U.S. Securities and Exchange Commission
Washington,===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSISON
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
Commission File No.file number 0-26389
CYBEAR, INC.
(Exact name of Registrant as specified in its charter)
DelawareDELAWARE 13-3936988
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporationIncorporation or organization) Identification No.)
5000 Blue Lake Drive, SuiteBLUE LAKE DRIVE, SUITE 200
Boca Raton, FloridaBOCA RATON, FLORIDA 33431
- ------------------------------- ----------
(Address of principal (Zip Code)
executiveExecutive offices
(561) 999-3500
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.days:
YES [X] NO [ ]
As of November 2, 1999,May 5, 2000, there were 17,650,91217,773,787 shares of the Registrant's
only class of common stock issued and outstanding.
===============================================================================
CYBEAR, INC.
INDEX TO THE FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets -
as of September 30, 1999 and DecemberMARCH 31, 1998 3
Unaudited Consolidated Statements of Operations -
for the three and nine months ended September 30, 1999 and 1998 4
Unaudited Consolidated Statements of Cash Flows -
for the nine months ended September 30, 1999 and 1998 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 192000
PAGE NUMBER
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets -
as of March 31, 2000 and December 31, 1999 3
Unaudited Consolidated Statements of Operations -
for the three months ended March 31, 2000 and 1999 4
Unaudited Consolidated Statements of Cash Flows -
for the three months ended March 31, 2000 and 1999 5
Notes to Unaudited Consolidated Financial Statements 6
Unaudited Pro Forma Condensed Consolidated Financial Statements 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
2
CYBEAR, INC.
PART I
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CYBEAR, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
September 30,March 31, December 31,
2000 1999
1998
------------ -------------------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 6,635,2071,040 $ 3,98311,922
Investments available-for-sale 37,878,850 --25,703 26,072
Investment interest receivable 1,107,230 --433 740
Accounts receivable, net of allowance of $5,000$8 and $3 as of
September 30,March 31, 2000 and December 31, 1999, 139,018 --
Receivable from Blue Lake Ltd. -- 366,000respectively 162 104
Convertible notes receivable 7,000 3,000
Prepaid expenses and other current assets 888,166 194,385
------------ ------------420 642
-------- --------
Total current assets 46,648,471 564,36834,758 42,480
Property and equipment, net 3,747,302 2,406,6293,608 3,523
Product development costs, net 351,028 358,000362 333
Software licenses 4,127 1,603
Goodwill, net 3,931,914 --3,721 3,819
Other assets 892,175 2,954
------------ ------------222 1,310
-------- --------
Total assets $ 55,570,89046,798 $ 3,331,951
============ ============53,068
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 604,3862,348 $ 1,153,0592,758
Accrued liabilities 780,867 301,782
Due to Andrx Corporation -- 2,344,727
------------ ------------779 332
-------- --------
Total current liabilities 1,385,253 3,799,568
------------ ------------3,127 3,090
-------- --------
Commitments and contingencies (Note 9)(Notes 2, 5 and 10)
Shareholders' equity (deficit):equity:
Preferred stock, $.01 par value; 2,000,000 shares authorized, none
issued and outstanding -- --
Common stock, $.001 par value; 25,000,000 shares authorized,
17,648,41217,772,537 and 17,653,662 shares issued and outstanding at September 30, 1999as of
March 31, 2000 and 13,269,400 shares issued
and outstanding at December 31, 1998 17,648 13,2691999, respectively 18 18
Additional paid-in-capital 64,797,287 3,558,695paid-in capital 65,154 64,873
Accumulated deficit (10,547,761) (4,039,581)
Unrealized(21,422) (14,813)
Accumulated other comprehensive loss on investments available-for sale (81,537) --
------------ ------------(79) (100)
-------- --------
Total shareholders' equity (deficit) 54,185,637 (467,617)
------------ ------------43,671 49,978
-------- --------
Total liabilities and shareholders' equity (deficit) $ 55,570,89046,798 $ 3,331,951
============ ============53,068
======== ========
The accompanying notes to unaudited consolidated financial statements are an
integral part of these balance sheets.
3
CYBEAR, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
Three Months Ended
Nine Months Ended
September 30, September 30,March 31,
-------------------------------
-------------------------------2000 1999
1998 1999 1998
------------ ------------ ------------ ---------------------- ----------
Revenues:
Subscription and otherRevenues $ 91,369231 $ -- $ 118,540 $ --
------------ ------------ ------------ -------------
---------- ----------
Operating expenses:
Cost of revenues 209 -
Network operations and operations support 774,873 121,226 2,198,031 248,712933 728
Product development 988,392 391,974 2,184,628 1,126,388948 526
Sales and marketing 1,203,329 136,002 2,767,673 395,2761,896 725
General and administrative 601,188 307,806 1,917,158 462,391880 655
Depreciation and amortization 360,619 34,336 850,710 89,634
------------ ------------ ------------ ------------549 191
Merger costs 832 -
Other non-recurring charges 1,152 -
---------- ----------
Total operating expenses 3,928,401 991,344 9,918,200 2,322,401
------------ ------------ ------------ ------------7,399 2,825
---------- ----------
Loss from operations (3,837,032) (991,344) (9,799,660) (2,322,401)(7,168) (2,825)
Other income (expense):
Interest income 559 1
Interest expense on due to Andrx Corporation -- (65,610) (216,182) (145,259)
Interest income 633,842 -- 683,593 --
------------ ------------ ------------ ------------- (91)
---------- ----------
Loss before income taxes (3,203,190) (1,056,954) (9,332,249) (2,467,660)(6,609) (2,915)
Income tax benefit -- -- 2,824,069 --
------------ ------------ ------------ ------------- 1,400
---------- ----------
Net loss $ (3,203,190)(6,609) $ (1,056,954) $ (6,508,180) $ (2,467,660)
============ ============ ============ ============(1,515)
========== ==========
Basic and diluted net loss per share $ (0.19)(0.37) $ (0.08) $ (0.44) $ (0.19)
============ ============ ============ ============(0.11)
========== ==========
Basic and diluted weighted average shares
of common stock outstanding 17,311,421 13,000,000 14,734,744 13,000,000
============ ============ ============ ============17,703,669 13,269,400
========== ==========
The accompanying notes to unaudited consolidated financial statements are an
integral part of these statements.
4
CYBEAR, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
NineThree Months Ended
September 30,March 31,
-------------------------------
2000 1999
1998
------------ --------------------- --------
Cash flows from operating activities:
Net loss $ (6,508,180)(6,609) $ (2,467,660)(1,515)
Adjustments to reconcile net loss to net cash used in
operating activities -
Depreciation and amortization 850,710 89,634
Write-off of capitalized product development costs 50,372 --
Write-off of property and equipment 19,100 --
Loss on sale of property and equipment 16,408 --549 191
Other non-cash charges 856 -
Changes in operating assets and liabilities:
Investment interest receivable (1,107,230) --307 -
Accounts receivable (82,758) --(58) -
Receivable from Blue Lake Ltd. 366,000 --- 366
Prepaid expenses and other current assets (693,781) (135,572)
Other assets (841,249) 10,2696 (175)
Accounts payable (592,822) 173,493
Accruedand accrued liabilities 479,085 85,710
------------ ------------537 (512)
--------- --------
Net cash used in operating activities (8,044,345) (2,244,126)
------------ ------------(4,412) (1,645)
--------- --------
Cash flows from investing activities:
PurchasesProceeds from sales of investments available-for-sale, net (37,960,387) --390 -
Funding of convertible note receivable (4,000) -
Purchases of property and equipment (1,973,938) (196,279)
Product development costs (119,667) (70,000)
Acquisition of Telegraph Consulting Corporation (1,176,424) --(558) (1,054)
Proceeds from sale of property and equipment 5,450 --
------------ ------------21 -
Product development costs (80) (55)
Purchases of software licenses (2,524) -
--------- --------
Net cash used in investing activities (41,224,966) (266,279)
------------ ------------(6,751) (1,109)
--------- --------
Cash flows from financing activities:
Proceeds from exercises of stock options 281 -
Advances from Andrx, Corporation, net of Andrx's utilization
of Cybear's income tax attributes 5,101,466 2,510,405
Repayment of bank loan (136,347) --
Net proceeds from public share offering 50,778,166 --
Proceeds from exercises of stock options 157,250 --
------------ ------------- 3,075
--------- --------
Net cash provided by financing activities 55,900,535 2,510,405
------------ ------------281 3,075
--------- --------
Net (decrease) increase in cash and cash equivalents 6,631,224 --(10,882) 321
Cash and cash equivalents, beginning of period 3,983 1,000
------------ ------------11,922 4
--------- --------
Cash and cash equivalents, end of period $ 6,635,2071,040 $ 1,000
============ ============
Supplemental disclosure of non-cash activities:
Conversion of due to Andrx Corporation into shares of common stock $ 7,446,193 $ --
============ ============325
========= ========
The accompanying notes to unaudited consolidated financial statements are an
integral part of these statements.
