U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-32195
AMERICAN HOSPITAL RESOURCES, INC.
(Exact name of small business issuer as specified in its charter)
UTAH 87-0319410
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1912 WEST BAY CREST
SANTA ANA, CA 92704
(Address of principal executive offices)
714-444-0223
(Issuer's telephone number)
NOT APPLICABLE
(Former name and address)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [ X] No [
]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
At March 31, 2003 the issuer had 8,654,000 shares of no par value common stock
issued and outstanding.
Transitional Small Business Format: Yes [ ] No [ X ]
FORM 10-QSB
AMERICAN HOSPITAL RESOURCES, INC.
INDEX
Page
PART I.. Financial Information
Item 1. Unaudited Condensed Consolidated Financial Statements 3
Unaudited Condensed Consolidated Balance Sheets - March 31,
2003 and December 31, 2002 4
Unaudited Condensed Consolidated Statements of Operations for
the three months ended March 31, 2003 and 2002 6
Unaudited Condensed Consolidated Statements of Cash Flows for
the three months ended March 31, 2003 and 2002 7
Notes to Unaudited Condensed Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition or Plan of Operation 27
Item 3. Controls and Procedures 29
PART II. Other Information
Item 2. Changes in Securities 29
Item 5. Other Information 31
Related Party Transactions 31
Subsequent Events 31
Item 6. Exhibits and Reports on Form 8-K 32
Signatures 33
(Inapplicable items have been omitted)
2
PART I.
FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
In the opinion of management, the accompanying unaudited financial statements
included in this Form 10-QSB reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the results of
operations for the periods presented. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for the
full year.
3
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
2003 2002
-------------- -------------
CURRENT ASSETS:
Cash. . . . . . . . . . . . . . . . . $ - $ 6,779
Accounts receivable, net of allowance
for doubtful accounts of $102,300 . - -
Advance to NIPSI. . . . . . . . . . . - 15,000
Prepaid expense . . . . . . . . . . . 67 30,075
-------------- -------------
Total Current Assets. . . . . . . . 67 51,854
-------------- -------------
PROPERTY AND EQUIPMENT, net . . . . . . 1,645 1,743
-------------- -------------
OTHER ASSETS:
Goodwill. . . . . . . . . . . . . . . 60,321 60,321
Deferred acquisition costs. . . . . . 250,000 -
Deferred stock offering costs . . . . 1,059,609 1,059,424
-------------- -------------
Total Other Assets. . . . . . . . . 1,369,930 1,119,745
-------------- -------------
$ 1,371,642 $ 1,173,342
============== =============
Continued
4
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
[CONTINUED]
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31, December 31,
2003 2002
------------ --------------
CURRENT LIABILITIES:
Bank overdraft . . . . . . . . . . . . . . . $ 4,794 $ -
Accounts payable . . . . . . . . . . . . . . 1,081,695 1,088,150
Accrued expenses . . . . . . . . . . . . . . 112,841 109,940
Deposit from NIPSI . . . . . . . . . . . . . 24,298 -
------------ ---------------
Total Current Liabilities. . . . . . . . 1,223,628 1,198,090
COMMITMENTS AND CONTINGENCIES [See Note 15]. . - -
------------ ---------------
Total Liabilities. . . . . . . . . . . . 1,223,628 1,198,090
------------ ---------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, no par value,
10,000,000 shares authorized:
Series A convertible preferred stock,
2,600,000 shares issued and outstanding. 3,900,000 3,900,000
Series B convertible preferred stock,
no shares issued and outstanding . . . . - -
Common stock, no par value,
100,000,000 shares authorized,
8,654,000 and 7,614,000 shares
issued and outstanding, respectively . . 4,019,122 3,759,522
Additional paid-in capital 955,496 955,496
Retained earnings (deficit). . . . . . . . . (8,726,604) (8,639,766)
------------ ---------------
Total Stockholders' Equity (Deficit) . . . 148,014 (24,748)
------------ ---------------
$ 1,371,642 $ 1,173,342
============ ===============
Note: The Balance Sheet of December 31, 2002 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
5
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months
Ended March 31,
---------------------------------
2003 2002
---------------------- ---------
REVENUES . . . . . . . . . . $ - $ -
---------------------- ---------
EXPENSES:
General and administrative 86,838 25,408
---------------------- ---------
Total Expenses . . . . . 86,838 25,408
---------------------- ---------
LOSS BEFORE OTHER EXPENSE. . (86,838) (25,408)
---------------------- ---------
OTHER EXPENSE:
Interest expense . . . . . - (596)
---------------------- ---------
Total Other Expense. . . - (596)
---------------------- ---------
LOSS BEFORE INCOME TAXES . . (86,838) (26,004)
CURRENT TAX EXPENSE. . . . . - -
DEFERRED TAX EXPENSE . . . . - -
---------------------- ---------
NET LOSS . . . . . . . . . . $ (86,838) $(26,004)
====================== =========
LOSS PER COMMON SHARE. . . . $ (.01) $ (.00)
====================== =========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
6
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months
Ended March 31,
----------------------
2003 2002
----------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . $ (86,838) $(26,004)
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . 98 -
Non-cash services for common stock . . . . . . . - 7,500
Changes in assets and liabilities:
Decrease in prepaid expense. . . . . . . . . . 30,008 -
Increase (decrease) in accounts payable. . . . (6,455) 10,682
Increase in accrued expenses . . . . . . . . . 2,901 596
(Decrease) in related party payable. . . . . . - (500)
----------- ---------
Net Cash (Used) by Operating Activities. . . (60,286) (7,726)
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on advance to NIPSI. . . . . . . 15,000 -
Payments received on note receivable . . . . . . . - 30,000
Payments for deferred acquisition costs. . . . . . - (62,520)
Payments of NIPSI acquisition costs. . . . . . . . (45,702) -
----------- ---------
Net Cash (Used) by Investing Activities. . . (30,702) (32,520)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank overdraft . . . . . . . . . . . 4,794 -
Proceeds from deposit from NIPSI . . . . . . . . . 70,000 -
Proceeds from notes payable. . . . . . . . . . . . - 120,000
Payments of stock offering costs . . . . . . . . . (585)
Proceeds from sale of common stock . . . . . . . . 10,000 -
Payments to repurchase common stock. . . . . . . . - (79,500)
----------- ---------
Net Cash Provided by Financing Activities. . 84,209 40,500
----------- ---------
[Continued]
7
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[CONTINUED]
For the Three Months
Ended March 31,
--------------------
2003 2002
----------- -------
NET INCREASE (DECREASE) IN CASH. . . . . . . . . . (6,779) 254
CASH AT BEGINNING OF THE PERIOD. . . . . . . . . . 6,779 80
----------- -------
CASH AT END OF THE PERIOD. . . . . . . . . . . . . $ - $ 334
----------- -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . $ - $ -
Income taxes . . . . . . . . . . . . . . . . . $ - $ -
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
For the three months ended March 31, 2003:
In January 2003, the Company issued 1,000,000 shares of common stock
as partial consideration of $250,000 for the proposed acquisition of
Coastalmed.
For the three months ended March 31, 2002:
In February 2002, the Company issued 675,000 shares of common stock as
payment of $7,500 of services related to the acquisition of AHR
Subsidiary.
In February 2002, the Company issued 11,000,000 shares of common stock
for a $30,000 note receivable and to convert $80,000 of notes payable.
In March 2002, the Company issued 1,600,000 shares of common stock as
payment of $10,000 of accounts payable and $22,000 of related party
payable.
In March 2002, the Company granted 20,000 options to purchase common
stock to attract new directors.
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
8
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - American Hospital Resources, Inc. ("Parent") was organized
under the laws of the State of Utah on May 9, 1972 as High-Line Investment
& Development Company. In 1977, Parent changed its name to Gayle
Industries, Inc. In 1978, Parent merged into Swing Bike. In 1979, Parent
changed its name to Horizon Energy Corporation. In 1992, Parent changed its
name to Millennium Entertainment Corp. In 1993, Parent changed its name to
New Horizon Education, Inc. In 1993, Parent also organized a wholly owned
subsidiary with the sole purpose of merging with Ruff Network Marketing,
Inc. In 1997, Parent sold its wholly owned subsidiary to Phoenix Ink, LLC.
On June 17, 2002, Parent changed its name to American Hospital Resources,
Inc.
