NETSMART TECHNOLOGIES, INC.
146 NASSAU AVENUE
ISLIP, NEW YORK 11751
August 6, 2001
Securities and Exchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Dear Sirs:
Pursuant to regulations of the Securities and Exchange Commission, submitted
herewith for filing on behalf of Netsmart Technologies, Inc. (the "Company") is
the Company's Quarterly Report on Form 10- Q for the second quarter ended June
30, 2001.
This filing is being effected by direct transmission to the Commission's EDGAR
system.
Very truly yours,
Anthony F. Grisanti
Chief Financial Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2001
Commission File Number 0-21177
NETSMART TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3680154
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
146 Nassau Avenue, Islip, NY 11751
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (631) 968-2000
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__
Number of shares of common stock outstanding as of July 16, 2001: 3,691,209
Netsmart Technologies, Inc. and Subsidiaries
Index
Part I: - Financial Information:
Item 1. Financial Statements: Page
----
Consolidated Balance Sheets - June 30, 2001 (Unaudited)
and December 31, 2000 1-2
Consolidated Statements of Income (Unaudited) -
Six Months Ended June 30, 2001 and June 30, 2000 and
Three Months Ended June 30, 2001 and 2000 3
Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended June 30, 2001 and June 30, 2000 4-5
Consolidated Statement of Stockholders' Equity (Unaudited) -
Six Months Ended June 30, 2001 6-7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
June 30, December 31,
2001 2000
(Unaudited) ------------
-----------
Assets:
Current Assets:
Cash and Cash Equivalents $ 2,946,317 $ 2,418,947
Accounts Receivable - Net 5,769,053 4,688,598
Costs and Estimated Profits in Excess
of Interim Billings 4,439,920 4,068,255
Deferred taxes 494,000 494,000
Other Current Assets 105,242 144,942
---------- ----------
Total Current Assets 13,754,532 11,814,742
---------- ----------
Property and Equipment - Net 465,632 512,281
---------- ----------
Other Assets:
Software Development Costs - Net 807,053 822,645
Customer Lists - Net 2,851,776 2,064,832
Other Assets 177,174 86,213
---------- ----------
Total Other Assets 3,836,003 2,973,690
---------- ----------
Total Assets $18,056,167 $15,300,713
========== ==========
See Notes to Consolidated Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
June 30, December 31,
2001 2000
(Unaudited) ------------
-----------
Liabilities and Stockholders' Equity:
Current Liabilities:
Current Portion - Capitalized Lease Obligations $ 37,620 $ 35,756
Current Portion - Long Term Debt 500,000 -
Accounts Payable 860,874 807,298
Accrued Expenses 775,716 1,154,647
Interim Billings in Excess of Costs and Estimated
Profits 3,583,125 3,350,697
Deferred Revenue 441,152 608,444
----------- -----------
Total Current Liabilities 6,198,487 5,956,842
----------- -----------
Capitalized Lease Obligations - Less current portion 22,063 40,458
Long Term Debt - Less current portion 2,000,000 -
----------- -----------
Total Liabilities 2,022,063 40,458
----------- -----------
Commitments and Contingencies
Stockholders' Equity:
Preferred Stock - $.01 Par Value, 3,000,000
Shares Authorized; None issued and outstanding
Common Stock - $.01 Par Value; Authorized
15,000,000 Shares; Issued 3,719,247 shares
at June 30, 2001, 3,524,692 shares at
December 31, 2000 37,192 35,246
Additional Paid-in Capital 20,850,479 20,454,391
Accumulated Deficit (10,752,244) (10,886,414)
----------- -----------
10,135,427 9,603,223
Less cost of Common Stock held
in treasury - 28,038 shares at June 30,
2001 and December 31, 2000 299,810 299,810
----------- -----------
Total Stockholders' Equity 9,835,617 9,303,413
----------- -----------
Total Liabilities and Stockholders' Equity $ 18,056,167 $ 15,300,713
=========== ===========
See Notes to Consolidated Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
--------------------------------------------------------------------------------
Six months ended Three months ended
June 30, June 30,
---------------- ------------------
2001 2000 2001 2000
