Lease expenses were $70,582 and $66,230 during the three months ended March 31, 2020 and 2019, respectively.

Pacific Health Care Organization, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the ThreeNine Months Ended March 31,September 30, 2020

(Unaudited)

Lease expenses were $72,687 and $73,825 during the three months ended September 30, 2020 and 2019, respectively and $225,903 and $212,723 during the nine months ended September 30, 2020 and 2019, respectively.

NOTE 3 - P3AYCHECK - SUBSEQUENT EVENTSPROTECTION PROGRAM LOANS

CARES Act Payroll Protection Program Loans

In April and May 2020 Pacific Health Care Organization, Inc. (“PHCO”), Medex Managed Care, Inc. (“MMC”) and Medex Medical Management, Inc. (“MMM”) received loans pursuant to the Coronavirus Aid, Relief and Economic Security (“CARES”) Act PayrollPaycheck Protection Program.

PHCO received a loan in the amount of $133,400 (the “PHCO PPP Loan”) from Pacific Western Bank. The PHCO PPP Loan is in the form of a Note dated April 21, 2020, issued by PHCO, which matures on April 21, 2022. The PHCO PPP Loan bears interest at a rate of 1% per annum and is payable monthly commencing on November 21, 2020. The monthly principal and interest payment for the PHCO PPP Loan will be $7,507.

MMCMMM and MMMMMC received loans of $267,700 and $59,600 respectively, from First Citizens Bank, (collectively the “Medex Companies PPP Loans”). The Medex Companies PPP Loans are also in the form of Notes dated April 30, 2020 and May 11, 2020, issued by MMM and MMC respectively, and mature on April 30, 2022 and May 11, 2022.2022, respectively. The Medex Companies PPP Loans bear interest at a rate of 1.0% per annum and are payable monthly commencing on November 30, 2020 for the MMM loan and December 11, 2020 for the MMC loan. The combined monthly principal and interest payments for the Medex Companies PPP Loans will be $18,419.

Funds from these loans may be used for payroll, rent, utilities and costs incurred to continue group health insurance benefits. The terms of the loans provide that certain amounts may be forgiven if the funds are used for qualifying expenses as described in the CARES Act.

NOTE 4 - SUBSEQUENT EVENTS

In accordance with ASC 855-10 Company management reviewed all material events through the date of issuance and other than the foregoing, there are no material subsequent events to report.

Item 2.  Management’s Discussion and Analysis of Financial Statements and Results of Operations

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are based on management’s beliefs and assumptions and on information currently available to them. For this purpose, any statement contained in this report that is not a statement of historical fact may be deemed to be forward-looking, including statements about our revenue, spending, cash flow, products, new customer acquisitions, trends, actions, intentions, plans, strategies and objectives. Without limiting the foregoing, words such as “may,” “hope,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “project,” “intend,” “budget,” “plan,” “forecast,” “predict,” “could,” “should,” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risksrisk and uncertainty, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industry in which we and our customers participate; the impacts of the Covid-19COVID-19 pandemic and our ability to react to those impacts; cost reduction efforts by our existing and prospective customers; competition within our industry, including competition from much larger competitors; business combinations; legislative requirements or changes which could render our services less competitive or obsolete; our failure to successfully develop new services, and/or products or to anticipate current or prospective customers’ needs; our ability to retain existing customers and to attract new customers; price increases; employee limitations; and delays, reductions, or cancellations of contracts we have previously entered.

Forward-looking statements are predictions and not guarantees of future performance or events. Forward-looking statements are based on current industry, financial and economic information, which we have assessed but which, by its nature, is dynamic and subject to rapid and possibly abrupt changes. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. We hereby qualify all our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of their dates and should not be relied upon. We undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise (other than pursuant to reporting obligations imposed on registrants pursuant to the Exchange Act) to reflect subsequent events or circumstances.

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes contained elsewhere in this report and in our other filings with the Commission.

