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Previous: VMS INVESTORS FIRST STAGED EQUITY LP II, 10QSB, 1995-08-11 |
Next: SPORTSMANS GUIDE INC, 10-Q, 1995-08-11 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission file number
June 30, 1995 0-15586
GHS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 52-1373960
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
1350 Piccard Drive Suite 360, Rockville, Maryland 20850
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 417-9808
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----------- -----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 10, 1995
----- -------------------------------
Common Stock, $.01 par value 6,447,828 Shares
1
<PAGE> 2
PART I
FINANCIAL INFORMATION
GHS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
<S> <C> <C>
Current assets:
Cash $ 34,000 $ 153,000
Accounts receivable, net 1,570,000 1,200,000
Unbilled accounts receivable 459,000 111,000
Current contract installments receivable -- 34,000
Inventory 12,000 15,000
Refundable deposits 290,000 290,000
Other current assets 146,000 84,000
------------- -----------
Total current assets $ 2,511,000 $1,887,000
Furniture and equipment, net 43,000 41,000
Capitalized software, net 323,000 389,000
Investment in joint venture 86,000 86,000
Other assets 12,000 14,000
Gamma Knife venture assets:
Gamma Knife 2,555,000 2,762,000
Costs incurred in connection with
leasehold interest 679,000 696,000
Deposits 65,000 10,000
-------- --------
TOTAL $ 6,274,000 $ 5,885,000
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts Payable $ 637,000 $ 483,000
Accrued expenses 46,000 39,000
Accrued cost to complete contracts 255,000 38,000
Notes Payable 100,000 --
Shareholder loans 67,000 --
Obligation under capital lease - current portion 397,000 444,000
------- -------
Total current liabilities $ 1,502,000 $ 1,004,000
Obligation under capital lease 2,071,000 2,236,000
--------- ---------
Minority interest 36,000 40,000
Common Stock - par value $.01: 500,000
shares issued with put option 500,000 500,000
Stockholders' equity:
Common stock - $.01 par value -
10,000,000 shares authorized;
6,447,828 issued and outstanding
in 1995 and 1994 $ 65,000 $ 65,000
Additional paid-in capital 3,082,000 3,082,000
(Deficit) (982,000) (1,042,000)
--------- ----------
Total stockholders' equity $ 2,165,000 $ 2,105,000
--------- ---------
TOTAL $ 6,274,000 $ 5,885,000
--------------- -------------
--------------- -------------
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
2
<PAGE> 3
GHS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------------------
1995 1994
---- ----
<S> <C> <C>
Revenue:
Software Systems $757,000 239,000
Maintenance 273,000 205,000
Patient Revenue 244,000 --
Interest Income -- 4,000
-------- -------
Total revenue 1,274,000 448,000
Expenses:
Software Systems 558,000 266,000
Maintenance 125,000 151,000
Patient Expenses 243,000 --
Selling, General, Administrative 191,000 214,000
Interest Expense 147,000 74,000
--------- -------
Total 1,264,000 705,000
Income before minority interest $ 10,000 $ (257,000)
Minority Interest 26,000 --
-------- --------
Net Income 36,000 (257,000)
-------- --------
-------- --------
Net Income (loss) per share $ -- $ (.04)
-------- --------
-------- --------
Weighted average shares outstanding 6,447,828 6,424,328
--------- ---------
--------- ---------
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
3
<PAGE> 4
GHS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------
1995 1994
---- ----
<S> <C> <C>
Revenue:
Software Systems $979,000 770,000
Maintenance 491,000 402,000
Patient Revenue 652,000 --
Interest Income -- 12,000
---------- ----------
Total revenue 2,122,000 1,184,000
Expenses:
Software Systems 780,000 580,000
Maintenance 235,000 281,000
Patient Expenses 444,000 --
Selling, General, Administrative 362,000 408,000
Interest Expense 245,000 105,000
---------- ----------
Total 2,066,000 1,374,000
Income before minority interest $ 56,000 $ (190,000)
Minority Interest 4,000 --
-------- ---------
Net Income 60,000 (190,000)
-------- ---------
-------- ---------
Net Income (loss) per share $ .01 $ (.03)
----------- ---------
----------- ---------
Weighted average shares outstanding 6,447,828 6,424,328
--------- ---------
--------- ---------
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
4
<PAGE> 5
GHS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30
--------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 60,000 $(190,000)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 299,000 77,000
Minority interest in net loss of consolidated subsidiary (4,000) --
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable - net (370,000) (175,000)
(Increase) decrease in unbilled accounts receivable (348,000) (143,000)
(Increase) decrease in inventory 3,000 --
Decrease in contract installments receivable 34,000 9,000
Increase (decrease) in other assets (60,000) 31,000
Increase (decrease) in accounts payable, accrued
expenses and accrued costs to complete contracts 378,000 1,000
------- ---------
Net cash provided by (used in) operating activities (8,000) (390,000)
Cash flows from investing activities :
Software Development Costs -- (45,000)
Furniture and equipment purchases (11,000) (14,000)
Investment in joint venture -- (4,000)
Deposits on Gamma Knife (55,000) 150,000
-------- -------
Net cash provided by (used in) investing activities (66,000) 87,000
Cash flows from financing activities:
Payment of lease obligations (212,000) --
Proceeds of notes payable 167,000 --
------- --------
Net cash (used in) financing activities (45,000) --
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (119,000) (303,000)
Cash and cash equivalents - beginning of period 153,000 716,000
------- -------
CASH AND CASH EQUIVALENTS - END OF PERIOD $34,000 $413,000
------- --------
------- --------
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
5
<PAGE> 6
GHS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Note A - Basis of Preparation
The accompanying financial statements at June 30, 1995, for the three
months ended June 30, 1995 and 1994, are unaudited; however, in the opinion of
management, such statements include all adjustments necessary to a fair
statement of the information presented therein. The balance sheet at December
31, 1994 has been derived from the audited financial statements at that date
appearing in the Company's Annual report on Form 10-K.
