SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-12992
NUMED HOME HEALTH CARE, INC.
------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
STATE OF NEVADA 34-1711764
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
5770 ROOSEVELT BOULEVARD, SUITE 700, CLEARWATER, FL 33760
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (727) 524-3227
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the 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. [ X ] Yes [ ] No
The number of shares outstanding of the Issuer's common stock at $.001 par value
as of November 14, 1999 was 5,867,012 (exclusive of Treasury Shares).
<PAGE>
NUMED HOME HEALTH CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
1999 1999
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 46,971 $ 38,830
Cash deposits securing contractual arrangements 275,000 1,176,000
------------ ------------
321,971 1,214,830
Accounts receivable, net of allowance for doubtful accounts of
$517,244 and $533,048, respectively 4,253,140 4,160,383
Prepaids, inventories, and other current assets 221,339 278,029
------------ ------------
TOTAL CURRENT ASSETS 4,796,450 5,653,242
Property and equipment, net 153,130 220,480
Goodwill, net of amortization of $1,616,926
and $1,444,255, respectively 3,563,209 3,735,880
Other intangibles assets, net of accumulated amortization of
$1,809,005 and $1,965,289 respectively 169,786 186,362
Other assets 18,877
------------ ------------
TOTAL ASSETS $ 8,682,575 $ 9,814,841
============ ============
LIABILITES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 695,480 $ 510,718
Accrued salaries and payroll related 1,456,065 935,662
Accrued expenses 443,205 345,141
Estimated amounts due to third party payors 510,463 919,275
Borrowings 1,575,480 2,687,073
------------ ------------
TOTAL CURRENT LIABILITIES 4,680,693 5,397,869
Stockholders' equity:
Preferred stock, authorized 2,000,000, no shares issued
or outstanding 0 0
Common stock, $.001 par value, authorized 48,000,000
shares, 5,901,500 shares issued 5,902 5,902
Additional paid-in capital 10,963,745 10,963,745
Treasury stock, 34,488 shares of common stock at
cost (39,096) (39,096)
Accumulated deficit (6,928,669) (6,513,579)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,001,882 4,416,972
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,682,575 $ 9,814,841
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
FORM 10-QSB
2
<PAGE>
NUMED HOME HEALTH CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
1999 1998
----------- -------------
<S> <C> <C>
Revenues $ 6,568,918 $ 9,379,647
Direct expenses 4,502,467 6,917,841
----------- -----------
GROSS PROFIT 2,066,451 2,461,806
GENERAL AND ADMINISTRATIVE EXPENSES:
Salaries and benefits 1,250,136 1,613,572
Operating expenses 346,515 466,268
Professional fees 109,139 181,653
Occupancy expenses 361,407 450,592
Insurance 58,517 121,627
Amortization and depreciation 258,119 276,172
Bad debt expense 125
----------- -----------
Total general and administrative 2,383,833 3,110,009
----------- -----------
Operating loss (317,382) (648,203)
OTHER REVENUES (EXPENSES):
Interest income 20,215 26,009
Interest expense (117,923) (142,644)
Other Income 500,337
----------- -----------
Total other revenues (expenses) (97,708) 383,702
----------- -----------
Loss before income taxes (415,090) (264,501)
Income tax 0 4,881
----------- -----------
Net loss $ (415,090) $ (269,382)
=========== ===========
PER SHARE:
Net loss after income taxes $ (0.07) $ (0.05)
=========== ===========
Weighted average shares outstanding-basic and diluted 5,867,012 4,950,845
</TABLE>
See notes to condensed consolidated financial statements
FORM 10-QSB
3
<PAGE>
NUMED HOME HEALTH CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
1999 1998
----------- -----------
<S> <C> <C>
Revenues $ 3,241,963 $ 4,633,483
Direct expenses 2,167,853 3,374,138
----------- -----------
GROSS PROFIT 1,074,110 1,259,345
GENERAL AND ADMINISTRATIVE EXPENSES:
Salaries and benefits 614,189 800,020
Operating expenses 175,956 242,090
Professional fees 67,898 116,100
Occupancy expenses 167,559 265,874
Insurance 22,885 65,053
Amortization and depreciation 130,283 141,117
