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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER: 0-22977
VISION TWENTY-ONE, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 59-3384581
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
120 WEST FAYETTE STREET - SUITE 700
BALTIMORE, MARYLAND 21201
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (410) 752-0121
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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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The registrant had 13,865,464 Shares outstanding as of March 31, 2001.
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PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
VISION TWENTY-ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
2000 2001
----------- -----------
Revenues:
Managed Care ......................................................... 13,492,020 11,584,964
----------- -----------
13,492,020 11,584,964
Operating expenses:
Medical claims .................................................... 9,741,255 7,713,233
General and administrative ........................................ 5,456,509 2,220,480
Depreciation and amortization ..................................... 688,581 444,748
Special items:
Restructuring credits ........................................... -0- (319,982)
Other charges and credits ....................................... -0- (301,208)
----------- -----------
Total operating expenses ........................................... 15,886,345 9,757,271
----------- -----------
Income (loss) from operations .......................................... (2,394,325) 1,827,693
Interest expense, net .................................................. (1,814,276) (1,006,046)
Other income ........................................................... -0- 127,221
----------- -----------
Income (loss) from continuing operations ............................... (4,208,601) 948,868
Discontinued operations:
Income from discontinued operations .................................. 601,382 -0-
Income (loss) on disposal of discontinued operations ................... (7,153) 654,645
----------- -----------
Income (loss) before extraordinary items ............................... (3,614,372) 1,603,513
Extraordinary item-costs associated with Opticare Health Systems,
Inc. merger ....................................................... (1,016,263) -0-
Extraordinary item - forgiveness of indebtedness ....................... -0- 532,500
----------- -----------
Net income (loss) ...................................................... (4,630,635) 2,136,013
=========== ===========
Basic and diluted income (loss) per common share:
Income (loss) from continuing operations ............................... $ (0.28) 0.07
Income from discontinued operations .................................. 0.04 -0-
Income (loss) on disposal of discontinued operations ................ -0- 0.04
----------- -----------
Income (loss) before extraordinary items ............................... (0.24) 0.11
Extraordinary item-costs associated with OptiCare Health Systems,
Inc. merger ........................................................ (0.07) -0-
Extraordinary item - forgiveness of indebtedness ....................... 0.00 0.04
----------- -----------
Net income (loss) per common share ..................................... $ (0.31) 0.15
=========== ===========
See accompanying notes to the condensed consolidated financial
statements.
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VISION TWENTY-ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, MARCH 31,
2000 2001
------------- -------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents ............................................... $ 2,609,973 $ 3,298,679
Accounts receivable due from:
Managed health benefits payors ....................................... 914,730 618,808
ASC ................................................................. 3,700,000 -0-
Other ................................................................ 241,968 328,146
Prepaid expenses and other current assets ............................... 306,792 463,044
Current assets of discontinued operations ................................ 1,741,693 1,615,472
------------- -------------
Total current assets ................................................ 9,515,156 6,324,149
Fixed assets, net ......................................................... 701,253 856,403
Excess of purchase price over fair values of net assets
acquired, net of accumulated amortization of $4,959,000
and $5,364,000 at December 31, 2000 and
March 31, 2001 respectively ............................................. 42,027,315 41,621,972
Other assets .............................................................. 1,175,547 1,099,206
Restricted cash ........................................................... 1,718,844 1,718,844
Non current assets of discontinued operations ............................. 513,730 481,415
------------- -------------
Total assets ........................................................ $ 55,651,845 $ 52,101,989
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable ........................................................ $ 3,707,711 $ 3,613,427
Accrued expenses ........................................................ 2,088,658 1,461,994
Medical claims payable .................................................. 4,461,219 4,023,614
Accrued compensation .................................................... 881,785 773,164
Accrued restructuring charge ............................................ 324,282 4,300
Accrued interest and loan fees .......................................... 98,078 294,902
Amount due to ECCA ...................................................... 1,531,873 1,531,873
Current portion of long-term debt ....................................... 64,737,500 60,452,185
Current portion of obligations under capital leases ..................... 57,131 55,890
Current liabilities of discontinued operations .......................... 590,216 235,602
------------- -------------
Total current liabilities ........................................... 78,478,453 72,446,951
Obligations under capital leases, less current portion .................... 104,332 147,576
Long-term debt, less current portion ...................................... -0- -0-
Long-term liabilities of discontinued operations .......................... 641,780 758,085
------------- -------------
Total liabilities ................................................... 79,224,565 73,352,612
Stockholders' deficit:
Preferred stock, $.001 par value; 10,000,000 shares
authorized: no shares issued ........................................... -0- -0-
Common stock, $.001 par value; 50,000,000 shares
authorized; 13,860,176 (2000) and
13,865,464 (2001) shares issued and outstanding ...................... 13,860 13,865
Additional paid in capital .............................................. 89,030,522 89,043,617
Notes receivable ........................................................ (172,984) -0-
Accumulated deficit ..................................................... (112,444,118) (110,308,105)
------------- -------------
Total stockholders' deficit ......................................... (23,572,720) (21,250,623)
------------- -------------
Total liabilities and stockholders' deficit ......................... $ 55,651,845 $ 52,101,989
============= =============
See accompanying notes to the condensed consolidated financial
statements.
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VISION TWENTY-ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
2000 2001
----------- ----------
OPERATING ACTIVITIES
Net income (loss) ........................................... $(4,630,635) 2,136,013
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Net gain (loss) from discontinued operations ............. (594,229) (654,645)
Depreciation and amortization ............................ 688,581 444,748
Extraordinary items ...................................... 1,016,263 (532,500)
Non-cash compensation expense ............................ 79,098 13,100
Other amortization ....................................... 192,135 -0-
Changes in operating assets and liabilities:
Accounts receivable, net ................................ (271,986) 209,744
Prepaid expenses and other current assets ............... (94,705) (156,252)
Other assets and restricted cash ........................ (252,914) 76,341
Accounts payable ........................................ (1,164,637) (94,284)
Accrued expenses ........................................ 536,945 (626,664)
Accrued compensation .................................... 51,561 (108,621)
Accrued restructuring charge ............................ (72,651) (319,982)
Accrued interest and loan fees .......................... 1,530,197 196,824
Medical claims payable .................................. (403,964) (437,605)
----------- ----------
Net cash provided by (used) in operating activities ... (3,390,941) 146,217
INVESTING ACTIVITIES
Payments for fixed assets, net .............................. (79,804) (149,542)
Net proceeds from sale of ASC ............................... -0- 3,700,000
----------- ----------
Net cash provided by (used in) investing activities ... (79,804) 3,550,458
FINANCING ACTIVITIES
Proceeds from credit facility ............................... 1,959,085 -0-
Payments on capital lease obligations and long term debt .... (1,520,667) (3,766,962)
----------- ----------
Net cash provided by (used in) financing activities ... 438,518 (3,766,962)
----------- ----------
DISCONTINUED OPERATIONS
Operating activities ...................................... (1,242,888) 768,909
Investing activities ...................................... 4,396,168 -0-
Financing activities ...................................... (27,872) 758,993
----------- ----------
Cash provided by discontinued operations .................... 3,125,408 759,000
----------- ----------
Increase in cash and cash equivalents ....................... 93,181 688,706
Cash and cash equivalents at beginning of period ............ 4,807,944 2,609,973
----------- ----------
Cash and cash equivalents at end of period .................. $ 4,901,125 3,298,679
=========== ==========
See accompanying notes to the condensed consolidated financial
statements
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VISION TWENTY-ONE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 2001
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by 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 have been included. Operating results for the three-months ended
March 31, 2001 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2001.
