-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M1qdSwz1PMsLhvm/0g220Wf9gU+m8LX1UIX9PiRAx4LNL+EsYYfzG6mIbyV3rlOX 3Nf4xedxsDpvNcTOjoYIKw== 0000950147-99-000350.txt : 19990415 0000950147-99-000350.hdr.sgml : 19990415 ACCESSION NUMBER: 0000950147-99-000350 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990228 FILED AS OF DATE: 19990414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AVESIS INC CENTRAL INDEX KEY: 0000795574 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 860349350 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-15304 FILM NUMBER: 99593216 BUSINESS ADDRESS: STREET 1: 3724 NORTH THIRD ST STREET 2: STE 300 CITY: PHOENIX STATE: AZ ZIP: 85012 BUSINESS PHONE: 6029567287 MAIL ADDRESS: STREET 1: 3724 NORTH THIRD STREET STREET 2: SUITE 300 CITY: PHOENIX STATE: AZ ZIP: 85012 FORMER COMPANY: FORMER CONFORMED NAME: NBS NATIONAL BENEFIT SERVICES INC DATE OF NAME CHANGE: 19910114 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL VISION SERVICES INC DATE OF NAME CHANGE: 19900117 10QSB 1 QUARTERLY REPORT FOR THE QTR ENDED 2/28/99 Securities and Exchange Commission Washington D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 1999 ------------------ [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ____________ to ____________ Commission File Number 0-15304 --------- AVESIS INCORPORATED --------------------------------------- (Exact name of small business issuer as specified in its charter) Delaware 86-0349350 - ------------------------------- --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 3724 North Third Street, Suite 300 Phoenix, Arizona 85012 --------------------------------------------------------- (Address of principal executive offices) (602) 241-3400 --------------------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ] The number of outstanding shares of the registrant's Common Stock on April 7, 1999 was 7,356,297. TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (Check One) [ ] Yes [X] No 1 of 13 PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS AVESIS INCORPORATED BALANCE SHEET FEBRUARY 28, 1999 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 2,452,265 Receivables, net 392,583 Prepaid expenses and other 234,727 ----------- Total current assets 3,079,575 Property and equipment, net 468,453 Deposits and other assets 245,146 ----------- Total Assets $ 3,793,174 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,635,255 Current installments of obligations under capital lease 10,288 Accrued expenses- Compensation 14,012 Other 26,159 Deferred income 20,554 ----------- Total current liabilities 1,706,268 Obligations under capital lease, excluding current installments 23,166 ----------- Total liabilities 1,729,434 ----------- Stockholders' equity: Preferred stock $.01 par value, authorized 12,000,000 shares: $3.75 Class A, senior nonvoting cumulative convertible preferred stock, Series A, $.01 par value; authorized 1,000,000 shares; 301,160 issued and outstanding (liquidation preference of $3.75 per share) 3,012 $10 Class A, nonvoting cumulative convertible preferred stock, Series 2, $.01 par value; authorized 1,000,000 shares; 6,000 shares issued and outstanding (liquidation preference of $10 per share) and $33,750 of dividends in arrears at $5.625 per share; dividends accrue at $.225 per share per calendar quarter 60 Common stock of $.01 par value, authorized 12,000,000 shares; 7,356,297 shares issued and outstanding 73,563 Additional paid-in capital 10,461,420 Accumulated deficit (8,474,315) ----------- Net stockholders' equity 2,063,740 ----------- $ 3,793,174 =========== The accompanying notes are an integral part of these statements. - 2 - AVESIS INCORPORATED STATEMENTS OF OPERATIONS FOR THE QUARTER AND NINE MONTHS ENDED FEBRUARY 28, 1999 AND 1998 (Unaudited)
Quarters Ended Nine Months Ended -------------------------- ------------------------- February 28, February 28, February 28, February 28, 1999 1998 1999 1998 ----------- ---------- ---------- ---------- Service revenues: Administration fees $ 2,164,134 $1,675,511 $6,334,156 $4,594,003 Provider fees 33,817 32,163 106,650 86,959 Buying group 393,511 392,165 1,182,837 1,197,774 Other 4,249 2,373 6,723 4,980 ----------- ---------- ---------- ---------- Total service revenues 2,595,711 2,102,212 7,630,366 5,883,716 Cost of services 1,754,802 1,572,476 5,442,193 4,422,165 ----------- ---------- ---------- ---------- Income from services 840,909 529,736 2,188,173 1,461,551 General and administrative expenses 273,507 252,989 788,064 710,736 Selling and marketing expenses 279,918 219,936 815,799 553,021 ----------- ---------- ---------- ---------- Income