UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
Amendment No. 1
(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, 1998.
[ ] 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
13005 Justice Avenue, Baton Rouge, LA 70816
(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 4, 1998, there
were 5,446,057 common shares of the Registrant outstanding.
Baton Rouge, Louisiana
Table of Contents
PART I
Page
Item 1.
Financial Statements 1
Consolidated Balance Sheets 2
Consolidated Statements of Operations 3
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements
Report of Independent Accountants 11
Item 2.
Management's Discussion and Analysis
of Financial Condition and Results of Operations 12
PART II
Item 2. Change in Securities 15
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 24
Signature 25
Exhibits
Item 1. Financial Information
Consolidated Medical Management, Inc.
(A Montana Corporation)
Consolidated Balance Sheets
(Unaudited)
September 30, 1998 Dec 31, 1997
Assets
Current Assets
Cash $ 112,743 $ -
Receivables 113,595 -
Notes Receivable 211,866
Total Current Assets 438,204 -
Property, Plant and Equipment Net 336,707 -
Other Assets 153,910 -
Total Assets $ 928,821 $ -
Liabilities and Stockholders' Equity
Current Liabilities
Notes Payable Current Portion $ 29,966 $ -
Accounts Payable 76,568 -
Accrued Expenses 42,127 -
Advances from and accounts payable
to related parties - 53,614
Deferred Income Taxes 7,293 -
Total Current Liabilities 155,954 53,614
Notes Payable Long Term Portion 299,736 -
Subordinated Debentures 440,000 -
Total Long Term Liabilities 739,736 -
Stockholders' Equity
Common Stock
$.001 par value, 50,000,000 shares
authorized, 5,446,057 shares issued
and outstanding as of September 30,
1998 and 216,057 shares issued and
outstanding as of December 31, 1997 5,446 216
Additional Paid-in-Capital 1,754,223 1,211,863
Retained Earnings (Deficit) (1,726,538) (1,265,693)
Total Stockholders' Equity (Deficit) 33,131 (53,614)
Total Liabilities and Stockholders'
Equity $ 928,821 $ -
The accompanying notes and are an integral part of these financial statements.
Consolidated Medical Management, Inc.
(A Montana Corporation)
Consolidated Statements of Operations
(Unaudited)
Three Months ended Nine Months ended
September 30, September 30,
1998 1997 1998 1997
Revenues $ 282,832 $ - $ 629,537 $ -
Operating Expenses
Personnel Costs 119,192 - 310,536 -
Bad Debt Expense 86,772 86,772
Consulting 99,324 - 142,409 -
Commissions 58,333 - 58,333 -
Depreciation and Amortization 11,991 - 19,455 -
Educational 5,859 - 9,158 -
Legal and Professional 11,370 3,630 34,825 10,370
Office Expense 50,533 1,284 89,453 3,613
Occupancy 13,516 - 27,208 -
Transportation 21,328 - 21,328 -
Total Operating Expenses 478,218 4,914 799,477 13,983
Income (Loss) from Operations (195,386) (4,914) (169,940) (13,983)
Other Income (Expenses)
Forgiveness of Debt - - 193,681
Merger and Acquisition
Expenses (230,000) - (270,000) -
Other (464) - 5,773 -
Interest Expense (13,151) - (25,462) -
Interest Income 276 - 280 4
(243,339) - (289,409) 193,685
Income (Loss) before Income
Taxes (438,725) (4,914) (459,349) 179,702
Income Tax Expense 5,288 - 1,496 -
Net Income (Loss) $ (444,013) $(4,914) $(460,845) $ 179,702
Net Income (Loss) per Share $ (0.1262) $ (0.03) $ (0.1310) $ 0.05
The accompanying notes and are an integral part of these financial statements.
Consolidated Medical Management, Inc.
Baton Rouge, Louisiana
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months ended
September 30, 1998 September 30, 1997
Cash Flows from Operating Activities:
Net Income (Loss) $ (460,845) $ 179,702
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 19,455 -
Deferred Income Tax Expense (1,496)
Non Cash Consulting and Services Paid
by Stock Issue 348,578
(Increase) Decrease in Receivables (15,624) -
(Increase) Decrease in Other Assets (32,710) -
Increase (Decrease) in Accounts Payable 28,218 (73,839)
Increase (Decrease) in Interest Payable
to Related Party - (81,524)
Increase (Decrease) in Advances from and
accounts payable to related parties (53,614) (25,179)
Increase (Decrease) in Accrued Expenses 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 (138,905) (840)
Cash Flows from Investing Activities:
Issuance of Notes Receivable (136,866)
Payment on Notes Receivable 10,134
Purchases of Property, Plant and Equipment (407,925)
Net Cash Used by Investing Activities (534,657) -
Cash Flows from Financing Activities:
Repayment of Loans to Shareholder and Short
Term Debt (15,000)
Proceeds from Issuance of Debentures 440,000
Issue Debt for Capital Leases 319,148
Proceeds from Issuance of Debt 10,000
Payments on Long-Term Debt (2,258)
Net Cash Provided by Financing Activities 751,890 -
Net Increase (Decrease) in Cash 78,328 (840)
Cash, Beginning of period 34,415 840
Cash, end of period 112,743 -
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Year for:
Interest $ 27,367 $ -
Income Taxes $ - $ -
The accompanying notes and are an integral part of these financial statements.
Consolidated Medical Management, Inc.
(A Montana Corporation)
Notes to Consolidated Financial Statements
(UNAUDITED)
Note 1 Organization and Summary of Significant Policies
The subsidiary provides management services for home healthcare providers
predominately in southern Louisiana.
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 subsidiary, grants credit
through trade receivables to its customers, all of whom are home health care
providers in the state of Louisiana. 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 and determined those receivables that collection was deemed
questionable and charged off those receivables. A further review
of receivables indicated no additional allowance was necessary for the
remaining accounts.
Cash Flows and Concentration of Credit Risk - 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, 1998 and December 31, 1997, 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:
1998 1997
Management Fees $ 100,031 $ -
Advances to Trinity Billing 13,564 -
$ 113,595 $ -
Note 3 Property, Plant and Equipment
1998 1997
Furniture $ 6,182 $ -
Equipment 30,587
Automotive 6,100
Assets under Capital Lease 386,175
428,753 -
Less Accumulated Depreciation (92,046) -
Property, Plant and Equipment Net $ 336,707 $ -
Note 4 Other Assets
1998 1997
Prepaid Consulting Agreement (net of
accumulated amortization of $4,000) $ 116,000 $ -
Acquisition Costs (net of accumulated
amortization of $4,928) 29,865
Prepaid Advertising 4,500
Prepaid Insurance 1,145
Deposits 2,400
$ 153,910 $ -
Note 5 Lease Commitments
During the periods ended September 30, 1998,
the Company leased its office facilities under
operating leases, which expired June 1998 and
August 1998, thereafter they have been rented
on a month-to-month basis. Monthly rent for
the office space totals $1,225. Lease expense
for the nine months ended September 30, 1998
and 1997 totaled $10,200 and $10,800 respectively.
The Company leases its copier under a non-cancelable operating lease
expiring in 1999. Lease expense for the three and nine-month periods
ended September 30, 1998 was $671 and $2,014, respectively. At September
30, 1998, future minimum lease payments under long-term non-cancelable
leases for succeeding fiscal periods is as follows:
1998 $ 671
1999 1,343
Total $2,014
Note 6 Notes Receivable
1998 1997
Note Receivable from Spectrum Financial, Inc. in
the original amount of $15,000, with interest at
6%, principal and interest due June 30, 1999,
unsecured. $ 15,000 $ -
Note Receivable from Jaguar, Inc. in the original
amount of $100,000, with interest at 6%, principal
and interest due June 30, 1999, unsecured. 100,000 -
Note Receivable from Southern Properties
Management, Inc. in the original amount of
$15,000, with interest at 6%, principal and
interest due on June 30, 1999, unsecured. 15,000
Note Receivable from Jaguar, Inc. in the original
amount of $17,000, with interest at 6%, principal
and interest due June 30, 1999, unsecured. 17,000 -
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. 64,866
Total Notes Receivable 211,866 -
Less Current Portion (211,866) -
Long Term Portion of Notes Receivable $ - $ -
Note 7 Economic Dependence
During the nine months ended September 30, 1998,
approximately forty-five (45%) percent of the
Company's management fee income was earned under
management contracts with one major customer.
The contracts have a term of one year, ending
December 31, 1998, renewable annually. The
customer has advised the Company that they
intend to renew and expand the current contract.
Note 8 Notes Payable
1998 1997
Note payable to the stockholder of the Company,
dated June 24, 1996, due on demand, interest at
6%, payable at maturity or demand, unsecured $ - $ -
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. 7,521 -
Two notes payable (in original amounts of
$5,000 each) to Spectrum Financial, Inc., a
stockholder of the Company, dated September 29,
1998, due April 29, 1999, interest at 10%,
payable on maturity, unsecured 10,000
Capital lease obligations assumed in acquisition
of Louisiana Mobile Imaging, Inc. calling for
monthly payments totaling $10,134 over various
periods associated with the underlying leases
of medical imaging equipment expiring over
fifty-five monthly payments with interest of
twelve (12%) percent. 312,181
Total Notes Payable 329,702 -
Less: Current Portion (29,966) ( )
Long-Term Portion $ 299,736 $ -
Maturities of Notes Payable over the next
five years are:
1998 $ 29,966
1999 82,421
2000 90,447
2001 73,557
2002 46,072
7,239
$ 329,702
Note 9 Income Taxes
The provision for income taxes for three and nine months ended
September 30, 1998 consists of the following:
1998 1997
Current Provision
Federal $ - $ -
State - -
Deferred Provision (Benefit) 1,496
Total Income Tax Expense (Benefit) $1,496 $ -
The effective tax rate of the Company for
1998 and 1997 differs from the federal
statutory rate primarily due to state income taxes.
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 principal temporary differences relate to revenue and expenses
accrued for financial purposes, which are not taxable for financial
reporting purposes.
The net deferred tax asset or liability is composed of the following:
1998 1997
Total Deferred Tax Assets $ - $ -
Total Deferred Tax Liabilities 7,293 -
Net Deferred Tax Liability 7,293 -
Less Current Portion 7,293 -
Long - Term Portion $ - $ -
Note 10 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, 1998.
The Management service contracts that the Company has with the Home Health
Care Agencies it serves 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 it by the Company.
Note 11 Related Party Transactions
During the three and nine month periods ended September 30, 1998, the Company
paid GCSW Funding Group, Inc. and Southern Property Management, Inc., related
parties, for purchased consulting services totaling $30,451 and $36,444,
respectively. At September 30, 1998 and December 31, 1997, $48,212 and $-0-,
respectively were due for these services. The Company had a Note Payable from
a major stockholder in the original amount of $15,000, which was repaid in the
third quarter. The balance owed was $-0- as of September 30, 1998. The
Company paid approximately $1,125 in interest in 1998 on this note. See Note
6.
Note 12 Subordinated Debentures
The Company issued 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, 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. As of September 30, 1998, the company had
issued $440,000 in debentures.
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 8) for the face amount of the debenture surrendered. In the three months
ended September 30, 1998, Spectrum exchanged 4,000 of its shares in connection
with this agreement and received two notes payable from the Company totaling
$10,000.
Note 13 Non Cash Financing Transactions
During 1998, the Company issued stock in exchange for services of $290,000
(210 common shares issued) and $348,578 (760 common shares issued) for the
nine months and three months ended September 30, 1998, respectively. The
Company also issued shares in satisfaction of debt of $37,517 (2,500,000
common shares) for the nine months ended September 30, 1998.
Note 14 Subsequent Events
On October 29, 1998, the Company amended its Articles of Incorporation to
allow it to issue preferred stock. The total preferred shares authorized were
20,000,000, $0.001 par value.
On November 4, 1998, the Company concluded an acquisition of Aplomb, Inc. (A
Mississippi Corporation) in a transaction wherein the Company issued a total
of 517,976 common shares and 3,239,870 preferred shares.
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, 1998, and the related
consolidated statements of operations and cash flows for the three-month and
nine-month periods ended September 30, 1998 and 1997, 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.
The balance sheet as of December 31, 1997 and the related statements of
income, cash flows and changes in stockholders' equity for the year then ended
(not present herein); have been previously audited, in accordance with
generally accepted auditing standards by other auditors whose report was dated
February 17, 1998, wherein he expressed an unqualified opinion on those
financial statements.
ROBERTS, CHERRY and COMPANY
A Corporation of
Certified Public Accountants
Shreveport, Louisiana
November 2,1998
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 7 of the 1997 Form 10-KSB, the financial
statements and notes contained in Item 8 of the 1997 Form 10-KSB and the
interim financial statements and notes thereto contained elsewhere in this
Report.
RESULTS OF OPERATIONS
For the Three and Nine Month Periods Ended
September 30, 1998 For the three months and nine months ended September 30,
1998, the Company recognized net losses of ($468,435) and ($460,845), (with
loss per share of ($0.1332) and ($0.1310) per common share, respectively).