The balance sheet at December 31, 2000 has been derived from the
audited financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
The accompanying condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 2000.
2. RECLASSIFICATION OF FINANCIAL STATEMENTS
As a result of the Company's exit from the physician practice
management business and the ASC/RSC business, the Company has accounted and
reported for these business segments as discontinued operations. Consequently,
prior period financial statements have been restated to reflect discontinued
operations treatment for the results of these business segments.
3. INCOME (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted
income (loss) per share for income (loss) from continuing operations:
THREE MONTHS ENDED
MARCH 31,
2000 2001
------------ -----------
Numerator for basic and diluted income (loss)
per share-income (loss) available to common
stockholders ...................................... $ (4,208,601) $ 948,868
Denominator for basic and diluted income
(loss) per share-weighted average shares .......... 14,879,532 13,860,822
------------ -----------
Basic and diluted income (loss) per common share ... $ (0.28) $ 0.07
============ ===========
There were no dilutive securities included in the computations of
income (loss) per share in the three-month period ended March 31, 2000 because
the Company incurred a loss from continuing operations. Options and warrants to
purchase shares of common stock were not included in the computation of diluted
income (loss) per share in the three-month period ended March 31, 2001 because
the effect would have been anti-dilutive.
4. SPECIAL ITEMS
During the fourth quarter of 1998, management of the Company committed
to and commenced the implementation of a restructuring plan (the "Restructuring
Plan") that was designed to facilitate the transformation
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of the Company into an integrated eye care company. The Restructuring Plan
initiatives, which were composed of a number of specific projects, were expected
to position the Company to take full operational and economic advantage of
recent acquisitions. The Restructuring Plan was to enable the Company to
complete the consolidation and deployment of necessary infrastructure for the
future, optimize and integrate certain assets and exit certain markets. The
Restructuring Plan initiatives resulted in the elimination of over 100 positions
throughout the Company and were completed during 1999.
The accrued restructuring charge of approximately $324,000 at
December 31, 2000 was reduced by approximately $320,000 during the three-month
period ended March 31, 2001. The reduction was related to a reversal of
severance costs as a result of an employee settlement.
The Company settled certain trade payables for approximately $474,000
less than the carrying amount and expensed a note receivable of approximately
$173,000 during the three-month period ended March 31, 2001. The net result of
approximately $301,000 (credit) is included in other charges and credits in the
accompanying statements of operations.
5. DISCONTINUED OPERATIONS
Effective August 31, 1999, the Company completed the sale of Vision
World, Eyecare One Corp., and The Eye DRx (the "Retail Optical Chains") to Eye
Care Centers of America, Inc. ("ECCA"). In connection with this transaction, the
Company received approximately $37,300,000 in cash, of which approximately
$1,250,000 was utilized to fund an escrow arrangement between the parties
relative to terms under the agreement. Based on post-closing adjustments, the
final sales price was approximately $31,800,000, and the Company had recorded a
liability of approximately $4,032,000 to ECCA, net of escrow, with respect to
such post-closing adjustments in 1999. In September 2000, the Company and ECCA
reached a comprehensive resolution of all disputed matters which provided for,
among other things, the reduction in the post-closing adjustment liability from
$4.0 million to $1.5 million. The liability under the post-closing adjustment
will be considered satisfied upon issuance of a three-year 7% convertible note,
convertible into shares of common stock at $ .18 per share. In addition, Vision
Twenty-One had indemnified one of its former managed optometry practices for
certain partnership obligations. A charge of $200,000 was recorded to loss on
disposal of discontinued operations in 1999, with respect to this litigation. In
January 2001, litigation regarding this matter was settled for approximately
$50,000 and the Company was released from such indemnification obligations.
On October 25, 1999, the Company announced its intent to exit the
business of managing optometry and ophthalmology practices. This represented a
crucial step in the Company's strategy of focusing its corporate resources on
expanding its managed care business. The exit of the physician practice
management ("PPM") business, completed in September, 2000, was accomplished
through the sale of the practice assets back to the physicians or affiliates,
the termination of management agreements and the restructuring of certain
refractive surgery center facility access agreements. The terms of each managed
practice divestiture were subject to the prior approval of the banks under the
Company's credit facilities as well as the Company's Board of Directors.
During the third quarter of 2000, the Company announced its intent to
exit the business of owning and managing Refractive and Ambulatory Surgery
Centers. The Company sold substantially all of the assets and liabilities of
five refractive and ambulatory surgery centers to American Surgisite Management
Services Organization, Inc. and R.E.S.C., LLC, for cash consideration of
$3,700,000. The transaction closed in the first quarter of 2001 with an
effective date of December 31, 2000. The Company withdrew as a member of
Suffolk Eye Management Associates, LLC and received cash consideration of
$100,000 for its membership interest. The transaction closed in the second
quarter of 2001 with an effective date of December 8, 2000. During the second
quarter of 2001, the Company also disposed of its partnership interest in
Pasco Surgery Center, LLP for cash consideration of $550,000, and sold
substantially all of the assets of its refractive surgery center in Phoenix,
Arizona for cash consideration of approximately $103,000. The total income of
the discontinued operations of approximately $655,000 for the three months
ended March 31, 2001, $155,000 in excess of the amount previously estimated at
December 31, 2000.
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The assets and liabilities of the discontinued operations primarily
include cash, accounts receivable, fixed assets, accounts payable and accrued
liabilities.
As a result of the changes occurring in the Company's business,
including, but not limited to, the divestiture of large business units, the
shift in operating focus, changes in the Company's managed care business, the
Company's exiting the PPM and ASC/RSC businesses and issues relating to the
Company's accessibility to future working capital, the overall results should
not necessarily be relied upon as being indicative of future operating
performance.
The operating results of these discontinued operations are summarized as
follows:
THREE MONTHS ENDED
MARCH 31,
2000 2001
---------- --------
Revenues $4,387,017 $ 0
Operating expenses 3,785,635 0
---------- --------
Income (loss) from discontinued
operations 601,382 0
---------- --------
Income (loss) on disposal (7,153) 654,645
---------- --------
Total income of discontinued operations $ 594,229 $654,645
========== ========
The operating expenses of the discontinued operations for the three
months ended March 31, 2000 and the operating expenses on the disposal of
discontinued operations for the three months ended March 31, 2001 include an
allocation of amortization expense of intangible assets of approximately
$36,000 and $8,000 respectively.
6. EXTRAORDINARY ITEMS
As a result of the termination of the merger agreement with Opticare
Health Systems, Inc. and OC Acquisition Corp., professional fees incurred in
connection with the proposed merger of approximately $1.0 million for the three
months ended March 31, 2000 were expensed and reported as an extraordinary item.
In March 2001, the Company settled litigation with The Source Buying
Group, Inc. for $30,000. As a result of the settlement with The Source Buying
Group, Inc., the Company recognized an extraordinary gain on forgiveness of
indebtedness of $532,500 during the three month period ended March 31, 2001.
