<PAGE> 1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
APRIL 28, 2000
NEOFORMA.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 000-28715 77-0424252
(STATE OR OTHER (COMMISSION FILE (I.R.S. EMPLOYER
JURISDICTION OF NUMBER) IDENTIFICATION NUMBER)
INCORPORATION)
</TABLE>
3061 ZANKER ROAD, SAN JOSE, CA 95134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(408) 468-4000
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
EquipMD Audited Financial Statements
(i) Report of Independent Public Accountants, dated April 12, 2000
(ii) Consolidated Balance Sheet as of December 31, 1999
(iii) Consolidated Statements of Operations for the period from
inception (September 23, 1999) to December 31, 1999 and for period
from inception (June 2, 1998) to October 31, 1999 of the
Predecessor
(iv) Consolidated Statements of Shareholders' Equity for the period
from inception (September 23, 1999) to December 31, 1999 and for
the ten months ended October 31, 1999 of the Predecessor
(v) Consolidated Statements of Cash Flows for the period from inception
(September 23, 1999) to December 31, 1999 and for the ten months
ended October 31, 1999 of the Predecessor
(vi) Notes to Financial Statements
EquipMD Unaudited Financial Statements
(i) Consolidated Balance Sheets as of March 31, 2000 (unaudited) and
December 31, 1999
(ii) Consolidated Statements of Operations for the three month periods
ended March 31, 2000 and 1999 (unaudited) and for the cumulative
period from inception (September 23, 1999) to March 31, 2000
(unaudited)
(iii) Consolidated Statements of Cash Flows for the three month periods
ended March 31, 2000 and 1999 (unaudited) and for the cumulative
period from inception (September 23, 1999) to March 31, 2000
(unaudited)
(iv) Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information.
Pro Forma Combined Consolidated Financial Statements (unaudited):
(i) Pro Forma Combined Consolidated Balance Sheet as of March 31, 2000
(unaudited)
(ii) Pro Forma Combined Consolidated Statement of Operations for the
three month period ended March 31, 2000 (unaudited)
(iii) Pro Forma Combined Consolidated Statement of Operations for the
year ended December 31, 1999 (unaudited)
(iv) Notes to Pro Forma Combined Consolidated Financial Statements
(unaudited)
2
<PAGE> 3
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.
NEOFORMA.COM, INC.
By: /s/ FREDERICK J. RUEGSEGGER
------------------------------------
Frederick J. Ruegsegger
Chief Financial Officer and Secretary
Dated: July 12, 2000
3
<PAGE> 4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To EquipMD, Inc.:
We have audited the accompanying consolidated balance sheet of EQUIPMD,
INC. AND SUBSIDIARY (a Georgia corporation) as of December 31, 1999, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the period from inception (September 23, 1999) to December 31, 1999.
We have also audited the statements of operations, stockholders' equity, and
cash flows for the ten months ended October 31, 1999 of the Predecessor. These
financial statements are the responsibility of the Company's and Predecessor's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of EquipMD,
Inc. and subsidiary as of December 31, 1999, and the results of their operations
and their cash flows for the period from inception (September 23, 1999) to
December 31, 1999 and the results of operations and cash flows of the
Predecessor for the ten months ended October 31, 1999 in conformity with
accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
April 12, 2000
4
<PAGE> 5
EQUIPMD, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,200,271
Accounts receivable....................................... 4,566
-----------
Total current assets.............................. 1,204,837
-----------
GOODWILL, net of accumulated amortization of $162,724....... 2,766,312
OTHER NONCURRENT ASSET...................................... 720,000
-----------
Total assets...................................... $ 4,691,149
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable.............................................. $ 300,000
Accounts payable.......................................... 177,535
Accrued interest.......................................... 4,214
-----------
Total current liabilities......................... 481,749
-----------
MANDATORILY REDEEMABLE PREFERRED STOCK (Note 4):
Series A, $.001 par value, 4,166,667 shares authorized,
2,777,778 shares issued and outstanding................ 83,241
Series B, $.001 par value, 300,000 shares authorized,
issued, and outstanding................................ 302,975
-----------
386,216
-----------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 100,000,000 shares
authorized, 15,277,778 shares issued and outstanding... 15,278
Additional paid-in capital................................ 4,963,097
Accumulated deficit....................................... (1,155,191)
-----------
Total stockholders' equity........................ 3,823,184
-----------
Total liabilities and stockholders' equity........ $ 4,691,149
===========
</TABLE>
The accompanying notes are an integral part of this consolidated balance sheet.
