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 February 12, 1997.
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 December 31, 1996 1
Consolidated Statements of Income
for the three month periods ended
December 31, 1995 and 1996 2
Consolidated Statements of Income
for the six month periods ended
December 31, 1995 and 1996 3
Consolidated Statements of Cash Flows
for the six month periods ended
December 31, 1995 and 1996 4
Notes to the Consolidated Financial
Statements 5
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 6
PART II: OTHER INFORMATION 9
ITEM 1 LEGAL PROCEEDINGS
ITEM 2 CHANGES IN THE RIGHTS OF THE COMPANY'S
SECURITY HOLDERS
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
ITEM 5 OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES 10
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Balance Sheet
December 31 June 30
1996 1996
(Unaudited) (Audited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 924,507 $2,734,705
Accounts receivable (net of
allowance for doubtful accounts
of ($183,000 and $131,000) 4,504,677 3,002,415
Deferred tax asset 133,460
Prepaid Expenses and other 315,681 133,728
---------- ---------
Total current assets 5,878,325 5,870,848
Furniture and equipment, net 261,383 309,017
Due from officer 137,416 128,007
Restricted cash 149,200
Goodwill (net of amortization of
$98,962 and $23,434 2,703,132 2,586,857
Other assets 282,596 128,350
---------- ----------
$9,262,852 $9,172,279
========== ==========
LIABILITIES:
Current Liabilities:
Accounts payable $ 401,141 $ 378,898
Accrued expenses 1,076,973 659,072
Notes payable 603,423 320,000
Current portion of long-term debt 3,232 265,417
Current income taxes (88,841) 644,000
Deferred taxes - current 531,000 146,000
---------- ----------
Total Current Liabilities 2,526,928 2,413,387
Deferred income taxes - noncurrent 2,254 383,000
Long-term debt, less current portion 364,471 389,073
---------- ---------
Total Liabilities 2,893,653 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 3,694,403 3,694,406
Retained Earnings 2,637,408 2,255,025
---------- ----------
Total Stockholders Equity 6,369,199 5,986,819
---------- ----------
$9,262,852 $9,172,279
========== ==========
</TABLE>
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Statements of Income
(Unaudited)
Three Months Ended December 31
1996 1995
<S> <C> <C>
Service fees $6,043,360 $2,736,497
Direct costs of services 3,792,679 1,927,529
---------- ----------
2,250,681 808,968
Selling, general and
administrative expenses 1,965,201 586,836
---------- ----------
Income from operations 285,480 222,132
Financial Income 14,764 20,359
---------- ----------
Income before income taxes 300,244 242,491
Federal and state income taxes 90,671 89,722
---------- ----------
NET INCOME $ 209,573 $ 152,769
========== ==========
Earnings per common share $ .09 $ .12
========== ==========
Weighted average number of
common shares 3,508,125 1,255,833
========== ==========
The accompanying notes to these financial statements are
an integral part hereof.
</TABLE>
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Statements of Income
(Unaudited)
Six Months Ended December 31
1996 1995
<S> <C> <C>
Service fees $10,803,255 $5,079,221
Direct costs of services 6,949,062 3,627,072
---------- ----------
3,854,193 1,452,149
Selling, general and
administrative expenses 3,289,877 934,034
---------- ----------
Income from operations 564,316 518,115
Financial Income 36,019 22,156
---------- ----------
Income before income taxes 600,335 540,271
Federal and state income taxes 217,671 170,492
---------- ----------
NET INCOME $ 382,664 $ 369,779
========== ==========
Earnings per common share $ .16 $ .32
========== ==========
Weighted average number of
common shares 3,508,125 1,152,916
========== ==========
The accompanying notes to these financial statements are
an integral part hereof.
</TABLE>
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended December 31
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 382,664 $369,779
Adjustments to reconcile net income
to cash (used in) provided by
operating activities:
Depreciation and Amortization 132,820 37,849
Deferred taxes (129,206) (151,858)
Changes in:
Accounts receivable (1,462,400) 598,531
Prepaid expenses and other (181,953) (62,234)
Accounts payable 120,085 47,326
Other current liabilities 434,876 (39,830)
Income taxes payable (780,309) 322,350
---------- ----------
Net cash (used in)provided
by operating activities (1,483,423) 1,120,913
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment 7,309 (47,671)
Acquisitions of subsidiaries (199,012) (75,000)
Increase in notes payable 16,475) -
Expiration of investment deposit 149,000 -
Increase in shareholder loans (9,409) -
Other (96,479) -
---------- ----------
Net cash used in investing activities (165,066) (122,671)
---------- ----------
Cash flows from financing activities:
Reduction of long-term liabilities (161,709) (4,984)
Net proceeds of common stock offering 3,333,983
---------- ----------
Net cash (used in) provided by financing
activities (161,709) 3,328,999
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,810,198) (4,327,241)
Cash and cash equivalents:
Beginning of period 2,734,705 24,994
---------- ----------
END OF PERIOD $ 924,507 $4,352,235
========== ==========
Cash Flow Information:
Cash payments for:
Interest 2,026 1,996
Income taxes 233,000 37,200
Supplemental disclosure of noncash investing
and financing activities:
Issuance of note for acquisition of
wholly owned subsidiary 25,000
</TABLE>
The accompanying notes to these 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>
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.