During these periods, 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, will add to its ability to provide medical services. The
following principal factors contribute to these results. For the periods ended
September 30, 1998, the Company recognizes the operations of its wholly-owned
subsidiary, CMMI-LA, including the operations of the newly formed
subsidiaries, Independent Diagnostic Services, Inc. and Psychiatric Management
Services, Inc. (PMSI) with consolidated operating revenue of $282,832 and
$629,537 for the three-month and nine-month periods ended September 30, 1998,
respectively.
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. 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 three-month and nine month periods ended September 30, 1998, the
Company incurred operating costs associated with the production of
management fee revenue totaling $478,218 and $799,477, respectively.
The most significant elements of operating expenses are personnel costs
totaling $119,192 and $310,536, respectively for these periods. 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. Another significant operating cost is consulting
fees paid in connection with the medical management performed by the
Company. These costs totaled $99,324 and $142,409, respectively for the
three and nine month periods ending September 30, 1998.
The Company incurred office expense totaling $89,453 for the nine-month
period, which includes a one-time charge of $18,860 to account for
non-professional fees incurred in completing the acquisition of and
Consolidated Medical Management, Inc. by Golden Maple and Mining Leaching,
Inc. The Company also identified and charged off as an allowance for bad
debts, receivables totaling $86,772.
The most significant non-operating contributions to the net loss for the
three and nine months are the merger and acquisition costs of $230,000
and $270,000, respectively, for these periods. Specifically, in the
three months ended September 30, 1998, the Company took a one-time charge
against earnings of $200,000 for merger and acquisition expenses associated
with the acquisition of Independent Diagnostic Services, Inc. (IDSI), and
Psychiatric Management Services, Inc. (PMSI). The Company issued shares of
its common stock in exchange for these expenses. In the nine months ended
September 30, 1998, the total merger and acquisition costs charged to
operations were $270,000 and included the acquisition costs associated
with the CMMI-LA acquisition of $40,000. These expenses included fees for
the location of the target companies, the negotiation of the merger
arrangements and terms and the successful conclusion of the plan.
The Company believes that with the acquisition of Aplomb, Inc. in the
fourth quarter, that the plans for the first phase of corporate
acquisitions will be completed. The Company is planning to continue to
seek future acquisitions; however, there are none in process as of this
filing.
For the three and nine months ended September 30, 1997, the net
loss applicable to common stock totaled ($4,914) or ($0.03) per share
and $179,702, respectively. In the 1997 period, the Company had no
operations and recognized nominal expenses associated with the maintenance
of the Company's filings. For the nine month period in 1997, the Company
realized a gain from debt forgiveness of $193,681 and operating loss of
($13,983) for the nine months ended June 1997, resulting in net income of
$179,702.
FINANCIAL CONDITION
Liquidity and Capital Resources
Since March 1998, the Company sold a total of $450,000 in convertible
subordinated debentures ($440,000 remain as of September 30, 1998). 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 $112,743 as of September 30, 1998
and receivables totaling $113,595 from customers, of which $99,297 (87% of
total receivables) was current, $0 (0%) was thirty days old and the
remainder of $14,298 (13%) was older than ninety days. 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 $147,000 as of September 30,
1998. The terms of the notes call for the Company to be paid interest of 6%,
are due June 30, 1999 and are unsecured. Management believes these amounts to
be collectable.
In the period subsequent to September 30, 1998, the Company completed
negotiations on the acquisition of Aplomb, Inc. In connection with
the acquisition, the Company has entered into an agreement with Spectrum
Financial, Inc. and GCSW Funding and the three insurance entities that formed
Aplomb, Inc., whereby the Company will pay these companies a fee in
remuneration of the services rendered therein. Payment of the fees is
estimated to be valued at approximately $1,800,000, and will be paid in the
form of issuance of 509,976 common shares and 323,987 preferred shares. This
charge to earnings is expected to be the final material charge to earnings
associated with acquisitions.
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Since the end of the fiscal year ended December 31, 1997, and through the end
of the quarter ended September 30, 1998, the Company has sold the following
shares of common stock of the Company without registration under the
Securities Act of 1933:
a. On March 31, 1998 the Company issued 2,500,000 shares of common stock
to Milagro Holdings, Inc., a Delaware corporation ("Milagro") controlled by
Howard M. Oveson, a former officer, director, and controlling shareholder of
the Company. The shares were issued for forgiveness of debt in the amount of
$37,517 owed by the Company to Milagro for operating funds advanced to the
Company by Milagro.
b. From March to May 1998 CMMI-LA issued subordinated convertible
debentures totaling $450,000. The debentures are convertible into shares of
common stock of the Company at the greater of $2.50 per share or 60% of the
bid price on the date of conversion. The Company has entered into an
agreement with Spectrum Financial Services, Inc. ("Spectrum"), a Texas
corporation and shareholder of the Company, in which Spectrum has agreed to
exchange shares it owns in the Company with the debenture holders upon
exercise of the conversion option in satisfaction of the Company's obligation
under the conversion provisions. Spectrum will then receive an unsecured
promissory note from the Company for the face amount of the debentures
surrendered. As of September 30, 1998, the Company had issued two promissory
notes to Spectrum in the amount of $10,000 for cancellation of debentures in
the amount of $10,000.
c. On May 23, 1998, the Company issued 1,850,000 shares of common stock to
Sunni M. Wooley for all of the outstanding stock of Consolidated Medical
Management, Inc., a Louisiana corporation ("CMMI-LA"). (See Item 5, below.)
d. On August 5, 1998, the Company issued 20,000 shares of common stock to
PILL PT--15435, a trust designated by Michael W. Sciacchetano, the sole
shareholder of the acquired company, for all of the outstanding stock of
Independent Diagnostic Services, Inc. (formerly United Medical Services
Corporation), a Louisiana corporation.
e. On August 25, 1998, the Company issued 140,000 shares of common stock
to Jaguar International Corp. ("Jaguar"), an entity created under the Belize
International Business Companies Act of 1990, as amended. Jaguar is a
controlling shareholder of the Company. The entity is owned and controlled by
Michelle Naquin. Garvis C. Wooley, Jr., the father of Sunni M. Wooley, the
president, director, and a principal shareholder of the Company, shares
control of such entity with Ms. Naquin.
f. On August 25, 1998, the Company issued 30,000 shares of common stock to
Dale Bachman as consideration for accepting the position of chief executive
officer of the Company.
g. On August 25, 1998, the Company issued 40,000 shares of common stock to
Frederick J. Gossen, Jr. as consideration for entering into a five-year
consulting contract with the Company.
h. On September 1, 1998, the Company issued 100,000 shares of common stock
to Louisiana Mobile Imaging, Inc., a Louisiana corporation for all of the
assets of such entity. (See Item 5, below.)
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
LaMar F. Laster, Jr. 47 Chairman and COO 1998
Dale L. Bachman 51 Director and CEO 1998
Sunni M. Wooley 23 Director and President and CFO 1998
Peggy D. Behrens 43 Director and Secretary 1998
Lynn Simon, M.D. 48 Director 1998
Set forth below is information concerning the business experience during the
last five years of each of the executive officers and directors of the Company
(except Ms. Wooley and Ms. Behrens, whose information has been previously
reported):
LA MAR F. LASTER, JR., has served as the Chairman and Chief Operating Officer
for the Company since September 16, 1998. He has had over twenty years of
experience in the medical devices and services industry. From 1982 to 1994 he
held various senior executive positions at Staar Surgical Company, including
chairman, chief operating officer, executive vice-president, vice-president of
finance, chief financial officer, and consultant. From 1994 to the present
Mr. Laster has been employed by LaMarz Interests, Inc., a Texas corporation
providing financial and medical company consultancy. Mr. Laster received a
B.A. degree in mathematics and economics from Macalaster College in 1972, and
received an M.B.A. in finance and accounting from the University of Chicago
Graduate School of Business in 1974.
DALE L. BACHMAN, has served as the Chief Executive Officer of the Company
since August 14, 1998. He has been semi-retired, working part-time as a
consultant with development stage and small to mid-size public companies
assisting them in developing funding and investor relations programs. Mr.
Bachman received a bachelors degree in business administration from the
University of Nebraska.
LYNN SIMON, M.D., is a licensed psychiatrist practicing in the State of
Louisiana and served on the New Orleans' Mayor's Taskforce on Nutrition from
January to December of 1994. Since 1975 he has served as a consultant to
various private and state-run health care organizations, and has served as an
expert witness in both civil and criminal court cases. Dr. Simon received an
M.D. degree from Maharry Medical College in 1972 and a B.S. degree from Morgan
State College in 1968.
The Company presently has no employment contracts with any of its executive
officers. The Company anticipates negotiating and entering into employment
contracts with such persons during the first quarter of 1999. It is
anticipated that Mr. Laster will be a full-time employee of the Company and
that Mr. Bachman and Ms. Wooley will be employed part-time.
There are no family relationships among directors or executive officers of the
Company.
Asset Acquisition
On September 1, 1998, the Company entered into an Asset Purchase Agreement to
purchase certain assets of Louisiana Mobile Imaging, Inc., a Louisiana
corporation ("LMI") owned and controlled by David Cooper and Michael Firth.
The Agreement, as amended effective September 17, 1998, provided for the
issuance of 100,000 shares of common stock of the Company to LMI. In return,
LMI agreed to transfer to the Company a Medicare provider number and a note
receivable in the amount of $75,000. Also, LMI agreed to sublease certain
imaging equipment and vehicles leased by LMI pursuant to lease/purchase
agreements with outside leasing companies, and to grant to the Company the
option to purchase such equipment for nominal consideration upon the
completion of the lease/purchase agreements. The closing of the Asset
Purchase Agreement was held on September 1, 1998, and the assets were
transferred, the stock was issued, and the sublease was granted. The number
of shares issued by the Company in this acquisition was based upon the amount
of revenues of LMI for the period ended October 31, 1998, and an assumed or
agreed value of the common stock of the Company for purposes of this
transaction only of $0.75 per share. Michael W. Sciacchetano, a consultant
for LMI, and the former sole shareholder of Independent Diagnostic Services,
Inc. (see Item 2, above), will also provide consulting services for the
Company in connection with the assets purchased in the transaction.
The sublease of equipment, dated September 1, 1998, provides that the Company
shall pay to LMI a monthly lease payment of $10,133.82 for all of the leased
assets purchased in the above-referenced agreement. The sublease for each
particular asset will terminate on the same state as the master lease between
LTM and the outside leasing company, the Company will have the option to
purchase such equipment. The Company is responsible for maintenance and
repair of the equipment and to maintain adequate liability and replacement
value insurance on the equipment. Set forth below a list of the items
comprising the equipment, the term of the lease between LMI and the outside
leasing companies, the commencement date of the particular lease, and the
buy-out price at the completion of the lease:
Equipment Description Lease Term Commencement Date Buy-Out Price
1998 Chevrolet Astrovan 36 months $1.00
1994 Ford Club Wagon 24 months March 1, 1997 $1.00
Toshiba Ultrasound 60 months October 1, 1996 $1.00
HP Image Point System 60 months August 1, 1998 $1.00
HP M2410A Image Point 60 months August 1, 1998 $1.00
HP M2401 A Image Point 60 months August 1, 1998 $1.00
Description of Preferred Stock
On October 29, 1998, the Company amended its articles of incorporation to
authorize 20,000,000 shares of preferred stock (par value $.001). The
preferred shares can be issued by the board of directors which has the
authority to determine the preferences, limitations, and relative rights of
any series of preferred stock issued by the Company. On November 19, 1998,
the Company filed articles of amendment creating two series of preferred stock
designated as the Series "A" $12.50 Preferred Stock (the "$12.50 Series") and
the Series "A" $8.00 Preferred Stock (the "$8.00 Series"). The $12.50 Series
consists of 2,159,913 shares of preferred stock, and the $8.00 Series consists
of 1,079,957 shares of preferred stock. Each series is identical with the
other in its preferences, limitations, and relative rights, except for the
conversion price. Both series have a preference over the common shares for
noncumulative dividends up to 1% in any fiscal year. Each share of the $12.50
Series is convertible into three shares of common stock of the Company at any
time after the common stock of the Company maintains an average bid price per
share of at least $12.50 for ten consecutive trading days. Each share of the
$8.00 Series is convertible into three shares of common stock of the Company
at any time after the common stock of the Company maintains an average bid
price per share of at least $8.00 for ten consecutive trading days. Neither
series shall have voting rights or will be redeemable by the Company. Each
series will have a preference upon liquidation, dissolution, or winding up of
the Company up to $5.00 per preferred share of the series, plus any unpaid
dividends upon such shares. The Company has issued all of the authorized
shares of the $12.50 Series and the $8.00 Series in connection with the
acquisition of Aplomb, Inc. ("Aplomb").
Arrangements Which May Result in Change of Control
If all of the shares of preferred stock issued to the former shareholders of
Aplomb were converted into shares of common stock of the Company, such persons
as a group would own 9,719,610 shares of common stock , or approximately 64%
of the outstanding shares of common stock, assuming no further shares were
issued. If such persons act as a group, they would have control of the
Company by virtue of the voting control of the Company.
