<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER 1-15223
OPTICARE HEALTH SYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
DELAWARE 76-0453392
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
</TABLE>
87 GRANDVIEW AVENUE, WATERBURY, CONNECTICUT 06708
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(203) 596-2236
Indicate by check X 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 shares outstanding of the registrant's Common Stock, par
value $.001 per share, at November 1, 2000 was 12,709,398 shares.
<PAGE>
INDEX TO FORM 10-Q
Page No.
PART I. FINANCIAL INFORMATION --------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30, 2000
(unaudited) and December 31, 1999 3
Condensed Consolidated Statements of Operations for the
three and nine months ended September 30, 2000 and
1999 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 2000 and 1999 (unaudited) 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURE 19
2
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OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
----------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,311 $ 2,921
Accounts receivable, net 13,064 10,557
Inventories 3,313 3,029
Deferred income taxes, current 2,146 2,579
Other current assets 1,907 2,259
----------------- -----------------
TOTAL CURRENT ASSETS 21,741 21,345
Property and equipment, net 9,761 9,598
Intangible assets, net 31,504 32,443
Deferred income taxes, non-current 935 951
Other assets 2,664 2,403
----------------- -----------------
TOTAL ASSETS $ 66,605 $ 66,740
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,413 $ 7,619
Accrued expenses 8,913 8,259
Current portion of long-term debt 5,301 3,459
Deferred income tax liability 334 397
Other current liabilities 575 920
----------------- -----------------
TOTAL CURRENT LIABILITIES 21,536 20,654
Long-term debt, less current portion 27,881 39,689
Other liabilities 850 1,123
----------------- -----------------
TOTAL LIABILITIES 50,267 61,466
----------------- -----------------
STOCKHOLDERS' EQUITY:
Series A Convertible Preferred Stock, $.001 par value, 550,000 shares
Authorized; 418,803 shares issued and outstanding 1 1
Common Stock, $0.001 par value; 50,000,000 shares authorized;
12,709,398 and 8,972,128 shares outstanding at September 30, 2000 and
December 31, 1999, respectively. 13 9
Additional paid-in-capital 59,989 47,784
Accumulated deficit (43,665) (42,520)
----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 16,338 5,274
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 66,605 $ 66,740
================= =================
</TABLE>
See notes to condensed consolidated financial statements
3
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OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------------- ---------------------------------
2000 1999 2000 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
NET REVENUES:
Laser correction and professional services $ 2,310 $ 976 $ 7,082 $ 1,276
Managed care services 8,903 6,356 26,859 16,089
Other integrated services 21,184 16,221 67,265 45,530
--------------- --------------- --------------- ---------------
Total net revenues 32,397 23,553 101,206 62,895
--------------- --------------- --------------- ---------------
OPERATING EXPENSES:
Cost of product sales 9,931 10,044 32,084 31,423
Medical claims expense 7,482 5,177 21,896 12,904
Salaries, wages and benefits 9,643 4,830 30,212 10,102
Selling, general and administrative 3,747 1,969 11,038 4,449
Terminated merger costs - - 1,810 -
Depreciation 600 360 1,894 853
Amortization 443 120 1,258 245
Interest 732 925 2,167 2,588
--------------- --------------- --------------- ---------------
Total operating expenses 32,578 23,425 102,359 62,564
--------------- --------------- --------------- ---------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES (181) 128 (1,153) 331
Income tax expense (benefit) (120) 51 (8) 119
--------------- --------------- --------------- ---------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (61) 77 (1,145) 212
LOSS FROM DISPOSAL OF DISCONTINUED OPERATIONS,
NET OF TAX - - - (2,317)
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (61) $ 77 $ (1,145) $ (2,105)
=============== =============== =============== ===============
INCOME (LOSS) PER COMMON SHARE -
BASIC AND DILUTED:
Income (loss) from continuing operations
Per common share 0.00 0.01 (0.09) (0.11)
=============== =============== =============== ===============
Net income (loss) per common share 0.00 0.01 (0.09) (0.79)
=============== =============== =============== ===============
Weighted average common shares outstanding:
Basic 12,623,883 5,593,626 12,280,961 3,414,626
=============== =============== =============== ===============
Diluted 12,623,883 6,260,396 12,280,961 3,414,626
=============== =============== =============== ===============
</TABLE>
See notes to condensed consolidated financial statements
4
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OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
2000 1999
--------------- --------------
<S> <C> <C>
OPERATING ACTIVITES:
Net loss $ (1,145) $ (2,105)
Add: Loss from discontinued operations - 2,317
--------------- --------------
Income (loss) from continuing operations (1,145) 212
Adjustments to reconcile net income to net cash
Used in operating activities:
Depreciation 1,894 853
Amortization 1,258 245
Changes in operating assets and liabilities
Accounts receivable (2,507) (988)
Inventories (284) (67)
Other current assets 785 434
Other assets (544) (2,360)
Accounts payable and accrued expenses (618) 3,065
Other current liabilities (408) (681)
Other liabilities (470) (253)
Cash used in discontinued operations - (1,467)
--------------- --------------
Net cash used in operating activities (2,039) (1,007)
--------------- --------------
INVESTING ACTIVITIES:
Purchases of equipment (1,704) (860)
Cash acquired in merger - 570
Cash used for acquisitions and related expenses - (4,737)
--------------- --------------
Net cash used in investing activities (1,704) (5,027)
--------------- --------------
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 10,122 -
Principal payments on long-term debt (8,789) -
Net increase in revolving Credit Facility 800 -
Proceeds from issuance of long-term bank debt - 3,274
--------------- --------------
Net cash provided by financing activities 2,133 3,274
--------------- --------------
Decrease in cash and cash equivalents (1,610) (2,760)
Cash and cash equivalents at beginning of period 2,921 5,956
=============== ==============
Cash and cash equivalents at end of period $ 1,311 $ 3,196
=============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 1,957 $ 3,047
Cash paid for income taxes $ 272 $ 110
</TABLE>
See notes to condensed consolidated financial statements
5
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OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of OptiCare
Health Systems, Inc., a Delaware corporation, and subsidiaries (the "Company")
for the three and nine months ended September 30, 2000 and 1999 have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and the instructions
to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of
1934 and are unaudited. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of only normal recurring accruals)
necessary for a fair presentation of the consolidated financial statements have
been included. The results of operations for the three and nine months ended
September 30, 2000 are not necessarily indicative of the results to be expected
for the full year. The condensed consolidated balance sheet as of December 31,
1999 was derived from the Company's audited financial statements, but does not
include all disclosures required by accounting principles generally accepted in
the United States of America.
