AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22, 2000
REGISTRATION NO. 333-48862
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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I-TRAX, INC.
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(Exact name of registrant as specified in its charter)
Delaware 7389 23-3057155
--------------------------------------------------------------------------------
(State or other jurisdiction (Primary Standard (IRS Employer
of incorporation) Industrial Identification
Classification Code No.)
Number)
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. / /
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. / /
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 DECEMBER 22, 2000
PROSPECTUS
I-TRAX, INC.
18,733,084
SHARES OF
COMMON STOCK
You are a stockholder of I-Trax.com, Inc. This prospectus is being provided
to you in connection with the formation of a holding company for I-Trax.com's
operations. Once the holding company reorganization is complete, 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. common stock 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 will be able to obtain the asked and
bid price for our shares of common stock after the reorganization on the
Over-the-Counter Bulletin Board under the trading symbol IMTX.
In addition, in conjunction with the holding company reorganization, we
entered into an agreement with the three owners of iSummit Partners, LLC.
iSummit Partners is doing business as MyFamilyMD. We agreed to issue up to
4,272,500 shares of our common stock to the owners of MyFamilyMD in exchange for
their contributions to us of the equity interests in MyFamilyMD. This prospectus
does not cover the shares of our common stock that we agreed to issue to the
owners of MyFamilyMD.
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 13 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.
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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.........................14
TERMS OF THE TRANSACTION WITH MYFAMILYMD......................................15
REORGANIZATION OF THE CORPORATE STRUCTURE.....................................16
DESCRIPTION OF CAPITAL STOCK..................................................20
COMPARISON OF CAPITAL STOCK...................................................21
MARKET PRICE AND DIVIDENDS OF I-TRAX.COM, INC. COMMON STOCK...................21
UNAUDITED PRO FORMA FINANCIAL STATEMENTS......................................22
MANAGEMENT'S DISCUSSION AND ANALYSIS..........................................26
BUSINESS......................................................................30
MANAGEMENT....................................................................38
EXECUTIVE COMPENSATION........................................................41
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................44
LEGAL OPINION.................................................................45
EXPERTS.......................................................................45
WHERE YOU CAN FIND MORE INFORMATION...........................................46
FINANCIAL INFORMATION........................................................F-1
EXHIBIT A AGREEMENT AND PLAN OF MERGER...................................A-1
ii
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SUMMARY OF THE PROSPECTUS
This brief summary highlights selected information from this document but
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, this document is written from the point of
view of I-Trax.com. 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 Co. 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" on page 35 of
this prospectus and under the heading "Terms of the Transaction with MyFamilyMD"
on page 15 of this prospectus, we have entered into agreement with MyFamilyMD
and its owners pursuant to which they will contribute all of the ownership
interests in MyFamilyMD in exchange for up to 4,272,500 shares of our common
stock. This prospectus does not cover the shares of common stock that we expect
to issue to the owners of MyFamilyMD. 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.
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.
Section 251(g) of the Delaware General Corporation Law
We are accomplishing the holding company reorganization pursuant to Section
251(g) of the Delaware General Corporation Law. We can merge I-Trax.com into
I-Trax.com Acquisition, a direct wholly-owned subsidiary of Holding Company and
an indirect wholly-owned subsidiary of I-Trax.com, without the consent of our
stockholders if we meet the requirements of Section 251(g). Thus, Section 251(g)
requires Holding Company to be a Delaware corporation with a certificate of
incorporation (except with respect to certain non-material provisions) and
by-laws identical to those of I-Trax.com. Section 251(g) also requires that the
certificate of incorporation of I-Trax.com provide that any transaction, which
by statute or certificate of incorporation provision required a vote of
I-Trax.com stockholders, shall in addition require a vote of Holding Company
stockholders. Further, Section 251(g) requires that the directors of Holding
Company after the reorganization must be the same as the directors of I-Trax.com
prior to the transaction. The reorganization must not result in the recognition
of gain or loss for United States federal income tax purposes by our
stockholders, and must result in each of our stockholders receiving the same
number of Holding Company shares as the stockholder held in I-Trax.com. Finally,
Holding Company shares must have the same voting powers, designations,
preferences and rights, and the same qualifications, restrictions and
limitations, as the stock previously held by the stockholder.
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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.
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
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 basis of accounting of
I-Trax.com and will be substantially identical to I-Trax.com's financial
statements prior to the reorganization.
The reorganization does not relate to the acquisition of MyFamilyMD, which
will be accounted for as a purchase.
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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 equity
interests in MyFamilyMD. Holding Company does not have any present intention to
engage in any other business activity; however, we expect that Holding Company
will acquire other operating companies in the health care or a related industry
if an appropriate opportunity presents itself.
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.
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 18.6% 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 in this prospectus. We do not
intend to seek approval for this transaction from our stockholders because none
is required under Section 251(g) of the Delaware General Corporation Law
pursuant to which we are completing the reorganization.
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Prior to November 20, 2000, MyFamilyMD's principal executive offices were
located at 60 Madison Avenue, Suite 903, New York, New York 10010. Effective as
of November 20, 2000 the principal executive offices of MyFamilyMD were
relocated to One Logan Square, 130 N. 18th Street, Suite 2615, Philadelphia,
Pennsylvania 19103. Its telephone number is (215) 557-7488.
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STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This prospectus includes and incorporates forward-looking statements. 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.
You should carefully consider the discussion of these and other factors in
the section entitled "Risk Factors" beginning on page 6.
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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, Which Requires Us, Among
Other Things, to Deploy Our Products Effectively, Attract Customers, and Develop
and Upgrade Our Technology
Although we believe our strategy can be successful, there are many reasons
why we may be unable to implement it successfully, 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.
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 September 30, 2000, our accumulated
deficit was $4,141,496. 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
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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 and We May Be Unable to Raise
Additional Capital
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
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 Business Model May Never 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.
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Our Dependence on the Internet and Internet Related Technologies Subjects Us to
Frequent Change and Numerous Risks
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
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 May Be Unable to Market Our Products Effectively Due to Our 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.
Our Business Will Be Adversely Affected If We Lose Key Employees or Fail to
Recruit and Retain Other Skilled Employees
Our Chairman, 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.
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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
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.
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;
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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.
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.
-10-
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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.
If Our Platform Infrastructure and its Scalability Cannot be Proven, Customers
May Be Reluctant to Purchase our Products
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.
We May be Sued by Our Users if We Provide Inaccurate Health Information on Our
Website or Inadvertently Disclose Confidential Health Information to
Unauthorized Users
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.
If Our Intellectual Property Rights Are Undermined By Third Parties Our Business
Will Suffer
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
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<PAGE>
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.
Provisions of Our Certificate of Incorporation Could Impede a Takeover of Our
Company Even Though a Takeover May Benefit Our Stockholders
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 38.5%
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, Which Will
Prevent Us From Executing Our Business Plan
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.
The Loss of Any of Our Very Limited Number of Customers Will Have a Material
Adverse Effect On Our Business
Historically, a very limited number of customers has accounted for a
significant percentage of our revenues. In 1998, our largest customer, Walter
Reed Army Medical Center, accounted for 71% of revenues. In 1999, our largest
two customers, Walter Reed Army Medical Center and Office of the Attending
Physician, accounted for 76% of revenues. In the nine month period ended
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September 30, 2000, our largest customers, Office of the Attending Physician and
The Henry M. Jackson Foundation, accounted for 83% 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.
