SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required]
For the fiscal year ended October 31, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to
Commission file number: 0-12825
BEST MEDICAL TREATMENT GROUP, INC.
(Exact name of small business issuer in its charter)
Nevada 84-0916272
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
Identification No.)
45110 Club Drive, Suite B
Indian Wells, California 92210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 360-1042
-------------------
Securities registered pursuant to Section 12(b) of the Act: None
----------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
State issuer's revenues for its most recent fiscal year: None
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of February 22, 1998 was not determinable since the Common
Stock was not traded.
The number of shares outstanding of the issuer's classes of Common
Stock as of February 22, 1998:
Common Stock, $.001 Par Value 1,018,379 Shares
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS
Best Medical Treatment Group, Inc., formerly named Gaensel Gold Mines, Inc.,
and World Technologies & Trading Company, was incorporated under the name
Chatham Energy Corporation on September 13, 1981, under the laws of the state of
Nevada. The Company has had no operations since 1984.
On March 31, 1997, the Company acquired all of the capital stock of Lifeline
Medical Information Systems, Inc. ("Lifeline") from Dempsey K. Mork, the
shareholder of Lifeline (the "Shareholder"), pursuant to an Agreement and Plan
of Reorganization (the "Agreement") between the Company and Shareholder.
Pursuant to the Agreement, the Company issued 800,000 Shares, including 625,000
shares to the Shareholder and 175,000 shares to various consultants.
Lifeline Medical Information Systems, Inc. has changed its name to Best Medical
Treatment, Inc. ("Best
Medical").
Best Medical intends to operate as a medical information company that will be
able to match the needs of an individual foreign patient with the best doctors
and hospitals in the United States capable of treating the patient.
Only developmental activities have occurred to date.
Over 100 million people, living outside the United States, can afford medical
treatment in the US. The United States is recognized throughout the world as
having the most advanced medical treatment available. In the past year John
Hopkins Hospital had an increase from 600 foreign patients to over 6,000. Many
financially capable foreign patients having serious ailments do not seek
treatment in the United States. Management believes that many foreigners are
intimidated by the many barriers involved in the process. Foreign physicians and
patients are not knowledgeable of which US doctors and hospitals are leaders in
a particular specialty. Language and cultural barriers, transfer of foreign
language medical records, financial arrangements, visas, passports, and travel
logistics, are all obstacles. Best Medical manages all of the above matters,
plus many others, to remove all barriers to medical treatment in the United
States.
To identify the best doctors and hospitals in the United States, Best Medical
has developed a proprietary search protocol and rating system that covers over
5,000 US hospitals, 600,000 US physicians, 4,000 medical journals, 10,000,000
medical references, 100 medical data bases and numerous surveys rating doctors
and hospitals.
The Company intends to provide a service to foreigners that will
overcome the obstacles that defer such persons from receiving the top medical
services available in the U.S. After accessing Best Medical's internal medical
library/database the Company will conduct an outside search following a
proprietary search protocol. The protocol calls for an systematic search of
multiple medical data bases, medical libraries and medical journals. The search
will also encompass accessing government reports publications, and medical
certification and disciplinary boards. At the conclusion of the search, Best
Medical will be able to match the best qualified US physicians and hospitals to
the precise medical needs of a particular patient.
Once advised of a patient's diagnosis and medical needs, Best Medical will
commence a search to
determine the three best doctor-hospital combinations in the US most capable of
treating that particular patient. The search research results will be
immediately communicated to the patient's physician by telephone, followed by a
full written report sent by overnight mail. The report will explain why each
doctor-hospital team was selected along with detailed information on their
history and capabilities.
Once a patient makes a selection, Best Medical will make all of the
arrangements for the patient to come under the care of the selected physician
and hospital. This service includes transfer of medical records, arranging for
the selected doctor and hospital team to treat the patient, cost estimates from
physicians and hospitals, travel arrangements, visas and passports, housing, and
payment arrangements.
3
<PAGE>
Best Medical anticipates receiving a discount from hospitals and physicians
similar to an insurance company or Health Maintenance Organization. This
discount is expected to range from 10% to 30% depending on the particular doctor
and hospital. Best Medical plans to pass the entire discount on to the patient.
For researching and identifying the three best hospitals and doctors in the
United States Best Medical intends to charge a fee of $3,500. For making all of
the medical arrangements for a patient to come under the care of the selected
physician and hospital, Best Medical expects to charge a fee equal to 10% of the
costs of the medical costs.
Best Medical's core asset is its medical library/database and search protocol,
and coordination systems. Best Medical's information is partly contained in
medical textbooks, partly in cyberspace, and partly on the Company's inhouse
computers. Best Medical will market its service to through foreign physicians
and foreign hospitals. The Company will attend medical conventions and seminars
in foreign countries.
Best Medical plans to introduce its service in South America, in the second
half of calender 1998. The introduction is expected to take six months, after
which the company will add staff in the US and commence commercial operations.
Best Medical anticipates expansion into Central America and Mexico in the last
quarter of 1999. In 1999 the company expects to introduce its services in both
the Middle East and China.
The Company has received some reverse take-over acquisition interest. The
Company may consider concluding such an acquisition and changing its line of
business, should management feel that this would be in the best interests of
shareholders.
The Company has no employees other than its directors.
Item 2. DESCRIPTION OF PROPERTY
The Company shares space with its officers at no cost. The Company pays its own
charges for long distance telephone calls and other miscellaneous secretarial,
photocopying and similar expenses.
Item 3. LEGAL PROCEEDINGS
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended October 31, 1997.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock has not traded since 1984. As of October 31,
1997, there were approximately 510 stockholders of record.
