UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (date of earliest event reported): June 19, 2000
MEDPLUS, INC.
(Exact name of registrant as specified in its charter)
Ohio 48-1094982
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8805 Governor's Hill Drive, Suite 100
Cincinnati, OH 45249
(Address of principal executive offices)
(513) 583-0500
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events.
On June 19, 2000, MedPlus, Inc. (the "Company") entered into an
equity financing agreement with Quest Diagnostics Incorporated
("Quest"), a leading provider of diagnostic testing, information
and services, to provide approximately $9.5 million in equity
financing to the Company.
Notification of this event, including a copy of the agreements
related to the transaction, was included in a filing with the
Securities and Exchange Commission on Form 10-Q on June 19, 2000.
Certain terms of the agreement are subject to shareholder approval
occurring at the Company's annual shareholders' meeting on July
25, 2000 and the Company not having a material adverse change, as
defined in the agreement, prior to the annual shareholders'
meeting. The final closing of the transaction is expected to
occur on or around July 25, 2000.
The pro forma effect of this transaction has been reflected on the
Company's Pro Forma Consolidated Balance Sheet as of May 31, 2000,
and the related Pro Forma Consolidated Statements of Operations
for the four month period ended May 31, 2000 and for the fiscal
year ended January 31, 2000 filed herewith as Item 7(b).
Item 7. Financial Statements and Exhibits
Financial Statements
(a) Financial statements
No financial statements are required to be included in this
filing.
(b) Pro forma financial information
The Pro Forma Consolidated Balance Sheet as of May 31, 2000, and
the related Pro Forma Consolidated Statements of Operations for
the four month period ended May 31, 2000 and for the fiscal year
ended January 31, 2000, reflecting, on a pro forma basis, the
equity financing filed herewith as Item 7(b).
Exhibits
(a) Exhibits
No exhibits are required to be included in this filing.
<PAGE>
Item 7 (b)
MedPlus, Inc.
Pro Forma Financial Information
(Unaudited)
On June 19, 2000, the Company entered into an equity financing
agreement with Quest Diagnostics Incorporated ("Quest"), a leading
provider of diagnostic testing, information and services, to
provide approximately $9.5 million in equity financing to the
Company. Quest is also a customer of the Company. The terms of
the agreement allow Quest to acquire an approximate 18% interest
in the capital stock of the Company. Also, the Company will issue
common stock warrants with an exercise price of 110% of the
contractually calculated value of the Company's stock price
providing for a potential effective ownership interest of up to
30% of the Company's common and common stock equivalents. The
exercise price for the warrants is subject to certain antidilution
provisions related to future issuance of the Company's common
stock and convertible securities. In addition, the agreement
provides Quest with a position on the Company's Board of
Directors. The proceeds of this agreement will be utilized to fund
working capital and repay existing debt. In conjunction with the
equity financing agreement, the Company also executed a national
sales and marketing agreement with Quest.
On June 19, 2000, the Company issued 283,693 shares of its common
stock to Quest for a purchase price of $1,478,750 payable on the
date of issuance. The purchase price was based upon the close of
the Company's stock price as traded over a fifteen-day average on
the Nasdaq stock market. In addition, the Company issued Quest
2,884,513 warrants with an exercise price of $5.73 (110% of the
Company's stock price as defined above). The warrants expire on
the earlier of eighteen months from the date of issuance or the
termination by Quest of the national sales and marketing agreement
referred to above.
Upon approval at the Company's annual shareholders' meeting on
July 25, 2000, the Company will issue to Quest 1,534,772
additional shares of its stock for a purchase price of $8,000,000.
The following pro forma consolidated balance sheet and pro forma
consolidated statements of operations (collectively, the "pro
forma consolidated statements") are based upon the historical
consolidated financial statements of the Company, adjusted to give
effect to the equity financing described above.
The pro forma consolidated balance sheet assumes that the equity
financing occurred on May 31, 2000. The fiscal year 2000 and
fiscal year-to-date 2001 pro forma consolidated statements of
operations assume that the equity financing occurred as of the
first day of the Company's 2000 and 2001 fiscal years,
respectively.
These consolidated statements are unaudited. As a result, the
ultimate effect of the transaction may differ from the pro forma
adjustments presented herein and described in the accompanying
notes. The pro forma consolidated statements do not purport to
present what the Company's financial position and results of
operations would actually have been had the financing occurred on
May 31, 2000 for the pro forma consolidated balance sheet, or on
the first day of the Company's 2000 and 2001 fiscal years for the
pro forma consolidated statements of earnings, or purport to
project the Company's results of operations for any future period.
The pro forma consolidated statements reflect certain assumptions
described in the accompanying notes. The pro forma consolidated
statements and accompanying notes should be read in conjunction
with the audited consolidated financial statements of the Company
and the related notes thereto which are included in the Company's
Annual Report on Form 10-KSB for its fiscal year ended January 31,
2000 and the Company's quarterly reports on Form 10-QSB, (all
filed with the Securities and Exchange Commission).