If the preferred shares are converted prior to November 19, 1999, Ms. Wooley
shall have voting control of such shares by virtue of the proxies granted to
her and would therefore have voting control of the Company.
Item 6. Exhibits and Reports on Form 8-K
During the nine-month period ended September 30, 1998, the Company filed an
8-K on May 26, 1998 concerning the Plan of Reorganization governing its
acquisition of Consolidated Medical Management, Inc. (the Louisiana private
company). On June 18,1998 the Company filed form 8-K/A (amendment 1) which
amended the original 8-K to include the audited financial statements for the
private company for the period ended December 31, 1997 thereof. On July 6,
1998, the Company filed amendment 2 to this form 8-K, which included the
proforma financial statements of the combined companies.
On September 9, 1998, the Company filed a Form 8-K to notify of the change in
independent auditor for the Company and to disclose the purchase of united
Medical Services, Inc. On September 18, 1998, the Company filed Form 8-K/A to
incorporate the audited financial statements of United Medical Services, Inc.
On November 18, 1998, the Company filed a Form 8-K concerning the acquisition
of Aplomb, Inc. (a Mississippi Company).
EXHIBIT Table
EXHIBIT No Description of Exhibit
2.1 Plan of acquisition of Aplomb, Inc. dated November 4, 1998
2.2 Plan of acquisition of Louisiana Mobile Imaging, Inc., dated
September 1, 1998, as amended
3.1 Amendment to Articles of incorporation dated October 7, 1998,
authorizing 20,000,000 shares of non-voting, non-cumulative
$0.001 per share par value preferred stock
3.2 Amendment to Articles of Incorporation to Create Series "A"
Preferred Stock
4.1 Form of Series "A" $12.50 preferred stock certificate
4.2 Form of Series "A" $8.00 preferred stock certificate
4.3 Form of Debenture
4.4 Form of Promissory Note to Spectrum
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this amended report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Consolidated Medical Management, Inc.
By - /S/ Sunni M. Wooley, President and Principal Financial Officer
Date: Dec 8, 1998
EXHIBIT 2.1
The agreement is as follows:This Agreement (the "Agreement"),
entered into this 4th day of November 1998, is by, between, and among
Consolidated Medical Management, Inc., a publicly held Montana corporation
(hereinafter the "Purchaser"), Aplomb Inc., a privately-held Mississippi
corporation (hereinafter the "Private Company"), and the shareholders of the
Private Company (hereinafter the "Shareholder").
RECITALS:
WHEREAS, the Purchaser wishes to acquire, and the Shareholder is willing to
sell, all of the outstanding stock of the Private Company in exchange solely
for shares of Preferred stock of the Purchaser, and
WHEREAS, the parties hereto intend to qualify such transaction as a tax-free
exchange pursuant to Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended;
NOW, THEREFORE, based upon the stated premises, which are incorporated herein
by reference, and for and in consideration of the mutual covenants and
agreements set forth herein, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Purchaser, the Private Company, and the
Shareholder approve and adopt this Agreement and mutually covenant and agree
with each other as follows:
1. Shares to be Transferred and Shares to be Issued.
1.1 On the Closing Date the Shareholder shall transfer to the Purchaser
certificates for the number of shares of the common stock of the Private
Company described in Schedule "A," attached hereto and incorporated herein,
which in the aggregate shall represent all of the issued and outstanding
shares of the common stock of the Private Company.
1.2 In exchange for the transfer of the common stock of the Private Company
pursuant to subsection 1.1. hereof, the Purchaser shall on the Closing Date
and contemporaneously with such transfer of the common stock of the Private
Company to it by the Shareholder issue and deliver to the Shareholder the
number of shares of preferred stock of the Purchaser specified on Schedule "A"
hereof.
2. Representations and Warranties of the Shareholder. The Shareholder,
represents and warrants to the Purchaser as set forth below. These
representations and warranties are made as an inducement for the Purchaser to
enter into this Agreement and, but for the making of such representations and
warranties and their accuracy, the Purchaser would not be a party hereto.
2.1 Ownership of Stock.
a. The Shareholder is the record and beneficial owner and holder of the
number of fully paid and nonassessable shares of the common stock of the
Private Company listed in Schedule "A" hereto as of the date hereof and will
continue to own such shares of the common stock of the Private Company until
the delivery thereof to the Purchaser on the Closing Date and all such shares
of common stock are or will be on the Closing Date owned free and clear of all
liens, encumbrances, charges and assessments of every nature and subject to no
restrictions with respect to transferability. The Shareholder currently has,
and will have at Closing, full power and authority to dispose, assign, and
transfer his shares of the Private Company in accordance with the terms
hereof. The Shareholder currently has, and will have at Closing, full power
and authority to vote his shares of the Private Company, without restriction
of any kind.
b. Except for this Agreement, there are no outstanding options, contracts,
calls, commitments, agreements or demands of any character relating to the
common stock of the Private Company listed in Schedule "A" and owned by the
Shareholders.
2.2 Accuracy of All Statements Made by the Shareholder. No representation
or warranty by the Shareholder in this Agreement, nor any statement,
certificate, schedule, or exhibit hereto furnished or to be furnished by or on
behalf of the Shareholder pursuant to this Agreement, nor any document or
certificate delivered to the Purchaser by the Shareholder pursuant to this
Agreement or in connection with actions contemplated hereby, contains or shall
contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not
misleading.
3. Representations and Warranties of the Private Company. The Private
Company represents and warrants to the Purchaser as set forth below. These
representations and warranties are made as an inducement for the Purchaser to
enter into this Agreement and, but for the making of such representations and
warranties and their accuracy, the Purchaser would not be a party hereto.
3.1 Organization and Authority. The Private Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Mississippi with full power and authority to enter into and perform the
transactions contemplated by this Agreement.
3.2 Capitalization. As of the date of the Closing, the Private Company will
have a total of no more than 1,000 shares of common stock issued and
outstanding. All of the shares will have been duly authorized and validly
issued and will be fully paid and nonassessable. There are no options,
warrants, conversion privileges, or other rights presently outstanding for the
purchase of any authorized but unissued stock of the Private Company.
3.3 Performance of This Agreement. The execution and performance of this
Agreement and the transfer of stock contemplated hereby have been authorized
by the board of directors of the Private Company.
3.4 Financials. True copies of the financial statements of the Private
Company for October 1, 1998, has been furnished to the Purchaser. Said
financial statements are true and correct in all material respects and present
an accurate and complete disclosure of the financial condition of the Private
Company as of October 1, 1998, and the earnings for the periods covered, in
accordance with generally accepted accounting principles applied on a
consistent basis. Such financial statements meet the requirements of
Regulation S-X and Item 7 of Form 8-K promulgated by the Securities and
Exchange Commission.
3.5 Liabilities. There are no material liabilities of the Private Company,
whether accrued, absolute, contingent or otherwise, which arose or relate to
any transaction of the Private Company, its agents or servants occurring prior
to October 1, 1998, which are not disclosed by or reflected in said financial
statements. As of the date hereof, there are no known circumstances,
conditions, happenings, events or arrangements, contractual or otherwise,
which may hereafter give rise to liabilities, except in the normal course of
business of the Purchaser.
3.6 Absence of Certain Changes or Events. Except as set forth in this
Agreement, since October 1, 1998, there has not been (i) any material adverse
change in the business, operations, properties, level of inventory, assets, or
condition of the Private Company, or (ii) any damage, destruction, or loss to
the Private Company (whether or not covered by insurance) materially and
adversely effecting the business, operations, properties, assets, or
conditions of the private Company.
3.7 Litigation. There are no legal, administrative or other proceedings,
investigations or inquiries, product liability or other claims, judgments,
injunctions or restrictions, either threatened, pending, or outstanding
against or involving the Private Company or its subsidiaries, if any, or their
assets, properties, or business, nor does the Private Company or its
subsidiaries know, or have reasonable grounds to know, of any basis for any
such proceedings, investigations or inquiries, product liability or other
claims, judgments, injunctions or restrictions. In addition, there are no
material proceedings existing, pending or reasonably contemplated to which any
officer, director, or affiliate of the Private Company or as to which the
Shareholder is a party adverse to the Private Company or any of its
subsidiaries or has a material interest adverse to the Private Company or any
of its subsidiaries.
3.8 Taxes. All federal, state, foreign, county and local income, profits,
franchise, occupation, property, sales, use, gross receipts and other taxes
(including any interest or penalties relating thereto) and assessments which
are due and payable have been duly reported, fully paid and discharged as
reported by the Private Company, and there are no unpaid taxes which are, or
could become a lien on the properties and assets of the Private Company,
except as provided for in the financial statements of the Private Company, or
have been incurred in the normal course of business of the Private Company
since that date. All tax returns of any kind required to be filed have been
filed and the taxes paid or accrued.
3.9 Hazardous Materials. No hazardous material has been released, placed,
stored, generated, used, manufactured, treated, deposited, spilled,
discharged, released, or disposed of on or under any real property currently
or previously owned or leased by the Private Company or any of its
subsidiaries.
3.10 Business Plan. All of the information contained in the business plan of
the Private Company, a copy of which has been furnished to the Purchaser, is
true and correct in all material respects and does not contain any untrue
statement of material fact or omit a material fact necessary to make the
statement contained therein not misleading.
3.11 Accuracy of All Statements Made by the Private Company. No
representation or warranty by the Private Company in this Agreement, nor any
statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by or on behalf of the Private Company pursuant to this Agreement,
nor any document or certificate delivered to the Purchaser by the Private
Company pursuant to this Agreement or in connection with actions contemplated
hereby, contains or shall contain any untrue statement of material fact or
omits or shall omit a material fact necessary to make the statements contained
therein not misleading.
4. Representations and Warranties of the Purchaser. The Purchaser represents
and warrants to the Private Company and to the Shareholder as set forth below.
These representations and warranties are made as an inducement for the Private
Company and the Shareholder to enter into this Agreement and, but for the
making of such representations and warranties and their accuracy, the Private
Company and the Shareholder would not be parties hereto.
4.1 Organization and Good Standing. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Montana with full power and authority to enter into and perform the
transactions contemplated by this Agreement.
4.2 Capitalization. As of the date of the Closing, the Purchaser will
have a total of no more than 5,446,057 shares of common stock issued and
outstanding, including the shares to be issued to the Shareholder. All of the
shares will have been duly authorized and validly issued and will be fully
paid and nonassessable. Except for the Purchaser's obligations hereunder with
respect to the shares to be issued pursuant to subsection 1.2 hereof, there
are no options, warrants, conversion privileges, or other rights presently
outstanding for the purchase of any authorized but unissued stock of the
Purchaser. As of the Closing, the Articles of Incorporation, as amended, of
the Purchaser (the "Purchaser Articles") and as currently in effect shall be
in the form previously furnished to the Private Company. The rights,
preferences, and privileges of the common stock shall be as set forth in the
Purchaser Articles.
4.3 Performance of This Agreement. The execution and performance of this
Agreement and the issuance of stock contemplated hereby have been authorized
by the board of directors of the Purchaser.
4.4 Financials. True copies of the financial statements of the Purchaser for
the fiscal year ended December 31, 1997, and the period ended September 30,
1998, have been delivered by the Purchaser to the Private Company. These
statements have been examined and certified by Scott McHone and Roberts,
Cherry & Company, Certified Public Accountants. Said financial statements are
true and correct in all material respects and present an accurate and complete
disclosure of the financial condition of the Purchaser as of September 30,
1998, and the earnings for the periods covered, in accordance with generally
accepted accounting principles applied on a consistent basis.
4.5 Liabilities. There are no material liabilities of the Purchaser, whether
accrued, absolute, contingent or otherwise, which arose or relate to any
transaction of the Purchaser, its agents or servants which are not disclosed
by or reflected in said financial statements. As of the date hereof, there are
no known circumstances, conditions, happenings, events or arrangements,
contractual or otherwise, which may hereafter give rise to liabilities, except
in the normal course of business of the Purchaser.
4.6 Litigation. There are no legal, administrative or other proceedings,
investigations or inquiries, product liability or other claims, judgments,
injunctions or restrictions, either threatened, pending, or outstanding
against or involving the Purchaser or its subsidiaries, if any, or their
assets, properties, or business, nor does the Purchaser or its subsidiaries
know, or have reasonable grounds to know, of any basis for any such
proceedings, investigations or inquiries, product liability or other claims,
judgments, injunctions or restrictions. In addition, there are no material
proceedings existing, pending or reasonably contemplated to which any officer,
director, or affiliate of the Purchaser is a party adverse to the Purchaser or
any of its subsidiaries or has a material interest adverse to the Purchaser or
any of its subsidiaries.
4.7 Taxes. All federal, state, foreign, county and local income, profits,
franchise, occupation, property, sales, use, gross receipts and other taxes
(including any interest or penalties relating thereto) and assessments which
are due and payable have been duly reported, fully paid and discharged as
reported by the Purchaser, and there are no unpaid taxes which are, or could
become a lien on the properties and assets of the Purchaser, except as
provided for in the financial statements of the Purchaser, or have been
incurred in the normal course of business of the Purchaser since that date.
