<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
                           EXCHANGE ACT OF 1934


                  For the quarterly period ended March 31, 2001


                                       or


 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                           EXCHANGE ACT OF 1934

              For the transition period from ________ to _________.


                        Commission File Number: 001-16079
                                                ---------

                               PracticeWorks, Inc.
                               -------------------
             (Exact name of registrant as specified in its charter)


                    Delaware                                    52-2259090
                    --------                                    ----------
         (State or other jurisdiction of                    (I.R.S. Employer
          incorporation or organization)                    Identification No.)

         1765 The Exchange, Suite 200  Atlanta, Georgia            30339
         ----------------------------------------------            -----
            (Address of principal executive offices)             (Zip code)


                                 (770) 850-5006
                                 --------------
              (Registrant's telephone number, including area code)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No

         The number of outstanding shares of the Registrant's common stock, par
value $.01 per share, was 9,117,194 as of May 4, 2001.


<PAGE>   2


                               PRACTICEWORKS, INC.

                                INDEX TO CONTENTS

<TABLE>
<CAPTION>

         DESCRIPTION OF CONTENTS                                                        PAGE NUMBER
         -----------------------                                                        -----------

<S>                                                                                     <C>
PART I - Financial Information

         Item 1 - Financial Statements of PracticeWorks, Inc.                                3

         Item 2 - Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                                     11

         Item 3 - Quantitative and Qualitative Disclosures About Market Risk                18


PART II - Other Information

         Item 1 - Legal Proceedings                                                         18

         Item 2 - Changes in Securities and Use of Proceeds                                 19

         Item 3 - Defaults Upon Senior Securities                                           20

         Item 4 - Submission of Matters to a Vote of Security Holders                       20

         Item 5 - Other Information                                                         20

         Item 6 - Exhibits and Reports on Form 8-K                                          20
</TABLE>



                                       2
<PAGE>   3


                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                               PRACTICEWORKS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                                               MARCH 31,        DECEMBER 31,
                                                                                 2001               2000
                                                                              -----------       ------------
                                                                              (UNAUDITED)

                                               ASSETS
<S>                                                                           <C>               <C>
Current:
    Cash and cash equivalents                                                 $  7,135          $  3,979
    Accounts receivable-trade, net of allowance of $1,452 and $1,103             7,590             8,097
    Other receivables                                                            1,169               979
    Deferred tax assets                                                            987             1,147
    Prepaid expenses and other current assets                                    1,308             1,080
                                                                              --------          --------
            Total current assets                                                18,189            15,282
Property and equipment, net of accumulated depreciation
    of $3,395 and $1,930                                                         6,289             4,120
Goodwill, net of accumulated amortization of
    $24,314 and $19,643                                                         46,996            33,571
Other intangible assets, net of accumulated amortization
    of $837 and $588                                                            15,545             9,769
Deferred tax assets                                                              4,370             4,029
Advances to pending acquisition                                                  1,650             1,550
Other assets                                                                       320               201
                                                                              --------          --------
                                                                              $ 93,359          $ 68,522
                                                                              ========          ========

                                    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                          $  5,113          $  1,483
    Accrued expenses                                                             4,605             4,324
    Accrued restructuring costs                                                  1,079             1,839
    Deferred revenue and customer deposits                                      10,636             9,753
    Current portion of long-term debt                                            2,126             1,055
                                                                              --------          --------
            Total current liabilities                                           23,559            18,454
Long-term debt, less current portion                                            20,031            20,239
                                                                              --------          --------
            Total liabilities                                                   43,590            38,693
                                                                              --------          --------

Commitments and contingencies

Convertible redeemable preferred stock, $0.01 par value; 20,000,000 shares
    authorized:
    Series A 6.5% convertible redeemable preferred; $32,000 liquidation
       preference and redemption value; 32,000 shares issued and outstanding
       at March 31, 2001; carrying value includes accumulated dividends of
       $136 and is net of $10,855 unamortized discount                          21,281                --
                                                                              --------          --------

    Series C convertible redeemable preferred; $5,000 liquidation preference
       and redemption value; 100,000 shares issued and outstanding at
       March 31, 2001; carrying value includes $52 estimated accrued
       redemption premium                                                        5,052                --
                                                                              --------          --------

Stockholders' equity:
    Common stock $0.01 par value, 100,000,000 authorized,
       8,783,814 issued and outstanding at March 31, 2001                           88                --
    Additional paid-in capital (Note 1)                                         26,989                --
    InfoCure Corporation equity                                                     --            29,720
    Accumulated deficit                                                         (3,576)               --
    Accumulated other comprehensive (loss) income                                  (65)              109
                                                                              --------          --------
            Total stockholders' equity                                          23,436            29,829
                                                                              --------          --------

                                                                              $ 93,359          $ 68,522
                                                                              ========          ========
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>   4

                               PRACTICEWORKS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                                      MARCH 31,
                                                               2001                2000
                                                             --------            --------
<S>                                                          <C>                 <C>
Revenue:
    Recurring                                                $  8,235            $  5,427
    Non-recurring                                               3,582               4,393
                                                             --------            --------
Total revenue                                                  11,817               9,820
                                                             --------            --------

Operating expense:
    Hardware and other purchases for resale                     1,447               1,296
    Selling, general and administrative                        10,212               8,520
    Research and development                                      726                 654
    Depreciation and amortization                               5,314               3,293
    Restructuring and other non-recurring charges               2,120                 778
    Gain on disposal of fixed assets                               --                (640)
                                                             --------            --------
Total operating expense                                        19,819              13,901
                                                             --------            --------

Operating loss                                                 (8,002)             (4,081)
Interest expense and other, net                                   625                 379
                                                             --------            --------
Loss before income taxes                                       (8,627)             (4,460)
Income tax benefit                                                 --              (1,502)
                                                             --------            --------

Net loss                                                       (8,627)             (2,958)

Accrued and accretive dividends on preferred stock                333                  --
                                                             --------            --------

Net loss available to common shareholders                    $ (8,960)           $ (2,958)
                                                             ========            ========

Loss per share - basic and diluted                           $  (1.03)           $  (0.36)
                                                             ========            ========

Weighted average shares outstanding:
    Basic and diluted                                           8,685               8,194
                                                             ========            ========
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>   5

                               PRACTICEWORKS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (IN THOUSANDS, EXCEPT SHARE AMOUNT)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED
                                                                                           MARCH 31,
                                                                                    2001                2000
                                                                                  --------            --------
<S>                                                                               <C>                 <C>
CASH PROVIDED BY OPERATING ACTIVITIES:
     Net loss                                                                     $ (8,627)           $ (2,958)
     Adjustments to reconcile net loss to cash flows provided by
        operating activities:
        Restructuring and other charges                                               (310)                 --
        Depreciation and amortization                                                5,314               3,293
        Provision for doubtful accounts                                                517                  --
        Gain on disposal of fixed assets                                                --                (640)
        Deferred taxes                                                                  --              (1,502)
        Changes in current assets and liabilities, net of acquisitions:
           Trade and other receivables                                                 266               1,613
           Prepaid expenses and other current assets                                   (90)                 33
           Accounts payable and accrued expenses                                     3,414                 275
           Deferred revenue and customer deposits                                     (436)                248
                                                                                  --------            --------
     Cash provided by operating activities                                              48                 362
                                                                                  --------            --------

CASH USED IN INVESTING ACTIVITIES:
     Cash paid for acquisitions                                                       (673)             (6,080)
     Additional purchase price consideration                                            --              (4,400)
     Property and equipment expenditures                                              (233)               (598)
     Cash paid for other intangible assets                                            (669)                (31)
     Advances to pending acquisition                                                  (100)               (500)
     Other                                                                            (117)                 73
                                                                                  --------            --------
     Cash used in investing activities                                              (1,792)            (11,536)
                                                                                  --------            --------

