UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECOND AMENDMENT TO THE
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
McCarthy Grenache, Inc.
(Name of Small Business Issuer in its charter)
Nevada 88-0381949
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification
number)
3651 Lindell Road, First Floor
Suite A, Las Vegas, Nevada 89103
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (702) 873-7404
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered: n/a
Name of exchange on which each class is to be registered: n/a
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
<PAGE> 1
TABLE OF CONTENTS
Page No.
Part I
Item 1. Description of Business 3
Item 2. Management's Discussion and Analysis 5
Item 3. Description of Property 10
Item 4. Security Ownership of Certain
Beneficial Owners and Management 10
Item 5. Directors, Executive Officers,
Promoters and Control Persons 10
Item 6. Executive Compensation 11
Item 7. Certain Relationships and Related
Transactions 11
Item 8. Description of Securities 11
Part II
Item 1. Market for Common Equity and Related
Stockholder Matters 11
Item 2. Legal Proceedings 12
Item 3. Changes In and Disagreements with
Accountants 12
Item 4. Recent Sales of Unregistered
Securities 13
Item 5. Indemnification of Directors and
Officers 13
Part F/S 14
Part III
Item 1. Index to Exhibits 40
Item 2. Description of Exhibits 40
Signatures 40
<PAGE> 2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
- -------
McCarthy Grenache, Inc., (the "Issuer" or "Company") was
incorporated under the laws of the State of Nevada on December
19, 1997, as McCarthy Grenache, Inc. McCarthy Grenache, Inc., was
initially wholly owned by Gregorian Surgical Instruments, Inc.
("Gregorian"). Gregorian, a corporation formed under the laws of
the Province of British Columbia, Canada in November of 1995, was
the predecessor parent company. In December of 1997, the
shareholders of Gregorian exchanged all the shares of Gregorian
on a one for one basis for shares of Common Stock of the Company
and the resulting successor corporation is McCarthy Grenache,
Inc. The Company has no subsidiaries and no affiliated companies.
The Company is a development stage company which does not
currently have supply contracts and, therefore, does not have
revenues from operations for the last two fiscal years.
Business of Issuer
- ------------------
The Company is engaged in the development of a principally
wholesale medical supplies, surgical instruments, and equipment
supply service. The Company's products are intended to be:
bathroom safety bars for the infirm, canes, colostomy supplies,
crutches, gloves, stethoscopes, nebulizers, oxygen supplies,
walkers, wheel chairs, and wheelchair van modification kits for
the disabled. The Company's products will be marketed to the aged
and the infirm. Management of the Company believes there is a
demand for these products due to the rapid increase in the age of
the population in the US due to better medical care and the baby
boom population reaching retirement age. Management further
believes that the rapid expansion of the Las Vegas area will
create a shortage of the types of products the Company intends to
market.
The Company intends to lease a suitable office/warehouse and
will wholesale products directly to retailers, medical and
nursing home facilities through mail order, Internet order and
advertising in the press and various other media. The Company
anticipates being able to broker orders through utilizing
attainable contacts within the medical supplies industry and
matching vendors with end-users via wholesaling. The Company
intends to generate revenue in the future by being listed in the
yellow pages and by developing its web-site for Internet orders
and inquiries. At this time, the Company does not have any
principal business suppliers.
The Company's competition varies among its business lines.
Competition in these products and services is primarily centered
on styling, quality, price, brand recognition and service with an
emphasis on the latter. In order for the Company to be
competitive in these marketplaces, the Company must effectively
maintain and promote the quality of its services and its products
among consumers and establish strong marketing relationships with
manufacturers and distributors of products which enhance that
quality image. While the Company believes that it will compete
effectively, the Company competes with a number of manufacturers
and marketers of medical supplies and equipment which have
substantially greater resources than the Company and many of
which have well-recognized brand name contracts and broader and
more established distribution networks. The Company anticipates
being able to utilize its smaller size to attract those seeking
<PAGE> 3
more personalized service and to maintain its ability to adapt
with technological changes over the Internet and in the
marketplace. Further, the Company expects to utilize the Internet
to further attract customers via various search engines upon
completion of various web pages. Specific organizations with whom
the Company intends to compete are A to Z Medical Supply, Medical
Mart and Mobility Plus, all located in Las Vegas, Nevada. As the
Company has not started marketing products, it presently has no
share of this market.
Planned Business
- ----------------
The Company plans to market and promote its wholesale
medical supplies starting in Nevada. The Company has reserved the
Internet site "www.mccarthymedical.com" which is currently under
development and is expected to be operational by March 15, 2000
or shortly thereafter. Since public interest in health is at an
all time high and growing, our presence on the Internet, along
with increased information on the Internet, and the aging of the
baby boom generation, should result in the development of a
vastly improved medical supply industry. Many items such as
wheelchairs, walkers, and mobility equipment for the aged and
infirm are automatically approved by most medical insurance
programs. There is a shortage of ambulatory equipment in the
United States today due to the increasing age of the population.
