<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 27, 2000
REGISTRATION NO. _________________
-----------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
I-TRAX, INC.
------------------------
(Exact name of registrant as specified in its charter)
Delaware 7389 23-3057155
-------------------------- -------------------------- -------------------
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation) Classification Code Number) Identification No.)
One Logan Square, Suite 2615, 130 N. 18th St.,
Philadelphia, PA 19103, (215) 557-7488
-------------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Frank A. Martin
Chairman and Chief Executive Officer
I-TRAX, INC.
One Logan Square, Suite 2615, 130 N. 18th St.
Philadelphia, PA 19103
(215) 557-7488
---------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
YURI ROZENFELD, ESQ. JUSTIN P. KLEIN, ESQ.
GENERAL COUNSEL STEVEN B. KING, ESQ.
I-TRAX, INC. BALLARD SPAHR ANDREWS
ONE LOGAN SQUARE, SUITE 2615 & INGERSOLL, LLP
130 N. 18TH ST. 1735 MARKET STREET, 51ST FLOOR
PHILADELPHIA, PA 19103 PHILADELPHIA, PA 19103
(215) 557-7488 (215) 864-8606
Approximate date of commencement of proposed sale of the securities to
the public: Upon consummation of the merger described herein.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement number for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Title of each class of Amount to be Proposed maximum offering Proposed Maximum Aggregate Amount of
securities to be registered registered price per share offering price registration fee
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common stock, $0.001 par value 18,730,834(1) $2.50(2) $46,827,085(2) $12,408
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Computed based on the maximum number of shares of common stock, par
value, $0.001 per share, of I-Trax.com, Inc. which will be converted
into shares of the Registrant.
(2) Estimated based on the last sale reported on the Over-the-Counter
Bulletin Board on October 26, 2000 pursuant to Rule 457(f)(1) solely
for the purpose of calculating the registration fee.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
----------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED WITHOUT
NOTICE. WE MAY NOT ISSUE THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE
NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 27, 2000
PROSPECTUS
I-TRAX, INC.
18,730,834
SHARES OF
COMMON STOCK
This prospectus is being provided to you in connection with the
formation of a holding company for our operations and our agreement to issue up
to 4,272,500 shares of our common stock to the three owners of iSummit Partners,
LLC. iSummit Partners is doing business as MyFamilyMD. Our shares will be issued
to the owners of MyFamilyMD in exchange for their contributions to us of their
ownership interests in MyFamilyMD.
We were formed by I-Trax.com, Inc., for the purpose of becoming a
holding company and entering into the transaction with MyFamilyMD and its
owners. We, in turn, formed a direct subsidiary, I-Trax.com Acquisition Co., to
assist us and I-Trax.com, Inc. in completing a holding company reorganization.
In the holding company reorganization, we will acquire and own all of the
outstanding capital stock of I-Trax.com. This acquisition will be accomplished
when I-Trax.com merges with I-Trax.com Acquisition Co. In this merger, your
shares of I-Trax.com common stock will be converted into shares of I-trax, Inc.
common stock. You will receive one share of I-trax, Inc. for each share of
I-Trax.com common stock you currently own.
This document constitutes a prospectus for the shares of common stock
that you will receive in the reorganization.
You are not entitled to vote on any of the transactions described in
this prospectus. This prospectus gives you detailed information about the
proposed reorganization and our transaction with the MyFamilyMD owners.
WE ARE NOT ASKING FOR A PROXY AND YOU ARE NOT REQURIED TO SEND US A PROXY.
YOU SHOULD READ THE "RISK FACTORS" ON PAGES 6 THROUGH 15 IN CONSIDERING THIS
TRANSACTION.
Neither the Securities and Exchange Commission nor any state securities
regulators have approved or disapproved the I-trax common stock to be issued in
the reorganization, or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
ii
<PAGE>
TABLE OF CONTENTS
SUMMARY OF THE PROSPECTUS................................................ 1
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION.......................... 5
RISK FACTORS.............................................................. 6
SELECTED HISTORICAL FINANCIAL DATA OF I-TRAX.COM, INC. ...................16
TERMS OF THE TRANSACTION WITH MYFAMILYMD .................................17
REORGANIZATION OF THE CORPORATE STRUCTURE ................................18
DESCRIPTION OF CAPITAL STOCK .............................................23
COMPARISON OF CAPITAL STOCK ..............................................24
MARKET PRICE AND DIVIDENDS OF I-TRAX.COM, INC. COMMON STOCK ..............24
UNAUDITED PRO FORMA CAPITALIZATION .......................................25
MANAGEMENT'S DISCUSSION AND ANALYSIS .....................................27
BUSINESS .................................................................32
MANAGEMENT ...............................................................43
EXECUTIVE COMPENSATION ...................................................48
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ...........................52
LEGAL OPINION ............................................................54
EXPERTS ..................................................................54
WHERE YOU CAN FIND MORE INFORMATION ......................................54
FINANCIAL INFORMATION ....................................................56
EXHIBIT A AGREEMENT AND PLAN OF MERGER ..................................57
iii
<PAGE>
SUMMARY OF THE PROSPECTUS
THIS BRIEF SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT
AND DOES NOT CONTAIN ALL THE INFORMATION THAT IS IMPORTANT TO YOU. WE URGE YOU
TO READ THIS ENTIRE DOCUMENT, INCLUDING THE FINANCIAL STATEMENTS AND THE NOTES
TO THE FINANCIAL STATEMENTS OF I-TRAX.COM, INC. TO UNDERSTAND THE REORGANIZATION
FULLY. ALTHOUGH THIS PROSPECTUS CONCERNS COMMON STOCK THAT WILL BE ISSUED BY
I-TRAX, INC., BECAUSE I-TRAX HAS NO OPERATING HISTORY OF ITS OWN AND WILL
SUCCEED TO I-TRAX.COM'S BUSINESS, REFERENCES IN THIS DOCUMENT TO "WE," "US,"
"OUR" AND THE COMPANY REFER TO I-TRAX.COM INC. WHEN THE CONTEXT SO REQUIRES. IN
CERTAIN INSTANCES WHERE APPROPRIATE, "US" OR "OUR" REFERS COLLECTIVELY TO I-TRAX
AND I-TRAX.COM. IN ADDITION, REFERENCES IN THIS DOCUMENT TO "HOLDING COMPANY"
REFER TO I-TRAX, INC. AND REFERENCES TO "I-TRAX.COM ACQUISITION" REFER TO
I-TRAX.COM ACQUISITION, INC. I-TRAX.COM, INC. WILL BECOME A WHOLLY-OWNED
SUBSIDIARY OF THE HOLDING COMPANY AS A RESULT OF THE REORGANIZATION.
The Reorganization
Formation of a Holding Company Which Will Own I-Trax.com, Inc.
The Board of Directors of I-Trax.com has voted to organize Holding
Company as a holding company to acquire and own all of the issued and
outstanding capital stock of I-trax.com. We refer to the organization of Holding
Company and its acquisition and ownership of all of I-trax.com's capital stock
as the "reorganization." The Board of Directors of I-trax.com believes that the
holding company structure will provide greater flexibility in terms of
operations, expansion, and diversification. In addition, as discussed in greater
detail under the heading "Business--I-Trax.com--MyFamilyMD Agreements" beginning
on page 38 of this prospectus and under the heading "Terms of the Transaction
with MyFamilyMD" beginning on page 17 of this prospectuts, we have entered into
agreement with MyFamilyMD and its owners pursuant to which such owners will
contribute all of the ownership interests in MyFamilyMD in exchange for up to
4,272,500 shares of our common stock. The reorganization into a holding company
structure is also intended to allow the owners of MyFamilyMD to realize certain
tax benefits with respect to their contribution of the ownership interests, and
is intended to be accomplished immediately prior to the closing of the
transactions with MyFamilyMD and its members.
<PAGE>
In the reorganization, I-Trax.com will continue its operations as
currently conducted under existing management, but will be a wholly-owned
subsidiary of Holding Company. We have attached the form of Agreement and Plan
of Merger relating to the reorganization as Exhibit A at the back of this
prospectus. The Boards of Directors of I-Trax.com, Holding Company and
I-Trax.com Acquisition may elect to abandon the reorganization at any time prior
to consummation.
Management
The directors and officers of I-Trax.com will continue to be directors
and officers of I-Trax.com following the reorganization. After the
reorganization, the present directors and officers of I-Trax.com will also
become the directors and officers of Holding Company.
Exchange of Shares and Options
When the reorganization is accomplished, you will receive one share of
Holding Company common stock for each share of I-Trax.com common stock you own
immediately prior to the reorganization. In addition, all of the obligations of
I-Trax.com under our 2000 Equity Compensation Plan will become obligations of
Holding Company on the same terms and conditions, with the exception that the
securities issued pursuant to 2000 Equity Compensation Plan will be Holding
Company common stock.
Stockholder Rights
Under Section 251(g) of the Delaware General Corporation Law, you do
not have the right to vote on the reorganization and under Section 262(b) of the
Delaware General Corporation Law you are not entitled to appraisal rights for
your shares of I-Trax.com stock with respect to the reorganization.
Tax Treatment
We expect that, for Federal income tax purposes, the reorganization
will be tax-free to holders of I-Trax.com common stock, to I-Trax.com and to
Holding Company. However, because tax matters are complicated, and tax results
may vary among stockholders, we urge you to contact your own tax advisor to
understand fully how the reorganization will affect you.
There are No Significant Differences Between Holding Company's and I-Trax.com's
Charter Documents
The certificate of incorporation and by-laws of Holding Company are the
same as the certificate of incorporation and by-laws of I-Trax.com, except for
the existence of an incorporator and the naming of Frank A. Martin as the sole
director in the certificate of incorporation of the Holding Company. The
certificates of incorporation and by-laws of both companies contain certain
provisions relating to the board of directors and certain business combinations,
all of which may be deemed to have "anti-takeover" effects, including
undesignated preferred stock, limitations on the call of a special meeting of
stockholders, elimination of cumulative voting and limitation on the matters
that may be brought before an annual meeting of the stockholders.
2
<PAGE>
Benefits of the Reorganization to Directors and Officers
The reorganization will not provide any substantive benefits to
directors or officers of I-Trax.com, although they will become directors and
officers, respectively, of Holding Company.
Accounting Treatment
For accounting and financial reporting purposes, the reorganization
will be treated similarly to a "pooling of interests," which means that
I-trax.com 's assets and liabilities will be carried forward at their previously
recorded amounts, without change, as the consolidated assets and liabilities of
Holding Company following the reorganization.
The Companies
I-Trax.com
I-Trax.com develops sophisticated software solutions to help
professionals in the medical community manage the most costly and complex
diseases. Our software permits caregivers to enter specific information about a
patient and the patient's health at the point-of-care, to access such
information at any time during the health delivery process and to share such
information with any other professional engaged in the care process. Our
software technologies also enable coordination of care through use of shared
records by all caregivers - specialists, primary care, critical care, nursing
staff, diagnostic-providers, pharmacy and patients. We have developed a powerful
disease management software engine and database architecture, which we believe
can be expanded into unlimited healthcare applications and partnerships.
Thus far, we have launched software applications to manage
immunization, asthma and cardiovascular disease. Our next product is expected to
be a software application for diabetes. We also develop custom products and
customize our existing products for individual clients.
Our principal executive offices are located at One Logan Square, 130 N.
18th Street, Suite 2615, Philadelphia, Pennsylvania 19103. Our telephone number
is (215) 557-7488.
Holding Company
Holding Company has not engaged in any business since its incorporation
in Delaware in September 2000. After the reorganization, Holding Company will
become a holding company whose principal asset will be all of the outstanding
shares of the capital stock of I-Trax.com, and upon consummation of the
MyFamilyMD transaction immediately after the reorganization, all of the
ownership interests in MyFamilyMD.
3
<PAGE>
Holding Company's principal executive offices are also located at One
Logan Square, 130 N. 18th Street, Suite 2615, Philadelphia, Pennsylvania 19103.
Holding Company's telephone number is (215) 557-7488.
I-Trax.com Acquisition
I-Trax.com Acquisition is a Delaware corporation newly organized as a
wholly-owned subsidiary of Holding Company in September 2000. I-Trax.com
Acquisition's sole purpose is to merge into I-Trax.com to facilitate the
reorganization. I-Trax.com Acquisition will disappear after the reorganization.
MyFamilyMD Transaction
In September 2000, we entered into an agreement with iSummit Partners,
LLC, which is doing business as MyFamilyMD, and its three owners. The owners
have agreed to contribute to us all of the outstanding ownership interests in
MyFamilyMD. MyFamilyMD is an Internet and software company developing
personalized Internet applications, commonly referred to as the MedWizards, to
enable individuals and families to manage their healthcare. Using sophisticated
technology to enhance privacy and security, MyFamilyMD's proprietary tools will
enable physicians to interact with and educate patients over the Internet, and
will allow patients to receive customized information about their healthcare
needs. Our acquisition of MyFamilyMD will enable us to offer a unique suite of
products that incorporate the patient in his or her own care process.
Under this agreement, we have agreed to issue an aggregate of 4,272,500
shares of our common stock to the owners of MyFamilyMD, which is equal to
approximately 22.8% of the currently issued and outstanding shares of our
capital stock and which will result in such owners owning approximately 18.57%
of our outstanding common stock after the transaction. After this transaction is
completed, the founder of MyFamilyMD, Stuart Ditchek, will also join our board
of directors.
This agreement is terminable if the closing has not occurred by March
31, 2001. The closing of this transaction is conditioned upon the occurrence of
several events, including the effectiveness of this registration statement and
the consummation of the Reorganization described herein. We do not intend to
seek approval for this transaction from our stockholders as none is required
under applicable law.
MyFamilyMD's principal executive offices are located at 60 Madison
Avenue, Suite 903, New York, New York 10010. Its telephone number is (212)
725-2595.
4
<PAGE>
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This prospectus includes and incorporates forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included or incorporated in this prospectus regarding our
strategy, future operations, financial position, future revenues, projected
costs, prospects, plans and objectives of management are forward-looking
statements. The words "anticipates," "believes," "estimates," "expects,"
"intends," "may," "plans," "projects," "will," "would" and similar expressions
are intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. In particular, but
without limiting the foregoing, our statements about our agreement with
MyFamilyMD and our combined product offerings following the consummation of the
closing under our agreement with MyFamilyMD constitute forward-looking
statements. We cannot guarantee that we actually will achieve the plans,
intentions or expectations disclosed in our forward-looking statements and you
should not place undue reliance on our forward-looking statements. Actual
results or events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements we make. We have
included important factors in the cautionary statements included or incorporated
in this prospectus, particularly under the heading "Risk Factors," that we
believe could cause actual results or events to differ materially from the
forward-looking statements that we make. Our forward-looking statements do not
reflect the potential impact of any future acquisitions, mergers, dispositions,
joint ventures or investments we may make. We do not assume any obligation to
update any forward-looking statements.
You should carefully consider the discussion of these and other factors in the
section entitled "Risk Factors" beginning on page 6.
5
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND THE OTHER INFORMATION
INCLUDED IN THIS PROSPECTUS. OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS COULD BE MATERIALLY AND ADVERSELY AFFECTED BY EACH OF SUCH RISKS.
SUCH AN ADVERSE EFFECT COULD CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO
DECLINE, AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.
Our Extremely Limited Operating Experience May Cause Us to Misjudge our Markets
or Needs
Although we have been in existence since 1969, our involvement in
software development and marketing has been a much more recent development. Our
initial enterprise software application has been operational for less than two
years and we have just begun to launch our Internet operations. Accordingly, we
have an extremely limited operating history in our current business.
Furthermore, in changing to our current business, we are substantially changing
our business operations, sales and implementation practices, customer service
and support operations, and management focus. We are also facing new risks and
challenges, including a lack of meaningful historical financial data upon which
to plan future budgets, more competition, the need to develop strategic
relationships and other risks described below. We cannot guarantee that we will
be able successfully to change to our new business model. An investor in our
common stock must consider the risks, uncertainties, expenses and difficulties
frequently encountered by companies in their early stages of development. As a
result of the absence of meaningful history and experience in our current
business, we may easily misjudge the nature or size of our perceived markets, or
the amount of work or capital necessary to complete our pending products or
implement our business plan.
We May Be Unable to Implement Our Business Strategy
Although we believe our strategy can be successful, there are many
reasons why we may be unable to implement it, including our possible inability
to:
o deploy eImmune(TM), AsthmaWatch(R), C-Trax, DiabetesCaretrax and
other potential products on a large
scale due to software development or other problems;
o attract a sufficiently large audience of users to our Internet-based
healthcare information network;
o increase awareness of our brand;
o strengthen user loyalty;
o develop and improve our product;
o continue to develop and upgrade our technology; and
o attract, retain and motivate qualified personnel.
6
<PAGE>
We Have a History of Operating Losses and Anticipate We Will Incur Continued
Losses for the Foreseeable Future and Therefore May Eventually be Unable to
Continue Our Operations
We have had substantial operating losses since incorporation in May
1969, and we have never earned a profit. As of June 30, 2000, our accumulated
deficit was $2,379,183. Moreover, we expect that our operating losses will
continue for the foreseeable future. Our ability to achieve profitability will
depend, in part, on:
o the success of our product development efforts;
o the acceptance of our business model by our customers; and
o our sales and marketing activities.
The success of our business model depends upon customers, such as
parents, schools, doctors, public health agencies, hospitals, health plans and
other health care providers, being attracted to and using our point-of-care
applications and related proprietary content which we make available to our
clients through the Internet or on a stand alone basis for a fee. This business
model is not yet proven, and we cannot assure you that we will ever achieve or
sustain profitability or that our operating losses will not increase in the
future. There is substantial uncertainty as to our ability to continue as a
going concern due to our historical negative cash flow and because we may not
have access to sufficient capital to meet our projected operating needs for at
least the next twelve months.
Our Capital Resources May Be Insufficient to Fund Implementation of Our System
and Marketing Its Advantages to Potential Users
Substantial funds are required to complete our planned product
development efforts and expand our sales and marketing activities. We expect
that our existing capital resources together with funds we hope to raise from
investors will be adequate to fund our operations through the second quarter of
2001, but we cannot guarantee that this time estimate will be accurate.
Our future capital requirements and the adequacy of available funds
will depend on numerous factors, including:
o the successful commercialization of our existing products;
o progress in our product development efforts;
o the growth and success of effective sales and marketing
activities; and
o the cost of filing, prosecuting, defending and enforcing
intellectual property rights.
If funds generated from our operations, together with our existing
capital resources, are insufficient to meet current or planned operating
requirements, we will have to obtain additional funds through equity or debt
financing, strategic alliances with corporate partners and others, or through
other sources. We do not have any committed sources of additional financing, and
we cannot provide assurance that additional funding, if necessary, will be
available on acceptable terms, if at all. If adequate funds are not available,
we may have to delay, scale-back or eliminate certain aspects of our operations
7
<PAGE>
or attempt to obtain funds through arrangements with collaborative partners or
others. These results, in turn, could cause the relinquishment of our rights to
certain of our technologies, products or potential markets, dilution of your
ownership in our business, or our loss of what we believe is a current
competitive advantage in the development of our health management system.
Therefore, the inability to obtain adequate funds could have a material adverse
impact on our business, financial condition and results of operations.
Our Products May Not be Accepted by the Market
To date, consumers have generally looked to health care professionals
as their principal source for health and wellness information. In turn, these
professionals are not accustomed to our system. The success of our business
model will depend on public health agencies, parents, schools, primary care
providers and other health professionals and other consumers being attracted to
and using our sophisticated point-of-care applications for a fee. This business
model is not yet proven, and we cannot assure you that it will be successful or,
if so, that we will be able profitably to implement this business model.
We plan to develop relationships with parents, schools, doctors, public
health agencies, hospitals and other health care providers to offer our products
and services. Such a strategy involves numerous risks and uncertainties. There
is no established business model for the sale of health care products or
services over the Internet. Accordingly, we cannot predict whether parents,
schools, doctors, public health agencies, hospitals and other health care
providers will elect to purchase our services and information.
We Depend on the Internet and Internet Related Technologies
Our success will depend, in large part, on Internet access and the
ability of the Internet to accommodate rapidly increasing traffic. The Internet
may not prove to be a viable commercial medium because of inadequate development
of the necessary infrastructure (e.g., reliable network backbone), timely
development of complementary products (e.g., high speed modems), delays in the
development or adoption of new standards and protocols required to handle
increased levels of Internet activity, or increased government regulation. If
the Internet continues to experience significant growth in the number of users
and the level of use, then the Internet infrastructure may not be able to
continue to support the demands placed on it.
We also depend upon the continuous, reliable and secure operation of
Internet servers and related hardware and software. In the past, several large
Internet commerce companies have suffered highly publicized system failures,
which resulted in adverse reactions in their stock prices, significant negative
publicity and, in certain instances, litigation. It is likely that we will also
suffer service outages from time to time. To the extent that our service is
interrupted, our users will be inconvenienced and our reputation may be
diminished. If access to our system becomes unavailable at a critical time,
users could allege we are liable as a result. Some of these outcomes could
8
<PAGE>
directly result in a reduction in our stock price, significant negative
publicity and litigation. Although we anticipate that our computer and
communications hardware will be protected through physical and software
safeguards, they will still be vulnerable to fire, storm, flood, power loss,
telecommunications failures, physical or software break-ins and similar events.
We will not have full redundancy for all of our computer and telecommunications
facilities. A catastrophic event could have a significant negative effect on our
business, results of operations, and financial condition.
We will also depend on third parties to provide potential users with
web browsers and Internet and on-line services necessary for access to our
website. It is possible that our users will experience difficulties with
Internet and other on-line services due to system failures, including failures
unrelated to our systems. Any sustained disruption in Internet access provided
by third parties could have a material adverse effect on our business, results
of operations and financial condition.
We also intend to retain confidential customer information in our
database. It is, therefore, critical that our facilities and infrastructure
remain secure and that our facilities and infrastructure are perceived by
consumers to be secure. Despite the implementation of measures in the Internet
industry, our infrastructure is likely to be vulnerable to physical break-ins,
computer viruses, programming errors or similar disruptive problems. A material
security breach could damage our reputation or result in liability to us.
We Have Limited Sales and Marketing Experience
A major thrust of our strategy is to make potential users aware of the
existence and functionalities of our point-of care clinical solutions. This will
require sales and marketing expertise. However, our current employees have
limited sales and marketing experience. Although we intend to identify and
recruit employees with sales and marketing experience, we may be unable to do so
and may therefore be unable to successfully establish and maintain a significant
sales and marketing organization.
We Are Dependent on Certain Key Individuals and Our Ability to Recruit and
Retain Skilled Employees
Our President, Frank A. Martin, is an integral part of our business and
our future success greatly depends upon his retention. Similarly, other officers
and directors provide us with key relationships, such as Dr. Michael O'Connell
with Walter Reed Medical Center and Dr. Craig Jones with Breathmobile and the
University of Southern California School of Medicine. Our failure to retain
these individuals as officers and directors could have a significant adverse
impact on our ability to compete and succeed in the future.
Our future success also depends to a significant extent on our ability
to attract, retain and motivate highly skilled employees. As we implement our
products, we will need to hire additional personnel in all operational areas.
Competition for personnel currently is intense, and competition for employees
experienced with Internet applications or in the eHealth industry is
9
<PAGE>
particularly intense. We may be unable to retain our key employees or attract,
assimilate or retain other highly qualified employees in the future. We have
from time to time in the past experienced, and we expect to continue to
experience in the future, difficulty in hiring and retaining highly skilled
employees with appropriate qualifications. If we do not succeed in attracting
new personnel or retaining and motivating our current personnel, our business
will be adversely affected.
We May Be Unable to Compete Successfully Against Companies Offering Other,
Similar Functions
A large number of health care companies are offering electronic medical
records capabilities. In addition, a large number of Internet companies compete
for users, advertisers, e-commerce transactions and other sources of on-line
revenue. The number of Internet websites offering users health care content,
products and services is vast and increasing at a rapid rate. In addition,
traditional media and health care providers compete for consumers' attention
both through traditional means as well as through new Internet initiatives. We
believe that competition for healthcare consumers will continue to increase as
the Internet develops as a communication and commercial medium. Although, we
believe our products serve a niche in the market which other competitors
currently do not serve, we compete for subscribers, syndication partners and
other affiliates with numerous Internet and non-Internet businesses.
Many of these potential competitors are likely to enjoy substantial
competitive advantages compared to our Company, including:
o the ability to offer a wider array of on-line products and services;
o larger production and technical staffs;
o greater name recognition and larger marketing budgets and resources;
o larger customer and user bases; and
o substantially greater financial, technical and other resources.
To be competitive, we must respond promptly and effectively to the
challenges of technological change, evolving computer and Internet related
standards, and our competitors' innovations. To do so, we must continue to
enhance our products and services, as well as our sales and marketing channels.
Although we currently serve a unique market niche, the large number of
Internet-based businesses currently in development makes it likely that we will
face a direct competitor before long. Moreover, we could also face reduced
prices or reduced margins, any of which could adversely affect our business.
Competition is likely to increase significantly as new companies enter the
market and current competitors expand their services.