The Company does not expect to pay a cash dividend upon its capital
stock in the foreseeable future. Payment of dividends in the future will depend
on the Company's earnings (if any) and its cash requirements at that time.
Item 6. PLAN OF OPERATIONS
The Company's activities to date have been limited to developing
its business plan and developing its information system. The Company's operating
deficit, estimated at $4,000 to $8,000, per month is being met by advances from
a shareholder. The Company has no revenues from operations to date. Until such
time as revenues
4
<PAGE>
can be generated the Company intends to obtain its working capital needs by
advances from this shareholder.
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company required to be
included in Item 7 are set forth in the Financial Statements Index.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Registrant's former independent accountant Cordovano and
Company, P.C. ("Cordovano") was dismissed from that capacity on January 20,
1998. The report by Cordovano on the financial statements of the Registrant
dated March 24, 1997, including balance sheets as of October 31, 1996 and 1995
and the statements of operations, cash flows and statement of stockholders'
equity for the years ended October 31, 1996, 1995 and 1994 did not contain an
adverse opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles. During the period covered by
the financial statements through the date of resignation of the former
accountant, there were no disagreements with the former accountant on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. A letter from the former independent accountant for
the Registrant was attached as an exhibit to a Current Report on Form 8-K dated
January 20, 1998. On January 20, 1998 the Registrant engaged Pritchett, Siler &
Hardy, PC., as its new independent accountant.
5
<PAGE>
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors and Executive Officers
The members of the Board of Directors of the Company serve until the
next annual meeting of stockholders, or until their successors have been
elected. The officers serve at the pleasure of the Board of Directors.
Information as to the directors and executive officers of the Company is as
follows.
Name Age Position
Robert Filiatreaux 67 President, Chief Financial
Officer and Director
Randall Baker 54 Vice President, Secretary
and Director
Robert Filiatreaux. Mr. Filiatreaux is 67 years of age and has been
engaged in international business for the
past 27 years. He attended college in Wisconsin where he received a bachelor's
degree from the University of
Wisconsin. During the Korean Conflict Mr. Filiatreaux served a three year tour
of duty in the US Air Force. The
majority of international business experience came from the airline industry
where Mr. Filiatreaux worked for many
years in various executive capacities, in sales and marketing. Mr. Filiatreuax
has worked and traveled to over 55
countries and is currently an associate in the merger and acquisition advisory
firm of Magellan Capital Corporation
in Indian Wells, California.
Randall A. Baker. Mr. Baker is 54 years old. He attended the
University of Minnesota. After a tour in the
United States Navy and a navigation teaching job in San Francisco, he began an
investment career with the Pacific
Coast Stock Exchange followed by employment with a number of major brokerage
houses. He then was employed
for twenty years as Executive Vice President with Wm. Mason & Company, an
Investment Counseling firm in Los
Angeles. Mr. Baker designed and implemented data systems, was responsible for
trading, personnel and was the
client/broker liaison. Mr. Baker is currently employed as the Vice President
for Magellan Capital Corporation, a
merger and acquisition advisory firm.
Item 10. EXECUTIVE COMPENSATION
No compensation was paid in fiscal 1997.
In addition to developing its medical service business, the Company
has received offers for reverse take-over acquisition. If a high quality
acquisition opportunity is presented management may conclude such an acquisition
and in that event current management may resign and be replaced by persons
associated with the business opportunity acquired, particularly if the Company
participates in a business opportunity by effecting a reorganization, merger or
consolidation. If any member of current management remains after effecting a
business opportunity acquisition, that member's time commitment will likely be
adjusted based on the nature and method of the acquisition and location of the
business which cannot be predicted. Compensation of management will be
determined by the new board of directors, and shareholders of the Company will
not have the opportunity to vote on or approve such compensation.
Directors currently receive no compensation for their duties as
directors.
In August of 1993, the Company's Board of Directors adopted the 1993
Employee Stock Compensation Plan, the 1993 Incentive Stock Option Plan and the
1993 Non-Statutory Stock Option Plan, all described below. Otherwise, the
Company does not have in force any pension, profit-sharing, stock appreciation
or bonus or other benefit plans, although such plans may be adopted in the
future.
1993 Employee Stock Compensation Plan. The Company has adopted an
Employee Stock Compensation
6
<PAGE>
Plan for employees, officers, directors of the Company and advisors to the
Company (the "ESC Plan"). The Company has reserved a maximum of 1,000,000 Common
Shares to be issued upon the grant of awards under the ESC Plan. Employees will
recognize taxable income upon the grant of Common Stock equal to the fair market
value of the Common Stock on the date of the grant and the Company will
recognize a compensating deduction at such time. The ESC Plan will be
administrated by the Board of Directors. 100,000 shares of common stock were
issued under the ESC Plan to Company counsel.
1993 Incentive Stock Option Plan. The Company has adopted an
Incentive Stock Option Plan for key employees (the "ISO Plan"). The Company has
reserved a maximum of 500,000 Common Shares to be issued upon the exercise of
options granted under the ISO Plan. The ISO Plan is intended to qualify as an
"incentive stock option" plan under Section 422 of the Internal Revenue Code of
1986, as amended. Accordingly, options will be granted under the ISO Plan at
exercise prices at least equal to the fair market value per share of the Common
stock on the respective dates of grant and will be subject to the limitations
provided by the Code. However, options may be granted to employees who own more
than 10% of the outstanding shares of the Company of all classes or any parent
or subsidiary thereof (a "Significant Shareholder") only at an option price
which on the date granted is at least 110% of the fair market value of the
Common Stock. With respect to options granted pursuant to Section 422, employees
will not recognize taxable income upon either the grant or exercise of such
options. The Company will not be entitled to any compensating deduction with
respect to such options unless disqualifying dispositions, as defined by such
law, are made. The ISO Plan will be administered by the Board of Directors or a
committee of directors. No options have been granted under the ISO Plan, and
none may be granted unless and until it has been approved by the shareholders.
