SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Form 10-K
(mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For fiscal year ended March 31, 2000
[] Transition report pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the transition period from ___ to ___
Commission File Number: 000-22851
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 Name of Each exchange on which registered
Common 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. [X] Yes [] No
Indiciate by check mark if disclosure of delinquent filers pursuant to Item 404
of Regulation S-K (S229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant'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 []
The aggregate market value of voting stock
held by non-affiliates of the Registrant as of March 31, 2000
was approximately $4,781,492.
On March 31, 2000, approximately 5,672,416
shares of the Registrant's Common Stock, no par
value, were outstanding.
Documents Incorporated by Reference
(1) Financial Statements for March 31, 1998,
1999 and 2000
(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 2000
Financial Statements, which is incorporated by
reference in this 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.
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
Masterpiece Technology Group (MTG) is a rapidly growing company that offers
high-quality information management software products, hardware, and related
services to the general business and medical fields. This is done by offering
state-of-the-art technology coupled with an extraordinary set of product
features and backing our systems with a high level of ongoing support. The
Company aims for long-term relationships with each client, by providing them
with a roadmap to improve their systems. This translates into on-going,
additional purchases of more MTG products and services. The Company's goal is
to become known as the premier company in our category. MTG's development goals
are for continual and aggressive enhancement of the product with ever-increasing
profitability.
MTG today is at the forefront of the digital information revolution. The
Company now offers cutting-edge software in document management, electronic
medical record systems, medical billing recovery systems, claims clearing house
and Web-based records management products with a heavy emphasis on medical
information management. The market is estimated to exceed $5 billion in total
annual revenues according to company research.
As a player in one of the fastest growing information market sectors,
Masterpiece expects to capture market share, brand recognition and vertical
product integration. Masterpiece Technology Group offers a much-needed market
response for end-to-end digital information management solutions within
traditional and web-enabled platforms. The Company's wholly owned divisions
(Maplecrest Software and Claims Direct) offer turnkey solutions for the document
management industry including intranet publishing, medical digital information
management, medical claims clearing house, physician office billing and many
other applications.
Information is the lifeblood of all businesses and government organizations.
The sum total of what any organization has achieved is reflected, documented and
accounted for in its records. Every organization must manage their records for
a variety of reasons including regulatory compliance, legal protection, and
internal information purposes. Records are here to stay and will always be
required by our target market. Regardless of whether the information is digital
or paper-based, Masterpiece is in an excellent position to provide technology to
manage it.
A strategic focus of the Company is its ability to identify and acquire private
companies with technologies and marketing mechanisms that work in concert with
Masterpiece. Masterpiece's acquisition of Maplecrest and Claims Direct are the
first steps along our path. With letters of intent to companies such as
Townsend Medical Systems and others, we will build our technology portfolio as a
powerful, robust fully web-enabled, global information solution for the next
century. Masterpiece will continue to evaluate the acquisition and partnership
of strategic companies, which will further enhance our market position.
Background Information
Masterpiece Medical commenced operations in 1983 and
is a provider of comprehensive record information systems
to the 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
EMR for Medical Practice Management
EMR is an electronic medical record-keeping software product. This product
features a tab environment that uses drill down navigation and pen based or
touch screen technology to perform all aspects of patient records management.
The entire patient encounter is documented and managed through dynamic,
customizable databases to build a seamless patient record. This system contains
the same references that might be contained in publications or in a patient's
chart, but it allows entry of data and organizes it in such a manner that the
practitioner can recall it in a variety of formats. EMR is designed to replace
the traditional paper-based medical records with an electronic system.
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 Maplecrest EMR
system provides a complete and accurate view f treatment histories.
Maplecrest Custom Software
The Custom Software Division has designed and built healthcare applications for
the past ten years. This group creates open architecture, single-site and
network-wide healthcare solutions, utilizing a mix of custom software and
integration of third party development. Projects range from simple web sites to
complex multi-tier office network solutions, and increase productivity in such
functions as clinical data communications, imaging, lab, pharmacy, peer review
and outcomes analysis.
The Custom Software Division has assisted medical practices with a variety of
solutions that include the automation of manual processes, converting legacy
systems to state of the art client/server systems, deploying Remote Access
Applications, providing automated data communications between sites, and
extending Local Area based applications. The Custom Software Division has a
team of certified developers that can deploy high-quality solutions with a wide
variety of capabilities. Some of the development tools utilized include Visual
Basic, Visual C++, and Oracle Designer 2000. Database design tools include
Microsoft SQL Server, Oracle and MS Access. By linking people and healthcare
partners through a secure intranet or extranet network, physicians and providers
can share medical information and knowledge electronically, rather than using
telephone messages, paper forms and couriers. Labs, authorizations,
prescriptions and consultations can be forwarded, annotated and filed
electronically. While reducing costs and increasing productivity, the
Maplecrest network solution also empowers the provider to improve the quality of
patient care. By designing Internet, intranet and extranet solutions, we've
introduced our clients, large and small, to the next level of healthcare
technology. Through this technology providers are able to realistically extend
and broaden communications among themselves, their partners and with their
patients 24 hours per day
.
DocPrep Studio
DocPrep Studio is a document publishing solution designed to revolutionize the
way documents are published and communicate with customers. DocPrep Studio is
much more than a standard document publishing software program. It's an
innovative system designed to create the most professional and highly
personalized customer communication materials. It allows you to respond quickly
to customer needs by automatically publishing and distributing documents
anywhere in your organization. DocPrep Studio is a software solution that can
adapt to your ever-changing business environment and can respond quickly while
saving you money.
