<PAGE> 1
=================================================================
__________________________________
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
__________________________________
AMENDMENT NO. 2 TO THE
FORM 10
General Form for Registration of Securities
File No. 0-29462
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
MEDICAL MANAGEMENT SYSTEMS, INC.
(Exact name of registrant as specific in its charter)
Colorado 95-4121451
(State of Incorporation) (I.R.S. Employer I.D. No.)
5459 South Iris Street
Littleton, Colorado 80123
(Address of principal executive offices, including zip code)
Telephone number, including area code: (303) 932-9998
Copies to: Conrad C. Lysiak, Esq.
West 601 First Avenue, Suite 503
Spokane, Washington 99204
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
Exhibit Index begins on page 39
=================================================================
<PAGE> 2
ITEM 1. BUSINESS.
HISTORY, ORGANIZATION AND CHANGE OF CONTROL
MEDICAL MANAGEMENT SYSTEMS, INC. (the "Company"), was
organized under the laws of the State of Colorado, on July 30,
1987. The Company was formed for the purpose of creating a
corporate vehicle to seek, investigate and, if such investigation
warranted, acquire an interest in business opportunities.
On March 24, 1989, the Company completed a public offering
of 150,000 Units. Each Unit consisted of one share of its no par
value common stock (the "Common Stock"), one Class A common stock
purchase warrant and one Class B common stock purchase warrant.
The Class A and Class B warrants expired on October 19, 1992. In
connection with the offering, the underwriter received for $100 a
purchase warrant for 15,000 shares of common stock at $0.60 per
share.
On September 10, 1991, the Company's Board of Directors
approved a 20 to 1 reverse stock split.
On September 30, 1991, pursuant to a Share Exchange
Agreement (the "Exchange"), the Company issued an aggregated of
4,680,000 shares of Common Stock in connection with its
acquisition of Staley Corp. ("Staley"), a privately held
development stage Colorado corporation, wherein the Company
acquired all of the issued and outstanding shares of Staley.
Prior to the exchange, the Company had an aggregate of 610,000
shares issued and outstanding. On the same date the Company's
name was changed to Dog World, Inc. In accordance with the
Agreement, all but one of the Company's officers and directors
resigned, and the directors and executive officers of Staley were
elected directors and executive officers of the Company.
From February 1, 1992 to November 1, 1993, the Company
operated a dog training and obedience facility located in Grand
Prairie, Texas under the name Dogs Only, Inc., a wholly owned
subsidiary of Dog World, Inc. The Company also offered dog
boarding and kenneling, retail sales of dog and cat care
supplies, dog and cat food, as well as, veterinary services
through arrangements with independent veterinarians. Prior to
February 1, 1992, the Company was considered to be in the
development stage and had not generated any revenues.
During the second and third quarter of fiscal 1993, the
Company raised $543,100 in a private placement sale of 1,810,333
shares of Common Stock. The proceeds from this sale of stock
were used to open a new retail facility, enhance the Company's
veterinary service capabilities and to repay outstanding bank
debt.
<PAGE> 3
In June 1993, using the proceeds from the private placement,
the Company opened a second retail facility in Irving, Texas
under the trade name Vet Works+. This facility provided a wide
range of total pet care services including a complete veterinary
hospital, "Dogs Only" discipline training, all breed grooming,
and indoor lodging and boarding, as well as, the sale of pet
foods and pet care products. The original Dogs Only facility in
Grand Prairie, Texas was consolidated on November 1, 1993 with
the Company's Irving, Texas Vet Works+ facility.
On June 1, 1993, the Company entered into an agreement with
Willis C. Dearing, DVM, to purchase the assets of Dearing Animal
Hospital, Inc. for cash. This agreement allowed the Company to
offer veterinary services to patrons of its stores, also provided
for certain stock option arrangements with Dr. Dearing.
In 1994, the Company issued 860,000 shares of Common Stock
to individuals in a private placement that raised net cash
proceeds of $250,471.
On March 15, 1995, the Company filed a Form 15 with the SEC
to terminate its duty to file reports under section 13 and 15(d)
of the Securities Exchange Act of 1934.
In April 1995, substantially all the Company's assets and
business operations were sold and the Company subsequently
changed its name to Medical Management Systems, Inc.
On June 26, 1995, the Company issued 6,000,000 shares to
Jack R. Daugherty, a former officer and director of the Company,
in lieu of payment of a loan in the amount of $150,000 due to Mr.
Daugherty.
On June 26, 1995, the Company issued 3,000,000 shares to
Donald L. Parnell, a former officer and director of the Company,
in lieu of payment of salary in the amount the $75,000 due Mr.
Parnell.
On June 26, 1995, the Company issued 400,000 shares to Gary
A. Agron, in lieu of payment of legal fees in the amount of
$10,000.
In August 1996, Mr. Davis, the Company's President, acquired
9,825,498 shares from Jack Daugherty and Donald Parnell, former
officers and directors of the Company and the Company changed its
business purpose to that of a "shell" corporation.
On May 7, 1997, the Company entered into an Agreement and
Release with Vet Works+ and Willis C. Dearing, DVM, modifying
their previous agreement dated March 28, 1995. The Agreement and
Release is a settlement of all disputes and claims between the
parties. The Agreement and Release provides the surrender and
<PAGE> 4
cancellation of the options granted to Dr. Dearing under the 1994
Incentive Stock Option Agreement under the Dog World, Inc.
Incentive Stock Option Plan.
In June 1997, Mr. Davis transferred 3,275,000 shares of
Common Stock each to Mr. Lee, the Company's Secretary, and Mr.
Van Gundy, the Company's Treasurer, respectively.
The Company is filing this Form 10 on a voluntary basis. It
has no obligations pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Company believes that
by filing such Form 10 and being obligated to file reports
pursuant to Section 13 of the Exchange Act, it can attract an
acquisition candidate of greater financial value with a track
record of success. While the Company believes it will be a more
attractive acquisition candidate, there is no assurance that the
foregoing assumption is correct.
The Company believes that there is a demand by non-public
corporations for shell corporations that have a public
distribution of securities, such as the Company. The Company
believes that demand for shells has increased dramatically since
the Securities and Exchange Commission (the "Commission") imposed
burdensome requirements upon "blank check" companies pursuant to
Reg. 419 of the Securities Act of 1933 (the "Act"). According to
the Commission, Rule 419 was designed to strengthen regulation of
securities offerings by blank check companies, which Congress has
found to have been a common vehicle for fraud and manipulation in
the penny stock market. See Securities Act Releases No. 6891
(April 17, 1991), 48 SEC Docket 1131 and No. 6932 (April 13,
1992) 51 Docket 0382, SEC Docket 0382. The foregoing regulation
has decreased, substantially, the number of "blank check"
offerings filed with the Commission, and as a result has
stimulated an increased demand for shell corporations. While the
Company has made the foregoing assumption, there is no assurance
that the same is accurate or correct and accordingly, no
assurance that the Company will be acquired by or acquire an
existing non-public entity.
GENERAL
The Company proposes to seek, investigate and, if warranted,
acquire an interest in one or more business opportunities
ventures. As of the date hereof the Company has no business
opportunities or ventures under contemplation for acquisition but
proposes to investigate potential opportunities in the form of
investors or entrepreneurs with a concept which has not yet been
placed in operation, or in the form of firms which are developing
companies. The Company may seek out established businesses which
may be experiencing financial or operation difficulties and are
in need of the limited additional capital the Company could
provide. The Company anticipates that it will seek to merge with
<PAGE> 5
or acquire an existing business. After the merger or acquisition
has taken place, the surviving entity will be the Company
(Medical Management Systems, Inc.), however, management from the
acquired entity will in all likelihood operate the Company.
There is however, a remote possibility that the Company may seek
to acquire and operate an ongoing business, in which case the
existing management might be retained. Due to the absence of
capital available for investment by the Company, the types of
business seeking to be acquired by the Company will no doubt be
smaller and higher risks types of businesses. In all likelihood,
a business opportunity will involve the acquisition of or merger
with a corporation which does not need additional cash but which
desires to establish a public trading market for its Common
Stock. Accordingly, the Company's ability to acquire any
business of substance will be extremely limited.
The Company does not propose to restrict its search for
investment opportunities to any particular industry, or
geographical location and may, therefore, engage in essentially
any business, anywhere, to the extent of its limited resources.
It is anticipated that business opportunities will be
available to the Company and sought by the Company from various
sources, throughout the United States including its Officers and
Directors, professional advisors such as attorneys and
accountants, securities broker/dealers, venture capitalists,
members of the financial community, other businesses and others
who may present solicited and unsolicited proposals. The reason
for this is to attract the most favorable business opportunities
and ventures available. Management believes that business
opportunities and ventures will become available to it, due to a
number factors, including, among others: (a) management's
willingness to enter into unproven, speculative ventures; (b)
management's contacts and acquaintances; and, (c) the Company's
flexibility with respect to the manner in which it may structure
potential financing and/or acquisitions. However, there is no
assurance that the Company will be able to structure or finance
and/or acquire any business opportunity or venture.
OPERATION OF THE COMPANY
The Company intends to search throughout the United States
for a merger/acquisition candidate, however, because of the lack
of capital, the Company believes that the merger/acquisition
candidate will be conducting business within a limited
geographical area. The Company, however, intends to maintain its
corporate headquarters and principal place of business at 5459
South Iris Street, Littleton, Colorado 80123. All corporate
records will be maintained at said office, and it is anticipated
that all shareholders' meetings will take place in Colorado. In
the event that a merger or acquisition of the Company takes
place, no assurance can be given that the corporate records or
<PAGE> 6
headquarters will continue to be maintained at Littleton,
Colorado, or that shareholders' meetings will be held in
Colorado.
