UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[x] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended
____________________________________
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from
_______________________ to _____________
Commission file number
________________________________
The J. Rish Group, Inc.
(Name of small business issuer in its charter)
Louisiana
(State or other jurisdiction of incorporation or organization)
84-1082394
______________________________
(I.R.S. Employer Identification No.)
6748 Renoir
_____________________________
(Address of principal executive offices)
(Zip Code) 70806
___________________________
Issuer's telephone number (225) 926-0596
____________________________________________________
Securities registered under Section 12(b) of the Exchange Act: NONE
Title of each class
___________________________________
___________________________________
Name of each exchange on which registered
OTC BULLETIN BOARD_____________
___________________________________
Securities registered under Section 12(g) of the Exchange Act:
_________________________________________________________________
(Title of class)
___________________________________________________________
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [ ] Yes [X] No
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and
no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [x]
State issuer's revenues for its most recent fiscal year. $5,975,962.00
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the
price at which the common equity was sold, or the average bid and
asked price of such common equity, as of a specified date within
the past 60 days. (See definition of affiliate in Rule 12b-2 of
the Exchange Act.)
Note: If determining whether a person is an affiliate will
involve an unreasonable effort and expense, the issuer may
calculate the aggregate market value of the common equity held by
non-affiliates on the basis of reasonable assumptions, if the
assumptions are stated.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court. [ ] Yes [X] No
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
__________________________
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g.,
Part I, Part II, etc.) into which the document is incorporated:
(1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities
Act"). The listed documents should be clearly described for
identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1990).
Transitional Small Business Disclosure Format (Check one):
Yes ____; No _X__
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a) Business Development. The J. Rish Group, Inc. (the
"Company"), formerly Best of America Corporation, was incorporated
under the laws of Colorado under the name of Unlimited Frontiers
Organization, Inc. on April 1, 1988.
Since 1993, the Company engaged in the construction, sale and
management of car wash equipment and self-service car washes.
In September 1998, the Company's predecessor, Best of America
Corporation, merged into its wholly owned subsidiary, The J. Rish
Group, Inc., a Louisiana corporation. Pursuant to the merger,
every shareholder of Best of America Corporation is entitled to
receive one share of common stock in the Company for every share of
common stock of Best of America Corporation, and two shares of
common stock for every one share of preferred stock of Best of
America Corporation.
After the merger, a new board of directors and officers were
elected. The new management of the Company shortly thereafter
sought to acquire viable business concerns with existing revenue,
to facilitate its growth. In late 1998, the Company entered into an
agreement to purchase a group of nine existing and operating
corporations in the medical care industry in a stock for stock
exchange. The transaction involved the issuance of 16,000,000
shares of the Company's common stock for all the outstanding
capital stock of each of the following:
1) Feliciana Outpatient Services, Inc.
2) S.W. Mississippi Outpatient Rehab of Woodville, Inc.
3) S.W. Mississippi Outpatient Rehab of Gloster, Inc.
4) S.W. Mississippi Outpatient Rehab of Natchez, Inc.
5) S.W. Mississippi Outpatient Rehab of Port Gibson, Inc.
6) N.E. Outpatient Rehab Services of Delhi, Inc.
7) N.E. Louisiana Outpatient Rehab of Monroe, Inc.
8) Baton Rouge Outpatient Rehab, Inc.
9) J Co., Inc.
(b) Business of Issuer. The Company acts as a holding
company, and through nine of its wholly owned subsidiaries, is a
diversified corporation which provides various health care services
in the states of Mississippi and Louisiana. The services include
rehabilitative and respiratory therapy, infusion therapy, skilled
nursing care, physical therapy and occupational rehabilitative
care. These services are provided through independent clinics
staffed with medical professionals holding certifications and
licenses in physical therapy, occupational therapy as well as
registered nurses.
The Company intends to expand its operations throughout its
market area of Mississippi and Louisiana, primarily in under served
rural areas where professional medical care is most needed. The
Company intends to expand its range of services through each of its
clinic locations as authorized by its license as a Comprehensive
Outpatient Rehab Facility. The Company's nine subsidiaries
providing health care services during the fiscal year 1998 were
primarily Medicare providers, however, the Company has made plans
to diversify these subsidiaries' patient mixes to include sources
of revenue outside the Medicare system.
The Company's subsidiaries and their revenues are subject to
the provisions of the Medicare Cost Reimbursement System as
administered under its agent fiscal intermediaries. Effective in
early 1999, the Company's source of revenue may be effected by the
changes in the Medicare Cost Reimbursement system as outlined in
the Balanced Budget Amendment as enacted by Congress in 1998. The
Company has anticipated these changes and has made plans to
diversify its operation to include payments for its services from
private insurance and other sources in addition to Medicare
reimbursement.
During 1999, the Company plans to continue its expansion to
under served medical markets, and to extend the range of its
services in the clinics owned by the Company's nine subsidiaries
providing health care services.
The Company provides professional services that are not
subject to rapid changes in technology, and therefore its ability
to compete and operate successfully does not solely depend upon its
ability to react to such changes.
All of the Company's and its subsidiaries' computer hardware
and software have been recently replaced such that there is no
exposure to a failure or other malfunction of the Company's or its
subsidiaries' computer systems resulting from the year 2000.
However, a material amount of the revenues of the Company and
subsidiaries is in the form of Medicare reimbursement provided by
the Federal Government through one of its fiscal intermediaries,
Blue Cross. If the Federal Government or its fiscal intermediary
suffers a computer malfunction caused by the year 2000, there could
be a material adverse effect to the Company.
The Company's business, capital expenditures, earnings and
competitive position are not materially affected by compliance with
Federal, State or local provisions which have been enacted or
adopted regulating the discharge of material into the environment,
or otherwise relating to the protection of the environment, and the
Company does not anticipate any material capital expenditures for
environmental control facilities in the future.
As of December 31, 1998, the Company and its subsidiaries had
165 full-time employees. As of September 30, 1999, the Company and
its subsidiaries had 185 full time employees.