5
CYBEAR, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999MARCH 31, 2000
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
(1) GENERAL
In the opinion of management, the accompanying unaudited consolidated
financial statements have been prepared by Cybear, Inc. ("Cybear" or the
"Company"), an approximately 74%72% owned subsidiary of Andrx Corporation ("Andrx")
as of September 30, 1999,March 31, 2000, pursuant to the rules and regulations of the U.S.United States
Securities and Exchange Commission ("SEC"). Certain information and footnote
disclosures normally included in annual financial statements prepared in
accordance with accounting principles generally accepted accounting principlesin the United States
have been condensed or omitted pursuant to those rules and regulations. However,
management believes that the disclosures contained herein are adequate to make
the information presented not misleading. The unaudited consolidated financial
statements reflect, in the opinion of management, all material adjustments
(which include only normal recurring adjustments) necessary to present fairly
the Company's unaudited financial position and results of operations. The
unaudited consolidated results of operations for the three and nine months ended September
30, 1999 and the unaudited consolidated cash flows for the ninethree months
ended September 30, 1999,March 31, 2000, are not necessarily indicative of the results of
operations or cash flows which may be expected for the remainder of 1999.2000. The
unaudited consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes for the year ended
December 31, 1998,1999, included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998.1999.
Certain prior period amounts have been reclassified to conform to the
current periodsperiod presentation.
(2) REGISTRATION STATEMENTTRACKING STOCK REORGANIZATION PLAN
In June 1999,March 2000, Andrx and Cybear announced that they executed a
definitive Agreement and Plan of Merger and Reorganization (the
"Reorganization") with respect to their previously announced tracking stock
reorganization plan. This plan, which was recommended to the Cybear Board of
Directors by its Special Committee and approved by the Boards of both Cybear and
Andrx, will create a new class of Andrx common stock to separately track the
performance of Cybear ("Cybear Group Common"). The Reorganization will be
submitted to Andrx and Cybear shareholders for approval during 2000.
In connection with the proposed tracking stock reorganization plan, the
Company successfully completedincurred merger costs of $832 in the public offeringthree months ended March 31, 2000.
The Company expects to incur merger costs of 3,450,000 sharesup to approximately $1,500 in
connection with the proposed tracking stock reorganization plan. These costs are
charged to expense as incurred.
Unaudited pro forma condensed consolidated financial statements giving
pro forma effect to the Reorganization are presented on page 10 of its common stock, raising approximately $50.8 million in net
proceeds.
(3) ACQUISITION
On September 17, 1999, the Company acquired Telegraph Consulting
Corporation ("Telegraph"), the programming, networking and interactive design
division of Telegraph New Technology, Inc. The purchase price of approximately
$4.1 million included $1.2 million in cash, the issuance of 320,000 shares of
Cybear unregistered common stock valued at approximately $2.8 million and the
assumption of approximately $148,000 of Telegraph's debt. The acquisition was
recorded using the purchase method of accounting. The excess of the purchase
price over the fair value of the net assets acquired represents goodwill of
approximately $3.9 million. The goodwill is being amortizedthis
Quarterly Report on a straight-line
basis over its estimated useful life of 10 years. The following summarizes the
acquisition:
Cash used for acquisition $ 1,176,424
Common stock issued 2,771,000
Debt assumed 148,347
-----------
Purchase price 4,095,771
Working capital acquired (24,111)
Property and equipment acquired (124,529)
-----------
Goodwill $ 3,947,131
===========Form 10-Q.
6
CYBEAR, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
The resultsMARCH 31, 2000
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
(3) CONVERTIBLE NOTES RECEIVABLE
In March 2000, Cybear entered into a software license agreement with
AHT Corporation ("AHT"). In connection with the agreement, upon receipt of
Telegraph have been included$4,000 from Cybear, AHT issued to Cybear a one-year convertible promissory note
(the "Note") in the accompanying
unaudited consolidated financial statements since the acquisition date. The
following unaudited pro forma information presents the consolidated resultsamount of operations of Cybear and Telegraph as if the acquisition had occurred$4,000 bearing interest at the beginningrate of each period presented:
Nine Months Ended
September 30,
----------------------------
1999 1998
------------ -----------
Revenues $ 960,615 $ 832,000
============ ===========
Net loss $ (6,941,566) $(2,756,104)
============ ===========
Basic and diluted net loss10.0%. At
its option, Cybear may convert the Note into AHT common stock at a conversion
price of the lower of $4.34 per share $ (0.46) $ (0.21)
============ ===========
Such pro forma information has been prepared for comparative purposes
only and is not necessarily indicative of what the consolidated results of
operations of Cybear and Telegraph would have been had the acquisition been made
at the beginningor 80% of the periods presented, nor is it necessarily indicativeaverage market price for the
30 trading days immediately preceding the conversion date provided that Cybear
cannot acquire upon conversion more than 1,913,550 shares of AHT common stock.
In addition, in the consolidated resultsevent of default by AHT, Cybear and Telegraph subsequentshall be granted a perpetual
license to the acquisition.
(4) INVESTMENTS AVAILABLE-FOR-SALEsoftware, including the source code to the software. The Company
utilizeshas recorded the provisionsNote at cost. As of Financial Accounting Standards
Board ("FASB"March 31, 2000, the closing sale price of
AHT's common stock was $3.38. In addition, AHT granted Cybear a warrant (the
"Warrant") Statement on Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debtto purchase 300,000 shares of its common stock. The Warrant has an
exercise price of $4.34 per share and Equity Securities". SFAS No. 115
requires that marketable equity securities and all debt securities be classified
into three categories: (i) held to maturity securities, (ii) trading securities,
or (iii) available-for-sale securities. The Company classifies its investments
as available-for-sale and, accordingly, any unrealized gain or loss is reported
as a separate component of shareholders' equity. The cost related to investments
available-for-sale is determined utilizingexpires five years from the specific identification method.
(5)grant date.
(4) REVENUE RECOGNITION
Revenues forrecorded in the three and nine months ended September 30, 1999 include
subscriptions toMarch 31, 2000 consist of
the Company's Physician Practice Portal product, webfollowing:
E-commerce $ 215
Web site development and maintenance services and e-commerce.12
Subscription and web4
-----
$ 231
=====
The Company had no revenues for the three months ended March 31, 1999
as it was in the development stage.
E-commerce revenues are earned when the products are shipped. Web site
development and maintenance and subscription revenues are earned when the
Company's services are provided. E-commerce revenues are earned when the products are shipped. The Company has entered into certain agreements
with medical organizations (see Note
9) to provide the Company's subscription services to the
organizations' members in exchange for various consulting services. Certain of
these agreements result in a net cash outflow. SuchSubscription services earned
under agreements withresulting in net cash outflows were reflectedare recorded as barter revenue ina reduction of
the three and six months ended June 30, 1999 pending further
evaluation as previously reported. Inamounts expensed for the consulting services received.
E-commerce revenues for the three months ended September 30, 1999,March 31, 2000 represent
revenues earned from an arrangement between Cybear and Andrx to sell products to
physicians on orders placed through Cybear's Physician Practice Portal product
(see Note 9).
(5) OTHER NON-RECURRING CHARGES
Other non-recurring charges for the three months ended March 31, 2000
consist of severance costs, impairment charges to certain assets and costs
incurred to terminate an agreement. Certain of these other non-recurring charges
pertain to an agreement whereby the Company further evaluated such agreementshas future monthly contractual
obligations through June 2001, totaling approximately $2,300. In March 2000, the
Company disputed the third party's performance under the agreement and reversed revenues of $25,000
recognized in the
three and six months ended June 30, 1999companies are attempting to resolve this dispute. While no amounts have been
recorded relating to such
agreements.any required performance under this agreement subsequent to
February 29, 2000, no assurance can be given that the Company will not be
required to record any additional charges upon the resolution of this dispute.
7
CYBEAR, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
Revenues recorded in the three and nine month periods ended September
30, 1999 consist of the following:
Three Months Nine Months
Ended Ended
September 30, 1999 September 30, 1999
------------------ ------------------
Subscription $ 81,084 $ 83,255
Reversal of previous period revenues (25,000) --
Web site development and maintenance 23,153 23,153
E-commerce 12,132 12,132
--------- ---------
$ 91,369 $ 118,540
========= =========
Subscription revenues for the three and nine months ended September 30,
1999 include $57,000 from one medical organization.
