U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(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, 1999.
| | TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ___________
COMMISSION FILE NUMBER 0-22916
PHC, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
Massachusetts 04-2601571
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
200 Lake Street, Suite 102, Peabody MA 01960
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
978-536-2777
(ISSUER'S TELEPHONE NUMBER)
- -------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT) Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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_ __
APPLICABLE ONLY TO CORPORATE ISSUERS
Number of shares outstanding of each class of common equity, as of April 30,
1999:
Class A Common Stock 5,530,206
Class B Common Stock 727,210
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
(Check one):
Yes______ No X
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<PAGE>
PHC, INC.
Part I, Item 1 financial statements filed in the Company's 10-QSB for the
period ended March 31, 1999, filed with the Securities and Exchange Commission
on May 14, 1999, are being amended to reflect the following:
1. The effect of the changes to the financial statements for the period ended
June 30, 1998, as amended.
a. Increase in general and administrative expenses amounting to
approximately $148,000 related to the issuance of warrants to a
financial advisor to the Company.
b. Increase in dividends related to the beneficial conversion feature of
series B convertible preferred stock of approximately $190,000.
2. The effect of changes to the financial statements for the period ended
September 30, 1998 as amended. a. Increase in interest expense related
to the issuance of warrants with debt, approximately $26,000 for the
three months ended September 30, 1998.
3. The effect of changes to the financial statements for the period ended
December 31, 1998 as amended. a. Increase in Interest expense related to
the issuance of warrants with debt, approximately $26,000 for the three
months ended December 31, 1998.
b. Increase in Professional fees related to the issuance of warrants with
convertible debentures as a finders fee, approximately $43,400 for the
three months ended December 31, 1998.
c. Increase in interest expense and reduction in intangible assets of
approximately $92,000 resulting from the correction of the accounting
for price guarantee shares issued to the former owners of BSC
d. Decrease in extraordinary income resulting from the reversal of the
recognition of part of the gain related to the liquidation of assets
of Quality Care Centers of Massachusetts, Inc. that the Company
subsequently determined was more appropriate to defer until final
resolution of all potential liabilities.
4. Increase Professional fees related to the issuance of warrants with
convertible debentures as a finders fee, approximately $31,400 for the
three months ended March 31, 1999.
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
PHC INC. AND SUBSIDIARIES (UNAUDITED)
CONSOLIDATED BALANCE SHEETS
MAR. 31 JUNE 30
1999 1998
ASSETS (as restated) (as restated)
__________________________
Current assets:
Cash & Cash Equivalents $ 137,949 $ 227,077
Accounts receivable, net of allowance for bad
debts of $3,079,521 at Mar. 31, 1999,
$3,488,029 at June 30, 1998 6,697,074 7,441,972
Prepaid expenses 322,207 156,695
Other receivables and advances 219,986 127,064
Deferred Income Tax Asset 459,280 515,300
Other Receivables, related party 75,531 64,065
____________ ___________
Total current assets 7,912,027 8,532,173
Accounts Receivable, noncurrent 640,000 685,000
Other receivables, noncurrent, related party,
net of allowance for accounts of $407,000 Mar
31, 1999 and $382,000 June 30, 1998 3,464,745 2,941,402
Other Receivable 115,520 426,195
Property and equipment, net 1,512,119 2,128,273
Deferred income taxes 154,700 154,700
Deferred financing costs, net of amortization of
$50,181 at Mar. 31, $18,065 at June 30, 1998 56,927 53,608
