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 quarterly period ended March 31, 1999
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number:0-17821
ALLION HEALTHCARE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 11-2962027
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(State or other jurisdiction of (I.R.S Employer
incorporation or organization Identification No.)
33 Walt Whitman Road, Suite 200A Huntington Station, NY 11746
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code.(516) 547-6520
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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 and 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 ____ NO X__
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Outstanding at
Class of Common Stock MAY 1, 1999
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$.01 par value 2,500,000
Transitional small business disclosure format (check one):
YES ___ NO X__
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ALLION HEALTHCARE, INC. AND SUBSIDIARIES
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Index
PART I. FINANCIAL INFORMATION Page
Financial Statements:
Consolidated Balance Sheet
March 31, 1999 (Unaudited) 3
Consolidated Statement of Operations
Two Months Ended March 31, 1999 (Unaudited) 4
Consolidated Statement of Cash Flows
Two months ended March 31, 1999 (Unaudited) 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K 9
Signatures 10
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ALLION HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
==========================
ASSETS March 31,1999
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CURRENT:
Cash and cash equivalents $ 179,755
Accounts receivable, net of allowance
for doubtful accounts of $(2,276,383) 4,968,362
Inventories (Note 3) 292,862
Prepaid expenses and other current assets 3,547
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TOTAL CURRENT ASSETS 5,444,526
PROPERTY AND EQUIPMENT, at cost, $465,719
less accumulated depreciation and
amortization of ($26,878)
Total Property and Equipment 438,841
OTHER 200
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$ 5,883,567
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LIABILITIES AND STOCKHOLDERS'
EQUITY
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CURRENT:
Revolving Credit Line Note payable to bank $ 4,569,654
Current Portion of Long Term Debt 37,619
Trade Accounts Payable 21,934
Interest Payable 61,142
Accrued expenses and other current liabilities 240,934
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TOTAL CURRENT LIABILITIES 4,931,283
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; shares authorized
5,000,000; issued and outstanding 2,500,000 25,000
Additional paid-in capital 975,000
Retained earnings (47,716)
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TOTAL STOCKHOLDERS' EQUITY 952,284
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$ 5,883,567
============
See accompanying notes to consolidated financial statements.
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ALLION HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
====================================
Two months ended
March 31, 1999
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NET SALES $ 2,695,429
COST OF GOODS SOLD 1,735,919
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Gross profit 959,510
OPERATING EXPENSES:
Selling, general and
administrative expenses 888,162
Total operating expenses 888,162
Income from operations 71,328
OTHER INCOME (EXPENSE):
Interest expense (121,049)
Miscellaneous income 2,005
Total other income (119,044)
NET INCOME $ (47,716)
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NET (LOSS) INCOME PER SHARE - BASIC $ (.02)
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,500,000
See accompanying notes to consolidated financial statement
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ALLION HEALTHCARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
=====================================
Two months ended
March 31, 1999
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OPERATING ACTIVITIES:
Net loss (47,716)
Adjustments to reconcile net loss to net cash
provided by (used in)operating activities:
Provision for uncollectible accounts receivable
Depreciation and amortization 26,878
Changes in operating assets and liabilities:
Accounts receivable (356,011)
Inventory ( 41,778)
Prepaid expenses ( 3,547)
Other assets ( 200)
Accounts payable and accrued expenses 214,206
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Net cash provided by (used in)operating activities (208,168)
FINANCING ACTIVITIES:
Proceeds from Sale of Common Stock 1,000,000
Proceeds from Draws of Note Payable 1,985,000
Repayment of Note Payable (2,620,360)
Net cash provided by financing activities 363,640
NET Change in Cash for Period ended March 31, 1999 155,472
CASH, February 1, 1999 24,283
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CASH, March 31, 1999 $ 179,755
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See accompanying notes to consolidated financial statements.
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ALLION HEALTHCARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO INTERIM PERIODS IS UNAUDITED)
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1. Basis of Presentation
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The consolidated financial statements of Allion Healthcare, Inc. and
Subsidiaries include the accounts of Allion Healthcare, Inc., its 100%
owned subsidiaries, Mail Order Meds of New York, Inc., The Care Group of
Texas, Inc., Careline of Houston, Inc., Mail Order Meds, Inc., and
Commonwealth Certified Home Care, Inc. All significant intercompany
balances and transactions have been eliminated.
2. Interim Periods
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The financial statements for the two months ended March 1, 1999 are
unaudited but, in the opinion of management, include all adjustments,
consisting of normal recurring accruals, necessary for fair presentation
of financial position and results of operations. Results for the interim
periods are not necessarily indicative of the results for a full year.
