PROSPECTUS
PHC, INC.
PIONEER BEHAVIORAL HEALTH
1,408,018 SHARES OF CLASS A COMMON STOCK
This prospectus covers the sale from time to time of shares of the
company's class A common stock, issuable on conversion of 136,000 shares of
series C convertible preferred stock and the exercise of warrants to purchase
125,000 shares of class A common stock by a selling security holder.
The company will only receive proceeds if warrants are exercised. Such
funds will be added to working capital. All other proceeds will be realized by
the selling security holder. The company is obligated to pay all of the expenses
incident to the prospectus estimated to be approximately $25,000.
The class A common stock trades in the over-the-counter market and current
prices are available on the Nasdaq SmallCap market under the symbol PIHC. On
July 5, 2000, the closing bid price of the class A common stock was $1.25.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" AT PAGE 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS July 21, 2000
OUR COMPANY
Our company is a national health care company, which provides psychiatric
services primarily to individuals who have alcohol and drug dependency, related
disorders and to individuals in the gaming and trucking industry. We operate
substance abuse treatment facilities in Utah and Virginia, four outpatient
psychiatric facilities in Michigan, two outpatient psychiatric facilities in
Nevada and an inpatient psychiatric facility in Michigan. We also provide
management and administrative services to psychotherapy and psychological
practices in New York and operate a website, Behavioralhealthonline.com, which
provides education, training and materials to behavioral health professionals.
Our company provides behavioral health- services and products through inpatient
and outpatient facilities and online to behavioral health professionals. Our
substance abuse facilities provide specialized treatment services to patients
who typically have poor recovery prognoses and who are prone to relapse. These
services are offered in small specialty care facilities, which permit us to
provide our clients with efficient and customized treatment without the
significant costs associated with the management and operation of general acute
care hospitals. We tailor these programs and services to "safety-sensitive"
industries and concentrate our marketing efforts on the transportation, oil and
gas exploration, heavy equipment, manufacturing, law enforcement, gaming and
health services industries. Our psychiatric facility provides inpatient
psychiatric care and intensive outpatient treatment, referred to as partial
hospitalization, to children, adolescents and adults. Our outpatient mental
health clinics provide services to employees of major employers, as well as to
managed care, Medicare and Medicaid clients. The psychiatric services are
offered in a larger, more traditional setting than PHC's substance abuse
facilities, enabling PHC to take advantage of economies of scale to provide
cost-effective treatment alternatives.
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The company treats employees who have been referred for treatment as a
result of compliance with Subchapter D of the Anti-Drug Abuse Act of 1988
(commonly known as the Drug Free Workplace Act), which requires employers who
are Federal contractors or Federal grant recipients to establish drug-free
awareness programs which, among other things, inform employees about available
drug counseling; rehabilitation and employee assistance programs. We also
provide treatment under the Department of Transportation implemented
regulations, which broaden the coverage and scope of alcohol and drug testing
for employees in "safety sensitive" positions in the transportation industry.
The company was incorporated in 1976 and is a Massachusetts corporation.
Our corporate offices are located at 200 Lake Street, Suite 102, Peabody, MA
01960 and our telephone number is (978) 536-2777.
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THE OFFERING
Securities Outstanding as of June 30, 2000:
Class A common stock 7,016,832
Class B common stock 726,991
Class C common stock 0
Preferred stock 136,000
Securities Offered 1,408,018 shares of class A common stock, of
which 1,283,018 are issuable on
conversion of preferred stock and
125,000 are issuable on exercise
of warrants.
NASDAQ Symbol PIHC
Proceeds to the company $ 375,000 Assuming the warrants are
exercised,
this amount will be added to our
working capital. All other
proceeds will be retained by the
selling security holder.