All tax returns of any kind required to be filed have been filed and the taxes
paid or accrued.
4.8 Hazardous Materials. No hazardous material has been released, placed,
stored, generated, used, manufactured, treated, deposited, spilled,
discharged, released, or disposed of on or under any real property currently
or previously owned or leased by the Purchaser or any of its subsidiaries,
except as set forth in the financial statements of the Purchaser.
4.9 Legality of Shares to be Issued. The shares of preferred stock of the
Purchaser to be issued by the Purchaser pursuant to this Agreement, when so issu
ed and delivered, will have been duly and validly authorized and issued by the
Purchaser and will be fully paid and nonassessable.
4.10 Accuracy of All Statements Made by the Purchaser. No representation or
warranty by the Purchaser in this Agreement, nor any statement, certificate,
schedule, or exhibit hereto furnished or to be furnished by the Purchaser
pursuant to this Agreement, nor any document or certificate delivered to the
Private Company or the Shareholder pursuant to this Agreement or in connection
with actions contemplated hereby, contains or shall contain any untrue
statement of material fact or omits to state or shall omit to state a material
fact necessary to make the statements contained therein not misleading.
5. Covenants of the Parties.
5.1 Corporate Records.
a. Simultaneous with the execution of this Agreement by the Private Company,
is not previously furnished, such entity shall deliver to the Purchaser copies
of the Articles of Incorporation, as amended, and the current bylaws of the
Private Company, and copies of the resolutions duly adopted by the board of
directors of the Private Company approving this Agreement and the transactions
herein contemplated.
b. Simultaneous with the execution of this Agreement by the Purchaser, if not
previously furnished, such entity shall deliver to the Private Company copies
of the Purchaser Articles, and the current bylaws of the Purchaser, and copies
of the resolutions duly adopted by the board of directors of the Purchaser
approving this Agreement and the transactions herein contemplated.
5.2 Access to Information.
a. The Purchaser and its authorized representatives shall have full access
during normal business hours to all properties, books, records, contracts, and
documents of the Private Company, and the Private Company shall furnish or
cause to be furnished to the Purchaser and its authorized representatives all
information with respect to its affairs and business as the Purchaser may
reasonably request. The Purchaser shall hold, and shall cause its
representatives to hold confidential, all such information and documents,
other than information that (i) is in the public domain at the time of its
disclosure to the Purchaser; (ii) becomes part of the public domain after
disclosure through no fault of the Purchaser; (iii) is known to the Purchaser
or any of its officers or directors prior to disclosure; or (iv) is disclosed
in accordance with the written consent of the Private Company. In the event
this Agreement is terminated prior to Closing, the Purchaser shall, upon the
written request of the Private Company, promptly return all copies of all
documentation and information provided by the Private Company hereunder.
b. The Private Company and its authorized representatives shall have full
access during normal business hours to all properties, books, records,
contracts, and documents of the Purchaser, and the Purchaser shall furnish or
cause to be furnished to the Private Company and its authorized
representatives all information with respect to its affairs and business the
Private Company may reasonably request. The Private Company shall hold, and
shall cause its representatives to hold confidential, all such information and
documents, other than information that (i) is in the public domain at the time
of its disclosure to the Private Company; (ii) becomes part of the public
domain after disclosure through no fault of the Private Company; (iii) is
known to the Private Company or any of its officers or directors prior to
disclosure; or (iv) is disclosed in accordance with the written consent of the
Purchaser. In the event this Agreement is terminated prior to Closing, the
Private Company shall, upon the written request of the Purchaser, promptly
return all copies of all documentation and information provided by the
Purchaser hereunder.
5.3 Actions Prior to Closing. From and after the date of this Agreement
and until the Closing Date:
a. The Purchaser and the Private Company shall each carry on its business
diligently and substantially in the same manner as heretofore, and neither
party shall make or institute any unusual or novel methods of purchase, sale,
management, accounting or operation.
b. Neither the Purchaser nor the Private Company shall enter into any contract
or commitment, or engage in any transaction not in the usual and ordinary
course of business and consistent with its business practices.
c. Neither the Purchaser nor the Private Company shall amend its Articles of
Incorporation or bylaws or make any changes in authorized or issued capital
stock, except as provided in this Agreement.
d. The Purchaser and the Private Company shall each use its best efforts
(without making any commitments on behalf of the company) to preserve its
business organization intact.
e. Neither the Purchaser nor the Private Company shall do any act or omit to
do any act, or permit any act or omission to act, which will cause a material
breach of any material contract, commitment, or obligation of such party.
f. The Purchaser and the Private Company shall each duly comply with all
applicable laws as may be required for the valid and effective issuance or
transfer of stock contemplated by this Agreement.
g. Neither the Purchaser nor the Private Company shall dispose of any
property or assets, except products sold in the ordinary course of business.
h. The Purchaser and the Private Company shall each promptly notify the
other of any lawsuits, claims, proceedings, or investigations that may be
threatened, brought, asserted, or commenced against it, its officers or
directors involving in any way the business, properties, or assets of such
party.
5.4 Shareholders' Meeting or Consent. The Purchaser shall promptly submit
this Agreement and the transactions contemplated hereby for the approval of
its stockholders and, subject to the fiduciary duties of the Board of
directors of the Purchaser under applicable law, shall use its best efforts to
obtain stockholder approval and adoption of this Agreement and the
transactions contemplated hereby. In connection with such meeting of
stockholders, the Purchaser shall prepare a proxy or information statement to
be furnished to the shareholders of the Purchaser setting forth information
about this Agreement and the transactions contemplated hereby. The Private
Party shall promptly furnish to the Purchaser all information, and take such
other actions, as may reasonably be requested in connection with any action to
be taken by the Purchaser in connection with the immediately preceding
sentence. The Private Company shall have the right to review and provide
comments to the proxy or information statement prior to mailing to the
shareholders of the Purchaser.
5.5 No Covenant as to Tax or Accounting Consequences. It is expressly
understood and agreed that neither the Purchaser nor its officers or agents
has made any warranty or agreement, expressed or implied, as to the tax or
accounting consequences of the transactions contemplated by this Agreement or
the tax or accounting consequences of any action pursuant to or growing out of
this Agreement.
5.6 Indemnification. The Private Company and the Shareholder, severally and
not jointly, shall indemnify Purchaser for any loss, cost, expense, or other
damage (including, without limitation, attorneys' fees and expenses) suffered
by Purchaser resulting from, arising out of, or incurred with respect to the
falsity or the breach of any representation, warranty, or covenant made by the
Private Company or the Shareholder herein, and any claims arising from the
operations of the Private Company prior to the Closing Date. Purchaser shall
indemnify and hold the Private Company and the Shareholder harmless from and
against any loss, cost, expense, or other damage (including, without
limitation, attorneys' fees and expenses) resulting from, arising out of, or
incurred with respect to, or alleged to result from, arise out of or have been
incurred with respect to, the falsity or the breach of any representation,
covenant, warranty, or agreement made by Purchaser herein, and any claims
arising from the operations of Purchaser prior to the Closing Date. The
indemnity agreement contained herein shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any party
and shall survive the consummation of the transactions contemplated by this
Agreement.
5.7 Publicity. The parties agree that no publicity, release, or other public
announcement concerning this Agreement or the transactions contemplated by
this Agreement shall be issued by any party hereto without the advance
approval of both the form and substance of the same by the other parties and
their counsel, which approval, in the case of any publicity, release, or other
public announcement required by applicable law, shall not be unreasonably
withheld or delayed.
5.8 Expenses. Except as otherwise expressly provided herein, each party to
this Agreement shall bear its own respective expenses incurred in connection
with the negotiation and preparation of this Agreement, in the consummation of
the transactions contemplated hereby, and in connection with all duties and
obligations required to be performed by each of them under this Agreement.
5.9 Further Actions. Each of the parties hereto shall take all such
further action, and execute and deliver such further documents, as may be
necessary to carry out the transactions contemplated by this Agreement.
6. Conditions Precedent to the Purchaser's Obligations. Each and every
obligation of the Purchaser to be performed on the Closing Date shall be
subject to the satisfaction prior thereto of the following conditions:
6.1 Truth of Representations and Warranties. The representations and
warranties made by the Private Company and the Shareholder in this Agreement
or given on their behalf hereunder shall be substantially accurate in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made or given on and as of the
Closing Date.
6.2 Performance of Obligations and Covenants. The Private Company and the
Shareholder shall have performed and complied with all obligations and
covenants required by this Agreement to be performed or complied with by them
prior to or at the Closing.
6.3 Officer's Certificate. The Purchaser shall have been furnished with a
certificate (dated as of the Closing Date and in form and substance reasonably
satisfactory to the Purchaser), executed by an executive officer of the
Private Company, certifying to the fulfillment of the conditions specified in
subsections 6.1 and 6.2 hereof.
6.4 No Litigation or Proceedings. There shall be no litigation or any
proceeding by or before any governmental agency or instrumentality pending or
threatened against any party hereto that seeks to restrain or enjoin or
otherwise questions the legality or validity of the transactions contemplated
by this Agreement or which seeks substantial damages in respect thereof.
6.5 No Material Adverse Change. As of the Closing Date there shall not have
occurred any material adverse change, financially or otherwise, which
materially impairs the ability of the Private Company to conduct its business
or the earning power thereof on the same basis as in the past.
6.6 Shareholders' Approval. The holders of not less than a majority of the
outstanding common stock of the Purchaser shall have voted for authorization
and approval of this Agreement and the transactions contemplated hereby.
6.7 Shareholders' Execution of Agreement. This Agreement shall have been
duly executed and delivered by each of the parties owning in the aggregate all
of the outstanding stock of the Private Company as of the Closing Date.
7. Conditions Precedent to Obligations of the Private Company and the
Shareholder. Each and every obligation of the Private Company and the
Shareholder to be performed on the Closing Date shall be subject to the
satisfaction prior thereto of the following conditions:
7.1 Truth of Representations and Warranties. The representations and
warranties made by the Purchaser in this Agreement or given on its behalf
hereunder shall be substantially accurate in all material respects on and as
of the Closing Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date.
7.2 Performance of Obligations and Covenants. The Purchaser shall have
performed and complied with all obligations and covenants required by this
Agreement to be performed or complied with by it prior to or at the Closing.
7.3 Officer's Certificate. The Private Company shall have been furnished
with a certificate (dated as of the Closing Date and in form and substance
reasonably satisfactory to the Private Company), executed by an executive
officer of the Purchaser, certifying to the fulfillment of the conditions
specified in subsections 7.1 and 7.2 hereof.
7.4 No Litigation or Proceedings. There shall be no litigation or any
proceeding by or before any governmental agency or instrumentality pending or
threatened against any party hereto that seeks to restrain or enjoin or
otherwise questions the legality or validity of the transactions contemplated
by this Agreement or which seeks substantial damages in respect thereof.
7.5 No Material Adverse Change. As of the Closing Date there shall not
have occurred any material adverse change, financially or otherwise, which
materially impairs the ability of the Purchaser to conduct its business.
7.6 No Material Liabilities of Purchaser. As of the Closing Date the
Purchaser shall have no liabilities which in the aggregate exceed $50,000.00,
that are not disclosed and the corporation balance sheet.
8. Securities Law Provisions.
8.1 Restricted Securities. Each of the parties hereto, severally and not
jointly,
represents that he, she, or it is aware that the shares issued or transferred
to him, her, or it will not have been registered pursuant to the Securities
Act of 1933, as amended (the "1933 Act"), or any state securities act, and
thus will be restricted securities as defined in Rule 144 promulgated by the
Securities and Exchange Commission (the "SEC"). Therefore, under current
interpretations and applicable rules, he, she, or it will probably have to
retain such shares for a period of at least one year and at the expiration of
such one year period his, her, or its sales may be confined to brokerage
transactions of limited amounts requiring certain notification filings with
the SEC and such disposition may be available only if the issuer is current in
its filings with the SEC under the Securities Exchange Act of 1934, as
amended, or other public disclosure requirements.
8.2 Non-distributive Intent. Each of the parties hereto, severally and not
jointly, covenants and warrants that the shares received are acquired for his,
her, or its own account and not with the present view towards the distribution
thereof and he, she, or it will not dispose of such shares except (i) pursuant
to an effective registration statement under the 1933 Act, or (ii) in any
other transaction which, in the opinion of counsel acceptable to the issuer,
is exempt from registration under the 1933 Act, or the rules and regulations
of the SEC thereunder. In order to effectuate the covenants of this
subsection, an appropriate legend will be placed upon each of the certificates
of common stock issued or transferred pursuant to this Agreement, and stop
transfer instructions shall be placed with the transfer agent for the
securities.