5
<PAGE> 6
EQUIPMD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PREDECESSOR
-------------------------------------
FOR THE FOR THE
PERIOD FROM PERIOD FROM
INCEPTION FOR THE INCEPTION
(SEPTEMBER 23, 1999) TEN MONTHS ENDED (JUNE 2, 1998) TO
TO DECEMBER 31, OCTOBER 31, DECEMBER 31,
1999 1999 1998
-------------------- ---------------- -----------------
(UNAUDITED)
<S> <C> <C> <C>
REVENUE:
Medical/surgical sales fees............ $ 8,978 $ 19,450 $ 6,410
Manufacturer fees...................... 2,307 11,854 --
Non-medical sales fees................. 513 7,864 --
----------- --------- ---------
Total revenue.................. 11,798 39,168 6,410
----------- --------- ---------
OPERATING EXPENSES:
Payroll related........................ 68,001 134,425 97,919
Selling and marketing.................. 71,115 31,733 26,291
General and administrative............. 781,462 55,301 56,027
Amortization of goodwill............... 162,724 -- --
----------- --------- ---------
Total operating expenses....... 1,083,302 221,459 180,237
----------- --------- ---------
Loss from operations........... (1,071,504) (182,291) (173,827)
OTHER INCOME (EXPENSE):
Interest income........................ 7,871 -- --
Interest expense....................... (5,342) (19,840) (3,078)
----------- --------- ---------
Net loss....................... $(1,068,975) $(202,131) $(176,905)
=========== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
6
<PAGE> 7
EQUIPMD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
-------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
---------- ------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JUNE 2, 1998
(Inception of Predecessor)
(Unaudited)........................ -- $ -- $ -- $ -- $ --
Net loss -- Predecessor............ -- -- -- (176,905) (176,905)
---------- ------- ---------- ----------- -----------
BALANCE AT DECEMBER 31, 1998 --
Predecessor (Unaudited)............ -- -- -- (176,905) (176,905)
Net loss -- Predecessor
(audited)....................... -- -- -- (202,131) (202,131)
---------- ------- ---------- ----------- -----------
BALANCE AT OCTOBER 31, 1999 --
Predecessor (Unaudited)............ -- -- -- (379,036) (379,036)
------------------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 23, 1999
(Inception of EquipMD)............. -- -- -- -- --
Net loss........................... -- -- -- (1,068,975) (1,068,975)
Issuances of common stock.......... 15,278,000 15,278 4,963,097 -- 4,978,375
Accretion of preferred stock to
redemption value................ -- -- -- (64,516) (64,516)
Preferred stock dividends
accrued......................... -- -- -- (21,700) (21,700)
---------- ------- ---------- ----------- -----------
BALANCE AT DECEMBER 31, 1999......... 15,278,000 $15,278 $4,963,097 $(1,155,191) $ 3,823,184
========== ======= ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
7
<PAGE> 8
EQUIPMD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR
-----------------------------------
PERIOD FROM PERIOD FROM
INCEPTION FOR THE INCEPTION
(SEPTEMBER 23, 1999) TEN MONTHS ENDED (JUNE 2, 1998)
TO DECEMBER 31, OCTOBER 31, TO DECEMBER 31,
1999 1999 1998
-------------------- ---------------- ---------------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss................................. $(1,068,975) $(202,131) $(176,905)
----------- --------- ---------
Adjustments to reconcile net loss to cash
and cash equivalents used in operating
activities:
Amortization of goodwill.............. 162,724 6,620 --
Change in assets and liabilities, net
of effects from purchase of
subsidiary:
Increase in accounts receivable..... (4,566) -- --
Increase in accounts payable and
accruals......................... 102,713 78,157 8,551
----------- --------- ---------
Total adjustments................ 260,871 84,777 8,551
----------- --------- ---------
Net cash used in operating
activities..................... (808,104) (117,354) (168,354)
----------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................... -- -- (13,646)
----------- --------- ---------
Net cash used in investing
activities..................... -- -- (13,646)
----------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of note payable... -- 118,000 182,000
Proceeds from issuance of Series A
mandatorily redeemable preferred
stock................................. 2,000,000 -- --
Proceeds from issuance of common stock... 8,375 -- --
----------- --------- ---------
Net cash provided by financing
activities..................... 2,008,375 118,000 182,000
----------- --------- ---------
NET INCREASE IN CASH AND CASH
EQUIVALENTS.............................. 1,200,271 646 --
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD................................... -- -- --
----------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD................................... $ 1,200,271 $ 646 $ --
=========== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
INFORMATION:
Issuance of stock for purchase
option.............................. $ 720,000 $ -- $ --
=========== ========= =========
Accretion of preferred stock to
redemption value.................... $ 64,516 $ -- $ --
=========== ========= =========
Preferred stock dividends accrued..... $ 21,700 $ -- $ --
=========== ========= =========
Cash paid during the year for
interest............................ $ 1,198 $ 19,840 $ 3,078
=========== ========= =========
Purchase price of acquired stock
(Note 2)............................ $ 2,550,000 $ -- $ --
Negative net assets assumed........... 379,036 -- --
----------- --------- ---------
Goodwill incurred..................... $ 2,929,036 $ -- $ --
=========== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
8
<PAGE> 9
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Formed in 1999, EquipMD, Inc. and Subsidiary (the "Company") is a supplier
of internet-based procurement solutions to the physician marketplace (See Note
2).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reported
period. Actual results could differ from those estimates.
STATEMENT OF CASH FLOWS
For purposes of the statement of cash flows, the Company considers all
short-term, highly liquid investments with original maturities of three months
or less to be cash equivalents.
GOODWILL
Goodwill represents the amount of purchase price in excess of the fair
value of the tangible net assets resulting from the 1999 acquisition (see Note
2) net of accumulated amortization. The goodwill is amortized on a straight-line
basis over a period of three years. The Company continually evaluates the
goodwill for impairment to determine if a write-down to net realizable value is
necessary. No impairment has been recorded to date.
