<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
February 29, 2000
------------------------------------------------
Date of Report (date of earliest event reported)
e-MedSoft.com
----------------------------------------------------
Exact name of Registrant as Specified in its Charter
Nevada 1-15587 84-1037630
- --------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
1300 Marsh Landing Parkway, Suite 106, Jacksonville, FL 32250
-------------------------------------------------------------
Address of Principal Executive Offices, Including Zip Code
(904) 543-1001
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL INFORMATION OF BUSINESSES ACQUIRED. The following
financial statements for VirTx, Inc. as of December 31, 1999, and for the
period from January 27, 1999 (date of inception) to December 31, 1999, are
filed herewith:
INDEX
PAGE
Financial Statements For the Period from January 27,
1999 (Date of Inception) to December 31, 1999,
Together With Independent Auditors' Report:
Independent Auditors' Report .............................. F-1
Balance Sheet - December 31, 1999 ......................... F-2
Liabilities and Stockholders' Deficit ..................... F-3
Statement of Operations for the Period from
January 27, 1999 (Date of Inception) to December 31,
1999 ...................................................... F-4
Statement of Stockholders' Deficit for the Period
from January 27, 1999 (Date of Inception) to
December 31, 1999 ......................................... F-5
Statement of Cash Flows for the Period from January 27,
1999 (Date of Inception) to December 31, 1999 ............. F-6
Notes to Financial Statements for the Period from
January 27, 1999 (Date of Inception) to December 31,
1999 ...................................................... F-7-F-14
(b) PRO FORMA FINANCIAL INFORMATION. Unaudited Pro Forma Financial
Statements for e-MedSoft.com and VirTx, Inc. as of December 31, 1999, and for
the nine months ended December 31, 1999 and for the four months ended March
31, 1999 are filed herewith on pages F-15 to F-19.
(c) EXHIBITS.
Exhibit
Number Description Location
------- ----------- --------
10.1 Corrected Agreement and Plan of Previously filed
Merger and Reorganization dated
February 21, 2000, among
e-MedSoft.com, VirTx Acquisition
Corporation and VirTx, Inc.
23 Consent of Independent Accountants Filed electronically
herewith
2
<PAGE>
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: May 12, 2000 By:/s/ Margaret A. Harris
Margaret A. Harris, Chief Financial
Officer
3
<PAGE>
CARPENTER KUHEN & SPRAYBERRY
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Virtx, Inc.
Camarillo, California
We have audited the accompanying balance sheet of Virtx, Inc. as of December
31, 1999 and the related statements of operations, stockholders' deficit and
cash flows for the period from January 27, 1999 (date of inception) to
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Virtx, Inc. as of December
31, 1999, and the results of its operations and cash flows for the initial
period then ended in conformity with generally accepted accounting principles.
/s/ Carpenter Kuhen & Sprayberry
Oxnard, California
April 5, 2000
F-1
<PAGE>
VIRTX, INC.
BALANCE SHEET - DECEMBER 31, 1999
ASSETS
CURRENT ASSETS:
Cash $ 50,971
Accounts receivable (net of allowance
for doubtful accounts of $0) 102,985
Inventory 94,729
Financing fees (net of $88,889 of
accumulated amortization) 444,445
--------
Total current assets 693,130
PROPERTY AND EQUIPMENT, AT COST:
Computer equipment $138,805
Furniture and fixtures 89,879
Office equipment 28,468
Leasehold improvements 6,636
Software 4,309
--------
268,097
Less - Accumulated depreciation (25,872) 242,225
-------- --------
DEPOSITS 24,235
--------
$959,590
========
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
VIRTX, INC.
