SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
(Amendment 1)
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 28, 2003
Commission File No. 000-31727
TRANSFORM PACK INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1886254
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
12230 Forest Hill Boulevard
Suite 157
Wellington, Florida 33414
(Address of principal executive offices)
(561) 227-1597
(Issuer's telephone number)
929 Cedar Cove Road, Wellington, Florida 33414
(Former name or former address, if changed since last report.)
Transform Pack International, Inc., a Minnesota corporation, is filing this
amendment to its Form 8-K dated May 28, 2003 in order to provide Item 7. (a)
Financial Statements of Business Acquired
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
The audited financial statements of Quantum HIPAA Consulting Group,
Inc. for the fiscal years ended October 31, 2002 and 2001
The unaudited financial statements of Quantum HIPAA Consulting
Group, Inc. for the six months ended April 30, 2003 and 2002, and for
the period July 24, 2001 (inception) to April 30, 2003.
(b) Pro Forma Financial Information.
The pro forma balance sheets at April 30, 2003 and October 31, 2002.
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.
Transform Pack International, Inc.
Date: October 2, 2003 /s/ Noel J. Guillama, President
2
TABLE OF CONTENTS
Independent Auditor's Report 4
Financial Statements:
Balance Sheets as of October 31, 2002 and 2001
and unaudited as of April 30, 2003 5
Statements of Operations for the year ended October 31, 2002, for the period
July 24, 2001 (inception) to October 31, 2001, unaudited for the six
months ended April 30, 2003 and 2002, and unaudited for the period July
24, 2001 (inception) to April 30, 2003. 6
Statements of Changes in Deficiency in Assets for the year ended October 31,
2002, the for the period July 24, 2001 to October 31, 2001, and unaudited
for the six months ended April 30, 2003 7
Statements of Cash Flow for the year ended October 31, 2002, for the period
July 24, 2001 (inception) to October 31, 2001, unaudited for the six
months ended April 30, 2003 and 2002, and unaudited for the period July
24, 2001 (inception) to October 31, 2003 8
Notes to Financial Statements 9
3
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Quantum HIPAA Consulting Group, Inc.
We have audited the accompanying balance sheets of Quantum HIPAA Consulting
Group, Inc. as of October 31, 2002 and 2001, and the related statements of
operations, changes in deficiency in assets and cash flows for the year ended
October 31, 2002 and for the period July 24, 2001 (inception) to October 31,
2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
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. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Quantum HIPAA Consulting Group,
Inc. as of October 31, 2002 and 2001, and the results of its operations and its
cash flows for the year ended October 31, 2002 and for the period July 24, 2001
to October 31, 2001 in conformity with accounting principles generally accepted
in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses and had negative
cash flows from operations which raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in the Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Daszkal Bolton LLP
Boca Raton, Florida
September 9, 2003
4
Quantum HIPAA Consulting Group, Inc.
( A Development Stage Enterprise)
Balance Sheet
October 31, October 31, April 30,
2002 2001 2003
----------- ----------- -----------
(unaudited)
ASSETS
Current assets:
Cash $ - $ 555 $ -
----------- ----------- -----------
Total current assets - 555 -
Property and equipment, net of
accumulated depreciation of
$1,657, $414 and $2,279 2,072 3,315 1,450
Other assets 1,820 1,820
----------- ----------- -----------
Total assets $ 3,892 $ 5,690 $ 1,450
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued
liabilities $ 18,788 $ 25,006 $ 71,245
Loan payable - shareholder 179,080 88,260 183,612
----------- ----------- -----------
Total current liabilities 197,868 113,266 254,857
Commitments and contingencies
Deficiency in assets (193,976) (107,576) (253,407)
----------- ----------- -----------
Total liabilities and deficiency in
assets $ 3,892 $ 5,690 $ 1,450
=========== =========== ===========
See accompanying notes to financial statements.
5
Quantum HIPAA Consulting Group, Inc.
