<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________________
FORM 10-KSB/A
AMENDMENT NO. 1
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission File Number 0-25908
JUST LIKE HOME, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
FLORIDA 65-0568234
(State or other jurisdiction of (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
3647 CORTEZ ROAD WEST
BRADENTON, FLORIDA 34210-3106
941-756-2555
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
<TABLE>
<S> <C>
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock ($.001 par value)
</TABLE>
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 __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
On April 10, 1997, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $5,876,000 (based on the average bid and
asked prices on such date). For purposes of determination of the above stated
amount, only directors, executive officers and 10% or greater shareholders have
been deemed affiliates.
As of April 10, 1997, there were outstanding 7,073,711 shares of Common
Stock, $.001 par value per share.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE> 2
ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis contains both historical and forward-looking
information. The forward-looking statements may be significantly affected by
risks and uncertainties and are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. There can be no
assurance that anticipated future results will be achieved. Readers are
cautioned that a number of factors, which are described in this report and
below, could adversely affect the Company's ability to obtain these results,
including the Company's ability to obtain long-term financing for development
of new facilities, the Company's ability to sell certain assets held for sale
on acceptable terms, the ability of the new management team to operate its
facilities efficiently, the ability to fill-up current and new facilities and
the ability to attract qualified personnel.
OVERVIEW
The Company's revenues consist primarily of (i) rental of residences in
assisted living facilities, (ii) management fees for the provision of such
services to facilities owned by other entities and (iii) consulting fees.
Resident rental rates are reviewed annually and adjustments are sought based on
changes in the Company's operating costs or as market conditions dictate. The
level of service provided to each resident is also reviewed on a continuous
basis to determine whether individual needs have changed which require an
adjustment of services and, therefore, rates. The Company's expenses for
Company owned facilities include (i) residence operating expenses, such as
staff payroll, food, utilities, insurance, property taxes, and other direct
residence operating expenses, (ii) depreciation and amortization and (iii)
interest expense. General and administrative expenses consisting of marketing,
legal, accounting and other administrative expenses are incurred for Company
owned and managed facilities.
The following table sets forth the number of facilities owned or managed
and the total beds and occupancy as of the end of each of the periods presented
and the average occupancy percentages for each of such periods.
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Facilities owned 2 6
Facilities managed 3 3
Total beds 100 184
Occupancy percentage at end of period 97.0% 81.0%
Average occupancy percentage 89.5% 76.6%
</TABLE>
The occupancy at year end 1996 and the average occupancy for 1996 reflect
the opening of two new facilities in July and December, 1996. The average
occupancy for existing facilities for 1996 (excluding the two new facilities)
was 90.4%.
<PAGE> 3
RESULTS OF OPERATIONS
The Company reported a net loss in 1996 of $2,978,000 compared to a net
loss in 1995 of $811,000. Although resident fee income increased $671,000 (or
125%) from $538,000 in 1995 to $1,209,000 in 1996, operating expenses increased
$1,393,000 (or 76%) from $1,835,000 in 1995 to $3,228,000 in 1996. The
increase in resident fee income was due primarily to the acquisition of two
facilities (40 units) in March, 1996, and initial occupancy in the two
facilities that were opened in 1996. The operating expenses in 1996 were
directly affected by a $338,000 write off of receivables from the National
Foundation for uncollectable advances to and management fees owed by the
National Foundation as more fully discussed under "Item 12, Certain
Relationships and Related Transactions." Operating expenses in 1996 also
included approximately $98,000 in start up expenses associated with the opening
of two new facilities in 1996.
The net loss for 1996 was also directly affected by the $818,500 loss from
impairment of value of property held for sale. As of December 31, 1996, the
Company held $1,580,000 of real property as "property held for sale". See the
discussion in "Item 2, Description of Properties" of the properties the Company
proposes to sell. As a result of this reclassification by the Company, the
difference between the carrying value of property held for sale and its
estimated fair market value is reported as loss from the impairment of value of
property held for sale.
The Company's net loss for 1996 was further affected by the $409,443
charge to expenses related to the settlement of certain litigation. As part of
that settlement, the Company granted the plaintiffs the right to put an
aggregate of 264,882 shares of Common Stock of the Company to the Company at a
purchase price of $4.00 per share at any time during a 30 day period in April -
May, 1999. The present value of that obligation at December 31, 1996, is
reported as a charge to expense, as further described in Note 13 of the Notes
to Financial Statements in Item 7.
Even without the charges related to (1) the write off of the National
Foundation receivable, (2) the write down in the value of property held for
sale, and (3) the settlement of certain litigation, the net loss of the Company
in 1996 was approximately $1,412,000 compared to $881,000 in 1995. The
Company's plans to reduce or eliminate this net loss in 1997 is to (1) reduce
overhead through the consolidation of operations of the Company and Community
after the merger that became effective April 10, 1997, (2) increase occupancy
of existing and new facilities through a more aggressive marketing plan, (3)
develop new facilities so that certain general and administrative expenses are
spread over more units/facilities, and (4) eliminate activities that are not
directly related to the Company's core assisted living business, as more fully
described under "Liquidity and Capital Resources." Certain of these steps,
such as the development of new facilities, are not likely to result in an
immediate improvement in profitability, due to the start up expenses associated
with opening new facilities. Accordingly, the Company does not expect to
report a net operating income in 1997.
<PAGE> 4
LIQUIDITY AND CAPITAL RESOURCES
The losses incurred by the Company during the 1995 and 1996 have been
funded primarily through the private sale of Common Stock in January, 1995,
from which the Company realized approximately $900,000 and the Company's
initial public offering in July, 1995, from which the Company realized
approximately $4,123,000 and short term borrowings. The proceeds of the public
offering were also used (along with the proceeds of certain borrowings) to
acquire certain vacant property for future facility developments. The proceeds
of those offerings were substantially depleted by December 31, 1996, and
substantially all cash resources of the Company were depleted by March 15,
1997. Under the terms of the Merger Agreement with Community Assisted Living
Centers, Community assumed operational control of the Company on March 17,
1997, and agreed to fund certain cash needs of the Company until the merger was
completed, which occurred on April 10, 1997. Community expended approximately
$65,000 fulfilling this obligation.
The Company anticipates that it will address its current liquidity crisis
through a number of actions. First, Community had approximately $500,000 in
cash and cash equivalents at the time the merger was completed, which is now
available to fund the Company's operations. Secondly, simultaneously with the
closing of the merger, the Company closed a private placement of 1,510,000
shares of its Common Stock to accredited investors at a purchase price of $1.00
per share, for an aggregate purchase price of $1,510,000. The Company also
intends to immediately offer for sale three parcels of land acquired in the
last two years for future assisted living facility developments. These parcels
are of a size or in a location that is not consistent with the Company's
current plans to focus on smaller facilities in more rural communities. The
Company is obligated to apply all of the net proceeds of these sales to the
reduction of certain indebtedness of the Company. Thus these sales will not
directly provide additional working capital, but they should reduce the debt
burden of the Company and the corresponding interest expense.
Finally, the Company has received a non-binding proposal from a real
estate investment trust ("REIT") for up to $40,000,000 in sale-leaseback
financings for assisted living facilities. If completed, the initial financing
would involve the sale-leaseback of five assisted living facilities owned by
the Company for an aggregate sale price of approximately $4,100,000. If the
financing is completed, the Company will have changed its current focus from
owning each of its assisted living facilities and financing those facilities
with traditional mortgage financings to a philosophy of transferring ownership
to the REIT or similar financing sources and entering into long-term operating
leases for those facilities. By transferring ownership of the Company's
assisted living facilities to a REIT, the Company will free up capital in
existing facilities that can be used to help roll-out new facilities and will
reduce the amount of the Company's capital needed for future growth. The REIT
financing is subject to numerous conditions, including completion of due
diligence review of the facilities and the Company by the REIT and approval of
the financing by the governing board of the REIT. The REIT
<PAGE> 5
financing is also conditioned upon the Company raising a minimum of $1,500,000
in additional equity capital, which the Company has done as a result of the
private placement offering described above. The Company anticipates that the
REIT financing would provide the Company with approximately $1,000,000 in
additional working capital after the payment of certain long-term and
short-term indebtedness related to the facilities to be sold to the REIT.
