UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to
__________
Commission File Number: 2-89616
Consolidated Medical Management, Inc.
(Exact name of Registrant as specified in charter)
Montana 82-0369233
State or other jurisdiction of IRS Employer I.D. No.
incorporation or organization
11829 Florida Blvd., Baton Rouge, LA 70815
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (504) 292-3100
Check whether the Issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such fling requirements for the past 90 days. (1) Yes
[X] No [ ] (2) Yes [X] No [ ]
State the number of shares outstanding of each of the Issuer's classes of
common equity as of the latest practicable date: At November 12, 1999, there
were 7,932,587 common shares of the Registrant outstanding.
Consolidated Medical Management, Inc.
Baton Rouge, Louisiana
Table of Contents
Part I - Financial Information
Page
Item 1. Financial Statements (UNAUDITED) 1
Consolidated Balance 2
Consolidated Statements of Operations 3
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5
Report of Independent Accountants 16
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 17
Part II - Other Information
Item 2. Change in Securities 19
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 22
Signature 22
<PAGE>
Part I
Financial Information
Item 1. Financial Information
The consolidated financial statements for Consolidated Medical Management
Company, Inc. (the Company) included herein are unaudited but reflect, in
management's opinion, all adjustments, consisting only of normal recurring
adjustments, that are necessary for a fair presentation of the Company's
financial position and the results of its operations for the interim periods
presented. Because of the nature of the Company's business, the results of
operations for the nine months ended September 30, 1999 are not necessarily
indicative of the results that may be expected for the full fiscal year. The
financial statements included herein should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1998 (1998 Form 10-KSB).
The consolidated financial statements included herein have been subjected to a
limited review by Roberts, Cherry and Company, independent accountants for the
Company, whose report is included herein.
Consolidated Medical Management, Inc.
(A Montana Corporation)
Consolidated Balance Sheets
(Unaudited)
September 30, 1999 December 31, 1998
Assets
Current Assets
Cash $ 39,218 $ 25,540
Receivables , net 332,377 166,869
Inventory 7,337
Prepaid Expenses 8,844 4,315
Notes Receivable 116,000 140,673
Total Current Assets 503,776 337,397
Property and Equipment, net 328,389 336,298
Other Assets 865,947 139,743
Total Assets $1,698,112 $813,438
Liabilities and Stockholders' Equity
(Deficit)
Current Liabilities
Notes Payable - Current Portion $527,102 $88,532
Capital Lease Obligation Payable
- Current Portion 87,860 83,406
Convertible Debentures and Notes
Payable - Current Portion 465,000 415,000
Accounts Payable 477,716 140,456
Accrued Expenses 78,360 138,101
Total Current Liabilities 1,636,038 865,495
Long Term Liabilities
Notes Payable - Long Term Portion - 2,613
Capital Lease Obligation Payable
- Long-Term Portion 154,940 221,156
Total Long Term Liabilities 154,940 223,769
Total Liabilities 1,790,978 1,089,264
Stockholders' Equity
(Deficit)
Common Stock
$.001 par value, 50,000,000
shares authorized, 7,932,587
shares issued and outstanding
as of September 30, 1999 and
5,496,057 shares issued and
outstanding as of December 31,
1998 7,933 5,496
Additional Paid-in-Capital 2,689,025 1,854,173
Retained Earnings (Deficit) (2,789,824) (2,135,495)
Total Stockholders' Equity
(Deficit) (92,866) (275,826)
Total Liabilities and Stockholders'
Equity (Deficit) $1,698,112 $813,438
The accompanying notes and are an integral part of the consolidated financial
statements.
<PAGE>
Consolidated Medical Management, Inc.
Baton Rouge, Louisiana
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September30, September30,
1999 1998 1999 1998
Revenues $457,368 $282,832 $1,104,211 $629,537
Operating Expenses
Personnel Costs 458,401 119,192 781,433 310,536
Bad Debt Expense - 86,772 - 86,772
Consulting 51,876 99,324 255,194 142,409
Commissions - 58,333 - 58,333
Depreciation and
Amortization 34,122 11,991 98,472 19,455
Educational - 5,859 - 9,158
Legal and Professional 50,597 11,370 305,877 34,825
Office Expense 66,183 50,533 155,928 89,453
Occupancy 22,738 13,516 43,817 27,208
Transportation 4,342 21,328 37,474 21,328
Total Operating Expenses 688,259 478,218 1,678,195 799,477
Income (Loss) from
Operations (230,891) (195,386) (573,984) (169,940)
Other Income
(Expenses)
Merger and Acquisition
Expenses - (230,000) - (270,000)
Other (200) (464) - 5,773
Interest Expense (29,007) (13,151) (76,869) (25,462)
Interest Income 1,853 276 5,329 280
(27,354) (243,339) (71,540) (289,409)
Income (Loss) before
Income Taxes (258,245) (438,725) (645,524) (459,349)
Income Tax Expense - 5,288 - 1,496
Net Income (Loss) $(258,245) $(444,013) $(645,524) $(460,845)
Net Income (Loss) per
Share $(0.0461) $(0.126) $(0.0963) $(0.131)
<PAGE>
Consolidated Medical Management, Inc.