SUMMARY CONSOLIDATED FINANCIAL DATA
NINE MONTHS ENDED
MARCH 31, YEAR ENDED JUNE 30,
---------- -------------------
2000 1999 1999 1998
----------------------------------------------
STATEMENTS OF OPERATIONS DATA:
Revenue $14,851,592 $14,371,529 $19,139,496 $21,246,189
Operating expenses 14,738,446 14,605,109 19,691,234 24,346,787
---------- ---------- ---------- ----------
Income (loss) from operations 113,146 (233,580) (551,738) (3,100,598)
Other expense (129,356) (597,834) (742,914) (839,706)
Provision for taxes 53,289 44,635 59,434 219,239
-------- -------- ------- ---------
Loss from continuing $ (69,499) $(876,049) $(1,354,086) $(4,159,543)
operations
Loss from discontinued -- -- -- (2,220,296)
operations
Net Loss $ (69,499) $(876,049) $(1,354,086) $(6,379,839)
Dividends (589,514) (92,356) (142,110) (207,060)
Loss applicable to common $(659,013) $(968,405) $(1,496,196) $(6,586,899)
shares
Basic and diluted Loss per $ (0.10) $ (0.16) $ (0.25) $ (1.26)
common share
Basic and diluted weighted
average number of shares
outstanding 6,645,742 5,910,928 6,008,263 5,237,168
AS OF
MARCH 31, 2000
BALANCE SHEET DATA:
Total assets $ 15,612,856
Working capital (deficit) (2,553,482)
Long-term obligations 2,040,479
Stockholders' equity 3,280,164
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RISK FACTORS
An investment in the securities offered hereby is speculative in nature
and involves a high degree of risk. In addition to the other information in this
prospectus, the following risk factors should be considered carefully in
evaluating whether to invest in the securities offered hereby.
OPERATING RISKS
THE CONCENTRATION OF ACCOUNTS RECEIVABLE DUE FROM GOVERNMENT PAYORS COULD
CREATE A SEVERE CASH FLOW PROBLEM SHOULD THESE AGENCIES FAIL TO MAKE TIMELY
PAYMENT. We had substantial receivables from Medicaid and Medicare of
approximately $155,000 at March 31,2000 and $400,000 at June 30, 1999, which
would create a cash flow problem should these agencies defer or fail to make
reimbursement payments as due, which would require us to borrow at unfavorable
rates.
IF MANAGED CARE ORGANIZATIONS DELAY APPROVING TREATMENT, OR REDUCE THE
PATIENT LENGTH OF STAY OR NUMBER OF VISITS OR REIMBURSEMENT, OUR COMPANY'S
ABILITY TO MEET OPERATING EXPENSES IS AFFECTED. As managed care organizations
and insurance companies adopt policies that limit the length of stay for
substance abuse treatment, our business is materially adversely affected since
our revenues and cash flow go down and our fixed operating expenses continue.
Reimbursement for substance abuse and psychiatric treatment from private
insurers is largely dependent on our ability to substantiate the medical
necessity of treatment. The process of substantiating a claim often takes up to
four months and sometimes longer; as a result, we experience significant delays
in the collection of amounts reimbursable by third-party payors, which adversely
affects our working capital condition.
AS OUR ACCOUNTS RECEIVABLE AGE AND BECOME UNCOLLECTABLE OUR CASH FLOW IS
NEGATIVELY IMPACTED. Our accounts receivable (net of allowance for bad debts)
increased to $7,273,608 on March 31, 2000 from $6,214,663 at December 31, 1999
due to an increase of approximately $1,435,000 in net revenue from patient care
for the quarter ended March 31, 2000 over the quarter ended December 31, 1999.
Our accounts receivable (net of allowance for bad debts) were $6,214,663 at
December 31, 1999 compared with $6,938,227 at June 30, 1999 and $8,126,972 at
June 30, 1998. As we expand, we will be required to seek payment from a larger
number of payors and the amount of accounts receivable will likely increase. The
overall decrease in current accounts receivable through December 31, 1999 was
due primarily to significant increases in reserves due to our more aggressive
reserve policies established in June 1997. If the amount of receivables, which
eventually become uncollectible, exceeds such reserves, we could be materially
adversely affected. In addition, any decrease in our ability to collect our
accounts receivable or any further delay in the collection of accounts
receivable would have a material adverse effect on our results of operations.