There can be no assurance that the Company will be able to complete the
REIT financing at all or on terms favorable to the Company.
If the Company is unable to complete the REIT financing or a similar
financing, it would have to substantially restrict its planned development of
additional facilities. Without regard to the timing of long-term financing, if
any, the Company will be exploring opportunities for savings from the combined
operations of the Company and Community, including consolidations of corporate
headquarters, elimination of franchise operations, possible sale of the
consulting business and similar actions intended to return the Company's focus
to its core assisted living business.
The primary cash needs of the Company relate to start-up costs associated
with opening new facilities, projected operating losses for those facilities
until they reach a stabilized occupancy and certain corporate office expense
until all facilities are generating sufficient cash flow to cover those
expenses. The rate at which the Company develops new facilities, if at all,
will depend directly upon the availability of financing for those developments
(including start-up
ITEM 7. FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Just Like Home, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Just Like Home,
Inc. and Subsidiaries as of December 31, 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
two years in the period ended December 31, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used
<PAGE> 6
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Just Like Home,
Inc. and Subsidiaries as of December 31, 1996, and the consolidated results of
their operations and their cash flows for each of the two years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
Orlando, Florida
April 10, 1997
<PAGE> 7
JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1996
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash $ 187,135
Restricted cash 82,662
Certificate of deposit - restricted 250,000
Accounts receivable - trade 160,878
Due from related parties, net 7,305
Other current assets 33,784
----------
Total current assets 721,764
Property and Equipment, net 5,044,953
Property Held for Sale 1,579,836
Goodwill, net of $28,752 accumulated amortization 316,278
Other Intangible Assets, net of $89,193 accumulated amortization 203,855
Restricted cash 56,216
Other Assets 28,424
----------
Total Assets $7,951,326
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 391,291
Accrued interest payable 71,526
Accrued compensation 94,035
Current portion of long-term debt 978,762
Current portion, notes payable to related party 150,000
Other current liabilities 110,273
----------
Total current liabilities 1,795,887
Long-Term Debt, less current portion 3,910,622
Notes Payable to Related Party, less current portion 185,405
----------
Total liabilities 5,891,914
----------
Common Stock and Options Subject to Put Options 409,443
----------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $.01 par value; 2,000,000 shares authorized; none
issued and outstanding --
Common stock, $.001 par value; 13,000,000 shares authorized;
3,917,461 shares issued and outstanding 3,917
Additional paid-in capital 6,135,981
Accumulated deficit (4,489,929)
----------
Total stockholders' equity 1,649,969
---------
Total Liabilities and Stockholders' Equity $7,951,326
==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 8
JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995
-------------------------------------
<S> <C> <C>
Revenue:
Resident fees $ 1,209,366 $ 537,868
Management fees 100,430 96,041
Consulting fees 518,149 476,083
Companion fees 67,845 --
Other income 58,645 33,219
----------- ----------
Total revenue 1,954,435 1,143,211
----------- ----------
Expenses:
Operating, selling, general and administrative 3,228,221 1,835,167
Depreciation and amortization 248,060 79,600
Loss from impairment of property held for sale 818,500 --
Litigation settlement 409,443 --
----------- ----------
Total expenses 4,704,224 1,914,767
----------- ----------
Operating Loss (2,749,789) (771,556)
Non-Operating Income (Expense):
Interest expense (307,096) (130,257)
Interest income 78,804 90,773
----------- ----------
(228,292) (39,484)
----------- ----------
Loss Before Income Taxes (2,978,081) (811,040)
Income Tax Expense -- --
----------- ----------
Net Loss $(2,978,081) $ (811,040)
=========== ==========
Net Loss Per Common Share $ (0.76) $ (0.24)
=========== ==========
Weighted Average Shares of Common Stock Outstanding:
Primary 3,909,192 3,440,577
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 9
JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
COMMON STOCK
------------ ADDITIONAL
NUMBER OF PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- ------ --------- ---------- -----
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 3,012,311 $3,012 $1,378,767 $ (700,808) $ 680,971
Issuance of common stock
under employment
agreements 25,799 26 174,667 -- 174,693
Sales of common stock,
net of issuance costs 839,00 839 4,122,587 -- 4,123,426
Net loss -- -- -- (811,040) (811,040)
--------- ------ ---------- ----------- ----------
Balance, December 31, 1995 3,877,110 3,877 5,676,021 (1,511,848) 4,168,050
Issuance of common stock -
Charis Place acquisition 40,351 40 459,960 -- 460,000
Net loss -- -- -- (2,978,081) (2,978,081)
--------- ------ ---------- ----------- ----------
Balance, December 31, 1996 3,917,461 $3,917 $6,135,981 $(4,489,929) $1,649,969
========= ====== ========== =========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 10
JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995
------------ ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $(2,978,081) $ (811,040)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation 167,115 55,917
Amortization 80,945 23,683
Non-cash loss from impairment of property held for sale 121,229 --
Provision for losses on amounts due from related party 338,000 --
Non-cash loss from impairment of property held for sale 501,162 --
Litigation settlement 409,443 --
Deferred taxes -- 3,762
Common stock issued as compensation -- 174,693
Changes in assets and liabilities:
Increase in accounts receivable (86,049) (14,044)
(Increase) decrease in other current assets (18,345) 14,379
Increase in other assets (1,780) --
Increase (decrease) in accounts payable 210,981 (88,663)
Increase in accrued interest payable 44,003 3,129
Increase (decrease) in accrued compensation 22,764 (90,174)
Increase in other current liabilities 71,619 16,734
Increase (decrease) in income taxes payable -- (29,714)
----------- -----------
Net cash used in operating activities (1,116,994) (741,338)
============ ===========
Cash Flows from Investing Activities:
Acquisitions of property and equipment (3,421,562) (1,648,425)
Loans to related parties (76,855) (305,165)
Repayments of related-party loans 23,168 29,344
Payments made in connection with acquisition of Charis Place, Inc. (390,000) --
Payments for debt issuance costs (34,005) (39,567)
Deposits into restricted cash accounts (30,116) (27,092)
Payments for other assets (96,479) (30,657)
Purchase of certificate of deposit (800,000) (600,000)
Proceeds from certificate of deposit 1,150,000 --
----------- -----------
Net cash used in investing activities (3,675,849 (2,621,562)
=========== ============
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt 3,301,177 950,000
Repayment of long-term debt (109,774) (716,520)
Proceeds from common stock sales, net of expenses of $910,574 -- 4,123,426
Payment of common stock subscriptions receivable -- 900,000
Borrowings from related parties -- 27,454
Repayment of related-party loans (4,166) (136,037)
----------- -----------
Net cash provided by financing activities 3,187,237 5,148,323
=========== ===========
</TABLE>
<PAGE> 11
JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995
------------------------
<S> <C> <C>
Net Increase (Decrease) in Cash (1,605,606) 1,785,423
Cash - Beginning of Year 1,792,741 7,318
---------- ----------
Cash - End of Year $ 187,135 $1,792,741
========== ==========
Supplemental Disclosure of Cash Flow Information:
Total interest paid, net of $17,435 and $65,786 capitalized
in 1996 and 1995, respectively $ 343,336 $ 127,128
========== ==========
Total income taxes paid $ -- $ 29,536
========== ==========
</TABLE>
Non-cash investing and financing transactions:
* In 1996, the Company issued 40,351 shares of common stock, valued at
$460,000, in connection with the acquisition of Charis Place, Inc.