The Officers and Directors will personally seek
acquisition/merger candidates and/or orally contact individuals
or broker/dealers and advise them of the availability of the
Company as an acquisition candidate. The Officers and Directors
will review material furnished to them by the proposed
merger/acquisition candidates and decide if a merger/acquisition
is in the best interests of the Company and its shareholders.
The Company may employ outside consultants, however, until a
merger/acquisition candidate has been targeted by the Company,
management believes that it is impossible to consider the
criteria that will be used to hire consultants. While the
Company may hire independent consultants, it has not considered
any criteria regarding their experience, the services to be
provided, or the term of service. The Company has not had any
discussions with any consultants and there are no agreements or
understandings with any consultants.
Other than as disclosed herein, there are no other plans for
accomplishing the business purpose of the Company.
SELECTION OF OPPORTUNITIES
The analysis of new business opportunities will be
undertaken by or under the supervision of the Officers and
Directors, none of whom is a professional business analyst or has
any previous training or experience in business analysis.
Inasmuch as the Company will have no funds available to it in its
search for business opportunities and venture, the Company will
not be able to expend significant funds on a complete and
exhaustive investigation of such business or opportunity. The
Company will however, investigate, to the extent believed
reasonable by its management, such potential business
opportunities or ventures.
As part of the Company's investigation, Officers and
Directors will meet personally with management and key personnel
of the firm sponsoring the business opportunity, may visit and
inspect plants and facilities, obtain independent analysis or
verification of certain information provided, check references of
management and key personnel, and conduct other reasonable
measures, to the extent of the Company's limited financial
resources and management and technical expertise.
Prior to making a decision to recommend to shareholders
participation in a business opportunity or venture, the Company
will generally request that it be provided with written materials
regarding the business opportunity containing such items as a
<PAGE> 7
description of products, services and company history; management
resumes; financial information; available projections with
related assumptions upon which they are based; evidence of
existing patents, trademarks or service marks or rights thereto;
present and proposed forms of compensation to management; a
description of transactions between the prospective entity and
its affiliates during relevant periods; a description of present
and required facilities; an analysis of risks and competitive
conditions; and, other information deemed relevant.
It is anticipated that the investigation of specific
business opportunities and the negotiation, drafting and
execution of relevant agreements, disclosure documents and other
instruments will require substantial management time and
attention and costs for accountants, attorneys and others.
$17,503 in legal and accounting expenses, $2,241 in stock
transfer fees and $1,853 in travel and miscellaneous expenses
were paid by Mr. Davis and Mr. Lee, Officers and Directors of the
Company. Mr. Davis and Mr. Lee anticipate funding the Company's
operations, including providing funds necessary to search for
acquisition candidates. Mr. Davis and Mr. Lee anticipate funding
such expenses until an acquisition candidate is found, without
regard to the amount involved. Accordingly, no alternative cash
resources have been explored.
There are no loan agreements or understandings. The Company
will not make any loans to officers or directors, nor will the
Company make loans to any acquisition candidate. Money advanced
by Messrs. Davis and Lee will be repaid by the Company when
adequate funds become available.
The Company will have unrestricted flexibility in seeking,
analyzing and participating in business opportunities. In its
efforts, the Company will consider the following kinds of
factors:
(a) Potential for growth, indicated by new technology,
anticipated market expansion or new products;
(b) Competitive position as compared to other firms engaged
in similar activities;
(c) Strength of management;
(d) Capital requirements and anticipated availability of
required funds from future operations, through the sale of
additional securities, through joint ventures or similar
arrangements or from other sources; and,
(e) Other relevant factors.
<PAGE> 8
Potentially available business opportunities may occur in
many different industries and at various stages of development,
all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and
complex. Potential investors must recognize that due to the
Company's limited capital available for investigation and
management's limited experience in business analysis, the Company
may not discover or adequately evaluate adverse facts about the
opportunity to be acquired.
The Company is unable to predict when it may participate in
a business opportunity. It expects, however, that the analysis
of specific proposals and the selection of a business opportunity
may take several months or more. The Company does not plan to
raise any capital at the present time, by private placements,
public offerings, pursuant to Regulation S promulgated under the
Act, or by any means whatsoever. Further, there are no plans,
proposals, arrangements or understandings with respect to the
sale or issuance of additional securities prior to the location
of an acquisition or merger candidate.
FORM OF ACQUISITION
The manner in which the Company participates in an
opportunity will depend upon the nature of the opportunity, the
respective needs and desires of the Company and the promoters of
the opportunity, and the relative negotiating strength of the
Company and such promoters. The exact form or structure of the
Company's participation in a business opportunity or venture will
be dependent upon the needs of the particular situation. The
Company's participation may be structured as an asset purchase
agreement, a lease, a license, a joint venture, a partnership, a
merger, or acquisition of securities.
As set forth above, the Company may acquire its
participation in a business opportunity through the issuance of
Common Stock or other securities in the Company. Although the
terms of any such transaction cannot be predicted, it should be
noted that in certain circumstances the criteria for determining
whether or not an acquisition is so-called "tax free"
reorganization under Section 368(a)(1) of the Internal Revenue
Code of 1954, as amended, may depend upon the issuance to the
shareholders of the acquired company of at least eighty percent
(80%) of the Common Stock of the combined entities immediately
following the reorganization. If a transaction were structured
to take advantage of these provisions rather than other "tax
free" provisions provided under the Internal Revenue Code all
prior shareholders may, in such circumstances, retain twenty
percent (20%) or less of the total issued and outstanding Common
Stock. If such a transaction were available to the Company, it
will be necessary to obtain shareholder approval to effectuate a
reverse stock split or to authorize additional shares of Common
<PAGE> 9
Stock prior to completing such acquisition. This could result in
substantial additional dilution to the equity of those who were
shareholders of the Company prior to such reorganization.
Further, extreme caution should be exercised by any investor
relying upon any tax benefits in light of the proposed new tax
laws. It is possible that no tax benefits will exist at all.
Prospective investors should consult their own legal, financial
and other business advisors.
The present management and the shareholders of the Company
in this offering will in all likelihood not have control of a
majority of the voting shares of the Company following a
reorganization transaction. In fact, it is most probable that
the shareholders of the acquired entity will gain control of the
Company. Further, management intends to make available for
purchase by shareholders of the acquired entity of up to 75% of
the shares of Common Stock owned by them. The terms of sale of
the shares presently held by officers and/or directors of the
Company will not be afforded to other shareholders of the
Company. As part of such a transaction, all or a majority of the
Company's Directors may resign and new Directors may be appointed
without any vote by shareholders.
Present stockholders have not agreed to vote their
respective shares of Common Stock in accordance with the vote of
the majority of all non-affiliated future stockholders of the
Company with respect to any business combination.
The Company may not borrow funds and use funds to make
payments to Company promoters, management or their affiliates or
associates.
The Company has an unwritten policy that it will not acquire
or merge with a business or company in which the Company's
management or their affiliates or associates directly or
indirectly have an ownership interest. Management is not aware
of any circumstances under which the foregoing policy will be
changed and management, through their own initiative, will not
change said policy.
The Company is required by the regulations promulgated under
the Securities Exchange Act of 1934 to obtain and file with the
Commission, audited financial statements of the acquisition
candidate not later than sixty days from the date the Form 8-K is
due at the Commission disclosing the acquisition/merger.
RIGHTS OF DISSENTING SHAREHOLDERS
Under the Colorado Corporation Code, a business
combination typically requires the approval of two-thirds of the
outstanding shares of both participating companies. The
Company's Articles of Incorporation reduce the voting requirement
<PAGE> 10
to a majority of the Company's outstanding Common Stock.
Shareholders who vote against any business combination in certain
instances may be entitled to dissent and to obtain payment for
their shares pursuant to Sections 7-4-123 and 7-4-124 of the
Colorado Corporation Code. The requirement of approval of the
Company's shareholders in any proposed business combination is
limited to those transactions identified as a merger or a
consolidation. A business combination identified as a share
exchange does not require the approval of the Company's
shareholders, nor does it entitle shareholders to dissent and
obtain payment for their shares. Accordingly, unless the
acquisition is a statutory merger, requiring shareholder
approval, the Company will not provide shareholders with a
disclosure document containing audited or unaudited financial
statements, prior to such acquisition.
Prior to any business combination for which shareholder
approval is required, the Company intends to provide its
shareholders complete disclosure documentation concerning the
business opportunity or target company and its business. Such
disclosure will in all likelihood be in the form of a proxy
statement which will be distributed to shareholders at least 20
days prior to any shareholder's meeting.
None of the Company's officers, directors, promoters, their
affiliates or associates have had any preliminary contact or
discussions with and there are no present plans, proposals,
arrangements or understandings with any representatives of the
owners of any business or company regarding the possibility of an
acquisition or merger transaction contemplated in this
registration statement.
NOT AN "INVESTMENT ADVISER"
The Company is not an "investment adviser" under the Federal
Investment Advisers Act of 1940, which classification would
involve a number of negative considerations. Accordingly, the
Company will not furnish or distribute advice, counsel,
publications, writings, analysis or reports to anyone relating to
the purchase or sale of any securities within the language,
meaning and intent of Section 2(a)(11) of the Investment Advisers
Act of 1940, 15 U.S.C. 80b2(a)(11).
NOT AN "INVESTMENT COMPANY"
The Company may become involved in a business opportunity
through purchasing or exchanging the securities of such business.
The Company does not intend however, to engage primarily in such
activities and is not registered as an "investment company" under
the Federal Investment Company Act of 1940. The Company
believes such registration is not required.