Subscription revenues for the three and nine months ended September 30,
1999 include $19,311 from Andrx (see Note 10). In September 1999, Cybear started
providing subscriptions to its Physician Practice Portal product to certain of
Andrx customers at the standard monthly rate of $24.95 per subscriber. Andrx
pays for such subscription services on behalf of its customers.MARCH 31, 2000
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
(6) INCOME TAXES
Cybear's taxable results will beof operations for tax purposes through the
completion of the public offering in June 1999 were included in the consolidated
income tax return of Andrx as long assince Andrx ownsowned at least 80% of the common stock of
Cybear. Cybear and Andrx have a tax allocation agreement that provides, among
other things, for the allocation ofpursuant to which
Federal income tax liabilities or benefits are allocated to Cybear at the approximate amounts which would have been computed as if the
CompanyCybear
had filed a separate income tax returns.return when Cybear's taxable results through
the completion of the public offering (see Note 2) will beare
included in the consolidated income tax return of Andrx. Upon completion of the
public offering in June 1999, Andrx's ownership in Cybear was reduced below 80%.
Consequently, thereafter Cybear will now filefiles its income tax returns separately.
For the three months ended September 30, 1999,March 31, 2000, Cybear did not record any
income tax benefit as Andrx's ownership in Cybear was below 80% and Cybear
generated net operating loss carryforwards. Under the provisions of SFASStatement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes",
Cybear has provided a valuation allowance to reserve against 100% of its net
operating loss carryforwardsdeferred tax assets due to its history of net losses. For the ninethree months ended
September 30,March 31, 1999, Cybear recorded $2,824,069$1,400 in income tax benefit. The income tax
benefit reflects the reimbursement from Andrx for the utilization of Cybear's
income tax attributes pursuant to the tax allocation agreement.
For the three and nine months ended September 30, 1998, Cybear did not record
any income tax provision or benefit as Andrx could not utilize Cybear's tax
attributes.
(7) NET LOSS PER SHARE
For all periods presented, basic and diluted net loss per share is
based on the weighted average number of shares of common stock outstanding.
Since the effect of common stock equivalents was antidilutive, all such
equivalents were excluded in the computation of diluted net loss per share.
Common equivalent shares consist of the incremental common shares issuable upon
exercise of stock options and warrants using the treasury stock method. There
were 1,648,7081,574,334 and 470,5001,033,583 options and warrants outstanding at September 30,March 31, 2000
and 1999, and 1998, respectively, that could potentially dilute earnings per share in the
future.
8
CYBEAR, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(8) COMPREHENSIVE LOSS
The components of the Company's comprehensive loss are as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Net loss $(3,203,190) $(1,056,954) $(6,508,180) $(2,467,660)
Unrealized loss on investments available-for-sale (81,537) -- (81,537) --
----------- ----------- ----------- -----------
Comprehensive loss $(3,284,727) $(1,056,954) $(6,589,717) $(2,467,660)
=========== =========== =========== ===========
(9) COMMITMENTS
In May 1999, the Company entered into a one-year agreement with Genesis
Health Ventures, Inc. ("Genesis"). Pursuant to the agreement, Genesis will
provide Cybear with certain consulting services. In addition, Genesis will
promote the installation and use of Cybear's Physician Practice Portal product
to 500 of its provider physicians. In consideration thereof, Cybear is paying
Genesis $150,000 for the consulting services with $50,000 payable on the date of
the agreement and $25,000 at the end of each quarter thereafter provided that
its Physician Practice Portal product is installed and used by an additional 125
Genesis providers each quarter. In addition, Cybear will provide its Physician
Practice Portal product to the Genesis providers with no monthly subscription
fee during the term of the agreement. For the three and nine months ended
September 30, 1999, Cybear recorded $37,500 and $50,000, respectively, in
consulting expense relative to this agreement.
In May 1999, Cybear entered into a five-year renewable consulting
agreement with Innovative Clinical Solutions, Ltd. formerly known as PhyMatrix
Management Company, Inc. ("PhyMatrix") superceding the previous three-year
agreement entered in February 1999. In exchange for a $1 million consulting fee
to be paid by Cybear, PhyMatrix will make reasonable good faith efforts to cause
healthcare professionals employed by or any medical practice managed by or
affiliated with PhyMatrix to subscribe to Cybear's Physician Practice Portal
product, to market Cybear's Physician Practice Portal product to others, and to
present Cybear with potential advertisers. PhyMatrix also agreed to pay Cybear
$600,000 representing 24 subscription months for the first 1,000 subscribers
obtained from PhyMatrix. In addition, Cybear and PhyMatrix will share revenues
generated from subscribers and advertisers provided by PhyMatrix. In June 1999,
Cybear paid PhyMatrix $500,000 of the $1 million consulting fee and recorded the
payment to other assets. Cybear is expensing this other asset at a monthly rate
of $41,667 over 24 months. For the three and nine months ended September 30,
1999, Cybear recorded $125,000 and $166,667, respectively, in marketing expense
related to this other asset. For the three and nine months ended September 30,
1999, Cybear also recorded a reduction to its marketing expense totaling $75,000
and $100,000, respectively, representing three and four subscription months,
respectively, for the first 1,000 subscribers obtained from PhyMatrix.
9
CYBEAR, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
On June 1, 1999, the Company entered into an agreement with Cox
Interactive Media, Inc. ("CIMedia"), an operator of web sites and other online
and interactive services in over 20 cities in the U.S. The agreement has a
25-month term beginning on June 1, 1999, and may be extended by mutual
agreement. Under the terms of the agreement, beginning on September 1, 1999
Cybear is providing healthcare-related content for health channels that CIMedia
is including on its web sites. Additionally, the Company's products will be
advertised on the CIMedia web sites. The Company is paying to CIMedia a fee of
$3,625,000 in monthly installments during the term of the agreement in exchange
for CIMedia's implementing, updating and maintaining the Internet portal box on
CIMedia's health channels and for advertising services CIMedia is providing to
the Company. These monthly installments are recorded to other assets and are
being expensed at a monthly rate of $164,773 beginning in September 1999 over
the remaining term of this agreement. For the three and nine months ended
September 30, 1999, Cybear made payments to CIMedia of $435,000 and $645,000,
respectively, and has expensed $164,773.
On August 20, 1999, the Company entered into a partnership with
HealthAtoZ.com to supply health news, information and personalized content for
its consumer health site also accessible through CIMedia's new health channels.
The agreement has a 12-month term and may be extended by Cybear for an
additional 12-month term. Under the terms of the agreement, the Company will
share with HealthAtoZ.com 50% of its net advertising and e-commerce revenue
derived from the co-branded site. In September 1999, Cybear paid HealthAtoZ.com
$309,210 to cover the cost of developing, updating and maintaining the
co-branded site and recorded the payment to prepaid expenses. Cybear is
expensing this payment at a monthly rate of $25,768 over 12 months and therefore
recorded $25,768 in expense for the three and nine months ended September 30,
1999.
In September 1999, the Company amended its lease with Blue Lake Ltd. to
expand the leased premises by 16,420 square feet starting April 1, 2000. This
will increase the annual base rent to $490,316 excluding taxes, insurance,
utilities and common area maintenance charges starting on April 1, 2000. In
addition, the lease term was extended to
March 31,
2007.
In September2000 1999
the Company entered into a partnership with Health
Paradigm Advisors ("HPA"), a Medical Services Organization in the northeast
U.S., to co-market Cybear's intranet services to 45,000 physicians served by
HPA. In exchange for marketing Cybear's product to its members, Cybear issued a
warrant to purchase up to 75,000 shares of its common stock to Summit Health
Administrators, Inc., an HPA's affiliate company, at $14.41, which was the
average closing trading price for the 60 day period immediately preceding the
execution of the agreement. The warrant will be exercisable only in the event
Cybear achieves certain paid subscription objectives among HPA's membership. In
addition, Cybear has agreed to pay HPA a one-time marketing fee of $97,500 and
volume rebates of up to $750,000 when Cybear achieves certain paid subscription
objectives among HPA's membership. For the three and nine months ended September
30, 1999, no expenses were recorded relative to this agreement.
(10)---- ----
Net loss $ (6,609) $ (1,515)
Unrealized gain on investments
available-for-sale 21 -
--------- ---------
Comprehensive loss $ (6,588) $ (1,515)
========= =========
(9) RELATED PARTY TRANSACTIONS
In September 1999, the Company started providing subscriptions to its
Physician Practice Portal product to certain of Andrx customers at the standard
monthly rate of $24.95 per subscriber. Andrx pays for such subscription services
on behalf of its customers. Revenues generated from such services were $19,311
for both the three and nine months ended September 30, 1999 and were included in
accounts receivable on the Company's consolidated balance sheet as of September
30, 1999.
