U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (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, 2001. |_| TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ______________ Commission file number 0-22916 _________ PHC, INC. (Exact name of small business issuer as specified in its charter) Massachusetts 04-2601571 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 200 Lake Street, Suite 102, Peabody MA 01960 (Address of principal executive offices) (Zip Code) 978-536-2777 (Issuer's telephone number) - ------------------------------------------------------------------------------- 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 8,508,308 Class B Common Stock 726,991 Transitional Small Business Disclosure Format (Check one): Yes______ No X PHC, Inc. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets - March 31, 2001 and June 30, 2000. Condensed Consolidated Statements of Operations - Three months ended March 31, 2001 and March 31, 2000; Nine months ended March 31, 2001 and March 31, 2000. Condensed Consolidated Statements of Cash Flows - Nine months ended March 31, 2001 and March 31, 2000. Notes to Condensed Consolidated Financial Statements - March 31, 2001. Item 2. Management's Discussion and Analysis or Plan of Operation PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits Signatures PART I. FINANCIAL INFORMATION Item 1 Financial Statements PHC, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March, 31 June, 30 2001 2000 _________________________________________ ASSETS (Unaudited) Current assets: Cash & cash equivalents $ 75,319 $ 551,713 Accounts receivable, net of allowance for bad debts of $2,879,859 at March 31, 2001, 5,790,487 6,286,490 $2,850,470 at June 30, 2000 Prepaid expenses 112,393 120,481 Other receivables and advances 229,654 148,554 Deferred income tax asset 459,280 459,280 Other receivables, related party RPS 329,289 -- Other receivables, related party 78,256 77,500 ____________ ____________ Total current assets 7,074,678 7,644,018 Accounts receivable, noncurrent 736,000 642,000 Other receivables, noncurrent, related party, net of allowance for doubtful accounts of -- 3,239,456 $1,125,054 at June 30, 2000 (Note B) Other receivables 132,537 95,214 Property and equipment, net 1,361,767 1,327,630 Deferred income taxes 154,700 154,700 Deferred financing costs, net of amortization of $112,108 at March 31, 2001 and $87,555 at June 22,000 46,554 30, 2000 Goodwill, net of accumulated amortization of $251,667 at March 31, 2001 and $296,907 at June 1,093,170 2,630,265 30, 2000 (Note B) Other assets 127,284 107,972 _____________ _____________ Total assets $10,702,136 $15,887,809 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $2,617,879 $ 1,717,362 Notes payable--related parties 200,000 200,000 Current maturities of long-term debt 989,174 1,622,239 Revolving credit note 1,860,767 1,555,149 Deferred Revenue 19,504 -- Current portion of obligations under capital 18,946 45,482 leases Accrued payroll, payroll taxes and benefits 413,149 416,111 Accrued expenses and other liabilities 1,270,010 1,798,400 Net liabilities of discontinued operations (Note F) 965,213 1,884,234 _____________ _____________ Total current liabilities 8,354,642 9,238,977 _____________ _____________ Long-term debt 2,893,476 2,508,715 Obligations under capital leases 15,349 12,808 Convertible debentures 500,000 500,000 _____________ _____________ Total noncurrent liabilities 3,408,825 3,021,523 _____________ _____________ Total liabilities 11,763,467 12,260,500 _____________ _____________ Stockholders' equity (deficit): Preferred stock, $.01 par value; 1,000,000 shares authorized, 155,700 and 136,000 issued and outstanding March 31, 2001 and June 30, 2000, respectively 1,557 1,360 Class A common stock, $.01 par value; 20,000,000 shares authorized, 8,370,209 and 7,019,608 shares issued March 31, 2001 and 83,702 70,196 June 30, 2000, respectively Class B common stock, $.01 par value; 2,000,000 shares authorized, 726,991 issued and outstanding March 31, 2001 and June 30, 2000, convertible into one share of Class A common stock 7,270 7,270 Additional paid-in capital 18,676,954 17,895,162 Treasury stock, 14,526 and 2,776 shares at (22,122) (12,122) cost at March 31, 2001 and June 30, 2000 Notes receivable, common stock (80,000) -- Accumulated deficit (19,728,692) (14,334,557) _____________ _____________ Total stockholders' equity (deficit) (1,061,331) 3,627,309 _____________ _____________ Total liabilities and stockholders' equity (deficit) $10,702,136 15,887,809 ============= ============ See Notes to Condensed Consolidated Financial Statements. PHC INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended March 31 March 31 ______________________________________________ 2001 2000 2001 2000 Revenues: Patient Care, net $5,763,309 $5,541,406 $15,516,547 $13,599,089 Management Fees -- 290,192 