<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
F O R M 10 - Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
------------------------
For Quarter Ended March 31, 1997 Commission file number 0-17821
------------------ -----------
The Care Group, Inc.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 11-2962027
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 HOLLOW LANE, LAKE SUCCESS, NEW YORK, N.Y. 11042
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 516-869-8383
----------------
N/A
- ------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed from last report)
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 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.
YES X NO
----- -----
As of May 6, 1997, the registrant had 13,997,053 shares of common stock,
$.001 par value per share, outstanding.
Page 1 of 16 pages
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THE CARE GROUP, INC.
AND
SUBSIDIARIES
THREE MONTHS ENDED MARCH 31, 1997
PART I
FINANCIAL INFORMATION
Page 2 of 16 pages
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THE CARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA) MARCH 31, DECEMBER 31,
- ------------------------------------- 1997 1996
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 153 $ 24
Marketable securities 13 21
Accounts receivable, net of allowances of $5,382 at
March 31, 1997 and $5,637 at December 31, 1996 12,677 12,163
Inventories 766 887
Recoverable Income Taxes 1,858 1,875
Prepaid expenses and other current assets 305 366
-------- --------
Total Current Assets 15,772 15,336
-------- --------
PROPERTY AND EQUIPMENT - at cost 5,596 5,457
LESS - Accumulated depreciation 2,545 2,424
-------- --------
Net property and equipment 3,051 3,033
-------- --------
INTANGIBLES - Net 12,127 12,249
-------- --------
OTHER ASSETS 193 190
-------- --------
TOTAL ASSETS $ 31,143 $ 30,808
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 1,511 $ 1,546
Accounts payable 1,498 1,673
Accrued expenses 406 1,103
Note payable - bank 6,450 5,192
Other short-term debt 1,020 891
-------- --------
Total Current Liabilities 10,885 10,405
LONG-TERM DEBT, excluding current portion 1,841 1,974
-------- --------
TOTAL LIABILITIES 12,726 12,379
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value per share; 2,000
shares authorized, no shares issued and outstanding -- --
Common Stock, $.001 par value per share; 30,000 shares authorized
13,038 and 12,638 shares issued and 12,998 and 12,598 shares outstanding,
at March 31, 1997 and December 31, 1996, respectively 13 13
Additional Paid-In-Capital 24,380 23,905
Accumulated deficit (5,835)
-------- --------
(5,348)
18,558 18,570
Common Stock held in treasury, at cost - 40 and 40
shares at March 31, 1997 and December 31, 1996, respectively (141) (141)
-------- --------
Total Stockholders' Equity 18,417 18,429
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,143 $ 30,808
======== ========
</TABLE>
See notes to consolidated financial statements.
Page 3 of 16 pages
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THE CARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
MARCH 31,
(In thousands, except 1997 1996
per share data) (Unaudited) (Unaudited)
- --------------------- ----------- -----------
NET REVENUES $ 7,376 $ 9,235
COST OF REVENUES 4,240 4,301
GROSS PROFIT 3,136 4,934
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 3,411 4,609
OPERATING (LOSS) INCOME (275) 325
INTEREST:
Interest income 1 3
Interest expense (213) (161)
Net Interest Expense (212) (158)
(LOSS) INCOME BEFORE (BENEFIT FROM)
PROVISION FOR INCOME TAXES (487) 167
(BENEFIT FROM) PROVISION FOR
INCOME TAXES -- 106
NET (LOSS) INCOME $ (487) $ 61
NET (LOSS) INCOME PER COMMON AND
COMMON EQUIVALENT SHARES $ (.04) $ .01
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING 13,072 8,462
See notes to consolidated financial statements.
Page 4 of 16 pages
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THE CARE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) FOR THE THREE MONTHS
- -------------- ENDED MARCH 31,
1997 1996
(UNAUDITED) (UNAUDITED)
----------- -----------
OPERATING ACTIVITIES:
Net income (loss) $ (487) $ 61
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 219 294
Provision for contractual allowances and bad debts (255) 395
Deferred income tax expense -- 69
Unrealized loss (gain) on marketable securities 8 (58)
Loss on sale of marketable securities -- 60
Changes in assets and liabilities;
Marketable securities -- 222
Accounts receivable (259) 152
Income taxes receivable 17 --
Inventories 121 (458)
Prepaid expenses and other current assets 61 226
Other assets (3) (6)
Accounts payable and other liabilities (175) 365
Accrued expenses (697) (405)
Net purchases of rental equipment (97) (91)
------- -------
Net cash (used in) provided by operating activities (1,547) 826
------- -------
INVESTING ACTIVITIES:
Disposal of property and equipment (4) --
Purchases of property and equipment --
(124)
Payments for intangible assets acquired -- (45)
Organization costs -- (12)
Investment in certified home health agency (15) (74)
------- -------
Net cash used in investing activities (19) (255)
------- -------
FINANCING ACTIVITIES:
Proceeds from note payable - bank 1,258 150
Repayments of note payable - bank -- (450)
Repayment of long-term debt (133) (105)
Proceeds from other short-term debt 520 --
Repayment of other short-term debt (425) --
Proceeds from issuance of common stock 475 --
Purchase of treasury stock -- (118)
------- -------
Net cash provided by (used in) financing activities 1,695 (523)
------- -------
INCREASE IN CASH AND CASH
EQUIVALENTS 129 48
CASH AND CASH EQUIVALENTS, beginning of year 24 561
------- -------
CASH AND CASH EQUIVALENTS, end of year $ 153 $ 609
======= =======
Supplemental disclosure of cash flow information:
Interest paid $ 213 $ 161
======= =======
Taxes paid $ -- $ 106
======= =======
See notes to consolidated financial statements.
