<PAGE> 1
PRICING SHEET
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment #1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 23, 1996
-----------------------
Simione Central Holdings, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-22162 22-3209241
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(State or other (Commission) (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
6600 Powers Ferry Road, Atlanta, Georgia 30339
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (770) 644-6500
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InfoMed Holdings, Inc.
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(Former name or former address, if changed since last report)
<PAGE> 2
This amendment to InfoMed Holdings, Inc. Form 8-K dated October 23,
1996 is being filed to provide the information required by Item 7, Financial
Statements, Pro Forma Financial Information and Exhibits, which pursuant to
Section 7(a)(4) of the Instructions to the Current Report on Form 8-K permits
the registrant to file the required financial statements of the business
acquired and pro forma financial information within 60 days of the original
Form 8-K.
2
<PAGE> 3
Item 2. Acquisition of Assets.
On October 8, 1996 (the "Effective Date"), InfoMed Holdings, Inc. ("InfoMed")
merged its wholly-owned subsidiary InfoSub, Inc. with Simione Central Holding,
Inc ("Simione"). In connection therewith, each issued and outstanding share of
Simione common stock was converted into and exchanged for the right to receive
.22021 shares of InfoMed common stock (the "Exchange Ratio") as of the
Effective Date. InfoMed issued 7,918,530 common shares to Simione's
shareholders pursuant to the merger. In addition, (1) each of the outstanding
shares of InfoMed Class A Convertible Preferred stock was converted into and
exchanged for shares of InfoMed Common stock and (2) all outstanding options
and warrants to purchase Simione common stock as of the Effective Date were
converted into the right to purchase shares of InfoMed common stock; provided
that the number of shares to be so purchased and the respective exercise prices
thereof have been adjusted by the Exchange Ratio. For more information
regarding the merger, see InfoMed's current reports on Form 8-K dated September
13, 1996 and October 23, 1996.
The merger will be accounted for as a reverse purchase under the purchase
method of accounting and that, for accounting purposes, Simione will be
regarded as having acquired InfoMed. The historical financial statements of
Simione shall become the historical financial statements of InfoMed and shall
include the business of both companies from the Effective Date. Simione has
been on a December 31 fiscal year end, and therefore, the fiscal year end of
the registrant will become December 31. In addition, the name of the holding
company was changed to Simione Central Holdings, Inc. effective December 19,
1996.
Prior to the merger and effective January 1, 1996, Simione had purchased the
assets of Simione & Simione, CPAs - Consulting Division (A Division of Simione
and Simione, CPAs, a Partnership) ("S & S") for $2,000,000. This acquisition
was accounted for by Simione using the purchase method of accounting.
Item 7. Financial Statements and Pro Forma Financial Information.
(a) Financial Statements of Businesses Acquired.
(1) Audited Financial Information
(a) Simione Central Holding, Inc. Consolidated Balance
Sheets as of December 31, 1995 and 1994, and the related
Consolidated Statements of Operations, Shareholders'
Equity (Deficit), and Cash Flows for the years ended
December 31, 1995, 1994, and 1993, Notes to Consolidated
Financial Statements, and Report of Independent Auditors.
(b) Simione & Simione, CPAs - Consulting Division (A
Division of Simione & Simione, CPAs, a Partnership)
Statements of Net Assets as of December 31, 1995 and
1994, and the Statements of Divisional Operations,
Divisional Equity, and Divisional Cash Flows for the
years ended December 31, 1995, 1994, and 1993, Notes
to Financial Statements, and Independent Auditor's
Report.
<PAGE> 4
(2) Unaudited Interim Financial Information
(a) Simione Central Holding, Inc. Condensed Consolidated
Balance Sheet (unaudited) as of September 30, 1996.
(b) Simione Central Holding, Inc. Condensed Consolidated
Statements of Operations (unaudited) for the nine
months ended September 30, 1996 and 1995.
(c) Simione Central Holding, Inc Consolidated Statement of
Shareholders' Equity (unaudited) for the nine months
ended September 30, 1996 and 1995.
(d) Simione Central Holding, Inc. Condensed Consolidated
Statements of Cash Flows (unaudited) for the nine
months ended September 30, 1996 and 1995.
(b) Pro Forma Financial Information.
(1) Simione Central Holdings, Inc. (formerly InfoMed Holdings,
Inc.) Pro Forma Condensed Combined Balance Sheet (unaudited)
as of September 30, 1996.
(2) Simione Central Holdings, Inc. (formerly InfoMed Holdings,
Inc.) Pro Forma Condensed Combined Statement of Operations
(unaudited) for the nine months ended September 30, 1996.
(3) Simione Central Holdings, Inc. (formerly InfoMed Holdings,
Inc.) Pro Forma Condensed Combined Statement of Operations
(unaudited) for the twelve months ended December 31, 1995.
The pro forma condensed combined balance sheet (unaudited) as of September 30,
1996 gives effect to the acquisition of InfoMed by Simione as if it had
occurred at that date. The pro forma condensed combined statements of
operations (unaudited) for the year ended December 31, 1995 and for the nine
months ended September 30, 1996 give effect to the acquisition of InfoMed by
Simione and the acquisition of S & S by Simione as if the acquisitions had
occurred on January 1, 1995.
The pro forma information is based upon the historical financial information of
the companies. Management is in the process of evaluating the fair value of
the InfoMed assets acquired and liabilities assumed. These pro forma
statements may not be indicative of the results that actually would have
occurred if the combination had occurred on the dates indicated or which may be
obtained in the future.
The pro forma financial statements should be read in conjunction with the
financial statements and notes thereto of Simione Central Holding, Inc.,
Simione & Simione, CPAs-Consulting Division (A Division of Simione & Simione,
CPAs, a Partnership), and InfoMed Holdings, Inc.
<PAGE> 5
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.
SIMIONE CENTRAL HOLDINGS, INC.
------------------------------
(Registrant)
/s/ Lori Nadler Siegel
Dated: December 23, 1996 ------------------------------
Lori Nadler Siegel
Chief Financial Officer
<PAGE> 6
Consolidated Financial Statements
Simione Central Holding, Inc.
Years ended December 31, 1995, 1994, and 1993
with Report of Independent Auditors
<PAGE> 7
Simione Central Holding, Inc.
