MASTERPIECE TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its
charter)
Utah
(State or other jurisdiction of incorporation
or organization)91-179-3053
(I.R.S. Employer Identification Number)
455 Wards Corner Road, Suite 700
Loveland, Ohio 45140
(Address of Principal Executive Offices, including
ZIP Code)
10655 NE 4th St, Suite 707
Bellevue, WA 98004
(Former address)
Registrant's telephone number, including area code:
(513) 831-6647
Securities registered pursuant to Section 12(b) of the
Act:
Title of each class
Common Name of Each exchange on which registered
National Association of Securities Dealers
Securities registered pursuant to Section 12(g) of the Act:
_________________________________
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 _____ No X
Indicate by check mark if disclosure of
delinquent filers pursuant to item 405 of Regulation
S-K is not contained herein, and will not be
contained, to the best of registrants's knowledge, in
definitive proxy or information statements
incorporated by reference in part III of this Form
10-K or any amendment to this Form 10-K. [X]
The aggregate market value of voting stock
held by non-affiliates of the Registrant as of July 1,
1999 was approximately $15,156,888.
On July 1, 1999, approximately 2,526,148
shares of the Registrant's Common Stock, $.01 par
value, were outstanding.
Documents Incorporated by Reference
(1) Financial Statements for March 31,
1999 and 1998
(2) Except for the historical information
presented, the matters discussed in this Form 10-K
include forward-looking statements that involve
risks and uncertainties. The Company's actual
results could differ materially from those discussed
herein. Factors that could cause or contribute to
such differences include, but are not limited to,
those discussed under the caption "Factors That
May Affect Future Results" under "Management's
Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's 1999
Financial Statements, which is incorporated by
reference in this Amended Form 10-K.
PART I
Item I. Business
Introduction
Masterpiece Technology Group, Inc. (the "Company") is
a Utah Corporation. Prior to October 31, 1997, the Company
was a Washington corporation with offices located in
Bellevue and Tacoma, Washington. On October 31, 1997, the
Company merged in a reverse merger transaction into a
publicly held company by the name of US Mining Company,
Inc., a Washington corporation. Upon closing this
transaction on November 15, 1997, US Mining Company, Inc.
changed its name to Global Digital Information, Inc. The
Board of Directors of US Mining (now The Company) resigned,
and the shareholders elected the current Board of Directors
of the Company. The Company changed its name to
Masterpiece Technology Group, Inc. on June 11, 1999.
Since the name change occurred after the year-end date,
the independent auditors report refers to Global Digital Information, Inc.
The Company subsequently merged with Masterpiece Medical, a
Delaware company on June 22, 1999. The current officers of
the Company were reappointed by the Board of Directors.
The Company
The Company designs, develops, markets and supports
medical document management systems and personal
productivity software which facilitates the recording,
imaging, manipulation, distribution and storage of paper-
based medical information on personal and network computers
using Microsoft Windows and Windows NT operating systems.
In September, 1997, the Company released its flagship
product "Masterpiece EMR"(formerly known as Cadusys) at the annual
Microsoft Healthcare Users Group (MS-HUG) convention in Las Vegas.
"Masterpiece EMR" is a state -of-the-art electronic patient
record that seamlessly interfaces with existing medical
billing software allowing today's healthcare professional
instant multi-user access to "realtime refreshed" outcome-
based patient data. "Masterpiece EMR" is a 32-bit,
client/server clinical information software package that
collects and stores patient data during the creation of the
clinical narrative. The Masterpiece EMR product offers improved
quality of care, instant access to patient charts, reduced
information costs, increased revenues, instant outcomes,
instant connectivity, flexibility and ease of use, as well
as specific clinical and medical/legal benefits.
"Masterpiece EMR" is sold to health care organizations
including, but not limited to, single and multi-doctor
practices, clinics, health care organizations and small
hospitals. The primary target markets are medium to large
medical clinics, Independent Provider Associations,
Preferred Provider Organizations and Health Maintenance
Organizations. Annual client savings in excess of one-half
million dollars per installation are attainable in these
target accounts.
