Lanvision Systems, Inc. 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended April 30, 2006 |
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or |
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from _____________ to _____________ |
Commission File Number: 0-28132
LANVISION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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31-1455414
(I.R.S. Employer
Identification No.) |
10200 Alliance Road, Suite 200
Cincinnati, Ohio 45242-4716
(Address of principal executive offices) (Zip Code)
(513) 794-7100
(Registrants 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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer o Accelerated filer o Non-accelerated filer þ
1
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes ___No X
Number of shares of Registrants Common Stock ($.01 par value per share) issued and
outstanding, as of June 1, 2006: 9,173,708.
2
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
LANVISION SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Assets
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(Unaudited) |
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(Audited) |
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April 30, |
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January 31, |
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2006 |
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2006 |
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Current assets: |
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Cash |
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$ |
3,204,398 |
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$ |
4,634,219 |
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Accounts receivable, net of allowance for doubtful
accounts of $200,000, respectively |
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1,850,397 |
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2,117,495 |
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Contract receivables |
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2,578,577 |
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2,268,913 |
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Prepaid expenses |
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516,990 |
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366,731 |
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Deferred tax asset |
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601,000 |
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601,000 |
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Total current assets |
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8,751,362 |
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9,988,358 |
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Property and equipment: |
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Computer equipment |
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2,196,061 |
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2,120,321 |
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Computer software |
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1,056,892 |
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989,556 |
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Office furniture, fixtures and equipment |
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775,957 |
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736,858 |
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Leasehold improvements |
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522,863 |
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522,863 |
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4,551,773 |
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4,369,598 |
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Accumulated depreciation and amortization |
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(2,859,860 |
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(2,666,784 |
) |
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1,691,913 |
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1,702,814 |
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Contract receivables |
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728,541 |
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728,541 |
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Capitalized software development costs, net of accumulated
amortization of $4,304,066 and $4,033,232, respectively |
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2,835,862 |
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2,706,697 |
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Other, including deferred taxes of $1,274,000, respectively |
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1,312,936 |
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1,306,741 |
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$ |
15,320,614 |
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$ |
16,433,151 |
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See Notes to Condensed Consolidated Financial Statements.
4
LANVISION SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Liabilities and Stockholders Equity
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(Unaudited) |
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(Audited) |
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April 30, |
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January 31, |
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2006 |
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2006 |
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Current liabilities: |
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Accounts payable |
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$ |
986,418 |
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$ |
1,055,539 |
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Accrued compensation |
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368,514 |
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1,139,587 |
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Accrued other expenses |
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663,509 |
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744,112 |
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Deferred revenues |
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2,499,873 |
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2,617,184 |
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Current portion of long-term debt |
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1,000,000 |
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1,000,000 |
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Current portion of capitalized leases |
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86,425 |
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84,951 |
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Total current liabilities |
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5,604,739 |
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6,641,373 |
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Capitalized leases |
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124,884 |
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147,051 |
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Long-term debt |
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1,000,000 |
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1,000,000 |
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Non-current lease incentives |
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279,454 |
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293,409 |
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Stockholders equity: |
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Convertible redeemable preferred stock, $.01 par value per share
5,000,000 shares authorized |
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Common stock, $.01 par value per share, 25,000,000 shares
authorized, 9,173,708 and 9,159,541 shares issued, respectively |
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91,737 |
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91,595 |
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Capital in excess of par value |
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35,130,256 |
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35,090,302 |
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Accumulated (deficit) |
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(26,910,456 |
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(26,830,579 |
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Total stockholders equity |
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8,311,537 |
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8,351,318 |
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$ |
15,320,614 |
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$ |
16,433,151 |
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See Notes to Condensed Consolidated Financial Statements.
5
LANVISION SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended April 30,
(Unaudited)
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Three Months Ended |
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2006 |
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2005 |
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Revenues: |
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Systems sales |
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$ |
1,208,662 |
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$ |
140,804 |
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Services, maintenance and support |
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1,828,267 |
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1,799,024 |
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Application-hosting services |
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811,494 |
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757,045 |
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Total revenues |
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3,848,423 |
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2,696,873 |
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Operating expenses: |
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Cost of systems sales |
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626,407 |
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280,187 |
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Cost of services, maintenance and support |
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838,672 |
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761,364 |
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Cost of application-hosting services |
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280,230 |
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250,902 |
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Selling, general and administrative |
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1,414,878 |
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1,056,881 |
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Product research and development |
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759,679 |
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601,657 |
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Total operating expenses |
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3,919,866 |
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2,950,991 |
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Operating (loss) |
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(71,443 |
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(254,118 |
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Other income (expense): |
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Interest income |
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32,991 |
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17,794 |
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Interest expense |
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(41,426 |
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(40,195 |
) |
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Net (loss) |
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$ |
(79,878 |
) |
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$ |
(276,519 |
) |
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Basic net (loss) per common share |
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$ |
(.01 |
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$ |
(.03 |
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Diluted net (loss) per common share |
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$ |
(.01 |
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$ |
(.03 |
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Number of shares used in per common share
computations: |
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Basic |
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9,168,335 |
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9,087,164 |
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Diluted |
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9,168,335 |
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9,087,164 |
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See Notes to Condensed Consolidated Financial Statements.
6
LANVISION SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended April 30,
(Unaudited)
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2006 |
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2005 |
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Operating activities: |
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Net (loss) |
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$ |
(79,878 |
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$ |
(276,519 |
) |
Adjustments to reconcile net (loss) to net cash
(used for) operating activities: |
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Depreciation and amortization |
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463,910 |
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357,675 |
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Share-based compensation expense |
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22,967 |
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Cash (used for) provided by assets and liabilities: |
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Accounts and contract receivables |
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(42,566 |
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(578,712 |
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Other current assets |
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(150,259 |
) |
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(37,443 |
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Accounts payable and accrued expenses |
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(920,796 |
) |
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(364,350 |
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Deferred revenues |
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(117,311 |
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220,654 |
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Net cash (used for) operating activities |
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(823,933 |
) |
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(678,695 |
) |
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Investing activities: |
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Purchases of property and equipment |
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(182,175 |
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(470,889 |
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Capitalization of software development costs |
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(399,999 |
) |
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(300,000 |
) |
Other |
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(20,150 |
) |
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134,614 |
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Net cash (used for) investing activities |
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(602,324 |
) |
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(636,275 |
) |
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Financing activities: |
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Payment of capitalized leases |
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(20,693 |
) |
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(57,376 |
) |
Exercise of stock options |
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17,129 |
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9,620 |
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Net cash (used for) financing activities |
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(3,564 |
) |
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(47,756 |
) |
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(Decrease) in cash |
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(1,429,821 |
) |
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(1,362,726 |
) |
Cash at beginning of period |
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4,634,219 |
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4,181,073 |
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Cash at end of period |
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$ |
3,204,398 |
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$ |
2,818,347 |
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Supplemental cash flow disclosures: |
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Income taxes paid ( refund ) |
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$ |
41,425 |
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$ |
(4,882 |
) |
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Interest paid |
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$ |
38,300 |
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$ |
40,598 |
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Leasehold improvements (included in property
and equipment) paid for by the landlord as a
lease inducement |
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$ |
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$ |
326,000 |
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See Notes to Condensed Consolidated Financial Statements.
