<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended...............March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from...............to...............
Commission file number...............0-13591
HEALTHAXIS INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2214195
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 DeKalb Pike, East Norriton, Pennsylvania 19401
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (610) 279-2500
Former name, former address and former fiscal year, if changed since last
report: N/A
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 13,097,618 shares of
common stock, par value $.10, outstanding as of May 11, 2000.
Page 1 of 20
<PAGE>
HealthAxis Inc.
Table of Contents
Page
----
PART I Financial Information
Item 1. Restated Condensed Financial Statements
Restated Consolidated Balance Sheets...................................3
Restated Consolidated Statements of Operations.........................4
Restated Consolidated Statement of Changes in Stockholders' Equity.....5
Restated Consolidated Statement of Cash Flows........................6-7
Notes to Restated Condensed Consolidated Financial Statements.......8-16
Item 2. Management's Discussion and Analysis of Results
Of Operations and Financial Condition..............................17-21
Item 3. Quantitative and Qualitative Disclosures About Market Risk............21
PART II Other Information
Items 1-5.............................................................22
Item 6. Reports on Form 8-K...........................................22
Signatures....................................................................23
Page 2 of 20
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Restated Condensed Financial Statements
HealthAxis Inc. and Subsidiaries
Restated Consolidated Balance Sheets
(Dollars in thousands except share and per share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
(Unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $ 44,612 $ 58,069
Accounts receivable, net of allowance for doubtful accounts of $129 7,454 -
Prepaid expenses 704
Other current assets 416 549
-------- -------
Total current assets 53,186 58,618
Property, equipment and software, less accumulated depreciation and
amortization of $15,980 and $2,259, respectively 12,917 357
Capitalized software and contract start-up costs, less accumulated amortization of $747 3,152 -
Goodwill, less accumulated amortization of $54,086 and $765, respectively 680,115 7,114
Customer base, less accumulated amortization of $1,076 16,129 -
Long-term receivables from employees 641 -
Acquisition costs 341 750
Prepaid alliance agreements, net of accumulated amortization of $891 and $436, respectively -
Assets held for sale 4,797 12,458
Other assets 395 305
-------- -------
Total assets $771,673 $79,602
======== =======
Liabilities and Stockholders' Equity
Accounts payable $ 1,974 $ 1,823
Accrued liabilities 7,725 4,746
Deferred revenues 619 -
Obligations under capital lease 503 410
-------- -------
Total current liabilities 10,821 6,979
Convertible debentures 25,526 25,019
Federal income taxes 585 585
Ceding commission liability 5,750 5,600
Post retirement and employment liabilities 1,042 1,030
Obligations under capital lease 175 117
Other liabilities 30 -
-------- -------
Total liabilities 43,929 39,330
Commitments and Contingencies Minority interest in HealthAxis:
Common stock 478,052 12,603
Preferred stock 15,049 15,049
Stockholders' Equity:
Preferred stock, par value $1: authorized 20,000,000 shares:
Series A cumulative convertible, none issued and outstanding - -
Series B cumulative convertible, none issued and outstanding - -
Common stock, par value $.10: authorized 50,000,000,
issued and outstanding 13,097,618 and 13,027,668 shares 1,310 1,303
Common stock, Class A, par value $.10: authorized 20,000,000, - -
none issued and outstanding
Additional paid-in capital 325,041 81,798
Accumulated deficit (81,813) (70,481)
Unearned compensation (9,895) -
-------- -------
Total stockholders' equity 234,643 12,620
-------- -------
Total liabilities and stockholders' equity $771,673 $79,602
======== =======
</TABLE>
See notes to consolidated financial statements.
Page 3 of 20
<PAGE>
HealthAxis Inc. and Subsidiaries
Restated Consolidated Statements of Operations
(Dollars in thousands, except share and per share data) (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended,
March 31, March 31,
2000 1999
-----------------------------
<S> <C> <C>
Revenue $ 11,375 $ -
Expenses:
Cost of revenues 8,203 -
Operating 3,959 36
Sales and marketing 648 84
General and administrative 4,446 1,180
Amortization of intangibles 10,498 -
-------- -------
Total expenses 27,754 1,300
-------- -------
Operating loss (16,379) (1,300)
Interest and other income, net (585) (334)
-------- -------
Loss before minority interest (16,964) (1,634)
Minority interest in loss of subsidiary 9,360 99
-------- -------
Loss from continuing operations (7,604) (1,535)
Loss from discontinued operations (3,728) (1,333)
-------- -------
Net loss $(11,332) $(2,868)
Dividends on preferred stock - 34
-------- -------
Net loss applicable to common stockholders $(11,332) $(2,902)
======== =======
Loss per share of common stock (basic and diluted)
Continuing operations $ (0.58) $ (0.14)
Discontinued operations (0.29) (0.11)
-------- -------
Net loss $ (0.87) $ (0.25)
======== =======
Weighted average common shares and equivalents
used in computing loss per share
Basic and diluted 13,051,000 11,614,000
</TABLE>
See notes to consolidated financial statements.
Page 4 of 20
<PAGE>
HealthAxis Inc. and Subsidiaries
Restated Consolidated Statements of Changes in Stockholders' Equity
(Dollars and shares in thousands) (Unaudited)
<TABLE>
<CAPTION>
Additional
Preferred Stock Common Stock Paid-In Accumulated
Shares Amount Shares Amount Capital Deficit
------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 - $ - 13,027 $ 1,303 $ 81,798 $ (70,481)
Valuation of Insurdata options
Net loss (11,332)
Amortization of unearned compensation
Stock options exercised 71 7 334
Increase in net assets in HealthAxis.com, Inc. 242,704
Stock options issued in lieu of compensation 205
----- ----- ------ ------- --------- ---------
BALANCE, MARCH 31, 2000 $ - 13,098 $ 1,310 $ 325,041 $ (81,813)
===== ===== ====== ======= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Unearned
Compensation Total
------------ -----
<S> <C> <C>
BALANCE, DECEMBER 31, 1999 $ 0 $ 12,620
Valuation of Insurdata options (10,691) (10,691)
Net loss (11,332)
Amortization of unearned compensation 796 796
Stock options exercised 341
Increase in net assets in HealthAxis.com, Inc. 242,704
Stock options issued in lieu of compensation 205
-------- ---------
BALANCE, MARCH 31, 2000 $ (9,895) $ 234,643
======== =========
</TABLE>
See notes to consolidated financial statements.