We May be Unable to Integrate MyFamilyMD into Our Operations, Which Will Have A
Material Adverse Effect On Our Business
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, it will have a material
adverse effect on our business, financial condition and prospects.
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<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 nine months ended September 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 Nine months ended
December 31, September 30,
Statement of Operations Data 1999 1998 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 987,533 $347,800 $ 277,163 $ 601,376
Operating expenses 1,558,087 274,276 3,666,713 931,641
(Loss) income from operations (570,554) 73,524 (3,389,550) (330,265)
Interest expense 258 500 2,619 255
Other income (expenses) 9,171 -- (102,692) --
Net (loss) income (561,641) 73,024 (3,494,861) (330,520)
Basic and diluted (loss) income per share (.05) .01 (.20) (.03)
Basic and diluted weighted average
shares outstanding 11,336,168 8,852,751 17,767,904 10,409,601
</TABLE>
<TABLE>
<CAPTION>
(Unaudited)
December 31, September 30,
Balance Sheet Data 1999 2000
---- ----
<S> <C> <C>
Cash $ 195,728 $ 311,181
Accounts receivables 412,038 339,094
Office Equipment and furniture, net 36,120 327,152
Working capital 336,410 76,078
Total assets 708,818 1,513,360
Total liabilities 296,126 798,483
Stockholders' equity 412,692 714,877
</TABLE>
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<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" on page 35 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 18.6% 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.
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REORGANIZATION OF THE CORPORATE STRUCTURE
The Boards of Directors of I-Trax.com and Holding Company have approved a
plan of reorganization under which 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 into a holding company structure
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;
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.
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<PAGE>
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 November 30, 2000, directors and executive officers of
I-Trax.com and their affiliates were the beneficial owners of 8,865,417 shares
(47.3% 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.
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.
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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.
Costs of the Reorganization
The costs of the reorganization to Holding Company and I-Trax.com are
estimated at approximately $50,000. 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.
The reorganization does not relate to the acquisition of MyFamilyMD, which
will be accounted for as a purchase.
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. We have been advised by our counsel, Ballard Spahr
Andrews & Ingersoll, LLP, provided that the reorganization is consummated as
described herein, the reorganization will have the following material tax
consequences under current law:
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
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exchange therefor, provided that such I-Trax.com common stock is held
as a capital asset on the date of consummation of the reorganization.
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.
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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.
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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--Provisions of Our Certificate of
Incorporation Could Impede a Takeover of Our Company Even Though a Takeover May
Benefit Our Stockholders" 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 November 30) $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 December 4, 2000, the last reported sales price of I-Trax.com common
stock was $3.00. As of November 30, 2000, there were approximately 705
registered holders of record of the I-Trax.com common stock. As of the same
date, 18,733,084 shares of I-Trax.com common stock were outstanding.
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.
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<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following table sets forth at September 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. A Pro Forma Statement of Operations
has not been provided as of December 31, 1999 because MyFamilyMD did not
commence operations until January 18, 2000.
For purposes of the following pro forma financial statements, the valuation
of the purchase price and the allocation thereof is deemed preliminary as of the
date of this prospectus. Although I-Trax.com expects to obtain a formal
valuation of its common stock to be issued in the MyFamilyMD transaction and the
allocation of the purchase price to the intangible assets, such valuation has
not been completed as of the date of this prospectus. For purposes of recording
the acquisition of MyFamilyMD in the pro forma financial statements, the
I-Trax.com has established $2 per share as the value of its common stock because
this is the price of at which common stock was sold in its most recent private
placement.
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<PAGE>
PRO FORMA BALANCE SHEET
<TABLE>
<CAPTION>
Pro Forma
Consolidated
I-trax, iSummit
Inc. Partners, LLC
I-Trax.com (Unaudited) (MyFamilyMD) Pro Forma
I-Trax.com, Acquisition I-trax, (Net of September 30, Pro Forma Consolidated
Inc. Co. Inc. Elimination 2000 Adj. Adjustments I-trax, Inc.
(Unaudited) (Unaudited) (Unaudited) Entries) Unaudited Ref. (Unaudited) (Unaudited)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash $ 311,181 $ - $ - $ 311,181 $ 28,456 $ - $ 339,637
Accounts receivable 339,094 - - 339,094 - - 339,094
Prepaid expenses 121,606 - - 121,606 - - 121,606
Other receivables 75,414 10 10 75,414 26,102 - 101,516
------------------------------------------------------------------------------------------------------
Total current assets 847,295 10 10 847,295 54,558 - 901,853
------------------------------------------------------------------------------------------------------
Machinery & Equipment, net 327,152 - - 327,152 13,218 340,370
Software Development Costs 210,750 - - 210,750 - 210,750
Intangible assets -
goodwill, etc. - - - A 6,836,000 3,904,549
B 100,635
C (1,732,086)
D (1,300,000)
Security deposits 128,163 - - 128,163 - - 128,163
------------------------------------------------------------------------------------------------------
Total assets $ 1,513,360 $ 10 $ 10 $1,513,360 $ 67,776 $3,904,549 $5,485,685
======================================================================================================
Total Liabilities $ 798,483 $ - $ - $ 798,483 $ 168,411 $ - $ 966,894
------------------------------------------------------------------------------------------------------
Common Stock 18,711 10 10 18,711 - A 3,418 22,129
Additional Paid - In -
Capital 4,870,996 - - 4,870,996 - A 6,832,582 11,703,578
Member's deficit - - - - (100,635) B 100,635 -
Accumulated Deficit and
Other (4,174,830) - - (4,174,830) - C (1,732,086) (7,206,916)
D (1,300,000)
------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 714,877 10 10 714,877 (100,635) 3,904,549 4,518,791
======================================================================================================
Total liabilities &
stockholder's equity $ 1,513,360 $ 10 $ 10 $1,513,360 $ 67,776 $3,904,549 $5,485,685
======================================================================================================
</TABLE>
See accompanying notes on page 25.
-23-
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
iSummit
Partners, LLC
From
Inception
January 18,
I-Trax.com Pro Forma 2000, to Pro Forma
I-Trax.com, Acquisition I-trax, Consolidated September 30, Pro Forma Consolidated
Inc. Co. Inc. I-trax, Inc. 2000 Adj. Adjustments I-trax, Inc.
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Ref. (Unaudited) (Unaudited)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $ 277,163 $ - $ - $ 277,163 $ - $ - $ 277,163
-------------------------------------------------------------------------------------------------------
Operating expenses:
Cost of revenue 163,123 - - 163,123 - - 163,123
General and
administrative 3,372,752 - - 3,372,752 1,210,635 C 1,732,086 7,615,473
D 1,300,000
Marketing & advertising 130,838 - - 130,838 - - 130,838
-------------------------------------------------------------------------------------------------------
Total operating expenses 3,666,713 - - 3,666,713 1,210,635 3,032,086 7,909,434
-------------------------------------------------------------------------------------------------------
Loss before other income
(expenses) (3,389,550) - - (3,389,550) (1,210,635) (3,032,086) (7,632,271)
Other income (expenses) (105,311) - - (105,311) - - (105,311)
-------------------------------------------------------------------------------------------------------
Net loss $ (3,494,861) $ - $ - $(3,494,861) $(1,210,635) $(3,032,086) $(7,737,582)
=======================================================================================================
SHARE DATA:
Basic and Diluted*:
Net loss $ (0.20) n/a n/a $ (0.20) n/a $ (0.37)
=======================================================================================================
Weighted average number of
shares outstanding 17,767,904 1,000 1,000 17,767,904 n/a n/a 21,185,904
=======================================================================================================
</TABLE>
See accompanying notes on page 25.
