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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to section 13 of 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 28, 1998
Network Six, Inc.
(Exact name of registrant as specified in its charter)
Commission File No. 0-21038
Rhode Island 05-036-6090
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
475 Kilvert Street, Warwick, Rhode Island 02886
(Address of principal executive offices, including zip code)
(401) 732-9000
(Registrant's telephone number, including area code)
Item 5. Other Events
The July 28, 1998 Press Release of the Registrant attached hereto as
EXHIBIT 99 is incorporated herein by reference.
Item 7 (c). Exhibits
99 Press Release, dated July 28, 1998, of Network Six, Inc.
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.
Network Six, Inc.
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(Registrant)
Date: July 28, 1998 By: /s/ Dorothy M. Cipolla
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Dorothy M. Cipolla
Chief Financial Officer
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Network Six, Inc.
Current Report on Form 8-K
Dated July 28, 1998
Exhibit Index
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<CAPTION>
Exhibit
No. Exhibits
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<S> <C>
99............. Press Release dated July 28, 1998
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EXHIBIT 99
NETWORK SIX REPORTS NET INCOME
UP 28% FOR SECOND QUARTER
Kenneth C. Kirsch, President and CEO
Or
Dorothy M. Cipolla, CFO and Treasurer
July 28, 1998
Network Six, Inc. of Warwick, Rhode Island reported revenues for the second
quarter, which ended June 30, 1998 of $3,253,696 and net income of $309,798, or
$0.30 per diluted share. Compared to the same period a year ago, revenues were
down $178,139, or 5%, while net income increased $67,001, or 28%, from net
income of $242,797 a year ago.
Kenneth C. Kirsch, President and CEO commented, "Our six month numbers show a
13% increase in revenue and a 307% increase in net income compared to the same
period a year ago. Projects that are winding down are being replaced with higher
margin projects."
Mr. Kirsch stated, "Our marketing strategy prospectively is to expand our
efforts in working with state health and human service agencies, while at the
same time, increase our role in other areas of government and the private
sector. We expect to see considerable growth in our Network Services Division
and, as long as the economy remains strong, expect that growth to continue at a
robust rate."
Dorothy M. Cipolla, CFO commented, "This marks our fifth consecutive profitable
quarter. We now have a trailing annual earnings per share of $0.60 per share.
Since January, we have been operating the company on current cash flows and have
not needed to draw upon our short term line of credit."
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Network Six is a systems integrator for state health and human service agencies,
providing information technology that enables states to become more efficient
and effective. Network Six's
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systems encompass Temporary Assistance to Needy Families (TANF), Health Care,
Child Welfare, Child Support Enforcement, Child Care, JOBS, and Medicaid
Eligibility programs. Network Six also provides network and information
technology services to the public and private sector. Network Six's stock is
traded on the NASDAQ National Market under the symbol NWSS. Its website is
http://www.networksix.com.
This report contains forward-looking statements reflecting the Company's
expectations or beliefs concerning future events that could materially affect
Company performance in the future. All forward-looking statements are subject to
the risks and uncertainties inherent with predictions and forecasts. Please
refer to the company's 10K for December 31, 1997 or 10Q's for March 31 or June
30, 1998 for more discussion.
The following is a recap of Network Six's operating results and balance sheet:
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Network Six, Inc.