American Hospital Resources, Inc. ("AHR Subsidiary") was organized under
the laws of the State of Delaware on August 27, 1999 as Frozen Enterprises,
Inc. In February 2002, AHR Subsidiary changed its name to American Hospital
Resources, Inc. On December 31, 2002, the Board of Directors determined to
dissolve AHR Subsidiary. AHR Subsidiary is not in good standing with the
State of Delaware [See Note 17].
NIPSI Pharmacy of Texas ("NPT Subsidiary") was organized as a wholly owned
subsidiary under the laws of the State of Nevada on December 19, 2002 to
provide pharmacy services.
American Hospital Resources, Inc., AHR Subsidiary and NPT Subsidiary ("the
Company") provides hospital consulting and management. The Company has, at
the present time, not paid any dividends and any dividends that may be paid
in the future will depend upon the financial requirements of the Company
and other relevant factors.
CONDENSED FINANCIAL STATEMENTS - The accompanying financial statements have
been prepared by the Company without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position, results of operations and cash
flows at March 31, 2003 and 2002 and for the periods then ended have been
made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles in the United States of America have been condensed or omitted.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's December 31, 2002 audited financial statements. The results of
operations for the periods ended March 31, 2003 and 2002 are not
necessarily indicative of the operating results for the full year.
CONSOLIDATION - The consolidated financial statements include the accounts
of Parent, its wholly owned AHR Subsidiary and its wholly owned NPT
Subsidiary. All significant intercompany transactions have been eliminated
in consolidation.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid debt
investments purchased with a maturity of three months or less to be cash
equivalents.
9
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]
ACCOUNTS AND LOANS RECEIVABLE - The Company records accounts and loans
receivable at the lower of cost or fair value. The Company determines the
lower of cost or fair value of nonmortgage loans on an individual asset
basis. The Company recognizes interest income on an account receivable
based on the stated interest rate for past-due accounts over the period
that the account is past due. The Company recognizes interest income on a
loan receivable based on the stated interest rate over the term of the
loan. The Company accumulates and defers fees and costs associated with
establishing a receivable to be amortized over the estimated life of the
related receivable. The Company estimates allowances for doubtful accounts
and loan losses based on the aged receivable balance and historical losses.
The Company records interest income on delinquent accounts and loans
receivable only when payment is received. The Company first applies
payments received on delinquent accounts and loans receivable to eliminate
the outstanding principal. The Company charges off uncollectible accounts
and loans receivable when management estimates no possibility of collecting
the related receivable. The Company considers accounts and loans receivable
to be past due or delinquent based on contractual terms.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
Expenditures for repairs and maintenance are charged to operating expense
as incurred. Expenditures for additions and betterments that extend the
useful lives of property and equipment are capitalized, upon being placed
in service. When assets are sold or otherwise disposed of, the cost and
related accumulated depreciation or amortization is removed from the
accounts and any resulting gain or loss is included in operations.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets of five years [See Note 6].
WEBSITE COSTS - The Company has adopted the provisions of Emerging Issues
Task Force 00-2, "Accounting for Web Site Development Costs." Costs
incurred in the planning stage of a website are expensed as research and
development while costs incurred in the development stage are capitalized
and amortized over the life of the asset, estimated to be five years. As of
March 31, 2003, the Company has capitalized a total of $1,541 of website
costs which are included in property and equipment. The Company did not
incur any planning costs and did not record any research and development
costs for the three months ended March 31, 2003 and 2002.
INTANGIBLE ASSETS - The Company accounts for their intangible assets in
accordance with Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" [See Note 7].
STOCK OFFERING COSTS - Costs related to proposed stock offerings are
deferred and will be offset against the proceeds of the offering. In the
event a stock offering is unsuccessful, the costs related to the offering
will be written off to expense.
ACQUISITION COSTS - Costs related to proposed acquisitions are deferred and
will be included in the acquisition price. In the event an acquisition is
unsuccessful, the costs related to the acquisition will be written off to
expense.
10
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]
REVENUE RECOGNITION - The Company's revenue comes from the management of
hospitals and from the sale of hospital property. Revenue from the
management of hospitals is recognized over the term of the managing
agreement. A portion of the managing services is subcontracted out by the
Company to third party vendors. These direct costs are recorded by the
Company as general and administrative expenses. Revenue from the sale of
hospital property is recorded when property is sold. The Company has
purchased the right to receive a portion of the revenues from a consulting
and asset sale agreement. Revenue derived from the purchased contract
rights is recorded as received on a net basis. On a net basis, only the
share of revenue belonging to the Company is recorded as revenue.
STOCK BASED COMPENSATION - The Company accounts for their stock based
compensation in accordance with Statement of Financial Accounting Standards
No. 123 "Accounting for Stock-Based Compensation." This statement
establishes an accounting method based on the fair value of equity
instruments awarded to employees as compensation. However, companies are
permitted to continue applying previous accounting standards in the
determination of net income with disclosure in the notes to the financial
statements of the differences between previous accounting measurements and
those formulated by the new accounting standard. The Company has adopted
the disclosure only provisions of SFAS No. 123. Accordingly, the Company
has elected to determine net income using previous accounting standards.
LOSS PER SHARE - The computation of loss per share of common stock is based
on the weighted average number of shares outstanding during the periods
presented, in accordance with Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" [See Note 14].
ACCOUNTING ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions
that effect the reported amounts of assets and liabilities, the disclosures
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 estimated by
management.
RECENTLY ENACTED ACCOUNTING STANDARDS - Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations", SFAS No. 142,
"Goodwill and Other Intangible Assets", SFAS No. 143, "Accounting for Asset
Retirement Obligations", SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections", SFAS No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities", SFAS No. 147, "Acquisitions of Certain
Financial Institutions - an Amendment of FASB Statements No. 72 and 144 and
FASB Interpretation No. 9", and SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment of FASB Statement
No. 123", were recently issued. SFAS No. 141, 142, 143, 144, 145, 146, 147
and 148 have no current applicability to the Company or their effect on the
financial statements would not have been significant.
11
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]
RECLASSIFICATION - The financial statements for periods prior to March 31,
2003 have been reclassified to conform to the headings and classifications
used in the March 31, 2003 financial statements.
NOTE 2 - ACQUISITION AND VOIDING OF ACQUISITION
On December 13, 2002, Parent signed an asset purchase agreement with NIPSI
Healthcare of Houston Limited Partnership ("NIPSI") and NIPSI of Houston,
Inc. ("NIPSI General Partner"). The agreement provided for Parent to assume
certain liabilities of NIPSI and to sign an unsecured 18-month $150,000
note payable to NIPSI for most of the operating assets of NIPSI. The
agreement also included a non-compete covenant from NIPSI and NIPSI General
Partner. The acquisition closed December 16, 2002; however, subsequently,
in a default judgement against NIPSI in favor of a creditor, the court
voided and nullified the transfer of NIPSI assets to the Company [See Notes
15 and 17]. Also, NIPSI General Partner sent a demand letter to the Company
to rescind the asset purchase agreement and claiming damages of $120,000
against the Company [See Note 15]. The financial statements reflect the
acquisition as having been voided or rescinded and any expenses associated
with the voided acquisition have been classified as a cost of the
unsuccessful NIPSI acquisition.
NOTE 3 - ACQUISITION
On April 3, 2002, Parent signed an agreement and plan of reorganization
with Phase One, LLC and AHR Subsidiary. The agreement provided for Parent
to issue 3,196,873 shares of its common stock for all 1,500 shares of AHR
Subsidiary's common stock. In connection with the proposed reorganization,
Parent previously issued a total of 13,000,000 shares of its common stock
to Phase One, LLC for $130,000 in financing. The agreement called for
former shareholders of AHR Subsidiary to receive up to 12,870,000 shares of
the common stock issued to Phase One, LLC based on the performance of the
Company. In connection with the agreement, Parent amended its articles of
incorporation to authorize 10,000,000 shares of preferred stock and to
change its name to American Hospital Resources, Inc. Also in connection
with the agreement, Parent and AHR Subsidiary entered into three-year
consulting agreements with both Synergistic Connections, Inc. and Corporate
Dynamics, Inc. [See Note 15]. As a result of the agreement, the former
officers and directors of the Company resigned and new officers and
directors were appointed. The acquisition closed June 17, 2002 and has been
accounted for as a purchase of AHR Subsidiary. The Company recorded
goodwill of $60,321 as a result of the acquisition. On December 31, 2002,
the agreement and plan of reorganization was amended to exchange the
13,000,000 shares of the Company's common stock that had been issued to
Phase One, LLC for 2,600,000 shares of the Company's Series A preferred
stock. The agreement was further amended to issue the 2,600,000 shares of
Series A preferred stock to the Chief Executive Officer for value received
by Phase One, LLC, which effected a change in control of the Company. The
amended agreement also grants the Chief Executive Officer the right to
convert, at any time, any or all of the common stock that he received under
the agreement into Series A preferred stock at a rate of five shares of
common stock into one share of Series A preferred stock.