10
<PAGE>
Government Regulation Could Adversely Affect Our Business
Our business is subject to government regulation. Laws and regulations
have been or may be adopted with respect to the Internet or other on-line
services covering issues such as:
o user libel and personal privacy;
o the regulation of medical devices;
o the practice of medicine and pharmacology;
o the regulation of government and third-party cost reimbursement;
o copyright protection;
o distribution; and
o characteristics and quality of products and services.
The applicability to the Internet of existing laws in various
jurisdictions governing issues is uncertain and may take years to resolve.
Demand for our content, features and services may be affected by additional
regulation of the Internet. Although our transmissions have not yet been
initiated, once initiated, the governments of other states or foreign countries
may attempt to regulate our transmissions, levy sales or other taxes relating to
our activities or impose other restrictions on our content or services. The laws
governing the Internet, however, remain largely unsettled, even in areas where
there has been some legislative action. In addition, the growth and development
of the market for Internet commerce may prompt the adoption of more stringent
consumer protection laws, both in the United States and abroad, that impose
additional burdens on companies conducting business over the Internet. The
requirement that we comply with any new legislation or regulation, or any
unanticipated application or interpretation of existing laws, may decrease the
demand for our services, increase our cost of doing business or otherwise have a
material adverse effect on our business, results of operations and financial
condition.
Furthermore, the practice of medicine and pharmacology requires
licensing under applicable state law. We endeavor to structure our website,
products, programs and affiliate relationships to avoid violation of state
licensing requirements, and specifically warn against and disclaim such
practice; however, a state regulatory authority may allege that some portion of
our business violates one or more of these statutes. Any such allegation could
result in a material adverse effect on our business, results of operations and
financial condition. Further, any liability based on a determination that we
engaged in the practice of medicine without a license may be excluded from
coverage under the terms of our general liability insurance policy.
The Federal Trade Commission and state governmental bodies have
recently investigated the disclosure of personal identifying information
obtained from individuals by Internet companies. Legislative proposals have also
been made by the Federal government in this area, specifically relating to the
use and ownership of patient medical information. Although we believe our
current use of patient medical information complies with all applicable rules
and regulations, in the event the Federal Trade Commission or other governmental
authorities adopt or modify laws or regulations relating to the Internet, it is
possible that the dissemination or use of our products may be curtailed. If such
an event were to occur, our business, results of operations and financial
condition could be adversely affected.
A number of legislative proposals have been made at the Federal, state
and local level, and by certain foreign governments, that would impose
additional taxes on the sale of goods and services over the Internet or
Internet-related activities. Such legislation or other attempts at regulating
commerce over the Internet may substantially impair the growth of commerce on
the Internet and, as a result, adversely affect our opportunity to derive
financial benefit from such activities.
11
<PAGE>
Some computer applications and software are considered medical devices
and are subject to regulation by the United States Food and Drug Administration
(the "FDA"). We do not believe that any of our proposed applications or services
will be regulated by the FDA; however, our proposed applications and services
may become subject to FDA regulation. Additionally, we may expand our
application and service offerings into areas that subject us to FDA regulation.
We have no experience in complying with FDA regulations. We believe that
complying with FDA regulations would be time consuming, burdensome and expensive
and could delay or prevent our introduction of our applications or services.
Our Prior Line of Business May Lead to Liabilities; We May be Exposed to
Uninsured Liability Claims
As U.S. Medical Alliance, our prior line of business, we were engaged
in the physician practice management business. While we are no longer engaged in
that business, the Company may be subject to unknown liabilities arising from
such prior business operations, which may have a material adverse effect on our
business, operations, financial condition, or prospects.
Prior to the merger with us, Member-Link Systems, Inc., our
predecessor, was engaged in the business of marketing, selling and installing
certain software products, including eImmune(TM) and AsthmaWatch(R). Since
beginning its operations in 1996 until March 15, 2000, we did so without
obtaining product or professional liability insurance. Accordingly, in the event
any customer of Member-Link and of I-Trax.com, as a successor-in-interest to
Member-Link, should in the future claim that the software Member-Link sold prior
to the merger was defective and allege related damages, we would not have the
protection of insurance in satisfying or defending against such claims. At this
time we are not aware of any such claims. Any such claims, however, could have a
material adverse effect on our business, results of operations, financial
condition and prospects.
Consumers may sue us if any of the products or services that are sold
through our website are defective, fail to perform properly or injure the user,
even if such goods and services are provided by unrelated third parties. Even
though we currently have product liability insurance, liability claims could
require us to spend significant time and money in litigation, to pay significant
damages and to reserve for such liability on our financial statements. At this
time we are not aware of any such claims. However, any such claims, whether or
not successful, could seriously damage our reputation and our business, results
of operations or financial position.
Our Platform Infrastructure and its Scalability Are Not Proven
We are just beginning to implement our Internet based products. If the
system is used by an increasing number of users, we would need to expand our
network infrastructure from time to time. In addition, we will need to
accommodate changing consumer and customer requirements. We are unable to
project accurately the rate or timing of increases, if any, in the use of our
website and may be unable to expand and upgrade our systems and infrastructure
to accommodate such changes on a timely basis, at a commercially reasonable
cost, or at all. Our systems may not accommodate increased use while maintaining
acceptable overall performance. Service lapses could cause our users to instead
use the on-line services of our competitors.
12
<PAGE>
We May Have Liability for Information Retrieved From the Internet
Because users of our website will access health content and services
relating to a condition they may have or may distribute our content to others,
third parties may sue us for defamation, negligence, copyright or trademark
infringement, personal injury or other matters. We could also become liable if
confidential information is disclosed inappropriately. These types of claims
have been brought, sometimes successfully, against on-line services in the past.
Others could also sue us for the content and services that will be accessible
from our website through links to other websites or through content and
materials that may be posted by our users in chat rooms or bulletin boards. Any
such liability will have a material adverse effect on our reputation and our
business, results of operations or financial position.
We Depend on Our Intellectual Property Rights
Our intellectual property is important to our business. We rely on a
combination of copyright, trademark and trade secret laws, confidentiality
procedures and contractual provisions to protect our intellectual property. Our
efforts to protect our intellectual property may not be adequate. Our
competitors may independently develop similar technology or duplicate our
products or services. Unauthorized parties may infringe upon or misappropriate
our products, services or proprietary information. In addition, the laws of some
foreign countries do not protect proprietary rights as well as the laws of the
United States do, and the global nature of the Internet makes it difficult to
control the ultimate destination of our products and services. In the future,
litigation may be necessary to enforce our intellectual property rights or to
determine the validity and scope of the proprietary rights of others. Any such
litigation would probably be time-consuming and costly. We could be subject to
intellectual property infringement claims as the number of our competitors grows
and the content and functionality of our website overlaps with competitive
offerings. Defending against these claims, even if not meritorious, could be
expensive and divert our attention from operating our company. If we become
liable to third parties for infringing their intellectual property rights, we
could be required to pay a substantial damage award and forced to develop
noninfringing technology, obtain a license or cease selling the applications
that contain the infringing technology. We may be unable to develop
noninfringing technology or obtain a license on commercially reasonable terms,
or at all. We also intend to rely on a variety of technologies that we will
license from third parties, including any database and Internet server software,
which will be used to operate our future website to perform key functions. These
third-party licenses may not be available to us on commercially reasonable
terms. The loss of or inability to obtain and maintain any of these licenses
could delay the introduction of software enhancements, interactive tools and
other features until equivalent technology could be licensed or developed. Any
such delays could materially adversely affect our business, results of
operations and financial condition.
13
<PAGE>
Anti-takeover Considerations
Our Board of Directors has the authority, without further action by the
stockholders, to issue from time to time, up to 2,000,000 shares of preferred
stock in one or more classes or series, and to fix the rights and preferences of
such preferred stock. We are subject to provisions of Delaware corporate law
which, subject to certain exceptions, will prohibit us from engaging in any
"business combination" with a person who, together with affiliates and
associates, owns 15% or more of our common stock (referred to as an interested
stockholder) for a period of three years following the date that such person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. Additionally, our bylaws establish an advance notice
procedure for stockholder proposals and for nominating candidates for election
as directors. These provisions of Delaware law and of our certificate of
incorporation and by-laws may have the effect of delaying, deterring or
preventing a change in our control, may discourage bids for our common stock at
a premium over market price and may adversely affect the market price, and the
voting and other rights of the holders of our common stock.
Our Officers Have Effective Control of the Company and Other Stockholders May
Have Little or No Voice in Corporate Management
Our Chairman and President, and the venture capital firm with which our
Chairman is affiliated, beneficially own, in the aggregate, approximately 38.6%
of the outstanding shares of our common stock (31.4 % after the MyFamilyMD
transaction). As a result, these stockholders, acting together, effectively
control the election of directors and matters requiring approval by our
stockholders. Thus, they may be able to prevent corporate transactions such as
future mergers that might be favorable from our standpoint or the standpoint of
the other stockholders.
Our Agreement with MyFamilyMD and its Owners is Subject to Possible Termination
if the Closing under the Agreement does not Occur by March 31, 2001
Our agreement with MyFamilyMD and its owners is subject to termination
by either party if the closing conditions under that agreement have not been
satisfied by March 31, 2001. The agreement is subject to certain closing
conditions that may not be satisfied by March 31, 2001. If the agreement is
terminated, our business plan will be adversely affected.
A Very Limited Number of Customers Has Accounted for a Significant Percentage of
Our Revenues
Historically, a very limited number of customers has accounted for a
significant percentage of our revenues. In 1998, our largest customer accounted
for 71% of revenues. In 1999, our largest three customers accounted for 76% of
revenues. In the six month period ended June 30, 2000, our largest customer
accounted for 52% of revenues. We anticipate that our results of operations in
any given period will continue to depend to a significant extent upon revenues
of a small number of customers. Accordingly, if we were to lose the business of
even a single customer, our results of operations would be materially and
adversely affected.
14
<PAGE>
We May be Unable to Integrate MyFamilyMD into Our Operations
Our acquisition of MyFamilyMD will require us to integrate MyFamilyMD
and its employees into our corporate structure and to integrate MyFamilyMD's
technology into our technology. Although based on our due diligence and
reasonable assumptions we believe that we can achieve both of these tasks, there
is no assurance that we will be able to do so in a timely manner. In the event
that we do not achieve these tasks in a timely manner, will have a material
adverse effect on our business, financial condition and prospects.
15
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF I-TRAX.COM, INC.
We have summarized below our historical financial data as of December 31,
1999 and for each of the two years in the period ended December 31, 1999,
derived from our financial statements audited by Massella, Tomaro & Co., LLP,
independent public accountants. The selected financial data and balance sheet
data as of and for the six months ended June 30, 1999 and 2000 have been derived
from our unaudited financial statements, which we believe include all
adjustments necessary for a fair presentation of the financial condition and
results of operations for such periods. When you read the information below, you
should refer to "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our financial statements and the notes to those
financial statements included elsewhere in this prospectus.
<TABLE>
<CAPTION>
(Unaudited)
Year ended Six months ended
December 31, June 30,
Statement of Operations Data 1999 1998 2000 1999
---------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 987,533 $ 347,800 $ 64,227 $ 236,819
Operating expenses 1,558,087 274,276 1,675,960 689,905
(Loss) income from operations (570,554) 73,524 (1,611,733) (453,086)
Interest expense 258 500 1,675 168
Other income (expenses) 9,171 -- (119,140) --
Net (loss) income (561,641) 73,024 (1,732,548) (453,254)
Basic and diluted (loss) income per share (.05) .01 (.10) (.05)
Basic and diluted weighted average
shares outstanding 11,336,168 8,852,751 17,378,084 8,852,751
</TABLE>
<TABLE>
<CAPTION>
(Unaudited)
December 31, June 30,
Balance Sheet Data 1999 2000
------------------ ---- ----
<S> <C> <C>
Cash $ 195,728 $ 84,699
Accounts receivables 412,038 253,617
Machinery and equipment, net 36,120 231,873
Working capital (deficency) 336,410 (67,017)
Total assets 708,818 1,001,443
Total liabilities 296,126 526,418
Stockholders' equity 412,692 475,025
</TABLE>
16
<PAGE>
TERMS OF THE TRANSACTION WITH MYFAMILYMD
Contribution and Exchange Agreement
I-Trax.com and Holding Company, on the one hand, and MyFamilyMD and its
owners, on the other hand, entered into a Contribution and Exchange Agreement on
September 22, 2000. Pursuant to this agreement Holding Company agreed to issue
an aggregate of up to 4,272,500 shares of our common stock to the owners of
MyFamilyMD in exchange for all of the ownership interests in MyFamilyMD. Of this
total, up to 1,709,000 shares may be forfeited by the owners to us, 854,500
shares in the event MyFamilyMD does not meet certain product development targets
and up to 854,500 shares in the event MyFamilyMD does not meet certain revenue
targets within one year after product launch. See the section of this prospectus
entitled "Business--I-Trax.com--MyFamilyMD Agreements" beginning on page 38 for
a description of our agreement with MyFamilyMD and its owners.
The aggregate number of shares of Holding Company common stock to be
issued to the owners of MyFamilyMD pursuant to the Contribution and Exchange
Agreement is equal to approximately 22.8% of the currently issued and
outstanding shares of our common stock and once issued, will result in such
owners owning approximately 18.57% of our outstanding common stock. We are not
required to seek stockholder approval for issuance of shares of our capital
stock in this transaction under applicable law.
The Boards of Directors of I-Trax.com and Holding Company has approved
the transaction with MyFamilyMD and its owners, including the issuance of shares
of Holding Company common stock to the owners.
17
<PAGE>
REORGANIZATION OF THE CORPORATE STRUCTURE
The Boards of Directors of I-Trax.com and Holding Company have approved
a plan of reorganization under which the business of I-Trax.com will become a
wholly-owned subsidiary of Holding Company. We have attached the form of
Agreement and Plan of Merger relating to the reorganization as Exhibit A at the
back of this prospectus. We encourage you to read this agreement, as it is the
legal document which governs the reorganization. However, under Section 251(g)
of the Delaware General Corporation Law, the reorganization does not require the
approval of the stockholders of I-Trax.com. Therefore, we are not asking you to
vote on the reorganization.
Reasons For The Reorganization
The Board of Directors of I-Trax.com believes that the holding company
structure resulting from the reorganization will provide greater flexibility in
terms of operations, expansion, and diversification of the Company. In addition,
the reorganization into a holding company structure is also intended to allow
the owners of MyFamilyMD to treat their contribution of their ownership
interests in MyFamilyMD to our business as a tax-free exchange for Federal
income tax purposes, and is intended to be accomplished simultaneously with the
closing of the transactions with MyFamilyMD and its owners.
Organizational Transactions
At the direction of the Board of Directors of I-Trax.com, Holding
Company was incorporated under the laws of the State of Delaware in September
2000 for the purpose of becoming a holding company by acquiring all of the
outstanding I-Trax.com common stock.
At the direction of the Boards of Directors of I-Trax.com and Holding
Company, I-Trax.com Acquisition Co. was incorporated under the laws of the State
of Delaware in September 2000 for the purpose of merging into I-Trax.com to
facilitate the reorganization. Holding Company is currently the sole stockholder
of I-Trax.com Acquisition Co.
Terms of The Plan Of Reorganization
Conversion
At the effective time of the reorganization:
o Each share of I-Trax.com common stock issued and outstanding
immediately prior to the effective time of the reorganization
will, at the effective time of the reorganization,
automatically become and be converted into the right to
receive one share of Holding Company common stock;
18
<PAGE>
o Each share of I-Trax.com Acquisition Co. common stock issued
and outstanding immediately prior to the effective time of the
reorganization will, on and after the effective time of the
reorganization, be converted into one share of I-Trax.com
common stock, the surviving corporation in the merger; and
o Each share of Holding Company common stock issued and
outstanding immediately prior to the effective time of the
reorganization will, at the effective time of the
reorganization, be canceled.
As a result, at the effective time of the reorganization, all of the
common stock of I-Trax.com will be owned by Holding Company. At the effective
time of the reorganization, I-Trax.com stockholders and, as a result of the
MyFamilyMD transaction, the members of MyFamilyMD, will become the stockholders
of Holding Company. As stockholders of Holding Company, they will have the same
rights to govern the Holding Company's activities as they currently have to
govern I-Trax.com's activities; however, as stockholders of Holding Company,
they will not be entitled to vote on matters requiring the approval of
I-Trax.com stockholders. Stockholders of Holding Company will be entitled to
vote with respect to matters affecting Holding Company, which will own 100% of
the voting rights in I-Trax.com.
Effective Time of The Reorganization
The reorganization will be effective at the time a certificate of
merger is filed in the office of the Secretary of State of Delaware. The
effective time of the reorganization will not occur until the satisfaction of
all of the requirements of law and conditions specified in the plan of
reorganization and in our agreement with MyFamilyMD. We currently anticipate
that the reorganization will occur shortly following the distribution of this
prospectus to our stockholders.
Interests of Certain Persons In The Reorganization
The plan of reorganization provides that the directors of I-Trax.com
immediately prior to the effective time of the reorganization will be directors
of I-Trax.com and Holding Company immediately after the reorganization.
Additionally, the officers and other employees of I-Trax.com immediately prior
to the effective time of the reorganization will all be employed in
substantially the same capacities by I-Trax.com immediately after the
reorganization. As of October 4, 2000, directors and executive officers of
I-Trax.com and their affiliates were the beneficial owners of 8,865,417 shares
(47.33% of the issued and outstanding shares) of I-Trax.com common stock.
Employee Benefits
Upon consummation of the reorganization, I-Trax.com's 2000 Equity
Compensation Plan will be assumed by Holding Company. All options issued under
this plan will be converted into options to acquire an identical number of
shares of Holding Company common stock on identical terms and conditions, and
for an identical exercise price. Holding Company will assume all of I-Trax.com's
obligations with respect to the outstanding options.
19
<PAGE>
All other employee benefits and benefit plans of I-Trax.com in effect
immediately prior to the effective time of the reorganization will be unchanged
by the reorganization, except that any plan which refers to I-Trax.com common
stock will, following consummation of the reorganization, be deemed to refer
instead to Holding Company common stock and will become the employee benefits
and benefit plans solely of I-Trax, Inc.
Conditions To The Reorganization
The obligations of each of the parties to the plan of reorganization to
consummate the reorganization are subject to the satisfaction on or before the
effective time of the reorganization, of the following conditions:
o approval of the plan of reorganization by a majority of the
outstanding shares of Holding Company and I-Trax.com Acquisition
Co.;
o approval by a majority of the respective Board of Directors of
I-Trax.com, Holding Company and I-Trax.com Acquisition Co.; and
o effectiveness of the registration statement covering the
transactions described in this prospectus.
The directors of I-Trax.com, I-Trax.com Acquisition Co. and Holding Company have
approved the plan of reorganization. I-Trax.com, as the sole stockholder of
Holding Company, and Holding Company, as the sole stockholder of I-Trax.com
Acquisition Co., have approved the plan of reorganization.
Termination of Plan of Reorganization
The plan of reorganization may be terminated before the effective time
of the reorganization if it is determined by respective Board of Directors of
I-Trax.com, Holding Company or I-Trax.com Acquisition Co. that for any reason
the completion of the transactions provided for in the plan of reorganization
would be inadvisable or not in the best interest of the applicable corporation
or its stockholders.
Exchange Of Share Certificates
The shares of Holding Company common stock will continue to be
represented by the same stock certificates which previously represented shares
of I-Trax.com common stock.
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES TO OUR TRANSFER AGENT OR THE COMPANY.
NO EXCHANGE OF CERTIFICATES IS REQUIRED.
20
<PAGE>
Costs of the Reorganization
The costs of the reorganization to Holding Company and I-Trax.com are
estimated at approximately $35,000. These costs will be paid by I-Trax.com.
These costs do not include any costs of MyFamilyMD and its owners incurred by
them in connection with the negotiation of the Contribution and Exchange
Agreement and related transactions.
Stockholder Approval and Appraisal Rights
Pursuant to the provisions of Section 251(g) of the Delaware general
corporation law, stockholders of I-Trax.com do not have the right to vote on the
reorganization and will not have appraisal rights with respect to their shares
of I-Trax.com common stock as a result of the reorganization.
Accounting Treatment
Because the reorganization is a reorganization with no change in
ownership interests, the financial statements of Holding Company and the
financial statements of I-Trax.com will retain the former bases of accounting of
I-Trax.com and will be substantially identical to I-Trax.com's financial
statements prior to the reorganization.
Material Federal Income Tax Consequences
The following discussion is limited to the material federal income tax
consequences of the proposed reorganization and does not discuss state, local,
or foreign tax consequences or all of the tax consequences that might be
relevant to an individual stockholder of I-Trax.com in light of his or her
particular circumstances.
We anticipate that the reorganization will qualify for federal income
tax purposes as a "reorganization" under Sections 368(a)(1)(A) and 368(a)(2)(E)
of the Internal Revenue Code of 1986, as amended, which we refer to in this
prospectus as the Code. If the reorganization so qualifies, the reorganization
will have the following material tax consequences:
o No gain or loss will be recognized by Holding Company upon the
issuance of its stock in the reorganization;
o No gain or loss will be recognized by the stockholders of
I-Trax.com as a result of the exchange of their shares of
I-Trax.com common stock for Holding Company common stock pursuant
to the reorganization;
o The basis of the Holding Company common stock received by the
stockholders of I-Trax.com pursuant to the reorganization will be
the same as the basis of the shares of I-Trax.com common stock
surrendered in exchange therefor; and
o The holding period of the Holding Company common stock received by
stockholders of I-Trax.com pursuant to the reorganization will
include the holding period of the I-Trax.com common stock
surrendered in exchange therefor, provided that such I-Trax.com
common stock is held as a capital asset on the date of
consummation of the reorganization.
21
<PAGE>
We further anticipate that the reorganization and the contribution to
the Holding Company of all of the ownership interests of MyFamilyMD in exchange
for the issuance of shares of Holding Company common stock to the owners of
MyFamilyMD will be treated as a single transaction. If the reorganization and
such contribution are so treated, the owners of MyFamilyMD will recognize no
gain or loss under Section 351(a) of the Code on the exchange of their ownership
interests in MyFamilyMD for shares of Holding Company common stock.
I-TRAX.COM'S STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO
SPECIFIC TAX CONSEQUENCES TO THEM OF THE REORGANIZATION INCLUDING TAX RETURN
REPORTING REQUIREMENTS AND THE APPLICABILITY AND EFFECT OF FEDERAL, STATE,
LOCAL, FOREIGN, AND OTHER APPLICABLE TAX LAWS.
22
<PAGE>
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of Holding Company is 52,000,000 shares,
of which 50,000,000 shares are designated as common stock, par value $.001 per
share, and of which 2,000,000 shares are designated as preferred stock, par
value $.001 per share.
Common Stock
Holding Company stockholders are entitled to one vote for each share
held of record on all matters submitted to a vote of the Holding Company
stockholders. Subject to preferences that may be applicable to any outstanding
preferred stock, holders of common stock are entitled to receive ratably any
dividends as may be declared by Holding Company's Board of Directors out of
funds legally available for dividends. In the event of a liquidation,
dissolution or winding up of Holding Company, Holding Company stockholders are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preferences of any outstanding shares of preferred stock.
Holders of common stock have no preemptive rights.
Preferred Stock
Holding Company's preferred stock is issuable in series upon resolution
of its Board of Directors. The Board of Directors is authorized to establish the
relative terms, rights and other provisions of any series of preferred stock. No
preferred stock is outstanding, and Holding Company's Board of Directors has no
current intention of issuing any preferred stock. However, unless otherwise
required by law in a particular circumstance, the Board of Directors can,
without stockholder approval, issue preferred stock in the future with voting
and conversion rights which could adversely affect the voting power of the
common stock. The issuance of preferred stock could be expected to, and may have
the effect of, delaying, averting or preventing a change in control of Holding
Company.
Holding Company's Certificate of Incorporation provides that directors
of Holding Company will not be personally liable to Holding Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
Holding Company or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law relating to prohibited
dividends, distributions and repurchases or redemptions of stock or (iv) for any
transaction from which the director derives an improper personal benefit.
However, such limitation on liability would not generally apply to violations of
the Federal securities laws, nor does it limit the availability of non-monetary
relief in any action or proceeding.
The transfer agent for Holding Company common stock is StockTrans,
Inc., Ardmore, Pennsylvania.
23
<PAGE>
COMPARISON OF CAPITAL STOCK
The Certificate of Incorporation and By-laws of Holding Company are the
same as the Certificate of Incorporation and By-laws of I-Trax.com except in
such minor respects as are permitted under Section 251(g) of the Delaware
General Corporation Law. The certificates of incorporation and by-laws of both
companies contain certain provisions relating to the board of directors and
certain business combinations, all of which may be deemed to have
"anti-takeover" effects, including undesignated preferred stock, limitations on
the call of a special meeting of stockholders, elimination of cumulative voting
and limitation on the matters that may be brought before an annual meeting of
the stockholders. See "Risk Factors--Anti-takeover Considerations" above.
