UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
June 7, 1996
(Date of earliest event reported)
Help at Home, Inc.
(Exact name of registrant as specified in its charter)
Delaware 33-97034 36-4033986
(State or other Commission File Number (IRS Employer
of incorporation) ID Number)
223 West Jackson, Suite 500
Chicago, IL 60606
(Address of Principal Executive Offices) (Zip Code)
(312) 663-4244
(Registrant s telephone number, including area code)
THIS DOCUMENT IS A COPY OF THE 8-KA FILED ON AUGUST 26, 1996
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
Financial Statements
(Item 7)
Financial statements, as audited and prepared by Eubank &
Betts, PLLC, of Jackson, MS for HASC Staffing Systems, Inc.,
Homemakers of Montgomery, Inc., and Statewide Healthcare Services,
Inc. are submitted herewith as Exhibits 1-3, respectively.
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, duly authorized.
Help at Home, Inc.
(Registrant)
Date: August 26, 1996 \s\ Sharon S. Harder
Chief Financial Officer
<PAGE>
EXHIBIT 1
HASC STAFFING SYSTEMS, INC.
FINANCIAL STATEMENTS
PERIOD ENDED MAY 31, 1996
AND
YEAR ENDED DECEMBER 31, 1995
<PAGE>
INDEPENDENT AUDITOR S REPORT
To the Board of Directors
HASC Staffing Systems, Inc.
Jackson, Mississippi
We have audited the accompanying balance sheets of HASC
Staffing Systems, Inc.,as of May 31, 1996 and December 31, 1995,
and the related statements of income (loss)and retained earnings
and cash flows for the five month period and year then ended,
respectively. These financial statements are the responsibility of
the Company s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
HASC Staffing Systems, Inc. as of May 31, 1996, and December 31,
1995, and the results of its operations and its cash flows for the
five month period and year then ended, respectively, in conformity
with generally accepted accounting principles.
\EUBANK & BETTS, PLLC
Jackson, Mississippi
July 31, 1996
<PAGE>
<TABLE>
HASC STAFFING SYSTEMS, INC.
Balance Sheets
May 31, 1996 and December 31, 1995
ASSETS
1996 1995
<S> <C> <C>
Current assets:
Cash $128,724 $ -
Due from related parties 771,078 793,987
Prepaid insurance 3,653 15,961
________ ________
Total current assets 903,455 809,948
Equipment, furniture and fixtures,
net of accumulated depreciation 76,853 88,331
Other assets 13,230 12,693
________ ________
Total assets $993,538 $910,972
======== ========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 40,227 $ 73,173
Accrued expenses 77,514 39,914
Leases payable - Current 6,254 11,202
Notes payable 320,000 270,000
Current portion of long term debt 31,160 51,640
________ ________
Total current liabilities 475,155 445,929
Leases payable -long term 17,402 17,402
Long-term debt 232,170 232,170
Notes payable - stockholder 128,939 81,939
________ ________
Total liabilities 853,666 777,440
________ ________
Stockholders equity:
Common stock - $10 par value,
1,000 shares authorized and issued,
500 shares outstanding 10,000 10,000
Additional paid-in capital 1,344 1,344
Retained earnings 128,628 122,288
________ ________
139,972 133,632
Less: treasury stock, at cost (100) (100)
________ ________
Total stockholder s equity 139,872 133,532
________ ________
Total liabilities and
stockholder s equity $993,538 $910,972
======== ========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HASC STAFFING SYSTEMS, INC.
Statements of Income (Loss) and Retained Earnings
Seven Month Period Ended May 31, 1996 and Year Ended December 31,1995
1996 1995
<S> <C> <C>
Revenues:
Management fees $ 392,977 $ 943,692
________ _________
Expenses:
Advertising and promotion 18,172 101,745
Depreciation 11,478 17,210
Equipment rent 877 7,052
Interest 25,273 53,217
Occupancy 47,040 101,467
Office supplies and expense 16,447 50,354
Other employee costs 25,485 75,903
Professional fees 15,304 24,916
Repairs and maintenance 3,873 10,667
Salaries and wages 206,999 457,575
Taxes and licenses 723 1,081
Telephone 10,963 25,965
Travel and entertainment 4,003 20,397
________ _________
Total expenses 386,637 947,549
________ _________
Net income (loss) 6,340 (3,857)
Retained earnings,
beginning of period 122,288 126,145
________ _________
Retained earnings,
end of period $ 128,628 $ 122,288
========= =========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HASC STAFFING SYSTEMS, INC.
