UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under section 12(b) or (g) of the Securities Exchange Act of 1934
Commission File Number: 0-28581
TRIAD INDUSTRIES, INC. formerly known as Healthcare Resource Management, Inc.
(Name of small business issuer in its charter)
NEVADA 88-0422528
(States of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
16395 W. Bernardo Dr., Suite 232 San Diego, CA 92127 92127
(Address of principal executive offices) (Zip Code)
Issuers telephone number (858) 618-1710
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
To be so registered each class is to be registered
N/A N/A
Securities registered under Section 12 (g) of the Exchange Act:
Common stock, par value $.001 per share
(Title of class)
(Title of class)
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At December 31, 1998, the aggregate market value of the voting stock held by
non-affiliates was $880,000.00. At December 31, 1999, the aggregate market value
of the voting stock held by non-affiliates was $ 2,878,636 ( based on a price of
$1.10 per share) as of February 24, 2000.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Issuer had 5,256,716 shares of common stock outstanding as of December 31, 1998.
The issuer had 5,593,822 shares of common stock outstanding as of March 31,
1999, June 30, 1999 and September 30, 1999. The issuer had 6,403,418 shares of
common stock outstanding as of December 31, 1999.
DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if
incorporated by reference and the part of the form 10-SB (e.g., part I, part II,
etc.) into which the document is incorporated: (1) Any annual report to security
holders; (2) any proxy or other information statement; and (3) Any prospectus
filed pursuant to rule 424 (b) or (c) under the Securities Act of 1933: None
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TRIAD INDUSTRIES, INC.
FORM 10 SB/A
TABLE OF CONTENTS
PART I
PAGE
ITEM 1. Description of Business . . . . . . . . . . . . . . ........... 4
ITEM 2. Managements Discussion and Analysis or Plan of Operation . . . 7
ITEM 3. Description of Property . . . . . . . . . . . . . . . . . . . . 13
ITEM 4. Security Ownership of Certain Beneficial Owners and Management .14-15
ITEM 5. Directors, Executive Officers, Promoters and Control Persons . .15-16
ITEM 6. Executive Compensation . . . . . . . . . . . . . . . . . . . . .17
ITEM 7. Certain Relationships and Related Transactions . . . . . . . . .18
ITEM 8. Description of Securities. . . . . . . . . . . . . . . . . . . .19
PART II
ITEM 1. Market Price of and Dividends on Registrants Common Equity and
Other Shareholder Matters . . . . . . . . . . . . . . . . . . . . . . . 19
ITEM 2. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . .20
ITEM 3. Changes in and Disagreements with Accountants . . . . . . . . . .21
ITEM 4. Recent Sales of Unregistered Securities . . . . . . . . . . . . .21
ITEM 5. Indemnification of Directors and Officers . . . . . . . . . . . .21
PART F / S
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 22-102
PART III
ITEM 1. Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . 103
ITEM 2. Description of Exhibits . . . . . . . . . . . . . . . . . . . . 103
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
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TRIAD INDUSTRIES, INC.
FORM 10 SB/A
PART I
ITEM 1. Description of Business
Triad Industries, Inc., (the Company) was incorporated under the laws of the
State of Nevada, on October 3, 1997. The Company was originally known as
Telescript Industries, Inc., a New York company incorporated in 1957. Telescript
Industries, Inc., was founded for the purpose of marketing, television, and
broadcasting equipment and services. Telescript Industries, Inc., became a
public company as a result of a Regulation A underwriting in April 1961. The
Company closed operations in late 1964. The Company was then reactivated on May
31, 1984. The Company then did a one for ten share reversal that became
effective October 15, 1987. On October 15, 1997 the Company completed a change
of state domicile merger to the State of Nevada. As of the change of state
domicile merger the Companys name became International Telescript Industries,
Inc. The Company then acquired all the outstanding shares of Interstate Care
Systems, Inc., for 3,734,500 shares of its common stock. In conjunction with
that transaction, the Company, changed its name to Healthcare Resource
Management, Inc. Healthcare Resource Management, Inc., was in the business of
managing medical providers, facilities, and practices. Healthcare Resource
Management, Inc., revenues were derived from consulting income. As a management
company, Healthcare Resource Management, Inc., was not subject to any licensing
restriction. On March 15, 1998, the Company completed a one for nine reverse
split. As of December 31, 1998 there were 5,256,716 shares of common stock
outstanding.
On March 15, 1999 at a Special Meeting of Shareholders, the Company (1) reversed
its outstanding common stock from 5,256,716 on a one for ten basis to 526,672
shares outstanding and (2) approved an Agreement and Plan of Reorganization
whereby the Company acquired 100% of the capital stock of RB Capital and
Equities, Inc., a Nevada Corporation, and its subsidiary Gam Properties, Inc.,
in exchange for 5,068,150 shares of common stock. As a result of the reverse
merger acquisition, RB Capital and Equities, Inc., is the predecessor of Triad
Industries, Inc. The Company also agreed to issue 700,000 shares of $1.00
preferred stock for a 99% interest in Miramar Road Associates, LLC., and (3)
approved an Amendment to the Articles of Incorporation changing the corporate
name to Triad Industries, Inc. Triad Industries, Inc., is a holding Company with
no operations. As of December 31, 1999 there were 6,403,418 shares of common
stock and 850,000 shares of preferred stock outstanding.
The Company owns five subsidiaries:
1- RB Capital and Equities, Inc., a Nevada corporation, is a financial service
corporation that operates a merger and acquisition consulting business. The
company does corporate filings and capital reorganization business for
small emerging private and public client corporations. 100% owned.
2- Miramar Road Associates, LLC., a California Limited Liability Company, owns
and operates a 51,000 square foot commercial building located at 6920
Miramar Rd., Suite 102 San Diego, CA 92121. 100% owned.
3- Gam Properties, Inc., a California corporation, owns and rents apartments:
Seven units located at 4592 Bancroft, San Diego, CA 92117. Four units
located at 2016-18 and 2015-17 Hornblend and Balboa, San Diego, CA 92109.
Three units located at 3635 3rd Ave, San Diego, CA 92103.
4- HRM, Inc., a newly formed Nevada corporation, was capitalized with the
Healthcare Resource Management assets after the Triad transaction. The
company is presently inactive in the healthcare industry. 100% owned.
5- Triad Reality, a newly formed California corporation, is not yet operating
as a consolidating real estate company. 100% owned.
Services
RB Capital & Equities, Inc. 100% owned The services that are provided by the
Company are for client companies. The Company prepares forms such as S-1, S-4,
and S-18 Registration Statements, 15c2-11, Private Placement Regulation D 504,
505, 506, and other reports such as 12q, 10SB, 10K, 10KSB, 12G, 8K, Standard and
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Poors filings, Blue Sky listings, Annual Reports, NASDAQ filings, and National
Quotation Bureau listing forms. In addition RB Capital and Equities, Inc.,
prepares Plans of Reorganizations re 368(a)(1)(a)(b) and (c) and change of
domicile forms. The Company also prepares and files Articles of Incorporation,
Officer and Director filings, federal and state annual reports, business plans,
and does general accounting. The Company arranges auditing and legal services
for clients, these services are preformed by outside firms. Shareholders
communications, including assistance with shareholder letters, corporate profile
newsletter and press releases. The main function is consulting in business
merger and acquisitions.
Miramar Road Associates,LLC. 100% owned as of September 20, 1999 Miramar Road
Associates, LLC., owns, and operates a 51,000 square foot commercial center
located at 6920 Miramar Rd., San Diego, CA 92121. The building is over 100%
occupied. This includes leasing the roof space for local cellular communications
companies. There are 47 tenants who occupy the building. There are 5 material
leases that occupy 23,515 square feet or 46% of the building and contribute 47%
of the rental income per month. Rental revenues for the last ten months of the
fiscal year for the commercial center were $383,251.
Gam Properties, Inc. 100% owned. Owns and rents on a month to month basis four
apartment properties of 15 units, all located in San Diego, Ca.
4592 Bancroft
2016-18 Balboa
2015-17 Hornblend
3635 3rd Ave.
2135-39 Grand Ave.
Gam Properties, Inc., is currently experiencing a 100% occupancy rates. There
are 15 tenants who occupy the properties. Gam does not have any material leases.
Rental revenues, for the last ten months of fiscal year 1999, for the properties
were $ 112,205.
HRM, Inc. The Company is currently analyzing the healthcare industry. The
Company is looking to find a new cutting edge healthcare industry to enter, or
to acquire existing healthcare management facilities. As of yet, the Company has
not decided on a specific trade or acquisition in the healthcare industry.
Triad Realty, Inc. The Company is not yet operating as a consolidated real
estate company. The Company will make Gam Properties, Inc., and Miramar Road
Associates, LLC., subsidiary operations to consolidate the Companys real estate
holdings. Also, all new real estate holdings will be acquired as a subsidiary of
Triad Realty.
Marketing
RB Capital and Equities, Inc., has no formal marketing program. All clients are
referred by accountants, lawyers, broker/dealers and from existing clients.
Miramar Road Associates, LLC. and Gam Properties, Inc. rent their properties via
classified advertising or Realtor referrals. The rental income will increase on
the existing properties based on demand.
Competition
Triad Industries, Inc., has no competition. This is due to the fact that Triad
Industries, Inc., is a holding company.
RB Capital & Equities, Inc., has large scale competition in the financial
services industry. Some of the same functions of the Company are provided by
accounting firms, legal firms, brokerage firms, and individual consultants.
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However, the management of the Company feels that they have a competitive
advantage over these companies, which is due to the fact that the Company offers
all the services their competition does (expect legal and auditing) under one
roof. Most of the competition is fragmented and only provides one aspect of
these services.
Miramar Road Associates. LLC., is not experiencing heavy competition due to the
low commercial vacancy rate in San Diego. The commercial vacancy rate in San
Diego is less than 5%. The building is actually over 100% occupied. The building
is over occupied because tenants are renting roof space for communication
devices.
Gam Properties, Inc., is not experiencing heavy competition in the residential
realty rental business. This can be attributed to approximately a 2% residential
rental vacancy is the San Diego region.
Healthcare Resource Management, Inc., and Triad Realty Corporation., face no
competition. This can be attributed to the companies being inactive.
Employees
Presently the Company has eight full time employees and one part time employee.
Management will hire additional employees only on an as needed basis and as
funds are available. In such cases compensation to management and employees will
be considered in light of prevailing wages for services to be rendered.
RB Capital and Equities, Inc., has five full time employees, Miramar Road
Associates, LLC., has two full time employees, Gam Properties, Inc., has one
full time employee, and Healthcare Resource Management, Inc., has one part time
employee. Triad Realty Corporation will be a real estate consolidation company
so the company will not have employees, except those working in the consolidated
subsidiaries when the company becomes active. The employees all work for the
subsidiaries. Only four employees from RB Capital and Equities, Inc., do work
for Triad Industries, Inc. These four employees spend approximately 30% of their
time working for Triad.
Facilities
The Company has a resident agent for services in Nevada located at 1905 South
Eastern Avenue, Las Vegas, NV 84144. The corporate headquarters and RB Capital
and Equities, Inc., lease a 2500 square foot office space at 16935 West Bernardo
Drive, Suite 232, San Diego, CA 92127. Miramar Road Associates and Gam
Properties, Inc., occupy 470 square feet at the Company owned building at 6920
Miramar Road, Suite 102, San Diego, CA 92121 as a management and rental office.
Legal
The Company is not a part of any material pending legal proceedings and no such
action by, or to the best of its knowledge, against the Company has been
threatened. Gam Properties, Inc., was a named party in a lawsuit regarding the
sale of a property by others and in managements opinion the lawsuit does not
directly effect Gam Properties, Inc. The lawsuit is being defended by former
owners of Gam Properties. This case was dismissed in March 2000.
The proceeding is pending in the Superior Court of California, County of
San Diego, Central Court. The proceedings began October 15, 1999. The
principal parties in the case are Manuel and Mary Zambrana (the plaintiffs)
and Amresco Management, John Franco, Michael H. de Domenico, Greenland
Corporation, and Gam Properties, Inc.
Gam Properties, Inc., was named in a court proceeding together with other
parties on April 2, 1999 in the Judicial District of San Diego, California.
The principal parties to the litigation were as follows:
Plaintiffs:
Manuel Zambrana and Mary Zambrana
Defendants:
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Amresco Management, Inc., ATF for RTC Mortgage Trust 1994 N2 and State Street
Bank and Trust Company, Chicago Title
Company, John Franco, Global Funding Corporation, Global Home Lending, Inc.,
Michael H. DeDomenico, Kathleen DeDemenico, Gam Properties, Inc., and
Greenland Corporation.
The plaintiffs purchased property from Gam Properties, Inc., at 4027 31
Hamilton Street, San Diego, CA., for a purchase price of $260,799.52. This
purchase took place prior to Gam Properties, Inc., being acquired by the
issuer. The plaintiffs alleged that some of the defendants named, other
than Gam Properties, Inc., induced the plaintiffs to purchase securities in
a public company other than the issuer as well as accepting large amounts
of cash from the plaintiffs. The relief sought by the plaintiffs was
approximately $210,000.00.
Subsequent to lengthy interrogations by some of the defendants, which
included Gam Properties, Inc., the case was dismissed with prejudice for
lack of merit.
Licenses
Healthcare Resource Management, Inc., is currently inactive in the
healthcare industry, therefore; no licensing is currently necessary.
Miramar Road Associates, LLC., and Gam Properties, Inc., have California
Department of real estate broker and sales licenses numbers 00373421 and
00869929 respectively.
ITEM 2. Managements Discussion and Analysis or Plan of Operation
Overview
The Company became incorporated in Nevada in October 1997. The Company
began operations as a health care company. Healthcare Resource Management,
Inc., was in the business of managing medical providers, facilities and
practices. Healthcare Resource Management, Inc., revenues were derived from
consulting income. As a management company, Healthcare Resource Management,
Inc., was not subject to any licensing restrictions. The Company had
minimal revenue in 1997 and 1998. In 1999, since the acquisition heretofore
represented the operating subsidiaries achieved operating revenues as
follows:
December 31, December 31, December 31,
1999 1998 1997
Healthcare Resource Management .. $ 0 $ 74,174 $ 26,325
RB Capital & Equities ............ 658,604 917,307 209,316
Miramar Road Associates .......... 824,260 -- --
Gam Properties .................... 113,415 -- --
Sale of Realty .................... 1,369,500 -- --
For the year ended December 31, 1997 Healthcare Resource Management,
Inc., had revenues of $26,325 which were derived from the needed management
business. Healthcare Resource Management, Inc., had total operating
expenses of $93,244. Therefore, Healthcare Resource Management, Inc., had a
net loss of $55,189 which included $11,730 of a income tax benefit.
In December of 1997, Healthcare Resource Management, Inc., wrote off
$86,637.00 worth of assets. These assets were comprised of obsolete
manuals, contracts, unverifiable equipment, and uncollected receivables.
These assets were written off either due to obsolescence or non-substantial
supporting documents to verify asset value. The write off had no effect on
operations and liquidity, just a charge to earnings.
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As of December 31, 1997 Healthcare Resource Management, Inc., had
total current assets of $23,695 with total assets of $23,695, no
liabilities, and stockholders equity of $23,695.
For the year ended December 31, 1997 RB Capital and Equities, Inc.,
(the predecessor due to reverse merger) had total operating income derived
from consulting and security sales of $209,316.00 with total operating
costs of $195,220. Income from operations was $14,096. RB Capital and
Equities, Inc., had total other income of $160,175.00, therefore, the net
income for 1997 was $133,269.
As of December 31, 1997 RB Capital and Equities, Inc., had current
assets of $674,060, with total assets of $909,058, subject to current
liabilities of $178,352 and total shareholders equity of $730,702.
As of December 31, 1998 Healthcare Resource Management, Inc., had
revenues of $74,174 with total operating expenses of $72,146. The Company
had an income tax expense of $304 leaving a net income of $1,724.
Healthcare Resource Management, Inc., was not active in management as of
the last half of 1998.
As of December 31, 1998 Healthcare Resource Management, Inc., had
total current assets of $27,619 with total assets of $27,619, no
liabilities and total stockholders equity of $27.619.
As of December 31, 1998 RB Capital and Equities, Inc., had operating
revenues of $917,307 and total operating costs $701,295 leaving income from
operations of $216,012. RB Capital and Equities, Inc., had total other
income of $333,068 leaving a net loss of $82,304 when netted with income
tax benefit.
As of December 31, 1998 RB Capital and Equities, Inc., had total
current assets of $667,923, total assets of $1,062,633 with total current
liabilities of $92,681, total liabilities of $92,681 and total stockholders
equity of $969,772.
As of December 31, 1999 Triad Industries, Inc., (the Company) had
total operating revenues of $789,984 with total operating expenses of
$1,299,996. The Company had total other expenses of $213,125. Therefore,
the Company had a net loss of $529,737 when the net loss is netted with the
income tax benefit.
