As filed with Securities and Exchange Commission on May 22, 1997
Registration No. 33-97034
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST EFFECTIVE AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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HELP AT HOME, INC.
(Name of small business issuer in its charter)
Delaware 8082 36-4033986
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification Number)
223 West Jackson
Suite 500
Chicago, Illinois 60606
(312) 663-4244
(Address and Telephone Number of Principal Executive
Offices and Principal Place of Business)
Louis Goldstein, Chairman and Chief Executive Officer
223 West Jackson, Suite 500
Chicago, Illinois 60606
(312) 663-4244
(Name, address and telephone number of agent for service)
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Copies to:
Jay M. Kaplowitz, Esq.
GERSTEN, SAVAGE, KAPLOWITZ,
FREDERICKS & CURTIN, LLP
101 East 52nd Street
New York, New York 10022
(212) 752-9700
(212) 752-9713 (Fax)
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EXPLANATORY NOTE
This Registration Statement contains one form of prospectus to be used in
connection with an offering of (a) up to 1,638,750 shares of Common Stock, $.02
par value, of Help At Home, Inc. (the "Company") which are reserved for issuance
upon exercise of Redeemable Warrants, each to purchase one share of Common Stock
at an exercise price of $6.00 per share ("Warrants"), (b) 71,250 units, each
unit consisting of one share of Common Stock and two Redeemable Warrants,
issuable upon exercise of the Underwriter's Warrants issued in connection with
the Company's initial public offering of Common Stock and Warrants in November
1995, and (c) up to 71,250 shares of Common Stock included in the Units
underlying the Underwriter's Warrants and up to 142,500 shares of Common Stock
issuable upon exercise of the Warrants included in such Units.
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CROSS REFERENCE SHEET
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<CAPTION>
Registration Statement Item and Heading Prospectus Caption
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<S> <C>
1. Front of the Registration Statement and Outside Front Outside Front Cover Page of Prospectus
Cover Page of Prospectus................................
2. Inside Front and Outside Back Cover Pages of Inside Front and Outside Back Cover Pages of
Prospectus.............................................. Prospectus
3. Summary Information and Risk Factors.................... Prospectus Summary; Risk Factors
4. Use of Proceeds......................................... Use of Proceeds
5. Determination of Offering Price......................... Not Applicable
6. Dilution................................................ Dilution
7. Selling Security Holders................................ Not Applicable
8. Plan of Distribution.................................... Outside Front and Outside Back Cover Pages of Prospectus
9. Legal Proceedings....................................... Business - Legal Proceedings
10. Directors, Executive Officers, Promoters and Control Management
Persons.................................................
11. Security Ownership of Certain Beneficial Owners and Principal Stockholders
Management..............................................
12. Description of Securities............................... Description of Securities
13. Interest of Named Experts and Counsel................... Legal Matters; Experts
14. Disclosure of Commission Position on Indemnification Management - Indemnification of Officers and
for Securities Act Liabilities.......................... Directors
15. Organization Within Last 5 Years........................ Not Applicable
16. Description of Business................................. Prospectus Summary - The Company; Business
17. Management's Discussion and Analysis or Plan of Management's Discussion and Analysis of Financial
Operations.............................................. Condition and Results of Operations
18. Description of Property................................. Business - Property
19. Certain Relationships and Related Transactions.......... Certain Transactions
20. Market Price for Common Equity and Related Outside Front Cover Page of Prospectus; Risk Factors
Stockholder Matters.....................................
21. Executive Compensation.................................. Management - Executive Compensation
22. Financial Statements.................................... Financial Statements
23. Changes in and Disagreements with Accountants on Experts
Accounting and Financial Disclosure.....................
</TABLE>
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an order to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PRELIMINARY PROSPECTUS DATED MAY 22, 1997
SUBJECT TO COMPLETION
HELP AT HOME, INC.
1,638,750 Shares of Common Stock,
Issuable Upon the Exercise of Redeemable Warrants
71,250 Units, Each Unit Consisting of
One Share of Common Stock and Two Redeemable Warrants,
71,250 Shares of Common Stock Included in such Units
and 142,500 Shares of Common Stock
Issuable upon the Exercise of Redeemable Warrants Included in such Units
This Prospectus relates to (i) the sale of up to 1,638,750 shares of
common stock, par value $.02 per share (the "Common Stock"), of Help At Home,
Inc. (the "Company") which are reserved for issuance upon the exercise of
redeemable warrants, each warrant to purchase one share of Common Stock each
("Warrant"), issued in connection with the Company's 1995 initial public
offering of securities (the "IPO"), (ii) the issuance of up to 71,250 units (the
"Units") issuable upon the exercise of the Warrants (the "Underwriter's
Warrants) originally sold to Lew Lieberbaum & Co. (the "Underwriter") in
connection with the IPO, each Unit consisting of one share of Common Stock and
two Warrants, and (iii) up to 71,250 shares of Common Stock which are included
in the Units and up to 142,500 shares of Common Stock which are reserved for
issuance upon the exercise of the Warrants included in the Units.
Each Warrant entitles the registered holder thereof to purchase one share
of Common Stock at a price of $6.00, subject to adjustment in certain
circumstances, until December 4, 2000. The Warrants are redeemable by the
Company upon notice of not less than thirty (30) days, at a price of $.10 per
Warrant, provided that the closing bid price per share of the Common Stock on
NASDAQ, or last sale price, if listed on a National Exchange, has exceeded $9.00
per share (subject to adjustment) for a period of 10 consecutive trading days
ending on the third business day prior to the date on which the Company gives
notice, during the period in which the Warrants are exercisable. The holders of
Warrants will have the right to exercise their Warrants until the close of
business on the date fixed for redemption. See "Description of Securities."
On December 5, 1995 the Common Stock and the Warrants began trading on
NASDAQ under the symbols "HAHI" and "HAHIW", respectively. On May 20, 1997 the
closing sale price of the Common Stock and Warrants on NASDAQ was $4.13 and
$0.63, respectively. See "Certain Market Information."
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION AND SHOULD NOT BE PURCHASED BY INVESTORS WHO CANNOT AFFORD
THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" (COMMENCING ON PAGE 7)
AND "DILUTION."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS IS NOT APPLICABLE TO AND MAY NOT BE USED FOR THE RESALE OF
THE COMMON STOCK ACQUIRED UPON EXERCISE OF THE WARRANTS.
THE DATE OF THIS PROSPECTUS IS MAY 22, 1997.
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AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered by this Prospectus.
This Prospectus, filed as part of such Registration Statement, does not contain
all of the information set forth in, or annexed as exhibits to, the Registration
Statement, certain portions of which have been omitted in accordance with the
rules and regulations of the Commission. For further information with respect to
the Company and this Offering, reference is made to the Registration Statement
including the exhibits filed therewith. The Registration Statement may be
inspected and copies may be obtained from the Public Reference Section at the
Commission's principal office, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the New York Regional Office, 7 World Trade
Center, New York, New York 10048, upon payment of the fees prescribed by the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete and where the contract
or other document has been filed as an exhibit to the Registration Statement,
each such statement is qualified in all respects by such reference to the
applicable document filed with the Commission.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith is required to file reports, proxy statements and other information
with the Securities and Exchange Commission ("Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549; at its New York Regional Office, 7 World Trade Center, New York, New
York 10048; and at its Chicago Regional Office, 500 West Madison Street,
Chicago, Illinois 60661-2511, and copies of such material can be obtained from
the Commission's Public Reference Section at the prescribed rates. The
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically. The Company furnishes its shareholders with annual
reports containing audited financial statements and such other periodic reports
as the Company deems appropriate or as may be required by law.
..........................................
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
more detailed information, including financial statements and the notes thereto,
appearing elsewhere in this Prospectus. Unless otherwise indicated, all
references to the Company herein include the Company's wholly-owned subsidiaries
Help at Home, Inc., an Illinois corporation ("Help Illinois"), Lakeside Home
Health Agency, Inc., a Missouri corporation ("Lakeside"), Lakeside Home Health
Agency, Inc., an Illinois corporation ("Lakeside Illinois"), Rosewood Home
Health Inc., an Illinois corporation ("Rosewood"), Statewide Health Care
Services, Inc., a Mississippi corporation, Homemakers of Montgomery, Inc., an
Alabama corporation, Preferred Nursing Care, Inc., an Alabama corporation
("Preferred Nursing") (collectively "Oxford"). On November 16, 1995, the Company
effected a 1 for 2 reverse stock split (the "Reverse Stock Split"). Unless
otherwise indicated, all numbers in the Prospectus reflect the Reverse Stock
Split.
The Company
The Company provides homemaker, custodial and skilled home health care
services to elderly and disabled persons within their homes. Such services
consist of nutritional planning and assistance, household management, personal
care, skilled nursing interventions, rehabilitative therapy and medical social
work services. Approximately 64% of the Company's clients are obtained and
served through 14 regional contracts with the Illinois Department on Aging
("IDOA") and contracts with other state and municipal agencies. The Company also
provides medically necessary, skilled home health care services through its
subsidiaries certified as Medicare home health agencies. The company operates
through 26 offices in Illinois, Indiana, Missouri, Alabama and Mississippi.
In July 1995, the Company purchased all of the capital stock of Lakeside
from the two shareholders of Lakeside for $100,000. Each of the sellers also
entered into covenant not to compete agreements with the Company. In addition,
on the closing date, the Company entered into consulting agreements with each of
the sellers which provide for a maximum aggregate of $50,000 in consulting fees
over a two year period. As a result of its acquisition of Lakeside, the Company
has expanded the services it offers to include in-home skilled nursing services
through a staff of approximately 20 registered nurses, licensed practical
nurses, nurses' aides and physical therapists. Lakeside personnel serve
individual clients in Missouri who are eligible for Medicare reimbursement.
Since 1993, Lakeside has been certified by the State of Missouri to receive
Medicare reimbursement.
In January 1996, the Company purchased all of the capital stock of
Rosewood for $20,000.
In May 1996, the Company purchased all of the capital stock of Oxford,
from the three shareholders of Oxford for $2,150,000. In addition, the former
majority shareholder of Oxford, entered into a covenant not to compete with the
Company for four years within the States of Alabama, Illinois, Mississippi and
Missouri.
In October 1996, the Company purchased all of the capital stock of
Preferred Nursing, from the three shareholders of Preferred Nursing, for
$175,000. In addition, each of the sellers entered into covenant not to compete
agreements with the Company. As a result of the acquisition of Preferred
Nursing, the Company has expanded its operations in Alabama.
In the event that the Warrants are exercised, the Company intends to use a
portion of the net proceeds to continue to acquire businesses which complement
the Company's existing home care operations, including the possibility of
additional Medicare-certified companies, as well as private duty nursing,
homecare agencies and related providers. The Company has not identified any
specific acquisition candidates.
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In addition, the Company plans to form a subsidiary to be located within
the Company's Chicago, Illinois office that will be engaged exclusively in
in-home hospice care. Through such operations, the Company intends to provide
unskilled homemaker and skilled nursing services to terminally ill patients in
their homes which will serve as an alternative to hospice centers, hospitals or
nursing homes. Hospice care is designed to allow terminally ill patients, who
can no longer benefit from curative treatment, to live out the remainder of
their lives as pain-free and as comfortably as possible. The typical hospice
patient has a projected life expectancy of six months or less. The Company plans
to enter into arrangements with nursing homes and hospitals which will provide
the Company with the right to use a certain number of rooms for the placement of
those patients who become too ill to remain at home. The Company intends to
apply for and obtain the required licenses from the State of Illinois to provide
hospice care services, as well as certification to receive Medicare
reimbursement in connection with its hospice clients. The Company estimates that
it will take approximately four months to obtain a license to provide hospice
services from the State of Illinois. The Company has not yet applied for a
hospice license and there can be no assurance that such a license will be
granted on a timely basis, or at all.
Between May 1995 and July 1995, the Company opened additional branch
offices in Alton, Ottawa, Rock Island and Midlothian, Illinois, expanding its
operations to nine branches in Illinois. Each branch office in Illinois serves a
separate region whose boundaries are generally defined by contract with the
IDOA. The Company intends to further expand operations by opening additional
branch offices in and around the Chicago area and the Midwest.
The Company's growth is attributable to revenue increases in both its
private home care, which accounted for approximately 90% of the Company's total
revenues, for the year ended June 30, 1996, and its state and municipal contract
service operations. The Company also realized $510,913 of revenues due to the
acquisition of Oxford. During the Company's last two fiscal years, the Company
achieved an approximate 50% aggregate increase in net revenues in its private
home care business. Management believes such growth was due to concentrated
sales and marketing efforts directed toward third party referral sources, as
well as through the Company's general reputation for providing high qualify care
and development of return referral arrangements with complementary service
providers. During this same period, the Company significantly expanded its
contract client base by procuring five additional contract regions within the
State of Illinois and substantially increasing services under its existing
contracts.
According to published industry data, the home care industry in 1994
constituted a $23 billion market, with annual growth rates for this sector of
the economy exceeding 20%. Primary reasons cited for such rapid growth include:
(1) the general aging of the United States population; (2) the substantial cost
savings achievable through at-home treatment as an alternative to hospital care;
(3) medical and technological advances which enable a growing number of
treatments to be administered at home rather than in a medical facility; and (4)
Medicare reimbursement policies which provide certain incentives to minimize the
length of in-patient hospital care.
The Company was incorporated on August 7, 1995, in the State of Delaware.
Help at Home Inc., an Illinois corporation, was incorporated on October 29,
1974, and through a merger on June 17, 1982, merged with and into Help at Home
of Evanston, Inc., an Illinois corporation, which was originally incorporated on
February 27, 1975. Simultaneously with the merger, such surviving entity changed
its name to Help at Home, Inc. Lakeside Home Health Agency, Inc. was
incorporated in the State of Missouri on April 20, 1993 and Lakeside Home Health
Agency, Inc., an Illinois corporation was incorporated on August 3, 1995.
Rosewood Home Health Inc. was incorporated in the State of Illinois on March 4,
1994. Statewide Health Care Services, Inc. was incorporated in the State of
Mississippi on January 10, 1974. Homemakers of Montgomery, Inc. was incorporated
in the State of Alabama on March 27, 1995. HASC Staffing Systems, Inc. was
incorporated in the State of Mississippi on March 23, 1986. Preferred Nursing
Care, Inc. was incorporated in the State of Alabama on February 22, 1994. The
Company's principal executive offices are located at 223 West Jackson, Suite
500, Chicago, Illinois 60606 and its telephone number is 312-663-4244.
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The statements which are not historical facts contained in this Prospectus
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.
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THE OFFERING
Securities Offered.......... Up to 1,638,750 shares of Common Stock reserved
for issuance upon exercise of outstanding
Warrants, up to 71,250 Units (each unit consisting
of one share of Common Stock and two Warrants)
issuable upon exercise of one Warrant originally
sold to Lew Lieberbaum & Co. (the "Underwriter")
in connection with the IPO (the "Underwriter's
Warrant"), up to 71,250 shares of Common Stock
included in the Units underlying the Underwriter's
Warrants and up to 142,500 shares of Common Stock
reserved for issuance upon exercise of the
Warrants included in such Units. See "Description
of Securities."
Common Stock Outstanding
Prior to the Offering(1).. 1,869,375 Shares
After the Offering(1)(2).. 3,721,875 Shares
Units....................... Each Unit consists of one share of Common Stock
and two Warrants. The Units offered hereby are
issuable upon exercise of the Underwriter's
Warrants. The Underwriter's Warrants entitle the
Underwriter to purchase up to 71,250 Units at
$10.08 per Unit.
Warrants
- --------
Exercise Terms.............. Each Warrant entitles the holder thereof to
purchase one share of Common Stock at a price of
$6.00 (the "Exercise Price"), subject to
adjustment in certain circumstances, during the
five-year period commencing December 5, 1995. See
"Description of Securities - Warrants."
Expiration Date............. December 4, 2000.
Redemption.................. Redeemable by the Company, in whole or in part,
commencing December 5, 1996, at a redemption price
of $.10 per Warrant, on not less than 30 days
prior written notice to the holders of the
Warrants, provided that the closing high bid price
per share of the Common Stock, if traded on
NASDAQ, or last sale price, if listed on a
national exchange, for 10 consecutive trading days
ending on the third business day prior to the date
of the redemption notice, equals or exceeds $9.00,
subject to adjustment for certain events. See
"Description of Securities - Warrants."
Risk Factors................ The securities described herein involve a high
degree of risk and immediate substantial dilution.
Holders of Warrants should carefully consider the
factors set forth under the caption "Risk Factors"
before exercising the Warrants to purchase the
Shares offered hereby. See "Risk Factors" and
"Dilution."
Use Of Proceeds............. The proceeds from the exercise of the Warrants, if
any, will be used primarily for acquisitions and
working capital purposes. See "Use of Proceeds."
NASDAQ Symbols.............. Common Stock: HAHI
Warrants: HAHIW
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(1) Does not include (i) exercise of all outstanding Warrants, (ii) exercise of
all Underwriter's Warrants or (iii) exercise of all Warrants included in the
Units issuable upon exercise of the Underwriter's Warrants.
(2) Assumes (i) exercise of all outstanding Warrants, (ii) exercise of all
Underwriter's Warrants and (iii) exercise of all Warrants included in the
Units issuable upon exercise of the Underwriter's Warrants, although there
can be no assurance that any of the foregoing will be exercised.
Summary Financial Information
The following is a summary of the Company's financial information
extracted from the Company's included Financial Statements, and is reflective in
its entirety by the detailed financial information appearing in the Financial
Statements and the Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Statement of Operations:
<TABLE>
<CAPTION>
Year Ended Year Ended
1996 1997 June 30, 1995 June 30, 1996
---- ---- ------------- -------------
Nine Months Ended
March 31,
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(Unaudited)
<S> <C> <C> <C> <C>
Service Fees........................... $8,128,256 $16,524,385 $7,928,649 $11,885,712
Income from operations................. $822,576 $850,907 $870,968 1,156,011
Net income............................. $543,694 $495,783 $547,426 718,845
Net income per share................... $0.39 $0.22 $.52 $.41
Weighted average shares outstanding.... 1,382,284 3,508,125 1,050,000 2,243,227
</TABLE>
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Balance Sheet Data:
<TABLE>
<CAPTION>
(Actual) (As Adjusted) (1)
March 31, 1997 March 31, 1997
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(Unaudited)
<S> <C> <C>
Working capital.............................................. $4,171,295 $15,526,295
Total assets................................................. $10,099,249 $21,454,249
Current Liabilities.......................................... $2,493,369 $2,493,369
Long-term debt............................................... $1,120,686 $1,120,686
Stockholders' equity......................................... $6,481,677 $17,836,677
</TABLE>
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(1) Gives effect to (i) exercise of all outstanding Warrants, (ii) exercise of
all Underwriter's Warrants and (iii) exercise of all Warrants included in the
Units issuable upon exercise of the Underwriter's Warrants, resulting in
proceeds to the Company of $11,355,000 (after deducting expenses of the offering
other than solicitation fees, if any, to be paid to the Underwriter in
connection with the exercise of the Warrants). See "Warrant Solicitation."
