UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _______ to ________
Commission File Number: 2-89616
Consolidated Medical Management, Inc.
(Exact name of Registrant as specified in charter)
Montana 82-0369233
State or other jurisdiction of IRS Employer I.D. No.
incorporation or organization
11829 Florida Blvd, Baton Rouge, LA 70815
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (504) 292-3100
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 filing 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: $1,027,387
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 has been
determined to be $ 2,413,826 as of March 29, 2000 based on the closing price
$0.30 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 29, 2000 there were
10,096,087 common shares of the Registrant outstanding. At December 31, 1999,
there were 8,046,087 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 securities Act of 1993
- - None.
<PAGE>
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, clinic, 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 sale
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 1999, since the acquisition of Consolidated Medical Management, Inc.
(Louisiana) (hereafter referred to as "CMMI-LA") the Company initially 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
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 ("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 2, of which 2 are considered full-time employees.
During the year ended December 31, 1999 and 1998, approximately forty-seven
(47%) 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 advised
the Company in July 1999 that they would cancel the contract. This left the
Company with no operations from this customer as of December 31, 1999
Acquisition of Nevada Resort Medical Services, LLC
On June 4, 1999, the Company acquired all of the outstanding ownership
interests of Nevada Resort Medical Services, LLC, in exchange for the issuance
of 200,000 shares of the Company's common stock and payment $238,000 in cash
or notes. Pursuant to the purchase, the Company issued notes payable totaling
$238,000 dated June 4, 1999, due in full on August 4,1999, bearing 10%
interest and secured by a pledge of the interest acquired in this purchase.
The Company has cancelled this contract and wrote off the notes payable due to
non performance of the Nevada Resort Medical Services, LLC to turn over
required records as required by the contract.
Acquisition of Practice Management Group
On June 4, 1999, the Company also acquired all of the outstanding ownership
interests of Practice Management Group in exchange for the issuance of 190,000
shares of the Company's common stock and payment of $200,000 in cash or
notes. Pursuant to the purchase, the Company issued notes payable totaling
$200,000 dated June 4, 1999, due in full on August 4,1999 bearing 10% interest
and secured by a pledge of the interest acquired in this purchase. The Company
has cancelled this contract and wrote off the notes payable due to non-
performance of the Practice Management Group to turn over required records as
required by the contract.
The Company has signed contracts to acquire two MRI centers in Houston Texas.
Details of the contracts are as follows:
On December 14, 1999, a contract was signed between the Company and
Diagnostic Imaging Specialties, Inc. ("Diagnostic") in Angleton Texas to
acquire all of the outstanding stock of Diagnostic for $1,500,000 in cash and
stock. The Company is currently performing MRI imaging services and produced
revenues of $ 1,802,285 in 1999 and a net income of $61,449. The contract is
subject to the Company obtaining financing. Sterling Bank in Houston, Texas
has approved the loan and closing is expected in April 2000.
On December 14, 1999, a contract was signed between the Company and
Gulf Coast MRI & Diagnostic, Inc. ("Gulf Coast") in Clear Lake City, Texas to
acquire all of the outstanding stock of Gulf Coast for $4,000,000 in cash and
stock. The Company is currently performing MRI imaging services and produced
revenues in excess of $4,000,000. The contract is subject to the Company
obtaining financing.
The Company has received a commitment letter from The Belgravia Fund LTD to
pledge 10 million dollars in "blue-chip" stock as additional collateral on the
loans referenced above. The loan for the acquisition of Diagnostic has been
approved and expected to close before the end of April 2000.
The Company is actively perusing acquisitions in the medical services field
and with the acquisitions they are expected to be profitable after the
acquisitions are completed.
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 judgment.
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
business and may acquire or participate in a business opportunity based on the
decision of management which potentially could act without 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 August 1999, the Company's administrative offices have been located at
11829 Florida Blvd, 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, 1999.
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 l5c2-6, 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 8,096,087 shares are outstanding as of December 31, 1999.
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.
1999 Low Bid High Bid
First Quarter $ 1/4 $ 1/2
Second Quarter $ 1/4 $ 1/2
Third Quarter $ 1/4 $ 3/8
Fourth Quarter $ 1/4 $ 3/8
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, 1999 and March 31, 2000, the Company had approximately 434 and
438 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 is Discussion and Analysis or Results if 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 ($691,141) for
1999 on gross revenue of $1,027,387 and total operating costs of $1,718,528.
This results in a net loss before income taxes for the Company of ($710,333).
The Company's financial condition reflects a deficit in stockholders' equity
of ($148,756), a deficit in working capital of ($640,969) with total
liabilities of $878,414 and total assets of $729,658.
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 $465,000 in convertible
subordinated debentures ($465,000 remain as of December 31, 1999 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 $13,610 as of December 31, 1999 and receivables from
operations totaling $60,134 from customers. 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), Inc. in the form of notes receivable totaling $100,000 during
1999. The terms of the notes receivable call for the Company to be paid
interest of 6%, are due June 30, 2000 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.
In December of 1999, the Organization that had sub-leased the equipment to the
Company for operations picked up the three of the four pieces of imaging
equipment. Since the Organization defaulted in its agreement to provide the
equipment, the Company has written off the three units that are not in its
possession. The balance of the one unit is shown as a current liability until
final arrangements are made the Organization
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, 2000, 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 were 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 were due
July 31, 1999.
As of December 31, 1999, the Company has incurred trade payables and accrued
compensation and personnel costs totaling $250,039.
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
In March of 2000 the Company appointed the firm of Clyde Bailey P.C. as the
Company's principal auditor. There were no accounting disagreements with the
prior auditing firm.
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
Douglas M Kemp. 56 Chairman, President and CEO 1999
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. Behrens, whose information has been previously reported):
DOUGLAS M KEMP - Mr. Kemp has over thirty years of experience in management
and consulting for medical related companies and financial institutions. Mr.
Kemp has extensive experience in factoring and financing of medical
receivables, and has served as Chief Executive Officer of Hospital Information
Services, Inc. that provided administration and receivable factoring for 1,000
physicians and 32 hospitals. He also serves as Director of merger and
acquisitions for Affiliated Computer Systems, Inc.
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 1958.
(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, 1999, or the two prior fiscal years.
For Fiscal Year Ending December 31, 1999:
Officer Position Base Salary Bonus Paid
Douglas K Kemp CEO $ 30,000 * $ 0
Peggy Behrens Director $ 63,551 $ 5,000
The bonuses paid to Ms. Behrens are paid in the form of stock of the Company
which was based on a $2.00 per share value. The salary for Mr. Kemp has been
accrued as of December 31, 1999.