Page 5 of 16 pages
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THE CARE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - GENERAL
The principal business of The Care Group, Inc. and its wholly-owned
subsidiaries (the "Company") is providing home health care, including therapy,
to patients with HIV (Human Immunodeficiency Virus) Disease, AIDS (Acquired
Immune Deficiency Syndrome), cancer, and other diseases requiring high
technology intermittent therapies. In 1994, the Company began selling and
renting durable medical equipment through its subsidiary, Advanced Care
Associates, Inc. In 1995, the Company began mail order distribution of
pharmaceuticals through Mail Order Meds, Inc., a wholly owned subsidiary.
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q 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, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of The
Care Group, Inc. and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted in accordance with the rules and regulations of
the Securities and Exchange Commission. These financial statements should be
read in conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1996.
(a) USE OF ESTIMATES
The preparation of consolidated 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.
(b) REVENUE RECOGNITION
Revenues are recognized at the time the service is provided to the
patient. A substantial majority of the Company's revenues are billed to
third-party payors. These revenues are recognized net of known contractual
adjustments. Payment from third-party payors is dependent upon the specific
benefits included in the patient's policy. The Company provides an allowance
to cover the difference between the Company's billable charges and expected
collections from third-party payors and patients.
(c) INCOME TAXES
The Company's deferred tax provision is determined under the
liability method. Under this method, deferred tax assets and liabilities are
recognized based on differences between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which differences are expected to reverse. Income tax expense is the tax
payable or refundable for the period plus or minus the change during the
period in deferred tax assets or liabilities.
Page 6 of 16 pages
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(d) NET INCOME PER COMMON AND COMMON EQUIVALENT SHARES
Net income per common and common equivalent shares is computed by
dividing net income by the weighted average number of common and common stock
equivalents outstanding. Common stock equivalents result from dilutive stock
options and warrants.
(e) RECLASSIFICATIONS
Certain amounts in the 1996 consolidated financial statements have
been reclassified to conform to the 1997 presentation.
(f) FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments consist primarily of investments in cash and
cash equivalents, short-term investments, trade accounts receivable, accounts
payable and debt obligations. At March 31, 1997 and December 31, 1996, the
fair value of the Company's financial instruments approximated the carrying
value.
(g) CASH AND CASH EQUIVALENTS
Cash equivalents consist of short-term highly liquid investments
which are readily convertible into cash, and have maturities of three months
or less.
(h) ACCOUNTS RECEIVABLE, NET
Accounts receivable, net, is comprised principally of amounts
expected to be collected from insurance companies for services provided.
(i) INVENTORIES
Inventories, consisting of supplies, durable medical equipment and
pharmaceuticals are stated at the lower of cost (first-in, first-out) or
market.
(j) PROPERTY AND EQUIPMENT
Leasehold improvements, furniture, equipment and equipment acquired
under capitalized leases are stated at cost. Depreciation is provided on a
straight-line basis over the estimated useful lives of the furniture and
equipment. Leasehold improvements are amortized over the period of the
respective leases or the estimated useful lives of the assets, whichever is
shorter. Equipment acquired under capitalized leases are depreciated on a
straight-line basis over the estimated useful lives or the lease term,
whichever is shorter.
(k) INTANGIBLES
Intangible assets resulting from acquisitions primarily consist of
the excess of the acquisition cost over the fair value of the net assets
acquired (goodwill). Goodwill is amortized on a straight-line basis over
twenty or forty years. Other intangible assets are amortized over the
estimated life of the related asset.
Page 7 of 16 pages
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(l) MARKETABLE SECURITIES
At March 31, 1997 and December 31, 1996, marketable securities
consisted of equity securities. The provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS 115"), requires a positive intent and ability to hold
debt securities to maturity as a precondition for reporting those securities
at amortized cost. Securities not meeting the condition are considered either
available-for-sale or trading, as defined, and are reported at fair value.
Trading securities are reported at fair value with adjustments recorded
through the consolidated statements of income. The investments owned by the
Company are considered trading securities as they are bought and held
principally for the purpose of selling them in the near term to generate a
profit on short-term differences in price.
NOTE 3 - NOTE PAYABLE BANK
As of March 31, 1997, the Company was in default of certain financial
convenants contained in the Loan Agreement, dated December 31, 1996 (the
"Credit Agreement"), between the Company and Key Bank of New York (the
"Lender"). The Lender waived the violation, but such waiver does not currently
permit the Company to borrow amounts in excess of the lesser of $6,450,000 or
a certain formula, which formula equaled, as of March 31, 1997, $6,530,000.
NOTE 4 - LITIGATION
The Company is a party to litigation arising in the normal course of
its operations. It is the opinion of management of the Company that it has
meritorious defenses against all outstanding claims and that the outcome of
such litigation will not have a significant adverse effect on the Company's
consolidated financial position or results of operations. Further, management
intends to vigorously defend all such litigation.
On March 5, 1997, the Company was served with a lawsuit from an
investor. The investor is suing the Company for breach of contract and
breach of fiduciary duty. On or about June 19, 1996, the investor purchased
150,000 shares of the Company's common stock at a reduced price and had a
right to a demand registration 75 days after June 19, 1996. The Company
received a demand registration request on October 18, 1996. The investor,
among other things, is suing the Company for not registering the shares in a
timely manner. Management intends to vigorously defend such litigation and
believes that the outcome of such litigation will not have a material adverse
effect on the Company's financial position or results of operations.
NOTE 5 - SUBSEQUENT EVENTS
On February 14, 1997, the Company entered into a non-binding Letter
of Intent to sell its Atlanta, Georgia operations. The Company expects this
transaction to be consummated by May, 1997.