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RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND SHOULD BE
PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT IN THE
COMPANY. EACH PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS, AS WELL AS ALL OTHER INFORMATION SET FORTH ELSEWHERE IN THIS
PROSPECTUS.
THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW AND ELSEWHERE IN THIS
PROSPECTUS, INCLUDING BUT NOT LIMITED TO GENERAL TRENDS IN THE HOME HEALTH CARE
INDUSTRY AND THE ABILITY OF THE COMPANY TO SUCCESSFULLY IMPLEMENT ITS EXPANSION
PLANS.
1. Dependence on Customer Relationships; Absence of Customer and Caregiver
Contracts. The Company's business is dependent on its ability to establish and
maintain close working relationships with state agencies, Federal agencies
(i.e., medicare, medicaid) hospitals, clinics, nursing homes, physician groups,
health maintenance organizations, educational institutions, third party payors
and other referral sources, and with caregivers providing services on behalf of
the Company. Although the Company has established customer and caregiver
relationships in the markets in which the Company presently operates, there can
be no assurance these relationships will continue. None of the contracts by and
between the Company and its customers, is exclusive, and these contracts do not
obligate the customers to utilize a designated number of home care staff for any
specific period of time. In addition, there is no assurance the Company will be
successful in maintaining relationships with caregivers such that the Company
can provide services as customers may require. See "Business - Business
Strategy" and - "Services."
2. Dependence on Illinois Department on Aging. During the years ended June
30, 1996 and June 30, 1995, fees billed to the Illinois Department on Aging
("IDOA") amounted to approximately $8,674,000 (73% of total revenues) and
$6,500,000 (82% of total revenues), respectively. During the nine months ended
March 31, 1997, fees billed to the IDOA amounted to approximately $8,284,000,
(approximately 50%) of total revenues. The Company has 13 regional contracts
with the IDOA. The Company is materially dependent on the revenue produced from
its contracts with the IDOA.
3. Indefinite Nature of Contracts. The Company's agreements with the IDOA
are on a non-exclusive basis. The Company's contracts with the IDOA expire at
different times, the first of which expires on June 30, 1997. The agreements do
not provide for any fixed amount of revenues for the Company and are terminable
upon 30 days prior written notice by either the Company or the IDOA. The
termination of any of such agreements would have a material adverse effect on
the Company. In addition, all fees earned by the Company are for services
actually performed. Consequently, if the CCUs (defined below in "Business -
Industry Overview") do not direct residents requiring home-care to the Company,
there would be a materially adverse effect on the Company's business.
4. Dependence on Key Personnel. The Company's success depends to a
significant extent on the efforts of Louis Goldstein, the Company's founder and
current Chief Executive Officer and Chairman of the Board. The loss of the
services of Mr. Goldstein could have a material adverse effect on the Company.
The Company maintains key-man life insurance on the life of Mr. Goldstein in the
amount of $2,000,000. There can be no assurance that the Company will be able to
maintain such a policy. The Company's future success will depend in part upon
its continuing ability
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<PAGE>
to attract and retain highly qualified personnel to manage the future growth of
the Company. There can be no assurance that the Company will be successful in
attracting and retaining such personnel. See "Management."
5. Ability to Manage Growth; Acquisition Strategy. As part of its business
strategy, the Company has attempted to pursue rapid growth, including
acquisitions of related and complementary businesses, and intends to continue
this strategy. The Company's growth strategy will require expanded client
services and support, increased personnel throughout the Company, expanded
operational and financial systems and the implementation of new control
procedures. There can be no assurance that the Company will be able to achieve
rapid growth or be able to manage expanded operations effectively. Moreover,
failure to implement financial and other systems and to add resources could have
a material adverse impact on the Company's results of operations and financial
condition. The Company has no present commitments, understandings or agreements
for any acquisitions. The Company's acquisitions could involve a number of risks
including the diversion of management's attention to the assimilation of the
companies to be acquired, unforeseen difficulties in the acquired operations,
adverse effects on the Company's operating results, amortization of acquired
intangible assets and dilution in the ownership interest of stockholders as a
result of the issuance of additional Common Stock or Preferred Stock. The
Company is prohibited from issuing any Preferred Stock until December 5, 1997,
without the consent of Lew Lieberbaum & Co., Inc. (the "Underwriter"). There is
no assurance the Company will be successful in consummating any acquisition
transactions. See "Business - Business Strategy."
6. Government Health Care Reform Proposal; Uncertainty in Health Care
Industry. Several legislative proposals have been made to reform the United
States health care system. These programs contain proposals to increase
government involvement in health care, lower Medicare and Medicaid reimbursement
rates and otherwise change the environment in which the Company operates. The
Company cannot predict with any certainty what impact, if any, proposals for
health care reforms might have on the Company's business. Due to the wide
variety of national and state proposals relating to health care presently under
consideration, the impact of such proposals cannot be predicted. The health care
industry is subject to changing political, economic and regulatory influences.
During the past several years, the health care industry has been subject to an
increase in government regulation of, among other things, reimbursement rates
and certain capital expenditures. In addition, major third party payors of
health care services (insurance companies, Medicare and Medicaid) have
significantly revised payment procedures in an effort to contain health care
costs. Although the majority of the Company's revenues are currently generated
through the provision of non-skilled services, factors affecting the health care
industry may have a significant impact on the Company's operating results. See
"Business - Regulation."
7. Regulation. The Company's health care business is subject to extensive
and frequently changing regulation by federal, state and local authorities.
Regulation imposes a significant compliance burden on the Company, including
state licensing and federal and state eligibility standards for certification as
a Medicare and Medicaid provider. In many of the states with such regulation,
the Company need only be licensed as a Medicare and Medicaid provider. In almost
half the states, home care providers must receive a certificate of need ("CON")
from the state in order to directly provide Medicare and Medicaid services. CON
requirements and restrictions vary substantially from state to state. Lakeside,
Rosewood and Homemakers of Montgomery, Inc. (part of the Oxford group) are
certified in their respective states to receive Medicare reimbursement. Lakeside
(IL) has applied to become a licensed Medicare provider in the State of
Illinois, and is awaiting a final survey to become licensed. There can be no
assurance that the Company will be successful in its efforts to obtain such
license or certificate, or as to when it may obtain such license or certificate,
or that it will not incur substantial expense to obtain such license or
certificate. In the event that the Company should for any reason lose its
Medicare license in any state in which such certification was obtained, the
Company's Medicare-related services in such state would be terminated until such
time as the license was reinstated, if ever.
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The Company believes it is in substantial compliance with all material
statutes, regulations, standards and conditions applicable to its business.
However, new laws and/or regulations, standards or conditions may be adopted or
existing laws, regulations, standards or conditions may be interpreted by
governmental authorities in a manner which could adversely impact the Company's
operations. The Company cannot predict whether any such proposals or
interpretations will be adopted and, if adopted, what effect such proposals or
interpretations would have on the Company's business. See "Business -
Regulation."
8. Government Regulation; Operation Restore Trust. The United States
Department of Health and Human Services Office of Inspector General has recently
announced plans to extend its Medicare/Medicaid anti-fraud and abuse
demonstration project known as Operation Restore Trust to all 50 states. While
the two-year demonstration project officially ended March 31, 1997 and did not
focus on any states in which the Company conducts its home health operations,
the creation of a permanently funded program operating in every state could
result in additional scrutiny of the Company's practices regarding
administration and billing of services for Medicare and/or Medicaid
beneficiaries. The Company believes it is in substantially compliance with all
billing and reimbursement regulations promulgated in connection with Medicare
and various state Medicaid programs; however, there can be no assurance that the
Company will not come under scrutiny regarding its compliance with such
regulations in the future.
9. Risks Associated with Expansion into Provision of Medicare Services.
Presently, approximately 10% of the Company's revenues are derived from
reimbursements from Medicare. The Medicare program is highly regulated and
subject to budgetary and other constraints, including rate adjustments. There
can be no assurance that services offered by the Company, now or in the future,
will initially meet or continue to meet the requirements for reimbursement by
such program.
The Medicare program is also subject to statutory and regulatory changes,
administrative rulings, interpretations of policy, intermediary determinations
and governmental funding restrictions, all of which may materially increase or
decrease the rate of program payments to health care facilities. Since 1985,
Congress has consistently attempted to limit the growth of federal spending
under the Medicare program. In recent years, an increasing number of legislative
proposals have been introduced in Congress that would effect major reforms of
the healthcare system. The President and several members of Congress have
proposed various reforms to the healthcare system. The Company can give no
assurance that payments under such program will in the future remain at a level
comparable to the present level.
10. Potential For Liability Under Fraud and Abuse Laws. In connection with
the Company's Medicare service operations, to the extent it receives referrals
from medical professionals, the Company will be subject to various state and
federal laws that regulate the relationships between providers of health care
services and physicians, including employment or service contracts and
investment relationships. These laws include the fraud and abuse provisions of
federal Medicare and Medicaid statutes and similar state statutes governing
Medicaid and Medicare and certain private payors (the "Fraud and Abuse Laws"),
which prohibit the payment, receipt, solicitation or offering of any direct or
indirect remuneration intended to induce the referral of residents or for the
ordering or providing of covered services, items or equipment. Violations of
these provisions may result in civil or criminal penalties and/or exclusion from
participation in the Medicare and Medicaid programs or various private insurance
programs.
The United States Department of Health and Human Services ("HHS") has
interpreted the Fraud and Abuse Laws as they apply to Medicare and Medicaid
broadly to include the intentional payment of anything of value to influence the
referral of Medicare or Medicaid recipients. HHS has issued regulations that set
forth certain so-called "safe harbors," representing business relationships and
payments that can be undertaken without violation of the Fraud and Abuse Laws.
While not all of the Company's contracts and business arrangements may fall
within the particular
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<PAGE>
safe harbors, the Company believes that it has arranged and will continue to
arrange its business relationships so as to comply with the Fraud and Abuse
Laws. See "Business - Government Regulation."
11. Competition. The market for home care services is highly competitive.
Many of the Company's existing and potential competitors have substantially
greater financial, marketing and personnel resources than the Company
and have established reputations in the home care services market. In addition,
the Company's operations depend, to a significant degree, on its ability to
recruit and retain qualified personnel. The Company faces competition from other
companies in recruiting qualified personnel and there is no assurance that
qualified personnel will be available to the Company in the future. In addition,
to the extent the Company expands its skilled services operations, it will be
highly dependent upon its ability to attract and retain registered nurses and
other professionals for its staff. The competition for such professionals is
intense, and there can be no assurance that the Company will be able to employ
and retain qualified personnel. The failure of the Company to recruit and retain
qualified personnel could have a material adverse effect on the Company's
operations. There can be no assurance that the Company will be able to continue
to compete successfully in the markets in which it is active. See "Business -
Competition."
12. Possible Exposure to Claims. The Company could be exposed to risk of
loss for personal injury to clients. Although the Company has liability
insurance which it deems adequate, there can be no assurance that the Company
will be able to maintain such insurance or will not be subjected to claims in
excess of its insurance coverage. Similarly, as is customary for companies whose
employees work in clients' homes, each field employee is bonded by the Company
in the amount of $5,000. There can be no assurance that the Company will be able
to maintain such bonding or that it will not be subjected to claims in excess of
the bond. See "Business of the Company - Insurance and Bonding."
13. Immediate and Substantial Dilution. This Offering involves an
immediate and substantial dilution of $1.93 per share (or 32.2%) to investors
receiving shares of Common Stock in this offering upon the exercise of Warrants,
Underwriter's Warrants or the Warrants included therein. See "Dilution."
14. Broad Discretion in Application of Proceeds. The proceeds to the
Company from the exercise of the Warrants, the Underwriter's Warrants and the
Warrants included therein, net of expenses of this offering (other than
solicitation fees, if any, to be paid to the Underwriter in connection with the
exercise of Warrants), will be approximately $11,355,000 assuming that all such
Warrants, Underwriter's Warrants and Warrants included therein are exercised.
Management anticipates that the proceeds of this offering, if any, will be used
for acquisitions, working capital and general corporate purposes. Accordingly,
the Company's management will have broad discretion as to the application of
such proceeds. See "Use of Proceeds" and "Warrant Solicitation."
15. Need for Additional Financing. The continued expansion and operation
of the Company's and its ability to make acquisitions may be dependent upon its
ability to obtain additional financing. There can be no assurance that
additional financing will be available on terms acceptable to the Company, or at
all. In the event that the Company is unable to obtain such additional financing
as it becomes necessary, the Company will not be able to achieve all of its
business plans. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
16. Control by Management and Current Stockholders. As of the date of this
Prospectus, each of the officers and directors of the Company, beneficially own,
in the aggregate, approximately 54.1% of the outstanding Common Stock (assuming
no exercise of the Warrants, the Underwriter's Warrants or the Warrants included
therein or of any other options or warrants). Accordingly, in the event such
stockholders were to act in concert with respect to the Company's operations,
they would be in a position to cause an increase in the authorized capital or
cause the dilution, merger or sale of assets of the Company, and generally
control the affairs of the Company. Assuming that all of the
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<PAGE>
Warrants, Underwriter's Warrants and Warrants included therein are exercised,
the officers and directors will beneficially own, in the aggregate,
approximately 27.2% of the outstanding Common Stock (assuming no exercise of any
other options or warrants other than those held by such individuals). Although
such shareholders would not represent, in the aggregate, a majority of the
voting securities of the Company, their significant beneficial holdings would
enable them to exercise substantial influence over the Company. See "Principal
Stockholders" and "Description of Securities."
17. Shares Eligible for Future Sale. Of the 1,869,375 shares of Common
Stock of the Company outstanding as of the date of this Prospectus, 1,012,500
shares are "restricted securities," which are owned by "affiliates" of the
Company, as those terms are defined in Rule 144 promulgated under the Securities
Act. Absent registration under the Securities Act, the sale of such shares is
subject to Rule 144, as promulgated under the Securities Act. All of the
"restricted securities" are presently eligible for resale under Rule 144. In
general, under Rule 144, subject to the satisfaction of certain other
conditions, a person, including an affiliate of the Company, who has
beneficially owned restricted shares of Common Stock for at least one year is
entitled to sell in brokerage transactions, within any three-month period, a
number of shares that does not exceed the greater of 1% of the total number of
outstanding shares of the same class, or if the Common Stock is quoted on NASDAQ
or a stock exchange, the average weekly trading volume during the four calendar
weeks preceding the sale. Rule 144 also permits a person who presently is not
and who has not been an affiliate of the Company for at least three months
immediately preceding the sale and who has beneficially owned the shares of
Common Stock for at least two years to sell such shares without regard to any of
the volume limitations as described above. No prediction can be made as to the
effect, if any, that sales of shares of Common Stock or the availability of such
shares for sale will have on the market prices of the Company's securities
prevailing from time to time. The possibility that substantial amounts of Common
Stock may be sold under Rule 144 into the public market may adversely affect
prevailing market prices for the Common Stock and could impair the Company's
ability to raise capital in the future through the sale of equity securities.
See "Shares Eligible for Future Sale."
18. No Dividends and None Anticipated. To date, no dividends have been
declared or paid on the Common Stock, and the Company does not anticipate
declaring or paying any dividends in the foreseeable future, but rather intends
to reinvest profits, if any, in its business. Investors should, therefore, be
aware that it is unlikely that any dividends will be paid on the Common Stock in
the foreseeable future. See "Dividends."
19. Exercise Price Arbitrarily Determined. The exercise price and other
terms of the Warrants were determined by negotiation between the Company and the
Underwriter and are not necessarily related to the Company's assets, book value
or financial condition, and may not be indicative of the actual value of the
Company.
20. NASDAQ Maintenance Requirements; Possible Delisting of Securities from
NASDAQ Market; Risks of Low-Priced Stocks.
The Company's Common Stock and Warrants are listed on the NASDAQ National
Market System. The Commission has approved rules imposing criteria for listing
of securities on NASDAQ National Market, including standards for maintenance of
such listing. For continued listing, a company, among other things, must have
$1,000,000 in net tangible assets, $1,000,000 in market value of securities in
the public float and a minimum bid price of $1.00 per share. If the Company is
unable to satisfy NASDAQ National Market's maintenance criteria in the future,
its securities may be delisted from NASDAQ National Market. In such event, the
Company would seek to list its securities on the NASDAQ Small Capitalization
Market, however, if it was unsuccessful, trading, if any, in the Company's
securities would thereafter be conducted in the over-the-counter market in the
so-called "pink sheets" or the NASD's
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<PAGE>
"Electronic Bulletin Board." As a consequence of such delisting, an investor
would likely find it more difficult to dispose of, or to obtain quotations as
to, the price of the Company's securities.
21. Potential Adverse Effect of Redemption of Warrants. The Warrants
offered hereby are redeemable, in whole or in part, at a price of $.10 per
Warrant, commencing December 5, 1996 (or earlier with the consent of the
Representative) and prior to their expiration; provided that (i) prior notice of
not less than 30 days is given to the Warrantholders; (ii) the closing high bid
price if traded on NASDAQ, or the last sale price if traded on a national
exchange, per share of Common Stock on each of the 10 consecutive trading days
ending on the third business day prior to the date on which the Company gives
notice of redemption has been at least $9.00; and (iii) Warrantholders
shall have exercise rights until the close of the business day preceding the
date fixed for redemption. Notice of redemption of the Warrants could force the
holders to exercise the Warrants and pay the Exercise Price at a time when it
may be disadvantageous for them to do so, or to sell the Warrants at the current
market price when they might otherwise wish to hold them, or to accept the
redemption price, which may be substantially less than the market value of the
Warrants at the time of redemption. The Warrants may not be exercised unless the
registration statement pursuant to the Securities Act covering the underlying
shares of Common Stock is current and such shares have been qualified for sale,
or there is an exemption from applicable qualification requirements, under the
securities laws of the state of residence of the holder of the Warrants. Such
restrictions could have the effect of preventing certain Warrantholders from
liquidating their Warrants. See "Description of Securities - Warrants."
