SECURITIES AND EXCHANGE COMMISSION FORM 8-K CURRENT REPORT |
| Oregon (State or other jurisdiction of incorporation) | 000-28285 (Commission file number) | 93-0890696 (IRS employer identification no.) |
20500 NW Evergreen Parkway (503) 531-7000 Not applicable |
On December 26, 2001, MedicaLogic/Medscape, Inc. (the "Company"), together with its subsidiaries Medscape Enterprises, Inc. (now renamed MedicaLogic Enterprises, Inc.) and Medscape, Inc. (now renamed MSCP Holdings, Inc. "Holdings"), completed the sale of its Internet Portals business to WebMD Corporation, a Delaware corporation ("WebMD"), for approximately $10,000,000. The transaction was structured as a sale by the Company, Medscape Enterprises, Inc. and Holdings of substantially all of the assets of Holdings pursuant to an Asset Purchase Agreement, dated as of December 26, 2001 (the "Asset Purchase Agreement"). Holdings is an indirect, wholly-owned subsidiary of the Company that (together with its subsidiaries) held the assets and conducted the operations of the Company's Internet Portals business. The sale also included one subsidiary of Holdings, Medscape Portals, Inc. and licenses from Holdings and the Company to WebMD for certain intellectual property assets. The Company and its subsidiaries will cease to use the "Medscape" mark and name in accordance with the terms of the Asset Purchase Agreement. Holdings received initial purchase price proceeds of approximately $7,740,000 (after adjustments of $760,000 for various assets and liabilities) from WebMD on December 26, 2001. The remaining purchase price of $1,500,000 will be held in an escrow account for up to one year pursuant to the terms of an Escrow Agreement, dated as of December 26, 2001 (the "Escrow Agreement"). These descriptions of the terms of the Asset Purchase Agreement and the Escrow Agreement are not complete and are qualified by reference to the Asset Purchase Agreement and the Escrow Agreement that are attached hereto as Exhibits 2.1 and 99.1, respectively, and incorporated herein by reference.
On December 26, 2001, MedicaLogic/Medscape, Inc. (the "Company"), together with its subsidiaries Medscape Enterprises, Inc. (now renamed MedicaLogic Enterprises, Inc.) and Medscape, Inc. (now renamed MSCP Holdings, Inc. "Holdings"), completed the sale of its Internet Portals business to WebMD Corporation, a Delaware corporation ("WebMD"), for approximately $10,000,000. The transaction was structured as a sale by the Company, Medscape Enterprises, Inc. and Holdings of substantially all of the assets of Holdings pursuant to an Asset Purchase Agreement, dated as of December 26, 2001 (the "Asset Purchase Agreement"). Holdings is an indirect, wholly-owned subsidiary of the Company that (together with its subsidiaries) held the assets and conducted the operations of the Company's Internet Portals business. The sale also included one subsidiary of Holdings, Medscape Portals, Inc. and licenses from Holdings and the Company to WebMD for certain intellectual property assets.
As disclosed in the Form 8-K filed with the Securities and Exchange Commission on November 16, 2001, the Company executed a Restructuring Agreement on November 7, 2001 with Viacom Inc. ("Viacom") in which the Company and Viacom terminated their relationship. In exchange for cancellation of all agreements between the Company and Viacom, Viacom paid the Company $10,000,000 in cash and transferred to the Company the 4,695,892 shares of Company stock held by Viacom. The Company returned to Viacom the CBS advertising inventory which had a carrying value of approximately $57.7 million at September 30, 2001.
The unaudited pro forma condensed consolidated balance sheet of the Company at September 30, 2001 reflects the financial position of the Company after giving effect to the above transactions as if they had occurred on September 30, 2001. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2001 and 2000 and the year ended December 31, 2000 give effect to the above transactions as if they had occurred at the beginning of the periods presented.
These unaudited pro forma condensed consolidated financial statements may not be indicative of the Company's financial position or results of operations for any future period. The unaudited pro forma condensed consolidated financial statements set forth below should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2000 filed on Form 10-K/A with the Securities and Exchange Commission on November 30, 2001 and the Company's Form 10-Q for the period ended September 30, 2001.
