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
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “accelerated filer”,” large
accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
|
Large
Accelerated Filer
o
|
Non-Accelerated
Filer
o
|
|
Accelerated
Filer
o
(do
not check if a smaller reporting
company)
|
Smaller
Reporting Company
x
|
Indicated
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act.) Yes
o
No
x
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:
The
number of shares of common stock of registrant outstanding on August 14, 2008
was 15,093,171.
TABLE OF
CONTENTS
AMERICAN
CARESOURCE HOLDINGS, INC.
FORM
10-Q
FOR THE
QUARTER ENDED JUNE 30, 2008
|
Part
I
|
Financial
Information
|
1
|
|
Item
1.
|
Financial
Statements
|
1
|
|
|
Consolidated
Statements of Operations (unaudited)
|
1
|
|
|
Consolidated
Balance Sheets
(unaudited)
|
2
|
|
|
Consolidated
Statements of Stockholders’ Equity (unaudited)
|
3
|
|
|
Consolidated
Statements of Cash Flows (unaudited)
|
4
|
|
|
Notes
to Unaudited Consolidated Financial Statements
|
5
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
|
9
|
|
Item
4.
|
Controls
and
Procedures
|
13
|
|
Part
II
|
Other
Information
|
14
|
|
Item
1A.
|
Risk
Factors
|
14
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
14
|
|
Item
6.
|
Exhibits
|
14
|
|
Signatures
|
|
15
|
PART
I. FINANCIAL INFORMATION
ITEM 1.
Financial Statements
AMERICAN
CARESOURCE HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three
months ended
|
|
|
Six
months ended
|
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
$
|
13,012,528
|
|
|
$
|
4,008,288
|
|
|
$
|
24,518,203
|
|
|
$
|
6,274,857
|
|
|
Cost
of revenues
|
|
|
11,110,593
|
|
|
|
3,478,292
|
|
|
|
20,911,715
|
|
|
|
5,579,935
|
|
|
Contribution
margin
|
|
|
1,901,935
|
|
|
|
529,996
|
|
|
|
3,606,488
|
|
|
|
694,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
|
1,194,504
|
|
|
|
1,209,740
|
|
|
|
2,307,358
|
|
|
|
1,911,272
|
|
|
Depreciation
and amortization
|
|
|
96,606
|
|
|
|
83,642
|
|
|
|
188,672
|
|
|
|
161,715
|
|
|
Total
operating expenses
|
|
|
1,291,110
|
|
|
|
1,293,382
|
|
|
|
2,496,030
|
|
|
|
2,072,987
|
|
|
Operating
income (loss)
|
|
|
610,825
|
|
|
|
(763,386
|
)
|
|
|
1,110,458
|
|
|
|
(1,378,065
|
)
|
|
Interest
income
|
|
|
(31,240
|
)
|
|
|
(49,758
|
)
|
|
|
(71,908
|
)
|
|
|
(103,632
|
)
|
|
Interest
expense
|
|
|
1,606
|
|
|
|
2,488
|
|
|
|
3,444
|
|
|
|
6,449
|
|
|
Debt
issuance costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,300
|
|
|
Total
interest (income) expense, net
|
|
|
(29,634
|
)
|
|
|
(47,270
|
)
|
|
|
(68,464
|
)
|
|
|
(50,883
|
)
|
|
Income
(loss) before income taxes
|
|
|
640,459
|
|
|
|
(716,116
|
)
|
|
|
1,178,922
|
|
|
|
(1,327,182
|
)
|
|
Income
tax provision
|
|
|
19,019
|
|
|
|
-
|
|
|
|
36,064
|
|
|
|
-
|
|
|
Net
income (loss)
|
|
$
|
621,440
|
|
|
$
|
(716,116
|
)
|
|
$
|
1,142,858
|
|
|
$
|
(1,327,182
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.04
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.09
|
)
|
|
Diluted
|
|
$
|
0.04
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average common shares outstanding
|
|
|
15,069,007
|
|
|
|
14,492,863
|
|
|
|
14,973,213
|
|
|
|
14,489,806
|
|
|
Diluted
weighted average common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
|
17,435,365
|
|
|
|
14,492,863
|
|
|
|
17,343,860
|
|
|
|
14,489,806
|
|
See
accompanying notes.
AMERICAN
CARESOURCE HOLDINGS, INC.
