United States
Securities and Exchange Commission
Washington D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______________ to _______________
Commission File Number 0-15304
AVESIS INCORPORATED
---------------------------------------
(Exact name of small business issuer as
specified in its charter)
Delaware 86-0349350
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3724 North Third Street, Suite 300 Phoenix, Arizona 85012
---------------------------------------------------------
(Address of principal executive offices)
(602) 241-3400
---------------------------
(Issuer's telephone number)
The number of outstanding shares of the registrant's Common Stock on November 2,
1999 was 7,343,297.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
(Check One) [ ] Yes [X] No
1 of 12
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AVESIS INCORPORATED
BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,587,237
Receivables, net 290,490
Prepaid expenses and other 213,823
------------
Total current assets 3,091,550
Property and equipment, net 498,075
Deposits and other assets 345,681
------------
$ 3,935,306
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,265,840
Current installments of obligations under capital lease 10,288
Accrued expenses-
Compensation 47,033
Other 11,646
Deferred income 17,478
------------
Total current liabilities 1,352,285
Obligations under capital lease, excluding current installments 16,604
------------
Total liabilities 1,368,889
------------
Stockholders' equity:
Preferred stock $.01 par value, authorized 12,000,000 shares:
$3.75 Class A, senior nonvoting cumulative convertible
preferred stock, Series A, $.01 par value; authorized
1,000,000 shares; 297,660 issued and outstanding
(liquidation preference of $3.75 per share) 2,977
$10 Class A, nonvoting cumulative convertible preferred stock,
Series 2, $.01 par value; authorized 1,000,000 shares; 5,000
shares issued and outstanding (liquidation preference of
$10 per share) and $31,500 of dividends in arrears at $6.30
per share; dividends accrue at $.225 per share per calendar
quarter 50
Common stock of $.01 par value, authorized 20,000,000 shares;
7,343,297 shares issued and outstanding 73,433
Additional paid-in capital 10,434,475
Accumulated deficit (7,944,518)
------------
Total stockholders' equity 2,566,417
------------
$ 3,935,306
============
The accompanying notes are an integral part of these statements.
2
<PAGE>
AVESIS INCORPORATED
STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND FOUR MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Quarters Ended Four Months Ended
---------------------------- ----------------------------
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Service revenues:
Administration fees $ 2,071,843 $ 2,050,742 $ 2,758,762 $ 2,691,817
Provider fees 37,685 41,312 51,720 52,814
Buying group 330,984 394,597 470,051 538,044
Other 2,744 753 2,979 1,385
------------ ------------ ------------ ------------
Total service revenues 2,443,256 2,487,404 3,283,512 3,284,060
Cost of services 1,684,641 1,852,946 2,318,268 2,471,884
------------ ------------ ------------ ------------
Income from services 758,615 634,458 965,244 812,176
Gel and administrative expenses 284,458 236,317 377,370 315,717
Selling and marketing expenses 277,169 253,346 362,581 341,604
------------ ------------ ------------ ------------
Income from operations 196,988 144,795 225,293 154,855
------------ ------------ ------------ ------------
Non-operating income:
Other income 714 1,419 714 1,419
Interest income 28,905 12,543 37,627 15,967
Interest expense (773) (1,081) (1,146) (1,453)
------------ ------------ ------------ ------------
Net non-operating income 28,846 12,881 37,195 15,933
------------ ------------ ------------ ------------
