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, 2000.
|_| 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
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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)
-------------------------------------------------------------------------------
Indicate by check mark 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___
Number of shares outstanding of each class of common equity, as of April 30,
2000:
Class A Common Stock 7,009,779
Class B Common Stock 727,170
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
(Check one):
Yes______ No __X__
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PHC, INC.
PART I. FINANCIAL INFORMATION
Item 1. Note D to the Condensed Consolidated Financial Statements is being
revised to provide addtional disclosure regarding the method used to
determine the adequacy of the reserve on amounts due from the
unrelated professional corporation - March 31, 2000.
Note E to the Condensed Consolidated Financial Statements is being
revised to present segment information for the quarters ended March 31,
2000 and 1999 in addition to the information for the nine month periods
ended March 31, 2000 and 1999.
Item 2. Management's Discussion and Analysis or Plan of Operation is being
revised to expand information on the impact of patient days on revenues.
PART II. OTHER INFORMATION
Item 6. Exhibits
Signatures
3
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, JUNE 30,
2000 1999
-------- --------
ASSETS (unaudited)
Current assets:
Cash & cash equivalents $ 172,852 $ 381,170
Accounts receivable, net of allowance for bad
debts of $3,374,100 at March 31, 2000,
$3,647,848 at June 30, 1999 6,634,608 6,343,227
Prepaid expenses 162,284 101,865
Other receivables and advances 232,462 334,155
Deferred income tax asset 459,280 459,280
Other receivables, related party 77,245 53,517
_________ _________
Total current assets 7,738,731 7,673,214
Accounts receivable, noncurrent 639,000 595,000
Other receivables, noncurrent, related party, net
of allowance for doubtful accounts of $1,162,287
at March 31, 2000 and $782,000 at June 30, 1999 3,211,891 2,908,113
Other receivable 128,721 109,165
Property and equipment, net 1,377,816 1,483,319
Deferred income taxes 154,700 154,700
Deferred financing costs, net of amortization of
$77,072 at March 31, 2000 and $64,041 at June 30,
1999 32,036 45,067
Goodwill, net of accumulated amortization of
$195,642 at March 31, 2000 and $116,900 at June
30, 1999 1,682,334 1,761,075
Deferred costs related to discontinued operations 546,778 219,443
Other assets 100,849 78,338
___________ ___________
Total assets $15,612,856 $15,027,434
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,684,353 $ 1,832,750
Notes payable--related parties 200,000 200,000
Current maturities of long term debt 1,827,246 1,286,318
Revolving credit note 1,914,641 1,669,830
Current portion of obligations under capital
leases 79,543 60,815
Accrued payroll, payroll taxes and benefits 360,315 333,955
Accrued expenses and other liabilities 1,584,578 1,459,290
Net current liabilities of discontinued
operations 2,641,537 2,641,537
___________ __________
Total current liabilities 10,292,213 9,484,495
___________ __________
Long-term debt 1,371,679 1,730,230
Obligations under capital leases 168,800 51,657
Convertible debentures 500,000 500,000
___________ __________
Total noncurrent liabilities 2,040,479 2,281,887
___________ __________
Total liabilities 12,332,692 11,766,382
___________ __________
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000
shares authorized, 813 shares issued and
outstanding June 1999 -- 8
Class A common stock, $.01 par value; 20,000,000
shares authorized, 7,005,404 and 5,612,930
shares issued March 2000 and June 1999,
respectively 70,054 56,129
Class B common stock, $.01 par value; 2,000,000
shares authorized, 727,170 and 727,210 issued
March 2000 and June 1999 respectively, convertible
into one share of Class A common Stock 7,272 7,272
Additional paid-in capital 16,631,381 15,967,176
Treasury stock, 2,776 shares at cost (12,122) (12,122)
Accumulated deficit (13,416,421) (12,757,411)