Page 5 of 20
<PAGE>
HealthAxis Inc. and Subsidiaries
Restated Consolidated Statements of Cash Flows
(Dollars in thousands) (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
Cash flows from operating activities March 31, March 31,
2000 1999
-------------------------------
<S> <C> <C>
Net loss $ (11,332) $ (2,868)
Adjustments to reconcile net loss to net cash (used in)
operating activities:
Issuance of common stock - 90
Depreciation and amortization 13,427 1,695
Net realized gain on sale of subsidiaries - (1,500)
Bad debt reserve 4 -
Minority interest in loss of subsidiary:
Share of loss from continuing operations (9,360) (99)
Share of loss from discontinued operations (6,574) (267)
Stock option compensation 1,621 -
Loss on disposition of assets 348 -
Interest on convertible debt 507 -
Change in:
Accounts receivable (1,624) -
Premium due and uncollected, unearned premium and
premium received in advance - (83)
Prepaid expense 1,053 (1,500)
Due to/from reinsurers - (14,055)
Due from third party administrator - 6,849
Deferred policy acquisition costs, net - (107)
Accrued investment income - 96
Other assets, current and deferred income taxes 43 (1,434)
Accounts payable and accrued liabilities (828) -
Accrued commissions and expenses - 494
Deferred revenues 222 -
Ceding commission and interest 150 150
Future policy benefits and claims 12 (9,311)
Other liabilities (338) -
------- -------
Net cash (used in) operating activities (12,669) (21,850)
------- -------
Cash flows from investing activities
Sales of bonds - 512
Cash in acquired company 2,126 -
Investment in capitalized software and contract start-up (227) -
Other (10) -
Payment of acquisition costs (1,031) -
Maturities of investments and loans - (2)
Loans to officer, director and shareholder - 694
Purchases of property, equipment and software (2,023) (136)
------- -------
Net cash provided by (used in) investing activities (1,165) 1,068
------- -------
</TABLE>
See notes to consolidated financial statements.
Page 6 of 20
<PAGE>
HealthAxis Inc. and Subsidiaries
Restated Consolidated Statements of Cash Flows (Continued)
(Dollars in thousands) (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
2000 1999
------------------------------
<S> <C> <C>
Cash flows from financing activities
Payments on capital leases (147) -
Repayment of loans payable - (198)
Net proceeds from the sales of HealthAxis preferred stock - 8,807
Exercise of stock options 341 1,666
Exercise of HealthAxis options 183 -
Dividends paid on preferred stock - (35)
-------- --------
Net cash (used in) provided by financing activities 377 10,240
-------- --------
(Decrease) in cash and cash equivalents (13,457) (10,542)
Cash and cash equivalents, beginning of period 58,069 26,185
-------- --------
Cash and cash equivalents, end of period $ 44,612 $ 15,643
======== ========
Supplemental disclosure of cash flow information:
Interest paid $ 184 $ 269
Non-cash financing activities
Issuance of warrants $ - $ 724
Exercise of options $ - $ 509
Repayment of loans payable $ - $ 2,400
Non-cash investing activities
Sale of subsidiary $ - $ 1,500
</TABLE>
See notes to consolidated financial statements.
Page 7 of 20
<PAGE>
HealthAxis Inc. and Subsidiaries
Notes to Restated Consolidated Financial Statements
(Dollars in Thousands)
Note A - Description of business and basis of presentation
Unaudited Financial Information
The unaudited restated condensed consolidated financial statements have been
prepared by HealthAxis Inc. and subsidiaries (the "Company" or "HAI"), pursuant
to the rules and regulations of the Securities and Exchange Commission and
reflect all adjustments which, in the opinion of the Company, are necessary to
present fairly the results for the interim periods. Certain financial
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the accompanying disclosures are adequate to make the
information presented not misleading. Results of operations for the three-month
period ended March 31, 2000, are not necessarily indicative of the results that
may be expected for the year ending December 31, 2000.
These financial statements should be read in conjunction with the financial
statements and notes thereto contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1999, as amended and restated on Form 8-K
filed on October 27, 2000.
General
HealthAxis.com, Inc. ("HealthAxis"), the Company's subsidiary, was formed on
March 26, 1998. On January 7, 2000, HealthAxis completed a merger with Insurdata
Incorporated ("Insurdata") as described in Note D (the "Merger with Insurdata,
Incorporated"). On June 30, 2000, HealthAxis entered into an Asset Purchase
Agreement to sell assets used in connection with its retail website, to Digial
Insurance, Inc. ("Digital"), (see Note K). In connection with this transaction,
HealthAxis and Digital entered into additional agreements also described in Note
E.
Prior to the sale of assets to Digital, HealthAxis' eDistribution Group operated
as a retail website. As a result of the sale of assets to Digital, which was
consummated on October 13, 2000, the eDistribution Group will no longer be an
operating segment. HealthAxis' remaining operations provide web-enablement for
both healthcare payers, (including insurance companies, Blue Cross Blue Shield
Organizations, third-party administrators and large self-funded groups) and the
intermediaries through which product is sold and serviced.
As of December 31, 1999 and March 31, 2000, HAI owned 66.9% and 34.7%,
respectively, of HealthAxis' common and preferred stock. As of March 31, 2000,
HAI owned 36.2% of HealthAxis' common stock. Due to various voting trust
agreements, HAI and its affiliates had, as of March 31, 2000, voting power for
an additional 25.3% of HealthAxis' common and preferred stock. As a result of
HAI and its affiliates (who are members of either or both the HAI and HealthAxis
Board of Directors) having voting power with respect to a total of 60.0% of
HealthAxis' common and preferred stock as of March 31, 2000, HAI consolidated
HealthAxis for financial reporting purposes. Due to amendments made to a voting
trust, HAI and its affiliates have voting power with respect to a total of 54.2%
of HealthAxis' common and preferred stock as of July 31, 2000.