See the Consolidated Financial Statements and notes related thereto included
herein or incorporated herein by reference.
DUE TO THE COMPANY'S CURRENT HIGH DEBT TO EQUITY RATIO AND RECENT LOSSES
FROM OPERATIONS, IF THE COMPANY NEEDS ADDITIONAL FINANCING IT MAY REQUIRE
BORROWING AT UNFAVORABLE RATES. We are utilizing, to the maximum extent, our
accounts receivable funding facilities, which bear interest at the prime rate
plus 2.25%, to meet our current cash needs. Should we require additional funds
to meet our cash flow requirements or to fund growth or new investments, we may
be required to meet these needs with more costly financing. If we are unable to
obtain needed financing, it could have a material adverse effect on our
financial condition, operations and business prospects. See Consolidated
Financial Statements and related notes included or incorporated into this
prospectus by reference.
THE COMPANY'S RELIANCE ON CONTRACTS WITH KEY CLIENTS TO MAINTAIN
SUFFICIENT PATIENT CENSUS WOULD IMPACT OUR ABILITY TO MEET OUR FIXED COSTS
SHOULD ONE OR MORE OF THESE CLIENTS CANCEL CONTRACTS OR BE UNABLE TO PAY FOR
SERVICES RENDERED. We have entered into relationships with large employers,
health care institutions and labor unions to provide treatment for psychiatric
disorders, chemical dependency and substance abuse in conjunction with
employer-sponsored employee assistance programs. The employees of such
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institutions may be referred to us for treatment, the cost of which is
reimbursed on a per diem or per capita basis. Approximately 30% of our total
revenue is derived from these key clients. No one of these large employers,
health care institutions or labor unions individually accounts for 10% or more
of our consolidated revenues, the loss of any of these key clients would require
us to expend considerable effort to replace patient referrals and would result
in revenue losses and attendant loss in income.
CONTROL OF THE HEALTHCARE INDUSTRY EXERCISED BY FEDERAL, STATE AND LOCAL
REGULATORY AGENCIES CAN INCREASE COSTS, ESTABLISH MAXIMUM REIMBURSEMENT LEVELS
AND LIMIT EXPANSION. Our company and the health care industry are subject to
rapid regulatory change with respect to licensure and conduct of operations at
existing facilities, construction of new facilities, acquisition of existing
facilities, the addition of new services, compliance with physical plant safety
and land use requirements, implementation of certain capital expenditures,
reimbursement for services rendered and periodic government inspections.
Governmental budgetary restrictions have resulted in limited reimbursement rates
in the healthcare industry including our company. As a result of these
restrictions we cannot be certain that payments under government programs will
remain at a level comparable to the present level or be sufficient to cover the
costs allocable to such patients. In addition, many states, including the State
of Michigan, are considering reductions in state Medicaid budgets.
INSURANCE COMPANIES AND MANAGED CARE ORGANIZATIONS ARE ENTERING INTO SOLE
SOURCE CONTRACTS WITH HEALTHCARE PROVIDERS, WHICH COULD LIMIT OUR ABILITY TO
OBTAIN PATIENTS. Private insurers, managed care organizations and, to a lesser
extent, Medicaid and Medicare, are beginning to carve-out specific services,
including mental health and substance abuse services, and establish small,
specialized networks of providers for such services at fixed reimbursement
rates. Continued growth in the use of carve-out systems could materially
adversely affect our business to the extent we are not selected to participate
in such smaller specialized networks or if the reimbursement rate is not
adequate to cover the cost of providing the service.
IF WE ACQUIRE NEW BUSINESSES OR EXPAND OUR BUSINESSES, THE OPERATING COSTS
MAY BE FAR GREATER THAN REVENUES FOR A SIGNIFICANT PERIOD OF TIME. The operating
losses and negative cash flow associated with start-up operations or
acquisitions could have a material adverse effect on our profitability and
liquidity unless and until such facilities are fully integrated with our other
operations and become self sufficient. Until such time we may be required to
borrow at higher rates and less favorable terms.
