SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO.3 TO
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2003
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-26715
COMPREHENSIVE HEALTHCARE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-0962699
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
45 Ludlow Street, Suite 602
Yonkers, New York 10705
(Address of principal executive offices) (Zip Code)
(914) 375-7591
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of January 14, 2004, we had
10,409,366 shares of common stock outstanding, $0.10 par value.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
BASIS OF PRESENTATION
The accompanying unaudited financial statements are presented in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The accompanying statements should be read in
conjunction with the audited financial statements for the year ended February
28, 2003. In the opinion of management, all adjustments (consisting only of
normal occurring accruals) considered necessary in order to make the financial
statements not misleading, have been included. Operating results for the three
months ended November 30, 2003 are not necessarily indicative of results that
may be expected for the year ending February 28, 2004. The financial statements
are presented on the accrual basis.
The Company is filing this amended 10QSB due to the fact that the financial
statements for this period were not audited by an accountant who was registered
with the Public Company Accounting Oversight Board ("PCAOB"). The Company
engaged an accountant registered with the PCAOB in order to file this amended
10QSB with the reviewed financial statements in a timely manner.
2
FINANCIAL STATEMENTS AND EXHIBITS.
FINANCIAL STATEMENTS
For the information required by this Item, refer to the Index to Financial
Statements appearing on page F-1 of the registration statement.
COMPREHENSIVE HEALTHCARE SOLUTIONS, INC.
(F/k/a NANTUCKET INDUSTRIES, INC. AND SUBSIDIARIES)
AMENDED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2003
TABLE OF CONTENTS
Page
Consolidated Balance Sheet F- 2
Consolidated Statements of Operations F- 3
Consolidated Statements of Cash Flows F- 4
Notes to the Consolidated Financial Statements F- 5 -8
F-1
Comprehensive Healthcare Solutions, Inc.
(f/k/a Nantucket Industries, Inc. and Subsidiaries)
Amended Condensed Consolidated Balance Sheet
November 30, 2003
---------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 34,288
Accounts receivable, net 136,439
Other current assets 6,300
---------------------
Total current assets 177,027
Property and equipment, net 66,331
Other assets, net
Intangible assets 565,570
---------------------
Total Assets $ 808,928
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 77,800
Accrued liabilities 48,964
---------------------
Total Current Liabilities 126,764
Convertible debenture 150,000
Revolving line of credit 30,000
Other liabilities 19,821
---------------------
Total Liabilities 326,585
Stockholders' equity:
Common stock, $.10 par value: 20,000,000
shares, 10,409,366 shares issued 1,040,937
Additional paid-in capital 13,269,425
Deferred stock-based consulting (73,067)
Accumulated deficit (13,754,952)
---------------------
Total stockholders' equity 482,343
---------------------
Total Liabilities and Stockholders' Equity $ 808,928
=====================
See the accompanying notes to the financial statements
F-2
Comprehensive Healthcare Solutions, Inc.
(f/k/a Nantucket Industries, Inc. and Subsidiaries)
Amended Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended November 30, 2003 and 2002
--------------------- --------------------- --------------------- ----------------------
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
November 30, 2003 November 30, 2002 November 30, 2003 November 30, 2002
--------------------- --------------------- --------------------- ----------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales $ 103,086 $ 94,321 $ 309,453 $ 329,968
Cost of sales 97,946 76,067 246,433 253,112
--------------------- --------------------- --------------------- ----------------------
Gross profit 5,140 18,254 63,020 76,856
Selling, general and administrative
expenses 80,245 73,036 196,196 179,403
--------------------- --------------------- --------------------- ----------------------
Loss from operations (75,105) (54,782) (133,176) (102,547)
Other expense:
Interest expense 4,071 1,650 6,696 8,100
Depreciation and amortization 22,415 27,788 46,175 83,364
--------------------- --------------------- --------------------- ----------------------
Total other expense 26,486 29,438 52,871 91,464
--------------------- --------------------- --------------------- ----------------------
Loss before income taxes (101,591) (84,220) (186,047) (194,011)
Income taxes - - - -
--------------------- --------------------- --------------------- ----------------------
Net loss $ (101,591) $ (84,220) $ (186,047) $ (194,011)
===================== ===================== ===================== ======================
Loss per share - basic and diluted (0.01) (0.01) (0.02) (0.02)
===================== ===================== ===================== ======================
Weighted average shares outstanding - 10,162,114 8,298,985 10,162,114 8,298,985
===================== ===================== ===================== ======================
basic and diluted
See the accompanying notes to the financial statements
F-3
Comprehensive Healthcare Solutions, Inc.
