UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File No. 033-97034
HELP AT HOME, INC.
DELAWARE 36-4033986
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
223 W. Jackson, Suite 500
Chicago, IL 60606
Address of principal executive offices) (Zip Code)
(312) 663-4244
(Issuer s telephone number, including area code)
Indicate by checkmark whether the issuer (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 issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the issuer s classes
of common equity, as of the latest practicable date:
Common Stock, par value $.02 per share, 1,869,375 shares
as of November 12, 1996.
Transitional Small Business Disclosure Format: Yes No X
<PAGE>
Help at Home, Inc.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Consolidated Balance Sheets at
June 30, 1996 and September 30, 1996 1
Consolidated Statements of Income
for the three month periods ended
September 30, 1995 and 1996 2
Consolidated Statements of Cash Flows
for the three month periods ended
March 31, 1995 and 1996 3
Notes to the Consolidated Financial
Statements 4
ITEM 2 MANAGEMENT S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 5
PART II: OTHER INFORMATION 8
ITEM 1 LEGAL PROCEEDINGS 8
ITEM 2 CHANGES IN THE RIGHTS OF THE COMPANY S 8
SECURITY HOLDERS
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 8
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 8
ITEM 5 OTHER INFORMATION 8
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 8
SIGNATURES 9
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Balance Sheet
September 30 June 30
1996 1996
(Unaudited) (Audited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $1,977,598 $2,734,705
Accounts receivable (net of
allowance for doubtful accounts
of ($131,000 and $111,000) 3,213,006 3,002,415
Prepaid Expenses and other 196,815 133,728
---------- ---------
Total current assets 5,387,419 5,870,848
Furniture and equipment, net 268,421 309,017
Due from officer 134,535 128,007
Restricted cash 149,200 149,200
Goodwill (net of amortization of
$23,434 and $59,234 2,551,057 2,586,857
Other assets 192,275 128,350
---------- ----------
$8,682,907 $9,172,279
========== ==========
LIABILITIES:
Current Liabilities:
Accounts payable $ 283,022 $ 378,898
Accrued expenses 958,410 659,072
Notes payable 262,147 320,000
Current portion of long-term debt 19,707 265,417
Current income taxes 147,000 644,000
Deferred taxes - current 146,000 146,000
---------- ----------
Total Current Liabilities 1,816,286 2,413,387
Deferred income taxes - noncurrent 341,000 383,000
Long-term debt, less current portion 365,991 389,073
---------- ---------
Total Liabilities 2,523,277 3,185,460
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,
1,869,375 shares issued
and outstanding 37,388 37,388
Additional Paid in Capital 3,694,406 3,694,406
Retained Earnings 2,427,836 2,255,025
---------- ----------
Total Stockholders Equity 6,159,630 5,986,819
---------- ----------
$8,682,907 $9,172,279
========== ==========
</TABLE>
[FN]
The accompanying notes to the financial statements
are an integral part hereof.
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Statements of Income
(Unaudited)
Three Months Ended September 30
1996 1995
<S> <C> <C>
Service fees $4,759,894 $2,342,724
Direct costs of services 3,156,384 1,699,543
---------- ----------
1,603,510 643,181
Selling, general and
administrative expenses 1,324,673 347,198
---------- ----------
Income from operations 278,837 295,983
Financial Income (Expense) 21,254 1,797
---------- ----------
Income before income taxes 300,091 297,780
Federal and state income taxes 127,000 80,770
---------- ----------
NET INCOME $ 173,091 $ 217,010
========== ==========
Earnings per common share $ .07 $ .21
========== ==========
Weighted average number of
common shares 3,508,125 1,050,000
========== ==========
</TABLE>
>FN>
The accompanying notes to financial statements are
an integral part hereof.
