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, 1997 |_| TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ___________ Commission file number 0-23524 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) 508-536-2777 (Issuer's telephone number) (Former Name, former address and former fiscal year, if changed since last report) Check 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 _____ No__X___ In a no action letter, the U. S. Securities and Exchange Commission indicated that the company's failure to file a report on Form 8-K in connection with its acquisition of Behavioral Stress Centers, Inc. in November 1, 1996 will not preclude stockholders from selling under Rule 144. Applicable only to corporate issuers Number of shares outstanding of each class of common equity, as of April 30, 1997: Class A Common Stock 2,646,884 Class B Common Stock 731,348 Class C Common Stock 199,816 Transitional Small Business Disclosure Format (Check one): Yes No X The Financial Statements as orginally filed have been adjusted to properly account for warrants issued in connection with financing and services rendered. PHC INC. AND SUBSIDIARIES Item 1 Financial Statements CONSOLIDATED BALANCE SHEETS Mar. 31 June 30 1997 1996 -------- --------- ASSETS (Unaudited) Current assets: $ $ Cash................................................. 59,846 293,515 Accounts receivable, net of allowance for bad debts of 1,563,824 at March 31, 1997 and 1,492,983 at June 30, 1996.......................... 12,352,515 8,866,06 Prepaid expenses.................................. 567,996 259,893 Other receivables and advances.................... 1,582,293 66,513 Deferred Income Tax Asset......................... 515,300 515,300 ---------- -------- Total current assets............................ 15,077,950 10,001,286 Accounts Receivable, Non Current..................... 2,201.645 740,000 Loan Receivable...................................... 126,305 113,805 Property and equipment, net.......................... 7,857,904 7,884,063 Deferred income taxes................................ 154,700 154,700 Deferred financing costs, net of amortization........ 773,936 702,948 Goodwill, net of accumulated amortization............ 891,690 709,573 Other assets......................................... 972,783 454,160 Net assets of discontinued operation................. --- 56,682 ---------- ---------- Total Assets.................................... 28,056,913 20,817,217 ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable................................... 3,942,029 3,127,052 Notes payable--related parties..................... 51,600 56,600 Current maturities of long term debt............... 1,892,220 403,894 Current portion of obligations under capital leases............................................... 118,591 88,052 Accrued payroll, payroll taxes and benefits........ 712,201 715,515 Accrued expenses and other liabilities............. 448,570 738,784 ---------- ---------- Total Current liabilities....................... 7,165,211 5,129,897 ---------- ---------- Long-term debt....................................... 8,973,081 7,754,262 Obligations under capital lease...................... 1,585,958 1,468,475 Notes payable related parties........................ 23,696 47,394 7% Convertible Debentures (3,125,000 less discount 468,750)............................................. 2,656,250 ---- ---------- ---------- Total noncurrent liabilities....................... 13,238,985 9,270,131 ---------- ---------- Total liabilities.................................. 20,404,196 14,400,028 Stockholders' Equity: Preferred stock, $.01 par value; 1,000,000 shares authorized, none issued............................ --- ---- Class A common stock, $.01 value; 20,000,000 shares authorized, 2,646,884 and 2,293,568 issued, 2,638,228 and 2,293,568 outstanding March 1997 and June 1996........................... 26,468 22,936 Class B common stock, $.01 par value; 2,000,000 shares authorized, 731,348 and 812,127 shares issued March 1997 and June, 1996, convertible into one share of Class A common stock............. 7,314 8,122 Class C common stock, $.01 par value; 200,000 shares authorized and 199,816 shares issued March 1997 and June, 1996......................... 1,998 1,998 Additional paid-in capital......................... 