ITEM 2. DESCRIPTION OF PROPERTY
The Company leases all of its facilities throughout Louisiana
and Mississippi. In each case the leases are standard commercial
leases with rents at or below market rates for the area. The
following subsidiaries operate clinics providing health care
services from facilities in the following locations:
Name of Subsidiary Location of Leased Facility
1) Feliciana Outpatient Services, Inc. Clinton, LA
2) S.W. Mississippi Outpatient Rehab of Woodville, Inc. Woodville, MS
3) S.W. Mississippi Outpatient Rehab of Gloster, Inc. Gloster, MS
4) S.W. Mississippi Outpatient Rehab of Natchez, Inc. Natchez, MS
5) S.W. Mississippi Outpatient Rehab of Port Gibson, Inc. Port Gibson, LA
6) N.E. Outpatient Rehab Services of Delhi, Inc. Delhi,LA
7) N.E. Louisiana Outpatient Rehab of Monroe, Inc. Monroe,LA
8) Baton Rouge Outpatient Rehab, Inc. Baton Rouge,LA
9) J Co., Inc. Baton Rouge, LA
ITEM 3. LEGAL PROCEEDINGS
Best of America Car Wash Systems, Inc. (BACW), a wholly owned
subsidiary of the Company, was named as a defendant in a petition
filed in the 22nd Judicial District for the Parish of St. Tammany
of the State of Louisiana. The suit was filed on August 30, 1999
by the plaintiff, Thomas Saucier, and names as defendant BACW.
The suit arises from a promissory note dated December 22, 1993
in the amount of $83,698.47 with an interest rate of eight (8%)
percent made payable to Thomas Saucier by BACW. The petition
alleges that only $6,006.80 was paid on the promissory note, but
the accounting records of BACW indicate at least $23,582.40 was
paid on the note. The petition asserts that the defendants owe the
plaintiff $119,631.79, together with eight (8%) percent annual
interest thereon from May 31, 1999 plus twenty (20%) percent
attorney's fee on the principal and interest due.
The Company knows of no other material pending or threatened
legal proceedings to which the Company or its subsidiaries is a
party or of which any of its properties is subject, and no such
proceedings are known to the Company to be contemplated by
governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended December
31, 1998, no matters were submitted to a vote of the Company's
security holders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
On December 30, 1998, the Company exchanged sixteen million
(16,000,000) shares of Class A no par common stock of the company
for all the issued and outstanding shares of: (1) Baton Rouge
Outpatient Rehab, Inc.; (2) Feliciana Outpatient Services, Inc.;
(3) S. W. Mississippi Outpatient Rehab of Woodville, Inc.; (4) S.
W. Mississippi Outpatient Rehab of Glouster, Inc.; (5) S. W.
Mississippi Outpatient Rehab of Natchez, Inc.; (6) S. W.
Mississippi Outpatient Rehab of Port Gibson, Inc.; (7) N. E.
Outpatient Rehab Services of Delhi, Inc.; (8) N. E. Louisiana
Outpatient Rehab of Monroe, Inc.; and (9) J Co., Inc.
(collectively, the "Clinics") which became wholly owned
subsidiaries of the Company. The consideration for the exchange
was determined as a result of an arm's length negotiation between
the Company's disinterested directors and the Clinics' sole
shareholder, Julian P. Rish. The amount of consideration was
determined by the fair market value of the Clinics and the market
price of the stock on December 15, 1998, the date that the Purchase
Agreement between the Company and the Julian P. Rish was executed.
The Company relied on the exemption provided in Section 4(2)
of the Securities Act of 1933. The issuance of the stock was only
offered to Julian P. Rish who is a sophisticated investor with
access to the financial and operating records of the Company.
Market Information. The Company's common stock is traded on
the OTC Bulletin Board under the symbol "RISH".
The following table sets forth the range of high and low bid
quotations for the Company's no par, common stock for each quarter
of the last two fiscal years and the first three quarters of 1999,
as reported by the OTC Bulletin Board. The Company's market makers
are M. H. Myerson, Sharp Capital, Inc., Knight Securities, Inc.
and Wien Securities Corp. The quotations represent inter-dealer
prices without retail markup, markdown or commission, and may not
necessarily represent actual transactions.
Quarter Ended High Bid Low Bid
9/30/96 $1 .12 $.50
12/31/96 .90 .25
3/31/97 .125 .125
6/30/97 .185 .06
9/30/97 .30 .125
12/31/97 .90 .21
3/31/98 .85 .185
6/30/98 .185 .06
9/30/98 1.01 .12
12/31/98 1.03 .45
3/31/99 1.01 .50
6/30/99 .69 .35
9/30/99 .84 .25
The Company's no par common stock commenced trading on the
over-the-counter market in September, 1996. Prior to that time,
there was no market for the securities of the Company.
Holders. The approximate number of holders of record of the
Company's no par common stock, as of December 31, 1998, was 105.
Currently, as of September 30, 1998, there are 105 holders of
record.
Dividends. Holders of the Company's no par common stock are
entitled to receive such dividends as may be declared by its Board
of Directors. No dividends have been paid in the last two fiscal
years or for the first three quarters of 1999 and the Company does
not anticipate that dividends will be paid on its common stock in
the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(a) Plan of operation: The Company during fiscal 1998
entered, through several acquisitions, the medical care field.
Its plans for 1999 include continued expansion into underserved
medical markets throughout Louisiana and Mississippi as well as the
addition of services to include community mental health centers,
rural health clinics, inpatient rehabilitative hospitals, inpatient
psychiatric hospitals, additional outpatient rehab clinics and the
development of a management company to provide for a wide array of
medical management services for other health care enterprises not
owned by the Company.
The Company plans to utilize its existing patient base and
referral network to expand its services and in contrast to fiscal
1998, to include additional sources of income outside the Medicare
Cost reimbursement system.
The Company has generated sufficient cash to sustain its
existing operations for the next twelve months. Subsequent
acquisitions and start up costs for new clinics will be financed
primarily through local financing sources. During fiscal 1999, the
Company plans to continue its expansion primarily through
acquisitions of existing companies in the health care services
industry. The Company functions as a focal point of staff and
management support for all existing and prospective acquisitions
through its central office and corporate headquarters in Baton
Rouge, Louisiana.
Substantially all of the anticipated future expansion of the
Company will involve additions in operating assets, specifically
that of leasehold improvements, accounts receivables and various
clinical equipment and supplies relative to the operation of each
medical facility.
(b) Management's Discussion and Analysis of Financial
Condition and Results of Operations. For the first time in the
Company's history, its total net revenue has increased from $47,147
in fiscal 1997 to $5,975,962 in fiscal 1998, or an increase of over
1,000 percent. The increase in revenues are due to the Company's
acquisition of nine subsidiary companies in fiscal 1998 which has
been accounted for as a reverse acquisition. Although the Company
reflects a net loss of $398,619 for fiscal 1998, much of the loss
was attributable to the costs associated with the acquisition of
the nine subsidiaries.
