SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ x ] Quarterly report pursuant to section 13 of 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 1999
[ ] Transition report pursuant to section 13 of 15(d) of the Securities
Exchange Act of 1934 for the transition period from ------------- to
-------------
Commission File No. 0-21038
Network Six, Inc.
(Exact name of registrant as specified in its charter)
Rhode Island 05-0366090
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
475 Kilvert Street, Warwick, Rhode Island 02886
(Address of principal executive offices, including zip code)
(401) 732-9000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 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 .
As of March 31, 1999, there were 780,156 shares of the registrant's Common
Stock, $.10 par value, outstanding.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Network Six, Inc.
Condensed Balance Sheets
Mar. 31, 1999 Dec. 31, 1998
Assets (unaudited)
Current assets: ------------ ------------
Cash $ 1,331,204 $ 1,442,035
Contract receivables, less allowance for
doubtful accounts of $69,175 at March 31,
1999 and December 31, 1998 1,431,149 1,966,788
Costs and estimated earnings in excess of
billings on contract 1,371,005 1,220,253
Other current assets 130,365 112,433
------------ ------------
Total current assets 4,263,723 4,741,509
Property and equipment
Computers and equipment 599,555 590,527
Furniture and fixtures 162,687 163,532
Leasehold improvements 20,191 20,191
------------ ------------
782,433 774,250
Less: accum. depreciation and amortization 593,446 602,033
------------ ------------
Net property and equipment 188,987 172,217
Deferred taxes 37,097 37,097
Contract receivables and costs in excess
of billings on Hawaii contract 3,459,382 3,459,382
Other assets 277,220 290,577
------------ ------------
$ 8,226,409 $ 8,700,782
=========== ===========
Mar. 31, 1999 Dec. 31, 1998
(unaudited)
Liabilities and Stockholders' Equity ------------ ------------
Current liabilities:
Notes payable to bank - -
Current installment of obligations
under capital leases $ 83,582 $ 89,483
Current portion of long-term debt:
Vendors 200,000 200,000
Others 88,835 91,997
Accounts payable 121,441 58,456
Accrued salaries and benefits 422,535 579,320
Accrued subcontractor expense 27,380 24,950
Other accrued expenses 296,236 320,982
Billings in excess of costs and
estimated earnings on contracts 357,871 341,572
Income taxes payable 126,011 780,066
Deferred taxes 42,491 42,491
Preferred stock dividends payable 874,588 795,992
------------ ------------
Total current liabilities 2,640,970 3,325,309
Obligations under capital leases,
excluding current installments 29,958 38,090
Long-term debt, less current portion:
Vendors 542,239 542,239
Others 390,310 409,778
Hawaii Payable 576,483 576,483
------------ ------------
Total Liabilities 4,179,960 4,891,899
Stockholders' equity:
Series A convertible preferred stock,
$3.50 par value. Authorized 857,142.85
shares; issued and outstanding 714,285.71
shares at March 31, 1999 and December 31,
1998; liquidation of $3.50 per share
plus unpaid and accumulated dividends 2,235,674 2,235,674
Common stock, $.10 par value. Authorized
4,000,000 shares; issued 780,156 shares
at March 31, 1999 and 764,663 at
December 31, 1998 78,016 76,466
Additional paid-in capital 1,853,698
1,796,284Retained earnings (accumulated deficit) (120,939) (299,541)
------------ ------------
Total stockholders' equity 4,046,449 3,808,883
------------ ------------
Total Liabilities & Stockholders' Equity $ 8,226,409 $ 8,700,782
=========== ===========
Network Six, Inc.
Condensed Statements of Income
(Unaudited)
Three months Three months
ended 3/31/99 ended 3/31/98
------------- -------------
Contract revenue earned 2,688,400 2,221,618
Cost of revenue earned 1,574,522 1,446,656
------------ ------------
Gross profit 1,113,878 774,962
Selling, general & administrative expenses 661,920 557,824
------------ ------------
Income from operations 451,958 217,138
Other deductions (income)
Interest expense 29,956 29,187
Interest earned (13,927) (50,124)
------------ ------------
Income before income taxes 435,929 238,075
Income taxes 178,731 97,610
------------ ------------
Net income 257,198 140,465
============= =============
Net income per share:
Basic 0.23 0.08
============= =============
Diluted 0.23 0.08
============= =============
Shares used in computing net income per share:
Basic 774,975 749,503
============= =============
Diluted 774,975 749,503
============= =============
Preferred dividends declared 78,596 83,219
============= =============
Network Six, Inc.