10
CYBEAR, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
Beginning in September 1999, Cybear entered into an arrangement with
Andrx for the sale by Cybear of products to physician offices on orders placed
through Cybear's Physician Practice Portal product.Portal. Andrx purchases, warehousescharges Cybear at its cost for
the products sold. Andrx also charges Cybear for services that include the
purchasing, warehousing and distributesdistribution of the products to the physician
offices and charges Cybear for these
services.offices. Management believes that the amounts incurred for these services
approximate fair market value. For the three and nine months ended September 30,
1999,March 31, 2000, Andrx charged
Cybear recorded product sales of $12,132 under such arrangement. Costs
incurred$22 for the services provided by Andrx were $2,701 for the three and nine
months ended September 30, 1999.it provided.
8
CYBEAR, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
The Company and Andrx have a corporate services agreement whereby Andrx
provides the Company with various services of its management.management services. For the three and
nine months
ended September 30,March 31, 2000 and 1999, and 1998, the Company incurred amounts for these services
based upon mutually agreed upon allocation methods. Management believes that the
amounts incurred for these services approximate fair market value. Costs for
such services were $30,000$30 for botheach of the three-month periods ended March 31, 2000
and 1999.
(10) SUBSEQUENT EVENT
In April 2000, Cybear entered into a three-year agreement with a
medical organization to provide the Company's subscription services to the
organization's members in exchange for various consulting and marketing
services. Under the terms of this agreement, Cybear paid $1,200 at inception for
various consulting and marketing services and will receive monthly subscription
fees of $25. Consequently, this agreement will result in a net cash outflow to
Cybear of $300 over its term. Therefore, subscription services earned under this
agreement will be recorded as a reduction of the amounts expensed for the
consulting and marketing services received.
9
CYBEAR, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated balance sheet as of
March 31, 2000 and the unaudited pro forma condensed consolidated statements of
operations for the three months ended September 30,March 31, 2000 and for the year ended
December 31, 1999, give pro forma effect to the corporate reorganization plan
(the "Reorganization") which will create a new class of Andrx common stock,
Cybear Group Common, to separately track the performance of Cybear.
Pursuant to the Reorganization, Andrx will acquire all of the publicly
traded shares of common stock of Cybear in what should be a tax-free
reorganization. Cybear's public shareholders currently own approximately 4.9
million shares, or 27.6%, of the common shares of Cybear as of March 31, 2000
and 1998, respectively, and $90,000those shareholders will receive one share of Cybear Group Common for bothevery
Cybear common share they currently own. In the nine months
ended September 30, 1999 and 1998, respectively.
Cybear's taxable resultsReorganization, the number of
Cybear shares held by Andrx will be reduced from 12.9 million shares to 10.8
million shares so as to provide the equivalent of a 20% increase in shares held
by the non-Andrx shareholders of Cybear. As a result, the non-Andrx shareholders
of Cybear will own approximately 31.2% of the Cybear Group Common following the
closing of the transaction. Pursuant to the Reorganization, each Andrx common
share will be converted into (i) one share of Andrx Group Common and (ii)
approximately .1622 shares of Cybear Group Common. Upon completion of the
Reorganization, (i) Cybear will be a wholly owned subsidiary of Andrx with 100%
of its value publicly traded in the form of Cybear Group Common; (ii) current
Cybear public shareholders will own approximately 31.2% of the Cybear Group
Common; and (iii) current Andrx shareholders will own 100% of the Andrx Group
Common and approximately 68.8% of the Cybear Group Common. The preceding share
ownership and percentages exclude the potential exercise by Edward E. Goldman,
M.D., Cybear's Chief Executive Officer, of an outstanding warrant to acquire
525,000 shares of Cybear common stock currently owned by Andrx.
The unaudited pro forma condensed consolidated balance sheet gives
effect to the Reorganization as if it occurred as of March 31, 2000. The
unaudited pro forma condensed consolidated statements of operations give effect
to the Reorganization as if it occurred at the beginning of the periods
presented.
As a result of the Reorganization, Cybear will be a wholly owned
subsidiary of Andrx Corporation and its common stock will become a separate
class of Andrx common stock, Cybear Group Common, representing the equity
interest and businesses of the Cybear Group. The equity interests and businesses
of Andrx Corporation and its subsidiaries other than the Cybear Group will
become another separate class of Andrx common stock, Andrx Group Common.
Accordingly, under the Reorganization, the Cybear Group and the Andrx
Group will present separate financial statements relating to their respective
class of Andrx common stock.
Cybear Group financial statements will include basic and diluted
earnings (loss) per share based on the group's financial position and operating
results and based on the Cybear Group Common basic and diluted shares
outstanding. In connection with the Reorganization, Cybear and the other members
of the Andrx consolidated group will enter into, among other things, a tax
sharing agreement. The financial statements of Andrx Group and Cybear Group will
utilize the separate company method of accounting for purposes of allocating
Federal and state consolidated tax liabilities among group members. Under the
terms of the tax sharing agreement, a member of the group will be entitled to
its income tax benefits in the year generated to the extent that the member can
utilize such tax benefits in the year generated. To the extent the member cannot
utilize its income tax benefits in the year generated, the member will not be
compensated in that year by other members of the Andrx consolidated group for
any utilization of those benefits. Instead, if and when a member leaves the
group, Andrx may elect to reimburse that member for any unreimbursed income tax
benefits utilized. That reimbursement will take the form of a capital investment
by Andrx, for which it will receive stock. In the case of any "tracking stock"
members, such as the Cybear Group, the stock received by Andrx shall be in the
form of tracking shares. In addition, if any member of the group causes another
member to become subject to state tax in a state where it would otherwise not be
taxed on a separate company basis, the member causing the tax liability
10
will be responsible for the additional incremental state tax and other
additional costs of the other member.
For financial statement purposes, at such time as the Cybear Group
achieves profitability, if ever, or is otherwise able to recognize its tax
benefits under accounting principles generally accepted in the United States,
the Cybear Group will recognize the benefit of its accumulated income tax
benefits (which had previously been utilized by the Andrx Group) in its
statement of operations with a corresponding decrease to its shareholders'
equity (i.e., effectively accounted for as a non-cash dividend).
The unaudited pro forma condensed consolidated financial statements are
provided for informational purposes only and are not necessarily indicative of
our results of operations or financial position had the transaction assumed
therein occurred, nor are they necessarily indicative of the results of
operations that may be expected to occur in the future. Consummation of the
transaction is subject to various conditions, including approval by shareholders
of Andrx and Cybear. In addition to shareholder approval, Andrx and Cybear will
be filing with the SEC a joint proxy statement and registration statement with
respect to the proposed transaction. The transaction will be subject to various
Federal and state regulatory approvals, and accordingly, no assurance can be
given that this transaction will be consummated. Furthermore, the unaudited pro
forma condensed consolidated financial statements are based upon assumptions
that Cybear believes are reasonable and should be read in conjunction with the
unaudited consolidated financial statements and the accompanying notes thereto
included elsewhere in this Form 10-Q and the consolidated financial statements
and accompanying notes thereto for the year ended December 31, 1999, included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
11
CYBEAR, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2000
(IN THOUSANDS)
Historical Pro Forma
Cybear Pro Forma Cybear
Consolidated Adjustments Group
------------ ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 1,040 $ - $ 1,040
Investments available-for-sale 25,703 - 25,703
Investment interest receivable 433 - 433
Accounts receivable, net 162 - 162
Convertible notes receivable 7,000 - 7,000
Prepaid expenses and other current assets 420 - 420
-------- -------- --------
Total current assets 34,758 - 34,758
Property and equipment, net 3,608 - 3,608
Product development costs, net 362 - 362
Software licenses 4,127 - 4,127
Goodwill, net 3,721 2,700 (2) 22,103
15,682 (3)
Other assets 222 - 222
-------- -------- --------
Total assets $ 46,798 $ 18,382 $ 65,180
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,348 $ 668 (1) $ 3,016
Accrued liabilities 779 - 779
-------- -------- --------
Total current liabilities 3,127 668 3,795
Commitments and contingencies
Shareholders' equity 43,671 (668)(1) 61,385
2,700 (2)
15,682 (3)
-------- -------- --------
Total liabilities and shareholders' equity $ 46,798 $ 18,382 $ 65,180
======== ======== ========
The accompanying notes to the unaudited pro forma condensed consolidated income
tax returnbalance
sheet are an integral part of Andrx as long as Andrx owns at least 80%this statement.