Throughout this quarterly report on Form 10-Q, unless the context indicates otherwise, the terms, “we,” “us,” “our” or “the Company” refer to Pacific Health Care Organization, Inc., (“PHCO”) and our wholly-owned subsidiaries Medex Healthcare, Inc. (“Medex”), Industrial Resolutions Coalition, Inc. (“IRC”), Medex Managed Care, Inc. (“MMC”), Medex Medical Management, Inc. (“MMM”), and Medex Legal Support, Inc., (“MLS”) and Pacific Medical Holding Company, Inc. (“PMHC”).

Overview

We incorporated under the laws of the state of Utah in April 1970, under the name Clear Air, Inc. We changed our name to Pacific Health Care Organization, Inc., in January 2001. We have six wholly owned subsidiaries. In February 2001, we acquired Medex Healthcare, Inc. (“Medex”), a California corporation organized in March 1994, in a share for share exchange. Medex is in the business of managing and administering both Health Care Organizations (“HCOs”) and MedicalManaged Provider Networks (“MPNs”) in the state of California. In August 2001, we formed Industrial Resolutions Coalition, Inc. (“IRC”), a California corporation, as a wholly-owned subsidiary of PHCO.corporation. IRC oversees and manages the Company’s Workers’ Compensation Carve-Outs services. In June 2010, we acquired Medex Legal Support, Inc. (“MLS”), a Nevada corporation incorporated in September 2009. ��MLS offers lien representation services and Medicare Set-asideSet-Aside (“MSA”) services. In March 2011, we incorporated Medex Managed Care, Inc. (“MMC”) in the state of Nevada. MMC oversees and manages the Company’s utilization review and managed bill review services. In February 2012, we incorporated Medex Medical Management, Inc., (“MMM”) in the state of Nevada, as a wholly owned subsidiary of the Company.Nevada. MMM is responsible for overseeing and managing medical case management services. In March 2011, we incorporated Medex Managed Care, Inc. (“MMC”) in the state of Nevada, as a wholly owned subsidiary of the Company.  MMC oversees and manages the Company’s utilization review and bill review services. In October 2018, we incorporated Pacific Medical Holding Company, Inc. (“PMHC”) in the state of Nevada to act as a holding company for future potential acquisitions.

Business of the Company

We are workers’ compensation cost containment specialists providing a range of services principally to California employeesemployers and claims administrators. Our business objective is to deliver value to our clients that reduces their workers’ compensation related medical claims expense in a manner that will assure that injured employees receive high quality healthcare that allows them to recover from injury and return to gainful employment without undue delay. According to studies conducted by auditing bodies on behalf of the California Division of Workers’ Compensation, (“DWC”) the two most significant cost drivers for workers’ compensation are claims frequency and medical treatment costs.

Our clients include self-administered employers, insurers, third party administrators, municipalities and others. Our principal clients are located in the Statestate of California where the high cost of workers’ compensation insurance is a critical problem for employers. We have processedprocess medical bill reviews in 25 states. Our provider networks are composed of experts in treating worker injuries.

Impact of Covid-19COVID-19 on our Business

In late 2019 the novel coronavirus, Covid-19,COVID-19, was identified. By February 2020, the virus had spread to many countries around the world, including the United States. By late February, authorities in the United States began advising American businesses to prepare for the effects of the outbreak. On March 20,19, 2020, the governor of California issued a stay-at-home order except for essential services, such as grocery stores, gas stations and banks. In mid-March 2020 we implemented our disaster recovery and business plan addressing how our business operations would be performed by our employees working remotely. As a result, since late March 2020that time, nearly 100% of our employees have been working remotely and performing approximately 95% of our typical business functions, with the primary exceptions being certain manual, non-critical functions.

Even though we have been able to transition our work force and work flow to address the restrictions designed to “flatten the curve” of the Covid-19COVID-19 pandemic, the extent of the long-term adverse effect of the Covid-19COVID-19 pandemic on the economy, our industry, and our results of operations and financial condition is unknown and largely dependent on future developments, most of which, including the severity and duration of this pandemic, are beyond our control.

Revenue for our services is derived from our employer customers’ employee counts and workers’ workplace injuries. Several of our employer customers, including some of our largest customers, have had to suspend or significantly modify their operations during the stay-at-home order issued by the governor of California. This stay-at-home order has been extended until July 15, 2020, although certain industries are being allowed to open with restrictions in place.