from operations 287,484 56,811 584,310 197,794 ----------- ---------- ---------- ---------- Non-operating income (expense): Other income (expense) 47,033 807 48,958 (24,980) Interest income 25,838 6,976 57,942 24,394 Interest expense (951) (3,759) (3,080) (18,920) ----------- ---------- ---------- ---------- Net non-operating income (expense) 71,920 4,024 103,820 (19,506) ----------- ---------- ---------- ---------- Net income $ 359,404 $ 60,835 $ 688,130 $ 178,288 =========== ========== ========== ========== Preferred stock dividends (26,760) (87,342) (80,261) (262,026) Net income/(loss) available to common stockholders $ 332,644 $ (26,507) $ 607,849 $ (83,738) =========== ========== ========== ========== Earnings/(loss) per share - Basic $ 0.05 $ (0.01) $ 0.09 $ (0.02) =========== ========== ========== ========== Earnings/(loss) per share - Diluted $ 0.03 $ (0.01) $ 0.07 $ (0.02) =========== ========== ========== ========== Weighted average common and equivalent shares outstanding - Basic 7,363,053 4,065,661 6,597,748 4,088,045 =========== ========== ========== ========== Weighted average common and equivalent shares outstanding - Diluted 10,411,853 4,065,661 9,740,892 4,113,245 =========== ========== ========== ==========
The accompanying notes are an integral part of these statements. - 3 - AVESIS INCORPORATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED FEBRUARY 28, 1999 AND 1998 (Unaudited) 1999 1998 ---------- --------- Cash flows from operating activities: Net income $ 688,130 $ 178,288 ---------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 90,704 85,132 Loss on fixed asset disposal -0- 2,124 Provision for losses on accounts receivable 12,800 10,000 Changes in assets and liabilities: Decrease (increase) in receivables 74,525 (47,043) (Increase) decrease in prepaid expenses and other (119,276) 3,698 (Increase) in other assets (1,637) (73,256) Increase in accounts payable 529,090 391,045 (Decrease) in accrued expenses (31,492) (77,966) Increase (decrease) in deferred income 3,606 (6,282) (Decrease) increase in accrued rent (92,827) 6,658 ---------- --------- Total adjustments 465,493 294,110 ---------- --------- Net cash provided by operating activities 1,153,623 472,398 ---------- --------- Cash flows from investment activities: Purchases of property and equipment (151,300) (283,422) Proceeds from dispositions of property and equipment 1,370 5,000 ---------- --------- Net cash used in investing activities (149,930) (278,422) ---------- --------- Cash flows from financing activities: Principal payments under capital lease obligation (7,969) (4,062) Payment of Series A Preferred Stock dividend (51,715) -0- Exercise of stock options and warrants 1,228,656 -0- Repurchase of common and preferred stock (714,010) (20,629) Repayment of convertible subordinated debentures -0- (189,000) ---------- --------- Net cash provided by (used in) financing activities 454,962 (213,691) ---------- --------- Net increase (decrease) in cash and cash equivalents 1,458,655 (19,715) Cash and cash equivalents, beginning of period 993,610 817,535 ---------- --------- Cash and cash equivalents, end of period 2,452,265 797,820 ========== ========= Supplemental information: (a) Interest paid during the period - Notes payable to stockholders -0- 5,629 Subordinated Debentures -0- 8,978 The accompanying notes are an integral part of these statements. - 4 - AVESIS INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 28, 1999 AND 1998 (Unaudited) Note 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Avesis Incorporated, and its wholly-owned subsidiary, Avesis of Washington, D.C. (collectively, the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for a complete financial statement presentation. In the opinion of Management, such unaudited interim information reflects all adjustments, consisting only of a normal recurring nature, necessary to present the Company's financial position and the results of operations and cash flows for the periods presented. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full fiscal year. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-KSB, for the year ended May 31, 1998. Note 2. Earnings (Loss) per Share A summary of the reconciliation from basic earnings (loss) per share to diluted earnings (loss) per share for the quarter and nine month periods ended February 28, 1999 and 1998 follows: Quarter ended Quarter ended February 28, 1999 February 28, 1998 ----------------- ----------------- Net earnings $ 359,404 $ 60,835 Less: preferred stock dividends 26,760 87,342 ----------- ----------- Income (loss) available to common stockholders $ 332,644 $ (26,507) =========== =========== Basic EPS - weighted average shares outstanding 7,363,053 4,065,661 =========== =========== Basic earnings (loss) per share $ 0.05 $ (0.01) =========== =========== Basic EPS - weighted average shares outstanding 7,363,053 4,065,661 Effect of dilutive securities: Convertible preferred stock 3,048,800 -- ----------- ----------- Dilutive EPS - weighted average shares outstanding 10,411,853 4,065,661 Net earnings (loss) $ 359,404 $ (26,507) ----------- ----------- Diluted earnings (loss) per share $ 0.03 $ (0.01) =========== =========== Convertible Preferred Stock not included in diluted EPS since antidilutive -- 970,450 =========== =========== -5- Nine months ended Nine months ended February 28, 1999 February 28, 1998 ----------------- ----------------- Net earnings $ 688,130 $ 178,288 Less: preferred stock dividends 80,261 262,026 ---------- ---------- Income (loss) available to common stockholders $ 607,869 $ (83,738) ========== ========== Basic EPS - weighted average shares outstanding 6,597,748 4,088,045 ========== ========== Basic earnings (loss) per share $ 0.09 $ (0.02) ========== ========== Basic EPS - weighted average shares outstanding 6,597,748 4,088,045 Effect of dilutive securities: Convertible debentures -0- 25,200 Convertible preferred stock 3,143,144 -0- ---------- ---------- Dilutive EPS - weighted average shares outstanding 9,740,892 4,113,245 Net earnings (loss) $ 688,130 $ (83,738) Interest expense on non-CSE debt -0- 8,978 ---------- ---------- $ 688,130 $ (74,761) Diluted earnings (loss) per share $ 0.07 $ (0.02) ========== ========== Convertible Preferred Stock not included in diluted EPS since antidilutive -0- 970,450 ========== ========== Note 3. Use of Estimates Management of the Company has made certain estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses to prepare the financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. Note 4. Leases On December 16, 1998, the Company entered into a lease agreement to expand its current principal office location by approximately 3,200 square feet. The term of the lease will run concurrently with the current lease on the principal office location and will expire on September 30, 2002. On February 24, 1999, the Company was released by the landlord from the lease agreement and by the lessee from the sub-lease agreement covering the Company's former principal office. The lease agreement had an original expiration date of September 30, 2000. The write-off of unamortized broker's commissions and accrued rent that related to the lease for the Company's former principal office resulted in approximately $47,000 of miscellaneous income. -6- ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS FOR THE NINE MONTHS ENDED FEBRUARY 28, 1999 AND 1998 The statements contained in this discussion and analysis regarding management's anticipation of adequacy of cash reserves for operations, adequacy of reserves for claims, anticipated level of operating expenses related to new cardholders, viability of the Company, cash flows and marketability of the Company constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements. Management's anticipation is based upon assumptions regarding the market in which the Company operates, the level of competition, the level of demand for services, the stability of costs, the retention of Sponsors and cardholders enrolled in the Company's benefit programs, the relevance of the Company's historical performance, Year 2000 issues and the stability of the regulatory environment. Any of these assumptions could prove inaccurate, and therefore there can be no assurance that the forward-looking information will prove to be accurate. Avesis Incorporated, a Delaware corporation (together with its subsidiary, the "Company"), incorporated in June 1978, markets and administers vision, hearing, dental and chiropractic managed care and discount programs ("Programs") nationally. The Programs are designed to enable participants ("Members" or "Cardholders"), who are enrolled through various Sponsoring organizations such as insurance carriers, HMOs, Blue Cross and Blue Shield organizations, corporations, unions and various associations ("Sponsors"), to realize savings on purchases of services and products through networks of providers such as ophthalmologists, optometrists, opticians, hearing specialists, dentists and chiropractors ("Providers"). The Company derives its administration fee revenue from plan Sponsors who customarily pay a set fee per Member per month. Administration fee revenue is recognized on the accrual basis