REVENUE RECOGNITION
The Company categorizes its services into three primary service lines as
follows: medical/surgical sales fees, manufacturer fees, and non-medical sales
fees. Medical/surgical sales fees are derived from transaction fees paid by
participating sellers of medical products on the Company's website. Manufacturer
fees are derived from transaction fees paid by participating manufacturers who
produce the medical equipment sold on the Company's website. Non-medical sales
fees are derived from miscellaneous sources such as equipment leasing,
insurance, and financial electronic claims submission.
Transaction fee revenue represents the Company's percentage of the gross
transaction fees at the time the buyer's order is confirmed or accepted by the
seller.
STOCK-BASED COMPENSATION PLAN
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for
Stock-Based Compensation. SFAS No. 123 allows companies which have stock-based
compensation arrangements with employees to adopt a new fair-value basis of
accounting for stock options and other equity instruments or to continue to
apply the existing accounting rules under Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, but with additional
financial statement disclosure. The company has elected to account for
stock-based compensation expense under APB No. 25 and make the required pro
forma disclosures for compensation expense (see Note 5).
9
<PAGE> 10
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
2. ACQUISITION
In November 1999, the Company formed Lynx Acquisition Corp. as a wholly
owned subsidiary for the purpose of acquiring all of the stock of Lynx
Purchasing Services, LLC ("Lynx" or the "Predecessor"), a supplier of
Internet-based procurement solutions to the physician marketplace. Accordingly,
the operations of Lynx from the date of acquisition have been included in the
accompanying consolidated statement of operations for the period from inception
(September 23, 1999) to December 31, 1999. The acquisition was accounted for
using the purchase method of accounting and accordingly, the purchase price was
allocated to the tangible and intangible assets acquired and liabilities assumed
on the basis of their respective fair values on the acquisition date.
The Company purchased Lynx through the issuance of 3,125,000 shares of the
Company's common stock and 300,000 shares of Series B mandatorily redeemable
preferred stock (see Note 4). The purchase price of $2,550,000 exceeded the fair
value of the net assets acquired by $2,929,036 which amount was recorded as
goodwill. The goodwill will be amortized over an estimated life of three years.
During 1999, the Company issued 1,000,000 shares of common stock to Central
Point Services, LLC, a computer licensing company. The shares were issued to
obtain an option to purchase Central Point Services, LLC at a future date. The
common stock was valued at $0.72 per share and is shown as Other Noncurrent
Asset in the accompanying consolidated balance sheet.
3. NOTE PAYABLE
With the acquisition by Lynx, the Company assumed the outstanding balance
at the acquisition date on a line of credit which was being utilized to meet
working capital needs. The total amount outstanding under the loan agreement was
$300,000 at December 31, 1999. The loan agreement is personally guaranteed by
certain stockholders of the Company. Maximum borrowings allowed under the
agreement are $300,000, of which $0 was available at December 31, 1999. Interest
is based on the bank's prime rate (9.0% at December 31, 1999). Interest expense
incurred by the Company under the loan agreement for the period from inception
(September 23, 1999) to December 31, 1999 was $5,342 and for the ten months
ended October 31, 1999 amounted to $19,840.
4. MANDATORILY REDEEMABLE PREFERRED STOCK
The Company has authorized 20,000,000 shares of preferred stock to be
issued from time to time in different series of preferred issuances.
In November 1999, the Company issued 2,777,778 shares of Series A
mandatorily redeemable preferred stock ("Series A") at $0.72 per share.
In November 1999, the Company issued 300,000 shares of Series B mandatorily
redeemable preferred stock ("Series B") as partial consideration for the
acquisition of Lynx by the Company. (See Note 2).
The rights and preferences of the outstanding Series A and B are as
follows:
DIVIDENDS
The holders of Series A and B are entitled to receive cumulative dividends
prior to and in preference to any declaration or payment of any dividend on the
common stock at the rate of 8% and 7%, respectively, per share per annum. The
dividends shall accrue from day to day, whether or not earned or declared. As of
December 31, 1999, no dividends have been paid but have been accrued and are
included in the accompanying balance sheet as part of mandatorily redeemable
preferred stock.
10
<PAGE> 11
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
LIQUIDATION PREFERENCE
In the event of any liquidation, dissolution or winding up of the Company,
holders of Series A are entitled to receive $0.72 per share, plus all dividends
accrued but unpaid. Holders of Series B are entitled to an amount equal to each
holder's cost basis plus all dividends accrued but unpaid. If upon liquidation,
the Company's assets to be distributed among the holders of the Series A and B
are insufficient to permit payment in full of the Series A and B liquidation
values to such holders, such assets will be distributed ratably among them based
upon aggregate Series A and B liquidation values of the Series A and B held by
each holder.
MANDATORY REDEMPTION
The Company may redeem the Series A at any time in its sole discretion
provided, however, that the Company must redeem the Series A no later than the
earlier of the (i) closing of a qualified public offering and (ii) January 31,
2005 (the "Redemption Date"). The redemption price of the Series A will be $0.72
per share plus accrued but unpaid dividends and shares of common stock equal to
the number of shares of preferred stock being redeemed. Since the redemption
will include common stock equal to the number of shares of preferred stock being
redeemed, the initial value of the preferred Series A issuance has been
allocated to common stock. From the date of issuance of the preferred stock to
the redemption date of January 31, 2005, the Company will accrete up to the
redemption price. Such accretion amounted to $64,516 for the period from
inception (September 23, 1999) to December 31, 1999 and was charged to retained
earnings.