THE LIMITED NUMBER OF HEALTHCARE PROFESSIONALS IN THE AREAS IN WHICH WE
OPERATE MAY CREATE STAFFING SHORTAGES. Our success depends, in large part, on
our ability to attract and retain highly qualified personnel, particularly
skilled health care personnel, which are in short supply. We face competition
for such personnel from governmental agencies, health care providers and other
companies and are constantly increasing our employee benefit programs, and
related costs, to maintain required levels of skilled professionals. These
increasing costs impact our profitability.
MANAGEMENT RISKS
BRUCE A. SHEAR IS IN CONTROL OF THE COMPANY SINCE HE IS ENTITLED TO ELECT
AND REPLACE A MAJORITY OF THE BOARD OF DIRECTORS. Bruce Shear and his affiliates
own and control 92.3% of the class B common stock which elects three of the five
members of the Board of Directors. Bruce Shear can establish, maintain and
control business policy and decisions by virtue of his control of the board of
directors.
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RETENTION OF KEY PERSONNEL WITH KNOWLEDGE OF KEY CONTRACTS AND CLIENTS IS
ESSENTIAL TO THE SUCCESS OF THE COMPANY. PHC is highly dependent on the
principal members of its management and professional staff, particularly Bruce
A. Shear, PHC's President and Chief Executive Officer, Robert H. Boswell, PHC's
Senior Vice President and the other members of PHC's management and their
continued relationship with key clients.
MARKET RISKS
THE NASDAQ STOCK MARKET MAY DELIST THE COMPANY'S STOCK FROM THE NASDAQ
EXCHANGE IF THE COMPANY FAILS TO MEET LISTING REQUIREMENTS. The Nasdaq staff has
notified us of its concern regarding the continued listing of our Common Stock
on the Nasdaq SmallCap Market based on our failure to maintain a minimum bid
price greater than $1.00 over thirty consecutive trading days as required.
Nasdaq has also advised us that we are not in compliance with the required Net
Tangible Assets for listing. We believe that we are now in compliance with the
minimum bid price requirement since our bid price for Common Stock has closed
higher than $1.00 for the past fifteen trading days. We have discussed the net
tangible asset requirement with the Nasdaq and believe that we will be in
compliance with this requirement following the close of our current fiscal year.
We are awaiting response from the Nasdaq as to whether it will grant us the time
required to get into compliance with this requirement.
SHOULD THE COMPANY'S SECURITIES BE DELISTED FROM THE NASDAQ STOCK MARKET,
STOCKHOLDERS MAY HAVE DIFFICULTY SELLING THE STOCK. If our Common Stock is
delisted from Nasdaq, the Common Stock would be traded on the bulletin board.
Cost of trading on the bulletin board can be more than the cost of trading on
the SmallCap market and since there may be an absence of market makers on the
bulletin board the price may be more volatile and it may be harder to sell the
securities.
IF OUR COMMON STOCK IS NOT ACTIVELY TRADED, THE SMALL NUMBER OF TRANSACTIONS
CAN RESULT IN SIGNIFICANT SWINGS IN THE MARKET PRICE, AND IT MAY BE DIFFICULT
FOR STOCKHOLDERS TO DISPOSE OF STOCK IN A TIMELY WAY AT A DESIRABLE MARKET PRICE
OR MAY RESULT IN PURCHASING OF SHARES FOR A HIGHER PRICE.
OUR RIGHT TO ISSUE CONVERTIBLE PREFERRED STOCK MAY ADVERSELY AFFECT THE
RIGHTS OF THE COMMON STOCK. Our Board of Directors has the right to establish
the preferences for and issue up to 1,000,000 shares of preferred stock without
further stockholder action. The terms of any series of preferred stock, which
may include priority claims to assets and dividends and special voting rights,
could adversely affect the market price of and the ability to sell common stock.
