UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which registered
None N/A
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 [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $921,502
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days: The aggregate market value of the voting stock held
by non-affiliates of the Registrant computed by using the closing sale price
has been determined to be $7,41,317 as of April 9, 1999 based on the closing
price of $1.125 per share.
State the number of shares outstanding of each of the Issuer's classes of
common equity as of the latest practicable date: At March 31, 1999, there were
6,349,838 common shares of the Registrant outstanding. At December 31, 1998,
there were 5,496,057 common shares of the Registrant outstanding.
Documents Incorporated by Reference: (1) Any annual report to security holders
- - None; (2) Any proxy or information statement - None; (3) Any prospectus
filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933 - None.
Consolidated Medical Management, Inc.
Baton Rouge, Louisiana
Table of Contents
Part I Page
Item 1. Description of Property 1
Item 2. Description of Proceedings 2
Item 3. Legal Proceedings 2
Item 4. Submission of Matters to a Vote of Security 3
Part II
Item 5. Market for Common Equity and Related Stockholder 3
Item 6. Management's Discussion and Analysis or Results of 4
Item 7. Financial Statements 5
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders' Equity
(Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Additional Information
Report of Independent Accountants
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure 5
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act 6
Item 10. Executive Compensation 7
Item 11. Security Ownership of Certain Beneficial Owners and Management 9
Item 12. Certain Relationships and Related Transactions 9
Item 13. Exhibits and Reports on Form 8-K 12
Signature 13
Part I
Item 1. Description of Business
(a) Business Development
The Company was incorporated under the laws of the State of Montana on August
13, 1981. The Company ceased its mining operations in 1985, and discontinued
all business operations in 1990. The final mining claims held by the Company
were dropped in 1993 because the Company did not have the funds to pay the
annual Bureau of Land Management claim rental fees on such claims.
On August 26, 1997, the shareholders of the Company authorized a reverse split
of the 5,401,279 outstanding shares of common stock of the Company at the rate
of one share for each twenty-five shares outstanding. The reverse spit
reduced the number of outstanding shares to 216,057. In addition, the
shareholders approved an amendment to Article V of the Articles of
Incorporation of the Company to increase the number of authorized shares of
common stock to 50,000,000 and to reduce the par value to $.001.
On May 23, 1998, the Company concluded the acquisition of Consolidated Medical
Management, Inc., a privately owned Louisiana Company that specialized in
provides management services for home healthcare providers predominately in
southern Louisiana.
With the acquisition of Consolidated Medical Management, Inc., the Company
(which was formerly known as Golden Maple Mining and Leaching Co., Inc.)
changed it name to Consolidated Medical Management, Inc. and moved its
administrative offices to Baton Rouge, Louisiana.
On July 10, 1998, the Company purchased 100% of the outstanding stock of
Independent Diagnostic Services, Inc. ("IDSI") (formerly United Medical
Services Corporation) in exchange for issuance of 20,000 shares of the
Company. Independent Diagnostic Services, Inc. provides diagnostic ultrasound
imaging services to physician offices, clinics, hospital, and skilled nursing
facilities, and also provides mobile laboratories that will enable services to
be provided for communities with limited access to technologists, hospitals
and diagnostic laboratories.
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 above), will also provide consulting services for the Company in
connection with the assets purchased in the transaction.
(b) Business of the Company
During 1998, since the acquisition of Consolidated Medical Management, Inc.
(Louisiana) (hereafter referred to as "CMMI-LA") the Company inititally
focused its efforts on the continuation of the business services offered by
CMMI-LA. These services focused on the delivery of turn-key management
services for the home health industry, predominately in south Louisiana.
With the acquisition of IDSI, the Company expanded its services to provide
provides diagnostic ultrasound imaging services to physician offices, clinics,
hospital, and skilled nursing facilities, and also provides mobile
laboratories that will enable services to be provided for communities with
limited access to technologists, hospitals and diagnostic laboratories.
The Company then formed a subsidiary, Psychiatric Medical Services, Inc.
("PMSI") to operate a partial-unit mental services hospital in an existing
hospital environment. This unit has operated since June 1998. This service
is very susceptible to changes in funding under federal and state Medicare and
Medicaid rules as well as the funding priorities of these agencies.
The Company employs 19, of which 19 are considered full-time employees.
The selection of a business opportunity in which to participate is complex and
risky. Additionally, as the Company has only limited resources, it may be
difficult to find good opportunities. There can be no assurance that the
Company will be able to identify and acquire any business opportunity based on
management's business judgement.
The activities of the Company are subject to several significant risks which
arise primarily as a result of the fact that the Company has no specific busines
s and may acquire or participate in a business opportunity based on the
decision of management which potentially could act without the consent, vote,
or approval of the Company's shareholders. The risks faced by the Company are
further increased as a result of its lack of resources and its inability to
provide a prospective business opportunity with significant capital.
Item 2. Description of Property
Since May 1998, the Company's administrative offices have been located at
13005 Justice Avenue, Suite 5, Baton Rouge, Louisiana. These offices are
leased from an unrelated third party under an operating lease on a month to
month basis.
From 1990 until May 1998, the Company's administrative offices were located at
421 Coeur d'Alene Avenue, Suite 3, Coeur d'Alene, Idaho 83814, which are the
offices of Donald L. Hess, the former president and a former director of the
Company. Mr. Hess had allowed the Company to use this office space without
charge.
Item 3. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of shareholders of the Company during the
fourth quarter of the fiscal year ended December 31, 1998.
Part II
Item 5. Market for Common Equity and Related Stockholder Matters
Since mid 1998, the Company ("Registrant") has been publicly-traded under the
symbol "CMMI" on the OTC Bulletin Board which is operated under the
supervision of the National Association of Securities Dealers, Inc. The OTC
Bulletin Board is a securities market utilizing a sophisticated computer and
telecommunications network. Market participants comprise market makers
generally dealing in "penny stocks", independent dealers who commit capital
and stocks and compete with each other for orders. The OTC Bulletin Board has
adopted rules that require companies quoted on its system to be current in
their reporting obligations to the SEC, among other things. The Securities and
Exchange Commission has adopted rules, such as Rule 15c2-6, which impose
restrictions on a broker-dealer's ability to trade in penny stocks. Prior to
this, the Company's stock was not traded.
