<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 2000
----------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________________ TO _______________
COMMISSION FILE NUMBER 0-16453
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HEARx LTD
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EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
DELAWARE 22-2748248
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(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1250 NORTHPOINT PARKWAY, WEST PALM BEACH, FLORIDA 33407
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 478-8770
--------------------------
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT
INDICATE BY CHECK [X] 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
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ON OCTOBER 31, 2000, 11,857,685 SHARES OF THE REGISTRANT'S COMMON STOCK WERE
OUTSTANDING.
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets 3
September 29 , 2000 and December 31, 1999
Consolidated Statements of Operations 4
Nine months ended September 29, 2000 and October 1, 1999
Consolidated Statements of Operations 5
Three months ended September 29, 2000 and October 1, 1999
Consolidated Statements of Cash Flows 6
Nine months ended September 29, 2000 and October 1,1999
Notes to Consolidated Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis of Financial Condition 9 - 12
and Results of Operations
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 13
Item 6. Exhibits and reports on Form 8-K 13 - 14
Signatures 15
</TABLE>
2
<PAGE> 3
HEARx LTD.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 29, December 31,
2000 1999
------------- -------------
CURRENT ASSETS: (unaudited) (audited)
<S> <C> <C>
Cash and cash equivalents $ 2,181,563 $ 2,857,187
Investment securities 3,038,264 900,000
Accounts and notes receivable, less allowance for
doubtful accounts of $ 187,827 and $535,609 5,180,699 7,027,536
Inventories 516,972 551,460
Prepaid expenses 467,849 531,169
Other assets 2,420,596 349,391
------------- -------------
Total current assets 13,805,943 12,216,743
PROPERTY AND EQUIPMENT - NET 7,645,699 8,492,708
OTHER ASSETS 1,988,901 2,170,300
------------- -------------
$ 23,440,543 $ 22,879,751
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 7,999,169 $ 8,202,010
Restructure reserve 69,778 214,656
Accrued salaries and other compensation 588,531 1,562,510
Current maturities of long term debt 71,137 294,993
Dividends payable 1,176,056 1,003,759
------------- -------------
Total current liabilities 9,904,671 11,277,928
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LONG TERM DEBT, LESS CURRENT MATURITIES 262,857 322,332
------------- -------------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Non-redeemable preferred stock:
(Aggregate liquidation preference $ 13,491,058 and $9,318,757)
$1 par, 2,000,000 shares authorized
2000 Convertible 500 & 0 shares outstanding 500 -
1998 Convertible 5,515 & 7,315 shares outstanding 5,515 7,315
1997 Convertible 0 & 1,000 shares outstanding - 1,000
------------- -------------
Total preferred stock 6,015 8,315
Common stock; $.10 par; 20,000,000 shares
authorized; 12,364,139 & 11,547,337 shares
issued 1,236,414 1,154,734
Additional paid-in capital 92,124,554 87,307,886
Accumulated deficit (77,727,483) (75,083,251)
Accumulated other comprehensive income 4,641 -
Unamortized deferred compensation (9,453) (37,813)
Treasury stock, at cost:463,860 & 388,760 common shares (2,361,673) (2,070,380)
------------- -------------
Total stockholders' equity 13,273,015 11,279,491
------------- -------------
$ 23,440,543 $ 22,879,751
============= =============
</TABLE>
See accompanying notes to the consolidated financial statements
3
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HEARX LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 29, 2000 AND OCTOBER 1, 1999
<TABLE>
<CAPTION>
2000 1999
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
NET REVENUES $41,643,215 $35,721,997
------------ ------------
COSTS AND EXPENSES:
Cost of products sold 14,056,328 11,176,580
Center operating expenses 21,241,810 19,038,006
General and administrative expenses 6,479,019 5,750,521
Depreciation and amortization 1,923,165 1,780,042
Interest expense 22,502 19,019
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Total costs and expenses 43,722,824 37,764,168
------------ ------------
