PRACTICE WORKS INC, S-1, 2001-01-16

PRACTICE WORKS INC
S-1, 2001-01-16
MANAGEMENT CONSULTING SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 16, 2000

REGISTRATION NO. 333-

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

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PRACTICEWORKS, INC.

(Exact name of registrant as specified in its charter)

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<TABLE>
<S> <C> <C>
DELAWARE 7372 52-2259090
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

1765 THE EXCHANGE

SUITE 200

ATLANTA, GEORGIA 30339

(770) 850-5006

(Address, including zip code, and telephone number, including

area code, of registrant's principal executive offices)

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JAMES K. PRICE

CHIEF EXECUTIVE OFFICER AND PRESIDENT

PRACTICEWORKS, INC.

1765 THE EXCHANGE

SUITE 200

ATLANTA, GEORGIA 30339

(770) 850-5006

(Name, address, including zip code, and telephone number, including area code,
of agent for service)

COPY TO:

JOHN J. KELLEY III

KING & SPALDING

191 PEACHTREE STREET

ATLANTA, GEORGIA 30303-1763

(404) 572-4600

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement is declared effective.

If any securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), 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 for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
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. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per
share............................ 9,000,000 shares $4.21 $37,890,000 $9,473
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</TABLE>

(1)Calculated pursuant to Rule 457(f)(2) under the Securities Act, based on the
book value of the Registrant as of December 31, 2000.

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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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.

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<PAGE> 2

[INFOCURE LETTERHEAD]

, 2001

Dear Fellow Stockholder:

I am pleased to inform you that the Board of Directors of InfoCure
Corporation has approved a pro rata distribution to holders of InfoCure common
stock of all of the outstanding shares of common stock of PracticeWorks, Inc.,
an information management technology provider to dentists, orthodontists and
oral and maxillofacial surgeons. PracticeWorks is currently an indirect, wholly
owned subsidiary of InfoCure.

The distribution will take place on , 2001. Each holder of
InfoCure common stock as of , 2001 will receive 1/4 of a share of
PracticeWorks common stock for every share of InfoCure common stock held on that
date. No fractional shares of PracticeWorks common stock will be issued. If you
otherwise would be entitled to a fractional share, you will receive a check for
the cash value of the fractional share interest.

We have applied to list the PracticeWorks common stock you are receiving on
the Nasdaq Stock Market's National Market under the symbol "PWKS."

We believe that the distribution will meaningfully enhance value for
InfoCure stockholders and will give PracticeWorks the financial and operational
flexibility to take advantage of significant growth opportunities in the
information management technology business for the dental, orthodontic and oral
and maxillofacial surgery markets. We believe that separating the two companies
will enhance the ability of each of PracticeWorks and InfoCure to focus on new
business opportunities and to design equity-based compensation programs targeted
to its own performance. In addition, we expect that the transition to an
independent company will heighten PracticeWorks' management's focus, provide
PracticeWorks with greater access to capital, and allow PracticeWorks to better
pursue business relationships and acquisitions.

The enclosed prospectus describes the distribution and provides important
financial and other information about PracticeWorks. Please read it carefully.

You do not have to take any action to receive your shares of PracticeWorks
stock. You will not be required to pay anything or to surrender your shares of
InfoCure common stock. If you hold your InfoCure stock through a broker or other
nominee, your shares of PracticeWorks stock should be credited to your account
with your stockbroker or nominee on or about , 2001.

Sincerely,

Frederick L. Fine
Chief Executive Officer and President
<PAGE> 3

[PRACTICEWORKS LETTERHEAD]
, 2001

Dear Stockholder:

We are very pleased that you will soon be a stockholder of PracticeWorks,
Inc. PracticeWorks is an information management technology provider to dentists,
orthodontists and oral and maxillofacial surgeons.

We believe that the separation of our business from the businesses of our
corporate parent, InfoCure Corporation, will enhance our ability to grow our
business aggressively, both internally and through selective acquisitions. For
the first time, we will have the ability to offer our employees incentive
opportunities linked to our performance as a stand-alone company, which we
believe will aid our efforts to enhance employee performance.

As an independent company, we can more effectively focus on our objectives
and support the capital needs of our company, bringing value to you as a
stockholder.

We have applied to list the shares of PracticeWorks common stock you are
receiving on the Nasdaq Stock Market's National Market under the symbol "PWKS."

Our board, management and employees are excited about our future as an
independent company, and we look forward to your support and participation in
our success.

Sincerely,

James K. Price
Chief Executive Officer and President
<PAGE> 4

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT OFFER 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 IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED JANUARY 16, 2001

PROSPECTUS

PRACTICEWORKS, INC.

9,000,000 SHARES

COMMON STOCK
(PAR VALUE $0.01 PER SHARE)

InfoCure Corporation is sending you this prospectus to describe the pro
rata distribution to holders of InfoCure common stock of all of the outstanding
shares of common stock of PracticeWorks, Inc. In this distribution, you will
receive 1/4 of a share of PracticeWorks common stock for every share of InfoCure
common stock that you hold at the close of business on , 2001.
Stockholders will receive cash in lieu of fractional shares to which they would
otherwise be entitled. See "The Distribution" beginning on page 41.

PracticeWorks is currently an indirect, wholly owned subsidiary of
InfoCure. Immediately after the distribution is completed, InfoCure will not own
any shares of PracticeWorks stock, and PracticeWorks will be an independent
public company.

The distribution of the PracticeWorks common stock will be effected at
11:59 p.m., Atlanta, Georgia time, on , 2001. You do not have to take
any action to receive your shares of PracticeWorks stock. You will not be
required to pay anything or to surrender your InfoCure shares. The number of
shares of InfoCure common stock that you own will not change as a result of the
distribution.

There is no current public trading market for the PracticeWorks common
stock. We have applied to list the PracticeWorks common stock on the Nasdaq
Stock Market's National Market under the symbol "PWKS." InfoCure intends to
change its trading symbol to "VWKS" immediately following the distribution. See
"The Distribution -- Listing and Trading of the PracticeWorks Common Stock"
beginning on page 44.

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NO VOTE OF STOCKHOLDERS IS REQUIRED IN CONNECTION WITH THE DISTRIBUTION. WE
ARE NOT ASKING YOU FOR A PROXY OR ANY CONSIDERATION, AND YOU ARE REQUESTED NOT
TO SEND US A PROXY OR YOUR SHARE CERTIFICATES OR ANY CONSIDERATION.

YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED IN THIS PROSPECTUS
BEGINNING ON PAGE 19.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS
PROSPECTUS OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS , 2001.

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TABLE OF CONTENTS

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PAGE
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Questions and Answers About the Distribution................ 1
Summary..................................................... 5
Risk Factors................................................ 19
Introduction................................................ 41
The Distribution............................................ 41
Relationship Between InfoCure and PracticeWorks Following
the Distribution.......................................... 49
Dilution.................................................... 52
PracticeWorks, Inc. Capitalization.......................... 53
Dividend Policies........................................... 54
Use of Proceeds............................................. 54
PracticeWorks (A Division of InfoCure Corporation) Selected
Financial Data............................................ 55
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 61
Business.................................................... 79
Management.................................................. 102
Certain Transactions........................................ 106
Beneficial Ownership of Common Stock........................ 109
Description of Capital Stock................................ 111
Anti-Takeover Provisions of PracticeWorks' Certificate of
Incorporation, Bylaws and Delaware Law.................... 116
Liability and Indemnification of Directors and Officers..... 121
Legal Matters............................................... 122
Experts..................................................... 122
Additional Information...................................... 123
Index to Financial Statements............................... F-1
</TABLE>

<PAGE> 6

QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION

The following section answers various questions that you may have with
respect to the pro rata distribution to holders of InfoCure common stock of all
of the outstanding shares of PracticeWorks common stock. This is referred to in
this prospectus as the distribution. See "Summary -- The Distribution" beginning
on page 9 for more information about the distribution.

Q: WHEN WILL THE DISTRIBUTION OCCUR?

A: We currently anticipate completing the distribution at 11:59 p.m., Atlanta,
Georgia time, on , 2001. This is referred to as the distribution date.

Q: WHAT WILL I RECEIVE AS A RESULT OF THE DISTRIBUTION?

A: For every share of InfoCure common stock that you own of record on
, 2001, you will receive 1/4 of a share of PracticeWorks common stock.
For example, if you own 100 shares of InfoCure common stock on , 2001,
you will receive 25 shares of PracticeWorks common stock. This date is referred
to as the record date.

Fractional shares of PracticeWorks common stock will not be distributed.
Fractional shares will be aggregated and sold in the public market by the
distribution agent. The aggregate net cash proceeds of these sales will be
distributed ratably to those stockholders who would otherwise have received
fractional interests.

Q: HOW WILL THE PRACTICEWORKS STOCK BE DISTRIBUTED TO ME?

A: InfoCure currently intends to distribute the PracticeWorks common stock by
issuing physical certificates. If you are a record holder of InfoCure stock you
will receive from PracticeWorks' transfer agent shortly after , 2001
physical stock certificates for the shares of PracticeWorks stock distributed to
you. If you are not a record holder of InfoCure stock because your shares are
held on your behalf by your stockbroker or other nominee, your shares of
PracticeWorks stock should be credited to your account with your stockbroker or
nominee on or about , 2001.

Q: WHAT DO I HAVE TO DO TO RECEIVE MY PRACTICEWORKS STOCK?

A: Nothing. Your shares of PracticeWorks common stock will be either sent to
you by delivery of physical certificates that PracticeWorks' transfer agent will
send to you shortly after , 2001 or credited to your account with your
broker or nominee on or about , 2001.

Q: WHEN WILL I RECEIVE MY PRACTICEWORKS STOCK?

A: If you hold your shares of InfoCure common stock in your own name, your
account statement will be mailed to you on or about , 2001. You should
allow several days for the mail to reach you.

If you hold your shares of InfoCure common stock through your stockbroker,
bank or other nominee, you are probably not a stockholder of record, and your
receipt of shares of PracticeWorks common stock depends on your arrangements
with the nominee that holds your shares of InfoCure common stock for you.
InfoCure anticipates that stockbrokers and

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banks generally will credit their customers' accounts with PracticeWorks common
stock on or about , 2001, but you should check with your stockbroker,
bank or other nominee. See "The Distribution -- Manner of Effecting the
Distribution" beginning on page 42.

Q: WHAT IF I WANT TO SELL MY INFOCURE COMMON STOCK OR MY PRACTICEWORKS COMMON
STOCK?

A: You should consult with your own financial advisors, such as your
stockbroker, bank or tax advisor. InfoCure does not make recommendations on the
purchase, retention or sale of shares of InfoCure common stock or PracticeWorks
common stock.

If you do decide to sell any shares, you should make sure your stockbroker,
bank or other nominee understands whether you want to sell your InfoCure common
stock or your PracticeWorks common stock, or both. The following information may
be helpful in discussions with your stockbroker, bank or other nominee.

There is not currently a public market for the PracticeWorks common stock,
although a when-issued market may develop prior to completion of the
distribution. When-issued trading refers to a transaction made conditionally
because the security has been authorized but not yet issued. On the first
trading day following the distribution date, when-issued trading in respect of
our common stock will end and regular-way trading will begin. Regular-way
trading refers to trading after a security has been issued and typically
involves a transaction that settles on the third full business day following the
date of a transaction. We have applied to list the PracticeWorks common stock on
the Nasdaq Stock Market's National Market under the symbol "PWKS."

Beginning about , 2001 and continuing through , 2001,
Nasdaq National Market practices should generally allow you to sell your
InfoCure shares either together with the right to receive shares of the
PracticeWorks common stock in the distribution or without the right to receive
the PracticeWorks common stock. If you sell your InfoCure common stock with the
right to receive the PracticeWorks common stock, you or your broker or bank will
be required to deliver to the buyer the PracticeWorks common stock you receive
in the distribution. You should also be able to sell your right to receive the
PracticeWorks common stock without selling your InfoCure common stock.

Sales of InfoCure common stock with the right to receive shares of
PracticeWorks common stock should generally settle in the customary three
business day settlement period. Sales of InfoCure common stock without the right
to receive shares of the PracticeWorks common stock and sales of PracticeWorks
common stock without the right to receive InfoCure common stock will settle
according to the terms of the individual contract for the sale of the stock. You
should check with your stockbroker, bank or other nominee for details. Beginning
about , 2001, you may only sell your InfoCure common stock and
PracticeWorks common stock separately. Once again, check with your stockbroker,
bank or other nominee for details. See "The Distribution -- Listing and Trading
of the PracticeWorks Common Stock" beginning on page 44.

Q: WILL I HAVE TO PAY TAXES ON THE PRACTICEWORKS STOCK THAT I RECEIVE?

A: We expect the distribution to be tax-free to you for United States federal
income tax purposes except with respect to any cash you receive in lieu of a
fractional share of PracticeWorks common stock. King & Spalding, counsel to
InfoCure, will render an

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opinion to InfoCure and PracticeWorks to the effect that, although the matter is
not free from doubt, the distribution should qualify for nonrecognition
treatment under Section 355 of the Internal Revenue Code. See "Risk
Factors -- The distribution may fail to qualify for nonrecognition treatment
under Section 355 of the Internal Revenue Code" beginning on page 20 and "Risk
Factors -- You may be required to pay income taxes in connection with the
distribution" on page 21 and "The Distribution -- Federal Income Tax
Consequences of the Distribution" beginning on page 45.

Q: WILL THERE BE ANY CHANGE IN THE UNITED STATES FEDERAL INCOME TAX BASIS OF MY
INFOCURE COMMON STOCK AS A RESULT OF THE DISTRIBUTION?

A: Yes. If the distribution qualifies for tax-free treatment under Section 355
of the Internal Revenue Code, the tax basis in your InfoCure common stock prior
to the distribution will be allocated among your shares of InfoCure common stock
and PracticeWorks common stock in proportion to their relative fair market
values at the time of the distribution. If you are the record holder of your
InfoCure common stock, you will receive information with your account statement
that will help you calculate the adjusted tax basis for your InfoCure common
stock, as well as the tax basis for your PracticeWorks common stock. See "The
Distribution -- Federal Income Tax Consequences of the Distribution" beginning
on page 45.

Q: WHERE CAN I GET MORE INFORMATION?

A: If you have any questions relating to the mechanics of the distribution of
PracticeWorks common stock prior to the distribution, you can contact the
distribution agent. The distribution agent will also serve as the transfer agent
and registrar for PracticeWorks' common stock after the distribution. The
distribution agent is:

StockTrans, Inc.
44 West Lancaster Ave.
Ardmore, Pennsylvania 19003
(610) 649-7300

For other questions related to the distribution, InfoCure or PracticeWorks,
please contact:

Georgeson Shareholder Communications, Inc.
17 State Street
New York, New York 10004
(800) 223-2064

After the distribution, PracticeWorks stockholders with inquiries relating
to the distribution or their investment in PracticeWorks should contact:

PracticeWorks, Inc.
1765 The Exchange
Suite 200
Atlanta, Georgia 30339
Attention: Corporate Secretary
(770) 850-5006

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After the distribution, InfoCure stockholders with inquiries relating to
the distribution or their investment in InfoCure should contact:

InfoCure Corporation

239 Ethan Allen Highway

Ridgefield, CT 06877

Attention: General Counsel

Telephone: (203) 438-3654

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SUMMARY

This summary highlights selected information contained elsewhere in this
document. To acquire a better understanding of the distribution and
PracticeWorks, you should read this entire document carefully, including the
risk factors beginning on page 19 and the financial statements and the notes
thereto beginning on page F-1. Throughout this prospectus, the terms "we" and
"our" refer solely to PracticeWorks.

WHY INFOCURE SENT THIS DOCUMENT TO YOU

InfoCure Corporation sent you this document because you were an owner of
InfoCure common stock on , 2001. This entitles you to receive a pro
rata distribution of 1/4 of a share of common stock of PracticeWorks, Inc.,
which is currently an indirect, wholly owned subsidiary of InfoCure, for every
share of InfoCure common stock you owned on that date. This is referred to as
the "distribution." No action is required on your part to participate in the
distribution and you do not have to pay cash or other consideration to receive
your shares of PracticeWorks common stock.

This document describes our business, the relationship between InfoCure and
PracticeWorks and how this transaction benefits InfoCure and its stockholders,
and provides other information to assist you in evaluating the benefits and
risks of holding or disposing of the PracticeWorks common stock that you will
receive in the distribution. You should be aware of certain risks relating to
the distribution and our business, which are described in this prospectus
beginning on page 19.

PracticeWorks was incorporated in August 2000 and, following the
distribution, will operate the information management technology business for
dentists, orthodontists and oral and maxillofacial surgeons currently conducted
by InfoCure. Our principal executive offices are located at 1765 The Exchange,
Suite 200, Atlanta, Georgia 30339, and our telephone number is (770) 850-5006.

OUR BUSINESS

PracticeWorks is an information management technology provider for
dentists, orthodontists and oral and maxillofacial surgeons. Our offerings
currently include the following:

- practice management applications -- we develop software applications that
automate dental, orthodontic and oral and maxillofacial surgery
practices, such as scheduling and billing;

- business-to-business e-commerce services -- we provide access to systems
that enable online purchasing of orthodontic and office supplies;

- electronic data interchange, or EDI, services -- we provide access to
systems that permit our customers to electronically submit insurance
claims and patient billing information for processing at national
clearinghouses; and

- ongoing maintenance, support and training related to the above services.

These applications and services are designed to automate the provider's
practice, resulting in greater efficiency, lower costs and higher quality care.
As of December 31,

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2000, we had an installed base of approximately 35,000 providers in the United
States, including 27,000 dentists, 4,000 orthodontists and 4,000 oral and
maxillofacial surgeons. We derive substantially all of our revenues from our
installed customer base through a combination of systems and software licenses
and maintenance support and service fees.

During the second quarter of 2000, we changed our business model from one
based on revenues generated from a one-time licensing fee with continuing
maintenance, support and service to a subscription-based model whereby revenues
are generated from our customers' paying a fixed monthly fee for use of our
practice management applications and maintenance and support services.

During the second quarter of 2001, we intend to offer specified modules of
our practice management applications through an application service provider, or
ASP, model, to offer an Internet portal, to develop practice websites for our
customers and to expand our e-commerce services to include online purchasing of
dental supplies. To date, with the exception of e-commerce, we have not
generated any revenues from these activities. We expect to release our ASP
applications for the dental market in the second quarter of 2001 and for the
orthodontic and oral and maxillofacial markets in the fourth quarter of 2001.
Although our initial ASP applications will contain the basic functionality
required to manage a dentist's office, they will not offer the full
functionality of our current products. We expect to provide full functionality
of our ASP applications for the dental market in the fourth quarter of 2001 and
for the orthodontic and the oral and maxillofacial markets in the third quarter
of 2002.

PENDING TRANSACTIONS

Following the distribution, we will enter into three transactions which we
believe will strengthen our business. Each of these transactions is described
below. In addition, you should read the sections of this prospectus entitled
"Risk Factors -- Risks Related to Our Business -- Our stockholders may
experience significant dilution as a result of the InfoSoft acquisition, the
Medical Dynamics acquisition and the Crescent investment" beginning on page 25,
"-- We may have difficulty integrating current and future acquisitions into our
business" on page 32, "-- We may be unable to improve the operations of Medical
Dynamics following completion of the acquisition" beginning on page 32;
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on page 61; and "Description of Capital Stock -- Preferred Stock"
beginning on page 110 as well as the audited financial statements of Medical
Dynamics and InfoSoft and the PracticeWorks pro forma financial statements
included in this prospectus for a further discussion of the terms and associated
risks of these proposed transactions.

INFOSOFT ACQUISITION

On December 27, 2000, we entered into an agreement to acquire SoftDent,
LLC, or InfoSoft, the practice management software subsidiary of Ceramco, Inc.,
a wholly-owned subsidiary of DENTSPLY International, Inc. Pursuant to the
agreement, Ceramco will transfer to SoftDent, LLC the assets used in DENTSPLY's
business of developing, marketing, licensing and supporting its SoftDent product
in exchange for all of the membership interests of SoftDent, LLC, and Ceramco
will assign these membership interests to us. In exchange for Ceramco's transfer
of membership interests, we will issue 32,000 shares of our series A convertible
redeemable preferred stock to Ceramco having a

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stated redemption value of $32.0 million. These shares of series A convertible
redeemable preferred stock will be convertible into approximately 9.8% of our
outstanding common stock at the time of the distribution.

The acquisition will be completed only if specified conditions are
satisfied or waived, including completion of the distribution and the
termination or expiration of all applicable filing and waiting period
requirements with respect to the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended. Either Ceramco or PracticeWorks may terminate the agreement
(1) if there is a material breach of any provision which has not been waived or
cured; (2) by mutual consent; or (3) if the acquisition has not closed on or
before March 31, 2001, or such later date as the parties may agree upon.

InfoSoft develops and provides dental practice management systems and
currently provides software for approximately 22,000 dentists. The proposed
acquisition of InfoSoft will strengthen our presence in the dental segment of
the healthcare information systems market by adding approximately 22,000
dentists to our installed customer base. Upon closing of this acquisition, we
expect to have an installed customer base in the United States of approximately
49,000 dentists, in addition to 4,000 orthodontists and 4,000 oral and
maxillofacial surgeons. This acquisition also affords opportunities for future
conversion of the acquired customer base to newer technology offered by us, the
potential for additional revenue from our connectivity offerings and the cost
savings potential of eliminating duplicative services and redundancies in
staffing. On a pro forma basis, the acquisition of InfoSoft would have increased
our revenues by $9.5 million and $6.4 million for the year ended December 31,
1999 and the nine months ended September 30, 2000, respectively, and would have
increased our net loss by approximately $1.1 million and $3.6 million,
respectively, for the same periods.

MEDICAL DYNAMICS ACQUISITION

InfoCure originally agreed to acquire Medical Dynamics pursuant to an
Agreement and Plan of Reorganization dated as of December 21, 1999. The
agreement, as amended and restated, was further amended on December 19, 2000, to
provide that PracticeWorks will assume all of InfoCure's obligations under the
agreement except for InfoCure's obligation to issue a specified number of shares
of InfoCure common stock. The aggregate consideration to be paid to the Medical
Dynamics shareholders in connection with the merger is approximately $9.9
million. Each Medical Dynamics shareholder of greater than 100 shares of Medical
Dynamics common stock will receive 0.017183 shares of PracticeWorks common
stock, 0.07558 shares of PracticeWorks series B convertible redeemable preferred
stock and 0.06873 shares of InfoCure common stock in exchange for each share of
Medical Dynamics common stock outstanding on a fully diluted basis on the date
of the merger. Each holder of 100 or fewer shares of Medical Dynamics common
stock will receive $0.75 in cash for each share of Medical Dynamics. Assuming
13.2 million shares of Medical Dynamics are outstanding on a fully diluted basis
on the date of the acquisition, PracticeWorks will issue approximately 219,500
shares of PracticeWorks common stock and approximately 965,000 shares of
PracticeWorks series B convertible redeemable preferred stock (with a stated
redemption value of $5.3 million) and will pay approximately $325,000 in cash as
consideration for the merger. Assuming full conversion of the PracticeWorks
series B convertible redeemable preferred stock, the PracticeWorks securities to
be issued in connection with the Medical Dynamics merger will represent, in the
aggregate, less than 2% of PracticeWorks' common stock at the time of the

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distribution. InfoCure will issue approximately 878,000 shares of its common
stock as a portion of the consideration for the merger.

The Medical Dynamics merger will require approval of the Medical Dynamics
shareholders. No vote of the PracticeWorks or InfoCure shareholders is required
to approve the merger. Either PracticeWorks or Medical Dynamics may terminate
the merger agreement under certain circumstances, including (1) if both parties
consent in writing; (2) if the merger is not completed by March 31, 2001; and
(3) if the Medical Dynamics shareholders do not approve the merger.

Medical Dynamics will pay InfoCure a "break up" fee of $250,000 if (1)
Medical Dynamics approves, enters into, or consummates a transaction
contemplated by an acquisition proposal; (2) the Medical Dynamics board
withdraws, modifies or changes its recommendation as to the merger; or (3)
specified principal stockholders of Medical Dynamics who own approximately 17%
of the outstanding shares of Medical Dynamics stock fail to comply with their
obligations under a stockholders agreement to vote in favor of the merger. In
addition, InfoCure will pay Medical Dynamics a fee of $250,000 if Medical
Dynamics terminates the merger agreement because InfoCure breaches its
representations, warranties or obligations under the merger agreement in any
material respect.

The proposed acquisition of Medical Dynamics will strengthen our presence
in the dental segment of the healthcare information systems market by adding
approximately 4,000 dentists to our installed customer base. This acquisition
also affords opportunities for future conversion of the acquired customer base
to newer technology offered by us, the potential for additional revenues from
our connectivity offerings and the cost savings potential of eliminating
duplicative services and redundancies in staffing. On a pro forma basis, the
acquisition of Medical Dynamics would have increased our revenue by $11.0
million and $3.0 million, respectively, for the year ended December 31, 1999 and
for the nine months ended September 30, 2000, and would have increased our pro
forma net loss by approximately $3.7 million and $3.4 million, respectively, for
the same periods.

CRESCENT INVESTMENT

After the distribution, we will issue 100,000 shares of our series C
convertible redeemable preferred stock to Crescent International Ltd. in a
private placement. We expect to use the proceeds of this investment to fund our
general operations.

Crescent will have the right after one year to convert all, or a portion,
of the shares of series C convertible redeemable preferred stock held by it into
shares of our common stock based upon a pre-determined conversion price. In
addition, we will have the right either to redeem in cash or to require the
conversion of the shares of series C convertible redeemable preferred stock,
provided certain conditions are met. If the series C convertible redeemable
preferred stock has not been converted after 48 months, Crescent may require us
to redeem the series C convertible redeemable preferred stock at a premium to
the liquidation preference. In addition, PracticeWorks will recognize an
accretive dividend of approximately $938,000 annually related to this feature.
In no event, however, will Crescent be entitled to obtain 10% or more of our
common stock upon conversion. Crescent will also receive specified registration
rights in connection with its investment. Crescent will have voting rights on
all matters on which the holders of our common stock are entitled to vote.

8
<PAGE> 14

THE DISTRIBUTION

Distributing Company............ InfoCure Corporation, a Delaware
corporation.

Distributed Company............. PracticeWorks, Inc., a Delaware corporation.

Primary Purposes of
Distribution.................... InfoCure's board of directors believes that
separating PracticeWorks from the rest of
InfoCure's businesses will allow both
PracticeWorks and InfoCure to focus on their
respective businesses and provide them with
the flexibility to pursue different
strategies and react quickly to changing
market environments. For a more detailed
discussion of the reasons for the
distribution, see "The
Distribution -- Reasons for the
Distribution" beginning on page 41.

Trading Market and Symbol....... There is no current trading market for the
PracticeWorks common stock, although a when-
issued market may develop prior to
completion of the distribution. When-issued
trading refers to a transaction made
conditionally because the security has been
authorized but not yet issued. On the first
trading day following the distribution date,
when-issued trading in respect of the
PracticeWorks common stock will end and
regular-way trading will begin. Regular-way
trading refers to trading after a security
has been issued and typically involves a
transaction that settles on the third full
business day following the date of a
transaction. We cannot predict the trading
prices for the PracticeWorks common stock
before or after the distribution date;
however, we believe the presence of a
when-issued trading market prior to the
distribution may have a stabilizing effect
on the price of the PracticeWorks common
stock following the distribution. We have
applied to list the PracticeWorks common
stock you are receiving on the Nasdaq Stock
Market's National Market under the symbol
"PWKS." InfoCure intends to change its
trading symbol to "VWKS" immediately
following the distribution.

Relationship with InfoCure After
The Distribution.............. Immediately prior to the distribution date,
InfoCure and PracticeWorks will enter into
agreements to transfer to PracticeWorks the
assets and liabilities of InfoCure's
information management technology business
for dentists, orthodontists and oral and
maxillofacial surgeons, to arrange for the
continued provision of certain services by
InfoCure and PracticeWorks to one another,
to make
9
<PAGE> 15

arrangements for the distribution and to
define the ongoing relationships between
InfoCure and PracticeWorks. The services to
be provided to InfoCure by PracticeWorks
include the preparation of tax returns,
maintenance of the general ledger,
preparation of financial statements,
corporate record-keeping and payroll. The
services to be provided to PracticeWorks by
InfoCure include insurance-related services,
employee benefit services and specified
information technology services. InfoCure
and PracticeWorks will also enter into an
agreement providing for the sharing of taxes
incurred by them prior to the distribution
and providing indemnification rights with
respect to tax matters. After the
distribution, InfoCure and PracticeWorks
will not have any other material contracts
or other arrangements between them other
than arrangements made on an arm's length
basis. See "Relationship Between InfoCure
and PracticeWorks Following the
Distribution" beginning on page 49.

Credit Facility................. At the time of the distribution, we expect
to incur approximately $20.0 million of
indebtedness under a new credit facility
with FINOVA Capital Corporation. This
indebtedness represents the portion of
InfoCure's long-term indebtedness relating
to our business. The terms of the credit
facility will include customary affirmative
and negative covenants that, among other
things, require us to satisfy specified
financial tests and maintain certain
financial ratios, and limit our ability to
declare and pay dividends on the
PracticeWorks common stock. We may also
incur additional indebtedness from time to
time for general corporate purposes,
including working capital requirements,
capital expenditures and future
acquisitions. See "Management's Discussion
and Analysis of Financial Condition and
Results of Operations -- Liquidity and
Capital Resources" beginning on page 75.

Post-Distribution Dividend
Policies...................... PracticeWorks. Following the distribution,
our dividend policy will be set by our board
of directors. The declaration and payment of
dividends is generally at the discretion of
our board of directors and will be subject
to our financial results and the
availability of surplus funds to pay
dividends. We do not anticipate declaring or
paying any cash dividends on our common
stock in the

10
<PAGE> 16

foreseeable future. See "Dividend Policies"
on page 54.

InfoCure. InfoCure has never declared or
paid any cash dividends on its common stock.
InfoCure currently intends to retain all
available funds and any future earnings for
use in the operation and expansion of its
business and does not anticipate declaring
or paying any cash dividends in the
foreseeable future. See "Dividend Policies"
on page 54.

Anti-takeover Effects........... Certain provisions of our certificate of
incorporation and bylaws and the Tax
Disaffiliation Agreement may have the effect
of making the acquisition of control of
PracticeWorks more difficult or expensive.
See "Risk Factors -- Provisions of our
certificate of incorporation, bylaws and the
Tax Disaffiliation Agreement may discourage
takeovers which would otherwise be in the
best interest of our stockholders" beginning
on page 39 and "Anti-Takeover Provisions of
PracticeWorks' Certificate of Incorporation,
Bylaws and Delaware Law" beginning on page
115.

RISK FACTORS

You should review the risks relating to the distribution and our business
described in "Risk Factors" beginning on page 19. These risks include, among
others, the following:

- We have a recent history of losses and we may never achieve or maintain
profitability. We had net losses of $16.7 million for the nine months
ended September 30, 2000.

- We anticipate incurring substantial operating losses and negative
operating cash flow in the foreseeable future. Because we expect to
continue to recognize reduced revenues compared to our prior business
model due to our introduction of subscription pricing in the second
quarter of 2000, we expect our operating and net losses to continue for
the foreseeable future.

- We have an accumulated deficit. Our accumulated deficit as of September
30, 2000 was $20.2 million.

- We operate in a highly competitive market with low barriers to
entry. The market for providing information management technology to
dentists, orthodontists and oral and maxillofacial surgeons is highly
competitive. In addition, the market for Internet-based application
service providers in the healthcare industry is relatively new and
evolving. Many of our competitors have substantially greater resources,
longer operating histories, greater name recognition and more established
relationships than we have. In addition, the lack of barriers to entry in
our market exposes us to a potentially increasing number of competitors.
11
<PAGE> 17

- Our stockholders may experience significant dilution as a result of
issuances of our stock in connection with pending and future acquisitions
and financing transactions. In connection with the issuance of our
convertible redeemable preferred stock to Ceramco, Crescent and the
shareholders of Medical Dynamics, our stockholders may experience
dilution, as these holders of convertible redeemable preferred stock are
entitled, under specified circumstances, to convert this preferred stock
into shares of our common stock. The convertible redeemable preferred
stock to be issued pursuant to the Medical Dynamics and InfoSoft
acquisitions and the Crescent investment will be convertible, in the
aggregate, into a maximum of approximately 21% of our common stock at the
time of the distribution.

12
<PAGE> 18

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

SUMMARY HISTORICAL AND
PRO FORMA FINANCIAL DATA

You should read the following summary historical and pro forma financial
data in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our audited financial statements as of
and for the years ended December 31, 1999 and 1998 and the eleven months ended
December 31, 1997, our unaudited financial statements as of September 30, 2000
and for the nine months ended September 30, 2000 and 1999 and the related notes
appearing elsewhere in this prospectus. The statement of operations data for
each of the years ended December 31, 1999 and 1998 and the eleven months ended
December 31, 1997 and the balance sheet data as of December 31, 1999 and 1998
are derived from, and qualified by reference to, the financial statements
included elsewhere in this prospectus that have been audited by BDO Seidman,
LLP, PracticeWorks' independent certified public accountants. The information as
of and for the nine month periods ended September 30, 2000 and 1999 is
unaudited. Results for the nine month period ended September 30, 2000 are not
necessarily indicative of results that may be expected for the fiscal year. We
believe that the assumptions underlying the preparation of our financial
statements are reasonable. However, our subscription based revenue model is
different than the one we have used historically and we are currently developing
new applications and services we have not historically offered. Therefore, the
financial information included in this prospectus may not be indicative of our
future results of operations, financial position and cash flows. In addition,
this financial information may not reflect the financial results we would have
achieved if we had been a separate stand-alone entity during these periods.

The financial statements for all periods presented give retroactive effect
to pooling of interests treatment for five acquisitions completed during the
year ended December 31, 1999 attributed to us by InfoCure and include the
results of operations for all purchase acquisitions attributed to us by InfoCure
from the respective acquisition date.

13
<PAGE> 19

(continued from previous page)

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED ELEVEN MONTHS
SEPTEMBER 30, DECEMBER 31, ENDED
------------------ ----------------- DECEMBER 31,
2000(1) 1999 1999(2) 1998(3) 1997(4)
-------- ------- ------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Restructuring(5)............. 3,753 -- 1,814 1,031 6,463
Impairment and other non-
recurring charges(5)...... 2,004 -- -- -- --
Merger costs................. -- 464 659 69 --
Compensatory stock awards.... -- 428 428 6,447 14
Gain on disposal of fixed
assets.................... (626) -- -- -- --
-------- ------- ------- ------- -------
Total operating
expense.............. 53,557 33,415 48,690 44,143 25,720
-------- ------- ------- ------- -------
Operating (loss) income........ (23,705) 7,949 5,901 (656) (4,236)
Interest expense and other,
net....................... 1,558 1,244 1,335 966 198
-------- ------- ------- ------- -------
(Loss) income before income
taxes and extraordinary
item......................... (25,263) 6,705 4,566 (1,622) (4,434)
(Benefit) provision for income
taxes........................ (8,583) 2,516 2,186 873 (171)
Extraordinary item, net of
income taxes................. -- (72) (72) -- --
-------- ------- ------- ------- -------
Net (loss) income.............. $(16,680) $ 4,117 $ 2,308 $(2,495) $(4,263)
======== ======= ======= ======= =======
Per share data:
Basic and diluted:
(Loss) income before
extraordinary item........ $ (2.00) $ 0.61 $ 0.33 $ (0.52) $ (1.10)
Extraordinary item, net of
tax.......................... -- (0.01) (0.01) -- --
-------- ------- ------- ------- -------
Net (loss) income.............. $ (2.00) $ 0.61 $ 0.33 $ (0.52) $ (1.10)
======== ======= ======= ======= =======
OTHER DATA:
EBITDA(6)...................... $ (6,182) $10,693 $12,086 $ 9,163 $ 2,792
CASH FLOW FROM:
Operating activities......... (7,644) 4,783 5,814 2,258 3,016
Investing activities......... (20,324) (4,804) (10,276) (15,575) (5,730)
Financing activities......... 28,825 692 5,356 14,209 2,817
</TABLE>

<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
SEPTEMBER 30, ----------------------------
2000 1999 1998 1997
------------- ------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA (IN THOUSANDS):
Cash and cash equivalents.............. $ 3,384 $ 2,527 $ 1,633 $ 741
Working capital........................ (5,237) (1,190) (1,034) (3,598)
Total assets........................... 74,636 57,842 37,098 14,434
Long-term debt, less current portion... 19,567 9,614 14,769 4,405
Net divisional equity.................. 36,017 32,419 10,800 983
</TABLE>

-------------------------

(1) During the nine months ended September 30, 2000, InfoCure acquired six
companies attributed to PracticeWorks in transactions accounted for as
purchases.
14
<PAGE> 20

(2) During 1999, InfoCure acquired four companies attributed to PracticeWorks in
transactions accounted for as purchases.

(3) During 1998, InfoCure acquired one company attributed to PracticeWorks in a
transaction accounted for as a purchase.

(4) InfoCure and PracticeWorks changed their fiscal year end from January 31 to
December 31 effective February 1, 1997. Accordingly, the 1997 fiscal period
is comprised of eleven months. During 1997, InfoCure acquired two companies
attributed to PracticeWorks in transactions accounted for as purchases.

(5) On August 1, 2000, we announced our 2000 restructuring plan which included
the termination of 145 employees resulting in severance and other
termination benefits of $1.6 million, and the closure and consolidation of
11 facilities resulting in facility closure costs and other charges of $1.3
million. For the nine months ended September 30, 2000, restructuring also
included $816,000 related to the 1999 plan. Impairment and other
non-recurring charges consisted of impairment charges of approximately
$500,000 for asset write-downs and a write-down of inventory of $1.5 million
related to PracticeWorks' decision to discontinue selling hardware and
hardware support in certain of its business lines in connection with its new
hardware agreement with Dell Computer Corporation. During the year ended
December 31, 1999 restructuring consisted of the write-off of capitalized
software costs of $874,000, contingent consideration related to acquired
companies whose products were discontinued of $700,000, charges for asset
write-downs of $97,000, facility closure costs of $95,000 and severance and
other termination benefits of $48,000. An additional $816,000 of costs
related to the 1999 restructuring were recorded in 2000. These costs
consisted primarily of termination and other severance costs for employee
terminations determined in 1999 but for whom the details were not
communicated until 2000. During the year ended December 31, 1998
restructuring consisted of contingent consideration related to acquired
companies whose products were discontinued of $750,000 and severance and
other termination benefits of $281,000. During the eleven months ended
December 31, 1997, restructuring consisted of the write-off of goodwill of
$3.5 million, contingent consideration of $2.2 million related to acquired
companies whose products were discontinued, facility closure costs of
$401,000, the write-off of capitalized software costs of $339,000 and other
charges for asset write-downs of $90,000.

(6) EBITDA represents earnings before interest, (benefit) provision for income
taxes, depreciation and amortization, restructuring and other charges,
merger costs, compensatory stock awards and gain on disposal of fixed
assets. We have excluded restructuring and other charges, merger costs,
compensatory stock awards and gain on disposal of fixed assets from EBITDA
because we do not believe those costs are representative of the normal
recurring nature of our operations. EBITDA is provided because it is a
measure commonly used by analysts and investors to determine a company's
ability to incur and service debt. EBITDA is not a measurement in accordance
with generally accepted accounting principles, or GAAP, and should not be
considered an alternative to, or more meaningful than, net (loss) income as
a measure of our profitability or cash flows as a measure of our liquidity.
All companies do not calculate EBITDA in the same manner. Accordingly, our
EBITDA may not be comparable with that of other companies. We have included
information concerning EBITDA because management believes EBITDA provides a
useful measure of our performance. You should note, however, that the items
excluded from EBITDA are significant components in understanding and
assessing our performance.
15
<PAGE> 21

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined financial statements have been
prepared to give effect to the acquisition of InfoSoft, the practice management
business of DENTSPLY International, Inc. On December 27, 2000, we entered into
an agreement to acquire SoftDent, LLC, or InfoSoft, the practice management
software subsidiary of Ceramco, Inc., a wholly-owned subsidiary of DENTSPLY.
Pursuant to the agreement, Ceramco will transfer to SoftDent, LLC the assets
used in DENTSPLY's business of developing, marketing, licensing and supporting
its SoftDent product in exchange for all of the membership interests of
SoftDent, LLC, and Ceramco will assign these membership interests to
PracticeWorks. In exchange for Ceramco's transfer of membership interests, we
will issue 32,000 shares of our series A convertible redeemable preferred stock
to Ceramco having a stated redemption value of $32.0 million. These shares of
series A convertible redeemable preferred stock will be convertible into
approximately 9.8% of our outstanding common stock at the time of the
distribution.

The unaudited pro forma condensed combined financial statements have been
prepared to give effect to PracticeWorks' assumption of InfoCure's obligations
under the merger agreement and proposed acquisition of all the outstanding
common stock of Medical Dynamics by PracticeWorks.

Upon completion of the distribution, PracticeWorks will assume InfoCure's
obligation to acquire Medical Dynamics, Inc. InfoCure originally agreed to
acquire Medical Dynamics pursuant to an Agreement and Plan of Reorganization
dated as of December 21, 1999. The agreement, as amended and restated, was
further amended on December 19, 2000, to provide that PracticeWorks will assume
all of InfoCure's obligations under the agreement except for InfoCure's
obligation to issue a specified number of shares of InfoCure common stock. The
aggregate consideration to be paid to the Medical Dynamics shareholders in
connection with the merger is approximately $9.9 million. Each Medical Dynamics
shareholder of greater than 100 shares of Medical Dynamics common stock will
receive 0.017183 shares of PracticeWorks common stock, 0.07558 shares of series
B convertible redeemable preferred stock and 0.06873 shares of InfoCure common
stock in exchange for each share of Medical Dynamics common stock outstanding on
a fully diluted basis on the date of the merger. Each holder of 100 or fewer
shares of Medical Dynamics common stock will receive $0.75 in cash for each
share of Medical Dynamics.

16
<PAGE> 22

Assuming 13.2 million shares of Medical Dynamics are outstanding on a fully
diluted basis on the date of the acquisition, PracticeWorks will issue
approximately 219,500 shares of PracticeWorks common stock and approximately
965,000 shares of PracticeWorks series B convertible redeemable preferred stock
(with a stated redemption value of $5.3 million) and will pay approximately
$325,000 in cash as consideration for the merger. Assuming full conversion of
the PracticeWorks series B convertible redeemable preferred stock, the
PracticeWorks securities to be issued in connection with the Medical Dynamics
merger will represent, in the aggregate, less than 2% of PracticeWorks' common
stock at the time of the distribution. InfoCure will issue approximately 878,000
shares of its common stock as a portion of the consideration for the merger.

In accordance with the terms of the merger agreement, the 878,000 shares of
InfoCure common stock were originally valued at approximately $4.3 million.
InfoCure's issuance of these shares to the Medical Dynamics shareholders will be
accounted for by PracticeWorks as an equity contribution to recognize the
substance of the transaction as originally contemplated. The ultimate value
ascribed to the equity contribution will be a function of the exchange ratio and
the market value of the respective companies' common stock at the date of
closing.

PracticeWorks' proposed acquisition of Medical Dynamics will strengthen its
presence in the dental segment of the healthcare information systems market by
adding approximately 4,000 dentists to its installed customer base. Medical
Dynamics' customer base is relatively large and produced a recurring revenue
stream of approximately $2.5 million from customer support contracts for the
fiscal year ended September 30, 2000. The acquisition also affords opportunities
for future conversion of the acquired customer base to newer technology offered
by PracticeWorks, the potential for additional revenues from PracticeWorks'
connectivity offerings and the cost savings potential of eliminating duplicative
services and redundancies in staffing.

The unaudited pro forma condensed combined financial statements also give
effect to the proposed $5.0 million investment by Crescent in exchange for
100,000 shares of PracticeWorks series C convertible redeemable preferred stock
issuable in a private placement. If the series C convertible redeemable
preferred stock has not been converted after 48 months, Crescent may require
PracticeWorks to redeem the series C convertible redeemable preferred stock at a
price equal to 175% of the $5.0 million liquidation preference. PracticeWorks
will recognize an accretive dividend of approximately $938,000 annually related
to this feature. In no event, however, will Crescent be entitled to obtain 10%
or more of our common stock upon conversion. Crescent will also receive
specified registration rights in connection with its investment.

For a complete discussion of the terms of each of the series A, series B
and series C convertible redeemable preferred stock, see the section entitled
"Description of Capital Stock -- Preferred Stock" on page 110.

The following selected unaudited pro forma condensed combined financial
information has been derived from the historical financial statements of
PracticeWorks (A Division of InfoCure Corporation), Integrated Dental
Technologies, Inc. d/b/a PracticeWorks (a wholly owned subsidiary of Bio-Dental
Technologies Corporation, a wholly owned subsidiary of Zila, Inc.)
("Integrated"), a dental practice management company, Crunchy Frog Software,
Inc. ("Crunchy Frog"), a technology holding company, and Medical Dynamics and
InfoSoft included elsewhere in this prospectus. The unaudited pro forma
condensed combined statements of operations data for the nine months ended

17
<PAGE> 23

September 30, 2000 and the year ended December 31, 1999 have been presented as
if the the pending acquisitions of Medical Dynamics and InfoSoft had been
consummated on January 1, 1999. The unaudited pro forma condensed combined
balance sheet data as of September 30, 2000 has been presented as if the pending
acquisitions of Medical Dynamics and InfoSoft and the proposed $5.0 million
investment in the series C convertible redeemable preferred stock had been
consummated on that date.

The selected unaudited pro forma condensed combined financial information
gives effect to the acquisitions of Integrated, Crunchy Frog, Medical Dynamics
and InfoSoft under the purchase method of accounting for business combinations
and is based upon the assumptions and adjustments described in the notes to the
unaudited pro forma condensed combined financial statements.

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------ -----------------
(IN THOUSANDS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue................................ $ 39,231 $80,135
Restructuring and other charges.............. 3,753 2,469
Impairment and other non-recurring charges... 2,004 --
Merger costs................................. -- 659
Compensatory stock awards.................... -- 478
Operating (loss) income...................... (30,934) 1,421
Net loss before extraordinary item........... (23,644) (2,529)
Preferred stock dividend..................... 3,672 4,895
Net loss available to common shareholders
before extraordinary item.................. (26,806) (7,424)
Net loss per share before extraordinary item,
basic and diluted.......................... (3.20) (1.03)
OTHER DATA:
EBITDA....................................... $ (5,238) $13,356
</TABLE>

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 2000
------------------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................ $ 7,915
Working capital.......................................... (3,964)
Total assets............................................. 113,407
Long-term debt, less current portion..................... 19,703
Convertible redeemable preferred stock (3 series)........ 29,750
Stockholders' equity..................................... 40,872
</TABLE>

18
<PAGE> 24

RISK FACTORS

In addition to the information contained elsewhere in this document, you
should carefully read the following risk factors related to the distribution and
to PracticeWorks. All references to "we" or "our" are deemed to refer to
PracticeWorks and its subsidiaries.

RISKS RELATING TO THE DISTRIBUTION

BECAUSE THERE HAS NOT BEEN ANY PRIOR TRADING MARKET FOR OUR COMMON STOCK, THE
TRADING PRICE OF OUR COMMON STOCK IS LIKELY TO FLUCTUATE AND YOU MAY NOT BE ABLE
TO RESELL SHARES OF OUR COMMON STOCK AT A PROFIT OR AT ALL.

There is no current trading market for our common stock, although a
when-issued trading market may develop prior to completion of the distribution.
When-issued trading refers to a transaction made conditionally because the
security has been authorized but not yet issued. On the first trading day
following the distribution date, when-issued trading in respect of our common
stock will end and regular-way trading will begin. Regular-way trading refers to
trading after a security has been issued and typically involves a transaction
that settles on the third full business day following the date of a transaction.
We cannot predict the trading prices for our common stock before or after the
distribution date.

We have applied to list our common stock on the Nasdaq Stock Market's
National Market under the symbol "PWKS." There can be no assurance that our
common stock will be actively traded, and we cannot predict the prices at which
our common stock will trade. Some of the InfoCure stockholders who receive
shares of our common stock may decide that they do not want shares in an
information management technology company focused exclusively on the dental,
orthodontic and oral and maxillofacial surgery markets, and they may sell their
shares of our common stock following the distribution. These sales may delay the
development of an orderly trading market in our common stock for a period of
time following the distribution. Until the shares of our common stock are fully
distributed and an orderly market develops, the prices at which our common stock
trades may fluctuate significantly and may be lower or higher than the price
that would be expected for a fully distributed issue. Prices for our common
stock will be determined in the marketplace and may be influenced by many
factors, including the depth and liquidity of the market for the shares, our
results of operations, investors' impressions of PracticeWorks, changes in
economic conditions in the healthcare information technology industry and
general economic and market conditions. Further, market fluctuations could have
a material adverse impact on the trading price of our common stock. There can be
no assurance that the market price of our common stock will not suffer a
prolonged decline. Any such decline could limit our ability to establish
business relationships with companies that require an equity interest as a
component of a transaction and could adversely affect our ability to acquire
complementary businesses. Further, any such decline could hurt the liquidity of
our common stock.

19
<PAGE> 25

THE DISTRIBUTION WILL LIKELY CAUSE THE TRADING PRICE OF INFOCURE COMMON STOCK TO
INITIALLY DECLINE AND MAY CAUSE CONTINUED FLUCTUATIONS IN THE TRADING PRICE OF
INFOCURE COMMON STOCK.

Following the distribution, InfoCure common stock will continue to be
listed and traded on the Nasdaq Stock Market's National Market. InfoCure's
common stock is currently traded under the symbol "INCX." InfoCure intends to
change its trading symbol to "VWKS" immediately following the distribution. As a
result of the distribution, the trading price of InfoCure common stock
immediately following the distribution will likely be lower than the trading
price of InfoCure common stock immediately prior to the distribution. The
combined trading prices of InfoCure common stock and PracticeWorks common stock
after the distribution may be less than the trading price of InfoCure common
stock immediately prior to the distribution. Until the market has fully analyzed
the operations of InfoCure without the operations of PracticeWorks, the prices
at which InfoCure common stock trades may fluctuate significantly.

THE POSSIBILITY OF SUBSTANTIAL SALES MAY HAVE AN ADVERSE IMPACT ON THE TRADING
PRICE OF OUR COMMON STOCK.

Based on the number of shares of InfoCure common stock outstanding on
, 2001, InfoCure will distribute to its stockholders a total of
approximately shares of our common stock. Under the United States
federal securities laws, almost all of these shares may be resold immediately in
the public market, except for shares of our common stock held by our affiliates.
We cannot predict whether stockholders will resell large amounts of our common
stock in the public market following the distribution or how quickly they may
resell those shares. The resale of large amounts of our common stock could have
a material adverse effect on the trading price of our common stock.

THE DISTRIBUTION MAY FAIL TO QUALIFY FOR NONRECOGNITION TREATMENT UNDER SECTION
355 OF THE INTERNAL REVENUE CODE.

In connection with the distribution, King & Spalding, counsel to InfoCure,
will render an opinion to the effect that, although the matter is not free from
doubt, the distribution should qualify for nonrecognition treatment under
Section 355 of the Internal Revenue Code. There can be no assurance, however,
that the distribution will qualify for nonrecognition treatment under Section
355 of the Internal Revenue Code, and the opinion of King & Spalding will be
subject to a degree of uncertainty for a number of reasons. First, Section 355
of the Internal Revenue Code is highly technical and complex, and many aspects
of the statute have not yet been addressed by judicial decisions, Treasury
regulations, or other administrative guidance. The opinion of King & Spalding
represents its best interpretation of the legal requirements of Section 355 as
applied to the distribution, but an opinion of counsel is not binding on the
Internal Revenue Service or the courts. Second, the determination of whether a
transaction qualifies for nonrecognition treatment under Section 355 of the
Internal Revenue Code depends in part on the business reasons for the
transaction and satisfaction of numerous other fact-based requirements. The
opinion of King & Spalding, therefore, will be subject to certain assumptions
and based on various factual representations made by officers of InfoCure and
PracticeWorks. If any of the assumptions or representations upon which the
opinion of King & Spalding will be based is inaccurate or incomplete in any
material respect, the distribution could fail to qualify for nonrecognition
treatment under Section 355 of the Internal Revenue Code. Finally, the opinion
of King & Spalding is subject to uncertainty because it is possible that

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the distribution could be rendered taxable to InfoCure, but not its
stockholders, under Section 355(e) of the Internal Revenue Code as a result of
subsequent acquisitions of the stock or assets of InfoCure or PracticeWorks.

YOU MAY BE REQUIRED TO PAY INCOME TAXES IN CONNECTION WITH THE DISTRIBUTION.

If the distribution fails to qualify for nonrecognition treatment under
Section 355 of the Internal Revenue Code, the transaction would be taxable for
federal income tax purposes. In that case, you would be treated as if you had
received a taxable distribution in an amount equal to the fair market value of
the PracticeWorks common stock received in the distribution. All or a portion of
this taxable distribution could be treated as a dividend for federal income tax
purposes.

INFOCURE COULD INCUR A SUBSTANTIAL CORPORATE INCOME TAX LIABILITY IN CONNECTION
WITH THE DISTRIBUTION, AND PRACTICEWORKS MAY BE REQUIRED TO INDEMNIFY INFOCURE
FOR ALL OR A PORTION OF THIS TAX LIABILITY.

If the distribution fails to qualify for nonrecognition treatment under
Section 355 of the Internal Revenue Code, then a corporate income tax also could
be payable by InfoCure based upon the difference between (1) the aggregate fair
market value of the shares of PracticeWorks common stock distributed in the
distribution and (2) InfoCure's adjusted basis in the shares of PracticeWorks
stock. Although the corporate level tax would be payable by InfoCure, we have
agreed to indemnify InfoCure under certain circumstances for all or a portion of
this tax liability. This indemnification obligation, if triggered, could be
substantial. In addition, under the federal income tax regulations that govern
corporations filing a consolidated return, each member of InfoCure's
consolidated group, including PracticeWorks, is jointly and severally liable for
any tax liability incurred by InfoCure prior to the distribution or in
connection with the distribution.

Even if the distribution qualifies for nonrecognition treatment under
Section 355 of the Internal Revenue Code, a corporate income tax could be
payable by InfoCure as described above pursuant to Section 355(e) of the
Internal Revenue Code if, during the four-year period beginning two years before
the distribution, one or more persons were to acquire a 50% or greater interest
in InfoCure or PracticeWorks as part of a plan or series of related transactions
that includes the distribution. For example, a transaction or series of
transactions resulting in an acquisition of a 50% or greater interest in either
InfoCure or PracticeWorks, in the aggregate, by one or more persons within the
two-year period following the distribution would trigger a corporate level tax
liability to InfoCure under Section 355(e) unless InfoCure affirmatively
establishes that the acquisition or acquisitions were not part of a plan or
series of related transactions that included the distribution. If such an
acquisition of either InfoCure or PracticeWorks were to occur within the
two-year period following the distribution, InfoCure may be unable to prove that
the acquisition was not part of a plan or series of related transactions that
included the distribution, in which case the distribution would be taxable to
InfoCure under Section 355(e) of the Internal Revenue Code. We have agreed to
indemnify InfoCure under certain circumstances for all or a portion of the
corporate income tax liability.

The distribution also could be taxable to InfoCure, but not its
stockholders, under Section 355(e) of the Internal Revenue Code if certain
acquisitions of "predecessors" of either InfoCure or PracticeWorks are treated
as having occurred pursuant to a plan or series of related transactions that
includes the distribution. A number of corporations that InfoCure acquired
within the two-year period preceding the distribution may be treated as

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predecessors of InfoCure or of PracticeWorks under Section 355(e), although the
statute is not clear and no administrative guidance or court decisions to date
have addressed the matter. If corporations acquired by InfoCure within the
two-year period preceding the distribution are treated as predecessors of
InfoCure or PracticeWorks, the distribution would be presumed to occur pursuant
to a plan or series of related transactions that included InfoCure's acquisition
of the predecessor corporations, and the distribution would be taxable to
InfoCure unless InfoCure affirmatively establishes that none of its pre-
distribution acquisitions of any predecessors occurred pursuant to a plan or
series of related transactions that includes the distribution.

RISKS RELATING TO OUR BUSINESS

WE HAVE NO OPERATING HISTORY AS AN INDEPENDENT COMPANY AND WE MAY BE UNABLE TO
MAKE THE CHANGES NECESSARY TO OPERATE AS A STAND-ALONE COMPANY.

We do not have an operating history as an independent public company. We
have relied on InfoCure for various financial, administrative and managerial
expertise in conducting our operations. Following the distribution, InfoCure
will have no obligation to provide assistance to us other than the interim
services which will be provided by InfoCure under the Transition Services
Agreement and which are described in "Relationship Between InfoCure and
PracticeWorks Following the Distribution," beginning on page 49. The services to
be provided to InfoCure by PracticeWorks include the preparation of tax returns,
maintenance of the general ledger, preparation of financial statements,
corporate record-keeping and payroll. The services to be provided to
PracticeWorks by InfoCure include insurance-related services, employee benefits
services and specified information technology services. Because our business has
never been operated as an independent company, we cannot assure you that we will
be able to successfully put in place the financial, administrative and
managerial structure necessary to operate as an independent company, or that the
development of such a structure will not require a significant amount of
management's time or result in significant additional operating costs, any of
which could cause our results of operations to suffer. Further, for the period
from July 1997 through September 30, 2000, InfoCure has made net cash advances
of approximately $31.4 million to PracticeWorks. If we are unable to develop our
own sources of funding, we may be unable to execute on our business plan.

OUR HISTORICAL FINANCIAL INFORMATION DOES NOT REFLECT THE PRICING MODEL AND MANY
OF THE APPLICATION AND SERVICE OFFERINGS THAT WE EXPECT TO BE THE FOCUS OF OUR
BUSINESS IN THE FUTURE, WHICH MAKES IT DIFFICULT TO EVALUATE OUR HISTORICAL AND
FUTURE FINANCIAL PERFORMANCE.

PracticeWorks began operating as a separate division of InfoCure in the
first quarter of 2000. Historically, we charged our customers a license fee plus
maintenance and service fees for our practice management applications and
services. For the nine months ended September 30, 2000, we derived approximately
20% of our revenue from license fees, 60% from maintenance and service fees and
approximately 11% from transaction fees relating to electronic data interchange,
or EDI, services. Our new pricing strategy is to migrate substantially all of
our providers to subscription pricing over the next five years. In addition, our
business strategy is to promote the most technologically advanced of our
existing applications, our application service provider, or ASP, applications
and the other new applications and services, including our Internet portal and
website development and hosting services that we are currently developing. We
expect the revenue and operating expenses from subscription pricing and our new
application and service offerings to differ

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from our historical results. Specifically, revenue from subscription pricing
will initially be lower than revenue provided by one-time licenses because of
the elimination of the large up-front payment associated with selling software
licenses. Accordingly, our historical financial information reflects our results
from a pricing model that differs from the pricing model to which we are
transitioning our customer base and application and service offerings that
represent only a portion of the applications and services that we expect to
offer in the future.

OUR ASP APPLICATIONS AND SERVICES WILL NOT INITIALLY OFFER FULL FUNCTIONALITY
WHICH MAY MAKE IT DIFFICULT TO ATTRACT NEW CUSTOMERS FOR THESE PRODUCTS.

Our initial ASP applications will not offer the full functionality of our
current products. Specifically, while our dental ASP will initially feature the
functionality required by most dental practices, plus the efficiency of the ASP
delivery model, upon initial release, the application will not include third
party features such as charting, graphical representation or imaging of teeth or
electronic medical records. We expect to provide these levels of functionality
in the fourth quarter of 2001. Similarly, although our ASP applications for the
orthodontic and oral and maxillofacial surgery markets will contain the
administrative and financial management functions required to manage a
physician's office, they will not initially include the third party features or
support for imaging and x-rays. We expect to provide such functionality for the
orthodontic and the oral and maxillofacial surgery markets in the third quarter
of 2002. While we believe the fact that the planned releases offering the
administrative and financial functions required by most physicians, coupled with
the efficiency of the ASP delivery model will be a competitive advantage, the
lack of full functionality may result in our products not being well received in
the marketplace. Should these circumstances occur, our ability to convert
existing customers to these applications and our ability to achieve lower costs
from this technology will be adversely affected. Additionally, our ability to
attract new customers may be adversely affected as well. As a result, we may be
unable to grow revenues and our ability to achieve profitability will be
impaired.

WE MAY EXPERIENCE DELAYS IN RELEASING OUR ASP APPLICATIONS IN TARGETED MARKETS.

We may experience delays in releasing our ASP applications in their
respective target markets. We expect to release our ASP applications for use by
dentists in the United States during the second quarter of 2001 and our
orthodontic and oral and maxillofacial surgery ASP applications by the fourth
quarter of 2001. We expect to release our Internet portal and our website
development and hosting services in the second quarter of 2001. However, we
cannot assure you that we will not experience a delay in releasing our ASP
applications to our targeted markets. Any delay in releasing our ASP
applications may impair our ability to attract new customers and to grow
revenues and achieve profitability.