(A Development Stage Enterprise)
Statement of Operations
For the period
For the year from July 24, 2001 For the six month ended July 24, 2001
ended (inception) to ------------------------------ (inception) to
October 31, 2002 October 31, 2001 April 30, 2003 April 30, 2002 April 20, 2003
---------------- ------------------ -------------- -------------- --------------
(unaudited) (unaudited) (unaudited)
Expenses Representing
Net Loss $ (86,400) $ (127,576) $ (59,431) $ (48,134) $ (273,407)
================ ================== ============== ============== ==============
Basic and diluted
loss per common share $ (0.004) $ (0.006) $ (0.003) $ (0.002) $ (0.014)
================ ================== ============== ============== ==============
Weighted average number
of common shares
outstanding 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
================ ================== ============== ============== ==============
See accompanying notes to financial statements.
6
Qunatum HIPAA Consulting Group, Inc.
(A Development Stage Enterprise)
Statement of Changes in Deficiency in Assets
Common Stock Accumulated
par value $.001 per share Deficit
90,000,000 authorized Additional During
------------------------- Paid-in Development Total
# of Shares Amount Capital Stage Deficiency
------------ ------------ ---------- ----------- ----------
Balance 7/24/01
(inception) - $ - $ - $ - $ -
Sale of common stock 20,000,000 $ 20,000 $ - 20,000
Net Loss $ (127,576) (127,576)
------------ ------------ ---------- ----------- ----------
Balance 10/31/01 20,000,000 $ 20,000 $ - $ (127,576) $(107,576)
Net Loss $ (86,400) $ (86,400)
------------ ------------ ---------- ----------- ----------
Balance at 10/31/02 20,000,000 $ 20,000 $ - $ (213,976) $(193,976)
Unaudited:
Net Loss $ (59,431) (59,431)
------------ ------------ ---------- ----------- ----------
Balance at 4/30/03 20,000,000 20,000 $ - $ (273,407) $(253,407)
============ ============ ========== =========== ==========
See accompanying notes to financial statements.
7
Quantum HIPAA Consulting Group, Inc.
(A Development Stage Enterprise)
Statements of Cash Flow
For the period
from July 24, 2001 Six months Six months July 24, 2001
Year ended (inception to ended ended (inception) to
October 31, October 31, April 30 April 30 April 30
2002 2001 2003 2002 2003
----------- ------------------ ---------- ---------- --------------
(unaudited) (unaudited) (unaudited)
OPERATING ACTIVITIES
Net (loss) $ (86,400) $ (127,576) $ (59,431) $ (48,134) $ (273,407)
----------- ------------------ ---------- ---------- --------------
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation and
amortization 1,243 414 622 622 2,279
Changes in operating
assets and liabilities:
(Increase) decrease in
other assets (1,820) 1,820
Increase (decrease) in
accounts payable
and accrued liabilities (6,218) 25,007 52,457 (16,528) 71,246
----------- ------------------ ---------- ---------- --------------
Total adjustments (4,975) 23,601 54,899 (15,906) 73,525
----------- ------------------ ---------- ---------- --------------
Net cash used in
operating activities (91,375) (103,975) (4,532) (64,040) (199,882)
INVESTING ACTIVITIES
Purchase of property and
equipment (3,730) (3,730)
Investment in related
companies
----------- ------------------ ---------- ---------- --------------
Net cash (used in)
investing activities - (3,730) - - (3,730)
----------- ------------------ ---------- ---------- --------------
FINANCING ACTIVITIES
Proceeds from loan
payable- shareholder 90,820 88,260 4,532 63,485 183,612
Proceeds from issuance of
common stock 20,000 20,000
----------- ------------------ ---------- ---------- --------------
Net cash provided by
financing activities 90,820 108,260 4,532 63,485 203,612
----------- ------------------ ---------- ---------- --------------
Net increase (decrease) in
cash (555) 555 0 (555) (0)
Cash at beginning of period 555 - - 555 -
----------- ------------------ ---------- ---------- --------------
Cash at end of period $ (0) $ 555 $ 0 $ (0) $ (0)
=========== ================== ========== ========== ==============
Supplemental disclosures
of cash flow information:
Cash paid during the
period for interest $ - $ - $ - $ - $ -
See accompanying notes to financial statements.