Net income $ 225,834 $ 157,676 $ 262,488 $ 170,788
============ ============ ============ ============
Preferred stock dividends (26,240) (27,781) (34,987) (37,042)
Net income available to common
stockholders $ 199,594 $ 129,895 $ 227,501 $ 133,746
============ ============ ============ ============
Earnings per share - Basic $ 0.03 $ 0.02 $ 0.03 $ 0.02
============ ============ ============ ============
Earnings per share - Diluted $ 0.02 $ 0.02 $ 0.02 $ 0.02
============ ============ ============ ============
Weighted average common shares
outstanding - Basic 7,352,482 6,095,247 7,353,420 5,634,905
============ ============ ============ ============
Weighted average common and equivalent
shares outstanding - Diluted 10,525,181 9,302,937 10,514,801 8,887,419
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
AVESIS INCORPORATED
STATEMENTS OF CASH FLOWS
FOR THE FOUR MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
1999 1998
----------- -----------
Cash flows from operating activities:
Net income $ 262,488 $ 170,788
----------- -----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 47,797 37,727
Provision for losses on accounts receivable (14,771) -0-
Increase (decrease) in cash resulting
from changes in:
Receivables 65,286 158,847
Prepaid expenses and other 43,078 (75,852)
Other assets (111,762) (12,982)
Accounts payable (98,745) 165,358
Accrued expenses (49,262) (30,623)
Deferred income 5,276 5,824
Accrued rent -0- (7,834)
----------- -----------
Total adjustments (113,103) 240,465
----------- -----------
Net cash provided by operating activities 149,385 411,253
----------- -----------
Cash flows from investment activities:
Purchases of property and equipment (79,784) (58,006)
Proceeds from dispositions of property
and equipment -0- 1,370
----------- -----------
Net cash used in investing activities (79,784) (56,636)
----------- -----------
Cash flows from financing activities:
Principal payments under capital lease obligation (3,764) (3,457)
Exercise of stock options and warrants -0- 1,228,657
Payment of dividend on preferred stock (50,821) -0-
Payments for repurchase of common
and preferred stock (27,121) (658,262)
----------- -----------
Net cash (used in) provided by
financing activities (81,706) 566,938
----------- -----------
Net (decrease) increase in cash
and cash equivalents (12,105) 921,555
Cash and cash equivalents, beginning of period 2,599,342 993,610
----------- -----------
Cash and cash equivalents, end of period $ 2,587,237 $ 1,915,165
=========== ===========
The accompanying notes are an integral part of these statements.
4
<PAGE>
AVESIS INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Avesis Incorporated, and its wholly-owned subsidiaries, Avesis of Washington,
D.C. and Avesis Reinsurance Incorporated (collectively, the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for a complete financial statement presentation. In the opinion of Management,
such unaudited interim information reflects all adjustments, consisting only of
a normal recurring nature, necessary to present the Company's financial position
and the results of operations and cash flows for the periods presented. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for a full fiscal year. These condensed consolidated
financial statements should be read in conjunction with the Company's audited
consolidated financial statements included in the Company's Annual Report on
Form 10-KSB, for the year ended May 31, 1999.
Change in Fiscal Year - On October 5, 1999, the Company changed its fiscal
year-end from May 31 to December 31 to conform to the year-end of Avesis
Reinsurance Incorporated ("ARI"). Reinsurance corporations are required to have
a December 31 fiscal year-end and submit calendar year-end audited financial
statements by the Arizona Department of Insurance.
