UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 1997
Commission file Number 000-28976
Acadia National Health Systems, Inc.
(Exact name of registrant as specified in its charter.)
Colorado 10509781
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
460 Main Street, Lewiston, Maine U.S.A. 04240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(207) 777-3423
(800) 274-9185
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 [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date:
Common Stock, $0 Par Value - 3,733,987 shares as of
December 31, 1997.
PART I - FINANCIAL INFORMATION
ACADIA NATIONAL HEALTH SYSTEMS, INC.
STATEMENT OF INCOME
FOR THE THREE MONTHS
ENDED DECEMBER 31, 1997 AND DECEMBER 27, 1996
(Unaudited)
Three months ended Three months ended
December 31 December 27
__________________ _________________
1997 1996
________ ________
Sales $186,883 $195,339
Operating Expenses $171,683 $123,359
-------- --------
Net Operating Income 15,200 71,980
Other Income/(Expense), Net (13,808) 83,970
--------- ---------
Net Income Before Taxes 1,392 (11,990)
(Provision for)
Benefit From Income Taxes 0 4,400
--------- --------
Net Income $1,392 ($ 7,590)
========= ========
Net Income Per
Common Share $0.004 ($0.002)
Weighted Average Number
of Common Shares
Outstanding 3,733,987 3,733,987
See Accompanying
Notes to Financial Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
BALANCE SHEETS
(Unaudited)
December 31, 1997 December 27, 1996
______________ ______________
Current Assets:
Cash-Operating $ 9,955 $ 19,525
Accounts Receivable 651,166 409,355
Unbilled Work at Estimated
Realizable Value 65,415 84,889
Inventories 4,470 3,234
Other Current Assets 45,017 3,874
-------------- --------------
Total Current Assets $776,024 $520,877
Prop., Plant & Equip.:
Cost 178,474 159,285
Less Accum. Depr. (86,104) (59,993)
-------------- --------------
$92,370 $99,292
Other Assets:
Other 7,952 11,900
Organization Cost 33,150 32,819
Less Accum. Amort. (5,037) 0
Notes Receivable 91,689 0
-------------- --------------
Total Assets $996,147 $664,888
============== ==============
Current Liabilities:
Accounts Payable $ 6,330 $ 2,568
Line of Credit 490,014 249,717
Accrued Expense 65,109 45,108
Current Portion of
Long Term Notes 20,000 18,000
-------------- -------------
Total Current Liabilities $581,452 $315,393
Long Term Liabilities:
Long Term Debt 92,517 105,445
-------------- --------------
Total Liabilities $673,969 $420,838
December 31, 1997 December 27, 1996
______________ ______________
Stockholders' Equity:
Common Stock 276,640 251,640
Paid In Capital & Treas. 42,281 0
Retained Earnings 3,258 (7,590)
-------------- -------------
Total Equity $322,178 $244,050
-------------- -------------
Total Liabilities &
Equity $996,147 $664,888
============== =============
See Accompanying
Notes to Financial
Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
AND DECEMBER 27, 1996
(Unaudited)
Quarter Quarter
Ending Ending
December 31 December 27
1997 1996
------------- ------------
Net Income (Loss) $ 1,392 ($ 7,590)
Depreciation & Amortization $ 7,180 $10,920
Changes in Assets & Liabilities:
Accounts Receivable $50,808 ($273,961)
Other Current Assets 535 (302)
Other Non-current Assets 1,168 (2,158)
Accounts Payable (12,335) (30,934)
Other Current Liabilities (21,390) 31,536
------------- -------------
Net Cash (Used for) Provided
By Operating Activities $ 27,357 ($272,489)
Investment Activities (18,401) 0
Financing Activities (4,712) 171,026
-------------- -------------
Net Increase (Decrease) in $ 4,244 ($101,463)
Cash or Cash Equivalents
Cash & Cash Equivalents:
Beginning of Period 5,711 120,988
End of Period $ 9,955 $ 19,525
============== ==============
See Accompanying
Notes to Financial
Statements
<PAGE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
Note 1. Summary of Significant Accounting Policies
The accompanying unaudited financial statements have been prepared in
accordance with Generally Accepted Accounting Principles for interim financial
information and with the instructions to Form 10QSB and Rule 310 of Regulation
S-B. 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 fair presentation have
been included.
The accompanying unaudited financial statements should be read in
conjunction with the audited balance sheet of Acadia National Health Systems,
Inc. ("the Company") included in the 1997 Annual Report filed on Form 10-KSB.
The unaudited financial statements have been prepared in the ordinary
course of business for the purpose of providing information with respect to
the interim period.
Note 2. Net Income Per Common Share
Computation of net income per common share was based on the weighted
average number of shares outstanding during such periods. These amounted to
3,733,987 shares for the three months ending December 31, 1997 and 3,733,987
shares for the three months ending December 27, 1996.
Note 3. Long Term Debt - Short Term Financing
The total of lines of credit drawn upon (outstanding) from Northeast
Bank, FSB ("Bank") as of December 31, 1997 was $490,014 on a $650,000 demand
line limit, compared to $249,717 at December 27, 1996 on a line of credit from
Peoples Heritage Bank.