Certain prior period amounts have been reclassified to conform to the
current period presentation.
2. MERGERS AND ACQUISITIONS
OptiCare Health Systems, Inc. is an integrated eye health services company
focused on managed care and professional eye care services. The Company's
current form is the result of mergers (the "Mergers") completed on August 13,
1999 by and among Saratoga Resources, Inc. and two eye care services companies,
OptiCare Eye Health Centers, Inc. and Prime Vision Health, Inc. ("Prime"). For
accounting purposes, Prime was the accounting acquirer. Accordingly, the
operating results of OptiCare Eye Health Centers have been included in the
accompanying consolidated financial statements since September 1, 1999, the
deemed effective date of the acquisition for accounting purposes.
On October 1, 1999 the Company purchased Cohen Systems, Inc. (the "Cohen
Acquisition"), a software systems provider, specializing in point of sale and
internet-based solutions for optical retail and optical manufacturing
laboratories.
Assuming the Mergers and Cohen Acquisition had occurred on January 1, 1999,
pro forma net revenue, loss from continuing operations and net loss of the
Company for the nine months ended September 30, 1999 would have been $97,376,
$424 and $2,741, respectively. On the same pro forma basis, basic and diluted
loss per common share from continuing operations for the nine months ended
September 30, 1999 would have been $0.05 and basic and diluted net loss per
common share for the nine months ended September 30, 1999 would have been $0.31.
This pro forma information is for informational purposes only and is not
necessarily indicative of the results that would have been obtained had these
events actually occurred at the beginning of the period presented, nor does it
intend to be a projection of future results.
6
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OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
3. DISCONTINUED OPERATIONS
In December 1998, Prime began the process of discontinuing its ophthalmology
operations and recorded a loss on the disposal of these discontinued operations.
The disposal of these operations continued in 1999 through the cancellation of
the administrative service agreements with affiliated ophthalmologists and the
repurchase of practice assets by the physicians. During the three months ended
June 30, 1999, the Company revised its estimate of loss on the disposal of its
ophthalmology operations and accordingly recorded an additional loss on the
disposal of $2,317, net of a tax benefit of $212.
4. EARNINGS PER SHARE
The following tables set forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------------------- --------------------------------
2000 1999 2000 1999
--------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
INCOME (LOSS) FROM CONTINUING OPERATIONS
APPLICABLE TO COMMON STOCKHOLDERS:
Income (loss) from continuing operations $ (61) $ 77 $ (1,145) $ 212
Preferred stock dividends - - - (600)
--------------- ------------- -------------- -------------
Income (loss) from continuing operations
applicable to common stockholders $ (61) $ 77 $ (1,145) $ (388)
=============== ============= ============== =============
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS:
Net income (loss) $ (61) $ 77 $ (1,145) $ (2,105)
Preferred stock dividend - - - (600)
--------------- ------------- -------------- -------------
Net income (loss) available to common
stockholders $ (61) $ 77 $ (1,145) $ (2,705)
=============== ============= ============== =============
Weighted average common shares - basic 12,623,883 5,593,626 12,280,961 3,414,626
Effect of dilutive securities:
Preferred stock * 204,849 * *
Options * 331,364 * *
Warrants * 130,557 * *
--------------- ------------- -------------- -------------
Weighted average common shares-diluted 12,623,883 6,260,396 12,280,961 3,414,626
=============== ============= ============== =============
Income (loss) from continuing operations
per common share - basic and diluted $ 0.00 $ 0.01 $(0.09) $ (0.11)
=============== ============= ============== =============
Net income (loss) per common share - basic
And diluted $ 0.00 $ 0.01 $(0.09) $ (0.79)
=============== ============= ============== =============
</TABLE>
* Anti-dilutive.
The weighted average common shares outstanding in 1999 have been adjusted to
reflect the conversion associated with the reverse merger with Saratoga in
August 1999.