Statements of Cash Flows
Five Month Period Ended May 31, 1996 and Year Ended December 31,
1995
1996 1995
<S> <C> <C>
Cash flows provided by (used for)
operating activities:
Net income (loss) $ 6,340 $ (3,857)
Adjustments to reconcile net income
(loss) to net cash provided
by (used for) operating activities:
Depreciation 11,478 17,210
(Increase) decrease in assets:
Due from related parties 22,909 (45,992)
Prepaid expenses 12,308 (10,681)
Other assets (537) (6,774)
Increase (decrease) in liabilities:
Trade accounts payable (32,946) 39,308
Accrued liabilities 37,600 7,834
_________ ________
Net cash provided by (used for) operating
activities 57,152 (2,952)
_________ ________
Cash used for investing activities:
Purchase of property and equipment - (37,740)
_________ ________
Cash flows provided by (used for)
financing activities:
Advances from stockholder 47,000 7,448
Advances on debt and notes payable 50,000 35,495
Principal payments on capital
lease obligations (20,480) (57,231)
Principal payments on debt and
notes payable (4,948) (7,961)
_________ ________
Net cash provided by (used for)
financing activities 71,572 (22,249)
_________ ________
Net increase (decrease) in cash 128,724 (62,941)
Cash, beginning of period - 62,941
________ ________
Cash, end of period $128,724 $ -
======== ========
Supplemental disclosures:
Interest paid during period $ 22,512 $ 53,860
Income taxes paid during period $ - $ -
Supplemental disclosure of noncash investing and financing activities:
During the year ended December 31, 1995, the Company purchased
equipment totaling $23,276 under capital lease obligations.
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
HASC STAFFING SYSTEMS, INC.
Notes to Financial Statements
May 31, 1996 and December 31, 1995
Note 1- Summary of significant accounting policies:
The summary of significant accounting policies is presented to
assist in understanding the financial statements. The financial
statements and notes are representations of HASC Staffing Systems,
Inc. s management, who is responsible for their integrity and
objectivity. These accounting policies conform to generally
accepted accounting principles in place for the period ended May
31, 1996 and the year ended December 31, 1995.
Nature of business:
HASC Staffing Systems, Inc.,(The Company) was incorporated
under the laws of the state of Mississippi in 1986, for the purpose
of providing management services to home health care service
providers.
Revenue recognition:
The Company maintains its books on the accrual method of
accounting, whereby income is recognized when earned and expenses
are recognized as incurred.
Accounts receivable:
The Company records revenue and the corresponding accounts
receivable when earned. All of the Company s receivables are from
related parties. No allowance for doubtful accounts is considered
necessary.
Equipment, furniture and fixtures:
Equipment, furniture and fixtures are carried at cost, less
accumulated depreciation. The cost of property and equipment is
depreciated over the estimated useful lives of the related assets.
Depreciation is computed using the straight line method for
financial reporting purposes and accelerated methods for income tax
purposes. Amortization of capitalized lease costs is included in
depreciation expense.
Income taxes:
The Company s stockholders have elected S corporation status
under the Internal Revenue Code, thereby consenting to include the
income or losses in their individual tax returns. Accordingly,
there is no provision for income taxes in these financial
statements.
Treasury stock:
Treasury stock includes the repurchase of five hundred shares
of stock at cost.
Cash equivalents:
For purposes of the statements of cash flows, the Company
considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
<PAGE>
Note 1 - Summary of significant accounting policies (Continued):
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expense during the reporting
period. Actual results could differ from those estimates.
Affiliated companies:
The Company s stockholders are also shareholders in the
following companies:
Statewide Healthcare Services, Inc.
