U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURTIES
EXCHANGE ACT OF 1934
For the transition period from.......... to..............
Commission file number D-24165
MID-ATLANTIC HOME HEALTH NETWORK, INC.
Nevada 93-1108124
7504 Diplomat Drive, Suite 101
Manassas, Virginia
20109-2631
703-335-1957
Securities registered pursuant to Section 12(b) of the Act:
Common Stock $ .001 Par Value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No __.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing:
As of March 31, 1999 the average bid price of common stock was $.03 and the
average asked price was $.25.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date: As of March 31, 1999 the
number of shares of common stock outstanding was 12,621,142.
INDEX TO FINANCIAL STATEMENTS
Pages
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Consolidated balance sheets 3 and 4
Consolidated statements of income 5
Consolidated statements of stockholders' equity 6
Consolidated statements of cash flows 7
Notes to consolidated financial statements 8 - 16
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Mid-Atlantic Home Health Network, Inc.
and Subsidiaries
We have audited the accompanying consolidated balance sheets of Mid-
Atlantic Home Health Network, Inc. and Subsidiaries (the Company), as of
December 31, 1998 and 1997, and the related consolidated statements of income,
stockholders' equity and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Mid-Atlantic Home Health Network, Inc. and Subsidiaries as of December 31, 1998
and 1997, and the results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.
As discussed in Note 11, the Company may be liable for additional
amounts related to a potential purchase price adjustment of a previously
acquired subsidiary. The ultimate amount, if any, of the adjustment cannot be
determined; however, management is of the opinion that it will not have a
material effect on the Company's financial position.
March 26, 1999
15/1
FINANCIAL STATEMENTS
YEARS ENDED
DECEMBER 31, 1998 AND 1997
3.
MID-ATLANTIC HOME HEALTH NETWORK, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
1998 1997
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 816,294 $ 578,699
Accounts receivable, net of allowances of
$43,371 in 1998 and $44,071 in 1997 2,998,489 2,783,677
Due from affiliates 228,805 153,998
Prepaid expenses and other current assets 157,449 70,911
Deferred tax asset 37,000 34,000
Total current assets 4,238,037 3,621,285
PROPERTY AND EQUIPMENT, net 253,221 260,103
OTHER ASSETS
Goodwill, net of accumulated amortization of
$222,351 in 1998 and $181,663 in 1997 671,360 712,048
Other assets, net of accumulated amortization
of $177,075 in 1998 and $149,045 in 1997 3,058 32,347
Total other assets 674,418 744,395
Total assets $ 5,165,676 $ 4,625,783
See Notes to Consolidated Financial Statements.
4.
MID-ATLANTIC HOME HEALTH NETWORK, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
1998 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 15,988 $ 93,405
Notes payable 2,606,175 1,904,517
Accounts payable 152,724 205,913
Accrued salaries and related employee benefits 255,220 323,265
Other current liabilities 119,162 154,403
Total current liabilities 3,149,269 2,681,503
LONG-TERM DEBT, net of current maturities 306,739 241,248
Total liabilities 3,456,008 2,922,751
STOCKHOLDERS; EQUITY
Common stock, Class A, $.001 par
value, 200,000,000 shares authorized
12,621,202 shares issued and
outstanding at December 31, 1998 and 1997 12,621 12,621
Common stock, Class B, $.001 par value,
10,000 shares authorized, issued and
outstanding 10 10
Preferred stock, $1 par value, 5,000,000
shares authorized, 10,000 shares issued
and outstanding 10,000 10,000
Additional paid-in capital 1,103,485 1,103,485
Retained earnings 772,802 766,166
1,898,918 1,892,282
Stock subscription receivable (189,250) (189,250)
Total stockholders' equity 1,709,668 1,703,032
Total liabilities and stockholders' equity $ 5,165,676 $ 4,625,783
5.
MID-ATLANTIC HOME HEALTH NETWORK, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
December 31, 1998 and 1997
1998 1997
REVENUES $ 14,698,133 $ 13,740,390
EXPENSES
Patient care costs 10,873,185 10,071,783
General and administrative 3,411,951 3,020,441
Amortization 70,338 149,320
Interest expense, net 334,823 264,678
Total expenses 14,690,297 13,506,222
Income before income taxes 7,836 234,168
PROVISION FOR INCOME TAXES - 58,461
Net income $ 7,836 $ 175,707
EARNINGS PER COMMON SHARE $ - $ .01
See Notes to Consolidated Financial Statements.
6.