7. LITIGATION
During the quarter for which this report is filed, there have been no
material developments to previously reported legal proceedings except for the
settlement with The Source Buying Group, Inc. Except as previously reported, the
Company is not a party to any material litigation and is not aware of any
threatened material litigation.
Management of the Company is unable to determine the impact, if any,
that the resolution of the previously disclosed pending lawsuits will have on
the financial position or results of operations of the Company. However, there
can be no assurance that the resolution of the previously disclosed pending
lawsuits will not have a material adverse effect on the Company and further
contribute to its negative financial operations.
The Company is currently attempting to restructure debt with certain of
its creditors. To the extent it is unsuccessful in achieving the same, the
Company could face material litigation which could have a material adverse
effect on the Company.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
Vision Twenty-One, Inc. ("Vision Twenty-One" or the "Company") is a
vision care company that is mainly focused on the provision of administrative
services to managed care entities. The Company manages routine vision and
medical/surgical eye care programs through contracts with managed care
organizations and other third-party payors.
Previously, Vision Twenty-One's local area eye care delivery (LADS)
operating revenue was primarily derived from a wide range of service fees earned
through strategic affiliations with eye care clinics and retail optical
locations and through ownership interests in refractive surgery centers
("RSCs"), ambulatory surgery centers ("ASCs") and retail optical chains. LADS
also included the management of practices of optometry and ophthalmology through
the Physician Practice Management ("PPM") Division. During 2000, the Company
completed divesting itself of the PPM business in order to focus on the managed
care business. The PPM divestiture required multiple transactions involving the
sale of practice assets, typically back to the doctors or their affiliates, and
the termination of Management Agreements. This divestiture program commenced
late in the 4th quarter of 1999 and was completed by September 30, 2000. During
the third quarter of 2000 the Company announced its plans to exit the ASC/RSC
business. During the first and second quarters of 2001, the Company completed
the divestiture of eight refractive and ambulatory surgery centers. See Note 5
to Condensed Consolidated Financial Statements.
In an effort to streamline costs, the Company closed its Largo, Florida
corporate headquarters and most of its operations at the Boca Raton, Florida
managed care service center and relocated and consolidated these functions into
operations in Baltimore, Maryland.
Management Restructuring. As part of the Company's plan of
restructuring, several officers and directors resigned during fiscal year 2000
and the vacancies created by such departures were filled by promoting its MEC
and Block Vision senior executives. In addition, a seasoned financial executive
was hired as the Company's Chief Financial Officer.
Consolidation of Managed Care Offices. The consolidation of the
Corporate Executive and Managed Care Offices was started in October 2000 and was
substantially completed by year-end 2000. Additional steps to integrate the IS
function from the Boca Raton service center into MEC's Baltimore service center
were completed during the first quarter of 2001. The Vision Twenty-One executive
offices in Largo were leased directly from the landlord to a new tenant and all
equipment was moved or sold. The lease for the Block Vision facility in Boca
Raton was terminated on April 1, 2001, and Block Vision leased smaller space in
the same building for certain of its staff. Equipment not retained at the Boca
Raton location was either moved to the Baltimore location or sold.
Credit Facilities. On November 10, 2000 the Company amended and
restated its credit agreement dated July 1, 1998, as previously amended (the
"Credit Agreement"). The $64.2 million restated and amended credit facility
consists of a $3.0 million revolving loan, $45.8 million term loan and $6.4
million convertible note with maturity dates of October 31, 2003, and a $9.0
million bridge loan which matures on October 31, 2002. Quarterly principal
repayments under the term loan of $0.5 million begin March 31, 2002. The bridge
loan was reduced to $5.3 million in the first quarter of 2001 and is required
to be further reduced by $1.0 million on June 30, 2001, by $0.5 million on
September 30, 2001 and by $0.5 million on December 31, 2001, with a balloon
payment due at maturity. Mandatory principal payments are required from 100% of
the proceeds of any asset sale. In addition, mandatory prepayments are required
from 75% of Annual Excess Funds. Annual Excess Funds are defined as EBITDA, as
determined by Generally Accepted Accounting Principles ("GAAP"), for the
immediately preceding four quarters, less payments made for interest, income
tax, capital expenditures, capital lease payments, required term loan principal
payments, and permanent revolver paydowns. For 2001 only, EBITDA shall exclude
income arising as a result of excess prior period restructuring/transition
accruals and shall be reduced by cash payments on prior period
restructuring/transition accruals. Mandatory loan prepayments will be applied
first to the permanent reduction of the Bridge Loan Commitment and second to the
Term Facility. Any Term Facility prepayments will be applied to the reduction of
the remaining scheduled amortization payments in inverse order of maturity.
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On March 31, 2001, the Company entered into a First Amendment to the
Credit Agreement (the "First Amendment"). The First Amendment (i) reduced the
amount due under the bridge facility on March 31, 2001, (ii) revised certain
covenants and financial ratios, (iii) extended the date by which the Company is
required to obtain the approval of its shareholders, (the "Shareholder
Approval") of an increase in the authorized shares of the Company's capital
stock from February 28, 2001 until May 31, 2001, and (iv) waived the Company's
non-compliance with certain financial reporting obligations through May 31,
2001. On March 31, 2001, the Company also entered into a First Amendment to the
Convertible Note Agreement, Warrant Agreement, and Warrants providing for the
extension of the date by which the Company is required to obtain the Shareholder
Approval. The Company has requested a further extension of the date by which the
Shareholder Approval is required. Since the Company will not have obtained the
Shareholder Approval by May 31, 2001, if the lenders do not consent to the
extension, the Company will be in default under the Credit Agreement.
Additional Overview. Managed care revenues are derived principally from
fixed premium payments received by the Company pursuant to its managed care
contracts on a capitated or risk-sharing basis. The Company also receives fees
for the provision of certain administrative services related to its
fee-for-service plans. Pursuant to its capitated managed care contracts, the
Company receives a fixed premium payment per-member-month for a predetermined
benefit level of eye care services, as negotiated between the Company and the
payor. Profitability of the Company's capitated managed care contracts is
directly related to the specific terms negotiated, utilization of eye care
services by member patients and the effectiveness of administering the
contracts. Although the terms and conditions of the Company's managed care
contracts vary considerably, they typically have a one-year term with automatic
annual renewals unless either party elects to terminate the contract pursuant to
its terms.
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RESULTS OF OPERATIONS
The following table sets forth, as a percentage of total revenues,
certain items in the Company's statement of operations for the periods
indicated. As a result of the changes occurring in the Company's business,
including, but not limited to the shift in operating focus, changes in the
Company's managed care business, the Company's exiting the PPM and ASC/RSC
businesses, the Company's settlement of claims with numerous unsecured creditors
and issues relating to the Company's accessibility to future working capital,
the overall results should not necessarily be relied upon as being indicative of
future operating performance.