Website and E-Commerce
- ----------------------
The Company is in the process of developing an Internet
Website located on the World Wide Web at www.mccarthymedical.com.
The Website is in the process of being constructed. The Company
anticipates that the Website, once it is constructed, will
promote the Company's medical supplies and equipment.
Marketing
- ---------
The Company intends to acquire and market medical supplies
and equipment for the aged direct to the retailers from the
manufacturers. The Company intends to rely on a marketing team
and for the prospects of e-commerce to implement the Company's
marketing objectives. The Company also intends to utilize direct
mailing, and e-mail to solicit manufacturers and retailers.
The Company's marketing and licensing strategy is to (i)
establish and expand the sales of the Company's products; (ii)
selectively establish licensed product lines to be marketed and
promoted on the Company's offline developed website; (iii) expand
the number of representatives; and, (iv) acquire or establish
relationships with major manufacturers businesses, companies,
properties or technologies.
<PAGE> 4
The Company will purchase most of its inventory from
existing manufacturers principally in North America and Asia. To
date, no contracts have been executed and the Company does not
anticipate entering into any contracts due to lack of funding.
Upon funding, letters of credit may be sought.
The Company does not anticipate being dependent on one major
or a few major customers. The Company intends to supply to large
nursing facilities and hospitals as well as to major drug store
chains and emergency clinics. However, at this time, the Company
does not have any contracts with any such organizations. Also,
management of the Company expects that the proliferation of web
pages throughout various search engines on the Internet will
attract customers. However, there is no guarantee that the
Company's web-site, when completed, will have a positive impact
on the Company's business.
As of the date of this Registration Statement, the Company
has two part time employees, neither of whom have entered into an
employment arrangement with the Company. The Company's president,
Sean McCarthy, works full-time for the Company. The Company has
no collective bargaining agreements covering any of its
employees, has not experienced any material labor disruption and
is unaware of any efforts or plans to organize its employees. The
Company considers relations with its employees to be good.
Other than the development of its website, the Company has
no intellectual property rights.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward Looking Statements
- --------------------------
This Registration Statement on Form 10-SB contains forward-
looking statements. Such statements consist of any statement
other than a recitation of historical facts and can be identified
by words such as "may," "expect," "anticipate," "estimate,"
"hopes," "believes," "continue," "intends," "seeks,"
"contemplates," "suggests," "envisions" or the negative thereof
or other variations thereon or comparable terminology. These
forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and
uncertainties, including but not limited to: those risks
associated with economic conditions generally and the economy in
those areas where the Company has or expects to have assets and
<PAGE> 5
operations, including, but not restricted to Nevada and
eventually other jurisdictions; competitive and other factors
affecting the Company's operations, markets, products and
services; those risks associated with the ability to obtain
medical supply contracts and the funding of the Company and other
costs associated with the Company's marketing strategies; those
risks associated with the Company's ability to successfully
negotiate with certain business owners; those risks relating to
estimated contract costs, estimated losses on uncompleted
contracts and estimates regarding the percentage of completion of
contracts, risks relating to the ability of Company to raise the
funds necessary to operate and develop business, and risks
relating to changes in interest rates and in the availability,
cost and terms of financing; risks related to the performance of
financial markets; risks related to changes in domestic and
foreign laws, regulations and taxes; risks related to changes in
business strategy or development plans; risks related to any
possible future lawsuits against the Company and the associated
costs, and risks associated with future profitability. Many of
these factors are beyond the Company's control. Actual results
could differ materially from these forward-looking statements.
In light of these risks and uncertainties, there can be no
assurance that the forward-looking information contained in this
registration statement on Form 10-SB will, in fact, occur.
The Company's actual results may differ materially as a result
of certain factors, including those set forth in this Form 10-SB.
Potential investors should consider carefully the previously
stated factors, as well as the more detailed information
contained elsewhere in this Form 10-SB, before making a decision
to invest in the common stock of the Company.
The following is a discussion of the financial condition and
results of operations of the Company as of the date of this
Registration Statement. This discussion and analysis should be
read in conjunction with the accompanying audited Financial
Statements of the Company including the Notes thereto which are
included elsewhere in this Form 10-SB and the notice regarding
forward-looking statements.
The need for medical supplies increases with the increase in
the population and the age of the population. Management of the
Company expects that the aging baby-boomer population will
positively affect the general demand for medical supplies.
