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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED August 31, 2002
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 1-10751
STAR MULTI CARE SERVICES, INC.
(Exact Name of Registrant as specified in its charter)
New York 11-1975534
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
33 Walt Whitman Road, Huntington Station, New York 11746
(Address of principal executive offices)
Registrant's telephone number, including area code: (631) 423-6689
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
requirement for the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of October 15, 2002:
Class Number of Shares
Common Stock, $0.001 par value 1,032,865
STAR MULTI CARE SERVICES, INC.
INDEX
Page
Part I - Financial Information
Item 1
Consolidated Balance Sheets as of August 31, 2002 and May 31, 2002 ..... 3
Consolidated Statements of Operations for the three months ended
August 31, 2002 and August 31, 2001 .................................... 4
Consolidated Statements of Cash Flows for the three months ended
August 31, 2002 and August 31, 2001 ................................... 5
Notes to Consolidated Financial Statements ............................. 6-8
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................... 9-10
Part II - Other Information
Item 6
Exhibits and Reports on Form 8-K ....................................... 11
Signatures.............................................................. 12
STAR MULTI CARE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
August 31, May 31,
2002 2002
------------ ------------
ASSETS: Unaudited Audited
- -------
CURRENT ASSETS:
Cash and cash equivalents $ 82,792 $ 74,235
Accounts receivable, net of allowance for doubtful accounts of
$200,000 at August 31, 2002 and May 31, 2002 1,532,573 1,613,540
Prepaid expenses and other current assets 64,014 83,206
Deferred income taxes 206,000 206,000
------------ ------------
Total current assets 1,885,379 1,976,981
PROPERTY AND EQUIPMENT, net 500,858 572,859
GOODWILL 1,307,444 1,307,444
OTHER INTANGIBLE ASSETS, net 351,860 351,860
DEFERRED INCOME TAXES 1,404,000 1,404,000
OTHER ASSETS 48,962 50,647
------------ ------------
$ 5,498,503 $ 5,663,791
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accrued payroll and related expenses $ 621,221 $ 637,908
Accounts payable 499,735 586,629
Accrued expenses 589,302 758,368
Due Medicare 250,000 350,000
Note payable - related party 50,000 --
Due officer 125,000 125,000
------------ ------------
Total current liabilities 2,135,258 2,457,905
------------ ------------
LONG-TERM LIABILITIES:
Revolving credit line 1,138,353 990,254
------------ ------------
SHAREHOLDERS' EQUITY:
Convertible preferred stock-aggregate liquidation value $469,000 and $325,000;
$1.00 par value, 5,000,000 shares authorized;
469 and 325 shares issued, respectively 469 325
Common stock, $.001 par value per share, 5,000,000 shares
authorized; 1,059,232 and 1,024,021 shares issued,
respectively 1,059 1,024
Additional paid-in capital 21,821,685 21,669,864
Deficit (19,207,630) (19,064,891)
Treasury stock, 26,367 common shares, at cost (390,691) (390,691)
------------ ------------
Total shareholders' equity 2,224,892 2,215,631
------------ ------------
$ 5,498,503 $ 5,663,790
============ ============
See accompanying notes to consolidated financial statements
3
STAR MULTI CARE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
Three Months Ended
----------------------------------
August 31, 2002 August 31, 2001
--------------- ---------------
REVENUE, net $ 2,389,353 $ 7,984,200
OPERATING EXPENSES:
Costs of revenue 1,440,867 5,373,138
Selling, general and administrative 971,715 2,347,678
Depreciation and amortization 72,000 246,132
Provision for doubtful accounts 10,885 80,340
----------- -----------
2,495,467 8,047,288
----------- -----------
OPERATING LOSS (106,114) (63,088)
OTHER EXPENSE:
Loss on sale of business -- (21,582)
Interest expense, net (28,825) (447,733)
----------- -----------
(28,825) (469,315)
----------- -----------