MARKET PRICE AND DIVIDENDS OF I-TRAX.COM, INC. COMMON STOCK
Since September 29, 1999, I-Trax.com common stock has been quoted on
the OTC Bulletin Board under the symbol "IMTX." Prior to September 29, 1999,
I-Trax.com common stock had been quoted on the OTC Bulletin Board under the
symbol "UMAI." The following table sets forth the high and low closing bid
information for the common stock for the periods indicated:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
2000
Fourth Quarter (through October 26) $ 3.0000 $ 1.7500
Third Quarter 5.0000 2.3770
Second Quarter 3.5000 1.2500
First Quarter 5.2500 1.2500
1999
Fourth Quarter 2.2500 0.1875
Third Quarter 0.1875 0.1875
Second Quarter No inside quotes reported
First Quarter No inside quotes reported
1998
Fourth Quarter No inside quotes reported
</TABLE>
The information presented above was supplied to I-Trax.com by Nasdaq
Trading and Market Services and reflects inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
On October 26, 2000, the last reported sales price of I-Trax.com common
stock was $2.50. As of October 17, 2000, there were approximately 702 registered
holders of record of the I-Trax.com common stock.
24
<PAGE>
The stock of Holding Company is not currently publicly traded. Upon
consummation of the reorganization, Holding Company common stock will quoted on
the OTC Bulletin Board under the symbol "IMTX" as the successor to I-Trax.com.
I-Trax.com has never paid or declared any cash dividends on our common
stock or other securities and does not anticipate paying cash dividends in the
foreseeable future.
Holding Company has not paid any dividends since the date of its
incorporation and does not anticipate doing so in the foreseeable future.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following table sets forth at June 30, 2000 the unaudited actual
financial statements of I-Trax.com and the proposed reorganization, and the pro
forma financial statements of I-Trax.com, Holding Company and Holding Company on
a consolidated basis to reflect the completion of the reorganization and the
consummation of the MyFamilyMD transaction.
25
<PAGE>
<TABLE>
<CAPTION>
Unaudited Pro Forma Balance Sheet
at June 30, 2000
PROFORMA
I-TRAX.COM CONSOLIDATED
I-TRAX,COM, INC. ACQUISITION I-TRAX INC. I-TRAX, INC
(UN-AUDITED) (UN-AUDITED) (UN-AUDITED) (UN-AUDITED)
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash $ 84,699 $ - $ - $ 84,699
Accounts receivable 253,617 - - 253,617
Prepaid expenses 30,382 - - 30,382
Other receivables 61,960 10 10 61,960
-----------------------------------------------------------------------------------
Total current assets 430,658 10 10 430,658
-----------------------------------------------------------------------------------
Machinery & Equipment, net 231,873 - - 231,873
Web site development costs 210,750 - - 210,750
Intangible assets - goodwill, etc. - -
Security deposits 128,162 - - 128,162
-----------------------------------------------------------------------------------
Total assets $ 1,001,443 $ 10 $10 $ 1,001,443
===================================================================================
Total Liabilities $ 526,418 $ - $ - $ 526,418
-----------------------------------------------------------------------------------
Common Stock 17,828 10 10 17,828
Additional Paid - In - Capital 2,836,380 - - 2,836,380
Member's deficit - - - -
Accumulated Deficit (2,379,183) - - (2,379,183)
-----------------------------------------------------------------------------------
Total Stockholders' Equity 475,025 10 10 475,025
===================================================================================
Total liabilities & stockholder's equity $ 1,001,443 $ 10 $10 $ 1,001,443
===================================================================================
Unaudited Pro Forma Statement of Income
at June 30, 2000
Revenue $ 64,227 $ - $ - $ 64,227
-----------------------------------------------------------------------------------
Operating expenses:
Cost of revenue 45,513 - - 45,513
General and administrative 1,508,295 - - 1,508,295
Marketing & advertising 122,152 - - 122,152
-----------------------------------------------------------------------------------
Total operating expenses 1,675,960 - - 1,675,960
-----------------------------------------------------------------------------------
Loss before oher income (expenses) (1,611,733) - - (1,611,733)
Other income (expenses) (120,815) - - (120,815)
-----------------------------------------------------------------------------------
Net loss $(1,732,548) $ - $ - $(1,732,548)
===================================================================================
SHARE DATA:
Preferred Stock:
Authorized 2,000,000 0 2,000,000 2,000,000
Outstanding 0 0 - -
Common Stock:
Authorized 50,000,000 1,000 50,000,000 50,000,000
Outstanding 17,828,084 1,000 1,000 17,828,084
===================================================================================
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
ISUMMIT
PARTNERS, LLC PRO FORMA
d/b/a PRO FORMA CONSOLIDATED
MYFAMILYMD ADJUSTMENTS I-TRAX, INC
(as of August 31, 2000) ADJ. REF (UN-AUDITED) (UN-AUDITED)
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash $ 64,587 $ - $ 149,286
Accounts receivable - - 253,617
Prepaid expenses - - 30,382
Other receivables 26,102 - 88,062
-----------------------------------------------------------------------------------
Total current assets 90,689 - - 521,347
-----------------------------------------------------------------------------------
Machinery & Equipment, net 13,543 245,416
Web site development costs - 210,750
Intangible assets - goodwill, etc. - a 6,836,000 5,196,256
b 92,342
c (1,732,086)
Security deposits - - 128,162
-----------------------------------------------------------------------------------
Total assets $ 104,232 - $ 5,196,256 $ 6,301,931
===================================================================================
Total Liabilities $ 196,574 $ - $ 722,992
-----------------------------------------------------------------------------------
Common Stock - a 3,418 21,246
Additional Paid - In - Capital - a 6,832,582 9,668,962
Member's deficit (92,342) b 92,342 -
Accumulated Deficit - c (1,732,086) (4,111,269)
-----------------------------------------------------------------------------------
Total Stockholders' Equity (92,342) 5,196,256 5,578,939
===================================================================================
Total liabilities & stockholder's equity $ 104,232 $ 5,196,256 $ 6,301,931
===================================================================================
Revenue $ - $ - $ 64,227
-----------------------------------------------------------------------------------
Operating expenses:
Cost of revenue - - 45,513
General and administrative 1,202,342 c 1,732,086 4,442,723
Marketing & advertising - - 122,152
-----------------------------------------------------------------------------------
Total operating expenses 1,202,342 - 1,732,086 4,610,388
-----------------------------------------------------------------------------------
Loss before oher income (expenses) (1,202,342) - (1,732,086) (4,546,161)
Other income (expenses) - - (120,815)
-----------------------------------------------------------------------------------
Net loss $ (1,202,342) - $ (1,732,086) $(4,666,976)
===================================================================================
SHARE DATA:
Preferred Stock:
Authorized n/a n/a 2,000,000
Outstanding n/a n/a -
Common Stock:
Authorized n/a n/a 50,000,000
Outstanding n/a n/a 21,246,084
===================================================================================
</TABLE>
a - to effect for the issuance of 3,418,000 shares of $.001 par value common
stock valued at $2 per share
b - to eliminate ISummit, LLC partner's deficit upon consolidation
c - to write off and estimated 25% of the purchase price to purchased R&D.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS TOGETHER WITH OUR
CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES TO OUR CONSOLIDATED FINANCIAL
STATEMENTS INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS
MAY DIFFER MATERIALLY FROM THOSE INDICATED IN SUCH FORWARD-LOOKING STATEMENTS.
Introduction
We were incorporated in the State of Delaware under the name of Marmac
Corporation in May 1969. In December 1979, we changed the Company's name to Ibex
Industries International, Inc. On April 1, 1996, we purchased the assets of
certain physician practices, changed the Company's name to U.S. Medical
Alliance, Inc., and commenced operations as a physician practice management
company.
As U.S. Medical Alliance, we completed one additional physician
practice acquisition. However, we did not have adequate liquidity and capital
resources to withstand the downturn in the physician practice management
industry, nor the ability to acquire profitable physician practices.
During 1997, the Company, formerly known as US Medical Alliance, Inc.,
ceased doing its business activities as a physician practice management company
and embarked on a program of winding down such activities, returning physician
practice assets to physicians in exchange for cancellation of stock in the
Company issued for such assets, and settling its obligations. During 1998, the
Company had no operations. In August, 1999, six principal stockholders of the
Company purchased 4,000,000 shares of the Company's Common Stock for $400,000 to
raise working capital which enabled the Company to enter into a license
agreement, a technical services agreement and a management services agreement
with Member-Link Systems, Inc., a health information technology company, to own
and develop the Internet application of an immunization tracking system known as
"I-Trax." As consideration for these agreements, we issued 3,000,000 shares of
our Common Stock to Member-Link and an aggregate of 2,000,000 shares of our
Common Stock to certain executive officers of Member-Link. We also changed our
name to "I-Trax.com, Inc." on August 27, 1999.
Effective as of December 30, 1999, Member-Link merged with and into us
pursuant to a Merger Agreement dated as of December 14, 1999. In the merger,
each of the 1,809,686 outstanding shares of Common Stock of Member-Link was
converted into a right to receive 4.4207 shares of our Common Stock. An
aggregate of 8,000,082 shares of our Common Stock was issued in the merger. The
27
<PAGE>
3,000,000 shares of our Common Stock held of record by Member-Link at the time
of the merger were canceled. As a further consequence of the merger, each of the
license agreement, the technical services agreement and management services
agreement were canceled.
The Company believes that the merger of Member-Link into the Company
effective as of December 30, 1999 will have substantial impact on its future
operating results.
Overview
The Company has historically developed enterprise or client server
applications for collecting disease specific data at the point of care. In the
first fiscal quarter of 2000, the Company began to develop its Internet
applications. We have just recently begun to deploy such Internet applications.
The Company intends to continue to increase its expenditures primarily in the
areas of product development, client services, business development, and sales
and marketing. As a result, the Company expects to continue to incur substantial
operating losses over the next nine to twelve months.
The Company's current primary sources of revenues are license fees and
product development fees it charges its customers. In the future, the Company
expects to generate a significant portion of its revenue from subscriptions to
the Company's products delivered over the Internet.
Results of Operations
Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999.
Total revenues for the six-month period ended June 30, 2000 decreased
to $64,227 as compared to $236,819 for the six-month period ended June 30, 1999,
due primarily to the Company's continued migration to an Internet model as well
as normal sales cycles. Cost of revenue was $45,513 for the six-month period
ended June 30, 2000 as compared to $188,299 for the prior comparable period,
consisting primarily of computer hardware, networking and consulting.
The aggregate operating expenses for the six-month period ended June
30, 2000 increased to $1,675,960 as compared to $689,905 for the prior
comparable period. The significant increase in the aggregate operating expenses
was due primarily to the Company's selling, general and administrative expenses,
which equaled $1,508,295 during this period as compared to $400,435 for the
prior comparable period. Selling, general and administrative expenses consisted
primarily of compensation for legal, finance, sales, management, travel, rent,
telephone and consulting services. This increase resulted primarily from
increased costs necessary to support the growth of the Company's business
activities. The Company intends to continue to increase the amounts spent in
these categories in future periods to support continued growth and expansion.
28
<PAGE>
The Company did not incur any research and development expenses for the
six-month period ended June 30, 2000, as compared to $89,588 for the six-month
period ended June 30, 1999. Although the Company has expensed its research and
development costs in the past, the Company intends to capitalize a significant
percentage of the costs associated with the development of its Internet versions
of its existing products in the future.
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998.
Total revenues in fiscal year 1999 were $987,533 as compared to
$347,800 for fiscal 1998. Revenues for fiscal 1999 were comprised of $625,209
for the licensing and development of "C-Trax," the Company's cardiovascular
disease management program for Walter Reed Army Medical Center ("WRAMC"),
$87,055 for "AsthmaWatch" for LA County-USC, Phoenix Children's Hospital, and
Mobile Care Foundation in Chicago, $123,161 for the Medicive Medical Records
database for The Office of Attending Physician, and $52,108 of other revenue
from small subcontracts. Revenues for 1998 consisted of $62,000 from WRAMC for
"I-Trax," the Company's immunization tracking system, $81,800 for LA
County-USC's "AsthmaWatch," and $204,000 for "C-Trax" from WRAMC.
Cost of Revenue was $374,132 for fiscal 1999 consisting primarily of
hardware and network installations and subcontractors as compared to $149,115
for the same items in fiscal 1998. The increase was due to the increase in
revenue.
Research and development expenses of $186,908 for fiscal 1999 consist
primarily of employee compensation of information systems personnel. There was
no employee compensation for fiscal 1998. Although the Company has expensed its
R&D costs in the past, it will likely capitalize a significant percentage of the
costs associated with the development of its web-based versions of its existing
products in the future.
Selling, general and administrative expenses consist primarily of
compensation for legal, finance, sales, management, travel, rent, telephone and
consulting services. Selling, general and administrative expenses were $997,047
for fiscal 1999 and $125,161 for fiscal 1998. The increase resulted primarily
from increased costs necessary to support the growth of the Company's business
activities. The Company intends to increase the amounts spent in these
categories to support continued growth and expansion in future periods.
Liquidity And Capital Resources
The Company's accumulated deficit of $2,379,183 from inception through
June 30, 2000 has been funded through capital contributions from the sale of its
common stock. On February 20, 2000, the Company completed a private placement of
1,800,000 shares of its Common Stock at $1.00 per share, yielding to the Company
aggregate proceeds of $1,800,000, to fund the next phase of the Company's
expansion.
In addition, in May 2000 the Company initiated a second private
placement of 1,000,000 shares of its common stock at $2.00 per share, seeking to
29
<PAGE>
raise an additional $2,000,000. The Board of Directors of I-Trax.com amended the
private placement in July 2000 to cover 2,500,000 shares of Common Stock, at the
same price per share, seeking to raise an aggregate of $5,000,000. No money was
raised pursuant to this private placement during the quarter ended June 30,
2000. As of October 25, 2000, however, the Company sold an aggregate of 911,250
shares of Common Stock, yielding to the Company an aggregate of $1,822,500. The
raised funds have been and will be used to fund operations and to accelerate the
Company's product development efforts and to fund development of certain
intellectual property acquired from MyFamilyMD. For further discussion of this
arrangement with MyFamilyMD, see "Business--I-Trax.com--MyFamilyMD Agreements"
beginning on page 38. The Company believes that these funds, together with
anticipated revenue, will be sufficient to meet the Company's present business
expansion requirements until the end of the second quarter of 2001. Although the
Company plans to seek additional capital during that period, there can be no
assurance that such financing will be available on acceptable terms, if at all.
At June 30, 2000, the Company had $84,699 in cash. The Company's
principal source of liquidity is the cash obtained from the private placements
described above. The Company currently has no available credit facilities.
For the six-months ended June 30, 2000, the Company used $1,463,135 of
cash for operating activities and $387,275 for investing activities (which was
primarily for the purchase of machinery and equipment). The funds used for
operating and investing were all funded through the sale of common stock
pursuant to the Company's private placements, which amounted to $1,794,881.
For the six-months ended June 30, 1999, the Company used $127,325 for
operating activities and $29,520 for investing activities. All of the cash used
was funded from borrowings pursuant to a promissory note, which was subsequently
converted into equity.
Factors Affecting the Company's Business and Prospects
We expect to experience significant fluctuations in our future
quarterly operating results due to a variety of factors, many of which are
outside of our control. These issues are discussed more fully in the section
titled "Risk Factors" above.
Market Risk
The Company has no material interest-bearing assets or liabilities, nor
does the Company have any current exposure for changes in foreign currency
exchange rates. The Company does not use derivatives or other financial
instruments. The Company's financial instruments consist of cash and
receivables. The market values of these financial instruments approximate book
value.
30
<PAGE>
Inflation
The financial statements are presented on a historical cost basis and
do not fully reflect the impact of prior years' inflation. While the U.S.
inflation rate has been modest for several years, inflation issues may impact
the Company's business in the future. The ability to pass on inflation costs is
an uncertainty due to general economic conditions and competitive situations.
Year 2000 Preparation
Software failures due to calculations using Year 2000 dates are a known
risk. Although the most critical date (January 1, 2000) has occurred without
incident in our software, problems with Year 2000 software could nonetheless
result in system failures or miscalculations causing disruptions of operations,
including, among others, a temporary inability to process transactions, send
invoices or engage in similar normal business activities. To date, the Company
has experienced very few problems related to Year 2000 testing and those
requiring modification have been fixed. The Company does not believe that there
is material exposure to the Year 2000 issue with respect to its electronic
commerce transaction processing and online activity since these systems
correctly define the Year 2000. The Company is nonetheless conducting an
analysis to determine whether others with whom the Company does business have
Year 2000 issues on a continual basis.
The Company has not incurred any material expenses in addressing Year
2000 compliance to date.
31
<PAGE>
BUSINESS
Holding Company
Holding Company was incorporated in September 2000 and has not engaged
in any business since its incorporation. After the reorganization and
consummation of the MyFamilyMD transaction, Holding Company will become a
holding company whose principal assets will be all of the outstanding shares of
the capital stock of I-Trax.com and all of the membership interests of
MyFamilyMD. The business of I-Trax.com, as currently conducted and as the
Holding Company will conduct such business after the reorganization, is
described below.
I-Trax.com
Business History
We were incorporated in the State of Delaware under the name of Marmac
Corporation in May 1969. In December 1979, we changed the Company's name to Ibex
Industries International, Inc. On April 1, 1996, we purchased the assets of
certain physician practices, changed the Company's name to U.S. Medical
Alliance, Inc., and commenced operations as a physician practice management
company.
As U.S. Medical Alliance we completed one additional physician practice
acquisition. However, we did not have adequate liquidity or capital resources to
withstand the downturn in the physician practice management industry, nor the
ability to acquire profitable physician practices. In January 1997, the Board of
Directors, in an effort to reorganize the Company, elected Frank A. Martin as
its President. Mr. Martin negotiated the return of the previously acquired
physician practice assets to the physicians in exchange for the cancellation of
any U.S. Medical Alliance capital stock or notes associated with those
acquisitions. We then changed the Company's name to I-Trax.com, Inc. on August
27, 1999.
On September 3, 1999, we entered into a Software and Proprietary
Product Corporate License Agreement with Member-Link Systems, Inc., a health
information technology company. The license agreement gave us the exclusive
right to use certain software in an immunization tracking system (which we call
eImmune(TM)), and to develop an application allowing, public and private health
systems, among other parties, to track immunizations over the Internet.
Concurrently with entering into the license agreement, the parties also entered
into a technical services agreement, related to the technology licensed pursuant
to the license agreement, and a management services agreement, related to the
management and implementation of our business plan. As consideration for these
agreements, we issued 3,000,000 shares of our Common Stock to Member-Link and an
aggregate of 2,000,000 shares of our Common Stock to certain executive officers
of Member-Link.
Effective as of December 30, 1999, Member-Link merged with and into us
pursuant to a Merger Agreement dated as of December 14, 1999. In the merger,
32
<PAGE>
each of the 1,809,686 outstanding shares of Common Stock of Member-Link was
converted into a right to receive 4.4207 shares of our Common Stock. 8,000,082
shares of our Common Stock were issued in the merger. The 3,000,000 shares of
our Common Stock held of record by Member-Link at the time of the merger were
canceled. As a further consequence of the merger, each of the license agreement,
the technical services agreement and management services agreement were
canceled.
As of the date of this prospectus we had 18,730,834 outstanding shares
of common stock.
Overview/Background
Our Company is a medical information systems and eHealth organization
that is building an Internet portal. The portal will be focused on providing a
secure and confidential repository of clinical health information to public
health agencies, private health organizations, health care providers, and the
public at large. The Company's technology, which is already deployed in
non-Internet applications, provides a platform for collecting certain
disease-specific data at the point of care, offers a secure and confidential
repository of clinical health information, which is fully accessible with proper
authorization by any branch of the health care community, and is well positioned
to offer commerce opportunities in an interactive setting. We are developing a
series of proprietary data management applications, some of which we will make
available over the Internet.
Our first product, eImmune(TM), is a comprehensive immunization
software product for processing, recording and tracking all immunizations and
related adverse events. The application was developed in conjunction with Walter
Reed Army Medical Center (WRAMC), Allergy and Immunology Department in
Washington, DC to maintain all military immunizations at that site. First
installed at Walter Reed Medical Center in January 1998, it now has over one
million records. The Internet version of eImmune(TM) will give public health
agencies and private health organizations, the ability to create online
immunization records that can be accessed over the Internet by parents, schools,
primary care, and other health providers.
The eImmune(TM) application supports information flow required during
the patient encounter and facilitates many aspects of the immunization process.
Application functionality includes retrieving and recording vital patient
information such as medical history, medication history and allergies, ordering
vaccines, tracking administration of vaccines, generating schedules for future
vaccines and reminder notices, recording and reporting adverse events. As with
all I-trax applications, eImmune(TM) captures standardized data that can be
later used to generate outcome studies.
Our second application is an asthma and respiratory disease management
system, AsthmaWatch(R), developed in conjunction with The University of Southern
California Los Angeles County Medical Center and The Asthma and Allergy
Foundation of America. AsthmaWatch(R) is an information system developed to
support community based asthma intervention programs. This information system
models the flow of the health process so data is entered at time of the
encounter, at point of care. Its functionality includes:
33
<PAGE>
o capturing complete medical and asthma history, medications
and diagnostic results;
o supporting comprehensive staff assessments, including
documentation of vital signs, medication,
materials and device training and environmental assessment;
o capturing case management encounters;
o capturing a comprehensive provider assessment which includes
asthma activity, asthma severity, and upper airway disease
assessment; general medical exam and ICD9 and CPT coding;
ordering skin tests, medications; and
o automating development of personalized care plans and
pharmaceutical plans
This application facilitates team asthma care management by combining
the collective expertise of specialists, nurses, care managers, acute and
primary care providers and pharmacists, and providing up to the minute disease
and patient information. AsthmaWatch(R) has proven to be an integral part of
aggressive asthma programs such as Breathmobile projects that are underway
across the nation and leading the attack on inner-city pediatric asthma. At this
time we are working towards making AsthmaWatch(R) available over the Internet.
Research and development activities involve adding new functionalities
to existing products and developing new disease management modules for the most
difficult to manage diseases. Current work includes development of C-Trax, a
sophisticated cardiovascular disease management module, development of a
complete patient encounter module and development of a diabetes module.
The Market
We believe that the potential market for our disease management and
medical information services is currently very large and is expected to continue
to increase. There is a growing recognition throughout the health care community
of the need for coordinated medical care for the following reasons:
o There is a growing demand in the United States for
immunization registries in both public and private health care
sectors to track and report the immunizations administered to
children and adults. Managed care plans are looking to
registries to assist in their meeting the quality measures of
Health Plan Employer Data and Information Set (HEDIS) and the
accreditation requirements of the National Committee for
Quality Assurance (NCQA). Many health care experts believe
that utilization of immunization registries will provide
health system cost savings and increased vaccine safety.
o The incidence and severity of asthma is reaching epidemic
proportions, particularly in highly populated American cities.
The Health Journal (Wall Street Journal) reported on December
3, 1999 that, "Asthma has tripled since 1980 for children
under age five." We believe that effective asthma management
requires the ability to connect health care providers at every
level of specialty, with schools, pharmacies, and community
health centers. AsthmaWatch(R) enables such networking and
care coordination.
34
<PAGE>
The Company's first two Internet applications will, in essence, create
integrated models of care through their unique data repositories that are
accessible to all branches of the health care community - providers, hospitals,
health plans, pharmacies, consumers and government agencies. The benefits of
such a system include both quality and cost advantages.
We believe that current software technologies for managing medical data
are outdated, cumbersome to use, and extremely expensive. In the case of
immunization registries, many software products are non-compliant with the data
elements required by the current Center for Disease Control requirements. The
Internet is likely to be the preferred methodology for the healthcare community
to access easily software data management systems with the desired
functionality.
Our software applications are built on a proprietary, intelligent
software architecture, Medicive Medical Enterprise Data System. The Medicive
Medical Enterprise Data System is designed to receive information for both the
most complex and the simplest tasks encountered in a medical setting. It
currently contains over 2,000 standard data entries containing in excess of
1,000,000 data elements. We believe that it provides the platform for
development of unlimited healthcare applications. A key feature of the system is
the architecture's ability to accept new and critical data elements, which is
important for an industry experiencing rapid advances in clinical and laboratory
research, as well as changes in treatment protocols. We believe the technology
is "user-friendly" and personalized because it was developed by a team of health
care providers, technology experts, and 3rd party users. At the point of care,
our products collect data such as demographics and staff and physician
assessments, and allow the user to view a record over time, call it up in
graphical display, generate reports, and make quick comparisons in easy-to-read
formats. The clinical encounter tracking feature not only gives the provider a
view of the progress of treatments and factors that contribute to a particular
disease but also provides a comprehensive picture of the management of the
disease and the treatment outcome. We believe that comprehensive, accessible
information of this type supports successful health care delivery. Overall, we
believe our technology promotes user interaction, facilitates decision-making
and supports health care management. And we believe that these advantages will
enable our products to be accepted as an enterprise-wide solution.
We are beginning to track the cost savings and efficiencies which we
believe are realized though use of our software. We recently completed a study
of immunization tracking in one of the largest public health care systems in the
United States. The report revealed that three of 30 community health centers
covered by the study deliver some 3,000 vaccines per month. Further, the study
found that the health provider responsible for delivering the vaccinations must
complete mandatory paperwork each month to satisfy the requirements set forth by
the existing immunization program. This process requires a health provider in
each department of each facility to complete two hours of paperwork per week. At
this rate, governmental health care professionals devote 15,043 hours per year
to such paperwork. The I-Trax.com system can effectively produce one central
report covering the activities for all facilities with one person working only
three hours per week, for a substantial savings.
