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 quarterly period ended March 31, 2000
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the period from ______________ to ______________
Commission file number 0-26445
-------
ACCESS HEALTH ALTERNATIVES, INC.
--------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 59-3542362
------- ----------
(State of other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
4619 Parkbreeze Court, Orlando, Florida 32808
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(407) 299-0629
---------------
(Issuer's Telephone Number)
- --------------------------------------------------------------------------------
(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. 2,636,887 shares of common stock
as of March 20, 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
(UNAUDITED)
MARCH 31, DECEMBER 31,
2000 1999
---------- ------------
<S> <C> <C>
ASSETS
- ----------------------------
Current assets:
Cash $ 1,112 1,757
Receivables:
Trade, net 57,986 58,923
Other 4,380 4,380
---------- ------------
Total receivables 62,366 63,303
Inventories 127,737 144,250
---------- ------------
Total current assets 191,215 209,310
Property and equipment, net 48,378 52,357
Other assets 5,050 5,050
Deferred rescission costs 640,663 640,663
---------- ------------
Total assets $ 885,306 907,380
========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ACCESS HEALTH ALTERNATIVES, INC.
CONSOLIDATED BALANCE SHEET, CONTINUED
(UNAUDITED)
MARCH 31, DECEMBER 31,
2000 1999
------------ -------------
<S> <C> <C>
Liabilities and Stockholders' Deficit
Current liabilities:
Notes and commercial paper $ 1,555,201 1,491,348
Current obligation under capital lease 7,213 8,847
Bank overdraft 4,408 8,016
Accounts payable 430,333 404,935
Accrued liabilities 884,208 610,511
Due to related parties:
Stockholders 198,086 185,137
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. 35,510 29,651
------------ -------------
Total due to related parties 1,837,405 1,818,597
------------ -------------
Total current liabilities 4,718,768 4,342,254
Unearned income 253,731 274,370
Obligation under capital lease, less current portion 10,749 10,749
Minority interest in subsidiary 129,545 129,545
------------ -------------
Total liabilities 5,112,793 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,
2,626,787 shares issued and outstanding 2,627 2,627
Capital in excess of par value 1,530,217 1,530,217
Accumulated deficit (5,760,331) (5,382,382)
------------ -------------
Total stockholders' deficit (4,227,487) (3,849,538)
------------ -------------
Total liabilities and stockholders' deficit $ 885,306 907,380
============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ACCESS HEALTH ALTERNATIVES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
2000 1999
-------------------- ----------
<S> <C> <C>
Revenues:
Equipment $ - -
Products 56,412 89,048
Other 19,202 23,009
-------------------- ----------
Total revenues 75,614 112,057
Cost of sales:
Equipment - -
Products 16,513 25,639
Other - 372
-------------------- ----------
Total cost of sales 16,513 26,011
-------------------- ----------
Gross profit 59,101 86,046
Selling, general and administrative 414,068 433,768
-------------------- ----------
Operating loss (354,967) (347,722)
Other expense:
Interest expense 22,932 38,482
Other, net 50 -
-------------------- ----------
Total other expense 22,982 38,482
-------------------- ----------
Net loss $ (377,949) (386,204)
==================== ==========
Basic net loss per share $ (0.14) $ (0.34)
==================== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ACCESS HEALTH ALTERNATIVES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
2000 1999
-------------------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (377,949) (386,204)
Adjustment to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 3,979 8,598
Losses of limited liability companies - 28,354
Unearned income recognized (20,639) (19,500)
Issuance of common stock for services - 63,280
Cash provided by (used in) changes in:
Receivables 937 (2,939)
Inventories 16,513 2,540
Other assets - (28,711.00)
Deferred rescission costs - -
Bank overdraft (3,608) 17,586
Accounts payable 25,398 162,284
Accrued liabilities 273,697 7,774
-------------------- -----------
Net cash used in operating activities (81,672) (146,938)
Cash flows from investing activities:
Purchases of property and equipment - (4,382)
-------------------- -----------
Cash flows from financing activities:
Payments on notes and commercial paper (913) (80,793)
Proceeds from notes and commercial paper 64,766 -
Due to stockholders 12,949 (54,878)
Advances (to) from limited liability companies - (168,168)
Due to related party 5,859 (3,600)
Payments on capital lease obligations (1,634)
Proceeds from issuance of stock - 485,000
-------------------- -----------
Net cash provided by financing activities 81,027 177,561
-------------------- -----------
Net (decrease) increase in cash (645) 26,241
Cash at beginning of period 1,757 419
-------------------- -----------
Cash at end of period $ 1,112 26,660
==================== ===========
Supplemental disclosure:
Cash paid during the period for interest $ 4,515 33,129
==================== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<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 ten-for-one 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.
<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 two separate law suits by various lenders
demanding, among other things, the enforcement of a settlement agreement between
the lender and the Company. The Company believes the suit will be satisfied
upon payment of all outstanding amounts owed, which totals approximately
$200,000 and is reflected as a liability on the balance sheet at September 30,
1999.
(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.
The Company is contemplating a public or private offering of securities as a
means of raising funds to implement its business plan.
<PAGE>
ACCESS HEALTH ALTERNATIVES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) SUBSEQUENT EVENTS
VITACARE
April 18, 2000 the Company signed a letter of intent to acquire Vitacare
Solutions, Inc. (Vitacare); a management service organization representing
affiliated Independent Physicians Associations. The Company will acquire
Vitacare in an all-stock transaction. The transaction is subject to the
completion of definitive agreements and additional due diligence, and is
expected to close on or before June 30, 2000.
