<PAGE> 1
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 AUGUST 31, 2000, 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 0-11380
STAFF BUILDERS, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2650500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1983 Marcus Avenue, Lake Success, New York 11042
(Address of principal executive offices) (Zip Code)
(516) 750-1600
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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. Yes X No
--- ---
The number of shares of Class A Common Stock and Class B Common Stock
outstanding on October 16, 2000 were 23,345,672 and 286,125 shares,
respectively.
<PAGE> 2
STAFF BUILDERS, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
August 31, 2000 and February 29, 2000 2
Condensed Statements of Consolidated
Operations - Three and six months ended
August 31, 2000 and 1999 3
Condensed Statements of Consolidated Cash
Flows - Six months ended August 31, 2000
and 1999 4
Notes to Condensed Consolidated Financial
Statements 5-6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7-8
Factors Affecting the Company's Future
Performance 8
PART II. OTHER INFORMATION 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
</TABLE>
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
AUGUST 31,
2000 FEBRUARY 29,
(UNAUDITED) 2000
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 576 $ 394
Accounts receivable, net of allowance
for doubtful accounts of $2,049 and
$2,528, respectively 22,788 25,653
Prepaid expenses and other current assets 376 194
-------- --------
Total current assets 23,740 26,241
FIXED ASSETS, net of accumulated
depreciation of $1,942 and
$1,309, respectively 4,652 4,892
INTANGIBLE ASSETS, net of accumulated
amortization of $2,290 and
$2,025, respectively 7,981 8,246
OTHER ASSETS 456 228
-------- --------
TOTAL $ 36,829 $ 39,607
======== ========
LIABILITIES:
CURRENT LIABILITIES:
Accounts payable $ 937 $ 2,201
Accrued expenses 3,359 7,374
Accrued payroll and payroll related expenses 3,565 3,341
Current portion of long-term debt 440 232
-------- --------
Total current liabilities 8,301 13,148
LONG-TERM DEBT 702 592
DUE UNDER SECURED CREDIT FACILITY 18,275 15,149
OTHER LIABILITIES 91 25
-------- --------
TOTAL LIABILITIES 27,369 28,914
-------- --------
STOCKHOLDERS' EQUITY:
Class A Common Stock - $.01 par value;
50,000,000 shares authorized; 23,345,412
and 23,331,252 outstanding at August 31,
2000 and February 29, 2000, respectively 233 233
Class B Common Stock - $.01 par value;
1,554,936 shares authorized; 286,385 and
300,545 outstanding at August 31, 2000 and
February 29, 2000, respectively 3 3
Additional paid-in capital 13,522 13,522
Accumulated deficit (4,298) (3,065)
-------- --------
Total stockholders' equity 9,460 10,693
-------- --------
TOTAL $ 36,829 $ 39,607
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 4
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
August 31, August 31,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CONTINUING OPERATIONS:
REVENUES:
Service revenues $ 29,484 $ 29,298 $ 57,580 $ 58,546
-------- -------- -------- --------
OPERATING EXPENSES:
Service costs 22,928 22,398 44,885 45,054
General and administrative expenses 6,113 5,483 12,331 10,809
Depreciation and amortization 431 198 898 392
Interest expense, (net) 630 275 1,093 437
Other (income) expense, net (372) -- (394) 15
-------- -------- -------- --------
Total operating expenses 29,730 28,354 58,813 56,707
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (246) 944 (1,233) 1,839
PROVISION FOR INCOME TAXES -- -- -- --
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS (246) 944 (1,233) 1,839
INCOME FROM DISCONTINUED OPERATIONS
(net of income tax) -- 302 -- 118
-------- -------- -------- --------
NET INCOME (LOSS) $ (246) $ 1,246 $ (1,233) $ 1,957
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE - BASIC:
(Loss) income from continuing operations $ (.01) $ .04 $ (.05) $ .08
Income from discontinued operations -- .01 -- .01
-------- -------- -------- --------
Net (loss) income $ (.01) $ .05 $ (.05) $ .09
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE - DILUTED:
(Loss) income from continuing operations $ (.01) $ .04 $ (.05) $ .08
Income from discontinued operations -- .01 -- .01
-------- -------- -------- --------
Net (loss) income $ (.01) $ .05 $ (.05) $ .09
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER COMMON SHARES
Basic 23,632 23,619 23,632 23,619
======== ======== ======== ========
Diluted 23,632 23,714 23,632 23,714