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, 1999, 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 of Amount of Beneficial Nature of Beneficial Percent of
Beneficial Owner Ownership(1) Ownership(1) Class
Cede & Co. 1,889,724 Direct 23.49%
P. 0. Box 222 Ownership
Bowling Green Station
New York, NY
CJD, Inc. 400,000 Direct 4.47%
6603 Lost Horizon Dr. Ownership
Austin, TX
Jaguar International Corp 2,342,660 Direct 29.12%
13005 Justice Ave Ownership
Baton Rouge, LA
Virgil A. Robbins 390,000 Direct 4.85%
4855 Twin Valley Dr. Ownership
Austin, TX
(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, 1999, of all directors and executive officers and directors and
executive officers of the Company as a group:
Name and Address of Amount of Beneficial Nature of Beneficial Percent
Beneficial Owner Ownership(1) Ownership(1) Class
None
(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, 1999, 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 FIT--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.
j) On January 14, 1999 the Company issued 159,995 shares of common stock
to Underwrites Trust, controlled by Charles Coburn, Trustee, a consultant of
the Company. The shares were issued for consulting services under the
Company's Non-Qualified Stock Option Plan dated October 7, 1998.
k) On January 14, 1999 the Company issued 117,999 shares of common stock
to Spectrum Financial , Inc., controlled by C. J. Douglas and Virgil Robbins,
consultants to the Company. The shares were issued for consulting services
under the Company's Non-Qualified Stock Option Plan dated October 7, 1998.
l) On January 14, 1999 the Company issued 239,992 shares of common stock
to GCSW Funding Group, controlled by Garvis Wooley, stockholder of the
Company. The shares were issued for consulting services under the Company's
Non-Qualified Stock Option Plan dated October 7, 1998.
m) On January 19, 1999 the Company issued 306,295 shares of common stock
to Rapid Release Research, L.L.C., a contract promotional company engaged by
the Company. The shares were issued for promotional marketing consulting
services.
n) On January 21, 1999 the Company issued 5,000 shares of common stock
to Ms. Antoinette Dipluma, an employee of the Company. The shares
were issued for consulting services.
o) On April 29, 1999 the Company issued 50,000 shares of common stock to
Dr. Dale Bachman, an consultant to the Company. The shares were issued for
consulting services in identifying targets for acquisition and are valued at
$25,000 based on 50% current market price.
p) On April 29, 1999 the Company issued 5,000 shares of common stock to
Mr. Curtis W. Poindexter, a consultant to the Company. The shares were issued
for consulting services in identifying targets for acquisition and are valued
at $2,500 based on 50% current market price.
q) On April 29, 1999 the Company issued 2,000 shares of common stock to
Mr. Tim Von Scheele, a consultant to the Company. The shares were issued for
consulting services in identifying targets for acquisition and are value at
$1,000 based on 50% current market price.
r) On May 14, 1999 the Company issued 230,030 shares of common stock to
Mr. David LeClere, an attorney of the Company. The shares were issued for
legal representation services rendered to the Company.
s) On May 14, 1999 the Company issued 19,970 shares of common stock to Mr.
David LeClere, an attorney of the Company. The shares were issued for legal
representation services rendered to the Company.
t) On May 14, 1999 the Company issued 250,000 shares of common stock to
Spectrum Financial, Inc., a related party to the Company whose principals are
Virgil Robbins and C. J. Douglas, consultants to the Company. The shares were
issued for general consulting services and consultations related to new
acquisitions of the Company.
u) On May 14, 1999 the Company issued 250,000 shares of common stock to
Southern Property Management, Inc., a related party to the Company whose
principal is Garvis Wooley, consultant to the Company. The shares were issued
for general consulting services and consultations related to new acquisitions
of the Company.
v) On May 14, 1999 the Company issued 5,100 shares of common stock to
Sunni M. Wooley, the Company's President. The shares were issued for general
consulting services and consultations related to new acquisitions of the
Company.
w) On May 14, 1999, the Company issued a total of 26,900 shares of common
stock to various employees of the Company. The shares were issued for services
to the Company.
x) On May 14, 1999, the Company issued 128,249 shares of common stock to
Trace Resources, Inc., an independent consultant used in the promotion of the
ISDI subsidiary.
y) On June 4, 1999, the Company issued 197,530 shares of common stock to
Rapid Resources, LLC a contract promotional company engaged by the Company.
The shares were issued for promotional marketing consulting services.
z) On June 4, 1999, the Company issued 250,000 shares of common stock to
David LeClere, an attorney of the Company. The shares were issued for legal
representation services rendered to the Company.
aa) On June 30, 1999, the Company issued 400,000 shares of common stock to
Jack London in exchange for his ownership in Nevada Resort Medical Services,
Ltd and Practice Management Group Nevada, which was purchased by the Company.
These shares are in review of being cancelled since the acquisitions were not
completed.
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
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.
To the best of management's knowledge and except as otherwise set forth
herein, during the fiscal year ended December 31, 1999, 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 non
cumulative 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.
Certain Business Relationships
Except as reported above, during the fiscal year ended December 31, 1999,
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, 1999, 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 1999, 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 $39,904.
Item 13. Exhibits, Financial Statements and Reports on For 8-K
(a) Financial Statements. The following financial statements are included
in this report:
Report of Independent Accountants - Clyde Bailey P.C.
Consolidated Balance Sheet
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(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
24 General Employment Contract - Douglas M Kemp
25 Stock Purchase Agreement - JM Rebescher and Larry Parker
26 Stock Purchase Agreement - Deborah and Michael McCombs
(c) The following reports on Form 8-K were filed during the last quarter of
the year ended December 31, 1999 and subsequently:
None
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/Douglas M Kemp___
Chief Executive Officer
April 12, 2000
<PAGE>
Exhibit 11
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 (869,802) 3,986,890 ($0.21816)
to common stockholders
Effect Dilutive Securities 30,417 -
Convertible Debt
Dilutive EPS ($839,385) 3,986,890 ($0.2105)
Income (Loss) available
to common stockholders
Earnings per share for the year ended December 31, 1999 is computed as
follows:
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income $ (710,333)
Basic EPS
Income (Loss) available (710,333) 7,356,545 ($0.0916)
to common stockholders
Effect Dilutive Securities - 186,000
Convertible Debt
Dilutive EPS $ (710,333) 7,542,545 ($0.0941)
Income (Loss) available
to common stockholders
The Company has issued convertible debt that, if fully converted, would have
a diluted effect of 186,000 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.
<PAGE>
Report of Independent Certified Public Accountant
To the Board of Directors and Shareholders
Consolidated Medical Management, Inc.
We have audited the accompanying consolidated balance sheet of Consolidated
Medical Management, Inc. and subsidiaries (Company) as of December 31, 1999
and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for the year ended December 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements based
on our audit. The financial statements of the Company, as of December 31,
1998, were audited by other auditors whose report dated February 5, 1999
expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has no operations
currently and suffered recurring losses from operations. This is further
explained in the notes to financial statements.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company and
subsidiaries as of December 31 1999, and the consolidated results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
s/ Clyde Bailey
Certified Public Accountant
March 2, 2000
<PAGE>
CONSOLIDATED MEDICAL MANAGEMENT, INC.
(A Montana Corporation)
Consolidated Balance Sheet
As of December 31, 1999
ASSETS
Current Assets
Cash $13,610
Receivables, net 60,134
Prepaid Expenses 8,975
Notes Receivable 100,000
Total Current Assets 182,719
Property and Equipment, net 58,095
Prepaid Acquisition Costs 400,000
Other Assets 88,844
Total Assets $729,658
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current Liabilities
Notes Payable-Current Portion $57,198
Accounts Payable 250,039
Accrued Expenses 51,451
Convertible Debentures 465,000
Total Current Liabilities 823,688
Notes Payable - Long Term Portion 54,726
Total Long-Term Liabilities 54,726
Total Liabilities 878,414
Commitments and Contingencies: -
Stockholders' Equity
Common Stock 8,046
Additional Paid-in-Capital 2,689,025
Retained Earnings (Deficit) (2,845,827)
Total Stockholders' Equity (Deficit) (148,756)
Total Liabilities and Stockholders'
Equity (Deficit) $729,658
See accompanying notes to Consolidated Financial Statements.
<PAGE>
CONSOLIDATED MEDICAL MANAGEMENT, INC.
