Info

Network Pharmaceuticals, Inc. is a wholly-owned subsidiary of PrimeRx.com, a closely held pharmacy management company of which e-Medsoft.com owns 29% and has managed pursuant to a Management Services Agreement since April 2000, as modified in March, 2001. As described in the Annual Report for the period ended March 31, 2001, the Company has consolidated financial statements with those of Network since April 2000. Network represented a material portion of revenues for the fiscal year ended March 31, 2001, at $54 million or 61.5% of total consolidated revenues. As described in the Annual Report, the relationship with PrimeRx and Network has been a troubled one characterized by numerous disputes, some of which have resulted in litigation. The most recent dispute involves a lawsuit brought by Network on July 16, 2001, alleging various breaches of a Settlement and Mutual General Release Agreement dated March 21, 2001. Despite the filing of this lawsuit, the principals of Network and their agents cooperated with e-MedSoft.com as recently as last month in the preparation of consolidated financial statements contained in the Company's Annual Report. Network is now taking the position that it will not turn over financial information in connection with the period ended June 30, 2001, unless the Company pays amounts allegedly owed to Network under the Settlement Agreement. To date, the Company has not been successful in obtaining this information through negotiation, and may be forced to seek immediate judicial relief. The Company stated that it could not predict if it will ultimately be successful in obtaining the Network financial information. Should the information be obtained, an amended Quarterly Report for the period ended June 30, 2001--that is prepared in accordance with accounting principles generally accepted in the United States--will be filed. Upon consolidating Network in accordance with generally accepted accounting principles, e-MedSoft.com anticipates that consolidated revenues, expenses, and net loss will increase by material amounts in the consolidated statement of operations for the three months ended June 30, 2001. Additionally, the consolidated assets, liabilities and stockholder's deficit will increase by material amounts in the consolidated balance sheet of June 30, 2001, as compared to those reported today. The Company anticipates that upon consolidation of Network, there will be material changes to the consolidated statement of cash flows and disclosures. The Company will announce a conference call to review the quarterly results when the proposed issues and amendments have been resolved.