Condensed Statements of Cash Flow
(Unaudited)
Three months Three months
ended ended
March 31, 1999 March 31, 1998
--------------- ---------------
Net Income 257,198 140,465
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 16,032 14,522
Provision for doubtful accounts - -
Loss on sale/disposal of fixed assets 8 4,316
Changes in operating assets and liabilities:
Contract receivables 535,639 1,231,423
Cost and estimated earnings
in excess of billings on contracts (150,752) (272,502)
Other current assets (17,932) 84,722
Other assets 13,357 11,948
Accounts payable 62,985 (31,618)
Accrued salaries and benefits (156,785) (18,180)
Accrued subcontractor expense 2,430 (853,252)
Other notes payable - (63,871)
Other accrued expenses (24,746) (27)
Billings in excess of costs
and estimated earnings on contracts 16,299 28,396
Income taxes payable (654,055) 75,281
--------------- ---------------
Net cash provided by (used in)
operating activities (100,322) 351,623
--------------- ---------------
Cash flows from investing activities:
Cash Proceeds from Sale/Disposal
of Capital Assets 350 -
Capital expenditures (33,160) (44,123)
--------------- ---------------
Net cash used in investing activitie (32,810) (44,123)
--------------- ---------------
Three months Three months
ended ended
March 31, 1999 March 31, 1998
--------------- ---------------
Cash flows from financing activities:
Principal payments on capital
lease obligations (14,033) (16,835)
Payments on long term debt (22,630) -
Net payments on note payable to bank - (1,160,000)
Proceeds from issuance of common stock 58,964 43,726
--------------- ---------------
Net cash provided by (used in)
financing activities 22,301 (1,133,109)
--------------- ---------------
Net decrease in cash (110,831) (825,609)
Cash at beginning of period 1,442,035 1,291,924
--------------- ---------------
Cash at end of period 1,331,204 466,315
============== ==============
Supplemental cash flow information:
Cash paid during the period for:
Income taxes 832,786 23,180
Interest 22,849 25,678
============= ==============
Network Six, Inc.
Notes to Financial Statements
March 31, 1999
(unaudited)
(1) Basis of Presentation
The interim financial statements have been prepared without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission
(SEC). Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to SEC rules
and regulations; nevertheless, management believes that the disclosures
herein are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Form 10K and Proxy Statement.
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position
of the Company as of March 31, 1999, and the statements of income and cash
flows for the three month periods ended March 31, 1999 and 1998, have been
included herein. The results of operations for the interim periods are not
necessarily indicative of the results for the full years.
(2) Under the new requirements in SFAS No. 128 for calculating basic earnings
per share, the dilutive effect of stock options and warrants are
excluded.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
This report contains forward-looking statements reflecting the Company's
expectations or beliefs concerning future events that could materially affect
Company performance in the future. All forward-looking statements are subject
to the risks and uncertainties inherent with predictions and forecasts. They
are necessarily speculative statements, and unforeseen factors, such as
competitive pressures, litigation results and regulatory and state funding
changes could cause results to differ materially from any that may be
expected. In particular, adverse decisions in on-going material litigation
could have a material adverse effect on the Company's financial condition and
operating results. Actual results and events may therefore differ
significantly from those discussed in forward-looking statements. Moreover,
forward-looking statements are made in the context of information available as
of the date stated, and the Company undertakes no obligation to update or
revise such statements to reflect new circumstances or unanticipated events as
they occur.
General
In January 1999, the Company announced that the State of Rhode Island,
Department of Administration, had increased its contract with the Company for
an additional $2.5 million for enhancing the State's InRHODES computer system,
used by the Department of Human Services and the Division of Taxation - Child
Support Enforcement. This brings the total value of the Company's support
contract with the State of Rhode Island for InRHODES-related work to $5.3
million.
In February 1999, the Company announced that Dr. Samara H. Navarro,
formerly Deputy Commissioner, Department of Children and Families, State of
Florida, joined the Company as Vice President of Governmental Services.