___________ ____________
Total stockholders' equity 3,280,164 3,261,052
___________ _____________
Total liabilities and stockholders' equity $15,612,856 $15,027,434
=========== ============
See Notes to Condensed Consolidated Financial Statements
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PHC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31 MARCH 31
2000 1999 2000 1999
(as restated) (as restated)
___________________________________________________
Revenues:
Patient Care, net $5,541,406 $4,333,651 $13,599,089 $13,125,581
Management Fees 290,192 122,141 783,427 518,983
Other 148,434 254,092 469,076 726,965
__________ __________ __________ __________
Total revenue 5,980,032 4,709,884 14,851,592 14,371,529
__________ __________ __________ __________
Operating expenses:
Patient care expenses 2,485,483 2,165,868 6,822,757 6,828,704
Cost of management
contracts 147,133 130,292 364,899 389,304
Provision for doubtful
accounts 560,641 275,263 1,629,029 1,419,583
Website expenses 200,817 -- 548,657 --
Administrative expenses 1,895,836 1,808,024 5,373,104 5,967,518
__________ __________ __________ __________
Total operating
expenses 5,289,910 4,379,447 14,738,446 14,605,109
__________ __________ __________ __________
Income (loss)from operations 690,122 330,437 113,146 (233,580)
__________ __________ __________ __________
Interest income 111,604 118,258 309,780 357,006
Other income 35,874 19,286 161,935 58,206
Interest expense (215,793) (240,612) (601,071) (1,013,046)
__________ __________ __________ __________
Total other expenses (68,315) (103,068) (129,356) (597,834)
__________ __________ __________ __________
Income (loss) before
Provision for Taxes 621,807 227,369 (16,210) (831,414)
Provision for Income Taxes 53,189 43,724 53,289 44,635
__________ __________ __________ __________
Net income (loss) $ 568,618 $ 183,645 $ (69,499) $ (876,049)
========= ========= =========== ===========
BASIC AND DILUTED EARNINGS PER SHARE
Net income (loss) $ 568,618 $ 183,645 $ (69,499) $ (876,049)
Preferred stock dividends (533,318) (62,547) (589,514) (92,356)
__________ __________ __________ __________
Income (loss)applicable to
common shareholders $ 35,300 $ 121,098 $ (659,013) $ (968,405)
========= ========= =========== ===========
Basic income (loss) per
common share $ 0.00 $ 0.02 $ (0.10) $ (0.16)
Basic weighted average number
shares outstanding 7,225,013 6,182,204 6,645,742 5,910,928
Diluted income (loss) per
common share $ 0.00 $ 0.02 $ (0.10) $ (0.16)
Diluted weighted average number
of shares outstanding 7,651,468 6,194,456 6,645,742 5,910,928
See Notes to Condensed Consolidated Financial Statements
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PHC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
MARCH 31
2000 1999
(as restated)
_____________________________
Cash flows from operating activities:
Net loss $(69,499) $(876,049)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 249,474 249,483
Compensatory stock options, stock and warrants
issued for obligations 104,490 174,234
Changes in:
Accounts Receivable (580,750) 325,224
Prepaid expenses (60,419) (165,512)
Other assets (349,846) 69,859
Accounts payable (148,397) 194,736
Accrued expenses and other liabilities 151,648 (152,036)
__________ ___________
Net cash used in operating activities (703,299) (180,061)
__________ ___________
Cash flows from investing activities:
Acquisition of property and equipment (64,231) (150,420)
Disposition of property, equipment and
intangibles -- 363,104
__________ ___________
Net cash provided by (used in) investing activities (64,231) 212,684
__________ ___________
Cash flows from financing activities:
Revolving debt, net 244,811 (283,181)
Net debt activity 318,248 (344,550)
Deferred financing costs (5,288) (3,319)
Preferred stock dividends paid (4,809) (5,712)
Issuance of common stock 6,250 15,011
Convertible debt -- 500,000
__________ ___________
Net cash provided by (used in)financing activities 559,212 (121,751)
__________ ___________
NET DECREASE IN CASH (208,318) (89,128)
Beginning cash balance 381,170 227,077
__________ ___________
ENDING CASH BALANCE $172,852 $137,949