(A Montana Corporation)
Consolidated Statement of Operations
For the Years Ended December 31, 1999 and
1998
1999 1998
Revenues $1,027,387 $921,502
Operating Expenses
Personnel Costs 657,498 619,155
Bad Debt Expense 157,791 126,876
Consulting - 405,919
Depreciation and Amortization 112,345 21,091
Educational 2,759 11,434
Legal and Professional 548,649 92,966
Office Expense 179,328 111,731
Occupancy 60,158 36,585
Total Operating Expenses 1,718,528 1,425,757
Income (Loss) from Operations (691,141) (504,255)
Other Income (Expenses)
Lease Equipment Returned 55,386 -
Merger and Acquisition Expenses (12,991) (302,850)
Other - (25,925)
Interest Expense (68,469) (46,575)
Interest Income 6,882 4,006
(19,192) (371,344)
Income (Loss) before Income Taxes (710,333) (875,599)
Income Tax Expense (Benefit) - (5,797)
Net Income (Loss) $(710,333) $(869,802)
Net Income (Loss) per Share $ (0.0966) $ (0.2182)
Weighted Average Number of Shares 7,356,545 3,986,890
See accompanying notes to Consolidated Financial Statements.
<PAGE>
CONSOLIDATED MEDICAL MANAGEMENT, INC.
(A Montana Corporation)
Consolidated Statement of Cash Flows
For the Years Ended December 31, 1999 and 1998
1999 1998
Cash Flows from Operating Activities:
Net Income (Loss) $(710,333) $(869,802)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 112,345 21,091
Non Cash Consulting and Services Paid
by Stock Issue 437,289 527,590
(Increase) Decrease in Receivables 106,735 (166,869)
(Increase) Decrease in Prepaid Expenses (4,660) (4,315)
(Increase) Decrease in Other Assets 50,899 (19,743)
(Increase) Decrease in Accounts Payable (109,582) 140,457
(Increase) Decrease in Prepaid Acquisition
Costs (400,000) -
(Increase) Decrease in Advances from and
accounts payable to related parties - (53,614)
(Increase) Decrease in Accrued Expenses 86,650 138,101
Net Cash Provided Used by Operating
Activities $(430,657) $(287,104)
Cash Flows from Investing Activities:
Issuance of Notes Receivables - (223,000)
Payments of Notes Receivables 40,673 82,327
Purchases of Property, Plant and Equipment,
net 327,464 (357,389)
Net Cash Provided Used by Operating Activities $368,137 $(498,062)
Cash Flows from Financing Activities:
Proceeds from Issuance of Debentures - 450,000
Issue (Cancel) Debt for Capital Leases (315,355) 332,183
Stock Issurance for Acquisitions 400,000 -
Proceeds from Issuance of Debt 15,000 94,746
Payments on Short-Term Debt (49,055)
Payments on Long-Term Debt - (66,223)
Net Cash Provided Used by Financing Activities $50,590 $810,706
Net Increase (Decrease) in Cash $(11,930) $25,540
Cash, Beginning of period 25,540 -
Cash, End of period $13,610 $25,540
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Year for:
Interest $37,290 $44,389
Income Taxes $ - $ -
See accompanying notes to Consolidated Financial Statements.
<PAGE>
CONSOLIDATED MEDICAL MANAGEMENT, INC.
(A Montana Corporation)
Consolidated Statements of Changes in Stockholders' Equity
(Deficit)
For the Years Ended December 31, 1999 and 1998
Common Stock Retained Total
Additional Paid Earnings
Shares Amount In Capital (Deficit)
Balances, January 1,
1998 216,057 216 1,211,863 (1,265,693) (53,614)
Issue stock for
advances 2,500,000 2,500 35,017 37,517
to related party debt
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)
Balance December 31,
1998 5,496,057 $5,496 $1,854,173 $(2,135,495) $(275,826)
Stock issued for
services 517,986 518 51,281 51,799
rendered under 1998
Non-Qualified
Stock Plan
Stock issued for
promotional 424,544 425 127,891 128,316
marketing consulting
services
Stock issued for
services 594,000 594 167,156 167,750
Stock issued for
legal services 500,000 500 88,924 89,424
Stock issued for
acquisitions 400,000 400 399,600 400,000
Stock issued to
debenture holders 113,500 114 114
Net Income (Loss) (710,333) (710,333)
Balance December 31,
1999 8,046,087 8,046 $2,689,025 $(2,845,828)$(148,756)
Common Stock-
$.001 par value, 50,000,000 shares authorized, 8,046,087
shares issued and outstanding as of December 31, 1999 and 5,496,057
shares issued and outstanding as of December 31, 1998.
Preferred Stock-
$.001 par value, 20,000,000 shares authorized, 0 shares
issued and outstanding as of December 31, 1999.
<PAGE>
Consolidated Medical Management, Inc
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Organization
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 provided management services for home healthcare providers
predominately in southern Louisiana. The Company's subsidiary, Independent
Diagnostic Services, Inc., provides diagnostic ultrasound imaging services to
physician offices, clinics, hospital and skilled nursing facilities, and also
provides mobile laboratories that will enable services to be provided for
communities with limited access to technologists, hospitals and diagnostic
laboratories. The Company has formed a subsidiary, Psychiatric Medical
Services, Inc. ("PMSI") to operate a partial-unit mental services hospital in
an existing hospital environment. As of December 31, 1999, all operating
activities has ceased due to the fact that a contract with a major customer
was cancelled in August of 1999.
Principles of Consolidation
The consolidated financial statements include the accounts of Consolidate
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. The Company also owns the other
corporations, Healthscape, Inc. and Health Worx Services, Inc., that was
incorporated in Louisiana on May 11, 1999. These new corporations have been
inactive to date. All significant intercompany transactions and balances have
been eliminated.
Accounting policies of the Company conform with the generally accepted
accounting principles and reflect practices appropriate to the industry in
which it operates. The significant policies are summarized below.
Consolidated Medical Management, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (con't)
Receivables - The Company, through its 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, 1999 and 1998, the Company's deposits did not
exceed the insured limits.
Risks and Uncertainties - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.
Note 2 - Receivables
Receivables consist of the following:
1999
Service Billings $ 51,109
Advances to Trinity Billing -0-
Interest 9,025
Other -0-
60,134
Less: Allowance for -0-
Uncollectible Accounts
$ 60,134
<PAGE>
Consolidated Medical Management, Inc
Notes to Financial Statements
Note 3 - Notes Receivables
100,000
Total Notes Receivable 100,000
Less Current Portion (100,000)
Long Term Portion of Notes Receivable $ -
Note 4 - Property, Plant and Equipment 1999
Furniture $ 6,721
Equipment 33,974
Automotive Assets
under Capital Lease 71,633
112,329
Less Accumulated Depreciation (54,234)
Property, Plant and Equipment- Net $ 58,095
Note 5 - Other Assets 1999
Prepaid Consulting Agreement $ 86,000
(net of accumulated amortization of $34,000)
Deposits 2,844
Other $ 88,844
<PAGE>
Consolidated Medical Management, Inc
Notes to Financial Statements
Note 6 - Lease Commitments
During the period ended December 31, 1999, the Company leased its main
administration office facilities under operating leases, which expired June
1998 and August 1998. Thereafter the office space has been rented on a
month-to-month basis. Monthly rent for the office space totals $625. Lease
expense for the year ended December 31, 1999 and 1998 totaled $15,107 and $
10,400 respectively.
The Company is also leasing equipment used by its 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, 1999 was $10,400.
The Company also leases other office assets, notably a copier, and phone
system, under non-cancelable operating leases expiring through September 2000.