Today, a real competitive advantage lies in efficient document publishing that
can improve customer communications while reducing costs. Now more than ever,
timely and personalized communication with your customers is critical to the
success of your business.
Claims Direct & Retrobill
Claims Direct, Inc. (CLDI) provides proprietary electronic data interchange
("EDI") services for insurance claims and patient statements originating in
healthcare facilities. These services assist physicians and hospitals by
improving cash flows and by reducing administrative costs and burdens. The
Company's customers range in size from large hospital systems with multiple
facilities to single doctor offices. Claims Direct acquired Medical Records
Concepts, Inc. in January of 1997 as a wholly owned subsidiary, and integrated
its hospital revenue enhancement service, known as "Retrobill" into Claims
Direct's healthcare EDI services. Claims Direct has provided revenue
enhancement services to over 117 hospitals throughout the United States. CLDI
has clients from both completed and active revenue enhancement contracts
(Retrobill) in 16 states, with hospitals ranging in size from 15 beds to 870
beds.
Claims Direct, Inc. provides all of its services through the application of its
proprietary database software. This service allows for many data editing, data
reporting, and data enhancements for customer's medical claims rather than just
using a typical printed claims reformat process to achieve an electronic claim
transmission. Claims Direct maintains a 24-hour, 7 days per week dial in
service for the receipt of customer claims and statements via toll free 800
numbers nationwide. This service operates from a secure bulletin board system
with private phone lines within the company's headquarters. The company also
offers a "retrieval" service to dial into a provider's office computer after
hours and retrieve data to produce payment ready claims and statements
electronically. The proprietary ClaiMaster(tm) software for HCFA-1500 claims
editing and its companion UB-92 claims editor are available to customers, as
well as a licensed UB-92 claims editor designed for on-site use in hospital
billing departments. The services are not restricted to PC Desktop computers or
Windows Operating Systems. The company successfully receives and/or retrieves
claims and statements from other systems ranging from the DEC Micro PDP-11 to a
hospital mainframe multi-facility computer network, and a large regional billing
office for a national provider of health rehabilitation services. The edit
results from applying database techniques to claims editing results in a variety
of management reports and graphs for customers which may also be facility
specific. Multi-facility Hospital System Specific Edits can be based upon
individual Group Numbers or Rendering physician PIN numbers. Management reports
in the form of Graphs, Charts, and Summaries are also prepared from the Claims
Direct database report generating software. Mid-level management at our
customer locations may utilize more detailed summary reports prepared by Claims
Direct such as the "Top Ten Edit Results" each month. Operations supervisors at
our customer sites use Top Ten, Summaries, and claim by claim detail reports to
identify and improve trends in coding and billing. Trend analysis is also
available for each state in a multi-state customer operation, or for each doctor
within a multi-doctor practice. The reports may be reformatted to provide
patient encounter data, or payor and utilization data. Unique Out-Bound claim
formats are also utilized by Claims Direct to provide for the maximum number of
electronic claims submissions. Claims Direct interchanges certain claims with
regional clearinghouses and receives a portion of the remuneration paid by the
carriers (payors) to the clearinghouse for clean electronic claims.
CLDI's Retrobill service provides for the creation of medical insurance claims
for patient services not previously billed. The services eligible for
Retrobilling have been overlooked, and are known as "Retrobill" into Claims
Direct's healthcare EDI services. Claims Direct has provided revenue
enhancement services to over 117 hospitals throughout the United States. CLDI
has clients from both completed and active revenue enhancement contracts
(Retrobill) in 16 states, with hospitals ranging in size from 15 beds to 870
beds.
Claims Direct, Inc. provides all of its services through the application of its
proprietary database software. This service allows for may data editing, data
reporting and data enhacements for customer's medical claims rather than just
using a typical printed claims reformat process to acheive an electronic claim
transmission. Claims Direct maintains a 24-hour, 7 days per week dial in
service for the receipt of customer claims and statements via toll free 800
numbers nationwide. This service operates from a secure bulletin board system
with private phone lines within the company's headquarters. The company also
offers a "retrieval" service to dial into a provider's office computer after
hours and retrieve data to produce payment ready claims and statements
electronically. The proprietary ClaiMaster(tm) software for HCFA-1500 claims
editing and its companion UB-92 claims editor are available to customers, as
well as a licences UB-92 claims editor designed for on-site use in hospital
billing departments. The services ar enot restricted to PC Desktop computers or
Windows Operating Systems. The company successfuly receives and/or retrieves
claims and statements from other systems ranging from the DEC Micro PDP-11 to a
hospital mainframe multi-facilitycomputer network, and a large regional billing
office for a national provider of health rehabilitation services. The edit
results from applying databse techniques to claims editing results in a variety
of management reports and graphs for customers which may also be facility
specific. Mutli-facility Hospital System Specific Edits can be based upon
individual Group Numbers of Rendering physician PIN numbers. Management reports
in the form of Graphs, Charts and Summaries are also prepared from the Claims
Direct database report generating software. Mid-level management at our
customer locations may utilize more detailed summary reports prepared by Claims
Direct such as the "Top Ten Edit Results" each month. Operations supervisors at
our customer sites use Top Ten, Summaries and claim by claim detail reports to
identify and improve trends in coding and billing. Trend analysis is also
available for each state in a multi-state customer operation, or for each doctor
within a mutli-doctor practice. The reports may be reformatted to provide
patient encounter data, or payor and utilization data. Unique Out-Bound claim
formats are aso utilized by Claims Direct to provide for the maximum number of
electronic claims submissions. Claims Direct interchanges certain claims with
regional clearinghouses and receives a portion of the remuneration paid by the
carriers (payors) to the Clearinghouse for clean electronic claims.
