UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-KSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarter year ended March 31, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _______ to ________
Commission File Number: 2-89616
Consolidated Medical Management, Inc.
(Exact name of Registrant as specified in charter)
Montana 82-0369233
State or other jurisdiction of IRS Employer I.D. No.
incorporation or organization
11829 Florida Blvd, Baton Rouge, LA 70815
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (504) 292-3100
Check whether the Issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. (1) Yes [X]
No [ ] (2) Yes [X] No [ ]
State the number of shares outstanding of each of the Issuer's classes of
common equity as of the latest practicable date: At May 5, 2000, there were
14,382,087 common shares of the Registrant outstanding.
<PAGE>
Consolidated Medical Management, Inc.
Baton Rouge, Louisiana
Table of Contents
Page
Part I - Financial Information
Item 1. Financial Statements
Report of Independent Accountant 2
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operation 18
Part II - Other Information
Item 2. Change in Securities 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
Signature 22
<PAGE>
Part I
Financial Information
Item 1. Financial Information
The consolidated financial statements for Consolidated Medical Management
Company, Inc. (the Company) included herein are unaudited but reflect, in
management's opinion, all adjustments, consisting only of normal recurring
adjustments, that are necessary for a fair presentation of the Company's
financial position and the results of its operations for the interim periods
presented. Because of the nature of the Company's business, the results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the full fiscal year. The
financial statements included herein should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1999 (1999 Form 10-KSB).
The consolidated financial statements included herein have been subjected to a
limited review by Clyde Bailey P.C., independent accountant for the Company,
whose report is included herein.
<PAGE>
1
REPORT OF INDEPENDENT ACCOUNTANT
To the Board of Directors
Consolidated Medical Management, Inc.
(A Montana Corporation)
Baton Rouge, Louisiana
We have made a review of the consolidated balance sheet of Consolidated
Medical Management, Inc. as of March 31, 2000,and the related consolidated
statements of operations and cash flows for the three months period ended
March 31, 2000 and 1999, in accordance with the standards established by the
American Institute of Certified Public Accountants. These financial
statements are the responsibility of the Company's management.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and
making inquiries of persons responsible for financial and accounting matters.
It is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1999, and the
related consolidated statements of income, cash flows and changes in common
shareholders' equity (deficit) for the year then ended (not presented herein);
and in our report dated March 2, 2000, we expressed a qualified opinion on
those financial statements. In our opinion , the information set forth in the
accompanying balance sheet as of December 31, 1999, is fairly stated in all
material respects in relation to the balance sheet from which it has been
derived.
Clyde Bailey P.C.
A Corporation of
Certified Public Accountants
San Antonio, Texas
May 8, 2000
2
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Consolidated Medical Managment, Inc.
(A Montana Corporation)
Consolidated Balance Sheet
(Unaudited)
Assets
March 31, 2000 December 31, 1999
Current Assets
Cash $ 69,074 13,610
Receivables, net 64,744 60,134
Prepaid Expenses 8,975 8,975
Notes Receivables 100,000 100,000
Total Current Assets 242,793 182,719
Property and Equipment, net 56,008 58,095
Prepaid Acquisition Costs 400,000 400,000
Other Assets 82,844 88,844
Total Assets 781,645 729,658
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Notes-Payable-Current Portion $ 57,197 57,198
Accounts Payable 260,505 250,039
Accrued Expenses 54,190 51,451
Convertible Debentures 465,000 465,000
and Notes Payable-Current Portion
Total Current Liabilities 836,892 823,688
Notes Payable- Long Term Portion $ 54,726 $ 54,726
Capital Lease Obligation Payable - -
Long-Term Portion
Total Long-Term Liabilities 54,726 54,726
Total Liabilities 891,618 878,414
Commitments and Contingencies:
Stockholders' Equity
Common Stock $ 10,382 8,046
$0.001 par value, 50,000,000
shares authorized 10,382,087
shares issued and outstanding
as of March 31, 2000 and
3,046,087 shares issued and
outstanding as of December 31,
1999.