Bad debt expense 125
----------- -----------
Total general and administrative 1,178,770 1,630,379
----------- -----------
Operating loss (104,660) (371,034)
OTHER REVENUES (EXPENSES):
Interest income 10,042 (16,148)
Interest expense (57,426) (72,621)
Other Income 500,337
----------- -----------
Total other revenues (expenses) (47,384) 411,568
----------- -----------
Loss before income taxes (152,044) 40,534
Income tax 0
----------- -----------
Net loss $ (152,044) $ 40,534
=========== ===========
PER SHARE:
Net loss after income taxes $ (0.03) $ 0.01
=========== ===========
Weighted average shares outstanding-basic and diluted 5,867,012 4,950,845
</TABLE>
See notes to condensed consolidated financial statements
FORM 10-QSB
4
<PAGE>
NUMED HOME HEALTH CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - UNAUDITED
SIX MONTHS ENDED SEPTEMBER 30, 1999 AND YEAR ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK
------------------------ PAID-IN ACCUMULATED --------------------
SHARES DOLLARS CAPITAL (DEFICIT) SHARES DOLLARS TOTAL
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT MARCH 31, 1998 5,010,219 $ 5,010 $10,653,754 $(4,306,799) (43,599) $ (87,634) $ 6,264,331
==============================================================================================
Net loss (2,206,780) (2,206,780)
Purchase Treasury Shares 19,627 20 9,205 (19,627) (9,225) --
Other 126,974 127 127
Shares issued under Termination
and Mutual Release Agreement 744,680 745 349,255 350,000
Shares issued under employee stock
purchase plan (48,469) 28,738 57,763 9,294
----------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1999 5,901,500 $ 5,902 $10,963,745 $(6,513,579) (34,488) $ (39,096) $ 4,416,972
Net loss (415,090) $ (415,090)
----------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1999 5,901,500 $ 5,902 $10,963,745 $(6,928,669) (34,488) $ (39,096) $ 4,001,882
==============================================================================================
</TABLE>
See notes to condensed
consolidated financial statements.
FORM 10-QSB
5
<PAGE>
NUMED HOME HEALTH CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
SEPTEMBER 30 SEPTEMBER 30
1999 1998
-------------------------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (415,090) $ (269,382)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 258,119 276,172
Loss on sale or disposal of property, plant and equipment
Increase (decrease) in cash due to net changes in operating
assets and liabilities
Accounts receivable (92,757) 12,628
Prepaids and other current assets 56,690 137,723
Accounts payable and accrued expenses 803,229 (589,283)
Estimated amounts due to third party payors (408,812)
Other Assets 18,877
----------- -----------
Net cash provided by (used in ) operating activities 220,256 (432,142)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (1,521) (3,056)
----------- -----------
Net cash provided by (used in ) investing activities (1,521) (3,056)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 3,407,372 6,178,744
Payments on borrowings (4,518,966) (5,784,415)
Cash securing contractual arrangements 901,000 99,980
----------- -----------
Net cash (used in) provided by financing activities (210,594) 494,309
----------- -----------
(Decrease) Increase in cash and cash equivalents 8,141 59,111
Cash and cash equivalents at beginning of year 38,830 59,725
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 46,971 $ 118,836
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the year $ 112,027 $ 142,644
=========== ===========
Income taxes paid during the year $ -- $ --
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements
FORM 10-QSB
6
<PAGE>
NUMED HOME HEALTH CARE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 1999
NOTE A-BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six month period
ended September 30, 1999 are not necessarily indicative of the results that may
be expected for the year ending March 31, 2000. For further information, refer
to the consolidated financial statements and footnotes included in NuMED Home
Health Care, Inc. and Subsidiaries' ("the Company") Form 10-KSB for the year
ended March 31, 1999.