In April 1999, the Company announced the resignation of Director Clifton
C. Dutton and the appointment of Director Peter C. Wallace.
Year 2000 Disclosure
The Year 2000 issue concerns the inability of information systems,
primarily computer software programs, to recognize properly and process date
sensitive information subsequent to December 31, 1999. The Company has
committed resources (approximately $56,000) over the past nine months to
improve its information systems ("IS project"). The Company has used this IS
project as an opportunity to evaluate its state of readiness, estimate
expected costs and identify and quantify risks associated with any potential
year 2000 issues.
State of Readiness:
In evaluating the Company's exposure to the year 2000 issue, management
first identified those systems that were critical to the ongoing business of
the Company and that would require significant manual intervention should
those systems be unable to process dates correctly following December 31,
1999. These systems were the Company's internal time tracking system and
internal administrative system. Once these systems were identified,
management identified and agreed to undertake the following steps to ascertain
the Company's state of readiness:
I. Obtaining letters from software and hardware vendors concerning
the ability of their products to properly process dates after
December 31, 1999;
II. Testing the operating systems of all hardware used in the
Company, and internal administration systems to determine if
dates after December 31, 1999 can be processed correctly;
III. Surveying other parties who provide or process information in
electronic format to the Company as to their state of readiness
and ability to process dates after December 31, 1999; and
IV. Testing the identified information systems to confirm that they
will properly recognize and process dates after December 31,
1999.
The Company anticipates completion of Step I - Step IV above for all
material software and hardware by the end of June 1999. Any software or
hardware determined to be non-compliant will be modified, repaired or
replaced. The Company estimates the aggregate costs of such modifications,
repairs and replacements to be $100,000 at this time.
Costs:
As noted above, the Company spent approximately $56,300 over the past
nine months to improve its information systems. In addition, the Company
anticipates that it will spend approximately $44,000 over the next 9 months to
further improve its information systems.
Risks:
Effective August 4, 1998, the Securities and Exchange Commission
issued Release No. 33-7558 (the "Release") in an effort to provide further
guidance to reporting companies concerning disclosure of the year 2000
issue. In this Release, the Commission required that registrants include
in its year 2000 disclosure a reasonable description of its "most
reasonably likely worst case scenario." Based on the Company's assessment
and the results of remediation performed to date as described above, the
Company believes that all problems related to the year 2000 will be
addressed on a timely basis so that the Company will experience little or
no disruption in its business immediately following December 31, 1999.
However, if unforeseen difficulties arise, or if compliance testing is
delayed or necessary remediation efforts are not accomplished in accordance
with the Company's plans described above, the Company anticipates that its
"most reasonably likely worst case scenario" (as required to be described
by the Release) is that some percentage of the Company's time tracking
related to contract labor costs would need to be processed manually for
some limited period of time. In addition, the Company anticipates that all
businesses (regardless of their state of readiness), including the Company,
will encounter some minimal level of disruption in its business (e.g.,
phone and fax systems, alarm systems, etc.) as a result of the year 2000
issue. However, the Company does not believe that it will incur any
material expenses or suffer any significant loss of revenues in connection
with such minimal disruptions.
Contingency Plans:
As discussed above, in the event of the occurrence of the "most
reasonably likely worst case scenario" the Company could hire an appropriate
level of temporary staff to manually assist with the time tracking process.
Forward Looking Statements:
Certain information set forth above regarding the year 2000 issue and
the Company's plans to address those problems are forward looking statements
under the Securities Act and the Exchange Act. See the second paragraph of
Management's Discussion and Analysis of Financial Condition and Results of
Operations for a discussion of forward-looking statements and related risks
and uncertainties. In addition, certain factors particular to the year 2000
issue could cause actual results to differ materially from those contained in
the forward looking statements, including, without limitation: failure to
identify critical information systems which experience failures, delays and
errors in the compliance and remediation efforts described above, unexpected
failures by key vendors, software providers or business partners to be year
2000 compliant or the inability to repair critical information systems. In
any such event, the Company's results of operations and financial condition
could be adversely affected. In addition, the failure to be year 2000
compliant of third parties outside of our control such as electric utilities
or financial institutions could adversely effect the Company's results of
operations and financial condition.
