ATC HEALTHCARE INC /DE/ (AHN) SPO
|Company Name||ATC HEALTHCARE INC /DE/|
|Company Address||1983 MARCUS AVE
LAKE SUCCESS, NY 11042
|Employees (as of 11/4/2004)||15154|
|State of Inc||DE|
|Fiscal Year End||2/28|
|Exchange||American Stock Exchange|
|Shares Over Alloted||--|
|Shareholder Shares Offered||13,078,182|
|Lockup Period (days)||180|
|Quiet Period Expiration||--|
This prospectus relates to shares of our common stock that may be offered and sold from time to time by Cornell Capital Partners, L.P. We will receive proceeds from the sale of shares of our common stock to Cornell Capital Partners, under the Standby Equity Distribution Agreement. The purchase price of the shares purchased under the Standby Equity Distribution Agreement will be equal to 97% of the lowest closing bid price of the common stock for the five consecutive trading days immediately following the notice to advance funds date. We have agreed to pay Cornell Capital Partners, 5% of the proceeds that we receive under the Standby Equity Distribution Agreement. We cannot draw more than $53,000 per advance. For illustrative purposes, we have set forth below our intended use of proceeds for the range of net proceeds indicated below to be received under the Standby Equity Distribution Agreement. The intended uses of proceeds are listed in order of priority. Although we are able to draw down the full $5,000,000 pursuant to the Standby Equity Distribution Agreement, we anticipate only needing to draw down in addition to amounts already drawn between $1,500,000 and $3,000,000. The table assumes estimated offering expenses of $45,000, plus the 5% fee to be paid to Cornell Capital Partners. AMOUNT AMOUNT AMOUNT GROSS PROCEEDS $1,500,000 $3,000,000 $5,000,000 NET PROCEEDS (AFTER OFFERING EXPENSES AND 5% FEE) $1,380,000 $2,805,000 $4,705,000 USE OF PROCEEDS Repayment of Bank Debt (1) $ 800,000 $1,100,000 $2,600,000 Sales & Marketing $0 $ 300,000 $ 300,000 General Working Capital (2) $ 580,000 $1,405,000 $1,805,000 TOTAL $1,380,000 $2,805,000 $4,705,000 (1) Refers to our $15 million revolving loan agreement with HFG Healthco-4 LLC that matures in April 2008. For a complete description, see "Liquidity and Capital Resources" on page 41. (2) Primarily includes costs associated with opening Company-owned offices and general administrative expenses, which may include hiring additional sales personnel. On November 11, 2004, we issued a promissory note in the principal amount of $425,000 to Cornell Capital Partners for a $425,000 advance against the Standby Equity Distribution Agreement. As was contemplated, the note was repaid through issuances of common stock to Cornell Capital Partners under the Agreement. Proceeds from that advance were used to fund general working capital needs. At August 31, 2005, $600,000 remained outstanding on the note. On February 18, 2005, we issued a promissory note to Cornell Capital Partners in the principal amount of $825,000 for an $825,000 advance. As was contemplated, the note is to be repaid through issuances of common stock to Cornell Capital Partners under the Standby Equity Distribution Agreement. At February 28, 2005, $760,000 was outstanding on that promissory note and at May 31, 2005, $255,000 remained outstanding on it. Proceeds from that advance were used to fund general working capital needs. During the fiscal year ended February 28, 2005, we issued 1,682,104 shares of common stock to Cornell Capital Partners under the Standby Equity Distribution Agreement at sale prices of $0.27 to $0.41 per share and received proceeds of $176,000 net of expenses of $358,000 from the sale of those shares. Those proceeds were used to reduce our promissory note obligations to Cornell Capital Partners. On May 25, 2005, we issued a promissory note to Cornell Capital Partners in the principal amount of $850,000 for an $850,000 advance. As was contemplated, the note is to be repaid through issuances of common stock to Cornell Capital Partners under the Standby Equity Distribution Agreement. At May 31, 2005, $850,000 was outstanding on that promissory note. Proceeds from that advance will be used to fund general working capital needs. At August 31, 2005, $600,000 remained outstanding on that note. During the three months ended May 31, 2005, we issued 1,944,323 shares of common stock to Cornell Capital Partners under the Standby Equity Distribution Agreement at sale prices of $0.29 to $0.36 per share. We received proceeds of $606,000 net of expenses from the sale of those share which we used to reduce our promissory note obligations to Cornell Capital Partners. In connection with the Standby Equity Distribution Agreement and our promissory notes to Cornell Capital Partners, we have placed in escrow a certificate evidencing our common shares. As of May 31, 2005, the certificate evidenced 4,465,711 shares.
The medical staffing industry is extremely fragmented, with numerous local and regional providers nationwide providing nurses and other staffing solutions to hospitals and other health care providers. We compete with full-service staffing companies and with specialized temporary staffing agencies as well as small local and regional healthcare staffing organizations. There are three dominant healthcare staffing companies that we compete with, including Medical Staffing Network, American Mobil Nursing and Cross Country Nursing. We compete with these firms to attract our temporary healthcare professionals and to attract hospital and healthcare facility clients. We compete for temporary healthcare professionals on the basis of the compensation package and benefit package offered as well as the diversity and quality of assignments available. We compete for hospital and healthcare facility clients on the basis of the quality of our temporary healthcare professionals, price of our services and the timely availability of our professionals with the requisite skills. As HMOs and other managed care groups expand, so too must the medical staffing companies that service these customers. In addition, momentum for consolidation is increasing among smaller players, often venture capital-backed, who are trying to win regional and even national accounts. Because the temporary staffing industry is dominated generally by large national companies that do not specialize in medical staffing, management believes that its specialization will give it a competitive edge. In addition, licensee program gives each licensee an incentive to compete actively in his or her local marketplace.
We provide supplemental staffing to health care facilities through a network of 52 offices in 23 states, of which 35 offices are operated by 23 licensees and 17 are owned and operated by us. We offer our clients qualified health care staff in over 60 job categories ranging from
the highest level of specialty nurse, including critical care, neonatal and labor and delivery, to medical administrative staff, including third party billers, administrative assistants, claims processors, collection personnel and medical records clerks. Our principal executive offices are located at 1983 Marcus Avenue, Lake Success, New York 11042. Our telephone number is (516) 750-1600.
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