As of December 31, 1999 the Company had total current assets of
$2,504,671, total assets of $6,428,133, with total current assets of
$2,504,671, total assets of $6428,133 with total current liabilities of
$3,975,792, total liabilities of $3,975,792 and total stockholders equity
of $2,452,341.
Healthcare Resource Management, Inc., the predecessor of Triad
Industries, Inc., was dormant in the last half of 1998. In March of 1999
the Company completed its acquisition of RB Capital & Equities, Inc., Gam
Properties, Inc., and Miramar Road Associates. The companies acquired,
operating as subsidiaries, are engaged in Financial Consulting and Services
business and Real Estate businesses, as owners and landlords on properties
located in San Diego, California.
On April 6, 1999, HRM, Inc., was incorporated in Nevada, and was
capitalized by the assets of predecessor corporation, and will be operated
in the Healthcare industry in the future, as a wholly owned subsidiary. On
July 29, 1999, Triad Realty Corporation was incorporated in the State of
California, and will be used to consolidate the assets and operations of
Gam Properties and Miramar Road Associates.
Triad Industries, Inc., is a holding company with no operations of its
own. There are no arrangements by which Triad Industries, Inc., receives
distributions from its subsidiaries. Monetary distributions from
subsidiaries are on an as needed basis. This is because all subsidiaries
are responsible for their own operating expenses.
Triad Industries, Inc., is involved in a management contract with RB
Capital and Equities, Inc., a subsidiary. The agreement calls for a
$7,500.00 a month payment to RB Capital and Equities, Inc., for management
services. Included in this management service fee are investor relations,
office space, secretarial work, telephone, meeting room and accounting.
The Companys current capital was provided by existing revenues and
the sale of real property. The Company sold two residential properties for
a total of $1,369,500. The properties had a total cost of $ 1,576,215;
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therefore, there was a net loss on the property sales of $ 206,715. These
sales provided $235,091 of working capital for the Company. Management
believes that the Companys cash requirement can be met from existing cash
flow for the next ninety days. The Companys short term cash requirement is
approximately $200,000. The existing sources of cash flows for the next 90
days is approximately $120,000 of rental revenue from Miramar Road
Associates, LLC., $30,000 in rental revenue from Gam Properties, Inc., and
$70,000 from consulting services and security sales from RB Capital and
Equities, Inc. There have been no agreements to purchase additional
properties. However, if additional revenues for existing properties are not
adequate to satisfy its capital needs, the Company will have to explore
other alternatives for funding. Management anticipates that further capital
of $500,000 will be necessary to expand its real estate holdings. The
Company has not yet decided on how it will fund further purchases. The
Company will most likely use a mixture of cash on hand and additional debt
or equity sales.
In the event, outside funding is necessary; the Company will
investigate the possibility of interim financing, either debt or equity, to
provide capital. Although, management has not made any arrangements or
definitive agreements, the Company would consider private funding or the
private placements of its securities and/or public offering. If the Company
experiences a substantial delay in marketing revenues and its unable to
secure public financing from the sale of its securities or from private
lenders, the continuation of the Company as a going concern would be
seriously jeopardized.
The Company is proceeding with the procurement of long term financing
on the Miramar property that would reduce mortgage payments presently on
the property. The Company is also looking into a possible filing of a
Regulation D Rule 505 private placement offering in the next fiscal year in
the amount of $2,500,000. There is of course, no guarantee that 100% of the
offering will be sold within the 180-day term of the offering. The
Regulation D Rule 505 private placement offering would be conducted by the
parent holding company.
The company also has a $50,000 unused bank line of credit. The $50,000
credit line is an adjustable rate loan. The loan is an open revolving line
of credit, with annual terms of prime plus 3.65%.
Net Operating Loss
The Company has accumulated approximately $87,067 of net operating
loss carryforwards as of December 31, 1998. As of December 31, 1999 the net
operating loss carryforwards was $616,084, which may be offset against
taxable income and income taxes in future years. The use of these losses to
reduce income taxes will depend on the generation of sufficient taxable
income prior to the expiration of the net operating loss carryforwards. The
carryforwards expire in the year 2014. In the event of certain changes in
control of the Company, there will be an annual limitation on the amount of
net operating loss carryforwards, which can be used. No tax benefit has
been reported in the financial statements for the year ended December 31,
1998. For the year ended December 31, 1999 a tax benefit has been reported
in the financial statements for $193,400.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standard (SFAS) No. 128, Earnings Per Share and
Statement of Financial Accounting Standards No. 129 Disclosures of
Information about an Entitys Capital Structure. SFAS No. 128 provides a
different method of calculating earnings per share than is currently used
in accordance with Accounting Principles Board Opinion No. 15, Earnings
Per Share. SFAS No. 128 provides for the calculation of Basic and
Dilutive earnings per share. Basic earnings per share includes no
dilution and is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflect the potential dilution
of securities that could share in the earnings of an entity, similar to
fully diluted earnings per share. SFAS no. 129 establishes standards for
disclosing information about an entitys capital structure. SFAS no. 128
and SFAS no. 129 are effective for financial statements issued for periods
ending after December 15, 1997. Their implementation is not expected to
have a material effect on the
financial statements.
The Financial Accounting Standards Board has also issued SFAS No. 130,
Reporting Comprehensive Income and SFAS no. 131, Disclosures about
Segments of an Enterprise and Related Information. SFAS No. 130
establishes standards for reporting and display of comprehensive income,
its components and accumulated balances. Owners and distributors to owner
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define comprehensive income to include all changes in equity except those
resulting from investments. Among other disclosures, SFAS no. 130 requires
that all items that are required to be recognized under current accounting
standards as components of comprehensive income be reported in a financial
statement that displays with the same prominence as other financial
statements. SFAS no. 131 supersedes SFAS no. 14 Financial Reporting for
Segments of a Business Enterprise. SFAS no. 131 establishes standards on
the way that public companies report financial information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial statements issued
to the public. It also establishes standards for disclosure regarding
products and services, geographic areas and major customer. SFAS no. 131
defines operating segments as components of a company about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in
assessing performance.
SFAS 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Results of operations and financial position,
however, will be unaffected by implementation of the standard.
Inflation
In the opinion of management, current inflation rates will not have a
material effect on the operations of the Company. Rental agreements include
cost of living increases on an annual basis.
Risk Factors and Cautionary Statements
This Registration Statement contains certain forward-looking
statements. The Company wishes to advise readers that actual results may
differ substantially from such forward-looking statements. Forward-looking
statements involve risks and uncertainties that could cause actual results
to differ materially from those expressed in or implied by the statements,
including, but not limited to, the following: the ability of the Company to
meet its cash and working capital needs, the ability of the Company to
successfully market its product, and other risks detailed in the Companys
periodic report filings with the Securities and Exchange Commission.
Quarterly Trends
The Company expects revenues to grow moderately through the next four
quarters of 2000. The moderate growth of revenues will be largely
attributed to increasing rental rates in San Diego. Therefore, Gam
Properties, Inc., and Miramar Road Associates, LLC., should experience
increasing rental revenues. Also OTC-BB companies must now be full
reporting. This will increase the service and consulting revenues of RB
Capital and Equities, Inc. Long term financing is also being sought for
Miramar Road Associates, LLC., which would reduce interest expense by
approximately $5,000 a month.
Liquidity and Capital Resources
Since inception through December 31, 1998, Healthcare Resource
Management, Inc., funded its historical business operations by equity
transactions and revenues generated from the healthcare business. As of
December 31, 1998, the Company had current assets of $47,619, total assets
of $47,619 and liabilities of $0 with a net equity of $47,619 and shares
outstanding of 5,256,716.
Since inception on October 17, 1997 through December 31, 1998 RB
Capital &Equities, Inc., (the predecessor due to reverse merger) funded its
historical business operations by equity transaction, revenues generated by
historical services, and merger acquisition consulting income. As of
December 31, 1998 RB Capital & Equities, Inc., had current assets of
$667,923, total assets of $1,062,633 with total current liabilities of
$92,681, total liabilities of $92,681 and total stockholders equity of
$969,772.
Since March 15, 1999 through December 31, 1999 the consolidated
operations have been funded by equity transactions, business service
income, rental income, and mortgage financing. As of December 31, 1999 the
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Company has current assets of $2,567,171, total assets of $6,490,633, with
liabilities of $3,975,792, net equity of $2,514,841, with 6,403,418 shares
of common stock and 850,000 shares of preferred stock outstanding.
The Companys current capital was provided by existing revenues,
liquidity of current assets, sale of real property, and equity
transactions. The Company sold two residential properties for a total sale
of $1,365,500. These sales provided $235,091of working capital for the
Company. Management believes that the Companys cash requirement can be met
from existing cash flow for the next ninety days. The Companys short term
cash requirement is approximately $200,000. The existing sources of cash
flow for the next 90 days is approximately $144,000 of rental revenue from
Miramar Road Associates, LLC., $30,000 in rental revenue for Gam
Properties, Inc., and $100,000 from consulting services and security sales
from RB Capital and Equities, Inc. There have been no agreements to
purchase additional properties. However, if additional revenues for
existing properties are not adequate to satisfy its capital needs, the
Company will have to explore other alternatives for funding. Management
anticipates that further capital of $500,000 will be necessary to expand
its real estate holdings. The Company has not yet decided on how it will
fund further purchases. The Company will most likely use a mixture of cash
on hand, additional debt, and equity offerings.
There are different long term financial needs for the subsidiaries of
Triad Industries, Inc. The financial needs for each is as follows:
RB Capital & Equities, Inc., is seeking approximately $500,000 whether
through Triad Industries, Inc., possible 505 D offering or through private
financing. This would enable RB Capital & Equities, Inc., to become more
active in either aggressively pursuing merger and acquisitions for the
parent company or pursuing start-ups that need venture capital.
Miramar Road Associates, LLC., is seeking long term financing for the
property located at 6920, 6910, 6914 San Diego, California 92212, (the
property). The financing being sought is a long term loan in the amount of
$2,785,000 together with the cost of the new loan, approximately $132,000.
The terms of the new financing being sought is as follows: An interest rate
of 9 to 91/2% amortized over a 25 or 30 year period. A financing package is
submitted for approval with a lending institution. The lending institution
is completing the required paperwork and documentation necessary for final
approval and funding. Closing is expected to occur in late July. The
funding is debt financing. This new loan would reduce Miramar Road
Associates, LLC., monthly interest payment by about $5,000.00 a month. Also
a new long term loan would alienate expensive yearly loan fees. The new
loan fees would be amortized over a longer period.
Gam Properties, Inc., only current long term would be if the parent
company did a 505 D offering. Gam Properties, Inc., would use about
$500,000.00 to pay down mortgage debt. Other then this case, Gam
Properties, Inc., is currently stable with its historical cash flow.
Healthcare Resource Management, Inc., and Triad realty, Inc., are both
currently inactive. Therefore, there has not been any analysis to consider
long tern cash flow needs for either subsidiary.
Triad Industries, Inc., has $2,504,671 in current assets and $43,236
in cash. The Company believes the $454,782 its holds in marketable
securities, and the $1,345,350 in assets held for sale to be very liquid.
The marketable securities can be converted to cash in under three days and
the assets held for sale would take about a month. However, there is a
tremendous housing boom in Southern California. The Company holds $463,041
in accounts receivable. This is also highly liquid, however; this liquidity
depends on the party the amount is due from. The tax impound account and
income tax benefit are not liquid. The tax benefit is an amount that most
likely will be recognized in the next year. The impound accounts includes
property taxes paid on behalf of the assets held for sale.
Year 2000 Compliance
The Company is reviewing its computer systems and operations, as well
as the components for its systems, to determine the extent to which the
business will be vulnerable to potential errors and failures as a result if
the Year 2000 problem. The year 2000 problem results from the use of
computer programs which were written using only two digits (rather than
four digits) to define applicable years. On January 1, 2000, any clock or
date recording mechanism, including date sensitive software which uses only
two digits to represent the year, could recognize a date using 00 as the
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year 1900, rather than the year 2000. This could result in system
failures or miscalculations, causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send
invoices, provide services or engage in similar activities. These failures,
miscalculations and disruptions could have a material adverse effect on our
business, operations, and financial conditions. The Companys software and
hardware components in its systems are Y2K compliant, and the Company is
taking steps to make sure its developed systems are Y2K compliant and the
system components are Y2K compliant.
The Company has made inquiries to its outside suppliers to ascertain
if such suppliers are Y2K compliant. At this time, management is satisfied
that such suppliers have made or are making appropriate examinations and
necessary upgrades to insure Y2K readiness. However, the Company does not
depend exclusively on one supplier, and, therefore, does not anticipate any
significant interruption in materials and supplies in the event that any
particular supplier experiences Y2K problems. Although the Company does not
anticipate any material adverse effects, it cannot guarantee that no
disruption in products or services will occur if multiple suppliers
experience Y2K problems.
The Company has not experienced and does not anticipate any
extraordinary expenses related to Y2K. The Company will continue to monitor
its internal systems and keep in close touch with its outside suppliers to
insure that its operations are not materially affected by Y2K.
Currently, the Company does not have contingency plans in place to
deal with unanticipated Y2K disruptions if they occur. Such unanticipated
disruptions could have an adverse effect on the Companys operation.
Results of Operation
A summary of our balance sheet for the years ended December 31, 1997,
1998, and 1999 are as follows:
Years Ending December 31,
1997 1998 1999
Cash/Cash Equivalents $ 496 $ 1,187 $ 43,236
Other Current Assets 23,199 26,432 2,461,435
Other Assets -- -- 3,923,462
Total Assets 23,695 27,619 6,428,133
Current Liabilities -- -- 3,975,792
Other Liabilities -- -- --
Total Liabilities -- -- 3,975,792
Total Shareholders Equity 23,695 27,619 2,452,341
Total Liabilities and
Shareholders Equity 23,695 27,619 6,428,133
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Summary of Revenue Statement
The following summarizes the results of the Companys operations for the three
years ended December 31, 1997, 1998, and 1999.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended
December 31
1997 1998 1999
Revenue $ 26,325 $ 74,147 $ 903,795
Cost of Goods Sold -- -- 113,811
Operating Income 26,325 74,174 789,984
Operating Expenses 93,244 72,146 1,299,996
Other Income & (Expenses) (11,730) 304 (213,125)
Provision For Income
Tax (Benefit) -- -- (193,400)
Net Income (Loss) (55,189) 1,724 (529,737)
Loss or gain per share
Basic (0.01) 0.00 (0.12)
Diluted 0.00 0.00 (0.09)
Plan of Operation
Assuming present occupancy the real estate operation generates $58,000
per month or $696,000 as an annualized basis, the financial service
business generates $700,000 per year and in 1999 the Company had real
estate sales of $1,369,500. The properties had a cost of $ 1,576,215;
therefore, there was a net loss on the property sale of $ 206,715. As of
December 31, 1999 the Company had an accumulated earning deficit of $
616,804. The Company expects losses arising from interest expense,
depreciation, and amortization to decrease as properties are traded or
sold.
The Company is looking into the possibility of a sale of securities
pursuant to Regulation D Rule 505 for $2,500,000. The use of these funds
will be to reduce mortgage debt, additional properties, and provide working
capital.
The Company has secured at $50,000 bank line of credit to be used in
the future.
ITEM 3. Description of Property
Triad Industries, Inc., and its subsidiary RB Capital and Equities,
Inc., occupy a leased 2500 square foot office located at 16935 West
Bernardo Drive, Suite 232, San Diego, CA 92127 and Miramar Road Associates
and Gam Properties, Inc., occupy an office of 470 square feet at 6920
Miramar Road, Suite 105, San Diego, CA 92121 as a property management and
rental office.
The Company owns and operates a 51,000 square foot commercial complex
of four buildings on a 2.5 acres of land on a major thoroughfare at 6920
Miramar Road, in San Diego, CA. The building is 100% occupied and leased to
forty-seven (47) tenants and generates approximately $48,000 per month in
gross income.
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The Company also owns 4 apartment buildings located at 4592 Bancroft
Avenue, 2016-18 Balboa, 2015-17 Hornblend , 3635 3rd Avenue, and 2135-39
Grand Avenue, all in the city of San Diego, CA that generate $10,000 per
month in gross revenues.
It is the intent of the Company to expand its real property portfolio
by using equity securities.
The total of the 15 apartments are rented to 15 people are rented on a
month to month basis and are fully occupied. The mortgages on all of the
properties are fully amortized.
Interest Square Annual
Rental
Location Descriptioon Rate Cost Debt Footage Income
2135-39 Grand Ave. Tri-plex 7.667% $ 355,350$ 233,955 2,050 $30,900
per year
Taxes $3,602 (or $10,300 per unit)
4952 Bancroft 7 Units 7.500% 390,000 264,099 3,950 $48,420
per year
Taxes $2,138 (or $6,917 per unit)
3635 3rd Ave. Condo 10.250% 180,000 113,004 900 $12,600
per year
Taxes $1,514 (or 1,050 per unit)
2016-18 Balboa 4 Units 7.817% 420,000 307,908 1,800 $35,700
2015-17 Hornblend per year
(or 8,925 per unit)
Taxes $320
Commercial Property
The company owns a fifty one thousand square foot commercial building
located at 6920 6910 A & B and 6914 Miramar Rd, San Diego, California.
