<PAGE> 1
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FORM 10-Q
-----------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED SEPTEMBER 30, 1997
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: 0-22162
SIMIONE CENTRAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3209241
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6600 POWERS FERRY ROAD 30339
ATLANTA, GEORGIA (zip code)
(Address of principal
executive offices)
(Registrant's telephone number, including area code) (770) 644-6700
N/A
---
(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 registrant's
classes of common stock, as of the latest practicable date:
Outstanding at
Class 10/31/97
----- --------
COMMON STOCK, $.001 PAR VALUE 8,506,925 SHARES
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<PAGE> 2
SIMIONE CENTRAL HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets - December 31, 1996 and
September 30, 1997 (unaudited).
Consolidated Statements of Operations - Three Months
and Nine Months Ended September 30, 1996 and 1997
(unaudited).
Consolidated Statements of Shareholders' Equity -
For the Nine Months Ended September 30, 1997
(unaudited).
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1996 and 1997 (unaudited).
Notes to Consolidated Financial Statements -
September 30, 1997 (unaudited).
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE> 3
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
----------------- --------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 19,530,966 $ 3,384,728
Accounts receivable, net of allowance for doubtful
accounts of $1,278,312 and $1,063,014 respectively 8,820,990 5,651,415
Prepaid expenses and other current assets 716,579 870,729
--------------- ----------------
Total current assets 29,068,535 9,906,872
Purchased software, furniture and equipment, net 1,923,833 1,867,996
Intangible assets, net 5,192,490 5,922,755
Restricted cash at December 31, 1996 and other assets 198,295 1,078,056
--------------- ----------------
Total assets $ 36,383,153 $ 18,775,679
=============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Lines of credit $ 1,013,321 $ -
Accounts payable 1,643,833 3,199,353
Accrued compensation expense 1,028,920 666,650
Accrued liabilities 2,787,419 3,251,636
Customer deposits 2,019,033 1,679,565
Unearned revenues 984,722 2,006,044
Current portion of capital lease obligations 303,311 306,466
--------------- ----------------
Total current liabilities 9,780,559 11,109,714
Notes payable and capital lease obligations, less current portion 291,485 2,986,267
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value; 10,000,000 shares authorized;
none issued or outstanding - -
Common stock, $.001 par value; 20,000,000 shares authorized;
8,501,245 and 5,952,166 shares issued and outstanding,
respectively 8,501 5,952
Additional paid-in capital 41,483,552 23,216,050
Stock subscription receivable - (850,000)
Accumulated deficit (15,180,944) (17,692,304)
--------------- ----------------
Total shareholders' equity 26,311,109 4,679,698
--------------- ----------------
Total liabilities and shareholders' equity $ 36,383,153 $ 18,775,679
=============== ================
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE> 4
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
--------------------------------------- ----------------------------------------
1997 1996 1997 1996
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net revenues:
Shared resource solution $ 2,904,353 $ 3,680,536 $ 7,959,809 $ 10,345,247
In-house solution 4,562,906 - 11,669,443 -
Agency support and consulting services 4,641,948 1,838,619 15,147,462 5,687,870
--------------- ---------------- --------------- -----------------
Total net revenues 12,109,207 5,519,155 34,776,714 16,033,117
Costs and expenses:
Cost of revenues 5,516,213 3,355,961 16,131,302 9,928,673
Selling, general and administrative 3,319,884 1,252,389 9,783,031 3,414,343
Research and development 1,730,625 1,333,345 5,172,905 3,681,549
Amortization and depreciation 411,047 129,952 1,238,644 362,448
--------------- ---------------- --------------- -----------------
Total costs and expenses 10,977,769 6,071,647 32,325,882 17,387,013
--------------- ---------------- --------------- -----------------
Income (loss) from operations 1,131,438 (552,492) 2,450,832 (1,353,896)
Other income (expense):
Interest expense (40,767) (27,360) (185,702) (52,601)
Interest and other income 201,675 59,441 246,230 145,993
--------------- ---------------- --------------- -----------------
Net income (loss) $ 1,292,346 $ (520,411) $ 2,511,360 $ (1,260,504)
=============== ================ =============== =================
Net income (loss) per share $ 0.14 $ (0.13) $ 0.33 $ (0.34)
=============== ================ =============== =================
Weighted average common and
common equivalent shares 9,051,656 3,959,274 7,624,199 3,736,716
=============== ================ =============== =================
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE> 5
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Stock
Common Paid-in Subscription Accumulated
Shares Stock Capital Receivable Deficit
-------------- ----------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 5,952,166 $ 5,952 $ 23,216,050 $ (850,000) $ (17,692,304)
Issuance of 549,079 shares of
$.001 par value common stock
from exercise of stock options and
and warrants 549,079 549 550,284 - -
Issuance of 2,000,000 shares of
$.001 par value common stock,
net of offering costs 2,000,000 2,000 17,717,218
Payment of stock subscription - - - 850,000 -
Net income - - - - 2,511,360
---------- ----------- ------------ --------------- --------------
Balance at September 30, 1997 8,501,245 $ 8,501 $ 41,483,552 $ - $ (15,180,944)
========== =========== ============ =============== ==============
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE> 6
SIMIONE CENTRAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------
1997 1996