Consolidated Financial Statements
Years ended December 31, 1995, 1994, and 1993
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors................................................. 1
Audited Consolidated Financial Statements
Consolidated Balance Sheets.................................................... 2
Consolidated Statements of Operations.......................................... 4
Consolidated Statements of Shareholders' Equity (Deficit)...................... 5
Consolidated Statements of Cash Flows.......................................... 6
Notes to Consolidated Financial Statements..................................... 7
</TABLE>
<PAGE> 8
[ERNST & YOUNG LLP LETTERHEAD]
Report of Independent Auditors
The Board of Directors
Simione Central Holding, Inc.
We have audited the accompanying consolidated balance sheets of Simione Central
Holding, Inc. as of December 31, 1995 and 1994, and the related consolidated
statements of operations, shareholders' equity (deficit), and cash flows for
each of the three years in the period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Simione Central Holding, Inc. as of December 31, 1995 and 1994, and the
consolidated results of its operations and cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
September 6, 1996
<PAGE> 9
Simione Central Holding, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
----------------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 323,023 $ 462,598
Accounts receivable 761,557 856,917
Notes receivable from officer 252,075 -
Other assets 30,360 20,174
----------------------
Total current assets 1,367,015 1,339,689
Computer software 424,000 -
Other 36,831 -
----------------------
Total assets $1,827,846 $1,339,689
======================
</TABLE>
2
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<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
----------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 59,834 $ 71,248
Due to Central Health Holding Company, Inc.
(CHHC) 1,076,855 2,079,559
Accrued expenses 657 8,428
Accrued contribution to Employee Stock
Ownership Plan 40,894 17,736
----------------------
Total current liabilities 1,178,240 2,176,971
Commitments and contingencies
Shareholders' equity (deficit) 649,606 (837,282)
----------------------
Total liabilities and shareholders' equity (deficit) $1,827,846 $1,339,689
======================
</TABLE>
See accompanying notes.
3
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Simione Central Holding, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
---------------------------------------
<S> <C> <C> <C>
Revenues:
Management fee from third parties $ 3,868,661 $ 3,249,424 $ 561,538
Management fee from CHHC
agencies (Note 7) 9,077,305 8,574,514 4,500,868
Other income 276,077 286,406 145,414
--------------------------------------
13,222,043 12,110,344 5,207,820
Operating expenses:
Salaries and benefits 5,583,461 5,077,147 3,570,311
Other professional fees 760,934 876,363 6,791
Rent expense 1,553,885 1,568,731 -
Contract labor 1,185,009 1,008,854 104,931
Administrative and general 1,501,043 1,123,074 1,014,479
Management fee from CHHC
(Note 7) 3,593,836 3,163,789 717,579
--------------------------------------
14,178,168 12,817,958 5,414,091
--------------------------------------
Net loss $ (956,125) $ (707,614) $ (206,271)
======================================
</TABLE>
See accompanying notes.
4
<PAGE> 12
Simione Central Holding, Inc.
Consolidated Statements of Shareholders' Equity (Deficit)
<TABLE>
<CAPTION>
COMMON STOCK RETAINED
AND PAID-IN EARNINGS
CAPITAL (DEFICIT) TOTAL
---------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1992 $ - $ 76,603 $ 76,603
Net loss - (206,271) (206,271)
---------------------------------------------------
Balance at December 31, 1993 - (129,668) (129,668)
Net loss - (707,614) (707,614)
---------------------------------------------------
Balance at December 31, 1994 - (837,282) (837,282)
Net loss - (956,125) (956,125)
Capital contribution (Note 1) 2,443,013 - 2,443,013
---------------------------------------------------
Balance at December 31, 1995 $ 2,443,013 $(1,793,407) $ 649,606
===================================================
</TABLE>
See accompanying notes.
5
<PAGE> 13
Simione Central Holding, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
-------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (956,125) $ (707,614) $ (206,271)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Changes in operating assets and
liabilities:
Accounts receivable 95,360 (598,843) (209,853)
Receivables from officer loans (252,075) - 46,500
Due to CHHC 1,440,309 (854,704) 1,469,117
Other assets (47,017) 8,397 201,785
Accounts payable (11,414) 26,528 18,819
Accrued contribution to Employee
Stock Ownership Plan 23,158 (17,148) 34,884
Accrued expenses (7,771) (13,902) 22,330
------------------------------------
Net cash provided by (used in)
operating activities 284,425 (2,157,286) 1,377,311
INVESTING ACTIVITIES
Purchases of computer software (424,000) - -
------------------------------------
Net cash used in investing activities (424,000) - -
------------------------------------
Net (decrease) increase in cash (139,575) (2,157,286) 1,377,311
Cash at beginning of year 462,598 2,619,884 1,242,573
------------------------------------
Cash at end of year $ 323,023 $ 462,598 $2,619,884
====================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING ACTIVITIES
Capital contribution from CHHC
(Note 1) $2,443,013 $ - $ -
====================================
</TABLE>
See accompanying notes.
6
<PAGE> 14
Simione Central Holding, Inc.
Notes to Consolidated Financial Statements
December 31, 1995
1. ACCOUNTING POLICIES
BASIS OF PRESENTATION
Simione Central Holding, Inc. ("SCHI") provides information management,
operations, clinical and financial support as well as various consulting
services to home care providers. SCHI's operations include the historical
results of operations of Central Health Management Services, Inc. ("CHMS") and
also certain operations of Central Health Services, Inc. ("CHS"). CHMS was
incorporated in 1991 and provided information management and operations,
clinical and financial support to third party home care providers. From its
incorporation until January 1996, CHMS was a wholly-owned subsidiary of Central
Health Holding Company, Inc. ("CHHC"). CHS, a wholly-owned subsidiary of CHHC,
provides information management, operations, clinical and financial support
solely to home health care agencies wholly-owned by CHHC. Effective January 1,
1996, CHHC transferred at book value the assets and employees related to CHS's
information management and certain clinical and financial support operations to
CHMS. Accordingly, these consolidated financial statements give effect to the
reorganization of these entities under common control and reflect the prior
operating results of CHMS and the CHS operations transferred to CHMS but
exclude the assets, liabilities and results of operations of CHHC and its
subsidiaries not transferred to SCHI. Net revenue resulting from the
information management and clinical and financial support services provided by
the transferred CHS operations to the CHHC wholly-owned home health care
agencies have been recorded for purposes of these consolidated financial
statements at an amount equal to the direct cost of the services being
provided.
