UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K / A NO. 1
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 April 18, 2000, Claimsnet.com inc., a Delaware corporation
(the"Company"), through its wholly-owned subsidiary, HealthExchange.com, Inc., a
Delaware corporation ("HECOM"), acquired from VHx Company, a Nevada corporation
("VHx"), substantially all of the properties and assets, the business and
goodwill related to the HealthExchange(TM), BenefitExchange(TM) and
CareExchange(TM) product suite (together, "HealthExchange") under development by
VHx, including the HealthExchange.com name and HealthExchange, BenefitExchange
and CareExchange trademarks, development and business contracts, and assume
certain liabilities in exchange for (i) $300,000 cash at closing, (ii) 1,200,000
shares of common stock, par value $.001 per share (the "Common Stock"), (iii)
13,767 shares of Series A 8% Convertible Redeemable Preferred Stock (the "Series
A Preferred Stock") and 13,767 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"), (iv) the cancellation of $2,013,742
owed by VHx to the Company, (v) options to purchase 175,000 shares of common
stock at a price of $8.00 per share, and (vi) the assumption of liabilities in
the amount of $500,000.
The Common Stock and the Preferred Stock are subject to an escrow
agreement and the Common Stock is subject to certain potential adjustments
related to the dissolution of VHx.
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 recognition of revenue from 6,000,000 member months
attributable to assets acquired. The performance milestone for the Series B
Preferred Stock is the existence of 1,000,000 lives covered by the business
operation 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. The maximum number of shares of common stock
into which the Preferred Stock may be converted if both performance milestones
are met is 1,427,076. 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, HECOM entered into employment
agreements with each of Eric T. Hillerbrand, Jeffrey W. 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 comprised of the HealthExchange assets and an EDI Division,
which EDI Division was not acquired by the Company. HealthExchange is an
Internet-based health care infomediary application, designed to provide 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.
HealthExchange will be comprised of a suite of three customizable, proprietary
healthcare products; HealthExchange(TM), BenefitExchange(TM) and
CareExchange(TM). Each product will be based on secure, scalable application
service provider technology that meets all currently proposed federal guidelines
for patient record confidentiality.
The Company believes that the HealthExchange solution will be 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 will 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, HealthExchange will facilitate the flow of vital
information and transactions between employers, doctors and health plans, and
most uniquely, tie the employee/member into the benefit and health management
process in a personalized, confidential online relationship. The result will be
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.
John Deere Health ("JDH"), a subsidiary of Deere & Co., is
participating in the pilot development of the products. JDH represents
approximately 1,800 employers in addition to Deere & Co. In addition to
development fees associated with the JDH agreement, primary future revenue
sources for HealthExchange will 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 for HealthExchange 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.
The Company believes that the assets acquired, primarily software under
development and intellectual property, do not meet the criteria of a business as
defined in Regulation S-X, Article 11, Rule 11-01(d).
(c) Exhibits.
4.1 Form of Certificate of Designation of Series A 8% Convertible
Redeemable Preferred Stock.
4.2 Form of Certificate of Designation of Series B 8% Convertible
Redeemable Preferred Stock.
10.1 Form of Asset Purchase Agreement, dated as of March 20, 2000, between
Claimsnet.com inc., HealthExchange.com, Inc., and VHX Company.*
10.2 Form of Amendment No. 1 to Asset Purchase Agreement, dated as of April
18, 2000, among Claimsnet.com inc., HealthExchange.com, Inc., and
VHX Company.
10.3 Form of Escrow Agreement, dated as of April 18, 2000, among
Claimsnet.com inc., HealthExchange.com, Inc., VHX Company, Abrams,
Garfinkel & Rosen, as Escrow Agent.
10.4 Side Letters, dated April 18, 2000, relating to the Asset Purchase
Agreement, dated as of March 20, 2000, between Claimsnet.com inc.,
HealthExchange.com, Inc., and VHX Company.
10.5 Employment Agreement, dated as of April 18, 2000, between
HealthExchange.com Inc. and Nan P. Smith.
10.6 Employment Agreement, dated as of April 18, 2000, between
HealthExchange.com Inc. and Eric T. Hillerbrand.
10.7 Employment Agreement, dated as of April 18, 2000, between
HealthExchange.com Inc. and Jeffery W. Muscarella.
*Previously filed
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: June 5, 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