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MEDPLUS, INC. AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
As of May 31, 2000
(unaudited)
Financing
Pro Forma
Historical (a) Adjustments Pro Forma
______________ ________________ _______________
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 590,300 1,478,750 (b) 8,069,050
6,000,000 (c)
Accounts receivable 2,667,600 2,667,600
Other receivables 29,900 29,900
Costs in excess of billings 403,600 403,600
Inventories 347,200 347,200
Prepaid expenses 359,800 359,800
__________ ___________ ____________
Total current assets 4,398,400 7,478,750 11,877,150
__________ ___________ ____________
Capitalized software development
costs, net 3,107,700 3,107,700
Fixed assets, net 1,136,300 1,136,300
Other assets 293,100 (10,000)(d) 283,100
__________ ___________ ____________
$ 8,935,500 7,468,750 16,404,250
========== =========== ============
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of obligations
under capital leases 7,600 7,600
Accounts payable 1,324,300 1,324,300
Accrued expenses 1,376,300 1,376,300
Deferred revenue 1,362,900 1,362,900
__________ ___________ __________
Total current liabilities 4,071,100 - 4,071,100
__________ ___________ __________
Long-term debt 2,036,000 (2,000,000)(c) -
(36,000)(d)
__________ ___________ __________
6,107,100 (2,036,000) 4,071,100
__________ ___________ __________
Shareholders' equity:
Preferred stock, with liquidation
preferences, .01 par value,
authorized 5,000,000 shares,
issued 2,371,815 shares 23,700 23,700
Common stock, no par value,
authorized 15,000,000 shares:
issued 6,415,232 shares - - -
Additional paid-in capital 21,772,200 1,478,750 (b) 31,250,950
8,000,000 (c)
Treasury stock, at cost, 200,000
shares (863,500) (863,500)
Accumulated deficit (18,070,800) 26,000 (d) (18,044,800)
Unearned stock compensation (33,200) (33,200)
__________ _________ ___________
Total shareholders' equity 2,828,400 9,504,750 12,333,150
__________ _________ ___________
$ 8,935,500 7,468,750 16,404,250
=========== ========= ==========
See notes to Pro Forma Consolidated Balance Sheet.
</TABLE>
MedPlus, Inc. and Subsidiaries
Notes to Pro Forma Consolidated Balance Sheet
As of May 31, 2000
The Pro Forma Consolidated Balance Sheet is unaudited. As a
result, the ultimate effect of the transaction may differ from the
pro forma adjustments presented herein and described in these
notes.
Certain pro forma adjustments are dependent upon the approval at
the Company's annual shareholders' meeting, scheduled for July 25,
2000. In addition, these pro forma adjustments do not include any
effect related to the exercise of 2,884,513 warrants with an
exercise price of $5.73, as these warrants have not been
exercised.
(a) The amounts in the "Historical" column are derived from the
unaudited financial records of the Company as of May 31, 2000.
(b) Represents the receipt and allocation of gross proceeds
related to the first closing of the equity financing, which
occurred on June 19, 2000. Offering costs related to the
transaction were negligible.
(c) Represents the receipt and allocation of the gross proceeds
related to the second closing of the equity financing, which is
subject to shareholder approval expected to occur on July 25,
2000. A portion of the proceeds will be utilized to repay the
Company's $2 million long-term debt.
(d) Represents the write-off of debt issue costs and a premiums
incurred in conjunction with a debt and equity financing that
occurred in June 1999.
