<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 27, 1999
-------------------------------
GHS, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-15586 52-1373960
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
65 Broadway, 7th Floor, New York, New York 10006
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 430-6430
-----------------------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 7.FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Historical financial statements of Change Your Life.com, LLC,
a Delaware limited liability company ("CYL"), are not included
as a part of this Form 8-K/A as CYL was formed on April 21,
1999 and has had no significant operations prior to the date
of acquisition. Accordingly, such financial statements are not
material to an understanding of the financial condition of
GHS, Inc. ("GHS"). Concept Development Inc. ("CDI") had no
significant activities and there are therefore no financial
statements provided for CDI.
(b) Pro Forma FINANCIAL INFORMATION.
PRO FORMA unaudited consolidated financial statements of GHS
including the following, which give effect to the reverse
acquisition of CYL by GHS, the acquisition of CDI by GHS and
the related private placement of preferred stock and license
and option agreements with The Learning Annex are
included as a part of this Form 8-K/A as Attachment 7(b) and
are incorporated herein by this reference:
PRO FORMA Unaudited Consolidated Balance Sheet as of March 31,
1999
PRO FORMA Unaudited Consolidated Statement of Operations for
the three months ended March 31, 1999
PRO FORMA Unaudited Consolidated Statement of Operations for
the year ended December 31, 1998
Notes to PRO FORMA Unaudited Consolidated Financial
Information
(c) EXHIBITS DESCRIPTION
2(a) Contribution and Exchange Agreement dated as of May
20, 1999 among the Company, Change Your Life.com,
LLC, Anthony J. Robbins, Robbins Research
International Inc. and CYL Development Holdings, LLC
(1)
2(b) Agreement and Plan of Reorganization dated as of May
27, 1999 among the Company, Concept Acquisition
Corporation, Concept Development, Inc., William
Zanker and Debbie Dworkin (1) (2)
2(c) Agreement of Merger dated as of May 27, 1999 between
Concept Acquisition Corporation and Concept
Development, Inc. (1) (2)
3(a) Certificate of Designations for Series A Preferred
Stock (1)
3(b) Certificate of Designations for Series B Preferred
Stock (1)
3(c) Certificate of Designations for Series C Preferred
Stock (1)
3(d) Amended and Restated By-Laws (1)
10(a) Content Provider Agreement and License effective as
of April 23, 1999 between Change Your Life.com, LLC,
Anthony J. Robbins and Research International Inc.
(1) (2)
10(b) Escrow Agreement dated as of May 27, 1999 among the
Company, Debbie Dworkin and State Street Bank and
Trust Company (1) (2)
10(c) Repurchase Agreement dated as of May 27, 1999 between
the Company and Debbie
<PAGE>
Dworkin (1) (2)
(CONTINUED) EXHIBITS DESCRIPTION
10(d) Employment Agreement dated as of May 27, 1999 between
the Company and Wiliam Zanker (1)
10(e) Exclusive License and Marketing Agreement dated as of
May 27, 1999 among the Company, Seligman Greer
Communication Resources, Inc. ("Seligman"), SGS
Communications Resources, Inc., Seligman Greer
Sandberg Enterprises, Inc., SGC Communication
Resources LLC and Learning Annex Interactive LLC (1)
(2)
10(f) Option Agreement dated as of May 27, 1999 among the
Company, Seligman Greer Communication Resources,
Inc., SGS Communication Resources, Inc., Seligman
Greer Sandberg Enterprises, Inc., SGC Communication
Resources LLC and Learning Annex Interactive LLC and
certain shareholders and members, as applicable, of
such entities other than the Company listed therein
(1) (2)
10(g) Registration Rights Agreement dated as of May 27,
1999 among the Company, Anthony J. Robbins, Robbins
Research International Inc. and CYL Development
Holdings, LLC (1)
10(h) Stockholders Agreement dated as of May 27, 1999 among
the Company, Anthony J. Robbins, Robbins Research
International Inc. and CYL Development Holdings, LLC
(1)
99(a) Press Release issued May 28, 1999 (1)
---------------
(1)Previously filed as identically numbered exhibit to the GHS's Form
8-K/A dated May 27, 1999 and filed with the Securities and Exchange
Commission on June 11, 1999, which amended GHS's current report on
Form 8-K dated May 27, 1999 and filed with the Securities and
Exchange Commission as of June 11, 1999.