8.3 Evidence of Compliance with Private Offering Exemption. Each of the
parties hereto, severally and not jointly, hereby represents and warrants that
he, she, or it, either individually or together with his, her, or its
representative, has such knowledge and experience in business and financial
matters that he, she, or it is capable of evaluating the risks of this
Agreement and the transactions contemplated hereby, and that the financial
capacity of such party is of such proportion that the total cost of such
person's commitment in the shares would not be material when compared with
his, her, or its total financial capacity. Upon the written request of the
issuer of the securities issued or transferred pursuant to this Agreement, any
party hereto shall provide such issuer with evidence of compliance with the
requirements of any federal or state exemption from registration. The
Purchaser and the Private Company shall each file, with the assistance of the
other and its respective legal counsel, such notices, applications, reports,
or other instruments as may be deemed by each of them to be necessary or
appropriate in an effort to document reliance on such exemptions, unless an
exemption requiring no filing is available in the particular jurisdiction, all
to the extent and in the manner as may be deemed by such parties to be
appropriate.
9. Closing.
9.1 Time and Place. The Closing of this transaction ("Closing") shall take
place at 13000 Justice Avenue Suite 6, Baton Rouge, Louisiana, at 3:00 PM on
October 15, 1998, or at such other time and place as the parties hereto shall
agree upon. Such date is referred to in this Agreement as the "Closing Date. "
9.2 Documents To Be Delivered by the Private Company and the Shareholder. At
the Closing the Private Company and the Shareholder shall deliver to the
Purchaser the following documents:
a. Certificates for the number of shares of common Company in the manner
and form required by subsection 1.1 hereof.
b. The certificate required pursuant to subsection 6.3 hereof.
Such other documents of transfer, certificates of and documents as the
Purchaser may reasonably request.
9.3 Documents To Be Delivered by the Purchaser. At the Closing shall deliver
to the Private Company and the Shareholder the following documents:
a. Certificates for the number of shares of preferred as determined in
sub-section 1.2 hereof.
b. The certificate required pursuant to subsection 7.3 hereof.
c. Such other documents of transfer, certificates of and documents as the
Private Company and the Shareholder may reasonably request.
10. Termination. This Agreement may be terminated by the Purchaser or the
Private Company by notice to the other if, (i) at any time prior to the
Closing Date any event shall have occurred or any state of facts shall exist
that renders any of the conditions to its or their obligations to consummate
the transactions contemplated by this Agreement incapable of fulfillment, or
(ii) on November 30, 1998, if the Closing shall not have occurred. Following
termination of this Agreement no party shall have liability to another party
relating to such termination, other than any liability resulting from the
breach of this Agreement by a party prior to the date of termination.
11. Miscellaneous.
11.1 Notices. All communications provided for herein shall be in writing and
shall be deemed to be given or made when served personally or when deposited
in the United States mail, certified return receipt requested, addressed as
follows, or at such other address as shall be designated by any party hereto
in written notice to the other party hereto delivered pursuant to this
subsection:
Purchaser: Consolidated Medical Management, Inc.
13000 Justice Avenue Suite # 6
Baton Rouge, Louisiana 70816
Attention: Sunni M. Wooley
Private Company: Mr. Robert C. Coburn Sr.
120 S. George St
Petal, Ms. 39465
11.2 Default. Should any party to this Agreement default in any of the
covenants, conditions, or promises contained herein, the defaulting party
shall pay all costs and expenses, including a reasonable attorney's fee, which
may arise or accrue from enforcing this Agreement, or in pursuing any remedy
provided hereunder.
11.3 Assignment. This Agreement may not be assigned in whole or in part by the
parties hereto without the prior written consent of the other party or
parties, which consent shall not be unreasonably withheld.
11.4 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their heirs, executors,
administrators, successors and assigns.
11.5 Partial Invalidity. If any term, covenant, condition, or provision of
this Agreement or the application thereof to any person or circumstance shall
to any extent be invalid or unenforceable, the remainder of this Agreement or
application of such term or provision to persons or circumstances other than
those as to which it is held to be invalid or unenforceable shall not be
affected thereby and each term, covenant, condition, or provision of this
Agreement shall be valid and shall be enforceable to the fullest extent
permitted by law.
11.6 Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all negotiations, representations, prior discussions, letters of
intent, and preliminary agreements between the parties hereto relating to the
subject matter of this Agreement.
11.7 Interpretation of Agreement. This Agreement shall be interpreted and
construed as if equally drafted by all parties hereto.
11.8 Survival of Covenants. Etc. All covenants, representations, and
warranties made herein to any party, or in any statement or document delivered
to any party hereto, shall survive the making of this Agreement and shall
remain in full force and effect until the obligations of such party hereunder
have been fully satisfied.
11.9 Further Action. The parties hereto agree to execute and deliver such
additional documents and to take such other and further action as may be
required to carry out fully the transactions contemplated herein.
11.10 Amendment. This Agreement or any provision hereof may not be changed,
waived, terminated, or discharged except by means of a written supplemental
instrument signed by the party or parties against whom enforcement of the
change, waiver, termination, or discharge is sought.
11.11 Full Knowledge. By their signatures, the parties acknowledge that they
have carefully read and fully understand the terms and conditions of this
Agreement, that each party has had the benefit of counsel, or has been advised
to obtain counsel, and that each party has freely agreed to be bound by the
terms and conditions of this Agreement.
11.12 Headings. The descriptive headings of the various sections or parts of
this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
11.13 Counterparts. This Agreement may be executed in two or more partially or
fully executed counterparts, each of which shall be deemed an original and
shall bind the signatory, but all of which together shall constitute but one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto executed the foregoing Agreement as of
the day and year first above written.
PURCHASER: CONSOLIDATED MEDICAL MANAGEMENT, INC.
By: /S/ Sunni M. Wooley
Sunni M. Wooley President
PRIVATE COMPANY: APLOMB, INC.
By: /S/ Robert C. Coburn Sr.
Robert C. Coburn Sr. President
SCHEDULE "A" TO THE AGREEMENT
NAME OF NO. OF SHARES OF NO. OF SHARES OF
SHAREHOLDER THE PRIVATE COMPANY THE PURCHASER
TO BE TRANSFERRED TO BE ISSUED
Colonial American Holding, Inc. 111 360,000
Myers And Raggio 111 360,000
Sam Love 111 360,000
Underwriters Trust or
Charles Coburn Trustee 445 1,439,956
Charles Walker Trustee 111 359,957
Innovative Trust 111 359,957
TOTAL SHARES 1,000 3,239,870
EXHIBIT 2.2 Plan of acquisition of Louisiana Mobile Imaging, Inc., dated
September 1, 1998
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), entered into this 1st day of
September, 1998, by and between Consolidated Medical Management, Inc., a
Montana corporation (hereinafter the
"Purchaser"), and Louisiana Mobile Imaging Inc., a Louisiana corporation
(hereinafter the "Seller").
RECITALS:
WHEREAS, the Purchaser wishes to acquire, and the Seller is willing to sell
the assets listed on Schedule "A" of the Seller in exchange solely for a part
of the rule 144 Common voting stock of the Purchaser.
NOW, THEREFORE, based upon the stated premises, which are incorporated herein
by reference, and for and in consideration of the mutual covenants and
agreements set forth herein, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Purchaser and the Seller approve and
adopt this Agreement and mutually covenant and agree with each other as
follows:
I . Assets to be Transferred, Liabilities to be Assumed, and Shares to be
Issued..
1.1 Assets to be Transferred. Upon execution of this agreement the Seller
will convey, transfer, assign and deliver to Purchaser, and Purchaser will
accept and acquire, the assets which are owned by Seller as described in
Schedule "A" attached hereto and incorporated herein (hereinafter the
"Assets").
1.2 Liabilities to be Assumed. At closing Purchaser shall assume and
agree to pay any liabilities, or assume any obligations, of the Seller set
forth in Schedule "B" attached hereto and incorporated herein (hereinafter the
"Seller Liabilities"). Anything to the contrary herein notwithstanding,
Purchaser shall not assume or pay any liabilities, or assume any obligations,
except such Seller Liabilities as set forth in Schedule "B."
1.3 Shares to be Issued. In exchange for the transfer of the Assets
pursuant to sub-section 1. 1. hereof, the Purchaser shall on the closing date,
and contemporaneously with such transfer of the Assets to it by the Seller,
issue and deliver to the Seller 150,000 shares of Rule 144 Common stock of
the Purchaser.
2. Representations and Warranties of the Seller. The Seller represents
and warrants to the Purchaser as set forth below. These representations and
warranties are made as an inducement for the Purchaser to enter into this
Agreement and, but for the making of such representations and warranties and
their accuracy, the Purchaser would not be a party hereto.
2.1 Organization and Authority. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Louisiana with full power and authority to enter into and perform the
transactions contemplated by this Agreement.
2.2 Seller is Sole Owners of Assets. The Seller is the sole owner of the
Assets and has the full right and power to sell and transfer the Assets as set
forth in this Agreement. The Assets are free from any security interest or
other lien or encumbrance, except for the Seller Liabilities set forth in
Schedule "B."
2.3 Performance of This Agreement. The execution and performance of this
Agreement and the transfer of assets contemplated hereby have been authorized
by the board of directors of the Seller.
2.4 Liabilities. There are no material liabilities of the Seller, whether
accrued, absolute, contingent or otherwise, which arose or relate to any
transaction of the Seller, its agents or servants occurring prior to July 31,
1998, which are not disclosed by or reflected in said financial statements.
As of the date hereof, there are no known circumstances, conditions,
happenings, events or arrangements, contractual or otherwise, which may
hereafter give rise to liabilities, except in the normal course of business of
the Purchaser.
2.5 Absence of Certain changes or Events. Except as set forth in this
Agreement, since July 31, 1998, there has not been (i) any material
adverse change in the business, operations, properties, level of inventory,
assets, or condition of the Seller, or (ii) any damage, destruction, or loss
to the Seller (whether or not covered by insurance) materially and adversely
affecting the business, operations, properties, assets, or conditions of the
Seller.
2.6 Litigation. There are no legal, administrative or other proceedings,
investigations or inquiries, product liability or other claims, judgments,
injunctions or restrictions, either threatened, pending, or outstanding
against or involving the Seller or its subsidiaries, if any, or their assets,
properties, or business, nor does the Seller or its subsidiaries know, or have
reasonable grounds to know, of any basis for any such proceedings,
investigations or inquiries, product liability or other claims, judgments,
injunctions or restrictions. In addition, there are no material proceedings
existing, pending or reasonably contemplated to which any officer, director,
or affiliate of the Seller is a party adverse to the Seller or any of its
subsidiaries or has a material interest adverse to the Seller or any of its
subsidiaries.
2.7 Taxes. All federal, state, foreign, county and local income, profits,
franchise, occupation, property, sales, use, gross receipts and other taxes
(including any interest or penalties relating thereto) and assessments which
are due and payable have been duly reported, fully paid and discharged as
reported by the Seller, and there are no unpaid taxes which are, or could
become a lien on the properties and assets of the Seller, except as provided
for in the financial statements of the Seller, or have been incurred in the
normal course of business of the Seller since that date. All tax returns of
any kind required to be filed have been filed and the taxes paid or accrued.
2.8 Accounting Information. The Seller is aware of the accounting
requirements of the Purchaser as set by the Securities and Exchange
Commission, and can provide to the Purchaser within the required time limits
such accounting information of the Seller as shall be required for the
purchaser to meet the requirements of such item.
2.9 Accuracy of All Statements Made by the Seller. No representation or
warranty by the Seller in this Agreement, nor any statement, certificate,
schedule, or exhibit hereto furnished or to be furnished by or on behalf of
the Seller pursuant to this Agreement, nor any document or certificate
delivered to the Purchaser by the Seller pursuant to this Agreement or in
connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statement contained therein not misleading.
3. Representations and Warranties of the Purchaser. The Purchaser represents
and warrants to the Seller as set forth below. These representations and
warranties are made as an inducement for the Seller to enter into this
Agreement and, but for the making of such representations and warranties and
their accuracy, the Seller would not be party hereto.
3.1 Organization and Good Standing. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Montana with full power and authority to enter into and perform the
transactions contemplated by this Agreement.
3.2 Capitalization. As of the date of the closing, the Purchaser will
have a total of no more than 5,386,057 shares of common stock issued and
outstanding. All of the shares will have been duly authorized and validly
issued and will be fully paid and nonassessable. In addition, as of the date
of the closing, the Purchaser will have no shares of preferred stock issued
and outstanding. Except for the Purchaser's obligations hereunder with
respect to the shares to be issued pursuant to subsection 1.3 hereof, there
are no options, warrants, conversion privileges, or other rights presently
outstanding for the purchase of any authorized but unissued stock of the
Purchaser.
3.3 Performance of This Agreement. The execution and performance of
this Agreement and the issuance of stock contemplated hereby have been
authorized by the board of directors of the Purchaser.
3.4 Financials. True copies of the financial statements of
the Purchaser consisting of the balance sheet as of the fiscal year ended
December 31 1997, and the 7th month ended July 31, 1998, and statements of
income, cash flow and changes in stockholder's equity for the fiscal year
ended December 31, 1997, and the 7th months ended July 31, 1998, have been
delivered by the Purchaser to the Seller. The year-end statements have been
examined and certified by T. J. Dunne and Roberts, Cherry & Company, Certified
Public Accountants; the financial statements for the 7th month ended July 31,
1998, have been prepared by management of the Purchaser. Said financial
statements are true and correct in all material respects and present an
accurate and complete disclosure of the financial condition of the Purchaser
as of July 31, 1998, and the earnings for the periods covered, in accordance
with generally accepted accounting principles applied on a consistent basis.
