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 March 31, 1998
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
(800) 274-9185
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
March 31, 1998.
PART I - FINANCIAL INFORMATION
ACADIA NATIONAL HEALTH SYSTEMS, INC.
STATEMENT OF INCOME
FOR THE THREE MONTHS
ENDED MARCH 31, 1998 AND MARCH 28, 1997
(Unaudited)
Three months ended Three months ended
March 31 March 28
__________________ _________________
1998 1997
________ ________
Sales $232,188 $176,839
Operating Expenses $218,626 $144,446
-------- --------
Net Operating Income 13,562 32,393
Other Income/(Expense), Net 0 (16,252)
--------- ---------
Net Income Before Taxes 13,562 16,141
(Provision for)
Benefit From Income Taxes (2,688) (5,624)
--------- --------
Net Income $ 10,874 $ 10,517
========= ========
Net Income Per
Common Share $ 0.003 $ 0.003
Weighted Average Number
of Common Shares
Outstanding 3,733,987 3,733,987
See Accompanying
Notes to Financial Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
BALANCE SHEETS
(Unaudited)
March 31, 1998 March 28, 1997
______________ ______________
Current Assets:
Cash-Operating $ 19,570 $ 153,222
Accounts Receivable 680,811 491,216
Unbilled Work at Estimated
Realizable Value 123,208 86,200
Inventories 3,700 3,754
Other Current Assets 83,276 7,397
-------------- --------------
Total Current Assets $ 910,565 $ 741,789
Prop., Plant & Equip.:
Cost 179,774 168,688
Less Accum. Depr. (93,298) (67,135)
-------------- --------------
$ 86,476 $ 101,553
Other Assets:
Other 7,000 7,500
Organization Cost 35,502 34,354
Less Accum. Amort. (6,655) (3,198)
Notes Receivable 52,400 0
-------------- --------------
$ 88,247 $ 38,656
Total Assets $ 1,085,288 $ 881,998
============== ==============
Current Liabilities:
Accounts Payable $ 46,982 $ 2,861
Line of Credit 426,895 180,051
Accrued Expense 170,554 322,468
Current Portion of
Long Term Notes 20,000 18,000
-------------- -------------
Total Current Liabilities $ 664,431 $ 523,380
Long Term Liabilities:
Long Term Debt 87,517 103,652
Other Non-Current Liab. 0 0
-------------- -------------
Total Liabilities $ 751,948 $ 627,032
Stockholders' Equity:
Common Stock 276,640 251,640
Treasury Stock (1,272) 0
Paid In Capital 43,840 400
Retained Earnings 14,131 2,926
-------------- -------------
Total Equity $ 333,340 $ 254,966
-------------- -------------
Total Liabilities &
Equity $ 1,085,288 $ 881,998
============== =============
See Accompanying
Notes to Financial
Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
AND DECEMBER 27, 1996
(Unaudited)
Quarter Quarter
Ending Ending
March 31 March 28
1998 1997
------------- ------------
Net Income (Loss) $ 10,874 $ 10,517
Depreciation & Amortization $ 8,811 $ 10,339
Changes in Assets & Liabilities:
Accounts Receivable $(87,438) $(83,172)
Other Current Assets (37,488) (4,043)
Other Non-current Assets 37,889 4,400
Accounts Payable 40,653 293
Other Current Liabilities 42,326 277,360
------------- -------------
Net Cash (Used for) Provided
By Operating Activities $ 15,627 $215,694
Investment Activities (1,012) (10,938)
Financing Activities (5,000) (71,059)
-------------- -------------
Net Increase (Decrease) in $ 9,615 $133,697
Cash or Cash Equivalents
Cash & Cash Equivalents:
Beginning of Period 9,955 19,525
End of Period $ 19,570 $153,222
============== ==============
See Accompanying
Notes to Financial
Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
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 1997 Annual Report filed on Form 10-KSB.
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 March 31, 1998 and 3,733,987
shares for the three months ending March 28, 1997.
Note 3. Long Term Debt - Short Term Financing
The total of lines of credit drawn upon (outstanding) from Northeast
Bank, FSB ("Bank") as of March 31, 1998 was $426,895 on a $650,000 demand
line limit, compared to $180,051 at March 28, 1997 on a line of credit from
Peoples Heritage Bank.
On July 24, 1997, Bank provided the Company an additional $100,000
term loan, of which $86,666 is outstanding. All loans made by Bank under such
facilities are renewable at three/six month terms.
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 Stockholders
Mr. Paul W. Chute, Mrs. Jacquelyn J. Magno and Mr. Mark T. Thatcher, all
Members of the Board of Directors, had total voting authority, on March 31,
1998 and owned approximately 67% of the Common Stock of the Company.
Note 5. Additional Bank Financing Events
On July 24, 1997, Northeast Bank FSB of Auburn, Maine provided the
following loans, which were used to retire all outstanding debt obligations
(note 5. A., B.) to Peoples Heritage Bank with the following balance for
operations:
1.) $400,000 line of credit for operations and funding
of its waivered billing/foster care product,
variable at 1% over national prime APR.
2.) $100,000 term loan, 5 year variable, at 1.25%
over national prime APR.
3.) $250,000 line of credit to fund a new billing
service product, variable at 1% over national
prime APR.
This new term loan and lines of credit are secured by the accounts
receivable, inventory and equipment of the Company.
Note 6. Account Receivable Financing
The Company has arrangements with certain customers whereby the Company
advances the customers amounts based on their security and collateralized
by their accounts receivable. The Company then assumes the responsibility
for billing and collecting such receivables.
