U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHAN GE ACT
OF 1934 FOR THE PERIOD ENDED MARCH 31, 1997
(Exact name of Registrant as specified in its character)
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ________________.
Commission file Number: 0-29006
HEALTH CARE CENTERS OF AMERICA, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 62-1210877
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
100 North Arlington Suite 22F, Reno, NV 89501
(Address of Principal Executive Office) (Zip Code)
(702) 786-1461
(Issuer's Telephone Number)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) as been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of May 10, 1997, 827,485,297 shares of the Registrant's common stock were
outstanding.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [X]
Transitional Small Business Disclosure Format (check one): Yes / / No /X/
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are filed with this Form 10-QSB:
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Page
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Accountant's Report 3
Balance Sheets 4
Statement of Operations 6
Statement of Changes in Stockholders' Equity 7
Statement of Cash Flows 10
Notes to Financial Statements 11
Accountant's Report on Supplemental Schedules 20
Schedule A--Property, Plant and Equipment 21
Schedule B--Accumulated Depreciation of
Property, Plant and Equipment 22
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<PAGE>
W. DALE MCGHIE Town & Country Plaza
CERTIFIED PUBLIC ACCOUNTANT 1539 Vassar St. Reno, Nevada 89502
Tel: 702-323-7744
Fax: 702-323-8288
To the Board of Directors
Health Care Centers of America, Inc.
Reno, Nevada
ACCOUNTANT'S REVIEW REPORT
I have reviewed the accompanying consolidated balance sheet of Health Care
Centers of America, Inc. and Subsidiaries (A development Company) as of March
31, 1997, and the related consolidated statements of operations for the period
ending March 31, 1997 and March 31, 1996, and the changes in stockholders'
equity for the periods ending March 31, 1997 and March 31, 1996, and statement
of cash flows for the periods ending March 31, 1997 and March 31, 1996 and from
June 29, 1993 (date of reorganization) through March 31, 1997, in accordance
with standards established by the American Institute of Certified Public
Accountants. All information included in these financial statements is the
representation of the management of Health Care Centers of America, Inc.
Financial Statements for the year ending December 31, 1996 were audited by me
and I expressed an unqualified opinion on them with an explanation paragraph
same as described below, in my report dated March 31, 1997, except for Notes 10,
14 and 15 which are dated August 22, 1997. I have not performed any auditing
procedures since that date.
A review consists principally of inquires of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be
made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
Management has prepared the accompanying financial statements assuming that the
Company will continue as a going concern, as discussed in Note 3 to the
financial statement. A majority of the Company's assets consist of mineral
inventories and mineral properties with a carrying value of $200 million, and
real estate properties with recorded values of $43 million. Recovery of the
Company's mineral inventories is dependent upon the extraction and recovery of
developed reserves in an economical fashion. Realization of a major portion of
the real estate properties is dependent on consummation of the real estate
transactions. The financial statements do not include any adjustments that might
result in a negative outcome as a result of this uncertainty.
W. Dale McGhie
Reno, Nevada
August 22, 1997
<PAGE>
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HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
( A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
FOR THE THREE MONTHS ENDING MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(SEE ACCOUNTANTS REPORT)
ASSETS
FOR THE THREE MONTHS
ENDING MARCH 31, DECEMBER 31,
1997 1996
----------------- ----------------
(unaudited) (audited)
CURRENT ASSETS
<S> <C> <C> <C>
Cash (Note 1) $ 778 $ 196,214
Accounts Receivable 587
Prepaid Expenses 9,449 1,500
----------------- ----------------
Total Current Assets 10,814 197,714
----------------- ----------------
PROPERTY, PLANT & EQUIPMENT (Note 1)
Equipment Held for Rent 555,185 555,185
Equipment 549,728 24,935
Furniture & Fixtures 12,307 6,249
----------------- ----------------
1,117,219 586,369
Less Accumulated Depreciation 26,043 11,355
----------------- ----------------
Net Property, Plant & Equipment 1,091,176 575,014
----------------- ----------------
OTHER ASSETS
Mineral Inventory /Property (Note 4) 269,375,000 200,000,000
Investment in Future Acquisitions
(Note 2) 46,020,200 49,016,330
Notes Receivable (Note 5) 266,347 260,000
Interest Receivable 7,838 6,600
Organizational Costs, Net
of Amortization 64,555 47,422
Goodwill, Net of Amortization 2,979,436 -
----------------- ----------------
Total Other Assets 318,713,376 249,330,352
----------------- ----------------
$ 319,815,365 $ 250,103,080
================= ================
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
( A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
FOR THE THREE MONTHS ENDING MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(SEE ACCOUNTANTS REPORT)
LIABILITIES AND STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS
ENDING MARCH 31, DECEMBER 31,
1997 1996
----------------- ----------------
(unaudited) (audited)
CURRENT
LIABILITIES
<S> <C> <C>
Accounts Payable and Accrued
Liabilities $ 90,872 $ $103,128
Deferred Revenue 3,590
Shareholder Advance 4,400 4,400
Interest Payable 103,156
Notes Payable - Bank 90,000
Notes Payable Affiliate 457,835
Notes Payable - Shareholder (Note 6) 267,373 462,809
----------------- ----------------
Total Current Liabilities $ 1,017,225 $ 570,337
----------------- ----------------
STOCKHOLDERS' EQUITY
Common stock $.001 par value;
900,000,000 shares authorized;
issued and outstanding are
827,485,297 shares on
March 31, 1997 and 452,485,297
shares on December 31, 1996 827,485 452,485
Additional Paid in Capital 332,510,659 263,388,756
Retained Earnings (13,702,162) (13,702,162)
Deficit Accumulated during the
Development Stage (837,842) (606,336)
----------------- ----------------
Total Stockholders' Equity 318,798,140 249,532,743
----------------- ----------------
Total Liabilities and Stockholders'
Equity $ 319,815,365 $ 250,103,080
================= ================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDING MARCH 31, 1997 and 1996
AND THE PERIOD FROM JUNE 29, 1993 THROUGH MARCH 31, 1997
(SEE ACCOUNTANTS REPORT)
(Date of Reorganiztion)
June 29, 1993
For the three months ending Through
March 31, March 31, March
1997 1996 31, 1997
------------ ------------- ------------
(unaudited) (audited)
<S> <C> <C> <C>
REVENUE $ 8,228 $ - $ 8,228
------------ ------------- ------------
EXPENDITURES
Depreciation and Amortization 40,379 1,634 63,872
Dues and Subscriptions - - 8,497