There are forty seven tenants leased on a standard commercial basis. There
are 47 tenants who occupy the building. There are 5 material leases that
occupy 23,515 square feet or 46% of the building and contribute to 47% of
the rental income per month.
Tenant Square Footage
Del Mar Imaging 3,219
Robins Research 8,095
Training Directions 7,327
American Dream Invitations 1,946
Quki Lube 3,224
Projected Annual Income $576,000
Projected Service Fees 360,780
Taxes 16,788
ITEM 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, to the best of the
Companys knowledge, as of December 31, 1999, with respect to each director
and officer and management as a group and any holder owning more than 5% of
the outstanding common stock.
Name and Position Title of
Address Class
-----------------------------------------------------------------------------
Gary DeGano President/Director Common
819 Nantasket Court
San Diego, CA 92109
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Linda M. Bryson Vice President Common
9980 Scripps Vista Way #96 Director
San Diego, CA 92131
Michael Kelleher Secretary Common
5209 Hewlett Drive Treasurer
San Diego, CA 92115 Director
James B. Crowell Director Common
PO Box 15711
Long Beach, CA 90815
Terry Worthylake Director Common
4440 North Rancho Drive
Suite 170
Las Vegas, NV
Dave Czoske Director Common
6920 Miramar Road
Suite 102
San Diego, CA 92121
Management as a Group
American Health Systems, Inc.
46 Corporate Park
Suite 100
Irvine, CA 92606
Amount of
Shares Percentage
Gary DeGano 190,000 3%
819 Nantasket Court
San Diego, CA 92109
Linda M. Bryson 240,000 4%
9980 Scripps Vista Way #96
San Diego, CA 92131
Michael Kelleher 150,000 3%
5209 Hewlett Drive
San Diego, CA 92115
James B. Crowell 165,723 3%
PO Box 15711
Long Beach, CA 90815
Terry Worthylake 199,362 3%
4440 North Rancho Drive
Suite 170
Las Vegas, NV
Dave Czoske 50,000 1%
6920 Miramar Road
Suite 102
San Diego, CA 92121
Management as a Groupp 995,085 16%
American Health Systems, Inc. 1,120,000 17.5%
46 Corporate Park
Suite 100
Irvine, CA 92606
The above figures are based on 6,403,418 shares of common stock issued and
outstanding as of December 31, 1999.
ITEM 5. Directors, Executive Officers, Promoters and Control Persons
Executive Officers and Directors
The executive officers and directors of the Company are as follows:
Name and Address Age Position
Gary DeGano 59 President/Director
16935 West Bernardo Drive President Triad Realty
Suite 232
San Diego, CA 92127
Linda M. Bryson 41 Vice President/Director
16935 West Bernardo Drive President RB Capital &
Suite 232 Equities
San Diego, CA 92127
Michael Kelleher 25 Secretary/Director
16935 West Bernardo Drive Controller
Suite 232
San Diego, CA 92127
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Dave Czoske 56 Director
6920 Miramar Road President, GAM Properties,
Suite 100 Inc.
San Diego, CA 92121
James B. Crowell 60 Director
PO Box 15711 President, HRM, Inc.
Long Beach, CA 90815
Terry Worthylake 64 Director
4440 North Rancho Drive
Las Vegas
The directors are elected to serve for one year, or until the next
annual meeting, or until their successors are duly qualified. The officers
are appointed by the directors of the Company.
Gary DeGano, President
Mr. DeGano is President of Miramar Road Associates. He has served for over
twenty-six years in the mortgage banking, escrow and real estate finance
industries. Co-founded a full service mortgage banking firm that provides
sources of real estate loan funding to builders, mortgage brokers, and the
general real estate sales community, directly responsible for developing
programs, processing and quality control systems, loans servicing and
foreclosures. President and Chief Executive Officer of Sun Harbor Financial
Resources, a publicly held holding company that directed mortgage lending
and escrow operations. Mr. DeGano currently serves as a director of
American Electric Automobile, Inc. American Electric Automobile, Inc., is
not affiliated with Triad Industries, Inc.
Linda M. Bryson, Vice President
Since 1996, Ms. Bryson has been the President of RB Capital and Equities,
Inc., a corporation in the financial services field. She has served on the
board of Spa International, Inc., and is currently the Director of Human
Resources for Bellissima Day Spa.
Michael Kelleher, Secretary/Treasurer
Mr. Kelleher received his BS in accounting from San Diego State University.
He is currently the Secretary/Treasurer of RB Capital and Equities, a
corporation in the financial services field and the President of Escondido
Capital, Inc., an investment corporation.
Dave Czoske, Director
Mr. Czoske is President of Gam Properties. He has more than 15 years
experience in the real estate business. Mr. Czoske has extensive experience
in the area of relocation. At one time Mr. Czoske ran the relocation
department of three North County Realtors in which he specialized in
relocating incoming corporate executives. His responsibilities with Gam
Properties beyond the day to day operations include advertising and showing
properties, negotiating leases as well as all maintenance for several
residential and commercial properties.
James B. Crowell, Director
Mr. Crowell is the president of HRM has served as a Director, Vice
President and COO of Med-Search, Inc. As COO he was responsible for the day
to day operations of a Southern California IPA that contracted with 8
managed care organizations. From 1982 to 1992 Mr. Crowell was President if
PPO Services, Inc., a consulting firm, that was instrumental in developing
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several managed care delivery systems including Pacific Physicians
Network, Associated Providers Network and Southern California Health Plan.
From 1979 to 1982 Mr. Crowell served as Director of Marketing for
CompreCare, a Federally Qualified HMO. From 1976 to 1979 Mr. Crowell served
as a consultant to Blue Cross of Southern California were he was
responsible for the development of managed care programs. Mr. Crowell has a
Ph.D. in Healthcare Administration, an MBA in Finance and his BA in
Political Science.
Terry Worthylake, Director
Mr. Worthylake is the chairman of HRM, prior to the formation of the
company he served as a Director and President of Med-Search, Inc., a public
company, that acquired and managed medical practices, and IPAs. The
Company contracted with 8 HMOs and several PPOs through a network of over
1500 physicians. From 1987, until the firm was acquired by Med-Search in
1993, Mr. Worthylake was the President of Interstate Care Systems a company
that developed into an 80-hospital, 7000-physician PHO serving over 600,000
beneficiaries. From 1982 to 1984 he was the Executive Vice President of
Benefit Panel Services during its initial development into a 20-hospital
800-physician PPO. From 1980 to 1982 Mr. Worthylake was Director of the Med
Network Program, a national PPL. From 1978 to 1980 Mr. Worthylake was the
founder and CEO of Sam Mateo Services, a management services organization
that provided services to medical practices in the San Francisco Bay Area.
Mr. Worthylake has a MBA in Healthcare Management and a BA in Economics.
ITEM 6. Executive Compensation
Gary DeGano
Mr. DeGano receives $36,000 per year.
Linda M. Bryson
Ms. Bryson receives $48,000 per year.
Michael Kelleher
Mr. Kelleher receives $36,000 per year.
Dave Czoske
Mr. Cassock receives $26,400 a year.
James B. Crowell
Mr. Crowell receives ten (10) percent of the profit participation
of HRM, Inc.
Gary DeGano, Linda Bryson and Michael Kelleher are paid cash monthly
by RB Capital and Equities, Inc. Dave Czoske is paid cash monthly by Gam
Properties, Inc., and Jim Crowell is paid cash by Healthcare Resource
Management, Inc., only if there is an operating profit.
Directors receive $12,000 per year paid by Triad Industries, Inc.,
payable in stock, paid quarterly, plus expenses for attending meetings.
Name and Year Salary Bonus Other annual
Principal compensation
Position
Gary DeGano 1999 $21,000 $ 25,000 $6,000
President
Linda Bryson 1999 36,000 -- 4,800
Vice President
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Michael Kelleher 1999 30,000 5,000 3,600
Secretary/Treasurer
David Czoske 1999 18,000 18,000 2,400
President of Gam Properties
James B. Crowell 1999 -- -- 1,000
President, HRM, Inc.
ITEM 7. Certain Relationships and Related Transactions
Gary DeGano, Linda Bryson, Michael Kelleher, and Dave Czoske received
shares in Healthcare Resource Management, Inc., because they owned shares
in RB Capital and Equities, Inc., when the reverse merger was complete.
Mr. Crowell and Mr. Worthylake received 112,500 shares each due to
their ownership of Healthcare Resource Management, Inc., stock through the
reverse merger.
The remaining 3,218,798 common shares were issued to shareholders of
RB Capital and Equities, Inc., and Healthcare Resource Management, Inc.
The following officers and directors of RB Capital and Equities, Inc.,
received common shares of Triad Industries, Inc., (formerly Healthcare
Resource Management, Inc.) in exchange for common shares they owned in RB
Capital and Equities, Inc., and Healthcare Resource Management, Inc., for
the March 15, 1999 reverse merger with Healthcare Resource Management, Inc.
Gary DeGano $156,450
Linda M. Bryson 180,000
Michael Kelleher 132,900
Dave Czoske 10,000
American Health Systems, Inc., received a note for $700,000 from RB
Capital and Equities, Inc., for the purchase of Miramar Road Associates,
LLC. After the March 15, 1999 reverse merger the note was restricted by
issuing $700,000 in $1.00 preferred stock.
American Health Systems, Inc., also received 1,120,000 shares of
common stock as a result of the sale of Gam Properties, Inc., to RB Capital
& Equities, Inc. In consideration for the 1,120,000 shares of common stock,
American Health Systems, Inc., exchanged $1,327 of cash, $4,062 in tax
impound accounts, and $2,926,436 in real estate property, and intercompany
loans totaling $(43,655), for total assets for $2,888,169. These assets
were subject to accounts payable of $2,800, property taxes of $10,684,
security deposits of $14,957, and mortgage principle of $1,848,197. Gam
Properties, Inc., had a net equity value of $1,011,611.
American Health Systems, Inc., also received a note for $700,000 from
RB Capital & Equities, Inc., for the purchase of Miramar road Associates,
LLC. After the March 15, 1999 reverse merger the note was retired by
issuing 700,000 shares of $1.00 preferred stock. In consideration for the
preferred stock American Health Systems, Inc., exchanged a building with
approximately $2.7 million, therefore; the Miramar Road Associate, LLC.,
had a net worth of $700,000.
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Triad Industries, Inc., is a holding company with no operations of its
own. There are no arrangements by which Triad Industries, Inc., receives
distributions from its subsidiaries. Monetary distributions from
subsidiaries are on an as needed basis. This is because all the
subsidiaries are responsible for their own operating expenses.
Triad Industries, Inc., is involved in a management contract with RB
Capital and Equities, Inc., a subsidiary. The agreement calls for a $7,500
a month payment to RB Capital and Equities, Inc., for management services.
Included in the management contract are fees for investor relations, office
space, secretarial work, telephones, meeting rooms and accounting.
ITEM 8. Description of Securities
The Company is authorized to issue 50,000,000 shares of Common Stock,
par value $.001 per share, of which 5,256,716 were issued and outstanding
as of December 31, 1998. These shares were reversed on a 1:10 basis on
March 15, 1999. 5,593,822 shares of common stock were issued and
outstanding on March 31, June 30, and September 30, 1999. 6,403,418 shares
of common stock were outstanding as of December 31, 1999. In addition, the
corporation is authorized to issue 10,000,000 shares of preferred stock par
value $1.00 that may be issued in series at stated value, of which zero
were issued as of December 31, 1998 and March 31, 1999. 700,000 shares were
issued and outstanding as of June 30, 1999 and September 30, 1999. As of
December 31, 1999 there were 850,000 shares of preferred stock issued and
outstanding.
All shares of Common Stock have equal rights and privileges with
respect to voting, liquidation and dividend rights. All shares of Common
Stock entitle the holder thereof to (i) one non-cumulative vote for each
share held of record on all matters submitted to a vote of the
stockholders; (ii) to participate equally and to receive any and all such
dividends as may be declared by the Board of Directors out of funds legally
available therefore; and (iii) to participate pro rata in any distribution
of assets available for distribution upon liquidation of the Company.
Stockholders of the Company have no preemptive rights to acquire additional
shares of Common Stock or any other securities. The Common Stock is not
subject to redemption and carries no subscription or conversion rights. All
outstanding shares of Common Stock are fully paid and non-assessable.
The preferred stock is (1) non- voting stock, (2) convertible at the
second anniversary from issuance on a two for one (2:1) basis, (3) has a
preference over common stock to be paid $1.00 per share as a preferrencial
liquidation
PART II
ITEM 1. Market Price of and Dividends on the Registrants Common Equity and
Other Shareholder Matters
The shares of Triad Industries, Inc., the Registrant, trade on the NQB
Electronic Pink Sheets under the symbol TRDD with a Standard and Poors
Cusip # 89579C 10 7. As of September 30, 1999 there were 722 shareholders
of record. The recent high bids and low bids, from the National Quotation
Bureau, were:
High Low
December 31, 1998 $.25 $ .125
March 31, 1999 $.50$ .25
june 30, 1999 $.25$ .1875
September 30, 1999 $.18$ .125
December 31, 1999 $.30$ .20
There are eight broker-dealers listed as traders of the Company stock.
Frankel Securities Paragon Securities
Hill-Thompson Securities Equitrade Securities
Myerson Securities Sharpe Securities
Nabe Securities Wein Securities
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These quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions
The Companys shares will be subject to the provisions of Section 15(g)
and Rule 15g-9 of the Securities and Exchange Act of 1934, as amended (the
Exchange Act), commonly referred to as the penny stock rule. Section 15(g)
sets forth-certain requirements for transactions in penny stocks and title
15g-9(d)(1) incorporates the definition of penny stock that is found in
Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security
that has a market price less the $5.00 per share, subject to certain
exceptions. Rule 3a51-1 provides that any equity security is considered to
be penny stock unless that security is: registered and traded on a national
securities exchange meeting specified criteria set by the Commission;
authorized for quotation from the NASDAQ stock Market; issued by a
registered investment company; excluded from the definition on the basis of
price (at least $5.00 per share) or the issuers net tangible assets; or
exempted from the definition by the Commission. If the Companys shares are
deemed to be a penny stock, trading in the shares will be subject to
additional sales practice requirements on broker-dealers who sell penny
stocks to persons other than established customers and accredited
investors, who generally are persons with assets in excess of $1,000,000 or
annual income exceeding $200,000, or $300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make a
special suitability determination for the purchase of such security and
must have received the purchasers written consent to the transaction prior
to the purchase. Additionally, for any transaction involving a penny stock,
unless exempt, the rules require the delivery, prior to the first
transaction, of a risk disclosure document relating to the penny stock. A
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, and current quotations for
the securities. Finally, monthly statements must be sent disclosing recent
price information for the penny stocks held in account and information on
the limited market in penny stocks. Consequently, these rules may restrict
the ability of broker-dealers to trade and/or maintain a market in the
Companys Common Stock and may affect the ability to shareholders to sell
their shares.
Dividend Policy
The Company has not declared or paid cash dividends or made
distributions in the past, and the Company does not anticipate that it will
pay cash dividends or make distributions in the foreseeable future. The
Company currently intends to retain and invest future earnings to finance
its operations.
ITEM 2. Legal Proceedings
The Company is not a part of any material pending legal proceedings
and no such action by, of to the best of its knowledge, against the Company
has been threatened. Gam Properties, Inc., case number 729554, is named in
a lawsuit regarding the sale of property by others and in managements
opinion the lawsuit does not directly effect Gam Properties, Inc. The
lawsuit is being defended by former owners of Gam Properties, Inc.
The proceeding is pending in the Superior Court of California, County
of San Diego, Central Court. The proceedings began October 15, 1999. The
principal parties in the case are Manuel and Mary Zambrana (the plaintiffs)
and Amresco Management, John Franco, Michael H. de Domenico, Greenland
Corporation, and Gam Properties, Inc., (the defendants).
Gam Properties, Inc., was named in a court proceeding together with
other parties on April 2, 1999 in the Judicial District of San Diego,
California. The principal parties to the litigation were as follows:
Plaintiffs:
Manuel Zambrana and Mary Zambrana
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Defendants:
Amresco Management, Inc., ATF for RTC Mortgage Trust 1994 N2 and
State Street Bank and Trust Company, Chicago Title Company, John Franco,
Global Funding Corporation, Global Home Lending, Inc., Michael H.
DeDomenico, Kathleen DeDemenico, Gam Properties, Inc., and Greenland
Corporation.
The plaintiffs purchased property from Gam Properties, Inc., at 4027
31 Hamilton Street, San Diego, CA., for a purchase price of $260,799.52.
This purchase took place prior to Gam Properties, Inc., being acquired by
the issuer. The plaintiffs alleged that some of the defendants named, other
than Gam Properties, Inc., induced the plaintiffs to purchase securities in
a public company other than the issuer as well as accepting large amounts
of cash from the plaintiffs. The relief sought by the plaintiffs was
approximately $210,000.00.