At December 31, 1999, future minimum lease payments under long-term
non-cancelable leases for succeeding fiscal periods is as follows:
2000 $ 12,842
2001 7,926
Thereafter -
Total $ 20,768
Note 7 - Notes Payable 1999
$ 3,760
116,164
Total Notes Payable 119,924
Less Current Portion (57,198)
Long Term Portion $ 54,726
Maturities of Notes Payable over the next five years are:
2000 $ 57,198
2001 and thereafter 54,726
$ 119,924
<PAGE>
Consolidated Medical Management, Inc
Notes to Financial Statements
Note 8 - Capital Leases 1999
$ 31,200
Less Current Portion 31,200
Long Term Portion $ -
Following is a schedule of minimum lease payments
under Capital Leases:
2000 $ 31,200
2001 -0-
2002 -0-
2003 -0-
After -
Total Payments 31,200
Less: Interest included therein (-0-)
Net Payments $ 31,200
Maturities of Capital Lease Obligations payable in
subsequent periods are as follows:
2000 31,200
2001 -
2000 -
2001 -
After -
$ 31,200
Additional Notes:
In December of 1999, the Organization that had sub-leased the equipment to
the Company for operations picked up the three of the four pieces of imaging
equipment. Since the Organization defaulted in its agreement to provide the
equipment, the Company has written off the three units that are not in its
possession. The balance of the one unit is shown as a current liability until
final arrangements are made the Organization.
<PAGE>
Consolidated Medical Management, Inc.
Notes to Financial Statements
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 sixty (60%) percent of the bid price, whichever is greater on the
date of conversion. Accrued interest and any principal amount not converted
to shares of stock will be paid in cash at conversion. As of 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 were 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 $325,000 in debentures. The notes were due July
31, 1999.
The Company has entered into an agreement with Spectrum Financial, Inc.
("Spectrum") whereby Spectrum will exchange shares it owns with the debenture
holder upon exercise of the debenture's conversion option, in satisfaction of
the Company's obligations under the conversion provisions. In exchange,
Spectrum will then receive an unsecured note payable from the Company (see
Note 7) for the face amount of the debenture surrendered. During the year
ended December 31, 1998, Spectrum exchanged a total of 14,000 of its shares in
connection with this agreement and received five notes payable from the
Company totaling $35,000.
1999
Total Convertible Debentures and Notes Payable $ 465,000
Less: Current Portion (465,000)
Long-Term Portion $ -0-
<PAGE>
Consolidated Medical Management, Inc.
Notes to Financial Statements
Note 10 - Income Taxes
The provision for income taxes years ended December 31, 1999 and 1998 consists
of the following:
1999 1998
Current Provision
Federal $ - $ -
State - -
Deferred Provision (Benefit) - (5,797)
Total Income Tax Expense (Benefit) $ - $ (5,797)
The effective tax rate of the Company for 1999 and 1998 differs from the
federal statutory rate primarily due to state income taxes, if any.
Deferred income taxes arise from temporary differences resulting from the
Company's subsidiary utilizing the cash basis of accounting for tax purposes
and the accrual basis for financial reporting purposes. Deferred taxes are
classified as current or noncurrent, depending on the classification of the
assets and liabilities to which they relate. Deferred taxes arising from
timing differences that are not related to an asset or liability are
classified as current or noncurrent depending on the periods in which the
timing differences are expected to reverse. The Company's previous principal
temporary differences relate to revenue and expenses accrued for financial
purposes, which are not taxable for financial reporting purposes. The
Company's 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:
1999 1998
Total Deferred Tax Assets $ 239,879 $ 293,690
Less: Valuation Allowance (239,879) (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 carry forwards totaling $ 1,580,135 , which
expire through 2015.
<PAGE>
Consolidated Medical Management, Inc.
Notes to Financial Statements
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, 1999 and 1998. As of December 31, 1999 and
1998, the Company had 8,046,087 and 5,496,057 shares issued and outstanding,
respectively.
Preferred Stock
In 1998, the Company amended its articles to authorize Preferred Stock. There
are 20,000,000 shares authorized with a par value of $ 0.001. The shares are
non-voting and non-redeemable by the Company. The Company further designated
two series of its Preferred Stock: "Series 'A' $12.50 Preferred Stock" with
2,159,193 shares of the total shares authorized and "Series 'A' $8.00
Preferred Stock," with the number of authorized shares set at 1,079,957
shares. As of December 31, 1999 and 1998 there are no shares issued and
outstanding.
Dividends - Dividends are non-cumulative, however, the holders of such series,
in preference to the holders of any common stock, shall be entitled to
receive, as and when declared payable by the Board of Directors from funds
legally available for the payment thereof, dividends in lawful money of the
United States of America at the rate per annum fixed and determined as herein
authorized for the shares of such series, but no more, payable quarterly on
the last days of March, June, September, and December in each year with
respect to the quarterly period ending on the day prior to each such
respective dividend payment date. In no event shall the holders of either
series receive dividends of more than percent (1%) in any fiscal year. Each
share of both series shall rank on a party 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" of $ 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.
Consolidated Medical Management, Inc.
Notes to Financial Statements
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 (869,802) 3,986,890 ($0.21816)
to common stockholders
Effect Dilutive Securities 30,417 -
Convertible Debt
Dilutive EPS ($839,385) 3,986,890 ($0.2105)
Income (Loss) available
to common stockholders
Earnings per share for the year ended December 31, 1999 is computed as
follows:
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income $ (710,333)
Basic EPS
Income (Loss) available (710,333) 7,356,545 ($0.0916)
to common stockholders
Effect Dilutive Securities - 186,000
Convertible Debt
Dilutive EPS $ (710,333) 7,542,545 ($0.0941)
Income (Loss) available
to common stockholders
The Company has issued convertible debt that, if fully converted, would have
a diluted effect of 186,000 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.
Consolidated Medical Management, Inc.
Notes to Financial Statements
Note 13 - Commitments and Contingencies
There exists some contingencies that the Company may be exposed to additional
liabilities that are not recorded on the Balance Sheet. One, the Company
issued notes payable to two Company that was to be acquired. The balance of
the notes payable is $438,000, but the Company has refused to honor these
notes because the acquiring Companies did not honor their contractual
agreement to provide necessary information to the Company. Secondly, the
Company in indebted to the Organization that the Company had subleased the
imaging equipment. Since the Organization picked up three of the four units,
the Company removed the liabilities from its Balance Sheet. Total contingent
liabilities from the equipment leases that was written off is $ 211,370.
Note 14 - Economic Dependence
During the year ended December 31, 1999 and 1998, approximately forty-seven
(47%) 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 advised
the Company in July 1999 that they would cancel the contract. This left the
Company with no operations from this customer as of December 31, 1999.
Note 15 - Related Party Transactions
During the year ended December 31, 1999, the Company paid fees totaling
$124,616 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 $ 24,999
Jaguar International, Inc. Consulting services provided 35,713
Southern Properties, Inc. Consulting services provided 25,000
Spectrum Financial, Inc. Consulting services provided 39,904
$ 124,616
The Company has 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 1999 was $84,212.
<PAGE>
Consolidated Medical Management, Inc.
Notes to Financial Statements
Note 15 - Related Party Transactions (continuation)
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, 1999, to provide consulting
services. Such consulting services have included identifying potential
targeted companies for acquisition, and negotiating such transactions.
Spectrum is then paid fees, either in cash or by the issuance of the companies
stock. In 1999, the Company paid Spectrum fees totaling $39,904 for such
services.
The Company also has notes payable totaling $116,164 payable to Spectrum
Financial, Inc. as of December 31, 1999. The notes are unsecured, see Note 7.