LOSS BEFORE PROVISION FOR INCOME TAXES (134,939) (532,403)
PROVISION FOR INCOME TAXES -- --
----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (134,939) (532,403)
EXTRAORDINARY ITEM -
Gain on extinguishment of debt, net of income taxes -- 1,607,824
----------- -----------
NET (LOSS) INCOME $ (134,939) $ 1,075,421
=========== ===========
BASIC (LOSS) INCOME PER COMMON SHARE:
Loss before extraordinary item $ (0.14) $ (0.79)
Extraordinary item -- 2.38
----------- -----------
Net (loss) income $ (0.14) $ 1.59
=========== ===========
DILUTED (LOSS) INCOME PER COMMON SHARE:
Loss before extraordinary item $ (0.14) $ (0.79)
Extraordinary item -- 2.38
----------- -----------
Net (loss) income $ (0.14) $ 1.59
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic 1,011,815 675,042
=========== ===========
Diluted 1,011,815 675,042
=========== ===========
See accompanying notes to consolidated financial statements
4
STAR MULTI CARE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
Three Months Ended
--------------------------------
August 31, 2002 August 31, 2001
--------------- ---------------
Cash flow from operating activities:
Net (loss) income $(134,939) $ 1,075,421
--------- -----------
Adjustments to reconcile net (loss) income to net cash used in operating
activities:
Extraordinary gain on extinguishment of debt -- (2,593,324)
Depreciation and amortization 72,000 246,132
Provision for doubtful accounts 10,885 80,340
Gain on sale of business (21,582)
Deferred income taxes -- 985,000
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 70,082 (114,050)
Prepaid expenses and other current assets 19,192 (41,155)
Other assets 1,685 35,133
Increase (decrease) in liabilities:
Accrued payroll and related expenses (16,687) (173,772)
Accounts payable and other accrued expenses (211,760) (28,079)
--------- -----------
Total adjustments (54,603) (1,625,357)
--------- -----------
Net cash used in by operating activities (189,542) (549,936)
--------- -----------
Cash flows from investing activities:
Proceeds from officer loan -- --
Proceeds from sale of business -- 3,750,000
Purchase of property and equipment -- (12,091)
Deposit on contract for sale of business -- 150,000
--------- -----------
Net cash provided by investing activities -- 3,887,909
--------- -----------
Cash flows from financing activities:
Proceeds from note 50,000 800,000
Revolving credit line 148,099 (3,847,315)
Repayment of long-term debt -- (269,786)
Exercise of stock options -- --
--------- -----------
Net cash provided by (used in) financing activities 198,099 (3,317,101)
--------- -----------
Net increase in cash and cash equivalents 8,557 20,872
Cash and cash equivalents at beginning of period 74,235 10,511
--------- -----------
Cash and cash equivalents at end of period $ 82,792 $ 31,383
========= ===========
Supplemental disclosure:
Income taxes paid $ -- --
========= ===========
Interest paid $ 28,000 $ 425,000
========= ===========
See accompanying notes to consolidated financial statements
5
STAR MULTI CARE SERVICES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In the opinion of management, the accompanying unaudited interim
consolidated financial statements of Star Multi Care Services, Inc. and its
subsidiaries (the "Company") contain all adjustments necessary to present fairly
the Company's financial position as of August 31, 2002, results of its
operations for the three month periods ended August 31, 2002 and August 31,
2001, and cash flows for the three month periods ended August 31, 2002 and
August 31, 2001.
The accounting policies followed by the Company are set forth in Note 1 to
the Company's consolidated financial statements included in its Annual Report on
Form 10-K for the fiscal year ended May 31, 2002, which is incorporated herein
by reference. Specific reference is made to this report for the notes to
consolidated financial statements included therein.
The results of operations for the three-month period ended August 31, 2002
are not necessarily indicative of the results to be expected for the full year.