CHMS was a separate legal entity and a wholly-owned subsidiary of CHHC as of
December 31, 1995. On January 6, 1996, CHMS formed CHMS Transitory Corp.
("Transitory Corp."). Transitory Corp. issued 27,199,999 shares of Class A
Common Stock and one share of Class B Common Stock, all of which were held by
CHMS. On January 16, 1996, CHMS and Transitory Corp. merged with Transitory
Corp. as the survivor. The 100 shares of CHMS Common Stock held by CHHC were
canceled and CHHC received the Class A and Class B Common Stock of Transitory
Corp. Immediately subsequent to the merger, Transitory Corp. amended its
articles of incorporation and changed its name to Central Health Management
Services, Inc. On January 17, 1996, CHHC completed a pro-rata distribution to
its shareholders of all the outstanding capital stock of CHMS. The
distribution was accomplished through the
7
<PAGE> 15
Simione Central Holding, Inc.
Notes to Consolidated Financial Statements (continued)
1. ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION (CONTINUED)
issuance of 15.492 Class A shares of CHMS common stock for each share of CHHC's
common stock held by the respective shareholder. On January 18, 1996, CHMS
amended its articles of incorporation to rename the corporation Simione Central
Holding, Inc.
DESCRIPTION OF BUSINESS
SCHI provides information management, operations, clinical and financial
support. These support services include administrative, accounting, clinical
operations, training and development, financial management, operations
management, reimbursement, human resources, facilities management, and certain
other management services.
SCHI's customers include third party home care providers and home health care
agencies owned by CHHC. For the years ended December 31, 1995, 1994 and 1993,
the percentage of revenue earned from CHHC owned agencies totaled 69%, 71% and
86%, respectively. CHHC's home health care agencies derived approximately 97%
of their net revenues from services provided under the Medicare and Medicaid
programs.
ACCOUNTS RECEIVABLE
Accounts receivable represent receivables due from third party home care
providers. Current operations are charged with an allowance for doubtful
accounts based upon experience and any unusual circumstances which affect the
collectibility of receivables. Amounts deemed uncollectible are charged
against this allowance.
COMPUTER SOFTWARE
Computer software is stated at cost. Depreciation of computer software is
provided using the straight-line method over a five year period.
PAID-IN CAPITAL
In November 1995, CHHC made a capital contribution of $2,443,013 to CHMS. CHMS
in return used the proceeds to repay indebtedness of $2,443,013 to CHS.
8
<PAGE> 16
Simione Central Holding, Inc.
Notes to Consolidated Financial Statements (continued)
1. ACCOUNTING POLICIES (CONTINUED)
SHAREHOLDERS' EQUITY (DEFICIT)
Shareholders' equity (deficit) includes the common stock, additional
paid-in-capital and retained earnings (deficit) of CHMS and the results of
operations of the CHS operations transferred to SCHI. CHMS had 100 shares of
no par value common stock outstanding as of December 31, 1995 and 1994.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. NOTES RECEIVABLE FROM OFFICER
Notes receivable from officer are payable on demand and bear interest at the
applicable monthly federal short-term rate. SCHI received full payment in
1996.
3. CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject SCHI to significant
concentrations of credit risk consist principally of trade accounts receivable
which are due from third party home care providers. At December 31, 1995,
there are a relatively small number of companies which comprise SCHI's customer
base however, SCHI does not anticipate nonperformance by any of these agencies.
4. EMPLOYEE STOCK OWNERSHIP PLAN
CHHC sponsors an employee stock ownership plan (the "Plan"), which enables the
employees of its wholly-owned subsidiaries which have adopted the Plan to
acquire an indirect interest in shares of CHHC's common stock. The Plan covers
substantially all full-time employees of CHHC. The Plan is funded by CHHC and
its wholly-owned
9
<PAGE> 17
Simione Central Holding, Inc.
Notes to Consolidated Financial Statements (continued)
4. EMPLOYEE STOCK OWNERSHIP PLAN (CONTINUED)
subsidiaries through contributions to an employee stock ownership trust (the
"Trust"). These contributions are made at the discretion of the Board of
Directors of CHHC and its wholly-owned subsidiaries. Shares of CHHC common
stock are allocated to each eligible employee's account and are held in trust
until the employee's termination, retirement, total disability or death.
The accompanying consolidated financial statements include SCHI's share of
employee benefit expense related to the Plan for the CHMS employees and also
the CHS employees transferred from CHS to SCHI in conjunction with the transfer
of certain operations of CHS to SCHI as discussed in Note 1. These expenses
were approximately $439,000, $474,000, and $331,000 in 1995, 1994, and 1993,
respectively.
Upon consummation of a pending transaction between the shareholders of CHHC and
a third party, SCHI will assume future responsibility for the administration of
the ESOP.
5. INCOME TAXES
SCHI accounts for income taxes under the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under this
statement, deferred tax liabilities and assets are determined based upon the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
CHMS has not incurred or paid any income taxes since its inception. As a
result of the losses incurred in each year since inception, temporary
differences between financial and tax bases of assets and liabilities are more
than offset by operating loss carryforwards. In addition, any net deferred tax
assets due to the operating loss carryforwards would be fully offset by a
valuation allowance due to the uncertain realization of the deferred tax asset.
At December 31, 1995, SCHI has approximately $626,000 of federal net operating
loss carryforwards and various state income tax net operating loss
carryforwards expiring in 2010.
10
<PAGE> 18
Simione Central Holding, Inc.
Notes to Consolidated Financial Statements (continued)
6. COMMITMENTS AND CONTINGENCIES
CHHC and its subsidiaries are self-insured for medical and dental claims below
certain individual and aggregate limits. Under the self-insurance program,
CHHC charges SCHI for its share of expenses for this program which amounted to
$146,000, $146,000, and $136,000 for 1995, 1994 and 1993, respectively.
Subsequent to December 31, 1995, SCHI's employees were no longer covered by the
CHHC self insurance program and are covered by an independent insurance plan
which is not a self insurance program.
7. RELATED PARTY TRANSACTIONS
The management fee revenue from CHHC represents the charges to CHHC for the
services provided by SCHI to the home health care agencies owned by CHHC.
These charges were recorded for purposes of these consolidated financial
statements in an amount equal to the direct cost of the services being
provided. In addition, CHHC charges SCHI a management fee for services
provided to SCHI. These services include facilities management, payroll,
general accounting, human resources, repairs and maintenance, legal services,
training, executive and support staff. CHHC's charges are based on the
allocated direct cost of the various services being provided.