The Company holds a note receivable from Jaguar International, Inc. which owns
thirty-two ($32%) percent of the outstanding stock as of December 31, 1999, in
the amount of $ 100,000, see Note 3.
Note 16 - Non Cash Financing Transactions
During 1999 and 1998, the Company issued stock in exchange for services of
$375,073 (2,610,000 common shares issued) for year ended December 31, 1998 and
$437,289 (2,036,530 common shares issued) for the year ended December 31, 1999.
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 minimum exercise price
of $4.125 per share. In 1999, 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.
<PAGE>
Consolidated Medical Management, Inc.
Notes to Financial Statements
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
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.
This company has limited operations at year-end because the Company lost three
of its four pieces of imaging equipment.
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.
Consolidated Medical Management, Inc
Notes to Financial Statements
Note 18 - Merger and Acquisitions (continuation)
Acquisition of certain assets of Louisiana Mobile Imaging, Inc.
(continuation)
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 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:
Buy-Out
Equipment Description Lease Term Commencement Date 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
In December of 1999, LMI took three of the four imaging equipment back into
their possession leaving the Company without the use of these machines.
Without these imaging machine, the Company has reduced its operations
dramatically.
Acquisition of Nevada Resort Medical Services, LLC
On June 4, 1999, the Company acquired all of the outstanding ownership
interests of Nevada Resort Medical Services, LLC, in exchange for the issuance
of 200,000 shares of the Company's common stock and payment $238,000 in cash
or notes. Pursuant to the purchase, the Company issued notes payable totaling
$238,000 dated June 4, 1999, due in full on August 4,1999, bearing 10%
interest and secured by a pledge of the interest acquired in this purchase.
The Company has cancelled this contract and wrote off the notes payable due to
non performance of the Nevada Resort Medical Services, LLC to turn over
required records as required by the contract.
Acquisition of Practice Management Group
On June 4, 1999, the Company also acquired all of the outstanding ownership
interests of Practice Management Group in exchange for the issuance of 190,000
shares of the Company's common stock and payment of $200,000 in cash or
notes. Pursuant to the purchase, the Company issued notes payable totaling
$200,000 dated June 4, 1999, due in full on August 4,1999 bearing 10% interest
and secured by a pledge of the interest acquired in this purchase. The Company
has cancelled this contract and wrote off the notes payable due to non-
performance of the Practice Management Group to turn over required records as
required by the contract.
<PAGE>
Consolidated Medical Management, Inc
Notes to Financial Statements
Note 19 - Going Concern
The Company has sustained a net loss of $710,333 and a loss from operations of
$691,141, and has Stockholders' Equity (Deficit) of ($148,756). These losses
and deterioration of its financial condition, as demonstrated by the deficit
in working capital of ($640,969), raise substantial doubt about the Company's
ability to continue as a going concern.
The Company has signed contracts to acquire two MRI centers in the Houston
Texas area. The Company should improve its ability to operate as a going
concern after the completion of these acquisitions. This is further explained
Note 21.
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 31,1999 does not differ materially from the aggregate
carrying values of its financial instruments recorded in the accompanying
balance sheet.
Note 21 - Subsequent Events
The Company has signed contracts to acquire two MRI centers in Houston Texas.
Details of the contracts are as follows:
On December 14, 1999, a contract was signed between the Company and
Diagnostic Imaging Specialties, Inc. ("Diagnostic") in Angleton Texas to
acquire all of the outstanding stock of Diagnostic for $1,500,000 in cash and
stock. The Company is currently performing MRI imaging services and produced
revenues of $ 1,802,285 in 1999 and a net income of $61,449. The contract is
subject to the Company obtaining financing. Sterling Bank in Houston, Texas
has approved the loan and closing is expected in April 2000.
On December 14, 1999, a contract was signed between the Company and
Gulf Coast MRI & Diagnostic, Inc. ("Gulf Coast") in Clear Lake City, Texas to
acquire all of the outstanding stock of Gulf Coast for $4,000,000 in cash and
stock. The Company is currently performing MRI imaging services and produced
revenues in excess of $4,000,000. The contract is subject to the Company
obtaining financing.
The Company has received a commitment letter from The Belgravia Fund LTD to
pledge 10 million dollars in "blue-chip" stock as additional collateral on the
loans referenced above. The loan for the acquisition of Diagnostic has been
approved and expected to close before the end of April 2000.
The Company is actively perusing acquisitions in the medical services field
and with the acquisitions they are expected to be profitable after the
acquisitions are completed.
<PAGE>
Exhibit 23
CLYDE BAILEY P.C.
______________________________________________________________________________
Certified Public Accountant
10924 Vance Jackson #404
San Antonio, Texas 78230
(210) 699-1287(ofc.)
(888) 699-1287 ¨ (210) 691-2911 (fax)
Member:
American Institute of CPA's
Texas Society of CPA's
April 12, 2000
We consent to the use of our report dated March 2, 2000 on the financial
statements of Consolidated Medical Management Inc. dated December 31, 1999,
included in the Form 10KSB.
s/Clyde Bailey
<PAGE>
Exhibit 24
General Employment Contract
Agreement made this 4th day of November 1999, between Consolidated
Medical Management, Inc. having a principal place of business at 11829 Florida
Blvd in Baton Rouge, LA, hereinafter referred to as the Employer, and Douglas
M. Kemp hereinafter referred to as the Employee.
TERMS AND DUTIES
1. The Employee is hereby employed as Chief Executive Office and Chairman
of the Board of Directors of Employer, and shall work at such locations as
Employee deems in the best interest of Employer and other place or places as
may be directed by the Employer, for a term of one year and thereafter at the
will of the Employer.
COMPENSATION
2. As compensation for services rendered under this Agreement, the
Employee shall be entitled to receive from the Employer a salary of $180,000
per year, payable in equal monthly installments of $15,000 on the 1st day of
each month, commencing upon the month of the execution of a letter of intent
executed by Employer and the seller of a medical imaging operation or company,
(the "Base Salary").
3. In addition, Employee shall receive options to purchase one million
(1,000,000) shares of Employer's Common Stock at an option price equal to the
price of said stock if purchased on the date of this agreement in a
transaction by a willing purchaser and a willing seller, neither being under
any obligation to purchase or sell, for each five million dollars of gross
income, or an annualized basis, to be received by Employer as a result of any
acquisitions made during Employee's employment by Employer. Provided however,
the maximum amount of shares to be purchased as a result of acquisitions shall
not exceed four million.
4. Employer shall furnish Employee a full size automobile or equivalent
allowance and pay for/or reimburse Employee for all reasonable expenses
incurred on behalf of the Company, including travel expenses, meals, and
lodging while away from the home office, entertainment expenses incurred in
furthering the Company's business and other reasonable and necessary expenses
incurred on it's behalf.
VACATION PAY
5. The Employee shall, if he is in the active employ of the Employer at
the start of the vacation period as herein defined, be entitled to a two (2)
weeks vacation period during the first two years of employment. The vacation
period will increase to three (3) weeks during the third year of employment,
and four (4) weeks during the fourth year of employment and thereafter. The
vacation period, during which vacations must be taken, shall be between
January 2 and December 31 each year commencing in the year 2000 and the
Employer may elect to stagger the vacations during such period. The Employer
reserves the ultimate right to determine the vacation time.
HOLIDAYS
6. The Employee shall be entitled to a holiday on the following days with
full pay: Christmas Day, New Years Day, Fourth of July, Thanksgiving Day,
Labor Day, and such other days as may be approved by Employer from time to
time.
TERMINATION
7. This agreement may be terminated by either party by giving written
notice of termination to the other. Such termination shall not prejudice any
remedy which the terminating party may have at law or in equity.
