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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
HELP AT HOME, INC.
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DELAWARE 36-4033986
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
223 W. JACKSON, SUITE 500
CHICAGO, IL 60606
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ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(312) 663-4244 (REGISTRANT'S TELEPHONE NUMBER,
- -------------- INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
- ------------------- ------------------------------------
COMMON STOCK, PAR VALUE $0.02 NASDAQ NATIONAL MARKET
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $0.02 PER SHARE
---------------------------------------
(TITLE OF CLASS)
INDICATE BY CHECKMARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTIONS 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 .
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AS OF MAY 10, 1996, THERE WERE 1,869,375 SHARES OF THE REGISTRANT'S COMMON STOCK
OUTSTANDING.
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HELP AT HOME, INC.
INDEX
PAGE
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PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AT MARCH 31, 1996 (UNAUDITED) 1
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTH
PERIODS ENDED MARCH 31, 1995 AND 1996 (UNAUDITED) 2
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTH
PERIODS ENDED MARCH 31, 1995 AND 1996 (UNAUDITED) 3
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTH
PERIODS ENDED MARCH 31, 1995 AND 1996 (UNAUDITED) 4
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' 5
EQUITY (UNAUDITED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
PART II. OTHER INFORMATION 11
SIGNATURES
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<TABLE>
<CAPTION>
HELP AT HOME, INC.
BALANCE SHEET
(UNAUDITED)
JUNE 30 MARCH 31
1995 1996
------------ -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 24,994 $ 5,229,480
Accounts receivable (net of allowance
For doubtful accounts of $25,000 and $39,000) 2,258,139 1,817,098
Prepaid Expenses 57,864 151,340
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Total current assets 2,340,997 7,197,918
Property and equipment, net 178,071 238,110
Due from stockholder 142,556 150,845
Security deposits and other assets 85,299 87,848
Goodwill (net of amortization of $5,130) 217,602
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$ 2,746,923 $ 7,892,323
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LIABILITIES
Current Liabilities:
Accounts payable $ 205,363 $ 121,062
Accrued expenses 250,818 953,154
Income taxes payable 54,092 471,000
Current portion of long-term debt 12,395 13,261
Deferred taxes 628,000 474,000
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Total Current Liabilities 1,150,668 2,032,477
Long-term debt, less current portion 39,075 42,349
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Total Liabilities 1,189,743 2 ,074,826
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share; 1,000,000 shares
authorized, none issued and outstanding
Common stock, par value $.02 per share; 14,000,000 shares
authorized, 1,050,000 and 1,869,375 shares issued and
outstanding 21,000 37,388
Additional Paid in Capital 3,680,735
Retained Earnings 1,536,180 2,099,374
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Total Stockholders' Equity 1,557,180 5,780,109
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$ 2,746,923 $ 7,892,323
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</TABLE>
The accompanying notes to the financial statements
are an integral part hereof.
1
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HELP AT HOME, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
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1995 1996
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(UNAUDITED) (UNAUDITED)
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<S> <C> <C>
Service fees $2,040,139 $3,049,039
Direct costs of services 1,356,803 2,100,252
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683,336 948,787
Selling, general and administrative
expenses 432,502 623,309
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Income from operations 250,834 325,478
Financial Income (Expense) 63,148
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Income before income taxes 250,834 388,626
Federal and state income taxes 95,317 196,116
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NET INCOME $ 155,517 $ 233,173
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Earnings per common share $ .15 $ .11
Weighted average number of common shares 1,050,000 1,850,584
</TABLE>
The accompanying notes to financial statements are
an integral part hereof.
2
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HELP AT HOME, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
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1995 1996
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(UNAUDITED) (UNAUDITED)
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<S> <C> <C>
Service fees $5,531,654 $8,128,256
Direct costs of services 3,940,385 5,734,892
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1,591,269 2,393,364
Selling, general and administrative
expenses 949,715 1,570,788
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Income from operations 641,544 822,576
Financial Income (Expense) (679) 84,118
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Income before income taxes 640,875 906,694
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Federal and state income taxes 271,838 363,000
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NET INCOME $ 369,037 $ 543,689
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Earnings per common share $ .35 $ .39
Weighted average number of common shares 1,050,000 1,382,284
</TABLE>
The accompanying notes to financial statements are
an integral part hereof.
