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, 2000
Commission File No. 033-97034
HELP AT HOME, INC.
DELAWARE 36-4033986
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
223 W. Jackson Blvd., 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, 1,849,375 shares
outstanding as of May 9, 2000.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
Help at Home, Inc.
Index
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet at
March 31, 2000 3
Consolidated Statements of Income
for the three months ended
March 31, 2000 and 1999 4
Consolidated Statements of Income
for the Nine months ended March 31,
2000 and 1999 5
Consolidated Statements of Cash Flows
for the nine months ended
March 31, 2000 and 1999 6
Notes to the Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
PART II: OTHER INFORMATION 13
ITEM 1. LEGAL PROCEEDINGS 13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 13
ITEM 5. OTHER INFORMATION 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURES 14
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Balance Sheet
March 31
2000
(Unaudited)
-----------
<S> <C>
Assets
Current Assets:
Cash and cash equivalents $ 817,000
Accounts receivable (net of allowance
for doubtful accounts of $3,342,000) 8,310,000
Prepaid expenses and other current
assets 269,000
Income tax receivable 30,000
Deferred income taxes - current 150,000
A/R Financing 1,352,000
----------
Total Current Assets 10,928,000
Furniture and equipment, net 246,000
Due from officer 156,000
Other assets 88,000
----------
Total Assets $ 11,418,000
===========
Liabilities and Stockholders' Deficit
Current Liabilities:
Accounts payable $ 1,946,000
Accrued expenses and other current
liabilities 8,065,000
Due to third party payors 454,000
Current maturities of short-term debt 2,000
Deferred income taxes - current 150,000
----------
Total Current Liabilities 10,617,000
Deferred income taxes - noncurrent 164,000
----------
Total Liabilities 10,781,000
Preferred stock, par value $.01 per share;
1,000,000 shares authorized, none issued
or outstanding -
Common stock, par value $.02 per share;
14,000,000 shares authorized, 1,869,375
issued and outstanding 37,000
Additional paid in capital 3,694,000
Deficit (3,094,000)
----------
Total Stockholders' Equity 637,000
----------
Total Liabilities and
Stockholders' Equity $11,418,000
==========
The accompanying notes to these consolidated financial statements
are an integral part hereof.
</TABLE>
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31
2000 1999
---------- ----------
<S> <C> <C>
Service fees $ 8,630,000 $ 6,916,000
Direct costs of services 5,604,000 4,742,000
---------- ----------
Gross margin 3,026,000 2,174,000
Selling, general and
administrative expenses 2,401,000 1,956,000
---------- ---------
Income from operations
before income taxes 625,000 218,000
Income tax expense 263,000 87,000
---------- ---------
Net Income $ 362,000 $ 131,000
========== =========
Basic and diluted
earnings per share $ .19 $ .07
========== =========
Weighted average number of
common shares 1,849,375 1,869,375
The accompanying notes to these consolidated financial statements
are an integral part hereof.
</TABLE>
<PAGE>
<TABLE>
HELP AT HOME, INC.
Consolidated Statements of Income
(Unaudited)
Nine Months Ended March 31
2000 1999
---------- ----------
<S> <C> <C>
Service fees $24,581,000 $20,568,000
Direct costs of services 16,316,000 13,991,000
---------- ----------
Gross margin 8,265,000 6,577,000
Selling, general and
administrative expenses 6,886,000 5,994,000
---------- ----------
Income from operations
before income taxes 1,379,000 583,000
Income tax expense 546,000 216,000
---------- ----------
Net Income $ 833,000 $ 367,000
========== ==========
Basic and diluted
earnings per share $ .45 $ .20
========== ==========
Weighted average number of
common shares 1,869,375 1,869,375
The accompanying notes to these consolidated 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
2000 1999
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 833,000 $ 368,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 70,000 72,000
Current income taxes 20,000 149,844
Changes in:
Accounts receivable 1,293,000 (1,760,000)
Prepaid expenses and other
current assets (146,000) 38,000
Accounts payable 168,000 373,000
Other current liabilities 4,095,000 1,742,000
---------- ----------
Net cash provided by
operating activities 3,748,000 962,000
Cash flows from investing activities:
Acquisition of property (176,697) (36,000)
(Increase) in shareholder loan (10,000) (9,000)
--------- ----------
Net cash used in investing activities (187,000) (45,000)
Cash flows from financing activities:
Repayment of short-term debt (2,957,000) -
Repayment of long-term debt (1,607,000) (362,000)
---------- ----------
Net cash used in
financing activities (2,957,000) (362,000)
Net increase in cash and
cash equivalents 604,000 555,000
Cash and cash equivalents:
Beginning of period 214,000 412,000
---------- ----------
End of period $ 817,000 $ 967,000
========== ==========
Supplemental disclosure of cash flow
information:
Cash payments for:
Interest $ 268,000 $ 253,000
Income taxes - -
The accompanying notes to these consolidated financial statements
are an integral part hereof.