LOSS BEFORE MINORITY INTEREST (2,079,609) (2,042,171)
MINORITY INTEREST - (13,563)
------------ ------------
NET LOSS (2,079,609) (2,055,734)
DIVIDENDS ON PREFERRED STOCK (564,623) (591,754)
------------ ------------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $(2,644,232) $(2,647,488)
============ ============
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.22) $ (0.25)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING 11,826,380 10,697,459
============ ============
</TABLE>
See accompanying notes to the consolidated financial statements
4
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HEARx LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 29, 2000 AND OCTOBER 1, 1999
<TABLE>
<CAPTION>
2000 1999
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
NET REVENUES $13,347,032 $13,262,242
------------ ------------
COSTS AND EXPENSES:
Cost of products sold 4,226,554 4,238,203
Center operating expenses 7,234,736 6,606,358
General and administrative expenses 2,208,636 1,981,108
Depreciation and amortization 636,873 594,714
Interest expense 6,220 6,246
------------ ------------
Total costs and expenses 14,313,019 13,426,629
------------ ------------
LOSS BEFORE MINORITY INTEREST (965,987) (164,387)
MINORITY INTEREST - (211,115)
------------ ------------
NET LOSS (965,987) (375,502)
DIVIDENDS ON PREFERRED STOCK (261,852) (165,724)
------------ ------------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $(1,227,839) $ (541,226)
============ ============
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.10) $ (0.05)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING 11,913,845 10,953,351
============ ============
</TABLE>
See accompanying notes to the consolidated financial statements
5
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HEARx LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 29, 2000 AND OCTOBER 1, 1999
<TABLE>
<CAPTION>
2000 1999
------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,079,609) $(2,055,734)
Adjustments to reconcile net loss to net cash
Used by operating activities:
Depreciation and amortization 1,923,165 1,780,042
Provision(recoveries) for doubtful accounts (184,016) 422,500
Loss on disposition of equipment 32,040 14,925
Minority interest - 13,563
(Increase) decrease in:
Accounts and notes receivable 2,030,853 (3,734,353)
Inventories 34,489 (35,655)
Prepaid expenses 63,320 90,748
Other current assets (2,034,349) 91,487
Increase (decrease) in:
Accounts payable (202,843) 1,305,615
Accrued expenses (1,118,856) (286,965)
------------- -------------
Net cash used by operating activities (1,535,806) (2,393,827)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (937,879) (1,209,151)
Proceeds from sale of equipment 2,587 -
Purchase of investments (9,130,575) (2,750,000)
Proceeds from maturities of investments 6,996,951 7,859,174
Net cash from consolidating HEARx West - 656,223
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Net cash (used)/provided by investing activities (3,068,916) 4,556,246
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of:
Long-term debt - 32,822
Principal payments:
Long-term debt (283,332) (500,284)
Acquisition of treasury stock (291,293) (1,474,363)
Proceeds from the issuance of stock, net of expenses 4,503,723 (155,717)
------------- -------------
Net cash provided(used) by financing activities 3,929,098 (2,097,542)
------------- -------------
Net (decrease) increase in cash and cash equivalents (675,624) 64,877
------------- -------------
Cash and cash equivalents at beginning of period 2,857,187 2,650,111
------------- -------------
Cash and cash equivalents at end of period $ 2,181,563 $ 2,714,988
============= =============
</TABLE>
See accompanying notes to the consolidated financial statements
6
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HEARx LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation have been
included. Operating results for the three and nine month periods ended
September 29, 2000 are not necessarily indicative of the results that
may be expected for the year ending December 29, 2000. For further
information, refer to the audited consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K
for the year ended December 31, 1999.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reclassifications
Certain amounts in the 1999 consolidated financial statements have been
reclassified in order to conform to the 2000 presentation.