CASH PROVIDED BY FINANCING ACTIVITIES:
     Net cash advances from InfoCure                                                   344               4,705
     Proceeds from sale of series C convertible
       redeemable preferred stock,net                                                4,741                  --
     Borrowings of long-term debt                                                       --               7,663
     Payment of loan costs                                                            (183)                 --
                                                                                  --------            --------
     Cash provided by financing activities                                           4,902              12,368
                                                                                  --------            --------

Effect of exchange rate changes on cash and cash equivalents                            (2)                 --
                                                                                  --------            --------

Net increase in cash and cash equivalents                                            3,156               1,194
Cash and cash equivalents, beginning of period                                       3,979               2,527
                                                                                  --------            --------
Cash and cash equivalents, end of period                                          $  7,135            $  3,721
                                                                                  ========            ========


NONCASH TRANSACTIONS:
     Convertible redeemable preferred stock issued
       for acquisition, net of discount                                           $ 21,000            $     --
     Issuance of 8,754,937 shares of common stock in exchange for
        net assets at time of spin-off                                              26,600                  --
     InfoCure common stock issued for acquisitions                                      --               2,386
     Disposal of building under capital lease obligation                                --              (1,109)
                                                                                  ========            ========

ADDITIONAL CASH FLOW INFORMATION:
     Interest paid                                                                $      9            $     --
                                                                                  ========            ========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>   6

                               PRACTICEWORKS, INC.
                NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL
                             STATEMENTS -- UNAUDITED

NOTE 1.  NATURE OF OPERATIONS AND BASIS OF PRESENTATION

         PracticeWorks, Inc. was incorporated in Delaware on August 10, 2000 as
a wholly owned subsidiary of InfoCure Corporation. On March 5, 2001 (the
"Spin-Off Date"), InfoCure completed the pro rata distribution of the all of the
outstanding shares of PracticeWorks' common stock to its stockholders in a
tax-free distribution (the "Spin-Off"). The Spin-Off was effected through the
dividend of one share of PracticeWorks common stock for every four shares of
InfoCure common stock held by InfoCure stockholders of record as of February 21,
2001. Immediately prior to the Spin-Off, InfoCure transferred to PracticeWorks
the assets and liabilities of its information management technology business for
dental, orthodontic and oral and maxillofacial surgery practices, including its
interests in all wholly owned subsidiaries engaged in such business. Results of
operations prior to the Spin-Off are those of PracticeWorks, a division of
InfoCure, considered the predecessor to PracticeWorks, Inc. For purposes of
these financial statements the term "PracticeWorks" or the "Company" means
PracticeWorks, a division of InfoCure Corporation, for periods prior to the
Spin-Off, and PracticeWorks, Inc. for periods after the Spin-Off.

         The information presented at March 31, 2001, and for the three months
ended March 31, 2001 and 2000 is unaudited, however, in the opinion of
management, includes all normal recurring adjustments necessary for a fair
presentation of the consolidated financial position, results of operations and
cash flows of PracticeWorks for the periods presented. All significant
intercompany balances and transactions have been eliminated in consolidation.
The results for the three-month period ended March 31, 2001 are not necessarily
indicative of the results to be expected for the full year. Certain information
in footnote disclosures normally included in annual financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission (the "Commission"). The consolidated financial statements,
notes thereto and other information should be read in conjunction with the
historical consolidated financial statements and related notes thereto contained
in PracticeWorks' Annual Report on Form 10-K for the year ended December 31,
2000, (the "Form 10-K"). The results for the quarter ended March 31, 2000 and
for the period through March 5, 2001 are not reflective of PracticeWorks as a
stand-alone entity, but as an operating division of InfoCure. Accumulated
deficit reflects activity from March 5, 2001. Certain prior period amounts have
been reclassified to conform to the current presentation.

         The Company is a provider of information management technology for
dentists, orthodontists and oral and maxillofacial surgeons throughout the
United States, and in Canada, Europe and Australia. The Company's offerings
include practice management applications, business-to-business e-commerce
services, electronic data interchange, or EDI, services, ongoing maintenance and
support and training. These systems are designed to increase the quality and
reduce the cost of providing care by allowing dentists and physicians to manage
their practices more efficiently and reduce the administrative burdens created
by an increasingly complex healthcare environment. The Company is currently
developing new practice management applications, tailored to the needs of
dental, orthodontic and oral and maxillofacial surgery customers that can be
delivered through its application services provider, or ASP, delivery model and
other Internet-based applications and services.

NOTE 2.  REVENUE

         The Company reports two types of revenue: recurring and non-recurring
revenue. Recurring revenue includes contractual arrangements for maintenance and
support services, subscriptions and e-services (electronic data interchange
("EDI" transactions) and royalties and other revenues from e-commerce and other
Internet-based services). Non-recurring revenue includes one-time sales of
licenses and systems and fees for training and implementation services.


                                       6
<PAGE>   7

NOTE 3.  BUSINESS COMBINATIONS

         As reported in the Company's Form 10-K, InfoCure completed three
acquisitions during the first quarter of 2000 and an additional three during the
second quarter of 2000. These acquisitions were accounted for as purchases and
attributed to the Company in conjunction with the Spin-Off. Additionally, on
March 7, 2001, the Company acquired the membership interests of SoftDent, LLC,
or InfoSoft, the practice management subsidiary of Ceramco, Inc. ("Ceramco"), a
wholly owned subsidiary of DENTSPLY International, Inc. ("DENTSPLY"), for which
the aggregate consideration was approximately $32.7 million represented by
32,000 shares of the Company's series A convertible redeemable preferred stock
and transaction costs. This transaction was also accounted for as a purchase.
The following unaudited pro forma information presents the results of operations
of the Company as if the foregoing acquisitions had occurred as of the beginning
of each of the periods presented. The pro forma information is not necessarily
indicative of what would have occurred had the acquisitions been made as of such
periods, nor is it indicative of future results of operations. The pro forma
amounts give effect to appropriate adjustments for the fair value of the assets
acquired, amortization of intangibles, interest expense and income taxes.


<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED MARCH 31,
                                                                       -------------------------------------
                                                                             2001                 2000
                                                                       ------------------   ----------------
                                                                      (In thousands, except per share amount)

<S>                                                                      <C>                    <C>
PRO FORMA AMOUNTS
Revenue......................................                            $ 13,191               $14,558
Net loss available to common stockholders                                 (10,858)               (6,683)
Loss per common share - basic and diluted                                   (1.25)                (0.82)
</TABLE>

PENDING ACQUISITION

         In October 1999, InfoCure entered into a definitive agreement to
acquire Medical Dynamics, Inc. ("Medical Dynamics"), a dental practice
management company. As amended, this agreement contemplates aggregate
consideration of approximately $8.2 million comprised of the issuance of shares
of PracticeWorks common and preferred stock, issuance of shares of InfoCure
common stock and a small cash payment in exchange for all the outstanding equity
interests of Medical Dynamics. The transaction is expected to close during the
third quarter of 2001. In connection with this proposed transaction, as of
March 31, 2001, InfoCure has advanced MEDY $1.65 million under terms of a loan
agreement dated October 1999. PracticeWorks has assumed all obligations of
InfoCure under the merger agreement except for InfoCure's obligation to issue
approximately 878,000 shares of its common stock. InfoCure's issuance of these
shares will be accounted for by PracticeWorks as an equity contribution to
recognize the substance of the transaction as originally contemplated.