CLDI's Retrobill service provides for the creation of medical insurance claims
for patient services not previously billed. The services eligible for
Retrobilling have been overlooked, and are known as "Lost Charges." Retrobill
does not include the re-submission of a claim sent previously to any insurance
carrier, Medicare, or other payer. Lost charge items found during a Retrobill
analysis may range from an all inclusive 10 day patient stay in a hospital to a
single billing code referring to a "professional compenent" for service in the
Emergency Room. The average hospital bills approximately $50,000 annually.
The range of overlooked charges often range from 1% to 5% of total hospital
billing. CLDI estimates that the range of unbilled charges available for its
Retrobill service averages from $500,000 to $2,500,000 per hospital. The
Retrobill process begins with a sampling of medical records and claims covering
a selected 30-day period. Data analysis is also run when available, to compare
the use of certain billing codes in relation to commonly used billing code
combinations. Retrobill claims are produced by utilizing contracted medical
coding and billing companies to prepare a set of claims. The claims are
electronically transferred into the claims editing computers at the Claims
Direct headquarters office. When received, the claims are electronically
analyzed for completeness of information, proper codes, and numerous
combinations of billing criteria known to cause a claim either to pay on first
submission or to be rejected by the insurance payer. Claims edits at CLDI now
include over 11,000 "edits," emphasizing carrier specific "deep" edits. Each
claim must pass all applicable edits before it is released electronically from
the Claims Direct main server (computer) to the appropriate payer in the manner
acceptable to that payer.
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.
Financial Information about Industry
Segments, Backlog, etc.
The financial statements required by this
item are included in the Company's 2000 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
Apparently 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, 2000:
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 National Association of Securities Dealers,
with the high bid at $4.25 per share and the low bid
of $1.25 per share during the last quarter. Additional
information required by this item may be found in
the Company's 2000 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 2000 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 2000 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
2000 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
2000 Financial Statements are 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 2000 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
The Company retained the services of the accounting firm of Von
Lehman on May 8, 2000. The information pertaining to this action
And required by this item is available in the Company's 8-K report,
Filed May 15, 2000, and amendments thereto.
PART III
Item 10. Directors and Executive Officers of the
Registrant
Newell D. Crane, B.S., M.B.A., Ph.D.
Chief Executive Officer
Mr. Crane brings 29 years of experience in the medical field ranging from
pharmaceuticals to clinical software. In 1969, Mr. Crane began his career with
Searle Pharmaceuticals as a medical sales representative in Beverly Hills,
California. Over the next 16 years with Searle, Mr. Crane held positions in
hospital sales, medical training, drug utilization and analysis, and field sales
management responsible for the mid-west. While still with Searle
Pharmaceuticals and as part of a drug research project, Mr. 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, Mr. Crane
founded Del Crane Medical Corporation, 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, Mr. Crane founded Masterpiece Medical to provide clinical
software to the physician marketplace. In 1997 Masterpiece Medical acquired
control of Del Crane Medical and the companies now operate as one, with Mr.
Crane serving as President & CEO.
Jeffrey H. Beneson
Vice President Investor Relations, Masterpiece Technology Group
Founder of Global Digital Information, Inc., has served as COB, CEO, President
and a Director since inception. Mr. Beneson has an extensive background in
business development and merchant banking, serving as a Manager for Emmett
Larkin Co., (NASD member firm) of San Francisco. Formerly Mr. Beneson worked in
top management with various national advertising and manufacturing concerns
including Careff Paint & Chemical and Stewart Oxygen Service. Mr. Beneson
attended San Fernando Valley College majoring in Marketing.
Rick Gressett, B.S.
President, Maplecrest Professional Services Division
Mr. Gressett graduated from Eastern Nazarene College in 1979 with a Bachelors of
Science in Math. That same year he joined the Information Systems Group at
Union Carbide Corporation where he received extensive management training and
exposure to a multitude of systems projects. In 1986, Mr. Gressett left to
start a consulting division at a small PC company. While there, he oversaw the
development of several large-scale client server systems and managed several
systems consulting engagements for such companies as Merrill Lynch, GE Capital
and IBM. In 1990 he bought the consulting division and formed Maplecrest
Software.
David A. Losiewicz
Vice President - Director Research and Development, Medical Division
Mr. Losiewicz has been invaluable in the development of all billing and
documentation aspects of the Masterpiece Medical program and to Del Crane
Medical's billing service systems by lowering costs and increasing revenues for
the Company and its clients in several areas. He created the Masterpiece
Service Representative Procedure Manual, documentation systems, and training
program for field representatives to establish national consistency and
efficiency in billing.
Margaret Crane, B.S., M.B.A.
Vice President, Masterpiece Technology Group
Having exhaustively researched medico-legal cases to determine the importance of
clinical documentation, Mrs. Crane designed Masterpiece to conform to practice
guidelines and specific medico-legal and clinical compliance issues most
frequently addressed by medical practices.
