SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. _________]
Filed by the Registrant _X_
Filed by a Party other than the Registrant ___
Check the appropriate box:
_X_ Preliminary Proxy Statement
___ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
___ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
e-MedSoft.com
(Name of Registrant as Specified in Its Charter)
e-MedSoft.com
(Name of Person(s) Filing Proxy Statement)
<PAGE>
PRELIMINARY COPY
E-MEDSOFT.COM
1300 Marsh Landing Parkway, Suite 106
Jacksonville, Florida 32250
(904) 543-1001
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 7, 2000
TO THE SHAREHOLDERS OF E-MEDSOFT.COM:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of
e-MedSoft.com, a Nevada corporation (the "Company"), will be held on Thursday,
September 7, 2000, at the Sawgrass Marriott Resort, 1000 PGA Tour Boulevard,
Ponte Vedra Beach, Florida, at 10:00 a.m., Eastern Time, and at any and all
adjournments thereof, for the purpose of considering and acting upon the
following matters:
1. The election of six (6) Directors of the Company to serve until the
next Annual Meeting of Shareholders and until their successors have been duly
elected and qualified;
2. The ratification of the appointment of Arthur Andersen LLP as the
Company's independent auditors;
3. The approval of an amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of Common Stock from
100,000,000 to 200,000,000 shares; and
4. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of the $.001 par value common stock of the Company of record
at the close of business on July 27, 2000, will be entitled to notice of and
to vote at the Meeting or at any adjournment or adjournments thereof. The
proxies are being solicited by the Board of Directors of the Company.
All shareholders, whether or not they expect to attend the Annual Meeting
of Shareholders in person, are urged to sign and date the enclosed Proxy and
return it promptly in the enclosed postage-paid envelope which requires no
additional postage if mailed in the United States. The giving of a proxy will
not affect your right to vote in person if you attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN F. ANDREWS, PRESIDENT
Jacksonville, Florida
July 27, 2000
<PAGE>
E-MEDSOFT.COM
1300 Marsh Landing Parkway, Suite 106
Jacksonville, Florida 32250
(904) 543-1001
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 7, 2000
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of e-MedSoft.com, a Nevada corporation (the "Company"), for use at
the Company's Annual Meeting of Shareholders to be held on Thursday, September
7, 2000, at the Sawgrass Marriott Resort, 1000 PGA Tour Boulevard, Ponte Vedra
Beach, Florida, at 10:00 a.m., Eastern Time, and at any adjournment thereof.
It is anticipated that this Proxy Statement and the accompanying Proxy will be
mailed to the Company's shareholders on or about July 31, 2000.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
$.001 par value common stock, with each share entitled to one vote. Only
shareholders of record at the close of business on July 28, 2000, are entitled
to notice of and to vote at the Meeting or any adjournment thereof. On July
27, 2000, the Company had __________ shares of its $.001 par value common
stock outstanding, each share of which is entitled to one vote on all matters
to be voted upon at the Meeting, including the election of Directors.
Cumulative voting in the election of Directors is not permitted.
A majority of the Company's outstanding common stock represented in
person or by proxy shall constitute a quorum at the Meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of the
Company's $.001 par value common stock owned beneficially, as of July 10,
2000, by any person, who is known to the Company to be the beneficial owner of
5% or more of such common stock, and, in addition, by each Director, Nominee
for Director and Executive Officer of the Company, and by all Directors,
Nominees for Director and Executive Officers of the Company as a group.
Information as to beneficial ownership is based upon statements furnished to
the Company by such persons. Each person has sole voting and investment power
over the shares except as noted.
Name and Address Amount and Nature of Percent
of Beneficial Owners Beneficial Ownership of Class
-------------------- -------------------- --------
John F. Andrews 27,071,460 (1) 34.7%
197 Admirals Way South
Ponte Vedra Beach, FL 32082
Mitchell J. Stein 26,581,460 (2) 34.2%
4332 St. Clair Avenue
Studio City, CA 91604
Sam J. W. Romeo 0 --
1000 S. Fremont Avenue, A-11
Allambra, CA 91807
Masood Jabbar 500,000 .6%
901 San Antonio Street
Palo Alto, CA 94303
W. Cedric Johnson 1,405,363 (3) 1.8%
4553 Glencoe Ave., Suite 320
Marina del Rey, CA 90292
Donald H. Ayers 4,737,000 (4) 6.1%
6125 Memorial Drive
Dublin, OH 43017
Margaret A. Harris 90,000 (5) 0.1%
Suite 320
20750 Ventura Boulevard
Woodland Hills, CA 91364
Marshall Gibbs 90,000 (6) 0.1%
Suite 106
1300 Marsh Landing Parkway
Jacksonville, FL 32250
TSI Technologies, LLC 26,581,460 34.2%
Suite 320
20750 Ventura Boulevard
Woodland Hills, CA 91364
HealthMed Inc. 26,581,460 (7) 34.2%
Suite 320
20750 Ventura Boulevard
Woodland Hills, CA 91364
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Sanga International 9,000,000 11.6%
Mark Bielenson
c/o Pachulski, Stang, Ziehl & Young
10100 Santa Monica Blvd., Suite 110
Century City, CA 90067
National Century Financial 4,750,000 6.1%
Enterprises, Inc.