</TABLE>
<PAGE>
HELP AT HOME, INC.
NOTES TO THE UNAUDITED 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-KSB for the fiscal year ended June 30, 1999 (1999 Form 10-KSB).
The following Notes to the Unaudited Consolidated Financial Statements
highlight the significant changes to those Notes included in the 1999
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 the full year.
Note 2: Debt
On June 17, 1999, the Company entered into a Master Factoring
Agreement (the "Agreement") with Oxford Commercial Funding LLC.
("Oxford"). Under the terms of the Agreement, Oxford will advance 80%
of the Net Diluted Value of eligible accounts receivable, as defined
in the agreement, without recourse. The purchasers fee is .375% of
the face value of each invoice every five days for a maximum of 90
days. The purchasers fee is subject to adjustment if certain minimum
terms, as defined in the agreement, are not maintained. The proceeds
of the initial advance under the Agreement were received on July 1,
1999 and were used to satisfy the Company's secured bank debt with
Harris Bank. The Company entered into a revised Master Factoring
Agreement, dated August 25, 1999 with Oxford. Under the terms of the
revised agreement, the purchaser's fee was replaced by an interest
rate of prime + 3.5%. The Agreement is for a one-year term.
Note 3: Commitments and Contingencies
Litigation. The Company has been named in several legal proceedings
in connection with matters that arose during the normal course of its
business and related to certain acquisitions. While the ultimate
result of the litigation or claims cannot be determined, it is
management's opinion, based upon information it presently possesses,
that it has adequately provided for losses that may be incurred
related to these claims.
Termination and Benefits Agreements. As of October, 1997 the
Company's Compensation Committee established a termination and
benefits policy with respect to key executive employees which provides
for payment of severance and benefits to promote adherence to the
Company's non-competition policies in the event of involuntary
termination without cause and/or a change in control. As of March 1,
1998 the Company entered into an employment agreement with the Chief
Operating Officer. In the event of a change in control the maximum
aggregate salary commitment for this employee would be approximately
$390,000.
<PAGE>
As of December 5, 1997 the Compensation Committee also approved a
revised ten-year contract for the Chief Executive Officer which
provides for severance and a one-time change of control payment in the
event of involuntary termination without cause or termination arising
from a change in the ownership and/or management of the Company.
Assuming an effective date of December 1, 1998, the maximum aggregate
severance commitment pursuant to this contract provision is
approximately $2.5 Million. The change of control payment is defined
as an amount equal to 10% of excess market capitalization of the
Company on the 30th day following the change in control. Excess market
capitalization is defined as an amount equal to the Company's
outstanding capital stock multiplied by the closing per share price on
the 30th day following the change less $6 Million.
Note 4: 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.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW:
Help at Home, Inc. (The "Company") provides general homemaker and
respite services to the elderly, medically fragile and disabled in
their homes. The Company has engaged in the provision of unskilled
homemaker services for over two decades. Help at Home operates 27
locations in Illinois, Missouri, Indiana, Alabama, and Mississippi.
The Company derives a significant portion of its revenues from 28
contracts with the Illinois Department on Aging. Similarly, the Company
contracts with other state, regional and municipal agencies for the
provision of custodial home care services.
The Company's Board of Directors elected to discontinue Medicare home
health operations and adopted a disposition plan as of June 30, 1998
which calls for the sale or closure of the Company's Medicare home
health agencies (Homemakers of Montgomery, Inc., Lakeside Home Health
Agency, Inc. [IL], Lakeside Home Health Agency, Inc. [MO], and Rosewood
Home Health, Inc. In connection with the Company's decision to
discontinue Medicare home health services, Lakeside Home Health Agency,
Inc. (IL) ceased operations as of August 31, 1998. Certain assets of
Homemakers of Montgomery, Inc. were sold as of October 9, 1998 and that
entity's patients were simultaneously transferred to a non-affiliated
provider. Rosewood Home Health, Inc. was closed as of October 30, 1998
and its patients transferred to another non-affiliated provider.
