statements,
notes thereto and other information should be read in conjunction with the
historical consolidated financial statements and related notes thereto contained
in InfoCure's Annual Report on Form 10-K for the year ended December 31, 1999,
as amended (the "Form 10-K").
InfoCure was founded in November 1996 to develop, market and service
practice management systems for use by healthcare providers throughout the
United States. The Company is currently developing new practice management
software applications tailored to the needs of medical and dental customers that
can be delivered through an application service provider, or "ASP", delivery
model. The Company is also developing Internet and wireless solutions that will
allow its customers to utilize new technology to enhance office workflow and
conduct business-to-business e-commerce. Through December 31, 1999, the Company
completed 24 acquisitions, as further described in InfoCure's Form 10-K. During
the three months ended March 31, 2000, the Company completed three acquisitions
(the "First Quarter Acquisitions"), and during the three months ended June 30,
2000, the Company completed three additional acquisitions (the "Second Quarter
Acquisitions"), all six of which were accounted for as purchases.
The consolidated financial statements of the Company included herein
give retroactive effect to all of its historical acquisitions that were
accounted for as poolings of interest. As a result, the financial position,
results of operations and cash flows are presented as if the combining
companies had been consolidated for all periods presented and the consolidated
stockholders' equity reflects the accounts of InfoCure as if the additional
common stock issued in connection with the mergers had been issued for all
periods presented. All significant intercompany balances and transactions have
been eliminated in consolidation. Results of operations for the interim periods
may not be indicative of annual results. Certain amounts in the 1999 quarterly
financial statements have been reclassified to conform to the current period
presentation.
NOTE 2. REVENUE RECOGNITION
During the three months ended June 30, 2000, the Company began
offering its customers subscription pricing for substantially all of its
products. Contracts are generally for a period of three to five years with
revenue being recognized ratably over the contract period commencing,
generally, when the product has been installed and training has been completed.
NOTE 3. GOODWILL AMORTIZATION
As previously reported in InfoCure's Form 10-K, management changed its
estimate of the useful life of its remaining goodwill from 15 years to three
years during the fourth quarter of 1999. The effect of this change was to
increase the net loss on a pre-tax basis by approximately $8.2 million or $0.25
per share for the three months ended June 30, 2000 and $15.5 million or $0.47
per share for the six months ended June 30, 2000.
NOTE 4. BUSINESS COMBINATIONS
As reported in InfoCure's Form 10-K, the Company completed five
acquisitions during 1999 that were accounted for as purchases (the "1999
Purchase Acquisitions"). In addition, the Company completed the First Quarter
Acquisitions for which the total consideration paid was approximately $6.1
million in cash and $2.4 million in InfoCure common stock. The total
consideration paid for the Second Quarter Acquisitions was approximately $7.3
million in cash. The following unaudited pro forma information presents the
consolidated results of operations of the Company as if the acquisitions had
occurred as of the beginning of each of the periods presented. The pro forma
information is not necessarily indicative of what would have occurred had the
1999 Purchase Acquisitions, the First Quarter Acquisitions and the Second
Quarter Acquisitions been made as of such periods, nor is it indicative of
future results of operations. The pro forma amounts give effect to appropriate
5
<PAGE> 7
adjustments for the fair value of the assets acquired, reductions in personnel
costs and other operating expenses not assumed as part of the acquisitions,
amortization of intangibles, interest expense and income taxes.
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA AMOUNTS (IN THOUSANDS,
------------------------------------------ THREE MONTHS ENDED SIX MONTHS ENDED
EXCEPT PER SHARE AMOUNTS) JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000 JUNE 30, 1999
------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue .......................................... $ 34,405 $59,059 $71,712 $119,592
Net (loss) income ................................ (14,534) 635 (26,422) 1,926
(Loss) earnings per share - after extraordinary item:
Basic .......................................... (0.44) 0.02 (0.80) 0.08
Diluted ........................................ (0.44) 0.02 (0.80) 0.06
</TABLE>
NOTE 5. RESTRUCTURING AND OTHER CHARGES
In the fourth quarter of 1999, the Company decided to restructure its
business into medical and dental divisions, changed its product strategy to
begin development of ASP applications and Internet solutions, decided to
transition to a subscription pricing model and completed six acquisitions.