Registrant is authorized to issue Fifty Million (50,000,000) Common Shares, of
which approximately 5,496,057 shares are outstanding as of December 31, 1998.
In addition, Registrant is authorized to issue Twenty Million (20,000,000)
Preferred Shares. No shares of Preferred Stock have been issued. The
following table shows the high and low bid of Registrant's Common Stock during
the prior year.
1998 Low Bid High Bid
First Quarter $ na $ na
Second Quarter $ 3 1/8 $ 5 6/8
Third Quarter $ 1 1/2 $ 5 1/2
Fourth Quarter $ 7/8 $ 6 7/8
It should be noted that, in all of the above cases, these prices have been
established with a very low trading volume. As a result, a small trading
volume may result in significant price fluctuation.
Since its inception the Company has not paid any dividends on its common stock
and the Company does not anticipate that it will pay dividends in the
foreseeable future.
At December 31, 1998 and March 31, 1999, the Company had approximately 394 and
402 shareholders of record, respectively, as reported by the Company's
transfer agent. The transfer agent for the Company is Idaho Stock Transfer
Company, P.O. Box 2196, Coeur d'Alene, ID 83816-2196; telephone number (208)
664-3544.
Item 6. Management's Discussion and Analysis or Results of
Operations
Overview
Since discontinuing operations in 1990, through May 1998, the Company has had
no operations, other than the ownership of unpatented mining claims, which
were abandoned in August 1993. The Company was organized for the purpose of
engaging in mining activities; however, the Company did not have any
significant cash or other material assets, nor did it have an established
source of revenues sufficient to cover operating costs and to allow it to
continue as a going concern.
Since the Company's acquisition of CMMI-LA and the expansion of its
operations, the Company has suffered operating losses, totaling ($504,255) for
1998 on gross revenue of $921,502 and total operating costs of $1,425,757. In
addition, the Company has incurred $302,580 in costs attributable to the
merger and acquisition of IDSI, the LMI asset acquisition and the attempt to
acquire Aplomb, Inc. This results in a net loss before income taxes for the
Company of ($875,599).
The Company's financial condition reflects a deficit in stockholders' equity
of ($275,826), a deficit in working capital of ($528,097) with total
liabilities of $1,089,262 and total assets of $813,438.
Currently, management is exploring the opportunities of expanding our
involvement in other medical markets.
Liquidity and Capital Resources
Since March 1998, the Company sold a total of $450,000 in convertible
subordinated debentures ($415,000 remain as of December 31, 1998 due to
conversions, however, the debt has been reissued to Spectrum Financial, Inc.).
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 $25,540 as of December 31, 1998 and receivables from
operations totaling $166,869 from customers, of which $113,102 (67.779% of
total receivables) was current, $28,428 (17.036%) was over thirty days old and
the remainder of $25,339 (15.185%) 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 the following related parties: Jaguar, Inc.
(a shareholder), Spectrum Financial, Inc. (a shareholder) and Southern
Properties Management, Inc. in the form of notes receivable totaling $147,000
during 1998. As of December 31, 1998, the balances owed by these companies
had been paid down to $115,000. The terms of the notes receivable 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 July 1998, the Company issued stock to acquire certain of the assets of
Louisiana Mobile Imaging, Inc. ("LMI"). Included in these assets were a note
receivable of $75,000 and the sublease of certain capital assets which are
classified as capital leases to the Company. The monthly lease payments of
$10,133, have been applied as payment on the note receivable from LMI. As of
December 31, 1998, the total cost of the capital lease assets is $399,175, the
accumulated amortization totals $92,463 and the related obligation under the
capital lease is $304,561.
The Company has financed its operations through incurring the following debt
obligations:
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;
Six (6) notes payable to Spectrum Financial, Inc., a related party of
the Company, dated September 29, 1998, due July 29, 1999, interest at 10%,
payable on maturity, unsecured;
The Company issued convertible debentures in 1998 that are subordinated
to bank debt and secured leases. The debentures are otherwise unsecured but
are given a preference over unsecured debt. The debentures include interest
at fifteen (15%) percent, interest is payable in monthly installments. Each
debenture has a conversion right for each holder to convert the debenture
principal to shares of the Company's common stock at 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 at conversion. As of December 31, the
company had issued and outstanding $190,000 in debentures. The debentures are
due one year from date of issue. All debentures issued in 1998 are due in
1999.
The Company issued convertible promissory notes payable in 1998. The
notes are unsecured and include interest at ten (10%) percent, interest is
payable in monthly installments. Each note has a conversion right for each
holder to convert the note's unpaid principal to shares of the Company's
common stock based on $2.50 per share, or a total of 90,000 at the note
holder's discretion. Accrued interest and any principal amount not converted
to shares of stock will be paid in cash at conversion. As of December 31, the
company had issued and outstanding $225,000 in debentures. The notes are due
July 31, 1999.
As of December 31, 1998, the Company has incurred trade payables and accrued
compensation and personnel costs totaling $278,557. Included in these amounts
are $138,101 of accruals of personnel costs and stock based compensation paid
in 1999.
Item 7. Financial Statements
The financial statements of the Company are attached to this annual report.
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
NONE
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act
(a) 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.
(b) There are no significant employees other than executive officers above.
(c) There are no family relationships among directors or executive officers
of the Company.
Item 10. Executive Compensation
According to information supplied by the president of the Company, following
is a table of compensation awarded to, earned by, or paid to any of the
executive officers of the Company or any of its subsidiaries during the year
ended December 31, 1998, or the two prior fiscal years.