Goodwill, net of accumulated amortization of $79,347
at Mar. 31, 1999 $307,707 at June 30, 1998 1,788,625 2,011,613
Other assets 292,198 19,386
____________ ___________
Total assets $15,936,861 $16,952,350
____________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,540,947 $2,346,213
Notes payable--related parties 267,356 159,496
Current maturities of long term debt 1,292,666 1,107,167
Revolving credit note 1,400,277 1,683,458
Current portion of obligations under capital
leases 62,349 67,492
Accrued Payroll, Payroll Taxes and Benefits 325,923 729,194
Accrued expenses and other liabilities 1,255,999 1,004,763
Net current liabilities of discontinued operations 2,641,537 2,641,537
____________ ___________
Total Current liabilities 9,787,054 9,739,320
____________ ___________
Long-term debt 1,865,665 2,850,089
Obligations under capital lease 67,787 93,747
Convertible Debentures 500,000 --
____________ ___________
Total noncurrent liabilities 2,433,452 2,943,836
____________ ___________
Total liabilities 12,220,506 12,683,156
____________ ___________
Stockholders' Equity:
Preferred stock, $.01 par value; 1,000,000
shares authorized, 864 and shares issued and
outstanding Mar. 31, 1999 and June 30, 1998
liquidation preference ($864,000 and $950,000
respectively) 9 10
Class A common stock, $.01par value; 20,000,000
shares authorized, 5,530,206 and 4,935,267 shares
issued Mar. 99 and June 98 55,302 49,353
Class B common stock, $.01 par value; 2,000,000 shares
authorized, 727,210 and 727,328 issued Mar. 99 and
June 98 respectively, into one share of Class A
common stock 7,272 7,273
Additional paid-in capital 15,895,723 15,485,895
Treasury stock, 2,776 shares at cost (12,122) (12,122)
Accumulated Deficit (12,229,829) (11,261,215)
____________ ___________
Total Stockholders' Equity 3,716,355 4,269,194
____________ ___________
Total Liabilities and Stockholders' Equity $15,936,861 $16,952,350
____________ ___________
See Notes to Consolidated Financial Statements
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<PAGE>
PHC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31 MARCH 31
1999 1998 1999 1998
(as restated) (as restated)
_____________________________________________________
Revenues:
Patient Care, net $4,587,743 $5,362,955 $13,852,546 $15,503,447
Management Fees 122,141 182,290 518,983 644,983
__________ __________ ___________ ___________
Total revenue 4,709,884 5,545,245 14,371,529 16,148,430
__________ __________ ___________ ___________
Operating expenses:
Patient care expenses 2,296,160 2,822,708 7,218,008 8,509,056
Provision for doubtful
accounts 275,263 537,128 1,419,583 1,536,377
Administrative expenses 1,808,024 2,075,115 5,625,589 6,702,613
__________ __________ ___________ ___________
Total operating
expenses 4,379,447 5,434,951 14,263,180 16,748,046
__________ __________ ___________ ___________
Income (loss) from
operations 330,437 110,294 108,349 (599,616)
__________ __________ ___________ ___________
Interest income 118,258 87,725 357,006 288,323
Other income 19,286 58,960 58,206 180,709
Interest expense (240,612) (336,943) (1,013,046) (935,145)
Facility Closing Costs -- -- 304,994) --
HRH Relocation Expense -- -- (36,935) --
__________ __________ ___________ ___________
Total other income
(expense) (103,068) (190,258) (939,763) (466,113)
__________ __________ ___________ ___________
Income (Loss) before
Provision for Taxes 227,369 (79,964) (831,414) (1,065,729)
Provision for Income Taxes 43,724 98,309 44,635 105,509
__________ __________ ___________ ___________
Income (loss) from
Continuing Operations $ 183,645 $ (178,273) $ (876,049) $(1,171,238)
__________ __________ ___________ ___________
Loss from Discontinued
Operations -- $ (807,802) -- (1,829,508)
__________ __________ ___________ ___________
Net Income (Loss) $ 183,645 (986,075) $ (876,049) $(3,000,746)
Dividends (62,547) -- (92,356) --
__________ __________ ___________ ___________
Loss applicable to common
shareholders $ 121,098 $ (968,075) $ (968,405) $(3,000,746)
__________ __________ ___________ ___________
Basic Earnings (loss) per
