United States
Securities and Exchange Commission
Washington, D.C. 20549
------------------------
Form 10-KSB/A
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2002
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period from_________to__________
Commission File Number 0-33187
CareDecision Corporation
(Exact Name of Registrant as Specified in its Charter)
Nevada 91-2105842
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
2 Penn Plaza, 15th Floor, Suite 1500-53, New York, NY 10121
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, Including Area Code: (212) 292-4959
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value per share, 200,000,000 shares
authorized, 75,364,137 issued and outstanding as of December 31, 2002.
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. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-B is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
The approximate aggregate market value of the Common Stock held
by non-affiliates of the registrant, based upon the closing price
of the Common Stock reported on OTCBB, was $1,470,702 as of April
9, 2003. (1) For the purposes of this computation, all
executive officers, directors and 5% shareholders of the Company
have been assumed to be affiliates. Certain of such persons may
disclaim that they are affiliates of the Company.
/1/
Some of the statements contained in this Form 10-KSB are not
historical facts rather "forward-looking statements" which can be
identified by the use of terminology such as "estimates,"
"projects," "plans," "believes," "expects," "anticipates,"
"intends," or the negative of such terms or other variations, or
by discussions of strategy that involve risks and uncertainties.
Caution should be exercised in regards to these forward-looking
statements. Such statements contained herein reflect our current
beliefs with respect to future events. These beliefs involve
known and unknown risks, uncertainties and other factors,
including, but not limited to, economic, competitive, regulatory,
technological, key employee and general business factors
affecting our operations, market growth, services, products and
licenses. No assurances can be given regarding the achievement
of future results. Actual results may differ materially as a
result of the above-mentioned risks, and from assumptions made
based on anticipated events. Factors that could cause or
contribute to such differences include, but are not limited to,
those discussed in the Risk Factor section of this document and
in Item 6, "Management's Discussion and Analysis of Financial
Condition or Plan of Operation."
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Overview and History
ATR Search Corporation, a Nevada corporation incorporated on
March 2, 2001, was a developmental stage company engaging in the
placement of information technology ("IT") professionals with
technology sector companies on a temporary and/or permanent
basis.
Medicius, Inc., a Nevada corporation incorporated on July 6,
2000, was a developmental stage company with a principal business
objective to provide Internet-enhanced information technology for
physicians at the point of clinical decision. The software
systems, communication tools and suite of software applications
employed by Medicius, Inc. permits the office practice physician
to request critical patient medical and/or medication information
via the Internet on a Microsoft Windows CE-based Personal Digital
Assistant ("PDA") at, or prior to the point-of-care.
The system captures and displays the requested information,
and overlays medical treatment protocols and medical step
therapies (steps and procedures that insurance companies issue
for treating illnesses a physician has not treated before),
creating not only a patient specific historical medical chart,
but also suggested treatment alternatives, approved medications
and diagnosis specific protocols.
Utilization of this system by the practicing physician
enhances clinical decision-making, improves physician
productivity, insures formulary compliance, reduces the cost of
healthcare and positively impacts the care provided to the
patient.
On June 17, 2002 a shareholder vote approved the merger of
Medicius, Inc. into ATR Search Corporation whereby ATR Search
Corporation adopted the business model of Medicius, Inc. and on
August 2, 2002 Amended Articles of Incorporation were filed with
the Secretary of State of Nevada changing the name of the company
to CareDecision Corporation ("CareDecision" or the "Company").
/2/
Our Amended Articles of Incorporation (see exhibit 3c)
authorize us to issue up to 200,000,000 shares of common stock at
a par value of $0.001 per share and 5,000,000 shares of preferred
stock at a par value of $0.001 per share. As of December 31,
2002 we had 75,364,137 shares of our Common Stock outstanding.
Due to our lack of operating history and given our current cash
flows, our accounting firm has issued a comment regarding our
ability to continue as a going concern (see footnote 2 of the
audited financial statements). It may be necessary to raise
additional funds and/or reduce cash expenditures in the next 12
months. Funds could be generated through the issuance of
additional stock. Cash expenditures could be reduced through the
lay-off of personnel and or a reduction in employee salaries or
benefits.
Industry Background
Information Techology
Technological improvements over the past few years have
caused ever increasing growth in the high tech industry.
Established companies have responded to this increased growth by
redirecting their resources to develop products to meet the
demands of the information age. Additionally, relatively new
companies have built their businesses around, and continue to
focus on, providing new and improved means of doing business.
Although, a number of technologies, even those employing the
Internet as a backbone, have failed to achieve the expected
information transformation, in almost all instances, the
communication of electronic data has achieved universal support.
Medical Information Technology
Currently, the overwhelming majority of clinical information
exists in proprietary Active Server Pages (paper, mainframes, and
physician practice management systems). The extraction and
sharing of this information is a time consuming and costly
process. For these reasons, the medical industry is moving
towards transferring this information into electronic format for
easy access. Each segment of the medical industry (physicians,
labs, insurance companies, etc.) recognizes and embraces the
efficiencies and cost reductions that can be realized through the
electronic exchange of data.
Over the last decade managed care has transformed healthcare
into a highly competitive and market driven industry. The
transition has resulted in the elimination of many of the
unnecessary costs that had historically contributed to the
continued and unabated acceleration of the cost of health care.
One crucial segment, which has remained resistant to ongoing
efforts to realize real and obvious opportunities to affect cost
reductions, lies in the means of communications resident within
the industry.
The nature of domestic healthcare delivery has resulted in a
highly fragmented system involving hundreds of thousands of payor
and provider organizations scattered across a broad geographical
landscape. Each of these locations employs diverse and
incompatible information systems that have restricted electronic
communication of vital medical and administrative information
between the participants.
Additionally, healthcare mainly relies on paper communication
processes. We estimate that current healthcare administration
costs exceed $300 billion annually. It is management's belief
that online process automation and transaction processing
solutions can eliminate over 50% of those costs, which are
directly attributable to the time and expense associated with
manual processing for routine processes and transactions.