---- ---- ---- ----
Revenues:
Software and Related
Systems and Services:
General $ 5,833,078 $ 7,659,191 $ 2,767,723 $ 3,335,261
Maintenance Contract
Services 2,472,791 1,646,971 1,428,529 879,713
---------- ---------- ---------- ----------
Systems and Services 8,305,869 9,306,162 4,196,252 4,214,974
Data Center Services 933,620 1,204,590 468,396 694,415
---------- ---------- ---------- ----------
Total Revenues 9,239,489 10,510,752 4,664,648 4,909,389
---------- ---------- ---------- ----------
Cost of Revenues:
Software and Related
Systems and Services:
General 4,062,096 4,714,017 1,870,553 1,959,791
Maintenance Contract
Services 1,611,175 1,062,178 976,700 541,835
---------- ---------- ---------- ----------
Total Software and Related
Systems and Services 5,673,271 5,776,195 2,847,253 2,501,626
Data Center Services 506,614 507,946 240,083 265,876
---------- ---------- ---------- ----------
Total Cost of Revenues 6,179,885 6,284,141 3,087,336 2,767,502
---------- ---------- ---------- ----------
Gross Profit 3,059,604 4,226,611 1,577,312 2,141,887
Selling, General and
Administrative Expenses 2,218,934 2,367,888 1,114,209 1,280,397
Cost of Warrants Issuance and Extension - 181,000 - -
Research and Development 641,311 704,019 356,000 382,063
---------- ---------- ---------- ----------
Income before Interest Expense and
Provision for Income Taxes 199,359 973,704 107,103 479,427
Interest Expense 54,18 83,787 31,723 26,310
---------- ---------- ---------- ----------
Income before provision for income taxes 145,170 889,917 75,380 453,117
Provision for income taxes 11,00 - 5,800 -
---------- ---------- ---------- ----------
Net Income $ 134,170 $ 889,917 $ 69,580 $ 453,117
========== ========== ========== ==========
Earnings Per Share of Common Stock:
Basic:
Net Income $ .04 $ .27 $ .02 $ .13
========== ========== ========== ==========
Weighted Average Number of Shares of
Common Stock Outstanding 3,555,733 3,260,039 3,598,959 3,488,581
========== ========== ========== ==========
Diluted:
Net Income $ .04 $ .24 $ .02 $ .12
========== ========== ========== ==========
Weighted Average Number of Shares of
Common Stock Outstanding 3,832,539 3,753,687 3,873,939 3,891,884
========== ========== ========== ==========
See Notes to Consolidated Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
--------------------------------------------------------------------------------
Six months ended
June 30
----------------
2001 2000
---- ----
Operating Activities:
Net Income $ 134,170 $ 889,917
---------- ----------
Adjustments to Reconcile Net Income to Net
Cash [Used in] Provided by Operating Activities:
Depreciation and Amortization 513,996 332,595
Financing Cost Related to Issuance
and Extension of Warrants - 181,000
Changes in Assets and Liabilities:
[Increase] Decrease in:
Accounts Receivable (1,080,455) (1,240,684)
Costs and Estimated Profits in
Excess of Interim Billings (371,665) 611,909
Other Current Assets 39,700 (43,577)
Other Assets (90,961) 66,566
Increase [Decrease] in
Accounts Payable 53,576 (274,669)
Accrued Expenses (378,931) (66,785)
Interim Billings in Excess of
Costs and Estimated Profits 232,428 (382,196)
Deferred Revenue (167,292) 161,244
--------- ---------
Total Adjustments (1,249,604) (654,597)
--------- ---------
Net Cash (Used In) Provided by -
Operating Activities (1,115,434) 235,320
--------- ---------
Investing Activities:
Net Cost of AIMS Acquisition (779,700) -
Acquisition of Property and Equipment (82,799) (121,806)
Software Development Costs - (423,852)
--------- ---------
Net Cash (Used for) Investing Activities (862,499) (545,658)
--------- ---------
See Notes to Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
--------------------------------------------------------------------------------
Six months ended
June 30
----------------
2001 2000
---- ----
Financing Activities:
Payments of Short-Term Notes $ - $ (882,404)
Proceeds from Long Term Loan 2,500,000 -
Payment of Capitalized Lease Obligations (16,531) (12,267)
Net Proceeds from Warrant Exercise - 1,139,630
Net Proceeds from Stock Options Exercised 21,834 132,385
--------- ---------
Net Cash Provided by Financing Activities 2,505,303 377,344