In addition, the Company opted to retain much of the staff
employed by the acquired subsidiaries. At the end of fiscal 1998,
the Company planned to position itself for the anticipated changes
in the industry by retaining qualified personnel and maintaining
its clinical infrastructure as it continued to convert its
primarily Medicare reimbursed operation into a multi-faceted health
care delivery system. Until these plans can be fully realized, the
Company's earnings will be compromised until occurrence of any
combination of the following anticipated events:
1) Re-institution of the Medicare cost reimbursement rates
to levels existing prior to January 1, 1999.
2) Increase of revenue through non-capped services that the
Company's subsidiaries can provide that allow for
adequate reimbursement in the Medicare system.
3) Development of revenue from private insurance and other
sources for medical services that the Company's
subsidiaries provide.
4) Diversification into other ventures in the health care
industry that provide additional revenues from the
existing patient base and referral sources while
providing enhanced economies with the existing
infrastructure.
5) Development of revenues from management services to be
provided to companies in the health care industry not
owned by the Company.
6) Development of additional revenues, through acquisitions
of companies not in the health care industry.
The Company's total assets grew from $729,551 in fiscal 1997
to a level of $3,120,633 at the end of fiscal 1998, principally as
a result of various acquisitions. Of this amount, $1,680,417 is
cash with the remainder in accounts receivables, inventory and
prepaid expenses.
Liabilities have been booked representing estimated effects at
fiscal year end of cost report filings with Medicare. These amounts
were estimated since the Medicare fiscal year end of each
subsidiary is different from that of the Company. The ultimate
liability of the Company for such estimated differences will be
determined upon final preparation and acceptance of the year end
cost reports filed for each subsidiary that is a medical provider.
Substantially all of the medical service revenues from all
company subsidiaries in 1998 were from the Medicare reimbursement
system. During 1998, the U.S. Congress passed the Balanced Budget
Amendment which limits the amounts paid to the company for certain
services provided by the Company, beginning in January 1999. The
Company during 1998 anticipated the corresponding reduction of
revenue for such services and embarked on a program to re-orient
its operations through diversification and expansion of medical
services to its existing patient and referral bases.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
J Rish Group, Inc.
Estimated Quarterly Income Comparison
FYE December 31, 1998
UNAUDITED
<CAPTION>
12MOS 1st QTR 2nd QTR 3rd QTR
12/31/98 03/31/98 06/30/98 09/30/98 12/31/98
<S> <C> <C> <C> <C> <C>
Net Patient Revenue 5,975,962.00 1,195,192.40 1,374,471.26 1,613,509.74 1,792,788.60
Salaries & Benefits 3,106,797.00 621,359.40 714,563.31 838,835.19 932,039.10
Contract Labor 530,219.00 106,043.80 121,950.37 143,159.13 159,065.70
Insurance 60,881.00 12,176.20 14,002.63 16,437.87 18,264.30
Office Supplies 221,512.00 44,302.40 50,947.76 59,808.24 66,453.60
Management Fees 1,160,000.00 232,000.00 266,800.00 313,200.00 348,000.00
Consulting 82,149.00 16,429.80 18,894.27 22,180.23 24,644.70
Rent 362,060.00 72,412.00 83,273.80 97,756.20 108,618.00
Repairs & Maintenance 90,630.00 18,126.00 20,844.90 24,470.10 27,189.00
Retent & Recruit 221,303.00 44,260.60 50,899.69 59,751.81 66,390.90
Utilities 104,576.00 20,915.20 24,052.48 28,235.52 31,372.80
Depreciation 139,860.00 27,972.00 32,167.80 37,762.20 41,958.00
Bad Debts 45,351.00 9,070.20 10,430.73 12,244.77 13,605.30
Merchandise Purchases 0.00 0.00 0.00 0.00 0.00
Transportation Expense 121,930.00 24,386.00 28,043.90 32,921.10 36,579.00
Miscelaneous Expense 80,512.00 16,102.40 18,517.76 21,738.24 24,153.60
6,327,780.00 1,265,556.00 1,455,389.40 1,708,500.60 1,898,334.00
Income (Loss) From Operations (351,818.00) (70,363.60) (80,918.14) (94,990.86) (105,545.40)
Interest Income 2,610.00 522.00 600.30 704.70 783.00
Miscellaneous Income 8,646.00 1,729.20 1,988.58 2,334.42 2,593.80
Interest Expense (58,057.00) (11,611.40) (13,353.11) (15,675.39) (17,417.10)
(46,801.00) (9,360.20) (10,764.23) (12,636.27) (14,040.30)
Net Income (Loss) (398,619.00) (79,723.80) (91,682.37) (107,627.13) (119,585.70)
UNAUDITED
</TABLE>
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Identification of Directors and Executive Officers of the Company
The following table sets forth the names and ages of all
directors and executive officers of the Company and all persons
nominated or chosen to become a director, indicating all positions
and offices with the Company held by each such person and the
period during which he has served as a director:
DIRECTORS AND EXECUTIVE OFFICERS
Name Age Position Since
Michael Yates* 44 Vice President December, 1993
C. Lynn White* 55 Director and Chairman of
the Board December, 1993
Claud Hallmark* 67 Director December, 1993
Walter Lark,Jr.* 48 Director December, 1996
Julian P. Rish 60 Sec./Treas., Director and
Chairman of the Board December, 1993
Edwin J. Cantin, Jr. 45 President and Director September 1998
Tracie Rish 39 Director October, 1998
Julian W. Rish 26 Director September 1998
Anatole J. Plaisance 63 President and Director December, 1993
Kenneth P. Rish* 41 Director September 1998
* As of 12/31/98, no longer a director or officer of Company
Each Director will hold office until the shareholders Annual
Meeting and until his successor shall have been duly elected and
qualified, or until he shall have resigned or been removed as
provided by the By-Laws.
Family Relationships. Tracie Rish, Kenneth P. Rish and
Julian W. Rish are the children of Julian P. Rish.
Business Experience. The following is a brief account of the
business experience during at least the past five years of the
directors and executive officers, indicating their principal
occupations and employment during that period, and the names and
principal businesses of the organizations in which such occupations
and employment were carried out.