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MEDPLUS, INC. AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
For the Four Month Period Ended May 31, 2000
(unaudited)
Financing
Pro Forma
Historical (a) Adjustments Pro Forma
______________ ________________ _________________
<S> <C> <C> <C>
Revenues:
Systems sales $ 1,377,700 1,377,700
Support and consulting
revenues 1,903,700 1,903,700
______________ ________________ _________________
Total revenues 3,281,400 - 3,281,400
______________ ________________ _________________
Cost of revenues:
Systems sales 765,100 765,100
Support and consulting
revenues 1,229,000 1,229,000
______________ ________________ _________________
Total cost of revenues 1,994,100 - 1,994,100
______________ ________________ _________________
Gross profit 1,287,300 - 1,287,300
Operating expenses:
Sales and marketing 1,107,100 1,107,100
Research and development 687,200 687,200
General and administrative 1,108,800 1,108,800
______________ ________________ _________________
Total operating expenses 2,903,100 - 2,903,100
______________ ________________ _________________
Operating loss (1,615,800) - (1,615,800)
Other income (expense):
Interest expense (167,400) 86,700 (b) (72,740)
7,960 (c)
Other income (expense), net 58,500 119,700 (d) 178,200
______________ ________________ _________________
Total other income (expense) (108,900) 214,360 105,460
______________ ________________ _________________
Net loss (1,724,700) 214,360 (1,510,340)
Preferred stock dividend
requirements (82,000) (82,000)
______________ ________________ _________________
Loss attributable to common
shareholders $ (1,806,700) 214,360 (1,592,340)
============== ================ =================
Loss per common share
(basic and diluted) $ (0.29) (0.19)
============== ================ =================
Weighted average shares
outstanding 6,206,885 8,025,350
============== ================ =================
See notes to Pro Forma Consolidated Statements of Operations.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MEDPLUS, INC. AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations
For the Year Ended January 31, 2000
(unaudited)
Financing
Pro Forma
Historical (a) Adjustments Pro Forma
______________ ________________ _________________
<S> <C> <C> <C>
Revenues:
Systems sales $ 8,377,100 8,377,100
Support and consulting revenues 4,160,800 4,160,800
______________ ________________ _________________
Total revenues 12,537,900 - 12,537,900
______________ ________________ _________________
Cost of revenues:
Systems sales 4,014,700 4,014,700
Support and consulting revenues 3,285,500 3,285,500
______________ ________________ _________________
Total cost of revenues 7,300,200 - 7,300,200
______________ ________________ _________________
Gross profit 5,237,700 - 5,237,700
Operating expenses:
Sales and marketing 3,181,800 3,181,800
Research and development 1,606,600 1,606,600
General and administrative 3,323,700 3,323,700
______________ ________________ _________________
Total operating expenses 8,112,100 - 8,112,100
______________ ________________ _________________
Operating loss (2,874,400) - (2,874,400)
Other income (expense):
Interest expense (518,800) 195,000 (b) (305,900)
17,900 (c)
Other income (expense), net 140,900 396,600 (d) 537,500
Synergis management expenses,
acquisition and offering costs (179,700) (179,700)
______________ ________________ _________________
Total other income (expense) (557,600) 609,500 51,900
______________ ________________ _________________
Loss before income tax benefit (3,432,000) 609,500 (2,822,500)
Income tax benefit (11,200) (11,200)
______________ ________________ _________________
Loss from continuing
operations (3,420,800) 609,500 (2,811,300)
Income from discontinued
operations (1,757,700) - (1,757,700)
______________ ________________ _________________
Net loss (5,178,500) 609,500 (4,569,000)
Conversion discount on preferred
stock (346,300) (346,300)
Preferred stock dividend
requirements (246,000) (246,000)
______________ ________________ _________________
Loss attributable to common
shareholders $ (5,770,800) 609,500 (5,161,300)
============== ================ =================
Loss per common share (basic and diluted)
Continuing operations (0.66) (0.43)
Discontinued operations (0.29) (0.22)
______________ ________________ _________________
Net loss $ (0.95) (0.65)
============== ================ =================
Weighted average shares
outstanding 6,086,970 7,905,435
============== ================ =================
See notes to Pro Forma Consolidated Statements of Operations.
</TABLE>
MedPlus, Inc. and Subsidiaries
Notes to Pro Forma Consolidated Statements of Operations
For the Four Month Period Ended May 31, 2000 and the Year Ended
January 31, 2000
The consolidated statements are unaudited. The ultimate effect of
the transaction may differ from the pro forma adjustments
presented herein and described in these notes.
(a) The amounts in the "Historical" column included in the
statement of operations for the year ended January 31, 2000 are
derived from the audited financial statements of the Company as of
January 31, 2000 included in the Company's Annual Report as filed
in its Form 10-KSB for the year then ended. The amounts in the
"Historical" column for the statement of operations for the four
month interim period ended May 31, 2000 are derived from the
unaudited financial records of the Company as of May 31, 2000.
(b) Represents the reversal of interest expense related to the
Company's Subordinated Notes. The Company will be utilizing the
proceeds from the second closing of the agreement to repay debt
outstanding. The second closing of the agreement is contingent
upon shareholder approval at the Company's Annual Shareholders'
Meeting on July 25, 2000 and the Company not having a material
adverse change, as defined in the agreement, prior to the meeting.
The Company has also historically incurred interest expense
relating to a line of credit with a bank that was repaid on May
15, 2000. Interest expense associated with a line of credit has
not been reversed as the Company anticipates entering into new
debt facilities in the near term.
(c) Represents the reversal of certain debt issuance costs that
were being amortized over the life of the Subordinated Notes.
(d) Represents the recognition of interest income related to the
estimated average cash and cash equivalents outstanding during the
period. An average interest rate of 5% and 5.5% for the year
ended January 31, 2000 and the four-month period ended May 31,
2000, respectively, was utilized. This rate represents the
Company's historical average interest rate earned for cash
invested in its short-term money market fund over the respective
periods.
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 thereunto duly authorized.
MEDPLUS, INC.
Date: June 27, 2000
By: /s/Daniel A. Silber
-----------------------
Daniel A. Silber
Chief Financial Officer