Lakeside Home Health Agency, Inc. (MO) was closed on December 12, 1998
and its patients transferred to another non-affiliated provider.
<PAGE>
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.
This report covers the Company's operations for the third quarter of
its 2000 fiscal year which will end on June 30, 2000. References
herein to the third quarter of 2000 are specifically intended to
relate to the quarter ended March 31, 2000, while references to the
third quarter of 1999 are specifically intended to relate to the
quarter ended March 31, 1999.
THREE MONTHS ENDED March 31, 2000 COMPARED TO THE THREE MONTHS
ENDED March 31, 1999:
Reportable Segments: In keeping with the adoption of SFAS No.
131, "Disclosures about Segments of an Enterprise and Related
Information", the Company has identified reportable segments based on
geographic areas (states). Revenues in all four segments are derived
from the provision of unskilled homemaker/respite services. In
addition to the disclosures made elsewhere herein, the following
table presents a quarter to quarter comparison (in thousands) of the
Company's segments:
<TABLE>
Alabama Illinois Missouri Mississippi Total
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
----- ----- ----- ----- ----- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $624 $717 $6,255 $4,840 $469 $329 $1,281 $1,030 $8,629 $6,916
Direct
Costs 435 477 4,083 3,330 287 208 799 726 5,604 4,741
----- ----- ----- ----- ----- ---- ----- ----- ----- -----
Gross
Margin 189 240 2,172 1,510 182 121 482 304 3,025 2,175
Operating
Expenses 122 119 1,133 729 112 116 293 228 1,660 1,192
----- ----- ----- ----- ----- ---- ----- ----- ----- -----
Operating
income 67 121 1,039 781 70 5 189 76 1,365 983
----- ----- ----- ----- ----- ---- ----- ----- ----- -----
Net Income $ 67 $121 $1,039 $781 $70 $5 $189 $76 $1,365 $983
===== ===== ===== ===== ===== ==== ===== ===== ===== =====
Total
Assets $2,079 $2,122 $4,073 $5,233 $1,279 $688 $1,386 $1,518 $8,817 $9,561
===== ===== ===== ===== ===== ==== ===== ===== ===== =====
</TABLE>
<PAGE>
Reconciliation of segments' operating income to the consolidated
net income (loss) is as follows:
2000 1999
------ ------
Segments' operating income $ 1,365 $ 983
Less:
Income tax expense 263 87
Corporate overhead expense 740 768
------ ------
Net income (loss) $ 362 $ 131
====== ======
Reconciliation of segments' total assets to consolidated net
assets is as follows:
Segments Total Assets $ 8,817 $ 9,561
Plus:
Corporate/support entities' total assets 2,601 1,252
------ ------
Total Assets $11,418 $10,813
====== ======
Client Service Revenue: Revenues derived from services to the Company's
clients for the three months ended March 31, 2000 grew to
approximately $8.6 Million reflecting an increase of approximately $1.7
Million or 25% over the third quarter from the same quarter last year.
Approximately $7.7 Million, or 90%, of the Company's revenues for the
Third quarter of 2000 were derived from contracts pursuant to which
the Company provides custodial services to clients in their homes. For
the same quarter of fiscal 1999, contract services represented $6.1
Million or 88% of total revenues. Approximately $863,000, or 10%, of
the Company's third quarter 2000 revenue was derived from commercial
payors, institutional staffing arrangements, and private pay
arrangements as compared to $830,000 or 12% for the same quarter of
1999.
A comparison of the third quarter of fiscal 2000 as contrasted to the
same period in fiscal 1999, by state, shows the greatest revenue growth
($140,000 or 43 %) in Missouri, followed by Illinois ($1,415,000 or
30%) and Mississippi ($251,000 or 24%). Alabama revenues declined
by $93,000 or 13% from 1999 to 2000 due to the Company's decision to
reduce locations and service areas.
Approximately 74% ($1,274,000) of the fiscal 2000 growth in revenue was
derived from services provided to clients of the Illinois Department on
Aging("IDOA"). Services to IDOA clients amounted to 65% of consolidated
revenues for the third quarter of fiscal 2000 versus 63% of
consolidated revenues for the third quarter of 1999. The Company
realized, as of July 1, 1999, a 7.8% rate increase for all services
provided to IDOA clients.