(f/k/a Nantucket Industries, Inc. and Subsidiaries)
Amended Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended November 30, 2003 and 2002
--------------------- --------------------
Nine Months Nine Months
Ended Ended
November 30, 2003 November 30, 2002
--------------------- --------------------
(Unaudited) (Unaudited)
Cash Flows from Operating Activities:
Net loss $ (163,547) $ (194,011)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock issued for services 59,656 84,500
Depreciation and amortization 28,203 80,864
Decrease (increase) in assets and liabilities:
Accounts receivable (26,615) 2,644
Inventories (1,980) (765)
Other current assets 6,045 2,225
Notes receivable - -
Accounts payable and other current assets 34 5,667
--------------------- --------------------
Net cash used by operating activities (98,204) (18,876)
--------------------- --------------------
Cash Flows from Investing Activities:
Advances on note receivable - (70,090)
Purchases if equipment (8,058) -
--------------------- --------------------
Net cash used by investing activities (8,058) (70,090)
--------------------- --------------------
Cash Flows from Financing Activities
Proceeds from line of credit - 30,000
Proceeds from debenture 150,000 56,900
Repayment on loan (10,000) -
--------------------- --------------------
Net cash provided by financing activities 140,000 86,900
--------------------- --------------------
Net increase (decrease) in cash and cash equivalents 33,738 (2,066)
Cash and cash equivalents, beginning of the period 550 6,266
--------------------- --------------------
Cash and cash equivalents, end of the period $ 34,288 $ 4,200
===================== ====================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 4,071 $ 1,650
===================== ====================
Income taxes $ - $ -
===================== ====================
See the accompanying notes to the financial statements
F-4
Comprehensive Healthcare Solutions, Inc. and Subsidiaries
(f/k/a Nantucket Industries, Inc. and Subsidiaries)
Notes to Condensed Consolidated Financial Statements
November 30, 2003
NOTE 1 - ORGANIZATION
Comprehensive Healthcare Solutions, Inc. and its wholly owned subsidiaries
(f/k/a Nantucket Industries, Inc. and Subsidiaries), (the "Company") is engaged
in the business of selling and distributing hearing aids and providing the
related audio logical services.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
The accompanying interim unaudited financial information has been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations, although management believes that the disclosures are
adequate to make the information presented not misleading. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial position of the Company as of November
30, 2003 and the related operating results and cash flows for the interim period
presented have been made. The results of operations of such interim period are
not necessarily indicative of the results of the full year. For further
information, refer to the financial statements and footnotes thereto included in
the Company's 10-KSB and Annual Report for the fiscal year ended February 29,
2003.
Use of Estimates
Use of estimates and assumptions by management is required in the preparation of
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates and assumptions.
Earnings Per Share
Basic earnings per share ("EPS") is computed by dividing earnings available to
common shareholders by the weighted-average number of common shares outstanding
for the period as required by the Financial Accounting Standards Board (FASB)
under Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Shares". Diluted EPS reflects the potential dilution of securities that could
share in the earnings.
F-5
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Company is filing this amended 10QSB due to the fact that the financial
statements for this period were not audited by an accountant who was registered
with the Public Company Accounting Oversight Board ("PCAOB"). The Company
engaged an accountant registered with the PCAOB in order to file this amended
10QSB with the reviewed financial statements in a timely manner.