On July 24, 1997, Bank provided the Company an additional $100,000 term
loan, of which $92,517 is outstanding. All loans made by Bank under such
facilities are renewable at three/six month terms.
All loans and repayment of lines of credit payable to Bank and future
borrowings under any such credit facilities have been collateralized by the
accounts receivable and equipment of the Company.
<PAGE>
Note 4. Majority Stockholders
Mr. Paul W. Chute, Mrs. Jacquelyn J. Magno and Mr. Mark T. Thatcher, all
Members of the Board of Directors, had total voting authority, on December 31,
1997 and owned approximately 67% of the Common Stock of the Company.
Mr. Hackett, prior majority stockholder passed away unexpectedly on May
25, 1997. On July 29, 1997, Mr. Hackett's estate sold 2,701,000 of its shares
or 72% of the common stock of the Company to Paul W. Chute and Jacquelyn J.
Magno and members of senior management and current board members.
Note 5. Additional Bank Financing Events
A. On October 1, 1996 Peoples Heritage Bank provided the Company an
additional $100,000 term loan.
B. On March 18, 1997 People's Heritage Bank provided the Company an
additional $250,000 line of credit bringing the total line of credit to
$500,000. This total line of credit is secured by the accounts receivable
and equipment of the Company.
C. On July 24, 1997, Northeast Bank FSB of Auburn, Maine provided the
following loans, which were used to retire all outstanding debt obligations
(note 5. A., B.) to Peoples Heritage Bank with the following balance for
operations:
1.) $400,000 line of credit for operations and funding
of its waivered billing/foster care product.
Variable at 1% over national prime July 24, 1997 APR 9.5%.
2.) $100,000 term loan, 5 year variable, at 1.25%
over national prime APR as of July 24, 1997,
9.75%.
3.) $250,000 line of credit to fund a new billing
service product. Variable at 1% over national
prime July 24, 1997 APR 9.5%.
This new term loan and lines of credit are secured by the accounts receivable,
inventory and equipment of the Company.
Note 6. Account Receivable Financing
The Company has arrangements with certain customers whereby the Company
advances the
<PAGE>
customers amounts based on their security and collateralized by their accounts
receivable. The Company then assumes the responsibility for billing and
collecting such receivables.
12/31/97 12/27/96
Accounts Receivable (Trade) $ 38,922 $ 29,491
Advances 612,244 379,864
Total Accounts Receivable $651,166 $409,355
========= ========
Note 7. Note Receivable
The Company holds $91,689 in conditional notes receivable from a vendor of
which $75,000 earns 10% interest, due in monthly installments of $2,420,
including interest beginning November 1, l998. The $75,000 note is secured by
accounts receivable, equipment and inventory of the vendor. Both notes will
be applied as part of the purchase price upon the successful completion of the
purchase of the vendor by the Company (see Management's Discussion and
Analysis).
<PAGE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
December 31, 1997
RESULTS OF OPERATIONS:
======================
THREE MONTHS ENDING DECEMBER 31, 1997
=====================================
Note:
Acadia National Health Systems purchased the assets of Physician Resources,
Inc. on September 27, 1996, and took over the operations of that company as of
September 28, the first day of the fiscal quarter and year. It did not
conduct operations prior to this date. All activities for the current quarter
are compared with the operations for the same quarter a year earlier.
Comparative results have not been adjusted for the difference between
Acadia's calendar quarters ending December 31, l997 in a calendar month end
and Acadia's fiscal quarters ending December 27, 1996 on the last Friday of a
calendar month.
SALES
Sales for the period were $186,883 compared to $195,339 for the corresponding
period in 1996. This minor sales decline was due to the retirement of a major
client and new clients not coming on board until March 1998.
OPERATING EXPENSES
Increases in operating expenses during the period were principally due to:
(i) ongoing consulting services incurred in taking the Company public;
(ii) further developing the Letters of Intent with three corporations; and
(iii) working with an investment banker towards capital financing. These
operating expenses were in addition to increases in depreciation, office
supplies and salaries and wages for additional members of
senior management, also incurred in preparation of becoming a reporting
Company.
OPERATING INCOME
An operating gain for the quarter was $1,392, compared to a loss of $7,590
for the three month period in 1996.
INCOME TAXES
Acadia is a C Corporation with no current accruals for State or Federal
taxes.
NET INCOME
Acadia's gain of $1,392 was ($0.0004) per share on 3,733,987 outstanding
common shares.
LIQUIDITY AND CAPITAL RESOURCES
The Company's non-trade accounts receivable increased to $612,244 due to the
rapid growth of the waivered foster home and non-medical billing programs.
These are clean secured receivables with the majority due from the State of
Maine. During this same period, the Company added $19,189 in property, plant
and equipment, principally computer systems and related equipment. Acadia
spent over $10,000 during this quarter in Corporate organization costs
associated with Acadia's capital financing and merger activities. Anticipated
public reporting expenses and planned acquisitions will place additional
demands on liquidity during the remainder of the next year. Management, with
its new principal lender, Northeast Bank FSB, maintain routine analysis of the
lines of credit and the Company's capital needs.