Demonstration Tapes 4,401 - 4,401
Exposition & Conventions 2,434 - 2,434
Employee Benefits 3,016 - 3,016
Professional Fees 35,501 28,160 211,859
Postage and Courier Service 1,163 1,551 20,589
Marketing & Promotion 2,220 - 34,703
Travel and Entertainment 19,999 6,475 143,302
Telephone Expenses 5,663 4,213 48,676
Other Office Occupancy Costs 29,508 2,377 64,268
Program Development 4,000 - 41,710
Rent 12,377 1,080 18,804
Wages & Salaries 55,252 3,600 88,424
------------ ------------- ------------
Total Expenses from Operations 215,913 49,090 754,555
------------ ------------- ------------
Net Operating Loss (207,684) (49,090) (746,326)
------------ ------------- ------------
OTHER INCOME (EXPENSES)
Interest Income 1,238 2,411 13,274
Interest Expense (25,060) (11,570) (104,790)
------------ ------------- ------------
Total Other Income (Expense) (23,822) (9,159) (91,516)
------------ ------------- ------------
Net Income (Loss) before
Federal Income taxes (231,506) (58,250) (837,842)
------------ ------------- ------------
Federal Income Taxes (Note 1) - - -
------------ ------------- ------------
Net Income (Loss) $ (231,506) $ (58,250) $ (327,842)
============ ============= ============
Net Income (Loss) Per Share (Note 1) $ (0.0005) $ (0.0004)
============ =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM JUNE 29, 1993 THROUGH MARCH 31, 1997
(SEE ACCOUNTANTS REPORT)
Accumulated
Retained during the
Common Stock Additional Earnings Development
Stock Amount paid in Capitol (Deficit) Stage
----- ------ --------------- -------- -----------
<S> <C> <C> <C> <C> <C>
Balance at June 29, 1993 12,038,500 $ 240,770 $ 13,461,391 $ (13,702,162) $ -
On June 29, 1993: Issued
Common stock to current
shareholders for loss of prior stock 1,800,000 36,000 (36,000) - -
Issued shares of common stock to
Masterhouse Ltd. (a related party)
for 3500 master recording value
unknown 4,500,000 90,000 (90,000) - -
Reverse stock split
One share of new stock for three
shares of old stock and change
par value from $0.02 to $0.001 (12,225,667) (360,657) 360,657 - -
Net loss through December 31, 1993 (819)
-----------------------------------------------------------------------------
Balance December 31, 1993 6,112,833 6,113 13,696,048 (13,702,162) (819)
In January and May 1994, Common
stock issued for services valued at par 31,960,000 31,960 - - -
In May 1994, record retroactive adjustment
in connection with the acquisition of
ElfWorks, Ltd., pooling of interest 40,000,000 40,000 -
(Note 2)
In May 1994, Issued shares valued at
estimated cost of learning center 400,000 400 49,600
(Note 2)
In May 1994, Issued shares for a mining Co.,
valued at replacement cost of equipment
(see Note 2) 12,000,000 12,000 74,130
...continued
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM JUNE 29, 1993 THROUGH MARCH 31, 1997
(SEE ACCOUNTANTS REPORT)
...continued
Accumulated
Retained during the
Common Stock Additional Earnings Development
Stock Amount paid in Capitol (Deficit) Stage
----- ------ --------------- -------- -----------
<S> <C> <C> <C> <C> <C>
*In July and September 1994, Issued
shares held in trust capacity, in exchange
for real estate valued at fair market value
(see Note below) 94,921,349 94,921 22,847,441 - -
In September 1994, Issued shares for a
mining co., valued replacement cost
of equipment, (Note 2) 20,000,000 20,000 390,000 - -
Capital contributed by shareholders' - - 126,768 - -
Net loss through December 31, 1994 (135,695)
------------------------------------------------------------------------
Balance December 31, 1994 205,394,182 205,394 37,183,987 (13,702,162) (136,514)
In February 1995, common stock issued for
services, recorded at par value 5,000,000 5,000 - - -
*In February and August 1995, Issued
shares held in trust capacity, in exchange
for real estate valued at fair market value
(see Note below and Note 2) 95,000,000 95,000 22,866,371 - -
In August 1995, Issued shares in exchange
for a music Co. valued at a discounted
stock price (Note 2) 4,000,000 4,000 2,496,000 - -
In August 1995, Common stock issued
for inventory of precious metal ore,
valued at a discounted stock price
stock price (Note 4) 100,000,000 100,000 199,900,000 - -
*In September 1995, Issued Common stock
held in trust capacity, in exchange for
services performed in conjunction with
the real estate transactions, valued
at fair market value (see Note
below and Note 2) 275,000 275 66,192 - -
Capital contributed by shareholders' - - 45,575 - -
Net loss through December 31, 1995 (95,400)
------------------------------------------------------------------------
Balance December 31, 1995 409,669,182 409,669 262,558,125 (13,702,162) (231,914)
</TABLE>
...continued
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM JUNE 29, 1993 THROUGH MARCH 31, 1997
(SEE ACCOUNTANTS REPORT)
...continued
Accumulated
Retained during the
Common Stock Additional Earnings Development
Stock Amount paid in Capitol (Deficit) Stage
----- ------ --------------- -------- -----------
<S> <C> <C> <C> <C> <C>
In June 1996, Common stock issued
for a mining interest, transaction not
consummated, stock to be recovered,
valued at zero, see Note 9 40,000,000 40,000 (40,000) - -
In June 1996, Issued shares of common
stock in exchange for equipment (Note 1) 2,066,115 2,066 553,119 - -
On November 21, 1996, Issued shares
of common stock as an incentive,
valued at par, see Note 10 750,000 750 (750) - -
Imputed value of services provided by
Officers and/or Directors (Note 10) - - 34,970 - -
Capital contributed by shareholders' - - 283,292 - -
Net loss through December 31, 1996 (374,422)
-------------------------------------------------------------------------------
Balance December 31, 1996 452,485,297 452,485 263,388,756 (13,702,162) (606,336)
In February 1997, Issued shares of common
stock in exchange for a Mining Interest
valued at a discounted
stock price (Note 2) 375,000,000 375,000 69,000,000 - -
Imputed value of services provided by
Officers and/or Directors (Note 10) - - 21,420 - -
Capital contributed by shareholders' - - 100,483 - -
Net loss through March 31, 1997 (231,506)
-------------------------------------------------- ------------ ---------------
Balance March 31, 1997 827,486,297 $ 827,485 $332,510,659 $(13,702,162) $ (837,842)
=========== ========== ============ ============ ==========
</TABLE>
* Note: These shares identified with a "*" above are in contemplation of
various contingent agreements and are held in a trust capacity. These
shares are listed as outstanding, however, for purposes of the earnings per
share calculation, weighted weighted shares were adjusted excluding these
shares (see Note 1). With exception to the real estate, it is managements
belief that these transactions are probable. Management is unable to
determine the probability of the outcome of the real estate acquisition(s)
at this time (see Note 9).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDING MARCH 31, 1997 and 1996
AND THE PERIOD FROM JUNE 29, 1993 THROUGH MARCH 31, 1997
(SEE ACCOUNTANTS REPORT)
June 29, 1993
For the three months ending Through
March 31, March 31, March
1997 1996 31, 1997
------------ ------------- ------------