Additional Paid-in-Capital 2,827,079 2,689,025
Retained Earnings (Deficit) 2,947,434 2,845,827
Total Stockholders' Equity (109,973) (148,756)
Total Liabilities and Stockholders'
Equity (Deficit) $ 781,645 $ 729,658
The accompanying notes are integral part of the consolidated
financial statements.
3
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Consolidated Medical Managment, Inc.
(A Montana Corporation)
Consolidated Statement of Operations
(Unaudited)
Three Months Ended March 31
2000 1999
Revenues $ 76,287 $ 308,376
Operating Expenses
Personnel Costs 68,928 53,245
Consulting - 112,335
Depreciation and Amortization 8,086 3,964
Legal and Professional 50,175 87,634
Office Expense 25,603 47,963
Occupancy 6,114 8,752
Total Operating Expenses $ 158,906 $ 313,893
Income (Loss) from Operations (82,619) (5,517)
Other Income (Expenses)
Other - 9,069
Interest Expense (20,799) (15,823)
Interest Income 1,812 12
18,897 6,742
Income (Loss) Before Income Taxes $(101,606) (12,259)
Income Tax Expense - -
Net Income (Loss) $(101,606) (12,259)
Net Income (Loss) per Share $ (0.0106) $ (0.0023)
The accompanying notes are integral part of the consolidated
financial statements.
4
<PAGE>
Consolidated Medical Managment, Inc.
Baton Rouge, Louisiana
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended March 31
2000 1999
Cash Flows from Operating Activities:
Net Income (Loss) $(101,606) $ (12,259)
Adjustments to Reconcile Net
Income (Loss) to Net Cash Provided
by Operating Activities:
Depreciation and Amortization 8,086 3,964
Non Cash Consulting and Services Paid
by Stock issue 8,600 84,168
(Increase) Decrease in Receivables (4,608) (42,116)
(Increase) Decrease in Prepaid Expenses - (11,588)
(Increase) Decrease in Other Assets - 4,156
(Increase) Decrease in Accounts Payable 10,463 96,773
(Increase) Decrease in Interest Payable 20,910 -
(Increase) Decrease in Accrued Expenses (18,171) (106,812)
Net Cash Provided (Used) by Operating
Activities $ 76,326 16,296
Cash Flows from Investing Activities:
Payments of Notes Receivables - 24,673
Net Cash Provided (Used) by Investing
Activities $ - $ 24,673
Cash Flows from Financing Activities:
Payments on Long-Term Debt - (31,429)
Common Stock 131,791 -
Net Cash Provided (Used) by Financing
Acivities $131,791 $ (31,429)
Net Increase (Decrease) in Cash $ 55,465 $ 9,530
Cash, Beginning of Period 13,610 25,540
Cash, End of Period 69,075 35,070
Supplemental Disclosure of Cash Flow
Information
Cash Paid During the Period for:
Interest: $ - $ 15,823
Income Taxes - -
Supplemental Disclosure of Non-Cash
Financing Information
In the quarter ended March 31, 2000
and 1999, the Company issued common
stock for consulting services rendered
totaling $8,600 and $84,168 respectively.
The accompanying notes are integral part of the consolidated
financial statements.
5
<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.
<PAGE>
6
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 March 31,2000, 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:
Service Billings $ 53,910
Advances to Trinity Billing -0-
Interest 10,834
Other -0-
64,744
Less: Allowance for -0-
Uncollectible Accounts
$ 64,744
7
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 $ -0-
Note 4 - Property, Plant and Equipment
Furniture $ 6,721
Equipment 33,974
Automotive
Assets under Capital Lease 71,633
112,329
Less Accumulated Depreciation (56,321)
Property, Plant and Equipment- Net $ 56,008
Note 5 - Other Assets
Prepaid Consulting Agreement $ 80,000
(net of accumulated amortization of $40,000)
Deposits 2,844
Other
$ 82,844
8
<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 $2000. Lease
expense for the period ended March 31, 2000 and 1999 totaled $6,000 and
$1,875 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.