Baton Rouge, Louisiana
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
1999 1998
Cash Flows from Operating Activities:
Net Income (Loss) ($ 645,524) ($460,845)
Adjustments to Reconcile Net
Income (Loss) to Net Cash Provided
by Operating Activities:
Depreciation and Amortization 98,924 19,455
Deferred Income Tax Expense - (1,496)
Non Cash Consulting and Services
Paid by Stock Issue 391,959 348,578
(Increase) Decrease in Receivables (165,508) (15,624)
(Increase) Decrease in Prepaid Expenses (4,529) -
(Increase) Decrease in Other Assets 53,646 (32,710)
Increase (Decrease) in Accounts Payable 337,261 28,218
Increase (Decrease) in Advances from and
accounts payable to related parties - (53,614)
Increase (Decrease) in Accrued Expenses (59,741) 27,637
Increase (Decrease) in Income Taxes Payable - (3,380)
Increase (Decrease) in Deferred Income Taxes - 4,876
Net Cash Provided (Used) by Operating
Activities 6,488 (138,905)
Cash Flows from Investing Activities:
Issuance of Notes Receivable - (136,866)
Payment on Notes Receivable 24,673 10,134
Purchases of Property, Plant and Equipment (3,678) (407,925)
Net Cash Provided (Used) by Investing
Activities 20,995 (534,657)
Cash Flows from Financing Activities:
Repayment of Loans to Shareholder and Short
Term Debt (15,000)
Proceeds from Issuance of Debentures and
Convertible Notes 100,000 440,000
Issue Debt for Capital Leases 319,148
Repayment of Debentures (50,000) -
Proceeds from Stock Issuance - -
Proceeds from Issuance of Debt - 10,000
Payments on Long-Term Debt (63,805) (2,258)
Net Cash Provided (Used) by Financing
Activities (13,805) 751,890
Net Increase (Decrease) in Cash 13,678 78,328
Cash, Beginning of period 25,540 34,415
Cash, end of period $39,218 $112,743
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Year for:
Interest $29,007 $ 27,367
Income Taxes $ - $ -
Supplemental Disclosure of Non-Cash Financing Information
In the nine months ended September 30, 1999, the Company issued
common stock for consulting services rendered totaling $233,087.
The accompanying notes and are an integral part of the consolidated financial
statements.
<PAGE>
Consolidated Medical Management, Inc.
(A Montana Corporation)
Notes to Consolidated Financial Statements
(UNAUDITED)
Note 1 Organization and Summary of Significant Policies
The Company (formerly Golden Maple Mining and Leaching Co., Inc.) was
incorporated under the laws of the State of Montana on August 13, 1981. The
Company ceased its mining operations in 1985, and discontinued all business
operations in 1990. On May 23, 1998, the Company acquired all the common
stock of Consolidated Medical Management, Inc. (a private Louisiana
corporation, hereafter sometimes referred to as "CMMI-LA" or "subsidiary") in
a stock for stock exchange transaction, whereupon, CMMI-LA became a wholly
owned subsidiary of the Company
The CMMI-LA subsidiary provided management services for home healthcare
providers predominately in southern Louisiana. The Company's subsidiary,
Independent Diagnostic Services, Inc., provides diagnostic ultrasound imaging
services to physician offices, clinics, hospital, and skilled nursing
facilities, and also provides mobile laboratories that will enable services to
be provided for communities with limited access to technologists, hospitals
and diagnostic laboratories. The Company's subsidiary, Psychiatric Medical
Services, Inc. ("PMSI") operates a partial-unit mental services hospital in an
existing hospital environment. In June 1999, the Company acquired Nevada
Resort Medical Services, Ltd. and Practice Management Group Nevada, both based
in Las Vegas, Nevada, to expand its medical services delivery abilities.
Principles of Consolidation - The consolidated financial statements include
the accounts of Consolidated Medical Management, Inc. (a Montana Corporation),
and its subsidiaries, Independent Diagnostic Services, Inc. and Psychiatric
Management Services, Inc. The Company and its subsidiaries provide health
care services specializing in mobile diagnostic imaging and the operation of a
part-hospital psychiatric unit and therefore extends credit to the health care
providers involved with the patients served. All significant intercompany
transactions and balances have been eliminated.
Accounting policies of the Company conform with generally accepted accounting
principles and reflect practices appropriate to the industry in which it
operates. The significant policies are summarized below:
Property, Plant, Equipment and Depreciation - Expenditures for property,
plant and equipment are recorded at cost. Renewals and improvements which
extend the economic life of such assets are capitalized. Expenditures for
maintenance, repairs and other renewals are charged to expense. For major
dispositions, the cost and accumulated depreciation are removed from the
accounts and any gain or loss is included in the results of operations.
Depreciation is provided over the estimated useful lives of assets using
accelerated methods.
Receivables - The Company, through it's Louisiana and Nevada subsidiaries,
grants credit through trade receivables to its customers, all of whom are home
health care providers in the state of Louisiana and individual patients in
Nevada. The Company performs ongoing credit evaluations of its customers'
financial condition and, generally, requires no collateral from its customers.
As of year-end, the company reviewed its receivables. Those receivables where
collection was deemed questionable were charged off. A further review of
receivables indicated no additional allowance was necessary for the remaining
accounts.
Inventories - Inventories generally consist of supplies used in the normal
course of providing medical management services, and are valued at the lower
of cost or market, using the specific identification method.