MEDICALOGIC/MEDSCAPE, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001
(IN THOUSANDS, EXCEPT SHARE DATA)
Pro Forma Pro Forma
As Reported Adjustments As Adjusted
----------------- ----------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents................................................ $ 11,136 $ 7,740 (a)$ 28,876
10,000 (c)
Short-term investments................................................... 2,500 -- 2,500
Accounts receivable, net................................................. 5,893 1,500 (a) 3,469
(3,924) (b)
Prepaid expenses and other current assets................................ 13,344 (10,800) (c) 1,622
(922) (b)
----------------- ----------------- ----------------
Total current assets................................................. 32,873 3,594 36,467
Property and equipment, net................................................ 18,449 (11,412) (b) 7,037
Goodwill and intangibles, net.............................................. 11,666 (7,182) (b) 4,484
Prepaid advertising and other assets, net.................................. 61,537 (46,942) (c) 14,572
(23) (b)
----------------- ----------------- ----------------
Total assets..................................................... $ 124,525 $ (61,965) $ 62,560
================= ================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................................... $ 2,850 $ (10) (b)$ 2,840
Accrued and other liabilities............................................ 10,510 (2,674) (b) 9,705
1,869 (d)
Deferred revenue......................................................... 10,483 (6,644) (b) 3,839
Long term liabilities, current portion................................... 2,313 (98) (b) 2,215
----------------- ----------------- ----------------
Total current liabilities............................................ 26,156 (7,557) 18,599
Long term liabilities, net of current portion.............................. 1,702 (856) (b) 846
Long term deferred revenue, net of current portion......................... 814 -- 814
-----------------
----------------- ----------------
Total liabilities................................................ 28,672 (8,413) 20,259
----------------- ----------------- ----------------
----------------
Series 1 convertible redeemable preferred stock, 50,000,000 authorized, no
par value, 5,933,332 and no shares issued and outstanding at September
30, 2001 and December 31, 2000, respectively............................ 8,819 -- 8,819
----------------- ----------------- ----------------
Shareholders' equity:
Common stock, no par value; authorized 100,000,000 shares; issued and
outstanding 56,428,054 and 55,657,348 shares at June 30, 2001 and
December 31, 2000, respectively.......................................... 1,254,720 (1,080) (c) 1,253,640
Common stock notes receivable, net....................................... (5,708) -- (5,708)
Warrants................................................................ 52,722 -- 52,722
Deferred stock compensation.............................................. (328) -- (328)
Accumulated deficit...................................................... (1,214,372) (52,472) (b) (1,266,844)
----------------- ----------------- ----------------
Total shareholders' equity........................................... 87,034 (53,552) 33,482
----------------- ----------------- ----------------
Total liabilities and shareholders' equity....................... $ 124,525 $ (61,965) $ 62,560
================= ================= ================
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial
information.
MEDICALOGIC/MEDSCAPE, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Pro Forma Pro Forma
As Reported Adjustments As Adjusted
--------------- --------------- -------------
Revenues:
Application license......................................................... $ 2,765 $ -- $ 2,765
Subscription and support services.......................................... 9,420 -- 9,420
Sponsorship and advertising................................................ 16,872 (16,872) (A) --
--------------- --------------- -------------
--------------- --------------- -------------
Total revenues.......................................................... 29,057 (16,872) 12,185
Non-cash sales discount.................................................... (1,248) -- (1,248)
--------------- --------------- -------------
Net revenues........................................................... 27,809 (16,872) 10,937
--------------- --------------- -------------
Operating expenses:
Cost of revenues:
Application license.................................................... 401 -- 401
Subscription and support services...................................... 9,138 -- 9,138
Sponsorship and advertising............................................ 6,779 (6,779) (A) --
Marketing and sales.......................................................... 28,675 (16,955) (A) 8,080
(3,640) (B)
Research and development..................................................... 12,918 (3,692) (A) 9,226
General and administrative................................................... 7,891 (2,340) (A) 5,551
Depreciation and amortization................................................ 180,376 (169,550) (A) 10,826
Restructuring charges........................................................ 2,236 (453) (A) 1,783
Non-recurring gain.......................................................... (8,500) 8,500 (A) --
Impairment charges.......................................................... 323,858 (323,858) (A) --
--------------- --------------- -------------
Total operating expenses................................................ 563,772 (518,767) 45,005
--------------- --------------- -------------
Operating loss................................................................. (535,963) 501,895 (34,068)
Other income, net............................................................ 741 (75) (A) 666
--------------- --------------- -------------
Loss from continuing operations................................................ (535,222) 501,820 (33,402)
Discontinued operations:
Loss from operations of discontinued operations............................ (47,889) -- (47,889)
Loss on disposal of discontinued operations, including
provision of $7,750 for operating losses during phase-out period......... (246,264) -- (246,264)
--------------- --------------- -------------
Net loss....................................................................... $ (829,375) $ 501,820 $ (327,555)
=============== =============== =============
Basic and diluted net loss per share:
Loss from continuing operations............................................. $ (9.54) $ (0.65)
Loss from discontinued operations........................................... (5.25) (5.72)
--------------- -------------
Net loss per share........................................................... $ (14.79) $ (6.37)
=============== =============
Weighted average shares:
basic and diluted............................................................ 56,079 (4,696)(c) 51,383
=============== ================ ============
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial
information.