NOTE B - SEGMENT REPORTING
The following schedule presents information about the Company's
continuing operations for different industry segments:
FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
HOME HEALTH REHABILITATION
TOTAL SERVICES SERVICES CORPORATE
----------- ------------ -------------- ----------
<S> <C> <C> <C> <C>
Revenue $6,568,918 $5,880,273 $ 688,645
Direct Expenses 4,502,467 4,042,615 459,852
Gross Profit 2,066,451 1,837,658 228,793
Depreciation and Amortization 258,119 117,611 140,508
Operating Loss (317,382) (153,808) (163,574)
Interest Income 20,215 18,101 2,114
Interest Expense 117,923 77,240 40,683
Loss Before Income Tax Expense (415,090) (212,947) (202,143)
Identifiable Assets 8,682,575 4,225,772 3,970,465 $486,338
Capital Expenditures 1,521 1,521 -- --
</TABLE>
FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
HOME HEALTH REHABILITATION
TOTAL SERVICES SERVICES CORPORATE
---------- ----------- -------------- ---------
<S> <C> <C> <C> <C>
Revenue $9,379,647 $6,212,458 $3,167,189
Direct Expenses 6,917,841 4,311,344 2,606,497
Gross Profit 2,461,806 1,901,114 560,692
Depreciation and Amortization 276,172 136,119 140,053
Operating Loss (648,203) (164,735) (483,468)
Interest Income 26,009 17,166 8,843
Interest Expense 142,644 88,439 54,205
Other Income 500,337 0 500,337
Loss Before Income Tax Expense (264,501) (236,008) (28,493)
Identifiable Assets 9,814,841 3,969,155 4,462,592 $1,383,094
Capital Expenditures 3,056 3,056 -- --
</TABLE>
FORM 10-QSB
7
<PAGE>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
HOME HEALTH REHABILITATION
TOTAL SERVICES SERVICES CORPORATE
---------- ----------- -------------- ---------
<S> <C> <C> <C> <C>
Revenue $3,241,963 $2,882,811 $ 359,152
Direct Expenses 2,167,853 1,934,916 232,937
Gross Profit 1,074,110 947,895 126,215
Depreciation and Amortization 130,283 60,029 70,254
Operating Loss (104,660) (45,152) (59,508)
Interest Income 10,042 8,945 1,097
Interest Expense 57,426 37,614 19,812
Loss Before Income Tax Expense (152,044) (73,821) (78,223)
Identifiable Assets 8,682,575 4,225,772 3,970,465 $486,338
Capital Expenditures 1,521 1,521 -- --
</TABLE>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
HOME HEALTH REHABILITATION
TOTAL SERVICES SERVICES CORPORATE
---------- ----------- -------------- ---------
<S> <C> <C> <C> <C>
Revenue $4,633,483 $3,027,760 $1,605,723
Direct Expenses 3,374,238 2,117,783 1,266,455
Gross Profit 1,259,345 910,078 349,267
Depreciation and Amortization 141,117 71,090 70,027
Operating Loss (371,034) (133,942) (237,092)
Interest Income (16,148) (11,079) (5,069)
Interest Expense 72,621 45,025 27,596
Other Income 500,337 0 500,337
Loss Before Income Tax Expense 40,534 (190,046) 230,580
Identifiable Assets 9,814,841 3,969,155 4,462,592 $1,383,094
Capital Expenditures 3,056 3,056 -- --
</TABLE>
NOTE C - EARNINGS PER SHARE
In 1998, the Company adopted Statement of Financial Accounting
Standards No. 128, "Earning Per Share" (SFAS 128). Accordingly, basic net loss
per share was computed based on the weighted average number of common shares
outstanding during the fiscal year. Dilutive net loss per share was computed
based on the weighted average number of common shares outstanding plus the
shares that would be outstanding assuming exercise of dilutive securities. For
the six months ended September 30, 1999 and 1998, basic net loss per share
equaled dilutive net loss per share because of the Company's net loss.
FORM 10-QSB
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net Revenues for the six months ended September 30, 1999, decreased by
30% or approximately $2,811,000 over the same period one year ago. The revenues
in the rehabilitation division, NuMED Rehabilitation, Inc., decreased
approximately $2,479,000 or 78% compared to the same period last year. The cause
was the voluntary withdrawal from the East Coastal and Illinois regions, in
preparation for the Prospective Payment System (PPS) imposed by the federal
government effective January 1, 1999. The Home Health division's revenue
decreased approximately $332,000 or 5% compared to the same period last year.
While the company's patient referrals increased, the length of stay has
decreased. This was an expected result of the Interim Payment System (IPS)
imposed by the federal government. The Home Health Division now comprises 90% of
the total revenues with Rehabilitation comprising 10% compared to 67% and 33%
respectively for the six month period last year.