/3/
Principal Products and Services
CareDecision's principal product is an E-Health handheld
information appliance software. CareDecision presently has a
complete suite of medical information and communication
applications, all integrated, and all on one PDA Internet
appliance. These applications have been designed to meet the
needs of both the inpatient and outpatient environments and are
not just commercially viable but also regulatory standard
compliant. Additionally, the software was conceived and
implemented to offer the ability to monitor patient treatment
plans on a handheld information appliance.
Our software is designed to integrate point of care medical
applications, treatment protocols and up to the moment patient
histories coupled with real-time on-line medical insurance claims
submission. The ultimate key to success resides in providing the
private practice physician with the capability to, sequentially,
learn about the history of his or her patient during, or prior
to, entering the examining room, treat the patient and update the
insurer of the episode of care. Accomplishing these objectives
resolves a major dilemma for the health care provider;
instantaneous communication of vital patient related information
at or before the patient encounter.
The technology is grounded in the central need to furnish
the doctor with the crucial patient information rapidly and
reliably on a PDA. It utilizes the power of the Internet to move
large amounts of data to and from a variety of platforms securely
via a powerful Windows CE based PDA designed for portability and
upgradability. Totally compliant with the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA"), this PDA
technology is among the first to offer legacy system applications
on a totally portable (PDA) appliance.
The PDA software operates on any Microsoft Windows CE "Pocket PC"
based handheld device, either in a wireless or "wired" mode. The
local host for the Company's PDA devices is a Windows (9X, NT or later)
based PC in the physician's office, which, in turn, permits one
to eight of the aforementioned PDAs to be linked to the medical network
and allows each PDA to become a uniquely identified mobile node on the
medical network, independent of PC linkage, thereby, assisting the
doctor in the review of relevant patient medical history, medications
and prescriptions, lab test ordering, medical step processes and
protocols and specialist referral processes. The PDA software
provides rules based software capabilities and the ability to
receive order fulfillment information for over 5,000 patients,
which represents approximately 3 years of patient encounters in a
typical primary care medical practice and allows for providers to
access payor and health plan business rules, and policy/plan
coverage's directly from the plan(s).
New Product Offerings
As of December 31, 2002 we have:
1.Developed and implemented a business plan;
2.Recruited and retained an appropriate management team and
board of directors; and
3.Attained capital that we believe will be sufficient for
the next 12 to 24 months of operations.
We have commenced operations, and have begun generating
minimal revenues. However, we expect the industry to become
increasingly competitive, despite the size and growth expected in
the market. We intend to compete by targeting specific market
segments such as physicians, HMO's and other healthcare
providers. Our main goal is to ensure client satisfaction with
our services and to develop an outstanding reputation for client
service. If we fail to market and distribute our products and
generate sufficient revenues, we may be unable to continue as a
going concern.
/4/
Distribution, Marketing and Customer Relations
Management intends to implement an aggressive but targeted
marketing campaign to educate healthcare providers about
CareDecision's technology solutions and the benefits obtained
through its use. The industry focused marketing campaign is
intended to leverage our efforts by qualifying customers' needs
and interests.
The CareDecision marketing strategy will ultimately target
the physician providers through the provision of technology and
services that specifically respond to their needs and
requirements. The physician will be the ultimate determinant as
to the success of any given system; therefore, it is incumbent on
any marketing strategy to focus on the satisfaction of their
needs. CareDecision has created PDA-centric products and a suite
of Internet enhanced software applications that includes those
features that specifically respond to the requirements of the
practicing physician. We believe that the combination of unique
and responsive benefits derived from our system coupled with its
simplicity, portability, convenience and ease of use will
initiate and propel the desired transition from paper processes.
Healthcare is an interdependent web of payors and providers.
CareDecision's success is reliant on targeting multiple segments
within the industry. As has been previously stated, although the
physician will determine a product's utilization, it is the other
components of the system that will bear the cost of the product's
introduction and ongoing employment. Insurers and industry
service providers must participate in the electronic network,
both logistically and financially to complete the link that will
provide utility and value to all participants. It is incumbent
on us to therefore extend our marketing strategy to facilitate
this reality.
We will concentrate our marketing efforts in specific target
geographic locations that will permit the completion of our
density strategy crucial to sustained penetration and long-term
success. Implicit to this strategy is the contracting of
multiple payors, pharmacy benefit management entities, medical
case management entities and clinical labs within a targeted
region that provides for system integration to the product and
payment for transactions communicated to or from the
participating physicians. Once the network has been established
the product will be distributed to those physicians included
within the contracted payors Provider Network. We will rely on
those contracted payors to support and assist in the distribution
of the product to the said physicians.
The creation of such networks will be conducted in multiple
geographic locations simultaneously. Upon their completion the
process employed will be introduced and replicated in other
locations targeted for access.
Competition
The medical industry is highly competitive in the attraction
and retention of physician customers, insurers and other medical
providers. The number of competing companies and the size of
such companies varies in different geographic areas. Generally,
CareDecision is in competition with other PDA technology
companies that offer medically related software suites, with the
most effective competition coming from companies that possess
greater capital resources, have longer operating histories,
larger customer bases, greater name recognition and significantly
greater financial, marketing and other resources than do we.