--------- ---------
Net Increase in Cash and Cash Equivalents 527,370 67,006
Cash and Cash Equivalents - Beginning of Period 2,418,947 204,989
--------- ---------
Cash and Cash Equivalents - End of Period $2,946,317 $ 271,995
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the periods for:
Interest $ 42,153 $ 83,787
Income Taxes $ 114,366 $ 95,395
Non Cash Investment Activities:
Value of Common Stock Issued in AIMS Acquisition $ 376,200 $ -
See Notes to Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - (Unaudited)
--------------------------------------------------------------------------------
For the Six Months Ended June 30, 2001
Common Stock $.01 Par Value Authorized Shares Amount
------ ------
15,000,000 Shares
Beginning Balance - December 31, 2001 3,524,692 $ 35,246
Common Stock Issued - Exercise of Options 14,555 146
Common Stock Issued - Acquisition 180,000 1,800
--------- -------
Ending Balance - June 30, 2001 3,719,247 $ 37,192
========= =======
See Notes to Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - (Unaudited)
--------------------------------------------------------------------------------
For the Six Months Ended June 30, 2001
Additional Paid-In Capital Common Stock Shares Amount
------ ------
Beginning Balance - December 31, 2001 $ 20,454,391
Common Stock Issued - Exercise of Options 21,688
Common Stock Issued - Acquisition 374,400
-----------
Ending Balance - June 30, 2001 $ 20,850,479
===========
Accumulated Deficit
Beginning Balance - December 31, 2001 $(10,886,414)
Net Income 134,170
-----------
Ending Balance $(10,752,244)
===========
Treasury Stock
Beginning Balance - June 30, 2001 28,038 $ (299,810)
------ -----------
Ending Balance 28,038 $ (299,810)
====== ===========
Total Stockholders Equity $ 9,835,617
===========
See Notes to Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(1) In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of the Company as
of June 30, 2001 and the results of its operations for the six and three months
ended June 30, 2001 and 2000 and the changes in cash flows for the six months
ended June 30, 2001 and 2000. The results of operations for the six and three
months ended June 30, 2001 are not necessarily indicative of the results to be
expected for the full year.
(2) The accounting policies followed by the Company are set forth in Notes 1 and
2 to the Company's consolidated financial statements as filed in its Form 10-K
for the year ended December 31, 2000.
(3) Income per share - Income per share is computed by dividing the net income
for the period by the weighted average number of shares of common stock. The
common stock equivalents are assumed converted to common stock when dilutive.
(4) During the period ended June 30, 2001, stock options to purchase 14,555
shares were exercised and the Company received gross proceeds of $21,834. As a
result, common stock and additional paid in capital increased by $146 and
$21,688.
(5) The Company is a defendant in an arbitration proceeding commenced in March
2001 seeking damages of $635,000 for an alleged breach of a staff augmentation
services agreement. The Company believes that it has valid legal defenses to
such action.
(6) On May 10, 2001, the Company acquired the intellectual property, customer
contracts and certain other assets of Advanced Institutional Management Systems
("AIMS"). The principal assets acquired were the AIMS' customer base and the
rights to AIMS' Correctional and Public Health Systems software. The purchase
price consisted of 180,000 shares of the Company's common stock, valued at
$376,200, of which 18,000 shares are held in escrow, and $500,000 cash. In
addition, the Company may issue up to 100,000 additional shares of common stock,
based on revenue derived from new contracts for the AIMS systems. The Company
also assumed certain contract obligations. The Company has allocated $194,986 of
assumed contract obligations to the purchase price. The cost of the acquisition
was $1,155,900, of which $167,000 was allocated to purchased software, which is
included as other assets on the balance sheet, and $988,900 to customer lists.
