<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of l934
Date of report (date of earliest event reported): May 9, 2000
Allscripts, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
000-26537 36-3444974
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(Commission File Number) (IRS Employer Identification No.)
2401 Commerce Drive, Libertyville, Illinois 60048
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(Address of Principal Executive Offices) (Zip Code)
(847) 680-3515
--------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
None
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K,
originally filed with the Securities Exchange Commission on May 25, 2000 as set
forth in the pages attached hereto.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of business to be acquired. The following
condensed financial statements of MasterChart, Inc. are attached:
Balance Sheets for the three months ended March 31, 2000 (unaudited)
and for the years ended December 31, 1999 and 1998 (audited)
Statements of Operations for the three months ended March 31, 2000 and
1999 (unaudited) and for the years ended December 31, 1999 and 1998
(audited)
Statements of Stockholders' Deficit for the three months ended March
31, 2000 (unaudited) and for the years ended December 31, 1999 and
1998 (audited)
Statements of Cash Flows for the three months ended March 31, 2000 and
1999 (unaudited) and for the years ended December 31, 1999 and 1998
(audited)
Notes to Financial Statements
(b) Pro Forma Financial Information. The following unaudited pro forma
financial statements are attached:
Pro Forma Consolidated Financial Information Overview
Pro Forma Consolidated Statements of Operation for the three months
ended March 31, 2000 (unaudited)
Pro Forma Consolidated Statements of Operation for the year ended
December 31, 1999 (unaudited)
Notes to Pro Forma Consolidated Statements of Operation
Pro Forma Consolidated Balance Sheet for the three months ended March
31, 2000 (unaudited)
Notes to Pro Forma Consolidated Balance Sheet for the three months
ended March 31, 2000
2
<PAGE>
Item 7 - FINANCIAL STATEMENTS AND EXHIBITS
MasterChart, Inc.
BALANCE SHEETS
For the Three Months Ended March 31, 2000 and the Years Ended December 31, 1999
and 1998
<TABLE>
<CAPTION>
March 31, December 31,
------------ ---------------------------
2000 1999 1998
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,310 $ 347,610 $ 994,748
Accounts receivable, net of allowances of $0 in
2000, $0 in 1999 and $45 in 1998 642,847 1,018,891 238,450
Note receivable 43,743 9,062 -
Prepaid expenses and other current assets 77,512 63,321 57,544
------------ ------------ ------------
Total current assets 770,412 1,438,884 1,290,742
------------ ------------ ------------
Fixed assets, net 574,232 480,537 371,518
Long-term marketable securities 186,894 291,502 311,752
------------ ------------ ------------
Total assets $ 1,531,538 $ 2,210,923 $ 1,974,012
------------ ------------ ------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 155,793 $ 86,360 $ -
Accrued expenses 156,139 83,518 4,350
Unearned revenue 699,925 872,586 -
Customer deposits 179,959 179,959 -
Loan obligations 15,353 11,451 -
------------ ------------ ------------
Total current liabilities 1,207,169 1,233,874 4,350
------------ ------------ ------------
Long-term liabilities:
Fixed principal note-Lanier 3,136,271 3,059,776 2,781,615
Line of credit-Lanier 1,410,762 1,376,353 1,073,416
Loan obligations 25,952 33,215 -
------------ ------------ ------------
Long-term liabilities 4,572,985 4,469,344 3,855,031
------------ ------------ ------------
Total liabilities 5,780,154 5,703,218 3,859,381
------------ ------------ ------------
Commitments and contingencies (see Notes 5 and 8) - - -
Stockholders' deficit:
Common stock, no par value, 100,000 shares authorized,
6,000 issued and outstanding 1,000 1,000 1,000
Additional paid-in capital 14,378,269 8,855,790 8,729,770
Unrealized gain (loss) on marketable securities (33,784) (24,926) 11,752
Accumulated deficit (18,594,101) (12,324,159) (10,627,891)
------------ ------------ ------------
Total stockholders' deficit (4,248,616) (3,492,295) (1,885,369)
------------ ------------ ------------
Total liabilities and stockholders' deficit $ 1,531,538 $ 2,210,923 $ 1,974,012
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
Item 7 - FINANCIAL STATEMENTS AND EXHIBITS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Masterchart, Inc.
In our opinion, the accompanying balance sheets and the related statements of
operations, of stockholders' deficit and of cash flows present fairly, in all
material respects, the financial position of Masterchart, Inc. at December 31,
1999 and 1998, and the results of its operations and its cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States. 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 of these
statements in accordance with auditing standards generally accepted in the
United States, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Chicago, Illinois
July 14, 2000
<PAGE>
Item 7 - FINANCIAL STATEMENTS AND EXHIBITS
MasterChart, Inc.