<PAGE> 11
The Company must conduct its activities so as to avoid
becoming inadvertently classified as a transient "investment
company" under the Federal Investment Company Act of 1940, which
classification would affect the Company adversely in a number of
respects. Section 3(a) of the Investment Company Act provides
the definition of an "investment company" which excludes an
entity which does not engage primarily in the business of
investing, reinvesting or trading in securities, or which does
not engage in the business of investing, owning, holding or
trading "investment securities" (defined as "all securities other
than United States government securities or securities of
majority-owned subsidiaries") the value of which exceeds forty
percent (40%) of the value of its total assets (excluding
government securities, cash or cash items). The Company intends
to implement its business plan in a manner which will result in
the availability of this exemption from the definition of
"investment company." The Company proposes to engage solely in
seeking an interest in one or more business opportunities or
ventures.
Effective January 14, 1981, the Securities and Exchange
Commission adopted Rule 3a-2 which deems that an issuer is not
engaged in the business of investing, reinvesting, owning,
holding or trading in securities for purposes of Section
3(a)(1), cited above, if, during a period of time not exceeding
one year, the issuer has a bona fide intent to be engaged
primarily, or as soon as reasonably possible (in any event by the
termination of a one year period of time), in a business other
than that of investing, reinvesting, owning, holding or trading
in securities and such intent is evidenced by the Company's
business activities and appropriate resolution of the Company's
Board of Directors duly adopted and duly recorded in the minute
book of the Company. The Rule 3a-2 "safe harbor" may not be
relied on more than a single time.
COMPANY'S OFFICE
The Company's offices are located at 5459 South Iris Street,
Littleton, Colorado 90123, and the telephone number is (303)
932-9998. The Company's office is located in the home of Philip
Davis, the Company's President and a member of the Board of
Directors. Approximately nine square feet are allocated to the
Company on a rent free basis. The office will remain at Mr.
Davis's home until an acquisition has been concluded. There are
no written documents memorializing the foregoing.
There are no preliminary agreements or understandings with
respect to the office facility subsequent to the completion of an
acquisition. Upon a merger or acquisition, the Company intends
to relocate its office to that of the acquisition candidate.
<PAGE> 12
EMPLOYEES
The Company is a development stage company and currently has
no employees other than certain of its Officers and Directors.
See "Management." Management of the Company expects to use
consultants, attorneys and accountants as necessary, and does not
anticipate a need to engage any full-time employees so long as it
is seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection
with the decision whether or not to acquire or participate in a
specific business opportunity.
ITEM 2. FINANCIAL INFORMATION.
SELECTED CONSOLIDATED FINANCIAL DATA
The selected financial data presented below has been derived
from the financial statements of the Company, which financial
statements have been audited by Hein + Associates, LLP,
independent certified public accountants, as indicated in their
report included elsewhere herein.
The following table summarized certain financial information
and should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
and the Financial Statements and related notes included elsewhere
in this Prospectus. For the reasons set forth in this Form 10
registration statement the information shown below may not be
indicative of the Company's future results of operations.
(In order to transmit this document via EDGAR, the Company's
Statement of Loss and Accumulated Deficit Table has been
formatted to fit across two pages. This is page 1 of page 2.)
<TABLE>
<CAPTION> Four
Months
Years Ended December 31 Ended
1996 1995 1994 12/31/93
<S> <C> <C> <C> <C>
Net Operating revenues $ - $ - $ - -
Income (Loss) from
continuing operations (8,964) (102,098) - -
Income (loss) from
continuing operations
per share - (0.01) - -
Income (loss) from
discontinued operations (60,000) (167,127) (363,625) (126,992)
Income (loss) for
extraordinary items - - - -
Balance Sheet Data:
Total Assets - 68,964 343,330 407,174
Long term debt - 150,000 172,351 76,023
Stockholders' Equity (14,358) (180,394) 88,831 291,985
<PAGE> 13
(In order to transmit this document via EDGAR, the Company'
Statement of Loss and Accumulated Deficit Table has been
formatted to fit across two pages. This is page 2 of page 2.)
Six Months
Years Ended August 31 Ended
1993 1992 6/30/97 6/30/96
<C> <C> <C> <C>
$ - $ - $ - $ -
- - (21,597) (8,964)
- - - -
(267,571) (126,684) 10,000 (60,000)
- - 6,358 -
394,874 157,171 1,993 -
13,466 - - -
328,977 53,448 (19,597) (14,358)
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITIONS
The Company is considered to be in the development stage as
defined in Statement of Financial Accounting Standards No. 7.
There have been no operations since April 1995 when the Company
sold substantially all of its assets in pet care and veterinary
services. Since April 1995, the Company has been dormant.
On May 7, 1997, the Company reached an agreement with a
former director of the Company whereby the former director agreed
to pay $8,500 in cash along with a promissory note for $1,500 in
settlement of a dispute involved in the sale of Company assets in
April 1995. In addition, the former director agreed to surrender
options granted him to acquire 985,333 shares of the Company's
common stock and release the Company from all claims, demands and
obligations. The Company accepted the cash and note in
satisfaction of a $60,000 note due from the former director which
had been written off and recorded as a loss in its financial
statements for the year ended December 31, 1996. The promissory
note carries interest at 12%, is unsecured and is due with
accrued interest six months from the agreement date.
The Company used $8,000 of the cash received to settle an
outstanding trade payable. The difference between the amount that
had been due, $14,358, and the amount paid has been recognized as
income from relief of indebtedness.
<PAGE> 14
In August 1995, the Company changed its business purpose to
a blank check company.
Liquidity and Capital Resources.
The Company has 18,310,330 shares of Common Stock
outstanding. The Company has no current operating history and no
material assets. The Company has $493.00 in cash as of June 30,
1997.
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company has no material assets.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth as of July 31, 1997, the
Common Stock ownership of each person known by the Company to be
the beneficial owner of five percent or more of the Company's
Common Stock, each director individually and all officers and
directors of the Company as a group. Each person has sole voting
and investment power with respect to the shares of Common Stock
shown, and all ownership is of record and beneficial.
Name and address Number of Percent
of owner Shares Position of Class
- ----------------------------------------------------------------
Philip J. Davis 3,519,198 President and a member 19.22%
5459 South Iris Street of the Board of Directors
Littleton, CO 80123
John C. Lee [2] 3,275,000 Secretary and a member 17.90%
5410 E. Long Pl. of the Board of Directors
Littleton, CO 80122
Charles C.
Van Gundy[3] 3,275,000 Treasurer and a member 17.90%
210 Dawson Drive of the Board of Directors
Castle Rock, CO 80104
All officers and 10,034,198 55.02%
directors as a
group (3 persons)
Gary A. Agron 942,000 5.14%
5445 DTC Parkway
Suite 570
Englewood, CO 80111
<PAGE> 15
Jack Daugherty 2,087,835 11.4%
1600 West 7th Street
Fort Worth, TX 76012
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
Officers and Directors.
The officers and directors of the Company are as follows:
Name Age Position
Philip J. Davis 41 President and a member of the
Board of Directors
John C. Lee 42 Secretary and a member of the
Board of Directors
Charles C. Van Gundy 45 Treasurer and a member of the
Board of Directors
All directors hold office until the next annual meeting of
shareholders and until their successors have been elected and
qualified. The Company's officers are elected by the Board of
Directors at the annual meeting after each annual meeting of the
Company's shareholders and hold office until their death, or
until they resign or have been removed from office.
Philip J. Davis - President and a member of the Board of
Directors
Mr. Davis has been the President and a member of the Board
of Directors of the Company, since August 1996. Since December
1996, Mr. Davis has been the President, Treasurer and a member of
the Board of Directors of Mizar Energy Company, a Colorado
corporation, which was formed for the purpose of buying, selling
and producing oil and gas, and buying and selling oil and gas
leases. Since December 1992, Mr. Davis is a self-employed
consultant. From January 1991 to November 1992, Mr. Davis was
affiliated with Private Investors Cartel, Ltd., a securities
broker/dealer, as a trader and principal thereof. From
September 1984 to December 1990, Mr. Davis was the President and
a member of the Board of Directors of Richfield Securities, Inc.,
a securities broker/dealer. On January 27, 1992, the District
Business Conduct Committee of the National Association of
Securities Dealers, Inc. rendered a decision against Mr. Davis
finding that Mr. Davis, Richfield Securities, Inc. and another
individual charged unfair and fraudulent markups in connection
with the sale of securities. Further, the District Business
Conduct Committee found that Mr. Davis and Richfield Securities,
<PAGE> 16
Inc. failed to establish and implement written supervisory
procedures to detect and prevent the markup violations.
Richfield Securities, Inc. was fined $30,133.97 and suspended
from membership in the National Association of Securities
Dealers, Inc. for one year and Mr. Davis was censured, fined
$30,133.97, suspended from the National Association of Securities
Dealers for one year and required to requalify by examination
prior to becoming associated with any member of the National
Association of Securities Dealers, Inc. On January 15, 1991, Mr.
Davis voluntarily closed Richfield Securities, Inc. Further,
Richfield Securities, Inc., Mr. Davis and the third party were
assessed the costs of the action in the amount of $908.00. Mr.