6125 Memorial Drive
Dublin, OH 43017
Healthcare Capital, LLC 4,750,000 6.1%
6125 Memorial Drive
Dublin, OH 43017
All Directors, Nominees for 33,893,823 43.1%
Director and Executive Officers
as a Group (8 persons)
__________________
(1) Includes 26,581,460 shares of common stock held of record by TSI
Technologies and Holdings LLC (TSI). HealthMed, Inc. holds a controlling
interest in the shares of our common stock held by TSI. Also includes 490,000
underlying stock options held by Mr. Andrews exercisable within 60 days
pursuant to the terms of his employment agreement.
(2) Represents shares held of record by TSI Technologies and Holdings LLC.
(3) Includes 1,405,363 shares held of record by CypherComm, Inc. for which
Mr. Johnson serves as President.
(4) Includes 1,637,000 shares held of record by Mr. Ayers and 250,000 shares
underlying currently exercisable warrants held by Mr. Ayers. Also includes
25% of the 4,750,000 shares held of record by Healthcare Capital LLC, 25% of
the 4,750,000 shares held of record by National Century Financial Enterprises,
Inc., and 25% of the 1,900,000 shares held of record by I.I.A., LLC.
(5) Represents shares underlying stock options held by Ms. Harris exercisable
within 60 days.
(6) Includes 40,000 shares underlying stock options held by Mr. Gibbs
exercisable within 60 days and 50,000 shares issuable to Mr. Gibbs issuable to
him pursuant to the terms of his employment agreement within 60 days.
(7) Includes 26,581,460 shares held by TSI Technologies, LLC in which
HealthMed Inc. holds a controlling interest.
The Company knows of no arrangement or understanding, the operation of
which may at a subsequent date result in a change of control of the Company.
ELECTION OF DIRECTORS
The number of Directors of the Company is currently set at six (6)
Directors. The Board of Directors recommends the election as Directors of the
six (6) nominees listed below, to hold office until the next Annual Meeting of
Shareholders and until their successors are elected and qualified or until
their earlier death, resignation or removal. Each of the current members of
the present Board of Directors has been nominated for reelection. The person
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<PAGE>
named as "Proxy" in the enclosed form of Proxy will vote the shares
represented by all valid returned proxies in accordance with the
specifications of the shareholders returning such proxies. If at the time of
the Meeting any of the nominees named below should be unable to serve, which
event is not expected to occur, the discretionary authority provided in the
Proxy will be exercised to vote for such substitute nominee or nominees, if
any, as shall be designated by the Board of Directors.
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently
held, and the period during which each person has served as a Director:
POSITIONS AND OFFICES HELD AND
NAME AGE TERM AS A DIRECTOR
----------------- --- --------------------------------------------
John F. Andrews 46 Chairman, President and Chief Executive
Officer and Director since January 1999
Masood Jabbar 49 Director since December 1999
W. Cedric Johnson 48 Director since May 2000
Sam J.W. Romeo 59 Director since September 1999
Mitchell J. Stein 41 Director since September 1999
Donald H. Ayers 64 Director since July 2000
There is no family relationship between any Director or Executive Officer
of the Company.
Set forth below are the names of all Directors and Executive Officers of
the Company, all positions and offices with the Company held by each such
person, the period during which he has served as such, and the principal
occupations and employment of such persons during at least the last five
years:
JOHN F. ANDREWS, has served as our Chairman of the Board, President, and
Chief Executive Officer since January 7, 1999. Mr. Andrews served as Chief
Executive Officer of Sanga International, one of our significant stockholders,
from April 1998 until July 1999. Mr. Andrews continues to serve on the board
of directors with Sanga International. During November 1999, Sanga
International filed for protection pursuant to Chapter 11 of the Uniform
Bankruptcy Code in Los Angeles, Califorina. Prior to joining Sanga
International, Mr. Andrews was Chief Information Officer of CSX Corporation
and Chief Executive Officer of CSX Technology from April 1993 to April 1998.
Mr. Andrews was Vice President and General Manager of GTE Health Systems from
1991 to 1993. Mr. Andrews also served as Vice President and General Manager at
several other business units at GTE and held positions in information
technology, finance, marketing, and field operations. Mr. Andrews has served
on the board of directors of PrimeRX.com since April 2000.