---------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,511,360 $ (1,260,504)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH USED IN OPERATING
ACTIVITIES:
Provision for doubtful accounts 800,087 47,132
Amortization and depreciation 1,238,644 362,448
Loss on sale of assets 28,426 --
CHANGES IN ASSETS AND LIABILITIES:
Accounts receivable (3,969,662) (1,504,589)
Prepaid expenses and other current assets 154,150 (386,430)
Other assets (120,239) --
Accounts payable (1,555,520) 1,423,375
Accrued compensation expense 362,270 144,607
Accrued liabilities (434,045) 53,740
Customer deposits 339,468 --
Unearned revenues (1,021,322) (139,434)
------------ ------------
Net cash used in operating activities (1,666,383) (1,259,655)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of consulting division of Simione & Simione -- (2,000,000)
Purchase of software, furniture and equipment (566,561) (369,089)
(Increase) decrease in restricted cash 1,000,000 (1,000,000)
Purchase of intangible assets -- (114,647)
------------ ------------
Net cash provided by (used in) investing activities 433,439 (3,483,736)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from former parent company -- 4,000,000
Proceeds from repayment of stock subscription 850,000 --
Proceeds from (payment on) notes payable (1,486,479) 1,805,000
Proceeds from issuance of common stock less offering costs
of $2,280,782 17,719,218 229,609
Proceeds from officer loans -- 252,075
Payments to former parent company -- 225,814
Principal payments on capital lease obligations (224,218) --
Payments of related party notes (30,172) --
Proceeds from exercise of stock options and warrants 550,833 --
------------ ------------
Net cash provided by financing activities 17,379,182 6,512,498
------------ ------------
Net increase in cash and cash equivalents 16,146,238 1,769,107
Cash and cash equivalents, beginning of period 3,384,728 323,023
------------ ------------
Cash and cash equivalents, end of period $ 19,530,966 $ 2,092,130
============ ============
Supplemental disclosure of non-cash investing activities
Software, furniture and equipment obtained through capital leases $ 39,904 $ --
</TABLE>
See notes to consolidated financial statements (unaudited)
<PAGE> 7
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements have been prepared by the Company and are
unaudited. In the opinion of management, all adjustments (which consist of
normal recurring adjustments) considered necessary for a fair presentation have
been included. Interim results are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997.
Certain financial information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto as of December 31, 1996, appearing in the Company's Annual Report on
Form 10-K.
On October 8, 1996, InfoMed Holdings, Inc. ("IMHI") and Central Health
Management Services, Inc. ("CHMS") merged in a transaction accounted for as a
reverse acquisition for financial reporting purposes. In connection with the
acquisition, IMHI issued 3,958,356 shares of its common stock in exchange for
all the outstanding common stock of CHMS, and thereby, the former shareholders
of CHMS acquired control of IMHI. As a result, CHMS is considered the acquiring
company; hence, the historical financial statements of CHMS became the
historical financial statements of IMHI and include the results of operations
of IMHI only from the effective acquisition date. On December 19, 1996, IMHI
changed its name to Simione Central Holdings, Inc. (the "Company").
Certain prior period amounts have been reclassified to conform to the 1997
financial statement presentation.
DESCRIPTION OF BUSINESS
The Company is a leading provider of integrated systems and services designed
to enable home health care providers to more effectively operate their
businesses and compete in a managed care environment. The Company offers two
systems which provide a core platform of software applications and can also
incorporate specialized selected modules to enable customers to generate and
utilize comprehensive financial, operational and clinical information. The
Company's Shared Resource Solution offers customers an outsourcing opportunity
which incorporates the Company's proprietary NAHC IS application software.
Under this arrangement, the Company operates a data center which stores
customer data and allows them real-time, secure access through a wide area
communications network. The Company's In-House Solution, STAT 2, offers similar
functionality, but is licensed to customers for use on their own computer
systems. In addition to these two system solutions, the Company's home health
care consulting services assist providers in addressing the challenges of
reducing costs, maintaining quality, streamlining operations and re-engineering
organizational structures. The Company also provides comprehensive agency
support services which include administrative, billing and collection,
training, reimbursement and financial management services, among others.
<PAGE> 8
SIMIONE CENTRAL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
NOTE 2 - ACQUISITION
On October 8, 1996, IMHI merged with CHMS. The merger was accounted for as a
reverse acquisition for financial reporting purposes. CHMS is considered the
acquiring company; hence, the historical financial statements of CHMS became
the historical financial statements of IMHI and include the results of
operations of IMHI only from the effective acquisition date.
Unaudited pro forma information giving effect to the acquisition as if it took
place on January 1, 1996 follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
Net revenues $ 8,071,000 $ 24,813,000
Net loss $ (658,000) $ (13,775,000)
Net loss per share $ (0.11) $ (2.42)
Weighted average common shares 5,908,000 5,685,000
</TABLE>
The three months ended September 30, 1996 pro forma net loss includes a net
charge of $149,000 for additional amortization expense related to the
allocation of purchase price to intangible assets and for decreased
depreciation expense related to a reduction in value of fixed assets acquired.