On April 3 and April 7 the Company completed a private placement of
600,000 and 400,000 shares of common stock for a total consideration of
$1,250,000, $500,000 of which consisted of notes issued by the Company in
January and February 1997 to Equity Dynamics, Inc. The president of Equity
Dynamics, Inc., Mr. John Pappajohn, is also a director of the Company. The
notes were exchanged for 10 Units (the "Units") of the Company's securities.
Each Unit consists of 40,000 shares of common stock and warrants to purchase
40,000 shares of common stock at $2.50 per share.
Page 8 of 16 pages
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ITEM. 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This quarterly Report contains, in addition to historical
information, forward-looking statements that involve risks and uncertainties.
The Company's actual results could differ significantly from the results
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include those discussed below and in other
filings made by the Company with the Securities and Exchange Commission,
including without limitation, the factors described in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, under the heading
"Certain Factors Affecting Operations and Market Price of Securities." The
Company wishes to caution readers not to place undue reliance on any such
forward-looking statements which are made pursuant to the Private Securities
Litigation Reform Act of 1995, and, as such, speak only as of the date made.
The Management's Discussion and Analysis of Financial Condition and
Results of Operations for the three months ended March 31, 1997, should be
read in conjunction with the Management's Discussion and Analysis of Financial
Condition and Results of Operations for the year ended December 31, 1996,
included in the Company's Annual Report on Form 10-K.
RESULTS OF OPERATIONS
Net revenues for the three months ended March 31, 1997 decreased to
$7,376,000 as compared to $9,235,000 for the comparable period last year. The
decrease of $1,859,000, or 20 percent was concentrated in Dallas, which
accounted for about $1,000,000 of the decrease, and New York which accounted
for about $1,400,000 of the decrease, and was primarily attributable to the
growth of managed care organizations. Managed care has not only had the effect
of reducing the Company's rates on a per therapy basis, but, more importantly,
it has changed referral patterns and has made it more difficult to obtain
qualified referrals from our physician base. The decrease was partially offset
by an increase in net revenues at the Company's other branches.
Cost of revenues for the three months ended March 31, 1997 as a
percentage of net revenues was 57 percent as compared to 47 percent for the
same period in 1996. The increase in the cost of revenues as a percentage of
net revenues was primarily attributable to the lower volume of sales and the
effects of managed care. The managed care business typically has a lower gross
margin than fee for service business.
The Company's selling, general and administrative ("SG&A") costs as a
percentage of net revenues for the three months ended March 31, 1997 decreased
to 46 percent as compared to 50 percent for the same period in 1996. This
decrease is primarily due to the decrease in bad debt expense which was over
$700,000 for the three months ended March 31, 1996 and only $125,000 for the
equivalent period in 1997. This decrease in bad debt is due to the increase in
referrals from managed care organizations who pay negotiated amounts, thereby
allowing the Company to collect receivable on a more timely basis. This
percentage decrease was partially offset by lower revenues.
Net loss for the three months ended March 31, 1997 was $487,000 ($.04
per share) as compared with a profit of $61,000 ($.01 per share) for the same
period in 1996. The loss was primarily caused by the decrease in revenues and
the increase in costs of goods sold as a percentage of net revenues, each of
which is discussed above.
Page 9 of 16 pages
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FINANCIAL CONDITION AND LIQUIDITY
Current assets have increased to $15,772,000 at March 31, 1997 from
$15,336,000 at December 31, 1996. The increase of $436,000 in current assets
is due to the Company's increase in accounts receivable.
At March 31, 1997, working capital was $4,887,000 as compared to
$4,931,000 at December 31, 1996. The decrease of $44,000 is attributable to
the increase in bank and other short-term debt.
On December 31, 1996, the Company entered into a three-year revolving
term credit agreement (the "Credit Agreement") with Key Bank of New York (the
"Lender") which provides for borrowing up to $9,000,000, with interest payable
at prime plus one percent as of May 1, 1997. Pursuant to the Credit Agreement,
the amount the Company may borrow is determined with reference to the
following formula (the "Formula"): up to 65 percent of eligible receivables
under 120 days old, plus the lesser of $600,000 or 40 percent of all eligible
receivables more than 120 days and less then 240 days old, plus the lesser of
$200,000 or 30 percent of eligible inventory, as defined in the Credit
Agreement. As of March 31, 1997, the Formula equaled approximately $6,530,000
and the outstanding balance of the funds advanced to the Company pursuant to
the Credit Agreement, as of such date, was $6,450,000. Accordingly, the
Company had minimal additional borrowing availability, as determined by the
Formula.
As of March 31, 1997, the Company was in violation of certain
financial covenants (the "Financial Covenants") contained in the Credit
Agreement. The Lender has waived the violation, but pursuant to such waiver
the Company may not borrow additional amounts in excess of the lesser of
$6,450,000 or the Formula. As noted above, even if such waiver permitted the
Company to borrow a greater amount under the Credit Agreement, pursuant to the
Formula, the Company is only able to borrow a nominal amount.
On each of January 30, 1997 and February 28, 1997, Equity Dynamics
advanced the Company $250,000, for a total of $500,000, in exchange for the
Company's notes. The notes issued in January and February, 1997 were exchanged
on April 3, 1997 for 10 units (the "Units") of the Company's securities (the
"Exchange"). Each Unit consists of 40,000 shares of common stock and warrants
to purchase 40,000 shares of common stock at $2.50 per share. On March 18,
1997, the Company consummated a private placement of an additional 10 Units
and received net proceeds of $500,000. On April 3, 1997, the Company
consummated a private placement of an additional 15 units and received
$750,000. The Company anticipates consummating the private placement for up to
an additional 5 Units on May 31, 1997 (in addition to the Exchange) and
expects to receive net proceeds of up to $250,000. Although there can be no
assurance that the Company will be able to consummate the placement of the 5
Units by such date, if ever.