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2000 and 1999 and
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
For the Three Months For the Year Ended
Ended March 31, December 31,
-----------------------------------------------------------------
2000 1999 1999 1998
(unaudited)
<S> <C> <C> <C> <C>
Revenues
Professional services $ 556,105 $ 296,073 $ 1,557,723 $ 1,448,000
Maintenance 49,312 44,850 175,159 131,610
License 314,798 125,538 1,423,843 336,623
Equipment sales 15,901 - 156,667 2,600
------------ ------------ ------------ ------------
Total revenues 936,116 466,461 3,313,392 1,918,833
Cost of Revenues
Professional services 547,207 280,042 1,453,103 1,200,275
Maintenance 71,129 53,750 211,193 145,466
Equipment 22,611 - 135,836 -
------------ ------------ ------------ ------------
Total cost of revenues 640,947 333,792 1,800,132 1,345,741
Research and development 208,655 204,684 854,754 909,722
Selling, general and administrative expenses 6,253,868 441,142 2,007,407 1,247,877
------------ ------------ ------------ ------------
Loss from operations (6,167,354) (513,157) (1,348,901) (1,584,507)
Interest income 8,822 14,150 47,350 65,536
Interest expense (111,410) (100,792) (394,717) (318,707)
------------ ------------ ------------ ------------
Net loss (6,269,942) (599,799) (1,696,268) (1,837,678)
Accumulated deficit - beginning (12,324,159) (10,627,891) (10,627,891) (8,790,213)
------------ ------------ ------------ ------------
Accumulated deficit - ending $(18,594,101) $(11,227,690) $(12,324,159) $(10,627,891)
============ ============ ============ ============
</TABLE>
4
<PAGE>
Item 7--FINANCIAL STATEMENTS AND EXHIBITS
MasterChart, Inc.
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the Three Months Ended March 31, 2000 and
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Unrealized
Gain/(Loss)
Additional on Total
Paid-In Marketable Accumulated Stockholders'
Common Shares Capital Securities Deficit Deficit
------------------- ------------ ---------- ------------ -----------
Shares Amount
------ ------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997 6,000 $1,000 $ 7,806,409 $ 9,248 $ (8,790,213) $ (973,556)
Net loss for the year ended
December 31, 1998 (1,837,678) (1,837,678)
Other comprehensive income - change
in unrealized gain/(loss) 2,504 2,504
-----------
Comprehensive loss (1,835,174)
Issuance of convertible debt at below
market interest rates 923,361 923,361
------ ------ ------------ -------- ------------ -----------
December 31, 1998 6,000 1,000 8,729,770 11,752 (10,627,891) (1,885,369)
Net loss for the year ended
December 31, 1998 (1,696,268) (1,696,268)
Other comprehensive income -
change in unrealized gain/(loss) (36,678) (36,678)
-----------
Comprehensive loss (1,732,946)
Issuance of convertible debt at below
market interest rates 126,020 126,020
------ ------ ------------ -------- ------------ -----------
December 31, 1999 6,000 1,000 8,855,790 (24,926) (12,324,159) (3,492,295)
(unaudited)
Net loss for the quarter ended
March 31, 2000 (6,269,942) (6,269,942)
Other comprehensive income -
change in unrealized gain/(loss) (8,858) (8,858)
-----------
Comprehensive loss (6,278,800)
Issuance of warrants to consultants 5,522,479 5,522,479
------ ------ ------------ -------- ------------ -----------
March 31, 2000 - unaudited 6,000 $1,000 $14,378,269 $(33,784) $(18,594,101) $(4,248,616)
====== ====== ============ ======== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Item 7 - FINANCIAL STATEMENTS AND EXHIBITS
MasterChart, Inc.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2000 and 1999 and
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
For the Three Months For the Year Ended
Ended March 31, December 31,
2000 1999 1999 1998
(unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(6,269,942) $(599,799) $(1,696,268) $(1,837,678)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation expense 44,989 46,891 151,954 165,264
Amortization of debt discount 110,904 96,375 387,118 318,707
Warrants issued to consultants 5,522,479 - - -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net 376,044 (35,854) (780,441) 85,978
Increase in note receivable (34,681) - (9,062) -
(Increase) decrease in prepaid expenses and other
current assets (14,191) 14,630 (5,777) (27,849)
Increase in accounts payable 69,433 65,408 86,360 -
Increase in accrued expenses 72,621 17,614 79,168 4,350
(Decrease) increase in unearned revenue (172,661) 143,497 872,586 -
Increase in customer deposits - - 179,959 -
----------- --------- ----------- -----------
Net cash used in operating activities (295,005) (251,238) (734,403) (1,291,228)
=========== ========= =========== ===========
Cash flows from investing activities:
Capital expenditures (138,684) (17,044) (214,484) (110,127)
Purchase of investments - - (20,678) (100,000)
Sale of investments 95,750 - 4,250 -
----------- --------- ----------- -----------
Net cash used in investing activities (42,934) (17,044) (230,912) (210,127)
=========== ========= =========== ===========
Cash flows from financing activities:
Principal payments on loan obligations (3,361) - (1,823) -
Borrowings under line of credit - - 320,000 1,930,795
----------- --------- ----------- -----------
Net cash provided (used) by financing activities (3,361) - 318,177 1,930,795
=========== ========= =========== ===========
Net increase (decrease) in cash and cash equivalents (341,300) (268,282) (647,138) 429,440
Cash and cash equivalents at beginning of period 347,610 994,748 994,748 565,308
----------- --------- ----------- -----------
Cash and cash equivalents at end of period $ 6,310 $ 726,466 $ 347,610 $ 994,748
=========== ========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Item 7 - FINANCIAL STATEMENTS AND EXHIBITS
MasterChart, Inc.