The nine months ended September 30, 1996 pro forma net loss includes pro forma
adjustments for a $12,574,000 charge to operations for purchased in-process
research and development costs, and a net charge of $446,000 for additional
amortization expense related to the allocation of purchase price to intangible
assets and for decreased depreciation expense related to a reduction in value
of fixed assets acquired. This pro forma information does not purport to be
indicative of the results that actually would have occurred if the acquisition
had been effective on the date indicated.
NOTE 3 - NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS
On May 1, 1997, the Company redeemed its $1 million certificate of deposit to
pay down and terminate its $1 million line of credit. The line was secured by
the certificate of deposit which was reported as restricted cash as of December
31, 1996.
On June 6, 1997, the Company entered into a Loan and Security Agreement with a
bank. Pursuant to the Agreement, the bank agreed to make available to the
Company a revolving credit facility, the maximum principal amount of which at
any time must be equal to the lesser of $5 million or the "borrowing base" then
in effect. Interest will accrue at a variable rate per annum equal to the prime
rate plus 0.25% (8.75% as of September 30, 1997). Under the terms of the
Agreement, the Company granted to the bank a security interest in all accounts,
inventory, equipment, and general intangibles. Additionally, borrowings under
this agreement are secured by the outstanding capital stock of the Company's
subsidiaries. The Company's subsidiaries have also guaranteed the Company's
obligations to the bank under the Agreement. As of September 30, 1997,
$1,013,000 was outstanding and $3,987,000 was available for use.
On June 24, 1997, the Company utilized $1.5 million from this newly acquired
revolving credit facility to pay down and terminate the $1.5 million line of
credit outstanding with another bank.
<PAGE> 9
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
(UNAUDITED)
NOTE 4 - INCOME TAXES
At December 31, 1996, the Company had approximately $5,975,000 of net operating
losses ("NOL") for income tax purposes available to offset future taxable
income. Such losses expire $3,159,000 in 2010 and $2,816,000 in 2011 and may be
subject to certain limitations for changes in ownership. For the nine months
ended September 30, 1997, the Company has applied a portion of this NOL against
income tax expense for financial reporting purposes. A valuation allowance
reducing net deferred tax assets recognized to zero has been recorded based on
management's assessment that it is not "more likely than not" that the assets
are realizable as of September 30, 1997.
NOTE 5 - MAJOR CUSTOMERS AND TRANSACTIONS WITH FORMER PARENT COMPANY
For the three months and the nine months ended September 30, 1997, affiliates
of Columbia/HCA Healthcare Corporation accounted for approximately 47.0% and
50.1%, respectively, of the Company's total net revenue and for 35.0% of net
accounts receivable at September 30, 1997.
Through October 31, 1996, the Company derived revenue from charges for the
services provided to the home health care agencies wholly-owned by the
Company's former parent, Central Health Holding Company, Inc. ("CHHC"). The
charges were recorded, for purposes of these consolidated financial statements,
in an amount equal to the cost of the services being provided and therefore
generated no operating profit. Cost-based revenues from CHHC of $3,433,000, or
62.2% of total net revenues, were recognized for the three months ended
September 30, 1996 and $10,415,000 or 65.0% of total net revenues for the nine
months ended September 30, 1996. In addition, CHHC charged the Company a
management fee for certain services provided to the Company based on the
allocated direct cost of the various services provided. Management fees in the
amount of $126,000 and $266,000 were incurred for the three months and nine
months ended September 30, 1996.
NOTE 6 - RECENTLY ADOPTED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued a new
accounting pronouncement, SFAS No. 128, "Earnings per Share", which will change
the current method of computing earnings per share. The new standard requires
presentation of "basic earnings per share" and "diluted earnings per share"
amounts, as defined. SFAS No. 128 will be effective for the Company's quarter
and year ending December 31, 1997, and upon adoption, all prior-period earnings
per share data presented shall be restated to conform with the provisions of
the new pronouncement. Application earlier than the Company's quarter ending
December 31, 1997 is not permitted. The restated basic and diluted earnings or
loss per share to be reported upon adoption of SFAS No. 128 will not differ
from amounts reported under existing accounting rules for all periods reported
by the Company through December 31, 1996. The Company has not evaluated the
impact of SFAS No. 128, if any, on the amounts reported as of September 30,
1997.
<PAGE> 10
SIMIONE CENTRAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
NOTE 7 - SHAREHOLDERS' EQUITY
On July 1, 1997, the Registration Statement, filed by the Company with the
Securities and Exchange Commission on Form S-1, became effective. In
conjunction with the effectiveness of the Registration Statement, the Company
had a one-for-two reverse stock split of the Company's outstanding common
stock. The Company sold 2,000,000 (post-reverse split) shares of its common
stock for $10.00 per share and received approximately $17.7 million in net
proceeds. A shareholder also sold 1,220,000 (post-reverse split) shares for
$10.00 per share. The Company did not receive any of the proceeds from the sale
of shares by the selling shareholder.
All share and per share amounts included in these financial statements have
been restated to reflect the reverse stock split for the periods presented.