22. Penny Stock Regulation. In the event that the Company is unable to
satisfy the maintenance requirements for the NASDAQ National Market and its
Common Stock falls below the minimum bid price of $5.00 per share for the
initial quotation, the Company would seek to list its securities on the NASDAQ
Small Capitalization Market. If it was unsuccessful, trading would be conducted
on the "pink sheets" or the NASD's Electronic Bulletin Board. In the absence of
the Common Stock being quoted on NASDAQ, or the Company's having $2,000,000 in
stockholders' equity, trading in the Common Stock would be covered by Rule 15g-9
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), for non-NASDAQ and non-exchange listed securities. Under such rule,
broker-dealers who recommend such securities to persons other than established
customers and accredited investors must make a special written suitability
determination for the purchaser and receive the purchaser's written agreement to
a transaction prior to sale. Securities are exempt from this rule if the market
price is at least $5.00 per share.
The Commission adopted regulations that generally define a penny stock to
be any equity security that has a market price of less than $5.00 per share,
subject to certain exceptions. Such exceptions include an equity security listed
on NASDAQ, and an equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in continuous operation
for three years, (ii) net tangible assets of at least $5,000,000, if such issuer
has been in continuous operation for less than three years, or (iii) average
revenue of at least $6,000,000 for the preceding three years. Unless an
exception is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the risks associated therewith.
If the Company's securities were to become subject to the regulations
applicable to penny stocks, the market liquidity for the securities would be
severely affected, limiting the ability of broker-dealers to sell the securities
and the ability of purchasers in this Offering to sell their securities in the
secondary market. There is no assurance that trading in the Company's securities
will not be subject to these or other regulations that would adversely affect
the market for such securities.
23. Preferred Stock. The Company's Certificate of Incorporation authorizes
the issuance of 1,000,000 shares of "blank check" Preferred Stock with such
designations, rights and preferences as may be determined from time to time by
its Board of Directors. Accordingly, the Company's Board of Directors is
empowered, without further
12
<PAGE>
stockholder approval, to issue Preferred Stock with dividend, liquidation,
conversion, voting or other rights that could adversely affect the voting power
or other rights of the holders of the Common Stock. In the event of issuance,
the Preferred Stock could be used, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company. The
Company has no current plans to issue any shares of Preferred Stock and is
prohibited from issuing such Preferred Stock until December 5, 1997, without the
prior written consent of the Representative. See "Description of Securities."
24. Non-Registration in Certain Jurisdictions of Shares Underlying the
Warrants. Although the Units were not knowingly sold to purchasers in
jurisdictions in which they were not registered or otherwise qualified for sale,
purchasers may have purchased Warrants in the aftermarket or may have moved to
jurisdictions in which the shares of Common Stock issuable upon exercise of the
Warrants are not so registered or qualified during the period that the Warrants
are exercisable. In the event that such registration or qualification is
required, the Company would be unable to issue shares to those persons desiring
to exercise their Warrants unless and until the shares could be registered or
qualified for sale in the jurisdiction in which such purchasers reside. If the
Company was unable to register or qualify the shares in a particular state and
no exemption to such registration or qualification was available, in order to
realize any economic benefit from the purchase of the Warrants, a holder might
have to sell the Warrants rather than exercising them. No assurance can be
given, however, as to the ability of the Company to effect any required
registration or qualification of the Units, Common Stock or Warrants in any
jurisdiction in which registration or qualification has not already been
completed. See "Description of Securities - Warrants."
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<PAGE>
USE OF PROCEEDS
The proceeds received by the Company upon exercise of the Warrants, the
Underwriter's Warrants and the Warrants included therein, net of expenses of the
offering, estimated at $50,000, (other than solicitation fees, if any, to be
paid to the Underwriter in connection with the exercise of Warrants), are
estimated to be $11,355,000, assuming that all of such Warrants, Underwriter's
Warrants and Warrants included therein are exercised. There can be no assurance
as to the number of Warrants, if any, or Underwriter's Warrants or Warrants
included therein, if any, which will be exercised. Management anticipates that
the net proceeds of this offering, if any, will be used for acquisitions and
allocated to working capital and general corporate purposes. See "Warrant
Solicitation."
The proceeds allocated to working capital and general corporate purposes
will be applied, to the extent necessary, to the Company's current operations.
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<PAGE>
CERTAIN MARKET INFORMATION
The Company's Common Stock and Warrants commenced trading on the NASDAQ
National Market System under the symbol "HAHI" and "HAHIW", respectively, on
December 5, 1995. The range of high and low reported closing sales prices for
the Common Stock as reported by NASDAQ since the commencement of trading were as
follows:
HAHI
- ----
1995 High Low
Fourth Quarter $6.00 $5.50
1996 High Low
First Quarter $6.19 $5.38
Second Quarter $8.38 $5.50
Third Quarter $8.25 $6.50
Fourth Quarter $7.25 $4.75
1997
First Quarter $6.63 $4.75
HAHIW
- -----
1995 High Low
Fourth Quarter $1.25 $0.75
1996 High Low
First Quarter $1.63 $1.13
Second Quarter $3.13 $1.50
Third Quarter $2.87 $1.87
Fourth Quarter $2.13 $1.13
1997
First Quarter $2.00 $1.00
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- ----------
The prices set forth above reflect inter dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.
On May 20, 1997, as reported by the Company's transfer agent, shares of
Common Stock were held by eleven persons, based on the number of record holders,
including several holders who are nominees for an undetermined number of
beneficial owners.
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DILUTION
The difference between the exercise price of the Warrants and the adjusted
net tangible book value per share of Common Stock after this offering, assuming
exercise for cash of all Warrants, Underwriter's Warrants and Warrants included
therein, constitutes the dilution to investors in this offering. Net tangible
book value per share on any given date is determined by dividing the net
tangible book value (total tangible book value less total liabilities) of the
Company on such date by the number of shares of Common Stock outstanding on such
date.
At March 31, 1997, the net tangible book value of the Company was
$3,822,120, or approximately $2.04 per share of Common Stock. After giving
effect to the sale by the Company of 1,638,750 shares of Common Stock upon the
exercise of outstanding Warrants, 71,250 shares of Common Stock upon the
exercise of the Underwriter's Warrants and 142,500 shares of Common Stock upon
the exercise of the Warrants included therein, and the receipt of the net
proceeds therefrom, the net tangible book value at March 31, 1997 would have
been $15,177,120, or approximately $4.08 per share of Common Stock, representing
an immediate increase in net tangible book value of $2.03 per share to existing
shareholders and an immediate dilution of (32.2%) per share to those who
exercise Warrants. The following table illustrates the foregoing information
with respect to dilution on a per share basis:
Exercise Price (1)......................................................$6.00
Net tangible book value per share before exercise.......$2.04
Increase per share attributable to exercise (2)(3)......$2.03
Adjusted net tangible book value after exercise.........................$4.07
-----
Dilution to persons exercising Warrants.................................$1.93
=====
- ----------
(1) Before deducting solicitation fees, if any, to be paid to the Underwriter
in connection with the exercise of Warrants. See "Warrant Solicitation."
(2) Assumes no exercise of other outstanding options or warrants.
(3) Includes proceeds from the sale of 213,750 shares of Common Stock upon the
exercise of the Underwriter's Warrants at an average price of $7.36 per
share.
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CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997 and as adjusted to give effect to the sale of Units offered
hereby and the application of the net proceeds of this Offering. This
information should be read in conjunction with the Financial Statements and
related notes thereto appearing elsewhere in this Prospectus.
Actual
As of
March 31,
1997
(unaudited) As Adjusted (1)
---------- ------------
Long-term Debt .................................. $1,120,686 $1,120,686
Stockholders' Equity:
Preferred Stock $0.01 par value:
Authorized 1,000,000 shares; none issued
Common Stock $0.02 par value;
Authorized 14,000,000 shares
Issued and outstanding - 1,869,375 and
3,721,875 shares, respectively .............. $ 37,388 $ 70,163
Additional paid-in capital ...................... $3,694,401 $15,016,626
Retained earnings ............................... $2,749,888 $ 2,749,888
---------- -----------
Total stockholders' equity .................. $6,481,677 $17,836,677
========== ===========
- ----------
(1) Gives effect to the sale of 1,638,750 shares of Common Stock upon the
exercise of outstanding Warrants and the sale of 71,250 shares of Common
Stock upon exercise of the Underwriters' Warrants and 142,500 shares of
Common Stock upon the exercise of the Warrants included therein, resulting
in net proceeds to the Company of $11,355,000 (after deducting expenses of
the offering other than solicitation fees, if any, to be paid to the
Underwriter in connection with the exercise of the Warrants). See "Warrant
Solicitation."
DIVIDENDS
To date, the Company has paid no dividends on any shares of its Common
Stock and the Company's Board of Directors has no present intention of paying
any dividends on its Common Stock in the foreseeable future, as it intends to
use its earnings, if any, to generate increased growth. The payment by the
Company of dividends in the future, if any, rests solely within the discretion
of the Board of Directors and will depend upon, among other things, the
Company's earnings, capital requirements and financial condition, as well as
other factors deemed relevant by the Company's Board of Directors. Although
dividends are not limited currently by any agreements, it is anticipated that
future agreements, if any, with institutional lenders may also limit the
Company's ability to pay dividends.
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SELECTED FINANCIAL DATA
The following selected financial data of the Company are derived from the
Financial Statements of the Company. The financial statements as of June 30,
1995 have been audited by Richard A. Eisner & Company, LLP. The financial
statements as of June 30, 1996 have been audited by Coopers & Lybrand, LLP.
Financial information for the nine months ended March 31, 1997 and 1996 set
forth below are derived from unaudited financial statements of the Company. In
the opinion of the Company's management the unaudited financial statements
reflect all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the results of operations for the periods then ended
and the financial position of the Company as of such dates. The selected
financial data set forth below should be read in conjunction with the Financial
Statements of the Company and related notes thereto included elsewhere in this
Prospectus and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Income Statement Data:
1996 1997 1996 1995
---- ---- ---- ----
Years ended
Nine Months Ended March 31, June 30,
------------------------------ --------
(unaudited)
Fees Billed .................. $8,128,256 $16,524,385 $11,885,712 $7,928,649
Income from operations ....... $ 822,576 $ 850,907 $ 1,156,011 $ 870,968
Net income ................... $ 543,694 $ 495,783 $ 718,845 $ 547,426
Net income per share ......... $ 0.39 $ 0.22 $ .41 $ .52
Weighted average common shares
outstanding (1) ............ 1,382,284 3,508,125 2,243,227 1,050,000
Balance Sheet Data:
March 31, 1997
-----------------
(Unaudited)
Actual As Adjusted(2)
------ --------------
Current assets .......................... $ 6,664,664 $18,019,664
Current liabilities ..................... $ 2,493,369 $ 2,493,369
Working capital ......................... $ 4,171,295 $15,526,295
Total assets ............................ $10,099,249 $21,454,249
Long term debt .......................... $ 1,120,686 $ 1,120,686
Retained earnings ....................... $ 2,749,888 $ 2,749,888
Stockholders' equity .................... $ 6,481,677 $17,836,677
- ----------
(1) The capitalization of the Company has been retroactively adjusted to
reflect the recapitalization of the Company and the Reverse Stock Split.
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<PAGE>
(2) Gives effect to the sale of 1,638,750 shares of Common Stock upon the
exercise of the outstanding Warrants, and the sale of 71,250 shares of
Common Stock upon exercise of the Underwriters' Warrants and 142,500
shares of Common Stock upon exercise of the Warrants included therein,
resulting in net proceeds to the Company of $11,355,000 (after deducting
expenses of this offering other than solicitation fees, if any, to be paid
to the Representative in connection with the exercise of the Warrants).
See "Warrant Solicitation."
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company provides home care services in Illinois, Indiana, Missouri,
Alabama and Mississippi. The Company's fiscal year ends on June 30. Unless
otherwise noted, references to fiscal 1995 and 1996 relate to the fiscal years
ended June 30, 1995 and 1996.
The Company's revenues are derived primarily from custodial services.
Additionally, approximately 10% of the Company's revenues, during fiscal 1996,
were derived from skilled home health care services. The Company believes that
the home care market will continue to experience significant growth due to aging
of the population, continued emphasis on preventive health care services, early
patient discharges from acute care institutions, and new advances in medical
technology. The Company believes that it is well positioned to take advantage of
the expected growth in both the custodial home care and home health care
segments of the market.
The Company's overall strategy is focused on providing a continuum of
services to elderly and disabled clients in their homes, concentrating on
geographic areas with favorable demographics and reimbursement trends. The
Company will implement this business strategy through a combination of internal
growth of existing services/locations, expansion into new areas adjacent to
existing locations, and acquisition of geographically proximate businesses with
complementary service mixes and locations.
The Company strives to maintain an overall gross profit margin of at least
30% and intends to generate additional operating profits through increased
economies of scale to be derived from savings in general and administrative
expenses. Personnel is the single largest component of the Company's costs,
comprising approximately 80% of net sales which the Company believes is typical
for similarly situated home care providers.
The following discussion and analysis of the Company's results of
operations, liquidity and financial condition should be read in conjunction with
the financial statements of the Company included elsewhere in this Prospectus
and the related notes thereto.
RESULTS OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1997 AS COMPARED TO THE NINE MONTHS ENDED MARCH
31, 1996:
Revenues derived from services to clients for the first three quarters of
1997 exceeded revenues from the same period one year earlier by $8,396,000
representing overall revenue growth of 100%. Acquired and start-up operations
accounted for $5,875,000 of the growth (70%) with the remainder of the growth
coming from expansion of services provided through the Company's existing
locations. Of the Company's total revenues for the nine months, approximately
$8,284,000 (50%) came from services provided pursuant to contracts with the
Illinois Department on Aging compared to 88% of total revenues for the same
three quarters of the previous year.
Direct costs of providing services increased by $4,924,000 (85%) as a
result of the increase in revenues noted above. Direct costs are entirely
comprised of wages paid to field staff members who provide client/patient
services. Direct costs for the nine month period represented 65% of total
revenues versus 70% for the three quarters of 1996. As noted, the productivity
improvement is due to an increase in rates paid under various contracts with the
Illinois Department on Aging after taking in account lesser increases in the
minimum wage.
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Selling, general and administrative expenses increased by $3,444,000 (46%)
which offset the increase in the gross profit margin of $3,472,000.
Approximately $2,175,000 (63%) of the increase is attributable to acquired and
start-up operational expenses. The remaining increase of $1,269,000 is
attributable to increases in corporate office expenses ($427,000, 12%) and other
increases in local adiministrative support functions necessary to support
internal expansion ($842,000, 25%).
Financial income for the nine months ended March 31, 1997 was less than
financial income for the preceding year to date by $82,000 due to expenditure of
proceeds realized from the Company's initial public offering.
Fiscal 1996 Compared to Fiscal 1995:
Net revenue derived from client/patient services for the fiscal year ended
June 30, 1996 were $11.9 Million compared to $7.9 Million for the fiscal year
ended June 30, 1995, representing an increase of approximately 50%. The increase
in sales relates to a $2.8 Million, or 35%, increase derived from the expansion
of homemaker services. Of the general homemaker service growth, $312,000 or 1%
is attributable to the Oxford Healthcare acquisition with the remainder ($2.5
Million) coming from continued development of the Company's established Illinois
and Missouri locations. Also, the addition of medically necessary, skilled home
health services comprised $1.2 Million, or 29%, of the overall increase in
revenues.
The Illinois Department on Aging ("IDOA") accounted for approximately 81%
of total homemaker revenues of $10.7 Million during Fiscal 1996. Illinois
Department on Aging revenues, as a percentage of total homemaker service
revenue, remained essentially unchanged from 1995 to 1996. The contractual
arrangement with IDOA requires that, at a minimum, 73% of receipts from IDOA
client services be spent for direct costs of providing care. The Company is in
compliance with this requirement; however, should the Company's IDOA direct
costs, as a percentage of IDOA revenues, fall below 73%, the contract could be
subject to termination.
The Medicare program provided approximately 74% of the $1.2 Million in
revenues attributable to home health care services. There were no home health
care revenues for 1995 that were reimbursable under the Medicare program.
Direct costs of providing services constituted $5.8 Million and $8.2
Million in 1995 and 1996, respectively, representing 73% and 69% of total
revenues. The 30% growth of $2.4 Million in the cost of providing services
relates directly to revenue growth with homemaker services comprising a constant
73% of related revenues and costs of providing home health services accounting
for 34% of related revenues. The gross margin increased, from $2.1 Million or
27% of revenues in 1995 to $3.7 Million, or 31% of revenues, in 1996. The
improvement in the overall relationship between revenues and cost of services
relates directly to the addition of home health care services.
Operating expenses ($1.2 Million in 1995 and $2.5 Million in 1996)
comprised 16% and 21% of revenues, respectively. Administrative salaries and
benefits grew $674,000 from $547,000 to $1.2 Million due primarily to the
addition of administrative staff members ($419,000 or 62% of the increase) to
handle increased work loads related to higher revenue levels. In connection with
the Company's IPO and acquisition program, certain managerial level positions
were added, accounting for approximately $255,000 of annual salaries and
benefits that constituted approximately 38% of the overall growth in such
expenses.
Professional fees increased by $29,000 to $141,000 an increase of 26%. The
increase is attributable to general labor matters and other routine issues
typically associated with the increase in overall business.
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Office expense increased from $237,000 (3% of revenues) to $543,000 (5% of
revenues) with the bulk of the increase (43% or $233,000) coming from the
opening of additional Illinois, Missouri and Indiana offices of Help at Home,
Inc. Opening of the corporate headquarter offices accounted for 14% or $76,000
of additional office expense with the remainder of the growth ($228,000,700 or
42%) stemming from acquired businesses.
