<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
September 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.
<TABLE>
<CAPTION>
Class Outstanding at November 10, 1995
----- ---------------------------------
<S> <C>
Common Stock, $.01 par value 6,447,828 Shares
</TABLE>
1
<PAGE> 2
PART I
FINANCIAL INFORMATION
GHS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
---- ----
<S> <C> <C>
Current assets:
Cash $ 12,000 $ 153,000
Accounts receivable, net 1,574,000 1,200,000
Unbilled accounts receivable 454,000 111,000
Current contract installments receivable -- 34,000
Inventory 12,000 15,000
Refundable deposits 290,000 290,000
Other current assets 101,000 84,000
----------- -----------
Total current assets $ 2,443,000 $ 1,887,000
Furniture and equipment, net 51,000 41,000
Capitalized software, net 342,000 389,000
Investment in joint venture 86,000 86,000
Other assets 11,000 14,000
Gamma Knife venture assets:
Gamma Knife 2,451,000 2,762,000
Costs incurred in connection with
leasehold interest 670,000 696,000
Deposits 65,000 10,000
------ -------
TOTAL $ 6,119,000 $ 5,885,000
========= =========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Current liabilities:
Accounts Payable $ 704,000 $ 483,000
Accrued expenses 76,000 39,000
Accrued cost to complete contracts 247,000 38,000
Notes Payable 120,000 --
Obligation under capital lease - current portion 494,000 444,000
------- -------
Total current liabilities $ 1,641,000 $ 1,004,000
Obligation under capital lease 1,859,000 2,236,000
--------- ---------
Minority interest 8,000 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 -
25,000,000 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) (1,036,000) (1,042,000)
----------- -----------
Total stockholders' equity $ 2,111,000 $ 2,105,000
--------- ---------
TOTAL $ 6,119,000 $ 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
September 30, 1995
------------------
1995 1994
---- ----
<S> <C> <C>
Revenue:
Patient Revenue $254,000 127,000
Software Systems 296,000 477,000
Maintenance/Facilities Management 309,000 219,000
Interest Income -- 3,000
-------- -------
Total revenue 859,000 826,000
Expenses:
Patient Expenses 173,000 67,000
Software Systems 267,000 364,000
Maintenance/Facilities Management 199,000 159,000
Selling, General, Administrative 168,000 269,000
Interest Expense 134,000 88,000
--------- ---------
Total expense 941,000 947,000
Income (loss) before minority interest $ (82,000) $ (121,000)
Minority Interest in Net Loss 28,000 65,000
-------- ---------
Income (loss) (54,000) $ (56,000)
======== =========
Income (loss) per share $ (.01) $ (.01)
======== =========
Weighted average shares outstanding 6,447,828 6,447,828
========= =========
</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>
Nine Months Ended
September 30,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
Revenue:
Patient Revenue $ 906,000 127,000
Software Systems 1,275,000 1,247,000
Maintenance/Facilities Management 800,000 621,000
Interest Income -- 15,000
--------- ---------
Total revenue 2,981,000 2,010,000
Expenses:
Patient Expenses 617,000 125,000
Software Systems 1,047,000 835,000
Maintenance/Facilities Management 434,000 430,000
Selling, General, Administrative 530,000 738,000
Interest Expense 379,000 193,000
--------- ---------
Total expense 3,007,000 2,321,000
Income (loss) before minority interest $ (26,000) $ (311,000)
Minority Interest 32,000 65,000
--------- ---------
Income (loss) 6,000 (246,000)
========= =========
Income (loss) per share $ -- $ (.04)
========= =========
Weighted average shares outstanding 6,447,828 6,447,828
========= =========
</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>
Nine Months Ended
September 30
-------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 6,000 $(246,000)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Minority interest in net (loss) of
consolidated subsidiaries (32,000) (65,000)
Depreciation and amortization 450,000 139,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable - net (374,000) (207,000)
(Increase) decrease in unbilled accounts receivable (343,000) 33,000
(Increase) decrease in inventory -- --
(Increase) decrease in contract installments receivable 34,000 12,000
(Increase) decrease in other current assets (17,000) (3,000)
Increase (decrease) in other assets (52,000) (50,000)
Increase (decrease) in accounts payable, accrued
expenses and accrued costs to complete contracts 467,000 (105,000)
-------- --------
Net cash provided by (used in) operating activities 139,000 (492,000)
-------- --------
Cash flows from investing activities :
Software Development Costs (50,000) (45,000)
Equipment Purchases (23,000) (21,000)
Investment in Joint Venture -- (4,000)
Return of Deposit on Gamma Knife -- 148,000
Cost Incurred with Leasehold improvements(1) -- 500,000
-------- -------
Net cash provided by (used in) investing activities (73,000) $578,000
-------- --------
Cash flows from financing activities:
Payment of lease obligations (327,000) --
Proceeds of notes payable 100,000 --
Loan from shareholders 20,000 --
Use of cash held in escrow -- (500,000)
-------- ---------
Net cash (used in) financing activities (207,000) (500,000)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (141,000) (414,000)
Cash and cash equivalents - beginning of period 153,000 716,000
-------- -------
CASH AND CASH EQUIVALENTS - END OF PERIOD $12,000 $302,000
======= ========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
- ----------------------------------
(1) Excludes increase of $23,000 obtained by issuance of 23,000 shares of stock
in connection with services provided.