NOTE 4. RESTRUCTURING AND OTHER NON-RECURRING CHARGES

RESTRUCTURING

         As reported on PracticeWorks' Form 10-K, InfoCure announced on August
1, 2000 its plans to restructure each of its dental and medical operating
divisions, PracticeWorks and VitalWorks, respectively, through a plan of
employee reductions and consolidation of existing facilities. During the third
and fourth quarter of 2000, PracticeWorks closed or consolidated 11 facilities
and terminated approximately 145 employees. The following table sets forth
changes in the restructuring reserves during the three months ended March 31,
2001:


                                       7
<PAGE>   8


<TABLE>
<CAPTION>
                                                              RESERVE                    COSTS         RESERVE
                                                              BALANCE    ADDITIONS/     APPLIED        BALANCE
                                                              DECEMBER   ADJUSTMENTS    AGAINST          MARCH
                                                              31, 2000   TO RESERVE     RESERVES      31, 2001
                                                              --------   ----------     --------      --------
                                                                                 (IN THOUSANDS)

<S>                                                           <C>           <C>           <C>           <C>
Facility closure and consolidation ...................        $1,222        $(389)        $(200)        $  633
Compensation costs for severance and other termination
  benefits ...........................................           617           79          (250)           446
                                                              ------        -----         -----         ------
              Total ..................................        $1,839        $(310)        $(450)        $1,079
                                                              ======        =====         =====         ======
</TABLE>

OTHER NON-RECURRING CHARGES

         During the three months ended March 31, 2001, the Company recorded
other non-recurring charges of approximately $2.4 million related primarily to
professional fees, printing and similar costs in connection with completion of
the Spin-Off.

NOTE 5.  NOTES PAYABLE AND LONG TERM DEBT

         On March 5, 2001, concurrent with the Spin-Off, the Company borrowed
approximately $21.6 million under a credit facility executed with FINOVA (the
"Credit Facility") to repay amounts attributed to the Company under InfoCure's
credit facility. The Credit Facility matures June 30, 2003 and is collateralized
by substantially all of the Company's assets. Amounts outstanding will bear
interest at a variable rate which, through June 30, 2001, is a margin equal to
1.5% plus a base rate equal to the higher of the prime rate as announced from
time to time by Citibank N.A. or a weighted average of the rates on overnight
federal fund transactions plus 50 basis points. Subsequent to June 30, 2001, the
margin increases to 1.75% and after January 1, 2002 increases to 2.25%. The
original outstanding principal balance of the loan will amortize at 5.0% per
quarter beginning October 1, 2001, and the remaining outstanding balance under
the Credit Facility will be due in full on June 30, 2003.

         The Credit Facility contains restrictions and covenants, including
limitations on our leverage, a minimum net worth requirement, a minimum current
ratio requirement and a minimum liquidity requirement. For a more detailed
discussion of the Credit Facility, including the requirements, restrictions and
covenants contained therein, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

NOTE 6.  INCOME TAXES

         During the three months ended March 31, 2001, the Company generated
approximately $5.2 million in taxable losses. Approximately $3.2 million of
these losses were generated prior to the Spin-Off and will remain with InfoCure.
The remaining $2.0 million were generated subsequent to the Spin-Off and will be
available to offset any future taxable income the Company generates. At March
31, 2001, the Company reported deferred tax assets of $5.4 million consisting of
gross deferred tax assets of $6.7 million and a valuation allowance of $1.3
million. The gross deferred tax assets consisted of $5.9 million in temporary
differences in the book and tax bases of certain assets and liabilities and
$800,000 in net operating loss carryforwards. The Company has recorded a
valuation allowance to reduce the deferred tax assets to an amount that
management believes is more likely than not to be realized.

NOTE 7.  STOCKHOLDERS' EQUITY

Common Stock

         The weighted average number of shares outstanding used in computing
basic and diluted net loss per share for the three months ended March 31, 2001
was 8,685,081. The weighted average number of shares outstanding used in
computing diluted net loss for the three months ended March 31, 2001 excludes
approximately 975,000 shares of potentially issuable common stock assuming
conversion of the series A preferred stock because such inclusion would be
antidilutive. Potentially dilutive shares of 87,025 for exercise of options and
warrants were also excluded from the diluted loss per share calculation because
they were antidilutive.

         For purposes of computing the historical basic and diluted weighted
average per share amounts for periods prior to the Spin-Off, PracticeWorks used
the distribution ratio of 1/4 share of PracticeWorks common stock for every
outstanding share of InfoCure common stock.

Series A Convertible Redeemable Preferred Stock Issued to Ceramco


                                       8
<PAGE>   9

         In connection with the acquisition of the InfoSoft division of
DENTSPLY, PracticeWorks issued 32,000 shares of series A convertible redeemable
preferred stock to Ceramco as consideration for the transfer of the membership
interests in SoftDent, LLC representing the assets which were used in DENTSPLY's
business of developing, marketing, licensing and supporting the SoftDent
software product. These preferred shares have a stated redemption value of $32.0
million, accrue dividends at an annual rate of 6.5%, are convertible into
approximately 9.8% of PracticeWorks outstanding common stock at the time of the
Spin-Off, or approximately 975,000 shares, and are redeemable after five years
if not converted. Ceramco also received certain registration rights in
connection with this acquisition.

Series C Convertible Redeemable Preferred Stock Issued to Crescent

         On March 6, 2001, the Company issued 100,000 shares of its series C
convertible redeemable preferred stock for $5.0 million to Crescent
International Ltd. ("Crescent"). If the series C convertible redeemable
preferred stock has not been converted after four years, the holders may require
the Company to redeem the series C convertible redeemable preferred stock at a
175% premium to the liquidation preference. The Company will recognize an
accretive dividend of approximately $938,000 annually related to this feature
for four years which will impact earnings per share. The series C convertible
redeemable preferred stock is not convertible for one year after issuance.
Thereafter, the holders of the series C convertible redeemable preferred stock
can convert all or a portion of their shares based on a floating conversion
price which is a function of our common stock's closing price. Holders will not
be entitled to obtain more than 20% of the Company's common stock in the
aggregate upon conversion. Crescent also received certain registration rights in
connection with its investment.

Warrants

         In connection with the Spin-Off, the Company issued to the lender a
warrant to purchase up to 98,750 shares of the Company's common stock at a price
of $4.80 per share in connection with the antidilution provisions of existing
warrants to purchase InfoCure common stock. This warrant is immediately
exercisable and has an eight-year term. The estimated fair value of
approximately $540,000 has been recorded as deferred loan costs and is being
amortized over the life of the loan. No warrants had been exercised as of March
31, 2001.

         In connection with the Spin-Off, the Company issued to the investor a
warrant to purchase up to 50,000 shares of the Company's common stock at a price
of $18.40 per share in connection with the antidilution provisions of existing
warrants to purchase InfoCure common stock. The estimated fair value of this
grant is nil. This warrant is immediately exercisable and has a four-year term.
No warrants had been exercised as of March 31, 2001.

Contingently Issuable Shares

         As reported in PracticeWorks' Form 10-K, in connection with the
Spin-Off, PracticeWorks assumed a portion of InfoCure's contingent obligation
under a letter agreement between InfoCure and WebMD Corporation ("WebMD"),
formerly Healtheon/WebMD, executed February 2000 whereby PracticeWorks may be
obligated to issue up to 482,253 shares of PracticeWorks common stock to WebMD.
These shares would represent the PracticeWorks common stock that WebMD would
have been entitled to receive in the Spin-Off had it owned the full number of
shares of InfoCure common stock on the record date. On March 8, 2001, InfoCure
filed a lawsuit against WebMD alleging certain claims related to a dispute
between the parties with respect to the letter agreement and a related marketing
agreement. On March 2, 2001, InfoCure issued 1,929,012 shares of common stock to
WebMD pursuant to the February 2000 letter agreement. The exact number of shares
of PracticeWorks common stock to be delivered to WebMD, if any, will be
determined through negotiations and/ or litigation regarding the InfoCure/WebMd
February 2000 letter agreement and related marketing agreement.

NOTE 8.  SEGMENT INFORMATION

         SFAS No. 131 establishes standards for the way in which public
companies are to disclose certain information about operating segments in their
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers.