7
<PAGE>
OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
5. SEGMENT INFORMATION
The Company currently manages the operations of the business through three
operating segments: (1) Laser Correction and Professional Services (2) Managed
Care Services and (3) Other Integrated Services. Management assesses the
performance of its segments based on income before income taxes, interest
expense, depreciation and amortization, and other corporate overhead. Summarized
financial information, by segment, for the three and nine months ended September
30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -------------------------------
2000 1999 2000 1999
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Laser correction and professional services $ 2,310 $ 976 $ 7,082 $ 1,276
Managed care services 9,567 6,526 28,842 16,259
Other integrated services 24,821 19,218 75,685 50,876
------------- ------------ ------------- -------------
Segment totals 36,698 26,720 111,609 68,411
Elimination of inter-segment revenues (4,301) (3,167) (10,403) (5,516)
------------- ------------ ------------- -------------
Total net revenue $32,397 $23,553 $ 101,206 $ 62,895
============= ============ ============= =============
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAX:
Laser correction and professional services $ 811 $ 662 $ 2,438 $ 961
Managed care services 287 403 1,697 999
Other integrated services 1,214 638 4,015 2,226
------------- ------------ ------------- -------------
Segment totals 2,312 1,703 8,150 4,186
Depreciation (600) (360) (1,894) (853)
Amortization (443) (120) (1,258) (245)
Interest expense (732) (925) (2,167) (2,587)
Corporate (including terminated merger costs) (718) (170) (3,984) (170)
------------- ------------ ------------- -------------
Income (loss) from continuing operations
before income taxes $ (181) $ 128 $ (1,153) $ 331
============= ============ ============= =============
</TABLE>
6. CONTINGENCIES
The Company is both a plaintiff and defendant in lawsuits incidental to its
current and former operations. Such matters are subject to many uncertainties
and outcomes are not predictable with assurance. Consequently, the ultimate
aggregate amount of monetary liability or financial impact with respect to these
matters at September 30, 2000 cannot be ascertained. Management is of the
opinion that, after taking into account the merits of defenses, insurance
coverage and established reserves, the ultimate resolution of these matters will
not have a material adverse effect in relation to the Company's consolidated
financial statements or results of operations.
8
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OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
7. STOCKHOLDERS' EQUITY
In January 2000, the Company completed the sale of 3,571,429 registered
shares of common stock. Gross proceeds from the offering, based on the offering
price of $3.50 per share, totaled $12,500, including the cancellation of a
$2,000 subordinated note payable previously issued by the Company. The shares
were issued under a registration statement filed with the Securities and
Exchange Commission on January 18, 2000. The Company used $7,000 of the net
proceeds to pay down long-term debt and used the remaining proceeds for, among
other things, business expansion, working capital and general corporate
purposes.
8. VISION TWENTY-ONE, INC. MERGER
On June 19, 2000, the Company notified Vision Twenty-One, Inc. ("Vision
Twenty-One") that it was terminating the merger agreement with Vision Twenty-One
pursuant to which the Company would have acquired Vision Twenty-One, effective
June 29, 2000, unless certain defaults were cured to the Company's satisfaction
on or prior to that date. The defaults were not cured to the Company's
satisfaction by June 29, 2000 and the termination of the merger agreement became
effective on that date.
In June 2000, the Company recorded a one-time charge of $1,810 of merger
costs associated with the terminated merger with Vision Twenty-One. These costs
consisted primarily of professional fees.
9. SUBSEQUENT EVENTS
On October 10, 2000 the Company obtained $2,250 of bridge financing through
the issuance of a subordinated promissory note. In connection with this
financing, the Company issued 2,250,000 warrants to purchase common stock at
$1.00 per share.
On November 8, 2000 the Company entered into a non-binding letter of intent
for the sale of its Connecticut-based retail and integrated eye health center
operations. The closing of the proposed sale is subject to certain conditions
including, but not limited to, the satisfactory completion of due diligence, the
buyer's receipt of financing, execution of a definitive agreement and the
procurement of any required regulatory approvals.
9
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion may be understood more fully by reference to the
financial statements, notes to the financial statements, and management's
discussion and analysis contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 1999, as filed with the Securities and Exchange
Commission.
Overview. OptiCare Health Systems, Inc. (the "Company") is an integrated
eye care services company focused on managed care and professional eye care
services. On August 13, 1999 Saratoga Resources, Inc. ("Saratoga"), a Delaware
corporation, PrimeVision Health, Inc. ("Prime") and OptiCare Eye Health Centers,
Inc. merged (the "Mergers"). In this transaction Prime merged with Saratoga
through a reverse acquisition by Prime of Saratoga at book value with no
adjustments reflected to historical values. Immediately following the Prime
Merger, OptiCare Eye Health Centers, Inc. was acquired by Saratoga, which was
accounted for under the purchase method of accounting with the excess of
purchase price over the estimated fair value of net assets acquired recorded as
goodwill. Accordingly, the operating results of OptiCare Eye Health Centers have
been included in the accompanying consolidated financial statements since
September 1, 1999, the deemed effective date of the acquisition for accounting
purposes.
The Company executes its business through three business segments: (1)
laser correction and professional services (2) managed care services and (3)
other integrated services. The laser correction and professional services
segment includes the development of laser correction centers and provides
marketing, systems, software and other services to eye care professionals. The
managed care services segment contracts with managed care plans to manage the
eye health portion of managed care plans. The other integrated services segment
owns and operates fully integrated eye health centers, retail optical stores and
a buying group program for optical products.
RESULTS OF OPERATIONS
Three Months Ended September 30, 2000 Compared to the Three Months Ended
September 30, 1999
Laser correction and professional services revenue. Laser correction and
professional services revenue was $2.3 million for the three months ended
September 30, 2000 compared to $1.0 million for the three months ended September
30, 1999, an increase of $1.3 million. This increase in revenue was primarily
comprised of $0.6 million in laser vision correction and ambulatory surgery
services as a result of the merger with OptiCare Eye Health Centers in August
1999, and $0.6 million in sales of software systems by Cohen Systems, Inc.,
which was acquired in October 1999.
Managed care services revenue. Managed care services revenue increased to
$8.9 million for the three months ended September 30, 2000 from $6.4 million for
the three months ended September 30, 1999, an increase of $2.5 million. This
increase is primarily due to revenue associated with managed care contracts held
by OptiCare Eye Health Centers that were acquired in connection with the
Mergers.
