UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): December 3, 2001
CYBERCARE, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 0-20356 65-0158479
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(State or other jurisdiction (Commission File Number) (IRS Employer ID
of incorporation) Number)
2500 QUANTUM LAKES DRIVE, SUITE 1000, BOYNTON BEACH, FLORIDA 33426
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(Address of principal executive offices)
Registrant's telephone number, including area code: 561-742-5000
Item 2. Acquisition or Disposition of Assets
In October 2001, CyberCare, Inc., (the "Registrant") regained ownership of
the air ambulance business ("Air Ambulance Business") it had previously sold in
September 2000 from the buyer in that transaction, following the buyer's uncured
breach of its payment obligations. The September 2000 transaction was not
accounted for as a sale for financial reporting purposes by the Registrant,
since it did not meet the criteria for a divestiture as outlined in SEC Staff
Accounting Bulletin ("SAB") Topic 5E, Accounting for Divestiture of a Subsidiary
or Other Business Operation. Accordingly, since September 2000, the Air
Ambulance Business has been accounted for as a discontinued operation in the
Registrant's consolidated financial statements.
Subsequent to regaining ownership of the Air Ambulance Business, the
Registrant entered into a purchase agreement to sell the Air Ambulance Business
in a transaction in which all of the stock of one operating subsidiary and
certain assets of the other two operating subsidiaries were sold to AIM
Aircraft, Inc., a privately-held Colorado corporation ("AIM") in exchange for a
$5,000,000 note.
Under the Purchase Agreement, effective as of October 1, 2001 (the
"Purchase Agreement"), the execution and terms of which were finalized on
December 3, 2001, AIM purchased all the issued and outstanding stock of Global
Air Charter, Inc. ("GAC"), and certain assets of Air Response North, Inc.
("ARN") and Global Air Rescue, Inc. ("GAR"), in exchange for a $5,000,000
convertible promissory note (the "Note"), which earns interest at 6 percent per
annum and matures in ten years. The principal and interest payments required
under the Note are based on the Distributable Net Profits and Available Cash of
the acquired business, as those terms are defined in the Note and the Purchase
Agreement. The Note may be converted by the holders of the Note into a 19.9
percent non-voting equity interest in AIM, subject to reduction based on
principal and interest payments and further subject to dilution in the event AIM
issues additional equity securities.
AIM has also agreed to pay, out of Available Cash, up to $1,000,000 of
accounts payable of ARN incurred prior to the effective date of the Purchase
Agreement, for a six month period following the execution of the Purchase
Agreement, and has agreed to purchase or lease a Lear 31 aircraft or equivalent
within six months following the execution of the Purchase Agreement for use in
the business.
Upon the execution of the Purchase Agreement, GAC simultaneously entered
into aircraft lease agreements with ARN and GAR, as lessors, for use of the air
ambulance fleet for a term of 30 months. The leases for the Lear 35/36 aircrafts
provide for rental payments equal to the monthly amount for such aircraft due
the finance company and require GAC to be responsible for major structural
repair and maintenance (except for one aircraft, for which lessor will remain
responsible for major structural repair and maintenance). The master lease for
the Lear 25 aircrafts provides for hourly-based rental payments, with minimum
use obligations, and requires the lessors to maintain and insure these
aircrafts. Under the leases, GAC has the right to purchase each of the aircrafts
for an amount equal to the payoff amount due the finance company. The lessors,
however, have the right to sell the leased aircraft to a third party buyer,
provided that GAC has a thirty day right of first refusal to purchase the
aircraft at the same price and terms a third party buyer has offered, which
shall be at least equal to the amount due the finance company.
The Purchase Agreement does not meet the criteria for a divestiture per
SAB Topic 5E since the leasing of the aircrafts to AIM and the related
maintenance and insurance obligations assumed by the Registrant on certain of
the aircrafts constitutes significant continuing involvement by the Registrant.
Accordingly, the Registrant will continue to account for the Air Ambulance
Business as a discontinued operation, until the Registrant has no further
continuing involvement in the acquired business.
The foregoing description of the disposition of the Air Ambulance Business
is subject to the terms and conditions of the Purchase Agreement and its
exhibits, copies of which are filed as exhibits to this Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro forma financial information:
(i) Pro Forma Condensed Consolidated Balance Sheet as
of September 30, 2001.
(ii) Notes to Pro Forma Condensed Consolidated Balance Sheet
as of September 30, 2001.
(c) Exhibits:
EXHIBIT NUMBER DESCRIPTION
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2 Purchase Agreement By and Among AIM
Aircraft, Inc. and CyberCare, Inc.,
Air Response Medical Transport
Corp., Global Air Rescue, Inc.,
Global Air Charter, Inc. and Air
Response North, Inc.
2.1 AIM Aircraft, Inc. promissory note
2.2 Security Agreement
2.3 Master aircraft lease agreement with
option to purchase.
2.4 Aircraft lease agreement with option
to purchase.
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 duly authorized.
CYBERCARE, INC.
Date: December 18, 2001 By: /s/ STEVEN M. COHEN
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Steven M. Cohen
Chief Financial Officer
CyberCare, Inc.
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 2001 (All amounts in thousands of dollars)
(As Reported) Pro Forma Pro Forma
September 30, 2001 Adjustment September 30, 2001
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Assets
Current Assets:
Cash and cash equivalents $ 5,066 $ -- $ 5,066
Marketable securities 1,000 1,000
Accounts receivable, net 5,445 5,445
Net assets of discontinued operations 6,747 A (6,747) --
Inventories, net 6,506 6,506
Note receivable - related parties 555 555
Notes receivable and other current assets 1,937 1,937
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Total current assets 27,256 (6,747) 20,509
Property and equipment, net 2,563 2,563
Intangible assets, net 15,721 15,721
Note receivable 4,143 4,143
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Total assets $ 49,683 $ (6,747) $ 42,936
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Liabilities and Stockholders' Equity
Current Liabilities:
Lines of credit $ 2,138 $ -- $ 2,138
Accounts payable 2,607 2,607
Accrued expenses 3,965 3,965
Net liabilities of discontinued operations 653 653
Other current liabilities 361 361
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Total current liabilities 9,724 9,724
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Convertible subordinated debentures, net 7,872 7,872
Other liabilities 415 415
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Total liabilities 18,011 18,011
Total stockholders' equity 31,672 A (6,747) 24,925
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Total liabilities and stockholders' equity $ 49,683 $ (6,747) $ 42,936
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See Notes to Pro Forma Condensed Consolidated Balance Sheet
CyberCare, Inc.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of September 30, 2001
1. PRO FORMA ADJUSTMENT
The accompanying pro forma condensed consolidated balance sheet gives
effect to the following pro forma adjustments necessary to reflect the
Company entering into an agreement to sell its Air Ambulance Business as
if the transaction had occurred on September 30, 2001.
A) To eliminate all of the Air Ambulance Business assets and liabilities.