(unaudited) (audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net Loss $ (231,506) $ (58,250) $ (837,842)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and Amortization 40,379 1,634 63,871
Services paid in Stock: - - 36,960
Imputed Value of Services Provided by
Officers and Directors (Note 10) 21,420 - 56,390
Net (Increase) Decrease in:
Prepaid Expenses 487 - (1,013)
Accounts Receivable 706 - 706
Notes Receivable - - (260,000)
Interest Receivable (1,238) (1,238) (7,838)
Organizational Costs - - (19,560)
Net Increase (Decrease) in:
Accounts Payable &
Accrued Liabilites 25,302 11,490 50,874
Interest Payable 23,245 11,570 98,166
------------ ------------- ------------
Net Cash Provided (Used) by Operating Activities (121,206) (34,794) (819,286)
------------ ------------- ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of Furniture & Fixtures (6,058) (534) (6,058)
Purchase of Equipment (2,286) - (33,470)
------------ ------------- ------------
Net Cash Provided by Investing Activities (8,344) (534) (39,528)
------------ ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contributed by Shareholders 100,484 36,478 556,118
Borrowings (163,736) - 303,474
------------ ------------- ------------
Net Cash Provided by Financing Activities (63,252) 36,478 859,592
------------ ------------- ------------
Net Increase in Cash (192,802) 1,150 778
Cash at the beginning of period 193,579 192,429 -
------------ ------------- ------------
Cash at the end of period $ 778 $ 193,579 $ 778
============ ============= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND DECEMBER 31, 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION:
Health Care Centers of America, Inc. a Nevada Corporation headquarter in Reno,
Nevada was incorporated under the name Carleton Enterprises, Ltd. On November
13, 1984 the Company changed its name to SCN, Ltd. On December 15, 1986, an
involuntary petition for reorganization, under Chapter 11 of the U.S. Bankruptcy
Code, was filed against SCN, Ltd. In December 1988, the Company became debtor in
possession of its assets under a voluntary proceeding. The Company was dormant
until September 31, 1993 at which time the bankruptcy was ordered dismissed. On
November 19, 1993 the Company again changed its name to Health Care Centers of
America, Inc. (HCCA). The Company is a development stage enterprise as defined
by FASB No. 7. "Accounting and Reporting by Development Stage Enterprises".
NATURE OF BUSINESS:
Currently the Company is focused on the development, management and exploitation
of five primary industry segments. The first is to continue its previous
entertainment activity of recording new master recordings, TV specials and
marketing the recordings. The second is the development of mining interests and
exploitation of existing inventories of ore concentrate. The third is the
management and development of a wide range of real estate interests. The fourth
is the development of various educational facilities and products. The fifth is
to develop and promote a nationally established chain of Health Care Centers
both within and outside the United States.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of its wholly owned
subsidiaries, ElfWorks, Ltd., Nashville Music Consultants, Inc. and Peeples
Mining Company, Inc. All significant inter-company transactions have been
eliminated.
ORGANIZATIONAL COSTS:
Organizational costs consisting of legal and accounting fees are capitalized and
amortized over a five year period.
FINANCIAL INSTRUMENTS:
At March 31, 1997 and December 31, 1996, the fair value of the Company's notes
payable and note receivable (see Note 6 and 7) are assumed to be equal to their
reported carrying amounts.
PROPERTY, PLANT AND EQUIPMENT:
Equipment and furniture are stated at cost. Depreciation is computed using the
straight-line method over a period of five to ten years.
Equipment also included 24 Medaway-1 infectious waste treatment units, an
on-site machine to process medical waste. The Company plans to lease these
machines to hospitals and nursing homes. The machines were purchased June 1996
through an exchange of 2,066,015 shares of the Company's common stock. The
transaction was valued at the seller's cost of $555,185 or $23,133 per unit.
CASH AND CASH EQUIVALENTS:
The company considers all short-term deposits with a maturity of three months or
less to be cash equivalent.
FEDERAL INCOME TAX:
Due to an operating loss, since reorganization and since consolidation, there is
no provision for federal income tax.
<PAGE>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND DECEMBER 31, 1996
USE OF ESTIMATES:
The preparation of financial statements in conformity with general accepted
accounting principals requires management to make estimates and assumptions that
affects certain reported amounts and disclosures. Accordingly, actual results
could differ from these estimates.
LOSS PER COMMON SHARE:
Weighted average shares outstanding used in the loss per common share
calculation were 487,963,948 at March 31, 1997 and 143,347,833 at March 31,
1996. The weighted average shares outstanding calculation does not include
outstanding shares of 189,921,349 at March 31, 1997 and 226,721,349 at March 31,
1996, which includes shares held in trust capacity for future acquisitions
because it would be anti-dilutive. If the shares held in trust were included in
the weighted average calculation, the loss per share would be .0003 for March
31, 1997 and .0002 at March 31, 1996. Stock options are not included in the
calculation since they are anti-dilutive.
NOTE 2 - ACQUISITIONS
1. On June 26, 1996 the Company issued 40 million shares of its common stock
in exchange for all of the outstanding common stock of ElfWorks, Ltd. The
business combination has been accounted for as a pooling of interest and,
accordingly, the Company's consolidated financial statements have been
given retroactive effect to include the accounts and operations of
ElfWorks, Ltd. for all periods prior to the acquisition. ElfWorks, Ltd. had
not commenced operations and had no activity since inception, except for
organizational costs of $40,000. Therefore, the combined corporations will
show no effect on the profit and loss from ElfWorks Ltd. operations.
This combination was accounted for as a pooling of interest after
satisfying the twelve criteria referenced under APB 16, as follows: 1) each
company is autonomous, 2) each company is independent, 3) the combination
was effected in a single transaction, 4) common stock was issued for all
the common stock of ElfWorks, Ltd., 5) the equity interest of common stock
of each company was unchanged, 6) the combining companies reacquired a
normal number of shares, 7) the ratio interest of individual stockholders
was unchanged, 8) voting rights are exercisable, 9) the combination was
resolved at the consummation date of June 26, 1996, 10) ElfWorks, Ltd.
agreed not to retire common stock to effect the combination, 11) there is
no intent to dispose of a significant part of the assets of ElfWorks, Ltd.,
and 12) no financial arrangements have been made for the benefit of former
stockholders.