======== ======== ======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 5
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
August 31,
2000 1999
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,233) $ 1,957
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operations:
Depreciation and amortization 898 392
Provision for doubtful accounts (479) (245)
Change in operating assets and liabilities:
Accounts receivable 3,344 1,479
Prepaid expenses and other current assets (182) (99)
Accounts payable and accrued expenses (5,055) 234
Other assets (228) 29
Other liabilities 66 --
------- -------
Net cash provided by (used in)
operating activities (2,869) 3,747
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net short term assets of discontinued operations -- 68
Net long term assets of discontinued operations -- (186)
Purchases of fixed assets (393) (1,220)
------- -------
Net cash provided by (used in)
investing activities (393) (1,338)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings(payments)in capital leases,(net) 318 (43)
Increase (decrease) in borrowings under
secured credit facility 3,126 (2,394)
------- -------
Net cash provided by (used in)
financing activities 3,444 (2,437)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
CASH EQUIVILENTS 182 (28)
CASH AND CASH EQUIVILENTS, BEGINNING
OF PERIOD 394 197
------- -------
CASH AND CASH EQUIVILENTS, END OF PERIOD $ 576 $ 169
======= =======
SUPPLEMENTAL DATA:
Cash paid for:
Interest $ 1,121 $ 937
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 6
STAFF BUILDERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in Thousands, Except Where Indicated Otherwise and, for
Per Share Amounts)
1. FINANCIAL STATEMENTS - In the opinion of Staff Builders, Inc.,(the
"Company"), the accompanying unaudited condensed consolidated financial
statements contain all adjustments (consisting of only normal and recurring
accruals) necessary to present fairly the financial position of the Company and
its subsidiaries as of August 31, 2000 and February 29, 2000, the results of
operations for the three and six months ended August 31, 2000 and 1999, and the
cash flows for the six months ended August 31, 2000 and 1999. Certain prior
period amounts have been reclassified to conform with the August 2000
presentation.
The results for the six months ended August 31, 2000 and 1999 are not
necessarily indicative of the results for an entire year. It is suggested that
these condensed consolidated financial statements be read in conjunction with
the Company's audited financial statements as of February 29, 2000 and for the
year then ended.
2. SPIN-OFF TRANSACTION - On March 22, 1999, the Company's Board of Directors
approved a plan to separate its home health care business from its supplemental
staffing business and to create a separate, publicly-traded company engaged
exclusively in providing home health care services. To accomplish this
separation of its businesses, the Company's Board of Directors established a
new, wholly-owned subsidiary, Tender Loving Care Health Care Services,
Inc.("TLCS"), which acquired 100% of the outstanding capital stock of the
Company's subsidiaries engaged in the home health care business. The spin-off
was effected on October 20, 1999 through a pro rata distribution to the
Company's stockholders of all the shares of common stock of TLCS owned by the
Company (the "Distribution"). The Distribution was made by issuing one share of
TLCS common stock for every two shares of the Company's common stock outstanding
on October 12, 1999 ("the Record Date"). Based upon the 23,619,388 shares of the
Company's common stock outstanding on the Record Date, 11,809,694 shares of TLCS
common stock were distributed to holders of the Company's Class A and Class B
common stock after the spin-off. The Company's supplemental staffing business
remained with the Company.
The Board of Directors believes that the spin-off was in the best interests of
the Company and its stockholders. One of the principal benefits of the spin-off
was the creation of a separate and distinct identity for the supplemental
staffing business of the Company. This separation should allow financial
analysts and institutional investors to better understand that business. It also
enhanced the Company's ability to obtain financing outside an environment of
tighter government regulation of the home health care industry and reduced
government reimbursement for the provision of home health care services.