CONSOLIDATED
BALANCE SHEETS
|
|
|
June
30,
|
|
|
|
|
|
|
|
2008
|
|
|
December
31,
|
|
|
|
|
(Unaudited)
|
|
|
2007
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
6,077,395
|
|
|
$
|
4,272,498
|
|
|
Accounts
receivable, net
|
|
|
4,421,223
|
|
|
|
3,651,203
|
|
|
Prepaid
expenses and other current assets
|
|
|
561,066
|
|
|
|
403,559
|
|
|
Deferred
income taxes
|
|
|
5,886
|
|
|
|
5,886
|
|
|
Total
current assets
|
|
|
11,065,570
|
|
|
|
8,333,146
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
640,115
|
|
|
|
332,450
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
|
|
|
|
|
Certificate
of deposit, restricted
|
|
|
145,000
|
|
|
|
145,000
|
|
|
Deferred
income taxes
|
|
|
255,731
|
|
|
|
255,731
|
|
|
Other
non-current assets
|
|
|
200,739
|
|
|
|
237,246
|
|
|
Intangible
assets, net
|
|
|
1,387,447
|
|
|
|
1,494,238
|
|
|
Goodwill
|
|
|
4,361,299
|
|
|
|
4,361,299
|
|
|
|
|
$
|
18,055,901
|
|
|
$
|
15,159,110
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Due
to service providers
|
|
$
|
4,225,359
|
|
|
$
|
3,344,278
|
|
|
Accounts
payable and accrued liabilities
|
|
|
1,605,439
|
|
|
|
1,320,036
|
|
|
Current
maturities of long-term debt
|
|
|
57,718
|
|
|
|
55,697
|
|
|
Total
current liabilities
|
|
|
5,888,516
|
|
|
|
4,720,011
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
20,967
|
|
|
|
50,348
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.01 par value; 10,000,000 shares
authorized,
|
|
|
|
|
|
|
|
|
|
none
issued
|
|
|
-
|
|
|
|
-
|
|
|
Common
stock, $0.01 par value; 40,000,000 shares
authorized;
|
|
|
|
|
|
|
|
|
|
15,087,855
and 14,668,416 shares issued and outstanding in
|
|
|
|
|
|
|
|
|
|
2008
and 2007, respectively
|
|
|
150,879
|
|
|
|
146,684
|
|
|
Additional
paid-in capital
|
|
|
18,224,494
|
|
|
|
17,613,880
|
|
|
Accumulated
deficit
|
|
|
(6,228,955
|
)
|
|
|
(7,371,813
|
)
|
|
Total
shareholders' equity
|
|
|
12,146,418
|
|
|
|
10,388,751
|
|
|
|
|
$
|
18,055,901
|
|
|
$
|
15,159,110
|
|
See
accompanying notes.
AMERICAN
CARESOURCE HOLDINGS, INC.
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Stockholders'
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2007
|
|
|
14,668,416
|
|
|
$
|
146,684
|
|
|
$
|
17,613,880
|
|
|
$
|
(7,371,813
|
)
|
|
$
|
10,388,751
|
|
|
Net
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,142,858
|
|
|
|
1,142,858
|
|
|
Stock-based
compensation expense
|
|
|
-
|
|
|
|
-
|
|
|
|
316,147
|
|
|
|
-
|
|
|
|
316,147
|
|
|
Exercise
of stock options
|
|
|
419,439
|
|
|
|
4,195
|
|
|
|
133,136
|
|
|
|
-
|
|
|
|
137,331
|
|
|
Issuance
of common stock warrants for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
payment
of client management fees
|
|
|
-
|
|
|
|
-
|
|
|
|
161,331
|
|
|
|
-
|
|
|
|
161,331
|
|
|
Balance
at June 30, 2008
|
|
|
15,087,855
|
|
|
$
|
150,879
|
|
|
$
|
18,224,494
|
|
|
$
|
(6,228,955
|
)
|
|
$
|
12,146,418
|
|
See
accompanying notes.
AMERICAN
CARESOURCE HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Six
months ended June 30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
1,142,858
|
|
|
$
|
(1,327,182
|
)
|
|
Adjustments
to reconcile net income (loss) to net cash
|
|
|
|
|
|
|
|
|
|
provided
by (used in) operations:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
316,147
|
|
|
|
206,032
|
|
|
Depreciation
and amortization
|
|
|
188,672
|
|
|
|
161,715
|
|
|
Amortization
of debt issuance costs
|
|
|
-
|
|
|
|
46,300
|
|
|
Client
management fee expense related to warrants
|
|
|
26,455
|
|
|
|
8,812
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(770,020
|
)
|
|
|
(325,268
|
)
|
|
Prepaid
expenses and other assets
|
|
|
13,876
|
|
|
|
(366,038
|
)
|
|
Accounts
payable and accrued liabilities
|
|
|
285,403
|
|
|
|
370,967
|
|
|
Due
to service providers
|
|
|
881,081
|
|
|
|
112,983
|
|
|
Net
cash provided by (used in) operating
activities
|
|
|
2,084,472
|
|
|
|
(1,111,679
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Investment
in software development costs
|
|
|
(284,085
|
)
|
|
|
-
|
|
|
Additions
to property and equipment
|
|
|
(105,461
|
)
|
|
|
(69,606
|
)
|
|
Net
cash used in investing activities
|
|
|
(389,546
|
)
|
|
|
(69,606
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Payments
on long-term debt
|
|
|
(27,360
|
)
|
|
|
(322,572
|
)
|
|
Proceeds
from exercise of stock options
|
|
|
137,331
|
|
|
|
2,391
|
|
|
Net
cash provided by (used in) financing
activities
|
|
|
109,971
|
|
|
|
(320,181
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
1,804,897
|
|
|
|
(1,501,466
|
)
|
|
Cash
and cash equivalents at beginning of period
|
|
|
4,272,498
|
|
|
|
5,025,380
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$
|
6,077,395
|
|
|
$
|
3,523,914
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
3,444
|
|
|
$
|
25,310
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
non-cash financing activity:
|
|
|
|
|
|
|
|
|
|
Warrants
issued as payment of client management fees
|
|
$
|
161,331
|
|
|
$
|
52,913
|
|
See
accompanying notes.