The Company also leases other office assets, notably a copier, and phone
system, under non-cancelable operating leases expiring through September 2000.
At March 31, 2000, future minimum lease payments under long-term
non-cancelable leases for succeeding fiscal periods is as follows:
2000 $ 9,632
2001 7,926
Thereafter -
Total $ 17,558
Note 7 - Notes Payable
Note payable to GE Capital, financing the phone
system, in the original amount of $10,222, dated
Septemer 16, 1997, payable in thirty-nine
installments of $341 with interest at 12.5%,
secured by a pledge of the phone system $ 3,760
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 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
9
<PAGE>
Consolidated Medical Management, Inc.
NOTES TO FINANCIAL STATEMENTS
Note 8 - Capital Leases
Equipment Capital Leases Payable to leasing companies in original amounts
totaling approximately $399,176, payable in monthly installments ranging
from twenty-four to sixty months, totaling $10,133, with implicit interest
rate of twelve (12%) percent, through March 2003. These leases are secured by
pledges of imaging equipment and related transportation vehicles with original
cost totaling approximately $400,000 as of December 31, 1998. These vehicles
are included in company owned assets described as Capital Lease Assets. See
additional notes in this section. $ 31,200
Less Current Portion 31,200
Long Term Portion $ -0-
Following is a schedule of minimum lease payments
under Capital Leases:
2000 $ 31,200
2001 -0-
2002 -0-
2003 -0-
After -0-
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 -0-
2000 -0-
2001 -0-
After -0-
$ 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.
10
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. 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. 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.
Total Convertible Debentures and Notes Payable $ 465,000
Less: Current Portion (465,000)
Long-Term Portion $ -0-
11
Consolidated Medical Management, Inc.
NOTES TO FINANCIAL STATEMENTS
Note 10 - Income Taxes
The provision for income taxes periods ended March 31, 2000 and 1999 consists
of the following:
Current Provision
Federal $ -
State -
Deferred Provision (Benefit) -
Total Income Tax Expense (Benefit) $ -
The effective tax rate of the Company for 2000 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:
March 31, 2000
Total Deferred Tax Assets $ 328,236
Less: Valuation Allowance (328,236)
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.
12
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 March 31, 2000. As of March 31, 2000 and 1999, the Company
had 19,382,087 and 6,347,838 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 March 31, 2000 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.
13
Consolidated Medical Management, Inc.
NOTES TO FINANCIAL STATEMENTS
Note 12 - Earnings per Share
Earnings per share for the year ended March 31, 2000 is computed as follows:
Weighted-Average
Outstanding
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income (Loss) ($101,606)
Basic EPS
Income (Loss) available (101,606) 9,603,421 ($0.0106)
to common stockholders
Effect Dilutive Securities -0- -
Convertible Debt
Dilutive EPS ($101,606) 9,603,421 ($0.0106)
Income (Loss) available
to common stockholders
Earnings per share for the year ended March 31, 1999 is computed as follows:
Income Shares Per-Share
(Numerator) ( Denominator ) Amount
Net Income $(12,259)
Basic EPS
Income (Loss) available (12,259) 6,347,838 ($0.0023)
to common stockholders
Effect Dilutive Securities -0- -0-
Convertible Debt
Dilutive EPS $(12,259) 6,347,838 ($0.0023)
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.
14
<PAGE>
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 Organizations that were to be acquired. The
balance of the notes payable is $438,000, but the Company has refused to honor
these notes because the acquiring Organizations 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
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.
The Company has notes payable totaling $116,164 payable to Spectrum Financial,
Inc. as of March 31, 2000. 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 March 31, 2000 in the
amount of $ 100,000, see Note 3.
