UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 27, 1997
Commission file Number 000-28976
Acadia National Health Systems, Inc.
(Exact name of registrant as specified in its charter.)
Colorado 10509781
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
460 Main Street, Lewiston, Maine U.S.A. 04240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(207) 777-3423
Indicate by check mark whether the registrant(1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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 [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date:
Common Stock, $0 Par Value - 3,733,987 shares as of
June 27, 1997.
PART I - FINANCIAL INFORMATION
ACADIA NATIONAL HEALTH SYSTEMS, INC.
STATEMENT OF INCOME
FOR THE THREE MONTHS
ENDED JUNE 27, 1997 AND JUNE 30, 1996
(Unaudited)
Three months ended Three months ended
June 27 June 30
__________________ _________________
1997 1996
________ ________
Sales $156,355 $152,457
Operating Expenses $159,312 $113,411
-------- --------
Net Operating Income (2,957) 39,045
Other Income/(Expense), Net (7,767) (20,304)
-------- ---------
Net Income Before Taxes (10,724) 18,742
Provision for Income Taxes 2,405 0
-------- --------
Net Income ($8,318) $18,742
========= ========
Net Income Per
Common Share ($0.002) $0.005
Weighted Average Number
of Common Shares
Outstanding 3,733,987 3,733,987
<FN> See Accompanying
Notes to Financial
Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
BALANCE SHEETS
(Unaudited)
June 27, 1997 June 30, 1996
______________ ______________
Current Assets:
Cash-Operating $ 101,585 $ 173,030
Accounts Receivable 416,380 208,559
Unbilled Work at Estimated
Realizable Value 74,836 57,816
Inventories 4,091 5,834
Other Current Assets 4,371 2,328
-------------- --------------
Total Current Assets $683,550 $447,567
Prop., Plant & Equip.:
Cost 169,596 101,557
Less Accum. Depr. (73,837) (58,626)
-------------- --------------
$95,758 $42,932
Other Assets:
Deferred Income Taxes 7,500 0
Organization Cost 34,110 17,850
Less Accum. Amort. (4,912) 0
-------------- --------------
Total Assets $816,006 $508,349
============== ==============
Current Liabilities:
Accounts Payable $ 1,568 $ 351
Line of Credit 259,446 193,917
Accrued Expense 196,220 105,022
Current Portion of
Long Term Notes 18,000 128,046
-------------- --------------
Total Current Liabilities $475,233 $427,336
Long Term Liabilities:
Long Term Debt 93,349 14,000
Other Non-Current Liab. 0 0
-------------- --------------
Total Liabilities $568,582 $441,336
June 27, 1997 June 30, 1996
______________ ______________
Stockholders' Equity:
Common Stock 251,640 1,000
Paid In Capital & Treas. 1,715 1,426
Retained Earnings (5,391) 64,586
-------------- --------------
Total Equity $274,424 $67,012
-------------- --------------
Total Liabilities &
Equity $816,006 $508,348
============== ============
<FN>
See Accompanying
Notes to Financial
Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 27, 1997
AND JUNE 30, 1996
(Unaudited)
Quarter Quarter
Ending Ending
June 27, June 30,
1997 1996
------------- -------------
Net Income (Loss) ($8,318) $18,742
Depreciation & Amortization $8,417 $3,701
Changes in Assets & Liabilities:
Accounts Receivable $3,914 ($247,183)
Other Current Assets 2,688 (178)
Other Non-current Assets 244 0
Accounts Payable (1,293) 137
Other Current Liabilities (126,248) (139,320)
------------- -------------
Net Cash (Used for) Provided
By Operating Activities $120,598 $130,263
Investment Activities (908) 0
Financing Activities 69,866 10,001
------------ -------------
Net Increase (Decrease) in ($51,639) $140,264
Cash or Cash Equivalents
Cash & Cash Equivalents:
Beginning of Period 153,222 32,766
End of Period $101,583 $173,030
============= =============
<FN>
See Accompanying
Notes to Financial
Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
June 27, 1997
Note 1. Summary of Significant Accounting Policies
The accompanying unaudited financial statements have been
prepared in accordance with Generally Accepted Accounting Principles
for interim financial information and with the instructions to Form
10QSB and Rule 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 of normal recurring accruals)
considered necessary for fair presentation have been included.
The accompanying unaudited financial statements should be read
in conjunction with the audited balance sheet of Acadia National Health
Systems, Inc. ("the Company") included in the 1996 Registration Statement
filed on Form 10-SB. The unaudited financial statements have been prepared
in the ordinary course of business for the purpose of providing
information with respect to the interim period.
Note 2. Net Income Per Common Share
Computation of net income per common share was based on the weighted
average number of shares outstanding during such periods. These amounted
to 3,733,987 shares for the three months ending June 27, 1997 and 3,733,987
shares for the three months ending June 30, 1996 as adjusted for the
reorganization.