1993 Non-Statutory Stock Option Plan. The Company had adopted a
Non-Statutory Stock Option Plan for officers, key employees, potential key
employees, non-employee directors and advisors (the "NSO Plan"). The Company has
reserved a maximum of 5,000,000 Common Shares to be issued upon the exercise of
options granted under the NSP Plan. The NSO Plan will not qualify as an
"incentive stock option" plan under Section 422 A of the internal Revenue Code
of 1986, as amended. Options will be granted under the NSP Plan at exercise
prices to be determined by the Board of Directors or other NSO Plan
administrator. With respect to options granted pursuant to the NSO Plan,
optionees will not recognize taxable income upon the grant of options, but will
realize income (or capital loss) at the time the options are exercised to
purchase Common stock. The amount of income will be equal to the difference
between the exercise price and the fair market value of the Common Stock on the
date of exercise. The Company will be entitled to a compensating deduction in an
amount equal to the taxable income realized by an optionee as a result of
exercising the option. The NSO Plan will be administered by the Board of
Directors or a committee of directors. No options have been granted under the
NSO Plan.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to the beneficial
ownership of Company common stock by those persons beneficially holding more
than 5% of the Company capital stock, by the Company's directors and executive
officers, and by all of the Company's directors and executive officers as a
group, as of February 22, 1998.
<TABLE>
<CAPTION>
Percentage
Name of Number of of Outstanding
Stockholder Shares Owned Common Stock
<S> <C> <C>
Dempsey K. Mork(1)(2) 801,967 78.8%
Randy Baker(1) -- --
Robert Filiatreaux(1) -- --
All officers and directors
as a group (2 persons)
</TABLE>
7
<PAGE>
(1) The address of this person is c/o of the Company.
(2) Includes 635,167 shares owed by Magellan Capital Corporation, a
corporation controlled by Mr. Mork.
Item 12. Certain Relationships and Related Transactions.
On March 31, 1997, the Company acquired all of the capital stock of
Lifeline Medical Information Systems, Inc. ("Lifeline") from Dempsey K. Mork,
then President of the Company (the "Shareholder"), pursuant to an Agreement and
Plan of Reorganization (the "Agreement") between the Company and Shareholder.
Pursuant to the Agreement, the Company issued 800,000 shares, including 625,000
shares to the Shareholder of Lifeline and 175,000 shares to various consultants.
In February 1996 the Company issued 166,900 shares to an affiliated
party, Dempsey K. Mork for investment banking services. On October 31, 1996, the
Company issued 10,167 shares for payment of expenses to Magellan Capital
Corporation with which Mr. Mork is affiliated and issued 1,000 shares to Eric J.
Sunsvold, a former officer and director, for cash of $500.
Effective as of October 31, 1995, the Company issued an additional 55
common shares to Eric J. Sunsvold in consideration of an additional $1,863 of
Company expenses which he paid, bringing his holdings in the Company to 530
shares. On October 21, 1994, the Board of Directors of the Company resolved to
purchase 450 of its common shares owned by Thomas J. Loguin (a former officer
and director of the Company), in a private transaction for the cash sum of
$1,000. These shares subsequently were purchased and cancelled by the Company.
Unless otherwise noted, all share information in Parts I, II and III has
been adjusted for a stock split effected in March 1997.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits, if any, marked with an asterisk
(*) are filed with this report. Other exhibits have previously been filed with
the Securities and Exchange Commission and are incorporated by reference to
another report, registration statement or form. As to any shareholder of record
requesting a copy of this report, the Company will furnish any exhibit indicated
in the list below as filed with report upon payment to the Company of its
expenses in furnishing the information.
2. Plan of acquisition, reorganization, arrangement, liquidation
or succession.
2.1. Agreement and Plan of Reorganization dated March 31,
1997 between the Company and Shareholder.
Incorporated by reference to the Current Report on
Form 8-K dated March 31, 1997.
3. Articles and Bylaws
3.1 Articles of Incorporation of Chatham Energy
Corporation, incorporated by reference to
registration statement on Form S-18 of Chatham Energy
Corporation, file no. 2-75288-NY.
3.2 Articles of Amendment of Chatham Energy Corporation
(changing name to World Technologies and Trading
Company), incorporated by reference to Exhibit 3.2 to
Form 10-KSB for fiscal year ended October 31, 1991.
3.3 Articles of Amendment of World Technologies and
Trading Company (changing name
to Gaensel Gold Mines, Inc.) to be provided by
amendment.
3.4 Bylaws of the Company adopted August 31, 1993,
incorporated by reference to Exhibit 3.4 to Form
10-KSB for fiscal year ended October 31, 1991.
8
<PAGE>
4. Instruments Establishing Rights of Security Holders
4.1 Specimen common stock certificate of the Company,
incorporated by reference to Exhibit 4.1 to Form
10-KSB for fiscal year ended October 31, 1991.
4.2 Board Resolutions describing the Advisor Compensation
Plan. Incorporated by reference
to the Company's Registration Statement of Form S-8, File No
. 333-45035.
10. Material Contracts
10.1 1993 Employee Stock Compensation Plan of the Company,
incorporated by reference to Exhibit 10.1 to Form
10-KSB for fiscal year ended October 31, 1991.