The president and a shareholder of CHHC, along with certain other shareholders
of CHHC, are shareholders of Healthfield, Inc. ("Healthfield"). SCHI entered
into a management services agreement with Healthfield in February 1994.
Healthfield paid SCHI approximately $1,913,000 and $2,287,000 in management
fees during the years ended December 31, 1995 and 1994, respectively, for
certain administrative and financial services rendered to Healthfield in
accordance with the agreement. In December 1995, the management services
agreement with Healthfield was terminated.
8. SUBSEQUENT EVENTS
On January 16, 1996, CHHC made a $4 million cash capital contribution to SCHI.
SCHI obtained a $1,000,000 line of credit on January 16, 1996 which is
guaranteed by a $1 million certificate of deposit and expires on January 17,
1997. Any outstanding principal amount bears interest at 8.72%. SCHI obtained
an additional $1,500,000 line of credit on June 13, 1996 which is secured by
SCHI's accounts receivable and other rights to payment and expires on January
17, 1997. Any outstanding principal amount
11
<PAGE> 19
Simione Central Holding, Inc.
Notes to Consolidated Financial Statements (continued)
8. SUBSEQUENT EVENTS (CONTINUED)
bears interest at 8.25%. Borrowings under these agreements totaled $1,430,000
at September 6, 1996. SCHI's obligations under these agreements have been
personally guaranteed by an officer and shareholder of SCHI.
On January 17, 1996, Simione Central, Inc. ("SCI"), a wholly-owned subsidiary
of SCHI, purchased the assets of the management consulting practice of Simione
& Simione CPA's for $2 million in cash. The transaction will be accounted for
under the purchase method of accounting.
On January 17, 1996, CHMS Transitory Corp. established the Central Health
Management Services, Inc. 1996 Stock Option Plan (the "Plan") under which
options to purchase up to 4,800,000 shares of Class A common stock may be
issued. The Plan was amended on February 27, 1996 to rename the Plan as the
Simione Central Holding, Inc. 1996 Stock Option Plan. The Plan terminates ten
years from the effective date. The administration committee of the Plan has the
right to terminate options granted under the Plan in the event of a merger or
consolidation of SCHI. As of September 6, 1996, options covering 4,666,250
shares of Class A Common Stock were outstanding under the Plan. These options
have an exercise price per share ranging from $0.349 to $0.55 per share and
options covering 2,407,500 are exercisable. None of these options have been
exercised as of September 6, 1996. The remaining options totaling 2,258,750
shares vest over a three year period based on employment at the end of each
year. These options become fully vested upon a change of control of SCHI.
On March 5 and March 22, 1996, employees of SCHI purchased 8,544,175 and
214,901 shares of Class A Common Stock, respectively, for a price of $0.349 per
share or an aggregate of $3,056,918. These shares were purchased under the
terms of a stock subscription agreement whereby 10% was due at the date of
purchase and the remainder is due on December 5, 1996.
12
<PAGE> 20
Simione Central Holding, Inc.
Notes to Consolidated Financial Statements (continued)
8. SUBSEQUENT EVENTS (CONTINUED)
On April 12, 1996 SCHI issued warrants to a home health agency to purchase an
aggregate of 100,000 shares of Class A common stock at a purchase price per
share equal to $0.349. These warrants were issued in consideration of services
to be provided to SCI, including marketing assistance, consulting services and
acting as a model demonstration site to exhibit SCI's shared information
management services in operation. The number of shares and exercise price are
subject to adjustment upon the occurrence of certain events such as a
reorganization, consolidation, merger, stock dividend, or stock split. The
warrants are exercisable beginning six months after the issuance date and
expire 10 years thereafter.
On September 4, 1996, SCHI converted the amounts due to CHHC to a note payable
which totaled $822,063. This note is due on demand and bears no interest. The
note is unsecured.
SCHI signed a definitive merger agreement with InfoMed Holdings, Inc.
("InfoMed"), a publicly-traded company, on September 5, 1996. InfoMed is a
provider of home health care information systems and serves stand-alone,
hospital-based and multi-office home care providers. The transaction is
subject to approval of SCHI shareholders and is expected to close within 60
days. Under the terms of the agreement, SCHI shareholders will exchange their
stock for stock of InfoMed. For accounting purposes, the transaction will be
treated as a recapitalization of SCHI with SCHI as the acquirer (reverse
acquisition).
13
<PAGE> 21
SIMIONE & SIMIONE, CPAS - CONSULTING DIVISION
(A DIVISION OF SIMIONE & SIMIONE, CPAS, A PARTNERSHIP)
FINANCIAL REPORT
DECEMBER 31, 1995
<PAGE> 22
CONTENTS
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT 1
- ------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Statements of net assets 2
Statements of divisional operations 3
Statements of divisional equity 4
Statements of divisional cash flows 5
Notes to finanical statements 6-10
- ------------------------------------------------------------------------------
</TABLE>
<PAGE> 23
[MCGLADREY & PULLEN, LLP LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Simione Central, Inc.