(2)Confidential treatment has been requested for certain portions of
this exhibit. Omitted portions have been filed separately with the
Securities and Exchange Commission.
<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.
GHS, INC.
Dated as of: August 24, 1999 /s/ Beth Polish
------------------------------
Beth Polish
President
<PAGE>
ATTACHMENT 7(B)
PRO FORMA FINANCIAL INFORMATION
<PAGE>
GHS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET AS OF MARCH 31,1999
(in thousands)
<TABLE>
<CAPTION>
GHS, INC. AND PRO FORMA
CHANGE YOUR SUBSIDIARIES RECLASSIFICATION OF ADJUSTMENT
LIFE.COM AS REPORTED DISCONTINUED MERGER OF CYL
(CYL) [9] MARCH 31, 1999 OPERATIONS AND GHS, INC. [1]
-------- -------------- ---------- -----------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,659 $ 341
Certificates of deposit - at
cost which approximates market 1,100 (1,100)
Accounts receivable 399 (399)
Other current assets 108 (108)
------- ------- -------- --------
Total current assets 4,266 (1,266)
------- ------- -------- --------
Net assets of discontinued operation - 1,532
------- ------- -------- --------
Furniture & Equipment (net of
accumulated depreciation) 56 (56)
Gamma Knife (net of accumulated depreciation) 3,675 (3,675)
Leasehold improvements (net of
accumulated amortization) 1,398 (1,398)
------- ------- -------- --------
Total property and equipment - 5,129 (5,129) -
------- ------- -------- --------
Deferred tax asset 260 (260)
Cash held in escrow 93 (93)
Deposits 3 (3)
Intangible Assets
------- ------- -------- --------
Total other assets 356 (356) -
------- ------- -------- --------
TOTAL $ - $ 9,751 $ (5,219) $ -
======= ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 353 $ (353)
Accrued litigation settlement 934 (650)
Obligations under capital lease and loans
payable - current portion 1,473 (1,473)
Income tax payable - -
------- ------- -------- --------
Total current liabilities - 2,760 (2,476) -
------- ------- -------- --------
Deferred tax liability 450 (450)
Obligations under capital lease and loans
payable, net of current portion 2,293 (2,293)
Common stock - par value $.01: 375,000
in 1999; 500,000 in 1998
shares issued with put option 375
------- ------- -------- --------
Total other liabilities - 3,118 (2,743) -
------- ------- -------- --------
Total Liabilities-Carry Forward - 5,878 (5,219) -
------- ------- -------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GHS, INC. AND PRO FORMA
CHANGE YOUR SUBSIDIARIES RECLASSIFICATION OF ADJUSTMENT
LIFE.COM AS REPORTED DISCONTINUED MERGER OF CYL
(CYL) [9] MARCH 31, 1999 OPERATIONS AND GHS, INC. [1]
-------- -------------- ---------- -----------------
<S> <C> <C> <C> <C>
Total Liabilities Brought Forward $ - $ 5,878 $ (5,219) $ -
------- ------- -------- --------
Stockholders' equity:
Common stock - $.01 par value - 25,000,000
shares authorized; 6,979,160 shares and
7,047,828 shares issued and outstanding
actual and pro forma, respectively. 66
Convertible preferred stock Series A -
$.01 par value - 100,000 shares
authorized; 99,059 shares issued and
outstanding on a pro forma basis. 1
Convertible preferred stock Series B
- $.01 par value - 178,582 shares
authorized, issued and outstanding on
a pro forma basis. -
Convertible preferred stock Series C -
$.01 par value - 55,745 shares authorized,
issued and outstanding on a pro forma basis.
Additional paid in capital 3,238 569
Deferred compensation
Retained earnings (accumulated deficit) (1) 569 (569)
------- ------- -------- --------
Total stockholders' equity - 3,873 - -
------- ------- -------- --------
TOTAL $ - $ 9,751 $ (5,219) $ -
======= ======= ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OTHER PRO FORMA ADJUSTMENTS
-------------------------------------------------------
PRO FORMA THE LEARNING
REFLECTING THE CONCEPT ANNEX INC.