American
CareSource Holdngs, Inc.
Notes to
Condensed Financial Statements
(Unaudited)
|
(1)
|
Description
of Business and Basis of
Presentation
|
American
CareSource Holdings, Inc., a Delaware corporation (the “Company,” “American
CareSource Holdings,” “ACS,” “we,” “our,” “us,” or the “Registrant”), is in the
business of delivering ancillary healthcare services for employment groups
through its national network of ancillary care providers. The Company markets
its products to insurance companies, third-party administrators and preferred
provider organizations. American CareSource Holdings has one wholly
owned subsidiary, Ancillary Care Services, Inc. (“Care Services”).
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States (“GAAP”) interim reporting requirements of Form 10-Q and Rule 8-03
of Regulation S-X of the rules and regulations of the Securities and Exchange
Commission (“SEC”). Consequently, financial information and disclosures normally
included in financial statements prepared annually in accordance with GAAP have
been condensed or omitted. Balance sheet amounts are as of June 30,
2008 and December 31, 2007 and operating result amounts are for the three months
and six months ended June 30, 2008 and 2007, and include all normal and
recurring adjustments that we consider necessary for the fair summarized
presentation of our financial position and operating results. As
these are condensed financial statements, readers of this report should,
therefore, refer to the consolidated financial statements and the notes included
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007,
filed with the SEC on March 31, 2008.
In
accordance with Statement of Financial Accounting Standards (“SFAS”) No. 131,
“Disclosures About Segments of an Enterprise and Related Information,” the
Company uses the “management approach” for reporting information about segments
in annual and interim financial statements. The management approach
is based on the way the chief operating decision-maker organizes segments within
a company for making operating decisions and assessing
performance. Reportable segments are based on products and services,
geography, legal structure, management structure and any other manner in which
management disaggregates a company. Based on the “management
approach” model, the Company has determined that its business is comprised of a
single operating segment.
Our
interim results of operations are not necessarily indicative of results of
operations that will be realized for the full fiscal year.
The
Company evaluates its service provider contracts using the indicators of EITF
No. 99-19 “Reporting Gross Revenue as a Principal vs. Net as an Agent” (“EITF
99-19”) to determine whether the Company is acting as a principal or an agent in
the fulfillment of services to be rendered.
Revenues
are recorded gross when services by providers have been authorized and performed
and collections from third-party payors are reasonably assured. The Company acts
as principal under EITF 99-19 when settling claims for service providers through
its
contracted service provider network for
the following reasons:
|
|
·
|
The
Company negotiates a contract with the service provider and also
negotiates separate contracts with the payor. Neither the service provider
nor the payor can look through the Company and claim directly against the
other party. Each service provider contracts with the Company only, and
not with the payor. Likewise, each payor contracts with the
Company only, and not with the service provider. Each party
deals directly with the Company and does not deal
directly
with each
other.
|
|
|
·
|
The
Company determines through negotiations which service providers will be
included
in
or excluded
from
the network to be offered to the
client payor based on, among other things, price
and
access.
|
|
|
·
|
The
Company does not earn a fixed dollar amount per client transaction
regardless of the amount billed to clients or earn a stated percentage of
the amount billed to its clients.
|
|
|
·
|
The
Company is responsible to the service provider for processing claims and
managing the claims its adjustors
process.
|
|
|
·
|
The
Company sets prices to be settled with payors and separately negotiates
the prices to be settled with the service
providers.
|
|
|
·
|
The
Company may realize a positive or negative margin represented by the
difference between the negotiated fees received from the payor and the
negotiated amount paid to service
providers.
|
When
claims are recorded gross, the payor’s payment to the Company is recorded as
revenue and the Company’s payment to the service provider is recorded as cost of
revenue in the statement of operations.
The
Company does not have responsibility for collecting co-payments to be made or
co-insurance claims to be received. Accordingly, co-payments or co-insurance
claims collected are not recorded as either revenue or cost of
revenues.
The
Company records an allowance on all sales reported as gross to arrive at a net
revenue amount. Co-payments, deductibles and co-insurance can all affect the
collectability of each individual claim. While the Company is able to re-price a
claim and accurately estimate what should be paid for the service, the presence
of co-pays, deductibles and co-insurance can all affect the ultimate
collectability of the claim. In addition, the Company’s collection experience
with each payor varies. The Company records an allowance against
gross revenue to better estimate collectability. This allowance is applied
specifically for each payor and is adjusted to reflect the Company’s collection
experience each quarter.