3. DISCONTINUED OPERATIONS - Discontinued operations represent Chelsea Computer
Consultants, Inc.("Chelsea"), an information technology staffing company, which
was originally purchased by the Company on October 30, 1997 and was sold on
September 17, 1999. Substantially all of the revenues and expenses related to
the discontinued operations have been historically segregated on a specifically
identified basis.
4. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE - The calculation of basic
and fully diluted earnings (loss) per share was calculated for all periods in
accordance with the requirements of Statement of Financial Accounting Standards
No. 128, "Earnings per Share."
The shares used in computing basic earnings (loss) per share were 23,632,000 and
23,619,000 shares for the three and six months ended August 31, 2000 and 1999,
respectively. The shares used in computing diluted earnings per share were
23,632,000 and 23,714,00 for the three and six months ended August 31, 2000 and
1999, respectively.
5
<PAGE> 7
5. CONTINGENCIES
a. Contingent obligations
Roger Jackson Pleasant v. Staff Builders Services, Inc. and Staff Builders, Inc.
The Company is contingently liable for a confession of judgement being paid by
TLCS in favor of Roger Jackson Pleasant in the principal amount of approximately
$2.5 million outstanding as of September, 2000. The installment on the
obligation which is due on November 1, 2000 is $170. The Company is indemnified
by TLCS pursuant to agreement for any liability arising out of this settlement.
BancOne Leasing Corporation
Pursuant to the terms of a Stipulation of Settlement dated January 14, 2000, the
Company is contingently liable on equipment leases that total $1,200 over a
two-year period. Because the equipment is used in TLCS offices primarily, TLCS
has entered into an Assumption Agreement whereby it agreed to assume
responsibility jointly and severally with the original parties to the leases,
which include the Company.
Chase Equipment Leasing, Inc.
The Company is a signatory on a Forbearance and Acknowledgement Agreement along
with TLCS and all of its subsidiaries, pursuant to which TLCS will pay a total
of $163 pursuant to monthly installments of $75 for equipment used by TLCS. TLCS
and its subsidiaries are also guarantors under the Forbearance and
Acknowledgement Agreement. If all payments due in calendar year 2000 are made by
TLCS, Affidavits of Judgment for the existing indebtedness will be destroyed at
the end of 2000. TLCS is current with their payments with Chase.
Albert Gallatin
On September 20, 1995, the United States Attorney for the Eastern District of
Pennsylvania alleged that between 1987 and 1989, a corporation, substantially
all assets and liabilities of which were acquired by a subsidiary of TLCS in
1993, submitted false claims to Medicare. The alleged false claims were made
before TLCS acquired that corporation in 1993. TLCS has negotiated a settlement
of the outstanding claims for approximately $650, payable over twelve months,
the conclusion of which is pending final government signatures. The Company is
likely to be a signatory to any such settlement agreement; however, pursuant to
an agreement between the Company and TLCS, the Company will be indemnified by
TLCS for any obligations arising out of this matter.
b. Litigation:
The Company is a defendant in several civil actions which are routine and
incidental to its business. The Company purchases insurance in such amounts
which management believes to be reasonable and prudent. Although the Company
cannot estimate the ultimate cost of its open legal matters with precision, in
the opinion of management, the outcome of pending litigation will not have a
material adverse effect on the Company's consolidated financial position or
results of operations.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Dollars in Thousands, Except Where Indicated Otherwise and, for
Per Share Amounts)
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. This discussion should be read in
conjunction with the Condensed Consolidated Financial Statements appearing in
Item 1.
Results of Operations
Total revenues increased by $200 or .7% for the three months ended August 31,
2000 to $29.5 million from $29.3 million for the three months ended August 31,
1999. For the six months ended August 31, 2000, total revenues decreased by $900
or 1.5% to $57.6 million from $58.5 million for the six months ended August 31,
1999. The increase in revenues for the three months relates mainly to organic
growth from existing locations. The decrease in the Company's service revenues
for the six months was primarily due to the decrease in the number of operating
staffing offices to 49 locations as of August 31, 2000 as compared to 57
locations as of August 31, 1999. The decrease in offices was offset by growth in
sales of some offices.
