-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DEuekObBKQsqJK6vB8p9rJ6TboQtBVfK42YgpKvrB23BIjgnvUccQqdlsdS9JtBl S1IQQfyJXhJpS83b2n3/Ww== 0000947871-96-000178.txt : 19970102 0000947871-96-000178.hdr.sgml : 19970102 ACCESSION NUMBER: 0000947871-96-000178 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961224 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19961231 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNETIC INC CENTRAL INDEX KEY: 0000850436 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 222975182 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17822 FILM NUMBER: 96688798 BUSINESS ADDRESS: STREET 1: 669 RIVER DRIVE CITY: ELMWOOD PARK STATE: NJ ZIP: 07407 BUSINESS PHONE: 2017033400 MAIL ADDRESS: STREET 1: 669 RIVER DRIVE CITY: ELMWOOD PARK STATE: NJ ZIP: 07407 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------- FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ----------------------------- Date of Report (date of earliest event reported): December 24, 1996 SYNETIC, INC. ----------------------------- (Exact name of registrant as specified in its charter) Delaware 0-17822 22-2975182 - ---------------------------- ------------------------ ---------------- (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 669 River Drive, River Drive Center II, Elmwood Park, New Jersey 07407 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (201) 703-3400 Exhibit Index Appears on Page 5 Page 1 of 8 Pages Item 2. Acquisition or Disposition of Assets. On December 24, 1996, Synetic, Inc., a Delaware corporation (the "Company"), acquired Avicenna Systems Corp., a Massachusetts corporation ("Avicenna"), for a purchase price of approximately $30,500,000 (subject to post-closing adjustments), through the merger (the "Merger") of Synternet Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of the Company ("Synternet"), with and into Avicenna. As a result of the Merger, Avicenna has become a wholly owned subsidiary of the Company. The Merger was effected pursuant to the Agreement and Plan of Merger, dated as of December 23, 1996, among the Company, Avicenna, Synternet and the individual and entities listed on the signature page thereto (the "Merger Agreement"). The Merger Agreement is incorporated herein by reference to Exhibit 10.2 of the Registration Statement on Form S-3 (No. 333-18771) filed by the Company with the Securities and Exchange Commission (the "SEC") on December 24, 1996, as amended through the date hereof. A copy of the Company's press release announcing the completion of the Merger is filed as an exhibit hereto and incorporated by reference herein. The Company anticipates that a substantial portion of the purchase price for Avicenna will be attributed to purchased research and development costs. Under generally accepted accounting principles, the Company will charge to expense the portion of the purchase price attributable to purchased research and development costs. The amount of this charge cannot be determined until the Company's independent valuation consultants perform an appraisal of Avicenna, which the Company anticipates will be completed prior to February 15, 1997. The Company expects, however, based on recent acquisitions of software development companies by others, that this nonrecurring charge will range between $18,000,000 and $29,000,000. As a result of this nonrecurring charge, which the Company anticipates will be recognized during the quarter ending December 31, 1996, the Company will have a consolidated net loss of up to $26,800,000 for such quarter. In addition, the Company will have a consolidated net loss for the fiscal year ending June 30, 1997 as a result of this nonrecurring charge. The Company is in the initial development phase of offering services to provide inter-enterprise connectivity to payors and providers in the healthcare industry. Avicenna, the Company's first acquisition in this new business area, has operated at a loss since its inception two years ago, a substantial portion of which was attributable to research and development expenses, and as of November 30, 1996 had an unaudited accumulated deficit of approximately $3,100,000. The current rate of these Page 2 of 8 Pages expenses approximates $1,500,000 per fiscal quarter. The Company expects to continue to incur significant research and development expenses and to incur additional operating losses in connection with this new area of business until Avicenna successfully develops and markets its products and services. There can be no assurance that such products and services will be successfully developed or marketed. Research and development expenses relating to Avicenna may be materially greater in the future than current amounts until Avicenna successfully develops and markets its products and services. The Company anticipates, however, that such research and development expenses will not exceed $2,250,000 per fiscal quarter for the third and fourth quarters of the current fiscal year ending June 30, 1997 and will not result in net losses for the Company on a consolidated basis for the fiscal quarter ending December 31, 1996 or for the current fiscal year (excluding the anticipated charge for purchased research and development costs relating to the acquisition of Avicenna), or for either of the fiscal quarters ending March 31, 1997 or June 30, 1997. Further, the Company expects to acquire additional businesses to supplement its own internal efforts and those of Avicenna. There is no specific time frame for the first commercial introduction of these new services, and the Company anticipates that it will incur significant development expenses until these services are successfully developed and marketed. No assurances can be given that the Company's effort in establishing such services will be successful or that it will succeed in consummating such acquisitions or that such acquisitions will ultimately provide the Company with the ability to offer these services. Page 3 of 8 Pages (c) Exhibits. Exhibit Number Description ------ ----------- 2 Agreement and Plan of Merger, dated as of December 23, 1996, among the Company, Avicenna, Synternet and the individual and entities listed on the signature page thereto (incorporated herein by reference to Exhibit 10.2 of the Registration Statement on Form S-3 (No. 333-18771)) filed by the Company with the SEC on December 24, 1996, as amended through the date hereof. 