Davis appealed the foregoing decision to the Securities and
Exchange Commission (the "Commission") and on November 12, 1993
the foregoing sanctions were affirmed by the Commission. The
suspensions referred to above began on March 21, 1994 and
concluded on the close of business on March 21, 1995. In October
1992, Mr. Davis filed for protection under Chapter XIII of the
United States Bankruptcy Act. In July 1994, the action was
voluntarily dismissed by the Bankruptcy Court. On December 2,
1994, Mr. Davis filed a petition for bankruptcy pursuant to
Chapter VII of the United States Bankruptcy Act. Mr. Davis was
granted a discharge in March 1995. From May 1991 to November
1995, Mr. Davis was Secretary/Treasurer and a member of the Board
of Directors of Kapalua Acquisitions, Inc., a Colorado
corporation, which was formed for the purpose of acquiring or
merging with an existing operating entity. Kapalua's Common
Stock began trading on the Bulletin Board, operated by the
National Association of Securities Dealers, Inc., in November
1995. From November 1994 to November 1995, Mr. Davis was
President of Kapalua Acquisitions, Inc. Mr. Davis resigned his
positions as an officer and director of Kapalua Acquisitions,
Inc., on November 17, 1995, when it completed a reverse
acquisition with Startech Corporation, a Connecticut corporation
engaged in the business of waste disposal. From May 1991 to
November 1995, Mr. Davis was Secretary/Treasurer and a member of
the Board of Directors of Paia Acquisitions, Inc., a Colorado
corporation. Paia's Common Stock began trading on the Bulletin
Board operated by the National Association of Securities Dealers,
Inc., in January 1996. In November 1995, Paia acquired all of
the issued and outstanding shares of common stock of Consolidated
Financial Management, Inc. d/b/a Banc-Pro, an Arizona corporation
in exchange for 3,900,000 post reverse-split restricted shares of
common of Paia and 845,000 preferred shares of Paia. Mr. Davis
resigned as an officer and director of Paia in November 1995.
From May 1991 to November 1995, Mr. Davis was Secretary/Treasurer
of Lahaina Acquisitions, Inc., a Colorado corporation which was
formed for the purpose of acquiring or merging with an existing
operating entity. Lahaina's Common Stock began trading on the
Bulletin Board, operated by the National Association of
Securities Dealers, Inc., in August 1996. In November 1995, Mr.
Davis resigned from the foregoing positions to assume the
<PAGE> 17
Presidency of Lahaina Acquisitions, Inc. Mr. Davis resigned the
foregoing positions on May 27, 1997, when he sold 366,667 shares
of a total of 440,000 shares owned by him to a third party. Mr.
Davis also resigned his position as a Director of Lahaina
Acquisitions, Inc. on the same date, a position he held since May
1991. Mr. Davis will devote approximately 20% of his time to the
Company.
John C. Lee - Secretary and a member of the Board of Directors
Mr. Lee is Secretary and a member of the Board of Directors
of the Company, since August 1996. Since December 1996, Mr. Lee
has been the Secretary and a member of the Board of Directors of
Mizar Energy Company, a Colorado corporation which was formed for
the purpose of buying, selling and producing oil and gas, and
buying and selling oil and gas leases. Mr. Lee has held the
foregoing positions since inception of the Company. Since
November 1992, Mr. Lee been engaged in the practice of investing
his personal funds in securities. From November 1995 to May
1997, Mr. Lee was Secretary and a member of the Board of
Directors of Lahaina Acquisitions, Inc., a Colorado corporation,
which was formed for the purpose of acquiring or merging with an
existing operating entity. Lahaina's Common Stock began trading
on the Bulletin Board, operated by the National Association of
Securities Dealers, Inc., in August 1996. On May 27, 1997, Mr.
Lee resigned the foregoing positions when he sold 366,667 shares
of a total of 440,000 shares owned by him to a third party. From
November 1994 to November 1995, Mr. Lee was Vice President and a
member of the Board of Directors of Kapalua Acquisitions, Inc., a
Colorado corporation. Kapalua's Common Stock began trading on
the Bulletin Board, operated by the National Association of
Securities Dealers, Inc., in November 1995. Mr. Lee resigned his
positions, on November 5, 1995, as an officer and director when
it completed a reverse acquisition with Startech Corporation, a
Connecticut corporation engaged in the business of waste
disposal. From August 1989 to November 1992, Mr. Lee was
Secretary of Private Investors Cartel, Ltd. a securities
broker/dealer. From April 1985 to August 1989, Mr. Lee was
self-employed as a financial consultant. From March 1985 to July
1986, Mr. Lee was Vice President of American Mobile
Communications in Littleton, Colorado. American Mobile
Communications was engaged in the business of acquiring and
managing mobile home parks. From November 1984 to July 1985, Mr.
Lee was Secretary of Sequal Securities, Inc. a securities
broker/dealer located in Glendale, Colorado. From October 1981
to March 1985, Mr. Lee was President of Rigel Securities, a
securities broker/dealer located in Aurora, Colorado. Mr. Lee
will devote approximately 20% of his time to the operation of the
Company.
<PAGE> 18
Charles C. Van Gundy - Treasurer and a member of the Board of
Directors.
Mr. Van Gundy is Treasurer and a member of the Board of
Directors of the Company, since August 1996. From January 1992
to August 1997, Mr. Van Gundy was an employed by U. S. Pawn,
Inc., Denver, Colorado, a NASDAQ traded public company, in
various accounting positions and ultimately as its Vice President
of Finance and Chief Financial Officer, Secretary/Treasurer and a
member of the Board of Directors. From November 1995 to May
1997, Mr. Van Gundy was Treasurer and a member of the Board of
Directors of Lahaina Acquisitions, Inc., a Colorado corporation
which was formed for the purpose of acquiring or merging with an
existing operating entity. Lahaina's Common Stock began trading
on the Bulletin Board, operated by the National Association of
Securities Dealers, Inc., in August 1996. On May 27, 1997, Mr.
Van Gundy resigned the foregoing positions when he sold 16,667
shares of a total of 20,000 shares owned by him to a third party.
From 1982 to January 1992, Mr. Van Gundy served as an accounting
officer for various mutual fund, high technology and economic
redevelopment organizations. Mr. Van Gundy holds a Bachelor of
Science degree in accounting and finance from Metropolitan State
College of Denver (1979), and subsequently studied law at the
University of San Diego School of Law until 1981.
There are no family relationships between any director or
executive officer and any other director or executive officer.
There are no agreements or understandings for any officer or
director to resign at the request of another person and that none
of the officers or directors are acting on behalf of or will act
at the direction of any other person. The officers and directors
may resign, however, at the time of the acquisition or merger at
the request of the management of the acquisition candidate.
The activities of each Officer and Director will be material
to the operation of the Company. No other person's activities
will be material to the operation of the Company. There are no
promoters of the Company, other than its Officers and Directors.
Salient Issues of Lahaina Transaction.
On or about May 27, 1997, Messrs. Davis, Lee and Van Gundy
entered into an agreement with Paxford Acquisitions, S.A., a
Bahamian corporation wherein Messrs. Davis, Lee and Van Gundy
sold a total 750,000 shares of Lahaina common stock owned by them
in consideration of $125,000, thereby effectively transferring
control of Lahaina to Paxford Acquisitions, S.A. At the same
time Messrs. Davis, Lee and Van Gundy resigned as officers and
directors of Lahaina Acquisitions, Inc.
<PAGE> 19
ITEM 6. EXECUTIVE COMPENSATION.
None of the Company's officers or directors currently
receives any salary from the Company. The Company does not
anticipate entering into employment agreements with any of its
officers or directors in the near future. Directors do not
receive compensation for their services as directors and are not
reimbursed for expenses incurred in attending board meetings.
Other than consulting fees and finder's fees which may be
paid to unaffiliated third parties, no other individuals will
receive any salaries or fees from the Company. The Company's
officers and directors will not receive finder's fees, consulting
fees or salaries. Officers, directors and/or principal
shareholders may receive cash or stock from the sale of their
shares of the Company's stock to the Company's merger/acquisition
candidate or principals of the merger/acquisition candidate.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On March 24, 1989, the Company completed a public offering
of 150,000 Units. Each Unit consisted of one share of its no par
value common stock (the "Common Stock"), one Class A common stock
purchase warrant and one Class B common stock purchase warrant.
The Class A and Class B warrants expired on October 19, 1992. In
connection with the offering, the underwriter received for $100 a
purchase warrant for 15,000 shares of common stock at $0.60 per
share
On September 1, 1991, the Company's Board of Directors
approved a 10 to 1 reverse stock split.
On September 30, 1991, pursuant to a Share Exchange
Agreement (the "Exchange"), the Company issued an aggregated of
4,680,000 shares of Common Stock in connection with its
acquisition of Staley Corp. ("Staley"), a privately held
development stage Colorado corporation, wherein the Company
acquired all of the issued and outstanding shares of Staley.
Prior to the exchange, the Company had an aggregate of 610,000
shares issued and outstanding. On the same date the Company's
name was changed to Dog World, Inc. In accordance with the
Agreement, all but one of the Company's officers and directors
resigned, and the directors and executive officers of Staley were
elected directors and executive officers of the Company.
From February 1, 1992 to November 1, 1993, the Company
operated a dog training and obedience facility located in Grand
Prairie, Texas under the name Dogs Only, Inc., a wholly owned
subsidiary of Dog World, Inc. The Company also offered dog
boarding and kenneling, retail sales of dog and cat care
supplies, dog and cat food, as well as, veterinary services
<PAGE> 20
through arrangements with independent veterinarians. Prior to
February 1, 1992, the Company was considered to be in the
development stage and had not generated any revenues.
During the second and third quarter of fiscal 1993, the
Company raised $543,100 in a private placement sale of 1,810,333
shares of Common Stock. The proceeds from this sale of stock
were used to open a new retail facility, enhance the Company's
veterinary service capabilities and to repay outstanding bank
debt.
In June 1993, using the proceeds from the private placement,
the Company opened a second retail facility in Irving, Texas
under the trade name Vet Works+. This facility provided a wide
range of total pet care services including a complete veterinary
hospital, "Dogs Only" discipline training, all breed grooming,
and indoor lodging and boarding, as well as, the sale of pet
foods and pet care products. The original Dogs Only facility in
Grand Prairie, Texas was consolidated on November 1, 1993 with
the Company's Irving, Texas Vet Works+ facility.
On June 1, 1993, the Company entered into an agreement with
Willis C. Dearing, DVM, to purchase the assets of Dearing Animal
Hospital, Inc. for cash. This agreement allowed the Company of
offer veterinary services to patrons of its stores, also provided
for certain stock option arrangements with Dr. Dearing.