The Company's products use peripherals and
applications commonly found on personal and network
computers that transform the PC into a personal and network
paper-free office management and productivity software
system for large or small office or home office ("SOHO")
medical professionals. Through the use of multimedia
databases, the Company's applications convert paper
documents to digital information for electronic filing,
faxing, editing scanning, printing, sending and retrieving
of paper-based documents by electronic mail. All of the
Company's applications employ scanning and image
compression engines that convert scanned or faxed documents
and images to editable text compatible with most word
processors and desktop publishers.
Background Information
Masterpiece Medical commenced operations in 1983 and
is a provider of comprehensive record information systems
to industry in general as well as to independent
physicians, independent physician associations ("IPAs"),
management service organizations ("MSOs"), physician
practice management organizations ("PPMs"), managed care
organizations and other providers of health care services
in the United States. The Company develops, markets and
supports the Company's record management systems, which
addresses the financial, administrative, clinical and
management needs of multiple marketplaces. The Company's
system has been implemented in a wide variety of practice
settings from small groups to Fortune 100 companies. The
Company also sells related hardware, implementation
services and maintenance contracts. While the majority of
its sales are North American in scope, the Company also
sells internationally. Its customers are Fortune 1000
class companies and similar sized governmental entities.
The Company has over 300 accounts primarily in the
manufacturing, medical, government, service, utilities and
financial industries. While the Company's core market
consists of records management software, the product can
include such technologies as electronic document management
and imaging. Application software for this rapidly
growing industry is experiencing double-digit increases
each year. This industry is driven by continued corporate
investment in new technology.
Global Digital Information, Inc. was founded by
Jeffrey Beneson to create a platform for growth
through acquisition of the most promising
technologies and products that lend themselves to
the process of digital convergence and commerce.
Products
Masterpiece EMR
To provide return on investment an EMR must be first be
easy to use and achieve physician acceptance. Masterpiece
EMR offers unprecedented versatility and ease of use. With
a tab environment that uses drill down navigation and pen
based or touch screen technology the system performs all
aspects of patient record management for a physician's
office. The entire patient encounter is documented and
managed on a system that supports dynamic, customizable
knowledge bases to build a seamless patient record.
The user may also define guidelines and protocols that take
into account health plan requirements and the providers'
own experience and perspective.
The exclusive visual builder feature allows the physician
to create comprehensive problem lists and chart notes in
seconds. Prescriptions can be filled, refilled and
transmitted electronically improving speed, accuracy and
legibility. The system not only automates routines but
also triggers events such as follow up care. It offers
flexibility and reporting capabilities not found in other
systems. By tracking and recording all key clinical data,
the Masterpiece EMR provides and complete and accurate view
of treatment histories.
With the advanced security system the provider determines
and assigns who has access to patient records and what part
of those records each individual may see and use. An
override feature is also available that tracks the time and
identity of an individual that breaks security due to an
emergency.
Masterpiece EMR Intellectual Property
The company has copyrighted its medical records
software program called Masterpiece EMR. No
assurances can be given that the foregoing copyright
and trademarks issued by the United States Trademark
and Patent Office will afford the Company any
meaningful protection against third parties. The
Company also has a patent pending for the Masterpiece
EMR as it applies to ERISA Regulations.
The Company has entered into a Merger Agreement with Maplecrest, Inc.,
a privately-held software company that has steadily grown into a full
service systems provider of innovative Internet and Intranet business
solutions with an emphasis in print automation. Maplecrest, founded in 1990
and based in Danbury, Connecticut, is recognized for its ability to
streamline information flow from the sales office to the back office. The
merger is expected to be complete by December 1, 1999.
The Company develops, markets and supports the Company's record management
systems, which addresses the financial, administrative, clinical and
management needs of multiple marketplaces. The Company's system has been
implemented in a wide variety of practice settings from small groups to
Fortune 100 companies. The Company also sells related hardware, implentaion
services and maintenance contracts. While the majority of its sales are
North American in scope, the Company also sells internationally. Its
customers are Fortune 1000 class companies and similar sized governmental
entities. The Company has over 300 accounts primarily in the manufacturing,
medical, government, service, utilities and financial industries. While the
Company's core market consists of records management software, the product
can include such technologies as electronic document management and imaging.
Application software for this rapidly growing industry is experiencing
double-digit increases each year. This industry is driven by continued
corporate investment in new technology.
Financial Information about Industry
Segments, Backlog, etc.
The financial statements required by this
item are included in the Company's 1999 Financial
Statements and are incorporated by reference.