Other integrated services revenue. Other integrated services revenue
increased to $21.2 million for the three months ended September 30, 2000 from
$16.2 million for the three months ended September 30, 1999, an increase of $5.0
million. This increase represents a $6.2 million increase in optometry and
ophthalmology revenue, primarily as a result of the merger with OptiCare Eye
Health Centers and is partially offset by a $1.2 million decrease in buying
group revenue resulting primarily from a decrease in purchasing volume.
Cost of product sales. Cost of product sales decreased to $9.9 million for
the three months ended September 30, 2000 from $10.0 million for the three
months ended September 30, 1999, a decrease of $0.1 million. This decrease is
comprised of a $1.4 million decrease in cost of sales related to the buying
group
10
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program, which is consistent with the decrease in revenue. This decrease is
partially offset by an increase of approximately $1.0 million in cost of product
sales of OptiCare Eye Health Centers as a result of the merger and $0.1 million
in cost of product sales from Cohen Systems. The remaining increase of $0.3
million is attributed to increased costs in other optometry areas and is
consistent with increased optometry revenue optometry.
Medical claims expense. Medical claims expense increased to $7.5 million for
the three months ended September 30, 2000 from $5.2 million for the three months
ended September 30, 1999, an increase of $2.3 million. This increase primarily
represents medical claims expense associated with managed care contracts
acquired in connection with the merger with OptiCare Eye Health Centers as well
as an overall increase in claims.
Salaries wages and benefits. Salaries, wages and benefits increased to $9.6
million for the three months ended September 30, 2000 from $4.8 million for the
three months ended September 30, 1999, an increase of $4.8 million. Of this
increase, approximately $2.7 million represents compensation expenses of
OptiCare Eye Health Centers as a result of the merger and $0.3 million
represents compensation expenses of Cohen Systems for the three months ended
September 2000. The remaining increase primarily represents increased employee
costs associated with an increase in operations and corporate staff, which were
added to support the company's combined business.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased to $3.7 million for the three months ended
September 30, 2000 from $2.0 million for the three months ended September 30,
1999, an increase of $1.7 million. Of this increase, approximately $1.1 million
represents general and administrative expenses of OptiCare Eye Health Centers as
a result of the merger. The remaining increase is attributed to increased costs
associated with the Company's overall growth.
Income (loss) from continuing operations before income taxes. The Company
reported a loss from continuing operations before income taxes of $0.2 million
for the three months ended September 30, 2000 compared to income from continuing
operations before income taxes of $0.1 million for the three months ended
September 30, 1999, a decrease of $ 0.3 million. This decrease represents
increased revenue, primarily attributed to the mergers in 1999, which was
slightly more than offset by increases in operating expenses as described above.
Income tax expense (benefit). The company reported a $0.1 million income tax
benefit for the three months ended September 30, 2000 compared to a $0.1 million
income tax expense for the three months ended September 30, 1999. The income tax
benefit for the three months ended September 30, 2000 represents a tax benefit
on the loss from continuing operations for the quarter as well as a year-to-date
adjustment to the Company's book tax.
Nine Months Ended September 30, 2000 Compared to the Nine Months Ended
September 30, 1999
Laser correction and professional services revenue. Laser correction and
professional services revenue was $7.1 million for the nine months ended
September 30, 2000 compared to $1.3 million for the nine months ended September
30, 1999, an increase of $5.8 million. This increase is comprised of
approximately $2.9 million in laser vision correction and ambulatory surgery
services resulting from the merger with OptiCare Eye Health Centers in August
1999 and $1.7 million in sales of software systems by Cohen Systems, Inc., which
was acquired in October 1999. The remaining increase of $1.2 million represents
an increase in other sales and services, primarily due to an increase in Health
Service Organization agreements.
Managed care services revenue. Managed care services revenue increased to
$26.9 million for the nine months ended September 30, 2000 from $16.1 million
for the nine months ended September 30, 1999, an
11
<PAGE>
increase of $10.8 million.. This increase is primarily associated with managed
care contracts held by OptiCare Eye Health Centers, which were acquired in
connection with the merger, as well as new managed eye care contracts and growth
in existing member lives.
Other integrated services revenue. Other integrated services revenue
increased to $67.3 million for the nine months ended September 30, 2000 from
$45.5 million for the nine months ended September 30, 1999, an increase of $21.7
million. This increase is comprised of a $25.8 million increase in optometry and
ophthalmology revenue, resulting primarily from the merger with OptiCare Eye
Health Centers. This increase is offset by a $4.1 million decrease in buying
group revenue resulting primarily from a decrease in purchasing volume.
Cost of product sales. Cost of product sales increased to $32.1 million for
the nine months ended September 30, 2000 from $31.4 million for the nine months
ended September 30, 1999, an increase of $0.7 million. This increase is
comprised of approximately $3.9 million of cost of product sales associated with
the merger with OptiCare Eye Health Centers and $0.3 million of cost of product
sales of Cohen Systems for the nine months ended September 30, 2000. These
increases were partially offset by a $4.3 million decrease in costs of product
sales associated with the buying group program, which is consistent with the
decrease in revenue. The remaining increase of $0.1 million represents increased
costs associated with the growth of other sales and services of the company.
Medical claims expense. Medical claims expense increased to $21.9 million
for the nine months ended September 30, 2000 from $12.9 million for the nine
months ended September 30, 1999, an increase of $9.0 million. This increase is
due to medical claims expenses on managed care contracts of OptiCare Eye Health
Centers, which were acquired in connection with the merger, and claims
associated with new managed care contracts.