WE HAVE A RECENT HISTORY OF LOSSES AND WE MAY NEVER ACHIEVE OR MAINTAIN
PROFITABILITY.

We had net losses of $16.7 million for the nine months ended September 30,
2000. Our accumulated deficit as of September 30, 2000 was $20.2 million. We
expect to continue to recognize reduced revenues due to our introduction in the
second quarter of 2000 of subscription pricing. This is due to the elimination
of the large up-front payment that we received in connection with one-time
licenses. As a result, we expect our operating and net losses to continue for
the foreseeable future. We cannot assure you we will

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increase revenue or control expenses sufficiently to achieve or maintain
profitability in the future.

WE MAY BE REQUIRED TO RECOGNIZE COMPENSATION EXPENSE RELATED TO A GRANT OF
OPTIONS MADE BY INFOCURE, WHICH WILL ADVERSELY AFFECT OUR NET INCOME.

In connection with the distribution, PracticeWorks will assume liability
for a portion of the compensation expense that may be recognized by InfoCure as
a result of InfoCure option grants to former InfoCure management and employees
who will become employees of PracticeWorks after the distribution. On August 21,
2000, the board of directors of InfoCure approved a grant of options to
purchase, in the aggregate, approximately 8,915,000 shares of InfoCure common
stock to management and employees of InfoCure. If the distribution is not
completed prior to March 31, 2001, approximately 75% of the options will be
canceled. If the distribution is completed, the option grants will vest ratably
over the four-year period beginning on the grant date and will expire ten years
after the grant date.

If the exercise price of these options is less than the market price of the
InfoCure common stock at the time of the distribution, InfoCure will recognize
compensation expense, if any, related to the contingently issued portion of
these grants. The compensation expense, if any, will be calculated based on the
difference between the fair market value of the underlying InfoCure common stock
at the effective date of the distribution and the grant price multiplied by the
number of options outstanding. The calculated expense would be allocated to
PracticeWorks based on the compensation expense related to the grants made to
employees designated as PracticeWorks employees and will then be amortized over
the remaining vesting period of the options. If PracticeWorks is required to
recognize compensation expense related to these option grants, our net income
will be adversely affected.

WE MAY NOT SUCCESSFULLY COMPLETE THE DEVELOPMENT OF OUR NEW APPLICATIONS AND
SERVICES, WHICH WOULD AFFECT OUR ABILITY TO IMPLEMENT OUR GROWTH STRATEGY.

Our strategy for growing our business and achieving profitability depends
upon our ability to offer a number of additional applications and services in
the near future. We are continuing to develop our ASP applications and our
Internet portal, or website, and the services it will enable. We expect to
initially release our ASP applications for use by dentists in the United States
during the second quarter of 2001 and our orthodontic and oral and maxillofacial
surgery ASP applications by the fourth quarter of 2001. Our initial ASP
applications will not offer the full functionality of our current products. We
expect to release our Internet portal in the second quarter of 2001. During
2001, we expect to spend approximately $1.2 million in development expenditures
for the completion and enhancement of the Internet portal and our ASP products.
These expenditures will be financed through operating cash flows and the
proceeds from the Crescent investment. However, because the development of our
applications and services entails significant technical and business risks and
requires substantial expenditures and lead time, we may be unable to offer these
applications and services on our projected schedule, in a cost-effective manner
or at all. If the offering of any or all of these applications and services is
delayed or cancelled, our ability to grow our business and achieve profitability
will be substantially impaired.

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IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS FROM THIRD PARTY
CHALLENGES, IT MAY SIGNIFICANTLY IMPAIR OUR COMPETITIVE POSITION.

Our success and ability to compete depend in part on our ability to protect
our proprietary intellectual property rights, which consists primarily of our
internally developed and acquired software. Any failure to adequately protect
our proprietary rights could result in our competitors offering similar
services, which could impair our competitive advantage and decrease our revenue.
To protect our proprietary rights, we rely primarily on a combination of
copyright, trade secret and trademark laws, confidentiality agreements with
third parties, and protective contractual provisions such as those contained in
license agreements with suppliers, vendors and customers. In addition, our
employees are expected to sign an agreement to comply with our corporate
policies and procedures, including our policy regarding non-disclosure of
confidential information. We have not entered into these agreements in every
case, and there remains a risk that existing copyright, trademark and trade
secret laws afford only limited protection.

We cannot assure you that our means of protecting our proprietary rights
are adequate. Policing use of our proprietary information is difficult, and the
steps we have taken might not prevent misappropriation, particularly in foreign
countries where the laws may not protect our proprietary rights as fully as do
the laws of the United States. Despite our efforts, unauthorized parties may
copy aspects of our applications or services and obtain and use information that
we regard as proprietary. Our competitors could also independently develop
similar technology. Other parties may breach confidentiality agreements and
other protective contracts into which we have entered. We may not become aware
of, or have adequate remedies in the event of, breaches.

OUR STOCKHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION AS A RESULT OF THE INFOSOFT
ACQUISITION, THE MEDICAL DYNAMICS ACQUISITION AND THE CRESCENT INVESTMENT.

In connection with our proposed acquisition of InfoSoft, we will issue
32,000 shares of our series A convertible redeemable preferred stock. The series
A convertible redeemable preferred stock to be issued to Ceramco pursuant to the
InfoSoft acquisition will be convertible, in the aggregate, into approximately
9.8% of our outstanding common stock. If Ceramco converts all, or a portion of
the series A convertible redeemable preferred stock into shares of our common
stock, this will result in dilution to our stockholders.

In connection with our proposed acquisition of Medical Dynamics, we will
issue approximately 965,000 shares of series B convertible redeemable preferred
stock and approximately 219,000 shares of common stock. The common stock and
series B convertible redeemable preferred stock to be issued to the Medical
Dynamics shareholders, assuming full conversion of the series B convertible
redeemable preferred stock, will represent, in the aggregate, less than 2% of
our common stock at the time of the distribution. If all or a portion of the
series B convertible redeemable preferred stock is converted into common stock,
our stockholders will be diluted.

In connection with the proposed Crescent investment, we will issue 100,000
shares of our series C convertible redeemable preferred stock, will be used to
fund our operations. Pursuant to the terms of this investment, Crescent will be
able to convert its preferred stock into shares of our common stock one year
after issuance. Also, after the fourth anniversary of the issuance, Crescent
will have the right to require us to redeem the series C convertible redeemable
preferred stock at a premium equal to 175% of the $5.0 million liquidation
preference. If the price of our common stock decreases following the

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distribution, we may be required to redeem the shares of series C convertible
redeemable preferred stock at a significant premium in order to prevent a
dilutive conversion of the series C convertible redeemable preferred stock into
shares of our common stock. The series C convertible redeemable preferred stock
issued to Crescent will be convertible into no greater than 10% of our common
stock upon conversion of their preferred stock based upon a pre-determined
conversion price.

The convertible redeemable preferred stock to be issued in connection with
these transactions will be convertible, in the aggregate, into a maximum of
approximately 21% of our common stock outstanding at the time of the
distribution. If all or a portion of our convertible redeemable preferred stock
is converted into shares of our common stock, this will result in dilution to
our stockholders.

OUR STOCKHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION IF FUTURE EQUITY OFFERINGS
ARE USED TO FUND OUR OPERATIONS OR ACQUIRE COMPLEMENTARY BUSINESSES.

We expect to incur increased operating costs associated with the
development of our ASP applications and other new applications and services, the
establishment of additional business relationships and marketing and sales
expenses in connection with the introduction of new applications and services.
If we finance future acquisitions through the issuance of equity securities, our
stockholders could experience significant additional dilution. In addition,
securities issued in connection with future financing activities or potential
acquisitions may have rights and preferences senior to the rights and
preferences of our common stock.

OUR STOCKHOLDERS MAY EXPERIENCE SUBSTANTIAL DILUTION IF WE ARE REQUIRED TO ISSUE
SHARES OF OUR COMMON STOCK TO WEBMD CORPORATION.

In connection with the distribution, we will assume a portion of InfoCure's
contingent obligation under a letter agreement between InfoCure and WebMD
Corporation, formerly Healtheon/WebMD, executed in February 2000 whereby we will
issue up to 482,253 shares of PracticeWorks common stock to WebMD. Under the
terms of the February 2000 letter agreement, WebMD made a $10.0 million
investment in VitalWorks, a subsidiary of InfoCure, in exchange for 400,000
shares of VitalWorks convertible preferred stock. In conjunction with the
February 2000 letter agreement, InfoCure and WebMD also entered into a marketing
agreement which provided for utilization, delivery and promotion of WebMD's
clinical financial transaction and EDI services. The VitalWorks convertible
preferred stock was to have automatically converted into 1.0% of the outstanding
common stock of VitalWorks upon the completion of VitalWorks' initial public
offering. If the VitalWorks initial public offering was not consummated by
November 11, 2000, WebMD had the right to exchange the VitalWorks convertible
preferred stock for shares of InfoCure common stock based on a current price for
InfoCure common stock. The VitalWorks initial public offering was never
consummated. On November 29, 2000, WebMD notified InfoCure of its election to
exchange the VitalWorks convertible preferred stock for 1,929,012 shares of
InfoCure common stock, which if issued would represent approximately 5.0% of the
total outstanding shares of InfoCure common stock.

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marketing agreement. As part of the liabilities assumed by PracticeWorks in the
distribution, PracticeWorks has agreed to assume InfoCure's contingent
obligation to issue to WebMD up to 482,253 shares of PracticeWorks common stock,
or approximately 5.0% of the outstanding PracticeWorks common stock. These
shares would represent the PracticeWorks common stock that WebMD would have been
entitled to receive in the distribution had it owned the full number of shares
of InfoCure common stock on the record date. The exact number of shares of
InfoCure common stock to be issued to WebMD, if any, as well as the
corresponding number of shares of PracticeWorks common stock, will be determined
through negotiations and/or litigation regarding the InfoCure/WebMD February
2000 letter and marketing agreements. If we are required to issue the full
482,253 shares of PracticeWorks common stock to WebMD in satisfaction of this
contingent obligation, our stockholders will experience significant dilution.

WE MAY NOT BE ABLE TO ESTABLISH THE BUSINESS RELATIONSHIPS NECESSARY TO
IMPLEMENT OUR GROWTH STRATEGY.

We expect to develop additional business relationships with providers of
dental and other supplies. This is necessary to allow us to begin offering our
e-commerce application, which we call the PracticeWorks Exchange, in the dental
and oral and maxillofacial surgery markets. The PracticeWorks Exchange is a
software application that was designed to reduce administrative effort and
increase the efficiency of the procurement function of a practice by enabling
online purchasing of dental and office supplies.

The availability of the PracticeWorks Exchange to our dental and oral and
maxillofacial surgery customers is dependent on our ability to develop business
relationships with suppliers in these industries. We cannot assure you that we
will be able to develop or sustain these relationships. Establishing these
relationships will involve negotiation with various suppliers and we may be
unable to reach acceptable agreements. We have not currently finalized any
relationships with suppliers in the dental and oral and maxillofacial surgery
markets, and as a result, we are unable to predict when the PracticeWorks
Exchange will be operational in the dental and oral and maxillofacial surgery
markets. If we are unable to establish business relationships with providers of
dental and other supplies, our ability to offer the PracticeWorks Exchange will
be limited and our ability to grow our business and achieve profitability will
be substantially impaired.

The PracticeWorks Exchange has been operational for our orthodontic
customers since May 2000 and has generated nominal revenues to date.

WE MAY BE UNABLE TO GROW OUR REVENUE IF CUSTOMERS DO NOT RESPOND FAVORABLY TO
OUR NEW APPLICATIONS AND SERVICES.

Our growth strategy depends on our ability to generate usage of our ASP
applications, Internet portal, the PracticeWorks Exchange and other new
applications and services by a large number of dentists, orthodontists and oral
and maxillofacial surgeons. We cannot be certain that these new applications and
services will achieve market acceptance. In order to successfully sell our new
applications and services, we will need to convince new and existing customers
that the features and functionality of our applications justify their cost, as
well as the time and administrative expense required for conversion. They may be
unwilling to adopt new practice management systems if they have made an
extensive investment in hardware, software and training for existing systems. In
addition, potential customers are likely to be unfamiliar with the ASP delivery
model and may be unwilling

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to utilize a practice management system in which the application and patient
data is stored on an off-site server and delivered to their offices through the
Internet. Our ASP applications have not been released yet, and therefore, we
currently have no customers using our ASP applications and related services. If
we are unsuccessful in attracting customers to our new applications and services
or if the market for our applications and services does not grow or grows
slowly, achieving profitability could take longer than expected or we may never
achieve profitability.

WE MAY INCUR INCREASED EXPENSES IF THE TRANSITION SERVICES AGREEMENT WITH
INFOCURE IS TERMINATED.

In connection with the distribution, we will enter into a Transition
Services Agreement with InfoCure. This agreement provides that InfoCure will
provide services, such as insurance and employee benefits, to us, and we will
provide services, such as tax, accounting, corporate record-keeping and payroll,
to InfoCure. The agreement will be terminable by either party at any time upon
60 days prior written notice. If the agreement is terminated, we will be
required to obtain insurance and employee benefits services from a third party.
This could be more expensive than the fees which we will be required to pay
under the Transition Services Agreement.

WE EXPECT OUR QUARTERLY OPERATING RESULTS TO FLUCTUATE, WHICH COULD CAUSE OUR
STOCK PRICE TO FLUCTUATE.

Our revenue and operating results may vary significantly from quarter to
quarter due to a number of factors which are outside of our control. Some of
these factors include:

- the rate of adoption of our new applications and services by new and
existing customers;

- costs of developing new applications and services;

- changes in the adoption of Internet usage and acceptance by healthcare
providers of electronic commerce;

- changes in customer purchasing patterns;

- costs related to acquisitions of technologies or businesses; and

- general economic conditions, as well as those specific to the healthcare
information technology market and related industries.

In addition, the following factors that are within our control may cause
our revenue and operating results to vary significantly from quarter to quarter:

- our success in appropriately setting subscription fees and the rate at
which new and existing customers adopt subscription pricing;

- the timing of the release of our ASP applications and Internet portal and
the introduction of the PracticeWorks Exchange to the dental and oral and
maxillofacial surgery markets;

- our success in establishing additional business relationships, including
those necessary to enable the introduction of the PracticeWorks Exchange
in the dental and oral and maxillofacial surgery markets; and

- the timing and amount of sales and marketing expenditures.

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Any change in one or more of these or other factors could cause our annual
or quarterly operating results to fluctuate. If our operating results do not
meet market expectations, our stock price will likely decline.

OUR SUBSCRIPTION PRICING MODEL IS UNPROVEN AND WE MAY BE UNABLE TO SET
SUBSCRIPTION FEES AT LEVELS WHICH ENABLE US TO ACHIEVE PROFITABILITY.

The success of our subscription pricing model depends on our ability to set
subscription fees for our applications and services at rates that will allow us
to achieve profitability. Under our subscription pricing model, our customers
pay a fixed, monthly subscription fee for our practice management applications,
maintenance and support. The subscription fee is based on the practice specialty
and number of authorized system users. We have limited experience with
subscription pricing as we first introduced it to our customers during the
second quarter of 2000. Furthermore, the markets for practice management
applications and services delivered on a subscription basis is new and evolving.
There are relatively few similar products whose subscription fees we can
evaluate in setting our fees and the providers of those products have also had
to set their fees in the context of an undeveloped market. As a result, we have
limited information from which to evaluate the appropriate level for our
subscription fees and we may fail to set our subscription fees at levels that
enable us to become profitable. In addition, we expect to enter into multi-year
agreements with subscribers pursuant to which subscription fees or increases in
fees will be locked-in typically for three to five years, limiting our ability
to increase our subscription fees for those subscribers. If we fail to
appropriately price our subscription fees, achieving profitability could take
longer than expected or we may never achieve profitability.

IF WE CANNOT EFFICIENTLY CONVERT THE DATA STORED IN EXISTING PRACTICE MANAGEMENT
APPLICATIONS TO OUR ASP APPLICATIONS, OUR GROWTH AND RESULTS MAY BE HARMED.

When customers elect to use our ASP applications, they may need us to
convert the data stored in their existing practice management applications to
our ASP applications. We expect conversions to take approximately 30 days from
the date that a practice establishes Internet connectivity. If we cannot rapidly
and accurately convert the data stored in customers' existing practice
management systems to our ASP applications, whether they are existing customers
using our applications or new customers, our business will suffer. If we
experience difficulties or delays in converting this data, we will be forced to
incur additional costs necessary to correctly convert the data and we may be
unable to attract additional customers.

OUR NEW PRODUCT STRATEGY AND SUBSCRIPTION PRICING MODEL WILL REQUIRE ADDITIONAL
FINANCING WHICH MAY NOT BE AVAILABLE.

We expect our transition to the subscription pricing model to continue to
adversely impact our cash flow until subscription fees replace the decline in
one-time revenue from license fees and hardware sales. In addition, we expect to
incur operating costs associated with the development of our ASP applications,
Internet portal and other new applications and services, the establishment of
additional business relationships and marketing and sales expenses in connection
with the introduction of new applications and services. We currently expect to
spend approximately $1.0 million on hardware, software and maintenance costs,
approximately $1.7 million in sales, marketing and brand awareness expenditures
and approximately $800,000 associated with additional employees. While we

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believe that operating cash flows, along with the proceeds from the Crescent
investment, will be sufficient to meet these, and other working capital needs in
both the long-term and the short-term, we may also need to raise funds in the
future to meet our working capital needs. Additional financing may not be
available when and if we need it, and if available, it may not be available on
terms favorable to us. Recently, some Internet companies with a history of
operating losses have been unable to raise additional financing. If adequate
funds are not available on acceptable terms, we may not be able effectively to
develop and enhance our application and service offerings, market our
applications and services, respond to competitive pressures or fund
acquisitions. If we raise additional funds by issuing equity or convertible debt
securities, your ownership will be diluted and our stock price may decline. Any
new securities could also have rights, preferences and privileges senior to
those of our common stock.

WE PLAN TO EXPAND RAPIDLY AND WE MAY BE UNABLE TO MANAGE OUR GROWTH.

We intend to rapidly grow our business. However, we cannot be sure that we
will successfully manage our growth. In order to successfully manage our growth,
we must:

- expand and enhance our administrative infrastructure;

- improve our management, financial and information systems and controls;

- expand, train and manage our employees effectively; and

- successfully retain and recruit additional employees.

Continued growth could place a further strain on our management, operations
and financial resources because we have not historically functioned as an
independent company. There will also be additional demands on our sales,
marketing, information systems and administrative resources as we offer new
applications and services, such as the ASP delivery model, an Internet portal
and website development and hosting, and expand our target markets and
customers. We cannot assure you that our operating and financial control
systems, administrative infrastructure, facilities and personnel will be
adequate to support our future operations or to effectively adapt to future
growth. If we cannot manage our growth effectively, our business may be harmed.

WE MAY NOT BE ABLE TO ACHIEVE A RECOGNIZED BRAND NAME FOR PRACTICEWORKS, WHICH
WOULD MAKE IT DIFFICULT TO IMPLEMENT OUR BUSINESS STRATEGY.

Achieving market acceptance for our new applications and services will
require substantial sales and marketing efforts and the expenditure of
significant funds to increase awareness and demand by our target customers. We
expect to spend approximately $1.7 million on the branding of the PracticeWorks
name and on programs that will promote market awareness of this brand. We will
finance these expenditures through operating cash flows and from the proceeds of
the Crescent investment. To cultivate new customers within the dental,
orthodontic and oral and maxillofacial surgery markets, we plan to implement a
program designed to create a strong brand identity for PracticeWorks. We also
need to ensure that our current customers, especially those obtained through
acquisitions, are familiar with the PracticeWorks brand name. If we fail to
successfully create a recognized brand name for PracticeWorks, our ability to
obtain new customers and retain current customers could suffer.

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WE MAY BE UNABLE TO CONTINUE TO ATTRACT QUALIFIED PERSONNEL, WHICH WOULD AFFECT
OUR ABILITY TO EXPAND OUR BUSINESS.

We believe our success depends largely on our ability to attract and retain
highly skilled technical, managerial and marketing personnel to develop and
market our new applications and services. We have hired over 100 employees since
January 1, 2000 and we expect to hire over 25 additional employees during the
next 12 months. We expect to spend approximately $200,000 on recruiting costs
associated with hiring these new employees. We will fund these expenditures
through operating cash flows. Individuals with the information technology skills
we need to further develop our applications and services are in short supply and
competition for qualified personnel is particularly intense. Further, it can be
difficult to hire experienced sales professionals. We may not be able to hire
the necessary personnel to implement our business strategy, or we may need to
pay higher compensation for employees than we currently expect. If we are unable
to hire and retain qualified employees, our business and expansion plans will
suffer.

WE ARE DEPENDENT UPON OUR EXECUTIVE OFFICERS, AND THE LOSS OF THESE PERSONNEL
COULD DISRUPT OUR GROWTH.

Our success depends on the continued services and performance of our
executive officers and we cannot guarantee that we will be able to retain those
individuals. The loss of the services of one or more of our executive officers
could seriously impair our ability to implement the changes in our application
and service offerings and pricing model that we are currently undertaking and
our ability to manage and expand our business. We do not maintain key person
life insurance.

THE MARKETS WE SERVE ARE HIGHLY COMPETITIVE, AND WE MAY BE UNABLE TO COMPETE
WITH BUSINESSES THAT HAVE GREATER RESOURCES THAN WE DO.

The market for providing information management technology to dentists,
orthodontists and oral and maxillofacial surgeons is extremely competitive. In
addition, the market for Internet-based application service providers in the
healthcare industry is relatively new and evolving. We anticipate that
competition will continue to intensify as the use of the Internet grows. Our
competitive position is difficult to evaluate due to the variety of current and
potential competitors and the evolving nature of the healthcare information
technology market.

Our primary competitors include national and regional providers of
traditional practice management systems, application service providers,
healthcare e-commerce and Internet connectivity companies. Specifically, we
compete with EagleSoft, a subsidiary of Patterson Dental Supply, Inc., Dentrix
Dental Systems, Inc., a subsidiary of Henry Schein, Inc., the Trizetto Group,
Inc. and MediBuy. We believe, based on published industry reports, that we have
licensed our practice management applications to more dental, orthodontic and
oral and maxillofacial surgery practices than any of our competitors. Each of
these types of companies currently competes with us or can be expected to
compete with us in the future in delivering information management technology to
dentists, orthodontists and oral and maxillofacial surgeons, including the
delivery of practice management applications and services through the ASP
delivery model. Furthermore, major software companies and other entities,
including those specializing in the healthcare industry that are not currently
offering applications or services that compete with our applications, may enter
our markets. We also expect to compete with traditional and online retailers of
dental, medical and

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office supplies, health content providers and website developers. In addition,
companies with which we have business relationships may compete with us from
time to time by selling, consulting on or hosting other applications that
compete with our applications and services.

Many of our competitors have substantially greater financial, technical and
marketing resources, longer operating histories, greater name recognition and
more established relationships in the healthcare information technology market
than we have. In addition, the lack of barriers to entry in our market exposes
us to a potentially increasing number of competitors. We cannot assure you that
we will have the resources or expertise to compete successfully in the future.
If we are unable to develop and expand our applications and services or adapt to
changing customer needs as well as our current or future competitors are able to
do, we may experience reduced profitability and a loss of market share.

WE MAY HAVE DIFFICULTY INTEGRATING CURRENT AND FUTURE ACQUISITIONS INTO OUR
BUSINESS.

Since December 1, 1999, InfoCure has acquired 12 companies that have been
attributed to us. We may from time to time acquire other companies, including
our proposed acquisitions of Medical Dynamics and InfoSoft. As a result, we are
exposed to increased risks relating to integrating these companies into our
business, including:

- integration of new operations, products, services and personnel;

- integration of InfoSoft's value added reseller distribution network into
our existing distribution channels;

- diversion of resources from our existing business;

- client communication and branding awareness;

- inability to generate revenues from new products and services sufficient
to offset associated acquisition costs;

- maintenance of uniform standards, controls and policies;

- accounting issues that adversely affect our financial results;

- impairment of employee and customer relations as a result of any
integration of new management personnel; and

- dilution to existing stockholders from the issuance of equity securities.

In addition, liabilities or other problems associated with an acquired
business may adversely affect our business or operating results.

WE MAY BE UNABLE TO IMPROVE THE OPERATIONS OF MEDICAL DYNAMICS FOLLOWING
COMPLETION OF THE ACQUISITION.

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agreement except for InfoCure's obligation to issue a specified number of shares
of InfoCure common stock. Since the original execution of the agreement, Medical
Dynamics' net sales have dropped considerably. Further, Medical Dynamics'
independent accountants have stated that there is substantial doubt as to
Medical Dynamics' ability to continue as a going concern. As of December 31,
2000, InfoCure has advanced to Medical Dynamics $1.55 million to repay certain
existing obligations and for general working capital purposes. There can be no
assurance that PracticeWorks will be able to improve the operations of Medical
Dynamics following the acquisition.

WE HAVE RECORDED, AND MAY CONTINUE TO RECORD, A SIGNIFICANT AMOUNT OF GOODWILL
IN CONNECTION WITH OUR ACQUISITION STRATEGY.

As a result of our recent acquisitions, goodwill accounts for a significant
portion of our total assets. In addition, we may record additional goodwill
related to future acquisitions. As we integrate the acquired companies into our
business, we will evaluate the carrying amount of goodwill whenever adverse
facts and circumstances occur indicating an impairment in value. If the benefits
of our acquisitions do not ultimately exceed the associated costs, including any
dilution to our stockholders resulting from the issuance of shares of our common
stock in connection with our acquisitions, we could continue to incur increased
losses, or be required to write down some or all of the unamortized goodwill and
other intangible assets. As a result, our results of operations may be adversely
affected.

Additionally, prior to the fourth quarter of 1999, goodwill was amortized
on a straight-line basis over a 15-year estimated useful life. As a result of
our new product strategy involving the development of ASP applications and other
Internet-based applications and services, the transition to a subscription
pricing model and the current rate of change within the ASP information
management technology industries, we estimated that the useful life of remaining
goodwill and goodwill for our recent acquisitions is currently three years. If
our assumptions underlying this change or our estimates with respect to this
time period are inaccurate, our net losses could increase.

MARKET ACCEPTANCE OF OUR INTERNET-BASED APPLICATIONS AND SERVICES WILL BE
DEPENDENT ON INCREASED USE OF THE INTERNET BY OUR CUSTOMERS AND THEIR SUPPLIERS,
AND A LACK OF GROWTH OR DECLINE IN THEIR INTERNET USE MAY ADVERSELY AFFECT OUR
BUSINESS MODEL.

We intend to grow, in part, by encouraging dentists, orthodontists and oral
and maxillofacial surgeons to use our ASP applications, which are accessed
through the Internet, to place orders with suppliers over the Internet using our
PracticeWorks Exchange application and to access other services on our Internet
portal. If use of the Internet for commerce and communication in the healthcare
industry does not increase, our customers and healthcare suppliers may not
utilize the Internet as we anticipate and our growth could be substantially
limited. Rapid growth in the use of the Internet is a recent phenomenon. As a
result, acceptance and use may not continue to develop at historical rates. A
number of factors may inhibit the continued growth and development of the
Internet, including:

- inadequate network infrastructure;

- lack of availability of cost-effective high-speed service;

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- security and privacy concerns; or

- inconsistent quality of services.

If Internet usage grows, the Internet infrastructure may not be able to
support the demands placed on it by this growth and its performance and
reliability may decline. In addition, websites have experienced interruptions in
their service as a result of outages and other delays occurring throughout the
Internet network infrastructure. If these outages or delays frequently occur in
the future, Internet usage could grow more slowly or decline. Even if Internet
usage grows generally, our business will suffer if our existing and potential
customers, many of whom have not traditionally utilized the Internet for
business purposes, do not accept Internet-based systems.

WE WOULD NOT BE ABLE TO DELIVER OUR ASP APPLICATIONS OR OUR INTERNET PORTAL IF
THIRD PARTIES DO NOT PROVIDE INFRASTRUCTURE AND APPLICATION HOSTING.

We do not intend to develop or maintain Internet infrastructure or
application hosting capabilities to support our ASP applications, our Internet
portal or the services it enables. Therefore, we are dependent on obtaining
those capabilities from our hosting partner, GlobalCenter, or another third
party hosting partner. The ability to remotely host our ASP applications and our
Internet portal is central to our business strategy and depends on the efficient
and uninterrupted operation of the computer and network systems of the hosting
partner we select. If we fail to establish or continue a relationship with a
hosting partner on acceptable terms, or if our hosting partner fails to host our
ASP or our Internet portal applications due to a breach of our agreement with
the hosting partner, technical difficulties or for any other reason, we may be
unable to provide our ASP applications and other services to our customers,
which would harm our business.

SYSTEM FAILURES MAY CAUSE INTERRUPTIONS OF OUR INTERNET-BASED APPLICATIONS AND
SERVICES, WHICH COULD AFFECT OUR CUSTOMERS' SATISFACTION WITH OUR SYSTEMS.

The performance of our hosting partner's servers, networking hardware and
software infrastructure will be critical to our ability to provide our ASP
applications and our Internet portal and the services it will enable. Any
systems failure or interruption could result in disruption of service or loss or
compromise of customer data. These failures, especially if they are prolonged or
repeated, would make our services less attractive to customers and damage our
reputation. Our hosting partner's systems may fail because:

- its systems and operations will be vulnerable to damage or interruption
from human error, natural disaster, power loss, telecommunications
failures, break-ins, sabotage, computer viruses and similar events;

- its hardware and application software may experience system failures;

- performance may suffer due to firewall security;

- there may be errors in architectural design; and

- it may be unable to manage its growth and to attract and retain
employees.

Any system failure that causes an interruption in service or a decrease in
responsiveness of our Internet-based services, if sustained or repeated, may
adversely affect our business and operating results.

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INTERNET SECURITY CONCERNS COULD ADVERSELY AFFECT OUR BUSINESS.

The secure transmission of confidential information over public networks is
a fundamental requirement for the applications and services we plan to offer
over the Internet. Concerns over the security of transactions and information
and other privacy issues may inhibit the growth of the Internet and delivery of
applications and services such as ours over the Internet. We plan to use
encryption and authentication technology for the transmission of confidential
information over the Internet. However, technological advances, including new
discoveries in the field of cryptography, could result in a compromise or breach
of our security systems. Therefore, we cannot be certain that our security
measures will prevent breaches. An intruder who breaches our security measures
could misappropriate proprietary information or cause interruptions in our
operations. In addition, we could be required to spend a significant amount of
time and money to protect against security breaches or to alleviate problems
caused by such breaches. Security breaches could also expose us to a risk of
loss or litigation and possible liability. As a result, security breaches could
adversely affect our reputation, our business or our operating results.

TECHNOLOGY SYSTEMS MAY CHANGE FASTER THAN WE ARE ABLE TO UPDATE OUR PRODUCTS,
WHICH WOULD AFFECT OUR ABILITY TO GROW OUR BUSINESS.

Although the healthcare industry, including dental, orthodontic and oral
and maxillofacial surgery practices, has been slow to respond to technological
advances, many companies are introducing technologically advanced products in
anticipation of growing demand in this market. As a result, the healthcare
industry is likely to experience rapidly changing technology, evolving industry
standards, emerging competition and the frequent introduction of new
applications and services. Our success could depend partly on our ability to:

- develop new or enhance existing applications and services to meet our
customers' changing needs in a timely and cost-effective manner;

- respond effectively to technological changes and new application and
service offerings of our competitors; and

- maintain and continue to develop relationships with providers of Internet
infrastructure and application hosting capabilities.

We cannot assure you that we will be able to accomplish any or all of these
goals. Many of our competitors may develop products or technologies that are
better or more attractive than ours or that may render our applications and
services obsolete. If we do not succeed in adapting our applications and
services, our business could be harmed.

WE ARE SUBJECT TO GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES AND OUR FAILURE
OR INABILITY TO COMPLY COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.

HIPAA. Federal regulations have been adopted, and others proposed, that
will impact the manner in which we conduct our business. The Health Insurance
Portability and Accountability Act of 1996, or HIPAA, required the Secretary of
the Department of Health and Human Services, referred to as the Secretary, to
promulgate national standards to facilitate the electronic exchange of health
information as part of specified standard health care and health coverage
transactions, and to ensure the confidentiality and security

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of such information. The regulations will apply directly to specified health
care providers, health plans and health care clearinghouses, referred to as
covered entities. In addition, the privacy and security regulations will require
that covered entities enter into written agreements that contractually will
impose many of the regulatory requirements on business associates with which
covered entities share confidential health information.

The Secretary adopted final regulations governing the requirements for
standard electronic transactions on August 17, 2000 and adopted final health
information privacy regulations on December 28, 2000. The HIPAA regulations
become effective sixty days after publication and require compliance by most
covered entities within 24 months of the effective date while specified small
health plans will have 36 months to comply. Accordingly, most covered entities
must comply with the electronic transactions regulations by October 16, 2002 and
must comply with the privacy regulations by February 26, 2003. On August 12,
1998, the Secretary proposed regulations to establish health information
security standards which are yet to be adopted in final form.

The HIPAA regulations may require us to expend significant resources to
comply with applicable requirements. The privacy regulations in particular will
impose significant requirements on covered entities and their business
associates with respect to permissible uses and disclosures of individually
identifiable health information. Because these regulations are new, there is
uncertainty as to how they will be interpreted and enforced. In addition, the
delay in adopting final security regulations creates uncertainties as to what
security requirements ultimately will be imposed, to what extent we will be
required to comply with those requirements, and what the deadline for compliance
will be.

Although we will make a good faith effort to ensure that we comply with,
and that our products enable compliance with, applicable HIPAA requirements, we
may not be able to conform our operations and products to such requirements in a
timely manner, or at all. The failure to do so could subject us to civil
liability when we are the business associate of a covered entity, and could
subject us to civil liability and criminal sanctions to the extent we are
regulated directly as a covered entity. In addition, delay in developing or
failure to develop products that would enable HIPAA compliance for our current
and prospective customers could put us at a significant disadvantage in the
marketplace. Accordingly, the sale of our products and our business could be
harmed by the implementation of HIPAA regulations.

OTHER E-COMMERCE REGULATION. Additionally, we may be subject to additional
federal and state statutes and regulations in connection with our changing
product strategy, which includes internet services and products. On an
increasingly frequent basis, federal and state legislators are proposing laws
and regulations that apply to internet commerce and communications. Areas being
affected by this regulation include user privacy, pricing, content, taxation,
copyright protection, distribution, and quality of products and services.

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To the extent that our products and services are subject to these laws and
regulations, the sale of our products and our business could be harmed.

CHANGES IN STATE AND FEDERAL LAWS RELATING TO CONFIDENTIALITY OF PATIENT MEDICAL
RECORDS COULD LIMIT OUR CUSTOMERS' ABILITY TO USE OUR SERVICES.

We cannot assure you that changes to state or federal laws will not
materially affect or restrict the ability of healthcare providers to submit
information from patient records using our products and services. Any such
restrictions would inevitably decrease the value of our applications to our
customers, which could materially harm our business. The confidentiality of
patient records and the circumstances under which records may be released are
already subject to substantial regulation by state governments. Although
compliance with these laws and regulations is principally the responsibility of
the healthcare provider under these current laws, statutes and regulations
governing patient confidentiality rights are evolving rapidly. In addition to
the obligations being imposed at a state level, legislation governing the
dissemination of medical information is being passed at the federal level. The
legislation may require holders of this information to implement security
measures, which could entail substantial expenditures on our part. Consequently,
the sale of our products and our business could be harmed.

CHANGES IN THE REGULATORY AND ECONOMIC ENVIRONMENT IN THE HEALTHCARE INDUSTRY
COULD ADVERSELY AFFECT OUR BUSINESS.

The healthcare industry is highly regulated and subject to changing
political, economic and regulatory influences. These factors affect the
purchasing practices and operation of healthcare organizations. Changes in
current healthcare financing and reimbursement systems could require us to make
unplanned enhancements of applications or services, or result in delays or
cancellations of orders or the revocation of endorsement of our products and
services by companies with which we have business relationships and others.
Federal and state legislatures periodically consider programs to reform or amend
the U.S. healthcare system. These programs may contain proposals to increase
governmental involvement in healthcare, lower reimbursement rates, or otherwise
change the environment in which healthcare industry participants operate.
Healthcare industry participants may respond by reducing their investments or
postponing investment decisions, including investments in our applications and
services. As a consequence, our business could be adversely affected.

FDA. In addition to the adopted and proposed requirements under HIPAA, the
United States Food and Drug Administration, or FDA, is vested with the
responsibility for ensuring the safety and efficacy of medical devices under the
Federal Food, Drug and Cosmetic Act. Computer applications and software are
considered as medical devices for purposes of this Act and, as such, are subject
to regulation by the FDA when they are indicated, labeled or intended to be used
in the diagnosis of disease or other conditions or in the cure, mitigation,
treatment or prevention of disease, or they are intended to affect the structure
or function of the body. We do not believe that any of our current products or
services are subject to FDA regulation as medical devices. However, we plan to
expand our product and service offerings into areas that may be subject to FDA
regulation. We have no experience in dealing with FDA regulation and,
accordingly, any compliance efforts could prove to be time consuming, burdensome
and expensive, which could negatively affect the sale of our products and our
business.

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ASSERTING, DEFENDING AND MAINTAINING OUR INTELLECTUAL PROPERTY RIGHTS COULD BE
DIFFICULT AND COSTLY AND FAILURE TO DO SO MAY DIMINISH OUR ABILITY TO COMPETE
EFFECTIVELY AND MAY HARM OUR OPERATING RESULTS.

We may need to pursue lawsuits or legal action in the future to enforce our
intellectual property rights, to protect our trade secrets and domain names and
to determine the validity and scope of the proprietary rights of others. If
third parties prepare and file applications for trademarks used or registered by
us, we may oppose those applications and be required to participate in
proceedings to determine priority of rights to the trademark. Similarly,
competitors may have filed applications for patents, may have received patents
and may obtain additional patents and proprietary rights relating to
applications or services that block or compete with ours. We may have to
participate in interference proceedings to determine the priority of invention
and the right to a patent for the application. Litigation and interference
proceedings, even if they are successful, are expensive to pursue and time
consuming, and we could use a substantial amount of our financial resources in
either case.

WE MAY FACE THIRD-PARTY CLAIMS ALLEGING INFRINGEMENT OF THEIR INTELLECTUAL
PROPERTY RIGHTS, WHICH COULD RESULT IN SIGNIFICANT EXPENSE TO US AND LOSS OF
SIGNIFICANT RIGHTS.

From time to time, third parties may assert patent, copyright, trademark
and other intellectual property rights to technologies that are important to our
business. This risk may increase as the number of entrants to our market
increases and we improve the functionality of our applications and services,
potentially causing an overlap with the applications and services of other
companies. Any claims against us, or companies with which we have business
relationships, asserting that our applications or services infringe or may
infringe proprietary rights of third parties, whether with or without merit,
could be time consuming, result in costly litigation, divert the efforts of our
technical and management personnel, disrupt our relationships with our customers
or require us to enter into royalty or licensing agreements, any of which could
have a negative impact upon our operating results. Royalty or licensing
agreements, if required, may not be available on terms acceptable to us, if at
all. If a claim against us is successful and we cannot obtain a license to the
relevant technology on acceptable terms, license a substitute technology, or
redesign our applications or services to avoid infringement, our business and
financial results could be harmed.

THE FINOVA CREDIT FACILITY AND THE TERMS OF THE CRESCENT PURCHASE AGREEMENT WILL
IMPOSE LIMITATIONS AND FINANCIAL COVENANTS WHICH MAY ADVERSELY AFFECT OUR
ABILITY TO OPERATE OUR BUSINESS.

The FINOVA credit facility will contain limitations on our business and
financial covenants. For example, the credit facility will include a minimum net
worth requirement, a limitation on our leverage, a minimum debt service coverage
ratio requirement, a minimum current ratio requirement and a minimum liquidity
requirement. Also, the credit facility will include restrictions on our ability
to incur additional indebtedness, create liens, conduct mergers and
acquisitions, pay dividends, incur capital expenditures in excess of a specified
amount or invest in other entities, even if we believe these activities are in
the best interests of our stockholders. We will not be able to obtain any
additional borrowings under the credit facility without FINOVA's consent. In
addition to the limitations imposed by the FINOVA credit facility, the terms of
the purchase agreement with Crescent for the

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series C convertible redeemable preferred stock restrict our ability to effect a
merger or consolidation of assets unless the resulting successor entity assumes
our obligations to deliver shares of series C convertible redeemable preferred
stock. These limitations and financial covenants may restrict our ability to
manage our business.

PROVISIONS OF OUR CERTIFICATE OF INCORPORATION, BYLAWS AND THE TAX
DISAFFILIATION AGREEMENT MAY DISCOURAGE TAKEOVERS WHICH WOULD OTHERWISE BE IN
THE BEST INTEREST OF OUR STOCKHOLDERS.

Our certificate of incorporation and bylaws contain provisions that may
make more difficult or expensive or that may discourage a tender offer, change
in control or takeover attempt that is opposed by our board of directors. In
particular, our certificate of incorporation and bylaws include the following
anti-takeover provisions:

(1) classify our board of directors into three groups, so that
stockholders elect only one-third of the board each year;

(2) permit stockholders to remove directors only for cause;

(3) permit a special stockholders' meeting to be called only by the
chairman of the board of directors, the chief executive officer or
a majority of the board of directors;

(4) require stockholders to give us advance notice to nominate
candidates for election to our board of directors or to make
stockholder proposals at a stockholders' meeting;

(5) permit our board of directors to issue, without stockholder
approval, preferred stock with such terms as the board may
determine; and

(6) require the vote of the holders of at least 66 2/3% of our voting
shares for stockholder amendments to our bylaws.

In addition, Section 203 of the Delaware General Corporation Law, which
will be applicable to us after the distribution, provides certain restrictions
on business combinations between us and any party acquiring a 15% or greater
interest in our voting stock other than in a transaction approved by our board
of directors and in certain cases by our stockholders. These provisions of our
certificate of incorporation and bylaws and Delaware law could discourage
potential acquisition proposals and could delay or prevent a change in control
of PracticeWorks, even if our stockholders support such proposals. These
provisions could also make it more difficult for third parties to remove and
replace the members of our board of directors. Moreover, these provisions could
diminish the opportunities for stockholders to participate in certain tender
offers, including tender offers at prices above the then-current market value of
our common stock, and may also inhibit increases in the trading price of our
common stock that could result from takeover attempts or speculation.

In connection with the distribution, we have agreed to indemnify InfoCure
for all taxes and liabilities incurred solely because (1) we breach a
representation or covenant given to King & Spalding in connection with rendering
its tax opinion, which contributes to an Internal Revenue Service determination
that the distribution was not tax-free or (2) a post-distribution action or
omission by us or one or more of our affiliates contributes to an Internal
Revenue Service determination that the distribution was not tax-free. Unless
InfoCure effectively rebuts the presumption that a change in control transaction
involving

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PracticeWorks or disposition of PracticeWorks occurring prior to the second
anniversary of the distribution date is pursuant to the same plan or series of
related transactions as the distribution, the Internal Revenue Service might
determine that the distribution was not tax-free, giving rise to our
indemnification obligation. These provisions of the Tax Disaffiliation Agreement
may have the effect of discouraging or preventing an acquisition of
PracticeWorks or a disposition of our businesses, which may in turn depress the
market price for PracticeWorks common stock.

THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH MAY DIFFER FROM ACTUAL
EVENTS.

This document contains forward-looking statements that reflect our current
assumptions and estimates of future performance, the development and timing of
our release of new applications and services, the rate of adoption of our new
applications and services by new and existing customers, our success in
establishing business relationships, the growth of our business, and general
economic conditions. These statements may pertain to periods following the
distribution. You can find many of these statements by looking for words such as
"believes," "expects," "anticipates," "estimates" or similar expressions. Any
forward-looking statements are subject to risks and uncertainties that may cause
actual results and future trends to differ materially from those projected,
stated, or implied by the forward-looking statements. Our results and the
accuracy of the forward-looking statements could be affected by many factors,
including the risk factors discussed above.

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INTRODUCTION

On , 2001, InfoCure's board of directors declared a pro rata
distribution payable to the holders of record of InfoCure common stock at the
close of business on , 2001, referred to as the record date, of 1/4 of
a share of PracticeWorks common stock for every share of InfoCure common stock
outstanding on the record date. The distribution will be effected at 11:59 p.m.,
Atlanta, Georgia, time, on , 2001. This is referred to as the
distribution date. As a result of the distribution, all of the outstanding
PracticeWorks common stock will be distributed to holders of InfoCure common
stock.

InfoCure intends to distribute the PracticeWorks stock by issuing physical
stock certificates. Each InfoCure stockholder that is a record holder of
InfoCure shares will receive physical stock certificates representing shares of
PracticeWorks stock to which they are entitled. PracticeWorks stock should be
credited to accounts with stockbrokers, banks or nominees of InfoCure
stockholders that are not record holders on or about , 2001.

The information management technology business for dentists, orthodontists
and oral and maxillofacial surgeons currently conducted by PracticeWorks
constitutes a significant part of the business of InfoCure. For the year ended
December 31, 1999, the business of PracticeWorks constituted 21.8% of InfoCure's
revenue, contributed $2.3 million of net income to InfoCure's consolidated net
loss of $3.8 million and constituted 36.0% of InfoCure's EBITDA. In addition,
the operations of PracticeWorks constituted 63.0% of InfoCure's cash flow from
operating activities, 25.5% of InfoCure's cash flow used in investing
activities, and 14.3% of InfoCure's cash flow from financing activities. For the
nine months ended September 30, 2000, the business of PracticeWorks constituted
28.5% of InfoCure's revenue, 32.3% of InfoCure's net loss and 34.3% of
InfoCure's EBITDA. In addition, PracticeWorks used 100.0% of InfoCure's
consolidated net cash flow used in operating activities, used 123.8% of
InfoCure's consolidated net cash flow used in investing activities and provided
137.8% of InfoCure's consolidated net cash flow provided from financing
activities. As of September 30, 2000, the assets of PracticeWorks constituted
36.1% of InfoCure's assets. Following the distribution, InfoCure will be focused
exclusively on information management technology for medical practices.

THE DISTRIBUTION

REASONS FOR THE DISTRIBUTION

The board of directors and management of InfoCure believe that the
distribution is in the best interests of InfoCure, PracticeWorks and InfoCure's
stockholders. InfoCure believes that the distribution will meaningfully enhance
value for InfoCure stockholders and give PracticeWorks the financial and
operational flexibility to take advantage of significant growth opportunities in
the information management technology business for dentists, orthodontists and
oral and maxillofacial surgeons.

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Our business is a distinct business with significant differences from
InfoCure's medical operations with respect to its markets, products, capital
needs and plans for growth. For example, the majority of dental practices in the
United States consist of single providers, and the average dental practice
consists of fewer than two providers. In contrast, the delivery of medical
services is conducted by a wide range of entities ranging from single-provider
practices to very large integrated delivery networks consisting of thousands of
providers. Further, practice management organizations consisting of large
numbers of physicians are much more common in the medical industry. In addition,
managed care companies and third party payers are much less pervasive in the
dental industry than in the medical industry. Finally, dentists generally have
much different communication needs, electronically or otherwise, with other
industry participants in the scope of the normal delivery of care and
transaction settlement, than do medical physicians. These differences
necessitate a different approach to sales and marketing, application development
and the supply chain for the dental and medical industries. Overall, the dental
and medical practice management applications industries demonstrate
significantly different strategic and operating characteristics, which we
believe can be more effectively addressed through highly focused, independent
management teams and organizational structures.

InfoCure's board of directors and management believe that the distribution
will enhance the ability of each of PracticeWorks and InfoCure to focus on new
business opportunities and to design equity-based compensation programs targeted
to its own performance. As an independent entity, PracticeWorks will be able to
pursue initiatives and alliances in the areas of claims, electronic statements,
patient eligibility, business forms, supplies and handheld devices that will be
independent of agreements that were specifically negotiated by InfoCure for the
medical markets. In addition, InfoCure's board of directors expects that the
transition to an independent company will heighten our management's focus,
provide us with greater access to capital, and allow us to better pursue new
business relationships and acquisitions.

The separation will also enable InfoCure management to concentrate its
attention on the remaining InfoCure businesses. InfoCure management believes
that these businesses may be expanded more effectively if PracticeWorks is no
longer controlled by InfoCure.

MANNER OF EFFECTING THE DISTRIBUTION

The general terms and conditions relating to the distribution will be set
forth in an Agreement and Plan of Distribution, referred to as the Distribution
Agreement, between InfoCure and PracticeWorks. See "Relationship between
InfoCure and PracticeWorks Following the Distribution -- Distribution Agreement"
on page 49.

The distribution will be made on the basis of 1/4 of a share of
PracticeWorks common stock for every share of InfoCure common stock outstanding
on the record date. As further discussed below, fractional shares will not be
distributed. The actual total number of shares of PracticeWorks common stock to
be distributed will depend on the number of InfoCure shares outstanding on the
record date. Based upon the number of shares of InfoCure common stock
outstanding on , 2001, approximately shares of PracticeWorks
common stock will be distributed to InfoCure stockholders. The PracticeWorks
common stock to be distributed will constitute all of the outstanding
PracticeWorks common stock. Options to purchase InfoCure common stock held by
InfoCure employees who will become our employees will be replaced by options to
purchase PracticeWorks common stock. The option price and number of shares
subject to

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<PAGE> 48

each option will be adjusted so that the aggregate percentage difference between
the market price and the option price will be equal for the InfoCure options and
the PracticeWorks options. See "Relationship Between InfoCure and PracticeWorks
Following the Distribution -- Employee Benefits and Compensation Allocation
Agreement" beginning on page 50.

Following the distribution, each record holder of InfoCure common stock on
the record date will receive from StockTrans, Inc., our distribution agent,
stock certificates representing the PracticeWorks common stock credited to the
stockholder's account.

Fractional shares of PracticeWorks common stock will neither be issued as
part of the distribution nor credited to stockholder accounts. In lieu of
receiving fractional shares, each holder of InfoCure common stock who would
otherwise be entitled to receive a fractional share of PracticeWorks common
stock will receive cash for the fractional interest. The distribution agent
will, as soon as practicable after the distribution date, aggregate fractional
shares into whole shares and sell them in the open market at the prevailing
market prices and distribute the aggregate proceeds, net of brokerage fees,
ratably to InfoCure stockholders who would otherwise have been entitled to
fractional interests. The amount of this payment will depend on the prices at
which the aggregated fractional shares are sold by the distribution agent in the
open market shortly after the distribution date.

No InfoCure stockholder will be required to pay any cash or other
consideration for the PracticeWorks common stock received in the distribution,
or to surrender or exchange InfoCure common stock in order to receive
PracticeWorks common stock. No vote of InfoCure stockholders is required or
sought in connection with the distribution, and InfoCure stockholders will have
no appraisal rights in connection with the distribution.

In order to receive PracticeWorks common stock in the distribution, holders
of InfoCure common stock must be stockholders at the close of business on the
record date.

RESULTS OF THE DISTRIBUTION

After the distribution, PracticeWorks will be a separate public company
operating the information management technology business for dentists,
orthodontists and oral and maxillofacial surgeons currently operated by
InfoCure. Immediately after the distribution, we expect to have approximately
holders of record of PracticeWorks common stock and approximately
shares of PracticeWorks common stock outstanding, based on the number
of stockholders of record and outstanding InfoCure common stock on ,
2001 and after giving effect to the delivery to stockholders of cash in lieu of
fractional shares of PracticeWorks common stock. The actual number of shares to
be distributed will be determined on the record date. The distribution will not
affect the number of outstanding shares of InfoCure common stock or any rights
of InfoCure stockholders. InfoCure options held by InfoCure employees who will
become our employees will be replaced by PracticeWorks options. See
"Relationship Between InfoCure and PracticeWorks Following the
Distribution -- Employee Benefits and Compensation Allocation Agreement"
beginning on page 50. In addition, holders of warrants to acquire InfoCure
common stock may be entitled to receive up to 175,000 shares of PracticeWorks
common stock under the antidilution provision of the InfoCure warrants. See
"Description of Capital Stock -- Warrants" on page 115.

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<PAGE> 49

LISTING AND TRADING OF THE PRACTICEWORKS COMMON STOCK

We have applied to list the PracticeWorks common stock on the Nasdaq Stock
Market's National Market under the symbol "PWKS." There is not currently a
public market for the PracticeWorks common stock, although a when-issued market
may develop prior to completion of the distribution. When-issued trading refers
to a transaction made conditionally because the security has been authorized but
not yet issued. On the first trading day following the distribution date,
when-issued trading in respect of our common stock will end and regular-way
trading will begin. Regular-way trading refers to trading after a security has
been issued and typically involves a transaction that settles on the third full
business day following the date of a transaction. We cannot predict the trading
prices for the PracticeWorks common stock before or after the distribution date;
however, we believe the presence of a when-issued trading market prior to the
distribution may have a stabilizing effect on the price of the PracticeWorks
common stock following the distribution.

A stockholder who decides to sell any PracticeWorks common stock or
InfoCure common stock should make sure that the stockholder's stockbroker, bank
or other nominee understands whether the stockholder wants to sell shares of
InfoCure common stock, shares of PracticeWorks common stock, or both. Beginning
on or about , 2001 and continuing through , 2001, Nasdaq
National Market practices should generally allow sales of InfoCure common stock
either together with the right to receive the PracticeWorks common stock in the
distribution or without the right to receive the PracticeWorks common stock. A
stockholder that sells InfoCure common stock with the right to receive the
PracticeWorks common stock will be required to deliver to the buyer the
PracticeWorks common stock received in respect of such InfoCure common stock in
the distribution. Stockholders should also be able to sell their rights to
receive PracticeWorks common stock without selling InfoCure common stock.

Sales of InfoCure common stock with the right to receive the PracticeWorks
common stock should generally settle in the customary three business day
settlement period. Sales of InfoCure common stock without the right to receive
PracticeWorks common stock and sales of PracticeWorks common stock without the
right to receive InfoCure common stock will settle according to the terms of the
individual contract for the sale of the stock. Beginning about , 2001,
stockholders should only be able to sell InfoCure common stock and PracticeWorks
common stock separately. Stockholders should consult their brokers for details.

The shares of PracticeWorks common stock distributed to InfoCure
stockholders will be freely transferable, except for PracticeWorks common stock
received by persons who may be deemed to be our "affiliates" under the
Securities Act of 1933, as amended. Persons who may be deemed to be our
affiliates after the distribution generally include individuals or entities that
control, are controlled by, or are under common control with us, including our
directors, officers and holders of 10% or more of our outstanding common stock.
Persons who are our affiliates will be permitted to sell their shares of
PracticeWorks common stock only pursuant to an effective registration statement
under the Securities Act or an exemption from the registration requirements of
the Securities Act, such as the exemptions afforded by Section 4(1) of the
Securities Act and Rule 144 promulgated under the Securities Act. It is believed
that persons who may be deemed to be our affiliates immediately after the
distribution will beneficially own approximately 953,000 shares of PracticeWorks
common stock, or approximately 11.2% of the outstanding shares of PracticeWorks
common stock, upon completion of the distribution.

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<PAGE> 50

There can be no assurance that PracticeWorks common stock will be actively
traded and we cannot predict the prices at which PracticeWorks common stock will
trade. Some of the InfoCure stockholders who receive shares of PracticeWorks
common stock may decide that they do not want shares in an information
management technology focused exclusively on the dental, orthodontic and oral
and maxillofacial surgery markets, and they may sell their PracticeWorks common
stock following the distribution. These sales may delay the development of an
orderly trading market in the PracticeWorks common stock for a period of time
following the distribution. Until the shares of PracticeWorks common stock are
fully distributed and an orderly market develops, the prices at which the
PracticeWorks common stock trades may fluctuate significantly and may be lower
or higher than the price that would be expected for a fully distributed issue.
Prices for PracticeWorks common stock will be determined in the marketplace and
may be influenced by many factors, including the depth and liquidity of the
market for the shares, our operating results, investors' impressions of
PracticeWorks, changes in economic conditions in the healthcare information
technology industry and general economic and market conditions.

Following the distribution, InfoCure common stock will continue to be
listed and traded on the Nasdaq National Market. InfoCure's common stock is
currently traded under the symbol "INCX". InfoCure intends to change its trading
symbol to "VWKS" immediately following the distribution. As a result of the
distribution, the trading price of InfoCure common stock immediately following
the distribution will likely be lower than the trading price of InfoCure common
stock immediately prior to the distribution. Until the market has fully analyzed
the operations of InfoCure without the operations of PracticeWorks, the prices
at which InfoCure common stock trades may fluctuate significantly.

In addition, the stock market often experiences significant price
fluctuations that are unrelated to the operating performance of the specific
companies whose stock is traded. Market fluctuations could have a material
adverse impact on the trading price of PracticeWorks common stock and/or
InfoCure common stock.

FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION

The following summary of the material federal income tax consequences of
the distribution is not a complete description of those consequences and, in
particular, may not address federal income tax considerations that may affect
you if you are subject to special tax rules, including if you acquired your
InfoCure stock by exercising employee stock options or otherwise as
compensation. Your individual circumstances also may affect the tax consequences
of the distribution to you. In addition, no information is provided in this
prospectus with respect to tax consequences under applicable foreign, state or
local laws. Consequently, you are advised to consult your own tax advisor as to
the specific tax consequences of the distribution to you.

The following discussion is based on currently existing provisions of the
Internal Revenue Code, existing, proposed and temporary Treasury regulations
promulgated under the Internal Revenue Code, and current administrative rulings
and court decisions. All of the foregoing are subject to change, possibly on a
retroactive basis, and any of these changes could affect the validity of the
following discussion.

Neither InfoCure nor PracticeWorks has requested an advance ruling from the
Internal Revenue Service as to the tax consequences of the distribution.

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<PAGE> 51

GENERAL

King & Spalding, counsel to InfoCure, will render an opinion to InfoCure
and PracticeWorks to the effect that, although the matter is not free from
doubt, the distribution should qualify as a transaction described in Section 355
of the Internal Revenue Code. If the distribution so qualifies, the following
United States federal income tax consequences generally will apply to you,
assuming that you hold your InfoCure common stock as a capital asset:

- Except for any cash you may receive in lieu of a fractional share of
PracticeWorks common stock, you will not recognize any income, gain or
loss as a result of the receipt of PracticeWorks common stock in the
distribution.

- Your holding period for shares of PracticeWorks common stock received in
the distribution will include the period for which your shares of
InfoCure common stock were held.

- Your tax basis for shares of PracticeWorks common stock received in the
distribution will be determined by allocating to shares of PracticeWorks
common stock, on the basis of the relative fair market values of InfoCure
common stock and PracticeWorks common stock at the time of the
distribution, a portion of your basis in your shares of InfoCure common
stock. Your basis in your shares of InfoCure common stock will be
decreased by the portion allocated to the shares of PracticeWorks common
stock.

- The receipt of cash in lieu of a fractional share of PracticeWorks common
stock will be treated as a sale of the fractional share, and you will
recognize gain or loss equal to the difference between the amount of cash
you receive and your basis in the fractional share, as determined above.
The gain or loss will be long-term capital gain or loss if your holding
period for the fractional share, as determined above, is more than one
year.

- Neither InfoCure nor PracticeWorks will recognize any gain or loss in
connection with the distribution other than deferred intercompany gains
and excess loss accounts, if any, that may be triggered as a result of
the transactions.

Notwithstanding the foregoing, there can be no assurance that the
distribution will qualify for nonrecognition treatment under Section 355 of the
Internal Revenue Code, and the opinion of King & Spalding will be subject to a
degree of uncertainty for a number of reasons. First, Section 355 of the
Internal Revenue Code is highly technical and complex, and many aspects of the
statute have not yet been addressed by judicial decisions, Treasury regulations,
or other administrative guidance. The opinion of King & Spalding represents its
best interpretation of the legal requirements of Section 355 as applied to the
distribution, but an opinion of counsel is not binding on the Internal Revenue
Service or the courts. Second, the determination of whether a transaction
qualifies for nonrecognition treatment under Section 355 depends in part on the
business reasons for the transaction and satisfaction of numerous other
fact-based requirements. In rendering its opinion, King & Spalding will rely
upon analysis, assumptions, representations and future undertakings from
PracticeWorks and InfoCure and certain other data, documentation and other
materials that King & Spalding deems necessary for purposes of its opinion. If
any of the assumptions or representations upon which the opinion of King &
Spalding will be based is inaccurate or incomplete in any material respect, the
distribution could fail to qualify for nonrecognition treatment under Section
355 of the Internal Revenue Code.

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<PAGE> 52

Finally, the opinion of King & Spalding is subject to uncertainty because it is
possible that the distribution could become taxable to InfoCure, but not
InfoCure stockholders, under Section 355(e) of the Internal Revenue Code if
during the four-year period beginning two years before the distribution, one or
more persons were to acquire a 50% or greater interest in InfoCure or
PracticeWorks as part of a plan or a series of related transactions that
includes the distribution. Similarly, Section 355(e) of the Internal Revenue
Code would cause the distribution to be taxable to InfoCure, but not to
InfoCure's stockholders, if InfoCure failed to prove that any of the
corporations acquired by InfoCure within the two-year period preceding the
distribution and that are treated as "predecessors" of either InfoCure or
PracticeWorks under Section 355(e) were not acquired pursuant to a plan or
series of related transactions including the distribution.