03/31/98 03/28/97
Accounts Receivable (Trade) $172,858 $141,033
Advances 631,161 436,383
Total Accounts Receivable $804,019 $577,416
========= ========
The advances are secured by third party collateral and pre-approval from
the State of Maine Department of Human Services.
Note 7. Note Receivable
The Company holds $90,130 in conditional notes receivable from a vendor of
which $75,000 earns 10% interest, due in monthly installments of $2,420,
including interest beginning November 1, l998. The $75,000 note is secured by
accounts receivable, equipment and inventory of the vendor.
ACADIA NATIONAL HEALTH SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
March 31, 1998
RESULTS OF OPERATIONS:
======================
THREE MONTHS ENDING MARCH 31, 1998
=====================================
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 for the same quarter a year earlier.
Comparative results have not been adjusted for the difference between
Acadia's calendar quarters ending March 31, l998 in a calendar month end
and Acadia's fiscal quarters ending March 28, 1997 on the last Friday of a
calendar month.
SALES
Sales for the period were $232,188 compared to $176,839 for the corresponding
period in 1997. This sales increase was due to new client business starting
mid March 1998. Acadia was successful in adding six (6) new clients during
mid March with annualized revenues of $325,000. Three additional contracts
have been secured for mid April 1998 with $100,000 revenue anticipated.
These new clients are medical specialists in radiology, anesthesiology and
family medicine which further compliments our solid base in these
disciplines.
OPERATING EXPENSES
Increases in operating expenses during the period were principally due to
routine operating expenses, addition to increases in depreciation, office
expenses, legal and accounting and additional members of senior management,
and other costs incurred in preparation of becoming a reporting company
OPERATING INCOME
An operating gain for the quarter was $10,874, compared to a gain of $10,517
for the three month period in 1997.
INCOME TAXES
Acadia is a C Corporation with current accruals for state taxes of $723 and
Federal taxes of $2,164.
NET INCOME
Acadia's gain of $10,874 was ($0.003) per share on 3,733,987 outstanding
common shares.
LIQUIDITY AND CAPITAL RESOURCES
The Company's non-trade accounts receivable increased to $631,161 due to the
rapid growth of the waivered foster home and non-medical billing programs.
These are clean secured receivables with the majority due from the State of
Maine. Acadia completed most of its Corporate organization costs prior to
this quarter. Anticipated public reporting expenses and planned acquisitions
will place additional demands on liquidity during the remainder of the next
year. Management, with its new principal lender, Northeast Bank FSB maintain
routine analysis of the lines of credit and the Company's capital needs.
OTHER INFORMATION
=================
Acadia has spent the last few months of operation preparing our organization
for rapid sales growth and expansion. We have completely revised our
operating policies, installed a new financial management system and recruited
experienced, operational and management personnel. Additionally, we
maintained our public reporting and trading on the OTC Bulletin Board under
our symbol OTCBB: ACAD. During the third quarter 1997 year the company
negotiated three signed Letters of Intent with other medical management
service organizations and technology companies with which we intended to merge
alliances. Discussions with these businesses have been put on hold. Acadia
has initiated discussions with other medical service businesses about some
form of relationship and these are ongoing. The Company is working with
investment firms, specializing in health care companies, who arrange future
capitalization. Acadia is also developing a relationship with retail brokers
to help market and support our public float.
MAJOR ACQUISITION
The Company has ongoing discussions with various companies towards mergers and
acquisitions that would continue to strengthen Acadia and its product lines.
SALES TRENDS
Growth in Acadia's existing business lines, medical billing services and
billing for waivered foster home care are positive. Current sales run rates
show a 60% increase in revenue since this same period last year.
BUSINESS AND PROPERTIES OF ACADIA NATIONAL HEALTH SYSTEMS, INC.
===============================================================
HISTORY
Physician Resources, Inc., the predecessor of Acadia, was formed in 1972 as a
doctor billing and bookkeeping services company. In 1990 bookkeeping and
doctor billing functions were segregated into separate companies. The
successor company, Acadia, continued the operations of Physician Resources and
currently provides practice management, invoicing and accounts receivable
collection services for doctors offices, foster homes and hospital-based
practices.
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 will allow
the Company to approach capital markets and initiate the raising of equity
when needed to fuel growth through mergers and acquisitions. Access to public
markets is critical, since the growth rates will be too rapid to fund through
earnings or debt.
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, require
electronic billing to reduce processing costs. Electronic billing brought the
added benefit of improved reliability and timeliness of third party payments,
therefore, improved medical practice 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 and
is a very successful service for Physician Resources.
Acadia uses principally HEALTHPAC software technology. This system
includes the capability of: automated patient appointment scheduling,
electronic charting features, client/server based medical practice management,
electronic billing and direct funds transfer. The technology is capable of
distributed data processing with multiple location data entry and discrete
paper copy printing, unlimited client accounts and patient census, all running
on the NT, PICK, D3, relational data base on Microsoft Windows 95' platform.
These attributes will provide the technological base that will reinforce the
company's long-term objective as a major player in tertiary markets.
The Company will grow through strategic acquisitions, joint ventures and
internal expansion. Promotion of our medical billing software technology and
medical practice management consulting services will add additional growth to
our front line business of medical billing. Many smaller billing services and
some practice management consultants are ill equipped to deal with the changes
occurring in the health care market and the regulatory environment and these
are candidates for affiliation. Acadia intends to grow its business through
mergers and acquisitions of companies who's business philosophy is based on
producing a high quality product, who's management is dedicated to long term
ethical growth and who's 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
No reports have been filed on Form 8-K during this
quarter.
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
May 13, l998 /s/Mark T. Thatcher
Date
MARK T. THATCHER,
Filing Agent
May 13, l998 /s/Paul W. Chute
Date
PAUL W. CHUTE
Chief Executive Officer