<PAGE>
Direct Costs of Providing Services: Direct costs of providing services
to clients, comprised entirely of wages and related expenses paid to
field staff members, were $5,604,000 (65% of revenues) for the three
months ended March 31, 2000 versus $4,741,000 (69% of revenues) for
the same quarter one year earlier. The increase of $863,000 (18%) is
attributable primarily to the increase in service volume during the
quarter. A comparison of direct costs by segment shows that, as a
percentage of revenues, Illinois direct costs were at 65% compared to
69% for the previous quarter. Alabama direct costs were 70% for the
fiscal year 2000 quarter compared to 67% for the corresponding quarter
in fiscal 1999. The 3% decrease in performance is attributed to the
Company's increased labor costs. Missouri direct costs were 61% of
revenues for the quarter ended March 31,2000 versus 63% of revenues
for the same quarter one year earlier. Mississippi direct costs were
62% of revenues for the 2000 quarter compared to 70% for the same
quarter in fiscal 1999. The increase in performance is attributable to
increased reimbursement rates.
The gross margin on services grew by $850,000 in fiscal 2000 and
reached approximately $3.0 Million as compared to approximately $2.2
Million for the same quarter in fiscal 1999. Gross margin
contributions by state include $2,172,000 for Illinois (compared to
$1,510,000 for the same quarter last year), $189,000 for Alabama (as
compared to $240,000 for the same quarter last year), $182,000 for
Missouri (as compared to $121,000 for the same quarter last year) and
$482,000 for Mississippi (as compared to $304,000 for the same quarter
last year).
Selling, General and Administrative Expense: Overall selling, general
and administrative expenses increased by $445,000 for the third quarter
of fiscal 2000 moving from $1,956,000 in fiscal 1999 to $2,401,000 in
fiscal 2000. In general, the increase is related to increases in
interest from short term debt, increases in administrative salary
expense and costs associated with expansion in Missouri.
Selling, general and administrative expense for the third quarter of
fiscal 2000 represented 28% of revenues as compared to 28% of revenues
for the same quarter in fiscal 1999. The pre-tax income for the third
quarter of fiscal 2000 was $625,000 versus a pre-tax income
contribution of $218,000 for the same quarter last year.
Administrative salaries and benefits increased by $360,000 for the
quarter to $1,340,000 versus $980,000 for the same period one year
earlier. The increase is attributable to a the addition of accounting
personel in the corporate office. Professional fees and insurance
expenses decreased by $35,000 to $164,000 during the quarter with the
majority of the decrease attributable to a reduction in the use of
outside accounting assistance. Occupancy expenses increased from
$276,000 in fiscal 1999 to $285,000 in fiscal 2000 with the majority of
the increase due to rent escalations in several offices. Travel and
entertainment expenses increased by approximately $15,000 during the
third quarter of 2000, moving from $39,000 to $54,000. The increase
was due to increased corporate travel expenses. Bad debt expenses
increased by $23,000 from $104,000 to 127,000 due primarily to service
volume increases which form the basis for calculation of bad debt
expense reserves.
<PAGE>
With respect to the Company's identified segments, Illinois operations
experienced a $404,000 increase in overall operating expenses moving
from $729,000 to $1,133,000 quarter to quarter. The increase is due to
additional supervisory staff necessitated by the increase in service
volume. Alabama operating expenses increased $3,000 from 1999 to 2000.
Missouri operating expenses decreased by $4,000 from $116,000 in the
third quarter of fiscal 1999 to $112,000 in the third quarter of fiscal
2000. Mississippi operating expenses increased by $65,000. The
increase was attributed to the addition of supervisory staff as a
result of the increase in service volume.
Earnings: Net income of $362,000 in the third quarter of 2000 compares
to net income of $131,000 for the same quarter last year. Earnings per
share of common stock were $.19 and $.07 for the quarters,
respectively. The EPS calculation is based on the computational
guidelines for earnings per share information contained in the FASB
Statement of Financial Accounting Standards No. 128, "Earning Per
Share." The Company has 1,638,750 Warrants outstanding as a result of
its initial public offering.
<TABLE>
NINE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE NINE MONTHS ENDED
MARCH 31, 1999.