Cash Flows and Concentration of Credit Risk - For purposes of the statement
of cash flows, the Company considers all highly liquid investments that are
readily convertible to known amounts of cash and that have an original
maturity of three months or less to be cash equivalents. Cash consists
principally of demand deposits at commercial banks. These balances, as
reflected in the bank's records, are insured by the Federal Deposit Insurance
Corporation up to $100,000. At September 30, 1999 and December 31, 1998, the
Company's deposits did not exceed the insured limits.
Risks and Uncertainties - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
Note 2 Receivables
Receivables consist of the following:
1999 1998
Management Fees, Service billings $ 341,471 $ 188,484
Advances to Trinity Billing - 13,564
Interest 7,512 3,478
Other 9,934 1,447
358,917 206,973
Less: Allowance for Uncollectible Accounts (26,540) (40,104)
$ 332,377 $ 166,869
Note 3 Notes Receivable
1999 1998
Note Receivable from Spectrum Financial,
Inc., a related party, in the
original amount of $15,000, with interest
at 6%, principal and interest due
June 30, 1999, unsecured. $ 15,000 $ 15,000
Note Receivable from Jaguar
International, Inc., a related party,
in the original amount of $100,000,
with interest at 6%, principal and
interest due June 30, 1999, unsecured. 100,000 100,000
Note Receivable from Louisiana Mobile
Imaging, Inc. in the original amount of
$75,000, with interest at 0%, principal
due December 1, 1998, secured by a
pledge of receivables. - 24,673
Note 3 Notes Receivable (continued)
Note Receivable from an individual in the
original amount of $1,000, with
interest at 6%, principal and interest
due November 13, 1999, unsecured. 1,000 1,000
Total Notes Receivable 116,000 140,673
Less Current Portion (116,000) (140,673)
Long Term Portion of Notes Receivable $ - $ -
Note 4 Property, Plant and Equipment
1999 1998
Furniture $ 6,721 $ 6,721
Equipment 103,758 30,297
Automotive 14,640 3,600
Assets under Capital Lease 399,175 399,175
524,294 439,793
Less Accumulated Depreciation (including
$172,316 of accumulated amortization
of capital lease assets) (195,905) (103,495)
Property, Plant and Equipment - Net $ 328,389 $ 336,298
Note 5 Other Assets
1999 1998
Prepaid Consulting Agreement (net of
accumulated amortization of $28,000 and
10,000, respectively) $ 92,000 $ 110,000
Goodwill 775,005 -
Deposits 4,297 2,684
Other 2,077 27,059
$ 879,379 $ 139,743
The Company recognized Goodwill in the acquisition of Nevada Resort Medical
Services, Ltd. Goodwill will be amortized over the expected life of the
assets acquired, ten years on a straight-line basis.
Note 6 Lease Commitments
During the period ended September 30, 1999, the Company leased its main
administration office facilities under operating leases, which expired June
1998 and August 1998. Thereafter the office space has been rented on a
month-to-month basis. Monthly rent for the office space totals $600. Lease
expense for the nine-month periods ended September 30, 1999 and 1998 totaled
$2,806 and $10,200, respectively.
The Company also is leasing remote office space for its subsidiary, IDSI, from
a related party, Jaguar International, Inc. under a monthly operating lease of
$1,700 monthly. Total rent expense for the nine-month period ended September
30, 1999 was $15,300. The Company also leases office space in Baton Rouge for
its subsidiary, PMSI. The lease is for one year beginning May 1, 1999 with
monthly installments of $1,318, totaling $5,272 for the nine months ended
September 30, 1999.
The Company is also leasing equipment used by it's subsidiary, IDSI, under
operating leases with total monthly lease expense payments of $842. The
leases are for thirty-six (36) months, and expire in September and October
2001. Total lease expense for the nine-month period ended September 30, 1999
was $2,526.
The Company also leases office space for the use of one of its officers in San
Antonio, Texas under an operating lease. The lease is on a month-to-month
basis with monthly rental of $200. Total rent paid in the third quarter of
1999 was $600 and $1,800 for the nine months ending September 30, 1999..
The Company also leases other office and transportation assets, notably a
copier, two vans and phone system, under non-cancelable operating leases
expiring through September 2000. Lease expense for the nine-month period
ended September 30, 1999 totaled $12,000.
