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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2002
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Commission file number: 0-23598
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NWH, INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-3735316
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(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
156 West 56 Street, Suite 2001, New York, NY 10019
-------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(212) 582 1212
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(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 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
issuer's classes of common stock, as of the latest practicable date.
Common Stock, $.01 par value: 2,957,000 shares as of
September 10, 2002.
NWH, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
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PAGE
Condensed Consolidated Balance Sheets as of July 31, 2002 and
October 31, 2001 (Unaudited) 3
Condensed Consolidated Statements of Operations for the three and nine
months ended July 31, 2002 and 2001 (Unaudited) 4
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three
and nine months ended July 31, 2002 and 2001 (Unaudited) 5
Condensed Consolidated Statements of Cash Flows for the nine months
ended July 31, 2002 and 2001 (Unaudited) 6
Notes to Condensed Consolidated Financial Statements (Unaudited) 7 - 10
2
NWH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
- -------------------------------------------------------------------------------
JULY 31, OCTOBER 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $ 30,211,952 $ 19,231,683
Marketable securities 14,328,288 34,794,641
Trade and other receivables 2,086,629 2,245,892
Prepaid expenses and other current assets 1,316,958 1,246,696
--------------------- -------------
TOTAL CURRENT ASSETS 47,943,827 57,518,912
Property and equipment, net of accumulated
depreciation of $2,844,617 and $2,020,469, respectively 2,930,892 2,963,438
Goodwill 3,762,187 2,972,117
Investments and other assets 517,830 564,863
--------------------- -------------
TOTAL ASSETS $ 55,154,736 $ 64,019,330
===================== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,529,339 $ 2,055,230
Call options written, at fair value 2,333,286 2,397,791
Securities sold short, at fair value 1,342,500 3,700,000
Current portion of long-term debt 274,424 264,364
Current income taxes 1,033,130 58,130
Deferred income taxes 6,080,333 8,135,333
--------------------- -------------
TOTAL CURRENT LIABILITIES 12,593,012 16,610,848
Note payable to related party 140,000 140,000
Long-term debt 149,997 348,662
--------------------- -------------
TOTAL LIABILITIES 12,883,009 17,099,510
--------------------- -------------
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized;
no shares issued or outstanding - -
Common stock, $.01 par value: 20,000,000 shares authorized;
3,333,000 shares issued and outstanding 33,330 33,330
Paid-in capital 23,071,872 23,071,872
Retained earnings 22,347,425 18,674,613
Accumulated other comprehensive income 1,391,221 5,333,000
Treasury stock 376,000 and 16,500 shares in
2002 and 2001, respectively, at cost (4,572,121) (192,995)
--------------------- -------------
TOTAL STOCKHOLDERS' EQUITY 42,271,727 46,919,820
--------------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 55,154,736 $ 64,019,330
===================== =============
See accompanying notes to unaudited condensed consolidated financial statements.
3
NWH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
- -------------------------------------------------------------------------------
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED JULY 31, ENDED JULY 31,
2002 2001 2002 2001
----------------- ------------- ------------- ------------
Services revenue $ 2,961,599 $ 3,070,199 $ 8,936,154 $ 9,198,784
----------------- ------------- ------------- ------------
Cost of services 1,315,502 1,818,467 4,036,225 5,323,844
Professional fees 149,456 121,653 471,610 470,201
General and administrative 1,415,079 1,692,769 4,209,088 5,883,635
Depreciation and amortization 187,282 258,539 571,740 833,990
----------------- ------------- ------------- ------------
3,067,319 3,891,428 9,288,663 12,511,670
----------------- ------------- ------------- ------------
Loss from operations (105,720) (821,229) (352,509) (3,312,886)
----------------- ------------- ------------- ------------
Other income (expense):
Gain on securities transactions, net 1,842,761 966,034 5,089,568 7,069,747
Dividend income 96,728 91,892 307,112 304,176
Interest income 128,039 445,513 307,976 1,389,687
Interest expense (24,295) (31,484) (79,335) (78,372)
----------------- ------------- ------------- ------------
2,043,233 1,471,955 5,625,321 8,685,238
----------------- ------------- ------------- ------------
Income before provision for
income taxes and cumulative effect of change
in accounting for written call options 1,937,513 650,726 5,272,812 5,372,352
Provision for income taxes 500,000 125,000 1,600,000 1,425,000
----------------- ------------- ------------- ------------
Income before cumulative effect of a change in
accounting for written call options 1,437,513 525,726 3,672,812 3,947,352
Cumulative effect of a change in accounting for
written call options, net of income taxes of
($1,514,667) - - - (2,812,000)
----------------- ------------- ------------- ------------
NET INCOME $ 1,437,513 $ 525,726 $ 3,672,812 $ 1,135,352
================= ============= =========== ============
Net income per common share:
Basic $ 0.47 $ 0.16 $ 1.17 $ 0.34
================= ============= =========== ============
Diluted $ 0.47 $ 0.16 $ 1.17 $ 0.34
================= ============= =========== ============
Weighted average number of common shares outstanding:
Basic 3,043,959 3,333,000 3,141,277 3,333,000
================= ============= =========== ============
Diluted 3,043,959 3,333,000 3,141,277 3,333,000
================= ============= =========== ============
See accompanying notes to unaudited condensed consolidated financial statements.