12
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following at:
March 31, December 31,
2003 2002
--------------- --------------
Parkview management consulting services $ 7,800 $ 7,800
Parkview purchased commission . . . . . 94,500 94,500
--------------- --------------
102,300 102,300
Less: allowance for doubtful accounts . (102,300) (102,300)
--------------- --------------
Net accounts receivable . . . . . . . . $ - $ -
--------------- --------------
At March 31, 2003 and December 31, 2002, the Company had receivables from
two agreements with Parkview. Parkview is undergoing bankruptcy
reorganization and the receivables were generated as part of the
reorganization. While management expects to collect on both Parkview
receivables, collection is not certain and an allowance has been recorded.
NOTE 5 - ADVANCE TO NIPSI
Advance to NIPSI consisted of the following at:
March 31, December 31,
2003 2002
-------------- -------------
Advance to NIPSI . . $ - $ 15,000
-------------- -------------
Net advance to NIPSI $ - $ 15,000
-------------- -------------
At December 31, 2002, the Company had made advances to NIPSI which had not
been repaid. In 2003, the Company received $15,000 from NIPSI; however,
NIPSI General Partner subsequently rescinded an asset purchase agreement
and, in a default judgement against NIPSI in favor of a creditor, the court
voided and nullified the transfer of NIPSI assets to the Company [See Notes
2, 15 and 17].
13
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at:
March 31, December 31,
2003 2002
--------------- --------------
Office equipment . . . . . . . $ 431 $ 431
Website. . . . . . . . . . . . 1,541 1,541
--------------- --------------
1,972 1,972
Less: accumulated depreciation (327) (229)
--------------- --------------
Net property and equipment . . $ 1,645 $ 1,743
--------------- --------------
Depreciation expense for the three months ended March 31, 2003 and 2002 was
$98 and $0, respectively.
NOTE 7 - GOODWILL
The Company has no indefinite-life or definite-life intangible assets. The
following is a summary of the Company's goodwill.
Goodwill at December 31, 2002 $ 60,321
---------------
Goodwill at March 31, 2003 $ 60,321
===============
NOTE 8 - ACCRUED EXPENSES
Accrued expenses consist of the following at:
March 31, December 31,
2003 2002
-------------- -------------
Accrued payroll and related expenses $ 112,841 $ 109,940
-------------- -------------
Total accrued expenses . . . . . . . $ 112,841 $ 109,940
-------------- -------------
NOTE 9 - NOTES PAYABLE
On February 27, 2002, the Company signed a $40,000 convertible note payable
to McKinley Enterprises, Inc. Profit Sharing Plan. The note accrued
interest at 8% per annum, was due February 27, 2003 and was convertible
after 90 days to 500,000 shares of common stock. On May 30, 2002, the
$40,000 note payable and its accrued interest of $789 were converted to
500,000 shares of common stock [See Note 10].
14
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - NOTES PAYABLE [CONTINUED]
On July 11, 2001, the Company signed a $20,000 note payable to Growth
Ventures Inc., Pension Plan and Trust. The note accrued interest at 10% per
annum and was due October 9, 2001 but was extended through February 11,
2002. On February 27, 2002, the Company issued 500,000 shares of common
stock as full payment of the $20,000 note payable and its accrued interest
of $1,281 [See Note 10].
NOTE 10 - CAPITAL STOCK
PREFERRED STOCK - The Company has authorized 10,000,000 shares of preferred
stock, no par value, with such rights, preferences and designations and to
be issued in such series as determined by the Board of Directors. On
December 30, 2002, the Company's Board of Directors designated 5,000,000
shares as Series A and 5,000,000 shares as Series B.
SERIES A PREFERRED STOCK - Each share of Series A preferred stock has the
voting rights of 5 shares of common stock, is convertible into 5 shares of
common stock and is entitled to receive a $.0575 annual dividend payable
monthly. The total annual dividend for all shares of Series A preferred
stock is limited to 50% of the Company's earnings before interest, taxes,
depreciation and amortization for the year and the monthly payments are
adjusted accordingly. For the three months ended March 31, 2003, the
Company has negative earnings before interest, taxes, depreciation and
amortization; therefore, no dividend is due on the Series A preferred stock
and no accrual for future dividend payments has been recorded in the
accompanying financial statements. In addition, if shares of the Series A
preferred stock are required to be converted as part of a sale or merger of
the Company, then each share of Series A preferred stock is convertible
into 5.5 shares of common stock.
In December 2002, the Company issued 2,600,000 shares of their previously
authorized but unissued Series A preferred stock in exchange for 13,000,000
shares of the Company's common stock.
SERIES B PREFERRED STOCK - Each share of Series B preferred stock is
convertible into 1 share of common stock and is entitled to receive a 6.5%
annual dividend payable quarterly. The 6.5% annual dividend is based on the
purchase price paid to or the consideration received by the Company. At
March 31, 2003, no shares were issued and outstanding. The Series B
preferred stock rights were subsequently modified [See Note 17].
COMMON STOCK - The Company has authorized 100,000,000 shares of common
stock with no par value. In February 2003, the Company issued 40,000 shares
of their previously authorized but unissued common stock for cash of
$10,000, or $.25 per share. Stock offering costs of $400 were netted
against the proceeds.
In January 2003, the Company issued 1,000,000 shares of their previously
authorized but unissued common stock as partial consideration of $250,000
for the proposed acquisition of Coastalmed, or $.25 per share.
In December 2002, the Company repurchased and cancelled 13,000,000 shares
of the Company's issued and outstanding common stock for 2,600,000 shares
of Series A preferred stock.
15
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - CAPITAL STOCK [CONTINUED]
In October 2002, the Company issued 200,000 shares of their previously
authorized but unissued common stock for cash of $50,000, or $.25 per
share. Stock offering costs of $5,000 were netted against the proceeds.
In August 2002, the Company issued 584,000 shares of their previously
authorized but unissued common stock for services valued at $146,000, or
$.25 per share.
In June 2002, in connection with an agreement and plan of reorganization,
the Company issued 3,196,873 shares of their previously authorized but
unissued common stock to acquire AHR Subsidiary [See Note 3].
In May 2002, the Company issued 500,000 shares of their previously
authorized but unissued common stock to convert a $40,000 note payable and
its accrued interest of $789, or $.081578 per share.
In April 2002, the Company issued 2,000,000 shares of their previously
authorized but unissued common stock to Phase One, LLC for cash of $20,000,
or $.01 per share.
In March 2002, the Company issued 1,600,000 shares of their previously
authorized but unissued common stock as payment of $10,000 of accounts
payable and $22,000 of related party payable, or $.02 per share.
In February and March 2002, the Company repurchased and cancelled 3,198,736
shares of the Company's issued and outstanding common stock for cash in the
amount of $79,500, or an average of approximately $.025 per share. The
Company had offered to repurchase the shares for an amount up to the
original sales price because the National Association of Securities Dealers
had imposed a special restriction on the trading of these shares.
In February 2002, the Company issued 11,000,000 shares of their previously
authorized but unissued common stock to Phase One, LLC for a $30,000 note
receivable and to convert $80,000 of notes payable. Total consideration
amounted to $110,000, or $.01 per share. This issuance resulted in a change
in control of the Company.
In February 2002, the Company issued 125,000 shares of their previously
authorized but unissued common stock for services rendered related to the
acquisition of AHR Subsidiary valued at $2,500, or $.02 per share.
In February 2002, the Company issued 450,000 shares of their previously
authorized but unissued common stock for services rendered related to the
acquisition of AHR Subsidiary valued at $5,000, or $.01 per share.
In February 2002, the Company issued 500,000 shares of their previously
authorized but unissued common stock to convert a $20,000 note payable and
its accrued interest of $1,281, or $.04256 per share.
COMMON STOCK AUTHORIZED - Although none of the shares have been issued, in
February 2003 the Board of Directors authorized the future issuance of
720,000 shares of common stock to consultants and an attorney.