345,111 783,427 Pharmaceutical Study 115,196 -- 210,104 -- Website services 1,405 -- 16,486 -- Contract Support Services 334,945 148,434 723,098 469,076 __________ ___________ ___________ __________ Total revenue 6,214,855 5,980,032 16,811,346 14,851,592 __________ ___________ ___________ __________ Operating expenses: Patient care expenses 2,555,605 2,485,483 7,140,700 6,822,757 Cost of management contracts 288,470 147,133 651,602 364,899 Provision for doubtful accounts 289,687 532,248 1,914,594 1,522,691 Website expenses 365,946 200,817 1,103,835 548,657 Administrative expenses 1,980,646 1,895,836 5,427,774 5,373,104 Practice management closing expenses (Note B) -- -- 4,855,966 -- __________ ___________ ___________ __________ Total operating expenses 5,480,354 5,261,517 21,094,471 14,632,108 __________ ___________ ___________ __________ Income (loss) from operations 734,501 718,515 (4,283,125) 219,484 __________ ___________ ___________ __________ Interest income 8,288 111,604 22,774 309,780 Other income 24,663 7,481 46,790 55,597 Interest expense (268,661) (215,793) (782,826) (601,071) __________ ___________ ___________ __________ Total other expenses (235,710) (96,708) (713,262) (235,694) Income (loss) before Provision for Taxes 498,791 621,807 (4,996,387) (16,210) Provision for Income Taxes -- 53,189 44,450 53,289 __________ ___________ ___________ __________ Net income (loss) $ 498,791 $ 568,618 $(5,040,837) $ (69,499) =========== =========== =========== ========== BASIC AND DILUTED EARNINGS PER SHARE Net income (loss) $ 498,791 $ 568,618 $(5,040,837) $ (69,499) Dividends (31,613) (533,318) (180,385) (589,514) __________ ___________ ___________ __________ Income (loss) applicable to common shareholders $ 467,178 $ 35,300 $(5,221,222) $ (659,013) __________ ___________ ___________ __________ Basic income (loss) per common share $ 0.05 $ 0.00 $ (0.63) $ (0.10) Basic weighted average number of shares outstanding 8,655,613 7,225,013 8,264,481 6,645,742 Diluted income (loss) per common share $ 0.05 $ 0.00 $ (0.63) $ (0.10) Diluted weighted average number of shares outstanding 9,743,334 7,651,468 8,264,481 6,645,742 See Notes to Condensed Consolidated Financial Statements PHC INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Nine Months Ended March 31 2001 2000 _____________________________ Cash flows from operating activities: Net loss $ (5,040,837) $ (69,499) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 187,942 249,474 Goodwill impairment 1,545,609 -- Write down of accounts receivable, 3,071,310 -- professional corporation Compensatory stock options, stock and warrants issued for obligations 22,630 104,490 Changes in: Accounts receivable 121,681 (580,750) Prepaid expenses 8,088 (60,419) Other assets (19,312) (22,511) Accounts payable 900,517 (148,397) Accrued expenses and other liabilities (511,848) 151,648 Net liabilities of discontinued operations (919,021) (327,335) _____________ ____________ Net cash used in operating activities (633,241) (703,299) Cash flows from investing activities: Acquisition of property and equipment (154,796) (64,231) Web development (70,226) -- Disposition of property, equipment and intangibles 3,689 -- _____________ ____________ Net cash used in investing activities (221,333) (64,231) Cash flows from financing activities: Revolving debt, net 305,618 244,811 Proceeds (repayment) of debt, net (272,299) 318,248 Deferred financing costs 24,554 (5,288) Preferred stock dividends (93,292) (4,809) Issuance of preferred stock at a discount 250,000 -- Common stock issued in earnout 297,500 -- Issuance of common stock -- 6,250 Cost related to issuance of capital stock (43,901) -- Notes issued for stock purchase (90,000) -- _____________ ____________ Net cash provided by financing activities 378,180 559,212 _____________ ____________ NET DECREASE IN CASH AND CASH EQUIVALENTS (476,394) (208,318) Beginning cash 551,713 381,170 _____________ ____________ ENDING CASH $ 75,319 $ 172,852 ============= ============ SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 780,072 $ 616,071 Income taxes 94,780 88,689 SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: Conversion of preferred stock to common stock $ 143,000 $ 756,346 Issuance of preferred stock in lieu of cash dividends 0 33,386 Issuance of common stock in lieu of cash dividends 3,506 551,319 See Notes to Condensed Consolidated Financial Statements PHC, INC. and Subsidiaries Notes to Condensed Consolidated Financial Statements March 31, 2001 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. BSC-NY, Inc., a subsidiary of PHC, Inc., which is now closed, provided management services on behalf of physician owned behavioral health practices in the greater New York City metropolitan area (see below). Pioneer Development and Support Services ("PDSS") provides help line services primarily through contracts with