7
LANVISION SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by
LanVision Systems, Inc. (LanVision or the Company) without audit, in accordance with accounting
principles generally accepted in the United States for interim financial information, pursuant to
the rules and regulations applicable to quarterly reports on Form 10-Q of the U. S. Securities and
Exchange Commission. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of the Condensed Consolidated Financial Statements have been
included. These Condensed Consolidated Financial Statements should be read in conjunction with the
financial statements and notes thereto included in the most recent LanVision Systems, Inc. Annual
Report on Form 10-K, Commission File Number 0-28132. Operating results for the three months ended
April 30, 2006, are not necessarily indicative of the results that may be expected for the fiscal
year ending January 31, 2007.
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Companys significant accounting policies is presented beginning on page 39 of its
fiscal year 2005 Annual Report on Form 10-K. Users of financial information for interim periods
are encouraged to refer to the footnotes contained in the Annual Report when reviewing interim
financial results. There has been no material change in the accounting policies followed by the
Company during fiscal year 2006, except for the adoption and implementation of Financial Accounting
Standards No. 123(R), Share-Based Payment, which requires the expensing the fair value of equity
awards effective the first quarter of fiscal year 2006. (See also note 4 below.)
Note 3 CHANGES IN BALANCE SHEET ACCOUNT BALANCES
The decrease in cash during the quarter results primarily from the payment of year end accrued
compensation and accounts payable, the purchase of fixed assets and the capitalization of software
development costs during the quarter.
The decrease in total receivables is due to the collection during the quarter of outstanding
receivables at year end.
Prepaid expenses consist of software and hardware awaiting installation (related to unrecognized
revenue) and prepaid expenses, including commissions.
8
The increase in property and equipment is primarily the result of the acquisition of additional
equipment to accommodate additional employees.
Other non-current assets consist primarily of the deferred federal income tax asset relating to the
net operating loss carry forward.
The decrease in accounts payable results primarily from the payment during the quarter of invoices
received in January and paid after the fiscal year end.
The decrease in accrued compensation results primarily from the payment of year end bonuses during
the first quarter.
Note 4 EQUITY AWARDS
During the first quarter of the current fiscal year, the Company granted no equity awards. During
the same period, no options were forfeited and 14,167 options were exercised under all plans during
the quarter.
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation,
established a fair value method of financial accounting and reporting for stock-based compensation
plans. LanVision elected to continue to account for stock options under the intrinsic value method
prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
and, accordingly, adopted the disclosure only provisions of Statement 123 through fiscal year 2005.
At April 30, 2006, LanVision had two stock-based compensation plans. No stock-based compensation
cost is reflected in the 2005 net earnings, as all options granted under the plans had exercise
prices equal to the fair market value of the underlying common stock on the date of grant. The
table below illustrates the effect on net earnings and earnings per share for the first quarter of
fiscal year 2005 as if LanVision had applied the fair value recognition provisions of Statement of
Financial Accounting Standards No. 123, to stock-based employee compensation.
In December 2004, the Financial Accounting Standards Board adopted Statement of Financial
Accounting Standards No. 123(R), Share-Based Payment. The statement establishes new accounting
standards for entities which exchange equity instruments (e.g. stock options, restricted stock,
stock appreciation rights (SARs), employee stock purchase plans, etc.) for goods or services.
The Company adopted the standards of Statement of Financial Accounting Standards No. 123(R),
Share-Based Payment, effective the first quarter of fiscal year 2006, using the
modified-prospective-transition method which requires expensing the fair value of the equity awards
beginning in the fiscal period in which the recognition provisions are first applied. Based on the
number of stock-based compensation equity awards currently outstanding, the impact on operating
expense in fiscal year 2006 is not expected to be material in amount. However, future grants of
equity awards could have a material impact on reported expenses depending upon the number, value
and vesting period of future awards. The expense relating to the fair value of equity awards
included in the first quarter of fiscal year 2006 operating expenses amounted to $22,967.
9
Pro forma information regarding the net earnings and net earnings per common share is required for
the first quarter of 2005, and has been determined as if LanVision had accounted for its stock
options under the fair value method of that Statement.
The fair value of all equity awards was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted average assumptions for fiscal year 2005: risk-free
interest rate of 4.25%; a dividend yield of zero percent; a volatility factor of the expected
market price of LanVisions Common Stock of .842 and a weighted average expected life of five
years. No equity awards have yet been granted in fiscal 2006.
The outstanding SARs vest when certain performance criteria are met. The performance objectives
are such that the recipient earns 100% or 0% of the number of SARs granted. Performance based SAR
expense is recognized over the performance period based on the stock price at each reporting date,
when satisfaction of the performance criteria is deemed probable. As the performance criteria as
of April 30, 2006 was not deemed probable, no expense was recognized in the first quarter of 2006.
First quarter 2005 Pro forma information
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Net (loss), as reported |
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$ |
(276,519 |
) |
Deduct: Total stock based compensation expense determined under
the fair value based method for all awards, net of related tax
effects |
|
|
(11,390 |
) |
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Pro forma net earnings |
|
$ |
(287,909 |
) |
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Loss per share: |
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Basic as reported |
|
$ |
(0.03 |
) |
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Basic pro forma |
|
$ |
(0.03 |
) |
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Diluted as reported |
|
$ |
(0.03 |
) |
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|
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Diluted pro forma |
|
$ |
(0.03 |
) |
|
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|
The assumptions used to calculate the fair value of equity awards granted are evaluated and
revised, as necessary, to reflect current market conditions and prior experience.
