SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 14, 1996
PHC. Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 0-23524 04-2601571
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
200 Lake Street Suite 102. Peabody, MA 01960
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (508) 536-2777
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Item 7. Financial Statements and Exhibits.
On November 14, 1996, in its report on Form 10Q-SB (as amended by the
filing of Form 10-QSB-A-l on December 5, 1996), PHC, Inc. (the "Company")
described the acquisition as of October 31, 1996 of the businesses previously
conducted by Behavioral Stress Centers, Inc. and Clinical Associates and
Clinical Diagnostics (the "Acquired Companies"). Since the Acquired
Companies are anticipated to be of significance to the Company pursuant to
Item 310(c) of Form S-B, the Company is obligated under Item 7 of Form 8-K,
promulgated by the Securities and Exchange Commission, to file two years of
audited financial statements for the Acquired Companies within 60 days after
the Company's Report on Form 10-QSB (in this case, not later than January 13,
1997).
The Company will be unable to file two years of audited financial
statements for the Company for the following reasons: The Acquired Companies
utilized the cash basis method of accounting. Their record keeping was
rudimentary at best. For example, revenue was recognized by the Acquired
Companies upon the receipt of payment, irrespective of when services were
rendered. Unfortunately, the Acquired Companies did not retain, in all
circumstances, the documentation required to verify the date on which
services were rendered, and some of the records that were retained were
destroyed in a basement flood. Accordingly, there is no consistent and
accurate record available that would allow the determination of the period in
which a service, resulting in a payment, was actually rendered.
In addition, it appears that the Acquired Companies did not invoice all
services rendered and in many cases did not create invoices in a timely
manner. Some of the records of invoices which were retained were also
destroyed in the flood described above, and the Acquired Companies did not
retain backup information in a secure, off-site location. As a result of the
poor record-keeping of the Acquired Companies, it is impossible to trace
invoices to determine whether payment has been received or whether the
services were billed.
Prior to the acquisition of the Acquired Companies and in light of the
inability of the Company to verify certain accounting records of the Acquired
Companies, the Company spent significant time and effort studying the
prudence of the acquisition and whether the transaction would be economically
beneficial to the Company and its shareholders.
For the reasons stated above, the Company's independent public
accountants, Richard A. Eisner & Company, Inc., have indicated to the Company
that they will not be able to conduct an audit of the Acquired Companies in
accordance with generally accepted auditing standards for the period
required. In addition, the Company believes that it will be virtually
impossible to produce unaudited financial statements for the Acquired
Companies on an accrual basis in accordance with generally accepted
accounting principles for the period prior to the Closing. Commencing with
the fiscal quarter ending December 31, 1996, the consolidated financial
statements of the Company will include the operations of the Acquired
Companies.
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SIGNATURE
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.
PHC, INC.
Date: December 20, 1996 BY: ______________________________
Bruce A. Shear
President
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SIGNATURE
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.
PHC, INC.
Date: December 20, 1996 BY: _/s/ Bruce A. Shear__________
Bruce A. Shear
President