8
QUANTUM HIPAA CONSULTING GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1: DESCRIPTION OF COMPANY
Quantum HIPAA Consulting Group, Inc. was incorporated on July 24, 2001. The
Company is a development stage enterprise which was formed to provide medical
practice and HIPAA compliance consulting services to the health care industry.
The accompanying financial statements reflect ongoing losses, negative cash
flows from operating activities, negative working capital and shareholders'
deficit.
The Company has no revenues to date. Since its inception, the Company has been
dependent upon the receipt of capital investment to fund its continuing
activities. In addition to the normal risks associated with a new business
venture, there can be no assurance that the Company's business plan will be
successfully executed. The Company's ability to execute its business model will
depend on its ability to obtain additional financing and achieve a profitable
level of operations. There can be no assurance that sufficient financing will be
obtained. Nor can any assurance be made that the Company will generate
substantial revenues or that the business operations will prove to be
profitable. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents
The Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents. For the six months
ended July 31, 2003 and 2002, there were no cash equivalents.
Property and Equipment
Furniture and equipment are stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the assets, which range
from three to five years.
Research and Development Costs
Research and development costs are charged to expense when incurred.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates and the differences could be material.
9
QUANTUM HIPAA CONSULTING GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
The Company has not recognized any benefit of start up cost or net operating
loss carry forwards, totaling approximately $255,000, in the accompanying
financial statements in accordance with the provisions of SFAS No. 109, as the
realization of this deferred tax benefit is not likely. A 100% valuation
allowance has been recognized to offset the entire effect of the Company's net
deferred tax asset. The net operating losses will expire in 2021 and 2022.
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards (" SFAS ') No. 143 which requires entities to
record the fair value of a liability for an asset retirement obligation in the
period in which it is incurred and a corresponding increase in the carrying
amount of the related long-lived asset. Subsequently, the asset retirement cost
should be allocated to expense using a systematic and rational method over its
useful life. SFAS No. 143 is effective for fiscal years beginning after June 15,
2002. Adoption of SFAS No. 143 did not have a material impact on the Company's
financial statements.
In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. This statement addresses accounting and reporting
for costs associated with exit or disposal activities and nullifies emerging
issues Task Force Issue No. 94-3. The statement is effective for exit or
disposal costs initiated after December 31, 2002, with early application
encouraged. The Company adopted SFAS No. 146 effective January 1, 2003, which
did not have a material impact on the Company's financial statements.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of FASB Statement No. 123.
This statement provides alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee
compensation. Adoption of SFAS No. 148 did not have a material impact on the
Company's financial statements.
10
QUANTUM HIPAA CONSULTING GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In May 2003, the FASB issued SFAS No. 150, "Accounting For Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
changes the accounting for certain financial instruments with characteristics of
both liabilities and equity that, under previous pronouncements, issuers could
account for as equity. The new accounting guidance contained in SFAS No. 150
requires that those instruments be classified as liabilities in the balance
sheet. SFAS No. 150 affects the issuer's accounting for three types of
freestanding financial instruments. One type is mandatory redeemable shares,
which the issuing company is obligated to buy back in exchange for cash or other
assets. A second type includes put options and forward purchase contracts, which
involve instruments that do or may require the issuer to buy back some of its
shares in exchange for cash or other assets. The third type of instruments that
are liabilities under this Statement is obligations that can be settled with
shares, the monetary value of which is fixed, tied solely or predominantly to a
variable such as a market index, or varies inversely with the value of the
issuers' shares. SFAS No. 150 does not apply to features embedded in a financial
instrument that is not a derivative in its entirety. Most of the provisions of
SFAS No. 150 are consistent with the existing definition of liabilities in FASB
Concepts Statement No. 6, "Elements of Financial Statements". The remaining
provisions of this Statement are consistent with the FASB's proposal to revise
that definition to encompass certain obligations that a reporting entity can or
must settle by issuing its own shares. This Statement shall be effective for
financial instruments entered into or modified after May 31, 2003 and otherwise
shall be effective at the beginning of the first interim period beginning after
June 15, 2003, except for mandatory redeemable financial instruments of a
non-public entity, as to which the effective date is for fiscal periods
beginning after December 15, 2003. The Company is currently assessing the impact
of SFAS No. 150, which is not expected to have a material impact on the
Company's financial statements.