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended September 30
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 173,091 $ 217,010
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and Amortization 69,088 15,983
Deferred taxes 2,000 (324,174)
Changes in:
Accounts receivable (210,591) 912,321
Prepaid expenses and other (63,087) (32,032)
Accounts payable (576) (89,884)
Accrued expenses 297,240 178,276
Income taxes payable (541,000) 404,944
---------- ----------
Net cash provided by
operating activities (273,835) 1,282,444
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment 7,309 (34,316)
Acquisitions of subsidiaries (75,000)
Increase in shareholder loans (6,528)
Other Investments (65,163)
---------- ----------
(64,382) (109,316)
---------- ----------
Net cash used in investing activities
Cash flows from financing activities:
Reduction of long-term liabilities (418,890) (2,964)
Payment of deferred offering costs (143,545)
---------- ----------
Net cash provided by financing
activities (418,890) (146,509)
---------- ----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (757,107) 1,026,619
Cash and cash equivalents:
Beginning of period 2,734,705 24,994
---------- ----------
END OF PERIOD $1,977,598 $1,051,613
========== ==========
Supplemental disclosure of noncash investing
and financing activities:
Cash payments for:
Interest 10,741 1,225
Income taxes 666,666 37,200
Supplemental disclosure of noncash investing
and financing activities:
Issuance of note for acquisition of
wholly owned subsidiary 25,000
</TABLE>
[FN]
The accompanying financial statements are an
integral part hereof.
<PAGE>
HELP AT HOME, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Basis of Presentation
These unaudited Consolidated Financial Statements should be read in
conjunction with the consolidated Financial Statements and Notes thereto
included in Help at Home, Inc. s (the Company ) Annual Report on Form
10-KSB for the fiscal year ended June 30, 1996 ( 1996 Form 10-KSB ).
The following Notes to the Consolidated Financial Statements highlight
significant changes to the Notes included in the 1996 Form 10-KSB and
such interim disclosures as required by the Securities and Exchange
Commission. Certain financial information that is normally included in
annual financial statements prepared in accordance with generally
accepted accounting principles but is not required for interim reporting
purposes has been omitted. The accompanying unaudited Consolidated
Financial Statements reflect, in the opinion of management, all
adjustments necessary for a fair presentation of the interim financial
statements. All such adjustments are of a normal and recurring nature.
The financial results for interim periods may not be indicative of
financial results for a full year.
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 of the Company, par value $0.02 par value ( Common Share ) and two
redeemable warrants, were issued for $6.30 per unit. Net proceeds from
the offering were approximately $3,694,000 after underwriting
commissions and expenses. Funds realized from the offering were
deposited into a highly liquid money market fund and are included in
cash and cash equivalents in the accompanying financial statements.
Note 3: Earnings Per Share
Earnings per share have been determined by dividing earnings by the
weighted-average number of shares of Common Stock outstanding during
each period. The modified treasury method of calculating earnings per
share has been utilized by the Company for reporting purposes.<PAGE>
<PAGE>
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
and entered the skilled services market in 1995. Help at Home operates
from 26 locations in Illinois, Missouri, Indiana, Mississippi and
Alabama. The Company derives a significant portion of its revenues from
several contracts with the Illinois Department on Aging. Similarly, the
Company contracts with other state, regional and municipal agencies for
the provision of custodial home care services. The Company also provides
Medicare home health services to homebound persons through its three
Medicare certified home health agencies located in Missouri, Illinois
and Alabama.
The statements which are not historical facts contained in this
Form 10-QSB are forward looking statements that involve risks and
uncertainties, including, but not limited to, the integration of new
acquisitions into the operations of the company, the ability of the
Company to locate attractive acquisition candidates, the effect of
economic conditions and interest rates, general labor costs, the impact
and pricing of competitive services, regulatory changes and conditions,
the results of financing efforts, the actual closing of contemplated
transactions and agreements, the effect of the Company s accounting
policies, and other risks detailed in the Company s Securities and
Exchange Commission filings. No assurance can be given that the actual
results of operations and financial condition will conform to the
forward-looking statements contained herein.