MASOOD JABBAR has served as a member of our board of directors since
December 2, 1999. Mr. Jabbar currently serves as President of Sun
Microsystems, Inc.'s Computer Division. Since joining Sun Microsystems in
1986, Mr. Jabbar has held a number of senior positions, including Vice
President of Finance and Planning for Sun Microsystems' field organization,
Director of Marketing for the U.S. organization, and General Manager for the
Interactive Products Group.
4
<PAGE>
W. CEDRIC JOHNSON has served as a member of our board of directors since
May 3, 2000. Mr. Johnson has served as Chief Executive Officer of Quantum
Digital Solutions Corporation, which he founded in June 1995 under the name of
CypherComm, since January 1997. Prior to founding Quantum Digital, Mr. Johnson
served as President and Chief Executive Officer of ETA Technologies
Corporation, an applied sciences firm. Prior to his term at ETA Technologies,
Mr. Johnson served as a systems engineer at Rockwell International and was a
technology consultant to Fortune 100 companies.
DR. SAM J. W. ROMEO has served as a member of our board of directors
since September 1, 1999. Dr. Romeo, who has more than 30 years of experience
in the health care field, currently serves as the President and CEO of
University Affiliates IPA, the nation's first fully accredited IPA. In
addition to having held senior faculty positions at the USC School of
Medicine, Medical College of Wisconsin, and the St. Louis University School of
Medicine, Dr. Romeo has also served as the Medical Director of several health
maintenance organizations in California, Florida, and New York, and is
licensed to practice medicine in the States of California, Florida, Idaho,
Missouri, and Wisconsin. Dr. Romeo received the prestigious Physician
Executive of the Year Award given by the American College of Medical Practice
Executives in October 1998.
MITCHELL J. STEIN has served as a member of our board of directors since
September 1, 1999, when he was added to the board as an ex-officio member
representing TSI a principal stockholder. Mr. Stein is the Chairman of the
Board of TSI. Mr. Stein previously served as Managing Partner of the law firm
of Stein, Perlman & Hawk from December 1990 to September 1998. Mr. Stein
served as the President and Chairman of the Board of MediManager, Inc. from
June 1994 to August 1998.
DONALD H. AYERS has served as a member of our board of directors since
July 10, 2000. Mr. Ayers currently serves as Vice Chairman, Chief Operating
Officer and a director of National Century Financial Enterprises, Inc.
("NCFE"). Mr. Ayers has 32 years of experience in the healthcare industry. In
1990, Mr. Ayers founded Falcon Receivable Systems, Inc., a company which was
merged into a subsidiary of NCFE in December 1996. Previously, Mr. Ayers was
president of two private healthcare management companies for 10 years and
president of Grant Hospital in Columbus, Ohio for 13 years. Mr. Ayers holds a
B.S. in Education and Psychology from Muskingum College in New Concord, Ohio
and an M.B.A. in Health Care Management from George Washington University.
MARGARET A. HARRIS has served as our Chief Financial Officer and Senior
Vice President since March 1, 1999. From June 1993 until March 1999, Ms.
Harris worked as an independent contractor/consultant providing financial
services to various companies including the following: HemaCare
Corporation--July 1993 until July 1994; American Outpatient Services,
Corp.--July 1994 until October 1995, serving as the Acting Chief Financial
Officer; GCI RenalCare, Inc.--December 1995 until December 1996, serving as
the Chief Financial Officer; MediaManager, Inc.--December 1996 to March 1999,
serving as the Acting Chief Financial Officer. Ms. Harris served as Vice
President of Finance for American Medical International, Inc., one of the
largest hospital management companies in the world and a predecessor to Tenet
Health Care Holding Corp., from June 1973 until July 1991. Prior to joining
American Medical International, Ms. Harris began her career with Arthur
Andersen LLP in the audit group. She is 52 years old.
5
<PAGE>
IAN MCPHERSON has served as the Managing Director of e-Net since 1995.
Prior to Mr. McPherson's current position, he acquired Relay Systems (now
called e-Net) in 1997 and merged it into Network Wales Limited, where Mr.
McPhearson was Chairman and Managing Director. In 1996 Mr. McPherson formed
Network Wales Limited, an Internet services business operating in Wales, which
was a joint venture with the U.K. government. From 1992 until 1997, he was
Chairman and Managing Director of Syntech Computer Systems, Ltd. From 1989
until 1992, Mr. McPherson was the Chief Information Officer for Ryan
International PLC. He is 52 years old.
MARSHALL GIBBS has served as our Chief Technology Officer and Executive
Vice President since January 10, 1999. From June 1998 until May 1999, Mr.