NOTE 2. EARNINGS PER SHARE
A summary of the reconciliation from basic earnings per share to diluted
earnings per share for the quarters and four months ended September 30, 1999 and
1998 follows:
<TABLE>
<CAPTION>
Quarter ended Quarter ended
September 30, 1999 September 30, 1998
----------- -----------
<S> <C> <C>
Net earnings $ 225,834 $ 157,676
Less: preferred stock dividends 26,240 27,781
----------- -----------
Income available to common stockholders 199,594 129,895
=========== ===========
Basic EPS - weighted average shares outstanding 7,352,482 6,095,247
=========== ===========
Basic earnings per share $ 0.03 $ 0.02
=========== ===========
Basic EPS - weighted average shares outstanding 7,352,482 6,095,247
Effect of dilutive securities:
Stock Purchase Options - common stock 160,013 --
Convertible preferred stock 3,012,687 3,207,690
----------- -----------
Dilutive EPS - weighted average shares outstanding 10,525,181 9,302,937
Net earnings $ 225,834 $ 157,676
----------- -----------
Diluted earnings per share $ 0.02 $ 0.02
=========== ===========
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Four Months ended Four Months ended
September 30, 1999 September 30, 1998
----------- -----------
<S> <C> <C>
Net earnings $ 262,488 $ 170,788
Less: preferred stock dividends 34,987 37,042
----------- -----------
Income available to common stockholders 227,501 133,746
=========== ===========
Basic EPS - weighted average shares outstanding 7,353,420 5,634,905
=========== ===========
Basic earnings per share $ 0.03 $ 0.02
=========== ===========
Basic EPS - weighted average shares outstanding 7,353,420 5,634,905
Effect of dilutive securities:
Stock Purchase Options - common stock 145,313 --
Convertible preferred stock 3,016,067 3,242,514
----------- -----------
Dilutive EPS - weighted average shares outstanding 10,514,801 8,877,419
Net earnings $ 262,488 $ 170,788
----------- -----------
Diluted earnings per share $ 0.02 $ 0.02
=========== ===========
</TABLE>
NOTE 3. USE OF ESTIMATES
Management of the Company has made certain estimates and assumptions
relating to the reporting of assets, liabilities, revenues and expenses to
prepare the financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE QUARTERS AND FOUR MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
The statements contained in this discussion and analysis regarding
management's anticipation of adequacy of cash reserves for operations, adequacy
of reserves for claims, anticipated level of operating expenses related to new
Members, viability of the Company, cash flows and marketability of the Company
constitute "forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements involve risks and
uncertainties, which could cause actual results to differ materially from the
forward-looking statements. Management's anticipation is based upon assumptions
regarding the market in which the Company operates, the level of competition,
the level of demand for services, the stability of costs, the retention of
Sponsors and Members enrolled in the Company's benefit programs, the relevance
of the Company's historical performance, Year 2000 issues and the stability of
the regulatory environment. Any of these assumptions could prove inaccurate, and
therefore there can be no assurance that the forward-looking information will
prove to be accurate.
Avesis Incorporated, a Delaware corporation (together with its
subsidiaries, the "Company"), incorporated in June 1978, markets and administers
vision, dental, chiropractic and hearing managed care and discount programs
("Programs") nationally. The Programs are designed to enable participants
("Members"), who are enrolled through various sponsoring organizations such as
insurance carriers, HMOs, Blue Cross and Blue Shield organizations,
corporations, unions and various associations ("Sponsors"), to realize savings
on purchases of services and products through networks of providers such as
ophthalmologists, optometrists, opticians, dentists, chiropractors and hearing
specialists ("Providers"). The Company incorporated Avesis Reinsurance Inc. in
October 1999, to enable the Company to insure risks as a life and disability
reinsurer, thereby maximizing the potential revenues and earnings related to its
Programs.
6
<PAGE>
The Company derives its administration fee revenue from plan Sponsors who
customarily pay a set fee per Member per month. Administration fee revenue is
recognized on the accrual basis during the month that the Member is entitled to
use the benefit. Certain Sponsors pay for services rendered by the Company on a
fee for service basis. Based upon the type of Program (e.g., managed care,
discount, third party administration) the Provider's claim for service provided
to Members is paid either by the Company, Sponsor, Member or combination
thereof. Buying Group revenues are recorded at the total amount billed to
participating Providers and recognized in the month the product is shipped.
Vision Provider fee revenue is based upon a percentage of materials sold by
certain participating Providers under certain plans.