10.2 1993 Incentive Stock Option Plan of the Company,
incorporated by reference to Exhibit 10.2 to Form
10-KSB for fiscal year ended October 31, 1991.
10.3 1993 Non-Statutory Stock Option Plan of the Company,
incorporated by reference to Exhibit 10.3 to Form
10-KSB for fiscal year ended October 31, 1991.
16.1 Letter from Cordovano & Co. incorporated by reference to the
Company's Current Report on From
8-K dated January 20, 1998.
23. Consents
23.1 Consent of Pritchett, Siler & Hardy PC*
(b) Reports on Form 8-K. None were filed by the Company during
the fourth fiscal quarter ended
October 31, 1997.
(c) Financial Statements and supplementary data. See page F-1 for
financial statements index.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on February 24, 1998.
BEST MEDICAL TREATMENT GROUP, INC.
By: /s/ Robert Filiatreaux
Robert Filiatreaux
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on February 24, 1998.
By: /s/ Robert Filiatreaux President, Chief Financial Officer and Director
Robert Filiatreaux (chief executive, financial and accounting officer)
By: /s/ Randall Baker Secretary and Director
Randall Baker
10
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1997
11
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
-- Independent Auditors' Report 1
-- Consolidated Balance Sheet, October 31, 1997 2
-- Consolidated Statement of Operations, from inception
on April 8, 1997 through October 31, 1997 3
-- Consolidated Statement of Stockholders' Equity, from
inception on April 8, 1997 through October 31, 1997 4
-- Consolidated Statement of Cash Flows, from inception
on April 8, 1997 through October 31, 1997 5
-- Notes to Consolidated Financial Statements 6 - 15
</TABLE>
12
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
BEST MEDICAL TREATMENT GROUP, INC.
Indian Wells, California
We have audited the accompanying consolidated balance sheet of Best Medical
Treatment Group, Inc. and Subsidiary [a development stage company] at October
31, 1997, and the related consolidated statements of operations, stockholders'
equity and cash flows from inception on April 8, 1997 through October 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 consolidated financial statements audited by us present
fairly, in all material respects, the financial position of Best Medical
Treatment Group, Inc. and Subsidiary as of October 31, 1997, and the results of
its operations and its cash flows for the period from inception through October
31, 1997, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 9 to the financial
statements, the Company has incurred losses since inception and has not yet
established profitable operations, raising substantial doubt about its ability
to continue as a going concern. Management's plans in regards to these matters
are also described in Note 9. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
The accompanying information contained in Note 10 regarding the operations of
Parent prior to the recapitalization of Subsidiary was not audited by us, and
accordingly, we do not express an opinion on it.
January 26, 1998
PRITCHETT, SILER & HARDY, P.C.
Salt Lake City, Utah
1
<PAGE>
<TABLE>
<CAPTION>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
CONSOLIDATED BALANCE SHEET
ASSETS
October 31, 1997
CURRENT ASSETS:
<S> <C>
Cash in bank $ -
Total Current Assets -
PROPERTY & EQUIPMENT, net 129,577
OTHER ASSETS:
Intellectual properties 1
Organization costs, net 441
Deposits and prepaids 31,997
Total Other Assets 32,439
$ 162,016
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 14,440
Accounts payable - related party 7,737
Total Current Liabilities 22,177
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
50,000,000 shares authorized,
1,018,843 shares issued and
outstanding 1,018
Capital in excess of par value 185,492
Deficit accumulated during the
development stage (46,671)
Total Stockholders' Equity 139,839
$ 162,016
</TABLE>
The accompanying notes are an integral part of this
financial statement.
- 2 -
2
<PAGE>
<TABLE>
<CAPTION>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
CONSOLIDATED STATEMENT OF OPERATIONS
From Inception
on April 8, 1997
Through
October 31, 1997
<S> <C>
REVENUE: $
-
EXPENSES:
General and administrative 46,671
LOSS BEFORE INCOME TAXES (46,671)
CURRENT TAX EXPENSE -
DEFERRED TAX EXPENSE -
NET LOSS $ (46,671)
LOSS PER COMMON SHARE $ (.05)
WEIGHTED AVERAGE SHARES OUTSTANDING 1,018,379
</TABLE>
The accompanying notes are an integral part of this
financial statement.
- 3 -
3
<PAGE>
<TABLE>
<CAPTION>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON APRIL 8, 1997
THROUGH OCTOBER 31, 1997
[RESTATED]
Deficit
Accumulated
Common Stock Capital in During the
Excess of Development
Shares Amount Par Value Stage
<S> <C> <C> <C> <C>
BALANCE, April 8, 1997 - $ - $ - $ -
Issuance of 800,000 shares of common stock for assets valued at $193,569, in
connection with the original organization
of the Company 800,000 800 192,769 -
Recapitalization of the
Company pursuant to
Agreement and Plan of
Reorganization between
Best Medical Treatment
Group, Inc. (formerly
Gaensel Gold, Inc.) and
Best Medical Treatment, Inc.
(formerly Lifeline Medical
Information Systems, Inc.),
accounted for in a manner
similar to a reverse acquisition
(See Note 2) 218,379 218 (7,277) -
Adjustment for fractional
shares of Common stock issued
in reverse Stock splits
during February, 1997 and
April, 1996 464 - - -
Net loss for the period ended
October 31, 1997 - - - (46,671)
BALANCE,
October 31, 1997 1,018,843 $ 1,018 $ 185,492 $ (46,671)
</TABLE>
The accompanying notes are an integral part of this
financial statement.