Gibbs was employed by Sanga International as Chief Technology Officer. From
March 1994 until May 1998, Mr. Gibbs was employed by CSX Technology, serving
the last six months as Vice President of Enterprise Technology Services at CSX
Technology. Prior to CSX Technology, Mr. Gibbs was with Price Waterhouse,
where he was in the Management Consulting Services group. He is 34 years old.
COMMITTEES OF THE BOARD
The Company's Bylaws authorize the Board of Directors to appoint among
its members one or more committees consisting of one or more Directors.
AUDIT COMMITTEE. The Board of Directors has recently established an Audit
Committee which is comprised of Masood Jabbar and Dr. Sam J.W. Romeo. The
Audit Committee will review the quarterly and annual financial statements, any
significant accounting issues, the scope of the audit with the Company's
independent auditors and will discuss with the auditors any other
audit-related matters that may arise. During the fiscal year ended March 31,
2000, this Committee did not hold any formal meetings.
COMPENSATION COMMITTEE. The Compensation Committee's responsibilities are
to make determinations with respect to salaries and bonuses payable to
executive officers and to administer stock option plans. The Compensation
Committee is comprised of Mitchell J. Stein, W. Cedric Johnson and Donald H.
Ayers. This committee was only recently formed and during the fiscal year
ended March 31, 2000, this committee did not hold any formal meetings.
The Company's Directors hold office until the next annual meeting of the
shareholders and until their successors have been elected and qualified.
The Officers of the Company are elected by the Board of Directors at the
first meeting after each annual meeting of the Company's shareholders, and
hold office until their death, or until they shall resign or have been removed
from office.
During the fiscal year ended March 31, 2000, the Company's Board of
Directors held no formal meetings, and took action by consent 24 times.
There are no known arrangements or understandings between any director or
executive officer and any other person pursuant to which any of the above-named
executive officers or directors or nominees was selected as an officer
or director or nominee for director of the Company.
6
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain written representations, no persons who were either a
Director, Officer or beneficial owner of more than 10% of the Company's Common
Stock, failed to file on a timely basis reports required by Section 16(a) of
the Exchange Act during the most recent fiscal year, except that Masood
Jabbar, and Marshall Gibbs did not file Form 3 reports, and John F. Andrews
filed one Form 4 reporting one transaction late. In addition, Marshall Gibbs
did not file a Form 5 report.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the executive
compensation for the Company's President and each other executive officer
whose total annual salary and bonus exceeded $100,000 for the fiscal year
ended March 31, 2000 and the four months ended March 31, 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- ------------------- --------
SECURI-
TIES
UNDERLY-
OTHER RE- ING ALL
ANNUAL STRICTED OPTIONS/ OTHER
NAME AND PRINCIPAL COMPEN- STOCK SARs LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARD(S) (NUMBER) PAYOUTS SATION
------------------ ---- ------- ----- ------ -------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Andrews, 2000 $500,000 $540,104 -- -- -- -- --
Chairman & CEO 1999 125,000 0 -- -- -- -- --
Marshall A. Gibbs,
EVP, CTO 2000 215,166 100,000 -- -- 40,000 -- --
1999 -- -- -- $302,250 -- -- --
Margaret A. Harris,
SVP, CFO 2000 220,000 -- -- -- 60,000 -- --
----------------
(1) During the four months ended March 31, 1999, Mr. Andrews was also
advanced $25,000 toward the next years' salary.
OPTION GRANTS
The following table provides information on stock options granted to our
Chief Executive Officer and our two other most highly-compensated executives
during the fiscal year ended March 31, 2000.
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</TABLE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------------------------- ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS MARKET APPRECIATION FOR
UNDERLYING GRANTED TO PRICE ON OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE THE DATE EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR PRICE OF GRANT DATE 5% 10%
------------------ ---------- ------------ ------------ -------- ---------- ------- -------
($/SH)
<S> <C> <C> <C> <C> <C> <C> <C>
John F.Andrews -- -- -- -- -- -- --
Marshall A.Gibbs -- -- -- -- -- -- --
Margaret A.Harris 180,000 20.8% $2.50 $2.50 10/31/04 124,327 274,730
</TABLE>
Potential gains are net of the exercise price, but before taxes
associated with the exercise. The amounts represent hypothetical gains that
could be achieved for the respective options if exercised at the end of the
option term. The assumed 5 percent and 10 percent rates of stock price
appreciation are provided in accordance with the rules of the Securities and
Exchange Commission and do not represent our estimate or projection of the
future price of our common stock. Actual gains, if any, on stock option
exercises will depend upon the future market prices of our common stock.