4
NWH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
- -------------------------------------------------------------------------------
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED JULY 31, ENDED JULY 31,
2002 2001 2002 2001
------------ ----------- ------------ ------------
Net income $ 1,437,513 $ 525,726 $ 3,672,812 $ 1,135,352
Other comprehensive income:
Cumulative effect of a change in
accounting for written call options, net of income
taxes of $1,514,667 - - 2,812,000
Net unrealized holding loss on marketable
securities arising during the period, net of
income taxes of ($630,613), ($371,780),
and ($2,026,240) and ($1,082,216), respectively (1,237,134) (662,228) (3,656,226) (1,981,627)
Reclassification adjustment for gains recognized
in net income, net of income taxes of ($104,388)
$0, ($153,760) and ($1,209,968), respectively (193,863) - (285,553) (1,924,161)
------------ ----------- ------------ -------------
OTHER COMPREHENSIVE LOSS (1,430,997) (662,228) (3,941,779) (1,093,788)
------------ ----------- ------------ -------------
COMPREHENSIVE INCOME (LOSS) $ 6,516 $ (136,502) $ (268,967) $ 41,564
============ =========== ============ ============
See accompanying notes to unaudited condensed consolidated financial statements.
5
NWH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
- -------------------------------------------------------------------------------
FOR THE NINE MONTHS ENDED
JULY 31,
2002 2001
Cash flows from operating activities:
Net income $ 3,672,812 $ 1,135,352
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 827,111 973,327
Loss on exiting satellite programming uplink operations - 532,020
(Accretion) amortization of interest income (8,562) 44,364
Gain on securities transactions, net (1,246,726) (4,756,390)
Unrealized gain on securities transactions (3,842,842) (35,224)
Deferred income taxes 125,000 (39,667)
Bad debt expense 16,255 -
Net changes in assets and liabilities:
Trade and other receivables 143,008 (750,628)
Prepaid expenses and other current assets (70,262) (50,949)
Investments and other assets 47,033 67,389
Accounts payable and accrued expenses (525,891) 159,723
Current income taxes payable 975,000 (278,130)
------------- --------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 111,936 (2,998,813)
------------- --------------
Cash flows from investing activities:
Acquisition of property and equipment (794,565) (1,517,234)
Proceeds from sale of property and equipment - 219,722
Acquisition of marketable equity securities (7,314,450) (38,925,572)
Proceeds from sale of marketable equity securities 26,294,185 41,748,988
Proceeds from sale of marketable securities - short sale 2,006,967 4,109,479
Acquisition of marketable securities - short sale (3,966,003) (4,697,965)
Acquisition of common stock of ENS (790,070) -
------------- --------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 15,436,064 937,418
------------- --------------
Cash flows from financing activities:
Acquisition of treasury stock (4,379,126) -
Borrowing of short-term debt 100,000 -
Principal payments of debt (288,605) (97,097)
------------- --------------
NET CASH USED IN FINANCING ACTIVITIES (4,567,731) (97,097)
------------- --------------
Net increase (decrease) in cash and cash equivalents, end of period 10,980,269 (2,158,492)
Cash and cash equivalents, beginning of period 19,231,683 11,520,876
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 30,211,952 $ 9,362,384
============== ==============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 24,295 $ 78,372
Cash paid for income taxes $ 500,000 $ 302,500
Assets acquired under capital lease obligations $ - $ 447,085
See accompanying notes to unaudited condensed consolidated financial statements.
6
NWH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- -------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of NWH, Inc. (the "Company") have been prepared in accordance with
accounting principles generally accepted in the United States of
America for interim financial statements and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for
complete financial statements. In the opinion of management, all
adjustments, consisting solely of normal recurring accruals necessary
for a fair presentation of the financial statements for these interim
periods, have been recorded. Operating results for the interim period
are not necessarily indicative of the results that may be expected for
a full year. For further information, refer to the financial statements
and footnotes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 2001 (File No. 0-23598) as
filed with the Securities and Exchange Commission.
Certain reclassifications have been made in prior period's financial
statements to conform to classifications used in the current period.
2. NEW ACCOUNTING PRONOUNCEMENTS
In October 2001, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets". This statement defines the accounting for
long-lived assets to be held and used, assets held for sale and assets
to be disposed of by other than sale and is effective for fiscal years
beginning after December 15, 2001. The Company does not expect the
adoption of this pronouncement to have a material effect on the
earnings or financial position of the Company.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". The standard requires
companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a
commitment to an exit or disposal plan. Previous accounting guidance
was provided by EITF Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs incurred in a Restructuring)". SFAS No. 146
replaces Issue 94-3. The provisions of SFAS No. 146 are to be applied
prospectively to exit or disposal activities initiated after December
31, 2002. The Company does not expect the adoption of this
pronouncement to have a material effect on the earnings or financial
position of the Company.
3. MARKETABLE SECURITIES
Components of the available-for-sale marketable securities as of
July 31, 2002 are as follows:
UNREALIZED
HOLDING FAIR
COST GAIN VALUE
BellSouth common stock $ 12,217,066 $ 2,111,222 $ 14,328,288
============= ============= ===============
Included on the balance sheet are call options written on BellSouth,
common stock as of July 31, 2002 at a fair value of $2,333,286
representing contracts for 500,000 shares. Also included on
7
NWH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- -------------------------------------------------------------------------------
the balance sheet are short sales of BellSouth common stock as of
July 31, 2002 at a fair value of $1,342,500, representing 50,000
shares.
4. GOODWILL
Effective November 1, 2001, the Company adopted Statement of Financial
Accounting Standard ("SFAS") No. 141, "Business Combinations" and SFAS
No. 142," Goodwill and Other Intangible Assets. Under the new
pronouncements, goodwill and intangible assets that have an indefinite
useful life will no longer be amortized but will be subject to at least
an annual impairment test in accordance with the statement. Other
intangible assets that have finite useful lives will continue to be
amortized over their useful life.
The Company completed the first step of the transitional goodwill
impairment test and did not record an impairment charge as a result.
