UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 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.)
95 Park 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 - 4,337,987 shares as of
December 31, 1998.
PART I - FINANCIAL INFORMATION
ITEM 1
ACADIA NATIONAL HEALTH SYSTEMS, INC.
BALANCE SHEETS
(Unaudited)
December 31, 1998 December 31, 1997
_________________ _________________
Current Assets:
Cash-Operating $ 8,071 $ 9,955
Accounts Receivable 779,943 651,166
Unbilled Work at Estimated
Realizable Value 275,811 65,415
Prepaid & Other Assets 81,927 49,487
----------------- -----------------
Total Current Assets $ 1,145,752 $ 776,023
Prop., Plant & Equip.:
Cost 497,775 178,474
Less Accum. Depr. (115,623) (86,104)
----------------- -----------------
$ 382,512 $ 92,370
Other Assets:
Deferred Taxes 5,960 7,000
Intangible Assets 127,041 35,502
Less Accum. Amort. (19,816) (5,037)
Notes Receivable & Advances 182,803 90,289
----------------- -----------------
295,988 127,754
Total Assets $ 1,824,252 $ 996,147
================= =================
Current Liabilities:
Accounts Payable $ 62,559 $ 6,328
Line of Credit 476,193 490,014
Accrued Expense 69,887 65,109
Current Portion of
Long Term Notes 118,400 20,000
----------------- -----------------
Total Current Liabilities $ 727,039 $ 581,451
Long Term Liabilities:
Long Term Debt 343,888 92,517
----------------- -----------------
Total Liabilities $ 1,070,927 $ 673,968
December 31, 1998 December 31, 1997
_________________ _________________
Stockholders' Equity:
Common Stock $ 644,640 $ 276,640
Paid In Capital & Treas. 41,993 42,281
Retained Earnings 66,692 3,258
----------------- -----------------
Total Equity $ 753,325 $ 322,179
----------------- -----------------
Total Liabilities &
Equity $ 1,824,252 $ 996,147
================= =================
See Accompanying
Notes to Financial
Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
STATEMENT OF INCOME
FOR THE THREE MONTHS
ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997
(Unaudited)
Three months ended Three months ended
December 31 December 31
__________________ __________________
1998 1997
__________________ __________________
Sales $ 523,107 $ 186,883
Operating Expenses $ 511,930 $ 171,683
------------------ ------------------
Net Operating Income 11,177 15,200
Other Income/(Expense), Net 0 (13,808)
------------------ ------------------
Net Income Before Taxes 11,177 1,392
(Provision for)
Benefit From Income Taxes 0 0
------------------ ------------------
Net Income $ 11,177 $ 1,392
================== ==================
Net Income Per
Common Share $ 0.0030 $ 0.0004
Weighted Average Number
of Common Shares
Outstanding 4,004,654 3,733,987
See Accompanying
Notes to Financial Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1998
AND DECEMBER 31, 1997
(Unaudited)
Quarter Ending Quarter Ending
December 31, 1998 December 31, 1997
----------------- -----------------
Net Income (Loss) $ 11,177 $ 1,392
Depreciation & Amortization $ 28,251 $ 7,180
Changes in Assets & Liabilities:
Accounts Receivable $ (54,644) $ 50,807
Other Current Assets 7,590 535
Other Non-current Assets (119,316) 1,168
Accounts Payable (10,074) (12,335)
Other Current Liabilities (56,267) (21,390)
----------------- -----------------
Net Cash (Used for) Provided
By Operating Activities $ (193,283) $ 27,357
Investment Activities (33,621) (18,401)
Financing Activities 232,446 (4,712)
----------------- -----------------
Net Increase (Decrease) in $ 5,542 $ 4,244
Cash or Cash Equivalents
Cash & Cash Equivalents:
Beginning of Period 2,529 5,711
End of Period $ 8,071 $ 9,955
================= =================
See Accompanying
Notes to Financial
Statements
ACADIA NATIONAL HEALTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
December 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 1998 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
4,337,987 shares for the three months ending December 31, 1998 and 3,733,987
shares for the three months ending December 31, 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 December 31, 1998 was $476,193 on a $650,000 demand
line limit, compared to $490,014 at December 31, 1997.
On July 24, 1997, Bank provided the Company an $100,000 term loan, and
on June 24, 1998 an additional $30,000, of which 99,942 is still outstanding
at December 31, 1998.
On September 1, 1998, Bank provided the Company a $200,000 term loan with
interest at 9.25%, due in monthly installments of $4,177, including interest,
through September 2003. The note balance at December 31, 1998 is $192,031.
The note, which was primarily used to fund the acquisition of Northeast
Medical Billing, is collateralized by equipment and fixtures of the Company.
The company also has a note payable collateralized by a vehicle which
totals
$14,577 at December 31, 1998.
A total of $155,243 of equipment was acquired at various times during the
year under capital leases. Capital lease obligations at December 31, 1998
total $135,898.
All other 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 December 31,
1998 and owned approximately 60% of the Common Stock of the Company.
Note 5. 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.
12/31/98 13/27/97
Accounts Receivable (Trade) $422,858 $ 38,922
Advances 632,896 612,244
Total Accounts Receivable $1,055,754 $651,166
========== =========
Note 6. Note Receivable
The Company holds $90,208 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.
ITEM 2.
ACADIA NATIONAL HEALTH SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
December 31, 1998
RESULTS OF OPERATIONS:
=====================================
THREE MONTHS ENDING DECEMBER 31, 1998
=====================================
The Company's financial statements and notes thereto for the current period
and the audited financial statements and notes thereto for the fiscal year
ending September 30, l998, should be read in conjunction with this
Management's Discussion.