For Fiscal Year Ending December 31, 1998:
Officer Position Base Salary Bonus Paid
Dale L. Bachman CEO $ 17,525 $ 0
LaMar F. Laster, Jr. COO $ 0 $ 0
Sunni M. Wooley President $ 33,137 $ 5,000
Peggy Behrens Director $ 63,551 $ 5,000
The bonuses paid to Ms. Wooley and Ms. Behrens are paid in the form of stock
of the Company which was based on a $2.00 per share value.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security ownership of certain beneficial owners
The following table sets forth certain information furnished by current
management concerning the ownership of common stock of the Company as of
December 31, 1998, of (i) each person who is known to the Company to be the
beneficial owner of more than 5 percent of the Common Stock; (ii) all
directors and executive officers; and (iii) directors and executive officers
of the Company as a group:
Name and Address Amount ofp Nature of Percent of Class
of Beneficial Owner Beneficial Beneficial
Ownership(1) Ownership(1)
Cede & Co.
P. O. Box 222
Bowling Green Station
New York, NY 555,897 Direct ownership 10.133%
CJD, Inc.
6603 Lost Horizon Dr.
Austin, TX 400,000 Direct ownership 7.278%
Jaguar International
Corp
13005 Justice Ave
Baton Rouge, LA 2,407,160 Direct ownership 43.798%
Virgil A. Robbins
4855 Twin Valley Dr.
Austin, TX 390,000 Direct ownership 7.096%
(b) Security ownership of management
The following table sets forth certain information furnished by current
management concerning the ownership of common stock of the Company as of
December 31, 1998, of all directors and executive officers and directors and
executive officers of the Company as a group:
Name and Address Amount and Nature of Percent of Class
of Beneifical Owner Beneficial Ownership(1)
Sunni Michelle Wooley
13005 Justice Ave
Baton Rouge, LA 400,000 Direct ownership 7.278%
(1) Unless otherwise indicated, this column reflects amounts as to which the
beneficial owner has sole voting power and sole investment power.
(c) Changes in control
Since the end of the fiscal year ended December 31, 1997, and through the end
of the year ended December 31, 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, and then the Company from June to July
1998, 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 December 31, 1998, the Company had issued
five promissory notes to Spectrum in the amount of $35,000 for cancellation of
debentures in the amount of $35,000.
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.
i) On December 31, 1998, the Company issued 50,000 shares of common stock to
PILL PT--15435, a trust designated by Michael W. Sciacchetano, as consideration
for continued consulting services provided to the Company.
All of the aforesaid securities set forth immediately above were issued
without registration under the Act by reason of the exemption from
registration afforded by the provisions of Section 4(2) thereof, as
transactions by an issuer not involving any public offering, each recipient of
securities having delivered appropriate investment representations to
Registrant with respect thereto and having consented to the imposition of
restrictive legends upon the certificates evidencing such securities. No
underwriting discounts or commissions were paid in connection with such
issuances.
Item 12. Certain Relationships and Related Transactions
Transactions with Management and Others
Since April 1997, Milagro Holdings, Inc., a corporation owned and controlled
by Mr. Howard M. Oveson, a former officer and director of the Company, has
advanced approximately $37,307 through February 18, 1998, to the Company for
the purpose of making payments for the benefit of the Company to the Company's
auditor so that the Company may complete appropriate periodic reports for
filing with the Securities and Exchange Commission. These advances have also
been used to settle certain obligations owed by the Company to its former
legal counsel and to the president of the Company, Mr. Donald L. Hess for
prior year accounting fees.
Mr. Donald L. Hess, the former president and a former director, who was a 5%
shareholder of the Company, owns and controls, with his wife, Idaho Stock
Transfer Company, the transfer agency for the Company. Management believes
that the fees charged for the services performed by such transfer agency are
equal to the fees which would have been charged by an unrelated transfer
agency.
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
To the best of management's knowledge and except as otherwise set forth
herein, during the fiscal year ended December 31, 1998, there were no material
transactions, or series of similar transactions, since the beginning of the
Company's prior fiscal year, or any currently proposed transactions, or series
of similar transactions, to which the Company was or is to be party, in which
the amount involved exceeds $60,000, and in which any director or executive
officer, or any security holder who is known by the Company to own of record
or beneficially more than 5% of the Company's common stock, or any member of
the immediate family of any of the foregoing persons, has an interest.
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").
Certain Business Relationships
Except as reported above, during the fiscal year ended December 31, 1998,
there were no material transactions between the Company and its management or
principal shareholders.
Indebtedness of Management
Unless otherwise disclosed herein or in the financial statements, there were
no material transactions, or series of similar transactions, since the
beginning of the Company's fiscal year ended December 31, 1998, or any
currently proposed transactions, or series of similar transactions, to which
the Company was or is to be a party, in which the amount involved exceeds
$60,000 and in which any director or executive officer, or any security holder
who is known to the Company to own of record or beneficially more than 5% of
any class of the Company's common stock, or any member of the immediate family
of any of the foregoing persons, has an interest.
Transactions with Promoters
In 1998, the Company has engaged the services of Spectrum Financial, Inc.
("Spectrum") and its principals, Virgil Robbins and C. J. Douglas, each of
whom is a 5% or greater shareholder, to assist it in the promotion of the
Company in the open stock market. In connection therewith, the Company has
paid fees under arrangements with Spectrum totaling $95,132.
The Company has advanced $15,000 to Spectrum in the form of a note receivable
bearing interest at 6%, due June 30, 1999, unsecured.
Item 13. Exhibits, Financial Statements and Reports on Form 8-K
(a) Financial Statements. The following financial statements are included
in this report:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Accountants - Roberts, Cherry and Company
(b) Exhibits. The following exhibits are included as part of this report:
Exhibit No Description of Exhibit
11 Statement re: computation of per share earnings
23 Consent of Independent Auditor
(c ) The following reports on Form 8-K were filed during the last quarter
of the year ended December 31, 1998 and subsequently:
On November 18, 1998, the Company filed a Form 8-K concerning the acquisition
of Aplomb, Inc. (a Mississippi Company).
On January 8, 1999, the Company filed a Form 8-K concerning the recession of
the purchase of Aplomb, Inc, which had been reported in a Form 8-K filed on
November 18, 1998.
