UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

November 17, 2011

Date of Report (Date of earliest event reported) 

 

Medytox Solutions, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or Other Jurisdiction of Incorporation)

 

000-54346

(Commission File Number)

 

54-2156042

(IRS Employer Identification No.)

 

400 S. Australian Ave., Suite 800, West Palm Beach, Florida 33401

(Address of Principal Executive Offices and Zip Code)

                                                                       

(561) 855-1626

(Registrant’s Telephone Number, Including Area Code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[__]      Written communications pursuant to Rule 425 under the Securities Act

(17 CFR 230.425)

 

[__]      Soliciting material pursuant to Rule 14a-12 under the Exchange Act

            (17 CFR 240.14a-12)

 

[__]      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[__]      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)

 

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Explanatory Note

 

On November 4, 2011, we filed a Form 8-K with the Securities and Exchange Commission (“SEC”) to include financial statements regarding our acquisitions of Trident Laboratories, Inc. (“Trident”) and Medical Billing Choices, Inc. (“MBC”). This Amendment to the Form 8-K is being filed solely to provide reviewed June 30, 2011 financial statements regarding each entity as well as June 30, 2011 pro forma statements which were inadvertently omitted from the Form 8-K filed with the SEC on November 4, 2011.

                                                                                                                                                                                               

 

Section 1 – Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement.

 

Acquisition of Trident Laboratories, Inc.

                    As previously reported on October 26, 2011, Medytox Institute of Laboratory Medicine, Corp. ("Medytox"), a wholly owned subsidiary of registrant, Casino Players, Inc. (the "Company"), entered into an agreement (the "Agreement") for the purchase of up to eighty-one percent (81%) of the issued and outstanding equity ownership interests of Trident Laboratories, Inc. ("Trident") from its shareholders ("Shareholders").  Trident is a Florida corporation maintaining its principal place of business at 6011 Rodman Street, Suite 107, Hollywood, Florida 33032.

                    As of the signing of the agreement, Trident assigned 49% of the stock to escrow for the benefit of Medytox and consented to perform testing on behalf of Medytox.  Upon payment of the $500,000 note Medytox will receive the 49% of the stock plus an additional 32% from the shareholders of Trident and Medytox will own 81% of the Trident.  Until the note is paid in full the former shareholders of Trident will be allowed to keep 100% of the profits of their existing and future non-Medytox testing after a fair allocation of operating costs

                    Medytox offers to purchase the remaining 19% from the shareholders of Trident, after 24 months of combined operations, for consideration equal to three (3) times the annual profits as determined from audited financial statements.  This offer expires after 36 months.  

                    The Company filed audited financial statements for the years ended December 31, 2010 via Form 8-K on November 4, 2011.  Trident was organized in December 2009 and started operations in March 2010.  Only the 2010 statements were audited.  The balances at August 22, 2011 are as yet unaudited. 

                    Medytox. accounted for the assets, liabilities and ownership interests in accordance with the provisions of ASC 805, Business Combinations for acquisitions occurring in years beginning after December 15, 2008 (formerly SFAS No. 141R, Business Combinations).  As such, the recorded assets and liabilities acquired have been recorded at fair value and any difference in the net asset values and the consideration given has been recorded as a gain on acquisition or as goodwill. The unaudited values as of the date of agreement are as follows:

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                    Pro forma results of operations for the years ended December 31, 2010 and 2009 as though this acquisition had taken place at January 1, 2009 are as follows:

 

 

                    The unaudited balance sheet and pro forma results disclosed in the tables above are based on various assumptions and are not necessarily indicative of the results of the financial position or operations that would have occurred had the Company completed this acquisition on January 1, 2009 or 2010.  The acquired balance sheet above is subject to revision during the year end audit.

Acquisition of Medical Billing Choices, Inc.

 

                    As previously reported, on October 27, 2011, Medytox Solutions, Inc. (OTCBB: "MMMS"), f/k/a Casino Players, Inc. (the "Company",), entered into an agreement (the "Agreement") for the purchase of all issued and outstanding equity ownership interests of Medical Billing Choices, Inc. a/k/a TA ARC Medical Billing ("MBC") from its shareholders ("Shareholders").  MBC is a corporation maintaining its principal place of business at 814 Tyvola Road, Suite 116, Charlotte, North Carolina 28217.

 

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As of the signing of the agreement, MBC assigned 49% of the stock to escrow for the benefit of the Company and assumed the duties of billing the medical services provided by any subsidiary of the Company.  Upon payment of the $750,000 note the Company will receive the 49% of the stock and the remaining 51% from the shareholders of MBC and the Company will own 100% of the MBC.  Until the note is paid in full the former shareholders of MBC will be allowed to keep 100% of the profits of their existing and future non- Company billings.