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business
Masterchart, Inc. ("Masterchart" or the "Company") develops clinical
software for the enterprise-wide healthcare institution market. Masterchart
operates in one industry segment. The Company was incorporated in Illinois
on July 23, 1992.
2. Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The accompanying interim consolidated financial statements as of March 31,
2000 and 1999 and the three months ended March 31, 2000 and 1999 together
with the related notes are unaudited but include all adjustments,
consisting of only normal recurring adjustments, which management considers
necessary to present fairly, in all material respects, the financial
position, and results of operations and cash flows for the interim periods
ended March 31, 2000 and 1999. Results for the three months ended March 31,
2000 are not necessarily indicative of results for the entire year.
Use of Estimates
Generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at year
end and the reported amounts of revenue and expenses during the year.
Actual results could differ from these estimates.
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalent balances consist of cash and highly liquid
corporate debt securities with maturities at the time of purchase of less
than 90 days. At December 31, 1999 and 1998, cash equivalents were
comprised of money market funds and commercial paper totaling $816 and
$727,529, respectively.
Marketable securities include corporate debt and equity instruments with
maturities of greater than 90 days at the time of purchase. Long-term
marketable securities have maturities of greater than one year at the
balance sheet date. The securities, that are available for sale, had an
average weighted time to maturity of 27 years at December 31, 1999. At
December 31, 1999, the gross unrealized loss totaled $30,603 and the gross
unrealized gain totaled $5,677. At December 31, 1998, the gross unrealized
gain totaled $11,752.
7
<PAGE>
Fixed Assets
Fixed assets are stated at cost. Expenditures for maintenance, repairs,
renewals and betterments that do not significantly prolong the useful lives
of the assets are charged to expense as incurred. Depreciation is computed
on the straight-line method over the estimated useful lives of the related
assets. Upon asset retirement or other disposition, the cost and related
allowance for depreciation are removed from the accounts, and any gains or
losses are included in the statements of operations.
Leases
Leases that substantially transfer all of the benefits and risks of
ownership of property to Masterchart or otherwise meet the criteria for
capitalizing a lease under generally accepted accounting principles are
accounted for as capital leases. An asset is recorded at the time a capital
lease is entered into together with its related obligation to reflect its
purchase and financing. Payments under operating leases are expensed as
incurred.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheets for cash and cash
equivalents, accounts receivable and accounts payable approximate their
fair values due to the short-term nature of these financial instruments.
The fair value of the long-term debt is estimated based on current interest
rates available to Masterchart for debt instruments with similar terms,
degrees of risk and remaining maturities. The carrying value of the long-
term debt approximates its fair value.
Concentration of Credit Risk
Financial instruments that potentially subject Masterchart to a
concentration of credit risk consist of cash and cash equivalents,
marketable securities and trade receivables. Masterchart maintains its cash
balances with one major commercial bank and its cash equivalents and
marketable securities in interest bearing, investment-grade securities.
Masterchart sells its products and services to healthcare providers. Credit
risk with respect to trade receivables is generally diversified due to the
large number of customers and their dispersion across the United States. To
reduce credit risk, Masterchart performs ongoing credit evaluations of its
customers and their payment histories. In general, Masterchart does not
require collateral from its customers.