Interim Financial Information for the Six Month Period Ended April 30, 2003 and
2002
The information presented as of April 30, 2003 and 2002 has not been audited. In
the opinion of management, the unaudited interim financial statements include
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Company's financial position as of April 30, 2003 and 2002,
and the results of its operations and its cash flows for the six months ended
April 30, 2003 and 2002, and the stockholders' deficit for the six months ended
April 30, 2003. The results of operations for the six months period ended April
30, 2003 are not necessarily indicative of the results for the full year.
NOTE 3: COMMITMENTS
As of October 31, 2002, the Company had commitments under operating leases for
premises, maturing December 31, 2002. Rent expense for the year ended October
31, 2002 was $18,447.
NOTE 4: RELATED PARTY TRANSACTIONS
From inception, July 24, 2001 through October 31, 2002, the sole shareholder has
advanced to the Company $179,080, which is non-interest bearing. (See Note 5)
11
QUANTUM HIPAA CONSULTING GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 5: SUBSEQUENT EVENTS
On November 1, 2002, the Company entered into an agreement with a shareholder to
purchase certain intellectual property integral to the Company's business. In
exchange, the company issued a three (3) year installment note for $179,080 with
an interest rate of eighteen percent (18%) per annum. The price of the sale was
equal to the cost the shareholder incurred to develop the property purchased.
The note is payable monthly starting January 2003. The Company is in technical
default as no payments have been made on the note. The Company is accruing
interest, at 18% per annum, monthly on the unpaid principal balance and has
classified the note as current as per the agreement.
On November 2, 2002 the Company signed a demand note, with an interest rate of
eighteen percent (18%) per annum, for the expenses a shareholder paid on behalf
of the Company subsequent to the sale of the intellectual property. The note
balance as of April 30, 2003 was $4,532.
Effective May 28, 2003, the Company consummated a merger pursuant to a merger
agreement with Transform Pack International, Inc. The Transform Pack
International, Inc. completed the merger by issuing 27,000,000 million shares of
Common Stock, in exchange for all the issued and outstanding shares of the
Company. For accounting purposes, the acquisition will be treated as a
recapitalization of the Company. The value of the net assets of the Company
after the acquisition was completed is the same as their historic book value.
In July 2003, the Company purchased a 20% interest Renaissance Health Systems,
Inc. for $5,000 from a shareholder of the Company. Renaissance Health Systems is
a development stage enterprise in the health care business. Additionally, the
Company purchased a 20% interest in Quantum Medical Technologies, Inc. for
$5,000 from a shareholder of the Company. Quantum Medical Technologies, Inc. is
a development stage enterprise in the medical technologies business.
12
Pro Forma Financial Information
Transform Pack International, Inc. and Quantum HIPAA Consulting Group, Inc.
Introduction to Pro Forma Balance Sheet
(Unaudited)
On May 28, 2003 a majority of the shareholders of Transform Pack International,
Inc. approved an Agreement and Plan of Exchange between Transform Pack
International, Inc. and Quantum HIPAA Consulting Group, Inc. whereby Transform
Pack International, Inc. issued 27,000,000 shares of its Common Stock in
exchange for all of the outstanding common stock of Quantum HIPAA Consulting
Group, Inc.
