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 March 31, 2002
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 May 1, 2002: 3,696,709
=========
Netsmart Technologies, Inc. and Subsidiaries
Index
Part I: - Financial Information:
Item 1. Financial Statements: Page
----
Condensed Consolidated Balance Sheets - March 31, 2002 (Unaudited)
and December 31, 2001 1-2
Condensed Consolidated Statements of Income - (Unaudited)
Three Months Ended March 31, 2002 and March 31, 2001 3
Condensed Consolidated Statements of Cash Flows - (Unaudited)
Three Months Ended March 31, 2002 and March 31, 2001 4-5
Condensed Consolidated Statement of Stockholders' Equity - (Unaudited)
Three Months Ended March 31, 2002 6-7
Notes to Condensed Consolidated Financial Statements 8-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
Part II: Other Information
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 13
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
March 31, December 31,
--------- ------------
2002 2001
---- ----
Unaudited
---------
Assets:
Current Assets:
Cash and Cash Equivalents $ 3,943,109 $ 3,837,226
Accounts Receivable - Net 5,488,759 5,876,970
Costs and Estimated Profits in Excess
of Interim Billings 3,732,744 3,783,356
Deferred taxes 500,000 500,000
Other Current Assets 151,430 128,232
---------- ----------
Total Current Assets 13,816,042 14,125,784
---------- ----------
Property and Equipment - Net 341,206 366,356
---------- ----------
Other Assets:
Software Development Costs - Net 605,129 686,301
Customer Lists - Net 2,499,323 2,618,145
Other Assets 182,051 210,787
---------- ----------
Total Other Assets 3,286,503 3,515,233
---------- ----------
Total Assets $17,443,751 $18,007,373
========== ==========
See Notes to Condensed Consolidated Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
March 31, December 31,
--------- ------------
2002 2001
---- ----
Unaudited
---------
Liabilities and Stockholders' Equity:
Current Liabilities:
Current Portion - Long Term Debt $ 500,000 $ 500,000
Current Portion Capital Lease Obligations 22,492 28,905
Accounts Payable 947,339 688,682
Accrued Expenses 439,004 359,908
Interim Billings in Excess of Costs and Estimated
Profits 3,061,980 3,959,230
Deferred Revenue 703,266 685,569
----------- ----------
Total Current Liabilities 5,674,081 6,222,294
----------- ----------
Capital Lease Obligations - Less current portion
included above 9,394 12,519
Long Term Debt - Less current portion 1,625,006 1,750,004
Interest Rate Swap at Fair Value 49,818 74,875
----------- ----------
Total Non Current Liabilities 1,684,218 1,837,398
----------- ----------
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 3,724,747 shares at
March 31, 2002, 3,719,247 shares at
December 31, 2001
37,247 37,192
Additional Paid in Capital 20,865,661 20,856,166
Accumulated Comprehensive loss - Interest Rate Swap (49,818) (74,875)
Accumulated Deficit (10,467,828) (10,570,992)
---------- ----------
10,385,262 10,247,491
Less cost of shares of Common Stock held
in treasury - 28,038 shares at March 31, 2002
and December 31, 2001 299,810 299,810
---------- ----------
Total Stockholders' Equity 10,085,452 9,947,681
---------- ----------
Total Liabilities and Stockholders' Equity $ 17,443,751 $ 18,007,373
========== ==========
See Notes to Condensed Consolidated Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
--------------------------------------------------------------------------------
Three months ended
March 31,
2002 2001
---- ----
Revenues:
Software and Related
Systems and Services:
General $ 2,851,889 $ 3,065,355
Maintenance Contract
Services 1,508,490 1,044,262
---------- ----------
Total Software and Related
Systems and Services 4,360,379 4,109,617
Data Center Services 469,693 465,224
---------- ----------
Total Revenues 4,830,072 4,574,841
---------- ----------
Cost of Revenues:
Software and Related
Systems and Services:
General 2,008,581 2,191,543
Maintenance Contract
Services 875,075 634,475
---------- ----------
Total Software and Related
Systems and Services 2,883,656 2,826,018
Data Center Services 260,933 266,531
---------- ----------
Total Cost of Revenues 3,144,589 3,092,549
---------- ----------
Gross Profit 1,685,483 1,482,292
Selling, General and
Administrative Expenses 1,203,195 1,104,725
Research and Development 328,929 285,311
---------- ----------
Total 1,532,124 1,390,036