Results of Operations - Three Months Ended March 31, 1999 Compared to 1998
Contract revenue increased $466,782 or 21% from $2,221,618 in the three
months ended March 31, 1998 to $2,688,400 in the three months ended March 31,
1999 primarily due to increased work on the Rhode Island Department of Human
Services contract due to welfare reform and increased revenues on private
sector systems development activities and information technology consulting
services.
Cost of revenue earned, consisting of direct employee labor, direct
contract expense and subcontracting expense, increased $127,866 or 9% from
$1,446,656 in the three months ended March 31, 1998 to $1,574,522 in the three
months ended March 31, 1999 due to the increased effort to support the higher
level of business.
Gross profit increased $338,916 or 44% from $774,962 for the three
months ended March 31, 1998 to $1,113,878 for the three months ended March 31,
1999. Gross profit as a percentage of revenue earned increased from 34.9% for
the three months ended March 31, 1998 to 41.4% for the three months ended
March 31, 1999. The increase in gross profit percentage is due to higher
margins on new projects.
Selling, general and administrative (SG&A) expenses increased $104,096
or 19% from $557,824 in the three months ended March 31, 1998 to $661,920 in
the three months ended March 31, 1999 due to an increase in marketing and
business development related expenses. On a percentage of revenues basis,
SG&A expenses were essentially flat at 25%.
Interest expense increased $769 to $29,956, or 2.6%, from $29,187 due to
a contractually higher interest rate on a long-term note payable.
As a result, income before income taxes increased $197,854 from $238,075
for the three months ended March 31, 1998 to $435,929 for the three months
ended March 31, 1999.
Net income increased $116,733, or 83%, from $140,465 for the three
months ended March 31, 1999 to $257,198 for the three months ended March 31,
1999.
Liquidity and Capital Resources
In order to finance bid preparation costs and to obtain sufficient
collateral to support performance bonds required by some customers, the
Company has, in the past, entered into joint ventures with other firms with
greater financial resources when bidding for contracts. The Company expects to
continue and expand this practice prospectively as well as to pursue more time
and material contracts than it has historically pursued. Time and materials
contracts generally do not require performance bonds and almost always involve
less risk to deliver what the customer requires.
The Company has historically not received its first contract progress
payments until approximately three to six months after contract award, which
itself was as much as 12 months after proposal preparation commences. The
Company was therefore required to fund substantial costs well before the
receipt of related income, including marketing and proposal costs and the cost
of a performance bond. Prospectively, the Company expects to tighten up this
timetable, thereby reducing the requirement for additional working capital.
The Company has funded its operations through cash flows from
operations, bank borrowings, borrowings from venture partners, and private
placements of equity securities. Net cash provided by (used in) operating
activities was ($100,322) and $351,623 in the three months ended March 31,
1999 and 1998 respectively. Fluctuations in net cash provided by operating
activities are primarily the result of changes in net income, accounts
receivable and income tax receivable, accounts payable and costs and estimated
earnings in excess of billings on contracts due to differences in contract
milestones and payment dates.
On December 31, 1997 the Company signed a $1.5 million line of credit
with a commercial lender (the "Line of Credit"). Accounts receivable from four
of the Company's contracts secure the new Line of Credit. The Company can
borrow up to 80% of the aggregate invoice amounts and is required to repay any
borrowings within 90 days. The interest rate is prime plus five percent on
balances below $1 million and prime plus one and one half percent on balances
over $1 million. The Line of Credit also carries a six- percent annual
service fee on borrowed balances. At March 31, 1999 the Line of Credit had an
outstanding balance of zero.
On September 21, 1998 the Company entered into two five-year term loans,
each for $250,000. One lender was the Small Business Loan Fund Corporation,
("SBLFC"), a subsidiary of the Rhode Island Economic Development Corporation.
The other lender was the Business Development Corporation of Rhode Island
("BDC"). The SBLFC loan carries an annual interest rate of 9.5% and must be
repaid over five years. The BDC loan carries an annual interest rate of
10.25%, and an annual deferred fee of $5,000, and must be paid back over five
years. Both term loans are secured by substantially all the assets of the
Company. The BDC was also issued five-year warrants to purchase 11,500
unregistered shares of the Company's Common Stock at a price of $4.50 per
share. The warrants expire on September 20, 2003. The fair value of the
warrants was estimated by the Company to be $36,806 using the Black-Scholes
model and is being amortized ratably over the exercise period. Such amount is
included in other noncurrent assets on the accompanying balance sheet.