Concurrently, management committed to a plan of restructuring and reorganization
related to acquisitions completed during 1999, which was substantially completed
in the second quarter of 2000, to consolidate certain facilities and eliminate
staffing redundancies involving approximately 80 employees. The following table
sets forth changes in the restructuring reserves as a result of actions taken to
implement the Company's restructuring and reorganization plans during the three
and six months ended June 30, 2000:
<TABLE>
<CAPTION>
RESERVE COSTS RESERVE COSTS RESERVE
BALANCE APPLIED BALANCE APPLIED BALANCE
DECEMBER AGAINST MARCH AGAINST JUNE
31, 1999 ADJUSTMENTS RESERVES 31, 2000 ADJUSTMENTS RESERVES 30, 2000
--------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Facility closure and consolidation $1,434 $ -- $ (203) $1,231 $ 14 $(100) $1,145
Compensation costs for severance
and other termination benefits 515 1,030 (903) 642 398 (274) 766
Incremental costs associated with
completion of discontinued
customer contracts 235 -- -- 235 -- (176) 59
Contingent consideration payable
to former stockholders 350 -- (350) -- -- -- --
Other asset write-downs and costs -- 174 (18) 156 -- (156) --
--------------------------------------------------------------------------------
$2,534 $1,204 $(1,474) $2,264 $412 $(706) $1,970
--------------------------------------------------------------------------------
</TABLE>
NOTE 6. NOTES PAYABLE AND LONG TERM DEBT
In April 2000, the Company borrowed approximately $7.3 million under
its $100.0 million credit facility to finance the Second Quarter Acquisitions.
As of June 30, 2000, the amount outstanding under the credit facility was $58.5
million. The Company was not in compliance with certain financial covenants
contained in the credit facility as of June 30, 2000 and received a waiver for
such non-compliance. During July 2000, the Company entered into an amendment to
the credit facility to eliminate certain financial covenants and establish new
financial covenants.
NOTE 7. STOCKHOLDERS' EQUITY
Common Stock
The weighted average number of shares outstanding used in computing
basic net (loss) income for the three months ended June 30, 2000 and 1999 were
33,266,837 and 28,214,599, respectively. The weighted average number of shares
outstanding used in computing basic net (loss) income for the six months ended
June 30, 2000 and 1999 were 32,888,861 and 24,637,480, respectively. The
weighted average number of shares outstanding used in computing diluted net
income for the three months ended June 30, 1999 was 32,863,180, including
4,648,581 shares of potentially dilutive common stock assuming exercise of the
Company's potentially dilutive options and warrants. The weighted average
number of shares
6
<PAGE> 8
outstanding used in computing diluted net income for the six months ended June
30, 1999 was 30,442,491, including 5,805,011 shares of potentially dilutive
common stock assuming exercise of the Company's potentially dilutive options and
warrants. Potentially dilutive shares were 313,245 and 2,605,586 for the three
months and six months ended June 30, 2000, respectively, and have not been
included in the calculation of diluted net loss per share because such inclusion
is antidilutive.
Subsidiary Preferred Stock
In February 2000, InfoCure entered into an agreement with
Healtheon/WebMD Corporation ("Healtheon/WebMD") whereby Healtheon/WebMD would
acquire up to $100.0 million of convertible redeemable preferred stock of
VitalWorks, Inc. ("VitalWorks"), a subsidiary of the Company. In consideration
of the investment, the agreement provides for development and distribution
agreements between the parties to create an industry-standard physician practice
management system to be delivered through an ASP delivery model. Similarly, the
parties entered into a marketing agreement which, with respect to services
conducted by VitalWorks, provides for utilization, delivery and promotion of
Healtheon/WebMD's clinical financial transaction and electronic data
interchange, or EDI, services. InfoCure received $10.0 million in exchange for
shares issuable of Series A preferred stock of VitalWorks, which will
automatically convert into 1% of the outstanding common stock of VitalWorks (on
a fully-diluted basis) upon completion of an initial public offering of
VitalWorks. The agreement contemplates the investment of an additional $90.0
million upon completion of an initial public offering of VitalWorks, subject to
regulatory approval and approval of both companies' board of directors. On May
4, 2000, InfoCure announced that, in light of market conditions, it had
suspended its previously announced plans to conduct an initial public offering
of the common stock of VitalWorks. InfoCure's agreement with Healtheon/WebMD
provides that if the initial public offering of VitalWorks is not completed
within nine months of the date of the agreement: (i) the initial $10.0 million
in VitalWorks Series A preferred stock will be exchangeable, at
Healtheon/WebMD's option, into InfoCure's common stock at a per share conversion
price equal to the average closing price of InfoCure's common stock for the
twenty trading days immediately prior to the nine month anniversary of the
agreement and (ii) Healtheon/WebMD will no longer be obligated to make the
additional $90.0 million investment contemplated by the agreement.
Notes Receivable - Stockholders
During the second quarter of 2000, the Company made advances to certain
executive officers of the Company in an aggregate amount of approximately $9.7
million, the outstanding balance of which totaled approximately $5.2 million as
of June 30, 2000. The Company made these advances to prevent these officers from
being forced to sell shares of InfoCure's common stock in the market, which the
Company believed might further depress InfoCure's stock price. The officers
issued promissory notes to the Company to evidence the portion of the advances
outstanding as of June 30, 2000. The notes bear interest at a rate of prime plus
0.5% (10.0% at June 30, 2000, per annum) and are due December 31, 2000. The
notes are included as contra-equity balances in the accompanying consolidated
balance sheet as of June 30, 2000.
During the second quarter of 2000, the Company received notes
receivable from certain executive officers of the Company in an aggregate amount
of approximately $6.9 million, in conjunction with the exercise of vested stock
options. The notes bear interest at a rate of prime plus 0.5% (10.0% at June 30,
2000) per annum and are due April 18, 2002. The notes are recorded as
contra-equity balances in the accompanying consolidated balance sheets.