Further, at this time, management is not aware of any additional
trends that could affect the Company's liquidity.
<PAGE> 6
PLAN OF OPERATION
The Company is organizing to wholesale medical supplies,
surgical instruments and equipment specializing in ambulatory
aids for the aged. Additional funding through private placement
will be necessary to enable the Company to lease a suitable
office warehouse facility in Las Vegas and to enable the Company
to complete its Web Page and to secure contracts with suppliers
and users.
The Company intends to raise adequate funds from interested
local parties to provide adequate working capital of up to
$750,000 for the next 12 months. When the Company seeks to
actually raise such funds, it is anticipated it will do so by
undertaking an offering of securities pursuant to Regulation D,
Rule 505 or 506, which provides an exemption from registration
under the Securities Act of 1933, as amended. Management will
select the exemption at the time it makes such an offering based
upon advice of counsel. At this time, management has not
commenced any such offering. Such raised funds would be used to
develop Internet business, pay professionals and for advertising
in the Yellow Pages and media. No product research or development
is considered necessary; no new equipment or plant is required,
nor is there expected to be a significant change in the number of
employees over the next 12 months.
Revenue
- -------
The Company has not received revenues from operations during
the two-year period preceding the filing of this form. The
Company has not yet achieved any revenue from operations to date.
Since the Company is still in the development stage its expenses
were nominal.
Liquidity
- ---------
The Company will have to raise additional capital in the
next twelve months. As of December 31, 1998, the Company had
nominal working capital and results. In order to satisfy the
liquidity needs of the Company for the following twelve months,
the Company will be primarily dependent upon proceeds from the
sale of the Company's common and/or preferred stock and possible
future cash flow from operations. Since the Company is in its
development stage and has not entered into any contracts,
attracted clientele or otherwise engaged in any activity that
would generate revenue at this time, the Company does not
currently have the revenue necessary to fund future operations of
the Company. If the Company is unable to obtain adequate funds
from the sale of its stock in public offerings, private
placements, or alternative financing arrangements, it may be
necessary to postpone any additional acquisitions or the
Company's ability to obtain Letters of Credit. The Company, under
such circumstances, would resort to using cash flow for internal
growth.
While the Company has raised capital to meet its working
capital and financing needs, additional financing is required in
order to complete the planned improvements necessary to
the Company's acquisitions. The Company is seeking financing, in
the form of equity and debt in order to make the necessary
improvements and provide working capital. There are no
assurances the Company will be successful in raising the funds
required.
<PAGE> 7
The Company has issued shares of its Common Stock from time
to time in the past to satisfy certain obligations and expects in
the future to also acquire certain services, satisfy indebtedness
and/or make acquisitions utilizing authorized shares of the
capital stock of the Company. If operations and cash flow can be
improved through these efforts, management believes that the
Company's liquidity problems will be resolved and that the
Company can continue to operate. However, no assurance can be
given that management's actions will result in profitable
operations.
The plan of the Company is to raise more financing as soon
as the Company's shares are approved for trading to enable the
Company to enter into purchase and supply contracts. An overall
budget of $750,000 for the first year should achieve the
Company's goals. The Company does not anticipate that there will
be a need to increase the number of employees over the next
twelve months.
Potential Uncertainties
- -----------------------
As the Company expects eventually to obtain equipment from
overseas manufacturers and such expenditures are generated in
foreign currencies, fluctuations in the value of currencies
relative to the United States dollar could adversely affect the
Company's profitability. Royalty payments paid by the Company
relating to foreign licensing arrangements will be converted to
U.S. dollars based on the exchange rate at the time of payment.
Year 2000 Compliance
- --------------------
BACKGROUND. Some computers, software and other equipment
include programming code in which calendar year data is
abbreviated to only two digits. As a result of this design
decision, some of these systems could fail to operate or fail to
produce correct results if "00" is interpreted to mean 1900,
rather then 2000.
<PAGE> 8
ASSESSMENT. The Year 2000 Problem could affect computers,
software and other equipment used, operated or maintained by the
Company. Accordingly, the Company has reviewed its internal
computer programs and systems to ensure that the programs and
systems will be Year 2000 compliant. The Company presently
believes that its computer systems are Year 2000 complaint.
However, while the estimated cost of these efforts, if any arise,
is not expected to be material to the Company's financial
position or any year's results of operations, there can be no
assurance as to this effect.