The Board of Directors of HealthAxis will consist of up to nine members. UICI
and HAI may each independently nominate three nominees to the board, and, the
remaining three directors will be nominated by mutual agreement of HAI (acting
by the vote of a majority of the members of the board that were not nominated by
or agreed to by UICI) and UICI. At March 31, 2000, the board was comprised of
seven members, with three nominated by HAI, three nominated by UICI, and one
nominated by mutual agreement of HAI and UICI at March 31, 2000, two of
HealthAxis' board members also serve on the Board of Directors of UICI, four of
HealthAxis' board members also serve on the Board of Directors of HAI and the
seventh board member is an officer of HealthAxis.
Page 8 of 20
<PAGE>
On November 30, 1999, the Company sold its remaining insurance operations, which
were conducted through Provident Indemnity Life Insurance Company ("PILIC"). As
a result, the financial statements have been restated to reflect the results of
operations of PILIC and the eDistribution Group as those of discontinued
business segments. The operations of the Company thereafter are principally
those of the Insurdata merger.
On January 26, 2000, HAI and HealthAxis entered into an Agreement and Plan of
Reorganization and Agreement and Plan of Merger pursuant to which HAI plans to
acquire all of the outstanding shares of HealthAxis it does not currently own
through the merger of HealthAxis with a wholly owned subsidiary of HAI. HAI and
HealthAxis entered into amended and restated agreements on September 29, 2000.
This transaction is referred to as the HAI merger. In connection with this
merger, on February 11, 2000, HAI filed a Registration Statement on Form S-4
with the Securities and Exchange Commission to seek shareholder approval of the
HAI Merger and register the HAI common stock to be issued to the HealthAxis
shareholders. The Form S-4 regarding this transaction is currently pending at
the Securities and Exchange Commission. On September 29, 2000, HAI and
HealthAxis entered onto an Amended and Restated Agreement and Plan of
Reorganization and Amended and Restated Agreement and Plan of Merger, which was
further amended on October 26, 2000, and among other things, adjusted the merger
exchange ratio from 1.127 to 1.334. The transaction is expected to close in the
first quarter of 2001.
On January 27, 2000, the Company filed an amendment to its Amended and Restated
Articles of Incorporation changing its name from Provident American Corporation
to HealthAxis Inc. Effective February 1, 2000, the Company changed its symbol
under which its common stock trades on the NASDAQ National Market to "HAXS".
Note B - Restated Financial Statements
These financial statements have been restated to reflect the discontinued
operations associated with the Digital Sale (as described in Note K).
Note C - Losses and Uncertainties
HealthAxis has incurred costs to develop and enhance its technology, to create
and introduce its website and to establish marketing, insurance carrier and
claims administration relationships. As a result, the Company has incurred
significant losses and expects to continue to incur losses on a quarterly and
annual basis. The Company expects that current cash and cash equivalents will be
sufficient to sustain operations for the forseeable future.
Note D - Merger with Insurdata Incorporated
On January 7, 2000, HealthAxis completed a merger with Insurdata, a health care
technology company and a majority owned subsidiary of UICI (the "Merger"). The
transaction was accounted for as a purchase in accordance with Accounting
Principles Board Opinion No. 16, Business Combinations. HealthAxis, by virtue of
its holding a majority of the voting power, was determined to be the accounting
acquirer. As a result, the net assets of Insurdata have been recorded at their
fair value with the excess of the purchase price over the fair value of the net
assets acquired allocated to goodwill.
In connection with the Merger, each outstanding share of Insurdata common stock
was converted into the right to receive 1.33 shares of HealthAxis common stock.
HealthAxis issued 21,807,567 shares of HealthAxis common stock to Insurdata
shareholders. In connection with the Merger, HealthAxis also issued 426,930
options to purchase HealthAxis common stock to existing Insurdata optionholders.
The fair value of the consideration given by HealthAxis for the acquisition of
Insurdata under the purchase method of accounting totaled $723,927. This
purchase price consideration consisted of: (1) the fair value of the HealthAxis
common shares issued to Insurdata shareholders totaling $654,799 ($30.03 per
share), (2) the fair value of HealthAxis options granted to Insurdata
optionholders under Insurdata stock option plans totaling $11,901 (average fair
value of $27.87 per option), (3) the difference between the fair value of shares
issued in the December 7, 1999 private placement and the $15 issue price
totaling $55,788, and (4) merger costs totaling $1,439. The fair value per share
of HealthAxis common stock was determined based upon the quoted NASDAQ market
price of HAI common stock on the measurement date of December 7, 1999. The value
of the December 7, 1999 private placement of HealthAxis common shares in excess
of the cash received from their issuance represents additional value tendered by
HealthAxis in a transaction occurring simultaneously with the purchase of
Insurdata. The fair value of the HealthAxis options granted to Insurdata
optionholders was determined using the Black Scholes option pricing model.
Page 9 of 20
<PAGE>
The fair value of the Insurdata assets and liabilities acquired through the
Merger were:
Cash and cash equivalents $ 2,126
Accounts receivable, net 5,834
Fixed assets 6,278
Developed software 2,862
Unearned compensation 10,691
Customer base 17,205
Goodwill 682,184
Other assets 1,768
Other liabilities (5,021)
---------
$ 723,927
In connection with the Merger, the Company recorded an increase in minority
interest in HealthAxis common stock totaling $481,223, and an increase to
additional paid-in capital of $242,704. The increase in additional paid-in
capital represents dilution to minority shareholders resulting from the Merger.
Developed software, customer base, and goodwill are being amortized over their
estimated useful lives of 3, 4 and 20 years, respectively. The amount allocated
to unearned compensation is based upon the intrinsic value of the unvested
HealthAxis options issued to Insurdata optionholders discussed above and is
being amortized over the remaining vesting term of the options. HealthAxis has
recorded the unearned compensation as a reduction of stockholders' equity.