35
<PAGE>
Furthermore, the study discovered that each vaccine encounter takes
approximately 30 minutes per patient. There are approximately 19,800 patient
vaccination encounters in this study population per year, equating to 9,900
employee hours. I-Trax.com has proven in existing installations that the entire
vaccine encounter can be reduced to 10 to 15 minutes, which reduces total
delivery times by half and produces an additional 4000(+) employee hours
savings.
<TABLE>
<CAPTION>
Patient Encounters: Employee Hours for Current Approach vs. eImmune(TM)Approach
----------------------------------------------------------------------------------
Current Process I-Trax.com Approach
----------------------------------------------------------------------------------
<S> <C> <C>
Time/Patient Encounter 30 minutes 10-15 minutes
----------------------------------------------------------------------------------
# of Patient Encounters 19,800 19,800
----------------------------------------------------------------------------------
Total Hours/Year 9,900 4,125
----------------------------------------------------------------------------------
</TABLE>
Represents 3 of 30 community health centers in one of the largest counties in
the United States.
Data on cost savings, efficiencies and improved care is currently being
collected by the AsthmaWatch(R) system and being analyzed by medical
professionals currently using the system. This data should be available shortly.
Strategy
At this time we permit our clients to license our products for a one
time fee or on a periodic subscription basis. We currently intend to charge
customer fees on a per user basis for our planned Internet applications. We also
intend to create virtual communities around our online record/disease management
systems between parents, schools, doctors, public health agencies, hospitals and
other health care providers. We further plan to develop children and adult
health information and referral resources, as well as marketing services for
companies selling relevant health care products, educational products and other
goods and services. We believe that the user's ability to use and benefit from
the secure database through the convenience and utility of the Internet, will
foster long-term advertising and promotional relationships, licensing fees,
business-to-business and as well as business-to-consumer e-commerce. eImmune(TM)
immunization record management system is the first application using this model.
We will follow a similar business model for AsthmaWatch(R), C-Trax and our
diabetes module, initially focusing marketing efforts on larger public health
agencies, academic medical centers and major health care systems along with
networks of specialist doctors and pediatricians.
We believe that I-Trax.com is one of the first companies to target
immunization, healthcare and disease management online applications. We believe
that our competitive advantages are the clinician-developed, high quality,
proprietary interfaces which are combined with a flexible and expandable
database system.
36
<PAGE>
In the future we intend to develop new disease information management
applications for difficult to manage diseases, as well as to provide additional
functionality and modifications to currently available software. Included will
be support for new government and industry standards, such as those set forth in
the Health Insurance Portability and Accountability Act of 1996 and any further
requirements from the National Centers for Disease Control. There is no
assurance that we can successfully do so.
The Company believes that there will be strong advantages to be the
first entrant in the market for these products. As such, we believe it will be
possible for us to become the preferred Application Service Provider in
particular communities, in which case we would establish ourselves as the
dominant leader in such communities. We believe that our potential success
factors include offering high quality software applications, secure and
expandable databases and a high level of service quality. Our primary goal is to
provide many interface and service options so that I-Trax.com software is easy
to use and to reduce the impediments to health care providers using our
products. Greater compliance in reporting and tracking immunizations and
managing the health of asthmatics will be made possible by I-Trax.com.
We believe industry partnerships can play a central role in our
business strategy by providing access to key relationships, established customer
bases, value-added content, and specific knowledge. Possible partners include
eHealth web sites, pharmaceutical companies, and managed care organizations,
research institutions and hospitals. We believe such partnerships could enable
I-Trax.com effectively to launch multiple disease specific portals that draw
upon existing market share and brand name recognition of the partners products.
At this time we have not initiated any substantive negotiations with any such
possible partners and there is no assurance that once we do so that we will be
able to enter into agreements with such possible partners.
The I-Trax.com Web Site
The I-Trax.com web site (www.I-Trax.com) is currently available as an
informational site offering product descriptions and demonstrations. We are
completing the development of our first Internet application, the eImmune(TM)
immunization registry. When it is available, physicians who have subscribed to
the software will be given access to the application. Other modules will be
added to our web site at later dates.
The Company intends to provide space on its web site for sponsorship by
pharmaceutical manufacturers, corporate and institutional supporters. The
Company believes that this will lead to reciprocal opportunities for advertising
on other Internet websites.
At this time, the Company does not intend to engage in Internet
advertising in the form of banner ads.
37
<PAGE>
Customer Service
We obtain new business, in part, based upon referrals from satisfied
customers, such as Walter Reed Army Medical Center and Los Angeles County. We
have received referrals from Walter Reed Medical Center in two primary forms.
First, the immunology department at Walter Reed has referred its own departments
to us for possible product purchase. Second, Walter Reed has provided some of
our prospective customers with positive information relating to our products and
our commitment to customer service. In addition, customers, such as Walter Reed
Medical Center, have returned to purchase some of our new products and upgrades
on our existing products. We attribute this success, in part, on our high level
of customer service. We intend to continue this high level of customer service,
as we believe it is a key factor for its success in this market space.
Management has recently implemented a staffing plan in advance of growth to
assure that premier standards in customer service are met.
MyFamilyMD Agreements
In August 2000 and September 2000, we entered into several agreements
with iSummit Partners, LLC, which is doing business as MyFamilyMD, and its three
owners. MyFamilyMD is an Internet and software company developing personalized
Internet applications, commonly referred to as MedWizards, to enable individuals
and families to manage their healthcare.
In August 2000, we entered into an agreement with MyFamilyMD to make
arrangements about certain intellectual property of MyFamilyMD and to allocate
the responsibility for developing MyFamilyMD's World Wide Web site and the
MedWizards. The parties entered into this agreement in recognition of the need
to proceed with the development of MyFamilyMD's World Wide Web site and the
MedWizards while we continued to negotiate an acquisition of MyFamilyMD from its
owners in exchange for shares of our Common Stock. In this agreement, MyFamilyMD
granted us a license (which is exclusive except with respect to MyFamilyMD) to
MyFamilyMd's existing intellectual property, including the conceptual framework
of the MedWizards, permitted us to develop MyFamilyMD's World Wide Web site and
the MedWizards, and permitted us to own all of the intellectual property that
would result from this development effort. In turn, we agreed to pay for all
development costs and, in the event we did not sign a binding agreement to
acquire MyFamilyMD or in the event we signed such an agreement but the closing
under such agreement did not occur before March 31, 2001, we also agreed to
acquire from MyFamilyMD all intellectual property that we did not already own
for a fee equal to a percentage of revenues generated by the MedWizards over a
fixed period of time after the MedWizards were launched.
On September 22, 2000, I-Trax.com and Holding Company, on the one hand,
and MyFamilyMD and its owners, on the other hand, entered into a Contribution
and Exchange Agreement pursuant to which the Holding Company agreed to acquire
all of the outstanding ownership interests in MyFamilyMD from its owners. In
addition, prior to and as a condition of the acquisition, we agreed to complete
a restructuring to create a new holding company structure. In the restructuring,
all of our existing stockholders will become stockholders of the Holding
Company, which will own all of the outstanding capital stock of the I-Trax.com.
38
<PAGE>
Pursuant to the Contribution and Exchange Agreement, the Holding
Company will issue an aggregate of up to 4,272,500 shares of its common stock to
the owners of MyFamilyMD in exchange for their contribution to the Holding
Company of all of the ownership interests in MyFamilyMD. Of this total number of
shares, up to 1,709,000 or 40% may be forfeited by the owners to the Holding
Company. 854,500 shares, or 20% of the aggregate shares, will be held in escrow
and released to the MyFamilyMD owners when the Holding Company launches
MyFamilyMD's technology -- the MedWizards. In addition, 854,500, or an
additional 20% of the aggregate shares, will be held in escrow and released to
MyFamilyMD owners when and if the Holding Company's revenues generated by
products incorporating the MedWizards, during the period beginning on the date
we launch the MedWizards and ending on the date which is the first anniversary
of such launch date, reach $11,000,000. If such revenues are less than
$11,000,000, the number of shares released to the members of MyFamilyMD on
account of reaching the revenue target will be reduced by one share for every
$5.50 shortfall in the revenues. An aggregate of 427,250 shares or 10% of the
aggregate shares will be held in escrow and released to the members of
MyFamilyMD following the Holding Company's fiscal 2001 audit if MyFamilyMD's
representations, warranties and covenants have not been breached.
The aggregate number of shares of our common stock to be issued to the
owners of MyFamilyMD pursuant to our agreement with them and MyFamilyMD are
equal to approximately 22.8% of the currently issued and outstanding shares of
our capital stock and which will result in such owners owning approximately
18.57% of our outstanding common stock.
We are not required to seek stockholder approval for issuance of shares
of our capital stock in this transaction under applicable law.
We have agreed to grant MyFamilyMD owners "piggy back" registration
rights (subject to underwriter cut back) in the event we register any common
stock for our own account under the Securities Act of 1933.
Competition
Many companies are operating in one or more segments of the electronic
health-related market. We believe our focus on building disease-specific,
coordinated-care applications, intended to operate in conjunction with health
care providers at the point of care, is unique and we are not aware of any
direct competitors in this market niche. Nevertheless, we consider each of the
following companies to compete with us in providing a similar, although
different, product:
o Healthcare portals including: Business to Business companies
such as Medscape/Medicalogic and Careinsite and Business to
Consumer companies such as WebMD and iVillage. (Although we
view many firms in this category as competitors they are also
capable of becoming strategic partners.)
39
<PAGE>
o Disease management companies and electronic medical record
companies. E.g. H2I, Wellmed, BreathAmerica.
o Disease Management Tool Companies e.g. HealthHero, LifeChart
o Established providers of existing, health care information
technology. These firms have competencies in hospital
information systems but also offer general electronic medical
records, practice management systems, clinical data
repositories, hospital info systems, accounting systems. E.g.
Cerner Corporation, Sheared Medical Systems, McKesson HBOC.
o Health-related on-line services or websites targeted at
consumers, such as accesshealth.com, ahn.com,
betterhealth.com, drkoop.com, drweil.com, healthcentral.com,
healthgate.com, intelihealth.com, mayohealth.org;
mediconsult.com, onhealth.com, thriveonline.com and webmd.com;
o On-line and Internet portal companies, such as America Online,
Inc.; Microsoft Network; Yahoo! Inc.; Excite, Inc.; Lycos
Corporation and Infoseek Corporation;
o Hospitals, HMOs, managed care organizations, insurance
companies and other healthcare providers and payors which
offer healthcare information through the Internet; and
o Other consumer affinity groups, such as the American
Association of Retired Persons, SeniorNet and ThirdAge Media,
Inc. which offer healthcare-related content to special
demographic groups.
One or more of these companies could choose to expand their markets so
as to compete more directly with our applications. Many of them are better
capitalized than we are, and therefore such an entry into our niche would add to
the competitive pressures of our business. Nonetheless, we believe we enjoy two
primary competitive advantages. First, we have long-standing strategic
relationships with our customers referred to elsewhere in the prospectus.
Second, we would also have a time advantage in software and database development
over any new direct competitor.
Intellectual Property
The Company's proprietary software for the structure, integration and
access to its databases is registered under United States copyright laws, and
the Company's graphic user interfaces (screens) are similarly protected. The
Company has registered the use of certain of its tradenames and service names in
40
<PAGE>
the United States. The Company also has the rights to several Internet domain
names, including I-Trax.com and I-Trax.net; Asthma-Watch.com and
Asthma-Watch.net; Member-Link.com; eImmune.com and eImmune.net; and
MedicalRecordsDept.com. In addition, the Company is currently exploring the
potential availability of patent protection for its business processes and
innovations.
Research and Development
We conduct research and development on three levels on a continuing
basis. First, the Company continually studies the business process in the
medical community. A pivotal part of the success of our products is
understanding the exact needs of our customers, and applying that knowledge to
the graphic user interface, thus allowing our systems to integrate into the
user's workflow without disruption. The Company was founded on this principle.
We are constantly studying the changing work environment and clinical landscape
of our customers and the industry as a whole. New disease modules, such as the
C-Trax cardiovascular module, are under development and modifications and
additional functionality will continue to be added to currently available
software applications.
Second, as a by-product of the business process study, the invention
and development of unique problem solving tools embedded in our software make
possible the process of entering and retrieving vast amounts of information in
short periods of time. Constant development, re-engineering and implementation
of these tools is a priority of the design and engineering staff and will
continue to be a focus of the Company, allowing us to maintain a leading role in
information systems development.
Third, further technology platform research, development and
engineering is conducted on a continual basis. New technologies, such as
Internet applications and the commercial software that support it, lack certain
capabilities and functionalities required to allow the medical and health care
industry to migrate to a total eHealth strategy. We believe we are in the
process of creating software components to solve these problems and are
constantly educating ourselves on available and emerging technologies that will
help support and enhance our products.
Employees
The Company believes its success depends to a significant extent on its
ability to attract, motivate and retain highly skilled vision-oriented
management and employees. To this end, the Company focuses on incentive programs
for its employees and endeavors to create a corporate culture which is
challenging, rewarding and fun. As of October 23, 2000, the Company had 54
full-time employees.
Properties
Our executive, administrative and sales offices are located at our
principal office in Philadelphia, Pennsylvania, where we lease approximately
4,659 square feet of office space pursuant to a lease expiring in June 2005 at a
current annual rate of $123,463.50. The property is in good condition.
41
<PAGE>
Our technology development offices are located in Reston, Virginia,
where we lease approximately 6,455 square feet of office space pursuant to a
lease expiring in October 2004 at a current annual rate of $161,375. The
property is in good condition.
Legal Proceedings
We are not a party to any material legal proceedings.
42
<PAGE>
MANAGEMENT
Executive Officers and Directors
The following table sets forth the executive officers and directors of
I-Trax.com and their ages:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Frank A. Martin 50 Chairman, Chief Executive Officer,
Treasurer and Director
Hans C. Kastensmith 40 President and Director
Gary Reiss 50 Chief Operating Officer
David C. McCormack 31 Vice President and Chief Technology
Officer
Michael O'Connell, M.D. 41 Chief Medical Officer
Alan D. Sakal 41 Senior Vice President, Sales
Craig Jones, M.D. 42 Director
David R. Bock 56 Director
William S. Wheeler 44 Director
Philip D. Green 51 Director
John R. Palumbo 49 Director
Michael M. E. Johns, M.D. 58 Director
</TABLE>
Frank A. Martin has been a director of I-Trax.com, Inc. since 1996, President
since January 1997 and the Chief Executive Officer and Treasurer since February
1, 2000. Mr. Martin founded, and has been a Managing Director of, the Nantucket
Group, LLC, a health care venture capital firm specializing in investing in
early stage health care service and technology companies since December 1998. He
is currently also on the Board of Directors of two other companies, ReCall
Services, Inc. and Beansprout Networks, Inc. Mr. Martin served as the Chief
Executive Officer and Director of EduNeering, Inc. from April 1999 to April
2000. In November of 1992 Mr. Martin founded Physician Dispensing Systems, Inc.
("PDS"), a health care information technology company that developed
pharmaceutical software for physicians' offices. Mr. Martin assisted in the sale
of PDS to Allscripts Inc. in December of 1996 and joined its Board of Directors
where he remained until 1998.
Hans C. Kastensmith has been the President and one of the directors of
I-Trax.com, Inc. since September 1999. Mr. Kastensmith founded and served as the
Chief Executive Officer of Member-Link since 1992. Mr. Kastensmith is
responsible for bringing the Medicive Medical Enterprise Data System from
concept to reality, playing an active role in the design both of the Medical
43
<PAGE>
Enterprise Database and its various graphic user interfaces and application
modules. He has personally built the Company's present customer base, and
overseen all aspects of the development to date.
Gary Reiss has been the Chief Operating Officer of I-Trax.com, Inc. since March
2000. In this capacity, he oversees the daily operations of the Company. Mr.
Reiss has over eight years of experience as the chief operating officer of
health and medical information management companies. From November 1999 to March
2000, Mr. Reiss served as the Chief Operating Officer of EduNeering, Inc., an
electronic knowledge management company, where his responsibilities include
positioning the company as a web provider and portal. From 1995 to 1999, Mr.
Reiss served as the Chief Operating Officer of Allscripts, Inc., a one billion
dollar health care information and implementation publicly traded company, where
he was responsible for all operations and implementations. From 1992 to 1995,
Mr. Reiss was an Executive Vice President and Chief Operating Officer of
Physician Dispensing Systems, a company he founded and which was later acquired
by Allscripts, Inc.
David C. McCormack has been the Chief Technology Officer of I-Trax.com, Inc.
since January 2000. Mr. McCormack was the Vice President, Engineering of
Member-Link since January 1999. In this capacity, he advises software system
developers and integrators on issues related to the analysis, development,
integration and testing of distributed enterprise information systems. Mr.
McCormack has significant software development experience with both Microsoft
Windows and Unix based operating systems. He has developed and deployed systems
with most major programming languages. From April 1997 until January 1999, Mr.
McCormack served as a partner in a Virginia based consulting firm, where he
oversaw all software developed by the firm: an inventory management system, an
EDI transaction processing system and an electronic document management system.
Additionally, from January 1995 until April 1997, Mr. McCormack consulted
Lockheed Martin Mission Systems during its development of the Global
Transportation Network (GTN) for the Air Force. His architectural guidance was
instrumental in successfully fielding multi-terabyte distributed data warehouse
that integrates millions of transportation related transactions daily. Mr.
McCormack has worked for several large defense contractors. His responsibilities
have included the design, development and integration of mission critical
systems for the Army, Navy and Air Force. Mr. McCormack has a current Top Secret
clearance.
Michael O'Connell, M.D., has been the Chief Medical Officer of I-Trax.com, Inc.
since November 1999. In this role, he oversees development of the I-Trax(TM)
database system. He is responsible for intellectual content and successful
compliance with current Center for Disease Control and other national
immunization guidelines. Dr. O'Connell has served as the Assistant Chief of the
Allergy-Immunology Department at Walter Reed Army Medical Center and as a
Co-Consultant to the Army Surgeon General for Allergy & Immunizations since May
1997. He has been intimately involved in the development and deployment of the
I-Trax.com immunization system at Walter Reed, providing the current
immunization data, tables, and guideline/recommendations for incorporation. Dr.
O'Connell has served as a United States Army Medical Officer since 1985 and
offers us excellent leadership skills.
44
<PAGE>
Alan D. Sakal has been our Senior Vice President, Sales, since April 2000. In
this capacity he oversees all of the Company's sales initiatives. Mr. Sakal has
over 17 year of experience in sales and related areas. From November 1999 to
March 2000, Mr. Sakal served as the Vice President, Sales, of EduNeering, Inc.,
an electronic knowledge management company, where his responsibilities included
overseeing all of EduNeering's sales initiatives. From 1997 to 1999, Mr. Sakal
served as a Senior Sales Strategy Consultant of MDM Marketing. From 1992 to
1997, Mr. Sakal held several sales positions, including Vice President, Point of
Care Sales, of Allscripts, Inc.
Craig A. Jones, M.D., has been a director of I-Trax.com, Inc. since January
2000. Dr. Jones is currently Director of the Division of Allergy & Immunology
and the Allergy & Immunology Residency Training Program at the Los Angeles
County and University of Southern California Medical Center and an Assistant
Professor of Pediatrics at the University of Southern California School of
Medicine. From November 1996 to present Dr. Jones serves as Director of the
Breathmobile Mobile Asthma Clinic Program, which he developed. The Company's
AsthmaWatch(R) system is currently installed and in use in this Breathmobile.
Based on the clinical impact, the program is serving as a model for community
based preventive healthcare and disease management. From January 1997 to
December 1997 Dr. Jones served as President of the Los Angeles Society of
Asthma, Allergy & Immunology. Because of this position, Dr. Jones is widely
respected for his clinical, educational, and managerial commitment to this
public health problem. Currently, he is designing and implementing for the Los
Angeles County Department of Health Services. This program integrates clinical
operations and patient flow in three Breathmobiles serving more than sixty
school sites, County Comprehensive Health Centers, and Pediatric Services at the
LAC+USC Medical Center. He is instrumental in the future development of the
AsthmaWatch(R) application.
David R. Bock has been a director of I-Trax.com, Inc. since February 1, 2000.
Mr. Bock has been a managing partner in Federal City Capital Advisors, LLC
("FCCA"), an investment banking firm located in Washington, D.C. Mr. Bock is
also a Managing Director of the Nantucket Group, LLC. From 1992 to 1995 Mr. Bock
was a Managing Director in the London corporate finance group of Lehman Brothers
and was responsible for developing Lehman Brothers' investment banking business
in a wide range of emerging markets, including India, Russia, Turkey and Central
Europe. Mr. Bock also served in a variety of management positions in the World
Bank, including as chief of staff for the Bank's worldwide lending operations.
From 1995 to 1997, he was President of Maitland-Ruick & Company, a predecessor
firm to FCCA. He was also a partner in a corporate finance boutique focused on
the Mid-Atlantic region of the United States from 1979 to 1982, and an Associate
with McKinsey & Company in London, Paris and Washington, D.C. from 1970 to 1974.
Mr. Bock has extensive experience in economic policy, capital markets and
corporate strategy across a wide range of sectors, including financial services,
health care, real estate, energy and natural resources.
William S. Wheeler has been a director of I-Trax.com, Inc. since September 1999.
Mr. Wheeler offers an excellent technology, financial and customer perspective
to the Board of Directors. Mr. Wheeler was a Vice President at Cable & Wireless
USA from June 1989 until February 1999. During this period, Mr. Wheeler held the
positions Vice President & Controller, Senior Vice President, Finance and acting
45
<PAGE>
President, Dial Internet Services. While leading the Dial Internet Services
division, Mr. Wheeler successfully transitioned 300,000 consumer and business
dial Internet customers to Cable & Wireless USA from MCI as a result of Cable &
Wireless' acquisition of MCI's Internet Business. In this capacity, Mr. Wheeler
had full responsibility for Marketing, Finance, a 500-seat Customer Service
Center, and all Operational Support Systems (billing, registration,
authentication, etc.). He developed a Marketing and Financial Plan to increase
the customer base and improve profitability in a very short time frame; and he
directed the launch of Cable & Wireless USA's first Consumer Internet Service
(www.cwix.com). The business was later sold to Prodigy Internet in the 3rd
quarter of 1999. In May 1999 Mr. Wheeler co-founded an Internet Communications
business that is being launched in April 2000. Mr. Wheeler's experience is
critical to the development of the I-Trax.com Internet disease specific
applications.
Philip D. Green has been our director since March 2000. Since July 2000, Mr.
Green has been a partner of Akin, Gump, Strauss, Hauer & Feld, L.L.P., a leading
international law. From its formation in 1989 until its merger with Akin Gump in
July 2000, Mr. Green was the founding principal of the Washington, D.C. based
law firm of Green, Stewart, Farber & Anderson, P.C. From 1978 through 1989, Mr.
Green was a partner in the Washington, D.C. based law firm of Schwalb,
Donnenfeld, Bray and Silbert, P.C. Mr. Green practices health care law, and
corporate planning and transactions. Mr. Green represents a significant number
of major teaching hospitals and integrated health care delivery systems. Mr.
Green also represents a number of public and private for-profit health care
companies. Mr. Green is currently a member of the Board of Director of
Allscripts, Inc. and Imagyn Medical Technologies.
John R. Palumbo has been our director since March 2000. Since 1996, Mr. Palumbo
has served as a Vice President of Shared Medical Systems Corporation, a
worldwide leader of health information solutions serving over 5,000 providers in
the United States, Europe and the Pacific Rim. At Shared Medical, Mr. Palumbo
oversaw the start-up of the National Health Services division, which markets to
and services the for-profit and not-for profit national health systems, such as
for example Tenant and UHS, and now has responsibility for National Health and
Western Operations. From 1995 to 1996, Mr. Palumbo served as an Executive Vice
President and Chief Operating Officer of Allscripts, Inc. From 1990 to 1995, Mr.
Palumbo was the Executive Vice President of Healthworks Alliance, Inc., a
company he founded specializing in point of care technology and reengineering
services allowing physicians to process patients through the healthcare delivery
system.
Michael M. E. Johns, M.D., has been our director since October 2000. Since 1996,
Dr. Johns has served as an Executive Vice President for Health Affairs of Emory
University, overseeing Emory University's widespread academic and clinical
programs in health sciences. In this position, Dr. Johns leads strategic
planning initiatives for both patient care and research. In addition, since
1996, Dr. Johns has served as the Chairman of the Board and Chief Executive
Officer of Emory Healthcare, the most comprehensive healthcare system in
metropolitan Atlanta. Emory Healthcare includes two physician practices, three
wholly owned hospitals and a jointly owned fourth hospital, as well as numerous
affiliated hospitals in Atlanta and throughout Georgia. Dr. Johns also is
46
<PAGE>
Chairman of the Board of EHCA, LLC, a company overseen jointly by Emory
Healthcare and HCA Corporation. Through EHCA, Emory is responsible for clinical
performance improvement and quality assurance in six local hospitals and five
surgery centers owned by HCA Corporation. From 1990 to 1996, Dr. Johns served as
the Dean of the Johns Hopkins School of Medicine and Vice President for Medical
Affairs at Johns Hopkins University. Under Dr. Johns' leadership, the medical
school moved into first place among all medical schools in sponsored research,
completely revamped its medical education curriculum and developed a technology
transfer program considered a model of its kind.
