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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 7, 1999
------------------------------------------------
Date of Report (date of earliest event reported)
e-MedSoft.com
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Exact name of Registrant as Specified in its Charter
Nevada 33-8420-D 84-1037630
- --------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
20750 Ventura Boulevard, Suite 202
Woodland Hills, California 91364
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Address of Principal Executive Offices, Including Zip Code
(818) 710-9813
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Registrant's Telephone Number, Including Area Code
MEDTECH, INC.
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Former Name or Former Address, if Changed Since Last Report
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ITEM 5. OTHER EVENTS
This Form 8-K amendment does not include any financial or other
information concerning the Company's recent acquisition of UK-based Relay
Business Systems. This information will be included in a Form 8-K which will
be filed as soon as possible.
In the Company's Form 8-K filing dated January 7, 1999, the Company
reported that it would receive a royalty of 7% of the gross revenues that
Sanga International, Inc. ("Sanga") receives from licensing the software plus
a royalty of 25% of the net revenues received by Sanga pursuant to a Software
License Agreement dated December 2, 1998, between Sanga e-Health, LLC and
Sanga. Subsequently on January 23, 1999, the Company, Sanga and Sanga e-
Health, LLC agreed to terminate the Software License Agreement. As a result,
the Company will have full responsibility for marketing the technology and the
Company will receive 100% of the revenues from the sale of the technology. It
will also be responsible for its costs of operating its business and for any
future softwware development. Previously these costs were to be reimbursed by
Sanga.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL INFORMATION OF BUSINESSES ACQUIRED. The following
financial statements for Sanga e-Health, LLC for the period from inception
(December 15, 1998) to December 31, 1998 are filed herewith:
PAGE
AUDITED FINANCIAL STATEMENTS OF SANGA E-HEALTH, LLC
Report of Independent Certified Public Accountants ............. F-1
Financial Statements:
Balance Sheet ................................................ F-2
Statement of Operations ...................................... F-3
Statement of Changes in Stockholders' Equity ................. F-4
Statement of Cash Flows ...................................... F-5
Notes to Financial Statements ................................ F-6
(b) PRO FORMA FINANCIAL INFORMATION. Unaudited Pro Forma Financial
Statements for e-MedSoft.com and Sanga e-Health, LLC as of December 31, 1998,
and for the seven months ended December 31, 1998, are filed herewith on pages
F-9 through F-11.
(c) EXHIBITS.
Exhibit 10 Stock Acquisition and Technology Transfer Agreement
dated December 22, 1998, between Medtech, Inc.
(formerly "High Hopes, Inc.") and Sanga e-Health LLC
(previously filed)
Exhibit 10.1 Waiver, Rescission and Termination of Software
License Agreement between Sanga e-Health, LLC
and Sanga International, Inc. dated December 2,
1998 (filed electronically herewith)
2
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SIGNATURES
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, hereunto duly authorized.
e-MedSoft.com
Dated: March 23, 1999 By:/s/ John F. Andrews
John F. Andrews, President
3
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Sanga e-Health, LLC
Woodland Hills, CA 91364
We have audited the accompanying balance sheet of Sanga e-Health, LLC (a
development-stage company) as of December 31, 1998, and the related statements
of operations, members' (deficit) and cash flows for the period from December
1, 1998 (date of inception) through 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our 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 Sanga e-Health, LLC (a
development-stage company) as of December 31, 1998, and the results of its
operations, changes in its members' (deficit) and its cash flows for the
period from December 1, 1998 (date of inception) through December 31, 1998 in
conformity with generally accepted accounting principles.
/s/ Schumacher & Associates, Inc.
Schumacher & Associates, Inc.
Certified Public Accountants
12835 E. Arapahoe Road
Tower II, Suite 110
Englewood, CO 80112
March 22, 1999
F-1
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Sanga e-Health, LLC
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
ASSETS
Current Assets $ -
-----------
Total Current Assets -
TOTAL ASSETS $ -
===========
LIABILITIES AND MEMBERS' (DEFICIT)
Current Liabilities:
Accounts payable, related party $ 15,599
-----------
Total Current Liabilities 15,599
-----------
TOTAL LIABILITIES 15,599
-----------
Commitments (Notes 2,3,4 and 5) -
Members' (Deficit):
Contributed Capital 77,908
Accumulated (Deficit) (93,507)
-----------
TOTAL MEMBERS' (DEFICIT) (15,599)
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TOTAL LIABILITIES AND MEMBERS' (DEFICIT) $ -
===========
The accompanying notes are an integral part of the financial statements.