8
<PAGE>
Revenue Recognition
Masterchart's revenue is primarily derived from the sale of clinical
software and related consulting services. Software license fee revenues are
recognized when persuasive evidence of an arrangement exists, delivery has
occurred, the license fee is fixed and determinable and collection of the
fee is probable. Revenues related to arrangements that include multiple
elements for which the Company has no vendor specific objective evidence
(VSOE) of the value of the undelivered elements are recognized ratably over
the term of the arrangement. Revenues from consulting services are
recognized as services are performed. Maintenance revenues are recognized
ratably over the term of the contract on a straight-line basis.
Advertising Costs
Masterchart recognizes advertising costs as incurred. Advertising expense
totaled $127,645 in 1999. There were no advertising costs in 1998.
Comprehensive Income
The Company follows Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. The only
component of other comprehensive income is the change in unrealized gains
(losses) on marketable securities. Comprehensive income is included as a
component of stockholders' deficit.
Software Development Costs
Masterchart applies Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed" ("SFAS No. 86") which requires the capitalization of
software development costs incurred from the time technological feasibility
of the software is established until the software is ready for use.
Development costs incurred subsequent to the establishment of technological
feasibility but prior to the release of the software were not significant
and as a result, the Company has not capitalized any software development
costs. Software maintenance costs related to software development are
expensed as incurred. Reimbursed development costs are reported as a
reduction of research and development expense.
9
<PAGE>
Income Taxes
The Company has elected to be treated as an S-Corporation for income tax
purposes. Accordingly, its taxable income is reportable on the individual
federal income tax return of the common stockholders.
Stock-Based Compensation
The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25"), and complies
with the disclosure provisions of Statement of Financial Accounting
Standards No. 123 ("SFAS No. 123"), Accounting for Stock-Based
Compensation. Under APB 25, compensation expense is based on the difference
between the estimated fair value of the Company's stock and the redemption
value of the shares issued under the Company's performance share plans.
3. Related Party Transactions
The Company recognized revenue related to sales with Lanier, with whom the
Company has a loan outstanding (see Note 6), of $569,564 and $648,247
during the years ended December 31, 1999 and 1998, respectively. Lanier
sales totaled $______ and $______ for the three months ended March 31, 2000
and March 31, 1999, respectively. Accounts receivable from Lanier totaled
$30,000 (unaudited), $30,360 and $24,242 at March 31, 2000, December 31,
1999 and December 31, 1998, respectively.
4. Fixed Assets
Fixed assets are summarized as follows:
<TABLE>
<CAPTION>
Estimated December 31,
-------------------------------
Useful Lives 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
Computer equipment 3 years $701,148 $582,349
Phone equipment 7 years 56,433 14,443
Furniture and fixtures 7 years 112,766 54,703
Automobiles 5 years 72,631 45,305
Assets under capital lease 5 years 14,795 -
-------------- --------------
957,773 696,800
Less accumulated depreciation 475,634 325,282
Less accumulated amortization of capitalized leases 1,602 -
-------------- --------------
$480,537 $371,518
-------------- --------------
</TABLE>
10
<PAGE>
5. Lease Commitments
Masterchart conducts its operations from leased premises. On September 23,
1999, Masterchart entered into a five-year cancelable lease for office
space. Payments began November 1, 1999 and escalate 3% each year. Rent
expense totaled $155,235 and $117,488 for the years ended December 31, 1999
and 1998, respectively.
Future minimum rental payments for the next five years are as follows:
<TABLE>
<CAPTION>
Operating Capital
Leases Leases
--------- -------
<S> <C> <C>
Year Ending
December 31,
2000 $168,290 $ 5,777
2001 173,235 5,777
2002 174,962 2,889
2003 178,473 -
2004 152,440 -
-------- -------
Total minimum lease payments $847,400 $14,443
======== =======
Amount representing interest $ - $ 2,881
Present value of minimum lease
payments 847,400 11,562
</TABLE>
<TABLE>
<CAPTION>
Operating Capital
Leases Leases
--------- -------
<S> <C> <C>
Quarter Ending
March 31,
2000
2001
2002
2003
2004
--------- -------
Total minimum lease payments
========= =======
Amount representing interest
Present value of minimum lease
payments
</TABLE>
6. Debt
Outstanding debt as of December 31 consisted of the following:
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Auto Loan $ 33,104 $ -
Capital Lease 11,562 -
Lanier Line of Credit 1,376,353 1,073,416
Lanier Fixed Note Payable 3,059,776 2,781,615
---------- ----------
Total debt outstanding 4,480,795 3,855,031
---------- ----------
Less current maturities 11,451 -
---------- ----------
Long-term debt $4,469,344 $3,855,031
========== ==========
</TABLE>
11
<PAGE>
Auto Loan:
During December of 1999, the Company entered into a loan to finance the
purchase of an automobile. The loan carries a four-year term at a rate of
6.99% a year. Monthly payments total $792.52. In the event of default,
the bank has a security interest in the automobile.