Fredrick "Rick" M. Kelley, Jr.
Vice President Claims Direct
Mr. Kelley has over 20 years of experience in corporate and medical practice
management. For the past thirteen years he has been directly involved in
bringing new products to the medical profession and has overseen the
installation of practice management software in over 150 physician offices. Mr.
Kelley has also designed a new service to electronically transfer medical
billing statements from hospitals and physician offices to a large volume print
facility at US West Communications.
Item 11. Executive Compensation
Other than information provided in the
Company's 2000 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> <C> <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
Financial Statements:
MASTERPIECE TECHNOLOGY GROUP, INC.
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT
March 31, 2000
MASTERPIECE TECHNOLOGY GROUP, INC.
TABLE OF CONTENTS
PAGE
Independent Auditors' Report
Financial Statements
Balance Sheets 1
Statements of Income 2
Statements of Stockholders' Equity 3
Statements of Cash Flows 4
Notes to the Financial Statements 5-13
Supplemental Information
Division Balance Sheets 14
Division Statements of Income (Unaudited) 15
INDEPENDENT AUDITORS' REPORT
Directors and Officers
Masterpiece Technology Group, Inc.
We have audited the accompanying balance sheets of Masterpiece Technology
Group, Inc. as of March 31, 2000, and the related statements of income,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Masterpiece Technology Group, Inc.
(formerly Global Digital Information, Inc.) as of March 31, 1999 and for the
years ended March 31, 1999 and 1998, were audited by other auditors whose report
dated November 8, 1999 on those statements included an explanatory paragraph
that described the fact that the Company had suffered recurring losses from
operations and has a working capital deficiency.
Except as discussed in the following paragraph, we conducted our audit in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit 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
audit provided a reasonable basis for our opinion.
During the year the Company acquired three companies through merger. The
records of these companies had never been audited. Proper documentation of
various transactions were not always available. Because of these inadequacies
in the accounting records of these acquired companies, we are unable to form an
opinion regarding the statement of income, statement of cash flow and statement
of stockholders' equity for the year ended March 31, 2000.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Masterpiece Technology Group, Inc.
as of March 31, 2000, in conformity with generally accepted accounting
principles.
Masterpiece Technology Group, Inc.
Page Two
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has incurred a substantial operating loss for
the year and has a working capital deficiency. These conditions raise
substantial doubt about its ability to continue as a going concern. Management
plans regarding those matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Fort Mitchell, Kentucky
July 7, 2000
MASTERPIECE TECHNOLOGY GROUP, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31
--------------------------
2000
1999
<S>
<C> <C>
Current Assets
Accounts Receivable $ 447,491
$14,800
Other Current Assets 303,531
170
Notes Receivable - Current _________
________
Total Current Assets 751,022
14,970
_________ ________
Property and Equipment
Building and Improvements 257,786
-
Equipment, Furniture and Fixtures 834,787
38,603
_________ ________
1,092,573 38,603
Less Accumulated Depreciation 680,368
9,974
_________ ________
Total Property and Equipment 412,205
28,629
_________ ________
Other Assets
Due from Masterpiece Medical -
81,000
Capitalized Software Cost 6,532,125
53,309
Deposits and Other Assets 29,774
-
_________ ________
Total Other Assets 6,561,899
134,309
_________ ________
Total Assets $7,725,126
$177,908
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank overdraft 72,720
418
Current Portion of Mortgage Note 1,131
-
Notes Payable - Banks 1,491,428
-
Notes Payable - Officers and Related Parties 1,402,375
-
Notes Payable - Others 1,247,171
-
Capital Lease Obligations - Current 49,048
-
Accounts Payable
1,096,824 176,116
Accrued Expenses
1,153,610 122,513
_________ ________
Total Current Liabilities 6,514,307
299,047
_________ ________
Long-Term Liabilities
Mortgage Payable - Bank (Less Current Portion) 150,550 -
Notes Payable - Shareholders -
203,552
Capital Lease Obligations (Less Current Portion) 35,842 -
_________ ________
Total Long-Term Liabilities 186,392
203,552
_________ ________
Stockholders' Equity
Common Stock, No Par Value; 50,000,000 Shares
Authorized 5,672,416 in 2000 and 220,148 in 1999,
Issued and Outstanding 5,672 10,779
Paid-In Capital
7,698,043 837,352
Accumulated Deficit (6,679,288)
(1,172,822)
___________ ___________
Total Stockholders' Equity 1,024,427
(324,691)
___________ ___________
Total Liabilities and Stockholders' Equity $7,725,126
$177,908
=========== ===========
</TABLE>
See auditors' report and accompanying notes.