Service costs were 77.8% and 76.4% of total revenues for three months ended
August 31, 2000 and 1999, and 78.0% and 77.0% for the six months ended August
31, 2000 and 1999 respectively. The increase in service costs as a percentage of
total revenues for the three and six months ended August 31, 2000 as compared to
the same periods in the prior year is primarily due to increases in travel and
lodging costs associated with our medical staffing professionals. Service costs
increased $500 or 2.3% for the three months ended August 31, 2000 to $22.9
million from $22.4 million while decreasing $200 for the six months ended August
31, 2000 to $44.9 million from $45.1 million for the six months ended August 31,
1999. These increases and decreases are directly related to the increase and
decreases in total revenues for the comparable periods.
General and administrative expenses were $6.1 million or 20.7% of total revenues
for the three months ended August 31, 2000 and $5.5 million or 18.7% of total
revenues for the three months ended August 31, 1999. This represents and
increase of $600 or 11.5% for the three month period. For the six months ended
August 31, 2000, general and administrative expenses were $12.3 million or 21.4%
of total revenues and $10.8 million or 18.5% of total revenues for the six
months ended August 31, 1999. This represents and increase of $1.5 million or
14.1% for the six month period. The increase in general and administrative
expenses for the three and six months ended August 31, 2000 as compared to the
same periods of the prior year is primarily due to the expansion of the
Company's infrastructure (primarily personnel) to permit the Company to
accommodate future increases in business volume. Professional fees associated
with the initial development and implementation of the expanded infrastructure
also added to the increases. These costs should not be incurred in the future.
Interest expense,(net) was $630 and $275 for the three months ended August 31,
2000 and 1999, and $1.1 million and $437 for the six months ended August 31,
2000 and 1999, respectively. In addition, interest expense of $371 for the three
months ended August 31, 1999 and $742 of interest expense for the six months
ended August 31, 1999 was included in discontinued operations. The decrease in
total interest expense for the three and six months ended August 31, 2000 as
compared to the same periods in the prior year is primarily due to decreased
borrowings under the Company's secured revolving line of credit and debt
relating to discontinued operations.
Other income,(net) totaled $372 for the six months ended August 31, 2000. Other
income was comprised mainly of the following: Gain on the sale of a
subsidiary($150), New York State Economic Development grant($50),the recognition
of additional funds from the sale of discontinued operations($165) and a
reduction of an accrual ($80).
7
<PAGE> 9
Liquidity and Capital Resources
On March 29, 2000, the Company secured a new financing facility ("New Facility")
for a $20 million revolving loan, whereby a portion of the proceeds were used to
repay a loan agreement provided to the Company on February 29, 2000. The term of
the New Facility is for three years, with annual interest bearing a rate of
prime plus 2%. The New Facility is collateralized by a first priority lien on
all of the Company's assets. The New Facility has certain covenants which
include tangible net worth and debt coverage ratios.
On July 31, 2000 the New Facility was amended increasing the annual interest
rate from prime plus 2% to prime plus 3% beginning June 1, 2000 and amended the
required covenants. The Company is in compliance with these covenants.
FORWARD-LOOKING STATEMENTS
Certain statements in this report on Form 10-Q constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are typically identified by the inclusion of phrases
such as "the Company anticipates", "the Company believes" and other phrases of
similar meaning. These forward-looking statements are based on the Company's
current expectations. Such forward-looking statements involve known and unknown
risks, uncertainties, and other factors that may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. The potential risks and uncertainties which would
cause actual results to differ materially from the Company's expectations are as
follows:
BUSINESS CONDITIONS - The Company must continue to establish and maintain close
working relationships with physicians and physician groups, managed care
organizations, hospitals, clinics, nursing homes, social service agencies and
other health care providers. There can be no assurance that the Company will
continue to establish or maintain such relationships. The Company expects
additional competition will develop in future periods given the increasing
market demand for the type of services offered.
ATTRACTION AND RETENTION OF LICENSEES AND EMPLOYEES - Maintaining quality
licensees, managers and branch administrators will play a significant part in
the future success of the Company. The Company's professional nurses and other
health care personnel are also key to the continued provision of quality care to
the Company's patients. The possible inability to attract and retain qualified
licensees, skilled management and sufficient numbers of credentialed health care
professionals and para-professionals and information technology personnel could
adversely affect the Company's operations and quality of service. Also, because
the travel nurse program is dependent upon the attraction of skilled nurses from
overseas, such program could be adversely affected by immigration restrictions
limiting the number of such skilled personnel who may enter and remain in the
United States.