Note 5 EARNINGS PER SHARE
The basic (loss) per common share is calculated using the weighted average number of common shares
outstanding during the period.
The 2006 diluted net (loss) per common share calculation, excludes the effect of the common stock
equivalents (stock options and warrants), as the inclusion thereof would be antidilutive.
10
The Company had approximately 487,000 equity award shares and 750,000 warrant shares outstanding at
April 30, 2006 that were not included in the diluted net (loss) per share calculation as the
inclusion thereof would be antidilutive.
The 2005 diluted net (loss) per common share calculation, excludes the effect of the common stock
equivalents (stock options), as the inclusion thereof would be antidilutive. The Company had
approximately 537,942 equity award shares and 750,000 warrant shares outstanding at April 30, 2005
that were not included in the diluted net (loss) per share calculation as the inclusion thereof
would be antidilutive.
Note 6 CONTRACTUAL OBLIGATIONS
The following table details the remaining obligations, by fiscal year, as of the end of the quarter
for the capitalized leases, long-term debt, other commitments and the operating leases.
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Total |
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2006 |
|
|
2007 |
|
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2008 |
|
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2009 |
|
|
2010 |
|
Capitalized leases |
|
$ |
229,382 |
|
|
$ |
73,730 |
|
|
$ |
98,306 |
|
|
$ |
57,346 |
|
|
$ |
|
|
|
$ |
|
|
Long-term debt |
|
|
2,000,000 |
|
|
|
1,000,000 |
|
|
|
1,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
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Operating leases |
|
|
1,508,190 |
|
|
|
286,782 |
|
|
|
363,601 |
|
|
|
350,228 |
|
|
|
342,484 |
|
|
|
165,095 |
|
|
|
|
|
|
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Total |
|
$ |
3,737,572 |
|
|
$ |
1,360,512 |
|
|
$ |
1,461,907 |
|
|
$ |
407,574 |
|
|
$ |
342,484 |
|
|
$ |
165,095 |
|
|
|
|
|
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|
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|
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|
|
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|
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Capitalized Leases
During fiscal year 2005, LanVision acquired additional computer equipment for the
application-hosting services data center, which are accounted for as capitalized leases. The
amount of the computer equipment leased assets is $267,237. The lease is payable monthly in
installments of $8,192, through August 2008. The present value of the future lease payments upon
lease inception was $267,237 using the interest rates implicit in the lease agreement at the
inception of the lease.
Long-term Debt
In July 2004, LanVision entered into a new three year working capital term loan agreement. The
long-term debt of $2,000,000 is secured by all of the assets of LanVision and the loan agreement
restricts LanVision from incurring additional indebtedness for borrowed money, including
capitalized leases, etc. without lender consent. The loan is repayable in two installments, which
are due and payable of not less than $1,000,000 by July 30, 2006 and $1,000,000 by July 30, 2007
and interest is payable quarterly, at the banks prime rate (currently 8.0%). In May 2006, the
loan agreement was amended to remove the minimum cash balance requirement and add certain financial
covenants, including; minimum level of tangible net worth and fixed charge coverage ratio in place
of the minimum cash balance. LanVision complied with all of the provisions of its loan agreements
during the period.
In 1998, LanVision issued a $6,000,000 note which was repaid in full in July, 2004. In connection
with the issuance of the note, LanVision issued Warrants to purchase 750,000 shares
11
of Common Stock of LanVision at $3.87 per share at any time through July 16, 2008. The Warrants
are subject to customary antidilution and registration rights provisions.
Warranties and Indemnities
LanVision provides for the estimated cost of the product warranties at the time revenue is
recognized. Should products fail to meet certain performance standards for an initial warranty
period, LanVisions estimated warranty liability might need to be increased. LanVision bases its
warranty estimates on the nature of any performance complaint, the effort necessary to resolve the
issue, customer requirements and any potential concessions, which may be required to be granted to
a customer, which result from performance issues. LanVisions ASPeN application-hosting services
guarantees specific up-time and response time performance standards, which, if not met may
result in reduced revenues, as a penalty, for the month in which the standards are not met.
LanVisions standard agreements with its customers also usually include provisions to indemnify
them from and against third party claims, liabilities, damages, and expenses arising out of
LanVisions operation of its business or any negligent act or omission of LanVision. To date,
LanVision has always maintained the ASPeN performance standards and has not been required to make
any material penalty payments to customers or indemnify any customers for any material third party
claims. At April 30, 2005 and 2006, LanVision had a warranty reserve in the amount of $250,000.
Each contract is reviewed quarterly with the appropriate LanVision Client Manager to determine the
need for a warranty reserve based upon the most currently available information as to the status of
the contract, the customer comments, if any, and the status of any open or unresolved issues with
the customer.
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In addition to historical information contained herein, this Quarterly Report on Form 10-Q contains
forward-looking statements. The forward-looking statements contained herein are subject to certain
risks and uncertainties that could cause actual results to differ materially from those reflected
in the forward-looking statements, included herein. These risks and uncertainties include, but are
not limited to, the impact of competitive products and pricing, product demand and market
acceptance, new product development, key strategic alliances with vendors that resell LanVision
products, the potential cancellation of existing contracts or clients not completing projects in
the current backlog, the ability of LanVision to control costs, availability of products obtained
from third-party vendors, the healthcare regulatory environment, healthcare information system
budgets, availability of healthcare information systems trained personnel for implementation of new
systems, as well as maintenance of legacy systems, fluctuations in operating results and other risk
factors that might cause such differences including those discussed herein. Readers are cautioned
not to place undue reliance on these forward-looking statements, which reflect managements
analysis only as of the date hereof. The Registrant undertakes no obligation to publicly revise
these forward-looking statements, to reflect events or circumstances that arise after the date
hereof. Readers should carefully review the risk factors described in other documents LanVision
files from time to time with the Securities and Exchange
12
Commission, including Annual Reports of Form 10-K, Quarterly Reports on Form 10-Q and any Current
Reports on Form 8-K.
LanVisions discussion and analysis of its financial condition and results of operations are based
upon its consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these financial statements
requires LanVision to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues, and expenses, and related disclosure of contingent liabilities. On an
ongoing basis, LanVision evaluates its estimates, including those related to product revenues, bad
debts, capitalized software development costs, income taxes, warranty obligations, support
contracts, contingencies, and litigation. LanVision bases its estimates on historical experience
and on various other assumptions that LanVision believes are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and
liabilities and revenue and expense recognition. Actual results may differ from these estimates
under different assumptions or conditions.