Travel expenses grew by $82,000, or 65%, to $206,000 due to an increase in
the reimbursable travel between clients/patients, increased travel among
operating units, travel associated with investor meetings, and visits to
potential acquisition candidates.
Insurance expense increased by $82,000 in 1996 to $136,000, a 150%
increase, due to the growth in the business and increased number of entities
requiring general insurance coverages.
Depreciation and amortization expense in 1996 increased by $71,000 to
$117,000 a total increase of 155%. The increase is due to capital asset
additions together with amortization of goodwill related to acquisitions made
during year.
Marketing expenses went from $86,000 to $124,000 in 1996 for an overall
increase of 69%. The increased expense is the result of escalated marketing
efforts which have contributed to the overall growth in homemaker revenues.
Provision for income taxes grew from 38% of pre-tax income to 44% of
pre-tax income in 1996, due in part to increased state income taxes and the
adjustment of accrued tax benefits ($55,000) that were recorded in prior years.
Before the adjustment, current year tax provisions approximated 40% of pre-tax
income.
Earnings per share of common stock were $.52 (fully diluted) in 1995 and
$.41 in 1996 based on weighted average shares outstanding of 1,050,000 and
2,243,227, respectively. As noted herein, the Company has approximately 1.6
Million Warrants outstanding as a result of its initial public offering. The
Company has adopted the modified treasury method of presenting earnings per
share for the year ended June 30, 1996. On a fully diluted basis, the Company's
earnings per share in 1996 represented a decrease of $.11 or 21% from the
preceding year on a corresponding increase of 1,193,227 shares.
LIQUIDITY AND CAPITAL RESOURCES
The Company has net working capital of $4,171,295 as of March 31, 1997.
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 retired $884,000 of
Oxford Health Care's indebtedness subsequent to the purchase transactions.
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The Company's indebtedness includes a $325,000 obligation to a former
shareholder of Oxford Health Care, $250,000 of unsecured bank debt utilized for
the acquisition of Preferred Nursing Services, Inc. of Muscle Shoals, Alabama,
unsecured bank debt in the amount of $400,000 used to fund expansion and
business development, $272,200 for the February 1997 acquisition of a Piper
Navajo aircraft, and capital lease obligations amounting to $38,000. The
Company's portfolio of accounts receivable, totaling approximately $5,188,000,
is unencumbered.
The Company has access to $350,000 remaining on its $1,000,000 unsecured
line of credit from the Bronson-Gore Bank at the bank's prime rate. The Company
is also investigating opportunities 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 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 May 2, 1997 the closing price of the Common Stock on the NASDAQ
Stock Market was $4.50.
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.
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BUSINESS
GENERAL
Help at Home, Inc. and its subsidiaries (collectively, the Company)
provide homemaker, custodial and skilled home health care services to elderly
and disabled persons within their homes. Such services consist of nutritional
planning and assistance, household management, personal care, skilled nursing
interventions, rehabilitative therapy, and medical social work services. The
majority of the Company's clients are obtained and served through 13 regional
contracts with the Illinois Department on Aging (IDOA) and contracts with other
state and municipal agencies. Help at Home also provides medically necessary,
skilled home health care services through its subsidiaries certified as Medicare
home health agencies. The Company operates through 24 offices in Illinois,
Indiana, Missouri, Alabama and Mississippi.
Overview of the Home Care Industry
The home care industry serves the elderly as well as persons with
temporary or permanent disabilities of any age. The primary purpose of home care
programs is to keep clients from becoming institutionalized and to fill the gap
created by inadequate health insurance coverage. The need for such services has
escalated over the last decade due to the general aging of the population and
the desire of elderly or disabled persons to maintain their quality of life by
remaining independent and living in their own homes.
According to published industry data, the home care industry in 1994
constituted a $23 Billion market, with annual growth rates for this sector of
the economy exceeding 20%. In addition to the general aging of the population,
primary reasons cited for such rapid growth include the substantial cost savings
achievable through at-home care as an alternative to more expensive
institutional care, medical and technological advances which enable a growing
number of treatments to be administered at home rather than in a medical
facility and Medicare reimbursement policies which provide certain incentives to
minimize the length of in-patient hospital stays.
Moreover, it has been predicted that long-term maintenance home care
services will be the largest area of growth in the home care field. Fully 20% of
those over 65 can be considered frail elderly who experience functional
limitations secondary to chronic disease processes; while 46% of those over the
age of 85 fall into the frail elderly grouping and are, therefore, candidates
for continuous, long-term custodial home care services. The need for assistance
with the activities of daily living such as eating, dressing, bathing, walking
and household management is sometimes thought of as a social need rather than a
medical requirement. However, the provision of these basic services, often by a
paid home care worker, is crucial to the health and well-being of the elderly
patient and is being considered more and more often as medically necessary,
preventive care.
The majority of home care recipients obtain services by participating in
federally or state-funded programs for which they are eligible. Medically
necessary, skilled home health care interventions, such as those provided
through the Company's Medicare certified home health agencies, are reimbursed
through Medicare Part A payments. Similarly, non-medical, custodial services to
homebound clients are provided pursuant to contracts with agencies such as the
Illinois Department on Aging or various Medicaid Waiver Programs. The Company is
a provider to Medicare, Medicaid and other state program recipients through
various contractual arrangements.
There have been a number of proposals offered in recent years through
which the Federal government would increase its involvement in the delivery of
health care, lower reimbursement rates for home care services and/or modify the
payment methodology for Medicare home health services. The Company cannot
predict what
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effect, if any, such proposals may have given the wide variety of proposals and
the changing nature of the political, economic and regulatory influences at work
in the government and U.S. economy. The Company believes, however, that such
proposals will take time to enact, will likely have a phased-in approach and
will, therefore, have minimal impact on the Company's business in the immediate
future.
In August, 1996, the U.S. Congress ratified an increase in the Minimum
Wage to $5.15 as of September, 1997. The minimum wage amendment to the budget
bill will affect the Company through imposition of an increase in the minimum
wage as of October 1, 1996 to $4.75. The Company, in anticipation of such a wage
increase, is working to effect pro-rata rate increases in each of its affected
homemaker service contracts.
Business Strategy
The Company's business strategy is to provide a variety of home care
services, through skilled therapeutic interventions (nursing and therapy
services) and custodial (homemaker services), to a diversified mix of groups and
individuals in the geographic markets served by the Company. The Company expects
to expand the number of locations and markets it serves through development of
additional service contracts, acquisition of existing home care businesses and
introduction of complementary services. Key elements of the Company's strategy
include:
1) Broadening Customer Relationships. The Company has revamped its
marketing program in an effort to identify and obtain additional contracts and
grants from local, state and federal government programs. Likewise, the Company
has focused on involvement in community organizations and senior service
activities, such as those offered by local senior service provider councils and
coalitions for the purpose of enhancing the Company's name and service
recognition among the its constituencies.
2) Cross-Marketing Services. The Company believes that numerous
opportunities exist to cross-market services, thus ensuring retention of clients
who may experience fluctuations or changes in their home care needs. For
example, an elderly home care client who becomes ill may require skilled
services for a time, after which his/her needs may revert back to custodial
care. The Company will be in a position, either through its homemaker service
divisions or Medicare home health agencies, to meet the needs of such clients.
As the Company continues to strengthen its ability to continuously meet changes
in the home care requirements of its elderly clientele it will be in a better
position to avoid loss of business to other providers with a wider, or
different, array of service offerings.
3) Acquiring Complementary Businesses. The Company intends to continue to
pursue acquisition of businesses that complement the Company's existing
locations and/or service offerings. Desirable acquisition targets include
Medicare-certified providers of skilled nursing and related services proximately
located to current operating units. The Company will also continue to focus on
existing home care companies whose service lines can be readily expanded through
the addition of new services, such as skilled service providers that can be
readily expanded through the addition of custodial services.
4) Achievement of Operating Efficiencies. The Company believes that, as it
increases in size and market share, it will be able to reduce, as a percentage
of revenues, corporate overhead and operating costs including personnel,
insurance, computer and communications systems, legal, accounting, and marketing
expense. By increasing the Company's revenue base through internal growth and
acquisitions, the Company believes it can achieve certain economies of scale,
that will allow the Company to recoup a larger profit from its services.
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5) Increasing Market Penetration in Selected Markets. The Company has
focused on increasing its market share in Alabama and Mississippi in connection
with the acquisition of Oxford Healthcare. The Company has opened 11 new offices
in Illinois, Indiana, Missouri and Alabama for the purpose of strengthening its
market presence. The Company will continue to focus on business development and
acquisitions in neighboring areas throughout the Midwest, Southeastern,
Mid-Atlantic and Southwestern part of the United States.
Services
The Company maintains contracts with several state and municipal agencies
to provide custodial services to elderly and disabled clients. Such custodial
services generally entail homemaker services, household management, and
assistance with activities of daily living. The Company provides in-depth
training to its workers who provide such services to ensure consistency of
approach and adequacy of care.
Case managers, engaged by the state agencies, generally refer custodial
care clients to the Company after eligibility for service is determined. Case
managers generally refer clients to home care companies on a rotating basis
unless a specific home care provider is identified by the client to be served.
Approximately 90% of the Company's revenues in fiscal 1996 were derived from the
delivery of custodial services.
In addition to custodial services, the Company provides skilled services
to those with an established medical need as determined by a physician. Skilled
home care services include nursing interventions, physical therapy for
improvement of range of motion and pain reduction, occupational therapy for
enhancement of the patient's ability to perform routine activities of daily
living, speech therapy directed at resolution of swallowing or language
difficulties and medical social work services to address and help resolve issues
related to the psycho-social aspects of home care . Through its Medicare
certified home health agencies, the Company also provides home health aide
services that are provided under the direct supervision of a nurse.
The Company has indicated its intention to enter into hospice care through
which it will provide in-home care to terminally ill patients. In-home hospice
care offers an alternative to hospice centers or nursing homes for terminally
ill individuals who prefer to live out the remainder of their lives in their own
residences. It is the Company's intention to provide such services, through
licensed and certified hospice organizations, to Medicare and Medicaid patients.
The Company has completed its first applications to form hospices under the
aegis of Oxford Healthcare in Alabama and Mississippi; however, the hospices are
not yet operational.
Marketing and Sales
The Company has developed separate marketing strategies for its contract
business and private home care operations.
Contract Services. The Company is not able to directly potential clients,
market its services to various government entities as contract procurement is
based on the competitive bidding process. In this area, the Company's main sales
and marketing objective is to maintain favorable relationships with the CCUs and
the various contract and grant sources. In the event clients do not choose a
particular provider, the CCUs control the flow of clients to the contract
vendors through a system of rotation. In order to obtain renewal of existing
contracts, as well as procure additional contracts, the Company must work to
maintain and improve the relationships between itself and the state or municipal
agency. Such relationship-building methods may include involvement in the pilot
projects for the particular government program and participation in fund raisers
and agency sponsored events, such as senior picnics and provider council
meetings. Fund raising events are typically
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costly to participate in and there can be no assurance that management will
determine that the expense of participating in any fund raisers justify the
anticipated benefits to be derived therefrom.
Most of the state program participants are unknowledgeable about
particular home care providers and are unable, when asked by the CCU, to request
a company by name or specify one provider over the other. The Company intends to
introduce marketing efforts designed to bring its name to the mind of the end
user, thereby positioning itself to receive a larger share of CCU referrals
through specific client requests. Management believes that fund raisers and
participation in program events will provide a personal way for potential
clients to become familiar with the Company's name and its administrative staff.
However, as discussed above, if the costs of participation in fund raising
events prove to be prohibitive, management will be forced to seek other, less
costly avenues to build name recognition. The Company also intends to utilize
various advertising and direct mail campaigns to achieve additional levels of
exposure.
Private Home Care Services. The Company has already developed
relationships with local and regional health care providers as sources of
referral. The Company anticipates that, as it implements its acquisition
strategy into related home care businesses, the base of referring third party
payors and agencies will expand. In addition, since many persons are only able
to afford in home health services through their Medicare coverage, the Company
intends to increase its market penetration through the acquisitions of home
healthcare agencies with existing Medicare certification. The Company has not
identified any particular acquisition candidates and there can be no assurance
that it will be successful in identifying such candidates.
The Company derives a portion of its home care clients from referral
sources such as insurance companies and private pay sources, as well as from a
variety of professionals such as hospital discharge planners, social workers,
trust officers and other home care providers. Management anticipates that the
Company will continue to develop marketing programs specifically targeted toward
these referral sources as its home care capabilities are expanded.
Government Regulation
Custodial services, which comprise the bulk of the services provided by
the Company, are generally unregulated. The Company must, however, maintain
certain state and/or federal licenses or certifications in order to offer
specific health services. With respect to licensure of skilled home health care
services, each state specifies the manner in which home health agencies will
operate. Approximately half of the states, including Alabama and Mississippi,
require that home health agencies possess one or more valid Certificates of Need
(CON) in order to qualify as a provider of Medicare home health services. Absent
a valid CON, a home health agency may be precluded from providing certain
services or expanding its operations into new geographic areas. Recently,
however, several states have initiated a process through which the requirement
may be reconsidered and within the next several years, reliance on CONs as a
means of controlling home health care costs may be significantly diminish.
Currently there is a moratorium on the issuance of new Certificates of Need,
thus limiting the ability of would-be Medicare home health providers to enter
CON markets. The Company possesses a Certificate of Need in Montgomery County,
Alabama through Homemakers of Montgomery, Inc. and has initiated an action in
the Circuit Court of Montgomery County Alabama (15th Judicial Circuit) to secure
CON authorization in the Alabama counties of Bullock, Elmore, Macon and
Tallapoosa.
All Medicare home health agencies must also successfully demonstrate, on
an annual basis, compliance with Medicare Conditions of Participation in order
to continue to provide services to Medicare beneficiaries. Such conditions
generally embody established standards for home health agency management of
personnel, adherence
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to patients' rights, supervision of care, financial management and the presence
of an independent, professional advisory group. All of the Company's Medicare
provider units have successfully passed their annual Medicare surveys.
In addition, Homemakers of Montgomery, Inc. has been accredited by the
Joint Commission on the Accreditation of Healthcare Organizations (JCAHO). The
Company intends to apply for JCAHO accreditation for each of the operating units
providing skilled home health services.
Competition
The Company competes with other providers of custodial services for
various state and municipal contracts pursuant to a competitive bidding process.
Each company competing for a bid is required to provide specific information
regarding its history and duration as a provider of services. Depending on each
bidder's responses to requested information and the fulfillment of specific
evaluative criteria, points are awarded to each provider in Illinois with
contracts going to the bidders with the greatest number of accumulated points.
With respect to this process, the key competitive factors are the length of time
in business and the geographic areas served by the provider. As a result of the
Company's long history, market penetration and presence, the Company has been
highly successful in obtaining contracts for provision of custodial services.
Competition among home health agencies for Medicare patients is based, in
part, on availability of qualified personnel who can be dispatched to care for a
patient in a timely manner. Likewise, a home health agency's array of service
offerings, geographic coverage and relationships with major referral sources
significantly influences competitive position. In states with applicable CON
regulations, competition may be more limited due to the smaller number of
providers in any one market. There is limited, if any, price competition with
regard to services provided to Medicare and/or Medicaid coverage recipients.
Employees
Exclusive of field personnel who work on a per diem basis, the Company has
133 administrative employees, as of May 20, 1997.
The number of caregivers providing services to clients varies from day to
day. These personnel do not, necessarily, work full time shifts; nor do they
exclusively work for the Company. Certain of the Company's employees in Chicago
are represented by a union. Relations with the union are considered to be good.
The Company has in place a screening process for all of its caregivers to
ensure compliance with laws generally, and the absence of criminal convictions
and/or disciplinary actions that limit professional activity.
Insurance and Bonding
Due to the personal service aspect of the Company's business, the Company
may be exposed to the risk of personal injury claims brought by its clients. The
Company maintains an insurance policy for such purposes in the amount of
$1,000,000 per occurrence and $2,000,000 in the aggregate. In addition, each of
the Company's field personnel is bonded by the Company in the amount of $5,000
against other claims that can arise in connection with acts of employees working
at in-home service businesses, such as the Company. See "Risk Factors - Possible
Exposure to Claims."
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Property
The Company's principal executive offices are located at 223 West Jackson
Blvd., Chicago, IL and consist of approximately 3,100 square feet of rented
space. Similarly, the Company leases office space in each of its 24 operating
locations as follows:
Help at Home, Inc. - Corp Offices Help at Home, Inc. - Chicago
223 West Jackson Blvd, Suite 500 223 West Jackson Blvd., Suite 510
Chicago, IL 60606 Chicago, IL 60606
Lease expires November 30, 2000 Lease expires November 30, 2000
Help at Home, Inc. - St. Charles Help at Home, Inc. - Ottawa
103 North 11th St. Suite 107 615 West Main Street
St. Charles, IL 60174 Ottawa, IL 61350
Lease expires March 31, 1999 Lease expires July 9, 1997
Help at Home, Inc. - Alton Help at Home, Inc. - St. Louis
707 Berkshire Blvd. 300 Biltmore Drive - Suite 336
Suite 260 Fenton, MO 63026
Alton, IL 62024 Lease expires July 31, 1998
Lease expires February 28, 1997
Help at Home, Inc. - Waukegan Help at Home, Inc. - Oak Forest
2504 Washington Street, Suite 101 15337 S. Cicero Ave., Suite F
Waukegan, IL 60085 Oak Forest, IL 60452
Lease expires June 30, 1997 Lease expires May 31, 1998
Help at Home, Inc. - Quad Cities Help at Home, Inc. - Munster
2100 18th Avenue, Suite 5 9250 Columbia, Suite D2
Rock Island, Il 61201 Munster, IN 46321
Lease expires July 31, 1998 Lease expires June 30, 1997
Help at Home, Inc. - Macomb Help at Home, Inc. - Belleville
107 Business and Tech Center 213 South Illinois, Suite 101
Western Illinois University
Macomb, IL 61455 Belleville, IL 62220
Lease expires March 31, 1997 Lease expires April 14, 1999
Lakeside Home Health Agency - MO Lakeside Home Health Agency - IL
300 South Biltmore 223 West Jackson Blvd.
Fenton, MO 63026 Chicago, IL 60606
Lease expires July 31, 1998 Month to Month Lease
Rosewood Home Health, Inc.