Loan with Harris and Lanier
On December 22, 1995, Masterchart entered into an agreement with Harris
Corporation, wherein Harris agreed to provide Masterchart a line of credit
funding arrangement totaling up to $10 million over the following four
years. The loan agreement carried no interest through June 30, 2000, at
which point the unpaid principal balance accrued interest at the annual
prime rate, adjusted monthly. Payments were due in annual installments
equal to 5% of the Company's gross revenues, beginning with the year ended
December 31, 2000. The final payment was due no later than June 30, 2015.
Upon drawing on the line of credit, the Company recorded the carrying value
of the debt based on the present value of the loan using an interest rate
of 10%. The debt discount is amortized over the life of the debt as
interest expense using the effective interest method.
In conjunction with the credit funding arrangement, Masterchart issued
Harris a non-detachable warrant to purchase 4,000 shares of common stock
for an aggregate purchase price of $10,000,000. The consideration for
exercising the warrant was cancellation of any amounts outstanding under
the line of credit arrangement and, to the extent that the outstanding
amount was less than $10,000,000, Harris was to pay an amount equal to
$10,000,000 less the canceled amount. The warrant was not exercised and
was canceled when the debt was renegotiated in March of 1998.
On March 16, 1998, Masterchart entered into a renegotiation of this
agreement. As a result of the renegotiation, the agreement was assigned to
Lanier Worldwide, a subsidiary of Harris. The $5,000,000 that was then
outstanding under the original agreement was converted to a fixed principal
note payable to Lanier carrying the same terms described above, with the
exception of the first payment due date. Under the renegotiated fixed
principal note, the first payment began with the year ended December 31,
2001. The final payment date remains June 30, 2015.
12
<PAGE>
In connection with the renegotiation, Masterchart also entered into an
amended line of credit agreement with Lanier wherein Masterchart may draw
up to an additional $5,000,000 on the line of credit. The maturity date
was the first to occur of June 30, 2015, change of control of Masterchart,
or event of default. Upon drawing on the line of credit, the Company
recorded the carrying value of the debt based on the present value of the
loan using an interest rate of 10%. The debt discount is amortized over
the life of the debt as interest expense using the effective interest
method. At December 31, 1999, the Company may draw an additional
$2,749,000 under the existing line of credit.
Also, in connection with the renegotiation, Masterchart issued Lanier a
non-detachable warrant to purchase 1,500 shares of common stock for an
aggregate purchase price of $5,000,000. The consideration for exercising
the warrant was cancellation of any amounts outstanding under the fixed
principal note and, to the extent that the outstanding note amount was less
than $5,000,000, Lanier was to pay an amount equal to $5,000,000, less the
canceled amount. The warrant was exercised in connection with the purchase
of Masterchart by Allscripts on May 9, 2000. See Note 11.
7. Stockholders' Equity
Warrants issued to Consultants
During the first quarter of 2000, in anticipation of a purchase
transaction, the Company issued warrants to two consultants. One consultant
was issued a warrant to purchase 357 shares of common stock at $2.80 per
share. The second consultant was issued a warrant to purchase 33 shares of
common stock at $5,000 per share. The warrants were exercised in connection
with the purchase of Masterchart by Allscripts on May 9, 2000 (see Note
11). Compensation expense of $5,522,479 was recorded during the three
months ended March 31, 2000 related to the warrants.
Performance Share Plans
The Company instituted a series of three performance share plans, under
which certain employees were granted performance shares at the discretion
of an established committee. After being granted, the shares vested based
upon criteria as set forth by the committee. From 1995 through 1999, a
total of 1478.8 shares were issued under the plans. The plan is a formula
based plan wherein the value of the shares is calculated as a function of
taxable income. Based on the operating results of the Company, there has
been no compensation expense recorded related to the shares. Had the
Company accounted for the plans pursuant to SFAS No. 123, no compensation
expense would have been recorded. All of the shares became fully vested on
May 9, 2000, the closing date of the acquisition of Masterchart by
Allscripts (see Note 11).
13
<PAGE>
8. Contingencies
The Company is from time to time subject to legal proceedings and claims
that arise in the normal course of its business. All such matters are
subject to uncertainties that are not predictable with assurance. However,
it is management's opinion that the disposition of such matters will not
have a significant adverse effect on Masterchart's financial position,
results of operations or cash flows.
9. Defined Contribution Plan
The Company sponsors a defined contribution 401(k) profit sharing plan
covering substantially all of its full time employees. Contributions by the
Company to the Plan are discretionary. As of December 31, 1999 and 1998 the
Company had elected to not make any contributions to the Plan.