All directors hold office until their respective successors are
elected, or until death, resignation or removal. Officers serve at the
discretion of the Board of Directors. There are no family relationships between
any directors or executive officers of the Company.
47
<PAGE>
EXECUTIVE COMPENSATION
I-Trax.com
Frank A. Martin, Chairman, Chief Executive Officer and Treasurer of
I-Trax.com received during fiscal 1999, in lieu of compensation, 250,000 shares
of Common Stock of I-Trax.com, valued at $.10 per share, representing aggregate
compensation of $25,000. Mr. Martin did not receive any compensation during
fiscal 1998.
Member-Link (Our predecessor)
Hans C. Kastensmith, former President of Member-Link and current
President of I-Trax.com received no compensation from Member-Link during fiscal
1998. Mr. Kastensmith received $77,250 in compensation from Member-Link in
fiscal 1999. Mr. Kastensmith also received during fiscal 1999, in lieu of
compensation, 1,000,000 shares of Common Stock of I-Trax.com, valued at $.125
per share, representing aggregate compensation of $125,000.
David C. McCormack, former Chief Technology Officer of Member-Link and
current Chief Technology Officer of I-Trax.com received $100,984 in compensation
from Member-Link in fiscal 1999. Mr. McCormack also received during fiscal 1999,
in lieu of compensation, 330,000 shares of Common Stock of I-Trax.com, valued at
$.125 per share, representing aggregate compensation of $41,250.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Restricted Number LTIP All
Name and Salary Bonus Other Stock of Payouts Other
Principal Position Year ($) ($) ($) Awards Options ($) ($)
------------------ ---- --- --- --- ------ ------- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Frank A. Martin
CEO 1999 -0- -0- $25,000(1) -0- -0- -0- -0-
Hans C. Kastensmith
President 1999 77,250 -0- $125,000(2) -0- -0- -0- -0-
David C. McCormack 1999 100,984 -0- $41,250(3) -0- -0- -0- -0-
Chief Technology
Officer
</TABLE>
--------------
(1) 250,000 shares of I-Trax.com common stock valued at $0.10 per share.
(2) 1,000,000 shares of I-Trax.com common stock valued at $0.125 per share.
(3) 330,000 shares of I-Trax.com common stock valued at $0.125 per share.
48
<PAGE>
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise Price Expiration
Name Granted Fiscal Year (Dollars per Share) Date
---- ------- ----------- ------------------- ----
<S> <C> <C> <C> <C>
Frank A. Martin -0- -0- -0- N/A
Hans C. Kastensmith -0- -0- -0- N/A
David C. McCormack -0- -0- -0- N/A
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
Options/SARs at FY-End ($)
At FY-End (#)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable Unexercisable
---- ----------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Frank A. Martin -0- -0- -0- -0-
Hans C. Kastensmith -0- -0- -0- -0-
David C. McCormack -0- -0- -0- -0-
</TABLE>
Employment Agreements
We have entered into employment agreements with each of Hans C.
Kastensmith, David C. McCormack and Dr. Michael O'Connell.
Hans C. Kastensmith
On June 1, 1999, Member-Link, our predecessor, entered into an
employment agreement with Hans C. Kastensmith, our President and one of our
directors, for a period of three years ending on May 31, 2002. We are bound by
the agreement as a successor-in-interest to Member-Link. The agreement provides
for an annual base salary of $175,000 and cash bonuses from time to time as our
Board of Directors may deem appropriate. Effective March 23, 2000, Mr.
Kastensmith waived his right to receive any compensation, bonuses or any other
benefits accumulated but unpaid under this agreement during fiscal 1999.
The agreement prohibits Mr. Kastensmith from using or disclosing any of
our confidential information at any time in the future and he has agreed that
any inventions he develops during his employment relating to our business will
become our sole and absolute property. He is also prohibited from competing with
us for a period of 12 months following the termination of the agreement, unless
the resulting termination is due to our breaching the agreement.
49
<PAGE>
Mr. Kastensmith may terminate the agreement at any time upon at least
60 days written notice.
David C. McCormack
On September 28, 2000 and effective as of January 1, 2000, we entered
into an employment agreement with David C. McCormack, our Chief Technology
Officer, for an initial term of three years ending on December 31, 2002.
Thereafter, the employment agreement renews automatically for successive periods
of one year, unless either party elects not to renew. The agreement provides for
an annual base salary during the initial term of $125,000 and bonuses and option
grants that may be approved by our Board of Directors or the compensation
committee of the Board of Directors from time to time.
In the event we terminate Mr. McCormack's employment without cause at
any time during his employment, we will pay Mr. McCormack severance, equal to
one year's salary, payable over one year. Further, in the event of such a
termination, Mr. McCormack will be released from the non-competition
restrictions described below.
With the exception of the circumstance described above, Mr. McCormack
agreed not to compete against us for a period of one year following the
expiration of the original term or any renewal term, even if the actual
employment is terminated prior to such expiration. Mr. McCormack also agreed not
to use or disclose any of our confidential information for at least five years
after the expiration of the original term or any additional term, even if the
actual employment is terminated prior to such expiration. He also agreed that
any inventions he develops during his employment relating to our business will
become our sole and absolute property.
Mr. McCormack can terminate the agreement for health reasons, upon a
material breach of the agreement by us and upon 90 days notice.
Dr. Michael O'Connell
On November 29, 1999, we entered into an employment agreement with Dr.
Michael O'Connell, our Chief Medical Officer, for a period of three years ending
on November 29, 2002. The agreement provides for an annual base salary of
$85,000 and cash bonuses from time to time as our Board of Directors may deem
appropriate. We also issued to Dr. O'Connell 100,000 shares of our Common Stock
and granted to him options to acquire an additional 100,000 shares of our Common
Stock under our 2000 Equity Competition Plan. The options vest in increments to
be determined but in no event later than November 29, 2002.
Dr. O'Connell is also entitled to a sales bonus for sales of our
enterprise application systems for which he is determined to be primarily
responsible. The bonus is equivalent to a commission of six percent (6%) of the
revenue realized from such sales net of sales costs and expenses, gross receipts
taxes, and capital cost recovery.
50
<PAGE>
The agreement prohibits Dr. O'Connell from using or disclosing any of
our confidential information at any time in the future and he has agreed that
any inventions he develops during his employment relating to our business will
become our sole and absolute property. He is also prohibited from competing with
us for a period of 24 months following the termination of the agreement, unless
the resulting termination is due to our breaching the agreement.
Dr. O'Connell may terminate the agreement at any time upon at least 60
days written notice.
2000 Equity Compensation Plan
On February 1, 2000 and March 14, 2000, the Company's Board of
Directors adopted and amended, respectively, and as of March 14, 2000 the
Company's then stockholders ratified and approved, the Company's 2000 Equity
Compensation Plan. The purpose of the Plan is to provide (i) designated
employees of I-Trax.com and its subsidiaries, (ii) certain consultants and
advisors who perform services for the Company or its subsidiaries and (iii)
non-employee members of the Board of Directors of the Company with the
opportunity to receive grants of incentive stock options, nonqualified stock
options and restricted stock. The Company believes that the Plan will encourage
the participants to contribute materially to the growth of the Company, thereby
benefitting the Company's stockholders, and will align the economic interests of
the individuals to whom grants are made with those of the stockholders.
The Plan permits grants to be made for a total of 3,000,000 shares of
Common Stock. The maximum aggregate number of shares of Common Stock that shall
be subject to grants made under the Plan to any individual during any calendar
year is 350,000 shares. Shares issuable pursuant to grants that terminate or
expire unexercised will be available for future grants under the Plan.
All employees of the Company and its subsidiaries, including employees
who are officers or members of the Board of Directors, and members of the Board
of Directors who are not employees shall be eligible to participate in the Plan.
Consultants and advisors who perform services for the Company or any of its
subsidiaries shall be eligible to participate in the Plan if such key advisors
render bona fide services to the Company or its subsidiaries, the services are
not in connection with the offer and sale of securities in a capital-raising
transaction, and such key advisors do not directly or indirectly promote or
maintain a market for the Company's securities.
The Plan is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee has the sole authority to (i) determine
the individuals to whom grants shall be made under the Plan, (ii) determine the
type, size and terms of the grants to be made to each such individual, (iii)
determine the time when the grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for
exercisability and the acceleration of exercisability, (iv) amend the terms of
any previously issued grant, and (v) deal with any other matters arising under
the Plan. The Compensation Committee shall from time to time review the
implementation and results of the Plan to determine the extent to which the
51
<PAGE>
Plan's purpose is being accomplished. In addition, the Compensation Committee
shall periodically meet with senior management of the Company to review
management's suggestions regarding grants under the Plan, including the
individuals who are proposed to receive grants and the amount and time of such
grants; provided, that all such grants shall be determined solely by the
Committee in its discretion.
Recipients of stock options under the Plan will have the right to
purchase shares of Common Stock at an exercise price, during a period of time
and on such other terms and conditions as are determined by the Compensation
Committee. For incentive stock options, the recipient must be an employee, the
exercise price must be at least 100% (110% if issued to persons owning 10% or
more of the Common Stock of the Company) of the fair market value, as defined in
the Plan, of the Common Stock on the date of grant and the term cannot exceed
ten years (five years if issued to persons owning 10% or more of the Common
Stock of the Company) from the date of grant. If permitted by the Compensation
Committee and subject to certain conditions, an option exercise price may be
paid by delivery of shares of Common Stock that have been outstanding, a
promissory note, a broker's undertaking to deliver promptly the necessary funds
or by a combination of these methods. If permitted by the Compensation
Committee, options may be settled by the Company's paying to the recipient, in
cash or in shares of Common Stock valued at the then fair market value of the
Common Stock, an amount equal to such fair market value minus the exercise price
of the option shares.
Generally, upon termination of a recipient's employment or other
relationship with the Company, stock options remain exercisable for a period of
three months (one year if termination is due to death or disability) to the
extent the stock options were exercisable at the date of expiration, except as
otherwise agreed between the employee and the Company.
The Board of Directors of the Company has adopted a policy of granting
options to acquire I-Trax.com common stock to non-stockholder members of the
Company's Board of Directors. As of October 10, 2000, the Board has awarded
options to acquire 100,000 shares of I-Trax.com common stock to each of Philip.
D. Green, John R. Palumbo and Dr. Michael M.E. Johns at exercise prices of
$1.00, $1.00 and $2.00, respectively, which amounts represent the fair market
value of the stock at the time of grant. The options vest over a period of two
years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1999, we issued and sold 1,000,000 shares of our Common Stock
to each of Frank A. Martin, Melvin B. Siegel and Joseph E. Shamy and Greta
Shamy, as tenants in common, at a per share price of $.10, for an aggregate cash
consideration of $300,000 to raise working capital. Mr. Martin is our Chairman,
Chief Executive Officer and director. Each of Melvin B. Siegel and Joseph E.
Shamy and Greta Shamy, as tenants in common, are beneficial owners of more than
5% of our outstanding common stock.
In September 1999, we issued to certain executive officers of
Member-Link an aggregate of 2,000,000 shares, of which 1,000,000 shares were
52
<PAGE>
issued to Hans C. Kastensmith, the Company's President and director, as
consideration for services to be rendered by Mr. Kastensmith in connection with
a certain license agreement, a management services agreement and a technical
services agreement between Member-Link and the Company. The aggregate
consideration deemed received by Mr. Kastensmith in this transaction was
$125,000.
Effective as of December 30, 1999, Member-Link merged with and into
I-Trax.com pursuant to a Merger Agreement dated as of December 14, 1999. In the
merger, each of the 1,809,686 outstanding shares of Common Stock of Member-Link
was converted into a right to receive 4.4207 shares of I-Trax.com common stock.
8,000,082 shares of I-Trax.com Common Stock were issued in the merger. At the
time of the merger, Nantucket Healthcare Ventures I, L.P., an affiliate of Mr.
Martin, the Chairman and a Director of the Company, and an affiliate of David R.
Bock, a director of the Company, held in the aggregate 486,168 shares of
Member-Link Common Stock, which shares were converted in the merger into
2,149,203 shares of our Common Stock. In addition, at the time of the merger,
Hanks C. Kastensmith, our President, held in the aggregate 796,148 shares of
Member-Link Common Stock, which shares were converted in the merger into
3,519,534 shares of our Common Stock.
In February 2000, we sold 1,800,000 shares of our Common Stock for an
aggregate consideration of $1,800,000, in a series of closings pursuant to a
private placement. Mr. Martin together with his wife and children purchased
125,000 of such shares for an aggregate purchase price of $125,000.
Dr. Craig A. Jones, one of our directors, is the Director of the
Division of Allergy & Immunology at the Los Angeles County and University of
Southern California Medical Center, which is operated by the Los Angeles County
Department of Health Services (DHS). The Los Angeles County DHS is purchasing an
information system from us at an approximate cost of $100,000 to support
implementation of a clinical disease management program. Dr. Jones is the
director of that clinical program. In May 2000, the Company also entered into a
verbal consulting agreement with Dr. Craig Jones. Pursuant to the agreement, in
addition to attending Board of Directors meeting, Dr. Jones assists us with our
product development efforts, attends trade shows on our behalf and originates
business leads. We compensated Dr. Jones at a rate of $3,000 per month.
In May 2000, we entered into a Consulting Agreement with Health
Industry Investments, LLC, an affiliate of Philip D. Green, a director of the
Company. Pursuant to the Consulting Agreement, Health Industry agreed to perform
certain service for the Company, which include arranging introductions with
potential customers. In turn, Health Industry received the right to purchase
20,000 shares of our Common Stock at a purchase price of $2.00 per share. This
right was exercised and the shares were purchased in September 2000 by the
beneficial owners of Health Industry pursuant to a private placement conducted
by the Company. In addition, Health Industry received options to acquire up to
80,000 shares of our Common Stock at an exercise price of $0.625 as compensation
for performing services under the Consulting Agreement. The options vest in
equal monthly installments over the one-year term of the Consulting Agreement.
53
<PAGE>
LEGAL OPINION
The validity of the shares of common stock issued in the reorganization
will be passed upon for Holding Company by Ballard Spahr Andrews Ingersoll, LLP,
Philadelphia, Pennsylvania.
EXPERTS
The financial statements of I-Trax.com, Inc. as of December 31, 1999
and 1998, and for each of the years in the two-year period ended December 31,
1999, included in this document and in the registration statement have been
audited by Massella, Tomaro & Co., LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
The financial statements of iSummit Partners, LLC as of August 31, 2000
and from the period from inception (January 18, 2000) through August 31, 2000,
included in this document have been audited by Bernath & Rosenberg, P.C.,
independent public accountants, and are included herein in reliance upon the
authority of said firm as experts.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission. Copies of such reports, proxy statements and
other information may be inspected and copied at the public reference facilities
maintained by the Securities and Exchange Commission:
<TABLE>
<CAPTION>
<S> <C> <C>
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 500 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
</TABLE>
Copies of these materials can also be obtained by mail at prescribed
rates from the Public Reference Section of the Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 or by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission maintains a website that contains reports, proxy statements
and other information regarding our company. The address of this website is
http://www.sec.gov.
Holding Company has filed a registration statement under the Securities
Act with the Securities and Exchange Commission with respect to the shares of
common stock of Holding Company to be issued to I-Trax.com stockholders in the
reorganization. This document constitutes the prospectus of Holding Company
filed as part of the registration statement. This document does not contain all
54
<PAGE>
of the information set forth in the registration statement because some parts of
the registration statement are omitted as provided by the rules and regulations
of the Securities and Exchange Commission. You may inspect and copy the
registration statement at any of the addresses listed above.
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO PURCHASE, THE COMMON STOCK OF HOLDING COMPANY OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS
UNLAWFUL TO MAKE THE OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN
THAT JURISDICTION. NEITHER THE DELIVERY OF THIS DOCUMENT NOR ANY DISTRIBUTION OF
SECURITIES MEANS, UNDER ANY CIRCUMSTANCES, THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH IN THIS DOCUMENT OR IN THE AFFAIRS OF HOLDING COMPANY
SINCE THE DATE OF THIS DOCUMENT.
55
<PAGE>
FINANCIAL INFORMATION
The following financial information represents historical financial
information of I-Trax.com, Inc. If the reorganization is completed, this
financial information will represent the historical financial information of
Holding Company on a consolidated basis.
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
INDEX TO FINANCIAL STATEMENTS
Page
Number
------
Independent auditors' report F-1
Balance sheet at December 31, 1999 F-2
Statements of operations for the years
ended December 31, 1999 and 1998 F-3
Statement of stockholders' equity (deficiency) for the
years ended December 31, 1999 and 1998 F-4
Statements of cash flows for the
years ended December 31, 1999 and 1998 F-5
Notes to financial statements F-6 to F-15
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
I-Trax.com, Inc. (formerly U.S. Medical Alliance, Inc.)
We have audited the accompanying balance sheet of I-Trax.com, Inc. (formerly
U.S. Medical Alliance, Inc.) (the "Company") as of December 31, 1999, and
the related statements of operations, stockholders' equity (deficiency) and
cash flows for the years ended December 31, 1999 and 1998. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of
December 31, 1999, and the results of its operations and cash flows for the
years ended December 31, 1999 and 1998 in conformity with generally accepted
accounting principles.
Massella, Tomaro & Co., LLP
Jericho, New York
March 13, 2000, except for
note 10(c) as to which
the date is April 4, 2000
F - 1
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
Current assets:
<S> <C>
Cash $ 195,728
Accounts receivable 412,038
Prepaid expenses 24,770
-----------
Total current assets 632,536
-----------
Property and equipment, net 36,120
Security deposits 40,162
-----------
Total Assets $ 708,818
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 192,578
Convertible note payable 37,500
Due to related parties 66,048
-----------
Total current liabilities 296,126
-----------
Commitments & Contingencies (Note 8) --
Stockholders' Equity:
Preferred stock - $.001 par value, 2,000,000 shares
authorized, -0- issued and outstanding --
Common Stock - $.001 par value, 50,000,000 shares
authorized, 16,028,084 issued and outstanding 16,028
Additional paid - in capital 1,043,299
Accumulated deficit (646,635)
-----------
Total stockholders' equity 412,692
-----------
Total Liabilities and Stockholders' Equity $ 708,818
===========
</TABLE>
See accompanying notes to financial statements
F - 2
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---------- --------
<S> <C> <C>
Revenue $ 987,533 $347,800
---------- --------
Operating expenses:
Cost of revenue 374,132 149,115
Selling, general and administrative 997,047 125,161
Research and development 186,908 -
----------- ---------
Total operating expenses 1,558,087 274,276
----------- ---------
(Loss) income before other income
(expenses) and provision for income tax (570,554) 73,524
------------ ---------
Other income (expenses):
Miscellaneous income 9,171 -
Interest expense (258) (500)
------------ ----------
Total other income (expenses) 8,913 (500)
----------- ----------
(Loss) income before provision for income taxes (561,641) 73,024
------------ ---------
Provision for income taxes - -
----------- ---------
Net (loss) income $ (561,641) $ 73,024
=========== =========
Basic:
Net (loss) income $ (.05) $ .01
=========== =========
Weighted average number of shares
outstanding 11,336,168 8,852,751
=========== =========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Total
Common Stock Additional Stockholders'
------------ Paid-in Accumulated Equity
Shares Amount Capital Deficit (Deficiency)
---------- ------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1997 852,669 $ 853 $ 434,156 $(910,509) $(475,500)
Net income for the year ended
December 31, 1998 -- -- -- 73,024 73,024
---------- ------- ---------- --------- ---------
Balances at December 31, 1998 852,669 853 434,156 (837,485) (402,476)
Issuance of common stock in
connection with conversion of
subordinated convertible notes 270,333 270 405,230 -- 405,500
Issuance of common stock in
connection with services
rendered to the Company 685,000 685 67,815 -- 68,500
Sale of common stock 4,220,000 4,220 530,780 -- 535,000
Issuance of common stock to the
former stockholders of
Memberlink-System
for services rendered to
the Company 2,000,000 2,000 248,000 -- 250,000
Issuance of common stock in
connection with the merger of
Memberlink-Systems, Inc.,
net of costs 8,000,082 8,000 300,327 (190,518) 117,809
Recapitalization in connection
with reverse acquisition -- -- (943,009) 943,009 --
Net loss for the year ended
December 31, 1999 -- -- -- (561,641) (561,641)
---------- ------- ---------- --------- ---------
Balances at December 31, 1999 16,028,084 $16,028 $1,043,299 $(646,635) $ 412,692
=========== ======= ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
I-TRAX.COM, INC
(FORMERLY U.S. MEDICAL ALLIANCE INC.)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Operating activities:
Net (loss) income $(561,641) $ 73,024
Adjustments to reconcile net loss to net
Cash used for operating activities:
Depreciation and amortization 7,647 --
Issuance of common stock for consideration of services 318,500 --
Decrease (increase) in:
Accounts receivable (165,538) (156,500)
Prepaid expenses (18,770) 1,450
(Decrease) increase in:
Accounts payable and accrued expenses 62,654 2,697
--------- ---------
Net cash used for operating activities (357,148) (79,329)
--------- ---------
Investing activities:
Purchase of property and equipment (43,817) (5,950)
Security deposits (40,162) --
--------- ---------
Net cash used for investing activities (83,979) (5,950)
--------- ---------
Financing activities:
Proceeds from notes payable 150,000 100,000
Costs in connection with merger (92,952) --
(Repayments to) advances from related parties (8,076) 23,760
Proceeds from sale of common stock 535,000 --
--------- ---------
Net cash provided by financing activities 583,972 123,760
--------- ---------
Net increase in cash 142,845 38,481
Cash and cash equivalents at beginning of year 52,883 14,402
--------- ---------
Cash and cash equivalents at end of year $ 195,728 $ 52,883
========= =========
Supplemental disclosure of non-cash flow information:
Cash paid during the year for:
Interest $ 258 $ 500
========= =========
Income taxes $ -- $ --
========= =========
Schedule of non-cash financing activities:
Issuance of 270,333 shares of common
stock in connection with conversion of
debentures $ 405,500 $ --
========= =========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 1-- ORGANIZATION
HISTORY
I-Trax.com, Inc (the "Company") was incorporated in the state of
Delaware on May 23, 1969 under the name Marmac Corporation. During
December 1979, the Company changed its name to Ibex Industries
International, Inc. During April 1996, in connection with the
acquisition of assets and the assumption of liabilities of various
medical practices (which reverted back to the original owners during
1997 as a result of cash flow deficiencies), the Company changed its
name to U.S. Medical Alliance, Inc. The Company, on August 27, 1999
changed its name to I-Trax.com, Inc. prior to the merger discussed
below. The Company had no operations for the year ended December 31,
1998 and only general and corporate expenses for the year ended
December 31, 1999.
MERGER
Pursuant to a merger agreement dated as of December 14, 1999 (with an
effective date of December 30, 1999), the Company issued 8,000,082
shares of its common stock in exchange for all the issued and
outstanding common stock of Member-Link Systems, Inc. ("Memberlink").
Memberlink which is also a Delaware corporation, is a health
information technology company which has developed certain software
technology which it sells and licenses to various organizations,
including but not limited to governmental agencies.
The merger of the Company and Memberlink has been treated as a
recapitalization of Memberlink with Memberlink as the acquirer (reverse
acquisition). The accompanying financial statements reflect this
transaction as if it had occurred on January 1, 1998. Such transaction
is considered a capital transaction whereby Memberlink contributed its
stock for the net assets of the Company. Upon consummation of the
merger on December 30, 1999, the shareholders of Memberlink received
8,000,082 shares of the Company's common stock, which represented 49.9%
of the outstanding common stock immediately after the issuance.
Simultaneously with the merger, Memberlink's former President was
elected as the Company's President. Upon consummation of the merger
transaction the Company was recapitalized and Memberlink ceased to
exist with the Company being the surviving entity.
MEMBERLINK
Memberlink was originally incorporated in the state of New York on June
8, 1993. On June 29, 1999, Memberlink as a New York corporation was
merged into Memberlink - Delaware pursuant to an agreement and plan of
merger dated June 29, 1999. In connection with such merger from
Memberlink - New York to Memberlink - Delaware, the previous
shareholders of Memberlink New York exchanged their stock on a one for
one basis for a total of 1,323,518 shares of MemberLink - Delaware.