707 Berkshire Blvd.
Suite 250
Alton, IL 62024
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Lease expires October 31, 1999
Homemakers of Montgomery, Inc. Statewide Healthcare Services, Inc.
229 Interstate Park Drive 3828 Interstate 55 North
Montgomery, AL 36109 Jackson, MS 39211
Lease expires December 31, 1998 Lease expires May 31, 2001
Statewide Healthcare Services,Inc. Statewide Healthcare Services, Inc.
1209 A Snow Street 956 Montclair Road, Suite 218
Oxford, AL 36203 Birmingham, AL 35213
Lease expires November 30, 1997 Lease expires July 31, 1997
Statewide Healthcare Services,Inc. Statewide Healthcare Services, Inc.
115B Longwood Drive SE 1141 Montlimar Drive, Suite 2400
Huntsville, AL 35801 Mobile, AL 36609
Lease expires July 31, 1997 Lease expires July 31, 1997
Statewide Healthcare Services, Inc. Statewide Healthcare Services, Inc.
188 North Foster, Suite 200 2000 Flint Road, Suite 102
Dothan, AL 35708 Decatur, AL 35602
Lease expires September 30, 1998 Lease expires September 30, 1997
HASC Staffing Services, Inc. Statewide Healthcare Services, Inc.
3828 Interstate 55 North 229 Interstate Park Drive
Jackson, MS 39211 Montgomery, AL 36101
Lease expires May 31, 2001 Month to Month Lease
Office leases are generally for terms of one to five years. The Company
believes that its office facilities, which are utilized exclusively for
administrative purposes, will be generally suitable to fulfill the Company's
needs for the foreseeable future. The Company maintains insurance on all of its
properties.
Legal Proceedings
The Company is not a party to any legal proceedings which it believes may
have a materially adverse effect on the Company's financial condition or results
of operations.
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MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information concerning each of the
current executive officers and directors of the Company. The Company's officers
are elected to serve in such capacities until the earlier to occur of the
election and qualification of their respective successors or until their
respective deaths, resignations or removals by the Company's Board of Directors
from such positions. The Company's directors are elected to serve in such
capacities until the earlier to occur of the election and qualification of their
respective successors or their respective deaths, resignations, or removals by
the Company's stockholders from such positions. Directors do not currently
receive compensation for their services as such. One director-designee has
received shares of Common Stock in consideration for agreeing to serve as
director. One director, Marlene Schaffer, resigned from the Board of Directors.
See "Certain Transactions."
Name Age Positions and Offices
---- --- ---------------------
Louis Goldstein 53 Chairman of the Board, Chief Executive
Officer and Treasurer
Joel Davis 32 Chief Operating Officer, Secretary and
Director
Sharon Harder 47 Chief Financial Officer
Robert Rubin 55 Director
Steven L. Venit 37 Director
Dr. Michael J. Morgenstern 57 Director
- ----------
All of the Company's officers devote full time to the Company's business.
The principal occupation and business experience of each director and
executive officer is set forth below.
Louis Goldstein. Mr. Goldstein, the founder of the Company, served as
President and Director since its inception. He is presently CEO and Chairman of
the Board. Mr. Goldstein served as a director of Superior Care, Inc., a Delaware
corporation (now known as Olsten Corporation ("Olsten")). Olsten, a New York
Stock Exchange listed company, is engaged in providing home care and
institutional staffing services and health care management services. Mr.
Goldstein was also founder of Home Med North, Inc., a not for profit Medicare
agency in Chicago, Illinois, from 1976 through 1986. From 1967 through 1976, Mr.
Goldstein ran Baker Employment Agency, a sole proprietorship and domestic
employment service.
Joel Davis. Mr. Davis joined the Company as general counsel in July 1995.
Mr. Davis has been the Chief Operating Officer of the Company since March, 1996.
From October, 1989 through July 1995, he worked as an
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associate at the law firm of Hlustik, Huizenga, Williams & VanderWoude, Ltd. in
Chicago where from August 1994 until his departure he represented the Company in
a broad range of general corporate matters. Mr. Davis received a JD from the
DePaul University College of Law (1989). Mr. Davis received a B.S. in
Kinesiology from the University of Colorado (1986).
Sharon Harder. Ms. Harder joined the Company in March, 1996 as Chief
Financial Officer. For six years prior to joining the Company, Ms. Harder was
Chief Operating Officer and Chief Financial Officer for Child Health Systems,
Inc. and Pediatric Homecare of America. The companies offered a wide range of
alternate site services including center based day health care, skilled home
nursing care, rehabilitative therapies, infusion therapy, home medical equipment
and case management services.
Robert M. Rubin. has served as a Director of the Company since June 1992
and has been Chairman since November 1996. Since December 5, 1995 Mr. Rubin has
been a Director of Help at Home, Inc., a public company engaged in the business
of providing homemaker and general housekeeping services to elderly and disabled
persons at home. From June 1994 through March 1997, Mr. Rubin was a Director of
Kaye Kotts Associates, Inc., a public company that provides representation for
delinquent tax payers before tax authorities. In October 1996, Mr. Rubin became
a director of Med-Emerg International Inc., an operator of nursing homes and
related healthcare services. Currently, Mr. Rubin is also a director of Arzan
International, an Israeli food distributor.
Mr. Rubin has served as the Chairman of the Board of Directors of Western
Power & Equipment Corp. ("WPEC"), a construction equipment distributor, since
November 20, 1992. Between November 20, 1992 and March 7, 1993, Mr. Rubin served
as Chief Executive Officer of WPEC. Between October, 1990 and January 1, 1994,
Mr. Rubin served as the Chairman of the Board and Chief Executive Officer of
American United Global, Inc., a telecommunications and software company (AAUGI@)
and since January 1, 1994, solely as Chairman of the Board of AUGI. Since
October 1992, Mr. Rubin has been president and a director of Trans Cap, Inc., a
blind pool company. Mr. Rubin was the founder, President, Chief Executive
Officer and a Director of Superior Care, Inc. ("SCI") from its inception in 1976
until May 1986 and continued as a Director of SCI (now known as Olsten
Corporation ("Olsten")) until the latter part of 1987. Olsten, a New York Stock
Exchange listed company, is engaged in providing home care and institutional
staffing services and health care management services. Mr. Rubin was formerly a
Director and Vice Chairman, and is a minority stockholder of American Complex
Care, Incorporated ("ACCI"), a public company which provided on-site health care
services, including intradermal infusion therapies. In April 1995, the principal
operating subsidiaries of ACCI petitioned in the Circuit Court of Broward
County, Florida for an assignment for the benefit of creditors. Mr. Rubin is
also a Director, Chairman and minority stockholder of Universal Self Care, Inc.,
a public company engaged in the sale of products used by diabetics, and Response
USA, Inc., a public company engaged in the sale and distribution of personal
emergency response systems. Mr. Rubin is also Chairman, Chief Executive Officer
and a Director and a principal stockholder of ERD Waste Corp., a public company
specializing in the management and disposal of municipal solid waste, industrial
and commercial nonhazardous solid waste and hazardous waste.
Steven L. Venit. Mr. Venit has been a Director of the Company since
December 1995. Mr. Venit has been a sole practitioner with the law offices of
Steven L. Venit, Esq. for more than 10 years and is licensed to practice law in
the states of Illinois, Nevada and Wisconsin. Mr. Venit graduated from
Valparaiso University in 1980 and in 1983 received a J.D. from John Marshall
School of Law. Mr. Venit has acted as legal counsel to the Company on a variety
of routine legal matters. See "Certain Transactions."
Dr. Michael J. Morgenstern is a practicing orthopedic surgeon in Chicago
for over 20 years. Dr. Morgenstern became a director of the Company in January
of 1997. Dr. Morgenstern is a licensed orthopedic surgeon practicing in the city
of Chicago. He received his undergraduate degree from the University of Illinois
at Champaign in 1966.
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<PAGE>
In 1970 Dr. Moregenstern graduated from Chicago Medical School and went on
to complete his residency and fellowship at Columbia Presbyterian Hospital in
Manhattan in 1975. From 1975 to 1979 Dr. Morgenstern was Assistant Chief of
Staff o Orthopedics at Mt. Sinai Hospital in Chicago. In 1979 Dr. Morgenstern
became Chief of Scoliosis and Spinal Deformities.
None of the directors has received or currently receives any cash
compensation for serving on the Board of Directors; however, directors may be
reimbursed for expenses incurred in connection with their services as such.
Advisors
The Company appointed Sheldon Lieberbaum as an advisor to the Board of
Directors for a period of three years commencing December 5, 1995. Mr.
Lieberbaum is not compensated for acting in such capacity except that he will be
reimbursed for any reasonable expenses that he incurs in attending meetings of
the Company's Board of Directors. Mr. Lieberbaum will have no other affiliation
with the Company except that Mr. Lieberbaum is director of corporate finance and
a director and shareholder of Lew Lieberbaum & Co., Inc., an investment banking
firm which was the co-underwriter of the Company's initial public offering (the
"Representative"). Mr. Lieberbaum has been in the brokerage business for more
than 35 years and serves as a director for the following publicly-traded
companies: Unapix Enterprises, a worldwide licensor of feature films and
television programs; Response USA, Inc., which manufacturers and sells personal
emergency response systems; Boston Pacific Medical, Inc., which is engaged in
the manufacture and sale of disposable medical products; All American
Semi-Conductor, Inc., which engaged in the manufacture of semi-conductors; and,
In Home Health, Inc., a home health care company. Mr. Lieberbaum has developed
and participated in the implementation of corporate finance activities at a
variety of New York and Florida based investment banking firms. He has served as
the Underwriter's Director of Corporate Finance and Syndicate Manager from April
1990 to the present and served in similar capacities with Global Capital
Securities, Inc. from 1988 to 1990, Schweitzer & Co. from 1986 to 1988 and RLR
Securities from 1984 to 1986. In addition, Mr. Lieberbaum was an officer of
Lieberbaum & Company from 1960 to 1971 and was employed by Dreyfus and Company
from 1957 to 1960.
The National Association of Securities Dealers, Inc. ("NASD") recently
alleged that the Representative and others, including Mr. Lieberbaum, in 1991
engaged in market manipulation, inaccurately maintained books and records and
failed to adequately supervise the activities of its personnel in connection
with the trading for the Representative's account of warrants which were part of
a public offering of units of convertible preferred stock and warrants of a
company for which the Representative had acted in 1991 as managing underwriter.
In order to expeditiously resolve this matter and without admitting or denying
these allegations, in January 1995 Mr. Lieberbaum and others voluntarily entered
into a Letter of Acceptance, Waiver and Consent with the NASD pursuant to which
Mr. Lieberbaum was censured and fined by the NASD, agreed to pay with the
Representative and others restitution to customers and was suspended from
associating with any NASD member for a one month period.
Committees of the Board
The Company has an Audit Committee and a Compensation Committee whose
members consist of Robert M. Rubin and Steven L. Venit.
Executive Compensation
The following table sets forth the cash compensation, as well as certain
other compensation paid or accrued, by the Company to the Company's Chief
Executive Officer and its former President for the fiscal years ended June 30,
34
<PAGE>
1994, 1995, and 1996. No other executive officer had a total annual salary and
bonus exceeding $100,000 during the reported periods.
Stock
Options
Name and Principal Position Year Salary Bonus Granted
- --------------------------- ---- ------ ----- -------
Long Term
Annual Compensation Compensation
------------------- ------------
Louis Goldstein, 1996 $192,611 - -
Chairman, Chief Executive 1995 $155,082 - -
Officer, Director 1994 $152,966 - -
Marlene Schaffer, 1996 $104,654 - -
President 1995 $100,594 - -
1994 $88,845 - -
Employment Agreements
In August 1995, the Company entered into an employment agreement with
Louis Goldstein which became effective December 5, 1995. Pursuant to the
agreement, Mr. Goldstein will receive a base annual salary of $175,000 in the
first year and receives a $200,000 salary in the second year, subject to
increase in each successive year of the contract term at the discretion of the
Compensation Committee of the Board of Directors. In addition, Mr. Goldstein is
entitled to receive a "benefit allowance" in lieu of health, life and disability
insurance and other similar benefits, in the amount of 10% of Mr. Goldstein's
base salary per year. The agreement is for a period of five years and is
automatically renewable for additional one year terms unless prior notice is
given not less than 90 days prior to the end of the initial term or any
succeeding year. The agreement also subjects Mr. Goldstein to non-competition
provisions.
Option/SAR Grants During Fiscal 1996
<TABLE>
<CAPTION>
Name # of Securities % of total granted Ex. Price Expiration Date
<S> <C> <C> <C> <C>
Louis Goldstein -0- - - -
Joel Davis 10,000 50% $5.88 February 6, 2006
Sharon Harder -0- - - -
</TABLE>
Stock Option Plan
In August 1995, the Board of Directors adopted and approved the 1995 Stock
Option Plan (the "Plan" or the "1995 Stock Option Plan"), and the Plan received
stockholder approval in August 1995. The Plan is administered by the Board of
Directors or by a committee appointed by the Board. Pursuant to the Plan,
options to acquire an aggregate of 264,375 shares of Common Stock may be
granted, 20,000 of which have been granted to date. The Plan provides for grants
to employees, consultants and directors of the Company.
35
<PAGE>
The 1995 Stock Option Plan authorizes the Board to issue incentive stock
options ("ISOs"), as defined in Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"), as well as stock options that do not conform to
the requirements of the Code section ("Non-ISOs"). Consultants and directors who
are not also employees of the Company could be granted only Non-ISOs. The
exercise price of each ISO may not be less than 100% of the fair market value of
the Common Stock at the time of grant, except that in the case of a grant to an
employee who owns 10% or more of the outstanding stock of the Company or a
subsidiary or parent of the Company (a "10% Stockholder"), the exercise price
may not be less than 110% of the fair market value on the date of grant. The
exercise price of each Non-ISO shall be determined by the Board of Directors in
its discretion and may be less than the fair market value of the Common Stock
(but not less than 85%) on the date of grant. Notwithstanding the foregoing, the
exercise price of any option granted on or after the effective date of the
registration of any class of equity security of the Company pursuant to Section
12 of the Securities Exchange Act of 1934, and prior to six months after the
termination of such registration may be no less than 100% of the fair market
value per share on the date of the grant. ISOs may not be exercised after the
tenth anniversary (fifth anniversary in the case of any option granted to a 10%
Stockholder) of their grant. Non-ISOs may not be exercised after the tenth
anniversary of the date of grant. Options may not be transferred during the
lifetime of an option holder. No stock options could be granted under the Plan
after August 15, 2005.
Subject to the provisions of the Plan, the Board had the authority to
determine the individuals to whom the stock options are to be granted, the
number of shares to be covered by each option, the exercise price, the type of
option, the option period, the restrictions, if any, on the exercise of the
option, the terms for the payment of the option price and other terms and
conditions. Payments by optionholders upon exercise of an option may be made (as
determined by the Board) in cash or such other form of payment as may be
permitted under the Plan, including without limitation, by promissory note or by
shares of common stock.
Indemnification of Officers and Directors
The Articles of Incorporation and Bylaws of the Company provide for
indemnification of each director and officer or former director or officer or
any person who may have served at the request of the Company as a director or
officer of another corporation in which the Company owns shares of capital stock
or is a creditor. The Company will indemnify against reasonable costs and
expenses incurred in connection with any action, suit or proceeding to which any
of the individuals described above were made a party by reason of his or her
being or having been such a director or officer, unless such director has been
adjudicated to have been liable for misconduct in his or her corporate duties or
such officer has been adjudicated to have been liable for negligence or
misconduct in his or her corporate duties. As of the date of this Prospectus,
the Company is not aware of any existing, threatened or pending litigation
involving a former or current director that will require the indemnification of
the Company.
Notwithstanding the foregoing indemnification provisions of the Company's
Articles of Incorporation and Bylaws, the Company has been informed that, in the
opinion of the Commission, indemnification for liabilities arising under the
Securities Act is against public policy and is, therefore, unenforceable.
36
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this Prospectus and as
adjusted to reflect the issuance by the Company of shares of Common Stock upon
exercise of the Warrants, certain information with respect to stock ownership of
(i) all persons known by the Company to be beneficial owners of 5% or more of
its outstanding shares of Common Stock; (ii) each director; and (iii) all
directors and officers as a group, together with their respective percentage
ownership of such shares before the Offering and as adjusted to reflect the sale
of the shares of Common Stock and Warrants offered hereby. Unless otherwise
indicated, the beneficial owners have sole voting and investment power over the
shares of Common Stock listed below.
Name and Address Shares Before After
---------------- Owned Offering Offering(1)
----- -------- -----------
Percentage of
Common Stock Owned
------------------
Louis Goldstein (1) 960,000 51.3% 25.8%
c/o 223 West Jackson, Suite 510
Chicago, Illinois 60606
Robert M. Rubin (2) 52,500 2.8% 1.4%
c/o 223 West Jackson, Suite 510
Chicago, Illinois 60606
Joel Davis (2) 50 * *%
c/o 223 West Jackson, Suite 510
Chicago, Illinois 60606
Sharon Harder - - -
c/o 223 West Jackson, Suite 510
Chicago, Illinois 60606
Steven L. Venit - - -
c/o 223 West Jackson, Suite 510
Chicago, Illinois 60606
All officers and directors as 1,012,500 54.1% 27.2%
a group
(5 persons)........................
* Less than one percent.
- -----------
(1) These percentages assume that all outstanding Warrants are exercised and
that the Underwriter exercises all of the Underwriter's Warrants and all
of the Warrants included therein.
(2) Does not include Shares issuable upon the exercise of outstanding options.
37
<PAGE>
CERTAIN TRANSACTIONS
In connection with the formation of the Company, on August 7, 1995, the
Company issued to Louis Goldstein 962,500 shares of Common Stock in exchange for
2,750 shares of common stock of Help At Home, Inc., an Illinois company ("Help
Illinois"). In exchange for 143 shares of common stock of Help Illinois, the
Company issued to Mr. Rubin 50,000 shares of the Company's Common Stock. Until
July 31, 1993, Help Illinois leased its office space from Louis Goldstein. Mr.
Goldstein was paid $42,387 for rent for the eleven months ended June 30, 1993.
Help Illinois abandoned its office space and incurred an expense of $64,650 on
the abandonment of its lease.