The Company is amortizing the purchased software over a three-year life and the
customer lists over a seven-year life.
(7) In June 2001, the Company entered into a financing arrangement with a bank.
This improved credit facility and medium term financing replaced the Company's
asset-based borrowing facility. The new financing provides the Company with a
five-year term loan of $2.5 million, and a $1.5 million revolving line of
credit. The term loan bears interest at a fixed rate of 7.95% per annum and the
revolving line of credit is priced at the bank's prime rate. The interest rate
on the previous facility was prime + 2%.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
A significant portion of our revenue is derived from fixed price software
development contracts and licenses. We recognize this revenue on the estimated
percentage of completion basis. Since the billing schedules under the contracts
differ from the recognition of revenue, at the end of any period, these
contracts generally result in either costs and estimated profits in excess of
billing or billing in excess of cost and estimated profits. The largest
component of our revenue is based upon the time spent by our technical personnel
on a project. As a result, during the third and fourth quarters, when many of
our employees are on vacation and holidays, our revenue could be affected.
Six months Ended June 30, 2001 and 2000
Our revenue for the six months ended June 30, 2001 (the "June 2001 period") was
$9,239,000, a decrease of $1,271,000, or 12%, from our revenue for the six
months ended June 30, 2000 (the "June 2000 period"), which was $10,511,000. The
largest component of revenue was turnkey systems labor revenue, which decreased
to $3,385,000 in the June 2001 period, from $3,521,000 in the June 2000 period,
reflecting a 4% decrease. This decrease reflects an industry wide slow down in
information technology purchasing activity. Revenue from third party hardware
and software decreased to $1,353,000 in the June 2001 period, from $2,246,000 in
the June 2000 period, which represents a decrease of 40%. Sales of third party
hardware and software are made in connection with the sales of turnkey systems
and were affected by the decline in revenue from turnkey systems. These sales
are typically made at lower gross margins than our behavioral health systems and
services revenue. The data center (service bureau) revenue decreased to $933,000
in the June 2001 period, from $1,205,000 in the June 2000 period, reflecting a
decrease of 22%. This decrease is substantially the result of work performed for
one particular client during the June 2000 period as well as a smaller client
base during the June 2001 period. License revenue decreased to $483,000 in June
2001 period, from $1,258,000 in the June 2000 period, reflecting a decrease of
62%. License revenue is generated as part of a sale of a behavioral health
information system pursuant to a contract or purchase order that includes
delivery of the system and maintenance and is affected by the decline in revenue
from turnkey systems. Maintenance revenue increased to $2,473,000 in June 2001
period, from $1,647,000 in the June 2000 period, reflecting an increase of 50%.
As turnkey systems are completed, they are transitioned to the maintenance
division. Included in the June 2001 period is $387,000 of maintenance revenue
related to contracts for AIMS software. Revenue from the sales of our small
turnkey division decreased to $612,000 in the June 2001 period, from $634,000 in
the June 2000 period, reflecting a decrease of 3%.
Revenue from contracts from government agencies represented 42% of revenue in
the June 2001 period and 47% of revenue in the June 2000 period.
Gross profit decreased to $3,060,000 in the June 2001 period from $4,227,000 in
the June 2000 period, reflecting a decrease of 28%. The decrease in gross margin
was substantially attributable to the decrease in our license and data center
revenue mentioned above.
Selling, general and administrative expenses were $2,219,000 in the June 2001
period, reflecting a decrease of 6% from the $2,368,000 in the June 2000 period.
This decrease was substantially in the area of administrative costs and was
partially offset by an increase in sales and marketing costs.
In the June 2000 period, we issued warrants for services rendered. We also
extended one series of our warrants for fourteen months. An aggregate of
$181,000 was charged to operations for the warrant issuance and the warrant
extension. As a result of the extension of the warrants in the June 2000 period,
we raised additional equity of $1,153,000 from the exercise of the warrants.