THREE MONTHS ENDED
MARCH 31,
2000 2001
------ ------
Revenues:
Managed care ..................................... 100.0% 100.0%
----- -----
Total revenues ............................... 100.0 100.0
----- -----
Operating expenses:
Medical claims ................................... 72.2 66.6
General and administrative ....................... 40.4 19.2
Depreciation and amortization .................... 5.1 3.8
Special Items:
Restructuring and other charges (credit) ......... -0- (2.8)
Other charges and credits ........................ -0- (2.6)
----- -----
Total operating expenses ..................... 117.7 84.2
----- -----
Income (loss) from operations ...................... (17.7) 15.8
Interest expense ................................... (13.4) (8.7)
Other Income ....................................... 0.0 1.1
----- -----
Income (loss) from continuing operations .......... (31.1) 8.2
Discontinued operations:
Income (loss) from discontinued operations ... 4.5 0.0
Income (loss) from disposal discontinued
operations ................................... (0.1) 5.6
----- -----
Income (loss) before extraordinary item ........... (26.7) 13.8
Extraordinary items-costs associated with
Opticare Health Systems, Inc. .............. (7.5) -0-
Extraordinary Items - forgiveness of
Indebtedness ............................... -0- 4.6
----- -----
Net Income (loss) .................................. (34.2)% 18.4%
===== =====
Medical claims ratio ............................... 72.2% 66.6%
===== ======
THREE-MONTH PERIOD ENDED MARCH 31, 2001 COMPARED TO THREE-MONTH PERIOD ENDED
MARCH 31, 2000
Revenues.
Revenues decreased 14.1% from $13.5 million for the three months ended
March 31, 2000 to 11.6 million for the three months ended March 31, 2001. This
decrease was primarily due to the termination of several non-profitable
contracts in 2000.
Medical claims expense decreased 20.8% from $9.7 million for the three
months ended March 31, 2000 to $7.7 million for the three months ended March 31,
2001. The Company's medical claims ratio decreased from 72.2% for the three
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months ended March 31, 2000 to 66.6% for the three months ended March 31, 2001.
Medical claims expense consists of payments by the Company to its affiliated
providers for vision care. This improvement in claims expense was partially due
to the termination of certain unprofitable contacts and price increases in
others.
General and Administrative.
General and administrative expenses decreased 59.3% from $ 5.4 million
for the three months ended March 31, 2000 to $2.2 million for the three months
ended March 31, 2001. General and administrative expenses consist mainly of
salaries, wages and benefits related to management and administrative staff
located at the Company's corporate headquarters and its managed care service
centers as well as professional fees, advertising, building and occupancy costs,
operating lease expenses and other costs related to the maintenance of a
headquarters operation. Expenses as a percentage of revenue also decreased
dramatically from 40.4% for the three months ended March 31, 2000 to 19.2% for
the three months ended March 31, 2001. Management has been aggressively reducing
staff and related overhead expenses in an effort to bring overall general and
administrative expenses in line with the current run rate of the continuing
business, including the consolidation of the managed care and corporate
operations.
Depreciation and Amortization.
Depreciation and amortization expense decreased from $.7 million for
the three months ended March 31, 2000 to $.4 million for the three months ended
March 31, 2001. As a percentage of revenues, depreciation and amortization
expense decreased from 5.1% for the three months ended March 31, 2000 to 3.8%
for the three months ended March 31, 2001 due to the consolidation of offices.
Interest Expense.
Interest expense decreased 44.5% from $1.8 million for the three months
ended March 31, 2000 to $1.0 million for the three months ended March 31, 2001.
Average borrowings were approximately $4 million higher in the first quarter of
2000 versus the same period in 2001. The remainder of the lower expense was due
to reduced interest rates.
Discontinued Operations.
During the first quarter of 2001, the Company sold five refractive and
ambulatory surgery centers for cash consideration of $3.7 million. During the
second quarter of 2001, the Company received cash consideration of approximately
$750,000 for the sale of its interests in three additional refractive and
ambulatory surgery centers.
Extraordinary Items.
The extraordinary gain of approximately $0.5 million represents
forgiveness of indebtedness as a result of a settlement agreement with The
Source Buying Group.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its working capital and
capital expenditure requirements primarily through institutional borrowings and
private debt and equity financing. Net cash provided by operating activities for
the three months ended March 31, 2001 was $0.1 million as compared to net cash
used in operating activities of $3.4 million for the three months ended March
31, 2000.
The Company currently has insufficient liquidity and capital resources
to meet its obligations to unsecured creditors and mandatory principal payments
due to the Company's lenders.
Additionally, the Company may have to post additional cash reserves to
meet reserve/solvency requirements for its managed care operations. The Company
cannot estimate the amount, if any, of such reserve requirements at this time.
Net cash used in investing activities for the three months ended March
31, 2000 was $0.1 million resulting from purchases of medical equipment, office
furniture and capitalized acquisition costs. Net cash provided by
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investing activities for the three months ended March 31, 2001 was $3.5 million
and resulted from proceeds of the sale of the ASC/RSC businesses.
Net cash used in financing activities for the three months ended March
31, 2001 of $3.8 million was primarily attributable to paying down existing debt
as compared to net cash provided by financing activities of $0.4 for the three
months ended March 31, 2000.
On November 10, 2000 the Company amended and restated its credit
agreement dated July 1, 1998, as previously amended (the "Credit Agreement").
The $64.2 million restated and amended credit facility consists of a $3.0
million revolving loan, $45.8 million term loan and $6.4 million convertible
note with maturity dates of October 31, 2003 and a $9.0 million bridge loan
which matures on October 31, 2002. Quarterly principal repayments under the
term loan of $0.5 million begin March 31, 2002. The bridge loan was reduced
to $5.3 million in the first quarter of 2001 and is required to be further
reduced by $1.0 million on June 30, 2001, by $0.5 million on September 30,
2001 and by $0.5 million on December 31, 2001, with a balloon payment due
at maturity. Mandatory principal payments are required from 100% of the
proceeds of any asset sale. In addition, mandatory prepayments are
required from 75% of Annual Excess Funds. Annual Excess Funds are defined
as EBITDA, as determined by Generally Accepted Accounting Principles
("GAAP"), for the immediately preceding four quarters, less payments made
for interest, income tax, capital expenditures, capital lease
payments, required term loan principal payments, and permanent revolver
paydowns. For 2001 only, EBITDA shall exclude income arising as a result of
excess prior period restructuring/transition accruals and shall be reduced by
cash payments on prior period restructuring/transition accruals. Mandatory loan
prepayments will be applied first to the permanent reduction of the Bridge Loan
Commitment and second to the Term Facility. Any Term Facility prepayments will
be applied to the reduction of the remaining scheduled amortization payments in
inverse order of maturity.
On March 31, 2001, the Company entered into a First Amendment to the
Credit Agreement (the "First Amendment"). The First Amendment (i) reduced the
amount due under the bridge facility on March 31, 2001, (ii) revised certain
covenants and financial ratios, (iii) extended the date by which the Company is
required to obtain the approval of its shareholders, (the "Shareholder
Approval") of an increase in the authorized shares of the Company's capital
stock from February 28, 2001 until May 31, 2001, and (iv) waived the Company's
non-compliance with certain financial reporting obligations through May 31,
2001. On March 31, 2001, the Company also entered into a First Amendment to the
Convertible Note Agreement, Warrant Agreement, and Warrants providing for the
extension of the date by which the Company is required to obtain the Shareholder
Approval. The Company has requested a further extension of the date by which the
Shareholder Approval is required. Since the Company will not have obtained the
Shareholder Approval by May 31, 2001, if the lenders do not consent to the
extension, the Company will be in default under the Credit Agreement.