3.5 Liabilities. There are no material liabilities of the Purchaser,
whether accrued, absolute, contingent or otherwise, which arose or relate to
any transaction of the Purchaser, its agents or servants that are not
disclosed by or reflected in said financial statements. As of the date
hereof, there are no known circumstances, conditions, happenings, events or
arrangements, contractual or otherwise, which may hereafter give rise to
liabilities, except in the normal course of business of the Purchaser.
3.6 Litigation. There arc no legal, administrative or other proceedings,
investigations or inquiries, product liability or other claims, judgments,
injunctions or restrictions, either threatened, pending, or outstanding
against or involving the Purchaser or its subsidiaries, if any, or their
assets, properties, or business, nor does the Purchaser or its subsidiaries
know, or have reasonable grounds to know, of any basis for any such
proceedings, investigations or inquiries, product liability or other claims,
judgments, injunctions or restrictions. In addition, there are no material
proceedings existing, pending or reasonably contemplated to which any officer,
director, or affiliate of the Purchaser is a party adverse to the Purchaser or
any of its subsidiaries or has a material interest adverse to the Purchaser or
any of its subsidiaries.
3.7 Taxes. All federal, state, foreign, county and local income, profits,
franchise, occupation, property, sales, use, gross receipts and other taxes
(including any interest or penalties relating thereto) and assessments which
are due and payable have been duly reported, fully paid and discharged as
reported by the Purchaser, and there are no unpaid taxes which are, or could
become a lien on the properties and assets of the Purchaser, except as
provided for in the financial statements of the Purchaser, or have been
incurred in the normal course of business of the Purchaser since that date.
All tax returns of any kind required to be filed have been filed and the taxes
paid or accrued.
3.8 Legality of Shares to be Issued. The shares of common stock of the
Purchaser to be issued by the Purchaser pursuant to this Agreement, when so
issued and delivered to the Seller, will have been duly and validly authorized
and issued by the Purchaser and will be fully paid and nonassessable.
3.9 Accuracy of All Statements Made by the Purchaser. No representation
or warranty by the Purchaser in this Agreement, nor any statement,
certificate, schedule, or exhibit hereto furnished or to be furnished by the
Purchaser pursuant to this Agreement, nor any document or certificate
delivered to the Seller pursuant to this Agreement or in connection with
actions contemplated hereby, contains or shall contain any untrue statement
of material fact or omits to state or shall omit to state a material fact
necessary to make the statement contained therein not misleading.
4. Covenants of the Parties.
4.1 Corporate Records.
a. Simultaneous with the execution of this Agreement by the Seller, such
entity shall deliver to the Purchaser copies of the articles of incorporation,
as amended, and the current bylaws of the Seller, and copies of the
resolutions duly adopted by the board of directors of the Seller approving
this Agreement and the transactions herein contemplated.
b. Simultaneous with the execution of this Agreement by the Purchaser,
such entity shall deliver to the Seller copies of the articles of
incorporation, as amended, and the current bylaws of the Purchaser, and copies
of the resolutions duly adopted by the board of directors of the Purchaser
approving this Agreement and the transactions herein contemplated.
4.2 Access to Information.
a. The Purchaser and its authorized representatives shall have full access
during normal business hours to all properties, books, records, contracts,
and documents of the Seller, and the Seller shall furnish or cause to be
furnished to the Purchaser and its authorized representatives all information
with respect to its affairs and business as the Purchaser may reasonably
request. The Purchaser shall hold, and shall cause its representatives to
hold confidential, all such information and documents, other than information
that (i) is in the public domain at the time of its disclosure to the
Purchaser; (ii) becomes part of the public domain after disclosure through no
fault of the Purchaser; (iii) is known to the Purchaser or any of its
officers or directors prior to disclosure; or (iv) is disclosed in accordance
with the written consent of the Seller.
b. The Seller and its authorized representatives shall have
full access during normal business hours to all properties, books, records,
contracts, and documents of the Purchaser, and the Purchaser shall furnish or
cause to be furnished to the Seller and its authorized representatives all
information with respect to its affairs and business the Seller may reasonably
request. The Seller shall hold, and shall cause its representatives to hold
confidential, all such information and documents, other than information that
(i) is in the public domain at the time of
its disclosure to the Seller; (ii) becomes part of the public domain after
disclosure through no fault of the Seller; (iii) is known to the Seller or any
of its officers or directors prior to disclosure; or (iv) is disclosed in
accordance with the written consent of the Purchaser.
5. Conditions Precedent to the Purchaser's Obligations.
Each and every obligation of the Purchaser to be performed on the closing date
shall be subject to the satisfaction prior thereto of the following
conditions:
5.1 Truth of Representation and Warranties. The
representations and warranties made by the Seller in this Agreement or given
on their behalf hereunder shall be substantially accurate in all material
respects on and as of the closing date with the same effect as though such
representations and warranties had been made or given on and as of the closing
date.
6. Conditions Precedent to Obligations of the Seller. Each and every
obligation of the Seller to be performed on the closing date shall be subject
to the satisfaction prior thereto of the following conditions:
6.1 Truth of Representations and Warranties. The representations and
warranties made by the Purchaser in this Agreement or given on its behalf
hereunder shall be substantially accurate in all material respects on and as
of the closing date with the same effect as though such representations and
warranties had been made or given on and as of the closing date.
6.2 No Litigation or Proceedings. There shall be no litigation or any
proceeding by or before any governmental agency or instrumentality pending or
threatened against any party hereto that seeks to restrain or enjoin or
otherwise questions the legality or validity of the transactions contemplated
by this Agreement or which seeks substantial damages in respect thereof
7. Securities Law Provisions.
7.1 Restricted Securities. The Seller represents that it is aware that
the shares to be issued to it will not have been registered pursuant to the
Securities Act of 1933, as amended (the "1933 Act"), or any state securities
act, and thus will be restricted securities as defined in Rule 144 promulgated
by the Securities and Exchange Commission (the "SEC"). Therefore, under
current interpretations and applicable rules, it will probably have to retain
such shares for a period of at least one year and at the expiration of such
one year period its sales may be confined to brokerage transactions of limited
amounts requiring certain notification filings with the SEC and such
disposition may be available only if the issuer is current in its filings with
the SEC under the Securities Exchange Act of 1934, as amended, or other public
disclosure requirements.
7.2 Non-distributive Intent. The Seller covenants
and warrants that the shares received are acquired for its own account and not
with the present view towards the distribution thereof and it will not dispose
of such shares except (I) pursuant to an effective registration statement
under the 1933 Act, or (ii) in any other transaction which, in the opinion of
counsel acceptable to the issuer, is exempt from registration under the 1933
Act, or the rules and regulations of the SEC thereunder. In order to
effectuate the covenants of this subsection 8.2, an appropriate legend
will be placed upon each of the certificates of common stock of issued or
transferred pursuant to this Agreement, and stop transfer instructions shall
be placed with the transfer agent for the securities.
7.3 Evidence of Compliance with Private Offering Exemption. The
Seller hereby represents and warrants that it, through its representative, has
such knowledge and experience in business and financial matters that it is
capable of evaluating the risks of this Agreement and the transactions
contemplated hereby. Upon the written request of the Purchaser, the Seller
shall provide the Purchaser with evidence of compliance with the requirements
of any federal or state exemption from registration. The Purchaser and the
Seller shall each file, with the assistance of the other and its respective
legal counsel, such notices, applications, reports, or other instruments as
may be deemed by each of them to be necessary or appropriate in an effort to
document reliance on such exemptions, unless an exemption requiring no filing
is available in the particular jurisdiction, all to the extent and in the
manner as may be deemed by such parties to be appropriate.
8. Closing.
8.1 Time and Place. The closing of this transaction ("closing") shall
take place at _________________________, Baton Rouge, Louisiana, at 10:00
a.m., ___day of ______, 1998, or at such other time and place as the parties
hereto shall agree upon. Such date is referred to in this Agreement as the
"closing date."
8.2 Documents To Be Delivered by the Seller. At the closing the Seller
shall deliver to the Purchaser the following documents:
a. An assignment, and other documents evidencing the transfer of the
Assets to the Purchaser, in form acceptable to counsel for the Purchaser.
b. Such other documents of transfer, certificates of authority,
and other documents as the Purchaser may reasonably request.
8.3 Documents To Be Delivered by the Purchaser. At the closing the
Purchaser shall deliver to the Seller the following documents:
a. Certificates for the number of shares of common stock of the Purchaser as
determined in sub-section 1.3 hereof.
b. Such other documents of transfer, certificates of authority, and other
documents as the Seller may reasonably request.
9. Miscellaneous.
9.1 Notices. All communications provided for herein shall be in
writing and shall be deemed to be given or made when served personally or when
deposited in the United States mail, certified return receipt requested,
addressed as follows, or at such other address as shall be designated by any
party hereto in written notice to the other party hereto delivered pursuant to
this subsection:
Purchaser: Sunni M. Wooley
Consolidated Medical Management, Inc.
13005 Justice Ave.
Baton Rouge, La. 70816
Seller: Michael Frith, President
Louisiana Mobile Imaging, Inc.
14076 Hwy 44
Gonzales, La. 70737
9.2 Default. Should any party to this Agreement default in any of the
covenants, conditions, or promises contained herein, the defaulting party
shall pay all costs and expenses, including a reasonable attorney's fee, which
may arise or accrue from enforcing this Agreement, or in pursuing any remedy
provided hereunder or by the statutes of the State of Louisiana.
9.3 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their heirs, executors,
administrators, successors and assigns.
9.4 Partial Invalidity. If any term, covenant, condition, or provision of
this Agreement or the application thereof to any person or circumstance shall
to any extent be invalid or unenforceable, the remainder of this Agreement or
application of such term or provision to persons or circumstances other than
those as to which it is held to be invalid or unenforceable shall not be
affected thereby and each term, covenant, condition, or provision of this
Agreement shall be valid and shall be enforceable to the fullest extent
permitted by law.
9.5 Entire Agreement This Agreement constitutes the entire understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all negotiations, representations, prior discussions, and
preliminary agreements between the parties hereto relating to the subject
matter of this Agreement.
9.6 Interpretation of Agreement. This Agreement shall be interpreted and
construed as if equally drafted by all parties hereto.
9.7 Survival of Covenants, Etc, All covenants, representations, and
warranties made herein to any party, or in any statement or document
delivered to any party hereto, shall survive the making of this Agreement
and shall remain in full force and effect until the obligations of
such party hereunder have been fully satisfied.
9.8 Further Action. The parties hereto agree to execute and deliver such
additional documents and to take such other and further action as may be
required to carry out fully the transactions contemplated herein.
9.9 Full Knowledge. By their signatures, the parties acknowledge that
they have carefully read and fully understand the terms and conditions of this
Agreement, that each party has had the benefit of counsel, or has been advised
to obtain counsel, and that each party has freely agreed to be bound by the
terms and conditions of this Agreement.
9.10 Headings. The descriptive headings of the various sections or parts
of this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
9.11 Counterparts. This Agreement may be executed in two or more
partially or fully executed counterparts, each of which shall be deemed an
original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto executed the foregoing Agreement as of
the day and year first above written.
PURCHASER: Consolidated Medical Management, Inc.
By /S/ Sunni M. Wooley
Sunni M. Wooley President
SELLER: Louisiana Mobile Imaging, Inc.
By /S/ Michael Frith
Michael Frith President
SCHEDULE A
This Schedule "A" is to be attached and become part of the Asset Purchase
Agreement September 1, 1998 by and between Louisiana Mobile Imaging, Inc.
and Consolidated Medical Management, Inc. The assets purchased includes
all technicians and all the items listed below:
1. Medicare Provider #5F785
2. A Note in the amount of Seventy Five Thousand Dollars ($75,000.00)
secured by all of the Account Receivable as shown on the August
31, 1998 Balance Sheet of Louisiana Mobile Imaging, Inc.
3. A lease covering six (6) leases and equipment as follows:
Louisiana Mobile Imaging, Inc. Lease Dated
--Months Beginning Payment $521.40
1998 Chevrolet Astrovan VIN # 1GCDM19W2WB101251
Lease End: Purchase Price $1.00
USECO, Inc. Lease Dated 9-30-96
(60) Months Beginning October 1, 1996 Payment $3662.00
Toshiba Ultrasound Complete
Lease End: Purchase Price $1.00
USECO, Inc. Lease Dated 2-4-97
(24) Months Beginning March 1, 1997 Payment $562.00
1994 Ford Club Wagon VIN # 1FBHE31H1RHA36258
Lease End: Purchase Price $1.00
Bankers Leasing Association, Inc. Lease Dated 4-30-98
(60) Months Beginning Payment $1935.05
Hewlett-Packard M2410A Imagepoint System Complete
Hewlett-Packard Lease Dated 6-24-98
(36) Months Beginning Payment $2379.24
Hewlett-Packard M2401A Imagepoint System Complete
Lease End: Purchase Price $1.00
Hi-Tec Financial Services, Inc. Lease Dated 4-29-98
(60) Months Beginning April 29, 1998 Payment $1934.19
Hewlett-Packard Imagepoint Ultra Sound System Complete
SCHEDULE B
LIABILITIES ASSUMED
There will be no liabilities assumed, however the Purchaser will sign a
lease with Louisiana Mobile Imaging, Inc. for the equipment listed on Schedule
"A".