Subsequent to lengthy interrogations by some of the defendants, which
included Gam Properties, Inc., the case was dismissed with prejudice for
lack of merit.
ITEM 3. Changes in and Disagreements with Accountants
There have been no changes in or disagreements with accountants.
ITEM 4. Recent Sales of Unregistered Securities
Shares totaling 5,068,150 were issued to 159 shareholders in exchange
for 100% of the common stock of RB Capital and Equities and Gam Properties.
700,000 shares of preferred stock were issued in exchange for a 99%
interest in Miramar Road Associates, LLC. In December of 1999 150,000
shares of preferred stock were issued to Pro Glass Technologies, Inc., in
exchange for 1,500,000 shares of common stock.
In August of 1999, the Company sold 320,000 shares of common stock at
$.223 to two accredited investors. The exemption from registration was
based on Section 4(2) and 4(6) of the Securities Act. The shares were sold
under investment letter and subscription agreement.
No securities were sold under a Regulation D offering.
ITEM 5. Indemnification of Directors and Officers
The By-laws of the Company provide for indemnification of the
Companys Officers and Directors against liabilities arising due to certain
acts performed on behalf of the Company. Because indemnification for
liabilities arising under the Securities Act may not be permitted to
Directors, Officers or persons controlling the Company, pursuant to the
foregoing provisions, the Company has been informed that in the opinion of
the Securities Commission such indemnification is against public policy as
expressed in such Act and is therefore unforceable
.
Transfer Agent
The transfer agent and registrant of the Company is Signature Stock
Transfer 14675 Midway Road, Suite 221, Dallas, TX 75244.
PART F / S
The Companys financial statements for the fiscal year ended December 31,
1997 and 1998 and June 30 and September 30, 1999 have been examined to the
extent indicated in their reports by Armando C. Ibarra, independent
certified public accountant, and have been prepared in accordance with
generally accepted accounting principles and pursuant to Regulation S-B as
promulgated by the Securities and Exchange Commission and are included
herein in response to Item 15 of this Form 10-SB.
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RB CAPITAL & EQUITIES, INC.
FINANCIAL STATEMENTS
December 31, 1997
CONTENTS
Independent Auditors' Report
Balance Sheet .......................................
Statement of Operations ................................
Statement of Stockholders' Equity ..................
Statement of Cash Flows..................
Notes to the Financial Statements
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JONES, JENSEN
& COMPANY, LLC
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
INDEPENDENT AUDITORS'REPORT
To the Board of Directors
RB Capital & Equities, Inc.
San Diego, California
We have audited the accompanying balance sheet of RB Capital & Equities,
Inc., as of December 31, 1997 and the related statements of operations,
stockholders' equity and cash flows for the year ended December 31, 1997.
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.
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
provides 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 RB Capital & Equities,
Inc. as of December 31, 1997 and the results of its operations and its cash
flows for the year ended December 31, 1997 in conformity with generally
accepted accounting principles.
Jones, Jensen & Company
Salt Lake City, Utah
June 16, 1998
23
<PAGE>
RB CAPITAL & EQUITIES, INC.
Balance Sheet
ASSETS
December 31,
1997
CURRENT ASSETS
Cash 4,522
Accounts receivable, net (Note 2) 19,004
Marketable securities (Note 3) 646,470
Interest receivable 4,064
Total Current Assets 674,060
PROPERTY AND EQUIPMENT- NET (Note 5) 4,746
OTHER ASSETS
Accounts receivable, net (Note 2) 197,882
Investments in securities held to maturity (Note 6) 32,370
Total Other Assets 230,252
TOTAL ASSETS $909,058
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
RB CAPITAL & EQUITIES, INC.
Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
1997
CURRENT LIABILITIES
Accounts payable $ 8,707
Unearned revenue 76,237
Note payable (Note 8) 23,910
Accounts payable - related party 28,500
Taxes payable (Note 9) 41,002
Total Liabilities 178,356
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY (Note 4)
Common stock: $0.001 par value, authorized 50,000,000 shares;
779,843 shares issued and outstanding 780
Additional paid-in capital 634,656
Retained earnings 95,266
Total Stockholders' Equity 730,702
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $909,058
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
RB CAPITAL & EQUITIES, INC.
Statement of Operations
For the
Year Ended
December 31,
1997
REVENUES
Operating revenue $ 209,316
Total Revenues 209,316
OPERATING COSTS
Cost of securities sold 44,627
Amortization and depreciation 5,949
General and administrative 144,644
Total Operating Costs 195,220
INCOME FROM OPERATIONS 14,096
OTHER INCOME (EXPENSE)
Gain on appreciation of marketable securities 205,383
Interest and other income 4,064
Bad debt expense (49,272)
Total Other Income (Expense) 160,175
INCOME BEFORE TAXES 174,271
INCOME TAX EXPENSE (41,002)
NET INCOME $ 133,269
EARNINGS PER SHARE $ 0.27
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 499,013
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
RB CAPITAL & EQUITIES, INC.
Statement of Stockholders' Equity
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earningis
Balance, December 31, 1996 386,200 $ 386 $307,962 $(38,003
March 18, 1997 common stock
issued at $2.70 per share
for services 20,000 20 53,800 --
March 18, 1997 common stock
issued at $2.70 per share for
securities 11,572 11 31,269 --
March 18, 1997 common stock
issued at $1.40 per share for
securities 28,013 28 39,440 --
June 25, 1997 common stock
issued at $0.35 per share for
furniture 15,808 16 5,537 --
June 25, 1997 common stock
issued at $0.70 per share for
securities 66,750 67 46,832 --
June 25, 1997 common stock
issued at $0.33 per share for
cash 15,000 15 4,850 --
October 17, 1997 common stock
issued at $0.50 per share for
services 15,000 15 7,350 --
December 22, 1997 common
stock issued at $0.62 per
share for securities 221,500 222 137,616 --
Net income for
December 31, 1997 -- -- - 133,269
Balance, December 31, 1997 779,843 780 $634,656 $ 95,266
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
RB CAPITAL & EQUITIES, INC.
Statement of Cash Flows
For the
Year Ended
December 31,
1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from operations $ 133,269
Adjustments to reconcile net (income to net cash
used by operating activities:
Common stock issued for services 61,185
Bad debt expense 49,272
Amortization and depreciation expense 5,949
Changes in operating assets and liabilities:
Increase in accounts payable 5,845
Increase in accounts payable (related) 28,500
Increase in unearned revenue 76,238
(Increase) in accounts receivable (243,280)
(Increase) in interest receivable (4,065
(Increase) in marketable securities (161,419)
(Increase) in taxes payable 41,002
Net Cash (Used) by Operating Activities (7,504)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (16,870)
Net Cash (Used) by Investing Activities (16,870)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued for cash 4,865
Proceeds from note payable 23,910
Net Cash provided by Financing Activities 28,775
INCREASE IN CASH AND CASH EQUIVALENTS 4,401
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 121
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,522
Cash Paid For:
Interest $ --
Income taxes $ -
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
RB CAPITAL & EQUITIES, INC.
Notes to the Financial Statements
December 31, 1997
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
On July 2, 1990, the Company was incorporated under the laws of Nevada as
Combined Communications Corporation to engage in any lawful activity as
shall be appropriate under laws of the State of Nevada.
On October 17, 1997, the Company met to amend the Articles of
Incorporation. The name of the Company was changed to RB Capital &
Equities, Inc.
The Company has authorized 50,000,000 shares of $0.001 par value common
stock. The Company has elected a calendar year end.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31, year end.
b. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
c. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
d. Earnings per Common Share
Earnings per common share has been calculated based on the weighted
average number of shares of common stock outstanding during the period.
29
<PAGE>
RB CAPITAL & EQUITIES, INC.
Notes to the Financial Statements
December 31, 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Income taxes
The Company recognizes a liability or asset for the deferred tax
consequences of all temporary differences between the tax bases and the
reported amounts of assets and liabilities in the accompanying consolidated
balance sheets. These temporary differences will result in taxable or
deductible amounts in future years when the reported amounts of the assets
or liabilities are recovered or settled.
Investment and research and development tax credits will be accounted for
as a reduction of income tax expense when they are realized.
f. Accounts Receivable
The Company has entered into various contracts, by which the Company
provides financial services.
Accounts receivable $ 266,158
Less: allowance for bad debt (49,272)
Less: current portion (19,004)
Long-Term Portion $ 197,882
g. Deferred Income
The Company has various consulting contracts outstanding in which the
Company performs a set of various financial services. The Company will
recognize revenues when services on each contract have been completed. As
of December 31, 1997, the Company had approximately $152,000 in contract
receivables. At December 31, 1997, approximately $75,000, or 50%, of the
net contracts have been completed and recognized as revenue. The remaining
50% are recognized as unearned revenue and will be recognized as revenue
when services have been completed.
h. Investments in Securities
Marketable securities at December 31, 1997 are classified and disclosed as
trading securities under the requirements of SFAS No. 115. Under such
statement, the Company's securities are required to be reflected at fair
market value.
30
<PAGE>
RB CAPITAL & EQUITIES, INC.
Notes to the Financial Statements
December 31, 1997
NOTE 3 - MARKETABLE SECURITIES
At December 31, 1997, the Company held trading securities of the
following companies:
Number of Market Price Balance
hares At Year End At Year End
Uniforms for America, Inc. 25,000 $ 3.50 $ 87,500
Peacock Financial Corporation 150,000 .09 13,578
The Hart Court Companies, Inc. 25,000 1.92 48,083
The Beverage Store, Inc. 20,000 2.25 45,000
Golden Panther Resources, Ltd. 150,000 1.00 151,207
Phone Time Resources, Inc. 25,000 .25 6,375
Golden Age Homes, Inc. 190,566 1.55 294,727
Total $646,470
NOTE 4 - COMMON STOCK
During the month of March, a total of 59,585 shares were issued at an
average price of $2.10 a share. In the month of June, a total of 97,558
shares were issued at an average price of $0.59 a share. In October, 15,000
shares were also issued at $0.50 a share. At the end of October, the
Company proposed a 1 0-to-1 reverse split of the Company's common stock. In
December, 221,500 shares were issued at $0.62 a share. Stock issuance
prices are based on determined value of proceeds received for stock
issuance.
NOTE 5 - PROPERTY AND EQUIPMENT
The Company issued 15,808 shares of common stock at $0.35 cents a share,
equaling $5,695. The furniture has a 3 year life and is depreciated using
the straight-line method of depreciation with no salvage value.
Furniture $ 5,695
Less: accumulated depreciation (949)
Total Property and Equipment $ 4,746
31
<PAGE>
RB CAPITAL & EQUITIES, INC.
Notes to the Financial Statements
December 31, 1997
NOTE 6 - INVESTMENTS IN SECURITIES HELD TO MATURITY
In 1995, the Company bought 250,000 shares of Heritage National Corporation
at $0.10 a share. The common stock from Carrara of California, Inc.,
Clearwater Mining, Inc. and Superior Mining Corporation was purchased for
cash and is classified held to maturity,
Number of Market Price Balance
Shares At Year End At Year End
Carrara of California, Inc. 325,000 $.01 $ 370
Clear Water Mining, Inc. 600,000 .01 6,000
Superior Mining Corporation 100,000 .01 1,000
Heritage National Corporation 250,000 .10 25,000
Total 32,370
NOTE 7 - COMMITMENTS AND CONTINGENCIES
In October 1997, the Company entered into a management contract with
Escondido Capital. The Company pays $15,000 a month for rent and wages.
NOTE 8 - NOTES PAYABLE
In December 1997, the Company had notes payable totaling $43,910. No
interest is stated and funds are due on demand.
NOTE 9 - INCOME TAXES
Income taxes payable at December 31, 1997 consist of the following:
December 31,
1997
Taxes currently payable
Federal 41,002
State --
41,002
Less prepayment --
Total taxes currently payable 41,002
32
<PAGE>
RB CAPITAL & EQUITIES, INC.
Notes to the Financial Statements
December 31, 1997
NOTE 9 - INCOME TAXES (Continued)
For the year ended December 31, 1997, the provision for federal and state
income taxes consisted of the following 1997
Federal 41,002
State -
Total 41,002
A reconciliation of income taxes at the federal statutory rate to the
effective tax rate is as follows:
1997
Income taxes computed at the federal
statutory rate 46,702
Loss carryforwards for which
benefit was received (5,700)
Income Tax Expense 41,002
33
<PAGE>
JONES, JENSEN
& COMPANY, LLC
June 16, 1998
To the Board of Directors
RB Capital & Equities, Inc.
San Diego, California
We have audited the balance sheet of RB Capital & Equities, Inc. for the
year ended December 31, 1997 and the related statements of operations,
stockholders' equity and cash flows for the year then ended, and have
issued our report dated June 16, 1998. Professional standards require that
we provide you with the following information related to our audit.
Our Responsibility under Generally Accepted Auditing Standards
As stated in our engagement letter dated March 6, 1998, our responsibility,
as described by professional standards, is to plan and perform our audit to
obtain reasonable, but not absolute, assurance about whether the financial
statements are free of material misstatement. Because of the concept of
reasonable assurance and because we did not perform a detailed examination
of all transactions, there is a risk that material errors, irregularities,
or illegal acts, including fraud and defalcations, may exist and not be
detected by us.
As part of our audit, we considered the internal control structure of RB
Capital & Equities, Inc. Such considerations were solely for the purpose of
determining our audit procedures and not to provide any assurance
concerning such internal control structure.
Significant Accounting Policies
Management has the responsibility for selection and use of appropriate
accounting policies. In accordance with the terms of our engagement letter,
we will advise management about the appropriateness of accounting policies
and their application. No new accounting policies were adopted and the
application of existing policies was not changed during the year ending
December 31, 1997. We noted no transactions entered into by the Company
during the year that were both significant and unusual, and of which under
professional standards, we are required to inform you, or transactions for
which there is a lack of authoritative guidance or consensus.
Significant Audit Adjustments
For purposes of this letter, professional standards define a significant
audit adjustment as a proposed correction of the financial statements that,
in our judgment, may not have been detected except through our auditing
procedures. We recorded audit adjustments that in our judgment, either
individually or in the aggregate, have a significant effect on the
Company's financial reporting process. These adjustments have been in
agreement with the Company and have been incorporated into the financial
statements.
Disagreements with Management
There were no disagreements on proposed adjustments made to financial
statements.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with the management
in performing our audit.
This information is intended solely for the use of the audit committee,
board of directors, and management of RB Capital & Equities, Inc. and
should not be used for any other purpose.
34
<PAGE>
Very truly yours,
Jones, Jensen & Company
35
<PAGE>
RB CAPITAL & EQUITIES, INC.
FINANCIAL STATEMENTS
December 31, 1998
36
<PAGE>
JONES, JENSEN
& COMPANY, LLC
To the Board of Directors
RB Capital & Equities, Inc.
San Diego, California
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of RB Capital & Equities,
Inc., as of December 31, 1998 and the related statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1998
and 1997. 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 audits.
We conducted our audits 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 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 RB Capital & Equities,
Inc. as of December 31, 1998 and the results of its operations and its cash
flows for the years ended December 31, 1998 and 1997 in conformity with
generally accepted accounting principles.
Jones, Jensen & Company
Salt Lake City, Utah
March 31, 1999
37
<PAGE>
CONTENTS
Independent Auditors' Report
Balance Sheet ...........
Statements of Operations ......
Statements of Stockholders' Equity
Statements of Cash Flows ..............
Notes to the Financial Statements
38
<PAGE>
R8 CAPITAL & EQUITIES, INC.
Balance Sheet
ASSETS
December 31,
1998
CURRENT ASSETS
Cash $ 191
Accounts receivable, net (Note 2) 11,500
Marketable securities (Note 3) 666,32
Total Current Assets 667,923
PROPERTY AND EQUIPMENT- NET (Note 5) 3,112
OTHER ASSETS
Accounts receivable, net (Note 2) 109,228
Investments in securities hold to maturity (Note 6) 282.37
Total Other Assets 391,598
TOTAL ASSETS $1,062,633
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
RB CAPITAL & EQUITIES, INC.
Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS'EQUITY
December 31,
1998
CURRENT LIABILITIES
Accounts payable $ 5,775
Unearned revenue 77,156
Note payable (Note 8) 3,680
Taxes payable (Note 9) 6,250
Total Liabilities 92,861
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS'EQUITY (Note 4)
Common stock: $0.001 par value, authorized 50,000,000
shares; 1,211,068 shares issued and outstanding 1,211
Stork subscription receivable (62,500)
Additional paid-in capital 1,018,099
Retained earnings 12,962
Total Stockholders' Equity 969,772
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY 1,062,633
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
RB CAPITAL & EQUITIES, INC.