during the month that the Member is entitled to use the benefit. There are arrangements with certain Sponsors to pay for services rendered by the Company on a fee for service basis. Based upon the type of program (e.g., managed care, discount, third party administration) the Provider's claim for service provided to Members is paid either by the Company, Sponsor, Member or combination thereof. Buying Group revenues are recorded at the total amount billed to participating Providers and recognized in the month the merchandise is shipped. Vision Provider fee revenue is based upon a percentage of materials sold by certain participating providers under certain plans. RESULTS OF OPERATIONS: The following tables detail the Company's major revenue and expense categories for the quarters and nine months ended February 28, 1999 and 1998: -7-
Quarter Ended Quarter Ended February 28, 1999 February 28, 1998 Increase/(Decrease) ----------------- ----------------- ------------------- % of Total % of Total Revenue: Service Revenue Service Revenue % Change - -------- --------------- --------------- -------- Total Service Revenue $2,595,711 100% $2,102,212 100% $493,499 23% Vision & Hearing Program 1,909,495 74% 1,412,283 67% 497,212 35% Vision Provider Fee 33,817 1% 32,163 2% 1,654 5% Dental Program 254,360 10% 256,312 12% (1,952) (1%) Buying Group Program 393,511 15% 392,165 19% 1,346 0% Expenses: Cost of Services 1,754,802 68% 1,572,476 75% 182,326 12% General & Administrative 273,507 11% 252,989 12% 20,518 8% Selling & Marketing 279,918 11% 219,936 10% 59,982 27% Income from Operations 287,484 11% 56,811 3% 230,673 406% Net Income 359,404 14% 60,835 3% 298,569 491% Nine Months Ended Nine Months Ended February 28, 1999 February 28, 1998 Increase/(Decrease) ----------------- ----------------- ------------------- % of Total % of Total Revenue: Service Revenue Service Revenue % Change Total Service Revenue $7,630,366 100% $5,883,716 100% $1,746,650 30% Vision & Hearing Program 5,487,040 72% 3,698,152 63% 1,788,888 48% Vision Provider Fee 106,650 1% 86,959 1% 19,691 23% Dental Program 840,496 11% 878,548 15% 38,052 (4%) Buying Group Program 1,182,837 16% 1,197,774 20% 14,937 (1%) Expenses: Cost of Services 5,442,193 71% 4,422,165 75% 1,020,027 23% General & Administrative 788,064 10% 710,736 12% 77,328 11% Selling & Marketing 815,799 11% 553,021 9% 262,778 48% Income from Operations 584,310 8% 197,794 3% 386,516 195% Net Income 688,130 9% 178,288 3% 509,842 286%
Past and future revenues in all lines of business are directly related to the number of Cardholders enrolled in the Company's benefit programs. However, there may be significant pricing differences to Sponsors depending on whether the benefit offered is funded in part or whole by the plan Sponsor. A substantial portion of the Company's Cardholder base is derived from a limited number of Sponsors. The Company's four largest Sponsors accounted for approximately 93% and 83% of the total administration fee revenue for the nine months ended February 28, 1999 and 1998, respectively. The increase in total service revenues is principally due to a vision plan Sponsor who has increased the level of benefit of their Cardholders, and the resulting fees paid to the Company, over the prior year, and a second vision plan Sponsor which has added approximately 78,000 Cardholders since May 1998. -8- The Company had approximately 825,000 vision and 6,000 hearing cardholders as of February 28, 1999, compared to approximately 676,000 vision and 6,500 hearing cardholders as of February 28, 1998. The increase in vision and hearing revenue during the current quarter and nine months was largely the result of the two vision plan Sponsors mentioned above. Other changes in the number of vision and hearing cardholders occurred due to Sponsors' employee or Member fluctuations in the normal course of business. Vision provider fee revenue remained constant in the current quarter as compared to the same quarter in the previous fiscal year. This resulted from a similar utilization rate and total membership of plan benefits in which Providers are required to pay the fee. The Company had approximately 150,000 and 129,000 dental cardholders as of February 28, 1999 and 1998, respectively. The Company's dental program revenue has declined slightly while the number of cardholders has increased. This situation is caused by the different prices charged per cardholder related to the level of benefit provided, as previously discussed. The Company makes available to its vision Providers a buying group program that enables the Provider to order eyeglass frames from