Homemakers of Montgomery, Inc.
Concentration of credit risk:
A s previously discussed the Company provides services
primarily to related entities.
A t times, the Company maintains balances at financial
institutions in excess of the amount insured by the Federal Deposit
Insurance Corporation.
Note 2 - Equipment, furniture and fixtures:
The details of equipment, furniture and fixtures were as
follows:
May 31, December 31,
1996 1995
Equipment, furniture and fixtures $ 150,644 $ 150,644
Less accumulated depreciation (73,791) (62,313)
_________ _________
$ 76,853 $ 88,331
========= =========
The total amount recorded as capital leases at May 31, 1996
and December 31, 1995, totaled $43,524. Accumulated depreciation at
May 31, 1996 and December 31, 1995, totaled $20,874 and $15,729,
respectively.
Depreciation for the five month period ended May 31, 1996 and
the year ended December 31, 1995, amounted to $11,478 and $17,210
respectively.
Note 3-Related party transactions:
The details of amounts due (to)/from affiliated companies were
as follows:
May 31, December 31,
1996 1995
Homemakers of Montgomery, Inc. $ 143,955 $ 235,653
Statewide Healthcare Services, Inc. 627,123 558,334
_________ _________
$ 771,078 $ 793,987
========= =========
<PAGE>
The note payable-stockholder represents operating advances
from one of the Company s shareholders. The note payable bears
interest at 6% and was repaid after May 31, 1996.
The Company performs general management functions for two
related home health service agencies, Homemakers of Montgomery,
Inc., and Statewide Healthcare Services, Inc. All management fees
are derived from these services.
Note 4-Capital leases:
The Company leases certain equipment under leases classified
as capital leases. Future minimum lease payments under the capital
leases are as follows:
June 1, 1996 - December 31,1996 $ 7,330
1997 7,211
1998 5,788
1999 4,132
________
24,461
Less amount representing interest (805)
________
Present value of minimum
capital lease payments 23,656
Less: current portion
(due on or before December 31, 1996) (6,254)
________
Long-term portion
of capitalized lease obligations $ 17,402
========
Note 5- Notes payable and long-term debt:
The Company had short-term installment notes payable to a bank
at May 31, 1996 and December 31, 1995, totaling $320,000 and
$270,000, respectively. The notes renew monthly and bear interest
at the market rate at the date of renewal and are collateralized by
cash and commercial paper of Statewide Healthcare Services, Inc.,
(Statewide) and Homemakers of Montgomery, Inc., (Homemakers).
<PAGE>
Note 5-Notes payable and long-term debt (Continued):
The following are details of long-term debt:
May 31, December 31,
1996 1995
Toyota Motor Credit Corp., 8.125%,
due in installments of $869 through
October 1999, collateralized by an
automobile $ 31,008 $ 34,234
Note payable bank, 8.5% due in
installments of $5,200 through
April 1997, with the balance
due May 1997, collateralized
by cash and commercial paper
of Statewide and Homemakers 232,322 249,576
________ ________
Total long-term debt 263,330 283,810
Current portion of long-term debt (31,160) (51,640)
________ ________
Long-term debt $232,170 $232,170
======== ========
The principal maturities of long-term debt
are as follows:
Due on or before:
December 31, 1996 $ 31,160
December 31, 1997 214,470
December 31, 1998 9,328
December 31, 1999 8,372
________
Total long-term debt $263,330
========
Note 6-Operating leases:
The Company pays $3,100 each month for office space leased on
a month to month basis to one of the Company s shareholders. Under
a second lease agreement, the Company pays $5,084 per month for
office space under a lease expiring December 1998. This lease
provides for additional rental payments based on increases in basic
operating costs, as defined in the lease agreement, over the
initial year of the lease. These leases are classified as
operating leases. Rental expense for the five months ended May 31,
1996 and the year ended December 31, 1995, totaled $39,720 and
$75,113, respectively.