Salaries wages and benefits. Salaries, wages and benefits increased to $30.2
million for the nine months ended September 30, 2000 from $10.1 million for the
nine months ended September 30, 1999, an increase of $20.1 million. Of this
increase, $13.7 million represents compensation expenses resulting from the
merger with OptiCare Eye Health Centers and $0.7 million represents compensation
expense of Cohen Systems for the nine months ended September 30, 2000. The
remaining increase primarily represents increased employee costs associated with
an increase in corporate and operations staff added to support the company's
combined business and servicing increased managed care contracts.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased to $11.0 million for the nine months ended
September 30, 2000 from $4.4 million for the nine months ended September 30,
1999, an increase of $6.6 million. Of this increase, $4.9 million represents
general and administrative expenses of OptiCare Eye Health Centers and $0.3
million represents general and administrative expenses of Cohen Systems, as a
result of the mergers in 1999. In addition, $0.3 million represents increased
general and administrative costs of managed care operations primarily incurred
to support the Company's growth in its managed care business. The remaining $1.1
million represents an increase in costs associated with the Company's overall
growth.
Terminated merger costs. Terminated merger costs of $1.8 million represent
non-recurring costs associated with the merger with Vision Twenty-One, which was
terminated in June 2000. These costs consist primarily of professional fees and
related transaction expenses.
Depreciation. Depreciation increased to $1.9 million for the nine months
ended September 30, 2000 from $0.9 million for the nine months ended September
30, 1999, an increase of approximately $1.0 million. This increase is primarily
associated with the merger with OptiCare Eye Health Centers.
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Amortization. Amortization increased to $1.3 million for the nine months
ended September 30, 2000 from $0.2 million for the nine months ended September
30, 1999, an increase of approximately $1.1 million. This increase is the result
of the Mergers and related goodwill amortization.
Interest expense. Interest expense decreased to $2.2 million for the nine
months ended September 30, 2000 from $2.6 million for the nine months ended
September 30, 1999 a decrease of approximately $0.4 million. Interest expense
primarily relates to the Company's bank indebtedness and notes payable to
sellers in connection with acquisition activities. The decrease in interest
expense is primarily due to a reduction in the Company's outstanding bank debt
and reduced interest rate associated with the Mergers in August 1999 and the
paydown of debt using the proceeds received from the registered offering in
January 2000 and scheduled principal payments made during the year.
Income (loss) from continuing operations before income taxes. The Company
reported a loss from continuing operations before income taxes of $1.2 million
for the nine months ended September 30, 2000 compared to income from continuing
operations before income taxes of $0.3 million for the nine months ended
September 30, 1999, a decrease of $1.5 million. This decrease was primarily the
result of a $1.8 million charge representing merger costs related to the
proposed merger with Vision Twenty-One, which was terminated in June 2000. The
Company's income from continuing operations before income taxes without taking
into effect the costs associated with the terminated merger would have been $0.7
million.
Income tax expense. The income tax benefit for the nine months ended
September 30, 2000 was the result of income tax expense from continuing
operations offset by tax benefits related to the terminated merger costs.
Loss from discontinued operations, net of tax. In December 1998, Prime began
the process of discontinuing its ophthalmology operations and recorded a loss on
the disposal of these discontinued operations. The disposal of these operations
continued in 1999 through the cancellation of the administrative service
agreements with affiliated ophthalmologists and the repurchase of practice
assets by the physicians. During the three months ended June 30, 1999, the
company revised its estimate of loss on the disposal of these ophthalmology
operations, and accordingly recorded an additional loss of $2.5 million, net of
a tax benefit of $0.2 million.
LIQUIDITY AND CAPITAL RESOURCES
In August 1999, in connection with the mergers, the Company entered into a
loan agreement (the "Credit Facility") with Bank Austria Creditanstalt Corporate
Finance, Inc., as agent for the lenders ("Bank Austria"). Borrowings from the
Credit Facility were used to pay certain indebtedness of PrimeVision Health and
OptiCare Eye Health Centers and to fund the Company's business operations. The
Credit Facility is comprised of a term loan and up to a $12.7 million revolving
credit facility and is secured by a security interest in substantially all of
the assets of the Company. The Company is required to maintain certain financial
ratios, which are calculated on a quarterly and annual basis, as part of the
financial covenants set forth in the Credit Facility. After giving effect to the
amendment discussed below, the Credit Facility terminates on June 1, 2003 and
all amounts outstanding thereunder are due and payable. As of September 30,
2000, the Company had $17.8 million of borrowings outstanding under the term
loan and $12.3 million of advances outstanding under the revolving credit
facility.
The interest rate applicable to the Credit Facility equals the Base Rate or
the Eurodollar Rate (each, as defined in the loan agreement with Bank Austria
("Loan Agreement")), as the company may from time to time elect, in accordance
with the provisions of the Loan Agreement. The base rate, after giving effect to
the amendment discussed below, is generally the higher of (a) the prime rate of
Bank Austria for domestic commercial loans in effect on such applicable day or
(b) the federal funds rate in effect on such applicable
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day plus three-quarters of one percent (3/4 of 1%), which generally equals LIBOR
plus 2.25%. The Eurodollar rate will generally equal the offered rate quoted by
Bank Austria in the inter-bank Eurodollar market for U.S. dollar deposits of an
aggregate amount comparable to the principal amount of the Eurodollar loan to
which the quoted rate is to be applicable.