         The Company historically evaluated its business based on specialty
group (i.e. dental, orthodontic, and oral) clients. The Company's business model
has changed and reshaped these bases for evaluation. Effective in the first
quarter of 2001, in connection with the Spin-Off, the Company changed the way it
evaluates its business to reflect the new business model. Although the Company's
products and services are similar, management believes that the delineation
between the Company's revenue streams provides definition for reportable
segments and is consistent with its newly adopted business model. Consequently,
the Company has identified two reportable operating segments based on the
criteria of SFAS No. 131: recurring revenue and non-recurring revenue. Recurring
revenue includes contractual arrangements for maintenance and support services,
subscriptions and e-services. Non-recurring revenue includes one-time sales of
licenses and systems and fees for training and implementation services.

         The Company also conducts operations in Europe and Australia. For the
three months ended March 31, 2001, less than 10% of the Company's total revenues
were generated outside the United States.

         The Company's President and Chief Executive Officer evaluates
performance based on measures of segment revenues and company-wide operating
results. Employee headcount and operating costs and

                                       9
<PAGE>   10

expenses are managed by functional areas, rather than by revenue segments.
Moreover, the Company does not account for or report to the President and CEO
its assets or capital expenditures by segments.

         The accompanying statements of operations disclose the financial
information of the Company's reportable segments in accordance with SFAS No. 131
for the three months ended March 31, 2001 and 2000.

NOTE 9.  LEGAL PROCEEDINGS

         Pursuant to the Agreement and Plan of Distribution, executed in
connection with the Spin-Off, PracticeWorks agreed to assume any and all
contingent liability arising from the definitive resolution of the litigation
filed on June 21, 2000 against InfoCure by Joseph Hafner. On June 21, 2000, a
lawsuit styled Joseph Hafner v. InfoCure Corporation et al., was filed in the
United States District Court in and for the Eastern District of Pennsylvania.
The lawsuit alleges that InfoCure breached the terms of a registration rights
agreement whereby InfoCure was required, prior to a specified date, to effect
the registration for resale with the Securities and Exchange Commission of
shares of InfoCure's common stock which the plaintiff owned. The complaint
further alleges breach of fiduciary duties owed to the plaintiff as a
stockholder of InfoCure and tort claims against InfoCure as a result of the
alleged failure to timely register shares for resale. The complaint seeks in
excess of $3.2 million in compensatory damages as a result of InfoCure's alleged
breach of this agreement, as well as punitive damages and reimbursement for the
plaintiff's attorney's fees and associated costs and expenses of the lawsuit. On
March 30, 2001, the court denied the plaintiff's motions for judgment on the
pleadings with respect to plaintiffs' claim that InfoCure breached the terms of
the registration rights agreement, and the court also denied InfoCure's motion
to dismiss certain of the plaintiff's contract and tort claims in the case.
InfoCure's management believes it has meritorious defenses in this matter and
intends to pursue these defenses vigorously. Management of PracticeWorks
believes that the ultimate resolution of this matter will not have a material
adverse effect on PracticeWorks' financial condition.


                                       10
<PAGE>   11


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

         PracticeWorks, Inc. ("PracticeWorks" or "we") is an information
management technology provider for dentists, orthodontists and oral and
maxillofacial surgeons. Our offerings include practice management applications,
business-to-business e-commerce services, electronic data interchange, or EDI,
services, ongoing maintenance and support and training. These applications and
services are designed to automate the provider's practice, resulting in greater
efficiency, lower costs and higher quality care. As of March 31, 2001, we had an
installed base of approximately 61,000 providers, including 49,000 dentists,
4,000 orthodontists and 4,000 oral and maxillofacial surgeons in the United
States and an additional 4,000 dentists worldwide.

         For the quarter ended March 31, 2000 and through March 5, 2001, we
operated as a division of InfoCure Corporation ("InfoCure"). On March 5, 2001,
InfoCure completed the pro rata distribution of all of the outstanding shares of
PracticeWorks common stock to InfoCure stockholders. InfoCure currently owns
none of our outstanding common stock.

         A substantial part of our growth has been achieved through
acquisitions. From July 10, 1997 through March 5, 2001, InfoCure completed 18
acquisitions that were attributed to us in the Spin-Off. In addition on March 7,
2001, we acquired the membership interests of SoftDent, LLC ("InfoSoft"), the
practice management subsidiary of Ceramco, Inc. ("Ceramco"), a wholly owned
subsidiary of DENTSPLY International, Inc. Given the significant number of
acquisitions in each of the periods presented, the results of operations from
period to period may not necessarily be comparable.

         Of the 18 acquisitions, InfoCure acquired six dental practice
management companies that were accounted for as purchases during the year ended
December 31, 2000. The aggregate consideration for these acquisitions was $13.4
million in cash and $2.4 million in InfoCure common stock. Goodwill of
approximately $15.7 million was recorded for these transactions and will be
amortized over an estimated useful life of three years.

         In connection with the InfoSoft acquisition, we issued 32,000 shares of
our series A convertible redeemable preferred stock having a stated redemption
value of $32.0 million. The shares of series A convertible redeemable preferred
stock are convertible into a number of shares representing approximately 9.8% of
our outstanding common stock at the time of the Spin-Off, or approximately
975,000 shares. If not converted, the holder can redeem the series A convertible
redeemable preferred stock for $32.0 million after five years. Goodwill of
approximately $17.7 million was recorded for this transaction based on
preliminary estimates of the purchase price and will be amortized over an
estimated useful life of three years. The fair value of the transaction, net of
an estimated $11.0 million discount on the series A convertible redeemable
preferred stock consideration, is approximately $21.7 million including
transaction costs. The $11.0 million discount will be recognized over the
five-year redemption period as an accretive dividend.

         In October 1999, InfoCure entered into an agreement to acquire Medical
Dynamics, Inc. ("Medical Dynamics"). In connection with the Spin-Off,
PracticeWorks assumed all of InfoCure's obligations under the Medical Dynamics
merger agreement except for InfoCure's obligation to issue a specified number of
shares of InfoCure common stock. In connection with the proposed acquisition,
each Medical Dynamics stockholder of greater than 100 shares of Medical Dynamics
common stock will receive 0.017183 shares of PracticeWorks common stock, 0.07558
shares of PracticeWorks series B convertible redeemable preferred stock and
0.06873 shares of InfoCure common stock in exchange for each share of Medical
Dynamics common stock outstanding on a fully diluted basis on the date of the
merger. Each holder of 100 or fewer shares of Medical Dynamics common stock will
receive $0.75 in cash for each share of Medical Dynamics, which cash amount will
be paid by PracticeWorks. Assuming 13.2 million shares of Medical Dynamics are
outstanding on a fully diluted basis on the date of the acquisition,
PracticeWorks will issue approximately 219,500 shares of PracticeWorks common
stock and approximately 965,000 shares of PracticeWorks series B convertible
redeemable preferred stock (with a stated redemption value of


                                       11
<PAGE>   12

$5.3 million) and will pay approximately $325,000 in cash as consideration for
the merger. Assuming full conversion of the PracticeWorks series B convertible
redeemable preferred stock, the PracticeWorks securities to be issued in
connection with the Medical Dynamics merger will represent, in the aggregate,
less than 2% of PracticeWorks' outstanding common stock at the time of the
Spin-Off. InfoCure will issue approximately 878,000 shares of its common stock
as a portion of the consideration for the merger. The estimated consideration
for Medical Dynamics will be approximately $2.6 million in PracticeWorks and
InfoCure common stock, approximately $5.3 million in PracticeWorks series B
convertible redeemable preferred stock and approximately $325,000 in cash. The
net consideration is approximately $7.5 million, including $300,000 in estimated
transaction costs, $500,000 estimated value assigned to stock options being
assumed and after giving effect to a $1.5 million discount applied to reduce the
series B convertible redeemable preferred stock to approximate fair value. The
purchase price will be allocated based on fair values of tangible assets and
total liabilities assumed. PracticeWorks expects to record goodwill of $10
million to $11 million which will be amortized over three years. The $1.5
million discount will be recognized over the five-year redemption period as an
accretive dividend. The Medical Dynamics acquisition is expected to close during
the third quarter of 2001.