<PAGE>
Note 7-Fair value of financial instruments:
F a ir value approximates the carrying amount for cash,
receivables and payables. The interest rates on debt approximate
the current rates at which the Company could borrow funds and,
thus, approximate fair value. It is not practical to estimate the
fair value of the note payable-stockholder as the transactions
underlying the liability were consummated between related parties.
Note 8-Subsequent event:
In June 1996, the Company s stock was sold to Help at Home,
Inc., a national home health provider, for an amount in excess of
book value. The note payable - stockholder was repaid in
connection with the sale. Long-term debt of $232,322 and notes
payable of $320,000 have also been repaid subsequent to May 31,
1996.
<PAGE>
EXHIBIT 2
HOMEMAKERS OF MONTGOMERY, INC.
FINANCIAL STATEMENTS
PERIOD ENDED MAY 31, 1996
AND
YEAR ENDED OCTOBER 31, 1995
<PAGE>
INDEPENDENT AUDITOR S REPORT
To the Board of Directors
Homemakers of Montgomery, Inc.
Jackson, Mississippi
We have audited the accompanying balance sheets of Homemakers
of Montgomery, Inc., as of May 31, 1996 and October 31, 1995, and
the related statements of income and retained earnings (deficit)
and cash flows for the seven month period and year then ended,
respectively. These financial statements are the responsibility of
the Company s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Homemakers of Montgomery, Inc., as of May 31, 1996, and October 31,
1995, and the results of its operations and its cash flows for the
seven month period and year then ended, respectively, in conformity
with generally accepted accounting principles.
\EUBANK & BETTS, PLLC
Jackson, Mississippi
July 31, 1996
<PAGE>
<TABLE>
HOMEMAKERS OF MONTGOMERY, INC.
Balance Sheets
May 31, 1996 and October 31, 1995
ASSETS
1996 1995
<S> <C> <C>
Current assets:
Cash $ 3,471 $ 3,479
Trade accounts receivable 210,883 194,518
Other assets 771 1,458
________ ________
Total current assets 215,125 199,455
Equipment, furniture and fixtures,
net of accumulated depreciation 9,608 13,420
________ ________
Total assets $224,733 $212,875
======== ========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 51,52 $ 38,955
Accrued expenses 85,913 82,174
Due to related parties 186,303 183,753
Current portion - capital leases 3,816 7,854
_______ ________
Total current liabilities 327,554 312,736
Note payable - stockholder 96,000 96,000
Long-term portion of capital leases 2,099 2,548
________ ________
Total liabilities 425,653 411,284
________ ________
Stockholder s equity:
Common stock - $1 par value,
10,000 shares authorized, 5,000
shares issued, outstanding 5,000 5,000
Retained earnings (deficit) (205,920) (203,409)
________ ________
Total stockholder s equity (200,920) (198,409)
________ ________
Total liabilities and
stockholder s equity $224,733 $212,875
======== ========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HOMEMAKERS OF MONTGOMERY, INC.
Statements of Income and Retained Earnings (Deficit)
Seven Month Period Ended May 31, 1996 and Year Ended October 31,
1995
1996 1995
<S> <C> <C>
Revenues:
Health care services $ 962,339 $1,618,350
_________ __________
Expenses:
Advertising and promotion 31 1,229
Bad debt expense 140 -
Depreciation 4,561 6,094
Employee training 3,228 3,248
Interest 1,489 1,373
Labor 570,210 978,182
Management fees 171,196 302,815
Medical supplies 29,630 58,508
Occupancy 884 1,972
Office supplies and expense 14,769 23,747
Other employee costs 117,730 204,408
Professional fees 8,392 16,039
Rent 10,258 8,099
Repairs and maintenance 1,909 3,841
Taxes and licenses 1,843 1,922
Travel and entertainment 28,580 52,770
_________ __________
Total expenses 964,850 1,664,247
Net loss (2,511) (45,897)
Retained earnings (deficit),
beginning of period (203,409) (157,512)
_________ __________
Retained earnings (deficit),
end of period $(205,920) $(203,409)
========= ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
HOMEMAKERS OF MONTGOMERY, INC.
