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
March 31, 1996 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 May 12, 1996
----- ---------------------------
Common Stock, $.01 par value 6,447,828 Shares
<PAGE>
PART I
FINANCIAL INFORMATION
GHS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1996 1995
---- ----
Current assets:
Cash $ 144,000 $ 198,000
Accounts receivable, net 1,152,000 1,451,000
Unbilled accounts receivable 526,000 576,000
Current contract installments receivable 15,000 15,000
Inventory 8,000 12,000
Refundable deposits 290,000 290,000
Other current assets 116,000 91,000
----------- -----------
Total current assets $ 2,251,000 $ 2,633,000
Furniture and equipment, net 59,000 56,000
Capitalized software, net 304,000 291,000
Other assets 97,000 98,000
Gamma Knife venture assets:
Gamma Knife 2,244,000 2,348,000
Progress Payment- Gamma Knife 1,160,000 1,160,000
Costs incurred in connection with
leasehold interest 682,000 661,000
Deposits 65,000 65,000
Cash held in escrow 68,000 27,000
TOTAL $ 6,930,000 $ 7,339,000
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts Payable $ 985,000 $ 1,337,000
Loans Payable- Officer -- 20,000
Notes Payable - Other 100,000 100,000
Accrued cost to complete contracts 25,000 25,000
Loan Payable - Gamma Knife - current portion 55,000 55,000
Obligation under capital lease - current portion 525,000 512,000
Equipment 5,000 5,000
----------- -----------
Total current liabilities 1,695,000 2,054,000
Obligation under capital lease:
Gamma Knife 1,590,000 1,724,000
Equipment 8,000 9,000
Loan Payable Gamma Knife 1,105,000 1,105,000
Minority interest 18,000 18,000
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 1996 and 1995 $ 65,000 $ 65,000
Additional paid-in capital 3,082,000 3,082,000
(Deficit) (1,133,000) (1,218,000)
----------- -----------
Total stockholders' equity $ 2,014,000 $ 1,929,000
----------- -----------
TOTAL $ 6,930,000 $ 7,339,000
=========== ===========
2
<PAGE>
GHS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31, 1996
------------------
1996 1995
---- ----
Revenue:
Software Systems $ 490,000 222,000
Maintenance 307,000 218,000
Claims Processing 167,000 --
Patient Revenue 314,000 408,000
---------- ----------
Total revenue 1,278,000 848,000
Expenses:
Software Systems 384,000 222,000
Maintenance 211,000 110,000
Claims Processing Expense 102,000 --
Patient Expenses 181,000 201,000
Selling, General, Administrative 187,000 171,000
Interest Expense 128,000 98,000
---------- ----------
Total expense 1,193,000 802,000
Income (loss) before minority interest $ 85,000 $ 46,000
Minority Interest -- (22,000)
Net Income (loss) $ 85,000 $ 24,000
---------- ----------
Net Income (loss) per share $ .01 --
---------- ----------
Weighted Average Shares Outstanding 6,447,828 6,447,828
========== ==========
The accompanying notes to financial statements are an integral part hereof.
3
<PAGE>
GHS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
------------------
1996 1995
---- ----
Revenue:
Net Income $ 85,000 24,000
Adjustments to reconcile net income to net cash
provided by operating and activities:
Depreciation and amortization 156,000 149,000
Minority interest in net income of consolidated
subsidiary 22,000
Changes in operating assets and liabilities:
(Increase)decrease in accounts receivable-net 299,000 (108,000)
Decrease in unbilled accounts receivable 50,000 2,000
Decrease in contract installments receivable 4,000
Decrease in inventory 4,000 3,000
(Increase)decrease in other assets (65,000) 12,000
(Decrease) in accounts payable, accrued
expenses and accrued costs to complete contracts (352,000) (74,000)
--------- ---------
Net cash provided by operating activities 177,000 34,000
Cash flows from investing activities :
Furniture and equipment purchases (9,000) (6,000)
Software development costs (50,000) --
Costs incurred with leasehold improvements (30,000)
Deposits on Gamma Knife -- (34,000)
--------- ---------
Net cash (used in) investing activities (89,000) (40,000)
Cash flows from financing activities:
Payment of lease obligations (122,000)
Payment of loan to officer (20,000) (106,000)
--------- ---------
Net cash (used in) financing activities (142,000) (106,000)
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (54,000) (112,000)
Cash and cash equivalents - beginning of period 198,000 153,000
--------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 144,000 $ 41,000
========= =========
The accompanying notes to financial statements are an integral part hereof.