There are a number of small and large companies that have
announced their intentions to provide some type of Internet
interconnectivity for physicians to the healthcare systems:
/5/
a. Large publicly traded companies: WebMD, formerly known as
Healtheon (HLTH), the former MedicaLogic/Medscape (merged into
HLTH) and to a slightly lesser degree Cerner/Citation (CERN),
IDX Corporation (IDXC) and venerable Shared Medical
(acquired by Seimens) are very broadly involved in
healthcare Internet based services including consumer
services, E-commerce and connectivity. Of these
companies only Cerner is working on a PDA based interface for
physicians, although Healtheon has identified the PDA
as a critical component for a network and is
"evaluating potential partners to provide physicians
with hand-held computers after an in-house product was
deemphasized after beta testing."
b. Non-PDA based start-ups and small publicly traded companies:
CyBear (merged last year into parent Andrx), Medix Resources
(MXR), Advanced Health (merged into Proxymed) and Abaton.com
(merged into HBO-McKesson and then shut down) have or had
announced some form of connectivity systems that are non-PDA
based and have, at best, limited numbers of clinical
installations.
c. More mature companies such as Kinetra (acquired by HLTH),
McKesson-HBOC and ProxyMed (PILL), have launched Internet
enhanced ventures without any clinical successes.
d. PDA-based start-ups: PatientKeeper Corp. (formerly Virtmed),
ePhysician (recently downsized and assets sold) and iScribe
(recently reorganized and then merged) have announced products
that reside on 3-Com's Palm PC. The PatientKeeper product will
allow physicians to capture billing information for hospital-
based accounts and purports to manage receivable transactions (a
mix of a 1st generation feature on a 3rd generation technology).
ePhysician's product offering allows prescription ordering from a
PDA. On the surface, the former iScribe system offers a few of
the features of CareDecision's system, but has chosen to
implement a wireless wide-area network solution through an
Internet link to a legacy system server. This approach has
greater capital cost and platform data management disadvantages
compared to CareDecision's product line. Yet, iScribe, even with
its costly and incremental approach, and its history of financial
troubles nonetheless garnered an impressive valuation.
All of the embryonic PDA technology based companies have a
similar broad goal to deliver PDA based data management to
physicians. One company, AllScripts (MDRX) appears to be
positioned to advance to a market leadership position. However,
this position is defined by a product distribution of less than
2000 physicians' office sites (1% of the total market) and does
not possess a major factor in any medical trade area.
Increased competition may result in reduced operating
margins and a loss in our clientele base. There can be no
assurance that we will be able to compete successfully against
current and future competitors, and competitive pressures faced
by us may have a material adverse effect on our business,
prospects, financial condition and results of operations.
Further, as a strategic response to changes in the competitive
environment, management may from time to time make certain
pricing, service or marketing decisions or acquisitions that
could have a material adverse effect on our business, prospects,
financial condition and results of operations.
Based on management's industry experience, CareDecision
believes it will build a strong reputation for the quality of our
products and services as well as our client-oriented approach.
We believe that our experienced employees, broad range of
products and services, local and broad market expertise, and
operating infrastructure enable us to compete effectively in each
of our business disciplines.
/6/
Government Regulation
Federal, state, local and foreign governmental organizations
may propose or institute laws or regulations concerning various
aspects of the medical industry, including electronic claims
processing, electronic prescriptions and privacy matters.
CareDecision is not currently subject to direct regulation by any
domestic or foreign governmental agency, other than regulations
applicable to businesses generally, and laws or regulations
directly applicable to the medical industry. However, due to the
increasing popularity and use of the Internet and other online
services, it is possible that a number of laws and regulations
may be adopted with respect to the Internet or other online
services covering issues such as user privacy, pricing, content,
copyrights, distribution and characteristics and quality of
products and services.
Furthermore, the growth and development of the market for
online commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those
companies conducting business online. The adoption of any
additional laws or regulations may decrease the demand for our
products and services and increase our cost of doing business, or
otherwise have an adverse effect on our business, prospects,
financial condition and results of operations.
Proprietary Rights
We may be required to license additional products or
services in the future, for use in the general operations of our
business plan. We cannot assure you that these third party
licenses will be available or will continue to be available to us
on acceptable terms if at all. The inability to enter into and
maintain any of these licenses could have a material adverse
effect on our business, financial condition or operating results.
In addition, policing unauthorized use of our proprietary and
other intellectual property rights could be expensive if not
difficult or impossible.
We cannot guarantee that third parties will not bring claims
of copyright or trademark infringement against us or claim that
certain aspects of our processes or other features violates a
patent they may hold. There can be no assurance that third
parties will not claim that we have misappropriated their
creative ideas or formats or otherwise infringed upon their
proprietary rights. Any claims of infringement, with or without
merit, could be time consuming to defend, result in costly
litigation, divert management attention, or require us to enter
into costly royalty or licensing arrangements. These
potentialities could have a material adverse effect on our
business, financial condition or operating results.
Employees
CareDecision currently has 2 part time and 8 full staff
employees. The full time employees are situated as follows: 6
are located in the California office, one is in Chicago and one
is in the New York office. Management does not foresee hiring
additional employees for at least the next twelve to twenty-four
months, or until we generate sufficient revenues, in management's
opinion, to support hiring additional staff. No employees are
covered by labor agreements or contracts and management believes
our relations with our employees are good.
/7/
RISK FACTORS
The following discussion contains, in addition to historical
information, forward-looking statements that involve risks and
uncertainties. Our actual results could differ significantly
from the results discussed in the forward-looking statements.
Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below and in
Item 6, "Management's Discussion and Analysis of Financial
Condition or Plan of Operation."
Our limited operating history could delay our growth and minimize
your investment.
We are considered a development stage company incorporated
on March 2, 2001 and thus have a limited operating history on
which to base an evaluation of our business and prospects. Our
prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early
stage of development. Such risks include, but are not limited
to, dependence on the growth of use of electronic medical
information and services, the adoption of PDA based Internet
appliances for the transmission and display of medical
information, the need to establish our brand name, the ability to
establish a sufficient client base, the level of use of medical
providers and the management of growth. To address these risks,
we must maintain and increase our customer base, implement and
successfully execute our business and marketing strategy,
continue to develop and improve our point of care software and
patient processing system, provide superior customer service,
respond to competitive developments and attract, retain, and
motivate qualified personnel. There can be no assurance that we
will be successful in addressing such risks, and the failure to
do so could have a negative impact the value of our Company's
common shares and could result in the loss of your entire
investment.
Auditors have issued an opinion raising substantial doubt as to
our ability to continue as a going concern, which may diminish
your return on investment.