16
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - CAPITAL STOCK [CONTINUED]
STOCK OPTIONS - In November 2002, the Company granted 2,000,000 options to
purchase common stock at $.50 per share for services rendered valued at
$882,400. The options vested immediately and are exercisable for three
years. At March 31, 2003, none of these options had been exercised,
forfeited or cancelled.
In March 2002, the Company granted 20,000 options to purchase common stock
at $.05 per share to attract new directors to Company. The options vested
immediately and are exercisable for two years. At March 31, 2003, none of
these options had been exercised, forfeited or cancelled.
STOCK WARRANTS - In December 2002, the Company granted 300,000 warrants to
purchase common stock to directors and NIPSI personnel for services
rendered valued at $19,577. The warrants were granted from the 2003 Stock
Bonus Pool, vested immediately and are exercisable at $.25 per share for
five years. At March 31, 2003, none of these warrants had been exercised,
forfeited or cancelled.
STOCK OPTION AND WARRANT COMPENSATION COST - The Company has adopted the
disclosure only provisions of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation." Had compensation cost
for the Company's stock options and warrants been determined based on the
fair value at the grant date consistent with the provisions of SFAS No.
123, the Company's net loss and loss per share would have been reduced to
the pro forma amounts indicated below:
For the Three Months
Ended March 31,
---------------------
2003 2002
--------- ----------
Net Loss. . . . . . . As reported $(86,838) $(26,004)
Pro forma . . . . . $ (86,838) $(26,391)
Loss Per Common Share As reported $ (.01) $ (.00)
Pro forma . . . . . $ (.01) $ (.00)
The fair value of each option and warrant granted is estimated on the date
granted using the Black-Scholes option pricing model, with the following
assumptions used for the grants on December 31, 2002: risk-free interest
rate of 2.78%, expected dividend yield of zero, expected lives of 5 years
and expected volatility of 100%. The following assumptions were used for
grants on November 1, 2002: risk-free rate of 2.92%, expected dividend
yield of zero, expected lives of 3 years and expected volatility of 100%.
The following assumptions were used for grants on March 14, 2002: risk-free
rate of 3.63%, expected dividend yield of zero, expected lives of 2 years
and expected volatility of 100%. The following assumptions were used for
grants on March 4, 2002: risk-free rate of 3.24%, expected dividend yield
of zero, expected lives of 2 years and expected volatility of 100%.
17
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - CAPITAL STOCK [CONTINUED]
INCENTIVE STOCK BONUS PLAN - On December 31, 2002, the Board of Directors
of the Company adopted the Incentive Stock Bonus Plan ("the Plan"). The
Plan provides for the granting of 5-year warrants to purchase shares of
common stock to directors, senior management and certain key employees.
Awards under the Plan will be granted as determined by the Board of
Directors. The Board of Directors further authorized the 2003 Stock Bonus
Pool which consists of 1,000,000 warrants to purchase common stock at $.25
per share. At March 31, 2003, total warrants available to be granted from
the 2003 Stock Bonus Pool amounted to 700,000.
A summary of the status of the warrants granted under the Company's
Incentive Stock Bonus Plan at March 31, 2003 is presented below:
March 31, 2003
----------------------------------
Weighted Average
Shares Exercise Price
---------------- ----------------
Outstanding at beginning of year. . . . 300,000 $ .25
Granted . . . . . . . . . . . . . . . . - $ -
Exercised . . . . . . . . . . . . . . . - $ -
Forfeited . . . . . . . . . . . . . . . - $ -
Expired . . . . . . . . . . . . . . . . - $ -
---------------- ----------------
Outstanding at end of period. . . . . . 300,000 $ .25
---------------- ----------------
Weighted average fair value of warrants
granted during the period . . . . . . - $ -
================ ================
A summary of the status of the warrants outstanding under the Company's
Incentive Stock Bonus Plan at March 31, 2003 is presented below:
Warrants Outstanding Warrants Exercisable
------------------------------------------- -------------------------------
Range of Weighted-Average Weighted-Average Weighted-Average
Exercise Number Remaining Exercise Number Exercise
Prices Outstanding Contractual Life Price Exercisable Price
--------- ----------- ---------------- --------------- ------------ -----------------
.25 300,000 4.8 years $ .25 300,000 $ .25
--------- ----------- ---------------- --------------- ------------ -----------------
NOTE 11 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". SFAS
No. 109 requires the Company to provide a net deferred tax asset or
liability equal to the expected future tax benefit or expense of temporary
reporting differences between book and tax accounting methods and any
available operating loss or tax credit carryforwards. At March 31, 2003,
the Company has available unused operating loss carryforwards of
approximately $353,000, which may be applied against future taxable income
and which expire in various years through 2023. If certain substantial
changes in the Company's ownership should occur, there will be an annual
limitation on the amount of net operating loss carryforwards which can be
utilized.
18
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - INCOME TAXES [CONTINUED]
At March 31, 2003, the total of all deferred tax assets was approximately
$239,000 and the total of all deferred tax liabilities was $0. The amount
of and ultimate realization of the benefits from the deferred tax assets
for income tax purposes is dependent, in part, upon the tax laws in effect,
the future earnings of the Company, and other future events, the effects of
which cannot be determined. Because of the uncertainty surrounding the
realization of the loss carryforwards, the Company has established a
valuation allowance of approximately $239,000. The net change in the
valuation allowance was approximately $34,000 during the three months ended
March 31, 2003.
The temporary differences gave rise to the following deferred tax asset
(liability):
March 31,
2003
----------
Excess of tax over financial
accounting depreciation. . $ 90
Accrued compensation . . . . 44,950
Capital loss carryover . . . 12,945
Allowance for bad debt . . . 40,751
Net operating loss carryover 140,638
The components of federal income tax expense from continuing operations
consisted of the following for the three months ended:
March 31,
2003
-----------
Current income tax expense:
Federal . . . . . . . . . . . . . . . . . . $ -
State . . . . . . . . . . . . . . . . . . . -
-----------
Net current tax expense . . . . . . . . . . . $ -
-----------
Deferred tax expense (benefit) resulted from:
Excess of tax over financial
accounting depreciation . . . . . . . . . $ 36
Accrued compensation. . . . . . . . . . . . (1,156)
Net operating loss carryover. . . . . . . . (33,239)
Valuation allowance . . . . . . . . . . . . 34,359
-----------
Net deferred tax expense. . . . . . . . . . . $ -
===========
Deferred income tax expense results primarily from the reversal of
temporary timing differences between tax and financial statement income.
19
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - INCOME TAXES [CONTINUED]
The reconciliation of income tax from continuing operations computed at the
U.S. federal statutory tax rate to the Company's effective rate is as
follows for the three months ended:
March 31,
2003
----------
Computed tax at the expected
federal statutory rate . . . . . . . . . 34.00%
State income taxes, net of federal benefit 5.83
Other. . . . . . . . . . . . . . . . . . . (.26)
Valuation allowance. . . . . . . . . . . . (39.57)
----------
Effective income tax rates . . . . . . . . 0.00%
===========
NOTE 12 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America,
which contemplate continuation of the Company as a going concern. However,
the Company has just recently commenced operations and all of their
revenues have been from one customer. Further, the Company has current
liabilities in excess of current assets. These factors raise substantial
doubt about the ability of the Company to continue as a going concern. In
this regard, management is proposing to raise any necessary additional
funds not provided by operations through loans or through sales of their
common stock or through a possible business combination with another
company. There is no assurance that the Company will be successful in
raising this additional capital or in achieving profitable operations. The
financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
NOTE 13 - RELATED PARTY TRANSACTIONS
NOTE RECEIVABLE - On February 27, 2002, the Company received a $30,000 note
receivable from Phase One, LLC for the issuance of common stock [See Note
10]. The note was due May 28, 2002 and accrued interest at 10% per annum.
The note was paid on March 31, 2002 with no interest being recognized on
the note.
DEPOSIT FROM NIPSI - In January and February 2003, during the period that
the Company operated the assets of NIPSI pursuant to an asset purchase
agreement [See Notes 2, 15 and 17], the Company received $70,000 from NIPSI
as reimbursement of costs incurred as part of the unsuccessful NIPSI
acquisition. At March 31, 2003, the Company has $24,298 remaining which
will be used to offset the future expenses of the unsuccessful NIPSI
acquisition.