Statements of Operations
For the
Years Ended
1998 1997
REVENUES
Operating revenue 917,307 209,316
Total Revenues 917,307 209,316
OPERATING COSTS
Cost of securities sold 394,233 44,627
Amortization and depreciation 1,657 5,949
General and administrative 305,405 144,644
Total Operating Costs 701,295 195,220
INCOME FROM OPERATIONS 216,012 14,096
OTHER INCOME (EXPENSE)
(Loss) gain on valuation of marketable (300,006) 205,383
securities to market 1,765 4,064
Interest and other income (31,827) (49,272)
Bad debt expense -- --
Total Other Income (Expense) (333,068) 160,175
INCOME (LOSS) BEFORE TAXES (117,056) 174,271
INCOME TAX (EXPENSE) BENEFIT 34,752 (41,002)
NET INCOME (LOSS) (82,304) 133,269
BASIC EARNINGS (LOSS) PER SHARE (0.11) 0.27
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 703,730 499,013
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
RB CAPITAL & EQUITIES, INC.
Statements of Stockholders' Equity
Common Stock Paid in
Shares Amount Capital
Balance, December 31, 1996 386,200 $ 386
March 18,1997 common stock
issued at $2.70 per sham
for services 20,000 20
Match 18, 1997 common stock
issued at $2.70 per share for
securities 11,572 11
March 18, 1997 common stock
issued at $1.40 per share for
securities 28,013 28
June 25,1997 common stock
issued at $0.35 per share for
furniture 15,808 16
June 25, 1997 common stock
issued at $0-70 per share for
securities 68,750 67
June 25, 1997 common stock
issued at $0.33 per share for
cash 15,000 15
October 17. 1997 common stock
issued at $0.50 per share for
services 15,000
December 22, 1997 common
stock issued at $0.62 per
share for securities 221,500 222
Net income for the year ended
December 31, 1997 --
Balance, December 31, 1997 779,843 S 780 S
42
<PAGE>
Additional
Paid In Subscription Retained
Capital Receivable Earnings
Balance, December 31, 1996 $ 307,962 $ $ (38,003)
March 18,1997 common stock
issued at $2.70 per sham
for services 53,800
Match 18, 1997 common stock
issued at $2.70 per share for
securities 31,269
March 18, 1997 common stock
issued at $1.40 per share for
securities 39,440
June 25,1997 common stock
issued at $0.35 per share for
furniture 5,537
June 25, 1997 common stock
issued at $0-70 per share for
securities 46,832
June 25, 1997 common stock
issued at $0.33 per share for
cash 4,850
October 17. 1997 common stock
issued at $0.50 per share for
services 15 7,350
December 22, 1997 common
stock issued at $0.62 per
share for securities 137,616
Net income for the year ended
December 31, 1997 132,269
Balance, December 31, 1997 634,656 $ $ 95,266
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
RB CAPITAL & EQUITIES, INC.
Statements of Stockholders' Equity (Continued)
Common Stock
Shares Amount
Balance, December 31, 1997 779.843 $ 780
June 17,1998, common stock
issued for securities valued at
S6.68 per share 4,400
June 17, 1998, common stock
issued for securities valued at
$2.70 per share 20,000 20
June 17,1998, common stock
issued for securities valued at
$0.25 per share 5,000 5
June 17,1998, common stock
issued for note payable
valued at $1.00 per share 10,160 11
June 17, 1998, common stock
issued for securities valued at
$1.00 per share 45,000 46
June 30. 1998, common stock
issued for services (officers)
valued at $1.00 per share 100,000 100
November 4,1998, common stock
issued at $0.50 for Subscription
receivable 125,000 125
December 31, 1998. common
stock issued for note payable
at $1,00 per share 6,250 6
December 31, 1998, common
stock issued for management
fees valued at $1 .00 per sham 20,253 20
December 31, 1998, common
stock issued for note payable
at $1.00 per share 20,162 20
December 31, 1998, common
stock issued for securities
valued at $0.62 per share 75,000 75
Contributed capital
Not loss for the year ended
December 31, 1998
Balance, December 31, 1998 1,211,068 $ 1,211
44
<PAGE>
Additional
Paid In Subsciption Retained
Capital Receivable Earnings
Balance, December 31, 1997 634,656 $ -- $ 95,266
June 17,1998, common stock
issued for securities valued at
S6.68 per share 14,105 --
June 17, 1998, common stock
issued for securities valued at
$2.70 per share 53,980 --
June 17,1998, common stock
issued for securities valued at
$0.25 per share 1,245
June 17,1998, common stock
issued for note payable
valued at $1.00 per share 10,150
June 17, 1998, common stock
issued for securities valued at
$1.00 per share 44,955
June 30. 1998, common stock
issued for services (officers)
valued at $1.00 per share 99,900
November 4,1998, common stock
issued at $0.50 for Subscription
receivable 62,375 (62,500)
December 31, 1998. common
stock issued for note payable
at $1,00 per share 6,044
December 31, 1998, common
stock issued for management
fees valued at $1 .00 per sham 20,233
December 31, 1998, common
stock issued for note payable
at $1.00 per share 20,142
December 31, 1998, common
stock issued for securities
valued at $0.62 per share 46,175
Contributed capital 4,139
Not loss for the year ended
December 31, 1998 (82,304)
Balance, December 31, 1998 $ 1,018,099 (62,500) $12,962
The accompanying notes are an integral part of these financial statements.
45
<PAGE>
RB CAPITAL & EQUITIES, INC.
Statements of Cash Flows
For the
Years Ended
December 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from operations $ (82,304) $133,269
Adjustments to reconcile net (income to net cash
used by operating activities:
Common stock issued for services 120,253 61,185
Bad debt expense 31,827 49,272
Amortization and depreciation expense 1,656 5,949
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable (2,932) 5,845
Increase (decrease) in accounts payable (related) (28,500) 28,500
Increase in unearned revenue 920 76,238
(Increase) decrease in accounts receivable 64,332 (243,280)
(increase) decrease in interest receivable 4,065 (4,065)
(Increase) in marketable securities (9,763) (161,419)
Increase (decrease) in taxes payable (34,752) 41,002
(Decrease) in notes payable (20,130)
Net Cash (Used) by Operating Activities 44,5Z2 (7,504)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (23)
Purchase of marketable securities (48,880)
Net Cash (Used) by Investing Activities (46,903) (16,870)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued for cash 4,865
Proceeds from note payable 23,910
Net Cash Provided by Financing Activities 28,775
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,331) 4,401
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,522 121
CASH AND CASH EQUIVALENTS AT END OF YEAR 191 4,522
Cash Paid For:
Interest $ -- $ --
Income taxes $ -- $
Non-Cash Financing Activities:
Common stock issued for securities $ 201,120 $
The accompanying notes are an integral part of these financial statements.
46
<PAGE>
RB CAPITAL & EQUITIES, INC.
Notes to the Financial Statements
December 31, 1998 and 1997
NOTE I - ORGANIZATION AND DESCRIPTION OF BUSINESS
On July 2, 1990, the Company was incorporated under the laws of Nevada as
Combined Communications Corporation to engage in any lawful activity as
shall be appropriate under laws of the State of Nevada.
On October 17, 1997, the Company met to amend the Articles of
Incorporation. The name of the Company was changed to RB Capital &
Equities, Inc.
The Company has authorized 50,000,000 shares of $0.001 par value common
stock. The Company has elected a calendar year end.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting, The Company has elected a December 31, year end.
b. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents..
c. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
d. Income taxes
The Company recognizes a liability or asset for the deferred tax
consequences of all temporary differences between the tax bases and the
reported amounts of assets and liabilities in the accompanying consolidated
balance sheets. These temporary differences will result in taxable or
deductible amounts in future years when the reported amounts of the assets
or liabilities are recovered or settled.
Investment and research and development tax credits will be accounted for
as a reduction of income tax expense when they are realized.
47
<PAGE>
RB CAPITAL & EQUITIES, INC.
Notes to the Financial Statements
December 31, 1998 and 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Accounts Receivable
The Company has entered into various contracts, by which the Company
provides financial services.
Accounts receivable $ 170,000
Less, allowance for bad debt (49,272)
Less.- current portion (11-500)
Long-Term Portion 109,228
f. Deferred Income
The Company has various consulting contracts outstanding in which the
Company performs a set of various financial services. The Company will
recognize revenues when services on each contract have been completed. As
of December 31, 1998, the Company had approximately $152,000 in contract
receivables. At December 31, 1998. approximately $105,000, or 70%, of the
net contracts have been completed and recognized as revenue. The remaining
30% are recognized as unearned revenue and will be recognized as revenue
when services have been completed.
g. Investments in Securities
Marketable securities at December 31, 1998 are classified and disclosed as
trading securities under the requirements of SFAS No. 115. Under such
statement, the Company's securities are required to be reflected at fair
market value.
h. Basic Earnings (Loss) Per Common Share
Basic earnings (lose) per common share has been calculated based on the
weighted average number of shares of common stock outstanding during the
period.
48
<PAGE>
RB CAPITAL & EQUITIES, INC.
Notes to the Financial Statements
December 31, 1998 and 1997
NOTE 3 - MARKETABLE SECURITIES
At December 31, 1996, the Company held trading securities of the following
companies,
Number of Market Price Balance
Shares At Year End At Year End
Beach Drew, Inc. 625,000 $ .028 $ 17,500
Peacock Financial Corporation 200,000 0.06 12,500
Fortune Oil & Gas, Inc. 33,000 0.26 8,840
Health Care Resources 35,950 0.62 22,289
Golden Panther Resources, Ltd. 150,000 0.95 14,250
Mezzanine Capital 107,000 1.25 134,820
Golden Age Homes, Inc. 611,270 0.51 311,748
Greenland Corporation 4.113 0.12 494
Little Mark Corporation 510,833 0.12 72,219
Total Entertainment, Inc. 92,500 0.50 46,250
Spa International, Inc. 245,165 0.06 15,322
Total $656,232
NOTE 4 - COMMON STOCK
During the month of March, a total of 59,585 shares were issued at an
average price of $2.10 a share. In the month of June, a total of 97,558
shares were issued at an average price of $0.59 a share. In October, 15,000
shares were also issued at $0.50 a share. At the end of October, the
Company proposed a 10-to-1 reverse split of the Company's common stock. In
December, 221,500 shares were issued at $0.62 a share. Stock issuance
prices are based on determined value of proceeds received for stock
issuance.
NOTE 5 - PROPERTY AND EQUIPMENT
The Company issued 15,808 shares of common stock at $0.35 cents a share,
equaling $5,718. The furniture has a 3 year life and is depreciated using
the straight-line method of depreciation with no salvage value.
Furniture $ 5,718
Less: accumulated depreciation (2,606)
Total Property and Equipment $ 3,112
49
<PAGE>
RB CAPITAL & EQUITIES, INC.
Notes to the Financial Statements
December 31, 1998 and 1997
NOTE 6 - INVESTMENTS IN SECURITIES AVAILABLE FOR SALE
In 1995, the Company bought 250,000 shares of Heritage National Corporation
at $0. 10 a share. The common stock from Carrara of California, Inc.,
Clearwater Mining, Inc, and Superior Mining Corporation was purchased for
cash and is classified available for sale. In June of 1998, 50,000 shares
of preferred stock was issued at $&00 a share
Number of Market Price Balance
Shares At end of year At Year End
Carrara of California, Inc. 325,000 $ .01 $ 370
Clear Water Mining, Inc. 600,000 .01 6,000
Superior Mining Corporation 100,000 .01 1,000
Heritage National Corporation 250.000 .10 25,000
American Health Systems, Inc. 50,000 5.00 250,000
Total $282,370
NOTE 7 - COMMITMENTS AND CONTINGENCIES
In October 1997, the Company entered into a management contract with
Escondido Capital (a related party). The Company pays $15,000 a month for
rent and wages.
NOTE 8 - NOTES PAYABLE
In December 1998, the Company had notes payable totaling $3,680. No
interest is stated and funds are due on demand,
NOTE 9 - INCOME TAXES
Income taxes payable at December 31, 1998 consist of the following
December 31.
1998 1997
Taxes currently payable (benefit)
Federal $ 5,248 $ 34, 432
State 1,002 6,570
6,250 41,002
Less prepayment -- --
Total taxes currently payable 6,250 41,002
50
<PAGE>
RB CAPITAL & EQUITIES, INC.
Notes to the Financial Statements
December 31, 1998
NOTE 9 - INCOME TAXES (Continued)
For the year ended December 31, 1998, the provision for federal and state
income taxes consisted of the following
1998 1997
Federal (28,902) 34,432
State (5,850) 6,570
Total (34,752) 41,002
A reconciliation of income taxes at the federal statutory rate to the
effective tax rate is as follows:
1998 1997
Income taxes computed at the federal
statutory rate $ $ 46,702
Loss carryforwards for which benefit
was received (34,75) (5,700)
Income Tax Expense (Benefit) $ (34,752) $ 41,002
NOTE10-SUBSEQUENT EVENTS
In March 1999, Healthcare Resources Management, Inc. ratified a plan of
reorganization, whereby Healthcare Resources Management, Inc. will acquire
100% of the common stock of RB Capital & Equities, Inc. for 3,633,183
shares of the post-split common stock of Healthcare Resources Management,
Inc.
51
<PAGE>
AMERICAN HEALTH SYSTEMS, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
and
Independent Auditor's Report
Year Ended December 31, 1998
52
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBSEDURIES
Table of Contents
Independent Auditor's Report
Audited Financial Statements:
Consolidated Balance Sheet
Consolidated Statement of Operations
Consolidated Statement of Changes in Stockholders' Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
53
<PAGE>
Boros & Frrnington
CERTIFIED PUBLIC ACCOUNTANTS
A Professional Corporation
11770 Bernardo Plaza Court, Suite 2 10
San Diego, CA 92128-2424
(619) 487-8518 Fax (619) 487-6794
INDEPENDENT AUDITOR'S REPORT
Board of Directors
American Health Systems, Inc. and Subsidiaries
We have audited the consolidated balance sheet of American Health Systems,
Inc. and Subsidiaries as of December 31, 1998 and the related statements of
operations, changes in 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.
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
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of American
Health Systems, Inc. and Subsidiaries at December 31, 1998, and the results
of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1, the
Company has suffered significant losses and has undertaken a reorganization
plan that involves a change in management, the disposition of substantially
all Company assets, and a change in business direction that is subject to
regulatory approval. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements
do not include any adjustments that might result from
the outcome of this uncertainty.
Boros & Farrington PC
San Diego, California
July 15, 1999
54
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1998
ASSETS
Current assets
Cash $ 7,259
Prepaid expenses and other 24,062
Assets held for sale 2,280,629
Total current assets 2,311,945
Property, net 2,862,814
Loan fees, net 76,441
$ 5,251,200
LIABILITIES AND STOCKHOLDERS'EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 33,143
Notes payable on assets held for sale 1,854,851
Total current liabilities 1,887,994
Long-term debt 2,320,000
Security deposits 53,319
Total liabilities 4,261,313
Commitments and contingencies (note 7)
Stockholders' equity
Preferred stock, $.Ol par value: 25,000,000 shares authorized;
290,000 shares issued and outstanding 2,900
Common stock, $.001 par value: 100,000,000 shares authorized;
6,745,661 shares issued and outstanding 6,746
Additional paid-in capital 3,553,278
Accumulated deficit after December 31, 1997 (2,573,037)
Total stockholders' equity 982,887
$ 5,251,200
See notes to consolidated financial statements
55
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
Year Ended December 31, 1998
Revenues
Rental income $ 771,593
Service income 666,731
Other 21.489
1,459,813
Costs and expenses
Cost of rental income 432,626
Cost of service income 676,888
Selling, general, and administrative 521,532
Interest, net 533,516
Loss from investments 193,990
Loss on disposal of assets held for sale 114,755
Special charges
Loss on disposal of subsidiary 487,672
Write-down of assets held for sale to net realizable value 1,071,871
4032.85
Net loss $(2,573,037)
Net loss per common share - basic and diluted $ (0.45)
Weight average number of common shares outstanding 5,766,576
See notes to consolidated financial statements
56
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBSUDIARIES
Consolidated Statement of Changes in Stockholders' Equity
Year Ended December 31, 1998
Common Preferred
Shares Stock
Balance, January 1, 1998 4,648,175 $ 2,900
Issued for cash ........ 360,000 --
Issued for services .... 1,201,563 1,202
Issued for securities .. 90,000 90
Collection of note ..... -- --
Issued for minority
interest in Miramar .. 395,923 396
Issued for goods ....... 50,000 50
Stock issuance and
promotion costs ..... -- --
Net loss ............... (2,573,037
Balance, December 31,
1998 $ 6,745,661 $ 2,900
57
<PAGE>
Additional
Common Paid-In Accumulated
Stock Capital Deficit
Balance, January 1, 1998 $ 4,648 $ 2,425,458 $ --
Issued for cash ........ 360 322,140 --
Issued for services .... 1,202 453,973 -
Issued for securities .. 90 89,910 --
Collection of note ..... -- -- -
Issued for minority
interest in Miramar .. 369 320,225 -
Issued for goods ....... 50 49,950 -
Stock issuance and
promotion costs ..... (108,378) (108,378) -
Net loss ............... (2,573,037)
Balance, December 31,
1998 $ 6,746 $ 3,553,278 $(2,573,037)
58
<PAGE>
Stock
Subscription
Recievable Total
Balance, January 1, 1998 $ (65,250) 2,367,756
Issued for cash ........ - 322,500
Issued for services - 455,175
Issued for securities .. - 90,000
Collection of note ..... 65,250 65,250
Issued for minority
Interest in Miramar
Issued for gooda - 50,000
Stock issuance and
Promotion costs - (108,378))
Net loss ............... - (2,573,037)
Balance, December 31,
1998 $ -- $ 989,887
See notes to consolidated financial statements.