Statements of Cash Flows
Seven Month Period Ended May 31, 1996 and Year Ended October 31,
1995
1996 1995
<S> <C> <C>
Cash flows provided by (used for)
operating activities:
Net loss $ (2,511) $ (45,897)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation 4,561 6,094
Bad debt expense 140 -
(Increase) decrease in assets:
Trade accounts receivable (16,504) (48,789)
Other assets 687 (288)<PAGE>
Increase (decrease) in liabilities:
Trade accounts payable 12,567 (469)
Accrued liabilities 3,739 9,376
Increase in payables to
related parties 2,550 86,064
________ _________
Net cash provided by operating activities 5,229 6,091
________ _________
Cash used for investing activities:
Purchase of property and equipment (750) (670)
________ _________
Cash flows used for financing activities:
Principal payments on capital lease
obligations (4,487) (5,632)
________ _________
Net decrease in cash (8) (211)
Cash, beginning of period 3,479 3,690
________ _________
Cash, end of period $3,471 $3,479
======== =========
Supplemental disclosures:
Interest paid during period $1,489 $1,373
======== =========
Supplemental disclosures of noncash investing and financing
activities:
During the year ended October 31, 1995, the Company purchased
$ 16,033 of equipment under capital lease obligations.
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
HOMEMAKERS OF MONTGOMERY, INC.
Notes to Financial Statements
May 31, 1996 and October 31, 1995
Note 1- Summary of significant accounting policies:
The summary of significant accounting policies is presented to
assist in understanding the financial statements. The financial
s t a tements and notes are representations of Homemakers of
Montgomery, Inc. s management, who is responsible for their
integrity and objectivity. Those accounting policies conform to
generally accepted accounting principles in place for the period
ended May 31, 1996 and the year ended October 31, 1995.
Nature of business:
Homemakers of Montgomery, Inc. (The Company) was incorporated
under the laws of the state of Alabama in 1975, for the purpose of
providing home health care services and employee leasing services
for hospitals, clinics and individuals.
Revenue recognition:
The Company maintains its books on the accrual method of
accounting, whereby income is recognized when earned and expenses
are recognized as incurred. Service revenues are recorded at the
established rate or the amount agreed with third party payers
(e.g., Medicare, Medicaid, HMO s, and other insurance companies).
Accounts receivable:
The Company records revenue and the corresponding accounts
receivable when earned. The Company extends credit to its customers
in the normal course of business and performs ongoing credit
evaluations of its customers. An allowance for doubtful accounts
is provided based on historical experience and management s
evaluation of outstanding accounts receivable. No allowance for
doubtful accounts is considered necessary at May 31, 1996, and
October 31, 1995, respectively.
Equipment, furniture and fixtures:
Equipment, furniture and fixtures are carried at cost less
accumulated depreciation. The cost of equipment, furniture and
fixtures is depreciated over the estimated useful lives of the
related assets. Depreciation is computed using the straight line
method for financial reporting purposes and accelerated methods for
income tax purposes.
Income taxes:
The Company s stockholders have elected S corporation status
under the Internal Revenue Code, thereby consenting to include the
income or losses in their individual tax returns. Accordingly,
there is no provision for income taxes in these financial
statements.
Cash equivalents:
For purposes of the statements of cash flows, the Company
considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
<PAGE>
Note 1 - Summary of significant accounting policies ( continued):
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expense during the reporting
period. Actual results could differ from those estimates.
Affiliated companies:
The Company s stockholders are also shareholders in the
following companies:
HASC Staffing Systems, Inc.<PAGE>
Statewide Healthcare Services, Inc.
Concentration of credit risk:
The Company provides home health services primarily to
patients in Mississippi and Alabama. The Company also provides the
majority of its services under contracts with federal, state and
local payers including various insurance companies and HMO s.
Services provided under these contracts are subject to federal and
state regulations for the health care industry.