RESULTS OF OPERATIONS
GENERAL
LanVision Systems, Inc. (LanVisionÔ or the Company) is a healthcare information technology
company doing business as Streamline Health" TM, which is focused on developing and
licensing proprietary software solutions that improve document-centric information flows and
complement and enhance existing transaction-centric hospital healthcare information systems. The
Companys workflow and document management solutions bridge the gap between current, predominantly
paper-based processes and transaction-based healthcare information systems by 1) electronically
capturing document-centric information from disparate sources, 2) electronically directing that
information through vital business processes, and 3) providing access to the information to
authenticated users (such as physicians, nurses, administrative and financial personnel and
payers) across the continuum of care. LanVisions systems are designed for enterprise wide
deployment to seamlessly connect disparate departmental systems, or silos of independent
technologies which are not connected, into a common interoperable document management workflow
solution.
The Companys workflow-based products and services offer solutions to specific healthcare business
processes within the revenue cycle, such as remote coding, abstracting and chart completion,
remote physician order processing, pre-admission registration scanning, insurance verification,
denial management, secondary billing services, explanation of benefits processing, release of
information processing and other departmental workflow processes.
LanVisions products and services also create an integrated document-centric repository of
historical health information that is complementary to, and can be seamlessly bolted on to
existing transaction-centric clinical, financial and management information systems, allowing
healthcare providers to aggressively move toward fully Electronic Medical Record (EMR) processes
while improving service levels and convenience for all stakeholders. These integrated systems
allow providers and administrators to dramatically improve the availability of patient
13
information while decreasing direct costs associated with document retrieval, work-in-process,
chart completion, document retention and archiving.
LanVisions software solutions can be provided on a subscription basis via remote
application-hosting services as an Application Service Provider or licensed and installed locally.
LanVision provides ASPeNSM, Application Service Provider-based remote hosting services
to The University Hospital, a member of the Health Alliance of Greater Cincinnati, M.D. Anderson
Cancer Center, and Childrens Medical Center of Columbus, OH, among others. In addition,
LanVision has licensed its workflow and document management solutions, which are installed at
leading healthcare providers including Stanford Hospital and Clinics, the Albert Einstein
Healthcare Network, Beth Israel Medical Centers, the University of Pittsburgh Medical Center,
Medical University Hospital Authority of South Carolina, and Memorial Sloan-Kettering Cancer
Center, among others.
LanVisions applications allow authenticated users, such as physicians, nurses, administrative and
financial personnel, and payers with access to patient healthcare information that exists in
disparate systems across the continuum of care and improve operational efficiencies through
business process re-engineering and automating labor-intensive and demanding paper environments.
LanVisions applications and services are complementary to existing clinical and financial
systems, and use document imaging and advanced workflow tools to ensure users can electronically
access both structured (transaction-centric) and unstructured (document-centric) patient data
and all the various forms of clinical and financial healthcare information from a single permanent
and secure repository, including clinicians handwritten notes, laboratory reports, photographs,
insurance cards, etc.
LanVisions workflow solutions offer value to all of the constituents in the healthcare delivery
process by enabling them to simultaneously access and utilize LanVisions advanced technological
workflow applications to process information, on a real-time basis from virtually any location,
including the Physicians desktop, using Web-based technology. LanVisions solutions integrate
its own proprietary imaging platform, application workflow modules and image and web-enabling
tools that allow for the seamless merger of back office functionality with existing Clinical and
Financial Information Systems at the desktop.
LanVision offers its own document imaging/management infrastructure (Foundation Suite) that is
built for high volume transaction processing and is specifically designed for the healthcare
industry. In addition to providing access to information not previously available at the desktop,
LanVisions applications fulfill the administrative and regulatory needs of the Medical Records,
Patient Financial Services and other hospital departments. Furthermore, these systems have been
specifically designed to integrate with any Clinical Information System. For example, LanVision
has integrated its products with selected systems from Siemens Medical Solutions USA Inc.
(Siemens), Cerner Corporation, and IDX Information Systems Corporation (IDX) a unit of GE
Healthcare applications, thus enabling customers to use LanVision solutions without the expense of
replacing entire software systems to gain the software functionality. By offering electronic
access to all the patient information components of the medical record, this integration completes
one of the most difficult tasks necessary to provide a true Electronic Medical Record.
14
LanVisions systems deliver on-line enterprisewide access to fully updated patient information,
which historically was maintained on a variety of media, including paper, magnetic disk, optical
disk, and microfilm.
LanVision operates in one segment as a provider of health information technology solutions that
streamline healthcare information flows within a healthcare facility. The financial information
required by Items 101(b) of Regulation S-K is contained in Item 6 Selected Financial Information of
this Form 10-K.
Historically, LanVision has derived most of its revenues from systems sales, recurring
application-hosting services, recurring maintenance fees, and professional services involving the
licensing, either directly or through remarketing partners, of its Medical Record Workflow and
Revenue Cycle Management solutions to Integrated Healthcare Delivery Networks (IDN). In a
typical transaction, LanVision, or its remarketing partners, enter into a perpetual license or
fee-for-service subscription agreement for LanVisions software application suite and may license
or sell other third-party software and hardware components to the IDN. Additionally, LanVision
provides professional services, including implementation, training, and product support.
With respect to systems sales, LanVision earns its highest margins on proprietary LanVision
software and application-hosting services and the lowest margins on third-party hardware and
software. Systems sales to customers may include different configurations of LanVision software,
hardware, third party software, and professional services, resulting in varying margins among
contracts. The margins on professional services revenues fluctuate based upon the negotiated terms
of the agreement with each customer and LanVisions ability to fully utilize its professional
services, maintenance, and support services staff.
Beginning in 1998, LanVision began offering customers the ability to obtain its workflow solutions
on an application-hosting basis as an Application Service Provider. LanVision established a
hosting data center and installed LanVisions suite of workflow products, called ASPeN (Application
Service Provider eHealth Network) within the hosting data center. Under this arrangement,
customers electronically capture information and securely transmit the data to the hosting data
center. The ASPeN services store and manage the data using LanVisions suite of applications, and
customers can view, print, fax, and process the information from anywhere using the LanVision
Web-based applications. LanVision charges and recognizes revenue for these ASPeN services on a per
transaction or subscription basis as information is captured, stored, retrieved and processed.