Upon the earliest to occur of (i) the sale of all or substantially all of
the assets of the Company, (ii) an initial public offering of the Company's
common stock, or (iii) November 5, 2002, any holder of Series B may require the
Company to redeem in cash all or less than all of the outstanding Series B held
by each holder based on the holder's cost basis in the shares as adjusted for
dividends accrued but unpaid.
VOTING RIGHTS
Each holder of the Series A are entitled to cast such number of votes at
any given time that such holder would be entitled to cast if such holder held
the shares of common stock that such holder would be entitled to receive if such
holder's shares of the Series A were then redeemed by the Company.
5. EMPLOYEE STOCK OPTIONS
On November 30, 1999, the Company adopted a stock option plan (the "Plan")
and the Board of Directors reserved 2,875,838 shares of common stock for
issuance under the Plan. On this date, such options were granted. The Plan
allows the issuance of nonqualified stock options at exercise prices
approximating fair value of the underlying shares on the grant date. Options
granted under the Plan vest at a rate of 12.5% per quarter commencing on the
last day of the first full calendar quarter following the grant date and expire
ten years from the date of grant. As of December 31, 1999, options for 2,875,838
shares were outstanding (See Note 7).
11
<PAGE> 12
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
Stock option activity was as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD FROM INCEPTION
(SEPTEMBER 23, 1999) TO
DECEMBER 31, 1999
-----------------------------
WEIGHTED
NUMBER AVERAGE
OF SHARES EXERCISE PRICE
---------- ---------------
<S> <C> <C>
Outstanding, beginning of period............................ -- $ --
Granted..................................................... 2,875,838 0.72
Exercised................................................... -- --
Canceled or expired......................................... -- --
--------- -----
Outstanding, end of period.................................. 2,875,838 $0.72
========= =====
</TABLE>
The Company accounts for the Plan under the provisions of APB No. 25. Had
compensation expense for the Plan been determined based on the fair value at the
grant dates for awards consistent with the method of SFAS 123, the Company's net
loss would not have been materially different from what was reported for any of
the periods in the accompanying statement of operations.
6. INCOME TAXES
The Company accounts for income taxes pursuant to the provisions of SFAS
No. 109, Accounting for Income Taxes. SFAS 109 requires recognition of deferred
tax assets and liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined using the current
applicable enacted tax rate and provisions of the enacted tax law.
Due to the Company's loss position, there was no provision for income taxes
for the period from inception (September 23, 1999) to December 31, 1999 nor for
the ten months ended October 31, 1999 for the predecessor.
At December 31, 1999, the Company had cumulative net operating loss
carryforwards of approximately $400,000 for federal and state income tax
purposes. Due to there not being a history of taxable income for the Company, a
valuation allowance for all of the net operating loss carryforwards has been
recorded.
7. SUBSEQUENT EVENTS
Subsequent to December 31, 1999, the Company issued the remaining 1,388,889
authorized shares of Series A Preferred Stock. The total proceeds received
amounted to $1.0 million.
On February 7, 2000, the Board of Directors authorized and the Company
granted an option to purchase up to 208,796 shares of common stock at an
exercise price of $0.90 per share.
On February 21, 2000, Board of Directors authorized and the Company granted
an option to purchase up to 874,566 shares of common stock at an exercise price
of $0.90 per share.
On March 16, 2000, the Company acquired substantially all of the assets of
Central Point Services, LLC, a computer licensing company. The acquisition was
accounted for using the purchase method of accounting. The total purchase price
consisted of $250,000 in cash, the issuance of 253,750 shares of the Company's
common stock, and a $1,750,000 promissory note due in quarterly payments of
$62,578 over 24 months, at which time the unpaid principal balance and accrued
interest becomes due. Interest accrues on the outstanding principal balance at a
rate of 7.5% per annum.
12
<PAGE> 13
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
On March 22, 2000, the Board of Directors reserved 318,163 shares of common
stock for issuance under the Company's stock option plan.
On March 27, 2000, the Company signed a definitive agreement with
Neoforma.com, Inc. whereby Neoforma.com, Inc. will acquire all of the
outstanding capital stock and options of the Company in exchange for
approximately 5.4 million shares of Neoforma.com, Inc.'s common stock. The
acquisition will be accounted for using the purchase method of accounting.