The Company issued 860,000 shares of Common Stock to
individuals in a private placement that raised net cash proceeds
of $250,471.
In 1994, the Company has an Incentive Stock Plan, under
which 1,653,333 shares of the Company's common stock may granted
to employees. Options granted are to be exercisable at current
market value at the time of grant over a period not to exceed ten
years. Pursuant to the Plan, in 1994, the Company granted
options to purchase a total of 1,608,333 shares at $0.30 per
share to four formerly directors of the Company. In 1996,
650,000 of the options were canceled upon resignation of three of
the directors. The remaining 958,333 were held by the director
to whom the Company sold its assets and business operations in
1995. These options are all exercisable as of December 31, 1996,
except for 166,667 shares, which become exercisable on April 1,
1997. The options will expire, if unexercised, as follows:
April 1, 2000 333,333 [1]
April 1, 2001 333,333 [1]
April 1, 2002 166,667 [1]
June 1, 2003 125,000
-------
958,333
=======
<PAGE> 21
[1] For these options, the Company agreed to provide cash to the
optionee in an amount sufficient to pay any related tax
liability.
On March 15, 1995, the Company filed a Form 15 with the SEC
to terminate its duty to file reports under section 13 and 15(d)
of the Securities Exchange Act of 1934.
On April 1 1995, the Company sold substantially all of its
assets to a director of the Company in exchange for the
following: (1) $100,000 in cash: (2) a non-interest bearing note
with payments scheduled to begin in December 1995, over 60 months
in the total amount of $60,000 to $120,000, depending on monthly
sales of the disposed business; and (3) assumption of lease
obligations totaling approximately $60,000. In addition, the
sale agreement provided that the purchaser would continue to be
considered an employee under the Incentive Stock Option Agreement
for a period of ten years, which would enable him to retain his
stock options. No payments have been received to date on the
note and it was fully reserved as of December 31, 1996.
On June 26, 1995, the Company issued 6,000,000 shares to
Jack R. Daugherty, a former officer and director of the Company,
in lieu of payment of loan in the amount of $150,000 due to Mr.
Daughter. The Company relied upon Section 4(2) of the Securities
Act of 1933 (the "Act") and the transaction was by the issuer not
involving a public offering. All certificates contained a legend
which prohibited transfer unless the same were registered or were
sold pursuant to an applicable exemption from registration. The
Company believed that the purchaser did not need the protection
of the Act, because the purchaser was sophisticated and had
access to all material information about the Company.
On June 26, 1995, the Company issued 3,000,000 shares to
Donald L. Parnell, a former officer and director of the Company
is lieu of payment of salary in the amount of $75,000 due Mr.
Parnell. The Company relied upon Section 4(2) of the Securities
Act of 1933 (the "Act") and the transaction was by the issuer not
involving a public offering. All certificates contained a legend
which prohibited transfer unless the same were registered or were
sold pursuant to an applicable exemption from registration. The
Company believed that the purchaser did not need the protection
of the Act, because the purchaser was sophisticated and had
access to all material information about the Company.
On June 26, 1995, the Company issued 400,000 shares to Gary
Agron, in lieu of payment of legal fees in the amount of $10,000.
The Company relied upon Section 4(2) of the Securities Act of
1933 (the "Act") and the transaction was by the issuer not
involving a public offering. All certificates contained a legend
which prohibited transfer unless the same were registered or were
sold pursuant to an applicable exemption from registration. The
<PAGE> 22
Company believed that the purchaser did not need the protection
of the Act, because the purchaser was sophisticated and had
access to all material information about the Company.
In August 1996, Mr. Davis the Company's President acquired
9,825,498 shares from Jack Daugherty and Donald Parnell, former
officers and directors of the Company. Messrs. Daugherty,
Parnell and Davis relied upon Section 4(1/2) exemption in that
the parties believed that the shares had come to rest and the
transaction did not involve a public offering. The shares were
issued under the premise that Mr. Davis's ownership would
commence a new holding period. All certificates issued to Mr.
Davis contained a legend which prohibited transfer unless the
same were registered or were sold pursuant to an applicable
exemption from registration. Messrs. Daugherty, Parnell and
Davis believed that Mr. Davis did not need the protection of the
Act, because Mr. Davis was sophisticated and had access to all
material information about the Company.
On May 7, 1997, the Company entered into an Agreement and
Release with Vet Works+ and Willis C. Dearing, DVM, modifying
their previous agreement dated March 28, 1995. The Agreement and
Release is a settlement of all disputes and claims between the
parties. The Agreement and Release provides the surrender and
cancellation of the options granted to Dr. Dearing under the 1994
Incentive Stock Option Agreement under the Dog World, Inc.
Incentive Stock Option Plan. By the terms of the Agreement,
certain options issued to Dr. Dearing were rescinded, cancelled,
set aside and held for naught. Further, 25,000 shares of Common
Stock owned by Dr. Dearing were transferred to Mr. Davis. Dr.
Dearing and Mr. Davis relied upon Section 4(1/2) exemption for
the transfer of the 25,000 shares of Common Stock in that the
parties believed that the shares had come to rest and the
transaction did not involved a public offering. The shares were
transferred to Mr. Davis under the premise that Mr. Davis's
ownership would commence a new holding period. All certificates
issued to Mr. Davis contained a legend which prohibited transfer
unless the same were registered or were sold pursuant to an
applicable exemption from registration. Dr. Dearing and Mr.
Davis believed that Mr. Davis did not need the protection of the
Act, because Mr. Davis was sophisticated and had access to all
material information about the Company.
In June 1997, Mr. Davis transferred 3,275,000 shares of
Common Stock each to Mr. Lee, the Company's Secretary, and Mr.
Van Gundy, the Company's Treasurer, respectively. Messrs. Lee,
Van Gundy and Davis relied upon Section 4(1/2) exemption in that
the parties believed that the shares had come to rest and the
transaction did not involved a public offering. The shares were
transferred under the premise that Messrs. Lee's and Van Gundy's
ownership would commence a new holding period. All certificates
issued to Messrs. Lee and Van Gundy contained a legend which
<PAGE> 23
prohibited transfer unless the same were registered or were sold
pursuant to an applicable exemption from registration. Messrs.
Lee, Van Gundy and Davis believed that Messrs. Lee and Van Gundy
were sophisticated and had access to all material information
about the Company.
ITEM 8. LEGAL PROCEEDINGS.
The Company is not a party to any litigation and to its
knowledge, no action, suit or proceedings against it has been
threatened by any person.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
No market exists for the Company's securities and there is
no assurance that a regular trading market will develop, or if
developed, that it will be sustained. A shareholder in all
likelihood, therefore, will be unable to resell the securities
referred to herein should he or she desire to do so.
Furthermore, it is unlikely that a lending institution will
accept the Company's securities as pledged collateral for loans
unless a regular trading market develops.
There are currently no plans, proposals, arrangements or
understandings with any person with regard to the development of
a trading market in any of the Company's securities other than as
follows. Upon being advised by the Securities and Exchange
Commission (the "Commission") that it has no further comments
relating to this Form 10, the Company intends to approach
broker/dealers to determine if any broker/dealers would consider
making a market in the Company's securities. As of the date
hereof, the Company has not discussed market making activities
with any broker/dealers.
As of July 31, 1997, the Company has 93 holders of record of
its Common Stock.
The Company has not paid any dividends since it is inception
and does not anticipate paying any dividends on its Common Stock
in the foreseeable future.
Blue Sky Considerations.
The laws of some states prohibit the resale of securities
issued by "blank check" or "shell" corporations. The Company may
be considered a "blank check" or "shell" corporation for the
purpose of state securities laws. Accordingly, it is possible
that current shareholders may be unable to resell their
securities in other states. The Company is unaware which
particular states prohibit such resales, other than Idaho and
Indiana.
<PAGE> 24
The Securities and Exchange Commission (the "Commission")
has suggested that the Company take steps to prohibit further
transfer of the securities distributed to current shareholders,
unless the Company is assured that further transfer would not
violate the securities laws of the fifty states. The Company
believes that the Commission has no authority to cause the
Company to place restrictions on the securities it previously
distributed and which it currently does not own. Such action by
the Company would legally be construed as a unilateral
modification of a fully executed contract and would therefore
constitute a breach of the agreement under which the shares were
originally issued. Further, the Company believes that such
action by the Commission would be a usurpation of the authority
granted the Commission by Congress.
Further, because each state has a series of exempt
securities transactions predicated upon the particular facts of
each transaction, it is impossible to determine if a contemplated
transaction by an existing shareholder would possibly violate the
securities laws of any particular state.
In the event a current shareholder or broker/dealer resells
its securities in a state where such resales are prohibited, the
Company believes that the seller thereof may be liable criminally
and/or civilly under that particular state's laws. The Company
believes that it will not be liable for such improper secondary
sales.
Existing shareholders should exercise caution in the resale
of their shares of common stock in light of the foregoing.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
On June 26, 1995, the Company issued 6,000,000 shares to
Jack R. Daugherty, a former officer and director of the Company,
in lieu of payment of loan in the amount of $150,000 due to Mr.
Daughter. The Company relied upon Section 4(2) of the Securities
Act of 1933 (the "Act") and the transaction was by the issuer not
involving a public offering. All certificates contained a legend
which prohibited transfer unless the same were registered or were
sold pursuant to an applicable exemption from registration. The
Company believed that the purchaser did not need the protection
of the Act, because the purchaser was sophisticated and had
access to all material information about the Company.
On June 26, 1995, the Company issued 3,000,000 shares to
Donald L. Parnell, a former officer and director of the Company
is lieu of payment of salary in the amount of $75,000 due Mr.
Parnell. The Company relied upon Section 4(2) of the Act and the
transaction was by the issuer not involving a public offering.