During
the six months ended June 30, 2008,
two of
the Company
’s
customers
comprised
a significant portion of the Company’s
revenues. The following is a summary of the approximate amounts of
the Company’s revenue and accounts receivable contributed by each of those
customers as of the dates presented:
|
|
|
Six
months ended June 30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Accounts
|
|
|
|
|
|
%
of Total
|
|
|
Accounts
|
|
|
|
|
|
%
of Total
|
|
|
|
|
receivable
|
|
|
Revenue
|
|
|
Revenues
|
|
|
receivable
|
|
|
Revenue
|
|
|
Revenues
|
|
|
Customer
A
|
|
$
|
2,183,000
|
|
|
$
|
14,947,000
|
|
|
|
61%
|
|
|
$
|
791,000
|
|
|
$
|
4,449,000
|
|
|
|
71%
|
|
|
Customer
B
|
|
|
2,183,000
|
|
|
|
9,040,000
|
|
|
|
37%
|
|
|
|
710,000
|
|
|
|
998,000
|
|
|
|
16%
|
|
|
Others
|
|
|
55,000
|
|
|
|
531,000
|
|
|
|
2%
|
|
|
|
159,000
|
|
|
|
828,000
|
|
|
|
13%
|
|
|
|
|
$
|
4,421,000
|
|
|
$
|
24,518,000
|
|
|
|
100%
|
|
|
$
|
1,660,000
|
|
|
$
|
6,275,000
|
|
|
|
100%
|
|
The
following table details the reconciliation of basic earnings per share to
diluted earnings per share:
|
|
|
Three
months ended
|
|
|
Six
months ended
|
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Numerator
for basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
621,440
|
|
|
$
|
(716,116
|
)
|
|
$
|
1,142,858
|
|
|
$
|
(1,327,182
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
basic common shares outstanding
|
|
|
15,069,007
|
|
|
|
14,492,863
|
|
|
|
14,973,213
|
|
|
|
14,489,806
|
|
|
Assumed
conversion of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
805,761
|
|
|
|
-
|
|
|
|
832,779
|
|
|
|
-
|
|
|
Warrants
|
|
|
1,560,597
|
|
|
|
-
|
|
|
|
1,537,868
|
|
|
|
-
|
|
|
Potentially
dilutive common shares
|
|
|
2,366,358
|
|
|
|
-
|
|
|
|
2,370,647
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
for diluted earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per
share - Adjusted weighted - average shares
|
|
|
17,435,365
|
|
|
|
14,492,863
|
|
|
|
17,343,860
|
|
|
|
14,489,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.04
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.09
|
)
|
|
Diluted
|
|
$
|
0.04
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.09
|
)
|
Long-term
debt consists of the following as of the dates presented:
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Notes
payable to Capital One Bank, $135,000 due
|
|
|
|
|
|
|
|
September
2009, due in monthly installments of
|
|
|
|
|
|
|
|
approximately
$4,143, including interest at 6.5%
|
|
$
|
59,470
|
|
|
$
|
81,939
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
lease obligations
|
|
|
19,215
|
|
|
|
24,106
|
|
|
|
|
|
78,685
|
|
|
|
106,045
|
|
|
Less
current maturities
|
|
|
(57,718
|
)
|
|
|
(55,697
|
)
|
|
Long-term
debt, less current maturities
|
|
$
|
20,967
|
|
|
$
|
50,348
|
|
On July
2, 2007, the Company announced that it had signed an Ancillary Care Services
Network Access Agreement (“the agreement”) effective May 21, 2007 with a new
customer, Texas True Choice, Inc. (“TTC”). As partial compensation
under the agreement, the Company issued to an affiliate of TTC, warrants to
purchase a total of 225,000 shares of the Company’s common stock at an exercise
price of $1.84, the closing price of our stock on May 21, 2007. 25%
of the shares vested on May 21, 2007 and May 21, 2008, and 25% vest on May 21 on
each of the two subsequent years. As of June 30, 2008, 25%, or 56,250
warrants had vested. According to the agreement, TTC must provide two
years notice in the event of termination. Since the measurement date
for the third traunch of warrants had been reached as of June 30, 2008, we
recorded the fair value of 25% of the warrants, or 56,250 warrants, which were
recorded as other non-current assets and will be amortized over the related
contract period. The total fair value of the warrants was $161,331,
which was recorded based on the Black-Scholes-Merton method.
|
(6)
|
Recent
Accounting Pronouncements
|
In
December 2007, the Financial Accounting Standards Board issued SFAS No. 141(R)
“Business Combinations.” SFAS No. 141(R) changes the accounting for
business combinations including the measurement of acquirer shares issued in
consideration for a business combination, the recognition of contingent
consideration, the accounting for pre-acquisition gain and loss contingencies,
the recognition of capitalized in-process research and development, the
accounting for acquisition-related restructuring cost accruals, the treatment of
acquisition related transaction costs and the recognition of changes in the
acquirer’s income tax valuation allowance. SFAS No. 141(R) is
effective for fiscal years beginning after December 15, 2008, with early
adoption prohibited. We are currently evaluating the impact of
the pending adoption of SFAS 141(R) on our financial statements.
FORWARD-LOOKING
STATEMENTS
This
discussion includes forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. You can identify these statements by
forward-looking words such as “may,” “will,” “expect,” “intend”, “anticipate,”
“believe,” “estimate” and “continue” or similar words. You should read
statements that contain these words carefully because they discuss our future
expectations, contain projections of our future operating results or of our
financial condition or state other “forward-looking” information.