If the distribution fails to qualify for nonrecognition treatment under
Section 355 of the Internal Revenue Code, your receipt of PracticeWorks common
stock in the distribution would be treated as a taxable distribution in an
amount equal to the fair market value of the PracticeWorks common stock
received. This amount would be treated as (1) a dividend to the extent paid out
of InfoCure's current or accumulated earnings and profits, if any, including
earnings and profits recognized by InfoCure as a result of the distribution,
then (2) a reduction in the tax basis in your InfoCure common stock to the
extent that the amount you receive exceeds the amount treated as a dividend, and
then (3) gain from the sale or exchange of InfoCure common stock to the extent
the amount received exceeds the amounts described in clauses (1) and (2) above.

If the distribution fails to qualify for nonrecognition treatment under
Section 355 of the Internal Revenue Code as to InfoCure's stockholders, or if
Section 355(e) of the Internal Revenue Code applies to the distribution, then,
in general, a corporate income tax could be payable by InfoCure based upon the
difference between (1) the aggregate fair market value of the shares of
PracticeWorks stock distributed in the distribution and (2) InfoCure's adjusted
basis in the shares of PracticeWorks stock.

INDEMNIFICATION

We would be obligated to indemnify InfoCure under the Tax Disaffiliation
Agreement for the full amount of any liability of InfoCure incurred solely
because (1) we breach a representation or covenant given to King & Spalding in
connection with rendering its tax opinion, which breach contributes to an
Internal Revenue Service determination that the distribution was not tax-free,
or (2) a post-distribution action or omission by us or any affiliate of ours
contributes to an Internal Revenue Service determination that the distribution
was not tax-free. InfoCure will indemnify us for all taxes and liabilities
incurred solely because (1) InfoCure breaches a representation or covenant given
to King & Spalding in connection with rendering its tax opinion, which breach
contributes to an Internal Revenue Service determination that the distribution
was not tax-free, or (2) a post-distribution action or omission by InfoCure or
any affiliate contributes to an Internal Revenue Service determination that the
distribution was not tax-free. If the Internal Revenue Service determines that
the distribution was not tax-free for any other reason, InfoCure and
PracticeWorks will indemnify each other against 50% of all taxes and
liabilities. If triggered, PracticeWorks' indemnification obligation would be
substantial.

We will also indemnify InfoCure for any taxes resulting from any internal
realignment undertaken to facilitate the distribution on or before the
distribution date. Any such taxes are not expected to be material.

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<PAGE> 53

For a description of the agreement pursuant to which InfoCure and
PracticeWorks have provided for certain tax disaffiliation and other tax-related
matters, see "Relationship Between InfoCure and PracticeWorks Following the
Distribution -- Tax Disaffiliation Agreement" on page 50.

INFORMATION REPORTING

Current United States Treasury regulations require each InfoCure
stockholder who receives shares of PracticeWorks common stock pursuant to the
distribution to attach to his or her federal income tax return for the year in
which the distribution occurs a detailed statement setting forth such data as
may be appropriate in order to show the applicability of Section 355 of the
Internal Revenue Code to the distribution. InfoCure will provide appropriate
information to each holder of record of InfoCure stock as of the record date.

REASONS FOR FURNISHING THIS DOCUMENT

This document is being furnished solely to provide information to InfoCure
stockholders who will receive shares PracticeWorks common stock in the
distribution. It is not, and is not to be construed as, an inducement or
encouragement to buy or sell any securities of InfoCure or PracticeWorks.
Neither InfoCure nor PracticeWorks will update the information contained in this
document except in the normal course of their respective public disclosure
practices. However, we will amend this document if there is any material change
in the terms of the distribution or if King & Spalding will not render the
opinion described above under "-- Federal Income Tax Consequences of the
Distribution."

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<PAGE> 54

RELATIONSHIP BETWEEN INFOCURE AND PRACTICEWORKS
FOLLOWING THE DISTRIBUTION

For purposes of governing certain of the ongoing relationships between
InfoCure and PracticeWorks after the distribution and to provide for an orderly
transition to the status of two independent companies, InfoCure and
PracticeWorks have entered or will enter into the agreements described in this
section. The forms of agreements summarized in this section are included as
exhibits to the registration statement on Form S-1 that we have filed with the
Securities and Exchange Commission, and the following summaries are qualified in
their entirety by reference to the agreements as so filed. See "Additional
Information" on page 122.

DISTRIBUTION AGREEMENT

Prior to the distribution date, InfoCure and PracticeWorks will enter into
a Distribution Agreement, which will provide for, among other things, the
principal corporate transactions required to effect the distribution and other
agreements relating to the continuing relationship between PracticeWorks and
InfoCure after the distribution. Pursuant to the Distribution Agreement,
InfoCure will transfer or cause to be transferred to PracticeWorks all of the
assets and liabilities relating to InfoCure's information management technology
business for dentists, orthodontists and oral and maxillofacial surgeons, and
InfoCure will acquire all of our issued and outstanding common stock. InfoCure
will effect the distribution by delivering a certificate or certificates
representing all of the shares of PracticeWorks common stock to be distributed
to InfoCure's stockholders to the distribution agent.

Under the Distribution Agreement and effective as of the distribution date,
we will assume, and will agree to indemnify InfoCure against, all liabilities,
litigation and claims, including related insurance costs, arising out of our
business, and InfoCure will retain, and will agree to indemnify us against, all
liabilities, litigation and claims, including related insurance costs, arising
out of InfoCure's business. The foregoing obligations will not entitle an
indemnified party to recovery to the extent any such liability is covered by
proceeds received by such party from any third party insurance policies.

The Distribution Agreement will provide that each of InfoCure and
PracticeWorks will be granted access to certain records and information in the
possession of the other, and will require the retention by each of InfoCure and
PracticeWorks for a period of eight years following the distribution date of all
of this information in its possession. Also, the Distribution Agreement provides
for a three-year period during which neither InfoCure nor PracticeWorks may
solicit pre-existing customers or employees of the other party.

TRANSITION SERVICES AGREEMENT

InfoCure and PracticeWorks will enter into a Transition Services Agreement
prior to the distribution date. In exchange for specified fees, InfoCure will
provide to PracticeWorks services including insurance-related services, employee
benefit services and specified information technology services, and
PracticeWorks will provide to InfoCure services including the preparation of tax
returns, maintenance of the general ledger,

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<PAGE> 55

preparation of financial statements, corporate record-keeping and payroll. The
fees paid pursuant to the Transition Services Agreement will be equal to (a) a
pro rata portion of the cost of providing the services, based solely on the
number of employees of each company, with respect to payroll services and
employee benefits services and (b) the aggregate of all expenses and costs
attributable to the provision of the services, with respect to all other
services. The Transition Services Agreement will provide that each of InfoCure
and PracticeWorks will undertake to provide the same degree of care and
diligence as it uses in providing these services to itself and its subsidiaries.
Provision of any service under the Transition Services Agreement will terminate
upon 60 days prior written notice by either company, but in no event may any
service be terminated prior to February 28, 2001. We believe that the terms and
conditions on which services will be provided to us under the Transition
Services Agreement are as favorable to us as those available from unrelated
parties for a comparable arrangement.

TAX DISAFFILIATION AGREEMENT

InfoCure and PracticeWorks will enter into a Tax Disaffiliation Agreement
which will identify each party's rights and obligations with respect to
deficiencies and refunds, if any, of federal, state, local or foreign taxes for
periods before and after the distribution and related matters such as the filing
of tax returns and the conduct of Internal Revenue Service and other audits.
Under the Tax Disaffiliation Agreement, we will indemnify InfoCure for any tax
liability of us or our affiliates for any period. We will also indemnify
InfoCure for all taxes and liabilities incurred solely because (1) we breach a
representation or covenant given to King & Spalding in connection with rendering
its tax opinion, which breach contributes to an Internal Revenue Service
determination that the distribution was not tax-free or (2) a post-distribution
action or omission by us or any affiliate of ours contributes to an Internal
Revenue Service determination that the distribution was not tax-free. InfoCure
will indemnify us for all taxes and liabilities incurred solely because (1)
InfoCure breaches a representation or covenant given to King & Spalding in
connection with rendering its tax opinion, which breach contributes to an
Internal Revenue Service determination that the distribution was not tax-free,
or (2) a post-distribution action or omission by InfoCure or any affiliate
contributes to an Internal Revenue Service determination that the distribution
was not tax-free. If the Internal Revenue Service determines that the
distribution was not tax-free for any other reason, InfoCure and PracticeWorks
will indemnify each other against 50% of all taxes and liabilities. If
triggered, PracticeWorks' indemnification obligation would be substantial.

EMPLOYEE BENEFITS AND COMPENSATION ALLOCATION AGREEMENT

Prior to the distribution, InfoCure and PracticeWorks will enter into an
Employee Benefits and Compensation Allocation Agreement, which will contain
provisions relating to employee compensation, benefits and labor matters and the
treatment of options to purchase InfoCure common stock held by InfoCure
employees who will become our employees. This agreement will provide that
InfoCure options held by InfoCure employees who will become our employees may be
replaced by PracticeWorks options. Employees

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<PAGE> 56

whose InfoCure options are fully vested as of the distribution date will have
the right to surrender their vested InfoCure options for options to purchase
PracticeWorks common stock for a period of 20 days following the distribution
date. Any InfoCure employees who will become our employees who choose not to
surrender their vested InfoCure options during this time period will continue to
hold InfoCure options which will expire according to their terms. Employees who
are not fully vested in InfoCure options as of the distribution date will have
their InfoCure options exchanged for PracticeWorks options as of the
distribution date. The exercise price for the shares of PracticeWorks common
stock subject to each option will be determined by dividing the option price for
the related InfoCure option by the PracticeWorks conversion factor, and the
number of shares of PracticeWorks common stock subject to each PracticeWorks
option will be determined by multiplying the number of shares subject to the
related InfoCure option by the PracticeWorks conversion factor. The
PracticeWorks conversion factor will be a number equal to (1) the closing price
of InfoCure common stock on the Nasdaq National Market on the distribution date,
divided by (2) the opening price of the PracticeWorks common stock on the Nasdaq
National Market on the day following the distribution date.

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<PAGE> 57

DILUTION

Our pro forma net tangible book value (deficit) as of September 30, 2000
was $(41.3) million, or $(4.71) per share of common stock. Pro forma net
tangible book value (deficit) per share is determined by dividing our net
tangible book value, which is our total tangible assets less total liabilities
and convertible redeemable preferred stock, by the number of outstanding shares
of our common stock. Since we will receive no proceeds from the distribution,
our pro forma net tangible book value (deficit) will be the same both before and
after the distribution.

After the distribution, we will have outstanding options to acquire
approximately 3.25 million shares of our common stock with a weighted average
exercise price of $16.44 per share. The investors could experience dilution if
any of these options are exercised. In addition, future issuances of our equity
securities could dilute existing investors.

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PRACTICEWORKS, INC.

CAPITALIZATION

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The following table sets forth our cash and capitalization as of September
30, 2000:

- on an actual basis (as of September 30, 2000, we were capitalized by
contributions from InfoCure in the amount of $100); and

- pro forma to reflect the distribution; and

- pro forma combined to reflect (a) the issuance of 32,000 shares of our
series A convertible redeemable preferred stock to acquire InfoSoft; (b)
the issuance of approximately 219,500 shares of our common stock and
approximately 965,000 shares of our series B convertible redeemable
preferred stock to assume InfoCure's obligations under the Medical
Dynamics merger agreement; and (c) the sale of 100,000 shares of our
series C convertible redeemable preferred stock in a private placement to
Crescent.

<TABLE>
<CAPTION>
PRO FORMA
ACTUAL PRO FORMA COMBINED
------ --------- ---------
<S> <C> <C> <C>
Cash and cash equivalents......................... $ -- $ 3,384 $ 7,915
===== ======== ========
Current portion of long-term debt................. $ -- $ 2 $ 377
===== ======== ========
Long-term debt, less current portion.............. $ -- $ 19,567 $ 19,703
----- -------- --------
Redeemable preferred stock, $0.01 par value;
20,000,000 shares authorized:
Series A 6.5% convertible redeemable preferred;
$1,000 per share liquidation preference and
redemption value; 32,000 shares authorized;
shares issued and outstanding, 0 actual; 0
pro forma; 32,000 pro forma combined......... -- -- 32,000
Series B 6.0% convertible redeemable preferred;
$5.44 per share liquidation preference and
redemption value; 965,000 shares authorized;
shares issued and outstanding, 0 actual; 0
pro forma; 965,000 pro forma combined........ -- -- 5,250
Series C convertible redeemable preferred; $50
per share liquidation preference and
redemption value; 100,000 shares authorized;
shares issued and outstanding, 0 actual; 0
pro forma; 100,000 pro forma combined........ -- -- 5,000
Discount on preferred stock(1).................. -- -- (12,500)
----- -------- --------
Total redeemable preferred stock............. -- -- 29,750
----- -------- --------
Stockholders' equity:
Common stock: $.01 par value; 100,000,000 shares
authorized; shares issued and outstanding,
100 actual; 8,765,370 pro forma.............. -- 85 88
Additional paid-in capital...................... -- 56,102 60,954
Accumulated deficit............................. -- (20,170) (20,170)
----- -------- --------
Total stockholders' equity................... -- 36,017 40,872
----- -------- --------
Total capitalization......................... $ -- $ 55,584 $ 90,325
===== ======== ========
</TABLE>

---------------

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<PAGE> 59

(1)Represents adjustment to estimated fair value for the series A and series B
convertible redeemable preferred stock. Discount will be amortized over the
five-year redemption period as an accretive dividend.

DIVIDEND POLICIES

Following the distribution, our dividend policy will be set by our board of
directors. We currently intend to retain all available funds and any future
earnings for use in the operation and expansion of our business and do not
anticipate declaring or paying any cash dividends on our common stock in the
foreseeable future. Any future determination as to the declaration and payment
of dividends will be at the discretion of our board of directors and will depend
on then existing conditions, including our financial condition, results of
operations, contractual restrictions, capital requirements, business prospects
and other factors that our board of directors considers relevant. In addition,
our credit facility with FINOVA will prohibit payment of dividends on our common
stock.

Holders of series A convertible redeemable preferred stock will be entitled
to receive cumulative dividends of 6.5% when and if declared by our board of
directors and will also share on an as-converted basis with the holders of our
common stock in any dividends declared on our common stock. Unpaid dividends on
the series A convertible redeemable preferred stock will accrue whether or not
they have been declared.

Holders of series B convertible redeemable preferred stock will be entitled
to receive cumulative dividends at an annual rate of 6.0%, and dividend payments
may be made in cash or shares of our common stock.

Holders of series C convertible redeemable preferred stock will not be
entitled to dividends. Our board of directors must pay accrued and unpaid
dividends to the holders of our series C convertible redeemable preferred stock
before any dividends are paid to the holders of our common stock.

InfoCure has never declared or paid any cash dividends on its common stock.
InfoCure currently intends to retain all available funds and any future earnings
for use in the operation and expansion of its business and does not anticipate
declaring or paying any cash dividends in the foreseeable future. Any future
determination as to the declaration and payment of dividends will be at the
discretion of InfoCure's board of directors and will depend on then existing
conditions, including its financial condition, results of operations,
contractual restrictions, capital requirements, business prospects and other
factors that its board of directors considers relevant. In addition, InfoCure's
credit facility prohibits payment of dividends.

USE OF PROCEEDS

We will not receive any proceeds from the distribution.

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<PAGE> 60

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

SELECTED FINANCIAL DATA

You should read the following selected financial data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our audited financial statements as of and for the years ended
December 31, 1999 and 1998 and the eleven months ended December 31, 1997, our
unaudited financial statements as of September 30, 2000 and for the nine months
ended September 30, 2000 and 1999 and the related notes appearing elsewhere in
this prospectus. The statement of operations data for each of the years ended
December 31, 1999 and 1998 and the eleven months ended December 31, 1997 and the
balance sheet data as of December 31, 1999 and 1998 are derived from, and
qualified by reference to, the financial statements included elsewhere in this
prospectus that have been audited by BDO Seidman, LLP, PracticeWorks'
independent certified public accountants. The information as of and for the
years ended January 31, 1997 and 1996 and the nine month periods ended September
30, 2000 and 1999 is unaudited. Results for the nine month period ended
September 30, 2000 are not necessarily indicative of results that may be
expected for the fiscal year. We believe that the assumptions underlying the
preparation of our financial statements are reasonable. However, our
subscription based revenue model is different than the one we have used
historically and we are currently developing new applications and services we
have not historically offered. Therefore, the financial information included in
this prospectus may not be indicative of our future results of operations,
financial position and cash flows. In addition, this financial information may
not reflect the financial results we would have achieved if we had been a
separate stand-alone entity during these periods.

The financial statements for all periods presented give retroactive effect
to poolings of interests treatment for five acquisitions completed during 1999
attributed to us by InfoCure and include the results of operations for all
purchase acquisitions from the respective acquisition date attributed to us by
InfoCure.

<TABLE>
<CAPTION>
ELEVEN
NINE MONTHS ENDED YEAR ENDED MONTHS YEAR ENDED
SEPTEMBER 30, DECEMBER 31, ENDED JANUARY 31,
------------------ ----------------- DECEMBER 31, -----------------
2000(1) 1999 1999(2) 1998(3) 1997(4) 1997 1996
-------- ------- ------- ------- ------------ ------- -------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA (IN THOUSANDS EXCEPT
PER SHARE DATA):
REVENUE:
Systems and software..... $ 9,365 $27,077 $34,325 $27,825 $13,961 $ 7,726 $ 7,623
Maintenance, support and
services............... 20,487 14,287 20,266 15,662 7,523 11,919 10,523
-------- ------- ------- ------- ------- ------- -------
Total revenue.......... 29,852 41,364 54,591 43,487 21,484 19,645 18,146
-------- ------- ------- ------- ------- ------- -------
OPERATING EXPENSE:
Hardware and other items
purchased for resale... 4,331 7,525 9,654 9,726 3,722 6,334 6,278
Selling, general and
administrative
(excluding compensatory
stock awards).......... 29,167 21,134 28,666 21,061 11,703 9,394 9,360
Research and
development............ 2,536 2,012 4,185 3,537 3,267 1,924 1,917
Depreciation and
amortization........... 12,392 1,852 3,284 2,272 551 283 282
</TABLE>

55
<PAGE> 61

(continued from previous page)

<TABLE>
<CAPTION>
ELEVEN
NINE MONTHS ENDED YEAR ENDED MONTHS YEAR ENDED
SEPTEMBER 30, DECEMBER 31, ENDED JANUARY 31,
------------------ ----------------- DECEMBER 31, -----------------
2000(1) 1999 1999(2) 1998(3) 1997(4) 1997 1996
-------- ------- ------- ------- ------------ ------- -------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Restructuring(5)......... 3,753 -- 1,814 1,031 6,463 -- --
Impairment and other
nonrecurring
charges(5)............. 2,004 -- -- -- -- -- --
Merger costs............. -- 464 659 69 -- -- --
Compensatory stock
awards................. -- 428 428 6,447 14 -- --
Gain on disposal of fixed
assets................. (626) -- -- -- -- -- --
-------- ------- ------- ------- ------- ------- -------
Total operating
expense.............. 53,557 33,415 48,690 44,143 25,720 17,935 17,837
-------- ------- ------- ------- ------- ------- -------

Operating (loss) income.... (23,705) 7,949 5,901 (656) (4,236) 1,710 309
Interest expense and other,
net...................... 1,558 1,244 1,335 966 198 182 183
-------- ------- ------- ------- ------- ------- -------
(Loss) income before income
taxes and extraordinary
item..................... (25,263) 6,705 4,566 (1,622) (4,434) 1,528 126
(Benefit) provision for
income taxes............. (8,583) 2,516 2,186 873 (171) (26) (191)
-------- ------- ------- ------- ------- ------- -------
(Loss) income before
extraordinary item (16,680) 4,189 2,380 (2,495) (4,263) 1,554 317
Extraordinary item, net of
income taxes............. -- (72) (72) -- -- -- --
-------- ------- ------- ------- ------- ------- -------
Net (loss) income.......... $(16,680) $ 4,117 $ 2,308 $(2,495) $(4,263) $ 1,554 $ 317
======== ======= ======= ======= ======= ======= =======
Per share data:
Basic and diluted:
(Loss) income before
extraordinary item..... $ (2.00) $ 0.62 0.34 $ (0.52) $ (1.10) $ 1.13 $ 0.23
Extraordinary item, net of
tax...................... -- (0.01) (0.01) -- -- -- --
-------- ------- ------- ------- ------- ------- -------
Net (loss) income.......... $ (2.00) $ 0.61 $ 0.33 $ (0.52) $ (1.10) $ 1.13 $ 0.23
======== ======= ======= ======= ======= ======= =======
OTHER DATA:
EBITDA(6).................. $ (6,182) $10,693 $12,086 $ 9,163 $ 2,792 $ 1,993 $ 591
CASH FLOW FROM:
Operating activities..... (7,644) 4,783 5,814 2,258 3,016 (8,341) 353
Investing activities..... (20,324) (4,804) (10,276) (15,575) (5,730) 484 180
Financing activities..... 28,825 692 5,356 14,209 2,817 15,357 7,366
</TABLE>

<TABLE>
<CAPTION>
AS OF AS OF
AS OF DECEMBER 31, JANUARY 31,
SEPTEMBER 30, ---------------------------- ---------------
2000 1999 1998 1997 1997 1996
------------- ------- ------- -------- ------ ------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA (IN
THOUSANDS):
Cash and cash equivalents............ $ 3,384 $ 2,527 $ 1,633 $ 741 $ 638 $ 390
Working capital...................... (5,237) (1,190) (1,034) (3,598) 1,337 804
Total assets......................... 74,636 57,842 37,098 14,434 3,659 5,142
Long-term debt, less current
portion............................ 19,567 9,614 14,769 4,405 351 1,631
Net divisional equity................ 36,017 32,419 10,800 983 1,229 721
</TABLE>

-------------------------

(1) During the nine months ended September 30, 2000, InfoCure acquired six
companies attributed to PracticeWorks in transactions accounted for as
purchases.

(2) During 1999, InfoCure acquired four companies attributed to PracticeWorks in
transactions accounted for as purchases.

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<PAGE> 62

(3) During 1998, InfoCure acquired one company attributed to PracticeWorks in a
transaction accounted for as a purchase.

(4) InfoCure changed its fiscal year end from January 31 to December 31
effective February 1, 1997. Accordingly, the 1997 fiscal period is comprised
of eleven months. During 1997, InfoCure acquired two companies attributed to
PracticeWorks in transactions accounted for as purchases.

(5) On August 1, 2000, we announced our 2000 restructuring plan which included
the termination of 145 employees resulting in severance and other
termination benefits of $1.6 million, and the closure and consolidation of
11 facilities resulting in facility closure costs and other charges of $1.3
million. For the nine months ended September 30, 2000, restructuring also
included $816,000 related to the 1999 plan. Impairment and other
non-recurring charges consisted of impairment charges of approximately
$500,000 for asset write-downs and a write-down of inventory of $1.5 million
related to our decision to discontinue selling hardware and hardware support
in certain of our business lines in connection with our new hardware
agreement with Dell Computer Corporation. During the year ended December 31,
1999 restructuring consisted of the write-off of capitalized software costs
of $874,000, contingent consideration related to acquired companies whose
products were discontinued of $700,000, charges for asset write-downs of
$97,000, facility closure costs of $95,000 and severance and other
termination benefits of $48,000. An additional $816,000 of costs related to
the 1999 restructuring were recorded in 2000. These costs consisted
primarily of termination and other severance costs for employee terminations
determined in 1999 but for whom the details were not communicated until
2000. During the year ended December 31, 1998 restructuring consisted of
contingent consideration related to acquired companies whose products were
discontinued of $750,000 and severance and other termination benefits of
$281,000. During the eleven months ended December 31, 1997, restructuring
consisted of the write-off of goodwill of $3.5 million, contingent
consideration of $2.2 million related to acquired companies whose products
were discontinued, facility closure costs of $401,000, the write-off of
capitalized software costs of $339,000 and other charges for asset
write-downs of $90,000.

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<PAGE> 63

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined financial statements have been
prepared to give effect to PracticeWorks' assumption of InfoCure's obligations
under the merger agreement and the proposed acquisition of all the outstanding
equity interest of Medical Dynamics by PracticeWorks.

Upon completion of the distribution, PracticeWorks will assume InfoCure's
obligation to acquire Medical Dynamics, Inc. InfoCure originally agreed to
acquire Medical Dynamics pursuant to an Agreement and Plan of Reorganization
dated as of December 21, 1999. The agreement, as amended and restated, was
further amended on December 19, 2000, to provide that PracticeWorks will assume
all of InfoCure's obligations under the agreement except for InfoCure's
obligation to issue a specified number of shares of InfoCure common stock. The
aggregate consideration to be paid to the Medical Dynamics shareholders in
connection with the merger is approximately $9.9 million. Each Medical Dynamics
shareholder of greater than 100 shares of Medical Dynamics common stock will
receive 0.017183 shares of PracticeWorks common stock, 0.07558 shares of
PracticeWorks series B convertible redeemable preferred stock and 0.06873 shares
of InfoCure common stock in exchange for each share of Medical Dynamics common
stock outstanding on a fully diluted basis on the date of the merger. Each
holder of 100 or fewer shares of

58
<PAGE> 64

Medical Dynamics common stock will receive $0.75 in cash for each share of
Medical Dynamics. Assuming 13.2 million shares of Medical Dynamics are
outstanding on a fully diluted basis on the date of the acquisition,
PracticeWorks will issue approximately 219,500 shares of PracticeWorks common
stock and approximately 965,000 shares of series B convertible redeemable
preferred stock (with a stated redemption value of $5.3 million) and will pay
approximately $325,000 in cash as consideration for the merger. Assuming full
conversion of the PracticeWorks series B convertible redeemable preferred stock,
the PracticeWorks securities to be issued in connection with the Medical
Dynamics merger will represent, in the aggregate, less than 2% of PracticeWorks'
common stock at the time of the distribution. InfoCure will issue approximately
878,000 shares of its common stock as a portion of the consideration for the
merger.

The unaudited pro forma condensed combined financial statements also give
effect to the proposed $5.0 million investment by Crescent International in
exchange for 100,000 shares of PracticeWorks series C convertible redeemable
preferred stock issuable in a private placement. If the series C convertible
redeemable preferred stock has not been converted after four years, the holder
may require PracticeWorks to redeem any or all of the series C convertible
redeemable preferred stock at a price equal to 175% of the $5.0 million
liquidation preference. PracticeWorks will recognize an accretive dividend of
approximately $938,000 annually related to this feature. In no event, however,
will Crescent be entitled to obtain 10% or more of our common stock upon
conversion. Crescent will also receive specified registration rights in
connection with its investment.

The following selected unaudited pro forma condensed combined financial
information has been derived from the historical financial statements of
PracticeWorks (A Division of InfoCure Corporation), Integrated Dental
Technologies, Inc., d/b/a PracticeWorks (a wholly owned subsidiary of Bio-Dental
Technologies Corporation, a wholly owned subsidiary of Zila, Inc.)
("Integrated"), a dental practice management company, Crunchy Frog Software,
Inc. ("Crunchy Frog"), Medical Dynamics and InfoSoft included elsewhere in this
prospectus. The unaudited pro forma condensed combined statements of

59
<PAGE> 65

operations data for the nine months ended September 30, 2000 and the year ended
December 31, 1999 have been presented as if the pending acquisitions of Medical
Dynamics and InfoSoft had been consummated on January 1, 1999. The unaudited pro
forma condensed combined balance sheet data as of September 30, 2000 has been
presented as if the pending acquisitions of Medical Dynamics and InfoSoft and
the proposed $5.0 million investment in the series C convertible redeemable
preferred stock had been consummated on that date.

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------ -----------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue................................ $ 39,231 $80,143
Restructuring charges........................ 3,753 2,469
Impairment and other non-recurring charges... 2,004 --
Merger costs................................. -- 659
Compensatory stock awards.................... -- 478
Operating (loss) income...................... (30,934) 1,421
Net loss..................................... (23,644) (2,529)
Preferred stock dividend..................... 3,672 4,895
Net loss available to common shareholders
before extraordinary item.................. (27,316) (7,424)
Net loss per share before extraordinary item,
basic and diluted.......................... (3.20) (1.03)
OTHER DATA:
EBITDA....................................... $ (5,238) $13,356
</TABLE>

<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 2000
------------------
(IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 7,915
Working capital............................................. (3,964)
Total assets................................................ 113,407
Long-term debt, less current portion........................ 19,703
Convertible, redeemable preferred stock..................... 29,750
Stockholders' equity........................................ 40,872
</TABLE>

60
<PAGE> 66

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
the "Selected Financial Data" and the accompanying financial statements and
related notes included elsewhere in this prospectus. The following discussion
contains forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those discussed in
these forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this prospectus, particularly in "Risk Factors."

OVERVIEW

We are an information management technology provider for dentists,
orthodontists and oral and maxillofacial surgeons. Our offerings include
practice management applications, business-to-business e-commerce services,
electronic data interchange, or EDI, services, ongoing maintenance and support
and training. These applications and services are designed to automate the
provider's practice, resulting in greater efficiency, lower costs and higher
quality care. As of December 31, 2000, we had an installed base of approximately
35,000 providers, including 27,000 dentists, 4,000 orthodontists and 4,000 oral
and maxillofacial surgeons in the United States.

For all of the periods presented in this prospectus, we operated as part of
InfoCure Corporation. InfoCure's board of directors has approved a pro rata
distribution to its holders of common stock of all of the outstanding shares of
common stock of PracticeWorks, which is currently an indirect, wholly owned
subsidiary of InfoCure. Immediately prior to completion of the distribution,
InfoCure will transfer the assets and liabilities of its information management
technology business for dentists, orthodontists, oral and maxillofacial surgeons
to PracticeWorks. After the completion of the distribution, InfoCure will not
own any of our outstanding stock. Upon completion of the distribution, we will
enter into various agreements related to our interim and ongoing relationships
with InfoCure.

A substantial part of our growth has been achieved through acquisitions.
From July 10, 1997 through December 31, 2000, InfoCure completed 18 acquisitions
that will be attributed to us in the distribution, and we anticipate completing
the acquisitions of InfoSoft and Medical Dynamics in the first quarter of 2001.
Given the significant number of acquisitions in each of the periods presented,
the results of operations from period to period may not necessarily be
comparable. Of the 18 acquisitions, the five companies listed below (the "1999
Pooled Companies") were acquired in transactions accounted for as poolings of
interests during the year ended December 31, 1999. These mergers provided for
the exchange of substantially all of the outstanding equity interests of such
companies for shares of InfoCure's common stock.

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<PAGE> 67

<TABLE>
<CAPTION>
SHARES OF INFOCURE
COMMON STOCK
COMPANY ISSUED
------- ------------------
<S> <C>
OMSystems, Inc.............................................. 2,287,998
Ardsley, M.I.S., Inc........................................ 209,016
Kevin Kozlowski, Inc., d/b/a Human Touch Software........... 255,247
Unident Corporation......................................... 357,796
InfoLogic, Inc.............................................. 102,096
</TABLE>

Because these acquisitions were accounted for as poolings of interests, the
financial statements included in this prospectus have been retroactively
restated to reflect them. As a result, the financial position, results of
operations and cash flows are presented as if the 1999 Pooled Companies had been
included for all periods presented. See notes to financial statements.

Of the 18 acquisitions, InfoCure acquired six dental practice management
companies that were accounted for as purchases during the nine months ended
September 30, 2000. The aggregate consideration for these acquisitions was $13.4
million in cash and $2.4 million in InfoCure common stock. The total assets
acquired were valued at approximately $2.1 million and the total liabilities
assumed were approximately $1.6 million. Goodwill of approximately $15.3 was
recorded for these transactions and will be amortized over an estimated useful
life of three years.

PracticeWorks has agreed to acquire SoftDent, LLC, the practice management
software subsidiary of Ceramco, Inc., a wholly-owned subsidiary of DENTSPLY.
Pursuant to the agreement, Ceramco will transfer to SoftDent, LLC the assets
used in the InfoSoft division in exchange for all of the membership interests of
SoftDent, LLC, and Ceramco will assign these membership interests to us. In
exchange for Ceramco's transfer of membership interests, we will issue 32,000
shares of our series A convertible redeemable preferred stock having a stated
redemption value of $32.0 million. These shares of series A convertible
redeemable preferred stock are convertible into approximately 9.8% of our
outstanding common stock at the time of the distribution and will be issued to
Ceramco the day after distribution. The total tangible assets to be acquired
approximate $1.6 million, the value attributed to developed technology is
approximately $4.4 million and the total liabilities to be assumed approximate
$2.1 million. Goodwill of approximately $28.6 million, inclusive of $500,000
estimated transaction costs, is expected to be recorded and will be amortized
over three years. Total consideration in the transaction is approximately $30.7
million including estimated transaction costs and after giving effect to a
discount of $12.5 million applied to reduce the series A convertible redeemable
preferred stock to approximate fair value. The $12.5 million discount will be
recognized over the five-year redemption period as an accretive dividend.

Upon completion of the distribution, PracticeWorks will assume all of
InfoCure's obligations under the Medical Dynamics merger agreement except for
InfoCure's obligation to issue a specified number of shares of InfoCure common
stock. Each Medical Dynamics shareholder of greater than 100 shares of Medical
Dynamics common stock will receive 0.017183 shares of PracticeWorks common
stock, 0.07558 shares of PracticeWorks series B convertible redeemable preferred
stock and 0.06873 shares of InfoCure common stock in exchange for each share of
Medical Dynamics common stock outstanding on a fully diluted basis on the date
of the merger. Each holder of 100 or fewer shares of Medical Dynamics common
stock will receive $0.75 in cash for each share of Medical Dynamics. Assuming
13.2 million shares of Medical Dynamics are outstanding on a fully

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<PAGE> 68

diluted basis on the date of the acquisition, PracticeWorks will issue
approximately 219,500 shares of PracticeWorks common stock and approximately
965,000 shares of PracticeWorks series B convertible redeemable preferred stock
(with a stated redemption value of $5.3 million) and will pay approximately
$325,000 in cash as consideration for the merger. Assuming full conversion of
the PracticeWorks series B convertible redeemable preferred stock, the
PracticeWorks securities to be issued in connection with the Medical Dynamics
merger will represent, in the aggregate, less than 2% of PracticeWorks' series B
convertible redeemable common stock at the time of the distribution. InfoCure
will issue approximately 878,000 shares of its common stock as a portion of the
consideration for the merger. The consideration for Medical Dynamics will be
$4.3 million in PracticeWorks and InfoCure common stock, $5.3 million in
PracticeWorks series B convertible redeemable preferred stock and $325,000 in
cash. The total tangible assets to be acquired approximate $704,000 and the
total liabilities to be assumed approximate $3.1 million. Goodwill of $13.1
million, inclusive of $300,000 estimated transaction costs and $500,000
estimated value assigned to stock options being assumed, is expected to be
recorded for the transaction and will be amortized over three years.

On a pro forma basis, the acquisitions of InfoSoft and Medical Dynamics
increased our revenues by $9.5 million and $11.0 million, respectively, for the
year ended December 31, 1999 and $6.4 and $3.0 million, respectively, for the
nine months ended September 30, 2000. InfoSoft and Medical Dynamics combined
increased our pro forma net loss by approximately $4.8 million and $7.0 million
for the year ended December 31, 1999 and the nine months ended September 30,
2000, respectively. InfoSoft and Medical Dynamics combined increased our EBITDA
by approximately $173,000 and $944,000 for the year ended December 31, 1999 and
for the nine months ended September 30, 2000, respectively. As of September 30,
2000, the acquisitions provided net additional working capital of approximately
$1.3 million.

During the year ended December 31, 1999, revenue from licensing new
software products and software upgrades represented approximately 45% of our
total revenue, reselling hardware components in connection with a portion of our
software sales represented approximately 22% of our total revenue, providing
customer support and services represented approximately 31% of our total revenue
and revenue from EDI services with customers and third-party clearinghouses
represented 2% of our total revenue. Customer support and services typically
have been provided pursuant to renewable annual contracts or on a fee basis.
Approximately 31% of our total 1999 revenue was recurring in nature and
consisted primarily of customer support and services.

We base our revenue recognition policies for sales of software on the
provisions of the American Institute of Certified Public Accountants' Statement
of Position ("SOP") No. 97-2, "Software Revenue Recognition." Revenue from
software sales is recognized upon shipment in instances where we have evidence
of a contract, the fee charged is fixed and determinable and collection is
probable. Revenue from hardware sales is recognized upon product shipment.
Revenue from support and maintenance contracts, which are typically one year in
length, are recognized ratably over the life of the contract. Revenue from other
services is recognized as the services are provided.

Depreciation and amortization expense results primarily from the
amortization of goodwill, which represents the excess of the consideration we
paid over the fair value of the net assets acquired in acquisitions accounted
for under the purchase method of

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<PAGE> 69

accounting. As of December 31, 1999, our balance sheet included goodwill, net of
accumulated amortization, of $32.8 million. Goodwill is amortized over its
estimated useful life, which had previously been 15 years. The 15-year estimated
useful life was derived primarily from our historical experience with the length
of our customer relationships. In the fourth quarter of 1999, management
responded to external changes in the business environment by making significant
changes to its strategic business model and product strategy. As a result,
management determined that the estimated useful life of goodwill should be
shortened substantially to be more reflective of the impact of these changes,
the current rate of technological change and competitive conditions within the
marketplace. Accordingly, management changed the estimated useful life of
goodwill from 15 years to three years. The new three-year life is based, in
part, on the term of our new subscription agreement. This change in accounting
estimate is applied prospectively from the fourth quarter of 1999 and increased
1999 amortization expense by approximately $600,000. As of September 30, 2000,
future amortization expense related to historical goodwill is estimated to total
approximately $16.5 million per year.

Depreciation and amortization expense also includes depreciation of
property and equipment and amortization of software development costs. Property
and equipment are assigned depreciable lives ranging from three to 40 years.
Software development costs are expensed until technological feasibility is
achieved. Costs incurred after achievement of technological feasibility and
before general release are capitalized and amortized, generally over a four-year
life. Costs incurred after general release are expensed as incurred. As
discussed below, during the fourth quarter of 1999, we adopted a new product
strategy involving the development of ASP applications and other Internet-based
applications and services. Additionally, in connection with restructuring the
businesses of recently acquired companies, we decided to modify future product
offerings. As a result of these decisions, we recorded a charge of approximately
$874,000 in the fourth quarter of 1999 representing the write-off of the
carrying value of software development costs.

CHANGE IN PRODUCT STRATEGY AND BUSINESS MODEL

In the fourth quarter of 1999, we decided to transition to a subscription
pricing model and commenced development of practice management applications that
may be delivered through an ASP delivery model and other Internet-based
applications and services.

Following these decisions, in the second quarter of 2000 we began offering
substantially all of our products and services on a subscription basis. Under
this subscription pricing model, customers pay a fixed, monthly fee for use of
our practice management applications and maintenance and support services. The
subscription fee for each customer is based upon the practice specialty and the
number of authorized system users. This represents a change in our historical
pricing model in which customers were charged an initial licensing fee for use
of practice management products and were charged for continuing maintenance and
support. As a result of the transition to subscription pricing model, we have
experienced a decline in one-time revenue from software license fees and
hardware sales, which we expect to be replaced over time by monthly subscription
fees. In addition, as we convert existing customers to our new subscription
contracts, the recurring support revenue from our installed customer base will
gradually decline and will be replaced by increasing monthly subscription fee
revenue. We expect the percentage of our revenue that is recurring in nature to
increase substantially as a result of this change. Under our subscription
pricing model, as with our historical pricing model, we will charge our
customers transaction fees, on a per-transaction basis, for the use of our EDI
services.

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<PAGE> 70

Our existing practice management applications are installed either on
servers or personal computers located in the provider's office. We are
developing ASP applications, which will be remotely hosted on a central server
which our customers will access through a standard Internet browser. We expect
to release an ASP application for use by dentists in the United States during
the second quarter of 2001 and to release ASP applications for orthodontists and
oral and maxillofacial surgeons by the fourth quarter of 2001. Although our
initial ASP applications will contain the basic functionality required to manage
a dentist's office, they will not offer the full functionality of our core
products. Following the release of these applications, we will offer customers a
choice between our most advanced existing applications and our ASP applications.
We expect to provide full functionality consistent with our existing products
for our ASP applications in the dental market in the fourth quarter of 2001 and
in the orthodontic and oral and maxillofacial markets in the third quarter of
2002.

In addition, we have developed the PracticeWorks Exchange, an e-commerce
application that enables convenient, online purchasing of dental, orthodontic
and office supplies and promotional materials offered by companies with which we
have business relationships. The PracticeWorks Exchange features an electronic
catalogue of the supplies offered by our e-commerce suppliers. Customers can
create orders by selecting products from this catalogue, and the PracticeWorks
Exchange sends the order to be fulfilled by one of our e-commerce suppliers. The
PracticeWorks Exchange also offers an inventory management function which can
automatically generate practice-specific supply orders for orthodontic supplies
based on the pre-determined needs of the practice. We currently offer the
PracticeWorks Exchange only to our orthodontic customers. Because the
PracticeWorks Exchange was released in May 2000, the aggregate revenue generated
by the PracticeWorks Exchange for the nine months ended September 30, 2000 was
nominal. We currently have three business relationships which relate to the
PracticeWorks Exchange. Two of these current business relationships benefit our
customers by providing discounted supplies and services to our customers. These
two relationships also generate revenue for us in the form of royalty payments
or rebates. These rebates and royalties payable to us generally range from 5% to
10% of sales generated through the PracticeWorks Exchange. Our other current
business relationship with a distributor benefits our customers by providing a
vehicle by which customer orders for supplies are fulfilled and shipped at a
discount to our customers. Pursuant to this business relationship, we generate
revenue based on the sale of each product effected through our supplier. The
revenue we recognize through our relationship with our distributor is based on
the sales volume of products purchased through the distributor by our customers.

We are developing additional business relationships to facilitate online
ordering of dental supplies, which will allow us to begin offering the
PracticeWorks Exchange in the dental and oral and maxillofacial surgery markets.
We cannot currently predict when the PracticeWorks Exchange will be available in
the dental and oral and maxillofacial surgery markets, as this is dependent on
our establishing business relationships with suppliers in these industries. We
expect to derive increasing revenue from e-commerce transactions utilizing the
PracticeWorks Exchange. We are also developing an Internet portal which will
provide access to our ASP applications, enable secure communication between
patients and providers, feature healthcare content relevant to the markets we
serve and provide access to additional online services. Further, we intend to
develop business relationships to enable us to design custom websites for our
customers, enabling them to utilize the Internet to provide information about
their practices and market their services.

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We began the implementation of these changes in our pricing model and
product strategy during the nine months ended September 30, 2000. During the
three months ended March 31, 2000, we formalized our sales approach relating to
our new pricing model and ASP applications and developed new marketing
materials. In addition, during the nine months ended September 30, 2000, we
substantially completed company-wide training and education related to our
subscription pricing model for our sales and support staffs. Because these
training initiatives were ongoing throughout the nine months ended September 30,
2000, we had a reduced sales effort from that of comparable periods. As a result
of our announcement to deliver ASP applications, we believe that some potential
customers may have delayed purchases of practice management applications.

We also believe that the overall reduction in our sales was partially due
to purchases customers made in 1999 to prepare for Year 2000 computer issues.
These factors impacted our results for the nine months ended September 30, 2000
compared to the corresponding period in 1999. In addition, because of these
changes in our pricing model and product offerings, we do not believe our
historical financial results are representative of future results.

RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES

THE 2000 PLAN. In July 2000, we completed a comprehensive assessment of
infrastructure requirements including personnel, facilities and other resources
for PracticeWorks. As a result of the integration efforts required for the
recent acquisitions and the assessment of infrastructure requirements to execute
our new product strategy and subscription pricing model, management has adopted
a significant initiative to restructure PracticeWorks. On August 1, 2000, we
announced the plan of restructuring which included the consolidation and closing
of approximately 11 facilities and the reduction of approximately 145 employees.
In the third quarter 2000, we recorded non-recurring charges of approximately
$2.9 million related to the restructuring. The components of the charges are
$1.6 million related to severance and other termination costs and $1.3 million
related to facility closure and consolidation costs, including cancellation of
leases and other contracts. The restructuring is expected to be completed during
the fourth quarter of 2000. Once completed, the restructuring is expected to
reduce operating expenses by approximately $9.0 million on an annualized basis.

In addition to the restructuring, we also recorded an impairment charge
related to fixed assets of approximately $500,000 for asset write-downs and
wrote down inventory of $1.5 million related to our decision to discontinue
selling hardware and hardware support in certain of our business lines in
connection with our new hardware agreement with Dell Computer Corporation.

Under our historical business model, combined sales of hardware and
hardware support comprised approximately 15% of total historical revenues.
However, the costs of hardware purchased for resale, the direct costs associated
with hardware support and the estimated overhead associated with these
activities typically aggregated approximately 85% to 95% of the related revenue.
Accordingly, the gross margin on the sales of hardware and hardware maintenance
ranged from 5% to 15%. Our new business model attempts to minimize activities
that make such small gross margin contributions and instead focuses on building
recurring revenues from subscription-based use of our applications.

Under our new agreement with Dell, entered into on August 1, 2000, our
customers will obtain hardware and related support for Windows-Intel platform
products directly from

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Dell at market prices. In exchange for access to our customers and our
assistance in coordinating the referrals, we will receive a marketing fee. An
additional benefit of the Dell agreement is the elimination of the substantial
capital requirement which would have been needed to provide hardware under our
subscription pricing model.

In comparison to our historical business model, the decision to exit
hardware sales and related support activities would have reduced total revenues
by approximately $8.0 million based on 1999 revenues. Operating expenses for
1999 would have been reduced by an estimated $6.8 to $7.6 million with a
corresponding reduction in operating income for 1999 of between approximately
$400,000 and $1.2 million. However, this reduction would have been substantially
mitigated by the fees available under the terms of the Dell marketing agreement.

The validity of this comparison, in management's opinion, is not directly
relevant to future trends. As compared to our historical business model, our
subscription pricing model contemplates that revenues from traditional sales of
licenses and hardware would decline and be replaced by revenues from
subscription fees. While this decline will be somewhat accentuated by our
decision to exit certain hardware and related support activities, we believe
that the effect on operating income will be essentially neutral as the previous
margins from such activities are replaced by a combination of the marketing fee
and anticipated reductions in indirect costs. Further, cash flows will be
positively impacted by the significant reduction in capital expenditures which
would have been otherwise required to effectively finance customers' purchases.

THE 1999 PLAN. In the fourth quarter of 1999, InfoCure decided to
restructure its business into a medical division and a dental division. The
dental division formed in this restructuring constitutes the business that will
be transferred to PracticeWorks immediately prior to the distribution. At the
time of the restructuring, we decided to transition to subscription pricing and
to commence development of ASP applications and other Internet-based
applications and services. Management committed to a plan of restructuring and
reorganization in connection with the establishment of the dental division and
these changes in our pricing model and product strategy. This restructuring
plan, which was substantially completed in the second quarter of 2000, included
consolidating facilities, eliminating staffing redundancies and repositioning
PracticeWorks to capitalize on the change in our pricing model and product
strategy. In the fourth quarter of 1999, we recorded $1.8 million in
restructuring and other charges in connection with this plan. The components of
these charges are:

- $874,000 representing carrying value of software development costs, the
estimated useful life of which is now considered minimal based on changes
to our product strategy;

- $700,000 reflecting contingent consideration deemed payable to former
stockholders of entities whose products were discontinued as part of the
restructuring;

- $97,000 representing other asset write-downs and costs;

- $95,000 representing facility closure and consolidation costs, including
cancellation of leases and other contracts; and

- $48,000 representing incremental costs associated with completion of
discontinued customer contracts.

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Additional charges related to the 1999 plan were recorded in 2000 primarily
to provide for costs associated with staffing reductions and other asset
write-downs. These personnel changes were finalized and communicated in the
first quarter of 2000. Accordingly, compensation costs, including severance and
other termination benefits, and asset write-downs aggregating $816,000 were
recorded in 2000.

THE 1997 PLAN. In 1997, we adopted a plan to restructure our operations by
consolidating existing facilities and acquired operations. In connection with
the restructuring plan, which was substantially completed in the second quarter
of 1998, we recorded restructuring and other charges totaling $6.5 million in
the fourth quarter of 1997 and $1.0 million in the first six months of 1998.

CHANGE IN FISCAL YEAR

In the first quarter of 1998, InfoCure changed its fiscal year end from
January 31 to December 31. As a result, our fiscal year beginning February 1,
1997 and ending on December 31, 1997 reflects eleven months of operations.

RESULTS OF OPERATIONS

The following table sets forth certain statement of operations data as a
percentage of total revenue for the periods indicated:

<TABLE>
<CAPTION>
ELEVEN
NINE MONTHS MONTHS
ENDED YEAR ENDED ENDED
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
---------------- --------------------------- ------------
2000 1999 1999 1998 1997
----- ----- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE:
Systems and software...... 31.4% 65.5% 62.9% 64.0% 65.0%
Maintenance, support and
services................ 68.6 34.5 37.1 36.0 35.0
----- ----- ----- ----- -----
Total revenue... 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
OPERATING EXPENSE:
Hardware and other items
purchased for resale.... 14.5 18.2 17.7 22.4 17.3
Selling, general and
administrative
(excluding compensatory
stock awards)........... 97.7 51.1 52.5 48.4 54.5
Research and
development............. 8.5 4.9 7.7 8.1 15.2
Depreciation and
amortization............ 41.5 4.5 6.0 5.2 2.6
Restructuring............. 12.6 -- 3.3 2.4 30.1
Impairment and other non-
recurring charges....... 6.7 -- -- -- --
Merger costs.............. -- 1.1 1.2 .2 --
Compensatory stock
awards.................. -- 1.0 .8 14.8 --
Gain on disposal of fixed
assets.................. (2.1) -- -- -- --
----- ----- ----- ----- -----
Total operating
expense...... 179.4 80.8 89.2 101.5 119.7
----- ----- ----- ----- -----
</TABLE>

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<TABLE>
<CAPTION>
ELEVEN
NINE MONTHS MONTHS
ENDED YEAR ENDED ENDED
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
---------------- --------------------------- ------------
2000 1999 1999 1998 1997
----- ----- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating (loss) income... (79.4)% 19.2% 10.8% (1.5)% (19.7)%
Interest expense and
other, net.............. 5.2 3.0 2.4 2.2 0.9
----- ----- ----- ----- -----
(Loss) income before
income taxes and
extraordinary item...... (84.6) 16.2 8.4 (3.7) (20.6)
(Benefit) provision for
income taxes............ (28.7) 6.1 4.0 2.0 (0.8)
----- ----- ----- ----- -----
Net (loss) income before
extraordinary item...... (55.9) 10.1 4.4 (5.7) (20.6)
Extraordinary item, net of
income taxes............ -- (0.1) -- -- --
----- ----- ----- ----- -----
Net (loss) income....... (55.9)% 10.0% 4.4% (5.7)% (20.6)%
===== ===== ===== ===== =====
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999

REVENUE. Total revenue for the nine months ended September 30, 2000
decreased $11.5 million, or 27.8%, to $29.9 million from $41.4 million for the
nine months ended September 30, 1999. For the nine months ended September 30,
2000, systems and software revenue decreased $17.7 million, or 65.6%, to $9.4
million from $27.1 million in the nine months ended September 30, 1999. These
decreases are the result of lower unit sales in the current period due to our
transition to a subscription pricing model and pending release of ASP
applications and the result of some customers preparing during 1999 for any Year
2000 computer issues. Maintenance, support and service revenue for the nine
months ended September 30, 2000 increased $6.2 million, or 43.4%, to $20.5
million from $14.3 million for the nine months ended September 30, 1999. These
increases are primarily due to additional revenue of approximately $3.2 million
generated by acquisitions made in December 1999 and March and April 2000. The
increase also includes an increase in EDI revenue of $2.9 million for the nine
months ended September 30, 2000, resulting from an increase in the number of
practices using this service, and revenue related to new subscription contracts.

HARDWARE AND OTHER ITEMS PURCHASED FOR RESALE. For the nine months ended
September 30, 2000, hardware and other items purchased for resale in the dental
division was $4.3 million, or 14.4% of total revenue compared to $7.5 million,
or 18.1% of total revenue, for the nine months ended September 30, 1999. These
changes as a percentage of revenue reflect the increase in higher margin EDI
transactions and software maintenance contracts and a decrease in lower margin
hardware sales.

SELLING, GENERAL AND ADMINISTRATIVE, OR SG&A. SG&A expense includes
salaries and benefits (excluding compensatory stock awards), product maintenance
and support, variable commissions and bonuses, marketing, travel,
communications, facilities, insurance and other administrative expenses. SG&A
expense increased $8.1 million, or 38.4%, to $29.2 million for the nine months
ended September 30, 2000, from $21.1 million for the
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nine months ended September 30, 1999. Of this amount, approximately $6.4 million
was related to the SG&A costs of the acquisitions made in December 1999 and the
2000 acquisitions. We incurred marketing expenses related to the new
subscription pricing model of approximately $300,000. Legal and professional
fees increased approximately $300,000 due to costs related to potential
acquisitions and other transactions that were not completed. During the third
quarter of 2000 we also increased the allowance for doubtful accounts by
approximately $400,000 as a provision for possible bad debts which may result
from the effects of the restructuring.

RESEARCH AND DEVELOPMENT. Research and development expense increased
$524,000, or 26.2%, to $2.5 million for the nine months ended September 30, 2000
from $2.0 million for the nine months ended September 30, 1999. This increase is
primarily due to a decrease in software development costs eligible for
capitalization as a result of products being placed into general release and
also due to an increase in the number of products we offered, primarily from our
acquisitions. In addition, for the nine-months ended September 30, 2000,
$594,000 was capitalized related to software development costs.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $10.5 million, or 552.6%, to $12.4 million for the nine months ended
September 30, 2000, from $1.9 million for the nine months ended September 30,
1999. This increase in depreciation and amortization expense is primarily due to
the change in the estimated useful life of goodwill from 15 years to three years
during the fourth quarter of 1999.

RESTRUCTURING. On August 1, 2000, we announced our intention to terminate
approximately 145 employees and to close or consolidate 11 facilities as part of
our 2000 restructuring plan. As a result, in the third quarter of 2000 we
incurred costs of $1.6 million related to severance and other termination
benefits and facility closure costs and other charges of $1.3 million. For the
nine months ended September 30, 2000, restructuring also includes $816,000,
consisting primarily of severance and other termination costs, concluding the
1999 plan.

IMPAIRMENT AND OTHER NONRECURRING CHARGES. During the nine months ended
September 30, 2000 we recorded impairment and other nonrecurring charges of
approximately $2.0 million. Of this amount, $500,000 related to fixed assets
which are being disposed of as a result of our decision to consolidate our
office locations. The remainder of the charge, $1.5 million, related to our
decision to discontinue hardware sales and support for certain of our business
lines in connection with our new hardware agreement with Dell Computer
Corporation.

INTEREST EXPENSE AND OTHER, NET. Interest expense and other, net increased
$314,000, or 26.2%, to $1.6 million for the nine months ended September 30,
2000, from $1.2 million for the nine months ended September 30, 1999. This
increase relates to the increase in the amount of the outstanding balance under
our credit facility and other debt agreements during the comparable periods.

(BENEFIT) PROVISION FOR INCOME TAXES. The provision for income taxes was a
net benefit of $8.6 million for the nine months ended September 30, 2000
compared to a net expense of $2.5 million for the nine months ended September
30, 1999. The change is due to the generation of net operating losses for the
nine months ended September 30, 2000 versus net operating income for the nine
months ended September 30, 1999. The effective income tax rate for the nine
months ended September 30, 2000 was (34.0%) versus 37.5% for the nine months
ended September 30, 1999. The decrease in the effective income tax

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rate is a result of accelerated non-deductible goodwill amortization. The
variance from the federal statutory rate for the nine months ended September 30,
1999 is due to a combination of the effect of non-deductible goodwill
amortization and state taxes resulting in a higher effective income tax rate.

We reported net deferred tax assets of $9.4 million in our financial
statements as of September 30, 2000. Included in the net deferred tax assets are
net operating loss, or NOL, carryforwards which, if fully realized, would
produce future tax benefits of $7.2 million. These NOL carryforwards expire in
2020. Based upon current tax law, we will ultimately be required to generate
approximately $25.0 million of future taxable income, prior to the expiration of
the NOL's, for full realization of the $9.4 million net deferred tax asset.

Management believes that it is more likely than not that the required
amount of taxable income will be generated in future years and prior to the
expiration of the NOLs to realize the $9.4 million net deferred tax asset at
September 30, 2000. In reaching this conclusion with regards to the $7.2 million
component of the net deferred tax asset representing our NOL carryforwards,
management noted a number of factors, including the following related to its
operations:

- Our operations were historically profitable.

- The loss generated during the nine months ended September 30, 2000 was
not indicative of our ability to generate future earnings as the results
were significantly impacted by the recognition of restructuring, asset
impairment and other non-recurring charges in conjunction with
restructuring plans -- See Note 5 to the Condensed Interim Financial
Statements. Additionally, management's decision to change its estimated
useful life of remaining goodwill from 15 years to three years
significantly impacted the loss generated during the nine months ended
September 30, 2000 and increased net deferred tax assets by approximately
$1.9 million. We will realize these assets through the reversal of this
temporary difference against future taxable income.

- We have opportunities, if necessary, to accelerate taxable income into
the NOL carryforward period. Tax planning strategies would include the
sale-lease back of certain appreciated assets and revision of depreciation
and amortization methods for tax purposes.

- Management's projections indicate that we will generate sufficient
taxable income to realize the deferred tax assets related to the NOL
carryforwards.

NET (LOSS) INCOME. As a result of the above factors, our net loss for the
nine months ended September 30, 2000 was $(16.7) million compared to net income
of $4.1 million for the nine months ended September 30, 1999.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

TOTAL REVENUE. Total revenue for the year ended December 31, 1999
increased $11.1 million, or 25.5%, to $54.6 million from $43.5 million for the
year ended December 31, 1998. The acquisition of the 1999 Pooled Companies,
which are accounted for as pooling of interests, are reflected retroactively for
all periods presented. Systems and software revenue increased $6.5 million, or
23.4%, to $34.3 million for the year ended December 31, 1999 from $27.8 million
for the year ended December 31, 1998. Maintenance, support, and

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service revenue increased $4.6 million, or 29.3%, to $20.3 million for the year
ended December 31, 1999 from $15.7 million for the year ended December 31, 1998.
These revenue increases primarily reflect overall volume growth in the business
of $10.5 million, including purchases made in preparation for year 2000 computer
issues, and, to a lesser extent, acquisitions during the fourth quarter of 1999.

HARDWARE AND OTHER ITEMS PURCHASED FOR RESALE. Hardware and other items
purchased for resale was $9.7 million for both the years ended December 31, 1999
and 1998. For the year ended December 31, 1999, gross margin was 82.3%, compared
to 77.6%, for the year ended December 31, 1998. This increase in gross margin is
attributable primarily to a change in the mix of revenues resulting from the
growth in service revenues related to EDI which generally carries higher
margins.

SELLING, GENERAL AND ADMINISTRATIVE, OR SG&A. SG&A expense increased $7.6
million, or 36.0%, to $28.7 million for the year ended December 31, 1999
compared to $21.1 million for the year ended December 31, 1998. This increase
reflects primarily additional marketing and administrative personnel and other
selling and administrative costs necessary to support the consolidated
businesses of the acquired companies. As a percentage of revenue, SG&A expense
increased to 52.5% for the year ended December 31, 1999 from 48.4% for the year
ended December 31, 1998 primarily due to the fact that the SG&A expense for the
acquisition of the 1999 Pooled Companies were substantially higher in relation
to their revenues than ours. Because all of these companies were acquired in
December 1999, cost savings measures resulting from their integration had not
yet been reflected. Further, during the fourth quarter of 1999, the allowance
for doubtful accounts increased by $700,000 to more closely align the allowance
with our collection experience and for the potential write-off associated with
customers migrating from traditional support programs to our subscription
pricing offerings.

RESEARCH AND DEVELOPMENT. Research and development expense increased
$648,000, or 18.5%, to $4.2 million for the year ended December 31, 1999 from
$3.5 million for the year ended December 31, 1998. This increase was due
primarily to acquisitions and the number of products that we support. We
capitalize development costs incurred from the time a new product reaches
technological feasibility until it is available for general release. The higher
level of capitalized costs in 1999 is reflective of the state of development of
a variety of projects, including new e-commerce applications. As a percentage of
total revenue, research and development expense decreased to 7.7% of total
revenue for the year ended December 31, 1999 from 8.1% of total revenue for the
year ended December 31, 1998 due to the significant increase in revenues from
acquisitions and business growth.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $1.0 million, or 43.5%, to $3.3 million for the year ended December
31, 1999 from $2.3 million for the year ended December 31, 1998. This increase
was primarily due to increased expense for amortization of goodwill resulting
from the addition of approximately $10.5 million of goodwill related to the 1999
acquisitions and a change in accounting estimate, which was effected in the
fourth quarter of 1999, to reduce the estimated useful life of goodwill from 15
years to three years. This change in accounting estimate resulted in additional
goodwill amortization of approximately $600,000 for 1999.