EFFECT OF TERMINATION ON COMPENSATION
8. In the event Employee is terminated he shall be entitled to the
compensation earned by him prior to the date of termination computed pro rata
up to the date of termination computed pro rata up to and including that date,
plus any additional compensation as provided for in paragraph 3 above for
transactions then under fully executed or letters of intent, if subsequently
consummated by purchase or sale, and shall not be entitled to any other
compensation.
ELECTION TO BOARD
9. Immediately upon execution, the Board of Directors shall elect Employee
as Chief Executive Officer of Employer and the Directors and/or Shareholders
of Employer shall elect Employee to a position on the Board of Directors and
as Chairman of said Board.
Executed on the 4th of November of 1999
EMPLOYER:
S/ Dale Bachman, Director
EMPLOYEE:
S/ Douglas M Kemp
<PAGE>
EXHIBIT 25
STOCK PURCHASE AGREEMENT
This is a Contract whereby J.M. Mike Rebescher and Larry Parker, herein called
Sellers, agree to sell to Consolidated Medical Management, Inc., herein called
Buyer, who agrees to purchase, upon the terms and provisions hereof all of the
outstanding stock in Diagnostic Imaging Specialties, Inc., a Texas Corporation,
herein called the Company.
(1) SALE AND PURCHASE OF STOCK. Sellers will sell to Buyer at a purchase price
of $1,500,000.00 all of their outstanding stock in Diagnostic Imaging
Specialties, Inc. a Texas Corporation., which constitutes one hundred percent
(100%) of all of the outstanding stock for the purchase pricee set forth
herein by paying the same in cash at closing or part cash and part Buyers
Convertible Debentures or all in Buyers Convertible Debentures at Sellers
option. The said debentures shall be Buyer's Ten Thousand Dollar Convertible
Debentures7 each bearing interest at the rate of eight and one-half percent
per annum (8.5%) payable in quarterly interest installments for five years
from the date of issuance, with one final installment of the principal plus
accrued interest due five years from the dace of issuance, convertible into
common stock of the buyer at any time after eighteen months from issuance by
the holder thereof giving Buyer notice of holder's intent to convert prior to
the maturity date of the debenture. The number of shares to be issued at the
time of conversion shall be determined by dividing sixty Percent of the
closing price of the Buyers common stock on the last trading day prior to the
date of conversion into the face amount of the debenture to be converted and
issuing that number of full shares. Any fractional share and accrued interest
shall be paid to the debenture holder in cash. All stock issued in any
conversion shall be unregistered and subject to all applicable State and
Federal, if any, laws restricting their resale or marketability. The buyer
will assume or liquidate corporate debt and arrange for the release of all
personal liability on the corporate debt.
(2) CLOSING. The closing of such sale and purchase shall take place at the
offices of Buyers Counsel on or before February 15, 2000. At closing, Sellers
will deliver to Buyer, free and clear of all liens, certificates {or the shares
to be sold by them in negotiable form. Upon such delivery the Buyer, subject to
the terms and conditions hereof, will deliver to Sellers the consideration
described in Paragraph one (1) above.
(3) REPRESENTATIONS AND WARRANTY BY SELLERS. Sellers warrant:
(a) The Company is a Corporation duly existing, validly existing, and in
good standing under the laws of the State of Texas. Copies of the Corporation'
s Articles of Incorporation, including all of the amendments thereto, the
Corporation' s By-Laws and minutes shall be delivered to Buyer within five
days of the execution of this Contract.
(b) The Company's entire authorized capital stock consists of 1,000 shares
of which 1,000shares have been issued to Sellers.
(b) Sellers have delivered to Buyer copies of the Financial Statement of
the Company, all of Which are true, complete, and have been prepared in
accordance with generally accepted accounting principles.
(d) Sellers have no knowledge that the Corporation has any liability, or
obligation of any nature, whether absolute, accrued, contingent or otherwise
except those obligations set forth in the Financial Statements to be furnished
to Buyer.
(e) There has been no change in the condition, financial or otherwise, assets,
liabilities or business of the Company as reflected in the Financial
Statements to be furnished other than changes in the ordinary course of
business none of which have been materially adverse to the Corporation.
(f) The Company has good and marketable title to all of its properties and
assets, real and personal, including those reflected on the Financial
Statements to be delivered to Buyer.
(g) The Company has filed all Federal tax returns required by law to be filed
and~ has filed all tax returns required to be filed by the State of Texas and
has paid taxes shown to be due and payable on such returns and all other taxes
and assessments which are payable before they have become delinquent. Sellers
do not know of any proposed tax assessment against the Company. All tax
liabilities are adequately provided for in the Company's books. No income tax
liability of the Company has been asserted by the Internal Revenue Service of
taxes in excess of those already paid. The Company is not subject to or has
not received any requests for any waiver of the stature of limitations or
extensions of time with respect to the assessment of any tax.
(h) The Company has filed all reports required to be filed with any State or
Federal Government or agency thereof regarding the Company's business,
corporate charter, licenses, employees or any other matters for which a report
or filing would be due from the Company.
(i) There are no action~, suits, claims, proceedings, investigations or
litigation's pending, or threatened aqainst or affecting the Company or any of
its assets, or any circumstances known or that should be known to Sellers
which would give rise to any such action, suit, claim, proceeding,
investigation or litigation, and the Company is not in default with respect to
any order, writ, injunction, written request or decree of any Court of
federal, state, municipal, or other governmental department, commission,
board, bureau, agency or instrumentality.
(j) There is no agreement between any of the shareholders of the Company
relating to a right of first refusal or other restrictions on transfers with
respect to the purchase or sale of any such shareholders common stock of the
Company or any voting agreement or voting trust with respect to shares of
Common Stock of the Company.
(k) The Company has all licensees approvals, authorizations, and
qualifications of all federal, state, or local agencies or instrumentatity's
required for it to carry, on its' business as presently conducted. The Company
has made all required reports and filings to and with all relevant
governmental authorities and has submitted full and accurate records of its
business and transactions to all examiners or agents of such authorities.
(l) Sellers warrant that those items on Exhibit attached hereto and made a
part hereof, shall be the assets of the Corporation at the time of the closing
of this transaction.
(m) The Company does not have any employee contracts that are based on profits
of the company as a whole.
(n) Sellers have furnished Buyer with all information about the
Company as requested by Buyer and no facts, representation or warranty contained
in the furnished information, or this Article
(3), including all Exhibits relating thereto, contains any untrue statements
of a material fact, or omits to state any material facts necessary to 'make
any such -representation, warranty, or statement misleading.
(4) ACCESS AND INFORMATION. Sellers will cause the Company to give the Buyer
and Buyer's counsel, accountants and their representatives full access during
normal business hours throughout the period prior to closing access to all of
the Company's properties, books, contracts, commitments and records, and to
furnish the Buyer during such period all such information concerning the
Company's affairs as Buyer my reasonable request.
(5). CONDUCT OF BUSINESS PENDING CLOSING. Sellers warrant and agree that
pending the closing:
(a) The Company's business shall be conducted only in the ordinary course;
(b) No change shall be made in the Company's Certificate of Corporation or
By-Laws except as may be first approved in writing by the Buyer;
(c) No change shall be made on the Company's authorized or issued capital
stock;
(d) No dividend or other distribution or payment shall be declared or made
with respect to the Company's capital stock;
(e) No increase shall be made in the compensation payable, or to become
payable by the Company, to any officer, employee, or agency, nor shall any
bonus Payment or arrangement be made by the Company to or with any of the
above;
(f) No contract or commitment shall be entered into by or on behalf of the
Company except those currently in effect;
(g) No changes shall be made affecting the personnel, compensation
payments, banking, or safe deposit arrangements without Buyer's prior written
approval; and
(h) The Company, except as otherwise requested by Buyer, but without
making any commitment of the Company's or Buyer's behalf, will use its best
efforts to preserve the Company's business organization intact.