Overview
Net sales refer to fees earned by the provision of audiological testing in our
offices as well as those provided on site in Nursing Homes, Assisted Living
Facilities, Senior Care Facilities and Adult Day Care Centers as well as the
sales and distribution of hearing aids generated in each of these venues. A
majority of our sales represent reimbursement from Medicare, Medicaid and third
party payors. Generally, reimbursement from these parties can take as long as
120 to 180 days. We have recently implemented the billing of Medicare on-line
which should cut reimbursement time to approximately 60 days. Medicaid
reimbursements can only be billed with various submissions which are mailed on a
weekly basis. While we are attempting to find a method of expediting this paper
submission process it seems unlikely that we will be able to accomplish this in
our near future. As a result, Medicaid payments, which constitute approximately
60% of our reimbursement will continue to take 120 to 180 days to be realized.
The anticipated growth in revenues resulting from the prior acquisition of the
audiology practice of Park Avenue has not yet come to fruition. This was caused
in part by our inability to attract additional audiologists on a timely basis as
well as insufficient working capital. We believe that this will not be long
lived since we are developing new compensation packages that will include
incentives of cash and common stock. Management believes that the new capital
markets are improving which will allow the Company sufficient new working
capital to achieve these goals. We continue to not be able to meet our original
anticipated growth in revenues. This has been caused in part by our continuing
inability to attract additional audiologists. We are currently networking with
Paxxon Healthcare Services, Inc. which expends funds on a continuing basis to
advertise for and recruit speech pathologists. Paxxon will be adding
audiologists in their help wanted advertising copy to assist us in our hiring
endeavors. To date we have started to receive audiologists resumes and are in
the process of setting up interviews. We feel that this assistance along with a
more sophisticated compensation packages including both cash and common stock,
as well as our anticipated success in raising additional working capital will
assist us in achieving our goals. We have identified and are actively pursuing
various early intervention agencies, which if we are successful in signing
contracts with, will add to our revenue stream. Since our last reporting period
we have begun to negotiate contracts with five new agencies and have added one
agency and anticipate adding two others in the next three months.
In order for us to implement our business plan, we will require financing in a
minimum amount of $500,000 to $750,000 during the next twelve months. As of
November 30, 2003, we raised $150,000 in convertible debt financing and as of
January 14, 2004 we have received a subscription agreement from an accredited
investor for an additional $50,000.00 convertible debenture. We anticipate that
we will receive this additional financing within a period of 30 days. We intend
to continue to use our best efforts to generate between an additional $600,000
to $1,000,000 in equity or convertible debt financing from a private placement
of our securities within six to eighteen months. To date we have received
limited financing which we believe is in part attributable to the market
conditions in 2003. At this time, we are unable to state what the amount of
shareholder dilution which will result from the intended financing.
If we are unable to raise the required funds through a private placement, we
will endeavor to raise the required financing from other sources such as lease
financing for major equipment purchases and loans from banks or institutional
lenders. We cannot be certain that we will be able to raise the required
financing from any of the foregoing sources.
3
THREE MONTHS ENDED NOVEMBER 30, 2003 COMPARED TO THREE MONTHS ENDED
NOVEMBER 30, 2002
Sales for the third quarter of fiscal year ended 2003 and 2002 were $103,086 and
$94,321 respectively. Management attributes the revenue increase to be due for
the most part to an additional customer base of existing offices. This
conservative increase is a result of managements continued conservation of
operating capital until such time as additional revenues and costs related a
additional revenues could be fiscally sound. In addition, management has been
actively involved in pursuing potential merger and/or acquisition candidates in
related fields, which diminished marketing efforts by the company to attempt to
increase the number of facilities being serviced and therefore adding to our
revenue base.
Cost of sales was $97,946 and $76,067, respectively. The increase was due to the
fact that revenues also increased in approximately the same proportions and
management attempts to contain costs.
General and Administrative costs were $80,245 and $73,036, respectively. This
minimal increase is attributable for the most part to attempts at keeping these
costs in line with revenues but also include additional costs involved with the
due diligence required for potential acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities were ($98,204) and ($18,876) respectively.
Cash flows from investing activities were($8,058) and ($70,090) respectively.
Cash flows from financing activities were $140,000 and $86,900 respectively.
These changes were primarily due to the Company's issuance of common stock and
convertible debentures which were used to finance the Company's operations and
the acquisition of equipment.
Outlook
We intend to continue to devote ongoing efforts to increase our professional
staff so as to enable us to increase the number of additional nursing homes and
assisted living facilities we service. During the next twelve to eighteen months
we intend to add a new advertising program to increase the number of resale
sales which carry higher sales prices and related gross profit percentages.