In a letter that accompanies this application, our
accountant, G. Brad Beckstead, says in part, the accompanying
financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is in the development stage
and, accordingly, has not yet generated a proven history of
operations. Since its inception, the Company has been engaged
substantially in financing activities and developing its product
line, incurring substantial costs and expenses. As a result, the
Company incurred accumulated net losses from June 21, 2001
(inception) through the period ended December 31, 2002 of
$1,975,132. In addition, the Company's development activities
since inception have been financially sustained by capital
contributions.
The ability of the Company to continue as a going concern is
dependent upon its ability to raise additional capital from the
sale of common stock and, ultimately, the achievement of
significant operating results. The accompanying financial
statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets
or satisfy its liabilities
Our profitability and your investment will be directly affected
by our competition.
Many of CareDecision's potential competitors have longer
operating histories, larger clientele bases, better service
recognition and significantly greater financial, marketing and
other resources than do we. Increased competition may result in
reduced operating margins, loss of market share and a diminished
brand franchise. There can be no assurance that we will be able
to compete successfully against current and future competitors,
and competitive pressures faced by ucould harm our operating
results, our business prospects, and financial condition.
/8/
We may not be able to retain our key personnel or attract
additional personnel, which could affect our ability to continue
as a going concern, which may diminish your return on investment.
Our performance is substantially dependent on the services
and on the performance of our Management. CareDecision is, and
will be, heavily dependent on the skill, acumen and services of
Mr. Robert Cox (President, Secretary and Director) and Mr. Keith
Berman (Treasurer and Director). Our performance also depends on
our ability to attract, hire, retain and motivate our officers and
key employees. The loss of the services of our executives could
have a material adverse effect on our business, prospects, financial
condition and results of operations. We have not entered into a
long-term employment agreements with our key personnel and currently
have no "Key Employee" life insurance policies. Our future success
may also depend on our ability to identify, attract, hire, train,
retain and motivate other highly skilled technical, managerial,
marketing and customer service personnel. Competition for such
personnel is intense, and there can be no assurance that we will
be able to successfully attract, assimilate or retain
sufficiently qualified personnel. If we are unable to attract,
retain, and train the necessary technical, managerial, marketing
and customer service personne,our expectations of increasing our
clientele could be hindered, and the profitability of our Company
reduced.
The selling security holder shares are being registered for
resale in this registration statement and the sale of such shares
can dilute the market price of our common stock and your return
on investment.
The sale of shares can have a negative impact on the price
of our common stock. No predictions can be made as to the
effect, if any, that sales of our shares by the selling security
holder shares being registered will have on the market price of
our common stock. Nevertheless, sales of substantial amounts of
our common stock, or the perception that such sales may occur,
could reduce our market price.
Possible Future Issuances of Common Stock Will Have a Dilutive
Affect on Existing Shareholders
The Company is authorized to issue up to 200,000,000 Shares
of common stock. As of December 31, 2002, there are 75,364,137
shares of common stock issued and outstanding. Additional
issuances of common stock may be required to raise capital, to
acquire stock or assets of other companies, to compensate
employees or to undertake other activities without stockholder
approval. These additional issuances of common stock will
increase outstanding shares and further dilute stockholders'
interests. Because our common stock will be subject to the
existing rules on penny stocks, the market liquidity for and
value of our securities can be severely adversely affected.
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/9/
ITEM 2. DESCRIPTION OF PROPERTIES.
The Company's headquarters and facilities are located at 2
Penn Plaza, 15th Floor, Suite 1500-53, New York, New York 10121.
The CEO of CareDecision, Robert Cox, at no cost to the
corporation, is currently providing for these facilities.
Additionally, CareDecision has assumed the lease on the space
occupied by Medicius, approximately 2300 sq. feet, located at
2660 Townsgate Road, Suite 300, Westlake Village, CA. As of
April 1, 2003 there are 17 months remaining on this lease at
$3,750.00 per month. We do not have any proposed programs for
the renovation, improvement or development of our office space,
nor do we plan to relocate our offices in the foreseeable future.
If additional facilities are needed, management believes that
suitable expansion space is available to meet our future needs at
commercially reasonable terms.
ITEM 3. LEGAL PROCEEDINGS.
We were not subject in the year 2002, nor are we currently
subject to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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/10/
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
A. Market Information
Our common stock, par value $0.001 per share, is traded on
the Over-the-Counter Bulletin Board (OTCBB) under the symbol "CDED."
Our common stock began formal trading on the OTCBB February 8,
2002. The following table sets forth the high and low price for our
common stock on the OTCBB.
HIGH LOW
2002
First Quarter (For the period Feb 8, 2002 to Mar 31, 2002) .30 .06
Second Quarter .13 .03
Third Quarter .12 .03
Fourth Quarter .11 .03
Our OTCBB quotations reflect inter-dealer prices, without
retail mark-ups, markdowns or commissions, and may not
necessarily represent actual transactions.
B. Holders
As of December 31, 2002 there were 120 stockholders of record of our
Common Stock.
C. Dividends
We have not paid cash dividends on our Common Stock and do not intend
to pay any cash dividends for the foreseeable future.
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/11/
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS
The statements contained in this report that are not
historical facts are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act. Forward-
looking statements are made based upon management's current
expectations and beliefs concerning future developments and their
potential effects upon the Company. There can be no assurance
that future developments affecting the Company will be those
anticipated by management. Actual results may differ materially
from those included in the forward-looking statements.
Readers are also directed to other risks and uncertainties
discussed in other documents filed by the Company with the
Securities and Exchange Commission. The Company undertakes no
obligation to update or revise any forward-looking information,
whether as a result of new information, future developments or
otherwise.
General
CareDecision Corporation ("CareDecision"), a Nevada
corporation incorporated on March 2, 2001, is a developmental
stage company with a principal business objective to provide
enhanced information technology (IT) for physicians. Our
software allows medical information to be provided within seconds
of its request at the point of the physician's clinical decision
making, either in the examining room or at bedside. The software
systems, communication tools and suite of software applications
employed by CareDecision permits the office practice physician to
request critical patient medical and/or medication information
via the Web on a Microsoft Windows based Personal Digital
Assistant ("PDA") at, or prior to the point-of-care.