99.1 Press release of the Company, dated December 24, 1996 Page 4 of 8 Pages SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SYNETIC, INC. (Registrant) Date: December [31], 1996 By /s/ Victor L. Marrero -------------------------------- Name: Victor L. Marrero Title: Vice President - Finance Page 5 of 8 Pages EXHIBIT INDEX Exhibit No. Description Page - ----------- ----------- ---- 2 Agreement and Plan of Merger, dated December 23, * 1996, among the Company, Avicenna, Synternet and the individual and entities listed on the signature page thereto (incorporated herein by reference to Exhibit 10.2 of the Prospectus included in the Registration Statement on Form S-3 (No. 333- 18771)) filed by the Company with the SEC on December 24, 1996, as amended through the date hereof. 99.1 Press release of the Company, Inc., dated December 24, 1996 6 - --------------------- * incorporated by reference as indicated. Page 6 of 8 Pages EX-99.1 2 EXHIBIT 99.1 EXHIBIT 99.1 [LETTERHEAD OF SYNETIC, INC.] FOR IMMEDIATE RELEASE Contact: Victor L. Marrero Vice President - Finance and Chief Financial Officer (201) 703-3405 Elmwood Park, New Jersey, December 24, 1996--Synetic, Inc. (NASDAQ: SNTC) announced today that it has signed a merger agreement providing for the acquisition of Avicenna Systems Corporation, a privately held Cambridge, Massachusetts based company that markets and builds Intranets for managed health care plans, integrated healthcare delivery systems, and hospitals. The parties expect the acquisition to close later today. Avicenna's controlled-access Intranet systems are designed to allow managed care organizations and provider groups to exchange transactional, procedural, patient outcome and educational information. This acquisition represents an initial step by Synetic in its previously announced effort to provide inter-enterprise connectivity for healthcare communications and commerce using the distributive power of the Internet. Synetic expects to acquire additional businesses to supplement its own internal efforts and those of Avicenna. Avicenna's development of Internet technology-based information systems will provide Synetic with the necessary platform to promote widespread acceptance of a new generation of inter-enterprise healthcare transaction applications. Avicenna is working to bring integrated payor-specific content and transactional data to the physician's desktop. This important capability will be a cornerstone in Synetic's plan to build new channels of communication linking managed care organizations, pharmacy benefit managers, clinical laboratories, physicians and other providers of healthcare services. Page 7 of 8 Pages "The acquisition of Avicenna Systems Corporation represents the first significant step towards our goal," said Martin J. Wygod, Chairman of Synetic. "Avicenna provides us with an organization with a common vision for confidential, secure Internet healthcare commerce, and a talented management team with relevant experience," he continued. "We believe that the emergence of the World Wide Web as a commercial medium provides solutions to several complex issues facing the healthcare industry as inter-enterprise communication becomes the key to a patient-centric model of healthcare management," said I-J Gujral, founder of Avicenna. "By leveraging the existing healthcare information systems infrastructure, we allow payors and providers to quickly share mission critical information, while preserving their investment in existing technologies." Synetic will acquire all of Avicenna's outstanding equity and indebtedness (including employee stock options) for a total purchase price of $30.5mm, payable in shares of Synetic common stock. As additional consideration, Synetic has agreed to issue to certain of the sellers nontransferable warrants covering 250,000 shares of Synetic common stock, exercisable after December 23, 1998 at a price of $54.50 per share. Synetic has entered into arrangements with Mr. Gujral and the other key members of Avicenna's management team with respect to their equity holdings that are designed to assure their continuation with the Company. Promptly following the closing, Synetic has agreed to file a Registration Statement covering certain of the shares of the Synetic stock issued as consideration for the acquisition. Synetic anticipates that a substantial portion of the purchase price for Avicenna will be attributed to purchased research and development costs. Under generally accepted accounting principles, Synetic will charge to expense the portion of the purchase price attributable to purchased research and development costs. Synetic anticipates that this charge will be recognized during the quarter ended December 31, 1996. During calendar 1996, Avicenna incurred losses, a substantial portion of which related to research and development expenses. The current rate of these expenses approximates $500,000 per month. Synetic expects to incur research and development expenses which may be significantly in excess of such amount without the benefit of revenues until these products and services are sold to users. * * * * * The statements contained in this release, other than the terms of the acquisition of Avicenna, are forward looking statements that involve risks and uncertainties, including, but not limited to, product demand and market acceptance risks, the feasibility of developing commercially profitable Internet healthcare services, the effect of economic conditions, user acceptance, the impact of competitive products, services, and pricing, product development, commercialization and technological difficulties, and other risks detailed in the Company's Securities and Exchange Commission filings. Page 8 of 8 Pages -----END PRIVACY-ENHANCED MESSAGE-----