-24-
<PAGE>
FOOTNOTES TO PRO FORMA BALANCE SHEET
------------------------------------
AND
---
STATEMENT OF OPERATIONS
-----------------------
* Basic and Diluted Earnings Per Share are the same because the effect of
potentially dilutive securities including options and contingent
issuable shares would be antidilutive.
Adj. A Pursuant to the Contribution & Exchange Agreement, I-trax, Inc. will
issue an aggregate of up to 4,272,500 shares of its common stock to the
owners of iSummit Partners, LLC. Of this total of number of shares,
1,709,000 will be held in escrow and released as follows; (i) 854,500
shares upon the completion and launch of MyFamilyMD technology (the
"MedWizards") and (ii) 854,500 shares when and if the revenues generated
by the MedWizards during the period beginning on the launch date 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 to be released will be reduced by one share for every
$5.50 shortfall in revenues. Accordingly, in connection with the terms
of the Contribution & Exchange Agreement, I-trax, Inc. will initially
issue 3,418,000 shares at $2 each of its common stock or $6,836,000,
which is composed of 2,563,500 (the guaranteed shares) and 854,500 (the
shares issuable in connection with the development of the MyFamilyMD
technology (which is being developed by I-Trax.com)). The remaining
854,500 shares will be recognized as a compensation expense ($1,709,000
assuming the stock is valued at $2 per share) if revenues generated by
MyFamilyMD technology reach $11,000,000 on the first anniversary of the
launch date of the MedWizards. The purchase price and the allocation
thereof are preliminary. As of the date of this prospectus, I-Trax.com
is obtaining a valuation of the I-trax, Inc. common stock that is
expected to be issued and the assets that it expects to acquire in
MyFamilyMD transaction.
Adj. B To eliminate iSummit Partners, LLC partner's deficit upon consolidation.
Adj. C To write off an estimated 25% of the purchase price to purchased R&D as
management believes this amount represents the acquired in-process
research which has not reached technical feasibility and has no
alternative future use.
Adj. D To amortize goodwill and other intangible assets over an average life of
three years.
-25-
<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 our name to Ibex
Industries International, Inc. On April 1, 1996, we purchased the assets of
certain physician practices, changed our 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, I-Trax.com, Inc. (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.
The Company returned 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
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 merger of Member-Link into the Company effective as of December 30,
1999 will have a substantial impact on the Company's current and future
operating results. The Company's operating results will be negatively affected
as to profitability until mid-2001 because the Company expects to devote
substantial sums to developing current and new products, expanding sales and
marketing resources necessary to implement rapid rollout of such products into
additional markets, and attract and retain additional management personnel.
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.
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<PAGE>
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
Nine-Months Ended September 30, 2000 Compared to Nine-Months Ended
September 30, 1999.
Total revenues for the nine-month period ended September 30, 2000 decreased
to $277,163 as compared to $ 601,376 for the nine-month period ended September
30, 1999, due primarily to the Company's continued migration to an Internet
model as well as normal sales cycles. Cost of revenue was $163,123 for the
nine-month period ended September 30, 2000 as compared to $209,705 for the prior
comparable period, consisting primarily of computer hardware and networking and
consulting expenses.
The aggregate operating expenses for the nine-month period ended September
30, 2000 increased to $3,503,590 as compared to $ 721,936 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 $3,372,752 during this period as compared to $702,028 for the
prior comparable period. Selling, general and administrative expenses consisted
primarily of compensation for product development, 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, and the development of its core products and new
products. The Company intends to continue to spend in these categories in future
periods to support continued growth and expansion.
For the nine months ended September 30, 2000 and 1999, the Company
generated losses amounting to $3,494,861 and $ 330,520, respectively. The
increase in losses is directly attributable to its increasing selling, general
and administrative expenses, which are expected to continue through mid 2001.
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.
-27-
<PAGE>
Liquidity and Capital Resources
The Company's accumulated deficit of approximately $4,142,000 from
inception through September 30, 2000 has been funded primarily 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 $1,794,880 (net
of offering expenses), which have funded the Company's planned 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. As of September 30,
2000, the Company had sold 857,750 shares pursuant to this private placement,
yielding to the Company an aggregate of $1,715,500. The Company closed the
private placement on November 12, 2000. As of November 12, 2000, the Company had
sold 905,000 shares pursuant to this private placement yielding to the Company
an aggregate of $1,810,000. The raised funds have been and will be used to fund
operations and to accelerate the Company's product development efforts. The
funds will also be used 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" on page 35. The
Company believes that these funds, together with anticipated collection of its
accounts receivables, its anticipated revenues and certain bridge financing
(which is currently under negotiations) will be sufficient to meet the Company's
present business expansion requirements until the end of the second quarter of
2001, at which time the Company expects to become self sufficient. Although the
Company plans to seek additional capital during the first half of fiscal 2001,
there can be no assurance that such financing will be available on acceptable
terms, if at all.
To allow the Company to meet its current monthly cash requirements, during
October 2000, the Company's Chief Executive Officer and Chief Operating Officer
advanced an aggregate of $500,000 to the Company for working capital.
Furthermore, effective as of November 13, 2000, we initiated an offering of
convertible promissory notes and stock purchase warrants to accredited investors
pursuant to Rule 506 of Regulation D. As of the date hereof we have raised
approximately $1,350,000 pursuant to this offering.
At September 30, 2000, the Company had approximately $310,000 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 nine-months ended September 30, 2000, the Company used $2,806,316
of cash for operating activities and $484,411 for investing activities (which
was primarily for the purchase of office equipment and furniture and fixtures).
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
$3,475,380 for the nine months ended September 30, 2000.
For the nine-months ended September 30, 1999, the Company used $208,585 for
operating activities and $29,963 for investing activities. All of the cash used
was funded from borrowings pursuant to a promissory note and sale of common
stock.
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.
The Company is susceptible to additional risk because each of its few
customers accounts for a large percentage of revenues. For the three and nine
months ended September 30, 2000, the Company had two unrelated customers,
respectively, which accounted for 50% and 42% and 39% and 44% of total revenues,
respectively. For the three and nine months ended September 30, 1999, the
Company had one unrelated customer, which accounted for 74% and 82% of total
revenues, respectively. As of September 30, 2000, the Company had two unrelated
customers, which accounted for 48% and 36%, respectively, of accounts
receivables.
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<PAGE>
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.
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.
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<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
which will own I-Trax.com and 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,
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 18,733,084 outstanding shares of
common stock.
Our Products
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. More specifically, our software permits
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<PAGE>
every individual or entity, such as the family physician, the specialist, the
school nurse, the emergency room nurse or the pharmacist, who may be called upon
to administer care to an individual, or the individual herself, with proper
authorization, to enter data into or view such individual's medical records. We
are also developing a series of proprietary data management applications, some
of which we will make available over the Internet. Once these proprietary
applications are deployed, we will greatly expand the individuals and entities
who can share the clinical health information that is stored in our database.
Each of our software applications is built on a common platform--Medicive
Medical Enterprise Data System(TM)--our proprietary, intelligent software
architecture. The Medicive Medical Enterprise Data System(TM) is a proprietary
database developed to collect, store, retrieve and analyze a broad range of
information used in the healthcare industry. In fact, Medicive(TM) is capable of
handling all data necessary to operate one or many medical treatment facilities.