Note 16 - Non Cash Financing Transactions
The Company issued stock in exchange for services of $8,600 (86,000 common
shares issued) for period ended March 31, 2000 and $84,168 (851,781 common
shares issued) for the year ended March 31, 1999.
15
<PAGE>
Consolidated Medical Management, Inc.
NOTES TO FINANCIAL STATEMENTS
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.
Note 18- Merger and Acquisitions
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 owners of Gulf Coast has decided not to honor the
terms of the contract and the Company has withdrawn its plans to pursue with
the purchase of the Gulf Coast.
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.
16
Consolidated Medical Management, Inc.
NOTES TO FINANCIAL STATEMENTS
Note 19- Going Concern
The Company has sustained a net loss of $101,606 from operations, and has
Stockholders' Equity (Deficit) of ($109,973). These losses and deterioration
of its financial condition, as demonstrated by the deficit in working capital
of ($594,099), 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 18.
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 March 31, 2000 does not differ materially from the aggregate
carrying values of its financial instruments recorded in the accompanying
balance sheet.
Note 21- Subsequent Events
There are no other material events that have occurred since the balance sheet
date that warrant disclosure in these financial statements.
17
<PAGE>
Consolidated Medical Management, Inc.
(A Montana Corporation)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis should be read in combination with
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Item 6 of the 1999 Form 10-KSB, the financial statements and
notes contained in Item 7 of the 1999 Form 10-KSB and the interim financial
statements and notes thereto contained elsewhere in this Report.
Certain statements set forth in this discussion and analysis of financial
condition and results of operations including anticipated store openings,
planned capital expenditures and trends in or expectations regarding the
Company's operations constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are based on currently available operating, financial and
competitive information and are subject to various risks and uncertainties.
Actual future results and trends may differ materially depending on a variety
of factors as set forth herein.
RESULTS OF OPERATIONS
For the Three-Month Period Ended March 31, 2000
The Company recognized net loss of ($101,606), (with loss per share of
($0.0106) per common share). During this period , the Company has only
limited operation due to the fact that contracts were lost with a major
customer in 1999 and they only have one piece of equipment to perform medical
treatments. For the period ended March 31, 2000, the Company recognized the
operations of its wholly-owned subsidiaries, Independent Diagnostic Services,
Inc. and Psychiatric Management Services, Inc. (PMSI) with consolidated
operating revenue of $76,287 for the three-month period ended March 31, 2000.
For the three-month period ended March 31, 2000, the Company incurred
operating costs associated with the production of revenue totaling $158,926.
The most significant elements of operating expenses are personnel costs
totaling $68,928 for the quarter. Personnel costs include professional wages
of the personnel who deliver the health-care services required by the
contracts and related administrative salaries and benefits. In the quarter,
the Company incurred legal and professional fees totaling $50,175 primarily
associated with filings and legal matters on stock related issues. The
Company incurred office expense totaling $25,603 for the three-month period.
18
For the Three-Month Period Ended March 31, 1999
The Company recognized net loss of ($12,259), (with loss per share of
($0.0023) per common share). During this period , the Company, since the
acquisition of Consolidated Medical Management, Inc. (the private Louisiana
company) by the public Company (formerly Golden Maple Mining and Leaching,
Inc.), has aggressively pursued acquisitions of related medical service
providers and other entities that, once required, will add to its ability to
provide medical services. The following principal factors contribute to these
results. For the period ended March 31, 1999, the Company recognized the
operations of its wholly-owned subsidiaries, Independent Diagnostic Services,
Inc. and Psychiatric Management Services, Inc. (PMSI) with consolidated
operating revenue of $308,376 for the three-month period ended March 31, 1999.