Item 2. Properties
The Company's executive offices are
located in Loveland, Ohio. The Company has a
sales/development office located in Danbury, Connecticut,
which creates and promotes the software products. A
customer support and product testing office is located in
Jacksonville, Florida.
Item 3. Legal Proceedings
Apparantely a lawsuit has been filed against the Company by a
shareholder, Russell Koch, for enforcement of an option agreement. Management
has not seen this lawsuit and cannot therefore comment on its content or
validity, but intends to vigorously defend against the allegations.
Item 4. Submission of Matters to a Vote of
Security Holders
The following matters were submitted to a
vote of the Company's security holders during the
fourth quarter of its fiscal year ended March 31, 1999:
Date and Type of Meeting
No matters were voted on during the fourth quarter of the Company's
fiscal year.
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters
The Company is currently trading, OTC, on
the Nationals Association of Securities Dealers
with the high bid at $1.50 per share and the low bid
of $.10 per share during the last quarter. Additional
information required by this item may be found in
the Company's 1999 Financial Statements and is
incorporated herein by reference.
Item 6. Selected Financial Data
The information required by this item is set
forth in the Company's 1999 Financial Statements
and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis
of Financial Condition and Reports of
Operation
The information required by this item is set
forth in the Company's 1999 Financial Statements
and is incorporated herein by reference.
Item 8. Financial Statements and Supplemental
Date
The consolidated financial statements
required by this item are included in the Company's
1999 Financial Statements and are incorporated by
reference. With the exception of the
aforementioned information and the information
incorporated in Items 5, 6 and 7, the Company's
1999 Financial Statements is not to be deemed filed
as part of this Form 10-k Annual Report. The
report of the Company's Independent Auditors on
the Company's consolidated financial statements is
included in the Company's 1999 Financial
Statements and is incorporated by reference. The
report of the Company's Independent Auditors on
the financial statement schedule required by this
item is included herein.
Item 9. Changes in and Disagreements with
Accountants on Accounting Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the
Registrant
Newell Crane
B.S, M.B.A., Ph.D.
Dr. Crane brings 29 years of experience in the medical
field ranging from pharmaceuticals to clinical software.
In 1969, Dr. Crane began his career with Searle
Pharmaceuticals. In 1983 while still with Searle
Pharmaceuticals and as part of a drug research project, Dr.
Crane joined the Pharmacy Department at the University of
Cincinnati as assistant professor of Pharmacy with
responsibility for research grants and graduate studies at
the Masters and Doctorate level for Business & Pharmacy.
In 1984, Dr. Crane founded Del Crane Medical Corporation &
Cold Jet, Inc. The Cold Jet Company manufactures
specialized industrial carbon dioxide blasting and cleaning
equipment. Dr. Crane has guided the company's growth to a
#1 position in the world with distribution in 20 countries.
Cold Jet can be found on the Web at www.coldjet.com. At
the same time Dr. Crane founded Del Crane Medical, a
company that provides billing services and medical supplies
to patients in nursing homes. Del Crane has provided
product, billing services and clinical software to over
1,000 nursing homes in the US. In 1994, Dr. Crane founded
Masterpiece Medical to provide clinical software to the
physician marketplace. Del Crane and Masterpiece Medical
can be found on the Web at www.del-crane.com.
Morris Gorelick
Mr. Gorelick brings over 50 years experience in business
and finance to Global Digital. After attending the
University of Washington School of Pharmacology, Mr.
Gorelick founded and continues to operate Thrifty Plumbing
Supply of Seattle for over 40 years. Additionally, he is a
co-founding financier in Starbucks, Triadd Software
(document storage), Transwest Communications (telephone
interconnection), Ultra Vection International (home
electronics), and Medical Research and Marketing.
Dave Leytze
B.A., M.B.A.
Mr. Leytze has over 30 years experience in the
financial community dealing with investment and management
of several significant organizations and investment
management for personal, corporate, and retirement Funds.
He has approximately $25 million under management. Mr.
Leytze specializes in conservative equity and debt
securities for increase and growth, and precious metals
investments as a hedge against monetary and inflation
problems. He has served as Investment Banking Lead and/or
Participant in capital formation for various small-cap and
start-up companies. Currently, he is associate Instructor
College of Mount Saint Joseph, Cincinnati, Ohio teaching
Money & Banking, Corporate Finance, and Investments. Other
Directorships that he holds are Metro Recycling,
Cincinnati, Ohio, Revere Coal Reclamation Co. Inc., PA,
and Golden Quest, Las Vegas, NV.