Management has been aggressively reducing staff and related overhead
spending, carefully managing business unit operating cash flow and working
toward completing the divestiture of the Refractive and Ambulatory Surgery
Center businesses in an effort to further improve the Company's liquidity
position and restore profitability. Additionally, during the first quarter of
2001, the Company engaged an investment banking firm to assist it in evaluating
strategic alternatives which may include private debt or equity financing, the
sale of one or more business units or the entire company. There can be no
assurance that the proceeds which may be realized by the Company from such a
transaction, if one were to occur, would be sufficient to satisfy the Company's
obligations under the Credit Agreement or to its unsecured creditors, or that
sufficient proceeds would remain for the benefit of the shareholders. In the
event the Company's efforts are not successful, the Company will have to
restructure its obligations under the Credit Agreement. If such restructuring
efforts are not successful, the Company may need to seek protection under the
Federal Bankruptcy Code.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to changes in interest rates primarily as a
result of borrowing activities under its Amended and Restated Credit Agreement,
which is used to maintain liquidity and fund the Company's business operations.
The nature and amount of the Company's debt may vary as a result of future
business requirements, market conditions and other factors. The extent of the
Company's interest rate risk is not quantifiable or predictable because of the
variability of future interest rates and business financing requirements, but
the Company does not believe such risk is material. The Company did not use
derivative instruments to adjust the Company's interest rate risk profile during
the three months ended March 31, 2001.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q, and certain information provided periodically in
writing and orally by the Company's designated officers and agents contain
certain statements which constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The terms "Vision Twenty-One," "Company," "we,"
"our" and "us" refer to Vision Twenty-One, Inc. The words "expect," "believe,"
"goal," "plan," "intend," "estimate," and similar expressions and variations
thereof are intended to specifically identify forward-looking statements. Those
statements appear in this Form 10Q, and the documents incorporated herein by
reference, particularly "Management's Discussion and analysis of Financial
Condition and Results of Operations," and include statements regarding the
intent, belief or current expectations of the Company, its directors or officers
with respect to, among other things:
(i) our financial prospects;
(ii) our exit from the PPM and ASC/RSC businesses;
(iii) our financing plans including our ability to meet our
obligations under our current credit facility and obtain
satisfactory operating and working capital;
(iv) trends affecting our financial condition or results of
operations including our divestiture of business units;
(v) our operating strategy including the shift in focus to the
managed care business;
(vi) the impact on us of current and future governmental
regulations;
(vii) our current and future managed care contracts and the impact
such contracts have on gross profit;
(viii) our ability to maintain our relationships with providers;
(ix) our ability to operate the managed care business efficiently,
profitably and effectively;
(x) our integration of systems and implementation of cost savings
and reduction plans;
(xi) our expected savings from the restructuring programs;
(xii) our current and expected future revenue and the impact of the
consolidation of infrastructure and business divestitures may
have on our future performance;
(xiii) our timely filing of Securities and Exchange Act Reports;
(xiv) the purported class action complaints filed against the
Company;
(xv) our contemplated restructuring of certain outstanding
indebtedness;
(xvi) the issuance and expected issuance of a significant number of
additional shares of Common Stock and securities convertible
into Common Stock; and
(xvii) the need for shareholder approval of a sufficient increase in
the number of authorized shares of Common Stock to enable the
Company to complete the financial restructuring.
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You are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those projected in the forward-looking
statements as a result of various factors. The factors that might cause such
differences include, among others, the following:
(i) our inability to sell certain business units and any potential
losses arising therefrom;
(ii) our inability to obtain sufficient cash from our credit
facility and business divestitures to fund our ongoing
operations including severance obligations and contingent
payment obligations;
(iii) our loss of, changes in, or inability to keep, key personnel,
management or directors;
(iv) Any unexpected increases in or additional charges or losses
related to the unwinding of the ASC/RSC centers;
(v) the continuation of operating and net losses being experienced
by the Company and increases in such losses;
(vi) any material inability to acquire additional sufficient
capital at a reasonable cost to fund our continued operations
or to maintain compliance with our credit facility;
(vii) the inability to maintain our managed care business or to
increase and expand managed care initiatives;
(viii) any adverse changes in our managed care business, including
but not limited to, the inability to renew existing managed
care contracts or obtain future contracts or maintain and
expand our provider network;
(ix) our inability to negotiate managed care contracts with HMOs;
(x) our inability to successfully and profitably operate our
managed care business or for existing managed care contracts
to positively impact gross profit;
(xi) any adverse change in our medical claims to managed care
revenue ratio;
(xii) the inability to maintain or obtain required licensure in the
states in which we operate; or any changes in state or federal
governmental regulations which could materially affect our
ability to operate;
(xiii) consolidation of our competitors, poor operating results by
our competitors, or adverse governmental or judicial rulings
against our competitors;
(xiv) our inability to realize any significant benefits, cost
savings or reductions from our restructuring program;
(xv) unexpected cost increases;
(xvi) our inability to successfully defend against the class action
lawsuits, or any additional litigation that currently exists
or may arise in the future;
(xvii) our inability to timely file our required reports with the SEC
or to maintain the listing of our Common Stock on NASDAQ;
(xviii) our inability to restructure and settle any and all
indebtedness, claims and disputes in a manner that permits
continued operations of the Company;
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(xix) our inability to enter into acceptable settlement agreements
with parties making claims against us or to fulfill our
obligations pursuant to such settlement agreements;
(xx) our inability to complete our restructuring efforts,
including, but not limited to, obtaining any required consents
or approvals of the shareholders;
(xxi) our stock price;
(xxii) in the event the Company becomes a debtor in Bankruptcy Court;
and
(xxiii) other factors including those identified in our filings from
time-to-time with the SEC.
The Company undertakes no obligation to publicly update or revise
forward-looking statements to reflect events or circumstances after the date of
this Form 10-Q and annual report or to reflect the occurrence of unanticipated
events.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as described below, the Company is not a party to any material
litigation and is not aware of any threatened material litigation:
The Company, one of its former executive officers who was also a
director and two former officers are named as defendants in several purported
class action lawsuits filed in the United States District Court for the middle
District of Florida, Tampa Division. The complaints allege, principally, that
the Company and other defendants issued materially false and misleading
statements related to the Company's integration of its acquisitions, in
violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder. The plaintiffs seek to certify their
complaints as class actions on behalf of all purchasers of the Company's Common
Stock in the period between December 5, 1997 and November 5, 1998, and seek an
award of an unspecified amount of monetary damages to all of the members of the
purported class. The purported class action lawsuits were as follows: (i) Tad
McBride against Vision Twenty-One, Inc., Theodore N. Gillette, Richard T. Welch,
and Michael P. Block (filed on January 22, 1999); (ii) Robert Rosen v. Vision
Twenty-One, Inc., Theodore N. Gillette and Richard T. Welch (filed on January
27, 1999); (iii) Charles Murray against Vision Twenty-One, Inc., Theodore N.
Gillette, Richard T. Welch and Michael P. Block (filed on January 29,1999); and
(iv) Sam Cipriano, on behalf of himself and all others similarly situated v.
Vision Twenty-One, Inc., Theodore N. Gillette, Richard T. Welch and Michael P.
Block (filed on February 22, 1999 ).