MEDICALOGIC/MEDSCAPE, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Pro Forma Pro Forma
As Reported Adjustments As Adjusted
--------------- --------------- -------------
Revenues:
Application license......................................................... $ 7,103 $ -- $ 7,103
Subscription and support services.......................................... 7,441 -- 7,441
Sponsorship and advertising................................................ 12,458 (12,458) (A) --
--------------- --------------- -------------
--------------- --------------- -------------
Total revenues.......................................................... 27,002 (12,458) 14,544
--------------- --------------- -------------
Operating expenses:
Cost of revenues:
Application license.................................................... 1,957 -- 1,957
Subscription and support services...................................... 13,176 -- 13,176
Sponsorship and advertising............................................ 5,654 (5,654) (A) --
Marketing and sales.......................................................... 38,400 (15,340) (A) 21,210
(1,850) (B)
Research and development..................................................... 14,585 (1,155) (A) 13,430
General and administrative................................................... 11,792 (5,501) (A) 6,291
Depreciation and amortization................................................ 98,444 (89,224) (A) 9,220
Restructuring charges........................................................ 13,558 (2,338) (A) 11,220
--------------- --------------- -------------
Total operating expenses................................................ 197,566 (121,062) 76,504
--------------- --------------- -------------
Operating loss................................................................. (170,564) 108,604 (61,960)
Other income, net............................................................ 4,848 (330) (A) 4,518
--------------- --------------- -------------
Loss from continuing operations................................................ (165,716) 108,274 (57,442)
Discontinued operations:
Loss from operations of discontinued operations............................ (38,937) -- (38,937)
--------------- --------------- -------------
Net loss....................................................................... $ (204,653) $ 108,274 $ (96,379)
=============== =============== =============
Basic and diluted net loss per share:
Loss from continuing operations............................................. $ (3.85) $ (1.50)
Loss from discontinued operations........................................... (0.90) (1.01)
--------------- -------------
Net loss per share........................................................... $ (4.75) $ (2.51)
=============== =============
Weighted average shares:
basic and diluted............................................................ 43,100 (4,696)(c) 38,404
=============== =============== =============
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial
information.
MEDICALOGIC/MEDSCAPE, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Pro Forma Pro Forma
As Reported Adjustments As Adjusted
--------------- --------------- -------------
Revenues:
Application license......................................................... $ 10,494 $ -- $ 10,494
Subscription and support services.......................................... 9,828 -- 9,828
Sponsorship and advertising................................................ 20,483 (20,483) (A) --
--------------- --------------- -------------
--------------- --------------- -------------
Total revenues.......................................................... 40,805 (20,483) 20,322
--------------- --------------- -------------
Operating expenses:
Cost of revenues:
Application license.................................................... 1,219 -- 1,219
Subscription and support services...................................... 16,560 -- 16,560
Sponsorship and advertising............................................ 8,649 (8,649) (A) --
Marketing and sales.......................................................... 52,974 (22,695) (A) 27,249
(3,030) (B)
Research and development..................................................... 18,608 (1,602) (A) 17,006
General and administrative................................................... 16,418 (8,807) (A) 7,611
Depreciation and amortization................................................ 165,238 (149,970) (A) 15,268
Restructuring charges........................................................ 24,661 (2,546) (A) 22,115
--------------- --------------- -------------
Total operating expenses................................................ 304,327 (197,299) 107,028
--------------- --------------- -------------
Operating loss................................................................. (263,522) 176,816 (86,706)
Other income, net............................................................ 5,685 (336) (A) 5,349
--------------- --------------- -------------
Loss from continuing operations................................................ (257,837) 176,480 (81,357)
Discontinued operations:
Loss from operations of discontinued operations............................ (63,634) -- (63,634)
--------------- --------------- -------------
Net loss....................................................................... $ (321,471) $ 176,480 $ (144,991)
=============== =============== =============
Basic and diluted net loss per share:
Loss from continuing operations............................................. $ (5.58) $ (1.96)
Loss from discontinued operations........................................... (1.38) (1.53)
--------------- -------------
Net loss per share........................................................... $ (6.96) $ (3.49)
=============== =============
Weighted average shares:
basic and diluted............................................................ 46,186 (4,696)(c) 41,490
=============== =============== =============
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial
information.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: January 10, 2002