the manufacturers at discounts from wholesale costs. These discounted prices are generally lower than a Provider could negotiate individually, due to the large volume of purchases of the buying group. Costs of Services primarily relate to servicing Members, Providers, and Sponsors under the Company's vision, hearing, dental and chiropractic benefit programs as well as the cost of frames that are sold through the Company's buying group program as discussed above. The increase in Cost of Services from the prior year resulted from additional claims expenses from the increase of managed care business and payroll for increased staff in the customer service and claims departments. Cost of Services and General and Administrative expenses continued to decrease as a percentage of total service revenues during the quarter and nine months ended February 28, 1999, as compared to the same periods in fiscal 1998. This is due to the efficiencies of scale that the Company is experiencing as its Total Service Revenues and Cardholder base continues to grow. Selling and marketing expenses include marketing fees, broker commissions, inside sales and marketing salaries and related expenses, travel related to the Company's sales activities and an allocation of related overhead expenses. The increase in expenses during the current period was primarily due to the addition of an experienced salesperson during September 1998 and the increase of commissions directly related to the Company's increased administrative fee revenues. A significant amount of the Company's marketing activities has been outsourced to management consultants, National Health Enterprises (an affiliate). -9- LIQUIDITY AND CAPITAL RESOURCES The Company had cash and cash equivalents of $2,452,265 as of February 28, 1999, compared to $993,610 as of May 31, 1998. The increase of $1,458,655 is primarily due to the Company's continued ability to reduce expenses, emphasize timely collections of accounts receivable, advantageously time payments to vendors during the nine-month period and the exercise of stock options and warrants during August 1998, reduced by the cost of repurchased and retired common and preferred stock. The Company is maintaining its policy of paying vendors on a net 45-day basis and continues to remain current on all of its trade accounts payable. Current cash on hand and cash provided from operations is expected to allow the Company to sustain operations for the foreseeable future. The Company is party to a revolving credit facility for an amount not to exceed $100,000. The credit facility allows the Company to better manage its cash liquidity. To date, the Company has never drawn funds on the credit facility. As of February 28, 1999, the Company had $1,635,255 of Accounts Payable, compared to $1,106,165 as of May 31, 1998. The increase is predominately due to reserves for claims of $1,327,606 as of February 28, 1999, compared to $786,052 as of May 31, 1998, included in Accounts Payable. The reserves are for incurred but not reported claim reimbursements to Providers who participate in certain managed care programs. The Company believes this reserve is adequate based upon historical results and its experience. During the fiscal year ended May 31, 1998, the Company retired the final $189,000 of Convertible Subordinated Debentures, due December 1, 1997, and all $160,000 of subordinated notes payable to certain affiliates due March 18, 1998, with funds provided by operations. Accordingly, there are no amounts listed as interest for Debentures or Notes payable to stockholders during the current quarter on the Statements of Cash Flows. On December 16, 1998, the Company entered into a lease agreement to expand its current principal office location by approximately 3,200 square feet. The term of the lease will run concurrently with the current lease on the principal office location and will expire on September 30, 2002. The additional space is necessary to accommodate the growth of the Company's Customer Service department. The Company expects to pay dividends of approximately $50,180 on the Series A Preferred on June 1, 1999. -10- YEAR 2000 COMPLIANCE The Year 2000 issue is the result of computer systems that were written using two digits rather than four to define the applicable year. This programming decision may prevent such systems from accurately processing dates occurring in the year 2000 and thereafter. This could result in system failures or in miscalculations causing a disruption of operations, including, but not limited to, a temporary inability to process Member eligibility information, to process