SEGMENT AND MARKET INFORMATION

         We report our results in two segments: recurring revenue and
non-recurring revenue. Recurring revenue includes contractual arrangements for
maintenance and support services, subscriptions and e-services (including
electronic data interchange, or "EDI" transactions, and royalties and other
revenues from e-commerce and other Internet-based services). Non-recurring
revenue includes one-time sales of licenses and systems and fees for training
and implementation services.

CONSOLIDATED RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

REVENUE (In thousands)

<TABLE>
<CAPTION>
                                                             Percent               Percent     Dollar      Percent
Revenues for the three months ended March 31,      2001      of total     2000     of total    change      change
---------------------------------------------     -------    --------   --------   --------    ------      -------

<S>                                               <C>        <C>        <C>        <C>         <C>         <C>
Recurring                                         $ 8,235      69.7%     $5,427      55.3%     $ 2,808       51.7%
Non-recurring                                       3,582      30.3%      4,393      44.7%        (811)     (18.5%)
                                                  -------     -----      ------     -----      -------      -----
  Total                                           $11,817     100.0%     $9,820     100.0%     $ 1,997       20.3%
                                                  =======     =====      ======     =====      =======      =====
</TABLE>



            Total Revenue. Total revenue for the three months ended March 31,
2001 increased by $2.0 million, or 20.3%, from the three months ended March 31,
2000, primarily as a result of organic growth in the core elements of our new
business model of $1.7 million. For the three months ended March 31, 2001,
revenues attributable to acquisitions added $2.5 million including $1.6 million
attributable to acquisitions made in the first and second quarters of 2000 and
$900,000 attributable to the InfoSoft acquisition. The growth in revenues from
our core business and acquisitions was offset by a reduction of $1.2 million in
software sales as a result of our transition to subscription-based pricing and a
$1.0 million reduction in hardware sales related as well to subscription pricing
and to our new hardware agreement entered into in August 2000.

            Recurring Revenue. Recurring revenue includes contractual
arrangements for maintenance and support services, subscriptions and e-services.
Recurring revenue for the three months ended March 31, 2001 increased by $2.8
million, or 51.7%, from the three months ended March 31, 2000 as a result of

                                       12
<PAGE>   13

increases of $800,000 in subscriptions, $1.0 million in maintenance contracts
and $1.0 million in e-services. These increases are largely volume related and
include the effects of new services offered to existing customers. Increases in
maintenance and e-services include approximately $700,000 of maintenance revenue
attributed to the effect of several small acquisitions completed in 2000 and
approximately $500,000 of e-services revenue attributable to the InfoSoft
acquisition.

            Non-Recurring Revenue. Non-recurring revenue includes one-time sales
of licenses and systems and fees for training and implementation services.
Non-recurring revenue for the three months ended March 31, 2001 decreased by
$800,000, or 18.5%, from the three months ended March 31, 2000, primarily as a
result of an $800,000 net decrease in hardware sales and a $400,000 net decrease
in software licenses, offset by an increase of $400,000 in training and
implementation service revenue. The decrease in hardware and software sales
includes a $2.0 million net reduction in domestic sales offset by increases of
$800,000 in foreign sales. The domestic decrease is the expected result of lower
unit sales of one-time licenses as we transition to subscription pricing for
most products coupled with lower unit sales of hardware related as well to
subscription pricing and to an agreement we entered in August 2000 to
essentially outsource hardware in certain business lines in exchange for a
marketing fee. The foreign sales activity resulted from an acquisition completed
in the second quarter of 2000. Increases in training and implementation revenue
reflects growth in subscription units.

OPERATING COSTS AND EXPENSES (In thousands)

<TABLE>
<CAPTION>
Operating costs and expenses for the three                           Percent                Percent      Dollar      Percent
  months ended March 31,                                 2001        of sales     2000      of sales     change      change
------------------------------------------               ----        --------     ----      --------     ------      -------

<S>                                                      <C>         <C>         <C>         <C>         <C>         <C>
Hardware and other purchases for resale                   1,447        12.2%      1,296       13.2%         151        11.7%
Selling, general and administrative                      10,212        86.4%      8,520       86.8%       1,692        19.9%
Research and development                                    726         6.1%        654        6.7%          72        11.0%
Depreciation and amortization                             5,314        45.0%      3,293       33.5%       2,021        61.4%
Restructuring and other non-recurring charges             2,120        17.9%        778        7.9%       1,342       172.5%
Interest expense, net                                       625         5.3%        379        3.9%         246        64.9%
Income tax benefit                                           --         0.0%     (1,502)     (15.3%)      1,502      (100.0%)
</TABLE>


            Hardware and Other Purchases for Resale. Hardware and other
purchases for resale consists of costs incurred to purchase hardware and
includes costs of processing, forms and postage for EDI claims and statements
and other e-services, outsourced hardware maintenance, third-party software and
other items for resale in connection with the sales of new systems and software.
Hardware and other purchases for resale for the three months ended March 31,
2001, compared to the three months ended March 31, 2000, increased in the
aggregate due to the growth in e-services but decreased as a percentage of sales
as a result of an increase in higher margin e-services transactions and software
maintenance contracts and a decrease in lower margin hardware sales.

            Selling, General and Administrative, or SG&A. SG&A expense includes
salaries and benefits, product maintenance and support, variable commissions and
bonuses, marketing, travel, communications, facilities, insurance and other
administrative expenses. SG&A expense increased by $1.7 million, or 19.9%. Of
this increase, approximately $416,000 was attributable to the InfoSoft
acquisition completed in March 31, 2001. Additionally, the allowance for
doubtful accounts increased $500,000 when compared to the first quarter of 2000
to more closely align with our revenue growth and collection experience. The
remainder of this increase is due to the effect of SG&A costs from the
acquisitions completed in the first and second quarter of 2000, offset by the
reduction in SG&A costs resulting from the August 2000 restructuring.


                                       13
<PAGE>   14

            Research and Development. Research and development expense increased
$72,000 or 11.0% for the three months ended March 31, 2001 primarily as a result
of costs incurred on products acquired during 2000.

            Depreciation and Amortization. Depreciation and amortization expense
increased $2.0 million or 61.4% primarily due to the additional amortization
expense from the acquisitions completed in the first and second quarters of 2000
and, to a lesser extent, the InfoSoft acquisition completed in March 2001.

            Restructuring and Other Non-Recurring Charges. In the three months
ended March 31, 2001, PracticeWorks incurred approximately $2.4 million in
non-recurring charges relating primarily to professional fees, printing and
similar costs in connection with the completion of the Spin-Off from InfoCure
offset by a $310,000 reduction in restructuring costs relating to the
re-negotiation of terminated facility leases. In the three months ended March
31, 2000, PracticeWorks incurred restructuring charges of approximately $778,000
primarily associated with contingent consideration payable to former
stockholders of entities whose products were discontinued as part of the 1999
restructuring plan.

            Interest Expense, net. Interest expense increased by $246,000 or
64.9% due to the increase in the amount of the outstanding balance under our
credit facility and other debt agreements during the comparable periods coupled
with increases in the prime lending rate.