RESTRUCTURING AND OTHER CHARGES. In the year ended December 31, 1999, we
incurred costs of $1.8 million associated with a restructuring plan announced in
the fourth quarter of 1999. In the year ended December 31, 1998 we incurred $1.0
million of charges associated with the 1997 restructuring plan that was
completed in 1998.

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MERGER COSTS. We incurred $659,000 in merger costs in 1999 related to the
acquisitions of the 1999 Pooled Companies.

COMPENSATORY STOCK AWARDS. Compensatory stock awards expense decreased
$6.0 million, or 93.8%, to $428,000 for the year ended December 31, 1999 from
$6.4 million for the year ended December 31, 1998. Compensatory stock award
expense for the year ended December 31, 1999 related to the vesting of
restricted awards to executive officers of InfoCure. The $6.4 million expense in
1998 related to contingently exercisable stock options of an acquired company.
Under the terms of the purchase agreement, the value of the options became
determinable in the fourth quarter of 1998, resulting in recognition of
compensation expense. As a percentage of total revenue, compensatory stock
awards expense decreased to 0.8% for the year ended December 31, 1999 from 14.8%
for the year ended December 31, 1998.

INTEREST EXPENSE AND OTHER, NET. Interest expense and other, net increased
$369,000, or 38.2%, to $1.3 million for the year ended December 31, 1999 from
$966,000 for the year ended December 31, 1998. The increase relates primarily to
higher average outstanding debt balances during 1999 and a higher effective
interest rate resulting from the amortization of loan costs. As a percentage of
total revenue, interest expense and other, net increased to 2.4% for the year
ended December 31, 1999 from 2.2% for the year ended December 31, 1998.

PROVISION (BENEFIT) FOR INCOME TAXES. The provision for income taxes was
$2.2 million for the year ended December 31, 1999, compared to $873,000 for the
year ended December 31, 1998. The effective income tax rate of 47.9% for the
year ended December 31, 1999 is higher than statutory rates due to state income
taxes and permanent differences resulting primarily from the amortization of
nondeductible goodwill. In addition, the effective tax rate for 1998 differs
from the statutory tax rate due to the more significant impact of pooling of
interests accounting with certain S-corporation entities that incurred no
federal income taxes prior to their acquisition by us.

NET (LOSS) INCOME. As a result of the above factors, our net income for
the year ended December 31, 1999 was $2.3 million compared to net loss of $(2.5)
million for the year ended December 31, 1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO ELEVEN MONTHS ENDED DECEMBER 31, 1997

TOTAL REVENUE. Total revenue for the year ended December 31, 1998
increased $22.0 million, or 102.3%, to $43.5 million from $21.5 million for the
eleven months ended December 31, 1997. Systems and software revenue increased
$13.8 million, or 98.6%, to $27.8 million for the year ended December 31, 1998
from $14.0 million for the eleven months ended December 31, 1997. Maintenance,
support and services revenue increased $8.2 million, or 109.3%, to $15.7 million
for the year ended December 31, 1998 from $7.5 million for the eleven months
ended December 31, 1997. These increases are related to revenue of $14.7 million
from acquisitions as of their respective effective dates, and overall volume
growth of the business of $7.3 million.

HARDWARE AND OTHER ITEMS PURCHASED FOR RESALE. Cost of hardware and other
items purchased for resale increased $6.0 million, or 162.2%, for the year ended
December 31, 1998, to $9.7 million compared to $3.7 million for the eleven
months ended December 31, 1997. The increase is primarily related to the
acquisitions made in 1998 and 1997. Gross

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margin as a percentage of revenue was 77.6% for the year ended December 31, 1998
and 82.7% for the eleven months ended December 31, 1997. The decrease in gross
margin is due primarily to an increase in the sales of lower margin hardware
during 1998.

SELLING, GENERAL AND ADMINISTRATIVE, OR SG&A. SG&A expense increased $9.4
million, or 80.3%, to $21.1 million for the year ended December 31, 1998
compared to $11.7 million for the eleven months ended December 31, 1997. This
increase reflects primarily an increase in marketing and administrative
personnel and other selling and administrative costs necessary to support the
businesses of acquired companies. SG&A expense as a percentage of revenue
decreased to 48.4% for the year ended December 31, 1998 from 54.5% for the
eleven months ended December 31, 1997. This decrease reflects our ability to
leverage economies of scale resulting from the larger installed customer base
and higher base of revenue realized from acquisitions.

RESEARCH AND DEVELOPMENT. Research and development expense increased
$270,000, or 8.2%, to $3.5 million for the year ended December 31, 1998 compared
to $3.3 million for the eleven months ended December 31, 1997. The overall
increase in research and development expense is primarily due to additional
development staff from acquisitions and expenditures to integrate the acquired
products. Research and development expense for the year ended December 31, 1998
as a percentage of total revenue increased to 15.2% from 8.1% for the eleven
months ended December 31, 1997.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased $1.7 million to $2.3 million for the year ended December 31, 1998
compared to $551,000 for the eleven months ended December 31, 1997. This
increase represents primarily the significant increase in goodwill arising from
acquisitions.

RESTRUCTURING AND OTHER CHARGES. Restructuring and other charges were $1.0
million for the year ended December 31, 1998, related primarily to additional
contingent consideration that was deemed earned due to the effect of the
discontinuance of the products of some of the acquired companies. For the eleven
months ended December 31, 1997, restructuring and other charges were $6.5
million due to a restructuring plan that included a $3.5 million write-down of
goodwill related to a July 1997 acquisition and $2.2 million of contingent
consideration earned or deemed payable under terms of acquisition agreements for
acquired companies whose products were discontinued as part of the
restructuring.

COMPENSATORY STOCK AWARDS. During the year ended December 31, 1998, we
recorded approximately $6.4 million related to contingently exercisable stock
options of an acquisition.

INTEREST EXPENSE AND OTHER, NET. Interest expense and other, net increased
$768,000 to $966,000 for the year ended December 31, 1998 compared to $198,000
for the eleven months ended December 31, 1997. This increase reflects primarily
increases in interest expense associated with indebtedness incurred to complete
acquisitions.

PROVISION (BENEFIT) FOR INCOME TAXES. The provision for income taxes was
$873,000 for the year ended December 31, 1998 compared to a net benefit of
$171,000 for the eleven months ended December 31, 1997. This is due to net
taxable income being generated in 1998 versus a net taxable loss being generated
in 1997. The effective income tax rate for the year ended December 31, 1998 is
higher than statutory rates due to permanent differences resulting primarily
from the amortization of nondeductible goodwill

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and the impact of pooling of interests accounting with certain S-corporation
entities that incurred no federal income taxes prior to their acquisition by us.

NET LOSS. As a result of the above factors, our net loss for the year
ended December 31, 1998 was $2.5 million compared to net loss of $4.3 million
for the eleven months ended December 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

Our principal capital requirements have been to fund:

- acquisitions;

- working capital;

- capital expenditures for buildings, furniture, fixtures and equipment;
and

- capitalized software development costs.

Historically, InfoCure has managed cash on a centralized basis. Cash
receipts associated with our business have largely been retained by InfoCure and
InfoCure has provided funds to cover our disbursements for operating activities,
capital expenditures and acquisitions. The cash balances reported by us at
December 31, 1999 and 1998 are based on the results of our operations and the
net cash resulting from intercompany transfers between us and InfoCure. The
investing and financing activities discussed below were funded as a result of
activities entered into by InfoCure and relating to our operations. The
long-term debt amounts reported by us are based on long-term debt that InfoCure
incurred to acquire businesses and other assets that will be transferred to us
immediately prior to the distribution.

During the nine months ended September 30, 2000, we used $7.6 million of
cash in operating activities primarily relating to (1) a net loss of $16.7
million, offset by the net effect of non-cash charges of $12.4 million in
depreciation and amortization and $5.8 million in restructuring and other
charges and the non-cash benefit of $8.6 million associated with deferred taxes
and (2) payments of accounts payable and accrued liabilities of approximately
$2.8 million, offset by a reduction of approximately $1.5 million in accounts
receivable. The net use of cash flow from operations is due primarily to the
impact of ongoing transition to subscription-based pricing, the pending release
of our ASP applications and some customers making purchases in 1999 to prepare
for Year 2000 issues.

During the year ended December 31, 1999, we generated $5.8 million of cash
from operating activities primarily relating to net income of $2.3 million,
which includes non-cash charges for depreciation and amortization and
restructuring and other charges, offset by an increase in accounts receivable.

During the nine months ended September 30, 2000, cash used in investing
activities was $20.3 million, primarily representing cash used for acquisitions
and related expenditures of $13.4 million. During the year ended December 31,
1999, cash used in investing activities was $10.3 million, consisting primarily
of cash used for acquisitions of $8.3 million.

During the nine months ended September 30, 2000, we generated $28.8 million
of cash from financing activities consisting primarily of borrowings attributed
to us of $11.0 million from InfoCure's line of credit and $18.0 million in cash
advances from InfoCure. During the year ended December 31, 1999, we generated
net cash from financing activities

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of $5.4 million, including $8.7 million in proceeds from InfoCure's line of
credit and $13.3 million in cash advances from InfoCure. These proceeds were
principally used to retire outstanding debt previously attributed to us of $16.7
million and to fund the acquisition of the 1999 Purchased Companies.

InfoCure maintains a credit facility with FINOVA in the amount of $100.0
million that has a five-year term, bears interest at a floating rate (9.5% at
September 30, 2000) and is secured by substantially all of InfoCure's assets.
During July 2000, InfoCure entered into an amendment to the credit facility to
eliminate certain previous financial covenants and establish new financial
covenants. At the time of the distribution, we will have entered into a new
credit facility with FINOVA under which we will incur approximately $20.0
million of indebtedness to repay InfoCure's long-term indebtedness relating to
our business. The new FINOVA credit facility will contain restrictions and
covenants, similar in nature to those contained in InfoCure's credit facility,
as amended, including with respect to limitations on our leverage, a minimum net
worth requirement, a minimum current ratio requirement and a minimum liquidity
requirement. Also, the new credit facility will prohibit payment of dividends on
our capital stock and will bear interest at a rate equal to the higher of the
prime rate as announced from time to time by Citibank N.A. and a weighted
average of the rates on overnight federal fund transactions plus 50 basis
points. The outstanding principal balance of the loan will amortize at 5.0% per
quarter beginning October 1, 2001, and the entire outstanding balance under the
facility will be due in full on June 30, 2002.

Following the distribution, we will issue 100,000 shares of our series C
convertible redeemable preferred stock to Crescent in a private placement. We
will close this transaction the day after the distribution date. Pursuant to the
terms of the investment, Crescent will have the right after one year to convert
all, or a portion, of its shares of series C convertible redeemable preferred
stock held by it into shares of our common stock based upon a pre-determined
conversion price. In addition, we will have the right to either redeem in cash
at a premium or require the conversion of the shares of preferred stock,
provided certain conditions are met. The redemption premiums will increase
proportionately each year from 115% of the liquidation preference during the
first year after issuance of the preferred stock to 160% of the liquidation
preference following the fourth anniversary year of issuance. If the series C
convertible redeemable preferred stock has not been converted after four years,
Crescent may require us to redeem the series C convertible redeemable preferred
stock at a cost equal to 175% of the liquidation preference. In no event,
however, will Crescent be entitled to obtain 10% or more of our common stock
upon conversion. See "Description of Capital Stock -- Series C Convertible
Redeemable Preferred Stock to be Issued to Crescent." If the price of our common
stock decreases following the distribution, we may be required to redeem the
shares of series C convertible redeemable preferred stock at a significant
premium in order to prevent a dilutive conversion of the series C convertible
redeemable preferred stock into shares of our common stock.

In addition, we are required to redeem for cash the shares of series B
convertible redeemable preferred stock issuable to Medical Dynamics on the fifth
anniversary of issuance, and the holders of the shares of series A convertible
redeemable preferred stock issuable to Ceramco may require the redemption in
cash of their shares of preferred stock at any time following the fifth
anniversary of issuance. There can be no assurance that we will have the
necessary funds to redeem any such shares of our preferred stock, and any such
redemption may have an adverse effect on our business, financial condition and
results of operations.

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At September 30, 2000, we had total cash and cash equivalents of $3.4
million and negative working capital of $5.2 million. We expect the transition
to a subscription pricing model will continue to adversely impact our cash flow
until revenue from subscription fees replaces revenue from software license fees
and hardware sales. We also expect to incur increased operating costs associated
with the development of our ASP applications and other new applications and
services, the establishment of additional business relationships and marketing
and sales expenses in connection with the introduction of new applications and
services. We expect to finance these activities and future acquisitions, if any,
through the issuance of debt or equity securities. Management believes that
projected operating cash flows, together with the proceeds from the Crescent
investment, will be sufficient to meet our short-term and long-term working
capital needs. There can be no assurance that additional sources of capital will
be available on terms acceptable to us. We believe that our existing cash and
anticipated future operating cash flow, combined with availability of funds from
other sources of financing, will be sufficient to fund our working capital
requirements through at least the next twelve months. However, if insufficient
funds are available, we may not be able to increase our marketing and sales
expenses and grow our businesses or effectively compete in any of our markets,
which could materially harm our business, financial condition and results of
operations.

FORWARD-LOOKING STATEMENTS

This section contains forward-looking statements that reflect our current
assumptions and estimates of future performance, the development and timing of
our release of new applications and services, the rate of adoption of our new
applications and services by new and existing customers. Any forward-looking
statements are subject to risks and uncertainties that may cause actual results
and future trends to differ materially from those projected, stated or implied
by the forward-looking statements. Our results and the accuracy of the
forward-looking statements could be affected by the risk factors discussed
elsewhere in this prospectus.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1998, the American Institute of Certified Public Accountants
issued SOP 98-1, "Accounting for the Cost of Computer Software Developed or
Obtained for Internal Use." SOP 98-1 was effective for financial statements for
years beginning after December 15, 1998. SOP 98-1 provides guidance over
accounting for computer software developed or obtained for internal use,
including the requirement to capitalize specified costs and amortization of such
costs. Adoption of this standard did not have a material effect on our
capitalization policy.

Financial Accounting Standards Board Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivatives and Hedging Activities",
as amended, establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging activities.
Historically, we have not entered into derivative contracts either to hedge
existing risks or for speculative purposes. Accordingly, we do not expect
adoption of this new standard on January 1, 2001 to have an effect on our
financial statements.

SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities -- a Replacement of FASB Statement No. 125"
was issued in September 2000 to address securitizations and other transfers of
financial assets and collateral, and requires specified new disclosures.
Specified disclosure provisions are

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effective for fiscal years ending after December 15, 2000 with the accounting
for transfers and servicing of financial assets and extinguishments of
liabilities effective for transactions occurring after March 31, 2001. Adoption
of this new standard is not expected to have an effect on our financial
statements.

The Financial Accounting Standards Board issued Interpretation
("Interpretation") No. 44, "Accounting for Certain Transactions involving Stock
Compensation, an Interpretation of APB Opinion No. 25" which is effective July
1, 2000. Interpretation No. 44 clarifies (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining whether a
stock compensation plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. Adoption of the provisions of the
Interpretation did not have a significant impact on our financial statements.

In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No.
101, -- Revenue Recognition, which outlines the basic criteria that must be met
to recognize revenue and provides guidance for presentation of revenue and for
disclosure related to revenue recognition policies in financial statements filed
with the Securities and Exchange Commission. The effective date for SAB No. 101
is September 1, 2001 and we do not believe that adopting SAB No. 101 will have a
significant impact on our financial position or results of operations.

COSTS RELATED TO YEAR 2000 COMPLIANCE

We recognized the material nature of the business issues surrounding
computer processing of dates into and beyond the Year 2000 and took corrective
action prior to December 31, 1999. Our total Year 2000 compliance costs were
approximately $1.4 million all of which was incurred prior to December 31, 1999.
We do not expect to apply additional material funds to address Year 2000 issues.

As of December 31, 2000, we were not aware of any material disruption in
the operation of our products by our customers as a result of Year 2000 issues.
In addition, as of December 31, 2000, we have not experienced any material
disruptions of our internal computer systems or software applications, and have
not experienced any material problems with the computer systems or software
applications of the third parties with whom we regularly do business as a result
of Year 2000 issues.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risks include fluctuations in interest rates and
variability in interest rate spread relationships, such as prime to LIBOR
spreads. Approximately $18.8 million of our outstanding debt at September 30,
2000 related to long-term indebtedness under InfoCure's credit facility with
FINOVA that will be allocated to PracticeWorks at the time of the distribution.
We expect interest on the outstanding balance of our credit facility to be
charged based on a variable rate related to prime rate or, at our option, the
LIBOR rate. Both rate bases are incremented for margins specified in the
agreement. Thus, our interest rate is subject to market risk in the form of
fluctuations in interest rates. The effect of a hypothetical one percentage
point increase across all maturities of variable rate debt would result in an
increase of approximately $188,000 in pre-tax net loss assuming no further
changes in the amount of borrowings subject to variable rate interest from
amounts outstanding at September 30, 2000. We do not trade in derivative
financial instruments.

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BUSINESS

OVERVIEW

We are an information management technology provider for dentists,
orthodontists and oral and maxillofacial surgeons. Our offerings include
practice management applications, business-to-business e-commerce services,
electronic data interchange, or EDI, services, ongoing maintenance and support
and training. These applications and services are designed to automate the
provider's practice, resulting in greater efficiency, lower costs and higher
quality care. As of December 31, 2000, we had an installed base of approximately
35,000 providers, including approximately 27,000 dentists, 4,000 orthodontists
and 4,000 oral and maxillofacial surgeons in the United States.

We believe that the direct and frequent use of our practice management
applications by providers and office staff throughout the business day combined
with our substantial installed customer base strongly positions us to facilitate
business-to-business e-commerce between our customers and dental, medical and
orthodontic product manufacturers and distributors as well as other suppliers.
Through business relationships we have established to date, orthodontists using
our e-commerce application can make convenient, cost-effective online purchases
of orthodontic supplies, office supplies and promotional materials. We are
developing additional business relationships to enable online purchasing of
dental supplies using our e-commerce application. This will allow us to expand
our e-commerce services to the dental and oral and maxillofacial surgery markets
and further develop this revenue stream.

Our existing practice management applications are installed either on
servers or personal computers located in the provider's office. We are
developing practice management applications that we will deliver through an
applications services provider, or ASP, delivery model whereby the applications
will be remotely hosted on a central server which our customers will access
through a standard Internet browser. Our ASP applications will benefit our
customers primarily by:

- decreasing their total cost of ownership by reducing hardware
requirements and allowing them to outsource maintenance and support
functions;

- automatically providing immediate access to future updates and
improvements to our applications;

- enabling secure, online communication with patients; and

- enabling remote access to their practice management applications.

We expect to release specified modules of our ASP application for use by
dentists in the United States during the second quarter of 2001 and to release
specified modules of our ASP applications for orthodontists and oral and
maxillofacial surgeons by the fourth quarter of 2001. Although our initial ASP
applications will contain the basic functionality required to manage a
physician's office, they will not offer the full functionality of our core
products. We expect to provide these levels of full functionality for our ASP
applications in the dental market in the fourth quarter of 2001 and in the
orthodontic and oral and maxillofacial markets in the third quarter of 2002.

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INFOSOFT ACQUISITION

On December 27, 2000, we entered into an agreement to acquire SoftDent,
LLC, or InfoSoft, the practice management software subsidiary of Ceramco, Inc.,
a wholly owned subsidiary of DENTSPLY. Pursuant to the agreement, Ceramco will
transfer to SoftDent, LLC the assets used in DENTSPLY's business of developing,
marketing, licensing and supporting its SoftDent product in exchange for all of
the membership interests of SoftDent, LLC, and Ceramco will assign these
membership interests to us. In exchange for Ceramco's transfer of membership
interests, we will issue 32,000 shares of our series A convertible redeemable
preferred stock to Ceramco having a stated redemption value of $32.0 million.
These shares of series A convertible redeemable preferred stock will be
convertible into approximately 9.8% of our outstanding common stock at the time
of the distribution.

InfoSoft develops and provides dental practice management systems and
currently provides software for approximately 22,000 dentists. The proposed
acquisition of InfoSoft will strengthen our presence in the dental segment of
the healthcare information systems market by adding approximately 22,000
dentists to our installed customer base. Upon closing of this acquisition, we
expect to have an installed customer base of approximately 49,000 dentists in
the United States, in addition to 4,000 orthodontists and 4,000 oral and
maxillofacial surgeons. The acquisition also affords us opportunities for future
conversion of the acquired customer base to newer technology offered by us, the
potential revenue from our connectivity offerings and the cost savings potential
of eliminating duplicative services and redundancies in staffing. On a pro forma
basis, the acquisition of InfoSoft increased our revenues by $9.5 million and
$6.4 million for the year ended December 31, 1999 and the nine months ended
September 30, 2000, respectively. As a result of the InfoSoft acquisition, our
pro forma net loss increased by approximately $1.1 million and $3.6 million for
the year ended December 31, 1999 and the nine months ended September 30, 2000,
respectively.

MEDICAL DYNAMICS ACQUISITION

Upon completion of the distribution, PracticeWorks will assume InfoCure's
obligation to acquire Medical Dynamics except for InfoCure's obligation to issue
a specified number of shares of InfoCure common stock. The aggregate
consideration to be paid to the Medical Dynamics shareholders in connection with
the merger is approximately $9.9 million. Each Medical Dynamics shareholder of
greater than 100 shares of Medical Dynamics common stock will receive 0.017183
shares of PracticeWorks common stock, 0.07558 shares of PracticeWorks series B
convertible redeemable preferred stock and 0.06873 shares of InfoCure common
stock in exchange for each share of Medical Dynamics common stock outstanding on
a fully diluted basis on the date of the merger. Each holder of 100 or fewer
shares of Medical Dynamics common stock will receive $0.75 in cash for each
share of Medical Dynamics. Assuming 13.2 million shares of Medical

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Dynamics are outstanding on a fully diluted basis on the date of the
acquisition, PracticeWorks will issue approximately 219,500 shares of
PracticeWorks common stock and approximately 965,000 shares of PracticeWorks
series B convertible redeemable preferred stock (with a stated redemption value
of $5.3 million) and will pay approximately $325,000 in cash as consideration
for the merger. Assuming full conversion of the PracticeWorks series B
convertible redeemable preferred stock, the PracticeWorks securities to be
issued in connection with the Medical Dynamics merger will represent, in the
aggregate, less than 2% of PracticeWorks' common stock at the time of the
distribution. InfoCure will issue approximately 878,000 shares of its common
stock as a portion of the consideration for the merger.

The Medical Dynamics merger will require approval of the Medical Dynamics
shareholders. No vote of the PracticeWorks or InfoCure shareholders is required
to approve the merger. Either PracticeWorks or Medical Dynamics may terminate
the merger agreement under specified circumstances, including if both parties
consent in writing; if the merger is not completed by March 31, 2001; and if the
Medical Dynamics shareholders do not approve the merger.

The proposed acquisition of Medical Dynamics will strengthen our presence
in the dental segment of the healthcare information systems market by adding
approximately 4,000 dentists to our installed customer base. Medical Dynamics'
customer base is relatively large and produced a revenue stream of approximately
$2.5 million from customer support contracts for the fiscal year ended September
30, 2000. This acquisition also affords opportunities for future conversion of
the acquired customer base to newer technology offered by us, the potential for
additional revenues from our connectivity offerings and the cost savings
potential of eliminating duplicative services and redundancies in staffing. On a
pro forma basis, the acquisition of Medical Dynamics increased our revenue by
$11.0 million and $3.0 million, respectively, for the year ended December 31,
1999 and for the nine months ended September 30, 2000, and increased our pro
forma net loss by approximately $3.7 million and $3.4 million, respectively, for
the same periods.

CRESCENT INVESTMENT

After the distribution, we will issue 100,000 shares of our series C
convertible redeemable preferred stock to Crescent International in a private
placement. We expect to use the proceeds of this investment to fund our general
operations.

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redeemable preferred stock, provided certain conditions are met. If the series C
convertible redeemable preferred stock has not been converted after four years,
Crescent may require us to redeem the series C convertible redeemable preferred
stock at a premium to the liquidation preference. In addition, PracticeWorks
will recognize an accretive dividend of approximately $938,000 annually related
to this feature. In no event, however, will Crescent be entitled to obtain 10%
or more of our common stock upon conversion. Crescent will also receive
specified registration rights in connection with its investment. Crescent will
have voting rights on all matters on which the holders of our common stock are
entitled to vote.

THE INDUSTRY

CURRENT STATE OF THE DENTAL INDUSTRY

According to the Health Care Financing Administration, healthcare
expenditures were approximately $1.15 trillion, or 13.7% of the U.S. gross
domestic product in 1998. Spending on dental services in the United States
reached approximately $53.7 billion in 1998 and was expected to increase 6.3% in
1999. Dental services are expected to grow at a compound rate of 6.6% annually
through the year 2007, when total dental care would account for $95.2 billion of
U.S. healthcare expenditures. Expenditures on dental services are growing at a
slightly faster pace than total U.S. healthcare expenditures, growing from 4.7%
of the total in 1997 to over 4.8% in 1999. Based on our experience in the
industry, we believe the primary drivers of growth in dental services include
the aging U.S. population, natural teeth being retained longer, changing dental
practices, general population growth and an increase in private dental
insurance. According to Dorland Healthcare Information, a healthcare industry
research firm, orthodontic services were estimated to have represented $4.1
billion of total dental services expenditures in 1999, an increase of 7.0%
annually since 1997.

The market for professional dental products is estimated to have been
approximately $3.1 billion in 1999, growing at annual rate of 6.7% to more than
$3.5 billion by 2001, according to the Detwiler Group, a healthcare industry
research firm. This market is comprised of a wide range of products including
supplies, such as hand instruments, polishing materials and consumables used in
patient therapy, and equipment, such as sterilizers, powered hand pieces and
ultrasonic cleaners. In addition, orthodontists and oral and maxillofacial
surgeons use other specialty equipment and supplies including bonding and wiring
material, anesthesia and surgical supplies.

The traditional supply chain for professional dental and related products
is highly fragmented and inefficient, with more than 300 distributors serving
dental practices, of which fewer than 20 have more than $20.0 million in annual
sales, according to the Detwiler Group. According to Strategic Dental Marketing,
an industry market research firm, the six largest manufacturers of dental
supplies control approximately 45% of the market, but very few sales are made
directly to dental practices. However, the cost effective procurement of
supplies and equipment is highly important to managing dental practice expenses.

According to Dorland Health Information, "the spread of managed care in
dental care is likely to increase in the future as HMOs and other managed care
plans contract with dentists to provide services on a capitated basis in an
effort to control costs. The key to prosperity in the capitated environment will
be cost control." The managed care, fixed-fee and capitated models are replacing
the fee-for-service reimbursement model that has been

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the traditional basis for payment for healthcare services. We believe this shift
will increase the demand for dental practice management applications and
services.

We note that information about the oral and maxillofacial surgery markets
was not available and is not included in industry data about the dental services
market. Therefore, our discussion of trends and forecasts in the dental services
industry is necessarily incomplete.

CURRENT INFORMATION MANAGEMENT TECHNOLOGY SYSTEMS

To more efficiently manage their practices in connection with cost
containment pressures, recent information from the American Dental Association
indicates that dental practitioners are increasingly utilizing information
management technology, including practice management applications, in the
day-to-day operation of their practices. Practice management applications
include a range of software products for dentists, physicians and other
healthcare providers that are used throughout the business day. Most practice
management applications provide several common functions, including:

- administrative functions, such as patient scheduling;

- financial functions, such as patient billing and receivables management;
and

- clinical functions, such as preventative care notification.

However, practitioners have informed us that most existing healthcare practice
management systems are largely inadequate because those systems:

- were not designed to handle the complexity of the pricing pressures
created by managed care;

- cannot be automatically upgraded to reflect rapid technological
advancements;

- are not designed to not take advantage of the efficiencies available
through the Internet;

- require substantial up-front investments; and

- require practices to utilize technology experts to efficiently manage
their information technology systems, which is cost prohibitive for all
but the largest practices.

THE EMERGENCE OF THE APPLICATION SERVICE PROVIDER MODEL

The ASP model of application delivery offers the end user local access to
an application hosted centrally on remote servers, and all ASP maintenance is
performed centrally once for the benefit of the user community. Customers
typically pay a monthly subscription fee, which is often based on the number of
computer terminals or users authorized to access the application. The advantages
of this form of technology outsourcing include:

- the significant reduction or avoidance of up-front costs to purchase
software, application maintenance and upgrades;

- faster implementation;

- a reduced need for in-house information technology maintenance resources;

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- better data storage at a central site;

- remote access to applications; and

- higher level of server security.

These various benefits combine to create a lower total cost of ownership
that can be significant. Gartner Group, an independent research firm, estimates
that companies that choose ASP models can reduce related information technology
costs by 35% to 55% over the life of an application. Because of these many
advantages, Gartner Group further estimates that the overall ASP market will
grow from $900 million in 1998 to approximately $23 billion by 2003. The ASP
model is especially beneficial for small to medium sized businesses, including
dental and related practices, due to the impracticality of retaining in-house
information technology resources.

GROWTH OF THE INTERNET AND BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE

Many companies in a variety of industries have increasingly begun to use
the Internet to utilize business-to-business electronic communication to
streamline complex processes, purchase and sell goods and exchange information
among fragmented groups of customers, manufacturers and distributors. Forrester
Research, an independent research firm, has estimated that U.S.
business-to-business e-commerce, defined as the total volume of inter-company
trade of goods and services in which the final order is placed over the
Internet, will increase from $109 billion in 1999 to $1.3 trillion in 2003.
Business-to-business e-commerce enables purchasers and sellers in fragmented
markets to reduce supply chain inefficiencies. Sellers are able to
cost-effectively access additional markets, streamline their sales, marketing
and distribution operations, reduce their time-to-market and efficiently
distribute updated product information. Buyers can improve their purchasing
process and easily access current product information and a broad range of
products and services.

OPPORTUNITY FOR NEW INFORMATION MANAGEMENT TECHNOLOGY SYSTEMS FOR PHYSICIANS

Information management technology and the Internet are becoming
increasingly important and commercially viable systems to reduce the current
cost burden in many industries. Because of its size, fragmentation and
dependence on information exchange, we believe the healthcare sector, including
the dental, orthodontic and oral and maxillofacial surgery industries, is
ideally suited to benefit from increased use of technology systems to control
costs and manage complex data requirements. However, we believe there are unmet
needs between the older legacy vendors and the new technology vendors. Legacy
vendors can provide systems with advanced features but typically lack systems
that are user-friendly and enable electronic communications. On the other hand,
new technology vendors can provide this Internet connectivity but often lack the
experience, customer base and feature functionality to promote widespread
adoption. We believe a significant opportunity exists for companies that have
experience in delivering information management technology systems to dental
providers, advanced feature functionality and new technology systems that
enhance connectivity through the Internet.

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THE PRACTICEWORKS SYSTEMS

We offer dentists, orthodontists and oral and maxillofacial surgeons
information management technology systems that include:

- PRACTICE MANAGEMENT APPLICATIONS. Our feature-rich practice management
applications are designed to automate dental, orthodontic and oral and
maxillofacial surgery practices. We also provide our customers with the
necessary training, maintenance and support.

- E-COMMERCE SERVICES. The PracticeWorks Exchange, our e-commerce
application, enables convenient, online purchasing of dental and office
supplies and promotional materials offered by our suppliers. Through our
existing business relationships, orthodontists currently use the
PracticeWorks Exchange to order orthodontic supplies, office supplies and
promotional materials. We are developing business relationships to
facilitate online ordering of dental supplies, which will allow us to
begin offering the PracticeWorks Exchange in the dental and oral and
maxillofacial surgery markets.

- ELECTRONIC DATA INTERCHANGE SERVICES. Through the EDI component of our
practice management applications, customers can electronically submit
insurance claims and patient billing information for processing at
national clearinghouses.

- ASP APPLICATIONS. We expect to release specified modules of our ASP
application for use by dentists in the United States during the second
quarter of 2001 and our orthodontic and oral and maxillofacial surgery
ASP applications by the fourth quarter of 2001. These applications will
be remotely hosted on a central server which our customers will access
with a standard Internet browser. Our initial ASP applications will not
offer the full functionality of our core products, as our ASP
applications currently do not offer charting, graphical representation or
imaging of teeth or an electronic medical record. We expect to provide
these levels of full functionality for our ASP applications in the dental
market in the fourth quarter of 2001 and for our ASP applications in the
orthodontic and oral and maxillofacial markets in the third quarter of
2002.

- INTERNET PORTAL. We are developing an Internet portal, or website, that
will provide access to our ASP applications and an Internet-based version
of the PracticeWorks Exchange, enable secure communication between
patients and providers and feature healthcare content for patients and
providers about dentistry, orthodontics and oral and maxillofacial
surgery. We also expect to enter into business relationships which will
enable us to provide additional services to our customers through our
Internet portal. These services may include credentialing, continuing
medical education, or CME, banking, insurance and travel services. We
expect to release our Internet portal in the second quarter of 2001.

- PRACTICE WEBSITES. We plan to offer custom website development services
for our customers, enabling them to use the Internet to provide
information about their practices and market their services. We are also
plan to pursue relationships with companies that will offer tools for our
customers to develop their own websites and provide hosting for our
customers' websites. We expect to release our website development and
hosting services in the second quarter of 2001.

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Our existing applications and services, together with the additional
products we are developing, will provide our customers with the following
significant benefits:

- ROBUST AND SPECIALTY-SPECIFIC FUNCTIONALITY. Our practice management
applications include features that automate the administrative, financial
and clinical information management functions of our customers'
practices. In addition to these standard features, many of our
applications offer specialized features that serve the practice-specific
needs of dental, orthodontic and oral and maxillofacial surgery
customers. Our technologically advanced applications are also scalable,
providing the flexibility to serve practices of all sizes and with
multiple locations.

- CONVENIENT AND COST-EFFECTIVE E-PROCUREMENT. The PracticeWorks Exchange
is designed to reduce the administrative effort and increase the
efficiency of a practice by enabling convenient, online purchasing of
dental, medical and office supplies at competitive prices from a single
application.

- LOWER START-UP AND TOTAL COSTS. We expect use of our ASP applications to
result in a lower total cost of ownership for our customers by reducing
hardware requirements and the need for in-house maintenance and support.
We offer our practice management applications and maintenance and support
services for a fixed, monthly subscription fee, which reduces start-up
costs by eliminating one-time application licensing, maintenance and
support fees. Subscription pricing also provides our customers with
protection against application obsolescence, because we provide customers
with upgrades for no additional charge as we expand the functionality of
our applications. Furthermore, our customers will be able to purchase
hardware directly from Dell Computer Corporation at a discount from its
suggested retail prices and pay for their purchases on an installment
basis, further reducing start-up and overall costs.

- CONVENIENCE OF OUR ASP APPLICATIONS AND INTERNET PORTAL. Our ASP
applications will provide additional benefits, including rapid
implementation and immediate access to upgrades and improvements to our
applications as they become available. Our Internet portal will enable
remote access to our ASP applications, feature Internet-based training
and support services and facilitate secure communication between our
customers and their patients through our ASP applications. We also plan
to offer Internet-based customer support applications that will enable
customers to view the current status of support requests sent using these
applications and provide access to a customer knowledge base of
frequently-asked questions.

OUR STRATEGY

Our objective is to become a leading provider of information management
technology for dentists, orthodontists and oral and maxillofacial surgeons. Our
principal strategies include:

PROMOTE OUR PRACTICE MANAGEMENT APPLICATIONS

We plan to offer customers a choice between the most technologically
advanced of our applications that are installed in the provider's office, which
we call our core applications, and our ASP applications. In addition to
marketing our applications to new customers, we intend to actively encourage
existing customers to upgrade to our ASP

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applications or our core applications. Based on our experience in the
information management technology industry, we believe providers traditionally
upgrade to new practice management systems approximately every five years. We
expect this relatively short upgrade cycle, combined with our strong customer
relationships and our establishment of a centralized data conversion center to
facilitate our efforts to upgrade our existing customers. As our existing
customers upgrade to our ASP or core applications, we believe we can reduce our
operating costs by retiring some of our existing applications and reducing the
overall number of applications we support.

PROMOTE E-COMMERCE BETWEEN OUR CUSTOMERS AND SUPPLIERS

We believe we can capitalize on the direct and frequent use of our practice
management applications by providers and office staff throughout the business
day and our significant market penetration to facilitate e-commerce transactions
between our customers and dental, medical and orthodontic product manufacturers
and distributors as well as other suppliers. We have established business
relationships with Ormco Corporation, a leading supplier of orthodontic
supplies, a division of United Stationers Supply Co., a leading wholesale
provider of office supplies, and Summit Marketing Group, Inc., a leading
supplier of promotional materials. Through these relationships, orthodontists
currently utilize the PracticeWorks Exchange to place orders directly with Ormco
and Summit Marketing Group. Our customers can place orders for office supplies
directly with us, a service we market under the brand name PracticeDepot, and
the orders are fulfilled by e-NITED, a division of United Stationers. We
recently began marketing the PracticeWorks Exchange in the orthodontic market,
and we are continuing to promote the product to that market. In addition, we are
developing business relationships to facilitate online ordering of dental
supplies, which will allow us to begin offering the PracticeWorks Exchange to
the dental and oral and maxillofacial surgery markets.

ESTABLISH A NATIONAL MARKETING IDENTITY AND TARGET NEW CUSTOMERS

We plan to implement a program designed to create a strong brand identity
for PracticeWorks and to gain new customers within the dental, orthodontic and
oral and maxillofacial surgery markets. Our marketing program will include
direct mailings, advertising, participation in trade shows, promotions at user
group meetings and an annual seminar program which will enable us to meet
face-to-face with existing and potential customers in major U.S. cities.

FURTHER LEVERAGE OUR EXISTING CUSTOMER BASE

In addition to our efforts to promote our core and ASP applications and
e-commerce transactions using the PracticeWorks Exchange, we believe there are
other efforts we can take with existing customers to increase revenue and reduce
operating costs. A significant number of our existing customers do not currently
utilize our EDI services. We plan to encourage customers to begin using our EDI
services through a direct marketing campaign. We also recently established a
direct sales group to focus on marketing our maintenance and support services to
our existing customers that do not currently use those services. We expect to
convert substantially all of our customer base to subscription pricing over the
next five years, which will provide our customers with lower start-up and total
costs and will provide us with a substantial source of recurring revenue. We
will market subscription pricing to existing customers primarily in conjunction
with our efforts to

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upgrade those customers to our ASP or core applications or as their existing
maintenance and support contracts expire.

SELECTIVELY ACQUIRE COMPLEMENTARY BUSINESSES AND TECHNOLOGY

Since July 1997, InfoCure has acquired 18 practice management application
companies that will be attributed to us in connection with the distribution.
These acquisitions have enabled us to build a substantial customer base, expand
into new markets and obtain the technology utilized by those businesses. We
intend to pursue additional acquisitions as we identify appropriate
opportunities to further increase our customer base, expand into additional
markets and enhance our product offerings.

OUR APPLICATIONS AND SERVICES

PRACTICE MANAGEMENT APPLICATIONS

APPLICATION FEATURES. Our practice management applications are designed to
automate the administrative, financial and clinical information management
functions for dental, orthodontic and oral and maxillofacial surgery practices.
Our applications include features and functions most essential to our customers'
practices, primarily in the following areas:

- ADMINISTRATIVE MANAGEMENT -- appointment scheduling, patient
registration, resource management, patient correspondence, referral
management and management reporting;

- FINANCIAL MANAGEMENT -- payor billing, patient billing and accounts
receivable management; and

- CLINICAL INFORMATION MANAGEMENT -- complete documentation of patient
visits, patient dental history and treatment planning.

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In addition to providing standard practice management features, our
applications offer advanced features that serve many of the specialty-specific
needs of orthodontic and oral and maxillofacial surgery practices. Some of these
advanced features are summarized in the following chart:

<TABLE>
<CAPTION>
SPECIALTY AREA SPECIALTY SPECIFIC FEATURES
-------------- ---------------------------
<S> <C>
Orthodontics - Contract billing via payment coupons
- Time scheduling by units of doctor and
assistant time per procedure
- Treatment charting
- Diagnostic and treatment planning
- Automatic patient treatment milestone tracking
- Imaging
Oral and Maxillofacial - Medical and dental claim processing and cross-
Surgery coding
- Surgery narrative reporting
- Surgery stage tracking
- Implant tracking
- Pretreatment estimating and treatment planning
- Image integration into patient records
</TABLE>

CURRENT APPLICATIONS. We classify our existing practice management
applications as either "core" or "classic." Core applications are the
applications we currently market to new and existing customers and, together
with our ASP applications, are the focus of our ongoing product development
efforts. Core applications offer advanced functionality and operate with the
latest generation of operating systems and hardware platforms. Classic
applications, while continuing to offer adequate functionality, may lack the
most advanced practice management features and may not be designed for the
latest generation of operating systems. We have designated some of our
applications that offer advanced functionality and operate on the latest
generation of operating systems as classic applications because we have a core
application that we believe better serves the same market. Therefore, our
classic applications will not be further marketed or developed as part of our
strategy to reduce the number of applications we support.

As of December 31, 2000, approximately 34% of our practice sites used core
applications, while approximately 66% used classic applications. We believe
there is a significant opportunity to upgrade those customers utilizing classic
applications to our core applications or, when available, to our ASP
applications. While we no longer actively market our classic applications, we
will continue to provide support for those applications until we determine that
it is no longer cost effective to do so.

ASP APPLICATIONS. We expect to release our ASP application for use by
dentists in the United States during the second quarter of 2001 and our
orthodontic and oral and maxillofacial surgery ASP applications by the fourth
quarter of 2001. Our ASP applications will be remotely hosted on a central
server that our customers will access using a standard Internet browser or
handheld device. We believe this architectural design will result in lower
support costs because maintenance and updating of the application will be
performed once on the central server rather than having to be performed at each
site. For instance, we will only need to update standardized diagnosis and
procedure codes used

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for reimbursement once on the central server for the benefit of all of our
customers. In addition, a customer will require only Internet access and a
standard browser to access and utilize our ASP applications, minimizing hardware
requirements. We are also developing Internet-based training and support
services for our ASP applications which will improve accessibility of these
services by our customers while reducing our cost of providing these services.

The advantages to our customers of our ASP applications over traditional
software applications include:

- decreasing their total cost of ownership by reducing hardware
requirements and allowing them to outsource maintenance and support
functions;

- automatically providing immediate access to future updates and
improvements to our applications;

- enabling secure, online communication with patients;

- enabling remote access to their practice management applications;

- offering better data storage through automatic back ups and storage at
secure data centers;

- providing access to Internet-based support and training; and

- providing faster implementation for new customers.

Our dental ASP application will initially feature the functionality
required by most dental practices, plus the efficiency of the ASP delivery
model. Upon its initial release, the dental ASP application will not include
third party features such as charting, graphical representation or imaging of
teeth or an electronic medical record. We expect to include such functionality
in the fourth quarter of 2001. We will continue to develop our dental ASP
application to offer the full functionality of our core products. In addition,
although our ASP applications for the orthodontic and oral and maxillofacial
surgery markets will contain the minimum functionality required to manage a
physician's office, they will not initially include all of the functionality of
our core applications for those markets, although we will also continue to
develop those applications to offer the full functionality of our core
applications. For example, the orthodontic and oral and maxillofacial surgery
products will not initially contain the third party features or support for
imaging and x-rays. We expect to provide this functionality in the third quarter
of 2002. To the extent that technological advances are achieved and proven in
the general market, we intend to incorporate such advances into our ASP
products.

INTERNET PORTAL

We plan to launch our Internet portal, or website, in the second quarter of
2001 in connection with the release of our dental ASP application. Customers
will access the portal through a standard Internet browser and then log in by
entering a unique personal identification number and password. After logging in,
customers will be able to utilize our ASP applications, Internet-based version
of the PracticeWorks Exchange and our website development services and will have
access to an Internet-based customer service application. In addition, our
customers will be able to offer their patients access to selected features of
our ASP applications through the portal, including a feature that will enable
secure, online communication between patient and provider. Practices will also
have the

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option to allow their patients to view their provider's schedule, request an
appointment and receive confirmation of the appointment, view their clinical
records, obtain account information and view the status of insurance claims.
Access to our ASP applications will be user-specific, so that customers and
patients will have different levels of access and distinct user groups within a
provider's office staff may be given varying levels of access. We also expect to
enter into business relationships which will enable us to provide additional
services to our customers through our Internet portal. These services may
include credentialing, continuing medical education, Internet-based banking,
insurance and travel services. Our Internet portal will feature relevant content
regarding the dental, orthodontic and oral and maxillofacial surgery markets.

THE PRACTICEWORKS EXCHANGE

The PracticeWorks Exchange, our e-commerce application, is designed to
reduce administrative effort and increase the efficiency of the procurement
function of a practice by enabling online purchasing of dental, orthodontic and
office supplies and promotional materials. The PracticeWorks Exchange features
an electronic catalogue of the supplies offered by our e-commerce suppliers.
Customers create orders by selecting products from this catalogue, and the
PracticeWorks Exchange sends the order to be fulfilled by one of our e-commerce
suppliers. The PracticeWorks Exchange also offers an inventory management
function which can automatically generate practice-specific supply orders for
orthodontic supplies based on the pre-determined needs of the practice.

We introduced the PracticeWorks Exchange in the orthodontic market in the
second quarter of 2000. Through our business relationships, orthodontists use
the PracticeWorks Exchange to order orthodontic supplies directly from Ormco and
promotional supplies directly from Summit Marketing Group. Customers place
orders for office supplies directly with us, a service we offer under the brand
name PracticeDepot. Through a business relationship with us, e-NITED fulfills
those office supply orders for our customers. We are continuing to develop
additional business relationships with providers of dental supplies, which will
allow us to expand our marketing of the PracticeWorks Exchange and PracticeDepot
to the dental and oral and maxillofacial surgery markets. We plan to include the
PracticeWorks Exchange as an additional component of our core practice
management applications for no additional charge when we provide those
applications to new customers or to existing customers who upgrade to our core
applications.

We plan to place into general release an Internet-enabled version of the
PracticeWorks Exchange during the first quarter of 2001. Customers will be able
to access this version of the PracticeWorks Exchange directly through an
Internet browser. The Internet-enabled version of the PracticeWorks Exchange
will provide real time access to product information and special promotional
offerings by us or our e-commerce suppliers, in addition to providing customers
the other advantages of an application delivered through the ASP model.
Initially, the Internet-enabled version of the PracticeWorks Exchange will not
include inventory management functionality.

ELECTRONIC DATA INTERCHANGE

Using the EDI component of our practice management applications, customers
are able to (1) electronically submit insurance claims to independent national
clearinghouses that then submit the claims to payers and (2) submit patient
billing information to clearinghouses that process, print and mail patient
statements and provide billing reports to

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the customer. The use of our EDI services can improve a practice's cash flow by
enabling more accurate and rapid submission of claims to third-party payers and
statements to patients. Furthermore, our EDI application is an integrated
component of most of our practice management applications, enabling customers to
submit information to clearinghouses without the need to access a separate
system or re-enter data. We expect to expand our EDI services to enable
customers to determine patient insurance eligibility in the second quarter of
2001.

WEBSITE DEVELOPMENT SERVICES

Healthcare practices are increasingly establishing their own websites to
market their services and provide information about their practices over the
Internet. To serve this growing demand, we plan to offer custom website
development services either directly or through a business relationship we plan
to form with an independent website developer. We also plan to develop a
business relationship with a website developer to provide tools for practices to
develop their own websites. Customers will access these website development
services through our Internet portal. Through our relationship with
GlobalCenter, we plan to offer hosting for our customer's websites. We expect to
begin offering these website development and hosting services in connection with
launching our Internet portal during the second quarter of 2001.

SUBSCRIPTION PRICING MODEL

Under our subscription pricing model, our customers pay a fixed, monthly
subscription fee for our practice management applications, maintenance and
support. The subscription fee is based on the practice specialty and number of
authorized system users, which may include practitioners and support staff. The
subscription fee is set by a contract that is typically three years in length,
but may be terminated following the first year if the customer provides notice
at least 90 days prior to the end of the first year. Subscription fees also
include access to the PracticeWorks Exchange and our EDI application, although
customers pay us or an e-commerce supplier for supplies ordered through the
PracticeWorks Exchange and pay us a fee per EDI transaction. Subscription fees
for users of our ASP applications will also include access to the applications
offered through our Internet portal. In some cases, subscription fees will
include connection to an Internet service provider, or ISP. We plan to offer
this service by establishing a business relationship with an ISP. We will also
provide subscribers with updates to our practice management applications as they
become available for no additional charge.

BUSINESS RELATIONSHIPS

We believe the direct and frequent use of our practice management
applications by providers and their office staff throughout the business day
combined with our substantial installed customer base strongly positions us to
facilitate e-commerce between providers and dental, medical and orthodontic
product manufacturers and distributors as well as other suppliers. To pursue
these opportunities, we intend to form business relationships with companies
that can provide fulfillment of supply orders placed through the PracticeWorks
Exchange. In addition, we intend to enter into business relationships with (1) a
website developer to offer website development services and tools to our
customers and (2) vendors that will provide healthcare content that we will
offer our customers and

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their patients through our Internet portal. To date, we have entered into
business relationships with the following companies:

GLOBALCENTER. GlobalCenter, a wholly-owned subsidiary of Global Crossing,
Ltd., is a leading provider of complex web hosting services to business
customers worldwide. We have entered into an agreement with GlobalCenter under
which GlobalCenter will provide our customers with Internet connectivity and
related services. The agreement, which terminates on October 1, 2001, is
automatically renewed annually unless terminated earlier by either party.

ORMCO CORPORATION. Ormco Corporation, a subsidiary of Sybron Dental
Specialities Inc., is a leading provider of orthodontic supplies and other
industry-related goods. We have entered into an agreement with Ormco under which
Ormco will be our exclusive supplier of orthodontic supplies ordered by our
customers through the PracticeWorks Exchange. The two year agreement provides
that Ormco will rebate to us a percentage of each sale generated through the
PracticeWorks Exchange, a portion of which we will rebate to the customer. The
agreement will renew automatically for subsequent one year terms unless
terminated earlier by either party.

E-NITED. e-NITED is a division of United Stationers Supply Co., the
leading wholesale distributor of business products and office supplies. We have
entered into an agreement with e-NITED under which e-NITED fulfills orders for
office supplies placed by our customers using the PracticeWorks Exchange.
Customers place orders with PracticeDepot, the trade name under which we offer
office supplies, and we then send the orders to e-NITED for fulfillment. e-NITED
has order processing facilities nationwide and will ship orders from the closest
facility to the PracticeWorks customer, shipping on the same day if the order is
received by 2 p.m. e-NITED bills us the for cost of the orders processed and we
are responsible for billing our customers and providing payment to e-NITED.

SUMMIT MARKETING GROUP, INC. Summit Marketing Group, Inc. is a leading
supplier of marketing and promotional materials. We have entered into an
agreement with Summit under which Summit will be our exclusive supplier of
promotional materials for orthodontists ordered by our customers through the
PracticeWorks Exchange. The two year agreement provides that Summit will pay us
a royalty based on the amount of sales generated through the PracticeWorks
Exchange. The agreement will renew automatically for subsequent one year terms
unless terminated earlier by either party.

DELL COMPUTER CORPORATION. Dell Computer Corporation is a leading
designer, developer and manufacturer of personal computers and also provides
personal computer hardware, software and service and support programs to its
customers. We have entered into an agreement with Dell under which Dell will be
the exclusive supplier of computer hardware and related products to our
customers. Under the agreement, our customers purchase their computer hardware
directly from Dell. In addition, Dell will provide general service and support
for its products. In connection with its hardware products, Dell also licenses
some of its software to us for use by our customers. Dell grants our customers a
discount from its suggested retail prices. The one year agreement renews
automatically for successive one year terms unless terminated earlier by either
party.

The rebates and royalties payable to us pursuant to our business
relationships generally range from 5% to 10% of sales generated through the
PracticeWorks Exchange. Revenue is generated with respect to the e-NITED
agreement based on sales volume of

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purchases through the PracticeWorks Exchange. Revenue is generated with respect
to the Dell agreement by a royalty arrangement.

SALES AND MARKETING

SALES

We generate sales primarily through a direct sales force that is organized
by practice area and consisted of 40 sales representatives as of December 31,
2000. Our sales force generates sales to new customers and promotes and sells
new applications and services to existing customers. We recently established an
additional dedicated sales force to focus on promoting our maintenance and
support services to our existing customers who do not utilize those services. We
recently introduced a new application for use by our sales force which provides
tools for remote generation of proposals, quotes and licenses, lead tracking,
sales forecasting and customer base forecasting.

We plan to focus our sales efforts on the following initiatives:

- aggressively promote our ASP and core applications to new customers or as
upgrades for existing customers;

- continue our efforts to enroll orthodontic customers in the PracticeWorks
Exchange and aggressively promote enrollment in the PracticeWorks
Exchange by dentists and oral and maxillofacial surgeons as we introduce
the application in those markets;

- promote use of our maintenance and support services by existing customers
who do not currently subscribe to these services through our new
dedicated sales force;

- increase utilization of our EDI applications by new and existing
customers through a direct marketing campaign; and

- encourage existing customers to convert to subscription pricing as their
maintenance and support contracts expire or when they upgrade to either
our ASP applications or our core products.

InfoSoft currently uses a value added reseller network to distribute products
and services. Following completion of the InfoSoft acquisition, we intend to
review the agreements governing the reseller network to determine what, if any,
changes will be required to integrate distribution of products and sales with
our existing sales strategy.

MARKETING

In connection with the introduction of our subscription pricing model, the
continued rollout of the PracticeWorks Exchange and the upcoming release of our
ASP application and Internet portal, we have focused our resources on an
enhanced marketing program. Our new marketing program, which we intend to launch
in the first quarter of 2001, includes the following components:

- INTENSE BRANDING CAMPAIGN. We will brand all components of our
technology systems, except for specified components associated with the
InfoSoft acquisition, with our PracticeWorks logo. While using our
practice management applications, the user will constantly see our
PracticeWorks logo. In addition, we will use the "PracticeWorks" name in
connection with all trade shows and medical journals and

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other areas in which we have historically advertised individual products
under different names.

- NATIONAL SEMINAR PROGRAM. Our ongoing seminar program will enable us to
meet face-to-face with thousands of customers in major U.S. cities to
strengthen our customer relationships and apprise them of the new
products and features available through our practice management
applications and services.

- LEAD GENERATION. We are implementing a third party lead generation
application to track our contact with existing and potential customers to
increase the efficiency and management of our sales and our marketing
efforts.

We target our new and existing customers principally through customer
referrals, participation in trade shows, our seminar program, direct mailings
and advertising.

CUSTOMERS

As of December 31, 2000, we had an installed base of approximately 35,000
providers in the United States, including 27,000 dentists, 4,000 orthodontists
and 4,000 oral and maxillofacial surgeons. We have systems installed in all 50
states.

In addition, as of December 31, 2000, through the result of an acquisition
in April 2000, approximately 2,200 dentists in Sweden, representing
approximately 28% of all dentists in Sweden, and approximately 1,500 dentists in
the United Kingdom, representing approximately 5% of all dentists in the United
Kingdom, utilized our practice management applications. These providers
currently utilize our core and classic applications, which we expect will
continue to be the primary applications that we promote and support
internationally.

CUSTOMER SERVICE AND SUPPORT

Our support staff provides a wide range of customer support functions. We
employ functional and technical support personnel who work directly with our
customers to resolve technical, operational and application problems or
questions.

Our support group also assists with the implementation process.
Implementation consists of training, hardware installation and, with respect to
new customers or existing customers that are upgrading from our classic systems,
data conversion. We train providers and their staffs on the use of our products
through on-site training and we regularly offer seminar training in major U.S.
cities. Data conversion is generally performed while providers are using their
existing practice management systems so that the day-to-day operations of their
practices are not interrupted. We recently established a centralized data
conversion center which we believe will enable us to more efficiently and
effectively perform customer data conversions. Hardware support is generally
provided directly by the manufacturer or its authorized reseller, although we
provide the first level of phone support and dispatch the service call to the
appropriate vendor.

We recently established a centralized support center for our classic
applications and we intend to migrate a majority of the support for our classic
applications to customer support personnel at this location. We believe this
will offer a higher level of support to our customers at reduced expense levels.
We plan to leverage the capabilities of our support staff through the
implementation and use of sophisticated computer software that keeps track of
solutions to common computer and software related problems. Use of this

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software will allow our support staff to learn from the experience of other
personnel within our company and is expected to reduce the time required to
respond to support requests.

We are also developing Internet-based training and maintenance and support
services for our ASP applications. Internet-based training will allow our
customers and their office staff to learn to utilize their practice management
systems as needed and on a more consistent basis than periodic on-site training
or seminars can offer. The benefit of training services being available on a
constant basis is particularly important due to frequent turnover in providers'
office personnel. Our Internet-based training will include competency testing
which we expect to increase the proficiency of users and to reduce unnecessary
maintenance and support requests. We expect our Internet-based training will
also reduce our training expenses by reducing the need for on-site training and
seminars. Our Internet-based maintenance and support services will include help
menus and a summary of frequently asked questions to allow users to solve common
problems. We expect these Internet-based services to reduce our costs by
reducing the necessary number of maintenance and support personnel.

As of December 31, 2000, we had 185 employees performing customer support
functions.

PRODUCT DEVELOPMENT

We are currently focusing our product development efforts on our core
applications, ASP applications and our Internet portal and the services it will
enable. We will devote our product development resources on an ongoing basis to
the continuing development of our applications and services. Our product
development staff will develop additional functionality for our applications by
regularly communicating with our customers, our customer service and support
staff and our sales representatives to ensure our applications meet market
demands. Our product development staff will also develop additional
functionality by assessing the best attributes of our classic applications and
applications of companies we may acquire. Further, we have established market
specific product advisory councils, consisting of cross-functional product
development staff, to advise us with respect to the products requested by their
customers. We also intend to establish end user groups to provide feedback to us
with respect to the needs of the marketplace. As of December 31, 2000, we had 39
employees performing product development functions. We spent $2.5 million on
research and development during the nine months ended September 30, 2000, $4.2
million during the year ended December 31, 1999, $3.5 million during the year
ended December 31, 1998 and $3.3 million during the eleven months ended December
31, 1997.

TECHNOLOGY

CORE APPLICATIONS

We believe that PC-based practice management systems are standardizing on
the Windows family of operating systems. Our PC-based core applications use
industry standard relational database software, such as SQL-Server or B-Trieve,
and Microsoft Corporation's operating system software, such as Windows 95,
Windows 98 and Windows NT, and networking software, such as Windows Terminal
Server. We have adopted 32-bit client/server technology for our PC-based core
applications, increasing their scalability in local and wide area network
environments.

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ASP APPLICATIONS

We have established a business relationship with GlobalCenter, which will
host our ASP applications on secure servers located at hosting centers it
maintains. GlobalCenter will provide continuous back up of data. All data will
be transmitted through secure socket layers and will be 128-bit encrypted, the
highest level commercially available. Our ASP applications will utilize an
Oracle relational database and the remaining components will be Microsoft
Corporation applications, including Microsoft Transaction Server, Visual Basic,
and Internet Information Server.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

Our success and ability to compete depend in part on our ability to protect
our proprietary intellectual property rights in our applications and services.
To protect these rights, we rely primarily on a combination of copyright, trade
secret and trademark laws, confidentiality agreements with third parties, and
protective contractual provisions such as those contained in agreements with
companies with which we have business relationships, vendors and customers. In
addition, we expect our employees to sign an agreement to comply with our
corporate policies and procedures, including our policy regarding non-
disclosure of confidential information. Despite our efforts to protect our
proprietary information, unauthorized parties may attempt to obtain and use our
proprietary information. Policing unauthorized use of our proprietary
information is difficult, and the steps we have taken might not prevent
misappropriation, particularly in foreign countries where the laws may not
protect our proprietary rights as fully as do the laws of the United States. In
addition, competitors may independently develop similar applications and
services similar to ours.

COMPETITION

The market for healthcare information services is intensely competitive,
rapidly evolving, highly fragmented and subject to rapid technological change.
Our competitors can be categorized as follows:

- national and regional practice management application providers,
including EagleSoft, a subsidiary of Patterson Dental Supply, Inc., and
Dentrix Dental Systems, Inc., a subsidiary of Henry Schein, Inc.;

- application services providers, such as the Trizetto Group, Inc.;

- traditional and online suppliers of dental, medical and office supplies,
such as MediBuy, OfficeDepot.com, and Staples.com; and

- website development companies.