INTERNAL INFRASTRUCTURE. The Company believes that it has
reviewed and assessed all of the major computers, software
applications, and related equipment used in connection with its
internal operations that would potentially require modification,
upgrade, or replacement to minimize the possibility of a material
disruption to its business. The Company's internal review of
such systems did not identify any material Year 2000 Problem. If
the Company had identified an exposure to the "Year 2000
Problem," Management currently estimates the total cost of
internal reprogramming of its software products and the upgrading
of purchased hardware and software would not be material. While
this is management's best current estimate, items outside
management's control relating to the "Year 2000 Problem" may
impact the Company. The Company estimates the total cost to the
Company of completing any required modifications, upgrades, or
replacements of these internal systems would not have a material
adverse effect on the Company's business or results of
operations.
SYSTEMS OTHER THAN INFORMATION TECHNOLOGY SYSTEMS. In
addition to computers and related systems, the operations of
office and facilities equipment such as fax machines,
photocopiers, telephone switches, security systems, and other
common devices may be affected by the Year 2000 Problem.
CURRENT STATUS. As of the end of February, 2000, the Company
has not encountered any Year 2000 problems with its equipment or
with any of its relationships with third parties. Further,
management is not currently aware of any continuing or latent
Year 2000 risks and does not expect there to be any continuing or
latent risks as the new century progresses.
DISCLAIMER. The discussion of the Company's efforts, and
management's expectations, relating to Year 2000 compliance are
forward-looking statements. The Company's Y2K compliance status
and the level of incremental costs associated therewith, if any,
could be adversely impacted by, among other things, the
availability and cost of programming, testing resources, vendors'
abilities to modify proprietary software, and unanticipated
problems identified in ongoing internal compliance reviews.
<PAGE> 9
ITEM 3. DESCRIPTION OF PROPERTY
The Company's principal executive and administrative offices
are located in Nevada at 3651 Lindell Road, Suite A, Las Vegas NV
89103 in leased premises under an agreement for a term scheduled
to expire June 1, 2000, at which time the Company will renew the
lease for another 12 month term unless the Company has made other
plans or found suitable office/warehouse space. The Company's
right to renew its lease for another term is guaranteed at the
Company's option, with thirty days' notice. The Company is
obligated to pay $1,200 in rent per year on a shared office
basis. The rent for the next 12 month term, if leased, will be
$1,260 per year. The new lease term will only be executed, if
necessary, for economic reasons until the Company has adequate
financing to develop its business and requires other space. The
Company considers its executive and administrative offices to be
adequate and suitable for its current needs. The Company does not
own or lease any other real estate.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of September 30, 1999, the Company's sole officer and
director did not own any securities or the right to acquire any
securities of the Company. Further, as of September 30, 1999,
management of the Company is not aware of any person or group who
owns 5% or more of the securities of the Company.
CHANGES IN CONTROL
The Company has no arrangements which might result in a
change in control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The following table sets forth the sole director and
executive officer of the Company, his age, and all positions held
with the Company.
Name Age Positions
- ---------------------------------------------------------------
Sean McCarthy 46 President, Secretary,
Treasurer and Sole Director
Mr. McCarthy has been the President, Sole Officer and
Director of the Company since its inception in December 1997. Mr.
McCarthy has been involved in the medical supplies and
equipment business for the past eleven years. He has worked
supplying and servicing medical equipment to principal hospitals
and nursing homes in Toronto, Vancouver, and later in Nevada.
From March of 1993 to December of 1997, Mr. McCarthy was the
sole proprietor of SM Medical Company in Toronto, Ontario and
then later in Vancouver, British Columbia. He devotes
approximately 50 hours per week to the affairs of the Company.
<PAGE> 10
ITEM 6. EXECUTIVE COMPENSATION
There has been no executive compensation in any form to date
due to the lack of working capital in the company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The shareholders of Gregorian Surgical Instruments, Inc.,
exchanged an aggregate of 4,942,000 shares of Gregorian for an
aggregate of 4,942,000 shares of McCarthy Grenache, Inc. on a
share for share basis pursuant to the exchange agreement dated
December 26, 1997. The aggregate value of the shares was $4,942,
or $.001 per share, which accounted for a loss of $4,942 as a
result of the exchange.
There have been no material transactions in the past two
years or proposed transactions to which the Company has been or
is proposed to be a party in which any officer, director, nominee
for officer or director, or security holder of more than 5% of
the Company's outstanding securities is involved.
The Company has no promoters other than its sole executive
officer and director. There have been no transactions which
have benefitted or will benefit its sole executive officer and
director either directly or indirectly.
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock
The Company has 25,000,000 authorized shares of Common
Stock, $.001 par value per share, of which 5,122,000 shares were
issued and outstanding as of September 30, 1999. Holders of the
Common Stock are entitled to one vote per share with respect to
all matters that are required by law to be submitted to a vote of
shareholders. Holders of the Common Stock are not entitled to
cumulative voting. The Common Stock has no redemption, preemptive
or sinking fund rights.