20
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - RELATED PARTY TRANSACTIONS [CONTINUED]
NOTES PAYABLE - On February 11, 2002, the Company signed a $50,000
convertible note payable to Phase One, LLC. The note was due February 11,
2003, accrued interest at 10% per annum and was convertible to 5,000,000
shares of common stock. On February 27, 2002, the note was converted to
common stock and no interest was recognized on the note [See Note 10].
On January 25, 2002, the Company signed a $30,000 convertible note payable
to Phase One, LLC. The note was due January 25, 2003, accrued interest at
10% per annum and was convertible to 3,000,000 shares of common stock. On
February 27, 2002, the note was converted to common stock and no interest
was recognized on the note [See Note 10].
SERIES A PREFERRED STOCK FOR COMMON STOCK - In December 2002, the Company
issued 2,600,000 shares of Series A preferred stock to Phase One, LLC in
exchange for 13,000,000 shares of common stock [See Note 10].
COMMON STOCK ISSUANCES - In April 2002, the Company issued 2,000,000 shares
of common stock to Phase One, LLC for cash of $20,000 [See Note 10].
In March 2002, the Company issued 1,100,000 shares of common stock to their
former President as payment of $22,000 for services previously rendered
[See Note 10].
In February 2002, the Company issued 11,000,000 shares of common stock to
Phase One, LLC for a $30,000 note receivable and to convert $80,000 of
notes payable [See Note 10].
OPTIONS - In March 2002, the Company granted 20,000 options to purchase
common stock to attract new directors to the Company [See Note 10].
WARRANTS - In December 2002, the Company granted 275,000 warrants to
purchase common stock to directors of the Company for services rendered
valued at $13,750 [See Note 10].
MANAGEMENT COMPENSATION - During the three months ended March 31, 2003 and
2002, respectively, the Company expensed $30,000 and $0 as salary to the
Chief Executive Officer. At March 31, 2003, the Company owed $106,937 in
accrued salary which includes amounts accrued prior to the acquisition of
AHR Subsidiary.
In December 2002, the Company granted 275,000 warrants to purchase common
stock to directors of the Company for services rendered valued at $13,750
[See Note 10].
In March 2002, the Company granted 20,000 options to purchase common stock
to attract new directors to the Company [See Note 10].
In February 2002, the Company paid $1,500 to their former directors.
21
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - RELATED PARTY TRANSACTIONS [CONTINUED]
OFFICE SPACE - Beginning October 1, 2002, the Company pays the Chief
Executive Officer $500 per month on a month-to-month basis for use of his
office space. The Company previously paid their former President $100 per
month on an as-needed, month-to-month basis. Total rents to the Chief
Executive Officer and President amounted to $1,500 and $300, respectively,
for the three months ended March 31, 2003 and 2002.
PURCHASE AND SALE AGREEMENT - On September 15, 2002, the Company signed a
Purchase and Sale Agreement with Gaelic Capital Group ("Gaelic"), an entity
controlled by the Chief Executive Officer. The agreement calls for the
Company to pay $94,500 to Gaelic for the right to receive all of the
receipts that were then owed to Gaelic as part of a February 11, 2002
agreement ("February Agreement") between Gaelic and Parkview Community
Hospital Medical Center ("Parkview"). The Company had made advances
totaling $94,500 in anticipation of the agreement. Under the February
Agreement, the Company will receive 6% of the sales price for the sale of
the peripheral assets of Parkview. As of March 31, 2003, the Company had
collected none of this receivable and had recognized no revenues as part of
this agreement. At March 31, 2003, the Company was owed a total of $218,100
from this agreement.
NOTE 14 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for
the periods:
For the Three Months
Ended March 31,
-----------------------------------
2003 2002
---------------------- -----------
Net loss available to common
shareholders (numerator) . . . . . . $ (86,838) $ (26,004)
---------------------- -----------
Weighted average number of common
shares outstanding used in loss per
common share for the period
(denominator). . . . . . . . . . . . 8,292,667 7,558,840
---------------------- -----------
At March 31, 2003, the Company had 2,020,000 outstanding options, 300,000
outstanding warrants and preferred stock convertible into 13,000,000 shares
of common stock which were not used in the computation of dilutive loss per
share because their effect would be anti-dilutive. Dilutive loss per share
was not presented, as the Company had no common stock equivalent shares for
all periods presented that would effect the computation of diluted loss per
share.
22
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 - COMMITMENTS AND CONTINGENCIES
COMMON STOCK CONVERSION RIGHT - On December 31, 2002, the Chief Executive
Officer was granted the right to convert shares of common stock that he had
received under an agreement and plan of reorganization into Series A
preferred stock at a rate of five shares of common stock into one share of
Series A preferred stock [See Note 3].
CONSULTING AGREEMENTS - On April 1, 2002, the Company signed three-year
consulting agreements with both Synergistic Connections, Inc. and Corporate
Dynamics, Inc. (collectively "Consultants"). The agreements call for the
Company to pay $10,000 per month for consulting services. In August 2002,
the Company issued 480,000 shares of common stock to Consultants for
services valued at $120,000 [See Note 10]. During the three months ended
March 31, 2003, the Company paid $30,000 for services rendered by
Consultants under these agreements.
On January 15, 2002, the Company entered into a six-month consulting
agreement with Synergistic Connections, Inc. to assist the Company in
selecting and negotiating the acquisition of potential merger candidates.
The Company paid $60,000 and issued stock valued at $12,500 to Synergistic
Connections, Inc. as part of this agreement.
EQUITY LINE OF CREDIT AGREEMENT - On November 4, 2002, the Company signed
an Equity Line of Credit Agreement with Cornell Capital Partners, LP
("Cornell"). The agreement calls for the Company to sell up to $10,000,000
of common stock to Cornell at 95% of the closing bid price for the five
preceding trading days. The agreement requires that the shares of common
stock be registered with the Securities and Exchange Commission and that
the shares be sold in intervals over a two-year period commencing after
such registration is effective. The agreement calls for the Company to
issue common stock as payment of a commitment fee of $290,000 and
associated legal fees of $10,000 which are classified as deferred stock
offering costs. The agreement also states that, at the time of each stock
sale transaction, the Company will pay $500 in legal fees and pay Cornell
7% of the proceeds received. The agreement was negotiated by consultants of
the Company under finder agreements [See below]. At March 31, 2003, the
commitment fee of $290,000 and associated legal fees of $10,000 were still
unpaid and are classified as accounts payable.
FINANCING AGREEMENTS - In March 2003, the Company retained Douglas A.
Jackson to negotiate a 5-year $6,000,000 loan for the Company. The Company
agreed to pay $12,500 plus 5% of the proceeds received by the Company.
During the three months ended March 31, 2003, the Company paid $12,500 for
services rendered by Douglas A. Jackson under this agreement.
In February 2003, the Company retained Douglas A. Jackson to negotiate a
line of credit for the Company. The Company agreed to pay $5,000 plus 5% of
the proceeds received by the Company. During the three months ended March
31, 2003, the Company paid $5,000 for services rendered by Douglas A.
Jackson under this agreement.
23
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 - COMMITMENTS AND CONTINGENCIES [CONTINUED]
FINDER AGREEMENTS - On April 1, 2002, the Company signed three-year finder
agreements with both Synergistic Connections, Inc. and Corporate Dynamics,
Inc. (collectively "Consultants"). The agreements call for the Company to
pay finders' fees of 10% of the first $3,000,000, 8% of the next
$3,000,000, 6% of the next $3,000,000, and 4% of any additional funding
provided through the efforts of Consultants. In October 2002, the Company
sold 200,000 shares of common stock for cash of $50,000 which was
negotiated by Consultants and the Company recorded stock offering costs of
$5,000 which were offset against the proceeds [See Note 10]. In December
2002, the Company signed a $10,000,000 Equity Line of Credit Agreement
which was negotiated by Consultants and the Company recorded stock offering
costs of $757,000 which are classified as deferred stock offering costs
[See above]. In February 2003, the Company sold 40,000 shares of common
stock for cash of $10,000 which was negotiated by Consultants and the
Company recorded stock offering costs of $400 which were offset against the
proceeds [See Note 10]. At March 31, 2003, finders' fees of $747,400 were
still unpaid and are classified as accounts payable.
