<PAGE> 1
FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended - December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________.
Commission file number 0-29462
MEDICAL MANAGEMENT SYSTEMS, INC.
(Exact name of Company as specified in its charter)
Colorado 95-4121451
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
5459 South Iris Street
Littleton, Colorado 80123
(Address of principal executive offices, including postal code.)
(303) 932-9998
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Common Stock
Securities registered pursuant to Section 15(d) of the Act:
Title of each class
None
Indicate by check mark whether the Company (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Company was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. YES [ x ] NO [ ]
<PAGE> 2
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]
The number of shares outstanding each of the Registrant's classes of
Common Stock, as of December 31, 1997 was 18,310,330.
<PAGE> 3
PART I
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.
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
<PAGE> 4
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 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 filed its Form 10 on a voluntary basis. It had no
obligations pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Company believed that by filing
<PAGE> 5
such Form 10 and being obligated to file reports pursuant to Section
13 of the Exchange Act, it could 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 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.
<PAGE> 6
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 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.
<PAGE> 7
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
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.
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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.
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.
<PAGE> 9
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 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.
<PAGE> 10
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 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).
<PAGE> 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.
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.
<PAGE> 12
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.
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. PROPERTIES.
The Company owns no real property.
ITEM 3. LEGAL PROCEEDINGS.
No material legal proceedings are pending to which the
Registrant is a party or of which any of Registrant's property is the
subject matter. No legal proceedings are known to be contemplated by
governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no matters submitted to a vote of security
holders for the period ending December 31, 1997.
PART II
ITEM 5. MARKET FOR 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.
<PAGE> 13
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 its 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.
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.
<PAGE> 14
Existing shareholders should exercise caution in the resale of
their shares of common stock in light of the foregoing.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data presented below has been derived
from the financial statements of the Company. The following table
summarizes certain financial information and should be read in
conjunction with "Management's Discussion and Analysis of Results of
Operations and Financial Condition" and the Financial Statements and
related notes included elsewhere in this Statement.
Statement of Operations and Accumulated Deficit Data:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Income Statement:
Income $ - $ - $ - $ - $ -
Operating
Expenses $ 24,473 $ 8,964 $ 102,098 $ - $126,992
Loss from
Continuing
Operations $(24,473) $ (8,964) $(102,098) $ - $ -
Net Loss $ (8,115) $(68,964) $(269,225) $(363,625) $(126,992)
Net Loss
per share $ - $ - $ (0.03) $ (0.04) $ (0.02)
Balance Sheet Data:
Working Capital $ 836 $(14,358) $ (90,394) $ (3,338) $ 112,161
Total Assets $ 1,951 $ - $ 68,964 $ 343,330 $ 407,175
Long-term debt $ - $ - $ 150,000 $ 127,000 $ -
Shareholders'
Equity
(deficit) $(22,473) $(14,358) $(180,394) $ 88,831 $ 291,985
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations - Through December 31, 1997.
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 basically dormant;
except the Company incurred $24,473 of expenses in 1997, primarily
for legal and accounting costs associated with filing its Form 10;
$8,964 in 1996 for various administrative expenses and $102,098 in
1995 for costs incurred subsequent to the disposal of the business in
an initial effort to enter other business ventures. The Company
expenses in 1997 were funded by advances from shareholders.
<PAGE> 15
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
promissory note was repaid in February 1998.
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 recorded with gain on
disposal of business, along with the $10,000 settlement referred to
above.
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 $451 in cash as of December 31, 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
FINANCIAL STATEMENTS BEGIN ON FOLLOWING PAGE.
<PAGE> 16
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. and Subsidiary as of December 31,
1997 and 1996, and the related consolidated statements of operations,
changes in stockholders' deficit and cash flows for the years ended
December 31, 1997, 1996, and 1995. 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, 1997 and 1996, and the results of their operations and
their cash flows for the years ended December 31, 1997, 1996 and
1995, 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.