(see Note 4).
See accompanying notes to consolidated financial statements.
<PAGE> 12
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
1. ORGANIZATION AND NATURE OF BUSINESS:
The accompanying consolidated financial statements present the combined
historical results of operations for Just Like Home, Inc. and Subsidiaries (the
Company), and includes the accounts of JLH Series I, Inc., JLH Management
Corp., JLH Franchising Corp., Project Market Decisions, Inc. d.b.a. Project
Market Decisions, Just Like Home IV, Inc., Just Like Family, Inc., Just Like
Home Corporate Center, Inc., Charis Place, Inc. and Edgewood Double Drive, Inc.
The Company is principally engaged in the business of developing, operating and
managing assisted-living facilities located in Florida. Additionally, the
Company provides demographic analysis and related consulting services to the
assisted-living residential industry in the eastern United States. The Company
also provides companion services to senior citizens in Florida who, although
generally mobile, need help with the activities of daily living, or are in need
of companionship.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A summary of significant accounting policies used in the preparation of the
accompanying financial statements follows:
Principles of Consolidation - The consolidated financial statements include
Just Like Home, Inc. and all of its subsidiaries. All significant
inter-company transactions and accounts are eliminated in the consolidated
financial statements.
Cash and Cash Equivalents - The Company considers all highly liquid investments
with an original maturity of three months or less to be cash equivalents.
Revenue Recognition - The Company charges fees to residents of its
assisted-living facilities pursuant to short-term operating lease agreements.
Resident fees are recognized as revenue ratably over the term of the related
leases. Management and consulting fees are recognized as services are
provided. Companion fees are recognized when all services have been
substantially performed.
Depreciation - Depreciation expense is provided for property and equipment
using the straight-line method over the estimated lives of the various classes
of depreciable assets which, in general, range as follows:
<TABLE>
<S> <C>
Buildings and improvements 20 - 40 years
Furniture, fixtures and equipment 5 - 7 years
</TABLE>
<PAGE> 13
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:
Long-Lived Assets - The Company reviews long-lived assets and certain
identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. The Company records a provision when it has been determined that
assets are impaired.
Amortization - Organization costs are amortized over five years using the
straight-line method. Costs incurred in connection with the issuance of debt
are deferred and amortized over the term of the related debt using the
straight-line method, which approximates the interest method.
Goodwill - The Company amortizes costs in excess of fair value of net assets of
businesses acquired using the straight-line method over ten years.
Capitalization of Interest - Interest incurred during construction or major
renovations is capitalized.
Income Taxes - Income taxes are provided for the tax effects of transactions
reported in the financial statements. Deferred taxes are recorded to reflect
the tax consequences in future years of temporary differences between the tax
bases of assets and liabilities and their financial reporting amounts at each
year end based on enacted tax laws and statutory tax rates applicable to
periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
currently payable for the period and the change during the period in deferred
tax assets and liabilities at the statutory tax rates.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Net Loss Per Common - Primary net loss per common share is computed by dividing
net loss by the weighted average number of common shares outstanding during
each period. Common stock equivalents are not included in the calculation as
their impact would be anti-dilutive.
Reclassifications - Certain amounts in the 1995 financial statements have been
reclassified to conform to the current year presentation.
<PAGE> 14
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
3. TRANSACTIONS WITH THE NATIONAL FOUNDATION ON GERONTOLOGY, INC.:
In 1994, the Company sold three operating residential facilities and certain
vacant land to National Foundation on Gerontology, Inc. (Foundation), a
not-for-profit corporation. The Chairman of the Board of Directors of the
Company served as President of the Foundation and his son now currently serves
as Foundation President and Director. The Company received a $500,000 second
mortgage note with interest of 10.5% from the Foundation in connection with
this sale. Principal and interest on the note are payable solely from
available cash from the Foundation's operations after payment of debt service
on the primary mortgage.
The Company is recognizing profit on the sale under the cost recovery method,
whereby profit is recognized to the extent cash received exceeds the cost of
the property sold. For financial reporting purposes, the $500,000 subordinated
note receivable is presented net of the related deferred gross profit. No
payments were received on this note in 1996 or 1995 and, therefore, no gross
profit was recognized. Deferred gross profit in the amount of $500,000 has not
been recognized.
In January, 1995, the Company advanced $287,606 to the Foundation in connection
with the construction of a residential facility. In April, 1995, the Company
received a promissory note in the amount of $292,498 from the Foundation
evidencing the indebtedness. The note was payable on demand with interest at
10%. In June, 1995, the note was restructured to require monthly principal and
interest payments of $7,500 commencing on August 1, 1995 through July 1, 1999.
Payments under the note began in October, 1995. In June, 1996, the note was
again restructured when the Company received a promissory note in the amount of
$252,015 from the Foundation. The note, plus accrued interest at 10%, is due
July 1, 1997. Additionally, at December 31, 1996, the Company was owed an
additional amount of $85,985 related to management fees which had not been paid
(see Note 12). An allowance has been recorded resulting in a charge to
operating expenses in the amount of $338,000 related to these receivables.
4. CHARIS PLACE, INC. ACQUISITION:
On March 15, 1996, the Company acquired the common stock of Charis Place, Inc.
("Charis") which included two related assisted-living facilities, with a
capacity for up to 44 residents, located in Leesburg, Florida, for a purchase
price of $1,400,000. The Company paid $390,000 in cash, issued 40,351 shares
of common stock having an aggregate value of $460,000, and issued a promissory
note ("Wrap Note") in the original principal amount of $550,000. The Wrap Note
is subject to an existing mortgage. The Wrap Note bears interest at 9% per
annum payable in seventy-six installments of $5,589 (including principal and
interest), and matures on August 1, 2002, at which time a balance of
approximately $401,000 is due and payable.
<PAGE> 15
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
4. CHARIS PLACE, INC. ACQUISITION - CONTINUED:
The acquisition was accounted for using the purchase method of accounting and,
accordingly, the purchase price was allocated to the fair market value of
assets acquired as follows:
<TABLE>
<S> <C>
Assisted-Living Facilities $ 940,000
Assembled Work Force 25,000
Goodwill 345,030
Active Resident List 26,180
Non-Compete Agreement 25,000
Net Current Assets 38,790
-----------
$ 1,400,000
===========
</TABLE>
The goodwill is being amortized over a ten-year period and the other intangible
assets over a three-year period.