Note 3. Long Term Debt - Short Term Financing
The total of lines of credit drawn upon (outstanding) from Peoples
Heritage Bank ("Bank") as of June 27, 1997 was $259,446 on a
$500,000 demand line limit, compared to $193,917 at June 30, 1996.
On October 01, 1996, Bank provided the Company an
additional $100,000 term loan, of which $90,499 is outstanding. All loans
made by Bank under such facilities are renewable annually.
All loans and repayment of lines of credit payable to Bank
and future borrowings under any such credit facilities have been
collateralized by the accounts receivable and equipment of the
Company.
Note 4. Majority Stockholder
On June 27, 1997, Mr. Thomas N. Hackett and Peacock Hill Farm
Limited Liability Company, of which Mr. Hackett had total voting authority,
owned approximately 77% of the Common Stock of the Company.
Note 5. Additional Bank Financing Events
A. On October 01, 1996 Peoples Heritage Bank provided the
Company an additional $100,000 term loan.
B. On March 18, 1997 People's Heritage Bank provided the Company
an additional $250,000 line of credit bringing the total line of credit to
$500,000. This total line of credit is secured by the accounts receivable
and equipment of the Company.
ACADIA NATIONAL HEALTH SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
June 27, 1997
RESULTS OF OPERATIONS:
======================
THREE MONTHS ENDING JUNE 27, 1997
=====================================
Note:
Acadia National Health Systems purchased the assets of Physician
Resources, Inc. on September 27, 1996, and took over the operations
of that company as of September 28, the first day of the fiscal
quarter and year. It did not conduct operations prior to this date.
All activities for the current quarter are compared with the
operations of Physician Resources for the same quarter a year earlier.
Comparative results have not been adjusted for the difference between
Physician Resources' calendar quarters ending in a calendar month end
and Acadia's fiscal quarters ending on the last Friday of a calendar month.
SALES
Sales for the period of $156,355 were up $3,898 or 2.6% from the
corresponding period in 1996. This was principally due to continued
growth in the Waivered Foster Care program. There were no
software or franchise sales during the period.
OPERATING EXPENSES
Operating expenses increased $45,901 during the period, principally
due to ongoing consulting services incurred in taking the Company
public, in addition to increases in depreciation, office supplies
and salaries and wages for additional members of Senior Manage-
ment, also in preparation of becoming a reporting Company.
OPERATING INCOME
An operating loss for the quarter was $8,318, compared to a gain of
$18,742 for the comparable quarter in 1996. This loss was principally
due to unusual consulting expenses and employment of executive
staff prior to public trading and expansion.
Operating expenses increased 40% to $159,312. The Company incurred
non-recurring expenses of $14,648 in consulting and legal expenses.
Interest expense increased 98% to $22,558 as a result of higher credit
line balances primarily used in its waivered foster care services.
INCOME TAXES
Physician Resources was an S Corporation and incurred no tax liability.
Acadia is a C Corporation that accrued $2,405 combined State and Federal
tax credits for current quarter earnings.
NET INCOME
Acadia's loss of $8,318 were ($0.002) per share on 3,733,987 outstanding
common shares.
LIQUIDITY AND CAPITAL RESOURCES
Accounts Receivable increased $224,841 from June 30, 1996, to June
27, 1997, principally due to the rapid growth of the Waivered Foster
Home program. These are solid receivables due from the
State of Maine. During this same period, the Company added
$60,039 in property, plant and equipment, principally computer systems
and related equipment. Acadia spent $101,519 during the first
three quarters of its fiscal year, September 28, 1996 through June
27, 1997 in Corporate organization costs associated with
preparation of a Uniform Franchise Offering Circular (UFOC)
and startup of Acadia as a reporting company. Anticipated Acadia
market activities and planned acquisitions will place additional
demands on liquidity during the remainder of the year.
OTHER INFORMATION
===================
SOFTWARE CONVERSION AND PREPARATION FOR EXPANDED SALES ACTIVITY
During the second quarter, Acadia finished its conversion of its billing
software from an obsolete Unix-based system to state-of-the-art data
base technology and the Microsoft NT server. This system now enables
Acadia to offer clients a variety of its own products and also Microsoft
products running on the network. The conversion was a necessary first
step, learning internally in anticipation of offering these technologies
to outside clients. During the third quarter, the Company continued
offering the software for sale.
UNIFORM FRANCHISE OFFERING CIRCULAR (UFOC)
The Company is preparing a UFOC for filing with the FTC in the fourth
quarter and anticipates selling Acadia franchises as soon as approval
is obtained. Franchisees will be offered the opportunity to market Acadia's
billing systems technology, other brand name products and related support
services to tertiary markets throughout the country. This timeline is a
delay from our original business plans and will adversely effect future
sales and earnings from this product line.
MAJOR ACQUISITION
The Company has initiated discussions with various companies towards
major acquisitions that will greatly strengthen Acadia and its
product lines.