On April 20, 1999, pursuant to a motion and order, these complaints
were consolidated into one case captioned: Tad McBride, Plaintiff, v. Vision
Twenty-One, Inc., Theodore N. Gillette, Richard T. Welch and Michael P. Block
(Case No. 99I38-CIV-T-25F), and one plaintiff's group was appointed lead
plaintiff by judicial order on May 6, 1999. This uncertified consolidated class
action seeks to hold the Company and one of its former officers, who was also a
director, as well as two former officers liable for alleged federal securities
law violations based upon alleged misstatements and omissions in analyst
reports, trade journal articles, press releases and filings with the Securities
and Exchange Commission.
Pursuant to judicial orders, the lead plaintiffs filed an amended
consolidated complaint on August 14, 1999. On October 11, 1999, the lead
plaintiffs and Michael P. Block executed a stipulation dismissing without
prejudice the action against Mr. Block. The Defendants filed a motion to dismiss
the amended consolidated complaint on October 15, 1999. The lead plaintiffs
served answering papers on December 3, 1999. The Defendant's motion to dismiss
was granted in part on August 18, 2000. A Motion for Class Certification was
filed on January 26, 2001. The parties are now engaged in class certification
discovery to enable the Defendants to respond to the Plaintiffs' Motion for
Class Certification. The Company believes that it has substantial defenses to
this matter and intends to assert them vigorously.
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The Company is party to several lawsuits alleging medical malpractice
by providers which were previously associated with the Company through certain
of its discontinued operations. Several of these lawsuits have been referred to
the Company's malpractice insurance carrier for defense and coverage; however,
the Company is unable to determine whether its exposure, if any, would exceed
its insurance coverage.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a.) Exhibits - See Exhibits under attached hereto.
b.) Reports on Form 8-K. The Company did not file any reports on
Form 8-K during the quarter ended March 31, 2001.
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SIGNATURE
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, in the city of Baltimore, State of
Maryland on May 21, 2001.
VISION TWENTY-ONE, INC.,
Registrant
By: /s/ RICHARD W. JONES
-------------------------------
Richard W. Jones
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBITS DESCRIPTION
------ --------------------
3.1* Amended and Restated Articles of Incorporation of Vision
Twenty-One, Inc.(1)
3.2* By-laws of Vision Twenty-One, Inc.(1)
4.5* Note Purchase Agreement for 10% Senior Subordinated Notes due
December 19, 1999 (Detachable Warrants Exchangeable Into Common
Stock) dated December 20, 1996, by and between Vision Twenty-One,
inc. and certain purchasers.(1)
4.6* Amendment No. 1 dated April 18, 1997 to that certain Note
Purchase Agreement dated December 20, 1996, by and between Vision
Twenty-One, Inc. and certain purchasers.(1)
4.7* Note Purchase Agreement for 10% Senior Subordinated Series 1997
Notes Due December 19, 1999 (Detachable Warrants Exchangeable
into Common Stock) dated February 28, 1997 between Vision
Twenty-One Inc. and Piper Jaffrey Healthcare Fund II Limited
Partnership.(1)
4.8* Amended and Restated Note and Warrant Purchase Agreement dated
June 1997 and First Amendment to Amended and Restated Note and
Warrant Purchase Agreement dated August 1997 between Vision
Twenty-One, Inc. and Prudential Securities Group.(4)
4.9* Credit facility commitment letter dated October 10, 1997 between
Prudential Securities Credit Corporation and Vision Twenty-One,
Inc.(5)
4.10* Note Purchase Agreement dated October 1997 between Vision
Twenty-One, Inc. and Prudential Securities Credit Corporation.(9)
4.11* Letter Amendment dated December 30, 1997 to the Note and Warrant
Purchase Agreement between Vision Twenty-One Inc. and Prudential
Securities Credit Corporation.(10)
4.13* Credit Agreement dated as of January 30, 1998 among Vision
Twenty-One, Inc. and Bank of Montreal as Agent for a consortium
of banks.(11)
4.14* Amended and Restated Credit Agreement dated as of July 1, 1998
among Vision Twenty-One, Inc., and the Bank of Montreal as Agent
for a consortium of banks.(15)
4.15* First Amendment to the Amended and Restated Credit Agreement
dated as of February 23, 1999 among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(18)
4.16* Second Amendment to the Amended and Restated Credit Agreement
dated as of June 11, 1999 among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(18)
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19
4.17* Third Amendment to the Amended and Restated Credit Agreement
dated as of August 30, 1999 by and among Vision Twenty-One, Inc.,
the Banks who are a party thereto and Bank of Montreal as
Agent.(19)
4.18* Waiver Letter dated October 14, 1999 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(20)
4.19* Fourth Amendment and Waiver to the Amended and Restated Credit
Agreement dated as of November 12, 1999 by and among Vision
Twenty-One, Inc., the Banks who are a party thereto and Bank of
Montreal as Agent.(21)
4.20* Fifth Amendment to the Amended and Restated Credit Agreement
dated as of November 24, 1999 by and among Vision Twenty-One,
Inc., the Banks who are a party thereto and Bank of Montreal as
Agent.(22)
4.21* Sixth Amendment to the Amended and Restated Credit Agreement
dated as of December 3, 1999 by and among Vision Twenty-One,
Inc., the Banks who are a party thereto and Bank of Montreal as
Agent.(22)
4.22* Seventh Amendment to the Amended and Restated Credit Agreement
dated as of December 10, 1999 by and among Vision Twenty-One,
Inc., the Banks who are a party thereto and Bank of Montreal as
Agent.(22)
4.23* Waiver Letter dated December 29, 1999 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(23)
4.24* Waiver letter dated February 29, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(26)
4.25* Waiver letter dated March 24, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(26)
4.26* Waiver letter dated as of April 14, 2000 to the Amended and
Restated Credit Agreement by and among Vision Twenty-One, Inc.,
the Banks who are a party thereto and Bank of Montreal as
Agent.(26)
4.27* Waiver letter dated as of May 5, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(26)
4.28* Waiver letter dated as of May 19, 2000 to the Amended and
Restated Credit Agreement by and among Vision Twenty-One, Inc.,
the Banks who are a party thereto and Bank of Montreal as
Agent.(27)
4.29* Waiver letter dated June 1, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(27)
4.30* Waiver letter dated June 9, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(27)
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20
4.31* Waiver letter dated June 16, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(27)
4.32* Waiver letter dated June 29, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who area party thereto and Bank of Montreal as Agent.(27)
4.33* Waiver letter dated July 21, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(27)
4.34* Waiver letter dated August 11, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.