YEAR-END OPTION VALUES
The following table provides information respecting the options held by
our Chief Executive Officer and our two other most highly compensated
executive officers as of March 31, 2000. The executive officers did not
exercise options during fiscal 2000.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Option Values As Of March 31, 2000
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
----------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John F. Andrews -- -- -- --
Marshall A. Gibbs 40,000 -- $595,100 --
Margaret A. Harris 60,000 120,000 $896,400 $1,792,800
</TABLE>
Calculated based upon the closing price of our common stock as quoted on
the American Stock Exchange on March 31, 2000 of $17.44 per share.
EMPLOYMENT AGREEMENTS
On August 31, 1999, we entered into an Executive Employment Agreement
with John F. Andrews, the Company's Chairman of the Board, President and Chief
Executive Officer. The initial term of the Agreement is from January 15, 1999
through January 15, 2002. The Agreement will be automatically renewed for
additional one year periods unless terminated. In the event of a termination
by the Company without cause, or by Mr. Andrews for "good reason," Mr. Andrews
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will receive full compensation for the remainder of the initial term or
eighteen months from the date of termination, whichever is longer. In the
event of a termination by the Company with cause, he will receive full
compensation for the remainder of the initial term or twelve months from the
date of termination, whichever is longer. In the event of a termination by Mr.
Andrews without a "good reason," he will receive no further compensation.
The base salary under the Agreement is $500,000 per year, which is to be
increased by at least 10% at the end of each year. Mr. Andrews is also to
receive a whole life insurance policy with a face amount of $2,000,000 for his
benefit; the use of a fully insured automobile; club dues for one country club
and one luncheon club; disability and medical insurance; an allowance of up to
$12,500 per year for professional counseling and services; and four to five
weeks of vacation per year.
Mr. Andrews also had the right to immediately receive shares of the
Company's Common Stock without any required payment upon the occurrence of
certain events.
During fiscal 2000, Mr. Andrews amended his employment agreement and
waived his rights to the shares earned from inception of his contract through
January 15, 2000. In connection therewith, we have agreed to pay Mr. Andrews a
bonus for our fiscal year ended March 31, 2000 in the amount of $500,000. In
addition, the terms of the contract concerning stock and options were
clarified and amended.
Mr. Andrews now has the right to receive options to purchase shares of
our common stock upon the occurrence of the following events:
a. 5,000 shares for each month he is employed commencing January 15,
2000.
b. 50,000 shares for each quarter in which we have gross revenues in
excess of $7 million commencing with the quarter ending March 31,
2000.
c. 175,000 shares for each quarter in which we have gross revenues in
excess of $20 million commencing with the quarter ending March 31,
2000.
d. 350,000 shares for each quarter in which we have gross revenues in
excess of $50 million commencing with the quarter ending March 31,
2000.
The option price for the options earned under subparagraph a. above will
be zero. The option price for the options earned under b., c., and d., above
will be determined by Mr. Andrews at the grant date.
In addition to the above, Mr. Andrews is entitled to receive a percentage
of the Company's net profit before taxes as follows:
a. One percent (1%) of net profit before taxes for each quarter such
profit exceeds $1,000,000, plus
b. Two percent (2%) of net profit before taxes for each quarter such
profit exceeds $3,000,000, plus
c. Three percent (3%) of net profit before taxes for each quarter such
profit exceeds $10,000,000, plus
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d. Four percent (4%) of net profit before taxes for each quarter such
profit exceeds $20,000,000.
In the event of a "change in control" of the Company, as defined in the
Agreement, Mr. Andrews has the right to terminate the Agreement and receive a
$2,500,000 payment. The Company believes it critical and vital to compensate
Mr. Andrews in this manner as Mr. Andrews has chosen to be critical to the
Company's success and is likely to be so as the Company continues its attempts
to achieve its business objectives and maximize its growth.
We have entered into an employment agreement with Marshall A. Gibbs, our
Executive Vice President and Chief Technical Officer. The initial term of the
agreement expires in January 2002 and will automatically renew for additional
one year periods unless terminated by Mr. Gibbs or us. If we terminate Mr.
Gibbs' employment without cause or if Mr. Gibbs terminates his employment as a
result of our material breach of the agreement, Mr. Gibbs will receive full
compensation for the remainder of the initial term plus a severance payment
equal to 12 months pay. If we terminate his employment with cause, Mr. Gibbs
will receive compensation for the remainder of the initial term. Under the
agreement, Mr. Gibbs' base salary is $250,000 per year. Mr. Gibbs will also
receive a $100,000 signing bonus; a car allowance; reimbursement for
automobile insurance; club dues for one country club; an allowance of up to
$2,000 per year for professional counseling and services; and 15 days of
vacation per year.
Mr. Gibbs also has the right to receive 150,000 common shares of our
stock without any required payment and 40,000 stock options to purchase our
stock. The stock vests equally over a three year period and the stock options
vest over a one year period.