F-2
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Sanga e-Health, LLC
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period from December 1, 1998 (date of inception)
through December 31, 1998
Revenue $ -
-----------
Expenses
Research and development 21,334
Sales and marketing 52,768
General and administrative 19,405
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Total expenses 93,507
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Net (Loss) $ (93,507)
===========
The accompanying notes are an integral part of the financial statements.
F-3
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Sanga e-Health, LLC
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from December 1, 1998 (date of inception) through
December 31, 1998
Contributed Accumulated
Capital (Deficit) Total
----------- ----------- --------
Balance at December 1, 1998 $ - $ - $ -
Member capital contributed 77,908 - 77,908
Net loss for the period from
December 1, 1998 through
December 31, 1998 - (93,507) (93,507)
------- -------- --------
Balance at December 31, 1998 $77,908 $(93,507) $(15,599)
The accompanying notes are an integral part of the financial statements.
F-4
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Sanga e-Health, LLC
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period from December 1, 1998 (date of inception)
through December 31, 1998
Operating Activities:
Net (Loss) $ (93,507)
----------
Adjustments to reconcile net loss
to net cash (used in) operating
activities:
Increase in accounts payable, related party 15,599
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Net Cash (Used in) Operating Activities (77,908)
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Cash Flows from Investing Activities -
----------
Cash Flows from Financing Activities:
Services contributed to capital 77,908
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Net Cash Provided by Financing Activities 77,908
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Increase in Cash -
Cash, Beginning of Period -
----------
Cash, End of Period $ -
==========
Interest Paid $ -
==========
Income Taxes Paid $ -
==========
The accompanying notes are an integral part of the financial statements.
F-5
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Sanga e-Health, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
(1) Summary of Accounting Policies
This summary of significant accounting policies of Sanga e-Health, LLC
(Company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of
the Company's management who is responsible for their integrity and
objectivity. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in the
preparation of the financial statements.
(a) Description of Business
Sanga e-Health, LLC ("e-Health" or the "Company"), a limited
liability company formed under the laws of the State of California,
is a corporate joint venture that was organized on December 15,
1998. e-Health's business purpose is primarily to develop a
centralized computer software product utilizing the technology
transferred to the Company by HealthMed Inc. ("HealthMed") and Sanga
International, Inc. ("Sanga"), e-Health's Members. The Members to
this corporate joint venture equally participate in the management
of e-Health and have equal voting rights.
Under e-Health's operating agreement dated December 1, 1998,
HealthMed contributed its proprietary MedSoft computer software to
e-Health. Sanga contributed to e-Health for use within the health-
care industry, all rights, licenses, ownership, powers, privileges,
entitlements or other ownership in and to computer hardware and
computer software products utilized in Sanga's business, including
without limitation, the JAVA technology marketed by Sun Microsystems
which Sanga has the right to utilize and market. From the
contribution of these technologies, the Company has developed and is
continuing to develop software technology for application in
healthcare environments. This software is being developed with the
intended purpose of permitting real time, off-site access to patient
financial and medical records with minimal software or hardware
installation at the offices of the healthcare provider or the off-
site user (the "Software").
(b) Use of Estimates in the Preparation of Financial Statements
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
revenue and expenses during the reporting period. Actual results
could differ from those estimates.
F-6
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Sanga e-Health, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
(Continued)
(c) Technology, Software, Licenses and Research and Development Costs
HealthMed and Sanga expensed all research and development costs for
the contributed assets. The basis for the financial statements of
e-Health at formation is the carryover basis of HealthMed and Sanga
and therefore, the balance sheet of e-Health at formation reflects
no assets or equity related to the contributed assets. The
financial statements at December 31, 1998 reflect activity of the
Company from inception. For accounting purposes, December 1, 1998,
the date of e-Health's operating agreement, has been used as the
date of inception. All research and development costs of the
Company have been expensed. Various services and advances provided
to the Company from related parties are reflected in the financial
statements as contributed capital.
(2) Related Party Transactions
The Company, as a newly formed corporate joint venture, relied on the
advances and services from its Members and other companies affiliated
with the Members. MediManager, Inc. ("MMI")(which has ownership in
common with HealthMed) has provided certain services of its employees
to HealthMed for the continued development of the Software. The costs
associated with these services are minimal. HealthMed has agreed to
contribute these services to the Company. Sanga has provided services
of its employees for the continued development of the Software. In
addition, Sanga has provided services of its employees for the marketing
and sub-licensing of the Software. These services have been contributed
by Sanga to the Company. As discussed in Note 3 below, the original
intent of the Software License Agreement was that Sanga would be
responsible for all costs relating to marketing and sub-licensing. The
consulting services provided by Sanga and HealthMed to the Company
through December 31, 1998 have been expensed and were approximately
$78,000. Affiliated companies made other payments on the behalf of
e-Health. Such payments have been expensed and any balances owed to
these companies have been reflected in accounts payable, related party.
