<PAGE>
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 28, 2000
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
incorporation or organization) Identification No.)
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)
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Item 5. Other Events
The February 28, 2000 Press Release of the Registrant attached hereto
as EXHIBIT 99 is incorporated herein by reference.
Item 7 (c) Exhibits
99 Press Release, dated February 28, 2000 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 29, 2000 By: /s/ James J. Ferry
James J. Ferry
Vice President, Finance &
Administration and
Chief Financial Officer
Network Six, Inc.
Current Report on Form 8-K
Dated February 28, 2000
Exhibit Index
Exhibit
No. Exhibits
99 Press Release dated February 28, 2000
EXHIBIT 99
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Exhibit 99
NETWORK SIX REPORTS FOURTH QUARTER
AND FULL YEAR RESULTS
Kenneth C. Kirsch, President and CEO
Or
James J. Ferry, Vice President of Finance &
Administration, CFO and Treasurer
February 28, 2000
Warwick, RI: Network Six, Inc. (NASDAQ: NWSS) reported contract revenue earned
for the quarter ending December 31, 1999 of $2,411,718, up 6.6%, or $149,655
from $2,262,063 the same period a year ago. Net income for the period was
$83,700, or $0.00 per share, down $228,907 from the same period a year ago when
the Company posted net income of $312,607, or $0.30 per share.
For full year 1999, contract revenue earned was $10,225,676, down 1.7%, or
$174,303 from the previous year's total of $10,399,979. Full year 1999 net loss
was $1,221,615, or $2,282,621 lower than last year's net income of $1,061,006.
These figures include a one-time pre-tax charge of approximately $3.1 million
($1.8 million after-tax) related to the Company settling its long-standing
litigation with the State of Hawaii. Without the settlement charge, net income
for the full year would have been $623,117 or $.38 per share.
Kenneth C. Kirsch, President and CEO commented, "The last year was disappointing
from both a revenue and a profit perspective. Revenues were down primarily for
two reasons: (1) investments we made in sales and marketing have taken longer to
materialize than expected; and (2) the Y2K `lockdown' caused many of our
customers to put `on hold' numerous information technology (IT) initiatives.
Profits suffered as a result of the lack of revenue growth, the investments we
made in sales and marketing activities and the charge for the State of Hawaii
litigation settlement.
During the year, however, we renewed two significant contracts, one with the
State of Rhode Island, to support and enhance their InRHODES computer system,
the other with the State of Maine, to support their MACWIS child welfare system.
Prior to the close of the year, we were selected by the State of Rhode Island to
support their child welfare system known as RICHIST. We recently signed that
contract and commenced the project. We also assisted several other customers
with the development of state-of-the art web-enabled applications.
We anticipate a revitalized demand for IT and related services that were put on
hold during the Y2K lockdown. Our entire company, moreover, is in the process of
transitioning into the e-commerce space where we believe our future and the
future of our customers lie. Our initiatives include, among other things,
web-enabling mainframe and client-server applications, enhancing websites to
facilitate our clients conducting more business over the internet, developing
proprietary web-based systems for the applications service provider (ASP)
marketspace and leveraging our network services expertise to the rapidly growing
field of internet security. This transition will require continued investment in
the training of our technical staff, significant additional investment in sales
and marketing activities and leveraging strategic alliances and partnerships. We
believe that these investments will position the Company well for the future."
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James J. Ferry, Vice President of Finance & Administration, CFO and Treasurer
added, "We continue to strengthen our financial position through operating cash
flows. At year-end, the Company had $2.5 million of cash and cash equivalents,
up from $1.4 million from the same period in 1998. The combination of cash on
hand and the Company's untapped $1 million revolving line of credit provide a
solid financial foundation for the future."
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Network Six is a full service provider of information technology solutions that
enable its customers to operate more efficiently and effectively. Network Six's
services include e-commerce planning and implementation, technology consulting,
applications development and support and network design and implementation.
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, 1999 or 10Q's for March
31, 1999, June 30, 1999 or September 30, 1999 for more discussion and
information.