Unaudited pro forma financial information for the three months ended March 31,
1999, as though the Merger had occurred on January 1, 1999, is as follows:
Revenues $ 9,990
Net Loss $ (4,955)
Net loss per common share $ (0.43)
Weighted average common shares outstanding
(basic and diluted) 11,614,000
Note E - Discontinued Operations
On November 30, 1999, the Company sold PILIC, a wholly owned subsidiary, to AHC
Acquisition, Inc., a corporation owned by Mr. Alvin H. Clemens, HAI's and
HealthAxis' chairman of the board of directors. PILIC represented the last of
the Company's remaining insurance operations. The operating results of PILIC
have been reported as discontinued operations for all periods presented.
On June 30, 2000, HealthAxis entered into an Asset Purchase Agreement to sell
assets used in connection with its retail website to Digital, which was amended
on September 29, 2000. Included in the sale was the current and next generation
of the retail website user interface (the presentation layer of the website that
includes the graphical templates that create the look and feel of the website),
all existing in-force insurance policies, physical assets, and agreements,
including, but not limited to portal marketing agreements and agreements related
to the affiliate partner program. This transaction closed on October 13, 2000.
The consideration received by HealthAxis in return for those assets consisted
of: $500 in cash; a $500 note; 11% of the outstanding shares of Digital, on a
fully-diluted basis, at closing; and a portion of Digital's net commission
revenues received by Digital through the acquired website user interface or an
affinity partner. In accordance with Accounting Principles Board Opinion Number
30, HealthAxis has reported the operations of the eDistribution Group as
discontinued operations as of the measurement date of June 30, 2000 and restated
the financial statements for all the periods presented.
Page 10 of 20
<PAGE>
In connection with the Digital Sale, HealthAxis and Digital entered into a
Software Licensing and Consulting Agreement that provides HealthAxis with: a
perpetual nonexclusive license to use and sublicense, subject to restrictions,
the user interface sold to Digital Insurance; licensing fees over the next 30
months of $3.0 million for software owned by HealthAxis that will be used by
Digital in conjunction with the user interface it purchased; and professional
service fees over the next 12 months of a minimum of $3.0 million for services
relating to customizing, maintaining and upgrading the user interface and other
software.
Following is a summary of the results of the Company's discontinued operations
including both the discontinued insurance operations and eDistribution Group
operations for the three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------------------------------------------
March 31, 2000 March 31, 1999
------------------------------------ ------------------------------------
eDistribution Insurance eDistribution Insurance
Group Operations Total Group Operations Total
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Insurance operations revenue $ - $ - $ - $ - $ 4,404 $ 4,404
Interactive commission and fee revenue 298 - 298 6 - 6
------------------------------------ ------------------------------------
Total Revenue 298 - 298 6 4,404 4,410
Expenses:
Insurance operations expenses - - - - 4,069 4,069
Operating 3,392 - 3,392 261 - 261
Sales and marketing 7,207 - 7,207 1,661 - 1,661
General and administrative - - - 4 - 4
Amortization of assets related to
acquisition - - - - - -
------------------------------------ ------------------------------------
Total expenses 10,599 - 10,599 1,926 4,069 5,995
------------------------------------ ------------------------------------
Operating income (loss) (10,301) - (10,301) (1,920) 335 (1,585)
Interest and other income, net (1) - (1) - - -
------------------------------------ ------------------------------------
Loss before income taxes and minority
interest (10,302) - (10,302) (1,920) 335 (1,585)
Provision for income taxes - - - - (15) (15)
------------------------------------ ------------------------------------
Loss before minority interest (10,302) - (10,302) (1,920) 320 (1,600)
Minority interest in loss of subsidiary 6,574 - 6,574 267 - 267
------------------------------------ ------------------------------------
Loss from discontinued operations $ (3,728) $ - $ (3,728) $ (1,653) $ 320 $ (1,333)
==================================== ====================================
</TABLE>
Note F - Revenue Recognition
The Company's revenues through HealthAxis, consist primarily of transaction
fees, professional services fees, and data capture fees.
Transaction revenues are earned on a fee-per-unit basis. Depending on the
product or service provided, the fee may be a charge per covered life or member,
per transaction processed, per document or electronic transmission, or per unit
serviced (such as per PC for LAN support). Transaction revenue is derived from
HealthAxis' workflow and business applications, data capture outsourcing
services and technology management services. Transaction revenue is recorded in
the month the services are rendered.
Professional service revenue consists of time and materials projects and fixed
price projects. Time and materials projects are billed on a fee per hour or per
day, or based upon a multiple of monthly salary, dependent upon the nature of
the project. Such revenue is recorded as the services are performed.
Professional services revenue on fixed price projects is recognized using the
percentage-of-completion method in proportion to the hours expended compared to
Page 11 of 20
<PAGE>
the total hours projected for the project. Changes in estimates of
percentage-of-completion are recognized in the period in which they are
determined. Provisions for estimated losses, if any, are made in the period in
which the loss first becomes apparent. Professional service revenue is derived
from HealthAxis' system integration, consulting and programming services, as
well as customization and implementation performed in conjunction with workflow
and business application software.
Data Capture revenues are earned on a fee per unit basis, typically per claim or
per document. These fees are recorded in the month the services are rendered.
Note G - Related Party Transactions
HealthAxis conducts a significant amount of business with a major shareholder,
UICI. HealthAxis currently provides services to a number of UICI subsidiaries
and affiliates pursuant to written agreements ranging from one to five years,
with annual renewable options thereafter. These services include the use of
certain of its proprietary workflow and business applications, as well as
systems integration and technology management. UICI and its subsidiaries and
affiliates constitute, in the aggregate, HealthAxis' largest customer. For the
three months ended March 31, 2000, UICI and its subsidiaries and affiliates
accounted for an aggregate of $7,341 (65%) of HealthAxis' total revenues for the
period. As of March 31, 2000, HealthAxis had trade receivables from UICI and its
subsidiaries and affiliates of $3,167 (42%). In addition, accrued liabilities at
March 31, 2000 included $941, which related to amounts owed to UICI primarily
for employee benefits.
Note H - Capitalized Software and Contract Start-up Costs
Developed Software
HealthAxis incurs development costs that relate primarily to the development of
new products and major enhancements to existing services and products.
