Attached files
| file | filename |
|---|---|
| EX-32.1 - EXHIBIT 32.1 - SPLASH BEVERAGE GROUP, INC. | ex32.htm |
| EX-32.2 - EXHIBIT 32.2 - SPLASH BEVERAGE GROUP, INC. | ex32_2.htm |
| EX-31.2 - EXHIBIT 31.2 - SPLASH BEVERAGE GROUP, INC. | ex31_2.htm |
| EX-31.1 - EXHIBIT 31.1 - SPLASH BEVERAGE GROUP, INC. | ex31_1.htm |
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2014
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _________
Commission File No. 333-182639
CANFIELD MEDICAL SUPPLY, INC.
(Name of registrant in its charter)
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Colorado
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34-1720075
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(State or other jurisdiction of incorporation or formation)
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(I.R.S. employer identification number)
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4120 Boardman Canfield Road, Canfield, Ohio 44406
(Address of principal executive offices)
(330) 533-1914
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
¨ Yes x No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ¨
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Accelerated filer ¨
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Non-accelerated filer ¨
(Do not check if a smaller reporting company)
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨ Yes x No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. On May 15, 2014, there were 10,010,200 shares of Common Stock issued and outstanding.
CANFIELD MEDICAL SUPPLY, INC.
FORM 10-Q
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
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Page
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Item 1.
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Financial Statements
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3
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Condensed Balance Sheets (unaudited)
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3
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Condensed Statements of Operations (unaudited)
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4
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Condensed Statements of Cash Flows (unaudited)
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5
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Notes to Unaudited Condensed Financial Statements
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6-8
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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9
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
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10
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Item 4.
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Controls and Procedures
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10
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PART II. OTHER INFORMATION
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11
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Item 1.
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Legal Proceedings
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11
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Item 1A.
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Risk Factors
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11
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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11
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Item 3.
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Defaults Upon Senior Securities
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11
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Item 4.
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Mine Safety Disclosures
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11
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Item 5.
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Other Information
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11
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Item 6.
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Exhibits
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11
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Signatures
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12
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- 2 -
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
CANFIELD MEDICAL SUPPLY, INC.
CONDENSED BALANCE SHEETS
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March 31,
2014
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December 31,
2013
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||||||
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(Unaudited)
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|||||||
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ASSETS
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|||||||
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Current Assets
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|||||||
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Cash
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$
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28,281
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$
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669
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Accounts receivable
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28,409
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30,921
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Inventory
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16,879
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12,542
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Total Current Assets
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73,569
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44,132
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Equipment, net of accumulated depreciation of $3,108 and $1,912
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22,661
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23,857
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Total Assets
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$
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96,230
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$
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67,989
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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|||||||
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Current Liabilities
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|||||||
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Accounts payable
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$
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35,719
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$
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43,043
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|||
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Related party notes payable
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8,500
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8,500
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|||||
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Line of credit
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81,750
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82,500
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Current portion of long-term debt
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3,618
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3,537
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|||||
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Total Current Liabilities
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129,587
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137,580
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|||||
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Long-term debt
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16,794
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17,784
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|||||
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Total Liabilities
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146,381
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155,364
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|||||
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Stockholders’ Deficit
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|||||||
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Preferred stock, no par value; 5,000,000 shares authorized;
no shares issued and outstanding
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-
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-
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|||||
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Common stock, no par value; 100,000,000 shares authorized;
9,842,000 (2014) and 9,750,800 (2013) shares issued and
outstanding
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72,215
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49,415
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Accumulated deficit
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(122,366
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) |
(136,790
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)
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Total Stockholders’ Deficit
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(50,151
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) |
(87,375
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)
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Total Liabilities and Stockholders’ Deficit
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$
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96,230
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$
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67,989
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The accompanying notes are an integral part of these unaudited financial statements.
- 3 -
CANFIELD MEDICAL SUPPLY, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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Three months
ended
March 31,
2014
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Three months
ended
December 31,
2013
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Sales (net of returns)
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$ | 156,639 | $ | 73,354 | ||||
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Cost of goods sold
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72,027 | 29,025 | ||||||
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Gross profit
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84,612 | 44,329 | ||||||
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Operating expenses:
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General and administrative
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68,050 | 49,915 | ||||||
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Depreciation
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1,196 | - | ||||||
| 69,246 | 49,915 | |||||||
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Income (loss) from operations
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15,366 | (5,586 | ) | |||||
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Other income (expense):
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||||||||
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Interest expense
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(942 | ) | (581 | ) | ||||
| (942 | ) | (581 | ) | |||||
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Income (loss) before provision for income taxes
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14,424 | (6,167 | ) | |||||
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Provision for income tax
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- | - | ||||||
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Net income (loss)
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$ | 14,424 | $ | (6,167 | ) | |||
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Net income (loss) per share (basic and fully diluted)
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$ | 0.00 | $ | (0.00 | )* | |||
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Weighted average number of common shares outstanding (basic and fully diluted)
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9,758,033 | 9,500,000 | ||||||
* denotes income (loss) of less than $0.01 per share.