RESULTS OF OPERATIONS:
The following tables detail the Company's major revenue and expense
categories for the quarters and four months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
September 30, 1999 September 30, 1998 Increase/(Decrease)
------------------------ ------------------------ ------------------------
% of Total % of Total
Service Revenue Service Revenue % Change
Revenue: --------------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total Service Revenue $2,443,256 100% $2,487,404 100% $ (44,148) (2%)
Vision & Hearing Program 1,865,228 76% 1,746,235 70% 118,993 7%
Vision Provider Fee 37,685 2% 41,312 2% (3,627) (9%)
Dental Program 206,607 8% 301,228 12% (94,621) (31%)
Buying Group Program 330,984 14% 394,597 16% (63,613) (16%)
Expenses:
Cost of Services 1,684,641 69% 1,852,946 74% (168,305) (9%)
General & Administrative 284,458 12% 236,317 10% 48,141 20%
Selling & Marketing 277,169 11% 253,346 10% 23,823 9%
Net Income 225,834 9% 157,676 6% 68,158 43%
Four Months Ended Four Months Ended
September 30, 1999 September 30, 1998 Increase/(Decrease)
------------------------ ------------------------ ------------------------
% of Total % of Total
Service Revenue Service Revenue % Change
Revenue: --------------- --------------- ----------
Total Service Revenue $3,283,512 100% $3,284,060 100% $ (548) (0%)
Vision & Hearing Program 2,486,302 76% 2,286,988 70% 199,314 9%
Vision Provider Fee 51,720 2% 52,815 2% (1,095) (2%)
Dental Program 272,448 8% 398,496 12% (126,048) (32%)
Buying Group Program 470,051 14% 538,044 16% (67,993) (13%)
Expenses:
Cost of Services 2,318,268 71% 2,471,884 75% (153,616) (6%)
General & Administrative 377,370 11% 315,717 10% 61,653 20%
Selling & Marketing 362,581 11% 341,604 10% 20,977 6%
Net Income 262,488 8% 170,788 5% 91,700 54%
</TABLE>
Past and future revenues in all lines of business are directly related to
the number of Members enrolled in the Company's benefit programs. However, there
may be significant pricing differences to Sponsors depending on whether the
7
<PAGE>
benefit offered is funded in part or whole by the plan Sponsor. Two major
Sponsors accounted for 48% and 14% of total service revenues during the four
months ended September 30, 1999, and three major Sponsors accounted for 28%, 17%
and 14% of total service revenues during the four months ended September 30,
1998. Two of the Company's three major Sponsors accounted for separately during
the four months ended September 30, 1998 were combined prior to the current
fiscal year. The Company is substantially dependent on a limited number of
Sponsors and may be materially adversely affected by termination of its
agreements with those Sponsors.
The increase in total service revenues is principally due to a vision plan
Sponsor who has increased the level of benefit of its Members, over the prior
year, and a second vision plan Sponsor which has added approximately 100,000
Members since September 1998.
The Company had approximately 710,000 vision and 4,000 hearing Members as
of September 30, 1999, compared to approximately 800,000 vision and 5,000
hearing Members as of September 30, 1998. The increase in vision and hearing
revenue during the quarter and four months ended September 30, 1999 as compared
to the same periods in the previous fiscal year was largely the result of the
two vision plan Sponsors mentioned above. The decrease in vision Members was
partially caused by the termination of an account with approximately 91,000
Members in a discount program, which did not provide significant revenue to the
Company. Other changes in the number of vision and hearing Members occurred due
to Sponsors' employee or Member fluctuations in the normal course of business.
Vision provider fee revenue remained constant as a percentage of total service
revenues from the four months ended September 30, 1998 to the four months ended
September 30, 1999.
The Company had approximately 124,000 dental Members as of September 30,
1999, compared to approximately 159,000 dental Members as of September 30, 1998.
The decline of the Company's dental program revenue and membership resulted from
a Sponsor's loss of approximately 23,000 Members who participated in the
Company's dental program. There also have been reductions in Members from
various Sponsors in the normal course of business.
The Company makes available to its vision Providers a buying group program
that enables the Provider to order eyeglass frames from the manufacturers at
discounts from wholesale costs. These discounted prices are generally lower than
a Provider could negotiate individually, due to the large volume of purchases of
the buying group.
Costs of Services primarily relate to servicing Members, Providers, and
Sponsors under the Company's vision, hearing, dental and chiropractic benefit
programs as well as the cost of frames that are sold through the Company's
buying group program as discussed above. Cost of Services decreased as a
percentage of total service revenues during the quarter and four months ended
September 30, 1999, as compared to the same periods in the prior fiscal year.