4
<PAGE>
GHS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Note A - Basis of Preparation
The accompanying financial statements at March 31, 1996, for the three
months ended March 31, 1996 and 1995, 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, 1995 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.
5
<PAGE>
GHS, INC. AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
First Fiscal Quarter 1996 Compared to First Fiscal Quarter 1995
Results of Operations
Total revenues increased 51% to $1,278,000 for the quarter ended March 31,
1996 as compared to $848,000 for the same period in 1995. System sales from
Global Health Systems increased 120% from a year ago. Sales were the result on
the contract with the Chicago Department of Health (CDOH) and additional sales
to customers already using the system. Maintenance revenue increased 41% to
$307,000 from $218,000 for the same period, one year ago. The increase is from
the growth of the Company's facilities management services. These services
provide the customer with on site, hands on management of the Global Health
Information System (GHiS). In the second half of 1995 the Company began using
the GHiS to process claims for municipalities. The Company had $167,000 of
revenue from this segment in the first quarter. U.S. Neurosurgical (USN) which
manages stereotactic radiosurgery centers had a decrease of 23% in revenue as
compared to 1995. Revenue was $314,000 down from 408,000 in 1995. USN opened its
first Gamma Knife facility in the third quarter of 1994 at the Research Medical
Center in Kansas City, Missouri.
Total expenses increased 49% to $1,193,000 from $802,000 for the same
period in 1995. System costs increased 73% to $384,000 from $222,000 a year
earlier. The increase in costs was due to a large hardware purchase related to
the CDOH contract. Maintenance costs increased 92% to $211,000 from $110,000 a
year earlier. This was due to increased travel costs. Patient expenses declined
10% to $181,000 from $201,000 in the first quarter of 1995. Selling, general
administrative expenses increased 10% from a year earlier. Interest expense
increased to $128,000 from $98,000 a year earlier. This increase was due to
progress payments that USN has made for its second Gamma Knife, which will be
located in New York and is scheduled to open later this year. As a result of the
foregoing the Company had a net income of 85,000 for the period ended March
31,1996.
Liquidity and Capital Resources
For the three months ended March 31, 1996 net cash provided by operating
activities was $177,000 as compared to $34,000 in 1995. Depreciation and
amortization expense was $156,000 as compared to $149,000 for the same period in
1995. Depreciation of the Gamma Knife as well as amortization of capitalized
software are the major components of this expense. Accounts receivable decreased
$299,000 from December 31, 1995.
The Company had net cash used in investing activities of $89,000 as
compared to $40,000 a year earlier. The Company capitalized $50,000 of software
development in the first quarter. Net cash used in financing activities of
$122,000 was used to make payments on lease obligations related to the Gamma
Knife.
For the period ended March 31,1996, the company had a decrease of cash and
cash equivalents of $54,000 as compared to $112,000 in 1995. 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 as annual payment of $805,000.
6
<PAGE>
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 March
31, 1996.
7
<PAGE>
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 May 10, 1996 By /s/ Alan Gold
-------------------------- -----------------------------------
Alan Gold
Director and President
Chief Executive Officer
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 10-Q and is
qualified in it's entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 144,000
<SECURITIES> 0
<RECEIVABLES> 1,707,000
<ALLOWANCES> 14,000
<INVENTORY> 8,000
<CURRENT-ASSETS> 2,251,000
<PP&E> 2,985,000 <F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,930,000
<CURRENT-LIABILITIES> 1,695,000
<BONDS> 3,275,000
0
0
<COMMON> 65,000
<OTHER-SE> 2,014,000
<TOTAL-LIABILITY-AND-EQUITY> 6,930,000
<SALES> 1,278,000
<TOTAL-REVENUES> 1,278,000
<CGS> 878,000
<TOTAL-COSTS> 1,193,000
<OTHER-EXPENSES> 187,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 128,000
<INCOME-PRETAX> 85,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,000
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
<FN>
<F1> Net of depreciation.
</FN>
</TABLE>