The Company believes that cash flows generated by operations will be
sufficient to fund continuing operations through the end of 1999. This
assumes, however, that there are no materially adverse decisions rendered in
the ongoing litigation with Hawaii, MAXIMUS and CBSI. See Item 1 - Legal
Proceedings.
The Company believes that inflation has not had a material impact on its
results of operations to date.
PART 11 - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In June 1995, the Company began negotiating a significant amendment to
its contract for a child support enforcement ("CSE") system with the State of
Hawaii (the State) when it determined that the total estimated cost to
complete the system would be significantly greater than expected. In March
1996, the Company received final State and federal government approval for
this contract amendment totaling $4.4 million. As a result of numerous in-
depth reviews of this contract amendment, management determined that remaining
contract costs would exceed the contract value by $440,000, and therefore,
accrued this loss in December 1995.
In June 1996 the Company announced a new subcontract agreement with
Complete Business Solutions, Inc ("CBSI") to expand CBSI's role in the Hawaii
CSE contract. CBSI, at the request of Hawaii, was contracted to lead a
detailed review of the current system under development. Hawaii, in turn,
agreed to pay CBSI $1.2 million from the Company's remaining contract budget
when various milestones were achieved. The Company had a significant role in
the detailed review and had hoped that its results would facilitate the
resolution of open contractual scope issues.
On September 13, 1996, the State of Hawaii terminated its contract with
the Company, effective September 23, 1996, claiming that the Company had
failed to fulfill its obligations under the contract. In response, the
Company also terminated the contract with the State effective September 23,
1996. The Hawaii contract, originally estimated to be a $20.7 million
contract, was increased to $25.2 million by the State and the Company in
February 1996, and was the Company's largest contract at the time. Prior to
termination, approximately $16.5 million of costs had been incurred towards
completion of the contract, and $11 million had been billed and substantially
paid.
On November 12, 1996 the State of Hawaii filed a lawsuit in the Circuit
Court of the First Circuit of the State of Hawaii against the Company and
Aetna Casualty and Surety and Federal Insurance Company for damages due to
breach of contract (the "Hawaii litigation"). Aetna Casualty and Surety and
Federal Insurance Company provided the $10.3 million performance bond on the
Company's contract with the State of Hawaii to develop and install the State's
child support enforcement system. The suit alleges the Company failed to meet
contractual deadlines, provided late, incomplete and/or unsuitable
deliverables, materially breached the contract by never completing the design,
the application programming, and the system test and systems implementation.
The State is seeking an unspecified amount for general damages, consequential
and special damages, liquidated damages, attorneys' fees, reimbursement for
the cost of the suit and interest costs that the court deems just and proper.
The Company vigorously denies the State's allegation and, on January 23,
1997, filed a counter claim against the State alleging that the State has
breached the contract. The Company is seeking $70 million in damages and is
alleging that the State fraudulently induced the Company into designing and
building a system having capabilities and features far beyond the scope of the
Company's contract. The fraudulent inducement was in the form of withholding
payments, improper rejection of work that satisfied the requirements of the
contract and verbal and written abuse of the Company's employees and
management.
In addition, Unisys, a vendor providing equipment under the Company's
Hawaii contract, submitted a $896,000 claim against the $10.3 million
performance bond. In February of 1997, the State released all but $1.1
million of the performance bond; the remainder is intended to cover amounts
payable to Unisys and other subcontractors. In April of 1997, after a
detailed review of their records and discussions with the Company, Unisys
agreed to lower their claim to $859,602 and Aetna Casualty and Surety paid
that claim. Lockheed Martin IMS (Lockheed), who guaranteed the performance
bond, reimbursed Aetna for that claim. In December 1997, the Company reached
an agreement with Lockheed to repay the $859,602 over a five-year period.
On December 13, 1996 CBSI filed a lawsuit in the Superior Court of the
State of Rhode Island for $517,503, which the Company had previously accrued,
plus interest, costs and attorney's fees. The Company disputes the $517,503
owed to CBSI and filed a counterclaim against CBSI on January 13, 1997
alleging, among other things, that CBSI failed to complete its duties required
under the subcontract with the Company in a timely manner, improperly engaged
in negotiations with the State of Hawaii to complete the project, hired and
attempted to hire employees of the Company in violation of its subcontract
agreement with the Company and obtained and utilized confidential information
and proprietary intellectual property inappropriately. Also, the Company
alleges that CBSI owes the Company $482,750 as of December 31, 1996 for which
the Company has not established a reserve for uncollectibility.