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AVAILABLE INFORMATION
The company filed a registration statement with the Securities and
Exchange Commission covering the securities offered. This prospectus does not
contain all of the information set forth in the registration statement and the
related exhibits and schedules. For further information with respect to the
company and the securities being offered, see the registration statement, and
related exhibits and schedules. Copies of these documents are available for
review at the public reference facilities maintained at the principal office of
the Commission at 450 Fifth Street, N. W., Room 1024, Washington D.C. 20549 and
at the Commission's regional offices at 7 World Trade Center, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You may obtain information on the operation of the
public reference facilities by calling the Commission at 1-800-SEC-0330. Copies
of such materials are available upon written request from the public reference
section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains an Internet site that contains
reports, proxy and information statements and other information about PHC that
is filed electronically at http:\\WWW.SEC.GOV. Reference is made to the copies
of any contracts or other documents filed as exhibits to the registration
statement.
The company is subject to the informational requirements of the Securities
Exchange Act of 1934, and in accordance therewith files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information are available for inspection and copying at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material can be obtained at prescribed
rates from the Commission at such address. Such reports, proxy statements and
other information can also be inspected at the Commission's regional offices at
7 World Trade Center, New York, New York 10048 and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
A copy of our Annual Report on Form 10-KSB for the year ended June 30,
1999, as filed with the Commission, is available upon request, without charge,
by writing to PHC, Inc., 200 Lake Street, Suite 102, Peabody, Massachusetts
01960, Attention: Bruce A. Shear.
We furnish our stockholders and warrant holders with annual reports
containing audited financial statements and such other periodic reports as we
may from time to time deem appropriate or as may be required by law.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference and made a part of this prospectus are
the following: (1) our Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1999 filed with the Commission on October 13, 1999 as amended on
October 20, 1999 and November 29, 1999; (2) our Proxy Statement filed with the
Commission on November 18, 1999; (3) our Quarterly Report on Form 10-QSB for the
quarters ended September 30, 1999 filed with the Commission on November 15,
1999, December 31, 1999 filed with the Commission on February 14, 2000 as
amended on May 3, 2000 and May 9, 2000 and March 31, 2000 filed with the
Commission on May 12, 2000 as amended on June 1, 2000; and (4) the description
of the Class A Common Stock, which is registered under Section 12 of the
Exchange Act, contained in the company's Registration Statement on Form 8-A
dated December 17, 1993, and the amendment thereto on Form 8-A/A dated March 2,
1994. All documents subsequently filed by the company with the Commission, as
required by Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this prospectus and prior to the termination of the offering, will be
deemed to be incorporated by reference into this prospectus and to be a part of
this prospectus from the respective dates of filing of such documents. Any
statement contained in any document incorporated by reference shall be deemed to
be modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus. All information appearing in this prospectus is qualified in its
entirety by the information and financial statements (including notes to the
financial statements) appearing in the documents incorporated by reference,
except to the extent set forth in the immediately preceding statement.
The company will provide without charge to each person who receives a
prospectus, upon written or oral request of such person, a copy of the
information that is incorporated by reference herein. Requests for such
information should be directed to: PHC, Inc., 200 Lake Street, Suite 102,
Peabody, Massachusetts 01960, Attention: Bruce A. Shear.
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SELLING SECURITY HOLDER
The Shaar Fund, LTD acquired 136,000 shares of series C convertible
preferred stock and warrants to purchase 125,000 shares of class A common stock
from the company in June 2000. This prospectus registers the shares of common
stock issuable upon conversion of the preferred stock and exercise of the
warrants.