Note 2 - Equipment, furniture and fixtures:
The details of equipment, furniture and fixtures were as
follows:
May 31, October 31,
1996 1995
Equipment, furniture and fixtures $ 25,789 $ 25,040
Less accumulated depreciation (16,181) (11,620)
________ ________
$ 9,608 $ 13,420
======== ========
Depreciation for the seven month period ended May 31, 1996 and the
year ended October 31, 1995, totaled $4,561 and $6,094,
respectively.
Note 3-Related party transactions:
The details of amounts due to affiliated companies were as
follows:
May 31, October 31,
1996 1995
Statewide Healthcare Services, Inc. $ 42,348 $ 20,928
HASC Staffing Systems, Inc. 143,955 162,825
_________ _________
$186,303 $183,753
========= =========
<PAGE>
The note payable - stockholder represents operating advances
from one of the Company s shareholders. The note payable bears
interest at 6% and is was repaid after May 31, 1996.
The general management functions of the Company are performed
by HASC Staffing Systems, Inc.,(HASC). HASC allocates cost for
management to the Company. These costs are reflected on the
financial statements as management fees and totaled $171,196 and
$302,815 for the seven months ended May 31, 1996, and the year
ended December 31, 1995, respectively.
Note 4-Capital leases:
The Company leases certain equipment under leases classified
as capital leases. At May 31, 1996, future minimum lease payments
under the capital leases are as follows:
June 1, 1996 - October 31,1996 $ 3,988
Year ended October 31, 1997 2,141
_________
6,129
Less amount representing interest (214)
Present value of future minimum
capital lease payments 5,915
Less: current portion
(due on or before October 31, 1996) (3,816)
_________
Long-term portion $ 2,099
=========
Note 7-Fair value of financial instruments:
Fair value approximates the carrying amount for cash,
receivables and payables. It is not practical to estimate the fair
value of the note payable -stockholder, as the transactions
underlying the liability were consummated between related parties.
Note 9-Subsequent event:
In June 1996, the Company s stock was sold to Help at Home,
Inc., a national home health provider, for an amount in excess of
book value. The note payable - stockholder was repaid in
connection with the sale.
<PAGE>
EXHIBIT 3
STATEWIDE HEALTHCARE SERVICES, INC.
FINANCIAL STATEMENTS
PERIOD ENDED MAY 31, 1996
AND
YEAR ENDED DECEMBER 31, 1995
<PAGE>
INDEPENDENT AUDITORS REPORT
To the Board of Directors
Statewide Healthcare Services, Inc.
Jackson, Mississippi
We have audited the accompanying balance sheets of Statewide
Healthcare Services, Inc. as of May 31, 1996 and December 31, 1995,
and the related statements of income and retained earnings
(deficit) and cash flows for the five month period and year then
e n d e d, respectively. These financial statements are the
responsibility of the Company s management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Statewide Healthcare Services, Inc., as of May 31, 1996, and
December 31, 1995, and the results of its operations and its cash
flows for the five month period and year then ended, respectively,
in conformity with generally accepted accounting principles.
\EUBANK & BETTS, PLLC
Jackson, Mississippi
July 31, 1996
<PAGE>
<TABLE>
STATEWIDE HEALTHCARE SERVICES, INC.
Balance Sheets
May 31, 1996 and December 31, 1995
ASSETS
1996 1995
<S> <C> <C>
Current assets:
Cash $ 3,554 $ 3,577
Trade accounts receivable, net of
allowance for doubtful accounts
($47,773 and $117,029 at May 31, 1996
and December 31, 1995, respectively) 700,691 579,680
Other receivables 792 8,634
Other assets 1,397 1,397
_________ _________
Total current assets 706,434 593,288
Equipment, furniture and fixtures,
net of accumulated depreciation 14,233 15,218
_________ _________
Total assets $ 720,667 $ 608,506
========= =========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 28,949 $ 27,012
Accrued expenses 124,432 89,812
Due to related parties 584,775 515,342
Leases payable - current 3,044 1,571
_________ ________
Total current liabilities 741,200 633,737
Leases payable - long term 578 3,918
Notes payable - stockholder 97,705 106,206
_________ _________
Total liabilities 839,483 743,861
_________ _________
Stockholders equity:
Common stock - $1 par value, 1,000 shares
authorized, issued and outstanding 1,000 1,000
Retained earnings (deficit) (119,816) (136,355)
_________ _________
Total stockholders equity (118,816) (135,355)
_________ _________
Total liabilities and
stockholders equity $ 720,667 $ 608,506
========= =========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEWIDE HEALTHCARE SERVICES, INC.