- 4 -
4
<PAGE>
<TABLE>
<CAPTION>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
CONSOLIDATED STATEMENT OF CASH FLOWS
From Inception
on April 8, 1997
Through
October 31, 1997
Flows from Operating Activities:
<S> <C>
Net loss $ (46,671)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation and amortization 16,753
Non-cash expenses 7,666
Change in assets and liabilities:
Increase in accounts payable and accrued expense 14,440
Increase in accounts payable - related party 7,737
Net Cash provided by Operating Activities (75)
Cash Flows from Investing Activities:
Payment of organization costs (500)
Payment for intellectual properties (1)
Net Cash used by Investing Activities (501)
Cash Flows from Financing Activities:
Cash received in recapitalization 576
Net Cash provided by Financing
Activities 576
Net Increase in Cash -
Cash at Beginning of Period -
Cash at End of Period $ -
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ -
Income taxes $ -
Supplemental schedule of Noncash Investing and Financing Activities:
For the period ended October 31, 1997:
The Company issued 800,000 shares of stock for assets valued at
$193,569. The Company issued 218,379 shares pursuant to a
recapitalization in a manner similar to a reverse purchase.
</TABLE>
The accompanying notes are an integral part of this
financial statement.
- 5 -
5
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized as Lifeline Medical
Information Systems, Inc. under the laws of the State of Nevada on
April 8, 1997 as a wholly owned subsidiary of Magellan Capital
Corporation. The Company entered into a stock for stock restructuring
with Best Medical Treatment Group, Inc. (formerly Gaensel Gold Mines,
Inc.), a related entity [See Note 2]. In connection with the
restructuring the Company's name was changed to Best Medical Treatment,
Inc. ("Subsidiary"). The Company has not commenced planned principal
operations and is considered a development stage company as defined in
SFAS No. 7. The Company is planning to engage in the business of
providing a medical database information system which will be readily
accessible to the medical profession and general public through the
Internet on a world-wide basis. The Company has, at the present time,
not paid any dividends and any dividends that may be paid in the future
will depend upon the financial requirements of the Company and other
relevant factors.
Best Medical Treatment Group, Inc. ("Parent") was originally organized
in 1981
but has undergone various organizational changes. Just prior to the
reorganization with Subsidiary, Parent was known as Gaensel Gold
Mines, Inc.
but was inactive and had no current operations.
Consolidation - The consolidated financial statements include the
accounts of Best Medical Treatment Group, Inc. [Parent] (formerly
Gaensel Gold Mines, Inc.), and it's wholly-owned subsidiary Best
Medical Treatment, Inc. [Subsidiary] (formerly Lifeline Medical
Information Systems, Inc.). All significant intercompany transactions
between Parent and Subsidiary have been eliminated in consolidation.
Comparative Financial Statements - Prior year financial statements of
Parent are not included because the reorganization with subsidiary has
been accounted for in a manner similar to a reverse purchase. Parent
was inactive prior to the reorganization and the operations of
Subsidiary are the on-going operations of the combined enterprise.
Accordingly, the operations of Parent prior to the date of
reorganization have been eliminated. A summary of Parents stockholders'
equity prior to reorganization has been included in Footnote 10.
Development Stage Activities - The Company is considered a development
stage company as defined in SFAS No. 7. Accordingly, the financial
statement disclosures include information from the inception of
Subsidiary.
- 6 -
6
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment - Property and equipment are stated at cost.
Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized, upon being placed in
service. Expenditures for maintenance and repairs are charged to
expense as incurred. Depreciation is computed for financial statement
purposes on a straight-line basis over the estimated useful lives of
the assets which range from five to seven years.
Organization Costs - The Company is amortizing its organization costs,
which reflect amounts expended to organize the Company, over sixty [60]
months using the straight line method.
Intellectual Properties - The Company is in the process of developing a
medical database information system. The costs incurred to date by the
Company as well as the costs incurred by the Company's former Parent
[See Note 2] have been expensed as incurred. The Company evaluates the
recoverability of the carrying value of
long-lived assets, including property and equipment and intangible assets, in
accordance with the provisions of Statement of Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets to be Disposed Of". The
Company considers historical performance and anticipated future results in its
evaluation of potential impairment. Accordingly, when indicators of impairment
are present, the Company evaluates the carrying value of these assets in
relation to the operating performance of the business and future and
undiscounted cash flows without interest expected to result from the use of
these assets. Impairment losses are recognized when the fair value of the asset
or the present value of expected future cash flows are less than the assets'
carrying value. There were no impairment losses in 1997.
Loss Per Share - The computation of loss per share is based on the
weighted average number of shares outstanding during the period
presented.
Revenue Recognition - The Company has not yet generated any revenues.
Statement of Cash Flows - For purposes of the statement of cash flows,
the Company considers all highly liquid debt investments purchased with
a maturity of three months or less to be cash equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that effect the reported
amounts of assets and liabilities, the 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 could differ from those estimated by management.
Restatement of Financial Statements - All references to common stock
and to per share amounts have been restated to reflect the
recapitalization of subsidiary [See Note 2] and a reverse stock split
[See Note 5].
- 7 -
7
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - BUSINESS ACQUISITION
The Company was formed as a subsidiary of Magellan Capital Corporation
("Magellan"). Magellan previously commenced development of an
intangible medical database information system and business plan.
Magellan transferred the database and related assets and liabilities to
the Company upon formation in consideration for common stock. The
assets have been recorded at their historical carryover basis.