            Income Tax Benefit. For the three months ended March 31, 2001,
PracticeWorks generated net pre-tax losses for financial reporting purposes of
approximately $8.6 million and taxable net operating losses of approximately
$5.2 million. The financial reporting losses differ from the taxable losses
primarily due to book versus tax differences in goodwill amortization, including
non-deductible amounts. Approximately $3.2 million of these taxable losses were
generated prior to the Spin-Off and remained with InfoCure. The remaining $2.0
million of these taxable losses generated subsequent to the Spin-Off, are
attributable to PracticeWorks and will be available to offset any future taxable
income we generate. These net operating loss carryforwards create a deferred tax
asset of approximately $800,000. Additionally, certain of the assets and
liabilities spun-off to PracticeWorks had temporary differences between their
book and tax bases which carried over to PracticeWorks. As a result,
PracticeWorks' deferred tax assets at March 31, 2001 relating to temporary
differences approximate $5.9 million. Total deferred tax assets at March 31,
2001, including the net operating loss carryforwards and temporary differences
in the book and tax bases of assets and liabilities aggregate $6.7 million.

            PracticeWorks reported deferred tax assets at March 31, 2001 of
approximately $5.4 million representing essentially amounts attributable to us
based solely on reversing temporary differences as recorded by InfoCure through
December 31, 2000. Management believes that it is more likely than not that
these deferred tax assets will be realized based on our financial projections,
sales backlog and other operational factors. These factors indicate we will
generate taxable income within the next three to five years sufficient to
realize the tax benefits represented by these future deductible temporary
differences. During the quarter ended March 31, 2001, we recorded a valuation
allowance of approximately $1.3 million to reduce the total deferred tax assets
to the amount that we believe is more likely than not to be realized.

LIQUIDITY AND CAPITAL RESOURCES

     Our principal capital requirements have been to fund:

     - acquisitions;

     - working capital;

     - capitalized software development costs; and

     - capital expenditures for furniture, fixtures and equipment.


                                       14
<PAGE>   15
         During the three months ended March 31, 2001, we generated $48,000 of
cash in operating activities relating primarily to (1) a net loss of $8.6
million offset by non-cash charges of $5.3 million in depreciation and
amortization and (2) an increase in accounts payable and accrued expenses of
$3.4 million. This increase is primarily due to non-recurring charges relating
to the Spin-Off and, to a lesser extent, fees associated with the InfoSoft
acquisition. During the three months ended March 31, 2000, we generated $362,000
of cash from operating activities relating primarily to (1) a loss of $3.0
million offset by non-cash charges of $3.3 million for depreciation and
amortization and a non-cash benefit of $1.5 million associated with deferred
taxes and (2) a decrease in accounts receivable of $1.6 million.

            During the three months ended March 31, 2001, we used $1.8 million
of cash in investing activities primarily relating to cash paid in connection
with the InfoSoft acquisition of $673,000, cash paid for other intangibles of
$669,000 and cash paid for property and equipment expenditures of $233,000.
During the three months ended March 31, 2000, we used $11.5 million of cash in
investing activities primarily representing cash used for acquisitions and
related expenditures of $6.1 million, additional purchase price consideration of
$4.4 million, advances to Medical Dynamics of $500,000 and capital expenditures
of $598,000.

            During the three months ended March 31, 2001, we generated cash from
financing activities of $4.9 million consisting primarily from the sale of
series C convertible redeemable preferred stock, net of transaction costs, of
$4.7 million and net cash advances from InfoCure of approximately $344,000,
offset by the payment of deferred loan costs of $183,000. During the three
months ended March 31, 2000, we generated cash from financing activities of
$12.4 million consisting primarily of borrowings attributed to us of $7.7
million from InfoCure's line of credit and $4.7 million in cash advances from
InfoCure.

            In connection with the Spin-Off, we entered into a credit facility
with FINOVA Capital Corporation ("FINOVA") under which we incurred approximately
$21.6 million of indebtedness to repay InfoCure's long-term indebtedness
relating to our business. The FINOVA credit facility contains restrictions and
covenants, including limitations on our leverage, a minimum net worth
requirement, a minimum current ratio requirement and a minimum liquidity
requirement. Management believes that the covenants that have the greatest
likelihood of potentially restricting our operations are quarterly tests for
minimum net worth and minimum liquidity. Minimum net worth has been defined to
include the two completed convertible redeemable preferred stock issuances in
the first quarter of 2001, and the planned issuance to the stockholders of
Medical Dynamics in the second quarter of 2001. The minimum net worth
requirement ranges from a high of approximately $41.8 million at the quarter
ended March 31, 2001, to a low of approximately $18.1 million at the quarter
ended March 31, 2002. Minimum liquidity has been defined as cash and cash
equivalents, plus amounts up to $2.5 million available, but not drawn, under our
equity line (discussed below). The minimum liquidity requirement is
approximately $6.4 million at the quarter ended March 31, 2001 and ranges from a
high of approximately $11.1 million at the quarter ended March 31, 2003, to a
low of approximately $2.8 million at the quarter ended March 31, 2002. The
levels for the quarterly tests for minimum net worth and liquidity have been
computed based on discussions with the lender regarding our business plan. The
credit facility will prohibit payment of dividends on, or redemption of, our
capital stock. Amounts outstanding under the credit agreement will bear interest
at a variable rate which, through June 30, 2001, is a margin equal to 1.5% plus
a base rate equal to the higher of the prime rate as announced from time to time
by Citibank N.A. or a weighted average of the rates on overnight federal fund
transactions plus 50 basis points. Subsequent to June 30, 2001, the margin
increases to 1.75% and after January 1, 2002 increases to 2.25%. The original
outstanding principal balance of the loan will amortize at 5.0% per quarter
beginning October 1, 2001, and the remaining outstanding balance under the
facility will be due in full on June 30, 2003. We were in compliance with all of
the loan covenants at March 31, 2001.

            In connection with the Spin-Off, on March 6, 2001, we entered into
an equity line agreement with Crescent International Ltd. ("Crescent") that
allows us to issue and sell, and requires Crescent to purchase, upon our
request, shares of our common stock for consideration of up to $35.0 million
(minus applicable fees and expenses). Under this agreement, we can, from time to
time at our option, issue and sell


                                       15
<PAGE>   16

shares of our common stock with an aggregate purchase price of up to twice the
average daily trading value of our common stock during the 22 trading day period
immediately preceding the date of the notice to Crescent. However, in no event
may we require Crescent to purchase more than $2.5 million at one time. The
purchase price for shares of common stock sold to Crescent under this equity
line will be 94% of the average of the lowest three consecutive bid prices
during the 22 day trading period immediately preceding the applicable sale.
Management does not currently believe that it will be necessary to draw any
amounts under the Crescent equity line in the foreseeable future.

            In connection with the Spin-Off, on March 6, 2001, we issued 100,000
shares of our series C convertible redeemable preferred stock for $5.0 million,
net of transaction costs of approximately $300,000, to Crescent in a private
placement. The series C convertible redeemable preferred stock is not
convertible for one year after issuance. Thereafter, the holders can convert all
or a portion of the shares of series C convertible redeemable preferred stock
based on a floating conversion price which is a function of our common stock's
closing price. In no event will the holders of series C convertible redeemable
preferred stock be entitled to obtain, in the aggregate for all conversions,
more than 20.0% of our common stock upon conversion. We will have the right to
either redeem in cash at a premium or require the conversion of the shares of
series C convertible redeemable preferred stock, provided certain conditions are
met. The redemption premiums will increase proportionately each year from 115%
of the liquidation preference during the first year after issuance of the
preferred stock to 160% of the liquidation preference following the fourth
anniversary year of issuance. If the series C convertible redeemable preferred
stock has not been converted after four years, the holders may require us to
redeem the series C convertible redeemable preferred stock at a redemption price
equal to 175% of the liquidation preference, or $8.75 million. If the price of
our common stock decreases following the Spin-Off, we may be required to redeem
the shares of series C convertible redeemable preferred stock at a significant
premium in order to prevent a dilutive conversion of the series C convertible
redeemable preferred stock into shares of our common stock. We may not have the
necessary funds to redeem any shares of the series C convertible redeemable
preferred stock, or be permitted to do so under the FINOVA credit facility.

