HIL Declining Value Ahead, page-7

Too much debt, not enough cash. In violation of their debt covenants. In violation of the terms of their old credit facility requirements. When you are losing money and selling off assets to prop up things, your asset base shrinks and you have to reduce the debt because the bank has those assets as collateral.

When Hills has to announce they are raising another $10 million and dilutes your value even more, that will be to assure the have enough cash to stay in compliance with their bank convenents. They will also have problems even if they grow. They are a capital intensive business in Hills Health so they will have to use cash to implement contracts or lease to pay for the items which drives up their debt.

Fun times ahead. They will also have to write down earnings over a million dollars for deal expenses wasted with the failed merger at year end.

Cheers and good luck.