Income from Operations before Interest 153,359 92,256
Interest Income 9,179 --
Interest Expense 51,374 22,466
---------- ----------
Income before Income Tax Expense 111,164 69,790
Income Tax Expense 8,000 5,200
---------- ----------
Net Income $ 103,164 $ 64,590
========== ==========
Earnings Per Share of Common Stock:
Basic:
Net Income $ .03 $ .02
========== ==========
Weighted Average Number of Shares of
Common Stock Outstanding 3,695,334 3,499,126
========== ==========
Diluted:
Net Income $ .03 $ .02
========== ==========
Weighted Average Number of Shares of
Common Stock Outstanding 4,066,402 3,798,553
========== ==========
See Notes to Condensed Consolidated Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
--------------------------------------------------------------------------------
Three months ended
March 31,
2002 2001
---- ----
Operating Activities:
Net Income $ 103,164 $ 64,590
-------- --------
Adjustments to Reconcile Net Income
to Net Cash Provided by (Used in)
Operating Activities:
Depreciation and Amortization 292,379 228,182
Provision for Doubtful Accounts 90,000 90,000
Changes in Assets and Liabilities:
[Increase] Decrease in:
Accounts Receivable 298,211 35,785
Costs and Estimated Profits in
Excess of Interim Billings 50,612 (336,241)
Other Current Assets (23,198) (33,175)
Other Assets 28,736 2,499
Increase [Decrease] in
Accounts Payable 258,657 118,932
Accrued Expenses 79,096 (172,395)
Interim Billings in Excess of
Costs and Estimated Profits (897,250) (366,627)
Deferred Revenue 17,697 (276,469)
-------- --------
Total Adjustments 194,940 (709,509)
-------- --------
Net Cash Provided by
(Used In) Operating Activities 298,104 (644,919)
-------- --------
Investing Activities:
Acquisition of Property and Equipment (67,235) (87,103)
-------- --------
Net Cash Used In Investing Activities (67,235) (87,103)
-------- --------
See Notes to Condensed Consolidated Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
--------------------------------------------------------------------------------
Three months ended
March 31,
2002 2001
---- ----
Financing Activities:
Payment of Capitalized Lease Obligations $ (9,538) $ (8,566)
Net Proceeds from Stock Options Exercised 9,550 8,334
Payments of Term Loan (124,998) --
--------- ---------
Net Cash (Used in) Financing Activities (124,986) (232)
--------- ---------
Net Increase (Decrease) in Cash
and Cash Equivalents 105,883 (732,254)
Cash and Cash Equivalents -
Beginning of Period 3,837,226 2,418,947
--------- ---------
Cash and Cash Equivalents -
End of Period $3,943,109 $1,686,693
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 44,082 $ 22,466
Income Taxes $ 4,607 $ 39,128
Non Cash Financing Activities:
The fair value of the interest rate swap calculated at March 31, 2002 was
$49,818.
See Notes to Condensed Consolidated Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - (Unaudited)
--------------------------------------------------------------------------------
For the Three Months Ended March 31, 2002
Common Stock $.01 Par Value Authorized Shares Amount
------ ------
15,000,000 Shares
Beginning Balance - December 31, 2001 3,719,247 $ 37,192
Common Stock Issued - Exercise of Options 5,500 55
--------- -------
Ending Balance - March 31, 2002 3,724,747 $ 37,247
========= =======
See Notes to Condensed Consolidated Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - (Unaudited)
--------------------------------------------------------------------------------
For the Three Months Ended March 31, 2002
Additional Paid-In Capital Common Stock: Shares Amount
------ ------
Beginning Balance - December 31, 2001 $ 20,856,166
Common Stock Issued - Exercise of Options 9,495
-----------
Ending Balance - March 31, 2002 $ 20,865,661
===========
Accumulated Deficit
Beginning Balance - December 31, 2001 $(10,570,992)
Net Income 103,164
-----------
Ending Balance - March 31, 2002 $(10,467,828)
===========
Accumulated Comprehensive Loss - Interest Rate Swap:
Beginning Balance - December 31, 2001 $ (74,875)
Change in Fair Value of Interest Rate Swap 25,057
-----------
Ending Balance - March 31, 2002 $ (49,818)
===========
Treasury Stock
Beginning Balance - December 31, 2001 28,038 $ (299,810)
------ -----------
Ending Balance - March 31, 2002 28,038 $ (299,810)
------ -----------
Total Stockholders' Equity $ 10,085,452
===========
See Notes to Condensed Consolidated Financial Statements.