CHANGE YOUR LIFE.COM PRIVATE DEVELOPMENT INC. LICENSE AND
MERGER WITH GHS, INC. PLACEMENT [2] ACQUISITION [3] PURCHASE OPTION [4]
--------------------- ------------- --------------- -------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,000 $ 15,063 $ (2,000) $ (375)
Certificates of deposit - at
cost which approximates market -
Accounts receivable -
Other current assets - 375
-------- -------- -------- --------
Total current assets 3,000 15,063 (2,000) -
-------- -------- -------- --------
Net assets of discontinued operation 1,532
-------- -------- -------- --------
Furniture & Equipment (net of
accumulated depreciation) -
Gamma Knife (net of accumulated depreciation) -
Leasehold improvements (net of
accumulated amortization) -
-------- -------- -------- --------
Total property and equipment - - - -
-------- -------- -------- --------
Deferred tax asset -
Cash held in escrow -
Deposits -
Intangible Assets - 6,500 517
-------- -------- -------- --------
Total other assets - - 6,500 517
-------- -------- -------- --------
TOTAL $ 4,532 $ 15,063 $ 4,500 $ 517
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ -
Accrued litigation settlement 284
Obligations under capital lease and loans
payable - current portion -
Income tax payable -
-------- -------- -------- --------
Total current liabilities 284 - - -
-------- -------- -------- --------
Deferred tax liability -
Obligations under capital lease and loans
payable, net of current portion -
Common stock - par value $.01: 375,000
in 1999; 500,000 in 1998
shares issued with put option 375
-------- -------- -------- --------
Total other liabilities 375 - - -
-------- -------- -------- --------
Total Liabilities -Carry Forward 659 - - -
-------- -------- -------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OTHER PRO FORMA ADJUSTMENTS
-------------------------------------------------------
PRO FORMA THE LEARNING
REFLECTING THE CONCEPT ANNEX INC.
CHANGE YOUR LIFE.COM PRIVATE DEVELOPMENT INC. LICENSE AND
MERGER WITH GHS, INC. PLACEMENT [2] ACQUISITION [3] PURCHASE OPTION [4]
--------------------- ------------- --------------- -------------------
<S> <C> <C> <C> <C>
Total Liabilities Brought Forward $ 659 $ - $ - $ -
-------- -------- -------- --------
Stockholders' equity:
Common stock - $.01 par value - 25,000,000
shares authorized; 6,979,160 shares and
7,047,828 shares issued and outstanding
actual and pro forma, respectively. 66
Convertible preferred stock Series A -
$.01 par value - 100,000 shares
authorized; 99,059 shares issued and
outstanding on a pro forma basis. 1
Convertible preferred stock Series B
- $.01 par value - 178,582 shares
authorized, issued and outstanding on
a pro forma basis. 2
Convertible preferred stock Series C -
$.01 par value - 55,745 shares authorized,
issued and outstanding on a pro forma basis. - 1 0
Additional paid in capital 3,807 15,061 4,499 517
Deferred compensation -
Retained earnings (accumulated deficit) -
-------- -------- -------- --------
Total stockholders' equity 3,873 15,063 4,500 517
-------- -------- -------- --------
TOTAL $ 4,532 $ 15,063 $ 4,500 $ 517
======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------
EXECUTIVE OTHER PRO FORMA PRO FORMA
COMPENSATION [7] ADJUSTMENTS MARCH 31, 1999
---------------- --------------- --------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 15,688
Certificates of deposit - at
cost which approximates market -
Accounts receivable -
Other current assets 375
-------- -------- --------
Total current assets 16,063
-------- -------- --------
Net assets of discontinued operation (1,532)[8] -
-------- -------- --------
Furniture & Equipment (net of
accumulated depreciation) -
Gamma Knife (net of accumulated depreciation) -
Leasehold improvements (net of
accumulated amortization) -
-------- -------- --------
Total property and equipment - - -
-------- -------- --------
Deferred tax asset -
Cash held in escrow -
Deposits -
Intangible Assets 7,017
-------- -------- --------
Total other assets - - 7,017
-------- -------- --------
TOTAL $ - $ (1,532) $ 23,080
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ -
Accrued litigation settlement (284)[6] -
Obligations under capital lease and loans
payable - current portion -
Income tax payable -
-------- -------- --------
Total current liabilities - (284) -
-------- -------- --------
Deferred tax liability -
Obligations under capital lease and loans
payable, net of current portion -
Common stock - par value $.01: 375, 000
in 1999; 500,000 in 1998
shares issued with put option (375)[5] -
-------- -------- --------
Total other liabilities - (375) -
-------- -------- --------
Total Liabilities-Carry Forward - (659) -
-------- -------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OTHER PRO FORMA PRO FORMA
COMPENSATION [7] ADJUSTMENTS MARCH 31, 1999
---------------- --------------- --------------