Note 1: Net Income (Loss) Per Common Share
Net income (loss) per common share and per common and common equivalent
share is based upon weighted-average common and common equivalent shares
outstanding during each period. Common equivalent shares include the dilutive
effect of stock options if any.
Net income (loss) available to common shareholders was computed as
follows:
Three Months Ended
August 31,
------------------
2002 2001
---- ----
Net income (loss) $(134,939) $1,075,421
Dividends on preferred shares (7,800) (11,500)
--------- ----------
Net income (loss) available to common shareholders $(142,739) $1,063,921
========= ==========
Note 2: Reclassifications and Use of Accounting 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 date of the financial
statements. Estimates also affect the reported amounts of revenue and expenses
during the period. Such estimates primarily relate to accounts receivable
valuation allowances, recoverability of goodwill, realization of deferred tax
assets, and related valuation allowance and regulatory adjustments. Actual
amounts may differ from those estimates.
Certain reclassifications have been made to the financial statements for
the period ended August 31, 2001 to conform to the classifications used in 2002.
6
Note 3: Goodwill and Intangible Assets
In June 2002, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations" and SFAS No. 142, "Goodwill
and Intangible Assets." SFAS No. 141 requires the use of the purchase method of
accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS No. 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. It also
requires, upon adoption of SFAS No. 142 that the Company reclassify, if
necessary, the carrying amounts of intangible assets and goodwill based on the
criteria of SFAS No. 141.
SFAS No. 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least annually.
In addition, SFAS No. 142 requires that the Company identify reporting units for
the purpose of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets and cease
amortization of intangible assets with an indefinite useful life. No adjustments
for impairment losses were required.
The effect of adoption of SFAS No. 142 on the 2001 consolidated results of
operations were as follows:
2001
Reported loss before extraordinary item $ (532,403)
Add back: Amortization of goodwill 107,632
-----------
Loss before extraordinary item, as adjusted $ (424,771)
-----------
Basic earnings per share:
Reported loss before extraordinary item $ (0.79)
Amortization of goodwill 0.16
-----------
Basic earnings per share, as adjusted $ (0.63)
===========
Diluted earnings per share:
Reported loss before extraordinary item $ (0.79)
Add back: Amortization of goodwill 0.16
-----------
Diluted earnings, per share, as adjusted $ (0.63)
===========
Note 4: Credit Facility
On August 31, 2001, the Company entered into a $2 million dollar credit facility
with GE Capital HealthCare Financial Services, Inc., f/k/a Heller Healthcare
Finance, Inc. The facility provides for the Company to borrow up to 85% of
eligible accounts receivable (as defined) that are aged less than 150 days, at
the lender's prime rate (4-3/4% at August 31, 2002) plus 1%. The facility
expires on August 31, 2004, and requires the Company to meet certain financial
ratios and covenants. All assets of the Company collateralize the new credit
facility.
7
Note 5: Sale of Businesses
On July 3, 2001 the Company entered into an agreement with Premier Home
Healthcare Services, Inc. ("Premier") to sell selected assets and home health
care operations of the Company's New Jersey ("NJ Assets") and New York ("NY
Assets") operations for an aggregate sales price of $5.5 million. The allocation
of the sales price was $4.0 million for the NJ Assets, and $1.5 million for the
NY Assets.
On August 31, 2001, the Company completed the sale of the NJ Assets for an
adjusted sales price of $3,750,000, and recognized a loss of approximately
($21,000) on the sale, net of various transaction costs.
The sale agreement provided for the Company to retain its billed and
unbilled accounts receivable of the New Jersey and New York operations through
August 31, 2001.
Note 6: Extraordinary Item
In February 1999, the Company adopted a plan to discontinue its Medicare
business provided by one of its subsidiaries, Star Multi Care Services of
Florida, Inc. d/b/a American Health Care Services. The subsidiary ceased
operations on July 1, 1999, and in connection with its Medicare business, the
subsidiary was overpaid $2,593,324 by Medicare through its final date of
operation.