The following Pro Forma Combined Balance Sheets of the Registrant are reflective
of the year end change to October 31st, as filed on 8-K dated August 29, 2003
and have been prepared by management of the Registrant based upon the balance
sheets of the Registrant as of August 31, 2002 and February 28, 2003 and of
Quantum HIPAA Consulting Group, Inc. as of October 31, 2002 and April 30, 2003.
For accounting purposes, the acquisition has been treated as an acquisition of
Transform Pack International, Inc. by Quantum HIPAA Consulting Group, Inc. and
as a recapitalization of Quantum HIPAA Consulting Inc. The pro forma balance
sheet gives effect to the transaction as a public shell merger and the
assumptions and adjustments in the accompanying notes to pro forma combined
balance sheets. The pro forma combined balance sheet as of October 31, 2002
gives effect to the transaction as if it had occurred as of August 31, 2002. The
pro forma combined balance sheet as of April 30, 2003 gives effect to the
proposed transaction as if it had occurred as of February 28, 2003.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The pro forma combined
balance sheets do not purport to represent what the combined companies'
financial position would actually have been had the proposed transaction
occurred on such date or as of the beginning of the period indicated, or to
project the combined companies' financial position for any future period.
13
Transform Pack International, Inc. and Quantum HIPAA Consulting Group, Inc.
Pro Forma Condensed Combined Balance Sheet
October 31, 2002
(Unaudited)
ASSETS
Historical
------------------------
October August 31,
31, 2002 2002 Pro Forma Pro Forma
Quantum Transform Combined Adjustments Combined
----------- ----------- ----------- ------------- ------------
CURRENT ASSETS
Cash $ - $ - $ -
Inventory - 76,363 76,363 (76,363) -
Prepaid expenses and other
assets - 4,597 4,597 $ (4,597) -
Accounts recievable - 127,694 127,694 (127,694) -
----------- ----------- ----------- ------------- ------------
Total Current Assets - 208,654 208,654 (208,654) -
----------- ----------- ----------- ------------- ------------
PROPERTY & EQUIPMENT - NET 2,072 381,553 383,625 (381,553) 2,072
----------- ----------- ----------- ------------- ------------
OTHER ASSETS
Other assets 1,820 1,820 1,820
Investment in affiliate - 2,000 2,000 (2,000) -
----------- ----------- ----------- ------------- ------------
Total Other Assets 1,820 2,000 3,820 (2,000) 1,820
TOTAL ASSETS $ 3,892 $ 592,207 $ 596,099 $ (592,207) $ 3,892
=========== =========== =========== ============= ============
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Cash overdraft $ - $ 429,221 $ 429,221 $ (429,221) $ -
Accounts payable 18,788 445,516 464,304 (324,664)(b) 139,640
Current-portion - LT debt - 66,951 66,951 (66,951) -
Current-portion - redeemable
preferred shares 120,000 120,000 (120,000) -
Loan payable 179,080 179,080 179,080
- - - - -
----------- ----------- ----------- ------------- ------------
Total Current
Liabilities 197,868 1,061,688 1,259,556 (940,836) 318,720
----------- ----------- ----------- ------------- ------------
Long-term debt - 806,323 806,323 (806,323) -
Due to shareholder - 221,077 221,077 (221,077) -
----------- ----------- ----------- ------------- ------------
Total Long-term
Liabilities - 1,027,400 1,027,400 (1,027,400) -
Shareholders' Equity
(Deficit):
Common stock 20,000 2,080,812 2,100,812 (1,972,376) (a) 128,436
Additional paid in capital - - (229,288) (a) (229,288)
Retained Earnings (213,976) (3,577,693) (3,791,669) 3,577,693 (213,976)
----------- ----------- ----------- ------------- ------------
Total Shareholders' Equity
(Deficit) (193,976) (1,496,881) (1,690,857) 1,376,029 (314,828)
----------- ----------- ----------- ------------- ------------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY
(DEFICIT) $ 3,892 $ 592,207 $ 596,099 $ (592,207) $ 3,892
=========== =========== =========== ============= ============
See notes to pro forma condensed balance sheets.