MID-ATLANTIC HOME HEALTH NETWORK, INC.
AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1998 and 1997
<CAPTION>
Additional Stock
Common Stock Preferred Paid-In Retained Subscriptions
Class A Class B Stock Capital Earnings Receivable Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 12,534 10 10,000 $ 1,074,832 $ 591,659 $ (164,250) $ 1,524,785
Issuance of 44,000 shares
of stock as compensation 37 - - 3,703 - - 3,740
Exercise of stock options for
50,000 shares of Class A
common stock 50 - - 24,950 - (25,000) -
Dividend on preferred stock - - - - (1,200) - (1,200)
Net income - - - - 175,707 - 175,707
Balance, December 31, 1997 12,621 10 10,000 1,103,485 766,166 (189,250) 1,703,032
Dividend on preferred stock - - - - (1,200) - (1,200)
Net income - - - - 7,836 - 7,836
Balance, December 31, 1998 12,621 10 10,000 $ 1,103,485 $ 772,802 $ (189,250) $ 1,709,668
See Notes to Consolidated Financial Statements.
</TABLE>
7.
MID-ATLANTIC HOME HEALTH NETWORK, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 1998 and 1997
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 7,836 $ 175,707
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation 17,307 26,234
Amortization 68,718 119,228
Deferred taxes (3,000) 7,000
Issuance of stock for services rendered - 3,740
Changes in assets and liabilities:
Accounts receivable (214,810) 87,347
Due from affiliates (74,807) (6,495)
Prepaid expenses and other current assets (86,539) 30,091
Accounts payable (53,190) 20,282
Accrued salaries and related employee benefits (68,045) 31,703
Other current liabilities (35,241) (62,462)
Other assets 1,258
Net cash provided by (used in)
operating activities (440,513) 432,375
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (10,425) (16,355)
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in notes payable 701,658 (60,745)
Repayment of long-term debt (11,925) (10,512)
Dividend paid on preferred stock (1,200) (1,200)
Net cash provided by (used in)
financing activities 688,533 (72,457)
Net increase in cash and cash equivalents 237,595 343,563
CASH AND CASH EQUIVALENTS
Beginning 578,699 235,136
Ending $ 816,294 $ 578,699
See Notes to Consolidated Financial Statements.
8.
MID-ATLANTIC HOME HEALTH NETWORK, INC. PRIVATE
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 1. Organization and Significant Accounting Policies
Organization. The consolidated financial statements include the
accounts of Mid-Atlantic Home Health Network, Inc. (MAHN) and its
subsidiaries (collectively referred to herein as the Company). The
subsidiaries include Western Pennsylvania Home Health Network, Inc.
(Western Pennsylvania), Hunt Country Nursing Services, Inc. (Hunt
Country Nursing), Hunt Country Home Health, Inc. (Home Health), and
National Nurses Services, Inc.
Western Pennsylvania was sold for book value on June 30, 1998, and the
1998 financial statements include the results of its operation until the
date of sale. Revenues during the six-month period were approximately
$167,000 and losses from operations were approximately $39,000.
Approximately 80% of MAHN's outstanding shares are owned by Oak Springs
Nursing Home Limited Partnership (Oak Springs).
The Company is engaged in the business of providing integrated home
health services with an emphasis in providing nursing staff services to
hospitals, nursing homes and other facilities. The Company operates in
Virginia, Maryland, the District of Columbia and Pennsylvania.
Basis of consolidation. All significant intercompany accounts and
transactions have been eliminated.
Net revenues. Net revenues are reported at the estimated net
realizable amounts from patients, third party payors, and others for
services rendered, including estimated retroactive adjustments under
reimbursement agreements with third party payors. Revenue received
under third-party agreements is subject to audit. Any adjustments as
a result of these audits are reflected in current operations.
Approximately 11% and 12% of the Company's net revenues for the years
ended December 31, 1998 and 1997, respectively, were from
participation in Medicare and state Medicaid programs. In addition,
approximately 33% and 35% of the Company's net revenues for the year
ended December 31, 1998 and 1997, was from contracts with state and
local governmental correctional facilities, including the Commonwealth
of Virginia and the District of Columbia.
At December 31, 1998 and 1997, 8% and 20%, respectively, of net accounts
receivable were due from Medicare and Medicaid. The ability of payors
to meet their obligations depends upon their financial stability, future
legislation and regulatory actions.
The Company does not believe there are any significant credit risks
associated with receivables from Medicare and Medicaid.
(Continued)
9.