NETSMART TECHNOLOGIES, INC. AND SUBSIDIARIES
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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(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 March 31, 2002 and the results of its operations for the three months ended
March 31, 2002 and 2001 and the changes in cash flows for the three months ended
March 31, 2002 and 2001. The results of operations for the three months ended
March 31, 2002 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, 2001.
(3) Income per share - The following table sets forth the components use in the
computation of basic and diluted earnings per share.
Three Months Ended March 31,
----------------------------
2002 2001
---- ----
Numerator:
Net income $ 103,164 $ 64,590
Denominator:
Weighted average shares 3,695,334 3,499,126
--------- ---------
Effect of dilutive securities:
Employee stock option 370,338 299,427
Stock warrants 730 --
--------- ---------
Dilutive potential common shares 371,068 299,427
--------- ---------
Denominator for diluted earnings per
share-adjusted weighted average shares
after assumed conversions 4,066,402 3,798,553
========= =========
(4) Income Taxes - The provision for income taxes for the period ended March 31,
2002, reflects a deferred tax provision of approximately $34,000 offset by a
reduction in the deferred tax asset valuation allowance of the same amount.
(5) During the period ended March 31, 2002, stock options to purchase 5,500
shares were exercised and the Company received gross proceeds of $9,550. As a
result, common stock and additional paid in capital increased by $55 and $9,495
respectively.
(6) The Company was 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. This action was settled, and the settlement had no material
adverse effect on the results of operations of the Company.
In October 2000, the Company's subsidiary, Creative Socio-Medics, commenced an
action against the City of Richmond, in the Supreme Court of the State of New
York, County of Suffolk, which action was subsequently removed to the United
States District Court for the Eastern District of New York, for failure to pay
more than $1 million pursuant to a contract between the Company and Richmond.
Richmond advised the court that it intended to move to dismiss the complaint for
lack of personal jurisdiction in New York and improper venue. The parties are
currently engaged in discovery on jurisdictional issues. In November 2000,
Richmond filed a complaint in the
Circuit Court for the City of Richmond, Richmond, Virginia, alleging, among
other things, that the contract with Creative Socio-Medics was procured through
fraudulent misrepresentations concerning the nature of the work to be performed
and the price for the services and that Creative Socio-Medics failed to perform
its obligations under the agreement, seeking damages of $373,000 and a finding
that it owes no additional amounts to Creative Socio- Medics. The parties
entered into a stipulation staying the Richmond action until a determination of
Richmond's jurisdictional challenges to the New York action. We believe that we
have valid claims against Richmond and we intend to vigorously pursue those
claims. We also believe that the allegations contained in Richmond's complaint
are without merit and we intend to vigorously defend against those claims.
(7) On March 7, 2002 the stockholders approved the Company's 2001 Long Term
Incentive plan, covering 180,000 shares of common stock. On March 11, 2002, the
Company issued options to its employees to purchase 180,000 shares of common
stock at a price of $2.50 which was the fair market value at the date of grant.
(8) The Company currently classifies its operations into two business segments:
(1) Software and Related Systems and Services and (2) Data Center Services.
Software and Related Systems and Services is the design, installation,
implementation and maintenance of computer information systems that provide
comprehensive healthcare information technology solutions including billing,
patient tracking and scheduling for inpatient and outpatient environments, as
well as clinical documentation and medical record generation and management.