The Medicive Medical Enterprise Data System(TM) is designed to receive
information for both the most complex and the simplest tasks encountered in a
medical setting. It currently accommodates over 1,000 standard data elements
containing in excess of 4,000 data sub-elements. We believe that it provides the
platform for development of unlimited healthcare applications. A key feature of
The Medicive Medical Enterprise Data System(TM) is its open architecture, which
permits it 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.
The flexibility of Medicive Medical Enterprise Data System's(TM)
construction is due primarily to the effort that went into the design of its
architecture. Numerous focus groups with practicing health care providers were
held to design the architecture. As a result, it has been structured to capture
information about the general health care process or activity and then to narrow
the health care process or activity to the most specific level. Thus, the
architecture permits new data to be added to the database because in the
predominate majority of the instances new data are extensions of data already
addressed in the database. We believe that Medicive Medical Enterprise Data
System's(TM) flexibility in easily accommodating new health care processes or
activities gives us an advantage over competitors which may need to spend far
more time to modify their systems to accommodate new health care processes or
activities. The Medicive Medical Enterprise Data System(TM) contains and
organizes several industry standard medical data elements and is capable of
producing ICD9-CM, CPT, SNOMED, or Medcin coded medical data.
We have used our Medicive Medical Enterprise Data System(TM) as a basis for
several disease specific applications.
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.
eImmune(TM) 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. eImmune(TM) can provide a record of all immunizations,
makes those records always available and thereby avoids re-immunization because
of lost records. We believe that the flexibility and accessibility of
eImmune(TM) are not matched by any competing product. In addition, we believe
that integration of eImmune(TM) with MyFamilyMD technology will accelerate its
acceptance by parents and physicians.
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
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<PAGE>
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:
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 permitting
specialists, nurses, care managers, acute and primary care providers and
pharmacists up-to-the-minute access to disease and patient information. Because
our software permits real-time access to each patient's complete history by
logging into AsthmaWatch(R), none of the participants in the asthma care
delivery process would make decisions in a vacuum. Better patient care is
achieved by having the data necessary to make the best patient care decisions
available in real-time to all participating providers. Furthermore,
AsthmaWatch(R) was designed to match the protocol expected to be followed by the
applicable provider, thus preventing skipped steps.
When launched, the eCareCoordination(TM) feature of AsthmaWatch(R) will
allow all healthcare specialists, no matter where they are located, to access
the same record, enter their treatment and comments, and share that information
with the rest of the team by using the Internet. The current healthcare system
makes this type of collaboration difficult. 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.
Our 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. eCareCoordinator(TM) component of
AsthmaWatch(R) enables such networking and care coordination.
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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.
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.
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.
Patient Encounters: Employee Hours for Current Approach vs. eImmune(TM)
Approach
Current Process I-Trax.com Approach
Time/Patient Encounter 30 minutes 10-15 minutes
# of Patient Encounters 19,800 19,800
Total Hours/Year 9,900 4,125
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.
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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.
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 strategic partnerships with established medical information and
equipment companies can play a central role in our business strategy.
Specifically, we believe that our disease specific software products can be a
beneficial value-added product to such companies. We further believe that such
relationships will provide us access to 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.
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.
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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.
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
18.6% 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.
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Competition
Many companies are operating in one or more segments of the electronic
health-related market. We believe, however, our focus on building
disease-specific, coordinated-care applications, intended to operate in
conjunction with health care providers at the point of care, are unique and we
are not aware of any direct competitors in this market niche. Specifically, we
believe that our competitors approach disease management at the point of care in
a "one size fits all" fashion by offering the same product to every specialist.
After carefully examining many of these products, we believe that these products
lack features that we believe specialists require in information management
software. As an example, while doctors using our competitors' products enter
conditions by typing in free text, our products permit specialists to point and
click on a specific disease or condition. Because information collected in this
way is more suitable for analysis, our system permits quick outcome studies,
while our competitors' products using free-text based systems are more time
intensive. 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.)
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 standing strategic relationships
with two early adopters of our technology: Walter Reed Army Medical Center and
LA County/USC Medical Center, two entities that have used our custom
applications since 1995 and 1996, respectively. The use by these customers of
our software we believe has proved that our products add value to the delivery
of healthcare to patients with specific diseases. Second, we 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
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Company has registered the use of certain of its tradenames and service names in
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
are 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 November 20, 2000, the Company had 51
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.
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.
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MANAGEMENT
Executive Officers and Directors
The following table sets forth the executive officers and directors of
I-Trax.com and their ages:
Name Age Position
---- --- --------
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
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
Enterprise Data System 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.
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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.
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.
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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 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
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.
-40-
<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 $41,250.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
Restricted
Name and Principal Salary Bonus Stock Number of LTIP All
Position Year ($) ($) Other ($) Awards Options Payouts ($) Other ($)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frank A. Martin 1999 -0- -0- 25,000(1) -0- -0- -0- -0-
CEO
Hans C. Kastensmith 1999 77,250 -0- 125,000(2) -0- -0- -0- -0-
President
David C. McCormack 1999 100,984 -0- 41,250(3) -0- -0- -0- -0-
Chief Technology Officer
<FN>
__________
(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 $0.125 per share.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in Price
Name Granted Fiscal Year (Dollars per Share) Expiration Date
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frank A. Martin -0- -0- -0- N/A
Hans C. Kastensmith -0- -0- -0- N/A
David C. McCormack -0- -0- -0- N/A
</TABLE>
-41-
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs At Options/SARs at
FY-End (#) FY-End ($)
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.
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.
-42-
<PAGE>
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.
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.
-43-
<PAGE>
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
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 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.
-44-
<PAGE>
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.
LEGAL OPINIONS
The validity of the shares of common stock issued in the reorganization and
the tax treatment of 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.
-45-
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission (SEC File No. 0-30275). 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:
Judiciary Plaza Citicorp Center
Room 1024 500 West Madison Street Seven World Trade Center
450 Fifth Street, N.W. Suite 1400 13th Floor
Washington, D.C. 20549 Chicago, Illinois 60661 New York, New York 10048
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
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.
-46-
<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.
-F-1-
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
INDEX TO FINANCIAL STATEMENTS
Page
Number
------
Independent auditors' report F-3
Balance sheet at December 31, 1999 F-4
Statements of operations for the years
ended December 31, 1999 and 1998 F-5
Statement of stockholders' equity (deficiency) for the
years ended December 31, 1999 and 1998 F-6
Statements of cash flows for the
years ended December 31, 1999 and 1998 F-7
Notes to financial statements F-8 to F-17
-F-2-
<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-3-
<PAGE>
I-TRAX.COM, INC.
(FORMERLY U.S. MEDICAL ALLIANCE, INC.)
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
Current assets:
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-4-
<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-5-
<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-6-
<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-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 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
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 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. As consideration for the license, the Company issued
3,000,000 shares to Member Link Systems, Inc. ("Memberlink") which
were subsequently cancelled as a result of 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 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 accounting
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 in addition to the previously owned shares
represented 60% of the outstanding common stock immediately after the
merger. 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. No
goodwill or intangibles were recorded as the public shell (the
Company) only had nominal net assets and based on the reverse
acquisition accounting rules, the merger is valued at the net
tangible assets of the Company.
-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 1 -- ORGANIZATION (cont'd)
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.
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-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 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
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.