59
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBSEDIARIES
Consolidated Statement of Cash Flows
Year Ended December 31, 1998
Cash flows from operating activities
Net loss .................................................... $(2,573,037)
Adjustments to reconcile net loss to net
cash from operating activities
Depreciation ............................................. 324,836
Amortization of loan fees ................................ 30,346
Stock issued for services ................................ 455,175
Write-down of assets held for sale to net realizable value 1,071,871
Loss from investments .................................... 193,990
Loss on disposal of assets held for sale ................. 114,755
Loss on disposal of subsidiary ........................... 487,672
Changes in operating assets and liabilities
Accounts receivable .................................. 14,396
Prepaid expenses and other ........................... (22,076)
Accounts payable and accrued liabilities ............. (82,360)
Security deposits .................................... 11,859
Net cash from operating activities ................ 27,427
Cash flows from investing activities
Cash balances from subsidiary sold .......................... (4,841)
Proceeds from disposal of assets held for sale .............. 560,922
Capital expenditures ........................................ (691,728)
Net cash from investing activities ................ (135,647)
Cash flows from financing activities
Sale of common stock ........................................ 322,500
Collection of subscription receivable ....................... 65,250
Stock issuance and promotion costs .......................... (108,378)
Net borrowings under short-term debt ........................ (97,255)
Issuance of long-term debt .................................. 3,113,748
Repayment of long-term debt ................................. (3,182, I07)
Net cash from financing activities ................ 113,758
Net increase in cash ............................................ 5,538
Cash, beginning of year ......................................... 1,721
Cash, end of year ............................................... $ 7,259
Supplemental disclosure of cash flow information:
Interest paid ............................................... $ 533,516
Taxes paid$ 2,400
See notes to consolidated financial statements.
60
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
The Company. The Company was incorporated in Wyoming on October 22, 1984 and
until September 1992 was named Plumbing Assoc., Inc. During 1992, the Company
was merged with a newly formed Nevada corporation named A.R.S. International,
Inc. in order to change the Company name and have the surviving Company be
domiciled in Nevada. On August 1, 1994, the Company name was changed to
IncreMental Data, Inc. On September 9, 1997, the Company changed its name to
Golden Age Homes, Inc. On October 5, 1998, the Company changed its name to
American Health Systems, Inc.
Principles of Consolidation. The consolidated financial statements include the
accounts of American Health Systems, Inc. and its wholly owned subsidiaries GAM
Properties, Inc. ("GAM"), Golden Age Homes Development Corp., and Miramar Road
Associates, LLC ("Miramar'). The Company owns a 99% interest in Miramar, which
is scheduled to dissolve September 1, 2027. All significant intercompany
transactions have been eliminated.
Going Concern Considerations. The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. The Company
has suffered significant losses and has undertaken a reorganization plan that
involves a change in management, the disposition of substantially all Company
assets, and a change in business direction that is subject to regulatory
approval (see note 2). These factors raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result -from the outcome of this uncertainty.
Accounting Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results may differ from those estimates.
Revenue Recognition. Base rental income is recognized on a straight-line basis
over the life of the related leases. Rental income also includes reimbursement
of common area maintenance and other operating expenses. Tenant reimbursements
are recognized when earned.
Leasing Costs. Costs incurred in obtaining tenant leases are expensed as
incurred.
Advertising Costs. Advertising and promotion costs are expensed as incurred.
Income Taxes. Income taxes are based on pretax financial accounting income
(loss). Deferred tax liabilities and assets are principally recognized for the
expected future tax consequences of temporary differences between the financial
statements and tax bases of assets and liabilities at the applicable enacted
rates.
Common Stock Issuance and Promotion Costs. Common stock issuance and promotion
costs including
61
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
distribution fees, due diligence fees, wholesaling costs, marketing costs, legal
and accounting fees, and printing are capitalized before sale of the related
stock and then charged against gross proceeds when the stock is sold.
Property. Property is stated at cost. Additions, renovations, and improvements
are capitalized. Maintenance and repairs which do not extend asset lives are
expensed as incurred. Depreciation is provided on a straight-line basis over
estimated useful lives ranging from 27.5 years for commercial rental properties,
5 years for tenant improvements, and 5-7 years for furniture and equipment.
Allowance for Possible Losses. Management reviews the net realizable value of
the Company's real estate assets periodically to determine whether an allowance
for possible losses is necessary. The carrying value of the Company's
investments is evaluated on an individual investment basis, and to the extent
management's estimate of the net realizable value of each investment is less
than its carrying value, a provision for possible losses is established.
Assets Held for Sale Assets held for sale or trade are presented at the
estimated realizable value net of costs to sell.
Loan Fees. Loan fees are recorded at cost and amortized over the term of the
loans.
Concentration of Credit Risk The Company maintains cash with various financial
institutions. Management performs periodic evaluations of the relative credit
standing of the financial institutions. The Company has not sustained any
material credit losses from these instruments.
Fair Value of Financial Instruments. The carrying values reflected in the
balance sheet at December 31, 1998 reasonably approximate the fair values for
cash, accounts payable, and credit obligations. In making such assessment, the
Company has utilized discounted cash flow analyses, estimates, and quoted market
prices as appropriate.
Net Loss Per Common Share- Net loss per common share is based on the weighted
average number of common shares outstanding during the year.
2. SPECIAL CHARGES
Restructuring of Operations. In September 1998, the Company's stockholders
approved an acquisition agreement and plan of reorganization. The reorganization
plan provided for a change in management and business direction through the
disposal of the Company's existing elder care operations and commercial real
estate and the acquisition of a California health maintenance organization, an
insurance company, and other healthcare related operations. To facilitate the
reorganization, the Company changed its name to American Health Systems, Inc.,
increased the authorized number of common shares to 100,000,000, and designated
1,05 0,000 shares of class B preferred stock.
Planned Acquisition and Subsequent Rescission of Greater Pacific HMO, Inc. In
December 1998, the board of directors approved the acquisition of a 95% interest
in the common stock of Greater Pacific HMO, Inc. for 1,000,000 shares of the
Company's class B preferred stock and 1,000,000 shares of
62
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBIDIARIES
Notes to Consolidated Financial Statements
common stock. In addition, the board approved the issuance of 1,500,000 shares
of common stock to Mr. James Graf for the delivery of lives to the HMO based on
1,500 shares per life. And the Company issued 125,000 shares of its common stock
and 50,000 shares of its class B preferred stock to R.B. Capital & Equities,
Inc. as an investment banking fee in connection with the above transactions.
These transactions were contingent upon obtaining the necessary regulatory
approval for acquisition of the HMO. Because such approval has not been
obtained, the issuance of the shares has been rescinded in 1999, with
retroactive treatment in the accompanying financial statements.
Disposal of GAM and Miramar. In connection with the planned reorganization,
management has been actively marketing the assets of GAM, which consist
primarily of residential real estate. During 1998, the Company sold several of
these properties incurring losses of $114,755. At December 31, 1998, the
accompanying financial statements include a provision of $1,071,871 to reduce
the assets held for sale to estimated net realizable value. On March 17, 1999,
the Company sold all of the outstanding shares of its wholly owned subsidiary
GAM and all of its 99% interest in Miramar to R.B. Capital & Equities, Inc.
("RBC&E") for notes totaling $1,400,000 which bear interest at 7% and are
payable in annual installments of $100,000 beginning March 17, 2000. The Company
then agreed to receive 1,400,000 shares of RBC&E common stock as payment for the
notes. These agreements provide that there shall be a re-evaluation on the third
anniversary subsequent to the issuance of shares; and in the event said shares
are valued at less than $1.00 per share, based on the average bid price per
share, RBC&E reserves the right to issue additional shares in order to enhance
the value of the agreements to $1,400,000. In March 1999, RBC&E was acquired by
Triad Industries, Inc. ("Triad"). Triad then issued 1,120,000 shares of its
common stock and 700,000 shares of its convertible preferred stock in payment of
these notes.
Disposal of Golden Age Homes, Ina On May 1998, the Company formed as a wholly
owned subsidiary a California corporation named Golden Age Homes, Inc. ("GAH").
The Company then transferred its elder care net assets and operations to this
corporation. On November 13, 1998, in connection with the reorganization plan,
the Company sold all of the outstanding shares of this wholly owned subsidiary
to Todd Smith, the Company's former president. The following summarizes the loss
on disposal:
Proceeds from sale of subsidiary
Note receivable-secured ....................... $ 380,000
Intercompany receivables-unsecured ............ 231,583
Total proceeds ............................. 611,583
Less:
Net assets of subsidiary excluding intercompany
receivables/payables ....................... (497,660)
Provision for uncollectible receivables ....... (601,595)
Net loss ...................................... (487,672)
The note receivable of $380,000 is collateralized by the real estate assets of
GAH and the common shares of GAH held by Mr. Smith. However, because GAH is
operating at a loss and its real estate assets are encumbered by priority
claims, management has provided an allowance to reduce the carrying value of the
secured and unsecured receivables to zero.
63
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
PROPERTY
Land $ 280,000
Buildings 2,618,599
Tenant improvements 142,832
Furniture and equipment 1,507
3,042,938
Less accumulated depreciation
and amortization (180,124)
$ 2,862,814
NOTES PAYABLE ON ASSETS HELD FOR SALE
Maturity Interest Monthly Principal
Date Rate Payment Balance
Mortgage note payable 9/2020 7.732$ 2,152 $ 274,239
Mortgage note payable 3/2013 7.012 6,553 707,843
Mortgage note payable 2/2018 7.462 1,948 238,072
Mortgage note payable 2/2020 7.250 2,075 269,204
Mortgage note payable 2/2020 10.125 1,060 114,184
Mortgage note payable 5/2001 8.750 656 89,890
Note payable 11/1998 10.000 1,053 126,419
Note payable 4/1999 8.000 233 35,000
$1,854,851
The above loans are collateralized by assets held for sale, primarily
residential real estate. Management intends to repay the loans with proceeds
from the sale of these assets. Subsequent to December 31, 1998, the Company
refinanced the loan of $126,419 and repaid the loans of $274,239 and $707,843 in
connection with the sale of the related assets.
5. LONG-TERM DEBT
Maturity Interest Monthly Principal
Date Rate Payment Balance
First trust deed 2/2000 13.0% $19,500 $1,800,000
Second trust deed 10/1999 13.0% 4,117 380,000
Third trust deed 6/1999 13.0% 1,517 140,000
$2,320,OQQ
The above loans are collateralized by commercial real estate. The loan
agreements provide for monthly payments of interest with the principal due at
the above dates. Management has negotiated with the current lender a short-term
extension of these maturity dates and is attempting to obtain longer term
financing. Accordingly, the debt has been classified as long-term. Management
has discovered a lien of approximately $400,000 on the commercial real estate
which relates to the of debt of a stockholder and
64
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBSIDURIES
Notes to Consolidated Financial Statements
former officer of the Company. The Company is contingently liable for this debt.
6. INCOME TAXES
Income taxes are provided under the liability method whereby deferred tax asset
and liability account balances are calculated at the balance sheet date using
the current tax laws and rates in effect. As of December 31, 1998, the net
deferred income tax assets resulting from timing differences and net operating
loss carryforward benefits approximate $1 million. Because of the possibility
that the deferred tax assets will not be realized, a valuation allowance of $1
million has been used to offset the recognition in the consolidated financial
statements. The use of may tax loss carryforward benefits may also be limited as
a result of changes in Company ownership.
7. COMMITMENTS AND CONTINGENCIES
Litigation and Claims. The Company is involved in certain lawsuits and claims
arising in the normal course of its business. Although it is not possible to
determine the final outcome of these matters, management believes that any
liability will not have a material adverse effect on the Company's operations or
financial position.
Lien on Office Building. See note 5.
8. RELATED PARTY TRANSACTIONS
Disposition of Golden Age Homes, Inc See note 2.
Disposition of GAM Properties, Inc See note 2.
Stock Based Compensation. See note 9.
9. STOCK BASED COMPENSATION
The Company has issued restricted common voting stock in return for services.
The Company issued 340,000 shares to compensate directors and officers; 560,000
shares for management fees to R.B. Capital & Equities, Inc.; 276,161 shares for
stock promotion and issuance costs; and 25,402 shares for other services.
PREFERRED STOCK
The stock is convertible after December 31, 1999 into common stock using a value
of $5.00 per preferred share. The number of common shares received will be
computed using 90% of the average bid price prior to conversion for the value of
the common shares. The Company has a call provision on the preferred stock after
December 31, 1999 at
$5.50 per share.
65
<PAGE>
AMERICAN HEALTH SYSTEMS, INC. AND SUBSIDARIES
Notes to Consolidated Financial Statements
SUBSEQUENT EVENTS
Disposal of GAM and Miramar. See note2.
Rescission of Common and Preferred Stock Issuance. See note 2.
66
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
FINANCIAL STATEMENTS
December 31, 1998 and 1997
67
<PAGE>
TABLE OF CONTENTS
Independent Auditor's Report
Audited Financial Statements:
Balance Sheets
Statements of Operations
Schedules of Administrative Expenses
Statements of Stockholders' Equity
Statements of Cash Flow
Notes to Financial Statements
68
<PAGE>
ARMANDO C. 1BARRA
CERTIFIED PUBLIC ACCOUNTANTS
(A Professional Corporation)
INDEPENDENT AUDITORS REPORT
To the Board of Directors
Triad Industries, Inc.
(Formerly Healthcare Resources Management, Inc.)
16935 W. Bernardo Drive
San Diego, CA 92126
We have audited the accompanying balance sheet of Triad Industries, Inc.,
(Formerly Healthcare Resources Management, Inc.) (A Nevada corporation) as of
December 31, 1998 and 1997 and the related statement of operations,
stockholders' equity and cash flows for the years ended December 31, 1998 and
1997. 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.
We conducted our audits 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 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 Triad Industries, Inc., as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years ended December 31, 1998 and 1997 in conformity with generally
accepted accounting principles.