10. Recently Issued Accounting Pronouncements
In December 1999, the U.S. Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"), that provides the SEC's views in applying
generally accepted accounting principles to selected revenue recognition
issues. Adoption of SAB 101 is required in the fourth quarter of fiscal
year 2000. The Company is currently evaluating the impact of SAB 101 on the
Company's results of operations and financial position.
11. Subsequent Events
On May 9, 2000, all outstanding shares of Masterchart were acquired by
Allscripts, Inc. in exchange for 1,617,889 shares of Allscripts stock and
$5,000,000 of cash. The total Masterchart shares purchased by Allscripts
included the conversion of the Lanier warrants, the conversion of the
consultant warrants and the repurchase of the performance shares.
14
<PAGE>
Item 7--FINANCIAL STATEMENTS AND EXHIBITS
Allscripts, Inc.
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
OVERVIEW
Effective May 9, 2000 and May 17, 2000, Allscripts, Inc. (the Company)
acquired MasterChart, Inc. and Medifor, Inc., respectively (the acquired
companies). These acquisitions have been accounted for using the purchase
method of accounting and, accordingly, the purchase price has been allocated to
the tangible and identifiable intangible assets acquired and liabilities assumed
on the basis of their respective fair values on the acquisition dates, with the
excess of the purchase price recorded as goodwill.
The MasterChart, Inc. total purchase price of approximately $132.4
million consisted of 1,617,873 shares of the Company's common stock with a fair
value of approximately $127.4 million and cash of approximately $5 million.
The Medifor Inc. total purchase price of approximately $38.6 million consisted
of 935,858 shares of the Company's common stock with a fair value of
approximately $34.4 million and the issuance of 142,786 common stock options as
replacement of Medifor, Inc. common stock options with a fair value of
approximately $4.2 million.
The following unaudited pro forma consolidated statements of
operations reflects the Company's results of operations for the year ended
December 31, 1999, and three months ended March 31, 2000, as if the acquisitions
had occurred on January 1, 1999 after giving effect to purchase accounting
adjustments. The following unaudited pro forma consolidated balance sheet
reflects the Company's financial position as of March 31, 2000, as if the
acquisitions had occurred on March 31, 2000 after giving effect to purchase
accounting adjustments. These pro forma financial statements have been prepared
for comparative purposes only, do not purport to be indicative of what the
Company's operating results or financial position would have been had the
acquisitions actually taken place on January 1, 1999, or March 31, 2000,
respectively, and may not be indicative of future operating results or financial
position.
15
<PAGE>
Item 7 - FINANCIAL STATEMENTS AND EXHIBITS
Allscripts, Inc.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands except per share amounts)
Three Months Ended March 31, 2000
<TABLE>
<CAPTION>
Acquired Pro
Allscripts, Inc. Companies Adjustments Forma
----------------- --------- ----------- -------
<S> <C> <C> <C> <C>
Revenue $ 9,647 $ 1,177 $ - $ 10,824
Cost of revenue 7,597 671 575 (1) 8,843
-------- -------- -------- ---------
Gross profit 2,050 506 (575) 1,981
Selling, general and
administrative expenses 8,945 7,077 ($5,522)(1) 10,500
Amortization of intangibles 574 - $ 7,564 (1) 8,138
Other Operating Expenses - - - -
-------- -------- -------- ---------
Loss from Operations (7,469) (6,571) ($2,617) (16,657)
Interest income (expense), net 1,183 (99) $ 111 (1) 1,195
-------- -------- -------- ---------
Accretion of mandatory
redemption value of
preferred shares and
accrued dividends on
preferred shares - - - -
-------- -------- -------- ---------
Loss from continuing
operations including
accretion and accrued
dividends on Preferred
Shares ($6,286) ($6,670) ($2,506) ($15,462)
Per share data-basic and
diluted:
Continuing operations
(including accretion and
accrued dividends on
preferred shares) ($0.25) ($0.56)
Weighted average shares of
common stock outstanding
used in computing per
share data-basic and
diluted 24,933 2,554 (2) 27,487
</TABLE>
See accompanying notes to pro forma consolidated statements of operations.