/s/ Hein + Associates llp
Hein + Associates llp
Dallas, Texas
March 20, 1998
F-1
<PAGE> 17
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
December 31,
1997 1996
<S> <C> <C>
CURRENT ASSETS:
Cash and interest bearing accounts $ 451 $ -
Note receivable 1,500
------------ -----------
Total assets $ 1,951 $ -
============ ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES -
Trade accounts payable $ 1,115 $ 14,358
ADVANCES FROM RELATED PARTIES 23,309 -
STOCKHOLDERS' DEFICIT:
Preferred stock, no par value;
10,000,000 shares authorized,
none issued and outstanding - -
Common stock, no par value;
40,000,000 shares authorized;
18,310,330 shares issued and
outstanding 1,241,015 1,241,015
Accumulated deficit (1,263,488) (1,255,373)
------------ -----------
Total stockholders' deficit (22,473) (14,358)
------------ -----------
Total liabilities and
stockholders' deficit $ 1,951 $ -
============ ===========
</TABLE>
See accompanying notes to these financial statements.
F-2
<PAGE> 18
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended
December 31,
1997 1996 1995
<S> <C> <C> <C>
REVENUES $ - $ - $ -
GENERAL AND ADMINISTRATIVE
EXPENSES 24,473 8,964 102,098
--------- --------- ----------
Loss from continuing operations (24,473) (8,964) (102,098)
DISCONTINUED OPERATIONS:
Loss from operations - - (87,097)
Gain (loss) on
disposal of business 16,358 (60,000) (80,030)
--------- --------- ----------
Income (loss) from
discontinued operations 16,358 (60,000) (167,127)
--------- --------- ----------
NET LOSS $ (8,115) $ (68,964) $ (269,225)
========= ========= ==========
LOSS PER SHARE (Basic and Diluted):
Continuing operations $ - $ - $ (.01)
========= ========= ==========
Net loss $ - $ - $ (.03)
========= ========= ==========
WEIGHTED AVERAGE SHARES 18,310,330 17,526,996 8,050,330
========== ========== ==========
</TABLE>
See accompanying notes to these financial statements.
F-3
<PAGE> 19
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIT)
For the Period From January 1, 1995 through December 31, 1997
<TABLE>
<CAPTION>
Common Stock Accumulated
Shares Amount Deficit Total
<S> <C> <C> <C> <C>
BALANCES, 01/01/95 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, 12/31/96 18,310,330 1,241,015 (1,255,373) (14,358)
Net loss for the year - - (8,115) (8,115)
---------- ----------- ----------- ----------
BALANCES, 12/31/97 18,310 330 $ 1,241,015 $(1,263,488) $ (22,473)
========== =========== =========== ==========
</TABLE>
See accompanying notes to these financial statements.
F-4
<PAGE> 20
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended
December 31,
CASH FLOWS FROM OPERATING ACTIVITIES:
1997 1996 1995
<S> <C> <C> <C>
Net loss $ (8,115) $ (68,964) $ (269,225)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization - - 6,497
(Gain) loss on disposal of business (16,358) 60,000 80,030
Changes in current assets and liabilities (6,885) - 93,862
Other - - (30,420)
-------- --------- ----------
Net cash used by operating activities (31,358) (8,964) (119,256)
CASH FLOWS FROM INVESTING ACTIVITIES -
Collection of note receivable 8,500 - -
Proceeds from sale of business - - 100,000
-------- --------- ----------
Net cash provided by investing activities 8,500 - 100,000
CASH FLOWS FROM FINANCING ACTIVITIES -
Advances from related parties 23,309 - -
Proceeds from notes payable - - 23,000
-------- --------- ----------
Net cash provided by financing activities 23,309 - 23,000
-------- --------- ----------
NET INCREASE (DECREASE) IN CASH 451 (8,964) 3,744
CASH, beginning of year - 8,964 5,220
-------- --------- ----------
CASH, end of year $ 451 $ - $ 8,964
======== ========= ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION-
Settlement of account payable $ 6,358 $ - $ -
======== ========= ==========
Common stock issued to retire notes payable and
accrued liabilities $ - $ 235,000 $ -
======== ========= ==========
Property and equipment sold, net of capital lease
obligations $ - $ - $ 144,963
======== ========= ==========
Note receivable from sale of business $ - $ - $ 60,000
======== ========= ==========
Cash paid for interest $ - $ - $ 2,072
======== ========= ==========
</TABLE>
See accompanying notes to these financial statements.
F-5
<PAGE> 21
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
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.
