<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and
- --- Exchange Act of 1934 For the period ended September 30, 1998.
___ 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 (I.R.S. Employer
of Incorporation or Organization) Identification No.)
3655 CORTEZ ROAD WEST SUITE 110 34210
BRADENTON, FLORIDA (Zip Code)
(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER AND AREA CODE: 941-756-2555
(Former Address of Principal Executive Offices) (Former Zip Code)
</TABLE>
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
twelve 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 September 30, 1998, there were outstanding 6,927,601 shares of Just Like
Home, Inc. Common Stock, par value $.001.
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash $ 87,415
Restricted cash 36,308
Accounts receivable - trade 73,788
Other receivables 48,000
Other current assets 64,985
-----------
Total current assets 310,496
Property and equipment, net 2,984,609
Construction work in process 614,622
Property held for sale 1,228,829
Restricted cash and certificates of deposit 491,916
Due from related parties 26,966
Intangible assets, net 1,085,849
===========
Total Assets $ 6,743,287
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 654,895
Current portion of long-term debt and capital lease obligations 1,419,291
Current portion of related party debt 230,138
Other current liabilities 93,908
-----------
Total current liabilities 2,398,232
Long-term debt and capital lease obligations 2,625,968
Note payable to related party 68,425
Deferred gain on sale-leaseback transaction 258,287
-----------
Total liabilities 5,350,912
-----------
Common Stock and Options Subject to Put Options 913,403
-----------
Stockholders' Equity:
Preferred stock, $.01 par value; 2,000,000 shares
authorized; none issued and outstanding 0
Common stock, $.001par value;13,000,000 shares
authorized; 6,927,601 shares issued and outstanding 6,927
Additional paid-in capital 8,944,743
Accumulated deficit (8,472,698)
-----------
Total stockholders' equity 478,972
-----------
Total Liabilities and Stockholders' Equity $ 6,743,287
===========
</TABLE>
See accompanying notes to consolidated financial statements
1
<PAGE> 3
JUST LIKE HOME, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Resident fees $ 434,585 $ 443,631 $ 1,307,934 $ 1,302,555
Management and consulting fees 20,884 -- 404,072 --
Companion care fees 93,809 150,367 249,561 482,743
Development fees -- -- -- 166,000
Other income 27,562 18,607 93,480 59,650
-----------------------------------------------------------------
Total revenue 576,840 612,605 2,055,047 2,010,948
-----------------------------------------------------------------
Expenses:
General and administration 436,067 288,006 1,350,310 1,034,445
Assisted living facilities operations 419,514 590,758 1,039,908 1,344,842
Consulting expenses 102,651 -- 391,792 --
Companion care 114,898 154,866 307,740 450,163
Depreciation and amortization 241,262 169,787 322,439 437,626
Loss from impairment of property held for sale -- 83,102 -- 83,102
-----------------------------------------------------------------
Total expenses 1,314,392 1,286,519 3,412,189 3,350,178
-----------------------------------------------------------------
Operating Loss (737,552) (673,914) (1,357,142) (1,339,230)
-----------------------------------------------------------------
Non-Operating Income (Expense):
Interest expense (97,125) (43,190) (318,910) (271,984)
Interest income 34,390 10,832 70,385 28,046
Loss on sale of assets -- -- -- (172,368)
-----------------------------------------------------------------
(62,735) (32,358) (248,525) (416,306)
-----------------------------------------------------------------
Loss Before Income Taxes (800,287) (706,272) (1,605,667) (1,755,536)
-----------------------------------------------------------------
Income Tax Expense -- -- -- --
-----------------------------------------------------------------
Net Loss $ (800,287) $ (706,272) $(1,605,667) $(1,755,536)
=================================================================
Net Loss Per Common Share $ (0.12) $ (0.10) $ (0.28) $ (0.25)
=================================================================
Weighted Average Common Shares Outstanding 6,883,329 6,927,601 5,705,391 6,903,005
=================================================================
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE> 4
JUST LIKE HOME, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flow
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1998
---- ----
<S> <C> <C>
Cash Flows used in Operating Activities: $ (572,907) $ (737,529)
----------- -----------
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment 978,009 889,059
Acquisitions of property and equipment (64,967) (926,902)
Costs of property held for sale (1,521,608) (6,245)
Payments made for organization costs and intangible costs (186,371) --
Decrease in other assets 66,677 --
Deposits into restricted cash accounts (281,782) --
Proceeds from restricted cash accounts -- 165,888
----------- -----------
Net cash (used in) provided by investing activities (1,010,042) 121,800
----------- -----------
Cash Flows from Financing Activities:
Proceeds from mortgages and notes payable -- 888,634
Proceeds from financing arrangement 1,150,606
Repayment of mortgages and notes payable (256,815) (1,521,057)
Repayments to related parties (91,490) --
Issuance of common stock 1,545,749 44,272
----------- -----------
Net cash provided by (used in) financing activities 1,197,444 562,455
----------- -----------
Net decrease in cash (385,505) (53,274)
Cash, beginning of period 1,026,937 140,689
----------- -----------
Cash, end of period $ 641,432 $ 87,415
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE> 5
JUST LIKE HOME, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
Just Like Home, Inc. and Subsidiaries (the "Company") have not changed their
accounting and reporting policies from those stated in the 1997 Form 10-KSB
except as follows.