<PAGE>
Consolidated Medical Management, Inc.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Consolidated Medical Management, Inc.
/s/ Sunni M. Wooley
President and Chief Accounting Officer
April 12, 1999
/s/ LaMar Laster
Chairman and Chief Operating Officer
April 12, 1999
/s/ Dale F. Bachman
Chief Executive Officer
April 12, 1999
<PAGE>
Exhibit 11
Earnings per share for the year ended December 31, 1998 is computed as
follows:
Income (Numerator) Shares Per-Share
(Numerator) (Denominator) Amount
Net Income (Loss) ($869,802)
Basic EPS
Income (Loss) available
to common stockholders (869,802) 3,986,890 ($ 0.21816)
Effect of Dilutive
Securities
Convertible Debt (30,417) -
Diluted EPS
Income (Loss) available
to common stockholders ($839,385) 3,986,890 ($ 0.2105)
Earnings per share for the year ended December 31, 1997 is computed as
follows:
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income $ 162,144
Basic EPS
Income available to
common stockholders 162,144 3,672,872 $ 0.0441
Effect of Dilutive Securities
none - -
Diluted EPS
Income available to
common stockholders $ 162,144 3,672,872 $ 0.0441
The Company has issued convertible debt that, if fully converted, would have a
dilutive effect of 180,000 shares. The Company has entered into an agreement
with a related party, Spectrum Financial, Inc. whereby Spectrum will exchange
shares it controls for the debt issued to convertible debt holders upon the
debt holders' exercise of their options. Due to the effect of this agreement,
these shares are not considered dilutive for these calculations.
Exhibit 23
Independent Auditors Consent
We consent to the incorporation by reference in Form 10KSB of Consolidated
Medical Management, Inc. of our report dated February 5, 1999 on the financial
statements of Consolidated Medical Management, Inc. (formerly known as Golden
Maple Mining and Leaching Company, Inc.) as of December 31, 1998 and December
31, 1997 and for the periods then ended, appearing in this current report on
Form 10KSB of Consolidated Medical Management, Inc.
ROBERTS, CHERRY AND COMPANY
Consolidated Medical Management, Inc.
Baton Rouge, Louisiana
Table of Contents
Financial Statements
Consolidated Balance Sheets 17
Consolidated Statements of Operations 18
Consolidated Statements of Changes in Stockholders' Equity (Deficit) 19
Consolidated Statements of Cash Flows 20
Notes to Consolidated Financial Statements 21
Additional Information 32
Report of Independent Accountants 35
Consolidated Medical Management, Inc.
(A Montana Corporation)
Consolidated Balance Sheets
December 31, 1998 and 1997
1998 1997
Assets
Current Assets
Cash $ 25,540 $ -
Receivables , net 166,869 -
Prepaid Expenses 4,315
Notes Receivable 140,673
Total Current Assets 337,397 -
Property and Equipment, net 336,298 -
Other Assets 139,743 -
Total Assets $ 813,438 $ -
Liabilities and Stockholders' Equity
(Deficit)
Current Liabilities
Notes Payable - Current Portion $ 171,938 $ -
Accounts Payable 140,457 -
Accrued Expenses 138,101 -
Convertible Debentures 415,000 -
Advances from and accounts
payable to related parties - 53,614
Deferred Income Taxes - -
Total Current Liabilities 865,496 53,614
Notes Payable - Long Term Portion 223,768 -
Total Long Term Liabilities 223,768 -
Total Liabilities 1,089,264 53,614
Stockholders' Equity
Common Stock 5,496 216
Additional Paid-in-Capital 1,854,173 1,211,863
Retained Earnings (Deficit) (2,135,495) (1,265,693)
Total Stockholders' Equity
(Deficit) (275,826) (53,614)
Total Liabilities and
Stockholders' Equity
(Deficit) $ 813,438 $ -
The accompanying notes and are an integral part of these financial
statements.
<PAGE>
Consolidated Medical Management, Inc.
(A Montana Corporation)
Consolidated Statements of Operations
For the Years Ended December 31, 1998 and 1997
1998 1997
Revenues
$ 921,502 $ -
Operating Expenses
Personnel Costs 619,155 -
Bad Debt Expense 126,876
Consulting 405,919 -
Depreciation and Amortization 21,091 -
Educational 11,434 -
Legal and Professional 92,966 26,956
Office Expense 111,731 4,585
Occupancy 36,585 -
Total Operating Expenses 1,425,757 31,541
Income (Loss) from Operations (504,255) (31,541)
Other Income (Expenses)
Forgiveness of Debt - 193,681
Merger and Acquisition Expenses (302,850) -
Other (25,925) -
Interest Expense (46,575) -
Interest Income 4,006 4
(371,344) 193,685
Income (Loss) before Income Taxes (875,599) 162,144
Income Tax Expense (Benefit) (5,797) -
Net Income (Loss) $ (869,802) $ 162,144
Net Income (Loss) per Share $ (0.2182) $ 0.0441
Weighted Average Number of Shares 3,986,890 3,672,872
The accompanying notes and are an integral part of these financial statements.
<PAGE>
Consolidated Medical Management, Inc.
(A Montana Corporation)
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
For the Years Ended December 31,1998 and 1997
Common Stock Additional Retained
Shares Amount Paid Earnings
In Capital (Deficit) Total
Balances , January
1, 1996 5,401,279 $ 54,013 $ 1,158,066 $ (1,427,837) $ (215,758)
Reverse stock split
and change of par
value from $0.01
per share to
$0.001 per share (5,185,222) (53,797) 53,797
Net Income 162,144 162,144
Balances, December
31, 1997 216,057 216 1,211,863 (1,265,693) (53,614)
Issue stock for
advances to
related
party debt 2,500,000 2,500 35,017 37,517
Issue stock for
services
rendered
under 1998
Non-Qualified
Stock Plan 550,000 550 58,028 58,578
Recapitalization
- - Issue stock for
acquisition of
Consolidated Medical
Management, Inc. 1,850,000 1,850 24,645 26,495
Issue stock for
services rendered 210,000 210 289,790 290,000
Issue stock for
Acquisition of
United Medical
Services, Inc. 20,000 20 59,980 60,000
Issue stock for
acquisition of
assets 150,000 150 174,850 175,000
Net Income (Loss) (869,802) (869,802)
Balances, December
31, 1998 5,496,057 $ 5,496 $ 1,854,173 $ (2,135,495) $(275,826)
Common Stock-
$.001 par value, 50,000,000 shares authorized, 5,496,057 shares
issued and outstanding as of December 31, 1998 and 216,057 shares issued
and outstanding as of December 31, 1997
Preferred Stock-
$.001 par value, 20,000,000 shares authorized, 0 shares issued and
outstanding as of December 31, 1998
The accompanying notes and are an integral part of these financial statements.