The operating results of Charis Place, Inc. are included in the Company's
consolidated results of operations from the date of acquisition. The following
table reflects pro forma combined results of operations of the Company and
Charis Place, Inc. assuming that the acquisition had taken place and was
recorded at the beginning of the fiscal year for each of the periods presented:
<TABLE>
<CAPTION>
1996 1995
------------ ----------
<S> <C> <C>
Revenues $ 2,091,000 $1,793,000
Net loss $(2,960,000) $ (801,000)
Net loss per common share $ (0.76) $ (0.23)
Shares used in computation 3,917,461 3,480,928
</TABLE>
5. PROPERTY AND EQUIPMENT:
Property and equipment is stated at cost and includes the following at
December 31, 1996:
<TABLE>
<S> <C>
Land $ 861,007
Buildings 3,790,066
Furnishings and equipment 740,029
------------
5,391,102
Less: Accumulated depreciation (359,122)
------------
5,031,980
Construction in progress 12,973
------------
$ 5,044,953
============
</TABLE>
<PAGE> 16
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
6. LONG-TERM DEBT:
Long-term debt consists of the following at December 31, 1996:
<TABLE>
<S> <C>
Bonds payable, interest rates ranging from 8.5 to 10.5%, payable
semiannually; principal payments due in various annual installments
through October 1, 2003; collateralized by assisted-living facilities; net
book value of the collateral at December 31, 1996 was approximately
$794,000 $735,000
Mortgage note payable, interest at 10.25% through April 30, 2000 adjusted
to 3% over the one-year Treasury rate thereafter; monthly principal and
interest payments are approximately $8,800 based on a twenty-five year
amortization with a balloon payment of the remaining balance due on
April 1, 2005; collateralized by corporate office building; net book value
of the collateral at December 31, 1996 was approximately $1,055,000 935,106
Wrap note payable, issued in conjunction with acquisition of Charis Place,
Inc., subject to an existing mortgage, interest at 9%; monthly principal
and interest payments of approximately $5,600 are due through
August 1, 2002, at which time a balance of approximately $401,000 is
due; collateralized by two assisted-living facilities; net book value of the
collateral at December 31, 1996 was approximately $908,000 534,582
Mortgage note payable, interest at Chemical Bank's prime rate plus 1%
(9.25% at December 31, 1996); monthly interest payments only of
approximately $5,900 until May 22, 1997 when entire principal is due;
collateralized by property held for sale with a carrying value of $850,000 750,000
Mortgage note payable, interest at 8.25%; monthly principal and interest
payments are approximately $10,000 based on a twenty year
amortization with a balloon payment of the remaining balance due on
September 1, 2001; the Company is also required to maintain a
$250,000 certificate of deposit as additional collateral until a future time
as defined in the loan documents; collateralized by two assisted-living
facilities; net book value of the collateral at December 31, 1996 was
approximately $1,640,000 1,164,277
Note payable, interest at 5.5% payable in monthly principal and interest
payments of $647 through September, 1999; non-collateralized 20,419
Note payable to an individual, interest at prime plus one percent (9.25% at
December 31, 1996); all principal and accrued interest due in March,
1997; non-collateralized (due date modified - see Note 16) 600,000
</TABLE>
<PAGE> 17
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
6. LONG-TERM DEBT - CONTINUED:
<TABLE>
<S> <C>
Note payable to an individual, interest at 10%; all principal and interest due
December 31, 1996; non-collateralized (due date modified - see
Note 16) 150,000
------------
4,889,384
Less current portion (978,762)
------------
$ 3,910,622
============
</TABLE>
Additionally, the bond indenture requires certain reserve funds be established
and maintained for debt service, repairs and replacements, and operations.
Such reserves are shown as restricted cash in the accompanying consolidated
balance sheet. In addition, the Company is required to charge in each fiscal
year, rates, fees and charges for these facilities sufficient to produce and
maintain a fixed charges coverage ratio of at least 1.75 in each fiscal year as
defined in the bond indenture.
The Bonds are subject to redemption in whole or in part at the Company's option
prior to maturity as follows:
<TABLE>
<CAPTION>
Redemption Date Redemption Price
--------------- ----------------
<S> <C>
October 1, 1996 through September 30, 1997 101% of par
October 1, 1997 and thereafter 100% of par
</TABLE>
7. MATURITY SCHEDULE FOR LONG-TERM DEBT AND NOTES PAYABLE TO RELATED PARTY:
The following table presents principal payments required on long-term debt and
notes payable to related party for each of the five years subsequent to
December 31, 1996 and thereafter (see Notes 6 and 12):
<TABLE>
<CAPTION>
Notes Payable
Long-Term to Related
Debt Party Total
---------- ------------- ----------
<S> <C> <C> <C>
Year Ending December 31,
1997 $ 978,762 $150,000 $1,128,762
1998 86,947 185,405 272,352
1999 696,313 -- 696,313
2000 96,196 -- 96,196
2001 1,118,897 -- 1,118,897
Thereafter 1,912,269 -- 1,918,269
---------- -------- ----------
$4,889,384 $335,405 $5,224,789
========== ======== ==========
</TABLE>
<PAGE> 18
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
7. MATURITY SCHEDULE FOR LONG-TERM DEBT AND NOTES PAYABLE TO RELATED PARTY -
CONTINUED
<TABLE>
<S> <C>
Classified As:
Current portion of long-term debt $ $978,762
Current portion of note payable to related 150,000
party
Long-term debt 3,910,622
Note payable to related party 185,405
------------
</TABLE>
$ 5,224,789
============
8. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amounts of the Company's financial instruments, which include
certificates of deposit, long-term amounts due from related parties and
long-term debt, approximate fair values of those instruments. Fair values have
been estimated based upon expected cash flows at rates currently available to
the Company for financial instruments with similar terms and remaining
maturities.
9. INCOME TAXES:
The income tax provision (benefit) for the years ended December 31, 1996 and
1995 is comprised of the following:
<TABLE>
<CAPTION>
1996 1995
------ --------
<S> <C> <C>
Current:
Federal $ -- $ (3,583)
State -- --
------ --------
Deferred:
Federal -- 3,583
State -- --
------ --------
$ -- $ --
====== ========
</TABLE>
The components of the net deferred tax asset recognized in the accompanying
balance sheet in other assets at December 31, 1996 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Gain on sale recognized under installment
method for tax purposes $ 134,814
Net operating loss carryforward 1,233,119
Accrued expenses 48,005
Write-off of related-party receivable 158,735
Deferred rents 25,794
Other 12,749
----------
1,613,216
</TABLE> ==========
<PAGE> 19
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
9. INCOME TAXES - CONTINUED:
<TABLE>
<S> <C>
Deferred tax liabilities:
Depreciation (49,991)
----------
(49,991)
Valuation allowance (1,545,261)
----------
Net deferred tax asset $ 17,964
==========
</TABLE>
The following is a reconciliation of tax computed at the statutory federal rate
to the income tax expense in the statements of operations:
<TABLE>
<CAPTION>
For the Year Ended December 31,
1996 1995
---- ----
Amount % Amount %
------ ------- ------ -------
<S> <C> <C> <C> <C>
Tax computed at statutory federal rate $(1,012,548) (34.00)% $(275,754) (34.00)%
Effect of:
Litigation settlement 139,211 4.67 -- --
Other permanent differences 7,069 0.24 -- --
Change in valuation allowance -- -- (4,711) (0.58)
Loss for which no tax benefit was provided 866,268 29.09 280,465 34.58
----------- ------ --------- -------
$ -- -- % $ -- -- %
=========== ====== ========= =======
</TABLE>
For federal income tax purposes, net operating loss carryforwards aggregating
approximately $3,277,000 are available at December 31, 1996 which expire
$25,000 in 2008, $122,000 in 2009, $950,000 in 2010 and $2,180,000 in 2011.
The loss carryforwards expiring in the years 2008 and 2009 are generally
subject to separate return limitations.
10. STOCK OPTIONS AND STOCK AWARDS:
Stock Options -
Employee Stock Option Plan - In March, 1995, the Company adopted a Stock
Option Plan (the "Plan") under which 200,000 shares of common stock are
reserved for issuance upon exercise of stock options. Options may be granted
to all eligible employees of the Company, including officers and non-employee
directors and others who perform services for the Company. Options are granted
under the Plan on such terms and at such prices as determined by the Board of
Directors, except that the per share exercise price of incentive stock options
cannot be less than the fair market value of the common stock on the date of
the grant. Each option is exercisable after the period or periods specified in
the option agreement, but no option may be exercisable after the expiration of
ten years from the date of grant.
<PAGE> 20
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
10. STOCK OPTIONS AND STOCK AWARDS - CONTINUED:
Additionally, under the plan, each non-employee member of the Board of
Directors receives an option to purchase 10,000 shares of common stock upon
being elected to the Board (the "Initial Options") and options to purchase
2,000 additional shares of common stock annually (the "Annual Options"). The
exercise price is the fair market value at the date of the grant, and the
options expire within five years from the date of the grant. The options vest
at the rate of 25% at the end of each of the first four years. The options
received annually will be five-year options, exercisable in full at the end of
the first year.