JUDGEMENT AND VOIDING OF ACQUISITION - In March 2003, the Company was
notified that they were to be joined as defendants in a suit brought by
AmeriSource Bergen Corporation ("AmeriSource") against NIPSI. The original
suit by AmeriSource sought to recover $480,335 from NIPSI for failing to
honor a contract. In March 2003, AmeriSource filed a supplemental petition
to enjoin any transfer of assets from NIPSI to the Company. Subsequently,
the court entered a default judgement against NIPSI [See Note 17]. The
court found that NIPSI had fraudulently transferred assets to the Company
to avoid the claims of AmeriSource. The court voided and nullified the
transfer of assets from NIPSI to the Company and ordered NIPSI to pay
$551,264 to AmeriSource. As a result of these proceedings, the asset
purchase agreement between the Company, NIPSI and NIPSI General Partner was
voided and the Company was released as a defendant. The financial
statements reflect the acquisition as having been voided or rescinded and
any expenses associated with the voided acquisition have been classified as
a cost of the unsuccessful NIPSI acquisition.
NIPSI DEMAND LETTER - In March 2003, NIPSI and NIPSI General Partner sent a
demand letter to the Company to rescind the asset purchase agreement with
the Company because certain conditions of the agreement were not satisfied.
NIPSI General Partner is claiming damages of $120,000 against the Company.
The financial statements reflect the acquisition as having been voided or
rescinded and the expenses associated with the voided acquisition have been
classified as a cost of the unsuccessful NIPSI acquisition. No accrual for
possible losses or settlements, including the $120,000 in damages claimed
by NIPSI General Partner, has been recorded in the accompanying financial
statements.
OFFERS TO PURCHASE - In January 2003, the Company signed an Offer to
Purchase Rx Solutions, Inc. The offer calls for the Company to purchase
100% of the stock of Rx Solutions, Inc. for $2,250,000 payable as
$1,100,000 cash, $750,000 as a five-year 6% note payable with interest-only
payments for the first 18 months and $400,000 as Series B preferred stock.
The Company subsequently entered into a Stock Purchase Agreement with the
stockholders of Rx Solutions, Inc. [See Note 17].
24
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 - COMMITMENTS AND CONTINGENCIES [CONTINUED]
In October 2002, the Company signed an Offer to Purchase with Coastalmed
Inc. and Coastalmed of Panama City, Inc. (collectively "Coastalmed"). The
offer called for the Company to purchase all of the assets of Coastalmed
for $7,000,000 payable as $4,000,000 cash, $1,375,000 as a five-year 6.5%
note payable with interest-only payments for the first 18 months and
$1,625,000 as Series B preferred stock. This offer expired and was replaced
by a new Offer to Purchase signed in January 2003. The new offer calls for
the Company to purchase 100% of the stock of Coastalmed for $8,400,000
payable as $4,900,000 cash, $1,625,000 as a five-year 6.5% note payable
with interest-only payments for the first 18 months and $1,875,000 as
Series B preferred stock. The Company also issued 1,000,000 shares of
common stock as partial consideration [See Note 10].
In September 2002, the Company signed an Offer to Purchase to acquire all
of the assets of Quantum Pharmacy Alliance, Ltd. ("Quantum"). The offer
calls for the Company to purchase all of the assets of Quantum for one of
two financing alternatives at Quantum's option. The first alternative is
$250,000 cash, $500,000 as a five-year 6% note payable and $400,000 as
Series B preferred stock. The second alternative is $650,000 as a five-year
6% note payable and $850,000 as Series B preferred stock.
POSSIBLE LEGAL ACTION - In March 2003, the Company was notified that
Pre-Employment Screening, Inc., Lawrence J. Altman, Gateway Legal Services,
Inc. and Fun Services of Kansas City plan to file suit to seek $12,000 for
alleged violations of the Telephone Consumer Protection Act. The Company
denies the allegations and intends to vigorously defend themselves in this
matter. No accrual for possible losses or settlements has been recorded in
the accompanying financial statements.
POSSIBLE NIPSI CLAIMS - For approximately three months, the Company
operated the assets of NIPSI pursuant to an asset purchase agreement [See
Notes 2, 17 and above]. Company management believes that the Company is not
responsible for any liabilities of NIPSI, but the possibility exists that
creditors and others seeking relief from NIPSI may also include the Company
in claims and suits based on the previous relationship. The Company is not
currently named in, nor are they aware of, any such claims or suits against
NIPSI. Company management believes that the Company would be successful in
defending against any such claims. No accrual for possible losses or
settlements has been recorded in the accompanying financial statements. As
further disclosed above, NIPSI General Partner is claiming damages of
$120,000 against the Company.
NOTE 16 - CONCENTRATIONS OF CREDIT RISK
ACCOUNTS RECEIVABLE - At March 31, 2003, the Company has accounts
receivable of $102,300 which is owed by only one customer.
NOTE 17 - SUBSEQUENT EVENTS
DISSOLUTION AND STANDING OF AHR SUBSIDIARY - The Company is currently
working with the State of Delaware to resolve the taxes due in order for
AHR Subsidiary to be in good standing and the Company is preparing articles
of dissolution for AHR Subsidiary.
25
AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - SUBSEQUENT EVENTS [CONTINUED]
JUDGEMENT AND VOIDING OF ACQUISITION - In April 2003, the court entered a
default judgement against NIPSI. The court found that NIPSI had
fraudulently transferred assets to the Company to avoid the claims of
AmeriSource. The court voided and nullified the transfer of assets from
NIPSI to the Company and ordered NIPSI to pay $551,264 to AmeriSource. As a
result of these proceedings, the asset purchase agreement between the
Company, NIPSI and NIPSI General Partner was voided and the Company was
released as a defendant. The financial statements reflect the acquisition
as having been voided or rescinded and any expenses associated with the
voided acquisition have been classified as a cost of the unsuccessful NIPSI
acquisition.
SERIES A PREFERRED STOCK CANCELLATION - In May 2003, the Chief Executive
Officer returned 720,000 shares of Series A preferred stock to the Company
for cancellation.
SERIES A PREFERRED STOCK ISSUANCE - In April 2003, the Company issued
47,000 shares of Series A preferred stock for cash of $23,500, or $.50 per
share.
SERIES B PREFERRED STOCK RIGHTS MODIFICATION - In April 2003, the Board of
Directors modified the rights of the Series B preferred stock such that
each share of Series B preferred stock is convertible into 5 shares of
common stock and is entitled to receive a 6% annual dividend payable
quarterly.
STOCK PURCHASE AGREEMENT - Effective May 1, 2003, the Company entered into
a Stock Purchase Agreement with the shareholders of Rx Solutions, Inc. The
Agreement provides for Parent to acquire all 1,000 shares Rx Solution's
common stock. In exchange, Parent will sign a $300,000 90-day no-interest
note payable, will sign a $600,000 five-year 7% note payable with
interest-only payments for the first 24 months and will issue 720,000
shares of Series B preferred stock. The agreement also grants the Chief
Executive Officer the right for 18 months to purchase up to 300,000 shares
of Series B preferred stock from the shareholders of Rx Solutions, Inc. at
$2.50 per share. In connection with the agreement, the Company entered into
a three-year Management Agreement with the former managers of Rx Solutions,
Inc. to pay a total of $17,000 per month plus benefits for continuing
management services. The Management Agreement also provides for finder's
fees and a growth bonus.
26
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
FORWARD-LOOKING STATEMENT NOTICE
When used in this report, the words "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend," and similar expressions are
intended to identify forward-looking statements within the meaning of Section
27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act
of 1934 regarding events, conditions, and financial trends that may affect the
Company's future plans of operations, business strategy, operating results, and
financial position. Persons reviewing this report are cautioned that any
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors. Such factors are discussed under the "Item 2. Management's Discussion
and Analysis of Financial Condition or Plan of Operations," and also include
general economic factors and conditions that may directly or indirectly impact
the Company's financial condition or results of operations.
DESCRIPTION OF BUSINESS
GENERAL
American Hospital Resources, Inc. ("American Hospital Resources" or the
"Company") originally incorporated in the State of Utah on May 9, 1972, under
the name High-Line Investment & Development Company. In 1977, the Company
changed its name to Gayle Industries, Inc., and in 1978 the Company merged into
its subsidiary, Swing Bike, keeping the Swing Bike name. In 1979 the Company
changed its name from Swing Bike to Horizon Energy Corp. In 1992 the Company
changed its name to Millennium Entertainment Corp.
In 1993 the Company changed its name to New Horizon Education, Inc. and
implemented a business plan focusing on marketing computer education programs.