William Coyne, M.D.
Margaret Crane
Rich Gresset
Robin Hirschfield
Item 11. Executive Compensation
Other than information provided in the
Company's 1999 Financial Statements incorporated
herein, executive officers and directors have
received no other compensation.
Item 12. Security Ownership of Certain
Beneficial Owners and Management
<TABLE>
<CAPTION>
Title of Class (1) Name and (2) Amount and (3)Percent of Class
Address of Nature of
Beneficial Owner Beneficial Ownership
<S> <C>
Common Margaret Crane 400,000 Issued Shares 15.8%
5475 William Henry Harrison Ln.
Cincinnati, Ohio 45143
Common Newell D. Crane, 400,000 Issued Shares 15.8%
President, C.E.O. Director
5475 William Henry Harrison Ln.
Cincinnati, Ohio 45143
Common Clarissa Wiswell Trust 380,000 Issued Shares 15%
5475 William Henry Harrison Ln.
Cincinnati, Ohio 45143
Common Ruth Breslow Trust 380,000 Issued Shares 15%
5475 William Henry Harrison Ln.
Cincinnati, Ohio 45143
Common Morris Gorelick, 19,457 Issued Shares .08%
Director
13212 NE 16th
Bellevue, WA 98005
</TABLE>
Item 13. Certain Relationships and Related Transactions
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K
The following documents are filed as part of this
Form 10-K Annual Report:
1) Financial Statements
<PAGE>
GLOBAL DIGITAL INFORMATION, INC.
FINANCIAL STATEMENTS
MARCH 31, 1999
<PAGE>
GLOBAL DIGITAL INFORMATION, INC.
MARCH 31, 1999
CONTENTS
Page
Accountant's Report 1
Balance Sheet 2
Statement of Earnings(Deficit) and Retained Deficit
For the Year ended MARCH 31, 1999 3
Statement of Shareholders' Equity MARCH 31, 1999 4
Statement of Cash Flows For the Year
ended MARCH 31, 1999 5
Statement of Earnings(Deficit) and Retained Deficit
For the Three Months ended MARCH 31, 1999 6
Statement of Cash Flows For the Three Months
ended MARCH 31, 1999 7
Notes to Financial Statements 8
<PAGE>
THOMAS J HARRIS CPA
3901 STONE WAY N #202
SEATTLE, WA 98103
INDEPENDENT AUDITOR'S REPORT
Board of Directors
GLOBAL DIGITAL INFORMATION, INC
Seattle, Washington
We have audited the balance sheet of GLOBAL DIGITAL
INFORMATION, INC. as of March
31, 1999 and 1998, and the related statements of net income, retained
earnings, and cash flows for the years then ended. These financial
statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GLOBAL DIGITAL
INFORMATION, INC. as of March 31, 1999 and 1998, and the results
of its operations and its cash flows for the years then ended, are in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has
suffered recurring losses from operations and has a working capital
deficiency. These factors raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these
matters are described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
November 8, 1999
GLOBAL DIGITAL INFORMATION, INC.
BALANCE SHEET
MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
ASSETS
1999 1998
<C> <C> <C>
CURRENT ASSETS:
Cash in Bank $0 $36,367
Accounts Receivable 14,800 20,300
Inventory 170 0
TOTAL CURRENT ASSETS 14,970 56,667
PROPERTY & EQUIPMENT:
Office Equipment 38,603 33,449
Depreciation (9,974) (3,345)
TOTAL FIXED ASSETS 28,629 30,104
OTHER ASSETS
Due from Masterpiece Medical 81,000 0
CaduSys Software 53,309 8,044
TOTAL OTHER ASSETS 134,309 8,044
TOTAL ASSETS 177,908 94,815
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft 418
Accounts payable 176,116 0
Payroll taxes 122,513 26,917
TOTAL CURRENT LIABILITIES 299,047 26,917
Loans payable shareholders 203,552 113,590
TOTAL LIABILITIES 502,599 140,507
STOCKHOLDER'S EQUITY:
Common Stock, no par; $.001 stated value;
50,000,000 shares authorized,
10,778,394 and 10,200,000 shares issued 10,779 10,565
Paid in Surplus 837,352 825,928
Accumulated Deficit (1,172,822) (882,185)
TOTAL STOCKHOLDER'S EQUITY (324,691) (45,692)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 177,908 94,815
</TABLE>
See accompanying notes and accountants' report
<PAGE>
GLOBAL DIGITAL INFORMATION, INC.