In 1992, 1993 and 1994, Help Illinois loaned to Mr. Goldstein $135,470 and
$101,135 and $92,721, respectively. The loans bear interest at nine percent per
annum. The balance of such loans at December 31, 1996 was $133,767.31.
During fiscal 1996, the Company paid an aggregate of approximately $29,000
(including accrued fees from a prior year) to Steven L. Venit, a director, for
certain routine legal services.
See "Business - Management" for a discussion of the Company's agreement to
appoint Sheldon Lieberbaum as an advisor to the Company's Board of Directors.
The Company has adopted a policy that all future transactions, including
loans between the Company and its officers, directors, principal stockholders
and their affiliates must be approved by a majority of the Board of Directors,
including a majority of the independent and disinterested outside directors on
the Board of Directors, and will be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
38
<PAGE>
DESCRIPTION OF SECURITIES
As of the date of this Prospectus, the total authorized capital stock of
the Company consists of 14,000,000 shares of Common Stock, $.02 par value per
share and 1,000,000 shares of Preferred Stock, $.01 par value per share of which
1,869,375 shares of Common Stock are outstanding. The following descriptions of
the securities of the Company are qualified in all respects by reference to the
Company's Certificate of Incorporation and By-laws as currently in effect.
Common Stock
The holders of outstanding shares of Common Stock are entitled to share
ratably on a share-for-share basis with respect to any dividends when, as and if
declared by the Board of Directors out of funds legally available therefor. See
"Dividend Policy." Each holder of Common Stock is entitled to one vote for each
share held of record and is not entitled to cumulative voting rights. The Common
Stock is not entitled to conversion or preemptive rights and is not subject to
redemption. Upon liquidation, dissolution or winding up of the Company, and
subject to the prior rights of holders of the Company's Preferred Stock, if any,
the holders of Common Stock are entitled to receive pro rata all of the net
assets of the Company available for distribution to its stockholders. All
outstanding shares of Common Stock are, and the shares of Common Stock offered
hereby will upon issuance be, fully paid and nonassessable.
Warrants
Each Warrant entitles its holder to purchase one share of Common Stock at
an exercise price of $6.00 per share commencing on the December 5, 1995 until
December 4, 2000.
The Warrants were issued pursuant to a warrant agreement (the "Warrant
Agreement") among the Company, the Underwriter and Illinois Stock Transfer
Company, the warrant agent, and was evidenced by warrant certificates in
registered form.
The exercise price of the Warrants and the number and kind of shares of
Common Stock or other securities and property issuable upon exercise of the
Warrants are subject to adjustment in certain circumstances, including stock
splits, stock dividends, or subdivisions, combinations or reclassifications.
Additionally, an adjustment will be made upon the sale of all or substantially
all of the assets of the Company in order to enable holders of Warrants to
purchase the kind and number of shares of stock or other securities or property
(including cash) receivable in such event by a holder of the number of shares of
Common Stock that might otherwise have been purchased upon exercise of the
Warrants.
The Warrants do not confer upon the holder any voting or any other rights
of a stockholder of the Company. Upon notice to the holders of Warrants, the
Company has the right to reduce the exercise price or extend the expiration date
of the Warrants.
Warrants may be exercised upon surrender of the Warrant certificate
evidencing those Warrants on or prior to the respective expiration date (or
earlier redemption date) of the Warrants to the Warrant Agent, with the form of
"Election to Purchase" on the reverse side of the warrant certificate completed
and executed as indicated, accompanied by payment of the full exercise price (in
United States funds, by cash or certified bank check payable to the order of the
Warrant Agent) for the number of Warrants being exercised.
39
<PAGE>
No fractional shares will be issued upon exercise of the Warrants.
However, if a holder of a Warrant exercises all Warrants then owned of record by
him, the Company will pay to that holder, in lieu of the issuance of any
fractional share which would be otherwise issuable, an amount in cash based on
the market value of the Common Stock on the last trading day prior to the
exercise date.
No Warrant will be exercisable unless at the time of exercise the Company
has filed with the Commission a current prospectus covering the issuance of
shares of Common Stock issuable upon exercise of the Warrant and the issuance of
shares has been registered or qualified or is deemed to be exempt from
registration or qualification under the securities laws of the state of
residence of the holder of the Warrant. The Company has undertaken to use its
best efforts to maintain a current prospectus relating to the issuance of shares
of Common Stock upon the exercise of the Warrants until the expiration of the
Warrants, subject to the terms of the Warrant Agreement. While it is the
Company's intention to maintain a current prospectus, there is no assurance that
it will be able to do so. See "Risk Factors - Current Prospectus and State Blue
Sky Registration Required to Exercise Warrants."
The Warrants are redeemable, in whole or in part, by the Company at a
price of $.10 per Warrant, commencing December 5, 1996, and prior to their
expiration, provided that (i) the Company gives 30 days prior written notice to
the registered holders of the Warrants, and (ii) the closing high bid price or
sale price per share of the Common Stock (if the Common Stock is then traded on
NASDAQ or a national securities exchange, respectively) for a period of 10
consecutive trading days, ending on the third business day prior to the date of
any redemption notice, equals or exceeds at least $9.00 (subject to adjustment
in certain events). The Warrants shall be exercisable until the close of the
business day preceding the date fixed for redemption. In addition, subject to
the rules of the NASD, the Company has agreed to engage the Representative as
warrant solicitation agent, in connection with which it would be entitled to a
5% fee upon exercise of the Warrants. See "Underwriting."
Preferred Stock
The Company is authorized to issue up to 1,000,000 shares of preferred
stock, par value $.01 per share. The preferred stock may be issued in one or
more series, the terms of which may be determined at the time of issuance by the
Board of Directors, without further action by stockholders, and may include
voting rights (including the right to vote as a series on particular matters),
preferences as to dividends and liquidation, conversion rights, redemption
rights and sinking fund provisions. The issuance of any such preferred stock
could adversely affect the rights of the holders of Common Stock and, therefore,
reduce the value of the Common Stock. The ability of the Board of Directors to
issue preferred stock could discourage, delay or prevent a takeover of the
Company. The Company does not have any current plans to issue any Preferred
Stock and is prohibited from issuing such until December 5, 1997 without the
prior written consent of the Representative. See "Risk Factors - Preferred
Stock."
Registration Rights
In connection with the IPO, the Company granted to the Underwriter certain
demand and piggyback registration rights with respect to the 71,250 shares of
Common Stock issuable upon exercise of the Underwriter's Warrants and the
142,500 shares of Common Stock and 142,500 Warrants issuable upon the exercise
of the Warrants included in the Underwriter's Warrants. All 213,750 shares of
Common Stock underlying the Underwriter's Warrants have been included in the
Registration Statement of which this Prospectus forms a part.
40
<PAGE>
NASDAQ Maintenance Requirements; Possible Delisting of Securities from NASDAQ
Market; Risks of Low-Priced Stocks
The Company's Common Stock and Warrants are listed on the NASDAQ National
Market System. The Commission has approved rules imposing criteria for listing
of securities on NASDAQ National Market, including standards for maintenance of
such listing. For continued listing on the NASDAQ National Market System a
company, among other things, must have $1,000,000 in net tangible assets,
$1,000,000 in market value of securities in the public float and a minimum bid
price of $1.00 per share. If the Company is unable to satisfy NASDAQ National
Market's maintenance criteria in the future, its securities may be delisted from
NASDAQ National Market. In such event, the Company would seek to list its
securities on the NASDAQ Small Capitalization Market, however, if it was
unsuccessful, trading, if any, in the Company's securities would thereafter be
conducted in the over-the-counter market in the so-called "pink sheets" or the
NASD's "Electronic Bulletin Board." As a consequence of such delisting, an
investor would likely find it more difficult to dispose of, or to obtain
quotations as to, the price of the Company's securities.
Transfer Agent, Redeemable Warrant Agent and Registrar
The transfer agent and registrar for the Common Stock and the warrant
agent for the Warrants is Illinois Stock Transfer Company.
Reports to Shareholders
The Company has registered the Common Stock and Warrants under the
provisions of Sections 12(b) and 12(g) of the Exchange Act, and has agreed that
it will use its best efforts to continue to maintain such registration for a
minimum of six years from December 5, 1995. Such registration requires the
Company to comply with periodic reporting, proxy solicitation and certain other
requirements of the Exchange Act.
SHARES ELIGIBLE FOR FUTURE SALE
Of the 1,869,375 shares of Common Stock of the Company outstanding as of
the date of this Prospectus, 1,012,500 are "restricted securities" as that term
is defined in Rule 144 promulgated under the Securities Act. Absent registration
under the Securities Act, the sale of such shares is subject to Rule 144, as
promulgated under the Securities Act. In general, under Rule 144, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company, who has beneficially owned restricted shares of Common Stock for at
least one year is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of 1% of the total number of outstanding
shares of the same class, or if the Common Stock is quoted on NASDAQ or a stock
exchange, the average weekly trading volume during the four calendar weeks
preceding the sale. A person who presently is not and who has not been an
affiliate of the Company for at least three months immediately preceding the
sale and who has beneficially owned the shares of Common Stock for at least two
years is entitled to sell such shares under Rule 144 without regard to any of
volume limitations described above. The 1,012,500 shares are presently available
for resale under Rule 144. In addition, if all of the Warrants and other
derivative securities registered herein are exercised, the Company will have an
additional 1,852,500 shares of Common Stock available for sale. No prediction
can be made as to the effect, if any, that sales of shares of Common Stock or
the availability of such shares for sale will have on the market prices
prevailing from time to time. Nevertheless, the possibility that substantial
amounts of Common Stock may be sold in the public market may adversely affect
prevailing market prices for the Common Stock
41
<PAGE>
and could impair the Company's ability to raise capital in the future through
the sale of equity securities. See "Risk Factors - Shares Eligible for Future
Sale" and "Underwriting."
WARRANT SOLICITATION
The Company has agreed to engage the Representative as warrant
solicitation agent, in connection with which it would be entitled to a 5% fee
upon exercise of the Warrants. In accordance with the NASD Notice to Members
81-38, no fee shall be paid: (i) upon the exercise where the market price of the
underlying Common Stock is lower than the exercise price; (ii) for the exercise
of Warrants held in any discretionary account; (iii) upon the exercise of
Warrants where disclosure of compensation arrangements has not been made and
documents have not been provided to customers both as part of the original
Offering and at the time of exercise; (iv) upon the exercise of Warrants in
unsolicited transactions; or (v) upon the exercise of Warrants where such
exercise is solicited by the Company. Notwithstanding the foregoing, no fees
will be paid to the Representative or any other NASD members upon exercise of
the Warrants prior to December 5, 1996. In addition, upon consent of the
Representative, other NASD members may solicit the exercise of the Warrants
without giving up a portion of the 5% solicitation fee to the Representative.
Further, such NASD broker/dealer will receive a 5% solicitation fee only when
designated in writing by the warrantholder as the soliciting broker.
LEGAL MATTERS
The validity of the securities which are being offered hereby will be
passed upon for the Company by Gersten, Savage, Kaplowitz, Fredericks & Curtin,
LLP, 101 East 52nd Street, New York, New York 10022.
EXPERTS
The statements of income, retained earnings and cash flows for the year
ended June 30, 1994, have been included herein and elsewhere in this Prospectus
in reliance upon the reports of Schwartz, Frumm & Millman, LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing. The financial statements of
the Company as of June 30, 1995, and for the year then ended appearing in this
Prospectus and the Registration Statement of which this Prospectus forms a part
have been audited by Richard A. Eisner & Company, LLP, independent auditors, as
indicated in their report with respect thereto, and are included herein in
reliance upon such report given upon the authority of said firm as experts in
accounting and auditing. The financial statements of the Company as of June 30,
1996, and for the year then ended appearing in this Prospectus have been audited
by Coopers & Lybrand, LLP, independent auditors, as indicated in their report
with respect thereto, and are included herein in reliance upon such report given
upon the authority of said firm as experts in accounting and auditing.
On September 6, 1995, upon the approval of its Board of Directors, the
Company dismissed Schwartz, Frumm & Millman and engaged Richard A. Eisner &
Company, LLP as its independent auditors. There was no disagreement with the
former accountant on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure. The Company received an
unqualified audit report from Schwartz, Frumm & Millman, LLP, for the year ended
June 30, 1994.
42
<PAGE>
The Company's previous accountants, Richard A. Eisner & Company, LLP, were
replaced pursuant to a vote of the Audit Committee of the Board of Directors.
The report prepared by Richard A. Eisner & Company, LLP did not contain an
adverse opinion, disclaimer of opinion, qualification or modification as to
uncertainty, audit scope or accounting principles. There were no disagreements
between the firm and the Company regarding any matter of accounting principles
or practices, financial statement disclosure or audit scope. Richard A. Eisner &
Company, LLP was notified of the decision of the Audit Committee on May 30,
1996. The firm has been replaced by Coopers & Lybrand, LLP.
43
<PAGE>
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form SB-2 with the
Washington D.C. Office of the Commission in accordance with the provisions of
the Securities Act, with respect to the securities offered hereby. The
Prospectus does not contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. For further information with respect to the
Company and the Securities offered hereby, reference is made to the Registration
Statement and the exhibits filed as a part thereof. Statements herein contained
concerning the provisions of any document are qualified in their entirety by
reference to the exhibit for a complete statement of its terms and conditions.
The Registration Statement and the exhibits may be inspected, without charge at,
or copies thereof obtained at prescribed rates from, the Public Reference
Section of the Commission at Room 1024 at its principal office, Judiciary Plaza,
450 Fifth Street, N.W., Washington, DC 20549. The Commission maintains a Web
site (http://www.sec.gov) that contains reports, proxy and information
statements and other information statements and other information regarding
registrants that file electronically.
44
<PAGE>
HELP AT HOME, INC.
INDEX TO FINANCIAL STATEMENTS
FINANCIAL STATEMENT AT JUNE 30, 1996 AND FOR THE YEARS ENDED JUNE 30, 1996 AND
1995
Page
Number
------
Report of Independent Accountants ......................................... F-2
Report of Independent Auditors ............................................ F-3
Consolidated Balance Sheets ............................................... F-4
Consolidated Statements of Operations ..................................... F-5
Consolidated Statements of Changes in Stockholders' Equity ................ F-6
Consolidated Statements of Cash Flows ..................................... F-7
Notes to Financial Statements ............................................. F-8
FINANCIAL STATEMENT AT MARCH 31, 1997 AND FOR THE NINE MONTHS ENDED MARCH
31, 1997 AND 1996 (UNAUDITED)
Consolidated Balance Sheets (Unaudited) ................................... F-17
Consolidated Statements of Income (Unaudited) ............................. F-18
Consolidated Statements of Cash Flows (Unaudited) ........................ F-19
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Help at Home, Inc.
Chicago, Illinois
We have audited the consolidated balance sheet of Help at Home, Inc. (the
"Company") as of June 30, 1996, and the related consolidated statements of
operations, stockholders' equity and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of Help at Home, Inc.
for the year ended June 30, 1995, were audited by other auditors, whose report,
dated October 25, 1995, expressed an unqualified opinion on those statements.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Help at Home, Inc
as of June 30, 1996 and the consolidated results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
Coopers & Lybrand, LLP
Chicago, Illinois
September 26, 1996
F-2
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
Help At Home, Inc.
Chicago, Illinois
We have audited the accompanying balance sheet of Help At Home, Inc. as at
June 30, 1995 and the related statements of operations, changes in stockholder's
equity and cash flows for the year then ended. These financial statements are
the responsibility of Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly,
in all material respects, the financial position of Help At Home, Inc., at June
30, 1995, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
Richard A. Eisner & Company, LLP
New York, New York
October 25, 1995
With respect to Note H[2]
November 16, 1995
F-3
<PAGE>
HELP AT HOME, INC.
Consolidated Balance Sheets
June 30, 1995 and 1996
June 30 June 30
----------------------
1996 1995
Assets
Current Assets:
Cash and cash equivalents $2,734,705 $ 24,994
Accounts receivable (net of allowance for
doubtful accounts of $131,000 and
$25,000 respectively) 3,002,415 2,258,139
Prepaid expenses and other 133,728 57,864
---------- ----------
Total Current Assets 5,870,848 2,340,997
Furniture and equipment, net 309,017 178,071
Due from officer 128,007 142,556
Restricted cash 149,200
Goodwill (net of amortization of $23,434) 2,586,857
Other assets 128,350 85,299
Deferred income taxes 110,000
---------- ----------
$9,172,279 $2,856,923
========== ==========
Liabilities
Current Liabilities:
Accounts payable $ 378,898 $ 205,363
Accrued expenses 659,072 250,818
Notes payable 320,000
Current maturities of long-term debt 265,417 12,395
Current income taxes 644,000 54,092
Deferred income taxes - current 146,000 738,000
---------- ----------
Total Current Liabilities 2,413,387 1,260,668
Deferred income taxes - noncurrent 383,000
Long-term debt, less current portion 389,073 39,075
---------- ----------
Total Liabilities 3,185,460 1,299,743
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
and 1,050,000, respectively, issued
and outstanding 37,388 21,000
Additional paid in capital 3,694,406
Retained earnings 2,255,025 1,536,180
---------- ----------
Total Stockholders' Equity 5,986,819 1,557,180
---------- ----------
$9,172,279 $2,856,923
========== ==========
The accompanying notes to these consolidated financial
statements are an integral part hereof.
F-4
<PAGE>
HELP AT HOME, INC.
Consolidated Statements of Operations
For the Years Ended
June 30,
----------------------
1996 1995
Revenues:
Homemaker services $10,719,310 $7,928,649
Home Health services 1,166,402
----------- ----------
Total Revenues 11,885,712 7,928,649
Direct Costs of Services:
Homemaker services 7,807,487 5,824,584
Home health services 396,772
----------- ----------
Total Direct Costs of Services 8,204,259 5,824,584
----------- ----------
Gross Margin 3,681,453 2,104,065
Selling, general and administrative expense 2,525,442 1,233,097
----------- ----------
Income from operations 1,156,011 870,968
Interest income 130,834 12,009
----------- ----------
Income before income taxes 1,286,845 882,977
Provision for income taxes 568,000 335,551
----------- ----------
Net Income $ 718,845 $ 547,426
=========== ==========
Earnings per common share- primary $ .48 $ .52
Earnings per common share - fully diluted $ .41 $ .52
Weighted average number of common shares
(fully diluted) 2,243,227 1,050,000
Weighted average number of common shares
(unadjusted) 1,503,391 1,050,000
The accompanying notes to these consolidated financial
statements are an integral part hereof.