Segments
The Company's operations are organized by centers into three geographic
regions, the Northeast, Florida, and California. These regions comprise
one operating segment. Net sales from the Northeast, Florida and
California were approximately $10.4 million, $18.1 million and $13.1
million, respectively, for the nine months ended September 29, 2000 as
compared to $7.9 million, $18.2 million and $9.3 million, respectively
for the comparable period of 1999. Operating profits at the center
level for the nine months ended September 29, 2000, were approximately
$800,000, $3,500,000 and $1,900,000 for the Northeast, Florida and
California, respectively, as compared to an operating loss of
approximately $300,000 for the Northeast, and operating profit of
approximately $4,000,000 and $1,900,000, for Florida and California,
respectively, for the comparable period of 1999. Operating profits at
the center level are computed before corporate general and
administrative expenses, depreciation/amortization and preferred
dividends.
2. STOCKHOLDERS' EQUITY
Series I Convertible Preferred Stock
On May 9, 2000, the Company closed a private placement of its equity
securities with the sale of 500 shares of a newly designated series of
convertible preferred stock with a 7% dividend rate and warrants to
purchase up to 203,390 shares of common stock, for an aggregate
purchase price of $5 million. Dividends are payable upon conversion of
the preferred stock in cash or common stock at the election of the
Company. The preferred stock is convertible after August 6, 2000 at a
fixed conversion price of $4.46 per share until January 2001. From
January 2001 until May 2001, the holders may request redemption of the
shares of preferred stock at 110% of the stated value plus accrued
dividends. If the Company elects not to redeem the shares, the
conversion price converts to the lesser of $4.46 or the market price
(defined as the average of the 5 lowest closing prices for 30 days
preceding the conversion date) at the time of conversion. The preferred
stock automatically converts to common stock in three years. The
Company received proceeds of $4,585,000, net of cash commissions and
certain expenses. The Company has registered for resale the common
stock underlying the preferred stock and warrants.
7
<PAGE> 8
HEARx LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Conversion of Preferred Stock into shares of Common Stock
During the nine months ended September 29, 2000, 1,000 shares of the
1997 Convertible Preferred Stock and 1,800 shares of the 1998
Convertible Preferred Stock were converted into 299,214 and 517,988
shares of Common Stock, respectively.
Common Stock
During the nine months ended September 29, 2000, no warrants were
exercised. Employee stock options were exercised resulting in the
issuance of 1,600 shares of Common Stock.
3. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," (SFAS 133"). As amended by SFAS
No. 137, the Company is required to adopt SFAS 133 in the first quarter
of the year ending December 28, 2001. SFAS 133 establishes methods of
accounting for derivative financial instruments and hedging activities
related to those instruments as well as other hedging activities.
Because the Company currently holds no derivative financial instruments
and does not currently engage in hedging activities, adoption of SFAS
133 is expected to have no material impact on the Company's financial
condition or results of operations.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's strategy for continuing and accelerating center sales
growth and market penetration includes both aggressively advertising to
the non-insured self-pay or retail market and positioning the Company
as the leading provider of hearing care to the benefited populations
covered by managed care contracts.
HEARx intends, as its long-term goal, to establish a nationwide network
of hearing care centers, located in the metropolitan areas or regions
with concentrations of elderly consumers who are more likely to need
the Company's products and services. The Company is currently expanding
its hearing care center network through its joint venture, HEARx West
LLC, in California. The joint venture agreement provides for a 50/50
ownership by the Company and the Permanente Federation and its
affiliate Kaiser Foundation Health Plan, with the centers bearing the
HEARx name. For the nine months ended September 29, 2000, the Company
operated 19 of these centers in California.
During the nine months ended September 29, 2000, the Company formed two
strategic marketing partnerships, one with TIME Magazine ("TIME") and
one with Reader's Digest. As part of each program, patients visiting
HEARx centers will be offered an opportunity to take advantage of a
special promotion of these magazines large print editions.
TIME, as part of its agreement with HEARx, will include a HEARx offer
to TIME subscribers and prospective subscribers residing within zip
codes serviced by HEARx. Both of these groups will receive a discount
at HEARx when purchasing a hearing aid in addition to a free one year
subscription of either TIME regular or Time large print edition.