The Company and the executive officers intend to enter into an
agreement that would permit the Board of Directors to accelerate the repayment
of the notes to the extent the Board determines the Company needs to raise
additional equity financing.
NOTE 8. SEGMENT REPORTING
Effective in the fourth quarter of 1999, in connection with its change
in product strategy to focus on development of ASP applications and Internet
solutions, the Company announced its plans for a reorganization of its business
centered around medical and dental strategic business units. For purposes of
reporting this segment information, the Company allocated previously reported
corporate expenses to the respective divisions based on the relative use of the
corporate resource.
7
<PAGE> 9
The following table sets forth business segment information (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, 1999 June 30, 2000 June 30, 1999
2000
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Medical $ 23,844 $ 37,732 $ 49,576 $ 74,604
Dental 10,196 14,461 20,016 26,581
Corporate 164 408 331 408
-------------------------------------------------------------------------
$ 34,204 $ 52,601 $ 69,923 $ 101,593
=========================================================================
Operating (loss) profit (1):
Medical $(12,675) $ 4,832 $ (23,619) $ 10,847
Dental (7,312) 3,778 (11,259) 4,685
Corporate (82) (644) 35 (467)
-------------------------------------------------------------------------
$(20,069) $ 7,966 $ (34,843) $ 15,065
-------------------------------------------------------------------------
Depreciation and amortization:
Medical $ 6,798 $ 1,726 $ 13,505 $ 3,258
Dental 4,605 458 7,898 1,010
Corporate 289 408 339 762
-------------------------------------------------------------------------
$ 11,692 $ 2,592 $ 21,742 $ 5,030
-------------------------------------------------------------------------
EBITDA (2)
Medical $ (5,877) $ 6,557 $ (10,114) $ 13,425
Dental (2,707) 4,236 (3,361) 6,375
Corporate 207 (235) 374 295
-------------------------------------------------------------------------
$ (8,377) $ 10,558 $ (13,101) $ 20,095
=========================================================================
Interest expense and
other, net $ 1,298 $ 633 $ 2,524 $ 2,574
=========================================================================
Non-recurring charges (including
restructuring and other charges
and loss (gain) on disposal
of fixed assets):
Medical $ 433 $ 55 $ 902 $ 276
Dental 47 163 184 560
-------------------------------------------------------------------------
$ 480 $ 218 $ 1,086 $ 836
=========================================================================
(Loss) income before income taxes $(21,847) $ 7,115 $ (38,453) $ 11,655
=========================================================================
</TABLE>
(1) Excludes non-recurring charges of restructuring and other charges and loss
(gain) on disposal of fixed assets.
(2) EBITDA represents earnings before interest, (benefit) provision for income
taxes, depreciation and amortization and restructuring and other charges.
EBITDA is not a measurement in accordance with GAAP and should not be
considered as an alternative to, or more meaningful than, net (loss)
income or cash flows as defined by GAAP or as a measure of the Company's
profitability or liquidity. All companies do not calculate EBITDA in the
same manner. Accordingly, the Company's EBITDA data may not be comparable
with that of other companies.
8
<PAGE> 10
NOTE 9. SUBSEQUENT EVENTS
Restructuring
On August 1, 2000 the Company announced its plans to restructure each
of its medical and dental operating divisions, called VitalWorks and
PracticeWorks, respectively, through a plan of employee reductions and
consolidation of existing facilities. Over the next eight months, the Company
plans to close or consolidate 25 facilities and terminate approximately 400
employees. Compensation costs, including severance and other termination
benefits, and other exit costs aggregating approximately $20.0 million are
expected to be recorded in the third quarter of 2000.
Equity Financing Agreement
As of August 1, 2000, the Company entered into an agreement whereby it
has the right to make periodic sales to an institutional investor of up to an
aggregate of $60.0 million of its common stock over the next 28 months. The sale
of common stock under the terms of the agreement is at the Company's sole
discretion, although the Company is required to pay a fee and grant to the
investor warrants to purchase shares of the Company's common stock if the
Company has not sold to the investor a stated minimum amount of its common stock
pursuant to the agreement on or before the fourteenth month anniversary of the
agreement. The number of shares that can be sold at any one time will be
determined in accordance with the terms of the agreement based on the current
stock price at the time of the sale. The purchase price of the shares of stock
will represent a discount from the current stock price at the time of the sale.
Although the purchaser may resell the stock purchased pursuant to an effective
registration statement which the Company filed with the Securities and Exchange
Commission, the agreement also requires the purchaser to limit certain selling
activities.