<PAGE> 1
MASTERPIECE TECHNOLOGY GROUP, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended March 31
--------------------------------
(Unaudited)
2000
1999 1998
--------
-------- --------
<S> <C>
<C> <C>
Sales $ 263,902
$ - $ -
Cost of Sales 259,994 -
-
--------
-------- --------
Gross Profit 3,908 -
-
Other Revenue 1,012,128
182,555 65,737
--------
-------- --------
Operating Profit Before
Administrative Expenses 1,016,036
182,555 65,737
--------
-------- --------
Administrative Expenses
Payroll, Fees, Taxes and Related Benefits 992,053 310,254
304,835
Rent 303,409
22,101 13,120
Interest Expense 152,536
7,396 -
Professional Fees 455,196 -
-
Depreciation 72,075
6,630 3,345
Amortization 113,552
- -
Utilities and Telephone 115,296
43,807 30,976
Travel and Entertainment 63,473 36,574
28,009
Other 221,355
46,430 126,925
--------
-------- --------
Total Administrative Expenses 2,488,945 473,192
507,210
--------
-------- --------
Loss from Operations (1,472,909) (290,637)
(441,473)
Other Income and (Expenses) 282,299 -
-
--------
-------- --------
Loss Before Taxes (1,190,610)
(290,637) (441,473)
Income Taxes -
- -
--------
-------- --------
Net Loss $(1,190,610) $(290,637)
$(441,473)
========
======== ========
Net Loss Per Share $ (.039) $ (1.37) $ (3.50)
</TABLE>
See auditor's report and accompanying notes.
<PAGE> 2
MASTERPIECE TECHNOLOGY
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Common
Paid in Accumulated
Shares Stock
Surplus Deficit
-------- -------- --------
-----------
<S> <C> <C>
<C> <C>
Balance, March 31, 1997 $ 491,314 $ 491 $ 441,169 $
(440,712)
Stock Split 491,314 492
(492) -
Shares Issued for Cash 440,962 441 52,059
-
Common Shares Issued in Exchange
For Consulting 276,410 277 -
-
Shares Issued for Acquisition Rights 8,044,150 8,044 - -
Shares Issued for Cash 787,244 787 333,192
-
Net Loss - - -
(441,473)
-------- -------- --------
-----------
Balance, March 31, 1998 10,531,394 10,532 825,928
(882,185)
Shares Issued 247,000 247 99,324
-
Less: Expenses of Issuing
Common Stock - -
(87,900) -
Net Loss - - -
(290,637)
-------- -------- --------
-----------
Balance, March 31, 1999 10,778,394 10,779 837,352
(1,172,822)
Activity for the Year Unaudited
Reverse Stock Split (10,747,413) (10,749) - -
Merger of GDI and Masterpiece Medical
and Del Crane Medical 1,900,000 1,900
2,125,229 (4,315,856)
Common Shares Issued in Exchange
For Consulting 1,340,670 1,341
652,197 -
Acquisition of Maplecrest Software 1,850,765 1,851
3,121,315 -
Acquisition of Claims Direct 550,000 550
961,950 -
Net Loss - - -
(1,190,610)
-------- -------- --------
-----------
Balance, March 31, 2000 $5,672,416 $5,672 $7,698,043
$(6,679,288)
========== ========
========== ============
</TABLE>
See auditors' report and accompanying notes.
<PAGE> 3
MASTERPIECE TECHNOLOGY GROUP, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended March 31
---------------------------------------------
(Unaudited)
2000
1999 1998
------------ ----------- -----------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Loss
$(1,190,610) $ (290,637) $ (441,473)
Reconciliation of Net Loss with
Cash Flows from Operations
Depreciation
72,075 6,630
3,345
Amortization
113,552 -
-
Stock Issued for Services
653,538 - -
Changes in
Accounts Receivable
77,800 5,500 (20,300)
Other Current Assets
289,713 (170) -
Deposits and Other Assets
(19,864) - -
Accounts Payable
130,769 176,116 -
Accrued Expenses
(83,331) 95,596 26,917
---------- ----------
--------
Cash Provided (Used) by Operations 43,642
(6,965) (431,551)
---------- ----------
--------
Cash Flows from Investing Activities
Acquisition of Property and Equipment (90,584)
(50,419) (33,449)
Capitalized Software Costs (171,022)
- -
Payments of Notes Receivable 81,000
(81,000) -
---------- ----------
--------
Cash Used by Investing Activities (180,606) (131,419)
(33,449)
---------- ----------
--------
Cash Flows From Financing Activities
Increase in Bank Overdraft (56,596)
418 -
Increase in Notes Payable 237,428
89,962 113,590
Payments on Capital Lease Obligations (43,868)
- -
Sale of Common Stock, Net of Cost -
11,637 387,737
---------- ----------
--------
Cash Provided by Financing Activities 136,964
102,017 501,327
---------- ---------- --------
Net Change in Cash -
(36,367) 36,367
---------- ---------- --------
Beginning Cash Balance -
36,367 -
---------- ---------- --------
Ending Cash Balance $ -
$ - $ 36,367
========== ==========
==========
</TABLE>
See auditors' report and accompanying notes.
<PAGE> 4
MASTERPIECE TECHNOLOGY GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
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.
In 1999, the Company acquired Masterpiece Medical, Inc. and Del Crane Medical,
Inc. Masterpiece Medical is a Delaware corporation and Del Crane is an Ohio
corporation with software programs and billing capability that 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 Masterpiece Medical, Inc. The merger was accounted for as a
pooling of interests under APB No. 16. The Company changed its name to
Masterpiece Technology Group, Inc. (MPTG).
The Company acquired Maplecrest Software, a Connecticut corporation, on November
18, 1999. This business combination was accounted for as a purchase under APB
No. 16.
The Company acquired Claims Direct on March 30, 2000. This business combination
was accounted for as a purchase under APB No. 16.
Business Activity
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.
NOTE 1 - ACCOUNTING POLICIES (Continued)
Accounts Receivable
No allowance for bad debts has been provided since management expects no
material losses.