STATEMENT OF INCOME(DEFICIT) AND RETAINED DEFICIT
For the Years Ended MARCH 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C>
REVENUE 182,555 65,737
EXPENSES:
Payroll 281,300 272,628
Payroll taxes & employee benefits 28,954 32,207
Depreciation 6,630 3,345
Insurance 750 23,366
Interest 7,396 0
Marketing 9,078 15,367
Miscellaneous 13,624 55,459
Office 5,317 14,783
Postage & Delivery 7,025 5,069
Printing & Reproduction 3,136 12,881
Rent 22,101 13,120
Royalty 7,500 0
Telephone 43,807 30,976
Travel & Entertainment 36,574 28,009
Total Expenses 473,192 507,210
NET LOSS FOR THE PERIOD (290,637) (441,473)
RETAINED DEFICIT
Balance beginning of period (882,185) (441,660)
Balance end of period (1,172,822) (883,133)
</TABLE>
See accompanying notes and accountants' report
GLOBAL DIGITAL INFORMATION, INC.
Statement of Cash Flows
For the Years Ended MARCH 31, 1999 and 1998
<TABLE>
<CAPTION>
1998 1997
<S> <C>
Operating Activities
Net Income (Loss) (290,637) (441,473)
Add depreciation not
requiring cash 6,630 3345
Changes in:
Accounts Receivable 5500 (20300)
Accounts payable 176116 0
Inventory (170)
Payroll Taxes 95596 26917
Cash Provided (used)
by Operations (6965) (431511)
Investing Activities
Due from Masterpiece Medical (81000)
Investment in Office Equipment (5154) (33449)
CaduSys Software (45265) 0
Net Cash Provided(used) by Investing
Activities (131419) (33449)
Financing Activities
Shareholder loans 89962 113590
Sale of Common Stock 168500 509350
Costs of Issuing Common Stock (156863) (121613)
Net Cash provided (used) by Financing
Activities 101599 501327
Increase (Decrease) in Cash (36785) 36367
Cash Balance Beginning 36367 0
Cash Balance Ending (418) 36367
</TABLE>
See accompanying notes and accountants' report
GLOBAL DIGITAL INFORMATION, INC
STATEMENT OF INCOME(DEFICiT) AND RETAINED DEFICIT
For the Three Months Ended MARCH 31, 1999 and 1998
<TABLE>
<CAPTION>
1997 1999 1998
<S> <C>
54,214 REVENUE 44,557 11,523
EXPENSES:
182,587 Payroll 57,938 90,041
21,049 Payroll taxes & employee benefits 8,728 11,158
0 Depreciation 2,018 3,345
13,996 Insurance 279 9,370
0 Interest 1,497 0
0 Marketing 1,500 15,367
21,236 Miscellaneous 509 34,223
10,555 Office (346) 4,228
2,174 Postage & Delivery 1,505 2,895
10,620 Printing & Reproduction 0 2,261
7,300 Rent 5,175 5,820
0 Royalty 0 0
16,795 Telephone 2,319 14,181
23,864 Travel & Entertainment 12,469 4,145
310,176 Total Expenses 93,591 197,034
(255,962) NET LOSS FOR THE PERIOD (49,034) (185,511)
RETAINED DEFICIT
(441,660) Balance beginning of period (1,123,788) (697,622)
(697,622) Balance end of period (1,172,822) (883,133)
(/TABLE>
See accompanying notes and accountants' report
GLOBAL DIGITAL INFORMATION, INC.