<S> <C> <C> <C>
Total Liabilities-Brought Forward $ - $ (659) $ -
-------- -------- --------
Stockholders' equity:
Common stock - $.01 par value - 25,000,000
shares authorized; 6,979,160 shares and
7,047,828 shares issued and outstanding
actual and pro forma, respectively. 4[5] 70
Convertible preferred stock Series A -
$.01 par value - 100,000 shares
authorized; 99,059 shares issued and
outstanding on a pro forma basis. 1
Convertible preferred stock Series B
- $.01 par value - 178,582 shares
authorized, issued and outstanding on
a pro forma basis. 2
Convertible preferred stock Series C -
$.01 par value - 55,745 shares authorized,
issued and outstanding on a pro forma basis. 1
Additional paid in capital 10,118 655 [5][6] 33,125
(1,532)[8]
Deferred compensation (6,479) (6,479)
Retained earnings (accumulated deficit) (3,639) (3,640)
-------- -------- --------
Total stockholders' equity - (873) 23,080
-------- -------- --------
TOTAL $ - $ (1,532) $ 23,080
======== ======== ========
</TABLE>
<PAGE>
GHS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31,1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
GHS, INC. AND REFLECTING THE
CHANGE YOUR SUBSIDIARIES RECLASSIFICATION OF CHANGE YOUR LIFE.COM
LIFE.COM AS REPORTED DISCONTINUED MERGER WITH GHS, INC.
(CYL) MARCH 31, 1999 OPERATIONS AND SUBSIDIARIES [1] & [2]
----- -------------- ---------- --------------------------
<S> <C> <C> <C> <C>
Revenue:
Patient revenue $ 940 $ (940) $ -
------------------------------------------------------------------------------------
Expenses:
Patient expenses 343 (343) -
Selling, general and administrative 323 (323) -
------------------------------------------------------------------------------------
Total 666 (666) -
------------------------------------------------------------------------------------
Income (loss) from continuing operations - 274 (274) -
Interest expense (116) 116 -
Interest income 46 (2) 44
------------------------------------------------------------------------------------
Income (loss) from continuing operations - 204 (160) 44
Income tax expense (benefit) 80 62 18
------------------------------------------------------------------------------------
Net income (loss) - $ 124 $ (98) $ 26
====================================================================================
Basic and fully diluted income per share
Continuing operations [7] $ 0.02
Weighted average shares outstanding 6,479,160
==========
</TABLE>
<TABLE>
<CAPTION>
OTHER PRO FORMA ADJUSTMENTS
----------------------------------------------------------------------------------
THE LEARNING
CONCEPT ANNEX INC.
PRIVATE DEVELOPMENT INC. LICENSE AND EXECUTIVE
PLACEMENT [2] ACQUISITION [3] & [6] PURCHASE OPTION [4] COMPENSATION [5]&[6]
------------- --------------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Revenue:
Patient revenue
-------------------------------------------------------------------------------------
Expenses:
Patient expenses
Selling, general and administrative (542) (137) (4,697)
-------------------------------------------------------------------------------------
Total - (542) (137) (4,697)
-------------------------------------------------------------------------------------
Income (loss) from continuing operations - (542) (137) (4,697)
Interest expense
Interest income -
-------------------------------------------------------------------------------------
Income (loss) from continuing operations - (542) (137) (4,697)
Income tax expense (benefit)
-------------------------------------------------------------------------------------
Net income (loss) $ - $ (542) $ (137) $ (4,697)
=====================================================================================
Basic and fully diluted income per share
Continuing operations [7]
Weighted average shares outstanding
</TABLE>
<TABLE>
<CAPTION>
----------------------------------
OTHER PRO FORMA PRO FORMA
ADJUSTMENTS [8] MARCH 31, 1999
--------------- --------------
<S> <C> <C>
Revenue:
Patient revenue $ -
--------------------------------
Expenses:
Patient expenses -
Selling, general and administrative (5,376)
--------------------------------
Total (5,376)
--------------------------------
Income (loss) from continuing operations (5,376)
Interest expense -
Interest income 44
--------------------------------
Income (loss) from continuing operations (5,332)
Income tax expense (benefit) (18) -
--------------------------------
Net income (loss) $ 18 $ (5,332)
================================
Basic and fully diluted income per share
Continuing operations [7] $ (0.82)
Weighted average shares outstanding 6,479,160
==========
</TABLE>
<PAGE>
GHS, INC. AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
GHS, INC. AND REFLECTING THE
CHANGE YOUR SUBSIDIARIES RECLASSIFICATION OF CHANGE YOUR LIFE.COM
LIFE.COM AS REPORTED DISCONTINUED MERGER WITH GHS, INC.