OTHER INFORMATION
===================
Acadia has spent the last few months of operation preparing its organization
for rapid sales growth and expansion. The Company has completely revised
its operating policies, installed a new financial management system and
recruited experienced, operational and management personnel. Additionally,
Acadia maintains its public reporting and trading on the OTC Bulletin Board
under the symbol OTCBB: "ACAD". During the last quarter of our 1996-97 fiscal
year, the Company negotiated three signed Letters of Intent with other medical
management service organizations and technology companies intending to merge
the alliances. Discussions continue with these and other similar businesses
for future acquisitions and mergers. Also, the Company is actively working
with an underwriter specializing in health care companies who will arrange our
first public capitalization.
MAJOR ACQUISITION
The Company has initiated discussions with various companies towards major
acquisitions that will greatly strengthen Acadia and its product lines.
SALES TRENDS
Trends in Acadia's existing business lines, medical billing services and
billing for waivered foster home care, are positive, with expected
growth throughout FY 1998.
<PAGE>
BUSINESS AND PROPERTIES OF ACADIA NATIONAL HEALTH SYSTEMS, INC.
=====================================================
HISTORY
Thomas N. Hackett founded what later became Physician Resources (PRI) in 1971
as the financial services arm of Advantage Business Services. In 1990
bookkeeping and doctor billing were separated as Bookkeeping Resources, Inc.
In 1992 doctor billing was moved to a new company, Physician Resources, Inc.,
and commercial bookkeeping operations ceased. Physician Resources provided
practice management, invoicing and accounts receivable collection services for
doctors offices, foster homes and hospital-based practices.
The doctor billing service has undergone several technical transitions since
its inception. In the early days the service supported physicians who wished
to avoid an elaborate business function or complex computer systems. As
computer systems became simpler and easier to use, the company found other
value added services to retain clients. This led to practice management
consulting and, in the last few years, electronic billing and medical service
financing. Many health service payers, led by Medicare and Medicaid, have
begun to require electronic billing to reduce processing costs. Electronic
billing brought the added benefit of improved reliability and timeliness of
third party payments. This improved medical practice asset utilization and
profitability. Since electronic billing requires complex data modalities and
sophisticated software procedures, it is more adaptable to a high volume
billing service than to a single medical practitioner. This was a very
successful service for Physician Resources and continues to grow briskly
within Acadia.
On January 13, 1997, Acadia's Registration Statement on Form 10SB was
effectuated. On May 20, 1997, the Company received NASD trading "clearance"
pursuant to filing Form 211 and its accompanying Information and Disclosure
Statement that commenced the trading of its stock on the OTC market during
the third quarter of FY 1997. This has allowed the Company to approach
capital formation specialists and initiate the raising of equity needed to
fuel growth and finalize its first series of acquisitions. Access to public
markets is critical, since the growth rates will be too rapid to
fund through earnings or debt.
Acadia completed implementation of the significantly expanded HEALTHPAC
software technology in the second quarter of FY 1997. This system includes
the capability of: automated patient appointment scheduling, electronic
charting features, client/server based medical practice management, electronic
billing and direct funds transfer. The technology is capable of distributed
data processing with multiple location data entry and discrete paper copy
printing, unlimited client accounts and patient census, all running on the
NT, PICK, D#, rational data base on Microsoft Windows platform. These
attributes will provide the technological base that will reinforce the
company's long-term objective as a major player in tertiary markets and a
clearing house for franchised medical billing activities.
The Company will grow through strategic acquisitions, joint ventures and
internal expansion. Our market capitalization will foster our national
marketing and sales programs. Promotion of our medical billing software
technology and medical practice management consulting services will add
additional growth to our front line business of medical billing. Many
smaller billing services and some practice management consultants are ill
equipped to deal with the changes occurring in the health care market and
the regulatory environment establishing them as candidates for affiliation.
Acadia intends to grow its business through mergers and acquisitions of
companies who's business philosophy is based on producing a high quality
product, who's management is dedicated to long term ethical growth and who's
organization and structure are complimentary to Acadia's vision of a superior
company with a superior product.
<PAGE>
PART II - OTHER INFORMATION
Item #1 Legal Proceedings
Neither the Registrant nor any of its affiliates are a
party, nor is any of their property subject, to material
pending legal proceedings or material proceedings known
to be contemplated by governmental authorities.
Item #2 Changes in Securities
None
Item #3 Defaults Upon Senior Securities
None
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
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
No reports have been filed on Form 8-K during this
quarter.
_______________________________________________________________________________
ACADIA NATIONAL HEALTH SYSTEMS, INC.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly cause this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Registrant
February 12, l998 /s/ Mark T. Thatcher
Date
MARK T. THATCHER,
Filing Agent
February 12, l998 /s/ Paul W. Chute
Date
PAUL W. CHUTE
Chief Executive Officer
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<PERIOD-END> Dec-31-1997
<CASH> 9,955
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