AMENDMENT TO ASSET PURCHASE AGREEMENT
Reference is made to an Agreement dated September 1. 1998, between
Consolidated Medical Management, Inc., ( hereinafter the "Purchaser" ), and
Louisiana Mobile Imaging, Inc., ( hereinafter called "Seller" )
Where as the Purchaser and the Seller has agreed to amend the Asset
Purchase Agreement dated September 1, 1998, to read as follows:
1.3 Shares to be issued: In exchange for the transfer of the Assets
pursuant to sub-section 1.1 hereof, the Purchaser shall on the closing date, and
contemporaneously with such transfer of the Assets to it by the Seller, issue
and deliver to the Seller 100,000 shares of Rule 144 Common stock of the
Purchaser.
IN WITNESS WHEREOF, the parties hereto execute the foregoing Agreement this 17
day of September, 1998.
PURCHASER: Consolidated Medical Management, Inc.
By: /S/ Sunni M. Wooley
Sunni M. Wooley President
SELLER: Louisiana Mobile Imaging, Inc.
By: /S/ Michael Frith
Michael Frith President
EXHIBIT 3.1
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF CONSOLIDATED MEDICAL MANAGEMENT, INC.
Consolidated Medical Management, Inc. by and through the undersigned,
constituting the President and Secretary of such entity, hereby amends the
Articles of Incorporation of said corporation as follows:
1. The name of the corporation is Consolidated Medical Management, Inc.
2. Article V of the Articles of Incorporation is amended to read as
follows:
The stock of the corporation shall consist of common stock in the amount
of fifty million (50,000,000) shares of the par value of $0.001 each;
Preferred stock in the amount of twenty million (20,000,000) shares of the par
value of $0.001 each. The Board of Directors shall have the authority to
determine, in whole or in part, the preferences, limitations, and relative
rights, within the limits set forth in Section 35-1-618 of the Montana
Business Corporation Act, of the preferred shares or one or more series of
preferred shares before the issuance of any shares of that series.
3. The foregoing amendment was adopted by the shareholders at a special
meeting held on October 7, 1998.
4. The number of shares of common stock outstanding and entitled to vote
upon such amendment was 5,346,057. The number of votes indisputably
represented at the meeting was 4,890,000.
5. The number of shares voted for the amendment was 4,890,000, against
was 0, and abstained was 456,057.
Dated October 7, 1998 Consolidated Medical Management, Inc.
By /s/ Sunni M. Wooley
Sunni M. Wooley, President
Attest:
/s/ Peggy Behrens Peggy Behrens, Secretary
EXHIBIT 3.2
ARTICLES OF AMENDMENT
OF CONSOLIDATED MEDICAL, INC.
FOR THE CREATION OF TWO NEW SERIES OF PREFERRED STOCK
Consolidated Medical Management, Inc. (the "Company"), by and through the
undersigned, constituting the President and Secretary of such entity, hereby
amends the Articles of Incorporation of said corporation as follows:
1. The name of the corporation is Consolidated Medical Management, Inc.
2. The following amendment to the Articles of Incorporation setting forth
the terms of the Series "A" $12.50 Convertible Preferred Stock was duly
adopted by the Board of Directors on October 7, 1998:
A new series, the distinguishing designation of which new series is "Series
'A' $12.50 Preferred Stock," of the presently authorized but unissued
Preferred Stock, par value of $0.001 per share, of the Company be and it
hereby is established upon the terms set forth below, pursuant to Article V of
the Articles of Incorporation of the Company, as amended:
a. The number of authorized shares of the Series "A" $12.50 Preferred
Stock is 2,159,913 shares.
b. Dividends on the Series "A" $12.50 Preferred Stock shall be
noncumulative. 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 the Series "A" $12.50 Preferred Stock receive
dividends of more than one percent (1%) in any fiscal year. Each share of
Series "A" $12.50 Preferred Stock 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.
c. Any holder of the Series "A" $12.50 Preferred Stock may, subject to the
terms of this paragraph, convert any or all of such shares held by such
stockholder into fully paid and nonassessable shares of common stock of the
Company at any time at the rate set forth in this paragraph. 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.
For purposes of this paragraph the conversion date shall be the date the
notice of conversion is actually received by the Company. Any such conversion
may be effected by holders of the Series "A" $12.50 Preferred Stock by giving
written notice of election to convert shares of said stock, the number of
shares and the certificate numbers, and presenting said shares to the Company,
accompanied by the deposit and surrender of the certificates of such stock
duly endorsed in blank for transfer. If at any time, or from time to time,
the Company shall change, as a whole, any class of stock into which the Series
"A" $12.50 Preferred Stock is then convertible, into the same or a different
number of shares, with or without par value, of the same or of any other class
or classes (hereinafter in this paragraph called the "new stock") any holder
of such Series "A" $12.50 Preferred Stock, upon conversion thereof, shall be
entitled to receive, in lieu of the stock which (on conversion immediately
prior to such change) such stockholder would have become entitled to receive,
but for such change, a number of shares of new stock equivalent to the number
that would have been issued for such shares of stock as such stockholder would
have been entitled to receive on conversion immediately prior to such change.
The basic conversion value then in force shall thereupon remain unchanged or
shall be proportionately increased or decreased, as the case may be, in the
ratio which the number of shares of stock so changed shall bear to the number
of shares of the new stock.
d. The shares of the Series "A" $12.50 Preferred Stock shall not have any
voting rights.
e. The Series "A" $12.50 Preferred Stock shall not be redeemable by the
Company.
f. The preferential amount payable with respect to shares of the Series
"A" $12.50 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.
3. The following amendment to the Articles of Incorporation setting forth
the terms of the Series "A" $8.00 Convertible Preferred Stock was duly adopted
by the Board of Directors on October 7, 1998:
A new series, the distinguishing designation of which new series is "Series
'A' $8.00 Preferred Stock," of the presently authorized but unissued Preferred
Stock, par value of $0.001 per share, of the Company be and it hereby is
established upon the terms set forth below, pursuant to Article V of the
Articles of Incorporation of the Company, as amended:
a. The number of authorized shares of the Series "A" $8.00 Preferred Stock
is 1,079,957 shares.
b. Dividends on the Series "A" $8.00 Preferred Stock shall be
noncumulative. 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 the Series "A" $8.00 Preferred Stock receive
dividends of more than one percent (1%) in any fiscal year. Each share of
Series "A" $8.00 Preferred Stock 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.
c. Any holder of the Series "A" $8.00 Preferred Stock may, subject to the
terms of this paragraph, convert any or all of such shares held by such
stockholder into fully paid and nonassessable shares of common stock of the
Company at any time at the rate set forth in this paragraph. 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" $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. For
purposes of this paragraph the conversion date shall be the date the notice of
conversion is actually received by the Company. Any such conversion may be
effected by holders of the Series "A" $8.00 Preferred Stock by giving written
notice of election to convert shares of said stock, the number of shares and
the certificate numbers, and presenting said shares to the Company,
accompanied by the deposit and surrender of the certificates of such stock
duly endorsed in blank for transfer. If at any time, or from time to time,
the Company shall change, as a whole, any class of stock into which the Series
"A" $8.00 Preferred Stock is then convertible, into the same or a different
number of shares, with or without par value, of the same or of any other class
or classes (hereinafter in this paragraph called the "new stock") any holder
of such Series "A" $8.00 Preferred Stock, upon conversion thereof, shall be
entitled to receive, in lieu of the stock which (on conversion immediately
prior to such change) such stockholder would have become entitled to receive,
but for such change, a number of shares of new stock equivalent to the number
that would have been issued for such shares of stock as such stockholder would
have been entitled to receive on conversion immediately prior to such change.
The basic conversion value then in force shall thereupon remain unchanged or
shall be proportionately increased or decreased, as the case may be, in the
ratio which the number of shares of stock so changed shall bear to the number
of shares of the new stock.
d. The shares of the Series "A" $8.00 Preferred Stock shall not have any
voting rights.
e. The Series "A" $8.00 Preferred Stock shall not be redeemable by the
Company.
f. The preferential amount payable with respect to shares of the Series
"A" $12.50 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.
Dated: November 16, 1998 Consolidated Medical Management, Inc.
By /S/ Sunni M. Wooley
Sunni M. Wooley, President
Attest: /S/ Peggy D. Behrens
Peggy D. Behrens, Secretary
EXHIBIT 4.1 Form of Series "A" $12.50 preferred stock certificate
Number ____ _______ Shares
CONSOLIDATED MEDICAL MANAGEMENT, INC.
(A Montana Corporation)
Series "A" $12.50 Convertible Preferred Stock (Par Value $.001)
THIS CERTIFIES that __________________ is the owner of ______________________
fully paid and non-assessable shares of Series "A" $12.50 Convertible
Preferred Stock of Consolidated Management, Inc., a Montana corporation (the
"Company") transferable only on the books of the Company by the holder hereof
in person or by duly authorized Attorney upon surrender of this Certificate
properly endorsed. The shares of Series "A" $12.50 Convertible Preferred
Stock issued by the Company are subject to the following terms:
a. The number of authorized shares of the Series "A" $12.50 Preferred
Stock is 2,159,913 shares.
b. Dividends on the Series "A" $12.50 Preferred Stock shall be
noncumulative. 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 the Series "A" $12.50 Preferred Stock receive
dividends of more than one percent (1%) in any fiscal year. Each share of
Series "A" $12.50 Preferred Stock 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.
c. Any holder of the Series "A" $12.50 Preferred Stock may, subject to the
terms of this paragraph, convert any or all of such shares held by such
stockholder into fully paid and nonassessable shares of common stock of the
Company at any time at the rate set forth in this paragraph. 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.
For purposes of this paragraph the conversion date shall be the date the
notice of conversion is actually received by the Company. Any such conversion
may be effected by holders of the Series "A" $12.50 Preferred Stock by giving
written notice of election to convert shares of said stock, the number of
shares and the certificate numbers, and presenting said shares to the Company,
accompanied by the deposit and surrender of the certificates of such stock
duly endorsed in blank for transfer. If at any time, or from time to time,
the Company shall change, as a whole, any class of stock into which the Series
"A" $12.50 Preferred Stock is then convertible, into the same or a different
number of shares, with or without par value, of the same or of any other class
or classes (hereinafter in this paragraph called the "new stock") any holder
of such Series "A" $12.50 Preferred Stock, upon conversion thereof, shall be
entitled to receive, in lieu of the stock which (on conversion immediately
prior to such change) such stockholder would have become entitled to receive,
but for such change, a number of shares of new stock equivalent to the number
that would have been issued for such shares of stock as such stockholder would
have been entitled to receive on conversion immediately prior to such change.
The basic conversion value then in force shall thereupon remain unchanged or
shall be proportionately increased or decreased, as the case may be, in the
ratio which the number of shares of stock so changed shall bear to the number
of shares of the new stock.
d. The shares of the Series "A" $12.50 Preferred Stock shall not have any
voting rights.
e. The Series "A" $12.50 Preferred Stock shall not br redeemable by the
Company.
f. The preferential amount payable with respect to shares of the Series
"A" $12.50 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.
IN WITNESS WHEREOF, the said Company has caused this Certificate to be signed
by its duly authorized officers this ______ day of November 1998.
Secretary President
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be sold or transferred
unless a compliance with the registration provisions of such Act has been made
or unless availability of an exemption from such registration provisions has
been established, or unless sold pursuant to Rule 144 under the Securities Act
of 1933.
CERTIFICATE OF TRANSFER
For value received, the undersigned hereby sells, assigns and transfers unto
______________________ Shares represented by the within Certificate, and hereby
irrevocably constitutes and appoints ___________________________________
Attorney to transfer the said shares on the books of the Company with full
power of substitution in the premises.
Dated__________________ 199____
Signature
Signature Guaranteed
EXHIBIT 4.2 Form of Series "A" $8.00 preferred stock certificate
Number ___ _______ Shares
CONSOLIDATED MEDICAL MANAGEMENT, INC.