<PAGE>
Consolidated Medical Management, Inc.
Baton Rouge, Louisiana
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1998 and 1997
1998 1997
Cash Flows from Operating Activities:
Net Income (Loss) ($ 869,802) $ 162,144
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 21,091
Non Cash Consulting and
Services Paid by Stock
Issue 527,590
(Increase) Decrease in
Receivables (166,869)
(Increase) Decrease in
Prepaid Expenses (4,315)
(Increase) Decrease in
Other Assets (19,743)
Increase (Decrease) in
Accounts Payable 140,457 (75,187)
Increase (Decrease) in
Interest Payable to
Related Party (81,524)
Increase (Decrease) in
Advances from and accounts
payable to related parties (53,614) (6,273)
Increase (Decrease) in
Accrued Expenses 138,101 -
Net Cash Provided Used by Operating
Activities (287,104) (840)
Cash Flows from Investing Activities:
Issuance of Notes Receivable (223,000)
Payment on Notes Receivable 82,327
Purchases of Property, Plant and
Equipment (357,389)
Net Cash Used by Investing
Activities (498,062) -
Cash Flows from Financing Activities:
Proceeds from Issuance of Debentures 450,000
Issue Debt for Capital Leases 332,183
Proceeds from Issuance of Debt 94,746
Payments on Long-Term Debt (66,223)
Net Cash Provided by Financing
Activities 810,706 -
Net Increase (Decrease) in Cash 25,540 (840)
Cash, Beginning of period - 840
Cash, end of period $ 25,540 $-
Supplemental Disclosure of Cash Flow
Information
Cash Paid During the Year for:
Interest $ 44,389 $-
Income Taxes $ - $-
The accompanying notes and are an integral part of these financial statements.
<PAGE>
Consolidated Medical Management, Inc.
(A Montana Corporation)
Notes to Consolidated Financial Statements
Note 1 Organization and Summary of Significant Policies
The Company (formerly Golden Maple Mining and Leaching Co., Inc.) was
incorporated under the laws of the State of Montana on August 13, 1981. The
Company ceased its mining operations in 1985, and discontinued all business
operations in 1990. On May 23, 1998, the Company acquired all the common
stock of Consolidated Medical Management, Inc. (a private Louisiana
corporation, hereafter sometimes referred to as "CMMI-LA" or "subsidiary") in
a stock for stock exchange transaction, whereupon, CMMI-LA became a wholly
owned subsidiary of the Company. These financial statements reflect the
financial condition and results of operations for the consolidated Company,
retroactively stated as if the acquisition had occurred at the beginning of
the current fiscal period.
The subsidiary provides management services for home healthcare providers
predominately in southern Louisiana. The Company's subsidiary, Independent
Diagnostic Services, Inc., provides diagnostic ultrasound imaging services to
physician offices, clinics, hospital, and skilled nursing facilities, and also
provides mobile laboratories that will enable services to be provided for
communities with limited access to technologists, hospitals and diagnostic
laboratories. The Company has formed a subsidiary, Psychiatric Medical
Services, Inc. ("PMSI") to operate a partial-unit mental services hospital in
an existing hospital environment.
Principles of Consolidation - The consolidated financial statements include
the accounts of Consolidated Medical Management, Inc. (a Montana Corporation),
and its subsidiaries, Independent Diagnostic Services, Inc. and Psychiatric
Management Services, Inc.. The Company and its subsidiaries provide health
care services specializing in mobile diagnostic imaging and the operation of a
part-hospital psychiatric unit and therefore extends credit to the health care
providers involved with the patients served. All significant intercompany
transactions and balances have been eliminated.
Accounting policies of the Company conform with generally accepted accounting
principles and reflect practices appropriate to the industry in which it
operates. The significant policies are summarized below:
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.
Property, 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 (generally 7-10 years
for furniture and equipment) of assets generally using straight-line methods.
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 December 31, 1998 and 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
Service Billings $ 188,484 $ -
Advances to Trinity Billing 13,564
Interest 3,478
Other 1,447
Less: Allowance for Uncollectible Accounts (40,104) -
$ 166,869 $ -
Note 3 Notes Receivable
1998 1997
Note Receivable from Spectrum Financial, Inc.,
a related party, in the original amount of
$15,000, with interest at 6%, principal and
interest due June 30, 1999, unsecured. $ 15,000 $ -
Note Receivable from Jaguar International,
Inc., a related party, in the original amount
of $100,000, with interest at 6%, principal
and interest due June 30, 1999, unsecured. 100,000
Note Receivable from Louisiana Mobile
Imaging, Inc. in the original amount of
$75,000, with interest at 0%, principal due
December 1, 1998, secured by a pledge of
receivables. 24,673
Note Receivable from an individual in the
original amount of $1,000, with interest at
6%, principal and interest due November 13, 1999,
unsecured. 1,000
Total Notes Receivable 140,673 -
Less Current Portion (140,673) -
Long Term Portion of Notes Receivable $ - $ -
Note 4 Property, Plant and Equipment
1998 1997
Furniture $ 6,721 $ -
Equipment 30,297
Automotive 3,600
Assets under Capital Lease 399,175
439,793 -
Less Accumulated Depreciation
(including $92,463 of accumulated amortization
of capital lease assets) (103,495) -
Property, Plant and Equipment - Net $ 336,298 $ -
Note 5 Other Assets
1998 1997
Prepaid Consulting Agreement (net of
accumulated amortization of $10,000) $ 110,000 $ -
Deposits 2,684
Other 27,059
$ 139,743 $ -
Note 6 Lease Commitments
During the period ended December 31, 1998, the Company leased its main
administration office facilities under operating leases, which expired June
1998 and August 1998. Thereafter the office space has been rented on a
month-to-month basis. Monthly rent for the office space totals $625. Lease
expense for the year ended December 31, 1998 and 1997 totaled $10,400 and $-0-
respectively.