At September 30, 1999, future minimum lease payments under long-term
non-cancelable leases for succeeding fiscal periods is as follows:
1999, through December 31, $ 8,178
2000 18,114
2001 7,926
Thereafter -
Total $ 34,218
Note 7 Notes Payable
1999 1998
Note payable to GE Capital financing
the phone system, in the original amount
of $10,222, dated September 16, 1997,
payable in thirty-nine installments of
$341 with interest at 12.5%, secured by
a pledge of the phone system. $ 4,102 $ 6,145
Six (6) notes payable to Spectrum
Financial, Inc., a related party of the
Company, dated September 29, 1998, due
July 29, 1999, interest at 10%, payable
on maturity, unsecured 85,000 85,000
Note payable to individuals from the
acquisition of Nevada Resort Medical
Services and Practice Management Group,
dated June 4, 1999, payable on or
before August 4, 1999 with interest at
10.0%, secured by a pledge of the
Company's stock interest in the
acquired companies. 438,000
Total Notes Payable 527,102 91,145
Less: Current Portion (527,102) (88,532)
Long-Term Portion $ - $ 2,613
Maturities of Notes Payable over the
next five twelve month periods are:
1999-2000 $ 527,102
2000-2001 -
After -
$ 527,102
Note 8 Capital Leases
1999 1998
Equipment Capital Leases Payable to
leasing companies in original amounts
totaling approximately $399,176, payable
in monthly installments ranging from
twenty-four to sixty months, totaling
$10,133 ($9,572 beginning February 1,
1999), with implicit interest rate of
twelve (12%) percent, through March
2003. These leases are secured by pledges
of imaging equipment and related
transportation vehicles with original
cost totaling approximately $400,000 as
of December 31, 1998. These vehicles are
included in company owned assets
described as Capital Lease Assets. $ 242,800 $ 304,562
Less: Current Portion (97,592) (83,406)
Long-Term Portion $ 145,208 $ 221,156
Following is a schedule of minimum lease payments under Capital
Leases:
1999 $ 28,716
2000 114,863
2001 84,588
2002 46,431
2003 11,608
After -
Total Payments 286,206
Less: Interest included therein (43,406)
Net Payments $ 242,800
Maturities of Capital Lease Obligations payable in subsequent fiscal years
ending December 31, are as follows:
1999 $ 28,692
2000 93,286
2001 74,104
2002 42,262
2003 4,456
After -
$ 242,800
Note 9 Convertible Debentures and Notes Payable
The Company issued convertible debentures in 1998 that are subordinated to
bank debt and secured leases. The debentures are otherwise unsecured but are
given a preference over unsecured debt. The debentures include interest at
fifteen (15%) percent, interest is payable in monthly installments. Each
debenture has a conversion right for each holder to convert the debenture
principal to shares of the Company's common stock at $2.50 per share or sixty
(60%) percent of the bid price, whichever is greater on the date of
conversion. Accrued interest and any principal amount not converted to shares
of stock will be paid in cash at conversion. As of September 30, 1999, the
company had issued and outstanding $140,000 in debentures. The debentures are
due one year from date of issue. All debentures issued are due in 1999.
The Company issued convertible promissory notes payable in 1998. The notes
are unsecured and include interest at ten (10%) percent, interest is payable
in monthly installments. Each note has a conversion right for each holder to
convert the note's unpaid principal to shares of the Company's common stock
based on $2.50 per share, or a total of 90,000 at the note holder's
discretion. Accrued interest and any principal amount not converted to shares
of stock will be paid in cash at conversion. As of September 30, 1999, the
company had issued and outstanding $325,000 in debentures. The notes were due
July 31, 1999.
The Company has entered into an agreement with Spectrum Financial, Inc.
("Spectrum") whereby Spectrum will exchange shares it owns with the debenture
holder upon exercise of the debenture's conversion option, in satisfaction of
the Company's obligations under the conversion provisions. In exchange,
Spectrum will then receive an unsecured note payable from the Company (see
Note 7) for the face amount of the debenture surrendered. During the year
ended December 31, 1998, Spectrum exchanged a total of 14,000 of its shares in
connection with this agreement and received five notes payable from the
Company totaling $35,000.
1999
Total Convertible Debentures and Notes Payable $ 465,000
Less: Current Portion (465,000)
Long-Term Portion $ -
Note 10 Income Taxes
The provision for income taxes for nine months ended September 30, 1999 and
1998 consists of the following:
1999 1998
Current Provision
Federal $ - $ -
State - -
Deferred Provision (Benefit) - -
Total Income Tax Expense (Benefit) $ - $ -
The effective tax rate of the Company for 1999 and 1998 differs from the
federal statutory rate primarily due to state income taxes, if any.
Deferred income taxes arise from temporary differences resulting from the
Company's subsidiary utilizing the cash basis of accounting for tax purposes
and the accrual basis for financial reporting purposes. Deferred taxes are
classified as current or noncurrent, depending on the classification of the
assets and liabilities to which they relate. Deferred taxes arising from
timing differences that are not related to an asset or liability are
classified as current or noncurrent, depending on the periods in which the
timing differences are expected to reverse. The Company's previous principal
temporary differences relate to revenue and expenses accrued for financial
purposes, which are not taxable for financial reporting purposes. The
Company's temporary differences consist of bad debt expense recorded in the
financial statements that is not deductible for tax purposes and differences
in the depreciation expense calculated for financial statement purposes and
tax purposes.
The net deferred tax asset or liability is composed of the following:
1999 1998
Total Deferred Tax Assets $ - $ -
Less: Valuation Allowance - -
Net Deferred Tax Asset - -
Total Deferred Tax Liabilities - -
Net Deferred Tax Liability - -
Less Current Portion - -
Long - Term Portion $ - $ -
The Company has net operating loss carryforwards totaling $869,697, which
expire through 2014.
Note 11 Common and Preferred Stock
Common Stock
The Company's common stock is $0.001 par value, 50,000,000 shares are
authorized as of September 30, 1999 and December 31, 1998. As of September
30, 1999 and December 31, 1998, the Company had 7,932,587 and 5,496,057 shares
issued and outstanding, respectively.