The accompanying notes are an integral part of these unaudited financial statements.
- 4 -
CANFIELD MEDICAL SUPPLY, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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March 31,
2014
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March 31,
2013
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|||||||
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Cash Flows From Operating Activities:
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Net income (loss)
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$
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14,424
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$
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(6,167
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)
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Adjustments to reconcile net loss to net cash provided by (used for)
operating activities:
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||||||||
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Depreciation
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1,196
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-
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||||||
| Movement in operating assets and liabilities: | ||||||||
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Accounts receivable
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2,512
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(5,209
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)
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Inventory
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(4,337
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)
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-
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Accounts payable
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(7,324
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)
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9,594
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Net cash provided by (used for) operating activities
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6,471
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(1,782
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)
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Cash Flows From Investing Activities:
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Net cash provided by (used for) investing activities
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-
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-
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Cash Flows From Financing Activities:
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Payments on line of credit
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(750
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)
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(500
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)
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Payments on long-term debt
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(909
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)
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-
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Proceeds from sales of common stock
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22,800
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-
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Net cash provided by (used for) financing activities
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21,141
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(500
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)
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Net Increase (Decrease) in Cash
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27,612
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(2,282
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)
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Cash At The Beginning Of The Period
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669
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7,352
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Cash At The End Of The Period
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$
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28,281
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$
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5,070
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Schedule Of Non-Cash Investing And Financing Activities
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$
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-
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$
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-
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||||
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Supplemental Disclosure
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||||||||
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Cash paid for interest
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$
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942
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$
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534
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Cash paid for income taxes
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$
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-
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$
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-
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The accompanying notes are an integral part of these unaudited financial statements.
- 5 -
CANFIELD MEDICAL SUPPLY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The interim financial statements of Canfield Medical Supply, Inc. (“we”, “us”, “our” or the “Company”) are unaudited and contain all adjustments (consisting primarily of normal recurring accruals) necessary for a fair statement of the results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for a full year or for previously reported periods. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission (“SEC”) on April 15, 2014. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
The financial statements of the Company have been prepared pursuant to the rules and regulations of the SEC for Quarterly Reports on Form 10-Q and in accordance with US GAAP. Accordingly, these financial statements do not include all of the information and footnotes required by US GAAP for annual financial statements.
The financial statements are unaudited, but, in management's opinion, include all adjustments (which, unless otherwise noted, include only normal recurring adjustments) necessary for a fair presentation of such financial statements. The results of operations for the three months ended March 31, 2014 and 2013 are not necessarily indicative of the entire fiscal year or for any other period.
NOTE 2. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Canfield Medical Supply, Inc. (the "Company"), was incorporated in the State of Ohio on September 3, 1992 and changed domicile to Colorado on April 18, 2012. The Company sells medical supplies to clinics, hospitals and other end users.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.
Accounts receivable
The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary.
- 6 -
CANFIELD MEDICAL SUPPLY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Property and equipment
Property and equipment are recorded at cost and depreciated under accelerated or straight line methods over each item's estimated useful life.
Revenue recognition
Revenue is recognized on an accrual basis as earned under contract terms. Specifically, revenue from product sales is recognized subsequent to a customer ordering a product at an agreed upon price, delivery has occurred, and collectability is reasonably assured.
Income tax
The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. At March 31, 2014, the Company had net operating loss carryforwards to offset taxable income. Therefore, the provision for income taxes for the quarter ended March 31, 2014 is $0.
Net income (loss) per share
The Company computes net loss per share in accordance with ASC Topic 260, “Earnings per Share,” Under the provisions of the standard, basic and diluted net loss per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding during the period. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.
Financial instruments
The carrying value of the Company's financial instruments, as reported in the accompanying balance sheets, approximates fair value.
Long-lived assets
In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-1ived asset exceeds its fair value.
Recent accounting pronouncements
The Company does not believe that any recently issued but not yet effective accounting pronouncements will have a material impact on its financial position, results of operations or cash flows.
- 7 -
CANFIELD MEDICAL SUPPLY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3. COMMON STOCK
During the three months ended March 31, 2014, the Company sold 91,200 shares of its common stock at $0.25 per share, for total cash proceeds of $22,800. Subsequent to March 31, 2014, the Company sold 168,200 shares of its common stock at $0.25 per share for total proceeds of $42,050.