            In the third quarter of 2001, we intend to issue shares of our
series B convertible redeemable preferred stock to the stockholders of Medical
Dynamics. Once issued, we will be required to redeem for cash the shares of
series B convertible redeemable preferred stock on the fifth anniversary of
issuance. The redemption price of the series B convertible redeemable preferred
stock will be equal to $5.3 million plus accrued and unpaid dividends. In
addition, the holders of the shares of series A convertible redeemable preferred
stock may require the redemption in cash of their shares of series A convertible
redeemable preferred stock at any time following the fifth anniversary of
issuance. The redemption price of the series A convertible redeemable preferred
stock is equal to $32.0 million plus accrued and unpaid dividends. We may not
have the necessary funds to redeem any such shares of our convertible redeemable
preferred stock or be permitted to do so under the FINOVA credit facility.

            At March 31, 2001 we had total cash and cash equivalents of $7.1
million and a working capital deficit of $5.4 million (including the effect of
deferred revenue and customer deposits of $10.6 million). We expect the
transition to a subscription pricing model will continue to adversely impact our
cash flow until revenue from subscription fees replaces revenue from software
license fees and hardware sales. Based on current business plans, it is
anticipated that subscription fees will comprise approximately 10.0% of total
revenues for 2001. We anticipate the growth in subscription fees and other
revenue, coupled with the cost reductions from our 2000 restructuring, will
enable us to generate positive earnings before interest, income taxes,
depreciation and amortization ("EBITDA") commencing in the second quarter of
2001. We believe that our existing cash and anticipated future operating cash
flow, combined with availability of funds from other sources of financing as
described above, will be sufficient to fund our working capital requirements
both in the short term, which means the next twelve months, and in the long
term, which means a reasonable period of time thereafter. However, if
insufficient funds are available, we may not be able to increase our marketing
and sales expenses and grow our businesses or effectively compete in any of our
markets, which could materially harm our business, financial condition and
results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS


                                       16
<PAGE>   17

            Financial Accounting Standards Board Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivatives and Hedging
Activities", as amended, establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives), and for hedging
activities. Historically, we have not entered into derivative contracts either
to hedge existing risks or for speculative purposes. This standard was adopted
on January 1, 2001. Adoption of this standard did not have an effect on our
financial statements.

            SFAS No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities -- a Replacement of FASB Statement No.
125" was issued in September 2000 to address securitizations and other transfers
of financial assets and collateral, and requires specified new disclosures.
Specified disclosure provisions are effective for fiscal years ending after
December 15, 2000 with the accounting for transfers and servicing of financial
assets and extinguishments of liabilities effective for transactions occurring
after March 31, 2001. Adoption of this new standard did not have an effect on
our financial statements.

CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS

         This discussion contains forward-looking statements that reflect
management's current assumptions and estimates of future performance, the
development and timing of PracticeWorks' release of new applications and
services, the rate of adoption of its new applications and services by new and
existing customers, its success in establishing business relationships, the
growth of its business, and general economic conditions. You can find many of
these statements by looking for words such as "believes," "expects,"
"anticipates," "estimates," "plans," "intends" or similar expressions. Any
forward-looking statements are subject to risks, uncertainties and assumptions
that may cause actual results and future trends to differ materially from those
projected, stated, or implied by the forward-looking statements. PracticeWorks'
results and the accuracy of the forward-looking statements could be affected by
many factors, including, in particular, the discussion set forth above, and the
discussion set forth in the section entitled "Risk Factors" and elsewhere in
PracticeWorks' Annual Report on Form 10-K for the year ended December 31, 2000.
These risks, uncertainties and assumptions include:

-        PracticeWorks has a limited operating history as an independent
         company, which may make it difficult to evaluate its historical and
         future financial performance.

-        PracticeWorks has a recent history of losses and it may never achieve
         or maintain profitability.

-        PracticeWorks may be unable to refinance its obligations on favorable
         terms, or at all.

-        PracticeWorks may not successfully complete the development of its new
         applications and services, which would affect its ability to implement
         its growth strategy.

-        PracticeWorks' ASP offerings and subscription pricing model are
         unproven and if customers do not respond favorably to these new
         applications and services, its revenues and profitability may be
         harmed.

-        PracticeWorks and its officers and directors had, and may prospectively
         have, conflicts of interest with respect to the Spin-Off.

-        InfoCure could incur a substantial corporate income tax liability in
         connection with the Spin-Off, and PracticeWorks may be required to
         indemnify InfoCure for all or a portion of this tax liability.

-        Recent issuances, and proposed issuances of PracticeWorks securities,
         as well as the potential conversion of outstanding PracticeWorks
         preferred stock, may subject PracticeWorks' stockholders to significant
         dilution.

-        PracticeWorks' credit facility imposes limitations and financial
         covenants, which may adversely affect its ability to operate its
         business.

-        PracticeWorks has expanded, and plans to expand rapidly and it may be
         unable to manage its growth.

-        PracticeWorks may have to assert or defend its intellectual property
         rights, which may be costly and time-consuming to the company.


                                       17
<PAGE>   18

-        Market acceptance of the Internet, and/or Internet security concerns
         and system failures could adversely affect PracticeWorks' business.

-        PracticeWorks is subject to governmental regulation, and it must comply
         with the rules and regulations of the American Stock Exchange.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Our primary market risks include fluctuations in interest rates and
variability in interest rate spread relationships, such as prime to LIBOR
spreads. Approximately $21.6 million of PracticeWorks' outstanding debt at March
31, 2001 related to long-term indebtedness under our credit facility with FINOVA
that was used to repay InfoCure's long-term indebtedness related to our business
at the time of the Spin-Off. Amounts outstanding bear interest equal to 1.5%
plus a base rate equal to the higher of the prime rate as announced from time to
time by Citibank N.A. or a weighted average of the rates on overnight federal
fund transactions plus 50 basis points. The rate base is incremented for margins
specified in the agreement. Thus, PracticeWorks' interest rate is subject to
market risk in the form of fluctuations in interest rates. The effect of a
hypothetical one percentage point increase across all maturities of variable
rate debt would result in an increase of approximately $216,000 in pre-tax net
loss assuming no further changes in the amount of borrowings subject to variable
rate interest from amounts outstanding at March 31, 2001. PracticeWorks does not
trade in derivative financial instruments.

         PracticeWorks also conducts operations in Europe and Australia.
Accordingly, PracticeWorks is subject to risk for exchange rate fluctuations
between such local currencies and the U.S. dollar. For the three months ended
March 31, 2001, less than 10% of PracticeWorks' total revenues were earned
outside the United States and collected in the local currency and related
operating expenses were also paid in such corresponding local currencies.
PracticeWorks does not conduct any hedging activities.

         The financial statements of PracticeWorks' non-U.S. subsidiaries are
translated into U.S. dollars using current rates of exchange, with gains or
losses included in the foreign currency translation adjustment account, a
component of stockholder's equity. As of March 31, 2001, PracticeWorks had a
cumulative translation adjustment of $(65,000).