Operating revenues are composed of management fees associated with providing
services, under contract, to various home-health providers and PHP (Partial
Hospital Programs), primarily located in southern Louisiana and the fee income
from delivery of diagnostic and transportation services associated with the
health care industry. Changes in the home health care industry caused the
Company shift its emphasis away from home health care and toward the PHP
program, and to other medical management programs, which the Company expects
will be more profitable.
For the three-month period ended March 31, 1999, the Company incurred
operating costs associated with the production of revenue totaling $313,893.
The most significant elements of operating expenses are personnel costs totaling
$53,245 for the quarter. Personnel costs include the professional wages of
the personnel who deliver the health-care services required by the contracts
and related administrative salaries and benefits. Another significant
operating cost is consulting fees paid in connection with the medical
management performed by the Company. These costs totaled $112,335 for the
three-month period ending March 31, 1999. In the quarter, the Company
incurred legal and professional fees totaling $87,634 primarily associated
with filings and legal matters on stock related issues. The Company incurred
office expense totaling $47,963 for the three-month period.
FINANCIAL CONDITION
Liquidity and Capital Resources
As of March 2000, the Company sold a total of $500,000 in convertible and
subordinated debentures ($465,000 remains as of March 31, 2000). 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.
19
Liquidity and Capital Resources (continuation)
The Company has a cash balance of $69,074 as of March 31, 2000 and receivables
totaling $64,744 from customers, of which $53,910 (83% of total receivables)
was current. Management has reviewed the collectibility of these accounts,
and determined that the collection is probable.
The Company has advanced funds to Jaguar, Inc. (a shareholder), in the form of
notes receivable totaling $100,000 as of March 31, 2000. The terms of the
notes 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.
The Company's accounts payable and accrued expenses total $323,022 as of March
31, 2000. This compares to $301,490 as of December 31, 1999. The Company's
obligations under these accounts have aged since December 31, 1999, with
$306,871 of these amounts owed for more than ninety days.
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 owners of Gulf Coast has decided not to honor the
terms of the contract and the Company has withdrawn its plans to pursue with
the purchase of Gulf Coast.
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.
20
Part II
Other Information
Item 2. Changes in Securities and Use of Proceeds
Since the end of the fiscal year ended December 31, 1999, and through the end
of the quarter ended March 31, 2000, the Company has sold the following
shares of common stock of the company without registration under the
Securities Act of 1993.
a) On February 11, 2000, the Company issued 2,000,000 shares of common
stock to Jacob International for payment in cash of $100,000.
b) On February 17, 2000, the Company issued 250,000 shares of common
stock to J Brantley JV and Associates for legal services and settle a payable
owed by the Company.
c) On February 17, 2000, the Company issued 86,000 to Lynn Simon, a
director of the Company for services as a medical services director of the
Company.
All of the aforesaid securities set forth immediately above were issued
without registration under the Act by reason of the exemption from
registration afforded by the provisions of Section 4(2) thereof, as
transactions by an issuer not involving any public offering, each recipient of
securities having delivered appropriate investment representations to
Registrant with respect thereto and having consented to the imposition of
restrictive legends upon the certificates evidencing such securities. No
underwriting discounts of commission were paid in connection with such
issuances.
Item 5. Other Information
(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
(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 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are included as part of this report.
Exhibit No Description of Exhibit
None
(b) No reports on Form 8-K were filed during the quarter covered by this
report.
21
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Consolidated Medical Management, Inc.
By - Douglas M. Kemp - Chief Executive Officer
Date: May 11, 2000
<PAGE>
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
May 11, 2000
I have preformed a "limited review" and consent to the use, of my report dated
May 8, 2000, in the Form 10QSB of Consolidated Medical Management Inc. dated
March 31, 2000, included herein and to the reference made to me.
S/Clyde Bailey
Clyde Bailey
22
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 69,074
<SECURITIES> 0
<RECEIVABLES> 64,744
<ALLOWANCES> 0
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<CURRENT-ASSETS> 242,793
<PP&E> 56,008
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