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COST-CUTTING PROGRAM AND SENIOR MANAGEMENT CHANGES
In an effort to further reduce operating expenses, PainCare has eliminatedmany cost redundancies within its corporate operations and across itsproprietary network of physician practices. In addition, the Company hasfocused on reducing general corporate staffing levels, resulting in itsdecreasing corporate employee headcount from 27 to 18.
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PainCare has accepted the resignation of Ronald Riewold as President ofPainCare Holdings and executive member of the Board, effective January 31,2008. Replacing Riewold as President is Katie White, current President ofIPS. Riewold will work closely with White through and beyond his effectiveresignation date to ensure a seamless transition is achieved. In addition toher new role as President of PainCare Holdings, White will also continue tolead IPS.
"Since first assuming the helm at IPS in late 2007, Katie has quicklydistinguished herself as a very dynamic, results-oriented executive," statedRandy Lubinsky, CEO of PainCare. "But, this did not come as any surprise.For the past four years, Katie has proved invaluable to PainCare in her formerposition as Executive Vice President, where she played a significant role inbusiness development, mergers/acquisitions and policy compliance andmanagement within our Physician Practice Group. Upon taking control of day-to-day operations at IPS, she immediately applied her proactive managerialskill to the business, refining and redefining, as necessary, tactical growthstrategies that have led to a number of new sales opportunities being pursuedand the material expansion of IPS' national provider network. She is theobvious choice to replace Ron on our executive leadership team. It should benoted that we will sorely miss Ron, but sincerely wish him great success inall of his future business endeavors."
FINANCIAL MATTERS
On January 11, 2008, PainCare signed a forbearance agreement with itssenior lender, providing for the lender to forbear from exercising theirrights and remedies under the Company's loan agreements for a period of 120days. In addition, the lender has agreed to make cash advances to PainCare inan aggregate amount of up to $1 million, payable in predetermined installmentsthrough March 31, 2008. All extensions of credit will be added to theprincipal balance of the term loans, which has been reduced to approximately$8.5 million from approximately $30 million in association with the Company'songoing restructuring efforts.
In association with its efforts to leverage existing assets to meetcurrent working capital and future growth capital needs, management hasengaged the services of specialized investment banking group, MartinsAcquisition Group, who has been charged with marketing the sale of DynamicRehabilitation Centers, Michigan's most comprehensive spinal rehabilitationpractice specializing in the treatment of sub-acute and chronic back and neckpain. It is also one of the largest, physician-based MedX rehab facilities inthe world. PainCare originally acquired Dynamic in 2004.
The Company intends to continue assessing all other available strategicalternatives in hopes of further strengthening its operating platform andproviding the necessary financial resources to support ongoing growth of IPS.With two national contracts with major payor groups in place and threeadditional new contracts in various stages of negotiation, IPS continues tofocus on the expansion of its proprietary provider network, with initialrecruiting and credentialing emphasis in Florida, Tennessee, Texas andPennsylvania. "The key to long term success for IPS," said