3. Confirmation of Plan of Reorganization
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The United States Bankruptcy Court for the Western District of Texas
entered an order confirming the Company's First Amended Plan of
Reorganization on February 1, 1999. In accordance with generally
accepted accounting principles, and court order, The Company was
required to adopt "fresh start" reporting, which included all assets and
liabilities to their fair values as of the effective date. The financial
statements are not comparable with those prepared prior to confirmation
because they are, in effect, those of a new company.
4. Inventories
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Inventories at March 31, 1999 were comprised of pharmaceuticals and
Medical Equipment and supplies.
5. Issuance of Common Stock to Creditors
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The Company's plan of reorganization requires the Company to issue a
total of 500,000 shares of its new Common Stock to creditors holding
allowed unsecurred claims a pro rata basis. The company anticipates that
it will have completed legal review and compliance to issue these shares
in June 1999.
6. Taxes and Priority Claims
-------------------------
The Company has objected to priority tax claims filed by the states of
New York, Texas and the IRS. The Company believe these claims are
Administrative claims and plans to vigorously defend its position.
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ALLION HEALTHCARE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Results of Operations
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Two months ended March 31, 1999
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Net Sales: Net sales of the Company's home health care and mail order
medications divisions were $2,695,429 in the three months ended March 31, 1999.
Home health care sales for the two months ended March 31, 1999 were $1,583,425
while mail order medication sales were $1,112,004 for the same period.
Gross Profit: Gross profit was 35.6% of sales in the two months ended March 31,
1999.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses were $888,162 in the two months ended March 31, 1999.
Other Income (Expense): Other expense during the two months ended March 31, 1999
were $119,044.
Income Taxes: For the two months ended March 31, 1999 there was no tax provision
due to the fact that the Company had an operating loss for the two months ended
March 31, 1999.
Liquidity and Capital Resources: At March 31, 1999, the Company had a cash
balance of $179,755. Inventories at March 31, 1999 were $292,762. In addition,
the Company has a revolving credit facility, and a DIP loan which expires on
July 1999, in the amount of $ 6.5 million available to the Company for
short-term borrowings. Borrowings under the facility bear interest at Prime + 5%
and Prime + 2% respectively and are collateralized by a perfected and primary
security interest in all assets, accounts receivable, trademarks, licenses, and
values of any kind of the Company. At March 31, 1999 borrowings under this
receivable were $4,569,654. The company is finalizing negotiations for a new
credit facility outlined in the plan of confirmation with its lending
institution. The company plans to transfer a portion of its debt into a three
year term note at a rate of Prime + 4%, with quarterly interest payments. The
Company will also sign a new Revolving Credit Line of $4 million at Prime + 2%,
based on a formula of eligible Accounts Receivable. It is anticipated that this
transaction will be completed by the end of May 1999.
The Company believes that its existing capital resources will enable it to
maintain its current and planned operations for at least 12 months from the date
hereof.
Year 2000 Compliance: The Company utilizes and is dependent upon data processing
systems and software to conduct its business. The data processing systems and
software include those developed and maintained by the Company's third-party
data processing vendors and software which is run on in-house computer networks.
During the first quarter of fiscal 1999, the Company initiated a review and
assessment of all hardware and software to confirm that it will function
properly in the year 2000.
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ALLION HEALTHCARE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
=========================================================
With respect to internal systems, the results of that evaluation to date have
not revealed any year 2000 issues that, in the Company's opinion, cannot be
remedied in a timely manner; and therefore are not expected to create a material
risk of disruption of operations. With respect to outside vendors, those vendors
which have been contacted have indicated that their hardware or software is or
will be year 2000 compliant in time frames that meet regulatory requirements.
Evaluations of these issues is continuing and there can be no assurance that
additional issues, not presently known to the Company, will not be discovered
which could present a material risk of disruption to the Company's operations.
Forward Looking Statements: This report contains certain forward looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act, which are intended to be covered by the safe harbors
created thereby. Although the Company believes that the assumptions underlying
the forward looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward looking statements contained in this report will prove to be
accurate. Factors that could cause actual results to differ from the results
specifically discussed in the forward looking statements include, but are not
limited to , the absence of anticipated contracts, higher than historical costs
incurred in performance of contracts or in conducting other activities, future
economic, competitive and market conditions, the outcome of legal proceedings,
as well as management business decisions.
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ALLION HEALTHCARE, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6: : Exhibits and Reports on Form 8-K
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There were no reports on Form 8-K filed during the quarter
ended March 31, 1999.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Quarterly Report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date: May 24, 1999
ALLION HEALTHCARE, INC. AND SUBSIDIARIES
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(Registrant)
By: /s/Michael P. Moran
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Michael P. Moran
President, Chief Executive Officer
and Chief Financial Officer