We believe it is important to communicate to our stockholders and
potential investors not only the Company’s current condition, but management’s
forecasts about the Company’s future opportunities, performance and results,
including, for example, information with respect to potential margin expansion,
cash reserves and other financial items, and our strategies and
prospects. However, forward-looking statements are based on current
expectations and assumptions and are subject to substantial risks and
uncertainties, including, but not limited to, risks of market acceptance of, or
preference for, the Company’s systems and services, competitive forces, the
impact of geopolitical events and changes in government regulations, general
economic conditions and economic factors in the country and the healthcare
industry, and other risk factors as may be listed from time to time in the
Company’s filings with the SEC. In evaluating such forward-looking statements,
investors should specifically consider the matters set forth under the caption
“Risk Factors” appearing in our Annual Report on Form 10-K for the year ended
December 31, 2007 which was filed with the SEC on March 31, 2008, as well as any
other cautionary language contained in this quarterly report, any of which could
cause our actual results to differ materially from the expectations we describe
in our forward-looking statements. Except to the extent required by
applicable securities laws and regulations, we disclaim any obligation to update
or revise information contained in any forward-looking statement contained
herein to reflect events or circumstances occurring after the date of this
quarterly report.
ITEM
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
Management’s
discussion and analysis provides a review of the Company’s operating results for
the three and six months ended June 30, 2008 and its financial condition at June
30, 2008. The focus of this review is on the underlying business reasons for
significant changes and trends affecting the revenues, net income or loss and
financial condition of the Company. This review should be read in conjunction
with the accompanying unaudited consolidated financial statements and the
audited consolidated financial statements and the notes thereto included in our
Annual Report on Form 10-K for the year ended December 31, 2007.
OVERVIEW
ACS
provides ancillary healthcare services through its proprietary network of
ancillary healthcare service providers for the benefit of its healthcare payor
clients.
Clients
route
healthcare claims to ACS after service has been performed by providers
who participate
in
the ACS
network
.
ACS re-prices those claims according
to its contractual rate with the
service
provider. In the process of re-pricing the claim, ACS is paid
directly by the client or the insurer for the
provider’s
service. ACS then pays the
service
provider according to its
contractual rate. ACS assumes the risk of generating positive margin,
the difference between the payment it receives for the service and the amount it
is obligated to pay the original
service
provider or member of its proprietary network.
The
Company recognizes revenues for ancillary healthcare services when services by
providers have been authorized and performed and collections from payors are
reasonably assured. Cost of revenues for ancillary healthcare
services consist of amounts due to providers for providing patient services,
client administration fees paid to client payors to reimburse them for the cost
of implementing and managing claims submissions, and the Company’s related
direct labor and overhead of processing invoices, collections and payments. The
Company is not liable for costs incurred by independent contract service
providers until
the Company receives
payment from the payors. The Company recognizes actual or estimated
liabilities to independent contract service providers as the related revenues
are recognized. The Company markets its products to insurance companies,
third-party administrators and preferred provider
organizations. Although we have never reported a profit for a full
fiscal year, we realized positive net income of $506,953 during the second half
of 2007, which ended December 31, 2007. Our improved performance
during this period was attributable to the addition of five new clients during
our fiscal year
2007 and the expansion of
services performed for existing clients. The Company is seeking continuing
growth in the number of client payor and service provider relationships by
focusing on providing in-network services for its payors and aggressively
pursuing additional preferred provider organizations and third-party
administrators as its primary sales targets. The Company believes that this
strategy should increase the volume of claims the Company can adjudicate as well
as the volume of patients it can direct through its service provider network. No
assurances can be given that the Company can expand its service provider
network
or payor relationships, nor that any such
expansion will result in an improvement in the results of operations of the
Company.
RECENT EVENTS
On June 30, 2008, the Company announced that it signed
an agreement with Viant Holdings, Inc. (“Viant”) to provide ancillary care
services to the payor client base of an affiliate of Viant. The
affiliate offers comprehensive healthcare management services and custom
healthcare cost containment solutions for clients across the United
States.
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
Management’s
discussion and analysis of our
financial condition and results of operations
is
based upon our condensed financial
statements. These condensed financial statements have been prepared
following the requirements of accounting principles generally accepted in the
United States (“GAAP”) for interim periods and require us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates,
including those related to revenue recognition and amortization and potential
impairment of intangible assets and goodwill and stock-based compensation
expense. As these are condensed financial statements, one should also
read expanded information about our critical accounting policies and estimates
provided in Item 7, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations
” under the heading
“Critical Accounting Policies
,” included in our
Annual Report on
Form 10-K for the year ended
December 31, 2007. There have been no material changes to our critical
accounting policies and estimates from the information provided in our
Form
10-K for the year ended December 31,
2007.