SALES TRENDS
Trends in Acadia's existing business lines, medical billing services and
billing for waivered foster home care, are positive, with expected
growth throughout FY 1997 and FY 1998. Software sales, franchising,
related support services and major acquisitions are expected
to result in significant revenue and earnings increases in FY 1998
and beyond.
BUSINESS AND PROPERTIES OF ACADIA NATIONAL HEALTH SYSTEMS, INC.
===================================================================
HISTORY
Thomas N. Hackett founded what later became Physician Resources (PRI)
in 1971 as the financial services arm of Advantage Business Services.
In 1990 bookkeeping and doctor billing were separated as Bookkeeping
Resources, Inc. In 1992 doctor billing was moved to a new company,
Physician Resources, Inc., and commercial bookkeeping operations ceased.
Physician Resources provided practice management, invoicing and accounts
receivable collection services for doctors offices, foster homes and
hospital-based practices.
On May 25, 1997, Thomas N. Hackett passed away unexpectedly.
Two members of Senior Management are purchasing the majority
of his shares held by estate and intend to add other key leadership
personnel immediately. A full Board of Directors and officers
will be fully functional by the end of the FY 1997.
The doctor billing service has undergone several technical transitions
since its inception. In the early days the service supported physicians
who wished to avoid an elaborate business function or complex computer
systems. As computer systems became simpler and easier to use, the
company found other value added services to retain clients. This led
to practice management consulting and, in the last few years, electronic
billing and medical service financing. Many health service payers,
led by Medicare and Medicaid, have begun to require electronic billing
to reduce processing costs. Electronic billing brought the added benefit
of improved reliability and timeliness of third party payments. This
improved medical practice creates asset utilization and profitability.
Since electronic billing requires complex data modalities and sophisticated
software procedures, it is more adaptable to a high volume billing service
than to a single medical practitioner. This was a very successful service
for Physician Resources and continues to grow briskly within Acadia.
The company just completed expanding its state-of-the-art full-featured
software system that will become a key component for a national billing
service.
OBJECTIVES, NEAR-TERM
On January 13, 1997, Acadia's SEC application Form 10SB was effectuated.
On May 20, 1997, the Company received NASD acceptance pursuant to the filing
of a Form 211 and accompanying Information and Disclosure Statement, and
began to trade on the OTC market during the third quarter of FY
1997. This has allowed the Company to approach capital markets and
initiate the raising of equity needed to fuel growth and consummate a
first series of acquisitions. Access to public markets is critical, since
the growth rates will be too rapid to fund through earnings or debt.
Acadia completed implementation of significantly expanded software
technology in the second quarter of FY 1997. This system includes the
capability of: automated patient appointment scheduling, electronic charting
features, electronic billing, direct funds transfer and distributed data
processing with multiple location data entry and discrete paper copy
printing, unlimited client accounts and patient census, all running on the
NT platform. Later, full service computerized patient charting systems,
document management systems and state of the art dictation technology will
be added. These attributes will provide the technological base that will
reinforce the company as a major player in tertiary markets and a
clearinghouse for franchised medical billing activities.
OBJECTIVES, LONG-TERM
Acadia will create a franchised network of local entrepreneurs and other
companies to market full service Physician Practice Management (PPM)
services regionally and then nationally. Franchisees (Associates) will
sell practice management, billing, operations financing, accounting
and office systems services to doctors, foster homes and other small and
medium sized health care providers. They will also seek joint venture and
strategic partner alliances. Acadia's home office will provide centralized
and decentralized professional and data support, training, counseling, cash
control and other management services for Franchisees (Associates).
The Company will grow through strategic acquisitions, joint
ventures and internal expansion. Many smaller billing services, and some
practice management consultancies, are ill equipped to deal with the changes
occurring in the health care market and the regulatory environment. These
are candidates for affiliation. Acadia intends to grow its business
through mergers and acquisitions of companies whose business
philosophy is based on producing a high quality product, whose
management is dedicated to long term ethical growth and whose
organization and structure are complimentary to Acadia's vision of a
superior company with a superior product.
PART II - OTHER INFORMATION
Item #1 Legal Proceedings
Neither the Registrant nor any of its affiliates are a
party, nor is any of their property subject, to material
pending legal proceedings or material proceedings known
to be contemplated by governmental authorities.
Item #2 Changes in Securities
None
Item #3 Defaults Upon Senior Securities
None
Item #4 Submission of Matters to a Vote of Security Holders
None
Item #5 Other Information
None
Item #6 Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
Reports have been filed on Form 8-K during this
quarter as follows:
8-K, June 05, 1997, Item 5, Other Events
ACADIA NATIONAL HEALTH SYSTEMS, INC.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly cause this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Registrant
August 15, 1997 Mark T. Thatcher
Date
MARK T. THATCHER,
Filing Agent
August 15, 1997
Paul W. Chute
Date PAUL W. CHUTE,
Principal Executive Officer