Atlanta, Georgia
We have audited the accompanying statements of net assets of Simione & Simione,
CPAs (a Partnership) - Consulting Division (a division of Simione & Simione,
CPAs) as of December 31, 1995 and 1994, and the related statements of
divisional operations, divisional equity and divisional cash flows for each of
the years in the three year period ended December 31, 1995. These financial
statements are the responsibility of Simione & Simione, CPA's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets of Simione & Simione, CPAs - Consulting
Division as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the years in the three year period ended
December 31, 1995 in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New Haven, Connecticut
November 25, 1996
<PAGE> 24
SIMIONE & SIMIONE, CPAS - CONSULTING DIVISION
(A DIVISION OF SIMIONE & SIMIONE, CPAS, A PARTNERSHIP)
STATEMENTS OF NET ASSETS
DECEMBER 31, 1995 AND 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
-------------------------------
<S> <C> <C>
ASSETS (Notes 5 and 6)
Current Assets
Cash $ 10,239 $ 22,061
Accounts receivable and unbilled services, less allowance for
doubtful accounts 1995 $82,416; 1994 $66,362 708,522 577,057
Other assets (Note 4) 4,814 10,033
------------------------------
TOTAL ASSETS $ 723,575 609,151
==============================
LIABILITIES AND DIVISIONAL PARTNERSIP EQUITY
Current Liabilities
Line of Credit (Note 2) $ 76,558 $ 64,391
Current maturities of long-term debt (Note 3) 77,430 65,115
Accounts payable 128,614 71,707
Loans payable from partners (Note 4) 14,519 12,674
Accrued expenses 13,300 27,054
------------------------------
TOTAL CURRENT LIABILITIES 310,061 240,941
Long-term debt, less current maturities (Note 3) 77,430 130,230
------------------------------
TOTAL LIABILITIES 387,491 371,171
Commitments (Notes 5 and 7)
Net Asset, Divisional Equity 336,084 237,980
------------------------------
TOTAL LIABILITIES AND DIVISIONAL PARTNERSHIP EQUITY $ 723,575 $ 609,151
==============================
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 25
SIMIONE & SIMIONE, CPAS - CONSULTING DIVISION
(A DIVISION OF SIMIONE & SIMIONE, CPAS, A PARTNERSHIP)
STATEMENTS OF DIVISIONAL OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993
-----------------------------------------------
<S> <C> <C> <C>
Net services $ 2,350,120 $ 1,882,437 $ 1,633,908
-----------------------------------------------
Operating expenes 1,355,589 1,051,667 840,589
General and administrative expenses 301,243 277,581 245,287
-----------------------------------------------
1,656,832 1,329,248 1,085,876
-----------------------------------------------
OPERATING INCOME 693,288 553,189 548,032
-----------------------------------------------
Other income (expense) 11,566 5,570 6,507
Interest income (25,454) (25,426) (21,910)
Interest expense 13,252 6,168 1,234
-----------------------------------------------
Other (636) (13,508) (14,169)
-----------------------------------------------
NET INCOME $ 692,652 $ 539,681 $ 533,683
===============================================
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 26
SIMIONE & SIMIONE, CPAS - CONSULTING DIVISION
(A DIVISION OF SIMIONE & SIMIONE, CPAS, A PARTNERSHIP)
STATEMENTS OF DIVISONAL EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993
--------------------------------------------
<S> <C> <C> <C>
Balance, beginning $ 237,980 $ 142,273 $ 39,837
Net income 692,652 539,681 533,863
Net transfers (594,548) (443,974) (431,427)
--------------------------------------------
Balance, ending $ 336,084 $ 237,980 $ 142,273
============================================
</TABLE>
See Notes to Financial Statements.
-4-
<PAGE> 27
SIMIONE & SIMIONE, CPAS - CONSULTING DIVISION
(A DIVISION OF SIMIONE & SIMIONE, CPAS, A PARTNERSHIP)
STATEMENTS OF DIVISONAL CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993
---------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 692,652 $ 539,681 $ 533,683
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for doubtful accounts 16,054 7,657 27,921
Decrease (increase) in accounts receivable
and unbilled services (147,529) (146,261) (192,400)
Decrease (increase) in other assets 5,219 13,027 (17,754)
(Decrease) increase in accounts payable 56,907 19,888 13,931
(Decrease) increase in accrued expenses (13,754) 2,229 13,976
----------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 609,549 436,221 379,537
----------------------------------------------
Cash flows from financing activiites
Net financing obtained from (provided to) partnership (28,308) 25,793 40,396
Loans payable from partners, net 1,485 (1,177) 1,192
Net transfers (594,548) (443,974) (431,427)
----------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (621,371) (419,358) (389,839)
----------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (11,822) 16,863 (10,302)
Cash at beginning of year 22,061 5,198 15,500
----------------------------------------------
Cash at end of year $ 10,239 $ 22,061 $ 5,198
=============================================
</TABLE>
See Notes to Financial Statements.
-5-
<PAGE> 28
SIMIONE & SIMIONE, CPAS - CONSULTING DIVISION
(A DIVISION OF SIMIONE & SIMIONE, CPAS, A PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of business
Simione & Simione, CPA's, a Partnership ("Simione" or "Partnership") is a
public accounting firm based in Hamden, Connecticut. Simione & Simione, CPA's -
Consulting Division ("Simione Consulting"), a division of Simione provides
consulting services primarily serving the healthcare industry. Simione also
operated the audit and accounting division and the tax division. The results
of these divisions are not included in these financial statements.
A summary of the Partnership's significant accounting policies follows:
Financial statement presentation
Divisional balance sheets of Simione Consulting include accounts receivable and
unbilled services which are attributable specifically to consulting services
provided by Simione Consulting. Balance sheet accounts that are not directly
attributed to Simione Consulting are allocated based on a ratio of Simione
Consulting accounts receivable and unbilled services to total accounts
receivable and unbilled services of the Partnership. The statement of
operations of Simione Consulting includes direct service revenue and expenses
(primarily payroll) as well as an allocation of indirect operating expenses of
the Partnership. Expenses which were not directly attributable to Simione
Consulting were allocated on a pro-rata basis to each of the three divisions
operated by the Partnership. For the years ended December 31, 1995, 1994 and
1993 approximately $320,000, $303,000 and $267,000 of indirect operating
expenses were allocated to Simione Consulting. Management believes that the
allocations made were reasonable and include all expenses incurred on behalf of
the division.
The accompanying financial statements do not necessarily indicate the financial
position, results of operations or cash flows that would have been obtained if
the division had been operated as an independent entity.
Personal assets and liabilities and partners' salaries
In accordance with generally accepted methods of presenting partnership
financial statements, the divisional financial statements do not include the
personal assets and liabilities of the partners including their obligation for
income taxes on their distribution shares of net income of the partnership, nor
any provision for income tax expense.
-6-
<PAGE> 29
SIMIONE & SIMIONE - CONSULTING
(A DIVISION OF SIMIONE & SIMIONE, CPAS, A PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
The expenses shown on the statements of divisional operations do not include
any salaries to the partners.
Revenue recognition
Revenue is recognized when services are performed.
Accounting 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 period.
Included among the material reported amounts and disclosures that require
extensive use of estimates is the allocation of indirect Partnership operating
expenses. Actual results could differ from those estimates.
NOTE 2. LINE OF CREDIT
The Partnership had a $150,000 line of credit with a bank which subsequent to
December 31, 1995 was repaid. This line of credit was collateralized by
substantially all assets of the Partnership and was personally guaranteed by
the partners. Interest was payable monthly at the prime rate as published in
The Wall Street Journal (8.25% at December 31, 1995) plus 1.5 percent.