Later that year, the Company formed a new subsidiary, Sunset Horizon, Inc. for
the purpose of merging with Ruff Network Marketing, Inc. The subsidiary,
Sunset Horizon, Inc., owned the marketing rights to the computer education
programs and Ruff Network Marketing, Inc. provided the marketing network. The
Company was not successful in its marketing activities and in 1995 the Company
sold its assets and suspended operations. In 1997 the Company sold its
subsidiary and became essentially dormant from 1998 through 2000.
In 2001, the Company recommenced operations and in June of 2002, the Company
finalized an Agreement and Plan of Reorganization with American Hospital
Resources, Inc. Under the Agreement, American Hospital Resources Inc. became a
wholly owned subsidiary of the Company and the Company changed its name to
American Hospital Resources, Inc. The Company also authorized a class of
10,000,000 shares of Preferred Stock at no par value per share and changed its
business strategy to focus on providing health care services and management.
The Company's common stock is quoted on the OTCBB under the symbol "AMHR."
NATURE OF BUSINESS
American Hospital Resources is a healthcare services company that provides
pharmacy services to long-term care providers and hospitals as well as other
acute care consulting and management services. We are currently focusing on the
acquisition and consolidation of profitable pharmacy outsourcing businesses.
These consolidated pharmacy outsourcing and materials management companies
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provide pharmacy management services and pharmaceutical supplies to acute care
hospitals and long-term care facilities such as nursing homes and hospices. As
part of our business strategy, we have structured a program designed to merge
profitable regional pharmacy outsourcers into a national team. We believe these
regional providers will benefit from the enhanced buying power and market
presence of a consolidated healthcare entity.
THREE MONTH PERIODS ENDED MARCH 31, 2003 AND 2002
AMHR did not generate any revenue during the three months ended March 31, 2003.
Total expenses during this period consisted of general and administrative
expenses of $86,838. These expenses included $30,000 in executive compensation,
$47,500 for consulting and negotiation services and $1,500 in office rental.
The remaining expenses of approximately $7,838 consisted of legal and accounting
costs and other administrative expenses. AMHR did not generate any revenue
during the three months ended March 31, 2002 and had general and administrative
expenses of $25,408 consisting mainly of legal, accounting and other
professional expenses. The company also had interest expenses of $596 during
the three months ended March 31, 2002. As a result of theses factors, AMHR
realized a net loss of $86,838 during the first three months of fiscal 2003 and
a net loss of $26,004 during the comparable period in 2002.
Higher general and administrative expenses in 2003 are largely attributable to
professional and consulting costs associated with implementing our business plan
and the acquisition of American Hospital Resources in the summer of 2002.
LIQUIDITY AND CAPITAL RESOURCES
Total assets at March 31, 2003 were $1,371,642. Assets primarily consisted of
$1,059,609 in deferred stock offering costs, $250,000 in deferred acquisition
costs and $60,321 in goodwill. AMHR also had $1,645 in property and equipment.
Total current assets during this period consisted of $67 in prepaid expenses.
At December 31, 2002, current assets were $51,854 consisting of $6,779 in cash,
$15,000 in an advance due from NIPSI and prepaid expenses of $30,075. We also
had property and equipment of $1,743. Other assets at December 31, 2002
consisted of $60,321 in goodwill and $1,059,424 in deferred stock offering
costs.
Current liabilities at March 31, 2003 totaled $1,223,628 consisting of
$1,081,695 in accounts payable, $112,841 in accrued expenses, $24,298 in an
unsecured deposit from NIPSI and a bank overdraft of $4,794. Liabilities at
December 31, 2002 were $1,198,090 consisting of $1,088,150 in accounts payable
and $109,940 in accrued expenses. Accounts payable during both periods
consisted mainly of unpaid fees relating to securing a $10,000,000 equity line
of credit with Cornell Capital LP. Accrued expenses during both periods were
primarily due to accrued salaries and unpaid executive compensation.
During the next twelve months we hope to reduce liabilities and bring current
our outstanding debts. We anticipate that our operating expenses for the next
twelve months will be approximately $120,000 consisting mainly of salaries and
consulting fees. We will also have legal and auditing expenses relating to our
public reports as well as office rental and other expenses. Management hopes to
generate sufficient operating capital through the continued implementation of
our business plan and anticipated cash collections from accounts receivable.
Should it become necessary to raise additional capital, we may consider securing
loans from officers and directors, selling additional stock or entering into
debt financing. Other than as discussed in this report, we have no material
commitments for capital expenditures.
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PLAN OF OPERATION
Since acquiring our subsidiary and implementing our business plan, we have been
actively engaged in identifying pharmaceutical and healthcare companies to join
our healthcare network. During the past year we identified three companies that
we thought would be suitable for potential acquisition and/or management
opportunities. In December of 2002 we reported on Form 8-K an agreement to
acquire the assets of NIPSI Healthcare of Houston LP and its general partner.
We operated the assets of NIPSI for approximately three months from December of
2002 through February of 2003. In March of 2003 we returned the assets after
learning that AmerisourceBergen Corporation had a prior claim on NIPSI's assets.
Subsequent to the date of this report, in April of 2003, a Texas State court
entered a default judgment against NIPSI and voided the agreement.
We intend to continue seeking suitable healthcare and pharmaceutical companies
for potential acquisition, consulting or management opportunities. Subsequent
to the date of this report, in May of 2003, we finalized a stock purchase and
management agreement with Rx Solutions, Inc. The agreement documents are filed
as an exhibit to this report. We are currently negotiating to acquire the
assets of Coastalmed Inc. and Coastalmed of Panama City, Inc. Although we have
been actively engaged in negotiations, the proposed acquisition has not been
finalized at the date of this report. Our capital requirements may change
dramatically if the proposed transaction is consummated.
ITEM 3. CONTROLS AND PROCEDURES
Within the 90-day period prior to the date of this report, we evaluated the
effectiveness and operation of our disclosure controls and procedures pursuant
to Rule 13a-14 of the Securities Exchange Act of 1934. Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures are effective. There have
been no significant changes in internal controls or other factors that could
significantly affect internal controls subsequent to the date we carried out our
evaluation.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
In January of 2003, the Board of Directors authorized the issuance of 1,000,000
shares valued at $250,000 or $.25 per share. The shares were issued as an
inducement to acquire Coastalmed, Inc. and its affiliated company. The
securities were issued in a private transaction without registration in reliance
on the exemption provided by Section 4(2) of the Securities Act. No broker was
involved and no commissions were paid in the transaction.
In February 2003, we issued 40,000 shares of previously authorized but unissued
common stock to an accredited investor for $10,000 or $.25 per share. The
securities were sold in a private transaction without registration in reliance
on the exemption provided by Section 4(2) of the Securities Act. The investor
had a pre-existing relationship with American Hospital Resources and had access
to all material information pertaining to the Company's financial condition. No
broker was involved and no commissions were paid in the transaction.
In February 2003, the Board of Directors authorized the issuance of 720,000
shares of common stock to four individuals for ongoing legal and consulting
services. At the date of this report, none of these shares have been issued.
We intend to register the share on Form S-8.
29
On December 31, 2002, AMHR issued 2,600,000 shares of its previously authorized
but unissued preferred stock in exchange for 13,000,000 shares of common stock
held by Phase One LLC. The 13,000,000 shares of common stock were then
cancelled. The preferred shares have 5 to 1 voting rights and may be converted
into five shares of common stock. The securities were offered in a private
transaction without registration in reliance on the exemption provided by
Section 4(2) of the Securities Act. No broker was involved and no commissions
were paid in the transaction.
On December 31, 2002 the Board of Directors adopted an Incentive Stock Bonus
Plan. The plan allows the company to grant 5-year warrants to purchase shares
of common stock to directors, senior management and certain key employees. The
2003 stock bonus pool consists of 1,000,000 warrants to purchase common stock at
$.25 per share. The warrants are issued at the discretion of the Board of
Directors. On December 31, 2002, AMHR granted 300,000 warrants to purchase
common stock to directors and consultants as payment for prior services
collectively valued at $19,577 or approximately $.065 per warrant. At March 31,
2003, AMHR had 2,020,000 outstanding options, 300,000 outstanding warrants and
preferred stock convertible into 13,000,000 shares of common stock. At the date
of this report, no warrants have been exercised.