Fixed Assets
Furniture and fixtures, computer equipment are stated at cost. They are being
depreciated over their estimated useful lives of five to twenty years, as
appropriate.
Maintenance and repairs are charged to operations when incurred. Significant
betterments and renewals are capitalized. When property and equipment is sold
or otherwise disposed of, the asset account and related accumulated depreciation
account are relieved, and any gain or loss is included in operations.
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.
Use of Estimates
The process of preparing the financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and expenses. Certain
estimates related to unsettled transactions and events as of the date of the
financial statements. Other estimates relate to assumptions about the ongoing
operations and may impact future periods. Accordingly, upon settlement, actual
results may differ from estimated amounts.
Advertising
Advertising costs are charged to operations when incurred.
Amortization
Capitalized software costs are amortized over fifteen years using the straight-
line method. Capitalized software costs are stated net of accumulated
amortization of $630,570 as of March 31, 2000.
NOTE 1 - ACCOUNTING POLICIES (Continued)
Profit Sharing
The Company has a defined contribution 401(k) plan that covers substantially all
of its employees. Company contributions to the plan are discretionary and no
contributions by the Company were made in 2000. By its nature, the plan is
fully funded.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles, which contemplates continuation of the
company as a going concern. However, the Company has sustained substantial
operating losses in recent years. In addition, its working capital is in a
deficiency. At March 31, 2000 current liabilities exceeded current assets by
$5.8 million.
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which is dependent upon the Company's success of its future operations.
Management believes that actions presently being taken to revive the Company's
operating and financing requirements provide the opportunity for the Company to
continue as a going concern. Some of these steps include:
a. Upon acquisition of Maplecrest Software by MPTG, a debt was incurred due to
past salary owed to three of the founders of Maplecrest. An agreement has been
reached between Masterpiece and these individuals for full settlement for all
past due salaries arising for all periods between January 1, 1999 and May 1,
2000 by issuing to those individuals free trading stock in MPTG, as soon as
those shares are registered. There will be 111,200 shares of free trading stock
issued to satisfy $278,000 of salaries that are shown as a liability on the
balance sheet at March 31, 2000. This transaction is expected to occur in the
fiscal year ended March 31, 2001.
b. Upon acquisition of Maplecrest Software by MPTG, a debt was incurred
resulting from past unpaid payroll taxes and other bank and vendor debt. Three
of Maplecrest founders have agreed to sell off their personal stock to satisfy
approximately $992,000 in past debt. This transaction is expected to occur in
the fiscal year ended March 31, 2001. The agreed-upon debt is shown below:
Internal Revenue Service $600,000
Various Bank Debt 162,000
Equipment Leases 57,000
Various Credit Card Debt 173,000
NOTE 2 - GOING CONCERN (Continued)
c. MPTG has a current bank debt incurred over the past three years of
approximately $980,000 from past lines of credit. MPTG has recently turned over
800,000 shares of insider stock as collateral to this bank debt and the bank has
agreed to accept the stock and sell it to make payments towards the loans. As
this stock can be sold to make payments towards this debt, it will be.
NOTE 3 - CASH AND CASH FLOW INFORMATION
At various times throughout the year, the Company may have cash in certain
financial institutions in excess of insured limits.
For purposes of the cash flows statement, cash includes cash on hand and in
checking accounts.
Cash paid for interest was $18,347 for 2000.
The Company had noncash financing and investing transactions as follows:
March 31,
2000
Common stock issued for services
performed or to be performed $ 653,538
Common stock issued for mergers
Accounted for as a purchase:
Maplecrest $ 3,123,166
Claims Direct $ 962,500
NOTE 4 - 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. As part of the "Plan" the shareholders of GDI were
issued an additional 8,044,150 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 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.
NOTE 4 - MERGER AND REORGANIZATION (Continued)
On June 22, 1999, Masterpiece Technology Group, Inc. (formerly Global Digital
Information, Inc.) merged with Masterpiece Medical and Del Crane Medical, with
1,900,000 shares of stock going to the shareholders of Masterpiece Medical.
This was accounted for using the pooling of interest method under APB No. 16.
The balance sheet as of March 31, 2000 includes the accounts of Masterpiece
Medical and Del Crane Medical. The activity for the entire year ended March 31,
2000 is included in the statement of income. Activity for 1999 and 1998 is not
available and, therefore, not included in the income statements for these two
years.
On November 18, 1999, Maplecrest Software Development, Inc. was acquired by MPTG
by issuing 1,850,765 shares of MPTG to the shareholders of Maplecrest. The
cost of acquisition was $3,123,166 (using a value as of the date of acquisition
of $1.6875 per share), and resulting in an increase in the valuation of
Maplecrest's capitalized software cost of $3,680,877, which is being amortized
over 15 years. This was accounted for using the purchase method under APB No.
16. The balance sheet as of March 31, 2000 includes the accounts of Maplecrest,
but the income statement only includes activities from the date of merger
(November 18, 1999) through year end.
On March 30, 2000, Claims Direct, Inc. was acquired by MPTG by issuing 550,000
shares of MPTG to the shareholders of Claims Direct. The cost of acquisition
was $962,500 (using a value as of the date of acquisition of $1.75 per share).
This purchase price did not result in any goodwill or other increase in
intangible assets. This was accounted for using the purchase method under APB
No. 16. The balance sheet as of March 31, 2000 includes the accounts of Claims
Direct, but the income statement does not include any activity since the merger
date was March 30, 2000.