(CYL) MARCH 31, 1999 OPERATIONS AND SUBSIDIARIES [1] & [2]
----- -------------- ---------- --------------------------
<S> <C> <C> <C> <C>
Revenue:
Patient revenue $ 2,332 (2,332) $ -
-----------------------------------------------------------------------------------
Expenses:
Patient expenses 1,221 (1,221) -
Selling, general and administrative 1,148 (1,148) -
Litigation settlement 934 (934) -
-----------------------------------------------------------------------------------
Total 3,303 (3,303) -
-----------------------------------------------------------------------------------
Income (loss) from continuing operations - (971) 971 -
Interest expense (555) 555 -
Interest income 166 (4) 162
-----------------------------------------------------------------------------------
Income (loss) from continuing operations - (1,360) 1,522 162
Income tax expense (benefit) (451) (511) 60
-----------------------------------------------------------------------------------
Net income (loss) - $ (909) $ 1,011 $ 102
===================================================================================
Basic and fully diluted income per share
Continuing operations [7] $ (0.14)
Weighted average shares outstanding 6,479,160
=========
</TABLE>
<TABLE>
<CAPTION>
OTHER PRO FORMA ADJUSTMENTS
-----------------------------------------------------------------------------------
THE LEARNING
CONCEPT ANNEX INC.
PRIVATE DEVELOPMENT INC. LICENSE AND EXECUTIVE
PLACEMENT [2] ACQUISITION [3] & [6] PURCHASE OPTION [4] COMPENSATION [5]&[6]
------------- --------------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Revenue:
Patient revenue
-------------------------------------------------------------------------------------
Expenses:
Patient expenses
Selling, general and administrative (2,167) (547) (7,871)
Litigation settlement
-------------------------------------------------------------------------------------
Total - (2,167) (547) (7,871)
-------------------------------------------------------------------------------------
Income (loss) from continuing operations - (2,167) (547) (7,871)
Interest expense
Interest income -
-------------------------------------------------------------------------------------
Income (loss) from continuing operations - (2,167) (547) (7,871)
Income tax expense (benefit)
-------------------------------------------------------------------------------------
Net income (loss) $ - $ (2,167) $ (547) $ (7,871)
=====================================================================================
Basic and fully diluted income per share
Continuing operations [7]
Weighted average shares outstanding
</TABLE>
<TABLE>
<CAPTION>
----------------
OTHER PRO FORMA PRO FORMA
ADJUSTMENTS [8] MARCH 31, 1999
--------------- --------------
<S> <C> <C>
Revenue:
Patient revenue $ -
----------------------------------
Expenses:
Patient expenses -
Selling, general and administrative (10,585)
Litigation settlement -
----------------------------------
Total (10,585)
----------------------------------
Income (loss) from continuing operations (10,585)
Interest expense -
Interest income 162
----------------------------------
Income (loss) from continuing operations (10,423)
Income tax expense (benefit) (60) -
----------------------------------
Net income (loss) $ 60 $ (10,423)
==================================
Basic and fully diluted income per share
Continuing operations [7] $ (1.61)
Weighted average shares outstanding 6,479,160
=========
</TABLE>
<PAGE>
GHS, INC. AND SUBSIDIARIES
PRO-FORMA UNAUDITED FINANCIAL INFORMATION
The following pro-forma unaudited consolidated financial statements reflect
the reverse acquisition of Change Your Life.com LLC ("CYL") by GHS, Inc.