14
Transform Pack International, Inc. and Quantum HIPAA Consulting Group, Inc.
Pro Forma Condensed Combined Balance Sheet
April 30, 2003
(Unaudited)
ASSETS
Historical
------------------------
4/30/2003 2/28/2003 Pro Forma Pro Forma
Quantum Transform Combined Adjustments Combined
----------- ----------- ----------- ------------- ------------
CURRENT ASSETS
Cash $ 50,261 $ 50,261 $ (50,261) $ -
Inventory 40,347 40,347 (40,347) -
Prepaid expenses and other
assets 922 922 (922) -
- - - - -
----------- ----------- ----------- ------------- ------------
Total Current Assets - 91,530 91,530 (91,530) -
PROPERTY & EQUIPMENT - NET 1,450 350,787 352,237 (350,787) 1,450
----------- ----------- ----------- ------------- ------------
OTHER ASSETS
Seccurity deposits - - - -
Investment in affiliate - 2,000 2,000 (2,000) -
----------- ----------- ----------- ------------- ------------
Total Other Assets - 2,000 2,000 (2,000) -
TOTAL ASSETS $ 1,450 $ 444,317 $ 445,767 $ (444,317) $ 1,450
=========== =========== =========== ============= ============
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Cash overdraft $ - $ 426,004 $ 426,004 $ (426,004) $ -
Accounts payable 71,245 364,216 435,461 (243,364) (b) 192,097
Current-portion - LT debt - 66,951 66,951 (66,951) -
Current-portion - redeemable
preferred shares 566,250 566,250 (566,250) -
Loan payable 183,612 - 183,612 - 183,612
----------- ----------- ----------- ------------- ------------
Total Current
Liabilities 254,857 1,423,421 1,678,278 (1,302,569) 375,709
----------- ----------- ----------- ------------- ------------
Long-term debt - 406,760 406,760 (406,760) -
Due to shareholder - 231,077 231,077 (231,077) -
----------- ----------- ----------- ------------- ------------
Total Long-term
Liabilities - 637,837 637,837 (637,837) -
Shareholders' Equity
(Deficit):
Common stock 20,000 2,130,820 2,150,820 (2,022,384) (a) 128,436
Additional paid in capital - (229,288) (a) (229,288)
Retained Earnings (273,407) (3,747,761) (4,021,168) 3,747,761 (273,407)
----------- ----------- ----------- ------------- ------------
Total Shareholders'Equity
(Deficit) (253,407) (1,616,941) (1,870,348) 1,496,089 (374,259)
----------- ----------- ----------- ------------- ------------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY
(DEFICIT) $ 1,450 $ 444,317 $ 445,767 $ (444,317) $ 1,450
=========== =========== =========== ============= ============
See notes to pro forma condensed balance sheets.
15
Notes to Pro Forma Condensed Balance Sheets (Unaudited)
The pro forma balance sheet at April 30, 2003 is based on the period ended
February 28, 2003 for the registrant and April 30, 2003 for Quantum HIPAA
Consulting Group, Inc. The pro forma balance sheet gives effect to the share
exchange as if it had occurred on February 28, 2003. The pro forma balance sheet
at October 31, 2002 is based on the period ended August 31, 2002 for the
registrant and October 31, 2002 for Quantum HIPAA Consulting Group, Inc. The pro
forma balance sheet gives effect to the share exchange as if it had occurred on
August 31, 2002.
(a) Reflects the accounting for the merger of Quantum HIPAA Consulting Group,
Inc., which consists of issuance of 27,000,000 shares of common stock and the
cancellation of 7,000,000 for the disposition of the operating subsidiary as per
the merger agreement.
(b) Reflects assumption of $112,036 of the registrant's payables and $8,816 of
merger related expenses
16