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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): October 26, 1998
Network Six, Inc.
(Exact name of registrants as specified in its charter)
Commission File No. 0-21038
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Rhode Island 05-036-6090
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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475 Kilvert Street, Warwick, Rhode Island 02886
(Address of principal executive officer, including zip code)
(401) 732-9000
(Registrant's telephone number, including are code)
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Item 5. Other Events
The October 26, 1998 Press Release of the Registrant attached hereto
as EXHIBIT 99 is incorporated herein by reference.
Item 7 (c), Exhibits
99 Press Release, dated October 26, 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: October 26, 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 October 26, 1998
Exhibit Index
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Exhibit
No. Exhibits
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99 Press Release dated October 26, 1998
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EXHIBIT 99
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NETWORK SIX REPORTS NET INCOME
UP 155% FOR THIRD QUARTER
Kenneth C. Kirsch, President and CEO
Or
Dorothy M. Cipolla, CFO and Treasurer
October 26, 1998
Network Six, Inc. of Warwick, Rhode Island reported revenues for the third
quarter, which ended September 30, 1998 of $2,662,603 and net income of
$298,136, or $0.28 per diluted share. Compared to the same period a year ago,
revenues were down $909,710, or 25%, while net income increased $181,446, or
155%, from net income of $116,690 a year ago.
Kenneth C. Kirsch, President and CEO commented, "We are very pleased with this
quarter's results, particularly the increase in our net income. Our nine month
numbers, moreover show a 229% increase in net income compared to the same period
a year ago. Projects that are substantially completed, such as the Maine
Automated Child Welfare Information System, the Rhode Island Immunization
tracking system and the Idaho Child Support Enforcement projects are being
replaced with higher margin projects. New projects include the Rhode Island
Department of Human Services welfare reform project, the expansion of the MIM
Corporation project and additional business for the Network Services Division."
Mr. Kirsch added, "We continue to pursue our marketing strategy of expanding our
efforts with state health and human service agencies and increasing our role in
other areas of government, higher education and the private sector. Our Network
Services Division, although a small part of current business, has been growing
according to plan and we expect continued growth."
Dorothy M. Cipolla, CFO commented, "Our gross margins and net income after tax
ratios are finally returning to our early 1994 levels. This is a rate that we
feel is more normal for our business. We are financing the Company on current
cash flows and the recent $500,000 five year term loan helps us strengthen our
marketing efforts."
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Network Six is a full service systems integrator, providing information
technology solutions that enable its customers to become more effective and
efficient. Network Six's services include strategic planning, management
consulting, network design, network and application implementation, training,
outsourcing, maintenance and support. 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 or September 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
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Assets Sept. 30, 1998 Dec. 31, 1997
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Current assets: (unaudited)
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Cash $1,454,386 $1,291,924
Contract receivables, less allowance for doubtful
accounts of $50,000 at September 30, 1998 and
December 31, 1997 1,520,127 2,011,379
Costs and estimated earnings in excess of billings
on contracts 1,458,809 1,388,515
Other assets 244,257
119,896 244,257
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Total current assets 4,553,218 4,936,075
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Property and equipment
Computers and equipment 533,397 506,484
Furniture and fixtures 156,833 167,558
Leasehold improvements 20,191 20,191
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710,421 694,233
Accumulated depreciation and amortization 596,722 627,146
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Net property and equipment 113,699 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 347,141 438,084
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$8,864,915 $9,292,103
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Network Six, Inc.
Condensed Balance Sheets (continued)
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Sept. 30, 1998 Dec. 31, 1997
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(unaudited)
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Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to bank $ - $ 1,160,000
Current installment of obligations under capital leases 88,932 82,690
Accounts payable 106,557 188,377
Accrued salaries and benefits 540,207 449,133
Accrued subcontractor expense 180,102 1,352,393
Note payable - short term 191,015 163,871
Other accrued expenses 456,482 342,465
Billings in excess of costs and estimated earnings on contracts 124,474 155,754
Income taxes payable 538,578 13,338
Deferred taxes 545,869 545,869
Preferred stock dividends payable 712,499 460,068
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Total current liabilities 3,484,715 4,913,958
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Obligations under capital leases, excluding current installments 54,023 104,003
Note payable - long term 1,171,224 742,239
Hawaii Payable 576,483 576,483
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Total Liabilities 5,286,445 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
September 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 763,913 shares at
September 30, 1998 and 734,294 at
December 31, 1997 76,391 73,429
Additional paid-in capital 1,795,059 1,670,939
Retained earnings (accumulated deficit) (528,654) (1,024,622)
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Total stockholders' equity 3,578,470 2,955,420
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Total Liabilities & Stockholders' Equity $ 8,864,915 $ 9,292,103
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Network Six, Inc.
Condensed Statements of Income
(Unaudited)
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Three months Three months Nine months Nine months
ended 9/30/98 ended 9/30/97 ended 9/30/98 ended 9/30/97
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Contract revenue earned $ 2,662,603 $ 3,572,313 $ 8,137,916 $ 8,418,333
Cost of revenue earned 1,535,388 2,765,551 5,140,572 6,332,039
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Gross profit 1,127,215 806,762 2,997,344 2,086,294
Selling, general & administrative expenses 617,290 558,555 1,737,581 1,557,873
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Income from operations 509,925 248,207 1,259,763 528,421
Other deductions (income)
Interest expense 14,573 76,775 54,289 189,412
Interest earned (10,336) (2,130) (63,377) (10,684)
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Income before income taxes 505,688 173,562 1,268,851 349,693
Income taxes 207,552 56,872 520,452 122,393
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Net income $ 298,136 $ 116,690 $ 748,399 $ 227,300
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Net income per share:
Basic $ 0.28 $ 0.09 $ 0.66 $ 0.12
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Diluted
$ 0.28 $ 0.09 $ 0.66 $ 0.12
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Shares used in computing net income per share:
Basic 763,880 734,294 756,519 728,471
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Diluted 1,065,520 734,294 1,036,411 728,471
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Preferred dividends declared $ 85,068 $ 47,260 $ 252,431 $ 140,240
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