Preferred Stock
In 1998, the Company amended its articles to authorize Preferred Stock. There
are 20,000,000 shares authorized with a par value of $0.001. The shares are
non-voting and non-redeemable by the Company. The Company further designated
two series of its Preferred Stock: "Series 'A' $12.50 Preferred Stock" with
2,159,193 shares of the total shares authorized and "Series 'A' $8.00
Preferred Stock," with the number of authorized shares set at 1,079,957
shares. As of September 30, 1999 and December 31, 1998 there are no shares
issued and outstanding.
Dividends - Dividends are non-cumulative, however, the holders of such series,
in preference to the holders of any common stock, shall be entitled to
receive, as and when declared payable by the Board of Directors from funds
legally available for the payment thereof, dividends in lawful money of the
United States of America at the rate per annum fixed and determined as herein
authorized for the shares of such series, but no more, payable quarterly on
the last days of March, June, September, and December in each year with
respect to the quarterly period ending on the day prior to each such
respective dividend payment date. In no event shall the holders of either
series receive dividends of more than one percent (1%) in any fiscal year.
Each share of both series shall rank on a parity with each other share of
preferred stock, irrespective of series, with respect to dividends at the
respective fixed or maximum rates for such series.
Conversion provisions - Any holder of either series may convert any or all of
such shares into shares of common stock of the Company at any time. Said
shares shall be convertible at a rate equal to three (3) shares of common
stock of the Company for each one (1) share of Series "A" $12.50 Preferred
Stock. The Series "A" $12.50 Preferred Stock shall be convertible, in whole
or in part, at any time after the common stock of the Company shall maintain
an average bid price per share of at least $12.50 for ten (10) consecutive
trading days.
Series "A" $8.00 Preferred Stock shall be convertible at a rate equal to three
(3) shares of common stock of the Company for each one (1) share of Series "A"
$8.00 Preferred Stock. The Series "A" $8.00 Preferred Stock shall be
convertible, in whole or in part, at any time after the common stock of the
Company shall maintain an average bid price per share of at least $8.00 for
ten (10) consecutive trading days.
The preferential amount payable with respect to shares of either Series of
Preferred Stock in the event of voluntary or involuntary liquidation,
dissolution, or winding-up, shall be an amount equal to $5.00 per share, plus
the amount of any dividends declared and unpaid thereon.
Note 12 Earnings per Share
Earnings per share for the nine-month period ended September 30, 1999 is
computed as follows:
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income (Loss) ($645,524)
Basic EPS
Income (Loss) available to
common stockholders (645,524) 6,704,332 ($0.0963)
Effect of Dilutive Securities
Convertible Debt - -
Diluted EPS
Income (Loss) available to
common stockholders ($645,524) 6,704,332 ($0.0963)
Earnings per share for the nine months period ended September 30, 1998 is
computed as follows:
Income Shares Per-Share
(Numberator) (Denominator) Amount
Net Income (Loss) ($460,845)
Basic EPS
Income (Loss) available to
common stockholders (460,845) 3,517,168 ($0.1310)
Effect of Dilutive Securities
None - -
Diluted EPS
Income (Loss) available to
common stockholders ($460,845) 3,517,168 ($0.1310)
The Company has issued convertible debt that, if fully converted, would have a
dilutive effect of 180,000 shares. The Company has entered into an agreement
with a related party, Spectrum Financial, Inc. whereby Spectrum will exchange
shares it controls for the debt issued to convertible debt holders upon the
debt holders' exercise of their options. Due to the effect of this agreement,
these shares are not considered dilutive for these calculations.
Note 13 Commitments and Contingencies
In the opinion of management, there are no contingent claims or litigation
against the Company, which would materially affect its financial position at
September 30, 1999.
The Management service contracts that the Company has with the home health
care agencies it served include a provision that allows the Company's client
to recover the amount paid by the client from the management fees paid to the
Company if the client is required to repay any fees it receives, due to
actions or services provided by the Company.
Note 14 Economic Dependence
During the nine month period ended September 30, 1999, approximately
forty-four (44%) percent of the Company's total operating income was earned
under management contracts with one major customer. The contract, which had a
term of one year, ending December 31, 1999, renewable annually, was cancelled
after the third quarter. The effect on the renegotiations to reinstate the
contract are not known at this time.
Note 15 Related Party Transactions
During the three months and nine months periods ended September 30, 1999, the
Company paid fees totaling $85,922 and $35,799, respectively, in the form of
cash and stock, to related companies and individuals that own stock in the
Company and provided services to the Company. Included in this total of fees
are amounts paid as follows:
Paid to Description of Fees Amount
GCSW Funding, Inc. Consulting services provided $ 25,122
Spectrum Financial, Inc. Consulting services provided 36,800
Southern Property Management,
Inc Consulting services provided 24,000
$ 85,922
The Company has informal agreements with three related companies, GCSW
Funding, Inc., Jaguar International, Inc. (a shareholder of the Company) and
Southern Properties, Inc. to provide various consulting services to the
Company as required.
The Company engaged Spectrum Financial, Inc., which is owned by two of the
Company's shareholders who collectively own approximately fifteen percent of
the Company's outstanding common stock as of September 30, 1999, to provide
consulting services. Such consulting services have included identifying
potential targeted companies for acquisition, and negotiating such
transactions. Spectrum is then paid fees, either in cash or by the issuance
of the Company's stock. In 1999, the Company paid Spectrum fees totaling
$36,800 for such services.