The state orders have been modified to allow some categories of businesses to re-open under COVID-19 restrictions, while others, such as bars and restaurants, have been under various orders that have forced closures and re-openings several times. As of November 13, 2020, most client businesses are allowed to operate under COVID-19 restrictions but are continuing to experience lower-than normal business volume and employee counts due to the pandemic.

On May 6, 2020, the governor of California has declaredissued an executive order declaring that any employee thatwho becomes ill with Covid-19COVID-19 will be assumedpresumed to have contracted the disease in the workplace if the worker worked onsite any time during the fourteen-day period prior to the onset of the illness. This automatic assumption thatThe presumption is rebuttable by the disease was contractedemployer with sufficient evidence discovered within 30 days, but in the workplace effectivelymany cases this places the costburden of employee medical care for Covid-19COVID-19 cases on employers. The executive order was valid through July 5, 2020. A new California bill has been passed to address employer liability in Workers’ Compensation for COVID-19 cases contracted after the expiration of the Governor’s executive order. The bill includes a requirement that a certain percentage of the employer’s workers be confirmed to have contracted the coronavirus before a rebuttable presumption of industrial origin is applied to individual cases, which may impact the extent to which Workers’ Compensation is used to address its treatment on employers.in California.

The Actuary Committee of the California Workers’ Compensation Insurance Rating Bureau is presently attempting to assess the impact of the Covid-19COVID-19 pandemic on future claims frequency and costs in relation to historically traditional claims frequency during times of severe economic downturn. They are especially focused on post-termination claims, work-at-home arrangements, and the Covid-19COVID-19 presumption.

For the first two and one-half months of the quarter ended March 31, 2020, the Covid-19COVID-19 outbreak did not have a significant impact on our business. We began to experience some slowdown in claims in the last two weeks of March, which has continued intothrough the secondthird quarter of 2020. At this time, however, we cannot predict if, how or when our employer customers will be allowed to reopen/ramp up their operations, and when reopened/ramped up, whether those operations, employee counts and workplace injuries will be the same or less than they were before the outbreak of the Covid-19 pandemic.return to pre-COVID-19 operations/employment levels. We anticipate that reductions in employee counts and workplace injuries will continue to negatively impact our revenues and have an adverse impact on our results of operations and liquidity position.

On April 21, 2020, PHCO was granted a Paycheck Protection Program (“PPP”) loan for in an amount of $133,400. On April 30, 2020 and May 11, 2020 subsidiaries MMM and MMC were granted PPP loans of $267,700 and $59,600, respectively. In the spirit of the PPP loan program policy of protecting the continued economic stability of employees, we put virtually all of the PPP loan amounts toward payroll and employee benefit expenses. We are currently in the process of seeking forgiveness of the PPP loans via the federal policies set forth for this purpose. 

In late June 2020, the reduction in volume in some areas of our business became clear as a trend. As a result, and after attempts to cut expenses in other areas, it became necessary to institute a business restructuring that included a reduction in force. After conducting an analysis of departmental demand, departmental function, projected business needs, and personnel, we laid off four employees on July 16, 2020. The reduction in force has not impacted our customers or our revenue generation potential based on our current and projected business volume.

While we have taken steps to render our business functions remotely, to deploy these measures effectively, and to do our best to ensure data security, there is no guarantee the measures we have taken will be completely effective, that our productivity will not be adversely impacted, or that we will not encounter some of the common risks associated with a remote workforce, including employees accessing company data and systems remotely. As discussed in greater detail in Item 1A Risk Factorsof our Annual Reportannual report on Form 10-K, our business could be materially and adversely affected by the potential interruptions to our business operations arising from the Covid-19COVID-19 outbreak.

In addressing the risk of COVID-19 cases and Workers’ Compensation claims within the Company, we have also implemented onsite measures recommended by national, state, and local health authorities to reduce the chances of transmission among our employees. These measures include an office reopening plan, phased policy measures based on local and state orders and our own risk assessment, compliance with ventilation and other building-level recommendations as made possible by the building owner, physical barriers and signage, limited onsite presence, pre-shift symptom screening, requiring mask usage and social distancing, strictly limiting the occupancy of the office and each area within it, and other measures that as of the date of this report are recommended to reduce the risk of transmission of COVID-19 in office spaces.