In order to reduce its overhead and create a more focused entity
and improve its liquidity and financial condition, the Company plans to
dispose of operations in Georgia and California, which are outside of its core
base of operations of New York and Texas. The Georgia and California branches
of the Company have negatively impacted the Company's operations and have not
produced the revenue anticipated by the Company, primarily because of the loss
of referral sources in those markets. In addition, the Company is seeking a
strategic merger partner in order to spread its overhead over a larger patient
base and increase its market presence. Finally, the Company intends to improve
its revenues by aggressively marketing itself and training its employees to
more effectively cross-sell the Company's services. The Company has deployed
six (6) sales representatives in the New York Metropolitan area alone to
achieve this goal.
Page 10 of 16 pages
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On February 14, 1997, the Company entered into a non-binding letter
of intent to sell its Georgia branch for $1.6 million, which sale is currently
expected to be consummated in May, 1997. There can be no assurance, however,
that the Company will be able to successfully negotiate a definitive
agreement, or, if an agreement is negotiated, that it will provide for $1.6
million in proceeds to the Company or that it will be consummated in May 1997,
if ever. In addition, the Company is actively seeking a buyer for its
California branch. Even if a buyer is found, the Company does not expect to
derive significant proceeds from such sale. If the Company is unable to find a
buyer shortly, it may cease its operations in California, which have been
generating operating losses. The Company expects that the disposition of these
two facilities will enhance the net operating results of the Company.
In addition, the Company is discussing a possible business
combination with another provider of home infusion therapies in the New York
area. There can be no assurance, however, that the Company will be able to
successfully negotiate a deal with such company, what terms will ultimately be
negotiated, or, if the Company consummates a deal, that it will achieve the
goal of improving the Company's gross margins and increasing the Company's
regional presence and referral base.
The Company currently anticipates that any acquisitions it
undertakes in 1997 will be financed principally through the issuance of equity
securities. There can be no assurance, however, that the Company will be able
to consummate any acquisitions. Although the Company may be able to pursue its
acquisition program with equity financing, it will need additional funds in
order to make the necessary investments in inventories and operations required
to support the Company's growth.
The Company currently expects to receive a tax refund with respect
to its 1996 loss, which will be carried back to the 1995, 1994 and 1993 fiscal
years, in the approximate amount of $1.9 million. While it is difficult to
predict the exact timing, management expects to receive the refund by July
1997. There can be no assurance, however, that the Company will receive a tax
refund by that time.
Based on the historic rate of introduction of oral medications, as
well as the number of such products awaiting final approval from the Food and
Drug Administration, the Company expects that additional oral medications will
be brought to the market. The introduction of such medications may replace a
number of medications that are currently administered intravenously. If this
happens, the Company may see a decrease in net revenues from home infusion
therapies, which management believes may be offset by an increase in its mail
order medication operations.
The Company believes that the combination of the following items
will enable it to satisfy its debt and cash flow requirements in the immediate
future:
o The Company believes there are alternative sources for
financing its working capital if it is unable to obtain
additional waivers and amendments to its financial covenants
as necessary during 1997 from its bank, but the Company
believes that it will receive the necessary waivers and
amendments to its financial covenants from its bank in 1997.
o The Company has raised an additional $1,750,000 since
December 31, 1996 and has a commitment for an additional
$250,000 to close by May 31, 1997.
o The Company's plan to sell its Atlanta and Los Angeles
branches will help improve operating results and positively
contribute to cash flow.
o The Company expects a tax refund of approximately $1,900,000
attributable to the carryback of its 1996 loss to the tax
years 1995, 1994 and 1993.
o The results of operations anticipated for 1997 should
provide excess cash flow.
Page 11 of 16 pages
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 5, 1997, the Company was served with a complaint from an
investor alleging breach of contract and breach of fiduciary duty. On or about
June 19, 1996, the investor purchased 150,000 shares of the Company's common
stock at a reduced price and had a right to a demand registration 75 days
after June 19, 1996. The Company received a demand registration request on
October 18, 1996. The investor, among other things, is suing the Company for
not registering the shares in a timely manner. Management intends to
vigorously defend such litigation and believes that the outcome of such
litigation will not have a material adverse effect on the Company's financial
position or results of operations.
The Company is a party to other litigation arising in the normal
course of its operations. It is the opinion of management of the Company that
it has meritorious defenses against all outstanding claims and that the
outcome of such litigation will not have a significant adverse effect on the
Company's financial position or results of operations. Further, management
intends to vigorously defend all such litigations.