Effective June 30, 2000, the Company's Credit Facility was amended (the
"First Amendment"). The First Amendment provided, among other things, that (i)
the terminated merger costs associated with the Vision Twenty-One merger were
excluded from the calculation of the financial covenants and the Company's
borrowing availability; (ii) the interest rate was increased by one-half of one
percent (1/2 of 1%) to the amount set forth above; (iii) the term was reduced by
one year with the termination date changing from June 1, 2004 to June 1, 2003;
and (iv) the Company agreed to raise, or enter into binding commitments to
raise, no less than $5,000,000 by January 1, 2001 through the issuance of equity
or subordinated indebtedness or other means reasonably approved by Bank Austria.
In accordance with the terms of the Credit Facility, 50% of any capital raised
through the issuance of equity or subordinated indebtedness would be used to
reduce indebtedness under the Credit Facility. The remainder would be used for
capital expenditures and to meet working capital requirements. In the event
other means were used to raise such capital, the Company could be required to
use up to all of such funds to reduce indebtedness under the Credit Facility.
On October 10, 2000 the Company obtained $2.3 million through a bridge
financing arrangement (the "Bridge Loan") with Alexander Enterprise Holdings
Corp. ("Alexander Enterprises") and entered into a second amendment to the
Credit Facility (the "Second Amendment"). Of the $2.3 million of proceeds from
the Bridge Loan, $1.2 million was paid to Bank Austria pursuant to the Second
Amendment and the remaining $1.1 million was and will be used for general
working capital purposes.
The Bridge Loan is evidenced by a secured promissory note (the "Secured
Promissory Note") issued to Alexander Enterprises and is secured through a
security agreement (the "Security Agreement"). Pursuant to the terms of the
Security Agreement, the Company granted Alexander Enterprises a security
interest in substantially all of the assets of the Company. The Secured
Promissory Note accrues interest at the Eurodollar rate, generally equal to
LIBOR, plus two and one-quarter percent (2 1/4%) and matures on June 1, 2003. In
connection with the Bridge Loan, the Company also issued 2.3 million warrants to
a designee of Alexander Enterprises to purchase common stock at $1.00 per share.
The Second Amendment provides, among other things, that in connection with
the Bridge Loan from Alexander Enterprises, the Company pay $1.2 million to Bank
Austria as repayment of principal and interest. Of the $1.2 million paid to Bank
Austria, $0.3 million was applied to past due interest, $0.4 million was used to
repay principal and $0.5 million was applied as a prepayment of interest.
Net cash used in operating activities of $2.0 million for the nine months
ended September 30, 2000 included a $1.1 million loss from continuing
operations, a $2.5 million increase in accounts receivable driven by higher
revenue and a $1.5 million decrease in accounts payable, accrued expenses, and
other liabilities. These and other changes in working capital were partially
offset by $3.2 million of non-cash charges for depreciation and amortization.
Net cash used in operating activities of $1.0 million for the nine months
ended September 30, 1999 included $1.5 million of cash used in discontinued
operations partially offset by a non-cash charge of $1.1 million for
depreciation and amortization.
The company used $1.7 million of cash in investing activities during the
nine months ended September 30, 2000, compared to $5.0 million during the nine
months ended September 30, 1999. The company invested $1.7 million in property
and equipment during the nine months ended September 30, 2000 compared to $0.9
million for the nine months ended September 30, 1999. Fixed asset purchases in
2000 were comprised of improvements to existing facilities, the purchase of
equipment and the upgrade of certain information
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systems, which were incurred primarily to support the integration and growth of
the Company subsequent to the Mergers. Investing activities in 1999 also
included $4.7 million for merger related transactions.
Net cash provided by financing activities was $2.1 million for the nine
months ended September 30, 2000 compared to cash provided by financing
activities of $3.3 million for the nine months ended September 30, 1999. The
primary sources of cash from financing activities for the nine months ended
September 30, 2000 was $10.0 million of net proceeds from the sale of 3,571,429
registered shares of common stock in January 2000 and $0.8 million in advances
under the revolving Credit Facility. Cash used in financing activities for the
nine months ended September 30, 2000 was $8.8 million of principal payments on
long-term debt. Cash provided by financing activities for the nine months ended
September 30, 1999 of $3.3 million consisted of borrowings under the Company's
revolving Credit Facility.
As of September 30, 2000, under an agreement with the Texas Department of
Insurance, the Company is required to maintain a restricted investment of
$500,000. In addition, the Company is not allowed to declare or pay dividends or
otherwise transfer any funds from its limited purpose health maintenance
organization in Texas without prior approval from the Department of Insurance.
The Company does not believe the requirements of the Texas Department of
Insurance will have a material impact on the Company's liquidity. In July 2000,
a dividend of $500,000 was approved by the Texas Department of Insurance and
paid to the parent of the Texas limited purpose health maintenance organization.
The Company's principal sources of liquidity are from cash flows generated
from operations and from borrowing under the Company's Credit Facility and from
third party financing. The Company's principal uses of liquidity are to provide
working capital, meet debt service requirements and finance the Company's
growth. As of September 30, 2000, the Company had cash and cash equivalents of
approximately $1.3 million and no additional borrowing capacity available under
its revolving credit facility after a $0.4 million letter of credit obligation.
The Company intends to raise additional capital through the issuance of equity
or subordinated indebtedness in public or private transactions, or through other
means, in order to repay indebtedness under and remain in compliance with its
Credit Facility, consistent with the First Amendment discussed above, and for
capital expenditures and to meet working capital requirements for the next
twelve months. While the Company believes it will be successful in its capital
raising efforts, there can be no assurances that the Company will be successful
in raising such additional capital, that such capital will be available on a
timely basis or available on commercially reasonable terms or without causing
substantial dilution to stockholders. The failure by the Company to raise such
capital may have a material adverse impact on the business and operations of the
Company.