Statements of Income and Retained Earnings (Deficit)
Five Month Period Ended May 31, 1996 and Year Ended December 31,
1995
1996 1995
<S> <C> <C>
Revenues:
Health care services $1,672,307 $3,517,388
__________ __________
Expenses:
Advertising and promotion 5,234 12,521
Bad debt expense 31,139 19,218
Depreciation 1,889 5,113
Employee training 1,026 1,364
Interest 1,285 679
Labor 1,093,000 2,275,804
Management fees 266,941 628,932
Medical supplies 5,745 5,269
Office supplies and expense 18,593 40,809
Other employee costs 176,352 344,458
Professional fees 1,718 4,235
Rent 2,819 9,931
Repairs and maintenance 2,408 2,739
Taxes and licenses 2,518 1,798
Telephone 9,061 26,319
Travel and entertainment 36,040 89,528
__________ __________
Total expenses 1,655,768 3,468,717
Net income 16,539 48,671
Retained earnings (deficit),
beginning of period (136,355) (185,026)
__________ __________
Retained earnings (deficit),
end of period $ (119,816) $ (136,355)
========== ==========
<FN>
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
STATEWIDE HEALTHCARE SERVICES, INC.
Statements of Cash Flows
Five Month Period ended May 31, 1996 and Year Ended December 31,1995
1996 1995
<S> <C> <C>
Cash Flow provided by (used for)operating
activities:
Net income $ 16,539 $ 48,671
Adjustments to reconcile net income to
net cash provided by operating activities:
Bad debt expenses 31,139 19,218
Depreciation 1,889 5,113
Loss on sale of equipment 271 -
(Increase) decrease in assets:
Trade accounts receivable (152,150) 16,479
Other receivables 7,842 (1,300)
Other assets - 2,619
Increase (decrease) in liabilities
Trade accounts payable 1,937 4,069
Accrued liabilites 34,620 (6,821)
Payables to related parties 69,433 (28,839)
_________ _________
Net cash provided by operating
activities 11,520 59,209
_________ _________
Cash provided by (used for) investing activities:
Proceeds from sale of equipment 325 -
Purchases of equipment, furniture
and fixtures (1,500) (736)
_________ _________
Net cash used for investing activities (1,175) (736)
_________ _________
Cash flows used for financing activities:
Payments on notes payable -Stockholder (8,501) (55,000)
Principal payments on capital lease
obligations (1,867) (3,461)
_________ _________
Net cash provided by financing
activities (10,368) (58,461)
_________ _________
Net increase (decrease) in cash (23) 12
Cash, beginning of period 3,577 3,565
_________ _________
Cash, end of period $ 3,554 $ 3,577
========= =========
Supplemental disclosures:
Interest paid during period $ 1,285 $ 679
========= =========
Income taxes paid during period $ - $ -
========= =========
Supplemental disclosure of noncash investing and financing
activities:
During the year ended December 31, 1995, the Company purchased
equipment totaling $8,950 under capital lease obligations.
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STATEWIDE HEALTHCARE SERVICES, INC.
Notes to Financial Statements
May 31, 1996 and December 31, 1995
Note 1- Summary of significant accounting policies:
The summary of significant accounting policies is presented to
assist in understanding the financial statements. The financial
statements and notes are representations of Statewide Healthcare
Services, Inc. s management, who is responsible for their integrity
and objectivity. These accounting policies conform to generally
accepted accounting principles in place for the period ended May
31, 1996 and the year ended December 31, 1995.
Nature of business:
S t a tewide Healthcare Services, Inc. (The Company) was
incorporated under the laws of the state of Mississippi in 1974,
for the purpose of providing home health care services and employee
leasing services for hospitals, clinics and individuals.