The system captures and displays the requested information,
and overlays medical treatment protocols and medical step
therapies (steps and procedures Insurance companies issue for
treating illnesses a physician has not treated before), creating
not only a patient specific historical medical chart, but also
suggested treatment alternatives, approved medications and
diagnosis specific protocols. Utilization of this system by the
practicing physician enhances clinical decision-making, improves
physician productivity, insures formulary compliance, reduces the
cost of healthcare and positively impacts the care provided to
the patient.
The elements of our business strategy include: expanding
geographically into key markets through a combination of opening
new offices and developing relationships with clients to generate
demand for our services; recruiting qualified, medical software
and other technical personnel to perform technical,
implementation and support duties as contracts are entered into,
although there can be no assurance that any such contracts will
be secured; and pursuing entry into new markets complementary to
CareDecision's proposed operations. Future operations are
dependent upon our ability to implement our business and
marketing strategies and to establish relationships and contracts
with health insurers and HMOs to provide our e-health products
and services.
/12/
Results of Operation
Revenues. In fiscal 2002, we generated $2,000 in revenue
compared to $0 revenue generated in 2001. As a development stage
company, our efforts have been focused mainly on the development
of our software products. We believe that our initial revenues
during our development stage will be primarily dependent upon our
ability to cost effectively and efficiently develop our software
systems, communication tools and suite of software applications.
Our priorities for the next 12 months of operations are to
continue to develop and market our products, to establish our
business through the use of the internet and though client
referrals. Realization of increasing revenues for our software
products during the next fiscal year is vital to our plan of
operations. There are no guarantees that we will be able to
compete successfully or that the competitive pressures we may
face will not have a material adverse effect on our business,
results of operations and financial condition.
General and administrative expenses. General and
administrative expenses were $77,712 in fiscal 2002 compared with
$4,974 in fiscal 2001. General and Administrative expenses have
increased as we prepare to introduce our software products.
Payroll expense. Payroll expense consists primarily of
management and employee salaries. In fiscal 2002 payroll expense
was $186,819 compared with $0 in fiscal 2001. A management team
has been put in place to oversee the launch of our software
systems, communication tools and suite of software applications.
Management is focused on controlling payroll expenses until such
time as revenues are generated sufficient to increase the salary
paid to our executives.
Professional fees. Professional fees include fees paid to
our accountants and attorneys. Our professional fees were
$171,852 in fiscal 2002 compared with $0 in fiscal 2001. Our
professional fees were primarily due the merger that occurred
between our Company and Medicius, Inc.
Consulting expense. Our consulting expense was $1,319,482
in fiscal 2002 compared with $0 in fiscal 2001. Our consulting
expenses were incurred in relation to the preparation of the
merger between our Company and Medicius, Inc., general business
management consulting, and services provided by specific experts
for software development or technology acquisition.
Software development. Software development costs were
$129,000 in fiscal 2002 compared with $0 in fiscal 2001. This
represents the costs associated with the further development of
the software obtained through our merger with Medicius, Inc.
Depreciation. Depreciation was $40,778 in fiscal 2002
compared with $0 in fiscal 2001. This represents depreciation on
the assets of the Company.
Total expenses. We incurred total expenses for the year
ended 2002 of $1,925,643 compared with $4,974 in fiscal 2001.
Expenditures were primarily due to costs incurred for
professional and consulting fees, payroll expense and general and
administrative expenses.
Net Loss. The expenses incurred during fiscal 2002 has led
to a net operating loss of $1,923,643 and including total other
expenses of $46,515 we incurred a net loss of $1,970,158. We
anticipated incurring this loss during our initial commencement
of operations until such time as we will realize increased
revenues from our s software systems, communication tools and
suite of software applications in the fiscal year 2003.
/13/
Financial Condition and Liquidity
Since inception, we have funded operations primarily through
notes issued and the net cash proceeds from private offerings of
our common stock. At December 31, 2002, we had cash and cash
equivalents of $111,101 and total stockholders' equity of
$1,049,321, however we had negative working capital of $370,052.
The company expects that it will, from time to time, return to
the capital markets seeking additional equity capital or debt to
further our operations. Thus, if cash generated from operations
in future periods is insufficient to satisfy our liquidity
requirements, we may sell additional equity or debt securities,
or through bank credit facilities. The issuance of additional
equity or convertible debt securities could result in additional
dilution to our shareholders.
Net cash used by operating activities during fiscal 2002 was
$603,899, which was primarily due to the net loss of $1,970,158
offset by shares issued for consulting services of $1,319,482.
As the Company had not yet begun operations in 2001, net cash
used by operating activities during fiscal 2001 was $0.
Net cash provided by investing activities during fiscal 2002
and 2001 was $0. As cash flow allow the Company may enter into
investing activities on a case by case basis should management
believe it prudent to do so.
Net cash provided by financing activities was $715,000 in
fiscal 2002 comprised of $475,000 in increase in notes payable
and $240,000 received from the issuance of common stock. Net
cash provided by financing activities was $0 during fiscal 2001.
[balance of this page intentionally left blank]
/14/
ITEM 7. FINANCIAL STATEMENTS.
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT F-1
CONSOLIDATED BALANCE SHEET F-2
CONSOLIDATED STATEMENTS OF OPERATIONS F-3
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6 to F-11
/15/
Beckstead and Watts, LLP
Certified Public Accountants
3340 Wynn Road, Suite B
Las Vegas, NV 89102
702.257.1984
702.362.0540(fax)
INDEPENDENT AUDITORS' REPORT
Board of Directors
CareDecision, Inc. (formerly ATR Search Corporation)
We have audited the Balance Sheets of CareDecision, Inc.