SHARES OF CLASS A
COMMON STOCK
BENEFICIALLY
OWNED OR ISSUABLE
ON CONVERSION OF
OUTSTANDING
CONVERTIBLE
NAME, ADDRESS AND SECURITIES BEFORE WARRANTS TO NUMBER OF
PRIMARY CONTACT OF THE OFFERING PURCHASE SHARES SHARES OF
SELLING SECURITY EXCLUSIVE OF OF CLASS A CLASS A COMMON
HOLDER WARRANTS COMMON STOCK STOCK OFFERED
_______________________________________________________________________________
EXERCISE EXPIRATION
NUMBER PRICE DATE
-------------------------------------------------------------------------------
The Shaar Fund Ltd. 1,283,018 125,000 $3.00 6/28/2003 1,408,018
Samuel Levinson
c/o Levinson Capital Mgmt
2 World Trade Center
Suite 1820
New York, NY 10048
On June 28, 2000 the company entered into a securities purchase agreement
with The Shaar Fund, LTD, an investor. As a result of this transaction, the
Investor acquired a warrant to purchase 125,000 shares of class A common stock
and 136,000 shares of series C 8% convertible preferred stock for $1,000,000.
The investor is required to purchase an additional 34,000 shares of series C
preferred stock as provided in the agreement for $250,000.
Each share of preferred stock may be converted, in whole or in part, at
any time following the earlier of 180 days after the Closing Date and the
effective date of this prospectus.
The number of shares of common stock issuable upon conversion of each share
of preferred stock is calculated by multiplying the number of shares of
preferred stock to be converted by the stated value of $10.00, plus accrued and
unpaid dividends and divided by the applicable conversion price calculated as
described below. For the purpose of this filing we are assuming the conversion
price was $1.06 on the date of the transaction.
The conversion price is equal to the lesser of 125% of the closing bid
price for the Common Stock on the closing date of the agreement (subject to
adjustment for any stock-split or stock combination to occur after the date of
the agreement) and 97% of the market price (the arithmetic mean of the closing
bid prices of the common stock as reported on Nasdaq for the five consecutive
trading days on which the lowest closing bid prices are reported during any
valuation period) on the date of conversion; PROVIDED that any unconverted
preferred stock remaining 211 days after the closing date may be converted at a
conversion price per share of common stock equal to 94% of the market price;
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PROVIDED, FURTHER, that any unconverted preferred stock remaining 271 days after
the closing date may be converted at a conversion price per share of common
stock equal to 91% of the market price; and PROVIDED, FURTHER, that if the
common stock is delisted off Nasdaq for any reason, then any remaining
unconverted preferred stock may be converted at a conversion price per share of
common stock equal to 50% of the market price. At the company's option, the
amount of accrued and unpaid dividends as of the date of a conversion (whether
or not earned or declared, whether or not there were funds legally available for
the payment of dividends and whether or not a dividend payment due date has
occurred since the last dividend payment) shall not be subject to conversion but
instead may be paid in cash as of the conversion date; if the company elects to
convert the amount of such accrued and unpaid dividends at the conversion date
into common stock, the common stock issued to the investor shall be valued at
the applicable conversion price.
Conversion of the preferred stock is subject to limitations by the
agreement as follows. The investor shall not have the right, and the company
shall not have the obligation, to convert all or any portion of the preferred
stock (and the company shall not have the right to pay dividends on the
preferred stock in shares of common stock) if and to the extent that the
issuance to the investor of shares of common stock upon such conversion (or
payment of dividends) would result in the investor being deemed the "beneficial
owner" of more than 5% of the then outstanding shares of common stock within the
meaning of Section 13(d) of the Securities Exchange Act.
The agreement further provides that if and to the extent that, on any
date, the holding by the investor of shares of the preferred stock would result
in the investor's becoming subject to the provisions of Section 16(b) of the
Exchange Act in virtue of being deemed the "beneficial owner" of more than 10%
of the then outstanding shares of common stock, then the investor shall not have
the right, and the company shall not have the obligation, to convert so many of
the shares of preferred stock that it would cause the investor to be deemed the
beneficial owner of more than 10% of the then outstanding shares of common stock
during the period ending 60 days after the Section 16 determination date.