Results of Operations

Comparison of the three months ended September 30, 2020 and 2019

The following represents selected components of our consolidated results of operations, for the three-month periods ended March 31,September 30, 2020 and 2019, respectively, together with changes from period-to-period:

Revenue

Total revenues during the three-month period ended September 30, 2020, decreased 23% to $1,415,754 compared to $1,838,705 during the three-month period ended September 30, 2019. During the same period, HCO, MPN, utilization review, medical bill review, medical case management and other fees decreased by 30%, 5%, 4%, 44%, 27%, and 29%, respectively.

HCOFees

During the three-month periods ended March 31,September 30, 2020 and 2019, HCO fee revenues were $326,665revenue was $264,781 and $370,342$376,170, respectively. The 12%30% decrease in HCO revenue was attributable primarily attributable to the loss of twothree customers a decrease in the numberfourth quarter of HCO notifications for existing2019 and early 2020 and COVID-19 business restrictions which caused employer customers due to employee reductions made by our customers and revenue from HCO employee notifications that was recognized in the first quarter in 2019 being shifted to the second quarter in 2020. These decreases weretemporarily or permanently reduce their workforce, partially offset by an increaseincreases in claim network fees associated with COVID-19 related work illness. As a result of the number of claims, renegotiation of certain deliverablesCOVID-19 business restrictions, fees generated to an existing customerenroll employees into our HCO networks, monthly HCO program administration fees, and the addition of a new customer.claim network fees for workplace injuries decreased. HCO revenue is generated largely from fees charged to our employer customers for access to our HCO networks, per claim fees, notification fees and fees for other ancillary services the employer customers using our HCO networks may select. HCO notifications are mailed out annually and handed out by the employer for all new hires during the month. We prepare the mailings no earlier than three months prior to the end of the previous year’s enrollment so that our employers are able to prepare their employee rosters. Delays in the employer providing accurate and timely employee rosters can delay the notification process causing changes to when we record the revenues.

MPN Fees

MPN fee revenue for the three-month periods ended March 31,September 30, 2020 and 2019, was $120,749were $124,836 and $123,865,$131,164, respectively, a decrease of 3% resulting from fewer5%, primarily due to COVID-19 business restrictions which caused employers to temporarily or permanently reduce their workforce which resulted in a decrease in the number of claims reported by customers.and MPN program fees. Like HCO revenue, MPN revenue is generated largely from fees charged to our employer customers for access to our MPN networks, per claim fees and fees for other ancillary services the employer customers using our MPN networks may select. Unlike the HCO, MPNs do not require annual notifications, but only require a notice to be given to an injured worker at the time the employer is notified by the injured worker that an injury occurred.

Utilization reviewReview

During the three-month periods ended March 31,September 30, 2020 and 2019, utilization review revenue was $296,055$307,139 and $292,683,$318,816, respectively. The increasedecrease of 1%4% in the 2020 period was primarily attributable to existing employer customers adding utilization review services to the suite of services they hire us to perform and an increase in the number of utilization reviews performed for existing employer customers who were already utilizing our utilization review services. These increases were partially offset by the loss of two customers. Our employer customers retain us toin the third quarter of 2020 and fewer utilization referrals for review proposalsas a result of COVID-19 restrictions for non-essential medical treatment. Utilization review can provide a safeguard against unnecessary and inappropriate medical treatment from the perspective of medical necessity, quality of care, and appropriateness of decision-making. Our employer customers retain us to review proposals for treatment.

Medical bill reviewMedical Bill Review

During the three-month period ended March 31,September 30, 2020, medical bill review revenue was $77,075 and $136,793, respectively. Medical bill review revenue decreased 38%by $59,718 when compared to $83,079 from $134,997 during the same period a year earlier. This decrease was primarily caused by processing fewer medical and hospital bills from existing customers due to a decrease inCOVID-19 restrictions placed on the volumedelivery by medical providers for non-essential medical treatment. Many of our existing customers have elected to pay the fee schedule, as opposed to having us review their hospital bills reviewed and the completion of a project of a backlog of bills for an existing customer. This decrease was partially offset by an existing customer adding medical bill review services to the existing suite of services we provide for them.bills. Medical bill review involves analyzing medical provider services and equipment billing to ascertain proper reimbursement. Such services include, but are not limited to, coding review and re-bundling, confirming that the services are customary and reasonable, fee schedule compliance, out-of-network bill review, pharmacy review, and preferred provider organization repricing arrangements. TheseOur medical bill review services can result in significant network savings.