HealthAxis expenses or capitalizes, as appropriate, these development costs in
accordance with Statement of Financial Accounting Standards No. 86, Accounting
for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed. All
development costs related to software development projects incurred prior to the
time a project has reached technological feasibility are expensed. Software
development costs incurred subsequent to reaching technological feasibility are
capitalized. If the process of developing a new product or major enhancement
does not include a detailed program design, technological feasibility is
determined only after completion of a working model. The Company capitalized
$199 in software development costs during the three months ended March 31, 2000.
All software development costs capitalized are amortized using an amount
determined as the greater of (i) the gross revenue method or (ii) the
straight-line method over the remaining economic life of the product (generally
three to five years). HealthAxis recorded amortization relating to capitalized
software development costs of $245 during the three months ended March 31, 2000.
Contract Start-up Costs
The Company capitalizes costs directly attributable to contract start-up
activities in accordance with SOP 81-1, Accounting for Performance of
Construction-Type and Certain Production-Type Contracts. Costs capitalized
include direct labor and fringe benefits. Such costs are amortized over the life
of the respective contract. All other start-up costs not directly related to
contracts are expensed in accordance with SOP 98-5, Reporting on the Costs of
Start-up Activities. Total contract start-up costs capitalized during the three
months ended March 31, 2000 totaled $28. HealthAxis recorded amortization
relating to contract start-up costs of $88 during the same period.
Page 12 of 20
<PAGE>
Note I - Amortization of Intangibles
Amortization of intangibles is comprised of the following for the three months
ended March 31, 2000:
Amortization of goodwill $ 9,184
Amortization of customer base 1,076
Amortization of developed software 238
--------
$ 10,498
========
Note J - HealthAxis.com, Inc. Stock Options
During the three months ended March 31, 2000, the board of directors of
HealthAxis granted 1,178,200 options under its 1998 Stock Option Plan. All such
options were granted with exercise prices of $15.00 per share, which represented
the fair market value of the HealthAxis common stock as determined by the Board
of Directors based upon privately negotiated equity transactions. Since this
grant price was to be below the public fair market value of HAI's common stock
on the dates of the grants, HealthAxis has recorded compensation expense of
$1,416 based upon the intrinsic value method under Accounting Principles Board
opinion No. 25 Accounting for Stock Issued to Employees.
On May 24, 2000, the board of directors of HealthAxis granted 227,425 options
under the 1998 Plan. These options were granted with an exercise price of $3.31
which equaled the quoted market share price of HAI on the date of grant. No
stock based compensation has been recorded related to this grant as the exercise
price of the options equaled the deemed fair value of HealthAxis' common stock
on the date of grant.
On May 24, 2000, the board of directors of HealthAxis repriced 1,773,050
existing options. The options affected had original exercise prices ranging from
$12.00 to $15.00 per share. The exercise price of these options was adjusted to
$3.31 based upon the quoted market share price of HAI's common stock as reported
on the NASDAQ National Market on the date of the repricing. Accordingly,
HealthAxis now accounts for these options as a variable award.
Note K - Subsequent Events
Digital Agreement
On September 29, 2000, HealthAxis and Digital entered into an Amendment to the
Asset Purchase agreement which amends among other things, the payment terms in
the original agreement.
UICI Voting Trust Agreement
The UICI Voting Trust agreement, dated February 11, 2000, was amended, effective
July 31, 2000, to among other things, extend the termination date of the trust
if the HAI merger is not consummated to March 31, 2001, and revise the procedure
by which a successor trustee is elected. The amended agreement also reduces
shares in the trust to 6,433,069 shares.
Agent Stock Options Amended
On September 29, 2000, HAI entered into an agreement with certain of its former
agents which would, among other things, reduced the exercise price of the
options to purchase 318,042 shares of HAI's common stock from original exercise
prices ranging from $4.75 to $14.63 per share to $4.25 per share and reduced the
payments required to be made pursuant to a registration rights agreement with
such individuals in the event the Company does not register the shares issuable
upon the exercise of the options within certain specified time frames. During
2000, HAI will remeasure these options in accordance with FASB Interpretation
44, Accounting for Certain Transactions involving Stock Compensation.
NASDAQ Delisting
HAI was notified by NASDAQ that it does not meet the NASDAQ maintenance criteria
for continued listing due to the decline in its stock price and its Common Stock
would be delisted on November 9, 2000 if it did not achieve compliance by
Page 13 of 20
<PAGE>
November 7, 2000. HAI has filed a request for appeal which will stay the
delisting of the Common Stock pending the appeal panel's decision. At a NASDAQ
hearing on December 8, 2000, HAI appealed the delisting decision. HAI believes
that it will be in compliance with these requirements upon completion of the HAI
merger. The Company is awaiting a response from NASDAQ regarding this delisting.
HAI Merger
On September 29, 2000, the parties entered into an Amended and Restated
Agreement and Plan of Merger, which among other things, set the exchange ratio
at 1.334, extend the date by which either party may terminate the agreement if
the merger is not consummated by March 31, 2001, and to allow HealthAxis to
terminate the agreement if HAI is not unconditionally and irrevocably released
from a guarantee agreement with Hanover Life Reassurance Company of America by
October 31, 2000. On October 26, 2000, the HealthAxis board agreed that it would
not terminate the merger agreement during the current settlement negotiations
between HAI and Hannover Life Reassurance Company of America regarding the
outstanding liability.
Loan Agreements
HealthAxis and HAI entered into loan agreements dated as of September 29, 2000,
which provides for HealthAxis to loan HAI of up to $3,404,580. HAI's obligations
are secured pursuant to a stock pledge and security agreement between HAI and
HealthAxis dated as of September 29, 2000 in which a maximum of shares of
HealthAxis stock owned by HAI are pledged as collateral to the loans. These
notes become due and payable on the earlier of March 31, 2001 or the date the
HAI merger is consummated. The interest on the principal under each note will
accrue at 12% per annum from the date of the note until the date the note
terminates.