HEARx will be promoting Reader's Digest Large Print Edition in the
HEARx network of hearing care centers and in its patient mailings.
Reader's Digest Large Print will be including a special offer from
HEARx to current subscribers of Reader's Digest Large Print Edition.
HEARx will also receive a special credit for use in advertising in
Reader's Digest Large Print Edition. Reader's Digest Large Print
currently reaches over 500,000 people each month with more than 35
percent residing in areas currently serviced by HEARx.
During the nine months ended September 29, 2000, the Company entered
into an agreement with America Online for local advertising placement
across the America Online ("AOL") family of brands. Under the
agreement, the Company will receive distribution in the Florida Health
section throughout the Digital City Network and distribution in the
local areas of the AOL brands including Digital City, AOL, CompuServe,
MapQuest, Moviefone and Netscape. The Company believes this agreement
will significantly expand its reach to a growing number of consumers on
the internet.
The Company also launched a new website, HEARx.com, which was designed
to increase patient referrals to HEARx centers. The website contains
educational material regarding hearing loss and types of hearing aids
directed to the adult children of potential patients. The Company plans
to offer for purchase on the website various hearing enhancement
devices designed for the hearing impaired such as smoke detectors and
alarm clocks.
The Company has developed a national call center, which will begin beta
testing for five Florida centers in mid-November. The national call
center will be responsible for both inbound and outbound marketing. The
call center was designed to increase the effectiveness of advertising,
and is expected to be fully operational within six months.
9
<PAGE> 10
Effective January 1, 2000, several insurance companies with which the
Company has contracts significantly changed their contract benefits or
service areas. While some insurance companies increased their Medicare
benefits, others either limited or discontinued hearing benefits for
Medicare patients. The Company believes these changes will not have a
long-term material adverse effect on the Company's financial condition
or results of operations. The Company also believes that the loss of
any single managed care contract will not have a long term material
adverse effect on its financial condition or results of operations.
RESULTS OF OPERATIONS
For the three months ended September 29, 2000 compared to the three
months ended October 1,1999
Net revenues increased $84,790, to $13,347,032 in the third quarter of
2000 from $13,262,242 in the comparable quarter of 1999. Sales remained
relatively constant for the Company during the quarter despite the
hearing aid industry on a whole experiencing a decrease in sales for
the quarter.
Cost of products sold decreased $11,649, to $4,226,554 in the third
quarter of 2000 from $4,238,203 in the comparable quarter of 1999. The
modest decrease in the cost of products sold is a direct result of
retail pricing and changing marketing strategies. The cost of products
sold as a percent of net revenues was 32% for both the third quarter of
2000 and the third quarter of 1999.
Center operating expenses increased $628,378, or 10%, to $7,234,736 in
the third quarter of 2000 from $6,606,358 in the comparable quarter of
1999. The increase is partially because there were only 16 HEARx West
centers in the third quarter of 1999, compared to 19 HEARx West centers
in full operation during the comparable quarter of 2000. In addition,
the Company continued to intensify its aggressive marketing program,
increasing advertising expense to $1,811,746, up from $1,353,779 for
the comparable quarter of 1999. Center operating expenses as a percent
of revenue increased to 54% in the third quarter of 2000, from 50% in
the third quarter of 1999. The percentage increase is due to the
increase in expenses and revenues remaining constant.
General and administrative expenses increased $227,528 to $2,208,636 in
the third quarter of 2000 from $1,981,108 in the comparable quarter of
1999. This increase is partially due to the increase in wages and
fringe benefits associated with the expansion of corporate
administrative functions.
At the center level, all three geographic areas serviced by HEARx,
Florida, the Northeast and California (operating under HEARx West) were
profitable. In Florida and California sales were down approximately 5%
and 2%, respectively, compared to the 1999 comparable quarter, while in
the Northeast sales were up approximately 15%.