All certificates contained a legend which prohibited transfer
<PAGE> 25
unless the same were registered or were sold pursuant to an
applicable exemption from registration. The Company believed
that the purchaser did not need the protection of the Act,
because the purchaser was sophisticated and had access to all
material information about the Company.
On June 26, 1995, the Company issued 400,000 shares to Gary
Agron, in lieu of payment of legal fees in the amount of $10,000.
The Company relied upon Section 4(2) of the Act and the
transaction was by the issuer not involving a public offering.
All certificates contained a legend which prohibited transfer
unless the same were registered or were sold pursuant to an
applicable exemption from registration. The Company believed
that the purchaser did not need the protection of the Act,
because the purchaser was sophisticated and had access to all
material information about the Company.
In August 1996, Mr. Davis the Company's President acquired
9,825,498 shares from Jack Daugherty and Donald Parnell, former
officers and directors of the Company. Messrs. Daugherty,
Parnell and Davis relied upon a "Section 4(1/2)" exemption in
that the parties believed that the shares had come to rest and
the transaction did not involve a public offering. The shares
were issued under the premise that Mr. Davis's ownership would
commence a new holding period. All certificates issued to Mr.
Davis contained a legend which prohibited transfer unless the
same were registered or were sold pursuant to an applicable
exemption from registration. Messrs. Daugherty, Parnell and
Davis believed that Mr. Davis did not need the protection of the
Act, because Mr. Davis was sophisticated and had access to all
material information about the Company.
On May 7, 1997, the Company entered into an Agreement and
Release with Vet Works+ and Willis C. Dearing, DVM, modifying
their previous agreement dated March 28, 1995. The Agreement and
Release is a settlement of all disputes and claims between the
parties. The Agreement and Release provides the surrender and
cancellation of the options granted to Dr. Dearing under the 1994
Incentive Stock Option Agreement under the Dog World, Inc.
Incentive Stock Option Plan. By the terms of the Agreement,
certain options issued to Dr. Dearing were rescinded, cancelled,
set aside and held for naught. Further, 25,000 shares of Common
Stock owned by Dr. Dearing were transferred to Mr. Davis. Dr.
Dearing and Mr. Davis relied upon a "Section 4(1/2)" exemption
for the transfer of the 25,000 shares of Common Stock in that the
parties believed that the shares had come to rest and the
transaction did not involved a public offering. The shares were
transferred to Mr. Davis under the premise that Mr. Davis's
ownership would commence a new holding period. All certificates
issued to Mr. Davis contained a legend which prohibited transfer
unless the same were registered or were sold pursuant to an
<PAGE> 26
applicable exemption from registration. Dr. Dearing and Mr.
Davis believed that Mr. Davis did not need the protection of the
Act, because Mr. Davis was sophisticated and had access to all
material information about the Company.
In June 1997, Mr. Davis transferred 3,275,000 shares of
Common Stock each to Mr. Lee, the Company's Secretary, and Mr.
Van Gundy, the Company's Treasurer, respectively. Messrs. Lee,
Van Gundy and Davis relied upon a "Section 4(1/2)" exemption in
that the parties believed that the shares had come to rest and
the transaction did not involved a public offering. The shares
were transferred under the premise that Messrs. Lee's and Van
Gundy's ownership would commence a new holding period. All
certificates issued to Messrs. Lee and Van Gundy contained a
legend which prohibited transfer unless the same were registered
or were sold pursuant to an applicable exemption from
registration. Messrs. Lee, Van Gundy and Davis believed that
Messrs. Lee and Van Gundy were sophisticated and had access to
all material information about the Company.
ITEM 11. DESCRIPTION OF THE COMPANY'S SECURITIES TO BE
REGISTERED.
Common Stock.
The authorized Common Stock of the Company consists of
40,000,000 shares of no par value Common Stock. All shares have
equal voting rights and are not assessable. Voting rights are
not cumulative and, therefore, the holders of more than 50% of
the Common Stock could, if they chose to do so, elect all of the
directors of the Company.
Upon liquidation, dissolution or winding up of the Company,
the assets of the Company, after the payment of liabilities, will
be distributed pro rata to the holders of the Common Stock. The
holders of the Common Stock do not have preemptive rights to
subscribe for any securities of the Company and have no right to
require the Company to redeem or purchase their shares. The
shares of Common Stock presently outstanding are fully paid and
nonassessable.
Preferred Stock.
The Company is authorized to issue 10,000,000 shares of
Preferred Stock, no par value. The Preferred Stock may be issued
in series from time to time with such designation, rights,
preferences and limitations as the Board of Directors of the
Company may determine be resolution. The rights, preferences and
limitations of separate series of Preferred Stock may differ with
respect to such matters as may be determined by the Board of
<PAGE> 27
Directors, including, without limitation, the rate of dividends,
method and nature of payment of dividends, terms of redemption,
amounts payable on liquidation, sinking fund provisions (if any),
conversion rights (if any) and voting rights. No Preferred Stock
has been issued by the Company.
Dividends.
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of
the Company, out of funds legally available therefore. No
dividend has been paid on the Common Stock since inception, and
none is contemplated in the foreseeable future.
Transfer Agent.
American Securities Transfer and Trust, Inc., 1825 Lawrence
Street, Suite 444, Denver, Colorado 80202, is the Company's
transfer agent.
Issuance of Additional Securities.
The Company has not considered and does not know, at the
present time, of circumstances which may result in the issuance
to management, promoters or their affiliates or associates of
securities of the Company, other than the possible issuance of
securities to a finder of the acquisition/merger candidate. The
Company will not, however, issue securities to a finder who is an
Officer, Director or affiliate of the Company. Currently, there
are no agreements nor have there been any discussions with anyone
to pay a finder's fee in cash or securities.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 7-3-10(o) of the Colorado Revised Statutes and
certain provisions of the Company's Articles of Incorporation
under certain circumstances provide for indemnification of the
Company's Officers, Directors and controlling persons against
liabilities which they may incur in such capacities. A summary
of the circumstances in which such indemnification is provided
for is contained herein, but this description is qualified in its
entirety by reference to the Company's Articles of Incorporation
and to the statutory provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments
arising in connection with a legal proceeding to which such
person is a party, if that person's actions were in good faith,
were believed to the be in the Company's best interest, and were
not unlawful. Unless such person is successful upon the merits
in such an action, indemnification may be awarded only after a
<PAGE> 28
determination by independent decision of the Board of Directors,
by legal counsel, or by a vote of the shareholders, that the
applicable standard of conduct was met by the person to be
indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is
generally the same as those set forth above; however, with
respect to such actions, indemnification is granted only with
respect to expenses actually incurred in connection with the
defense or settlement of the action. In such actions, the person
to be indemnified must have acted in good faith and in a manner
believed to have been in the Company's best interest, and have
not been adjudged liable for negligence or misconduct.
Indemnification may also be granted pursuant to the terms of
agreements which may be entered in the future or pursuant to a
vote of shareholders or Directors. The statutory provision cited
above and the Company's Articles of Incorporation also grant the
power to the Company to purchase and maintain insurance which
protects its Officers and Directors against any liabilities
incurred in connection with their service in such a position, and
such a policy may be obtained by the Company.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements are included on pages 23 through 38
herein.
ITEM 14. DISAGREEMENTS WITH ACCOUNTANTS, AND ACCOUNTING AND
FINANCIAL DISCLOSURE.
There has been no change in the Company's independent
accountant during the past two fiscal years and through the date
hereof, accordingly the disclosures required by Item 14, are not
applicable.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
MEDICAL MANAGEMENT SYSTEMS, INC.
AND SUBSIDIARY
(Formerly Dog World, Inc.)
FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1996, 1995, 1994 AND 1993
<PAGE> 29
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Medical Management Systems, Inc.
Littleton, Colorado
We have audited the accompanying consolidated balance sheets of
Medical Management Systems, Inc. (formerly Dog World, Inc. and
Subsidiary) as of December 31, 1996, 1995, 1994 and 1993 and the
related consolidated statements of operations, changes in
stockholders' equity (deficit) and cash flows for each of the
three years in the period ended December 31, 1996 and the four
month period ended December 31, 1993. These financial statements
are the responsibility of management of the Company. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Medical Management Systems, Inc. and Subsidiary as of
December 31, 1996, 1995, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1996 and the four month period
ended December 31, 1993, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 1 to the financial statements, the Company currently has
no business operations, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in
regard to this matter are also described in Note 1. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
HEIN + ASSOCIATES LLP
February 10 , 1997
Dallas, Texas
F-1
<PAGE> 30 MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
(formerly Dog World, Inc.)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and interest
bearing accounts $ - $ 8,964 $ 5,220 $ 90,006
Trade accounts receivable,
no allowance for
doubtful accounts
considered necessary - - 6,456 3,134
Amounts due
from employees - - 15,491 445
Inventory - - 30,000 55,551
Prepaid expenses - - 21,643 2,192
------ --------- --------- ---------
Total Current Assets 8,964 78,810 151,328
PROPERTY AND EQUIPMENT, at cost:
Leasehold improvements - - 94,418 89,600
Training and veterinary
equipment - - 129,574 80,266
Office furniture and
equipment - - 40,428 34,942
------ --------- --------- ---------
- - 264,420 204,808
Less accumulated depreciation
and amortization - - (64,544)
(17,265)
------ --------- --------- ---------
Net Property & Equipment - - 199,876 187,543
OTHER ASSETS:
Cost in excess of net
assets acquired, net
of accumulated amortization
of $5,382 and $1,983 in 1994
and 1993, respectively - - 45,618 49,017
Organizational costs, net
of accumulated amortization
of $5,938 and $4,012 in 1994
and 1993, respectively - - 3,691 5,617
Note receivable, net of allowance
of $60,000 in 1996 - 60,000 - -
Other - - 15,335 13,670
------ --------- --------- ---------
Total Assets $ - $ 68,964 $ 343,330 $ 407,175
====== ========= ========= =========
Continued
F-2
<PAGE> 31
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
(formerly Dog World, Inc.)