Advertising credits from American Independent Network (AIN) were acquired
through the acquisition of ElfWorks, Ltd. Such credits have a face value of
$100,000,000 and are recorded at the predecessor's cost of zero. With
reference to Staff Accounting Bulletin No. 48 Topic 5-G (9/27/82), when a
company acquires assets from shareholders in exchange for stock prior to
registration of a the company, such asset should generally be recorded at
the cost to the shareholder. ElfWorks, Ltd. originally transferred common
stock to AIN in exchange for these trade due bills. The credits are an
irrevocable promise (trade due bill) to provide the holder with network
programming time and commercial advertising time. According to AIN's
current rate card, the Company could broadcast a 1/2 hour program 5 days a
week at prime time for more than 4 years, throughout the networks 161
stations. The certificates are transferable and negotiable.
2. The Company's recent registration of their common stock under the Exchange
Act has been declared effective on February 4th, 1997. Consummation of the
following stock exchange agreements have been declared effective:
<PAGE>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND DECEMBER 31, 1996
o Effective February 4th, 1997, the Company consummated the purchase of
Nashville Music Consultants, Inc. ("NMC") a Tennessee Corporation
headquarters in Nashville. On April 21, 1995, the Company entered into a
stock exchange agreement with NMC whereby 4,000,000 shares of the Company's
common stock valued by using the stock price on the date of the agreement
discounted 50% for restricted stock issued, was exchanged for all the
issued and outstanding shares of NMC. It has been determined that this
acquisition accounted for under the purchase method, valued at $2,500,000
is reasonable based on a valuation model projecting earnings for NMC.
NMC is focused on the development of selective artists and writers in the
country western music industry where NMC provided country music artists
with professional advice on career development through it's consulting
division, administers publishing rights through its publishing division and
produces recorded material in its production division. In addition, NMC is
currently planning on adding a song writing school to the country western
division, and expanding the Company to include gospel music.
o Effective February 4th, 1997, the Company consummated the purchase of F&H
Mining, Inc. ("F&H"), an international business corporation, and Peeples
Mining L.L.C. ("Peeples LLC"), an Arizona limited liability company. On
March 25th 1994, the Company entered into a stock exchange agreement with
F&H, whereby 20,000,000 shares of the Company's common stock was exchanged
for all the issued and outstanding shares of F&H valued current replacement
cost of equipment purchased of $410,000. On June 18th, 1994, the Company
entered into a stock exchange agreement with Peeples LLC, whereby
12,000,000 shares of the Company's common stock was exchanged for all the
issued and outstanding shares of Peeples LLC also valued at current
replacement cost of the equipment purchased of $86,130. Both companies are
dormant and have had no operations for several years.
o On February 4th, 1997, the Company formed Peeples Mining Company, a Nevada
Corporation, and a wholly owned subsidiary of the Company. The assets of
Peeples LLC and F&H were consolidated into the new corporation. As a
result, Peeples Mining Company now has mining operations in Arizona and
Nevada. The Arizona operation includes 17 claims on 340 acres. The Nevada
property includes 7 claims on 140 acres. The production facility and lab
equipment owned by Peeples Mining Company located in Nevada has moved to
Reno, Nevada. Assay reports obtained by professionals in the industry
indicate the expected value of these reserves to be in excess of the stock
value on the date of these agreements discounted by 50% for restriction.
o On February 6th, 1997, 375,000,000 shares of common stock was issued to
Zarzion, Ltd., for the purchase of 17 mining claims covering a 340-acre
site in the San Bernardino County, California. The shares were valued at
$69,375,000, the stock price on the date of the agreement discounted by 50%
for restriction. Assay reports obtained by an independent Chemist, indicate
a value far in excess of this value. An Independent appraisal on this
property is currently being conducted. Should it be determined that the
value has been impaired, the recorded amount will be adjusted. There has
been no activity on this property for several years.
3. The following stock exchange agreements have not yet consummated:
o In March, 1994, the Company entered into a stock exchange agreement with
Mr. William Jackson, thereafter amended, whereby 400,000 shares of the
Company's common stock was exchanged for the future operations of a
learning center in Reno, Nevada. The stock was valued at $50,000, the
estimated cost to commence operations for the Reno facility. Consummation
of the transaction is dependent on completion of the learning center, which
is expected to be before the 1997 year end. It is the Company's position
that the recipient is holding the stock certificates issued in this
transaction, which has yet to be consummated, in a trust capacity for the
benefit of both parties.
<PAGE>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND DECEMBER 31, 1996
o The company has entered into two agreements to acquire certain real estate
from Rainbow Group and Senior Group where consummation of the agreements
has not yet occurred. The current owner of the real estate contracts has
filed an action to rescind such contracts (see Note 9). It is management's
belief that the seller holds the common stock exchanged for such real
estate transactions in a trust capacity for the benefit of both parties,
and is considered outstanding. However, at this time, management is unable
to determine whether the outcome of the real estate matters will be
favorable or unfavorable to the Company.
The stock exchanged for the specific real estate transactions and the
learning center transaction have been valued as follows:
<TABLE>
<CAPTION>
Value
Description of property Assigned Ref.
----------------------- -------- ----
<S> <C> <C>
o A future learning center to be located in Reno, Nevada $ 50,000 (a)
o 26 town homes plus surrounding amenities 3,863,130 (b)
o Office Building, restaurant/banquet facility and vacant land 6,669,930 (b)
o A Motel located in Northbrook, Illinois, with 38 luxury suites 2,700,000 (c)
o A country club located in the Village of Lakemore, Illinois 359,758 (d)
o An interest in a golf course and a country club in Naperville, Illinois 2,684,779 (b)
o A Water and utility service located in Oakbrook Terrace, Ill. 408,000 (e)
o A restaurant site located in Shiller Park, Illinois 620,789 (d)
o An interest in a shopping center in Palatine, Illinois 6,689,596 (d)
o An interest in two leases and the land located in Shiller Park, Ill. 1,207,207 (e)
o 12 acre commercial parcel located in Dania, Florida 1,618,103 (d)
o An interest in a Yacht located in Ft. Lauderdale, Florida ("R Rendezvous") 688,608 (f)
o A large land development in Gallatin, Tenn. referred to as "Foxland" 16,000,00 (g)
o 24 acres of residential vacant land near Bellevue, Tenn. 800,400 (h)
o 56 acres parcel located on Dickerson Rd in Nashville, Tenn. 1,659,900 (b)
----------
Total Value for Stock Exchanged Transactions not consummated $ 46,020,200
</TABLE>
Ref:
(a) - Valued at the estimated cost to commence operations for the Reno
facility.
(b) - Valued based on tax assessors current Fair Cash Value.
(c) - Valued at market value determined by an independent appraisers and
consultants.
(d) - Value obtained from financial statement schedules indicating cost basis
of property.
(e) - Value determined by calculated the annual lease income x 6 years.
(f) - Value calculated based on the estimated annual net income discounted at
10%
(g) - Value based on a current contract offer price.
(h) - Valued at the current market value of a lot recently sold in a section
adjacent the property.