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 Dec. 31, 1999 Dec. 31, 1998
- ------ -------------------- ---------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $2,453,935 $1,442,035
Contract receivables, less allowance for doubtful
accounts of $49,175 at December 31, 1999 and
$69,175 at December 31, 1998 1,561,255 1,966,788
Costs and estimated earnings in excess of billings
on contracts 759,891 1,220,253
Refundable taxes on income 150,640 0
Deferred taxes 287,083 0
Other current assets 151,933 112,433
-------------------- ---------------------
Total current assets 5,364,737 4,741,509
Property and equipment
Computers and equipment 590,124 590,527
Furniture and fixtures 162,606 163,532
Leasehold improvements 20,191 20,191
-------------------- ---------------------
772,921 774,250
Less: accumulated depreciation and amortization 578,015 602,033
-------------------- ---------------------
Net property and equipment 194,906 172,217
Deferred taxes 513,795 37,097
Contract receivables and costs in excess of billings
on Hawaii contract 0 3,459,382
Other assets 86,750 290,577
-------------------- ---------------------
Total assets $6,160,188 $8,700,782
==================== =====================
</TABLE>
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<TABLE>
<CAPTION>
Dec. 31, 1999 Dec. 31, 1998
----------------- ----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installment of obligations under capital leases $8,132 $89,483
Current portion of long-term debt:
Vendors 100,000 200,000
Others 349,141 91,997
Accounts payable 202,195 58,456
Accrued salaries and benefits 508,193 579,320
Accrued subcontractor expense 12,843 24,950
Other accrued expenses 86,938 320,982
Billings in excess of costs and estimated earnings on contracts 124,458 341,572
Income taxes payable 0 780,066
Deferred taxes 0 42,491
Preferred stock dividends payable 1,119,468 795,992
----------------- ----------------
Total current liabilities 2,511,368 3,325,309
Obligations under capital leases, excluding current installments 0 38,090
Long-term debt, less current portion:
Vendors 542,239 542,239
Others 775,636 409,778
Hawaii Payable 0 576,483
----------------- ----------------
Total Liabilities 3,829,243 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
December 31, 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 794,306 shares at
December 31, 1999 and 764,663 at December 31, 1998 79,430 76,466
Additional paid-in capital 1,888,652 1,796,284
Treasury stock, recorded at cost,
8081 shares at December 31, 1999 (28,179) 0
Accumulated deficit (1,844,632) (299,541)
----------------- ----------------
Total stockholders' equity 2,330,945 3,808,883
----------------- ----------------
Total Liabilities & Stockholders' Equity $6,160,188 $8,700,782
================= ================
</TABLE>
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NETWORK SIX, INC.
Condensed Statements of Income
<TABLE>
<CAPTION>
Three months Three months Twelve months Twelve months
ended 12/31/99 ended 12/31/98 ended 12/31/99 ended 12/31/98
------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C>
Contract revenue earned $2,411,718 $2,262,063 $10,225,676 $10,399,979
Cost of revenue earned 1,405,890 1,278,106 6,178,286 6,418,678
------------------- ------------------ ------------------- ------------------
Gross profit 1,005,828 983,957 4,047,390 3,981,301
Selling, general and
administrative 908,944 522,837 2,920,352 2,260,418
Litigation settlement (50,000) 0 3,126,665 0
------------------- ------------------ ------------------- ------------------
Income (loss) from
operations 146,884 461,120 (1,999,627) 1,720,883
Other deductions (income)
Interest expense 34,253 71,025 153,765 125,314
Interest earned (30,653) (15,060) (88,777) (78,437)
------------------- ------------------ ------------------- ------------------
Income (loss) before
income taxes 143,284 405,155 (2,064,615) 1,674,006
Income taxes 59,584 92,548 (843,000) 613,000
------------------- ------------------ ------------------- ------------------
Net income (loss) $83,700 $312,607 ($1,221,615) $1,061,006
Net income (loss) per share:
Basic $0.00 $0.30 ($1.96) $0.96
=================== ================== =================== ==================
Diluted $0.00 $0.30 ($1.96) $0.96
=================== ================== =================== ==================
Shares used in computing net income (loss) per share:
Basic 794,123 764,630 787,638 758,547
=================== ================== =================== ==================
Diluted 794,123 764,630 787,638 758,547
=================== ================== =================== ==================
Preferred dividends declared $83,493 $83,494 $323,476 $335,925
=================== ================== =================== ==================
</TABLE>