12
CYBEAR, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
(1) Reflects the additional estimated fees and expenses of $668 to be
incurred by Cybear in connection with the Reorganization charged to
shareholders' equity. As the effect of the costs is non-recurring, it
has not been included in the unaudited pro forma condensed consolidated
statements of operations.
(2) Reflects the estimated fees and expenses of $2,700 incurred by Andrx
Group with respect to the acquisition of the historical minority
interest which was allocated to the Cybear Group goodwill.
(3) Reflects the effects of the Reorganization, as follows:
ADJUSTED
SHARES SHARES
OUTSTANDING REORGANIZATION OUTSTANDING
AT 3/31/2000 ELIMINATION AT 3/31/2000
-------------------------------------------
Andrx ownership of Cybear 12,877,000 (2,058,700) 10,818,300
Minority ownership of Cybear 4,896,000 4,896,000
-------------------------------------------
Total Cybear shares outstanding 17,773,000 (2,058,700) 15,714,300
===========
Times assumed per share price $ 5.00 $ 5.66
------------ -----------
Total Cybear market capitalization $ 88,865 $ 88,865
============ ===========
Minority ownership of Cybear 4,896,000
Times adjusted market price $ 5.66
-----------
Purchase price of minority interest acquired 27,711
Less: minority interest historical basis (12,029)
-----------
Goodwill - Purchase price of minority interest in excess
of its historical basis 15,682
Goodwill - Andrx Group estimated fees and expenses (see Note 2) 2,700
-----------
Total goodwill allocated to Cybear Group $ 18,382
===========
For purposes of the unaudited pro forma condensed consolidated
financial statements, the market price of Cybear, Inc common stock was
assumed to be $5.00 per share, which was adjusted to $5.66 per share
resulting from the elimination of Cybear. The Company and Andrx have a tax allocation agreement that provides,
among other things, for the allocation of Federal income tax liabilities or
benefits2,058,700 Cybear shares due to the
Company atexchange rate included in the approximate amounts which would have been
computedReorganization. As provided under the
Reorganization terms, the shares eliminated in the Reorganization are
calculated excluding the potential exercise by Edward E. Goldman, M.D.,
Cybear's Chief Executive Officer, of an outstanding warrant to acquire
525,000 shares of Cybear common stock currently owned by Andrx. In
connection with the repurchase of the historical Cybear minority
interest, the resulting goodwill of $18,382 was allocated to Cybear
Group Common shareholders. The actual amount of goodwill will be
determined based on Cybear common stock price as ifof the Company had filed separate income tax returns.closing of the
transaction. An increase or decrease of $1.00 in Cybear common stock
price will result in an increase or decrease of approximately $5,500 to
the goodwill and therefore in an increase or decrease of approximately
$550 to the annual goodwill amortization.
13
CYBEAR, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
Historical Pro Forma
Cybear Pro Forma Cybear
Consolidated Adjustments (5) Group
------------ ----------- ------------
Revenues $ 231 $ - $ 231
------------ ----------- ------------
Operating expenses:
Cost of revenues 209 - 209
Network operations and operations support 933 - 933
Product development 948 - 948
Sales and marketing 1,896 - 1,896
General and administrative 880 - 880
Depreciation and amortization 549 460 (3) 1,009
Merger costs 832 (832)(1) -
Other non-recurring charges 1,152 - 1,152
------------ ----------- ------------
Total operating expenses 7,399 (372) 7,027
------------ ----------- ------------
Loss from operations (7,168) 372 (6,796)
Other income (expense):
Interest income 559 - 559
------------ ----------- ------------
Net loss $ (6,609) $ 372 $ (6,237)
============ =========== =============
Basic and diluted net loss per share $ (0.37) $ (0.40)
============ =============
Basic and diluted weighted average shares
of common stock outstanding 17,703,700 (2,058,700)(4) 15,645,000
============ =========== =============
The accompanying notes to the unaudited pro forma condensed consolidated
financial statements are an integral part of this statement.
14
CYBEAR, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
Historical Pro Forma
Cybear Pro Forma Cybear
Consolidated Adjustments (5) Group
------------ ----------- ------------
Revenues $ 270 $ - $ 270
------------ ----------- ------------
Operating expenses:
Cost of revenues 77 - 77
Network operations and operations support 2,790 - 2,790
Product development 3,058 - 3,058
Sales and marketing 4,909 - 4,909
General and administrative 2,544 - 2,544
Depreciation and amortization 1,556 1,838 (3) 3,394
------------ ----------- ------------
Total operating expenses 14,934 1,838 16,772
------------ ----------- ------------
Loss from operations (14,664) (1,838) (16,502)
Other income (expense):
Interest income 1,282 - 1,282
Interest expense on due to Andrx (216) - (216)
------------ ----------- ------------
Loss before income taxes (13,598) (1,838) (15,436)
Income tax benefit 2,824 (2,824)(2) -
------------ ----------- ------------
Net loss $ (10,774) $ (4,662) $ (15,436)
============ =========== ============
Basic and diluted net loss per share $ (0.70) $ (1.15)
============ ============
Basic and diluted weighted average shares
of common stock outstanding 15,470,000 (2,058,700)(4) 13,411,300
============ =========== ============
The accompanying notes to the unaudited pro forma condensed consolidated
financial statements are an integral part of this statement.
15
CYBEAR, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
(1) For the three months ended September 30, 1999,March 31, 2000, reflects the elimination of
fees and expenses of $832 incurred by Cybear did not record any income tax benefit as
Andrx's ownership in Cybear was below 80% and Cybear generated net operating
loss carryforwards. Underconnection with the
provisionsReorganization. As the effect of SFAS No. 109, the Company has
provided a valuation allowance to reserve against 100% of its net operating loss
carryforwards due to its history of net losses. For the nine months ended
September 30, 1999, Cybear recorded $2,824,069 in income tax benefit reflecting
the reimbursement from Andrx for the utilization of Cybear's tax attributes
pursuant to the tax allocation agreement. For the three and nine months ended
September 30, 1998, Cybear did not record any income tax provision or benefit as
Andrx could not utilize Cybear's tax attributes (see Note 6).
Due to Andrxcosts is non-recurring, they have
been eliminated in the accompanying balance sheet asunaudited pro forma condensed consolidated
statement of December 31, 1998,
represented advances from Andrx to fund the Company's operations and the related
accrued interest. Such advances bore interest at prime plus 1/2%. Upon
completion of the public offering in June 1999 (see Note 2), Andrx converted its
advances due from Cybear, net of the reimbursement for tax attributes described
above, to Cybear's capital in exchange of 465,387 shares of Cybear common stock
at the public offering price of $16.00 per share. The Company did not receive
any advances from Andrx during the three months ended September 30,March 31, 2000.
(2) For the year ended December 31, 1999, reflects the elimination of
Cybear's historical $2,824 income tax benefit which would not have been
used by Cybear Group on a separate income tax return basis and consequently did not record any related interest expense for that period. The
Company recorded $216,182would
have been included in interest expense on the Duetax allocation to Andrx forGroup pursuant to the
nine
months ended September 30, 1999, and $65,610 and $145,259 forReorganization.
(3) Reflects the three and nine
months ended September 30, 1998, respectively.
The Company subleases 4,000 square feetamortization of office space in
Ridgefield Park, New Jersey from Strategy Business and Technology Solutions,
LLC, a company owned bygoodwill totaling $18,382, consisting of
$15,682 representing the chairmanexcess of the Company,purchase price of $27,711 offset
by historical minority interest of $12,029 and Andrx Group's estimated
Reorganization transaction costs and expenses of $2,700 incurred by
Andrx (see unaudited pro forma condensed consolidated balance sheet
Note 2). Such goodwill is amortized on a straight line basis over an
estimated life of ten years.
(4) Reflects the number of Cybear shares held by Andrx that were eliminated
as a result of the Reorganization (see unaudited pro forma condensed
consolidated balance sheet Note 3).
(5) Certain results of the Reorganization referred to house its business
development and sales activities. The lease provides for $120,000 and $5,000 in annual base rent and electricity, respectively, and has a five-year term
commencing on NovemberNote 1 1998. The Company recorded $34,166 and $99,974 in rent
expense relative to this lease for the
three and nine months ended September 30,
1999, respectively.
11unaudited pro forma condensed consolidated balance sheet have been
excluded from the unaudited pro forma condensed consolidated statements
of operations due to their non-recurring nature.
16
CYBEAR, INC.