Depreciation and amortization expense increased $42,159, or 7%, to
$636,873 in the third quarter of 2000 from $594,714 in the comparable
quarter of 1999. This increase is attributable to the increase of
depreciable assets due to the opening of 3 additional HEARx West
centers in California since the end of the third quarter of 1999 and
the relocation of certain centers within Florida during the third
quarter of 2000.
For the nine months ended September 29, 2000 compared to October 1,
1999
Net revenues increased $5,921,218, or 17%, to $41,643,215 in the first
nine months of 2000 from $35,721,997 in the comparable period of 1999.
The increase in net revenues
10
<PAGE> 11
resulted from the increase of revenues from HEARx West and the
Northeast and an increase in the Company's retail business arising from
the Company's aggressive advertising campaign.
Cost of products sold increased $2,879,748, or 26%, to $14,056,328 in
the first nine months of 2000 from $11,176,580 in the comparable period
of 1999. Approximately 57% of the 26% increase represents the increase
attributable to HEARx West increased product sales. The remainder of
the increase is attributable to the increase in product sales from
other centers. The cost of products sold as a percent of net revenues,
which was 34% and 31% for the first nine months of 2000 and 1999
respectively, fluctuates from period to period due to retail pricing
and changing marketing strategies.
Center operating expenses increased $2,203,804, or 12%, to $21,241,810
in the first nine months of 2000 from $19,038,006 in the comparable
period of 1999. The increase is partially because there were only 16
HEARx West centers in the first nine months of 1999, many of which were
not then fully operational, compared to 19 HEARx West centers in full
operation during the comparable period of 2000. In addition, the
Company continued to intensify its aggressive marketing program
increasing advertising expense to $5,308,964 up from $3,711,969 for the
comparable period of 1999. These increases were partially offset by the
recovery of bad debts totaling $184,016. Center operating expenses as a
percent of revenue decreased in the first nine months of 2000 to 51%
from 53% in the first nine months of 1999. The percentage decrease is
due to the increase in revenues.
General and administrative expenses increased $728,498, or 13% to
$6,479,019 in the first nine months of 2000 from $5,750,521 in the
comparable period of 1999. This increase is partially due to the
increase in wages and fringe benefits associated with the expansion of
corporate administrative functions. Travel costs also increased to
$229,516 for the nine months ended September 29, 2000 from $151,491 in
the comparable period of 1999 due to increased travel for HEARx West
business. In addition, corporate marketing expense increased $123,884,
to $385,261 in the first nine months of 2000 from $261,378 in the
comparable period of 1999.
Depreciation and amortization expense increased $143,123, or 8%, to
$1,923,165 in the first nine months of 2000 from $1,780,042 in the
comparable period of 1999. This increase is attributable to the
additional depreciation related to the opening 3 additional HEARx West
centers in California since the end of the third quarter of 1999 and
the relocation of certain centers within Florida during the first nine
months of 2000.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased $2,962,457 to $3,901,272 as of September 29,
2000 from $938,815 as of December 31, 1999. On May 9, 2000 the Company
completed a private placement of its preferred stock providing the
Company net proceeds of $4,585,000. The Company believes that its
current cash, and revenues from operations will be sufficient to
support the Company's capital needs through the year 2000, although
there can be no assurance that unexpected capital needs will not arise
for which existing resources may be insufficient.
Net cash used by operating activities decreased from $2,393,827 for the
first nine months of 1999, to $1,535,806 for the first nine months of
2000. The decrease in cash being used by operating activities was
primarily the result of the change in current assets, including
accounts and notes receivable, from net cash used in 1999 of
approximately $ 3.6 million to net cash provided of approximately
$94,000 offset against the change in accounts payable and accrued
expenses from net cash provided in 1999 of approximately $1.0 million
to net cash used of approximately $1.3 million.
11
<PAGE> 12
Net cash provided by investing activities decreased from $4,556,246 for
the first nine months of 1999, to cash being used by investing
activities of $3,068,916 for the first nine months of 2000. Net funds
from the maturity of investments were $6,996,951 for the first three
quarters of 2000, which were offset by the purchase of investments of
$9,130,575 and property and equipment of $937,879.