In May 1998 the Company entered into an agreement with Health Care REIT for the
sale/leaseback of the Company's assisted living facility in Leesburg, Florida.
The Company accounted for this transaction in its June 30, 1998 Form 10-QSB as a
sale of the property and as an operating lease for the leaseback. The Company
has determined that this lease should have been accounted for as a financing and
has recorded the related property and debt on the consolidated balance sheet at
September 30, 1998. The consolidated statement of operations for the nine months
ended September 30, 1998 reflects the adjustments to lease expense, depreciation
of the assisted living facility and interest expense.
In addition, as part of the May 1998 agreement, the Company agreed to include
additional collateral related to its assisted living facilities in Bradenton,
Florida. As a result, the lease related to these facilities has been reflected
as a financing, and the property and debt is recorded on the Company's
consolidated balance sheet.
These unaudited interim consolidated condensed financial statements should be
read in conjunction with the audited financial statements and related
disclosures included in the Company's annual report on Form 10-KSB for the year
ended December 31, 1997.
In the opinion of the management of the Company, the accompanying unaudited
consolidated condensed financial statements contain all adjustments, consisting
only of normal recurring accruals, necessary to present fairly the Company's
financial position, results of operations and cash flows for the periods
presented. The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full year.
NOTE 2 - NET LOSS PER COMMON SHARE
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.
4
<PAGE> 6
NOTE 3 - FUTURE ACCOUNTING REQUIREMENTS
Comprehensive Income: In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting of
Comprehensive Income", which establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and losses)
in a full set of financial statements. This statement also requires that all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements.
This statement is effective for fiscal years beginning after December 15, 1997.
Earlier application is permitted. Reclassification of financial statements for
earlier periods provided for a comparative purpose is required. For the three
and nine month periods ended September 30, 1997 and 1998 there were no
components of comprehensive income other than net income.
Disclosures About Segments of an Enterprise: In June 1997, the Financial
Accounting Standards Board also issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information", which establishes standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. This statement also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
This statement requires the reporting of financial and descriptive information
about an enterprise's reportable operating segments.
This statement is effective for financial statements for periods beginning after
December 15, 1997. In the initial year of application, comparative information
for earlier years is to be restated. The Company has not yet determined the
impact adoption of SFAS No. 131 will have on its financial statements.
SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits". In February 1998, the Financial Accounting Standards
Board issued SFAS No. 132, which is effective for periods ending after December
15, 1998. The new standard revises employers' disclosures about pensions and
other postretirement benefits. For the three and nine month periods ended
September 30, 1998 and 1997, there was no impact on the Company's financial
statements, as the Company does not have any postretirement benefits.
SFAS No. 133, "Accounting for Derivative Investments and Hedging
Activities". SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. This statement establishes accounting and
reporting standards for derivative instruments and hedging activities. The
Company does not maintain any derivative investments nor does it conduct any
hedging activities, therefore, there is no impact on the three or nine month
periods ended September 30, 1998 and 1997.
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". In March 1998, the American
Institute of Certified Public Accountants issued SOP 98-1, which is effective
for financial statements for fiscal years beginning after December 15, 1998.
This SOP provides guidance on accounting for the costs of computer software
developed or obtained for internal use and provides guidance for determining
whether computer software is for internal use. The Company does not develop any
internal use software, therefore, management does not believe that there will be
any impact on the Company's financial statements.
5
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS.
OVERVIEW
The historical financial statements represent the consolidated results
of operations and financial condition of Just Like Home, Inc. and its
subsidiaries (JLH or the Company).
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.
<TABLE>
<CAPTION>
December 31, Sept. 30,
-------------- ---------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Facilities owned .................... 6 2 1
Facilities leased (1)(2)(3) ......... 0 4 6
Facilities managed (4) .............. 3 3 0
Total beds .......................... 184 184 154
Occupancy percentage at end of period 75.9% 88.8% 69.5%
</TABLE>
(1) On July 18, 1997 the Company sold 4 facilities to Health Care REIT, Inc.
and simultaneously leased the properties back under a 10 year lease
agreement.