To date, the Company has not paid any dividends on its
common stock. The payment of dividends, if any, in the future is
within the discretion of the Board of Directors and will depend
upon the Company's earnings, its capital requirements and
financial condition, and other relevant factors. There are no
provisions in the Company's articles of incorporation or by-laws
that prevent or restrict the payment of dividends. Dividend
payments, if any, would be subject to the provisions of the
Nevada Revised Statutes as well.
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company is voluntarily filing this Registration
Statement on Form 10-SB to obtain listing on the OTC Bulletin
Board, which requires all listed companies to be registered with
the SEC under Section 13 or 15(d) of the Securities Exchange Act
of 1934 and to be current in its required filings once so
registered.
The Company has no public trading market for its common
stock. Although the Company intends to seek a quotation for its
common shares on the Over-the-Counter Bulletin Board in the
future, there is no assurance the Company will do so, nor is
there any assurance that should the Company succeed in obtaining
<PAGE> 11
a listing for its securities on the OTC Bulletin Board or on some
other exchange, that a trading market for the Company's stock
will develop. There are no outstanding options, warrants to
purchase, or securities convertible into common equity of the
Company outstanding. The Company has not agreed to register any
shares of its common stock for any shareholder. There are
presently 4,982,000 shares of common stock which were issued in
December of 1997, 60,000 shares of common stock which were issued
in February of 1998 and 80,000 shares of common stock which were
issued in September of 1999 which may be sold in reliance upon
Rule 144 of the Securities Act of 1933.
STOCKHOLDERS
The are approximately 49 shareholders of record for the
Company's common stock.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in accountants or disagreements
on accounting and financial disclosure matters.
<PAGE> 12
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In December 1997, the Company issued 4,942,000 shares of
Common Stock in connection with the reorganization and exchange
of shares only with the shareholders of Gregorian, the
predecessor company, on a share for share basis with no cash or
other consideration, pursuant to an exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.
These shares were valued at the par value of $.001 per share.
Following the exchange of shares, the value of the shares of the
subsidiary was written off in the period in which the subsidiary
was liquidated. The Company recognized a loss of $4,942 pursuant
to this transaction.
In December 1997, the Company issued 40,000 shares of Common
Stock for cash proceeds of $4,000 in a private transaction,
pursuant to an exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended.
In February 1998, the Company issued 60,000 shares of Common
Stock for cash proceeds of $6,000 in a private transaction,
pursuant to an exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended.
In September 1999, the Company issued 80,000 shares of
Common Stock for cash proceeds of $20,000 in a private
transaction, pursuant to an exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended.
All of the above issuances of securities were issued in
reliance on Section 4(2) of the Securities Act of 1933, as
amended, which provides an exemption from registration for
transactions not involving any public offering. Each distribution
above was very small for nominal amounts, was made to close
friends and associates and was consistent with normal growth of a
small company. Management of the Company believes that Section
4(2) of the Securities Act of 1933, as amended, was enacted with
the intent to exempt such small business offerings from
registration.
ITEM 5. INDEMNIFICATION 0F DIRECTORS AND OFFICERS
The Company's Bylaws provide that the Company will indemnify
its directors and executive officers and may indemnify its other
officers, employees and agents to the fullest extent permitted by
Nevada law. The Company is also empowered under its Bylaws to
enter into indemnification agreements with its directors and
officers and to purchase insurance on behalf of any person it is
required or permitted to indemnify.
In addition, the Company's Articles provide that the
Company's directors will not be personally liable to the Company
or any of its stockholders for damages for breach of the
director's fiduciary duty as a director or officer involving any
act or omission of any such director or officer. Each director
will continue to be subject to liability for breach of the
director's fiduciary duties to the Company for acts or omissions
that involve intentional misconduct, fraud or a knowing violation
of law, or the payment of dividends in violation of Nevada
corporate law. This provision also does not affect a director's
responsibilities under any other laws, such as the federal
securities laws.
<PAGE> 13
PART F/S
Financial Statements
- --------------------
The following financial statements are filed in this Part F/S of
this Form 10-SB:
1. Audited Financial Statements for the nine-months ended
September 30, 1999.
2. Audited Financial Statements for the year ended
December 31, 1998.
