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 December 31, 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 February 14, 2000 was 5,867,012 (exclusive of Treasury Shares).
Form 10-QSB
1
<PAGE>
NUMED HOME HEALTH CARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
<TABLE>
<CAPTION>
DECEMBER 31 MARCH 31
1999 1999
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,681 $ 38,830
Cash deposits securing contractual arrangements 275,000 1,176,000
------------ ------------
281,681 1,214,830
Accounts receivable, net of allowance for doubtful accounts of
$411,400 and $533,048, respectively 4,535,300 4,160,383
Prepaids, inventories, and other current assets 239,756 278,029
------------ ------------
TOTAL CURRENT ASSETS 5,056,737 5,653,242
Property and equipment, net 119,758 220,480
Goodwill, net of amortization of $1,703,261
and $1,444,255, respectively 3,476,874 3,735,880
Other intangible assets, net of accumulated amortization of
$1,821,313 and $1,965,289 respectively 157,475 186,362
Other assets 18,877
------------ ------------
TOTAL ASSETS $ 8,810,844 $ 9,814,841
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 1,378,156 $ 510,718
Accrued salaries and payroll related 1,572,250 935,662
Accrued expenses 383,856 345,141
Estimated amounts due to third party payors 224,294 919,275
Borrowings 1,581,915 2,687,073
------------ ------------
Total current liabilities 5,140,471 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)
Deficit (7,260,174) (6,513,579)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 3,670,377 4,416,972
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,810,848 $ 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>
NINE MONTHS ENDED DECEMBER 31,
1999 1998
------------ -------------
<S> <C> <C>
Revenues $ 9,687,642 $ 13,707,711
Direct expenses 6,720,402 10,075,690
------------ ------------
GROSS PROFIT 2,967,240 3,632,021
GENERAL AND ADMINISTRATIVE EXPENSES:
Salaries and benefits 1,820,241 2,344,285
Operating expenses 540,895 677,758
Professional fees 190,693 237,872
Occupancy expenses 527,496 634,421
Insurance 81,218 168,239
Amortization and depreciation 393,026 419,389
Bad debt expense 125
------------ ------------
Total general and administrative 3,553,569 4,482,089
------------ ------------
Operating loss (586,329) (859,068)
OTHER REVENUES (EXPENSES):
Interest income 21,409 39,508
Interest expense (183,803) (216,904)
Other Income 2,128 525,000
Other Expense (824,510)
------------ ------------
Total other revenues (expenses) (160,266) (476,906)
------------ ------------
Loss before income taxes (746,595) (1,326,974)
Income tax 0 4,881
------------ ------------
Net loss $ (746,595) $ (1,331,885)
============ ============
PER SHARE:
Net loss basic and diluted $ (0.13) $ (0.26)
============ ============
Weighted average shares outstanding-basic and diluted 5,867,012 5,199,663
</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 DECEMBER 31,
1999 1998
--------- -----------
<S> <C> <C>
Revenues $ 3,118,724 $ 4,328,064
Direct expenses 2,217,935 3,157,849
----------- -----------
GROSS PROFIT 900,789 1,170,215
GENERAL AND ADMINISTRATIVE EXPENSES:
Salaries and benefits 570,105 730,713
Operating expenses 194,380 211,490
Professional fees 81,554 56,219
Occupancy expenses 166,089 183,829
Insurance 22,701 46,612
Amortization and depreciation 134,907 143,217
----------- -----------
Total general and administrative 1,169,736 1,372,080
----------- -----------
Operating loss (268,947) (201,865)
OTHER REVENUES (EXPENSES):
Interest income 1,194 13,499
Interest expense (65,880) (74,260)
Other Income 2,128 (799,847)
----------- -----------
Total other revenues (expenses) (62,558) (860,608)
----------- -----------
Loss before income taxes (331,505) (1,062,473)
Income tax 0 0
----------- -----------
Net loss $ (331,505) $(1,062,473)
=========== ===========
PER SHARE:
Net loss after income taxes $ (0.06) $ 0.20
=========== ===========
Weighted average shares outstanding-basic and diluted 5,867,012 5,410,648
</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
NINE MONTHS ENDED DECEMBER 31, 1999 AND YEAR ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED TREASURY STOCK
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 (746,595) $ (746,595)
---------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999 5,901,500 $ 5,902 $ 10,963,745 $ (7,260,174) (34,488) $ (39,096) $ 3,670,377
=============================================================================================
</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>
DECEMBER 31 DECEMBER 31
1999 1998
-----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (746,595) $(1,331,855)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 393,026 419,389
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 (374,917) 278,254
Prepaids and other current assets 38,273 181,538
Accounts payable and accrued expenses 1,542,741 (465,752)
Deferred charges and other -- (40,557)
Estimated amounts due to third party payors (694,981)
Other Assets 18,877
----------------------------
Net cash provided by (used in ) operating activities 176,424 (958,983)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (4,411) (5,020)
