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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: JANUARY 16, 2001
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(DATE OF EARLIEST EVENT REPORTED)
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Florida 000-25273 59-3422536
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(STATE OR OTHER JURISDICTION (COMMISSION FILE (I.R.S. EMPLOYER
OF INCORPORATION) NUMBER) IDENTIFICATION NUMBER)
360 Central Avenue
St. Petersburg, Florida 33701
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(727) 803-2040
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
Insurance Management Solutions Group, Inc. (the "Company") is
filing this Current Report on Form 8-K to report certain events
relating to its liquidity and current cash position. In June, 1999, the
Company entered into a revolving line of credit agreement ("LOC") with
a financial institution (the "Bank") that provided for borrowings of up
to two times the Company's rolling four quarter earnings before
interest, taxes, depreciation and amortization ("EBITDA"), but in no
event more than $12.0 million. At September 30, 2000, as reported in
the Company's Quarterly Report on Form 10-Q for the three months ended
September 30, 2000, the outstanding balance and available line of
credit under the LOC were $0 and $10,421,992, respectively.
In December, 2000, the Company received notification from the
Bank that it would no longer honor any requests by the Company for
advances under the LOC due to the fact that the Bank believed the
Company had experienced a material adverse change in its financial
condition.
Since receiving such notification, the Company, believing that
it could obtain such financing, has sought to replace the LOC with an
alternative borrowing arrangement in the $3.0 million to $5.0 million
range with another lender. To date, the Company has been unable to
secure a new line of credit upon acceptable terms. Although management
of the Company continues to seek such an arrangement, no assurances can
be given that the Company will be able to obtain a new line of credit.
In light of the Bank's termination of the LOC, the Company
will have to rely solely upon cash on-hand and cash flows from
operations to satisfy anticipated working capital and capital
expenditure requirements for the foreseeable future. Although at
December 31, 2000, the Company had a cash balance of approximately
$4.15 million on a consolidated basis, approximately $2.8 million of
such amount was held by its Geotrac of America, Inc. ("Geotrac")
subsidiary. To date, the Company has been able to access Geotrac's
excess cash when necessary, primarily through the prepayment of
outstanding intercompany indebtedness. The remaining balance of such
intercompany debt (approximately $1.2 million) is expected to be repaid
within the next week.
Although the Company is the sole shareholder of Geotrac, it
entered into a Corporate Governance Agreement, dated July 31, 1998,
with Geotrac and Daniel J. White, in conjunction with the acquisition
of Geotrac, setting forth certain terms and conditions pertaining to
the operation of Geotrac. As previously disclosed, this Corporate
Governance Agreement provides, in part, that for so long as Mr. White
is a shareholder of the Company or Geotrac or has an option to purchase
Geotrac stock, (i) the Company will vote all of its shares of Geotrac
stock to fix and maintain the number of Geotrac directors at five, (ii)
the Company will vote its shares of Geotrac stock to elect as directors
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of Geotrac two persons designated by Mr. White, (iii) Mr. White's
termination as a Geotrac employee will require the vote of four out of
five members of the Board of Directors, and (iv) certain actions by
Geotrac will require the unanimous approval of the Geotrac Board of
Directors. Among the actions requiring such unanimous board approval
under the Corporate Governance Agreement is the making of cash
distributions to the Company, whether by dividend or otherwise.
Therefore, pursuant to the Corporate Governance Agreement, Mr. White
may impede the Company's ability to access excess cash balances
retained by its Geotrac subsidiary, even if all of the other directors
of Geotrac were to approve the distribution thereof to the Company. Mr.
White is presently a director and shareholder of the Company.
Despite the termination of the LOC and the existence of the
Corporate Governance Agreement, including its provisions regarding the
making of cash distributions to the Company, management believes cash
on-hand and cash flows from operations will be sufficient to satisfy
currently anticipated working capital and capital expenditure
requirements for the foreseeable future. At the same time, the Company
will continue its efforts to obtain a new line of credit upon
acceptable terms and will explore means of obtaining additional cash as
needed from its Geotrac subsidiary. No assurances can be given,
however, that the Company will be able to obtain a new line of credit
and/or obtain available cash from Geotrac. If the Company is unable to
do so, it ultimately could have a material adverse effect on the
Company's business, financial condition and results of operations.
CERTAIN STATEMENTS CONTAINED IN THIS REPORT, INCLUDING
STATEMENTS REGARDING (I) THE COMPANY'S ABILITY TO MEET ANTICIPATED
WORKING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS USING SOLELY CASH
ON-HAND AND CASH FLOWS FROM OPERATIONS, (II) THE COMPANY'S ABILITY TO
OBTAIN A NEW LINE OF CREDIT UPON ACCEPTABLE TERMS, AND (III) THE
COMPANY'S EFFORTS AND ABILITY TO ACCESS EXCESS CASH BALANCES RETAINED
BY ITS GEOTRAC SUBSIDIARY, AND THE STATEMENTS CONTAINED HEREIN
REGARDING MATTERS THAT ARE NOT HISTORICAL FACTS, ARE "FORWARD-LOOKING"
STATEMENTS (AS SUCH TERM IS DEFINED IN THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995). BECAUSE SUCH STATEMENTS ARE SUBJECT TO
RISKS AND UNCERTAINTIES, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. FACTORS
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS INCLUDE, BUT
ARE NOT LIMITED TO, (I) A DECLINE IN GENERAL ECONOMIC CONDITIONS, (II)
FLUCTUATIONS IN OPERATING RESULTS, (III) CHANGES IN INTEREST RATES AND
THE AVAILABILITY OF CREDIT, (IV) THE LOSS OF A MATERIAL CUSTOMER OR THE
INABILITY TO RENEW EXISTING CONTRACTS UPON COMPARABLE TERMS, (V) THE
FINANCIAL CONDITION OF THE COMPANY'S CLIENTS, (VI) POTENTIAL INCREASES
IN THE COMPANY'S COSTS, (VII) THE ENFORCEABILITY AND INTERPRETATION OF
THE CORPORATE GOVERNANCE AGREEMENT, AND (VIII) THE FACTORS DISCUSSED IN
ITEM 5 OF THE REPORT AND THE RISKS DISCUSSED UNDER THE CAPTION "RISK
FACTORS" INCLUDED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON MARCH 30, 2000.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
Not applicable
(b) Pro forma financial information.
Not applicable
(c) Exhibits.
None
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SIGNATURE
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.
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
By: /s/ DAVID M. HOWARD
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David M. Howard
President and Chief Executive Officer
Date: January 16, 2001
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