ANALYSIS
OF RESULTS OF OPERATIONS
The
following table sets forth a comparison of our revenues for the periods
presented ending June 30:
|
|
|
Second
Quarter
|
|
|
Six
Months
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
Change
|
|
|
($
in thousands)
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
Net
revenues
|
|
$
|
13,013
|
|
|
$
|
4,008
|
|
|
$
|
9,005
|
|
|
|
225
|
%
|
|
$
|
24,518
|
|
|
$
|
6,275
|
|
|
$
|
18,243
|
|
|
|
291
|
%
|
The
Company’s net revenues are generated from ancillary healthcare service claims.
For the three and six months ended June 30, 2008, approximately $5.9 million and
$12.1 million, respectively, of the increases in net revenues was due to the
addition of five new clients with which we entered into agreements in
2007. In addition, revenue from established clients increased
approximately $3.1 million and $6.1 million, respectively, for the three and six
months ended June 30, 2008 compared to the corresponding prior year
periods. Those increases were the result of expansion of services to
those existing clients.
The
Company will continue to attempt to increase the number of client payors and
service provider relationships by focusing on providing in-network services for
its payors and aggressively pursuing preferred provider organizations and third
party administrators as its primary sales targets. The Company believes that
this strategy should increase the volume of claims the Company can adjudicate as
well as the volume of patients it can direct through its service provider
network. No assurances can be given that the Company can expand its service
provider
network
or payor relationships,
nor that any such expansion will result in an improvement in the results of
operations of the Company.
Cost of Revenues and
Contribution Margins
The
following table sets forth a comparison of the components of our cost of
revenues, for the periods presented ending June 30:
|
|
|
Second
Quarter
|
|
|
Six
Months
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
Change
|
|
|
($
in thousands)
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
Provider
payments
|
|
$
|
9,555
|
|
|
$
|
2,793
|
|
|
$
|
6,762
|
|
|
|
242%
|
|
|
$
|
17,946
|
|
|
$
|
4,337
|
|
|
$
|
13,609
|
|
|
|
314%
|
|
|
Administrative
fees
|
|
|
751
|
|
|
|
166
|
|
|
|
585
|
|
|
|
352%
|
|
|
|
1,453
|
|
|
|
253
|
|
|
|
1,200
|
|
|
|
474%
|
|
|
Fixed
costs
|
|
|
805
|
|
|
|
519
|
|
|
|
286
|
|
|
|
55%
|
|
|
|
1,513
|
|
|
|
990
|
|
|
|
523
|
|
|
|
53%
|
|
|
Total
cost of revenues
|
|
$
|
11,111
|
|
|
$
|
3,478
|
|
|
$
|
7,633
|
|
|
|
219%
|
|
|
$
|
20,912
|
|
|
$
|
5,580
|
|
|
$
|
15,332
|
|
|
|
275%
|
|
Cost of
revenue
s
is comprised of payments to our providers,
administration fees paid to our client payors for converting claims to
electronic data interchange and routing them to both the Company for processing
and to their payors for payment, and the fixed costs of our network development
and claims administration organizations. For the three and six month
periods ended June 30, 2008, the increases in total cost of revenues compared to
the corresponding prior year periods, reflect increased amounts paid
to providers for their services as a result of our increased revenues, and the
fluctuation in the mix of types of services provided by the
Company. The increase in administration fees was due to the addition
of five new clients and expanded relationships with existing
clients. Fixed costs increased due to increased costs and expenses
related to increased volume of claims processing.
The
following table sets forth a comparison of contribution margin percentage for
the periods presented ending June 30:
|
|
|
Second Quarter
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
Change
|
|
|
($ in thousands)
|
|
2008
|
|
|
2007
|
|
|
% pts
|
|
|
2008
|
|
|
2007
|
|
|
% pts
|
|
|
Contribution margin
|
|
|
14.6%
|
|
|
|
13.2%
|
|
|
|
1.4%
|
|
|
|
14.7%
|
|
|
|
$11.1%
|
|
|
|
3.6%
|
|
Contribution
margin is calculated by dividing the difference between net revenues and total
costs of revenues by net revenues. The increase in contribution
margin reflected in the above table is attributable primarily to the increase in
net revenues, offset by a variety of factors, including more aggressive pricing
by the Company, fluctuations in the mix of services provided by the Company, and
increased administration fees payable to clients. The Company
anticipates that it will continue to experience margin expansion as the rate of
client volume increases over time as a result of leveraging its fixed cost
infrastructure.
S
elling,
General and Administrative Expenses
The
following table sets forth a comparison of
our selling
,
general and administrative (“SG&A”) expenses for the periods presented
ending June 30:
|
|
|
Second
Quarter
|
|
|
Six
Months
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
Change
|
|
|
($
in thousands)
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
Selling, general and
administrative
expenses
|
|
$
|
1,195
|
|
|
$
|
1,210
|
|
|
$
|
(15
|
)
|
|
|
(1)%
|
|
|
$
|
2,307
|
|
|
$
|
1,911
|
|
|
$
|
396
|
|
|
|
17%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
of total net revenues
|
|
|
9.2%
|
|
|
|
30.2%
|
|
|
|
|
|
|
|
|
|
|
|
9.4%
|
|
|
|
30.5%
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative (“SG&A”) expenses consist primarily of salaries
and related benefits, travel costs, sales commissions, sales materials, other
marketing related expenses, costs of corporate operations, finance and
accounting, human resources and other general operating expenses of the
Company. The increase in SG&A reflected in the above table is
primarily related to increased professional expenses, specifically accounting,
legal and consulting fees, accrued bonuses related to improved operating results
compared to the prior year periods, increased stock-based compensation expense
and sales commissions commensurate with our increased sales. Those
increases were offset by the effect of the severance costs incurred during the
three months ended June 30, 2007 related to our former Chief Executive Officer,
who resigned effective June 30, 2007. Those costs were approximately
$330,000.