13
<PAGE> 14
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
EQUIPMD, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------ -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,200,271 $ 1,432,946
Accounts receivable....................................... 4,566 19,743
----------- -----------
Total current assets.............................. 1,204,837 1,452,689
----------- -----------
GOODWILL.................................................... 2,766,312 5,429,651
OTHER NONCURRENT ASSET...................................... 720,000 --
----------- -----------
Total assets...................................... $ 4,691,149 $ 6,882,340
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable, current portion............................ $ 300,000 $ 737,734
Accounts payable.......................................... 177,535 469,045
Accrued payroll........................................... -- 186,813
Accrued interest.......................................... 4,214 10,802
----------- -----------
Total current liabilities......................... 481,749 1,404,394
----------- -----------
NOTES PAYABLE, net of current portion....................... -- 1,312,266
----------- -----------
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK:
Series A --
Authorized -- 4,166,667 shares
Issued and outstanding: 2,777,778 shares at December
31, 1999 and 4,166,667 shares at March 31, 2000; par
value $0.001.......................................... 83,241 274,191
Series B --
Authorized -- 300,000 shares
Issued and outstanding: 300,000 shares at December 31,
1999 and March 31, 2000; par value $0.001............. 302,975 308,225
----------- -----------
386,216 582,416
----------- -----------
STOCKHOLDERS' EQUITY:
Common Stock $0.001 par value:
Authorized -- 100,000,000 shares
Issued and outstanding: 15,277,778 shares at December
31, 1999 and 15,531,528 shares at March 31, 2000...... 15,278 15,532
Additional paid-in capital................................ 4,963,097 6,189,829
Accumulated deficit....................................... (1,155,191) (2,622,097)
----------- -----------
Total stockholders' equity........................ 3,823,184 3,583,264
----------- -----------
Total liabilities and stockholders' equity........ $ 4,691,149 $ 6,882,340
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
14
<PAGE> 15
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
EQUIPMD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE PREDECESSOR
PERIOD FROM ---------------
FOR THE QUARTER INCEPTION FOR THE QUARTER
ENDED (SEPTEMBER 23, 1999) ENDED
MARCH 31, TO MARCH 31, MARCH 31,
2000 2000 1999
--------------- -------------------- ---------------
<S> <C> <C> <C>
REVENUE:
Medical/surgical sales fees................ $ 36,317 $ 45,295 $ 17,198
Manufacturer fees.......................... 5,513 7,820 3,039
Non-medical sales fees..................... 609 1,122 4,590
----------- ----------- --------
Total revenue...................... 42,439 54,237 24,827
OPERATING EXPENSES:
Payroll related............................ 385,199 453,200 42,556
Selling and marketing...................... 50,149 121,264 20,155
General and administrative................. 601,970 1,383,432 30,052
Amortization of goodwill................... 285,036 447,760 --
----------- ----------- --------
Total operating expenses........... 1,322,354 2,405,656 92,763
----------- ----------- --------
Loss from operations.................... (1,279,915) (2,351,419) (67,936)
OTHER INCOME (EXPENSE):
Interest income............................ 19,716 27,587 --
Interest expense........................... (11,896) (17,238) (5,353)
----------- ----------- --------
Net loss................................ $(1,272,095) $(2,341,070) $(73,289)
=========== =========== ========
Accretion/dividends related to preferred
stockholders............................ (194,811) (281,027) --
----------- ----------- --------
Net loss attributable to common
stockholders............................ $(1,466,906) $(2,622,097) $(73,289)
=========== =========== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
15
<PAGE> 16
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
EQUIPMD, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
PREDECESSOR
PERIOD FROM ---------------
FOR THE QUARTER INCEPTION FOR THE QUARTER
ENDED (SEPTEMBER 23, 1999) ENDED
MARCH 31, TO MARCH 31, MARCH 31,
2000 2000 1999
--------------- -------------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss....................................... $(1,272,095) $(2,341,070) $(73,289)
Adjustment to reconcile net loss to net cash
and cash equivalents used in operating
activities:
Amortization of goodwill....................... 285,036 447,760 --
Change in assets and liabilities, net of
acquisitions:
Accounts receivable, net.................... (15,177) (19,743) (11,925)
Accounts payable and accruals............... 484,911 587,624 13,898
----------- ----------- --------
Net cash used in operating activities..... (517,325) (1,325,429) (71,316)
----------- ----------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for the acquisition of Central Point
Services, LLC............................... (250,000) (250,000) --
Capital expenditures........................... -- -- (2,409)
----------- ----------- --------
Net cash used in investing activities..... (250,000) (250,000) (2,409)
----------- ----------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of note payable..... -- -- 74,627
Proceeds from the issuance of Series A
mandatorily redeemable convertible preferred
stock....................................... 1,000,000 3,000,000 --
Proceeds from the issuance of common stock..... -- 8,375
----------- ----------- --------
Net cash provided by financing
activities............................. 1,000,000 3,008,375 74,627
----------- ----------- --------
Net increase in cash and cash
equivalents............................ 232,675 1,432,946 902
CASH AND CASH EQUIVALENTS, beginning of period... 1,200,271 -- (407)
----------- ----------- --------
CASH AND CASH EQUIVALENTS, end of period......... $ 1,432,946 $ 1,432,946 $ 495
=========== =========== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION:
Cash paid during the period for interest....... $ 1,094 $ 2,292 $ 3,583
=========== =========== ========
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING
ACTIVITIES:
Issuance of stock for purchase option.......... $ -- $ 720,000 $ --
=========== =========== ========
Accretion of preferred stock to redemption
value....................................... $ 129,561 $ 194,077 $ --
=========== =========== ========
Preferred stock dividends accrued.............. $ 65,250 $ 86,950 $ --
=========== =========== ========
Purchase price of acquired stock............... $ -- $ 2,550,000 $ --
Negative net assets assumed.................... -- 379,036 --
----------- ----------- --------
Goodwill incurred.............................. $ -- $ 2,929,036 $ --
=========== =========== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
16
<PAGE> 17
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1999
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three-month period ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000. For further information, refer to the consolidated financial statements
for the year ended December 31, 1999 and for the cumulative period from
September 23, 1999 (inception) to December 31, 1999 and notes thereto included
herein.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of EquipMD, Inc.
and its wholly owned subsidiary Central Point Services, LLC. All significant
intercompany accounts and transactions have been eliminated in consolidation.