4.35* Waiver letter dated September 8, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(29)
4.36* Waiver letter dated September 29, 2000 to the Amended and
Restated Credit Agreement by and among Vision Twenty-One, Inc.,
the Banks who are a party thereto and Bank of Montreal as
Agent.(30)
4.37* Waiver letter dated as of October 13, 2000 to the Amended and
Restated Credit Agreement by and among Vision Twenty-One, Inc.,
the Banks who are a party thereto and Bank of Montreal as
Agent.(31)
4.38* Waiver letter dated as of October 27, 2000 to the Amended and
Restated Credit Agreement by and among Vision Twenty-One, Inc.,
the Banks who are a party thereto and Bank of Montreal as
Agent.(31)
4.39* Amended and Restated Credit Agreement dated as of November 10,
2000 among Vision Twenty-One, Inc., the lenders party thereto
and Bank of Montreal as Agent.(31)
4.40* Convertible Note Agreement dated as of November 10, 2000
Re: $6,385,000 7% convertible Senior Secured Notes Due
October 31, 2003.(31)
4.41* Registration Rights Agreement dates as of November 10, 2000 among
Vision Twenty-One, Inc., and the Lenders thereto.(31)
4.42* Warrant Agreement dates as of November 10, 2000 Re: Class A
Warrants to Purchase Common Stock, Class B Warrants to purchase
Common Stock.(31)
4.43* First Amendment to Amended and Restated Credit Agreement dates as
of March 31, 2001, by and among Vision Twenty-One, Inc., the
lenders party thereto and Bank of Montreal as Agent.(32)
4.44* First Amendment to Convertible Note Agreement, Warrant Agreement
and Warrants dated as of March 31, 2001 by and among Vision
Twenty-One, Inc., the lenders party thereto and Bank of Montreal
as Agent.(32)
10.4* Services Agreement dated September 9, 1996 between Vision
Twenty-One, Inc., and Dr. Richard L. Lindstrom, M.D.(1)
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10.5* Vision Twenty-One, Inc. 1996 Stock Incentive Plan(1)
10.6* Vision Twenty-One, Inc. Affiliated Professionals Stock Plan(1)
10.7* Agreement dated May 10, 1996 between Vision Twenty-One, Inc. and
Bruce S. Maller.(1)
10.8* Advisory Agreement dated October 20, 1996 between Vision
Twenty-One, and Bruce S. Maller.(1)
10.9* Services Agreement dated March 10, 1996 between Vision
Twenty-One, Inc. and the BSM Consulting Group.(1)
10.14* Note Purchase Agreement for 10% Senior Subordinated notes Due
December 19, 1999 (Detachable Warrants Exchangeable Into Common
Stock) dated December 20, 1996 by and between Vision Twenty-One.,
and certain purchasers.(2)
10.15* Amendment No. 1 dated April 18, 1997 to that certain Note
Purchase Agreement dated December 20, 1996 and between Vision
Twenty-One, Inc. and certain purchasers, filed as Exhibit 4.6 to
this Report and incorporated herein by reference.(1)
10.16* Note Purchase Agreement for 10% Senior Subordinated Series 1997
Notes Due December 19, 1999 (Detachable Warrants Exchangeable
Into Common Stock) by and between Vision Twenty-One Inc. and
Piper Jaffray Healthcare Fund II Limited Partnership, filed as
Exhibit 4.7 to this Report and incorporated herein by
reference.(1)
10.17* Amended and Restated Note and Warrant Purchase Agreement dated
June 1997 and First Amendment to Amended and Restated Note and
Warrant Purchase Agreement dated August 1997 between Vision
Twenty-One, Inc. and Prudential Securities Group, Inc. filed as
Exhibit 4.8 to this Report and incorporated herein by
reference.(4)
10.18* Form of Indemnification Agreement.(1)
10.22* Business Management Agreement dated December 1, 1996 between
Vision Twenty-One, Inc. and Gillette & Associates, #6965,
P.A.(2)
10.24* Business Management Agreement dated December 1, 1996 between Eye
Institute of Southern Arizona, P.C. and ExcelCare, P.C. (as
assigned to Vision Twenty-One, Inc.)(1)
10.27* Business Management Agreement Dated December 1, 1996 between
Vision Twenty-One, Inc. and Lindstrom Samuelson & Hardten
Ophthalmology Associates, P.A.(1)
10.43* Regional Services Agreement dated May 1997 between Vision
Twenty-One, Inc. and Richard L. Lindstrom, M.D.(1)
10.47* Form of Contract Provider agreement(2)
10.53* Note Purchase Agreement dated October 1997 between Vision
Twenty-One, Inc. and Prudential Securities Credit Corporation,
filed as Exhibit 4.10 to this Report and incorporated herein by
reference(9)
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10.55* Letter Agreement of October 2, 1997 by and between Prudential
Securities Incorporated, as exclusive agent for obtaining a $50.0
million credit facility, and Vision Twenty-One, Inc.(9)
10.56* Letter Agreement of October 14, 1997 by and between Prudential
Securities Incorporated, as exclusive financial adviser in the
Block Acquisition, and Vision Twenty-One, Inc.(9)
10.57* Letter Amendment dated December 30, 1997 to the Note and Warrant
Purchase Agreement between Vision Twenty-One, Inc. and Prudential
Securities Credit Corporation, filed as Exhibit 4.11 to this
Report and incorporated herein by reference.(10)
10.59* Credit Agreement dated as of January 30, 1998 among Vision
Twenty-One, Inc., the Banks who are a party thereto and Bank of
Montreal as Agent, filed as Exhibit 4.13 to this Report and
incorporated herein by reference.(11)
10.60* Amended and Restated Credit Agreement dated as of July 1, 1998
among Vision Twenty-One, Inc., the Banks who are a party thereto
and Bank of Montreal as Agent.(15)
10.61* First Amendment to the Amended and Restated Credit Agreement
dated as of February 23, 1999 among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(18)
10.62* Second Amendment to the Amended and Restated Credit Agreement
dated as of June 11, 1999 among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(18)
10.65* Third Amendment to the Amended and Restated Credit Agreement
dated as of August 30, 1999 by and among Vision Twenty-One, Inc.,
the Banks who are a party thereto and Bank of Montreal as
Agent.(19)
10.66* Waiver Letter dated October 14, 1999 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(20)
10.67* Fourth Amendment and Waiver to the Amended and Restated Credit
Agreement dated as of November 12, 1999 by and among Vision
Twenty-One, Inc., the Banks who are a party thereto and Bank of
Montreal as Agent.(21)
10.72* Fifth Amendment to the Amended and Restated Credit Agreement
dated as of November 27, 1999 among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(22)
10.73* Sixth Amendment to the Amended and Restated Credit Agreement
dated as of December 3, 1999 among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(22)
10.74* Seventh Amendment to the Amended and Restated Credit Agreement
dated as of December 10, 1999 among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(22)
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23
10.75* Waiver letter dated December 29, 1999 to the Amended and Restated
Credit Agreement among Vision Twenty-One, Inc., the Banks who are
a party thereto and Bank of Montreal as Agent.(23)
10.76* Waiver letter dated February 29, 2000 to the Amended and Restated
Credit Agreement among Vision Twenty-One, Inc., the Banks who are
a party thereto and Bank of Montreal as Agent.(26)
10.77* Waiver letter dated March 24, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(26)
10.81* Agreement and Plan of Merger and Reorganization among Vision
Twenty-One, Inc., OC Acquisition Corp. and OptiCare Health
Systems, Inc.(26)
10.82* Waiver letter dated as of April 14, 2000 to the Amended and
Restated Credit Agreement among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(26)
10.83* Waiver letter dated as of May 5, 2000 to the Amended and Restated
Credit Agreement among Vision Twenty-One, Inc., the Banks who are
a party thereto and Bank of Montreal as Agent.(26)
10.84* Waiver letter dated as of May 19, 2000 to the Amended and
Restated Credit Agreement among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(27)
10.85* Waiver letter dated as of June 1, 2000 to the Amended and
Restated Credit Agreement among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(27)
10.86* Waiver letter dated as of June 9, 2000 to the Amended and
Restated Credit Agreement among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(27)
10.87* Waiver letter dated as of June 16, 2000 to the Amended and
Restated Credit Agreement among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(27)
10.88* Waiver letter dated as of June 29, 2000 to the Amended and
Restated Credit Agreement among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(27)
10.89* Waiver letter dated as of July 21, 2000 to the Amended and
Restated Credit Agreement among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(27)
10.90* Agreement dated May 5, 2000 by and among Vision Twenty-One,
Inc. and Vision 21 of Southern Arizona, Inc., Vital Sight, P.C.,
Ocusite-ASC, Inc. and Jeffrey I. Katz, M.D. and Barry Kusman,
M.D.(28)
10.91* Waiver letter dated as of August 11, 2000 to the Amended and
Restated Credit Agreement among Vision Twenty-One, Inc., the
Banks who are a party thereto and Bank of Montreal as Agent.(28)
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24
10.92* Waiver letter dated September 8, 2000 to the Amended and Restated
Credit Agreement by and among Vision Twenty-One, Inc., the Banks
who are a party thereto and Bank of Montreal as Agent.(29)
10.93* Waiver letter dated September 29, 2000 to the Amended and
Restated Credit Agreement by and among Vision Twenty-One, Inc.,
the banks who are a party thereto and Bank of Montreal as
Agent.(30)
10.94* Amended and Restated Employment Agreement dated July 31, 2000 by
and between Mark B. Gordon, O.D. and MEC Health Care, Block
Vision, Inc. and Vision Twenty-One, Inc.(30)
10.95* Amended and Restated Employment Agreement dated July 31, 2000 by
and between Ellen Gordon and MEC Health Care, Block Vision, Inc.