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) Software Development Costs
--------------------------
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-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 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-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 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-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 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-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 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-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
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-15-
<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-16-
<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)
f) 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 in addition to the previously
owned shares represented approximately 60% of the outstanding
common stock immediately after the merger. 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
1,800,000 shares of its common stock at $1 per share yielding
net proceeds of approximately $1,795,000 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-17-
<PAGE>
I-TRAX.COM, INC.
FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
Page
Number
------
Balance sheets at September 30, 2000 (unaudited) and
December 31, 1999 F-19
Statements of operations for the three months
ended September 30, 2000 and 1999 (unaudited) F-20
Statements of operations for the nine months
ended September 30, 2000 and 1999 (unaudited) F-21
Statement of stockholders' equity for the
nine months ended September 30, 2000 (unaudited) F-22
Statements of cash flows for the nine months
ended September 30, 2000 and 1999 (unaudited) F-23
Notes to financial statements (unaudited) F-24 to F-33
-F-18-
<PAGE>
I-TRAX.COM, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------
September 30,
2000 December 31,
(unaudited) 1999
----------- -----------
<S> <C> <C>
Current assets:
Cash $ 311,181 $ 195,728
Accounts receivables, net 339,094 412,038
Prepaid expenses 121,606 18,770
Other receivables 75,414 --
----------- -----------
Total current assets 847,295 626,536
----------- -----------
Office equipment and furniture, net 327,152 36,120
Software development costs 210,750 6,000
Security deposits 128,163 40,162
----------- -----------
Total assets $ 1,513,360 $ 708,818
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 418,123 $ 20,502
Accrued expenses 31,442 172,076
Convertible note payable -- 37,500
Due to related party 683 66,048
Capital lease payable 5,689 --
Deferred revenue 315,280 --
----------- -----------
Total current liabilities 771,217 296,126
----------- -----------
Capital lease obligation, net of current portion 27,266 --
----------- -----------
Total liabilities 798,483 296,126
----------- -----------
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,
18,710,834 and 16,028,084 issued and outstanding, respectively 18,711 16,028
Additional paid in capital 4,870,996 1,043,299
Accumulated deficit (4,141,496) (646,635)
Deferred expenses (33,334) --
----------- -----------
Total stockholders' equity 714,877 412,692
----------- -----------
Total Liabilities and Stockholders' Equity $ 1,513,360 $ 708,818
=========== ===========
</TABLE>
See accompanying notes to financial statements (unaudited)
-F-19-
<PAGE>
I-TRAX.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Three months
ended ended
September 30, September 30,
2000 1999
(unaudited) (unaudited)
------------ ------------
<S> <C> <C>
Revenue $ 212,936 $ 364,557
------------ ------------
Operating expenses:
Cost of revenue 117,610 21,406
General and administrative 1,624,457 213,005
Marketing and advertising 8,686 8,325
------------ ------------
Total operating expenses 1,750,753 242,736
------------ ------------
(Loss) income before other income (expenses)
and provision for income tax (1,537,817) 121,821
------------ ------------
Other income (expenses):
Miscellaneous income 11,718 --
Interest income 4,730 --
Interest expense (944) (87)
------------ ------------
Total other income (expense) 15,504 (87)
------------ ------------
(Loss) income before provision for income taxes (1,522,313) 121,734
------------ ------------
Provision for income taxes -- --
------------ ------------
Net (loss) income $ (1,522,313) $ 121,734
============ ============
Basic:
Net loss $ (.08) $ .01
============ ============
Weighted average number of shares
outstanding 18,325,647 13,472,53
============ ============
</TABLE>
See accompanying notes to financial statements (unaudited)
-F-20-
<PAGE>
I-TRAX.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months Nine months
ended ended
September 30, September 30,
2000 1999
(unaudited) (unaudited)
------------ ------------
<S> <C> <C>
Revenue $ 277,163 $ 601,376
------------ ------------
Operating expenses:
Cost of revenue 163,123 209,705
General and administrative expenses 3,372,752 702,028
Marketing and advertising 130,838 19,908
------------ ------------
Total operating expenses 3,666,713 931,641
------------ ------------
Loss before other income (expenses)
and provision for income taxes (3,389,550) (330,265)
------------ ------------
Other income (expenses):
Miscellaneous income 69,078 --
Interest income 4,730 --
Interest expense (2,619) (255)
Provision for loss contingency (176,500) --
------------ ------------
Total other income (expenses) (105,311) (255)
------------ ------------
Loss before provision for income taxes (3,494,861) (330,520)
------------ ------------
Provision for income taxes -- --
------------ ------------
Net loss $ (3,494,861) $ (330,520)
============ ============
Basic:
Net loss $ (.20) $ (.03)
============ ============
Weighted average number of
common shares outstanding 17,767,904 10,409,601
============ ============
</TABLE>
See accompanying notes to financial statements (unaudited)
F-21
<PAGE>
I-TRAX.COM, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Accumulated Deferred Stockhoders'
Shares Amount Capital Deficit Expenses Equity
------ ------ ------- ------- -------- ------------
<S> <C> <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 (Note 6(a)(i)) 1,800,000 1,800 1,793,080 -- -- 1,794,880
Sale of common stock
(Note 6(a)(ii)) 840,250 840 1,679,660 -- -- 1,680.500
Common Stock issued
in exchange for services
rendered 25,000 25 49,975 -- (33,334) 16,666
Common Stock issued
in connection with conversion
of related party debt 17,500 18 34,982 -- -- 35,000
Grant of Non-Qualified and
Non-Plan options to Consultants
as consideration for services -- -- 270,000 270,000
Net loss for the nine months
ended September 30, 2000 -- -- -- (3,494,861) -- (3,494,861)
---------- ------- ---------- --------- ------ ----------
Balances at September 30, 2000 18,710,834 $18,711 $4,870,996 $(4,141,496) $(33,334) $ 714,877
========== ======= ========== =========== ======== ==========
</TABLE>
See accompanying notes to financial statements (unaudited)
-F-22-
<PAGE>
I-TRAX.COM, INC
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months Nine months
ended ended
September 30, September 30,
2000 1999
(unaudited) (unaudited)
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,494,861) $ (330,520)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 22,809 4,664
Grant of Non-Qualified and Non-Plan
Options to Consultants for services 270,000 --
Decrease (increase) in:
Accounts receivable 72,944 80,430
Prepaid expenses (85,448) --
Other receivables (75,414) --
Security deposits (88,001) --
(Decrease) increase in:
Accounts payable 379,621 39,098
Accrued expenses (123,246) (2,257)
Deferred revenue 315,280 --
----------- -----------
Net cash used for operating activities (2,806,316) (208,585)
----------- -----------
Cash flows from investing activities:
Purchase of office equipment and furniture (279,661) (29,693)
Increase in software development costs (204,750) --
----------- -----------
Net cash used for investing activities (484,411) (29,693)
----------- -----------
Cash flows from financing activities:
Capital lease principal payments (1,335) --
(Repayment of) proceeds from convertible notes payable (37,500) 150,000
Repayments to related parties (30,365) (10,121)
Net proceeds from sale of common stock 3,475,380 58,500
----------- -----------
Net cash provided by financing activities 3,406,180 198,379
----------- -----------
Net increase (decrease) in cash 115,453 (39,899)
Cash and cash equivalents at beginning of period 195,728 52,883
----------- -----------
Cash and cash equivalents at end of period $ 311,181 $ 12,984
=========== ===========
Supplemental disclosure of non-cash flow information:
Cash paid during the period for:
Interest $ 2,619 $ 255
=========== ===========
Income taxes $ -- $ --
=========== ===========
Schedule of non-cash investing activities:
Acquisition of office equipment in connection
with capital lease obligation $ 34,290 $ --
=========== ===========
Schedule of non-cash financing activities:
Issuance of common stock in connection
with debt conversion $ (35,000) $ (405,500)
=========== ===========
</TABLE>
See accompanying notes to financial statements (unaudited)
-F-23-
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- ORGANIZATION AND 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.