major railroads. Pioneer Pharmaceutical Research conducts studies of the effects of FDA approved psychiatric pharmaceuticals on a controlled population through contracts with major manufacturers of these pharmaceuticals; and (3) Behavioral health online services, which includes behavioral health education, training and products for the behavioral health professional, through its website wellplace.com formerly known as behavioralhealthonline.com. Note B - Practice Management Closing Expenses In December 2000 the Board decided to close its' BSC-NY, Inc. practice management operations due to recent deterioration of operating results. Revenues of BSC-NY, Inc were dependent on the success of the professional corporation, Rubenfaer Physician Services, P.C., for which it provided management services. Although the New York practice management operations reported operating income of approximately $131,000 for the fiscal year ended June 30, 2000, adverse business conditions resulted in a loss of approximately $399,000 for the six months ended December 31, 2000 before facility closing expenses of $4,855,966. These adverse operating conditions were caused by the decline in revenues produced by the professional corporation which is in the process of closing down its' business operations. The table below outlines practice management closing expenses. Goodwill impairment $1,545,609 Write down of the receivable due from the professional corporation 3,071,310 Lease termination and other expenses 239,047 _____________ $4,855,966 ============= Note C - 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, 2001 are not necessarily indicative of the results that may be expected for the year ending June 30, 2001. The accompanying financial statements should be read in conjunction with the June 30, 2000 consolidated financial statements and footnotes thereto included in the Company's 10-KSB filed on September 29, 2000. Note D - Reclassifications Certain amounts have been reclassified to conform with the March 31, 2001 presentation. 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 administrative services segment for the nine months ended March 31, 2001 include $4,855,966 of facility closing expenses for the New York operations as detailed above. The following summarizes the Company's segment data: BEHAVIORAL HEALTH TREATMENT ADMINISTRATIVE ONLINE SERVICES SERVICES SERVICE ELIMINATIONS TOTAL _________________________________________________________ For the three months ended March 31, 2001 Revenues - external customers $5,763,309 $ 450,141 $ 1,405 $ -- $6,214,855 Revenues - intersegment -- 478,698 17,928 (496,626) -- Net income (loss) 1,173,941 (440,241) (234,909) -- 498,791 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) 1,253,849 (559,414) (125,817) -- 568,618 For the nine months ended March 31, 2001 Revenues - external customers $15,516,547 $1,278,313 $ 16,486 $ -- $16,811,346 Revenues - intersegment -- 1,454,094 31,448 (1,485,542) -- Net income (loss) 2,148,422 (6,499,041) (690,218) -- (5,040,837) Total Assets 8,932,971 24,440,166 130,505 (22,801,506) 10,702,136 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) 1,294,107 (1,039,949) (323,657) -- (69,499) Total Assets 9,988,294 25,366,980 18,931 (19,761,349) 15,612,856 Note F - Net Liabilities of Discontinued Operations Net liabilities of discontinued operations relates to the Franvale closure in 1998 and consists of the following: March 31, June 30, 2001 2000 __________________________________ Debt forgiveness and reserve for contingencies $ 2,641,537 $ 2,641,537 Less legal and other expenses incurred to date 1,676,324 757,303 ____________ _____________ Net liabilities of discontinued operations 965,213 1,884,234 ============ ============ The recognition of gain, if any, has been deferred until final resolution of all contingent liabilities related to the discontinued operations. 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 4.0% to $5,763,309 for the three months ended March 31, 2001 from $5,541,406 for the three months ended March 31, 2000 and 14.1% to $15,516,547 for the nine months ended March 31, 2001 from $13,599,089 for the nine months ended March 31, 2000. This increase in revenue is due primarily to an increase in rates, a more favorable payor mix and an increase in patient days for the nine months ended March 31, 2001, over the same period last year. Marketing efforts have continued to aid in maintaining a high patient census at all three in patient facilities. 