NOTE 3. LONG-TERM DEBT
Long-term debt of the Partnership consisted of the following at December 31,
1995 and 1994:
<TABLE>
<S> <C>
Note payable Bank, $12,500 due monthly plus
interest at the prime rate as published by
the Wall Street Journal (8.25% at December
31, 1995) plus 1.5 percent, through December
4, 1997, secured by substantially all assets
of the Partnership and personally guaranteed
by the partners. $ 300,000
============
</TABLE>
Subsequent to December 31, 1995 this note was repaid in full by the
Partnership.
-7-
<PAGE> 30
SIMIONE & SIMIONE - CONSULTING
(A DIVISION OF SIMIONE & SIMIONE, CPAS, A PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
NOTE 4. RELATED PARTY TRANSACTIONS
The Partnership rented their offices from S & S Realty, which is owned by
certain partners, under an operating lease which expired December 31, 1994.
Beginning January 1, 1995, the Partnership rented this facility on a month to
month basis. The rent paid to S & S Realty during each of those years was
approximately $156,000.
At December 31, 1994, approximately $23,000 was due from S & S Realty to the
Partnership. The allocated amount, $10,003, is classified as other asset at
December 31, 1994.
At December 31, 1995 and 1994, the Partnership had outstanding loans payable
from the partners of approximately $27,000 and $29,000, respectively.
Net transfers reflected on the statements of divisional equity and cash flows
represent transfers to the Partnership to fund partner distributions and to
fund other divisions of the Partnership.
NOTE 5. OPERATING LEASES
The Partnership has operating leases expiring in various years through 1998.
Future minimum payments, by year and in the aggregate, due under significant
noncancelable operating leases with initial or remaining terms of one year or
more, consisted of the following at December 31, 1995:
<TABLE>
<S> <C>
1996 $ 47,997
1997 37,145
1998 212
--------
$ 85,354
========
</TABLE>
Total lease expense of the Partnership for the years ended December 31, 1995,
December 31, 1994 and December 31, 1993 approximated $17,000, $37,000 and
$32,000, respectively.
-8-
<PAGE> 31
SIMIONE & SIMIONE - CONSULTING
(A DIVISION OF SIMIONE & SIMIONE, CPAS, A PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
NOTE 6. EMPLOYEE PROFIT SHARING PLAN
The Partnership maintains a 401(k) profit sharing plan for the benefit of
substantially all of its employees who meet certain minimum eligibility
requirements and who elect to participate. Under the terms of the Plan,
participants can contribute up to 20 percent of their pay to the extent
permitted by law. The Partnership may make discretionary matching
contributions to the Plan up to 50 percent of the employees' first 10 percent
of compensation contributed. Participants are immediately vested in their
contribution and vest completely in Partnership contributions after five years
of service. The Partnership has not made any contributions to the Plan
NOTE 7. SALE OF SIMIONE & SIMIONE - CONSULTING ASSETS
Effective January 1, 1996, the Partnership sold all of the assets used by their
consulting division including tangible property, contracts, leases, books and
records, customer lists, prepaid expenses and goodwill for $2,000,000 in cash
to Simione Central Holding, Inc. ("SCHI"). Under terms of this agreement, the
partners agree not to compete in any competing business, as defined in the
agreement, through December 31, 2001. The purchase price was allocated as
follows:
<TABLE>
<S> <C>
Client list and goodwill $ 1,990,000
Covenant not to compete 10,000
------------
$ 2,000,000
============
</TABLE>
On September 5, 1996, InfoSub, Inc., a subsidiary of InfoMed Holdings, Inc. and
SCHI entered into an agreement and plan of merger. The merger was consumated
on October 8, 1996.
NOTE 8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
Cash
The carrying amounts of this financial instrument approximates fair value
because of the short maturity of this financial instrument.
-9-
<PAGE> 32
SIMIONE & SIMIONE - CONSULTING
(A DIVISION OF SIMIONE & SIMIONE, CPAS, A PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
DECEMBER 31, 1995, 1994 AND 1993
- --------------------------------------------------------------------------------
Long-term debt
The carrying amount of long-term debt approximates fair value because the rates
are similar to quoted market prices for debt with similar requirements.
NOTE 9. MAJOR CUSTOMER
During the year 1995 one client provided approximately $273,000 of revenue to
the Division. At December 31, 1995 this client owed the Division $154,000.
-10-
<PAGE> 33
SIMIONE CENTRAL HOLDING, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (unaudited)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 2,092,121
Short term investment 1,039,593
Accounts receivable, net 2,484,396
Stock subscriptions receivable 1,949,261
Other current assets 111,825
-----------
Total current assets 7,677,196
Property and equipment, net 590,543
Goodwill and other intangible assets, net 1,993,576
-----------
Total assets $10,261,315
===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Lines of credit $ 1,805,000
Accounts payable and accrued expenses 2,773,851
Other current liabilities 112,496
-----------
Total current liabilities 4,691,347
Shareholders' equity:
Common stock and paid-in-capital 9,494,383
Accumulated deficit (3,051,915)
Stock subscriptions receivable (872,500)
-----------
Total shareholders' equity 5,569,968
-----------
Total liabilities and shareholders' equity $10,261,315
===========
</TABLE>
See accompanying notes to condensed consolidated financial statements
(unaudited).
<PAGE> 34
SIMIONE CENTRAL HOLDING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
Revenues $ 16,032,116 $ 9,394,085
Operating expenses:
Cost of services 13,366,776 7,567,043
Sales, general, and administrative 3,655,791 2,011,492
Amortization and depreciation 361,448 25,000
---------------- -----------------
Total expenses 17,384,015 9,603,535
---------------- -----------------
Loss from operations (1,351,899) (209,450)
Interest income (expense), net 93,391 --
---------------- -----------------
Net loss $ (1,258,508) $ (209,450)
================ =================
</TABLE>
See accompanying notes to condensed consolidated financial statements
(unaudited).