BALANCE SHEET - DECEMBER 31, 1999
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 205,429
Accrued payroll expenses 308,436
Billings in excess of costs and
estimated earnings on uncompleted
contracts 210,511
Accrued interest 24,106
Deposits 12,185
Notes payable - stockholders 159,012
Notes payable (net of unamortized
discount of $79,311) 720,689
----------
Total current liabilities 1,640,368
COMMITMENTS AND CONTINGENCIES --
STOCKHOLDERS' DEFICIT:
Common stock - $0.0005 par value
Authorized - 10,000,000 shares
Issued and outstanding - 6,163,334
shares $ 3,082
Additional paid-in capital 628,200
Retained deficit (1,312,060)
-----------
Total stockholders' deficit (680,778)
----------
$ 959,590
==========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
VIRTX, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 27, 1999 (DATE OF INCEPTION)
TO DECEMBER 31, 1999
REVENUE $ 758,194
COST OF REVENUE 766,024
-----------
Gross margin (7,830)
GENERAL AND ADMINISTRATIVE EXPENSES 1,227,114
-----------
Loss from operations (1,234,944)
INTEREST EXPENSE 77,116
-----------
Net loss $(1,312,060)
===========
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
VIRTX, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM JANUARY 27, 1999 (DATE OF INCEPTION)
TO DECEMBER 31, 1999
Additional Total
Common Stock Paid-In Retained Stockholders'
Shares Amount Capital Earnings Deficit
--------- ------ ---------- ----------- -------------
Balance -
January 27,
1999 (date
of inception) -- $ -- $ -- $ -- $ --
Sale of stock 2,650,000 2,650 -- -- 2,650
Stock issued
for property
and equipment 125,000 125 -- -- 125
2-for-1 stock
split 2,775,000 -- -- -- --
Detachable
stock warrants
issued in
connection with
notes payable -- -- 15,173 -- 15,173
Common stock
issued in
connection with
notes payable 533,334 267 533,067 -- 533,334
Common stock
issued in
connection
with notes
payable 80,000 40 79,960 -- 80,000
Net loss -- -- -- (1,312,060) (1,312,060)
--------- ------ -------- ----------- -----------
Balance,
December 31,
1999 6,163,334 $3,082 $628,200 $(1,312,060) $ (680,778)
========= ====== ======== =========== ===========
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
VIRTX, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 27, 1999 (DATE OF INCEPTION)
TO DECEMBER 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,312,060)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Non-cash items included in net income:
Depreciation and amortization 130,623
Net change in operating assets and liabilities 538,718
-----------
Net cash used in operating activities (642,719)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (267,972)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable - stockholders 159,012
Borrowings on notes payable 800,000
Issuance of common stock 2,650
-----------
Net cash provided by financing activities 961,662
-----------
NET INCREASE IN CASH 50,971
CASH, JANUARY 27, 1999 (DATE OF INCEPTION) --
-----------
CASH, END OF PERIOD $ 50,971
===========
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
VIRTX, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 27, 1999 (DATE OF INCEPTION)
TO DECEMBER 31, 1999
(1) Summary of Accounting Policies
This summary of accounting policies of Virtx, Inc. (the "Company") is
presented to assist in understanding the Company's financial statements. The
financial statements and notes are the representation of management who is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles.
a) Basis of Accounting
The Company reports on the accrual method of accounting. Revenue on
fixed-price contracts is recognized on the percentage-of-completion method for
financial statement purposes. The percentage-of-completion method used is
based on costs incurred in relation to total estimated costs. This method is
used because management considers costs incurred to be the best available
measure of progress on these contracts. Because of the inherent uncertainties
in estimating costs, it is at least reasonably possible that the Company's
estimates of costs and revenues will change in the near-term. Revenue from
maintenance contracts is recognized on a straight-line basis over the contract
period.
b) Business Activity and Concentrations of Credit Risk
The Company is a December year-end corporation incorporated in the
state of Delaware. It provides video, voice and data communications equipment
and services to the healthcare industry.
The Company maintains its cash balances in a bank in Ventura County.
Periodically throughout the year the Company has maintained balances in excess
of federally insured amounts. At December 31, 1999, the Company had uninsured
balances of $0.
c) Major Customers
The Company had one major customer that accounted for approximately
86% of total revenues for the period ended December 31, 1999. At December 31,
1999, accounts receivable from this customer totaled approximately 26% of
total accounts receivable.
d) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting year. Actual results could differ from those estimates.
e) Inventory
Inventory, consisting of raw materials, is stated at the lower of
cost or market and is determined on a first-in, first-out basis.
F-7
<PAGE>
<PAGE>
f) Property, Equipment, and Depreciation
Property is recorded at cost. Depreciation of property and equipment
is provided using the straight-line method over the following estimated useful
lives:
Estimated
Asset Classification Useful Life
Computer equipment 5 Years
Furniture and fixtures 7 Years
Office equipment 5-7 Years
Leasehold improvements 7 Years
Software 3 Years
Expenditures for maintenance and repairs are charged against
operations as incurred.