<PAGE> 14
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
September 30, 1999 AND
DECEMBER 31, 1998
<PAGE> 15
TABLE OF CONTENTS
Page Number
ACCOUNTANT'S REPORT........................................ 1
FINANCIAL STATEMENT:
Balance Sheet........................................ 2
Statement of Operations and Deficit
Accumulated During the Development Stage............. 3
Statement of Change in Stockholders' Equity.......... 4
Statement of Cash Flows.............................. 5
Notes to the Financial Statements.................... 6
<PAGE> 16
DAVID E. COFFEY 3651 Lindell Rd. - Suite A Las Vegas. NV 89103
CERTIFIED PUBLIC ACCOUNTANT (702) 871-3979
To the Board of Directors and Stockholders
of McCarthy Grenache, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheet of McCarthy
Grenache, Inc. (a development stage company) as of September 30,
1999 and December 31, 1998, and the related statement of
operations, cash flows and changes in stockholders' equity for
the period from December 19, 1997 (date of inception) to
September 30, 1999 and December 31, 1998. These financial
statements are the responsibility of McCarthy Grenache, Inc.'s
management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatements. 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. I believe that my
audit of the financial statements provide a reasonable basis for
my opinion.
In my opinion, the accompanying financial statement present
fairly, in all material respects, the financial position of
McCarthy Grenache, Inc. as of September 30, 1999 and December 31,
1998 and the results of operations, cash flows and changes in
stockholders' equity for the periods then ended as well as the
cumulative period from December 19, 1997 in conformity with
generally accepted accounting principles.
/s/ DAVID E. COFFEY
David E. Coffey, C.P. A.
Las Vegas, Nevada
October 22, 1999
<PAGE> 17
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
Sept 30, Dec. 31,
1999 1998
------- ---------
Cash $ 20,065 $ 1,417
---------- ---------
Total Assets $ 20,065 $ 1,417
========== =========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 400 $ 400
---------- ---------
Total Liabilities 400 400
Stockholders' Equity
Common stock, authorized 25,000,000 shares
at $.001 par value, issued and outstanding
5,122,000 shares and 5,042,000 respectfully 5,122 5,042
Paid-in capital 26,820 6,900
Deficit accumulated during
the development stage (12,277) (10,925)
---------- ---------
Total Stockholders' Equity 19,665 1,017
Total Liabilities and Stockholders' Equity $ 20,065 $ 1,417
========== =========
The accompanying notes are an integral part of these financial
statements.
-2-
<PAGE> 18
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
(With Cumulative Figures From Inception)
Inception
Sept. 30 Dec. 31 Dec. 19, 1997
1999 1999 To Date
----------- ----------- -----------
Sales $ 0 $ 0 $ 0
Expenses
Organizational expense 0 400 400
Office expenses 852 483 1,335
Rent 500 5,100 5,600
Loss on liquidation of subsidiary 0 0 4,942
----------- ----------- -----------
Total expenses 1,352 5,983 12,277
Net loss (1,352) (5,983) (12,277)
----------- ----------- -----------
Deficit accumulated,
beginning of period (10,925) (4,942) $ (12,277)
----------- ----------- ===========
Deficit accumulated during
the development stage $ (12,277) $ (10,925)
=========== ===========
Earnings (loss) per share
assuming dilution:
Net loss per share (.00) (.00) (.00)
=========== =========== ===========
Weighted average shares
outstanding 5,050,888 5,037,000 5,040,182
=========== =========== ===========
The accompanying notes are an integral part of these financial
statements.
-3-
<PAGE> 19
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM December 19, 1997 (Date of Inception)
To September 30, 1999
Additional
Common Paid-in
Shares Amount Capital Total
------- ------ ------- -----
Balance,
December 19, 1997 --- $ -- $ -- $ ---
Issuance of common
stock for cash
December of 1997 40,000 40 3,960 4,000
Issuance of common
stock for stock 4,942,000 4,942 0 4,942
Less net loss 0 0 0 (4,942)
-------- ------- --------- -------
Balance,
December 31, 1997 4,982,000 4,982 3,960 4,000
Issuance of common
stock for cash
February of 1998 60,000 60 5,940 6,000
Less offering costs 0 0 (3,000) (3,000)
Less net loss 0 0 0 (5,983)
-------- ------- --------- -------
Balance,
December 31, 1998 5,042,000 5,042 6,900 1,017
Issuance of common
stock for cash
September of 1999 80,000 80 19,920 20,000
Less net loss 0 0 0 (1,352)
-------- ------- --------- -------
Balance,
September 30, 1999 5,122,000 $ 5,122 $ 26,820 $ 19,665
======== ======= ========= =======
The accompanying notes are an integral part of these financial
statements.
