SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 of 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 23, 1999
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 February 23, 1999 Press Release of the Registrant
attached hereto as EXHIBIT 99 is incorporated herein by reference.
Item 7 (c) Exhibits
99 Press Release, dated February 23,1999, 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.
-----------------------
(Registrant)
Date: February 24, 1999 By: /s/ Dorothy M. Cipolla
Dorothy M. Cipolla
Chief Financial Officer
Network Six, Inc.
Current Report on Form 8-K
Dated February 23, 1999
Exhibit Index
Exhibit
No. Exhibits
99 Press Release dated February 23, 1999
EXHIBIT 99
NETWORK SIX REPORTS 161% INCREASE
IN ANNUAL NET INCOME
Kenneth C. Kirsch, President and CEO
Or
Dorothy M. Cipolla, CFO and Treasurer
February 23, 1999
Warwick, RI: Network Six, Inc. reported net income of $1,061,006, or
$.96 per share, for the calendar year ending December 31, 1998, up
161%, or $654,056, from the previous year's net income of $406,950, or
$.25 per share. Revenues for the year were $10,399,980, down 9.3%, or
$1,060,457, from the previous year's total of $11,460,437.
Kenneth C. Kirsch, President and CEO commented, "We are pleased with
our 1998 financial performance. Gross profit, as a percentage of
contract revenue earned, improved to 38%, compared to 25% a year ago
when we subcontracted a large portion of our Maine child welfare
contract to a third-party. Net income, as a percentage of contract
revenue earned, improved to 10% from 3.6% a year earlier. Although
revenues dropped somewhat from the previous year, we believe that we
are well-positioned to capture additional business. In this regard, we
intend to pursue new business in the government sector, particularly in
health and human services, where we enjoy an excellent national
reputation, as well as in higher education information technology
consulting, network services and selected private sector
opportunities."
Dorothy M. Cipolla, CFO and Treasurer added, "We are in a stronger
position financially than we were a year ago and continue to operate
the Company on cash flows from operations. The fourth quarter of 1998
marks our seventh consecutive quarter of profitability."
**********************
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 SmallCap 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 forthcoming
10K for December 31, 1998 or 10Q's for March 31, June 30, 1998 or
September 30, 1998 for more discussion and information.
The following is a recap of Network Six's operating results and balance
sheet:
Network Six, Inc.
Balance Sheets
December 31, 1998 and 1997
Assets 1998 1997
----- ----
Current assets:
Cash $ 1,442,035 $ 1,291,924
Contract receivables, less allowance for
doubtful accounts of $69,175 in 1998
and $50,000 in 1997 1,966,788 2,011,379
Costs and estimated earnings in excess
of billings on contracts 1,220,253 1,388,515
Other assets 112,433 244,257
--------- ---------
Total current assets 4,741,509 4,936,075
--------- ---------
Property and equipment
Computers and equipment 590,527 506,484
Furniture and fixtures 163,532 167,558
Leasehold improvements 20,191 20,191
-------- --------
774,250 694,233
Less: accum. depreciation and amortization 602,033 627,146
-------- --------
Net property and equipment 172,217 67,087
Deferred taxes 37,097 391,475
Contract receivables and costs in excess
of billings on Hawaii contract 3,459,382 3,459,382
Other assets 290,577 438,084
--------- ---------
$ 8,700,782 $ 9,292,103
========== ==========
Network Six, Inc.
Balance Sheets, continued
December 31, 1998 and 1997
Liabilities and Stockholders' Equity 1998 1997
-------- --------
Current liabilities:
Notes payable to bank $ - $ 1,160,000
Current installment of obligations under
capital leases 89,483 82,690
Accounts payable 58,456 188,377
Accrued salaries and benefits 579,320 449,133
Accrued subcontractor expense 24,950 1,352,393
Note payable - short term 291,997 163,871
Other accrued expenses 320,982 342,465
Billings in excess of costs and estimated
earnings on contracts 341,572 155,754
Income taxes payable 771,631 13,338
Deferred taxes 50,926 545,869
Preferred stock dividends payable 795,992 460,068
--------- --------
Total current liabilities 3,325,309 4,913,958
--------- ---------
Obligations under capital leases, excluding
current installments 38,090 104,003
Note payable - long term 952,017 742,239
Hawaii Payable 576,483 576,483
--------- ---------
Total Liabilities 4,891,899 6,336,683
--------- ---------
Stockholders' equity: Series A convertible
Preferred stock, $3.50 par value
Authorized 857,142.85 shares;
issued and outstanding 714,285.71 shares
in 1997 and 1996; 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 764,663 shares
in 1998 and 734,294 in 1997 76,466 73,429
Additional paid-on capital 1,796,284 1,670,939
Retained earnings (accumulated deficit) (299,541)(1,024,622)
--------- ----------
Total stockholders' equity 3,808,883 2,955,420
Total Liabilities & Stockholder's
Equity $ 8,700,782 $9,292,103
========== =========
Network Six, Inc.
Statements of Operations
Years ended December 31, 1998, 1997 and 1996
1998 1997 1996
---------- ----------- -----------
Contract revenue earned $ 10,399,979 $ 11,460,437 $ 7,344,380
Cost of revenue earned 6,418,678 8,620,097 7,359,649
----------- ----------- ------------
Gross profit (loss) 3,981,301 2,840,340 (15,269)
Selling, general & administrative
Expenses 2,260,418 2,071,294 2,240,073
Restructuring - - (119,436)
--------- --------- ------------
Income (loss) from operations 1,720,883 769,046 (2,135,906)
Other deductions (income)
Interest expense 125,314 266,030 435,925
Interest earned (78,437) (31,934) (38,463)
--------- -------- ----------
Income (loss) before
Income taxes 1,674,006 534,950 (2,533,368)
Income taxes 613,000 128,000 (775,023)
--------- --------- -----------
Net income (loss) $ 1,061,006 $ 406,950 $ (1,758,345)
=========== ========= ===========
Net income (loss) per share:
Basic $ 0.96 $ 0.25 $ (2.71)
============ =========== ============
Diluted $ 0.96 $ 0.25 $ (2.71)
============ =========== ============
Shares used in computing net income per share:
Basic 758,547 729,927 719,317
============ =========== ============
Diluted 758,547 729,927 719,317
============ =========== ============
Preferred dividends declared $ 335,924 $ 225,308 $ 187,500
============= =========== ============