Medical case managementCase Management

During the three months ended March 31,September 30, 2020 and 2019, medical case management revenue was $677,212$590,784 and $781,614,$804,004, respectively. ThisThe decrease in medical case management revenue of $213,220 was primarily due to COVID-19 restrictions placed on the resultdelivery of a decreasenon-essential medical treatment by medical providers and the loss of two customers in the number and amountthird quarter of time spent on claims managed with existing customers,2020, partially offset by certainincreases in medical management services on new and existing claims with current customers expandingand the suiteaddition of services they hire us to provide to include medical case management services.a new customer. Medical case management keeps medical treatment claims progressing to a resolution and assures treatment plans are aligned from a medical perspective. Medical oversight is a collaborative process that assesses plans, implements, coordinates, monitors and evaluates the options and services required to meet an injured worker’s health needs. MedicalA medical case managers actmanager acts as an ombudspersona liaison between the injured worker, claims adjuster, medical providers and attorneys to achieve optimal results for injured workers and employer/clients. We work to manage the number of nurses in our program to maintain our ratio of claims per nurse at a level that ensures timely and appropriate medical care is given to the injured worker and facilitates a faster claim closure for our customers.

Other

Other fees may consist of revenue derived from network access fees, lien representation, legal support services, Medicare-set-asideMedicare set-aside and workers’ compensation carve-outscarve-out services. Other fee revenue for three-month periods ended March 31,September 30, 2020 and 2019, was $49,149$51,139 and $79,937,$71,758, respectively. The decrease of $20,619 was due tothe result of fewer claimscustomers accessing our network and fewer Medicare-set-asides processed.Medicare set-asides referrals. We recorded no carve-out, lien representation, or legal support services during the three-month period ended September 30, 2020.

Expenses

Total expenses for the three months ended March 31,September 30, 2020 and 2019, were $1,381,728$1,225,294 and $1,346,116,$1,349,555, respectively. The 3% increasedecrease of $124,261 was primarily due tothe result of increases in bad debt provision, consulting fees, insurance, and outsource service fees, partially offset by depreciation and amortization, salaries and wages, professional fees, insurance, data maintenance, and general and administrative partially offset by decreases in depreciation, consulting fees, salaries and wages, and outsource service fees.expenses.

Depreciation and Amortization

During the three-month period ended March 31,September 30, 2020, we recorded depreciation and amortization expense of $17,231$14,122 compared to $18,884$18,512 during the comparable 2019 period. The decrease in depreciation and amortization was dueprimarily attributable to equipment that hadcertain fixed assets being fully depreciated prior to the quarter ended March 31, 2020.depreciated.

Bad Debtdebt Provision

During the three-month period ended March 31,September 30, 2020, we recorded bad debt provisions of $101 compared to $0 during the comparable 2019 period.  The increase in bad debt provision increased to $11,000 from $8,000 during the three-month period ended September 30, 2019. This increase was dueprimarily the result of an increase of customers with outstanding balances over 90 days during fiscal 2020, which was largely attributable to the writing off bad debtimpact of existingCOVID-19 on the businesses of our customers.

Consulting feesFees

ConsultingDuring the three months ended September 30, 2020, consulting fees decreased from $79,636increased 1% to $58,621 compared to $57,945 during the three months ended March 31, 2019, to $75,693 during the three months ended March 31, 2020.September 30, 2019. This decreaseincrease was the result of terminatingan increase in IT consulting fees offset by the termination of a consultant.consultant that was assisting with our insurance company acquisition search.