ARMANDO C. IBARRA, C.P.A. - APC
December 8, 1999
350 E. Street, Chula Vista, CA 91910
Tel: (619) 422-1348 Fax: (619) 422-1465
69
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Balance Sheets
December 31, 1998 and 1997
December December
1998 1997
ASSETS
Current Assets
Cash $ 1,187 $ 496
Notes receivable 15,006 4,100
Deferred tax asset 11,426 11,730
Accounts Receivable 0 7,369
Total Current Assets $ 27,619 $ 23,695
TOTAL ASSETS
LIABILITIES & STOCKHOLDERS'EQUITY
Common stock, $ 0.001 par value; 50,000,000 shares $ 5,257 9,302
authorized; 5,256,716 and 9,301,877 shares issued and
outstanding in 1998 and 1997 respectively
Additional paid-in capital 129,429 103,784
Stock subscription receivable (20,000) 0
Retained Earnings (87,067) (88,791)
TOTAL STOCKHOLDERS'EQUITY 27,619 23,695
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY 27,619 23,696
See Notes to the Financial Statement
70
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Balance Sheets
December 31, 1998 and 1997
December December
1998 1997
ASSETS
Current Assets
Cash $ 1,187 496
Notes receivable 15,006 4,100
Deferred tax asset 11,426 11,730
Accounts Receivable 0 7,369
Total Current Assets $27,619 $23,695
TOTAL ASSETS $27,619 $ 23,695
LIABILITIES & STOCKHOLDERS'EQUITY
Common stock, $ 0.001 par value; 50,000,000 shares $ 5,257 $ 9,302
authorized; 5,256,716 and 9,301,877 shares issued and
outstanding in 1998 and 1997 respectively
Additional paid-in capital 129,429 103,184
Stock subscription receivable (20,000) 0
Retained Earnings (87,067) (88,791)
TOTAL STOCKHOLDERS' EQUITY 27,619 23,695
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 27,619 23,695
See Notes to the Financial Statement
71
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Statements of Operations
For the twelve months ended December 31, 1998 and 1997
December 1998 December 1997
REVENUES
Revenu-es $ 74,174 $ 26,325
Total Revenues 74,174 26,325
GENERAL & ADMINISTRATIVE EXPENSES 72,146 93,244
Net Income (Loss) Before Taxes 2,028 (66,919)
Income Tax Expense (304) 11,730
NET INCOME $ 1,724 $ (55,189)
BASIC EARNINGS (LOSS) PER SHARE $ 0.00 $ (0.01)
DILUTED EARNINGS (LOSS) PER SHARE $ 0.00 $ 0.00
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 11,9732885 6,365,435
See Notes to the Financial Statement
72
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Schedules of General and Administrative Expenses
For the twelve months ended December 31, 1998 and 1997
December 1998 December 1997
General & Administrative expenses
Accounting $ 195 $ 1,075
Advertising 94 4,988
Answering services 873 1,044
Auto Expenses 0 6,921
Bad Debts 0 7,953
Bank charges 184 270
Consulting 48,160 22,430
Contracting Services 0 576
Computer Maintenance 0 431
Delivery 17 212
Donations 0 20
Dues & Subscriptions 0 77
Entertainment & Meals 0 1,368
Equipment Rentals 0 1,023
Fees & services 747 859
Insurance - Employees 0 2,418
Interest 0 289
Legal services 696 95
Management 0 8,997
Miscellaneous 272 679
Moving 100 0
Office expense 35 427
Office supplies 1,405 2,861
Printing and Reproduction 31 178
Postage 501 95
Rent 4,915 12,700
Rent Storage Space 0 1,400
Repairs & maintenance 65 0
Services 588 0
Travel and lodging 11,566 6,357
Taxes - Other 0 645
Telephone 1,702 4,565
Utilities 0 2,291
Total General & Administrative expenses $72,146 $93,244
See Notes to the Financial Statement
73
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Statement of Stockholders' Equity
From January 1, 1997 to December 31, 1998
December 31, 1998 Common Common
Shares Stock
Balance, January 1, 1997 5,567,377 5,567
Business Acquisition - October 15, 1997 3,734,500 3,735
Paid in Capital 52,039 52,039
Audit adjustment (86,637) (86,637)
Operating Loss December 31, 1997 (55,189) (55,189)
Balance, December 31, 1997 9,301,877 9,302
1:9 reverse stock split March 15, 1998 (8,245,461) (8,245)
Common shares issued March 31, 1998 2,200,300 2,200
Common shares issued July 1, 1998 2,000,000 2,000
Operating Income December 31, 1998 1,724 1,724
Balance, December 31, 1998 5,256,716 $ 5,257
74
<PAGE>
Additional Stock
paid In Subscription
Capital Receivable
Balance, January 1, 1997 191,960 0
Business Acquisition - October 15, 1997 (140,815) 0
Paid in Capital
Audit adjustment
Operating Loss December 31, 1997
Balance, December 31, 1997 103,184 0
1:9 reverse stock split March 15, 1998 8,245 0
Common shares issued March 31, 1998
Common shares issued July 1, 1998 18,000 (20,000)
Operating Income December 31, 1998
Balance, December 31, 1998 $ 129,429 $ (20,000)
75
<PAGE>
Retained Total
Earnngs
Balance, January 1, 1997 53,035 250,562
Business Acquisiotn on October 15, 1997 0 (137,080)
Paid In Capital 0 52,039
Audit Adjustment (86,637) (86,637)
Operating Loss Dewcember 31, 1997 (55,189) (55,189)
Balance December 31, 1997 (88,791) 23,695
1:9 reverse stock splti March 15, 1998 0 0
Common shares issued March 31, 1998 0 2,200
COmmon shares issued July 1, 1998 0 0
Operating Income December 31, 1998 1,724 1,724
Balance December 31, 1998 $ (87,067) $ 27,619
76
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Statement of Cash Flows
December 31, 1998 and 1997
December 1998 December 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,724 $(55,189)
Increase in deferred tax benefit 0 (11,730)
Increase in note receivable (10,906) 0
Decrease in accounts receivable 7,369 0
Decrease in deferred tax asset 304 0
Nd Cash provided (used) by operating activities (1,509) (66,919)
CASH FLOWS FROM MVESTING ACTINITIES
Net cash used by investing activities 0 0
CASH FLOWS FROM FINANCING ACTIMIES
Paid in Capital 0 52,039
Proceeds from the sale of common stock 0 3,735
Contributions by investors 2,200 0
Net cash provided financing activities 2,200 55,774
Net increase (decrease) in cash 691 (11,145)
Cash at beginning of year 496 11,641
Cash at end of year 1,187 $ 496
SUPPLEMENTAL DISCLOSURES
Cash paid during year for interest $ 0 $ 0
See Notes to the Financial Statement
77
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,1998 AND 1997
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations:
The company was originally incorporated in New York as International Telescript
in 1987 and traded under the symbol "TELC". The company ceased trading in 1988.
In October 1997, the business base of Interstate Care Systems, a four-year-old
Nevada healthcare management corporation, was acquired through a structured
acquisition, which was a reverse merger. The principles of Interstate assumed
management control of the company, redomiciled in Nevada and changed the name to
Healthcare Management Resources, Inc., to better reflect the nature of the
business. The company made the required filings and resumed trading on the OTC
Bulletin Board as "HRCL".
Issuance of Shares Equivalents:
Valuation of shares for services is based on the fair market value of
services.
Income (Loss) Per Share:
Basic earnings per share amounts are calculated based on the weighted average
number of shares outstanding during each period presented
Use of Estimates and Adjustments:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates. In accordance with FASB 16 all
adjustments are normal and recurring.
Income Tax: The Company records its income tax provision in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". (See Note 3).
Revenue Recognition
Revenue is derived from consulting in the healthcare industry. Accrual method of
accounting is used where as revenues are recognized when earned and expenses are
recognized when incurred.
78
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,1998 AND 1997
NOTE 2 - BASIS OF PRESENTATION AND CONSIDERATIONS RELATED TO
CONTINUED EXISTENCE (going concern)
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the twelve months ended December 31, 1998.
The Company's management intends to raise additional operating funds through
equity and/or debt offerings.
NOTE 3 - INCOME TAXES
The Company records its income tax provision in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" which
requires the use of the liability method of accounting for deferred income
taxes.
At December 31, 1998, the Company has a tax net operating loss carryforward of
$64,891 (tax benefits resulting from losses for tax purposes have been
recorded). At December 3 1, 1998, the Company has $11,426 of net tax benefit.
NOTE 4 - AUDIT ADJUSTMENTS
Management agreed to adjust intangibles, obsolete equipment, other assets and
liabilities with a net charge to retained earnings. Our adjustment was made to
correct the 1997 unaudited financial statements. We made our adjustment in
accordance with of FASB 16.
NOTE 5 - SUBSEQUENT EVENT
In March 1999, Healthcare Resources Management, Inc., ratified a plan of
organization, whereby, Healthcare Resources Management, Inc., will acquire 100%
of the common stock of RB Capital & Equities, Inc. and its wholly owned
subsidiary (Gam Properties) for 5,068,150 shares of the post-split common stock
of Healthcare Resources Management, Inc.
Also, HRM, Inc. will acquire 99% of Miramar Road Associates, LLC for 700,000
shares of preferred stock.
79
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31,1998 AND 1997
NOTE6-STOCK
As of January 1, 1997 there were 5,526,377 shares of common stock outstanding.
On October 15, 1997 the Company acquired Interstate Care Systems (through a
reverse merger) for 3,734,500 shares. As of December 31, 1997 there were
9,301,877 shares of common stock. As of January 1, 1998 there were 9,301,877
shares of common stock outstanding. On March 15, 1998 the Company reversed split
the 9,301,877 shares on a one for tern (1:9) leaving 1,056,416 shares
outstanding. On March 31, 1998 the Company issued 2,200,300 shares of stock for
$2,200 cash. On July 1, 1998 the Company issued 2,000,000 shares for a stock
subscription receivable of $20,0000. As of December 31, 1998 there were
5,256,716 shares of common stock outstanding.
80
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 1998 and 1999
81
<PAGE>
TABLE OF CONTENTS
Independent Auditor's Report
Audited Financial Statements:
Balance Sheets
Statements of Operations
Schedules of Administrative Expenses
Statements of Stockholders' Equity
Statements of Cash Flow
Notes to Financial Statements
82
<PAGE>
ARMANDO C. IBARRA
CERTIFIED PUBLIC ACCOUNTAM
(A Professional Corporation)
To the Board of Directors
Triad Industries, Inc.
(Formerly Healthcare Resources Management, Inc.)
RB Courtyard, Suite 232
16935 W. Bernardo Drive
San Diego, CA 92126
We have audited the accompanying consolidated balance sheets of Triad
Industries, Inc. (Formerly Healthcare Resources Management, Inc.) (collectively.
the company) as of December 31, 1999 and 1998 and the related consolidated
statements of operations, changes to stockholders' equity and cash flows- for
the year then ended. These consolidated financial statements are the
responsibility of the company's management- Out responsibility is to express an
opinion on these consolidated statements based on our audit.
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 consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fkirly, in all material respects, the financial position of the company as of
December 31, 1999 and 1998 and the results of its operations and its cash flows
for the year then ended, in conformity with generally accepted accounting
principles.
ARMANDO C. IBARRA, C.P.A. - APC
March 22, 2000
350 E Street, Chula V61a, CA 91910
Tel: (619) 422-1348 Fax: (619) 422-1465
83
<PAGE>
(Formerly Healthcare Resources Managemgent, Inc.)
Consolidated Balance Sheets
As of December 31,1999 and 1999
ASSETS
1999 1998
Current assets
Cash $ 43,236 1,187
Amounts receivable 463,941 15,006
Marketable securities 454,792 0
Impound account 4,062 0
Assets held for sale 1,345,350 0
Deferred tax benefit 193,400 11,426
Total current assets 2,504,671 27,619
Net Property and Equipment 3,420,612 0
Investments
Investment in securities available for sale 425,000 0
Total investments 425,000 0
Other Assets
Gift Certificates 6,000 0
Organization expense 25,000 0
Loan foes 143,779 0
Accumulated amortization (96,929) 0
Total other assets 77,850 0
TOTAL ASSETS $ 6,428,133 $ 27,619
See Notes to Consolidated Financial Statements
84
<PAGE>
TRIAD INDUSTREES, INC.
(Formerly Healthcare Resources Management, Inc.)
Consolidated Balance Sheets
As of December 31, 1999 and 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
1999 1998
Current liabilities
Accounts payable $ 19,933 $ 0
Loans payable 93,862 0
Deferred revenue 77,158 0
Greentree Lease 1,655 0
Taxes payable 16,853 0
Line of credit 25,000 0
Security deposits 39,965 0
Notes payable on assets held for sale 918,966 0
Trust deeds and mortgages 2,782,500 0
Total current liabilities 3,975,792 0
TOTAL LIABILITIFS $ 3,975,792 $ 0
Stockbolders' equity
Preferred stock (S1.00 par value,
10.000,000 shares 950,000 0
authorized 950,000
shares issued and outstanding.)
Common stock (SO.001 par value,
50,000,000 shares 6,404 5,257
authorized 6,403,4 18 and
5,256,716 shares i3sucd
and outstanding for 1999 and
1998, respectively)
Stock subscription receivable (62,500) (20,000)
Paid in capital 2,275,241 129,429
Retained earnings (616,804) (97,067)
Total Stockholders' equity 2,452,341 27,619
TOTAL LUBTLITIES & STOCKHOLDERS' EQUITV $ 6,428,133 $ 27,619
See Notes to Consolidated Financial Statements
85
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources, Management, Inc.)
Consolidated Statements of Operations
For the twelve months ended December 31,1999 and 1998
1999 1998
REVENUES
Consulting $ 434,723 74,174
Rental income 495,456
Sale of securities 177.952
Sale of assets - net (206,715)
Fee income 1,210
Interest Income 1,169
Total revenues 903,795 74,174
OPERATING COSTS
Cost of securities sold 113,911
Total operating costs 113,8t 1 0
Operating income 799,994 74,174
ADMINISTRATIVE EXPENSES 1,299,996 72,146
Loss before other income & (expenses) (510,012) 2,029
OTHER INCOME & (EXPENSES)
Other Expenses (149)
Other Income 27,806
Interest Expense (378,036)
Mortgage Refinancing 441,000
Unrecognized loss on securities (303,746)
Total Other income & expenses (213,125) 0
NET INCOME (LOSS) BEFORE TAXES (723,137) 2,029
PROVISION FOR INCOME TAXES (BENEM (193,400) (304)
NET INCOME (LOSS) $ (529,737) $ 1,724
BASIC EARNINGS (LOSS) PER SHARE $ (0.12) $ 0.00
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 4,649,949 3,729,424
DELUTED EARNINGS (LOSS) PER SHARE $ (0.09) $ 0.00
WEIGHTED AVERAGE OF DILUTED
COMMON SHARES OUTSTANDING 5,969,223 0
See notes to Consolidated Financial Statements
86
<PAGE>
TRIAD INDUSTREES, INC.
(Formerly Healthcare Resource Management, Inc.)
Consolidated Schedules of Administrative Expenses
For the twelve months ended December 31, 1999 and 1998
ADMINISRATIVE EXPENSES 1999 1998
Accounting $14,346 $195
Advertising 284 94
Answering services 0 873
Auto expenses 4,033 0
Bad Debt 5,637 0
Bank charges 902 194
Commissions 74,956 0
Compensation expense 29,376 0
Consulting fees 179,886 48,160
Delivery 0 17
Depreciation & Amortization 207,845 0
Discount on Trust Deed 104,634 0
Dues & subscriptions 1,760 0
Elevator 900 0
Employee bonus 1,000 0
Entertainment 134 0
Equipment rental 6,937 0
Fees & services 0 747
Filing fees 10,595 0
Freight 2,669 0
General Insurance 18,626 0
Homeowners fees 600 0
Janitorial 4,354 0
Landscaping 1.043 0
Lease commissions 8,250 0
Legal fees 14,960 696
Management fees 103,086 0
Membership fees 60 0
Miscellaneous 1,255 272
Moving expenses 0 100
See Notes to Consolidated Financial Statements
87
<PAGE>
TRIAD INDUSTIRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Consolidated Schedules of Administrative Expenses
For the twelve months ended December 31, 1999 and 1998
(CONT -)
1999 1998
Office expenses 15,654 35
Office supplies 0 1,405
On line services 2,250 0
Outside services 56,498 0
Postage and delivery 1,214 501
Printing 408 31
Professional fees 56,441 0
Rent 27,855 4,915
Repairs & maintenance 20,884 65
Services 0 589
Salaries 158,285 0
Stock transfer fees 12,869 0
Supplies 6,977 0
Federal taxes 793 0
Payroll taxes 1,733 0
Property taxes 26,474 0
Other taxes 3,968 0
Telephone 8,913 1,702
Tenant repairs 6,799 0
Title fees 2,443 0
Trash 3,961 0
Travel and lodging 17,426 11,566
Utilities 52,609 0
Warehouse expense 4,615 0
Water 12,690 0
Wire fees (brokerage) 220 0
Total Administrative expenses $ 1,299,996 $ 72,146
See Notes to Consolidated Financial Statements
88
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Consolidated Statement of Stockholders' Equity
For the years ending December 31, 1999 and 1998
Preferred Preferred
Shares Stock
Amount
Balance, January 1, 1998 -- $ --
1:9 reverse stock split March 15,1998 -- --
Common shares issued March 31, 1998 -- --
Common Shares issued July 31, 1999 -- --
Operating Income December 31.1999 -- --
Balance, December 31, 1998 0 0
March 14, 1999
1:10 reverse stock split -- --
Much 15, 1999 - Purchase of
Gam & RB Capital & Equities -- --
March 15, 1999 - Purchase of
Miramar Road Associates, LLC 700,000 700,000
Preferred Stock issued September 1999 1,500,000 1,500,000
Stock subscription receivable -- --
Common Stock issued December 1999 -- --
Common Stock issued December 1999 -- --
Operating (Loss) as of
December 31, 1999 -- --
Balance, December 31, 1999 850,000 $ 850,000
89
<PAGE>
Common Common
Shares Stock
Amount
Balance, January 1, 1998 9,301,877 $ 9,302
1:9 reverse stock split March 15,1998 (8,245,461) (8,245)
Common shares issued March 31, 1998 2,200,300 2,200
Common Shares issued July 31, 1999 2,000,000 2,000
Operating Income December 31.1999 -- --
Balance, December 31, 1998 5,256,716 5,257
March 14, 1999
1:10 reverse stock split (4,731,048) (4,731)
Much 15, 1999 - Purchase of
Gam & RB Capital & Equities 5,068,150 5,069
March 15, 1999 - Purchase of
Miramar Road Associates, LLC - -
Preferred Stock issued September 1999 -- --
1,50,000
Stock subscription receivable -- -
Common Stock issued December 1999 320,000 320
Common Stock issued December 1999 499,600 490
Operating (Loss) as of
December 31, 1999 -- --
Balance, December 31, 1999 $ 6,403,418 $ 6,404
90
<PAGE>
Addiitonal Stock
Paid in Subscriptions
Capital Receivable
Balance, January 1, 1998 $ 103,824
1:9 reverse stock split
March 15,1998 8,245 --
Common shares issued March 31, 1998 -- --
Common Shares issued July 31, 1999 18,000 (20,000)
Operating Income December 31.1999 -- --
Balance, December 31, 1998 129,429 (20,000)
March 14, 1999
1:10 reverse stock split 4,731 --
Much 15, 1999 - Purchase of
Gam & RB Capital & Equities 1,966,610 (62,500)
March 15, 1999 - Purchase of
Miramar Road Associates, LLC 73,960 --
Preferred Stock issued September 1999 -- --
Stock subscription receivable -- 20,000
Common Stock issued December 1999 71,625 --
Common Stock issued December 1999 28,886 --
Operating (Loss) as of
December 31, 1999 -- --
Balance, December 31, 1999 $2,275,241 $(62,500)
91
<PAGE>
Retained Total
Earnings
Balance, January 1, 1997 $ (88,791) $ 23,695
1:9 reverse stock split March 15, 1998 - -
Common shares issued March 31, 1998 - 2,200
Common Shares issued July 31, 1998 - -
Operating Income December 31, 1998 1,724 1,724
Balance, December 31, 1998 (87,067) 27,619
March 14, 1999
1:10 reverse split - 0
March 15, 1999 - Purchase of
Gam & RB Capital and Equities 0 1,909,178
March 15, 1999 - Purchase of
Miramar Road Associates, LLC 0 773,960
Preferred Stock Issued September 1999 0 150,000
Stock Subscription receivable 0 20,000
Common stock issed December 1999 0 71,945
Common stock issued December 1999 0 29,376
Operating (Loss) as of
December 31, 1999 (529,737) (529,737)
Balance, December 31, 1999 $ (616,804) $ 2,452,341
See Notes to Consolidated Financial Statements
92
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Consolidated Statements of Cash Flows
For the twelve months ended December 31, 1999 and 1998
1999 1998
CASH FLOWS FROM OPEMTING ACTMTIZS
Income (loss) from operations $ (529,737) $ 1,724
(Increase) in note receivable -- (10,906)
Depreciation & Amortization expense 207,945 --
(Increase) in accounts receivable (449,835) 7,369
(Increase) m deferred tax benefit (181,974) 304
(Increase) in Impound account (4,062) --
(Increase) in Marketable securities (454,792) --
(Increase) in Loan payable 93,962 --
Increase in other accounts payable 139,944 --
Security deposits 39,965 --
(Increase) in Other Assets (6,000) --
Net Cash provided (used) by operating activities (1,144,374) (1,509)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Securities (425,000) --
Acquisition of Investment property (4,901,879) --
Loan fees (143,779) --
Net cash used by investing activities (51470,657) 0
CASH FLOWS FROM FINANCING ACTIVITIES
Investment Property Mortgages 918,966 --
Greentree Lease 1,655 --
Trust Deeds 2,782,500 --
Contribution Capital 2,145,912 2,200
(Increase) in Stock Subscription rec (42,500) --
Common Stock 1,147 --
Preferred Stock 850,000 --
Net cash provided by financing activities 6,657,50 2,200
Net increase (decrease) In cash 42,049 691
Cash at beginning of year 1,197 496
Cash at end of year $ 43,236 $ 1,197
Supplemental Cash Flow Disclosures
Cash paid during year for interest $ 379,036 $ 0
See Notes to Consolidated Financial Statements
93
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1999 and 1998
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
The company was originally incorporated in New York as International Telescript
in 1997 and traded under the symbol "TELC". The company ceased trading in 1989.