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         From time to time, we are involved in various legal proceedings
relating to claims arising in the ordinary course of our business. There are no
material legal proceedings to which we are a party and our management is unaware
of any contemplated actions against us. However, pursuant to the Agreement and
Plan of Distribution, executed in connection with the Spin-Off of PracticeWorks
from InfoCure, we agreed to assume any and all contingent liability arising from
the definitive resolution of the litigation filed on June 21, 2000 against
InfoCure by Joseph Hafner. On June 21, 2000, a lawsuit styled Joseph Hafner v.
InfoCure Corporation et al., was filed in the United States District Court in
and for the Eastern District of Pennsylvania. The lawsuit alleges that InfoCure
breached the terms of a registration rights agreement whereby InfoCure was
required, prior to a specified date, to effect the registration for resale with
the Securities and Exchange Commission of shares of InfoCure's common stock
which the plaintiff owned. The complaint further alleges breach of fiduciary
duties owed to the plaintiff as a stockholder of InfoCure and tort claims
against InfoCure as a result of the alleged failure to timely register shares
for resale. The complaint seeks in excess of $3.2 million in compensatory
damages as a result of InfoCure's alleged breach of this agreement, as well as
punitive damages and reimbursement for the plaintiff's attorney's fees and
associated costs and expenses of the lawsuit. On March 30, 2001, the court
denied the plaintiff's motions for judgment on the pleadings with respect to
plaintiffs' claim that InfoCure breached the terms of the registration rights
agreement, and the court also denied InfoCure's motion to dismiss certain of the
plaintiff's contract and tort claims in the case. InfoCure's management believes
it has meritorious defenses in this matter and intends to pursue these defenses
vigorously. Management of PracticeWorks believes that the ultimate resolution of
this matter will not have a material adverse effect on our financial condition.


                                       18
<PAGE>   19

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         On March 5, 2001, we issued 8,754,937 shares of our common stock to
InfoCure. At the time, InfoCure was our sole stockholder. This issuance was
exempt under the Section 4(2) of the Securities Act.

         Immediately following the issuance of the shares referred to in the
paragraph above, InfoCure effected the pro rata distribution of all the issued
and outstanding shares of our common stock to the InfoCure stockholders. This
offering was effected pursuant to a Registration Statement on Form S-1 with
PracticeWorks as a named registrant. We received no proceeds from InfoCure's
distribution of our common stock to its stockholders.

         On March 6, 2001, we issued 100,000 shares of our series C convertible
redeemable preferred stock for $5.0 million to Crescent in a private placement.
This issuance was exempt under Section 4(2) of the Securities Act. The terms of
conversion of the series C convertible redeemable preferred stock are as
follows:

         -        at any time following one year after issuance, holders of the
                  series C convertible redeemable preferred stock will have the
                  right to convert all, or a portion, of our shares of series C
                  convertible redeemable preferred stock into shares of our
                  common stock based upon a conversion price equal to the lesser
                  of (1) 107.5% of the 50-day trading average of our common
                  stock immediately following the distribution, referred to
                  herein as the "reference price", or (2) the average of the
                  lowest three-day closing price of our common stock during the
                  22 days prior to conversion; provided, however, that in no
                  event will the holders of the series C convertible redeemable
                  preferred stock be entitled to obtain, in the aggregate for
                  all conversions, more than 20.0% of our common stock upon
                  conversion;

         -        the holders of series C convertible redeemable preferred stock
                  may not convert into shares of common stock if, as a result,
                  the holders and their affiliates would own more than 9.9% of
                  all our common stock outstanding on the applicable conversion
                  date; provided, however, that this restriction will not
                  prohibit the holders from converting some of their series C
                  convertible redeemable preferred stock up to 9.9% of our
                  common stock, and then selling all or a portion of their
                  common stock, and then converting more shares of series C
                  convertible redeemable preferred stock up to the 9.9%
                  limitation; provided, that the foregoing is subject to the
                  20.0% limitation on the aggregate number of shares of our
                  common stock that maybe issued upon conversion of the series C
                  convertible redeemable preferred stock;

         -        the conversion price is subject to a floor equal to 75% of the
                  reference price; however, this floor will be reduced by 7.5%
                  of the reference price per month following the 18 month
                  anniversary of issuance of the series C convertible redeemable
                  preferred stock;

         -        if the market value of our common stock exceeds 280% of the
                  reference price and if specified conditions are met, we may
                  require conversion of all or a portion of the series C
                  convertible redeemable preferred stock; and

         -        if the conversion price of the series C convertible redeemable
                  preferred stock is less than 75% of the reference price, we
                  may redeem the series C convertible redeemable preferred stock
                  for cash at a premium equal to 115% of the liquidation
                  preference during the first year after issuance, 130% during
                  the second year, 145% during the third year, 160% during the
                  fourth year.

         On March 7, 2001, we issued 32,000 shares of our series A convertible
redeemable preferred stock to Ceramco, Inc., a wholly owned subsidiary of
DENTSPLY International, Inc. in exchange for the membership interests of
Softdent, LLC, or InfoSoft, the practice management subsidiary of DENTSPLY. The
aggregate consideration in connection with this acquisition was approximately
$32.0 million. This issuance was exempt pursuant to Section 4(2) of the
Securities Act. The terms of conversion of the series A convertible redeemable
preferred stock are as follows:


                                       19
<PAGE>   20

         -        at any time prior to the fourth anniversary date of the
                  issuance of the series A convertible redeemable preferred
                  stock, holders of the series A convertible redeemable
                  preferred stock will have the right, at such holders' option,
                  to convert all or a portion of their series A convertible
                  redeemable preferred stock into shares of our common stock
                  based upon a conversion price that, assuming all shares were
                  converted, would result in the issuance of approximately 9.8%
                  of our outstanding common stock at the time of the Spin-Off,
                  or approximately 975,000 shares;

         -        at any time between the fourth and fifth anniversary dates of
                  the issuance of the series A convertible redeemable preferred
                  stock, holders of the series A convertible redeemable
                  preferred stock will have the right, at such holders' option,
                  to convert all or a portion of their series A convertible
                  redeemable preferred stock into shares of common stock at the
                  conversion price equal to the average of the closing price of
                  our common stock during the 30 trading days prior to the
                  conversion, unless we elect to redeem such shares based on
                  such average closing price, plus all accrued and unpaid
                  dividends; and

         -        the shares of series A convertible redeemable preferred stock
                  are subject to automatic conversion if the closing price for
                  20 consecutive trading days exceeds 175% of the conversion
                  price then applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.


ITEM 5.  OTHER INFORMATION

         None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:

<TABLE>
         <S>      <C>
         4.1      Certificate of Designations of Series A Preferred Stock issued
                  to Ceramco, Inc. (incorporated by reference to Exhibit 3.2(a)
                  to PracticeWorks Current Report on Form 8-K, filed with the
                  Commission on March 22, 2001).

         4.2      Certificate of Designations of Series C Preferred Stock issued
                  to Crescent International Ltd. (incorporated by reference to
                  Exhibit 3.2(b) to PracticeWorks Current Report on Form 8-K,
                  filed with the Commission on March 22, 2001).
</TABLE>


(b)      Reports on Form 8-K:

         On March 22, 2001, PracticeWorks filed a Current Report on Form 8-K
containing the following disclosure: (i) Item 2 disclosure announcing the
consummation of PracticeWorks' acquisition of all of the assets of SoftDent,
LLC, the practice management software subsidiary of Ceramco, Inc., a wholly
owned subsidiary of DENTSPLY International, Inc.; and (ii) Item 5 disclosure
announcing the consummation of InfoCure's Spin-Off of PracticeWorks. The
definitive agreements entered into by PracticeWorks in connection with the
Spin-Off were filed as exhibits thereto.


                                       20
<PAGE>   21

         On April 26, 2001, PracticeWorks filed an amendment to this Current
Report on Form 8-K to include audited financial statements of InfoSoft and pro
forma financial statements giving effect to the acquisition.


                                       21
<PAGE>   22


                                   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 thereunto duly authorized on this 15th day of May, 2001.


                                     PRACTICEWORKS, INC.



                                     /s/ James K. Price
                                     -------------------------------------------
                                     James K. Price
                                     President and Chief Executive
                                     Officer (Principal Executive
                                     Officer)


                                     /s/ James A. Cochran
                                     -------------------------------------------
                                     James A. Cochran
                                     Senior Vice President and Chief
                                     Financial Officer (Principal
                                     Financial and Accounting Officer)


                                       22