As filed with the Securities and Exchange Commission, Registration No. 333-121218
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
AMENDMENT NO. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933
PSYCHIATRIC HEALTH DIRECT CORPORATION
(Name of small business issuer in its charter)
NORTH CAROLINA
(State or jurisdiction of incorporation or organization) | 01-1120
(Primary Standard Industrial
Classification Code Number) | 57-1167912
(I.R.S. Employer Identifcation No.) |
100 Caniff Lane, Cary, North Carolina 27519, Phone (919) 623-2554
(Address and telephone number of principal executive offices)
Dr. Anne Edwards
100 Caniff Lane, Cary, North Carolina 27519, Phone (919) 623-2554
(Name, address and telephone number of agent for services)
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If the Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If the Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities To Be Registered | Amount To Be Registered | Proposed Max. Offering Price Per Unit | Proposed Max. Aggregate Offering Price | Amount of Registration Fee |
| | | | |
Common Stock | $250,000 | $10 | $250,000 | $29.42 |
| | | | | |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
Subject to Completion
Prospectus
Psychiatric Health Direct Corporation (PHDC)
25,000 shares of Common Stock
This offering involves a high degree of risk; see “RISK FACTORS” below to read about factors you should consider before buying shares of the common stock.
These securities have not been approved or disapproved by the Securities and Exchange Commission (the “SEC”) or any state or provincial securities commission, nor has the SEC or any state or provincial securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contray is a criminal offense.
Following the registration statement on Form SB-2 in which this prospectus is included being declared effective by the SEC, we will apply to the NASD for approval of our common stock for quotation. We are requesting PHDC as our stock symbol.
Our common stock is presently not listed on any national securities exchange or the Nasdaq Stock Market.
The Offering:
25,000 Shares Offered | Price Per Share | Total |
| | | |
| Public Price | $10 | $250,000 |
| Underwriting Discounts & Commissions | -0- | 00 |
| Total | $10 | $250,000 |
This is a best efforts public offering, with no minimum purchase requirement.
1. PHDC is not using an underwriter for this offering.
2. There is an arrangement to use a stock transfer company to assist with purchase transfers.
3. There is no arrangement to place proceeds from this offeringin an escrow, trust or similar account. Any funds raised fromthis offering will be immediately available to PHDC for its use.
The information in this prospectus is not complete and may be changed. PHDC may not sell these securities until the registration statement relating to these securities has been filed with the Securities and Exchange Commission and is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
The date of this Prospectus is January 28, 2005.
SUMMARY OF FINANCIAL INFORMATION (UNAUDITED), as of 01/28/05
| Current Assets | $1,110,000 |
| Current Liabilities | 225,000 |
| Shareholders’ Equity | $885,000 |
| Revenue | $300,000 |
| Net Loss | 00 |
The Offering
| Common Shares Outstanding Before This Offering | 510,000 |
| Maximum Shares Being Offered | 25,000 |
| Maximum Common Shares Outstanding After ThisOffering | 535,000 |
PHDC is authorized to issue 1,000,000 shares of common stock. Current shareholders of PHDC collectively own 510,000 shares of common stock. No officers, employees, or significant investors own any of the shares being offered.
There is currently no public market for the common stock of PHDC, as it is presently not traded on any market or securities exchange.
RISK FACTORS
The securities offered hereby are highly speculative and should be purchased only by persons who can afford to lose their entire investment in PHDC. Each prospective investor should carefully consider the following risk factors as well as all other information set forth elsewhere in this prospectus, before purchasing any shares of our common stock:
The risk of loss in trading securities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. In considering whether to trade or to authorize someone else to trade for you, you should be aware of the following:
If you purchase a security you may sustain a total loss of the purchase price and all transaction costs.
If you purchase or sell a security, you may sustain a total loss of the initial purchase price and any additional funds that you deposit with your broker. Under certain market conditions, you may find it difficult or impossible to liquidate a position. The placement of contingent orders by you or your trading advisor, will not necessarily limit your losses to the intended amounts since market conditions may make it impossible to execute such orders.
This brief statement cannot disclose all the risks and other significant aspects of the securities markets. You should, therefore, carefully study this prospectus document and securities trading before you trade, including the description of the principal risk factors of this investment.
PRINCIPAL RISK FACTORS
1. PHDC may not be able to achieve a 20% market penetration in the outsourced psychiatric testing market by our target date.
2. We may not be able to achieve our goal of Capitalization Expansion with this securities offer.
3. Competition in the medical arena can be difficult, and medical contracts are subject to change.
Psychiatric Health Direct Corporation (PHDC) provides psychiatric testing for hospitals, doctors, and corporations. An aging population and health-care crisis create opportunities for PHDC. Outsourced psychiatric testing is growing and PHDC is challenging larger rivals such as HMO’s and other healthcare service providers. PHDC operates two primary businesses: “risk assessment” for corporations and diagnostic services for medical providers. The firm is not immune to the changeable political winds that buffet U.S. healthcare but the critical nature of PHDC’s business allows us to weather the storm.