On March 31, 1997, in anticipation of the Company's subsequent
incorporation, the shareholders of the Company received 800,000 shares
of common stock of Best Medical Treatment Group, Inc. (formerly Gaensel
Gold Mines, Inc.) ["Parent"] in exchange for all of the outstanding
common stock of the Company. Parent had the same officers, directors
and controlling shareholder interest as the Company. The transaction
has been accounted for as a recapitalization of the Company. The
consolidated financial statements include the operations of the Company
from its inception. The operations of parent are included only from the
date of recapitalization. The retained deficit balances of parent prior
to the date of recapitalization have been eliminated in consolidation
and have been offset against paid in capital. In connection with the
recapitalization, the Company effected a reverse stock split on the
basis of 1 shares for each 10 shares previously outstanding prior to
the acquisition (resulting in 218,379 shares issued just prior to the
recapitalization). The Company also amended its corporate charter and
changed its name.
NOTE 3 - ACCOUNTS RECEIVABLE / PAYABLE - RELATED PARTY
As of October 31, 1997, the Company had an accounts payable due to an
entity related to a shareholder, officer and director of the Company in
the net amount of $7,737.
- 8 -
8
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at October 31, 1997:
1997
Furniture and equipment $ 9,270
Leasehold improvements 63,828
Vehicles 73,173
146,271
Less Accumulated depreciation (16,694)
$ 129,577
Depreciation expense amounted to $16,694 for the period ended October
31, 1997.
NOTE 5 - CAPITAL STOCK
Common Stock - During April, 1997, in connection with its initial
capitalization organization, the Company issued 800,000 shares of its
previously authorized, but unissued common stock (restated to reflect
recapitalization). In exchange for common stock the Company received
net assets with a carryover basis of $193,569 from its former parent
[See Note 2]. The following net assets and liabilities were transferred
by the former parent to the Company:
Receivable - related party $ 18,300
Property and equipment 146,271
Deposits 31,997
Intangible assets - Intellectual
properties 1
Accounts payable (3,000)
$ 193,569
Preferred Stock - The Company's wholly owned subsidiary (Best Medical
Treatment, Inc.) is authorized to issue 10,000,000 shares of $.001 par
value preferred stock with such rights and preferences and in such
series as determined by the Board of Directors at the time of issuance.
As of October 31, 1997 no shares have been issued.
- 9 -
9
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - CAPITAL STOCK (Continued)
Reverse Stock Split - In connection with the recapitalization, the
Company reverse split its outstanding common stock on the basis of 1
share issued for each 10 shares previously outstanding. The financial
statements have been restated to reflect the common stock split for all
periods presented.
Unissued Shares - During 1996, Parent authorized the issuance of 11,222
shares of common stock to related entities for services rendered and
for cash. The shares are accounted for as outstanding in these
financial statements although stock certificates have not yet been
issued.
NOTE 6 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes".
FASB 109 requires the Company to provide a net deferred tax
asset/liability equal to the expected future tax benefit/expense of
temporary reporting differences between book and tax accounting methods
and any available operating loss or tax credit carryforwards.
The Company has available at October 31, 1997, unused operating loss
carryforwards of approximately $45,000 which may be applied against
future taxable income and which expire in 2012. The amount of and
ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the
tax laws in effect, the future earnings of the Company, and other
future events, the effects of which cannot be determined. Because of
the uncertainty surrounding the realization of the loss carryforwards
the Company has established a valuation allowance equal to the tax
effect of the loss carryforwards and, therefore, no deferred tax asset
has been recognized for the loss carryforwards. The net deferred tax
assets are approximately $15,300 as of October 31, 1997 with an
offsetting valuation allowance of the same amount. Due to changes in
control and operations the operating losses of the Company prior to the
date of recapitalization will be limited. Consequently, these are not
included in the financial statements.
NOTE 7 - OPERATING LEASE
During April, 1997 the Company assumed the underlying lease obligation
for its office space from an entity related to an officer of the
Company for a lease held in the name of its former parent. The related
entity subsequently released the Company from any obligation related to
the lease. The rent expense for the period ended October 31, 1997 was
$1,997.
- 10 -
10
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - RELATED PARTY TRANSACTIONS
Account Receivable / Payable - The Company has an account receivable
from an entity (former Parent) related to a shareholder, officer and
director of the Company in the amount of $4,282. The shareholder,
officer and director of the Company routinely advances cash to pay
expenses on behalf of the Company. The account receivable had a balance
of approximately $18,000 when the Company issued its stock to acquire
certain assets and liabilities from the previous parent. The Company
has a payable to the same entity in the amount of $12, 019, resulting
in a net payable of $7,737 to the related entity.
Management Compensation - The Company has not paid any compensation to
its officers and directors.
Office Space - The Company previously entered into a sublease to rent
office space from an entity (former Parent) related to an officer,
director and majority shareholder of the Company. The lease agreement
provided for monthly payments of $1,997. However, the related entity
has released the Company from the obligation. The related entity is
providing office space as needed to the Company at no charge until
operations expand and the Company requires more extensive facilities.
NOTE 9 - GOING CONCERN
The Company was formed with a very specific business plan. However, the
possibility exists that the Company could expend virtually all of its
working capital in a relatively short time period and may not be
successful in establishing on-going profitable operations. The
financial statements do not contain any allowances, liabilities or
other adjustments which may need to be recorded if the Company is not
successful in achieving profitable operations.
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles which contemplate
continuation of the Company as a going concern. However, the Company is
newly formed, has incurred losses since its inception and has not yet
been successful in establishing profitable operations. These factors
raise substantial doubt about the ability of the Company to continue as
a going concern. In this regard, management is proposing to raise any
necessary additional funds not provided by operations through loans
and/or through additional sales of its common stock. There is no
assurance that the Company will be successful in raising additional
capital or achieving profitable operations. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.