Statement of Cash Flows
For the Three Months Ended MARCH 31, 1999 and 1998
</TABLE>
<TABLE>
<CAPTION>
1997 1999 1998
<S> <C>
Operating Activities
(441,473) Net Income (Loss) (49,034) (185,511)
Add depreciation not
3345 requiring cash 1,934 0
Changes in:
(20300) Accounts Receivable 19800 (2861)
0 Accounts payable (26481) 0
Inventory 3
26917 Payroll Taxes 59305 11914
Cash Provided (used)
(431511) by Operations 5527 (176458)
Investing Activities
Due from Masterpiece Medical 0
(33449) Investment in Office Equipment 0 (6319)
0 CaduSys Software 0 0
Net Cash Provided(used) by Investing
(33449) Activities 0 (6319)
Financing Activities
113590 Shareholder loans 23860 98587
509350 Sale of Common Stock 0 156600
(121613) Costs of Issuing Common Stock (20906) (54215)
Net Cash provided (used) by Financing
501327 Activities 2954 200972
36367 Increase (Decrease) in Cash 8481 18195
0 Cash Balance Beginning (8561) 18172
36367 Cash Balance Ending (80) 36367
</TABLE>
See accompanying notes and accountants' report
<PAGE>
GLOBAL DIGITAL INFORMATION , INC.
STATEMENT OF SHAREHOLDERS' EQUITY
PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
COMMON STOCK PAID IN SURPLUS ACCUM
SHARES AMOUNT AMOUNT DEFICIT
TOTAL
<C> <C> <C> <C> <C> <C>
United States Mining & Exploration Inc. prior to merger:
Balance, MARCH 31, 1997 491,314 491 441,169 (443,562) (1,902)
Shares issued 2 for 1 stock
split 491,314 492 (492)
Shares issued for cash
to investors 440,962 441 52,059 52,500
440,962 $ 441
Less expenses of issuing
the Common Stock (52,776) (52,776)
Shares issued for services
to Shareholders 276,410 276 276
Net Income 1,902 1,902
Balance, November 11, 1997 1,700,000 1,700 439,960 (441,660) 0
Global Digital Information Inc. shares issued prior to merger:
Shares issued at par
June, 1997 to Founders for
acquisition rights 8,044,150 8,044 8,044
Shares issued for cash
June, 1997 to November 11, 1997
to investors 455,850 456 327,294
327,750
Less expenses of issuing
the Common Stock (64,463)
(64,463)
Net Loss (217,589) (217,589)
Balance, November 11, 1997 8,500,000 8,500 262,831 (217,589) 53,742
Combined balance after merger
Balance, November 11, 1997 10,200,000 10,200 702,791 (659,249) 53,742
Shares issued for cash
November 11, 1997 to March 31,1998
to investors 331,394 332 156,268 156,600
Less expenses of issuing
the Common Stock (102,060) (102,060)
Net Loss (222,936) (222,936)
Balance, MARCH 31, 1998 10,531,394 10,532 756,999 (882,185) (114,654)
Shares issued for cash
March 31,1998 to December 30, 1998
to investors 247,000 247 $168,253 168,500
Less expenses of issuing
the Common Stock (66,994) (66,994)
Net Loss (241,603) (241,603)
Balance, December 31, 1998 10,778,394 10,779 858,258 (1,123,788)
(254,751)
Less expenses related to
the Common Stock (20,906) (20,906)
Net Loss (49,034) (49,034)
Balance, SEPTEMBER 30, 1998 10,778,394 10,779 837,352 (1,172,822)
(324,691)
</TABLE>
The accompanying notes are an integral part of these financial statements.
GLOBAL DIGITAL INFORMATION, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) The Company
The Company was incorporated in 1983 under the laws of the State
of Utah as Forward Electronics Corporation. In 1988 it was reorganized
with United States Mining & Exploration, Inc.(USM) and changed its
name at that time. Also in 1998 the Company acquired Ridge Rock
Mining Corporation which it subsequently dissolved. During 1989
Rocky Mountain Process Components was acquired. This company was
also dissolved. Since 1990 the Company has had no operations, until the
merger with Global Digital Information, Inc.(GDI) After the merger the
Company changed its name to Global Digital Information, Inc.
Although there has been a change in reporting entity ie from USM to
GDI the accompanying financial statements include the activities of
USM for comparison purposes for years prior to 1998.
(b) Fixed Assets
Fixed Assets includes all property, plant and equipment. Furniture
and fixtures, computer equipment and manufacturing equipment are
stated at cost. They are be depreciated over their estimated useful lives
of five to twenty years, as appropriate. Depreciation expense amounted
$1,500 for the quarter ended June 30, 1998.