4. The criteria used to value the stock exchange transactions vary by
agreement. For the purposes of these financial statements, the value was
calculated using the lower of the following: 1) the current tax assessed
value, replacement cost or market value estimated by cash flow/income, if
available, or 2) the value of the stock on the date of the agreement
discounted 50% for restriction. The calculated value of each exchange
agreement was originally booked to Investment in Future Acquisition
(Asset) resulting in a total value recorded at $49,016,330 at December 31,
1996. As of March 31, 1997, $2,996,130 was reclassified into Investment in
Affiliates with $3,012,913 recorded to goodwill. Exchange agreements
entered into but now determined to be "not probable" have been reversed
out of the financial statements until further negotiated and consummated.
Such contracts included abandoned contracts for the acquisition of health
care practices and an adjustment of shares for the learning centers.
<PAGE>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND DECEMBER 31, 1996
As a good faith measure, stock was issued upon signing the agreements. The
Company has no control over any of the entities included in these
acquisitions until such time as the acquisition is complete.
NOTE 3 - GOING CONCERN
As discussed in Note 1, the company has been in the development stage since June
29, 1993. A major portion of its assets includes mineral inventories valued at
$200 million, and contracts for the acquisition of real estate properties valued
at $43 million. Realization of a major portion of these assets is dependent upon
the company's ability to successfully liquidate the mineral inventory and
consummation of the real estate transactions. Consummation of the contracts to
acquire real estate properties is dependent on the outcome of current litigation
(see Note 9). The financial statements do not include any adjustments that might
result from the outcome of this uncertainty. These factors raise concern about
the company's ability to continue as a going concern. It is management's
intention to raise additional capital through 1) leasing of the MedAway machines
(Note 1), 2) sale of some or all of the Ore Inventory (Note 5), 3) sale of some
of the advertising trade credits (Note 2), and/or 4) a private placement of
securities.
NOTE 4 - MINERAL INVENTORIES:
Inventories at the Arizona site consist of ore concentrates, where recent assay
reports commissioned by the Company indicate there is a combination of precious
metals, rare earth, and other common elements. These concentrates were purchased
in exchange for 100,000,000 shares of the Company's common stock. Such stock was
valued at $200,000,000, based on the stock price on the date of the agreement
discounted by 50% on account of restrictions on transferability, applicable to
such stock. A subsequent independent valuation indicated a fair market value far
in excess of the recorded amount.
NOTE 5 - NOTES RECEIVABLE:
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
---- ----
<S> <C> <C>
A note from INMOB (a Mexican corporation) dated November 6, 1995, payable
November 5, 1996, with no interest. This was advanced for the purpose of
evaluating a project in Mexico, and, if consummated, entitles the Company
to a 66-2/3% interest in the project, as it is management's intent is to
converted their interest into the investment. This interest is for
assisting the joint venture in obtaining all financing arrangements. $ 215,000 $ 215,000
A note from M. Philip and T. Carnes dated August 25, 1995, payable August 25,
1996 with interest at 11% per annum, secured by an assignment of interest in an
unrelated law suit
Management believes this amount plus accrued interest will be paid 45,000 45,000
---------- ----------
Total Notes Receivable $ 260,000 $ 260,000
========== ==========
Both notes are delinquent as of the date of this report.
NOTE 6 - NOTE PAYABLE:
March 31 December 31
1997 1996
A note payable to R.K. Company (a related party) dated November 17, 1995, ---- ----
payable $43,367 per month with interest at 10% per annum through May 17,1996,
18% thereafter, unsecured (Note 11) $ 52,373 $ 247,809
</TABLE>
<PAGE>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
...continued March 31 December 31
1997 1996
<S> <C> <C>
A note payable to R. K. Company dated November 17,1995,
Payable $37,624 per month with interest at 10% per annum through
May 17 1996, 18% thereafter, unsecured 215,000 215,000
-------------- --------------
Total Notes Payable $ 267,373 $462,809
============== ==============
</TABLE>
In March 1997, a payment of $195,436 was made on the note payable to R.K.
Company, a related party. Both notes are delinquent as of August 22, 1997 and
there has been a demand for payment on both notes.
NOTE 7 - INCOME TAXES:
At December 31, 1993 the Company had a net operating loss carry forward for
federal income tax purposes which will be limited because of change in ownership
since 1993. Post 1993 net operating losses carry forward of approximately
$500,000 is available to provide future tax benefits:
Expiration Date Operating Losses
2008 $800
2009 101,000
2010 90,000
2011 308,200
NOTE 8 - CAPITAL STOCK:
On December 28, 1993 the Company amended its articles of incorporation's to
increase the authorized capitalization from 80,000,000 shares common stock to
900,000,000 shares of common stock and changed the par value of its common stock
from $0.02 per share to $0.001 per share. The Company also declared a one for
three reverse stock split.
NOTE 9 - CONTINGENCIES:
The company is subject to disputes, various claims and legal proceedings
primarily relating to its contracts to acquire real estate and on account of
various transactions affiliated with the owner of the real estate. Consummation
of the agreements have not yet occurred, and such contracts are the subject of
litigation, the outcome of which cannot presently be predicted to be favorable
or unfavorable to the Company. Should the outcome of the real estate litigation
be unfavorable to the Company, the outstanding shares will be recovered and the
remaining unrecoverable shares will be pursued.
In 1996, the company entered into a contract for the acquisition of an interest
in a mining operation, but the transaction was not consummated. The company has
recovered 56,000,000 shares of the 96,000,000 shares originally transferred, the
remaining 40,000,000 shares were transferred by the original holder to a third
party. The company is attempting to reacquire those shares, but, at this time,
management is unable to determine if collectability is probable.
Stock options for an aggregate of 50,000,000 shares were issued to The Rainbow
Group and The Senior Group (25,000,000 each). Such options must be exercised
within 10 years from the option grant date of June 28, 1994. The first
25,000,000 shares are reserved at an exercise price of $1 per share. The next
25,000,000 may be exercised at a price per share equal to the last trading price
at the close of business for the day immediately preceding the day on which the
option is exercised. In no event can the price be less than 110% of the trading
price on June 28, 1994. The holder of these options is the same individual who
holds the 40,000,000 shares discussed above.