(formerly ATR Search Corporation) (the "Company") (A Development
Stage Company), as of December 31, 2002 and 2001, and the related
Statements of Operations, Stockholders' Equity, and Cash Flows
for the period June 21, 2001 (Date of Inception) to December 31,
2002. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statement presentation. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of CareDecision, Inc. (formerly ATR Search Corporation) (A
Development Stage Company), as of December 31, 2002 and 2001, and
the results of its operations and cash flows for the years then
ended and for the period June 21, 2001 (Date of Inception) to
December 31, 2002, in conformity with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company has had limited
operations and have not commenced planned principal operations.
This raises substantial doubt about its ability to continue as a
going concern. Management's plan in regard to these matters are
also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.
/s/ Beckstead and Watts, LLP
April 4, 2003
F-1
/16/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Balance Sheet
December 31,
Assets 2002
------------
Current assets:
Cash and equivalents $ 111,101
Loan to shareholder 9,576
Notes receivable 5,376
------------
Total current assets 126,053
------------
Fixed assets, net 219,508
Intellectual property, net 1,199,865
------------
$ 1,545,426
============
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 496,105
------------
Total current liabilities 496,105
------------
Stockholders' Equity
Common stock, $0.001 par value, 200,000,000 shares
authorized, 75,364,137 shares issued and outstanding 75,364
Additional paid-in capital 3,045,839
Treasury stock (96,750)
(Deficit) accumulated during development stage (1,975,132)
------------
1,049,321
------------
$ 1,545,426
============
The accompanying notes are an integral part of these financial statements.
F-2
/17/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Statements of Operations
For the year ended June 21, 2001
December 31, (inception) to
---------------------- December 31,
2002 2001 2002
---------- ---------- -------------
Revenue $ 2,000 $ - $ 2,000
---------- ---------- -------------
Expenses:
General & administrative expenses 77,712 4,974 82,686
Payroll expense 186,819 - 186,819
Professional fees 171,852 - 171,852
Consulting expense 1,319,482 - 1,319,482
Software development 129,000 - 129,000
Depreciation 40,778 - 40,778
---------- ---------- -------------
Total expenses 1,925,643 4,974 1,930,617
---------- ---------- -------------
Net operating (loss) (1,923,643) (4,974) (1,928,617)
Other income (expense):
(Loss) on debt settlement (25,925) - (25,925)
Interest income 2,230 - 2,230
Interest (expenses) (22,820) - (22,820)
---------- ---------- -------------
Net (loss) $(1,970,158) $ (4,974) $ (1,975,132)
========== ========== =============
Weighted average number of common
shares outstanding - basic and 43,176,595 19,180,000
fully diluted ========== ==========
Net (loss) per share - $ (0.05) $ (0.00)
basic and fully diluted ========== ==========
The accompanying notes are an integral part of these financial statements.
F-3
/18/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Statement of Changes in Stockholders' Equity
(Deficit)
Accumulated
Common Stock Additional During Total
Paid-in Treasury Development Stockholders'
Shares Amount Capital Stock Stage Equity
-------- -------- --------- ------ ----------- ----------
Balance, 19,180,000 $ 19,180 $ 692,095 $ - $ (4,974) $706,301
December 31,
2001
Shares issued 1,825,000 1,825 271,925 273,750
for consulting
services
Shares issued 500,000 500 42,000 42,500
for consulting
services
Rescinded shares (1,935,000) (1,935) (96,750) (98,685)
Shares issued 32,968,863 32,969 733,162 766,131
pursuant to
merger agmt
Shares issued 3,000,000 3,000 147,000 150,000
for consulting
services
Shares issued 1,725,000 1,725 84,525 86,250
for conv
preferred shares
Shares issued 2,000,000 2,000 138,000 140,000
for consulting
services
Shares issued 950,000 950 41,800 42,750
for consulting
services
Shares issued 6,327,737 6,328 310,059 316,387
for consulting
services
Shares issued 2,539,574 2,540 197,460 200,000
for cash
Shares issued 3,515,000 3,515 253,080 256,595
for consulting
services
Shares issued 1,267,963 1,268 38,732 40,000
for cash
Shares issued 1,500,000 1,500 96,000 97,500
for consulting
services
Net (loss), (1,970,158) (1,970,158)
year ended -------- -------- --------- ------ ----------- ----------
December 31,
2002
75,364,137 $75,364 $3,045,839 $(96,750) $(1,975,132) $1,049,321
========== ======= ========== ======== =========== ==========
The accompanying notes are an integral part of these financial statements.
F-4
/19/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Consolidated Statements of Cash Flows
For the year ended June 21, 2001
December 31, (inception) to
------------------------ December 31,
2002 2001 2002
----------- ----------- -------------
Cash flows from operating
activities
Net (loss) $(1,970,158) $ (4,974) $ (1,975,132)
Shares issued for consulting 1,319,482 - 1,319,482
services
Loss on debt settlement 25,925 - 25,925
Depreciation 40,778 - 40,778
Adjustments to reconcile net
(loss) to net cash (used) by
operating activities:
(Increase) in loan to (9,576) - (9,576)
shareholder
(Increase) in notes receivable (5,376) - (5,376)
Increase (decrease) in accounts (4,974) 4,974 -
payable ----------- ----------- -------------
Net cash (used) by operating (603,899) - (603,899)
activities ----------- ----------- -------------
Cash flows from investing - - -
activities ----------- ----------- -------------
Cash flows from financing
activities
Increase in notes payable 475,000 - 475,000
Issuance of common stock 240,000 - 240,000
----------- ----------- -------------
Net cash provided by financing 715,000 - 715,000
activities ----------- ----------- -------------
Net increase in cash 111,101 - 111,101
Cash - beginning - - -
----------- ----------- -------------
Cash - ending $ 111,101 $ - $ 111,101
=========== =========== =============
Supplemental disclosures:
Interest paid $ - $ - $ -
=========== =========== =============
Income taxes paid $ - $ - $ -
=========== =========== =============
Non-cash transactions:
Number of shares issued for 19,617,737 - 19,617,737
consulting services =========== =========== =============
The accompanying notes are an integral part of these financial statements.