The Company also is leasing remote office space for its subsidiary, IDSI, from
a related party, Jaguar International, Inc. under a monthly operating lease of
$1,700 monthly. Total rent expense for the year ended December 31, 1998 was
$6,800.
The Company is also leasing equipment used by it's subsidiary, IDSI, under
operating leases with total monthly lease expense payments of $842. The
leases are for thirty-six (36) months, and expire in September and October
2001. Total lease expense for the year ended December 31, 1998 was $2,180.
The Company also leases office space for the use of one of its officers in San
Antonio, Texas under an operating lease. The lease is on a month to month
basis with monthly rental of $400. Total rent paid in 1998 is $600.
The Company also leases other office assets, notably a copier, and phone
system, under non-cancelable operating leases expiring through September
2000. Lease expense for the year ended December 31, 1998 was $671 and $2,014,
respectively. At December 31, 1998, future minimum lease payments under
long-term non-cancelable leases for succeeding fiscal periods is as follows:
1999 $ 15,552
2000 12,842
2001 7,926
Thereafter -
Total $ 36,320
Note 7 Notes Payable
1998 1997
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. $ 6,145 $ -
Six (6) notes payable to Spectrum
Financial, Inc., a related party of the
Company, dated September 29, 1998, due
July 29, 1999, interest at 10%, payable
on maturity, unsecured 85,000
Total Notes Payable 91,145 -
Less: Current Portion (88,532) (-)
Long-Term Portion $ 2,613 $ -
Maturities of Notes Payable over the
next five years are:
1999 $ 88,532
2000 2,613
2001 and thereafter -
$ 91,145
Note 8 Capital Leases
1998 1997
Equipment Capital Leases Payable to
leasing companies in original amounts
totaling approximately $399,176, payable
in monthly installments ranging from
twenty-four to sixty months, totaling
$10,133, with implicit interest rate of
twelve (12%) percent, through March 2003.
These leases are secured by pledges
of imaging equipment and related
transportation vehicles with original cost
totaling approximately $400,000 as of
December 31, 1998. These vehicles are
included in company owned assets
described as Capital Lease Assets. $ 304,562 $ -
Less: Current Portion (83,406) (-)
Long-Term Portion $ 221,156 $ -
Following is a schedule of minimum
lease payments under Capital Leases:
1999 $ 115,425
2000 114,863
2001 84,588
2002 46,431
2003 11,608
After -
Total Payments 372,915
Less: Interest included therein (68,352)
Net Payments $ 304,562
Maturities of Capital Lease Obligations
payable in subsequent periods are as
follows:
1999 $ 83,406
2000 93,286
2001 74,104
2002 42,262
2003 11,504
After -
$ 304,562
Note 9 Convertible Debentures and Notes Payable
The Company issued convertible debentures in 1998 that are subordinated to
bank debt and secured leases. The debentures are otherwise unsecured but are
given a preference over unsecured debt. The debentures include interest at
fifteen (15%) percent, interest is payable in monthly installments. Each
debenture has a conversion right for each holder to convert the debenture
principal to shares of the Company's common stock at 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 at conversion. As of December 31, the
company had issued and outstanding $190,000 in debentures. The debentures are
due one year from date of issue. All debentures issued in 1998 are due in
1999.
The Company issued convertible promissory notes payable in 1998. The notes
are unsecured and include interest at ten (10%) percent, interest is payable
in monthly installments. Each note has a conversion right for each holder to
convert the note's unpaid principal to shares of the Company's common stock
based on $2.50 per share, or a total of 90,000 at the note holder's
discretion. Accrued interest and any principal amount not converted to shares
of stock will be paid in cash at conversion. As of December 31, the company
had issued and outstanding $225,000 in debentures. The notes are due July 31,
1999.
The Company has entered into an agreement with Spectrum Financial, Inc.
("Spectrum") whereby Spectrum will exchange shares it owns with the debenture
holder upon exercise of the debenture's conversion option, in satisfaction of
the Company's obligations under the conversion provisions. In exchange,
Spectrum will then receive an unsecured note payable from the Company (see
Note 7) for the face amount of the debenture surrendered. During the year
ended December 31, 1998, Spectrum exchanged a total of 14,000 of its shares in
connection with this agreement and received five notes payable from the
Company totaling $35,000.
1998
Total Convertible Debentures and Notes Payable $ 415,000
Less: Current Portion (415,000)
Long-Term Portion $ -
Note 10 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) (5,797)
Total Income Tax Expense (Benefit) ($5,797) $ -
The effective tax rate of the Company for 1998 and 1997 differs from the federal
statutory rate primarily due to state income taxes, if any.
Deferred income taxes arise from temporary differences resulting from the
Company's subsidiary utilizing the cash basis of accounting for tax purposes
and the accrual basis for financial reporting purposes. Deferred taxes are
classified as current or noncurrent, depending on the classification of the
assets and liabilities to which they relate. Deferred taxes arising from
timing differences that are not related to an asset or liability are
classified as current or noncurrent depending on the periods in which the
timing differences are expected to reverse. The Company's previous principal
temporary differences relate to revenue and expenses accrued for financial
purposes, which are not taxable for financial reporting purposes. The
Company's material temporary differences consist of bad debt expense recorded
in the financial statements that is not deductible for tax purposes and
differences in the depreciation expense calculated for financial statement
purposes and tax purposes..
