| Company Background |
| Physical Therapy Associates (“PTA”), a Sole Proprietorship, is 100% owned by Michael N. Walters, P.T. The date of inception is 1960 and the company has operated in 3 locations in Houston, Texas. PTA leases office space in a 3 story medical building located at 1220 Blalock, Suite 220, Houston, Texas, 77055. PTA has been at this location since 1995. |
| PTA offers Physical Medicine and Rehabilitation services to the general public by physician referral. The company specializes in geriatric patients, stroke recovery, personal injury, cardiac rehabilitation, spinal injuries, post operative rehabilitation, workers’ compensation claims and other muscleo-skeletal disorders. PTA averages 60 patient visits per week (see Schedules 1 & 2). The company is certified to participate in both Medicare and Medicaid programs. |
| Michael Walters has operated the clinic as a solo practitioner since 1960 and is well known in the Houston health care community. |
| Significant Current Assets |
| Total assets on July 31, 2003 are $778,356. The most significant asset is receivable from Personal Injury case referrals. These cases require that PTA render services to patients on a Letter of Protection (“LOP”) basis with the referring attorney. The average time for collection of this type receivable is 18 months. PTA routinely writes off and adjusts the aggregate receivable amount. PTA wrote off $371,751 during the 12-month period ending July 31, 2003. The Balance Sheet carries $481,360 as the amount valued for Personal Injury cases. This amount reflects a 10% allowance for write off’s and a 25% allowance for cases settled requiring a fee adjustment. Furniture, Fixtures and Equipment are not depreciated and carried at estimated current value (see Schedule 3). |
| Revenue |
| Revenue is derived from out of office referrals (primarily out of town locations); insurance payments, personal injury cases and private pay patients. PTA bills insurance companies and carriers such as Medicare, Medicaid, Blue Cross and Blue Shield on a weekly basis. The average collection time is 6 weeks for an entire claim to be paid. Several physicians and attorneys refer patients weekly. |
| Expenses |
| PTA does not have any employees. It contracts labor on a 1099 basis and utilizes professional consultants. There are 3 individuals who average 35 hours per week on an hourly basis. Occasionally, PTA utilizes professional contracting agencies to provide labor for specific cases. |
| Total expenses are 68% of Total Net Revenue. |
| Cash Flows From Operating Activities |
| There are no significant issues or changes regarding working capital, accounts receivable, accounts payable, adjustments to insurance claims or writ-offs for personal injury cases. PTA does not have a revolving line of credit and uses collections for services provided as its sole source of cash flow. |
| Accounting Method |
| PTA reports revenue on a cash basis. |
| Tax Filing |
| PTA is a Sole Proprietorship and reports its taxable income and expenses on Schedule C as part of Michael Walters personal 1040 filing. |
| Accounts Receivable Billings |
| PTA uses MediSoft billing software and electronically bills most payer sources via Internet. |
| Forward Looking Statements |
| PTA has been an operating entity since 1960. The company relies on Michael Walters to perform the administrative and clinical tasks associated with a Physical Medicine and Rehabilitation clinic. Mr. Walters has no plans to retire in the immediate future. PTA is well established in the Houston health care marketplace and enjoys the niche that Mr. Walters has developed over the last 43 years. If PTA was sold to a like entity, the transition of ownership could be achieved with relative ease. If PTA were sold to an entity outside the health care industry, Mr. Walters would need to continue to direct the company or train a licensed Physical Therapist to assume his role. |