Alabama Illinois Missouri Mississippi Total
2000 1999 2000 1999 200 1999 2000 1999 2000 1999
----- ----- ------ ------ ----- ----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $1,873 $2,445 $17,923 $14,285 $1,285 $ 967 $3,499 $2,870 $24,580 $20,567
Direct
Costs 1,336 1,726 11,801 9,619 797 593 2,381 2,052 16,315 13,990
----- ----- ------ ------ ----- ----- ----- ----- ------ ------
Gross
Margin 537 719 6,122 4,666 488 374 1,118 818 8,265 6,577
Operating
Expenses 338 387 2,818 2,418 382 343 796 834 4,334 3,982
----- ----- ------ ------ ----- ----- ----- ----- ------ ------
Operating
income
(loss) 199 332 3,304 2,248 106 31 322 (16) 3,931 2,595
Net Income
(loss) $ 199 $ 332 $3,304 $2,284 $ 106 $ 31 $ 322 $ (16) $ 3,931 $2,595
===== ===== ====== ====== ===== ===== ===== ===== ====== ======
Total
Assets $2,079 $2,122 $4,073 $5,233 $1,279 $689 $1,386 $1,518 $8,817 $ 9,561
===== ===== ====== ====== ===== ===== ===== ===== ====== ======
</TABLE>
<PAGE>
Reconciliation of segments' operating income to the consolidated net
gain (loss) is as follows:
2000 1999
------ ------
Segments' operating income $ 3,931 $ 2,595
Less:
Income tax expense 546 87
Corporate overhead expense 2,552 2,140
------ ------
Net income (loss) $ 833 $ 368
====== ======
Reconciliation of segments' total assets to consolidated net assets
is as follows:
Segments Total Assets $ 8,817 $ 9,561
Plus:
Corporate/support entities' total assets 2,602 1,252
------ ------
Total Assets $11,419 $10,813
====== ======
Client Service Revenue: Revenues derived from services to the
Company's clients for the nine months ended March 31, 2000 grew to
approximately $24.6 Million reflecting an increase of $4.0 Million or
16% over the first three quarters of fiscal 1999.
Approximately $22.1 Million, or 90%, of the Company's revenues for the
first nine months of fiscal 2000 were derived from contracts pursuant
to which the Company provides custodial services to clients in their
homes. For the same quarters of fiscal 1999, contract services
represented $18.1 Million or 88% of total revenues. Approximately $2.5
Million, or 10%, of the Company's 2000 revenue was derived from
commercial payors, institutional staffing arrangements, and private pay
arrangements as compared to $2.5 Million or 12% for the same quarter of
1999.
A comparison of the first nine months of fiscal 2000 as contrasted to
the same period in fiscal 1999, by state, shows the greatest revenue
growth ($318,000 or 33%) in Missouri, followed by Illinois ($3.6
million or 25%) and Mississippi ($629,000 or 22%). Alabama revenues
declined by $572,000 or 23% from 1999 to 2000 due to the Company's
decision to consolidate offices and/or de-emphasize services in certain
rural markets.
Approximately 82% ($3.3 Million)of the fiscal 2000 growth in revenue
was derived from services provided to clients of the Illinois
Department on Aging ("IDOA"). Services to IDOA client amounted to 65%
of consolidated revenues for the nine months ended March 31, 2000
versus 63% for the same period last year. The Company realized, as of
July 1, 1999, a 7.8% rate increase for all services provided to IDOA
clients.
<PAGE>
Direct Costs of Providing Services: Direct costs of providing services
to clients, comprised entirely of wages and related expenses paid to
field staff members, were $16.3 Million (66% of revenues) for the nine
months ended March 31, 2000 versus $14.0 Million (68% of revenues) for
the same period one year earlier. The increase of $2.3 Million (17%) is
attributable entirely to the increase in service volume during the
quarter. A comparison of direct costs by segment shows that, as a
percentage of revenues, Illinois direct costs were 66% of revenues as
compared to 67% for the same period one year earlier. Alabama direct
costs were 71% for 2000 compared to 71% for the corresponding nine
month period in 1999. Missouri direct costs were 62% of revenues for
the nine months ended March 31, 2000 versus 61% of revenues for the
same nine month period one year earlier. Mississippi direct costs were
68% of revenues for 2000 versus 71% for the same three quarters in
fiscal 1999.
The gross margin on services grew by approximately 1.7 million in 2000
and reached $8.3 Million as compared to $6.6 Million for the same nine
months in fiscal 1999. Gross margin contributions by state include
$6.1 Million for Illinois (compared to $4.7 for the same nine months
last year), $537,000 for Alabama (as compared to $719,000 for the same
period last year), $488,000 for Missouri (as compared to $374,000 for
the same period last year) and $1.1 million for Mississippi (as
compared to $818,000 for the same period last year).