<PAGE> 11
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Act of 1934, as amended, and are
subject to the safe harbor created by such sections. When used in this report,
the words "believe", "anticipate", "estimate", "expect", and similar
expressions are intended to identify forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to be correct. The Company's actual results may differ significantly from
the results discussed in such forward-looking statements. When appropriate,
certain factors that could cause results to differ materially from those
projected in the forward-looking statements are enumerated. This Management's
Discussion and Analysis of Financial Condition and Results of Operations should
be read in conjunction with the Company's consolidated financial statements and
the notes thereto.
OVERVIEW
The Company is a leading provider of integrated systems and services designed
to enable home health care providers to more effectively operate their
businesses and compete in a managed care environment. The Company offers two
systems which provide a core platform of software applications and can also
incorporate selected specialized modules to enable customers to generate and
utilize comprehensive financial, operational and clinical information. The
Company's Shared Resource Solution offers customers an outsourcing opportunity
which incorporates the Company's proprietary NAHC IS application software.
Under this arrangement, the Company operates a data center which stores
customer data and allows them real-time, secure access through a wide area
communications network. The Company's In-House Solution, STAT 2, offers similar
functionality, but is licensed to customers for use on their own computer
systems. In addition to these two systems solutions, the Company's home health
care consulting services assist providers in addressing the challenges of
reducing costs, maintaining quality, streamlining operations and re-engineering
organizational structures. The Company also provides comprehensive agency
support services which include administrative, billing and collection,
training, reimbursement, and financial management services, among others.
The Company enters into multi-year contracts (generally 3 to 5 years) with its
customers in connection with its Shared Resource Solution and its provision of
agency support services. In general, these contracts provide for the payment of
monthly fees based on the number of billed home care visits made by the
customers. Revenues derived under these contracts are recognized monthly as the
related services are rendered and typically range from several hundred thousand
dollars to several million dollars per year. The loss of any of these contracts
could have a material adverse impact on the Company's business, financial
position and results of operations.
The Company sells its In-House Solution, STAT 2, pursuant to non-exclusive
license agreements which provide for the payment of a one-time license fee. In
accordance with SOP 91-1, these revenues are recognized when products are
delivered and collectibility of fees is probable, provided that no significant
obligations remain under the contract. Revenues derived from the sale of
software products requiring significant modification or customization are
recognized based upon the percentage of completion method. The price of the
Company's In-House Solution varies depending on the number of software modules
licensed and the number of users accessing the system and can range from thirty
thousand dollars to a few million dollars. The Company generally requires
payment of a deposit upon the signing of a customer order as well as certain
additional payments prior to delivery. As a result, the Company's balance sheet
reflects significant customer deposits.
<PAGE> 12
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW (CONTINUED)
Third party software and computer hardware revenues are recognized when the
related products are shipped. Software support agreements are generally
renewable for one year periods, and revenue derived from such agreements is
recognized ratably over the period of the agreements. The Company has
historically maintained high renewal rates with respect to its software support
agreements. The Company charges for software implementation, training and
technical consulting services as well as management consulting services on an
hourly or daily basis. The price of such services varies depending on the level
and expertise of the related professionals. The revenues are recognized as the
related services are performed.
The Company typically experiences long sales cycles for information systems and
agency support services, which may extend up to one year. In addition, the
implementation period related to its information systems can range from three
months to one year.
The Company defines recurring revenues as revenues derived under multi-year
contracts in addition to annual software support agreements. These revenues
were approximately $7.1 million, or 58.4% and $21.7 million or 62.3% of total
net revenues, for the three months and nine months ended September 30, 1997,
respectively and $600,000 or 10.8% and $1.6 million, or 9.8% of total net
revenues, for the three months and nine months ended September 30, 1996,
respectively.
For the three months and nine months ended September 30, 1996, 62.2% and 65.0%,
respectively, of the Company's total net revenues were derived from contracts
with home health care agencies wholly-owned by the Company's former parent,
Central Health Holding Company, Inc. ("CHHC"). These contracts were terminated
October 31, 1996, in connection with the sale of CHHC to Columbia/HCA
Healthcare Corporation ("Columbia/HCA"). Revenues derived from these contracts
were recorded in an amount equal to the costs of the services provided, and, as
a result, the Company recognized no operating profit under these contracts.
Subsequent to the sale of CHHC to Columbia/HCA, affiliates of Columbia/HCA
entered into multi-year contracts with the Company to provide its Shared
Resource Solution as well as agency support services to certain of the home
health care agencies formerly owned by CHHC. The historical results of
operations attributable to the terminated CHHC contracts may not therefore be
indicative of future results of operations. For the three months and nine
months ended September 30, 1997, the Company derived 47.0% and 50.1%,
respectively, of its total net revenues from affiliates of Columbia/HCA. The
loss of any of the Columbia/HCA contracts could have a material adverse impact
on the Company's business, financial position and results of operations.
The Company believes that continued development and enhancement of its software
systems is critical to its future success, and anticipates that the total
amount of research and development expense will continue to increase, but
should decrease as a percentage of total net revenues as the Company grows its
revenues. Costs incurred to establish the technological feasibility of computer
software products are expensed as incurred. The Company's policy is to
capitalize costs incurred between the point of establishing technological
feasibility and general release only when such costs are material. For the
three months and nine months ended September 30, 1997, the Company's
capitalized computer software development costs were approximately $45,000 and
$136,000, respectively.