(2) Financing Fees
As discussed in Note 6(b), financing fees incurred with the acquisition of the
Company's debt were paid by issuing 533,334 shares of the Company's common
stock with a fair market value of $1.00 per share. The loan fees have been
deferred and are being amortized over the life of the debt.
(3) Billings, Costs and Estimated Earnings on Uncompleted Contracts
Billings, costs and estimated earnings on uncompleted contracts for the year
ended December 31, 1999, are as follows:
Costs incurred to date on uncompleted
contracts $ 760,298
Gross (loss) recognized (2,448)
---------
757,850
Less - Billings to date (968,361)
---------
$(210,511)
=========
Included in the accompanying balance
sheet under the following captions:
Billings in excess of costs and estimated
earnings on uncompleted contracts $(210,511)
=========
F-8
<PAGE>
(4) Notes Payable - Stockholders
Note payable to Calvin Carrera, a stockholder,
due on April 1, 2000, with interest calculated
at 10% annually, compounded daily, unsecured. $ 62,663
Note payable to Murray Firestone, a stockholder,
due on April 1, 2000, with interest calculated
at 10% annually, compounded daily, unsecured. 45,500
Note payable to Calvin Carrera, a stockholder,
due on April 1, 2000, with interest calculated
at the applicable federal rates, unsecured. 22,425
Note payable to Jim Elder, a stockholder, due
on April 1, 2000, with interest calculated at
the applicable federal rates, unsecured. 19,946
Note payable to Murray Firestone, a stockholder,
due on April 1, 2000, with interest calculated
at the applicable federal rates, unsecured. 8,478
---------
$ 159,012
=========
(5) Notes Payable
Notes payable to the following companies/individuals, due in October 2000,
with interest compounded annually at 10%, unsecured. The notes become fully
due and payable if, before the stated due dates, the Company consummates
equity financing of at least five million dollars. The notes were issued at a
discount of $95,173. The discount results in an imputed interest rate of
24.85% and is being amortized using the effective interest rate method over
the lives of the loans. The $95,173 discount consists of the fair market
value of 80,000 shares of the Company's common stock and 133,328 warrants to
purchase common stock that were issued with the notes payable.
Unamortized
Principal Discount Net
--------- ------------ ---------
Augustine Fund, L.P. $400,000 $39,655 $360,345
Devonshire Management Corporation 100,000 9,914 90,086
Harvey Bibicoff 100,000 9,914 90,086
Paul Soll 100,000 9,914 90,086
Rock Bay Management Group 100,000 9,914 90,086
-------- ------- --------
$800,000 $79,311 $720,689
======== ======= ========
F-9
<PAGE>
(6) Commitments and Contingencies
a) Operating Leases
The Company leases its office under an operating lease that expires
June 30, 2002. Rent expense under this lease for the period ended December
31, 1999 was $44,255.
Minimum future rental payments under this non-cancelable operating
lease are:
Years ending December 31, 2000 $ 70,620
2001 70,620
2002 35,310
--------
$176,550
========
The Company leases office equipment under an operating lease that
expires May 31, 2004. Rent expense under this lease for the period ended
December 31, 1999 was $3,283.
Minimum future rental payments under this non-cancelable operating
lease are:
Years ending December 31, 2000 $ 5,628
2001 5,628
2002 5,628
2003 5,628
2004 2,345
--------
$ 24,857
========
b) Consulting Agreement
The Company entered into a consulting agreement during the year ended
December 31, 1999 with Strategic Capital Consultants, Inc. (the "Consultant"),
under which the Consultant will provide to the Company management, financial
consulting, and advisory services. In consideration of the services to be
provided for the Company by the consultant, the Company agreed to issue shares
of the Company's common stock and pay amounts in cash in accordance with the
following terms:
i) 533,334 shares will be issued and 10% of the gross proceeds will
be paid in cash simultaneously with, and as a condition of the closing of a
bridge financing of at least $250,000, where the Company has received such
funds from a party introduced to the Company by the Consultant.
ii) 533,332 shares will be issued simultaneously with the closing of
a reverse merger between the Company and another publicly traded entity
introduced to the Company by the Consultant.
iii) 533,332 shares will be issued and 13% of the gross proceeds
will be paid in cash simultaneously with the closing of a private placement of
the Company's securities of at least $5,000,000 with a party introduced to the
Company by the Consultant.