The Company has also agreed to pay Spectrum commissions in connection with its
services rendered in identification of specific targets for acquisition,
whether the targeted company is acquired or not.
The Company also has notes payable totaling $85,000 payable to Spectrum
Financial, Inc. as of September 30, 1999. The notes are unsecured. See Note
7. As of September, the Company has accrued $6,261 in interest payable on
these notes and has recorded $6,357 in interest expense.
The Company holds a note receivable from Jaguar International, Inc., which
owns approximately forty-four (44%) percent of the outstanding stock as of
September 30, 1999, in the amount of $100,000. The Company also holds a note
receivable from Spectrum Financial, Inc. in the amount of $15,000 as of
September 30, 1999.
The Company also has included in accounts payable, $6,261 payable to Spectrum
Financial, Inc. for cost reimbursements due. Accounts Payable also includes
$50,262 due to companies controlled by the Company's major stockholder, for
consulting services rendered and fees incurred by these companies on behalf of
the Company.
Note 16 Non Cash Financing Transactions
During the second quarter of 1999, the Company issued stock in exchange for
services of $233,087 (1,184,749 common shares issued).
Note 17 Stock Options
The Company has two stock option plans. The first plan was adopted in April
1998. Under this plan, the Company granted options to three entities for a
total of 550,000 shares of the Company's common stock. The original exercise
price of the options granted under the plan was $0.10 per share, and was for a
five-year period. All shares granted under this plan were issued.
In October 1998, the Company adopted "1998 Non-Qualified Stock Option Plan
No.2". Under this plan, a total of 1,500,000 shares are available. The
qualified recipients of the plan's options are all employees of the Company
and any other individuals who perform bona fide services to the Company. The
Options granted under this plan have a term of five years, and a maximum
exercise price of $4.125 per share. Subsequent to year-end, the Company
granted four options under this plan for a total of 522,986 shares at an
option price of $0.10 per share. All of the shares optioned to date have been
exercised.
No compensation costs were charged to income in 1999 under these plans.
Note 18 Fair Values
The Company has a number of financial instruments, none of which are held for
trading purposes. The Company estimates that the fair value of all financial
instruments at September 30, 1999 does not differ materially from the
aggregate carrying values of its financial instruments recorded in the
accompanying balance sheet.
Note 19 Acquisitions
On June 4, 1999, the Company acquired all of the outstanding ownership
interests of Nevada Resort Medical Services, LTD, LLC, in exchange for the
issuance of 200,000 shares of the Company's common stock and payment of
$238,000 in cash or notes. Pursuant to the purchase, the Company issued notes
payable totaling $238,000, dated June 4, 1999, due in full on August 4, 1999,
bearing 10% interest and secured by a pledge of the interest acquired in this
purchase. See Note 7
On June 4, 1999, the Company also acquired all of the outstanding ownership
interests of Practice Management Group in exchange for the issuance of 190,000
shares of the Company's common stock and payment of $200,000 in cash or
notes. Pursuant to the purchase, the Company issued notes payable totaling
$200,000, dated June 4, 1999, due in full on August 4, 1999, bearing 10%
interest and secured by a pledge of the interest acquired in this purchase.
See Note 7.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Consolidated Medical Management, Inc.
(A Montana Corporation)
Baton Rouge, Louisiana
We have made a review of the consolidated balance sheet of Consolidated
Medical Management, Inc. as of September 30, 1999, and the related
consolidated statements of operations and cash flows for the nine-month
periods ended September 30, 1999 and 1998, in accordance with standards
established by the American Institute of Certified Public Accountants. These
financial statements are the responsibility of the Company's management.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and
making inquiries of persons responsible for financial and accounting matters.
It is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1998, and the
related consolidated statements of income, cash flows and changes in common
shareholders' equity (deficit) for the year then ended (not presented herein);
and in our report dated February 5, 1999, we expressed a qualified opinion on
those financial statements. In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 1998, is fairly stated in all
material respects in relation to the balance sheet from which it has been
derived.
<PAGE>
ROBERTS, CHERRY and COMPANY
A Corporation of
Certified Public Accountants
Shreveport, Louisiana
November 15, 1999
Consolidated Medical Management, Inc.
(A Montana Corporation)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis should be read in combination with
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Item 6 of the 1998 Form 10-KSB, the financial statements and
notes contained in Item 7 of the 1998 Form 10-KSB and the interim financial
statements and notes thereto contained elsewhere in this Report.
RESULTS OF OPERATIONS
For the Nine Month Period Ended September 30, 1999
For the nine months ended September 30, 1999, the Company recognized net loss
of ($645,524), (with loss per share of ($0.0963) per common share). During
this period, the Company, since the acquisition of Consolidated Medical
Management, Inc. (the private Louisiana company) by the public Company
(formerly Golden Maple Mining and Leaching, Inc.), has aggressively pursued
acquisitions of related medical service providers and other entities that,
once acquired, it is believed, will add to its ability to provide medical
services. The following principal factors contribute to these results. For the
period ended September 30, 1999, the Company recognized the operations of its
wholly-owned Louisiana subsidiaries, Independent Diagnostic Services, Inc.,
Psychiatric Management Services, Inc. (PMSI) and its Nevada subsidiaries
Nevada Resort Medical Services, Ltd. (NRMS) and Practice Management Services
of Nevada, Inc. (PMSN) with consolidated operating revenue of $1,104,211 for
the nine months compared to $457,368 for the three-month period ended
September 30, 1999.