F - 6
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 2-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Cash and cash equivalents
The Company considers highly liquid investments with maturities of
three months or less at the time of purchase to be cash equivalents.
b) Income Taxes
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 109 "Accounting for
Income Taxes" which requires the use of the "liability method" of
accounting for income taxes. Accordingly, deferred tax liabilities
and assets are determined based on the difference between the
financial statement and tax bases of assets and liabilities, using
enacted tax rates in effect for the year in which the differences
are expected to reverse. Current income taxes are based on the
respective periods' taxable income for federal and state income tax
reporting purposes.
c) Earnings per share
Earnings per share are computed pursuant to Financial Accounting
Standards Board, "SFAS No. 128," "Earnings Per Share." SFAS No. 128
replaced the previously required reporting of primary and fully
diluted earnings per share with basic and diluted earnings per
share, respectively. Unlike the previously reported primary earnings
per share, basic earnings per share exclude the dilutive effects of
stock options. Diluted earnings per share are similar to the
previously reported fully diluted earnings per share. Earnings per
share amounts for all periods presented have been calculated in
accordance with the requirements of SFAS No. 128.
d) Use of estimates
In preparing the financial statements in conformity with generally
accepted accounting principles, management is required to make
estimates and assumptions which affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
e) Fair value disclosure at December 31, 1999
The carrying value of cash, accounts receivable, accounts payable
and accrued expenses are a reasonable estimate of their fair value
because of the short-term maturity.
f) Effect of New Accounting Standards
The Company does not believe that any recently issued accounting
standards, not yet adopted will have a material impact on its
financial position and results of operations when adopted.
F - 7
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 2-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
g) Property and Equipment
Property and equipment are recorded at cost less accumulated
depreciation which is provided on the straight line basis over the
estimated useful lives of the assets which range between five and
seven years. Expenditures for maintenance and repairs are expensed
as incurred.
h) Accounts Receivable
The Company utilizes the allowance method for recognizing the
collectibility of its accounts receivable. The allowance method
recognizes bad debt expense based on a review of the individual
accounts outstanding based on the surrounding facts. As of December
31, 1999 no allowance was deemed necessary by management.
i) Research and Development Costs
Research and development costs are expensed as incurred. Such costs
amounted to $186,908 and $- 0 - for the years ended December 31,
1999 and 1998, respectively.
j) Revenue Recognition
In October 1997, the American Institute of Certified Public
Accountant's Accounting Standards Executive Committee ("ACSEC")
issued Statement of Position ("SOP") 97-2, "Software Revenue
Recognition." SOP 97-2 was effective January 1, 1998 and generally
requires revenue earned on software arrangements involving multiple
elements such as software products, upgrades, enhancements,
post-contract customer support, installation and training to be
allocated to each element based on the relative fair value of the
elements. There was no material change to the Company's accounting
policy for revenue as a result of the adoption of SOP 97-2.
In December 1998, the ACSEC released SOP 98-9, "Modification of SOP
97-2, "Software Revenue Recognition with Respect to Certain
Transactions." SOP 98-9 amends SOP 97-2 to require that an entity
recognize revenue for multiple element arrangements by means of the
"residual method" when (1) there is vendor-specific objective
evidence ("VSOE") of the fair values of all the undelivered elements
that are not accounted for by means of long-term contract
accounting, (2) VSOE of fair value does not exist for one or more of
the delivered elements, and (3) all revenue recognition criteria of
SOP 97-2 (other than the requirement for VSOE of the fair value of
each delivered element) are satisfied.
F - 8
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 2-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
k) Comprehensive income
The Company adopted SFAS No. 130, "Accounting for Comprehensive
Income," during the fiscal year ended 1998. This statement
establishes standards for reporting and disclosing of comprehensive
income and its components (including revenues, expenses, gains and
losses) in a full set of general-purpose financial statements. The
Company had no comprehensive income in any of the years ended
December 31, 1999 and 1998.
NOTE 3-- PROPERTY AND EQUIPMENT
Property and equipment are as follows at December 31, 1999:
Furniture & fixtures $ 2,700
Computer equipment $ 41,067
-------------
43,767
Less: accumulated depreciation 7,647
-------------
$ 36,120
=============
Depreciation expense for the years ended December 31, 1999 and 1998
amounted to $7,647, and $- 0 - respectively.
NOTE 4-- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following at
December 31, 1999:
Consulting $ 104,188
Professional fees 17,522
Rent 23,123
Contingency loss 22,500
Other 25,245
--------
Total $192,578
========
NOTE 5-- CONVERTIBLE NOTE PAYABLE
During 1996, the Company issued subordinated convertible promissory
notes to investors accruing interest at an annual rate of 10% which
were convertible into shares of common stock at a conversion rate of
one share for each $5 of principal and accrued and unpaid interest.
F - 9
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 5-- CONVERTIBLE NOTE PAYABLE (cont'd)
During October 1999, all such noteholders, except one, agreed to
convert their principal balance on the notes which amounted to
$405,500 at $1.50 per share. Accordingly, the Company issued 270,333
shares of its common stock to certain noteholders. All interest due
pursuant to the notes was waived by all noteholders. The convertible
note balance at December 31, 1999 amounting to $37,500 represents
one noteholder who did not convert the note to common stock, and
accordingly, was repaid the principal balance in full subsequent to
December 31, 1999.
NOTE 6-- DUE TO RELATED PARTIES
Due to related parties as of December 31, 1999 amounting to $66,048
is comprised of the following:
i) Advances made by a former officer of Memberlink
amounting to $35,683. The former officer and current
shareholder of the Company has agreed to a repayment
of the advances at a rate of $3,000 per month until
fully paid, without interest, commencing April 2000.
ii) Advances made by a current officer of the Company
(previously an officer of Memberlink) amounting to
$18,679. The amount is due on demand and is
non-interest bearing.
iii) Advances made by a relative of the officer discussed
in (ii) above amounting to $11,686. The amount is
also due on demand and is non-interest bearing.
NOTE 7 -- PROVISION FOR INCOME TAXES
The Company accounts for income taxes in accordance with SFAS 109.
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently
due plus deferred taxes related to differences between the financial
statement and tax bases of assets and liabilities for financial
statement and income tax reporting purposes. Deferred tax assets and
liabilities represent the future tax return consequences of these
temporary differences, which will either be taxable or deductible in
the year when the assets or liabilities are recovered or settled.
Accordingly, measurement of the deferred tax assets and liabilities
attributable to the book-tax basis differentials are computed at a
rate of 34% federal and 6% state pursuant to SFAS No. 109.
The only material tax effect of significant items comprising the
Company's current deferred tax assets as of December 31, 1999 is its
net operating loss carryforwards which amounted to approximately
$997,000. The deferred tax asset associated with the Company's NOL's
amounted to approximately $358,000 as of December 31, 1999.
F - 10
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 7 -- PROVISION FOR INCOME TAXES (cont'd)
In accordance with SFAS No. 109, the Company has recorded a 100%
valuation allowance for such deferred tax asset since management
could not determine that it was "more likely than not" that the
deferred tax asset would be realized in the future. The Company's
NOL's will expire between 2011 and 2014 if not utilized.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
a) Lack of Insurance
The Company through March 14, 2000, did not maintain any liability
insurance or any other form of general insurance. Although the
Company is not aware of any claims resulting from product
malfunctions or any other type, there is no assurance that none
exists.
b) Significant customers and vendors.
For the year ended December 31, 1999, the Company had two unrelated
customers, which accounted for approximately 63%, and 13%,
respectively, of total revenues. For the year ended December 31,
1998 the Company had one unrelated customer which accounted for
approximately 71% of total revenue. As of December 31, 1999, the
Company had three unrelated customers, which accounted for
approximately 12%, 30% and 40% respectively, of accounts
receivables.
c) Office Lease
On October 22, 1999, the Company entered into a non-cancelable lease
agreement for its administrative offices pursuant to a five year
lease expiring October 31, 2004 with annual rent at approximately
$162,000 before annual escalations.
The Company's approximate future minimum rental payments under
non-cancelable operating leases in effect on December 31, 1999 are
as follows:
2000 $ 161,376
2001 166,212
2002 171,192
2003 176,352
2004 151,370
---------
$ 826,502
=========
Prior to October 1999, the Company rented office space on a month to
month basis at a rate of approximately $2,500 per month for a
portion of the year ended December 31, 1999 and $1,700 per month for
the year ended December 31, 1998.
Rent expense for the years ended December 31, 1999 and 1998 amounted
to approximately $52,625 and $21,020, respectively.
F - 11
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 8 - COMMITMENTS AND CONTINGENCIES (cont'd)
d) Employment Agreements
i) On June 1, 1999, Memberlink entered into four employment
agreements with certain officers' of the Company. The employment
agreements terminate on May 31, 2000 with annual salaries ranging
from $125,000 to $175,000. Subsequent to year end, the Company began
renegotiating the remaining three employment agreements (since one
was terminated) due to the merger effectuated on December 30, 1999.
(See note 10(c) for additional information)
ii) The Company entered into an employment agreement on November 29,
1999, with an individual to act as the Company's Chief Medical
Officer at an annual salary of $85,000. In addition, the Company
agreed to grant options to purchase 100,000 shares of common stock
pursuant to the Company's newly established 2000 Equity Compensation
Plan (see note 10(b)). Such options will vest in increments to be
determined, but in no event no later than November 29, 2002. Such
individual also received additional 100,000 common shares, valued at
$12,500 for past services rendered to the Company during the year
ended December 31, 1999. Lastly, such individual is also entitled to
a sales bonus for sales (after costs and related expenses) of the
Company's application systems for which he is primarily responsible.
e) Judgments
During 1998, several judgments were entered against U.S. Medical
Alliance, the predecessor to the Company, relating among other
things, to the Company's prior line of business of managing
physician practices. The allegations made in the underlying suits
relate to wrongful discharge, general breach of contract, breach of
equipment lease agreements and miscellaneous vendor claims. The
aggregate amount of such judgments entered against the Company and
certain associated physicians is approximately $600,000. None of the
plaintiffs in the underlying suits has attempted to collect on the
judgments. While it remains unclear whether the Company can
successfully satisfy the judgments in a favorable manner, based on a
reasoned opinion issued by the Company's special counsel retained to
resolve these matters, the Company has accrued, as of December 31,
1999, approximately $22,500, with a related charge to operations, as
a reserve for satisfying such judgments.
F - 12
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 9-- STOCKHOLDERS' EQUITY
a) Subordinated Loan and Warrant Purchase Agreement
Pursuant to a Subordinated Loan and Warrant Purchase Agreement dated
September 24, 1998 between Memberlink - New York (prior to its
re-incorporation in Delaware) and Nantucket Healthcare Ventures I,
L.P., ("Nantucket") a Delaware limited partnership, a partnership
controlled by the Company's Chief Executive Officer, Memberlink -
New York borrowed a total of $250,000 from Nantucket by issuing a
convertible promissory note. In addition to the convertible
promissory note, Nantucket was also issued a warrant to purchase at
an exercise price of $.01 per share the number of fully paid and
non-assessable shares of common stock of Memberlink - Delaware as
will equal 1.5% of the issued and outstanding common stock at the
time Nantucket exercised such warrant. Additionally, Nantucket
received the option to purchase from Memberlink - Delaware
additional warrants determined as follows: an additional 0.5% of the
issued and outstanding common stock of Memberlink - Delaware at the
time Nantucket exercised such warrant shall be subject to such
warrant for each $10,000 increment purchased by Nantucket in the
form of notes.
Effective as of December 30, 1999, Memberlink - Delaware issued
486,168 shares to Nantucket, upon Nantucket's exercising its
warrants. During June 1999, Memberlink - New York's shareholders
converted their stock in Memberlink - New York for stock of
Memberlink - Delaware. Accordingly, during June and December 1999,
Memberlink - Delaware issued 486,168 and 1,323,518, respectively, of
its common stock.
b) Issuance of common stock for settlement of debt
During 1996, the Company issued subordinated convertible promissory
notes to investors accruing interest at an annual rate of 10% which
were convertible into shares of common stock at a conversion rate of
one share for each $5 of principal and accrued and unpaid interest.
During October 1999, all such noteholders, except one, agreed to
convert their principal balance on the notes which amounted to
$405,500 at $1.50 per share. Accordingly, the Company issued 270,333
shares of its common stock to certain noteholders. All accrued and
unpaid interest on such notes was waived by all noteholders. The
convertible note balance at December 31, 1999 amounting to $37,500
represents one noteholder who did not convert the note to common
stock, and accordingly, was repaid the principal balance in full
subsequent to December 31, 1999.
F - 13
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 9-- STOCKHOLDERS' EQUITY (cont'd)
c) Issuance of common stock for consulting services
In connection with various services provided to the Company for
legal, accounting, public relations and financial consulting, the
Company, during July 1999, issued an aggregate of 685,000 shares of
its restricted common stock to various individuals which has been
valued at $68,500. Included in the common stock issued are 250,000
shares issued to its Chief Executive Officer valued at $25,000 for
consulting services.
d) Sale of common stock
From July 1999 to November 1999, the Company sold 4,220,000
restricted shares of its common stock yielding net proceeds of
$535,000 pursuant to regulation D promulgated under the Securities
Act of 1933. The shares of common stock were sold pursuant to
subscription agreements with prices ranging between $.10 to $.50 a
share, and include 1,000,000 shares having been sold to its Chief
Executive Officer for $100,000.
e) Issuance of common stock in connection with acquisition of license
and related consulting/management agreements
Prior to the Company's considering a merger with Memberlink, on
September 3, 1999, it had entered into a Software and Proprietary
Product Corporate License Agreement ("License Agreement), a
Technical Service Agreement ("Technical Agreement") and a Management
Service Agreement ("Management Agreement") with Memberlink for the
use and exploitation of certain proprietary software created by
Memberlink. In consideration for the license and the technical and
management support from Memberlink, the Company paid a $10,000 per
month management fee to Memberlink and issued an aggregate of
2,000,000 shares of its common stock to it's officers and to key
personnel responsible for the successful implementation and
customization of the proprietary software. Such shares have been
valued at $250,000 and charged to operations during the year ended
December 31, 1999.
Due to the merger on December 30, 1999, the agreements are deemed
void and are no longer applicable since the Company's is the
surviving entity after the transaction.
f) Acquisition of Memberlink
Pursuant to the merger agreement, dated as of December 14, 1999
(with an effective date of December 30, 1999), the Company issued
8,000,082 shares of its common stock in exchange for all the issued
and outstanding common stock of Memberlink.
F - 14
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 9-- STOCKHOLDERS' EQUITY (cont'd)
e) Acquisition of Memberlink (cont'd)
For accounting purposes the acquisition is treated as a
recapitalization of Memberlink with Memberlink as the acquirer
(reverse acquisition). The accompanying financial statements reflect
this merger as if it had occurred on January 1, 1998. Such
transactions are considered capital transactions whereby Memberlink
contributed its stock for the net assets of the Company and
accordingly, no goodwill is recorded. Upon consummation of the
merger on December 30, 1999, the previous shareholders of Memberlink
received 8,000,082 shares of the Company's common stock, which
represented 49.9% of the outstanding common stock immediately after
the issuance. Simultaneously with the merger, Memberlink's former
President was elected as the Company's President. Upon consummation
of the merger transaction, all of the issued and outstanding common
stock of Memberlink was cancelled and, accordingly, Memberlink
ceased to exist with the Company being the surviving entity.
NOTE 10-- SUBSEQUENT EVENTS
a) Sale of common stock
During February 2000, the Company sold an aggregate of 1,830,000
shares of its common stock at $1 per share yielding net proceeds of
approximately $1,780,000 after certain offering expenses. Such
shares were sold pursuant to Rule 506 of Regulation D promulgated
under the Securities Act of 1933.
b) 2000 Equity Compensation Plan
During February 2000, the Company established the 2000 Equity
Compensation Plan (the "Plan") to provide (i) designated employees
of the Company and its subsidiaries, (ii) certain consultants and
advisors who perform services for the Company or its subsidiaries,
and iii) non-employee members of the Board of Directors of the
Company with the opportunity to receive grants of incentive stock
options, non-qualified stock options and restricted stock.
The aggregate number of shares of common stock of the Company that
may be issued or transferred under the Plan is 3,000,000 shares. The
maximum aggregate number of shares of that shall be subject to
grants made under the Plan to any individual during any calendar
year shall be 350,000 shares.
c) Termination of Employment Agreement
Effective April 4, 2000, the Company and an employee responsible to
act as in-house counsel for the Company, executed an agreement of
settlement for the termination of the underlying employment
agreement entered on June 1, 1999. The Company agreed to pay
$50,000, payable in $10,000 monthly installments commencing April
15, 2000 for compensation. The Company also agreed to arrange for
the sale of 70,000 shares of the employee's common stock in the
Company at a price of not less than a $1.25 per share.
F-15
<PAGE>
I-TRAX.COM, INC.
FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<PAGE>
I-TRAX.COM, INC.
INDEX TO FINANCIAL STATEMENTS
(UNAUDITED)
Page
Number
------
Balance sheets at June 30, 2000 (unaudited) and
December 31, 1999 F-18
Statements of operations for the three months
ended June 30, 2000 and 1999 (unaudited) F-19
Statements of operations for the six months
ended June 30, 2000 and 1999 (unaudited) F-20
Statement of stockholders' equity for the
six months ended June 30, 2000 (unaudited) F-21
Statements of cash flows for the six months
ended June 30, 2000 and 1999 (unaudited) F-22
Notes to financial statements (unaudited) F-23 to F-28
<PAGE>
I-TRAX.COM, INC.
BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
June 30,
2000 December 31,
(unaudited) 1999
----------------- ----------------
Current assets:
<S> <C> <C>
Cash $ 84,699 $ 195,728
Accounts receivables, net 253,617 412,038
Prepaid expenses 30,382 18,770
Other receivables 61,960 -
----------------- --------------
Total current assets 430,658 626,536
----------------- --------------
Property and equipment, net 231,873 36,120
Web site development costs 210,750 6,000
Security deposits 128,162 40,162
----------------- --------------
Total assets $ 1,001,443 $ 708,818
================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable and accrued expenses $ 444,080 $ 192,578
Convertible note payable - 37,500
Capital lease payable 5,547 -
Due to related parties 48,048 66,048
----------------- --------------
Total current liabilities 497,675 296,126
----------------- --------------
Capital lease obligation, net of current portion 28,743 -
----------------- --------------
Total liabilities 526,418 296,126
----------------- --------------
Commitments & Contingencies (Note 5) - -
Stockholders' Equity:
Preferred Stock - $.001 par value, 2,000,000 shares authorized,
-0- issued and outstanding -
Common Stock - $.001 par value, 50,000,000 shares authorized,
17,828,084 and 16,028,084 issued and outstanding, respectively 17,828 16,028
Additional paid in capital 2,836,380 1,043,299
Accumulated deficit (2,379,183) (646,635)
----------------- ---------------
Total stockholders' equity 475,025 412,692
----------------- --------------
Total Liabilities and Stockholders' Equity $ 1,001,443 $ 708,818
================== ===============
</TABLE>
See accompanying notes to financial statements (unaudited)
F-18
<PAGE>
I-TRAX.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Three months
ended ended
June 30, June 30,
2000 1999
------------ ------------
<S> <C> <C>
Revenue $ 64,227 $ 12,869
-------------- -------------
Operating expenses:
Cost of revenue 45,513 64,216
General and administrative
1,016,483 299,684
Research and development - 47,881
Marketing and advertising 78,295 3,342
-------------- -------------
Total operating expenses 1,140,291 415,123
-------------- -------------
Loss before other income (expenses)
and provision for income tax (1,076,064) (402,254)
-------------- -------------
Other income (expenses):
Miscellaneous income 46,107 -
Interest expense (1,651) -
Provision for contingency losses (176,500) -
-------------- -------------
Total other (expenses) (132,044) -
-------------- -------------
Loss before provision for income taxes (1,208,108) (402,254)
--------------- -------------
Provision for income taxes - -
-------------- -------------
Net loss $ (1,208,108) $ (402,254)
============== =============
Basic:
Net loss $ (.07) $ (.05)
============== =============
Weighted average number of shares
outstanding 16,928,084 8,852,751
============== =============
</TABLE>
See accompanying notes to financial statements (unaudited)
F-19
<PAGE>
I-TRAX.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
For the six For the six
months ended months ended
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
Revenue $ 64,227 $ 236,819
---------------- --------------
Operating expenses:
Cost of revenue 45,513 188,299
General and administrative expenses 1,508,295 400,435
Research and development - 89,588
Marketing and advertising 122,152 11,583
---------------- --------------
Total operating expenses 1,675,960 689,905
---------------- --------------
Loss before other income (expenses)
and provision for income taxes (1,611,733) (453,086)
---------------- --------------
Other income (expenses):
Miscellaneous income 57,360 -
Interest expense (1,675) (168)
Provision for contingency losses (176,500) -
---------------- --------------
Total other income (expenses) (120,815) (168)
---------------- --------------
Loss before provision for income taxes (1,732,548) (453,254)
---------------- --------------
Provision for income taxes -
---------------- --------------
Net loss $ (1,732,548) $ (453,254)
================ ===============
Basic:
Net loss $ (.10) $ (.05)
================ ===============
Weighted average number of
common shares outstanding 17,378,084 8,852,751
================ ===============
</TABLE>
See accompanying notes to financial statements (unaudited)
F-20
<PAGE>
I-TRAX.COM, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1999 16,028,084 $ 16,028 $ 1,043,299 $ (646,635) $ 412,692
Sale of common stock,
net of costs 1,800,000 1,800 1,793,081 - 1,794,881
Net loss for the six months
ended June 30, 2000 - - - (1,732,548) (1,732,548)
------------ ----------- ------------- ------------ -------------
Balances at June 30, 2000 17,828,084 $ 17,828 $ 2,836,380 $ (2,379,183) $ 475,025
============ =========== ============= ============ =============
</TABLE>
See accompanying notes to financial statements (unaudited)
F-21
<PAGE>
I-TRAX.COM, INC
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Six months Six months
ended ended
June 30, June 30,
2000 1999
----------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,732,548) $ (453,254)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 15,062 1,890
Issuance of common stock as consideration for services - 58,500
Provision for contingency losses 164,000 -
Decrease (increase) in:
Accounts receivable 158,421 233,632
Prepaid expenses (5,612) (15,167)
Other receivables (61,960) -
Security deposits (88,000) -
(Decrease) increase in:
Accounts payable and accrued expenses 87,502 47,074
----------------- --------------
Net cash used for operating activities (1,463,135) (127,325)
----------------- ---------------
Cash flows from investing activities:
Purchase of property, equipment and website costs (387,275) (29,520)
----------------- ---------------
Net cash used for investing activities (387,275) (29,520)
----------------- ---------------
Cash flows from financing activities:
(Repayment to) proceeds from notes payable (37,500) 150,000
Repayments to related parties (18,000) (2,500)
Net proceeds from sale of common stock 1,794,881 -
----------------- --------------
Net cash provided by financing activities 1,739,381 147,500
----------------- --------------
Net decrease in cash (111,029) (9,345)
Cash and cash equivalents at beginning of period 195,728 52,883
----------------- --------------
Cash and cash equivalents at end of period $ 84,699 $ 43,538
================= ==============
Supplemental disclosure of non-cash flow information:
Cash paid during the period for:
Interest $ 1,675 $ 168
================= ==============
Income taxes $ - $ -
================= ==============
Schedule of non-cash investing activities:
Acquisition of office equipment in connection
with capital lease obligation $ 34,290 $ -
================= ==============
</TABLE>
See accompanying notes to financial statements (unaudited).
F-22
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- ORGANIZATION
Nature of Business
I-Trax.com, Inc. (the "Company") was incorporated in the state
of Delaware on May 23, 1969 under the name Marmac Corporation.
During December 1979, the Company changed its name to Ibex
Industries International, Inc. During April 1996, in
connection with the acquisition of assets and the assumption
of liabilities of various medical practices (which reverted
back to the original owners during 1997), the Company changed
its name to U.S. Medical Alliance, Inc. The Company, on August
27, 1999, changed its name to I-Trax.com, Inc. prior to the
merger discussed below.
Pursuant to a merger agreement dated as of December 14, 1999
(with an effective date of December 30, 1999), the Company
issued 8,000,082 shares of its common stock in exchange for
all the issued and outstanding common stock of Member-Link
Systems, Inc. ("Memberlink"). Memberlink also a Delaware
corporation, was a health information technology company which
had developed certain software technology which it sold and
licensed to various organizations, including but not limited
to governmental agencies.
The merger of the Company and Memberlink was treated as a
recapitalization of Memberlink with Memberlink as the acquirer
(reverse acquisition). The accompanying financial statements
reflect this transaction as if it had occurred on January 1,
1999. Such transaction is considered a capital transaction
whereby Memberlink contributed its stock for the net assets of
the Company. Upon consummation of the merger on December 30,
1999, the stockholders of Memberlink received 8,000,082 shares
of the Company's common stock, which then represented 49.9% of
the outstanding common stock immediately after the issuance.
Simultaneously with the merger, Memberlink's former President
was elected as the Company's President. Upon consummation of
the merger transaction the Company was recapitalized and
Memberlink ceased to exist with the Company being the
surviving entity.
NOTE 2 -- INTERIM RESULTS AND BASIS OF PRESENTATION
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instruction to Form 10-QSB and Items 303 and 310(B) of
Regulation S-B. In the opinion of management, the unaudited
financial statements have been prepared on the same basis as
the annual financial statements and reflect all adjustments,
which include only normal recurring adjustments, necessary to
present fairly the financial position as of June 30, 2000 and
the results of the operations and cash flows for the three and
six month periods ended June 30, 2000 and 1999. The results
for the three and six month periods ended June 30, 2000 are
not necessarily indicative of the results to be expected for
any subsequent quarter or the entire fiscal year ending
December 31, 2000. The balance sheet at December 31, 1999 has
been derived from the audited financial statements at that
date.