Condensed Balance Sheets
<TABLE>
<CAPTION>
Assets June 30, 1998 Dec. 31, 1997
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Current assets: (unaudited)
<S> <C> <C>
Cash ............................................. $ 821,599 $1,291,924
Contract receivables, less allowance for doubtful
accounts of $50,000 at June 30, 1998 and
December 31, 1997 ........................... 1,578,077 2,011,379
Costs and estimated earnings in excess of billings
on contracts ................................ 1,418,662 1,388,515
Other assets ..................................... 132,190 244,257
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Total current assets ........................ 3,950,528 4,936,075
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Property and equipment
Computers and equipment .......................... 513,120 506,484
Furniture and fixtures ........................... 156,833 167,558
Leasehold improvements ........................... 20,191 20,191
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690,144 694,233
Accumulated depreciation and amortization ............. 593,228 627,146
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Net property and equipment .................. 96,916 67,087
Deferred taxes ........................................ 391,475 391,475
Contract receivables and costs in excess of billings
on Hawaii contract ............................... 3,459,382 3,459,382
Other assets .......................................... 408,148 438,084
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$8,306,449 $9,292,103
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</TABLE>
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<TABLE>
<CAPTION>
June 30, 1998 Dec. 31, 1997
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(unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to bank .................................................. $ -- $ 1,160,000
Current installment of obligations under capital leases ................ 87,531 82,690
Accounts payable ....................................................... 136,480 188,377
Accrued salaries and benefits .......................................... 459,005 449,133
Accrued subcontractor expense .......................................... 776,254 1,352,393
Note payable - short term .............................................. 100,000 163,871
Other accrued expenses ................................................. 380,123 342,465
Billings in excess of costs and estimated earnings on contracts ........ 158,147 155,754
Income taxes payable ................................................... 319,629 13,338
Deferred taxes ......................................................... 545,869 545,869
Preferred stock dividends payable ...................................... 627,430 460,068
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Total current liabilities ......................................... 3,590,469 4,913,958
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Obligations under capital leases, excluding current installments ............ 69,512 104,003
Note payable - long term .................................................... 742,239 742,239
Hawaii Payable .............................................................. 576,483 576,483
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Total Liabilities ................................................. 4,978,704 6,336,683
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Stockholders' equity:
Series A convertible preferred stock, $3.50 par value. Authorized
857,142.85 shares; issued and outstanding 714,285.71 shares at June
30, 1998 and December 31, 1997; liquidation of $3.50 per share plus
unpaid and accumulated dividends .................................. 2,235,674 2,235,674
Common stock, $.10 par value. Authorized 4,000,000 shares; issued
763,438 shares at June 30, 1998 and 734,294 at December 31, 1997.. 76,344 73,429
Additional paid-in capital .................................................. 1,757,450 1,670,939
Retained earnings (accumulated deficit) ..................................... (741,722) (1,024,622)
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Total stockholders' equity ........................................ 3,327,746 2,955,420
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Total Liabilities & Stockholders' Equity .......................... $ 8,306,450 $ 9,292,103
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</TABLE>
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Network Six, Inc.
Condensed Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three months Three months Six months Six months
Ended 6/30/98 ended 6/30/97 ended 6/30/98 ended 6/30/97
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<S> <C> <C> <C> <C>
Contract revenue earned ...................... $ 3,253,696 $ 3,431,835 $ 5,475,313 $ 4,846,020
Cost of revenue earned ....................... 2,158,529 2,593,348 3,605,184 3,566,488
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Gross profit ............................ 1,095,167 838,487 1,870,129 1,279,532
Selling, general & administrative expenses ... 562,467 472,987 1,120,292 999,318
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Income from operations .................. 532,700 365,500 749,837 280,214
Other deductions (income)
Interest expense ........................ 10,529 61,979 39,715 112,636
Interest earned ......................... (2,918) (4,797) (53,041) (8,554)
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Income before income taxes ......... 525,088 308,318 763,163 176,132
Income taxes ................................. 215,290 65,521 312,900 65,521
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Net income ................................... $ 309,798 $ 242,797 $ 450,263 $ 110,611
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Net income per share:
Basic ........................................ $ 0.30 $ 0.27 $ 0.38 $ 0.02
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Diluted ...................................... $ 0.30 $ 0.26 $ 0.38 $ 0.02
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Shares used in computing net income per share:
Basic ........................................ 756,176 729,927 752,839 725,559
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Diluted ...................................... 1,037,956 917,124 1,021,842 725,559
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Preferred dividends declared ................. $ 84,144 $ 46,747 $ 167,363 $ 92,979
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