9
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well as
assumptions made by and information currently available to management. When used
in this report, the words "anticipate", "believe", "estimate", "expect",
"intend", "plan", or any similar expressions, as they relate to the Company or
its management, or the management of any of our businesses, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company with respect to future events and are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected, intended or planned. Reference is made in
particular to the discussion set forth below in this report and set forth in our
Annual Report on Form 10-K for the year ended December 31, 1999, as amended, for
a discussion of some of the risks, uncertainties and assumptions that could
cause actual results to differ materially from those described in our forward
looking statements. Those risks, uncertainties and assumptions include:
- We have recently incurred losses and expect to continue to
incur losses for the foreseeable future.
- Our quarterly operating results may fluctuate and could cause
our stock price to fluctuate.
- Our subscription pricing model is unproven and our success
depends on acceptance of this model and our ability to set
our subscription fees at appropriate levels.
- Our application service provider, or ASP, product strategy is
unproven and customers may not respond favorably to our new
products.
- The failure to successfully complete the development of our
Internet solutions and enter into strategic relationships
could harm our business and limit our potential growth.
- Our ASP product strategy is dependent upon the continued
development of the Internet.
- Our new product strategy and subscription pricing model will
require additional financing which may not be available.
- We are subject to government regulation and legal
uncertainties.
- If we do not become profitable when we anticipate, we may be
unable to realize the tax benefits of net operating loss carry
forwards
OVERVIEW
We are a leading national provider of healthcare practice management
software products and services to healthcare providers in targeted specialties.
Our systems are designed to increase the quality and reduce the cost of
providing care by allowing physicians to manage their practices more efficiently
and reduce the administrative burdens created by an increasingly complex
healthcare environment. We are currently developing new practice management
software applications tailored to the needs of medical and dental customers that
can be delivered through an application service provider, or "ASP", delivery
model. We are also developing Internet and wireless solutions that will allow
our customers to utilize new technology to enhance office workflow and conduct
business-to-business e-commerce.
A substantial part of our growth has been achieved through
acquisitions. For the period July 10, 1997 through June 30, 2000, we completed
12 acquisitions that were accounted for as poolings of interest. The results of
operations discussed below are presented as if these acquired companies had been
consolidated for all periods presented. We also have completed 18 acquisitions
that were accounted for using the purchase method of accounting and their
results of operations have been included from the applicable purchase date.
Given the significant number of acquisitions in each of the periods presented,
the results of operations from period to period may not be comparable.
In the fourth quarter of 1999, we decided to restructure our business
into medical and dental divisions, change our product strategy to begin
development of ASP applications and Internet solutions and transition to a
subscription-pricing model and we completed six acquisitions. The implementation
of these changes commenced during the three months ended March 31, 2000. During
the three months ended March 31, 2000, we formalized our sales approach and
business divisions and developed new marketing materials. We also initiated
company-wide training and education related to our business model, subscription
pricing and ASP applications for our sales
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and support staffs. We substantially completed our training initiatives during
the second quarter of 2000. Because our training initiatives were ongoing
throughout the six months ended June 30, 2000, we had a reduced sales effort
from that of comparable periods. As a result of our announcement to deliver ASP
applications, we believe that some of our customers that may have been
contemplating a product purchase delayed that purchase until the testing and
release of the ASP applications. These changes, as well as an overall reduction
in sales due to purchases customers made in 1999 to prepare for Year 2000
computer issues, impacted our results for the three and six months ended June
30, 2000, compared to the corresponding periods in 1999.
SEGMENT AND MARKET INFORMATION
We report our results in two industry segments: medical and dental.
Our medical segment consists of our business for general medical practices and
medical specialty practices in the areas of anesthesiology, dermatology and
plastic surgery, emergency medicine, oncology, ophthalmology, pathology,
pediatrics, podiatry and radiology. The dental segment consists of our business
for dental, orthodontic, oral and maxillofacial surgery practices.
CONSOLIDATED RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
AND SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Total Revenue. Total revenue for the three months ended June 30, 2000
decreased $18.4 million, or 35%, to $34.2 million from total revenue of $52.6
million for the three months ended June 30, 1999. Total revenue for the six
months ended June 30, 2000 decreased $31.7 million, or 31%, to $69.9 million
from total revenue of $101.6 million for the six months ended June 30, 1999.
These decreases are primarily a result of the effects of our transition to
subscription pricing, change in product strategy and reorganization
initiatives discussed above.
Revenue - Medical Division. Total revenue of our medical division for
the three months ended June 30, 2000 decreased $13.9 million, or 37%, to $23.8
million from $37.7 million for the three months ended June 30, 1999. Total
revenue of our medical division for the six months ended June 30, 2000 decreased
$25.0 million, or 34%, to $49.6 million from $74.6 million for the six months
ended June 30, 1999. For the three months ended June 30, 2000, systems and
software revenue decreased $11.8 million, or 72%, to $4.5 million from $16.3
million in the three months ended June 30, 1999. For the six months ended June
30, 2000, systems and software revenue decreased $21.0 million, or 66%, to $10.9
million from $31.9 million in the six months ended June 30, 1999. These
decreases are principally due to the pending release of our new ASP applications
and our change to a subscription pricing model. In addition, system sales
declined in 2000 as a result of purchases being made during 1999 to prepare for
any Year 2000 computer issues. Maintenance, support and service revenue for the
three months ended June 30, 2000 declined $2.1 million, or 10%, to $19.3 million
from $21.4 million for the three months ended June 30, 1999. Maintenance,
support and service revenue for the six months ended June 30, 2000 declined $4.0
million, or 9%, to $38.7 million from $42.7 million for the six months ended
June 30, 1999. These decreases are due to a reduced selling initiative, which
resulted in a decrease in the overall number of newly installed systems during
the three and six months ended June 30, 1999 and, as a result, less service and
maintenance revenue. These decreases were offset by an increase in revenue
associated with a new marketing and e-commerce agreement entered into during the
three months ended June 30, 2000, and increases in electronic data interchange
("EDI") revenue resulting from an increase in the number of practices using this
service.
