Auditors Doubt Future Health of Drkoop.com Site
Drkoop.com Inc.'s auditors said they have “substantial doubt” about the ability of the health-care information Web site co-founded by former U.S. Surgeon General C. Everett Koop to stay in business.
PricewaterhouseCoopers said the company “has sustained losses and negative cash flows from operations since its inception.” This raises “substantial doubt about its ability to continue as a going concern,” according to an audit for 1999 included in the company’s annual report filed Thursday with the Securities and Exchange Commission.
Drkoop.com, based in Austin, Texas, went public last June by selling shares for $9 apiece and netted $88.5 million. The stock traded as high as $45.75 last July and Thursday fell 6 cents to close at $6.25 on Nasdaq.
A year earlier, auditors warned the company in their report for 1998 that they had “uncertainty” about its ability to continue as a going concern because of its historical negative cash flow. Those warnings were included in regulatory filings the company made before the IPO.
The company said it plans to raise working capital through additional equity financings or debt financings--or both--in the coming year.
Drkoop.com said its ability to meet its obligations depends upon its success with these financings and in establishing profitable operations, entering into collaborative or other arrangements with corporate sources or securing other sources of money.
“In the event that the company does not successfully implement its business plan, certain assets may not be recoverable,” the filing said.
Drkoop.com officials couldn’t be reached for comment.
The annual report also detailed the company’s soured relationship with HealthMagic Inc. Columbia, S.C.-based HealthMagic was to develop technology for Drkoop.com to be able to offer Web-based personal medical records and other features in the first half of 1999, according to Drkoop.com’s IPO filing.
“The relationship never produced satisfactory results,” the annual report said. The companies are in settlement discussion regarding possible legal claims that they have against each other, according to the annual report.