<PAGE>
THREE MONTHS ENDED December 31, 1996 COMPARED TO THE THREE MONTHS ENDED
December 31, 1995:
Revenues derived from services to the Company s clients for the
three months ended December 31, 1996 reached $6,043,400 reflecting an
increase of $3,306,900 (120%) from the same quarter the previous year.
Approximately 63% ($3,867,800) of the revenue growth ($2,098,000) is
attributable to the June 1996 acquisition of Oxford Health Care.
Similarly, Medicare home health care services accounted for $858,200 or
26% of the growth with the remaining 10% ($350,800) due to internal
expansion of the Company s traditional homemaker business. Of the
Company s total revenues, approximately $2,834,500 (47%) 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 government sources accounted
for 36% of total revenues or $2,175,600. Approximately 14% of revenues
($858,200) came from the Medicare program and commercial payors. The
remaining $159,200 (3%) of the Company s revenues came from private
individuals.
Direct costs of providing services, comprised entirely of wages
paid to field staff members, increased by 98% to $3,792,679. The
increase corresponds directly to the increase in revenue. Direct costs
for the first quarter represented 63% of revenue from client services as
opposed to 70% for the same quarter in the previous year. The 7%
productivity improvement is primarily due to a general rate increase in
the Company s contracts with the Illinois Department on Aging which is
being partially offset increases in the minimum wage. The gross margin
on services grew by $1,441,700 from quarter to quarter.
The increase in the Company s gross margin was largely consumed by
a corresponding increase in selling, general and administrative expenses
of $1,378,400. The Company, through its Oxford Health Care subsidiary,
entered into contracts for provision of home care services in Alabama on
on October 1, 1996. Oxford Health Care accounted for $890,500 (65%)of
the increase in selling, general and administrative costs with the
remaining 35% of the growth ($487,900) due to general corporate
expansion (232,500) and administrative expenses ($255,400) related to
other home care operations. Of the increase realized from acquired
operations, 44% represents administrative salaries and benefits, 13%
represents occupancy costs and 43% or $450,500 represents other
administrative expense.
SIX MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THE SIX MONTHS ENDED
DECEMBER 31, 1995:
Revenues from services billed to the Company s clients for the six
months ended December 31, 1996 were $10,803,000 representing a
$5,723,800 increase over the same period during the previous year.
Approximately 75% or $4,263,600 of the increase is attributable to the
acquisition of Oxford Health Care and the Company s other subsidiaries.
Revenue growth of $1,420,000 (25%) was realized through continued growth
of the Company s homemaker business. Of the Company s total revenues
for the six month period, approximately $5,337,200 (50%) was received
from the Illinois Department on Aging. Other government funding sources
for home care services accounted for $4,969,500 (46%) of total revenues
for the six month period.
<PAGE>
Direct costs of providing services increased by 92% to $6,949,100.
The increase in direct costs is driven by the increase in revenues and
consists of wages paid to home care workers who provide day to day
service to the Company s clients. Direct costs for the six months
represented 65% of revenue as compared to 72% for the same quarter in
the previous year. The productivity improvement is due to the Illinois
Department of Aging s general rate increase. The gross margin on
services grew by $2,402,000.
The increase in the gross margin was offset by an increase in
selling, general and administrative expenses of $2,355,800. The
Company s acquired subsidiaries accounted for $1,937,200 of the
increase. Addition of the Company s corporate offices and staff
accounted for $243,600 or 10% of the increase with the remainder
($175,000) due to the general expansion of the business. Of the
increase realized from acquired operations, 47% represents salaries and
benefits, 9% represents costs of occupancy and 44% or $834,400.
represents other adminstrative costs.
LIQUIDITY AND CAPITAL RESOURCES:
The Company has net working capital of $3,351,000 as of December
31, 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
$175,000 for the purchase of Preferred Nursing Care, Inc. of Muscle
Shoals, AL. In addition, the Company retired $958,000 of the
indebtedness of Oxford Health Care and Preferred Nursing Care subsequent
to the purchase transactions.
The Company s indebtedness includes a $325,000 obligation to a
former shareholder of Oxford Health Care, $500,000 of unsecured bank
debt, and capital lease obligations amounting to $54,000. The remaining
$88,000 of the Company s long term debt is comprised of financed general
insurance premiums and accrued interest. The Company s portfolio of
accounts receivable, totaling approximately $4,505,000, is unencumbered.
The Company has access to $500,000 remaining on its $1,000,000
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.
<PAGE>
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
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.
<PAGE>
<PAGE>
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:
None.
<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: February 13, 1996 /s/Louis Goldstein
Louis Goldstein
CEO/Chairman
Date: February 13, 1996 /s/ Sharon S. Harder
Sharon S. Harder
Chief Financial Officer
<TABLE> <S> <C>
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<NAME> HELP AT HOME, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1996
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