F-5
/20/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
Note 1 - Significant accounting policies and procedures
Organization
The Company was organized March 2, 2001 (Date of Inception)
under the laws of the State of Nevada, as ATR Search
Corporation. On June 21, 2002, the Company merged Medicius,
Inc. and filed amended articles of incorporation changing its
name to CareDecision Corporation.
The Company has a limited history of operations, and in
accordance with SFAS #7, the Company is considered a development
stage company.
Cash and cash equivalents
The Company maintains a cash balance in a non-interest-bearing
account that currently does not exceed federally insured
limits. For the purpose of the statements of cash flows, all
highly liquid investments with an original maturity of three
months or less are considered to be cash equivalents. There
are no cash equivalents as of December 31, 2002.
Investments
Investments in companies over which the Company exercises
significant influence are accounted for by the equity method
whereby the Company includes its proportionate share of earnings
and losses of such companies in earnings. Other long-term
investments are recorded at cost and are written down to their
estimated recoverable amount if there is evidence of a decline
in value which is other than temporary.
Property, plant and equipment
Property, plant and equipment are stated at the lower of cost or
estimated net recoverable amount. The cost of property, plant
and equipment is depreciated using the straight-line method
based on the lesser of the estimated useful lives of the assets
or the lease term based on the following life expectancy:
Computer equipment 5 years
Vehicles 5 years
Office furniture and fixtures 7 years
Repairs and maintenance expenditures are charged to operations
as incurred. Major improvements and replacements, which extend
the useful life of an asset, are capitalized and depreciated
over the remaining estimated useful life of the asset. When
assets are retired or sold, the costs and related accumulated
depreciation and amortization are eliminated and any resulting
gain or loss is reflected in operations.
Revenue recognition
Revenue from proprietary software sales that does not require
further commitment from the company is recognized upon shipment.
Consulting revenue is recognized when the services are rendered.
License revenue is recognized ratably over the term of the
license. The cost of services, consisting of staff payroll,
outside services, equipment rental, communication costs and
supplies, is expensed as incurred.
Advertising costs
The Company expenses all costs of advertising as incurred.
There were no advertising costs included in general and
administrative expenses as of December 31, 2002.
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
F-6
/21/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain
market assumptions and pertinent information available to
management as of December 31, 2002. The respective carrying
value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments
include cash and accounts payable. Fair values were assumed to
approximate carrying values for cash and payables because they
are short term in nature and their carrying amounts approximate
fair values or they are payable on demand.
Impairment of long-lived assets
The Company reviews its long-lived assets and intangibles
periodically to determine potential impairment by comparing the
carrying value of the long-lived assets with the estimated
future cash flows expected to result from the use of the assets,
including cash flows from disposition. Should the sum of the
expected future cash flows be less than the carrying value, the
Company would recognize an impairment loss. An impairment loss
would be measured by comparing the amount by which the carrying
value exceeds the fair value of the long-lived assets and
intangibles. There were no impairment losses recognized in 2002.
Reporting on the costs of start-up activities
Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs
of Start-Up Activities," which provides guidance on the
financial reporting of start-up costs and organizational costs,
requires most costs of start-up activities and organizational
costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998. With the
adoption of SOP 98-5, there has been little or no effect on the
Company's financial statements.
Loss per share
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings
Per Share". Basic loss per share is computed by dividing
losses available to common stockholders by the weighted average
number of common shares outstanding during the period. As of
December 31, 2002, the Company had no dilutive common stock
equivalents, such as stock options or warrants.
Dividends
The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid or declared since
inception.
Comprehensive Income
SFAS No. 130, "Reporting Comprehensive Income", establishes
standards for the reporting and display of comprehensive income
and its components in the financial statements. The Company had
no items of other comprehensive income and therefore has not
presented a statement of comprehensive income.
Segment reporting
The Company follows Statement of Financial Accounting Standards
No. 130, "Disclosures About Segments of an Enterprise and
Related Information." The Company operates as a single segment
and will evaluate additional segment disclosure requirements as
it expands its operations.
Income taxes
The Company follows Statement of Financial Accounting Standard
No. 109, "Accounting for Income Taxes" ("SFAS No. 109") for
recording the provision for income taxes. Deferred tax assets
and liabilities are computed based upon the difference between
the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when
the related asset or liability is expected to be realized or
settled. Deferred income tax expenses or benefits are based on
the changes in the asset or liability each period. If
available evidence suggests that it is more likely than not
that some portion or all of the deferred tax assets will not be
realized, a valuation allowance is required to reduce the
deferred tax assets to the amount that is more likely than not
to be realized.
F-7
/22/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
Future changes in such valuation allowance are included in the
provision for deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences
resulting from income and expense items reported for financial
accounting and tax purposes in different periods. Deferred
taxes are classified as current or non-current, depending on
the classification of assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that
are not related to an asset or liability are classified as
current or non-current depending on the periods in which the
temporary differences are expected to reverse.
Recent pronouncements
In July 2002, the FASB issued SFAS No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities", which
addresses financial accounting and reporting for costs
associated with exit or disposal activities and supersedes EITF
No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS
No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is
incurred. Under EITF No. 94-3, a liability for an exit cost was
recognized at the date of an entity's commitment to an exit
plan. SFAS No. 146 also establishes that the liability should
initially be measured and recorded at fair value. The
provisions of SFAS No. 146 will be adopted for exit or disposal
activities that are initiated after December 31, 2002.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment
of SFAS No. 123." This Statement amends SFAS No. 123,
"Accounting for Stock-Based Compensation", to provide
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures
in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and
the effect of the method used on reported results. The adoption
of SFAS No. 148 is not expected to have a material impact on
the company's financial position or results of operations.