The following summarized proforma (unaudited) information assumes the
acquisition had occurred on April 1, 1999.
Year Ended
March 31, 2000
Sales $ 3,348,173
Net Loss $(1,967,324)
NOTE 5 - NOTES PAYABLE
The Company has several unsecured notes payable to officers and related parties.
The notes bear interest at rates ranging from 5.50% to 8% and are due on demand.
Interest expense on these notes was $67,535 for the year ended March 31, 2000.
The Company has several unsecured notes payable to various individuals. These
notes bear interest at rates ranging from 8% through 12% and are currently due.
The Company has several notes payable to banks. The notes are secured by
general assets of the Company. These notes bear interest at rates ranging from
8.5% through 10.5% and are currently due.
NOTE 5 - NOTES PAYABLE (Continued)
2000
Mortgage Loan Payable
The Company has a mortgage loan
payable with an interest rate of 8.5%, the
final balloon payment of which is due
December, 2026. $151,681
Less Current Portion 1,131
Long-Term Portion $150,550
The remaining maturities on the mortgage note payable are as follows:
Year Ended
March 31,
2001 $ 1,131
2002 109
2003 128
2004 137
2005 150
Thereafter 150,026
-------
$151,681
=======
NOTE 6 - CAPITAL LEASE OBLIGATIONS
The Company leases equipment under several capital lease obligations. They will
expire on various dates ranging from July, 2000 through June, 2005. The assets
and accumulated depreciation under capital leases at March 31, 2000 are as
follows:
Equipment $167,698
Accumulated Depreciation (83,472)
---------
$ 84,226
=========
NOTE 6 - CAPITAL LEASE OBLIGATIONS (Continued)
Minimum future payments under the capital lease obligations are as follows:
Year Ended
March 31,
2001 $ 60,858
2002 31,122
2003 5,885
2004 2,898
2005 724
---------
Total Payments 101,487
Interest Portion of
Minimum Payments (16,597)
--------
Present Value of Capital
Lease Obligations 84,890
Less Current Portion 49,048
------
Long-Term Portion $35,842
======
The interest rates are based on the imputed rate of return and range from 10.3%
to 30.1%.
NOTE 7 - ADVERTISING EXPENSE
Advertising expense was $16,222 for the year ended March 31, 2000.
NOTE 8 - INCOME TAXES
The Company has no income tax provision for the years ended March 31, 2000, 1999
and 1998 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, 2000 is as follows:
Federal net operating loss carryforwards $ 773,296
Total deferred tax asset 773,296
Valuation allowance (773,296)
Net deferred tax asset $ -
NOTE 8 - INCOME TAXES (Continued)
The Company records a valuation allowance due to the uncertainty of utilization
of net operating loss carryforwards. The change in the valuation allowance for
the year ended March 31, 2000 is as follows:
Balance April 1, 1999 $398,760
Increase in Non-Utilization of Net Operating
Loss Carryforwards 374,536
-------
Balance, March 31, 2000 $773,296
=======
At March 31, 2000, the Company had unused net operating loss carryforwards for
income tax purposes available to offset future taxable income, if any, as
follows:
Expiring In
2008 $ 17,000
2013 567,000
2014 589,000
2020 1,101,400 (a)
(a) The Company's tax returns are filed through 1997. Due to net operating
losses no tax should be due. These loss carryforwards are estimated based upon
preliminary review of tax filings.
NOTE 9 - SHAREHOLDER SUIT
Subsequent to the previously disclosed 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's opinion is that any monetary impact from this suit to the Company
would be insignificant.
NOTE 10 - LEASE COMMITMENTS
Facilities
The Company leases one of its premises from an unrelated entity. The lease
expires in December, 2004. Under the agreement, the Company pays a monthly base
rent plus a portion of the building's operating expenses. The Company's
building lease expense was $224,263 for the year ended March 31, 2000.
NOTE 10 - LEASE COMMITMENTS (Continued)
Equipment
The Company leases equipment under several noncancellable operating leases. The
leases expire on various dates from December, 2000 through June, 2002. The
Company's equipment lease expense was $19,611 for the year ended March 31, 2000.
Minimum future annual rental payments under the noncancellable leases are as
follows for the years ending March 31:
Building Equipment
Rent Lease Total
2001 $ 233,916 $24,957 $ 258,873
2002 243,180 19,773 262,953
2003 252,444 7,074 259,518
2004 261,708 - 261,708
2005 201,492 - 201,492
Thereafter - - -
$1,192,740 $51,804 $1,244,544
NOTE 11 - EARNINGS (LOSS) PER SHARE
Earnings (loss) per share amount for the year ended March 31, 2000 is based upon
the average outstanding shares of the Company. Earnings (loss) per share has
been restated for prior years to reflect the effect of the reverse stock split.
The average number of shares outstanding was 3,068,397, 212,531 and 126,046 for
the years ended March 31, 2000, 1999 and 1998, respectively.
SUPPLEMENTAL INFORMATION
MASTERPIECE TECHNOLOGY GROUP, INC.