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash investing and financing activities includes the following services and
acquisitions exchange for the Company's common stock:
<PAGE>
HEALTH CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
Date Exchanged for: No. of Shares Value Assigned
----- ------------------------ ------------- --------------
<C> <C> <C> <C>
1. 1/94 Services 31,960,000 $ 31,960
2. 5/94 A Future Learning Center 400,000 50,000
3. 5/94 Mining Interest 12,000,000 86,130
4. 7/94 Real Estate Properties (not consummated) 54,572,361 13,190,066
5. 9/94 Real Estate Properties (not consummated) 40,348,988 9,752,296
6. 9/94 Mining Interest 20,000,000 410,000
---------- ---------------
TOTAL 1994 159,281,349 $ 23,520,452
----------- ---------------
7. 2/95 Services 5,000,000 $ 5,000
8. 2/95 Real Estate Properties (not consummated) 22,000,000 5,317,370
9. 8/95 Music Company 4,000,000 2,500,000
10. 8/95 Real Estate Properties (not consummated) 73,000,000 17,644,001
11. 8/95 Mineral Inventory (Note 4) 100,000,000 200,000,000
12. 9/95 Services 275,000 66,467
----------- ---------------
TOTAL 1995 204,275,000 $ 225,532,838
----------- ---------------
13. 6/96 Mining Interest (Note 9) 40,000,000 -
14. 6/96 Medical Decontamination Machines 2,066,115 555,185
15. 7/96 Acquisition of ElfWorks, Inc. 40,000,000 40,000
16. 11/96 Incentive (Note 11) 750,000 750
----------- ---------------
TOTAL 1996 82,816,115 $ 595,935
---------- ---------------
17. 2/97 Mining Interest (Note 2 375,000,000 69,375,000
----------- ---------------
TOTAL 1994 - 1997 821,372,464 $ 319,024,225
----------- ---------------
</TABLE>
NOTE 11 - RELATED PARTY TRANSACTIONS:
o On February 6th, 1997, 375,000,000 shares of common stock was issued to
Zarzion, Ltd., for the purchase of 17 mining claims covering a 340-acre
site in the San Bernardino County, California. Zarzion is a major
shareholder. In April 1997, Maurice Furlong, CEO and President of the
Company obtained voting control of all common stock held by Zarzion.
o Inventories consisting of ore concentrates located in Arizona were
purchased from Zarzion Ltd. in exchange for shares of the Company's common
stock (see Notes 4).
o In November 1995, the Company borrowed $462,809 from R.K. Company, a major
stockholder of the Company. In March 1997, payment of $195,436 was made on
the note payable to R.K. Company. There has been a demand for payment on
both notes (see Note 6).
o In November 1996, 750,000 shares of common stock was issued as an
incentive to new Directors of the Company. Such shares are
non-forfeitable, future services are not required. The transaction was
booked at the Company's par value of Common Stock.
o Services contributed by officers and reimbursements forfeited were
expensed to "Imputed Wages" at an hourly rate proportionate to the
services performed. Contributed office occupancy provided by M. Furlong,
the Company's president and CEO, was expensed to rent at an average of
$330 a month.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The increase in the Company's assets from December 31, 1996, to March
31, 1997, in the amount of $69,712,285 is attributable primarily to the
acquisition of mineral property located in San Bernardino County, California,
purchased from Zarzion, Ltd. in February 1997. The value ascribed to this
property reflects the trading price of the stock exchanged for such property,
discounted by 50% on account of restrictions on its transferability resulting
from its not being registered under applicable securities laws. The increase in
the Company's assets also reflects consummation of the its acquisition of
Peeples Mining Company ("Peeples Mining") and Nashville Music Consultants, Inc.
("NMC") in February 1997, on account of which $2,102,913 was recorded as good
will. The increase in the Company's plant and equipment from $575,014 at
December 31, 1996 to $1,091,176 at March 31, 1997 is attributable to the
Company's acquisition of certain mining equipment in connection with its
acquisition of Peeples Mining. The increase in current liabilities in the amount
of $446,888 is mostly attributable to current interest and new loans incurred
incident to the acquisition of NMC. The decrease in the Company's cash postition
from December 31, 1996 to March 31, 1997, in the amount of $195,436 was due to
partial payment of a promissory note to The R.K. Company.
The Company recorded $8,228 in revenues in the first quarter of 1997,
all of which are attributable to the operations of NMC, a wholly owned
subsidiary of the Company. Operating losses increased from $49,090 in the first
quarter of 1996 to $207,684 in the first quarter of 1997, primarily on account
of first quarter losses incurred by NMC and increased in the Company's
professional fees, travel, rent, and operational expenses.
The increase in the number of shares outstanding on December 31, 1996,
which amounted to 452,485,297, to 827,485,297 at March 31, 1997, is primarily
attributable to the issuance of 375,000,000 shares to Zarzion, Ltd. in exchange
for the mining property in San Bernardino County, California.
PLAN OF OPERATION
The discussion contained in this section of Item 2 is "forward looking"
as that term is identified in, or contemplated by, Section 27A of the Securities
Act and Section 21E of the Exchange Act. Actual results may materially differ
from projections. Factors that could cause results to differ materially are
described throughout this report.
The Company's plan of operation for the immediate future is to focus on
commercializing its MedAway-1 units, and to raise funds necessary to commence
processing its precious metals concentrate, for which from $1,000,000 to
$5,000,000 will be required. The Company will seek to generate such funds by
realizing the commercial value, directly, through joint ventures, or by sale, of
some of its ore concentrate, its television time credits, its medical waste
disposal units, and/or its contractual or other, if any, interests in certain
real estate. With one exception (12 acres of land in Dania Florida, subject to a
joint venture agreement with Fairdan Suites), the Company has no contracts for
such sale or commercialization, and its real estate is the subject of litigation
with former owners; accordingly, there can be no assurance that the Company will
be successful in selling or commercializing any such assets. The Company will
also be required to devote substantial time and resources to prosecution of its
claims against Mr. Krilich and his affiliates, and to defend against the claims
filed by them.
At the same time, the Company will seek to raise funds through a private
offering of securities to an institutional buyer or through a registered broker
dealer. Up to $5,000,000 would be used to fund equipment and operations for
minerals processing; if less is required for this purpose, up to $1,000,000
would be used for the planning and organizational stages of the Company's health
care segment, and if its contracts to acquire real estate are consummated, up to
$1,000,000 would be used for
<PAGE>
development of the Company's real estate. A portion of such proceeds would be
used for working capital for marketing the Company's MedAway-1 leases, and to
provide funding for NMC. At such time as cash flow from one or more of these
activities permits, the Company will seek to develop its health care line of
business.
1. Mineral Processing Operations
The Company will seek to commence processing of its existing inventory
of ore concentrates as a matter of first priority. To initiate such processing,
the Company requires from $1,000,000 to $3,000,000 for equipment and another
$2,000,000 for working capital, for which it is presently seeking an appropriate
source of financing. The Company is exploring new, alternative technologies for
which equipment is significantly less expensive, but which is proprietary, and
may therefore require the negotiation of a joint venture arrangement. If less is
required for such purposes, the Company will apply the surplus towards the
Company's other lines of business as described below.
