UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the six month period ended June 30, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the period from ______________ to ______________
Commission file number 0-26445
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ACCESS HEALTH ALTERNATIVES, INC.
--------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 59-3542362
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(State of other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
4619 Parkbreeze Court, Orlando, Florida 32808
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(Address of principal executive offices)
(407) 299-0629
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(Issuer's Telephone Number)
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(Former name, former address and former fiscal year, if changed since last
report)
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 [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 2,661,509 shares of common stock
as of June 30, 2000.
--------------------------
Transitional Small Business Disclosure Format (Check one) Yes [ ] No [X]
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ACCESS HEALTH ALTERNATIVES, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, DECEMBER 31,
2000 1999
ASSETS (UNAUDITED) (AUDITED)
------ ------------ ------------
<S> <C> <C>
Current assets:
Cash $ 2,242 $ 1,757
Receivables:
Trade, net 64,197 58,923
Other 4,380 4,380
------------ ------------
Total receivables 68,577 63,303
Inventories 121,170 144,250
------------ ------------
Total current assets 191,989 209,310
Property and equipment, net 44,399 52,357
Other assets 5,051 5,050
Deferred recission costs 640,663 640,663
------------ ------------
Total assets $ 882,102 $ 907,380
============ ============
See accompanying notes to consolidated financial statements
1
<PAGE>
LIABILITIES AND STOCKHOLDER'S DEFICIT
-------------------------------------
Current liabilities:
Notes Payable $ 1,573,851 $ 1,491,348
Current obligation under capital lease 5,909 8,847
Bank overdraft 3,351 8,016
Accounts payable 476,376 404,935
Accrued liabilities 980,213 610,511
Due to related parties:
Stockholders 183,086 185,137
Limited liability companies including recision 1,603,809 1,603,809
of $763,750 to be offered to holders of economic
interests at September 30, 1999
Access Healthcare, Inc. 54,630 29,651
------------ ------------
Total due to related parties 1,841,526 1,818,597
------------ ------------
Total current liabilities 4,881,226 4,342,254
Unearned income 235,370 274,370
Obligation under capital lease, less current portion 10,749 10,749
Minority interest in subsidiary 129,545 129,545
------------ ------------
Total liabilities 5,256,891 4,756,918
Stockholders' deficit:
Preferred stock, $.01 par value, 10,000,000 shares authorized, - -
none issued
Common stock, $.001 par value, 50,000,000 shares authorized,
2,661,509 shares issued and outstanding 2,661 2,627
Capital in excess of par value 1,530,183 1,530,217
Accumulated deficit (5,907,632) (5,382,382)
------------ ------------
Total stockholders' deficit (4,374,788) (3,849,538)
------------ ------------
Total liabilities and stockholders' deficit $ 882,102 $ 907,380
============ ============
See accompanying notes to consolidated financial statements
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
ACCESS HEALTH ALTERNATIVES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Equipment $ - $ - $ - $ -
Products 42,989 111,577 99,401 200,625
Other 19,500 112,235 38,702 135,244
---------- ---------- ---------- ----------
Total revenues 62,489 223,812 138,104 335,869
Cost of sales:
Equipment - - - -
Products 6,567 51,475 23,080 77,114
Other - 2,088 - 2,460
---------- ---------- ---------- ----------
Total cost of sales 6,567 53,563 23,080 79,574
---------- ---------- ---------- ----------
Gross profit 55,922 170,249 115,023 256,295
Selling, general and administrative 175,695 273,971 589,763 707,739
---------- ---------- ---------- ----------
Operating loss (119,773) (103,722) (474,740) (451,444)
Other expense:
Interest expense 26,149 10,893 49,081 49,375
Other, net 1,381 - 1,431 -
---------- ---------- ---------- ----------
Total other expense 27,529 10,893 50,512 49,375
---------- ---------- ---------- ----------
Net loss $(147,302) $(114,615) $(525,251) $(500,819)
========== ========== ========== ==========
Basic net loss per share $ (0.06) $ (0.08) $ (0.20) $ (0.37)
========== ========== ========== ==========
See accompanying notes to consolidated financial statements
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ACCESS HEALTH ALTERNATIVES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(147,302) $(114,615) $(525,251) $(500,819)
Adjustment to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 3,979 9,749 7,958 18,347
Losses of limited liability companies - 57,850 - 86,204
Unearned income recognized (18,361) (19,500) (39,000) (39,000)
Issuance of common stock for services - 163,000 - 226,280
Cash provided by (used in) changes in:
Receivables (6,212) (18,311) (5,274) (21,250)
Inventories 6,567 10,623 23,080 13,163
Other assets - 17,805 0 (10,906)
Bank overdraft (1,057) (118,943) (4,665) (101,357)
Accounts payable 46,044 (301,165) 71,441 (138,881)
Accrued liabilities 96,005 (70,623) 369,702 (62,849)
---------- ---------- ---------- ----------
Net cash used in operating activities (20,337) (384,130) (102,009) (531,068)
Cash flows from investing activities:
Purchases of property and equipment - (3,556) (0) (7,938)
---------- ---------- ---------- ----------