(2) On May 1, 1998 the Company sold a facility to Health Care REIT, Inc. and
simultaneously leased the property back under a 10 year lease agreement.
(3) On June 28, 1998 the Company leased a new facility from Health Care REIT,
Inc. under a 10 year lease agreement.
(4) On April 1, 1998 the Company terminated its management agreements with the
National Foundation on Gerontology.
- ----------------
Revenues
Nine month
Total revenues for the nine-month period ended September 30, 1998 decreased by
2% from $2,055,000 in 1997 to $2,011,000 in 1998. Resident fee income decreased
from $1,308,000 in 1997 to $1,303,000 in 1998 due to decreased occupancy. Just
Like Family, Inc., the Company's companion care service subsidiary, reflected
revenues of $250,000 in 1997 and $483,000 in 1998, an increase of 93% due to
increased service hours. Management and Consulting Fees decreased from $404,000
in 1997 to $0 in 1998 due to the sale of Project Market Decisions, Inc. (PMD)
effective July 1, 1997 and the termination of the management contracts with
National Foundation on Gerontology. The Company received development fees on the
newly constructed facilities totaling $166,000 in 1998 from Health Care REIT,
Inc.
Three month
Total revenues for the three-month period ended September 30, 1998 increased by
6% from $577,000 in 1997 to $613,000 in 1998. Resident fee income increased 2%
from $435,000 in 1997 to $444,000 in 1998 due to revenues from a recently opened
facility. Just Like Family, Inc., the Company's companion care service
subsidiary, reflected revenues of $94,000 in 1997 and $150,000 in 1998, an
increase of 60% due to increased service hours. Management and Consulting Fees
decreased from $21,000 in 1997 to $0 in 1998 due to the sale of Project Market
Decisions, Inc. (PMD) effective July 1, 1997 and the termination of the
management contracts with National Foundation on Gerontology.
6
<PAGE> 8
Expenses
Nine month
Total expenses for the nine-month period ended September 30, 1998 decreased by
1%, from $3,392,000 in 1997, to $3,350,000 in 1998. Assisted living operating
expenses increased from $1,040,000 in 1997 to $1,345,000 in 1998 due to a newly
constructed facility and pre-opening marketing expenses of two new facilities
opened in October of 1998. Companion care costs increased from $308,000 in 1997
to $450,000 in 1998 due to increased volume. General and administrative expenses
were down from $1,350,000 in 1997 to $1,034,000 in 1998 attributable to cost
saving measures at the home office level. Consulting costs were eliminated in
1998 due to the sale of PMD, the Company's consulting division. The Company
wrote off $83,000 of costs of properties held for sale to reflect the amounts
realized of the actual sales of these properties in the fourth quarter of 1998.
Amortization and Interest expense have increased due to the financings the
Company entered into with Health Care REIT, Inc.
Three month
Total expenses for the three-month period ended September 30, 1998 decreased by
2%, from $1,314,000 in 1997, to $1,287,000 in 1998. Assisted living operating
expenses increased from $420,000 in 1997 to $591,000 in 1998 due to a newly
constructed facility and pre-opening marketing expenses of two new facilities
opened in October of 1998. Companion care costs increased from $115,000 in 1997
to $155,000 in 1998 due to increased volume. General and administrative expenses
were down from $436,000 in 1997 to $288,000 in 1998, due to a reduction in
executive office overhead resulting largely from elimination of certain staff
positions. Amortization and Interest expense have increased due to the
financings the Company entered into with Health Care REIT, Inc.
Interest Expense
Interest expense for the nine-month period ended September 30, 1998 decreased
from approximately $319,000 in 1997 to approximately $272,000 in 1998 due to
reduction of debt.
Loss Before Income Taxes
As a result of the above, the Company incurred a loss before income taxes of
approximately $1,756,000 for the 1998 period as compared to a loss of
approximately $1,606,000 for the 1997 period. As a result, no provision for
income taxes was required.
LIQUIDITY AND CAPITAL RESOURCES
The Company sustained a loss of $1,756,000 for the nine-period ended September
30, 1998. This was due to the Company not having a sufficient number of
facilities in operation to generate the necessary income to cover home office
overhead costs and the carrying costs associated with non-income producing
properties. To alleviate this trend, the Company opened the first of its new
42-unit prototype facility in May 1998. Two more of these facilities have been
completed and opened in October 1998. The Company finalized the sale-leaseback
of one of its Leesburg, Florida facilities in May 1998. This transaction
generated an additional $625,000 in working capital for the Company. A deferred
gain of $299,000 is being amortized over the 10-year lease period. Common stock
(44,272 shares at a value of $1 per share) was issued to pay salaries to two
officers during the period.
