UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
March 23, 2000
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(Date of Report)
Claimsnet.com inc.
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(Exact name of registrant as specified in its charter)
Delaware 001-14665 75-2649230
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
12801 N. Central Expressway, Suite 1515, Dallas, Texas 75243
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(Address of principal executive offices)
(972) 458-1701
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(Registrant's telephone number, including area code)
None
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(Former name or former address, if changed since last report.)
Item 5. Other Events.
General
On March 20, 2000, Claimsnet.com inc., a Delaware corporation (the
"Company"), through its wholly-owned subsidiary, HealthExchange.com, Inc., a
Delaware corporation ("HEX"), entered into an asset purchase agreement (the
"Asset Purchase Agreement") with VHX Company, a Nevada corporation ("VHX"),
whereby HEX will acquire substantially all of the properties and assets, the
business and goodwill of VHX, including the HealthExchange.com name and
HealthExchange.com trademarks, and assume certain liabilities in exchange for
(i) 1,200,000 shares of common stock, par value $.001 per share, (ii) shares of
Series A 8% Convertible Redeemable Preferred Stock (the "Series A Preferred
Stock") and shares of Series B 8% Convertible Redeemable Preferred Stock (the
"Series B Preferred Stock," and, together with the Series A Preferred Stock, the
"Preferred Stock"), and (iii) the cancellation of certain indebtedness owed by
VHX to the Company. The Company estimates that total purchase price to be
approximately $32 million.
Pursuant to the Asset Purchase Agreement, the stated value of the
shares of each series of Preferred Stock to be issued shall be determined
immediately prior to closing in accordance with the following formula: $15.35
million less (1) the product of 600,000 and the average of the closing sale
prices of the Common Stock as quoted on the Nasdaq SmallCap Market on each
trading day during the ten-day period terminating on the date immediately prior
to March 20, 2000 (the "Trailing Average Closing Price"), and (2) the product of
(a) the principal amount of, and accrued and unpaid interest on, the debt
obligations owed by VHX to the Company and (b) 0.5.
The Preferred Stock is convertible into shares of Common Stock at a
conversion price based upon the market value of the Common Stock at a specified
time provided that the conversion price cannot be less than $14.00 or greater
than $15.00, and provided further that (i) the convertibility of the Preferred
Stock has been approved by the stockholders of the Company by March 31, 2001 and
(ii) the performance milestone for the relevant series of Preferred Stock has
been satisfied by March 31, 2001. The performance milestone for the Series A
Preferred Stock is the existence of 1,000,000 lives covered by the business
operation attributable to assets acquired. The performance milestone for the
Series B Preferred Stock is the recognition of revenue from 6,000,000
member-months attributable to assets acquired. In the event that the performance
milestone of any series of Preferred Stock is not satisfied that series of
Preferred Stock will be cancelled. In the event that the performance milestone
for any series of Preferred Stock is satisfied by such date, but the required
approval by the stockholders of the Company is not obtained by such date, the
relevant series of preferred stock will begin on April 1, 2001 to accrued
cumulative dividends at the rate of 8% per annum and will be redeemed in equal
quarterly installments thereafter for three years out of capital legally
available therefor.
In connection with the Asset Purchase Agreement, HEX will at closing
entered into employment agreements with each of Eric Hillerbrand, Jeff
Muscarella and Nan P. Smith, the Executive Vice President - Chief Knowledge
Officer, Executive Vice President - Business Development, and President,
respectively, of VHX, each of whom will serve in various managerial capacities
with the Company.
About VHX
VHx is an Internet-based health care infomediary, providing all four
core health network constituents, self-insured employers, health plans, doctors
and employees/members (consumers), with highly customized administrative
services, health and disease management tools, and e-commerce opportunities. Its
business is primarily conducted through three customizable, proprietary
healthcare products; HealthExchange(TM), BenefitExchange(TM) and
CareExchange(TM). Each product is based on secure, scalable application service
provider technology that meets all currently proposed federal guidelines for
patient record confidentiality.
The Company believes that VHx's solution is the first of its kind to
supply health plans, providers, members and employers with highly customized
services, health management tools and content, and e-commerce offerings.
Together, the three products provide a comprehensive Internet-based solution
aimed at reducing costs and enhancing health plan members' health and overall
experience. Through a proprietary suite of Internet tools and e-commerce
solutions, VHx facilitates the flow of vital information and transactions
between employers, doctors and health plans, and most uniquely, ties the
employee/member into the benefit and health management process in a
personalized, confidential online relationship. The result is a reduction in
health benefit administrative costs for employers and health plans, and improved
health outcomes and satisfaction for employees/members. The management of
Claimsnet.com knows of no other company that offers an integrated, end-to-end
Internet solution that meets these needs for all four vital constituents of the
healthcare network.
VHx Company moved from development stage to operations in the fourth
quarter of 1999. John Deere Health ("JDH"), a subsidiary of industry giant,
Deere & Co. participated in the pilot development of the products. JDH
represents approximately 1,800 employers in addition to Deere & Co. Primary
revenue sources for VHx currently include subscription fees (per member per
month), transaction fees for e-commerce, co-branding and sponsorship fees and
permission marketing fees (for delivering highly focused, permission-based
marketing messages to users). VHx has signed product and marketing-related
Letters of Intent with Columbia University (clinical data repository with web-
based physician/patient access) and Employease.com (web-based HR benefits
management), and contracts with Hewlett-Packard (eSpeak(TM) Internet service
brokering platform), RX Remedy/Do Health (Healthscout.com content and health
risk assessments), VeriSign (digital encryption), Caredata.com (managed care
forecasting tools, Citeline search engine, physician credentialing), and eGain
(Web-based agent customer support technology).
The transaction described above is qualified in its entirety by the
Asset Purchase Agreement and related documents and subject to various conditions
set forth in the Asset Purchase Agreement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
It is impractical to provide the required financial statements at the
date of the filing of this Form 8-K. The required financial statements will be
provided as soon as practicable but not later than sixty days after the date on
which this Form 8-K must be filed.
(b) Pro Forma Financial Information.
It is impractical to provide the required pro forma financial
information at the date of the filing of this Form 8-K. The required pro forma
financial information will be provided as soon as practicable but not later than
sixty days after the date on which this Form 8-K must be filed.
(c) Exhibits.
10.1 Form of Asset Purchase Agreement, dated as of March 20, 2000,
between Claimsnet.com inc., HealthExchange.com, Inc., and VHX
Company.
SIGNATURE
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.
Dated: March 28, 2000
CLAIMSNET.COM INC.
By: /s/ Bo W. Lycke
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Bo W. Lycke
Chairman of the Board of Directors,
President, and Chief Executive Officer