Each of these types of companies can be expected to compete with us within
various segments of the market for information management technology for
dentists, orthodontists and oral and maxillofacial surgeons. Some of our
competitors may have greater financial, development, technical, marketing and
sales resources than we have.

Furthermore, major software information systems companies and other
entities, including those specializing in the healthcare industry that are not
presently offering

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applications that compete with our applications and services, may enter our
markets. We believe that the primary competitive factors in our industry are:

- product features and functionality;

- customer service, support and satisfaction;

- price;

- ease of implementation; and

- ongoing product enhancements.

Although our position in the market as compared to our competitors is
difficult to characterize due principally to the variety of current and
potential competitors and the evolving nature of our market, we believe that we
presently compete favorably with respect to all of these factors.

PRIVACY ISSUES

Because our applications and services are utilized to transmit and manage
highly sensitive and confidential health information, we must address the
security and confidentiality concerns of our customers and their patients. To
enable the use of our applications and services for the transmission of
sensitive and confidential medical information, we utilize advanced technology
designed to ensure a high degree of security. This technology generally
includes:

- security that requires a password to access our systems;

- user access restrictions that allow our customers to determine the
individuals who will have access to data and what level of access each
individual will have;

- encryption of data relating to our ASP applications and e-commerce
transactions transmitted over the Internet; and

- use of a mechanism for preventing outsiders from improperly accessing
private data resources on our internal network and our ASP applications,
commonly referred to as a "firewall."

The level of data encryption utilized by our products is in compliance with
the encryption guidelines set forth in the proposed rule regarding security and
electronic signature standards in connection with Health Insurance Portability
and Accountability Act of 1996. We also encourage each of our customers to
implement their own firewall to protect the confidentiality of information being
transferred into and out of their computer network.

Internally, we work to ensure the safe handling of confidential data by
employees in our electronic services department by:

- using individual user names and passwords for each employee handling
electronic data; and

- requiring each employee to sign an agreement to comply with all company
policies, including our policy regarding handling confidential
information.

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<PAGE> 104

We monitor proposed regulations that might affect our applications and
services, in order to ensure that we are in compliance with such regulations
when and if they are effected.

GOVERNMENT REGULATION

HEALTHCARE REGULATION

As a participant in the healthcare industry, our operations and
relationships are subject to regulation by federal and state laws and
regulations and enforcement by federal and state governmental agencies.
Sanctions may be imposed for violation of these laws. We believe our operations
are in substantial compliance with existing laws that are material to our
operations.

HIPAA. The Health Insurance Portability and Accountability Act of 1996,
known as HIPAA, required the Secretary of the Department of Health and Human
Services, referred to as the Secretary, to promulgate national standards to
facilitate the electronic exchange of health information and to ensure the
confidentiality and security of such information.

A substantial part of our activities involves the receipt or delivery of
confidential health information concerning patients of the dentists,
orthodontists and oral and maxillofacial surgeons with whom we have direct
relationships. For example, we transfer confidential health information to
national healthcare clearinghouses through our EDI services and we will transmit
confidential health information over the Internet in connection with offering
our ASP applications. On December 28, 2000, the Secretary published a final rule
setting standards to limit the permissible use and disclosure of individually
identifiable health information by health care providers, health plans and
health care clearinghouses, known collectively as "covered entities." Certain
requirements of the rule extend to "business associates" of the covered
entities. The covered entities are required to enter into agreements with their
business associates, extending applicable provisions of the rule to those
business associates. The covered entities are responsible for enforcing those
contractual provisions. The Secretary's actions are mandated by HIPAA because
Congress did not pass legislation protecting health information privacy by the
August 1999 deadline set by HIPAA.

Because of the broad definition of "business associates" under the final
privacy rule, we will at a minimum be considered to be business associates of
covered entities. The rule establishes a complex regulatory framework on a
variety of subjects, including (1) disclosure and use of health information, (2)
individuals' rights to access and amend their health information, (3)
individual's rights to an accounting of disclosures and (4) administrative,
technical and physical safeguards required of covered entities that maintain or
transmit protected health information. The final rule generally prohibits any
disclosure or use of protected health information except as authorized either by
the rule or by the patient under standards set by the final rule.

In addition to the federal privacy rule described above, most states have
enacted patient confidentiality laws which prohibit the disclosure of
confidential medical information. The federal privacy rule would establish
minimum standards and would preempt conflicting state laws which are less
restrictive than HIPAA regarding health information privacy but would not
preempt conflicting state laws that are more restrictive than HIPAA. The rule
provides that covered entities must comply with the health information privacy
standards within two years after the effective date of the final rule, or
February 26,

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<PAGE> 105

2003 in the case of most covered entities. The final rule may require
substantial changes to our applications and services, policies and procedures.

In addition to the federal privacy rule, on August 12, 1998 the Secretary
issued proposed regulations addressing security standards regarding transmission
of health information data under HIPAA. The security standards address various
areas, including, administrative procedures, physical safeguards, technical
security services and technical security mechanisms. Security standards may
require us to enter into agreements with certain of our customers restricting
the dissemination of health information and requiring implementation of
specified security measures. Final regulations are expected at an undetermined
date and will require compliance two years after the effective date of the final
rule. Although we are working to design our applications and services to comply
with the proposed security standards, there can be no assurance that final
security regulations will not require additional modifications to our
applications, policies and procedures.

FDA REGULATION. The Food and Drug Administration, or FDA, generally has
the authority to regulate medical devices, including computer applications, when
devices are indicated, labeled or intended to be used in the diagnosis of
disease or other conditions, or in the cure, mitigation, treatment or prevention
of disease, or are intended to affect the structure or function of the body. We
do not believe that any of our current applications or services are subject to
FDA regulation as medical devices, however, expansion of our application and
service offerings could subject us to FDA regulation. In addition, there can be
no assurance that the FDA will not assert jurisdiction over certain aspects of
our business. FDA jurisdiction over our business, including our applications and
services, could materially impact our ability to introduce new applications and
services in a timely manner because of the FDA approval process. In addition,
compliance with FDA regulations could be expensive.

REGULATION OF THE INTERNET

Laws and regulations applicable to communications or commerce over the
Internet may be adopted covering user privacy, pricing, content, copyright,
distribution and characteristics and quality of products and services. In
addition, some states or foreign countries could apply existing laws concerning
issues such as property ownership, sales tax, libel and personal privacy to
transactions conducted over the Internet. Additional laws or regulations or
application of laws to transactions over the Internet could require us to change
our operations or increase our cost of doing business.

REGULATION OF OUR INTERNATIONAL OPERATIONS

We currently have international offices in Australia, the United Kingdom
and Sweden. We also have customers located in approximately 15 additional
countries. Because we conduct business with dentists, orthodontists and oral and
maxillofacial surgeons in foreign countries, we may be subject to additional
laws and regulations concerning communications or commerce over the Internet,
international taxes and tariffs. Such laws and regulations could require us to
change our international operations or increase our cost of doing business
internationally.

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<PAGE> 106

EMPLOYEES

As of December 31, 2000, we had 396 full-time employees. Our employees are
not subject to any collective bargaining agreements. We believe our
relationships with our employees are satisfactory.

FACILITIES

Our principal executive offices are located in a facility InfoCure owns in
Atlanta, Georgia. Following the distribution, we intend to operate eight
additional facilities currently leased by InfoCure. These facilities are located
in Sacramento, California; Norcross, Georgia; Indianapolis, Indiana; Norwood,
Massachusetts and Lincoln, Nebraska and we have an office in each of Australia,
the United Kingdom and Sweden. The U.S. leases have expiration dates ranging
from June 2002 to June 2004. Upon completion of the distribution, we will assume
the leases on all of these facilities. We believe that our facilities are
adequate for our current operations and that additional leased space can be
obtained if needed.

LEGAL PROCEEDINGS

There are no material legal proceedings to which we are a party and our
management is unaware of any contemplated actions against us. However, pursuant
to the Distribution Agreement, we have agreed to assume any and all contingent
liability arising from the definitive resolution of the litigation filed on June
21, 2000 against InfoCure by Joseph Hafner. On June 21, 2000, a lawsuit styled
Joseph Hafner v. InfoCure Corporation et al., was filed in the United States
District Court in and for the Eastern District of Pennsylvania. The lawsuit
alleges that InfoCure breached the terms of a registration rights agreement
whereby InfoCure was required, prior to a specified date, to effect the
registration for resale with the Securities and Exchange Commission of shares of
InfoCure's common stock which the plaintiff owned. The complaint further alleges
breach of fiduciary duties owed to the plaintiff as a stockholder of InfoCure
and tort claims against InfoCure as a result of the alleged failure to timely
register shares for resale. The complaint seeks compensatory damages as a result
of InfoCure's alleged breach of this agreement, as well as reimbursement for the
plaintiff's attorney's fees and associated costs and expenses of the lawsuit.
Management of PracticeWorks believes that the ultimate resolution of this matter
will not have a material adverse effect on our financial condition.

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<PAGE> 107

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth information regarding our executive officers
and directors as of November 30, 2000.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Richard E. Perlman.................. 54 Chairman of the Board and Director
James K. Price...................... 42 Chief Executive Officer, President and Director
James C. Davis, D.M.D............... 53 Executive Vice President
James A. Cochran.................... 53 Senior Vice President, Chief Financial Officer
</TABLE>

Richard E. Perlman has been Chairman of the Board since our formation in
August 2000. Mr. Perlman has served as InfoCure's chairman and treasurer since
December 1997 and as a director of InfoCure since March 1997. Mr. Perlman will
resign from all positions with InfoCure upon completion of the distribution.
From December 1997 until October 1998, Mr. Perlman served as InfoCure's chief
financial officer. Mr. Perlman is the founder of Compass Partners, L.L.C., a
merchant banking and financial advisory firm specializing in corporate
restructuring and middle market companies, and has served as its president since
its inception in May 1995. From 1991 to 1995, Mr. Perlman was executive vice
president of Matthew Stuart & Co., Inc., an investment banking firm. Mr. Perlman
received a B.S. in Economics from the Wharton School of the University of
Pennsylvania and a Masters in Business Administration from the Columbia
University Graduate School of Business.

James K. Price has been our Chief Executive Officer and a director since
our formation in August 2000. Mr. Price is a founder of InfoCure and has been
its executive vice president and secretary since its inception in November 1996.
Mr. Price will resign from all positions with InfoCure upon completion of the
distribution. He has served as a director of InfoCure since its inception. Mr.
Price served as executive vice president of American Medcare from 1996 until
1997 and was vice president from 1993 to 1995. Mr. Price co-founded
International Computer Solutions and has served as its executive vice president
since 1994, as vice president from 1987 to 1994 and as president from 1985 to
1987. In addition, from 1991 to 1993, Mr. Price was a vice president of Newport
Capital. From 1983 to 1985, Mr. Price was healthcare sales manager of Executive
Business Systems, a practice management systems supplier, and from 1981 to 1983
was with Moore Business Systems. Mr. Price holds a B.A. in Marketing from the
University of Georgia.

James C. Davis, D.M.D., has served as our Executive Vice President since
our formation in August 2000. Dr. Davis manages our e-commerce operations. Dr.
Davis has served as Chairman of InfoCure's orthodontic group since February
1999. Dr. Davis will resign from all positions with InfoCure upon completion of
the distribution. He has been a practicing orthodontist for the past 25 years
and, in 1982, was a co-founder of OMSystems, Inc., the largest orthodontic
practice management software company in North America which we bought in
February 1999. Dr. Davis received a D.M.D. from the University of Alabama School
of Dentistry and a Certificate of Orthodontics from the

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<PAGE> 108

UCLA School of Dentistry. Dr. Davis previously served as president of the
Georgia Association of Orthodontists.

James A. Cochran has served as our Chief Financial Officer since our
formation in August 2000. He has been InfoCure's chief financial officer since
August 1999 but will resign from all positions with InfoCure upon completion of
the distribution. From 1992 until joining InfoCure, Mr. Cochran was a member of
the accounting firm of BDO Seidman, LLP, serving as a partner since 1995. Mr.
Cochran is a Certified Public Accountant. Mr. Cochran received a B.B.A. in
Accounting and an M.B.A. in Corporate Finance from Georgia State University.

BOARD OF DIRECTORS

We currently have two directors, and we intend to elect four additional
directors upon completion of the distribution. Our certificate of incorporation
provides that the terms of office of the directors are divided into three
classes: Class I, whose term will expire at the annual meeting of stockholders
to be held in 2002; Class II, whose term will expire at the annual meeting of
stockholders to be held in 2003; and Class III, whose term will expire at the
annual meeting of stockholders to be held in 2004. James K. Price is a Class II
director and Richard E. Perlman is a Class III director. There is currently no
director in Class I. So long as any shares of the series A convertible
redeemable preferred stock to be issued to Ceramco are outstanding, we will be
required to have a minimum of six directors, and the holders of such series A
convertible redeemable preferred stock, voting as a class, will be entitled to
elect one director to our board of directors. However, such holders will not be
entitled to vote with respect to the election of our remaining directors. As we
elect additional directors following the distribution, we will place them into
classes so that, as nearly as possible, each class will consist of one third of
the total number of directors at that time. At each annual meeting of
stockholders after the initial classification or special meeting in lieu
thereof, the successors to directors whose terms will then expire will be
elected to serve from the time of election and qualification until the third
annual meeting following election or special meeting held in lieu thereof. This
classification structure of the board of directors may have the effect of
delaying or preventing changes in control or management of PracticeWorks.

Our bylaws provide that the authorized number of directors may be changed
by an amendment to the bylaws adopted by our board of directors or by the
stockholders. In addition, our certificate of incorporation and our bylaws
provide that, in general, vacancies on the board may be filled by a majority of
directors in office, although less than a quorum.

COMMITTEES OF THE BOARD

Upon completion of the distribution, we will establish an audit committee,
all of whose members will consist of independent directors. The audit committee
will review, act on and report to our board of directors on various auditing and
accounting matters, including the selection of our independent accountants, the
scope of our annual audits, fees to be paid to the independent accountants, the
performance of our independent accountants and our accounting practices.

Upon completion of the distribution, we will establish a compensation
committee, all of whose members consist of independent directors. Our
compensation committee will establish salaries, incentives and other forms of
compensation for officers and other

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employees. This committee will also administer our incentive compensation and
benefit plans.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

We do not currently have a compensation committee. Prior to completion of
the distribution, all compensation matters were handled by the full board of
directors. No interlocking relationships have existed between our board of
directors and the board of directors or compensation committee of any other
company.

DIRECTOR COMPENSATION

Our directors do not currently receive cash compensation for their services
as directors, but are reimbursed for their reasonable and necessary expenses for
attending board and board committee meetings. Members of the board who are not
our employees, or employees of any parent, subsidiary or affiliate of
PracticeWorks, will be eligible to participate in our stock option plan. Such
members will receive options to purchase 5,000 shares of our common stock upon
election to the board and will receive options to purchase 2,500 shares of our
common stock for each year of service. The exercise price of the options will be
the fair market value of our common stock on the date of grant.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

PracticeWorks has never paid any compensation to its executive officers.
During the fiscal years ended December 31, 1999 and 1998 and the eleven months
ended December 31, 1997, the individuals were compensated in accordance with
InfoCure's plans and policies. The following tables set forth certain
information with respect to the annual and long-term compensation paid by
InfoCure for services to InfoCure for our chief executive officer and other
executive officers. The amounts set forth below do not reflect the compensation
these persons will receive from PracticeWorks following the distribution.

In addition, PracticeWorks has never granted stock options to executive
officers. All references in the following tables to stock and stock options
relate to awards of stock and stock options granted by InfoCure. InfoCure has
not granted stock appreciation rights. InfoCure options held by InfoCure
employees who will become PracticeWorks employees may be replaced by
PracticeWorks options. Employees whose InfoCure options are fully vested as of
the distribution date will have the right to surrender their InfoCure options
for options to purchase PracticeWorks common stock for a period of 20 days
following the distribution date. Any InfoCure employees who will become our
employees who choose not to surrender their vested InfoCure options during this
time period will continue to hold InfoCure options which will expire according
to their terms. Employees who are not fully vested in InfoCure options as of the
distribution date will have their InfoCure options exchanged for PracticeWorks
options as of the distribution date.

The option price for the shares of PracticeWorks common stock subject to
each PracticeWorks option will be determined by dividing the option price for
the related InfoCure option by the PracticeWorks conversion factor, and the
number of shares of PracticeWorks common stock subject to each PracticeWorks
option will be determined by multiplying the number of shares subject to the
related InfoCure option by the PracticeWorks conversion factor. The
PracticeWorks conversion factor is a number equal to (1) the closing price of

InfoCure common stock on the Nasdaq National Market on the

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<PAGE> 110

distribution date, divided by (2) the opening price of PracticeWorks common
stock on the day following the distribution date.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL -------------------------
COMPENSATION OTHER RESTRICTED SECURITIES
NAME AND PRINCIPAL ------------------ ANNUAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(2) OPTIONS/SARS COMPENSATION
------------------ ---- -------- ------- --------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard E. Perlman.... 2000 $215,833 $ -- $ -- $ -- 1,200,100 --
Chairman of the 1999 120,000 23,500 17,380 -- 440,100 --
Board 1998 120,000 33,333 -- 367,500 320,000 --
James K. Price........ 2000 209,375 4,000 -- -- 1,200,200 --
Chief Executive 1999 125,000 19,500 19,452 -- 440,200 --
Officer and 1998 125,000 33,333 19,270 367,500 320,200 --
President
James C. Davis(3)..... 2000 177,083 20,030 18,000 -- 700,200 --
Executive Vice 1999 109,375 20,000 14,000 -- 3,400 --
President 1998 -- -- -- -- -- --
James A. Cochran(4)... 2000 145,334 25,000 18,000 -- 250,100 --
Senior Vice 1999 52,083 -- 7,660 -- 300,000 --
President and Chief 1998 -- -- -- -- -- --
Financial Officer
</TABLE>

-------------------------

(1) The amounts presented for 2000 include an automobile allowance for the use
of a vehicle in the amount of $12,000 for each of Dr. Davis and Mr. Cochran
and compensation for business expenses in the amount of $6,000 for each of
Mr. Cochran and Dr. Davis. The amounts presented for 1999 include an
automobile allowance for the use of a vehicle in the amount of $11,380 for
Mr. Perlman, $13,292 for Mr. Price, $9,500 for Dr. Davis and $5,000 for Mr.
Cochran and compensation for business expenses in the amount of $6,000 for
each of Messrs. Perlman and Price, $4,500 for Dr. Davis and $2,500 for Mr.
Cochran. The amount presented for Mr. Price in 1998 includes an automobile
allowance for the use of a vehicle in the amount of $12,000 and compensation
for business expenses in the amount of $6,000. The compensation set forth in
this column does not include compensation in the form of perquisites or
other personal benefits for Mr. Perlman in fiscal years 1998 and 2000 and
Mr. Price in 2000 because such perquisites and other personal benefits did
not exceed the lesser of $50,000 or 10% of the total annual salary and bonus
for Mr. Perlman and Mr. Price for such years.

(2) The amounts presented represent the value on the date of grant of restricted
stock awards of 60,000 shares to Mr. Perlman and 60,000 shares to Mr. Price,
calculated based on the closing price of InfoCure's common stock as reported
on The Nasdaq Stock Market on such date. One-half of the shares awarded to
Messrs. Perlman and Price vested in the first quarter of 1999 and the
remaining shares vested in the third quarter of 1999. In January 1999,
InfoCure entered into agreements with Messrs. Perlman and Price pursuant to
which the benefit of the restricted stock awards was credited to a deferred
compensation arrangement upon vesting of the restricted stock. The value of
the restricted stock awards as of December 31, 1999, calculated on the basis
of the closing price for our common stock on such date, was $1,871,280 for
each of Messrs. Perlman and Price.
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<PAGE> 111

(3) Dr. Davis joined InfoCure in February 1999.

(4) Mr. Cochran joined InfoCure in August 1999.

OPTION GRANTS IN LAST FISCAL YEAR

PracticeWorks did not grant any options during 2000. The following table
contains information concerning the stock option grants made to our chief
executive officer and other executive officers by InfoCure during 2000. The
amounts shown for potential realizable values are based upon assumed annualized
rates of InfoCure stock price appreciation of five percent and ten percent over
the full ten year term (or shorter term) of the options, as required by the SEC,
and are not intended to represent or forecast possible future appreciation, if
any, of the price of InfoCure or PracticeWorks common stock.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------
% OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE AT ASSUMED
SHARES OF OPTIONS ANNUAL RATES OF STOCK
COMMON GRANTED PRICE
STOCK TO APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES EXERCISE TERM
OPTIONS IN PRICE EXPIRATION -----------------------
NAME GRANTED 2000 ($/SHARE)(1) DATE 5% ($) 10% ($)
---- ---------- --------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Perlman... 100 * $31.19 1/1/10 $ 1,962 $ 4,971
1,200,000 10.0% 4.44 8/21/10 3,350,751 8,491,460
James K. Price....... 200 * 31.19 1/1/10 3,923 9,942
1,200,000 10.0 4.44 8/21/10 3,350,751 8,491,460
James C. Davis....... 200 * 5.62 7/1/10 707 1,791
700,000 5.8 4.44 8/21/10 1,954,605 4,953,352
James A. Cochran..... 100 * 5.50 8/4/10 87,599 209,322
250,000 2.1 4.44 8/21/10 698,073 1,769,054
</TABLE>

-------------------------

* Less than one percent.

(1) All options were granted with exercise prices equal to or in excess of the
fair market value of the common stock on the date of grant as determined by
the board of directors.

CERTAIN TRANSACTIONS

During August 2000, InfoCure granted our executive officers additional
options to acquire InfoCure common stock. Mr. Perlman received 1,200,000
options, Mr. Price received 1,200,000 options, Dr. Davis received 700,000
options and Mr. Cochran received 250,000 options. The exercise price of these
options is $4.4375 per share and they expire ten years from the date of grant.
Fifty percent of the options granted to these executive officers vest in four
equal annual installments beginning on the first anniversary of the date of
grant. The remaining 50% of the options granted to these executive officers will
vest five

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years from the date of grant, but half of these options will immediately vest
upon the average closing price of InfoCure's common stock for 20 consecutive
trading days being equal to or greater than $8.875 per share and the remaining
options will vest upon the average closing stock price for 20 consecutive
trading days being equal to or greater than $13.3125 per share. Upon the
consummation of the distribution, each of these options will be converted to
options to purchase PracticeWorks common stock. However, if the distribution is
not consummated prior to March 31, 2001, approximately 75% of these options
granted to our executive officers will be cancelled and PracticeWorks may be
required to recognize compensation expense. See "Risk Factors -- We may be
required to recognize compensation expense related to a grant of options made by
InfoCure, which will adversely affect our net income" on page 24.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUE TABLE

Shown below is information with respect to the number of InfoCure shares
acquired upon exercise of stock options and the aggregate gains realized on
exercises during 2000 for our chief executive officer and executive officers.
The table also sets forth the number of shares covered by exercisable and
unexercisable options held by these executives on December 31, 2000 and the
aggregate gains that would have been realized had these options been exercised
on December 31, 2000, even though these options were not exercised, and the
unexercisable options could not have been exercised at that time.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN
UNDERLYING UNEXERCISED THE MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Perlman... 416,618 $2,996,316 158,309 1,673,582 $81,159 $240,882
James K. Price....... 416,618 2,996,316 164,650 1,677,727 91,812 243,477
James C. Davis....... -- -- -- 703,600 -- --
James A. Cochran..... -- -- 75,000 475,100 -- --
</TABLE>

-------------------------

(1) The closing price for InfoCure's common stock as reported by The Nasdaq
Stock Market on December 29, 2000 was $3.75. The value is calculated on the
basis of the difference between the option exercise price and $3.75,
multiplied by the number of shares of common stock underlying the option.

EMPLOYMENT AGREEMENTS

Following the distribution, we plan to enter into three-year employment
agreements with Richard E. Perlman, James K. Price, James C. Davis and James A.
Cochran on substantially the terms described below. The individual employment
agreements provide for an initial annual base salary of $350,000 for Messrs.
Perlman and Price, $250,000 for Dr. Davis and $175,000 for Mr. Cochran. The
agreements also provide for a severance payment for each executive equal to
three times his then current annual base salary rate upon the termination of the
executive's employment by us without cause or by the executive for good reason
or in the event of a change in control. The employment agreements will entitle
the executives to participate in our employee benefit programs and will provide
for other customary benefits. In addition, each employment agreement will
provide compensation pursuant to a program established by the compensation
committee of our board of directors, the grant of stock options on the first day
of the executive's employment and periodic grants of options thereafter as
recommended by the compensa-

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<PAGE> 113

tion committee of our board of directors. Each employment agreement will provide
for 100% vesting of all outstanding stock options upon a change in control. The
employment agreements also will provide for an additional, tax gross-up payment
to be made by us to the executive in the event that, upon a change in the
control, any payments made to the executive that are subject to an excise tax
under Section 4999 of the Internal Revenue Code. Finally, the employment
agreements will prohibit the executive from engaging in certain activities which
compete with us, seek to recruit our employees or disclose any of our trade
secrets or otherwise confidential information.

PRACTICEWORKS 2000 STOCK OPTION PLAN

We adopted an amended and restated stock option plan, effective December 1,
2000, pursuant to which 8,000,000 shares of common stock are reserved for
issuance. We estimate that approximately 3,250,000 stock options will be
outstanding immediately following the distribution as a result of the conversion
of existing InfoCure options to PracticeWorks options. The plan will be
administered by the compensation committee of our board of directors. The
compensation committee may grant incentive stock options and nonqualified stock
options to purchase shares of common stock, stock appreciation rights and may
make stock grants to our directors and employees. Each such stock option, stock
appreciation right and stock grant shall be subject to the terms and conditions
that the compensation committee deems appropriate. The option price for each
stock option granted will be the fair market value of common stock on the date
of the grant provided, however, that if the option is an incentive stock option
and the employee is the holder of more than ten percent of our issued and
outstanding stock, the option price will be no less than 110% of the fair market
value of common stock on the date of the grant. Upon a sale, merger or a change
in control of PracticeWorks, all stock options, stock appreciation rights and
stock grants shall be fully vested. The stock option plan permits us to loan
money to or guarantee loans made by a third party to finance all or a part of
the exercise of a stock option or the purchase of common stock subject to a
stock grant. Our board of directors can amend or terminate the stock option plan
at any time.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

Our certificate of incorporation limits the liability of directors to the
fullest extent permitted by Delaware law. In addition, our certificate of
incorporation and bylaws provide that we will indemnify our directors and
officers to the fullest extent permitted by Delaware law.

Our bylaws provide that we will indemnify officers and directors against
losses that they may incur in investigations and legal proceedings resulting
from their services to us, which may include services in connection with
takeover defense measures. These provisions may have the effect of preventing
changes in the management.

In connection with the distribution, we intend to enter into
indemnification agreements with each of our current directors and officers to
give them additional contractual assurances regarding the scope of the
indemnification set forth in our certificate of incorporation and bylaws and to
provide additional procedural protections. At present, there is no pending
litigation or proceeding involving any of our directors, officers or employees
for which indemnification from us is sought. We are not aware of any threatened
litigation that may result in claims for indemnification from us.

We currently have liability insurance for our directors and officers and
intend to extend that coverage for public securities matters.

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BENEFICIAL OWNERSHIP OF COMMON STOCK

All of our outstanding common stock is, and prior to the distribution will
be, held beneficially and of record by a wholly owned subsidiary of InfoCure.
After the distribution, InfoCure and its subsidiaries will not own any of our
outstanding common stock. The following table sets forth information concerning
the shares of PracticeWorks common stock that are projected to be beneficially
owned after the distribution by the following individuals:

- each person that is expected to own beneficially more than five percent
of the PracticeWorks common stock outstanding immediately following the
distribution, based on the ownership of InfoCure common stock as known to
us;

- each of our directors or director nominees;

- each of our executive officers; and

- all of our directors, director nominees and executive officers as a
group.

Unless otherwise indicated, the projections are based on the number of
InfoCure shares held by such persons as of December 29, 2000 and reflect the
distribution ratio of 1/4 of a share of PracticeWorks common stock for every
share of InfoCure common stock held on the record date. Unless otherwise
indicated in the footnotes to this table and subject to community property laws
where applicable, we believe that each of the stockholders named in this table
has sole voting and investment power with respect to the shares indicated as
beneficially owned. Unless otherwise indicated, the address for each person set
forth in the table is c/o PracticeWorks, Inc., 1765 The Exchange, Suite 200,
Atlanta, Georgia 30339.

In addition, at the time of the distribution, options to acquire InfoCure
common stock held by these persons will be converted into options to acquire
PracticeWorks common stock as described under "Relationship Between InfoCure and
PracticeWorks following the Distribution -- Employee Benefits and Compensation
Allocation Agreement." The number of shares shown as beneficially owned by each
person in the table below includes shares that can be acquired by that person
through stock option exercises on or prior to February 27, 2001. In calculating
the percentage owned by each person, we assumed that all shares issuable upon
exercise of options on or prior to February 27, 2001 are exercised by that
person. The total number of shares outstanding used in calculating the
percentage owned assumes no exercise of options held by other persons.

<TABLE>
<CAPTION>
TOTAL
COMMON EXERCISABLE NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER STOCK OPTIONS BENEFICIALLY OWNED OF CLASS(1)
------------------------ -------- ----------- ------------------ -----------
<S> <C> <C> <C> <C>
Richard E. Perlman...................... 264,613 39,577 304,190 3.6%
James K. Price.......................... 355,990 41,163 397,152 4.6
James C. Davis.......................... 232,518 -- 232,518 2.7
James A. Cochran........................ 265 18,750 19,015 *
-------- -------- -------- --------
All executive officers and directors as
a group (4 persons)................... 853,385 99,490 952,875 11.1%
======== ======== ======== ========
</TABLE>

-------------------------

* Less than 1%

(1) Based on an aggregate of 34,257,732 shares of InfoCure common stock issued
and outstanding as of December 29, 2000 and the distribution ratio of 1/4 of
a share of PracticeWorks common stock for every share of InfoCure common
stock outstanding.

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There are no stockholders known by InfoCure or PracticeWorks to be the
beneficial owner of more than five percent of InfoCure's outstanding common
stock as of December 29, 2000.

In addition, we will issue shares of our series A, series B and series C
convertible redeemable preferred stock in three separate transactions after the
distribution. The series A, series B and series C convertible redeemable
preferred stock are each convertible into shares of our common stock in
accordance with the terms of such series, and under specified circumstances, the
holders of series A and series B convertible redeemable preferred stock may
immediately convert their preferred stock into common stock in an amount
exceeding 5% of our outstanding common stock on the day of the distribution.
Additionally, we may issue shares of our common stock to WebMD in connection
with our assumption of InfoCure's contingent liability representing greater than
5% of our outstanding common stock on the day of the distribution. See the
sections entitled "Description of our Capital Stock -- Preferred Stock" on page
110 and "Risk Factors -- Our stockholders may experience substantial dilution if
we are required to issue shares of our common stock to WebMD Corporation" on
page 26.

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DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 100,000,000 shares of common
stock, $0.01 par value, and 20,000,000 shares of preferred stock, $0.01 par
value.

COMMON STOCK

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Subject to
preferences that may be applicable to any outstanding shares of preferred stock,
holders of common stock are entitled to receive ratably such dividends as may be
declared by the board out of legally available funds. In the event of our
liquidation, dissolution or winding up, holders of the common stock 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 or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are, and
all shares of common stock to be outstanding upon completion of this offering
will be, fully paid and nonassessable. The shares of our common stock to be
distributed will be freely transferable, except for our common stock received by
persons who may be deemed to be our "affiliates" under the Securities Act of
1933, as amended.

PREFERRED STOCK

GENERAL. We are authorized, subject to limitations prescribed by Delaware
law, to issue preferred stock in one or more series, to establish from time to
time the number of shares to be included in each series, and to fix the rights,
preferences and privileges of the shares of each wholly unissued series and any
of its qualifications, limitations or restrictions.

The terms and rights of any such series may include:

- the designation of the series,

- the number of shares of the series, which number our board of directors
may thereafter, except where otherwise provided in the applicable
certificate of designation, increase or decrease, but not below the
number of shares thereof then outstanding,

- whether dividends, if any, will be cumulative or noncumulative, and, in
the case of shares of any series having cumulative dividend rights, the
date or dates or method of determining the date or dates from which
dividends on the shares of such series shall be cumulative,

- the rate of any dividends or method of determining such dividends payable
to the holders of the shares of such series, any conditions upon which
such dividends will be paid and the date or dates or the method for
determining the date or dates upon which such dividends will be payable,

- the redemption rights and price or prices, if any, for shares of the
series,

- the terms and amounts of any sinking fund provided for the purchase or
redemption of shares of the series,

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- the amounts payable on and the preferences, if any, of shares of the
series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of our affairs,

- whether the shares of the series will be convertible or exchangeable into
shares of any other class or series, or any other security, of us or any
other corporation, and, if so, the specification of such other class or
series or such other security, the conversion or exchange price or prices
or rate or rates, any adjustments thereof, the date or dates as of which
such shares will be convertible or exchangeable and all other terms and
conditions upon which such conversion or exchange may be made,

- restrictions on the issuance of shares of the same series or of any other
class or series,

- the voting rights, if any, of the holders of the shares of the series,
and

- any other relative rights, preferences and limitations of such series.

The board may authorize the issuance of preferred stock with voting or
conversion rights that could adversely affect the voting power or other rights
of the holders of the common stock. The issuance of preferred stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, have the effect of delaying,
deferring or preventing a change in control of PracticeWorks and may adversely
affect the market price of the common stock and the voting and other rights of
the holders of common stock.

Except as described below, we currently do not plan to issue any shares of
preferred stock. We currently intend to issue three series of our convertible
redeemable preferred stock. The series A, series B and series C convertible
redeemable preferred stock will rank pari passu with respect to liquidation
preference and the payment of dividends, but each of the series A, series B and
series C convertible redeemable preferred stock will rank senior to our common
stock with respect to these terms.

SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK TO BE ISSUED TO CERAMCO

In connection with our proposed acquisition of the InfoSoft division of
DENTSPLY, we will issue 32,000 shares of our series A convertible redeemable
preferred stock to Ceramco, a wholly owned subsidiary of DENTSPLY, as
consideration for the transfer to us of the membership interests in SoftDent,
LLC representing the assets which are currently used in the business of
developing, marketing, licensing and supporting the SoftDent software product.
The series A convertible redeemable preferred stock will be issued to Ceramco in
a private placement. The rights, preferences and limitations of the series A
convertible redeemable preferred stock are as follows:

- holders of the series A convertible redeemable preferred stock will be
entitled to receive cumulative dividends, if so declared by our board of
directors, at an annual rate of 6.5% and will accrue if not so declared;

- holders of the series A convertible redeemable preferred stock will have
priority over common stock as to the declaration of dividends and will
share, on an as-converted basis, with the holders of our common stock in
any dividends declared on the common stock;

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- holders of the series A convertible redeemable preferred stock will be
entitled to receive a liquidation preference of $1,000 per share in the
event that we liquidate, dissolve or wind up before any distribution or
payment is made for the benefit of the holders of our common stock, or any
series of stock junior to the series A convertible redeemable preferred
stock and will share, on an as-converted basis, with the holders of our
common stock in any such distribution or payment up to a maximum of 200%
of the holders' liquidation preference plus all accrued and unpaid
dividends;

- on the fifth anniversary date of the issuance of the series A convertible
redeemable preferred stock, the holders of a majority of the outstanding
shares of series A convertible redeemable preferred stock will be entitled
to cause us to redeem all of the series A convertible redeemable preferred
stock outstanding in cash at a price equal to the then effective
liquidation preference plus accrued and unpaid dividends;

- holders of the series A convertible redeemable preferred stock, voting as
a class, are generally entitled to elect one director to our board of
directors, but are not entitled to vote with respect to the election of
the remaining directors;

- holders of the series A convertible redeemable preferred stock will
generally have the right to vote, on an as-converted basis, on all matters
on which our common stockholders are entitled to vote;

- at any time prior to the fourth anniversary date of the issuance of the
series A convertible redeemable preferred stock, holders of the series A
convertible redeemable preferred stock will have the right, at such
holders' option, to convert all or a portion of their series A convertible
redeemable preferred stock into shares of our common stock based upon a
conversion price that, assuming all shares were converted, would result in
the issuance of approximately 9.8% of our outstanding common stock at the
time of the distribution;

- at any time between the fourth and fifth anniversary dates of the
issuance of the series A convertible redeemable preferred stock, holders
of the series A convertible redeemable preferred stock will have the
right, at such holders' option, to convert all or a portion of their
series A convertible redeemable preferred stock into shares of common
stock at the conversion price equal to the average of the closing price of
our common stock during the 30 trading days prior to the conversion,
unless we elect to redeem such shares based on such average closing price,
plus all accrued and unpaid dividends;

- the shares of series A convertible redeemable preferred stock are subject
to automatic conversion if the closing price for 20 consecutive trading
days exceeds 175% of the conversion price then applicable; and

- holders of the series A convertible redeemable preferred stock will
receive piggyback registration rights as to the common stock issuable upon
conversion of the shares of series A convertible redeemable preferred
stock we issue.

We cannot assure you that we will be able to complete our acquisition of
InfoSoft or that any shares of our series A convertible redeemable preferred
stock having the terms summarized above will be issued.

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SERIES C CONVERTIBLE REDEEMABLE PREFERRED STOCK TO BE ISSUED TO CRESCENT

In connection with the Crescent investment, we will issue 100,000 shares of
our series C convertible redeemable preferred stock to Crescent in a private
placement. We expect the series C convertible redeemable preferred stock to have
the following rights, limitations and preferences:

- holders of the series C convertible redeemable preferred stock will be
entitled to receive a liquidation preference of $50 per share, plus an
accrued 6.5% return, in the event that we liquidate, dissolve or wind up,
before any payments or distributions of assets are made or set aside for
the benefit of our common stock;

- holders of the series C convertible redeemable preferred stock will not
be entitled to any dividends;

- at any time following one year after issuance, holders of the series C
convertible redeemable preferred stock will have the right to convert all,
or a portion, of our shares of series C convertible redeemable preferred
stock into shares of our common stock based upon a conversion price equal
to the lesser of (1) 140% of the 50-day trading average of our common
stock following the distribution, referred to herein as the reference
price, or (2) the average of the lowest three-day closing price of our
common stock during the 22 days prior to conversion;

- the conversion price will be subject to a floor equal to 75% of the
reference price; however, this floor will be reduced 7.5% per month
following the 18 month anniversary of issuance of the series C convertible
redeemable preferred stock;

- in no event will the holders of the series C convertible redeemable
preferred stock be entitled to receive 10% or more of our common stock
upon conversion;

- if the market value of our common stock exceeds 280% of the reference
price and if specified conditions are met, we may require conversion of
all or a portion of the series C convertible redeemable preferred stock;

- if the conversion price of the series C convertible redeemable preferred
stock is less than 75% of the reference price, we may redeem the series C
preferred stock for cash at a premium equal to 115% of the liquidation
preference during the first year after issuance, 130% during the second
year, 145% during the third year, 160% during the fourth year.

- at any time after 48 months after the date of issuance, the holders of
series C convertible redeemable preferred stock may require us to redeem
the stock at a premium equal to 175% of the liquidation preference;

- holders of the series C convertible redeemable preferred stock will have
the right to vote, on an as-converted basis, on all matters on which the
holders of our common stock are entitled to vote; and

- holders of the series C convertible redeemable preferred stock will
receive resale registration rights as to the shares of the common stock
issuable upon conversion of the series C convertible redeemable preferred
stock.

We can not assure you that we will consummate the Crescent investment or
that any shares of our series C convertible redeemable preferred stock having
the terms summarized above will be issued.

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SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK TO BE ISSUED TO MEDICAL DYNAMICS
SHAREHOLDERS

In connection with our assumption of InfoCure's obligations under the
Medical Dynamics merger agreement, we will issue approximately 965,000 shares of
our series B convertible redeemable preferred stock to the Medical Dynamics
stockholders as a portion of the consideration for their shares of Medical
Dynamics common stock. The exact rights, preferences and limitations of this
preferred stock will be described in a proxy statement sent to all Medical
Dynamics stockholders in connection with the Medical Dynamics' stockholders
meeting to approve the merger. However, we expect that the series B convertible
redeemable preferred stock will have the following rights, preferences and
limitations:

- the series B convertible redeemable preferred stock will rank senior to
our common stock;

- holders of the series B convertible redeemable preferred stock will be
entitled to receive cumulative dividends at an annual rate of 6.0%, and
dividend payments may be in cash or shares of our common stock;

- holders of the series B convertible redeemable preferred stock will be
entitled to receive a liquidation preference of $5.44 per share in the
event that we liquidate, dissolve or wind up, before any payments or
distributions of assets are made or set aside for the benefit of the
holders of our common stock;

- on the fifth anniversary date of the issuance of the series B convertible
redeemable preferred stock, we will redeem all the series B convertible
redeemable preferred stock outstanding in cash at a price equal to the
then effective liquidation preference plus accrued and unpaid dividends;

- holders of the series B convertible redeemable preferred stock will have
the right, at such holders' option, to convert all or a portion of their
shares of series B convertible redeemable preferred stock into shares of
our common stock; and

- holders of the series B convertible redeemable preferred stock may be
given the right to vote on all matters on which our common stockholders
are entitled to vote.

We estimate that all shares of our series B convertible redeemable preferred
stock issued to the former owners of Medical Dynamics common stock will be, in
the aggregate, convertible into approximately 2.0% of our common stock
outstanding immediately after the distribution. We cannot assure you that we
will be able to complete our acquisition of Medical Dynamics or that any shares
of our series B convertible redeemable preferred stock having the terms
summarized above will be issued.

NO PREEMPTIVE RIGHTS

No holder of any of our stock of any class authorized at the distribution
date will have any preemptive right to subscribe to any of our securities of any
kind or class.

WARRANTS

As of the distribution date, no warrants to acquire shares of PracticeWorks
common stock will be outstanding. Under the antidilution provisions of certain
warrants issued by

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InfoCure to acquire InfoCure common stock, the holders of InfoCure warrants may
be entitled to receive approximately 175,000 shares of PracticeWorks common
stock upon the exercise of the InfoCure warrants. The actual number of shares of
PracticeWorks common stock to be issued in connection with the InfoCure warrants
will depend on the applicable exercise price and number of shares of InfoCure
common stock issued at the time the warrant is exercised.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the PracticeWorks common stock
immediately following the distribution will be StockTrans.

NASDAQ NATIONAL MARKET LISTING

We have applied for our common stock to be listed on The Nasdaq Stock
Market's National Market under the symbol "PWKS."

ANTI-TAKEOVER PROVISIONS
OF PRACTICEWORKS' CERTIFICATE OF INCORPORATION, BYLAWS
AND DELAWARE LAW

GENERAL

Our certificate of incorporation, our bylaws and the Delaware General
Corporation Law contain certain provisions that could delay or make more
difficult an acquisition of control of PracticeWorks not approved by our board
of directors, whether by means of a tender offer, open market purchases, a proxy
contest or otherwise. These provisions have been implemented to enable us,
particularly but not exclusively in the initial years of our existence as an
independent, publicly owned company, to develop our business in a manner which
will foster our long-term growth without disruption caused by the threat of a
takeover not deemed by our board of directors to be in the best interests of
PracticeWorks and its stockholders. These provisions could have the effect of
discouraging third parties from making proposals involving an acquisition or
change of control of PracticeWorks, although such a proposal, if made, might be
considered desirable by a majority of our stockholders. These provisions may
also have the effect of making it more difficult for third parties to cause the
replacement of our current management without the concurrence of our board of
directors. In addition, some provisions of the Tax Disaffiliation Agreement to
be entered into by InfoCure and PracticeWorks may also have the effect of
discouraging third parties from making proposals involving an acquisition or
change of control of PracticeWorks prior to the second anniversary of the
distribution date. See "Relationship Between InfoCure and PracticeWorks
Following the Distribution -- Tax Disaffiliation Agreement" on page 43. Set
forth below is a description of the provisions contained in our certificate of
incorporation and bylaws and the Delaware General Corporation Law that could
impede or delay an acquisition of control of PracticeWorks that our board of
directors has not approved. This description is intended as a summary only and
is qualified in its entirety by reference to our certificate of incorporation
and bylaws, the forms of which are included as exhibits to the registration
statement, as well as the Delaware General Corporation Law.

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CLASSIFIED BOARD OF DIRECTORS

Our certificate of incorporation provides for our board of directors to be
divided into three classes of directors serving staggered three-year terms. As a
result, approximately one-third of our board of directors will be elected each
year. The first class of directors will initially serve a one-year term, and the
second class of directors will initially serve a two-year term. Thereafter, each
class of directors will be elected for a three-year term. See "Management"
beginning on page 88.

This provision could prevent a party who acquires control of a majority of
the outstanding voting stock from obtaining control of our board of directors
until the second annual stockholders meeting following the date on which the
acquiror obtains the controlling stock interest and could have the effect of
discouraging a potential acquiror from making a tender offer or otherwise
attempting to obtain control of PracticeWorks. Therefore, it could increase the
likelihood that incumbent directors will retain their positions.

NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES

Our certificate of incorporation and bylaws provide that the number of
directors shall be fixed only by resolution of our board of directors from time
to time. Our certificate of incorporation provides that the directors may be
removed by stockholders only both for cause and by the affirmative vote of at
least 66 2/3% of the shares entitled to vote.

Our certificate of incorporation and bylaws provide that vacancies on the
board of directors may be filled only by a majority vote of the remaining
directors or by the sole remaining director.

STOCKHOLDER ACTION

Our certificate of incorporation provides that stockholder action may be
taken only at an annual or special meeting of stockholders. Our certificate of
incorporation and bylaws provide that special meetings of stockholders may be
called only by the chairman of the board of directors, the chief executive
officer or a majority of the board of directors. Stockholders are not permitted
to call a special meeting or to require our board of directors to call a special
meeting of stockholders.

ADVANCE NOTICE FOR STOCKHOLDER PROPOSALS OR NOMINATION AT MEETINGS

Our bylaws establish an advance notice procedure for stockholder proposals
to be brought before any annual or special meeting of stockholders and for
nominations by stockholders of candidates for election as directors at an annual
meeting or a special meeting at which directors are to be elected. Subject to
any other applicable requirements, including, without limitation, Rule 14a-8
under the Securities Exchange Act of 1934, as amended, or the Exchange Act, only
such business may be conducted at a meeting of stockholders as has been brought
before the meeting by, or at the direction of, our board of directors, or by a
stockholder who has given our Secretary timely written notice, in proper form,
of the stockholder's intention to bring that business before the meeting. The
presiding officer at such meeting has the authority to make such determinations.
Only persons who are nominated by, or at the direction of, our board of
directors, or who are nominated by a stockholder who has given timely written
notice, in proper form, to our

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Secretary prior to a meeting at which directors are to be elected will be
eligible for election as directors of PracticeWorks.

To be timely, notice of nominations or other business to be brought before
any meeting must be delivered to our Secretary not less than 90 days nor more
than 120 days prior to the first anniversary date of the annual meeting for the
preceding year; provided, however, that if the annual meeting is not scheduled
to be held within a period that commences 30 days before and ends 30 days after
such anniversary date, such advance notice shall be given by the later of (1)
the close of business on the date 90 days prior to the date of the annual
meeting or (2) the close of business on the tenth day following the date that
the meeting date is first publicly announced or disclosed.

Any stockholder who gives notice of a proposal must provide the text of the
proposal to be presented, a brief written statement of the reasons why he or she
favors the proposal, the stockholder's name and address, the number and class of
all shares of each class of PracticeWorks stock owned, any material interest the
stockholder may have in the proposal, other than as a PracticeWorks stockholder,
and, in the case of any person that holds PracticeWorks stock through a nominee
or "street name" holder of record of such stock, evidence establishing such
person's indirect ownership of PracticeWorks stock and entitlement to vote on
the matter proposed at the annual meeting.

The notice of any nomination for election as a director must set forth the
name of the nominee, the number and class of all shares of each class of
PracticeWorks capital stock beneficially owned by the nominee, the information
regarding the nominee required by paragraphs (a), (e) and (f) of Item 401 of
Regulation S-K adopted by the SEC, the signed consent of each nominee to serve
as a director if elected, the nominating stockholder's name and address, the
number and class of shares of PracticeWorks stock owned by such nominating
stockholder and, in the case of any person that holds PracticeWorks stock
through a nominee or "street name" holder of record of such stock, evidence
establishing such person's indirect ownership of PracticeWorks stock and
entitlement to vote on the matter proposed at the annual meeting.

AMENDMENTS TO BYLAWS

Our certificate of incorporation provides that only our board of directors
or the holders of 66 2/3% of the shares of our capital stock entitled to vote at
an annual or special meeting of stockholders have the power to amend or repeal
our bylaws.

AMENDMENT OF THE CERTIFICATE OF INCORPORATION

Any proposal to amend, alter, change or repeal any provision of our
certificate of incorporation requires approval by the affirmative vote of a
majority of the voting power of all of the shares of our capital stock entitled
to vote on such matters, with the exception of certain provisions of our
certificate of incorporation which require a vote of 66 2/3% or more of such
voting power.

PREFERRED STOCK

Our certificate of incorporation authorizes our board of directors by
resolution to issue one or more series of preferred stock and to determine, with
respect to any series of preferred stock, the terms and rights of such series.

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As of January , 2001 we have authorized the issuance of series A and
series C convertible redeemable preferred stock, which are described in the
section entitled, "Description of Capital Stock -- Preferred Stock" on page 110.
In addition, if the Medical Dynamics merger agreement is consummated, we intend
to authorize a third series of convertible redeemable preferred stock containing
the rights, limitations and preferences set forth in "Description of Capital
Stock -- Series B Convertible Redeemable Preferred Stock to be Issued to Medical
Dynamics Shareholders."

We believe that the availability to issue additional preferred stock will
provide us with increased flexibility in structuring possible future financing
and acquisitions and in meeting other corporate needs which might arise. Having
such authorized shares available for issuance will allow us to issue shares of
preferred stock without the expense and delay of a special stockholders'
meeting. The authorized shares of preferred stock, as well as PracticeWorks
common stock, will be available for issuance without further action by our
stockholders, unless such action is required by applicable law or the rules of
the Nasdaq Stock Market's National Market, any other inter-dealer quotation
system or any stock exchange on which our securities may be listed. Our board of
directors has the power subject to applicable law to issue additional series of
preferred stock that could, depending on the terms of such series, impede the
completion of a merger, tender offer or other takeover attempt. For instance,
subject to applicable law, such series of preferred stock might impede a
business combination by including class voting rights which would enable the
holder to block such a transaction.

DELAWARE LAW

Under Section 203 of the Delaware General Corporation Law, or Section 203,
which will be applicable to us after the distribution, certain "business
combinations," which are defined generally to include mergers or consolidations
between the Delaware corporation and an interested stockholder and transactions
with an interested stockholder involving the assets or stock of the corporation
or its majority-owned subsidiaries and transactions which increase the
interested stockholder's percentage ownership of stock, between a publicly held
Delaware corporation and an "interested stockholder," which is defined generally
as those stockholders who become beneficial owners of 15% or more of a Delaware
corporation's voting stock or their affiliates, are prohibited for a three-year
period following the date that such stockholder became an interested
stockholder, unless:

(1) the corporation has elected in its certificate of incorporation
not to be so governed;

(2) either the business combination or the proposed acquisition of
stock resulting in the person becoming an interested stockholder was
approved by the board of directors of the corporation before the other
party to the business combination became an interested stockholder;

(3) upon consummation of the transaction that made it an interested
stockholder, the interested stockholder owned at least 85% of the voting
stock of the corporation outstanding at the commencement of the
transaction, excluding voting stock owned by officers who are also
directors or held in employee benefit plans in which the employees do not
have a confidential right to tender or vote stock held by the plan; or

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(4) the business combination was approved by the board of directors of
the corporation and also ratified by two-thirds of the voting stock which
the interested stockholder did not own.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. Our certificate of incorporation does not exclude us from
restrictions imposed under Section 203. The provisions of Section 203 may
encourage companies interested in acquiring PracticeWorks to negotiate in
advance with our board of directors, since the stockholder approval requirement
would be avoided if a majority of the directors then in office approved either
the business combination or the transaction which results in the stockholder
becoming an interested stockholder. Such provisions also may have the effect of
preventing changes in the management of PracticeWorks. It is possible that such
provisions could make it more difficult to accomplish transactions which
stockholders may otherwise deem to be in their best interests.

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LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

LIMITATION ON LIABILITY OF DIRECTORS

Pursuant to authority conferred by Section 102 of the Delaware General
Corporation Law, Article XI of our certificate of incorporation, or Article XI,
eliminates the personal liability of our directors to PracticeWorks or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that such exemption from liability or limitation thereof is
not permitted under the Delaware General Corporation Law as currently in effect
or as it may hereafter be amended. Under the Delaware General Corporation Law as
in effect on the date hereof, our directors remain liable for:

(1) any breach of the duty of loyalty to PracticeWorks or its
stockholders;

(2) any act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law;

(3) any violation of Section 174 of the Delaware General Corporation
Law, which proscribes the payment of dividends and stock purchases or
redemptions under certain circumstances; and

(4) any transaction from which directors derive an improper personal
benefit.

Article XI provides that any future repeal or amendment of its terms
(including any amendment or repeal of Article XI made by virtue of any change in
the Delaware General Corporation Law) will not adversely affect any rights of
directors existing thereunder with respect to acts or omissions occurring prior
to such repeal or amendment.

INDEMNIFICATION

Our bylaws and Section 145 of the Delaware General Corporation Law, which
allows, and in some cases requires, the indemnification of directors and
officers under certain circumstances, grant our directors and officers a right
to indemnification to the full extent permitted by law for all expenses relating
to civil, criminal, administrative or investigative procedures to which they are
a party (1) by reason of the fact that they are or were our directors or
officers or (2) by reason of the fact that, while they are or were our directors
or officers, they are or were serving at our request as a director, officer or
employee of another enterprise. Our bylaws further provide that an advancement
for any such expenses shall only be made upon delivery to us by the indemnitee
of an undertaking to repay all amounts so advanced if it is ultimately
determined that such indemnitee is not entitled to be indemnified by us.

Insofar as indemnification by us for liabilities arising under the federal
securities laws may be permitted to our directors, officers and controlling
persons, or otherwise, we have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the federal securities
laws and is, therefore, unenforceable.

INDEMNIFICATION AGREEMENTS

In connection with the distribution, we will enter into indemnification
agreements with our directors and officers. These agreements will require us to
indemnify these directors and officers with respect to their activities as our
directors or officers or when serving at our request as a director, officer or
trustee of another corporation, joint venture, trust or

121
<PAGE> 127

other enterprise against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by them in any
threatened, pending or completed suit or proceeding to which they are, or are
threatened to be made, parties as a result of their service to us. We will agree
to indemnify each indemnitee for any one or a combination of the following,
whichever is most advantageous to the indemnitee: (1) the benefits provided by
our certificate of incorporation and bylaws in effect on the date of the
indemnification agreement; (2) the benefits provided by our certificate of
incorporation and bylaws at the time expenses are incurred by the indemnitee;
(3) the benefits allowable under Delaware law in effect on the date of the
indemnification agreement; (4) the benefits allowable under the law of the
jurisdiction under which we exist at the time expenses are incurred by the
indemnitee; (5) the benefits available under liability insurance obtained by us;
and (6) such other benefits as may be otherwise available to indemnitee under
our existing practices. Under the indemnification agreements, each indemnitee
will continue to be indemnified even after ceasing to occupy a position as our
officer, director, employee or agent with respect to suits or proceedings
arising out of acts or omissions during his or her service to us.

Each indemnitee will agree to notify us promptly of any proceeding brought
or threatened and not to make any admission or settlement without our consent,
unless the indemnitee determines to undertake his or her own defense and waives
the benefits of the indemnification agreement.

LEGAL MATTERS

King & Spalding will pass on the validity of the common stock issued in the
distribution.

EXPERTS

The financial statements and schedule of PracticeWorks (a division of
InfoCure Corporation) as of December 31, 1999 and 1998 and for the years ended
December 31, 1999 and 1998 and the eleven months ended December 31, 1997; the
financial statements of InfoSoft (a division of Ceramco, Inc., a wholly owned
subsidiary of DENTSPLY International, Inc.) as of December 31, 1999 and 1998 and
for the year ended December 31, 1999 and for the period from March 18, 1998 to
December 31, 1998; and the financial statements of Crunchy Frog Software, Inc.
as of December 21, 1999 and for the period from January 1, 1999 to December 21,
1999 included in this prospectus and in the Registration Statement on Form S-1
have been audited by BDO Seidman, LLP, independent certified public accountants,
to the extent and for the periods set forth in their reports appearing elsewhere
herein and in the Registration Statement on Form S-1, and are included in
reliance upon such reports given upon the authority of said firm as experts in
auditing and accounting.

The financial statements of Medical Dynamics, Inc. and Subsidiaries as of
September 30, 2000 and for the years ended September 30, 2000 and 1999 included
in this prospectus and in the Registration Statement on Form S-1 have been so
included in reliance on the report of Hein + Associates LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

122
<PAGE> 128

The financial statements of Integrated Dental Technologies, Inc. dba
PracticeWorks as of July 31, 1999 and 1998 and for the years then ended included
in this prospectus and elsewhere in the Registration Statement have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report
appearing in this prospectus and elsewhere in the Registration Statement, and
are included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

ADDITIONAL INFORMATION

We have filed with the SEC the registration statement under the Securities
Act, with respect to the PracticeWorks common stock. This document does not
contain all of the information set forth in the registration statement and the
exhibits and schedules thereto, to which reference is hereby made. Statements
made in this document as to the contents of any contract, agreement or other
document referred to herein are not necessarily complete. With respect to each
such contract, agreement or other document filed as an exhibit to the
registration statement, reference is made to such exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.

The registration statement and the exhibits thereto filed by PracticeWorks
with the SEC may be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as at the Regional Offices of the SEC at Seven World Trade
Center, Thirteenth Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such information
can be obtained by mail from the Public Reference Branch of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The SEC maintains a
website that contains reports, proxy and information statements and other
information regarding statements regarding registrants that file electronically
with the SEC. The address of the SEC's website is http://www.sec.gov.

After the distribution, we will be required to comply with the reporting
requirements of the Exchange Act and to file with the SEC reports, proxy
statements and other information as required by the Exchange Act. Additionally,
we will be required to provide annual reports containing audited financial
statements to our stockholders in connection with our annual meetings of
stockholders. After the distribution, these reports, proxy statements and other
information will be available to be inspected and copied at the public reference
facilities of the SEC or obtained by mail or over the Internet from the SEC, as
described above. We have applied to list the PracticeWorks common stock on the
Nasdaq National Market. If and when the PracticeWorks common stock commences
trading on the Nasdaq National Market, these reports, proxy statements and other
information will be available for inspection at the offices of the Nasdaq
National Market, 9513 Key West Avenue, Rockville, Maryland 20850.