----------------------------
Net cash provided by (used in ) investing activities (4,411) (5,020)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 4,688,217 8,889,197
Payments on borrowings (5,793,379) (8,458,645)
Proceeds from issuance of stock through employee purchase plan 8,393
Roceeds from the issuance of stock 409,677
Cash securing contractual arrangements 901,000 99,980
----------------------------
Net cash (used in) provided by financing activities (204,162) 948,602
----------------------------
(Decrease) Increase in cash and cash equivalents (32,149) (15,401)
Cash and cash equivalents at beginning of year 38,830 59,725
----------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 6,681 $ 44,324
============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the year $ 175,675 $ 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)
December 31, 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 December 31, 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:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
DECEMBER 31, 1999 HOME HEALTH REHABILITATION
TOTAL SERVICES SERVICES CORPORATE
---------- ----------- -------------- ---------
<S> <C> <C> <C> <C>
Revenue $9,687,642 $8,639,855 $ 1,047,787
Direct Expenses 6,720,402 6,007,298 713,104
Gross Profit 2,967,240 2,632,557 334,683
Depreciation and Amortization 393,026 182,264 210,762
Operating Loss (586,329) (332,893) (253,436)
Interest Income 21,409 19,054 2,355
Interest Expense 183,803 126,456 57,347
Loss Before Income Tax Expense (746,595) (438,167) (308,428)
Identifiable Assets 8,810,844 4,535,597 3,933,456 $341,791
Capital Expenditures 4,411 4,411 -- --
FOR THE NINE MONTHS ENDED
DECEMBER 31, 1998 HOME HEALTH REHABILITATION
TOTAL SERVICES SERVICES CORPORATE
----------- ----------- -------------- ---------
Revenue $13,707,711 $9,068,447 $4,639,264
Direct Expenses 10,075,690 6,259,443 3,816,247
Gross Profit 3,632,021 2,809,004 823,017
Depreciation and Amortization 419,389 209,310 210,079
Operating Loss (850,068) (196,800) (653,268)
Interest Income 39,508 30,665 8,843
Interest Expense 216,904 162,699 54,205
Other Income and Expenses (299,510) (299,510)
Loss Before Income Tax Expense (1,326,974) (328,834) (698,630) (299,510)
Identifiable Assets 9,806,918 3,800,629 5,342,568 $663,721
Capital Expenditures 5,020 5,020 -- --
</TABLE>
Form 10-QSB
7
<PAGE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
DECTEMBER 31, 1999
HOME HEALTH REHABILITATION
TOTAL SERVICES SERVICES CORPORATE
---------- ---------- -------------- ---------
<S> <C> <C> <C> <C>
Revenue $3,118,724 $2,759,582 $ 359,142
Direct Expenses 2,217,935 1,964,683 253,252
Gross Profit 900,789 794,899 105,890
Depreciation and Amortization 134,907 64,653 70,254
Operating Loss (268,947) (179,085) (89,862)
Interest Income 1,194 953 241
Interest Expense 65,880 36,893 28,987
Loss Before Income Tax Expense (331,505) (212,897) (118,608)
Capital Expenditures 2,890 2,890 --
FOR THE THREE MONTHS ENDED
DECEMBER 30, 1998
HOME HEALTH REHABILITATION
TOTAL SERVICES SERVICES CORPORATE
---------- ---------- -------------- ---------
Revenue $4,328,064 $2,855,989 $1,472,075
Direct Expenses 3,157,849 1,948,099 1,209,750
Gross Profit 1,170,215 907,890 262,325
Depreciation and Amortization 143,217 73,191 70,026
Operating Loss (201,865) (32,065) (169,800)
Interest Income 13,499 12,014 1,485
Interest Expense 74,260 41,586 32,674
Other Income and Expense (799,847) 0 (799,847)
Loss Before Income Tax Expense (1,062,473) (61,637) (200,989) (799,847)
</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 nine months ended December 31, 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 nine months ended December 31, 1999, decreased by
29% or approximately $4,020,000 over the same period one year ago. The revenues
in the rehabilitation division, NuMED Rehabilitation, Inc., decreased
approximately $3,591,000 or 77% 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 $429,000 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 89% of
the total revenues with Rehabilitation comprising 11% compared to 66% and 34%
respectively for the nine month period last year.
Direct expenses as a percentage of net revenue for the nine months
ended December 31, 1999 decreased by 5% to 69% of net revenues as compared to
the same period one year ago. The cost of direct expenses for NuMED
Rehabilitation, Inc. is 68% of net revenue for the nine months ended December
31, 1999 and 71% of net revenue for the three months ended December 31, 1999.
The strategic withdrawal from the East Coastal and Illinois regions in the NuMED
Rehabilitation, Inc. division has resulted in the reduction of the direct
expenses as a percentage of revenue by 14% as compared to the same nine month
period last year of net revenues. The direct expenses for the Home Health
Division is 70% of net revenues for the nine months ended December 31, 1999 and
71% of net revenues for three months ended December 31, 1999. As a result, the
gross profit margins for the home health division decreased 1% to 30% for the
nine month period ended December 31, 1999.