F-5
<PAGE>
HELP AT HOME, INC.
Consolidated Statements of Changes in Stockholders' Equity
Years Ended June 30,
-----------------------
1996 1995
Common Stock Shares:
Balance, beginning of year 1,050,000 1,050,000
Stock issued 819,375
---------- ----------
Balance, end of year 1,869,375 1,050,000
========== ==========
Common Stock:
Balance, beginning of year $ 21,000 $ 21,000
Stock issued 16,388
---------- ----------
Balance, end of year $ 37,388 $ 21,000
========== ==========
Additional Paid in Capital:
Balance, beginning of year
Stock issued $3,694,406 0
---------- ----------
Balance, end of period $3,694,406 $ 0
========== ==========
Retained Earnings:
Balance, beginning of year $1,536,180 $ 988,754
Net income for year
ended June 30 718,845 547,426
---------- ----------
Balance, end of year $2,255,025 $1,536,180
========== ==========
The accompanying notes to these financial statements are an
integral part hereof.
F-6
<PAGE>
HELP AT HOME, INC.
Consolidated Statements of Cash Flows
Years Ended June 30,
-----------------------
1996 1995
Cash flows from operating activities:
Net Income $ 718,845 $ 547,426
Noncash changes in net income:
Depreciation 93,551 45,964
Amortization 23,434
Deferred tax (benefit) expense (99,000) 288,394
Changes in:
Accounts receivable 328,171 (911,775)
Prepaid expenses and other (69,251) (51,435)
Accounts payable 33,295 110,948
Other current liabilities (138,611) 96,587
Current income taxes 644,000 42,900
----------- ---------
Net cash provided by operating activities 1,534,434 169,009
----------- ---------
Cash flows from investing activities:
Acquisition of property (133,399) (167,943)
Proceeds from sale of property 45,000
Acquisition of subsidiaries (2,172,564)
Decrease (Increase) in stockholder loans 15,113 (81,830)
Other (179,058) 4,520
----------- ---------
Net cash (used in) investing activities (2,425,430) (245,253)
----------- ---------
Cash flows from financing activities:
Proceeds from common stock issued 5,162,068
Financing costs for common stock issued (1,451,274)
(Retirement)Issuance of long-term debt (110,087) 51,470
----------- ---------
Net cash provided by financing activities 3,600,707 51,470
----------- ---------
NET INCREASE (DECREASE) IN CASH 2,709,711 (24,774)
Cash and cash equivalents:
Beginning of period 24,994 49,768
----------- ---------
End of period $ 2,734,705 $ 24,994
=========== =========
Supplemental disclosure of cash flow information:
Cash payments for:
Interest $ 10,645 $ 1,257
Income taxes 81,435 4,257
Supplemental disclosures of noncash investing
and financing activities:
Execution of capital leases 61,300
Assumption of debt 582,000
The accompanying notes to these financial statements are an
integral part hereof.
F-7
<PAGE>
HELP AT HOME, INC.
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - Organization and Business
Help at Home, Inc., a Delaware corporation (Help (Delaware) or the
Company), was incorporated on August 7, 1995. In connection with the formation
of the Company, it issued 2,100,000 shares of common stock to the shareholders
of Help at Home Inc., an Illinois corporation (Help (Illinois)) in exchange for
all the common stock of Help (Illinois). In November 1995, the Company effected
a one-for-two reverse stock split. The accompanying financial statements give
retroactive effect to this reverse stock split.
The consolidated financial statements presented include the accounts of
Help (Delaware) and its wholly owned subsidiaries Help (Illinois), Rosewood Home
Health Inc. (Rosewood), Lakeside Home Health Agency, Inc. (Lakeside), and the
Oxford group (see Note 4).
The Company, through its Help (Illinois) subsidiary, provides homemaker
and general housekeeping services to elderly and disabled persons within their
homes in the Midwestern region of the United States. The vast majority of the
clients are obtained and served through 14 regional contracts with various state
and municipal agencies.
The Company, through its Lakeside, Rosewood and Oxford subsidiaries,
provides in-home skilled nursing services. Lakeside and Rosewood operate in the
St. Louis metropolitan area and Oxford operates in the south central United
States. Lakeside, Rosewood and Homemakers of Montgomery, Inc. (part of the
Oxford group) are certified in their respective states to receive Medicare
reimbursement.
Note 2 - Summary of Significant Accounting Policies
[1] Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and all wholly owned subsidiaries. All intercompany transactions and balances
have been eliminated in consolidation.
[2] Revenue and expense recognition
The accompanying financial statements are prepared using the accrual
method of accounting, whereby income is recognized when earned and expenses as
recognized as incurred. Service revenues are recognized in the period in which
the services are performed at the contracted established rate or the amount
agreed to with third-party payers (e.g. Medicare, Medicaid, HMO's, and other
insurance companies).
[3] Goodwill
Goodwill has been recognized for the excess of cost over the fair value of
assets acquired and is being amortized on a straight-line basis over periods of
ten to twenty years (see Note 4). Management calculates expected undiscounted
future cash flows from operations to evaluate recoverability whenever events or
changes in circumstances indicate a possible impairment.
F-8
<PAGE>
[4] Accounts Receivable
Accounts receivable are stated at estimated net realizable value. The
allowance for doubtful accounts is based on management's estimate of
collectibility, which considers outstanding accounts receivable, historical
experience and current economic conditions.
[5] Property and Equipment
Property and equipment are stated at cost. Depreciation is provided using
accelerated and straight-line methods over the estimated useful lives of the
assets. Amortization of capitalized lease costs is included in depreciation
expense. The estimated useful lives of property and equipment are as follows:
Computers, software, autos and
medical equipment 5 years
Furniture and fixtures 7 years
Leasehold improvements 10 years
[6] Earnings per share
Earnings per common share is based on the weighted average number of
common shares and common share equivalents outstanding during the period. Common
stock equivalents consist of stock options and warrants. Earnings per share have
been stated on a fully diluted basis using the modified treasury method.
[7] Cash and Cash Equivalents
All highly liquid investments with a maturity of three months or less are
considered to be cash equivalents.
[8] Income Taxes
Deferred taxes are recognized for the temporary differences between the
bases of assets and liabilities for financial and tax reporting purposes.
Deferred income taxes are provided for certain transactions which are reported
in different periods for financial reporting than for income taxes. Such
differences relate primarily to the reporting of income and expenses of Help
(Illinois) on the cash basis of accounting for income tax purposes and on the
accrual method of accounting for financial reporting purposes.
Under current IRS regulations, the Company will be required to change to
the accrual method for reporting its income for tax reporting purposes for the
years ending June 30, 1997 and thereafter. Such change will require that the
Company include in its taxable income, starting with the year ended June 30,
1997, the cumulative difference between the cash and accrual methods, as of June
30, 1996, over a period not to exceed four years. This change is not expected to
have a material effect on net income or earnings per share.
[9] 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
F-9
<PAGE>
of contingent assets and liabilities at the date of the financial statements.
Estimates also affect the reported amounts of revenues and expenses during the
reporting period. Significant estimates include allowances, accruals,
third-party settlements and deferred taxes. The actual results will differ from
those estimates and the differences could be material.
Note 3 - Concentration of Risk
For the year ended June 30, 1996, the Company earned over 73% of its
revenue from the Illinois Department on Aging, 10% from services to Medicare
beneficiaries and 17% from other sources. This funding is dependent upon timely
approval of appropriation bills by the respective state or local legislatures
and executive officers.
With the acquisition of Oxford, Lakeside and Rosewood (see Notes 1 and 4),
the Company will derive a higher percentage of its revenues from Medicare
reimbursements. The Medicare program is highly regulated and subject to
budgetary, statutory and other constraints. In recent years, several proposals
have been introduced in Congress which could limit the growth of federal
spending under the Medicare program; however no specific proposals are pending
that would, in management's opinion, materially change Medicare reimbursement to
the Company in the foreseeable future.
Note 4 - Acquisitions
On July 21, 1995, the Company purchased all of the stock of Lakeside Home
Health Agency, Inc. for $100,000. The Company recognized goodwill in the amount
of $66,000 based on an allocation of cost to the fair value of the assets
acquired. The goodwill is being amortized on a straight-line basis over a ten
year period.
On January 30, 1996, the Company purchased all of the stock of Rosewood
Home Health, Inc. for $20,000. The Company recognized goodwill in the amount of
$171,000 based on an allocation of cost to the fair value of the assets
acquired. The goodwill is being amortized on a straight-line basis over a ten
year period.
On May 31, 1996, the Company purchased all of the stock of Statewide
Healthcare Services, Inc., Homemakers of Montgomery, Inc., and HASC Staffing
Systems, Inc. (collectively referred to as "Oxford") for $2,150,000. The
agreement allows for the purchase price to be adjusted based on book value of
Oxford's consolidated assets on the purchase date. The Company recognized
goodwill in the amount of $2,384,000 based on an allocation of cost to the fair
value of the assets acquired. The goodwill is being amortized on a straight-line
basis over a twenty year period. The following table presents proforma results
of operations had the acquisition occurred at July 1, 1994.
F-10
<PAGE>
For the years ended
--------------------------------------------------
June 30, 1996 June 30, 1995
Revenues $16,829,784 $10,563,295
Other income 127,262 12,009
Cost of sales (10,549,639) (7,487,794)
Operating expenses (5,093,087) (2,184,165)
Income before income taxes 1,314,320 903,345
Income tax expense (578,990) (335,551)
----------- ------------
Net income $ 735,330 $ 567,794
=========== ============
The results of operations of these acquisitions, all of which were
accounted for using the purchase method, are reported in the consolidated
results of operations from the date of acquisition.
On May 4, 1996, the Company entered into an agreement to acquire certain
assets of a home health care services business. The purchase price to be paid at
closing is approximately $149,200, which has been placed in escrow. The closing
is dependent upon the satisfaction or waiver of all conditions of the parties to
consummate the transaction as specified in the agreement.
Note 5 - Property and Equipment
Property and equipment consists of the following:
June 30,
----------------------------------------
1996 1995
Furniture and fixtures $ 87,508 $ 46,548
Office and computer equipment 330,808 127,370
Medical and automotive
equipment 58,224 107,562
--------- --------
476,540 281,480
Less accumulated deprecation (167,523) (103,409)
--------- --------
$309,017 $178,071
========= ========
F-11
<PAGE>
The total amount of office and computer equipment recorded under capital
leases included above was $61,300 at June 30, 1996. Accumulated amortization on
capital leases was $3,800 at June 30, 1996 (see Note 9). There were no capital
leases at June 30, 1995.
Note 6 - Major Customer
Fees billed to one major customer, the Illinois Department on Aging
("IDOA"), accounted for approximately $8,674,000 (73%) and $6,500,000 (82%) of
the total fees for the years ended June 30, 1996 and 1995 respectively. The
amounts due under such contracts totaled $1,281,000 and $1,776,000 at June 30,
1996 and 1995, respectively.
The Company is subject to the IDOA's requirement whereby the Company must
expend a minimum of 73% of the total service fees from the department on direct
service worker costs, as defined. As a participant with the IDOA the Company is
subject to an audit of its systems and procedures to determine whether the
Company is in compliance with the rules and regulations of the contract. As of
June 30, 1996, the Company is compliance with the contract. Should the Company
be unable to maintain its compliance in this regard, the contractual arrangement
could be subject to immediate termination.
Note 7 - Commitments and Contingencies
[1] Leases
The Company has operating lease commitments for office space and equipment
which have various expirations through 2001. (See Note 9 for capital lease
information.) Operating leases for office space include escalation clauses for
increases in real estate taxes and certain operating expenses. Future minimum
lease payments under operating leases as of June 30, 1996 are as follows:
Year Ending June 30,
----------------------------
1997 $345,000
1998 93,000
1999 43,000
2000 6,000
2001 2,000
--------
$489,000
========
Rental expense under operating leases was $175,000 and $101,000 for the
years ended June 30, 1996 and 1995, respectively.
[2] Litigation
The Company has been named in several legal proceedings in connection with
matters which arose during the normal course of its business. While the ultimate
result of the litigation or claims cannot be determined, it is management's
opinion, based upon information it presently possesses, that is has meritorious
defenses to the above litigation or claims. The possibility of a material
adverse effect on the Company's financial position or results of operations and
cash flows is, in management's opinion, remote.
F-12
<PAGE>
Note 8 - Related Party Transactions
Approximately 54% of the Company's stock is held by Company officers or
directors.
The Company has a loan outstanding to its majority shareholder in the
amount of $128,007 and $142,556, including accrued interest thereon, as of June
30, 1996 and 1995 respectively. The loan bears interest at 9% per year. The
principal plus accrued interest is due on July 31, 1998.
The Company entered into an employment agreement with the Chairman, Chief
Executive Officer and major stockholder effective in December 1995. Pursuant to
the agreement, the stockholder's base annual salary and subsequent increases are
at the discretion of the Board of Directors. In addition, the stockholder is
entitled to receive a benefit allowance in lieu of health, life and disability
insurance and other similar benefits, in the amount of 10% of the shareholder's
base salary per year. The agreement is for a period of five years and is
automatically renewable for additional one year terms unless prior notice is
given not less than 90 days prior to the end of the initial term or any
succeeding year. The agreement also subjects the stockholder to noncompetition
provisions.
The Company, acting as a subcontractor, billed $183,000 and $98,000 in
service fees for the years ended June 30, 1996 and 1995, respectively, to a
not-for-profit organization in which the majority stockholder is an officer. The
amount due from this organization was approximately $119,000 and $73,000 at June
30, 1996 and 1995, respectively. The organization is provided certain space in
the Company's leased facilities without charge.
Note 9 - Long-term Debt
The following schedule details long-term debt outstanding as of June 30:
1996 1995
A note due January 2, 1998 used to finance
the purchase of the Oxford group (see Note
4). Interest is payable quarterly at the
prime rate plus 1%. $325,000
Note payable with monthly payments of $5,200
through April 1997 with the balance due May
1997. Interest is incurred at 8.5%. It is
collateralized by the cash balances and
commercial paper of two of the Company's
subsidiaries. Subsequent to June 30, 1996,
this note was repaid. 228,823
Notes secured by Company automobiles and
various capital leases for office and
computer equipment(see Note 5). The notes
are payable in equal monthly installments
F-13
<PAGE>
and bear interest at various rates between
9% and 18%. 100,657 $51,470
-------- -------
Total long-term debt $654,490 $51,470
Less current portion 265,417 12,395
-------- -------
Noncurrent portion of long-
term debt $389,073 $39,075
======== =======
The repayment schedule for long-term debt as of June 30, 1996 is as follows:
Amount due
----------
1997 265,417
1998 356,713
1999 27,997
2000 4,363
Interest expense included in the results of operations for the years ended June
30, 1996 and 1995, respectively was $10,645 and $1,257.
Note 10 - Income Taxes
The provision for federal and state income taxes consists of the following:
Year ended June 30,
1996 1995
Current: ------------------------------
Federal $563,000 $35,157
State 104,000 12,000
Deferred:
Federal (94,000) 230,394
State (5,000) 58,000
--------- --------
$568,000 $335,551
========= ========
A reconciliation of income tax expense with federal income taxes at the
statutory rate follows:
F-14
<PAGE>
Year ended June 30,
1996 1995
Federal income taxes at the statutory rate 34.0% 34.0%
Increase (Decrease) in taxes resulting from:
State income tax, net of federal benefit 6.1 4.7
Nondeductible items 1.6 3.2
Other 2.4 (3.9)
----- -----
Income tax expense provided 44.1% 38.0%
===== =====
The income tax effects of temporary differences that give rise to the net
deferred tax liability are as follows:
1996 1995
Current deferred tax liabilities:
Accrual to cash basis adjustment $146,000 $ 739,000
-------- --------
Noncurrent deferred tax liabilities(assets):
Accrual to cash basis adjustment 438,000
Alternative minimum tax
credit carryforward 0 (36,000)
Net operating loss carryforward 0 (16,000)
Other 0 (4,000)
Jobs tax credit carryforward (55,000) (55,000)
-------- ---------
Non-current deferred tax
liabilities(assets) 383,000 (111,000)
-------- ---------
Total deferred tax liability $529,000 $ 628,000
======== =========
The Company has job tax credits of approximately $55,000 at June 30, 1996.
These job credits will expire in 2008. It is management's judgment that there
will likely be sufficient future taxable income to absorb these credits,
therefore no valuation allowance has been estimated as of June 30, 1996.
Note 11 - Stock Options
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement on Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation." SFAS No. 123 is effective for fiscal years beginning after
December 15, 1995. SFAS No. 123 introduces a preferable fair value-based method
of accounting for stock-based compensation. SFAS No. 123 encourages, but does
not require, companies to recognize
F-15
<PAGE>
compensation expense for grants of stock, stock options, and other equity
instruments to employees based on the new fair value accounting rules. The
Company intends to continue applying the existing accounting rules contained in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and disclose net income and earnings per share on a pro forma basis,
based on the new fair value methodology.
In August 1995, the Company adopted the 1995 Stock Option Plan (the "Plan").
Under the Plan, incentive stock options and nonqualified stock options may be
granted, at the discretion of the Board of Directors, to purchase up to 264,375
shares of the Company's common stock through the year 2005.
Incentive stock options are to be granted at a price not less than the fair
market value of the Company's common stock at the date of the grant. The
exercise price may not be less than 110% of the fair market value of the
Company's common stock at the date of the grant if the shareholder owns 10% or
more of the Company's outstanding stock. Options may be granted to employees,
consultants, and directors of the Company and must be exercised within ten years
of the date of the grant. Incentive options for a total of 20,000 shares were
granted at a price of $5.88 per share to two employees in April, 1996. There
were no exercisable options at June 30, 1996.
Nonqualified stock options are exercised at a price to be determined by the
Board of Directors for a period of ten years after the grant date. No
nonqualified options have been granted under the Plan.