Cash flows from financing activities:
Payments on Notes 913 (53,194) - (133,987)
Proceeds from notes and commercial paper 17,737 444,429 82,503 444,429
Due to stockholders (15,000) (39,792) (2,051) (94,670)
Advances (to) from limited liability companies - 61,479 - (106,689)
Due to related party 19,120 3,961 24,979 361
Payments on capital lease obligations (1,303) - (2,938) -
Proceeds from issuance of stock - 25,000 - 510,000
---------- ---------- ---------- ----------
Net cash provided by financing activities 21,467 441,883 102,494 619,444
---------- ---------- ---------- ----------
Net (decrease) increase in cash 1,130 54,197 485 80,438
Cash at beginning of period 1,112 26,660 1,757 419
---------- ---------- ---------- ----------
Cash at end of period $ 2,242 $ 80,857 $ 2,242 $ 80,857
========== ========== ========== ==========
Supplemental disclosure:
Cash paid during the period for interest $ 4,895 $ 3,353 $ 9,410 $ 36,482
========== ========== ========== ==========
See accompanying notes to consolidated financial statements
</TABLE>
4
<PAGE>
ACCESS HEALTH ALTERNATIVES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION
On September 2, 1998, Access HealthMax Holdings, Inc. ("Holdings"), f/k/a PLC
Ventures Corp. ("PLC") acquired approximately 94.3% of the outstanding common
stock of Access HealthMax, Inc. ("HealthMax"), for 565,100 shares of authorized,
but previously unissued common stock. Immediately preceding the exchange, there
were 437,500 shares outstanding of PLC. The shares of PLC had been issued for a
total consideration of $1,000. PLC had no sales or revenues since its formation
on October 2, 1988 and had zero stockholders' equity at the time of acquisition
of HealthMax. For accounting purposes, the acquisition has been treated as an
acquisition of PLC by HealthMax and as a recapitilization ("Reverse
Acquisition") of HealthMax. The historical financial statements prior to
September 2, 1998 are those of HealthMax. Pro forma information is not
presented, since the combination is a recapitilization rather than a business
combination. The deficiency in the net assets of PLC were not adjusted in
connection with the Reverse Acquisition since it consisted of accounts payable.
On March 11, 1999, Holdings changed its name to Access Health Alternatives, Inc.
("Alternatives"). Unless the context indicates otherwise, references
hereinafter to the "Company" include HealthMax and/or Alternatives.
On March 3, 1999, the Board of Directors authorized a one-for-ten reverse stock
split effective March 15, 1999. All references in the financial statements to
number of shares, per share amounts and market prices of the Company's common
stock have been retroactively restated to reflect the decreased number of common
shares outstanding.
(2) BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim consolidated
financial statements include all adjustments necessary to present fairly the
financial position of the Company, the results of its operations and cash flows
for the interim periods reported. These adjustments are of a normal recurring
nature. However, the accompanying unaudited interim consolidated financial
statements have been prepared in accordance with the instructions and
requirements of Form 10-QSB and Regulation S-B and, therefore, do not include
all information and footnotes for a fair presentation of financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles.
The balance sheet as of December 31, 1999, was derived from the audited
consolidated balance sheet. These statements should be read in conjunction with
the financial statements included in the Company's Form 10-KSB filed with the
Securities and Exchange Commission, which include audited financial statements
for the year ended December 31, 1999. The results of operations for the interim
periods presented are not necessarily indicative of the results that may be
expected for the year.
5
<PAGE>
ACCESS HEALTH ALTERNATIVES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(3) LITIGATION
In October, 1999 HealthMax was advised by the Department of Professional and
Financial Regulation, Bureau of Banking, Securities Division for the State of
Maine that certain sales of LLC's economic interests to Maine residents were not
covered by an exemption from registration, and were effected with the assistance
of a person not licensed to sell securities in that state, and therefore are
subject to rescission to the Maine investors, but has not yet determined the
manner or method of this offer. Neither the LLC's, HealthMax nor the Company
has sufficient funds available to return the full amount of the Maine investors'
interests ($763,750), should they all elect to rescind their investment. The
Company has recorded a liability previously recorded with respect to the state
of Maine investors of $640,663. The Company has recorded deferred rescission
costs for $640,663.
In December 1999, the Company became aware of an inquiry by the Comptroller's
office of the State of Florida into the manner by which certain LLC interests
were sold to residents of Florida. The State has requested certain documents
and information from the Company, from LLC's and from HealthMax in what the
Company believes is an effort to determine if securities were sold without
registration or without an exemption from registration, or by persons not
licensed to sell securities in the State. The Company is cooperating with the
State's inquiry, and is unable to speculate at this time as to the outcome of
such inquiry. All LLC interests sold in the State of Florida are approximately
$1,472,000.