The decrease in Cost of Services in the current periods as compared to the
previous year primarily resulted from lower Provider claims for services on
which the Company is responsible for payment. However, Cost of Services
increased slightly as a percentage of total service revenue during the four
months ended September 30, 1999 (71%) as compared to the average for the entire
previous fiscal year (70%). This increase was largely due to the Company's focus
on Customer Service, Network Development and Provider communication.
8
<PAGE>
General and Administrative expenses increased as a percentage of total
service revenue during the quarter and four months ended September 30, 1999, as
compared to the quarter and four months ended September 30, 1998. The increase
was largely due to increases in rent, depreciation and equipment rentals related
to the expansion of the Company's principal offices beginning February 1999. The
Company's payments under its Management Agreement with National Health
Enterprises, Inc. (an affiliate) increased by $50,000 to $300,000 annually as of
June 1, 1999. The Company also began making monthly payments under its
Investment Advisor Agreement with Richter & Co., Inc. (an affiliate) at an
annual rate of $30,000 as of June 1, 1999.
Selling and marketing expenses include marketing fees, broker commissions,
inside sales and marketing salaries and related expenses, travel related to the
Company's sales activities and an allocation of related overhead expenses. The
increase in expenses during the quarter and four months ended September 30, 1999
as compared to the same periods in the previous fiscal year was primarily due to
the payroll and related expenses for a senior salesperson that joined the
Company during September 1998. A significant amount of the Company's marketing
activities has been outsourced to management consultants, National Health
Enterprises (an affiliate).
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $2,587,237 as of September 30,
1999, compared to $2,599,342 as of May 31, 1999. The decrease of $12,105 is
primarily due to the Company's net income earned during the four months ended
September 30, 1999, offset by fixed asset purchases, the payment of a dividend
on the Company's Series A preferred stock and the transfer of $100,000 to a
certificate of deposit, included in other assets, related to the formation of
ARI. Current cash on hand and cash provided from operations is expected to allow
the Company to sustain operations for the foreseeable future.
As of September 30, 1999, the Company had $1,265,841 of Accounts Payable,
compared to $1,364,586 as of May 31, 1999. Included in Accounts Payable are
reserves for claims of $1,057,850 as of September 30, 1999, and $1,082,072 as of
May 31, 1999. The reserves are for incurred but not reported claim
reimbursements to Providers who participate in certain managed care programs.
The Company believes this reserve is adequate based upon historical results.
The Company expects to pay dividends of approximately $49,000 on the Series
A Preferred Stock on December 1, 1999.
9
<PAGE>
YEAR 2000 COMPLIANCE
The Year 2000 issue is the result of computer systems that were written
using two digits rather than four to define the applicable year. This
programming decision may prevent such systems from accurately processing dates
occurring in the Year 2000 and thereafter. This could result in system failures
or in miscalculations causing a disruption of operations, including, but not
limited to, a temporary inability to process Member eligibility information, to
process claims payments, or to engage in routine business activities and
operations.
During July 1997, the Company contracted with a third party vendor to
develop new systems to support the Company's claims payment, customer and
provider service, quality assurance and network development functions. The
Company missed its anticipated implementation date for the new system of
September 1, 1999, due to issues with data conversion from its current systems.
As of October 4, 1999, the issues had been addressed in a satisfactory manner
and the new system was fully implemented as of November 1, 1999. As of September
30, 1999, the Company had paid approximately $440,000 for software development
and related hardware, which was capitalized. The Company expects to incur
approximately $44,000 of additional software development and related hardware
expenses during fiscal 2000.
The Company has reviewed all other internally used software and believes
that its systems that have recently been developed and are currently under
testing and all other critical applications are Year 2000 compliant. Based upon
its current computer operations and systems development, the Company believes
that its risks related to Year 2000 compliance are minimal. The Company does not
presently anticipate that any additional costs to address the Year 2000 issue
will have a material adverse effect on the Company's financial condition,
results of operations or liquidity.