123
<PAGE> 129

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
PRACTICEWORKS (A DIVISION OF INFOCURE CORPORATION)
HISTORICAL FINANCIAL STATEMENTS:
Report of Independent Certified Public Accountants.......... F-3
Balance sheets as of December 31, 1999 and 1998............. F-4
Statements of operations for the years ended December 31,
1999 and 1998 and the eleven months ended December 31,
1997...................................................... F-5
Statements of changes in divisional equity for the years
ended December 31, 1999 and 1998 and the eleven months
ended December 31, 1997................................... F-6
Statements of cash flows for the years ended December 31,
1999 and 1998 and the eleven months ended December 31,
1997...................................................... F-7
Notes to financial statements............................... F-8
Condensed balance sheets as of September 30, 2000
(unaudited) and December 31, 1999......................... F-29
Condensed statements of operations (unaudited) for the nine
months ended September 30, 2000 and 1999.................. F-30
Condensed statements of cash flows (unaudited) for the nine
months ended September 30, 2000 and 1999.................. F-31
Notes to condensed interim financial statements
(unaudited)............................................... F-32
PRACTICEWORKS, INC. PRO FORMA FINANCIAL STATEMENTS:
Introduction to unaudited pro forma condensed combined
financial statements...................................... F-37
Unaudited pro forma condensed combined balance sheet as of
September 30, 2000........................................ F-40
Unaudited pro forma condensed combined statement of
operations for the year ended December 31, 1999........... F-41
Unaudited pro forma condensed combined statement of
operations for the nine months ended September 30, 2000... F-42
Notes to unaudited pro forma condensed combined financial
statements................................................ F-43
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES HISTORICAL FINANCIAL
STATEMENTS:
Independent Auditor's Report................................ F-47
Consolidated balance sheet as of September 30, 2000......... F-48
Consolidated statements of operations for the years ended
September 30, 2000 and 1999............................... F-49
Consolidated statements of stockholders' equity for the
years ended September 30, 2000 and 1999................... F-50
Consolidated statements of cash flows for the years ended
September 30, 2000 and 1999............................... F-51
Notes to consolidated financial statements.................. F-53
</TABLE>

F-1
<PAGE> 130

<TABLE>
<S> <C>
INFOSOFT (A DIVISION OF CERAMCO, INC., A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL,
INC.) FINANCIAL STATEMENTS:
Report of Independent Certified Public Accountants............................................. F-64
Balance sheets as of December 31, 1999 and 1998................................................ F-65
Statements of income for the year ended December 31, 1999 and for the period from March 18,
1998 to December 31, 1998.................................................................... F-66
Statements of changes in divisional equity for the period from March 18, 1998 to December 31,
1998 and for the year ended December 31, 1999................................................ F-67
Statements of cash flows for the year ended December 31, 1999 and for the period from March 18,
1998 to December 31, 1998.................................................................... F-68
Notes to financial statements.................................................................. F-69
Condensed balance sheets as of September 30, 2000 (unaudited) and December 31, 1999............ F-77
Condensed statements of income (unaudited) for the nine months ended September 30, 2000 and
1999......................................................................................... F-78
Condensed statements of cash flows (unaudited) for the nine months ended September 30, 2000 and
1999......................................................................................... F-79
Notes to condensed interim financial statements (unaudited).................................... F-80
INTEGRATED DENTAL TECHNOLOGIES, INC. DBA PRACTICEWORKS (A WHOLLY-OWNED SUBSIDIARY OF BIO-DENTAL
TECHNOLOGIES CORPORATION, A WHOLLY-OWNED SUBSIDIARY OF ZILA, INC.) FINANCIAL STATEMENTS:
Independent Auditors' Report................................................................... F-81
Balance sheets, July 31, 1999 and 1998......................................................... F-82
Statements of operations, years ended July 31, 1999 and 1998................................... F-83
Statements of stockholders' capital deficiency, years ended July 31, 1999 and 1998............. F-84
Statements of cash flows, years ended July 31, 1999 and 1998................................... F-85
Notes to financial statements, years ended July 31, 1999 and 1998.............................. F-86
CRUNCHY FROG SOFTWARE, INC. FINANCIAL STATEMENTS:
Report of Independent Certified Public Accountants............................................. F-89
Balance sheet as of December 21, 1999.......................................................... F-90
Statement of income and retained earnings, January 1, 1999 through December 21, 1999........... F-91
Statement of changes in stockholders' equity, January 1, 1999 through December 21, 1999........ F-92
Statement of cash flows, January 1, 1999 through December 21, 1999............................. F-93
Notes to financial statements.................................................................. F-94
</TABLE>

F-2
<PAGE> 131

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

PracticeWorks
(A Division of InfoCure Corporation)
Atlanta, Georgia

We have audited the accompanying balance sheets of PracticeWorks (a
division of InfoCure Corporation) (the "Division") as of December 31, 1999 and
1998 and the related statements of operations, changes in divisional equity and
cash flows for the years ended December 31, 1999 and 1998 and the eleven months
ended December 31, 1997. These financial statements are the responsibility of
the Division'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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Division as of December
31, 1999 and 1998 and the results of its operations and its cash flows for the
years ended December 31, 1999 and 1998 and the eleven months ended December 31,
1997, in conformity with generally accepted accounting principles.

BDO Seidman, LLP
Atlanta, Georgia
August 9, 2000

F-3
<PAGE> 132

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS (NOTES 1 AND 8):
CURRENT:
Cash and cash equivalents............................. $ 2,527 $ 1,633
Accounts receivable -- trade, net of allowance of
$1,113 and $339..................................... 9,041 6,109
Other receivables..................................... 97 98
Inventory............................................. 1,772 1,388
Deferred tax assets (Note 11)......................... 669 774
Prepaid expenses and other current assets............. 453 493
------- -------
Total current assets............................. 14,559 10,495
Property and equipment, net of accumulated
depreciation (Note 5)............................... 2,046 2,521
Goodwill, net of accumulated amortization of $3,927
and $1,594 (Notes 3 and 4).......................... 32,800 19,991
Other intangible assets (Note 6)...................... 7,806 2,914
Deferred tax assets (Note 11)......................... 108 1,177
Other assets.......................................... 523 --
------- -------
$57,842 $37,098
======= =======
LIABILITIES AND DIVISIONAL EQUITY:
CURRENT LIABILITIES:
Accounts payable...................................... $ 2,772 $ 775
Accrued expenses (Note 7)............................. 5,712 1,450
Accrued restructuring costs (Note 4).................. 445 283
Deferred revenue and customer deposits................ 6,704 6,046
Current portion of long-term debt (Note 8)............ 116 2,975
------- -------
Total current liabilities........................ 15,749 11,529
Long-term debt, less current portion (Note 9)......... 9,614 14,769
Other liabilities..................................... 60 --
------- -------
Total liabilities................................ 25,423 26,298
------- -------
Commitments and contingencies (Notes 3, 8 and 9)
DIVISIONAL EQUITY:
Net advances from parent.............................. 35,909 16,598
Accumulated deficit................................... (3,490) (5,798)
------- -------
Total divisional equity.......................... 32,419 10,800
------- -------
$57,842 $37,098
======= =======
</TABLE>

See accompanying notes to financial statements

F-4
<PAGE> 133

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
ELEVEN MONTHS
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
------------ ------------ -------------
<S> <C> <C> <C>
REVENUE (NOTE 1):
Systems and software..................... $34,325 $27,825 $13,961
Maintenance, support and services........ 20,266 15,662 7,523
------- ------- -------
Total revenue....................... 54,591 43,487 21,484
------- ------- -------
OPERATING EXPENSE:
Hardware and other items purchased for
resale................................. 9,654 9,726 3,722
Selling, general and administrative
(excluding compensatory stock
awards)................................ 28,666 21,061 11,703
Research and development................. 4,185 3,537 3,267
Depreciation and amortization............ 3,284 2,272 551
Restructuring and other charges (Note
4)..................................... 1,814 1,031 6,463
Merger costs (Note 3).................... 659 69 --
Compensatory stock awards................ 428 6,447 14
------- ------- -------
Total operating expense............. 48,690 44,143 25,720
------- ------- -------
Operating income (loss).................. 5,901 (656) (4,236)
Interest expense and other, net.......... 1,335 966 198
------- ------- -------
Income (loss) before income taxes and
extraordinary item..................... 4,566 (1,622) (4,434)
Provision (benefit) for income taxes
(Note 11).............................. 2,186 873 (171)
------- ------- -------
Income (loss) before extraordinary
item................................... 2,380 (2,495) (4,263)
Extraordinary item -- debt extinguishment
cost, net of income taxes (Note 8)..... (72) -- --
------- ------- -------
Net income (loss)........................ 2,308 (2,495) (4,263)
Pro forma tax adjustments (Note 11)...... (384) (1,350) 653
------- ------- -------
Pro forma net income (loss).............. $ 2,692 $(1,145) $(4,916)
======= ======= =======
Per share data:
Basic and diluted:
Income (loss) before extraordinary
item................................ $ 0.34 $ (0.52) $ (1.10)
Extraordinary item, net of tax......... 0.01 -- --
------- ------- -------
Net income (loss)...................... 0.33 (0.52) (1.10)
Pro forma tax adjustments.............. (0.05) (0.28) 0.17
------- ------- -------
Pro forma net income (loss)............ $ 0.38 $ (0.24) $ (1.27)
======= ======= =======
Weighted average shares outstanding:
Basic and diluted (Note 2)............. 6,994 4,828 3,881
======= ======= =======
</TABLE>

See accompanying notes to financial statements

F-5
<PAGE> 134

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

STATEMENTS OF CHANGES IN DIVISIONAL EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
RETAINED
EARNINGS
NET ADVANCES (ACCUMULATED DIVISIONAL
FROM PARENT DEFICIT) EQUITY
------------ ------------ ----------
<S> <C> <C> <C>
Balance at January 31, 1997.................. $ 268 $ 960 $ 1,228
Net advances from InfoCure................... 4,018 -- 4,018
Net loss..................................... -- (4,263) (4,263)
------- ------- -------
Balance at December 31, 1997................. 4,286 (3,303) 983
Net advances from InfoCure................... 12,312 -- 12,312
Net loss..................................... -- (2,495) (2,495)
------- ------- -------
Balance at December 31, 1998................. 16,598 (5,798) 10,800
Net advances from InfoCure................... 19,311 -- 19,311
Net income................................... -- 2,308 2,308
------- ------- -------
Balance at December 31, 1999................. $35,909 $(3,490) $32,419
======= ======= =======
</TABLE>

See accompanying notes to financial statements.

F-6
<PAGE> 135

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
ELEVEN MONTHS
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
------------ ------------ -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES (NOTE 1):
Net income (loss)........................ $ 2,308 $(2,495) $(4,263)
Adjustments to reconcile net income
(loss) to cash flows provided by
operating activities:
Extraordinary item -- debt
extinguishment cost................. 110 -- --
Restructuring and other charges........ 1,814 1,031 6,463
Depreciation and amortization.......... 3,284 2,272 551
Allowance for doubtful accounts........ 774 247 (92)
Stock-based compensation............... 428 6,447 14
Deferred income taxes.................. 157 (702) 197
Changes in operating assets and
liabilities -- net of effects of
acquisitions:
Accounts receivable................. (3,150) (3,101) (1,334)
Inventory, prepaid expenses and
other current assets.............. (262) (240) 499
Accounts payable and accrued
expenses.......................... 618 (3,513) 536
Deferred revenue and customer
deposits.......................... (267) 2,312 445
-------- ------- -------
Net cash flows provided by
operating activities........ 5,814 2,258 3,016
-------- ------- -------
INVESTING ACTIVITIES:
Net cash paid for acquisitions........... (8,254) (12,501) (4,171)
Property and equipment expenditures...... (307) (894) (1,728)
Cash paid for other intangible assets.... (1,452) (2,252) (247)
Other.................................... (263) 72 416
-------- ------- -------
Net cash flows used in
investing activities........ (10,276) (15,575) (5,730)
-------- ------- -------
FINANCING ACTIVITIES:
Borrowings under credit facility and
other long-term debt................... 8,654 12,501 5,451
Principal payments on long-term debt..... (16,668) (208) (416)
Net cash advances from parent............ 13,370 1,916 107
Net repayment of other notes payable..... -- -- (2,325)
-------- ------- -------
Net cash flows provided by
financing activities........ 5,356 14,209 2,817
-------- ------- -------
Net increase in cash and cash
equivalents............................ 894 892 103
Cash and cash equivalents, beginning of
period................................. 1,633 741 638
-------- ------- -------
Cash and cash equivalents, end of
period................................. $ 2,527 $ 1,633 $ 741
======== ======= =======
</TABLE>

See accompanying notes to financial statements

F-7
<PAGE> 136

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

The accompanying financial statements include the operations, assets and
liabilities of the PracticeWorks Division (the "Division") of InfoCure
Corporation ("InfoCure"), which consists of InfoCure's information management
technology business for dental, orthodontic, oral and maxillofacial surgery
practices. In August 2000, InfoCure announced its plan to distribute to its
shareholders the shares of PracticeWorks, Inc., an indirect, wholly owned
subsidiary of InfoCure ("PracticeWorks"). Immediately prior to the distribution,
InfoCure will transfer the Division's assets and liabilities to PracticeWorks.
Those assets and liabilities will be reflected in PracticeWorks' financial
statements at InfoCure's historical cost.

The assets and liabilities of the Division (the "Contributed Businesses")
consist primarily of businesses InfoCure acquired at various times from the
consummation of InfoCure's initial public offering in July 1997 through 1999.
The Contributed Businesses include two acquisitions made by InfoCure in 1997,
one in 1998, and four in 1999, all of which were accounted for as purchases, and
also include five acquisitions during 1999 which were accounted for as poolings
of interests (see Note 3).

Revenues and expenses specifically identified with the Division have been
directly attributed to the Division in the financial statements. The Division's
costs and expenses in the accompanying financial statements include allocations
from InfoCure for centralized legal, accounting, treasury, real estate,
information technology, and other InfoCure corporate services and infrastructure
costs because specific identification of the expenses is not practicable. The
expense allocations have been determined on the bases that InfoCure and the
Division considered to be reasonable reflections of the utilization of services
provided or the benefit received by the Division using ratios such as relative
head count, sales and real estate occupied. However, the financial information
included herein may not necessarily reflect the financial position and results
of operations of PracticeWorks in the future or what these amounts would have
been had it been a separate, stand-alone entity during the periods presented.
However, we believe that if the Division had been a stand-alone entity during
the periods presented, the expenses would not have been materially different
from the allocations presented.

The Division is a provider of information management technology for
dentists, orthodontists and oral and maxillofacial surgeons. The Division's
offerings include practice management applications, business-to-business
e-commerce services, electronic data interchange, or EDI, services, ongoing
maintenance and support and training. These systems are designed to increase the
quality and reduce the cost of providing care by allowing dentists and
physicians to manage their practices more efficiently and reduce the
administrative burdens created by an increasingly complex healthcare
environment. The Division is currently developing new practice management
applications, tailored to the needs of dental, orthodontic, and oral and
maxillofacial surgery customers that can be delivered through its application
services provider, or ASP, delivery model and other Internet-based applications
and services.

F-8
<PAGE> 137
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FISCAL YEAR-END

InfoCure changed its fiscal reporting period to December 31 effective
February 1, 1997. Accordingly, the 1997 fiscal period is comprised of eleven
months.

REVENUE RECOGNITION

Revenue from software sales is recognized when all shipment obligations
have been met, fees are fixed and determinable, collection of the sale proceeds
is deemed probable and persuasive evidence that an agreement exists. Revenue
from hardware sales is recognized upon product shipment. Revenue from support
and maintenance contracts, which are typically one year in length, is recognized
ratably over the life of the contract. Revenue from other services is recognized
as the services are provided.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all highly liquid investments with
initial maturity dates of no more than three months. Historically, InfoCure has
managed cash for its divisions on a centralized basis.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments is the amount at which the
instrument could be exchanged in a current transaction between willing parties.
Management estimates that the carrying amounts of the Division's financial
instruments included in the accompanying balance sheets are not materially
different from their fair values.

INVENTORIES

Inventory consists primarily of peripheral computer equipment and related
supplies. Inventory is accounted for on the first-in, first-out basis and
reported at the lower of cost or market.

PROPERTY AND EQUIPMENT

Property and equipment, including equipment under capital leases, are
stated at the lower of the fair value or cost. Depreciation is computed over the
estimated useful lives of the related assets using both straight-line and
accelerated methods for financial reporting and primarily accelerated methods
for income tax purposes. Substantial betterments to property and equipment are
capitalized and repairs and maintenance are expensed as incurred.

F-9
<PAGE> 138
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

CAPITALIZED COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE MARKETED

Costs incurred, such as planning, designing, coding and testing, for
computer software to be sold, leased or otherwise marketed are expensed as
incurred prior to establishing the technological feasibility of a product.
Technological feasibility is generally achieved when the detail program design
or a working model has been completed. For the period between the establishment
of technological feasibility and the time a product is available for general
release, such costs are capitalized. Capitalized software costs are amortized
using the straight-line method over the estimated lives of the related products
(generally 48 months). During the fourth quarter of 1999, PracticeWorks adopted
a new product strategy involving the development of ASP applications and other
Internet-based applications and services. Additionally, in connection with
restructuring the businesses of recently acquired companies, management decided
to modify future product offerings. As a result of these decisions, the Division
recorded a charge of approximately $874,000 million in the fourth quarter of
1999 representing the write-off of the carrying value of software development
costs. A write-down of capitalized software in the amount of $339,000 was also
recorded in 1997 (Note 4).

COSTS OF COMPUTER SOFTWARE DEVELOPED FOR INTERNAL USE

Computer software development costs that are incurred during the
preliminary stage of development, such as product evaluation and selection, are
expensed as incurred. Costs incurred during the application development stage,
such as design coding and installation, are capitalized and amortized over the
useful life of the product, which is generally four years. Training, maintenance
and data conversion costs are expensed as incurred.

GOODWILL AND OTHER INTANGIBLE ASSETS

Intangible assets consist primarily of goodwill, which represents the
excess of cost over the fair value of assets acquired in business combinations
accounted for under the purchase method. All goodwill is amortized on a
straight-line basis over its estimated useful life. Prior to the fourth quarter
of 1999, goodwill was amortized over a 15 year estimated useful life, which was
reflective of management's analysis that goodwill is derived from the historical
and estimated future lives of its customer relationships, the longevity and
continuing use of its core products and the relatively minor impact of
technological obsolescence on these core products. As a result of InfoCure's
change in product strategy involving the development of ASP applications and
other Internet-based applications and services, its transition to a subscription
pricing model and the current rate of change within the industry, management now
estimates that the useful life of its remaining goodwill will be three years.

Other intangible assets also include (1) purchased technology, to be
amortized over four years, (2) customer lists, amortized over three years and
(3) deferred loan costs, amortized over the life of the respective loans at
rates which approximate the interest method.

F-10
<PAGE> 139
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

LONG-LIVED ASSETS

Long-lived assets, such as goodwill, property and equipment and capitalized
software development costs and cost of computer software developed for internal
use are periodically evaluated for impairment when events or changes in
circumstances indicate that the carrying amount of the assets may not be
recoverable through the estimated undiscounted future cash flows resulting from
the use of the assets. When any such impairment exists, the related assets will
be written down to fair value. A write-down of assets due to impairment in the
aggregate amount of $3.6 million, primarily related to goodwill, was required
for the eleven months ended December 31, 1997 (Note 4).

CHANGE IN ACCOUNTING ESTIMATES

In view of recent competitive developments, the rapid pace of change
engendered by the encroachment of Internet companies into the marketplace and
InfoCure's change in product strategy involving the development of ASP
applications and other Internet-based applications and services and the
transition to a subscription pricing model, management has reassessed the useful
life of goodwill. While in management's opinion, there is currently no
impairment in the carrying value of this long-lived intangible asset (based on
an analysis of undiscounted future cash flows), management has determined that
the useful life of goodwill should be shortened substantially to be more
reflective of the current rate of technological change and competitive
conditions. Accordingly, management changed the estimated useful life of
goodwill from an original life of 15 years to a remaining life of three years,
which change has been applied prospectively from the fourth quarter of 1999.
This change in accounting estimate increased amortization expense by
approximately $800,000 in 1999.

Additionally, based on InfoCure's analysis of current business and market
conditions, its cash collection experience and, in light of the potential
write-offs associated with customers migrating from traditional support programs
to InfoCure's subscription pricing offerings, management also increased the
allowance for doubtful accounts in 1999. This change of accounting estimate,
recorded in the fourth quarter of 1999, increased selling, general and
administrative expenses by $700,000 in 1999.

DIVISIONAL EQUITY

Divisional Equity represents InfoCure's net investment in and advances to
the Division. Intercompany interest expense has been allocated to, or included
in, the accompanying financial statements only for that portion of third-party
debt attributed to the Division. No intercompany interest income or expense has
been allocated to the Division for InfoCure's net investment in the Division.

STOCK-BASED COMPENSATION PLANS

The Division accounts for its stock-based compensation plans under the
provisions of Accounting Principles Board Opinion ("APB") No. 25, "Accounting
for Stock Issued to

F-11
<PAGE> 140
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Employees." In Note 10, the Division presents the disclosure requirements of
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-based Compensation." SFAS No. 123 requires that companies which elect not
to account for stock-based compensation as prescribed by that statement shall
disclose, among other things, the pro forma effects on net loss as if SFAS No.
123 had been adopted.

INCOME TAXES

For the periods presented, the Division was not a separate taxable entity
for federal, state or local income tax purposes and its operating results are
included in InfoCure's tax returns. The Division calculates its income taxes
under the separate return method and accounts for income taxes under an asset
and liability approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the Division's financial statements or tax returns. In estimating
future tax consequences, management generally considers all expected future
events other than possible enactments of changes in the tax laws or rates.

RESTRUCTURING COSTS

The Division records the costs of consolidating acquired operations into
the Division's existing facilities, including the external costs and liabilities
to close redundant Division facilities and severance and relocation costs
related to the Division's employees in accordance with Emerging Issues Task
Force Issue ("EITF") No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in Restructuring)."

PER SHARE DATA

The historical capital structure of the Division is not representative of
the future capital structure of PracticeWorks. The Division issued common stock
to a wholly owned subsidiary of InfoCure in August 2000 and will commence
operations as a separate legal entity upon completion of the distribution. For
purposes of these financial statements, we have assumed a distribution ratio of
1/4 share of PracticeWorks common stock for every outstanding share of InfoCure
common stock. The weighted average shares outstanding are based on the
outstanding shares of InfoCure and the assumed distribution ratio. The financial
information included herein may not reflect the financial position, results of
operations, changes in divisional equity and cash flows of the Division in the
future or what they would have been had the Division been a separate,
stand-alone entity during the periods presented.

MANAGEMENT ESTIMATES

F-12
<PAGE> 141
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.

NEW ACCOUNTING PRONOUNCEMENTS

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." This statement
provides guidance on accounting for the costs of computer software developed or
obtained for internal use and determining whether computer software is for
internal use. SOP No. 98-1 was effective in 1999. Adoption of this statement did
not have a significant impact on the Division's financial statements.

SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended, is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives), and for
hedging activities. Historically, the Division has not entered into derivatives
contracts either to hedge existing risks or for speculative purposes.
Accordingly, the Division does not expect adoption of the new standard on
January 1, 2001, to affect its financial statements.

The Financial Accounting Standards Board issued Interpretation
("Interpretation") No. 44, "Accounting for Certain Transactions involving Stock
Compensation, an Interpretation of APB Opinion No. 25" which is effective July
1, 2000. Interpretation No. 44 clarifies (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining whether a
stock compensation plan qualifies as a noncompensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. Adoption of the provisions of the
Interpretation are not expected to have a significant impact on the Division's
financial statements.

In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101
"Revenue Recognition" which outlines the basic criteria that must be met to
recognize revenue and provides guidance for presentation of revenue and for
disclosure related to revenue recognition policies in financial statements filed
with the SEC. The Division believes that adopting SAB No. 101 will not have a
material impact on its financial position or results of operations.

F-13
<PAGE> 142
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. BUSINESS COMBINATIONS

As discussed in Note 1, InfoCure completed 12 acquisitions attributable to
the Division at various times from the consummation of InfoCure's initial public
offering in July 1997 through 1999.

ACQUISITIONS ACCOUNTED FOR USING THE PURCHASE METHOD OF ACCOUNTING

The following tables summarize the fair values of the assets acquired,
liabilities assumed and consideration given in connection with the acquisitions
completed in each of the following years within the Division accounted for as
purchases:

<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Accounts receivable.................................. $ 555 $ 134 $ 649
Inventory............................................ 43 -- 261
Prepaid expenses..................................... 39 152 94
Property and equipment............................... 260 159 582
Goodwill............................................. 10,526 14,988 9,099
Capitalized software................................. 116 420 828
Other assets......................................... 200 72 393
Deferred revenue..................................... (925) (715) (1,292)
Accounts payable and accrued expenses................ (560) (9) (418)
Notes payable........................................ -- -- (1,347)
Other liabilities.................................... -- -- (978)
------- ------- -------
Net assets acquired................................ $10,254 $15,201 $ 7,871
======= ======= =======
These acquisitions were funded as follows:
InfoCure common stock................................ $ 2,000 $ 2,700 $ 3,700
Cash................................................. 8,254 12,501 4,171
------- ------- -------
$10,254 $15,201 $ 7,871
======= ======= =======
</TABLE>

Certain of the purchase acquisition agreements provided for additional
consideration based on the acquired company attaining specified revenue or
operating income goals. Maximum determinable contingent consideration aggregated
$2.0 million, $4.4 million and $3.4 million for acquisitions accounted for as
purchases during 1999, 1998 and 1997, respectively. As more fully described in
Note 4, portions of the contingent consideration related to certain acquisitions
were deemed earned and payable in connection with the Division's restructuring
plans. Accordingly, restructuring costs for the years ended December 31, 1999
and 1998 and the eleven months ended December 31, 1997 included approximately
$700,000, $750,000 and $2.2 million, respectively, in settlement of estimated
contingent consideration obligations related to the affected companies.

In 1999, contingent consideration of approximately $4.4 million was earned
and accrued as additional purchase price pursuant to the terms of the original
purchase agreements and was paid during 2000. As of December 31, 1999, maximum
contingent consideration payable based on future performance is $2.0 million.

F-14
<PAGE> 143
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The following unaudited pro forma information presents the results of
operations of the Division as if each of the acquisitions had occurred as of the
beginning of the immediately preceding period. The pro forma information is not
necessarily indicative of what would have occurred had the acquisitions been
made as of such periods, nor is it indicative of future results of operations.
The pro forma amounts give effect to appropriate adjustments for the fair value
of the assets acquired, reductions in personnel costs and other operating
expenses not assumed as part of the acquisitions, amortization of intangibles,
interest expense and income taxes.

<TABLE>
<CAPTION>
ELEVEN MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------- DECEMBER 31,
PRO FORMA AMOUNTS 1999 1998 1997
----------------- ------------ ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenue............................ $61,633 $52,044 $26,687
Pro forma net income (loss)........ 1,501 (3,100) (3,983)
</TABLE>

ACQUISITIONS ACCOUNTED FOR USING THE POOLING OF INTERESTS METHOD OF ACCOUNTING

Five of the Contributed Businesses acquired by InfoCure during 1999 were
accounted for as poolings of interests which provided for the exchange of
substantially all of the outstanding equity interest of each entity for shares
of InfoCure common stock. Accordingly, the accompanying financial statements
have been restated for all periods presented to include the financial position,
results of operations and cash flows of the combined companies. The following
table summarizes shares of InfoCure stock issued in these acquisitions:

<TABLE>
<CAPTION>
SHARES OF
COMPANY INFOCURE ISSUED CLOSING DATE
------- --------------- -----------------
<S> <C> <C>
OMSystems, Inc. ("OMS")....................... 2,287,998 February 18, 1999
Ardsley, M.I.S., Inc. ("Orthoware")........... 209,016 August 17, 1999
Kevin Kozlowski, Inc. d/b/a Human Touch
Software ("Human Touch").................... 255,247 December 20, 1999
Unident Corporation ("Unident")............... 357,796 December 21, 1999
InfoLogic, Inc. ("InfoLogic")................. 102,096 December 21, 1999
</TABLE>

F-15
<PAGE> 144
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The following table presents a reconciliation of revenue, income (loss)
before extraordinary item and pro forma net income (loss) to those presented in
the accompanying financial statements.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, ELEVEN MONTHS ENDED
--------------------------- DECEMBER 31,
1999 1998 1997
------------ ------------ -------------------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUE:
The Division........................ $22,238 $18,815 $ 4,898
OMS................................. 18,651 14,993 12,325
Orthoware........................... 2,330 1,800 1,301
Human Touch......................... 2,288 1,007 798
Unident............................. 6,518 4,510 353
InfoLogic........................... 2,566 2,362 1,809
------- ------- -------
$54,591 $43,487 $21,484
======= ======= =======
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM:
The Division........................ $ 3,239 $ 1,022 $(5,931)
OMS................................. 1,623 (3,296) 1,703
Orthoware........................... 260 (73) (2)
Human Touch......................... 34 (1) (17)
Unident............................. (1,545) (163) (27)
InfoLogic........................... (1,231) 16 11
------- ------- -------
$ 2,380 $(2,495) $(4,263)
======= ======= =======
PRO FORMA NET INCOME (LOSS) -- AFTER
EXTRAORDINARY ITEM:
The Division........................ $ 3,167 $ 1,022 $(5,931)
OMS................................. 1,623 (3,296) 1,703
Orthoware........................... 260 (73) (2)
Human Touch......................... 34 (1) (17)
Unident............................. (1,545) (163) (27)
InfoLogic........................... (1,231) 16 11
Pro forma tax adjustments........... 384 1,350 (653)
------- ------- -------
$ 2,692 $(1,145) $(4,916)
======= ======= =======
</TABLE>

Certain of the companies acquired in 1999 as poolings of interests ("1999
Pooled Companies") had fiscal years that differed from that of the Division.
Therefore, the balance sheet as of December 31, 1998 reflects the combination of
the Division's balance sheet as of this date with the balance sheets of the 1999
Pooled Companies as of the dates that most closely correspond thereto. The
statements of operations for the year ended December 31, 1998 and the eleven
months ended December 31, 1997 reflect the combination of the Division's results
for these periods with the results of each of the 1999 Pooled Companies for the
most closely comparable periods. As of and for the year ended December 31, 1999,
the 1999 Pooled Companies' balance sheets and statements of operations have been
restated to coincide with the Division's year-end. As a result, certain

F-16
<PAGE> 145
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

of the 1999 Pooled Companies' operations are included in both 1999 and 1998. The
net revenue and net loss for such duplicated periods was approximately $300,000
and $161,000, respectively.

The Division incurred costs of approximately $659,000 in completing the
acquisition of the 1999 Pooled Companies'. Such costs consisted principally of
professional fees and related transaction costs.

4. RESTRUCTURING AND OTHER CHARGES

THE 1999 PLAN. In the fourth quarter of 1999, InfoCure decided to
restructure its business into a medical division and a dental division. The
dental division formed in this restructuring constitutes the business that will
be transferred to PracticeWorks immediately prior to the distribution. At the
time of the restructuring, the Division's management decided to transition to
subscription pricing and to commence development of ASP applications and other
Internet-based applications and services. The Division's management committed to
a plan of restructuring and reorganization in connection with the establishment
of the dental division and these changes in the Division's pricing model and
product strategy. This restructuring plan, which was substantially completed in
the second quarter of 2000, included consolidating facilities and eliminating
staffing redundancies involving approximately 30 employees.

In connection with the change in product strategy, management also
re-evaluated the carrying value of its investment in capitalized software. As a
result, the Division recorded as a part of restructuring and other charges for
1999, an $874,000 write-off of capitalized software.

Staffing reductions were finalized for the new dental division and
communicated in the first quarter of 2000. Accordingly, compensation costs,
including severance and other termination benefits aggregating approximately
$600,000 are expected to be recorded in the first quarter of 2000 in accordance
with the provisions of EITF No. 94-3.

THE 1997 PLAN. Effective December 1, 1997, management determined to
restructure through a plan to consolidate existing facilities and acquired
operations. This restructuring plan enabled the Division to leverage more
effectively present and planned acquisitions, streamline its offering of
products and services and respond more effectively to changing market
conditions. In connection therewith, management also re-evaluated the Division's
investment in goodwill and capitalized software in light of current market
conditions and the restructuring plan. Management determined that, based on
current market conditions and an analysis of projected undiscounted future cash
flows calculated in accordance with the provisions of SFAS No. 121, the carrying
amount of certain long-lived assets may not be recoverable. The resultant
impairment of long-lived assets was due principally to the impact of
then-pending acquisitions, as a result of management's intention to migrate the
existing customer base to the new product offerings (Notes 1 and 3). This
impairment necessitated a write-down of approximately $3.5 million of goodwill
representing the excess of cost over net assets of an acquisition completed in
July 1997. The estimated fair values of these long-lived assets were determined
by calculating the present value of estimated

F-17
<PAGE> 146
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

expected future cash flows using a discount rate commensurate with the risks
involved. Additionally, a $339,000 write-down of capitalized software, whose
future utility was diminished based on market conditions, was also recorded.

Under the 1997 restructuring plan, which was completed in the second
quarter of 1998, the Division also recorded approximately $401,000 of costs and
accrued liabilities to close redundant facilities, cancel leases and other
executory contracts, recognized approximately $2.2 million related to contingent
consideration earned or deemed payable under terms of certain acquisition
agreements for acquired companies whose products were discontinued as part of
the consolidation and restructuring and terminated certain redundant staff
positions. Details of this element of the restructuring plan were finalized and
communicated in the first quarter of 1998. Accordingly, compensation costs,
including severance and other termination benefits for approximately 15
employees, and other future costs related to the restructuring aggregating
$281,000, were recognized in the first quarter of 1998 in accordance with EITF
No. 94-3. Additionally, in the first quarter of 1998, the Division recognized
$750,000 in final settlement of the contingent consideration.

A description of the type and amount of restructuring costs and other
charges recorded at the commitment date and subsequently incurred for all of the
restructurings discussed above are as follows:
<TABLE>
<CAPTION>
RESERVES
ESTABLISHED
ELEVEN
MONTHS COSTS RESERVE COSTS RESERVE
ENDED APPLIED BALANCE APPLIED BALANCE
DECEMBER AGAINST DECEMBER RESERVE AGAINST DECEMBER
DESCRIPTION 31, 1997 RESERVES 31, 1997 ADJUSTMENTS RESERVES 31, 1998
----------- ----------- -------- -------- ----------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Write-off of goodwill.......................... $3,483 $(3,483) $ -- $ -- $ -- $ --
Write-off of capitalized software development
costs......................................... 339 (339) -- -- -- --
Facility closure, consolidation and lease
termination costs............................. 401 -- 401 -- (118) 283
Contingent consideration earned or deemed
payable to former stockholders of entities
whose products were discontinued as part of
the consolidation and restructuring........... 2,150 -- 2,150 750 (2,900) --
Compensation costs for severance and other
termination benefits.......................... -- -- -- 281 (281) --
Other asset write-downs and costs.............. 90 -- 90 -- (90) --
------ ------- ------ ------ ------- ----
$6,463 $(3,822) $2,641 $1,031 $(3,389) $283
====== ======= ====== ====== ======= ====

COSTS RESERVE
APPLIED BALANCE
RESERVE AGAINST DECEMBER
DESCRIPTION ADJUSTMENTS RESERVES 31, 1999
----------- ----------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Write-off of goodwill.......................... $ -- $ -- $ --
Write-off of capitalized software development
costs......................................... 874 (874) --
Facility closure, consolidation and lease
termination costs............................. 95 (283) 95
Contingent consideration earned or deemed
payable to former stockholders of entities
whose products were discontinued as part of
the consolidation and restructuring........... 700 (350) 350
Compensation costs for severance and other
termination benefits.......................... 48 (48) --
Other asset write-downs and costs.............. 97 (97) --
------ ------- ----
$1,814 $(1,652) $445
====== ======= ====
</TABLE>

The terminated leases have various expiration dates through 2004 and the
other costs will be substantially paid in the first half of 2000.

F-18
<PAGE> 147
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. PROPERTY AND EQUIPMENT

Major classes of property and equipment consisted of the following:

<TABLE>
<CAPTION>
ESTIMATED DECEMBER 31,
USEFUL LIVES ---------------
(YEARS) 1999 1998
------------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Buildings........................................... 40 $1,883 $1,871
Office and computer equipment....................... 3-5 2,193 1,985
Furniture and fixtures.............................. 5-7 733 713
Leasehold improvements and other.................... 3-5 302 307
------ ------
5,111 4,876
Less accumulated depreciation....................... 3,065 2,355
------ ------
$2,046 $2,521
====== ======
</TABLE>

Depreciation expense was approximately $900,000, $800,000 and $300,000 for
the years ended December 31, 1999 and 1998 and the eleven months ended December
31, 1997, respectively. In connection with the restructuring plans described in
Note 4, the Division disposed of property and equipment, primarily office and
computer equipment, with a net book value of approximately $97,000 and $90,000
in 1999 and 1997, respectively.

6. OTHER INTANGIBLE ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1999 1998
------ ------
(IN THOUSANDS)
<S> <C> <C>
Purchased technology........................................ $6,530 $ --
Capitalized software development costs...................... 1,118 2,207
Loan costs.................................................. 423 1,155
Other....................................................... 102 209
------ ------
8,173 3,571
Less accumulated amortization............................... 367 657
------ ------
$7,806 $2,914
====== ======
</TABLE>

In the fourth quarter of 1999, InfoCure acquired technology for delivering
practice management applications in an ASP delivery model in exchange for cash
and common stock aggregating approximately $6.5 million. This technology will be
utilized by the Division's research and development staff in the development of
its own ASP applications. At the time of acquisition, the software had reached
technological feasibility and was in beta testing at three pilot sites. Costs to
complete this technology will be capitalized until products are ready for
general release, scheduled for the fourth quarter of 2000, and then will be
amortized over the products' estimated useful life. As described in Note 4,
approximately $874,000 of capitalized software was written off in 1999 as a
result of this

F-19
<PAGE> 148
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

change in product strategy. The remaining capitalized software development costs
relate to products not being replaced, primarily those related to various
e-commerce applications.

Amortization of capitalized software charged to operations was
approximately $267,000, $135,000, $29,000 for the years ended December 31, 1999
and 1998 and the eleven months ended December 31, 1997, respectively. As
discussed in Note 8, approximately $110,000 was allocated to the Division for
the write-off of unamortized loan costs in conjunction with the April 1999
prepayment of InfoCure's acquisition credit facility.

7. ACCRUED EXPENSES

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1999 1998
------ ------
(IN THOUSANDS)
<S> <C> <C>
Additional purchase price consideration..................... $4,400 $ --
Compensation................................................ 24 137
Interest.................................................... 426 334
Taxes, other than income.................................... 93 511
Other....................................................... 769 468
------ ------
$5,712 $1,450
====== ======
</TABLE>

8. LONG-TERM DEBT

The amounts recorded as notes payable and other long-term debt attributable
to the Division represent borrowings under Infocure's credit facility or other
note agreements which were used primarily to acquire the Contributed Businesses
and other Division assets. Long-term debt consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1999 1998
------ -------
(IN THOUSANDS)
<S> <C> <C>
Notes payable, FINOVA Capital Corporation
("FINOVA") (a)............................................ $8,604 $16,668
Other....................................................... 1,126 1,076
------ -------
9,730 17,744
Less current portion........................................ 116 2,975
------ -------
$9,614 $14,769
====== =======
</TABLE>

-------------------------

(a) Under provisions of an agreement dated August 11, 1999, InfoCure has a
$100.0 million credit facility with FINOVA including a revolving loan for
the funding of the acquisition program and working capital needs and a term
loan for certain real estate purchases. The total amount outstanding under
this facility was $36.8 million and

F-20
<PAGE> 149
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

$68.4 million, as of December 31, 1999 and 1998, respectively. The credit
facility has a five-year term and is collateralized by substantially all of
InfoCure's assets and accounts receivable, cash flows and assets of any
companies acquired in the future. Interest accrues at an annual rate based,
at InfoCure's option, on prime plus 0.5% to 1.25% or LIBOR plus 2.0% to
2.75%, depending on the achievement of certain debt service ratios. At
December 31, 1999, the rate was 9.0%. The agreement provides for mandatory
prepayments based upon achieving certain defined levels of cash flows and
contains certain restrictive covenants. The agreement was amended in August
2000. See Note 13 regarding the distribution agreement.

InfoCure's previous credit facility was repaid in April 1999 with proceeds
from the sale of its common stock. In connection with this early retirement of
debt, an extraordinary item was recognized for the unamortized portion of the
loan costs and prepayment costs which aggregated approximately $4.9 million and,
net of estimated tax effect, approximately $2.9 million. The Division was
allocated approximately $72,000, net of estimated tax effect, based on its
respective share of the borrowings.

As of December 31, 1999, future maturities of long-term debt are as
follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
---- --------------
(IN THOUSANDS)
<S> <C>
2000........................................................ $ 116
2001........................................................ 561
2002........................................................ 1,837
2003........................................................ 1,837
2004........................................................ 4,848
Thereafter.................................................. 531
------
$9,730
======
</TABLE>

9. COMMITMENTS

OPERATING LEASES

InfoCure leases office facilities and certain equipment under operating
leases having original terms ranging from one to seven years. Approximate future
minimum rentals, by year and in the aggregate, under noncancellable operating
leases with remaining terms of more than one year that relate to facilities and
equipment utilized by the Division are as follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
---- --------------
(IN THOUSANDS)
<S> <C>
2000........................................................ $ 773
2001........................................................ 609
2002........................................................ 583
2003........................................................ 551
2004........................................................ 481
------
Total..................................................... $2,997
======
</TABLE>

F-21
<PAGE> 150
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Rent expense was approximately $528,000, $323,000 and $485,000 for the
years ended December 31, 1999 and 1998 and the eleven months ended December 31,
1997, respectively.

EMPLOYEE BENEFIT PLAN

The Division's eligible employees may participate in a plan known as the
InfoCure 401(k) Plan (the "Plan"). Eligible employees may contribute up to 15%
of their annual salary to the Plan, subject to certain limitations. InfoCure may
make matching contributions and may also provide profit-sharing contributions at
its sole discretion. Employees become fully vested in any employer contributions
after five years of service. The Division's expense related to employee benefit
plans for the years ended December 31, 1999 and 1998 and the eleven months ended
December 31, 1997 were $680,000, $205,000 and $40,000, respectively. During 2000
and 1999, InfoCure, using InfoCure common stock, made the contribution for the
years ended December 31, 1999 and 1998, respectively.

10. STOCK COMPENSATION PLANS

InfoCure has stock option plans under which the Division's employees and
directors may be granted options to purchase common stock. Options are granted
at not less than the fair market value at grant date (110% of such value for 10%
stockholders). Options vest ratably over the four-year period beginning on the
grant date.

SFAS No. 123, "Accounting for Stock-Based Compensation," defines a "fair
value method" of accounting for employee stock options. It also allows
accounting for such options under the "intrinsic value method" in accordance
with APB No. 25, "Accounting for Stock Issued to Employees" and related
interpretations. If a company elects to use the intrinsic value method, then pro
forma disclosures of earnings and earnings per share are required as if the fair
value method of accounting was applied. The effects of applying SFAS No. 123 in
the pro forma disclosures are not necessarily indicative of future amounts
because the pro forma disclosures do not take into account the amortization of
the fair value of awards prior to 1995.

Management has elected to account for its stock options under the intrinsic
value method as outlined in APB No. 25. The fair value method requires use of
option valuation models, such as the Black-Scholes option valuation model, to
value employee stock options, upon which a compensation expense is based. The
Black-Scholes option valuation model was not developed for use in valuing
employee stock options. Instead, this model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
InfoCure's stock options have characteristics significantly different from those
of traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, it is management's opinion that the
existing models do not necessarily provide a reliable measure of the fair value
of its employee stock options. Under the intrinsic value method, compensation
expense is only recognized if the exercise

F-22
<PAGE> 151
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

price of the employee stock option is less than the market price of the
underlying stock on the date of grant.

The fair value for InfoCure's employee stock options was estimated at the
date of grant using the Black-Scholes option pricing model with the following
weighted average assumptions for the years ended December 31, 1999 and 1998 and
the eleven months ended December 31, 1997.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, ELEVEN MONTHS
------------------------------------- ENDED DECEMBER 31,
1999 1998 1997
----------------- ----------------- ------------------
<S> <C> <C> <C>
Risk-free interest rate...... 6.2% 6.0% 5.7-6.2%
Dividend yield............... 0.0% 0.0% 0.0%
Volatility factor............ 119.0% 58.0% 19.7%
Weighted average expected
life (in years)............ 4 4 5
</TABLE>

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Division's
pro forma information, based on the estimated options to be held by the
Division's employees, follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, ELEVEN MONTHS
----------------- ENDED DECEMBER 31,
1999 1998 1997
------- ------- ------------------
(IN THOUSANDS)
<S> <C> <C> <C>
PRO FORMA NET INCOME (LOSS):
As reported................................. $ 2,308 $(2,495) $ (4,263)
Pro forma................................... (1,446) (3,052) (4,313)
</TABLE>

F-23
<PAGE> 152
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

11. INCOME TAXES

The components of the provision (benefit) for income taxes are as follows:

<TABLE>
<CAPTION>
ELEVEN
MONTHS
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1997
------ ------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
CURRENT:
Federal............................................ $1,316 $ 420 $ --
State.............................................. 291 90 --
------ ------ -----
Total current expense......................... 1,607 510 --
------ ------ -----
DEFERRED:
Federal............................................ 138 (619) 174
State.............................................. 19 (83) 23
Change in deferred tax asset valuation allowance... -- (285) 285
------ ------ -----
Total deferred expense (benefit).............. 157 (987) 482
------ ------ -----
Total income tax expense (benefit) before
extraordinary item.......................... 1,764 (477) 482
Income tax benefit on extraordinary item........... 38 -- --
Pro forma tax adjustments for pooled companies..... 384 1,350 (653)
------ ------ -----
Provision (benefit) for income taxes.......... $2,186 $ 873 $(171)
====== ====== =====
</TABLE>

Deferred taxes result from temporary differences between the bases of
assets and liabilities for financial reporting purposes and such amounts as
measured by tax laws and regulations. The sources of the temporary differences
and their effect on deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
---- ------
(IN THOUSANDS)
<S> <C> <C>
CURRENT:
Deferred tax assets:
Allowance for doubtful accounts........................... $203 $ 63
Deferred revenue and customer deposits.................... 246 416
Accrued restructuring costs............................... 211 72
Accrued expenses.......................................... 9 223
---- ------
Total current deferred tax assets.................... $669 $ 774
==== ======
NONCURRENT:
Deferred tax assets:
Basis difference of goodwill, capitalized software costs,
property and equipment and other intangible assets..... $108 $ 888
Net operating loss carry forwards......................... -- 289
---- ------
Total noncurrent deferred tax assets................. 108 1,177
---- ------
$777 $1,951
==== ======
</TABLE>

F-24
<PAGE> 153
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Division's effective income tax rate varied from the U.S. federal
statutory rate as follows:

<TABLE>
<CAPTION>
YEAR ENDED ELEVEN MONTHS
DECEMBER 31, ENDED
1999 1998 DECEMBER 31, 1997
------ ----- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Expected tax expense (benefit).................. $1,552 $(552) $(1,505)
Increase (decrease) in income taxes resulting
from:
State income taxes............................ 213 (76) (207)
Nondeductible goodwill amortization........... 104 372 2,201
Other, net.................................... (67) 64 (292)
Effect of operations of pooled companies which
were pass-through entities................. 384 1,350 (653)
Change in deferred tax asset valuation
allowance.................................. -- (285) 285
------ ----- -------
Net income tax expense (benefit)........... $2,186 $ 873 $ (171)
====== ===== =======
</TABLE>

As discussed in Notes 1 and 3, acquisitions attributed to the Division
included five companies accounted for as pooling of interests. Four of these
five companies were pass-through entities for tax purposes in which the
then-owners agreed to report their share of income or loss in their respective
individual income tax returns. Upon their acquisition, the pass-through tax
status terminated. Pro forma net income (loss) is presented in the statement of
operations as if each of these entities had been a taxable corporation during
the periods presented.

12. SUPPLEMENTAL CASH FLOW INFORMATION

All required cash payments for interest and income taxes were made by
InfoCure on behalf of the Division.

13. SUBSEQUENT EVENTS

ACQUISITION

During 1999, InfoCure entered into a definitive agreement to acquire
Medical Dynamics, Inc. ("MEDY"), a dental practice management company. As
amended, this agreement contemplates the issuance of shares of InfoCure common
stock and shares of PracticeWorks common and preferred stock in exchange for all
the outstanding equity interests of MEDY. The transaction is expected to close
during the first quarter of 2001 and is being attributed to the Division. In
connection with this proposed transaction, as of October 31, 2000, InfoCure has
advanced MEDY $1.55 million under terms of a loan agreement dated October 1999.
As of December 31, 1999, $500,000 had been advanced, which is reflected in other
non-current assets in the accompanying balance sheet. PracticeWorks will assume
all obligations of InfoCure under the merger agreement except for InfoCure's
obligations to issue a specified number of shares of its common stock.

F-25
<PAGE> 154
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

AGREEMENTS WITH INFOCURE

For purposes of governing certain of the ongoing relationships between
PracticeWorks and InfoCure and to provide for an orderly transition to the
status of two independent companies, PracticeWorks and InfoCure will enter into
various agreements. A brief description of each of the agreements follows:

DISTRIBUTION AGREEMENT. Prior to the distribution date, InfoCure and
PracticeWorks will enter into a Distribution Agreement, which will provide
for, among other things, the principal corporate transactions required to
effect the distribution and the exchange and other agreements relating to
the continuing relationship between PracticeWorks and InfoCure after the
distribution. Pursuant to the Distribution Agreement, InfoCure will
transfer or cause to be transferred to PracticeWorks all assets and
liabilities relating to InfoCure's information management technology
provider business for dentists, orthodontists and oral and maxillofacial
surgeons, and InfoCure will acquire all of the issued and outstanding stock
of PracticeWorks. InfoCure will then effect the distribution by delivering
a certificate or certificates representing all of the shares of
PracticeWorks common stock and preferred stock to be distributed to
InfoCure's stockholders to the distribution agent.

Under the Distribution Agreement and effective as of the distribution
date, PracticeWorks will assume, and will agree to indemnify InfoCure
against, all liabilities, litigation and claims, including related
insurance costs, arising out of its business, and InfoCure will retain, and
will agree to indemnify PracticeWorks against, all liabilities, litigation
and claims, including related insurance costs, arising out of InfoCure's
businesses. The foregoing obligations will not entitle an indemnified party
to recovery to the extent any such liability is covered by proceeds
received by such party from any third party insurance policy.

The Distribution Agreement will provide that each of InfoCure and
PracticeWorks will be granted access to certain records and information in
the possession of the other, and will require the retention by each of
InfoCure and PracticeWorks for a period of eight years following the
distribution date of all such information in its possession. Also, the
Distribution Agreement provides for a three-year period during which
neither InfoCure nor PracticeWorks may solicit pre-existing customers or
employees of the other party.

TRANSITION SERVICES AGREEMENT. InfoCure and PracticeWorks will enter
into a Transition Services Agreement prior to the distribution date.
InfoCure will provide to PracticeWorks services including insurance-related
services, employee benefit services and specified information technology
services, and PracticeWorks will provide to InfoCure services including the
preparation of tax returns, maintenance of the general ledger, preparation
of financial statements, corporate record-keeping and payroll. The fees
paid pursuant to the Transition Services Agreement will be equal to (a) a
pro rata portion of the cost of providing the services, based solely on the
number of employees of each company, with respect to payroll services and
employee benefits services and (b) the aggregate of all expenses and costs
attributable to the provision

F-26
<PAGE> 155
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

of the services, with respect to all other services. The Transition
Services Agreement will provide that each of InfoCure and PracticeWorks
will undertake to provide the same degree of care and diligence as it uses
in providing these services to itself and its subsidiaries. Provision of
any service under the Transition Services Agreement will terminate upon 60
days prior written notice by either company, but in no event may any
service be terminated prior to February 28, 2001.

TAX DISAFFILIATION AGREEMENT. InfoCure and PracticeWorks will enter
into a Tax Disaffiliation Agreement which will identify each party's rights
and obligations with respect to deficiencies and refunds, if any, of
federal, state, local or foreign taxes for periods before and after the
distribution and related matters such as the filing of tax returns and the
conduct of Internal Revenue Service and other audits. Under the Tax
Disaffiliation Agreement, PracticeWorks will indemnify InfoCure for any tax
liability of PracticeWorks or its affiliates for any period. PracticeWorks
will also indemnify InfoCure for all taxes and liabilities incurred solely
because (1) PracticeWorks breaches a representation or covenant given to
King & Spalding in connection with rendering its tax opinion, which breach
contributes to an Internal Revenue Service determination that the
distribution and the exchange were not tax-free or (2) a post-distribution
action or omission by PracticeWorks or an affiliate of PracticeWorks
contributes to an Internal Revenue Service determination that the
distribution and the exchange were not tax-free. InfoCure will indemnify
PracticeWorks for all taxes and liabilities incurred solely because (1)
InfoCure breaches a representation or covenant given to King & Spalding in
connection with rendering its tax opinion, which breach contributes to an
Internal Revenue Service determination that the distribution and the
exchange were not tax-free, or (2) a post-distribution action or omission
by InfoCure or an affiliate contributes to an Internal Revenue Service
determination that the distribution and the exchange were not tax-free. If
the Internal Revenue Service determines that the distribution was not
tax-free for any other reason, InfoCure and PracticeWorks will indemnify
each other against 50% of all taxes and liabilities.

PracticeWorks will also indemnify InfoCure for any taxes resulting
from any internal realignment undertaken to facilitate the distribution and
the exchange on or before the distribution date. Any such taxes are not
expected to be material.

EMPLOYEE BENEFITS AND COMPENSATION ALLOCATION AGREEMENT. Prior to the
distribution, InfoCure and PracticeWorks will enter into an Employee
Benefits and Compensation Allocation Agreement, which will contain
provisions relating to employee compensation, benefits and labor matters
and the treatment of options to purchase InfoCure common stock held by
InfoCure employees who will become PracticeWorks employees. This agreement
will provide that InfoCure options held by InfoCure employees who will
become PracticeWorks employees may be replaced by PracticeWorks options.
Employees whose InfoCure options are fully vested as of the Distribution
Date will have the right to surrender their InfoCure options for options to
purchase PracticeWorks common stock for a period of 20 days following the
distribution date. Any InfoCure employees who will become our employees who
choose not to surrender their vested InfoCure options during this time
period will continue to hold InfoCure options which will expire according
to their terms.

F-27
<PAGE> 156
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Employees who are not fully vested in InfoCure options as of the
distribution date will have their InfoCure options exchanged for
PracticeWorks options as of the distribution date. The option price for the
number for the shares of PracticeWorks common stock subject to each option
will be determined by dividing the option price for the related InfoCure
option by the PracticeWorks conversion factor, and the number of shares of
PracticeWorks common stock subject to each PracticeWorks option will be
determined by multiplying the number of shares subject to the related
InfoCure option by the PracticeWorks conversion factor. The PracticeWorks
conversion factor is a number equal to (1) the closing price of InfoCure
common stock on the Nasdaq National Market on the distribution date,
divided by (2) the opening price of the PracticeWorks common stock on the
Nasdaq National Market on the day following the distribution date.

14. QUARTERLY INFORMATION

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 DECEMBER 31
-------- ------- ------------ ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
1998
Total revenue........................ $10,811 $11,099 $ 9,888 $11,689 $43,487
Net income........................... (392) 1,329 1,513 (4,945) (2,495)
Weighted average shares.............. 4,638 4,755 4,797 5,158 4,828
Basic and diluted earnings per
share.............................. (0.08) 0.28 0.32 (0.96) (0.52)
1999
Total revenue........................ $12,120 $14,461 $14,763 $13,247 $54,591
Net (loss) before extraordinary
item............................... (310) 1,939 2,118 (1,367) 2,380
Weighted average shares.............. 5,265 7,054 7,755 7,922 6,994
Basic and diluted (loss) earnings per
share.............................. (0.05) 0.28 0.28 (0.17) 0.34
</TABLE>

F-28
<PAGE> 157

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

CONDENSED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents............................. $ 3,384 $ 2,527
Accounts receivable-trade, net of allowance of $1,143
and $1,113.......................................... 7,302 9,041
Other receivables..................................... 571 97
Inventory............................................. 553 1,772
Deferred tax assets................................... 1,660 669
Prepaid expenses and other current assets............. 345 453
-------- -------
Total current assets............................. 13,815 14,559
Property and equipment, net of accumulated
depreciation of $2,331 and $3,065................... 3,364 2,046
Intangible assets, net of accumulated amortization of
$15,955 and $4,294 (Note 3)......................... 48,085 40,606
Deferred tax assets................................... 7,700 108
Other assets.......................................... 1,672 523
-------- -------
$ 74,636 $57,842
======== =======
LIABILITIES AND DIVISIONAL EQUITY
CURRENT LIABILITIES:
Accounts payable...................................... $ 1,919 $ 2,772
Accrued expenses (Note 5)............................. 5,628 5,712
Accrued restructuring costs (Note 7).................. 2,641 445
Deferred revenue and customer deposits................ 8,862 6,704
Current portion of long-term debt..................... 2 116
-------- -------
Total current liabilities........................ 19,052 15,749
Long-term debt, less current portion (Note 6)......... 19,567 9,614
Other liabilities..................................... -- 60
-------- -------
Total liabilities................................ 38,619 25,423
-------- -------
Commitments and contingencies
DIVISIONAL EQUITY:
Net advances from parent.............................. 56,187 35,909
Accumulated deficit................................... (20,170) (3,490)
-------- -------
Total divisional equity.......................... 36,017 32,419
-------- -------
$ 74,636 $57,842
======== =======
</TABLE>

See accompanying notes to financial statements.

F-29
<PAGE> 158

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

CONDENSED STATEMENTS OF OPERATIONS -- (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------- -------------
<S> <C> <C>
REVENUE (NOTE 2):
Systems and software................................. $ 9,365 $27,077
Maintenance, support and services.................... 20,487 14,287
-------- -------
Total revenue................................... 29,852 41,364
-------- -------
OPERATING EXPENSE:
Hardware and other items purchased for resale........ 4,331 7,525
Selling, general and administrative.................. 29,167 21,134
Research and development............................. 2,536 2,012
Depreciation and amortization........................ 12,392 1,852
Restructuring (Note 5)............................... 3,753 --
Impairment and other non-recurring charges........... 2,004 892
Gain on disposal of fixed assets..................... (626) --
-------- -------
Total operating expense......................... 53,557 33,415
-------- -------
Operating (loss) income.............................. (23,705) 7,949
Interest expense and other, net...................... 1,558 1,244
-------- -------
(Loss) income before income taxes and extraordinary
item............................................... (25,263) 6,705
(Benefit) provision for income taxes................. (8,583) 2,516
-------- -------
(Loss) income before extraordinary item.............. (16,680) 4,189
Extraordinary item -- debt extinguishment cost, net
of income taxes.................................... -- (72)
-------- -------
(Loss) income........................................ $(16,680) $ 4,117
======== =======
Per share data:
Basic and diluted:
(Loss) income before extraordinary item......... $ (2.00) $ 0.62
Extraordinary item, net of tax.................. -- (0.01)
-------- -------
Net (loss) income.................................... $ (2.00) $ 0.61
======== =======
Weighted average shares outstanding:
Basic and diluted............................... 8,329 6,790
======== =======
</TABLE>

See accompanying notes to financial statements.

F-30
<PAGE> 159

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

CONDENSED STATEMENTS OF CASH FLOWS -- (UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------- -------------
<S> <C> <C>
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:
Net (loss) income.................................... $(16,680) $ 4,117
Extraordinary item -- debt extinguishment cost....... -- 110
Restructuring and other charges...................... 5,757 892
Depreciation and amortization........................ 12,392 1,852
Allowance for doubtful accounts...................... 457 255
Gain on disposal of fixed assets..................... (626) --
Deferred taxes....................................... (8,583) (129)
Changes in current assets and liabilities, net of
acquisitions:
Accounts and other receivables..................... 1,517 (2,779)
Inventory, prepaid expenses and other assets....... (69) (258)
Accounts payable and accrued expenses.............. (2,766) 229
Deferred revenue and deposits...................... 957 494
-------- -------
Cash (used in) provided by operating activities.... (7,644) 4,783
-------- -------
CASH USED IN INVESTING ACTIVITIES:
Cash paid for acquisitions........................... (13,422) (4,616)
Property and equipment expenditures.................. (2,637) (142)
Cash paid for other intangible assets................ (2,402) (29)
Other................................................ (1,863) (17)
-------- -------
Cash used in investing activities.................. (20,324) (4,804)
-------- -------
CASH PROVIDED BY FINANCING ACTIVITIES:
Borrowings of long-term debt......................... 10,989 --
Principal payments of long-term debt................. (156) (16,668)
Net cash advances from parent........................ 17,992 17,360
-------- -------
Cash provided by financing activities.............. 28,825 692
-------- -------
Net change in cash flows............................. 857 671
Cash and cash equivalents, beginning of period....... 2,527 1,633
-------- -------
Cash and cash equivalents, end of period........... $ 3,384 $ 2,304
======== =======
NONCASH TRANSACTIONS:
InfoCure stock issued for acquisitions............... $ 2,386 $ --
Disposal of building under capital lease
obligation......................................... (1,109) --
InfoCure stock issued to settle obligations.......... 400 --
</TABLE>

See accompanying notes to financial statements.

F-31
<PAGE> 160

PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO CONDENSED INTERIM FINANCIAL
STATEMENTS -- UNAUDITED

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

The information presented at September 30, 2000, and for the periods ended
September 30, 2000 and 1999 is unaudited, however, in the opinion of management,
includes all normal recurring adjustments necessary for a fair presentation of
the financial position, results of operations and cash flows of PracticeWorks (a
division of InfoCure Corporation ("InfoCure")) (the "Division") for the periods
presented. Historical results may not be indicative of the results to be
expected in the future. Certain information in footnote disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission (the
"Commission"). The financial statements, notes thereto and other information
should be read in conjunction with the financial statements and related notes
contained in this information statement.

The Division consists of InfoCure's information management technology
business for dental, orthodontic, oral and maxillofacial surgery practices. In
August 2000, InfoCure announced its plan to distribute to its shareholders the
shares of PracticeWorks, Inc., an indirect, wholly owned subsidiary of InfoCure
("PracticeWorks"). Immediately prior distribution date, InfoCure will transfer
the Division's assets and liabilities to PracticeWorks. Those assets and
liabilities will be reflected in PracticeWorks' financial statements at
InfoCure's historical cost.

The assets and liabilities of the Division (the "Contributed Businesses")
consist primarily of businesses InfoCure acquired at various times since the
consummation of InfoCure's initial public offering in July 1997. The Contributed
Businesses include two acquisitions made by InfoCure in 1997, one in 1998, four
in 1999, and six in the nine months ended September 30, 2000, all of which were
accounted for as purchases, and also include five acquisitions made in 1999
which were accounted for as pooling of interests (see Note 4).