F-10
<PAGE>
The consulting agreement expires in September 2000. During the year
ended December 31, 1999, 533,334 shares of stock were issued to Strategic
Capital Consultants and $80,000 was paid in consulting fees in accordance with
Paragraph (i) above.
As explained in Note 2, such costs incurred are being amortized over
the life of the debt.
(7) Stock Split
On September 23, 1999, the Board of Directors authorized a 2-for-1 stock
split, thereby increasing the number of issued and outstanding shares to
5,550,000 and decreasing the par value of each share to $0.0005.
(8) Outstanding Warrants
During the year ended December 31, 1999, the Company issued detachable
warrants in connection with the issuance of debt. Upon surrender of a
warrant, the holder is entitled to purchase one share of the Company's common
stock at a strike price of $3 per share. The warrants were exercisable
immediately upon issuance. At December 31, 1999, there were 133,328 warrants
outstanding. The warrants will expire in October 2004.
The stock warrants are valued at $15,173, or $.1138 per share. The fair value
of the stock warrants was determined using the Black-Scholes option pricing
formula. The following assumptions were used in determining the fair value of
the warrants:
Stock price $1.00
Expected annual volatility 58.99%
The risk-free interest rate 6.47%
Dividend yield 0.00%
Expected life 30 months
The fair value of the stock warrants is treated as a component of the discount
on the related notes payable, which is amortized using the effective interest
rate method over the life of the notes.
(9) Income Taxes
Deferred Income Taxes
The difference between the financial statement and tax bases of assets
and liabilities is determined annually. These differences result from the use
of the accrual basis percentage-of-completion method of accounting for
financial statement purposes and the completed-contract method of accounting
for tax purposes, the use of different depreciation methods for financial
statement and tax return purposes, accrued interest expense, accrued payroll
expenses and net operating loss carryovers. Valuation allowances are
established, if necessary, to reduce deferred tax asset accounts to the
amounts that would be more likely than not be realized. At December 31, 1999,
the valuation allowance totaled $506,956. Income tax expense is the current
tax payable or refundable for the year, plus or minus the net change in the
deferred tax asset and liability accounts. At December 31, 1999, the Company
had a federal net operating loss carryover of $1,018,774, which expires in
2019, and a California net operating loss carryover of $1,017,974, which
expires in 2007.
F-11
<PAGE>
Total income tax expense differs from the expected tax expense (computed
by multiplying the United States federal statutory rate of approximately 35
percent by net income) as a result of the following:
Computed "expected" tax benefit $(446,100)
State tax benefit (115,986)
Non-deductible expenses 1,772
Valuation allowance 560,314
---------
$ --
=========
The Company's total deferred tax assets, deferred tax liabilities, and
deferred tax asset valuation allowances at December 31, 1999 are as follows:
Total deferred tax assets $ 560,314
Deferred tax valuation allowance (560,314)
---------
Net deferred tax asset $ --
=========
(10) Profit Sharing Plan
The Company has a qualified profit sharing plan with a deferred compensation
provision. All employees are eligible and are enrolled in the plan on the
first payroll of the month following his or her hire date. An employee may
contribute any amount up to 20% of pay on a before-tax basis. The Company's
contributions are discretionary and are determined annually by the Board of
Directors. The Company did not make any contributions during the period ended
December 31, 1999.
(11) Issuance of Stock for Property and Equipment
The Company issued 125,000 shares of common stock to Carespace, LLC, along
with $35,000 to purchase furniture, fixtures and computer equipment on
February 26, 1999.