Revenue - Dental Division. Total revenue of our dental division for the
three months ended June 30, 2000 decreased $4.3 million, or 30%, to $10.2
million from $14.5 million for the three months ended June 30, 1999. Total
revenue of our dental division for the six months ended June 30, 2000 decreased
$6.6 million, or 25%, to $20.0 million from $26.6 million for the six months
ended June 30, 1999. For the three months ended June 30, 2000, systems and
software revenue decreased $6.7 million, or 70%, to $2.8 million from $9.5
million in the three months ended June 30, 1999. For the six months ended June
30, 2000, systems and software revenue decreased $11.3 million, or 63%, to $6.6
million from $17.9 million in the six months ended June 30, 1999. These
decreases are the result of lower unit sales in the current period due to our
transition to a subscription pricing model and pending release of ASP
applications and the result of some customers preparing during 1999 for any
Year 2000 computer issues. Maintenance, support and service revenue for the
three months ended June 30, 2000 increased $2.4 million, or 48%, to $7.4 million
from $5.0 million for the three months ended June 30, 1999. Maintenance, support
and service revenue for the six months ended June 30, 2000 increased $4.7
million, or 55%, to $13.4 million from $8.7 million for the six months ended
June 30, 1999. These increases are primarily due to additional revenue generated
by acquisitions made in December 1999 and March and April 2000, an increase in
EDI revenue resulting from an increase in the number of practices using this
service, and revenue related to new subscription priced contracts.
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<PAGE> 13
Hardware and Other Items Purchased for Resale. Hardware and other
items purchased for resale consist of costs incurred to purchase hardware and
include costs of forms and postage, outsourced hardware maintenance,
third-party software and other items for resale in connection with the sales of
new systems and software. For the three months ended June 30, 2000, hardware
and other items purchased for resale decreased $4.4 million, or 33%, to $9.0
million from $13.4 million, resulting in a gross margin in both periods of 74%.
For the six months ended June 30, 2000, hardware and other items purchased for
resale decreased $7.5 million, or 31%, to $16.9 million from $24.4 million,
resulting in a gross margin in both periods of 76%.
Hardware and Other Items Purchased for Resale - Medical. For the three
months ended June 30, 2000, hardware and other items purchased for resale in the
medical division was $7.4 million, or 31% of total revenue, compared to $10.7
million, or 28% of total revenue, for the three months ended June 30, 1999.
Gross margin for the three months ended June 30, 2000 and 1999, was 69% and 72%,
respectively. For the six months ended June 30, 2000, hardware and other items
purchased for resale in the medical division was $14.0 million, or 28% of total
revenue, compared to $19.5 million, or 26% of total revenue, for the six months
ended June 30, 1999. Gross margin for the six months ended June 30, 2000 and
1999, was 72% and 74%, respectively. The decreases in the expense and gross
margin as a percentage of total revenue is due primarily to a change in product
mix resulting from fewer sales of higher margin enterprise and radiology systems
as compared to lower margin general medical systems. The decreases in gross
margin were partially offset by an increase in higher margin EDI transactions.
Hardware and Other Items Purchased for Resale - Dental. For the three
months ended June 30, 2000, hardware and other items purchased for resale in the
dental division was $1.6 million, or 15% of total revenue, compared to $2.7
million, or 19% of total revenue, for the three months ended June 30, 1999.
Gross margin for the three months ended June 30, 2000 and 1999, was 85% and 81%,
respectively. For the six months ended June 30, 2000, hardware and other items
purchased for resale in the dental division was $2.9 million, or 14% of total
revenue compared to $4.9 million, or 18% of total revenue, for the six months
ended June 30, 1999. Gross margin for the six months ended June 30, 2000 and
1999, was 86% and 82%, respectively. These increases in the gross margin
percentage reflect the increase in higher margin EDI transactions and software
maintenance contracts and a decrease in lower margin hardware sales.
Selling, General and Administrative, or SG&A. SG&A expense includes
salaries and benefits (excluding compensatory stock awards), product
development, product maintenance and support, variable commissions and bonuses,
marketing, travel, communications, facilities, insurance and other
administrative expenses. SG&A expense increased $4.3 million, or 17%, to $29.2
million for the three months ended June 30, 2000, from $24.9 million for the
three months ended June 30, 1999. SG&A expense increased $7.7 million, or 16%,
to $56.8 million for the six months ended June 30, 2000, from $49.1 million for
the six months ended June 30, 1999. These increases are due primarily to
increases of approximately $1.6 million related to acquisitions completed during
the six months ended June 30, 2000 and the addition of infrastructure of
approximately $1.0 million related to the newly formed dental division.