Revenues and expenses specifically identified with the Division have been
directly attributed to the Division in the financial statements. The Division's
costs and expenses in the accompanying financial statements include allocations
from InfoCure for centralized legal, accounting, treasury, real estate,
information technology, and other InfoCure corporate services and infrastructure
costs because specific identification of the expenses is not practicable. The
expense allocations have been determined on the bases that InfoCure and the
Division considered to be reasonable reflections of the utilization of services
provided or the benefit received by the Division using ratios such as relative
head count, sales and real estate occupied. However, the financial information
included herein may not necessarily reflect the financial position and results
of operations of PracticeWorks in the future or what these amounts would have
been had it been a separate, stand-alone entity during the periods presented. We
believe that if the Division had been a stand-alone entity during the periods
presented, the expenses would not have been materially different from the
allocations presented.

F-32
<PAGE> 161
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO CONDENSED INTERIM FINANCIAL
STATEMENTS -- UNAUDITED (CONTINUED)

The historical capital structure of the Division is not representative of
PracticeWorks' future capital structure. PracticeWorks issued common stock to
InfoCure in August 2000 and will commence operations as a separate legal entity
upon completion of the distribution. For purposes of these financial statements,
we have assumed a distribution ratio of 1/4 share of PracticeWorks common stock
for every outstanding share of InfoCure common stock. The weighted average
shares outstanding are based on the number of outstanding shares of InfoCure and
the assumed distribution ratio. The financial information included herein may
not reflect the financial position, results of operations, changes in divisional
equity and cash flows of PracticeWorks in the future or what they would have
been had the Division been a separate, stand-alone entity during the periods
presented.

The financial statements of the Division included herein give retroactive
effect to all of its historical acquisitions that were accounted for as poolings
of interest. As a result, the financial position, results of operations and cash
flows are presented as if the combining companies had been consolidated for all
periods presented. Results of operations for the interim periods may not be
indicative of annual results. Certain amounts in the 1999 quarterly financial
statements have been reclassified for comparative purposes.

NOTE 2. REVENUE RECOGNITION

During the three months ended June 30, 2000, the Division began offering
subscription pricing for its products. Contracts are generally for a period of
three years, but may range from one to five years, with revenue being recognized
ratably over the contract period commencing, generally, when the product has
been installed and training has been completed. Revenue recognition commences
upon installation if training is not required.

NOTE 3. GOODWILL AMORTIZATION

During the fourth quarter of 1999, management changed its estimate of the
useful life of its remaining goodwill from 15 years to three years. The effect
of this change was to increase the net loss on a pre-tax basis by approximately
$9.1 million for the nine months ended September 30, 2000.

NOTE 4. BUSINESS COMBINATIONS

InfoCure completed four acquisitions attributable to the Division during
1999 which were accounted for as purchases (the "1999 Purchase Acquisitions").
In addition, InfoCure completed six acquisitions attributable to the Division
during the nine months ended September 30, 2000, for which the total
consideration paid was approximately $13.4 million in cash and $2.4 million in
InfoCure common stock. Each of the acquisitions will be contributed to
PracticeWorks in connection with the distribution. The following unaudited pro
forma information presents the results of operations of the Division as if the
acquisitions had occurred as of the beginning of each of the periods presented.
The pro forma information is not necessarily indicative of what would have
occurred had the

F-33
<PAGE> 162
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO CONDENSED INTERIM FINANCIAL
STATEMENTS -- UNAUDITED (CONTINUED)

acquisitions been made as of such periods, nor is it indicative of future
results of operations. The pro forma amounts give effect to appropriate
adjustments for the fair value of the assets acquired, reductions in personnel
costs and other operating expenses not assumed as part of the acquisitions,
amortization of intangibles, interest expense and income taxes.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------------------
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
------------------ ------------------
(IN THOUSANDS)
<S> <C> <C>
PRO FORMA AMOUNTS
Revenue...................................... $ 31,602 $55,680
Net (loss) income............................ (17,782) 2,183
</TABLE>

NOTE 5. RESTRUCTURING AND OTHER CHARGES

RESTRUCTURING

THE 2000 PLAN. On August 1, 2000, InfoCure announced its plans to
restructure each of its medical and dental operating divisions, VitalWorks and
PracticeWorks, respectively, through a plan of employee reductions and
consolidation of existing facilities. Over the next six months, the Division
plans to close or consolidate 11 facilities and terminate approximately 145
employees. The Division recorded approximately $2.9 million in restructuring
costs in the third quarter of 2000 consisting primarily of $1.6 million of
compensation costs, including severance and other termination benefits, and $1.3
million of costs related to the closing of facilities and other charges.

THE 1999 PLAN. In the fourth quarter of 1999, InfoCure decided to
restructure its business into medical and dental divisions, changed its product
strategy to begin development of ASP applications and Internet solutions,
decided to transition to a subscription-pricing model and completed six
acquisitions. Concurrently, management committed to a plan of restructuring and
reorganization related to acquisitions completed during 1999, which was
completed in the second quarter of 2000, to consolidate certain facilities and
eliminate staffing redundancies involving approximately 30 employees. In the
nine months ended September 30, 2000, the Division recorded $816,000 in
restructuring costs related primarily to severance and termination costs for
personnel changes, finances and communicated in 2000.

F-34
<PAGE> 163
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO CONDENSED INTERIM FINANCIAL
STATEMENTS -- UNAUDITED (CONTINUED)

The following table sets forth changes in the restructuring reserves as a
result of actions taken to implement the Division's restructuring and
reorganization plans during the nine months ended September 30, 2000:

<TABLE>
<CAPTION>
RESERVE COSTS RESERVE
BALANCE APPLIED BALANCE
DECEMBER ADDITIONS AGAINST SEPTEMBER
31, 1999 TO RESERVE RESERVES 30, 2000
-------- ---------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
2000 PLAN
Facility closure and consolidation..................... $ -- $1,242 $ (29) $1,213
Compensation costs for severance and other termination
benefits............................................. -- 1,645 (217) 1,428
Other asset write-downs and costs...................... -- 50 (50) --
---- ------ ------- ------
2000 Plan Total.................................... $ -- $2,937 $ (296) $2,641
---- ------ ------- ------
1999 PLAN
Facility closure and consolidation..................... $ 95 $ 14 $ (109) $ --
Compensation costs for severance and other termination
benefits............................................. -- 628 (628) --
Contingent consideration payable to former stockholders
of entities whose products were discontinued as part
of the consolidation and restructuring............... 350 -- (350) --
Other asset write-downs and costs...................... -- 174 (174) --
---- ------ ------- ------
1999 Plan Total.................................... 445 816 (1,261) --
---- ------ ------- ------
$445 $3,753 $(1,557) $2,641
==== ====== ======= ======
</TABLE>

IMPAIRMENT AND OTHER NON-RECURRING CHARGES

Concurrent with the 2000 plan of restructuring, the Division recorded an
impairment charge of approximately $500,000 relating to assets that will be
abandoned due to the closing of facilities. The Division also recorded a
non-recurring charge of approximately $1.5 million to write-down inventory to
its estimated net realizable value based on a planned bulk lot disposal as a
result of the Division's decision to discontinue selling hardware and hardware
support in certain of its business lines in connection with its new hardware
agreement with Dell Computer Corporation entered into on August 1, 2000. This
agreement provides that Dell will be the exclusive supplier of computer hardware
and related products for the Intel platform to the Division's customers.

NOTE 6. NOTES PAYABLE AND LONG TERM DEBT

The amounts recorded as notes payable and long-term debt attributed to the
Division represent borrowings under InfoCure's credit facility or other note
agreements which were used primarily to acquire the Contributed Business, or
acquire other assets of the Division. InfoCure was not in compliance with
certain pre-amendment financial covenants contained in the credit facility as of
June 30, 2000 and received a waiver for such non-compliance. During July 2000
InfoCure finalized negotiations to amend to the credit facility to

F-35
<PAGE> 164
PRACTICEWORKS
(A DIVISION OF INFOCURE CORPORATION)

NOTES TO CONDENSED INTERIM FINANCIAL
STATEMENTS -- UNAUDITED (CONTINUED)

eliminate certain financial covenants and establish new financial covenants. The
first measurement date for the new financial covenants is September 30, 2000 and
InfoCure was in compliance with the credit facility as of that date.

7. QUARTERLY INFORMATION

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS
--------------------------------- ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 SEPTEMBER 30
-------- ------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
2000
Total revenue............................ $ 9,820 $10,196 $ 9,836 $ 29,852
Net loss before extraordinary item....... (2,958) (5,708) (8,014) (16,680)
Weighted average shares.................. 8,194 8,317 8,544 8,329
Basic and diluted loss per share......... (0.37) (0.69) (0.94) (2.00)
</TABLE>

8. SUBSEQUENT EVENT

INFOSOFT ACQUISITION

In December 2000, PracticeWorks entered into an agreement to acquire
SoftDent, LLC, or Infosoft, the practice management subsidiary of Ceramco, Inc.,
a wholly-owned subsidiary of DENTSPLY International, Inc. The agreement provides
for PracticeWorks to acquire all of the outstanding membership interests of
SoftDent, LLC ("LLC") in exchange for issuing 32,000 shares of 6.5% series A
convertible redeemable preferred stock in PracticeWorks, which is convertible
into 9.8% of PracticeWorks common stock and is redeemable for $32.0 million cash
after five years if not converted.

CRESCENT INVESTMENT

In January 2001, PracticeWorks entered into an agreement where it would
issue 100,000 shares of our series C convertible redeemable preferred stock to
Crescent International Ltd. in a private placement. If the series C convertible
redeemable preferred stock has not been converted after 48 months, Crescent may
require PracticeWorks to redeem the series C convertible redeemable preferred
stock at a premium to the liquidation preference. PracticeWorks will recognize
an accretive dividend of approximately $938,000 annually related to this
feature. In no event, however, will Crescent be entitled to obtain 10% or more
of PracticeWorks common stock upon conversion. Crescent will also receive
certain registration rights in connection with its investment.

F-36
<PAGE> 165

PRACTICEWORKS, INC.

INTRODUCTION TO

UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS

The unaudited pro forma condensed combined financial statements have been
prepared to give effect to InfoCure Corporation's ("InfoCure's) contribution of
the net assets of PracticeWorks (a division of InfoCure Corporation) (the
"Division") in exchange for all of the outstanding common stock of
PracticeWorks, Inc. ("PracticeWorks") and the subsequent pro rata distribution
of the outstanding common stock of PracticeWorks to InfoCure's common
shareholders. The unaudited pro forma condensed combined financial statements
also give effect to (1) PracticeWorks' proposed acquisition of all of the
membership interests of SoftDent, LLC ("InfoSoft"), the practice management
software subsidiary of Ceramco, Inc. ("Ceramco"), a wholly owned subsidiary of
DENTSPLY International, Inc. ("DENTSPLY"), (2) PracticeWorks' assumption of
InfoCure's obligation under a merger agreement to acquire all of the outstanding
common stock of Medical Dynamics, Inc. ("Medical Dynamics"), a dental practice
management software company, and (3) the proposed $5.0 million investment by
Crescent International, Ltd. ("Crescent").

Under the terms of the proposed InfoSoft acquisition agreement,
PracticeWorks will issue 32,000 shares of series A convertible redeemable
preferred stock to Ceramco. These preferred shares have a stated redemption
value of $32.0 million, accrue dividends at an annual rate of 6.5%, are
convertible into approximately 9.8% of PracticeWorks outstanding common stock at
the time of distribution and are redeemable after five years if not converted.
These shares of preferred stock will be issued to Ceramco upon closing, which is
anticipated to occur the day after the distribution.

Pursuant to the Medical Dynamics merger agreement, each holder of greater
than 100 shares of Medical Dynamics common stock will receive 0.017183 shares of
PracticeWorks common stock, 0.07558 shares of PracticeWorks series B convertible
redeemable preferred stock and 0.06873 shares of InfoCure common stock in
exchange for each share of Medical Dynamics common stock held. Each holder of
100 or fewer shares of Medical Dynamics common stock will receive $0.75 in cash
for each share of Medical Dynamics common stock held. Upon completion of the
distribution, PracticeWorks will assume all of InfoCure's obligations under the
Medical Dynamics merger agreement except for InfoCure's obligation to issue a
specified number of shares of InfoCure common stock. The unaudited pro forma
condensed combined financial statements assume 13.2 million shares of Medical
Dynamics common stock are outstanding on a fully diluted basis as of the date of
the acquisition, in which case PracticeWorks would issue approximately 219,500
shares of common stock and approximately 965,000 shares of PracticeWorks series
B convertible redeemable preferred stock in the merger and pay approximately
$325,000 in cash. Further, the pro forma condensed financial statements assume
that InfoCure will issue an aggregate of approximately 878,000 shares of
InfoCure common stock. The shares of series B convertible redeemable preferred
stock will have a stated redemption value of approximately $5.3 million, accrue
dividends payable in cash or stock at an annual rate of 6.0%, will be
convertible into approximately 2.0% of PracticeWorks outstanding common stock
and will be redeemable after five years if not converted.

Under the terms of the proposed Crescent investment for $5.0 million,
PracticeWorks will issue to Crescent 100,000 shares of series C convertible
redeemable preferred stock

F-37
<PAGE> 166

PRACTICEWORKS, INC.

INTRODUCTION TO

UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL STATEMENTS -- CONTINUED

which are not entitled to dividends. Crescent will have the right after one year
to convert all, or a portion, of its shares of preferred stock into shares of
PracticeWorks' common stock based upon a pre-determined conversion price. In
addition, PracticeWorks will have the right either to redeem in cash or to
require the conversion of the shares of preferred stock, provided certain
conditions are met. If the series C convertible redeemable preferred stock has
not been converted after 48 months, Crescent may require PracticeWorks to redeem
the series C convertible redeemable preferred stock at a price equal to 175% of
the $5.0 million liquidation preference. In no event, however, will Crescent be
entitled to obtain 10% or more of our common stock upon conversion.
PracticeWorks will recognize an accretive dividend of approximately $938,000
annually related to this feature.

The issuance of shares of InfoCure common stock to the stockholders of
Medical Dynamics, as well as the PracticeWorks shares issuable to Crescent and
Ceramco, will not adversely affect the qualification of the distribution under
section 355 of the Internal Revenue Code, although these shares may be taken
into account, together with other transactions, in determining whether section
355(e) of the Internal Revenue Code applies to the distribution. See "The
Distribution -- Federal Income Tax Consequences of the Distribution" on page 41.

The pro forma condensed combined financial statements included herein
reflect application of the purchase method of accounting for the acquisitions of
InfoSoft and Medical Dynamics. Such financial statements have been prepared
and/or derived from, and should be read in conjunction with, the historical
consolidated financial statements and notes thereto of the Division for the year
ended December 31, 1999 and for the nine months ended September 30, 2000, the
InfoSoft historical financial statements and the notes thereto for the year
ended December 31, 1999 and the nine months ended September 31, 2000 and the
Medical Dynamics historical consolidated financial statements and notes thereto
for the years ended September 30, 2000 and 1999 included elsewhere in this
information statement.

The pro forma condensed combined balance sheet gives effect to the
acquisitions of InfoSoft and Medical Dynamics as if they had occurred on
September 30, 2000 combining the balance sheets of the Division, InfoSoft and
Medical Dynamics as of that date. The pro forma condensed combined balance sheet
also gives effect to the proposed $5.0 million investment by Crescent as if it
occurred on September 30, 2000. The pro forma condensed combined statements of
operations give effect to the acquisitions of Integrated, Crunchy Frog, InfoSoft
and Medical Dynamics as if they had occurred on January 1, 1999, combining the
results of the Division, InfoSoft and Medical Dynamics for the nine months ended
September 30, 2000 and combining the results of the Division and InfoSoft for
the year ended December 31, 1999 with Integrated for the year ended July 31,
1999, Crunchy Frog for the period from January 1, 1999 to December 21, 1999 (the
date immediately preceding the acquisition by InfoCure) and Medical Dynamics for
the year ended September 30, 1999 which, for pro forma purposes, are all
considered comparable to the results of calendar twelve-month periods.

F-38
<PAGE> 167

PRACTICEWORKS, INC.

INTRODUCTION TO

UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL STATEMENTS -- CONTINUED

The pro forma combined statements of operations for the nine months ended
September 30, 2000 and for the year ended December 31, 1999 include appropriate
adjustments for amortization and other items related to the transactions, but
exclude any potential cost savings. The Division believes that it may be able to
reduce salaries and related costs and general and administrative expenses as it
eliminates duplication of overhead and has formulated a plan to implement such
savings. There can be no assurance that the plan will be successful in effecting
such cost savings.

The pro forma adjustments are based on preliminary estimates, available
information and certain assumptions that management deems appropriate. The pro
forma combined financial information is unaudited and does not purport to
represent the combined results that would have been obtained had the transaction
occurred at the dates indicated, as assumed, nor does it purport to present the
results which may be obtained in the future.

F-39
<PAGE> 168

PRACTICEWORKS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

SEPTEMBER 30, 2000

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRACTICEWORKS, CONTRIBUTION OF MEDICAL PRO FORMA
INC.(A) DIVISION(A) PRO FORMA INFOSOFT DYNAMICS ADJUSTMENTS COMBINED
-------------- --------------- --------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents.............. $ -- $ 3,384 $ 3,384 $ -- $ 331 $ (325)(C) $ 7,917
(473)(D)
5,000(F)
Accounts and notes
receivable, net.......... -- 7,873 7,873 458 43 -- 8,374
Inventory.................. -- 553 553 50 2 -- 605
Deferred tax assets........ -- 1,660 1,660 -- -- -- 1,660
Prepaid expense and other
current assets........... -- 345 345 216 1 -- 562
-------- -------- -------- ------- -------- -------- --------
Total current assets... -- 13,815 13,815 724 377 4,202 19,118
Property and equipment,
net...................... -- 3,364 3,364 866 285 -- 4,515
Intangible assets, net..... -- 48,085 48,085 9,791 3,593 12,186(B) 81,660
8,005(C)
Deferred tax asset......... -- 7,700 7,700 -- -- -- 7,700
Other assets............... -- 1,672 1,672 -- 42 (1,300)(E) 414
-------- -------- -------- ------- -------- -------- --------
Total assets........... $ -- $ 74,636 $ 74,636 $11,381 $ 4,297 $ 23,093 $113,407
======== ======== ======== ======= ======== ======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable........... $ -- $ 1,919 $ 1,919 $ 144 $ 66 $ -- $ 2,129
Accrued expenses........... -- 5,628 5,628 2,563 600 500(B) 8,803
(640)(B)
300(C)
(148)(D)
Accrued restructuring
costs.................... -- 2,641 2,641 -- -- -- 2,641
Deferred revenue and
customer deposits........ -- 8,862 8,862 -- 270 -- 9,132
Intercompany payables...... -- -- -- 5,449 -- (5,449)(B) --
Current portion of
long-term debt........... -- 2 2 -- 2,002 (327)(D) 377
(1,300)(E)
-------- -------- -------- ------- -------- -------- --------
Total current
liabilities.......... -- 19,052 19,052 8,156 2,938 (7,064) 23,082
Long-term debt, less
current portion.......... -- 19,567 19,567 -- 136 -- 19,703
Other liabilities.......... -- -- -- 891 -- (891)(B) --
-------- -------- -------- ------- -------- -------- --------
Total liabilities...... -- 38,619 38,619 9,047 3,074 (7,955) 42,785
-------- -------- -------- ------- -------- -------- --------
Convertible redeemable
preferred stock series A,
B and C.................. -- -- -- -- -- 21,000(B) 29,750
3,750(C)
5,000(F)
-------- -------- -------- ------- -------- -------- --------
Stockholders' equity:
Common stock -- 100,
8,545,870 and 8,765,370
shares issued and
outstanding actual, pro
forma and pro forma
combined................. -- 85 85 -- 13 (10)(C) 88
Additional paid-in
capital.................. -- 56,102 56,102 -- 28,353 (27,854)(C) 60,954
4,353(C)
Accumulated deficit........ -- (20,170) (20,170) 2,334 (27,143) (2,334)(B) (20,170)
27,143(C)
-------- -------- -------- ------- -------- -------- --------
Total stockholders'
equity............... -- 36,017 36,017 2,334 1,223 1,298 40,872
-------- -------- -------- ------- -------- -------- --------
Total liabilities and
stockholders'
equity............... $ -- $ 74,636 $ 74,636 $11,381 $ 4,297 $ 23,093 $113,407
======== ======== ======== ======= ======== ======== ========
</TABLE>

See accompanying notes to unaudited pro forma financial statements.

F-40
<PAGE> 169

PRACTICEWORKS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999

(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)

<TABLE>
<CAPTION>
PRACTICEWORKS CRUNCHY PRO FORMA
PRACTICEWORKS, INC. DIVISION INTEGRATED FROG ADJUSTMENTS SUBTOTAL INFOSOFT
------------------- ------------- ---------- ------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenue..................... $ -- $54,591 $4,515 $533 $ -- $59,639 $9,545
---- ------- ------ ---- ------- ------- ------
Operating expense:
Hardware and other items
purchased for resale............ -- 9,654 280 -- -- 9,934 720
Selling, general and
administrative (excluding
compensatory stock awards)...... -- 28,666 3,669 2 -- 32,337 5,811
Research and development......... -- 4,185 -- -- -- 4,185 155
Depreciation and amortization.... -- 3,284 55 -- 798(G) 4,137 1,417
Restructuring and other
charges......................... -- 1,814 -- -- -- 1,814 --
Merger costs..................... -- 659 -- -- -- 659 --
Compensatory stock awards........ -- 428 -- -- -- 428 --
---- ------- ------ ---- ------- ------- ------
Total operating expense......... -- 48,690 4,004 2 798 53,494 8,103
---- ------- ------ ---- ------- ------- ------
Operating income (loss)........... -- 5,901 511 531 (798) 6,145 1,442
Interest and other expense, net... -- 1,335 2 -- -- 1,337 --
---- ------- ------ ---- ------- ------- ------
Income (loss) before income taxes
and extraordinary item........... -- 4,566 509 531 (798) 4,808 1,442
Provision (benefit) for income
taxes............................ -- 2,186 -- -- 395(H) 2,581 558
---- ------- ------ ---- ------- ------- ------
Income (loss) before extraordinary
item............................. -- 2,380 509 531 (1,193) 2,227 884
Preferred stock dividends......... -- -- -- -- -- -- --
---- ------- ------ ---- ------- ------- ------
Net income (loss) before
extraordinary item available to
common stockholders.............. -- $ 2,380 $ 509 $531 $(1,193) $ 2,227 $ 884
==== ======= ====== ==== ======= ======= ======
Net loss per share before
extraordinary item: basic and
diluted..........................
Weighted average shares
outstanding......................

<CAPTION>
PRO FORMA PRO FORMA
MEDICAL DYNAMICS ADJUSTMENTS COMBINED
---------------- ----------- ---------
<S> <C> <C> <C>
Total revenue..................... $10,959 $ -- $80,143
------- ------- -------
Operating expense:
Hardware and other items
purchased for resale............ 4,050 -- 14,704
Selling, general and
administrative (excluding
compensatory stock awards)...... 9,592 -- 47,740
Research and development......... 3 -- 4,343
Depreciation and amortization.... 1,129 1,305(G) 8,329
341(G)
Restructuring and other
charges......................... 655 -- 2,469
Merger costs..................... -- -- 659
Compensatory stock awards........ 50 -- 478
------- ------- -------
Total operating expense......... 15,479 1,646 78,722
------- ------- -------
Operating income (loss)........... (4,520) (1,646) 1,421
Interest and other expense, net... 878 -- 2,215
------- ------- -------
Income (loss) before income taxes
and extraordinary item........... (5,398) (1,646) (794)
Provision (benefit) for income
taxes............................ -- 647(H) 1,735
(2,051)(H)
------- ------- -------
Income (loss) before extraordinary
item............................. (5,398) (242) (2,529)
Preferred stock dividends......... -- 2,080(I) 4,895
315(I)
2,500(J)
------- ------- -------
Net income (loss) before
extraordinary item available to
common stockholders.............. $(5,398) $(5,137) $(7,424)
======= ======= =======
Net loss per share before
extraordinary item: basic and
diluted.......................... $ (1.03)
=======
Weighted average shares
outstanding...................... 7,213(K)
=======
</TABLE>

See accompanying notes to unaudited pro forma financial statements

F-41
<PAGE> 170

PRACTICEWORKS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000

(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)

<TABLE>
<CAPTION>
PRACTICEWORKS MEDICAL PRO FORMA PRO FORMA
PRACTICEWORKS INC. DIVISION INFOSOFT DYNAMICS ADJUSTMENTS COMBINED
------------------- ------------- -------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total revenue..................... $-- $ 29,852 $6,414 $ 2,965 $ -- $ 39,231
--- -------- ------ ------- ------- --------
Operating expense:
Hardware and other items
purchased for resale........... -- 4,331 527 416 -- 5,274
Selling, general and
administrative................. -- 29,167 4,302 2,960 -- 36,429
Research and development......... -- 2,536 230 -- -- 2,766
Depreciation and amortization.... -- 12,392 1,195 874 3,688(G) 20,565
2,416(G)
Restructuring.................... -- 3,753 -- -- -- 3,753
Impairment and other
non-recurring charges.......... -- 2,004 -- -- -- 2,004
Gain on disposal of fixed
assets......................... -- (626) -- -- -- (626)
--- -------- ------ ------- ------- --------
Total operating expense........ -- 53,557 6,254 4,250 6,104 70,165
--- -------- ------ ------- ------- --------
Operating (loss) income........... -- (23,705) 160 (1,285) (6,104) (30,934)
Interest and other expense, net... -- 1,558 -- 293 -- 1,851
--- -------- ------ ------- ------- --------
(Loss) income before income
taxes............................ -- (25,263) 160 (1,578) (6,104) (32,785)
Provision (benefit) for income
taxes............................ -- (8,583) 61 -- (19)(H) (9,141)
(600)(H)
--- -------- ------ ------- ------- --------
Net (loss) income.............. -- (16,680) 99 (1,578) (5,485) (23,644)
Preferred stock dividends...... -- -- -- -- 1,560(I) 3,672
237(I)
1,875(J)
--- -------- ------ ------- ------- --------
Net (loss) income available to
common stockholders.......... $-- $(16,680) $ 99 $(1,578) $(9,157) $(27,316)
=== ======== ====== ======= ======= ========
Net loss per share available to
common stockholders, basic and
diluted.......................... $ (3.20)
========
Weighted average shares
outstanding...................... 8,549(K)
========
</TABLE>

See accompanying notes to unaudited pro forma financial statements.

F-42
<PAGE> 171

PRACTICEWORKS, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS

FOOTNOTE

(A)Records InfoCure's distribution of the Division's assets, liabilities and
equity to PracticeWorks. PracticeWorks was formed in August 2000, has nominal
assets and will have no operations until the distribution of assets and
operations of the Division. As such we have not included any financial
statements of PracticeWorks in the prospectus. As of September 30, 2000,
PracticeWorks was capitalized by contributions from InfoCure in the amount of
$100.

UNAUDITED PRO FORMA BALANCE SHEET ADJUSTMENTS

(B)Records the issuance for InfoSoft of PracticeWorks series A convertible
redeemable preferred stock with a stated redemption value of $32.0 million,
the elimination of intercompany payables and the estimated transaction costs
of $500,000. The series A convertible redeemable preferred stock will be
recorded net of a discount to adjust the total consideration to estimated
fair value. This discount will be recognized over the five-year redemption
period as an accretive dividend.

The acquisition will be accounted for as a purchase with the net
consideration estimated to be allocated to the assets acquired and
liabilities assumed as follows:

<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
----------- --------------
(IN THOUSANDS)
<S> <C>
Total Consideration:
Issuance of Series A convertible redeemable preferred
stock.................................................. $ 32,000
Discount on Series A convertible redeemable preferred
stock.................................................. (11,000)
Transaction costs......................................... 500
--------
21,500
Allocation:
Current assets............................................ (724)
Property and equipment.................................... (866)
Other intangible assets................................... (4,406)
Current liabilities....................................... 2,067
Goodwill.................................................. (17,571)
--------
$ 0
========
</TABLE>

(C) Records (1) the issuance of approximately 219,500 shares of PracticeWorks
common stock and recognizes the issuance of approximately 878,000 shares of
InfoCure common stock, together valued at approximately $4.3 million, (2)
the issuance of approximately 965,000 shares of PracticeWorks series B
convertible redeemable preferred stock, with a stated redemption value of
$5.3 million, and (3) the cash payment of approximately $325,000, all in
exchange for approximately 13.2 million shares of Medical Dynamics common
stock. Also records the exchange of PracticeWorks stock options for
outstanding Medical Dynamics stock options valued at approximately $500,000
and estimated costs of the transaction of $300,000. The PracticeWorks common
stock to be exchanged in the merger will be valued on the basis of the
closing price of PracticeWorks common stock on the day of closing. The
valuation of the series B convertible redeemable preferred stock is based on
the redemption value net of a discount to adjust to estimated fair value and
cash is valued at face value. For pro forma purposes, the consideration net
of the discount is equal to approximately $9.2 million. The issuance of
shares of InfoCure common stock to the stockholders of Medical Dynamics will
not adversely affect the qualification of the distribution under section 355
of the Internal Revenue Code,

F-43
<PAGE> 172

PRACTICEWORKS, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- CONTINUED

although these shares may be taken into account, together with other
transactions, in determining whether section 355(e) of the Internal Revenue
Code applies to the distribution. See "The Distribution -- Federal Income
Tax Consequences of the Distribution" on page 41.

The Medical Dynamics acquisition will be accounted for as a purchase with
the total consideration estimated to be allocated to the assets acquired as
follows:

<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
----------- --------------
(IN THOUSANDS)
<S> <C>
Total consideration:
Issuance of series B convertible redeemable preferred
stock.................................................. $ 5,250
Discount on series B convertible redeemable preferred
stock.................................................. (1,500)
Contribution of InfoCure's ownership of Medical
Dynamics............................................... 4,353
Payment to certain Medical Dynamics shareholders.......... 325
Transaction costs......................................... 300
Issuance of stock options................................. 500
--------
9,228
Allocation:
Current assets............................................ (377)
Property and equipment.................................... (285)
Other assets.............................................. (42)
Current liabilities....................................... 2,938
Long-term debt, net of current portion.................... 136
Goodwill.................................................. (11,598)
--------
$ 0
========
</TABLE>

(D)Records payments of accrued salary and vacation and certain promissory notes
to Medical Dynamics stockholders, officers and directors upon closing.

(E) Records elimination of InfoCure loans to Medical Dynamics.

(F)Records the issuance of 100,000 shares of series C convertible redeemable
preferred stock for the $5.0 million investment by Crescent.

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS

(G) Records adjustment to amortization expense to reflect increase for new basis
of goodwill and eliminate amortization for certain other intangibles to
which no value was assigned. Goodwill is amortized using the straight line
method over a 15-year life from January 1 to November 15, and over a
three-year life effective in the fourth quarter consistent with InfoCure's
adoption of a change in accounting estimate effected in 1999.

(H) Provides the effect of income taxes as though the companies filed
consolidated tax returns. Goodwill arising from the acquisition is not
deductible for income tax purposes and therefore does not provide a pro
forma income tax benefit.

(I) Records the annual dividends on PracticeWorks convertible redeemable
preferred stock to be issued in PracticeWorks' acquisitions of InfoSoft and
Medical Dynamics.

(J)Records the accretive dividends related to the discount on convertible
redeemable preferred stock to be issued in PracticeWorks' acquisitions of
InfoSoft and Medical Dynamics.

F-44
<PAGE> 173

PRACTICEWORKS, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- CONTINUED

(K)Excludes up to 482,253 shares of PracticeWorks common stock which may be
issuable in connection with our assumption of a portion InfoCure's contingent
obligations under a letter agreement with WebMD Corporation, formerly
Healtheon/WebMD, ("WebMD").

Under the terms of a February 2000 letter agreement, WebMD made a $10.0
million investment in VitalWorks, a subsidiary of InfoCure, in exchange for
400,000 shares of VitalWorks convertible preferred stock. In conjunction with
the February 2000 letter agreement, InfoCure and WebMD also entered into a
marketing agreement which provided for utilization, delivery and promotion of
WebMD's clinical financial transaction and EDI services. The VitalWorks
convertible preferred stock was to have automatically converted into 1% of
the outstanding common stock of VitalWorks upon the completion of VitalWorks'
initial public offering. If the VitalWorks initial public offering was not
consummated by November 11, 2000, WebMD had the right to exchange the
VitalWorks convertible preferred stock for shares of InfoCure common stock.
The VitalWorks initial public offering was never consummated. On November 29,
2000, WebMD notified InfoCure of its election to exchange the VitalWorks
convertible preferred stock for 1,929,012 shares of InfoCure common stock,
which if issued would represent approximately 5% of the total outstanding
shares of InfoCure common stock.

If WebMD was to acquire the shares of InfoCure common stock prior to the
record date of the distribution, it would be entitled to receive shares of
PracticeWorks common stock in the distribution. However, InfoCure has not yet
issued the shares of InfoCure common stock to WebMD pending resolution of
disputes under the InfoCure/WebMD marketing agreement. As part of the
liabilities assumed by PracticeWorks in the distribution, PracticeWorks has
agreed to assume InfoCure's contingent obligation to issue to WebMD up to
482,253 shares of PracticeWorks common stock, or approximately 5% of the
outstanding PracticeWorks common stock. These shares would represent the
PracticeWorks common stock that WebMD would have been entitled to receive in
the distribution had it owned the full number of shares of InfoCure common
stock on the record date. The exact number of shares of InfoCure common stock
to be issued to WebMD, if any, as well as the corresponding number of shares
of PracticeWorks common stock, will be determined through negotiations and/or
litigation regarding the InfoCure/WebMD February 2000 letter and marketing
agreements. If we are required to issue the full 482,253 shares of
PracticeWorks common stock to WebMD in satisfaction of this contingent
obligation, our stockholders will experience significant dilution.

(L)On August 21, 2000 the board of directors of InfoCure approved a grant of
options to purchase, in the aggregate, approximately 8,915,000 shares of
InfoCure common stock ("Option Grant") to management and employees of
InfoCure pursuant to the new InfoCure Corporation 2000 Broad Based Stock
Plan. If the distribution is not completed prior to March 31, 2001,
approximately 75% of the options will be canceled. If the distribution is
completed, the option grants will vest ratably over the four-year period
beginning on the grant date and expire ten years after the grant date.
Compensation expense, if any, related to the contingently issued portion of
the grants will be calculated based on the difference between the fair market
value of the

F-45
<PAGE> 174

PRACTICEWORKS, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- CONTINUED

underlying common stock at the effective date of the distribution and the
grant price multiplied by the number of options outstanding. The calculated
expense will be allocated to PracticeWorks based on the compensation expense
related to the grants made to employees designated as PracticeWorks employees
and will then be amortized over the remaining vesting period of the options.
No provision for this expense has been made in the Unaudited Pro Forma
Condensed Combined Statement of Operations.

F-46
<PAGE> 175

MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

INDEPENDENT AUDITOR'S REPORT

Board of Directors
Medical Dynamics, Inc.
Englewood, Colorado

We have audited the accompanying consolidated balance sheet of Medical
Dynamics, Inc. and subsidiaries (the "Company") as of September 30, 2000, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the years ended September 30, 2000 and 1999. 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.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Medical
Dynamics, Inc. and subsidiaries as of September 30, 2000, and the results of
their operations and their cash flows for the years ended September 30, 2000 and
1999, in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company has suffered recurring losses and
negative cash flows from operations. This raises substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

HEIN + ASSOCIATES LLP

Denver, Colorado
November 30, 2000

F-47
<PAGE> 176

MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000

<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents...................................... $ 330,800
Trade receivables, less allowance for doubtful accounts of
$19,600................................................ 43,300
Inventories............................................... 2,500
Prepaid expenses and other................................ 700
------------
Total current assets................................... 377,300
------------
SOFTWARE DEVELOPMENT AND SUPPORT:
Software development costs, net of accumulated
amortization of $1,321,800............................. 1,948,200
Technical support contracts, net of accumulated
amortization of $890,700............................... 593,800
------------
Total software development and support................. 2,542,000
------------
PROPERTY AND EQUIPMENT:
Demonstration equipment................................... 143,000
Machinery and equipment................................... 606,100
Furniture and fixtures.................................... 235,600
Leasehold improvements.................................... 54,500
------------
1,039,200
Less accumulated depreciation and amortization............ (753,900)
------------
Property and equipment, net............................ 285,300
------------
OTHER ASSETS:
Goodwill, net of accumulated amortization of $225,500..... 1,050,600
Deposits and other........................................ 42,500
------------
Total other assets..................................... 1,093,100
------------
Total Assets........................................... $ 4,297,700
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of notes payable....................... $ 2,002,200
Accounts payable and accrued expenses..................... 665,900
Unearned revenue.......................................... 269,800
------------
Total current liabilities.............................. 2,937,900
------------
Notes payable, net of current portion....................... 135,900
------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value; authorized 5,000,000
shares; none issued.................................... --
Common stock, $.001 par value; authorized 30,000,000
shares, issued and outstanding 13,229,206 shares....... 13,200
Additional paid-in capital................................ 28,353,200
Accumulated deficit....................................... (27,142,500)
------------
Total stockholders' equity............................. 1,223,900
------------
Total liabilities and stockholders' equity............. $ 4,297,700
============
</TABLE>

See accompanying notes to these consolidated financial statements.

F-48
<PAGE> 177

MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
SEPTEMBER 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
NET SALES:
Dental products:
Software, training, and installation................ $ 796,300 $ 3,809,700
Equipment........................................... 222,200 4,495,900
Support services.................................... 2,669,500 2,522,400
Medical products...................................... 11,300 130,700
----------- -----------
3,699,300 10,958,700
----------- -----------
COST OF SALES:
Dental products:
Software, training, and installation................ 616,200 1,133,000
Equipment........................................... 365,400 4,015,300
Support services.................................... 679,100 924,700
Medical products...................................... 54,500 34,600
----------- -----------
1,715,200 6,107,600
----------- -----------
GROSS PROFIT.......................................... 1,984,100 4,851,100
----------- -----------
OPERATING EXPENSES:
Selling and marketing............................... 608,000 3,679,800
General and administrative.......................... 2,945,500 4,983,300
Stock-based compensation............................ 24,400 49,600
Research and development............................ -- 2,900
Impairment of goodwill.............................. -- 655,200
----------- -----------
Total operating expenses......................... 3,577,900 9,370,800
----------- -----------
OPERATING LOSS........................................ (1,593,800) (4,519,700)
OTHER INCOME (EXPENSE):
Other income........................................ 3,800 44,900
Interest income..................................... 14,300 13,500
Interest expense.................................... (375,700) (650,000)
Loss on Command settlement.......................... -- (286,800)
----------- -----------
(357,600) (878,400)
----------- -----------
Net Loss.............................................. $(1,951,400) $(5,398,100)
=========== ===========
Basic and Diluted Loss Per Common Share............... $ (0.15) $ (0.52)
=========== ===========
Weighted Average Number of Shares Outstanding......... 13,087,200 10,312,700
=========== ===========
</TABLE>

See accompanying notes to these consolidated financial statements.

F-49
<PAGE> 178

MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
---------- ------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 1, 1998.......... 10,034,500 $10,000 $25,246,900 $(19,793,000) $ 5,463,900
Conversion of debentures to common
stock:
Principal, net of discount...... 1,144,900 1,200 1,142,200 -- 1,143,400
Accrued interest................ 101,300 100 125,900 -- 126,000
Fair value of warrants issued for
debt discount and issuance
costs........................... -- -- 299,400 -- 299,400
Proceeds from exercise of
options......................... 98,000 100 141,400 -- 141,500
Proceeds from sale of common
stock, net of offering costs of
$32,900......................... 523,800 500 766,600 -- 767,100
Additional shares issued pursuant
to terms of agreement........... 311,800 300 (300) -- --
Attribution of compensation under
stock options and warrants:
Employee........................ -- -- 32,100 -- 32,100
Non-employee.................... -- -- 17,500 -- 17,500
Net loss.......................... -- -- -- (5,398,100) (5,398,100)
---------- ------- ----------- ------------ -----------
BALANCE, SEPTEMBER 30, 1999....... 12,214,300 12,200 27,771,700 (25,191,100) 2,592,800
Conversion of debentures to common
stock:
Principal, net of discount...... 729,340 720 372,980 -- 373,700
Proceeds from exercise of
options......................... 207,700 200 184,200 -- 184,400
Additional shares issued pursuant
to terms of agreement........... 77,866 80 (80) -- --
Attribution of compensation under
stock options and warrants:
Non-employee.................... -- -- 24,400 -- 24,400
Net loss.......................... -- -- -- (1,951,400) (1,951,400)
---------- ------- ----------- ------------ -----------
BALANCE, SEPTEMBER 30, 2000....... 13,229,206 $13,200 $28,353,200 $(27,142,500) $ 1,223,900
========== ======= =========== ============ ===========
</TABLE>

See accompanying notes to these consolidated financial statements.

F-50
<PAGE> 179

MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
SEPTEMBER 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.............................................. $(1,951,400) $(5,398,100)
Adjustments to reconcile net loss to net cash used in
operating activities:
Common stock options granted for compensation and
other services................................... 24,400 49,600
Depreciation expense................................ 135,900 191,800
Amortization of intangible assets................... 887,900 937,000
Amortization of debt discount and issuance costs.... 123,000 446,500
Conversion of accrued interest on debentures to
common stock..................................... -- 126,000
Bad debt expense.................................... -- 82,300
Impairment of goodwill.............................. -- 655,200
Loss on disposal of Command, less cash received..... -- 279,500
Provision for obsolete and slow-moving
inventories...................................... -- 23,700
Other............................................... -- (23,200)
Changes in operating assets and liabilities, net of
effects of acquisitions:
Decrease (increase) in:
Trade receivables.............................. 211,100 454,000
Inventories.................................... 186,700 621,700
Prepaid expenses and other..................... 22,700 13,100
Increase (decrease) in:
Accounts payable and accrued expenses.......... (453,700) 263,500
Unearned revenue............................... (98,700) (1,600)
----------- -----------
Net cash used in operating activities....... (912,100) (1,279,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in restricted cash........................... -- 50,000
Software development costs............................ (68,200) (229,100)
Purchase of property and equipment.................... -- (85,800)
----------- -----------
Net cash used in investing activities....... $ (68,200) $ (264,900)
=========== ===========
</TABLE>

F-51
<PAGE> 180
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
SEPTEMBER 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable................... $ (353,300) $ (453,900)
Payment of debt issue costs........................... -- (90,900)
Proceeds from issuance of common stock................ -- 767,100
Proceeds from exercise of common stock options........ 184,400 141,500
Proceeds from issuance of convertible debentures...... -- 400,000
Proceeds from shareholder loan........................ -- 400,000
Proceeds from short-term borrowings................... 1,300,000 5,991,500
Repayment of short-term borrowings.................... -- (5,984,500)
----------- -----------
Net cash provided by financing activities... 1,131,100 1,170,800
----------- -----------
Net increase (decrease) in cash and equivalents....... 150,800 (373,100)
Cash and equivalents, beginning of year............... 180,000 553,100
----------- -----------
Cash and equivalents, end of year..................... $ 330,800 $ 180,000
=========== ===========
Supplemental disclosures of cash flow
information -- Cash paid for interest............... $ 161,900 $ 100,500
=========== ===========
Supplemental schedule of noncash investing and
financing activities:
Conversion of accounts payable to debt.............. $ -- $ 118,600
=========== ===========
Conversion of debentures to common stock, net of
discount......................................... $ 373,700 $ 1,143,400
=========== ===========
Conversion of accrued interest to notes payable..... $ -- $ 9,200
=========== ===========
Fair value of warrants issued for debt discount..... $ -- $ 40,000
=========== ===========
Debt issuance costs incurred for convertible
debentures....................................... $ -- $ 259,400
=========== ===========
</TABLE>

See accompanying notes to these consolidated financial statements.

F-52
<PAGE> 181

MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS OPERATIONS. Medical Dynamics, Inc. (the "Company") is
engaged in the development and marketing of practice management software and
related products for the dental profession. The Company's principal products are
practice management software, patient education systems, digital x-ray systems
and a wide variety of ancillary products utilized by the dental profession.

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries, Computer Age
Dentist, Inc. (CADI), Information Presentation Systems, Inc. (IPS) and DOM,
Inc., d/b/a Command Dental Systems (Command). All significant intercompany
accounts and transactions have been eliminated in the accompanying consolidated
financial statements.

USE OF ESTIMATES. The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. The actual results could differ
from those estimates.

The Company's consolidated financial statements are based on a number of
estimates, including the allowance for doubtful accounts, the provision for
obsolete and slow-moving inventories, the selection of estimated useful lives of
intangible assets and property and equipment, realization of long-lived assets,
assumptions affecting the valuation of common stock issued in business
combinations, and stock options and warrants granted to non-employees. It is
reasonably possible that estimates affecting the provision for obsolete and
slow-moving inventories and realization of long-lived assets will change in the
forthcoming year and such revisions could be material.

CASH EQUIVALENTS. The Company considers all highly liquid debt instruments
purchased with an original maturity of three months or less to be cash
equivalents. At September 30, 2000, cash equivalents include a mutual fund that
invests in money market instruments.

INVENTORIES. Inventories are stated at the lower of cost (first-in,
first-out method) or market and consist primarily of miscellaneous computer
hardware.

PROPERTY AND EQUIPMENT. Property and equipment is stated at cost.
Depreciation is computed principally by the straight-line method over the
following estimated useful lives:

<TABLE>
<CAPTION>
YEARS
------
<S> <C>
Demonstration equipment..................................... 3
Machinery and equipment..................................... 3 - 10
Furniture and fixtures...................................... 3 - 10
</TABLE>

Leasehold improvements are amortized over the lesser of the life of the
lease or the estimated useful life of the improvement.

F-53
<PAGE> 182
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SOFTWARE DEVELOPMENT COSTS. The Company capitalizes costs of producing
software to be sold, leased, or otherwise marketed, incurred subsequent to
establishing technological feasibility in accordance with Statement of Financial
Accounting Standards No. 86.

Amortization of capitalized software development costs is computed on a
product-by-product basis. The annual amortization is the greater of the amount
computed using the ratio of current gross revenue for a product to the total of
current and anticipated future gross revenue for that product or the
straight-line method, not to exceed 7 years. In addition, management
periodically compares the unamortized capitalized costs for each product to the
net realizable value of that product. If the unamortized capitalized costs
exceed the net realizable value, the excess will be charged to operations.

The total amount charged to expense in the statements of operations for
amortization of capitalized software costs was $465,700 and $446,100 for the
years ended September 30, 2000 and 1999, respectively, and is included in cost
of sales.

Costs incurred in researching, designing and planning for the development
of new software are classified as research and development expenses and are
charged to operations as incurred.

OTHER INTANGIBLE ASSETS. Other intangible assets are stated at cost and
are amortized utilizing the straight-line method over the following estimated
useful lives:

<TABLE>
<CAPTION>
YEARS
------
<S> <C>
Technical support contracts................................. 5
Goodwill.................................................... 15
Non-compete agreements...................................... 5
Patents and trademarks...................................... 3 - 10
</TABLE>

DEBT ISSUANCE COSTS. Debt issuance costs are amortized using the interest
method over the term of the related debt.

IMPAIRMENT OF LONG-LIVED ASSETS. Management of the Company assesses
impairment whenever events or changes in circumstances indicate that the
carrying amount of a long-lived asset may not be recoverable. If the net
carrying value exceeds the net cash flows, then impairment will be recognized to
reduce the carrying value to the estimated fair value. During the year ended
September 30, 1999, management determined that certain goodwill was impaired due
to the closing of certain regional operations, and recorded a loss on impairment
of $655,200. No loss on impairment was recorded during the year ended September
30, 2000.

RESEARCH AND DEVELOPMENT. Research and development costs are charged to
operations in the period incurred.

ADVERTISING. Advertising costs are expensed the first time the
advertisement is run. Total advertising costs charged to operations amounted to
$74,200 and $503,400 for the years ended September 30, 2000 and 1999,
respectively.

EARNINGS PER SHARE. Net loss per common share is presented in accordance
with the provisions of Statement of Financial Accounting Standards (SFAS) No.
128, Earnings Per

F-54
<PAGE> 183
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Share. SFAS No. 128 replaces the presentation of primary and fully diluted
earnings per share (EPS), with a presentation of basic EPS and diluted EPS.
Under SFAS No. 128, basic EPS excludes dilution for potential common shares and
is computed by dividing the net loss by the weighted average number of common
shares outstanding for the year. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock and resulted in the issuance of common
stock. Basic and diluted EPS are the same in 1999 and 2000 as all potential
common shares were antidilutive.

INCOME TAXES. The Company accounts for income taxes under the liability
method, which requires recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates.

REVENUE RECOGNITION. The Company recognizes sales when finished goods are
shipped to a customer. Revenue from the sale of the Company's proprietary
software is recognized when the software is delivered and the Company has
substantially performed all material obligations relating to the sale agreement
and collectibility is deemed probable by management. Revenue from software
services is recognized ratably over the contractual period or as the services
are performed.

Unearned revenue primarily represents payments received on deferred
maintenance contracts that has not been earned. The amounts are amortized into
revenue on a monthly basis using the straight-line method over the life of the
contracts.

Costs for maintenance and customer support are charged to expense when the
related revenue is recognized or when those costs are incurred, whichever occurs
first.

STOCK-BASED COMPENSATION. The Company accounts for stock-based
compensation for employees using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. Accordingly, compensation cost for stock
options granted to employees is measured as the excess, if any, of the quoted
market price of the Company's common stock at the measurement date (generally,
the date of grant) over the amount an employee must pay to acquire the stock.

In October 1995, the Financial Accounting Standards Board issued a new
statement titled Accounting for Stock-Based Compensation (SFAS No. 123). SFAS
No. 123 requires that options, warrants, and similar instruments which are
granted to non-employees for goods and services be recorded at fair value on the
grant date. Fair value is generally determined under an option pricing model
using the criteria set forth in SFAS No. 123. The Company did not adopt SFAS No.
123 to account for stock-based compensation for employees but is subject to the
pro forma disclosure requirements.

SEGMENT DISCLOSURES. Operating segments are components of a company about
which separate financial information is available that is evaluated regularly by
the chief operating decisionmaker in deciding how to allocate resources and in
assessing performance. The

F-55
<PAGE> 184
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

only material segment that the Company is currently engaged in is the dental
products segment. Accordingly, the accompanying financial statements do not
include disclosures for the immaterial medical products segment.

2. LIQUIDITY

Through September 30, 2000, the Company has incurred substantial operating
losses and negative cash flows from operations. The Company's future viability
depends on its ability to increase sales, curtail expenditures and become
profitable.

As discussed further in Note 8, the Company entered into an agreement to be
acquired, was successful in obtaining additional debt financing of $250,000 in
October 2000 and extended payments terms on certain notes payable. However,
management believes additional capital is necessary to fund existing working
capital requirements. The Company's ability to continue as a going concern is
dependent on completing the acquisition, or raising additional capital.

3. LONG-TERM LIABILITIES

CONVERTIBLE DEBENTURES. In October 1997, the Company issued convertible
debentures totaling $1,100,000. The conversion price is equal to the average of
the two lowest closing bid prices of the Company's common stock as reported by
NASDAQ during the 60 trading days preceding the conversion date. The Company
received net proceeds of $986,000 from the debentures, after paying all costs
related to the issuance. Through September 30, 1998, the holder had converted
$660,000 of debentures to 315,700 shares of common stock. In October 1998, the
holder converted the remaining $440,000 of debentures to 234,667 shares of
common stock.

The Company also granted the debenture holder a warrant to purchase 84,615
shares of the Company's common stock. The warrant is exercisable until October
31, 2000 at an exercise price of $3.38. The estimated fair value of this warrant
of $120,000 was accounted for as a discount on the convertible debentures.
During 1999, these warrants were canceled.

In July 1998, the Company issued additional convertible debentures totaling
$1,100,000. The conversion price is equal to the average of the two lowest
closing bid prices of the Company's common stock as reported by NASDAQ during
the 60 trading days preceding the conversion date. The Company received net
proceeds of $1,003,000 from the debentures, after paying all costs related to
the issuance. Through September 30, 1999, the holder had converted $800,000 of
debentures to 910,200 shares of common stock. In October 1999 and January 2000,
the holder converted the remaining $300,000 of debentures to 575,273 shares of
common stock.

The Company also granted the Debenture holder a warrant to purchase 110,000
shares of the Company's common stock. The warrant is exercisable until July 31,
2003 at an exercise price of $2.58. The estimated fair value of this warrant of
$100,000 was accounted for as a discount on the convertible debentures.

F-56
<PAGE> 185
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In November 1998, the Company issued an additional $400,000 of convertible
debentures with terms similar to the July 1998 issuance described above. The
Company also agreed to issue an additional warrant for 40,000 shares exercisable
until November 2003 at an exercise price of $2.58 per share. The estimated fair
value of the warrants of $40,000 was accounted for as a discount on the
convertible debenture.

During fiscal 1999, the Company entered into amendments to modify certain
terms and conditions of the debentures. The conversion price will be equal to
85% of the average of the two lowest closing bid prices over a 60-day period
immediately preceding the date of conversion. As a result of the issuance of
warrants in 1999 private placement, the exercise price of the outstanding
warrants to acquire 150,000 shares at $2.58 per share was decreased to $1.832.
As a result of the amendments, additional debt issuance costs of approximately
$260,000 were recorded.

In January 2000, the holder converted $102,600 of debentures to 154,067
shares of common stock. The debenture holder attempted to convert all remaining
1998 debentures but was precluded from doing so due to a provision under which a
maximum of 1,880,000 total shares can be issued to the debenture holder. As a
result, the balance of $297,400 of debentures were unable to be converted and
this amount is now due on demand. In addition, the Company was required to pay a
premium of 15% of the demand note to the debenture holder. This amount totaling
approximately $44,000 is included in accrued expenses as of September 30, 2000.

NOTES PAYABLE. At September 30, 2000, long-term debt consists of the
following:

<TABLE>
<S> <C>
Notes payable to InfoCure:
Interest at 12%, due September 2001 or upon sale of the
Company, collateralized by substantially all of the
Company's assets....................................... $ 1,300,000
Note payable to shareholder (former debenture holder):
Interest at 8%, due on demand, unsecured.................. 297,400
Notes payable to former shareholders of CADI:
Interest at 12%, due September 2001 or upon sale of the
Company, subordinated to the note payable to
InfoCure............................................... 126,700
Notes payable to former owners of Command:
Interest at 6%, due April 2003, unsecured................. 240,200
Discount for below-market interest, net of accumulated
amortization of $21,110................................ (26,500)
-----------
Net.................................................... 213,700
-----------
Note payable to shareholder:
Interest at 12%, due September 2001 or upon sale of the
Company, collateralized by substantially all of the
Company's assets, subordinated to the note payable to
InfoCure............................................... 200,300
-----------
Total notes payable.................................... 2,138,100
Less current maturities..................................... (2,002,200)
-----------
Notes payable, less current maturities................. $ 135,900
===========
</TABLE>

F-57
<PAGE> 186
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The effective interest rate on the debt incurred under the notes payable to
the former owners of CADI and Command was 15% to 16%.

As of September 30, 2000, aggregate maturities of notes payable are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30, PRINCIPAL DISCOUNT NET
------------------------- ---------- -------- ----------
<S> <C> <C> <C>
2001............................................ $2,018,000 $15,900 $2,002,100
2002............................................ 100,200 9,100 91,100
2003............................................ 46,400 1,500 44,900
---------- ------- ----------
Total......................................... $2,164,600 $26,500 $2,138,100
========== ======= ==========
</TABLE>

4. STOCKHOLDERS' EQUITY

In March 1999, an unaffiliated entity purchased 523,800 shares of the
Company's common stock for $800,000. In addition, the Company agreed to issue
additional shares to this entity at various determination dates which are
intended to compensate the entity for one-third of any decrease in the market
price of the Company's stock. As of September 30, 2000, the Company has issued
an additional 389,666 shares under this agreement. The Company has no further
obligations under the agreement.

STOCK OPTION PLAN. The Company has two stock option plans under which
incentive and non-qualified stock options may be granted to officers, directors,
employees, and consultants. Incentive stock options are required to have an
exercise price which is not less than the fair market value of the stock at the
date of grant. Under the first plan which was approved by shareholders in
October 1988, an aggregate of 1,000,000 shares were reserved for issuance
pursuant to the terms of the plan. Under the second plan which was approved by
shareholders in June 1998, an aggregate of 1,500,000 shares were reserved for
issuance pursuant to the terms of the plan. The maximum term is 10 years for
options granted under both plans. Activity in the 1988 and 1998 stock option
plans for the years ended September 30, 2000 and 1999 is as follows:

<TABLE>
<CAPTION>
1998 PLAN 1998 PLAN
-------------------------- --------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
NUMBER OF EXERCISE PRICE NUMBER OF EXERCISE PRICE
SHARES PER SHARE SHARES PER SHARE
--------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Outstanding, October 1, 1998..... 57,200 $1.74 -- $ --
Granted........................ -- -- 234,800 .93
Exercised...................... -- -- -- --
Canceled....................... (5,000) 3.00 -- --
------ --------
Outstanding, September 30,
1999........................... 52,200 1.61 234,800 .93
Granted........................ -- -- 40,000 1.81
Exercised...................... -- -- (207,700) .89
Canceled....................... -- -- (44,100) 1.64
------ --------
Outstanding, September 30,
2000........................... 52,200 1.61 23,000 1.47
====== ========
</TABLE>

F-58
<PAGE> 187
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Options available for future grant at September 30, 2000 totaled 1,225,200
shares under the 1998 plan. No shares were available for future grants under the
1988 plan.

As of September 30, 2000, all options outstanding under the 1988 plan are
vested and 23,000 are vested under the 1998 plan. If not previously exercised,
options outstanding at September 30, 2000, will expire as follows:

<TABLE>
<CAPTION>
1988 PLAN 1998 PLAN
-------------------- --------------------
NUMBER OF EXERCISE NUMBER OF EXERCISE
YEAR ENDING SEPTEMBER 30, SHARES PRICE SHARES PRICE
------------------------- --------- -------- --------- --------
<S> <C> <C> <C> <C>
2001...................................... 37,200 $1.38 -- $ --
2002...................................... 10,000 2.00 -- --
2003...................................... 5,000 2.63 -- --
2004...................................... -- -- 20,000 1.50
2005...................................... -- -- 3,000 1.25
------ ------
52,200 1.61 23,000 1.47
====== ======
</TABLE>

NON-QUALIFIED STOCK OPTIONS AND WARRANTS. The Company has also granted
non-qualified stock options and warrants to officers, directors, employees,
consultants, and lenders. The following is a summary of activity during the
years ended September 30, 2000 and 1999:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE PRICE
SHARES PER SHARE
---------- --------------
<S> <C> <C>
OUTSTANDING, SEPTEMBER 30, 1998........................ 4,236,500 $3.28
Granted to:
Employees............................................ 610,800 3.04
Consultants.......................................... 100,000 1.50
Convertible debenture holders........................ 40,000 2.58
Canceled............................................... (1,468,700) 3.70
Exercised.............................................. (98,000) 1.44
----------
OUTSTANDING, SEPTEMBER 30, 1999........................ 3,420,600 2.99
Granted................................................ -- --
Canceled............................................... (161,000) 3.25
Exercised.............................................. -- --
Expired:
Employees............................................ (160,900) 1.13
Consultants.......................................... (75,000) 4.50
----------
OUTSTANDING, SEPTEMBER 30, 2000........................ 3,023,700 3.03
==========
</TABLE>

F-59
<PAGE> 188
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

If not previously exercised, non-qualified options and warrants expire as
follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
YEAR ENDING SEPTEMBER 30, SHARES PRICE
------------------------- --------- --------
<S> <C> <C>
2001....................................................... 182,000 $1.73
2001....................................................... 250,000 2.87
2001....................................................... 115,000 3.75
2002....................................................... 10,200 3.00
2003....................................................... 52,000 1.50
2003....................................................... 258,900 2.68
2003....................................................... 274,800 3.84
2004....................................................... 140,800 1.60
2004....................................................... 40,000 2.58
2005....................................................... 1,200,000 3.25
2006....................................................... 500,000 3.25
---------
3,023,700
=========
</TABLE>

At September 30, 2000, a total of 2,323,700 non-qualified stock options and
warrants are vested. Unvested employee performance options were outstanding for
700,000 shares. These options vest when the Company achieves various revenue
levels. The Company also has 20,000 options outstanding that vest at future
dates. Vesting under most of these options can be accelerated if various
performance targets are achieved.

During the years ended September 30, 2000 and 1999, the Company recognized
compensation expense of $0 and $32,100, respectively, related to employee
performance options. The ultimate amount of compensation expense related to the
employee performance options will be determined based on the market value of the
Company's common stock on the date that the options vest.

The fair value of options granted to non-employees in 1999 (no options were
granted to non-employees in 2000) was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions:

<TABLE>
<S> <C>
Expected volatility......................................... 78.0%
Risk-free interest rate..................................... 6.0%
Expected dividends.......................................... 0.0%
Expected terms (in years)................................... .7
</TABLE>

For the years ended September 30, 2000 and 1999, options granted to
non-employees resulted in the recognition of approximately $24,400 and $17,500,
respectively, of compensation expense.