In accordance with SFAS 142, a reconciliation of the previously
reported net income and net income per share amounts adjusted for the
exclusion of goodwill amortization, net of any related income tax
effect, is as follows:
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED JULY 31, ENDED JULY 31,
2002 2001 2002 2001
------------- ---------- ------------ ------------
Reported net income $ 1,437,513 $ 525,726 $ 3,672,812 $ 1,135,352
Goodwill amortization, net of tax - 46,242 - 138,725
------------- ---------- ------------ ------------
Adjusted net income 1,437,513 571,968 3,672,812 1,274,077
------------- ---------- ------------ ------------
Basic weighted average common shares outstanding 3,043,959 3,333,000 3,141,277 3,333,000
------------- ---------- ------------ ------------
Basic net income per common share:
Reported net income 0.47 0.16 1.17 0.34
Goodwill amortization, net of tax - 0.01 - 0.04
------------- ---------- ------------ ------------
Adjusted net income 0.47 0.17 1.17 0.38
------------- ---------- ------------ ------------
Diluted weighted average common shares outstanding 3,043,959 3,333,000 3,141,277 3,333,000
------------- ---------- ------------ ------------
Diluted net income per common share:
Reported net income 0.47 0.16 1.17 0.34
Goodwill amortization, net of tax - 0.01 - 0.04
------------- ---------- ------------ ------------
Adjusted net income 0.47 0.17 1.17 0.38
------------- ---------- ------------ ------------
5. ENS
On December 7, 2001, the Company acquired 1,774,333 shares of the
voting common stock of ENS from a stockholder for $500,000 in cash and
$200,000 in the form of a contingent note. On June 27, 2002, the
Company acquired 586,000 shares of the voting common stock of ENS from
two shareholders for a total of $290,070 in cash. This increases the
Company's ownership to 94% of the outstanding common stock (assuming
conversion of its preferred stock), and with additional voting rights,
99% control of ENS.
8
NWH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- -------------------------------------------------------------------------------
6. CAPITAL STOCK
For the nine months ended July 31, 2002, the Company acquired 359,500
shares of its common stock for $4,379,126 under a plan that permits the
acquisition of up to 20% of the Company's stock.
7. SEGMENT INFORMATION
The Company currently operates in two operating segments: the holding
company, including certain investments which are not currently
material; and its investment in ENS.
NWH AND
OTHER ENS TOTAL
THREE MONTHS ENDED JULY 31, 2002
Revenues:
Service $ - $ 2,961,599 $ 2,961,599
Expenses:
Cost of services, professional fees, and
general and administrative (480,461) (2,399,576) (2,880,037)
Depreciation and amortization (870) (186,412) (187,282)
-------------- ------------- -------------
(Loss) income from operations $ (481,331) $ 375,611 $ (105,720)
============== ============= =============
Capital expenditure for property and equipment $ - $ 335,832 $ 335,832
============== ============= =============
THREE MONTHS ENDED JULY 31, 2001
Revenues:
Service $ 16,906 $ 3,053,293 $ 3,070,199
Expenses:
Cost of services, professional fees, and
general and administrative (548,826) (3,084,063) (3,632,889)
Depreciation and amortization (15,198) (243,341) (258,539)
-------------- ------------- -------------
Loss from operations $ (547,118) $ (274,111) $ (821,229)
============== ============= =============
Capital expenditure for property and
equipment $ - $ 1,434,659 $ 1,434,659
============== ============= =============
9
NWH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- -------------------------------------------------------------------------------
NWH AND
OTHER ENS TOTAL
NINE MONTHS ENDED JULY 31, 2002
Revenues:
Service $ 2,205 $ 8,933,949 $ 8,936,154
Expenses:
Cost of services, professional fees, and
general and administrative (1,310,251) (7,406,672) (8,716,923)
Depreciation and amortization (8,151) (563,589) (571,740)
-------------- ------------ -------------
(Loss) income from operations $ (1,316,197) $ 963,688 $ (352,509)
============== ============ =============
Total assets $ 46,500,937 $ 8,653,799 $ 55,154,736
============== ============ =============
Capital expenditure for property and equipment $ - $ 794,565 $ 794,565
============== ============ =============
NINE MONTHS ENDED JULY 31, 2001
Revenues:
Service $ 21,836 $ 9,176,948 $ 9,198,784
Expenses:
Cost of services, professional fees, and
general and administrative (2,078,757) (9,598,923) (11,677,680)
Depreciation and amortization (92,146) (741,844) (833,990)
-------------- ------------ -------------
Loss from operations $ (2,149,067) $ (1,163,819) $ (3,312,886)
============== ============ =============
TOTAL ASSETS $ 58,644,641 $ 7,859,109 $ 66,503,750
============== ============ =============
Capital expenditure for property and equipment $ - $ 1,964,319 $ 1,964,319
============== ============ =============
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NWH, Inc. ("NWH" or the "Company"), formerly National Wireless
Holdings Inc., a Delaware corporation, is an electronic commerce and
communications company focusing primarily on acquisition and operation of
telecommunications, e-commerce and other strategically linked businesses. The
Company currently owns and operates Electronic Network Systems, Inc. ("ENS"),
formerly known as Electronic Data Submission Systems, Inc., a
business-to-business healthcare e-commerce data interchange company,
providing links between healthcare providers and payers. In addition, the
Company continues its business of acquiring controlling interests in
telecommunications, healthcare, other strategically linked areas and other
unrelated businesses. In June 1997, the Company sold its wireless cable
assets in Miami, Florida in exchange for common stock of BellSouth
Corporation.
The Company was incorporated in Delaware on August 31, 1993. The
Company's fiscal year ends on October 31.
ENS is a leading healthcare transactions-processing intermediary. At
ENS, we execute a full-cycle suite of payer-driven services and products
known as Health-e Network(R) that establishes a transactions processing
environment for payers, physicians and other healthcare providers, including
hospitals and laboratories. Our services and products, (1) create healthcare
e-commerce connectivity between payers, physicians and other healthcare
providers, (2) significantly reduce the volume of paper healthcare
transactions and processing errors, and (3) set a clear migration path for
payers, physicians and other healthcare providers to utilize Internet and
Web-based applications and services effectively for greater operational
efficiency. We believe Health-e Network(R) is one of the most effective
services addressing the need to handle both paper and electronic transactions
on behalf of its customers, to reduce or eliminate inefficient paper
transactions and to conduct business electronically.