(3) Software License Agreement
On December 2, 1998, the Company signed a software license agreement with
Sanga International ("Sanga") granting to Sanga an exclusive license
for the sub-leasing of the Software to end-users thereof. Under this
agreement all marketing or sub-licensing costs shall be at the sole
expense of Sanga. Sanga shall pay to the Company licensing fees
based on formulas applied to gross revenues and net revenues generated by
Sanga as a result of this license.
F-7
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Sanga e-Health, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
(Continued)
Operating under this agreement, Sanga entered into negotiations with
various healthcare providers for the sub-leasing of the Software that
resulted in signed Memorandums of Understanding ("MOU") or Master
Agreements. On December 22, 1998, National Century Financial Enterprises
("NCFE") signed an initial funding commitment letter agreement for $1.5
million. This commitment agreement provided for the initial funding of
accounts receivable to be derived from the signed MOU and Master
Agreements entered into between Sanga and various healthcare providers.
On December 23, 1998 NCFE funded $750,000 to Sanga based on this
agreement.
On January 23, 1999 e-Health and Sanga entered into an agreement for
the waiver, rescission and termination of this software license. In
conjunction therewith, Sanga assigned, transferred and gave up in favor
of e-MedSoft.com (see Note 4 below), all right, title and interest under
or with respect to all of Sanga's contractual rights and privileges
arising from their agreements with various healthcare providers for the
sub-leasing of the Software, including but not limited to, that funding
commitment letter agreement with NCFE.
(4) Stock Acquisition and Technology Transfer Agreement
On December 29, 1998, the Company and e-MedSoft.com (formally known as
MedTech "MDTK") entered into an agreement for the issuance of 41,417,176
shares of common stock of MDTK, fully restricted under Rule 144 but free
and clear of any and all encumbrances. In exchange for the MDTK shares,
the Company agreed to transfer and assign to MDTK all right, title and
interest of the Company in and to the software rights referenced in the
Software License Agreement. In addition, e-Health agreed that MDTK be
the sole owner and beneficiary of all rights held by the Company in and
to the Software. This transaction closed on January 7, 1999. As a
result of this transaction, the Company owned 80% of the issued and
outstanding common stock of MDTK.
(5) Subsequent Events
On March 10, 1999, the Company transferred an aggregate of 2,000,000 of
its shares of common stock of MDTK, fully restricted under Rule 144, to
Intercontinental Investment Associates LTD ("IIA") and DAB Investments,
Inc. ("DAB") in full payment for consulting services previously
performed by employees and agents of IIA and DAB on behalf of the
Company.
F-8
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On January 7, 1999, e-MedSoft.com completed the acquisition of certain rights
to a JAVA-based, on-line healthcare management system in exchange for
41,417,176 shares of the Company's common stock (approximately 80% of the
shares now outstanding) which resulted in a change of control.
The following unaudited pro forma financial statements are derived from the
historical financial statements of e-MedSoft.com and Sanga e-Health, LLC and
give pro forma effect to their combination on January 7, 1999. These pro
forma statements should be read in conjunction with those historical financial
statements and related notes. The pro forma financial statements do not
purport to be indicative of the results that would actually have been obtained
if the combination had been in effect on the dates indicated, or that may be
obtained in the future.
F-9
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e-MedSoft.com
Proforma Combined Balance Sheet
December 31, 1998
<TABLE>
<CAPTION>
Proforma Proforma
e-MedSoft (a) Sanga e-Health Adjustments Combined
(unaudited)
<S> <C> <C> <C> <C>
ASSETS
Cash $ 191 $ - $ 191
-
Other Assets 19,528 - 19,528
-
--------- -------- ----------- ----------
TOTAL ASSETS $ 19,719 $ - $ - $ 19,719
========= ======== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable $ 9,442 $ - $ 9,442
Related Party Transactions (750,000) 15,599 (734,401)
Deferred Revenues 750,000 - 750,000
Shareholders' Equity
Common Shares 7,801 - 43,970 (b) 51,771
Paid in Capital 569,942 77,908 (43,970)(b) 603,880
Retained Earnings
(Deficit) (567,466) (93,507) - (660,973)
--------- -------- ----------- ----------
10,277 (15,599) - (5,322)
--------- -------- ----------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 19,719 $ - $ - $ 19,719
========= ======== =========== ==========
</TABLE>
NOTES TO THE COMBINED PROFORMA BALANCE SHEET
(a) The balance sheet for e-MedSoft.com is as of January 7, 1999, the
acquisition date of the assets of Sanga e-Health.