-4-
<PAGE> 20
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(with Cumulative Figures from Inception)
<TABLE>
<CAPTION>
Inception
Sept. 30, Dec. 31, Dec. 19, 1997
1999 1998 To Date
----------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITY
Net loss $ (1,352) $ (5,983) $ (12,277)
Non-cash expenses included in net loss
Liquidation of subsidiary 0 0 4,942
Increase in accounts payable 0 0 400
----------- ----------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITY (1,352) (5,983) (6,935)
CASH FLOWS USED BY INVESTING ACTIVITY
Organizational costs 0 0 400
----------- ----------- ------------
NET CASH USED BY
INVESTING ACTIVITY 0 0 400
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 80 60 180
Paid-in capital 19,920 5,940 29,820
Less offering costs 0 (3,000) (3,000)
----------- ----------- ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 20,000 3,000 27,000
NET INCREASE IN CASH 18,648 (2,983) $ 19,665
============
CASH AT BEGINNING OF PERIOD 1,417 4,000
----------- -----------
CASH AT END OF PERIOD $ 20,065 $ 1,017
=========== ===========
Supplemental disclosure of cash flow information:
Issuance of 4,942,000 shares of common stock in
exchange for common stock in the parent $ 4,942
============
</TABLE>
The accompanying notes are an integral part of these financial
statements.
-5-
<PAGE> 21
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999 and December 31, 1998
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on December 19, 1997
under the laws of the state of Nevada. The business
purpose of the Company is to wholesale medical
supplies.
The Company will adopt accounting policies and
procedures based upon the nature of future
transactions.
NOTE B STOCK OFFERING
The Company completed in December of 1997 a stock
offering. The offering consisted of selling 40,000
shares of its common stock for $4,000 or $.10 per
share. In February of 1998 the Company sold an
additional 60,000 shares of its common stock for
$6,000 or $.10 per share and completed another stock
offering in September of 1999 in which the Company
sold 80,000 shares of its common stock for $20,000 or
$.25 per share.
NOTE C RELATED PARTY TRANSACTIONS - STOCK EXCHANGE
In December of 1997, the Company was formed by
Gregorian Surgical Instruments, Inc. Therefore,
McCarthy Grenache, Inc. was its wholly owned
subsidiary. On December 26, 1997, the stockholders of
Gregorian Surgical Instruments, Inc.. approved an
exchange of all of the outstanding stock in Gregorian
Surgical Instruments, Inc. for stock in McCarthy
Grenache, Inc. on a share for share basis. At the time
of the exchange there were 4,942,000 shares of stock
outstanding of Gregorian Surgical Instruments, Inc.
for which the stockholders received 4,942,000 shares
of stock in McCarthy Grenache, Inc. There were no
tangible assets of Gregorian Surgical Instruments,
Inc. The excess of the par value of the common stock
over the assets acquired of the Gregorian Surgical
Instruments, Inc. was $4,942. This transaction has
been accounted for as a reverse merger.
Upon completion of the stock exchange, Gregorian
Surgical Instruments, Inc. became a wholly owned
subsidiary of McCarthy Grenache, Inc. and the board of
directors of Gregorian Surgical Instruments, Inc.
approved the dissolution and liquidation of Gregorian
Surgical Instruments, Inc. in December of 1997.
-6-
<PAGE> 22
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999 and December 31, 1998
NOTE D EARNINGS (LOSS) PER SHARE
Basic EPS is determined using net income divided by
the weighted average shares outstanding during the
period. Diluted EPS is computed by dividing net income
by the weighted average shares outstanding, assuming
all dilitive potential common shares were issued.
Since the Company has no common shares that are
potentially issuable, such as stock options,
convertible preferred stock, and warrants, basic and
diluted earnings per share are the same.
<PAGE> 23
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 1997
<PAGE> 24
TABLE OF CONTENTS
Page Number
ACCOUNTANT'S REPORT........................................ 1
FINANCIAL STATEMENT:
Balance Sheet........................................ 2
Statement of Operations and Deficit
Accumulated During the Development Stage............. 3
Statement of Changes in Stockholders' Equity......... 4
Statement of cash Flows.............................. 5
Notes to the Financial Statements.................... 6
<PAGE> 25
DAVID E. COFFEY 3651 Lindell Rd. - Suite A Las Vegas. NV 89103
CERTIFIED PUBLIC ACCOUNTANT (702) 871-3979
To the Board of Directors and Stockholders
of McCarthy Grenache, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheet of McCarthy
Grenache, Inc. (a development stage company) as of December 31,
1997 and the related statements of operations, cash flows and
changes in stockholders' equity for the period from December 19,
1997 (date of inception) to December 31, 1997. These financial
statements are the responsibility of McCarthy Grenache, Inc.'s
management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatements. 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. I believe that my
audit of the financial statements provide a reasonable basis for
my opinion.
In my opinion, the accompanying financial statements present
fairly, in all material respects, the financial position of
McCarthy Grenache, Inc. as of December 31, 1997 and the results
of operations, cash flows and changes in stockholders' equity for
the period then ended in conformity with generally accepted
accounting principles.