Cash from financing activities increased from cash being used by
financing activities of $2,097,542 in the first three quarters of 1999
to cash being provided by financing activities of $3,929,098 in the
first three quarters of 2000. This increase was primarily the result of
net proceeds of approximately $4,585,000, from a preferred stock
offering during in the second quarter of 2000.
Except for historical information provided in this discussion and
analysis, the discussion includes forward looking statements, including
those concerning the expected effect of SFAS 133 on the Company; the
Company's goal of establishing a nationwide center network; plans for
the TIME and Reader's Digest Large Print Edition promotionals; current
working capital and revenues from operations being sufficient to
support the Company's capital; the Company's belief concerning the
effect on its financial condition or operations of changes in benefits
announced by some insurance companies and the loss of any single
contract. Such statements involve certain risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements. Potential risks and uncertainties include
industry and market conditions, especially those affecting managed
health care; unforeseen capital requirements; trends in market sales,
and the success of the joint venture with The Permanente Federation and
of the strategic marketing partnerships programs with TIME and Reader's
Digest, as well as those risks associated with the Company's business
described in the Company's annual report on Form 10-K for the fiscal
year ended 12/31/99 filed with the Securities and Exchange Commission.
12
<PAGE> 13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
None
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USES OF PROCEEDS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Restated Certificate of Incorporation of
HEARx Ltd., including certain certificates
of designations, preferences and rights of
certain preferred stock of the Company.
[3] Filed as an exhibit to the Company's
Current Report on Form 8-K, filed May 17,
1996, as the exhibit number indicated in
brackets, and incorporated herein by
reference.
3.2 Amendment to Restated Certificate of
Incorporation. [3.1A]. Filed as an exhibit
to the Company's Quarterly Report on Form
10-Q for the period ended June 28,1996, as
the exhibit number indicated in brackets,
and incorporated herein by reference.
3.3 Certificate of Designations, Preferences
and Rights of the Company's 1997
Convertible Preferred Stock. [3] Filed as
an exhibit to the Company's Current Report
on Form 8-K, filed March 26, 1997, as the
exhibit number indicated in brackets, and
incorporated herein by reference.
3.4 Certificate of Designations, Preferences
and Rights of the Company's 1998
Convertible Preferred Stock. [3] Filed as
an exhibit to the Company's Current Report
on Form 8-K, filed August 27, 1998, as the
exhibit number indicated in brackets, and
incorporated herein by reference.
3.5 Certificate of Designations, Preferences
and Rights of the Company's 7% Series I
Convertible Preferred Stock. [3] Filed as
an exhibit to the Company's Current Report
on Form 8-K, filed May 9, 2000, as the
exhibit number indicated in brackets, and
incorporated herein by reference.
3.6 By-Laws of HEARx Ltd. [3.4]. Filed as an
exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended
12/31/99 as the exhibit number indicated
in brackets, and incorporated herein by
reference.
4.1 Form of Rights Agreement, dated December
14, 1999, between HEARx and the Rights
Agent, which includes the Certificate of
Designations, Preferences and Rights of
the Company's 1999 Series H Junior
Participating Preferred Stock. [4] Filed
as an exhibit to the Company's Current
Report on Form 8-K, dated
13
<PAGE> 14
December 17, 1999, as the exhibit number
indicated in brackets, and incorporated
herein by reference.
27 Financial Data Schedule (provided for the
information of the Securities and Exchange
Commission only).
(b) Reports on Form 8-K:
None
14
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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.
HEARx Ltd.
(Registrant)
Date: November 13, 2000 By: s/Stephen J. Hansbrough
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Stephen J. Hansbrough
President and
Chief Operating Officer
Date: November 13, 2000 By: s/James W. Peklenk
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James W. Peklenk
Vice President and
Chief Financial Officer
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