(c) Business Activity
GLOBAL DIGITAL INFORMATION, INC. was incorporated June
25, 1997 in the State of Washington. The Company designs, develops,
markets and supports medical document management systems and
personal productivity software which facilitates the recording, imaging,
manipulation, distribution and storage of paper-based medical
information on personal network computers. The Company has acquired
"CaduSys Medical Record" a client/server clinical information software
package that collects and stores patient data during the creation of the
clinical narrative. It is sold to health care organizations including, but
not limited to, single and multi-doctor practices, clinics, health care
organizations and small hospitals. Some of the Company's other
products include office adaptations which use the personal computer to
eliminate paper in the office filing system.
(d) Income Taxes
Effective April 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes". SFAS No. 109 requires a company to recognize deferred
tax assets and liabilities for the expected future income tax consequences
of events that have been recognized in the financial statements. Under
this method, deferred tax assets and liabilities are determined based on
the temporary differences between the financial statement carrying
amounts and tax basis of assets and liabilities using enacted tax rates in
effect in the year in which the temporary differences are expected to
reverse. There was no cumulative effect of adopting SFAS No. 109.
<PAGE>
GLOBAL DIGITAL INFORMATION, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES(Continued)
(e) Principals of Consolidation
The Consolidated Financial Statements, including the Balance Sheet,
Statement of Retained Earnings, Statement of Net Income(Loss), and
Statement of Cash Flows, include the accounts of all subsidiaries. All
intercompany items and transactions have been eliminated.
(f) Cash
Cash included in the statement of cash flows includes cash and cash
equivalents at the balance sheet date. Certain noncash transactions with
shareholders for which were reimbursed in shares of Common stock
have been eliminated.
NOTE 2. - MERGER AND REORGANIZATION
Effective November 11, 1997 the Company U. S. Mining &
Exploration, Inc.(USM) pursuant to a Reorganization Agreement(the
"Plan") with Global Digital Information, Inc.(GDI) USM was acquired
in a "reverse acquisition" and the shareholders of GDI became the major
shareholders in USM. the "Plan" as approved by the Board of Directors
provided for a 2 for 1 split of the then owned shares of the USM, the
issuance of additional shares(440,962) for cash($52,500), and 276,410
shares issued for services rendered by officers and directors of the
Company. The total shares of Common stock outstanding at that time
was then 1,700,000. As part of the "Plan" the shareholders of GDI were
issued an additional 8,500,000 shares making the total shares
outstanding 10,200,000 shares. The then existing Board of
Directors(USM) resigned and was replaced by directors from GDI.
The acquisition has been accounted for as a "Pooling of Interests" as
per APB Opinion No 16. Since GDI came into existence on June 25,
1997, its results of operations have been included in these financial
statements. No adjustment is made to prior years presented because
GDI was not in existence at that time.
<PAGE>
GLOBAL DIGITAL INFORMATION, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - EARNINGS PER SHARE:
Primary earnings per share have not been computed since they are
antidilutive.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company has acquired its rights to most of its software programs
from its shareholders who are also shareholders in previous corporations
which had these rights or had developed the programs. The company
purchased these rights through the issuance of common stock.
Although the value of these rights may be substantial, because of the
lack of a proper valuation method, they have been recorded at the par
value of the stock issued. ie. 8,044,150 shares were issued to the
founders and they have been valued at $.001 per share or $8,044. In
addition to the stock the Company agreed to pay for liabilities in the
approximate amount of $47,000.00.
NOTE 5 - Issuance of COMMON Stock:
Effective July 1, 1997, the Company offered shares of its common
stock to a limited number of investors pursuant to a Regulation D
exemption up to a maximum of 500,000 shares at $1.00 per share or
$500,000. At March 31, 1999, as a result of this offering, 1,034,244
Common Shares of stock were sold to individual investors for $1.00 per
unit, grossing the company $652,850. The placement is being offered on
a "best efforts" basis by various employees and officers of the company.
Fees and expenses were paid in conjunction with the offering amounting
to $254,423 at March 31, 1999, including commissions for a net total
of $398,427.
NOTE 6 - CASH TRANSACTIONS
Since no cash was actually paid by the company for the original
acquisition of the CaduSys software no cash disbursements have been
shown on these financial statements for that transaction.