The net deferred tax asset or liability is composed of the following:
1998 1997
Total Deferred Tax Assets $ 293,690 $ -
Less: Valuation Allowance (293,690)
Net Deferred Tax Asset -
Total Deferred Tax Liabilities - -
Net Deferred Tax Liability - -
Less Current Portion - -
Long - Term Portion $ - $ -
The Company has net operating loss carryforwards totaling $869,697, which
expire through 2014.
Note 11 Common and Preferred Stock
Common Stock
The Company's common stock is $0.001 par value, there are 50,000,000 shares
authorized as of December 31, 1998 and 1997. As of December 31, 1998 and
1997, the Company had 5,496,057 and 216,057 shares issued and outstanding,
respectively.
Preferred Stock
In 1998, the Company amended its articles to authorize Preferred Stock. There
are 20,000,000 shares authorized with a par value of $0.001. The shares are
non-voting and non-redeemable by the Company. The Company further designated
two series of its Preferred Stock: "Series 'A' $12.50 Preferred Stock" with
2,159,193 shares of the total shares authorized and "Series 'A' $8.00
Preferred Stock," with the number of authorized shares set at 1,079,957
shares. As of December 31, 1998 and 1997 there are no shares issued and
outstanding.
Dividends - Dividends are non-cumulative, however, the holders of such series,
in preference to the holders of any common stock, shall be entitled to
receive, as and when declared payable by the Board of Directors from funds
legally available for the payment thereof, dividends in lawful money of the
United States of America at the rate per annum fixed and determined as herein
authorized for the shares of such series, but no more, payable quarterly on
the last days of March, June, September, and December in each year with
respect to the quarterly period ending on the day prior to each such
respective dividend payment date. In no event shall the holders of either
series receive dividends of more than one percent (1%) in any fiscal year.
Each share of both series shall rank on a parity with each other share of
preferred stock, irrespective of series, with respect to dividends at the
respective fixed or maximum rates for such series.
Conversion provisions - Any holder of either series may convert any or all of
such shares into shares of common stock of the Company at any time. Said
shares shall be convertible at a rate equal to three (3) shares of common
stock of the Company for each one (1) share of Series "A" $12.50 Preferred
Stock. The Series "A" $12.50 Preferred Stock shall be convertible, in whole
or in part, at any time after the common stock of the Company shall maintain
an average bid price per share of at least $12.50 for ten (10) consecutive
trading days.
Series "A" $8.00 Preferred Stock shall be convertible at a rate equal to three
(3) shares of common stock of the Company for each one (1) share of Series "A"
$8.00 Preferred Stock. The Series "A" $8.00 Preferred Stock shall be
convertible, in whole or in part, at any time after the common stock of the
Company shall maintain an average bid price per share of at least $8.00 for
ten (10) consecutive trading days.
The preferential amount payable with respect to shares of either Series of
Preferred Stock in the event of voluntary or involuntary liquidation,
dissolution, or winding-up, shall be an amount equal to $5.00 per share, plus
the amount of any dividends declared and unpaid thereon.
Note 12 Earnings per Share
Earnings per share for the year ended December 31, 1998 is computed as
follows:
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income (Loss) ($869,802)
Basic EPS
Income (Loss) available to
common stockholders (869,802) 3,986,890 ($0.21816)
Effect of Dilutive Securities
Convertible Debt (30,417) -
Diluted EPS
Income (Loss) available to
common stockholders ($839,385) 3,986,890 ($0.2105)
Earnings per share for the year ended December 31, 1997 is computed as
follows:
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income $ 162,144
Basic EPS
Income available to
common stockholders 162,144 3,672,872 $ 0.0441
Effect of Dilutive
Securities none - -
Diluted EPS
Income available to
common stockholders $ 162,144 3,672,872 $ 0.0441
The Company has issued convertible debt that, if fully converted, would have a
dilutive effect of 180,000 shares. The Company has entered into an agreement
with a related party, Spectrum Financial, Inc. whereby Spectrum will exchange
shares it controls for the debt issued to convertible debt holders upon the
debt holders' exercise of their options. Due to the effect of this agreement,
these shares are not considered dilutive for these calculations.
Note 13 Commitments and Contingencies
In the opinion of management, there are no contingent claims or litigation
against the Company which would materially affect its financial position at
December 31, 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 14 Economic Dependence
During the year ended December 31, 1998, approximately fifty-two (52%) percent
of the Company's total operating 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 15 Related Party Transactions
During the year ended December 31, 1998, the Company paid fees totaling
$550,632 in the form of cash and stock, to related companies and individuals
that own stock in the Company and provided services to the Company. Included
in this total of fees are amounts paid as follows:
Paid to Description of Fees Amount
GCSW Funding, Inc. Consulting services provided $ 44,000
Jaguar International, Inc. Consulting services provided 206,500
Southern Properties, Inc. Consulting services provided 15,000
Spectrum Financial, Inc. Consulting services provided 31,800
Spectrum Financial, Inc. Commissions paid 63,332
Michael Sciacchetano Consulting services provided 160,000
$ 550,632
The Company has informal agreements with three related companies, GCSW
Funding, Inc., Jaguar International, Inc. (a shareholder of the Company) and
Southern Properties, Inc. to provide various consulting services to the
Company as required. Total services paid to these companies in 1998 was
$265,500.
The Company engaged Spectrum Financial, Inc., which is owned by two of the
Company's shareholders who collectively own fifteen percent of the Company's
outstanding common stock as of December 31, 1998, to provide consulting
services. Such consulting services have included identifying potential
targeted companies for acquisition, and negotiating such transactions.
Spectrum is then paid fees, either in cash or by the issuance of the companies
stock. In 1998, the Company paid Spectrum fees totaling $31,800 for such
services.
The Company has also agreed to pay Spectrum commissions in connection with its
services rendered in identification of specific targets for acquisition,
whether the targeted company is acquired or not. In 1998, the Company paid
Spectrum $63,332 in commissions for these services.
The Company also paid Michael Sciacchetano $160,000 in fees connected to the
Company's acquisition of certain assets of Louisiana Mobile Imaging, Inc.