(b) To record the payment of the acquisition price of 43,970,320 shares of
e-MedSoft common stock, restricted under Rule 144. The valuation of the
shares was based on the par value of the stock. The carryover basis of
the assets acquired is zero.
(c) This proforma does not include information relating to the various
contracts, revenues or assets associated with e-MedSoft.com's
acquisition of Relay Business Systems, Inc. on March 19, 1999. This
data will be included in a subsequently filed 8-K.
F-10
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e-MedSoft.com
Proforma Combined Statement of Operations
For the Seven Months ended December 31, 1998
<TABLE>
<CAPTION>
Proforma Proforma
e-MedSoft (a) Sanga e-Health Adjustments Combined
(unaudited)
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
--------- -------- ----------- ----------
Operating Expenses
Research and development - 21,334 21,334
Sales and marketing expense 812 52,768 53,580
General and administrative 234 19,405 19,639
--------- -------- ----------- ----------
1,046 93,507 - 94,553
Pre tax loss $ (1,046) $(93,507) $ - $ (94,553)
Provision for taxes - - - -
--------- -------- ----------- ----------
Net Loss $ (1,046) $(93,507) $ - $ (94,553)
========= ======== =========== ==========
Net Loss per Share $ (0.00) N/A $ (0.00)
Weighted Average Shares
Outstanding 7,801,150 N/A 51,771,470
</TABLE>
NOTES TO THE COMBINED PROFORMA STATEMENT OF OPERATIONS
(a) e-MedSoft.com's fiscal year end is May 31. The statement of operations
for e-MedSoft.com is for the seven months and 7 day period which
commenced on June 1, 1998 and ended January 7, 1999, the acquisition
date of the assets of Sanga e-Health.
(b) The proforma statement has included Sanga e-Health from its inception
on December 1, 1998 through December 31, 1998.
(c) The earnings per share were calculated using average weighted number of
shares outstanding during the year. The proforma earnings per share
were calculated as if all restricted shares of the company were issued
at the beginning of the period and included in weighted average shares
outstanding.
(d) This proforma does not include information relating to the various
contracts, revenues or assets associated with e-MedSoft.com's
acquisition of Relay Business Systems, Inc. on March 19, 1999. This
data will be included in a subsequently filed 8-K.
F-11
WAIVER, RESCISSION AND TERMINATION OF SOFTWARE LICENSE AGREEMENT
BETWEEN SANGA e-HEALTH, LLC AND SANGA INTERNATIONAL, INC. DATED 12/2/98
This WAIVER, RESCISSION AND TERMINATION OF SOFTWARE LICENSE AGREEMENT is
entered into this 23rd day of January, 1999, by and between Sanga e-Health, a
California Limited Liability Company, and Sanga International, Inc., a
Barbados Corporation, with reference to the following facts:
A. The parties hereto wish to restructure their respective businesses
in such a fashion that Sanga International, Inc. shall no longer
have the responsibility for, or the right to, market and distribute
the products developed by e-Health;
NOW, THEREFORE, the parties hereto agree as follows:
1. The Software License Agreement dated December 2, 1998 is hereby
terminated, cancelled and of no further force and effect; and
2. MedTech, Inc., in view of certain subsequent agreements involving
MedTech, Inc. which agreements relate to the Software License
Agreement dated December 2, 1998, hereby approves of and ratifies
this termination.
IN WITNESS WHEREOF, all parties have executed this Agreement, effective
as of the date written above.
SANGA e-HEALTH, LLC
A California Limited Liability Company
By: /s/ John F. Andrews
JOHN F. ANDREWS,
President and Chief Executive
SANGA INTERNATIONAL, INC.
A Barbados Corporation
By: /s/ John F. Andrews
JOHN F. ANDREWS,
Chief Executive Officer
THE FOREGOING IS RATIFIED AND APPROVED.
MEDTECH, INC.
A Nevada Corporation
By: /s/ John F. Andrews
JOHN F. ANDREWS,
President and Chief Executive