Michael Yates. Mr. Yates has been in charge of shipping and
receiving at Windsor Court Hotels, Inc. from 1986 to 1996.
C. Lynn White. Mr. White obtained a masters of business
administration from the University of Missouri in 1966. From 1966
to 1984, Mr. White worked in several management and coordinator
positions with Exxon USA and its overseas affiliates. Since
1984, Mr. White has worked as a real estate broker and is President
and principal shareholder of Commercial Real Estate Counsel Co., a
commercial investment real estate company. Mr. White is a North
Carolina license real estate broker.
Walter J. Lark. Mr. Lark obtained a Bachelor of Science
degree in Business Administration-Marketing in 1972 from the
University of Southwestern Louisiana. From 1973 through 1983, Mr.
Lark was a sales representative for industrial sales companies.
Since 1984, Mr. Lark has been self-employed in the real estate
industry and holds the designations "CCIM" and "CRS."
Claud Hallmark. Since 1966, Mr. Hallmark has worked in
various management positions of Allright Corporation and its
subsidiaries. In 1978, Mr. Hallmark was promoted to Senior Vice
President of Allright Corporation and is a member of the Board of
Directors with responsibility for twenty two (22) cities.
Julian P. Rish. Mr. Rish obtained a Bachelor of Science
degree in education and science in 1959 from Louisiana State
University. Mr. Rish has over 30 years experience with medical
management company and owns several businesses in the Energy and Real
Estate industries.
Anatole J. Plaisance. Mr. Plaisance obtained a Bachelor of
Arts Degree in Political Science and History from the University of
Southwestern Louisiana in May, 1987. In June, 1961, Mr. Plaisance
obtained a LLB degree from Louisiana State University Law School
and obtained his Juris Doctorate Degree from that law school in
December 1968. From 1963 to 1980, Mr. Plaisance was a practicing
attorney with the firm of Plaisance and Franques in Lafayette,
Louisiana. Mr. Plaisance currently serves as a legal consultant to
various attorneys and law firms.
Edwin J. Cantin, Jr. Mr. Cantin obtained a Bachelor of
Science Degree in Management and Finance in 1976 from the
University of New Orleans. Subsequent to this time, Mr. Cantin
worked at several banks in the South Louisiana area as a Senior
Loan and Credit Officer. Most recently Mr. Cantin was employed at
First National Bank of Covington where he served as Senior Line
Commercial Lender. In 1987, Mr. Cantin founded Northshore Capital
Enterprises Co., L.L.C., a consulting and investment banking firm
specializing in acquisitions, mergers, capitalization and
syndication of ventures in the real estate, energy and marine
industries.
Tracie Rish. Ms. Rish has been employed in the medical
industry for the last five years, primarily in the areas of
marketing and business development in the Baton Rouge area and most
recently functions as clinic administrator for one of the Company's
rehabilitation facilities.
Julian W. Rish, Director. Mr. Rish has been in the
construction and home improvement industry for more than five years
as an independent contractor.
Kenneth P. Rish. Mr. Rish is a 1978 graduate of Louisiana
State University, and for the past five years is the principal of
American Business Systems, Inc., where he functions as a consultant
to various business concerns with the design and development of
business forms and related goods and services.
Directorships. No director or nominee for director holds a
directorship in any other company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of
1934 or subject to the requirements of Section 15(d) of such Act or
any company registered as an investment company under the
Investment Company Act of 1940.
SIGNIFICANT EMPLOYEES
Name Age Position Since
Gary Johnson 36 Chief of Clinical 1997
Operations
Gary Johnson. Mr. Johnson is a 1989 graduate of Louisiana
State University School of Physical Therapy, and is licensed in the
State of Louisiana and Mississippi. Mr. Johnson's background
includes, since 1990, ownership in various health care concerns
which he sold prior to joining the Company. Currently, Mr. Johnson
serves as Chief of Clinical Operations. This position involves the
selection of new clinic locations, its staffing, human and capital
resource development and interface with the clinical and business
aspects of the Company's clinics.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid by the Company to the Chief Executive Officer and
for all other executive officers and significant employees whose
total annual compensation exceeds $100,000.
Summary Compensation Table
Annual Compensation
Annual Compensation
Name and Principal Year Salary
Position
Julian P. Rish, CEO 1998 250,000
Gary Johnson, Chief 1998 180,000
of Clinical Operations
In 1996 and 1997, no material remuneration has been paid or
accrued by the Company, to or on behalf of the Company's Chief
Executive Officer and the Company's four most highly compensated
executed officers determined as of the end of each of the last
three years.
Compensation Pursuant to Plans. The Company has no plan
pursuant to which cash or non-cash compensation was paid or
distributed during the last fiscal year, or is proposed to be paid
or distributed in the future, to the individuals and group
described above in this item.
Compensation of Directors. Directors of the Company who are
not employees of the Company may receive a fee of $250 per meeting
for their attendance at meetings of the Company's Board of
Directors, and are entitled to reimbursement for reasonable travel
expenses.
Termination of Employment and Change of Control Arrangement.
The Company has no compensatory plan or arrangements, including
payments to be received from the Company, with respect to any
individual named above in this Item, for the latest or the next
preceding fiscal year, if such plan or arrangement results or will
result from the resignation, retirement or any other termination of
such individual's employment with the Company, or from a change in
control of the Company or a change in the individual's
responsibilities following a change in control.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of December 31, 1999, the following persons were officers
or directors of the Company or were known by the Company to own or
control beneficially more than five percent of the Company's common
stock, no par value:
Amount and Nature Percent
Name and Address of of Beneficial of
Beneficial Owner Ownership Class
Julian Rish 21,579,361 90%
1907 Roseneath Drive
Baton Rouge, LA 70806
Changes in Control. There are no arrangements, known to the
Company, including any pledge by any person of securities of the
Company, the operation of which may at a subsequent date result in
a change of control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 30, 1998, the Company exchanged sixteen million
(16,000,000) shares of Class A no par common stock of the company
for all the issued and outstanding shares of: (1) Baton Rouge
Outpatient Rehab, Inc.; (2) Feliciana Outpatient Services, Inc.;
(3) S. W. Mississippi Outpatient Rehab of Woodville, Inc.; (4) S.
W. Mississippi Outpatient Rehab of Glouster, Inc.; (5) S. W.
Mississippi Outpatient Rehab of Natchez, Inc.; (6) S. W.