The Company had a Note Payable from an individual who is a major stockholder
and officer, in the original amount of $15,000, which was repaid in the third
quarter. The balance owed was $-0- as of December 31, 1998. The Company paid
approximately $1,125 in interest in 1998 on this note.
The Company also has notes payable totaling $85,000 payable to Spectrum
Financial, Inc. as of December 31, 1998. The notes are unsecured, see Note
7. As of December 31, 1998, the Company has accrued $1,196 in interest
payable on these notes and has recorded $1,196 in interest expense.
The Company holds a note receivable from Jaguar International, Inc., which
owns forty-four (44%) percent of the outstanding stock as of December 31,
1998, in the amount of $100,000, see Note 3, as of December 31, 1998. The
Company also holds a note receivable from Spectrum Financial, Inc. in the
amount of $15,000 as of December 31, 1998.
Note 16 Non Cash Financing Transactions
During 1998, the Company issued stock in exchange for services of $375,073
(2,610,000 common shares issued) for year ended December 31, 1998. The
Company also issued shares in satisfaction of debt of $37,517 (2,500,000
common shares). The Company also issued 170,000 common shares to acquire
assets and a business (United Medical Services, Inc.) for $235,000.
Note 17 Stock Options
The Company has two stock option plans. The first plan was adopted in April
1998. Under this plan, the Company granted options to three entities for a
total of 550,000 shares of the Company's common stock. The original exercise
price of the options granted under the plan was $0.10 per share, and was for a
five-year period. All shares granted under this plan were issued. In October
1998, the Company adopted "1998 Non-Qualified Stock Option Plan No.2". Under
this plan, a total of 1,500,000 shares are available. The qualified
recipients of the plan's options are all employees of the Company and any
other individuals who perform bona fide services to the Company. The Options
granted under this plan have a term of five years, and a maximum exercise
price of $4.125 per share. Subsequent to year-end, the Company granted four
options under this plan for a total of 522,986 shares at an option price of
$0.10 per share.
No compensation costs were charged to income in 1998 under these plans.
Note 18 Merger and Acquisitions
Acquisition of Consolidated Medical Management, Inc.
In May 1998, the Company completed its Plan of Reorganization wherein the
Company issued 1,850,000 shares of its stock in exchange for all the
outstanding stock of Consolidated Medical Management, Inc. (a Louisiana
corporation) (hereafter called "private company"). Concurrent with this Plan,
the Company changed its name from Golden Maple Mining and Leaching Co, Inc. to
Consolidated Medical Management, Inc. and moved its principal offices to Baton
Rouge, Louisiana. Incidental to the acquisition of the private company,
CMMI-LA became a wholly-owned subsidiary of the Company.
Acquisition of Independent Diagnostic Services, Inc.
On July 10, 1998, the Company purchased 100% of the outstanding stock of
Independent Diagnostic Services, Inc. in exchange for issuance of 20,000
shares of the Company. Independent Diagnostic Services, Inc. provides
diagnostic ultrasound imaging services to physician offices, clinics,
hospital, and skilled nursing facilities, and also provides mobile
laboratories that will enable services to be provided for communities with
limited access to technologists, hospitals and diagnostic laboratories.
Acquisition of certain assets of Louisiana Mobile Imaging, Inc
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 for all of the leased
assets purchased in the above-referenced agreement, (see Note 8). 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 February 19, 1998 $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
Note 19 Going Concern
The Company has sustained a net loss of $869,802 and a loss from operations of
$504,255, and has Stockholders' Equity (Deficit) of ($275,826). These losses
and deterioration of its financial condition, as demonstrated by the deficit
in working capital of ($528,099), raise substantial doubt about the Company's
ability to continue as a going concern.
The Company has developed a business plan that includes the expansion of its
current operations in its subsidiaries IDSI and PMSI, as well as additional
financing of its operations through investment in the company in the form of a
private placement and several registration statements.
Note 20 Fair Values
The Company has a number of financial instruments, none of which are held for
trading purposes. The Fund estimates that the fair value of all financial
instruments at December 31, 1998 does not differ materially from the
aggregate carrying values of its financial instruments recorded in the
accompanying balance sheet.
Additional Information
<PAGE>
Consolidated Medical Management, Inc.
(A Montana Corporation)
Proforma Schedule of Combined Operations
For the year ended December 31, 1997
Histocial Proforma
Golden Maple Proforma
Mining Co. CMMI Combined
(Louisiana) Adjustments Totals
Revenues $ - $ 1,064,212 $ - $ 1,064,212
Operating Expenses 31,541 1,052,469 1,084,010
Income (Loss) from
Continuing Operations (31,541) 11,743 - (19,798)
Other Income (Expenses) 193,685 (3,126) - 190,559
Income (Loss) before
Income Taxes 162,144 8,617 - 170,761
Income Tax Expense - 1,547 - 1,547
Net Income (Loss) $162,144 $ 7,070 $ - $ 169,214
Net Income (Loss) per
Share $ 0.0441 $ 0.0461
The accompanying notes and are an integral part of these financial statements.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Consolidated Medical Management, Inc.
(A Montana Corporation)
Baton Rouge, Louisiana
We have audited the balance sheets of Consolidated Medical Management, Inc. as
of December 31, 1998 and 1997, and the related statements of operations,
changes in stockholders' equity (deficit), and cash flows for the years ended
December 31, 1998 and 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Consolidated Medical
Management, Inc. as of December 31, 1998 and 1997, and the results of its
operations, changes in stockholders' equity (deficit) and its cash flows for
the years then ended, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule 1 is presented for purposes
of additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 19 to the
financial statements, the company has suffered significant operating losses
and deficits in stockholders' equity (deficit) for the years ended December
31, 1998 and 1997. This raises substantial doubt about the Company's ability
to continue as a going concern. Management's plans regarding these matters
also are discussed in Note 19. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
ROBERTS, CHERRY and COMPANY
A Corporation of
Certified Public Accountants
Shreveport, Louisiana
February 5, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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