The Company has been notified of three separate law suits by various lenders and
vendors demanding, among other things, return of principle and interest. There
has also been a suit filed by one LLC investor.
(4) CONTINGENCY
At December 31, 1999, the Company has suffered recurring losses and has a net
capital deficiency of $3,849,538 and a working capital deficiency of $4,132,944,
which raises substantial doubt about its ability to continue as a going concern.
Such losses have continued through 2000. The Company is contemplating a public
or private offering of securities and/or the borrowing of funds as a means of
raising capital to implement its business plan. Management of the Company is
considering, and has consulted with its attorneys as to, the possibility of the
Company's filing for protection under the federal bankruptcy laws if an offering
of securities and/or the borrowing of funds cannot be accomplished within a
reasonable time.
6
<PAGE>
ACCESS HEALTH ALTERNATIVES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) SUBSEQUENT EVENTS
ACCESS HEATHCARE
The Company agreed to acquire Access HealthCare, Inc. (Healthcare) during 1999,
subject to certain conditions including the financing of Alternatives. Under
the terms of the acquisition, to be accounted for as a pooling of interests, the
Company will exchange approximately 2,000,000 shares of common stock for all of
HealthCare's outstanding shares. HealthCare operates a chiropractic group
practice in Central Florida and has affiliated chiropractic practices throughout
Florida.
If the acquisition is consummated, the financial position and results of
operations of the Company and HealthCare will be combined in 2000 retroactive to
January 1, 2000. In addition, all prior periods presented will be restated to
give effect to the pooling.
Presented below are condensed combined pro forma financial statements as of and
for the six month period ended June 30, 2000 to give effect to the transaction.
The condensed combined financial statements reflect the elimination of
intercompany transactions.
Condensed balance sheet at June 30, 2000:
<TABLE>
<CAPTION>
COMPANY HEALTHCARE ELIMINATIONS COMBINED
------------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
Assets:
Current assets $ 191,989 341,445 - 533,434
Property & equipment, net 44,399 68,604 - 113,003
Other assets 5,051 48,630 (48,419) 5,262
Deferred rescission costs 640,663 - - 640,663
------------ ----------- ------------- ------------
$ 882,102 458,679 (35,510) 1,292,362
============ =========== ============= ============
Liabilities:
Current liabilities $ 4,881,226 499,577 (48,419) 5,332,384
Unearned income 235,370 - - 235,370
Long-term obligations 10,750 116,069 - 126,819
Minority interest 129,545 - - 129,545
------------ ----------- ------------- ------------
5,256,891 615,646 (48,419) 5,824,118
Stockholders' deficit (4,374,789) (156,967) - (4,531,756)
------------ ----------- ------------- ------------
$ 882,102 458,679 (48,419) 1,292,362
============ =========== ============= ============
7
<PAGE>
ACCESS HEALTH ALTERNATIVES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
COMPANY HEALTHCARE ELIMINATIONS COMBINED
------------ ----------- ------------- ------------
Condensed statement of operations:
Revenues $ 138,104 1,208,247 (22,541) 1,323,809
Operating costs and expenses 612,843 1,042,400 (22,541) 1,632,703
------------ ----------- ------------- ------------
Operating income (loss) (474,740) 165,846 - (308,893)
Other expenses (50,512) (27,067) - (77,579)
------------ ----------- ------------- ------------
Net income (loss) $ (525,251) 138,779 - (386,472)
============= =========== ============= ============
Basic net loss per share $ (.15)
=============
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis should be read in conjunction with
the financial statements of the Company and the accompanying notes appearing
previously under the caption "Financial Statements." The following discussion
and analysis contains forward-looking statements, which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results, expectations and plans discussed in these forward-looking statements.
Results of Operations for the Period Ended June 30, 2000 compared with Period
Ended June 30, 1999:
Management believes that a comparison of the financial performance of the
Company in the six months ended June 30, 2000 and in the six months ended June
30, 1999 clearly shows the continued impact of a lack of capital as well as the
change in its approach to the marketplace. In addition the capital shortfall
has consumed the attention of Senior Management as they established a public
trading market for the Company's securities.
During the six months represented, the Company continued to down size its
operations and reduce overhead in order to accommodate the cash shortfall.
Certain operations and development activities were suspended unless and until
new capital is raised. The resulting impact to Total Revenues was a decline of
58.9% dropping to $138,104. This Revenue figure is expected to decline further
in the third quarter but will soon reach a base representing core ongoing sales
of the products. Marketing activities during the six months revolved around
limited direct mail to current and past customers and promotions of specific
products. There has been a decline in the provider network as all regional
sales and support activities were suspended other than in the Central Florida
market. Sales and support activity is currently being handled by the corporate
staff in Orlando.