The decision by a healthcare provider to replace, substantially modify, or upgrade its information
systems is a strategic decision and often involve a large capital commitment requiring an extended
approval process. Since inception, LanVision has experienced extended sales cycles. It is not
uncommon for sales cycles to take six to eighteen months from initial contact to the execution of
an agreement. As a result, the sales cycles can cause significant variations in quarter-to-quarter
operating results. These agreements cover the licensing, implementation and maintenance of the
system, which typically takes place in one or more phases. The licensing agreements generally
provide for the licensing of LanVisions proprietary software and third-
15
party software with a perpetual or term license fee that is adjusted depending on the number of
concurrent users or workstations using the software. Site-specific customization, interfaces with
existing customer systems and other consulting services are sold on a fixed fee or a time and
materials basis. Alternatively, with LanVisions ASP services solution, the application-hosting
services agreements generally provide for utilizing LanVisions software and third-party software
on a fee per transaction or recurring subscription basis.
ASPeN services was designed to overcome obstacles in the buying decision such as large capital
commitment, length of implementation, and the scarcity of time for Healthcare Information Systems
personnel to implement new systems. LanVision believes that large IDNs and smaller healthcare
providers are looking for this type of ASP application because of the ease of implementation and
lower entry-level costs. LanVision believes its business model is especially well suited for the
medium to small acute care facility marketplace as well as the ambulatory marketplace and is
actively pursuing remarketing agreements, in addition to those discussed below, with other
Healthcare Information Systems (HIS) and staff outsourcing providers to distribute LanVisions
workflow solutions.
Generally, revenues from systems sales are recognized when an agreement is signed and products are
made available to end-users. Revenue recognition related to routine installation, integration and
project management are deferred until the work is performed. Revenues from consulting, training,
and application-hosting services are recognized as the services are performed. Revenues from
short-term support and maintenance agreements are recognized ratably over the term of the
agreements. Billings to customers recorded prior to the recognition of the revenue are classified
as deferred revenues. Revenues recognized prior to progress billings to customers are recorded as
contract receivables.
In 2002, LanVision entered into a five year Remarketing Agreement with IDX Information Systems
Corporation, which was acquired by GE Healthcare, a unit of the General Electric Company in January
2006. Under the terms of the Remarketing Agreement, IDX was granted a non-exclusive worldwide
license to distribute all LanVision workflow software including accessANYwareTM,
codingANYwareTM, and ASPeN application-hosting services to IDX customers and prospective
customers, as defined in the Remarketing Agreement.
Under the terms of a Remarketing Agreement with IDX, LanVision records this revenue when the
products are made available to end-users, which is usually at the same time the royalty report is
received from IDX. Royalties are remitted by IDX to LanVision based upon IDX sublicensing
LanVisions software to IDXs customers. Thirty percent of the royalty is due 45 days following
the end of the month in which IDX executes an end-user license agreement with its customer. The
remaining seventy percent of the royalty is due from IDX, in varying amounts based on specific
milestones, 45 days following the end of the month in which a milestone occurs.
LanVisions quarterly operating results have varied in the past and may continue to do so in the
future because of various reasons including: demand for LanVisions products and services, long
sales cycles, and extended installation and implementation cycles based on customers schedules.
16
Sales are often delayed because of customers budgets and competing capital expenditure needs as
well as customers personnel resource constraints.
Delays in anticipated sales or installations may have a significant impact on LanVisions quarterly
revenues and operating results, because substantial portions of the operating expenses are fixed
and the revenues more variable.
UNEVEN PATTERNS OF QUARTERLY OPERATING RESULTS
The Companys revenues from systems sales have varied, and may continue to vary, significantly from
quarter-to-quarter because of the volume and timing of systems sales and delivery. Professional
services revenues also fluctuate from quarter-to-quarter because of the timing of the
implementation services, project management and customized programming provided. Revenues from
maintenance services do not fluctuate significantly from quarter-to-quarter, but have been
increasing, on an annual basis, as the number of customers increase. Revenues from ASP
application-hosting services operations are expected to increase over time, as more hospitals
outsource services to LanVisions ASP Division, its partners begin to utilize the software, and
existing customers increase the volume of documents stored on the systems and the number of
retrievals increases.
The Companys revenues and operating results may vary significantly from quarter-to-quarter because
of a number of other factors, many of which are outside the Companys control. These factors
include the relatively high purchase price of a system, unpredictability in the number and timing
of systems sales, length of the sales cycle, delays in the implementation process and changes in
the customers financial condition or budget and the sales activities of the remarketing partners.
As a result, period-to-period comparisons may not be meaningful with respect to the past operations
of the Company nor are they necessarily indicative of the future operations of the Company.
REVENUES
Revenues for the first fiscal quarter ended April 30, 2006, were $3,848,423, compared with
$2,696,873 reported in the comparable quarter of 2005. The increase was primarily a result of
increased System Sales revenues resulting from a new client and the expansion of a system at an
existing client. Traditionally, the first two quarters are the most challenging because of the
seasonality of software licensing revenues, which the Company has experienced in the past, with a
greater portion of the annual revenues recorded in the later two quarters.
OPERATING EXPENSES
Cost of Systems Sales
The cost of systems sales includes amortization of capitalized software development costs on a
straight-line basis, royalties and the cost of third party software and hardware. Cost of systems
sales as a percentage of systems sales may vary from period-to-period depending on the mix of
17
hardware and software of the systems or add-on sales delivered. The cost of systems sales as a
percentage of systems sales for the first quarter of fiscal 2006 and 2005 were 52% and 199%,
respectively. The lower percentage of cost of sales reflects the increased software licensing
revenues during the current period when compared to the comparable prior period.
Cost of Services, Maintenance and Support
The cost of services, maintenance and support includes compensation and benefits for support and
professional services personnel and the cost of third party maintenance contracts. As a percentage
of services, maintenance and support revenues, the cost of such services, maintenance and support
was 46% and 42% for the first quarter of fiscal 2006 and 2005, respectively. The increased cost
percentage results from increased compensation expense for added personnel during the quarter
exceeding the increase in revenues. The Companys support margins are highest on LanVisions
proprietary software. Accordingly, margins should improve as more customers are added.
Cost of Application-hosting services
The cost of application-hosting services operations remained approximately the same for the first
quarter of 2006 when compared to the first quarter of 2005, as the cost of providing these services
is relatively fixed. As a percentage of application-hosting revenues, the cost of
application-hosting was 34% and 33% for the first quarter of fiscal 2006 and 2005, respectively.