Marketing expenses related to the new subscription pricing model and rent
expense related to acquisitions increased approximating $750,000 and $590,000,
respectively, during the three months ended June 30, 2000 and 1999. Legal and
professional fees increased approximately $360,000 in the three months ended
June 30, 2000, and $760,000 in the six months ended June 30, 2000, due to costs
related to potential acquisitions and other transactions which were not
completed.
Research and Development. Research and development expense increased
$625,000, or 16%, to $4.4 million for the three months ended June 30, 2000,
from $3.8 million for the three months ended June 30, 1999. Research and
development expense increased $1.3 million, or 16%, to $9.3 million for the six
months ended June 30, 2000, from $8.0 million for the six months ended June 30,
1999. These increases are primarily due to a decrease in software development
costs eligible for capitalization and also due to an increase in the number of
products we offered, primarily from our acquisitions.
Depreciation and Amortization. Depreciation and amortization expense
increased $9.1 million to $11.7 million for the three months ended
June 30, 2000, from $2.6 million for the three months ended June 30, 1999.
Depreciation and amortization expense increased $16.7 million to $21.7 million
for the six months ended June 30, 2000, from $5.0 million for the six months
ended June 30, 1999. These increases in depreciation and amortization
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<PAGE> 14
expense are primarily due to the change in the estimated useful life of
goodwill from 15 years to three years during the fourth quarter of 1999.
Restructuring and Other Charges. In the three and six months ended
June 30, 2000, the Company incurred costs of $412,000 and $1.6 million,
respectively, primarily associated with employee severance and other
termination costs and facility closure costs, that were part of our 1999
restructuring plan. In the three and six months ended June 30, 1999, the
Company incurred costs of $218,000 and $836,000, respectively, primarily
related to compensatory stock awards and merger costs.
Interest Expense and Other, Net. Interest expense and other, net
increased $665,000, or 105%, to $1.3 million for the three months ended June
30, 2000, from $633,000 for the three months ended June 30, 1999. This increase
in the three months ended June 30, 2000 directly relates to the retirement of
the outstanding balance under our credit facility and debt agreements during
April 1999. Interest expense and other, net remained consistent at $2.6 million
for the six months ended June 30, 2000 and 1999.
(Benefit) Provision for Income Taxes. The provision for income taxes
was a net benefit of $7.4 million for the three months ended June 30, 2000,
compared to a net expense of $2.8 million for the three months ended June 30,
1999. The provision for income taxes was a net benefit of $12.9 million for the
six months ended June 30, 2000, compared to a net expense of $4.8 million for
the six months ended June 30, 1999. The change from net income tax expense to
net income tax benefit is due to our generation of net operating losses in the
three and six months ended June 30, 2000, compared to net operating income in
the three and six months ended June 30, 1999. The effective tax rate decreased
to 34.0% for the three months ended June 30, 2000, from 38.8% for the three
months ended June 30, 1999. The effective tax rate decreased to 33.4% for the
six months ended June 30, 2000, from 41.4% for the six months ended June 30,
1999. These decreases are primarily a result of our generation of net operating
losses and the effect of non-deductible goodwill amortization expense.
At December 31, 1999, the Company had $24.0 million of net operating
loss carryforwards which expire, if unused, beginning in year 2014.
Additionally, results of operations through June 30, 2000 generate additional
net operating losses estimated at $20.0 million which would begin expiring in
2020. The Company has assessed its past financial and taxable earnings history,
when adjusted for non-recurring items such as restructuring charges, and its
sales backlog, budgeted sales, and expiration dates of carryforwards and
believes that it is more likely than not that it will generate taxable income
more than sufficient to realize the tax benefits associated with future
deductible temporary differences and net operating loss carryforwards prior to
their expiration. In addition, the Company believes that it has available tax
planning strategies that could be implemented to avoid the potential expiration
of net operating loss carryforward. The Company will need to generate future
taxable income of approximately $44.0 million in future years prior to the
expiration of the net operating losses. If the Company is unable to generate
sufficient taxable income in the future through operating results, a valuation
allowance may be required through a charge to income.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, we had total cash and cash equivalents of $15.3
million and working capital of $15.7 million. During the six months ended June
30, 2000, we used $6.1 million of cash in operating activities primarily
relating to (1) a net loss of $25.6 million offset by non-cash charges of $21.7
million in depreciation and amortization and (2) payments of accounts payable
and accrued liabilities of approximately $10.4 million offset by a reduction of
approximately $15.4 million in accounts receivable. The reduction in cash flow
from operations as compared to cash provided by operating activities of
approximately $1.5 million for the six months ended June 30, 1999 is due
primarily to the impact of our ongoing change in business model, transition to
subscription-based pricing, the anticipated future release of our ASP
applications and some customers making purchases in 1999 to prepare for Year
2000 issues. During this period, cash used in investing activities was $21.3
million, primarily representing cash used for acquisitions and related
expenditures of $13.4 million and capital expenditures of $5.5 million. We
generated approximately $25.9 million of cash from financing activities
consisting primarily of borrowings of $20.2 million under our long-term credit
facility and $10.0 million for the future issuance of preferred stock of a
subsidiary.
