UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File No. 033-97034
HELP AT HOME, INC.
DELAWARE 36-4033986
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
223 W. Jackson, Suite 500
Chicago, IL 60606
Address of principal executive offices) (Zip Code)
(312) 663-4244
(Issuer s telephone number, including area code)
Indicate by checkmark whether the issuer (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the issuer s classes
of common equity, as of the latest practicable date:
Common Stock, par value $.02 per share, 1,869,375 shares
as of May 2, 1997.
Transitional Small Business Disclosure Format: Yes No X
<PAGE>
Help at Home, Inc.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Consolidated Balance Sheets at
June 30, 1996 and March 31, 1997 1
Consolidated Statements of Income
for the three month periods ended
March 31, 1997 and 1996 2
Consolidated Statements of Income
for the nine month periods ended
March 31,1997 and 1996 3
Consolidated Statements of Cash Flows
for the three month periods ended
March 31, 1997 and 1996 4
Notes to the Consolidated Financial
Statements 5
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 6
PART II: OTHER INFORMATION 9
ITEM 1 LEGAL PROCEEDINGS 9
ITEM 2 CHANGES IN THE RIGHTS OF THE COMPANY'S
SECURITY HOLDERS 9
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 9
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 9
ITEM 5 OTHER INFORMATION 9
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURES 10
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Balance Sheet
March 31 June 30
1997 1996
(Unaudited) (Audited)
<S> <C> <C>
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
========== ==========
</TABLE>
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31
1997 1996
<C> <C> <C>
Service fees $5,931,151 $3,049,039
Direct costs of services 3,756,847 2,100,252
--------- ----------
2,174,304 948,787
Selling, general and
administrative expenses 1,874,874 623,309
--------- ----------
Income from operations 299,430 325,478
Financial Income (Expense) (15,638) 63,148
--------- ----------
Income before income taxes 283,792 388,626
Federal and state income taxes 122,300 192,510
--------- ----------
NET INCOME $ 161,492 $ 196,116
========= ==========
Earnings per common share $ .07 $ .11
========= ==========
Weighted average number of
common shares 3,508,125 1,850,584
========= ==========
The accompanying notes to financial statements are
an integral part hereof.
</TABLE>
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Statements of Income
(Unaudited)
Nine Months Ended March 31
1997 1996
<S> <C> <C>
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 financial statements are
an integral part hereof.
</TABLE>
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended March 31
1997 1996
<S> <C> <C>
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)
---------- ----------
Net cash used in investing activities
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 provided by financing
activities 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 investing
and financing activities:
Cash payments for:
Interest $ 11,365
Income taxes $ 892,255
</TABLE>
<PAGE>
HELP AT HOME, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Basis of Presentation
These unaudited Consolidated Financial Statements should be read in
conjunction with the consolidated Financial Statements and Notes
thereto included in Help at Home, Inc.'s (the Company ) Annual Report
on Form 10-KSB for the fiscal year ended June 30, 1996 ( 1996 Form
10-KSB ). The following Notes to the Consolidated Financial Statements
highlight significant changes to the Notes included in the 1996 Form
10-KSB and such interim disclosures as required by the Securities and
Exchange Commission. Certain financial information that is normally
included in annual financial statements prepared in accordance with
generally accepted accounting principles but is not required for
interim reporting purposes has been omitted. The accompanying
unaudited Consolidated Financial Statements reflect, in the opinion of
management, all adjustments necessary for a fair presentation of the
interim financial statements. All such adjustments are of a normal and
recurring nature. The financial results for interim periods may not be
indicative of financial results for a full year.
Note 2: Public Offering
In December, 1995 the Company effected an initial public offering of
its securities. A total of 813,375 units, comprised of one share of
common stock of the Company, par value $0.02 par value ( Common Share )
and two redeemable warrants, were issued for $6.30 per unit. Net
proceeds from the offering were approximately $3,694,000 after
underwriting commissions and expenses.
Note 3: Earnings Per Share
Earnings per share have been determined by dividing earnings by the
weighted-average number of shares of Common Stock outstanding during
each period. The modified treasury method of calculating earnings per
share has been utilized by the Company for reporting purposes.
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW:
Help at Home, Inc. (the Company ) provides skilled nursing,
therapies and custodial services to the elderly, medically fragile and
disabled in their homes. The Company has engaged in the provision of
unskilled homemaker services for two decades and entered the skilled
services market in 1995. Help at Home operates from 28 locations in
Illinois, Missouri, Indiana, Mississippi and Alabama. The Company
derives a significant portion of its revenues from several contracts
with the Illinois Department on Aging. Similarly, the Company
contracts with other state, regional and municipal agencies for the
provision of home care services. The Company also provides
Medicare home health services to homebound persons through its three
Medicare certified home health agencies located in Missouri, Illinois
and Alabama.