<PAGE> 13
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BACKLOG
The Company had backlog associated with its In-House Solution of approximately
$7.7 million on September 30, 1997. Backlog consists of the unrecognized
portion of contractually committed software license fees, hardware, estimated
installation fees and professional services. The length of time required to
complete an implementation depends on many factors outside the control of the
Company, including the state of the customer's existing information systems and
the customer's ability to commit the personnel and other resources necessary to
complete the implementation process. As a result, the Company may be unable to
predict accurately the amount of revenue it will recognize in any period and
therefore can make no assurances that the amounts in backlog will be recognized
in the next twelve months.
The Company enters into multi-year contracts with its customers in connection
with its Shared Resource Solution. In general, these contracts provide for the
payment of monthly fees based on the number of billed home care visits made by
the customer. Accordingly, the Company does not maintain a backlog with respect
to its Shared Resource Solution.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Net Revenues. Total net revenues for the three months ended September 30, 1997
increased $6.6 million, or 119.4%, to $12.1 million as compared to the three
months ended September 30, 1996. This increase includes $4.6 million
attributable to the business acquired in the InfoMed Holdings, Inc. ("IMHI")
acquisition which was completed in October 1996, $5.0 million from new
contracts with affiliates of Columbia/HCA and a decrease of $3.4 million
resulting from the termination of contracts with home health care agencies
wholly-owned by CHHC.
Cost of Revenues. Total costs of revenues increased $2.2 million, or 64.4%, to
$5.5 million for the three months ended September 30, 1997 as compared to the
three months ended September 30, 1996. The increase includes $1.2 million in
costs attributable to the business acquired in the IMHI acquisition and the
remainder primarily relates to increases in personnel. As a percentage of total
net revenues, total costs of revenues decreased to 45.6% for the three months
ended September 30, 1997 from 60.8% for the three months ended September 30,
1996. This reduction as a percentage of total net revenues is principally due
to the higher margins related to the business acquired in the IMHI acquisition,
and increased margins derived from new customers.
Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the three months ended September 30, 1997 increased
$2.1 million to $3.3 million as compared to the three months ended September
30, 1996. This increase includes $1.3 million in costs attributable to the
business acquired in the IMHI acquisition and the remainder principally relates
to increased administrative personnel to support growth. As a percentage of
total net revenues, selling, general and administrative expenses were 27.4% for
the three months ended September 30, 1997 compared with 22.7% for the three
months ended September 30, 1996. The Company believes that selling, general and
administrative expenses should continue to decrease as a percentage of total
net revenues assuming that the Company's revenues continue to increase.
Research and Development Expenses. Research and development expenses increased
approximately $400,000, or 29.8%, to $1.7 million for the three months ended
September 30, 1997, as compared to the three months ended September 30, 1996.
The increase is principally attributable to the business acquired in the IMHI
acquisition. As a percentage of total net revenues, these expenses decreased to
14.3% for the three months ended September 30, 1997, from 24.2% for the three
months ended September 30, 1996. This percentage decrease reflects the increase
in total net revenues compared to a relatively constant level of dollar
expenses. The Company anticipates that the total dollar amount of research and
development expense will continue to increase or remain constant, although such
expenses should not increase as a percentage of total net revenues assuming
that the Company's revenues continue to increase.
<PAGE> 14
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(CONTINUED)
Amortization and Depreciation. Total depreciation and amortization expense for
the three months ended September 30, 1997 increased by approximately $300,000
to approximately $400,000 as compared to the three months ended September 30,
1996. This increase includes approximately $200,000 of amortization expense
related to the $4.2 million of intangible assets recorded in the IMHI
acquisition, and the remainder relates to increased depreciation expense.
Other Income (Expense). Interest expense for the three months ended September
30, 1997 and 1996 relates to borrowings under the Company's line of credit
agreements. Interest and other income for the three months ended September 30,
1997 and 1996 consists principally of interest income related to the Company's
short-term cash and restricted cash investments. The increase of approximately
$140,000 is principally attributable to the $18 million in net proceeds from
the issuance of 2,000,000 shares of its common stock at $10.00 per share on
July 1, 1997 in conjunction with a Registration Statement filed with the
Securities and Exchange Commission.
Income Taxes. At December 31, 1996, the Company had net operating losses
("NOL") carryforwards for federal and state income tax purposes of $6.0
million, which expire at various dates through 2011, if not utilized. The
Company also has research and development and alternative minimum tax credits
("tax credits") of approximately $96,000 available to reduce future income tax
liabilities. The Tax Reform Act of 1986, as amended, contains provisions that
limit the NOL and tax credit carryforwards available to be used in any given
year when certain events occur, including additional sales of equity securities
and other changes in ownership. As a result, certain of the NOL and tax credit
carryforwards may be limited as to their utilization in any year. The Company
has concluded that it is more likely than not that these NOLs and tax credit
carryforwards will not be utilized based on a weighing of evidence at September
30, 1997, and as a result, a 100% deferred tax valuation allowance has been
recorded against these assets. Approximately $500,000 of the total deferred tax
asset relates to the IMHI acquisition and, if and when realized, will result in
a credit to intangible assets recorded in the acquisition. For the three months
ended September 30, 1997, the Company has applied a portion of the NOL against
income tax expense for financial reporting purposes.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Net Revenues. Total net revenues for the nine months ended September 30, 1997
increased $18.7 million, or 116.9%, to $34.8 million as compared to the nine
months ended September 30, 1996. This increase includes $11.7 million
attributable to the business acquired in the InfoMed Holdings, Inc. ("IMHI")
acquisition which was completed in October 1996, $15.6 million from new
contracts with affiliates of Columbia/HCA and a decrease of $10.4 million
resulting from the termination of contracts with home health care agencies
wholly-owned by CHHC.