The subsidiary liquidated its assets and discharged its liabilities
through an assignment for benefit of creditors under Florida State law, and the
subsidiary was dissolved. In connection with the dissolution and liquidation of
the subsidiary, the Company has recorded an extraordinary gain of $1,607,824
(net of income taxes of $985,500) for the extinguishment of the debt related to
the Medicare overpayments made to the subsidiary, which is shown as an
extraordinary item in the financial statements for the three months ended August
31, 2001.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis provides information which the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition. This discussion
should be read in conjunction with the attached consolidated financial
statements and notes thereto, and with the Company's audited financial
statements and notes thereto for the fiscal year ended May 31, 2002.
The Company is subject to significant external factors that could have a
significant impact on its business, including changes in Medicare reimbursement,
government fraud and abuse initiatives and other such factors that are beyond
the control of the Company. These factors, as well as future changes in
reimbursement and changes in interpretations of regulations, could cause future
results to differ materially from historical trends.
Results of Operations
Quarter ended August 31, 2002 compared to quarter ended August 31, 2001.
Net revenue for the quarter ended August 31, 2002 decreased $5,594,847 or
70% to $2,389,353 from $7,984,200 for the quarter ended August 31, 2001. This
decrease is primarily attributable to the sale of the New Jersey and New York
operations of the Company.
Gross profit margin increased to 39.7% for the quarter ended August 31,
2002 from 32.7% for the quarter ended August 31, 2001. The increase in the gross
profit margin is primarily attributable to the elimination of lower profit
margin contracts, primarily in New York.
Selling, general and administrative costs for the quarter ended August 31,
2002 decreased $1,375,963 (58.6%) to $971,715, from $2,347,678 for the quarter
ended August 31, 2001. The decrease in selling, general and administrative
expenses is primarily attributable to the Company's restructuring efforts, as
well as the sale of the New Jersey and New York operations.
Loss from operations increased $43,026 to a loss of $106,114 for the
quarter ended August 31, 2002, from a loss of $63,088) for the quarter ended
August 31, 2001. The increase in the operating loss is the result of decreased
revenue (from the sale of the New Jersey and New York operations), offset in
part by the increase in the gross margin percentage.
Interest expense decreased to $28,825 for the quarter ended August 31,
2002, from $447,733 for the quarter ended August 31, 2001. This decrease is the
result of lower outstanding borrowings, commensurate with the decrease in
revenue and accounts receivable and, to a lesser extent, a decrease in the
borrowing rate.
Financial Condition, Liquidity and Capital Resources
As of August 31, 2002 cash and cash equivalents were $82,792 as compared
with $74,235 at May 31, 2002, reflective of the Company's continued efforts to
keep its outstanding borrowings under its credit facility to a minimum.
9
The nature of the Company's business requires weekly payments to its
personnel at the time they render services, while it receives payment for
services rendered over an extended period of time (60 to 180 days or longer),
particularly when the payor is an insurance company, medical institution or
governmental unit. Accounts receivable represents a substantial portion of
current and total assets at August 31, 2002 and May 31, 2002.
On August 31, 2001, the Company entered into a $2 million dollar credit
facility with GE Capital HealthCare Financial Services, Inc., f/k/a Heller
Healthcare Finance, Inc., which provides for the Company to borrow up to 85% of
eligible accounts receivable (as defined in the loan agreement) that are aged
less than 150 days, at the lender's prime rate plus 1%. The facility expires on
August 31, 2004.
As of August 31, 2002, the outstanding loan balance was $1,138,353.
On July 11, 2001, the Company entered into a Settlement Agreement with
United States Department of Justice and the Office of Inspector General of the
Department of Health and Human Services. In order to avoid the delay,
uncertainty, inconvenience, and the expense of protracted litigation of the
claims, both parties mutually agreed upon a settlement amount of $1,000,000
payable by Star, in quarterly installment payments (as amended), with the first
payment of $250,000 made on November 8, 2001. The Company believes it will have
the available funds necessary to complete the payment by the required dates. As
of August 31, 2002, $250,000 remains payable under this settlement agreement.