GOODWILL
Goodwill consists of the amount of purchase price in excess of the fair
value of the tangible net assets, in the acquisitions of Lynx Purchasing
Services, LLC (or the "Predecessor") and Central Point Services, LLC (See Note
3). Goodwill is amortized on a straight-line basis over a period of 3 years.
Intangibles are evaluated quarterly for impairment and written down to
net-realizable value, if necessary. No impairment has been recorded to date.
COMPREHENSIVE INCOME
Comprehensive income includes all changes in equity (net assets) during a
period from non-owner sources. There were no components of comprehensive income
for the quarters ended March 31, 1999 and 2000 and for the period from inception
(September 23, 1999) to March 31, 2000.
SEGMENT INFORMATION
The Company identifies its operating segments based on business activities,
management responsibility and geographical location. During the quarters ended
March 31, 1999 and 2000 and for the period from inception (September 23, 1999)
to March 31, 2000 the Company operated in a single business segment supplying
internet-based procurement solutions to the physician marketplace. Through March
31, 2000, foreign operations have not been significant in either revenue or
investment in long-lived assets.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 provides guidance on applying generally accepted accounting
principles to revenue recognition issues in financial statements. The Company
will adopt SAB 101 as required in the fourth quarter of 2000. Management does
not expect the adoption of SAB 101 to have a material impact on its consolidated
results of operations and financial position.
17
<PAGE> 18
EQUIPMD, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ACQUISITION
On March 16, 2000, the Company acquired substantially all of the assets of
Central Point Services, LLC, a computer licensing company. The acquisition was
accounted for using the purchase method of accounting. The total purchase price
consisted of $250,000 in cash, the issuance of 253,750 shares of the Company's
common stock valued at $228,375, and a $1,750,000 promissory note due in
quarterly payments of $62,578 for 8 quarters, at which time the unpaid principal
balance and accrued interest become due. Interest accrues on the outstanding
principal balance at a rate of 7.5% per annum. As a result of the acquisition,
the noncurrent asset at December 31, 1999 amounting to $720,000 was considered
part of the consideration to Central Point Services, LLC. Thus, such amounts are
included in Goodwill in the accompanying consolidated balance sheet as of March
31, 2000.
4. NOTES PAYABLE
With the acquisition by Predecessor, the Company assumed the outstanding
balance of a line of credit, which was being utilized to meet working capital
needs. The total amount outstanding under the loan agreement was $300,000 at
December 31, 1999 and March 31, 2000. The loan agreement is personally
guaranteed by certain stockholders of the Company. Maximum borrowings allowed
under the agreement are $300,000, of which $0 was available at March 31, 2000.
Interest is based on the bank's prime rate (9.0% at March 31, 2000).
As part of the purchase price of Central Point Services, LLC, the Company
issued in March 2000 a promissory note payable to owners of Central Point
Services, LLC in the amount of $1,750,000. The note bears interest at 7.5% per
annum and is payable in 8 quarterly installments of $62,578, at which time the
unpaid principal balance and accrued interest become due and payable. At March
31, 2000, the remaining principal balance was $1,750,000. According to the
provisions of the note, a payment amounting to $250,000 on the note is due upon
change of control. As a result of the purchase of the Company by Neoforma.com,
Inc. ("Neoforma.com") (see Note 5), under the change of control provisions, the
Company included this $250,000 payment in the current portion of notes payable
at March 31, 2000.
5. SUBSEQUENT EVENTS
In April 2000, Neoforma.com, Inc. ("Neoforma.com") acquired the Company,
pursuant to an Agreement and Plan of Merger, dated as of March 24, 2000 (the
"Agreement"). Under the terms of the Agreement, the Company's shareholders
received an aggregate of 4,374,066 shares of the Neoforma.com's Common Stock,
and the Company's optionholders received the right to purchase 1,075,502 shares
of the Neoforma.com's Common Stock pursuant to the Company options that were
assumed.
18
<PAGE> 19
NEOFORMA.COM, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
In August 1999, Neoforma.com, Inc. ("Neoforma.com"), completed the
acquisition of GAR which has been accounted for as a purchase. Accordingly, the
results of operations of GAR have been included in the historical consolidated
statement of operations of Neoforma.com commencing on the date of acquisition.
The Industrial Products operations of GAR was sold to an owner of GAR ("Owner")
prior to its acquisition. Accordingly, the revenue and direct expenses
(consisting of only the salary of the Owner and certain employees) are
eliminated in the accompanying pro forma statements of operations.
In November 1999, Neoforma.com completed the acquisition of FDI which has
been accounted for as a purchase. Accordingly, the results of operations of FDI
have been included in the historical consolidated statement of operations of
Neoforma.com commencing on the date of acquisition.
In January 2000, Neoforma.com acquired all of the outstanding common stock
and options of Pharos in exchange for 2.0 million shares of Neoforma.com common
stock valued at approximately $22.2 million (at an assumed value of $11.00 per
share) and forgiveness of a $500,000 promissory note. The acquisition will be
accounted for as a purchase.
In March 2000, Neoforma.com acquired U.S. Lifeline, Inc. ("USL") a
healthcare content company. The acquisition was accounted for using the purchase
method of accounting. Accordingly, the purchase price was allocated to the
intangible assets acquired and liabilities assumed on the basis of their
respective fair values on the acquisition date.