Other Stock Options - In 1994, the Company entered into an employment agreement
with an employee which granted the employee the option to purchase 10,000
shares of common stock at a price of $3.50 per share. These options expire
five years from the date of grant.
Summary of Stock Options - The following table summarizes the stock options
outstanding under the plans described above:
<TABLE>
<CAPTION>
Options Number of Weighted
Available for Shares Average
Future Grant Under Option Option Price
------------- ------------ ------------
<S> <C> <C> <C>
Balance, January 1, 1995 -- 10,000 $3.50
Options authorized 200,000 -- --
Options granted (49,000) 49,000 $10.00
Options exercised -- -- --
Options canceled -- -- --
-------- --------
Balance, December 31, 1995 151,000 59,000 $8.90
Options authorized -- -- --
Options granted (122,134) 122,134 $8.97
Options exercised -- -- --
Options canceled 85,300 (85,300) $8.97
-------- --------
Balance, December 31, 1996 114,166 95,834
======== ========
</TABLE>
At December 31, 1996, the 95,834 options outstanding under the plan are
summarized in the following table:
<TABLE>
<CAPTION>
Range of
Option Exercise Weighted Average Weighted Average
Shares Prices Exercised Price Remaining Life
------ ------------ ---------------- ----------------
<S> <C> <C> <C>
95,834 $3.50-$10.00 $8.77 8.43
</TABLE>
<PAGE> 21
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
10. STOCK OPTIONS AND STOCK AWARDS - CONTINUED:
Options granted vest ratably over a four-year period. As of December 31, 1996,
22,125 options were vested and exercisable. These options and their weighted
average exercise price are summarized below:
<TABLE>
<CAPTION>
Option Weighted Average Weighted Average
Shares Exercised Price Remaining Life
------ ---------------- ----------------
<S> <C> <C>
22,125 $6.88 6.18
</TABLE>
Disclosure of Stock-Based Compensation - The Company has adopted the
disclosure-only provisions of Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation. Accordingly, no compensation
expense has been recognized for the stock option plans. The Company believes
that the options granted in 1996 and 1995 had no value and therefore there
would have been no effect on reported net losses.
Stock Grants - In 1994, the Company entered into an employment agreement
whereby the employee is entitled to bonus compensation in an amount equal to
20% of the initial franchise fee received by the Company upon the sale of a
franchise, one-half of which is payable in cash and one-half of which is
payable in the form of issuance of the Company's common stock. One franchise
agreement was sold and 499 shares were issued as of December 31, 1995.
In 1995, the Company issued 13,292 shares of common stock in accordance with
the terms of an employment agreement. For purposes of determining the number
of shares to be issued, the shares were valued at $2.00 per share.
Compensation of $79,752 related to these shares was recorded in 1994.
Additionally, the Company issued, upon completion of the offering described in
Note 11, an aggregate of 7,008 shares to certain current and former employees
valued at $6.00 per share. Compensation of $42,048 related to these shares was
recorded in 1994.
Other Stock Commitments - In 1995, the Company agreed to issue a consultant a
total of 5,000 shares of common stock subject to meeting certain production
standards. These shares were earned and issued in November, 1995.
Compensation expense of $50,000 was recorded in 1995.
11. STOCK TRANSACTIONS:
In connection with a sale of common stock which preceded the initial public
offering, the Company issued warrants to purchase 286,000 shares of common
stock at $6 per share. The warrants expire on December 31, 1997.
<PAGE> 22
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
11. STOCK TRANSACTIONS - CONTINUED:
On July 6, 1995, the Company completed an initial public offering in which
839,000 shares of its common stock were sold to the public. Proceeds of
approximately $4.4 million, prior to payment of legal, accounting, printing and
other offering expenses, were received by the Company upon its completion.
In connection with the offering, the underwriters acquired a 5-year warrant to
purchase up to 100,000 shares of common stock at an exercise price of $7.20 per
share. The warrant is exercisable for a period of five years, beginning one
year after the date of the public offering.
In November, 1995, the Company amended its articles of incorporation to change
the authorized capital stock of the Company from 15,000,000 shares of common
stock, $.001 par value, to 15,000,000 shares of capital stock, consisting of
13,000,000 shares of common stock, $.001 par value, and 2,000,000 shares of
preferred stock, $.01 par value. Of the authorized preferred stock, the
Company designated 1,500,000 shares as Series A 10% cumulative convertible
redeemable preferred stock (the "Series A Preferred Stock"). Annual dividends
on the Series A Preferred Stock are payable in cash, shares of Common Stock or
shares of Series A Preferred Stock and are cumulative. No Series A Preferred
Stock has been issued.
12. RELATED-PARTY TRANSACTIONS:
Due to Related Party - The amounts due to related party consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Note payable to the President of the Company,
interest at 10% payable on April 1, 1996 for
interest to that date and quarterly thereafter to
maturity, principal is payable $150,000 on April
1, 1997 with the remaining balance due on April
1, 1998 $ 335,405
Less current portion (150,000)
---------
Note payable to related party, less current portion $ 185,405
=========
</TABLE>
Included in accrued interest is $25,326 related to this note payable.
<PAGE> 23
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
12. RELATED-PARTY TRANSACTIONS - CONTINUED:
Management Agreement - In March, 1994, the Company entered into a management
and marketing agreement with the Foundation whereby the Company is paid an
annual fee equal to the lesser of $153,960 plus 9% of the net cash remaining
after payment of the Foundation's operating and other expenses, or (ii) 9% of
the gross revenues derived from the managed facilities. Management and
marketing fee expense, representing 9% of the gross revenues of the managed
facilities, was $100,430 and $96,041 for the years ended December 31, 1996 and
1995, respectively. The management fee is subordinated to any debt service
payments related to its facilities (see Note 3).
Expense Allocation - The Company is allocated certain administrative expenses
from Stancon Management Corporation (Stancon), a company 50%-owned by the
Chairman of the Board of Directors of the Company and the President of the
Company. Such allocated expenses amounted to $104,187 for the year ended
December 31, 1995.
In 1996, the Company is charging certain administrative expenses to Stancon.
Such expenses amounted to $86,851 for the year ended December 31, 1996.
13. COMMITMENTS AND CONTINGENCIES:
On April 17, 1996, a corporation which is a 5.5% holder of the Company's common
stock filed a lawsuit against the Company in the Twelfth Judicial Circuit of
Florida. The plaintiff corporation alleges that the 214,882 common shares
received in December, 1994 should have been freely tradable and not subject to
Rule 144 restrictions. The Company has entered into a settlement agreement in
which the Company agreed to repurchase the above common shares at $4 per share
two years after the merger agreement referred to in Note 16 is effective, at
the shareholder's option. Additionally, the Company issued an option to the
stockholder to purchase 50,000 additional shares of common stock at an option
price of $2 per share. The Company would also be required to repurchase these
shares as described above. The present value of the Company's obligation at
December 31, 1996 of $409,443 has been charged to expense.
14. IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF:
In accordance with FASB Statement No. 121, long-lived assets to be disposed of
must be reported in the balance sheet at the lower of their carrying amount or
the fair value less costs to sell. The Company holds certain property for sale
which it expects to dispose of during 1997. During 1996, a loss on impairment
of this property was recorded in the amount of $818,500 and the carrying amount
was reduced to $1,579,836.