SG&A
expenses as a percentage of net revenues decreased over the prior year periods
as a result of the disproportionately greater increase in our net
revenues.
Depreciation and
Amortization
The
following table sets forth a comparison of depreciation and amortization for the
periods presented ending June 30:
|
|
|
Second
Quarter
|
|
|
Change
|
|
|
Six
Months
|
|
|
Change
|
|
|
($
in thousands)
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
Depreciation
|
|
$
|
44
|
|
|
$
|
31
|
|
|
$
|
13
|
|
|
|
42%
|
|
|
$
|
83
|
|
|
$
|
56
|
|
|
$
|
27
|
|
|
|
48
%
|
|
|
Amortization
|
|
|
53
|
|
|
|
53
|
|
|
|
-
|
|
|
|
- %
|
|
|
|
106
|
|
|
|
106
|
|
|
|
-
|
|
|
|
- %
|
|
|
Total
Depreciation and amortization
|
|
$
|
97
|
|
|
$
|
84
|
|
|
$
|
13
|
|
|
|
15%
|
|
|
$
|
189
|
|
|
$
|
162
|
|
|
$
|
27
|
|
|
|
17%
|
|
Amortization
of intangibles consists of $21,000 of amortization of certain software
development costs and $32,000 in amortization of the capitalized value of
provider contracts that were acquired
in
the
2003
acquisition of American CareSource
Corporation’s assets by Patient Infosystems (now CareGuide, Inc.).
Interest (Income) Expense,
net
The
following table sets forth a comparison of the components of interest (income)
expense, net for the periods presented ending June 30:
|
|
|
Second
Quarter
|
|
|
Change
|
|
|
Six
Months
|
|
|
Change
|
|
|
($
in thousands)
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
2008
|
|
|
2007
|
|
|
$
|
|
|
|
%
|
|
|
Interest
income
|
|
$
|
(32
|
)
|
|
$
|
(50
|
)
|
|
$
|
18
|
|
|
|
(36)%
|
|
|
$
|
(72
|
)
|
|
$
|
(103
|
)
|
|
$
|
31
|
|
|
|
(30)%
|
|
|
Interest
expense
|
|
|
2
|
|
|
|
3
|
|
|
|
(1
|
)
|
|
|
(33)%
|
|
|
|
4
|
|
|
|
6
|
|
|
|
(2
|
)
|
|
|
(33)%
|
|
|
Debt
issuance costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
%
|
|
|
|
-
|
|
|
|
46
|
|
|
|
(46
|
)
|
|
|
(100)%
|
|
Total
interest (income)
expense, net
|
|
$
|
(30
|
)
|
|
$
|
(47
|
)
|
|
$
|
17
|
|
|
|
(36)%
|
|
|
$
|
(68
|
)
|
|
$
|
(51
|
)
|
|
$
|
(17
|
)
|
|
|
33
%
|
|
For the
six months ended June 30, 2008, interest (income) expense, net increased
compared to the prior year period due to the amortization of debt issuance costs
of $
46,300,
which was incurred during the
first quarter of 2007. Those costs were fully amortized as of
December 31, 2007.
For the
three and six months ended June 30, 2008, a provision for income taxes of $
19,019 and $36,064
was recorded, respectively, as
compared to no income tax provision being recorded in the prior year
periods. The provision amounts for the aforementioned periods in 2008
represents our estimated margin tax liability in the State of
Texas.
FINANCIAL
CONDITION AND LIQUIDITY
As of
June 30, 2008, the Company had a working capital surplus of $5.2 million as
compared to a working capital surplus of $3.6 million at December 31,
2007. The increase in working capital is primarily the result of net
cash provided by operating activities of $2.1 million during the six months
ended June 30,
2008. That
increase was partially offset by capital expenditures of approximately $390,000
during the same period.
For the
six months ended June 30, 2008, operating activities provided net cash of $2.1
million, the primary components of which were net income of $
1.1 million
,
adjusted for non-cash charges of share-based compensation expense of $
316
,
147 and depreciation and amortization of
$188,672
,
and a net decrease in
operating assets and liabilities of $
410
,
340
.
Net operating assets and liabilities
declined due to the timing of collection of claims paid to us by our clients and
payments made by us to the service providers in our network and the accrual made
for performance related bonuses during the six months ended June 30,
2008.
Investing
activities in the quarter
ended
June 30, 2008
were comprised of investments in
software development costs of $284,085 and in property and equipment of $
105
,
461
. The software development costs
relate primarily to enhancements to our internal reporting
capabilities.