In excess of 20,000 providers are connected to our e-commerce and
Internet services and, through our payer contracts, we currently conduct
daily paper to e-commerce claim conversion for another 185,000 healthcare
providers. Our revenues are generated from payers, physicians, other
providers and strategic partners through recurring subscriptions, flat or per
transaction fees and revenue sharing. As of September 10, 2002, we were
connected to over 1,000 commercial healthcare plans, managed care
organizations and Blue Cross/Blue Shield plans, as well as Medicare, Medicaid
and CHAMPUS.
We focus on the current and future connectivity and transactions
processing requirements of the healthcare industry. We provide healthcare
providers with a secure infrastructure for web-based and private network
transactions consisting of, among others, electronic medical claims
processing, electronic claims tracking and patient eligibility verification.
We also provide health care payers e-commerce connectivity with their
provider constituency as well as paper claims conversion, pre-adjudication,
reporting, education and marketing support to increase utilization of
e-commerce in this industry. Our strategy for the future is to facilitate the
migration of provider and payer clients from their current inefficient,
non-integrated transactions processing environments to efficient, seamlessly
integrated applications utilizing the transactions processing capabilities of
Health-e Network(R). Traditional applications linked to on-all-the-time
Internet capabilities or Application Service
11
Provider (ASP) environments will be able to route real-time transactions to
and from all payers utilizing Health-e Network(R). We believe that the
transition to these new levels of integrated transactions processing
capabilities will drastically change how the business of healthcare is
conducted among healthcare participants. We plan to continue to expand this
transactions infrastructure as management believes these applications will
evolve into viable and widely used systems over the next three to five years.
ENS Services - Health-e Network(R)
Health-e Network(R) suite of services addresses 100% of the
healthcare industry's transaction processing, both e-commerce and paper. As a
provider of a full-cycle payer, physician and provider e-commerce suite of
services, ENS developed these services to enhance the providers' and payers'
administrative efficiency. The service offerings range from a front-end data
capture/transmission software, to advanced pre-adjudication software, to
simple mailroom services. ENS presently services over 1,000 payer clients for
the e-commerce claims component of Health-e Network(R) and provides eight
payer organizations with the full suite of payer services.
Health-e Network(R) includes the following:
(-) HEALTHCARE E-COMMERCE TRANSACTIONS PROCESSING ENS delivers multiple
applications that enable healthcare providers easily to conduct key
healthcare transactions with many payers. ENS provides these
e-commerce applications through the Internet and on multiple operating
systems. ENS also delivers transaction processing capabilities to
strategic partners, such as medical management companies, who with their
own software, access payers to conduct electronic business transactions
via use of ENS' Application Programming Interface (API). ENS currently
processes and routes medical and hospital claims, eligibility requests
and responses, claims status, claims tracking, claim payment remittance
information, reporting, referral and authorization transactions. ENS
plans to support all of the HIPAA defined transactions and deliver to
providers various methods of conducting those transactions with payers.
(-) PROVIDER CONNECTIVITY (XPEDITE(TM)) enables ENS to identify the paper and
manual transaction volumes of a payer's provider groups, target high paper
submitters, track internal progress, and market specifically to selected
healthcare transaction submitters. Based on payer specific criteria, ENS
assigns different levels of internal resources to convert these providers
to electronic business processes with the payer. The Xpedite(TM) conversion
program then goes beyond the sales process and combines efforts of all ENS
internal departments. The purpose of Xpedite(TM) is to connect providers on
behalf of payer organizations to make the participants more efficient
through e-commerce.
(-) AUTOMATED DOCUMENT SERVICES(TM) (ADS(TM)) provides payers the complete
front-end handling and conversion (imaging/scanning) of paper claims forms
to an e-commerce format. Paper claims still constitute from 55-60% of
provider claims volume industry-wide to commercial payers. As the claims
are converted to an electronic format, ENS captures the names of all
paper-submitting providers in order to convert them for other e-commerce
products and services with the payer's support. Utilization of Health-e
Network(R) (which includes ADS(TM)) provides a payer with the opportunity
to have 100% e-commerce claims receipts. With ENS as their partner and core
e-commerce strategy implementer, payers can increase e-commerce
transactions from their provider constituency.
12
(-) PRE-ADJUDICATION SOFTWARE SYSTEM(TM) (PASS(TM)) provides a single,
HIPAA-compliant connectivity entry point to a payer for all claims
transactions, including transactions received via the Internet, through
private e-commerce networks, and received on paper. PASS(TM) channels the
claims by utilizing customized and algorithm-based logic, and conducts the
vital claims processing function of provider and member matching, including
real-time eligibility verification, a critical payer requirement for
increased claims paying accuracy and efficiency. ENS' PASS(TM) is an open,
flexible solution that is used with the vast majority of today's payer
operating environments.
(-) ELIGIBILITY is an ENS service that provides physician practices with
immediate access to participating payers plus various regional and
governmental payers for determining member plan eligibility. This service
is delivered over the Internet and receives constant updating.
(-) ELECTRONIC CLAIMS TRACKING (ECT(TM)) provides immediate Internet-based
tracking of both e-commerce claims and, for those payers utilizing Health-e
Network(R), up-dated status on the paper claims that have been converted to
an e-commerce format. ENS believes that this is the first tool that affords
providers the opportunity to utilize an Internet application to track
claims forwarded to payers electronically.
(-) DIRECT-PAYEr E-COMMERCE provides network connectivity for HIPAA-defined
transactions to and from payer organizations from existing physicians and
gateways.
(-) CUSTOMER SERVICE. As an adjunct to its transaction processing services, we
maintain customer service facilities with help desks for real-time customer
inquiries. We offer on-line and personal technical support. Client support
employs a modern call tracking and response system that is directly
connected to the processing center.