Cost of Revenues. Total costs of revenues increased $6.2 million, or 62.5%, to
$16.1 million for the nine months ended September 30, 1997 as compared to the
nine months ended September 30, 1996. The increase includes $3.3 million in
costs attributable to the business acquired in the IMHI acquisition and the
remainder primarily relates to increases in personnel. As a percentage of total
net revenues, total costs of revenues decreased to 46.4% for the nine months
ended September 30, 1997 from 61.9% for the nine months ended September 30,
1996. This reduction as a percentage of total net revenues is principally due
to the higher margins related to the business acquired in the IMHI acquisition,
and increased margins derived from new customers.
<PAGE> 15
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(CONTINUED)
Selling, General and Administrative Expenses. Total selling, general and
administrative expenses for the nine months ended September 30, 1997 increased
$6.4 million to $9.8 million as compared to the nine months ended September 30,
1996. This increase includes $3.8 million in costs attributable to the business
acquired in the IMHI acquisition and the remainder principally relates to
increased administrative personnel to support growth. As a percentage of total
net revenues, selling, general and administrative expenses were 28.1% for the
nine months ended September 30, 1997 compared with 21.3% for the nine months
ended September 30, 1996. The Company believes that selling, general and
administrative expenses should decrease as a percentage of total net revenues
assuming that the Company's revenues continue to increase.
Research and Development Expenses. Research and development expenses increased
approximately $1.5 million, or 40.5%, to $5.2 million for the nine months ended
September 30, 1997, as compared to the nine months ended September 30, 1996.
The increase is principally attributable to the business acquired in the IMHI
acquisition. As a percentage of total net revenues, these expenses decreased to
14.9% for the nine months ended September 30, 1997, from 23.0% for the nine
months ended September 30, 1996. This percentage decrease reflects the increase
in total net revenues compared to a relatively constant level of dollar
expenses. The Company anticipates that the total dollar amount of research and
development expense will continue to increase although such expenses should not
increase as a percentage of total net revenues assuming that the Company's
revenues continue to increase.
Amortization and Depreciation. Total depreciation and amortization expense for
the nine months ended September 30, 1997 increased by approximately $900,000 to
approximately $1.2 million as compared to the nine months ended September 30,
1996. This increase includes approximately $600,000 of amortization expense
related to the $4.2 million of intangible assets recorded in the IMHI
acquisition, and the remainder relates to increased depreciation expense.
Other Income (Expense). Interest expense for the nine months ended September
30, 1997 and 1996 relates to borrowings under the Company's line of credit
agreements. Interest and other income for the nine months ended September 30,
1997 and 1996 consists principally of interest income related to the Company's
short-term cash and restricted cash investments. The increase of approximately
$100,000 is principally attributable to the $18 million in net proceeds from
the issuance of 2,000,000 shares of its common stock at $10.00 per share on
July 1, 1997 in conjunction with a Registration Statement filed with the
Securities and Exchange Commission.
Income Taxes. At December 31, 1996, the Company had net operating losses
("NOL") carryforwards for federal and state income tax purposes of $6.0
million, which expire at various dates through 2011, if not utilized. The
Company also has research and development and alternative minimum tax credits
("tax credits") of approximately $96,000 available to reduce future income tax
liabilities. The Tax Reform Act of 1986, as amended, contains provisions that
limit the NOL and tax credit carryforwards available to be used in any given
year when certain events occur, including additional sales of equity securities
and other changes in ownership. As a result, certain of the NOL and tax credit
carryforwards may be limited as to their utilization in any year. The Company
has concluded that it is more likely than not that these NOLs and tax credit
carryforwards will not be utilized based on a weighing of evidence at September
30, 1997, and as a result, a 100% deferred tax valuation allowance has been
recorded against these assets. Approximately $500,000 of the total deferred tax
asset relates to the IMHI acquisition and, if and when realized, will result in
a credit to intangible assets recorded in the acquisition. For the nine months
ended September 30, 1997, the Company has applied a portion of the NOL against
income tax expense for financial reporting purposes.
<PAGE> 16
SIMIONE CENTRAL HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 1997, the Company's cash and cash
equivalents increased by approximately $16.1 million. The increase was
primarily due to the receipt of $17.7 million in net proceeds from the issuance
of 2,000,000 shares of its common stock at $10.00 per share on July 1, 1997 in
conjunction with a Registration Statement filed with the Securities and
Exchange Commission. The proceeds from this offering combined with operating
cash flows of $4.6 million for the nine months ended September 31, 1997 were
offset by an increase in accounts receivable of $4.0 million and a net decrease
in accounts payable, accrued compensation expense and accrued liabilities of
$1.6 million.