CONSOLIDATED BALANCE SHEETS, Continued
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
December 31,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
Current portion of capital
lease obligation $ - $ - $ 3,065 $ 2,723
Trade accounts payable 14,358 14,358 50,387 25,083
Accrued liabilities - 85,000 28,696 11,361
----------- ----------- ---------- --------
Total current liabilities 14,358 99,358 82,148 39,167
CAPITAL LEASE OBLIGATION,
net of current portion - - 45,351 12,523
NOTES PAYABLE:
Related party - 150,000 127,000 -
Bank - - - 63,500
STOCKHOLDERS' EQUITY(DEFICIT):
Preferred stock, no par
value; 10,000,000 shares
authorized, none issued
and outstanding - - - -
Common stock subscribed - - - 90,000
Common stock, no par value;
40,000,000 shares authorized;
shares issued and outstanding
were 18,310,330 at December 31,
1996, 8,910,330 at December 31,
1995 and 1994 and 8,050,330 at
December 31, 1993 1,241,015 1,006,015 1,006,015 755,544
Accumulated deficit (1,255,373) (1,186,409) (917,184) (553,559)
---------- ---------- ---------- ---------
Total Stockholders'
Equity (Deficit) (14,358) (180,394) 88,831 291,985
---------- ---------- ---------- ---------
Total Liabilities and
Stockholders' Equity
(Deficit) $ - $ 68,964 $ 343,330 $ 407,175
========== ========== ========== =========
</TABLE>
See accompanying notes to these financial statements.
F-3
<PAGE> 32
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
(formerly Dog World, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Four
Months Ended
For the Years Ended December 31, 12/31
1996 1995 1994 1993
<S> <C> <C> <C> <C>
GENERAL AND ADMINISTRATIVE
EXPENSES $ 8,964 $ 102,098 $ - $ -
---------- ---------- ---------- ----------
Loss from continuing
operations (8,964) (102,098) - -
DISCONTINUED OPERATIONS:
Loss from operations - 87,097 363,625 126,992
Loss on disposal
of business 60,000 80,030 - -
---------- ---------- ---------- ----------
(60,000) (167,127) (363,625) (126,992)
---------- ---------- ---------- ----------
NET LOSS $ (68,964) $ (269,225) $ (363,625) $ (126,992)
========== ========== ========== ==========
LOSS PER SHARE:
Continuing operations $ - $ (.01) $ - $ -
========== ========== ========== ==========
Net loss $ - $ (.03) $ (.04) $ (.02)
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES 17,526,996 8,910,330 8,766,997 8,050,330
========== ========== ========== ==========
</TABLE>
See accompanying notes to these financial statements.
F-4
<PAGE> 33
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
(formerly Dog World, Inc.)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For the Period From September 1, 1993 through December 31, 1996
<TABLE>
<CAPTION>
Common
Common Stock Stock Accumulated
Shares Amount Subscribed Deficit Total
<S> <C> <C> <C> <C> <C>
BALANCES, 09/01/93 8,050,330 $ 755,544 $ - $ (426,567) $ 328,977
Common stock subscribed - - 90,000 - 90,000
Net loss for the period - (126,992) (126,992)
---------- ---------- -------- ---------- ---------
BALANCES, 12/31/93 8,050,330 755,544 90,000 (553,559) 291,985
Shares issued 860,000 250,471 (90,000) - 160,471
Net loss for the year - - - (363,625) (363,625)
---------- ---------- -------- ----------- --------
BALANCES, 12/31/94 8,910,330 1,006,015 - (917,184) 88,831
Net loss for the year - - - (269,225) (269,225)
---------- ---------- -------- ---------- ---------
BALANCES, 12/31/95 8,910,330 1,006,015 - (1,186,409) (180,394)
Shares issued 9,400,000 235,000 - - 235,000
Net loss for the year - - - (68,964) (68,964)
---------- ---------- -------- ---------- ---------
BALANCES, 12/31/86 18,310,330 $1,241,015 $ - $(1,255,373) $ (14,358)
========== ========== ======== =========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 34
MEDICAL MANAGEMENT SYSTEMS INC. AND SUBSIDIARY
(formerly Dog World, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Four
Months Ended
For the Years Ended December 31, 12/31
1996 1995 1994 1993
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(68,964) $(269,225) $(363,625) $(126,992)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization - 6,497 52,605 8,444
Loss on disposal of business 60,000 80,030 - -
Changes in current assets
and liabilities 93,862 30,374 3,372
Other - (30,420) (1,669) 1,211
-------- --------- --------- ---------
Net cash used by operating
activities (8,964) (119,256) (282,315) (113,965)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for other assets - - - (7,518)
Expenditures for property
and equipment - - (24,612) (4,616)
Proceeds from sale of business - 100,000 - -
-------- --------- --------- ---------
Net cash provided (used) by
investing activities - 100,000 (24,612) (12,134)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from subscription and
sale of common stock - - 160,471 90,000
Proceeds from notes payable - 23,000 63,500 63,500
Repayments of capital
lease obligations - - (1,830) (838)
-------- --------- --------- ---------
Net cash provided by
financing activities - 23,000 222,141 152,662
-------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH (8,964) 3,744 (84,786) 26,563
CASH, beginning of year 8,964 5,220 90,006 63,443
-------- --------- --------- ---------
CASH, end of year $ - $ 8,964 $ 5,220 $ 90,006
======== ========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ - $ 2,072 $ 9,243 $ 838
======== ========= ========= =========
Common stock issued to retire notes
payable and accrued liabilities $235,000 $ - $ - $ -
======== ========= ========= =========
Equipment acquired - capital lease $ - $ - $ 35,000 $ -
======== ========= ========= =========
Property and equipment sold,
net of capital lease obligations $ - $ 144,963 $ - $ -
======== ========= ========= =========
Note receivable from
sale of business $ - $ 60,000 $ - $ -
======== ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 35
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
(formerly Dog World, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization.
Medical Management Systems, Inc. (the Company) was incorporated as
Apache Investments, Inc. in 1987 under the laws of the State of
Colorado. In February 1992, the Company commenced its initial
principal operations of owning and operating a pet school and kennel
in Grand Prairie, Texas. In September 1991, the name of the Company
was changed to Dog World, Inc. In June 1993, the Company acquired a
veterinary practice in Irving, Texas. In April 1995, substantially
all the Company's assets and business operations were sold and the
Company subsequently changed its name to Medical Management Systems,
Inc.
Change in Fiscal Year.
In 1993, the Company changed its fiscal year end from August 31 to
December 31. Accordingly, the accompanying financial statements
include statements of operations and cash flows for the four month
period ended December 31, 1993.
Consolidation Policy.
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, Consignment Sports, Inc.
All material inter-company accounts and transactions have been
eliminated in consolidation.
Net Loss per Common Share.
Net loss per common share is based upon the weighted average number
of outstanding common shares. Warrants and options are not
considered in the computation as their effect would be anti-dilutive.
Cash and Cash Equivalents.
The Company considers all highly liquid investments with an initial
maturity of three months or less to be cash equivalents.
Intangible Assets.
Costs in excess of net assets acquired were amortized on a
straight-line basis over fifteen years. Organization costs were
amortized on a straight-line basis over five years. These assets
were written off upon the sale of the Company's business operations
in 1995.
F-7
<PAGE> 35
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
(formerly Dog World, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property and Equipment.
Depreciation and amortization of property and equipment is computed
on the straight-line method over the shorter of the estimated useful
lives of the related assets or the lease term.
Inventory.
Inventory consists of pet supplies, medicine, food, and nutritional
supplements stated at the lower of average cost or market.
Income Taxes.
The Company accounts for income taxes under the liability method,
which requires recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on
the difference between the financial statements and tax bases of
assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse.
Continuation as a Going Concern.
The Company currently has no business operations or assets, which
raises substantial doubt about its ability to continue as a going
concern. Management's plans in regard to this matter are to
reorganize the Company in order to search for a viable merger or
acquisition candidate.
2. SALE OF BUSINESS OPERATIONS.
On April 1, 1995, the Company sold substantially all of its assets to
a director of the Company in exchange for the following: (1) $100,000
of cash; (2) a non-interest bearing note with payments scheduled to
begin in December 1995 over 60 months in the total amount of $60,000
to $120,000, depending on monthly sales of the disposed business; and
(3) assumption of lease obligations totaling approximately $60,000.
In addition, the sale agreement provided that the purchaser would
continue to be considered an employee under the Incentive Stock
Option Agreement (see Note 4) for a period of ten years, which would
enable him to retain his stock options. The Company recorded the
sale based upon the minimum amount due on the note, which resulted in
a loss on disposal of $80,030. No payments have been received to
date on the note and it was fully reserved as of December 31, 1996.
The provision for loss on the note of $60,000 was recorded as an
additional loss on disposal in the 1996 statement of operations.
F-8
<PAGE> 37
MEDICAL MANAGEMENT SYSTEMS AND SUBSIDIARIES
(formerly Dog World, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The revenues and expenses related to the disposed business have been
netted in the accompanying statements of operations under the caption
"loss from operations". Revenues from the disposed business were
$37,352, $365,901, and $114,249 for the periods ended 1995, 1994 and
1993, respectively.
3. RELATED PARTY TRANSACTIONS.
In 1994, a director of the Company repaid approximately $150,000 of
the Company's bank debt. The director was subsequently issued common
stock in satisfaction of the liability as described in Note 4.
4. STOCKHOLDERS' EQUITY.
In 1996, the Company issued 9,400,000 shares to satisfy $150,000 of
debt (Note 3) and $85,000 of accrued liabilities.