The statements which are not historical facts contained in this
Form 10-QSB are forward looking statements that involve risks and
uncertainties, including, but not limited to, the integration of new
acquisitions into the operations of the Company, the ability of the
Company to locate attractive acquisition candidates, the effect of
economic conditions and interest rates, general labor costs, the impact
and pricing of competitive services, regulatory changes and conditions,
the results of financing efforts, the actual closing of contemplated
transactions and agreements, the effect of the Company's accounting
policies, and other risks detailed in the Company's Securities and
Exchange Commission filings. No assurance can be given that the actual
results of operations and financial condition will conform to the
forward-looking statements contained herein.
THREE MONTHS ENDED MARCH 31,1997 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1996:
Revenues derived from services to the Company's clients for the
three months ended March 31, 1996 reached $5,931,000 reflecting an
increase of $2,882,000 from the same quarter the previous year.
Approximately 69% of the revenue growth ($1,980,000) is attributable to
the June 1996 acquisition of Oxford Health Care. Approximately 4%
($122,000) of the growth in revenue was derived from the acquisition of
Preferred Nursing Care in October 1996. The remaining 27% ($780,000) is
due to internal expansion of the Company's traditional homemaker
business. Of the Company's total revenues, approximately $2,598,000
(43%) was received from the Illinois Department on Aging as compared to
91% of the Company's revenues for the same period during the previous
year. Home care services reimbursed through other sources accounted
for 38% of total revenues or $2,254.000. The remaining 17% of revenues
($1,079,000) came from the Medicare program.
Direct costs of providing services, comprised entirely of wages
paid to field staff members, increased by 79% to $3,757,000. The
increase corresponds directly to the increase in revenue. Direct costs
for the quarter represented 64% of revenue from client services as
opposed to 69% for the same quarter in the previous year. The 5%
productivity improvement is due, primarily, to an increase in the
payment rate for the Company's services to clients referred by the
Illinois Department on Aging. The gross margin on services grew by
$1,225,000 from quarter to quarter.
<PAGE>
The increase in the Company's gross margin was entirely consumed
by a corresponding increase in selling, general and administrative
expenses of $1,252,000. Approximately $712,000 of the increase (57%)
is due to recognition of administrative expenses in the Company's
acquired operations. The remainder of the increase is divided among
increases in salaries and benefits of $368,000, increases in occupancy
costs of $46,000, increases in advertising costs of $29,000 and
increases in other administrative costs of $97,000. Of the increase
realized from acquired operations, 46% or $330,000 represents
administrative salaries and benefits, 13% or $87,000 represents
occupancy costs and 41% or $212,000 represents other administrative
expense.
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.
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
administrative 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.
LIQUIDITY AND CAPITAL RESOURCES:
The Company has net working capital of $4,171,295 as of March 31,
1997.
<PAGE>
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 transaction.
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, $192,000 for
the February 1997 acquisition of a Piper Navajo aircraft, capital
lease and other obligations of $119,000 . 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.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1 Legal Proceedings. None
ITEM 2 Changes in the Rights of the Company's Security Holders.
None.
ITEM 3. Defaults upon Senior Securities. None.
ITEM 4. Submission of Matters to a Vote of Security Holders
ANNUAL MEETING OF SHAREHOLDERS ON JANUARY 17, 1997:
The Company held its annual meeting of shareholders on January 17,
1997 in Birmingham, AL. At the annual meeting shareholders elected
five directors proposed by the Company's management, each of whom is
serving a one-year term. Those elected include Messrs. Louis
Goldstein, Joel Davis, Robert Rubin, Steven L. Venit and Dr. Michael J.
Morgenstern. Messrs. Goldstein and Davis are also full-time employees
of the Company serving, respectively, as Chairman/CEO and Chief
Operating Officer.
The shareholders also approved an amendment to the 1995 Stock
Option Plan which increased by 1,500,000 the aggregate number of shares
of common stock available for which options may be granted under the
1995 Stock Option Plan. To date, following the shareholders adoption
of the plan amendment, there have been no grants of options.
ITEM 5. Other Information. None.
ITEM 6. Exhibits and Reports on Form 8-K. None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Help at Home, Inc.
Registrant
Date: May 13, 1997 /s/Louis Goldstein
Louis Goldstein
CEO/Chairman
Date: May 13, 1997 /s/ Sharon S. Harder
Sharon S. Harder
Principal Financial Officer
<TABLE> <S> <C>
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<NAME> HELP AT HOME, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
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<ALLOWANCES> 179
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