DIVISION BALANCE SHEETS
<TABLE>
<CAPTION>
March
31, 2000
------------------------------------------------------------------------
Claims
Masterpiece Direct
Maplecrest Total
--------------
------------- --------------- ------------------
<S> <C> <C>
<C> <C>
Current Assets
Accounts Receivable $ 17,399 $ 165,793 $
264,299 $ 447,491
Other Current Assets 300,120 -
3,411 303,531
--------------
------------- --------------- ------------------
Total Current Assets 317,519 165,793
267,710 751,022
-------------- -------------
--------------- ------------------
Property and Equipment
Buildings and Improvements - -
257,786 257,786
Equipment, Furniture and Fixtures 130,185 86,658
617,944 834,787
-------------- -------------
--------------- ------------------
130,185 86,658
875,730 1,092,573
Less Accumulated Depreciation 87,017 47,192
546,159 680,368
-------------- -------------
--------------- ------------------
Total Property and Equipment 43,168 39,466
329,571 412,205
-------------- -------------
--------------- ------------------
Other Assets
Due from Masterpiece Medical - -
- -
Capitalized Software Cost 63,460 1,231,664
5,237,001 6,532,125
Deposits and Other Assets 23,839 4,017
1,918 29,774
-------------- ------------- --------------- ------------------
Total Other Assets 87,299 1,235,681
5,238,919 6,561,899
-------------- -------------
--------------- ------------------
Total Assets $ 447,986 $ 1,440,940
$ 5,836,200 $7,725,126
===============
============= ================= ==================
LIABILITES AND STOCKHOLDER'S EQUITY
Current Liabilities
Bank Overdraft $ 93,436 $ (18,631)
$ (2,085) $ 72,720
Notes Payable - Banks 1,014,796 -
477,763 1,492,559
Note Payable - Officers and
Related Parties 1,218,475 34,500 149,400 1,402,375
Notes Payable - Others 889,398 113,965
243,808 1,247,171
Capital Lease Obligations - Current - 21,435
27,613 49,048
Accounts Payable 307,154 123,514
666,156 1,096,824
Accrued Expenses 338,481 188,994
626,135 1,153,610
--------------
------------- ------------- ------------------
Total Current Liabilities 3,861,740 463,777
2,188,790 6,514,307
-------------- -------------
--------------- ------------------
Long-Term Liabilities
Note Payable - Bank - -
150,550 150,550
Capital Lease Obligations
(Less Current Portion) - 14,663 21,179
35,842
-------------- -------------
--------------- ------------------
Total Long-Term Liabilities - 14,663
171,729 186,392
-------------- -------------
--------------- ------------------
Total Liabilities 3,861,740 478,440
2,360,519 6,700,699
-------------- -------------
--------------- ------------------
Stockholder's Equity
Common Stock, No Par Value; 50,000,000 Shares
Authorized, 5,672,416 Shares Issued
and Outstanding 5,672 - - 5,672
Paid in Capital 2,404,210 962,500
4,331,333 7,698,043
Retained Earnings (5,823,636) -
(855,652) (6,679,288)
-------------- -------------
--------------- ------------------
Total Stockholder's Equity (3,413,754) 962,500
3,475,681 1,024,427
-------------- -------------
--------------- ------------------
Total Liabilities and
Stockholder's Equity $ 447,986
$ 1,440,940 $5,836,200 $7,725,126
==============
=============== ========= =========================
</TABLE>
See auditor's report on supplemental information and accompanying notes.
<PAGE> 14
MASTERPIECE TECHNOLOGY GROUP, INC.
DIVISION STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
March
31, 2000
----------------------------------------------------
Claims
Masterpiece Direct
Maplecrest Total
-------------- -------------
--------------- ------------------
<S> <C> <C> <C> <C>
Sales $ 139,537 $ -
$ 124,365 $ 263,902
Cost of Sales 61,148 -
198,846 259,994
-------------- -------------
--------------- ------------------
Gross Profit 78,389 -
(74,481) 3,908
Other Revenue 775,000 -
237,128 1,012,128
-------------- -------------
--------------- ------------------
Operating Profit Before Administrative
Expense 853,389 -
162,647 1,016,036
-------------- -------------
--------------- ------------------
Administrative Expenses
Payroll, Fees, Taxes and Related Benefits 592,319 -
399,734 992,053
Rent 87,728
- 215,681 303,409
Interest Expense 112,105 -
40,431 152,536
Professional Fees 433,861 -
21,335 455,196
Depreciation 28,463 -
43,612 72,075
Amortization 17,477 -
96,075 113,552
Utilities and Telephone 57,973 -
57,323 115,296
Travel and Entertainment 57,785 -
5,688 63,473
Other 69,005 -
152,350 221,355
-------------- -------------
--------------- ------------------
Total Administrative Expenses 1,456,716 -
1,032,229 2,488,945
-------------- -------------
--------------- ------------------
(Loss) Income from Operations (603,327) -
(869,582) (1,472,909)
Other Income and (Expenses) 268,369 -
13,930 282,299
-------------- -------------
--------------- ------------------
Net Loss $ (334,958) $ -
$(855,652) $(1,190,610)
===============
============= =============== ==================
See auditors' report on supplemental information and accompanying notes.
<PAGE> 15
The following documents are filed as part of this
Form 10-K Annual Report:
3)(i) Articles of Incorporation Incorporated by Reference
(ii) Bylaws Incorporated by Reference
5) Opinion re: legality Included
15) Letter re change in certifying accountant Incorporated by Reference
23) Consents of Experts and Counsel Included
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
Date: July 11, 2000
</TABLE>
