-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WMufWXVnVHidxWxT1sEfmRqfC5s42JU5Km86oYxNwWFDRjebFb8qoLCHbBJYF6fP D1O7G4YvjW/ZWO4oGyxx4A== 0000909012-02-000394.txt : 20020515 0000909012-02-000394.hdr.sgml : 20020515 20020515113326 ACCESSION NUMBER: 0000909012-02-000394 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLION HEALTHCARE INC CENTRAL INDEX KEY: 0000847935 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 112962027 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-17821 FILM NUMBER: 02649258 BUSINESS ADDRESS: STREET 1: 33 WALT WHITMAN ROAD SUITE 200A CITY: HUNGINTON STATION STATE: NY ZIP: 11746 BUSINESS PHONE: 5165476520 MAIL ADDRESS: STREET 1: 33 WALT WHITMAN ROAD SUITE 200A CITY: HUNGINTON STATION STATE: NY ZIP: 11746 FORMER COMPANY: FORMER CONFORMED NAME: CARE GROUP INC DATE OF NAME CHANGE: 19920703 10QSB 1 t24174.txt QUARTERLY REPORT -- 3/31/02 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 EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 000-17821 ALLION HEALTHCARE, INC. (Exact name of registrant as specified in its charter) DELAWARE 11-2962027 (State or other jurisdiction (I.R.S.Employer Identification No.) of incorporation) 33 WALT WHITMAN ROAD, SUITE 200A HUNTINGTON STATION, NEW YORK 11746 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (631) 547-6520 Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the past 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 __ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. YES X NO __ --- As of March 31, 2002, the total number of outstanding shares of the Registrant's common stock was 3,100,000. Transitional small business disclosure format (check one): YES __ NO X ---- TABLE OF CONTENTS PAGE PART I. FINANCIAL INFORMATION Item 1: Financial Statements: Condensed Consolidated Balance Sheet as of 3 March 31, 2002 (Unaudited).......................... Condensed Consolidated Statements of Operations for the 4 Three Months Ended March 31, 2002 and 2001 (Unaudited)......................................... Condensed Consolidated Statements of Cash Flows for the 5 Three Months Ended March 31, 2002 and 2001 (Unaudited) ........................................ Notes to Condensed Consolidated Financial Statements.... 6 Item 2: Management's Discussion and Analysis of Financial 7 Condition and Results of Operations..................... PART II. OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K.................... 9 Signatures.............................................. 9 -2- ALLION HEALTHCARE, INC. PART I FINANCIAL INFORMATION ITEM 1...FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) ASSETS MARCH 31,2002 ------ ------------- CURRENT: Cash and cash equivalents $ 953,681 Accounts receivable, net 2,155,701 Inventories 343,594 Prepaid expenses and other current assets 59,323 ---------- Total current assets 3,512,299 PROPERTY AND EQUIPMENT, net 265,500 INTANGIBLE ASSETS 789,500 OTHER ASSETS 60,100 ---------- $ 4,627,399 =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 2,617,223 Note payable 1,500,000 Current portion of capital lease obligation 39,433 Current portion of long-term debt 15,337 ---------- Total current liabilities 4,171,993 LONG TERM LIABILITIES: Capital lease obligation 145,567 Other 118,184 ---------- Total long term liabilities 263,751 STOCKHOLDERS' EQUITY: Preferred stock,$.01 par value; shares authorized 5,000,000; issued and outstanding 1,179,168 11,791 Common stock, $.01 par value; shares authorized 15,000,000; issued and outstanding 3,100,000 31,000 Additional paid-in capital 4,133,213 Accumulated deficit (3,984,349) ------------ TOTAL STOCKHOLDERS' EQUITY 191,655 ------------ $ 4,627,399 ===========
See notes to condensed consolidated financial statements. -3-
ALLION HEALTHCARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three months ended March 31, 2002 2001 ---------- ---------- NET SALES $ 5,930,318 $ 2,684,957 COST OF GOODS SOLD 5,042,646 2,209,271 ----------- ----------- Gross profit 887,672 475,686 OPERATING EXPENSES: Selling, general and administrative expenses 958,169 647,788 --------- ----------- Operating loss (70,497) (172,102) Interest expense ( 26,369) (31,946) --------- --------- LOSS BEFORE INCOME TAXES (96,866) (204,048) PROVISION FOR INCOME TAXES 6,651 7,253 --------- --------- NET LOSS $ (103,517) $ (211,301) ========== =========== BASIC AND DILUTED LOSS PER COMMON SHARE Net loss $ (.03) $ (.07) ========== =========== BASIC AND DILUTED WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING 3,100,000 3,100,000 ========== ===========
See notes to condensed consolidated financial statements. -4-