(6) CONDITIONS TO OBLIGATIONS OF BUYER. The obligation of Buyer to consummate
this Agreement on the Closing Date, is at the option of Buyer, subject to the
satisfaction of the following conditions at or prior to Closing:
(a) All of the terms, covenants and conditions of this Agreement to be
complied with or performed by Seller on or before the Closing Date shall have
been duly complied with and performed.
(b) All of the representations and warranties made by Seller herein shall
be true as of the Closing Date with the same force and effect as if such
representation and warranties had been made at and as if the Closing Date.
(c) All actions, proceedings, instruments and documents required to
effectuate this Agreement, or incidental hereto, and all other related legal
matters shall be satisfactory in substance and in form to Buyer and it's
counsel, and Buyer and it's counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may
reasonably request.
(d) There have been no investigations the instrumentally challenges or
questions the validity or legality of this Agreement of the transaction
contemplated hereby or in which any person or entity seeks to restrain or
invalidate any of such transaction. There shall be no investigation pending by
any governmental or regulatory authority having legal standing to petition any
Court to restrain or prohibit the consummation of the transaction contemplated
hereby.
(e) There have been no changes after date if this Agreement in the assets,
properties, business, financial condition or prospects of the Company that
could have a material adverse effect on the value of its business as a whole.
(f) Buyer shall have obtained any necessary approvals of licenses from any
governmental or regulatory authority having control or jurisdiction over any
such regulatory authority shall have been duly made, and all waiting periods
incident to any compliance with and such regulatory requirements shall have
expired.
(g) All of the Company's contracts with Healthcare Financial providers,
including, but limited to, Medicare, Insurance Companies, or Health
Maintenance Organizations, are in full force and effect and no default has
been alleged by any party thereto.
(7) COVENANT NOT TO COMPETE. Sellers agree that, from and after closing, they
will not, unless acting as an officer or employee of the Company, or with the
Buyer's prior written consent, directly or indirectly, own, manage, operate,
join, control of, or be connected as an officer, management, operation, or
control of, or be connected as an officer, employee, partner, or otherwise
with any business under any name similar to the Company's name, and that, for
a period of Two (2) years after the closing, they will not in any manner
directly or indirectly compete with or become interested in any competitor in
the Medical Imaging Business, Radiology Services, and the Medical Primary Care
Services, of the Company within five hundred miles of Austin, Texas. The
Sellers agree that the remedy at law for any breach by them of the foregoing
will be inadequate and that the Company and buyer shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
actual damages to the Company or Buyer.
(8) RESIGNATIONS OF OFFICERS AND DIRECTORS. At the Closing, Sellers shall
cause each Officer and member of the Board of Directors designated by Buyer to
execute and deliver to the Company a letter of resignation effective upon
receipt by the Company at a special meeting of the Board of Directors of the
Company to be held at Buyer's request, in the course of which, nominees of the
Buyer shall be elected to the Company's Board of Directors to replace the
resigning Directors.
(9) NOTICES. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given and delivered
when mailed first class, postage prepaid, registered or certified mail, return
receipt requested:
If to Seller: If to Buyer:
J.M. Mike Rebescher Douglas M Kemp
C/o Ted Hollen, Attorney
2323 Hwy 35 8705 Shoal Creek #209
Angleton, Texas 77515 Austin, TX 78757
The interests to be received by Sellers through this agreement have not been
registered under the Securities act of 1933, have been taken for investment,
and may not be sold or offered for sale unless a registration statement under
the Federal Securities Act of 1933, as Amended, with respect to such interests
is then is effect or an exemption from the registration requirements of such
act is then in fact applicable to such interests within six months of Sellers
conversion from debentures to common stock of the Company.
Witness our hands this 14th day of December 1999.
Sellers: Buyer:
S/ Larry Parker MD s/ Douglas M Kemp, President
S/ Mike Rebescher
<PAGE>
EXHIBIT 26
STOCK PURCHASE AGREEMENT
This is a Contract whereby Debra McCombs and Michael McCombs, herein called
Sellers, agree to sell to Consolidated Medical Management, Inc., herein called
Buyer, who agrees to purchase, upon the terms and provisions hereof all of the
outstanding stock in Guld Coast MRI & Diagnostic , Inc., a Texas Corporation,
herein called the Company.
(1) SALE AND PURCHASE OF STOCK. Sellers will sell to Buyer at a purchase price
of $4,000,000.00 all of their outstanding stock in Gulf Coast MRI &
Diagnostic, Inc. a Texas Corporation, which constitutes one hundred percent
(100%) of all of the outstanding stock for the purchase pricee set forth
herein by paying the sum of $3,400,000 at closing or part cash and the balance
payable by the execution and delivery of two hundred of Buyer's Ten Thousand
Convertible Debentures, each bearing interest at the rate of eight and
one-half percent per annum (8.5%) payable in quarterly interest installments
for five years from the date of issuance, or six hundred thousand dollars
cash; at Buyer's option. The said debentures shall be convertible into common
stock of the buyer at any time after eighteen months from issuance by the
holder thereof giving Buyer notice of holder's intent to convert prior to the
maturity date of the debenture. The number of shares to be issued at the time
of conversion shall be determined by dividing sixty Percent of the closing
price of the Buyers common stock on the last trading day prior to the date of
conversion into the face amount of the debenture to be converted and issuing
that number of full shares. Any fractional share and accrued interest shall
be paid to the debenture holder in cash. All stock issued in any conversion
shall be unregistered and subject to all applicable State and Federal, if any,
laws restricting their resale or marketability. The buyer will assume or
liquidate corporate debt and arrange for the release of all personal
liability on the corporate debt.
(2) CLOSING. The closing of such sale and purchase shall take place at the
offices of Buyers Counsel on or before February 15, 2000. At closing, Sellers
will deliver to Buyer, free and clear of all liens, certificates {or the shares
to be sold by them in negotiable form. Upon such delivery the Buyer, subject to
the terms and conditions hereof, will deliver to Sellers the consideration
described in Paragraph one (1) above.
(3) REPRESENTATIONS AND WARRANTY BY SELLERS. Sellers warrant:
(c) The Company is a Corporation duly existing, validly existing, and in
good standing under the laws of the State of Texas. Copies of the Corporation'
s Articles of Incorporation, including all of the amendments thereto, the
Corporation' s By-Laws and minutes shall be delivered to Buyer within five
days of the execution of this Contract.
(b) The Company's entire authorized capital stock consists of 1,000 shares
of which 1,000shares have been issued to Sellers.
(d) Sellers have delivered to Buyer copies of the Financial Statement of
the Company, all of Which are true, complete, and have been prepared in
accordance with generally accepted accounting principles.
(d) Sellers have no knowledge that the Corporation has any liability, or
obligation of any nature, whether absolute, accrued, contingent or otherwise
except those obligations set forth in the Financial Statements to be furnished
to Buyer.
(e) There has been no change in the condition, financial or otherwise, assets,
liabilities or business of the Company as reflected in the Financial
Statements to be furnished other than changes in the ordinary course of
business none of which have been materially adverse to the Corporation.
(f) The Company has good and marketable title to all of its properties and
assets, real and personal, including those reflected on the Financial
Statements to be delivered to Buyer.