There were no similar costs in the June 2001 period.
We incurred product development expenses of $641,000 in the June 2001 period, a
decrease of 9% from the $704,000 in the June 2000 period. During the June 2001
period, we continued to invest in improved functionality and technology in our
products, but at a lesser extent than the June 2000 period.
Interest expense was $54,000 in the June 2001 period, a decrease of $30,000, or
35%, from the $84,000 in the June 2000 period. This decrease was the result of
lower borrowings during the June 2001 period.
We have a net operating loss tax carry forward of approximately $7 million.
However, in the June 2001 period, we provided for income taxes in the amount of
$11,000. This provision was based upon federal alternative minimum tax
calculations as well as certain state taxes where we do not have any net
operating loss carry forwards.
As a result of the foregoing factors, in the June 2001 period, we generated a
net income of $134,000, or $.04 per share (basic and diluted). For the June 2000
period, we generated net income of $890,000, or $.27 per share (basic) and $.24
per share (diluted).
Three months Ended June 30, 2001 and 2000
Our revenue for the three months ended June 30, 2001 (the "June 2001 quarter")
was $4,665,000, a decrease of $245,000, or 5%, from our revenue for the three
months ended June 30, 2000 (the "June 2000 quarter"), which was $4,909,000. The
largest component of revenue was turnkey systems labor revenue, which increased
to $1,712,000 in the June 2001 quarter, from $1,666,000 in the June 2000
quarter, reflecting a 3% increase. This increase was substantially due to
customization & enhancements efforts with our existing client base. Revenue from
third party hardware and software decreased to $581,000 in the June 2001
quarter, from $764,000 in the June 2000 quarter, which represents a decrease of
24%. Sales of third party hardware and software are made in connection with the
sales of turnkey systems and were affected by the decline in revenue from new
turnkey systems. These sales are typically made at lower gross margins than our
behavioral health systems and services revenue. The data center (service bureau)
revenue decreased to $468,000 in the June 2001 quarter, from $694,000 in the
June 2000 quarter, reflecting a decrease of 33%. This decrease is substantially
the result of work performed for one particular client during the June 2000
quarter as well as a smaller client base during the June 2001 quarter. License
revenue decreased to $212,000 in June 2001 quarter, from $610,000 in the June
2000 quarter, reflecting a decrease of 65%. License revenue is generated as part
of a sale of a behavioral health information system pursuant to a contract or
purchase order that includes delivery of the system and maintenance and is
affected by the decline in revenue from turnkey systems. Maintenance revenue
increased to $1,429,000 in June 2001 quarter, from $880,000 in the June 2000
quarter, reflecting an increase of 62%. As turnkey systems are completed, they
are transitioned to the maintenance division. Included in the June 2001 quarter
is $387,000 of maintenance revenue related to contracts for AIMS software.
Revenue from the sales of our small turnkey division decreased to $262,000 in
the June 2001 quarter, from $295,000 in the June 2000 quarter, reflecting a
decrease of 11%.
Revenue from contracts from government agencies represented 40% of revenue in
the June 2001 quarter and 49% of revenue in the June 2000 quarter.
Gross profit decreased to $1,577,000 in the June 2001 quarter from $2,142,000 in
the June 2000 quarter, reflecting a decrease of 26%. The decrease in gross
margin was substantially attributable to the decrease in our license and data
center revenue mentioned above.
Selling, general and administrative expenses were $1,114,000 in the June 2001
quarter, reflecting a decrease of 13 % from the $1,280,000 in the June 2000
quarter. This decrease was substantially in the area of administrative costs and
was partially offset by an increase in sales and marketing costs.
We incurred product development expenses of $356,000 in the June 2001 quarter, a
decrease of 7% from the $382,000 in the June 2000 quarter. During the June 2001
quarter, we continued to invest in improved functionality and technology in our
products, but at a lesser extent than the June 2000 quarter.
Interest expense was $32,000 in the June 2001 quarter, an increase of $6,000, or
23%, from the $26,000 in the June 2000 quarter. This increase was the result the
$2.5 million term loan arrangement that we entered into in June 2001.