("GHS"), the acquisition of Concept Development, Inc. ("CDI") and the related
private placement of preferred stock and license and option agreements with
The Learning Annex. The acquisition of CYL is accounted for as a reverse
acquisition with CYL as the accounting acquirer as the members of CYL
obtained voting control of GHS pursuant to the transaction. In addition, as
the only assets of GHS at the time of the transaction were cash and the net
assets of the discontinued operations of U. S. NeuroSurgical, Inc. ("USN")
the reverse acquisition was accounted for as a recapitalization of CYL with
the issuance of shares of common stock and options and warrants to purchase
shares of common stock to the pre-transaction stockholders of GHS in exchange
for cash. The operations of USN are being distributed to the pre-transaction
common stockholders of GHS. The acquisition of CDI is accounted for as a
purchase.
The pro-forma balance sheet gives effect to the above transactions as if they
had occurred on March 31, 1999 and the pro-forma statements of operations
give effect to the transactions as if they had occurred at the beginning of
each of the respective periods.
In the opinion of management of the Company, all adjustments necessary to
present fairly such pro-forma unaudited financial statements have been made. The
pro-forma unaudited financial statements are not necessarily indicative of what
the actual financial position and results of operations would have been had the
transactions occurred on the dates indicated above, nor do they purport to
represent the future financial position or results of operations of the Company.
NOTES TO PRO-FORMA BALANCE SHEET
[1] Reflects the reverse acquisition of CYL by GHS with CYL as the acquirer for
accounting purposes.
[2] Reflects the issuance of 178,582 shares of series B convertible preferred
stock for $90 per preferred share for net proceeds of $15,063,000. The preferred
shares are automatically converted into common shares on a ten for one basis
upon the spin-off of USN.
[3] Reflects the purchase of CDI for a total purchase price of $6,500,000,
including cash of $2,000,000 and 50,000 shares of series C convertible preferred
stock. The preferred shares are automatically converted into common shares on a
ten for one basis upon the spin-off of USN. The preferred shares are valued at
$90 per preferred share which represents fair value. Such fair value was
determined based on the price of the private placement shares. The purchase
price was allocated to the intangible assets acquired, which consist of the
employment and non-compete agreements with the former President of CDI and the
Learning Annex license and marketing agreement which was entered into
separately. Both agreements have a three-year term and the intangible assets are
being amortized over three years.
[4] Reflects the payments required and the issuance of 5,745 shares of series C
convertible preferred stock for the option and license agreements with The
Learning Annex. The preferred shares are automatically converted into
common shares on a ten for one basis upon the spin-off of USN and are valued at
$90 per preferred share which represents fair value. Such fair value was
determined based on the price paid for the series B convertible preferred stock
issued in the private placement which carry the same rights as this series C
convertible preferred stock.
<PAGE>
The fair value of the stock issued on inception of the license agreement has
been recorded as an intangible asset and is being amortized over three years
(the term of the license agreement.)
[5] Reflects the cancellation of the put option on 375,000 shares of common
stock issued in 1993 to Research Medical Center (RMC) for $1.00 per share in
connection with the establishment of a USN radiosurgery center at RMC. As
part of such issuance, RMC obtained the right exercisable through 2003, to
resell such shares to GHS at $1.00 per share if the market price of GHS's
common stock was less than $1.25 per share. As a condition to GHS's
acquisition of CYL, GHS was required to eliminate certain of its liabilities
and obligations or transfer them to its wholly-owned subsidiary, USN. As a
result, GHS negotiated with RMC the cancellation of the put option possessed
by RMC with respect to the 375,000 shares of common stock still owned by RMC.
[6] Reflects the issuance of 68,668 shares of common stock in payment of a
settlement obligation relating to claims raised by former minority interest
holders of USN for damages relating to various causes of action for breach of
contract relating to lost salary, unreimbursed expenses and for consequential
damages as well as a dispute regarding the purchase price for the minority
interest in USN.
[7] Reflects the issuance of compensatory stock options to GHS's President
and Chief Operating Officer, which options were issued on May 27, 1999 in
connection with the hiring of such executive officer to lead GHS's Internet
initiative resulting from GHS's acquisitions of CYL and CDI and the
transaction with The Learning Annex.
[8] Reflects the spin-off of discontinued operations.