In addition to ENS, the Company continues its business of acquiring
controlling interests in telecommunications, healthcare and other strategically
linked areas. The Company may acquire or invest in other businesses.
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Given these uncertainties, prospective investors are cautioned
not to place undue reliance on such forward-looking statements. See "Special
Note Regarding Forward-Looking Statements" and Exhibit 99 in the Company's
Report on Form 10-K for the year ended October 31, 2001, and the Financial
Statements.
RESULTS OF OPERATIONS
The following sets forth results of operations for the Company. See below for a
more detailed discussion of ENS results of operations.
13
Nine months ended July 31, 2002 as compared to nine months ended July 31, 2001:
Services Revenue:
Services revenue decreased from $9,198,784 for the nine months ended July 31,
2001 to $8,936,154 for the nine months ended July 31, 2002, primarily reflecting
ENS' reduced volumes of paper processing, and related decrease in sales of those
services, as we succeeded in shifting providers from paper claims to electronic
submissions.
Cost of Services:
Cost of services decreased from $5,323,844 for the nine months ended July 31,
2001 to $4,036,225 for the nine months ended July 31, 2002 as a result of
improved efficiency of operations at ENS and reduced paper claims operations.
Included in Cost of Services for the nine months ended July 31, 2002 and July
31, 2001 is amortization of software costs of $255,371 and $139,337,
respectively.
Professional Fees:
Professional fees increased slightly from $470,201 in the nine months ended July
31, 2001 to $471,610 in the nine months ended July 31, 2002 as a result of
steady levels of activity.
General and Administrative:
General and administrative expense decreased from $5,883,635 in the nine months
ended July 31, 2001 to $4,209,088 in the nine months ended July 31, 2002,
primarily as a result of improved efficiency of operations and decrease in sales
commissions relating to reductions in less profitable services at ENS.
Depreciation and Amortization:
Depreciation and amortization decreased from $833,990 in the nine months ended
July 31, 2001 to $571,740 in the nine months ended July 31, 2002, primarily due
to a reduction of approximately $213,000 in amortization of goodwill as compared
to the prior period resulting from our adoption of FASB 142.
Loss from Operations:
As a result of the foregoing events, loss from operations decreased from
($3,312,886) for the nine months ended July 31, 2001 to ($352,509) for the nine
months ended July 31, 2002.
Gain on Securities Transactions, net:
Gain on securities transactions, net, decreased from gain of $7,069,747 for the
nine months ended July 31, 2001 to gain of $5,089,568 for the nine months ended
July 31, 2002, representing the net results of option and short sale liabilities
and settlements and realized gains from the sale of BellSouth common stock.
Under Financial Accounting Standards Board Statement No. 133 "Accounting for
Derivative Instruments and Hedging Activities," unrealized gains and losses
related to options and short sales are recorded in the Statement of Operations.
Further, unrealized gains and losses on BellSouth common stock, are recorded
through Other Comprehensive Income (Loss) and are only recorded in the Statement
of Operations when realized upon ultimate sale. The unrealized loss on Bell
South common stock, reflected in Other Comprehensive Loss, net of income taxes,
for the nine months ended July 31, 2002 was ($3,656,226) as compared to
($1,981,627) for the nine months ended July 31, 2001.
Interest and Dividend Income:
Interest income decreased from $1,389,687 for the nine months ended July 31,
2001 to $307,976 for
14
the nine months ended July 31, 2002, primarily because high yielding
investments matured and were reinvested at lower market interest rates. In
addition, we reduced our cash investments because of the repurchase of our
common stock and changes in cash levels relating to option and short
positions on BellSouth common stock.
Interest Expense:
Interest expense increased slightly from $78,372 in the nine months ended July
31, 2001 to $79,335 in the nine months ended July 31, 2002, primarily due to a
small increase in the average amount of debt outstanding at ENS during the
period. Capital lease obligations decreased during the period but were offset by
an increase in other debt.
Income Before Provision for Income Taxes and Cumulative Effect of a Change in
Accounting for Written Call Options:
We realized income before provision for income taxes and cumulative effect of
a change in accounting for written call options of $5,372,352 for the nine
months ended July 31, 2001, as compared to income before provision for income
taxes and cumulative effect of a change in accounting for written call
options of $5,272,812 for the nine months ended July 31, 2002, primarily as a
result of the decrease in the (Loss) from Operations offset by lower gains on
options and short positions and sales as described above.
Provision for Income Taxes:
Provision for income taxes was $1,600,000 for the nine months ended July 31,
2002, as compared to a provision for income taxes of $1,425,000 for the nine
months ended July 31, 2001.
Income before Cumulative Effect of Change in Accounting for Written Call
Options:
Net income before cumulative effect of change in accounting method
decreased from $3,947,352 for the nine months ended July 31, 2001 to
$3,672,812 for the nine months ended July 31, 2002, as a result of the
foregoing events.
Cumulative Effect of a Change in Accounting for Written Call Options:
Cumulative effect of a change in accounting for written call options net of
taxes of ($1,514,667) was ($2,812,000) for 2001 as a result of the adoption of
FAS 133.
Net Income:
Net income increased from $1,135,352 for the nine months ended July 31, 2001 to
$3,672,812 for the nine months ended July 31, 2002 as a result of the foregoing
events.
Three months ended July 31, 2002 as compared to three months ended
July 31, 2001:
Services Revenue:
Services revenue decreased from $3,070,199 in the three months ended July 31,
2001 to $2,961,599 in the three months ended July 31, 2002, primarily reflecting
ENS' reduced volumes of paper processing, and related decrease in sales of those
services, as we succeeded in shifting providers from paper claims to electronic
submissions.
Cost of Services:
Cost of services decreased from $1,818,467 in the three months ended July 31,
2001 to $1,315,502 in the three months ended July 31, 2002, primarily as a
result of improved efficiency of operations at ENS and reduced paper claims
operations. Included in Cost of Services for the three months ended July 31,
2002 and
15
July 31, 2001 is amortization of software costs of $101,942 and $74,731,
respectively.