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. During the quarter ended December 31, 2000 the company decided to close the New York practice management operations due to recent deterioration of operating results. The nine months ended March 31, 2001 includes practice management closing expenses of $4,855,966 which consists of goodwill impairment of $1,545,609, write down of the receivable due from the professional corporation of $3,071,310 and lease termination and other expenses of $239,047. The practice management impaired goodwill and a substantial portion of the accounts receivable relate to the purchase of the operations which was partially paid through the issuance of PHC class A common stock. Income before interest, taxes, depreciation, amortization, dividends, Behavioral Health Online and the New York operations was $1,077,139 for the three months ended March 31, 2001 and $1,908,350 for the nine months ended March 31, 2001 compared to $1,018,718 and $847,179 for the same periods last year. Contract support services revenue provided by PDSS increased 125.7% to $334,945 for the three months ended March 31, 2001 from $148,434 for the three months ended March 31, 2000 and 54.2% to $723,098 for the nine months ended March 31, 2001 from $469,076 for the same period last year. The cost of providing these services increased 96.1% to $288,470 for the three months ended March 31, 2001 from $147,133 for the three months ended March 31, 2000 and 78.6% to $651,602 for the nine months ended March 31, 2001 from $364,899 for the same period last year. These changes in revenue and expenses are due primarily to the addition of a new contract, which is being serviced jointly by PDSS and Behavioral Health Online, and carries with it high startup costs and an increase in services provided under existing contracts. The company also booked a small amount of revenue for website products and services and is now providing an additional revenue producing service by developing and hosting private label websites for individual therapists. The company's failure to secure funding for further web development has forced the company to change direction of this subsidiary to primarily provide support to the other Pioneer subsidiaries and continue to produce revenues through the private label websites. The company also booked pharmaceutical study revenue of $115,196 for the three months ended March 31, 2001 and $210,104 for the nine months ended March 31, 2001 in its newest, fastest growing subsidiary, PPR, Inc., which does business as Pioneer Pharmaceutical Research. Administrative expenses remained relatively constant increasing approximately 4.5% for the quarter ended March 31, 2001 and increasing slightly over one percent for the nine months ended March 31, 2001 compared to the same periods last year. The largest increase was in contract expenses related to PDSS of 96.6% for the three months ended March 31, 2001 and 78.6% for the nine months ended March 31, 2001. We also experienced increased expenses for our capitated rate contract services in Nevada. Website expenses include all costs relevant to the development and the operations of the Wellplace.com website. Website expenses increased 82.3% to $365,946 for the period ended March 31, 2001 from $200,817 for the three months ended March 31, 2000 and 101.2% to $1,103,835 for the nine months ended March 31, 2001 from $548,657 for the same period last year. The company has taken steps to reduce expenses for the internet company, largely through reduced staffing and consolidating office space with the corporate office. Patient care expenses increased by 2.8% to $2,555,605 for the three months ended March 31, 2001 from $2,485,483 for the three months ended March 31, 2000 and 4.7% to $7,140,700 for the nine months ended March 31, 2001 from $6,822,757 for the nine months ended March 31, 2000. These increases in expenses are due primarily to the increase in patient days as noted above with the primary increases in expenses directly related to patient census such as payroll, food, laundry, patient transportation and pharmacy. Bad debt expense decreased 45.6% to $289,687 for the three months ended March 31, 2001 from $532,248 for the three months ended March 31, 2000. This decrease is due to a larger percentage of accounts receivable in aging categories less than 150 days from the date of service, which carries with it a lower reserve requirement. Bad debt expense did increase 25.7% to $1,914,594 for the nine months ended March 31, 2001 from $1,522,691 for the same period last year. This increase is due primarily to increased patient care revenues and the company's continued assessment of collection exposures. Interest expense increased 24.5% to $268,661 for the three months ended March 31, 2001 from $215,793 for the three months ended March 31, 2000 and 30.2% to $782,826 for the nine months ended March 31, 2001 from $601,071 for the same period last year. This increase is due to increased utilization of the accounts receivable revolving credit and additional interest paid to secure and maintain a $330,000 overline in December, which was paid in full in April 2001. . Preferred stock dividends decreased to $31,613 for the quarter ended March 31, 2001 