STOCK OPTION PLANS
1999 STOCK COMPENSATION PLAN
In February 1999, our board of directors approved the establishment of
the 1999 Stock Compensation Plan. Our board of directors believes that the
1999 Plan advances our interests by encouraging our employees, officers,
directors, and consultants to acquire an equity interest in our company and by
providing additional incentives and motivation toward superior performance.
Our board of directors also believes it will also enable us to attract and
retain the services of key employees, officers, directors, and consultants
upon whose judgment, interest, and special effort we depend.
The 1999 Plan allows the board of directors, or a committee established
by the board of directors, to grant stock options from time to time to our
employees, officers, directors, and consultants. The board of directors has
the power to determine at the time the option is granted whether the option
will be an incentive stock option, which is an option that qualifies under
Section 422 of the Internal Revenue Code of 1986, or an option that is not an
incentive stock option. However, incentive stock options may only be granted
to our employees. Vesting provisions are determined by the Board at the time
options are granted.
The total number of shares of common stock subject to options under the
1999 Plan may not exceed five million shares, subject to adjustment in the
event of certain recapitalizations, reorganizations, and similar transactions.
Options may be exercisable by the payment of cash or by other means as
authorized by the board of directors.
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<PAGE>
The 1999 Plan also provides that the board of directors may issue
restricted stock pursuant to restricted stock right agreements that will
contain such terms and conditions as the board of directors determines.
Our board of directors may amend the 1999 Plan at any time, provided that
the board of directors may not amend the 1999 Plan to materially increase the
number of shares available under the 1999 Plan, materially increase the
benefits accruing to participants under the 1999 Plan, or materially change
the eligible class of employees without stockholder approval.
2000 NONQUALIFIED STOCK OPTION AND STOCK BONUS PLAN
In March 2000, our board of directors approved the establishment of the
2000 Nonqualified Stock Option and Stock Bonus Plan. Our board of directors
believes that the 2000 Plan encourages employees, officers, directors, and
consultants to acquire an equity interest in our company and by providing
additional incentives and awards and recognition of their contribution to our
company's success and to encourage these persons to continue to promote the
best interest of our company.
The 2000 Plan allows our board of directors to grant stock options or
issue stock bonuses from time to time to our employees, officers, directors,
and consultants. Options granted under the 2000 Plan will not qualify under
Section 422 of the Internal Revenue Code of 1986 as an incentive stock option.
The 2000 Plan also provides that our board of directors, or a committee,
may issue restricted stock pursuant to restricted stock right agreement
containing such terms and conditions as our board of directors deems
appropriate.
The total number of shares of common stock subject to our options and
grants of restricted stock under the 2000 Plan may not exceed 3.5 million
shares, subject to adjustment in the event of certain capitalizations,
reorganizations, and similar transactions. Options may be exercisable by the
payment of cash or by other means as authorized by the board of directors.
Our board of directors may amend the 2000 Plan at any time, provided that
the board of directors may not amend the 2000 Plan to adversely effect the
rights of participants under the 2000 Plan, without stockholder approval.
OTHER STOCK OPTIONS
We have issued options to acquire 302,500 shares of our common stock to
various employees of e-Net, our U.K. subsidiary. Our board of directors
believes that encouraging these U.K. employees to acquire an equity interest
in our company is in our best interests and provides additional incentives and
motivation toward superior performance for these employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ACQUISITION OF TECHNOLOGY FROM TSI
On January 7, 1999, we acquired certain rights to a Java-based, online
health care management system from TSI, which was formerly known as Sanga
e-Health LLC, in exchange for 41,417,176 shares (post-split) of our common
stock. TSI is a joint venture formed in December 1998 between Sanga
International, Inc. and HealthMed, Inc.
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The rights we acquired from TSI were subject to a software license
agreement between TSI and Sanga International for the subleasing of the
healthcare management system's software to end-users. On January 23, 1999, we
approved and ratified the termination of the software license agreement. The
effect of this termination was the assignment and transfer from Sanga
International to us of all right, title, and interest with respect to Sanga
International's contractual rights and privileges from their agreement with
various healthcare providers for the subleasing of the software. In connection
with the termination, previous funding received by Sanga International from
such healthcare agreements were transferred to us. The previous funding
received from Sanga International was based on certain financing rights owned
by HealthMed, Inc., which resulted in agreements to provide an initial funding
of $1.5 million for accounts receivable.
ACQUISITIONS AND JOINT VENTURES
In March 1999, we acquired all the issued and outstanding stock of e-Net,
formerly known as Palm Technology Holdings Limited, a UK-based company, which
owns all the issued and outstanding stock of U.K. based Relay Business Systems
Ltd. We purchased the stock pursuant to a share acquisition agreement, which
was originally entered into on July 22, 1998 between the shareholders of Palm
Technology and Sanga International, Inc. and subsequently assigned to us.