It is contemplated that the Company's mining and processing operations
could be operational as soon as 18 months after availability of financing. At
such time as the Company's planned facilities for producing dore bars are
operational, it is expected that revenues from this source will generate
sufficient cash flow for the Company's minerals division as well as for the
needs of its other business segments. Such plans may be impacted by numerous
contingencies, including but not limited to the accuracy of the various assays
obtained by the Company, the actual quality and quantity of precious metals in
such concentrates, the Company's ability to process such concentrates for a
reasonable price and market its product, the Company's ability to generate funds
through the sale of real estate or its television time credit certificates
and/or a private placement offering, the outcome of its negotiations or
litigation with Mr. Krilich and his affiliates, and state and federal regulation
of the minerals operations contemplated by the Company.
2. Entertainment Division
At the same time, the Company plans to continue development of the
activities of Nashville Music Consultants, Inc. ("NMC"). The Company's agreement
for acquisition of NMC became effective February 4, 1997, and from that time,
the Company is entitled to a management fee equal to 9% of NMC's gross revenues.
Heretofore focused on country and western music and performers, and anticipates
expanding into Christian music. The Company is committed to trying to arrange
$500,000 of financing for NMC's development. As of March 31, 1997, NMC had
liabilities of $638,975, and experienced a net loss before intercompany
eliminations of $78,341 in the first quarter of 1997. The Company believes that
NMC's cash flow is improving, but there can be no assurance that NMC will not
require all or a portion of such financing to continue with its plans.
However, NMC's plans may be impacted by several contingencies, including
but not limited to the continued demand for country western and Christian music,
its ability to locate and identify talented and marketable country western and
Christian music writers and performers, and its ability to maintain cash flows
to support its own business activities.
3. MedAway Units
The Company is currently engaged in marketing leases for its 24
MedAway-1 medical waste decontamination units to a hospital chain. The Company
intends also to market leases of its units to hospitals, nursing homes,
government entities, and related businesses. Working capital for this segment of
the Company's business is hoped to be provided by initial lease arrangements
with a substantial hospital chain. If such leases do not materialize in a
sufficiently short period of time, the Company will seek to contract with one or
more marketing representatives, and may seek a loan to
<PAGE>
launch a marketing campaign. When leased, each machine is expected to generate
income sufficient to sustain operations for this segment of the Company's
business. The Company plans to seek approval for assignment of the MedAway
distribution agreement, or a new distribution agreement with the manufacturer as
soon as the Company's financial resources appear sufficient to support expanded
marketing.
4. Learning Centers
The Company intends to open a learning center in Reno, Nevada, in the
fall of 1997. Approximately $50,000 is deemed necessary to commence operations,
which funds are being provided by William Jackson and his wife Jacqueline
Jordan. The Company's plan to start-up the learning center in Reno is dependent
on Mrs. Jordan's moving to the United States, and on the funding committed by
Mr. Jackson. Mr. Jackson's and Mrs. Jordan's plans to finance such start-up may
be impacted by various contingencies, including, but not limited to, their
ability to apply their business strategy to the United States, and their ability
to successfully compete with similar learning centers established in the United
States.
5. Health Care Centers
The Company continues to plan a national chain of health care centers.
Development of this business, however, will require significant investment,
including costs associated with background research, professional fees,
licensing, and organizational activities. It is hoped and anticipated that the
Company's mineral and real estate sectors will provide funds for the
organization of this line of business. The Company anticipates that the planning
and organizational phase may be completed in mid-1999, at which time the Company
will commence marketing of its health care management and affiliation
arrangements.
Such plans may be impacted by several contingencies, including but not
limited to the Company's ability to locate health care providers willing to
participate with the Company; consumer acceptance of and demand for the health
care centers contemplated by the Company; the Company's ability to generate
funds through commercialization of its precious metals concentrate,
commercialization of its television time credit certificates and/or interests in
real estate, and/or lease of its MedAway-1 units; and state and federal
regulation of the industry. When enough affiliates of various disciplines in one
area have entered into contracts with the Company, the Company plans to combine
such practices into multi-disciplinary health care centers. The goal will be to
provide primary and alternative health care at "one stop" health care
facilities. It is expected that funding for the multi-disciplinary health care
centers will be obtained through traditional financing arrangements,
supplemented by funds from the Company's mining and other operations.
The Company intends to defer further commitments to the joint venture in
Mexico in light of unforeseen problems with the joint venture arrangements and
title to the real estate in Mexico. As time and funds permit, the Company will
explore the resolution of such problems and the availability of financing for
the project.
<PAGE>
6. Real Estate
It is the Company's intent to pursue acquisition of the real estate with
respect to which it entered into contracts with and issued shares to Rainbow and
Senior Groups through litigation and settlement negotiations. If successful, the
Company will sell at least some of such real estate, particularly those
properties which require long term development effort and/or significant
financing.
The Company's ability to sell or otherwise realize income from the
properties contracted for from Rainbow Group or Senior Group will depend on the
outcome of such litigation, and could also be adversely affected by certain
court orders affecting Mr. Krilich and his properties. The Company has filed a
lawsuit with respect to such properties with a view to perfecting its rights,
and is contesting a lawsuit filed by Mr. Krilich for rescission of the contracts
relating to such properties. (See Part II, Item 2--"Legal Proceedings",
Registration Statement filed on Form 10-SB (Amended) August 29, 1997.)
At this time, no assurance can be given that the Company will ever
consummate the acquisition of such properties or realize income therefrom.
7. Other Considerations
To effectively manage the properties which it has acquired or agreed to
acquire, the Company will be obliged to perform numerous and extensive
administrative functions. It will be necessary for the Company to significantly
expand its employee base within the next 12 months. In addition, it will be
necessary for the Company to invest in the purchase of computer and other
equipment necessary to monitor the operations of its various lines of business.
During the next 12 months, the Company will require significant
additional funds to effect its plans. As indicated above, the Company is seeking
to generate funds by realizing the commercial value, by sale or otherwise,
directly, through joint ventures, or by sale, of some of its ore concentrate,
its television time credits, its medical waste disposal units, and/or its
contractual interests in certain real estate, and/or a private placement
offering. Absent such financing, the Company may be unable to put its plans into
immediate effect. Inasmuch as it is asset based with minimal operations, delay
in obtaining such financing is not deemed to pose a significant threat to the
Company's viability.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For information about certain legal proceedings in which the Company is
involved, reference is made to Part II, Item 2 of its Registration Statement
filed on Form 10-SB (Amended) August 29, 1997.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted during the fiscal year covered by this report
to a vote of security holders, through the solicitation of proxies or otherwise.
ITEM 5. OTHER INFORMATION
[Nothing is required here, but we could include the financial
information otherwise required by Form 8-K if we wished.]
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
INDEX TO EXHIBITS
("P" = Filed in paper only.)