The increase in the cost percentage reflects the 7% increase in revenues from existing clients with
a 12% increase in operating costs, primarily related to depreciation and compensation increases.
Selling, General and Administrative
Selling, General and Administrative expenses consist primarily of compensation and related benefits
and reimbursable travel and living expenses related to the Companys sales, marketing and
administrative personnel; advertising and marketing expenses, including trade shows and similar
type sales and marketing expenses; and general corporate expenses, including occupancy costs.
During the first quarter of fiscal 2006, Selling, General and Administrative expenses increased
when compared with the comparable prior quarter primarily because of planned increased salary cost
related to normal pay raises and increased personnel.
Product Research and Development
Product research and development expenses consist primarily of compensation and related benefits;
the use of independent contractors for specific development projects; and an allocated portion of
general overhead costs, including occupancy. During the first quarter, research and development
expenses increased modestly when compared with the comparable prior quarter. The Company
capitalized, in accordance with Statement of Financial Accounting Standards No. 86, approximately
$400,000 and $300,000 of product research and development costs in the first quarter of fiscal 2006
and 2005, respectively.
18
Operating (loss)
The operating (loss) for the first quarter of fiscal 2006 was ($71,443) compared with an operating
(loss) of ($254,118) in the first quarter of fiscal 2005. The decrease in the operating (loss) is
the result of the increased systems sales, especially software licensing revenues, offset to some
extent by planned increased operating expenses, primarily selling, general and administrative and
product research and development as noted above.
Interest income consists primarily of interest on invested cash. The increase in interest income
results from increased average cash balances and increased interest rates.
Interest expense relates primarily to the long-term debt and includes the interest expense on the
capitalized leases.
Net (loss)
The net (loss) for the first quarter of fiscal 2006 was ($79,878) ($.01 per share) compared with a
net (loss) of ($276,519) ($.03 per share) in the first quarter of fiscal 2005. The decrease in the
net (loss) is the result of the increased systems sales, especially software licensing revenues,
offset to some extent by planned increased operating expenses, primarily Selling, General and
Administrative and product research and development as noted above.
Management continues to believe that the healthcare document imaging and workflow market is going
to be a significant market. Management believes it has made, and continues to make, significant
investments in the talent and technology necessary to establish the Company as a leader in this
marketplace, and continues to believe the Company is well positioned to experience significant
revenue growth.
Since commencing operations in 1989, the Company has incurred operating losses. Although the
Company achieved profitability in fiscal years 1992, 1993, and 2000 through 2005, the Company
incurred a net (loss) in fiscal years 1994 through 1999. In view of the Companys prior operating
history, there can be no assurance that the Company will be able to achieve consistent
profitability on a quarterly or annual basis or that it will be able to sustain or increase its
revenue growth in future periods. Based upon the expenses associated with current and planned
staffing levels, profitability is dependent upon increasing revenues.
LIQUIDITY AND CAPITAL RESOURCES
During the last five fiscal years, LanVision has funded its operations, working capital needs, and
capital expenditures primarily from a combination of cash generated by operations, and a $3,500,000
bank loan in 2004. LanVisions liquidity is dependent upon numerous factors to include: the timing
and amount of revenues and collection of contractual amounts from customers, amounts invested in
research and development, capital expenditures, and the level of operating expenses, all of which
can vary significantly from quarter-to-quarter.
19
LanVisions customers typically have been well-established hospitals or medical facilities or major
HIS companies that resell LanVision products which have good credit histories and payments have
been received within normal time frames for the industry. However, some healthcare organizations
have experienced significant operating losses as a result of limits on third-party reimbursements
from insurance companies and governmental entities. Agreements with customers often involve
significant amounts and contract terms typically require customers to make progress payments.
LanVision has no significant obligations for capital resources, other than its $2,000,000 of
long-term debt, the noncancelable operating leases of approximately $1,508,000 payable over the
next five years and capitalized leases of approximately $229,000, payable over the next three
years. Capital expenditures for property and equipment in 2006 are not expected to exceed
$500,000.
During the three prior fiscal years, LanVision has expended in the aggregate approximately
$1,566,000 for capital expenditures, increased its sales and marketing expenses, its product
research and development and its support and consulting expenses, and made net debt and deferred
interest repayments of approximately $6,625,000. This resulted in significant net cash outlays
over the last three fiscal years. Although LanVision reduced staffing levels and related expenses
during 2003 and 2004, the stringent expense controls and reduced staffing, caused by the necessity
to retire the long-term debt, hampered the growth of revenues in fiscal year 2003 and 2004.
Accordingly, to continue to achieve increasing revenues and profitability it was necessary for the
Company to significantly increase the sales and marketing expenses in fiscal 2005 and will continue
to do so in 2006, albeit at a much lower rate. The Company believes that this strategic initiative
to expand sales and marketing should produce improved results in late 2006 and beyond as the
expanded sales and marketing efforts begin to produce results. However, there can be no assurance
LanVision will be able to do so. At April 30, 2006, LanVision had cash of $3,204,398.
LanVision has carefully monitored operating expenses during the last five fiscal years.
Notwithstanding the current levels of revenues and operating profit, for the foreseeable future,
LanVision will need to continually assess its revenue prospects compared to its then current
expenditure levels. If it does not appear likely that revenues will increase, it may be necessary
to reduce operating expenses or raise cash through additional borrowings, the sale of assets, or
issue additional equity, or a combination thereof. Certain of these actions will require current
lender approval. However, there can be no assurance LanVision will be successful in any of these
efforts. If it is necessary to significantly reduce operating expenses, this could have an adverse
effect on future operating performance.
LanVision believes that its present cash position, combined with cash generation currently
anticipated from operations, will be sufficient to meet anticipated cash requirements for the short
term. However, continued expansion of the Company in 2006 will require additional resources. The
Company may need to refinance its current debt, obtain an additional infusion of capital, or a
combination of both, depending on the extent of the expansion of the Company and future revenues.
However, there can be no assurance LanVision will be able to do so.
20
To date, inflation has not had a material impact on LanVisions revenues or expenses.
SIGNED AGREEMENTS BACKLOG
LanVision, or its remarketing partners, enter into master agreements with customers to specify the
scope of the system to be installed and services to be provided, the agreed upon aggregate price
and the timetable for implementation. The master agreement typically provides that the Company, or
its remarketing partner, will deliver the system in phases pursuant to the customers purchase
orders, thereby allowing the customer flexibility in the timing of its receipt of systems and to
make adjustments that may arise based upon changes in technology or changes in customer needs. The
master agreement also allows the customer to request additional components as the installation
progresses, which additions are then separately negotiated as to price and terms. Historically,
customers have ultimately purchased systems and services in addition to those originally
contemplated by the master agreement. Although there can be no assurance that customers will
continue in the future to expand their systems and purchase additional licenses and services,
LanVision believes, based on its past experience, that its customers will expand their existing
systems.