Convertible Debentures
On September 28, 2000, HAI entered into an Amendment to the Securities Purchase
Agreement dated September 14, 1999 between HAI and the holders of HAI's $27.5
million 2% convertible debentures. The terms of the debentures were amended to,
among other things, extend the maturity of the debentures from September 14,
2002 to September 14, 2005, and to change the conversion price from $20.34 to
$9.00. Warrants to purchase 202,802 shares of HAI common stock originally issued
to the purchasers of the debentures were also amended to reduce the exercise
price from $20.34 to $3.01 and to extend the exercise period of the warrants to
September 13, 2005.
The Amendment to the Securities Purchase Agreement provides that, among other
things, the amendments to the debentures, warrants and the registration rights
agreement will take effect on or before the fifth business day after HAI's
shareholders have approved the HAI Merger. The holders of the debentures have
agreed to conditionally waive and suspend any and all past or current defaults
or violations arising under the debenture or the registration rights agreement,
and to forbear from enforcing any and all past or current defaults or violations
by HAI arising under the debentures or the registration rights agreement as well
as any prospective defaults or violations arising under these agreements from
September 28, 2000 through the closing date of the HAI Merger. Penalties are
being accrued at $0.3 million per month beginning in September 2000 and will be
due in full if the merger is not approved or is terminated prior to March 31,
2001. When the merger is final, these penalties will be reversed.
Employee Termination Agreement
Effective August 15, 2000, Al Clemens, HAI's and HealthAxis' Chairman,
HealthAxis and HAI entered into a termination agreement of Mr. Clemens' current
employment contract. Under the terms of the agreement, Mr. Clemens will receive
aggregate payments totaling $2.125 million paid in quarterly installments over
five years. HAI may, at its option, make the quarterly payments in shares of HAI
common stock not to exceed a total of 500,000 shares. Except for the general
release of HealthAxis, which is effective as of August 15, 2000, the termination
agreement becomes effective upon consummation of the HAI Merger. If the HAI
Merger is not consummated by June 30, 2001, all of the terms of the termination
agreement, except for the release of HealthAxis, will be void, and Mr. Clemens'
amended employment agreement would again be in effect.
Settlement with Hannover Life
Under the Amended and Restated Merger Agreements, HealthAxis may terminate the
Reorganization if HAI is not unconditionally and irrevocably released from the
guarantee agreement with Hannover Life Reassurance Company of America by October
31, 2000. HAI was not released from this guarantee until December 12, 2000.
Under the settlement agreement, HAI paid Hannover Life $4.25 million in exchange
for a release from all liability under the guarantee agreement including a $5.7
million ceding commission liability. As of December 13, 2000, HealthAxis has
determined not to exercise its option to terminate the merger for this reason
but reserves the right to do so in the future.
Page 14 of 20
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Overview
HealthAxis Inc. ("HAI") is a Pennsylvania corporation organized in
1982. Until November 30, 1999, HAI was regulated as an insurance holding company
by the states in which its former wholly owned insurance subsidiary, Provident
Indemnity Life Insurance Company ("PILIC"), was licensed. Currently, the
operations of HAI and its subsidiaries (the "Company") are principally those of
its subsidiary, HealthAxis.com, Inc. ("HealthAxis"), which was formed on March
26, 1998.
During 1999, HealthAxis expanded from 15 to 105 employees, entered into
carrier partner agreements with nationally recognized insurance companies to
sell their products on its website, commenced interactive marketing of its
website through agreements with Internet portals, expanded and enhanced its
website and raised capital through several private placements of its securities.
On November 30, 1999, HAI completed the sale of PILIC to AHC
Acquisition, Inc., a company solely owned by Alvin H. Clemens, the Chairman of
HealthAxis and HAI, (the "Discontinued Insurance Operations").
On December 7, 1999, HealthAxis and Insurdata Incorporated
("Insurdata"), a healthcare technology company and a majority owned subsidiary
of UICI, signed a definitive agreement to merge the two companies (the
"Merger"). As of December 31, 1999 and March 31, 2000, HAI owned 66.9% and
34.7%, respectively, of HealthAxis' common and preferred stock. Due to various
voting trust agreements, HAI and its affiliates have voting power for an
additional 25.3% of HealthAxis' common and preferred stock. As of March 31,
2000, HAI owned 36.2% of HealthAxis' common stock. As a result of HAI and its
affiliates having voting power with respect to 60.0% of HealthAxis' common and
preferred stock as of March 31, 2000, HAI consolidated HealthAxis. As a result
of this merger, Insurdata became HealthAxis' application solutions group and
HealthAxis' former business is now referred to as the retail website. The
companies completed the Merger on January 7, 2000. The primary cause of the
changes in the results of operations discussed below was the addition of the
application solutions group's operations (the merged divisions of Insurdata) to
HealthAxis.
On January 26, 2000, HAI and HealthAxis entered into an Agreement and
Plan of Merger and Agreement and Plan of Merger pursuant to which HAI plans to
acquire all of the outstanding shares of HealthAxis it does not currently own
through the merger of HealthAxis with a wholly owned subsidiary of HAI. These
agreements expired on July 31, 2000 and amended and restated agreements were
entered into on September 29, 2000. This transaction is referred to as the HAI
merger. In connection with this merger, on February 11, 2000, HAI filed a
Registration Statement on Form S-4 with the Securities and Exchange Commission
to seek shareholder approval of the merger and register the HAI common stock to
be issued to the HealthAxis shareholders. The Form S-4 regarding this
transaction is currently pending at the Securities and Exchange Commission.
During the first quarter, as part of HealthAxis' efforts to refocus
resources on the business to business segment of its operations, HealthAxis has
changed its marketing to include primarily affinity marketing programs and away
from online marketing and certain offline marketing initiatives. The affinity
marketing programs involve distribution partnerships with companies for which
HealthAxis provides a co-branded or private label health insurance distribution
platform. As a result of this change, HealthAxis has not renewed its interactive
marketing agreements. On June 30, 2000, HealthAxis entered into an Asset
Purchase Agreement to sell certain assets used in connection with its retail
website, to Digital Insurance, Inc. ("Digital"). The operating results of
HealthAxis' retail website are reported as discontinued operations for all
periods presented.