F-12
<PAGE>
(12) Statement of Cash Flows - Supplemental Disclosures
The net change in operating assets and liabilities shown on the statement of
cash flows consists of the following:
(Increase) Decrease:
Accounts receivable $(102,985)
Inventory (94,729)
Deposits (24,235)
Increase (Decrease):
Accounts payable 205,429
Accrued payroll expenses 308,436
Billings in excess of costs and
estimated earnings on uncompleted
contracts 210,511
Accrued interest 24,106
Deposits 12,185
--------
$538,718
========
Operating activities reflect:
Interest paid $ 34,494
========
Income tax paid $ -
========
Non-cash investing and financing transactions:
Purchase of property and equipment $268,097
Issuance of common stock (125)
--------
Cash paid for purchase of property
and equipment $267,972
========
Issuance of common stock $ 3,082
Increase in additional paid-in capital 628,200
Financing fees (533,334)
Discount on notes payable (95,173)
Property and equipment (125)
--------
Cash received for issuance of
common stock $ 2,650
========
F-13
<PAGE>
(13) Subsequent Events
Merger
On February 21, 2000, the Company entered into an Agreement and Plan of
Merger and Reorganization with e-MedSoft.com, a Nevada Corporation, and Virtx
Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of
e-MedSoft.com.
e-MedSoft.com is in the health care information services industry.
e-MedSoft.com was initially organized in Nevada on August 25, 1986, in order
to evaluate, structure and complete a merger with, or acquisition of,
prospects consisting of private companies, partnerships or sole
proprietorships. On January 7, 1999, the e-MedSoft.com acquired from TSI
Technologies and Holding, LLC, the rights to a JAVA-based, on-line health care
management system. On March 19, 1999, e-MedSoft.com acquired all of the
issued and outstanding stock of e-Net Technology Ltd., a UK based company.
e-Net is a diversified Web Technology company, providing consulting services,
training, technical support, computer software and computer hardware to a
broad range of customers.
In accordance with the merger agreement, Virtx Acquisition Corporation
was merged with and into Virtx, Inc. As a result of the merger, the separate
corporate existence of Virtx Acquisition Corporation ceased and Virtx, Inc.
continued as the surviving corporation of the merger. As a result of this
merger, e-MedSoft.com owns all the issued and outstanding stock of Virtx, Inc.
and shall have full legal control over Virtx, Inc.
The 6,163,334 issued and outstanding shares of Virtx, Inc. common stock
prior to the merger were converted into 1,854,276 restricted shares of
e-MedSoft.com common stock.
After the date of the merger and through April 5, 2000, e-MedSoft.com
provided Virtx, Inc. with $290,000 to pay off shareholder loans, accrued
payroll expenses and other operating expenses.
This merger was not as a result of the consulting agreement discussed in
Note 6(b).
F-14
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS.
The following unaudited pro forma combined financial statements are
derived from the historical financial statements of e-MedSoft.com and Virtx,
Inc. and give effect to the acquisition of Virtx, Inc. (the "Virtx
Acquisition") by the registrant on February 29, 2000. The unaudited pro forma
combined balance sheet as of December 31, 1999 and the unaudited pro forma
combined statements of operations for the nine months ended December 31, 1999
and the four months ended March 31, 1999 and the period from January 27, 1999
(date of inception) to March 31, 1999 reflect the Virtx Acquisition as if it
had occurred on December 31, 1999 for the unaudited pro forma combined balance
sheet and at the beginning of each period for the unaudited pro forma combined
statements of operations. The unaudited pro forma combined 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. The unaudited pro forma
combined financial statements should be read in conjunction with the
historical consolidated financial statements of e-MedSoft.com and Virtx, Inc.,
together with the related notes thereto.