At April 30, 2006, LanVision has master agreements, purchase orders or royalty reports from
remarketing partners for systems and related services (excluding support and maintenance, and
transaction-based revenues for the application-hosting services) which have not been delivered,
installed and accepted which, if fully performed, will generate future revenues of approximately
$4,825,000. The related products and services are expected to be delivered over the next two to
three years. Furthermore, LanVision has entered into application-hosting agreements, which are
expected to generate revenues in excess of $4,100,000, through their respective renewal dates in
fiscal 2006 through 2007.
LanVisions master agreements also generally provide for an initial maintenance period and give the
customer the right to subscribe for maintenance and support services on a monthly, quarterly, or
annual basis. Maintenance and support revenues for fiscal years 2005, 2004 and 2003 were
approximately $5,104,000, $5,220,000 and $4,712,000, respectively. Maintenance and support
revenues are expected to increase in 2006. At April 30, 2006, LanVision had maintenance
agreements, purchase orders or royalty reports from remarketing partners for maintenance, which if
fully performed, will generate future revenues of approximately $2,900,000 through their respective
renewal dates in fiscal 2006 and 2007.
The commencement of revenue recognition varies depending on the size and complexity of the system;
the implementation schedule requested by the customer and usage by customers of the
application-hosting services. Therefore, LanVision is unable to predict accurately the revenue it
expects to achieve in any particular period. LanVisions master agreements generally provide that
the customer may terminate its agreement upon a material breach by LanVision, or may delay certain
aspects of the installation. There can be no assurance that a customer will not cancel all or any
portion of a master agreement or delay installations. A termination or installation delay of one
or more phases of an agreement, or the failure of LanVision to procure
21
additional agreements, could have a material adverse effect on LanVisions business, financial
condition, and results of operations.
Item 3 Quantitative and Qualitative Disclosures about Market Risk
For quantitative and qualitative disclosures about market risk, see Item 7A, Quantitative and
Qualitative Disclosures About Market Risk, of the annual report on Form 10-K for the fiscal year
ending January 31, 2006. The Company exposures to market risk have not changed materially since
January 31, 2006.
Item 4. Controls and Procedures
LanVision maintains disclosure controls and procedures that are designed to ensure that there is
reasonable assurance that the information required to be disclosed in LanVisions Exchange Act
reports is recorded, processed, summarized and reported within the time periods specified in the
SECs rules and forms, and that such information is accumulated and communicated to LanVisions
management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure based on the definition of disclosure
controls and procedures in Exchange Act Rules 13a-15(e) and 15d-14(e). In designing and evaluating
the disclosure controls and procedures, management recognizes that any controls and procedures, no
matter how well designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.
As of the end of the period covered by this report, an evaluation was performed under the
supervision and with the participation of LanVisions senior management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of
LanVisions disclosure controls and procedures to provide reasonable assurance of achieving the
desired objectives of the disclosure controls and procedures. Based on that evaluation, LanVisions
management, including the Chief Executive and Chief Financial Officer, concluded that there is
reasonable assurance that LanVisions disclosure controls and procedures were effective as of the
end of the period covered by this report and there have been no material changes in LanVisions
internal control or in the other controls during the quarter ended April 30, 2006 that could
materially affect, or is reasonably likely to materially affect, internal controls over financial
reporting.
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
LanVision is, from time-to-time, a party to various legal proceedings and claims, which arise, in
the ordinary course of business. LanVision is not aware of any legal matters that will have a
22
material adverse effect on LanVisions consolidated results of operations or consolidated financial
position.
Item 1A Risk Factors
In addition to the other information set forth in this report, you should carefully consider the
risk factors discussed in Part I, Item 1A, Risk Factors in the annual report on Form 10-K for the
fiscal year ending January 31, 2006. The risk factors have not changed materially since January
31, 2006. The risk factors described in the Annual Report on Form 10-K are not the only risks
facing the Company. In addition, risks and uncertainties not currently known to the Company or
that the Company currently deems to be immaterial also may materially adversely affect the Company,
its financial condition and/or operating results.
Item 3. DEFAULTS UPON SENIOR SECURITIES
The Company is not in default under its existing Loan Agreement.
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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|
On May 24, 2006, LanVision Systems, Inc. convened its Annual Meeting of Stockholders. The
stockholders considered the two proposals set forth in LanVisions proxy statement relating
to the election of the Companys four incumbent directors and an amendment to the Companys
Certificate of Incorporation to change its corporate name. The directors were elected as
proposed at the May 24, 2006 Annual Meeting. |
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|
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Votes For |
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Votes Withheld |
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|
|
|
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Jonathan R. Phillips |
|
|
4,561,704 |
|
|
|
153,393 |
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Richard C. Levy, M.D. |
|
|
4,562,404 |
|
|
|
152,693 |
|
Edward J. VonderBrink |
|
|
4,432,919 |
|
|
|
282,178 |
|
J. Brian Patsy |
|
|
4,074,372 |
|
|
|
640,725 |
|
|
|
The proposal to change the Companys corporate name required the affirmative vote of two
thirds of the outstanding shares of the Companys common stock. Due to broker non-votes and
the failure to vote by certain stockholders of record owning a significant number of shares,
less than two thirds of the Companys outstanding shares were present and able to vote on
the name change proposal. A motion was made and approved at the Annual Meeting to recess
the Annual Meeting until June 2, 2006 at 5:00 p.m. to allow additional time for stockholders
to vote on the name change proposal.
|
|
|
At the reconvened Annual Meeting of Stockholders held on June 2, 2006, the stockholders
approved (by a vote of 6,503,624 for, 165,448 against and 6,024 abstain) the Amendment to
the Certificate of Incorporation to change the name of the Company to Streamline Health
Solutions, Inc.
|
Item 6. EXHIBITS
(a) Exhibits
|
|
|
3.1
|
|
Certificate of Incorporation of LanVision Systems, Inc. (*) |
|
|
|
3.2
|
|
Bylaws of LanVision Systems, Inc. (*) |
|
|
|
11
|
|
Computation of Earnings (Loss) Per Common Share |
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended |
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended |
|
|
|
32.1
|
|
Certification of the Chief Executive Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.2
|
|
Certification of the Chief Financial Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
(*) Incorporated herein by reference from, the Registrants Registration Statement on Form S-1,
File Number 333-01494, as filed with the Commission on April 15, 1996.