The Company is in the process of contacting all vendors and clients who
forward data electronically to determine the extent of their compliance and to
plan accordingly. Based upon information recently received from third parties,
the Company believes that all significant vendors and clients have Year 2000
remediation efforts underway. The Company's five largest Sponsors that
collectively account for greater than 90% of the total administration fee
revenue either electronically transmit data using a four-digit year or forward
data in a hard copy format. To the extent that the Company's vendor and client
data are not Year 2000 compliant, the Company's new systems have been written
with the flexibility to translate the data accordingly into a Year 2000
compliant format. While the Company believes that its risks related to
disruption arising from Year 2000 compliance by vendors and its clients are
minimal, it does not have any control over these third parties and cannot
determine to what extent future operating results may be adversely affected by
the failure of third parties to address Year 2000 issues successfully.
10
<PAGE>
PART II OTHER INFORMATION
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(b) The Certificate of Designation for the Company's Class A, Senior Nonvoting
Cumulative Convertible Preferred Stock, Series A, restricts the payment of
dividends on the Company's Series 2 Preferred Stock and Common Stock.
Accordingly, the Company may not pay the quarterly dividend otherwise
scheduled for payment during October 1999, on shares of its Series 2
Preferred Stock. Such dividend is cumulative, and the total dividend
arrearage is $31,500, or $6.30 per share, as of September 30, 1999 for all
5,000 shares outstanding.
ITEM 5. OTHER INFORMATION
RETIREMENT OF STOCK INFORMATION
As previously disclosed in the Company's Form 10-QSB for the quarter ended
August 31, 1999, filed on October 13, 1999, the Company made the following
stock repurchases and retirements:
Series A Total Purchase Price
Date Common Shares Shares including Commissions
---- ------------- ------ ---------------------
September 3, 1999 13,000 $ 6,392
September 13,1999 3,500 $17,522
Subsequent to the filing of the Company's Form 10-QSB for the quarter ended
August 31, 1999, the Company made the following stock repurchase and
retirement:
Series A Total Purchase Price
Date Shares including Commissions
---- ------ ---------------------
November 1, 1999 7,500 $37,522
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index following the Signatures page, which is incorporated
herein by reference.
(b) No reports on Form 8-K were filed during the quarter ended September 30,
1999.
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AVESIS INCORPORATED
(Registrant)
Date: 11/11/99 /s/ Neal A. Kempler
----------------------------------------
Neal A. Kempler, Vice President
and Secretary
Date: 11/11/99 /s/ Joel H. Alperstein
----------------------------------------
Joel H. Alperstein, Director of Finance
and Treasurer
(Principal Financial Officer)
12
<PAGE>
Avesis Incorporated
Exhibit Index
Form 10-QSB for the Quarter Ended September 30, 1999
Exhibit No. Description Incorporated by Reference from the:
- ----------- ----------- -----------------------------------
11 Statement re: Computation Earnings (Loss) per Share Computation,
of per Share Earnings see Note 2 to the Notes to Condensed
Consolidated Financial Statements
27 Financial Data Schedule Filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS IN THE COMPANY'S FORM 10-QSB FOR THE QUARTER ENDED
SEPTEMBER 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 2,587,237
<SECURITIES> 0
<RECEIVABLES> 316,751
<ALLOWANCES> (26,261)
<INVENTORY> 0
<CURRENT-ASSETS> 3,091,550
<PP&E> 1,523,414
<DEPRECIATION> (1,025,339)
<TOTAL-ASSETS> 3,935,306
<CURRENT-LIABILITIES> 1,352,286
<BONDS> 0
0
3,027
<COMMON> 73,433
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,935,306
<SALES> 0
<TOTAL-REVENUES> 3,283,512
<CGS> 2,318,268
<TOTAL-COSTS> 739,951
<OTHER-EXPENSES> 38,341
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,146)
<INCOME-PRETAX> 262,488
<INCOME-TAX> 0
<INCOME-CONTINUING> 262,488
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 262,488
<EPS-BASIC> 0.03
<EPS-DILUTED> 0.02
</TABLE>