9,202,296 8,078,38 Notes receivable related to purchase of 31,000 shares of Class A common stock..................... --- (63,928) Less 8,656 Class A common treasury shares, at cost. (37,818) --- Accumulated Deficit................................. (1,547,541) (1,630,322) ---------- ---------- Total Stockholders' Equity.......................... 7,652,717 6,417,189 ---------- ---------- Total Liabilities & Stockholders' Equity............ 28,056,913 20,817,217 ---------- ---------- See Notes to Consolidated Financial Statements PHC INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended March 31 March 31 1997 1996 1997 1996 Revenues: Patient Care net.............. 7,215,386 6,567,335 19,472,446 5,935,970 Management Fees............... 402,187 63,599 806,122 164,844 --------- --------- ---------- --------- Total revenue................... 7,617,573 6,630,934 20,278,568 16,100,814 Operating expenses: Patient care expenses......... 4,067,634 3,276,949 10,492,750 8,893,030 Administrative expenses....... 2.986,741 2,966,822 8,478,923 6,589,688 Contract expenses............. 92,200 31,671 232,098 93,673 --------- --------- ---------- ---------- Total operating expenses.............. 7,146,575 6,275,442 19,203,771 15,576,391 --------- --------- ---------- ---------- Income from operations.......... 470,998 355,492 1,074,797 524,423 --------- --------- ---------- ---------- Interest income................. 73,457 4,225 106,788 10,787 Startup Cost Nursing Facility... --- --- --- (128,313) Other income (Expense).......... 122,005 46,282 332,944 141,744 Financing Cost.................. --- --- (120,000) --- Interest expense................ (558,561) (260,264)(1,318,226) (629,988) Gain from operations held for sale............................ --- 1,136 36,478 18,819 --------- --------- ---------- ---------- Total other income (363,099) (208,621) (962,016) (586,951) (expense)............. --------- --------- ---------- --------- Income (loss) before Provision for Taxes....................... 107,899 146,871 112,781 (62,528) Provision for Income Taxes...... 28,536 --- 30,000 --- --------- --------- ---------- ---------- NET INCOME (LOSS)............... 79,363 146,871 82,781 (62,528) --------- --------- ---------- ---------- Net Income (Loss) per share..... .02 .05 .03 (.02) Weighted average number of shares outstanding.................... 3,354,940 2,783,505 3,170,222 2,539,800 See Notes to Consolidated Financial Statements PHC INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Nine Months Ended March 31 March 31 --------- --------- 1997 1996 Cash flows from operating activities Net income (loss).................... 82,781 (62,528) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization........ 456,215 352,231 Increase in accounts receivable...... (3,553,085) (3,139,612) Compensatory Stock Options and Stoc Warrants issued for Obligations...... 125,000 -- Increase in prepaid expenses and other current assets....................... (308,103) (209,329) (Increase) Decrease in other assets... 102,704 (31,971) Decrease in net assets of operations held for sale........................... 56,682 107,094 Increase in accounts payable............ 486,649 49,769 Increase in accrued and withheld taxes.................................... --- 13,910 Increase (decrease) in accrued expenses and other liabilities..................... (239,620) 155,637 ----------- ---------- Net cash used in operating activities........ (2,790,777) (2,764,799) ----------- ---------- Cash flows from investing activities Acquisition of property and equipment...... (359,372) (1,530,567) Costs related to business acquisition...... (945,116) (575,000) Loan Receivable............................ (2,923,290) --- ----------- ---------- Net cash used in investing activities................................. (4,227,778) (2,105,567) ----------- ---------- Cash flows from financing activities Issuance of Common Stock................... 1,027,854 2,274,501 Net debt activity.......................... 3,100,782 2,091,679 Convertible debt........................... 2,656,250 --- ----------- ---------- Net cash provided by financing activities.................................... 6,784,886 4,366,180 ----------- ---------- NET INCREASE (DECREASE) IN CASH (233,669) (504,186) Beginning cash balance........................ 293,515 586,738 ----------- ---------- ENDING CASH BALANCE 59,846 82,552 See Notes to Consolidated Financial Statements 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 10 1997 /s/ Bruce A. Shear Bruce A. Shear President Chief Executive Officer Date: June 10, 1997 /s/ Paula C. Wurts Paula C. Wurts Controller Assistant Treasurer