- 11 -
11
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - PARENT'S STOCKHOLDERS' EQUITY (UNAUDITED)
Financial statements of Parent prior to the recapitalization of
subsidiary have not been included because Parent's operations have been
eliminated in consolidation. However, the following information taken
from Parents October 31, 1996 Form 10-K summarizes the Stockholders'
Equity of Parent prior to the reorganization.
<TABLE>
<CAPTION>
GAENSEL GOLD MINES, INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' DEFICIT
September 13, 1981 Through October 31, 1996
(Unaudited)
Deficit
Accumulated
Common Stock Capital in During the
Excess of Development
Shares Amount Par Value Stage Total
Shares issued for cash,
<S> <C> <C> <C> <C> <C>
September 17, 1981 1,250 $ -- $ 25,000 $ -- $ 25,000
Shares issued for cash,
September 17, 1981 50 -- 1,000 -- 1,000
Shares issued for cash,
September 17, 1981 50 -- 1,000 -- 1,000
Shares issued for cash,
September 17, 1981 50 -- 1,000 -- 1,000
Shares issued for cash,
September 17, 1981 50 -- 1,000 -- 1,000
BALANCE, October 31, 1981 1,400 -- 28,000 -- 28,000
Shares issued for cash,
May 15, 1982 5,363 1 96,499 -- 96,500
Net loss -- -- -- (1,589) (1,589)
BALANCE, October 31, 1982 6,763 1 124,499 (1,589) 122,911
Shares issued for cash,
January 2, 1983 400 -- 38,750 -- 38,750
Shares issued for oil and gas
leases, at cost, May 12, 1983 12,072 1 3,016,128 -- 3,016,129
Shares issued in exchange
for debt, July 28, 1983 3,333 -- 90,333 -- 90,333
Shares issued in exchange for
aircraft, at cost, July 28, 1983 157 -- 23,000 -- 23,000
Net Loss -- -- -- (3,227,379) (3,227,400)
BALANCE, October 31, 1983 22,725 2 3,292,710 (3,228,989) 63,723
- 12 -
12
</TABLE>
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - PARENT'S STOCKHOLDERS' EQUITY (UNAUDITED) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital in During the
Excess of Development
Shares Amount Par Value Stage Total
Shares issued to related party for debt,
<S> <C> <C> <C>
July 31, 1984 (Note B)(unaudited)500 -- 30,000 -- 30,000
Shares issued for services, at cost,
July 31, 1984 (unaudited) 30 -- 937 -- 937
Shares issued to related party for
services at cost, July 31, 1984
(Note B) (unaudited) 7,000 1 699 -- 700
Capital contribution,
October 21, 1984 (unaudited) -- -- 13,800 -- 13,800
Net loss (unaudited) -- -- -- (254,379) (254,379)
BALANCE, October 31, 1984
(unaudited) 30,235 3 3,338,146 (3,483,368) (145,219)
Acquisition and cancellation of shares,
December 11, 1984 (unaudited) (6,809) (1) -- 1 --
Shares issued to related party for
services, at cost, November 1, 1984
(Note B) (unaudited) 14,000 1 1,399 -- 1,400
Shares issued for services, at cost,
November 1, 1984 (unaudited) 100 -- 100 -- 100
Shares issued for services, at cost,
November 1, 1984 (unaudited) 100 -- 100 -- 100
Shares issued for services, at cost,
November 1, 1984 (unaudited) 100 -- 100 -- 100
Shares issued for services, at cost,
November 1, 1984 (unaudited) 100 -- 100 -- 100
Shares issued for services, at cost,
November 1, 1984 (unaudited) 200 -- 200 -- 200
Net income (unaudited) -- -- -- 143,219 143,219
BALANCE, October 31, 1985 (unaudited) 38,046 3 3,340,145 (3,340,148) --
Net income (loss) (unaudited) -- -- -- -- --
BALANCE, October 31, 1986 (unaudited) 38,046 3 3,340,145 (3,340,148) --
Shares issued to related party for
services, at cost, July 31, 1987
(Note B) (unaudited) 7,000 1 699 -- 700
Net income (loss) (unaudited) -- -- -- (700) (700)
BALANCE, October 31, 1987 (unaudited) 45,046 4 3,340,844 (3,340,848) --
Net income (loss) (unaudited) -- -- -- -- --
BALANCE, October 31, 1988 (unaudited) 45,046 4 3,340,844 (3,340,848) --
</TABLE>
- 13 -
13
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - PARENT'S STOCKHOLDERS' EQUITY (UNAUDITED) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital in During the
Excess of Development
Shares Amount Par Value Stage Total
Shares issued to related party for
<S> <C> <C> <C> <C> <C>
services, at cost, July 31, 1989
(Note B) (unaudited) 7,000 1 699 -- 700
Net loss (unaudited) -- -- -- (700) (700)
BALANCE, October 31, 1989 (unaudited) 52,046 5 3,341,543 (3,341,548) --
Net income (loss) (unaudited) -- -- -- -- --
BALANCE, October 31, 1990 52,046 5 3,341,543 (3,341,548) --
Shares issued for cash,
January 15, 1991 10,000 1 9,999 -- 10,000
Net income (loss) -- -- -- -- --
BALANCE, October 31, 1991 62,046 6 3,351,542 (3,341,548) 10,000
Shares issued to related party for
services, at cost, January
15, 1992 (Note B) 10,000 1 999 -- 1,000
Net loss -- -- -- (8,000) (8,000)
BALANCE, October 31, 1992 72,046 7 3,352,541 (3,349,548) 3,000
Shares issued for cash,
October 19, 1993 (Note B) 20,000 2 6,873 -- 6,875
Net loss -- -- -- (17,482) (17,482)
BALANCE, October 31, 1993 92,046 9 3,359,414 (3,367,030) (7,607)
Acquisition and cancellation of
shares, October 31, 1994 (Note B) (45,000) (4) (996) -- (1,000)
Shares issued for cash,
October 31, 1994 (Note B) 17,500 2 5,877 -- 5,879
Net loss -- -- -- (6,784) (6,784)
BALANCE, October 31, 1994 64,546 7 3,364,295 (3,373,814) (9,512)
Shares issued for cash,
October 31, 1994 (Note B) 5,479 -- 1,863 -- 1,863
Shares issued for services,
December 1, 1994 300 -- 30 -- 30