ITEM 2. CHANGE IN SECURITIES
N/A
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As of March 31, 1997, the Company was in violation of the Financial
Covenants contained in the Credit Agreement. The Lender has waived the
violation, but pursuant to such waiver the Company may not borrow additional
amounts in excess of the lesser of $6,450,000 or the Formula.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
N/A
ITEM 5. OTHER INFORMATION
On February 2, 1997, Mr. Richard G. Jung resigned from his position
as President and Chief Executive Officer of the Company. An Executive
Committee of the Board of Directors of the Company was established to assume
the responsibility of the office of the President and Chief Executive Officer.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS
(3) (i) Certificate of Incorporation of Registrant, as
amended (m)
(ii) Bylaws of Registrant (a)
(4) (i) Form of Specimen Stock Certificate (a)
Page 12 of 16 pages
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(ii) Form of Underwriter's Warrant Certificate (b)
(iii) Form of Stock Purchase Warrant Certificate (o)
(iv) Subscription Agreement dated as of August 14, 1996
between the Company and the Subscriber (o)
(v) Subscription Agreement dated as of June 19, 1996
between the Company and the Subscriber (m)
(vi) Form of Unit Purchase Options (m)
(vii) Subscription Agreement, dated March 14, 1997
between the Company and the Subscriber (s)
(9) Form of Voting Trust Agreement (a)
(10) (i) Form of Employment Agreement between Registrant
and Ann T. Mittasch dated as of January 1, 1992 (c)
(ii) Form of 1990 Stock Option Plan (a)
(iii) Form of 1991 Stock Option Plan (e)
(iv) Form of 1993 Stock Option Plan (d)
(v) Form of 1995 Stock Option Plan (l)
(vi) Standard industrial commercial single tenant net
lease dated July 6, 1991 by and between the Boone
Family Trust and Preferred Healthcare Services (c)
(vii) Lease Agreement dated November 27, 1991 by and
between California State Teachers' Retirement
System and The Care Group of Georgia, Inc.; and
Addendum Letter to said Lease Agreement dated
February 14, 1991 (f)
(viii) Form of Amendment to Lease Agreement dated June 27,
1988 by and between California State Teacher's
Retirement System and Windsor Homecare of Georgia,
Inc. (g)
(ix) Lease dated July 3, 1997 by and between Registrant
and Brown Realty Company (r)
(x) Leasehold Agreement dated December 17, 1990 by and
between M. Parisi & Son Construction Co., Inc. and
Windsor Placement, Inc. (g)
(xi) Sublease dated January 6, 1990 Between Windsor Home
Care, Inc. and Superior Medical Equipment and
Supply Corp. (a)
(xii) Temporary Help Service Errors and Omissions Policy
by and between National Union Fire Insurance
Company of Pittsburgh, PA and Windsor International
Agencies, Inc. (a)
(xiii) Form of Transfer Agent Agreement with American
Stock Transfer and Trust Company (a)
(xiv) Directors' and Officers' liability Insurance
(temporary rider) (h)
(xv) Lease Agreement dated December, 1991 between Philip
C. Richardson and The Care Group of Texas, Inc. (c)
(xvi) Lease Agreement by and between Texas Commerce Bank
and The Care Group of Texas, Inc. (c)
Page 13 of 16 pages
<PAGE>
(xvii) Lease Agreement between The Western - Southern Life
Assurance Company and The Care Group, Inc. (c)
(xviii) Amendment to Employment Agreement with Robert S.
Miller dated July 21, 1994 (the Company has deemed
this Agreement rescinded) (k)
(xix) Employment Agreement dated May 18, 1994 by and
among Advanced Care Associates, Inc., Robert P.
Wolk and the Company (the Company has deemed this
Agreement rescinded) (j)
(xx) Amendment to Employment Agreement with Robert P.
Wolk dated July 21, 1994 (the Company has deemed
this Agreement rescinded) (k)
(xxi) Asset Purchase Agreement dated July 18, 1994 by and
among Jack J. Gutkin, Care Line of Georgia, Inc.
and the Company (k)
(xxii) Lease dated August 5, 1994 between 257 Park Avenue
Associates and The Care Group of New York, Inc. (k)
(xxiii) Lease dated November 25, 1995 by and between Newark
Partners II and The Care Group of Georgia, Inc. (m)
(xxiv) Employment Agreement, dated January 1, 1996,
between the Company and Pat H. Celli (m)
(xxv) Employment Agreement, dated January 1, 1996,
between the Company and Randolph J. Mittasch (m)
(xxvi) Employment Agreement, dated August 14, 1996,
between the Company and Rick Jung (r)
(xxvii) Settlement agreement dated as of June 5, 1996,
between the Company and Advance Care Associates,
Inc., Robert Wolk and Hamet Wolk Robert Miller and
Ame Miller, and the United States of America (m).
(xxviii) Security agreement, dated as of June 5, 1996,
between the Company and the United States of
America
(xxix) Guaranty made by The Care Group. Inc. relating to
the settlement agreement ( r)
(xxx) Agency Agreement, dated as of August 14 1996,
between the Company and Royce Investment Group,
Inc. (o)
(xxxi) 1996 Stock Option Plan (p)
(xxxii) Loan Agreement, dated December 31, 1996, by and
between Key Bank of New York and the Company (q)
(xxxiii) Form of Borrower Pledge Agreement, dated December
31, 1996, by and between Key Bank of New York and
the Company (q)
(xxxiv) Form of Borrower Security Agreement, dated December
31, 1996, by and between Key Bank of New York and
the Company (q)
Page 14 of 16 pages
<PAGE>
(xxxv) Form of Guarantor Security Agreement, dated
December 31, 1996, by and between Key Bank of New
York and each of the Company's subsidiaries (q)
(xxxvi) Form of Guaranty, dated December 31, 1996, by and
between Key Bank of New York and each of the
Company's subsidiaries (q)
- ---------------------------
a) Filed in Registrant's Registration Statement on Form S-18 or
post-effective amendments thereto, which exhibit is incorporated
herein by reference (Registration No. 33-27840-NY).
b) Filed as an exhibit to Registrant's Registration Statement on Form
S-1 (Registration No. 33-42528), or post effective amendments
thereto, which was declared effective by the Securities and Exchange
Commission on October 18, 1991, which exhibit is incorporated herein
by reference.
c) Filed as an exhibit to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992, which exhibit is
incorporated herein by reference.
d) Filed as an exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, which exhibit is
incorporated herein by reference.
e) Filed as an exhibit to the Registrant's Registration Statement on
Form S-1 (33-41578) filed with Securities and Exchange Commission on
July 11, 1991, which exhibit is incorporated herein by reference.
f) Filed as an exhibit to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991, which exhibit is
incorporated herein by reference.
g) Filed as an exhibit to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1990, which exhibit is
incorporated herein by reference.
h) Filed as an exhibit to Registrant's Registration Statement on Form
S-1 (33-43196), which exhibit is incorporated herein by reference.