<PAGE> 35
SIMIONE CENTRAL HOLDING, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
Stock
Common Stock and Accumulated Subscriptions
Paid-In-Capital Deficit Receivable Total
---------------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1996 $ 2,443,013 $ (1,793,407) -- $ 649,606
Net loss -- (1,258,508) -- (1,258,508)
Capital contribution by Central Health
Holding Company, Inc. 4,000,000 -- 4,000,000
Issuance of common stock, net of fees 3,051,370 (872,500) 2,178,870
---------------- ------------ -------------- -----------
Balance at September 30, 1996 $ 9,494,383 $ (3,051,915) ($872,500) $ 5,569,968
================ ============ ============== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements
(unaudited).
<PAGE> 36
SIMIONE CENTRAL HOLDING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine months ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (1,258,508) $ (209,450)
Adjustments to reconcile net loss to
net cash (used in) provided by operating activities:
Depreciation and amortization 361,448 25,000
Write-off of fixed assets and software 44,050 -
Changes in operating assets and liabilities:
Accounts receivable (1,469,455) (123,281)
Other current assets (69,470) -
Accounts payable and accrued expenses 1,836,374 701,714
Other liabilities (141,573) -
---------------- -----------------
Net cash (used in) provided by operating activities (697,134) 393,983
---------------- -----------------
INVESTING ACTIVITIES
Purchase of Short Term Investment (1,039,593) -
Purchase of property and equipment (414,140) (400,000)
Purchase of Simione & Simione, CPAs - Consulting Division (2,000,000) -
Increase in intangibles (114,644) -
---------------- -----------------
Net cash used in investing activities (3,568,377) (400,000)
---------------- -----------------
FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of fees 3,051,370 -
Proceeds from line of credit 1,805,000 -
Notes issued to shareholders (2,821,761) -
Capital contribution by Central Health Holding Company, Inc. 4,000,000 -
---------------- -----------------
Net cash provided by financing activities 6,034,609 -
---------------- -----------------
Net (decrease) increase in cash and cash equivalents 1,769,098 (6,017)
Cash and cash equivalents at beginning of period 323,023 462,598
---------------- -----------------
Cash and cash equivalents at end of period $ 2,092,121 $ 456,581
================ =================
</TABLE>
See accompanying notes to condensed consolidated financial statements
(unaudited).
<PAGE> 37
Simione Central Holding, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
September 30, 1996
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the nine months
ended September 30, 1996, are not necessarily indicative of the results that
may be expected for the year ending December 31, 1996. These financial
statements should be read in conjunction with the December 31, 1995, audited
consolidated financial statements and related notes of Simone Central Holding,
Inc. ("Simione") and Simione & Simione, CPAs - Consulting Division (A Division
of Simione & Simione CPAs, a Partnership) ("S & S"), the latter having been
acquired by Simione effective January 1, 1996.
Revenues include fees for services provided by Simione Central Holding, Inc. to
Central Health Holding Company, Inc. ("CHHC") and its affiliates which are
related parties. CHHC was sold to an unrelated entity on October 31, 1996.
These services include information management and clinical and financial
support services. The net revenue has been recorded at an amount equal to the
direct cost of the services being provided and amounted to approximately $10.4
million for the nine months ended September 30, 1996 and $6.2 million for the
nine months ended September 30, 1995.
Certain amounts reported in the condensed consolidated statements of operations
(unaudited) have been reclassified in relation to the audited financial
statements of operations of Simione for the years ended December 31, 1995,
1994, and 1993 (included in this document) in order to conform with the manner
in which the company intends to report its results in the future.
Note 2 - Shareholders' Equity
On January 16, 1996, CHHC made a $4 million cash capital contribution to
Simione. On March 5 and March 22, 1996, employees of Simione purchased shares
of Class A Common Stock. These shares were purchased under the terms of a stock
subscription agreement whereby 10% was due at the date of purchase and the
remainder was due December 5, 1996. Stock subscriptions receivable of
$1,949,261 reported in current assets represents the amount which has been
collected by Simione as of December 20, 1996, whereas, the amount reported in
Shareholders' equity has not yet been collected as of that date.
<PAGE> 38
Note 3 - Subsequent Event
On October 8, 1996, Simione merged with a wholly-owned subsidiary of InfoMed
Holdings, Inc. This merger will be accounted for as a reverse purchase under
the purchase method of accounting.
<PAGE> 39
SIMIONE CENTRAL HOLDINGS, INC.
(FORMERLY INFOMED HOLDINGS, INC.)
PRO FORMA CONDENSED COMBINED BALANCE SHEET (unaudited)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Simione Central InfoMed Pro Forma Pro Forma
Holding, Inc. Holdings, Inc. Adjustments Combined
--------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,092,121 $ 750,202 $ - $ 2,842,323
Short term investment 1,039,593 - - 1,039,593
Accounts receivable, net 2,484,396 2,434,625 - 4,919,021
Stock subscriptions receivable 1,949,261 - - 1,949,261
Inventory - 101,034 - 101,034
Other current assets 111,825 114,855 - 226,680
------------- ----------- ----------- -------------
Total current assets 7,677,196 3,400,716 - 11,077,912
Property and equipment, net 590,543 630,750 - 1,221,293
Goodwill and other assets, net 1,993,576 79,457 16,377,610 (1) 18,450,643
------------- ----------- ----------- -------------
Total assets 10,261,315 4,110,923 16,377,610 30,749,848
============= =========== =========== =============
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Lines of credit 1,805,000 143,187 - 1,948,187
Accounts payable and accrued expenses 2,773,851 3,082,343 1,000,000 (1) 6,856,194
Deferred income - 1,389,526 - 1,389,526
Customer deposits - 1,406,841 - 1,406,841
Other current liabilities 112,496 - - 112,496
------------- ----------- ----------- -------------
Total current liabilities 4,691,347 6,021,897 1,000,000 11,713,244
Long term debt and other liabilities - 112,982 - 112,982
Shareholders' equity (deficit):
Preferred stock, common stock and paid-in-capital 9,494,383 4,198,312 13,353,654 (1) 22,848,037
(4,198,312) (2)
Accumulated deficit (3,051,915) (6,222,268) 6,222,268 (2) (3,051,915)
Stock subscriptions receivable (872,500) - - (872,500)
------------- ----------- ----------- -------------
Total shareholders' equity (deficit) 5,569,968 (2,023,956) 15,377,610 18,928,622
------------- ----------- ----------- -------------
Total liabilities and shareholders' equity (deficit) $ 10,261,315 $ 4,110,923 $16,377,610 $ 30,749,848
============= =========== =========== =============
</TABLE>
See accompanying note to pro forma condensed combined financial statements
(unaudited)
<PAGE> 40
SIMIONE CENTRAL HOLDINGS, INC.