and Vision Twenty-One, Inc.(30)
10.96* Amended and Restated Employment Agreement dated July 31, 2000 by
and between Andrew Alcorn and MEC Health Care, Block Vision, Inc.
and Vision Twenty-One, Inc.(30)
10.97* Amended and Restated Employment Agreement dated July 31, 2000 by
and between Richard Jones and MEC Health Care, Block Vision, Inc.
and Vision Twenty-One, Inc.(30)
10.98* Amended and Restated Employment Agreement dated July 31, 2000 by
and between Howard Levin, O.D. and MEC Health Care, Block Vision,
Inc. and Vision Twenty-One, Inc.(30)
10.99* Warrant Agreement dated as of November 10, 2000 Re: Class A
Warrants to Purchase Common Stock, Class B Warrants to purchase
Common Stock.(31)
10.100* Waiver letter dated as of October 13, 2000 to the Amended and
Restated Credit Agreement by and among Vision Twenty-One, Inc.,
the Banks who are a party thereto and Bank of Montreal as
Agent.(31)
10.101* Waiver letter dated as of October 27, 2000 to the Amended and
Restated Credit Agreement by and among Vision Twenty-One, Inc.,
the Banks who are a party thereto and Bank of Montreal as
Agent.(31)
10.102* Amended and Restated Credit Agreement dated as of November 10,
2000 among Vision Twenty-One, Inc., the lenders party hereto and
Bank of Montreal as Agent.(31)
10.103* Convertible Note Agreement dated as of November 10, 2000 Re:
$6,385,000 7% convertible Senior Secured Noted Due October 31,
2003.(31)
10.104* Registration Rights Agreement dated as of November 10, 2000 among
Vision Twenty-One, Inc., and the Lenders thereto.(31)
10.105* First Amendment to Amended and Restated Employment Agreement
dated November 10, 2000 by and between Mark B. Gordon, O.D.,
Vision Twenty-One, Inc. MEC Healthcare, Inc., and Block Vision,
Inc.(32)
10.106* First Amendment to Amended and Restated Employment Agreement
dated November 10, 2000 by and between Ellen Gordon, Vision
Twenty-One, Inc., MEC Health Care, Inc., and Block Vision,
Inc.(32)
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25
10.107* First Amendment to Amended and Restated Employment Agreement
dated November 10, 2000 by and between Andrew Alcorn, Vision
Twenty-One, Inc., MEC Health Care Inc., and Block Vision, Inc.
(32)
10.108* First Amendment to Amended and Restated Employment Agreement
dated November 10, 2000 by and between Richard Jones, Vision
Twenty-One, Inc., MEC Health Care Inc., and Block Vision, Inc.
(32)
10.109* First Amendment to amended and Restated Employment Agreement
dated November 10, 2000 by and between Howard Levin, O.D., Vision
Twenty-One, Inc., MEC Health Care, Inc., and Block Vision, Inc.
(32)
10.110* Agreement dated September 2000 by and between Vision Twenty-One,
Inc., Optometric Associates of Florida, P.A., TNG Management,
Inc. and Theodore N. Gillette.(32)
10.111* Agreement dated September 14, 2000 by and between Vision
Twenty-One, Inc., Minnesota Eye Consultants, P.A., Richard L.
Lindstrom, M.D., David R. Hardten, M.D., Thomas W. Samuelson,
M.D. and Laser Vision Centers, Inc.(32)
10.112* First Amendment to Amended and Restated Credit Agreement dated
as of March 31, 2001, by and among Vision Twenty-One, Inc., the
lenders party thereto and Bank of Montreal as Agent.(32)
10.113* First Amendment to Convertible Note Agreement, Warrant Agreement
and Warrants dated as of March 31, 2001 by and among Vision
Twenty-One, Inc., the lenders party thereto and Bank of Montreal
as Agent.(32)
Schedules (or similar attachments) have been omitted, and the
Registrant agrees to furnish supplementary a copy of any omitted
schedule to the Securities and Exchange Commission upon request.
* Previously filed as an Exhibit in the Company filing identified
in the footnote following the Exhibit description and
incorporated herein by reference.
(1) Registration Statement on Form S-1 filed on June 13, 1997 (File
No. 333-29213).
(2) Amendment No. 1 to Registration Statement on Form S-1 filed on
July 23, 1997.
(3) Amendment No. 3 to Registration Statement on Form S-1 filed on
August 14, 1997.
(4) Amendment No. 4 to Registration Statement on Form S-1 filed on
August 14, 1997.
(5) Form 8-K filed September 30, 1997.
(6) Registration Statement on Form S-1 filed on October 30, 1997
(33-39031).
(7) Amendment No.1 to Registration Statement on Form S-1 filed on
November 3, 1997.
(8) Form 10-Q filed on November 14, 1997.
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26
(9) Amendment No. 2 to Registration Statement on Form S-1 filed
November 19, 1997.
(10) Form 8-K filed January 13, 1998.
(11) Form 8-K filed February 10, 1998.
(12) Form 8-K filed April 14, 1998.
(13) Registration Statement of Form S-1 filed on April 30, 1998 (File
No. 333-51437).
(14) Amendment No. 1 to Registration Statement on Form S-1 filed on
May 12, 1998 (333-51437).
(15) Form 8-K filed July 10, 1998.
(18) Form 10-K filed June 18, 1999.
(19) Form 8-K filed August 30, 1999.
(20) Form 8-K filed October 14, 1999.
(21) Form 10-Q filed November 14, 1999.
(22) Form 8-K filed December 13, 1999.
(23) Form 8-K filed January 10, 2000.
(26) Form 10-K filed May 5, 2000.
(27) Form 8-K filed July 31, 2000.
(28) Form 10-Q filed August 14, 2000.
(29) Form 8-K filed September 15, 2000.
(30) Form 10-Q filed November 14, 2000.
(31) Form 8-K filed December 5, 2000.
(32) Form 10-K filed April 17, 2001.
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