<PAGE>
GLOBAL DIGITAL INFORMATION, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - COMMON STOCK SALE
As part of the reorganization between U. S. Mining and Exploration,
Inc.(USM) and Global Digital Information, Inc.(GDI) the Company
previously reported the receipt of $52,500(the amount has been reported
as expense of issuing common stock on the financial statements). Upon
further review, it has been determined that this amount is not correct
The correct amount may be $220,481 or it may be that the Company has
not received any funds for the sale of stock. The Company's previous
attorney, who is in control of the records, has refused to release them.
The Company is endeavoring to settle with the former majority
shareholders of USM concerning the merger between USM and GDI.
Upon receipt of those records, the correct amount received, as well as a
determination of what should have been received, will be known. If the
amounts actually received by the Company were greater than that which
was reported, the difference will be reported as additional costs or
reduced costs of issuing the common stock to effect the merger.
NOTE 8. - INCOME TAXES
As discussed in Note 1, effective April 1, 1993, the Company applied
the provisions of SFAS No. 109 in accounting for income taxes. Prior to
that date, the Company accounted for income taxes under the provisions
of Accounting Principles Board Opinion No. 11. The adoption of
SFAS No. 109 had no cumulative effect on the results of operations.
The Company has no income tax provision for the years ended March
31, 1998 and 1997 due to net operating loss carryforwards.
The income tax effect of the temporary differences giving rise to the
Company's deferred tax assets as of March 31, 1999 is as follows:
Federal net operating loss carryforwards $ 1,172,822
Total deferred tax asset 398,760
Valuation allowance (398,760)
Net deferred tax asset $ -0-
<PAGE>
GLOBAL DIGITAL INFORMATION, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 8 CONTINUED.
Upon implementation of SFAS No. 109 at April 1, 1993, the Company
recorded a valuation allowance due to the uncertainty of utilization of
net operating loss carryforwards. The change in the valuation allowance
for the year ended October 30, 1995 is as follows:
Balance April 1, 1997 $ 2,592
Increase in non-utilization of net operating
loss carryforwards 396,168
Balance, October 30, 1995 $ 398,760
At March 31, 1999, the Company had unused net operating loss
carryforwards for income tax purposes available to offset future taxable
income, if any, as follows:
Alternative
Expiring In Regular Tax Minimum Tax
2008 17,279 17,279
2013 566,799 566,799
2014 588,744 588,744
$1,172,822 $ 1,172,822
NOTE 9 - ACQUISITION OF MASTERPIECE MEDICAL
The Board of Directors of Global Digital Information, Inc. approved the
acquisition of Masterpiece Medical, Inc.(MM), and Del Crane Medical,
Inc(DC). Masterpiece Medical and Del Crane Medical are Ohio
corporations with software programs and billing capability which
compliment the CaduSys medical records program offered by the
Company. The merger was completed effective June 22, 1999 by
issuance of 2,150,000 shares of stock to the stockholders of MM. The
merger will be accounted for as a pooling of interests as provided for
under APB No. 16.
The Company believes that the addition of the sales generated by MM
and DC combined with the anticipated sales of the CaduSys product,
will produce significant sales and potential income for the Company.
GLOBAL DIGITAL INFORMATION, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 9 CONTINUED
In addition, the management and technical personnel of MM and DC
will be added to and compliment those of the Company.
NOTE 10 - Shareholder Suit:
Subsequent to the above merger one of the original shareholders of the
Company requested the exercise of an option to purchase shares of the
Company's stock. Management has refused to honor the option and it
has been reported that the shareholder is going to sue for performance.
The Company's attorney has no opinion as to whether there will be a
monetary impact from this suit and expects that management will contest
the suit vigorously.
a) Balance Sheet for March 31, 1999
b) Statement of Income (Loss), Year Ended
March 31, 1999
c) Statement of Shareholders' Equity, Year
Ended March 31, 1999
d) Statement of Cash Flows, March 31, 1999
and 1998
e) Notes to Financial Statements
2) Financial Statements Schedules
a) Independent Auditor's Report
All other schedules are omitted because
they are not applicable or the required
information is presented in the consolidated
financial statements or notes thereto.
3) Exhibits
a) Exhibits:
_____ The Company's Financial
Statements for March 31, 1999 and 1998
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) of the Securities and Exchange Act
of 1934, the Company has duly caused this
report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Masterpiece
Technology Group,
Inc.
By: /s/ Newell D. Crane
Newell D. Crane
President, Director
November 11, 1999<PAGE>