Mississippi Outpatient Rehab of Port Gibson, Inc.; (7) N. E.
Outpatient Rehab Services of Delhi, Inc.; (8) N. E. Louisiana
Outpatient Rehab of Monroe, Inc.; and (9) J Co., Inc.
(collectively, the "Clinics") which became wholly owned
subsidiaries of the Company. The consideration for the exchange
was determined as a result of an arm's length negotiation between
the Company's disinterested directors and the Clinics' sole
shareholder, Julian P. Rish. The amount of consideration was
determined by the fair market value of the Clinics and the market
price of the stock on December 15, 1998, the date that the Purchase
Agreement between the Company and the Julian P. Rish was executed.
The sole shareholder of the Clinics, Julian P. Rish, is the
majority shareholder of the Company. He is also a Director, CEO
and Secretary of the Company. The Company has an unsecured non-interest
bearing note receivable from Juilian P. Rish in the amount of
$84,000.
Indebtedness of Management. No director or executive officer
of the Company, nominee for election as a director, any member of
the immediate family of such persons, the corporation or
organization (other than the Company) of which any of such persons
is an executive officer or partner or is, directly or indirectly,
the beneficial owner of 10% or more of any class of equity
securities, or any trust or other estate in which any of such
persons has a substantial beneficial interest or as to which such
person serves as a trustee or in a similar capacity, has been
indebted to the Company at any time since the beginning of the
Company's last fiscal year in an amount in excess of $60,000.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Financial Statements and Schedules.
The following financial statements and schedules are filed as
part of this report:
Report of Independent Public Auditors
Balance Sheet
Statement of Operations
Statement of Stockholder's Equity
Statement of Cash Flows
Notes to Financial Statements
Schedules Omitted: All schedules other than those shown have
been omitted because they are not applicable, not required, or the
required information is shown in the financial statements or notes
thereto.
(b) List of Exhibits
The following exhibits are filed with this report:
Exhibit 13 - Annual Report
Exhibit 27 - Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has
duly caused this Report to be signed on its behalf by the
undersigned duly authorized person.
Date: October 7, 1999 THE J. RISH GROUP, INC.
/S/Julian P. Rish
By:Julian P. Rish, CEO & Controller
/s/ Edwin J. Cantin
________________________________
Edwin J. Cantin, Jr., Director
/s/ Tracie Rish
________________________________
Tracie Rish, Director
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities
and on the dates indicated.
THE J. RISH GROUP, INC.
(FORMERLY BEST OF AMERICA CORPORATION)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE>
J. RISH GROUP, INC.
(FORMERLY BEST OF AMERICA CORPORATION)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE>
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets 2 - 3
Consolidated Statement of Operations 4
Consolidated Statement of Changes in
Stockholders' Equity (Deficit) 5 - 6
Consolidated Statement of Cash Flows 7 - 8
Notes to Consolidated Financial Statements 9 - 17
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
The J. Rish Group, Inc.
We have audited the accompanying consolidated balance sheet of
The J. Rish Group, Inc. (formerly Best of America Corporation) as
of December 31, 1998, and the related consolidated statements of
operations, changes in stockholders' equity (deficit), and cash
flows for the year ended December 31, 1998. These consolidated
financial statements are the responsibility of The J. Rish Group,
Inc.'s management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that
our audit provides 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 The J. Rish Group, Inc. as of December 31, 1998, and
the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting
principles.
As explained in Note 3 to the financial statements, The J. Rish
Group, Inc., acquired Best of America Corporation in a
transaction accounted for as a reverse acquisition and has become
the reporting entity as of December 31, 1998.
POSTLETHWAITE & NETTERVILLE
Baton Rouge, Louisiana
September 21, 1999
<PAGE>
<TABLE>
THE J. RISH GROUP, INC.
(FORMERLY BEST OF AMERICA CORPORATION)
BATON ROUGE, LOUISIANA
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 1,680,417
Accounts receivable, net of allowance for
doubtful accounts of $83,104 400,249
Inventory 11,062
Prepaid expenses 13,450
------------
Total current assets 2,105,178
------------
NON-CURRENT ASSETS
Property and equipment (at cost)
net of accumulated depreciation of $191,703 320,669
Land 469,150
Intangible assets (net of amortization) 56,239
Due from affiliates 169,397
------------
Total Assets $ 3,120,633
===========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 1,683,253
Third party payor settlements 945,226
Accrued expenses 432,736
Notes payable - current portion 528,690
Other liabilities 78,009
------------
Total current liabilities 3,667,914
------------
Note payable - net of current portion 46,629
------------
COMMITMENTS AND CONTINGENCIES -
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $5 par value, non-voting,
non-cumulative, non participating,
convertible, 50,000,000 shares authorized
432,400 shares issued and outstanding (Notes 3 and 6) -
Common stock, no par value
1,000,000,000 shares authorized,
24,731,000 shares issued and outstanding (Notes 3 and 6) 80,036
Accumulated deficit (Notes 3 and 6) (673,946)
------------
Total Stockholders' Equity (Deficit) (593,910)
------------
Total Liabilities and Stockholders' Equity (Deficit) $ 3,120,633
===========
</TABLE>
<PAGE>
THE J. RISH GROUP, INC.
(FORMERLY BEST OF AMERICA CORPORATION)
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
REVENUES
Net patient revenue $ 5,975,962
------------
EXPENSES
Salaries & benefits 3,106,797
Contract labor 530,219
Insurance 60,881
Office supplies 221,512
Mangement fees 1,160,000
Consulting 82,149
Rent 362,060
Repairs & maintenance 90,630
Retention and recruitment of personnel 221,303
Utilities 104,576
Depreciation & amortization 139,860
Bad debts 45,351
Transportation expense 121,930
Miscellaneous expense 80,512
------------
6,327,780
------------
LOSS FROM OPERATIONS (351,818)
------------
OTHER INCOME AND (EXPENSE)
Interest income 2,610
Miscellaneous income 8,646
Interest expense (58,057)
(46,801)
NET LOSS $ (398,619)
=============
Loss per share: $ (0.04)
=============
Weighted average shares outstanding 9,215,000
=============
The accompanying notes are an integral part of this statement.
<PAGE>
<TABLE>
THE J. RISH GROUP, INC.