16
<PAGE>
Item 7--FINANCIAL STATEMENTS AND EXHIBITS
Allscripts, Inc.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands except per share amounts)
Year Ended December 31, 1999
<TABLE>
<CAPTION>
Acquired Pro
Allscripts, Inc. Companies Adjustments Forma
----------------- --------- ----------- -------
<S> <C> <C> <C> <C>
Revenue $ 27,586 $ 4,206 $ - $ 31,792
Cost of revenue 21,909 1,863 2,299 (1) 26,071
--------- -------- --------- ---------
Gross profit 5,677 2,343 (2,299) 5,721
Selling, general and
administrative expenses 20,656 5,155 - 25,811
Amortization of intangibles 1,351 - 30,259 (1) 31,610
Other Operating Expenses 319 - 13,729 (1) 14,048
--------- -------- --------- ---------
Loss from Operations (16,649) (2,812) (46,287) (65,748)
Interest income (expense), net 1,216 (323) 387 (1) 1,280
Accretion of mandatory
redemption value of
preferred shares and
accrued dividends on
preferred shares (2,198) - - (2,198)
--------- -------- --------- ---------
Loss from continuing
operations including
accretion and accrued
dividends on Preferred
Shares ($17,631) ($3,135) ($45,900) ($66,666)
Per share data-basic and
diluted:
Continuing operations
(including accretion and
accrued dividends on
preferred shares) ($1.20) ($3.86)
Weighted average shares of
common stock outstanding
used in computing per
share data-basic and
diluted 14,718 2,554 (2) 17,272
</TABLE>
17
<PAGE>
Item 7 - FINANCIAL STATEMENTS AND EXHIBITS
Allscripts, Inc.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
1. Pro forma Adjustments (in thousands, unless otherwise noted)
The following adjustments were applied to the Company's historical statements
of operations and those of the acquired companies to arrive at the pro forma
consolidated financial information.
Statement of Operations for the three months ended March 31, 2000:
. To record amortization of acquired trade names totaling $8.7 million for
Medifor, Inc. and $17.4 million for MasterChart, Inc. on a straight-line
basis over 60 months.
To record amortization of goodwill of $21.1 million related to the
Medifor, Inc. acquisition and $104.1 million related to the MasterChart, Inc.
acquisition on a straight-line basis over 60 months.
A summary of the pro forma adjustments relating to acquired intangible assets
is as follows (in thousands):
Medifor MasterChart Total
------- ----------- ------
Trade names $ 435 $ 870 $1,305
Goodwill $1,053 $5,206 $6,259
------ ------ ------
Total $1,488 $6,076 $7,564
. To record amortization of $575 for acquired software valued at $4.6
million related to the MasterChart, Inc. acquisition amortized on a
straight-line basis over 24 months.
. To eliminate interest expense of $111 related to convertible debt of
MasterChart, Inc. that was converted to the Company's equity in connection
with the acquisition.
. To eliminate compensation expense of $5,522 related to warrants exercised
in connection with acquisition of MasterChart, Inc.
Statement of Operations for the year ended December 31, 1999:
. To record amortization of acquired trade names totaling $8.7 million for
Medifor, Inc. and $17.4 million for MasterChart, Inc. on a straight-line
basis over 60 months.
To record amortization of goodwill of $21.1 million related to the
Medifor, Inc. acquisition and $104.1 million related to the MasterChart, Inc.
acquisition on a straight-line basis over 60 months.
18
<PAGE>
A summary of the pro forma adjustments relating to acquired intangible
assets is as follows (in thousands):
<TABLE>
<CAPTION>
Medifor MasterChart Total
------- ----------- -------
<S> <C> <C> <C>
Trade names $1,740 $ 3,480 $ 5,220
Goodwill $4,214 $20,825 $25,039
------ ------- -------
Total $5,954 $24,305 $30,259
</TABLE>
. To write-off the value of acquired in-process research and development
that had not yet reached technological feasibility and had no probable
alternative future uses of $8,700 for Medifor, Inc. and $5,029 for
MasterChart, Inc.
. To record amortization of $2,299 for acquired software valued at $4.6
million related to the MasterChart, Inc. acquisition amortized on a
straight-line basis over 24 months.
. To eliminate interest expense of $387 related to convertible debt of
MasterChart, Inc. that was converted to the Company's equity in
connection with the acquisition.
2. Net Loss per Share
Basic net loss per share for the year ended December 31, 1999 is computed
using the weighted average number of common shares outstanding during the
year. Diluted net loss per share is computed excluding the weighted average
number of common equivalent shares outstanding because such common
equivalents are anti-dilutive. Differences between historical weighted
average shares outstanding used to compute net loss per share result from
the inclusion of shares issued in conjunction with the acquisition as if
such shares were outstanding from January 1, 1999.
19
<PAGE>
Item 7 - FINANCIAL STATEMENTS AND EXHIBITS
Allscripts, Inc.