The Company filed audited financial statements for the years ended December 31, 2010 and December 31, 2009 via Form 8-K on November 4, 2011.  The balances at August 22, 2011 are as yet unaudited. 

The Company accounted for the assets, liabilities and ownership interests in accordance with the provisions of ASC 805, Business Combinations for acquisitions occurring in years beginning after December 15, 2008 (formerly SFAS No. 141R, Business Combinations).  As such, the recorded assets and liabilities acquired have been recorded at fair value and any difference in the net asset values and the consideration given has been recorded as a gain on acquisition or as goodwill. The unaudited values as of the date of agreement are as follows:

 

Pro forma results of operations for the years ended December 31, 2010 and 2009 as though this acquisition had taken place at January 1, 2009 are as follows:

 

 

Pro forma results of operations for the six months ended June 30, 2010 and 2011 as though this acquisition had taken place at January 1, 2009 are as follows:

 

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The unaudited balance sheet and pro forma results disclosed in the tables above are based on various assumptions and are not necessarily indicative of the results of the financial position or operations that would have occurred had the Company completed this acquisition on January 1, 2009 or 2010. The acquired balance sheet above is subject to revision during the year end audit.

 

Pro-forma results of the acquisitions of Medical Billing Choices, Inc and Trident Laboratories, Inc by Medytox Solutions, Inc and Subsidiary

 

Pro forma results of operations for the years ended December 31, 2010 and 2009 as though both acquisitions had taken place at January 1, 2009 are as follows:

 

 

Pro forma results of operations for the six months ended June 30, 2011 and 2010 as though both acquisitions had taken place at January 1, 2009 are as follows:

 

 

Section 2 – Financial Information

Item 2.01 Completion of Acquisition of Disposition of Assets.

See above.

The Trident Laboratories, Inc. Acquisition               

Shareholders involved in the transaction include Michele M. Steegstra, Christopher K. Hawley, Donnette W. Hawley, Skyler V. Lukas and Michael J. Falestra. There are no material relationships between the Company, Medytox or their respective affiliates and any of the parties to the Agreement, other than with respect to the Agreement.

5

The Medical Billing Choices, Inc. Transaction

The sole Shareholder of Medical Billing Choices, Inc. who entered into the agreement to sell his shares of common stock is Mike Nicholson.  There are no material relationships between the Company, or its affiliates and any of the parties to the Agreement, other than with respect to the Agreement.  The funds utilized to date in effectuating the purchase were derived from operating revenue of Company subsidiary, Medytox Institute of Laboratory Medicine, Inc. and a loan received from an unaffiliated entity known as Valley View Drive Associates, LLC, a New Jersey limited liability company.

 

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

 

(a)     Exhibit 10.1 – Agreement between Trident Laboratories, Inc., et al. and Medytox Institute of Laboratory Medicine, Corp. dated August 22, 2011.

 

(b)     Exhibit 10.2 – Agreement between Medical Billing Choices, Inc., et al. and Casino Players, Inc. n/k/a Medytox Solutions, Inc. dated August 22, 2011.

 

(c)     Financial Statements of Trident Laboratories, Inc.

 

(d)     Financial Statements of Medical Billing Choices, Inc.

 

SIGNATURES

                Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

                                                                                MEDYTOX SOLUTIONS, INC.

 

DATED:  November 17, 2011.                         By:         /s/:  William G. Forhan                                     

                                                                                William G. Forhan, CEO, CFO and Chairman,

                                                                                (Principal Executive Officer)

                                                                                (Principal Financial and Accounting Officer)

 

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Trident Laboratories, Inc.

Financial Statements

December 31, 2010

 

 

 

 

 

 

 

 

F-1

 

 

 

 

 

 

 

Table of Contents

 

            Report of Independent Registered Public Accounting Firm                          2

 

Balance Sheet as of December 31, 2010                                                        3

 

Statements of Operations and Changes in Stockholders’ Equity

For the year ended December 31, 2010                                                          4

 

Statements of Cash Flows for the year ended

December 31, 2010                                                                                         5

 

Notes to the Financial statements                                                                   6 – 11

 

 

 

 

F-2

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and
Shareholders of Trident Laboratories, Inc.:

I have audited the accompanying balance sheet of Trident Laboratories, Inc. as of December 31, 2010 and the related statements of operations and changes in stockholders’ equity and cash flows for the year then ended.  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 the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required at this time, to have, nor was I engaged to perform an audit of its internal control over financial reporting.  My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal controls over financial reporting.  Accordingly, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provided a reasonable basis for my opinion.