7
<PAGE> 9
The Company entered into an agreement on April 30, 1997, with Health Care REIT,
Inc., a real estate investment trust (the "REIT"), for up to $41,800,000 of
financing for assisted living facilities. To date, approximately $10,000,000 in
lease financings have been completed under the REIT agreement, which have
provided substantial working capital to the Company. That working capital,
however, has been depleted through continuing operating losses of the Company.
Each future REIT financing is subject to numerous conditions, including
satisfaction of certain financial coverage tests by the Company. As described in
Part III, below, the Company is currently in default of certain provisions of
the REIT agreement, and there can be no assurance that any additional financings
will be available from the REIT. Additionally, the REIT is not available to fund
the anticipated continuing operating losses of the Company, and the Company must
obtain a portion of the financing necessary to construct or develop any new
facilities from sources other than the REIT, before the REIT financing could be
utilized to finance or refinance any new facilities. The REIT financing
commitment expires on May 1, 2000, unless earlier terminated by the REIT due to
default by the Company.
Although the financing for construction of additional facilities may be
available to the Company under the REIT credit facility described above (subject
to continued compliance by the Company with the REIT requirements), the Company
is required to fund all start-up costs associated with each new project. The
Company estimates that it will need approximately $300,000 in cash resources
other than the REIT financing for each new facility developed by the Company.
As of October 31, 1998, the Company had significant negative working
capital. Operating losses are expected to continue to occur for the foreseeable
future. 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
expenses until all facilities are generating sufficient cash flow to cover those
expenses. Unless the Company is able to raise additional equity, it will not be
able to develop any additional facilities, which is necessary if the Company
hopes to obtain profitability from operations.
The Company is presently pursuing an equity financing with the
representative of several investors. However, there can be no assurance that the
financing will be accomplished or that it will be offered on terms acceptable to
the Company. If the Company is unable to complete the equity financing or is
unable to raise funds in another manner acceptable to it, the Company may not
have the cash to fund its anticipated continuing operating losses or to remain
in business.
YEAR 2000 COMPLIANCE
The Company believes that its two principal software systems (for
accounting and operations) are Year 2000 compliant based on the newness of the
systems, internal checks and vendor representations. The Company does not
believe that any systems or infrastructure at its assisted living facilities
will be affected by Year 2000 issues primarily because of the newness of the
facilities and the lack of computer or chip based systems in those facilities.
The Company has begun to implement a plan to confirm that Year 2000 issues will
not adversely the Company's operations and facilities, and if necessary to
develop an implementation plan to resolve any identified issues on a timely
basis. The Company does not presently anticipate that the plan will require any
substantial resources of the Company. The Company is also in the process of
discussing with its vendors the potential impact the Year 2000 issue will have
on their systems. Problems encountered by the vendors in connection with the
Year 2000 issue may have a material adverse effect on the Company's financial
condition and results of operations.
8
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company is presently in default of certain provisions
under its agreement with the REIT for the lease of six facilities from the REIT.
In particularly, the Company failed to obtain the consent of the REIT to certain
changes in its senior management in September, 1998, has been consistently 60
days in arrears in rental payments to the REIT, and is in violation of certain
financial covenants. The new senior management of the Company has met with
representatives of the REIT, and to date, the REIT has taken no actions to
exercise any of its remedies available to the REIT under the financing
documents. The Company has agreed to keep the REIT informed as to the efforts of
the Company to raise additional equity capital, and does not anticipate that the
REIT will take any actions adverse to the Company or its leased facilities until
the Company has had additional time to raise new equity capital. There can be no
assurance that the REIT will continue to forbear from exercising any remedies
available to it, including efforts to terminate the leases and regain possession
of the leased facilities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The following exhibit is filed with this Form 10-QSB:
27.1 Financial Data Schedule (for SEC use only).
9
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 25, 1998 Just Like Home, Inc.
(Daniel D. Levitan)
---------------------------------------------
Chief Executive Officer (Principal Executive,
Accounting and Financial Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JUST LIKE HOME, INC. FOR THE NINE MONTHS PERIOD ENDED
SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 87,415
<SECURITIES> 0
<RECEIVABLES> 73,788
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 310,496
<PP&E> 3,225,854
<DEPRECIATION> 241,045
<TOTAL-ASSETS> 6,743,287
<CURRENT-LIABILITIES> 2,398,232
<BONDS> 2,625,968
0
0
<COMMON> 6,927
<OTHER-SE> 8,944,743
<TOTAL-LIABILITY-AND-EQUITY> 6,743,287
<SALES> 0
<TOTAL-REVENUES> 2,010,948
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,350,178
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 271,984
<INCOME-PRETAX> (1,755,536)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,755,536)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,755,536)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