Pursuant to accounting requirements of the Securities and Exchange
Commission applicable to quarterly reports on Form 10-Q, the accompanying
financial statements and these notes do not include all disclosures required by
generally accepted accounting principles for complete financial statements.
Accordingly, these statements should be read in conjunction with the Company's
most recent annual financial statements.
Results of operations for interim periods are not necessarily
indicative of those to be achieved for full fiscal years.
Note B - Note Payable
The Company has entered into a promissory note with a finance company.
The Company has to make interest payments at a rate of 13.5% per annum.
6
<PAGE> 7
GHS, INC. AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
SECOND FISCAL QUARTER 1995 COMPARED TO SECOND FISCAL QUARTER 1994
Results of Operations
Total revenues increased 162% to $1,274,000 for the quarter ended June
30, 1995 as compared to $448,000 for the same period in 1994. The increase is
due to two factors. First, Global Health Systems entered into a three year
contract to provide facilities management services for the Chicago Department
of Health (CDOH). The services include the Global Health Information System
(GHiS), computer hardware, and on-going support services. Second, the revenues
include the Company s other subsidiary, U.S. NeuroSurgical, Inc. (USN), which
opened its first Gamma Knife facility, the Midwest Gamma Knife Center, at the
Research Medical Center in Kansas City, Missouri in the third quarter of 1994.
For the six months ended June 30, 1995 revenues increased to
$2,122,000 as compared to $1,184,000 for the same period in 1994. New system
sales increased to $979,000 from $770,000 for the period. Maintenance revenue
increased to $491,000 from $402,000 in 1994. Revenue from USN was $652,000 for
the six months ended June 30, 1995.
Total expenses increased 79% to $1,264,000 from $705,000 for the three
months ended June 30, 1995. System costs rose to $558,000 from $266,000 for
the same period in 1994. The increased expenses are due to the large hardware
order for the CDOH contract. Maintenance costs decreased by 17% as the Company
continued to monitor costs and negotiate larger discounts for data
transmission. Patient expenses of $243,000 were directly related to costs of
the Midwest Gamma Knife Center. For the six months ended June 30, patient
expenses were $444,000. Interest expense rose 133% to $245,000 from $105,000 a
year earlier for USN equipment leases. The Company is paying down a five year
lease on the first Gamma Knife, and has made a down payment on its second
knife, on which it is paying interest.
Net income for the three months ended June 30, 1995 was $36,000 as
compared to a loss of $257,000 for the same period in 1994. For the six months
ended June 30, 1995, net income was $60,000 as compared to a loss of $190,000 a
year earlier.
Liquidity and Capital Resources
For the six months ended June 30, 1995 net cash used in operating
activities was $8,000 as compared to $390,000 for the same period in 1994.
Depreciation and
7
<PAGE> 8
amortization expense of $299,000 was due to depreciation of the Gamma Knife, as
well as, amortization of capitalized software. Billed accounts receivable
increased $370,000 and unbilled accounts receivable increased by $348,000 from
December 31,1994. There was an increase of $378,000 in accounts payable and
accrued expenses from December 31, 1994. The increase in receivables and
payables was CDOH contract.
The Company had net cash used in investing activities of $66,000 as
compared to net cash provided of $87,000 in 1994. The USN subsidiary continued
to make deposits to its leasing company. Net cash used in financing activities
was $45,000.
For the period ended June 30, 1995, the Company had a decrease of cash
and cash equivalents of $119,000 from $303,000 in 1994.
The Company obtained a line of credit in this quarter, to meet its
working capital needs. The Company also received a $67,000 loan from a
shareholder. USN s current lease is a five year capital lease that has
annual payments of $805,000.
8
<PAGE> 9
PART II
OTHER INFORMATION
GHS, INC. AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K
(a) None
(b) No reports on Form 8-K were filed during the quarter ended
June 30, 1995.
9
<PAGE> 10
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.
GHS, INC.
Date August 10, 1995 By /s/ Alan Gold
---------------------------- --------------------------------
Alan Gold
Director and President
Chief Executive
Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-1-1995
<PERIOD-END> JUN-30-1995
<CASH> 34,000
<SECURITIES> 0
<RECEIVABLES> 2,129,000
<ALLOWANCES> 0
<INVENTORY> 12,000
<CURRENT-ASSETS> 2,511,000
<PP&E> 3,806,000
<DEPRECIATION> 530,000
<TOTAL-ASSETS> 6,274,000
<CURRENT-LIABILITIES> 1,502,000
<BONDS> 2,635,000
<COMMON> 65,000
0
0
<OTHER-SE> 2,100,000
<TOTAL-LIABILITY-AND-EQUITY> 6,274,000
<SALES> 757,000
<TOTAL-REVENUES> 1,274,000
<CGS> 558,000
<TOTAL-COSTS> 1,264,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 147,000
<INCOME-PRETAX> 36,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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