SATISFACTORY FINANCING - The Company entered into the New Facility on March 29,
2000, which was amended on July 31, 2000 to increase the interest rate payable
on borrowings. Management cannot provide assurance that the Company will remain
in compliance with the covenants of the New Facility. If the Company does not
remain in compliance with the covenants, the bank could immediately call the
amounts due under the New Facility immediately due and payable. If this were to
happen, the Company would have to seek alternative financing, which may not be
available on acceptable terms to the Company. The line of credit available under
the New Facility to the Company is $20 million. Management cannot provide
assurance that the available line of credit will be sufficient on a going
forward basis to provide sufficient funds to operate the business.
YEAR 2000 - The Company has made upgrades to substantially all of its computer
systems and equipment. The installation of these upgrades was completed in all
material respects as of December 1999. Such upgrades served to satisfy the
anticipated impacts of the so-called Year 2000 issue on our information
technology systems. As of August 31, 2000, the Company has not experienced any
materially important business disruptions or system failures as a result of Year
2000 issues, nor is it aware of any Year 2000 issues that have impacted its
payor sources, suppliers or other significant third parties to an extent
significant to the Company. However, Year 2000 compliance has many elements and
potential consequences, some of which may not be foreseeable or may be realized
in future periods. Consequently, there can be no assurance that unforeseen
circumstances may not arise, or that the Company will not in the future identify
equipment or systems which are not Year 2000 compliant.
8
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - See Note 5 in PART I. - ITEM 1.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(A) The Company held its Annual Meeting of Shareholders on August 11, 2000.
(B) Not Applicable
(C) The shareholders voted on the election of directors as follows:
Nominee For Withheld
-------------------- ---------- --------
Mr. David Savitsky 19,938,010 643,760
Mr. Jonathan Halpert 19,938,110 643,660
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
(B) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter ended
August 31, 2000.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
10.108 Loan and Security Agreement First Amendment between the Company and Healthcare Business
Credit Corporation (formerly known as Copelco/ American Healthfund Inc.) dated July 31,
2000. (*)
10.109 Employment agreement dated August 1, 2000 between the Company and Alan Levy. (*)
10.110 Equipment lease agreements with Technology Integration Financial Services, Inc. (*)
27 Financial Data Schedule. (*)
</TABLE>
NOTES TO EXHIBITS
-----------------
* Incorporated herein.
9
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
--------------------------------------
Stephen Savitsky
Chairman of the Board
and Chief Executive Officer
Dated: October 16, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman of the Board
and Chief Executive Officer
/S/ STEPHEN SAVITSKY (Principal Executive October 16, 2000
-------------------- Officer) and Director
Stephen Savitsky
/S/ DAVID SAVITSKY President, Secretary October 16, 2000
------------------ and Director
David Savitsky
Senior - Vice President, Finance,
Chief Financial Officer and
/S/ ALAN LEVY Treasurer (Principal Financial October 16, 2000
------------- and Accounting Officer)
Alan Levy
/S/ BERNARD J. FIRESTONE Director October 16, 2000
------------------------
Bernard J. Firestone, Ph.D
/S/ JONATHAN HALPERT Director October 16, 2000
--------------------
Jonathan Halpert, Ph.D.
/S/ DONALD MEYERS Director October 16, 2000
-----------------
Donald Meyers
</TABLE>
10
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
10.108 Loan and Security Agreement First Amendment between the Company and Healthcare Business
Credit Corporation (formerly known as Copelco/ American Healthfund Inc.) dated July 31,
2000. (*)
10.109 Employment agreement dated August 1, 2000 between the Company and Alan Levy. (*)
10.110 Equipment lease agreements with Technology Integration Financial Services, Inc. (*)
27 Financial Data Schedule. (*)
</TABLE>
NOTES TO EXHIBITS
-----------------
* Incorporated herein.