(FORMERLY BEST OF AMERICA CORPORATION)
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
YEAR ENDED DECEMBER 31, 1998
<CAPTION>
Common Stock Paid in Common Stock
Shares Amount Capital Subscriptions
<S> <C> <C> <C> <C>
Balance, December 31, 1997,
Best of America Corporation 9,129,000 $ 1,348,930 $ 26,647 $ (998,000)
Two for one stock split 0 0 0 0
Cancelation of common
stock subscriptions (998,000) (998,000) 0 998,000
Stock options exercised 600,000 96,000 0 0
Adjustment for acquisition (Note 3) 16,000,000 (366,894) (26,647) 0
Net (loss) for the year 0 0 0 0
---------- ----------- --------- ------------
Balance, December 31, 1998 24,731,000 $ 80,036 $ 0 $ 0
========== ============ ========== ============
</TABLE>
<PAGE>
<TABLE>
THE J. RISH GROUP, INC.
(FORMERLY BEST OF AMERICA CORPORATION)
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - CONTINUED
YEAR ENDED DECEMBER 31, 1998
<CAPTION>
Preferred Stock
Discount
Preferred Stock Below Accumulated
Shares Amount Par Deficit Total
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997,
Best of America Corporation 216,200 $ 2,162,000 $ (1,732,532) $ (631,051) $ 175,994
Two for one stock split 216,200 0 0 0 0
Cancelation of common
stock subscriptions 0 0 0 0 0
Stock options exercised 0 0 0 0 96,000
Adjustment for acquisition (Note 3) 0 (2,162,000) 1,732,532 355,724 (467,285)
Net (loss) for the year 0 0 0 (398,619) (398,619)
-------- ------------ -------------- ----------- -----------
Balance, December 31, 1998 432,400 $ 0 $ 0 $ (673,946) $ (593,910)
======== ============ =============== ============ ===========
</TABLE>
<PAGE>
THE J. RISH GROUP, INC.
(FORMERLY BEST OF AMERICA CORPORATION) Page 1 of 2
BATON ROUGE, LOUISIANA
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (398,619)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 139,860
Provision for bad debts 45,351
Changes in assets and liabilities:
Decrease in accounts receivable 307,155
Increase in prepaid (5,601)
Increase in third party settlements 945,226
Increase in accounts payable and
accrued expenses 1,137,418
Increase in other liabilities 26,336
-----------
Net cash provided by operating activities 2,197,126
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase receivable from affiliates (168,668)
Acquisition of cash from purchase 1,911
Acquisition of intangibles (79,218)
Acquisition of office equipment (276,283)
-----------
Net cash used in investing activities (522,258)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable (35,555)
-----------
Net cash used in financing activities (35,555)
-----------
Increase in cash 1,639,313
Cash and cash equivalents, beginning of period 41,104
-----------
Cash and cash equivalents, end of period $ 1,680,417
===========
The accompanying notes are an integral part of this statement.
<PAGE>
THE J. RISH GROUP, INC.
(FORMERLY BEST OF AMERICA CORPORATION) Page 2 of 2
BATON ROUGE, LOUISIANA
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
Supplemental cash flow information:
Cash paid for interest $ 58,057
===========
Cash paid for income taxes $ -
===========
Non-cash investing and financing activities:
On December 29, 1998, a transaction similar to a reverse acquisition of
the Company was completed. No cash was exchanged during the transaction.
The following assets and liablilities were received:
Current assets $ 11,970
Furniture and fixtures 3,992
Land 469,150
Other assets 3,258
Accounts payable 323,937
Other liabilities 7,251
Notes payable 79,057
The accompanying notes are an integral part of this statement.
<PAGE>
1. ORGANIZATION AND NATURE OF BUSINESS
The J. Rish Group, Inc., formerly Best of America Corporation,
was incorporated on April 1, 1988, in the State of Colorado.
The Company emerged from the development stage in 1996 and was
in the business of constructing, selling and managing self-
service and full service car wash facilities and other types
of properties in the United States; however, activity was
nominal, with gross sales in 1997 of less than $100,000 and a
net loss of $232,001. The Company was basically dormant in
1997 and 1998.
During fiscal 1998, Best of America Corporation merged into a
shell corporation primarily to change its name to The J. Rish
Group, Inc. (the Company) and to change its state of domicile
to Louisiana. In conjunction with the merger, preferred stock
was exchanged on a two-for-one basis and common stock was
exchanged on a one-for-one basis.
Also during 1998, four companies owned by the majority
shareholder, were acquired by the dormant public company. The
subsidiaries took over operating control of the combined
entity. This is considered to be a capital transaction in
substance, rather than a business combination and has been
accounted for in a manner similar to a reverse acquisition.
(See Note 3)
The new Company operates outpatient rehabilitation centers
located in Louisiana and Mississippi. The Company provides
supportive services to individuals at outpatient facilities.
These services include rehabilitative services such as
physical, occupational and speech therapy. The Company had
two facilities that started operations during 1997, two other
facilities that began full operations at the beginning of 1998
and two facilities that started operations during 1998.
2.SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements of include the
accounts of The J. Rish Group, Inc. and all of its wholly
owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from those estimates.
Fixed Assets
The Company depreciates its property and equipment utilizing
the straight line method over periods of five to seven years.
Depreciation expense was $113,454 for the year ended December
31, 1998.
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Loss Per Share
In February 1997, the Financial Accounting Standards Board
(FASB) issued SFAS No. 128, Earnings Per Share. SFAS No. 128
supercedes and simplifies the existing computational
guidelines under Accounting Principles Board (APB) Opinion
No. 15, Earnings Per Share.
The statement is effective for financial statements issued
for periods ending after December 15, 1997. Among other
changes, SFAS No. 128 eliminates the presentation of primary
earnings per share and replaces it with basic earnings per
share for which common stock equivalents are not considered
in the computation. It also revises the computation of
diluted earnings per share. The Company has adopted SFAS No.
128 and there is no material impact to the Company's earnings
per share, financial condition, or results of operations.
The basic loss per share is computed by dividing the net
loss for the period by the weighted average number of common
shares outstanding for the period.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and other highly
liquid debt instruments with an original maturity of less
than three months.
Inventories
The Company values its inventory which consists principally
of supplies at cost using the first-in, first-out method.
Financial Instruments
The Company's short term financial instruments consist of
cash and cash equivalents, accounts receivable, accounts
payable and short-term notes payable. The carrying amounts
of such financial instruments approximate fair value because
of the short term maturities of these instruments.