24
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.
|
|
|
|
|
|
|
|
|
LANVISION SYSTEMS, INC.
|
|
|
|
|
|
DATE: June 5, 2006
|
|
By:
|
|
/s/ William A. Geers |
|
|
|
|
|
|
|
|
|
William A. Geers
Chief Operating Officer |
|
|
|
|
|
DATE: June 5, 2006
|
|
By:
|
|
/s/ Paul W. Bridge, Jr. |
|
|
|
|
|
|
|
|
|
Paul W. Bridge, Jr.
Chief Financial Officer and Treasurer |
25
INDEX TO EXHIBITS
|
|
|
Exhibit No. |
|
Exhibit |
|
|
|
3.1
|
|
Certificate of Incorporation of LanVision Systems, Inc.
Previously filed with the Commission and incorporated herein
by reference from, the Registrants Registration Statement on
Form S-1, File Number 333-01494, as filed with the Commission
on April 15, 1996. |
|
|
|
3.2
|
|
Bylaws of LanVision Systems, Inc.
Previously filed with the Commission and incorporated herein
by reference from, the Registrants Registration Statement on
Form S-1, File Number 333-01494, as filed with the Commission
on April 15, 1996. |
|
|
|
11
|
|
Computation of Earnings (Loss) Per Common Share |
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a
- -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended |
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a
- -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended |
|
|
|
32.1
|
|
Certification of the Chief Executive Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
32.2
|
|
Certification of the Chief Financial Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 |
26
EX-11
EXHIBIT 11
LANVISION SYSTEMS, INC.
Computation of earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
April 30, |
|
|
|
2006 |
|
|
2005 |
|
Net (loss) |
|
$ |
(79,878 |
) |
|
$ |
(276,519 |
) |
|
|
|
|
|
|
|
Average shares outstanding |
|
|
9,168,335 |
|
|
|
9,087,164 |
|
Stock options & purchase plan: |
|
|
|
|
|
|
|
|
Total options & purchase plan shares |
|
|
|
|
|
|
|
|
Assumed treasury stock buyback |
|
|
|
|
|
|
|
|
Warrants assumed converted |
|
|
|
|
|
|
|
|
Convertible redeemable preferred
stock assumed converted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in per
common share computation |
|
|
9,168,335 |
|
|
|
9,087,164 |
|
|
|
|
|
|
|
|
Basic net ( loss ) per share of common stock |
|
$ |
(0.01 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
Diluted net ( loss ) per share of common stock |
|
$ |
(0.01 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
27
EX-31.1
Exhibit 31.1
LANVISION SYSTEMS, INC.
Certification of Chief Executive Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended
I, J. Brian Patsy, certify that:
|
1. |
|
I have reviewed this quarterly report on Form 10-Q of LanVision Systems, Inc.; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statements 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 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 report; |
|
|
4. |
|
The registrants other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a
15(e) and 15d 15(e)), for the registrant and we have: |
|
a) |
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; |
|
|
b) |
|
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls, as of the end of the period covered by this report based
on such evaluation; and |
|
|
c) |
|
Disclosed in this report any change in the registrants internal control
over financial reporting that occurred during the registrants most recent fiscal
quarter that has materially affected, or is reasonably likely to materially affect,
the registrants internal control over financial reporting; and |
28
5. |
|
The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors: |
|
a) |
|
All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably likely
to adversely affect the registrants ability to record, process, summarize and
report financial information; and |
|
|
b) |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls over
financial reporting. |
|
|
|
June 5, 2006
|
|
/s/ J. Brian Patsy
|
|
|
|
|
|
Chief Executive Officer and
President |
29
EX-31.2
EXHIBIT 31.2
LANVISION SYSTEMS, INC.
Certification of Chief Financial Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended
I, Paul W. Bridge, Jr., certify that:
1. |
|
I have reviewed this quarterly report on Form 10-Q of LanVision Systems, Inc.; |
|
2. |
|
Based on my knowledge, this report does not contain any untrue statements 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 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 report; |
|
4. |
|
The registrants other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a
15(e) and 15d 15(e)), for the registrant and we have: |
|
a. |
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; |
|
|
b. |
|
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls, as of the end of the period covered by this report based
on such evaluation; and |
|
|
c. |
|
Disclosed in this report any change in the registrants internal control
over financial reporting that occurred during the registrants most recent fiscal
quarter that has materially affected, or is reasonably likely to materially affect,
the registrants internal control over financial reporting; and |
30
5. |
|
The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors: |
|
a. |
|
All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably likely
to adversely affect the registrants ability to record, process, summarize and
report financial information; and |
|
|
b. |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls over
financial reporting. |
|
|
|
June 5, 2006
|
|
/s/ Paul W. Bridge, Jr. |
|
|
|
|
|
Chief Financial Officer and
Treasurer |
31
EX-32.1
EXHIBIT 32.1
LANVISION SYSTEMS, INC.
Certification of the Chief Executive Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
I, J. Brian Patsy, Chairman of the Board, Chief Executive Officer and President of LanVision
Systems, Inc. (the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350, that:
|
(1) |
|
The Quarterly Report on Form 10-Q of the Company for the quarter ended April 30, 2006
(the Report) fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
|
|
(2) |
|
The information contained in the Report fairly presents, in all material respects, the
financial condition, and results of operations of the Company. |
|
|
|
June 5, 2006
|
|
|
/s/ J. Brian Patsy
Chairman of the Board,
Chief Executive Officer and
President |
|
|
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
32
EX-32.2
EXHIBIT 32.2
LANVISION SYSTEMS, INC.
Certification of the Chief Financial Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
I, Paul W. Bridge, Jr., Chief Financial Officer of LanVision Systems, Inc. (the Company),
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
|
(3) |
|
The Quarterly Report on Form 10-Q of the Company for the quarter ended April 30, 2006
(the Report) fully complies with the requirements of section 13(a) or 15 (d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
|
(4) |
|
The information contained in the Report fairly presents, in all material respects, the
financial condition, and results of operations of the Company. |
|
|
|
June 5, 2006
|
|
|
/s/ Paul W. Bridge, Jr.
Chief Financial Officer |
|
|
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
33