Professional Fees:
Professional fees increased from $121,653 in the three months ended July 31,
2001 to $149,456 in the three months ended July 31, 2002, as a result of normal
corporate activity and stockholder issues.
General and Administrative:
General and administrative expenses decreased from $1,692,769 in the three
months ended July 31, 2001 to $1,415,079 in the three months ended July 31,
2002, primarily as a result of improved efficiency of operations at ENS and
decrease in sales commissions relating to reductions in less profitable services
at ENS.
Depreciation and Amortization:
Depreciation and amortization decreased from $258,539 in the three months ended
July 31, 2001 to $187,282 in the three months ended July 31, 2002, primarily due
to a reduction of approximately $71,000 in amortization of goodwill as compared
to the prior period resulting from our adoption of FASB 142.
Loss from Operations:
As a result of the foregoing events, loss from operations improved from a loss
of ($821,229) in the three months ended July 31, 2001 to ($105,720) in the three
months ended July 31, 2002.
Gain on Securities Transactions, Net:
We realized a net gain on securities transactions for the three months ended
July 31, 2002 of $1,842,761 as compared to a net gain for the three months ended
July 31, 2001 of $966,034, representing the net results of option and short sale
liabilities. Under Financial Accounting Standards Board Statement No. 133
"Accounting for Derivative Instruments and Hedging Activities," unrealized gains
and losses related to options and short sales are recorded in the Statement of
Operations. Further, unrealized gains and losses on BellSouth common stock, are
recorded through Other Comprehensive Income (Loss) and are only recorded in the
Statement of Operations when realized upon ultimate sale. The effect of
unrealized loss on marketable securities reflected in Other Comprehensive Loss,
net of related income taxes, amounts to ($1,237,134) at July 31, 2002 and
($662,228) at July 31, 2001, representing the unrealized loss in the BellSouth
common stock.
Interest and Dividend Income:
Interest income decreased from $445,513 in the three months ended July 31, 2001
to $128,039 in the three months ended July 31, 2002, primarily because high
yielding investments matured and were reinvested at lower interest rates. In
addition, we reduced our cash investments because of the repurchase of our
common stock and changes in cash levels relating to option and short positions
on BellSouth common stock.
Interest Expense:
Interest expense decreased from $31,484 in the three months ended July 31, 2001
to $24,295 in the three months ended July 31, 2002, primarily due to a decrease
in capital lease obligations at ENS.
Income before Provision for Income Taxes and Cumulative Effect of a Change in
Accounting for Written Call Options:
We realized gain before provision for income taxes and cumulative effect of a
change in accounting
16
for written call options of $1,937,513 for the three months ended July 31,
2002, as compared to a gain of $650,726 for the three months ended July 31,
2001, primarily as a result of the decrease in the (Loss) from Operations
offset by lower gains on options and short positions and sales as described
above.
Provision for Income Taxes:
The provision for income taxes was $500,000 for the three months ended July 31,
2002, as compared to a provision for income taxes of $125,000 for the three
months ended July 31, 2001.
Income before Cumulative Effect of Change in Accounting for Written Call
Options:
Net income before cumulative effect of change in accounting method increased
from $525,726 for the three months ended July 31, 2001 to $1,437,513 for the
three months ended July 31, 2002, as a result of the foregoing events.
Net Income:
Net income increased from $525,726 for the three months ended July 31, 2001 to
$1,437,513 for the three months ended July 31, 2002, as a result of the
foregoing events.
ENS--RESULTS OF OPERATIONS:
ENS - Nine months ended June 30, 2002 as compared to nine months ended
June 30, 2001:
Services Revenue:
Services revenue decreased slightly from $9,176,948 for the nine months ended
June 30, 2001 to $8,933,949 for the nine months ended June 30, 2002 (or
approximately 2.7%), primarily reflecting ENS' reduced volumes of paper
processing, and related decrease in sales of those services, as we succeeded in
shifting providers from paper claims to electronic submissions. Shifting claims
from paper to e-commerce reduces overall revenue as the revenue per claim for
e-commerce is less than paper; however, the shift from paper claims increases
efficiency for both payers and providers and, for ENS, generates significantly
higher gross profit per claim. While two large customers reduced the amount of
paper claims submitted, ENS has increased its number of direct e-commerce
connections with payers and increased its number of direct provider connections
by 37% since June 30, 2001.
Cost of Services:
Cost of services decreased from $5,320,963 in the nine months ended June 30,
2001 to $4,036,225 in the nine months ended June 30, 2002 (or approximately
24.1%), as a result of cost containment measures and reduced paper claims
operations. The decrease was substantially higher, in proportion, than the
decrease in services revenue because of implementation of our business model,
including a controlled growth program with less marketing, with most of the
decrease in costs concentrated in less profitable services. Included in Cost of
Services for the nine months ended July 31, 2002 and July 31, 2001 is
amortization of software costs of $255,371 and $139,337, respectively.
General and Administrative:
General and administrative expense decreased from $4,190,711 in the nine months
ended June 30, 2001 to $3,299,397 in the nine months ended June 30, 2002 (or
approximately 21.3%) as a result of cost containment measures.
Depreciation and Amortization:
Depreciation and amortization decreased from $741,844 in the nine months ended
June 30, 2001 to
17
$563,589 in the nine months ended June 30, 2002 (or approximately 24.0%), due
to a reduction of approximately $213,000 in amortization of goodwill as
compared to the prior period from our adoption of FASB 142.
Income (loss) from Operations:
As a result of the foregoing, income from operations increased from a loss of
($1,163,819) for the nine months ended June 30, 2001 to income of $963,688 for
the nine months ended June 30, 2002, reflecting the full implementation of our
business model, including cost containment, reduced marketing and related
reduction of less profitable lines of business. We believe ENS will continue its
performance through 2002 and 2003.