claims payments, or to engage in routine business activities and operations. The Company has reviewed all internally used software and believes that its systems that have recently been developed and are currently under testing and all other critical applications are Year 2000 compliant. Based upon its current computer operations and systems development, the Company believes that its risks related to Year 2000 compliance are minimal. The Company does not presently anticipate that any additional costs to address the Year 2000 issue will have a material adverse effect on the Company's financial condition, results of operations or liquidity. The Company is in the process of contacting all vendors and clients who forward data electronically to determine the extent of their compliance and to plan accordingly. Based upon information received from third parties, the Company believes that all significant vendors and clients have Year 2000 remediation efforts underway. The Company's five largest Sponsors that collectively account for greater than 90% of the total administration fee revenue, either electronically transmit data using a four digit year or forward data in a hard copy format. To the extent that the Company's vendors and clients data are not Year 2000 compliant, the Company's new systems have been written with the flexibility to translate the data accordingly into a Year 2000 compliant format. While the Company believes that its risks related to disruption arising from Year 2000 compliance by vendors and its clients are minimal, it does not have any control over these third parties and cannot determine to what extent future operating results may be adversely effected by the failure of third parties to successfully address Year 2000 issues. -11- PART II OTHER INFORMATION ITEM 3. DEFAULTS UPON SENIOR SECURITIES (b) The Certificate of Designation for the Company's Class A, Senior Nonvoting Cumulative Convertible Preferred Stock, Series A, places restrictions upon the payment of dividends on the Company's Class A, Nonvoting Cumulative Convertible Preferred Stock, Series 2 and Common Stock. Accordingly, the Company may not pay the quarterly dividend otherwise scheduled for payment during April 1999, on shares of its Series 2 Preferred Stock. Such dividend is cumulative and the total dividend arrearage is $35,100, or $5.85 per share, as of March 31, 1999 for all 6,000 shares outstanding. ITEM 5. OTHER INFORMATION - RETIREMENT OF STOCK INFORMATION As previously disclosed in the Company's Form 10-QSB for the quarter ended November 30, 1998, filed on January 12, 1999, the Company made the following stock repurchases and retirements: Total Purchase Price Date Common Shares including Commissions ---- ------------- --------------------- December 21, 1998 38,000 $11,422 Subsequent to the filing of the Company's Form 10-QSB for the quarter ended November 30, 1998, the Company made the following stock repurchases and retirements: Total Purchase Price Date Series A Shares including Commissions ---- --------------- --------------------- January 13, 1999 1,000 $3,647 January 25, 1999 2,800 $9,406 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) See Exhibit Index following the Signatures page, which is incorporated herein by reference. (b) No reports on Form 8-K were filed during the quarter ended February 28, 1999. -12- SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AVESIS INCORPORATED (Registrant) Date: 4/14/99 /s/ Neal A. Kempler ------------------------------------------- Neal A. Kempler, Vice President and Secretary Date: 4/14/99 /s/ Joel H. Alperstein ------------------------------------------- Joel H. Alperstein, Director of Finance and Treasurer (Principal Financial Officer) -13- Avesis Incorporated Exhibit Index Form 10-QSB for the Quarter Ended November 30, 1998 Exhibit No. Description Incorporated by Reference from the: - ----------- ----------- ----------------------------------- 11 Statement re: Computation of Earnings (Loss) per Share Computation, per Share Earnings see Note 2 to the Notes to Condensed Consolidated Financial Statements 27 Financial Data Schedule Filed herewith EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS IN THE COMPANY'S FORM 10-QSB FOR THE QUARTER ENDED FEBRUARY 28, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 U.S. DOLLARS 9-MOS MAY-31-1999 JUN-01-1998 FEB-28-1999 1 2,452,265 0 435,132 (42,549) 0 3,079,575 1,489,093 (1,020,640) 3,793,174 1,706,268 0 0 3,072 73,563 0 3,793,174 0 7,630,366 5,442,193 1,603,863 106,900 0 (3,080) 688,130 0 688,130 0 0 0 688,130 0.09 0.07
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