Other than the matters described above, the Company does not anticipate
any extraordinary material commitments for capital expenditures for the
Company's current fiscal year.
Forward Looking Statements
Certain statements in this report on Form 10-Q constitute" forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are typically identified by their inclusion of phrases
such as "the Company anticipates", "the Company believes" and other phrases of
similar meaning. These forward-looking statements are based on the Company's
current expectations. Such forward-looking statements involve known and unknown
risks, uncertainties, and other factors that may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. The potential risks and uncertainties which could
cause actual results to differ materially from the Company's expectations
include the impact of further changes in the Medicare reimbursement system,
including any changes to the current IPS and/or the ultimate implementation of a
prospective payment system; government regulation; health care reform; pricing
pressures from third-party payors, including managed care organizations;
retroactive Medicare audit adjustments; and changes in laws and interpretations
of laws or regulations relating to the health care industry. This discussion
should be read in conjunction with: (i) the attached consolidated financial
statements and notes thereto, (ii) with the Company's audited financial
statements and notes thereto for the fiscal year ended May 31, 2002, and (iii)
with the section entitled Forward Looking Statements appearing in the Company's
Form 10-K which is hereby incorporated by reference.
10
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits:
10.1 Second Amendment to Promissory Note dated May 21, 2002 by Star Multi Care
Services, Inc., Amserv Healthcare of New Jersey, Inc., Amserv Healthcare
of Ohio and EFCC Acquisition Corp. payable to Stephen Sternbach.
10.2 Amendment to Security Agreement dated May 21, 2002 by and among Stephen
Sternbach and Star Multi Care Services, Inc., Amserv Healthcare of New
Jersey, Inc., Amserv Healthcare of Ohio and EFCC Acquisition Corp.
10.3 Promissory Note dated August 26, 2002 by Star Multi Care Services, Inc.,
Amserv Healthcare of New Jersey, Inc., Amserv Healthcare of Ohio and EFCC
Acquisition Corp. payable to Matthew Solof.
10.4 Security Agreement dated August 26, 2002 by and among Matthew Solof and
Star Multi Care Services, Inc., Amserv Healthcare of New Jersey, Inc.,
Amserv Healthcare of Ohio and EFCC Acquisition Corp.
99.1 Chief Executive Officer Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Chief Financial Officer Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
b. Reports on Form 8-K.
None
11
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 hereunto duly authorized.
STAR MULTI CARE SERVICES, INC.
October 24, 2002 By: s/Stephen Sternbach
- ---------------- ------------------------------------
Date Chairman of the Board, President and
Chief Executive Officer
October 24, 2002 By: s/David M. Schoenberg
- ---------------- ------------------------------------
Date Director of Finance and
Chief Financial Officer
12
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
PURSUANT TO REGULATION ss.240.15D-14 AS PROMULAGATED
BY THE SECURITIES AND EXCHANGE COMMISSION
In connection with the Quarterly Report of Star Multi Care Services, Inc. (the
"Company") on Form 10-Q for the period ended August 31, 2002, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen
Sternbach, Chairman of the Board, President and Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 pursuant to Regulation
ss.240.15d-14 as promulgated by the Securities and Exchange Commission, that:
(1) I have reviewed the Report being filed;
(2) Based on my knowledge, the Report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by the Report;
(3) Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the issuer as of,
and for, the periods presented in the Report;
(4) I and the other certifying officers are responsible for establishing and
maintaining disclosure controls and procedures (as such term is defined in
paragraph (c) of this section) for the issuer and have:
(i) Designed such disclosure controls and procedures to ensure that
material information relating to the issuer, including its consolidated
subsidiaries, is made known to them by others within those entities,
particularly during the period in which the periodic Reports are being
prepared;
(ii) Evaluated the effectiveness of the issuer's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
the Report ("Evaluation Date"); and