k) Filed as an exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, which exhibit is
incorporated herein by reference.
l) Filed as an exhibit to Registrant's Registration Statement on Form
S-8 (333-00849) filed with the Securities and Exchange Commission on
February 12, 1996, which exhibit is incorporated herein by reference.
m) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended July 31, 1996, which exhibit is incorporated
herein by reference.
o) Filed as an exhibit to the Registrant's report on Form 8-K, dated
August 14, 1996, which exhibit is incorporated herein by reference.
p) Filed as Appendix A to the Registrant's Proxy Statement on Schedule
14A for the 1996 Annual Meeting of Stockholders held on October 4,
1996, which appendix is incorporated herein by reference.
q) Filed as an exhibit to the Registrant's report on Form 8-K, dated
December 31, 1996, which exhibit is incorporated herein by reference.
r) Filed as an exhibit to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, which is incorporated
herein by reference.
s) Filed as an exhibit to this Quarterly Report on Form 10-Q.
Page 15 of 16 pages
<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.
The Care Group, Inc.
--------------------
(Registrant)
Dated: May 13, 1997
/s/ Pat H. Celli
----------------------------------
Pat H. Celli
Chief Financial Officer
(Principal Financial Officer)
and Duly Authorized Signatory
Page 16 of 16 pages
<PAGE>
THE CARE GROUP, INC.
SUBSCRIPTION AGREEMENT made as of this 14 day of March, 1997
between The Care Group, Inc., a Delaware corporation with its principal
offices at One Hollow Lane, Lake Success, New York (the "Company") and the
undersigned (the "Subscriber").
WHEREAS, the Company desires to issue a minimum of ten (10) and a
maximum of forty (40) Units in a private placement solely to "accredited
investors" as such term is defined in Rule 501(a) under the Securities Act of
1933, as amended, each Unit consisting of forty thousand (40,000) shares (the
"Shares") of the Company's common stock, $.001 par value per share (the
"Common Stock"), and forty thousand (40,000) warrants (the "Warrants") in the
form attached hereto as Exhibit A on the terms and conditions hereinafter set
forth and the Subscriber desires to acquire that number of Units set forth on
the signature page hereof.
NOW, THEREFORE, for and in consideration of the promises and the
mutual conventants hereinafter set forth, the parties hereto do hereby agree
as follows:
I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY AND CONVENANTS OF
SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set
forth, the Subscriber hereby subscribes for and agrees to purchase from the
Company such number of Units as is set forth upon the signature page hereof at
a price equal to $50,000 per Unit, and the Company agrees to sell such Units
to the Subscriber for said purchase price subject to the Company's right to
sell to the Subscriber such lesser number of Units as it may, in its sole
desecration, deem necessary or desirable. The purchase price is payable by
certified or bank check made payable to the Company, by wire transfer to an
account maintained by the Company, or by surrender of notes of the company
valued at the principal amount of such notes, or any combination thereof,
contemporaneously with the execution and delivery of this Subscription
Agreement. The Warrants and certificates for the Shares will be delivered by
the Company within ten (10) days following the Termination Date as defined in
Article III hereof. The Subscriber understands however, that this purchase of
Units is contingent among other things upon the Company making sales of a
minimum of 10 Units prior to the Termination Date.
1.2 The Subscriber recognizes that the purchase of Units
involves a high degree of risk including those disclosed in the private
offering memorandum dated ______, 1997 (the "Private Offering Memorandum").
1.3 The Subscriber represents that he is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated
under the United States Securities Act of 1933, as amended (the "Act"), and
that he is able to bear the economic risk of an investment in the Units.
1.4 The Subscriber acknowledges that he has prior investment
experience, including investment in non-listed and non-registered securities,
or he has employed the services of an investment advisor, attorney or
accountant to read all of the documents furnished or made available by the
Company both to him and to all other prospective investors in the Units and to
evaluate the merits and risks of such an investment on his behalf, and that he
recognizes the highly speculative nature of this investment.
<PAGE>
1.5 The Subscriber acknowledges receipt and careful review
of the Private Offering Memorandum and hereby represents that he has been
furnished by the Company during the course of this transaction with all
information regarding the Company which he had requested or desired to know,
that he has been afforded the opportunity to ask questions of and receive
answers from duly authorized officers or other representative of the Company
concerning the terms and conditions of the offering, and any additional
information which he had requested.
1.6 The Subscriber acknowledges that this offering of Units
has not been reviewed by the United States Securities and Exchange Commission
("SEC") because of the Company's representations that this is intended to be a
nonpublic offering pursuant to Sections 4(2) or 3(b) of the Act. The
Subscriber represents that the Shares and Warrants comprising his Units are
being purchased for his own account, for investment and not for distribution
or resale to others. The Subscriber agrees that he will not sell or otherwise
transfer such securities unless they are registered under the Act or unless an
exemption from such registration is available.
1.7 The Subscriber understands that the Shares and Warrants
comprising the Units have not been registered under Act by reason of a claimed
exemption under the provisions of the Act which depends, in part, upon his
investment intention. In this connection, the Subscriber understands that it
is the position of the SEC that the statutory basis for such exemption would
not be present if his representation merely meant that his present intention
was to hold such securities for a short period , such as the capital gains
period of tax statutes, for a deferred sale, for a market rise, assuming that
a market develops, or for any other fixed period. The Subscriber realizes
that, in the view of the SEC, a purchase now with an intent to resell would
represent a purchase with an intent inconsistent with his representation to
the Company, and the SEC might regard such a sale or disposition as a deferred
sale to which such exemptions are not available.