========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $616,071 $802,549
Income taxes 88,689 94,919
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Conversion of preferred stock to common stock 756,346 185,571
Issuance of preferred stock in lieu of cash
dividends 33,386 44,000
Issuance of common stock in lieu of cash
dividends 551,319 54,447
See Notes to Condensed Consolidated Financial Statements
6
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PHC, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE A - THE COMPANY
PHC, Inc. and its wholly owned subsidiaries (the "Company") is a national
health care company specializing in behavioral health services including the
treatment of substance abuse, which includes alcohol and drug dependency and
related disorders and the provision of psychiatric services. The Company also
provides management, administrative and online behavioral health services. The
Company primarily operates under three business segments:
(1) BEHAVIORAL HEALTH TREATMENT SERVICES, including two substance abuse
treatment facilities: Highland Ridge Hospital, located in Salt Lake City, Utah;
and Mount Regis Center, located in Salem, Virginia, and eight psychiatric
treatment locations which include Harbor Oaks Hospital, a 64-bed psychiatric
hospital located in New Baltimore, Michigan and seven outpatient behavioral
health locations (two in Las Vegas, Nevada operating as Harmony Healthcare, one
in Shawnee Mission, Kansas operating as Total Concept and four locations
operating as Pioneer Counseling Center in the Detroit, Michigan metropolitan
area);
(2) BEHAVIORAL HEALTH ADMINISTRATIVE SERVICES, including delivery of
management, administrative and help line services. PHC, Inc. provides management
and administrative services for its behavioral health treatment subsidiaries and
BSC-NY, Inc., a subsidiary of PHC, Inc., provides management services on behalf
of physician owned behavioral health practices in the greater New York City
metropolitan area. Pioneer Development and Support Services ("PDSS") provides
help line services primarily through contracts with major railroads; and
(3) BEHAVIORAL HEALTH ONLINE SERVICES, which includes behavioral health
education, training and products for the behavioral health professional, through
its website behavioralhealthonline.com.
In June, 1998 the Company's sub acute long-term care facility, Franvale
Nursing and Rehabilitation Center, in Braintree, Massachusetts was closed in a
state receivership action which was precipitated when the Company caused the
owner of the Franvale facility, Quality Care Centers of Massachusetts, Inc., to
institute a proceeding under Chapter 11 of the Federal Bankruptcy Code. The net
assets and liabilities of this facility are shown as discontinued operations in
the accompanying financial statements. The liquidation of the assets and
liabilities of Franvale may result in a non-cash financial statement gain. The
recognition of any gain has been deferred until final resolution of all
contingent liabilities.
NOTE B - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-QSB and Item 310 of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the nine months ended March 31, 2000
are not necessarily indicative of the results that may be expected for the year
ending June 30, 2000. The accompanying financial statements should be read in
conjunction with the June 30, 1999 consolidated financial statements and
footnotes thereto included in the Company's 10-KSB filed on October 13, 1999 as
amended on October 20, 1999 and November 29, 1999.
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NOTE C - RESTATEMENT OF MARCH 31, 1999 FINANCIAL INFORMATION
In December 1998 the Company issued $500,000 in convertible debentures
together with 25,000 warrants and 105,000 warrants in lieu of cash for
professional fees. In error the value of these warrants was not charged as an
expense during the December 31, 1998 and March 31, 1999 quarters as required.
The Company has amended the December 31, 1998 and March 31, 1999 financial
information to reflect the Black-Scholes value of these warrants as additional
expense of $69,357 and $31,400 respectively.