3
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HELP AT HOME, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31
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1995 1996
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(UNAUDITED) (UNAUDITED)
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<S> <C> <C>
Cash flows from operating activities:
Net Income $ 369,037 $ 543,689
Adjustments to reconcile net income
of cash provided by operating activities:
Depreciation and Amortization 23,405 68,271
Deferred taxes (154,000)
Changes in:
Accounts receivable (716,739) 589,709
Prepaid expenses and other 17,324 (93,476)
Accounts payable (7,613) (98,383)
Accrued expenses 170,490 422,930
Income taxes payable 271,838 471,000
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Net cash provided by
operating activities 127,382 1,749,740
Cash flows from investing activities:
Purchase of property and equipment (81,238) (84,416)
Acquisitions of wholly owned subsidiaries (91,775)
Increase in shareholder loan (81,830) (8,289)
Other (8,008)
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Net cash used in investing
activities (163,068) (192,488)
Cash flows from financing activities:
Reduction of long-term liabilities (69,394)
Net proceeds from issuance of common stock,
819,375 shares 3,716,623
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Net cash provided by financing
activities 0 3,647,229
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NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (35,686) 5,204,486
Cash and cash equivalents:
Beginning of period 49,768 24,994
END OF PERIOD 14,082 5,229,480
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</TABLE>
The accompanying notes to the financial statements are an integral part thereof.
4
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<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
PREFERRED STOCK COMMON STOCK
1,000,000 SHARES 14,000,000 SHARES
AUTHORIZED AUTHORIZED
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TOTAL
SHARES SHARES ADDITIONAL RETAINED STOCKHOLDERS'
ISSUED AMOUNT ISSUED AMOUNT PD IN CAPITAL EARNINGS EQUITY
------ ------ ------ ----- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - June 30, 1994 1,050,000 $21,000 $ 988,754 $1,009,754
Net Income for the year
ended June 30, 1995 547,426 547,426
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Balance - June 30, 1995 1,050,000 21,000 1,536,180 1,557,180
--------- ------- ---------- ---------
Effect of Stock Exchange with HAH (FL) (19,500) 19,500
Sale of 819,375 shares
of common stock,
(net of offering costs
and commissions) 819,375 16,388 3,680,735 3,716,623
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Net income for the nine
months ended March 31, 1996 543,694 543,694
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BALANCE-March 31, 1996 1,869,375 37,388 3,680,735 2,099,374 5,817,497
--------- ------ --------- --------- ---------
--------- ------ --------- --------- ---------
</TABLE>
(Unaudited)
5
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HELP AT HOME, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB 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 the fair presentation of
the company's financial statements have been included herein. Operating results
for the three and nine month periods ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ended June 30, 1996.
For further information, refer to the consolidated financial statements and
footnotes thereto in the Company's registration statement on Form SB-2.
NOTE 2: PUBLIC OFFERING
In December, 1995 the Company effected an initial public offering of its
securities. A total of 813,375 units, comprised of one share of common stock
and two redeemable warrants, were issued for $6.30 per unit. Net proceeds from
the offering were approximately $3,697,000 after underwriting commissions and
expenses. Funds realized from the offering were deposited into a high liquid
money market fund and are included in cash and cash equivalents in the
accompanying financial statements.
NOTE 3: EARNINGS PER SHARE
Earnings per common share are determined by dividing earnings by the weighted-
average number of common shares outstanding during each year. Stock warrants
and stock options are not included in the earnings per share calculation because
they are anti-dilutive.
6
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW:
Help at Home, Inc. (the "Company") provides skilled nursing and therapeutic
services together with general homemaker services to the elderly, medically
fragile and disabled in their homes. The Company has engaged in the provision
of unskilled homemaker services for two decades, recently adding, through
acquisitions of two Medicare certified home health agencies, skilled care
capabilities. For the first three quarters of fiscal 1996, the Company realized
approximately 95 percent of its revenues from its general homemaker services and
5 percent from delivery of Medicare reimbursed home health services. The
Company derived 91 percent of its general homemaker revenue from contracts with
the Illinois Department of Aging ("IDOA") and other state and municipal agencies
with which multiple-year contracts are in force. With the exception of
arrangements made with individuals regarding payment for services (accounting
for approximately 3 percent of total revenues), virtually all of the Company's
revenues are subject to established rates of reimbursement. Medicare services
are reimbursed based on the actual cost of providing services, subject to
cost limits. The Company's contracts for provision of homemaker services
establish rates of reimbursement for the life of each contract.