<PAGE> 24
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
15. FOURTH QUARTER ADJUSTMENTS:
During the fourth quarter of 1996, the Company recorded the following
adjustments:
<TABLE>
<S> <C>
Impairment of value of property held
for sale (see Note 14) $ 818,500
Litigation settlement (see Note 13) 409,443
Allowance for uncollectible receivables (see Note 3) 338,000
-------------
$ 1,565,943
=============
</TABLE>
16. SUBSEQUENT EVENTS AND LIQUIDITY:
Merger - In February, 1997, the Company entered into a Merger Agreement with
Community Assisted Living Centers, Inc. ("Community") pursuant to which
Community will merge with a new wholly-owned subsidiary of the Company, Just
Like Home Acquisition Corp. Under the terms of the agreement, Community will
exchange each of its shares of common stock for one and one-half shares of the
Company's common stock.
The agreement provided that as of March 17, 1997, Community took operational
control of the Company. Community will use its best efforts in operating the
business and will make such changes as it deems necessary after consultation
and approval of the Company. In addition, Community has agreed to fund the
operational needs of the Company based upon Community's reasonable
determination of the cash needs of the Company's business between March 17,
1997 and the effective date (excluding any capital expenditures or real estate
taxes that may come due during that period). The merger became effective on
April 10, 1997.
Additional Borrowings - On January 10, 1997, the Company borrowed an additional
$100,000 from an individual, resulting in a total amount due to that individual
of $700,000 (see Note 6). The Company entered into a modification agreement
with the individual which extended the due date of the note payable to March
15, 1999, unless the sale of certain property held for sale takes place.
Varying amounts from the proceeds of the sales must be applied to the
outstanding balance of this note payable.
Note Extension - The note payable to an individual in the amount of $150,000
(see Note 6) was modified to extend the due date to July, 1997.
<PAGE> 25
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 1996 and 1995
16. SUBSEQUENT EVENTS AND LIQUIDITY - CONTINUED:
Private Placement - On March 27, 1997, the Company issued a private placement
memorandum offering up to 2,500,000 shares of its common stock at a purchase
price of $1.00 per share. The Company will use the proceeds of the offering to
pay certain existing liabilities of the Company, to pay anticipated and future
operating expenses, to fund development and start-up costs, and for general
corporate purposes. The private placement closed on April 10, 1997 and the
Company received approximately $1,510,000 in proceeds.
Going Concern - The Company has experienced recurring losses and at December
31, 1996 had limited resources. On April 10, 1997, the management of Community
(New Management) took effective control of the Company. In addition to the
events described above, New Management has plans to dispose of the property
held for sale at its carrying value, sell certain operating assets to an
assisted-living facility real estate investment trust and lease them back,
significantly improve operating results at facilities owned by the Foundation
(see Note 3) and utilize Community's existing resources. Current projections
and plans indicate that the Company will have sufficient resources to continue
as a going concern.
<PAGE> 26
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT.
The name, age and position of each director and executive officer of the
Company is as follows:
<TABLE>
<CAPTION>
DIRECTOR AND EXECUTIVE OFFICERS AGE POSITIONS AND OFFICES HELD
------------------------------- --- --------------------------
<S> <C> <C>
Ronald O. Braun 53 Co-Chairman of the Board
Richard T. Conard, M.D. 58 Co-Chairman of the Board
John F. Robenalt 44 President, Chief Executive
Officer, Chief Operating Officer
and Director
Elizabeth A. Conard 59 Executive Vice President and
Director
Isidore Seigel 79 Director
Norbert P. Donelly 45 Director
Michael W. Monahan, CPA 43 Treasurer and Chief Financial
Officer
Victoria Partin 47 Vice President, Operations
</TABLE>
RONALD O. BRAUN became Co-Chairman of the Board of Directors of the
Company on April 10, 1997, the effective date of the merger of Community into a
wholly-owned subsidiary of the Company. From July, 1996 through the present,
Mr. Braun has served as Chairman of the Board of Community. Mr. Braun is an
investment banker with Piper Jaffray Inc., where he specializes in health care
finance with an emphasis on long-term care projects for not-for-profit and
proprietary clients. Prior to joining Piper Jaffray, Mr. Braun was a corporate
Vice President of A.G. Edwards & Sons, Inc. for approximately eight years,
where he concentrated primarily in the long-term care sector of the health care
industry. Earlier in his career, he spent over seven years in health care
administration as a Vice President of a 332-bed hospital.
RICHARD T. CONARD, M.D. served as Chairman of the Board and Chief
Executive Officer of the Company and its predecessor since they were organized
until April 10, 1997, and now serves as Co-Chairman of the Board of Directors
of the Company. Dr. Conard is a frequent lecturer and author of the book "What
Should We Do About Mom?" (a McGraw-Hill publication). His lectures and book
address strategies for dealing with
<PAGE> 27
the phenomenon of aging in America, personal attitudes and expectations,
relationship with parents, impact on business, and opportunities for providing
goods and services.
JOHN F. ROBENALT, became President, Chief Executive Officer and Chief
Operating Officer of the Company on April 10, 1997, the effective date of the
merger of Community into a wholly-owned subsidiary of the Company. From July,
1996 through the present, Mr. Robenalt was also President and Chief Executive
Officer of Community. From 1982 to 1991, Mr. Robenalt served at various times
as Vice President, Outside Counsel and Corporate Secretary for Health Care
REIT, Inc. (the "REIT"), the first publicly held real estate investment trust
to specialize in long-term care investment. From 1989 until 1991, Mr. Robenalt
was responsible for all investments in long-term care by the REIT including
investment in nursing homes, retirement facilities, rehabilitation hospitals
and assisted living facilities. Since 1984, Mr. Robenalt has served at various
times as a Director, Vice President, Assistant Secretary and General Counsel
for Florida Convalescent Centers, Inc., a Sarasota-based owner of 17 long-term
care facilities. Throughout this period, Mr. Robenalt has also been engaged in
the practice of law, since 1988 as a principal in Robenalt & Robenalt. Mr.
Robenalt serves on the Board of Directors of Mariner Health Group, Inc., which
specializes in providing medical and nursing care primarily to sub-acute
patients.
ELIZABETH A. CONARD served as President and Chief Operating Officer of the
Company and its various subsidiaries from the dates they were formed until
April 10, 1997, the effective date of the merger of Community into a
wholly-owned subsidiary of the Company. Since that date, Ms. Conard has served
as an Executive Vice President of the Company and continues as a director of
the Company.
ISIDORE SIEGEL is a retired attorney. Until July, 1990, Mr. Siegel was a
senior partner with the law firm of Siegel & Godt in Garden City, New York.
Until June, 1994, Mr. Siegel served as corporate secretary of Weldotron
Corporation, an AMEX listed company engaged in the manufacture and sale of
stretch and shrink packaging machinery. Mr. Siegel also served as a director
of that company until April, 1993. At various times, Mr. Siegel has also been
a developer, owner and operator of nursing homes. During the late 1960s, Mr.
Siegel developed and owned two nursing homes, and from the mid-1970s to 1990,
Mr. Siegel developed, owned and operated two other nursing homes. Mr. Siegel
is currently a part owner in four nursing home facilities.
NORBERT P. DONELLY is currently the general manager, board member and
majority shareholder of Tervis Tumbler, a manufacturer of double-walled
tumblers. In addition, Mr. Donelly is president of Island Canvas, Ltd., a
manufacturer of canvas products and an owner of several outlet stores. Mr.
Donelly is also President and CEO of Delar, Inc., an equipment leasing company.
During the 1970s and early 1980s, Mr. Donelly was employed at various times
with several national investment banking firms including E.F. Hutton and
PaineWebber. Mr. Donelly is a graduate of Brown University with a Bachelors of
Arts in Economics.