The Company also amended the December 31, 1998 financial information to
reverse the recognition of part of the gain related to the liquidation of assets
of Quality Care Centers of Massachusetts, Inc. having determined that it was
more appropriate to defer recognition of any gain until final resolution of all
contingent liabilities. The accompanying balance sheet includes approximately
$2,600,000 in current liabilities and $545,000 in deferred expenses related to
the closing of the Quality Care Centers of Massachusetts facility, Franvale. The
deferred expenses are from various litigations brought against the subsidiary,
which except for the Massachusetts litigation, have been settled and related
legal costs. The Company anticipates that the final case pending, which was
filed by the State of Massachusetts, will result in additional costs of less
than the reserves available when all cases are settled. Based on existing facts
and conditions we anticipate that the elimination of this liability may result
in a non-cash gain and an increase in net worth. (See our 10-QSB for December
31, 1999 filed with the commission on February 14, 2000, "Part II, Item 1, Legal
Proceedings" for details regarding the case filed by the State of Massachusetts)
NOTE D - RECEIVABLE DUE FROM UNRELATED PROFESSIONAL CORPORATION
On November 1, 1996, BSC-NY, Inc. ("BSC"), merged with Behavioral Stress
Centers, Inc., a provider of management and administrative services to
psychotherapy and psychological practices in the greater New York City
Metropolitan Area. In connection with the merger, the Company issued 150,000
shares of PHC, Inc. Class A common stock to the former owners of Behavioral
Stress Centers, Inc. New York currently prohibits the ownership of a
professional corporation by a corporation; therefore, in connection with the
merger, a physician owned entity was formed, Shliselberg Physician Services,
P.C. formerly Perlow Physicians, P.C. ("Shliselberg"), to acquire the assets of
the medical practices theretofore serviced by Behavioral Stress Centers, Inc.
The Company advanced Shliselberg the funds to acquire those assets and at March
31, 2000 Shliselberg owed the Company $4,374,178 which includes in addition to
acquisition costs, management fees of approximately $2,351,000 and interest on
the advances of approximately $869,000. During fiscal 1998 the Company
established a reserve against this receivable in the amount of $382,000. The
Company increased the reserve to $782,000 in the fiscal year ended June 30, 1999
and to $1,162,287 through March 31, 2000. The reserve for estimated
uncollectible amounts is based on management's assessment of Shliselberg's
ability to pay its debts. Such assessment includes an evaluation of
Shliselberg's working capital, net assets, profitability and current and
projected cash flow. The reserve has been increased since June 30, 1998 to cover
net losses incurred by Shliselberg. The carrying value of the Company's
receivable at March 31, 2000 approximates the net assets of Shliselberg. Based
on management's assessment of Shliselberg's projected cash flow, collection of
the receivable is expected beyond the next twelve months. Accordingly, the
receivable is classified as a noncurrent asset in the accompanying balance
sheets.
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NOTE E - BUSINESS SEGMENT INFORMATION
The Company's behavioral health treatment services have similar economic
characteristics, services, patients and clients. Accordingly, all behavioral
health treatment services are reported on an aggregate basis under one segment.
The Company's segments are more fully described in Note A above. Residual income
and expenses from closed facilities are included in the administrative services
segment. The following summarizes the Company's segment data:
Behavioral Health
Treatment Administrative Online
Services Services Services Eliminations Total
_______________________________________________________________________________
For the three
months ended
March 31,2000
Revenues -- external
customers $5,541,406 $438,626 $ -- $ -- $5,980,032
Revenues --
intersegment -- 464,000 -- (464,000) --
Net income (loss) 882,849 (113,414) (200,817) -- 568,618
For the three
months ended
March 31, 1999
Revenues -- external
customers $4,325,170 $384,714 $ -- $ -- $4,709,884
Revenues --
intersegment -- 405,000 -- (405,000) --
Net income (loss) 144,666 38,979 -- -- 183,645
For the nine
months ended March
31, 2000
Revenues - external
customers $13,599,089 $1,252,503 $ -- $ -- $14,851,592
Revenues -
intersegment -- 1,342,000 -- (1,342,000) --
Net income (loss) 231,107 248,051 (548,657) -- (69,499)
Total assets 9,988,294 25,366,980 18,931 (19,761,349) 15,612,856
For the nine
months ended March
31, 1999
Revenues - external
customers 12,587,893 1,783,636 -- -- 14,371,529
Revenues -
intersegment -- 1,203,000 -- (1,203,000) --
Net loss (608,183) (267,866) -- -- (876,049)
Total assets 10,203,994 24,992,297 -- (19,259,430) 5,936,861
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PHC, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net patient care revenue increased 27.9% to $5,541,406 for the three months
ended March 31, 2000 from $4,333,651 for the three months ended March 31, 1999
and 3.6% to $13,599,089 for the nine months ended March 31, 2000 from
$13,125,581 for the nine months ended March 31, 1999. This increase in revenue
is due to a 29.8% increase in census in our in patient facilities and the
expansion of treatment services at our chemical dependency facility in Salt Lake
City Utah to include dual diagnosis patients. During this period of increased
inpatient census, we also experienced a substantial increase in out patient
visits. The quarter ended March 31, 2000 also provided more services to private
pay patients and fewer patients paid under lower rate contracts than in most
prior periods providing for a more profitable payor mix.