Interest Expense:
Interest expense, exclusive of interest payable to NWH, increased from $77,131
in the nine months ended June 30, 2001 to $79,335 (or approximately 2.9%) in the
nine months ended June 30, 2002, primarily due to an increase in the average
amount of debt outstanding at ENS during the period. Capital lease obligations
decreased during the period but were offset by an increase in other debt. For
the nine months ended June 30, 2002, $366,000 of interest expense was payable by
ENS to NWH and was eliminated in consolidation.
EBITDA:
EBITDA increased from ($282,638) for the nine months ended June 30, 2001 to
$1,782,648 for the nine months ended June 30, 2002 as a result of lower costs as
a percent of revenue, as discussed above. We provide EBITDA (earnings before
interest, taxes, depreciation and amortization) information as a guide to the
operating performance of ENS. EBITDA, which is not a term recognized under
generally accepted accounting principles, is calculated as the (Loss) Income
from Operations plus Depreciation and Amortization. Included in depreciation and
amortization for the purpose of calculating EBITDA is amortization of software
costs, which is included in Cost of Services. EBITDA as calculated by the
Company may not be comparable to calculations of similarly titled items reported
by other companies.
Three months ended June 30, 2001 as compared to three months ended
June 30, 2002:
Services Revenue:
Services revenue decreased slightly from $3,053,293 in the three months ended
June 30, 2001 to $2,961,599 in the three months ended June 30, 2002 (or
approximately 3.0%), primarily reflecting ENS' reduced volumes of paper
processing, and related decrease in sales of those services, as we succeeded in
shifting providers from paper claims to electronic submissions. Shifting claims
from paper to e-commerce reduces overall revenue as the revenue per claim for
e-commerce is less than paper; however, the shift from paper claims increases
efficiency for both payers and providers and, for ENS, generates significantly
higher profit per claim. While two large customers reduced the amount of paper
claims submitted, ENS has increased its number of direct e-commerce connections
with payers and increased its number of direct provider connections by 37.3%
since June 30, 2001.
Cost of Services:
Cost of services decreased from $1,824,464 in the three months ended June 30,
2001 to $1,315,502 in the three months ended June 30, 2002 (or approximately
27.9%), as a result of cost containment measures and reduced paper claims
operations. The decrease was substantially higher, in proportion, than the
decrease in services revenue because of implementation of our business model,
including a controlled growth program with a lower cost marketing program, with
most of the decrease in costs
18
relating to less profitable services. Included in Cost of Services for the
three months ended July 31, 2002 and July 31, 2001 is amortization of
software costs of $101,942 and $74,731, respectively.
General and Administrative:
General and administrative expense decreased from $1,267,246 in the three months
ended June 30, 2001 to $1,059,024 in the three months ended June 30, 2002 (or
approximately 16.4%) primarily as a result of improved efficiency of operations
and a variety of cost containment measures.
Depreciation and Amortization:
Depreciation and amortization decreased from $243,341 in the three months ended
June 30, 2001 to $186,412 in the three months ended June 30, 2002 (or
approximately 23.4%), primarily due to a reduction of approximately $71,000 in
amortization of goodwill as compared to the prior period from our adoption of
FASB 142.
Income (Loss) from Operations:
As a result of the foregoing events, income from operations increased from a
loss of ($274,111) in the three months ended June 30, 2001 to income of $375,611
in the three months ended June 30, 2002, due to the full implementation of our
business model, including cost containment and a decrease in costs relating to
less profitable operations. We believe ENS will continue its performance through
2002 and 2003.
Interest Expense:
Interest expense, exclusive of interest payable to NWH, decreased from $30,243
in the three months ended June 30, 2001 to $24,295 (or approximately 19.7%) in
the three months ended June 30, 2002, due to a decrease in capital lease
obligations. For the three months ended June 30, 2002, $126,000 of interest
expense was payable by ENS to NWH and
EBITDA:
EBITDA increased from $43,961 for the three months ended June 30, 2001 to
$663,965 for the three months ended June 30, 2002, primarily as a result of
lower cost of services as a percent of revenue, as discussed above. We provide
EBITDA (earnings before interest, taxes, depreciation and amortization)
information as a guide to the operating performance of ENS. EBITDA, which is not
a term recognized under generally accepted accounting principles, is calculated
as the (Loss) Income from Operations plus Depreciation and Amortization.
Included in depreciation and amortization for the purpose of calculating EBITDA
is amortization of software costs, which is included in Cost of Services. EBITDA
as calculated by the Company may not be comparable to calculations of similarly
titled items reported by other companies.
LIQUIDITY AND CAPITAL RESOURCES
As of July 31, 2002, we had approximately $44.5 million in cash and
marketable securities, as well as our interest in ENS and other investments. Our
assets have been used for, and are currently reserved to fund acquisitions of
healthcare e-commerce investments, telecommunications assets, media businesses,
development of our other businesses and development and acquisition of new
technologies and businesses in other areas. Such amount, with earnings thereon
including proceeds from sale of BellSouth common stock and related derivatives,
is expected to be sufficient to implement this business plan through July 2003,
or for a shorter period if we determine to invest a substantial portion of our
assets in major acquisitions, equity investments or stock repurchases. We
actively seek to acquire or invest in healthcare e-commerce, other businesses in
telecommunications,
19
media or in unrelated areas. We may also dispose of assets from time to time.
We have no specific arrangements with respect to any such acquisitions,
dispositions or investments at the present time. There can be no assurance
that any such acquisitions, dispositions or investments will be made.
Our board of directors authorized the repurchase of up to 20% of our
common stock because we believe, under current market conditions, the
repurchase is a favorable investment. The repurchased shares will also be
available for issuance upon exercise of outstanding options. Between
September, 2001 and July 31, 2002, we repurchased 376,000 shares for an
aggregate cost of $4,572,121.