Net Patient Revenue
Net patient service revenue represents the estimated net
realizable amounts from patients, third-party payors, and
others for services rendered. For revenue recognition,
revenue is recorded when services are performed.
Third-Party Contractual Adjustments
Contractual adjustments represent the difference between the
Company's established billing rate for covered services and
amounts reimbursed by third-party payors, pursuant to
reimbursement agreements. These adjustments are included in
net patient revenue.
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Allowance for Doubtful Accounts
The allowance for uncollectible accounts is established
based on prior experience and management's assessment of
collectibility.
Long-Lived Assets
In accordance with Statement of Financial Accounting
Standards No. 121 (FAS 121), Accounting for the Impairment of
Long-Lived Assets to be Disposed Of, the Company reviews for
the impairment of long-lived assets and certain identifiable
intangibles whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. Under FAS 121, an impairment loss would be
recognized when estimated future cash flows expected to
result from the use of the asset and its eventual disposition
is less than its carrying amount. No such impairment losses
have been identified by the Company.
Amortization of Intangible Assets
Amounts paid for outpatient rehabilitation centers in excess
of the fair value of assets and liabilities has been recorded
as goodwill. This amount is being amortized over a three
year life using the straight-line method.
Income Taxes
Provisions for income taxes are based on taxes payable or
refundable for the current year and deferred taxes on
temporary differences between the amount of taxable income
and pretax financial income and between the tax bases of
assets and liabilities and their reported amounts in the
financial statements. Deferred tax assets and liabilities
are included in the financial statements at currently enacted
income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be
realized or settled as prescribed in Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income
Taxes. As changes in tax laws or rates are enacted, deferred
tax assets and liabilities are adjusted through the provision
for income taxes.
Stock-Based Compensation
The Company continues to account for stock-based
compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees". Compensation cost for stock
options, if any, is measured as the excess of the quoted
market price of the Company's stock at the date of grant over
the amount an employee must pay to acquire the stock.
Restricted stock is recorded as compensation cost over the
requisite vesting periods based on the market value on the
date of grant. Compensation cost for shares issued under
performance share plans is recorded based upon the current
market value of the Company's stock at the end of each
period. There were no transactions applicable to stock-based
compensation during 1998.
Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-Based Compensation", established
accounting and disclosure requirements using a fair-value-
based method of accounting for stock based employee
compensation plans. The Company has elected to remain on its
current method of accounting as described above, and has
adopted the disclosure requirements of SFAS No. 123.
3. ACQUISITION
On December 29, 1998, the Company was combined with other
companies owned by the majority shareholder in a transaction
similar to a reverse acquisition. During this transaction the
dormant public company acquired the following companies, which
were wholly owned by the majority shareholder, into The J.
Rish Group: Baton Rouge Outpatient Rehab, Inc., Feliciana
Outpatient Services, Inc., S.W. Mississippi Outpatient Rehab
of Woodville, Inc., S.W. Mississippi Outpatient Rehab of
Glouster, Inc., S.W. Mississippi Outpatient Rehab of Natchez,
Inc., S.W. Mississippi Outpatient Rehab of Port Gibson, Inc.,
N.E. Outpatient Rehab Services of Delhi, Inc., N.E. Louisiana
Outpatient Rehab of Monroe, Inc. and J Co, Inc. (collectively
the CORFs).
The CORFs, which engage in outpatient rehabilitation activity,
became wholly owned subsidiaries of the Company through the
exchange of 16,000,000 shares of the Company's common stock
for all of the outstanding stock of the CORFs. However, due
to the CORF's having operating control of the combined Company
after the transaction the CORFs are deemed to be equal to the
accounting acquirer in a reverse acquisition.
The accompanying statement of operations and cash flows
reflect only the activity of the CORF's for the year ended
December 31, 1998. Information for the statement of
operations for the period ended December 31, 1997 for the
CORFs was not available to be included in the accompanying
financial statements. Adjustments were made to the Company's
stockholder equity section to reflect the substance of the
transaction to common and preferred stock and accumulated
deficit of the new combined entity and to adjust the
accumulated deficit of the former Company for all periods
prior to December 29, 1998.
Summarized results of operations of the companies as if they
were combined for the period from January 1, 1998 through
December 29, 1998, the date of acquisition, are as follows:
The J. Rish
Group, Inc.
Net sales $ 6,049,201
Net loss ($ 716,176)
4. OPTIONS
The Company paid $2,500 and $1,500 for options to purchase the
present office building and adjacent land for $160,000 and
$110,000, respectively. As of December 31, 1998, the options
had not been exercised.
5. NOTES PAYABLE
Due Within Due After
One Year One Year
Note payable to an individual dated
December, 1998, in original amount of $34,486,
payable in monthly installments of $900 and
including interest at 10%. Collateralized by the
car wash. $ 7,698 $ 26,788
Note payable to a related party of a tract of land in
Louisiana, dated October, 1997, in original amount
of $39,683, payable in annual installments of $9,921
and bearing interest at 10%. Collateralized by the
land in Louisiana. 24,730 19,841
Note payable to a bank with various dates, in original
amount of $123,367, payable in monthly installments
with the final payment due in September 1999,
and bearing interest at rates between 6.94% and 7.30%.
Collateralized by inventory, equipment and accounts
receivable. 111,398 -
Note payable to a bank dated December, 1996, in
original amount of $325,000, payable in monthly
installments with the final payment due in April 1999,
and bearing interest at 9.50%. Collateralized by
inventory, equipment and accounts receivable. 119,203 -
Note payable to a bank dated February 1998,
payable in monthly installments with the final
payment due in February 1999, and bearing interest
at 10.5%. Collateralized by equipment. 115,661 -
Note payable to a bank dated January 1998,
payable in monthly installments with the final
payment due in January 1998, and bearing interest
at 8.25%. Guaranteed by a relate 150,000 -
$ 528,690 $ 46,629
6. STOCKHOLDERS' EQUITY
Preferred Stock
The preferred stock is non-voting, non-cumulative, non-
participating, convertible preferred stock. The stock is
convertible into two shares of common stock of the Company.
As a result of the acquisition the preferred stock was deemed
to have no value in the transaction and was adjusted to zero
at December 31, 1998.
Common Stock
As a result of the acquisition, the value of the common stock
outstanding was adjusted to reflect the substance of the
transaction. An additional 16,000,000 shares were issued on
December 29, 1998 to complete the acquisition.