General and Administrative expenses (excluding amortization and
depreciation) for the nine months ended December 31, 1999, decreased by 22% to
approximately $3,161,000 or 33% of net revenue from approximately $4,063,000 or
30% of net revenue for the same period one year ago. The decrease was
approximately $902,000 for the nine months ended December 31, 1999 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, Inc.
division resulting in the closure of the Rehabilitation office in Horsham,
Pennsylvania. The General and Administrative expenses decreased approximately
$13,000 in the Home Health division and approximately $889,000 in NuMED
Consolidation, Inc. as compared to the same period last year. General and
Administrative expenses (excluding amortization and depreciation) for the three
months ended December 31, 1999, decreased by 16% to approximately $1,035,000 or
33% of net revenue from approximately $1,229,000 or 28% of net revenue for the
same period one year ago.
As a result of the foregoing, the Company incurred a net loss of
approximately $747,000 for the nine months ended December 31, 1999. The net loss
decreased 44% from approximately $1,332,000 as compared to the same period one
year ago. Included in the December 31, 1998 net loss was approximately $525,000
of other income resulting from the recovery of disallowed costs of a rehab
client and other expenses of approximately $825,000.
Form 10-QSB
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital and current ratio were approximately
negative $84,000 and 1.0, respectively, as of December 31, 1999, as compared to
approximately $255,000 and 1.0, respectively, as of March 31, 1999. Cash
decreased approximately $32,000 for the nine months ended December 31, 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, Company
representatives signed a settlement agreement with payment expected within 180
days.
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 $1,305,769 and $1,495,265, respectively, at December
31, 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 had not paid withholding taxes in a timely manner, it is in
default of the agreement. The Company has renegotiated with the lender to remedy
the situation and is in discussions to enter into a forebearance agreement,
although no assurance can be given that such an agreement will be reached.
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 December 31,
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
December 31, 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 December 31, 1999, net goodwill and
intangible assets of the Company were approximately $3.6 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, Successfully negotiate a repayment plan with the Internal Revenue
Service for back taxes and recover through litigation, monies owed 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 the next 12 months. Additionally, the
Company is seeking outside capital investment.
Form 10-QSB
10
<PAGE>
YEAR 2000
NuMED's Company-wide Year 2000 Project ("Project") was completed timely and
efficiently without any adverse effect on Company's result of operations. 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 used internal resources to implement the Project.
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 of approximately $6,000.
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.
NOTE D - ACQUISITIONS
On November 16, 1999, the Company signed a Letter of Intent with
Capital General Corporation ("CGC"), a Florida corporation located in Louisiana,
to acquire 80.9% of NuMED Home Health Care, Inc. by an issuance of 25,000,000
shares of NuMED common stock. In exchange NuMED will own approximately 45% of
CGC, will have (for a two-year period) all acquisitions targeted by CGC in the
health care field and upon closing will have a two million five hundred thousand
dollar ($2,500,000.00) loan for working capital. The proposed effective date for
the transaction was December 31, 1999 which was extended to March 9, 2000. The
transaction is subject to approval by the Board of Directors of both NuMED and
CGC, and execution of a definitive agreement and a closing pursuant to the terms
thereof.
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 4. - NOT APPLICABLE
ITEM 5. OTHER INFORMATION
On November 16, 1999, the Company signed a Letter of Intent with
Capital General Corporation ("CGC"), a Florida corporation located in Louisiana,
to acquire 80.9% of NuMED Home Health Care, Inc. by an issuance of 25,000,000
shares of NuMED common stock. In exchange NuMED will own approximately 45% of
CGC, will have (for a two-year period) all acquisitions targeted by CGC in the
health care field and upon closing will have a two million five hundred thousand
dollar ($2,500,000.00) loan for working capital. The proposed effective date for
the transaction was December 31, 1999 which was extended to March 9, 2000. The
transaction is subject to approval by the Board of Directors of both NuMED and
CGC, and execution of a definitive agreement and a closing pursuant to the terms
thereof.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. There are no exhibits filed with this report
(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: February 14, 2000 By: /s/ SUSAN J. CARMICHAEL
-----------------------
Susan J. Carmichael
Chief Executive Officer
Date: February 14, 2000 By: /s/ MARILYN K. MAGINNES
-----------------------
Marilyn K. Maginnes
Corporate Controller
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF: NUMBED HOME HEALTH CARE, INC. AS OF AND
FOR THE NINE MONTHS ENDED 12/31/99 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 282
<SECURITIES> 0
<RECEIVABLES> 4,946
<ALLOWANCES> 411
<INVENTORY> 23
<CURRENT-ASSETS> 5,057
<PP&E> 970
<DEPRECIATION> 850
<TOTAL-ASSETS> 8,811
<CURRENT-LIABILITIES> 5,140
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 3,664
<TOTAL-LIABILITY-AND-EQUITY> 8,811
<SALES> 0
<TOTAL-REVENUES> 9,688
<CGS> 0
<TOTAL-COSTS> 6,720
<OTHER-EXPENSES> 3,554
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 184
<INCOME-PRETAX> (747)
<INCOME-TAX> 0
<INCOME-CONTINUING> (747)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (747)
<EPS-BASIC> (.13)
<EPS-DILUTED> (.13)
</TABLE>