The Company, in July, 1995, acquired the stock of Lakeside Home Health
Agency, Inc.
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("Lakeside") based in Fenton, MO. In January, 1996 the company also acquired
Rosewood Home Health Agency ("Rosewood") in Alton, IL in furtherance of its
strategy to expand its range of services to include medically necessary, skilled
care. Based on the methodology used to determine Medicare reimbursement,
services provided by the Company to its subsidiaries (including financial
management and administrative support services) or recoverable through
allocations of home office costs to the medicare program.
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1995:
Service fees for the three months ended March 31, 1996 increased by
$1,008,900 over the same quarter in the previous fiscal year. The 49 percent
revenue growth is attributable to the opening of new Illinois offices pursuant
to additional contract awards in 1995 ($347,425), the addition of Medicare home
health services ($173,348) and general expansion in volume ($488,127). Direct
costs of providing services increased, as a percentage of revenue, by two
percent or $743,449 for the quarter and represented 69 percent of revenues
versus 67 percent for the thrid quarter of 1995 due primarily to a wage
increase that took effect in the second quarter of fiscal 1995. The gross
margin on services provided grew in the amount of $265,451 for the quarter
ended March 31, 1996 and represents 31 percent of revenues. Selling, general
and administrative expenses improved as a percentage of revenue to 20 percent.
The growth in expenses of $190,807 is attributable to an increase in
administrative salaries ($48,642), general office expense ($86,784), corporate
travel associated with potential acquisitions ($38,579) and advertising/
promotion ($15,989).
Income from operations increased over the same quarter a year ago by
$74,644. Financial income of $63,143 is largely comprised of interest income on
IPO proceeds netted against interest expense. The Federal and State income
taxes reflected in the quarter's result includes an additional $45,000
attributable to the first two quarters of the fiscal year for the purpose of
bringing provisions for current taxes into line with the Company's estimated
effective tax rate. Earnings per share were $.11 for the quarter as compared
to $.15 for the same quarter last year which was due to the increase in
estimated taxes, together with the significant increase in the number of
shares comprising the weighted average (1,851,000 in 1996 versus 1,050,000 in
1995).
8
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NINE MONTHS ENDED MARCH 31, 1996 COMPARED TO THE NINE MONTHS ENDED MARCH 31,
1995:
Revenues derived from services rendered to clients for the first three
quarters of 1996 exceeded revenues for the corresponding period in 1995 by
$2,596,602 representing overall growth in revenues of 47 percent. As noted
in the previous section, revenues increased due to an expansion in the number
of Illinois offices ($560,000), increased volume from the various IDOA
contracts ($1,637,000) and the addition of Medicare home health revenues
($400,000). Direct costs associated with providing client services grew to
$5,734,892 for an increase of $1,794,507. Direct costs, as a percentage of
revenues, were 70% for the third quarter of 1996 compared to 71% for the same
quarter the previous year. The gross profit margins for both nine month
periods were 29 percent of revenues. Selling, general and administrative
expenses grew by $621,073 in 1996, and represented 19 percent of revenues as
opposed to 17 percent for the nine month period in 1995. The increase in
general expense is attributable to the establishment of the corporate offices
and related operating expenses. Operating income for the nine months grew by
$181,990 to $822,576. Financial income of $84,113 for the nine month period
brought pre-tax income to $$906,689 versus $640,586 one year earlier. Net
income of $543,689 for the nine months represents an increase of $174,652
over the previous year. Earnings per share for the nine months of 1996 were
$.39 based on 1,382,000 shares versus $.35 for the prior nine months when
only 1,050,000 shares were outstanding.
LIQUIDITY AND CAPITAL RESOURCES:
The Company has net working capital of $5,165,441 as of March 31, 1996.
The Company has, historically, funded its cash requirements entirely from
operations. Additionally, the two acquisitions made in this fiscal year, to
date, have been funded through proceeds from operations, as well. In December,
1995 the Company completed an intial public offering consisting of 819,375
units, each of which consisted of one share of common stock and two redeemable
common stock purchase warrants at $6.30 per unit. The offering generated net
9
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proceeds of approximately $3,687,000 after deduction of underwriters' discounts,
commissions and expenses associated with issuance. The Company anticipates the
proceeds from the offering will be sufficient to satisfy cash requirements for
the next twelve months. The Company, at the end of March, 1996 had one bank
loan in the approximate amount of $56,000.
10
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PART III: OTHER INFORMATION
11