Selling, general and administrative expenses declined 16.7% and are
expected to further decline in the third quarter.
Liquidity and Capital Resources
Continued cash flow shortages have slowed the Company's growth and diverted
management's attention away from development activities. The Company has
experienced a rise in accounts payable and accrued liabilities. They increased
from $1,015,446 at the beginning of the year to $1,456,589, or 43.4%, when
combined, and from $1,314,541 at the beginning of the quarter or 9.8%. The
Company continues to rely on loans from affiliated and unaffiliated parties to
cover some of its cash flow shortfall. As evidence, Notes Payable increased by
$18,650 for the second quarter to $1,573,851. Loans from Access Healthcare, an
announced acquisition, increased to $54,630.
Accounts receivable and other current and long-term assets remained
relatively unchanged other then a reduction in Inventory of $23,080 for the six
months and $6,567 for the second quarter to $121,170 reflecting sales during the
period(s). Total asset decline of $25,278 for the six months and of $3,205 for
the second quarter to $882,102 is explained by the reduction in Inventory and
depreciation of property and equipment. There were no purchases or disposals of
assets during the period(s) other than in the normal course of business.
The cash used in operations for the six months ended June 31, 2000 and 1999
was $102,009 and $531,068, respectively.
9
<PAGE>
The Company continues to experience negative cash flow and anticipates this
continuing through the end of the current fiscal year. Management believes that
additional funding will be necessary in order for it to continue as a going
concern. Several options are being actively pursued including the private
placement of Preferred stock and a possible secondary public offering of the
Companies Common stock , as well as the borrowing of funds. Management of the
Company is considering, and has consulted with its attorneys as to, the
possibility of the Company's filing for protection under the federal bankruptcy
laws if an offering of securities and/or the borrowing of funds cannot be
accomplished within a reasonable time.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Access HealthMax, Inc. has been named in two suits. Innovative Health
Products, Inc. has alleged non-payment and is demanding, among other things
payment of all amounts owed. Management believes any financial outcome as been
fully reserved for and reflected in the statements. In addition, suit has been
brought by Raymond J. Rousseau and Theresa Rousseau against Access HealthMax,
Inc. and others, it has not been determined what impact a judgement against the
company would have other then repayment of financial investment of $75,000 by an
LLC of which Access HealthMax is the managing partner. Two other actions by
lenders, previously disclosed, remain pending.
ITEM 2. CHANGES IN SECURITIES
In April 2000, the Company designated the rights and preferences of its
Series B Redeemable Convertible Preferred Stock, and authorized the sale of up
to 2,800,000 common shares as part of the offering. To date no shares have been
sold.
In January 2000, the Company issued 100,000 shares each to Donald Metchick
and Steven Miracle pursuant to their respective Employment Agreements, pursuant
to Section 4(2) of the Securities and Exchange Act of 1933.
In July 2000, pursuant to an agreement made in 1999, the Company issued
34,722 shares of common along with two sets of warrants, each set allowing the
investor to purchase up to 34,722 shares of common with an exercise price of
$3.00 and $4.50. The shares and warrants were sold pursuant to Section 4(2) of
the Securities and Exchange Act of 1933.
In July 2000, a minority investor in Access HealthMax, Inc.converted his
interest into 20,000 shares of Access Health Alternatives, IncThe shares were
converted pursuant to Section 4(2) of the Securities and Exchange Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Access HealthMax, Inc. continues to be in default of is loan agreements and will
be unable to pay interest and principle until new capital has been raised.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
none
ITEM 5. OTHER INFORMATION.
In April 2000, the Company received confirmation that its registration
statement on Form 10SB under the Securities Exchange Act of 1934 (the "Exchange
Act") had "cleared" comments. Subsequently the companies common stock regained
listing on the Over the Counter Bulletin Board.
10
<PAGE>
In April 2000, the Company, and Vitacare Solutions, Inc. ("Vitacare"),
agreed to merge in an all stock transaction. The merger was contingent of due
diligence and definitive documents. On June 30, 2000 the company informed
Vitacare that it would not be going forward with the merger as planned. There
have been no further conversation between the Company and Vitacare.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
n/a
SIGNATURES
In accordance with the requirements of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
ACCESS HEALTH ALTERNATIVES, INC.
-----------------------------------
(registrant)
Date: 8/11/00 /s/ Daniel J. Pavlik
-------- ---------------------------------------
(signature)*
Daniel J. Pavlik, President & CEO
Date: 8/11/00 /s/ Steven Miracle
-------- ---------------------------------------
(signature)*
Steven Miracle, Chief Operating Officer
*Print the name and title of each signing officer under this signature.
12
<PAGE>