Page 15 of 20
<PAGE>
Results of Operations
Three months ended March 31, 2000 compared to three months ended March 31, 1999
Net loss applicable to common stock. Net loss applicable to common
stock was $11.3 million or ($0.87) per basic and diluted share for three months
ended March 31, 2000 compared to net loss of $2.9 million or ($0.25) per basic
and diluted share for three months ended March 31,1999. The January 2000 merger
of Insurdata into HealthAxis resulted in the increased loss, primarily
attributable to the amortization of goodwill and other merger related expenses.
The increased loss was also attributable to increased operations of the retail
website, which is now recorded as discontinued operations.
Revenues. Revenue was $11.4 million for the three months ended March
31, 2000 as compared to no revenues for the three months ended March 31, 1999.
All revenues in 2000 are derived from the merged divisions of Insurdata.
Cost of revenues. Cost of revenues of $8.2 million for the three months
ended March 31, 2000 represents the expense of the billable hours that generated
professional service revenues, which include the direct costs of employees.
Included in these employee costs for the three months ended March 31, 2000 is
$0.4 million in non-cash stock based compensation. HealthAxis expects that the
cost of revenues will increase in direct proportion with revenues. These costs
are related specifically to the addition of the merged divisions of Insurdata;
therefore, there were no similar costs in the comparative three months ended
March 31, 1999.
Operating expense. Operating expenses were $4.0 million for the three
months ended March 31, 2000 as compared to $36,000 for the three months ended
March 31, 1999 due primarily to the operations of the merged divisions of
Insurdata. Operating expenses primarily include technical salaries and benefits
for employees who provide support and maintenance to clients and internal
support. Included in these operating expenses for the three months ended March
31, 2000 is $0.5 million in non-cash stock based compensation.
In March 2000, the Emerging Issues Taskforce issued Abstract No. 00-2,
Accounting for Website Development Costs, ("EITF No. 00-2") which provides
additional authoritative guidance on how to account for costs incurred in the
planning, developing and operating of a website. Management has reviewed the
impact of EITF No. 00-2 on its current policy and has determined that there will
be no impact as a result of adopting this standard.
Sales and marketing expenses. Sales and marketing expenses were $0.3
million for the three months ended March 31, 2000 as compared to $84,000
for the three months ended March 31, 1999. This increase was due primarily to
increased personnel and additional initiatives, including direct mail and trade
shares, in the three months ended March 31, 2000 as compared to the same period
in 1999. Sales and marketing expense consist primarily of salaries and benefits
to marketing personnel, which included twelve employees at March 31, 2000 and
two employees at March 31, 1999. Included in these sales and marketing expenses
for the three months ended March 31, 2000 is $0.3 million in non-cash stock
based compensation. To support the business strategy, sales and marketing
expenses are expected to increase as the sales force is expanded.
General and administrative expenses. General and administrative
expenses were $4.4 million for the three months ended March 31, 2000 increased
from $1.2 million for the three months ended March 31, 1999 due primarily to the
merger of Insurdata into HealthAxis. Employee and recruiting expenses increased
from $0.5 million for the three months ended March 31, 1999 to $2.9 million for
the three months ended March 31, 2000, while professional fees and overhead
expenses increased from $0.7 million for the three months ended March 31, 1999
to $1.5 million for the three months ended March 31, 2000. Included in employee
and recruiting costs for the three months ended March 31, 2000 is $1.1 million
in non-cash stock based compensation. General and administrative expenses
include executive management, accounting, legal, and human resource personnel
and expenditures for applicable overhead costs.
Amortization of intangibles. Amortization of intangibles were $10.5
million for the three months ended March 31, 2000 and include amortization
related to the Merger of Insurdata into HealthAxis. The goodwill resulting from
the Insurdata and HealthAxis merger was recorded as $682.2 million. This
goodwill, of which $8.5 million has been amortized as of March 31, 2000, will be
amortized on a straight-line basis over a twenty-year period.
Page 16 of 20
<PAGE>
Net interest expense. Net interest expense was $0.6 million for the
three months ended March 31, 2000 as compared to $0.3 million for the three
months ended March 31, 1999 as it relates to interest earned on short-term
investments and interest accrued on the convertible debentures.
Liquidity and Capital Resources
A major objective of the Company is to maintain sufficient liquidity to
fund growth and meet all cash requirements with cash and short term equivalents
plus funds generated from operating cash flow.
The primary source of cash was revenues and debt and equity financing.
The primary uses of cash were payments to Internet portals under the interactive
marketing agreements, employee-related expenses, costs of reveneues, website
enhancements, and marketing costs. At March 31, 2000, HAI had a cash balance of
$44.6 million, of which $44.2 million was owned by HealthAxis. At December 31,
1999, HAI had a cash balance of $58.1 million, of which $56.5 million was owned
by HealthAxis. HealthAxis believes that its current cash and cash equivalents
will be sufficient to fund HealthAxis' operations. HealthAxis expects to be cash
flow positive by the second quarter of 2001.
HAI's liquidity needs will be met through loan agreements which
HealthAxis and HAI entered into as of September 29, 2000 in order to fund the
operations and commitments of HAI until the HAI Merger is consummated. The loans
become due and payable on the earlier of March 31, 2001 or the date the HAI
Merger is consummated. The interest on the principal under each note will accrue
at 12% per annum from the date of the note until the date the note terminates.
During the three months ended March 31, 2000, HealthAxis' liquidity
requirements were primarily met through the cash available from the December 7,
1999 equity financing and revenues. The primary uses of cash were operating
costs and payments to Lycos, Inc., Snap!, LLC, CNet Inc. and Yahoo! under the
interactive marketing agreements.
Prior to 1999, HAI's liquidity requirements were primarily created and
met by HAI's Discontinued Insurance Operations. During 1999, HAI's liquidity
requirements were primarily created and met by HealthAxis and HAI through the
private placement of debt and equity securities. During 1999 the primary uses of
cash for HAI were the operation of PILIC and HAI's November 30, 1999 sale of
PILIC, HAI's purchases of HealthAxis stock and HealthAxis' operating costs and
payments to America Online, Inc. ("AOL"), Lycos, Inc. ("Lycos"), CNet, Inc.