NOTE 4. SUBSEQUENT EVENTS
On April 30, 2014, the Company entered into an operating lease agreement for a vehicle. The lease is for 36 months with monthly payments of $400.
Subsequent to March 31, 2014, the Company sold 168,200 shares of its common stock at $0.25 per share for total proceeds of $42,050.
The Company has evaluated subsequent events through the date these financial statements were available to be issued of May 19, 2014 and determined that there are no other reportable subsequent events.
- 8 -
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the Financial Statements (unaudited) and Notes to Financial Statements (unaudited) filed herein.
BUSINESS OVERVIEW
We primarily provide services to the rehabilitation market, which consists primarily of home medical equipment and supplies. More than 50% of our revenues are derived from the sale and rental of durable home medical equipment including such items as wheeled walkers, manual and power wheelchairs, hospital beds, ramps, bedside commodes, and miscellaneous bathroom equipment. The balance of our revenue is from the sale of various home medical supplies including diabetic testing, incontinence, ostomy, wound care, and catheter care. Our emphasis is on helping patients with mobility related limitations, but our overall business is aimed at helping patients remain in their homes instead of having to go to hospitals, rehab centers and other similar facilities. Most of the equipment and supplies that we sell are prescribed by a physician as part of an overall care plan.
RESULTS OF OPERATION FOR THE THREE MONTHS ENDED MARCH 31, 2013 AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2012.
Revenues for the three months ended March 31, 2014 were $156,639 as compared to the revenues of $73,354 for the three months ended March 31, 2013. The 113% increase in sales is primarily due to winning the Medicare competitive bidding during the summer of 2013.
Cost of goods sold for the three months ended March 31, 2014 were $72,027 as compared to cost of goods sold for the three months ended March 31, 2013 of $29,025. The 148% increase in the latest three month period was due to the increase in the sales volume, combined with the fact that since July 1, 2013, Medicare has reduced the amount it is paying the Company for its products. The Company has also recently been forced to carry more inventory of certain products in order to accommodate the patient demand.
The only significant operating expenses during these periods consisted of general and administrative expenses which were $68,050 in the three months ended March 31, 2014 as compared to $49,915 for the three months ended March 31, 2013. The increase was due to a significant increase in hours worked by six hourly employees, the addition of two more part-time employees and the increase in the compliance costs associated with becoming a public company. Such costs include legal fees, accounting and audit fees, transfer agent expenses and printing.
The net income for the three months ended March 31, 2014 was $14,424 as compared to a net loss of $6,167 for the three months ended March 31, 2013. The primary reason for the $20,591 improvement in profitability was the 113% increase in sales.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2014, we had negative working capital of ($56,018) compared to negative working capital of ($93,448) as of December 31, 2013.
Net cash provided by operating activities during the three months ended March 31, 2014 was $6,471 as compared to net cash used for operating activities in the three months ended March 31, 2013 of $1,782. The primary reason for the improvement was the $14,424 in net income during the most recent three month period compared to a loss of $6,167 in the comparable period in 2013.
- 9 -
Net cash provided by financing activities during the three months ended March 31, 2014 was $21,141 as compared to $500 used in financing activities in the three months ended March 31, 2013. The Company sold shares of its common stock during the three months ended March 31, 2014 to raise $22,800 to help pay for the costs associated with being a public company.
CONTRACTUAL OBLIGATIONS
None.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures.
Our Chief Executive Officer and Principal Financial Officer have evaluated the effectiveness of the design and operations of our disclosure controls and procedures as of the end of the period covered by this quarterly report, and have concluded that our disclosure controls and procedures are adequate.
(b) Changes in Internal Control over Financial Reporting.
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
- 10 -
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended March 31, 2014, the Company sold 91,200 shares of its common stock at $0.25 per share, for total cash proceeds of $22,800.
Item 3. Defaults Upon Senior Securities.
We had no senior securities issued and outstanding the during the three months ended March 31, 2014 and 2013.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits.
(a) Exhibits required by Item 601 of Regulation S-K.
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Exhibit
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Description
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|
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31.1
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Certification of CEO and Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically
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31.2
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Certification of CFO and Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically
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32.1
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Certification of CEO and Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically
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32.2
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Certification of CFO and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically
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101
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XBRL Exhibits
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- 11 -
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 thereunto duly authorized.
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CANFIELD MEDICAL SUPPLY, INC.
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||
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Date: May 20, 2014
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By:
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/s/ Michael J. West
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Michael J. West, President and CEO
(Principal Executive Officer)
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||
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Date: May 20, 2014
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By:
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/s/ Stephen H. West
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Stephen H. West, CFO
(Principal Financial Officer and Principal Accounting Officer)
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- 12 -