 

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Trident Laboratories, Inc. as of December 31, 2010and the results of its operations for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Peter Messineo, CPA

 

Peter Messineo, CPA

Clearwater, Florida

November 4, 2011

 

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F-4

 

 

 

F-5

 

 

F-6

 

 

F-7

 

TRIDENT LABORATORIES, INC
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2010 and 2009

1.       Description of Business

Trident Laboratories, Inc., (“Trident” or the “Company”) was organized under the laws of Florida in December 2009, with an effective date of January 1, 2010.  The Company started operations in May 2010 as a medical testing laboratory.  The Company performs testing on a contract basis for medical and business entities through-out Florida.  The Company operates as an S-Corporation for corporate tax purposes.

2.       Accounting Policies  and Basis of Presentation

Basis of Presentation

The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States. 

Use of Estimates

The preparation of the Company's financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.

 

Financial Instruments

 

The carrying amounts of cash, receivables and current liabilities approximated fair value due to the short-term maturity of the instruments.  Debt obligations, when present, are carried at cost, which approximate fair value due to the prevailing market rate for similar instruments.

Fair Value Measurement

 

All financial and nonfinancial assets and liabilities were recognized or disclosed at fair value in the financial statements.  This value was evaluated on a recurring basis (at least annually).  Generally accepted accounting principles in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on a measurement date. The accounting principles also established a fair value hierarchy which required an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  Three levels of inputs were used to measure fair value.

·         Level 1: Quotes market prices in active markets for identical assets or liabilities.

·         Level 2: Observable market based inputs or unobservable inputs that were corroborated by market data.

·         Level 3: Unobservable inputs that were not corroborated by market data.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains its cash deposits in major financial institutions in the United States. At times deposits within a bank may exceed the amount of insurance provided on such deposits. Generally, these deposits are redeemed upon demand and, therefore, are considered by management to bear minimal risk.

 

F-8

Accounts Receivable

Accounts receivable represent amounts due from customers in the ordinary course of business from sales activities in each of the Company’s market segments.  The Company considers accounts more than 90 days old to be past due. The Company uses the allowance method for recognizing bad debts. When an account is deemed uncollectible, it is written off against the allowance. The Company generally does not require collateral for its accounts receivable. The Company considers all accounts receivable to be collectable and consequently has provided no allowance for doubtful accounts.

A portion of the receivables are with governmental payers and subject to periodic review and adjustment. 

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by applying the straight-line method to the estimated useful lives of the related assets. Useful lives range from 3 to 7 years for office equipment medical equipment, furniture and fixtures. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. When property or equipment is retired or otherwise disposed of, the net book value of the asset is removed from the Company’s balance sheet and the net gain or loss is included in the determination of operating income. Property, plant and equipment acquired as part of a business acquisition is valued at fair value.

Impairment of Long-Lived Assets

The Company evaluates the carrying value of its long-lived assets at least annually.  Impairment losses were recorded on long-lived assets used in operations when indicators of impairment were present and the undiscounted future cash flows estimated to be generated by those assets were less than the assets’ carrying amount.   If such assets were impaired, the impairment to be recognized was measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Assets to be disposed of were reported at the lower of the carrying value or fair value, less costs to sell.

Revenue Recognition

The Company performs medical testing of samples supplied by medical and corporate customers.  Services are billed when the results are presented.  The company uses an outside billing agency to process the invoices.  The services are billed at the estimated reimbursement rates published by the various payers.  A portion of the services are with billed governmental payers and subject to periodic review and retroactive adjustment. 

Retroactive adjustment due to a Medicare or Medicaid review are considered to be a change in the estimate and recorded in the period that the adjustment is communicated to the Company.  Adjustments are normal and recurring, and generally communicated within reasonable time or within the billing period.  Adjustments are considered immaterial.

 

Advertising Costs

 

The costs of advertising are expensed as incurred. Advertising expenses are included in the Company’s operating expenses. Advertising costs for the year ended December 31, 2010 was $458.

Income Taxes

A.                  For the year ended December 31, 2010 the Company had elected to be taxes as an S-Corporation.  As such, the taxable income is passed-through to the owners and taxed on their return.  Therefore no provision or benefit for income taxes is provided in these statements.  The Company follows the guidance provided by FIN 48, Accounting for Uncertainty in Income Taxes, for reporting uncertain tax provisions. 

Effect of Recent Accounting Pronouncements         

The Company reviews new accounting standards as issued. No new standards had any material effect on the financial statements.  Accounting pronouncements issued subsequent to the date of these financial statements were considered significant by management and evaluated for the potential effect on these financial statements. 