The Company entered into a Loan and Security Agreement with a bank. Pursuant to
the Agreement, the bank agreed to make available to the Company a revolving
credit facility, the maximum principal amount of which at any time must be
equal to the lesser of $5 million or the "borrowing base" then in effect.
Interest will accrue at a variable rate per annum equal to the prime rate plus
0.25%. Under the terms of the Agreement, the Company granted to the bank a
security interest in all accounts, inventory, equipment and general
intangibles. Additionally, borrowing's under this agreement are secured by the
outstanding capital stock of the Company's subsidiaries. The Company's
subsidiaries have also guaranteed the Company's obligations to the bank under
the Agreement. The Company utilized $1.5 million from this newly acquired
revolving credit facility to pay down and terminate the $1.5 million line of
credit outstanding with another bank. As of September 30, 1997, $1,013,000 was
outstanding and $3,987,000 was available for use.
The Company believes that its available cash, cash equivalents and cash to be
generated from its future results of operations will be sufficient to meet the
Company's operating requirements, assuming no change in the operation of the
Company's business, for at least the next twelve months.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued a new
accounting pronouncement, SFAS No. 128, "Earnings per Share," which will change
the current method of computing earnings per share. The new standard requires
presentation of "basic earnings per share" and "diluted earnings per share"
amounts, as defined. SFAS No. 128 will be effective for the Company's quarter
and year ending December 31, 1997, and, upon adoption, all prior period
earnings per share data presented shall be restated to conform with the
provisions of the new pronouncement. Application earlier than the Company's
quarter ending December 31, 1997, is not permitted. The restated basic and
diluted earnings or loss per share to be reported upon adoption of SFAS No. 128
will not differ from amounts reported under existing accounting rules for all
periods reported by the Company through December 31, 1996. The Company has not
evaluated the impact of SFAS No. 128, if any, on the amounts reported as of
September 30, 1997.
<PAGE> 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Neither the Company nor any of its subsidiaries is currently
a party to nor the subject of any legal proceedings which would be
material to the business or financial condition of the Company on a
consolidated basis. The Company was, however, served on July 17, 1997
with an administrative subpoena issued by the United States Department
of Health and Human Services, Office of Inspector General (the
"Subpoena") in connection with the Inspector General's investigation
of certain healthcare businesses. Government officials are reviewing,
in connection with the Subpoena, certain of the Company's agency
support contracts with affiliates of Columbia/HCA Healthcare
Corporation. The Company is cooperating fully with the government and
does not currently believe that this inquiry will have any material
effect on its overall business or financial condition.
Item 2. Change in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
The following Exhibits are filed as part of this
Quarterly Report on Form 10-Q:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3.1 Certificate of Incorporation of the Company
(Incorporated by reference to Exhibit 3.1 of the
Company's Registration Statement on Form S-4
(Registration Number 33-57150) as filed with the
Securities and Exchange Commission).
3.2 Amendment to the Certificate of Incorporation of the
Company (Incorporated by reference to Exhibit 3.2 of
the Company's Registration Statement on Form S-4
(Registration Number 33-57150) as filed with the
Securities and Exchange Commission).
3.3 Certificate of Ownership Merging Simione Central
Holdings, Inc. into InfoMed Holdings, Inc.
(Incorporated by reference to Exhibit 3.5 of the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 as filed with the
Securities and Exchange Commission).
3.4 Certificate of Amendment of the Certificate of
Incorporation of Simione Central Holdings, Inc.,
filed June 30, 1997 with the Secretary of State of
the State of Delaware (Incorporated by reference to
Exhibit 3.3 of the Company's Current Report on Form
8-K dated July 9, 1997 as filed with the Securities
and Exchange Commission).
3.5 Amended and Restated Bylaws of the Company
(Incorporated by reference to Exhibit 3.3 of the
Company's Registration Statement on Form S-1
(Registration Number 333-25551) as filed with the
Securities and Exchange Commission).
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1 Specimen Stock Certificate of the Company
(Incorporated by reference to Exhibit 4.1 of the
Company's Registration Statement on Form S-1
(Registration Number 333-25551) as filed with the
Securities and Exchange Commission).
4.2 See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of
the Company's Certificate of Incorporation and
Bylaws governing rights of holders of securities of
the Company.
4.3 Registration Rights Agreement dated October 7, 1996
by and among InfoMed Holdings, Inc., those
stockholders of Simione Central Holding, Inc.
appearing as signatories to the Registration Rights
Agreement, and those stockholders of InfoMed
Holdings, Inc. appearing as signatories to the
Registration Rights Agreement (Incorporated by
reference to Exhibit 10.1 of the Company's Current
Report on Form 8-K dated October 8, 1996 as filed
with the Securities and Exchange Commission).
10.1 Amendment 2 to Agreement for Information Technology
Services between SC Holding, Inc. and Integrated
Systems Solutions Corporation dated July 31, 1997
(Incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q dated August
13, 1997 as filed with the Securities and Exchange
Commission).