(A Montana Corporation)
Series "A' 8.00 Convertible Preferred Stock (Par Value $.001)
THIS CERTIFIES that __________________ is the owner of ______________________
fully paid and non-assessable shares of Series "A" $8.00 Convertible Preferred
Stock of Consolidated Management, Inc., a Montana corporation (the "Company")
transferable only on the books of the Company by the holder hereof in person
or by duly authorized Attorney upon surrender of this Certificate properly
endorsed. The shares of Series "A" 8.00 Convertible Preferred Stock issued by
the Company are subject to the following terms:
a. The number of authorized shares of the Series "A" $8.00 Preferred Stock
is 2,159,913 shares.
b. Dividends on the Series "A" $8.00 Preferred Stock shall be
noncumulative. 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 the Series "A" $8.00 Preferred Stock receive
dividends of more than one percent (1%) in any fiscal year. Each share of
Series "A" $8.00 Preferred Stock 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.
c. Any holder of the Series "A" $8.00 Preferred Stock may, subject to the
terms of this paragraph, convert any or all of such shares held by such
stockholder into fully paid and nonassessable shares of common stock of the
Company at any time at the rate set forth in this paragraph. 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" $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. For
purposes of this paragraph the conversion date shall be the date the notice of
conversion is actually received by the Company. Any such conversion may be
effected by holders of the Series "A" $8.00 Preferred Stock by giving written
notice of election to convert shares of said stock, the number of shares and
the certificate numbers, and presenting said shares to the Company,
accompanied by the deposit and surrender of the certificates of such stock
duly endorsed in blank for transfer. If at any time, or from time to time,
the Company shall change, as a whole, any class of stock into which the Series
"A" $8.00 Preferred Stock is then convertible, into the same or a different
number of shares, with or without par value, of the same or of any other class
or classes (hereinafter in this paragraph called the "new stock") any holder
of such Series "A" $8.00 Preferred Stock, upon conversion thereof, shall be
entitled to receive, in lieu of the stock which (on conversion immediately
prior to such change) such stockholder would have become entitled to receive,
but for such change, a number of shares of new stock equivalent to the number
that would have been issued for such shares of stock as such stockholder would
have been entitled to receive on conversion immediately prior to such change.
The basic conversion value then in force shall thereupon remain unchanged or
shall be proportionately increased or decreased, as the case may be, in the
ratio which the number of shares of stock so changed shall bear to the number
of shares of the new stock.
d. The shares of the Series "A" $8.00 Preferred Stock shall not have any
voting rights.
e. The Series "A" $8.00 Preferred Stock shall not br redeemable by the
Company.
f. The preferential amount payable with respect to shares of the Series
"A" $8.00 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.
IN WITNESS WHEREOF, the said Company has caused this Certificate to be signed
by its duly authorized officers this ______ day of November 1998.
Secretary President
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be sold or transferred
unless a compliance with the registration provisions of such Act has been made
or unless availability of an exemption from such registration provisions has
been established, or unless sold pursuant to Rule 144 under the Securities Act
of 1933.
CERTIFICATE OF TRANSFER
For value received, the undersigned hereby sells, assigns and transfers
unto Shares represented by the within Certificate, and hereby irrevocably
constitutes and appoints ___________________________________ Attorney to
transfer the said shares on the books of the Company with full power of
substitution in the premises.
Dated__________________ 199____
Signature
Signature Guaranteed
EXHIBIT 4.3 Form of Debenture
DEBENTURE AGREEMENT
WITH
CONVERSION PRIVILEGES
DUE _____________________
BATON ROUGE, LOUISIANA (DATE)__________
After date and for value received, Consolidated Medical Management, Inc.
("CMM") promises to pay to the order of ______________________________ whose
address is ____________________________________________________, the sum of
$_____________ pursuant to the terms hereinafter set forth:
1. SECURITIES PURCHASED. The Holder hereof has purchased as an
investment a $_________ convertible debenture. The debenture may be converted
to _________ shares of the common stock of CMM as further described in the
Debenture Agreement.
2. PUBLIC COMPANY. Holder understands that CMM is presently a privately
owned Corporation that has full intentions of becoming a publicly traded
company within a period of Ninety (90) days from the date of this Agreement
through a reverse merger. Holder understands this Agreement is structured as
if the reverse merger has been completed and CMM will be a publicly traded
company, quoted and listed on the NASDAQ BULLETIN BOARD.
3. SENIOR DEBT. The debenture shall have a preference in liquidation to
all obligations except bank debt or secured leases. Upon a liquidation,
dissolution, bankruptcy or reorganization, or similar transaction by the
company, the holders of the "senior debt" would be paid in full before payment
would be made on the debentures.
4. Security. The convertible debenture is not secured by any assets of
CMM.
5. Conversion. The convertible debenture holder may convert the
debenture into Common Stock of the corporation by exercising his right to
conversion after six (6) months from the date of this debenture or at any time
thereafter.
Should the Holder elect to exercise his right to conversion, the Corporation
shall pay any accrued interest on said debenture and issue it's Common Stock
at Sixty (60) percent of market value (bid price) or Two Dollars and Fifty
Cents ($2.50), which ever is greater, at the date of conversion in the amount
of shares necessary to satisfy the debenture.
When the debenture expires the debenture Holder may elect to take cash only,
cash and stock, or all stock. The debenture Holder will advise the
Corporation ninety (90) days prior, to the due date of the debenture as to the
payment method desired.
6. INTEREST. This debenture shall be subject to an annual interest rate
of 15% per annum payable monthly during the one year period. CMM shall be
obligated to make interest only payments. The Debenture is due in full
including all principal and accrued interest on or before _________, 1999.
Any payments of principal and interest not paid when due shall bear interest
at a default rate of 15% per annum until paid.
7. CONVERSION RIGHTS. In addition to the Conversion Rights discussed in
paragraph 4 above, the holder shall have the following rights:
a) Should the Holder elect to exercise his right to conversion, the
corporation shall pay in cash upon delivery of the Stock Certificate any
accrued interest on said debenture less any value of a dividend which has been
declared but not paid on the date of the election to convert.
b) CMM represents and warrants that at the time of making this
Convertible Debenture Agreement it has sufficient authorized but unissued Par
Value Common Stock available to satisfy its obligations pursuant to all rights
of conversion granted hereby and CMM agrees to reserve sufficient common stock
during the conversion term of this debenture to provide for the conversion of
this debenture. Should CMM at any time during the conversion period have a
capital reorganization, merger, consolidation, stock swap or sell substantially
all of its assets to any person or corporation, then as part of such merger,
consolidation or sale, provision shall be made for the Conversion Rights to be
adjusted in such a manner as to provide for the protection of said rights so
as to permit the conversion in as nearly equivalent a manner as set forth
herein as is possible. CMM shall reserve for issuance upon conversion
sufficient, equivalent recapitalized equity to meet its obligations hereunder
during the entire conversion period.
c) Upon presentation to CMM at the notice address of (1) a letter
requesting conversion, (2) the Conversion Form, which is Exhibit "A" attached
hereto and which provides for the cancellation of the Debenture upon issuance
of the Common Stock, and (3) the original Debenture Agreement all duly
executed; CMM shall within 5 business days issue a certificate for the
appropriate number of shares and send said certificate to the holder postage
prepaid, registered mail, return receipt or any other manner agreed to by the
holder and CMM.
d) All shares of Common Stock or other securities delivered upon the
exercise of the rights of conversion shall be validly issued, fully paid and
non-assessable.
e) Irrespective of the date of issuance and delivery of a certificate
or certificates for any shares of Common Stock issuable upon the exercise of
conversion rights, each person (including a corporation) in whose name any
such certificate or certificates is to be issued will for all purposes be
deemed to have become the holder of record of the Common Stock, the
securities, and/or property represented thereby on the date on which a duly
executed notice of exercise of conversion rights and the canceled underlying
Debenture is delivered to the Company.
f) The Holder is not, by virtue of ownership of the convertible
debenture, entitled to any rights whatsoever of a stockholder of the Company.
8. Restricted Securities/Restrictions on Assignments. The undersigned
Holder acknowledges that he understands that the securities represented
by this Convertible Debenture have not been registered pursuant to the
Securities Act of 1933 or pursuant to the laws of the State of Utah or any
other state and that the company is relying on exemptions from registration
of these securities. Each Debenture, and common share which may be issued
as a result of the conversion of the debenture shall be imprinted with a
restrictive legend as follows:
"This Debenture (Common Stock) and the rights hereunder have not been
registered or qualified under federal or state securities laws. This Debenture
(Common Stock) may not be assigned unless so registered or qualified or unless
an exemption exists, the availability of which is to be established by issuer's
counsel at the holder's expense; provided, however, if the proposed assignment
is made to a person or entity outside of the United States or Canada, and not
for the benefit of or to any U.S. or Canadian person, the establishment by
issuer's counsel of the availability of an exemption from registration shall
not be necessary for the holder to make such assignment in the absence of a
change of Law or Regulation which would then require proof of exemption or
registration of such transaction. The assignee under any such assignment shall
be likewise subject to the terms of this restriction upon any proposed
assignment or transfer".
This undersigned Holder hereof further acknowledges that he is purchasing this
debenture as an investment and not with an intent to resell.
9. NOTICES. All notices and communications to any party to this debenture
shall be in writing and sent to Consolidated Medical Management, Inc., Attn:
Sunni Wooley, President, at 13005 Justice Ave., Baton Rouge, La. 70816, and
to the Holder at the address set forth below the Holder's signature or at such
other place as may be designated in writing by either party hereto. All
notices to overseas addresses shall be by telex or FedEx overnight with
confirmation of receipt required.
10. General.
a) This debenture is being delivered and is intended to be performed
in the State of Louisiana and shall be construed and enforced in accordance
with and governed by the laws of such State. All of the terms of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto whether so
expressed or not, and in particular shall inure to the benefit of and be
enforceable by any holder or holders at the time of the debentures. This
Agreement embodies the entire convertible debenture agreement and
understanding between the undersigned Holder and the company and supersedes
all prior agreements and understandings relating to the subject matter hereof.
b) CMM may not consolidate or merge, or transfer or lease all or
substantially all of its assets to another corporation unless the other entity
assumes in writing all of the obligations of the Company under the debentures,
and that in the case of a transfer or lease of assets, although the successor
assumes the obligations in writing, the Company shall not be released from its
obligations to pay principal or interest on the debentures.
c) Should the holder lose the Debenture or should it be stolen or
destroyed, the Company will issue a replacement upon receipt of such
assurances as may be reasonably requested by the Company.
d) Interest is payable on the Debenture from the date of acceptance
by CMM which date shall not exceed 2 business days from receipt of the
Subscription Agreement with funds.
If you agree to the foregoing terms of the Convertible Debenture, please
sign the form in the place provided for the "Holder" and print or type your
full name, address, telephone number and social security number and execute
the attached subscription agreement. No debenture will be accepted without an
executed subscription agreement and payment in full which shall not be
refundable.
DATED this ____ day of ______________, 19____.
ATTEST:
/S/ Sunni Wooley___________________________
Sunni Wooley President
CMM Debenture Agreement ( 9 )
The foregoing debenture with attached warrant is hereby agreed to as of
the date hereof.
HOLDER:
____________________________________
Address: ____________________________
____________________________
____________________________
SS Number: __________________________
CMM Debenture Agreement ( 7c)
EXHIBIT "A"
(Attached to the Convertible Debenture
dated ________________)
EXERCISE AGREEMENT
To: Dated: __________________
The undersigned, pursuant to the Conversion Rights set forth in the
attached Debenture hereby agrees to subscribe for and purchase *__________
shares of the Common Stock covered by such Debenture and makes payment
herewith in full therefor by assigning the attached Debenture to Consolidated
Medical Management, Inc., thereby canceling said debt.
Signature: ___________________________________
___________________________________
Address: ___________________________________
___________________________________
EXHIBIT 4.4 Form of Note to Spectrum
PROMISSORY NOTE
DATE: __________________________
MAKER: _____________________
PAYEE: _____________________
PLACE FOR PAYMENT: __________________________
PRINCIPAL AMOUNT: ______________________________
ANNUAL INTEREST RATE ON UNPAID PRINCIPAL FROM DATE OF FUNDING:
10%
TERMS OF PAYMENT (principal and interest):
Principal and Interest Due on __________________________
ANNUAL INTEREST RATE ON MATURED, UNPAID AMOUNTS:
Maximum allowed by law
Maker promises to pay to the Order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above.
If this Note is given to an attorney for collection, or if suit is
brought for collection, or if it is collected through probate, bankruptcy, or
other judicial proceeding, then Maker shall pay Payee reasonable attorney's
fees in addition to other amount due. Reasonable attorney's fees shall be ten
percent (10%) of all amounts due unless either party pleads otherwise.
Nothing in this Note shall authorize the collection of interest in excess
of the highest rate allowed by law.
This Note shall be construed in accordance with and governed by the laws
of Texas, without regard to conflict of law principles.
CONSOLIDATED MEDICAL MANAGEMENT. INC.
By: ________________________________________
Sunni M. Wooley President
<TABLE> <S> <C>
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 112,743
<SECURITIES> 0
<RECEIVABLES> 113,595
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 438,204
<PP&E> 336,707
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0
0
<COMMON> 5,446
<OTHER-SE> 1,754,223
<TOTAL-LIABILITY-AND-EQUITY> 928,821
<SALES> 0
<TOTAL-REVENUES> 629,537
<CGS> 0
<TOTAL-COSTS> 799,477
<OTHER-EXPENSES> 289,409
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<INTEREST-EXPENSE> 25,462
<INCOME-PRETAX> (459,349)
<INCOME-TAX> 5,288
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