 

F-9

Management does not believe any subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to December 31, 2010 through the date these financial statements were issued.

3.       Notes Payable

The Company is party a vehicle loan.  At December 31, 2010 notes payable consisted of the following:

Principal maturities of notes payables for the next five years and thereafter are as follows:

4.       Related Party Transactions

 

The Company issued stock to organizing stockholders on a subscription receivable.  The subscription receivable is reported in the equity section as a contra-account to the common stock.  The subscription receivable for the stockholders at December 31, 2010 was $1,000.

 

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

 

5.       Commitments and Contingencies

 

From time to time the Company may be a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

A portion of the services are to billed governmental payers at published rates and subject to periodic review and retroactive adjustment.  Retroactive adjustment due to a Medicare or Medicaid review are considered to be a change in the estimate and recorded in the period that the adjustment is communicated to the Company. 

 

F-10

 

The Company leases office space in Hollywood, Florida under an annually renewable lease ending each February 2011.  The Company was also leasing medical office equipment under a short-term lease.   Rent expense for the office for year ended December 31, 2010 was $31,896.  Leasing costs for the equipment for the year ended December 31, 2010 was $2,422.

 

The minimum future lease payments on the office and equipment are as follows:

 

 

6.                   Subsequent Events

 

Subsequent to December 31, 2010, the stockholder elected to sell 81% of the stock to an unrelated corporation on an installment plan.  As of August 22, 2011 the stockholders have assigned 49% of the outstanding stock and hold those shares in escrow pending full payment of the installment note.  Upon payment of the note the 49% and the additional 32% of the stock will be transferred to the purchasers.

 

Management has evaluated subsequent events and is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing with the Securities and Exchange Commission (“SEC”) that would have a material impact on our financial statements.

 

F-11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical Billing Choices, Inc.

Financial Statements

December 31, 2010 and 2009

 

 

 

 

F-12

 

 

 

 

 

 

 

Table of Contents

 

            Report of Independent Registered Public Accounting Firm              2

 

Balance Sheets as of December 31, 2010 and 2009                           3

 

Statements of Operations and Changes in Member’s Equity

For the years ended December 31, 2010 and 2009                            4

 

Statements of Cash Flows for the years ended

December 31, 2010 and 2009                                                             5

 

Notes to the Financial statements                                                       6 – 11

 

 

 

 

F-13

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and
Shareholders of Medical Billing Choices, Inc.:

I have audited the accompanying balance sheets of Medical Billing Choices, Inc. as of December 31, 2010 and 2009 and the related statements of operations and changes in stockholders’ equity and cash flows for the years then ended.  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 audits.  

 

I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required at this time, to have, nor was I engaged to perform an audit of its internal control over financial reporting.  My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal controls over financial reporting.  Accordingly, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provided a reasonable basis for my opinion.

 

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Medical Billing Choices, Inc. as of December 31, 2010 and 2009and the results of its operations for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Peter Messineo, CPA

Peter Messineo, CPA

Clearwater, Florida

November 3, 2011

 

 

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F-18

MEDICAL BILLING CHOICES, INC
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2010 and 2009

1.  Description of Business

Medical Billing Choices, Inc. (“MBC” or the “Company”) was started in 1996 and organized as ARC Medical Billing Inc., (a North Carolina corporation) headquartered in Charlotte NC in 2002.  ARC Medical Billing Inc. was reorganized as Medical Billing Choices Inc., (a North Carolina corporation) dba ARC Medical Billing in May of 2009 and became a full service medical billing outsourcing firm. We specialize in complete accounts receivable outsourcing, from insurance billing to self-pay collections, for small to mid-level medical practices of all specialties. We service clients nationwide but major focus is in the southeastern US.  The Company operates as an S-Corporation for corporate tax purposes.

2.  Accounting Policies and Basis of Presentation

Basis of Presentation

The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States. 

Use of Estimates

The preparation of the Company's financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.

 

Financial Instruments

 

The carrying amounts of cash, receivables and current liabilities approximated fair value due to the short-term maturity of the instruments.  Debt obligations, when present, are carried at cost, which approximate fair value due to the prevailing market rate for similar instruments.

Fair Value Measurement

 

All financial and nonfinancial assets and liabilities were recognized or disclosed at fair value in the financial statements.  This value was evaluated on a recurring basis (at least annually).  Generally accepted accounting principles in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on a measurement date. The accounting principles also established a fair value hierarchy which required an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  Three levels of inputs were used to measure fair value.

·         Level 1: Quotes market prices in active markets for identical assets or liabilities.

·         Level 2: Observable market based inputs or unobservable inputs that were corroborated by market data.

·         Level 3: Unobservable inputs that were not corroborated by market data.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains its cash deposits in major financial institutions in the United States. At times deposits within a bank may exceed the amount of insurance provided on such deposits. Generally, these deposits are redeemed upon demand and, therefore, are considered by management to bear minimal risk.

 

F-19

Accounts Receivable

Accounts receivable represent amounts due from customers in the ordinary course of business from sales activities in each of the Company’s business segments.  The Company considers accounts more than 90 days old to be past due. The Company uses the allowance method for recognizing bad debts. When an account is deemed uncollectible, it is written off against the allowance. The Company generally does not require collateral for its accounts receivable. The Company considers all accounts receivable to be collectable and consequently has provided no allowance for doubtful accounts.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by applying the straight-line method to the estimated useful lives of the related assets. Useful lives range from 3 to 7 years for office equipment, furniture and fixtures. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. When property or equipment is retired or otherwise disposed of, the net book value of the asset is removed from the Company’s balance sheet and the net gain or loss is included in the determination of operating income. Property, plant and equipment acquired as part of a business acquisition is valued at fair value.

Impairment of Long-Lived Assets

The Company evaluates the carrying value of its long-lived assets at least annually.  Impairment losses were recorded on long-lived assets used in operations when indicators of impairment were present and the undiscounted future cash flows estimated to be generated by those assets were less than the assets’ carrying amount.   If such assets were impaired, the impairment to be recognized was measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Assets to be disposed of were reported at the lower of the carrying value or fair value, less costs to sell.

Revenue Recognition

The Company contracts with various medical providers to process the invoices for services and bill the various government and private third party payers or the patient for the services.  The Company receives payment for these services on a percentage of collections rate basis on short-term contracts.  The providers are billed when payment for the medical charges are collected. 

The Company also provides consulting services on billing and collecting processes to medical providers on fee for services basis.  These services are billed as services are providing according the contract.

 

Advertising Costs

 

The costs of advertising are expensed as incurred. Advertising expenses are included in the Company’s operating expenses.

Income Taxes

B.                  For the years ended December 31, 2010 and 2009, the Company had elected to be taxes as an S-Corporation.  As such, the taxable income is passed-through to the owners and taxed on their personal returns.  Therefore no provision or benefit for income taxes is provided in these statements.  The Company follows the guidance provided by FIN 48, Accounting for Uncertainty in Income Taxes, for reporting uncertain tax provisions. 

Effect of Recent Accounting Pronouncements         

The Company reviews new accounting standards as issued. No new standards had any material effect on the financial statements.  Accounting pronouncements issued subsequent to the date of these financial statements were considered significant by management and evaluated for the potential effect on these financial statements.  Management does not believe any subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to December 31, 2010 through the date these financial statements were issued.

 

F-20

3.  Notes Payable

The Company is party to vehicle loans.  At December 31, 2010 and 2009 long term debt consisted of the following:

Principal maturities of notes payables for the next five years and thereafter are as follows:

4.  Related Party Transactions

 

From time to time, certain employees were paid consulting fees for services outside their normal duties.  Total amounts paid to related parties for the years ended December 31, 2010 and 2009 were $25,200 and $21,000 respectively

 

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

 

F-21

 

5.  Commitments and Contingencies

 

From time to time the Company may be a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

 

The Company leases office space in Charlotte, North Carolina under a lease ending March 31, 2011.  The Company also leases a vehicle under a lease ending August 31, 2011.  Rent expense for the office for the years ended December 31, 2010 and 2009 was $29,804 and $25,153, respectively.

 

The minimum future lease payments on the office and vehicle are as follows:

 

 

6.  Subsequent Events

 

Subsequent to December 31, 2010, the shareholder entered into an agreement to sell 100% of the shares in the Company under an installment agreement.  The Company then entered in to a significant contract with a party related to the prospective buyers to process the billings for Trident Laboratories, Inc. 

 

Management has evaluated subsequent events and is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing with the Securities and Exchange Commission (“SEC”) that would have a material impact on our financial statements.

 

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Medical Billing Choices, Inc.

Financial Statements

June 30, 2011 and 2010

(unaudited)

 

 

 

 

 

 

 

F-23

 

 

 

 

 

 

 

Table of Contents

 

            Report of Independent Registered Public Accounting Firm              2

 

Balance Sheets as of June 30, 2011 and 2010 (unaudited)                            3

 

Statements of Operations and Changes in Member’s Equity

For the six months ended June 30, 2011 and 2010 (unaudited)                    4

 

Statements of Cash Flows for the six months ended

June 30, 2011 and 2010          (unaudited)                                                     5

 

Notes to the Financial Statements (unaudited)                                              6 – 11

 

 

 

 

F-24

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and
Shareholders of Medical Billing Choices, Inc..:

We have reviewed the accompanying balance sheet of Medical Billing Choices, Inc, as of June 30, 2011 and 2010 , and the related statements of income, stockholders’ equity and comprehensive income, and cash flows for the six-month periods ended June 30, 2011 and 2010 . These financial statements are the responsibility of the company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Peter Messineo, CPA

Peter Messineo, CPA

Clearwater, Florida

November 10, 2011

 

 

 

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MEDICAL BILLING CHOICES, INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Six Months Ended June 30, 2011 and 2010

7.       Description of Business

Medical Billing Choices, Inc. (“MBC” or the “Company”) was started in 1996 and organized as ARC Medical Billing Inc., (a North Carolina corporation) headquartered in Charlotte NC in 2002.  ARC Medical Billing Inc. was reorganized as Medical Billing Choices Inc., (a North Carolina corporation) dba ARC Medical Billing in May of 2009 and became a full service medical billing outsourcing firm. We specialize in complete accounts receivable outsourcing, from insurance billing to self-pay collections, for small to mid-level medical practices of all specialties. We service clients nationwide but major focus is in the southeastern US.  The Company operates as an S-Corporation for corporate tax purposes.

8.       Accounting Policies and Basis of Presentation

Basis of Presentation

The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States. In the opinion of management, the interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position as of June 30, 2011 and 2010, and the results of its operations and its cash flows for the six month periods ended June 30, 2011 and 2010, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2011 

Use of Estimates

The preparation of the Company's financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.

 

Financial Instruments

 

The carrying amounts of cash, receivables and current liabilities approximated fair value due to the short-term maturity of the instruments.  Debt obligations, when present, are carried at cost, which approximate fair value due to the prevailing market rate for similar instruments.

Fair Value Measurement

 

All financial and nonfinancial assets and liabilities were recognized or disclosed at fair value in the financial statements.  This value was evaluated on a recurring basis (at least annually).  Generally accepted accounting principles in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on a measurement date. The accounting principles also established a fair value hierarchy which required an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  Three levels of inputs were used to measure fair value.

·         Level 1: Quotes market prices in active markets for identical assets or liabilities.

·         Level 2: Observable market based inputs or unobservable inputs that were corroborated by market data.

·         Level 3: Unobservable inputs that were not corroborated by market data.

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Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains its cash deposits in major financial institutions in the United States. At times deposits within a bank may exceed the amount of insurance provided on such deposits. Generally, these deposits are redeemed upon demand and, therefore, are considered by management to bear minimal risk.

Accounts Receivable

Accounts receivable represent amounts due from customers in the ordinary course of business from sales activities in each of the Company’s business segments.  The Company considers accounts more than 90 days old to be past due. The Company uses the allowance method for recognizing bad debts. When an account is deemed uncollectible, it is written off against the allowance. The Company generally does not require collateral for its accounts receivable. The Company considers all accounts receivable to be collectable and consequently has provided no allowance for doubtful accounts.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by applying the straight-line method to the estimated useful lives of the related assets. Useful lives range from 3 to 7 years for office equipment, furniture and fixtures. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. When property or equipment is retired or otherwise disposed of, the net book value of the asset is removed from the Company’s balance sheet and the net gain or loss is included in the determination of operating income. Property, plant and equipment acquired as part of a business acquisition is valued at fair value.

Impairment of Long-Lived Assets

The Company evaluates the carrying value of its long-lived assets at least annually.  Impairment losses were recorded on long-lived assets used in operations when indicators of impairment were present and the undiscounted future cash flows estimated to be generated by those assets were less than the assets’ carrying amount.   If such assets were impaired, the impairment to be recognized was measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Assets to be disposed of were reported at the lower of the carrying value or fair value, less costs to sell.

Revenue Recognition

The Company contracts with various medical providers to process the invoices for services and bill the various government and private third party payers or the patient for the services.  The Company receives payment for these services on a percentage of collections rate basis on short-term contracts.  The providers are billed when payment for the medical charges are collected. 

The Company also provides consulting services on billing and collecting processes to medical providers on fee for services basis.  These services are billed as services are providing according the contract.

 

Advertising Costs

 

The costs of advertising are expensed as incurred. Advertising expenses are included in the Company’s operating expenses.

Income Taxes

C.                  For the years ended June 30, 2011 and 2010, the Company had elected to be taxes as an S-Corporation.  As such, the taxable income is passed-through to the owners and taxed on their personal returns.  Therefore no provision or benefit for income taxes is provided in these statements.  The Company follows the guidance provided by FIN 48, Accounting for Uncertainty in Income Taxes, for reporting uncertain tax provisions. 

 

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Effect of Recent Accounting Pronouncements         

The Company reviews new accounting standards as issued. No new standards had any material effect on the financial statements.  Accounting pronouncements issued subsequent to the date of these financial statements were considered significant by management and evaluated for the potential effect on these financial statements.  Management does not believe any subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to June 30, 2011 through the date these financial statements were issued.

 

9.       Notes Payable

The Company is party to vehicle loans.  At June 30, 2011 and 2010 long term debt consisted of the following:

Principal maturities of notes payables for the next five years and thereafter are as follows:

10.    Related Party Transactions

 

From time to time, certain employees were paid consulting fees for services outside their normal duties.  Total amounts paid to related parties for the six months ended June 30, 2011 and 2010 were $14,000 and $9,200 respectively

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The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

 

11.    Commitments and Contingencies

 

From time to time the Company may be a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

 

The Company leases office space in Charlotte, North Carolina under a lease ending March 31, 2011.  The Company also leases a vehicle under a lease ending August 31, 2011.  Rent expense for the office for the years ended June 30, 2011 and 2010 was $14,009 and $10,000, respectively.

 

The minimum future lease payments on the office and vehicle are as follows:

 

 

12.    Subsequent Events

 

Subsequent to June 30, 2011, the shareholder entered into an agreement to sell 100% of the shares in the Company under an installment agreement.  The Company then entered in to a significant contract with a party related to the prospective buyers to process the billings for Trident Laboratories, Inc. 

 

Management has evaluated subsequent events and is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing with the Securities and Exchange Commission (“SEC”) that would have a material impact on our financial statements.

 

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Trident Laboratories, Inc.

Financial Statements

June 30, 2011

(Unaudited)

 

 

 

 

 

 

 

 

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Table of Contents

 

            Report of Independent Registered Public Accounting Firm                                      2

 

Balance Sheet as of June 30, 2011 and 2010 (unaudited)                                                      3

 

Statements of Operations and Changes in Stockholders’ Equity

For the six months ended June 30, 2011and 2010 (unaudited)                                             4

 

Statements of Cash Flows for the six months ended

June 30, 2011 and 2010 (unaudited)                                                                          5

 

Notes to the Financial Statements (unaudited)                                                                      6 – 11

 

 

 

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and
Shareholders of Trident Laboratories, Inc..:

We have reviewed the accompanying balance sheet of Trident Laboratories, Inc.  as of June 30, 2011 and 2010, and the related statements of operation, stockholders’ equity and cash flows for the six-month  periods ended June 30, 2011 and 2010 . These financial statements are the responsibility of the company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

/s/ Peter Messineo, CPA

 

Peter Messineo, CPA

Clearwater, Florida

November 10, 2011

 

 

 

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TRIDENT LABORATORIES, INC
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2011 and 2010

13.    Description of Business

Trident Laboratories, Inc., (“Trident” or the “Company”) was organized under the laws of Florida in December 2009, with an effective date of January 1, 2010.  The Company started operations in May 2010 as a medical testing laboratory.  The Company performs testing on a contract basis for medical and business entities through-out Florida.  The Company operates as an S-Corporation for corporate tax purposes.

14.    Accounting Policies  and Basis of Presentation

Basis of Presentation

The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States. 

Use of Estimates

The preparation of the Company's financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.

 

Financial Instruments

 

The carrying amounts of cash, receivables and current liabilities approximated fair value due to the short-term maturity of the instruments.  Debt obligations, when present, are carried at cost, which approximate fair value due to the prevailing market rate for similar instruments.

Fair Value Measurement

 

All financial and nonfinancial assets and liabilities were recognized or disclosed at fair value in the financial statements.  This value was evaluated on a recurring basis (at least annually).  Generally accepted accounting principles in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on a measurement date. The accounting principles also established a fair value hierarchy which required an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  Three levels of inputs were used to measure fair value.

·         Level 1: Quotes market prices in active markets for identical assets or liabilities.

·         Level 2: Observable market based inputs or unobservable inputs that were corroborated by market data.

·         Level 3: Unobservable inputs that were not corroborated by market data.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains its cash deposits in major financial institutions in the United States. At times deposits within a bank may exceed the amount of insurance provided on such deposits. Generally, these deposits are redeemed upon demand and, therefore, are considered by management to bear minimal risk.

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Accounts Receivable

Accounts receivable represent amounts due from customers in the ordinary course of business from sales activities in each of the Company’s market segments.  The Company considers accounts more than 90 days old to be past due. The Company uses the allowance method for recognizing bad debts. When an account is deemed uncollectible, it is written off against the allowance. The Company generally does not require collateral for its accounts receivable. The Company considers all accounts receivable to be collectable and consequently has provided no allowance for doubtful accounts.

A portion of the receivables are with governmental payers and subject to periodic review and adjustment. 

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by applying the straight-line method to the estimated useful lives of the related assets. Useful lives range from 3 to 7 years for office equipment medical equipment, furniture and fixtures. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. When property or equipment is retired or otherwise disposed of, the net book value of the asset is removed from the Company’s balance sheet and the net gain or loss is included in the determination of operating income. Property, plant and equipment acquired as part of a business acquisition is valued at fair value.

Impairment of Long-Lived Assets

The Company evaluates the carrying value of its long-lived assets at least annually.  Impairment losses were recorded on long-lived assets used in operations when indicators of impairment were present and the undiscounted future cash flows estimated to be generated by those assets were less than the assets’ carrying amount.   If such assets were impaired, the impairment to be recognized was measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Assets to be disposed of were reported at the lower of the carrying value or fair value, less costs to sell.

Revenue Recognition

The Company performs medical testing of samples supplied by medical and corporate customers.  Services are billed when the results are presented.  The company uses an outside billing agency to process the invoices.  The services are billed at the estimated reimbursement rates published by the various payers.  A portion of the services are with billed governmental payers and subject to periodic review and retroactive adjustment. 

Retroactive adjustment due to a Medicare or Medicaid review are considered to be a change in the estimate and recorded in the period that the adjustment is communicated to the Company.  Adjustments are normal and recurring, and generally communicated within reasonable time or within the billing period.  Adjustments are considered immaterial.

 

Advertising Costs

 

The costs of advertising are expensed as incurred. Advertising expenses are included in the Company’s operating expenses. Advertising costs for the six months ended June 30, 2011and 2010 was $4,211 and $0, respectively.

Income Taxes

D.                  For the year ended December 31, 2010 the Company had elected to be taxes as an S-Corporation.  As such, the taxable income is passed-through to the owners and taxed on their return.  Therefore no provision or benefit for income taxes is provided in these statements.  The Company follows the guidance provided by FIN 48, Accounting for Uncertainty in Income Taxes, for reporting uncertain tax provisions. 

Effect of Recent Accounting Pronouncements         

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The Company reviews new accounting standards as issued. No new standards had any material effect on the financial statements.  Accounting pronouncements issued subsequent to the date of these financial statements were considered significant by management and evaluated for the potential effect on these financial statements.  Management does not believe any subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to June 30, 2011 through the date these financial statements were issued.

15.    Notes Payable

The Company is party a vehicle loan.  At June 30, 2011 notes payable consisted of the following:

Principal maturities of notes payables for the next five years and thereafter are as follows:

16.    Related Party Transactions

 

The Company issued stock to organizing stockholders on a subscription receivable.  The subscription receivable is reported in the equity section as a contra-account to the common stock.  The subscription receivable for the stockholders at June 30, 2011and 2010 was $1,000.

 

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

 

17.    Commitments and Contingencies

 

From time to time the Company may be a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

 

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A portion of the services are to billed governmental payers at published rates and subject to periodic review and retroactive adjustment.  Retroactive adjustment due to a Medicare or Medicaid review are considered to be a change in the estimate and recorded in the period that the adjustment is communicated to the Company. 

 

The Company leases office space in Hollywood, Florida under an annually renewable lease ending each February 2011.  The Company was also leasing medical office equipment under a short-term lease.   Rent expense for the office for six months ended June 30, 2011and 2010 was $15,026 and $5,247, respectively.  Leasing costs for the equipment for the six months ended June 30, 2011 was $3,318 and $331.70, respectively.

 

The minimum future lease payments on the office and equipment are as follows:

 

 

18.    Subsequent Events

 

Subsequent to June 30, 2011, the stockholder elected to sell 81% of the stock to an unrelated corporation on an installment plan.  As of August 22, 2011 the stockholders have assigned 49% of the outstanding stock and hold those shares in escrow pending full payment of the installment note.  Upon payment of the note the 49% and the additional 32% of the stock will be transferred to the purchasers.

 

Management has evaluated subsequent events and is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing with the Securities and Exchange Commission (“SEC”) that would have a material impact on our financial statements.

 

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