Operating revenues are composed of management fees associated with providing
services, under contract, to various home-health providers and PHP (Partial
Hospital Programs), primarily located in southern Louisiana and the fee income
from delivery of diagnostic and transportation services associated with the
health care industry, also in Louisiana and the delivery of medical services
billings on behalf of Nevada physicians. Changes in the home health care
industry caused the Company to shift its emphasis away from home health care
and toward the PHP program, and to other medical management programs, which
the Company expects will be more profitable.
For the nine-month period ended September 30, 1999, the Company incurred
operating costs associated with the production of revenue totaling $1,678,195
composed of $688,259 in the three months ended September 30, 1999 versus
$989,936 incurred in the first two quarters of 1999. The most significant
elements of operating expenses are personnel costs totaling $781,433 for the
nine months ended September 30, 1999 compared to $458,401 for the third
quarter and $323,052 for the prior two quarters. Personnel costs include the
professional wages of the personnel who deliver the health-care services
required by the contracts and related administrative salaries and benefits.
The increases recognized in the third quarter are tied to the introduction of
NRMS to the Company and are related to the revenue generated thereby.
Another significant operating cost is consulting fees paid in connection with
the medical management performed by the Company. These costs totaled $255,194
for the nine-month period ending September 30, 1999. In the three quarters
ended September 30, 1999, the Company incurred legal and professional fees
totaling $305,877 primarily associated with filings and legal matters on stock
related issues and the Company's acquisitions in 1999. The Company incurred
office expense totaling $155,928 for this nine-month period
The Company is actively pursuing several medical services related acquisitions
that will allow the Company to significantly expand its delivery of medical
management and consulting services. The Company has targeted several medical
management companies that are actively negotiating with to acquire and enable
the Company to enter more profitable service delivery areas.
FINANCIAL CONDITION
Liquidity and Capital Resources
As of September 1999, the Company sold a total of $550,000 in convertible and
subordinated debentures ($465,000 remains as of September 30, 1999). The
debentures are subordinated to bank debt and secured leases and are due within
one year of issue. The debentures are otherwise unsecured but are given a
preference over unsecured debt. The debentures include interest at fifteen
(15%) percent, payable in monthly installments. Each debenture has a
conversion right for each holder to convert the debenture principal to shares
of the Company's common stock at the greater of $2.50 per share or ninety
(90%) percent of the bid price, whichever is greater on the date of
conversion. Accrued interest and any principal amount not converted to shares
of stock will be paid in cash. A consultant to the Company, and a
stockholder, Spectrum Financial, Inc. entered into an agreement with the
Company whereby it assumed the Company's obligation to exchange shares it
owned upon request of conversion by a debenture holder.
The Company had cash of $39,218 as of September 30, 1999 and receivables
totaling $332,377 from customers. Management has reviewed the collectibility
of these accounts, and determined that the collection is probable.
The Company has advanced funds to Jaguar, Inc. (a shareholder), Spectrum
Financial, Inc. (a shareholder) and Southern Properties Management, Inc. in
the form of notes receivable totaling $116,000 as of September 30, 1999. The
terms of the notes call for the Company to be paid interest of 6%, were due
June 30, 1999 and are unsecured. Management believes these amounts to be
collectable, and intends to renegotiate the terms.
The Company's accounts payable and accrued expenses total $556,076 as of
September 30, 1999. This compares to $278,557 as of December 31, 1998. The
Company's obligations under these accounts have aged since December 31, 1998,
with approximately $300,000 of these amounts owed for more than ninety days,
as a result of the continued liquidity problems the Company faces.
The Company is considering various means to obtain long-term financing to
support its acquisition plans and current operation requirements. However,
the Company's ability to fund its obligations under its remaining debentures
and notes payable, with over $465,000 due in the next one hundred twenty days,
is not certain without additional long-term financing or capital injection.
The Company's total obligations due within the next one hundred twenty days is
approximately $1,550,000, exclusive of obligations under capital leases and
other operating lease obligations.
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Since the end of the fiscal year ended December 31, 1998, and through the end
of the quarter ended September 30, 1999, the Company has sold the following
shares of common stock of the Company without registration under the
Securities Act of 1933:
a. On January 14, 1999 the Company issued 159,995 shares of common stock
to Underwriters Trust, controlled by Charles Coburn, Trustee, a consultant of
the Company. The shares were issued for consulting services under the
Company's Non-Qualified Stock Option Plan dated October 7, 1998.
b. On January 14, 1999 the Company issued 117,999 shares of common stock
to Spectrum Financial, Inc., controlled by C. J. Douglas and Virgil Robbins,
consultants to the Company. The shares were issued for consulting services
under the Company's Non-Qualified Stock Option Plan dated October 7, 1998.
c. On January 14, 1999 the Company issued 239,992 shares of common stock
to GCSW Funding Group, controlled by Garvis Wooley, a stockholder of the
Company. The shares were issued for consulting services under the Company's
Non-Qualified Stock Option Plan dated October 7, 1998.
d. On January 19, 1999 the Company issued 306,295 shares of common stock
to Rapid Release Research, L. L. C., a contract promotional company engaged by
the Company. The shares were issued for promotional marketing consulting
services.