During the three months ended July 31, 2002, we settled part of our
option liabilities on BellSouth common stock. While we continue to review our
holdings of BellSouth common stock and from time to time have sold and purchased
shares and options of these holdings, we have not yet determined whether we will
sell or hedge our remaining BellSouth securities in the near future or how we
will invest the proceeds of any such transaction.
In the three months ended July 31, 2002, interest receivable by the
Company from ENS increased by $128,152 to $1,302,735 at July 31, 2002, for a
total outstanding loan to the Company of $6,482,735, including accrued interest.
The outstanding balance under this loan agreement including interest has been
eliminated from the consolidated Financial Statements. During the third quarter
of 2002, the Company spent $335,832 on fixed assets, including $287,788 for
internally developed software and $48,044 for computer equipment required for
increased claims processing and the development of Xpedite, our provider
targeting and tracking system. We purchased an additional 2.5% of ENS from
former officers in July 2002 for $290,070 and currently own 94% of the diluted
common stock of ENS.
Operating overhead costs of ENS have decreased as a result of cost
cutting measures and production efficiencies gained. We anticipate increased
revenues in the near future. The combination of these factors going forward will
improve overall profitability, allowing ENS to sustain itself on cash flows from
its operations without further investment from NWH.
ENS - LIQUIDITY AND CAPITAL RESOURCES:
ENS' losses have been financed principally through equity investments
by the Company and loans from the Company, which loans aggregated $6,438,985
through June 30, 2002 (including accrued interest of $1,258,985). ENS plans
additional investment in its technology enhancements, including further
development and implementation of Xpedite, its full contact management operating
system; its Internet claims processing system; Web Enrollment, a remote Internet
based technology to enroll customers at time of sale; ECT, an Internet based
full claims tracking system; additional payer connectivity; and enhancements to
broaden the transactions processing infrastructure.
Although we believe that ENS may need to obtain additional financing to
accelerate its strategic business plan based upon existing contracts with
physicians, other providers, payers and management companies and current expense
levels, management expects ENS to continue profitable operations, established in
the third quarter of fiscal 2001, through fiscal 2002.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary objective of our investment activities, other than activities
relating to ENS and potential acquisitions, is to preserve principal and
maintain liquidity, while at the same time maximizing the
20
yield we receive from our investment portfolio. We also utilize options and
short sales to protect our position in BellSouth common stock, preserve its
tax basis and reduce equity price risk.
Changes in prevailing interest rates and stock price of BellSouth will cause the
yield on our investments and the costs of shorts and options to fluctuate. To
minimize this risk, we maintain our portfolio of cash equivalents, short-term
investments and marketable securities (other than BellSouth common stock and
related shorts and options) in commercial paper, non-government debt securities,
money market funds, highly liquid U.S. Treasury notes and federal agency notes
and other low risk investments. We view these high grade securities within our
portfolio as having similar market risk characteristics. The weighted-average
interest rate of the portfolio was 1.8% at July 31, 2002.
Currently almost all our revenues and expenses are denominated in U.S. dollars
and, as a result, we have experienced no significant foreign exchange gains and
losses to date. We conduct only limited transactions in foreign currencies, and
we do not anticipate that foreign exchange gains or losses will be significant
in the foreseeable future. We have not engaged in foreign currency hedging
activities to date.
In the opinion of management, inflation has not had a material effect on the
operations of the Company.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In October, 2001, the Financial Accounting Standards Board issued SFAS No. 144
"Accounting for the Impairment or Disposal of Long-Lived Assets". This statement
defines the accounting for long-lived assets to be held and used, assets held
for sale and assets to be disposed of by other than sale and is effective for
fiscal years beginning after December 15, 2001. The Company does not expect the
adoption of this pronouncement to have a material effect on the earnings or
financial position of the Company.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Previous
accounting guidance was provided by EITF Issue No. 94-3, "Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs incurred in a Restructuring)". SFAS No. 146 replaces
Issue 94-3. The provisions of SFAS No. 146 are to be applied prospectively to
exit or disposal activities initiated after December 31, 2002. The Company does
not expect the adoption of this pronouncement to have a material effect on the
earnings or financial position of the Company.
21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
At its Annual Meeting of Stockholders held on August 9, 2002, the
Company's stockholders approved and ratified the following actions:
1. Election of Directors:
The following individuals were re-elected as Class II directors of the
Corporation:
Number of Number of
Votes for Votes Withheld
--------- --------------
Michael A. McManus, Jr. 2,876,524 62,663
Vincent Tese 2,642,525 297,180
to serve until the 2005 Annual Meeting of Stockholders and until
their respective successors have been elected and qualified.
2. 2,939,187 shares of all shares entitled to vote were voted in favor
of, and 0 votes were withheld for, the appointment of PricewaterhouseCoopers
L.L.P. as independent auditors of the Company until the next Annual Meeting
of Stockholders.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
22
Exhibit 99:
Press Release, dated August 9, 2002
(b) Reports on Form 8-K:
None.
23
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.
Date: September 12, 2002
NWH, INC.
-----------
(Registrant)
By: /s/ TERRENCE S. CASSIDY
-------------------------
Terrence S. Cassidy, President and Principal
Accounting Officer
24
CERTIFICATION
I, Terrence S. Cassidy, Principal Executive Officer and Principal Financial
Officer of NWH, Inc. ("NWH"), certify that, in accordance with 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
in my capacity as an officer of NWH that, to my knowledge, the Quarterly
Report of NWH on Form 10-Q for the period ended July 31, 2002, fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of 1934
and that the information contained in such report fairly presents, in all
material respects, the financial condition and results of operation of NWH,
and further,
I, Terrence S. Cassidy, as Principal Executive Officer and Principal
Financial Officer of NWH, certify that:
1. I have reviewed this quarterly report on Form 10-Q of the
registrant, NWH, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
Date: September 12, 2002 By:/s/ TERRENCE S. CASSIDY
-----------------------
Terrence S. Cassidy
Principal Executive Officer and
Principal Financial Officer
25