Financing
activities
in the quarter ended
June 30, 2008
produced cash of $
109
,
971
,
compared to cash used of $
320
,
181
in the
corresponding period
in
2007. Cash generated in financing activities was primarily comprised
of proceeds of $137,331, from the exercise of employee stock options, $
129,725
of which was received from the exercise
of
399,007
stock options by the former
Chief Executive Officer of the Company. Those proceeds were offset by
payment made under capital leases of $27,360.
During
the
six months
ended June 30, 2008, the
Company’s net income was $
1.1 million
and
cash flows from operating activities were $2.1 million. Historically,
we have relied on external sources of
capital,
including indebtedness
or
issuance of equity
securities
. We believe our current
cash balance ($6.1 million as of June 30, 2008) and expected future cash flows
from operations will be sufficient to meet our anticipated cash needs for
working capital, capital expenditures and other activities through the next
twelve months. If operating cash flows are not sufficient to meet our
needs, we believe that credit or access to capital through issuance of equity
would be available to us.
INFLATION
Inflation
did not have a significant impact on the Company’s costs during the quarters
ended March 31, 2008 and March 31, 2007, respectively. The Company
continues to monitor the impact of inflation in order to minimize its effects
through pricing strategies, productivity improvements and cost
reductions.
OFF-BALANCE
SHEET ARRANGEMENTS
The
Company does not have any material off-balance sheet arrangements at June 30,
2008 or June 30, 2007 or for the periods then ended.
ITEM
4. Evaluation of Disclosure Controls and Procedures
Eva
luation of Disclosure Controls and
Procedures.
Our management, with the participation of our Chief Executive
Officer
and
Chief Financial Officer, has
evaluated the effectiveness of our disclosure controls and procedures as of June
30, 2008. Based upon this evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of
1934, as amended
) are effective for the
recording, processing, summarizing and reporting of the information that the
Company is required to disclose in the reports it files under the Exchange Act,
within the time periods specified in the
SEC
’s rules and forms.
Changes in Internal Controls Over
Financial R
eporting
. Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer
,
has concluded that there
were no changes in the Company’s internal controls over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934, as amended
) during the quarter ended
June 30, 2008 that have materially affected the Company’s internal controls over
financial reporting or are reasonably likely to materially affect internal
controls over financial reporting, including any corrective actions with regard
to significant deficiencies and material weaknesses.
Part
II. OTHER INFORMATION
ITEM
1A. Risk Factors
In
addition to the other information set forth in this report, one should carefully
consider the discussion of various risks and uncertainties contained in Part I,
“Item 1A. Risk Factors” in our 2007 Annual Report on Form 10-K. We
believe those risk factors are the most relevant to our business and could cause
our results to differ materially from the forward-looking statements made by
us. Please note, however, that those are not the only risk factors
facing us. Additional risks that we do not consider material, or of
which we are not currently aware, may also have an adverse impact on
us. Our business, financial condition and results of operations could
be seriously harmed if any of these risks or uncertainties actually occurs or
materializes. In that event, the market price for our common stock
could decline, and our shareholders may lose all or part of their
investment. During the first three months of 2008, there were no
material changes in the information regarding risk factors contained in our
Annual Report on Form 10-K for the year ended December 31, 2007.
ITEM
4. Submission of Matters to a Vote of Security Holders
We held
our annual meeting of stockholders on May 20, 2008. The results of
the matters voted on at the meeting are as follows:
With
respect to the election of directors, shares were voted as follows:
|
|
|
Number
of
|
|
Number
of Votes
|
|
Nominee
|
|
Votes
For
|
|
Withheld
|
|
Edward
B. Berger
|
|
|
9,919,376
|
|
|
|
539,883
|
|
|
John
W. Colloton
|
|
|
10,397,259
|
|
|
|
62,000
|
|
|
Kenneth
S. George
|
|
|
10,397,259
|
|
|
|
62,000
|
|
|
John
N. Hatsopoulos
|
|
|
10,397,259
|
|
|
|
62,000
|
|
|
John
Pappajohn
|
|
|
9,919,334
|
|
|
|
539,925
|
|
|
Derace
L. Schaffer, MD
|
|
|
9,919,376
|
|
|
|
539,883
|
|
With
respect to the ratification of McGladrey & Pullen LLP as our independent
auditors for fiscal year 2008, votes were as follows:
|
For
|
Against
|
Abstain
|
|
10,418,758
|
9,800
|
30,701
|
ITEM
6. Exhibits
|
Exhibit
31.1
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
Exhibit
31.2
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
Exhibit
32.1
|
Certifications
Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of
2002
|
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.
|
|
AMERICAN
CARESOURCE HOLDINGS, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/
David
S. Boone
|
|
|
|
|
David
S. Boone
|
|
|
|
|
President
and Chief Executive Officer (principal executive officer and an authorized
signatory)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Steven
J. Armond
|
|
|
|
|
Steven
J. Armond
|
|
|
|
|
Chief
Financial Officer (principal financial officer and an authorized
signatory)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Matthew
D. Thompson
|
|
|
|
|
Matthew
D. Thompson
|
|
|
|
|
Controller
(principal accounting officer and an authorized
signatory)
|
|
|
|
|
|
Date:
August 14, 2008