Data Center Services involve Company personnel performing data entry and data
processing services for customers. Intersegment sales and sales outside the
United States are not material. Information concerning the Company's business
segments are as follows:
Software and
------------
Related Systems Data Center
--------------- -----------
Three Months Ended March 31, and Services Services Consolidated
--------------------------- ------------ -------- ------------
2002
Revenue $ 4,360,379 $ 469,693 $ 4,830,072
Income before income taxes 43,927 67,237 111,164
Total identifiable assets at March 31, 2002 15,771,078 1,672,673 17,443,751
2001
Revenue $ 4,109,617 $ 465,224 $ 4,574,841
Income (loss) before income taxes (2,495) 72,285 69,790
Total identifiable assets at March 31, 2001 13,393,365 1,275,147 14,668,512
(9) New Accounting Pronouncements - Statement of Financial Accounting Standards
("SFAS") No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangible Assets" became effective for the Company during the quarter ended
March 31, 2002. The provisions of these interpretations that are applicable to
the Company were implemented on a prospective basis as of January 1, 2002, which
had no material effect on the Company's financial statements.
SFAS No. 143, "Accounting for Asset Retirement Obligations" became effective for
the Company during the quarter ended March 31, 2002. The provisions of these
interpretations that are applicable to the Company were implemented on a
prospective basis as of January 1, 2002, which had no material effect on the
Company's financial statements.
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
became effective for the Company during the quarter ended March 31, 2002. The
provisions of the interpretations that are applicable to the Company were
implemented on a prospective basis as of January 1, 2002, which had no material
effect on the Company's financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The most significant portion of our revenue is derived from fixed price software
development contracts and licenses. We principally 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. This largest
component of total revenue, which is generated primarily from time spent by our
technical personnel, may be adversely affected during the third and fourth
quarters of our fiscal year when vacation and holidays occur.
Three Months Ended March 31, 2002 and 2001
Our revenue for the three months ended March 31, 2002 (the "March 2002 period")
was $4,830,000, an increase of $255,000, or 5.5%, from our revenue for the three
months ended March 31, 2001, (the "March 2001 period") which was $4,575,000. The
largest component of revenue was turnkey systems labor revenue, which decreased
by $37,000 to $1,636,000 in the March 2002 period, from $1,673,000 in March 2001
period, reflecting a 2% decrease. Revenue from third party hardware and software
decreased to $492,000 in the March 2002 period, from $772,000 in the March 2001
period, which represents a decrease of 36%. Sales of third party hardware and
software are made in connection with the sales of turnkey systems and were
affected by a change in the mix of sales components. These sales are typically
made at lower gross margins than our behavioral health systems and services
revenue. The data center (service bureau) revenue increased to $470,000 in the
March 2002 period, from $465,000 in the March 2001 period, reflecting an
increase of 1%. License revenue increased to $534,000 in the March 2002 period,
from $271,000 in the March 2001 period, reflecting an increase of 97%. 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. This increase, however, is due to the sale of our licensed
programs to an existing customer, which enables the customer to roll out our
software within its entire organization. While this is an example of our ability
to resell into our existing client base, there are no assurances that we will be
able to duplicate these sales with other customers, in future periods.
Maintenance revenue increased to $1,508,000 in the March 2002 period, from
$1,044,000 in the March 2001 period, reflecting an increase of 44%. As turnkey
systems are completed, they are transitioned to the maintenance division.
Included in March 2002 period is $280,000 of maintenance revenue related to
contracts for AIMS software. We acquired the rights to the AIMS software,
including its installed customer base, in May 2001. Revenue from the sales of
our small turnkey division decreased to $190,000 in the March 2002 period, from
$350,000 in the March 2001 period, reflecting a decrease of 46%.
Revenue from contracts from government agencies represented 41% of revenue in
the March 2002 period and 43% of revenue in the March 2001 period. This decrease
reflects a slight reduction in new government contracts.
Gross profit increased to $1,685,000 in March 2002 period from $1,482,000 in the
March 2001 period, reflecting an increase of 14%. Our gross margin percentage
increased to 35% in the March 2002 period from 32% in the March 2001 period.
This increase was substantially the result of an increase in our license and
maintenance revenue mentioned above.
Selling, general and administrative expenses were $1,203,000 in the March 2002
period, reflecting an increase of 9% from the $1,105,000 in the March 2001
period. This increase was substantially in the area of general insurance,
investor public relations costs as well as costs associated with our annual
shareholders' meeting.
We incurred product development expenses of $329,000 in the March 2002 period,
an increase of 15% from the
$285,000 in the March 2001 period. During the March 2002 period, we continued to
invest in improved functionality and technology in our products.