Salaries and wagesWages

During the three-month period ended March 31,September 30, 2020, salaries and wages decreased 1%12% to $745,989$694,352 compared to $753,705$789,319 during the same period in 2019. SalariesThe decrease in salaries and wages were lower duringwas the first quarter 2020 because we had one fewer full-time employee during that quarter.result of a reduction in our workforce of four employees.

Professional feesFees

For the three months ended March 31,September 30, 2020, we incurred professional fees of $87,226$68,979 compared to $77,965$86,241 during the three months ended March 31,September 30, 2019. The increase20% decrease in professional fees was mainly the result of higher fees paid to our medical consultants andlower legal fees, which was partially offset by decreased professional fees paid for accounting and medical case management services.fees, partially offset by increases in accounting fees.

Insurance

During the three-month period ended March 31,September 30, 2020, we incurred insurance expenses of $94,793,$91,951, a 29%13% increase over the same three-month period in 2019. TheThis increase in insurance expense was primarily attributable to increases in our group health insurance premiums. We expectand business insurance expenses will continuepremiums when compared to increase during 2020.the same period in 2019.

Outsource service feesService Fees

Outsource service fees consist of costs incurred by our subsidiaries in as a result of partially outsourcing general administrative tasks, utilization review, medical bill review, Medicare set-aside services and field medical case management services,fees and typically tends to increase and decrease in correspondence with increases and decreases in demand for those services. We incurred $106,114$115,803 and $124,809$111,567 in outsource service fees during the three-month periods ended MarchSeptember 30, 2020 and 2019, respectively. The 15%increase of $4,236 was primarily the result of increases in outsource services required for utilization review as we performed fewer utilization reviews in-house and outsourced more reviews during the third quarter 2020, partially offset by decreases in medical bill review, Medicare set-aside services, and field medical case management. We generally expect outsource service fees to fluctuate in correspondence with the level of utilization review, medical bill review and certain field medical case management services we provide.

Data Maintenance

During the three-month periods ended September 30, 2020 and 2019, data maintenance fees were $6,603 and $8,726, respectively. The decrease of $2,123 was the result of a reduction of HCO and MPN notification fees for existing customers due to employer customers reducing their workforce as a result of COVID-19 business restrictions during the three-month period ended September 30, 2020 when compared to the same period in 2019. Data maintenance fees tend to fluctuate from month to month depending on when new customers are enrolled, when the annual renewal of existing customer notification is due, and how many new employees our customers enroll in our HCO or MPN program.

General and Administrative

During the three-month period ended September 30, 2020, general and administrative expenses decreased 13% to $163,863 when compared to the three-month period ended September 30, 2019. This decrease was primarily attributable to decreases in dues and subscriptions, office supplies, parking, postage, rent-expense equipment, travel and entertainment and vacation expense, partially offset by increases in internet/IT enhancement, rent expense, telephone, and shareholders’ expense. These changes in general and administrative expenses were largely the result of COVID-19-related changes to how we have been conducting business during 2020.

Income from Operations

For the reasons described above total revenue during the three-month period ended September 30, 2020 decreased by $422,951, which was partially offset by a decrease of $124,261 from $1,349,555 in total expenses during the same period. Income from operations decreased by $298,690 or 61% during the three-month period ended September 30, 2020, when compared to the same period in 2019. 

Income Tax Provision

We realized income before taxes of $190,460 and $489,150 during the three-month periods ended September 30, 2020 and 2019, respectively, a decrease of $298,690. We similarly realized a decrease in volumeour income tax provision of $83,938, or 61%. The decrease in the provision of income taxes was the result of the decrease in income before taxes.

Net Income

During the three-month period ended September 30, 2020, total revenues of $1,415,754 decreased by 23% when compared to the same period in 2019. This decrease in total revenues was partially offset by a 9% decrease in total expenses, resulting in a 61% decrease in income from operations compared to the three months ended September 30, 2019. Correspondingly, we realized net income of $136,997 for the three-month period ended September 30, 2020, which reflects an 61% decrease compared to the three-month period ended September 30, 2019. 

Comparison of nine months ended September 30, 2020 and 2019

The following represents selected components of our customers that required outsource servicesconsolidated results of operations, for Medicare-set-asides,the nine-month periods ended September 30, 2020 and 2019, respectively, together with changes from period-to-period: