U.S. SECURITES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Amendment 2)
File Number: 333-101562
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CAREDECISION CORPORATION
Nevada 7371 91-2105842
(State or other (Primary standard (I.R.S. employer
jurisdiction of industrial identification
incorporation) classification code number)
number)
2 Penn Plaza, 15th Floor, Suite 1500-53
New York, New York 10121
Telephone: (212) 292-4959
Facsimile: (631) 544-0183
(Address and Telephone Number of Principal
Executive Offices and Principal Place Of Business)
ROBERT COX
CHIEF EXECUTIVE OFFICER, PRESIDENT AND DIRECTOR
16 Wood Hollow Lane
Fort Salonga, New York 11768
Telephone: (516) 680-4505
Facsimile: (631) 544-0183
(Name, Address and Telephone Number of Agent for Service)
COPIES TO:
Thomas C. Cook, Esq.
Law Offices of Thomas C. Cook, Ltd.
4955 S. Durango Dr., Suite 214
Las Vegas, Nevada 89113-0157
Telephone: (702) 952-8519
Facsimile: (702) 952-8521
Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement
becomes effective.
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities of
Act, check the following box and list the Securities Act
registration statement number earlier effective registration
statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement
number of the earlier effective registration statement for
the same offering. / /
If delivery of the prospectus will be made pursuant to Rule
434, please check the following box. / /
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act, check the following box:
/ /
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Prospectus (Subject to completion): Dated April 28, 2003.
/1/
CALCULATION OF REGISTRATION FEE
Title of Each Class Proposed Maximum Maximum Aggregate Amount of
of Securities Aggregate Offering Price (1) Registration Fee
to be Registered per Share (2)
69,105,469 shares of
Common Stock, $0.001 $0.040 Per Share $2,764,218.76 $552.84
par value (3)
----------------------------------------------------------------------------
Total $0.040 Per Share $2,764,218.76 $552.84
69,105,469 shares
of Common Stock
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457.
(2) Represents the average closing bid price of our common stock as of
April 28, 2003.
(3) Represents the maximum amount of shares of our common stock that we
will be required to register in accordance with our Merger Agreement.
This also includes, issued and distributed pursuant to consulting
agreements, note conversions, shares underlying notes and warrant
conversions. The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment
which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(A) of the
Securities Act of 1933 or until this Registration Statement shall
become effective on such date as the commission, acting pursuant to
said Section 8(A), may determine.
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Prospectus
CareDecision Corporation
Common Stock
This is an offering of a total of 69,105,469, shares of
our common stock, par value $.001.
The Restricted Stockholders have acquired our
restricted common shares through conversion of shares
pursuant to the merger agreement, through a purchase of
software and through consulting services.
OTCBB symbol: The shares of our Common Stock are
presently trading on the OTC Electronic Bulletin Board under
the symbol "CDED." There can be no assurance that an active
trading market will be sustained. As a result, an investor
may find it difficult to dispose of, or to obtain adequate
quotations as to the price of the shares of our common
stock. Our most recent bid and ask quotations were $0.03
and $0.04 respectively.
THESE ARE SPECULATIVE SECURITIES. RISK FACTORS ASSOCIATED
WITH THESE SECURITIES CAN BE FOUND ON PAGE 8 IN THE SECTION
TITLED RISK FACTORS.
These securities have not been approved or disapproved
by the Securities and Exchange Commission or any state
securities commission nor has the Securities and Exchange
Commission or any state securities commission passed upon
the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
Information in this document is subject to completion
or amendment. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may offers
to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in
any state in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under
the securities laws of any such state.
The Date Of This Prospectus is April 28, 2003.
/3/
TABLE OF CONTENTS
Page
Prospectus Summary 5
Summary Financial Information 8
Risk Factors 9
Forward Looking Statements 11
Use Of Proceeds 11
Dividend Policy 11
Market for Common Equity and Related Stockholder Matters Market Info 11
Plan Of Distribution 12
Legal Matters 12
Experts 12
Additional Information 13
Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
Business of the Company 15
Business Overview 15
Industry Trends 17
Industry Overview 17
Review of Products 17
Marketing 18
The Product Opportunity 18
The Need for Integration 19
Value Proposition 20
Solution & Benefits 21
Competition 23
Major Customers 24
Patents or Trademarks 25
Point Of Operation 25
Government Regulation 25
Employees 25
Facilities 25
Management 26
Executive Compensation 27
Certain Relationships And Related Transactions 27
Security Ownership of Certain Beneficial Owners and Management 27
Description of Securities 28
Shares Eligible For Future Sale 29
Security Holders and Recent Financing 31
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Prospectus Summary
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE
IN THIS PROSPECTUS. BECAUSE THIS IS A SUMMARY, IT MAY NOT
CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER
BEFORE RECEIVING A DISTRIBUTION OF OUR COMMON STOCK. YOU
SHOULD READ THIS ENTIRE PROSPECTUS CAREFULLY.
Medicius, Inc. ("Medicius"), a Nevada corporation
incorporated on July 6, 2000, was a developmental stage
company with a principal business objective to provide
Internet-enhanced information technology (IT) for physicians
at the point of clinical decision. The software systems,
communication tools and suite of software applications
employed by Medicius permits the office practice physician
to request critical patient medical and/or medication
information via the Web on a Microsoft Windows CE-based PDA
at, or prior to the point-of-care. The system captures and
displays the requested information, and overlays medical
treatment protocols and medical step therapies (steps and
procedures that insurance companies issue for treating
illnesses a physician has not treated before), creating not
only a patient specific historical medical chart, but also
suggested treatment alternatives, approved medications and
diagnosis specific protocols.
Utilization of this system by the practicing physician
enhances clinical decision-making, improves physician
productivity, insures formulary compliance, reduces the cost
of healthcare and positively impacts the care provided to
the patient.
Medicius decided to merge with ATR and transfer its business
model to ATR now known as CareDecision.
The Offering
Common stock outstanding: 75,364,137. This amount does
not include an aggregate of shares of our common stock
reserved for issuance upon the exercise of existing and
outstanding Medicius options, warrants and convertible
notes, or stock option agreements granted to our employees
and consultants.
Securities offered: 69,105,469-security holder
restricted shares.
The securities represent the maximum amount of shares
of our common stock that we will be required to register in
accordance with our Merger Agreement. This also includes
issued and distributed pursuant to consulting agreements.
Offering price: There is no offering price. The shares
are being registered for the security holders only.
Use of proceeds: We will not receive any proceeds from
this offering.
Risk factors: An investment in our common shares
involves a high degree of risk and our common shares should
not be purchased by anyone who cannot afford the loss of
their entire investment. Prospective purchasers of the
shares of our common stock should carefully review and
consider the factors set forth under "Risk Factors" as well
as other information in this document, before purchasing any
of the shares of our common stock.
The Company
We are headquartered in New York, New York. We provide
enhanced information technology (IT) for physicians. The
technology employed allows this information to be provided
within seconds of its request at the point of the
physician's clinical decision making, either in the
examining room or at bedside.
/5/
The software systems, communication tools and suite of
software applications employed by CareDecision permits the
office practice physician to request critical patient
medical and/or medication information via the Web on a
Microsoft Windows Microsoft Window Based ("PDA") at, or
prior to the point-of-care.
We were formed as a Nevada corporation under the name
ATR Search Corporation ("ATR") on March 2, 2001. On June
17, 2002 a shareholders' meeting was held and a
shareholders' resolution adopted that resolved that ATR
change its name to CareDecision Corporation
("CareDecision"), increase the number of authorized common
shares to 200,000,000 and approve the merger between the
Company and Medicius, Inc.
As noted on Note 6 of the September 2002 financial
statements, on June 21, 2001, the Company entered into an
agreement with Care Technologies, LLC whereby Care
Technologies, LLC sold all of the assets and liabilities of
Care Technologies, LLC in exchange for a 10% ownership of
the Company. The investment was recorded at $229,899, being
the fair value of Care Technologies, LLC assets on the
acquisition date (see September 30, 2002, Financials Note
4).
Also, on June 21, 2002, the Company adopted Medicius,
Inc's business model, which is to provide enhanced
information technology (IT) for physicians at the point of
clinical decision.
On June 28, 2002 we filed a report on Form 8-K with the
Securities and Exchange Commission, whereby Medicius, Inc.
("Medicius"), a Nevada corporation, merged with and into
ATR. Pursuant to the terms of the merger agreement, ATR
obtained the operations of Medicius.
The material disclosures on the Form 8-K were as
follows:
ITEM 5. OTHER EVENTS
This Current Report on Form 8-K contains forward-
looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Actual results
and developments may differ materially from those described
in this Report. For more information about ATR Search
Corporation and risks arising when investing in ATR Search
Corporation, investors are directed to ATR Search
Corporation most recent Report on Form 10-KSB as filed with
the Securities and Exchange Commission. On April 30, 2002,
ATR SEARCH Corporation entered into a definitive Agreement
and Plan of Merger (the "Merger Agreement"), by and among
ATR Search Corporation ("ATR"), and Medicius, Inc., a Nevada
corporation, ("Medicius").
Pursuant to the Merger Agreement and subject to the
terms and conditions set forth therein, Medicius merged with
and into ATR. Both Medicius and ATR are the surviving
corporations in the Merger. The operations of Medicius will
be conducted through ATR and the operations of ATR will be
conducted through CareTechnologies LLC, which at the time of
the closing of the transactions described herein, shall be a
wholly owned subsidiary of ATR.
ATR Search Corporation has adopted Medicius, Inc's
business model, which is to provide enhanced information
technology (IT) for physicians at the point of clinical
decision. The Medicius software systems, communication
tools and suite of software applications permits the office
practice physician to request critical patient medical
and/or medication information via the Web on a Microsoft
Windows CE-based PDA at, or prior to the point-of-care. The
system captures and displays the requested information, and
overlays formulaic medical treatment protocols and medical
step therapies, creating not only a patient specific
historical medical chart, but also suggested treatment
alternatives, approved medications and diagnosis specific
protocols.
Utilization of the Medicius system by the practicing
physician enhances clinical decision-making, improves
physician productivity, insures formulary compliance,
reduces the cost of healthcare and positively impacts the
care provided to the patient. Caredecision.net, the
principal shareholder of Medicius, has filed a master patent
/6/
application that at the appropriate juncture will be cleaved
into four more specific patents. Also, Caredecision.net has
applied for eleven software copyrights and five trademarks,
and expects to assign these intellectual property rights to
ATR.
The Merger Agreement has been approved unanimously by
both the board of directors of ATR Search Corporation and
the board of directors of Medicius, Inc. The terms of the
Merger Agreement were the result of arm's length
negotiations among the parties. The merger, which is tax-
free to the stockholders of both companies, was approved by
the shareholders of both companies and has received
regulatory approval.
Under the terms of the Merger Agreement, upon
consummation of the Merger, stockholders of Medicius will
receive three shares of ATR Search Corporation common stock
and .5 Warrant in exchange for each share of Medicius common
stock that they hold. ATR expects to issue approximately
10,000,000 million shares of common stock in exchange for
all outstanding shares of Medicius common stock. In
addition, ATR would assume all outstanding Convertible Notes
and Warrants of Medicius, which would be converted into the
right to acquire approximately 20,000,000 million shares of
ATR common stock. The transaction, which is subject to
customary conditions to closing, including the receipt of
regulatory approvals and the approval of the stockholders of
both ATR and Medicius, closed on June 17, 2002.
As of June 28, 2002, the Effective Date of the merger,
the capital stock of Medicius issued and outstanding
immediately prior to the Effective Date was converted into
ATR Common Stock as follows:
(i) Each share of Medicius Series A Preferred
Stock was converted into 3.5 common stock shares of ATR and
..75 ATR common stock purchase Warrants.
(ii) Each share of Medicius common stock was
converted into 3.0 common stock shares of ATR and .5 ATR
common stock purchase Warrants.
(iii) After the Effective Date, all Medicius
common stock purchase warrants that remain unexercised as of
the Effective Date and any Medicius Convertible Notes that
remain unconverted or unpaid on the Effective Date remain
exercisable for or convertible into the number of common
stock shares of ATR based on the same conversion ratio
outlined in paragraph (ii) above.
Following the merger between Medicius and ATR, both
entities survived. ATR became CareDecision Corporation and
Medicius became dormant.
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Summary Financial Information
The following table sets forth a summary of historical
financial information of CareDecision Corporation from June
21, 2001 (inception) to December 31, 2002 and for the nine
months ended December 31, 2002 and 2001. The summary
historical financial data should be read in conjunction with
the financial statements, and notes of CareDecision
Corporation and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included
elsewhere in this prospectus.
June 21, 2001
(inception) to For the year Ended
December 31, December 31,
2002 2002 2001
---- ---- ----
Statement ofoperations data:
Total revenue $ 2,000 $ 2,000 $ -
----------------------------------------
General and
administrative expenses $ 82,686 $ 77,712 $ 4,974
Payroll Expense $ 186,819 $ 186,819 $ -
Professional Fees $ 171,852 $ 171,852 $ -
Consulting Expense $ 1,319,482 $1,319,482 $ -
Software Development $ 129,000 $ 129,000 $ -
Depreciation $ 40,778 $ 40,778 $ -
----------------------------------------
Net operating loss $(1,928,617) $(1,923,643) $ (4,974)
Other income (expense) $ (22,820) (22,820) $ -
----------------------------------------
Net loss $(1,975,132) $(1,970,158) $ (4,974)
Loss per share (basic and diluted): $ (0.05) $ (0.00)
Weighted average shares outstanding $43,176,595 $19,180,000
Consolidated Balance sheet data: As of December 31, 2002
-----------------------
Working capital (deficit) $ (370,052)
Total current assets $ 126,053
Total assets $ 1,545,426
Total current liabilities $ 496,105
Total long-term debt $ 0
Total stockholders' equity $ 1,049,321
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Risk Factors
An investment in the securities being offered involves
a high degree of risk. Prior to making any investment
decision, prospective investors should carefully consider
the following risk factors together with the other
information presented in this prospectus including the
financial statements and notes.
Our limited operating history could delay our growth and
minimize your investment.
Microsoft Window Based
We are considered a development stage company
incorporated on March 2, 2001 and thus have a limited
operating history on which to base an evaluation of our
business and prospects. Our prospects must be considered in
light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of
development. Such risks include, but are not limited to,
dependence on the growth of use of electronic medical
information and services, the adoption of PDA based Internet
appliances for the transmission and display of medical
information, the need to establish our brand name, the
ability to establish a sufficient client base, the level of
use of medical providers and the management of growth. To
address these risks, we must maintain and increase our
customer base, implement and successfully execute our
business and marketing strategy, continue to develop and
improve our point of care software and patient processing
system, provide superior customer service, respond to
competitive developments and attract, retain, and motivate
qualified personnel. There can be no assurance that we will
be successful in addressing such risks, and the failure to
do so could have a negative impact the value of our
Company's common shares and could result in the loss of your
entire investment.
Auditors have issued an opinion raising substantial doubt as
to our ability to continue as a going concern, which may
diminish your return on investment.
In a letter that accompanies this application, our
accountant, G. Brad Beckstead, says in part, the
accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company
is in the development stage and, accordingly, has not yet
generated a proven history of operations. Since its
inception, the Company has been engaged substantially in
financing activities and developing its product line,
incurring substantial costs and expenses. As a result, the
Company incurred accumulated net losses from June 21, 2001
(inception) through the year ended December 31, 2002 of
$(2,009,532). In addition, the Company's development
activities since inception have been financially sustained
by capital contributions.
The ability of the Company to continue as a going
concern is dependent upon its ability to raise additional
capital from the sale of common stock and, ultimately, the
achievement of significant operating results. The
accompanying financial statements do not include any
adjustments that might be required should the Company be
unable to recover the value of its assets or satisfy its
liabilities
Our profitability and your investment will be directly
affected by our competition.
Many of CareDecision's potential competitors have
longer operating histories, larger clientele bases, better
service recognition and significantly greater financial,
marketing and other resources than do we. Increased
competition may result in reduced operating margins, loss of
market share and a diminished brand franchise. There can be
no assurance that we will be able to compete successfully
against current and future competitors, and competitive
pressures faced by us could harm our operating results, our
business prospects, and financial condition.
We may not be able to retain our key personnel or attract
additional personnel, which could affect our ability to
continue as a going concern, which may diminish your return
on investment.
Our performance is substantially dependent on the services
and on the performance of our Management. CareDecision is, and will
be, heavily dependent on the skill, acumen and services of Mr. Robert
Cox (President, and Director). Our performance also
depends on our ability to attract, hire, retain and motivate
/9/
our officers and key employees. The loss of the services of
our executives could have a material adverse effect on our
business, prospects, financial condition and results of
operations. We have not entered into a long-term employment
agreements with our key personnel and currently have no "Key
Employee" life insurance policies. Our future success may
also depend on our ability to identify, attract, hire,
train, retain and motivate other highly skilled technical,
managerial, marketing and customer service personnel.
Competition for such personnel is intense, and there can be
no assurance that we will be able to successfully attract,
assimilate or retain sufficiently qualified personnel. If
we are unable to attract, retain, and train the necessary
technical, managerial, marketing and customer service
personnel, our expectations of increasing our clientele
could be hindered, and the profitability of our Company
reduced.
The selling security holder shares are being registered for
resale in this prospectus and the sale of such shares can
dilute the market price of our common stock and your return
on investment.
The sale of shares can have a negative impact on the
price of our common stock. No predictions can be made as to
the effect, if any, that sales of our shares by the selling
security holder shares being registered will have on the
market price of our common stock. Nevertheless, sales of
substantial amounts of our common stock, or the perception
that such sales may occur, could reduce our market price.
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Forward Looking Statements
This prospectus includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act, and
Section 21E of the Exchange Act. Our actual results may
differ significantly from the results discussed in such
forward-looking statements. The safe harbors contained in
Section 27A of the Securities Act and Section 21E of the
Exchange Act, which apply to forward-looking statements, are
not applicable to this offering.
Use Of Proceeds
The shares of our common stock being offered are for
the account of the security stockholders. Accordingly, we
will not receive any of the proceeds from the resale of
shares of our common stock by the security stockholders. We
are registering the shares of our common stock under
contractual arrangements.
Dividend Policy
We have never paid dividends on our common stock and do
not anticipate paying such dividends in the foreseeable
future. The payment of future cash dividends by us on our
common stock will be at the discretion of our Board of
Directors and will depend on our earnings, financial
condition, cash flows, capital requirements and other
considerations as our board of directors may consider
relevant. Although dividends are not limited currently by
any agreements, it is anticipated that future agreements, if
any, with institutional lenders or others may limit our
ability to pay dividends on our common stock.
Market for Common Equity and Related Stockholder Matters
Market Information
Our shares of common stock are currently traded on the
OTC Electronic Bulletin Board under the symbol "CDED". The
common stock was approved for trading February 1, 2002.
There is no assurance that an active trading market will
develop that will provide liquidity for CareDecision's
existing shareholders or for the selling shareholders whose
common stock is being registered through this filing.
The Commission has adopted regulations which generally
define a "penny stock" to be any equity security that has a
market price less than $5.00 per share. Thus, our common
stock is presently a penny stock subject to rules that
impose additional sales practice requirements on broker-
dealers who sell such securities to persons other than
established customers and accredited investors. This would
generally include institutions with assets in excess of
$5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000
jointly with their spouse. Based on the above, investors
who are not established customers of broker-dealers or
accredited investors may find it difficult to purchase our
common stock without satisfying numerous requirements.
The reported high and low bid prices for our common
stock are shown below for each quarter beginning with the
quarter ended March 31, 2002. The high and low bid price
for the first, second and third quarter of 2002 are
quotations from the OTCBB. The quotations reflect inter-
dealer prices and do not include retail mark-ups, mark-downs
or commissions. The prices do not necessarily reflect
actual transactions.
PERIOD HIGH BID LOW BID
2002 - First Quarter .30 .06
2002 - Second Quarter .08 .03
2002 - Third Quarter .11 .03
2002 - Fourth Quarter .11 .04
2003 - First Quarter .08 .04
As of August 2, 2002, we are authorized to issue 200,000,000
shares of our common stock at par value $0.001 and 5,000,000
shares of our Preferred stock at par value $0.001.
Currently, we have shares of our common stock issued and
outstanding held by approximately 88 individual holders and
no shares of our preferred stock issued and outstanding.
/11/
Plan Of Distribution
Shares of our common stock may be sold from time to
time to purchasers directly by the selling security holders.
Alternatively, the selling security holders may from time to
time offer shares through underwriters, dealers or agents,
who may receive compensation in the form of underwriting
discounts, concessions or commissions from the selling
security holders for whom they may act as agent. The
selling security holders and any underwriters, dealers or
agents that participate in the distribution of our common
stock may be deemed to be underwriters, and any commissions
or concessions received by any such underwriters, dealers or
agents may be deemed to be underwriting discounts and
commissions under the Securities Act. Shares may be sold
from time to time by the selling security holders in one or
more transactions at a fixed offering price, which may be
changed, or at varying prices determined at the time of sale
or at negotiated prices.
We will pay our own legal and accounting fees and other
expenses incurred in connection with the offering. We
estimate the amount of offering expenses will be $3,000.
Legal Matters
The Law Offices of Thomas C. Cook, Ltd., 4955 S.
Durango Drive, Suite 214, Las Vegas, Nevada 89113 will pass
upon the validity of the common shares offered for us.
M&E Equities, LLC ("M&E") and Blimie Mendlowitz (the "Plaintiffs")
have filed a complaint, case # 600092-03, in the Supreme Court of
The State of New York County of New York, [M&E Equities, LLC, and
Blimie Mendlowitz against CareDecision Corporation, Medicius, Inc.,
Keith Berman, and William Lyons (the "Defendants")] alleging in
individual and collective plaintiff claims of cross-defaults, a
failure to repay note principal and interest, and a failure to
deliver common stock warrants. Plaintiffs also claim fraudulent
inducement and misrepresentation.
The Plaintiffs are seeking the amount of the notes plus interest
at no less than $475,000 and 225,000 warrants in Medicius, Inc.
The Plaintiffs are also seeking up to $4,000,000 in damages and
punitive damages.
The Company strongly believes there is no basis for any of the
Plaintiffs' allegations. The Company will vigorously and fully
defend against the claims, and believes that the Plaintiffs are
simply attempting to pressure the Company into paying off $475,000
in notes a year prior to maturity.
This litigation is still in the summons and complaint phase and
the ultimate outcome cannot presently be determined. Based on the
uncertain outcome of these contingencies, no provision for any loss
or gain that may result upon adjudication has been made in the
accompanying financial statements, and the possible effect it will
have on future financial statements is unknown.
Experts
The financial statements of CareDecision Corporation as
of December 31, 2002 are included in this Prospectus and
have been prepared by Beckstead and Watts LLC, Certified
Public Accountants. Along with their audit, Mr. Beckstead
and Mr. Watts have also included their expert opinion.
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Additional Information
We have filed with the SEC a prospectus on Form SB-2
under the Securities Act for the common stock being offered
under this prospectus. This prospectus, which is part of
the registration statement, does not contain all of the
information set forth in the prospectus and accompanying
exhibits. This prospectus contains descriptions of certain
agreements or documents that are exhibits to the prospectus.
The statements as to the contents of such exhibits, however,
are brief descriptions and are not necessarily complete, and
each statement is qualified in all respects by reference to
such agreement or document. In addition, we file annual,
quarterly and other reports, proxy statements and other
information with the SEC. You can review the registration
statement and its exhibits and schedules at the public
reference facility maintained by the SEC at Judiciary Plaza,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. The registration
statement is also available electronically on the World Wide
Web at http://www.sec.gov. You can also call or write us at
any time with any questions you may have. We would be
pleased to speak with you about any aspect of our business
and this offering.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations for period ended December 31, 2002.
The financial statements for the year ended December
31, 2002 have been prepared on a going concern basis. The
issuance of a going concern opinion by the auditors
indicates that the auditors have substantial doubt about
CareDecision's ability to continue as a going concern.
CareDecision incurred net losses of $1,923,643 for period
ended December 31, 2002. This indicates that CareDecision's
continuation, as a going concern is dependent upon our
ability to obtain adequate financing. If CareDecision were
unable to obtain adequate financing necessary to continue
our operations, advance our plan of operations, increase our
sales, increase our inventory and working capital, we would
be substantially limited. If CareDecision were unable to
properly fund our plan of operations, our continuation would
be jeopardized. Management's plan to overcome our financial
difficulties consists of raising additional capital and
obtaining revenues from the acquired assets of Medicius,
Inc. At this point, CareDecision has no definite plans to
raise money.
For the year ended
December 31, 2002
Statement of operations data:
Total revenue $ 2,000
General and administrative expenses $ 77,712
Payroll Expense $ 186,819
Professional Fees $ 171,852
Consulting Expense $ 1,319,482
Software Development $ 129,000
Depreciation $ 40,778
Net operating loss $ (1,923,643)
Other income (expense) $ (22,820)
Net loss $ (1,970,158)
Inventory -
/13/
Results of operations for the years ended December 30, 2002 and 2001.
For the years ended
December 31,
2002 2001
---- ----
Statement of operations data:
Total revenue $ 2,000 $ -
General and administrative expenses $ 77,712 $ 4,974
Payroll Expense $ 186,819 $ -
Professional Fees $ 171,852 $ -
Consulting Expense $ 1,319,482 $ -
Software Development $ 129,000 $ -
Depreciation $ 40,778 $ -
Net operating loss $ (1,923,643) $ (4,974)
Other income (expense) $ (22,820) $ -
Net loss $ (1,970,158) $ (4,974)
Inventory - -
Net Income (Loss)
We had net losses of $1,923,643 or a loss of $0.05 per
share for the year ending December 31, 2002. This loss was
due in large part to the merger completed with Medicius,
Inc. in June of 2002.
Internal and External Sources of Liquidity
We believe our cash on hand of $111,101 will be
sufficient to fund ongoing fiscal 2003 and 2004 operations
and provide for our working capital needs, however, we have
negative working capital of $370,052. Our accountant has
issued a note concerning our ability to continue as a going
concern. As we are still considered to be in the
development stage, our prospects of continuing as a going
concern are contingent upon our ability to achieve and
maintain profitable operations. Revenues generated over and
above expenses will be used for further development of our
services, to provide financing for marketing and promotion,
to secure additional customers, equipment and personnel, and
for other working capital purposes.
To date, we have financed our cash flow requirements
through a public issuance of common stock and through the
issuance of notes. During our normal course of business, we
will experience net negative cash flows from operations,
pending receipt of revenues. Further, we may be required to
obtain financing to fund operations through additional
common stock offerings and bank borrowings, to the extent
available, or to obtain additional financing to the extent
necessary to augment our available working capital.
Consulting Agreements
On February 17, 2002, the Company executed a business
consulting agreement with MLSA whereby the Company issued
1,350,000 shares of its $0.001 par value common stock to
Mark Lancaster for consulting services valued at $162,000.
The consulting services are to be rendered over a period of
90 days with an automatic three-month renewal provision.
Previously filed via an S-8 on 3/1/02.
On February 26, 2002, the Company executed a consulting
agreement with Qurag, Inc. whereby the Company issued
475,000 shares of its $0.001 par value common stock to Chaim
Drizin, a shareholder of the Company, for consulting
services valued at $30,875. The consulting services are to
be rendered over a period of 90 days with an automatic three-
month renewal provision. Previously filed via an S-8 on
3/1/02.
/14/
On March 27, 2002, the Company executed a consulting
agreement with Promark, Inc. whereby the Company issued
500,000 shares of its $0.001 par value common stock to Ken
Lowman for consulting services valued at $50,000. The
consulting services are to be rendered over a period of 90
days with an automatic three-month renewal provision.
Previously filed via an S-8 on 4/17/02.
On April 20, 2002, Medicius executed a secured
convertible revolving promissory note agreement with M&E
Equities, LLC ("M&E") whereby Medicius granted M&E a
continuing security interest in and a general lien upon the
Collateral for a loan valued at $500,000. Except as
otherwise contemplated in the transaction more fully
described in the Letter of Intent by and between ATR Search,
Inc. and Medicius, Inc., dated April 5, 2002.
On October 21, 2002, the Company executed a consulting
agreement with Robert Koch whereby the Company issued
2,000,000 its $0.001 par value common stock to Mr. Koch, for
consulting services. The consulting services are to be
rendered over a period of nine months. The consulting
services are to be rendered over a period of one hundred and
twenty days.
On December 11, 2002, the Company executed a service
agreement with Robert Jagunich, a shareholder of the
Company, whereby the Company issued 4,127,093 shares of its
$0.001 par value common stock to CRS, for consulting
services. The consulting services are to be rendered over a
period of nine months.
On December 13, 2002, the Company executed a consulting
agreement with Barbara Asbell, a shareholder of the Company,
whereby the Company issued 1,000,000 shares of its $0.001
par value common stock to CRS, for consulting services. The
consulting services are to be rendered over a period of 90
days with an automatic three-month renewal provision.
On December 13, 2002, the Company executed a consulting
agreement with Wizard Enterprises 9"wizard"), whereby the
Company issued 2,500,000 shares of its $0.001 par value
common stock to CRS, for consulting services. The
consulting services are to be rendered until the Agreement
terminates pursuant to written notification by either the
Company or Wizard, which notification may occur at any time
for any reason.
On December 20, 2002, the Company executed a consulting
agreement with Wizard Enterprises 9"wizard"), whereby the
Company issued 1,888,855 shares of its $0.001 par value
common stock to CRS, for consulting services. The
consulting services are to be rendered until the Agreement
terminates pursuant to written notification by either the
Company or Wizard, which notification may occur at any time
for any reason.
Business of the Company
Business Overview
CareDecision Corporation ("CareDecision"), a Nevada
corporation incorporated on March 2, 2001, is a
developmental stage company with a principal business
objective to provide enhanced information technology (IT)
for physicians. The technology employees allows this
information to be provided within seconds of its request at
the point of the physician's clinical decision making,
either in the examining room or at bedside.. The software
systems, communication tools and suite of software
applications employed by CareDecision permits the office
practice physician to request critical patient medical
and/or medication information via the Web on a Microsoft
Windows based Personal Digital Assistant ("PDA") at, or
prior to the point-of-care.
The system captures and displays the requested
information, and overlays medical treatment protocols and
medical step therapies (steps and procedures Insurance
companies issue for treating illnesses a physician has not
/15/
treated before), creating not only a patient specific
historical medical chart, but also suggested treatment
alternatives, approved medications and diagnosis specific
protocols. Utilization of this system by the practicing
physician enhances clinical decision-making, improves
physician productivity, insures formulary compliance,
reduces the cost of healthcare and positively impacts the
care provided to the patient.
The elements of our business strategy include:
expanding geographically into key markets through a
combination of opening new offices and developing
relationships with clients to generate demand for our
services; recruiting qualified, medical software and other
technical personnel to perform technical, implementation and
support duties as contracts are entered into, although there
can be no assurance that any such contracts will be secured;
and pursuing entry into new markets complementary to
CareDecision's proposed operations. Future operations are
dependent upon our ability to implement our business and
marketing strategies and to establish relationships and
contracts with health insurers and HMOs to provide our e-
health products and services.
On June 17, 2002 a shareholders' meeting was held and a
shareholders' resolution adopted that resolved that ATR
change its name to CareDecision Corporation
("CareDecision"), increase the number of authorized common
shares to 200,000,000 and approve the merger between the
Company and Medicius, Inc.
As noted on Note 6 of the September, 2002 financial
statements, on June 21, 2001, the Company entered into an
agreement with Care Technologies, LLC whereby the Company
sold all of the assets and liabilities of the Company in
exchange for a 10% ownership of Care Technologies, LLC. The
investment was recorded at $229,899, being the fair value of
the Company's assets on the acquisition date (see Financials
Note 4).
Also, on June 21, 2002, the Company adopted Medicius,
Inc's business model, which is to provide enhanced
information technology (IT) for physicians at the point of
clinical decision.
On June 28, 2002 we filed a report on Form 8-K with the
Securities and Exchange Commission, whereby Medicius, Inc.
("Medicius"), a Nevada corporation, merged with and the
Company. Pursuant to the terms of the merger agreement, the
Company obtained the operations of Medicius.
As of June 28, 2002, the Effective Date of the merger,
the capital stock of Medicius issued and outstanding
immediately prior to the Effective Date was converted into
CareDecision Corporation Common Stock as follows:
(i) Each share of Medicius Series A Preferred
Stock was converted into 3.5 common stock shares of ATR and
..75 ATR common stock purchase Warrants.
(ii) Each share of Medicius common stock was
converted into 3.0 common stock shares of ATR and .5 ATR
common stock purchase Warrants.
(iii) After the Effective Date, all Medicius
common stock purchase warrants that remain unexercised as of
the Effective Date and any Medicius Convertible Notes that
remain unconverted or unpaid on the Effective Date remain
exercisable for or convertible into the number of common
stock shares of ATR based on the same conversion ratio
outlined in paragraph (ii) above.
Following the merger between Medicius and ATR, both
entities survived. ATR became CareDecision Corporation and
Medicius became dormant.
We have a website at http://www.caredecision.net., which
provides a description of our services and products.
/16/
Industry Trends
The overwhelming majority of clinical information is
currently trapped in proprietary Active Server Pages (paper,
mainframes, and physician practice management systems). The
trend is moving towards taking all the information and
transferring it into electronic format for easy access. The
extraction and sharing of that information is a time
consuming and costly process. Each industry segment
recognizes and embraces the efficiencies and cost reductions
that can be realized through the electronic exchange of
data. A number of technologies, even those employing the
Internet as a backbone, have failed to achieve the expected
information transformation. In almost all instances the
communication of electronic data within the paradigm has the
universal support of the payors and industry service
providers (pharmacies, labs, etc.).
The movement of combining the information stored in the
Active Server Pages and transferring it to electronic format
will benefit our short-term and long-term liquidity, our net
sales and revenues, and our income from continuing
operations. Our short-term liquidity will increase with the
initial sales of our product. Our long-term liquidity will
also increase from the ongoing fees connected with our
service, which in turn will increase our income from
continuing operations.
Industry Overview
Over the last decade managed care has transformed
healthcare into a highly competitive and market driven
industry. The transition has resulted in the elimination of
many of the unnecessary costs that had historically
contributed to the continued and unabated acceleration of
the cost of health care. One crucial segment, which has
remained resistant to ongoing efforts to realize real and
obvious opportunities to affect cost reductions, lies in the
means of communications resident within the industry.
The nature of domestic healthcare delivery has resulted
in a highly fragmented system involving hundreds of
thousands of payor and provider organizations scattered
across a broad geographical landscape. Each of these
locations employs diverse and incompatible information
systems that have restricted electronic communication of
vital medical and administrative information between the
participants.
The overwhelming majority of clinical information is
currently trapped in proprietary Active Server Pages (paper,
mainframes, and physician practice management systems). The
extraction and sharing of that information is a time
consuming and costly process.
Additionally, healthcare mainly relies on paper
communication processes. We estimate that current
healthcare administration costs exceed $300 billion
annually. It is management's belief that online process
automation and transaction processing solutions can
eliminate over 50% of those costs, which are directly
attributable to the time and expense associated with manual
processing for routine processes and transactions.
Although the growth of Internet access and utilization
has clearly become the basis for accelerating the digital
integration of healthcare, progress remains limited with
full, broad user based deployment. A number of
technologies, even those employing the Internet as a
backbone, have failed to achieve the expected information
transformation. In almost all instances the communication
of electronic data within the paradigm has the universal
support of the payors and industry service providers
(pharmacies, labs, etc.). Each industry segment recognizes
and embraces the efficiencies and cost reductions that can
be realized through the electronic exchange of data.
Review of Products
The e-Health handheld information appliance software offered
by CareDecision advances the state-of-industry technology into
a new generation. These PDA technology innovations will lead
to competitive imitation that we anticipate will grow into
the industry standard. Competitors within the sector
/17/
currently offer an outpatient, PDA-based prescription writing
device and suggest the eventual inclusion of such features as
lab test order entry and fulfillment. The sector has recently
been witness to its own shakeout with first generation, outdated
product entries limiting growth prospects of several companies.
CareDecision presently has a complete suite of medical
information and communication applications, all integrated,
and all on one PDA Internet appliance. These applications
have been designed to meet the needs of both the inpatient
and outpatient environments and are not just commercially
viable but also regulatory standard compliant. Further, we
believe that CareDecision has conceived and implemented the
ability to monitor patient treatment plans on a handheld
information appliance.
Marketing
Management intends to implement an aggressive but
targeted marketing campaign to educate healthcare providers
about CareDecision's technology solutions and the benefits
obtained through its use. The industry focused marketing
campaign is intended to leverage our efforts by qualifying
customers' needs and interests.
The CareDecision marketing strategy ultimately targets
the physician provider through the provision of technology
and services that specifically respond to their needs and
requirements. The physician will be the ultimate
determinant as to the success of any given system;
therefore, it is incumbent on any marketing strategy to
focus on the satisfaction of their needs. CareDecision has
created PDA-centric products and a suite of Internet
enhanced software applications that includes those features
that specifically respond to the requirements of the
practicing physician. We believe that the combination of
unique and responsive benefits derived from our system
coupled with its simplicity, portability, convenience and
ease of use will initiate and propel the desired transition
from paper processes.
Healthcare is an interdependent web of payors and
providers. CareDecision's success is reliant on targeting
multiple segments within the industry. As has been
previously stated, although the physician will determine a
product's utilization, it is the other components of the
system that will bear the cost of the product's introduction
and ongoing employment. Insurers and industry service
providers must participate in the electronic network, both
logistically and financially to complete the link that will
provide utility and value to all participants. It is
incumbent on us to therefore extend our marketing strategy
to facilitate this reality.
We will concentrate our marketing efforts in specific
target geographic locations that will permit the completion
of our density strategy crucial to sustained penetration and
long-term success. Implicit to this strategy is the
contracting of multiple payors, pharmacy benefit management
entities, medical case management entities and payment for
transactions communicated to or from the participating
physicians. Once the network has been established the
product will be distributed to those physicians included
within the contracted payors Provider Network. We will rely
on those contracted payors to support and assist in the
distribution of the product to the said physicians.
The creation of such networks will be conducted in
multiple geographic locations simultaneously. Upon their
completion the process employed will be introduced and
replicated in other locations targeted for access.
The Product Opportunity
Healthcare is a matrix of interrelated providers and
payers. The physician resides at the core of the complex
structure, initiating the vast majority of interactions
between the participants. It is the physician who is
responsible for the disposition of 80% of the healthcare
dollar either, directly through the provision of service, or
indirectly through patient direction to other services
(prescriptions, lab tests, hospital admissions, CAT scans, X-
rays, home health products, etc.) Correspondingly, it is
those physician activities, which generate the preponderance
of paper communications cluttering the system. The
physician office practice then is central to the solution
and stands to benefit most from the introduction of that
solution. Paradoxically, however, it is the physician
office that has been the central impediment to the adoption
of the technologies that would permit system-wide,
instantaneous communication of clinical,
/18/
administrative and financial information between and amongst
the multitude of payors, providers and support industries
composing the enterprise.
Physicians are reluctant to adapt to technological
advances for a variety of reasons. Most of their objections
have been approached and resolved by the vendors
participating in the sector. Several, however, continue to
remain unresolved and serve as a continuing impediment to
physician acceptance of the new technology:
1. Patient information that is vital for the conduct of
the examination, such as, medical history, accurately
diagnose a malady, and provide a remedy, must be available
to the physician during or before the patient encounter;
2. The tool employed to capture information prospectively,
and record and distribute the prescribed remedy must be
portable, easy to use and fit within the existing workflow
of the office practice; and
3. The adopted tool must diminish, not add, to the work of
the physician or the staff.
Many technology companies have developed impressive
technologies, but have failed to satisfy the specific
demands of the physician community for acceptance of
innovative communication technology and digital integration
of their paper processes. In order to be accepted by the
physician population, by winning space on their valuable
"medical desktops," a medical IT company, even one with an
Internet connectivity solution, must be embraced by doctors
as a comprehensive enhancement to their practices.
CareDecision's system improves the quality and
efficiency of the physician's practice by providing clinical
information at the point of care. We are focused on point
of medical care (patient examining room, patient bedside)
tools and products.
The Need for Integration
Our software is designed to integrate point of care
medical applications, treatment protocols and up to the
moment patient histories coupled with real-time on-line
medical insurance claims submission. The ultimate key to
success resides in providing the private practice physician
with the capability to, sequentially, learn about the
history of his or her patient during, or prior to, entering
the examining room, treat the patient and update the insurer
of the episode of care. Accomplishing this objective
resolves a major dilemma for the health care provider;
instantaneous communication of vital patient related
information at or before the patient encounter.
The technology is grounded in the central need to
furnish the doctor with the crucial patient information
rapidly and reliably on a PDA. It utilizes the power of the
Web to move large amounts of data to and from a variety of
platforms securely via a powerful Windows CE based PDA
designed for portability and upgradability. Totally
compliant with the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA"), this PDA technology is
the first to offer legacy system applications on a totally
portable (PDA) appliance.
1. The PDA software operates on any Microsoft Windows CE
"Pocket PC" based handheld device, either in a wireless or
"wired" mode. The local host for the company's PDA devices
is a Windows (9X, NT or later) based PC in the physician's
office, which, in turn, permits one to eight of the
aforementioned PDAs to be linked to the medical network.
2. The PDA software allows each PDA to become a uniquely
identified mobile node on the medical network, independent
of PC linkage, thereby, assisting the doctor in the review
of relevant patient medical history, medications and
prescriptions, lab test ordering, medical step processes and
protocols and specialist referral processes. The PDA
software provides rules based software capabilities and the
ability to receive order fulfillment information for over
5,000 patients, which represents approximately 3 years of
patient encounters in a typical primary care medical
practice and allows for providers to access payor and health
plan business rules, and policy/plan coverage's directly
from the plan(s).
/19/
3. The Web server software establishes a real-time link to
health plans, lab and other service organizations legacy
systems.
4. Our system allows for providers to access payor and
health plan business rules, and policy/plan coverage's
directly from the plan(s).
Value Proposition
The PDA offered by CareDecision will enhance the
likelihood that the physician will prescribe the right
drugs, order the needed lab tests and refer to only
authorized specialists. The physician is guided by health
plan published treatment and step protocols while in the
presence of the patient. Typical post-examination
activities conducted by the doctor and his staff will result
in better time efficiency, fewer mistakes, corrections and
duplication of paperwork.
On the other side of the equation, if the health plan
is able to positively influence (manage) physician ordering
of services and medications without having to resort to
"charging" the doctor for his own mistakes and
inefficiencies, adoption of the tool or service is more
likely. This unique workflow equation distinguishes
CareDecision from other service companies begun prior to
1998. Although they initially defined the need for these
tools and demonstrated their cost saving potential, they
failed to induce broad user based adoption of their
technologies, because their tools did not provide the
requisite utility at the "point of care." CareDecision
offers a unique point of patient care medical efficacy and
treatment tool.
The software system offered by CareDecision satisfies
all the clinical and utilization requirements of the
practicing physician. CareDecision believes the products we
offer provide the utmost in efficiency., From the
standpoint of the physician, processing of patient
information is nearly automatic. Relevant data is pre-
loaded onto the PDA according to the doctor's schedule of
patients. Thus, physician induced data entry is kept to a
minimum, thereby overcoming one of the largest obstacles to
admission to the physician's "desk-top."
To win the battle for space on the "physician desktop,"
a medical IT company, even one with an Internet connectivity
solution, must be embraced by doctors as an enhancement to
their practices. The system CareDecision is offering
improves the quality and efficiency of the physician's
practice by providing clinical information at the point of
care. The applications and communication software permit
the physician to discard the piles of manila folders and
reference manuals. The PDA bearing proprietary software
enables the physician at the point-of-care to:
1. Review the patient's recent and/or long term medical
history;
2. Check the patient's eligibility to receive services
from a health plan;
3. Request care review of medical protocols and medical
step processes, to assure a minimum standard of care
according to each patient's diagnoses and health plan;
4. Electronically order laboratory tests or radiology
exams, and review the fulfillment of those orders by
electronic receipt of the medical test results;
5. Review the safety of a proposed prescription and its
propensity to interact with other prescribed medications for
a given patient. Identify the optimum medication contained
within the patient's benefit plan formulary;
6. Electronically refer the patient to a medical
specialist, and retrieve and review any report(s) sent from
the specialist related to the referral; and
7. Initiate care protocols, or step therapies, based on
the patient's diagnosis, and automatically follow the
progress or efficacy of the "steps" through an auto-
reminder.
[Balance of this page intentionally left blank.]
/20
The PDA technology and applications are a tightly
designed integration of application sets. The system
captures all current patient activity at the point of care
(the examining room or bedside) and then merges it with the
patient's history allowing various on-demand treatment
protocols to emerge, providing a wealth of data for
prospective treatment. Information supplied to and from the
physician via the PDA appliance includes:
Case/Episode Diagnosis 1. Episode by episode multiple
diagnosis and physician chosen
treatment;
2. Patient cumulative treatment
(electronic medical record)
histories, including hospitalizations
and histories from patient; and
3. Eight levels best care medical
protocols.
---------------------------------------------------------------
Medical Order Entry and 1. Full Pharmacy Benefits Management
Fulfillment programs with electronic script
writing with drug formulary and
drug-drug interaction checks;
2. Lab Order Entry with complete
reporting including results,
pending, tickler, out of limits,
historical, summary, etc.; and
3. Accident/Worker's Compensation
intervention modules. In addition,
CareDecision software applications
provide both on-line and off-line
(fax) order entry.
---------------------------------------------------------------
Payor-Related 1. Plan and Procedure Eligibility;
Applications 2. Procedure/Drug Authorization;
3. Patient Referral; and
4. Hospitalization Admission Decision
Tree.
The communication and integration system coupled with
its clinical and administrative applications constructs a
compelling and convincing rationale for adoption and
utilization by the physician within the office practice.
Solution & Benefits
Built on Industry Acceptable Standards
The System creates a fully secured series of private
communications networks and establishes, for the user's
organization, a medical network consisting of both size and
power. In effect, the System creates multiple Private data
networks, using the Internet and any service provider as its
backbone. The created network(s) become fully secure
private networks for the exclusive use of the participants.
They provide maximum security for all medical
communications. Currently, the System utilizes a desktop
computer as the client-server link to the Internet with one
to four PDAs docked to it. Each PDA battery is charged and
data is exchanged specific to each PDA's unique identifier.
In addition, the communication software has been designed,
and is currently resident on each suite delivered, to
accommodate direct connection of the PDA through a wireless
link to the Internet. From a practical standpoint, a number
of technological and economic issues must be overcome before
a wireless connection to the Internet in a healthcare
setting can be implemented. These issues include: (a) the
reliability and bandwidth of wireless Intranet
communications; (b) PDA battery life; (c) wireless connect
costs; and (d) the need for relatively expensive wireless
amplification and routing stations.
The broad-based technology is for utilizing low bandwidth,
seamless, automatic, (basically) free FTP (file transfer protocol)
nets, using the Internet. These applications (medical,
communications and database) are local to each physician's
palm-top, providing a comfort level to the physician and the
patient. This means that sensitive or critical medical information
can be provided automatically or upon request behind the closed door
of an examining room, or at the patient bedside. Communication
modules resident in the medical networks effect transmissions
automatically and seamlessly. The entire cycle takes less than
/21/
3 minutes using encrypted, encoded and "whittled" message
packets that are; (a) thrice cleaved into header, body and footer
segments that are then compressed with check digits, allowing
blocked transfer; (b) data packets to be transmitted through a
proprietary message parser along three separate, non-competing Internet
channels; and (d) automatically reassembled at the receiving end.
Connecting Through Integration
The PDA based applications provide a complete set of
clinical applications for managing patient care,
streamlining clinical paperwork, providing the physician
with Best Medical Care pathways and guidelines, and
increasing efficiency while improving the accuracy of
tracking patient care.
There are three categories of application modules.
1. Case/Episode Diagnosis and Treatment modules include:
(a) episode by episode multiple diagnosis and physician
chosen treatment pathways; (b) patient cumulative treatment
(electronic medical record) histories, including
hospitalizations and histories from patient encounters with
other physicians; (c) eight levels of Best Care Medical
Protocols, and (d) tentacle links to the Physician Desktop
Reference (PDR) and prescription drug databases;
2. Medical (outbound) Order Entry modules include: (a)
full Pharmacy Benefits Management programs with electronic
script, drug formulary and drug interaction modules; (b) Lab
Order Entry with complete reporting: results, pending,
tickler, out of limits, historical, summary, etc., and (c)
Accident/Worker's Compensation intervention modules.
Additionally, CareDecision software applications provide
both on-line and off-line (fax) order entry; and
3. Payor related applications modules include: (a) Plan
and Procedure Eligibility; (b) Procedure/Drug Authorization;
(c) Patient Referral, and (d) Hospitalization Admission
Decision Tree.
Real B2-B Model
The Internet serves not just as a portal, but a true
Business-to-Business destination to integrate all of the
constituents and trading partners for a revolutionary means
of transacting medical business. It doesn't just connect
insurer to physician, hospital to doctor's office or billing
to payment but rather, fully integrates the entire medical
care giving cycle within one host deployed processing
framework.
It is generally understood and accepted that physicians
will not bear the cost of being interconnected to health
plans and service providers, even though CareDecision type
solutions improve the efficiency and clinical effectiveness
of their practices. CareDecision anticipates that health
plans and service providers, such as clinical laboratories,
will subsidize (sponsor) the physician networks. That
subsidy will be provided because the Plans and Service
Providers will financially benefit from the creation of the
electronic data network.
Paper processing and physician non-compliance with a
health plan's prescription formulary are estimated to be $10
per year for each insured. Service providers believe that
they can capture incremental market share while protecting
their base through this technological linkage. The
CareDecision model derives its principal source of revenue
from transaction fees driven by the physician's use of the
PDA.
The costs of installing and maintaining the components
of the network in physician offices will be borne by the
health plan "sponsors" that the company has labeled, E-
trading partners. The system presents a visible and
definable cost savings to the sponsoring health plan through
a transaction fee structure that offers advance cost savings
benefits. The added indirect management capabilities
offered the sponsor make the adoption of CareDecision's
point of care concept unique in the industry.
/22/
The following table describes the types of fees that we
will charge and the payor of such fees.
Fee Category Specific Transaction Payor of Fee
--------------- ---------------------- ---------------------
Insurance a. Patient Eligibility Clerk Specific Insurer
b. Procedure Eligibility Clerk
c. Patient Referral
d. Procedure/Drug Authorization
Laboratory a. Laboratory Tests and Results Specific Laboratory
b. Historical Patient Lab Profile
c. Lab Supplies
d. Lab Supplies Order
e. Laboratory Super Bill
Pharmacy a. Drug Formulary Check Insurer or
Benefit b. Best Care Drug Guidelines Insurer's PBM
c. Drug Interaction Check
d. Electronic Prescription
Hospital a. Hospital Pre-Admission Checklist Specific Hospital
b. Discharge Report
c. Remote Physician Inquiry to EMR
d. Patient Insurance Profile
We anticipate that health plans and service providers,
such as clinical laboratories, will subsidize (sponsor) the
physician networks. As this is not assured, our costs will
be paid, by selling our PDA's through other avenues. We
have a business model to sell our PDA units through
distribution outlets. We have brought in one distributor in
California to test the feasibility of our business model.
Competition
The medical industry is highly competitive in the
attraction and retention of physician customers, insurers
and other medical providers. The number of competing
companies and the size of such companies varies in different
geographic areas. Generally, CareDecision is in competition
with other PDA technology companies that offer medically
related software suites, with the most effective competition
coming from companies that possess greater capital
resources, have longer operating histories, larger customer
bases, greater name recognition and significantly greater
financial, marketing and other resources than do we.
There are a number of small and large companies that
have announced their intentions to provide some type of
Internet interconnectivity for physicians to the healthcare
systems:
1. Large publicly traded companies: WebMD formerly known
as Healtheon (HLTH), the former MedicaLogic/Medscape ( HLTH)
and to a slightly lesser degree Cerner/Citation (CERN), IDX
Corporation (IDXC) and venerable Shared Medical (acquired by
Seimens) are very broadly involved in healthcare Internet
based services including consumer services, E-commerce and
connectivity. Of these companies only Cerner is working on
a PDA based interface for physicians, although Healtheon has
identified the PDA as a critical component for a network and
is "evaluating potential partners to provide physicians with
hand-held computers after an in-house product was
deemphasized after beta testing."
2. Non-PDA based start-ups and small publicly traded companies:
CyBear (merged last year into parent Andrx), Medix Resources
(MXR), Advanced Health (merged into Proxymed) and Abaton.com
/23/
(merged into HBO-McKesson and then shut down) have or had
announced some form of connectivity systems that are non-PDA
based and have, at best, limited numbers of clinical installations.
3. More mature companies such as Kinetra (acquired by
HLTH), McKesson-HBOC and ProxyMed (PILL), have launched
Internet enhanced ventures without any clinical successes.
4. PDA-based start-ups: PatientKeeper Corp. (formerly
Virtmed), ePhysician (recently downsized and sold assets)
and iScribe (recently reorganized and then merged) have
announced products that reside on 3-Com's Palm PC. The
PatientKeeper product will allow physicians to capture
billing information for hospital-based accounts and purports
to manage receivable transactions (a mix of a 1st generation
feature on a 3rd generation technology). ePhysician's
product offering allows prescription ordering from a PDA.
On the surface, the former iScribe system offers a few of
the features of CareDecision's system, but has chosen to
implement a wireless wide-area network solution through an
Internet link to a legacy system server. This approach has
greater capital cost and platform data management
disadvantages compared to CareDecision's product line. Yet,
iScribe, even with its costly and incremental approach, and
its history of financial troubles nonetheless garnered an
impressive valuation..
All of the embryonic PDA technology based companies
have a similar broad goal to deliver PDA based data
management to physicians. One company, AllScripts (MDRX)
appears to be positioned to advance to a market leadership
position. However, this position is defined by a product
distribution of less than 2000 physicians' office sites (1%
of the total market) and does not possess a major factor in
any medical trade area.
Increased competition may result in reduced operating
margins and a loss in our clientele base. There can be no
assurance that we will be able to compete successfully
against current and future competitors, and competitive
pressures faced by us may have a material adverse effect on
our business, prospects, financial condition and results of
operations. Further, as a strategic response to changes in
the competitive environment, management may from time to
time make certain pricing, service or marketing decisions or
acquisitions that could have a material adverse effect on
our business, prospects, financial condition and results of
operations.
Based on management's industry experience, CareDecision
believes it will build a strong reputation for the quality
of our products and services as well as our client-oriented
approach. We believe that our experienced employees, broad
range of products and services, local and broad market
expertise, and operating infrastructure enable us to compete
effectively in each of our business disciplines. (See "Risk
Factors - Competition")
Major Customers
As we are still in the development stage, CareDecision
has yet to generate significant revenue. However, pursuant
to an Agency Agreement with CareDecision.net,
Inc.,CareDecision will receive 90% of the total revenue,
which CareDecision.net, Inc. is to receive through a Program
Agreement with Pharmacare, Inc., a wholly owned subsidiary
of CVS Corporation, a leading provider of pharmacy benefit
services to health insurers. Pharmacare and the Company
plan to jointly market the CareDecision products. Thus far
the two companies have embarked upon a program to jointly
introduce the benefits of CareDecision.net's products to
several east coast based health plans that insure over five
million lives.
The material compensation terms of the Agency Agreement
are as follows:
A. Exclusivity Compensation. Agent agrees to pay
Company 10% of any sales revenues, services or training
revenues received as compensation for Company's appointing
Agent as exclusive Agent for the Products in the
Territory.
B. Compensation for PDA Design Changes. The PDA
based product listed in Section 1(A)
/24/
is complete, commercial ready and fully functional. However,
the PDA based Product listed in Section 1(A) functions in
a manner that allows Company to charge end users, or their
sponsors, use fees according to a proprietary Internet e-
commerce model. Agent agrees to pay, or cause Company to
be paid, 10% of any revenues received as compensation for
Company's agreement to alter the functionality and
workflow of the PDA based Product so that it/they may be
sold or licensed in Agent's Territory."
Patents or Trademarks
We have filed for several patents & trademarks early in
2001. We also filed for additional patents and trademarks
in late 2002. The applications are still pending.
Point Of Operation
CareDecision maintains its headquarters and
administrative operations in New York, New York.
Government Regulation
Federal, state, local and foreign governmental
organizations may propose or institute laws or regulations
concerning various aspects of the medical industry,
including electronic claims processing, electronic
prescriptions and privacy matters. CareDecision is not
currently subject to direct regulation by any domestic or
foreign governmental agency, other than regulations
applicable to businesses generally, and laws or regulations
directly applicable to the medical industry. However, due
to the increasing popularity and use of the Internet and
other online services, it is possible that a number of laws
and regulations may be adopted with respect to the Internet
or other online services covering issues such as user
privacy, pricing, content, copyrights, distribution and
characteristics and quality of products and services.
Furthermore, the growth and development of the market
for online commerce may prompt calls for more stringent
consumer protection laws that may impose additional burdens
on those companies conducting business online. The adoption
of any additional laws or regulations may decrease the
demand for our products and services and increase our cost
of doing business, or otherwise have an adverse effect on
our business, prospects, financial condition and results of
operations.
Employees
CareDecision currently has 2 part time and 8 full staff
employees. The full time employees are situated as follows:
6 are located in the California office, one is in Chicago
and one is in the New York office. Management does not
foresee hiring additional employees for at least the next
twelve to twenty-four months, or until we generate
sufficient revenues, in management's opinion, to support
hiring additional staff. No employees are covered by labor
agreements or contracts and management believes our
relations with our employees are good.
Facilities
The Company's headquarters and facilities are located
at 2 Penn Plaza, 15th Floor, Suite 1500-53, New York, New
York 10121. The CEO of CareDecision, Robert Cox, at no cost
to the corporation, is currently providing for these
facilities. Additionally, the company has assumed the lease
on the space Medicius occupied, approximately 2300 sq. feet,
located at 2660 Townsgate Road, Suite 300, Westlake Village,
CA. As of April 1, 2003 there are 17 months remaining on
that lease at $3,750.00 per month. If additional facilities
are needed, management believes that suitable expansion
space is available to meet our future needs at commercially
reasonable terms. Currently, management believes that our
office provides sufficient workspace to commence with
initial operations.
/25/
Management
Directors And Executive Officers
The following sets forth certain information with
respect to the executive officers, directors, key employees
and advisors of our company as of the date of this
prospectus:
NAME AGE POSITION
---- --- --------
Robert Cox 43 President, Director, and
Chief Executive Officer
Keith Berman 49 Secretary, Treasurer
and Director
William Lyons 49 Director
Robert Jagunich 56 Director
Robert L. Cox, Chairman, President, Director, and Chief
Executive Officer - Prior to joining CareDecision, Mr. Cox
was the Chief Executive Officer, President and Director of
Tower Realty Trust, Inc., a publicly traded Real Estate
Investment Trust ("REIT"). Prior to holding the positions
of CEO and President, since 1995 Mr. Cox served as the
Executive Vice President and Chief Operating Officer of
Tower Equities until October of 1997, when Tower Equities
became a public company (Tower Realty Trust, Inc.). Prior
to that, Mr. Cox served as Vice President of Development and
Construction of Tower Equities from March 1987 to March
1995, where his main responsibilities included supervising
all of Tower Equities' development and construction
projects. Mr. Cox is a graduate of Florida State
University.
Mr, Cox does not hold any directorships of other reporting
companies.
Keith Berman, Secretary, Treasurer and Director - Mr. Berman
has over 22 years experience in healthcare with such
companies as Technicon Corporation and Boehringer-Mannheim
Corporation, and in the last 15 years providing healthcare
software including intranet and Internet systems. Mr.
Berman was the founder of Cymedix, the operating division of
public Medix Resources, Inc. (MXR). Mr. Berman received a
BA and MBA from Indiana University.
William Lyons, Director - Mr. Lyons, has over 20 years
experience in healthcare endeavors, and for the past fifteen
years has concentrated on medical communications and medical
IT. Mr. Lyons, former President of Cybear, Inc. (CYBA) and
an original member of the management team at AllScripts
(MDRX), manages the company's sales and marketing efforts.
Mr. Lyons received a BA from St. Michael's College and an
MBA from Pace University.
Robert Jagunich, Director - Mr. Jagunich has as a director
of Cymedix Corporation, the operating entity of Medix
Resources, Inc. (AMEX:MXR), from April 1996 through December
1997. Mr. Jagunich has 27 years of experience in the
medical systems and device industry. Recently, he has held
the position of President at new Abilities Systems, a
privately-held manufacturer of advanced electronic systems
used in rehabilitation. He also consults to companies such
as Johnson and Johnson and has served as a senior executive
in such publicly-held companies as Laserscope and Acuson.
He received his B.S., M.S. and M.B.A. from the University of
Michigan.
Committees of the Board
We presently do not have any committees.
[Balance of this page intentionally left blank]
/26/
Executive Compensation
The following table sets forth all compensation paid to
our executive officers for the calendar years of 2001 & 2002:
Annual Compensation Awards Payouts
------------------- ------ -------
Other
Annual Restr- Long-Term All
Name & Compen- icted Securities Incentive Other
Principal Salary Bonus sation Stock Underlying Plan Compen-
Position Year ($) ($) ($) Award(s) Options (#) Payouts ($) sation($)
----------------------------------------------------------------------------
Robert 2002 30,000 0 0 0 0 0 0
Cox
President 2001 100,000 0 0 0 0 0 0
Executive Employment Agreements
Currently, there are no employment agreements with
executives.
Certain Relationships And Related Transactions
There has been one actual or proposed transactions that
occurred over the past two years to which any person related
to the issuer had or is to have a direct or indirect
material interest as set forth in item 404 of Regulation S-B
of the Securities and Exchange Act of 1933.
During the period ended September 30, 2002, the Company
acquired Intellectual Property from CareDecision.net, Inc, a
private stockholder owned corporation that completed several
transactions the Company. As a result of the merger and the
acquired intellectual property, two of the beneficial owners
of CareDecision.net are now beneficial owners of the
Company. Pursuant to the agreement, the Company paid
CareDecision.net, Inc. the sum of $187,500 with 700,000
shares of the Company's $0.001 par value preferred stock.
CareDecision.net, Inc. then elected to convert its preferred
shares into 5,075,000 shares of the Company's $0.001 par
value common stock. The two indirect beneficial owners are
Keith Berman and William Lyons.
Transactions with promoters
We have not had any transactions with promoters since
inception.
Security Ownership of Certain Beneficial Owners and
Management
The following table presents certain information as of
December 31, 2002, with respect to the beneficial ownership
of our common stock by:
(a) Each person who is known to be the beneficial owner of
more than 5.0% of any outstanding share;
(b) Each director and executive officer of our company; and
(c) All executive officers and directors as a group.
As of December 31, 2002 there are 75,364,137 shares issued
and outstanding common stock. Please note that unless
otherwise specified, the named beneficial owner has, to our
knowledge, sole voting and investment power.
/27/
Common Stock
Shares Percentage of
Name and Address Beneficially Owned Shares Outstanding
---------------- ------------------ ------------------
Anfel Trading1 4,206,531 5.58%
505 Park Avenue
New York, NY 10022
Keith Berman 6,383,325 8.47%
1623 Elmsford
Westlake, CA 91361
Robert L. Cox 1,123,861 1.49%
16 Wood Hollow Lane
Fort Salonga, NY 11768
Cede & Co.2 20,508,927 27.21%
PO Box 222
Bowling Green Station
New York, NY 10274
Robert Jagunich 1,465,000 1.94%
765 Christine Drive
Palo A lot, CA 94303
William Lyons 2,792,224 3.70%
617 Joshhue Court
Naperville, IL 60540
------------------ ------------------
Total ownership by our 11,764,410 15.60%
officers and directors
(four individuals)
Footnotes
1. The principal executive officer of Anfel Trading is
Jackie Bronner.
2. Cede & Co. is a clearing company. Of the 35
individuals that have their securities on deposit, none own
a position of more than 5% of the Common Stock of the Company.
Description of Securities
Our authorized capital stock is 200,000,000 shares of
common stock, par value $0.001 per share and 5,000,000
shares of preferred Stock, par value $.001 per share. As of
December 31, 2002, we had issued 75,364,137 of our shares of
common stock and no shares of preferred stock.
The following brief description of our common stock and
preferred stock is subject in all respects to Nevada law and
to the provisions of our Articles of Incorporation, as
amended and our Bylaws, copies of which have been filed as
exhibits to our initial 10-SB Registration Statement filed
with the Securities and Exchange Commission on September 27,
2001.
Common Stock
As a holder of our common stock:
(a) You have equal rights to dividends from funds legally
available, ratably, when as and if declared by our Board of
Directors;
/28/
(b) You are entitled to share, ratably, in all of our
assets available for distribution upon liquidation,
dissolution, or winding up of our business affairs;
(c) You do not have preemptive, subscription or conversion
rights and there are no redemption or sinking fund
provisions applicable;
(d) You are entitled to 1 vote per share of common stock
you own, on all matters that stockholders may vote, and at
all meetings of shareholders; and
(e) Your shares are fully paid and non-assessable.
Additionally, there is no cumulative voting for the
election of directors.
Preferred Stock
We are also authorized to issue up to 5,000,000 shares
of preferred stock, $0.001 par value. Although, we have not
issued any preferred stock to date, nor have we developed
the descriptive attributes of these preferred shares, we can
issue shares of preferred stock in series with such
preferences and designations as our board of directors may
determine. Our board can, without shareholder approval,
issue preferred stock with voting, dividend, liquidation,
and conversion rights. This could dilute the voting
strength of the holders of common stock and may help our
management impede a takeover or attempted change in control.
Nevada Anti-Takeover Provisions
The anti-takeover provisions of Sections 78.411 through
78.445 of the Nevada Corporation Law apply to CareDecision
Corporation Section 78.438 of the Nevada law prohibits us
from merging with or selling CareDecision Corporation or
more than 5% of our assets or stock to any shareholder who
owns or owned more than 10% of any stock or any entity
related to a 10% shareholder for three years after the date
on which the shareholder acquired the CareDecision
Corporation shares, unless the transaction is approved by
the Board of Directors of CareDecision Corporation. The
provisions also prohibit us from completing any of the
transactions described in the preceding sentence with a 10%
shareholder who has held the shares more than three years
and its related entities unless the transaction is approved
by our Board of Directors or a majority of our shares, other
than shares owned by that 10% shareholder or any related
entity. These provisions could delay, defer or prevent a
change in control of CareDecision Corporation.
Anti-Dilution
The shares of the CareDecision's preferred stock shall
not be subject to dilution unless all the holders of the
preferred stock vote to change this preference. In
addition, the preferred stock shall maintain its status even
if the common stock undertakes a reverse or forward split of
its shares. The preferred stock cannot be diluted unless it
is converted to common stock.
The transfer agent and registrar for our common stock
is Pacific Stock Transfer Company, 500 E. Warm Springs Road,
Suite 240, Las Vegas, Nevada 89119, (702)361-3033.
Shares Eligible For Future Sale
The outstanding shares of our common stock include
shares of common stock outstanding that are "restricted
securities," as that term is defined under Rule 144 of the
Securities Act, because such shares were purchased or
acquired by such stockholders of CareDecision in
transactions not involving a public offering, and may only
be sold if there is an effective registration statement
filed with the Securities Act, in compliance with the
exemption provisions of Rule 144, or if there is another
exemption under the Securities Act. All the restricted
shares of common stock that have been issued at least one
year are eligible for sale under Rule 144, subject to
certain volume limitations. The outstanding shares also
include shares of common stock held by the Selling Security
Holders. Such shares have been registered for resale in
this document.
/29/
In general, under Rule 144 as currently in effect, a
shareholder, including an affiliate of CareDecision, may
sell shares of common stock after at least one year has
elapsed since such shares were acquired from CareDecision or
an affiliate of CareDecision. The number of shares of common
stock, which may be sold within any three-month period, is
limited to the greater of 1% of the then outstanding common
stock or the average weekly trading volume in the common
stock during the four calendar weeks before the date on
which notice of such sale was filed under Rule 144. Other
requirements of Rule 144 concerning availability of public
information, manner of sale and notice of sale must also be
satisfied. In addition, a shareholder who is not an
affiliate of CareDecision, and who has not been an affiliate
of CareDecision for 90 days prior to the sale, and who has
beneficially owned shares acquired from CareDecision or an
affiliate of CareDecision for over two years may resell the
shares of common stock without compliance with the foregoing
requirements under Rule 144.
No predictions can be made as to the effect, if any,
that future sales of shares, or the availability of shares
for future sale, will have on the market price of our common
stock prevailing from time to time. Nevertheless, sales of
substantial amounts of our common stock, or the perception
that such sales may occur, could cause the price of our
common stock to decrease and could impair our ability to
raise capital through the sale of our equity securities.
[Balance of this page intentionally left blank]
/30/
Security Holders and Recent Financing
On June 28, 2002 we filed a report on Form 8-K with the
Securities and Exchange Commission, whereby Medicius, Inc.
("Medicius"), a Nevada corporation, merged with and into
CareDecision Corporation ("CareDecision"). Pursuant to the
terms of the merger agreement, CareDecision obtained the
operations of Medicius.
As of June 28, 2002, the Effective Date of the merger,
the capital stock of Medicius issued and outstanding
immediately prior to the Effective Date was converted into
CareDecision Common Stock as follows:
(i) Each share of Medicius Series A Preferred
Stock was converted into 3.5 common stock shares of
CareDecision and .75 CareDecision common stock purchase
Warrants.
(ii) Each share of Medicius common stock was
converted into 3.0 common stock shares of ATR and .5
CareDecision common stock purchase Warrants.
(iii) After the Effective Date, all Medicius
common stock purchase warrants that remain unexercised as of
the Effective Date and any Medicius Convertible Notes that
remain unconverted or unpaid on the Effective Date remain
exercisable for or convertible into the number of common
stock shares of CareDecision based on the same conversion
ratio outlined in paragraph (ii) above.
The following tables list the shares that were
distributed pursuant to the merger agreement.
AMOUNT OWNED AMOUNT INVESTORS
AMOUNT OF AFTER 3:1 WANT
INVESTOR4 INVESTMENT1 CONVERSION2 REGISTERED3
--------- ----------- ------------- -----------
Anfel Trading $147,270.00 3,681,750 3,681,750
Asbell, Barbara $ 47,100.00 1,177,500 1,177,500
Belcher, Michael $ 2,100.00 52,500 52,500
Berman, Keith $255,333.00 6,383,325 6,383,325
Binder, Alan $ 1,200.00 30,000 30,000
CareDecision.net $ 84,323.76 2,108,094 1,761,958
Cox, Robert $ 26,145.00 653,625 653,625
CRS, LLC $ 42,000.00 1,050,000 1,050,000
Drizin, Chaim $ 42,000.00 1,050,000 1,050,000
Eiskowitz, Leon $ 3,000.00 75,000 75,000
Friedman, Allen Zev $ 12,800.04 320,001 320,001
Garber, John $ 78,840.00 1,971,000 1,971,000
Goldner, Ari $ 17,184.00 429,600 429,600
Jagunich, Robert $167,133.00 4,178,325 825,000
Kernochan, William $ 30,000.00 750,000 750,000
Kriger, Marlene $ 3,200.04 80,001 80,001
Lyons, William $100,800.00 2,520,000 2,520,000
Makowsky, Frady $ 3,657.60 91,440 91,440
Makowsky, Joseph $ 7,315.20 182,880 182,880
Mayer, Benjamin $ 15,831.48 395,787 395,787
Mendlowitz, Moshe $110,400.00 2,760,000 2,760,000
NY Auto Mall $ 18,284.76 457,119 457,119
Patel, Sanjay $ 26,400.00 660,000 660,000
/31/
Petras, Michael $ 14,440.00 360,000 360,000
Poff, Tom $ 2,100.00 52,500 52,500
P. R. Diamonds $ 6,000.00 150,000 150,000
Schiffman, Jennifer $ 3,600.00 90,000 90,000
Schneierson, Daniel $ 15,831.48 395,787 395,787
Sharabi, Shabnam $ 1,200.00 30,000 30,000
Weinstein, David $ 20,790.00 519,750 519,750
Weiss, Morris $ 1,599.96 39,999 39,999
Williger, Moshe $ 7,315.20 182,880 182,880
Wolf, Leslie $ 3,600.00 90,000 90,000
----------- ------------- -----------
TOTAL $1,318,754.52 32,968,863 29,269,402
Footnotes:
(1) Consideration for Medicius shares at $0.04 per share.
(2) The conversion has been calculated by converting each
share of Medicius common stock into 3.0 common stock shares
of CareDecision Corporation.
(3) Amount investors want to register in this Registration
statement.
(4) The principals for the following corporations are as
follows: Anfel Trading - Jackie Bronner; CareDecision.net -
Keith Berman; CRS, LLC - Glen E. Greenfelder, Jr.; NY Auto
Mall - Isaac Orzechowitz; and P. R. Diamonds - Pincus Reisz.
AMOUNT OWNED
AFTER PREFERRED AMOUNT INVESTORS
AMOUNT OF STOCK AND OTHER WANT
INVESTOR4 INVESTMENT1 CONVERSIONS2 REGISTERED3
--------- ----------- ------------- -----------
Anfel Trading $ 20,991.24 524,781 524,781
Asbell, Barbara $ 34,222.28 855,557 855,557
Belcher, Michael $ 388.88 9,722 9,722
Binder, Alan $ 222.24 5,556 5,556
CareDecision.net $ 70,478.32 1,761,958 1,761,958
DeWitt, Catherine $ 29,040.00 726,000 726,000
Dobson, William F. $ 33,555.00 838,875 838,875
Drizin, Chaim $ 42,000.00 1,050,000 1,050,000
Ducat, Frank $ 9,300.00 232,500 232,500
Eiskowitz, Leon $ 1,522.80 38,070 38,070
Friedman, Allen Zev $ 6,090.00 152,250 152,250
Garber, John $ 31,942.44 798,561 798,561
Kriger, Marlene $ 1,522.80 38,070 38,070
Lyons, William $ 10,888.96 272,224 272,224
Makowsky, Frady $ 1,735.80 43,395 43,395
Makowsky, Joseph $ 3,480.60 87,015 87,015
Mayer, Benjamin $ 24,000.00 600,000 600,000
Mund, Sharon $ 7,555.52 188,888 188,888
NY Auto Mall $ 8,699.40 217,485 217,485
Patel, Bharat K. $ 1,500.00 37,500 37,500
Patel, Kiritkumar $ 3,000.00 75,000 75,000
Patel, Mafatbhai $ 3,000.00 75,000 75,000
Patel, Navin A. $ 1,500.00 37,500 37,500
Patel, Sanjay $ 18,981.44 474,536 474,536
Pazderik, Dennis $ 1,500.00 37,500 37,500
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Petras, Michael $ 17,066.68 66,667 66,667
Poff, Tom $ 388.88 9,722 9,722
P. R. Diamonds $ 3,045.00 76,125 76,125
Schiffman, Jennifer $ 9,690.00 242,250 242,250
Schneierson, Daniel $ 15,831.48 395,787 395,787
Schwartz, David $ 32,400.00 810,000 810,000
Sharabi, Shabnam $ 222.24 5,556 5,556
Weiss, Morris $ 2,454.00 61,350 61,350
Williger, Moshe $ 3,480.60 87,015 87,015
Wolf, Leslie $ 666.68 16,667 16,667
----------- ------------- -----------
TOTAL $452,362.96 10,949,082 10,949,082
Footnotes:
(1) Consideration for Medicius shares at $0.04 per share.
(2) The conversion has been calculated by converting each
share of Medicius common stock into 3.0 common stock shares
of CareDecision Corporation.
(3) Amount investors want to register in this Registration
statement;
(4) The principals for the following corporations are as
follows: Anfel Trading - Jackie Bronner; CareDecision.net -
Keith Berman; CRS, LLC - Glen E. Greenfelder, Jr.; NY Auto
Mall - Isaac Orzechowitz; and P. R. Diamonds - Pincus Reisz.
The following table lists the shares that were issued
pursuant to consulting, service, employment agreements, and
retirement of/or underlying shares of notes, or exercise of
warrants.
PARTY DATE CONSIDERATION SHARES ISSUED
Paradigm Partners1 9/30/02 $101,582.96 2,539,574
Robert Jagunich 9/30/02 $ 32,500 650,000
Keith Berman 9/30/02 $ 42,266 1,267,963
CareDecision.net, Inc. 9/30/02 $ 16,500 875,000
M&E Equities, LLC2 4/20/03 $475,000 8,000,000
(1) The principal for the following corporation is as
follows: Paradigm Partners - Joel Weintraub.
(2) The principal for the following limited liability
company is as follows: M&E Equities - Moshe Mendlowitz.
The following table lists the shares have been
authorized pursuant to consulting, service, employment
agreements, and retirement of notes or exercise of warrants;
but not yet issued.
PARTY DATE CONSIDERATION SHARES ISSUED
Robert Koch 10/21/02 $ 80,000 500,000
Barbara Asbell 10/21/02 $ 60,000 1,500,000
Robert Jagunich 12/13/02 $165,084 4,127,093
Barbara Asbell 12/13/02 $ 40,000 1,000,000
Wizard Enterprises 12/13/02 $100,000 2,500,000
Wizard Enterprises 12/20/02 $ 75,554 1,888,855
CareDecision.net, Inc. 02/23/03 $181,250 2,500,000
Thomas Chillemi 03/28/03 $ 50,000 1,538,500
We issued 12,625,000 shares of our $0.001 par value
common stock to our founders for cash of $64,525.
/33/
We issued 3,500,000 shares of our $0.001 par value
common stock at $0.10 per share to Sarcor Management, SA, a
British Virgin Island corporation, as a $350,000 down
payment on a technology licensing agreement.
We issued 350,000 shares of our $0.001 par value common
stock to Corporate Regulatory Services for consulting
services valued at $26,250.
We issued 150,000 shares of our $0.001 par value common
stock to Mary Lou Cox, mother of Robert Cox, the Company's
president, for consulting services valued at $15,000.
We issued 500,000 shares of our $0.001 par value common
stock to James De Luca, an independent consultant, for
consulting services valued at $50,000.
We issued 1,340,000 shares of our $0.001 par value
common stock at $0.10 per share for cash of $134,000. The
shares were sold pursuant to a Regulation D, Rule 505 of the
Securities and Exchange Commission offering.
We issued 115,000 shares of our $0.001 par value common
stock to extinguish promissory notes totaling $11,500.
We issued 600,000 shares of our $0.001 par value common
stock to Quarg, Inc. for consulting services valued at
$60,000.
On July 9, 2002, we issued a total of 32,968,863 shares
of its $0.001 par value common stock pursuant to its reverse
merger with Medicius, Inc. whereby each shareholder received
three Company shares for every one Medicius, Inc. share
held.
During the nine-months ended September 30, 2002, we
issued 1,725,000 shares of our $0.001 par value common stock
to CareDecision.net, Inc. pursuant to its election to
convert 700,000 shares of the Company's $0.001 par value
preferred stock into common stock.
During the nine-months ended September 30, 2002, we
issued 6,927,737 shares of our $0.001 par value common stock
to various persons and entities and to note-holders pursuant
to their election to convert $64,288 in convertible debt
inclusive of accrued interest.
During the nine-months ended September 30, 2002, we
issued 6,340,000 shares of our $0.001 par value common stock
to various individuals and entities for consulting services
valued at $276,056, the fair market value of the underlying
shares on the date of issuance.
Should M&E Equities, LLC convert its Medicius Note into
reserved merger shares, those shares shall total a maximum
of eight million 8,000,000 shares, or a portion thereof, and
shall be valued a the time(s) of conversion.
The total number of shares to be registered through this SB-
2 filing is 69,105,469.
[Balance of this page intentionally left blank.]
/34/
Part F/S: CareDecision Corporation, Financial Statements
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT F-1
CONSOLIDATED BALANCE SHEET F-2
CONSOLIDATED STATEMENTS OF OPERATIONS F-3
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6 to F-11
/35/
Beckstead and Watts, LLP
Certified Public Accountants
3340 Wynn Road, Suite B
Las Vegas, NV 89102
702.257.1984
702.362.0540(fax)
INDEPENDENT AUDITORS' REPORT
Board of Directors
CareDecision Corporation (formerly ATR Search Corporation)
We have audited the Balance Sheets of CareDecision Corporation
(formerly ATR Search Corporation) (the "Company") (A Development
Stage Company), as of December 31, 2002 and 2001, and the related
Statements of Operations, Stockholders' Equity, and Cash Flows
for the period June 21, 2001 (Date of Inception) to December 31,
2002. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statement presentation. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of CareDecision Corporation (formerly ATR Search Corporation) (A
Development Stage Company), as of December 31, 2002 and 2001, and
the results of its operations and cash flows for the years then
ended and for the period June 21, 2001 (Date of Inception) to
December 31, 2002, in conformity with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company has had limited
operations and have not commenced planned principal operations.
This raises substantial doubt about its ability to continue as a
going concern. Management's plan in regard to these matters are
also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.
/s/ Beckstead and Watts, LLP
April 4, 2003
F-1
/36/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Balance Sheet
December 31,
Assets 2002
------------
Current assets:
Cash and equivalents $ 111,101
Loan to shareholder 9,576
Notes receivable 5,376
------------
Total current assets 126,053
------------
Fixed assets, net 219,508
Intellectual property, net 1,199,865
------------
$ 1,545,426
============
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 496,105
------------
Total current liabilities 496,105
------------
Stockholders' Equity
Common stock, $0.001 par value, 200,000,000 shares
authorized, 75,364,137 shares issued and outstanding 75,364
Additional paid-in capital 3,045,839
Treasury stock (96,750)
(Deficit) accumulated during development stage (1,975,132)
------------
1,049,321
------------
$ 1,545,426
============
The accompanying notes are an integral part of these financial statements.
F-2
/37/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Statements of Operations
For the year ended June 21, 2001
December 31, (inception) to
---------------------- December 31,
2002 2001 2002
---------- ---------- -------------
Revenue $ 2,000 $ - $ 2,000
---------- ---------- -------------
Expenses:
General & administrative expenses 77,712 4,974 82,686
Payroll expense 186,819 - 186,819
Professional fees 171,852 - 171,852
Consulting expense 1,319,482 - 1,319,482
Software development 129,000 - 129,000
Depreciation 40,778 - 40,778
---------- ---------- -------------
Total expenses 1,925,643 4,974 1,930,617
---------- ---------- -------------
Net operating (loss) (1,923,643) (4,974) (1,928,617)
Other income (expense):
(Loss) on debt settlement (25,925) - (25,925)
Interest income 2,230 - 2,230
Interest (expenses) (22,820) - (22,820)
---------- ---------- -------------
Net (loss) $(1,970,158) $ (4,974) $ (1,975,132)
========== ========== =============
Weighted average number of common
shares outstanding - basic and 43,176,595 19,180,000
fully diluted ========== ==========
Net (loss) per share - $ (0.05) $ (0.00)
basic and fully diluted ========== ==========
The accompanying notes are an integral part of these financial statements.
F-3
/38/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Statement of Changes in Stockholders' Equity
(Deficit)
Accumulated
Common Stock Additional During Total
Paid-in Treasury Development Stockholders'
Shares Amount Capital Stock Stage Equity
-------- -------- --------- ------ ----------- ----------
Balance, 19,180,000 $ 19,180 $ 692,095 $ - $ (4,974) $706,301
December 31,
2001
Shares issued 1,825,000 1,825 271,925 273,750
for consulting
services
Shares issued 500,000 500 42,000 42,500
for consulting
services
Rescinded shares (1,935,000) (1,935) (96,750) (98,685)
Shares issued 32,968,863 32,969 733,162 766,131
pursuant to
merger agmt
Shares issued 3,000,000 3,000 147,000 150,000
for consulting
services
Shares issued 1,725,000 1,725 84,525 86,250
for conv
preferred shares
Shares issued 2,000,000 2,000 138,000 140,000
for consulting
services
Shares issued 950,000 950 41,800 42,750
for consulting
services
Shares issued 6,327,737 6,328 310,059 316,387
for consulting
services
Shares issued 2,539,574 2,540 197,460 200,000
for cash
Shares issued 3,515,000 3,515 253,080 256,595
for consulting
services
Shares issued 1,267,963 1,268 38,732 40,000
for cash
Shares issued 1,500,000 1,500 96,000 97,500
for consulting
services
Net (loss), (1,970,158) (1,970,158)
year ended -------- -------- --------- ------ ----------- ----------
December 31,
2002
75,364,137 $75,364 $3,045,839 $(96,750) $(1,975,132) $1,049,321
========== ======= ========== ======== =========== ==========
The accompanying notes are an integral part of these financial statements.
F-4
/39/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Statements of Cash Flows
For the year ended June 21, 2001
December 31, (inception) to
------------------------ December 31,
2002 2001 2002
----------- ----------- -------------
Cash flows from operating
activities
Net (loss) $(1,970,158) $ (4,974) $ (1,975,132)
Shares issued for consulting 1,319,482 - 1,319,482
services
Loss on debt settlement 25,925 - 25,925
Depreciation 40,778 - 40,778
Adjustments to reconcile net
(loss) to net cash (used) by
operating activities:
(Increase) in loan to (9,576) - (9,576)
shareholder
(Increase) in notes receivable (5,376) - (5,376)
Increase (decrease) in accounts (4,974) 4,974 -
payable ----------- ----------- -------------
Net cash (used) by operating (603,899) - (603,899)
activities ----------- ----------- -------------
Cash flows from investing - - -
activities ----------- ----------- -------------
Cash flows from financing
activities
Increase in notes payable 475,000 - 475,000
Issuance of common stock 240,000 - 240,000
----------- ----------- -------------
Net cash provided by financing 715,000 - 715,000
activities ----------- ----------- -------------
Net increase in cash 111,101 - 111,101
Cash - beginning - - -
----------- ----------- -------------
Cash - ending $ 111,101 $ - $ 111,101
=========== =========== =============
Supplemental disclosures:
Interest paid $ - $ - $ -
=========== =========== =============
Income taxes paid $ - $ - $ -
=========== =========== =============
Non-cash transactions:
Number of shares issued for 19,617,737 - 19,617,737
consulting services =========== =========== =============
The accompanying notes are an integral part of these financial statements.
F-5
/40/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
Note 1 - Significant accounting policies and procedures
Organization
The Company was organized March 2, 2001 (Date of Inception)
under the laws of the State of Nevada, as ATR Search
Corporation. On June 21, 2002, the Company merged Medicius,
Inc. and filed amended articles of incorporation changing its
name to CareDecision Corporation.
The Company has a limited history of operations, and in
accordance with SFAS #7, the Company is considered a development
stage company.
Cash and cash equivalents
The Company maintains a cash balance in a non-interest-bearing
account that currently does not exceed federally insured
limits. For the purpose of the statements of cash flows, all
highly liquid investments with an original maturity of three
months or less are considered to be cash equivalents. There
are no cash equivalents as of December 31, 2002.
Investments
Investments in companies over which the Company exercises
significant influence are accounted for by the equity method
whereby the Company includes its proportionate share of earnings
and losses of such companies in earnings. Other long-term
investments are recorded at cost and are written down to their
estimated recoverable amount if there is evidence of a decline
in value which is other than temporary.
Property, plant and equipment
Property, plant and equipment are stated at the lower of cost or
estimated net recoverable amount. The cost of property, plant
and equipment is depreciated using the straight-line method
based on the lesser of the estimated useful lives of the assets
or the lease term based on the following life expectancy:
Computer equipment 5 years
Vehicles 5 years
Office furniture and fixtures 7 years
Repairs and maintenance expenditures are charged to operations
as incurred. Major improvements and replacements, which extend
the useful life of an asset, are capitalized and depreciated
over the remaining estimated useful life of the asset. When
assets are retired or sold, the costs and related accumulated
depreciation and amortization are eliminated and any resulting
gain or loss is reflected in operations.
Revenue recognition
Revenue from proprietary software sales that does not require
further commitment from the company is recognized upon shipment.
Consulting revenue is recognized when the services are rendered.
License revenue is recognized ratably over the term of the
license. The cost of services, consisting of staff payroll,
outside services, equipment rental, communication costs and
supplies, is expensed as incurred.
Advertising costs
The Company expenses all costs of advertising as incurred.
There were no advertising costs included in general and
administrative expenses as of December 31, 2002.
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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.
F-6
/41/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain
market assumptions and pertinent information available to
management as of December 31, 2002. The respective carrying
value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments
include cash and accounts payable. Fair values were assumed to
approximate carrying values for cash and payables because they
are short term in nature and their carrying amounts approximate
fair values or they are payable on demand.
Impairment of long-lived assets
The Company reviews its long-lived assets and intangibles
periodically to determine potential impairment by comparing the
carrying value of the long-lived assets with the estimated
future cash flows expected to result from the use of the assets,
including cash flows from disposition. Should the sum of the
expected future cash flows be less than the carrying value, the
Company would recognize an impairment loss. An impairment loss
would be measured by comparing the amount by which the carrying
value exceeds the fair value of the long-lived assets and
intangibles. There were no impairment losses recognized in 2002.
Reporting on the costs of start-up activities
Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs
of Start-Up Activities," which provides guidance on the
financial reporting of start-up costs and organizational costs,
requires most costs of start-up activities and organizational
costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998. With the
adoption of SOP 98-5, there has been little or no effect on the
Company's financial statements.
Loss per share
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings
Per Share". Basic loss per share is computed by dividing
losses available to common stockholders by the weighted average
number of common shares outstanding during the period. As of
December 31, 2002, the Company had no dilutive common stock
equivalents, such as stock options or warrants.
Dividends
The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid or declared since
inception.
Comprehensive Income
SFAS No. 130, "Reporting Comprehensive Income", establishes
standards for the reporting and display of comprehensive income
and its components in the financial statements. The Company had
no items of other comprehensive income and therefore has not
presented a statement of comprehensive income.
Segment reporting
The Company follows Statement of Financial Accounting Standards
No. 130, "Disclosures About Segments of an Enterprise and
Related Information." The Company operates as a single segment
and will evaluate additional segment disclosure requirements as
it expands its operations.
Income taxes
The Company follows Statement of Financial Accounting Standard
No. 109, "Accounting for Income Taxes" ("SFAS No. 109") for
recording the provision for income taxes. Deferred tax assets
and liabilities are computed based upon the difference between
the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when
the related asset or liability is expected to be realized or
settled. Deferred income tax expenses or benefits are based on
the changes in the asset or liability each period. If
available evidence suggests that it is more likely than not
that some portion or all of the deferred tax assets will not be
realized, a valuation allowance is required to reduce the
deferred tax assets to the amount that is more likely than not
to be realized.
F-7
/42/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
Future changes in such valuation allowance are included in the
provision for deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences
resulting from income and expense items reported for financial
accounting and tax purposes in different periods. 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.
Recent pronouncements
In July 2002, the FASB issued SFAS No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities", which
addresses financial accounting and reporting for costs
associated with exit or disposal activities and supersedes EITF
No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS
No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is
incurred. Under EITF No. 94-3, a liability for an exit cost was
recognized at the date of an entity's commitment to an exit
plan. SFAS No. 146 also establishes that the liability should
initially be measured and recorded at fair value. The
provisions of SFAS No. 146 will be adopted for exit or disposal
activities that are initiated after December 31, 2002.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment
of SFAS No. 123." This Statement amends SFAS No. 123,
"Accounting for Stock-Based Compensation", to provide
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures
in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and
the effect of the method used on reported results. The adoption
of SFAS No. 148 is not expected to have a material impact on
the company's financial position or results of operations.
In November 2002, the FASB issued FASB Interpretation ("FIN")
No. 45, "Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees and Indebtedness of
Others", an interpretation of FIN No. 5, 57 and 107, and
rescission of FIN No. 34, "Disclosure of Indirect Guarantees of
Indebtedness of Others". FIN 45 elaborates on the disclosures
to be made by the guarantor in its interim and annual financial
statements about its obligations under certain guarantees that
it has issued. It also requires that a guarantor recognize, at
the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The initial
recognition and measurement provisions of this interpretation
are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002; while, the provisions of the
disclosure requirements are effective for financial statements
of interim or annual periods ending after December 15, 2002.
The company believes that the adoption of such interpretation
will not have a material impact on its financial position or
results of operations and will adopt such interpretation during
fiscal year 2003, as required.
In January 2003, the FASB issued FIN No. 46, "Consolidation of
Variable Interest Entities", an interpretation of Accounting
Research Bulletin No. 51. FIN No. 46 requires that variable
interest entities be consolidated by a company if that company
is subject to a majority of the risk of loss from the variable
interest entity's activities or is entitled to receive a
majority of the entity's residual returns or both. FIN No. 46
also requires disclosures about variable interest entities that
companies are not required to consolidate but in which a
company has a significant variable interest. The consolidation
requirements of FIN No. 46 will apply immediately to variable
interest entities created after January 31, 2003. The
consolidation requirements will apply to entities established
prior to January 31, 2003 in the first fiscal year or interim
period beginning after June 15, 2003. The disclosure
requirements will apply in all financial statements issued
after January 31, 2003. The company will begin to adopt the
provisions of FIN No. 46 during the first quarter of fiscal
2003.
F-8
/43/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
Stock-Based Compensation
The Company accounts for stock-based awards to employees in
accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related
interpretations and has adopted the disclosure-only alternative
of SFAS No. 123, "Accounting for Stock-Based Compensation."
Options granted to consultants, independent representatives and
other non-employees are accounted for using the fair value
method as prescribed by SFAS No. 123.
Year end
The Company has adopted December 31 as its fiscal year end.
Note 2 - Going concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern, which
contemplates the recoverability of assets and the satisfaction of
liabilities in the normal course of business. As noted above, the
Company is in the development stage and, accordingly, has not yet
generated a proven history of operations. Since its inception,
the Company has been engaged substantially in financing
activities and developing its product line, incurring substantial
costs and expenses. As a result, the Company incurred accumulated
net losses from June 21, 2001 (inception) through the year ended
December 31, 2002 of $(2,009,532). In addition, the Company's
development activities since inception have been financially
sustained by capital contributions.
The ability of the Company to continue as a going concern is
dependent upon its ability to raise additional capital from the
sale of common stock and, ultimately, the achievement of
significant operating results. The accompanying financial
statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets
or satisfy its liabilities.
Note 3 - Fixed assets
Fixed assets consists of the following:
December 31, 2002
-----------------
Computer and office equipment $ 260,286
Less accumulated depreciation (40,778)
-----------------
Total $ 219,508
=================
Depreciation expense totaled $40,778 for the year ended December
31, 2002.
Note 4 - Notes receivable
On January 15, 2002, Medicius loaned an officer a total of
$15,000 which is due in one year at an interest rate of 8% per
annum. At the close of the merger this note was assumed by the
Company.
Interest income totaled $2,230 during the year ended December 31,
2002.
Note 5 - Intellectual property
During the year ended December 31, 2002, the Company acquired
Intellectual Property from CareDecision.net, Inc, a private
stockholder owned corporation that completed several transactions
the Company. As a result of the merger and the acquired
intellectual property, two of the beneficial owners of
CareDecision.net are now beneficial owners of the Company.
Pursuant to the agreement, the Company
F-9
/44/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
paid CareDecision.net, Inc. the sum of $187,500 with 700,000
shares of the Company's $0.001 par value preferred stock. During
the year ended December 31, 2002, CareDecision.net, Inc.
converted its preferred stock into 1,725,000 shares of the
Company's $0.001 par value common stock.
Note 6 - Notes payable
On January 15, 2002, the Company received $40,000 from Keith
Berman, a beneficial owner of the Company, which was due on
December 31, 2003 and accrues interest at 8% per annum. The
principal and accrued interest were convertible at a rate of
$0.10 per share. During September 2002, Mr. Berman converted his
$40,000 loan plus interest into 1,267,963 shares of the Company's
$0.001 par value common stock.
On April 23, 2002, the Company was loaned $475,000 from M and E
Equities, LLC. The loan is due in full on April 23, 2004, and
bears interest at a rate of 9% per annum. The principal and
interest of the note are convertible into five shares of the
Company's $0.001 par value common stock for each $1 of debt. The
note is secured by all the assets of the Company including
accounts receivable, inventory, fixed assets, and intangible
assets.
During the year ended December 31, 2002, the Company recorded a
total of $62,573 from various entities and individuals. The
notes are due on demand and accrue interest of $1,715 at a rate
of 8%. During the year ended December 31, 2002, the note-holders
converted their debt and accrued interest into 664,644 shares of
the Company's $0.001 par value common stock.
The Company recorded interest expense of $22,820 during the year
ended December 31, 2002.
Note 7 - Income taxes
The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS No. 109"), which requires use of the liability
method. SFAS No. 109 provides that deferred tax assets and
liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for
financial reporting purposes, referred to as temporary
differences. Deferred tax assets and liabilities at the end of
each period are determined using the currently enacted tax rates
applied to taxable income in the periods in which the deferred
tax assets and liabilities are expected to be settled or
realized.
The provision for income taxes differs from the amount computed
by applying the statutory federal income tax rate to income
before provision for income taxes. The sources and tax effects
of the differences are as follows:
U.S federal statutory rate (34.0%)
Valuation reserve 34.0%
-----
Total -%
=====
As of December 31, 2002, the Company has a net operating loss
carry forward of approximately $2,010,000. The related deferred
asset has been fully reserved.
Note 8 - Stockholder's equity
The Company issued a total of 32,968,863 shares of its $0.001 par
value common stock pursuant to its reverse merger with Medicius,
Inc. whereby each shareholder received three Company shares for
every one Medicius, Inc. share held.
F-10
/45/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
The Company issued 1,725,000 shares of its $0.001 par value
common stock to CareDecision.net, Inc. pursuant to its election
to convert 700,000 shares of the Company's $0.001 par value
preferred stock into common stock.
The Company issued 2,539,574 shares of its $0.001 par value
common stock for cash totaling $200,000.
The Company issued 1,267,963 shares of its $0.001 par value
common stock to an officer of the Company for cash totaling
$40,000.
The Company issued 19,617,737 shares of its $0.001 par value
common stock to various individuals and entities for consulting
services valued at $1,405,732, the fair market value of the
underlying shares on the dates of issuance.
The Company rescinded 1,935,000 shares of its $0.001 par value
common stock into treasury stock at a value of $98,685, the fair
market value of the shares on the date of rescission.
There have been no other issuances of common stock.
Note 9 - Related party transactions
The Company received equipment in the amount of $27,857 from
Keith Berman, a beneficial owner of the Company.
The Company acquired Intellectual Property from CareDecision.net,
Inc, a private stockholder owned corporation that completed
several transactions the Company. As a result of the merger and
the acquired intellectual property, two of the beneficial owners
of CareDecision.net are now beneficial owners of the Company.
Pursuant to the agreement, the Company paid CareDecision.net,
Inc. the sum of $187,500 with 700,000 shares of the Company's
$0.001 par value preferred stock. CareDecision.net, Inc. then
elected to convert its preferred shares into 1,725,000 shares of
the Company's $0.001 par value common stock.
The Company received $40,000 from Keith Berman, a beneficial
owner of the Company, due on December 31, 2003 and accruing
interest at 8% per annum. During the year ended December 31,
2002, Mr. Berman elected to convert the note plus interest into
1,267,963 shares of the Company's $0.001 par value common stock.
Note 10 - Warrants
The Company issued 5,540,795 Class A non-callable warrants to
Medicius, Inc. shareholders pursuant to the merger agreement (see
Note 11 below). Each Class A warrant unit is exercisable into
one share of the Company's $0.001 par value common stock at $0.04
per share plus 0.5 Class C warrants. The Class A warrant units
expire on June 30, 2005.
Note 11 - Reverse acquisitions agreement with Medicius, Inc.
(MED)
On June 21, 2001, the Company entered into an agreement with MED
whereby the Company acquired all of the issued and outstanding
common stock of MED in exchange for 38,043,863 voting shares of
the Company's $0.001 par value common stock. The acquisition was
accounted for using the purchase method of accounting as
applicable to reverse acquisitions because the former
stockholders of the MED controlled the Company's common stock
immediately upon conclusion of the transaction. Under reverse
acquisition accounting, the post-acquisition entity was accounted
for as a recapitalization of MED.
The continuing company has retained December 31 as its fiscal
year end.
F-11
/46/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Table of Contents
Page
Independent Accountant's Review Report F-1
Consolidated Balance Sheet September 30, 2002 F-2
(unaudited)
Consolidated Statements of Operations For the Three F-3
Months Ended September 30, 2002 and 2001 (unaudited)
and For the Nine Months Ended September 30, 2002 and
2001 (unaudited) and For the Period July 6, 2000
(Inception) to September 30, 2002 (unaudited)
Consolidated Statements of Cash Flows For the Nine F-4
Months Ended September 30, 2002 and 2001 (unaudited)
and For the Period July 6, 2000 (Inception) to
September 30, 2002 (unaudited)
Notes to Financial Statements F-5
/47/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Balance Sheet
as of
September 30, 2002 (unaudited)
and
Consolidated Statements of Operations
for the Three and Nine Months Ended
September 30, 2002 and 2001 (unaudited),
and For the Period
July 6, 2000 (Inception) to September 30, 2002 (unaudited)
and
Consolidated Statements of Cash Flows
for the Nine Months Ended
September 30, 2002 and 2001 (unaudited),
and For the Period
July 6, 2000 (Inception) to September 30, 2002 (unaudited)
/48/
Beckstead and Watts, LLP
Certified Public Accountants
3340 Wynn Road, Suite C
Las Vegas, NV 89102
702.257.1984
702.362.0540 fax
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
Board of Directors
CareDecision Corporation
(formerly ATR Search Corporation)
(a Development Stage Company)
New York, NY
We have reviewed the accompanying balance sheet of
CareDecision Corporation (former1y ATR Search Corporation)
(a Nevada corporation) (a development stage company) as of
September 30, 2002 and the related statements of operations
for the three-months and nine-months ended September 30,
2002 and 2001 and for the period July 6, 2000 (Inception) to
September 30, 2002, and statements of cash flows for the
nine-months ended September 30, 2002 and 2001 and for the
period July 6, 2000 (Inception) to September 30, 2002. These
financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible
for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with
generally accepted auditing standards, which will be
performed for the full year with the objective of expressing
an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the accompanying
financial statements referred to above for them to be in
conformity with generally accepted accounting principles in
the United States of America.
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company
has had limited operations and has not commenced planned
principal operations. This raises substantial doubt about
its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note
2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
G. Brad Beckstead, CPA has previously audited, in accordance
with generally accepted auditing standards, the balance
sheet of CareDecision Corporation (former1y ATR Search
Corporation) (a development stage company) as of December
31, 2001, and the related statements of operations,
stockholders' equity, and cash flows for the year then ended
(not presented herein) and in his report dated Apri1 15,
2002, he expressed an unqualified opinion on those financial
statements.
/s/ Beckstead and Watts, LLP
November 8, 2002
F-1
/49/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Balance Sheet
(unaudited)
September 30,
Assets 2002
Current assets: -------------
Cash and equivalents $ 349,807
Notes receivable 15,850
-------------
Total current assets 365,657
-------------
Fixed assets, net 256,393
Intellectual property, net 1,113,615
-------------
$ 1,735,665
=============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 10,000
Notes payable 485,418
-------------
Total current liabilities 495,418
-------------
Stockholders' equity:
Common stock, $0.001 par value; 100,000,000 shares 69,681
authorized, 73,864,137 shares issued and outstanding
Additional paid-in capital 2,696,498
(Deficit) accumulated during development stage (1,525,932)
-------------
1,240,247
-------------
$ 1,735,665
=============
F-2
The accompanying notes are an integral part of these financial statements.
/50/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Statements of Operations
(unaudited)
For three months For nine months July 6, 2000
ended Sept 30, ended Sept 30, (inception) to
-------------- ---------------- Sept 30,
2002 2001 2002 2001 2002
------ ------ ------- ------- -------------
Revenue $ 500 $ - $ 1,555 $ - $ 1,555
------ ------ ------- ------- -------------
Expenses:
General&administrative 159,028 - 751,323 4,974 766,514
expenses
Consulting expense 276,056 - 276,056 - 601,056
Depreciation 1,363 - 2,756 - 71,756
------ ------ ------- ------- -------------
Total expenses 436,447 - 1,030,135 4,974 1,439,326
------ ------ ------- ------- -------------
Other income (expense):
(Loss) on debt settlement(68,363) - (68,363) - (68,363)
Interest income 1,885 - 2,852 - 2,852
Interest (expenses) (14,399) - (22,650) - (22,650)
------ ------ ------- ------- -------------
Net (loss) $(516,824) $ -$(1,116,741) $(4,974) $ (1,525,932)
====== ====== ======= ======= =============
Weighted average number
of common shares
outstanding - basic
and fully diluted 21,027,802 16,100,000 33,279,930 16,100,000
========== ========== ========== ==========
Net (loss) per share -
basic & fully diluted $ (0.02) $ - $ (0.03) $ (0.00)
========= ====== ======= =======
F-3
The accompanying notes are an integral part of these financial statements.
/51/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Statements of Cash Flows
(unaudited)
For the nine months ended July 6, 2000
September 30, (inception) to
------------------------ September 30,
2002 2001 2002
---------- ---------- ------------
Cash flows from operating activities
Net (loss) $(1,116,741) $ - $ (1,525,932)
Shares issued for services 276,056 - 601,056
Loss on debt settlement 68,363 - 68,363
Depreciation 2,756 - 71,756
Adjustments to reconcile net (loss) to
net cash (used) by operating activities:
(Increase) in notes receivable (15,850) - (15,850)
Increase in accounts payable 10,000 - 10,000
---------- ---------- ------------
Net cash (used) by operating activities (785,416) - (800,607)
---------- ---------- ------------
Cash flows from investing activities - - -
---------- ---------- ------------
Cash flows from financing activities
Increase in notes payable 485,418 - 485,418
Issuance of common stock 649,801 - 664,996
---------- ---------- ------------
Net cash provided by
financing activities 1,135,219 - 1,150,414
---------- ---------- ------------
Net increase in cash 349,803 - 349,807
Cash - beginning 4 - -
---------- ---------- ------------
Cash - ending $ 349,807 $ - $ 349,807
========== ========== ============
Supplemental disclosures:
Interest paid $ - $ - $ -
========== ========== ============
Income taxes paid $ - $ - $ -
========== ========== ============
Non-cash transactions:
Shares issued for services provided $ 276,056 $ - $ 601,056
========== ========== ============
F-4
The accompanying notes are an integral part of these financial statements.
/52/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
Note 1 - Basis of presentation
The consolidated interim financial statements included
herein, presented in accordance with United States generally
accepted accounting principles and stated in US dollars,
have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the
disclosures are adequate to make the information presented
not misleading.
These statements reflect all adjustments, consisting of
normal recurring adjustments, which, in the opinion of
management, are necessary for fair presentation of the
information contained therein. It is suggested that these
consolidated interim financial statements be read in
conjunction with the consolidated financial statements of
the Company for the period ended December 31, 2001 and notes
thereto included in the Company's Form 10-KSB. The Company
follows the same accounting policies in the preparation of
consolidated interim reports.
Results of operations for the interim periods are not
indicative of annual results.
Note 2 - Going concern
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern,
which contemplates the recoverability of assets and the
satisfaction of liabilities in the normal course of
business. As noted above, the Company is in the development
stage and, accordingly, has not yet generated a proven
history of operations. Since its inception, the Company has
been engaged substantially in financing activities and
developing its product line, incurring substantial costs and
expenses. As a result, the Company incurred accumulated net
losses from July 6, 2000 (inception) through the period
ended September 30, 2002 of $(1,525,932). In addition, the
Company's development activities since inception have been
financially sustained by capital contributions.
The ability of the Company to continue as a going concern is
dependent upon its ability to raise additional capital from
the sale of common stock and, ultimately, the achievement of
significant operating results. The accompanying financial
statements do not include any adjustments that might be
required should the Company be unable to recover the value
of its assets or satisfy its liabilities.
Note 3 - Notes receivable
On January 15, 2002, Medicius loaned an officer a total of
$15,000, which is due in one year at an interest rate of 8%
per annum. At the close of the merger this note was assumed
by the Company.
During the period ended June 30, 2002, the total interest
income is $1,885.
Note 4 - Fixed assets
As of September 30, 2002, the Company received equipment in
the amount of $27,857 from Keith Berman, a beneficial owner
of the Company.
As of September 30, 2002, the Company reclassified equipment
in the amount of $229,899 from Investment in Subsidiary
pursuant to its merger with Medicius, Inc.
Depreciation expense totaled $2,756 for the nine-month
period ended September 30, 2002.
F-5
/53/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
Note 5 - Intellectual property
During the period ended September 30, 2002, the Company
acquired Intellectual Property from CareDecision.net, Inc, a
private stockholder owned corporation that completed several
transactions the Company. As a result of the merger and the
acquired intellectual property, two of the beneficial owners
of CareDecision.net are now beneficial owners of the
Company. Pursuant to the agreement, the Company paid
CareDecision.net, Inc. the sum of $187,500 with 700,000
shares of the Company's $0.001 par value preferred stock.
During the three-months ended September 20, 2002,
CareDecision.net, Inc. converted its preferred stock into
1,725,000 shares of the Company's $0.001 par value common
stock.
Note 6 - Investment in Care Technologies, LLC
On June 21, 2001, the Company entered into an agreement with
Care Technologies, LLC whereby the Company sold all of the
assets and liabilities of the Company in exchange for a 10%
ownership of Care Technologies, LLC. The investment was
recorded at $229,899, being the fair value of the Company's
assets on the acquisition date (see Note 4 above).
Note 7 - Notes payable
On January 15, 2002, the Company received $40,000 from Keith
Berman, a beneficial owner of the Company, which is due on
December 31, 2003 and accrued interest at 8% per annum. The
principal and accrued interest can be converted at a rate of
$0.10 per share. During September 2002, Mr. Berman
converted his $40,000 loan plus interest into 1,267,963
shares of the Company's $0.001 par value common stock.
On April 23, 2002, the Company received $475,000 from M and
E Equities, LLC, which is due in two years at an interest
rate of 9% per annum. The principal and interest of the
note can be converted into five shares of the Company's
$0.001 par value common stock for each $1 of debt. This
note is secured by all the assets of the Company to include
accounts receivable, inventory, fixed assets, and intangible
assets.
During the nine-months ended September 30, 2002, the Company
recorded a total of $62,573 from various entities and
individuals, which is due upon demand, and accrued interest
of $1,715 at a rate of 8%. During the three-months ended
September 30, 2002, the note-holders converted their debt
and accrued interest into 664,644 shares of the Company's
$0.001 par value common stock
During the nine-months ended September 30, 2002, the Company
recorded interest expense of $22,650.
Note 8 - Stockholder's equity
During the nine-months ended September 30, 2002, the Company
issued a total of 32,968,863 shares of its $0.001 par value
common stock pursuant to its reverse merger with Medicius,
Inc. whereby each shareholder received three Company shares
for every one Medicius, Inc. share held.
During the nine-months ended September 30, 2002, the Company
issued 1,725,000 shares of its $0.001 par value common stock
to CareDecision.net, Inc. pursuant to its election to
convert 700,000 shares of the Company's $0.001 par value
preferred stock into common stock.
During the nine-months ended September 30, 2002, the Company
issued 6,927,737 shares of its $0.001 par value common stock
to various persons and entities and to note-holders pursuant
to their election to convert $64,288 in convertible debt
inclusive of accrued interest.
During the nine-months ended September 30, 2002, the Company
issued 6,340,000 shares of its $0.001 par value common stock
to various individuals and entities for consulting services
valued at $276,056, the fair market value of the underlying
shares on the date of issuance.
F-6
/54/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
During the nine-months ended September 30, 2002, the Company
issued 2,539,574 shares of its $0.001 par value common stock
for cash totaling $200,000.
There have been no other issuances of common stock.
Note 9 - Related party transactions
During the period ended September 30, 2002 the Company
received equipment in the amount of $27,857 from Keith
Berman, a beneficial owner of the Company.
During the period ended September 30, 2002, the Company
acquired Intellectual Property from CareDecision.net, Inc, a
private stockholder owned corporation that completed several
transactions the Company. As a result of the merger and the
acquired intellectual property, two of the beneficial owners
of CareDecision.net are now beneficial owners of the
Company.. Pursuant to the agreement, the Company paid
CareDecision.net, Inc. the sum of $187,500 with 700,000
shares of the Company's $0.001 par value preferred stock.
CareDecision.net, Inc. then elected to convert its preferred
shares into 5,075,000 shares of the Company's $0.001 par
value common stock.
On January 15, 2002, the Company received $40,000 from Keith
Berman, a beneficial owner of the Company, which is due on
December 31, 2003 and accrued interest at 8% per annum.
During the three-months ended September 30, 2002, Mr. Berman
elected to convert the note plus interest totaling $42,266
into 1,267,963 shares of the Company's $0.001 par value
common stock.
Note 10 - Warrants
During the nine-months ended September 30, 2002, the Company
has issued 5,540,795 Class A non-callable warrants to
Medicius, Inc. shareholders pursuant to the merger agreement
(see Note 11 below). Each Class A warrant unit is
exercisable into one share of the Company's $0.001 par value
common stock at $0.04 per share plus 0.5 Class C warrants.
The Class A warrant units expire on June 30, 2005.
Note 11 - Reverse acquisitions agreement with Medicius, Inc.
(MED)
On June 21, 2001, the Company entered into an agreement with
MED whereby the Company acquired all of the issued and
outstanding common stock of NDI in exchange for 38,043,863
voting shares of the Company's $0.001 par value common
stock. The acquisition was accounted for using the purchase
method of accounting as applicable to reverse acquisitions
because the former stockholders of the MED controlled the
Company's common stock immediately upon conclusion of the
transaction. Under reverse acquisition accounting, the
post-acquisition entity was accounted for as a
recapitalization of MED. The common stock issued was
recorded at $0, being the fair value of the Company's assets
on the acquisition date.
The continuing company has retained December 31 as its
fiscal year end.
F-7
/55/
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT F-1
CONSOLIDATED BALANCE SHEET F-2
CONSOLIDATED STATEMENT OF OPERATIONS F-3
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY F-4
CONSOLIDATED STATEMENT OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6
/56/
G. BRAD BECKSTEAD
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.257.1984
702.362.0540(fax)
INDEPENDENT AUDITOR'S REPORT
April 15, 2002
Board of Directors
ATR Search Corporation
Las Vegas, NV
I have audited the Consolidated Balance Sheet of ATR Search
Corporation and its subsidiary (the "Company") (A
Development Stage Company), as of December 31, 2001, and the
related Consolidated Statements of Operations, Stockholders'
Equity, and Cash Flows for the period March 2, 2001 (Date of
Inception) to December 31, 2001. These financial statements
are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statement presentation. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
balance sheet of ATR Search Corporation and its subsidiary,
(A Development Stage Company), as of December 31, 2001, and
its related consolidated statements of operations, equity
and cash flows for the period March 2, 2001 (Date of
Inception) to December 31, 2001, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company
has had limited operations and have not commenced planned
principal operations. This raises substantial doubt about
its ability to continue as a going concern. Management's
plan in regard to these matters are also described in Note
2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ G. Brad Beckstead
F-1
/57/
ATR Search Corporation
(a Development Stage Company)
Consolidated Balance Sheet
Assets December 31,
2001
------------
Current assets:
Cash and equivalents $ 25,693
Accounts receivable 168,650
Other current assets 30,766
------------
Total current assets 225,109
------------
Fixed assets, net 11,362
Acquired technology, net 1,275,000
------------
$ 1,511,471
============
Liabilities and Stockholders' Equity
Current liabilities:
Accrued interest 86,250
Accrued interest - related party 2,696
Short-term note payable 50,000
Current portion of capital lease obligation 120,000
------------
Total current liabilities 258,946
Capital lease obligation, net of current portion 1,030,000
------------
1,288,946
------------
Stockholders' Equity
Common stock, $0.001 par value, 100,000,000
shares authorized, 19,180,000 shares issued
and outstanding as of 12/31/01 19,180
Additional paid-in capital 692,095
(Defict) accumulated during development stage (488,750)
------------
222,525
------------
$ 1,511,471
============
F-2
The accompanying notes are an integral part of these financial statements.
/58/
ATR Search Corporation
(a Development Stage Company)
Consolidated Statement of Operations
March 2, 2001
(date of inception)
to December 31,
2001
--------------
Revenue $ 940,621
--------------
Cost of services:
Subcontractors 338,508
Consultants 207,619
Other costs 36,016
--------------
Total costs of services 582,143
--------------
Gross profit 358,478
--------------
Expenses:
General and administrative 366,709
Consulting fees 151,250
Amortization and depreciation 225,607
Organizational costs 12,250
--------------
Total expenses 755,816
--------------
Net operating (loss) (397,338)
Other (expenses):
Interest expense (88,716)
Interest expense - related party (2,696)
--------------
Net (loss) $ (488,750)
==============
Weighted average number of common shares
outstanding - basic and fully diluted 19,180,000
==============
Net (loss) per share - basic and fully diluted $ (0.025)
==============
F-3
The accompanying notes are an integral part of these financial statements.
/59/
ATR Search Corporation
(a Development Stage Company)
Consolidated Statement of Changes in Stockholders' Equity
(Deficit)
Accumulated
Common Stock Additional During Total
Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
-------- -------- --------- ----------- ----------
Founders shares
issued for cash 12,625,000 $ 12,625 $ 51,900 $ - $ 64,525
Shares issued
for licensed
technology 3,500,000 3,500 346,500 350,000
Shares issued
for consulting 350,000 350 25,900 26,250
Shares issued
for services 650,000 650 64,350 65,000
Shares issued for
cash pursuant to
Rule 504 offering 1,340,000 1,340 132,660 134,000
Shares issued for
conversion of debt 115,000 115 11,385 11,500
Shares issued
for consulting 600,000 600 59,400 60,000
Net (loss),
March 2, 2001
(inception) to
December 31, 2001 (488,750) (488,750)
-------- -------- --------- ----------- ----------
Balance,
December 31, 2001 19,180,000 $ 19,180 $ 692,095 $ (488,750) $ 222,525
F-4
The accompanying notes are an integral part of these financial statements.
/60/
ATR Search Corporation
(a Development Stage Company)
Consolidated Statement of Cash Flows
March 2, 2001
(date of inception)
to December 31,
2001
--------------
Cash flows from operating activities
Net (loss) $ (488,750)
Shares issued to acquire technology 350,000
Shares issued for services 151,250
Amortization and depreciation 225,607
Adjustments to reconcile net income to cash
provided by operations:
(Increase) in accounts receivable (168,650)
(Increase) in other current assets (30,766)
Increase in accrued interest 86,250
Increase in accrued interest - related party 2,696
--------------
Net cash provided by operating activities 127,637
--------------
Cash flows from investing activities
Short-term note payable 50,000
Long-term debt 1,150,000
Purchased fixed assets (11,969)
Acquired technology (1,500,000)
--------------
Net cash (used) by investing activities (311,969)
--------------
Cash flows from financing activities
Issuance of common stock 210,025
--------------
Net cash provided by financing activities 210,025
--------------
Net increase in cash 25,693
Cash - beginning -
--------------
Cash - ending $ 25,693
--------------
Supplemental disclosures:
Interest paid $ 329
==============
Income taxes paid $ -
==============
Non-cash transactions:
Number of shares issued to acquire technology 3,500,000
==============
Number of shares issued for services 1,600,000
==============
F-5
The accompanying notes are an integral part of these financial statements.
/61/
ATR Search Corporation
Notes
Note 1 - Significant accounting policies and procedures
Organization
The Company was organized March 2, 2001 (Date of Inception)
under the laws of the State of Nevada, as ATR Search
Corporation. The Company has a limited history of
operations, and in accordance with SFAS #7, the Company is
considered a development stage company.
As of March 14, 2001, the Company had a wholly owned
subsidiary, ATR Search, LLC.
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 revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
Cash and cash equivalents
The Company maintains a cash balance in a non-interest-
bearing account that currently does not exceed federally
insured limits. For the purpose of the statements of cash
flows, all highly liquid investments with an original
maturity of three months or less are considered to be cash
equivalents.
Fixed Assets
The cost of fixed assets is depreciated over the following
estimated useful life of the asset utilizing the straight-
line method of depreciation:
Furniture and fixtures 5 years
Leasehold improvements 7 years
Revenue recognition
The Company recognizes revenue on an accrual basis as it
invoices for services.
Reporting on the costs of start-up activities
Statement of Position 98-5 (SOP 98-5), "Reporting on the
Costs of Start-Up Activities," which provides guidance on
the financial reporting of start-up costs and organizational
costs, requires most costs of start-up activities and
organizational costs to be expensed as incurred. SOP 98-5
is effective for fiscal years beginning after December 15,
1998. With the adoption of SOP 98-5, there has been little
or no effect on the Company's financial statements.
Earnings per share
The Company follows Statement of Financial Accounting
Standards No. 128. "Earnings Per Share" ("SFAS No. 128").
Basic earnings per common share ("EPS") calculations are
determined by dividing net income (loss) by the weighted
average number of shares of common stock outstanding during
the year. Diluted earning per common share calculations are
determined by dividing net income (loss) by the weighted
average number of common shares and dilutive common share
equivalents outstanding. During periods when common stock
equivalents, if any, are anti-dilutive they are not
considered in the computation.
Advertising Costs
The Company expenses all costs of advertising as incurred.
There were no advertising costs included in selling, general
and administrative expenses during the period ended December
31, 2001.
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain
market assumptions and pertinent information available to
management as of December 31, 2001. The respective carrying
value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments
include cash and accounts payable. Fair values were assumed
to approximate carrying values for cash and payables because
they are short term in nature and their carrying amounts
approximate fair values or they are payable on demand.
F-6
/62/
ATR Search Corporation
Notes
Software Licenses
The Company capitalizes the costs associated with the
purchase of licenses for major business process application
software used in providing staffing and/or placement
services. Acquired technology costs are amortized over
sixty months.
Impairment of long lived assets
Long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the
carrying amount of the assets might not be recoverable. The
Company does not perform a periodic assessment of assets for
impairment in the absence of such information or indicators.
Conditions that would necessitate an impairment assessment
include a significant decline in the observable market value
of an asset, a significant change in the extent or manner in
which an asset is used, or a significant adverse change that
would indicate that the carrying amount of an asset or group
of assets is not recoverable. For long-lived assets to be
held and used, the Company measures fair value based on
quoted market prices or based on discounted estimates of
future cash flows. Long-lived assets to be disposed of are
carried at fair value less costs to sell. No such
impairments have been identified by management at September
30, 2001.
Segment reporting
The Company follows Statement of Financial Accounting
Standards No. 130, "Disclosures About Segments of an
Enterprise and Related Information". The Company operates as
a single segment and will evaluate additional segment
disclosure requirements as it expands its operations.
Dividends
The Company has not yet adopted any policy regarding payment
of dividends. No dividends have been paid or declared since
inception.
Income taxes
The Company follows Statement of Financial Accounting
Standard No. 109, "Accounting for Income Taxes" ("SFAS No.
109") for recording the provision for income taxes.
Deferred tax assets and liabilities are computed based upon
the difference between the financial statement and income
tax basis of assets and liabilities using the enacted
marginal tax rate applicable when the related asset or
liability is expected to be realized or settled. Deferred
income tax expenses or benefits are based on the changes in
the asset or liability each period. If available evidence
suggests that it is more likely than not that some portion
or all of the deferred tax assets will not be realized, a
valuation allowance is required to reduce the deferred tax
assets to the amount that is more likely than not to be
realized. Future changes in such valuation allowance are
included in the provision for deferred income taxes in the
period of change.
Deferred income taxes may arise from temporary differences
resulting from income and expense items reported for
financial accounting and tax purposes in different periods.
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.
F-7
/63/
ATR Search Corporation
Notes
Recent pronouncements
The FASB recently issued Statement No. 137, "Accounting for
Derivative Instruments and Hedging Activities-Deferral of
Effective Date of FASB Statement No. 133". The Statement
defers for one year the effective date of FASB Statement No.
133, "Accounting for Derivative Instruments and Hedging
Activities". The rule now will apply to all fiscal quarters
of all fiscal years beginning after June 15, 2000. In June
1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The
Statement will require the company to recognize all
derivatives on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through
income, if the derivative is a hedge, depending on the
nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value
will be immediately recognized in earnings. The company
does not expect SFAS No. 133 to have a material impact on
earnings and financial position.
In December 1999, the Securities and Exchange Commission
released Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements (SAB No. 101), which
provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. SAB No. 101
did not impact the company's revenue recognition policies.
Stock-Based Compensation
The Company accounts for stock-based awards to employees in
accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related
interpretations and has adopted the disclosure-only
alternative of FAS No. 123, "Accounting for Stock-Based
Compensation." Options granted to consultants, independent
representatives and other non-employees are accounted for
using the fair value method as prescribed by FAS No. 123.
Year end
The Company has adopted December 31 as its fiscal year end.
Note 2 - Going concern
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern,
which contemplates the recoverability of assets and the
satisfaction of liabilities in the normal course of
business. As noted above, the Company is in the development
stage and, accordingly, has not yet generated a proven
history of operations. Since its inception, the Company has
been engaged substantially in financing activities and
developing its product line, incurring substantial costs and
expenses. As a result, the Company incurred accumulated net
losses from March 2, 2001 (inception) through the period
ended December 31, 2001 of $(488,750). In addition, the
Company's development activities since inception have been
financially sustained by capital contributions.
The ability of the Company to continue as a going concern is
dependent upon its ability to raise additional capital from
the sale of common stock and, ultimately, the achievement of
significant operating results. The accompanying financial
statements do not include any adjustments that might be
required should the Company be unable to recover the value
of its assets or satisfy its liabilities.
Note 3 - Fixed assets
The Company acquired the following assets during the period
ended December 31, 2001:
Furniture & fixtures $ 1,969
Leasehold improvements 10,000
-------
$11,969
Depreciation expense totaled $607 for the period ended
December 31, 2001.
F-8
/64/
ATR Search Corporation
Notes
Note 4 - Intellectual Property, Patents, and Other
Intangibles
On March 28, 2001, the Company acquired the rights to use
technology known as "human resource compiler based search
recognition software and hardware" from Sarcor Management,
SA, a British Virgin Islands corporation, in exchange for a
lease agreement and the issuance of 3,500,000 common shares
of stock valued at $350,000.
Amortization expense totaled $225,000 for the period ended
December 31, 2001.
The Company relies on trademark, unfair competition and
copyright law, trade secret protection and contracts such as
confidentiality and license agreements with its employees,
customers, partners and others to protect its proprietary
rights. Despite precautions, it may be possible for
competitors to obtain and/or use the proprietary information
without authorization, or to develop technologies similar to
the Company's and independently create a similarly
functioning infrastructure. Furthermore, the protection of
proprietary rights in Internet-related industries is
uncertain and still evolving. The laws of some foreign
countries do not protect proprietary rights to the same
extent as do the laws of the United States. Protecting the
Company's proprietary rights in the United States or abroad
may not be adequate.
Note 5 - Stockholder's equity
The Company was originally authorized to issue 20,000,000
shares of its $0.001 par value common stock. Effective May
7, 2001, the Company amended its articles of incorporation
increasing its authorized shares to 100,000,000 shares of
$0.001 par value common stock.
All references to shares issued and outstanding reflect the
increase of authorization of 100,000,000 issuable shares
effected May 7, 2001.
The Company issued 12,625,000 shares of its $0.001 par value
common stock to its founders for cash of $64,525.
The Company issued 3,500,000 shares of its $0.001 par value
common stock at $0.10 per share to Sarcor Management, SA, a
British Virgin Island corporation, as a $350,000 down
payment on a technology licensing agreement.
The Company issued 350,000 shares of its $0.001 par value
common stock to Corporate Regulatory Services for consulting
services valued at $26,250.
The Company issued 150,000 shares of its $0.001 par value
common stock to Mary Lou Cox, mother of Robert Cox, the
Company's president, for consulting services valued at
$15,000.
The Company issued 500,000 shares of its $0.001 par value
common stock to James De Luca, an independent consultant,
for consulting services valued at $50,000.
The Company issued 1,340,000 shares of its $0.001 par value
common stock at $0.10 per share for cash of $134,000. The
shares were sold pursuant to a Regulation D, Rule 505 of the
Securities and Exchange Commission offering.
The Company issued 115,000 shares of its $0.001 par value
common stock to extinguish promissory notes totaling
$11,500.
The Company issued 600,000 shares of its $0.001 par value
common stock to Quarg, Inc. for consulting services valued
at $60,000.
There have been no other issuances of common stock.
F-9
/65/
ATR Search Corporation
Notes
Note 6 - Income taxes
The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS No. 109"), which requires use of the liability
method. SFAS No. 109 provides that deferred tax assets and
liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for
financial reporting purposes, referred to as temporary
differences. Deferred tax assets and liabilities at the end of
each period are determined using the currently enacted tax rates
applied to taxable income in the periods in which the deferred
tax assets and liabilities are expected to be settled or
realized.
The provision for income taxes differs from the amount computed
by applying the statutory federal income tax rate to income
before provision for income taxes. The sources and tax effects
of the differences are based on a 34% US federal statutory rate.
As of December 31, 2001, the Company has a net operating loss of
approximately $(488,750). The related tax asset of approximately
$112,829 has been fully reserved and, if not used, will expire in
2021. A valuation adjustment has been made in the event the
asset is not realizable.
Note 7 - Capital lease and rent obligations
10% capital lease payable to Sarcor Management, SA with monthly
interest-only
payments beginning in April 2001 of $5,000, increasing to
$10,000 in April 2002,
$15,000 in April 2003, and $19,100 thereafter, secured by
software licensing rights, due March 2011. $1,150,000
Less current portion ( 120,000)
----------
Total long-term debt $1,030,000
==========
Summary of Future Minimum Lease Payments:
Fiscal Year Amount
2001 $ 15,000
2002 150,000
2003 180,000
2004 229,200
2005 229,200
Thereafter 1,173,000
---------
Total lease payments over
the contractual period $1,976,400
Less: Interest (476,400)
---------
Original cost 1,500,000
=========
Interest expense for the capital lease totaled $57,500 for the
period ended December 31, 2001. Of which none has been paid as
of December 31, 2001.
On April 1, 2001, the Company entered into a sublease agreement
to rent office space for a period of four years at a rate of
$2,502 per month. Rent expense totaled $23,133 at December 31,
2001.
Note 8 - Short term note payable
On May 5, 2001, the Company executed a promissory note with
Robert Cox, the president of the Company, in the amount of
$50,000, which is due in 2 years. Interest in accrued on a
quarterly basis at an interest rate of 8% per annum. On May 5,
2003, the unpaid balance of principal and accrued interest will
convert into common stock at a ratio of one share of the
Company's $0.001 par value common stock for each $5. As of
December 31, 2001, interest expense totaled $3,025 of which $329
has been paid.
F-10
/66/
ATR Search Corporation
Notes
Note 9 - Related party transactions
On May 5, 2001, the Company executed a promissory note with
Robert Cox, the president of the Company, in the amount of
$50,000. (See Note 8 above.)
On May 24, 2001, the Company issued 150,000 shares of its
$0.001 par value common stock to Mary Lou Cox, mother of
Robert Cox, the Company's president, for consulting services
valued at $15,000.
Note 10 - Warrants and options
As of December 31, 2001, there were no warrants or options
outstanding to acquire any additional shares of common
stock.
Note 11 - Subsequent events
On February 17, 2002, the Company executed a business
consulting agreement with MLSA whereby the Company issued
1,350,000 shares of its $0.001 par value common stock to
Mark Lancaster for consulting services valued at $162,000.
The consulting services are to be rendered over a period of
90 days with an automatic three-month renewal provision.
On February 26, 2002, the Company executed a consulting
agreement with Qurag, Inc. whereby the Company issued
475,000 shares of its $0.001 par value common stock to Chaim
Drizin, a shareholder of the Company, for consulting
services valued at $30,875. The consulting services are to
be rendered over a period of 90 days with an automatic three-
month renewal provision.
On March 1, 2002, the Company executed a consulting
agreement with Corporate Regulatory Services, LLC (CRS), a
shareholder of the Company, whereby the Company issued
250,000 shares of its $0.001 par value common stock to CRS,
for consulting services valued at $16,250. The consulting
services are to be rendered over a period of approximately 1
year.
As of March 7, 2002, the Company issued 62,500 warrants to
CRS, a shareholder of the Company, to purchase the Company's
$0.001 par value common stock on a one-for-one basis. The
warrant exercise price is $0.10 per share of common stock
and substantially all warrants will expire on or before
March 7, 2007.
On March 27, 2002, the Company executed a consulting
agreement with Promark, Inc. whereby the Company issued
500,000 shares of its $0.001 par value common stock to Ken
Lowman for consulting services valued at $50,000. The
consulting services are to be rendered over a period of 90
days with an automatic three-month renewal provision.
F-11
/67/
Part II - Information Not Required In Prospectus
Item 24: Indemnification of Directors and Officers
THE ARTICLES OF INCORPORATION OF THE COMPANY PROVIDE FOR
INDEMNIFICATION OF EMPLOYEES AND OFFICERS IN CERTAIN CASES.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE
SECURITIES ACT OF 1933 MAY BE PERMITTED TO DIRECTORS,
OFFICERS OR PERSONS CONTROLLING THE COMPANY PURSUANT TO THE
FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN
THE OPINION OF THE SECURTIES AND EXCHANGE COMMISSION SUCH
INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE
ACT AND IS THEREFORE UNENFORCEABLE.
In addition, Section 78.751 of the Nevada General
Corporation Laws provides as follows: 78.751 Indemnification
of officers, directors, employees and agents; advance of
expenses.
1. A corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses,
including attorney's fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in
connection with the action, suitor proceeding if he acted in
good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, does not,
of itself, create a presumption that the person did not act
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action
or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
2. A corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees
actually and reasonably incurred by him in connection with
the defense or settlement of the action or suit if he acted
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim,
issue or matter as to which such a person has been adjudged
by a court of competent jurisdiction, after exhaustion of
all appeals therefrom, to be liable to the corporation or
for amounts paid in settlement to the corporation, unless
and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction
determines upon application that in view of all the
circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such expenses as the
court deems proper.
3. To the extent that a director, officer, employee or
agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to in subsections 1 and 2, or in defense of any
claim, issue or matter therein, he must be indemnified by
the corporation against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with
the defense.
4. Any indemnification under subsections 1 and 2,
unless ordered by a court or advanced pursuant to subsection
5, must be made by the corporation only as authorized in the
specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the
circumstances. The determination must be made: (a) By the
stockholders: (b) By the board of directors by majority vote
/68/
of a quorum consisting o directors who were not parties to
act, suit or proceeding; (c) If a majority vote of a quorum
consisting of directors who were not parties to the act,
suit or proceeding so orders, by independent legal counsel
in a written opinion; or (d) If a quorum consisting of
directors who were not parties to the act, suit or
proceeding cannot to obtained, by independent legal counsel
in a written opinion; or
5. The Articles of Incorporation, the Bylaws or an
agreement made by the corporation may provide that the
expenses of officers and directors incurred in defending a
civil or criminal, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt
of an undertaking by or on behalf of the director or officer
to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to
be indemnified by corporation. The provisions of this
subsection do not affect any rights to advancement of
expenses to which corporate personnel other than the
directors or officers may be entitled under any contract or
otherwise by law.
6. The indemnification and advancement of expenses
authorized in or ordered by a court pursuant to this
section: (a) Does not exclude any other rights to which a
person seeking indemnification or advancement of expenses
may be entitled under the articles of incorporation or any
bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a
court pursuant to subsection 2 or for the advancement of
expenses made pursuant to subsection 5, may not be made to
or on behalf of any director or officer if a final
adjudication establishes that his act or omissions involved
intentional misconduct, fraud or a knowing violation of the
law and was material to the cause of action. (b) Continues
for a person who has ceased to be a director, officer,
employee or agent and endures to the benefit of the heirs,
executors and administrators of such a person. Insofar as
indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses to
be borne by us (also referred to within as the Registrant) in
connection with the issuance and distribution of our Common
Shares pursuant to the Offering.
Nature of Expenses Amount
SEC Registration Fee $ 474.69
Accounting Fees and Expenses $ 5,000
Legal Fees and Expenses $ 5,000
Printing Expenses $ 2,000
Blue Sky Qualification Fees and
Expenses $ 0
Transfer Agent's Fee $ 1,000
TOTAL $ 13,552.84
(1) The amounts set forth above, except for the SEC fees,
are in each case estimated.
/69/
ITEM 26. Recent Sales of Unregistered Securities
On March 2, 2001, the Company was incorporated under
the laws of the State of Nevada as ATR Search Corporation.
The Company is authorized to issue 100,000,000 shares of
common stock, par value $0.001, and 5,000,000 shares of
preferred stock, par value $0.001.
At the Initial Meeting of the Board of Directors on
March 16, 2001, it was resolved that a formal Code of Bylaws
be adopted for the Corporation. At that same meeting, the
Company issued 875,000 shares of its $0.001 par value common
stock to Mr. Michael Vogel for cash of $875 and 1,750,000
shares of par value common stock to Mr. Robert L. Cox in
exchange for cash in the amount of $1,750.
During March 2001, the Company issued 11,975,000 shares
of its $0.001 par value common stock to its officers as
founders stock issued for cash of $15,000.
During March 2001, the Company issued 1,525,000 shares
of its $0.001 par value common stock to investors for cash
of $49,500.
During March 2001, we issued 350,000 shares to one
shareholder in lieu of services rendered in the amount of
$26,250. The issuance of shares represented payment to a
consulting company for facilitating the preparation of the
documentation necessary to become a publicly traded
company. This stock issuance was made in accordance with
Section 4(2) of the Securities Act of 1933, as amended.
The consulting company is a sophisticated purchaser. They
were provided full and complete access to our corporate
records, as they assisted us in preparing our offering
documentation. No brokers or dealers were involved in this
transaction and no discounts or commissions were paid.
We were originally authorized to issue 20,000,000
shares of its $0.001 par value common stock. Effective May
7, 2001, we amended our articles of incorporation increasing
our authorized shares to 100,000,000 shares of $0.001 par
value common stock.
All references to shares issued and outstanding reflect
the increase of authorization of 100,000,000 issuable shares
affected May 7, 2001.
We issued 12,625,000 shares of our $0.001 par value
common stock to our founders for cash of $64,525.
We issued 3,500,000 shares of our $0.001 par value
common stock at $0.10 per share to Sarcor Management, SA, a
British Virgin Island corporation, as a $350,000 down
payment on a technology licensing agreement.
We issued 350,000 shares of our $0.001 par value common
stock to Corporate Regulatory Services for consulting
services valued at $26,250.
We issued 150,000 shares of our $0.001 par value common
stock to Mary Lou Cox, mother of Robert Cox, the Company's
president, for consulting services valued at $15,000.
We issued 500,000 shares of our $0.001 par value common
stock to James De Luca, an independent consultant, for
consulting services valued at $50,000.
We issued 1,340,000 shares of our $0.001 par value
common stock at $0.10 per share for cash of $134,000. The
shares were sold pursuant to a Regulation D, Rule 505 of the
Securities and Exchange Commission offering.
We issued 115,000 shares of our $0.001 par value common
stock to extinguish promissory notes totaling $11,500.
/70/
We issued 600,000 shares of our $0.001 par value common
stock to Quarg, Inc. for consulting services valued at
$60,000.
On May 26, 2001 we conducted an offering in which we
issued 1,340,000 shares of common stock to 17 unaffiliated
shareholders at a price of $0.10 per share, for total
receipts of $134,000 in cash. This offering was made in
reliance upon an exemption from the registration provisions
of the Securities Act of 1933, as amended, in accordance
with Regulation D, Rule 504 of the Act. In addition, this
offering was made on a best efforts basis and was not
underwritten. In regards to the May 2001 offering, listed
below are the requirements set forth under Regulation D,
Rule 504 and the facts which support the availability of
Rule 504 to the May 2001 offering:
a. Exemption. Offers and sales of securities that
satisfy the conditions in paragraph (b) of this Rule 504 by
an issuer that is not:
1. subject to the reporting requirements of section 13 or
15(d) of the Exchange Act;
2. an investment company; or
3. a development stage company that either has no specific
business plan or purpose or has indicated that its business
plan is to engage in a merger or acquisition with an
unidentified company or companies, or other entity or
person, shall be exempt from the provision of section 5 of
the Act under section 3(b) of the Act.
Facts: At the time of the May 2001 offering, we were
not subject to the reporting requirements of section 13 or
section 15(d) of the Exchange Act. Further, we are not now,
nor were we at the time of the May 2001 offering, considered
to be an investment company. Finally, since inception, we
have pursued a specific business plan of placing information
technology ("IT") professionals with technology sector
companies on a temporary or permanent basis and continue to
do so.
b. Conditions to be met.
1. General Conditions. To qualify for exemption under
this Rule 504, offers and sales must satisfy the terms and
conditions of Rule 501 and Rule 502 (a), (c) and (d), except
that the provisions of Rule 502 (c) and (d) will not apply
to offers and sales of securities under this Rule 504 that
are made:
i. Exclusively in one or more states that provide for the
registration of the securities, and require the public
filing and delivery to investors of a substantive disclosure
document before sale, and are made in accordance with those
state provisions;
ii. In one or more states that have no provision for the
registration of the securities or the public filing or
delivery of a disclosure document before sale, if the
securities have been registered in at least one state that
provides for such registration, public filing and delivery
before sale, offers and sales are made in that state in
accordance with such provisions, and the disclosure document
is delivered before sale to all purchasers (including those
in the states that have no such procedure); or
iii. Exclusively according to state law exemptions from
registration that permit general solicitation and general
advertising so long as sales are made only to "accredited
investors" as defined in Rule 501(a).
Facts: On May 17, 2001, we were issued a permit to
sell securities by the State of New York, pursuant to our
application for registration by qualification of our
offering of Common Stock in that state. The application for
registration by qualification was filed pursuant to the
provisions of Section 359-e of the New York General Business
Law, which requires the public filing and delivery to
investors of a substantive disclosure document before sale.
On August 24, 2001, we completed a public offering of shares
of our common stock pursuant to Regulation D, Rule 504 of
the Securities Act of 1933, as amended, and the registration
by qualification of said offering in the State of New York,
whereby we sold 1,340,000 shares of Common Stock to
approximately 17 unaffiliated shareholders of record, none
of whom were or are officers or directors of ours. The
entire offering was conducted exclusively in the State of
New York, pursuant to the permit issued by the State of New
York.
/71/
2. The aggregate offering price for an offering of
securities under this Rule 504, as defined in Rule 501(c),
shall not exceed $1,000,000, less the aggregate offering
price for all securities sold within the twelve months
before the start of and during the offering of securities
under this Rule 504, in reliance on any exemption under
section 3(b), or in violation of section 5(a) of the
Securities Act.
Facts: The aggregate offering price for the May 2001
offering was $400,000, of which $134,000 was raised in the
offering.
During June 2001, we issued 1,250,000 shares to three
shareholders in lieu of services rendered in the amount of
$125,000. The issuance of shares represented payment to
three consulting companies for marketing and consulting
services including site location and development. These
stock issuances were made in accordance with Section 4(2)
of the Securities Act of 1933, as amended. The consulting
companies are sophisticated purchasers. They were provided
full and complete access to our corporate records, as they
assisted us in the development stage of our Company. No
brokers or dealers were involved in these transactions and
no discounts or commissions were paid.
During June 2001, we issued 115,000 shares to four
shareholders who elected to convert promissory notes to
common stock in the amount of $11,500. These stock
issuances were made in accordance with Section 4(2) of the
Securities Act of 1933, as amended. No brokers or dealers
were involved in these transactions and no discounts or
commissions were paid.
The following paragraphs set forth information with
respect to all securities sold by us within the past 14
months without registration under the Securities Act of
1933, as amended (the "Securities Act"). The information
includes the names of the purchasers, the date of issuance,
the title and number of securities sold and the
consideration received by us for the issuance of these
shares.
The consulting services agreements were made with such
investors that are sophisticated investors based on their
financial resources and knowledge of investments. They had
access to or were provided with relevant financial and other
information relating to the CareDecision Corporation.
Accordingly, the issuance of shares was exempt from the
registration requirements of the Act pursuant to Section
4(2) of the Act.
On February 17, 2002, we issued 1,350,000 shares of our
Common Stock to Mark W. Lancaster for consulting services
valued at $155,250.
On February 26, 2002, we issued 475,000 shares of our
Common Stock to Chaim Drizin for consulting services valued
at $54,625.
On April 4, 2002, we rescinded an aggregate of
1,935,000 shares of our Common Stock.
On July 9, 2002, we issued a total of 32,968,863 shares
of its $0.001 par value common stock pursuant to its reverse
merger with Medicius, Inc. whereby each shareholder received
three Company shares for every one Medicius, Inc. share
held.
On August 1, 2002, we issued 3,000,00 shares of our
Common Stock to Ken Lowman for consulting services valued at
$150,000.
On August 1, 2002, CareDecision.net, Inc. then elected
to convert its preferred shares into 5,075,000 shares of the
Company's $0.001 par value common stock.
On August 9, 2002, we issued 2,000,000 restricted
shares of our Common Stock to Barbara Asbell for consulting
services valued at $80,000.
On September 4, 2002, we issued 950,000 shares of our
Common Stock to Barbara Asbell for consulting services
valued at $38,000.
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On September 30, 2002, we issued 875,000 restricted
shares of common stock, to CareDecision.net, Inc., for
purchasing the empower care software and the care.net web
domain of CareDecision.net, Inc.
On September 30, 2002, we issued 1,267,963 restricted
shares of CareDecision Corporation common stock, to Keith
Berman for his retiring his CareDecision Corporation note.
On September 30, 200, we issued 640,000 restricted
shares of CareDecision Corporation common stock to Robert
Jagunich for his exercising 640,000 warrants at a strike
price of $0.05;
On September 30, 2002, we issued 2,539,574 restricted
shares of our Common Stock to Paradigm Partners for
consulting services valued at $101,582.96.
During the nine-months ended September 30, 2002, we
issued 1,725,000 shares of our $0.001 par value common stock
to CareDecision.net, Inc. pursuant to its election to
convert 700,000 shares of the Company's $0.001 par value
preferred stock into common stock.
During the nine-months ended September 30, 2002, we
issued 6,927,737 shares of our $0.001 par value common stock
to various persons and entities and to note-holders pursuant
to their election to convert $64,288 in convertible debt
inclusive of accrued interest.
During the nine-months ended September 30, 2002, we
issued 6,340,000 shares of our $0.001 par value common stock
to various individuals and entities for consulting services
valued at $276,056, the fair market value of the underlying
shares on the date of issuance.
On October 8, 2002 we issued 6,327,737 shares of our
Common Stock as follows:
NAME NUMBER OF SHARES
Anfel Trading 524,781
Barbara Asbell 218,057
Michael Belcher 9,722
Keith Berman 848,768
Alan Binder 5,556
Catherine Dewitt 726,000
Leon B. Eisikowitz 38,070
Allen Zev Friedman 152,250
John Garber 365,001
Robert Jagunich 773,768
Marlene Kriger 38,070
William Lyons 272,224
Frady Makowsky 43,395
Joseph Makowsky 87,015
Benjamin Mayer 600,000
New York Auto Mall 217,485
P R Diamonds 76,125
Sanjay Patel 122,223
Michael Petras 66,667
Tom Poff 9,722
Jennifer C. Schiffman 152,250
David Schwartz 810,000
Shabnam Sharabi 5,556
Morris Weiss 61,350
Moshe Williger 87,015
Leslie Wolf 16,667
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On October 9, 2002, we rescinded an aggregate of
3,350,000 shares of our Common Stock.
On October 21, 2002, we issued 500,000 restricted
shares of our Common Stock to Robert Koch for consulting
services valued at $20,000.
On October 21, 2002, we issued 1,500,000 restricted
shares of our Common Stock to Robert Koch for consulting
services valued at $60,000.
On December 11, 2002, we issued 4,127,093 restricted
shares of our Common Stock to Robert Jagunich for consulting
services value at $165,084.
On December 13, 2002, we issued 1,000,000 restricted
shares of our Common Stock to Barbara Asbell for consulting
services value at $40,000.
On December 13, 2002, we issued 2,500,000 restricted
shares of our Common Stock to Wizard Enterprises for
consulting services value at $100,000.
On December 20, 2002, we issued 1,888,855 restricted
shares of our Common Stock to Wizard Enterprises for
consulting services value at $75,554.
Should M&E Equities, LLC convert its Medicius Note into
reserved merger shares, those shares shall total a maximum
of seven million five hundred thousand 8,000,000 shares, or
a portion thereof, and shall be valued a the time(s) of
conversion.
[Balance of this page intentionally left blank.]
/74/
Item 27. Exhibits
Exhibits. The following is a complete list of Exhibits filed
as part of this registration statement.
Exhibit 3a Articles of Incorporation - Filed March 2, 2001
(Rendered as Previously Filed)
Exhibit 3b Articles of Amendments to Articles of
Incorporation - Filed May 9, 2001
(Rendered as Previously Filed)
Exhibit 3c Articles of Amendments to Articles of
Incorporation - Filed August 2, 2002
(Rendered as Previously Filed)
Exhibit 3d Bylaws of CareDecision Corporation (formerly
ATR Search Corporation)
(Rendered as Previously Filed)
Exhibit 10.1 Consulting Agreement with Dailyfinancial.com, Inc.
Exhibit 10.2 Agent's Representation Agreement.
Exhibit 10.3 Robert Jagunich Service Agreement.
Exhibit 10.4 M&E Secured Convertible Revolving Promissory Note Agreement.
Exhibit 10.5 Robert Jagunich Service Agreement.
Exhibit 10.6 Wizard Enterprises Consulting Agreement.
Exhibit 10.7 Wizard Enterprises Consulting Agreement.
Exhibit 10.8 Barbara Asbell Consulting Agreement.
Exhibit 10.9 Program Agreement.
Exhibit 10.10 Paradigm Partners Consulting Agreement.
Exhibit 10.11 Letter of Intent for Plan of Merger.
Exhibit 5 Attorney Legal Opinion and Consent Letter
(Rendered as Previously Filed)
Exhibit 23 Independent Auditor's Consent
Item 28. Undertakings
1. The Registrant will, during any period in which it offers
or sells securities, file a post-effective amendment to this
registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
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(iii) Include any additional or changed material information
on the plan of distribution.
2. The Registrant will, for determining liability under the
Securities Act, treat each post-effective amendment as a new
registration statement of the securities offered, and the
offering of the securities at that time to be the initial
bona fide offering.
3. The Registrant will file a post-effective amendment to
remove from registration any of the securities that remain
unsold at the end of the offering.
4. The Registrant will provide to each purchaser, if any, at
the closing certificates in such denominations and
registered in such names to permit prompt delivery to each
purchaser.
5. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to
directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that
in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed
in the Act
and is, therefore, unenforceable. 6. For purposes of
determining any liability under the Act, the information
omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant
under Rule 424(b)(1) or (4) or 497(h) under the Act shall be
deemed to be part of this registration statement as of the
time the Commission declared it effective.
Signatures
Pursuant to the requirements of the Securities and
Exchange Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements of filing on Form SB-2 and has duly caused this
Form SB-2 Registration Statement to be signed on its behalf
by the undersigned, there unto duly authorized, in the
City of New York, State of New York on the 28th day of April
2003.
CareDecision Corporation
By: /s/ Robert Cox
----------------
President and Director
By: /s/ Keith Berman
-----------------
Keith Berman
Secretary, Treasurer and
Director
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POWER OF ATTORNEY
Pursuant to the requirements of the Act, the following
persons in the capacities and on the dates indicated have
signed this Registration Statement. We, the undersigned
officers and directors of CareDecision Corporation hereby
severally constitute and appoint Thomas C. Cook, our true
and lawful attorney-in-fact and agent with full power of
substitution for us in our stead, in any and all capacities,
to sign any and all amendments (including post-effective
amendments) to this Registration Statement and all documents
relating thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said
attorney-in-fact and agent in full power and authority to do
and perform each and every act and thing necessary or
advisable to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-
fact and agent or his substitute or substitutes, any
lawfully do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE
/s/ Robert Cox President, Director, and April 28, 2003
------------------ Chief Executive Officer
Robert Cox
/77/
End of Filing