Two of the key indicators of profitability of inpatient facilities are
patient days, or census, and payor mix. Patient days is the product of the
number of patients times length of stay. Increases in the number of patient days
result in higher census, which coupled with a more favorable payor mix (more
patients with higher paying insurance contracts or paying privately) will
usually result in higher profitability. Therefore, patient census and payor mix
are monitored very closely.
Patient care expenses increased 14.8% to $2,485,483 for the three months
ended March 31, 2000 from $2,165,868 for the three months ended March 31, 1999
due to the increased costs of salaries, drugs, laboratory tests, food and other
hospital supplies related to the increase in census. Although there was an
increase in patient revenues for the nine months ended March 31, 2000 over the
same period in 1999, we experienced small decrease in patient care expenses for
the nine months ended March 31, 2000 due to recent streamlining and
consolidation of operations in prior quarters. Administrative expenses,
excluding bad debt and website expenses, have also increased 4.9% to $1,895,836
for the three months ended March 31, 2000 from $1,808,024 for the three months
ended March 31, 1999. This increase is primarily due to increased corporate
marketing expenses and increased consultant and maintenance costs related to our
Salt Lake City Utah facility. Administrative costs for the nine months ended
March 31, 2000 decreased 10% to $5,373,104 from $5,967,518 for the nine months
ended March 31, 1999. This decrease in expenses is also a result of the
reengineering and streamlining of all operations.
Website expenses include all costs relevant to the development and the
operations of the Behavioralhealthonline.com website. These expenses are
expected to continue to increase while the site is in development stages. The
site is not expected to produce revenues until the final quarter of fiscal 2000.
We are currently pursuing equity financing for the site development. The revenue
of the website will include only commissions on the sale of products and
services. A corresponding liability will be recorded at the time of the sale for
the cost of the product or service due to the provider. This is necessary since
the full amount of the sale will be charged to the end user and processed by
Behavioralhealthonline.com.
Interest expense decreased 40.6% to $601,071 for the nine months ended
March 31, 2000 from $1,013,046 for the nine months ended March 31, 1999. This
decrease is primarily due to one time interest charges on debt renewal and the
charge of the black scholes value of warrants issued in connection with the
renewal of the debt in the last fiscal year.
Provision for taxes represents State income taxes. The company has recorded
no provision for Federal income taxes for the nine months ended March 31, 2000
and 1999 due to available net operating loss carry forwards.
Preferred stock dividends increased to $533,318 for the quarter ended March
31, 2000 from $62,547 for the quarter ended March 31, 1999. The increase in the
price of the class A common stock in January prompted the conversion of all
outstanding preferred stock. This preferred stock carried a minimum conversion
price of $2.00 with an additional dividend due for the difference between the
actual conversion price and the minimum conversion price. Dividends recorded in
the quarter ended March 31, 2000 of $530,252 were a result of this minimum
conversion price and were paid in restricted class A common stock.