Direct expenses as a percentage of net revenue for the six months ended
September 30, 1999 decreased by 5% to 69% of net revenues as compared to the
same period one year ago. For the three month period ended September 30, 1999,
direct expenses decreased by 6% to 67%of net revenues as compared to the same
period one year ago. The cost of sales for NuMED Rehabilitation, Inc. is 67% for
the six months ended September 30, 1999 and 59% for the three months ended
September 30, 1999. The strategic withdrawal from the East Coastal and Illinois
regions in the NuMED Rehabilition, Inc. division has resulted in the reduction
of the direct expenses as a percentage of sales by 15% as compared to the same
period last year. The cost of sales for the Home Health Division is 69% for the
six months ended September 30, 1999 and 67% for three months ended September 30,
1999. As a result, the gross profit margins increased 5% to 32% for the six
month period ended September 30, 1999 and increased 6% to 33% for the three
month period ended September 30, 1999 as compared to the same period a year ago.
General and Administrative expenses (excluding amortization and
depreciation) for the six months ended September 30, 1999, decreased by 25% to
approximately $2,125,000 or 33% of net revenue from approximately $2,834,000 or
31% of net revenue for the same period one year ago. The decrease was
approximately $709,000 over the same period one year ago. The decrease was due
primarily to the voluntary withdrawal from the East Coastal and Illinois regions
in the NuMED Rehabilitation division resulting in the closure of the
Rehabilitation office in Horsham, Pennsylvania. The General and Administrative
expenses decreased approximately $354,000 in the Home Health division and
approximately $355,000 in the rehab division as compared to the same period last
year. General and Administrative expenses (excluding amortization and
depreciation) for the three months ended September 30, 1999, decreased by 29% to
approximately $1,048,000 or 32% of net revenue from approximately $1,489,000 or
32% of net revenue for the same period one year ago.
As a result of the foregoing, the Company incurred a net loss of
approximately $415,000 for the six months ended September 30, 1999, as compared
to net loss of approximately $269,000 for the same period one year ago.
Offsetting the total in the September 30, 1998 net loss was approximately
$500,000 of other income resulting from the recovery of disallowed costs of a
rehab client. The net loss decreased 43% to approximately $152,000 for the three
months ended September 30, 1999 from approximately $263,000 for the three months
ended June 30, 1999.
FORM 10-QSB
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital and current ratio were approximately
$116,000 and 1.0, respectively, as of September 30, 1999, as compared to
approximately $255,000 and 1.0, respectively, as of March 31, 1999. Cash
increased approximately $8,000 for the six months ended September 30, 1999, as
compared to March 31, 1999. The increase in cash was primarily attributable to
normal operations. Both working capital and the current ratio have decreased as
a result of net losses.
The Rehabilitation division's largest customer in 1997 underwent a
routine Medicare audit of its cost report. The customer's fiscal intermediary,
in its interpretation of the Medicare prudent buyer guidelines, concluded that
the cost of certain professional contract therapy services provided by the
Company exceeded these guidelines. Management believed that the fiscal
intermediary conducting this audit applied an overreaching and erroneous
interpretation of applicable reimbursement guidelines.
During the second quarter of fiscal 1999, NuMED Rehabilitation
successfully recovered a total of $512,000 from the client's fiscal
intermediary, representing disallowed costs for the client's fiscal year ending
June 30, 1996. Regarding the balance of approximately $75,000, the Company
anticipates that the second appeal will be settled without further arbitration.
The Company has a credit facility in the amount of $3,000,000, secured
by NuMED Home Health Care, Inc., NuMED Rehabilitation, Inc., Silver Moves, Inc.,
Countryside Health Services, Inc., Pennsylvania Medical Concepts, Inc., Whole
Person Home Health Care, Inc., Whole Person Home Health Care of Ohio, Inc. and
Parke Home Health Care, Inc. The credit advances are limited to the aggregate
accounts receivable balances of qualified accounts under 120 days. The
outstanding balance as was $1,292,369 and $1,495,265, respectively, at September
30, 1999 and March 31, 1999. The term of the credit facility expires August 14,
2000.