PART I
FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SOME OFCYBEAR, INC. AND SUBSIDIARIES ("CYBEAR" OR THE INFORMATION"COMPANY") CAUTIONS
READERS THAT CERTAIN IMPORTANT FACTORS MAY AFFECT THE COMPANY'S ACTUAL RESULTS
AND COULD CAUSE SUCH RESULTS TO DIFFER MATERIALLY FROM ANY FORWARD-LOOKING
STATEMENTS WHICH MAY BE DEEMED TO HAVE BEEN MADE IN THIS REPORT CONTAINS FORWARD-LOOKING
STATEMENTS WITHIN THE MEANINGOR WHICH ARE
OTHERWISE MADE BY OR ON BEHALF OF THE FEDERAL SECURITIES LAWS.COMPANY. FOR THIS PURPOSE, ANY STATEMENTS
CONTAINED IN THIS REPORT THAT ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE
DEEMED TO BE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS
TYPICALLY ARE IDENTIFIED BY USEWITHOUT LIMITING THE GENERALITY OF TERMS LIKE "MAY," "WILL," "EXPECT,"
"ANTICIPATE,"THE
FOREGOING, WORDS SUCH AS "MAY", "WILL", "EXPECT", "BELIEVE", "ANTICIPATE",
"INTEND", "COULD", "WOULD", "ESTIMATE" AND SIMILAR WORDS, ALTHOUGH SOME FORWARD-LOOKING
STATEMENTS ARE EXPRESSED DIFFERENTLY. READERS SHOULD BE AWARE THAT THE ACTUAL
RESULTS OF CYBEAR, INC. ("CYBEAR"OR "CONTINUE" OR THE "COMPANY") COULD DIFFER MATERIALLY FROM
THOSE CONTAINED INNEGATIVE OTHER
VARIATIONS THEREOF OR COMPARABLE TERMINOLOGY ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. FACTORS WHICH MAY AFFECT THE FORWARD-LOOKING STATEMENTS DUECOMPANY'S RESULTS
INCLUDE, BUT ARE NOT LIMITED TO, A NUMBER OF FACTORS,
INCLUDING OUR LIMITED OPERATING HISTORY AND SUBSTANTIAL
OPERATING LOSSES, AVAILABILITY OF CAPITAL RESOURCES, ABILITY TO EFFECTIVELY
COMPETE, ECONOMIC CONDITIONS, UNANTICIPATED DIFFICULTIES IN PRODUCT DEVELOPMENT,
ABILITY TO GAIN MARKET ACCEPTANCE AND MARKET SHARE, ABILITY TO MANAGE GROWTH,
RELIANCE ON
SHORT-TERM NON-EXCLUSIVE CONTRACTS, INTERNET SECURITY RISKS AND UNCERTAINTY RELATING TO THE EVOLUTION OF THE
INTERNET AS A MEDIUM FOR COMMERCE, DEPENDENCE ON THIRD PARTY CONTENT PROVIDERS,
DEPENDENCE ON OUR KEY PERSONNEL, ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY
YEAR 2000 PROBLEMS AND THE IMPACT OF FUTURE GOVERNMENT REGULATION ON OUR BUSINESS. READERS SHOULDTHE COMPANY IS
ALSO CONSIDER CAREFULLY
THESUBJECT TO OTHER RISKS DETAILED HEREIN OR DETAILED FROM TIME TO TIME IN
OURTHIS REPORT AND THE COMPANY'S FILINGS WITH THE U.S.UNITED STATES SECURITIES AND
EXCHANGE COMMISSION (THE "SEC").
INTRODUCTION
Cybear, Inc., a Delaware corporation, was incorporated on February 5, 1997.
Cybear is an information technology company using the Internet to attempt to
improve the efficiency of administrative and communications tasks of managing
patient care. Cybear provides access to the Internet and the Cybear product line
through its own Internet Service Provider ("ISP")ISP system, delivering productivity applications to health care
providers and health information to consumersproviders.
In March 1999, Cybear introduced its first product, its Physician
Practice Portal, which addressesis designed to address the communications and operational
needs of physicians. Cybear's future products will providemay include Internet-based
productivity software applications and communication networks for other
constituents of the healthcare community. InDuring the three months ended June 30,
1999, Cybear emerged from the development stage for financial reporting
purposes. In June 1999, the
Company successfully completed a public offering of 3,450,000 shares of its
common stock, raising approximately $50.8 million in net proceeds. In September
1999, the Company acquired Telegraph Consulting Corporation ("Telegraph"), the
programming, networking and interactive design division of Telegraph New
Technology, Inc. The purchase price of approximately $4.1 million included $1.2
million in cash, the issuance of 320,000 shares of Cybear unregistered common
stock valued at approximately $2.8 million and the assumption of approximately
$148,000 of Telegraph's debt. The acquisition was recorded using the purchase
method of accounting. As of September 30, 1999, Cybear was approximately 74%
owned by Andrx Corporation ("Andrx").
Cybear has incurred net operating losses and negative cash flows from
operating activities since its inception. As of September 30, 1999,March 31, 2000, Cybear had an
accumulated deficit of approximately $10.5$21.4 million. In addition, Cybear intends
to continue to invest heavilyincur significant expenses in product development, network
operations, customer support, sales and marketing and administrative areas. As a
result, Cybear expects to continue to incur substantial operating losses for the
foreseeable future, and may never achieve or sustain profitability.
12In March 2000, Andrx and Cybear announced that they executed a
definitive Agreement and Plan of Merger and Reorganization (the
"Reorganization") with respect to their previously announced tracking stock
reorganization plan. This plan, which was recommended to the Cybear Board of
Directors by its Special Committee and approved by the Boards of both Cybear and
Andrx, will create a new class of Andrx common stock to separately track the
performance of Cybear ("Cybear Group Common"). The Reorganization will be
submitted to Andrx and Cybear shareholders for approval during 2000.
17
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999MARCH 31, 2000 ("19992000 QUARTER"), AS COMPARED TO THREE MONTHS
ENDED SEPTEMBER 30, 1998MARCH 31, 1999 ("19981999 QUARTER").
Cybear had $91,369$231,000 in revenues for the 19992000 Quarter and had no
revenues for the 1998 Quarter. Revenue1999 Quarter as Cybear was in the development stage. Revenues
for the 19992000 Quarter representsincludes $215,000 from e-commerce transactions, $12,000
from web site development and maintenance, as well as $4,000 from subscriptions
to the Company's Physician Practice Portal product, as well asproduct.
Cybear had $209,000 in cost of revenues for the 2000 Quarter. Cost of
revenues for the 2000 Quarter represent the cost for the products sold through
Cybear's Physician Practice Portal product. Such products are purchased from
web
site development and maintenance and e-commerce revenues (see Notes 5 and 10 to
the accompanying unaudited consolidated financial statements).Andrx at cost.
Network operations and operations support costs were $774,873 for$933,000 in the
19992000 Quarter compared to $121,226 for$728,000 in the 19981999 Quarter. Network operations and
operations support costs consist primarily of personnel and related costs
associated with operating the network operations center and providing customer
support, telecommunications costs and maintenance expense on computer hardware
and software. The increase in network
operations and operations support costs for the 19992000 Quarter related primarily
to the establishment of the network operations
centeran increase in telecommunications costs and the development ofheadcount in the operations
support infrastructure.area.
Product development costs were $988,392$948,000 for the 2000 Quarter compared
to $526,000 for the 1999 Quarter compared
to $391,974 for the 1998 Quarter. Product development costs include outside
consultant fees, content fees, payroll, benefits and housing expenses of
employees involved in the creation, design and development of Cybear's products. The increase in the product development costs
for the 19992000 Quarter reflects the progress and expansion of Cybear's development
activities.
On August 31, 1999,
the Company closed its office in Tampa, Florida, which housed some of its
product development staff and in the process terminated 16 employees. The
Company incurred costs of approximately $100,000 to close this office. In
September 1999, the Company acquired Telegraph (see Note 3 to the accompanying
unaudited consolidated financial statements) resulting in the addition of 15
employees to its product development staff.
Sales and marketing expenses were $1.2$1.9 million for the 19992000 Quarter
compared to $136,002$725,000 for the 19981999 Quarter. Sales and marketing expenses consist
primarily of salaries and personnel related costs, outside consultant fees,
costs incurred to CIMedia and costs of developing and distributing promotional
material. The increase in sales and marketing
expenses for the 19992000 Quarter related primarily to the establishmentexpansion of the selling
and marketing infrastructure, the developmentan increase in consulting and distribution of promotional material and
costs incurred for trade shows and to CIMedia.advertising costs.