(iii) Presented in the Report their conclusions about the effectiveness
of the disclosure controls and procedures based on their evaluation as
of the Evaluation Date;
(5) I and the other certifying officers have disclosed, based on their most
recent evaluation, to the issuer's auditors and the audit committee of the board
of directors (or persons fulfilling the equivalent function):
(i) All significant deficiencies in the design or operation of internal
controls which could adversely affect the issuer's ability to record,
process, summarize and Report financial data and have identified for
the issuer's auditors any material weaknesses in internal controls; and
(ii) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the issuer's internal
controls; and
(6) I and the other certifying officers have indicated in the Report whether or
not there were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of their
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
By /s/ Stephen Sternbach
---------------------------
Stephen Sternbach
Chairman of the Board,
President and
Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
PURSUANT TO REGULATION ss.240.15D-14 AS PROMULAGATED
BY THE SECURITIES AND EXCHANGE COMMISSION
In connection with the Quarterly Report of Star Multi Care Services, Inc. (the
"Company") on Form 10-Q for the period ended August 31, 2002, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, David
Schoenberg, Secretary and Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 pursuant to Regulation ss.240.15d-14 as promulgated
by the Securities and Exchange Commission, that:
(1) I have reviewed the Report being filed;
(2) Based on my knowledge, the Report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by the Report;
(3) Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the issuer as of,
and for, the periods presented in the Report;
(4) I and the other certifying officers are responsible for establishing and
maintaining disclosure controls and procedures (as such term is defined in
paragraph (c) of this section) for the issuer and have:
(i) Designed such disclosure controls and procedures to ensure that
material information relating to the issuer, including its consolidated
subsidiaries, is made known to them by others within those entities,
particularly during the period in which the periodic Reports are being
prepared;
(ii) Evaluated the effectiveness of the issuer's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
the Report ("Evaluation Date"); and
(iii) Presented in the Report their conclusions about the effectiveness
of the disclosure controls and procedures based on their evaluation as
of the Evaluation Date;
(5) I and the other certifying officers have disclosed, based on their most
recent evaluation, to the issuer's auditors and the audit committee of the board
of directors (or persons fulfilling the equivalent function):
(i) All significant deficiencies in the design or operation of internal
controls which could adversely affect the issuer's ability to record,
process, summarize and Report financial data and have identified for
the issuer's auditors any material weaknesses in internal controls; and
(ii) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the issuer's internal
controls; and
(6) I and the other certifying officers have indicated in the Report whether or
not there were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of their
most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
By /s/ David Schoenberg
---------------------------
David Schoenberg
Secretary and
Chief Financial Officer
INDEX OF EXHBITS
10.1 Second Amendment to Promissory Note dated May 21, 2002 by Star Multi Care
Services, Inc., Amserv Healthcare of New Jersey, Inc., Amserv Healthcare
of Ohio and EFCC Acquisition Corp. payable to Stephen Sternbach.
10.2 Amendment to Security Agreement dated May 21, 2002 by and among Stephen
Sternbach and Star Multi Care Services, Inc., Amserv Healthcare of New
Jersey, Inc., Amserv Healthcare of Ohio and EFCC Acquisition Corp.
10.3 Promissory Note dated August 26, 2002 by Star Multi Care Services, Inc.,
Amserv Healthcare of New Jersey, Inc., Amserv Healthcare of Ohio and EFCC
Acquisition Corp. payable to Matthew Solof.
10.4 Security Agreement dated August 26, 2002 by and among Matthew Solof and
Star Multi Care Services, Inc., Amserv Healthcare of New Jersey, Inc.,
Amserv Healthcare of Ohio and EFCC Acquisition Corp.
99.1 Chief Executive Officer Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Chief Financial Officer Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.