The firm has shown a 20% annual growth. We have good organic growth and good acquisition potential. The whole market is getting larger, and we are in the pack. We have plans for expansion into Virginia and South Carolina within the next 12 months in order to capture a wider market for our services.
The principal objectives of PHDC are the following:
1. To achieve a 20% market penetration in the outsourced psychiatric testing market by the year 2006.
2. To raise $250,000 in Common Stock Capitalization Expansion, 1st Offering.
3. To raise $5 million in Common Stock Capitalization Expansion, 2nd Offering.
The mission of PHDC is to design, develop, and market new psychiatric testing services and products in the medical assessment field. Each market product will fill a current niche in medical assessment by improving upon an existing technology or by designing a product to serve a need that is clearly defined and acknowledged by medical professionals. Each product shall be priced to appeal to a managed-care market that stresses lowest cost of total treatment parameters.
The keys to success for PHDC are as follows:
1. Initial Public Offerings.
2. The ability to generate revenue through market expansion into Virginia andSouth Carolina.
3. Successful implementation of sales and marketing plan to U.S. managed careand corporate markets to obtain a minimum 20% market each year.
4. Increased product development and continued market share gains.
PHDC will develop and market psychiatric assessments through multiple distribution channels both domestic and foreign. The company is currently developing its technologies to final product and approval stage. It is, also, seeking to establish its corporate identity in the medical assessment field. Growth strategy calls for the following objectives:
1. Complete the IPO process.
2. Establish corporate identity, brand names, and trademarks.
3. Establish a medical advisory board.
4. Build staff, infrastructure, and retain consultants for trial and compliance issues.
5. Conduct testing trials.
6. Continue R & D and product development.
PHDC is a North Carolina “C” corporation, that is currently privately owned.
The key elements in the Business Plan for PHDC are the following:
1. The establishment of corporate identity.
2. The locations of doing business.
3. Funding of future expansions.
4. Salary for the three key managers.
5. Formulation of Strategic Plan. Raising funds through Capitalization Expansion.
The capital required for the continuation of operations in the first 1 to 2 years was provided by private investor funding.
2.3 Company Locations and Facilities
PHDC business offices are located at 100 Caniff Lane, Cary, North Carolina 27519. Phone is (919) 623-2554 and Fax is (919) 290-1155. These offices (valued at $250,000) are owned by Psychiatric Health Direct Corporation. This business plan calls for the establishment of corporate offices in Virginia and South Carolina including R & D facilities.
PHDC will market two distinct products:
1. Risk Assessments for corporations that include employee applicant screenings forpotential personnel problems or health handicaps.
2. Diagnostic services for medical providers that include patient evaluations forprivate services.
The technology used in these products is standardized through the AMA and APA.
PHDC Screening has relationships with corporations across North Carolina. Companies are eager to find ways to reduce insurance costs and provide benefits to employees. The results of our screenings are staggering. Of the customers screened, 8-10 percent showed some type of abnormality, while 2-3 percent were rated in the severe category and were encouraged to follow-up with their doctor on the same day of screening.
In the event of a significant mental illness, there is work loss on the part of the employee, with time spent in the hospital and recovery. Employers should take into account the costs of retraining a new employee, increased insurance premiums, and the loss of morale from the remaining staff who are sharing the work load of the ill person.
PHDC Screening can do the following for a company:
1. Reduce expenses that coincide with long-term medical care.
2. Help keep insurance premiums at the lowest amount possible.
3. Assist in the utilization of your employees’ Section 125 plan.
4. Enhance your flexible benefit goals.
5. Provide free educational workshops for your employees, teaching them the riskfactors and warning signs of these particular mental health diseases.
6. Provide screening services on-site for your employees.
7. Reduce loss of productivity due to health-related issues.
8. Increase morale by diminishing undue stress related to employee absenteeism.
PHDC Assessment provides a comprehensive range of mental health testing for hospitals and doctors. A full spectrum of psychiatric disorders are addressed including mood and thought disorders and, also, specialized diagnostics of depression, dual diagnosis, eating disorders, psychological trauma, and anxiety disorders.
4.0 Market Analysis Summary
The two key factors influencing discussion of PHDC’s market are the medical procedures and product usage statistics and the customer or chain of distribution considerations.
In both cases the trends are upwards in the favor of PHDC. Employee Screening and Psychiatric Assessment are growing rapidly and managed care stresses lowest cost of total treatment. Both offer great market potential to PHDC.