We maintain a credit facility in the amount of $100.0 million that has
a five-year term, bears interest at a floating rate (9.5% at June 30, 2000)
depending on the Company achieving certain debt service ratios, and is secured
by substantially all of our assets. The Company was not in compliance with
certain financial covenants contained in the credit facility as of June 30, 2000
and received a waiver for such non-compliance. During July 2000 we entered into
an
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amendment to the credit facility to eliminate certain financial covenants and
to establish new financial covenants.
As of August 1, 2000, the Company entered into an agreement (the "Common
Stock Purchase Agreement") whereby it has the right to make periodic sales of up
to $60.0 million of its common stock over the next 28 months. The sale of common
stock under the terms of the agreement is at the Company's sole discretion,
although the Company is required to pay a fee and grant to the investor warrants
to purchase shares of the Company's common stock if the Company has not sold to
the investor a stated minimum amount of its common stock, pursuant to the
agreement, on or before the fourteenth month anniversary of the agreement. The
number of shares that can be sold at any one time will be determined, in
accordance with the terms of the agreement, based on the current stock price at
the time of the sale. The purchase price of the shares of stock will represent a
discount from the current stock price at the time of the sale. Although the
purchaser may resell the stock purchased pursuant to an effective registration
statement filed with the Securities and Exchange Commission, the agreement also
requires the purchaser to limit certain selling activities.
On August 1, 2000, we sold certain assets relating to a patient statement
processing facility to National Data Corporation for approximately $11.0 million
in cash.
On August 1, 2000 we announced our plans to restructure both of our medical
and dental operating divisions, VitalWorks and PracticeWorks, through a plan of
employee reductions and consolidation of existing facilities. Over the next
eight months we plan to close or consolidate 25 facilities and terminate
approximately 400 employees. Compensation costs, including severance and other
termination benefits, and other exit costs aggregating approximately $20.0
million are expected to be recorded in the third quarter of 2000. We anticipate
that, once fully implemented, the restructuring will reduce operating expenses
by approximately $25.0 million on an annualized basis.
We expect the transition to a subscription pricing model to continue to
adversely impact our cash flow until revenue from subscription fees replaces
revenue from software license fees and hardware sales. We also expect to incur
increased marketing and sales expenses in connection with offering our ASP
applications and Internet solutions. We expect to fund our current working
capital requirements and to finance our restructuring and future acquisitions,
if any, through one or more of the following sources: our credit facility, other
indebtedness and the issuance of debt or equity securities by us or our
subsidiaries, including sales of securities pursuant to the Common Stock
Purchase Agreement and to strategic partners with whom we enter into agreements
relating to the rollout of our ASP applications and Internet solutions. The sale
of equity securities, including investments convertible into equity securities,
may result in further dilution to existing stockholders. We believe that our
existing cash, combined with availability of funds under the credit facility and
other sources of financing will be sufficient to fund our working capital
requirements through the next 12 months. There can be no assurance that
additional sources of capital will be available on terms acceptable to us or at
all.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Interpretation
("Interpretation") No. 44, "Accounting for Certain Transactions involving Stock
Compensation, an Interpretation of APB Opinion No. 25" which is effective July
1, 2000. Interpretation No. 44 clarifies (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining whether a
stock compensation plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. Adoption of the provisions of the
Interpretation are not expected to have a significant impact on our financial
statements.
COSTS RELATED TO YEAR 2000 READINESS
We recognized the material nature of the business issues surrounding
computer processing of dates into and beyond the Year 2000 and took corrective
action prior to December 31, 1999. Our total Year 2000 compliance costs were
approximately $1.4 million all of which was incurred prior to December 31, 1999.
We do not currently expect to apply additional material funds to address Year
2000 issues.
As of August 1, 2000, we are not aware of any material disruption in the
operation of our products by our customers as a result of Year 2000 issues. In
addition, as of August 1, 2000, we have not experienced any material disruptions
of our internal computer systems or software applications, and have not
experienced any material problems with the computer systems or software
applications of the third parties with whom we regularly do business as a result
of Year 2000 issues.