We have a net operating loss tax carry forward of approximately $7 million.
However, in the June 2001 quarter, we provided for income taxes in the amount of
$5,800. This provision was based upon the federal alternative minimum tax
calculation as well as certain state taxes where we do not have any net
operating loss carry forwards.
As a result of the foregoing factors, in the June 2001 quarter, we generated a
net income of $70,000, or $.02 per share (basic and diluted). For the June 2000
quarter, we generated net income of $453,000, or $.13 per share (basic) and $.12
per share (diluted).
Liquidity and Capital Resources
In June 2001, we entered into a financing arrangement with a bank. This improved
credit facility and medium term financing replaced our asset-based borrowing
facility. The new financing provides us with a five-year term loan of $2.5
million, as well as a $1.5 million revolving line of credit. The term loan bears
interest at a fixed rate of 7.95% per annum and the revolving line of credit is
priced at the prime rate. Under our revolving line of credit, we can borrow up
to 75% of eligible receivables up to a maximum of $1.5 million. The maximum
available to us at June 30, 2001 under the borrowing base formula was $1.5
million. The interest rate on the previous facility was prime + 2%. The proceeds
of the term loan are designated for acquisitions as well as product enhancements
specific to California requirements. The revolving line of credit will be
utilized for general working capital needs. We did not use the revolving line of
credit during the June 2001 period.
We had working capital of $7.6 million at June 30, 2001 as compared to working
capital of $5.9 million at December 31, 2000. The increase in working capital
for the June 2001 period was substantially the result of us entering into our
$2.5 million term loan arrangement as well as from net income after adding back
depreciation and amortization.
On May 10, 2001, we acquired the intellectual property, customer contracts and
certain other assets of Advanced Institutional Management Systems ("AIMS"). The
principal assets acquired were the AIMS' customer base and the rights to AIMS'
Correctional and Public Health Systems software. The purchase price consisted of
180,000 shares of the Company's common stock, of which 18,000 shares are held in
escrow, and $500,000 cash. We funded the cash portion with our term loan. In
addition, we may issue up to 100,000 additional shares of common stock, based on
revenue derived from new contracts for the AIMS systems.
At June 30, 2001, accounts receivable and costs and estimated profits in excess
of interim billings were approximately $10.2 million, representing approximately
199 days of revenue based on annualizing the revenue for the June 2001 period,
although no assurance can be given that revenue will continue at the same level
as the June 2001 period.
Based on our outstanding contracts and our continuing business, we believe that
our cash flow from operations, the availability under our financing agreement
and our cash on hand will be sufficient to enable us to continue to operate
without additional funding, although it is possible that we may need additional
funding if our business does not develop as we anticipate or if our expenses,
including our software development costs relating to our expansion of our
product line and our marketing costs for seeking to expand the market for our
products and services to include smaller clinics and facilities and sole group
practitioners exceed our expectations.
An important part of our growth strategy is to acquire other businesses that are
related to our current business. Such acquisitions may be made with cash or our
securities or a combination of cash and securities. If we fail to make any
acquisitions our future growth may be limited.
Forward Looking Statements
Statements in this Form 10-Q include forward-looking statements that
address, among other things, our expectations with respect to the development of
our business. In addition to these statements, other information including words
such as "seek," "anticipate," "believe," "plan," "estimate," "expect," "intend"
and other similar expressions are forward looking statements. Actual results
could differ materially from those currently anticipated due to a number of
factors, including those identified in our Annual Report on Form 10-K for 2000
under "Risk Factors," those discussed under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in this Form 10-Q and
our Form 10-K for 2000 and elsewhere, and in other documents which we file with
the Securities and Exchange Commission.
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.
NETSMART TECHNOLOGIES, INC.
/s/James L. Conway Chief Executive Officer August 6, 2001
------------------------- (Principal Executive Officer)
James L. Conway
/s/Anthony F. Grisanti Chief Financial Officer August 6, 2001
------------------------- (Principal Financial and
Anthony F. Grisanti Accounting Officer)