Note 12 - Stock Warrants Outstanding
The Company has 1,638,750 issued and outstanding stock purchase warrants as of
June 30, 1996. Each warrant entitles the holder to purchase one share of Common
Stock at an exercise price of $6.00 per share at any time until December 4,
2000. The exercise price of the Warrants is subject to adjustment in certain
events pursuant to the anti-dilution provisions thereof. The Warrants are
redeemable, in whole or in part, at a price of $.10 per Warrant commencing
December 5, 1996, or sooner with the sole consent of the lead underwriter,
provided that (I) the Company gives 30 days prior written notice to the
registered holders of the Warrants, and (ii) the closing high bid price or sale
price per share of the common Stock (if the common Stock is then traded on
NASDAQ or a national securities exchange, respectively) for a period of 10
consecutive trading days, ending on the third business day prior to the date of
any redemption notice, equals or exceeds at least $9.00. The Warrants shall be
exercisable until the close of the business day preceding the date fixed for
redemption.
The Company has also issued to the underwriters, for nominal consideration, the
Underwriters' Warrant to purchase from the Company up to 71,250 Units. The
Underwriters' Warrant is exercisable at a price of $10.08 per Unit for a period
of four years commencing December 5, 1996. These Units consist of one share of
Common Stock and two redeemable common stock purchase Warrants. Each Warrant
entitles the holder to purchase one share of Common Stock under terms identical
to the Warrants described in the preceding paragraph.
Note 13 - Note Payable and Line of Credit
As of June 30, 1996, the Company had notes payable totaling $320,000 utilized as
revolving credit. These notes had a fixed interest rate of 10%. The notes were
paid in full subsequent to June 30, 1996. In addition, in August, 1996 the
Company arranged an uncollateralized $1,000,000 line of credit with interest
chargeable at prime.
F-16
<PAGE>
HELP AT HOME, INC.
Consolidated Balance Sheet
March 31 June 30
1997 1996
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and cash equivalents $ 950,722 $2,734,705
Accounts receivable (net of allowance
for doubtful accounts of
($179,000 and $111,000) 5,188,447 3,002,415
Prepaid Expenses and other 348,935 133,728
Deferred tax asset 176,560
----------- ----------
Total current assets 6,664,664 5,870,848
Furniture and equipment, net 478,737 309,017
Due from officer 140,336 128,007
Restricted cash 149,200
Goodwill (net of amortization of
$142,037 and $59,234) 2,659,557 2,586,857
Other assets 155,955 128,350
----------- ----------
$10,099,249 $9,172,279
=========== ==========
LIABILITIES
Current Liabilities:
Accounts payable $ 555,373 $ 378,898
Accrued expenses 1,156,848 659,072
Notes payable 126,355 320,000
Current portion of long-term debt 39,000 265,417
Current income taxes 615,793 644,000
Deferred taxes - current 146,000
----------- ----------
Total Current Liabilities 2,493,369 2,413,387
Deferred income taxes - noncurrent 3,517 383,000
Long-term debt, less current portion 1,120,686 389,073
----------- ----------
Total Liabilities $ 3,617,572 $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 3,694,401 3,694,406
Retained Earnings 2,749,888 2,255,025
----------- ----------
Total Stockholders' Equity $ 6,481,677 $5,986,819
----------- ----------
$10,099,249 $9,172,279
=========== ==========
The accompanying notes to these financial statements are
an integral part hereof.
F-17
<PAGE>
HELP AT HOME, INC.
Consolidated Statements of Income
(Unaudited)
Nine Months Ended March 31
1997 1996
---- ----
Service fees $16,524,385 $8,128,256
Direct costs of services 10,658,541 5,734,892
----------- ----------
5,865,844 2,393,364
Selling, general and
administrative expenses 5,014,937 1,570,788
----------- ----------
Income from operations 850,907 822,576
Financial Income (Expense) 1,684 84,118
----------- ----------
Income before income taxes 852,591 906,694
Federal and state income taxes 356,808 363,000
----------- ----------
NET INCOME $ 495,783 $ 543,694
=========== ==========
Earnings per common share $ .22 $ .39
=========== ==========
Weighted average number of common shares 3,508,125 1,382,284
=========== ==========
The accompanying notes to these financial statements are
an integral part hereof.
F-18
<PAGE>
HELP AT HOME, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended
March 31
1997 1996
---- ----
Cash flows from operating activities:
Net Income $ 495,783 $ 543,694
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 212,357 68,271
Deferred taxes (705,560) (154,000)
Changes in:
Accounts receivable (2,222,894) 589,709
Prepaid expenses and other (215,207) (93,476)
Accounts payable 153,902 (93,383)
Accrued expenses 497,776 422,930
Income taxes payable 24,690) 471,000
----------- ----------
Net cash provided by
operating activities (1,808,533) 1,749,745
----------- ----------
Cash flows from investing activities:
Purchase of property and equipment (228,611) (84,416)
Acquisitions of subsidiaries (175,012) (91,775)
Increase in shareholder loans (12,329) (8,289)
Return of investment deposit 149,000
Other Investments (20,049) (8,008)
----------- ----------
Net cash used in investing activities (287,001) (192,448)
----------- ----------
Cash flows from financing activities:
Issuance of debt 1,052,546
Reduction of debt (740,995) (69,394)
Proceeds from Stock Offering 3,716,623
----------- ----------
Net cash used in financing
actitivies 311,551 3,647,229
----------- ----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (1,783,983) 5,204,486
Cash and cash equivalents:
Beginning of period 2,734,705 24,994
----------- ----------
END OF PERIOD $ 950,722 $5,229,480
=========== ==========
Supplemental disclosure of noncash investment
and financing activities:
Cash payments for:
Interest $ 11,365
Income taxes $ 892,255
F-19
<PAGE>
No dealer, salesperson or other person is authorized to give any information or
to make any representations other than those contained in this Prospectus, and,
if given or made, such information or representations must not be relied upon as
having been authorized by the Company or the Underwriter. This Prospectus does
not constitute an offer to buy any security other than the securities offered by
this Prospectus, or an offer to sell or a solicitation of an offer to buy any
securities by any person in any jurisdiction where such offer or solicitation is
not authorized or is unlawful. Neither delivery of this Prospectus nor any sale
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof.
--------------
TABLE OF CONTENTS
Page
Prospectus Summary............................................................1
The Offering..................................................................4
Risk Factors..................................................................7
Use of Proceeds..............................................................14
Certain Market Information...................................................15
Dilution ..................................................................17
Capitalization...............................................................18
Dividends ..................................................................18
Selected Financial Data......................................................19
Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................20
Business ...................................................................25
Management ...................................................................32
Certain Transactions..........................................................37
Principal Stockholders........................................................37
Certain Transactions..........................................................38
Description of Securities.....................................................39
Shares Eligible for Future Sale...............................................41
Warrant Solicitation..........................................................42
Legal Matters.................................................................42
Experts ...................................................................42
Additional Information........................................................44
Financial Statements.........................................................F-1
HELP AT HOME, INC.
1,638,750 SHARES OF COMMON STOCK,
ISSUABLE UPON THE EXERCISE OF REDEEMABLE WARRANTS
71,250 UNITS,
EACH UNIT CONSISTING OF ONE SHARE OF
COMMON STOCK AND TWO REDEEMABLE WARRANTS,
71,250 SHARES OF COMMON STOCK
INCLUDED IN SUCH UNITS AND
142,500 SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE OF
REDEEMABLE WARRANTS INCLUDED IN SUCH UNITS
--------------
PROSPECTUS
--------------
_________, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law, among other things, and
subject to certain conditions, authorizes the Company to indemnify its officers
and directors against certain liabilities and expenses incurred by such persons
in connection with claims made by reason of their being such an officer or
director. The restated Certificate of Incorporation and By-laws of the Company
provide for indemnification of its officers and directors to the full extent
authorized by law.
Reference is made to the Underwriting Agreement, the proposed form of which is
filed as Exhibit 1.1, pursuant to which the Underwriter agrees to indemnify the
directors and certain officers of the Registrant and certain other persons
against certain civil liabilities.
Except as hereinafter set forth, there is no charter provision, by-law,
contract, arrangement or statute under which any director or officer of Help At
Home Inc. (the "Registrant" or the "Corporation") is insured or indemnified in
any manner against any liability which he may incur in his capacity as such.
Article IX and Article X of the Corporation's Articles of Incorporation provide
as follows:
"The Corporation shall, to the fullest extent to which it is empowered to do so
by the Delaware General Corporation Law or any other applicable laws as may from
time to time be in effect, indemnify any present or former director or officer
of the Corporation or any person who may have served at the request of the
Corporation as a director or officer of another corporation in which the
Corporation owns shares of capital stock or of which it is a creditor, against
all expenses or costs actually and necessarily incurred by the director or
officer in connection with the defense of any action, suit or proceeding to
which he or she is made a party by reason of being or having been a director or
officer. The indemnification herein provided shall also cover expenditures
incurred in good faith in anticipation of, or in preparation for, threatened or
proposed litigation. It shall also cover the good-faith settlement of any
action, suit or proceeding, whether formally instituted or not. No
indemnification may be authorized for any officer adjudicated to be liable for
negligence or misconduct in the performance of his or her corporation duties. No
indemnification may be authorized for any director adjudicated to be liable for
misconduct in the performance of his or her corporate duties. The
indemnification herein provided shall not be deemed exclusive of any other
rights to which a director or officer may be entitled under any by-law,
agreement, vote of stockholders, or otherwise. Further, if any provision of this
Article shall be held to be invalid or unenforceable, the validity and
enforceability of the remaining provisions shall not in any way be affected or
impaired."
"Notwithstanding any provision of the Articles of Incorporation or By-Laws of
this Corporation to the contrary, no director of the Corporation shall be liable
to the Corporation or its stockholders
<PAGE>
for monetary damages for an act or omission in the director's capacity as a
director, except for liability for (i) any breach of a director's duty of
loyalty to the Corporation or its stockholders, (ii) an act or omission not in
good faith or which involves intentional misconduct or a knowing violation of
law, (iii) any transaction from which a director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope of the
director's office, (iv) an act or omission for which the liability of a director
is expressly provided for by statute, or (v) an act related to an unlawful stock
repurchase or payment of a dividend.
If the Delaware General Corporation Law is hereafter amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation, in addition to the limitation of
personal liability provided herein, shall be limited to the fullest extent
permitted by the amended Delaware General Corporation Law. Any repeal or
modification of this paragraph by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation on the personal
liability of a director of the Corporation existing at the time of such repeal
or modification. Further, if any provision of this Article shall be held to be
invalid or unenforceable, the validity and enforceability of the remaining
provisions shall not in any way be affected or impaired."
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses to be borne by the
Registrant in connection with the issuance and distribution of the securities
being registered hereby other than underwriting discounts and commission.
SEC Registration Fee.................................. $5,713.14
NASD Filing Fee....................................... $1,618.94
NASDAQ Filing Fee..................................... $21,000.00
Printing Engraving Expenses........................... $40,000.00
Legal Fees and Expenses............................... $135,000.00
Accounting Fees and Expenses.......................... $40,000.00
Blue Sky Fees and Expenses............................ $50,000.00
Miscellaneous......................................... $6,667.92
-----------
Total Expenses................................... $300,000.00
===========
Item 26. Recent Sales of Unregistered Securities
I. The following issuances are claimed to be exempt from registration under the
Securities Act, pursuant to Section 4(2) of such Act as transactions by an
issuer not involving any public offering. Each such purchaser acquired the
securities for investment and not with a view to distribution. The certificates
evidencing the securities issued have been impressed with a
II-2
<PAGE>
restrictive legend and transfer instructions with respect thereto have been
placed with the transfer agent for the Registrant.
A. Issuances of shares of Common Stock to founders, directors, employees and
advisors:
1.In connection with the formation of the Company, on August 7, 1995, the
Company issued to Louis Goldstein 962,500 shares of Common Stock in exchange for
2,750 shares of common stock of Help At Home, Inc., an Illinois corporation.
2.In August 1995, in exchange for 143 and 107 shares of common stock of Help at
Home, Inc., an Illinois corporation, the Company issued to each of Robert M.
Rubin and Marlene Schaffer, respectively, 50,000 and 37,500 shares of the
Company's Common Stock. 3.In September 1995, Mr. Goldstein agreed to personally
assign to Mr. Rubin 5,000 shares of Common Stock in consideration for agreeing
to serve on the Company's Board of Directors.
Item 27. Exhibits
1.1 Form of Underwriting Agreement**.........................................
1.2 Form of Selected Dealers Agreement**.....................................
1.3 Agreement Among Underwriters**...........................................
3.1 Articles of Incorporation of Help At Home of Evanston, Inc., an Illinois
corporation, dated February 27, 1975, as amended on June 17,
1982 changing its name to Help At Home, Inc.**...........................
3.2 Certificate of Incorporation of Help At Home, Inc., a Delaware
corporation, dated August 7, 1995.**.....................................
3.3 Certificate of Incorporation of Lakeside Home Health Agency, Inc., a
Missouri corporation, dated April 20, 1993.** ...........................
3.4 Certificate of Incorporation of Lakeside Home Health Agency Inc., an
Illinois corporation, dated August 3, 1995.** ...........................
3.5 Help At Home, Inc. Bylaws**..............................................
4.1 Specimen Common Stock Certificate**......................................
4.2 Specimen Redeemable Common Stock Purchase Warrant**......................
4.3 Form of Warrant Agreement**..............................................
4.4 Form of Underwriter's Warrant**..........................................
5.1 Form of Opinion of Gersten, Savage, Kaplowitz & Curtin, LLP**............
10.1 Employment Agreement with Louis Goldstein**..............................
10.2 1995 Stock Option Plan**.................................................
24.1 Consent of Gersten, Savage, Kaplowitz & Curtin, LLP, special counsel for
the Registrant, (included in Exhibit 5.1)** .............................
24.3 Consent of Richard A. Eisner & Company, LLP, independent auditors for
the Registrant ..........................................................
24.4 Consent of Robert M. Rubin**.............................................
24.5 Consent of Steven L. Venit**.............................................
24.6 Consent of Coopers & Lybrand, LLP independent accountants for
Registrant ..............................................................
- -----------
** Previously filed.
Item 28. Undertaking
Insofar as indemnification for liabilities arising under the
II-3
<PAGE>
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to any charter provision, by-law
contract arrangements statute, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the small business issuer in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned small business issuer hereby undertakes: (1)To file, during any
period in which offers or sales of securities are being made, a post-effective
amendment to this Registration Statement: (i) to include any prospectus required
by Section 10(a)(3) of the Securities Act; (ii) to reflect in the Prospectus any
facts or events which, individually or together, represent a fundamental change
in the information in the registration statement, notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) (ss. 230.424(b) of this chapter) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and (iii) to include any additional or changed
material information on the plan of distribution. (2)That, for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. (3)To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4)The small business issuer will provide to the Underwriter at the closing
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the Underwriter to permit prompt
delivery to each purchaser.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirement for filing on Form SB-2 and authorized this Post-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois on May 22, 1997.
HELP AT HOME, INC.
By: /s/ Louis Goldstein
---------------------
Louis Goldstein,
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
/s/ Louis Goldstein
- ------------------------- May 22, 1997
Louis Goldstein
/s/ Sharon Harder
- -------------------------
Sharon Harder May 22, 1997
Chief Financial Officer
*/s/ Joel Davis
- ------------------------- May 22, 1997
Joel Davis
Chief Operating Officer
*By: /s/ Louis Goldstein
--------------------
Louis Goldstein,
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit Page
- ------- ----
1.1 Form of Underwriting Agreement**.........................................
1.2 Form of Selected Dealers Agreement**.....................................
1.3 Agreement Among Underwriters**...........................................
3.1 Articles of Incorporation of Help At Home of Evanston, Inc., an Illinois
corporation, dated February 27, 1975, as amended on June 17, 1982
changing its name to Help At Home, Inc.**................................
3.2 Certificate of Incorporation of Help At Home, Inc., a Delaware
corporation, dated August 7, 1995.** ....................................
3.3 Certificate of Incorporation of Lakeside Home Health Agency, Inc., a
Missouri corporation, dated April 20, 1993.** ...........................
3.4 Certificate of Incorporation of Lakeside Home Health Agency Inc., an
Illinois corporation, dated August 3, 1995.** ...........................
3.5 Help At Home, Inc. Bylaws**..............................................
4.1 Specimen Common Stock Certificate**......................................
4.2 Specimen Redeemable Common Stock Purchase Warrant**......................
4.3 Form of Warrant Agreement**..............................................
4.4 Form of Underwriter's Warrant**..........................................
5.1 Form of Opinion of Gersten, Savage, Kaplowitz & Curtin, LLP**............
10.1 Employment Agreement with Louis Goldstein**..............................
10.2 1995 Stock Option Plan**.................................................
16.1 Letter from Schwartz, Frumm & Millman, LLP regarding change in certifying
accountants.** ..........................................................
24.1 Consent of Gersten, Savage, Kaplowitz & Curtin, LLP, special counsel for
the Registrant, (included in Exhibit 5.1)** .............................
24.3 Consent of Richard A. Eisner & Company, LLP, independent auditors for
the Registrant ..........................................................
24.4 Consent of Robert M. Rubin**.............................................
24.5 Consent of Steven L. Venit**.............................................
24.6 Consent of Coopers & Lybrand, LLP Independent Accountants
for Registrant ..........................................................
- -----------
** Previously filed.
Exhibit 24.3
Consent of Independent Auditors
We consent to use in the Post-Effective Amendment No. 1 to the Registration
Statement (Form SB-2 no. 33-97034) of Help At Home, Inc. of our report dated
October 25, 1995 (November 16, 1995 as to Note H[2]) related to the consolidated
financial statements of Help At Home, Inc. and subsidiaries for the year ended
June 30, 1995, which is contained in that Registration Statement. We also
consent to the reference to our firm under the captions "Selected Financial
Data" and "Experts."
New York, New York /s/ RICHARD A. EISNER & COMPANY,
April 29, 1997 LLP
[LETTERHEAD OF COOPERS & LYBRAND L.L.P.]
Consent of Independent Accountants
We consent to the inclusion in this Post Effective Amendment No. 1 to Form SB-2
(Commission File No. 033-97034) of our report dated September 26, 1996 on our
audit of the consolidated financial statements of Help at Home, Inc. as of and
for the year ended June 30, 1996. We also consent to the reference to our firm
under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Chicago, Illinois
May 20, 1997