General and administrative expenses were $601,188$880,000 for the 2000 Quarter
compared to $655,000 for the 1999 Quarter
compared to $307,806 for the 1998 Quarter. General and administrative expenses
consist primarily of salaries and personnel related expenses for executives and
administrative functions, housing expenses and professional fees. The increase in general and
administrative expenses for the 19992000 Quarter related to the establishment and developmentexpansion of the
administrative infrastructure.
Depreciation and amortization expense was $360,619$549,000 for the 2000 Quarter
compared to $191,000 for the 1999 Quarter
compared to $34,336 for the 1998 Quarter. Depreciation and amortization expense
consists primarily of the depreciation and amortization of property and
equipment and of capitalized product development costs. The increase in depreciation and
amortization for the 19992000 Quarter resulted primarily from Cybear's purchases of
computer hardware and software used in the establishment
of its network operations center and the
development of its products, and leasehold improvements to the rented space housing
its corporate headquarters and network operations center. In addition, the
depreciation and amortization expense includes amortization of the goodwill
related to the acquisition of Telegraph Consulting Corporation on September 17,
1999.
Merger costs were $832,000 for the 2000 Quarter. Merger costs consist
of costs associated with the pending merger with Andrx under a tracking stock
reorganization plan, primarily investment banking and legal fees. The Company
expects to incur merger costs of up to approximately $1.5 million in connection
with the pending merger.
Other non-recurring charges were $1.2 million for the 2000 Quarter.
These charges consist of severance costs, impairment charges to certain assets
and costs incurred to terminate an agreement. Certain of these other
non-recurring charges pertain to an agreement whereby the Company has future
monthly contractual obligations through June 2001, totaling approximately $2.3
million. In March 2000, the Company disputed the third party's performance under
the agreement and the companies are attempting to resolve this dispute. While no
amounts have been recorded relating to any required performance under this
agreement subsequent to February 29, 2000, no assurance can be given that the
Company will not be required to record any additional charges upon the
resolution of this dispute.
18
Cybear had no interest income of $559,000 in the 2000 Quarter and $1,000
in the 1999 Quarter. The interest income in the 2000 Quarter resulted primarily
from the investments of the net proceeds generated from the public offering in
money market funds and interest bearing investment grade securities.
Interest expense forof $91,000 in the 1999 Quarter compared to $65,610
for the 1998 Quarter. Interest expense represented interest on
Duethe due to Andrx under the credit agreement between the two companies to fund
Cybear's operations. Upon completion of the public offering in June 1999, Andrx
converted its advances due from Cybear, net of the reimbursement for income tax
attributes, to Cybear's capital in exchange offor 465,387 shares of Cybear common
stock at the public offering price of $16.00 per share.
13
Cybear had interest incomeCybear's results of $633,842operations for the 1999 Quarter and had no
interest income for the 1998 Quarter. The interest income resulted primarily
from the investments of the net proceeds generated from the public offering in
money market funds and interest bearing investment grade securities.
Cybear's taxable resultstax purposes through the completion
of the public offering in June 1999 were included in the consolidated income tax
return of Andrx.
Cybear's taxable results were included in the consolidated income tax return of
Andrx as long assince Andrx owned at least 80% of the common stock of Cybear.
Cybear and Andrx have a tax allocation agreement that provides, among other things, for
the allocation ofpursuant to which Federal
income tax liabilities or benefits are allocated to Cybear at the
approximate amounts that would have been computed as if Cybear had
filed a separate income tax returns.return when Cybear's taxable results are included in
the consolidated income tax return of Andrx. Upon completion of the public
offering in June 1999, Andrx's ownership in Cybear was reduced below 80%.
Consequently, thereafter Cybear files its income tax returns separately.
For the Companythree months ended March 31, 2000, Cybear did not record any
income tax benefit for the 1999 Quarter as Andrx's ownership in Cybear was below 80% and Cybear
generated net operating loss carryforwards. Under the provisions of SFAS No.
109, the Company"Accounting for Income Taxes", Cybear has provided a valuation allowance to
reserve against 100% of its net operating loss
carryforwardsdeferred tax assets due to its history of net
losses. For the 1998 Quarter, the
Company did not record anythree months ended March 31, 1999, Cybear recorded $1.4 million
in income tax provision or benefit as Andrx could not
utilize Cybear's tax attributes.
NINE MONTHS ENDED SEPTEMBER 30, 1999 ("1999 PERIOD"), AS COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1998 ("1998 PERIOD").
Cybear had revenues of $118,540 for the 1999 Period and had no revenues
for the 1998 Period. Revenue for the 1999 Quarter represents subscriptions to
the Company's Physician Practice Portal product, as well as revenues from web
site development and maintenance and e-commerce revenues (see Notes 5 and 10 to
the accompanying unaudited consolidated financial statements).
Network operations and operations support costs were $2.2 million for
the 1999 Period compared to $248,712 for the 1998 Period.benefit. The increase in
network operations and operations support costs for the 1999 Period related to
the establishment of the network operations center and the development of the
operations support infrastructure.
Product development costs were $2.2 million for the 1999 Period
compared to $1.1 million for the 1998 Period. The increase in the product
development costs for the 1999 Period reflects the progress and expansion of
Cybear's development activities.
Sales and marketing expenses were $2.8 million for the 1999 Period
compared to $395,276 for the 1998 Period. The increase in sales and marketing
expenses for the 1999 Period related primarily to the establishment of the
selling and marketing infrastructure, the development and distribution of
promotional material and costs incurred for trade shows.
General and administrative expenses were $1.9 million for the 1999
Period compared to $462,391 for the 1998 Period. The increase in general and
administrative expenses for the 1999 Period related to the establishment and
development of the administrative infrastructure.
Depreciation and amortization expense was $850,710 for the 1999 Period
compared to $89,634 for the 1998 Period. The increase in depreciation and
amortization for the 1999 Period resulted primarily from the Company's purchases
of computer hardware and software used in the establishment of its network
operations center and the development of its products, and leasehold
improvements to the rented space housing its corporate headquarters and network
operations center.
Interest expense was $216,182 for the 1999 Period compared to $145,259
for the 1998 Period. Interest expense represented interest on Due to Andrx under
the credit agreement between the two companies to fund Cybear's operations.
14
Cybear had interest income of $683,593 for the 1999 Period and had no
interest income for the 1998 Period. The interest income resulted primarily from
the investments of the net proceeds generated from the public offering in money
market funds and interest bearing investment grade securities.
Cybear recorded a tax benefit of $2,824,069 for the 1999 Period
reflectingreflects the reimbursement from
Andrx for the utilization of Cybear's income tax attributes pursuant to the tax
allocation agreement.
For the 1998 Period, the
Company did not record any income tax provision or benefit as Andrx could not
utilize Cybear's tax attributes.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999,March 31, 2000, Cybear had $44.5$26.7 million in cash, cash
equivalents and investments available-for-sale and $45.3$31.6 million of working
capital.
Net cash used in operating activities was $4.4 million for the 2000
Quarter compared to $1.6 million for the 1999 Period was $8.0
millionQuarter. The increase in net cash
used in operating activities in the 2000 Quarter, as compared to $2.2the 1999
Quarter is primarily due to Cybear incurring a net loss of $6.6 million forin the
1998 Period.2000 Quarter as compared to a net loss of $1.5 million in the 1999 Quarter, an
increase in accounts payable and accrued liabilities in the 2000 Quarter as
compared to a decrease in the 1999 Quarter, an increase in depreciation and
amortization expense in the 2000 Quarter, as compared to the 1999 Quarter and
other non-cash charges in the 2000 Quarter. The other non-cash charges result
primarily from impairment charges to certain assets.
In the 1999 Period,2000 Quarter, net cash used in operating activities was
primarily attributable to Cybear's loss from operations, an increase in interest receivable from the Company's
investments available-for-sale and an increase in other assets, offset by the
depreciation and amortization expense. Theexpense and other non-cash charges, and an
increase in other assets results
primarily from the payment of a portion of the consulting fee to Innovative
Clinical Solutions, Ltd. formerly known as PhyMatrix Management Company, Inc.accounts payable and payment to Cox Interactive Media, Inc. (see Note 9 to the accompanying
unaudited consolidated financial statements).accrued liabilities. In the 1998 Period,1999 Quarter, the
net cash used in operating activities was primarily attributableattributed to Cybear's loss
from operations.
Net cash used in investing activities forwas $6.8 million in the 2000
Quarter and $1.1 million in the 1999 Period was $41.2
million compared to $266,279 for the 1998 Period.Quarter. In the 1999 Period,2000 Quarter, Cybear
invested $38.0 million inreceived proceeds of $390,000 from sales of investments available-for-sale and
used $1.2funded a $4.0 million in net cash for the acquisition of Telegraph (see Note 3 to the accompanying
unaudited consolidated financial statements).one-year convertible promissory note from AHT Corporation.