In 1994, the Company issued 860,000 shares of common stock to
individuals in a private placement that raised net cash proceeds of
$250,471. The Company has an Incentive Stock Plan, under which
1,653,333 shares of the Company's common stock may be granted to
employees. Options granted are to be exercisable at current market
value at the time of grant over a period not to exceed ten years.
Pursuant to the Plan, in 1994 the Company granted options to purchase
a total of 1,608,333 shares at $.30 per share to four directors of
the Company. In 1996, 650,000 of the options were canceled upon
resignation of three of the directors. The remaining 958,333 were
held by the director to whom the Company sold its assets and business
operations in 1995 (see Note 2). These options are all exercisable
as of December 31, 1996, except for 166,667 shares, which become
exercisable on April 1, 1997. The options will expire, if
unexercised, as follows:
April 1, 2000 333,333 [1]
April 1, 2001 333,333 [1]
April 1, 2002 166,667 [1]
June 1, 2003 125,000
--------
958,333
========
[1] For these options, the Company agreed to provide cash to the
optionee in an amount sufficient to pay any related tax
liability.
F-9
<PAGE> 38
MEDICAL MANAGEMENT SYSTEMS AND SUBSIDIARIES
(formerly Dog World, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company is authorized to issue 10,000,000 shares of no par value
preferred stock. The preferred stock may be issued in series from
time to time with such designation, rights, preferences and
limitations as the board of directors of the Company may determine by
resolution.
5. INCOME TAX
The Company has a net operating loss for Federal income tax purposes,
which will be severely limited due to a change in common stock
ownership in 1996. Therefore, a valuation allowance has been
provided each year for the full amount of the deferred tax asset
resulting from the net operating losses.
F-10
<PAGE> 39
MEDICAL MANAGEMENT SYSTEMS, INC.
AND SUBSIDIARY
(Formerly Dog World, Inc.)
UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 1997
<PAGE> 40
MEDICAL MANAGEMENT SYSTEMS, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, 1997 December
(Unaudited) 31, 1996
<S> <C> <C>
Cash $ 493 -
Note receivable 1,500 -
---------- ----------
Total Assets $ 1,993 -
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable $ 2,015 $ 14,358
Loan payable to stockholders 19,575 -
---------- ----------
Total Liabilities 21,590 14,358
Stockholders Equity
Preferred stock, 10,000,000
shares authorized, no par
value; none issued and
outstanding - -
Common stock, 40,000,000
shares authorized, no par
value; 18,310,330 shares
issued and outstanding 1,241,015 1,241,015
Accumulated deficit (1,260,612) (1,255,373)
---------- ----------
Total Stockholders' Equity (19,597) (14,358)
---------- ----------
Total Liabilities and
Stockholders' Equity $ 1,993 $ -
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-1
<PAGE> 41
MEDICAL MANAGEMENT SYSTEMS, INC.
STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
06/30/97 06/30/96
(Unaudited) (Unaudited)
<S> <C> <C>
Cash Flows From Operations
Net income (loss) $ (5,239) $ (69,964)
Adjustments:
Accounts payable (12,343) -
Loss on disposal of business - 60,000
Recovery of bad debts (10,000) -
--------- ---------
Net cash used by operations (27,582) (8,964)
Cash Flows From Investing
Activities - -
Cash Flows From Financing
Activities
Payment received on recovery
of bad debt 8,500 -
Borrowings from stockholders 19,595 -
--------- ---------
Net cash provided by financing
activities 28,075 -
========= =========
Increase In Cash 493 (8,964)
Cash, Beginning Of Period - 8,964
--------- ---------
Cash, End Of Period $ 493 $ -
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE> 42
MEDICAL MANAGEMENT SYSTEMS, INC.
STATEMENT OF CASH FLOWS
For the Three and Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
Three Months Six Months
(Unaudited) (Unaudited)
<S> <C> <C>
Cash Flows From Operations
Net income (loss) $ 11,681 $ 5,239
Adjustments:
Accounts payable (12,343) (12,343)
Recovery of bad debts (10,000) (10,000)
--------- ---------
Net cash used by operations (10,662) (27,582)
Cash Flows From Investing
Activities - -
Cash Flows From Financing
Activities
Payment received on recovery
of bad debt 8,500 8,500
Borrowings from stockholders 2,655 19,595
--------- ---------
Net cash provided by financing
activities 11,155 28,075
========= =========
Increase In Cash 493 493
Cash, Beginning Of Period - -
--------- ---------
Cash, End Of Period $ 493 $ 493
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 43
MEDICAL MANAGEMENT SYSTEMS, INC.
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
Three Six
Months Months
(Unaudited) (Unaudited)
<S> <C> <C>
CONTINUING OPERATIONS
Revenues $ - $ -
Expenses
Accounting and legal 3,227 17,503
Stock transfer fees 350 2,241
Travel 1,067 1,532
Miscellaneous 33 321
-------- --------
$ 4,677 $ 21,597
-------- --------
Loss from continuing operations (4,677) (21,597)
DISCONTINUED OPERATIONS
Gain from recovery of bad debts 10,000 10,000
Income (loss from discontinued
Operations 10,000 10,000
-------- --------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 5,323 (11,597)
EXTRAORDINARY ITEM
Relief of liabilities 6,358 6,358
-------- --------
NET INCOME (LOSS) $ 11,681 $ (5,239)
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 44
MEDICAL MANAGEMENT SYSTEMS, INC.
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
06/30/97 06/30/96
(Unaudited) (Unaudited)
<S> <C> <C>
CONTINUING OPERATIONS
General and administrative
expenses $ 21,597 $ 8,964
--------- ---------
Loss from continuing expenses (21,597) (8,964)
DISCONTINUED OPERATIONS
Loss on disposal of business - (60,000)
Gain from recovery of bad debts 10,000 -
-------- ---------
Income (loss from discontinued
Operations 10,000 (60,000)
-------- ---------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (11,597) (68,964)
EXTRAORDINARY ITEM
Relief of liabilities 6,358 -
-------- ---------
NET INCOME (LOSS) $ (5,239) $ (68,964)
======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 45
MEDICAL MANAGEMENT SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Medical Management Systems, Inc. (the Company) was incorporated as
Apache Investments, Inc. in 1987 under the laws of the State of
Colorado. In February 1992, the Company commenced its initial
principal operations of owning and operating a pet school and kennel
in Grand Prairie, Texas. In September 1991, the name of the Company
was changed to Dog World, Inc. In June 1993, the Company acquired a
veterinary practice in Irving, Texas. In April 1995, substantially
all the Company's assets and business operations were sold and the
Company subsequently changed its name to Medical Management Systems,
Inc.
The Company currently has no business operations and intends to
actively seek, locate, evaluate, structure and complete mergers with
or acquisitions of private companies, partnership or sole
proprietorships.
2. OTHER INCOME AND NOTE RECEIVABLE
On May 7, 1997, the Company reached an agreement with a director of
the Company whereby the director agreed to pay $8,500 in cash along
with a promissory note for $1,500 in settlement of a dispute
involving the sale of Company assets in April 1995. In addition, the
director agreed to surrender options granted him to acquire 985,333
shares of the Company's common stock, execute a Consent of Directors
previously executed by all other directors, transfer 25,000 shares of
common stock to another officer and director and release the Company
from all claims, demands and obligations. The Company accepted the
cash and note in satisfaction of a $60,000 note due from the director
which had been written off and recorded as a loss in its financial
statements for the year ended December 31, 1996.
The promissory note carries interest at 12%, is unsecured and is due
with accrued interest six months from the agreement date.
The Company used $8,000 of the cash received to settle an
outstanding trade payable. The difference between the amount that
had been due, $14,358, and the amount paid has been recognized as
income from relief of indebtedness.
3. STOCKHOLDER LOAN
The Company is obligated to two stockholders and directors of the
Company for payments they have made from personal funds for Company
expenses. The amount, $19,575 at June 30, 1997, is payable without
interest when the Company has funds available.
F-6
<PAGE> 46
EXHIBITS
Exhibit No. Description
The following documents are incorporated herein by reference
from the Registrant's Form S-18 Registration Statement (SEC File No.
33-23986-LA) filed with the Securities and Exchange Commission on
August 25, 1988 and declared effective on October 20, 1988:
3.1 Articles of Incorporation.
3.2 Bylaws of the Company.
4.1 Specimen Stock Certificate.
The following documents are filed as exhibits hereto:
3.3 * Articles of Amendment to Articles of Incorporation
to change the name to Medical Management Systems,
Inc.
10.1 * Agreement and Release with Vet Works+ and Willis
Dearing.
* Previously filed.
<PAGE> 47
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Denver, Colorado, on this 24th day of
April, 1998.
MEDICAL MANAGEMENT SYSTEMS, INC.
BY: /s/ Philip J. Davis, President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Philip J. Davis, as true and
lawful attorney-in-fact and agent, with full power of substitution,
for his and in his name, place and stead, in any and all capacities,
to sign any and all amendment (including post-effective amendments)
to this registration statement, and to file the same, therewith, with
the Securities and Exchange Commission, and to make any and all state
securities law or blue sky filings, granting unto said
attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite or necessary to be
done in about the premises, as fully to all intents and purposes as
he might or could do in person, hereby ratifying the confirming all
that said attorney-in-fact and agent, or any substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this Form 10 Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
Signature Title Date
/s/ Philip J. Davis
Philip J. Davis President and a member April 24, 1998
of the Board of Directors
/s/ John C. Lee
John C. Lee Secretary and a member April 24, 1998
of the Board of Directors
/s/ Charles C. Van Gundy
Charles C. Treasurer, Principal April 24, 1998
Van Gundy Accounting Officer,
Chief Financial Officer
and a member of the
Board of Directors