ACCESS HEATHCARE
The Company agreed to acquire Access HealthCare, Inc. (Healthcare) during 1999,
subject to certain conditions. 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 three month period ended March 31, 2000 to give effect to the
transaction. The condensed combined financial statements reflect the
elimination of intercompany transactions.
Condensed balance sheet at March 31, 2000:
<TABLE>
<CAPTION>
COMPANY HEALTHCARE ELIMINATIONS COMBINED
------------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
Assets:
Current assets $ 191,215 249,218 - 440,433
Property & equipment, net 48,378 75,003 - 123,381
Other assets 5,050 35,722 (35,510) 5,262
Deferred rescission costs 640,663 - - 640,663
$ 885,306 359,943 (35,510) 1,209,739
------------ ----------- ------------- ------------
Liabilities:
Current liabilities $ 4,718,768 505,754 (35,510) 5,188,012
Unearned income 253,731 - - 253,731
Long-term obligations 10,749 123,108 - 133,857
Minority interest 129,545 - - 129,545
5,112,793 628,862 (35,510) 5,706,145
------------ ----------- ------------- ------------
Stockholders' deficit (4,227,487) (268,919) - (4,496,406)
$ 885,306 359,943 (35,510) 1,209,739
Condensed statement of operations:
Revenues $ 75,614 571,646 (22,541) 624,719
Operating costs and expenses
430,581 529,379 (22,541) 937,419
Operating income (loss) (354,967) 42,267 - (312,700)
------------ ----------- ------------- ------------
Other expenses (22,982) (15,440) - (38,422)
Net income (loss) $ (377,949) 26,827 - (351,122)
Basic net loss per share $ (.13)
</TABLE>
<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 March 31, 2000 compared with
Periods Ended March 31, 1999
Management believes that a comparison of the financial performance of the
Company in the three months ended March 31, 2000 and in the three months
ended March 31, 1999 clearly shows the impact of a lack of capital and the
attention of Senior Management to the establishment of a public trading market
for the Company's securities.
During the quarter represented, the Company continues to down size it's
operations in light of the cash shortfall. Certain operations and development
activities were suspended. The resulting impact to Total Revenues was a decline
of 32.5% dropping to $75,614. This Revenue figure is expected to drop further
in the second quarter but will soon reach a base representing core ongoing sales
of the products. Marketing activities during the quarter revolved around direct
mail and promotions of specific products. There were no increases in the
provider network as all regional sales and support activities were suspended
other then in the Central Florida market.
Selling, general and administrative expenses declined slightly, 4.5%, and
is expected to further decline in the second quarter
Liquidity and Capital Resources
Continued cash flow shortages that have slowed the Company's growth and
diverted management attention to away from development activities. The Company
has experienced a dramatic rise in accounts payable and accrued liabilities
increased from $1,015,446 at the beginning of the quarter to $1,314,541 or 29.5%
when combined. The Company continues to rely on loans from affiliated and
unaffiliated parties to cover some of its cash flow shortfall. As evidence,
Notes and commercial paper increased by $63,853 to $1,555,201. Loans from
stockholders and Access Healthcare, an announced acquisition, increased to
$198,086 and $35,510 respectively.
Accounts receivables and other Current and long term assets remained
relatively unchanged other then a reduction in Inventory of $16,513 to $127,737
reflecting sales during the period. Total asset decline of $22,704 to $885,306
explained by Inventory and depreciation. There were no purchases or disposals
of assets during the period other then in the normal course of business.
The cash used in operations for the three months ended March 31, 2000 and
1999 was $81,672 and $146,938 respectively. The major items comprising the
cash used in operations were losses of $377,949 and $386,204,
respectively.
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. In April, the Company initiated an offering to sell shares of Series
B Preferred Stock. Successful completion of this offering is expected to bring
$2,100,000 to the company before selling costs although there can be no
assurances that the Company will be successful in procuring such financing.
The Preferred Offering carries a conversion to common stock, which, if fully
converted will result in the issuance of 2,800,000 shares. The is a coupon of
8% payable quarterly.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There were no new legal proceedings initiated against the company in the
first quarter if 2000. Certain small claims actions and a suit by Innovative
Health Products were either settled or dismissed.
ITEM 2. CHANGES IN SECURITIES
On 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.
In January, 2000, the Company issued 100,000 shares to each of Donald
Metchick and Steven Miracle pursuant to their respective Employment
agreements, pursuant to Section 4(2).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
n/a
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
n/a
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 Exchange.
In April 2000, the Company, and Vitacare Solutions, Inc. ("Vitacare"),
agreed to merge in an all stock transaction. The merger is contingent of due
diligence and definitive documents and is expected to close no later then June
30, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
n/a
<PAGE>
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: 5/19/00 /s/ Daniel J. Pavlik
-------- ---------------------------------------
(signature)*
Daniel J. Pavlik, President & CEO
Date: 5/19/00 /s/ Donald Metchick
-------- ---------------------------------------
(signature)*
Donald Metchick, Vice President
Date: 5/19/00 /s/ Steven Miracle
-------- ---------------------------------------
(signature)*
Steven Miracle, Chief Operating Officer
*Print the name and title of each signing officer under this signature.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 62
<ALLOWANCES> 0
<INVENTORY> 128
<CURRENT-ASSETS> 192
<PP&E> 112
<DEPRECIATION> 64
<TOTAL-ASSETS> 885
<CURRENT-LIABILITIES> 4719
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 4225
<TOTAL-LIABILITY-AND-EQUITY> 885
<SALES> 76
<TOTAL-REVENUES> 76
<CGS> 17
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 414
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23
<INCOME-PRETAX> (338)
<INCOME-TAX> 0
<INCOME-CONTINUING> (338)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (338)
<EPS-BASIC> (.14)
<EPS-DILUTED> (.14)
</TABLE>