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 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. As consideration for the license, the Company issued
3,000,000 shares to Member Link Systems, Inc. ("Memberlink"), which
were subsequently cancelled as a result of 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 developed, sold and licensed software
technology 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 accounting
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 in addition to the previously owned shares
represented 60% of the outstanding common stock immediately after the
merger. 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. No
goodwill or intangibles were recorded as the public shell (the
Company) only had nominal assets and based on the reverse acquisition
accounting rules, the merger is valued at the net tangible assets of
the Company.
The Company has substantial losses since incorporation. As of
September 30, 2000, our accumulated deficit was $4,174,830. Moreover,
we expect that our operating losses will continue for the foreseeable
future. Our ability to continue as a going concern is primarily based
on raising sufficient equity to meet our objectives.
-F-24-
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
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, the instructions 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 September 30, 2000 and the
results of the operations and cash flows for the three and nine month
periods ended September 30, 2000 and 1999. The results for the three
and nine month periods ended September 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.
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.
Revenue Recognition
-------------------
The Company recognizes revenues in accordance with Statement of
Position 97-2 "Software Revenue Recognition" as further modified by
Statement of Position 98-9 "Modification of SOP 97-2, "Software
Revenue Recognition with Respect to Certain Transactions". 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. 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-25
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 -- INTERIM RESULTS AND BASIS OF PRESENTATION (cont'd)
Revenue Recognition (cont'd)
-------------------
Revenue from software development contracts is recognized on a
percentage-of-completion method with progress to completion measured
based upon labor hours incurred or achievement of contract
milestones.
Revenue from re-sale of hardware and software, obtained from vendors,
is recognized at the time hardware and software is delivered to
customers.
Deferred revenue represents funds received in advance in excess of
revenue recognized.
Software Development Costs
--------------------------
In accordance with the provisions of Statement of Financial
Accounting Standard (SFAS) No. 86, Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed, the
Company capitalizes software development and production costs once
technological feasibility has been achieved. Software development
costs incurred prior to achieving technological feasibility are
included in research and development expense in the accompanying
statement of operations.
Capitalized software development costs are reported at the lower of
unamortized cost or net realizable value. Commencing upon the initial
product release or when software development revenue has begun to be
recognized, these costs are amortized, based on current and future
revenue for each product with an annual minimum equal to the
straight-line amortization over the remaining estimated economic life
of the product, generally two to five years.
-F-26-
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
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 September 30, 2000 is comprised of $683
of advances made by the Company's President (formerly an officer of
Memberlink). This amount was repaid in October 2000.
During September 2000, the Company issued 17,500 shares of its $.001
common stock to a former officer of Memberlink in lieu of repayments
of $35,000 of advances made by such officer during 1999.
NOTE 5 -- COMMITMENTS AND CONTINGENCIES
a) Nature of Business
------------------
The Company is subject to risks and uncertainties common to
growing technology-based companies, including rapid technological
developments, reliance on continued development and acceptance of
the internet, intense competition and a limited operating
history.
b) 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 exist.
c) Significant customers and vendors
---------------------------------
Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of accounts
receivable. For the three and nine months ended September 30,
2000, the Company had two unrelated customers, respectively,
which accounted for 50% and 42% and 39% and 44% of total
revenues, respectively. For the three and nine months ended
September 30, 1999, the Company had one unrelated customer, which
accounted for 74% and 82% of total revenues, respectively. As of
September 30, 2000, the Company had two unrelated customers,
which accounted for 48% and 36%, respectively, of accounts
receivables.
d) 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.
-F-27-
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 - COMMITMENTS AND CONTINGENCIES (cont'd)
d) Office Lease (cont'd)
---------------------
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 annual rental payments
under the non-cancelable operating leases in effect as of
September 30, 2000 are as follows:
For the year
ended December 31:
2000 $ 244,000
2001 292,005
2002 299,315
2003 306,804
2004 284,152
Thereafter 66,390
------------
$ 1,492,666
============
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 September 30, 2000 and
1999 amounted to approximately $72,000 and $15,500, respectively.
Rent expense for the nine months ended September 30, 2000 and
1999 amounted to approximately $174,000 and $26,000,
respectively.
e) Employment Agreements
---------------------
i) On June 1, 1999, Memberlink entered into three employment
agreements with certain officers of the Company. The Company
succeeded to Memberlink's obligations under these employment
agreements. 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, one with its chief technology officer and
one with its President. On September 28, 2000 with an effective
as of January 1, 2000, the Company entered into a new employment
agreement with the chief technology officer. The agreement is for
an initial term of three years and provides for initial annual
pay of $125,000. The employment agreement with its president
remains under negotiations as of December 18, 2000.
A third such agreement was terminated effective April 4, 2000,
pursuant to an agreement of settlement. The Company paid $50,000,
in $10,000 monthly installments commencing April 15, 2000, as
settlement payments for which such employee continued to render
services as necessary for the Company during the period of
installments. The Company also arranged for the sale of 70,000
shares of common stock of the Company held by this employee at a
price of $1.25 per share, which was deemed to be the market value
at the date of settlement. As of September 30, 2000 the Company
has paid all such installments and accordingly such former
employee is not obligated to perform any future services.
-F-28-
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 - COMMITMENTS AND CONTINGENCIES (cont'd)
e) 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(b)). Such options will
vest in increments to be determined, but in no event, later than
November 29, 2002.
f) Judgments
---------
During 1998, several judgments 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 judgments entered
against the Company and certain associated physicians was
approximately $600,000. As of September 30, 2000, the Company has
settled and paid all such judgments (except one), for
approximately $189,000 in the aggregate. The last judgment in the
amount of approximately $24,000, stemming from a breach of
contract claim, has not yet been satisfied due to the death of
the judgment holder. The Company's offer amounting to $6,000 is
likely to be accepted based on legal counsel's correspondence. As
of September 30, 2000, the Company has kept a $10,000 reserve in
its contingency loss accrual relating to this judgment.
g) 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 participants to
make pretax contributions and the Company to match 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 September 30, 2000, the Company has made no
contributions.
h) 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 related
equipment secures the lease.
-F-29-
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 - COMMITMENTS AND CONTINGENCIES (cont'd)
h) Capital lease obligation (cont'd)
---------------------------------
The future minimum lease commitment under the capital lease as of
September 30, 2000 is as follows:
For the year
ended December 31:
------------------
2000 $ 2,193
2001 8,771
2002 8,771
2003 8,771
2004 8,771
Thereafter 4,380
---------
Total future payments 41,657
Less amount representing interest (8,702)
---------
Present value of minimum lease payments $ 32,955
=========
At September 30, 2000 computer equipment under capital leases are
carried at a book value of $33,982.
NOTE 6 -- STOCKHOLDERS' EQUITY
a) Sale of common stock
--------------------
i) 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 $1,794,880 after certain offering
expenses. Such shares were sold pursuant to Rule 506 of
Regulation D promulgated under the Securities Act of 1933.
ii) In May 2000, the Company commenced a Private Placement ("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 September 30, 2000, the Company has sold an
aggregate of 840,250 shares yielding proceeds of $1,680,500. In
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.