We paid approximately $2.2 million in cash. We borrowed $1.5 million of
this amount from two private investors and the balance was paid from our
working capital. Sanga International transferred its rights to buy Palm
Technology to us on January 23, 1999, in exchange for three million shares of
our common stock. These shares were contributed by TSI our majority
shareholder, and thus this payment did not dilute us or our stockholders.
Prior to assigning its rights to us, Sanga International, Inc. had paid
approximately $2.4 million to the shareholders of Palm as the initial
installment on the purchase price. John Andrews, our chairman of the board,
president, and chief executive officer, served as president and chief
executive officer of Sanga International through July 30, 1999 and is a
co-manager of TSI, our largest stockholder.
In February 2000, we entered into a preferred provider agreement with
NCFE, one of our significant stockholders, to provide a full suite of
healthcare information services throughout its network of physicians, clinics,
hospitals, and managed care organizations. As part of the terms of the
agreement, NCFE agreed to cancel more than $4.5 million of debt, committed to
fund an additional $5 million, provide us access to their distribution channel
and be the provider of all of their electronic processing needs in exchange
for 9.5 million shares of our common stock.
RELATED PARTY DISCLOSURE
Our President, Chief Executive Officer and Chairman of the Board also
served as President and Chief Executive Officer of Sanga International through
July 30, 1999 and is a Co-Manager of TSI, a significant stockholder of
e-MedSoft.
In December, 1998, NCFE, one of our strategic partners, transferred
$750,000 to Sanga International in accordance with its agreement to provide an
initial funding of $1.5 million for accounts receivable to be derived from
signed Master Agreements and Memorandum of Understanding. On January 23, 1999,
Sanga International assigned and transferred to us all right, title and
interest under or with respect to all of Sanga International's contractual
rights and privileges arising from its agreements with various healthcare
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providers. Additionally, the rights held by Sanga International in and to its
funding agreement with NCFE was assigned to us. In connection with these
activities, the previous funding received by Sanga International from such
healthcare agreements was legally transferred to the us and was included in
other long-term liabilities at March 31, 1999. Subsequent to and arising out
of this assignment, Sanga International transferred $604,970 of the NCFE
funding to us. The remaining balance of $145,030 was reflected as a related
party receivable from Sanga International at March 31, 1999. During the fiscal
year ended March 31,2000, Sanga International filed for bankruptcy and we
wrote-off this receivable. In February 2000, NCFE entered into a Preferred
Provider Agreement with us and as part of the terms of such agreement, the
debt payable to them was converted to equity.
During the period ended March 31, 1999 and 2000 HealthMed, Inc., a member
of TSI paid certain expenses on behalf of us and TSI. In addition, we
reimbursed HealthMed for certain of these expenses and paid certain expenses
on behalf of TSI. As of March 31, 1999 we had total receivable due from
HealthMed and TSI of approximately $15,800. There was no balance due at March
31, 2000.
In addition, prior to the Company's acquisition of e-Net, e-Net paid
certain expenses on the behalf of Sanga's U.K. operations. As of March 31,
1999, the Company had a receivable of $32,433 in this regard. These amounts
were reimbursed to e-Net from the Company during the fiscal year ended March
31, 2000.
During the year ended March 31, 2000, the Company received approximately
$1,277,000 in funding from National Trust Properties, Inc. for the issuance of
shares and debt. The Company's board member and a beneficial shareholder,
Mitchell J. Stein, is also an officer and director (but not owner) of NTP.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The independent accounting firm of Arthur Andersen LLP audited the
financial statements of the Company for the fiscal year ended March 31, 2000,
and has been selected in such capacity for the current fiscal year. At the
direction of the Board of Directors, this appointment is being presented to
the shareholders for ratification or rejection at the Annual Meeting of
Shareholders. If the shareholders do not ratify the appointment of Arthur
Andersen LLP, the appointment of auditors will be reconsidered by the Board of
Directors.
It is expected that representatives of Arthur Andersen LLP will be
present at the meeting and will be given an opportunity to make a statement
if they desire to do so. It is also expected that the representatives will be
available to respond to appropriate questions from shareholders.
On May 6, 1999, Arthur Andersen LLP was engaged as the Company's
independent accountants, and on August 26, 1999, Schumacher & Associates, Inc.
was notified that they were dismissed as the independent accountants of the
Company. Schumacher & Associates, Inc.'s report on the Company's financial
statements for the fiscal years ended May 31, 1997 and May 31, 1998 contained
no adverse opinion or disclaimer of opinion nor were they qualified as to
uncertainty, audit scope or accounting principles, except that Schumacher &
Associates, Inc.'s report on the Company's financial statements for the fiscal
year ended May 31, 1998, contained a qualification concerning the Company's
ability to continue as a going concern. The Company's Board of Directors made
the decision to engage Arthur Andersen LLP. At that time, the Company did not
have an audit committee.