On February 3, 1997, the Company filed a third-party complaint ("TPC")
as part of the Hawaii litigation against MAXIMUS Corporation ("MAXIMUS") and
CBSI. MAXIMUS has been the State of Hawaii's contract supervisor and advisor
since the inception of the Hawaii project. The allegations the Company has
made against MAXIMUS in this TPC are substantially similar to the allegations
made against CBSI in the Company's counterclaim to CBSI's December 13, 1996
lawsuit brought against the Company in Rhode Island. The Company alleged,
moreover, that MAXIMUS is liable to the Company on grounds that: (i) the
Company was an intended third party beneficiary under the contract between
MAXIMUS and Hawaii; (ii) MAXIMUS tortuously interfered in the contract between
the Company and Hawaii; (iii) MAXIMUS negligently breached duties to the
Company, and (iv) MAXIMUS aided and abetted Hawaii in Hawaii's breach of
contract. The Company's complaint seeks $70 million in damages.
In connection with the Hawaii litigation the Company was ordered to
assign all Hawaii related leases to the State. One of the lessors has sued the
Company for failure to pay. The Company believes it was released of all
responsibility on the lease per the court order.
Management believes that the Company's claims against the State, MAXIMUS
and CBSI have substantial merit and will vigorously pursue these claims. There
is substantial uncertainty, however, inherent in all litigation. If the
Company were not to prevail in its suit with the State, such a result could
have a material adverse financial effect on the Company and could jeopardize
the Company's ability to continue with its present listing on The NASDAQ
SmallCap Market. Management of the Company and its attorneys are unable to
predict with any certainty the ultimate outcome of this litigation, although
it is their belief that a favorable outcome is likely. At March 31, 1999, the
Company had unbilled work-in-process and related receivables from the State
and CBSI of approximately $3.5 million, which is slightly less than
stockholders' equity of approximately $4 million, for which no allowance for
uncollectibility has been recorded. The Company has not accrued for any
potential liability to the State, which may result from this litigation. In
addition, the Company has not accrued for any legal expense to be incurred in
connection with this litigation, which could be significant.
Due to the significant uncertainty created by these events, the Company
ceased recognition of revenue on the Hawaii contract in 1996. An adjustment
of $1.8 million was recorded in the fourth quarter to reverse revenue of $1
million, $400 thousand and $400 thousand previously in the first, second and
third quarters, respectively. In addition, 1996 costs incurred related to the
Hawaii contract of $1.96 million have been charged to expense.
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 Materially Important Events
None
Item 6. Exhibits and Reports
(a) Exhibit 27 Financial Data Schedule
(b) The following reports on Form 8-K have been filed during the quarter
for which this report is filed.
A current report on Form 8-K, dated January 13, 1999 was filed by the
Company and included the press release dated January 13, 1999,
announcing that the Company's received a contract amendment for
enhancing the InRhodes computer system.
A current report on Form 8-K, dated February 1, 1999 was filed by the
Company and included the press release dated February 1, 1999,
announcing new hire Samara H. Navarro.
A current report on Form 8-K, dated February 24, 1999 was filed by the
Company and included the press release dated February 23, 1999,
announcing the Company's results for the year ended December 31, 1998.
A Statement of Operations (without notes) for the years ended December
31, 1998, 1997 and 1996 and a Balance Sheet as of December 31, 1998 and
1997 was also included with the filing.
A current report on Form 8-K, dated March 19, 1999 was filed by the
Company and included the press release dated March 19, 1999, announcing
new hires and promotions.
A current report on Form 8-K, dated April 1, 1999 was filed by the
Company and included the press release dated April 1, 1999, announcing
the resignation of Director Clifton C. Dutton and the appointment of
Director Peter C. Wallace.
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.
Network Six, Inc.
Date: April 27, 1999 By: /s/ Kenneth C. Kirsch
Kenneth C. Kirsch
Chairman, President and
Chief Executive Officer
By: /s/ Dorothy M. Cipolla
Dorothy M. Cipolla
Chief Financial Officer and Treasurer
(principal financial officer)