1.8 The Subscriber understands that Rule 144 (the "Rule")
promulgated under the Act requires, among other conditions, a one year holding
period prior to the resale (in limited amounts) of securities acquired in a
nonpublic offering without having to satisfy the registration requirements
under the Act. The Subscriber understand that the Company makes no
representation or warranty regarding its fulfillment in the future of any
reporting requirements under the Securities Exchange Act of 1934, as amended,
or its dissemination to the public of any current financial or other
information concerning the Company, as is required by the Rule as one of the
conditions of its availability. The Subscriber understands and hereby
acknowledges that the Company is under no obligation to register the
securities comprising the Units under the Act, with the exception of certain
registration rights discussed elsewhere. The Subscriber consents that the
Company may, if it desires, permit the transfer of the securities comprising
the Units or issuable upon the exercise of the Warrants out of his name only
when his request for transfer is accompanied by an opinion of counsel
reasonably satisfactory to the Company that neither the sale nor the proposed
transfer results in a violation of the Act or any applicable state "blue sky"
laws (collectively "Securities Laws"). The Subscriber agrees to hold the
Company and its directors, officers and controlling persons and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as
a result of any misrepresentation made by him contained herein or any sale or
distribution by the undersigned Subscriber in violation of any Securities
Laws.
2
<PAGE>
1.9 The Subscriber consents to the placement of a legend on
any certificate or other document evidencing the Shares and Warrants
comprising his Units and the Common Stock issuable upon exercise of such
Warrants (collectively, the "Warrant Shares") stating that they have not been
registered under the Act and setting forth or referring to the restrictions on
transferability and sale thereof.
1.10 The Subscriber hereby represents that the address of
Subscriber furnished by him at the end of this Subscription Agreement is the
undersigned's principal residence if he is an individual or its principal
business address if it is a corporation or other entity.
1.11 The Subscriber acknowledges that if he is a Registered
Representative of an NASD member firm, he must give such firm the notice
required by the NASD's Rules of Fair Practice, receipt of which must be
acknowledged by such firm on the signature page hereof.
1.12 The Subscriber acknowledges that at such time, if ever,
as his Shares and Warrant Shares are registered, sales of such securities will
be subject to state securities laws, including those of New Jersey which
require any securities sold in New Jersey to be sold through a registered
broker-dealer or in reliance upon an exemption from registration.
1.13 The Subscriber will not, upon the completion of this
offering, own 10% or more of the Company's outstanding Common Stock, or is the
Subscriber aware of any other Subscriber in this offering who will own 10% or
more of the company's outstanding Common Stock.
1.14 The Subscriber has not entered into any voting
agreement or any other agreement or understanding, whether oral or written,
thereby he has agreed to vote his Common Stock with any other Subscriber nor
has the Subscriber given another Subscriber power of attorney to vote his
shares of Common Stock.
1.15 The Subscriber is purchasing the Units with his own
assets and is not acting as nominee for any company or other Subscriber.
1.16 The Subscriber understands that if he is found to be in
violation of the representations set forth in 1.14 through 1.15 above, the
Company may be subject to penalties from the Department of Health of the State
of New York, including, but not limited to, imposition of fines and loss of
its license.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber that
prior to the consummation of this offering and at the Closing Date:
(a) The Company is a corporation duly organized, existing
and in good standing under the laws of the State of Delaware and has the
corporate power to conduct the business which it conducts and proposes to
conduct and is qualified to do business in New York.
3
<PAGE>
(b) At the time of the Closing Date the execution, delivery
and performance of this Subscription Agreement by the Company will have been
duly approved by the Board of Directors of the Company and all other actions
required to authorize and effect the offer and sale of the Units and the
securities contained therein will have been duly taken and approved.
(c) The Shares and Warrants comprising the Units have been
duly and validly authorized and when issued and paid for in accordance with
the terms hereof, will, in the case of the Warrants, be valid and binding
obligations of the company enforceable in accordance with their respective
terms and, in the case of the Shares, be fully paid and nonassessable.
(d) The company will at all times during the term of the
Warrants have authorized and reserved a sufficient number of shares of Common
Stock to provide for exercise of the Warrants.
(e) The Company has obtained, or is in the process of
obtaining, all licenses, permits and other governmental authorizations
necessary to the conduct of its business; such licenses, permits and other
governmental authorizations obtained are in full force and effect; and the
Company is in all material respects complying therewith except where failure
to obtain or comply with such licenses, permits or other governmental
authorizations would not materially adversely affect the business, property,
financial condition or operations of the Company.
(f) The Company knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which could
materially adversely affect the business, property, financial conditions or
operations of the Company other than as set forth in the Private Offering
Memorandum.
(g) The Company is not in violation of or default under, nor
with the execution and delivery of this Subscription Agreement, the issuance
of the Shares or the Warrants, and the incurrence of the obligations herein
and therein set forth and the consummation of the transactions herein or
therein contemplated, result in a violation of, or constitute a default under
the certificate or incorporation or by-laws, in the performance or observance
of any material obligations, agreement, convenant or condition contained in
any bond, debenture, note or other evidence of indebtedness or in any material
contract, indenture, mortgage, loan agreement, lease, joint venture or other
agreement or instrument to which the Company is a party or by which it or any
of its properties may be bound or in violation or any material order, rule,
regulations, writ, injunction, or decree of any government, governmental
instrumentality or court, domestic or foreign, except for violations and
defaults which would not materially adversely affect the business, property,
financial condition or operations of the Company.
(h) The financial information contained or incorporated in
the Private Offering Memorandum previously furnished by the Company to the
Subscriber presents fairly the financial condition of the Company as of the
date and for the periods indicated.
III. TERMS OF SUBSCRIPTION
3.1 The subscription period will begin as of March 14, 1997
and will terminate at 11:59 PM Eastern Daylight Savings Time on May 31, 1997,
unless extended by the Company until the first to occur of (i) the expiration
of an additional sixty (60) days or (ii) the sale of all forty (40) Units
offered by the Company (the "Termination Date"). Of the Units, 10 will be
offered on an all or none basis and the remaining 30 Units will be offered an
a "best efforts" basis as more particularly set forth in the Private Offering
Memorandum.