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In connection with the prior audits for the fiscal years ended May 31,
1997 and May 31, 1998, and from May 31, 1998 to August 26, 1999, there were no
disagreements with Schumacher & Associates, Inc. on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure. The Company did not consult with Arthur Andersen LLP with regard
to any matter concerning the application of accounting principles to any
specific transactions, either completed or proposed, or the type of audit
opinion that might be rendered with respect to the Company's financial
statements.
AMENDMENT TO INCREASE AUTHORIZED COMMON STOCK
The Company's Board of Directors has approved, subject to the approval of
the Company's shareholders, an amendment to the Company's Articles of
Incorporation which would increase the number of shares of Common Stock which
the Company may issue from 100,000,000 shares to 200,000,000 shares.
The Board of Directors believes that it is necessary to increase the
number of authorized shares of Common Stock in order for the Company to have
sufficient shares available to meet its needs for current obligations under
outstanding options and warrants, commitments under earn-out provisions of
acquisition agreements, and to be available for other corporate purposes such
as raising additional capital, possible acquisitions, stock dividends, and
other purposes for which the Board of Directors deems advisable to issue
additional shares. As of July 14, 2000, the Company had 77,630,986 shares of
Common Stock outstanding, and had a total of 14,013,167 shares of Common Stock
reserved for issuance upon the exercise of outstanding warrants and for
issuance under the Company's stock plans. The Company also has commitments
under several acquisition agreements to issue additional shares on the
occurrence of certain events.
Assuming that this proposed amendment is approved, and not considering
the possible issuance of shares under the earn-out provisions of the
aquisition agreements the Company would have approximately 108,356,000 shares
of Common Stock authorized, unissued and unreserved, which the Board of
Directors would be able to authorize for issuance for any corporate purpose,
at any time, without obtaining further authorization from the holders of the
Company's Common Stock, unless such authorization is required by applicable
law, regulation or the rules of any stock exchange on which shares of the
Company's Common Stock may then be listed. No specific use of the additional
shares is presently contemplated. Holders of shares of Common Stock of the
Company have no preemptive rights in connection with the issuance of
additional shares of Common Stock.
The affirmative vote of a majority of the outstanding shares of the
Company's Common Stock will be required to approve the proposed amendment to
the Articles of Incorporation increasing the authorized Common Stock.
The Board of Directors recommends a vote FOR the proposed amendment to
the Articles of Incorporation.
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OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not
aware of any other matter to be presented at the Meeting other than as set
forth herein. However, if any other matters are properly brought before the
Meeting, the shares represented by valid proxies will be voted with respect to
such matters in accordance with the judgment of the persons voting them. A
majority vote of the shares represented at the meeting is necessary to approve
any such matters.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ending March 31, 2000,
accompanies this Proxy Statement. The Annual Report is not incorporated into
this Proxy Statement and is not to be considered part of the solicitation
material.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN AUGUST 2001
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in August 2001 must be received at
the offices of the Company, 1300 Marsh Landing Parkway, Suite 106,
Jacksonville, Florida 32250, prior to March 29, 2001, in order to be included
in the Company's proxy statement and proxy relating to that meeting.
JOHN F. ANDREWS, PRESIDENT
Jacksonville, Florida
July 27, 2000
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PRELIMINARY COPY
P R O X Y
E-MEDSOFT.COM
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John F. Andrews with the power to appoint
a substitute, and hereby authorizes him to represent and to vote as designated
below, all the shares of common stock of e-MedSoft.com held of record by the
undersigned on July 27, 2000, at the Special Meeting of Shareholders to be
held on September 7, 2000, or any adjournment thereof.
1. Election of Directors:
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] WITHHOLD authority to vote for all the nominees listed below:
John F. Andrews Masood Jabbar
W. Cedric Johnson Sam J.W. Romeo
Mitchell J. Stein Donald H. Ayers
[INSTRUCTION: To withhold authority to vote for an individual nominee, cross
out that nominee's name above.]
2. The ratification of the appointment of Arthur Andersen LLP as the
Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The approval of an Amendment to the Company's Articles of
Incorporation to increase the number of shares of authorized Common Stock from
100,000,000 to 200,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To transact such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS TO
THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, Proxy Statement and Annual Report.
Dated: _____________, 2000.
_____________________________________
_____________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians and attorneys should indicate when
signing. Attorneys should submit powers of attorney.
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF E-MEDSOFT.COM
PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED PRE-ADDRESSED ENVELOPE. THE
GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND
THE MEETING.