-F-30-
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 -- STOCKHOLDERS' EQUITY (cont'd)
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 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. The exercise price of any
incentive stock option granted under the plan shall not be less
than the fair market value of the stock on the date of grant, as
determined in good faith be the board of directors.
As of September 30, 2000, the Company has granted an aggregate of
2,318,500 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.
A summary of the status of the Company's options as of September
30, 2000 and changes during the nine months then ended is
presented below:
<TABLE>
<CAPTION>
Exercise
Shares Price
<S> <C> <C>
Outstanding at beginning of period - January 1, 2000 -- --
Granted 2,318,500 Between $1.00 and
$2.00
Exercised -- --
Canceled -- --
Outstanding at end of period September 30, 2000 2,318,500
Options available for grant at end of period 681,500
</TABLE>
In addition, during the nine months ended September 30, 2000, the
Company granted 280,000 non-plan options to consultants. For the
three and nine months ended September 30, 2000, the Company
recorded $30,000 and $270,000 consulting expenses on account of
such options.
-F-31-
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 -- STOCKHOLDERS' EQUITY (cont'd)
b) 2000 Equity Compensation Plan
-----------------------------
During 2000, Financial Accounting Standard ("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 its incentive stock options is equal
to or less than the exercise price of the options at the date of
grant.
c) Issuance of Common Stock For Services
-------------------------------------
During August 2000, the Company issued 25,000 shares of its $.001
par value common stock at $2.00 per share along with payments for
recruiting expenses in connection with expanding its sales force.
As of September 30, 2000, a portion of such shares and cash
payments are considered prepaid because a portion of the services
was not received until after September 30, 2000. Accordingly, as
of September 30, 2000, $14,583 of cash has been recorded as
prepaid and $33,334 of stock issued has been recorded as a
deferred expense and accordingly presented as a reduction of
stockholders' equity.
NOTE 7 -- SUBSEQUENT EVENTS
a) Agreement to acquire iSummit Partners, LLC
------------------------------------------
In connection with the non-binding letter of intent entered into
during July 2000 with iSummit Partners, LLC (D/B/A MyFamilyMD)
("MyFamilyMD"), during September 2000, the Company entered into a
Contribution and Exchange Agreement (the "Exchange Agreement")
whereby the Company agreed to issue an aggregate of up to
4,272,500 shares of its common stock to the owners of MyFamilyMD
in exchange for all of the ownership interest in MyFamilyMD.
Of this total, up to 1,709,000 shares may be forfeited as
follows: 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.
Immediately prior to the closing of the above transaction, the
Company will perform a reorganization (as approved by the Board
of Director) whereby the Company will become a wholly owned
subsidiary of I-trax, Inc. ("Holding Company").
In the reorganization, the Company's outstanding common stock
will be converted into Holding Company common stock on a
share-for-share basis. Immediately following the reorganization,
the owners of MyFamilyMD will contribute their interest to the
Holding Company, which in effect will make MyFamilyMD a wholly
owned subsidiary of Holding Company.
-F-32-
<PAGE>
I-TRAX.COM, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7 -- SUBSEQUENT EVENTS (cont'd)
a) Agreement to Acquire iSummit Partners, LLC (cont'd)
---------------------------------------------------
As part of the Exchange Agreement, the Company committed to fund
the development of MyFamilyMD's products (the "New Intellectual
Property") and in the event that the transaction is not
consummated by March 31, 2001 (as stipulated in the Exchange
Agreement), the Company will retain ownership of the New
Intellectual Property. In addition in the event the transaction
is not consummated by March 31, 2001, the Company will pay
MyFamilyMD, over a five-year period, 7% of the consumer revenue
generated by the New Intellectual Property in exchange for any of
MyFamilyMD's intellectual property that the Company does not
already own.
-F-33-
<PAGE>
ISUMMIT PARTNERS, LLC
FINANCIAL STATEMENT
FROM INCEPTION
JANUARY 18, 2000 THROUGH AUGUST 31, 2000
-F-34-
<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-35-
<PAGE>
ISUMMIT PARTNERS, LLC
BALANCE SHEET
AUGUST 31, 2000
<TABLE>
<S> <C>
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
</TABLE>
See Notes to Financial Statements
-F-36-
<PAGE>
ISUMMIT PARTNERS, LLC
STATEMENT OF OPERATIONS AND MEMBERS' DEFICIT
FROM INCEPTION JANUARY 18, 2000 THROUGH AUGUST 31, 2000
<TABLE>
<S> <C>
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)
</TABLE>
See Notes to Financial Statements
-F-37-
<PAGE>
ISUMMIT PARTNERS, LLC
STATEMENT OF CASH FLOWS
FROM INCEPTION JANUARY 18, 2000 THROUGH AUGUST 31, 2000
<TABLE>
<S> <C>
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
</TABLE>
See Notes to Financial Statements
-F-38-
<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-39-
<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-40-
<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-41-
<PAGE>
ISUMMIT PARTNERS, LLC
FINANCIAL STATEMENTS
FOR THE MONTH ENDED SEPTEMBER 30, 2000
AND
FROM INCEPTION
JANUARY 18, 2000 THROUGH SEPTEMBER 30, 2000
(UNAUDITED)
-F-42-
<PAGE>
ISUMMIT PARTNERS, LLC
BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
September 30,
2000 August 30,
(unaudited) 2000
-------------- --------------
<S> <C> <C>
CURRENT ASSETS
--------------
Cash $ 28,456 $ 64,587
----
Loans Receivable 26,102 26,102
----------------
Total Current Assets 54,558 90,689
--------------------
Property, Plant and Equipment
-----------------------------
Furniture & Fixtures 3,248 3,248
--------------------
Equipment 13,004 13,004
---------
Less: Accumulated Depreciation (3,034) (2,709)
------------------------------
Total Property, Plant and Equipment 13,218 13,543
-----------------------------------
TOTAL ASSETS $ 67,776 $ 104,232
LIABILITIES AND MEMBERS' DEFICIT
CURRENT LIABILITIES
Accrued Expenses $ 168,411 $ 196,574
----------------
Total Current Liabilities 168,411 196,574
-------------------------
Commitments and Contingencies - -
-----------------------------
Members' Deficit (100,635) (92,342)
----------------
TOTAL LIABILITIES AND MEMBERS' DEFICIT $ 67,776 $ 104,232
</TABLE>
See Notes to Financial Statements (unaudited)
-F-43-
<PAGE>
ISUMMIT PARTNERS, LLC
STATEMENTS OF OPERATIONS AND MEMBERS' DEFICIT
FOR THE MONTH ENDED SEPTEMBER 30, 2000
AND
FROM INCEPTION JANUARY 18, 2000 THROUGH SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
For the Month From Inception,
Ended January 18, 2000
September 30, Through
2000 September 30,
(unaudited) 2000
-------------- -----------------
<S> <C> <C>
REVENUE $ -0- $ -0-
GENERAL AND ADMINISTRATIVE EXPENSES:
Salaries - 181,080
--------
Payroll Taxes - 19,572
-------------
Rent 7,083 42,932
----
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 885 3,840
----------------
Development Costs - 693,122
-----------------
Depreciation 325 3,034
------------
Telephone - 3,008
---------
Travel & Conferences - 15,275
--------------------
Total General & Administrative Expenses 8,293 1,210,635
---------------------------------------
Net Loss (8,293) (1,210,635)
Members' Contributions - 1,110,000
Members' Deficit - September 30, 2000 - $ (100,635)
</TABLE>
See Notes to Financial Statements (unaudited)
-F-44-
<PAGE>
ISUMMIT PARTNERS, LLC
STATEMENTS OF CASH FLOWS
FOR THE MONTH ENDED SEPTEMBER 30, 2000
AND
FROM INCEPTION JANUARY 18, 2000 THROUGH SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
For the Month From Inception,
Ended January 18, 2000
September 30, Through
2000 September 30,
(unaudited) 2000
-------------- -----------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ (8,293) $ (1,210,635)
--------
Adjustments to Reconcile Net Loss to Net Cash
Used For Operating Activities:
-----------------------------
Depreciation 325 3,034
------------
Changes in Operating Assets and Liabilities:
-------------------------------------------
Increase in Loans Receivables - (26,102)
-----------------------------
(Decrease) Increase in Accrued Expenses (28,163) 168,411
---------------------------------------
Total Adjustments (27,838) 145,343
-----------------
Net Cash Used for Operating Activities (36,131) (1,065,292)
--------------------------------------
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 (Decrease) Increase in Cash for the Period (36,131) 28,456
Cash - September 30, 2000 - $ 28,456
</TABLE>
See Notes to Financial Statements (unaudited)
-F-45-
<PAGE>
ISUMMIT PARTNERS, LLC
NOTES TO FINANCIAL STATEMENTS
FOR THE MONTH ENDED SEPTEMBER 30, 2000
AND
FROM INCEPTION JANUARY 18, 2000 THROUGH SEPTEMBER 30, 2000
(UNAUDITED)
NOTE 1 - GENERAL
ISUMMIT PARTNERS, LLC (the "Company") was formed in January 2000. The focus of
the Company is to develop software, which 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.