The health care industry in the United States has been dominated by managed care and hospital buying groups. Lowest total cost treatment has been the evolution of the pricing model. PHDC is ideally positioned to capitalize on this trend. There has been a rapid trend to packaged Screening and Assessment from the previous norm of individual and private testing for the following reasons:
1. Fewer testing discrepancies.
2. Better control of patient care.
3. Lower risk of undiagnosed diseases.
4. Reduction of over-all treatment cost.
5. Positioned ideally for managed care.
6. Current research studies available.
The growth of Health Care Screening and Assessment has been as high as 30% per quarter according to the AMA and APA. The top 25 to 50 customers in each market may account for as much as 70% of the potential business, making it easy to target customers with multi-channel tiered strategy. The foreign markets may be penetrated initially with as few as four key distributors.
4.2.1 Industry Participants
No firm has a product competitive with PHDC. Managed care providers such as Humana, Kaiser, Blue Cross, etc, are easily identified. Hospital groups are, also, easily identified as are physician groups and corporations. An experienced Sales and Marketing Team to effectively attack these channels is imperative.
4.2.2 Distribution Patterns
Distribution patterns in the health care industry are such that the large buying groups dictate what products are used for certain procedures throughout their sphere of influence. Thus, our products could be mandated or forced out for thousands of patients due to their health plan or hospital group. Others recommend several alternatives which require physician education and intervention.
Distributors are key to foreign markets.
4.2.3 Competition and Buying Patterns
Time saving and effectiveness are the key economic parameters. PHDC will succeed based upon the capability of its products. They are already competitively priced, except they are more effective. After initial market resistance to any new product, PHDC’s products can grow to dominate a market segment, in this case distinct Screening and Assessment applications.
Psychiatric Screening is a huge and growing market. The market for Psychiatric Assessment is a currently existing one with accurate, up-to-date data. This clearly defined market represents one of the fastest growing segments in the medical industry. The reason is that doctors are transitioning rapidly from the old and traditional Assessment procedures to packaged procedures.
The entire Psychiatric Screening market is a $1 billion annual market. Nationally, Assessments account for more than 1.2 million procedures per year. The trend from traditional to packaged procedures has been rapid.
5.0 Strategy and Implementation Summary
PHDC will pursue specific, definable, market segments with a multi-tiered, multi-channel approach. We will leverage our technologies with a direct sales and distribution strategy using established distributors.
We will look to domestic markets with established distributors, and then foreign markets will follow. Large groups and plans will be targeted first.
Marketing will follow from industry and trade and physician awareness campaigns to specific executions directed at specific customer segments. The top tier of 20 to 30 customers in each segment will be attacked first. Only a few sales hits in these top tiers will enable achievement of targeted forecasts. PHDC will achieve its sales goals from direct and distributed presentations and company information. Worldwide sales through marketing representatives will provide needed cash flow.
Pricing for PHDC Screening and Assessment is $2000 per unit. Quantity discounts remain possible in negotiations with major buying groups.
Public relations, industry media, will help in over-all industry awareness plans. Feature articles and product reviews will help awareness. All will be integrated with physician materials and training video tapes.
PHDC has already worked closely with psychologists and physicians to design its products. As an outgrowth of our Doctors Advisory Board, PHDC will actively recruit allied psychologists and physicians with sponsored events and seminars. Every major market area will be targeted. An annual event will, also, be sponsored.
PHDC’s sales strategy is to open domestic markets in Virginia and South Carolina in addition to the existing one in North Carolina. To fully exploit them in 2005 will be initiated along with the penetration already in existence. Then our strategy is to grow both markets up to a 20% penetration.
This sales forecast includes small sales into the international market.
Sales programs include direct presentations to domestic corporations. Sales materials, video training tapes, and support materials will be produced. Physician material will be included.
Presentations will be by personal contact, direct mail, public relations, and media directed at key industry segments.
In addition electronic marketing will be deployed whenever it fits with the buying patterns of a key group.
A website and electronic commerce site will be utilized to cultivate direct sales to key industry groups.
The following are the key milestones for the next year (2005) of operations:
1. Capitalization Expansion was successfully completed.
2. The business plan has been completed.
3. All other first year milestones are currently on target time wise and budget wise.
The founders of PHDC are Anne Edwards, Ernest Fox, and Martha Fox. Anne will serve as President and CEO. Ernest will serve as Vice-President of Personnel and Credentialing. Martha will serve as Vice President of Corporate Development and Marketing.
Ernest will handle responsibility for assessor performance and compliance.
Martha will handle strategic growth plans, capitalization, and marketing.
Reporting to Ernest will be additional consultants and personnel as needed in the early going.
Even after successfully completing the first IPO of $250,000, a second round IPO is potentially available in the $5 million range. We have planned for additional capital input in the second half of 2005 as a safety net for cash flow/cash balance.
However, cash flow achievement within the parameters of the indicated plan plus a second round IPO will lead to the best value for shareholders. Then, strategy can dictate the best valuation.