RECENT ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("FAS") 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires that an entity
recognize all derivatives as either assets or liabilities in the Statement of
Financial Position and measure those instruments at fair value. The accounting
for changes in the fair value of a derivative (that is, gains and losses)
depends on the intended use of the derivative and its resulting designation. The
Company is in the process of evaluating the effect this new standard will have
on the Company's financial statements. The Company is required to adopt FAS 133,
as amended by FAS 138 beginning January 1, 2001.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial
Statements", which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. SAB 101, as amended by SAB
101A and SAB 101B, is effective for the Company's fourth quarter of 2000. It
requires companies to report any changes in revenue recognition as a cumulative
change in accounting principle at the time of implementation in accordance with
Accounting Principles Board Opinion 20, "Accounting Changes." The Company does
not expect that SAB 101, as amended, will have a material effect on its
financial position or results of operations.
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IMPACT OF INFLATION AND CHANGING PRICES
The Company is subject to pre-determined Medicare reimbursement rates which,
for certain products and services, have decreased over the past three years. A
decrease in Medicare reimbursement rates could have an adverse affect on the
Company's results of operations if it can not manage these reductions through
increases in revenues or decreases in operating costs. To some degree, prices
for health care are driven by Medicare reimbursement rates, so that the
Company's non-Medicare business is also affected by changes in Medicare
reimbursement rates.
Management believes that inflation has not had a material effect on the
Company's revenues for the three and nine-month periods ended September 30, 2000
and 1999.
FORWARD-LOOKING INFORMATION
Certain statements in this Form 10-Q and elsewhere (such as in other filings
by the Company with the Securities and Exchange Commission, press releases,
presentations by the Company or its management and oral statements) may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
include those relating to future opportunities, the outlook of customers, the
reception of new services, technologies and pricing methods, existing and
potential strategic alliances, the Company's ability to successfully raise
capital on a timely basis on commercially reasonable terms, development and
execution of an e-commerce strategy, the success of initiatives including
opening laser vision correction centers and the likelihood of incremental
revenues offsetting expense related to those new initiatives. In addition, such
forward-looking statements involve known and unknown risks, uncertainties, and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results expressed or
implied by such forward-looking statements. Such factors include: changes in the
regulatory environment applicable to the Company's business, demand and
competition for the Company's products and services, general economic
conditions, risks related to the eye care industry, the Company's ability to
successfully integrate and profitably operate its operations, the risks related
to maintaining or losing managed care contracts, the ability to raise capital
and/or obtain adequate cash flows from its operations to sustain its operations,
and other risks detailed from time to time in the Company's periodic earnings
releases and reports filed with the Securities and Exchange Commission, as well
as the risks and uncertainties discussed in this Form 10-Q. The Company
undertakes no obligation to publicly update or revise forward looking statements
to reflect events or circumstances after the date of this Form 10-Q or to
reflect the occurrence of unanticipated events.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to market risk from exposure to changes in interest
rates based on financing activities under the Company's Credit Facility. The
nature and amount of the Company's indebtedness may vary as a result of future
business requirements, market conditions and other factors. The extent of the
company's interest rate risk is not quantifiable or predictable due to the
variability of future interest rates and financing needs. The Company does not
expect changes in interest rates to have a material effect on income or cash
flows in the year 2000, although there can be no assurances that interest rates
will not significantly change. The Company did not use derivative instruments to
adjust the Company's interest rate risk profile during the nine months ended
September 30, 2000.
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On October 10, 2000, in connection with a $2.3 million Bridge Loan from
Alexander Enterprise Holdings Corp. ("Alexander Enterprise"), we issued warrants
to a designee of Alexander to purchase 2.3 million shares of our common stock at
$1.00 per share for an aggregate purchase price of $2.3 million. These warrants
were issued in a private placement and are exempt from the registration
requirements of the Securities Act pursuant to Section 4 (2). For further
discussion of the Bridge Loan see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources".
In August 2000, pursuant to a Share Adjustment Agreement, we issued an
aggregate of 31,133 shares of our common stock to two physicians formerly
affiliated with the Company. In addition, pursuant to a Settlement Agreement and
Mutual General Release, we issued an aggregate of 31,167 shares of our common
stock to two physicians formerly affiliated with the Company in exchange for,
among other things, a $0.2 million reduction of convertible subordinated
promissory notes issued by PrimeVision Health, Inc. The issuance of these shares
are exempt from the registration requirements of the Securities Act pursuant to
Section 4(2).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
In October 2000, in connection with the $2.3 million of proceeds from our
Bridge Loan and pursuant to the Second Amendment to our Loan Agreement, we paid
$1.2 million to Bank Austria. Of the $1.2 million paid to Bank Austria, $0.3
million was used to cure a default on interest due during the quarter ended
September 30, 2000, $0.4 million was used to repay principal and $0.5 million
was used as a prepayment of interest. Upon payment, together with the execution
of the Second Amendment, we were and remain in full compliance with our Loan
Agreement, as amended. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources".
ITEM 5. OTHER INFORMATION
On November 8, 2000 the Company entered into a non-binding letter of intent
for the sale of its Connecticut-based retail and integrated eye health center
operations. The closing of the proposed sale is subject to certain conditions
including, but not limited to, the satisfactory completion of due diligence, the
buyer's receipt of financing, execution of a definitive agreement and the
procurement of any required regulatory approvals. There can be no assurance that
the proposed transaction will be completed.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
The following Exhibits are filed as part of this Quarterly Report on
Form 10-Q:
Exhibit Description
------- -----------
2.1 Agreement and Plan of Merger and Reorganization among
Vision Twenty-One, Inc., OC Acquisition Corp. and OptiCare
Health Systems, Inc., incorporated by reference to Appendix
A to the Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on May 12, 2000.
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3.1 Certificate of Incorporation of Registrant, incorporated by
reference to Exhibit 3.1 to the Registrant's Annual Report
on Form 10-KSB filed February 3, 1995.
3.2 Certificate of Amendment of the Certificate of
Incorporation, dated as of August 13, 1999, as filed with
the Delaware Secretary of State on August 13, 1999,
incorporated by reference to Exhibit 3.1 to Registrant's
report on Form 8-K filed on August 30, 1999.
3.3 Amended and Restated By-laws of Registrant adopted March
27, 2000, incorporated by reference to Exhibit 3.3 to the
Registrant's Annual Report on Form 10-K filed on March 30,
2000.
10.1 Amended and Restated Loan and Security Agreement, dated as
of August 13, 1999, among Consolidated Eye Care, Inc.,
OptiCare Eye Health Centers, and PrimeVision Health, Inc.
as borrowers, the Registrant as the Parent, the lenders
named therein (the "Lenders"), Bank Austria, AG (the "LC
Issuer"), and Bank Austria Creditanstalt Corporate Finance,
Inc., as the agent (the "Agent")(excluding schedules and
other attachments thereto), incorporated by reference to
Exhibit 10.1 to the Registrant's report on Form 8-K filed
on August 30, 1999.
10.2 Guaranty dated as of August 13, 1999, among the Registrant,
OptiCare Eye Health Centers, PrimeVision Health, Inc.,
Consolidated Eye Care, Inc. and each of the other
subsidiaries and affiliates of the Registrant listed on the
signature pages thereto, in favor of the Lenders, the LC
Issuer and the Agent, incorporated by reference to Exhibit
10.2 to the Registrant's report on Form 8-K filed on August
30, 1999.
10.3 Security Agreement dated as of August 13, 1999, among the
Registrant and the other parties listed on the signature
page thereto in favor of the Agent for the benefit of the
Lenders and the LC Issuer, incorporated by reference to
Exhibit 10.3 to the Registrant's report on Form 8-K filed
on August 30, 1999.
10.4 Conditional Assignment and Trademark Security Agreement
dated as of August 13, 1999, between the Registrant and the
Agent for the benefit of the Lenders and the LC Issuer,
incorporated by reference to Exhibit 10.4 to the
Registrant's report on Form 8-K filed on August 30, 1999.
10.5 Pledge and Security Agreement, dated as of August 13, 1999,
among each of the Registrant, OptiCare Eye Health Centers,
PrimeVision Health, Inc., Consolidated Eye Care, Inc. and
each of the other subsidiaries and affiliates of the
Company listed on the signature pages thereto, in favor of
the Agent for the benefit of the Lenders and the LC Issuer,
incorporated by reference to Exhibit 10.5 to the
Registrant's report on Form 8-K filed on August 30, 1999.
10.6 Assignment of Notes and Security Agreement, dated as of
August 13, 1999, between PrimeVision Health, Inc. and the
Agent, incorporated by reference to Exhibit 10.6 to the
Registrant's report on Form 8-K filed on August 30, 1999.
10.7 Agreement and Plan of Merger, dated as of April 12, 1999,
among the Registrant (then known as "Saratoga Resources,
Inc."), OptiCare Shellco Merger Corporation, Prime Shellco
Merger Corporation, OptiCare Eye Health Centers, Inc., a
Connecticut corporation, and PrimeVision Health, Inc.,
incorporated herein by reference to Exhibit 2 to the
Registration Statement on Form S-4, registration no.
333-78501, first filed on May 14, 1999, as amended
("Registration Statement 333-78501").
10.8 Registration Rights Agreement dated as of August 13, 1999
between Registrant and Bank Austria Creditanstalt Corporate
Finance, Inc., incorporated by reference to Exhibit 10.37
to the Registrant's Annual Report on Form 10-K filed on
March 30, 2000.
10.9 First Amendment to Amended and Restated Loan and Security
Agreement, dated as of June 30, 2000 by and among the
Lenders and the Agent, incorporated by reference to
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Exhibit 10.9 to the Registrant's Form 10-Q filed on August
14, 2000.
10.10 Engagement letter dated as of September 18, 2000 between
Marlin Management, LLC and OptiCare Health Systems, Inc. *
10.11 Second Amendment to Amended and Restated Loan and Security
Agreement, dated as of October 10, 2000 by and among the
Lenders and the Agent. *
10.12 Secured Promissory Note dated as of October 10, 2000 among
OptiCare Eye Health Centers, Inc., Primevision Health,
Inc., OptiCare Eye Health Network, Inc., as makers, and
Alexander Enterprise Holdings Corp., as payee. *
10.13 Security Agreement dated as of October 10, 2000 among the
Registrant, OptiCare Eye Health Centers, PrimeVision
Health, Inc., Consolidated Eye Care, Inc. and each of the
other subsidiaries and affiliates of the Registrant listed
on the signature pages thereto, in favor of Alexander
Enterprise Holdings Corp. *
10.14 Warrant Agreement dated as of October 10, 2000 by and
between OptiCare Health Systems, Inc. and Medici Investment
Corp. *
27 Financial Data Schedule (for EDGAR filing only). *
* Filed herewith.
b. Reports filed on Form 8-K filed in the period covered by this report:
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be filed on its behalf by the
undersigned, hereunto duly authorized.
Date: November 14, 2000 OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Steven L. Ditman
----------------------------------------
Steven L. Ditman
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer and duly authorized officer)
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