In accordance with the covenants associated with the credit facility,
because the Company is not paying withholding taxes in a timely manner, it is in
default of the agreement. The Company is negotiating with the lender to remedy
the situation. The Company cannot predict today the costs of the renegotiation
or if the renegotiations will be successful.
The Company also has a $2,000,000 credit facility, secured by NuMED
Home Health Care, Inc. and Whole Person Home Health Care of Florida, Inc. The
credit advances are limited to the aggregate accounts receivable balance of
qualified accounts under 120 days. The outstanding balance as of September 30,
1999 and March 31, 1999 was zero. The term of the credit facility expires August
14, 2000.
The Company had two additional lines of credit as of March 31, 1999 in
the amount of $1,250,000 and $275,000. The credit lines were both secured by
certificates of deposits. As of August 4, 1999 the $1,250,000 line was closed
and paid in full. The outstanding balance on the remaining line of credit as of
September 30, 1999 was $275,000.
The Company's net income has been and will continue to be impacted
significantly by the non-cash charge of amortization expense of goodwill and
intangible assets of the Company. At September 30, 1999, net goodwill and
intangible assets of the Company were approximately $3.7 million. The
amortization of goodwill and intangible assets in the future will decrease net
income or increase any net loss.
If the Company can successfully conclude renegotiations of its credit
facilities, and recover through litigation, monies owned by a rehabilitation
chain, the Company believes that its current cash reserves, projected cash flow
and the funds available under its credit facilities will allow the Company to
continue to meet its expected capital and operating expenses and working capital
needs for at least the next 12 months. Additionally, the Company is seeking
outside capital invesment.
FORM 10-QSB
10
<PAGE>
YEAR 2000
NuMED's Company-wide Year 2000 Project ("Project") is proceeding on
schedule. The Project is addressing the issue of applications systems,
information technology (IT) systems and technologies which include embedded
systems being able to distinguish between the year 1900 and the year 2000. In
the fiscal year 1997, the Company began establishing processes for evaluating
and managing the risks associated with the Project. The Project is divided into
six components. These components include program management, communications,
application conversions and technology upgrades, contingency planning, quality
assurance and external entities. The Company is using internal resources to
implement the Project. The work to complete the Project is expected to be
completed by mid to late 1999. The Company has initiated informal communications
with its key third parties and has initiated formal contingency planning
processes to mitigate the risk to the Company if the third parties are not
prepared for the year 2000. This is planned to be completed by mid 1999. There
can be no guarantee that the third parties will successfully and timely
reprogram or replace and test all of their own computer hardware, software and
process control systems. While the failure of a single third party to achieve
year 2000 compliance should not have a material adverse effect on the Company's
results of operations, the failure of several key third parties could have such
an effect.
COST. The total costs associated with required modifications to become Year
2000 compliant is not expected to be material to the Company's financial
position. The Company has incurred costs to date of $5,000. Estimated costs for
the remainder of work is $1,000 for a total projected Project cost of $6,000.
RISKS. While the effort to assess and correct the Company's Year 2000
issues are expected to be complete prior to related forecasted failure horizons,
the Company is taking specific measures to assess risks and develop specific
contingency plans. A formal process is being developed to assess key business
functions and create action plans which will describe the communications,
operations and IT activities that will be conducted if the contingency plan must
be executed. The costs of the Project and the completion dates are based on
management's best estimates, which were derived from assumptions of future
events including the availability of resources, key third party modification
plans and other factors. There can be no guarantee that these estimates will be
achieved and actual results could vary due to uncertainties. The Company's Year
2000 efforts are ongoing and its overall Project will continue to evolve as new
information becomes available. The failure to correct a material Year 2000
problem could result in an interruption in certain normal business activities
and operations. Due to the general uncertainty inherent in the Year 2000
problem, resulting in part from the uncertainty of the Year 2000 readiness of
third parties on whom the Company relies, the Company is unable to determine at
this time whether the consequences of Year 2000 failures will have a material
adverse impact on the Company's results of operations but the Company believes
that with the implementation of new business systems and completion of the
Project as scheduled, the possibility of significant interruptions of normal
operations should be reduced.