<PAGE> 28
MICHAEL W. MONAHAN, CPA, became Treasurer and Chief Financial Officer of
the Company on April 10, 1997. From July, 1996 to the present, Mr. Monahan was
also Treasurer and Chief Financial Officer of Community. Prior to joining
Community, Mr. Monahan had been engaged in public accounting, including serving
as senior audit manager with a Big 6 firm, a partner in a smaller regional
firm, and a partner with a Sarasota-area firm.
VICTORIA PARTIN became Vice President, Operations of the Company on April
10, 1997. From August, 1996 through the present, Ms. Partin was also Vice
President, Operations of Community. Prior to joining Community, Ms. Partin was
the Health Care Administrator of Freedom Plaza in Sun City Center, Florida.
Freedom Plaza's expansive campus includes 348 congregate care apartments, as
well as a 40 bed assisted living unit, and a 42 bed skilled nursing facility.
Ms. Partin is a licensed nursing home and assisted living facility
administrator, and has an extensive background in both industries. From 1993
to 1994, Ms. Partin was the Director of Operations for the Company. From 1990
to 1993, Ms. Partin served as the administrator of Sarasota Health Care Center,
a 120 bed skilled nursing facility located in Sarasota, Florida. Ms. Partin's
other administrative assignments have included positions at long term care
facilities ranging in size from 120 to 180 beds. Ms. Partin has, earlier in
her career, served as the Director of Nursing and a line nurse in long term
care facilities.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the cash and other compensation paid in
1995 and 1996 to the Company's Chief Executive Officer of the Company. No
executive officer of the Company earned in excess of $100,000 in 1995 or 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION(1)
- --------------------------- ---- ------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Richard T. Conard, M.D. 1995 $35,611 -0- -0- $2,500
1996 75,000 -0- -0- 6,000
</TABLE>
_______________
(1) Consists of an automobile allowance.
In 1996, the Company made no grants of stock options or stock appreciation
rights to the Chief Executive Officer, and the Company does not have a
long-term incentive compensation plan. Additionally, there were no exercises
of stock options by the Chief Executive Officer in 1996.
<PAGE> 29
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 10, 1997, certain information
with regard to the beneficial ownership of the Common Stock by (i) all persons
known by the Company to be the beneficial owners of more than 5% of the
outstanding Common Stock; (ii) each director and nominee for director of the
Company; (iii) each executive officer named in the Summary Compensation Table
in Item 10; and (iv) all directors and executive officers of the Company as a
group. Unless otherwise indicated, all shares shown in the table below are
held with sole voting and investment power by the person indicated.
<TABLE>
<CAPTION>
TOTAL PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
- -------------------------------------------------------------- --------------- -------
<S> <C> <C>
John F. Robenalt ............................................. 2,577,500(1)(2) 36.4
Elizabeth A. Conard .......................................... 2,577,500(2) 36.4
Ronald O. Braun .............................................. 250,000 3.5
Richard T. Conard, M.D. ...................................... -0- --
Isidore Siegel ............................................... 20,000(3) 0.3
Norbert Donelly .............................................. 240,000(4) 3.4
Alastair Haddow .............................................. 75,000(5) 2.1
All directors and executive officers as a group (9 persons) .. 3,213,674 45.4
</TABLE>
________________
(1) Includes 22,500 shares of Common Stock held by various trusts for the
benefit of Mr. Robenalt's minor children, for which trusts Mr. Robenalt
acts as trustee. Does not include 297,500 shares of Common Stock held by
Vancene F. Robenalt, the wife of Mr. Robenalt, as to which shares Mr.
Robenalt disclaims beneficial ownership. Ms. Robenalt is the Vice
President, Construction, of the Company.
(2) All of the shares of Common Stock held by Mr. Robenalt and Ms. Conard are
subject to a Shareholders Agreement, which requires them to vote their
shares in accordance with that agreement, as further described below. As
a result of that agreement, each of Mr. Robenalt and Ms. Conard is the
beneficial owner of the shares held by the other. Mr. Robenalt has sole
dispositive power over 102,500 shares, including those listed in note 1.
Ms. Conard has sole dispositive power over 2,475,000 shares of Common
Stock.
(3) Held by a family limited partnership of which Mr. Siegel is a general
partner.
(4) Includes 150,000 shares held directly by Mr. Donelly, 57,500 shares held
by an employee trust for the benefit of Mr. Donelly and an aggregate of
32,500 shares held by Mr. Donelly as custodian for his minor children.
Excludes 50,000 shares held by Mr. Donelly's spouse and an aggregate of
32,500 shares held by Mr. Donelly's
<PAGE> 30
spouse as custodian for her minor children, as to which shares Mr. Donelly
disclaims beneficial ownership.
(5) Excludes 75,000 shares held by Mr. Haddow's spouse, as to which shares
Mr. Haddow disclaims beneficial ownership.
Mr. Robenalt and Ms. Conard are parties to a Shareholders Agreement dated
February 13, 1997, among the Company, Mr. Robenalt and Ms. Conard (the
"Shareholders Agreement"). The Shareholders Agreement became effective on
April 10, 1997, as a result of the effectiveness of the Merger of Community
Assisted Living Centers into a wholly-owned subsidiary of the Company. The
Merger Agreement whereby Community merged into a subsidiary of the Company
provided that upon the effective date of the Merger, a majority of the members
of the Board of Directors of the Company would be selected by Mr. Robenalt.
The Merger Agreement further provided that substantially all the executive
officers of Community prior to the Merger would become the executive officers
of the Company at the effective time of the Merger. On April 10, 1997, the
effective date of the Merger, Mr. Robenalt became the President, Chief
Executive Officer and Chief Operating Officer of the Company, and the other
executive officers of Community assumed their positions as executive officers
of the Company. On April 15, 1997, Mr. Robenalt and two other persons
designated by him (Ronald O. Braun and Norbert P. Donelly) were named to the
Board of Directors, filling three of the seven positions on the Board.
Under the Shareholders Agreement, Ms. Conard and Mr. Robenalt agree to
vote the shares of the Company's Common Stock held by each to elect to the
Board of Directors of the Company a majority of individuals selected by Mr.
Robenalt. After the effective time of the Merger, Mr. Robenalt designated
three of the six members of the Board of Directors of the Company. There is
one vacancy on the Board, which vacancy will be filled at the Annual Meeting.
Under the Shareholders Agreement, Ms. Conard and Mr. Robenalt will vote their
shares for a candidate for that seventh position selected by Mr. Robenalt. Mr.
Robenalt has selected (and the Board has nominated) Mr. Haddow to fill that
seventh position. Mr. Robenalt and Ms. Conard have stated their intention to
vote all of the shares held by each in favor of the nominees for director
listed below, in accordance with the terms of the Shareholders Agreement.
The Shareholders Agreement also provides that Ms. Conard and Mr. Robenalt
will vote their shares on any other matter submitted to a vote of the
shareholders of the Company as they mutually agree. If they are unable to
reach a mutually satisfactory agreement on the manner in which the shares will
be voted (other than for the election of directors), the full Board of
Directors of the Company will mediate the disagreement, and if that mediation
is not successful, an independent arbitrator will resolve the disagreement.
The Shareholders Agreement will expire on April 10, 2002. If Mr. Robenalt
dies or becomes disabled so as not to be able to perform his duties as chief
executive officer of
<PAGE> 31
the Company during the term of the Shareholders Agreement, Ronald O. Braun, the
Chairman of the Board of Community prior to the Merger and the Co-Chairman of
the Board of the Company after the Merger, will have the right to substitute
all shares owned by him for the shares of Mr. Robenalt covered by the
Shareholders Agreement, and Mr. Braun will assume the responsibilities of Mr.
Robenalt for the remaining term of the Shareholders Agreement.