F-60
<PAGE> 189
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRO FORMA STOCK-BASED COMPENSATION DISCLOSURES. The Company applies APB
Opinion 25 and related interpretations in accounting for stock options which are
granted to employees. Accordingly, no compensation cost is recognized for grants
of options to employees if the exercise prices were not less than the market
value of the Company's common stock on the measurement dates. Had compensation
cost been determined based on the fair value at the measurement dates consistent
with the method of SFAS No. 123, the Company's net loss and loss per share would
have been changed to the pro forma amounts indicated below.

<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net loss:
As reported......................................... $(1,951,400) $(5,398,100)
Pro forma........................................... (1,992,600) (6,739,100)
Net loss per common share:
As reported......................................... $ (.15) $ (.52)
Pro forma........................................... (.15) (.65)
</TABLE>

For purposes of the above pro forma amounts, the weighted average fair
value of options granted to employees for the years ended September 30, 2000 and
1999 was $1.25 and $1.00, respectively. The fair value of each employee option
granted in 2000 and 1999 was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions:

<TABLE>
<CAPTION>
YEARS ENDED
SEPTEMBER 30,
-------------
2000 1999
----- ----
<S> <C> <C>
Expected volatility......................................... 100.8% 81.0%
Risk-free interest rate..................................... 6.0% 6.0%
Expected dividends.......................................... 0.0% 0.0%
Expected terms (in years)................................... 5.0 4.5
</TABLE>

5. INCOME TAXES

The amounts which give rise to the net deferred tax asset at September 30,
2000, are as follows:

<TABLE>
<S> <C>
Net operating loss carryforwards............................ $ 8,497,000
Compensation expense related to stock options............... 109,000
Research and development tax credit carryforwards........... 20,000
Other....................................................... 137,000
-----------
Total deferred tax assets................................. 8,763,000
Valuation allowance......................................... (8,763,000)
-----------
$ --
===========
</TABLE>

F-61
<PAGE> 190
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Management has determined that a valuation allowance equal to the deferred
tax assets is required since it is more likely than not that the benefits of
these assets will not be realized. The valuation allowance decreased by
approximately $175,000 and increased by approximately $900,000 during the years
ended September 30, 2000 and 1999, respectively.

At September 30, 2000, the Company has approximately $22,879,000 of net
operating loss carryforwards, and approximately $20,000 of research and
development tax credit carryforwards, both of which expire in varying amounts
from 2001 through 2020. Usage of the net operating loss carryforwards may be
limited by Section 382 of the Internal Revenue Code.

6. EMPLOYEE BENEFIT PLAN

The Company maintains a defined contribution 401(k) plan which covers
eligible employees as defined in the plan document. Matching contributions are
at the discretion of the Company. For the years ended September 30, 2000 and
1999, matching contributions totaled approximately $8,800 and $11,000,
respectively.

7. COMMITMENTS AND CONTINGENCIES

LICENSE AGREEMENT. The Company has various agreements to pay royalties to
both a former officer and current directors of the Company. These royalties are
based on the sales of specified products, some of which are no longer
manufactured by the Company. In June 1987, the Company entered into a license
agreement with its then CEO and Chairman relating to the use of certain
technology invented and developed by the Chairman. In connection with the
agreement, the Company agreed to pay royalties based on the greater of 2% of
sales of products which relate to this technology or minimum annual royalties of
$120,000.

During 1997, the license agreement was amended to eliminate the minimum
annual royalty and to provide for future royalties generally equal to 2% of
sales of the products that relate to the technology. For the years ended
September 30, 2000 and 1999, the Company did not incur any royalty expense
related to this agreement. The license agreement may be terminated by the
Chairman in certain circumstances and the rights to the patents may revert to
him if commercial development of the related products does not occur within
prescribed deadlines.

F-62
<PAGE> 191
MEDICAL DYNAMICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OPERATING LEASES. The Company conducts its operations from leased
facilities and leases certain equipment. The terms of the facilities leases
require the Company to pay all maintenance, utilities, property taxes and
insurance. Rent expense has been recorded on a straight-line basis over the life
of the lease. Following is a schedule of future minimum commitments under
operating leases having an initial or remaining term of more than one year.

<TABLE>
<CAPTION>
YEARS ENDING SEPTEMBER 30,
--------------------------
<S> <C>
2001........................................................ $155,600
2002........................................................ 108,000
2003........................................................ 9,000
--------
$272,600
========
</TABLE>

Total rent expense was $321,500 and $430,400, net of sublease rentals
received, for the years ended September 30, 2000 and 1999, respectively.

EMPLOYMENT AGREEMENTS. The Company has employment agreements with two
individuals who are officers or directors of the Company or CADI. As of
September 30, 2000, the agreements were effective for a remaining period of two
years with an annual aggregate compensation of $210,000.

CONTINGENCIES. The Company may from time to time be involved in various
claims, lawsuits, disputes with third parties, actions involving allegations of
discrimination, or breach of contract incidental to the operations of its
business. The Company is currently involved in some incidental litigation which
it believes will not have a material adverse effect on its financial condition
or results of operations. Management has created a legal reserve for this
litigation which it believes is sufficient to cover these claims.

During the year ended September 30, 1999, the Company settled litigation
against the former principals of Command Dental Systems, a business acquired by
the Company in April 1998, resulting in a loss of approximately $287,000.

8. SUBSEQUENT EVENTS

In December 1999, the Company entered into an Agreement and Plan of Merger
and Reorganization with InfoCure Corporation (InfoCure) wherein InfoCure will
acquire 100% of the outstanding common stock of the Company in exchange for
common and preferred shares of InfoCure. This agreement was amended in October
2000 and again in December 2000 and the Company anticipates closing the
transaction during fiscal year 2001. If the agreement is breached by the
Company, the Company may, pursuant to specific details outlined in the
agreement, be responsible for reimbursement of InfoCure's costs and expenses
incurred in connection with the agreement and payment of a $250,000 termination
fee.

In October 2000, InfoCure advanced the Company an additional $250,000 at an
interest rate of 12% and extended the maturity of the entire indebtedness until
September 30, 2001.

F-63
<PAGE> 192

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

DENTSPLY International, Inc.

(Owner of InfoSoft Division of Ceramco, Inc., a Wholly-Owned Subsidiary)

York, Pennsylvania

We have audited the accompanying balance sheets of InfoSoft (a division of
Ceramco, Inc., a wholly owned subsidiary of DENTSPLY International, Inc.) (the
"Company") as of December 31, 1999 and 1998 and the related statements of
income, changes in divisional equity and cash flows for the year ended December
31, 1999 and for period from March 18, 1998 to December 31, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of InfoSoft (a division of
Ceramco, Inc., a wholly owned subsidiary of DENTSPLY International, Inc.) as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for the year ended December 31, 1999 and for the period from March 18, 1998 to
December 31, 1998 in conformity with generally accepted accounting principles.

BDO Seidman, LLP

January 3, 2001

Atlanta, Georgia

F-64
<PAGE> 193

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS:
CURRENT:
Cash and cash equivalents............................. $ -- $ 118,673
Accounts receivable, less allowance for doubtful
accounts of $22,000 and $10,000..................... 592,938 492,786
Supplies inventory.................................... 67,028 66,406
Prepaid expenses and other current assets............. 185,438 357,527
----------- -----------
Total current assets............................. 845,404 1,035,392
----------- -----------
Property and equipment, net (Note 4).................. 944,069 298,656
----------- -----------
OTHER ASSETS:
Capitalized software costs, net (Note 5).............. 4,070,711 3,328,342
Goodwill, less accumulated amortization of $689,749
and $253,702 (Note 3)............................... 5,782,251 6,218,298
----------- -----------
Total other assets............................... 9,852,962 9,546,640
----------- -----------
Total assets..................................... $11,642,435 $10,880,688
=========== ===========
LIABILITIES AND DIVISIONAL EQUITY:
CURRENT:
Bank overdrafts....................................... $ 216,912 $ --
Accounts payable...................................... 273,385 39,324
Income taxes payable (Note 7)......................... 520,000 442,000
Accrued expenses:
Salaries and related expenses....................... 725,082 655,051
Other............................................... 210,177 209,677
Deferred revenue (Note 2)............................. 814,449 719,282
----------- -----------
Total current liabilities........................ 2,760,005 2,065,334
Deferred tax liabilities, net (Note 7)................ 891,000 411,000
----------- -----------
Total liabilities................................ 3,651,005 2,476,334
----------- -----------
Commitments and contingencies (Note 6)
DIVISIONAL EQUITY:
Net advances from parent.............................. 5,756,707 7,053,222
Retained earnings..................................... 2,234,723 1,351,132
----------- -----------
Total divisional equity.......................... 7,991,430 8,404,354
----------- -----------
Total liabilities and divisional equity.......... $11,642,435 $10,880,688
=========== ===========
</TABLE>

See accompanying notes to financial statements

F-65
<PAGE> 194

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 18, 1998 TO
DECEMBER 31, DECEMBER 31,
1999 1998
------------ -----------------
<S> <C> <C>
Net sales........................................... $9,545,002 $6,507,452
Costs and expenses:
Cost of products purchased for sale............... 719,699 770,652
Selling, general and administrative expenses...... 7,228,712 3,445,668
Research and development.......................... 155,000 87,000
---------- ----------
Total operating costs and expenses............. 8,103,411 4,303,320
---------- ----------
Net income before income taxes...................... 1,441,591 2,204,132
Income taxes (Note 7)............................... 558,000 853,000
---------- ----------
Net income.......................................... $ 883,591 $1,351,132
========== ==========
</TABLE>

See accompanying notes to financial statements

F-66
<PAGE> 195

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

STATEMENTS OF CHANGES IN DIVISIONAL EQUITY

FOR THE PERIOD FROM MARCH 18, 1998

TO DECEMBER 31, 1998

AND FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
NET
ADVANCES RETAINED
FROM PARENT EARNINGS TOTAL
----------- ---------- -----------
<S> <C> <C> <C>
Balance, March 18, 1998.................... $ -- $ -- $ --
Net income............................... -- 1,351,132 1,351,132
Net advances............................. 7,053,222 -- 7,053,222
----------- ---------- -----------
Balance, December 31, 1998................. 7,053,222 1,351,132 8,404,354
Net income............................... -- 883,591 883,591
Net repayments........................... (1,296,515) -- (1,296,515)
----------- ---------- -----------
Balance, December 31, 1999................. $ 5,756,707 $2,234,723 $ 7,991,430
=========== ========== ===========
</TABLE>

See accompanying notes to financial statements

F-67
<PAGE> 196

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 18, 1998
DECEMBER 31, TO DECEMBER 31,
1999 1998
------------ ---------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income.......................................... $ 883,591 $1,351,132
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 1,417,213 744,514
Corporate overhead allocation..................... 95,817 55,569
Deferred income taxes............................. 480,000 411,000
Change in operating assets and liabilities, net of
effects of parent's acquisition of InfoSoft,
Inc.
Accounts receivable............................ (100,152) (191,786)
Supplies inventory............................. (622) (34,406)
Prepaid expenses and other current assets...... 172,089 (357,527)
Bank overdrafts................................ 216,912 --
Accounts payable............................... 234,061 (123,000)
Income taxes payable........................... 78,000 442,000
Accrued expenses............................... 70,531 130,728
Deferred revenue............................... 95,167 (267,718)
----------- ----------
Cash provided by operating activities........ 3,642,607 2,106,506
----------- ----------
INVESTING ACTIVITIES:
Acquisition of net assets of InfoSoft, Inc. by
parent............................................ -- (7,727,000)
Capital expenditures, net of effects of parent's
acquisition of InfoSoft, Inc...................... (940,073) (209,879)
Capitalized software expenditures, net effects of
parent's acquisition of InfoSoft, Inc............. (1,428,875) (1,102,607)
----------- ----------
Cash used by investing activities............ (2,368,948) (9,039,486)
----------- ----------
FINANCING ACTIVITIES:
Advance from parent for business purchase, net of
cash acquired..................................... -- 7,727,000
Net repayments to parent company.................... (1,392,332) (729,347)
Cash (used) provided by financing
activities................................ (1,392,332) 6,997,653
----------- ----------
Net change in cash and cash equivalents............. (118,673) 118,673
Cash and cash equivalents, beginning................ 118,673 --
----------- ----------
Cash and cash equivalents, ending................... $ -- $ 118,673
=========== ==========
</TABLE>

See accompanying notes to financial statements

F-68
<PAGE> 197

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

The accompanying financial statements include the operations, assets and
liabilities of InfoSoft, a division of Ceramco, Inc., a wholly owned subsidiary
of DENTSPLY International, Inc ("DENTSPLY"), referred to hereafter as "the
Division". The Division provides information management technology to dentists.
The Division's offerings include practice management applications,
business-to-business e-commerce services, electronic data interchange, or EDI,
services, ongoing maintenance and support and training. These systems are
designed to increase the quality and reduce the cost of providing care by
allowing dentists and physicians to manage their practices more efficiently and
reduce the administrative burdens created by an increasingly complex healthcare
environment.

The assets and liabilities of the Division were acquired by DENTSPLY on
March 18, 1998, and accounted for under the purchase method of accounting.

The Division's costs and expenses in the accompanying financial statements
include allocations from DENTSPLY for centralized corporate services and
infrastructure costs because specific identification of the expenses is not
practicable. The expense allocations have been determined on the bases that
DENTSPLY and the Division considered to be reasonable reflections of the
utilization of services provided or the benefit received by the Division using
ratios such as relative head count, sales and real estate occupied. These
allocations are minimal as the Division, for the most part, operates
independently.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Revenue from software sales is recognized when all shipment obligations
have been met, fees are fixed and determinable, collection of the sale proceeds
is deemed probable and persuasive evidence that an agreement exists. Revenue
from hardware sales, which was minimal for the periods presented, is recognized
upon product shipment. Revenue from support and maintenance contracts, which are
typically one year in length, is recognized ratably over the life of the
contract. Revenue from electronic claims processing is based upon a per
transaction fee. Customers using the Division's Electronic Claims Processing
services must pay the Division in advance and maintain prepaid deposits. The
Division records these deposits as deferred revenue until the processing of
transactions is complete and reported by a third party clearing house. Revenue
from other services is recognized as the services are provided.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all highly liquid investments with
initial maturity dates of no more than three months. Historically, DENTSPLY has
managed cash for its subsidiaries and divisions on a centralized basis.

F-69
<PAGE> 198

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments is the amount at which the
instrument could be exchanged in a current transaction between willing parties.
Management estimates that the carrying amounts of the Division's financial
instruments, which consist primarily of accounts receivable and accounts
payable, are not materially different from their fair values.

PROPERTY AND EQUIPMENT

Property and equipment, are stated at the lower of the fair value or cost.
Depreciation is computed over the estimated useful lives of the related assets
using both straight-line and accelerated methods for financial reporting and
primarily accelerated methods for income tax purposes. Substantial betterments
to property and equipment are capitalized and repairs and maintenance are
expensed as incurred.

CAPITALIZED COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE MARKETED

GOODWILL

Goodwill represents the excess of cost over the fair value of assets
acquired in a business combination accounted for under the purchase method. (See
Note 3). Goodwill is amortized on a straight-line basis over its estimated
useful life (15 years).

LONG-LIVED ASSETS

Long-lived assets, such as goodwill, property and equipment and capitalized
software development costs are periodically evaluated for impairment when events
or changes in circumstances indicate that the carrying amount of the assets may
not be recoverable through the estimated undiscounted future cash flows
resulting from the use of the assets. When any such impairment exists, the
related assets will be written down to fair value.

F-70
<PAGE> 199

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

DIVISIONAL EQUITY

Divisional Equity represents DENTSPLY's net advances to the Division,
through its wholly owned subsidiary, Ceramco, Inc. and divisional earnings. No
intercompany interest income or expense has been allocated to the Division for
DENTSPLY's net investment in the Division, as there is no portion of DENTSPLY's
third-party debt attributed to the Division.

INCOME TAXES

For the periods presented, the Division was not a separate taxable entity
for federal, state or local income tax purposes and its operating results are
included in the tax return of Ceramco, Inc. and ultimately are included in
DENTSPLY's consolidated tax returns. The Division calculates its income taxes
under the separate return method and accounts for income taxes under the asset
and liability approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the Division's financial statements or tax returns. In estimating
future tax consequences, management generally considers all expected future
events other than possible enactments of changes in the tax laws or rates.

MANAGEMENT ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.

NEW ACCOUNTING PRONOUNCEMENTS

F-71
<PAGE> 200

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

terms of a previously fixed stock option or award, and (d) the accounting for an
exchange of stock compensation awards in a business combination. Adoption of the
provisions of the Interpretation are not expected to have a significant impact
on the Division's financial statements.

In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101
"Revenue Recognition" which outlines the basic criteria that must be met to
recognize revenue and provides guidance for presentation of revenue and for
disclosure related to revenue recognition policies in financial statements filed
with the SEC. The effective date for SAB No. 101 is September 1, 2001 for the
Division and management of the Division believes that adopting SAB No. 101 will
not have a material impact on its financial position or results of operations.

3. BUSINESS COMBINATION

On March 18, 1998, through its wholly owned subsidiary, Ceramco, Inc.,
DENTSPLY acquired the assets and assumed the liabilities of InfoSoft, Inc.
DENTSPLY accounted for this acquisition under the purchase method of accounting
with the resulting assets, liabilities and equity pushed down to the newly
created InfoSoft Division of Ceramco, Inc. The fair values of the assets
acquired, liabilities assumed and consideration given in connection with this
transaction as of March 18, 1998 are as follows:

<TABLE>
<S> <C>
Accounts receivable......................................... $ 301,000
Inventory and other current assets.......................... 32,000
Property and equipment...................................... 206,000
Capitalized software........................................ 2,600,000
Goodwill.................................................... 6,472,000
Accounts payable............................................ (163,000)
Accrued expenses............................................ (734,000)
Deferred revenue............................................ (987,000)
----------
Net assets acquired....................................... $7,727,000
==========
This acquisition was funded as follows:
Cash contributed by parent.................................. $8,618,000
Less cash acquired.......................................... (891,000)
----------
$7,727,000
==========
</TABLE>

F-72
<PAGE> 201

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY AND EQUIPMENT

Major classes of property and equipment consisted of the following:

<TABLE>
<CAPTION>
ESTIMATED DECEMBER 31,
USEFUL LIVES ----------------------
(YEARS) 1999 1998
------------ ---------- ---------
<S> <C> <C> <C>
Office and computer equipment................. 2-5 $ 871,606 $ 386,596
Furniture and fixtures........................ 5-7 483,670 28,607
---------- ---------
Total fixed assets............................ 1,355,276 415,203
Less accumulated depreciation................. (411,207) (116,547)
---------- ---------
Net fixed assets.............................. $ 944,069 $ 298,656
========== =========
</TABLE>

Depreciation expense was approximately $295,000 and $117,000 for the year
ended December 31, 1999 and the period from March 18, 1998 to December 31, 1998,
respectively.

5. CAPITALIZED SOFTWARE COSTS

Capitalized software costs is summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1999 1998
----------- ----------
<S> <C> <C>
Capitalized software development costs................. $ 5,131,482 $3,702,607
Less accumulated amortization.......................... (1,060,771) (374,265)
----------- ----------
$ 4,070,711 $3,328,342
=========== ==========
</TABLE>

Amortization of capitalized software charged to operations was
approximately $687,000, and $374,000 for the year ended December 31, 1999 and
the period from March 18, 1998 to December 31, 1998, respectively.

F-73
<PAGE> 202

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. COMMITMENTS

OPERATING LEASES

The Division leases its office facilities and certain equipment indirectly
from third parties through DENTSPLY under operating leases having original terms
ranging from one to five years. Approximate future minimum rentals, by year and
in the aggregate, under the noncancellable operating leases with remaining terms
of more than one year that relate to facilities and equipment utilized by the
Division are as follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
---- ----------
<S> <C>
2000........................................................ $ 365,000
2001........................................................ 376,000
2002........................................................ 387,000
2003........................................................ 369,000
2004........................................................ 411,000
----------
Total..................................................... $1,908,000
==========
</TABLE>

Rent expense was approximately $270,000 and $80,000 for the year ended
December 31, 1999 and for the period from March 18, 1998 to December 31, 1998,
respectively.

EMPLOYEE BENEFIT PLAN

The Division's eligible employees may participate in a plan known as the
DENTSPLY 401(k) Plan (the "Plan"). Eligible employees may contribute up to 15%
of their annual salary to the Plan, subject to certain limitations. DENTSPLY may
make matching contributions and may also provide profit-sharing contributions at
its sole discretion. Employees become fully vested in any employer contributions
after five years of service. The Division's expense related to employee benefit
plans for the year ended December 31, 1999 and for the period from March 18,
1998 to December 31, 1998 were approximately $205,000 and $94,000, respectively.

LITIGATION

The Division is a party to various legal proceedings related to its
agreements with certain of its value-added resellers. Although the ultimate
disposition of these proceedings is not presently determinable, management does
not believe that adverse determination in any or all of such proceedings would
have a material impact on the financial statements of the Division.

F-74
<PAGE> 203

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES

The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 18, 1998 TO
DECEMBER 31, DECEMBER 31,
1999 1998
------------ -----------------
<S> <C> <C>
Current:
Federal.......................................... $ 68,000 $386,000
State............................................ 10,000 56,000
-------- --------
Total current................................. 78,000 442,000
-------- --------
Deferred:
Federal.......................................... 418,000 358,000
State............................................ 62,000 53,000
-------- --------
Total deferred................................ 480,000 411,000
-------- --------
Income tax expense............................ $558,000 $853,000
======== ========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1999 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Accounts receivable reserve............................ $ 9,000 $ 4,000
Basis difference of property and equipment............. 15,000 14,000
Other.................................................. 13,000 7,000
--------- ---------
Total deferred tax assets........................... 37,000 25,000
Deferred tax liabilities:
Capitalized software costs............................. (928,000) (436,000)
--------- ---------
Net deferred tax liabilities........................ $(891,000) $(411,000)
========= =========
</TABLE>

F-75
<PAGE> 204

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Division's effective income tax rate varied from the U.S. federal
statutory rate as follows:

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED MARCH 18, 1998 TO
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------------
<S> <C> <C>
Expected tax expense at U.S. Federal statutory
rate............................................ $490,000 $749,000
Increase (decrease) in income taxes resulting
from:
State income taxes.............................. 67,000 102,000
Meals and entertainment......................... 1,000 1,000
Other, net...................................... -- 1,000
-------- --------
Net income tax expense....................... $558,000 $853,000
======== ========
</TABLE>

8. SUBSEQUENT EVENT

In December 2000, DENTSPLY entered into an agreement with InfoCure
Corporation ("InfoCure") whereby InfoCure's dental division, PracticeWorks would
acquire the Division. The agreement provides for PracticeWorks to acquire all of
the outstanding membership interests of SoftDent, LLC ("LLC"), a newly formed
holding company to which DENTSPLY, will contribute the net assets of the
Division. Ceramco, Inc., a wholly-owned subsidiary of DENTSPLY, will receive
6.5% convertible redeemable preferred stock in PracticeWorks, which is
convertible into approximately 9.8% of PracticeWorks common stock and redeemable
for $32.0 million cash after five years if not converted.

F-76
<PAGE> 205

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
CURRENT:
Accounts receivable, net.............................. $ 457,460 $ 592,938
Supplies inventory.................................... 50,711 67,028
Prepaid expenses and other current assets............. 215,515 185,438
----------- -----------
Total current assets............................. 723,686 845,404
----------- -----------
Property and equipment, net........................... 866,287 944,069
----------- -----------
OTHER ASSETS:
Capitalized software costs, net....................... 4,406,430 4,070,711
Goodwill, net......................................... 5,384,412 5,782,251
----------- -----------
Total other assets............................... 9,790,842 9,852,962
----------- -----------
Total assets..................................... $11,380,815 $11,642,435
=========== ===========
LIABILITIES AND DIVISIONAL EQUITY:
CURRENT:
Bank overdrafts....................................... $ 14,318 $ 216,912
Accounts payable...................................... 129,228 273,385
Income taxes payable.................................. 640,000 520,000
Deferred revenue and accrued expenses................. 1,922,806 1,749,708
----------- -----------
Total current liabilities........................ 2,706,352 2,760,005
Deferred tax liabilities.............................. 891,000 891,000
----------- -----------
Total liabilities................................ 3,597,352 3,651,005
----------- -----------
DIVISIONAL EQUITY:
Net advances from parent.............................. 5,449,331 5,756,707
Retained earnings..................................... 2,334,132 2,234,723
----------- -----------
Total divisional equity.......................... 7,783,463 7,991,430
----------- -----------
Total liabilities and divisional equity.......... $11,380,815 $11,642,435
=========== ===========
</TABLE>

See accompanying notes to condensed interim financial statements

F-77
<PAGE> 206

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

CONDENSED STATEMENTS OF INCOME -- UNAUDITED

<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------- -------------
<S> <C> <C>
Net sales............................................ $6,413,724 $7,306,207
---------- ----------
Costs and expenses:
Cost of products purchased for resale.............. 526,809 221,499
Selling, general and administrative expenses....... 5,496,312 5,312,474
Research and development........................... 230,194 116,252
---------- ----------
Total operating costs and expenses................. 6,253,315 5,650,225
---------- ----------
Net income before income taxes..................... 160,409 1,655,982
Income taxes......................................... 61,000 629,000
---------- ----------
Net income......................................... $ 99,409 $1,026,982
========== ==========
</TABLE>

See accompanying notes to condensed interim financial statements

F-78
<PAGE> 207

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

CONDENSED STATEMENTS OF CASH FLOWS -- UNAUDITED

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income............................................ $ 99,409 $ 1,026,982
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................... 1,194,846 1,024,436
Corporate overhead allocation....................... 95,274 71,862
Deferred income taxes............................... -- 308,000
Change in operating assets and liabilities:
Accounts receivable.............................. 135,478 21,239
Supplies inventory............................... 16,317 (54,577)
Prepaid expenses and other current assets........ (30,077) 147,757
Bank overdrafts.................................. (202,594) --
Accounts payable................................. (144,157) 48,883
Income taxes payable............................. 120,000 221,000
Deferred revenue and accrued expenses............ 173,098 375,472
----------- -----------
Cash provided by operating activities................. 1,457,594 3,191,054
----------- -----------
INVESTING ACTIVITIES:
Capital expenditures.................................. (204,219) (705,055)
Capitalized software development expenditures......... (850,725) (1,033,183)
----------- -----------
Cash used by investing activities..................... (1,054,944) (1,738,238)
----------- -----------
FINANCING ACTIVITY:
Net repayments to parent.............................. (402,650) (1,544,116)
----------- -----------
Net change in cash and cash equivalents............... -- (91,300)
Cash and cash equivalents, beginning.................. -- 118,673
----------- -----------
Cash and cash equivalents, ending..................... $ -- $ 27,373
=========== ===========
</TABLE>

See accompanying notes to condensed interim financial statements

F-79
<PAGE> 208

INFOSOFT

(A DIVISION OF CERAMCO, INC.,

A WHOLLY-OWNED SUBSIDIARY OF DENTSPLY INTERNATIONAL, INC.)

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS -- UNAUDITED

1. ORGANIZATION AND BASIS OF PRESENTATION

The information presented at September 30, 2000, and for the nine months
ended September 30, 2000 and 1999 is unaudited, however, in the opinion of
management, includes all normal recurring adjustments necessary for a fair
presentation of the financial position, results of operations and cash flows of
InfoSoft, a division of Ceramco, Inc., a wholly owned subsidiary of DENTSPLY
International, Inc. ("DENTSPLY"), referred hereafter as "the "Division", for the
periods presented. Historical results may not be indicative of the results to be
expected in the future. Certain information in footnote disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission (the
"Commission"). The financial statements, notes thereto and other information
should be read in conjunction with the financial statements and related notes
contained in this information statement.

The accompanying financial statements include the operations, assets and
liabilities of the Division. The Division provides information management
technology to dentists. The Division's offerings include practice management
applications, business-to-business e-commerce services, electronic data
interchange, or EDI, services, ongoing maintenance and support and training.
These systems are designed to increase the quality and reduce the cost of
providing care by allowing dentists and physicians to manage their practices
more efficiently and reduce the administrative burdens created by an
increasingly complex healthcare environment.

2. SUBSEQUENT EVENT

In December 2000, DENTSPLY entered into an agreement with InfoCure
Corporation ("InfoCure") whereby InfoCure's dental division, PracticeWorks would
acquire the Division. The agreement provides for PracticeWorks to acquire all of
the outstanding equity interests of InfoSoft, LLC ("LLC"), a newly formed
holding company to which DENTSPLY will contribute the net assets of the
Division. Ceramco, Inc., a wholly owned subsidiary of DENTSPLY will receive 6.5%
convertible redeemable preferred stock in PracticeWorks, which is convertible
into 9.8% of PracticeWorks common stock and is redeemable for $32 million cash
after five years if not converted.

F-80
<PAGE> 209

INTEGRATED DENTAL TECHNOLOGIES, INC. DBA PRACTICEWORKS
(A WHOLLY-OWNED SUBSIDIARY OF BIO-DENTAL TECHNOLOGIES CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF ZILA, INC.)

INDEPENDENT AUDITORS' REPORT

Stockholders
Integrated Dental Technologies, Inc.
Phoenix, Arizona

We have audited the accompanying balance sheets of Integrated Dental
Technologies, Inc. dba PracticeWorks, (a wholly-owned subsidiary of Bio-Dental
Technologies Corporation, a wholly-owned subsidiary of Zila, Inc.), (the
"Company"), as of July 31, 1999 and 1998, and the related statements of
operations, stockholders' capital deficiency, and cash flows for the years then
ended. 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.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at July 31, 1999 and 1998, and
the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared from the separate
records maintained by the Company and may not necessarily be indicative of the
conditions that would have existed or the results of operations if the Company
had been operated as an unaffiliated company. Portions of certain expenses
represent allocations made from Zila, Inc. and Bio-Dental Technologies
Corporation applicable to the Company as a whole.

Deloitte & Touche LLP
Phoenix, Arizona

November 9, 1999

F-81
<PAGE> 210

INTEGRATED DENTAL TECHNOLOGIES, INC. DBA PRACTICEWORKS
(A WHOLLY-OWNED SUBSIDIARY OF BIO-DENTAL TECHNOLOGIES CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF ZILA, INC.)

BALANCE SHEETS
JULY 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
---------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 436,565 $ 199,964
Accounts receivable -- net............................. 136,339 181,864
Inventory.............................................. 35,556 27,027
Prepaid expenses and other current assets.............. 141,784 117,544
---------- -----------
Total current assets.............................. 750,244 526,399
Property and Equipment -- net.......................... 121,177 91,187
---------- -----------
Total............................................. $ 871,421 $ 617,586
========== ===========
LIABILITIES AND STOCKHOLDERS' CAPITAL DEFICIENCY
CURRENT LIABILITIES:
Accounts payable....................................... $ 41,988 $ 104,088
Related party payable -- net........................... 28,820 667,523
Accrued expenses....................................... 272,935 242,456
Deferred revenue....................................... 982,037 567,069
---------- -----------
Total current liabilities......................... 1,325,780 1,581,136
Commitments and Contingencies (Notes 4 and 6)
Stockholders' Capital Deficiency:
Common stock, no par value -- 1,000,000 shares
authorized, 100,000 shares issued and
outstanding....................................... 131,694 131,694
Accumulated deficit.................................. (586,053) (1,095,244)
---------- -----------
Total stockholders' capital deficiency............ (454,359) (963,550)
---------- -----------
Total............................................. $ 871,421 $ 617,586
========== ===========
</TABLE>

See notes to financial statements.

F-82
<PAGE> 211

INTEGRATED DENTAL TECHNOLOGIES, INC. DBA PRACTICEWORKS
(A WHOLLY-OWNED SUBSIDIARY OF BIO-DENTAL TECHNOLOGIES CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF ZILA, INC.)

STATEMENTS OF OPERATIONS
YEARS ENDED JULY 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Net sales............................................... $4,515,670 $3,417,735
Cost of sales........................................... 280,314 352,521
---------- ----------
Gross profit.......................................... 4,235,356 3,065,214
Selling, general and administrative expenses............ 3,724,094 3,335,430
---------- ----------
Income (loss) from operations........................... 511,262 (270,216)
Other expense -- net.................................... (2,071) (2,861)
---------- ----------
Net income (loss)..................................... $ 509,191 $ (273,077)
========== ==========
</TABLE>

See notes to financial statements.

F-83
<PAGE> 212

INTEGRATED DENTAL TECHNOLOGIES, INC. DBA PRACTICEWORKS
(A WHOLLY-OWNED SUBSIDIARY OF BIO-DENTAL TECHNOLOGIES CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF ZILA, INC.)

STATEMENTS OF STOCKHOLDERS' CAPITAL DEFICIENCY
YEARS ENDED JULY 31, 1999 AND 1998

<TABLE>
<CAPTION>
COMMON STOCK
------------------ ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
BALANCE, AUGUST 1, 1997............... 100,000 $131,694 $ (822,167) $(690,473)
Net loss.............................. (273,077) (273,077)
------- -------- ----------- ---------
BALANCE, JULY 31, 1998................ 100,000 131,694 (1,095,244) (963,550)
Net income............................ 509,191 509,191
------- -------- ----------- ---------
BALANCE, JULY 31, 1999................ 100,000 $131,694 $ (586,053) $(454,359)
======= ======== =========== =========
</TABLE>

See notes to financial statements.

F-84
<PAGE> 213

INTEGRATED DENTAL TECHNOLOGIES, INC. DBA PRACTICEWORKS
(A WHOLLY-OWNED SUBSIDIARY OF BIO-DENTAL TECHNOLOGIES CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF ZILA, INC.)

STATEMENTS OF CASH FLOWS
YEARS ENDED JULY 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................ $ 509,191 $(273,077)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.......................... 54,570 37,790
Changes in operating assets and liabilities:
Accounts receivable, net............................ 45,525 424,266
Inventory........................................... (8,529) (15,686)
Prepaid expenses and other current assets........... (24,240) (62,450)
Accounts payable.................................... (62,100) 361
Accrued expenses.................................... 30,479 (110,792)
Deferred revenue.................................... 414,968 187,256
Intercompany payable................................ (638,703) 55,172
--------- ---------
Net cash provided by operating activities......... 321,161 242,840
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment..................... (84,560) (78,740)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS.................... 236,601 164,100
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............. 199,964 35,864
--------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR................... $ 436,565 $ 199,964
========= =========
</TABLE>

See notes to financial statements.

F-85
<PAGE> 214

INTEGRATED DENTAL TECHNOLOGIES, INC. DBA PRACTICEWORKS
(A WHOLLY-OWNED SUBSIDIARY OF BIO-DENTAL TECHNOLOGIES CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF ZILA, INC.)

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 1999 AND 1998

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS -- Integrated Dental Technologies, Inc. dba
PracticeWorks (the "Company"), commenced operations in September 1994, and is
incorporated in the State of California. The Company is a wholly-owned
subsidiary of Bio-Dental Technologies Corporation, a wholly-owned subsidiary of
Zila, Inc. ("Zila").

The Company develops and markets PracticeWorks(TM), proprietary dental
office software to dentists located throughout the United States. Written to be
compatible with Windows NT and Windows 95 formats, PracticeWorks(TM) helps in
improving the operating efficiency of dental practices in areas such as patient
scheduling, treatment planning, insurance processing, accounts receivable
management, patient charting, and marketing communications.

SIGNIFICANT ACCOUNTING POLICIES are as follows:

a. Cash Equivalents -- The Company considers all highly-liquid
investments with an original maturity of three months or less to be
cash equivalents.

b. Inventory consists of finished goods and is stated at the lower of
cost (first-in, first-out) or market.

c. Property and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the
assets, which range from three to five years.

d. Income Taxes -- The Company provides for taxes as if the Company
operated on a stand-alone basis. Deferred tax assets and liabilities
are recognized for the estimated future tax effects attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis.

e. Revenue Recognition -- Software revenues are recognized when the
software product has been shipped, there are no uncertainties
surrounding product acceptance, the fees are fixed and determinable,
and collection is considered probable. Revenue from training is
recognized when the training occurs. Revenue from customer support is
recognized pro-rata over the period of support, usually 12 months.

f. Accounting Matters -- In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 133, Accounting for Derivative Instruments and
Hedging Activities, which is effective for fiscal year 2001. SFAS No.
133 requires that entities recognize all derivatives as either assets
or liabilities on the balance sheet and measure those instruments at
fair value. The standard also provides specific guidance for
accounting for derivatives designated as hedging instru-

F-86
<PAGE> 215
INTEGRATED DENTAL TECHNOLOGIES, INC. DBA PRACTICEWORKS
(A WHOLLY-OWNED SUBSIDIARY OF BIO-DENTAL TECHNOLOGIES CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF ZILA, INC.)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 1999 AND 1998 -- (CONTINUED)

ments. The Company has not evaluated what impact this standard will
have on the financial statements.

g. Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

h. Software Development Costs -- Development costs incurred in the
research and development of new software products are expensed as
incurred until technological feasibility has been established. The
Company considers technological feasibility to be established when
all planning, designing, coding and testing have been completed
according to design specifications. After technological feasibility
is established, any additional costs are capitalized. Historically,
product development has been substantially completed concurrently
with the establishment of technological feasibility and, accordingly,
no costs have been capitalized.

2. PROPERTY AND EQUIPMENT

Property and equipment at July 31 consist of the following:

<TABLE>
<CAPTION>
1999 1998
--------- --------
<S> <C> <C>
Furniture and fixtures............................ $ 52,584 $ 24,193
Computer equipment................................ 201,360 145,191
--------- --------
Total........................................... 253,944 169,384
Less accumulated depreciation..................... (132,767) (78,197)
--------- --------
Property and equipment -- net................ $ 121,177 $ 91,187
========= ========
</TABLE>

3. INCOME TAXES

The income tax provision consists of the following for the years ended July
31:

<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Current.......................................... $ 172,072 $(545,308)
Deferred......................................... (172,072) 545,308
--------- ---------
Total income tax provision..................... $ -- $ --
========= =========
</TABLE>

F-87
<PAGE> 216
INTEGRATED DENTAL TECHNOLOGIES, INC. DBA PRACTICEWORKS
(A WHOLLY-OWNED SUBSIDIARY OF BIO-DENTAL TECHNOLOGIES CORPORATION,
A WHOLLY-OWNED SUBSIDIARY OF ZILA, INC.)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 1999 AND 1998 -- (CONTINUED)

Deferred income taxes are provided for temporary differences between
financial statement and income tax reporting for certain transactions, primarily
net operating loss ("NOL") carryforward.

Net deferred income taxes at July 31 consist of the following:

<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Deferred income tax assets -- Timing
differences.................................... $ 188,592 $ 227,673
Deferred income tax assets -- NOL carryforward... 488,317 488,317
Valuation allowance.............................. (676,909) (715,990)
--------- ---------
Net deferred income tax asset.................. $ -- $ --
========= =========
</TABLE>

The Company files its income tax returns as a member of the Zila
consolidated income tax return. However, there is no formal income tax sharing
agreement to allocate income taxes among the members of the consolidated group.
Historically, the Company has not recorded an income tax benefit for losses it
has incurred that were utilized by Zila.

The Company has approximately $1,200,000 of federal and state net operating
loss carryovers which will begin to expire in 2012 for federal and 2002 for
state income tax purposes. The realization of these net operating loss
carryovers by Zila in its consolidated income tax return is uncertain and
therefore, Zila and the Company have recorded a valuation allowance equal to its
deferred tax asset at July 31, 1999 and 1998. This treatment results in no
income tax benefit being recorded in 1999 and 1998.

4. LEASE COMMITMENTS

OPERATING LEASES -- The Company leases its Sacramento and Indiana
facilities under operating leases. The facilities are currently being leased
under a five-year renewable lease at an annual rate of $87,840 and a
month-to-month lease at an annual rate of $42,792, respectively. Total rent
expense for the years ended July 31, 1999 and 1998 was $40,620 and $43,592,
respectively.

5. RELATED PARTIES

Certain administrative expenses aggregating $189,900 and $141,413 during
the years ended July 31, 1999 and 1998, respectively, have been allocated to the
Company by Zila and Bio-Dental Technologies Corporation based on the Company's
pro-rata share of these expenses.

6. SUBSEQUENT EVENT

On October 14, 1999, the Company entered into a letter of intent with
Infocure, Inc., in which Infocure, Inc. would purchase all of the assets and
assume all of the liabilities of the Company.

F-88
<PAGE> 217

CRUNCHY FROG SOFTWARE, INC.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Crunchy Frog Software, Inc.
Indianapolis, Indiana

We have audited the balance sheet of Crunchy Frog Software, Inc. (the
"Company") as of December 21, 1999, and the related statements of income changes
in stockholders' equity and cash flows for the period from January 1, 1999 to
December 21, 1999. 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 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 Crunchy Frog Software, Inc.
as of December 21, 1999, and the results of its operations and its cash flows
for the period from January 1, 1999 to December 21, 1999, in conformity with
generally accepted accounting principles.

BDO Seidman, LLP
Atlanta, Georgia
December 13, 2000

F-89
<PAGE> 218

CRUNCHY FROG SOFTWARE, INC.

BALANCE SHEET
DECEMBER 21, 1999

<TABLE>
<S> <C>
ASSETS
Current
Cash...................................................... $ 3,381
Accounts receivable-trade, no allowance................... 39,464
-------
Total assets........................................... $42,845
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued expense........................................... $ 1,655
STOCKHOLDERS' EQUITY
Common stock, no par value, 1,000 shares authorized, 150
shares issued and outstanding.......................... 300
Retained earnings......................................... 40,890
-------
Total stockholders' equity............................. 41,190
-------
Total liabilities and stockholders' equity............. $42,845
=======
</TABLE>

See accompanying notes to financial statements.

F-90
<PAGE> 219

CRUNCHY FROG SOFTWARE, INC.

STATEMENT OF INCOME AND RETAINED EARNINGS
JANUARY 1, 1999 THROUGH DECEMBER 21, 1999

<TABLE>
<S> <C>
Commissions revenue......................................... $ 532,982
Operating expense........................................... 2,105
---------
Net income.................................................. $ 530,877
=========
</TABLE>

See accompanying notes to financial statements.

F-91
<PAGE> 220

CRUNCHY FROG SOFTWARE, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
JANUARY 1, 1999 THROUGH DECEMBER 21, 1999

<TABLE>
<CAPTION>
COMMON STOCK
--------------- RETAINED
SHARES AMOUNT EARNINGS
------ ------ ---------
<S> <C> <C> <C>
Balance, January 1, 1999........................... 150 $300 $ 21,213
Net income......................................... -- -- 530,877
Dividends.......................................... -- -- (511,200)
---- ---- ---------
Balance, December 21, 1999......................... 150 $300 $ 40,890
==== ==== =========
</TABLE>

See accompanying notes to financial statements.

F-92
<PAGE> 221

CRUNCHY FROG SOFTWARE, INC.

STATEMENT OF CASH FLOWS
JANUARY 1, 1999 THROUGH DECEMBER 21, 1999

<TABLE>
<S> <C>
Cash provided by operating activities:
Net income................................................ $ 530,877
Adjustment to reconcile net income to cash provided by
operating activities:
Increase in accounts receivable........................ (20,195)
Increase in accrued expense............................ 1,655
---------
Net cash flows from operating activities............. 512,337
Cash used in financing activity:
Distributions to stockholders............................. (511,200)
---------
Net increase in cash................................. 1,137
Cash, beginning of period................................... 2,244
---------
Cash, end of year........................................... $ 3,381
=========
</TABLE>

See accompanying notes to financial statements.

F-93
<PAGE> 222

CRUNCHY FROG SOFTWARE, INC.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

BUSINESS

Crunchy Frog Software, Inc. ("the Company") was incorporated in Indiana in
October 1994 to promote electronic filing of insurance claims to users of a
related dental office practice management software program. The Company
currently has no operations other than receiving commission income.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all highly liquid investments with
initial maturity dates of no more than three months.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments is the amount at which the
instrument could be exchanged in a current transaction between willing parties.
Management estimates that the carrying amounts of the Company's financial
instruments (accounts receivable) included in the accompanying consolidated
balance sheets are not materially different from their fair values.

REVENUE RECOGNITION

Revenue on commission income is based on a fee per transaction and is
recognized each month as it is earned.

CONCENTRATION OF CREDIT RISK

The Company receives all of its commission income from one customer, MedE
America. Consequently, the Company is subjected to concentration of risk
regarding accounts receivable and revenue is dependent upon this customer.

MANAGEMENT ESTIMATES

NEW ACCOUNTING PRONOUNCEMENTS

F-94
<PAGE> 223
CRUNCHY FROG SOFTWARE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1999. Adoption of this statement did not have a significant impact on the
Company's financial statements.

SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended, is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives), and for
hedging activities. Historically, the Company has not entered into derivatives
contracts either to hedge existing risks or for speculative purposes.
Accordingly, the Company does not expect adoption of the new standard on January
1, 2001, to affect its financial statements.

2. INCOME TAXES

The Company has elected to be taxed as an "S" Corporation under the
provisions of Subchapter S of the Internal Revenue Code. As such, the profits of
the Company are taxed on the individual income tax returns of the stockholders.
Accordingly, no provision of income taxes has been made in the accompanying
financial statements.

3. SUBSEQUENT EVENT

On December 22, 1999, the shareholders of the Company sold all of the
outstanding common stock of the Company to InfoCure Corporation in exchange for
107,701 shares of InfoCure Corporation common stock.

F-95
<PAGE> 224

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the fees and expenses in connection with the
issuance and distribution of the securities being registered hereunder. Except
for the SEC registration fee, all amounts are estimates.

<TABLE>
<S> <C>
SEC registration fee........................................ $ 9,473
Nasdaq National Market listing fee.......................... *
Accounting fees and expenses................................ *
Legal fees and expenses..................................... *
Other professional expenses................................. *
Printing and Engraving expenses............................. *
Transfer Agent and Registrar fees and expenses.............. *
Miscellaneous expenses...................................... *
------------
Total..................................................... $ *
============
</TABLE>

-------------------------

* To be filed by amendment.

14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law ("DGCL") generally
provides that all directors and officers (as well as other employees and
individuals) may be indemnified against expenses (including attorney's fees)
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with certain specified actions, suits or proceedings, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation -- a "derivative action"), if they acted in good
faith and in a manner they 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 reasonable cause to believe their conduct was unlawful. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification extends only to expenses (including attorneys' fees)
actually and reasonably incurred in connection with defense or settlement of an
action and the DGCL requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. Section 145 of the DGCL also provides that the rights
conferred thereby are not exclusive of any other right which any person may be
entitled to under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, and permits a corporation to advance expenses to or on
behalf of a person to be indemnified upon receipt of an undertaking to repay the
amounts advanced if it is determined that the person is not entitled to be
indemnified.

The Registrant's bylaws allow, and in some cases require, the
indemnification of directors and officers under certain circumstances and grant
our directors and officers a right to indemnification to the full extent
permitted by law for all expenses relating to civil, criminal, administrative or
investigative procedures to which they are a party (1) by reason of the fact
that they are or were the Registrant's directors or officers or (2) by reason of
the fact that, while they are or were the Registrant's directors or officers,
they are or were

II-1
<PAGE> 225

serving at the Registrant's request as a director, officer or employee of
another enterprise. The Registrant's bylaws further provide that an advancement
for any such expenses shall only be made upon delivery to the Registrant by the
indemnitee of an undertaking to repay all amounts so advanced if it is
ultimately determined that such indemnitee is not entitled to be indemnified by
the Registrant.

In connection with the distribution, the Registrant will enter into
indemnification agreements with its directors and officers. These agreements
will require the Registrant to indemnify these directors and officers with
respect to their activities as its directors or officers or when serving at its
request as a director, officer or trustee of another corporation, joint venture,
trust or other enterprise against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by them in any threatened, pending or completed suit or proceeding to which they
are, or are threatened to be made, parties as a result of their service to the
Registrant. The Registrant will agree to indemnify each indemnitee for any one
or a combination of the following, whichever is most advantageous to the
indemnitee: (1) the benefits provided by the Registrant's certificate of
incorporation and bylaws in effect on the date of the indemnification agreement;
(2) the benefits provided by the Registrant's certificate of incorporation and
bylaws at the time expenses are incurred by the indemnitee; (3) the benefits
allowable under Delaware law in effect on the date of the indemnification
agreement; (4) the benefits allowable under the law of the jurisdiction under
which the Registrant exists at the time expenses are incurred by the indemnitee;
(5) the benefits available under liability insurance obtained by the Registrant;
and (6) such other benefits as may be otherwise available to indemnitee under
our existing practices. Under the indemnification agreements, each indemnitee
will continue to be indemnified even after ceasing to occupy a position as the
Registrant's officer, director, employee or agent with respect to suits or
proceedings arising out of acts or omissions during his or her service to the
Registrant.

Each indemnitee will agree to notify the Registrant promptly of any
proceeding brought or threatened and not to make any admission or settlement
without the Registrant's consent, unless the indemnitee determines to undertake
his or her own defense and waives the benefits of the indemnification agreement.

15. RECENT SALES OF UNREGISTERED SECURITIES

On August 10, 2000, PracticeWorks issued 100 shares of its common stock to
InfoCure Systems, Inc., a wholly-owned subsidiary of InfoCure Corporation. This
issuance is exempt from registration under the Securities Act (the "Act")
pursuant to Section 4(2) of the Act.

16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits. The following documents are filed as exhibits hereto:

<TABLE>
<CAPTION>
EXHIBIT
NO.
-----------
<C> <S> <C>
2.1*** -- Form of Agreement and Plan of Distribution.
3.1* -- Certificate of Incorporation of PracticeWorks,
Inc.
3.2(a)**** -- Certificate of Designations of Series A
Preferred Stock of PracticeWorks, Inc., to be
issued to Ceramco, Inc.
</TABLE>

II-2
<PAGE> 226

<TABLE>
<CAPTION>
EXHIBIT
NO.
-----------
<C> <S> <C>
3.2(b)**** -- Certificate of Designations of Series B
Preferred Stock of PracticeWorks, Inc. to be
issued to the Stockholders of Medical Dynamics,
Inc.
3.2(c)**** -- Certificate of Designations of Series C
Preferred Stock of PracticeWorks, Inc. to be
issued to Crescent International Ltd.
3.3* -- Form of By-Laws of PracticeWorks, Inc.
4.1*** -- Form of certificate representing PracticeWorks,
Inc. common stock.
5.1**** -- Opinion of King & Spalding.
8.1**** -- Form of Tax Opinion of King & Spalding.
10.1**** -- Form of Tax Disaffiliation Agreement.
10.2*** -- Form of Transition Services Agreement.
10.3*** -- Form of Agreement and Plan of Distribution
(filed as Exhibit 2.1).
10.4*** -- Form of Employee Benefits and Compensation
Allocation Agreement.
10.5(a)*** -- Form of Intellectual Property License Agreement.
10.5(b)*** -- Form of Intellectual Property License Agreement.
10.6*** -- Amended and Restated PracticeWorks, Inc. 2000
Stock Option Plan.
10.7*** -- Form of Indemnification Agreement.
10.8*** -- Form of Executive Officer Employment Agreement.
10.9+*** -- Inventory Control System Development & Marketing
Agreement by and between Ormco Corporation and
InfoCure Corporation, dated as of June 23, 1999.
10.10+*** -- InfoCure Corporation E-Commerce Agreement by and
between United Stationers Supply Co. and
InfoCure Corporation, dated as of January 18,
2000.
10.11+*** -- E-Commerce Agreement by and between Summit
Marketing Group, Inc. and InfoCure Corporation,
dated as of November 18, 1999.
10.12+*** -- Purchase and Marketing Agreement by and between
Dell Marketing, L.P. and InfoCure Corporation,
dated as of August 1, 2000.
10.13** -- Master Service Agreement by and between Global
Center, Inc. and PracticeWorks, Inc., dated as
of September 13, 2000.
10.14 -- Contribution Agreement, dated as of December 27,
2000, by and between InfoCure Corporation,
PracticeWorks, Inc., DENTSPLY International,
Inc., Ceramco, Inc. and SoftDent LLC.
10.15**** -- Registration Rights Agreement dated as of
January , 2001 between PracticeWorks, Inc.
and Ceramco, Inc.
10.16**** -- Stock Purchase Agreement dated as of January ,
2001 between PracticeWorks, Inc. and Crescent
International Ltd.
</TABLE>

II-3
<PAGE> 227

<TABLE>
<CAPTION>
EXHIBIT
NO.
-----------
<C> <S> <C>
10.17**** -- Registration Rights Agreement dated as of
January , 2001 between PracticeWorks, Inc. and
Crescent International Ltd.
10.18**** -- [FINOVA Documents]
10.19 -- Amended and Restated Agreement and Plan of
Merger and Reorganization by and among Medical
Dynamics, Inc., InfoCure Corporation and CADI
Acquisition Corporation, dated October 10, 2000.
10.20 -- First Amendment to the Amended and Restated
Agreement and Plan of Merger and Reorganization
by and among Medical Dynamics, Inc., InfoCure
Corporation and CADI Acquisition Corporation,
dated October 30, 2000.
10.21 -- Second Amendment to the Amended and Restated
Agreement and Plan of Merger and Reorganization
by and among Medical Dynamics, Inc., InfoCure
Corporation and CADI Acquisition Corporation,
dated December 19, 2000.
21.1* -- List of Subsidiaries.
23.1 -- Consent of BDO Seidman, LLP
23.2 -- Consent of Hein + Associates LLP
23.3 -- Consent of Deloitte & Touche LLP
23.4**** -- Consent of King & Spalding (included in Exhibit
5.1)
24.1 -- Power of Attorney (included on signature page).
</TABLE>

-------------------------

*Previously filed as exhibits to the Registration Statement on Form 10 (File
No. 1-16079), filed on August 22, 2000, that was withdrawn at the request of
the Registrant.

**Previously filed as exhibits to the Registration Statement on Form 10 (File
No. 1-16079), filed by the Registrant on November 13, 2000 that was
withdrawn at the request of the Registrant.

***Previously filed as exhibits to Amendment No. 1 to the Registration
Statement on Form 10, filed by the Registrant on November 13, 2000 (File No.
1-16079), that was withdrawn at the request of the Registrant.

****To be filed by amendment.

+PracticeWorks has applied for confidential treatment of portions of these
exhibits. Accordingly, portions thereof have been omitted and were filed
separately with the Securities and Exchange Commission on November 13, 2000.

II-4
<PAGE> 228

(b)(1)List of Financial Statements. The following financial statements are
included in the Registration Statement:

PRACTICEWORKS (A DIVISION OF INFOCURE CORPORATION) HISTORICAL
FINANCIAL STATEMENTS:

Report of Independent Certified Public Accountants.

Balance sheets as of December 31, 1999 and 1998.

Statements of operations for the years ended December 31, 1999 and 1998
and the eleven months ended December 31, 1997.

Statements of changes in divisional equity for the years ended December
31, 1999 and 1998 and the eleven months ended December 31, 1997.

Statements of cash flows for the years ended December 31, 1999 and 1998
and the eleven months ended December 31, 1997.

Notes to financial statements.

Condensed balance sheets as of September 30, 2000 (unaudited) and
December 31, 1999.

Condensed statements of operations (unaudited) for nine months ended
September 30, 2000 and 1999.

Condensed statements of cash flows (unaudited) for the nine months ended
September 30, 2000 and 1999.

Notes to condensed interim financial statements (unaudited).

PRACTICEWORKS (A DIVISION OF INFOCURE CORPORATION) PRO FORMA FINANCIAL
STATEMENTS:

Introduction to unaudited pro forma condensed combined financial
statements.

Unaudited pro forma condensed combined balance sheet as of September 30,
2000.

Unaudited pro forma condensed combined statement of operations for the
year ended December 31, 1999.

Unaudited pro forma condensed combined statement of operations for the
nine months ended September 30, 2000.

Notes to unaudited pro forma condensed combined financial statements.

MEDICAL DYNAMICS, INC. AND SUBSIDIARIES HISTORICAL FINANCIAL STATEMENTS:

Independent Auditor's Report.

Consolidated balance sheet as of September 30, 2000.

Consolidated statements of operations for the fiscal years ended
September 30, 2000 and 1999.

II-5
<PAGE> 229

Consolidated statements of stockholders' equity for the fiscal years
ended September 30, 2000 and 1999.

Consolidated statements of cash flows for the fiscal years ended
September 30, 2000 and 1999.

Notes to Consolidated Financial Statements.

INFOSOFT (A DIVISION OF CERAMCO, INC., A WHOLLY-OWNED SUBSIDIARY OF
DENTSPLY INTERNATIONAL, INC.):

Report of Independent Certified Public Accountants.

Balance sheets as of December 31, 1999 and 1998.

Statements of income for the year ended December 31, 1999 and for the
period from March 18, 1998 to December 31, 1998.

Statements of changes in divisional equity for the period from March 18,
1998 to December 31, 1998 and for the year ended December 31, 1999.

Statements of cash flows for the year ended December 31, 1999 and for
the period from March 18, 1998 to December 31, 1998.

Notes to financial statements.

Condensed balance sheets as of September 30, 2000 (unaudited) and
December 31, 1999.

Condensed statements of income (unaudited) for the nine months ended
September 30, 2000 and 1999.

Condensed statements of cash flows (unaudited) for the nine months ended
September 30, 2000 and 1999.

Notes to condensed interim financial statements (unaudited).

INTEGRATED DENTAL TECHNOLOGIES, INC. FINANCIAL STATEMENTS:

Independent Auditors' Report.

Balance sheets, July 31, 1999 and 1998.

Statements of operations, years ended July 31, 1999 and 1998.

Statements of stockholders' capital deficiency, years ended July 31,
1999 and 1998.

Statements of cash flows, years ended July 31, 1999 and 1998.

Notes to financial statements, years ended July 31, 1999 and 1998.

CRUNCHY FROG SOFTWARE, INC. FINANCIAL STATEMENTS:

Report of Independent Certified Public Accountants.

Balance sheet as of December 21, 1999.

Statement of income for the period January 1, 1999 through December 21,
1999.

II-6
<PAGE> 230

Statement of changes in stockholders' equity for the period from January
1, 1999 to December 21, 1999.

Statement of cash flows for the period January 1, 1999 through December
21, 1999.

Notes to financial statements.

(2) Financial Statement Schedules.

SCHEDULE II

PRACTICEWORKS (A DIVISION OF INFOCURE CORPORATION)

VALUATION AND QUALIFYING ACCOUNTS

(IN THOUSANDS)

<TABLE>
<CAPTION>
CHARGED TO
BALANCE AT CHARGED TO OTHER
BEGINNING COSTS AND ACCOUNTS- DEDUCTIONS- BALANCE AT
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE END OF PERIOD
----------- ---------- ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Year ended December 31,
1999....................... 339 998 -- (224)(A) 1,113
Year ended December 31,
1998....................... 92 504 -- (257) 339
Eleven months ended December
31, 1997................... -- 92 -- -- 92

ALLOWANCE FOR DEFERRED TAXES
Year ended December 31,
1999....................... -- -- -- -- --
Year ended December 31,
1998....................... 285 -- -- (285)(B) --
Eleven months ended December
31, 1997................... -- 285 -- -- 285
</TABLE>

---------------

(A)Uncollected receivables written off.

(B)Recovery of valuation reserve.

All financial statement schedules not listed are omitted because they are
inapplicable or the requested information is shown in the financial statements
of the Registrant or in the related notes to the financial statements.

17. UNDERTAKINGS

The registrant hereby undertakes to provide to the Distribution Agent, at
the time of the distribution, certificates in such denominations and registered
in such names as required to permit prompt delivery to each recipient of shares
of PracticeWorks common stock in the distribution.

Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933, as amended, 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 Securities Act of 1933, as amended, 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

II-7
<PAGE> 231

action, suit or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered hereunder,
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 Securities Act of 1933, as amended, and will be governed by the
final adjudication of such issue.

The Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933, as amended,
shall be deemed to be part of this Registration Statement as of the time it
was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment that contains a form
of prospectus 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.

II-8
<PAGE> 232

SIGNATURES AND POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Atlanta, State of Georgia, on January 16, 2001.

PracticeWorks, Inc.

By: /s/ JAMES K. PRICE

-----------------------------------

James K. Price

Chief Executive Officer and

President

KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints James K. Price and Richard E. Perlman, and each
of them, his or her true and lawful attorney-in-fact and agents, with full power
of substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to the Registration Statement, and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission and to sign and file any other
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, granting
unto said attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be done as fully
to all said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-1 has been signed by the following persons
in the capacities indicated on January 16, 2001.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

/s/ RICHARD E. PERLMAN Chairman of the Board and January 16, 2001
------------------------------------------ Director
Richard E. Perlman

/s/ JAMES K. PRICE Chief Executive Officer, January 16, 2001
------------------------------------------ President and Director
James K. Price (Principal Executive
Officer)

/s/ JAMES A. COCHRAN Senior Vice President, January 16, 2001
------------------------------------------ Secretary and
James A. Cochran Chief Financial Officer
(Principal Financial
Officer)
</TABLE>

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