11.1 Computation of Earnings per Share.
27.1 Financial Data Schedule (for SEC use only).
</TABLE>
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K on July 8,
1997 announcing that its Board of Directors and stockholders adopted a 1-for-2
reverse stock split that became effective June 30, 1997.
<PAGE> 19
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.
SIMIONE CENTRAL HOLDINGS, INC.
Dated: November 13, 1997 By: /s/ James R. Henderson
---------------------------
JAMES R. HENDERSON
Chief Executive Officer and President
Dated: November 13, 1997 By: /s/ Lori Nadler Siegel
---------------------------
LORI NADLER SIEGEL
Chief Financial Officer
<PAGE> 20
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation of the Company (Incorporated
by reference to Exhibit 3.1 of the Company's Registration
Statement on Form S-4 (Registration Number 33-57150) as filed
with the Securities and Exchange Commission).
3.2 Amendment to the Certificate of Incorporation of the
Company (Incorporated by reference to Exhibit 3.2 of the
Company's Registration Statement on Form S-4 (Registration
Number 33-57150) as filed with the Securities and Exchange
Commission).
3.3 Certificate of Ownership Merging Simione Central Holdings,
Inc. into InfoMed Holdings, Inc. (Incorporated by reference to
Exhibit 3.5 of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 as filed with the Securities
and Exchange Commission).
3.4 Certificate of Amendment of the Certificate of Incorporation of
Simione Central Holdings, Inc., filed June 30, 1997 with the
Secretary of State of the State of Delaware (Incorporated by
reference to Exhibit 3.3 of the Company's Current Report on Form
8-K dated July 9, 1997 as filed with the Securities and Exchange
Commission).
3.5 Amended and Restated Bylaws of the Company (Incorporated by
reference to Exhibit 3.3 of the Company's Registration Statement
on Form S-1 (Registration Number 333-25551) as filed with the
Securities and Exchange Commission).
4.1 Specimen Stock Certificate of the Company (Incorporated by
reference to Exhibit 4.1 of the Company's Registration Statement
on Form S-1 (Registration Number 333-25551) as filed with the
Securities and Exchange Commission).
4.2 See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of the
Company's Certificate of Incorporation and Bylaws governing
rights of holders of securities of the Company.
4.3 Registration Rights Agreement dated October 7, 1996 by and
among InfoMed Holdings, Inc., those stockholders of Simione
Central Holding, Inc. appearing as signatories to the
Registration Rights Agreement, and those stockholders of InfoMed
Holdings, Inc. appearing as signatories to the Registration
Rights Agreement (Incorporated by reference to Exhibit 10.1 of
the Company's Current Report on Form 8-K dated October 8, 1996
as filed with the Securities and Exchange Commission).
10.1 Amendment 2 to Agreement for Information Technology
Services between SC Holding, Inc. and Integrated Systems
Solutions Corporation dated July 31, 1997 (Incorporated by
reference to Exhibit 10.1 of the Company's Quarterly Report on
Form 10-Q dated August 13, 1997 as filed with the Securities and
Exchange Commission).
11.1 Computation of Earnings Per Share.
27.1 Financial Data Schedule (for SEC Use Only).
<PAGE> 1
EXHIBIT 11.1
SIMIONE CENTRAL HOLDINGS, INC.
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
----------------------------------------- -------------------------------------
1997 1996 1997 1996
------------------- ------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS (LOSS) PER SHARE:
Net income (loss) available to
to common stockholders $ 1,292,346 $ (520,411) $ 2,511,360 $ (1,260,504)
=============== ================= ================== =============
Weighted average shares outstanding 8,216,275 3,959,274 6,748,183 3,736,716
Add additional shares issuable upon
exercise of common stock options
and warrants 835,381 - 876,016 -
--------------- ----------------- ------------------ --------------
Weighted average common and common
equivalent shares 9,051,656 3,959,274 7,624,199 3,736,716
=============== ================= ================== ==============
Net income (loss) per share $ 0.14 $ (0.13) $ 0.33 $ (0.34)
=============== ================= ================== ==============
</TABLE>
Fully diluted earnings (loss) per share is not presented because fully diluted
earnings (loss) per share amounts do not differ significantly from primary
earnings per share.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SIMIONE CENTRAL HOLDINGS, INC. FOR THE NINE MONTH
PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 19,530,966
<SECURITIES> 0
<RECEIVABLES> 10,099,302
<ALLOWANCES> 1,278,312
<INVENTORY> 0
<CURRENT-ASSETS> 29,068,535
<PP&E> 3,021,927
<DEPRECIATION> 1,098,094
<TOTAL-ASSETS> 36,383,153
<CURRENT-LIABILITIES> 9,780,559
<BONDS> 0
0
0
<COMMON> 8,501
<OTHER-SE> 26,302,608
<TOTAL-LIABILITY-AND-EQUITY> 36,383,153
<SALES> 34,776,714
<TOTAL-REVENUES> 34,776,714
<CGS> 16,131,302
<TOTAL-COSTS> 16,131,302
<OTHER-EXPENSES> 16,194,580
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 185,702
<INCOME-PRETAX> 2,511,360
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,511,360
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,511,360
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
</TABLE>