Accumulated Deficit
The beginning accumulated deficit of The J. Rish Group, Inc.,
formerly Best of America Corporation, was adjusted to reflect
only the accumulated deficit of the acquirer (the CORF's).
(See Note 3)
7. THIRD-PARTY RATE ADJUSTMENTS AND REVENUE
Approximately 90% of the net client service revenues were
derived under federal third-party reimbursement programs.
These revenues are based, in part, on cost reimbursement
principles and are subject to audit and retroactive adjustment
by the respective third-party fiscal intermediaries. In the
opinion of management, retroactive adjustments, if any, may be
material to the financial position, results of operations or
cash flows of the Company. The net amount owed to Medicare at
December 31, 1998 was approximately $945,000.
8. INCOME TAXES
Deferred income taxes may arise from temporary differences
resulting from income and expense items reported for financial
accounting and tax purposes in different period. Deferred
taxes are classified as current or non-current, depending on
the classification of assets and liabilities to which they
relate. Deferred taxes arising from temporary differences
that are not related to an asset or liability are classified
as current or non-current depending on the periods in which
the temporary differences are expected to reverse. The
deferred tax asset of approximately $136,000 resulting from
the loss carryforward described below has been fully reserved.
The Company currently has net operating loss carryforwards
aggregating approximately $400,000 which expire in 2014.
9. RELATED PARTY TRANSACTIONS
In addition to the leases described in Note 10, and the loans
described in Note 5, the Company has identified the following
related party transactions with stockholders and companies in
which the majority stockholder has partial ownership:
1. The Company has a month-to-month agreement to operate
a car wash owned by an entity controlled by the Company's
majority shareholder. The Company pays a monthly rental of
$1,100 for which it receives all revenues from the car
wash and is responsible for its operating expenses.
2. The Company purchased leasehold improvements from
a company related through the majority shareholder. The
purchases amounted to $33,645 for the year ended December
31, 1998.
3. The Company repaid $205,293 in advances from
shareholders during the year ended December 31, 1998.
The Company has an unsecured, non-interest bearing note
receivable from the majority shareholder of $83,000 at
December 31, 1998.
The Company has receivables unsecured, non-interest bearing
from affiliates totaling $85,668 at December 31, 1998.
10. COMMITMENTS AND CONTINGENCIES
The Company leases office facilities under leases extending to
2002. The majority of the leases have renewal options of two
to three years at rates comparable to the present charges.
Rental expense for the year ended December 31, 1998 was
$362,060. The Company anticipates that rental expense for
these leases will continue at rates commensurate with the 1998
amount over the next four years. Minimum rental commitments
are as follows:
1999 $ 147,680
2000 115,570
2001 41,220
2002 34,375
$ 338,845
Included in rent expense for 1998 is $27,500 of rent paid to a
related party for the use of office space. Commitments to
this related party are included in the above schedule.
A subsidiary of the Company is named as a defendant in a
lawsuit regarding a promissory note. The note was assumed by
a stockholder of the Company in a previous year and is not
reflected on the books of the subsidiary. However, since the
subsidiary was the original maker on the note, it is
contingently liable. The suit is for approximately $120,000
plus 8% interest from May 31, 1999 plus 20% of fees on
principal and interest. The outcome of this suit is unknown
and has not been recorded in the accompanying financial
statements.
11. STOCK OPTION PLANS
The Company has a fixed employee stock-based compensation plan
and a performance-based plan. Under the fixed plan, the
Company may grant options for up to 10% of common stock shares
issued and outstanding. The exercise price of each option is
equal to the market price of the Company's stock on the date
of grant. The maximum term of the options is 10 years, and
they vest at the end of 5 years. Under the performance-based
plan, the Company may grant options at its discretion. The
exercise price of performance-based options is equal to the
market price of the Company's stock on the date of the grant.
There are no options outstanding at December 31, 1998.
12. SUBSEQUENT EVENTS
The following acquisitions were made subsequent to year end:
1) In April, 1999 the Company purchased a 30-bed rehabilitation
hospital in Monroe, LA for a total purchase price of $500,000.
2) In March, 1999,the Company purchased an outpatient
rehabilitation clinic in Greenville, MS for $85,000.
3) In May, 1999, the Company purchased a mental health clinic
in Miami, FL for $125,000.
All acquisitions will be accounted for using the purchase
method of accounting.
13. RETIREMENT PLAN
The Company adopted a 401(k) retirement plan effective June 1,
1998. The Plan covers employees who are at least 21 years of
age with one or more years of service. The Company does not
offer a match or any other type of contribution to the plan.
14. STOCK COMPENSATION PLAN
The Company adopted an executive stock compensation plan in
December of 1998 in order to retain, attract and motivate key
employees, officers and executive personnel. The plan will be
administered by a compensation committee consisting of two non-
employed directors. The Company did not compensate any
covered persons in the 1998 fiscal year.
15. CONCENTRATIONS OF CREDIT RISK
The Company grants credit without collateral to its clients,
most of whom are local residents and are insured under third-
party payor Agreements. Revenues from clients and third-party
payors were as follows:
Net Revenues
Medicare 90%
Medical and IMS 4%
PPOs 3%
Other Third-Party Payors 3%
100%
The Company maintains its cash balances in various financial
institutions located in areas of operation. The balances are
insured by the Federal Deposit Insurance Corporation up to
$100,000. At December 31, 1998, the Company's uninsured cash
balances totaled $339,579.
16. STOCK OPTIONS GRANTED
During 1997, the Company entered into a consulting contract
that granted the consultant the option to purchase up to
1,000,000 shares of common stock at varying prices. During
1998, the consultant exercised options for the purchase of
600,000 shares at .16 cents per share. In consideration for
the 600,000 shares, the Company received $6,000 in cash and
cancelled $90,000 of accounts payable to the consultant.
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1680
<SECURITIES> 0
<RECEIVABLES> 483
<ALLOWANCES> (83)
<INVENTORY> 11
<CURRENT-ASSETS> 2105
<PP&E> 512
<DEPRECIATION> (192)
<TOTAL-ASSETS> 3120
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<BONDS> 0
0
0
<COMMON> 80
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<INTEREST-EXPENSE> (58)
<INCOME-PRETAX> (399)
<INCOME-TAX> (399)
<INCOME-CONTINUING> (399)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (399)
<EPS-BASIC> 0
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</TABLE>