Interest expense was $51,000 in the March 2002 period, an increase of $29,000,
or 128%, from the $22,000 in the March 2001 period. This increase was
substantially the result of interest associated with the $2,500,000 term loan,
which we made in June 2001.
Interest income of $9,000, for the March 2002 period is generated from
short-term investments made with a substantial portion of the proceeds received
from the term loan arrangement.
We have a federal net operating loss tax carry forward of approximately $11
million. In the March 2002 period, a deferred tax provision in the amount of
$34,000 was offset by a reduction in the deferred tax valuation allowance of the
same amount. Therefore, in the March 2002 period we provided for taxes in the
amount of $8,000. This provision was based upon certain state taxes. We made a
similar provision in the March 2001 period in the amount of $5,200.
As a result of the foregoing factors, in the March 2002 period, we had a net
income of $103,000, or $.03 per share basic and diluted. For the March 2001
period, we had net income of $65,000, or $.02 per share basic and diluted.
Liquidity and Capital Resources
We had working capital of $8.1 million at March 31, 2002 as compared to working
capital of $7.9 million at December 31, 2001. The increase in working capital
for March 2002 period was substantially the result of our net income after
adding back depreciation and amortization.
In June 2001, we entered into a financing arrangement with Fleet Bank. This
financing provides us with a five-year term loan of $2.5 million, as well as a
two year $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 March 31, 2002 under the borrowing base formula was $1.5 million. The
proceeds of the term loan are intended to be used for acquisitions as well as
for product modifications specific to California requirements. The revolving
line of credit will be utilized for general working capital needs. We have not
used the revolving line of credit from inception through March 31, 2002. We have
made principal payments on the $2.5 million term loan and the amount outstanding
at March 31, 2002 is $2,125,000.
At March 31, 2002, accounts receivable and costs and estimated profits in excess
of interim billings were approximately $9.2 million, representing approximately
172 days of revenue based on annualizing the revenue for the year March 2002
period. In addition, there can be no assurance that revenue will continue at
this same level.
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. 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 expectation.
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 to only internal growth. As of the
date of this Form 10-Q
quarterly report, we did not have any agreements or understandings with respect
to any acquisitions, and we cannot give any assurance that we will be able to
complete any acquisitions.
Forward-Looking Statements
Statements in this Form 10-Q quarterly report may be "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include, but are not limited to, statements
that express our intentions, beliefs, expectations, strategies, predictions or
any other statements relating to our future activities or other future events or
conditions. ___ These statements are based on current expectations, estimates
and projections about our business based, in part, on assumptions made by
management. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may, and probably will, differ materially
from what is expressed or forecasted in the forward-looking statements due to
numerous factors, including those described above and those risks discussed from
time to time in this Form 10-Q quarterly report, and in other documents which we
file with the Securities and Exchange Commission. In addition, such statements
could be affected by risks and uncertainties related to product demand, market
and customer acceptance, competition, government regulations and requirements,
pricing and development difficulties, as well as general industry and market
conditions and growth rates, and general economic conditions. Any
forward-looking statements speak only as of the date on which they are made, and
we do not undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date of this Form 10-Q.
Part II
Item 1. Legal Proceedings
The Company was a defendant in an arbitration proceeding commenced in March 2001
by Price Waterhouse Coopers LLP, seeking damages of $635,000 for an alleged
breach of a staff augmentation services agreement.
This action was settled, and the settlement had no material adverse effect on
the results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
On March 7, 2002, we held our 2002 annual meeting of stockholders.
The following individuals were elected as directors:
Name Number of Votes
Edward D. Bright 3,065,809
James L. Conway 3,183,824
John F. Phillips 2,974,940
Gerald O. Koop 3,040,505
Joseph G. Sicinski 3,077,374
Francis J. Calcagno 3,135,424
The following proposals were approved as follows:
Votes For Votes Against Abstain
Approval of the 2001 Long
Term Incentive Plan 3,071,481 68,446 4,468
Approval of the selection of
Richard A. Eisner & Co., LLP
as independent auditors for 2001 3,135,588 2,863 5,944
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 May 15, 2002
-------------------- (Principal Executive Officer)
James L. Conway
/s/ Anthony F. Grisanti Chief Financial Officer May 15, 2002
----------------------- (Principal Financial and
Anthony F. Grisanti Accounting Officer)