FORWARD-LOOKING INFORMATION
THIS FORM 10QSB AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
ACADIA NATIONAL HEALTH SYSTEMS, INC. OR ITS REPRESENTATIVES CONTAIN STATEMENTS
WHICH MAY CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FIFTEEN U.S.C.A.
SECTIONS 77Z-2 AND 78U-5 (SUPP. 1996). THOSE STATEMENTS INCLUDE STATEMENTS
REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF ACADIA NATIONAL HEALTH
SYSTEMS, INC. AND MEMBERS OF ITS MANAGEMENT TEAM AS WELL AS THE ASSUMPTIONS ON
WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY
SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND
INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS
CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS ARE SET FORTH IN THE SAFE
HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT
99.1 TO THIS FORM 10QSB AND ARE HEREBY INCORPORATED HEREIN BY REFERENCE. THE
COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING
STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED
EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.
RISK FACTORS
In addition to the other information contained in this report,
individuals should carefully consider the following risk factors:
1. The Company believes that its assumptions are based upon reasonable
data derived from and known about its business and operations. No assurances
are made that actual results of operations or the results of the Company's
future activities will not differ materially from its assumptions;
2. Additional risks factors such as the uncertainty of the Company's
marketing activities, and the results of bringing additional acquisitions and
affiliations into a smooth operation with Company are unknown;
3. Additional concerns regarding the year 2000 compliance standards as
they effect the Company's operating technology as well as the technologies of
the industry which effect payment and processing of Company's billings;
4. Additional uncertainties regarding the ability for operating cash to
meet the current and projected cash flow needs of the organization;
5. Readers are cautioned not to place undue reliance on these
forward-looking statements, as they attempt to speak only of activities known
or anticipated as of this date.
YEAR 2000 COMPLIANCE
The Company continues to review its technology systems to attempt to discover
what effects year 2000 issues may have on its operations. Many of the earlier
systems, found not to be compliant, have been replaced while others are being
modified to comply. The Company is working with its known suppliers of
technology or services controlled by technology that might be effected by the
year 2000 events and are seeking written assurances from those determined to
have a potential effect upon Company's operations. However, there can be no
assurance that the Company will identify all of its data handling problems in
its business systems or those of its suppliers or clients in advance of any
effect upon Company's operations. The Company, therefore, bears some
unlimited and unknown risks to the year 2000 issue and could also be adversely
effected if other entities (State of Maine Department of Medicaid or
Medicare)do not adequately or timely resolve their payment mechanisms as it
relates to the Company's ongoing billing operations for its clients.
Note:
On September 1, 1998, Acadia National Health Systems purchased selected assets
of Northeast Medical Business Group, Inc., a medical billing and management
services corporation located in Keene, New Hampshire. The following
management discussion and analysis of financial conditions and results of
operations includes the operations of Northeast from October 1, 1998 to
December 31, 1998.
SALES
Sales for the period were $523,107 compared to $186,883 for the corresponding
period in 1997. This significant increase is the result of new client business
which commenced mid March 1998 resulting in additional annualized revenues of
$425,000 as well as the acquisition of Northeast Medical Billing in September
1998 with annualized revenues of $650,000. The Company also signed a major
contract in July 1998 with a large local behavioral medicine group for a one
year term. Revenue on this contract in the 1998 fiscal year totaled $61,000
with additional revenue of $100,000 expected before the contract expires in
mid 1999. Two additional client contracts have been signed effective 1/1/99
with annualized gross revenues of $106,000 expected for fiscal year 1999.
OPERATING EXPENSES
Increases in operating expenses during the period were principally due to
increased costs incurred in servicing the expanded client base, in addition to
increases in depreciation, occupancy and administrative costs related to the
acquisition of Northeast Medical Billing.
OPERATING INCOME
The operating gain for the quarter was $11,177 compared to a gain of $1,392
for the three month period in 1997.
INCOME TAXES
Acadia is a C Corporation with accruals of $390 for State and Federal taxes
at December 31, 1998.
NET INCOME
Acadia's gain of $11,177 was ($0.00279) per share on 4,004,654 outstanding
common shares.
LIQUIDITY AND CAPITAL RESOURCES
The Company's non-trade accounts receivable increased to $632,896 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. During this same period, the Company added $33,621 in property, plant
and equipment, principally computer systems and related equipment. 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.
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 1999. Added billing clients, software sales, practice
management consulting, related support services and major acquisitions are
expected to result in significant revenue and earning increases in FY 1999
and beyond.
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
OTHER INFORMATION
=================
Acadia has spent the last few months of operation preparing the 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 timely
maintained our Section 12, Exchange Act of 1934 public reporting requirements
and trade on the OTC Bulletin Board under our symbol OTCBB: "ACAD".
Discussions continue with other similar businesses for future acquisitions
and mergers. Also, the Company is actively working with underwriters and
capital formation specialists, concentrating in health care companies, to
arrange a secondary offering capitalization. Additionally the Company has
raised $275,000 of a $500,000 private placement offering, with the balance
expected to be raised in the second quarter of fiscal year 1999.
Another major accomplishment this year was the development and adoption of a
medical reporting compliance program. Acadia takes very seriously the need
for correct verification, reporting and billing of medical services to all
payors. Education of our employees and providers is constant and critical to
remain abreast in this very complex and rapidly changing medical billing and
regulated arena.
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27. Financial Data Schedule
Exhibit 99.1 Safe Harbor Compliance Statement
b. Reports on Form 8-K
A report on Form 8-K was filed by the Company during
the quarter on the following dates:
Press Release dated November 12, 1998;
Press Release dated November 24, 1998;
Press Release dated December 18, 1998.
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
February 17, l999 /s/ Mark T. Thatcher
MARK T. THATCHER,
Filing Agent
February 17, 1999 /s/ Paul W. Chute
PAUL W. CHUTE
Chief Executive Officer