FORWARD LOOKING STATEMENTS
The statements contained in this report which are not historical facts
contain forward looking information regarding the Company's financial position,
business strategy, plans, projections and future performance based on the
beliefs, expectations, estimates, intentions or anticipations of management as
well as assumptions made by and information currently available to the Company's
management. Such statements reflect the current view of the Company with respect
to future events and are subject to risks, uncertainties and assumptions related
to various factors that could cause the Company's actual results to differ
materially from those expected by the Company, including competitive factors,
customer relations, the integration of operations resulting from acquisitions,
the risk of obsolescence of the Company's products, relationships with
suppliers, the risk of adverse regulatory action affecting the Company's
business or the business of the Company's customers, changes in the
international business climate, product introduction and market acceptance,
general economic conditions, seasonality, changes in industry practices, the
outcome of litigation to which the Company is a party, and other uncertainties
detailed in this report and in the Company's other filings with the Securities
and Exchange Commission.
FORM 10-QSB
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in certain litigation and claims as a defendant
or plaintiff arising in the ordinary course of operations. Management, after the
advice of legal counsel, believes that the range of potential liabilities will
not materially affect the financial position of the Company.
The Company maintains professional liability insurance in amounts
believed to be adequate by the Company based on its experience. Currently, the
Company maintains coverage on its home health care operations in the amount of
$1,000,000 per occurrence with a $3,000,000 annual limit. The Company maintains
coverage on its rehabilitation therapy operations in the amount of $4,000,000
annual limit. The Company may be subject to liability for the actions of its
employees who provide medical services. There can be no assurance that the
Company's professional liability insurance will cover all types of claims, that
such insurance will continue to be available to the Company on terms that are
acceptable to it, or that the amount of such insurance will be sufficient.
In November, 1998 the Company and Turkey Vulture Fund XIII, Ltd.
("Turkey Vulture Fund"), a significant shareholder of the company, were involved
in a proxy battle. On January 6, 1999, the Company and its Board of Directors
reached an agreement with Turkey Vulture Fund to settle all outstanding
litigation and present to NuMED's stockholders a combined slate of nominees to
the Board of Directors for this Meeting. Pursuant to the settlement agreement,
Turkey Vulture Fund agreed to cause the Committee to withdraw its proxy
statement that had been filed in opposition to the Board of Directors' proxy
statement. The parties to the settlement agreement agreed to take all
appropriate steps pursuant to applicable law necessary to allow the Turkey
Vulture Fund to enter into a stock purchase agreement for 744,680 shares of
common stock directly from the company, from its currently authorized but
unissued stock for $350,000 in cash. The settlement agreement provided that the
closing was to occur within two days of the shareholders' approval. However,
Stockholder approval was not required under Nevada law, and accordingly, no such
approval was sought. As of November 14, 1999 the Stock Purchase Agreement with
the Turkey Vulture Fund has not been consummated.
FORM 10-QSB
12
<PAGE>
ITEMS 2 THROUGH 5. - NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
27 Financial Data Schedule (SEC use only).
(b) REPORTS ON FORM 8-K. The Company did not file any reports on Form 8-K during
the quarter ended June 30, 1999.
FORM 10-QSB
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NUMED HOME HEALTH CARE, INC.
Date: November 15, 1999 By: /s/ SUSAN J. CARMICHAEL
-----------------------------
Susan J. Carmichael
Chief Executive Officer
Date: November 15, 1999 By: /s/ MARILYN K. MAGINNES
-----------------------------
Marilyn K. Maginnes
Corporate Controller
Principal Accounting Officer
FORM 10-QSB
14
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27 Financial Date Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATMENTS OF: NUMED HOME HEALTH CARE, INC. AS OF AND FOR
THE SIX MONTHS ENDED 9/30/98 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 322
<SECURITIES> 0
<RECEIVABLES> 4,770
<ALLOWANCES> 517
<INVENTORY> 23
<CURRENT-ASSETS> 4,796
<PP&E> 964
<DEPRECIATION> 811
<TOTAL-ASSETS> 8,683
<CURRENT-LIABILITIES> 4,681
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 3,996
<TOTAL-LIABILITY-AND-EQUITY> 8,683
<SALES> 0
<TOTAL-REVENUES> 6,569
<CGS> 0
<TOTAL-COSTS> 4,502
<OTHER-EXPENSES> 2,384
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> (415)
<INCOME-TAX> 0
<INCOME-CONTINUING> (415)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (415)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