Finally, the company shall not issue shares of common stock upon conversion
of any shares of preferred stock or as a dividend on the preferred stock, if
such issuance of common stock, when added to the number of shares of common
stock previously issued by the company upon conversion of shares of the
Preferred Stock, upon exercise of the Warrant and in payment of dividends on the
preferred stock, would equal or exceed 20% of the number of shares of the common
stock issued and outstanding on the date of issuance of the preferred stock.
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PLAN OF DISTRIBUTION
The class A common stock offered hereby may be sold from time to time in
the over the counter market through underwriters, dealers, brokers or other
agents. PHC will receive $375,000 if the warrants to purchase 125,000 shares
being registered are exercised; however, PHC will receive no proceeds from the
sale of the additional 1,283,018 shares of class A common stock included in this
registration statement.
The class A common stock offered may be sold from time to time in one
or more transactions at a fixed offering price, which may be changed, or at
varying prices determined at the time of sale or at negotiated prices. The
selling security holder will determine the selling price at the time of the
transaction or by an agreement with its underwriters, dealers, brokers or other
agents.
Any underwriters, dealers, brokers or other agent to or through whom
class A common stock offered hereby is sold may receive compensation in the form
of underwriting discounts, concessions, commissions or fees from a selling
security holder and/or purchasers of class A common stock for whom they may act
as agent or to whom they may sell as principal, or both (which compensation to a
particular underwriter, broker, dealer or other agent might be in excess of
customary commissions). In addition, a selling security holder and any such
underwriters, dealers, brokers or other agents may be deemed to be underwriters
under the Securities Act, and any profits on the sale of class A common stock by
them and any discounts, commissions or concessions received by any of such
persons may be deemed to be underwriting discounts and commissions under the
Securities Act. Those who act as underwriter, broker, dealer or other agent in
connection with the sale of the class A common stock will be selected by a
selling security holder and may have other business relationships with PHC and
its subsidiaries or affiliates in the ordinary course of business. PHC cannot
presently estimate the amount of any such discounts, commissions or concessions.
PHC knows of no existing arrangements between the selling security holders and
any underwriter, dealer, broker or other agent.
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LEGAL MATTERS
Arent Fox Kintner Plotkin & Kahn, Washington, DC have passed upon the
validity of the securities offered hereby for PHC.
EXPERTS
The financial statements incorporated by reference in this prospectus have
been audited by BDO Seidman, LLP., independent certified public accountants, to
the extent and for the periods set forth in their report incorporated herein by
reference and are incorporated herein by reference in reliance upon the
authority of said firm as experts in accounting and auditing.
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No dealer, salesman or any other person
has been authorized to give any
information or to make any
representations other than those
contained in this prospectus in PHC, INC.
connection with the offering made
hereby, and, if given or made, such PIONEER BEHAVIORAL HEALTH
information or representations must not
be relied upon as having been authorized
by PHC. This Prospectus does not
constitute an offer to sell or a 1,408,018 SHARES OF CLASS A COMMON
solicitation of an offer to buy, by any STOCK
person in any jurisdiction in which it
is unlawful for such person to make such
offer or solicitation. Neither the
delivery of this prospectus nor any
offer, solicitation or sale made
hereunder shall under any circumstances
create any implication that the
information herein contained is correct
as of any time subsequent to the date of
the prospectus.
TABLE OF CONTENTS
PAGE
Prospectus Summary 3
Risk Factors
Operating Risks: 6-7
Delay in government payments 6
Managed care rates 6
Collectability of Accounts
Receivable 6
Lack of access to capital 6
Reliance on key clients 7
Rapid regulatory change 7
Negative cash flow 7
Sole source contracts 7
Acquisition and expansion 7
Staffing shortages 7
Management Risks: 8
Control of PHC by Bruce A.
Shear 8
Retaining key personnel 8
Market Risks: 8
Nasdaq delisting 8
Common Stock liquidity 8
Low trading volume 8
Issuance of Preferred Stock 8
Available Information 9
Incorporation of Documents by
Reference 10
Selling security holders 11-15
Plan of Distribution 16
Legal Matters 17
Experts 17
PROSPECTUS
JULY 21, 2000