F-15
<PAGE>
e-MedSoft.com
Unaudited Proforma Combined Balance Sheet
December 31, 1999
<TABLE>
<CAPTION>
Proforma Proforma
e-MedSoft Adjustments (1) Combined
(unaudited) VirTx, Inc. DR. CR. (unaudited)
------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 6,406,570 $ 50,971 $ - $ - $ 6,457,541
Accounts Receivable, net 6,904,285 102,985 - - 7,007,270
Inventory 1,436,503 94,729 - - 1,531,232
Receivables from Related Parties 297,903 - - - 297,903
Other Current Assets 914,739 444,445 - 444,445 (2) 914,739
------------ ----------- ----------- ----------- ------------
15,960,000 693,130 - 444,445 16,208,685
------------ ----------- ----------- ----------- ------------
Property, Plant and Fixtures, net 1,862,773 242,225 - - 2,104,998
Other Assets
Goodwill 7,477,447 - 30,586,055 (2) - 38,063,502
Investment in Subsidiary
Software System Investment 7,325,106 - - - 7,325,106
Deferred Financing Costs - - - - -
Other Assets 70,092 24,235 - - 94,327
------------ ----------- ----------- ----------- ------------
TOTAL ASSETS $ 32,695,418 $ 959,590 $30,586,055 $ 444,445 $ 63,796,618
============ =========== =========== =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 9,859,970 $ 205,429 - - $ 10,065,399
Accruals and Other Liabilities 1,974,936 555,238 - - 2,530,174
Bank Credit Facility 806,184 - - - 806,184
Current Maturities of Bridge
Financing/Capital leases 4,246,307 - - - 4,246,307
Notes payable - 879,701 720,689 (2) - 159,012
------------ ----------- ----------- ----------- ------------
16,887,397 1,640,368 720,689 - 17,807,076
------------ ----------- ----------- ----------- ------------
Long Term Liabilities
Capital Leases 783,987 - - - 783,987
Bridge Financing 288,932 - - - 288,932
Other long-term liabilities 1,193,581 - - - 1,193,581
------------ ----------- ----------- ----------- ------------
2,266,500 - - - 2,266,500
------------ ----------- ----------- ----------- ------------
Minority Interest in Consolidated
Subsidiary 54,454 - - - 54,454
Shareholders' Equity
Common Shares 57,871 3,082 3,082 (4) 1,854 (3) 59,725
Paid in Capital 20,962,359 628,200 628,200 (4) 30,179,667 (3) 51,142,026
Retained Earnings (Deficit) (7,533,163) (1,312,060) - 1,312,060 (4) (7,533,163)
------------ ----------- ----------- ----------- ------------
13,487,067 (680,778) (631,282) 31,493,581 43,668,588
------------ ----------- ----------- ----------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 32,695,418 $ 959,590 $ 1,351,971 $31,493,581 $ 63,796,618
============ =========== =========== =========== ============
The accompanying notes are an integral part of these unaudited proforma combined financial statements.
</TABLE>
F-16
<PAGE>
e-MedSoft.com
Unaudited Proforma Combined Statement of Operations
For the Nine Months ended December 31, 1999
<TABLE>
<CAPTION>
Proforma Proforma
e-MedSoft VirTx, Inc.(5) Adjustments (1) Combined
(unaudited) (unaudited) DR. CR. (unaudited)
----------- ----------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $25,944,826 $ 620,341 $ - $ - $26,565,167
Cost of Sales 20,276,340 626,747 - - 20,903,087
----------- ----------- ----------- --------- ------------
Gross Profit 5,668,486 (6,406) - - 5,662,080
----------- ----------- ----------- --------- ------------
Operating Expenses
Research and development 1,341,095 - - - 1,341,095
Sales and marketing 2,703,805 - - - 2,703,805
General and Administrative 4,847,599 1,003,348 135,000 (6) - 5,985,947
Non cash compesation 1,103,337 - - - 1,103,337
Depreciation and amortization 1,104,153 - 3,277,077 (7) - 4,381,230
Other Operating Costs - - - - -
----------- ----------- ----------- --------- ------------
11,099,989 1,003,348 3,412,077 - 15,515,414
----------- ----------- ----------- --------- ------------
Loss from operations (5,431,503) (1,009,754) (3,412,077) - (9,853,334)
Interest & Other expense 1,712,327 63,095 - 132,732 (8) 1,642,690
----------- ----------- ----------- --------- ------------
Loss before income taxes,
extraordinary item and minority
interest (7,143,830) (1,072,849) (3,412,077) 132,732 (11,496,024)
Extraordinary income 357,152 - - - 357,152
----------- ----------- ----------- --------- ------------
Loss before income taxes and
minority interest (6,786,678) (1,072,849) (3,412,077) 132,732 (11,138,872)
Tax benefit (expense) 146,875 (655) - - 146,220
Minority Interest, net of tax 8,620 - - - 8,620
----------- ----------- ----------- --------- ------------
Net income (loss) $(6,631,183) $(1,073,504) $(3,412,077) $ 132,732 $(10,984,032)
=========== =========== =========== ========= ============
Net income (loss) per share $ (0.12) $ (0.20)
Average Weighted Shares
Outstanding 53,202,779 1,854,276 - - 55,057,055
The accompanying notes are an integral part of these unaudited proforma combined financial statements.