Shares issued for services,
February 22, 1995 1,000 -- 100 -- 100
Shares issued for services
March 3, 1995 800 -- 80 -- 80
Net loss -- -- -- (7,836) (7,836)
BALANCE, October 31, 1995 72,125 7 3,366,368 (3,381,650) (15,275)
- 14 -
14
</TABLE>
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - PARENT'S STOCKHOLDERS' EQUITY (UNAUDITED) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital in During the
Excess of Development
Shares Amount Par Value Stage Total
Shares issued for services
<S> <C> <C> <C> <C>
November 1, 1995 (Note B) 2,000,000 200 99,800 -- 100,000
Shares issued for cash,
February 1, 1996 10,000 1 499 -- 500
Shares issued for payment of expenses,
October 31, 1996 (Note B) 58,065 6 2,898 -- 2,904
Shares issued for payment of expenses,
October 31, 1996 (Note B) 43,600 4 2,176 -- 2,180
Net loss -- -- -- (97,368) (97,368)
BALANCE, October 31, 1996 2,183,790 $ 218 $ 3,471,741 (3,479,018) (7,059)
</TABLE>
The following unaudited Proforma condensed financial information
assumes that Parent and Subsidiary had been consolidated since October 31, 1996
(date of Parents last 10-K filing) through October 31, 1997:
<TABLE>
<CAPTION>
For the Year Ended October 31, 1997
(Unaudited)
<S> <C>
Revenues $ --
Expenses 46,671
Net loss $ (46,671)
Loss per share $ (.05)
</TABLE>
NOTE 11 - STOCK OPTION AND BENEFIT PLANS
1993 Employee Stock Compensation Plan - The Company has adopted an
Employee Stock Compensation Plan for employees, officers, directors of
the Company and advisors to the Company (the "ESC Plan"). The Company
has reserved a maximum of 1,000,000 Common Shares to be issued upon the
grant of awards under the ESC Plan. Employees will recognize taxable
income upon the grant of Common Stock equal to the fair market value of
the Common Stock on the date of the grant and the Company will
recognize a compensating deduction at such time. The ESC Plan will be
administrated by the Board of Directors. In prior years, 100,000 shares
of common stock were issued under the ESC Plan to Company counsel.
- 15 -
15
<PAGE>
BEST MEDICAL TREATMENT GROUP, INC.
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - STOCK OPTION AND BENEFIT PLANS (Continued)
1993 Incentive Stock Option Plan - The Company has adopted an Incentive
Stock Option Plan for key employees (the "ISO Plan"). The Company has
reserved a maximum of 500,000 Common Shares to be issued upon the
exercise of options granted under the ISO Plan. The ISO Plan is
intended to qualify as an "Incentive stock option: plan under Section
422 of the Internal Revenue Code of 1986, as amended. Accordingly,
options will be granted under the ISO Plan at exercise prices at least
equal to the fair market value per share of the Common stock on the
respective dates of grant and will be subject to the limitations
provided by the Code. However, options may be granted to employees who
own more than 10% of the outstanding shares of the Company of all
classes or any parent or subsidiary thereof (a "Significant
Shareholder") only at an option price which on the date granted is at
least 110% of the fair market value of the Common Stock. With respect
to options granted pursuant to Section 422, employees will not
recognize taxable income upon either the grant or exercise of such
options. The Company will not be entitled to any compensating deduction
with respect to such options unless disqualifying dispositions, as
defined by such law, are made. The ISO Plan will be administered by the
Board of Directors or a committee of directors. No options have been
granted under the ISO Plan, and none may be granted unless and until it
has been approved by the shareholders.
1993 Non-Statutory Stock Option Plan - The Company had adopted a
Non-Statutory Stock Option Plan for officers, key employees, potential
key employees, non-employee directors and advisors (the "NSO Plan").
The Company has reserved a maximum of 5,000,000 Common Shares to be
issued upon the exercise of options granted under the NSO Plan. The NSO
Plan will not qualify as an "incentive stock option" plan under Section
422 A of the Internal Revenue Code of 1986, as amended. Options will be
granted under the NSO Plan at exercise prices to be determined by the
Board of Directors or other NSO Plan administrator. With respect to
options granted pursuant to the NSO Plan, optionees will not recognize
taxable income upon the grant of options, but will realize income (or
capital loss) at the time the options are exercised to purchase Common
stock. The amount of income will be equal to the difference between the
exercise price and the fair market value of the Common Stock on the
date of exercise. The Company will be entitled to it compensating
deduction in an amount equal to the taxable income realized by an
optionee as a result of exercising the option. The NSO Plan will be
administered by the Board of Directors or a committee of directors. No
options have been granted under the NSO Plan.
NOTE 12 - SUBSEQUENT EVENTS
During December, 1997 the Company filed amendments to its Articles of
Incorporation formally changing its name to Best Medical Treatment
Group, Inc. The name of the Subsidiary was also changed to Best Medical
Treatment, Inc.
- 16 -
16