Cybear also purchased $2.0 million$558,000 in property and equipment consisting mainly of
computer hardware and software used in the establishment of its network operations center and the
development of its products,products. Cybear also purchased $2.5 million in software
licenses. In the 1999 Quarter, Cybear purchased $1.1 million of property and
equipment consisting mainly of computer hardware and software used in its
network operations center and in its product development activities, leasehold
improvements to the rented space housing its corporate headquarters and network
operations center and furniture for its corporate headquarters.
Cybear also capitalized $119,667 in product development
costs. In the 1998 Period, Cybear purchased $196,279 of property and equipment
consisting mainly of computer hardware and software and furniture used in its
product development activities and capitalized $70,000 in product development
costs.19
Net cash provided by financing activities was $281,000 for the 2000
Quarter compared to $3.1 million for the 1999 Period was $55.9
million compared to $2.5 million for the 1998 Period.Quarter. In the 1999 Period,2000 Quarter, net
cash provided by financing activities consisted mainly of $50.8 million in net proceeds generated from the
public offeringexercises of 3,450,000 shares of common stock ofoptions. In the Company and $5.1 million1999 Quarter, net cash provided by financing
activities consisted of advances from Andrx to fund Cybear's operations, net of
the reimbursement from Andrx for the utilization of Cybear's income tax
attributes pursuant to the tax allocation agreement. In the 1998 Period, net
cash provided by financing activities consisted of advances from Andrx to fund
Cybear's operations.
From time to time, Cybear may be involved in litigation relating to
claims arising out of its operations in the normal course of business. Cybear is
not currently a party to any legal proceeding or aware of any other claim, the
adverse outcome of which, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on Cybear's business, operating
results and financial condition.
Cybear anticipates that its cash requirements will continue to increase
as it continues to expend substantial resources to build its infrastructure,
develop its products and establish its sales and marketing, network operations,
customer support and administrative organizations. Cybear currently anticipates that its available cash resources will be
sufficient to meet its presently anticipated working capital and capital
expenditure requirements for the next twelve months.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, as amended by SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133, as
amended, establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133, as amended, requires that
changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting.
SFAS No. 133, as amended, is effective for fiscal years beginning after
June 15,
YEAR 2000
The Year 2000 issue is2000. A company may also implement the resultprovisions of computer programs being written
using two digits rather than four to define the applicable year. Cybear's
computer equipment and software and devices with embedded technology that are
time-sensitive may recognize a date using "00"SFAS No. 133, as
the Year 1900 rather than the
Year 2000. This could result in a system failure or a miscalculation, causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Based upon its identification and assessment efforts to date, Cybear
believes that certainamended, as of the computer equipmentbeginning of any fiscal quarter after issuance. SFAS No. 133,
as amended, cannot be applied retroactively. SFAS No. 133, as amended, must be
applied to (a) derivative instruments and software it currently uses
required(b) certain derivative instruments
embedded in hybrid contracts that were issued, acquired, or substantively
modified after December 31, 1997 (and, at the Company's election, before January
1, 1998). The Company will require replacement or modification. Inadopt the ordinary courseprovisions of replacing computer equipment and software, Cybear will attempt to obtain
replacements that are Year 2000 compliant. Utilizing both internal and external
resources to identify and assess needed Year 2000 remediation, Cybear began its
Year 2000 identification, assessment, remediation and testing efforts in the
fourth quarter 1998 and expects to complete such activities in the fourth
quarter 1999 and that such efforts will be completed prior to any currently
anticipated impact on its computer equipment and software. Cybear estimates thatSFAS No. 133 beginning
January 1, 2001, as of October 31, 1999, it had completed approximately 80%required. Adoption of the initiatives
that it believes will be necessary to fully address potential Year 2000 issues
relating to its computer equipment and software. The projects comprising the
remaining 20% of the initiatives are in process.
Cybear has also mailed letters to its significant vendors and service
providers to determine the extent to which interfaces with such entities are
vulnerable to Year 2000 issues and whether the products and services purchased
from or by such entities are Year 2000 compliant. For those significant vendors
and service providers that have not provided written assurance that they are
Year 2000 compliant, Cybear has developed or is developing contingency plans to
address issues that might arise from interfaces with such entities.
Cybear believes that the cost of its Year 2000 identification,
assessment, remediation and testing efforts, as well as currently anticipated
costs to be incurred by Cybear with respect to Year 2000 issues of third
parties, will not exceed $200,000 and will be funded from current existing
financial resources. As of the dateprovisions of this report, Cybear had incurred costs of
approximately $116,000 related to its Year 2000 identification, assessment,
remediation and testing efforts. These costs were for planning, analysis, repair
of existing software, or evaluation of information received from significant
vendors, service providers, or customers. Other non-Year 2000 efforts have not
been and arestandard is not
expected to be materially delayed.
Cybearhave a material effect on the Company's consolidated results of
operations and financial condition.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's exposure to market rate risk for changes in interest
rates relates primarily to its investments available-for-sale portfolio. The
Company has initiated a comprehensive analysisnot entered into derivative financial instruments in its investments
available-for-sale portfolio. The Company's investments available-for-sale
portfolio consists of fixed rate debt instruments of the operational
problemsU.S. Government and costs (including lossits
agencies, and of revenues) that would be reasonably likely
to result from the failure by Cybear and certain third parties to complete
efforts necessary to achieve Year 2000 compliance on a timely basis. A
contingency plan for dealing with the most reasonably likely worst case scenario
is under development and should be completed by December 31, 1999.high-quality corporate issuers. The costs of Cybear's Year 2000 identification, assessment, remediation
and testing efforts and the dates on which Cybear believes it will complete such
efforts are based upon management's best estimates,Company has established
guidelines, which were derived using
numerous assumptions regardingapproved by its board of directors, relative to
diversification and maturities of its investments available-for-sale portfolio
that are designed to limit the amount of credit exposure to any one issuer and
help ensure safety and liquidity. Investments in fixed rate interest earning
instruments carries a degree of interest rate risk. Fixed rate securities may
have their fair market value adversely impacted due to a rise in interest rates.
Due in part to these factors, the Company's future events, includinginvestment income may fall
short of expectations due to changes in interest rates or the continued
availabilityCompany may suffer
losses in principal if forced to sell securities which have declined in market
value due to changes in interest rates. Although changes in interest rates may
affect the fair value of certain resources, third-party remediation plans,the investments available-for-sale portfolio and other
factors. Cybear cannot assure that these estimates will prove tocause
unrealized gains or losses, such gains or losses would not be accurate,
and actual results could differ materially from those currently anticipated.
Specific factors that could cause such material differences include, butrealized unless
the investments are not
limited to, the availability and cost of personnel trained in Year 2000 issues,
the ability to identify, assess, remediate and test all relevant computer codes
and embedded technology and other similar uncertainties. In addition,
variability of definitions of "compliance with Year 2000" and the variety of
different products and services and combinations thereof sold by Cybear may lead
to claims relating to Year 2000 compliance whose impact on Cybear is not
currently estimable. Cybear cannot
16
provide assurance that the aggregate cost of defending and resolving such
claims, if any, will not materially adversely affect Cybear's results of
operations.
17sold.
20
CYBEAR, INC.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)Exhibits:
27.127 Financial Data Schedule
(b)Reports on Form 8-K:
A Current Report on Form 8-K was filed on September 29, 1999 reporting
under Item 2 "Acquisition or Disposition of Assets" regarding the Company
acquiring Telegraph Consulting Corporation. The financial statements of the
business acquired and the pro forma financial statements required will be filed
by amendment no later than 60 days from the date of Form 8-K.
18None
21
CYBEAR, INC.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereonto
duly authorized.
By: /s//S/ EDWARD E. GOLDMAN
M.D.
-----------------------
Name:-----------------------------
Edward E. Goldman, M.D.
Title: President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Jack Greenman
-------------
Name: Jack Greenman
Title: Executive Vice/S/ TIMOTHY E. NOLAN
-----------------------------
Timothy E. Nolan
President and Chief FinancialOperating Officer
By: /S/ CLAUDE BERTRAND
-----------------------------
Claude Bertrand
Vice President Finance and Controller
(Principal Financial and Accounting Officer)
NovemberMay 15, 1999
192000
22
EXHIBIT INDEX
EXHIBIT DESCRIPTION
27.1 FINANCIAL DATA SCHEDULE- ------- -----------
27 Financial Data Schedule