(g) The Company has filed all Federal tax returns required by law to be filed
and has filed all tax returns required to be filed by the State of Texas and
has paid taxes shown to be due and payable on such returns and all other taxes
and assessments which are payable before they have become delinquent. Sellers
do not know of any proposed tax assessment against the Company. All tax
liabilities are adequately provided for in the Company's books. No income tax
liability of the Company has been asserted by the Internal Revenue Service of
taxes in excess of those already paid. The Company is not subject to or has not
received any requests for any waiver of the stature of limitations or extensions
of time with respect to the assessment of any tax.
(h) The Company has filed all reports required to be filed with any State or
Federal Government or agency thereof regarding the Company's business,
corporate charter, licenses, employees or any other matters for which a report
or filing would be due from the Company.
(i) There are no action~, suits, claims, proceedings, investigations or
litigation's pending, or threatened aqainst or affecting the Company or any of
its assets, or any circumstances known or that should be known to Sellers
which would give rise to any such action, suit, claim, proceeding,
investigation or litigation, and the Company is not in default with respect to
any order, writ, injunction, written request or decree of any Court of
federal, state, municipal, or other governmental department, commission,
board, bureau, agency or instrumentality.
(j) There is no agreement between any of the shareholders of the Company
relating to a right of first refusal or other restrictions on transfers with
respect to the purchase or sale of any such shareholders common stock of the
Company or any voting agreement or voting trust with respect to shares of
Common Stock of the Company.
(k) The Company has all licensees approvals, authorizations, and
qualifications of all federal, state, or local agencies or instrumentatity's
required for it to carry, on its' business as presently conducted. The Company
has made all required reports and filings to and with all relevant governmental
authorities and has submitted full and accurate records of its business and
transactions to all examiners or agents of such authorities..
(l) Sellers warrant that those items on Exhibit attached hereto and made a
part hereof, shall be the assets of the Corporation at the time of the closing
of this transaction.
(m) The Company does not have any employee contracts that are based on profits
of the company as a whole.
(n) Sellers have furnished Buyer with all information about the
Company as requested by Buyer and no facts, representation or warranty
contained in the furnished information, or this Article
(3), including all Exhibits relating thereto, contains any untrue statements
of a material fact, or omits to state any material facts necessary to 'make
any such -representation, warranty, or statement misleading.
(4) ACCESS AND INFORMATION. Sellers will cause the Company to give the Buyer
and Buyer's counsel, accountants and their representatives full access during
normal business hours throughout the period prior to closing access to all of
the Company's properties, books, contracts, commitments and records, and to
furnish the Buyer during such period all such information concerning the
Company's affairs as Buyer my reasonable request.
(5). CONDUCT OF BUSINESS PENDING CLOSING. Sellers warrant and agree that
pending the closing:
(i) The Company's business shall be conducted only in the ordinary course;
(j) No change shall be made in the Company's Certificate of Corporation or
By-Laws except as may be first approved in writing by the Buyer;
(k) No change shall be made on the Company's authorized or issued capital
stock;
(l) No dividend or other distribution or payment shall be declared or made
with respect to the Company's capital stock;
(m) No increase shall be made in the compensation payable, or to become
payable by the Company, to any officer, employee, or agency, nor shall any
bonus Payment or arrangement be made by the Company to or with any of the
above;
(n) No contract or commitment shall be entered into by or on behalf of the
Company except those currently in effect;
(o) No changes shall be made affecting the personnel, compensation
payments, banking, or safe deposit arrangements without Buyer's prior written
approval; and
(p) The Company, except as otherwise requested by Buyer, but without
making any commitment of the Company's or Buyer's behalf, will use its best
efforts to preserve the Company's business organization intact.
(6) CONDITIONS TO OBLIGATIONS OF BUYER. The obligation of Buyer to consummate
this Agreement on the Closing Date, is at the option of Buyer, subject to the
satisfaction of the following conditions at or prior to Closing:
(h) All of the terms, covenants and conditions of this Agreement to be
complied with or performed by Seller on or before the Closing Date shall have
been duly complied with and performed.
(i) All of the representations and warranties made by Seller herein shall
be true as of the Closing Date with the same force and effect as if such
representation and warranties had been made at and as if the Closing Date.
(j) All actions, proceedings, instruments and documents required to
effectuate this Agreement, or incidental hereto, and all other related legal
matters shall be satisfactory in substance and in form to Buyer and it's
counsel, and Buyer and it's counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may
reasonably request.
(k) There have been no investigations the instrumentally challenges or
questions the validity or legality of this Agreement of the transaction
contemplated hereby or in which any person or entity seeks to restrain or
invalidate any of such transaction. There shall be no investigation pending by
any governmental or regulatory authority having legal standing to petition any
Court to restrain or prohibit the consummation of the transaction contemplated
hereby.
(l) There have been no changes after date if this Agreement in the assets,
properties, business, financial condition or prospects of the Company that
could have a material adverse effect on the value of its business as a whole.
(m) Buyer shall have obtained any necessary approvals of licenses from any
governmental or regulatory authority having control or jurisdiction over any
such regulatory authority shall have been duly made, and all waiting periods
incident to any compliance with and such regulatory requirements shall have
expired.
(n) All of the Company's contracts with Healthcare Financial providers,
including, but limited to, Medicare, Insurance Companies, or Health
Maintenance Organizations, are in full force and effect and no default has
been alleged by any party thereto.
(7) COVENANT NOT TO COMPETE. Sellers agree that, from and after closing, they
will not, unless acting as an officer or employee of the Company, or with the
Buyer's prior written consent, directly or indirectly, own, manage, operate,
join, control of, or be connected as an officer, management, operation, or
control of, or be connected as an officer, employee, partner, or otherwise
with any business under any name similar to the Company's name, and that, for
a period of Two (2) years after the closing, they will not in any manner
directly or indirectly compete with or become interested in any competitor in
the Medical Imaging Business, Radiology Services, and the Medical Primary Care
Services, of the Company within five hundred miles of Austin, Texas. The
Sellers agree that the remedy at law for any breach by them of the foregoing
will be inadequate and that the Company and buyer shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
actual damages to the Company or Buyer.
(8) RESIGNATIONS OF OFFICERS AND DIRECTORS. At the Closing, Sellers shall
cause each Officer and member of the Board of Directors designated by Buyer to
execute and deliver to the Company a letter of resignation effective upon
receipt by the Company at a special meeting of the Board of Directors of the
Company to be held at Buyer's request, in the course of which, nominees of the
Buyer shall be elected to the Company's Board of Directors to replace the
resigning Directors.
(9) NOTICES. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given and delivered
when mailed first class, postage prepaid, registered or certified mail, return
receipt requested:
If to Seller: If to Buyer:
Debra McCombs Douglas M Kemp
C/o Ted Hollen, Attorney
1051 Pineloch Ste 175 8705 Shoal Creek #209
Houston, Texas 77602 Austin, TX 78757
The interests to be received by Sellers through this agreement have not been
registered under the Securities act of 1933, have been taken for investment,
and may not be sold or offered for sale unless a registration statement under
the Federal Securities Act of 1933, as Amended, with respect to such interests
is then is effect or an exemption from the registration requirements of such
act is then in fact applicable to such interests within six months of Sellers
conversion from debentures to common stock of the Company.
Witness our hands this 14th day of December 1999.
Sellers: Buyer:
Gulf Coast MRI & Diagnostic, Inc Consolidated Medical Management Inc.
S/ Debra McCombs, President s/ Douglas M Kemp, President
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