MID-ATLANTIC HOME HEALTH NETWORK, INC. PRIVATE
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 1. Organization and Significant Accounting Policies (Continued)
Property and equipment. Property and equipment is recorded at cost.
The cost and the related accumulated depreciation are removed from the
accounts in the year the related asset is sold or retired. Depreciation
is computed using the straight-line method over the estimated economic
lives of the assets, commencing at the time the assets are placed into
service.
Cash and cash equivalents. Cash and cash equivalents include cash on
hand and in the bank as well as any investment purchased with an
original maturity of three months or less. The Company maintains its
cash in bank deposit accounts which, at times, may exceed federally
insured limits. The Company has not experienced any losses in such
accounts. Cash equivalents are carried at cost which approximates fair
value.
Under the Company's cash management system, checks issued but
not yet presented to banks frequently result in overdraft
balances for accounting purposes. The overdraft balances have
been netted with positive balances and are classified as "cash
and cash equivalents" in the consolidated balance sheet.
Goodwill and other assets. Goodwill arises from acquisitions and
represents the excess of purchase price over identifiable
acquired net assets, and is amortized on a straight-line basis
over 20 years. Other assets principally consist of the estimated
value of the assembled workforce and capitalized fees related to
other long-term agreements and transactions. Other assets are
amortized on a straight-line basis over a period of 3 to 5 years.
Income taxes. The income tax provision includes federal and state
income taxes both currently payable and deferred because of differences
between financial reporting and tax bases of assets and liabilities.
Deferred tax assets and liabilities are measured using the enacted tax
rates and laws that will be in effect when necessary to reduce deferred
tax assets to the amounts expected to be realized.
Use of estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(Continued)
10.
MID-ATLANTIC HOME HEALTH NETWORK, INC. PRIVATE
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 1. Organization and Significant Accounting Policies (Concluded)
Stockholders' equity. The Company has three classes of stock. Two
hundred million shares of Class A common stock have been authorized. The
Class A shareholders have the right to elect one third of the directors
of the Company. Ten thousand shares of Class B common stock, with the
right to elect two thirds of the directors, have also been authorized.
Additionally, five million shares of Class C convertible preferred stock
have been authorized. The preferred stock is paid a dividend of 12%.
Earnings per share. Earnings per common share are computed by dividing
the weighted average number of shares outstanding into net income.
Diluted earnings per share are not presented because the outstanding
stock options are not dilutive.
Reclassification. Certain amounts in the 1997 financial statements have
been reclassified to conform to classifications used in preparing the
1998 financial statements with no effect on net income for the period.
Note 2. Accounts Receivable
Accounts receivable arise from the provision of home health services to
hospitals, nursing homes and other facilities in the Virginia, Maryland,
District of Columbia and Pennsylvania areas. The principal payors for
these services are the patients, insurance companies, various state and
local government agencies, other institutional providers of healthcare,
the Medicare program, and certain Medicaid programs.
The provision for doubtful accounts for the years ended December 31,
1998 and 1997, was $43,371 and $44,071, respectively.
Note 3. Property and Equipment
As of December 31, 1998 and 1997, property and equipment consisted of
the following:
1998 1997
Building and building improvements $ 320,818 $ 320,818
Furniture and equipment 382,116 371,491
702,934 692,309
Less accumulated depreciation 449,713 432,206
$ 253,221 $ 260,103
11.
MID-ATLANTIC HOME HEALTH NETWORK, INC. PRIVATE
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 4. Notes Payable
National Nurses Service, Home Health and Hunt Country Nursing borrow
funds under terms of agreements with a lender and secured by accounts
receivable. These agreements provide for advances on accounts
receivable of approximately 83% of the collateralized balances. The
Company is required to refund any borrowings for financial accounts
receivable balances not collected within 180 days.
1998 1997
Amount of advances on accounts
Receivable $ 3,165,321 $ 2,315,134
Less: Lender reserves 559,146 410,617
Note payable $ 2,606,175 $ 1,904,517
Note 5. Long-Term Debt
Long-term debt as of December 31, 1998 and 1997, consisted of the
following:
1998 1997
Note Payable, C.W. Cobb, collateralized
by first deed of trust on building and
guaranteed by the general partners
of Oak Springs. Payable in monthly
installments of $761, including
interest at 11%. Due April, 2021. $66,418 $67,124
Note Payable, C.W. Cobb, collateralized
by second deed of trust on building
and guaranteed by the general
partners of Oak Springs. Payable in
monthly installments of $221,
including interest at 13%. Due
April, 2021. 18,561 18,804
Note Payable, York Federal Savings and
Loan. Payable in monthly installments
of $1,116, including interest at 8.5%.