common share:
Income (loss) from
continuing operations .02 (.03) (.16) (.23)
Loss from discontinued
operations -- (.15) -- (.36)
Total .02 (.18) (.16) (.58)
Basic Weighted average
number of shares
outstanding 6,182,204 5,431,196 5,910,928 5,090,919
Diluted Earnings (loss)
per common share:
Income (loss) from continuing
operations .02 (.03) (.16) (.23)
Loss from discontinued
operations -- (.15) -- (.36)
Total .02 (.18) (.16) (.58)
Diluted Weighted average
number of shares
outstanding 6,194,456 5,431,196 5,910,928 5,090,919
See Notes to Consolidated Financial Statements
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<PAGE>
PHC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
MARCH 31
1999 1998
(as restated)
__________________________
Cash flows from operating activities:
Net income (loss) $ (968,405) $(3,000,746)
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Non-Cash charge (credit) related to
discontinued operations -- 999,121
Depreciation and amortization 249,483 334,066
Compensatory stock options and stock and
warrants issued for obligations 174,234 46,131
Changes in:
Accounts Receivable 325,224 (710,969)
Prepaid expenses and other current assets (165,512) 90,597
Other assets 66,540 (6,932)
Accounts payable 194,736 (498,696)
Accrued expenses and other liabilities (152,036) 291,201
___________ ____________
Net cash used in operating activities (275,736) (2,456,227)
___________ ____________
Cash flows from investing activities:
Acquisition of property and equipment (150,420) (112,911)
Disposition of property, equipment and
intangibles 363,104 (13,275)
Costs related to business acquisition -- (626,267)
Net cash provided by (used in) investing
activities 212,684 (752,453)
___________ ____________
Cash flows from financing activities,
Revolving debt, net (283,181) --
Other debt activity (165,339) 407,320
Preferred stock dividends paid (92,567) --
Issuance of Common Stock 15,011 2,049,480
Convertible debt 500,000 --
___________ ____________
Net cash provided by (used in) financing
activities (26,076) 2,456,800
___________ ____________
NET INCREASE (DECREASE) IN CASH (89,128) (751,880)
Beginning cash balance 227,077 844,471
___________ ____________
ENDING CASH BALANCE $ 137,949 $ 92,591
___________ ____________
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 802,549 $ 619,523
Income taxes 94,919 82,703
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Conversion of Debt to Common Stock -- 2,710,106
Conversion of Preferred Stock to Common
Stock 185,571 500,000
Stock issued for Acquisitions and Earnou
Agreement 219,165 614,280
Issuance of Preferred Stock in lieu of
cash for Dividends due 44,000 --
See Notes to Consolidated Financial Statements
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<PAGE>
Signatures
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
PHC, Inc. Registrant
Date: December 7, 1999 /s/ Bruce A. Shear
President
Chief Executive Officer
Date: December 7, 1999 /s/ Paula C. Wurts
Controller
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the consolidated
balance sheet and the consolidated statement of income filed as part of the
report on Form 10-QSB and is qualified in its entirety by reference to such
report on Form 10-QSB.
</LEGEND>
<CIK> 0000915127
<NAME> PHC, Inc.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-1-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1.000
<CASH> 137,949
<SECURITIES> 0
<RECEIVABLES> 9,776,595
<ALLOWANCES> 3,079,521
<INVENTORY> 0
<CURRENT-ASSETS> 7,912,027
<PP&E> 2,458,788
<DEPRECIATION> 946,669
<TOTAL-ASSETS> 15,936,861
<CURRENT-LIABILITIES> 9,787,054
<BONDS> 500,000
0
9
<COMMON> 62,574
<OTHER-SE> 3,653,772
<TOTAL-LIABILITY-AND-EQUITY> 15,936,861
<SALES> 0
<TOTAL-REVENUES> 14,371,529
<CGS> 0
<TOTAL-COSTS> 14,605,109
<OTHER-EXPENSES> 1,013,046
<LOSS-PROVISION> 1,419,583
<INTEREST-EXPENSE> 1,013,046
<INCOME-PRETAX> (831,414)
<INCOME-TAX> 44,635
<INCOME-CONTINUING> (876,049)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (876,049)
<EPS-BASIC> (.16)
<EPS-DILUTED> (.16)
</TABLE>