</TABLE>
F-17
<PAGE>
e-MedSoft.com
Unaudited Proforma Combined Statement of Operations
For the Four Months Ended March 31, 1999
<TABLE>
<CAPTION>
Proforma Proforma
e-MedSoft VirTx, Inc.(5) Adjustments (1) Combined
(unaudited) (unaudited) DR. CR.
----------- ----------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 2,649,563 $ 137,853 $ - $ - $ 2,787,416
Cost of Sales 1,998,505 139,277 - - 2,137,782
----------- ----------- ----------- ------- ------------
Gross Profit 651,058 (1,424) - - 649,634
----------- ----------- ----------- ------- ------------
Operating Expenses
Research and development 38,619 - - - 38,619
Sales and marketing 188,340 - - - 188,340
General and administrative 767,017 222,966 30,000 (6) - 1,019,983
Depreciation and amortization 46,303 - 728,239 (7) - 774,542
----------- ----------- ----------- ------- ------------
1,040,279 222,966 758,239 - 2,021,484
----------- ----------- ----------- ------- ------------
Operating Loss (389,221) (224,390) (758,239) - (1,371,850)
Interest & Other expense 376,468 14,021 - 29,496 (8) 360,993
----------- ----------- ----------- ------- ------------
Pre tax income (loss) (765,689) (238,411) (758,239) 29,496 (1,732,843)
Provision for taxes 138,928 145 - - 139,073
----------- ----------- ----------- ------- ------------
Net income (loss) $ (904,617) $ (238,556) $ (758,239) $29,496 $ (1,871,916)
=========== =========== =========== ======= ============
Net income (loss) per share $ (0.02) $ (0.05)
Average Weighted Shares
Outstanding 38,061,371 1,854,276 - - 39,915,647
The accompanying notes are an integral part of these unaudited proforma combined financial statements.
</TABLE>
F-18
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
GENERAL
1. The adjustments included in the unaudited pro forma combined
financial statements are based upon currently available information and upon
certain assumptions that e-MedSoft.com's management believes are reasonable.
e-MedSoft.com accounted for the Virtx Acquisition as a purchase of Virtx by
e-MedSoft.com. Virtx's assets and liabilities were recorded at their initial
estimated fair market value, less certain adjustments, as of the date of the
Virtx Acquisition. There can be no assurance that the actual adjustments will
not differ significantly from the pro forma adjustments reflected herein.
2. The following table details the allocation of the Virtx purchase
price:
Virtx purchase price $30,181,521
Acquisition costs 0
-----------
Adjusted purchase price $30,181,521
Add: Virtx negative equity 680,778
Deferred financing
fees written off 444,445
Less: Notes payable
converted to equity (720,689)
-----------
Goodwill $30,586,055
===========
The allocation of the purchase price of Virtx is preliminary and will be
finalized upon completion of asset valuations. In addition, e-MedSoft.com is
still evaluating certain obligations of Virtx prior to the acquisition and
further adjustments to the preliminary purchase price may result.
The goodwill will be amortized using the straight-line method over a
period of 7 years.
3. Reflects the issuance of 1.854 million restricted shares of
e-MedSoft.com to the former stockholders of Virtx, Inc.
4. Reflects the elimination of Virtx's historical stockholders' equity
balance.
5. The unaudited combined pro forma statement of operations include
e-MedSoft.com unaudited operations for the nine months ended December 31, 1999
and the four months of operations ended March 31, 1999 that were derived from
e-MedSoft.com's audited March 31, 1999 consolidated financial statements. The
statement of operations for Virtx, Inc. included in the pro forma is for the
nine months ended December 31, 1999 and for the period from January 27, 1999
(date of inception) to March 31, 1999.
6. Represents the increase in executive compensation as a result of
the acquisition.
7. Represents the amortization of goodwill using the straight-line
method over a period of 7 years.
8. Represents savings in amortization of deferred financing costs and
interest on notes payable.
F-19
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of e-MedSoft.com:
We hereby consent to the incorporation of our report included in this Form 8-K
into e-MedSoft.com's previously filed Registration Statement File Nos.
333-34028, 333-34026 and 333-33602.
/s/ Carpenter Kuhen & Sprayberry
Oxnard, California
May 11, 2000