from $533,318 for the quarter ended March 31, 2000. The decrease in dividends is due primarily to the recording of the additional beneficial conversion feature of the series B preferred stock recorded upon conversion of the last of the Series B preferred stock in the quarter ended March 31, 2000. The dividends recorded in the quarter ended March 31, 2001, are a result of the 8% per year dividend rate on the series C convertible preferred stock. We continue to closely monitor accounts receivable collections and are maintaining significant reserves for bad debts. The bad debt reserve was approximately 31% of the accounts receivable balance, which decreased 5.8% to $6,526,487 at March 31, 2001 from $6,928,490 at June 30, 2000. The reserve for bad debt is based on he 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 debts due to untimely filing of claims since errors on claims are identified and corrected in a more timely manner than in prior years. The $736,000 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 three months ended March 31, 2001 costs of $66,796 were incurred related to discontinued operations. These costs represent additional legal fees paid and accrued as a result of the ongoing Quality Care Centers of Massachusetts litigation and investigation as previously reported. When the bankruptcy proceedings of that subsidiary have been finalized any remaining net liabilities of the bankrupt subsidiary will result in increased equity in that amount. 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 decreased during the nine months ended March 31, 2001 by 5.8%, approximately $402,000. 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, 2001 the Company met its operating needs through ongoing accounts receivable financing and through debt and equity transactions as follows: In March 2001 the Company issued 18,838 shares of class A common stock as performance bonuses to the chief executive officers of high performing facilities. During the quarter ended March 31, 2001 the Company issued warrants to purchase 25,000 shares of class A common stock as payment for consulting services. In March 2001 the company signed an amendment to the Secured Term Note dated March 1997 extending payments on the Note through March 2003. We utilize our accounts receivable funding facilities to the maximum extent available to meet current cash needs and sustain existing operations. Although our treatment facilities are operating at a profit, expenses incurred by our internet company, Behavioral Health Online, Inc., losses incurred by the New York practice management company and the cash required for the Franvale settlement have caused negative cash flow from operations and created the need for additional financing. We have reduced expenses of the internet company through staff reductions. We are also in the process of closing the unprofitable New York operations. 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. Management believes cash from operations and current financing arrangements will meet the company's operating cash needs for the immediate future. PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Company's annual meeting of stockholders was held on January 11, 2001. In addition to the election of directors (with regards to which (I) proxies were solicited pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended, (II) there was no solicitation in opposition to the management's nominees as listed on the proxy statement, and (III) all of such nominees were elected), the stockholders ratified the selection by the Board of Directors of BDO Seidman, LLP as the Company's independent auditors for the fiscal year ending June 30, 2001. Item 6. Exhibits Exhibit No. Description ___________ ________________________________________________________________ 3.1.2 Restated Articles of Organization of the Registrant, as amended 4.39 Certificate of Designation of Series C Convertible Preferred Stock of PHC, Inc. adopted by the Board of Directors on June 15, 2000 and June 26, 2000. 4.40 Warrant Agreement issued to Union Atlantic Capital, LC. to purchase 25,000 Class A Common shares dated March 20, 2001 4.41 Warrant Agreement issued to Union Atlantic Capital, LC. to purchase 10,000 Class A Common shares dated April 15, 2001 10.53 Consolidated Restated Mortgage by and between PHC of Michigan, Inc. and Heller Healthcare Finance, Inc., Second Amended and Restated Cross-Collateralization and Cross-Default Agreement dated March 9, 2001. 10.54 Amendment number one, dated March 2001, to the Secured Term Note by and between PHC of Michigan, Inc. and Heller Financial Partners - Funding II, L.P. in the amount of $1,100,000 dated March 1997. 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: May 14, 2001 /s/ Bruce A. Shear President Chief Executive Officer Date: May 14, 2001 /s/ Paula C. Wurts Controller Treasurer