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. Effective December 31, 1997, the Company adopted
Statement of Financial Accounting Standards No. 128, Earnings
Per Share, for the 1997 and prior financial statements. This
new accounting standard established new rules for the
calculation of earnings or loss per share, but it had no effect
on the Company's financial statements in 1997 or 1996.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an
initial maturity of three months or less to be cash equivalents.
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.
F-6
<PAGE> 22
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies . . . Continued
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 former 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 in 1995 based upon the minimum amount due on the note of
$60,000, which resulted in a loss on disposal of $80,030.. No
payments had been received on the note as of December 31, 1996
and it was fully reserved at that time. The provision for loss
on the note of $60,000 was recorded as an additional loss on
disposal in the 1996 statement of operations.
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 for the year ended December 31, 1995.
On May 7, 1997, the Company reached an agreement whereby the
former 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's 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 promissory note carries interest at 12%, is unsecured and
was due with accrued interest six months from the agreement
date. The note was paid in full in February 1998.
In addition, in 1997 the Company settled certain liabilities
applicable to the sold assets at less than the recorded amount
and recognized income of $6,358 related to the transaction.
F-7
<PAGE> 23
MEDICAL MANAGEMENT SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Related Party Transactions
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, $23,309 at December 31, 1997, is
payable without interest when the Company has funds available.
4. Stockholders' Equity
In 1996, the Company issued 9,400,000 shares to satisfy $150,000
of debt and $85,000 of accrued liabilities.
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 canceled in 1997 as
described in Note 2.
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-8
<PAGE> 24
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 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.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
Officers and Directors
The officers and directors of the Company are as follows:
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, Inc. failed
to establish and implement written supervisory procedures to detect
and prevent the markup violations. Richfield Securities, Inc. was
<PAGE> 25
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 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.
<PAGE> 26
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.
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
<PAGE> 27
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.
Compliance with Section 16(a) of the Securities Exchange Act of
1934.
Section 16(a) of the Securities and Exchange Act of 1934
requires certain defined persons to file reports of and changes in
beneficial ownership of a registered security with the Securities and
Exchange Commission and the National Association of Securities
Dealers in accordance with the rules and regulations promulgated by
the Commission to implement the provisions of Section 16. Under the
regulatory procedure, officers, directors and persons who own more
than ten percent of a registered class of a company's equity
securities are also required to furnish the Company with copies of
all Section 16(a) forms they filed.
Based on review of the copies of Form 3 and a review of the
records of the Company's transfer agent, all reports required to be
filed pursuant to Section 16(a) have been filed with the Commission.
<PAGE> 28
ITEM 11. 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 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following schedule sets forth 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 Place 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> 29
Jack Daugherty 2,087,835 11.4%
1600 West 7th Street
Fort Worth, TX 76012
ITEM 13. 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 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.
<PAGE> 30
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
=======
[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.
<PAGE> 31
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 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
<PAGE> 32
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,
250,000 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 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.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) Financial Statements are contained in Item 8.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed for the period ended
December 31, 1997.
(c) 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:
<PAGE> 33
3.1 Articles of Incorporation.
3.2 Bylaws of the Company.
4.1 Specimen Stock Certificate.
The following documents are incorporated herein by reference
from the Registrant's Form 10 Registration Statement (SEC File No.
0-29462) filed with the Securities and Exchange Commission on
September 5, 1997:
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.
The following documents are incorporated as filed with the
Securities and Exchange Commission on November 13, 1997:
Form 10-Q Quarterly Report for the period ended September 30,
1997.
<PAGE> 34
SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto
duly authorized, on this 24th day of April, 1998.
MEDICAL MANAGEMENT SYSTEMS, INC.
(Registrant)
BY: /s/ Philip J. Davis, President
Philip J. Davis, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following person on
behalf of the Registrant and in the capacities and on this 24th day
of April, 1998.
SIGNATURES TITLE DATE
/s/ Philip J. Davis
Philip J. Davis President and a member May 24, 1998
of the Board of Directors
/s/ John C. Lee
John C. Lee Secretary and a member May 24, 1998
of the Board of Directors
/s/ Charles C. Van Gundy
Charles C. Treasurer, Principal May 24, 1998
Van Gundy Accounting Officer,
Chief Financial Officer
and a member of the
Board of Directors