A balloon payment of $86,809 is due
September, 2008. 81,875 84,961
Note Payable, Crestar Mortgage Corp.,
collateralized by building and
guaranteed by the managing general
partner of Oak Springs. Payable in
monthly installments of $772,
including interest at 8%. Due
December, 2024. 81,526 83,106
(Continued)
12.
MID-ATLANTIC HOME HEALTH NETWORK, INC. PRIVATE
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 5. Long-Term Debt (Concluded)
1998 1997
Note Payable, Central Fidelity Bank
guaranteed by the general partners
of Oak Springs, payable in monthly
installments of $1,668, including
interest at 11.21%. Due December 5,
2007. $74,347 $80,658
322,727 334,653
Less current maturities 15,988 93,405
$306,739 $241,248
Annual maturities of long-term debt outstanding at December 31, 1998,
are as follows:
1999 $ 15,988
2000 17,512
2001 20,071
2002 21,985
2003 24,083
Thereafter 223,088
$ 322,725
Note 6. Stock Option Plan and Stock Subscriptions
The Company has an Incentive Stock Option Plan that includes
substantially all officers and key employees. The Series C options
which expired in 1998 originally had an exercise price of $1 per share.
The Company subsequently reduced the option price to $.50 per share.
Options that have been exercised were financed by the Company through
notes bearing interest at 8%. The unpaid balance of outstanding notes
receivable for stock purchases is shown as a reduction of stockholders'
equity.
During 1998 and 1997, the Company did not receive any payments on
outstanding notes receivable for the purchase of shares. Because the
market value of the outstanding shares is below the option price, the
Company has suspended the required payments (including interest) on
these notes.
A summary of the status of the Company's incentive stock option plans as
of December 31, 1998 and 1997, and changes during the years ending on
those dates is presented below:
(Continued)
13.
MID-ATLANTIC HOME HEALTH NETWORK, INC. PRIVATE
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 6. Stock Option Plan and Stock Subscriptions (Concluded)
Exercisable Stock Options
Exercised
Outstanding Granted or Canceled Outstanding
Beginning During During At End
of Year the Year the Year of Year
1998
Shares
Series C $ 156,000 $ - $ 156,000 $ -
Weighted average
exercise price .50 - .50 -
1997
Shares
Series C $ 181,000 $ - $ 25,000 $ 156,000
Weighted average
exercise price .50 - .50 .50
The Company accounts for its stock option plans in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, which does not
allocate costs to stock options granted at current market values. The
Company could, as an alternative, allocate costs to stock options using
option pricing models, as provided in Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation. Because of
the limited number of options granted and the limited amount of trading
activity in the Company's stock, management believes that the Company's
stock options are best accounted for in accordance with APB Opinion No.
25. Had the Company accounted for its stock options in accordance with
SFAS No. 123, net earnings and earnings per share would not have been
materially different from reported amounts.
Note 7. Lease Commitments
The Company leases certain office facilities and other equipment under
non- cancelable leases for terms ranging from one to five years. Future
minimum lease payments under these operating leases are as follows:
1999 $ 168,933
2000 131,436
2001 87,890
2002 64,419
2003 17,317
Total future minimum lease payments $ 469,995
During 1998 and 1997, rent expense for all operating leases totaled
$131,976 and $131,976, respectively.
14.
MID-ATLANTIC HOME HEALTH NETWORK, INC. PRIVATE
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 8. Income Taxes
The Company files a consolidated Federal income tax return, which
includes Western Pennsylvania (1997 only), Hunt Country Nursing, Home
Health and National Nursing Service. The Company and its subsidiaries
file separate returns for state purposes.
The provision for income taxes for the years ended December 31, 1998 and
1997, was comprised of the following:
1998 1997
Current provision $ 3,000 $ 51,461
Deferred provision (benefit) (3,000) 7,000
Total provision $ - $ 58,461
The provision for income taxes in 1997 differed from the amount of
income tax determined by applying the applicable federal statutory tax
rate to pre-tax income as a result of the following:
1997
Statutory federal tax rate 34%
State taxes, net of federal benefit 3%
Goodwill amortization (14)%
Other 2%
Effective tax rate 25%
Taxable income for 1998 does not include the losses from operations for
Western Pennsylvania because it will file as part of the consolidated
return group of its new owners. Accordingly, the Company's taxable
income for 1998 was increased by approximately $40,000. As a result,
taxable income for tax purposes was approximately $16,000 due
principally to changes in deferred tax items.