We are currently exploring several potential acquisitions. All of these
businesses are in medically related fields which we believe can add favorably to
our revenue base and overall profitability. Along with this we are aggressively
seeking additional sources of new capital to allow us to expand our operations.
We are in ongoing negotiations to enter into a business combination with Paxxon
Healthcare Services, Inc. and believe that we will enter into a joint ventures
agreement with Paxxon by the end of February. To date no agreement has been
reached but we believe that this represents a tremendous opportunity for our
company to expand since speech pathology and early intervention are only some of
the services provided by Paxxon. Based upon the negotiations with Paxxon to
enter into a joint venture we currently have targeted three-four potential
acquisitions in the medical field. We believe that with the assistance of Paxxon
in the management and administration of these business we will be able to
generate a significant revenue stream from these potential transactions.
1. Staffing for homecare companies with approximately fifty contracts
currently in force;
2. Early intervention contracts with New York State, Westchester, Putnam
and Orange Counties;
3. Facility Staffing in several nursing homes and hospitals;
4. Management contracts with nursing homes in Brooklyn and Queens; and
5. Physical therapy centers with a representation in a total of 21
offices in the Bronx, Southern New Jersey, Long Island and Queens.
In furtherance of our efforts to expand our services and increase our revenue
stream we are in the process of finalizing a leasing arrangement to take space
in the Bronx office of Excellence Healthcare, a wholly owned subsidiary of
Paxxon. We intend to commence use of such space between March 1, 2004 and March
31, 2004 depending upon the arrival of equipment for this office space which has
been ordered and is expected to arrive at such time. This office will be a fully
equipped audiology office providing early intervention and all other
audiological services including the sales and distributions of hearing aids. The
existing patient base at this office will provide an ongoing exposure to the
types of patients we currently service.
4
We intend to continue to strive to develop a sales and marketing force to assist
in the addition of those senior care facilities, hospitals, day care and senior
care centers who can add to our referral base of patient and customers. To date
we have been unable fully develop our sales and marketing force due to our lack
of capital.
In addition, to the potential acquisitions due to the joint venture with Paxxon,
we have two other potential acquisitions in the medical field. We are currently
in negotiations with two entities, one based in Texas and one in New York, that
provide health care management services for medical management and alternative
medicine including chiropractic, physical therapy and acupuncture. We believe
that we will enter into a letter of intent for the acquisition of at least one
of these companies by the middle of February 2004.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of loss that may impact our financial position,
results of operations or cash flows due to adverse changes in market prices and
rates. Our short-term debt bears interest at fixed rates; therefore our results
of operations would not be affected by interest rate changes.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
Our principal executive officer and principal financial officer evaluated our
disclosure controls and procedures (as defined in rule 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934, as amended) as of a date within 90
days before the filing of this annual report (the Evaluation Date). Based on
that evaluation, our principal executive officer and principal financial officer
concluded that, as of the Evaluation Date, the disclosure controls and
procedures in place were adequate to ensure that information required to be
disclosed by us, including our consolidated subsidiaries, in reports that we
file or submit under the Exchange Act, is recorded, processed, summarized and
reported on a timely basis in accordance with applicable rules and regulations.
Although our principal executive officer and principal financial officer
believes our existing disclosure controls and procedures are adequate to enable
us to comply with our disclosure obligations, we intend to formalize and
document the procedures already in place and establish a disclosure committee.
Changes in internal controls
We have not made any significant changes to our internal controls subsequent to
the Evaluation Date. We have not identified any significant deficiencies or
material weaknesses or other factors that could significantly affect these
controls, and therefore, no corrective action was taken.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings None
Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities Not Applicable
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 None
a. Exhibits
31.1 Certification John H. Treglia, CEO
32.1 Certification John H. Treglia, CEO
b. Reports on Form 8-K None.
No reports on Form 8-K were filed for this quarter of 2003.
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMPREHENSIVE HEALTHCARE SOLUTIONS, INC.
By: /s/ John H. Treglia
---------------
JOHN H. TREGLIA
CEO, CFO and President
Dated: April 1, 2005
6