The total purchase price of approximately $7.2 million, consisted of
approximately 61,000 shares of common stock valued at $2.8 million, $3.5 million
in cash and estimated assumed liabilities of approximately $912,000. In the
initial allocation of the purchase price, $682,000 and $6.5 million was
allocated to tangible assets and goodwill, respectively. The goodwill will be
amortized over an estimated useful life of 5 years.
In April 2000, Neoforma.com acquired EquipMD in exchange for approximately
4.4 million shares of Neoforma.com common stock and options to purchase 1.1
million shares of Neoforma.com common stock at various prices. The acquisition
is valued at approximately $155.3 million (at an assumed price of $28.89 per
share) and will be accounted for as a purchase. The inception of EquipMD was
September 23, 1999.
In November 1999, EquipMD acquired Lynx Purchasing Services ("Lynx")
which was deemed to be a predecessor entity. Thus, the amounts for the
twelve months ended December 31, 1999 represent operating activity for
EquipMD from inception plus the full years activity of its predecessor
entity.
The accompanying unaudited pro forma condensed combined statement of
operations of Neoforma.com combined with Neoforma.com's previous
acquisitions of GAR, FDI, Pharos, and USL ("Previous Acquisitions") and
EquipMD for the year ended December 31, 1999 assumes that the acquisitions
took place as of the beginning of the year. The statement combines
Neoforma.com's Previous Acquisitions and EquipMD's statements of operations
for the year ended December 31, 1999, including the results of operations
for GAR and FDI for the period from January 1, 1999 through the date of
acquisition by Neoforma.com.
The accompanying unaudited pro forma condensed combined statement of
operations of Neoforma.com combined with Neoforma.com's previous
acquisitions of Pharos and USL ("Previous Acquisitions") and EquipMD for
the quarter ended March 31, 2000 assumes the acquisitions took place as of
the beginning of the year. The statement combines Neoforma.com's and
EquipMD's statements of operations for the quarter ended March 31, 2000 and
the results of operations for the Previous Acquisitions for the period from
January 1, 2000 through the date of acquisition by Neoforma.com.
19
<PAGE> 20
The unaudited pro forma condensed combined balance sheet as of March
31, 2000 combines Neoforma.com's March 31, 2000 balance sheet with
EquipMD's March 31, 2000 balance sheets.
The unaudited pro forma condensed combined information is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have actually occurred if the
acquisitions had been consummated as of the dates indicated, nor is it
necessarily indicative of future operating results or financial position. The
pro forma adjustments are based on the information available at the time of the
filing of this document.
The historical financial statements of EquipMD, are included elsewhere in
this document and the unaudited pro forma condensed combined information
presented herein should be read in conjunction with those financial statements
and related notes.
20
<PAGE> 21
NEOFORMA.COM, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
MARCH 31, 2000
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
NEOFORMA.COM
PRO FORMA PRO FORMA
NEOFORMA.COM EQUIPMD ADJUSTMENTS COMBINED
------------ ------- ----------- ------------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................... $102,192 $1,433 $103,625
Short-term investments...................... 11,574 -- 11,574
Accounts receivable......................... 884 20 904
Prepaid expenses and other current assets... 3,681 -- 3,681
Deferred debt costs, current portion........ 413 -- 413
-------- ------ --------
Total current assets................... 118,744 1,453 120,197
LONG-TERM INVESTMENTS......................... 2,198 -- 2,198
PROPERTY AND EQUIPMENT, NET................... 20,513 -- 20,513
OTHER ASSETS.................................. 6,480 -- 6,480
OTHER INTANGIBLES............................. 3,765 -- 19,100(D) 22,865
GOODWILL...................................... 33,158 5,429 100,690(D) 139,277
-------- ------ --------
Total assets........................... $184,858 $6,882 $311,530
======== ====== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Notes payable, current portion.............. $ 3,383 $ 738 $ 4,121
Accounts payable and other accrued
liabilities.............................. 19,656 666 5,341(C) 25,663
Deferred revenue............................ 871 -- 871
-------- ------ --------
Total current liabilities.............. 23,910 1,404 30,655
-------- ------ --------
NOTES PAYABLE, less current portion........... 7,124 1,312 8,436
-------- ------ --------
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
STOCK....................................... -- 583 (583)(C) --
STOCKHOLDERS' EQUITY (DEFICIT)................ 153,824 3,583 130,032(C) 272,439
(15,000)(D)
-------- ------ --------
Total liabilities and stockholders'
equity (deficit).................... $184,858 $6,882 $311,530
======== ====== ========
</TABLE>
21
<PAGE> 22
NEOFORMA.COM, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NEOFORMA.COM
PREVIOUS PRO FORMA PRO FORMA
NEOFORMA.COM ACQUISITIONS EQUIPMD ADJUSTMENTS COMBINED
------------ ------------ ------- ----------- ------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Transaction fees.................. $ 929 $ 864 $ 51 $ 1,844
Website sponsorship fees and
other.......................... 75 1,363 -- 1,438
-------- ------- ------- --------
Total revenue............. 1,004 2,227 51 3,282
OPERATING EXPENSES:
Operations........................ 5,006 230 -- 5,236
Product development............... 6,813 238 -- 7,051
Selling and marketing............. 14,303 828 203 15,334
General and administrative........ 9,566 2,780 938 13,284