3 Corporate documents
(i) Articles of incorporation of Cadgie Taylor, Inc., filed April 8, 1984
(incorporated by reference to Exhibit A filed with Form 10-SB December
6, 1996)
(a) Agreement of Merger merging Cadgie Taylor Co. into Carleton
Enterprises, Ltd., filed May 24, 1984 (incorporated by reference
to Exhibit A filed with Form 10-SB December 6, 1996)
(b) Amendment to Articles of Incorporation filed November 18, 1984,
inter alia changing name to SCN, Ltd. (incorporated by reference
to Exhibit A filed with Form 10-SB December 6, 1996)
(c) Certificate of Amendment of Articles of Incorporation filed
December 10, 1993, changing name to Health Care Centers of
America, Inc. (incorporated by reference to Exhibit A filed with
Form 10-SB December 6, 1996)
(d) Amendment to Articles of Incorporation filed January 4, 1994
(incorporated by reference to Exhibit A filed with Form 10-SB
December 6, 1996)
<PAGE>
(e) Amendment to Articles of Incorporation filed March 31, 1995
(incorporated by reference to Exhibit A filed with Form
10-SB December 6, 1996)
(ii) Bylaws (incorporated by reference to Exhibit B filed with Form
10-SB December 6, 1996)
10 Material contracts
(i) Transfer Agent and Registrar Agreement between Registrant and Nevada
Agency & Trust Co., dated June 28, 1993 (incorporated by reference to
Exhibit B filed with Form 10-SB December 6, 1996)
(ii) Stock Exchange Agreement dated December 14, 1993, between Registrant
and Hunt Chiropractic, and similar agreements with other health care
practices (incorporated by reference to Exhibit K filed with Form
10-SB December 6, 1996)
(iii) Stock Exchange Agreement dated March 25, 1994, between Registrant and
F&H Mining Co., Inc. (incorporated by reference to Exhibit G filed
with Form 10-SB December 6, 1996)
(P) (iv) Stock Exchange Agreement dated March 27, 1994, between Registrant and
1056463 Ontario, Ltd. (similar to agreements with 1040240 Ontario
Ltd., and 1077671 Ontario, Ltd.) (incorporated by reference to Exhibit
I filed with Form 10-SB December 6, 1996)
(v) Stock Exchange Agreement dated June 18, 1994, between Registrant and
Peeples Mining LLC (incorporated by reference to Exhibit H filed with
Form 10-SB December 6, 1996)
(P) (vi) Stock Exchange Agreement dated July 17, 1994, between Registrant and
Lee Chiropractic, and similar agreements with other health care
practices (incorporated by reference to Exhibit Y filed with Form
10-SB December 6, 1996)
(vii) Agreement for acquisition of gold concentrate dated March 15, 1995,
between Registrant and Robert Rood, IV, and Restated Agreement between
Registrant and Mar-Pro Services, Ltd. (incorporated by reference to
Exhibit S filed with Form 10-SB December 6, 1996)
(viii) Stock Exchange Agreement dated April 21, 1995, and addenda between
Registrant and Nashville Music Consultants, Inc. (incorporated by
reference to Exhibit J filed with Form 10-SB December 6, 1996)
(P) (ix) Joint venture agreement dated May 31, 1995, among Registrant,
Immobiliara y Fraccinoadora del 1 Nueva Viscaya, S.A. de C.V. and
Oscar Neninger G., and Robert R. Krilich, Sr. (incorporated by
reference to Exhibit Q filed with Form 10-SB December 6, 1996)
(x) Stock Exchange Agreement dated June 5, 1995, between Registrant and
Senior Group (incorporated by reference to Exhibit E filed with Form
10-SB December 6, 1996)
(xi) Amended and Restated Stock Exchange Agreement dated June 5, 1995,
between Registrant and Rainbow Group (incorporated by reference to
Exhibit D filed with Form 10-SB December 6, 1996)
(xii) Consulting services agreement dated January 10, 1996, between
Registrant and Robert R. Krilich, Sr. (incorporated by reference to
Exhibit R filed with Form 10-SB December 6, 1996)
(xiii) Asset purchase agreement dated June 12, 1996, between Registrant and
MedAway International, Inc. (incorporated by reference to Exhibit U
filed with Form 10-SB December 6, 1996)
(xiv) Stock Exchange Agreement dated June 26, 1996, and amendment dated
November 8, 1996, between Registrant and ELF Works, Ltd. (incorporated
by reference to Exhibit T filed with Form 10-SB December 6, 1996)
<PAGE>
(xv) Partnership Agreement dated August 30, 1996, between R&S Group and
Fairdan Suites, Inc. (incorporated by reference to Exhibit V filed
with Form 10-SB December 6, 1996)
(xvi) Sales Agreement dated February 6, 1997, between Zarzion, Ltd. and the
Registrant (incorporated by reference to Exhibit 10(xvi) filed with
Form 10-KSB May 2, 1997)
(15) Letter dated August 22, 1997, from Dale McGhie, CPA, concerning unaudited
interim financial information (filed with this report, page 3)
(18) Letter from Registrant dated November 29, 1996, on change in accounting
treatment of certain acquisitions (incorporated by reference to Exhibit
BB filed with Form 10-SB December 6, 1996)
(19) None
(23) Consent of experts and counsel
(i) Consent of Dale McGhie, certified public accountant (filed with this
report, page 31)
(27) Financial Data Schedule (filed with this report, page )
(99) Additional exhibits -- none
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HEALTH CARE CENTERS OF AMERICA, INC.
------------------------------------
(Registrant)
By /s/ MAURICE W. FURLONG
---------------------------------
Maurice W. Furlong, President
Date September 10, 1997
By /s/ MICHAEL PIETRZAK
---------------------------------
Michael Pietrzak, principal financial officer
Date September 10, 1997
Exhibit 23(i)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
HEALTH CARE CENTERS OF AMERICA, INC.
I hereby consent to the use of my report dated August 22, 1997, in the
registration statement of Health Care Centers of America, Inc., filed in Form
10-KSB in accordance with Section 13 of the Securities Exchange Act of 1934.
W. Dale McGhie, CPA
Reno, Nevada
September 10, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM HEALTH CARE
CENTERS OF AMERICA, INC. AND SUBSIDIARY FOR THE YEAR ENDING DECEMBER 31, 1996
AND THE QUARTER ENDING MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLAR
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 DEC-31-1996
<EXCHANGE-RATE> 1 1
<CASH> 778 196,214
<SECURITIES> 0 0
<RECEIVABLES> 587 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 10,814 197,714
<PP&E> 1,117,219 586,369
<DEPRECIATION> 26,043 11,355
<TOTAL-ASSETS> 319,815,365 250,103,080
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<BONDS> 0 0
0 0
0 0
<COMMON> 827,485 452,485
<OTHER-SE> 317,970,655 249,080,258
<TOTAL-LIABILITY-AND-EQUITY> 319,815,365 250,103,080
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<TOTAL-REVENUES> 8,228 0
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<OTHER-EXPENSES> 215,913 313,797
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 25,060 69,447
<INCOME-PRETAX> (231,506) (374,422)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
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<NET-INCOME> (231,506) (374,422)
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