F-23
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 -- INTERIM RESULTS AND BASIS OF PRESENTATION (cont'd)
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to the Securities and Exchange Commission's rules and
regulations. It is suggested that these unaudited financial
statements be read in conjunction with our audited financial
statements and notes thereto for the year ended December 31,
1999 as included in our report on Form 10-SB filed on April
10, 2000.
NOTE 3 -- CONVERTIBLE NOTE PAYABLE
The $37,500 convertible note payable was repaid in full during
the quarter ended March 31, 2000.
NOTE 4 -- DUE TO RELATED PARTIES
Due to related parties as of June 30, 2000 amounting to
$48,048 is comprised of the following:
i) Advances made by a former officer of Memberlink
amounting to $35,683. The former officer and current
shareholder of the Company had agreed to a repayment
schedule at a rate of $3,000 per month until fully
paid, without interest, commencing April 2000. During
July 2000, such note was converted into common stock
in connection with the Company's confidential private
placement memorandum. (See note 6 (c)).
ii) Advances made by a current officer of the Company
(previously an officer of Memberlink) amounting to
$679. The amount is due on demand and is non-interest
bearing.
iii) Advances made by a relative of the officer discussed
in (ii) above amounting to $11,686. The amount is
also due on demand and is non-interest bearing.
NOTE 5 -- COMMITMENTS AND CONTINGENCIES
a) Lack of Insurance
The Company, through March 14, 2000, did not maintain any
liability insurance or any other form of general insurance.
Although the Company is not aware of any claims resulting from
product malfunctions or any other type, there is no assurance
that none exists.
b) Significant customers and vendors
For the three and six months ended June 30, 2000, the Company
had two unrelated customers, which accounted for 52% and 48%
of total revenues. For the three and six months ended June 30,
1999, the Company had one customer, which accounted for 100%
and 86% of total revenues. As of June 30, 2000, the Company
had three unrelated customers, which accounted for 13%, 13%
and 64%, respectively, of accounts receivables.
F-24
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 -- COMMITMENTS AND CONTINGENCIES (cont'd)
c) Office Lease
On October 22, 1999, the Company entered into a non-cancelable
lease agreement for its technology and product development
office pursuant to a five year lease expiring October 31, 2004
with annual rent at approximately $162,000 before annual
escalations.
On April 10, 2000, the Company entered into a non-cancelable
lease agreement for its executive offices pursuant to a five
year lease expiring June 29, 2005 with annual rent of
approximately $123,000 per year before annual escalations.
The Company's approximate future minimum rental payments under
non-cancelable operating leases in effect on June 30, 2000 are
as follows:
2000 $ 189,888
2001 292,005
2002 299,315
2003 306,804
2004 284,152
Thereafter 66,390
------------
$ 1,438,554
============
Prior to October 1999, the Company rented office space on a
month to month basis at a rate of approximately $2,500 per
month.
Rent expense for the three months ended June 30, 2000 and 1999
amounted to approximately $58,000 and $10,500, respectively.
Rent expense for the six months ended June 30, 2000 and 1999
amounted to approximately $102,000 and $18,000, respectively.
d) Employment Agreements
i) On June 1, 1999, Memberlink entered into three employment
agreements with certain officers of the Company. The
employment agreements expire on May 31, 2002 with annual
salaries ranging from $125,000 to $175,000. Subsequent to
December 31, 1999, the Company began renegotiating two of the
employment agreements. Effective April 4, 2000, the Company
and an employee executed an agreement of settlement for the
termination of the underlying employment agreement entered on
June 1, 1999. The Company agreed to pay $50,000, payable in
$10,000 monthly installments commencing April 15, 2000 as
settlement payments for which such employee is to continue
render services as necessary by the Company during the period
of installments. The Company also agreed to arrange for the
sale of 70,000 shares of common stock in the Company held by
the employee at a price of $1.25 per share which was deemed to
be the market value at date of settlement.
F-25
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 -- COMMITMENTS AND CONTINGENCIES (cont'd)
d) Employment Agreements (cont'd)
ii) The Company entered into an employment agreement on
November 29, 1999, with an individual to act as the Company's
Chief Medical Officer at an annual salary of $85,000. In
addition, the Company agreed to grant options to purchase
100,000 shares of common stock in accordance with the
Company's newly established 2000 Equity Compensation Plan (see
note 6(c)). Such options will vest in increments to be
determined, but in no event, later than November 29, 2002.
e) Judgments
During 1998, several judgements were entered against the
Company while it was operating as U.S. Medical Alliance,
relating to, among other things, the Company's prior line of
business of managing physician practices. The allegations made
in the underlying suits relate to wrongful discharge, general
breach of contract, breach of equipment lease agreements and
miscellaneous vendor claims. The aggregate amount of such
judgements entered against the Company and certain associated
physicians was approximately $600,000. As of June 30, 2000,
the Company has settled one of the judgments of $43,875 for
$35,000. Such payment has been applied first to the $22,500
reserve the Company had established as of December 31, 1999
with the remaining balance of $12,500 charged to operations.
The remaining outstanding judgments are currently being
negotiated for settlements. The Company estimates that the
remaining judgments will be settled for an aggregate of
approximately $164,000, for which an accrual has been made as
of June 30, 2000 and included in accounts payable and accrued
expenses with a related charge to operations.
f) Profit sharing plan
During the second quarter 2000, the Company established a
401(k) profit sharing plan covering certain qualified
employees, which includes employer participation in accordance
with the provisions of the Internal Revenue Code. The plan
allows participant to make pretax contributions and the
Company matches certain percentages of employee contributions
depending on a number of factors including the participant's
length of service. The profit sharing portion of the plan is
discretionary and noncontributory. All amounts contributed to
the plan are deposited into a trust fund administered by an
independent trustee. As of June 30, 2000 no contributions have
been made by the Company.
g) Capital lease obligation
In April 2000, the Company acquired a telephone system for
$34,290 by entering into capital lease obligations with
interest at approximately 10.1% per annum, requiring 60
monthly payments of $731 which include principal and interest.
The lease is secured by the related equipment.
F-26
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 -- COMMITMENTS AND CONTINGENCIES (cont'd)
g) Capital lease obligation (cont'd)
At June 30, 2000, the aggregate future minimum lease payments
due pursuant to the above capital lease obligations are as
follows:
Total minimal lease payments $ 43,854
Less: Amounting representing interest 9,564
---------
Present value of net minimum lease payments $ 34,290
=========
At June 30, 2000 computer equipment under capital leases are
carried at a book value of $34,290.
NOTE 6 -- STOCKHOLDERS' EQUITY
a) Sale of common stock
During January and February 2000, the Company sold an
aggregate of 1,800,000 shares of its common stock at $1 per
share yielding net proceeds of approximately $1,794,881 after
certain offering expenses. Such shares were sold pursuant to
Rule 506 of Regulation D promulgated under the Securities Act
of 1933.
b) 2000 Equity Compensation Plan
During February 2000 (as amended during March 2000), the
Company established the 2000 Equity Compensation Plan (the
"Plan") to provide (i) designated employees of the Company and
its subsidiaries, (ii) certain consultants and advisors who
perform services for the Company or its subsidiaries, and
(iii) non-employee members of the Board of Directors of the
Company with the opportunity to receive grants of incentive
stock options, non-qualified stock options and restricted
stock.
The aggregate number of shares of common stock of the Company
that may be issued or transferred under the Plan is 3,000,000
shares. The maximum aggregate number of shares of common stock
that shall be subject to grants made under the Plan to any
individual during any calendar year shall be 350,000 shares.
Through June 30, 2000, the Company has granted an aggregate of
1,490,500 incentive and non-qualified stock options pursuant
to the above plan with exercise prices ranging between $1 and
$2 per share. Such options are subject to various vesting
periods ranging from June 2000 to May 2003.
The Company accounts for employee stock options in accordance
with Accounting Principles Board Opinion No. 25 (APB 25)
"Accounting for Stock issued to Employees." Under APB 25, the
Company recognizes no compensation expense related to employee
stock options, as no options are granted at a price below the
market price on the date of grant.
F-27
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 -- STOCKHOLDERS' EQUITY (cont'd)
b) 2000 Equity Compensation Plan (cont'd)
During 2000, FAS No. 123, "Accounting for Stock-Based
Compensation," became effective for the Company. FAS 123,
which prescribes the recognition of compensation expense based
on the fair value of options on the grant date, allows
companies to continue applying APB 25 if certain pro forma
disclosures are made assuming hypothetical fair value method
application. The Company has elected not to disclose any pro
forma disclosures since it has determined that the
hypothetical fair value of the options is equal to or less
than the exercise price of the options.
c) May 2000 Equity Offering
During May 2000, the Company commenced the May 2000 equity
offering ("the Offering") pursuant to Rule 506 of Regulation D
under the Securities Act of 1933. The offering was initially
comprised of 1,000,000 shares of its $.001 par value common
stock at $2 per share. As of June 30, 2000, no shares were
sold by the Company. Through the middle of July, the Company
has sold an aggregate of 674,750 shares yielding proceeds of
$1,349,500. During July 2000, the Board of Directors approved
an amendment to the offering by increasing the number of
shares offered from 1,000,000 to 2,500,000 with the same $2
per share price.
NOTE 7 -- SUBSEQUENT EVENT
Letter of Intent
During July 2000, the Company entered into a non-binding
letter of intent to exchange its common stock for all
outstanding membership interest of iSummit, LLC, a privately
held, New York City based company doing business under the
name MyFamilyMD. As a result of this transaction, MyFamilyMD
will become wholly owned subsidiary of the Company.
The Company expects to issue up to five million shares of its
common stock in this transaction. Two million of the five
million shares are forfeitable depending on whether MyFamilyMD
achieves certain performance targets mutually established by
the parties.
F-28
<PAGE>
ISUMMIT PARTNERS, LLC
FINANCIAL STATEMENT
FROM INCEPTION
JANUARY 18, 2000 THROUGH AUGUST 31, 2000
F-29
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Members of
ISUMMIT PARTNERS, LLC
New York, N.Y.
We have audited the accompanying balance sheet of ISUMMIT PARTNERS, LLC
(the "Company") as of August 31, 2000, and the related statements of income,
operations and members' deficit and cash flows for the period from inception,
January 18, 2000 through August 31, 2000. The financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
August 31, 2000 and the results of its operations and cash flows for the period
from inception, January 18, 2000 through August 31, 2000 in conformity with
generally accepted accounting principles.
BERNATH & ROSENBERG P.C.
Certified Public Accountants
New York, N.Y.
September 14, 2000
F-30
<PAGE>
ISUMMIT PARTNERS, LLC
BALANCE SHEET
AUGUST 31, 2000
--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
CURRENT ASSETS
--------------------------------------------------------------------------------
Cash $ 64,587
--------------------------------------------------------------------------------
Loans Receivable (Note 2) 26,102
--------------------------------------------------------------------------------
Total Current Assets 90,689
--------------------------------------------------------------------------------
Property, Plant and Equipment
--------------------------------------------------------------------------------
Furniture & Fixtures 3,248
--------------------------------------------------------------------------------
Equipment 13,004
--------------------------------------------------------------------------------
Less: Accumulated Depreciation (2,709)
--------------------------------------------------------------------------------
Total Property, Plant and Equipment 13,543
--------------------------------------------------------------------------------
TOTAL ASSETS $ 104,232
--------------------------------------------------------------------============
LIABILITIES AND MEMBERS' DEFICIT
CURRENT LIABILITIES
--------------------------------------------------------------------------------
Accrued Expenses (Note 3) $ 196,574
--------------------------------------------------------------------------------
Total Current Liabilities 196,574
--------------------------------------------------------------------------------
Commitments and Contingencies (Note 4)
--------------------------------------------------------------------------------
Members' Deficit (Note 5) (92,342)
--------------------------------------------------------------------------------
TOTAL LIABILITIES AND MEMBERS' DEFICIT $ 104,232
--------------------------------------------------------------------============
See Notes to Financial Statements
F-31
<PAGE>
ISUMMIT PARTNERS, LLC
STATEMENT OF OPERATIONS AND MEMBERS' DEFICIT
FROM INCEPTION JANUARY 18, 2000 THROUGH AUGUST 31, 2000
--------------------------------------------------------------------------------
REVENUE $ -0-
--------------------------------------------------------------------============
GENERAL AND ADMINISTRATIVE EXPENSES:
--------------------------------------------------------------------------------
Salaries 181,080
--------------------------------------------------------------------------------
Payroll Taxes 19,572
--------------------------------------------------------------------------------
Rent 35,849
--------------------------------------------------------------------------------
Health Insurance 3,336
--------------------------------------------------------------------------------
Advertising 3,549
--------------------------------------------------------------------------------
Consulting 50,000
--------------------------------------------------------------------------------
Shows & Expositions 9,200
--------------------------------------------------------------------------------
Dues & Subscription 280
--------------------------------------------------------------------------------
Professional Fees 170,412
--------------------------------------------------------------------------------
Office Expense 8,208
--------------------------------------------------------------------------------
Miscellaneous Expenses 3,787
--------------------------------------------------------------------------------
Internet Expense 2,955
--------------------------------------------------------------------------------
Development Costs 693,122
--------------------------------------------------------------------------------
Depreciation 2,709
--------------------------------------------------------------------------------
Telephone 3,008
--------------------------------------------------------------------------------
Travel & Conferences 15,275
--------------------------------------------------------------------------------
Total General & Administrative Expenses 1,202,342
--------------------------------------------------------------------------------
Net Loss (1,202,342)
--------------------------------------------------------------------------------
Members' Contributions 1,110,000
--------------------------------------------------------------------------------
Members' Deficit - August 31, 2000 $ ( 92,342)
--------------------------------------------------------------------============
See Notes to Financial Statements
F-32
<PAGE>
ISUMMIT PARTNERS, LLC
STATEMENT OF CASH FLOWS
FROM INCEPTION JANUARY 18, 2000 THROUGH AUGUST 31, 2000
--------------------------------------------------------------------------------
Cash Flows from Operating Activities:
--------------------------------------------------------------------------------
Net Loss $ (1,202,342)
--------------------------------------------------------------------------------
Adjustments to Reconcile Net Loss to Net Cash
Used For Operating Activities:
--------------------------------------------------------------------------------
Depreciation 2,709
--------------------------------------------------------------------------------
Changes in Operating Assets and Liabilities:
--------------------------------------------------------------------------------
Increase in Loans Receivables (26,102)
--------------------------------------------------------------------------------
Increase in Accrued Expenses 196,574
--------------------------------------------------------------------------------
Total Adjustments 173,181
--------------------------------------------------------------------------------
Net Cash Used for Operating Activities (1,029,161)
--------------------------------------------------------------------------------
Cash Flows from Investing Activities:
--------------------------------------------------------------------------------
Cash Payments for the Purchase of Property (16,252)
--------------------------------------------------------------------------------
Net Used by Investing Activities (16,252)
--------------------------------------------------------------------------------
Cash Flows From Financing Activities:
--------------------------------------------------------------------------------
Capital Contributions by Members 1,110,000
--------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 1,110,000
--------------------------------------------------------------------------------
Net Increase in Cash 64,587
--------------------------------------------------------------------------------
Cash - August 31, 2000 $ 64,587
-------------------------------------------------------------------=============
See Notes to Financial Statements
F-33
<PAGE>
ISUMMIT PARTNERS, LLC
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION JANUARY 18, 2000 THROUGH AUGUST 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
This summary of significant accounting policies of ISUMMIT PARTNERS, LLC , dba
My Family MD (the Company) is presented to assist in understanding the Company's
financial statements. The financial statements and notes are representations of
the Company's management who is responsible for its integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
a. Business Activity
The Company was formed in January 2000. The focus of the Company is to allow
patients to assist their physicians in both wellness and disease management
through their unique MD Wizard application readily accessible via the Internet.
The purpose of the Internet abled software is to streamline clinical care for
the patient, physician and institutions, including insurance providers and
hospitals.
b. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three
months or less at the time of the purchase to be cash equivalents.
c. Property and Equipment
Property and equipment are stated at cost. Depreciation is computed on the
straight-line method (half-year convention) over estimated useful life. The
estimated useful lives of property and equipment are from 3 to 5 years.
Expenditures for maintenance and repairs are charged against operations.
Renewals and betterments that materially extend the life of the assets are
capitalized.
d. Revenue Recognition
In October 1997, the American Institute of Certified Public Accountant's
Accounting Standards Executive Committee ("ACSEC") issued Statement of Position
("SOP") 97-2, "Software Revenue Recognition ." SOP 97-2 was effective January 1,
1998 and generally requires revenue earned on software arrangements involving
multiple elements such as software products, upgrades, enhancements,
post-contract customer support, installation and training to be allocated to
each element based on the relative fair value of the elements. Upon commencement
of operations, the Company will adopt SOP 97-2 and SOP 98-9 as discussed below.
In December 1998, the ACSEC released SOP 98-9, "Modification of SOP 97-2,
"Software Revenue Recognition with Respect to Certain Transactions." SOP 98-9
amends SOP 97-2 to require that an entity recognize revenue for multiple element
arrangements by means of the "residual method" when (1) there is vendor-specific
objective evidence ("VSOE") of the fair values of all the undelivered elements
that are not accounted for by means of long-term contract accounting, (2) VSOE
of fair value does not exist for one or more of the delivered elements, and (3)
all revenue recognition criteria of SOP 97-2 (other than the requirement for
VSOE of the fair value of each delivered element) are satisfied.
F-34
<PAGE>
ISUMMIT PARTNERS, LLC
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION JANUARY 18, 2000 THROUGH AUGUST 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
e. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported in its financial statements and accompanying notes.
Actual results could differ from those estimates.
f. Income Taxes
The Company is a limited liability company, treated as a partnership for income
tax purposes, and as such is not subject to income tax. Accordingly, no
provision for Federal and State income taxes is provided in the financial
statements. The Company is subject to New York City Unincorporated Business Tax.
g. Fair Value Disclosure at August 31, 2000
The carrying value of cash, loans receivable and accrued expenses are a
reasonable estimate of their fair value because of the short-term maturity.
h. Liability Insurance
The Company did not maintain any liability insurance or any other form of
general insurance. Although the Company is not aware of any claims resulting
from product malfunctions or any other type, there is no assurance that none
exists.
NOTE 2 - LOANS RECEIVABLE
This represents the amount of expenses incurred after August 1, 2000 by the
Company to be reimbursed by ITRAX. (Note 6)
NOTE 3 - ACCRUED EXPENSES
Accrued Expenses consists of the following at August 31, 2000:
Consulting $ 25,000
Professional Fees 143,412
Miscellaneous Office Expenses 6,062
Software Development 22,100
----------
Total $ 196,574
==========
F-35
<PAGE>
ISUMMIT PARTNERS, LLC
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION JANUARY 18, 2000 THROUGH AUGUST 31, 2000
NOTE 4 - COMMITMENTS AND CONTINGENCIES
ISUMMIT PARTNERS, LLC has a non-cancelable triple net lease for the operational
facility. The monthly rental payment is $7,083.33 under a lease that expires
August 31, 2004. As of report date the assignment of this lease to I-TRAX has
not yet been completed.
The future minimum lease payments are as follows:
Year
2000 $ 28,333
2001 85,000
2002 85,000
2003 85,000
2004 56,667
--------
$340,000
Rent expense for the period ended August 31, 2000 was $42,933.
NOTE 5 - MEMBERS' DEFICIT
The Company is a successor to ISUMMIT, INC. (the "Corporation") which was
liquidated in February 2000. Pursuant to the plan of liquidation, the
Corporation distributed its assets (consisting of cash, furniture and fixtures
and intangibles) subject to liabilities (consisting of shareholders' loans) to
the shareholders in proportion to their stock interest. Immediately thereafter
the shareholders contributed the assets distributed, subject to the liabilities,
to the Company, in exchange for interest in the Company, in proportion to the
respective interest in the Corporation.
As of August 31, 2000, each of the shareholders contributed his respective loan
to the capital of the Company.
NOTE 6 - SUBSEQUENT EVENTS
Letter of Intent
----------------
During July 2000, the Company and its members entered into a non-binding letter
of intent to exchange its membership interest in exchange for shares of I-TRAX
common stock. As a result of this transaction, MyFamilyMD will become wholly
owned subsidiary of the Company.
I-TRAX expects to issue up to five million shares of its common stock in this
transaction. Two million of the five million shares are forfeitable depending on
whether the Company achieves certain performance targets mutually established by
the parties.
In anticipation, ITRAX assumed all of the Company's employees as of August 16,
2000. It has also contracted with a consulting firm for the further development
of ISUMMIT's project.
F-36
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), entered into as of
September 22, 2000, by and among I-Trax.com, Inc., a Delaware corporation
("I-trax"), I-trax, Inc., a Delaware corporation (the "Holding Company") which
is a direct, wholly owned subsidiary of I-trax, and I-trax.com Acquisition Co.,
a Delaware corporation (the "Indirect Subsidiary") which is a direct, wholly
owned subsidiary of the Holding Company.
PRELIMINARY STATEMENTS
1. As of the date hereof, I-trax's authorized capital stock consists of
(i) 50,000,000 shares of common stock, par value $0.001 per share (the "I-trax
Common Stock"), of which, 18,327,834 shares are issued and outstanding and no
shares are held in I-trax's treasury; and (ii) 2,000,000 shares of preferred
stock, par value $0.001 per share, none of which are outstanding.
2. As of the date hereof, Holding Company's authorized capital stock
consists of (i) 50,000,000 shares of common stock, par value $0.001 per share
(the "Holding Company Common Stock"), of which 100 shares are issued and
outstanding and owned by I-trax and no shares are held in Holding Company's
treasury, and (ii) 2,000,000 shares of preferred stock, par value $0.001 per
share, none of which are outstanding.
3. As of the date hereof, Indirect Subsidiary's authorized capital
stock consists of 1,000 shares of common stock, par value $0.001 per share (the
"Indirect Subsidiary Common Stock"), of which 100 shares are issued and
outstanding and owned by Holding Company and no shares are held in Indirect
Subsidiary's treasury.
4. The designations, rights and preferences, powers and the
qualifications, limitations and restrictions of the Holding Company Common Stock
are the same as those of I-trax Common Stock.
5. The Certificate of Incorporation of Holding Company (the "Holding
Company Charter") and the Bylaws of Holding Company (the "Holding Company
Bylaws") in effect immediately after the Effective Date (as hereinafter defined)
will contain provisions identical to the Certificate of Incorporation of I-trax
(the "I-trax Charter") and Amended and Restated Bylaws of I-trax (the "Company
Bylaws") in effect immediately before the Effective Date (other than as required
by Section 251(g) of the General Corporation Law of the State of Delaware (the
"DGCL")).
6. The directors and executive officers of I-trax immediately prior to
the Merger (as hereinafter defined) will be the directors and executive officers
of Holding Company as of the Effective Date.
A-1
<PAGE>
7. Holding Company and Indirect Subsidiary are newly formed
corporations organized for the purpose of participating in the transactions
herein contemplated.
8. I-trax desires to create a new holding company structure by merging
Indirect Subsidiary with and into I-trax, with (a) I-trax continuing as the
surviving corporation of such merger and (b) each outstanding share (or any
fraction thereof) of I-trax Common Stock being converted in such merger into a
like number of shares of Holding Company Common Stock, all in accordance with
the terms of this Agreement (the "Merger").
9. The Merger is being made in connection with the execution of that
certain Contribution and Exchange Agreement, of even date herewith, by and among
I-trax, Holding Company, iSummit Partners, LLC (d/b/a MyFamilyMD), a New York
limited liability company ("MyfamilyMD"), and each member of MyFamilyMD
(collectively, the "Members") pursuant to which, among other things, immediately
following Merger the Members agree to contribute all issued and outstanding
membership interests of MyFamilyMD (collectively the "Interests") to Holding
Company in exchange for a certain number of shares of Holding Company Common
Stock (such shares, the "Consideration Shares", and such contribution, the
"Contribution").
10. The Merger and the Contribution are intended to qualify as a
tax-free transaction under Section 351 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Merger is intended to qualify as a tax-free merger
transaction pursuant to Section 368(a) of the Code.
11. The boards of directors of Holding Company, Indirect Subsidiary and
I-trax, I-trax, in its capacity as the sole stockholder of Holding Company, and
Holding Company, in its capacity as the sole stockholder of Indirect Subsidiary,
have approved this Agreement and the Merger upon the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained in this Agreement, and intending to be legally bound
hereby, I-trax, Holding Company and Indirect Subsidiary hereby agree as follows:
ARTICLE I.
THE MERGER
ARTICLE 1.01. THE MERGER. In accordance with Section 251(g) of the DGCL and
subject to, and upon the terms and conditions of, this Agreement, Indirect
Subsidiary shall, at the Effective Date, be merged with and into I-trax, the
separate corporate existence of Indirect Subsidiary shall cease, and I-trax
shall continue as the surviving corporation of the Merger (the "Surviving
Corporation"). At the Effective Date, the effects of the Merger shall be as
provided in Section 259 of the DGCL.