PRO FORMA CONSOLIDATED BALANCE SHEET
Unaudited
(In thousands, except share amounts)
Three Months Ended March 31, 2000
<TABLE>
<CAPTION>
Acquired Pro
Allscripts, Inc. Companies Adjustments Forma
----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $110,478 $ 210 $ (5,000) (1) $105,688
Marketable securities 31,886 63 - 31,949
Accounts receivable 6,750 737 - 7,487
Interest receivable 780 - - 780
Other receivable 4,160 - - 4,160
Inventories 3,938 33 - 3,971
Prepaid expenses and
other current expenses 860 138 - 998
------------- ------------ ------------- -------------
Total current assets 158,852 1,181 (5,000) 155,033
Long-term marketable 14,219 187 - 14,406
securities
Fixed assets, net 6,193 692 - 6,885
Intangible assets, net 3,007 137 151,251 (1) 158,992
4,597 (1)
-------------
Other assets 1,041 - - 1,041
------------- ------------ ------------- -------------
LIABILITIES
Current liabilities:
Accounts payable $ 4,101 $ 454 $ - $ 4,555
Accrued expenses 1,789 336 - 2,125
Deferred revenue 774 846 (846) (2) 774
------------- ------------ ------------- -------------
Total current liabilities 6,664 1,636 (846) 7,454
Long term debt - 4,573 (4,573) (3) -
Deferred revenue-net - 325 (325) (2) -
of current portion
------------- ------------ ------------- -------------
Total liabilities 6,664 6,534 (5,744) 7,454
STOCKHOLDERS' EQUITY
Preferred shares:
Undesignated, $0.01 2,784 (2,784) (1) -
par value, 1,000,000
shares authorized, no
shares issued and
outstanding at March
31, 2000
Common shares:
$0.01 par value, 263 2,056 (2,056) (1) 288
75,000,000 shares
authorized, 26,246,603
shares issued,
26,212,138 shares
outstanding at March 31, 2000
25 (1)
Unearned
compensation (1,491) (26) 26 (1) (1,491)
Other comprehensive income - (34) 34 (1) -
Additional paid-in capital 241,995 14,378 (14,378) (1) 407,954
165,959
Treasury stock at cost; (68) - (68)
34,465 common shares
at March 31, 2000
Accumulated deficit (64,051) (23,495) 23,495 (1) (64,051)
(13,729) (4)
------------- ------------ ------------- -------------
Total stockholders'
equity 176,648 (4,337) 156,592 328,903
Total liabilities and
stockholders' equity $183,312 $ 2,197 $150,848 $336,357
------------- ------------ ------------- -------------
</TABLE>
See accompanying notes to pro forma consolidated balance sheet.
20
<PAGE>
Item 7 - FINANCIAL STATEMENTS AND EXHIBITS
Allscripts, Inc.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
1. Pro forma Adjustments (in thousands, unless otherwise noted)
The following adjustments were applied to the Company's historical balance
sheet and those of the acquired companies to arrive at the pro forma
consolidated financial information.
. To record $5,000 cash included in the total consideration related to the
MasterChart, Inc.'s acquisition of approximately $132.4 million.
. To record the issuance of 1,617,873 shares of common stock with a fair
value of approximately $127.4 million in the acquisition of MasterChart,
Inc. and 935,858 shares of common stock with a fair value of
approximately $34.3 million in the acquisition of Medifor, Inc..
. To record goodwill and other intangible assets related to the
acquisition of MasterChart, Inc. and Medifor, Inc.. A summary of
goodwill and other intangibles acquired is as follows (in thousands):
<TABLE>
<CAPTION>
Medifor Masterchart Total
------- ----------- --------
<S> <C> <C> <C>
Acquired goodwill $21,069 $104,078 $125,147
Trade names $ 8,704 $ 17,400 $ 26,104
------- -------- --------
Total $29,773 $121,478 $151,251
</TABLE>
. The Company also acquired $4,597 of identified software related to the
purchase of MasterChart, Inc..
. To eliminate the equity accounts of the acquired companies.
2. An adjustment was made to the pro forma balance sheet to adjust the
acquirees' deferred revenue to the estimated cost of completing the services to
which the deferred revenue related.
3. Pursuant to the acquisition of MasterChart, Inc., certain debt instruments
held by Lanier that automatically converted into equity of MasterChart, Inc..
Upon execution of the acquisition, Lanier received consideration for their
equity.
4. An adjustment was made to the pro forma balance sheet to reflect the write-
off of acquired in-process research and development of $8,700 and $5,029 related
to Medifor, Inc. and MasterChart, Inc. respectively.
21
<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 hereunto duly authorized.
ALLSCRIPTS, INC.
Date: July 24, 2000 By: /s/ David B. Mullen
-------------------------------------
David B. Mullen, President
23