As a result of these provisions in the Merger Agreement and the
Shareholders Agreement, Mr. Robenalt effectively acquired control of the
Company as of the effective date of the Merger.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Until February 1996, Dr. Conard was President and director of the National
Foundation of Gerontology, Inc., a Florida nonprofit corporation. In March
1994, the Company sold to the National Foundation for $1,520,000 three of its
facilities and property on which an additional facility was subsequently
constructed. The National Foundation was originally known as the Southmark
Foundation on Gerontology, Inc. In 1989, Southmark Corporation, a company
unaffiliated with Dr. Conard and the primary source of funding for the National
Foundation, filed a bankruptcy proceeding and was unable to continue financial
support of the National Foundation. Prior to the acquisition from the Company
of the facilities and property referred to above, the sole source of revenue
for the National Foundation was from the collection of royalties from the sale
of "What Should We Do About Mom?," a book written by Dr. Conard.
Of the $1,520,000 purchase price paid to the Company for the facilities
and property, the Company received $1,020,000 in cash and a promissory note in
the aggregate principal amount of $500,000 (the "National Foundation Note").
The National Foundation Note provides for 10 equal annual payments of principal
($50,000) plus accrued interest, with such payments to commence on March 3,
1995, and the entire principal balance plus interest being due and payable on
March 3, 2004. Payments on the National Foundation Note are subordinated to
the debt service on certain taxable bonds previously sold by the National
Foundation in the aggregate principal amount of $2,500,000 ("Taxable Bonds").
Although the National Foundation Note is secured by a second mortgage on the
properties sold to National Foundation, no enforcement action of any kind or
foreclosure under that mortgage on the properties sold to National Foundation
is permitted until all amounts due on the Taxable Bonds have been paid in full.
To date, the Company has received no payments under the National Foundation
Note, and no payments are anticipated in the near future. Of the Company's
total gain on the sale of the properties ($564,791), $64,791 was recognized by
the Company on the date of the sale. As National Foundation is currently in
default under the terms of the National Foundation Note and the Company is
unable to enforce collection due to its subordinated position to the Taxable
Bonds, the remaining $500,000 of the gain on the sale of the properties has not
been recorded on the Company's financial statements and that gain will be
recognized only if payments are received by the Company on the Foundation Note.
<PAGE> 32
In connection with the National Foundation's renovation of three of the
acquired facilities and construction of the fourth facility, the Company,
during 1994, advanced $420,000 to the National Foundation, of which
approximately $16,000 remains outstanding. In January 1995, the Company
advanced an additional $287,606 to the National Foundation in connection with
the construction of the fourth facility, which amount currently remains
outstanding. This obligation is evidenced by a promissory note (the "1995
Foundation Note") bearing interest at the rate of 10% per annum with equal
principal and interest payments of $7,500 per month (commencing on August 1,
1995, and ending on June 1, 1999) and a final payment of approximately $6,400
due on July 1, 1999. Payments on the 1995 Foundation Note are also
subordinated to the debt service on the Taxable Bonds. The National Foundation
made only two payments on the 1995 Foundation Note in 1995 and no payments in
1996. At December 31, 1996, approximately $85,985 in unpaid management fees
were due to the Company. The Company has the right to declare the National
Foundation to be in default and to accelerate the payment of the National
Foundation Note and the 1995 Foundation Note (collectively, the "Foundation
Notes"). However, no enforcement action by the Company of any kind with
respect to the Foundation Notes or foreclosure under the mortgage is permitted
until the amounts due on the Taxable Bonds have been paid in full. As of
December 31, 1996, all amounts owed to the Company by the National Foundation
were written off by the Company, resulting in a charge to expense of $338,000.
The Company presently does not anticipate collecting any amounts from the
National Foundation on the unpaid management fees or either of the Foundation
Notes.
A company whose common stock is 50% owned by Dr. and Mrs. Conard shares
office space with the Company. Accounting and other personnel employed by the
Company perform accounting and other services for that company. Salaries of
employees who perform services for that other company are apportioned that
company and the Company based upon the time spent in performing the services
and rent is apportioned based upon the percentage of space occupied. In 1996,
that company paid to the Company rent and reimbursement of salaries and other
expenses in the aggregate of approximately $87,000.
From time to time since 1987, Elizabeth A. Conard has made loans to the
Company to support its operations. The Company has repaid only a portion of
those loans. At December 31, 1996, the total amount of the loans, including
interest, was $335,405. The loans bear interest at 10% per annum, payable
quarterly and the principal is payable $150,000 on April 1, 1997 and the
balance on April 1, 1998. The Company did not make the April 1, 1997 principal
and interest payment to Ms. Conard and is negotiating with her a longer payback
of principal on those advances.
During the first quarter of 1995, the Company advanced to two companies
controlled by the Ms. Conard an aggregate of $55,743. These advances were
repaid in June, 1995.
<PAGE> 33
In September, 1995, the Board of Directors approved the purchase from Dr.
Conard of two lots adjacent to one of the Company's facilities in Bradenton,
Florida. The two lots are currently being used as part of the drainage system
for the facility and enhance the property's zoning. The transaction was
completed on October 20, 1995, and the $60,000 purchase price (equal to the Dr.
Conard's cost) was paid in cash.
Dr. Conard has been a director of L.W. Blake Memorial Fund, Inc.
("Blake"), a Florida non-profit corporation, since its formation in 1975. In
April 1994, Blake acquired a 28-bed hospital located in Incline Village,
Nevada. The hospital did not operate as anticipated and in 1995, Blake filed a
voluntary petition for bankruptcy and was later liquidated under Chapter 7 of
the Bankruptcy Code.
<PAGE> 34
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The following exhibits are filed with this Form 10-KSB or are incorporated
herein by reference.
3(a) Articles of Incorporation, as amended **
3(b) Bylaws**
10(a) Stock Option Plan**
(b)(1) Underwriters' Warrant Agreement (Common Stock)**
(c) Management Agreement dated March 3, 1974, by and between
National Foundation on Gerontology, Inc. and the Company
and an Addendum thereto**
(d) Trust Indenture dated October 27, 1993, between JLH Series
I, Inc. and General Trust Company**
(e) Employee Leasing Agreement**
(f) Mortgage and Security Agreement**
(g) Employment Agreement with Richard T. Conard**
(h) Employment Agreement with Elizabeth A. Conard**
(i) Trademark Assignment**
(j) Copy of Franchise Agreement**
(k) Stock and Real Estate Purchase Agreement between the
Company and Henri P. Couture and Ann Marie Couture**
(l) Merger Agreement, dated February 13, 1997, among Just Like
Home, Inc., JLH Acquisition Corp. and Community Assisted
Living Centers, Inc.***
(m) Shareholders Agreement, dated February 13, 1997, among
Elizabeth A. Conard, John F. Robenalt and Just Like Home,
Inc.*
21 Subsidiaries of the Registrant**
27 Financial Data Schedule (for SEC use only)*
(b) Reports on Form 8-K.
None.
________________
* Filed previously.
** Incorporated by reference to the exhibit filed as part of the Company
Registration Statement (File No. 33-910120A) ordered effective
July 6, 1995.
*** Filed and amended in Form 8-K filed on February 16, 1997.
<PAGE> 35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
JUST LIKE HOME, INC.
By: /s/ JOHN F. ROBENALT
--------------------
John F. Robenalt
President, Chief Executive Officer &
Chief Operating Officer
Date: April 29, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the 29th day of April, 1997.
<TABLE>
<CAPTION>
Signature Title
<S> <C>
/s/ RICHARD T. CONARD, M.D. Co-Chairman of the Board
Richard T. Conard, M.D. and Director
/s/ MICHAEL W. MONAHAN Treasurer and Chief Financial
Michael W. Monahan Officer (Principal Accounting
and Financial Officer)
/s/ ELIZABETH A. CONARD Director
Elizabeth A. Conard
/s/ ISIDORE SIEGEL Director
Isidore Siegel
</TABLE>