ARTICLE 1.02. EFFECTIVE DATE. As soon as practicable on or after the date
hereof, the parties shall file a Certificate of Merger effecting the Merger (the
"Certificate of Merger"), executed in accordance with the relevant provisions of
A-2
<PAGE>
the DGCL, with the Secretary of State of the State of Delaware and shall make
all other filings or recordings required under the DGCL to effectuate the
Merger. The Merger shall become effective upon filing of the Certificate of
Merger with the Secretary of State of the State of Delaware (such date and time
being referred to herein as the "Effective Date").
ARTICLE 1.03. CERTIFICATE OF INCORPORATION. From and after the Effective Date,
I-trax's Charter, as in effect immediately prior to the Effective Date, shall be
the certificate of incorporation of the Surviving Corporation (the "Surviving
Corporation's Charter") until thereafter amended as provided therein or by the
DGCL, except as follows:
Article FOURTH thereof shall be amended so as to read in its entirety
as follows:
"FOURTH: The total number of shares of all classes of
capital stock which the Corporation shall have authority to issue is
1,000 shares, all such shares to be Common Stock having a par value of
$0.001 per share.
A new Article NINTH shall be added thereto which shall be and read in
its entirety as follows:
"NINTH: Any act or transaction by or involving the
Corporation other than the election or removal of directors of the
Corporation that requires for its adoption under the General
Corporation Law of the State of Delaware or this Certificate of
Incorporation the approval of the stockholders of the Corporation
shall, pursuant to Section 251(g) of the General Corporation Law of the
State of Delaware, require, in addition, the approval of the
stockholders of Holding Company, a Delaware corporation, or any
successor thereto by merger, by the same vote that is required by the
General Corporation Law of the State of Delaware or this Certificate of
Incorporation, as the case may be."
ARTICLE 1.04. BYLAWS. From and after the Effective Date, I-trax Bylaws, as in
effect immediately prior to the Effective Date, shall constitute the Bylaws of
the Surviving Corporation until thereafter amended as provided therein or by
applicable law.
ARTICLE 1.05. DIRECTORS. The directors of I-trax in office immediately prior to
the Effective Date shall be the directors of the Surviving Corporation and will
continue to hold office from the Effective Date until their successors are duly
elected or appointed and qualified in the manner provided in the Surviving
Corporation's Charter and Bylaws, or as otherwise provided by law.
ARTICLE 1.06. OFFICERS. The officers of I-trax in office immediately prior to
the Effective Date shall be the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their successors are duly
elected or appointed and qualified in the manner provided in the Surviving
Corporation's Charter and Bylaws, or as otherwise provided by law.
A-3
<PAGE>
ARTICLE 1.07. ADDITIONAL ACTIONS. Subject to the terms of this Agreement, the
parties hereto shall take all such reasonable and lawful actions as may be
necessary or appropriate in order to effectuate the Merger, which shall include
executing and delivering an Assumption Agreement (as hereinafter defined),
effective upon consummation of the Merger, in such form as I-trax and Holding
Company determine to be appropriate to evidence the assignment to, and
assumption by, Holding Company of such rights, interests, obligations and
liabilities as I-trax and Holding Company determine to be appropriate. If, at
any time after the Effective Date, the Surviving Corporation shall consider or
be advised that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of Indirect
Subsidiary or I-trax acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of each of Indirect
Subsidiary and I-trax, all such deeds, bills of sale, assignments and assurances
and to take and do, in the name and on behalf of each of Indirect Subsidiary and
I-trax or otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out this Agreement.
ARTICLE 1.08. CONVERSION OF SECURITIES. At the Effective Date, by virtue of the
Merger and without any action on the part of Holding Company, Indirect
Subsidiary, I-trax or the holder of any of the following securities:
(a) Conversion of I-trax Common Stock. Each share of I-trax Common
Stock (or fraction of a share of I-trax Common Stock) issued and outstanding
immediately prior to the Effective Date shall be converted into and thereafter
represent one duly issued, fully paid and nonassessable share (or equal fraction
of a share) of Holding Company Common Stock.
(b) Conversion of Capital Stock of Indirect Subsidiary. Each share of
Indirect Subsidiary Common Stock issued and outstanding immediately prior to the
Effective Date shall be converted into and thereafter represent one duly issued,
fully paid and nonassessable share of common stock, par value $0.001 per share,
of the Surviving Corporation.
(c) Cancellation of Capital Stock of Holding Company. Each share of
Holding Company Common Stock that is owned by I-trax immediately prior to the
Merger shall automatically be cancelled and retired and shall cease to exist.
(d) Rights of Certificate Holders. From and after the Effective Date,
holders of certificates formerly evidencing I-trax Common Stock shall cease to
have any rights as stockholders of I-trax, except as provided by law; except,
however, that such holders shall have the rights set forth in Section 1.09
herein.
ARTICLE 1.09. NO SURRENDER OF CERTIFICATES. Until thereafter surrendered for
transfer or exchange, each outstanding stock certificate that, immediately prior
to the Effective Date, evidenced I-trax Common Stock shall be deemed and treated
A-4
<PAGE>
for all corporate purposes to evidence the ownership of the number of shares of
Holding Company Common Stock into which such shares of I-trax Common Stock were
converted pursuant to the provisions of Section 1.08(a) herein.
ACTIONS TO BE TAKEN IN CONNECTION WITH THE MERGER
ARTICLE 1.10. ASSUMPTION OF STOCK INCENTIVE PLAN. Holding Company and I-trax
shall, as of the Effective Date, execute, acknowledge and deliver an assignment
and assumption agreement (the "Assumption Agreement") pursuant to which Holding
Company will, from and after the Effective Date, assume and agree to perform all
obligations of I-trax pursuant to I-trax's 2000 Equity Compensation Plan (the
"Stock Incentive Plan"). As of the Effective Date, each option to purchase a
share of I-trax Common Stock which has been granted and is then outstanding and
unexercised under the Stock Incentive Plan ("Existing Stock Option") shall be
converted into an option to purchase one share of Holding Company Common Stock
at the same exercise price, for the same period and subject to substantially the
same terms and conditions applicable to the relevant Existing Stock Option
("Substitute Option"); provided, however, that each holder of the Existing Stock
Option shall execute and deliver to Holding Company, not later than the
Effective Date, an instrument in such form as Holding Company may prescribe to
evidence his or her acceptance of the terms and conditions of the Substitute
Option.
ARTICLE 1.11. RESERVATION OF SHARES. On or prior to the Effective Date, Holding
Company shall reserve sufficient authorized but unissued shares of Holding
Company Common Stock to provide for the issuance of Holding Company Common Stock
upon the exercise of options payable and outstanding under the Stock Incentive
Plan.
CONDITIONS OF MERGER
ARTICLE 1.12. CONDITIONS PRECEDENT. The obligations of the parties to this
Agreement to consummate the Merger and the transactions contemplated by this
Agreement shall be subject to fulfillment or waiver by the parties hereto of
each of the following conditions:
(a) Listing of Holding Company Common Stock. Prior to the Effective
Date, the Holding Company Common Stock to be issued pursuant to the Merger shall
have been approved for listing, upon official notice of issuance, by the
Over-the-Counter Bulletin Board ("OTC BB").
(b) Registration Statement. Prior to the Effective Date, a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
on Form S-4 promulgated thereunder relating to the issuance of shares Holding
Company Common Stock pursuant to Article 1.08(a) (the "Registration Statement")
above shall have become effective under the Securities Act or the parties hereto
shall have determined that no such registration statement is required.
A-5
<PAGE>
(c) Rules and Regulations. Prior to the Effective Date, no order,
statute, rule, regulation, executive order, injunction, stay, decree, judgment
or restraining order shall have been enacted, entered, promulgated or enforced
by any court or governmental or regulatory authority or instrumentality which
prohibits or makes illegal the consummation of the Merger or the transactions
contemplated hereby.
COVENANTS
ARTICLE 1.13. ELECTION OF DIRECTORS. I-trax, in its capacity as the sole
stockholder of Holding Company, shall elect each person who is then a member of
the board of directors of I-trax as a director of Holding Company (and to be the
only directors of Holding Company), each of whom shall serve until the next
annual meeting of stockholders of Holding Company and until his successor shall
have been elected and qualified or until such director's early resignation or
removal.
ARTICLE 1.14. LISTING OF HOLDING COMPANY COMMON STOCK. Holding Company shall use
its best efforts to obtain, at or before the Effective Date, authorization to
list, upon official notice of issuance, on the OTC BB of Holding Company Common
Stock issuable pursuant to the Merger.
ARTICLE 1.15. STOCK INCENTIVE PLAN. I-trax and Holding Company shall take or
cause to be taken all actions necessary or desirable in order for Holding
Company to assume the Stock Incentive Plan.
ARTICLE 1.16. REGISTRATION STATEMENT. Holding Company shall use its best efforts
to obtain effectiveness of the Registration Statement under the Securities Act.
ARTICLE II.
TAX TREATMENT OF THE MERGER
ARTICLE 2.01. CODE SECTION 351. The parties hereto intend and agree that the
Merger and the Contribution shall be treated as part of a single integrated
transaction qualifying under Section 351 of the Code, so that the I-trax
stockholders and the Members will be treated as a single group in control (as
defined in Section 368(c) of the Code) of the Holding Company immediately after
the Merger and the Contribution.
ARTICLE 2.02. FEDERAL INCOME TAX TREATMENT OF MEMBERS. The parties hereto intend
that for federal income tax purposes, the contribution by the Members of all of
the outstanding Interests to Holding Company in exchange for the Consideration
Shares will qualify under Section 351 of the Code, pursuant to which the Members
will not recognize any gain or loss.
ARTICLE 2.03. FEDERAL INCOME TAX TREATMENT OF THE I-TRAX STOCKHOLDERS. The
parties hereto intend that for federal income tax purposes, the Merger will be
A-6
<PAGE>
treated as a contribution by the I-trax stockholders of I-trax Common Stock in
exchange for Holding Company Common Stock and will qualify under Section 351 of
the Code, pursuant to which the I-trax stockholders will not recognize any gain
or loss.
ARTICLE 2.04. FEDERAL INCOME TAX TREATMENT OF THE HOLDING COMPANY. The parties
hereto intend that Holding Company shall not recognize any gain or loss as a
result of the Merger and Contribution under Section 362(a) of the Code.
ARTICLE III.
TERMINATION AND AMENDMENT
ARTICLE 3.01. TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Date by
action of the board of directors of I-trax, Holding Company or Indirect
Subsidiary if it is determined that for any reason the completion of the
transactions provided for herein would be inadvisable or not in the best
interest of such corporation or its stockholders. In the event of such
termination and abandonment, this Agreement shall become void and neither
I-trax, Holding Company or Indirect Subsidiary nor their respective
stockholders, directors or officers shall have any liability with respect to
such termination and abandonment.
ARTICLE 3.02. AMENDMENTS. This Agreement may be supplemented, amended or
modified by the mutual consent of the boards of directors of the parties to this
Agreement; provided, however, that, any amendment effected subsequent to
stockholder approval shall be subject to the restrictions contained in the DGCL.
No amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the parties hereto.
ARTICLE IV.
MISCELLANEOUS PROVISIONS
ARTICLE 4.01. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws.
ARTICLE 4.02. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.
ARTICLE 4.03. ENTIRE AGREEMENT. This Agreement, including the documents and
instruments referred to herein, constitutes the entire agreement and supersedes
all other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
A-7
<PAGE>
IN WITNESS WHEREOF, Holding Company, Indirect Subsidiary and I-trax
have caused this Agreement to be executed as of the date first written above by
the irrespective officers thereunto duly authorized.
I-TRAX.COM, INC.
By: /s/ Frank A. Martin
------------------------------
Name: Frank A. Martin
Title: Chief Executive Officer
I-TRAX, INC.
By: /s/ Frank A. Martin
------------------------------
Name: Frank A. Martin
Title: Chief Executive Officer
I-TRAX.COM ACQUISITION CO.
By: /s/ Frank A. Martin
------------------------------
Name: Frank A. Martin
Title: Chief Executive Officer
A-8
<PAGE>
I, Gary Reiss, Secretary of I-trax.com, Inc. do hereby certify that the
Board of Directors of I-trax.com, Inc. approved and adopted this Agreement at a
meeting duly called for such purpose on September 13, 2000 pursuant to Section
251(g) of the Delaware General Corporation Law and the conditions specified in
the first sentence of said Section 251(g) have been satisfied.
/s/ Gary Reiss
---------------------------
Name: Gary Reiss
Title: Secretary
I, Gary Reiss, Secretary of I-trax, Inc. do hereby certify that the
sole director and the sole stockholder of I-trax, Inc. approved and adopted this
Agreement by written consent pursuant to Sections 141(f) and 228(a),
respectively, of the Delaware General Corporation Law on September 17, 2000
pursuant to Section 251(g) of the Delaware General Corporation Law and the
conditions specified in the first sentence of said Section 251(g) have been
satisfied.
/s/ Gary Reiss
---------------------------
Name: Gary Reiss
Title: Secretary
I, Gary Reiss, Secretary of I-trax.com Acquisition Co. do hereby
certify that the that the sole director and the sole stockholder of I-trax.com
Acquisition Co. approved and adopted this Agreement by written consent pursuant
to Sections 141(f) and 228(a), respectively, of the Delaware General Corporation
Law on September 17, 2000 pursuant to Section 251(g) of the Delaware General
Corporation Law and the conditions specified in the first sentence of said
Section 251(g) have been satisfied.
/s/ Gary Reiss
---------------------------
Name: Gary Reiss
Title: Secretary
A-9
<PAGE>
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145(a) of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
other than an action by or in the right of the corporation, by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or enterprise, against expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no cause to believe his conduct was unlawful.
Section 145(b) of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth
above, against expenses actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
court in which such action or suit was brought shall determine that, despite
such adjudication of liability, such person is fairly and reasonably entitled to
be indemnified for such expenses which the court shall deem proper.
Section 145 of the Delaware General Corporation Law further provides
that to the extent a director or officer of a Delaware corporation has been
successful in the defense of any action, suit or proceeding referred to in
subsections (a) or (b) of Section 145 or in the defense of any claim, issue or
matter therein, he shall be indemnified against any expenses actually and
reasonably incurred by him in connection therewith; that the indemnification
provided for by Section 145 shall not be deemed exclusive of any rights to which
the indemnified party may be entitled and the corporation may purchase and
maintain insurance on behalf of a director or officer of the corporation against
any liability asserted against him or incurred by him in any such capacity or
arising out of his status as such whether or not the corporation would have the
power to indemnify him against such liabilities under Section 145.
Section 102(b)(7) of the Delaware General Corporation Law permits a
Delaware corporation to include a provision in its Certificate of Incorporation,
and the Company's Certificate of Incorporation contains such a provision, to the
effect that, subject to certain exceptions, a director of a Delaware corporation
is not personally liable to the corporation or its stockholders for monetary
damages for a breach of his fiduciary duty as a director.
II-1
<PAGE>
The Company's Amended and Restated By-laws also provide that the
Company shall indemnify its directors and officers and, to the extent permitted
by the Board of Directors, the Company's employees and agents, to the full
extent permitted by and in the manner permissible under the laws of the State of
Delaware. In addition, the Company's By-laws permit the Board of Directors to
authorize the Company to purchase and maintain insurance against any liability
asserted against any of the Company's directors, officers, employees or agents
arising out of their capacity as such.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following exhibits are filed herewith:
NUMBER EXHIBIT TITLE
--------- --------------------------------------------------------------------
2.1 Agreement and Plan of Merger dated December 14, 1999 between
I-Trax.com, Inc. and Member-Link Systems, Inc. (Incorporated
by reference to Exhibit 2.1 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
2.2 Form of Agreement and Plan of Merger by and among the
Registrant, I-Trax.com and I-Trax.com Acquisition Co. (Exhibit
A to the prospectus filed herewith.)
3.1 Certificate of Incorporation of Registrant
3.2 By-laws of Registrant
4.1 Form of Common Stock certificate of Registrant's common stock
(Incorporated by reference to Exhibit 4.1 to I-Trax.com's
Registration Statement on Form 10-SB, Registration No.
000-30275.)
5.1 Form of Opinion of Ballard Spahr Andrews & Ingersoll, LLP
10.1 Agreement between Member-Link Systems, Inc. and The Office of
the Attending Physician of The Capitol. (Incorporated by
reference to Exhibit 10.1 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.2 Software License Agreement between Member-Link Systems, Inc.
and Walter Reed Army Medical Center. (Incorporated by
reference to Exhibit 10.2 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
II-2
<PAGE>
10.3 Office Lease dated October 22, 1999 by and between Reston
Plaza I & II, LLC and Member-Link Systems, Inc. (Incorporated
by reference to Exhibit 10.3 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.4 Consulting Agreement dated May 18, 2000 between I-Trax.com,
Inc. and Health Industry Investments, LLC (Incorporated by
reference to Exhibit 10.1 to I-Trax.com's Quarterly Report
Form 10-QSB for the quarter ended June 30, 2000.)
10.5 Lease Agreement dated April 10, 2000 between I-Trax.com, Inc.
and OLS Office Parnters, L.P. (Incorporated by reference to
Exhibit 10.1 to I-Trax.com's Quarterly Report Form 10-QSB for
the quarter ended June 30, 2000.)
10.6 Interim Agreement dated as of August 30, 2000 between
I-Trax.com and iSummit Partners, LLC
10.7 Contribution and Exchange Agreement dated as of September 22,
2000 by and among the Registrant, I-Trax.com, iSummit Partners
LLC, and Stuart Ditchek, A. David Fishman, and Granton
Marketing Nederland BV.
10.8 Side Letter Agreement dated September 22, 2000 to the
Contribution and Exchange Agreement dated as of September 22,
2000 by and among the Registrant, I-Trax.com, iSummit
Partners, LLC, and Stuart Ditchek, A. David Fishman, and
Granton Marketing Nederland BV.
10.9 Software License Agreement dated October 1, 1999, by and
between Member-Link Systems, Inc. and Mobile Care Foundation.
(Incorporated by reference to Exhibit 10.9 to I-Trax.com's
Registration Statement on Form 10-SB, Registration No.
000-30275.)
10.10 License Agreement dated November 9, 1999 between Member-Link
Systems, Inc. and Mobile Care Foundation. (Incorporated by
reference to Exhibit 10.10 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.11 Agreement dated December 1, 1999 between Member-Link Systems,
Inc. and Phoenix Children's Hospital. (Incorporated by
reference to Exhibit 10.11 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.12 Consulting Agreement dated February 2, 2000 between
I-Trax.com, Inc. and Kenneth Jennings, Ph.D. (Incorporated by
reference to Exhibit 10.12 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.13 Employment Agreement dated November 29, 1999 between
I-Trax.com and Michael O'Connell, M.D. (Incorporated by
reference to Exhibit 10.13 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
II-3
<PAGE>
10.14 Employment Agreement dated June 1, 1999 between Member-Link
Systems, Inc. and Hans C. Kastensmith. (Incorporated by
reference to Exhibit 10.14 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.15 Employment Agreement entered into on September 28, 2000,
effective as of January 1, 2000 between I-Trax.com and David
C. McCormack.
10.16 I-Trax.com, Inc. 2000 Equity Compensation Plan. (Incorporated
by reference to Exhibit 10.16 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
21.1 Subsidiaries of I-Trax, Inc.
23.1 Consent of Massella, Tomaro & Co., LLP.
23.2 Consent of Ballard Spahr Andrews & Ingersoll, (included in
Exhibit 5.1 above).
23.3 Consent of Bernath & Rosenberg, P.C.
99.1 Press Release, issued October 6, 2000. (Incorporated by
reference to Exhibit 99 to I-Trax.com's Current Report on Form
8-K filed on October 6, 2000.)
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) That, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) That prior to any public reoffering of the securities registered hereunder
through use of a prospectus that is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the registrant undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other Items of the applicable form.
II-4
<PAGE>
(c) That every prospectus (i) that is filed pursuant to paragraph (b)
immediately preceding, or (ii) that purports to meet the requirements of section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(d) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(e) To supply by means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein, that was not the
subject of and included in the registration statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1933,
the Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Philadelphia, Commonwealth of Pennsylvania, on the 27th day of October, 2000.
I-TRAX, INC.
By: /s/ Frank A. Martin
-----------------------------
Frank A. Martin, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Name Title Date
-----------------------------------------------------------------------------------
Chief Executive Officer:
<S> <C> <C>
By: /s/ Frank A. Martin Chief Executive Officer October 27, 2000
-------------------------
Frank A. Martin
Principal Financial and
Accounting Officer:
By: /s/ Frank A. Martin Treasurer October 27, 2000
--------------------------
Frank A. Martin
Sole Director:
By: /s/ Frank A. Martin Sole Director October 27, 2000
--------------------------
Frank A. Martin
</TABLE>
II-6
<PAGE>
EXHIIT INDEX
NUMBER EXHIBIT TITLE
--------- --------------------------------------------------------------------
2.1 Agreement and Plan of Merger dated December 14, 1999 between
I-Trax.com, Inc. and Member-Link Systems, Inc. (Incorporated
by reference to Exhibit 2.1 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
2.2 Form of Agreement and Plan of Merger by and among the
Registrant, I-Trax.com and I-Trax.com Acquisition Co. (Exhibit
A to the prospectus filed herewith.)
3.1 Certificate of Incorporation of Registrant
3.2 By-laws of Registrant
4.1 Form of Common Stock certificate of Registrant's common stock
(Incorporated by reference to Exhibit 4.1 to I-Trax.com's
Registration Statement on Form 10-SB, Registration No.
000-30275.)
5.1 Form of Opinion of Ballard Spahr Andrews & Ingersoll, LLP
10.1 Agreement between Member-Link Systems, Inc. and The Office of
the Attending Physician of The Capitol. (Incorporated by
reference to Exhibit 10.1 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.2 Software License Agreement between Member-Link Systems, Inc.
and Walter Reed Army Medical Center. (Incorporated by
reference to Exhibit 10.2 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.3 Office Lease dated October 22, 1999 by and between Reston
Plaza I & II, LLC and Member-Link Systems, Inc. (Incorporated
by reference to Exhibit 10.3 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.4 Consulting Agreement dated May 18, 2000 between I-Trax.com,
Inc. and Health Industry Investments, LLC (Incorporated by
reference to Exhibit 10.1 to I-Trax.com's Quarterly Report
Form 10-QSB for the quarter ended June 30, 2000.)
10.5 Lease Agreement dated April 10, 2000 between I-Trax.com, Inc.
and OLS Office Parnters, L.P. (Incorporated by reference to
Exhibit 10.1 to I-Trax.com's Quarterly Report Form 10-QSB for
the quarter ended June 30, 2000.)
II-7
<PAGE>
10.6 Interim Agreement dated as of August 30, 2000 between
I-Trax.com and iSummit Partners, LLC
10.7 Contribution and Exchange Agreement dated as of September 22,
2000 by and among the Registrant, I-Trax.com, iSummit Partners
LLC, and Stuart Ditchek, A. David Fishman, and Granton
Marketing Nederland BV.
10.8 Side Letter Agreement dated September 22, 2000 to the
Contribution and Exchange Agreement dated as of September 22,
2000 by and among the Registrant, I-Trax.com, iSummit
Partners, LLC, and Stuart Ditchek, A. David Fishman, and
Granton Marketing Nederland BV.
10.9 Software License Agreement dated October 1, 1999, by and
between Member-Link Systems, Inc. and Mobile Care Foundation.
(Incorporated by reference to Exhibit 10.9 to I-Trax.com's
Registration Statement on Form 10-SB, Registration No.
000-30275.)
10.10 License Agreement dated November 9, 1999 between Member-Link
Systems, Inc. and Mobile Care Foundation. (Incorporated by
reference to Exhibit 10.10 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.11 Agreement dated December 1, 1999 between Member-Link Systems,
Inc. and Phoenix Children's Hospital. (Incorporated by
reference to Exhibit 10.11 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.12 Consulting Agreement dated February 2, 2000 between
I-Trax.com, Inc. and Kenneth Jennings, Ph.D. (Incorporated by
reference to Exhibit 10.12 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.13 Employment Agreement dated November 29, 1999 between
I-Trax.com and Michael O'Connell, M.D. (Incorporated by
reference to Exhibit 10.13 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.14 Employment Agreement dated June 1, 1999 between Member-Link
Systems, Inc. and Hans C. Kastensmith. (Incorporated by
reference to Exhibit 10.14 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
10.15 Employment Agreement entered into on September 28, 2000,
effective as of January 1, 2000 between I-Trax.com and David
C. McCormack.
10.16 I-Trax.com, Inc. 2000 Equity Compensation Plan. (Incorporated
by reference to Exhibit 10.16 to I-Trax.com's Registration
Statement on Form 10-SB, Registration No. 000-30275.)
21.1 Subsidiaries of I-Trax, Inc.
23.1 Consent of Massella, Tomaro & Co., LLP.
23.2 Consent of Consent of Ballard Spahr Andrews & Ingersoll,
(included in Exhibit 5.1 above).
23.3 Consent of Bernath & Rosenberg, P.C.
99.1 Press Release, issued October 6, 2000. (Incorporated by
reference to Exhibit 99 to I-Trax.com's Current Report on Form
8-K filed on October 6, 2000.)
II-8