ALLION HEALTHCARE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three months ended March 31, 2002 2001 ------------- ----------- OPERATING ACTIVITIES: Net loss (103,517) (211,301) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Non-cash compensation -- 10,000 Depreciation and amortization 79,153 2,816 Provision for doubtful accounts 13,948 -- Changes in operating assets and liabilities: Accounts receivable (308,014) 114,439 Inventory (84,566) (20,460) Prepaid expenses and other assets (33,840) 5,287 Accounts payable and accrued expenses 834,943 (13,439) ----------- ----------- Net cash provided by (used in) operating activities 398,107 (112,658) ----------- ----------- INVESTING ACTIVITIES: Purchase of property and equipment (6,130) -- ----------- ----------- Net cash used in investing activities (6,130) -- ----------- ----------- FINANCING ACTIVITIES: Proceeds from draws of line of credit 1,450,000 -- Repayment of line of credit (2,443,936) -- Repayment of long-term debt (3,820) -- ----------- ----------- Net cash used in financing activities (997,756) -- ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (605,779) (112,658) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,559,460 727,981 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 953,681 $ 615,323 =========== ===========
See notes to condensed consolidated financial statements. -5- ALLION HEALTHCARE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 2002 NOTE A BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Article 2 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. For further information, refer to the consolidated financial statements and footnotes thereto included in Allion Healthcare, Inc.'s (the "Company") Annual Report on Form 10-KSB for the year ended December 31, 2001. NOTE B INVENTORIES Inventories consist of pharmaceuticals and are stated at the lower of cost or market, with cost being determined on a first-in, first-out basis. NOTE C REVENUE RECOGNITION Revenue is recognized as medications and delivered to customers. Substantially all of the Company's revenue is billed to third party payors, such as governmental payors, insurance companies and managed care programs, with governmental payors accounting for almost all of the Company's revenue. Revenue is recorded net of contractual adjustments and related discounts. Contractual adjustments represent estimated differences between billed revenues and amounts expected to be realized from third party payors under contractual arrangements. -6- NOTE D ACQUISITIONS On July 27, 2001, the Company acquired certain assets of the Specialty Care Pharmacy Division of Prescripticare, L.L.C. ("SCPD"). The results of operations attributable to such acquisition have been included in the Company's financial statements since July 27, 2001. The purchase price for SCPD was $1,411,000. The Company has not paid the final $10,000 due to Prescripticare, L.L.C. due to a dispute concerning accounts payable at the time of the acquisition. On September 14, 2001, the Company sold certain assets of SCPD not related to the Company's core business to New Geri Care of Brooklyn, L.L.C. The purchase price for such assets was $475,000, which included a one-time consulting fee, plus the fair market value of certain inventory. The Company is involved in a dispute with New Geri Care of Brooklyn, L.L.C. regarding the collection of the inventory. ALLION HEALTHCARE, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Report. This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements included herein and any expectations based on such forward-looking statements are subject to risks and uncertainties and other important factors, including, without limitation, the Company's cash constraints, the Company's limited operating history, the ability of the Company to market its customized packaging system and the acceptance of such system by healthcare providers and patients, the ability of the Company to manage its growth with a limited management team, the ability of the Company to integrate acquisitions, and the other risks and uncertainties described from time to time in the Company's public announcements and SEC filings, including without limitation the Company's Quarterly and Annual Reports on Forms 10-QSB and 10-KSB, respectively. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 AND 2001 NET SALES Net sales for the three months ended March 31, 2002 increased to $5,930,318 from $2,684,957 for the three months ended March 31, 2001, an increase of 120.87%. This increase is attributable primarily to the Company's acquisition of the Specialty Care Pharmacy Division of Prescripticare, L.L.C. in July 2001. GROSS PROFIT Gross profit was 14.96% and 17.71% of sales for the three months ended March 31, 2002 and 2001, respectively. The decrease in gross margin reflects a change in the prescription therapy and payor mix, as well as prescription reimbursement pricing pressure. -7- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses were $958,169 and $647,788 for the three months ended March 31, 2002 and 2001, respectively, and represented 16.16% and 24.13% of net sales, respectively. The increase in selling, general and administrative expenses in absolute dollars is attributable to an increase in clinical, administrative and sales personnel. The decrease in selling, general and administrative expenses expressed as a percentage of net sales is attributable to the increase in net sales. OPERATING LOSS For the three months ended March 31, 2002, the Company recorded an operating loss of $70,497, as compared to an operating loss of $172,102 for the comparable period in the prior year. This improvement is attributable to the increase in net sales and was offset by an increase in selling, general and administrative expenses. INTEREST EXPENSE During the three months ended March 31, 2002 and 2001, the Company incurred interest expense of $26,369 and $31,946, respectively. The Company repaid amounts outstanding under its revolving credit line during 2001 resulting in a decrease in interest expense in the three months ended March 31, 2002. PROVISION FOR INCOME TAXES For the three months ended March 31, 2002, the Company recorded a provision for income taxes of $6,651, as compared to an income tax provision of $7,253 for the comparable period in the prior year. The provision for income taxes relates primarily to franchise tax payments. NET LOSS For the three months ended March 31, 2002, the Company recorded a net loss of $103,517, as compared to a net loss of $211,301 for the comparable period in the prior year. This improvement is attributable to the increase in net sales, the decrease in interest expense and a smaller provision for taxes, and was offset by an increase in selling, general and administrative expenses. LIQUIDITY AND CAPITAL RESOURCES The Company purchases the medications it needs to fill prescriptions from wholesalers, who require that almost all purchases are made in cash. The Company is reimbursed by third party payors, on average, within 30 days after a prescription is filled and a claim is submitted in the appropriate format. Accordingly, the Company needs significant cash resources to operate. At March 31, 2002, the Company's cash balance was $953,681. -8- In addition, the Company has a revolving credit facility in the amount of $4.0 million available for short-term borrowings. Borrowings under the facility bear interest at prime rate plus two percent and are collateralized by a perfected and primary security interest in all assets, accounts receivable, trademarks, and licenses of the Company. At March 31, 2002, borrowings under this facility were $0. Management has not used this facility to fund the purchase of medication and the growth of the business because of concerns arising from the lag between the date when payment is due for medications and the date when the Company receives payment from third party payors. The Company had secured a loan from a bank for $1,500,000 that bears interest at 4.75% monthly, with the full principal payable in March of 2003. If the Company does not have sufficient available cash to repay the loan, it will need to extend the term of this loan for an additional year. In the past, the lender has been willing to extend the term, but there can be no assurance that the lender will continue to do so. The Company may seek additional debt or equity financing to meet its working capital requirements and fund its future growth, but there can be no assurance that it will be able to secure any financing on terms acceptable to the Company. ALLION HEALTHCARE, INC. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Not Applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5. OTHER INFORMATION. Not Applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are included herein: None. (b) Reports on Form 8-K: None. -9- SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ALLION HEALTHCARE, INC. Date: May 15, 2002 By: /S/ MICHAEL P. MORAN ----------------------------------------- Michael P. Moran Director, President, Chief Executive Officer, Chief Financial Officer and Secretary -10- -----END PRIVACY-ENHANCED MESSAGE-----