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):
October 29, 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 October 29, 1999 Press Release of the Registrant attached hereto
as EXHIBIT 99 is incorporated herein by reference.
Item 7 (c) Exhibits
99 Press Release, dated October 29,1999, 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: October 29, 1999 By: /s/ Dorothy M. Cipolla
Dorothy M. Cipolla
Chief Financial Officer
Network Six, Inc.
Current Report on Form 8-K
Dated October 29, 1999
Exhibit Index
Exhibit
No. Exhibits
99 Press Release dated October 29, 1999
EXHIBIT 99
NETWORK SIX REPORTS THIRD QUARTER
FINANCIAL RESULTS
Contact (401) 732-9000
Kenneth C. Kirsch, President and CEO
Or
Dorothy M. Cipolla, CFO and Treasurer
October 29, 1999
Warwick, RI: Network Six, Inc. (NASDAQ:NWSS) reported contract revenue earned
for the quarter ending September 30, 1999 of $2,575,192, down 3%, or $87,411,
from $2,662,603 the same period a year ago. Net income for the period was
$149,727, or $0.09 per share, down $148,409 from the same period a year ago
when the Company reported net income of $298,136, or $.28 per share.
Contract revenue earned for the nine months ending September 30, 1999 was
$7,813,958 down $323,958, or 4%, from $8,137,916 the same period a year ago.
Net loss for the period was $1,305,315, or $1.98 per share, down $2,053,714
from the same period a year ago when the Company reported net income of
$748,399, or $.66 per share. These figures include a one-time pre-tax charge
of approximately $3.2 million ($1.9 million after-tax) related to the Company
settling its long-standing litigation with the State of Hawaii. Without the
Hawaii settlement charge, net income for the first nine months would have been
$568,917 or $.42 per share.
Kenneth C. Kirsch, President and CEO commented, "Earlier in the year, we made a
conscious decision to beef up our sales and marketing staff and to pursue
selective markets. This investment continued during the third quarter and we
expect it to continue prospectively as well. With our improved financial
health, we are able to focus our efforts on growing the Company for the
long-term by making investments in product development and selling and
marketing activities that we expect to generate favorable returns for the
Company in the years to come. Although third quarter revenues fell below our
expectations, primarily due to a slowdown in new systems development
activities related to Y2K, we believe that new systems development initiatives
and related spending will re-commence shortly after the beginning of the year."
Dorothy Cipolla, CFO and Treasurer, added, "The Company continues to grow
stronger every day; our cash position has never been higher, our balance sheet
is solid and our credit facility remains untapped. We are well positioned for
growth."
**************************************************************************
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 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 10Q for June 30, 1999 or 10K for December 31, 1998 for
more discussion and information.
The following is a recap of Network Six's operating results and balance sheet:
Network Six, Inc.
Condensed Balance Sheets
Sept. 30, 1999 Dec. 31, 1998
Assets (unaudited)
Current assets: ------------ ------------
[S] [C] [C]
Cash $ 2,534,719 $ 1,442,035
Contract receivables, less allowance for
doubtful accounts of $50,000 at Sept. 30,
1999 and $69,175 at December 31, 1998 1,558,083 1,966,788
Costs and estimated earnings in excess of
billings on contract 816,352 1,220,253
Refundable income taxes relating to the
Hawaii settlement 686,000 -
Other current assets 127,820 112,433
------------ ------------
Total current assets 5,722,974 4,741,509
------------ ------------
Property and equipment
Computers and equipment 618,021 590,527
Furniture and fixtures 162,606 163,532
Leasehold improvements 20,191 20,191
------------ ------------
800,818 774,250
Less: accum. depreciation and amortization 587,574 602,033
------------ ------------
Net property and equipment 213,244 172,217
Deferred taxes 417,401 37,097
Contract receivables and costs in excess
of billings on Hawaii contract - 3,459,382
Other assets 86,906 290,577
------------ ------------
$ 6,440,525 $ 8,700,782
=========== ===========
Sept. 30, 1999 Dec. 31, 1998
(unaudited)
Liabilities and Stockholders' Equity ------------ ------------
Current liabilities:
Current installment of obligations
under capital leases $ 7,227 $ 89,483
Current portion of long-term debt:
Vendors 100,000 200,000
Others 340,918 91,997
Accounts payable 80,645 58,456
Accrued salaries and benefits 573,266 579,320
Accrued subcontractor expense 24,153 24,950
Other accrued expenses 74,726 320,982
Billings in excess of costs and
estimated earnings on contracts 328,478 341,572
Income taxes payable - 780,066
Deferred taxes 42,491 42,491
Preferred stock dividends payable 1,035,975 795,992
------------ ------------
Total current liabilities 2,607,879 3,325,309
------------ ------------
Obligations under capital leases,
excluding current installments - 38,090
Long-term debt, less current portion:
Vendors 642,239 542,239
Others 837,234 409,778
Hawaii Payable - 576,483
------------ ------------
Total Liabilities 4,087,352 4,891,899
------------ ------------
Stockholders' equity:
Series A convertible preferred stock,
$3.50 par value. Authorized 857,142.85
shares; issued and outstanding 714,285.71
shares at Sept. 30, 1999 and December 31,
1998; 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 792,881 shares
at September 30, 1999 and 764,663 at
December 31, 1998 79,288 76,466
Additional paid-in capital 1,886,294 1,796,284
Treasury stock, recorded at cost, 316 shares at
Sept.30, 1999 and 0 at December 31, 1998 (3,245) -
Retained earnings (accumulated deficit) (1,844,838) (299,541)
------------ ------------
Total stockholders' equity 2,353,173 3,808,883
------------ ------------
Total Liabilities &
Stockholders' Equity $ 6,440,525 $ 8,700,782
=========== ===========
Network Six, Inc.
Condensed Statements of Income
(Unaudited)
[C] [C] [C] [C]
Three months Three months Six months Six months
ended 9/30/99 ended 9/30/98 ended 9/30/99 ended 9/30/98
------------- ------------- ------------- -------------
Contract revenue earned 2,575,192 2,662,603 7,813,958 8,137,916
Cost of revenue earned 1,632,648 1,535,388 4,772,396 5,140,573
------------ ------------ ------------ ----------
Gross profit 942,544 1,127,215 3,041,562 2,997,344
Selling, general &
administrative expenses 655,048 617,290 2,011,408 1,737,581
Litigation settlement - - 3,176,665 -
------------ ------------ ------------ ------------
Income from operations 287,496 509,925 (2,146,511) 1,259,763
Other deductions (income)
Interest expense 60,147 14,573 119,512 54,289
Interest earned (26,426) (10,336) (58,124) (63,377)
------------ ------------ ------------ -----------
Income before
income taxes 253,775 505,688 (2,207,899) 1,268,851
Income taxes 104,048 207,552 (902,584) 520,452
------------ ------------ ------------ -----------
Net income 149,727 298,136 (1,305,315) 748,399
============= ============= ============= ===========
Net income per share:
Basic 0.09 0.28 (1.98) 0.66
============= ============= ============= ============
Diluted 0.09 0.28 (1.98) 0.66
============= ============= ============= ===========
Shares used in computing net income per share:
Basic 788,573 763,880 785,476 756,519
============= ============= ============= ============
Diluted 788,573 763,880 785,476 756,519
============= ============= ============= ============
Preferred dividends
declared 81,918 85,068 239,983 252,431
============= ============= ============= =============