In October 1997, the business base of Interstate Care Systems, a four-year-old
Nevada healthcare management corporation, was acquired through a structured
acquisition, which was a reverse merger. The principles of Interstate assumed
management control of the company, redomiciled in Nevada and changed the name to
Healthcare Management Resources, Inc., to better reflect the nature of the
business. The company made the required filings and resumed trading on the OTC
Bulletin Board as "HRCU'. On the 15" of March 1999, the company did a reverse
merger and a 1-9 reverse split of its outstanding stock and changed its name to
Triad Industries, Inc. The company now trades under the symbol "TRDW an the OTC
Bulletin Board.
The company operates through its subsidiaries and is in the healthcare,
financial services, and real estate business.
NOTE2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICZES
a. Accounting Method
The company's financial statements are prepared using the accrual method of
accounting. The company has elected a December 31, year end.
b. Basis of Consideration
The consolidated financial statements of Triad Industries, Inc. include those
accounts of RB Capital & Equity Inc., Gam Properties Inc., Healthcare Resource
Management Inc., and Miramar Road Associates, LLC- Triad Industries owns title
to all of the assets and liabilities of the consolidated financial statement.
All significant intercompany transactions have been eliminated.
c. Cash Equivalents
The company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. Estimates and Adjustments
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent Assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. In accordance with FASB 16 all
adjustments are normal and recurring.
e. Basis of Presentation and Considerations Related to Continued Existence
(going concern)
The company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.
94
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1999 and 1998
(Notes Continued)
The company's management intends to raise additional operating funds through
operations and/or debt offerings.
f. Intangibles
Intangible assets consist of organization expenses and loan fees and am being
amortized on a straight-line basis.
h. Concentration of Credit Risk
The company maintains credit with various financial institutions. Management
performs periodic evaluations of the relative credit standing of the financial
institutions. The company has not sustained any material credit losses for the
instruments. The carrying values reflected in the balance sheet at December 31,
1999 reasonable approximate the fair values of cash, accounts payable, and
credit obligations. In making such assessment, the company, has utilized
discounted cash flow analysis, estimated, and quoted market prices as
appropriate.
L Principle of Consolidation
The consolidated financial statements include the accounts of Triad Industries,
Inc., the parent company, Healthcare Management Resources, a Nevada corporation,
RB Capital & Equities Inc, a Nevada corporation, GAM Properties Inc., a
California corporation, and Miramar Road Associates Inc., a California LLC. All
subsidiaries are wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
j. Revenue Recognition and Deferred Revenue
Revenue includes the following: Miramar Road Associates, Inc. revenue consists
of commercial rental income. Gam Properties Inc. revenue consists of residential
rental income and assets held for sale. RB Capital & Equity Inc. revenue
consists of consulting income and the sale of securities (at fair market value).
The accrual method of accounting is used where as revenues are recognized when
earned and expenses are recognized when incurred.
RB Capital & Equity Inc. has various consulting contracts outstanding in which
the company performs a get of various financial services. The company will
recognize revenues when services on each contract are completed. Therefore, RD
Capital & Equities Inc. records deferred revenue.
k. Income Taxes
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryforwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
95
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1999 and 1998
(Notes Continued)
At December 31, 1999 the company has significant operating and capital losses
carryfoward. The benefits resulting for the purposes have been estimated as
follows .-
Capital Losses $ (57,800)
Valuation Allowance 57,800
Total 0
Net Operating Losses:
Income Tax Benefit $ (193,400)
The company has entered into various contracts, by which the company provides
financial services.
m. Investments in Securities
Marketable securities at December 31, 1999 and 1998 are classified and disclosed
as trading securities under the requirements of SFAS No. 115. Under such
statement, the company's securities are required to be reflected at fair market
value.
n. Property
Property is stated at cost. Additions, renovations, and improvements are
capitalized. Maintenance and repairs, which do not extend asset lives, are
expensed as incurred. Depreciation is provided on a straight-line basis over the
estimated useful lives ranging from 27.5 years for commercial rental properties,
5 years for tenant improvements, and 5 - 7 years on furniture and equipment. The
company owns a fifty-one thousand square foot commercial building located at
6920-6910 A & B and 6914'Miramar Road, San Diego, California.
Land $ 327,614
Buildings 3,067,619
Computer 1,000
Furniture 7,224
Tenant Improvements 153.738
$ 3,557,195
Less Accumulated Depreciation (116,583)
Net Property and Equipment $ 3,420,612
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TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1999 and 1998
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
o. Property Hold for Sale
All of the Company's properties held for sale are on a thirty-year
mortgage.
Location Description Interest Rate Cost Debt
2016-18 Balboa 4 Units 7.81% $420,000 $ 307,909
2015-17 Hornblend
213 5-3 9 Grand Ave Tri-plex 7.66% 355,350 233,955
4592 Brancroft 7 Units 7.500 390,000 264,099
3635 3rd Ave Condo 10.250 180,000 113,004
Total $1,345,350 $ 918,866
Gam Properties, Inc. sold two properties during 1999. In April, Chase property
sold for $1,170,000. In June, V4 Ave. 96 property sold for $199,500. Total costs
of assets sold is S 1, 576,215 leaving a not loss of ($206,715).
p. Short Term Debt - Miramar Building
Interest Rate
First Trust Deed 2/2000 13% $1,800,000
Second Trust Deed 10/ 1999 12% 390,000
Third Trust Deed 6/1999 13% 315,000
Forth Trust Deed 4/1999 14% 259,000
Fifth Trust Deed 6/2000 14% 28,500
$2,782,500
The office building collateralized the above loans. The loan agreements provide
for monthly payments of interest with principle due at the above dates.
Management has negotiated with the current lender a short-term extension of
these maturity dates and is attempting to obtain long term financing. Management
has discovered a hen of approximately S 400,000 on the office building which is
related to the debt of a stockholder and former officer of the L.L.C. The
company had a contingent liability for this debt and paid it off on September
20, 1999.
On September 20, 1999 the company acquired the remaining one-percent partner
minority interest on the Miramar property and paid off S 192,000 of the
outstanding mortgage liability-
97
<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1999 and 1998
q. Investments in Securities Available for Sale
In 1995, the company bought 250,000 shares of Heritage National Corporation at $
0.10 a share. In June, 1999, the company earned 50,000 shares of preferred stock
of American Health System, Inc. at $ 5.00 a share, In 1999, the company acquired
1.5 million shares of Pro Glass at S. 10 a share.
Number of Mkt. Price Balance
Share At Year End Al Year End
Heritage National Corporation 250,000 $ 0.10 $ 25,000
American Health Systems, Inc. 50,000 5.00 250,000
Pro Gins, Inc. 1,500,000 0.10 150,000
Total 1,775,000 $ 425,000
r. Accounts Receivable
Accounts receivable consist of the following: December 31, 1999
Accounts receivable - Various $ 21,323
Accounts receivable - Carrera 520
Accounts receivable - Gahi 1,450
Accounts receivable - Trans-Caribe 2,697
Accounts receivable - Contracts 118,630
Accounts receivable - Fortune Oil 11,500
Accounts receivable - Fees 32,994
Accounts receivable 3rd. Avenue 15,083
Accounts receivable - Ashy 5,000
Accounts receivable - Todd Smith 254,554
Accounts receivable - Trans-Caribe 1,000
Total $463,841
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<PAGE>
TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1999 and 1998
NOTE 3.MARKETABLE SECUR1TIES
At December 31, 1999, the company held trading securities of the following
companies:
Number Mkt. Price Balance
Shares At Year End At Year End
Beach Brew 625,000 0.28 17,500
Blue Gold 125,000 0.00 125
Carrara 325,000 0.00 370
Golden Panther 150,000 0.10 15,000
Fortune Oil 33,000 0.13 5,940
Golden Age 1,283,949 0.001 1,283
Greenland 4,113 0.56 2,303
Healthcare Resources 22,289 0.00 22
Littlemark 453,333 0.20 90,666
Mezzanine Capital 107,000 1.25 133,750
Nicholas Inv 364,583 0.00 364
Peacock Financial 200,000 0.68 136,000
Pro Glass 368,892 0.06 22,133
Spa International 245,165 0.02 4,903
Superior Oil 100,000 0.06 6,000
Thunderstom 3,068 0.06 184
Total Entertainment 55,000 0.31 17,050
Triad Industries 2,000 0.15 300
Regan 5,000 0.11 550
Processing 20,000 0.01 339
Total $ 454,782
NOTE4. OPERATING LEASE
The company operates its facilities under an operating lease agreement with an
unrelated party. The base rent is $ 3,434 per month.
Rent expense was $ 27,855 in 1999 and $ 4,915 in 1998.
99
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TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1999 and 1998
NOTE 5. STOCK
As of January 1, 1998 there were 9,301,877 shares of common stock outstanding.
On March 15, 1998 the Company reversed split the 9,301,877 shares on a one for
tarn (1:9) leaving 1,056,416 shares outstanding. On March 31, 1998 the Company
issued 2,200,300 shares of stock for $2,200 cash. On July 1, 1998 the Company
issued 2,000,000 shares for a stock subscription receivable of $20,0000. As of
December 31, 1998 there were 5,256,716 shares of common stock outstanding. As of
January 1, 1999 there were 5,256,720 shares of common stock outstanding. On
March 14, 1999 the company reversed split the 5,256,720 shares on a one for ten
( 1:10 ) leaving 525,672 shares outstanding. At the shareholders meeting held
March 15, 1999 the stockholders approved the acquisition of RB Capital and
Equities, Inc. a Nevada corporation and its subsidiaries for 5,068,150 shares of
common stock and 700,000 shares of preferred stock. In September the Company
issued 150,000 shares of preferred stock in exchange for 1.5 million shares of
Pro Glass Technologies, Inc. common stock. On September 30, 1999 there were
5,593,822 shares of common stock and 850,000 shares of preferred stock
outstanding. In December 1999, the company issued 489,000 of common stock shares
to management and key employees for services rendered. In December 1999 the
Company issued 320,000 shares of common stock for cash in the amount of 71,945.
On December 31, 1999 there were 6,403,4 18 shares of common stock and 850,000
shares of preferred stock outstanding.
NOTE 6. STOCKHOLDERS'EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of December 31, 1999.
A Preferred Stock, nonvoting, 1.00 par value; authorized 10,000 shares; issued
and outstanding 850,000 shares.
Common stock, $ 0.001 par value; authorized 50,000,000 issued and outstanding
6,403,418 and 5,256,716 shares for 1999 and 1998 respectively.
The holders of Preferred Stock are entitle to receive dividends calculated using
an "Available Cash Flow" formula as prescribed by the Certificate of Designation
of Preferred Stock. There have not been any dividends declared as of December
31, 1999,
100
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TRIAD INDUSTRIES, INC.
(Formerly Healthcare Resources Management, Inc.)
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1999 and 1998
NOTE 7. ISSUANCE OF SHARES FOR SERVICES - STOCK OPTIONS
The company has a nonqualified stock option plan, which provides for the
granting of options to key employees, consultants, and nonemployees directors of
the Company. The valuation of shares for services are based on the fair market
value of services. The Company has elected to account for the stock option plan
under Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees," and related interpretations.
A total of 489,600 shares at .06 were issued for services to management and key
employees for the year ended December 31, 1999.
NOTE 8. ACQUISITIONS
The acquisitions of RB Capital and Equities, Inc., a Nevada corporation, and its
subsidiaries (Gam Properties and Miramar Road Associates, LLC) were recorded as
a purchase in accordance with Accounting Principles Board Opinions No. 16 ( APB
No. 16).
The operating results of the acquired entities are included in the company's
consolidated financial statements from the date of acquisition.
101
<PAGE>
ARMANDO C. IBARRA
CERTIFIED PUBLIC ACCOUNTANIS
(A Professional Corporation)
June 29, 2000
Triad Industries, Inc.
(Formerly know as Healthcare Resources Management, Inc.)
RB Courtyard Suite #232
16935 W. Bernardo Drive
San Diego, Ca. 92126
Re: Triad Industries, Inc.
This is to confirm that we consent to the use of our December 31, 1999 & 1999
audited financial statements of Triad Industries, Inc. in your required SEC
filings including the 10K report.
Sincerely,
ARMANDO C. IBARRA, C.P.A.
350 E. Street, Chula V6U, CA 91910
Tel: (619) 422-1348 Fax: (619) 422-1465
102
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PART III
ITEM 1. Index to Exhibits
The following exhibits are filed with this Registration Statement.
A. *Articles of Incorporation Triad Industries, Inc., formerly Healthcare
Resource Management, Inc., formerly International Telescript, Inc.
B. *Amendments
C. *By-Laws
D. Acquisition Agreements
E. Financial Statements
December 31, 1997 and 1998 Healthcare Resource Management, Inc.
December 31, 1997 and 1998 RB Capital and Equities, Inc.
December 31, 1998 American Health Systems, Inc., and
Subsidiaries
December 31, 1998 and 1999 Triad Industries, Inc., formerly
Healthcare Resource Management, Inc.
F. Subsidiaries
1. RB Capital and Equities
a. *Articles of Incorporation
2. Gam Properties, Inc.
a. *Articles of Incorporation
3. Miramar Road Associates
a. *LLC
4. HRM, Inc.
a. *Articles of Incorporation
5. Triad Realty Corporation
a. *Articles of Incorporation
G. Financial Data Schedule
1. December 31, 1998 Healthcare Resource Management, Inc.
2. December 31, 1998 RB Capital and Equities, Inc.
3. December 31, 1999 Triad industries, Inc. (consolidated)
*Previously filed.
103
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SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly organized.
TRIAD INDUSTRIES, INC.
(Registrant)
Date: _______________ 2000 By: /S/ Gary DeGano
Gary DeGano, President
By: /S/ Linda M. Bryson
Linda M. Bryson, Vice President,
By: /S/ Michael Kelleher
Michael Kelleher, Secretary
104
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