Revenue recognition:
The Company maintains its books on the accrual method of
accounting, whereby income is recognized when earned and expenses
are recognized as incurred. Service revenues are recorded at the
established rate or the amount agreed with third party payers
(e.g., Medicaid, HMO s, and other insurance companies).
Accounts receivable:
The Company records revenue and the corresponding accounts
receivable when earned. The Company extends credit to its customers
in the normal course of business and performs ongoing credit
evaluations of its customers. An allowance for doubtful accounts
is provided based on historical experience and management s
evaluation of outstanding accounts receivable.
Equipment, furniture and fixtures:
Equipment, furniture and fixtures are carried at cost less
accumulated depreciation. The cost of property and equipment is
depreciated over the estimated useful lives of the related assets.
Depreciation is computed using the straight line method for
financial reporting purposes and accelerated methods for income tax
purposes.
Income taxes:
The Company s stockholders have elected S corporation status
under the Internal Revenue Code, thereby consenting to include the
income or losses in their individual tax return. Accordingly,<PAGE>
there is no provision for income taxes in these financial
statements.
Cash equivalents:
For purposes of the statements of cash flows, the Company
considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.<PAGE>
<PAGE>
Note 1 - Summary of significant accounting policies ( Continued):
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expense during the reporting
period. Actual results could differ from those estimates.
Affiliated companies:
The Company s stockholders are also shareholders in the
following companies:
HASC Staffing Systems, Inc.
Homemakers of Montgomery, Inc.
Concentration of credit risk:
The Company provides home health services primarily to
patients in Mississippi and Alabama. The Company also provides the
majority of its services under contracts with federal, state and
local payers including various insurance companies and HMO s.
Services provided under these contracts are subject to federal and
state regulations for the health care industry.
Note 2 - Equipment, furniture and fixtures:
The details of equipment, furniture and fixtures were as
follows:
May 31, December 31,
1996 1995
Equipment, furniture and fixtures $ 76,638 $ 76,262
Less accumulated depreciation (62,405) (61,044)
________ ________
$ 14,233 $ 15,218
======== =========
Depreciation for the five-month period ended May 31, 1996 and the
year ended December 31, 1995, amounted to $1,889 and $5,113,
respectively.
Note 3-Related party transactions:
The details of amounts due (to)/from affiliated companies were
as follows:
May 31, December 31,
1996 1995
Homemakers of Montgomery $ 42,348 $ 42,992
HASC Staffing Systems (627,123) (558,334)
_________ _________
$(584,775) $(515,342)
========= =========
The note payable -stockholder payable represents operating
advances from one of the Company s shareholders. The note payable
bears interest at 6% and was repaid after May 31, 1996.
<PAGE>
The general management functions of the Company are performed
by HASC Staffing Systems, Inc.,(HASC). HASC allocates cost for
management to the Company. These costs are reflected on the
financial statements as management fees and totaled $266,941 and
$628,932 for the five-month period ended May 31, 1996, and the year
ended December 31, 1995, respectively.
Note 4-Capital leases:
The Company leases certain equipment under leases classified
as capital leases. Future minimum lease payments under the capital
leases are as follows:
June 1, 1996 - December 31,1996 $ 3,104
1997 676
_______
3,780
Less amount representing interest (158)
_______
Present value of minimum
capital lease payments 3,622
Less: current portion
(due on or before December 31, 1996) (3,044)
_______
Long-term portion $ 578
=======
Amortization of capitalized lease cost is included in depreciation
expense.
Note 5- Operating leases:
The Company pays $450 each month for office space leased on a
month to month basis. This lease is classified as an operating
lease.
Note 6 - Fair value of financial instruments:
F a ir value approximates the carrying amount for cash,
receivables and payables. It is not practical to estimate the fair
v a lue of the note payable-stockholder, as the transactions
underlying the liability were consummated between related parties.
Note 7 - Subsequent event:
In June 1996, the Company s stock was sold to Help at Home,
Inc., a national home health care provider for an amount in excess
of book value. The note payable-stockholder was repaid in
connection with the sale.
<PAGE>