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We continue to view receivables most conservatively by maintaining the
ratio of reserves for bad debt to receivables at approximately 32% which is
evidenced by a 14.7% increase in bad debt expense for the nine months ended
March 31, 2000 over the same period last year. This amount is based on the
current age of accounts receivable and is expected to decrease as our more
aggressive collection practices decrease the number of days our patient
receivables remain unpaid. In addition to decreasing the number of days our
patient receivables remain outstanding, our more timely follow-up practice has
resulted in fewer accounts charged to bad debt due to untimely filing of claims
since errors on claims are identified and corrected in a more timely manner than
in prior years. The $639,000 shown as non-current patient accounts receivable is
presented at net realizable value. These amounts are due from individuals in
payment for treatment on which extended payment plans have been arranged and are
being met.
During the nine months ended March 31, 2000 we increased deferred costs
related to discontinued operations by $327,335 to $546,778. These costs
represent additional legal fees paid and accrued as a result of the ongoing
Quality Care Centers of Massachusetts litigation and investigation. This amount
will be offset by this discontinued segments liabilities of $2,641,537 when the
bankruptcy proceedings of that subsidiary have been finalized and result in
increased equity in that amount.
We also increased other assets by 28.7% to $100,849 as of March 31, 2000.
This is directly related to increases in deposits on expanded leased property
and deferred costs related to the equity financing for
Behavioralhealthonline.com.
LIQUIDITY AND CAPITAL RESOURCES
A significant factor in the liquidity and cash flow of the Company is the
timely collection of its accounts receivable. Net accounts receivable from
patient care increased during the quarter ended March 31, 2000 by 4.8%,
approximately $335,381. The Company continues to closely monitor its accounts
receivable balances and is working to reduce amounts due consistent with growth
in revenues.
During the quarter ended March 31, 2000 the Company met its cash flow needs
through ongoing accounts receivable financing and through debt and equity
transactions as follows:
During the quarter ended March 31, 2000 the Company issued 1,221,860 shares
of class A common stock in exchange for the remaining 781 shares of Series B
Convertible Preferred Stock and $533,318 in dividends.
In January 2000 the Company issued 13,572 shares of class A common stock in
conjunction with a consultant agreement.
In March 2000 the Company issued warrants to purchase 10,000 shares of
class A common stock exercisable at $1.50 in exchange for $10,000 in consultant
services provided to Behavioral Health Online, Inc.
Also in the quarter ended March 31, 2000 the Company issued 12,330 shares
of class A common stock as part of the employee stock purchase plan, 3,000
shares of class A common stock as an employee bonus and 5,000 shares of class A
common stock upon the exercise of employee stock options at $1.25 each.
We utilize our accounts receivable funding facilities to the maximum extent
available to meet current cash needs and sustain existing operations. Although
our existing operations are operating at a profit, expenses incurred by our
non-revenue producing start-up Company, Behavioral Health Online, Inc., cause
negative cash flow from operations and create the need for additional financing.
We are currently aggressively pursuing financing for our website operations to
help relieve the strain on cash flow from our behavioral health facilities. If
financing for our website operations does not become available in the near
future or should our existing operations result in unanticipated losses, we may
be required to borrow funds on less favorable terms than have been available in
the past.
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YEAR 2000 COMPLIANCE
As reported in the company's December 31, 1999 10-QSB the required
modifications to the Company's billing and receivable software were completed in
a timely manner to preclude major problems with the change over to the
eight-digit date on January 1, 2000. Some minor problems arose in the area of
reporting, which were immediately corrected without any major delays in work
progress.
We did not experience any stoppage or delays in receipt of essential
products nor were there any year 2000 equipment problems or utility service
interruptions.
12
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PART II OTHER INFORMATION
ITEM 6. EXHIBITS
EXHIBIT NO. DESCRIPTION
27.00 Financial Data Schedule
13
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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: June 1, 2000 /s/ Bruce A. Shear
President
Chief Executive Officer
Date: June 1, 2000 /s/ Paula C. Wurts
Controller
Assistant Treasurer
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