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1995:
Revenues derived from services to the Company s clients for the
three months ended September 30, 1996 reached $4,760,000 reflecting an
increase of $2,417,000 from the same quarter the previous year.
Approximately 63% of the revenue growth ($1,527,000) is attributable to
the June 1996 acquisition of Oxford Health Care. Similarly, Medicare
home health care services accounted for $706,000 or 29% of the growth
with the remaining 8% ($184,000) due to internal expansion of the
Company s traditional homemaker business. Of the Company s total
revenues, approximately $2,361,000 (50%) was received from the Illinois
Department on Aging as compared to 83% of the Company s revenues for the
same period during the previous year. Homemaker services reimbursed
through other state and municipal sources accounted for 34% of total
revenues or $1,642,000. The remaining 16% of revenues ($757,000) came
from the Medicare program and commercial payors.
Direct costs of providing services, comprised entirely of wages
paid to field staff members, increased by 85% to $1,457,000. The
increase corresponds directly to the increase in revenue. Direct costs
for the first quarter represented 66% of revenue from client services as
opposed to 73% for the same quarter in the previous year. The 6%
productivity improvement is due to a general rate increase in the
Company s contracts with the Illinois Department on Aging which will be
partially offset in the future by second quarter increases in the
minimum wage. The gross margin on services grew by $960,000 from
quarter to quarter.
<PAGE>
The increase in the Company s gross margin was essentially consumed
by a corresponding increase in selling, general and administrative
expenses of $958,000. In connection with expansion efforts in Alabama
which produced 5 new offices and 11 new state and regional contracts to
provide home care services, the Company expended a total of $165,000
including $85,000 for start-up staffing, $31,000 for establishment of
offices, and $46,000 for travel, advertising and promotion. The
contracts became effective on October 1, 1996 and the Company expects to
recoup its investment within the year. Apart from developmental
efforts; selling, general and administrative expenses increased by
$793,000. The majority of the increase ($718,000 or 90%) is due to
recognition of administrative expenses in the Company s acquired
operations. Of the increase realized from acquired operations, 63% or
$451,000 represents administrative salaries and benefits, 18% or
$127,000 represents occupancy costs and 19% or $140,000 represents other
administrative expense. The remaining $75,000, or 9%, of the increase
is due to the addition of corporate staff ($56,000) and corporate office
expense ($19,000).
LIQUIDITY AND CAPITAL RESOURCES:
The Company has net working capital of $3,571,000 as of September
30, 1996.
Historically, the Company has funded its cash requirements entirely
from operations; however, the acquisition of Oxford Health Care was
funded through proceeds realized from the Company s initial public
offering of its capital stock. The initial public offering, completed
in December, 1995, consisted 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 proceeds of
$3,694,000 after deduction of underwriters discounts, commissions and
related expenses. The Company used approximately $1,825,000 of the
proceeds for the Oxford Health Care transaction and an additional
$149,000 for the intended purchase of certain of the assets of
Dependable Home Health Nursing, Inc. In addition, the Company retired
$884,000 of Oxford Health Care s indebtedness subsequent to the purchase
transaction.
The Company s indebtedness includes a $332,000 obligation to a
former shareholder of Oxford Health Care, $250,000 of unsecured bank
debt utilized for the September 30, 1996 acquisition of Preferred
Nursing Services, Inc. of Muscle Shoals, Alabama and capital lease
obligations amounting to $41,000. The Company s portfolio of accounts
receivable, totaling approximately $3,213,000, is unencumbered.
The Company has access to $750,000 remaining on its $1,000,000<PAGE>
uncollateralized line of credit from the Bronson-Gore Bank at the bank s
prime rate. The Company is also continuing its efforts to arrange asset
based financing for use in business expansion activities.