On October 31, 2002, the Company signed an Offer to Purchase with Coastalmed
Inc. and Coastalmed of Panama City, Inc. The offer called for AMHR to purchase
all of the assets of Coastalmed Inc. and Coastalmed of Panama City, Inc. for
$7,000,000 payable as $4,000,000 cash, $1,375,000 as a five-year, 6.5% note
payable with interest-only payment for the first 18 months and $1,625,000 as 6%
convertible preferred stock with dividends payable quarterly. The original
offer expired in November of 2002. Subsequent to the date of this report, in
January of 2003, AMHR signed a revised offer to purchase 100% of the stock of
Coastalmed Inc. and Coastalmed of Panama City, Inc. for $8,400,000 payable as
$4,900,000 cash, $1,625,000 as a five-year, 6.5% note payable with interest-only
payment for the first 18 months and $1,875,000 as series B preferred stock. In
January of 2003, AMHR issued 1,000,000 shares of common stock as an enticement
on the offer to purchase the Coastalmed stock. The securities were issued
without registration in reliance on the exemption provided by Section 4(2) of
the Securities Act. No broker was involved and no commissions were paid in the
transaction.
On November 1, 2002, the Company granted a stock option to Spice Island Products
Corp. The option allows Spice Island to purchase up to 2,000,000 shares of the
Company's common stock at $0.50 per share at any time between November 1, 2002
and November 1, 2005. The securities were offered in a private transaction
without registration in reliance on the exemption provided by Section 4(2) of
the Securities Act. No broker was involved and no commissions were paid in the
transaction. No shares have been purchased under the option as of the filing
date of this report.
On October 31, 2002, the Company issued 200,000 shares of previously authorized
but unissued restricted common stock for cash of $50,000, or $.25 per share to
two accredited investors. The securities were sold in a private transaction
without registration in reliance on the exemption provided by Section 4(2) of
the Securities Act. The investors had pre-existing relationships with American
Hospital Resources and had access to all material information pertaining to the
Company's financial condition. No broker was involved and no commissions were
paid in the transaction.
In May of 2002 we issued 500,000 common shares to an accredited investor to
convert $40,000 in notes and accrued interest of $789. The securities were sold
in a private transaction without registration in reliance on the exemption
provided by Section 4(2) of the Securities Act. The investor had a pre-existing
relationship with American Hospital Resources and had access to all material
information pertaining to the Company's financial condition. No broker was
involved and no commissions were paid in the transaction.
30
Subsequent to the date of this report, in April of 2003, we issued 47,000 shares
of previously authorized but unissued Class A preferred stock to an accredited
investor for cash of $23,500 or $.50 per share. Each share of Class A preferred
stock may be converted to 5 shares of common stock. The securities were sold in
a private transaction without registration in reliance on the exemption provided
by Section 4(2) of the Securities Act. The investor had a pre-existing
relationship with American Hospital Resources and had access to all material
information pertaining to the Company's financial condition. No broker was
involved and no commissions were paid in the transaction.
Subsequent to the date of this report, in May of 2003, the Board of Directors
cancelled 720,000 shares of Class A preferred stock and authorized the issuance
of 720,000 shares of Class B preferred stock as part of a transaction to acquire
the assets of Rx Solutions, Inc. Each Class B preferred share is convertible
into five shares of common stock and is entitled to receive a 6% annual dividend
payable quarterly. The securities were sold in a private transaction without
registration in reliance on the exemption provided by Section 4(2) of the
Securities Act. The investor had a pre-existing relationship with American
Hospital Resources and had access to all material information pertaining to the
Company's financial condition. No broker was involved and no commissions were
paid in the transaction.
ITEM 5. OTHER INFORMATION
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October of 2002 we began renting office space from our current president for
$500 per month. Rents paid from January 1, 2003 through March 31, 2003 were
$1,500.
On September 15, 2002, AMHR signed a Purchase and Sale Agreement with Gaelic
Capital Group, an entity controlled by our president, Mr. Christopher Wheeler.
Under the Agreement, AMHR paid Gaelic $94,500 for the rights to receive 6% of
the sale price of the peripheral assets of Parkview Community Hospital Medical
Center. During the year ended December 31, 2002, AMHR received no revenues
under the Agreement. At March 31, 2003, AMHR was still owed $225,900 under the
agreement, however, Parkview is currently undergoing bankruptcy reorganization
and recovery of the assets is uncertain.
SUBSEQUENT EVENTS: ACQUISITION OF RX SOLUTIONS, INC.
On May 8, 2003 AMHR finalized a Stock Purchase Agreement to acquire and operate
Rx Solutions, Inc., a Mississippi healthcare corporation. The agreement is
effective as of May 1, 2003. As a result of this transaction, Rx Solutions
became a wholly owned subsidiary of AMHR. Mr. Christopher Wheeler represented
AMHR in the transaction and Rx Solutions was represented by its two
shareholders, Mr. Danny Myers and Mr. Robert Lang. Prior to the acquisition,
there were no material relationships between Mr. Wheeler and the shareholders of
Rx Solutions.
Under the Agreement, AMHR acquired 1,000 shares of Rx Solutions common stock
representing all of the issued and outstanding shares of Rx Solutions. In
exchange, AMHR issued 720,000 shares of AMHR Class B preferred stock and short
and long term notes totaling $900,000 to the Rx Solutions shareholders. A
summary of the terms follows:
- The $300,000 short-term note matures on August 8, 2003. Any unpaid
balance after August 8, 2003 is subject to an 18% interest rate.
- The long term notes are payable to Mr. Lang and Mr. Myers, the two
shareholders of Rx Solutions. Mr. Myers received a note for $306,000
and Mr. Lang received a note for $294,000. The notes accrue interest
at 7% per annum and mature on June 1, 2008.
31
- Each share of AMHR Class B preferred stock is convertible to five
shares of AMHR common stock. The Class B stock is also entitled to
receive a 6% annual dividend payable quarterly. Mr. Christopher
Wheeler, the Chief Executive Officer of AMHR, has the right to
repurchase up to 300,000 shares of Class B preferred stock at $2.50
per share within 18 months of closing.
Concurrent with the acquisition, AMHR entered into three-year management
contracts with the two shareholders of Rx Solutions. Mr. Myers and Mr. Lang
will each receive an $8,500 monthly salary and be eligible for growth bonuses in
exchange for managing the operations of Rx Solutions.
At closing, there are 8,654,000 shares of no par value AMHR common stock issued
and outstanding. In addition, AMHR has 1,927,000 shares of no par value Class A
preferred stock and 720,000 shares of no par value Class B preferred stock
issued and outstanding.
DESCRIPTION OF THE BUSINESS
AMHR is a healthcare services company based in Santa Ana, California that
incorporated in Utah on May 9, 1972. AMHR provides hospital and acute care
consulting and management services including crisis management, financial
restructuring, and pharmaceutical outsourcing. The Company is currently
focusing on acquiring and consolidating profitable pharmacy outsourcing and
materials management businesses. These companies provide pharmacy management
services and pharmaceutical supplies to acute care hospitals and long-term care
facilities such as nursing homes and hospices.
Rx Solutions, Inc. provides licensed pharmaceutical goods and services to
residents and patients of long-term care facilities in the states of Mississippi
and Alabama. These services include providing pharmaceuticals and medical
supplies, medical records support and pharmacy consulting services. According
to their audited financial statements, at December 31, 2002, Rx Solutions had
total assets of $646,297 and total liabilities of $587,919. Net income for Rx
Solutions during 2002 was $284,166.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBIT NUMBER TITLE LOCATION
2.0 Rx Solutions Stock Purchase Agreement. . . . . . . . . . . . . . . . Attached
10.1 Rx Solutions Management Agreement. . . . . . . . . . . . . . . . . . Attached
10.2 Rx Solutions Short-Term Promissory Note. . . . . . . . . . . . . . . Attached
10.3 Long Term Promissory Note Payable to Danny Myers . . . . . . . . . . Attached
10.4 Long Term Promissory Note Payable to Robert Lang . . . . . . . . . . Attached
99.0 Audited Financial Statements of Rx Solutions, December 31, 2002 *. . Attached
99.1 Certification of Chief Executive Officer and Chief Financial Officer Attached
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer and Chief Executive Officer Attached
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
* The March 31, 2003 financial statements of Rx Solutions Inc. and proforma financial
statements are to be filed on Form 8-K within 60 days of the transaction date.
32
REPORTS ON FORM 8-K:
No reports on Form 8-K were filed by AMHR during the 90 day period covered by
this report.
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
AMERICAN HOSPITAL RESOURCES, INC.
Date: May 14, 2003 By: /s/Christopher A. Wheeler
---------------------------------
Christopher A. Wheeler
Chief Executive Officer
Chief Financial Officer
33