Although our Year 2000 rollover did not present any material business
disruption, there are some remaining Year 2000-related risks. Our management
believes that appropriate action has been taken to address these remaining Year
2000 issues and contingency plans are in place to minimize the financial impact
to us. In addition, we will continue to monitor the third parties with whom we
regularly do business to determine if they will take appropriate action to
address the remaining Year 2000 issues. We, however, cannot be certain that Year
2000 issues will not have a material adverse effect on our business.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary market risks include fluctuations in interest rates and
variability in interest rate spread relationships (i.e. prime or LIBOR
spreads). Approximately $58.5 million of our outstanding debt at June 30, 2000
relates to our credit facility with FINOVA Capital Corporation. Interest on the
outstanding balance is charged based on a variable rate related to prime rate
or, at our option, the LIBOR rate. Both rate bases are incremented for margins
specified in the agreement. Thus, our interest rate is subject to market risk
in the form of fluctuations in interest rates. The effect of a hypothetical one
percentage point increase across all maturities of variable rate debt would
result in an increase of approximately $585,000 in pre-tax net loss assuming no
further changes in the amount of borrowings subject to variable rate interest
from amounts outstanding at June 30, 2000. We do not trade in derivative
financial instruments.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 21, 2000, a lawsuit styled Joseph Hafner v. InfoCure
Corporation et al., was filed in the United States District Court in and for the
Eastern District of Pennsylvania. The lawsuit alleges that the Company breached
the terms of a registration rights agreement whereby the Company was required,
prior to a specified date, to effect the registration for resale with the
Securities and Exchange Commission of shares of the Company's common stock which
the plaintiff owned. The complaint further alleges breach of fiduciary duties
owed to the plaintiff as a stockholder of the Company and tort claims against
the Company as a result of the alleged failure to timely register shares for
resale. The complaint seeks compensatory damages as a result of the Company's
alleged breach of this agreement, as well as reimbursement for the plaintiff's
attorney's fees and associated costs and expenses of the lawsuit. Management
believes that the ultimate resolution of this matter will not have a material
adverse effect on the financial condition of the Company.
On August 4, 2000, a lawsuit styled Joseph Memminger v. InfoCure
Corporation, et al., was filed in the United States District Court in and for
the District of Delaware. The lawsuit alleges that the Company breached the
terms of a registration rights agreement, whereby the Company was required to
effect the registration for resale with the Securities and Exchange Commission,
of shares of the Company's common stock which the plaintiff owned. The complaint
further alleges breach of fiduciary duties owed to the plaintiff as a
stockholder of the Company and tort claims against the Company as a result of
the alleged failure to timely register shares for resale. The complaint seeks
compensatory damages as a result of the Company's alleged breach of the
agreement, as well as reimbursement for the plaintiff's attorney's fees and
associated costs and expenses of the lawsuit. Management believes that the
ultimate resolution of this matter will not have a material adverse effect on
the financial condition of the Company.
ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS.
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 14, 2000, the annual meeting of the stockholders of InfoCure
was held for the purpose of re-electing Richard E. Perlman, Frederick L. Fine,
James K. Price, James D. Elliot and Raymond H. Welsh as directors and voting on
proposals by InfoCure's board of Directors to: (a) ratify and approve the
amendment of the InfoCure Corporation Length-of-Service 1996 Stock Option Plan
to increase the number of shares of common stock reserved for issuance under
such plan; (b) ratify and approve the grant of options to acquire shares of
InfoCure's common stock to Frederick L. Fine, James K. Price and Richard E.
Perlman; and (c) ratify and approve the selection of BDO Seidman, LLP as
InfoCure's independent auditors for the year ending December 31, 2000. Holders
of 15,925,906 shares were represented at the meeting. Holders of a majority of
the shares voted in favor of each of the proposals as follows:
<TABLE>
<CAPTION>
Proposal For Against Abstain
-------- --- ------- -------
<S> <C> <C> <C>
Elect Richard E. Perlman as Director 15,293,673 632,233 --
Elect James D. Elliot as Director 15,091,555 834,351 --
Elect Frederick L. Fine as Director 15,077,728 848,178 --
Elect James K. Price as Director 15,279,917 645,989 --
Elect Raymond H. Welsh as Director 15,293,673 632,233 --
Amend Length-of-Service Stock Option Plan 13,704,311 2,192,343 29,252
Approve Option Grants 12,830,624 3,865,364 29,918
Approve BDO Seidman, LLP as auditors 15,864,628 38,647 22,631
</TABLE>
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Amendment Number One to Loan Agreement by and Among
InfoCure Corporation, InfoCure Systems, Inc. and
Thoroughbred Acquisition, Inc. and FINOVA Capital
Corporation.
10.2 Common Stock Purchase Agreement, dated August 1,
2000, between InfoCure Corporation and Acqua
Wellington North American Equities Fund, Ltd.
10.3 Form of Officer Promissory Note with schedule of
makers and principal amount of notes.
27.1 Financial Data Schedule (solely for use by the
Commission).
(b) Reports on Form 8-K
None.
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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
Date: August 14, 2000 /s/ Frederick L. Fine
---------------------------------------------
Frederick L. Fine
President; Chief Executive Officer (Principal
Executive Officer); Director
Date: August 14, 2000 /s/ James A. Cochran
---------------------------------------------
James A. Cochran
Senior Vice President-Finance;
Chief Financial Officer
(Principal Financial and Accounting Officer)
17