The Company presently has 1,638,750 Warrants outstanding with an
exercise price of $6.00. The Warrants can be exercised at any time
subsequent to the public offering and can be called anytime after
December 5, 1996 provided the closing price of the Common Stock is equal
to or greater than $9.00 for 10 consecutive days. Since the initial
public offering of the Common Stock, the Common Stock has not traded at
or above $9.00 per share. Assuming an exercise of all outstanding
<PAGE>
Warrants, the Company could realize up to approximately $9,800,000 in
net proceeds. There can be no assurance, however, that any or all of
the Warrants will be exercised prior to their expiration on December 4,
2000. As of November 14, 1996 the closing price of the Common Stock on
the NASDAQ Stock Market was $5.875.
Management of the Company intends to pursue acquisitions in the
future and anticipates utilizing proceeds from exercise of the Warrants
and/or future indebtedness to pursue such acquisitions. In the event
that proceeds from exercise of the Warrants is insufficient to fund the
Company s capital requirements, the Company will rely on debt financing
to realize its business expansion strategy.
PART II
OTHER INFORMATION
ITEM 1 Legal Proceedings. None
ITEM 2 Changes in the Rights of the Company s Security Holders. None.
ITEM 3. Defaults upon Senior Securities. None.
ITEM 4. Submission of Matters to a Vote of Security Holders. None.
ITEM 5. Other Information. None.
ITEM 6. Exhibits and Reports on Form 8-K:
a) Exhibits:
None.
b) Reports on 8-K:
1) 8-KA filed July 2, 1996 reporting a Change in the
Company's Certifying Accountant.
2) 8-KA filed August 26, 1996 containing financial
statements for HASC Staffing Systems, Inc.,
Homemakers of Montgomery, Inc., and Statewide
Healthcare Services, Inc., all doing business as
Oxford Health Care, for the period ended
May 31, 1996.
<PAGE>
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.
Help at Home, Inc.
Registrant
Date: November 14, 1996 /s/Louis Goldstein
Louis Goldstein
CEO/Chairman
Date: November 14, 1996 /s/ Sharon S. Harder
Sharon S. Harder
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 1978
<SECURITIES> 0
<RECEIVABLES> 3213
<ALLOWANCES> 111
<INVENTORY> 0
<CURRENT-ASSETS> 5387
<PP&E> 268
<DEPRECIATION> (201)
<TOTAL-ASSETS> 8683
<CURRENT-LIABILITIES> 1816
<BONDS> 0
0
0
<COMMON> 37
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8683
<SALES> 4760
<TOTAL-REVENUES> 4760
<CGS> 3156
<TOTAL-COSTS> 3156
<OTHER-EXPENSES> 1325
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (21)
<INCOME-PRETAX> 300
<INCOME-TAX> 127
<INCOME-CONTINUING> 173
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 173
<EPS-PRIMARY> .09
<EPS-DILUTED> .07
</TABLE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-KA
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 29, 1996
(Date of earliest event reported)
HELP AT HOME, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-97034 36-4044986
(State of other (Commission File No.) (IRS Employer
jurisdiction of Identifica-
incorporation) tion Number)
223 West Jackson, Suuite 500
Chicago, IL 60606
(Address of principal executive offices) (Zip Code)
(312)663-4244
(Telephone Number including Area Code)
<PAGE>
Changes in Registrant s Certifying Accountant
(Item 4)
Exhibit 1
Following is the entire body of the letter received from Richard A.
Eisner & Company, LLP dated as of June 5, 1996 relative to the change in
accountants:
June 5, 1996
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
Re: Help at Home, Inc.
File Ref No. 33-97034
We were previously the principal auditors for Help at Home, Inc.; under
the date of October 25, 1995 (November 16, 1995 with respect to Note
h[2]), we reported on the financial statements of Help at Home, Inc. as
at June 30, 1995 and for the year then ended. On May 29, 1996 our
engagement was terminated. We have read Help at Home, Inc. s statements
included under Item 4 of a draft of its 8-K and we agree with such
statements, except that all references to our firm name should be
Richard A. Eisner & Company, LLP.
Very truly yours,
/s/Richard A. Eisner & Company, LLP
<PAGE>
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.<PAGE>
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
<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)
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,
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.
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.
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