[9] Series A convertible preferred stock is automatically converted to common
stock on a 310 to 1 basis upon the later of the authorization of shares of
common stock sufficient to permit conversion of all series A convertible
preferred stock or the next business day following the record date of the USN
spin-off.
NOTES TO PRO-FORMA STATEMENTS OF OPERATIONS
[1] Reclassifies the operations of USN as discontinued with the exception of
interest income related to the cash remaining in GHS.
[2] While the Company may earn interest income on its cash balances maintained,
the timing of future expenditures relating to content acquisition and general
business costs would effect the amount of interest earned and therefore, no
estimate of future interest income is included.
[3] Reflects the amortization of the intangible assets acquired in the CDI
acquisition over their expected useful lives of three years.
[4] Reflects the option and license payments to The Learning Annex and the
amortization of the cost of the license agreement which was valued based on the
series C convertible preferred stock issued on execution of the license
agreement. Such amount is being amortized over a three-year period consistent
with the term of the agreement.
[5] Reflects the issuance of compensatory stock options to the GHS's President.
[6] Reflects salary expense and employee benefits at an estimate of 20% of
salary for the GHS's President and for the former President of Concept
Development, Inc. now employed by GHS, pursuant to employment agreements.
[7] On a pro-forma basis, the effect of stock options, warrants and convertible
securities is anti-dilutive and therefore is not shown.
[8] To reverse income tax expense due to pre-tax loss on a pro forma basis.
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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2(a) Contribution and Exchange Agreement dated as of May 20, 1999
among the Company, Change Your Life.com, LLC, Anthony J.
Robbins, Robbins Research International Inc. and CYL
Development Holdings, LLC (1)
2(b) Agreement and Plan of Reorganization dated as of May 27, 1999
among the Company, Concept Acquisition Corporation, Concept
Development, Inc., William Zanker and Debbie Dworkin (1) (2)
2(c) Agreement of Merger dated as of May 27, 1999 between Concept
Acquisition Corporation and Concept Development, Inc. (1) (2)
3(a) Certificate of Designations for Series A Preferred Stock (1)
3(b) Certificate of Designations for Series B Preferred Stock (1)
3(c) Certificate of Designations for Series C Preferred Stock (1)
3(d) Amended and Restated By-Laws (1)
10(a) Content Provider Agreement and License effective as of April
23, 1999 between Change Your Life.com, LLC, Anthony J. Robbins
and Research International Inc. (1) (2)
10(b) Escrow Agreement dated as of May 27, 1999 among the Company,
Debbie Dworkin and State Street Bank and Trust Company (1) (2)
10(c) Repurchase Agreement dated as of May 27, 1999 between the
Company and Debbie Dworkin (1) (2)
10(d) Employment Agreement dated as of May 27, 1999 between the
Company and Wiliam Zanker (1)
10(e) Exclusive License and Marketing Agreement dated as of May 27,
1999 among the Company, Seligman Greer Communication
Resources, Inc. ("Seligman"), SGS Communications Resources,
Inc., Seligman Greer Sandberg Enterprises, Inc., SGC
Communication Resources LLC and Learning Annex Interactive LLC
(1) (2)
10(f) Option Agreement dated as of May 27, 1999 among the Company,
Seligman Greer Communication Resources, Inc., SGS
Communication Resources, Inc., Seligman Greer Sandberg
Enterprises, Inc., SGC Communication Resources LLC and
Learning Annex Interactive LLC and certain shareholders and
members, as applicable, of such entities other than the
Company listed therein (1) (2)
10(g) Registration Rights Agreement dated as of May 27, 1999 among
the Company, Anthony J. Robbins, Robbins Research
International Inc. and CYL Development Holdings, LLC (1)
10(h) Stockholders Agreement dated as of May 27, 1999 among the
Company, Anthony J. Robbins, Robbins Research International
Inc. and CYL Development Holdings, LLC (1)
99(a) Press Release issued May 28, 1999 (1)
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(1) Previously filed as identically numbered exhibit to the GHS's Form 8-K/A
dated May 27, 1999 and filed with the Securities and Exchange Commission on
June 11, 1999, which amended GHS's current report on Form 8-K dated May 27,
1999 and filed with the Securities and Exchange Commission as of June 11,
1999.
(2) Confidential treatment has been requested for certain portions of this
exhibit. Omitted portions have been filed separately with the Securities and
Exchange Commission.