/s/ DAVID E. COFFEY
David E. Coffey, C.P. A.
Las Vegas, Nevada
November 16, 1998
<PAGE> 26
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
Cash $ 4,000
Organizational costs 400
---------
Total Assets $ 4,400
=========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 400
---------
Total Liabilities 400
Stockholders' Equity
Common stock, authorized 25,000,000 shares
at $.001 par value, issued and outstanding
4,982,000 shares 4,982
Additional paid-in capital 3,960
Deficit accumulated during
the development stage (4,942)
---------
Total Stockholders' Equity 4,000
Total Liabilities and Stockholders' Equity $ 4,400
=========
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE> 27
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
FOR THE PERIOD ENDED FROM December 19, 1997
to December 31, 1997
Sales $ 0
Expenses 0
-----------
Net income before extraordinary item 0
Extraordinary item - Liquidation and
dissolution of wholly owned subsidiary (4,942)
-----------
Net loss (4,942)
Retained earnings, beginning of period ---
-----------
Deficit accumulated during
the development stage $ (4,942)
===========
The accompanying notes are an integral part of these financial
statements.
-3-
<PAGE> 28
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM December 19, 1997 (Date of Inception)
To December 31, 1997
Additional
Common Paid-in
Shares Amount Capital Total
------- ------ ------- -----
Balance,
December 19, 1997 --- $ -- $ -- $ ---
Issuance of common
stock for cash 40,000 40 3,960 4,000
Issuance of common
stock for stock 4,942,000 4,942 0 4,942
Less net loss (4,942)
-------- ------- --------- -------
Balance,
December 31, 1997 4,982,000 $ 4,982 $ 3,960 $ 4,000
======== ======= ========= =======
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 29
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
From December 19, 1997
To December 31, 1998
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net loss $ (4,942)
Non-cash expenses included in net loss:
Liquidation of subsidiary 4,942
Increase in accounts payable 400
-----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 400
CASH FLOWS USED BY INVESTING ACTIVITIES
Organizational costs 400
-----------
NET CASH USED BY
INVESTING ACTIVITIES 400
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 40
Additional paid-in capital 3,960
-----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 4,000
NET INCREASE IN CASH 4,000
CASH AT BEGINNING OF PERIOD ---
-----------
CASH AT END OF PERIOD $ 4,000
===========
Supplemental disclosure of cash flow information:
Issuance of 4,942,000 shares of common stock in
exchange for common stock in the parent $ 4,942
===========
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 30
MCCARTHY GRENACHE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1997
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on December 19, 1997
under the laws of the state of Nevada. The business
purpose of the Company is to produce surgical
instruments.
The Company will adopt accounting policies and
procedures based upon the nature of future
transactions.
NOTE B STOCK OFFERING
The Company completed in December of 1997 a stock
offering. The offering consisted of selling 40,000
shares of its common stock at $.10 per share. The net
proceeds of this offering will be used for the purpose
of producing surgical instruments.
NOTE C RELATED PARTY TRANSACTIONS - STOCK EXCHANGE
In December of 1997, the Company was formed by
Gregorian Surgical Instruments, Inc. Therefore,
McCarthy Grenache, Inc. was its wholly owned
subsidiary. On December 26, 1997, the stockholders of
Gregorian Surgical Instruments, Inc.. approved an
exchange of all of the outstanding stock in Gregorian
Surgical Instruments, Inc. for stock in McCarthy
Grenache, Inc. on a share for share basis. At the time
of the exchange there were 4,942,000 shares of stock
outstanding of Gregorian Surgical Instruments, Inc.
for which the stockholders received 4,942,000 shares
of stock in McCarthy Grenache, Inc. There were no
tangible assets of Gregorian Surgical Instruments,
Inc. The excess of the par value of the common stock
over the assets acquired of the Gregorian Surgical
Instruments, Inc. was $4,942. This transaction has
been accounted for as a reverse merger.
Upon completion of the stock exchange, Gregorian
Surgical Instruments, Inc. became a wholly owned
subsidiary of McCarthy Grenache, Inc. and the board of
directors of Gregorian Surgical Instruments, Inc.
approved the dissolution and liquidation of Gregorian
Surgical Instruments, Inc. in December of 1997.
<PAGE> 31
PART III
ITEMS 1 AND 2. INDEX TO EXHIBITS AND DESCRIPTION
No additional exhibits are being filed with this Second
Amendment to the Registration Statement on Form 10-SB.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant has caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly
authorized.
McCarthy Grenache, Inc.
(Registrant)
Date: February 29, 2000 By: /s/ SEAN McCARTHY
--------------------------------
Sean McCarthy
President, CEO and duly
authorized officer
<PAGE> 32