Amortization of intangibles and
goodwill....................... 715 -- 163 30,296(A) 31,174
Amortization of deferred
compensation................... 13,211 -- -- 7,684(B) 20,895
Cost of warrant issued to
recruiter...................... 2,364 -- -- 2,364
-------- ------- ------- --------
Total operating
expenses................ 51,978 4,076 1,304 95,338
-------- ------- ------- --------
Loss from operations.............. (50,974) (1,849) (1,253) (92,056)
OTHER INCOME (EXPENSE), NET......... (46) 14 (17) (49)
-------- ------- ------- --------
Net loss.......................... $(51,020) $(1,835) $(1,270) $(92,105)
======== ======= ======= ========
NET LOSS PER SHARE:
Basic and diluted................. $ (19.15) $ (9.78)
======== ========
Weighted average shares -- basic
and diluted.................... 2,664 9,422
======== ========
</TABLE>
22
<PAGE> 23
NEOFORMA.COM, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NEOFORMA.COM
PREVIOUS PRO FORMA PRO FORMA
NEOFORMA.COM ACQUISITIONS EQUIPMD ADJUSTMENTS COMBINED
------------ ------------ ------- ----------- ------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Transaction fees.................... $ 855 $ -- $ 42 $ 897
Website sponsorship fees and
other............................ 351 243 -- 594
-------- ----- ------- --------
Total revenue............... 1,206 243 42 1,491
OPERATING EXPENSES:
Operations.......................... 3,005 55 -- 3,060
Product development................. 4,983 40 -- 5,023
Selling and marketing............... 9,903 59 243 10,205
General and administrative.......... 3,802 411 794 5,007
Amortization of intangibles......... 1,311 -- 285 6,438(A) 8,034
Amortization of deferred
compensation..................... 8,466 -- -- 1,921(B) 10,387
Write off of acquired in-process
research and development......... 3,000 -- -- 3,000
-------- ----- ------- --------
Total operating expenses.... 34,470 565 1,322 44,716
-------- ----- ------- --------
Loss from operations................ (33,264) (322) (1,280) (43,225)
OTHER INCOME (EXPENSE), NET........... 1,287 -- 8 1,295
-------- ----- ------- --------
Net loss............................ $(31,977) $(322) $(1,272) $(41,930)
======== ===== ======= ========
NET LOSS PER SHARE:
Basic and diluted................... $ (0.77) $ (0.87)
======== ========
Weighted average shares -- basic and
diluted.......................... 41,520 47,929
======== ========
</TABLE>
23
<PAGE> 24
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
The total purchase price of the EquipMD acquisition has been allocated to
acquired assets based on estimates of their fair values. The estimated fair
value of the common stock to be issued ($28.89 per share) is based on the
average closing price of Neoforma.com common stock on the three days prior and
subsequent to the day the merger was announced which was March 27, 2000. The
purchase price of approximately $138,956 million has been assigned as follows:
<TABLE>
<S> <C>
Current assets.............................................. $ 1,453
Acquired in-process research and development................ 15,000
Assembled workforce......................................... 100
Customer list............................................... 19,000
Goodwill.................................................... 106,120
--------
Less: Liabilities assumed................................... (2,717)
--------
$138,956
========
</TABLE>
The adjustments to the unaudited pro forma condensed combined statements of
operations for the year ended December 31, 1999 and for the quarter ended March
31, 2000 assume the acquisitions occurred as of the beginning of each period,
and are as follows:
(A) To reflect the amortization of approximately $24.8 million and
$5.9 million of estimated goodwill and other intangibles resulting from the
EquipMD acquisition for the year ended December 31, 1999 and the quarter
ended March 31, 2000, respectively. The intangible assets will be amortized
over five years. Also includes amortization of approximately $5.5 million
and $0.5 million of estimated goodwill and other intangibles resulting from
the previous acquisitions of GAR and FDI in 1999 and Pharos and USL in
2000, respectively. These intangible assets are being amortized over a
three to seven year period.
(B) To reflect the amortization of $7.8 million and $1.9 million in
deferred compensation recorded for the year ended December 31, 1999 and the
quarter ended March 31, 2000, respectively, in connection with options to
purchase 806,627 shares of Neoforma.com common stock at an exercise price
of $2.92 granted to EquipMD employees. The options vest over a three year
period, assuming continued employment, and replaced fully vested EquipMD
options and include original exercise terms and prices.
The adjustments to the unaudited pro forma condensed combined balance sheet
as of March 31, 2000 are as follows:
(C) To reflect the purchase price paid for EquipMD as follows:
issuance of the Company's common stock and options to purchase common stock
valued at approximately $133.6 million, and acquisition-related expenses of
approximately $5.3 million.
(D) To reflect Goodwill, other intangibles and in-process research and
development of $140.2 million resulting from the acquisitions. We expect to
allocate approximately $15.0 million of the purchase price to in-process
research and development, which will be expensed upon consummation of the
acquisition as it has not reached technological feasibility and, in the
opinion of management, has no alternative future use. The estimated amount
allocated is subject to future adjustment. This amount has not been
reflected in the accompanying pro forma statements of operations as it is a
nonrecurring charge, but has been reflected as an adjustment to
stockholders' equity (deficit) in the accompanying pro forma balance sheet.
24