e. On January 21, 1999 the Company issued 15,000 shares of common stock to
Dr. Joe S. Wakil, M. D. a consultant and director of the Company. The shares
were issued for consulting services.
f. On January 21, 1999 the Company issued 7,500 shares of common stock to
Ms. Jean Brandau, a consultant to the Company. The shares were issued for
consulting services.
g. On January 21, 1999 the Company issued 5,000 shares of common stock to
Ms. Antoinette Dipuma, an employee of the Company. The shares were issued for
consulting services.
h. On April 29, 1999 the Company issued 50,000 shares of common stock to
Mr. Dale Bachman, an consultant to the Company. The shares were issued for
consulting services in identifying targets for acquisition and are valued at
$25,000 based on 50% current market price.
i. On April 29, 1999 the Company issued 5,000 shares of common stock to
Mr. Curtis W. Poindexter, a consultant to the Company. The shares were issued
for consulting services in identifying targets for acquisition and are valued
at $2,500 based on 50% current market price.
j On April 29, 1999 the Company issued 2,000 shares of common stock to Mr.
Tim Von Scheele, a consultant to the Company. The shares were issued for
consulting services in identifying targets for acquisition and are valued at
$1,000 based on 50% current market price.
k. On May 14, 1999 the Company issued 230,030 shares of common stock to
Mr. David LeClere, an attorney of the Company. The shares were issued for
legal representation services rendered to the Company.
l. On May 14, 1999 the Company issued 19,970 shares of common stock to Mr.
David LeClere, an attorney of the Company. The shares were issued for legal
representation services rendered to the Company.
m. On May 14, 1999 the Company issued 250,000 shares of common stock to
Spectrum Financial, Inc., a related party to the Company whose principals are
Virgil Robbins and C. J. Douglas, consultants to the Company. The shares were
issued for general consulting services and consultations related to new
acquisitions of the Company.
n. On May 14, 1999 the Company issued 250,000 shares of common stock to
Southern Property Management, Inc., a related party to the Company whose
principal is Garvis Wooley, consultant to the Company. The shares were issued
for general consulting services and consultations related to new acquisitions
of the Company.
o. On May 14, 1999 the Company issued 5,100 shares of common stock to
Sunni M. Wooley, The Company's President. The shares were issued for general
consulting services and consultations related to new acquisitions of the
Company.
p. On May 14, 1999 the Company issued a total of 26,900 shares of common
stock to various employees of the Company. The shares were issued for
services to the Company.
q. On May 14, 1999 the Company issued 128,249 shares of common stock to
Trace Resources, Inc., an independent consultant used in the promotion of the
IDSI subsidiary.
r. On June 4, 1999 the Company issued 197,530 shares of common stock to
Rapid Release Research, L. L. C., a contract promotional company engaged by
the Company. The shares were issued for promotional marketing consulting
services.
s. On June 4, 1999 the Company issued 250,000 shares of common stock to
David LeClere, an attorney of the Company. The shares were issued for legal
representation services rendered to the Company.
t. On June 30, 1999 the Company issued 400,000 shares of common stock to
Jack London in exchange for his ownership interest in Nevada Resort Medical
Services, Ltd. and Practice Management Group Nevada, which were purchased by
the Company.
All of the aforesaid securities set forth immediately above were issued
without registration under the Act by reason of the exemption from
registration afforded by the provisions of Section 4(2) thereof, as
transactions by an issuer not involving any public offering, each recipient of
securities having delivered appropriate investment representations to
Registrant with respect thereto and having consented to the imposition of
restrictive legends upon the certificates evidencing such securities. No
underwriting discounts or commissions were paid in connection with such
issuances.
Item 5. Other Information
Changes in Management
The following table sets forth the current executive officers and directors of
the Company:
Director
Name Age Position(s) Since
Douglas M. Kemp __ Chairman, President and CEO 1999
Dale L. Bachman 51 Director 1998
Sunni M. Wooley 23 Director 1998
Peggy D. Behrens 43 Director and Secretary 1998
Lynn Simon, M.D. 48 Director 1998
Douglas M. Kemp - Mr. Kemp has over thirty years of experience in management
and consulting for medical related companies and financial institutions. Mr.
Kemp has extensive experience in factoring and financing of medical
receivables, and has served as Chief Executive Officer of Hospital Information
Services, Inc., that provided administration and receivable factoring for
1,000 physicians and 32 hospitals. He also served as Director of mergers and
acquisitions for Affiliated Computer Systems, Inc.
All of the other officers have previously reported their biographical
information.
The Company presently has no employment contracts with any of its executive
officers. The Company does not currently anticipate negotiating and entering
into employment contracts with such persons.
Mr. Jack London, who was the Chairman and COO of the Company, resigned
effective October 5, 1999.
There are no family relationships among directors or executive officers of the
Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are included as part of this report:
Exhibit No Description of Exhibit
none
(b) No reports on Form 8-K were filed during the quarter covered by this
report.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Consolidated Medical Management, Inc.
___________________________________________
By - Douglas M. Kemp, President, Chairman and CEO
Date: November 19, 1999
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<PERIOD-END> SEP-30-1999
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<CURRENT-ASSETS> 503,776
<PP&E> 328,389
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0
0
<COMMON> 7,933
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