(FORMERLY INFOMED HOLDINGS, INC.)
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS (unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Simione Central InfoMed Pro Forma Pro Forma
Holding, Inc. Holdings, Inc. Adjustments Combined
--------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues $ 16,032,116 $ 8,780,234 $ - $ 24,812,350
Operating expenses:
Cost of services 13,366,776 3,728,426 - 17,095,202
Sales, general, and administrative 3,655,791 3,532,299 - 7,188,090
Amortization and depreciation 361,448 1,134,227 818,881 (3) 2,314,556
------------- ------------ ----------- -------------
Total expenses 17,384,015 8,394,952 818,881 26,597,848
------------- ------------ ----------- -------------
Income from operations (1,351,899) 385,282 (818,881) (1,785,498)
Other income:
Interest income (expense), net 93,391 37,125 - 130,516
Other - 82,440 - 82,440
------------- ------------ ----------- -------------
Total other income 93,391 119,565 - 212,956
------------- ------------ ----------- -------------
Net income (loss) $ (1,258,508) $ 504,847 $ (818,881) $ (1,572,542)
============= ============ =========== =============
Earnings per share $ (.14)
=============
Shares used in computation 11,096,729
=============
</TABLE>
See accompanying note to pro forma condensed combined financial statements
(unaudited).
<PAGE> 41
SIMIONE CENTRAL HOLDINGS, INC.
(FORMERLY INFOMED HOLDINGS, INC.)
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS (unaudited)
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Simione &
Simione Central Simione, CPAs InfoMed Pro Forma Pro Forma
Holding, Inc. Consulting Division Holdings, Inc. Adjustments Combined
--------------- ------------------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 13,222,043 $ 2,350,120 $ 13,650,505 $ - $ 29,222,668
Operating expenses:
Cost of services 11,174,419 1,355,589 9,068,438 594,548(4) 22,192,994
Sales, general, and administrative 2,970,416 301,243 7,793,692 - 11,065,351
Amortization and depreciation 33,333 - 1,721,360 1,091,841(3) 3,046,534
200,000(5) -
--------------- ---------------- ------------ ----------- -------------
Total expenses 14,178,168 1,656,832 18,583,490 1,886,389 36,304,879
--------------- ---------------- ------------ ----------- -------------
Income (loss) from operations (956,125) 693,288 (4,932,985) (1,886,389) (7,082,211)
Other income:
Gain on sale of assets - - 437,665 - 437,665
Interest income (expense), net - (13,888) (81,174) - (95,062)
Other - 13,252 - - 13,252
--------------- ---------------- ------------ ----------- -------------
Total other income - (636) 356,491 - 355,855
--------------- ---------------- ------------ ----------- -------------
Net income (loss) $ (956,125) $ 692,652 $ (4,576,494) $(1,886,389) $ (6,726,356)
=============== ================ ============ =========== =============
Earnings per share $ (.70)
=============
Shares used in computation 9,599,152
=============
</TABLE>
See accompanying note to pro forma condensed combined financial statements
(unaudited).
<PAGE> 42
Simione Central Holdings, Inc.
(Formerly InfoMed Holdings, Inc.)
Note to Pro Forma Condensed Combined Financial Statements (unaudited)
Note 1 - Basis of Presentation
The accompanying pro forma condensed combined financial statements (unaudited)
as of September 30, 1996 and for the nine months ended September 30, 1996 and
the year ended December 31, 1995 give effect to the acquisition of InfoMed
Holdings, Inc. (InfoMed") by Simione Central Holding, Inc. ("Simione") as if
the acquisition had occurred September 30, 1996 for balance sheet purposes and
January 1, 1995 for the statements of operations. The acquisition of Simione &
Simione, CPAs - Consulting Division (A Division of Simione & Simione, CPAs,
Partnership) ("S & S") by Simione for $2,000,000, was effective January 1,
1996, and is already included in the balance sheet as of September 30, 1996;
however, the results of the S & S operations for the year ended December 31,
1995 as if the acquisition had occurred January 1, 1995 have been included in
the pro forma statement of operations for 1995.
The pro forma information is based on the unaudited consolidated financial
statements of Simione as of and for the nine months ended September 30, 1996
and the audited consolidated financial statements of Simione as of and for the
year ended December 31, 1995. In addition, certain pro forma information was
obtained from InfoMed's audited financial statements as of and for the years
ended June 30, 1996 and 1995, and certain information was obtained from the
unaudited financial statements as of and for the six months ended December 31,
1995 and as of and for the three months ended September 30, 1996. Pro forma
financial data for S & S was obtained from the audited financial statements at
December 31, 1995. See InfoMed's 10-Ks for the years ended June 30, 1996 and
1995.
These pro forma condensed combined financial statements have been prepared by
management and may not be indicative of the results of operations or the
financial position that actually would have occurred if the combination(s) had
been in effect on the dates indicated or which may be obtained in the future.
These pro forma financial statements should be read in conjunction with the
unaudited financial statements and related notes of Simione Central Holding,
Inc. as of and for the nine months ended September 30, 1996 and the audited
consolidated financial statements and related notes of Simione, S & S, and
InfoMed.
<PAGE> 43
<PAGE> 43
Management is completing its evaluation of the fair value of the
InfoMed assets acquired for purchase accounting purposes. Management
believes there may be a significant amount of purchased incomplete
research and development costs that may have to be immediately
expensed in the period of acquisition. Upon completion of the
evaluation, management believes that this expense would have a material
impact on these pro forma condensed combined financial statements in
the period following consummation of the merger.
(1) To reflect the acquisition of InfoMed by Simione. The intangibles were
calculated as follows:
Estimated fair value of common stock
and common stock equivalents $13,353,654
Estimated acquisition costs 1,000,000
Excess of InfoMed liabilities over assets acquired 2,023,956
-----------
Acquired intangibles $16,377,610
===========
(2) To eliminate InfoMed's common stock and accumulated deficit as of
September 30, 1996.
(3) To amortize the acquired intangibles of $16,377,610 resulting from the
InfoMed merger over the weighted average estimated useful life of
fifteen years.
(4) To reflect S & S partners' distributions as compensation.
(5) To amortize the acquired intangibles of $2,000,000 from the S & S
purchase over ten years.