4
<PAGE>
3.2 The Subscriber hereby authorizes and directs the Company
to deliver the securities to be issued to such Subscriber pursuant to this
Subscription Agreement to the residential or business address indicated on the
signature page of this Agreement.
3.3 The Subscriber hereby authorizes and directs the Company
to return any funds for unaccepted subscriptions to the same account from
which the funds were drawn.
IV. CONDITIONS TO CLOSING
4.1 The Company shall have furnished to Subscriber a
Registration Rights Agreement substantially in the form of Exhibit A attached
hereto.
4.2 The Company shall have delivered a certificate executed
by its Chief Financial Officer, dated the Closing Date, and certifying that
all of the Company's representations and warranties made in this Agreement are
true and correct as of the Closing Date.
4.3 The Company shall have prior to or simultaneously with
the closing sold at least 10 Units.
V. MISCELLANEOUS
5.1 Any notice or other communication given hereunder shall
be deemed sufficient if in writing and sent by registered or certified mail,
return receipt requested, addressed to the Company, at its registered office,
One Hollow Lane, Lake Success, New York 11042, Attention: Mr. Pat Celli, Chief
Financial Officer, and to the Subscriber at his address indicated on the last
page of this Subscription Agreement. Notices shall be deemed to have been
given on the date of mailing, except notices of change of address, which shall
be deemed to have been given when received.
5.2 The Subscription Agreement shall not be changed,
modified or amended except by a writing signed by the parties to be charged,
and this Subscription Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
5.3 This Subscription Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective heirs,
legal representatives, successors and assigns. This Subscription Agreement
sets forth the entire agreement and understanding between the parties as to
the subject matter thereof and merges and supersedes all prior discussions,
agreements and understanding of any and every nature among them.
5.4 NOTWITHSTANDING THE PLACE WHERE THIS SUBSCRIPTION
AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY
AGREE THAT ALL THE TERMS AND PROVISIONS THEREOF SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES
HEREBY AGREE THAT ANY DISPUTE WHICH MAY ARISE BETWEEN THEM ARISING OUT OF OR
IN CONNECTION WITH THIS
5
<PAGE>
SUBSCRIPTION AGREEMENT SHALL BE ADJUDICATED BEFORE A COURT LOCATED IN NEW YORK
CITY AND THEY HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK LOCATED IN NEW YORK, NEW YORK AND OF THE FEDERAL COURTS IN
THE SOUTHERN DISTRICT OF NEW YORK WITH RESPECT TO ANY ACTION OR LEGAL
PROCEEDING COMMENCED BY ANY PARTY, AND IRREVOCABLY WAIVE ANY OBJECTION THEY
NOW OR HEREAFTER MAY HAVE RESPECTING THE VENUE OF ANY SUCH ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT RELATING TO OR ARISING OUT OF THIS
SUBSCRIPTION AGREEMENT OR ANY ACTS OR OMISSIONS RELATING TO THE SALE OF THE
SECURITIES HEREUNDER, AND CONSENT TO THE SERVICE OF PROCESS IN ANY SUCH ACTION
OR LEGAL PROCEEDING BY MEANS OF REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, IN CARE OF THE ADDRESS SET FORTH BELOW OR SUCH OTHER ADDRESS AS THE
UNDERSIGNED SHALL FURNISH IN WRITING TO THE OTHER.
5.5 This Subscription Agreement may be executed in
counterparts. Upon the execution and delivery of this Subscription Agreement
by the Subscriber, this Subscription Agreement shall become a binding
obligation of the Subscriber with respect to the Purchase of Units as herein
provided; subject, however, to the right hereby reserved to the Company to
enter into the same agreements with other subscribers and to add and/or to
delete other persons as subscribers.
5.6 The holding of any provision of this Subscription
Agreement to be invalid or unenforceable by a court of competent jurisdiction
shall not affect any other provision of this Subscription Agreement, which
shall remain in full force and effect.
5.7 It is agreed that a waiver by either party of a breach
of any provisions of this Subscription Agreement shall not operate, or be
construed, as a waiver of any subsequent breach of that same party.
5.8 This parities agree to execute and deliver all such
further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purpose and intent
of this Subscription Agreement.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed the Subscription
Agreement as of the day and year first written above.
Edgewater Private Equity Fund, II, LP
- ------------------------------------- -------------------------------------
Signature of Subscriber(s) by:
by:
/s/ James A. Gorden
- ------------------------------------- -------------------------------------
Name of Subscriber(s) by: James A. Gorden, President
(please print)
666 Grand Ave Suite 200, Des Moines, Iowa 50309
- ------------------------------------------------------------------------------
Address of Subscriber(s)
42-1446140
- ------------------------------------- -------------------------------------
Social Security or Taxpayer
Identification Number of Subscriber(s)
Ten (10)
- -------------------------------------
Number of Units Subscribed For
*IF SUBSCRIBER IS A REGISTERED REPRESENTATIVE WITH AN NASD MEMBER FIRM, HAVE
THE FOLLOWING ACKNOWLEDGMENT SIGNED BY THE APPROPRIATE PARTY:
The undersigned NASD member firm
acknowledges receipt of the notice
required by Article 3, Sections 28(s) Subscription Accepted:
and (b) of the Rules of Fair Practice.
THE CARE GROUP, INC.
By: /s/ Pat Celli
- ------------------------------------- ----------------------------------
Name of NASD Member Firm Pat Celli, Chief Financial Officer
by:
- -------------------------------------
authorized officer
7