5
<PAGE> 6
GHS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Note A - Basis of Preparation
The accompanying financial statements at September 30, 1995, for the
three months ended September 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 OPERATIONS
AND FINANCIAL CONDITION
Third Fiscal Quarter 1995 Compared to Third Fiscal Quarter 1994
Results of Operations
Total revenues increased 4% to $859,000 for the quarter ended September 30,
1995 as compared to $826,000 for the same period in 1994. Global Health
Systems, Inc. continued the installation of computer hardware and on-going
support services for the Chicago Department of Public Health, (CDPH). Revenues
from U.S. Neurosurgical, Inc., (USN), the Company's other subsidiary, were
$254,000 for the quarter as compared to $127,000 from the same period a year
earlier.
For the nine months ended September 30, 1995, revenues were up 48% to
$2,981,000 as compared to $2,010,000 for the same period in 1994. New system
sales increased to $1,275,000 from $1,247,000 a year earlier.
Maintenance/Facilities Management revenue increased 29% to $800,000 from
$621,000 for the same period in 1994. Management believes this increase is
significant, as it reflects Global's long term market strategy to build its
recurring revenue base by providing outsourcing management services to managed
care and public health organizations.
Total expenses declined to $941,000 for the three months ended September 30,
1995 as compared to $947,000 for the same period a year earlier. For the nine
months ended September 30, 1995, total expenses increased 30% to $3,007,000
from $2,321,000 for the same period in 1994. System costs rose to $1,047,000
from $835,000 for the nine months ended September 30, 1995 as compared to a
year earlier. Selling, general and administrative costs declined 37% to
$168,000 from $269,000 for the quarter ended September 30. Patient expenses of
$173,000 were directly related to costs of the Midwest Gamma Knife Center. For
the nine months ended September 30, patient expenses were $617,000. Interest
expense for the quarter was $134,000 as compared to $88,000 for the same
period, one year ago. For the nine months ended September 30, interest expense
rose to $379,000 from $193,000 a year ago. 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.
For the quarter ended September 30, the Company had a loss of $54,000 as
compared to a loss of $56,000 for the same period in 1994. For the nine months
ended September 30, 1995, net income was $6,000 as compared to a loss of
$246,000 a year earlier.
7
<PAGE> 8
Liquidity and Capital Resources
For the nine months ended September 30, 1995, net cash provided by operating
activities was $139,000 as compared to $492,000 used for operating activities
for the same period in 1994. Depreciation and amortization expense of $450,000
was due to depreciation of the Gamma Knife, as well as amortization of
capitalized software. Billed accounts receivable increased by $374,000 and
unbilled accounts receivable increased by $343,000 from December 31, 1994.
There was an increase of $467,000 in accounts payable and accrued expenses from
December 31, 1994. The increase in receivables and payables were due to the
CDPH contract.
The Company had net cash used in investing activities of $73,000 as compared to
$578,000 for the same period in 1994. Net cash used in financing activites was
$207,000 as compared to $500,000 for the same period a year earlier.
For the period ended September 30, 1995, the Company had a decrease of cash and
cash equivialents of $141,000 as compared to $302,000 a year ago. The Company
has a limited line of credit to meet its working capital needs. USN's current
lease is a five year capital lease which has an annual payment 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
September 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 November 8,1995 By /s/ Alan Gold
----------------------------- -------------------------------------
Alan Gold
Director and President
Chief Executive Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 12,000
<SECURITIES> 0
<RECEIVABLES> 2,028,000
<ALLOWANCES> 14,000
<INVENTORY> 12,000
<CURRENT-ASSETS> 2,443,000
<PP&E> 3,823,000
<DEPRECIATION> 651,000
<TOTAL-ASSETS> 6,119,000
<CURRENT-LIABILITIES> 1,641,000
<BONDS> 120,000
<COMMON> 65,000
0
0
<OTHER-SE> 2,111,000
<TOTAL-LIABILITY-AND-EQUITY> 6,119,000
<SALES> 859,000
<TOTAL-REVENUES> 859,000
<CGS> 639,000
<TOTAL-COSTS> 941,000
<OTHER-EXPENSES> 302,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 134,000
<INCOME-PRETAX> (54,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (54,000)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