("CNet"), Snap! LLC ("Snap!") and Yahoo! Inc ("Yahoo!").
Net cash used in operating activities of $12.7 million for the three
months ended March 31, 2000 was the result of operating losses in HAI and
HealthAxis.
On January 7, 2000, HealthAxis completed the Insurdata merger. In
connection with the Merger, HealthAxis anticipates that revenues will increase
as a result of including revenues of the merged divisions of Insurdata, which
now represent the application solutions group, which during 1999 were $42.9
million.
On January 26, 2000, HAI and HealthAxis entered into an agreement and
plan of reorganization, which provides for the merger of HealthAxis with a
wholly owned subsidiary of HAI, which was amended and restated on September 29,
2000 and October 26, 2000. The total cost is expected to be $2.1 million, $0.3
million of which occurred as of March 31, 2000, with the remaining $1.8 million
expected during the remainder of the year 2000 and the first quarter of 2001.
The severance costs for eight terminated employees amounts to $0.6 million and
includes payroll and related costs. The remaining $1.5 million includes legal,
accounting and investment consulting fees.
On June 30, 2000, HealthAxis entered into an Asset Purchase Agreement
to sell certain assets used in connection with its retail website to Digital. In
connection with this sale, HealthAxis will receive $500,000 in cash at closing
and $500,000 as a promissory note which is expected to occur in the third or
fourth quarter of 2000 and ongoing license fees totaling $3.0 million to be paid
over ten quarters. In addition, a license and consulting agreement provides for
$3.0 million of service fees to be received over twelve months and licensing
fees of $3.0 million over thirty months. In addition to the increase in
revenues, the sale to Digital is expected to result in decreased cash usage
related to the operating expenses and sales and marketing expenses currently
reported in the loss from discontinued operations. General and administrative
expenses are not expected to be effected by this sale.
HAI does not anticipate that future cash used or provided from
operations will include amounts related to HAI's Discontinued Insurance
Operations which were sold effective November 30, 1999.
Page 17 of 20
<PAGE>
During 1998 and 1999, HealthAxis entered into agreements with AOL,
Lycos, CNet, Snap! and Yahoo!. In connection with these agreements, HealthAxis
has paid $2.2 million in cash during 2000 and is required to pay $1.3 million
throughout the remainder of 2000. As a result of HealthAxis' change in marketing
strategy, HealthAxis did not renew any of these interactive marketing
agreements. HealthAxis believes that its current cash and cash equivalents will
be sufficient to fund HealthAxis' obligations under these agreements. HealthAxis
expects to be cash flow positive by the second quarter of 2001.
HAI had no future material commitments for capital expenditures at
March 31, 2000. Through March 31, 2000, HAI's capital expenditures totaled
approximately $2.0 million. Capital expenditures were primarily for equipment,
software, furniture and building improvements, of which approximately $0.8
million was attributable to the expansion of the imaging division of the
application solutions group. The majority of this expansion was complete at
March 31, 2000.
On January 7, 2000, HealthAxis and Insurdata, a subsidiary of UICI,
completed the merger of the two companies. HealthAxis has paid $1.4 million in
out-of-pocket merger costs as of March 31, 2000 and anticipates that it will pay
only minimal additional merger costs during the remainder of the year 2000.
Payment of dividends by HealthAxis to HAI is subject to restrictions
set forth in the Certificate of Designation related to HealthAxis Series A, B, C
and D Convertible Preferred Stock. Dividends are also restricted by various
provisions contained in agreements between HAI and Reassurance Company of
Hannover. HAI and HealthAxis do not anticipate paying cash dividends on common
stock or on any class of HealthAxis preferred stock in the foreseeable future.
Impact of Inflation
Higher interest rates, which have traditionally accompanied inflation,
affect the Company's short-term investment revenue.
Inflation has significantly increased the cost of health care. The
adequacy of premium rates in relation to the level of health claims is
constantly monitored and, where appropriate, premium rates on such policies, are
typically increased by carrier partners as policy benefits increase. Failure to
make such increases commensurate with health care cost increases may result in
losses to HealthAxis' carrier partners. Implementation by HealthAxis' carrier
partners of changes in premium rates may affect HealthAxis commission revenue.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Convertible Debentures outstanding at June 30, 2000 are fixed rate
obligations and would not be exposed to the impact of interest rate
fluctuations. To the extent that the Company seeks to refinance these
instruments, the prevailing market interest rates on replacement debt could
exceed rates currently paid thereby increasing interest expense and increasing
net loss.
Page 18 of 20
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable
Item 2. Change in securities.
Not applicable
Item 3. Defaults Upon Senior Securities.
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable
Item 5. Other Information.
Not applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(10) Severance Agreement between the Company and Anthony R. Verdi
(11) Computation of Earnings Per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed the following current reports:
(1) Current report on Form 8-K reporting the consummation of the
merger of Insurdata Incorporated with and into HealthAxis
which was filed on January 21, 2000, and amendment on Form
8-K/A, filed on February 17, 2000.
(2) Current report on Form 8-K reporting the execution of the
reorganization and merger agreement between HAI, HealthAxis
and a wholly owned subsidiary of HAI and the amendment to
HAI's amended and restated Articles of Incorporation
changing the name of the company from Provident American
Corporation to HealthAxis Inc., which was filed on February
1, 2000.
(3) Current report on Form 8-K containing the audited financial
statements of Insurdata Incorporated which we filed on March
31, 2000, and the amendment on Form 8-K/A, filed on April
20, 2000.
Page 19 of 20
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HealthAxis Inc.
Date: December 15, 2000 By: /s/ Michael Ashker
------------------ -------------------------------------------------
Michael Ashker, President and Chief Executive Officer
Date: December 15, 2000 By: /s/ Anthony R. Verdi
------------------ -------------------------------------------------
Anthony R. Verdi, Chief Financial Officer, Principal
Accounting Officer and Treasurer
Page 20 of 20