Selling, General and Administrative Expense: Overall selling, general
and administrative expenses were $4.3 Million for the nine month period
ended March 31, 2000 versus $4.0 million for the same period last year.
Selling, general and administrative expense for the nine months ended
March 31, 2000 represented 28% of revenues as compared to 29% of
revenues for the same nine month period in fiscal 1999. The pre-tax
income contribution for fiscal 2000 was $1,379,000 versus pre-tax
income of $583,000 on continuing operations for the same nine months
last year.
Administrative salaries and benefits associated with operations
increased by $350,000 for the nine months to $3,484,000 versus
$3,135,000 for the same period one year earlier. The increase
is primarily attributable to increase in management salary expense
associated with the growth in the business.
Professional fees and insurance expenses grew by $488,000 to $882,000
during the nine months due to higher insurance premiums as a result of
increased business, and fees associated with accounting and computer
programming personel in order to restructure the finance department.
Occupancy expenses increased from $784,000 to $795,000 due to the
opening of a new location. Travel and entertainment expenses increased
by $12,000 during the first nine months of 2000, moving from $161,000,
to $173,000 with the bulk of the increase attributable to increases in
regional travel expenses. Bad debt expenses increased by $181,000
from $305,000 to 486,000 due to service volume increases which form the
basis for calculation of bad debt expense reserves. Depreciation and
amortization expense increased by $1000 to $70,000 for the nine months.
<PAGE>
With respect to the Company's identified segments, Illinois operations
experienced a $400,000 increase in overall operating expenses which
grew from $2,418,000 to $2,818,000 for the nine months ended March 31,
2000. The entirety of the growth is due to service volume growth in
established locations. Alabama operating expenses decreased by $49,000
from 1999 to 2000 due to the continued reduction in office staff.
Missouri operating expenses increased by $39,000 in the first nine
months of 2000 due to the opening of a new office. Mississippi
operating expenses decreased by $38,000 to $796,000 during the first
nine months of 2000 reflecting the closure of low volume offices in
that state.
Earnings: Net income of $833,000 for the nine months ended March 31,
2000 compares to a net income of $368,000 for the same nine month
period last year. Earnings per share of common stock were $.45 and
$.20 for the nine month periods, respectively. The EPS calculation
is based on the computational guidelines for earnings per share
information contained in the FASB Statement of Financial Accounting
Standards No. 128, "Earning Per Share." The Company has 1,869,375
shares of Common Stock outstanding and 1,710,000 Warrants outstanding
as a result of its initial public offering.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's basic cash requirements are for operating expenses,
generally comprised of labor, occupancy and administrative costs. The
Company relied in fiscal 2000 on approximately $1.6 Million of new
borrowings under its existing credit facility to augment cash flow from
operations for business expansion. The Company's secured debt
obligations total approximately $1,352,000 as of March 31, 2000.
Total working capital was at $800,000 as of March 31, 2000 versus
$1.7 million as of the same date in 1999.
Cash provided by operations in fiscal 2000 was $3,748,000 versus
362,000 for the same quarter in fiscal 1999.
The Company had approximately $817,000 of cash on hand as of March 31,
2000 as contrasted to $967,000 of cash on hand at March 31, 1999.
Based on the Company's operating projections, cash flows from
established operations should be sufficient to fund existing business
locations during the remainder of the fiscal year.
The Company presently has 1,638,750 Warrants outstanding with an
exercise price of $6.00. The Warrants can be exercised at any time
prior to December 5, 2000 and can be called anytime after December 5,
1996 provided the closing price of the Company's Common Stock is equal
to or greater than $9.00 for ten consecutive trading days. The Company
could realize a maximum of approximately $9.8 Million from the exercise
of its Warrants. There can be no assurance, however, that the closing
price of the Company's common stock will reach a level sufficient to
precipitate exercise of the Warrants. As of the close of business on
May 8, 2000, the closing price of the Common Stock on the OTC/BB Stock
Market was $1.43.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. 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.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
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 9, 2000 /s/ Louis Goldstein
------------------------
Louis Goldstein
Chairman/CEO
Date: May 9, 2000 /s/ Joel Davis
------------------------
Joel Davis
Chief Operating Officer
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