The deferred tax asset relates to the allowance for doubtful accounts
reflected on the balance sheet and incurred but not reported claims
recorded through current earnings. Realization of the deferred tax
asset is contingent on the occurrence of a write-off of the accounts
receivable for tax purposes and payment of premiums to the insurer or
payments of actual claims. No valuation allowance was established since
the Company believes it is more likely than not that this asset will be
realized.
15.
MID-ATLANTIC HOME HEALTH NETWORK, INC. PRIVATE
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 9. Related Party Transactions
Periodically, Oak Springs and its affiliates provide the Company with
funds needed for various transactions. Oak Springs also enters into
debt on behalf of the Company. Rather than Oak Springs immediately
transferring cash to the Company at the time the debt is entered into,
the Company records an amount due from affiliate. Amounts due from and
due to affiliates as of December 31, 1998 and 1997, were as follows:
1998 1997
Due from affiliates:
Oak Springs Nursing Home LP $ 38,312 $ -
Oak Springs Nursing Home 41,237 181,924
Center for Ambulatory/
Home Infusion Services 19,334 9,783
Health Care Ventures, Inc. 106,809 -
Home Health Services of
Allegheny County, Inc. - 31,881
Health Ventures Group 4,086 -
Care Connections of
Pennsylvania, Inc. 83,565 146
293,343 223,734
Due to affiliates:
Western Pennsylvania Home
Health Network, Inc. 32,133 -
Health Care Ventures, Inc. 5 44,551
Health Ventures Group 24,283 25,185
Center for Ambulatory/
Home Infusion Services 445 -
Oak Springs Nursing Home 7,672 -
64,538 69,736
Net due (to) from affiliates $ 228,805 $ 153,998
Throughout the year, the Company pays a management fee to various
affiliates of Oak Springs. The Company paid management fees of $-0- and
$151,267 during the years ended December 31, 1998 and 1997,
respectively.
Oak Springs maintains a workers compensation policy, which covers the
Company. The Company paid Oak Springs $129,320 and $292,697 during the
years ended December 31, 1998 and 1997, respectively, related to this
policy.
Note 10. Supplementary Cash Flow Information
Interest paid during 1998 and 1997 was $334,432 and $265,949,
respectively. Income taxes paid during 1997 were $37,252.
16.
MID-ATLANTIC HOME HEALTH NETWORK, INC. PRIVATE
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
Note 11. Contingent Liability
As part of the acquisition of National Nurses Service, Inc. on June 30,
1995, the Company issued 500,000 shares of common stock. The stock
purchase agreement calls for an adjustment of the purchase price on June
30, 1998, if the market value of the stock is less than $800,000 ($1.60
per share), during the ten-day period immediately preceding June 30,
1998. The purchase price adjustment, to be paid in cash, is the
difference between the market value and $800,000. The stock has had
limited trading activity and sales prices close to June 30, 1998, were
in the range of $.625. Based on those prices the purchase price
adjustment could be approximately $487,500.
The Company is negotiating with the owners of the claim to settle the
potential purchase price adjustment.
The Company has also listed its securities on a national securities
exchange to increase the level of trading activity.
The acquisition of National Nurses Service, Inc. was accounted for as a
purchase and the Company recorded approximately $800,000 in goodwill.
The payment of any purchase price adjustment would not change the
underlying assets acquired. Accordingly, payments would reduce the
originally recorded value of stock issued and reduce the amount of paid-
in capital.
In the opinion of management, the amount of the purchase price
adjustment, if any, will not have a material effect on the Company's
financial position.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: April 16, 1999 MID-ATLANTIC HOME HEALTH NETWORK, INC.
By: /s/ Dennis Light
Dennis Light, President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Signature
/s/ Dennis Light April 16, 1999
Dennis Light, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 816294
<SECURITIES> 0
<RECEIVABLES> 2998489
<ALLOWANCES> 43371
<INVENTORY> 0
<CURRENT-ASSETS> 4238037
<PP&E> 253221
<DEPRECIATION> 0
<TOTAL-ASSETS> 5165676
<CURRENT-LIABILITIES> 3149269
<BONDS> 0
0
10000
<COMMON> 12631
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5165676
<SALES> 14698133
<TOTAL-REVENUES> 14698133
<CGS> 0
<TOTAL-COSTS> 14690297
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 334823
<INCOME-PRETAX> 7836
<INCOME-TAX> 7836
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7836
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