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.. 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 September 30, 2000 and
the results of the operations and cash flows for the one month then ended and
from inception, January 18, 2000 through September 30, 2000. The results for the
one month then ended and from inception, January 18, 2000 through September 30,
2000 are not necessarily indicative of the results to be expected for any
subsequent quarter or for the entire fiscal year ending August 31, 2001. The
balance sheet at August 31, 2000 has been derived from the audited financial
statements at that date.
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 regulation. It is suggested that these unaudited
financial statements be read in conjunction with the audited financial
statements and notes thereto from January 18, 2000, date of inception through
August 31, 2000 as included in this filing.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
The Company had a non-cancelable triple net lease for its operational and
development facility. The monthly rental payment was $7,083 under such lease,
which was to expire August 31, 2004. During November 2000, such lease was
mutually terminated with no additional costs or penalties as a result of the
sale of the membership's interest in the Company to I-Trax.com, Inc. (See note
5).
Rent expense for the month ended September 30, 2000 and from inception, January
18, 2000 to September 30, 2000, was $7,083 and $ 42,932, respectively.
-F-46-
<PAGE>
ISUMMIT PARTNERS, LLC
NOTES TO FINANCIAL STATEMENTS
FOR THE MONTH ENDED SEPTEMBER 30, 2000
AND
FROM INCEPTION JANUARY 18, 2000 THROUGH SEPTEMBER 30, 2000
(UNAUDITED)
NOTE 4 - 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
its 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.
Pursuant to the liquidation during February 2000, each of the shareholders
contributed his respective loan to the capital of the Company.
NOTE 5 - SALE OF MEMBERSHIP INTERESTS
In connection with the non-binding letter of intent entered into during July
2000 with I-Trax.com, Inc., during September 2000, the Company entered into a
Contribution and Exchange Agreement (the "Exchange Agreement") whereby the
members of the Company agreed to exchange their membership interest for an
aggregate of up to 4,272,500 shares of I-Trax.com, Inc.
Of this total, up to 1,709,000 shares may be forfeited by I-Trax.com, Inc as
follows: 854,500 shares in the event the Company does not meet certain product
development targets and up to 854,500 shares in the event the Company does not
meet certain revenue targets within one year after product launch.
Immediately prior to the closing of the above transaction I-Trax.com, Inc. will
perform a reorganization whereby the Company will become a wholly owned
subsidiary of I-Trax.com, Inc.
As part of the Exchange Agreement, I-Trax.com, Inc. committed to fund the
development of the Company's products (the "New Intellectual Property") and
assume certain overhead and salaries expense of the Company from August 1, 2000.
In the event that the transaction is not consummated by March 31, 2001 (as
stipulated in the Exchange Agreement), I-Trax.com, Inc. will retain ownership of
the New Intellectual Property. In addition, in the event the transaction is not
consummated by March 31, 2001, I-Trax.com, Inc. will pay the Company, over a
five year period, 7% of the consumer revenue generated by the New Intellectual
Property in exchange for any of the Company's intellectual property that
I-Trax.com, Inc. does not already own.
-F-47-
<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.
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").
-A-1-
<PAGE>
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
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.
-A-2-
<PAGE>
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.
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 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.
-A-3-
<PAGE>
ARTICLE II.
ACTIONS TO BE TAKEN IN CONNECTION WITH THE MERGER
ARTICLE 2.01. 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 2.02. 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.
ARTICLE III.
CONDITIONS OF MERGER
ARTICLE 3.01. 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.
(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.
ARTICLE IV.
COVENANTS
ARTICLE 4.01. 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 4.02. 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.
-A-4-
<PAGE>
ARTICLE 4.03. 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 4.04. REGISTRATION STATEMENT. Holding Company shall use its best
efforts to obtain effectiveness of the Registration Statement under the
Securities Act.
ARTICLE V.
TAX TREATMENT OF THE MERGER
ARTICLE 5.01. 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 5.02. 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 5.03. FEDERAL INCOME TAX TREATMENT OF THE I-TRAX STOCKHOLDERS. The
parties hereto intend that for federal income tax purposes, the Merger will be
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 5.04. 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 VI.
TERMINATION AND AMENDMENT
ARTICLE 6.01. 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 6.02. 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 VII.
MISCELLANEOUS PROVISIONS
ARTICLE 7.01. 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 7.02. 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.
-A-5-
<PAGE>
ARTICLE 7.03. 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.
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-6-
<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-7-
<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.
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.
-II-1-
<PAGE>
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 (Revised)
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 Opinion of Ballard Spahr Andrews & Ingersoll, LLP
5.2 Opinion of Ballard Spahr Andrews & Ingersoll, LLP (Tax
Matters)
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 Partners, 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.
-II-2-
<PAGE>
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 effective as of January 1, 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 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.)
* Previously filed.
+ Management contract or compensatory plan.
-II-3-
<PAGE>
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.
(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-4-
<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 22nd day of December 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.
Name Title Date
---- ----- ----
Chief Executive Officer:
By: /s/ Frank A. Martin Chief Executive Officer December 22, 2000
------------------- -----------------------
Frank A. Martin
Principal Financial and
Accounting Officer:
By: /s/ Frank A. Martin Treasurer December 22, 2000
------------------- -----------------------
Frank A. Martin
Sole Director:
By: /s/ Frank A. Martin Sole Director December 22, 2000
------------------- -----------------------
Frank A. Martin
-II-5-
<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 (Revised)
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 Opinion of Ballard Spahr Andrews & Ingersoll, LLP
5.2 Opinion of Ballard Spahr Andrews & Ingersoll, LLP (Tax Matters)
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 Partners, 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.
1
<PAGE>
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 effective as of January 1, 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 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.)
* Previously filed.
+ Management contract or compensatory plan.
2