In November 2002, the FASB issued FASB Interpretation ("FIN")
No. 45, "Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees and Indebtedness of
Others", an interpretation of FIN No. 5, 57 and 107, and
rescission of FIN No. 34, "Disclosure of Indirect Guarantees of
Indebtedness of Others". FIN 45 elaborates on the disclosures
to be made by the guarantor in its interim and annual financial
statements about its obligations under certain guarantees that
it has issued. It also requires that a guarantor recognize, at
the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The initial
recognition and measurement provisions of this interpretation
are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002; while, the provisions of the
disclosure requirements are effective for financial statements
of interim or annual periods ending after December 15, 2002.
The company believes that the adoption of such interpretation
will not have a material impact on its financial position or
results of operations and will adopt such interpretation during
fiscal year 2003, as required.
In January 2003, the FASB issued FIN No. 46, "Consolidation of
Variable Interest Entities", an interpretation of Accounting
Research Bulletin No. 51. FIN No. 46 requires that variable
interest entities be consolidated by a company if that company
is subject to a majority of the risk of loss from the variable
interest entity's activities or is entitled to receive a
majority of the entity's residual returns or both. FIN No. 46
also requires disclosures about variable interest entities that
companies are not required to consolidate but in which a
company has a significant variable interest. The consolidation
requirements of FIN No. 46 will apply immediately to variable
interest entities created after January 31, 2003. The
consolidation requirements will apply to entities established
prior to January 31, 2003 in the first fiscal year or interim
period beginning after June 15, 2003. The disclosure
requirements will apply in all financial statements issued
after January 31, 2003. The company will begin to adopt the
provisions of FIN No. 46 during the first quarter of fiscal
2003.
F-8
/23/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
Stock-Based Compensation
The Company accounts for stock-based awards to employees in
accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related
interpretations and has adopted the disclosure-only alternative
of SFAS No. 123, "Accounting for Stock-Based Compensation."
Options granted to consultants, independent representatives and
other non-employees are accounted for using the fair value
method as prescribed by SFAS No. 123.
Year end
The Company has adopted December 31 as its fiscal year end.
Note 2 - Going concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern, which
contemplates the recoverability of assets and the satisfaction of
liabilities in the normal course of business. As noted above, the
Company is in the development stage and, accordingly, has not yet
generated a proven history of operations. Since its inception,
the Company has been engaged substantially in financing
activities and developing its product line, incurring substantial
costs and expenses. As a result, the Company incurred accumulated
net losses from June 21, 2001 (inception) through the year ended
December 31, 2002 of $(2,009,532). In addition, the Company's
development activities since inception have been financially
sustained by capital contributions.
The ability of the Company to continue as a going concern is
dependent upon its ability to raise additional capital from the
sale of common stock and, ultimately, the achievement of
significant operating results. The accompanying financial
statements do not include any adjustments that might be required
should the Company be unable to recover the value of its assets
or satisfy its liabilities.
Note 3 - Fixed assets
Fixed assets consists of the following:
December 31, 2002
-----------------
Computer and office equipment $ 260,286
Less accumulated depreciation (40,778)
-----------------
Total $ 219,508
=================
Depreciation expense totaled $40,778 for the year ended December
31, 2002.
Note 4 - Notes receivable
On January 15, 2002, Medicius loaned an officer a total of
$15,000 which is due in one year at an interest rate of 8% per
annum. At the close of the merger this note was assumed by the
Company.
Interest income totaled $2,230 during the year ended December 31,
2002.
Note 5 - Intellectual property
During the year ended December 31, 2002, the Company acquired
Intellectual Property from CareDecision.net, Inc, a private
stockholder owned corporation that completed several transactions
the Company. As a result of the merger and the acquired
intellectual property, two of the beneficial owners of
CareDecision.net are now beneficial owners of the Company.
Pursuant to the agreement, the Company
F-9
/24/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
paid CareDecision.net, Inc. the sum of $187,500 with 700,000
shares of the Company's $0.001 par value preferred stock. During
the year ended December 31, 2002, CareDecision.net, Inc.
converted its preferred stock into 1,725,000 shares of the
Company's $0.001 par value common stock.
Note 6 - Notes payable
On January 15, 2002, the Company received $40,000 from Keith
Berman, a beneficial owner of the Company, which was due on
December 31, 2003 and accrues interest at 8% per annum. The
principal and accrued interest were convertible at a rate of
$0.10 per share. During September 2002, Mr. Berman converted his
$40,000 loan plus interest into 1,267,963 shares of the Company's
$0.001 par value common stock.
On April 23, 2002, the Company was loaned $475,000 from M and E
Equities, LLC. The loan is due in full on April 23, 2004, and
bears interest at a rate of 9% per annum. The principal and
interest of the note are convertible into five shares of the
Company's $0.001 par value common stock for each $1 of debt. The
note is secured by all the assets of the Company including
accounts receivable, inventory, fixed assets, and intangible
assets.
During the year ended December 31, 2002, the Company recorded a
total of $62,573 from various entities and individuals. The
notes are due on demand and accrue interest of $1,715 at a rate
of 8%. During the year ended December 31, 2002, the note-holders
converted their debt and accrued interest into 664,644 shares of
the Company's $0.001 par value common stock.
The Company recorded interest expense of $22,820 during the year
ended December 31, 2002.
Note 7 - Income taxes
The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS No. 109"), which requires use of the liability
method. SFAS No. 109 provides that deferred tax assets and
liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for
financial reporting purposes, referred to as temporary
differences. Deferred tax assets and liabilities at the end of
each period are determined using the currently enacted tax rates
applied to taxable income in the periods in which the deferred
tax assets and liabilities are expected to be settled or
realized.
The provision for income taxes differs from the amount computed
by applying the statutory federal income tax rate to income
before provision for income taxes. The sources and tax effects
of the differences are as follows:
U.S federal statutory rate (34.0%)
Valuation reserve 34.0%
-----
Total -%
=====
As of December 31, 2002, the Company has a net operating loss
carry forward of approximately $2,010,000. The related deferred
asset has been fully reserved.
Note 8 - Stockholder's equity
The Company issued a total of 32,968,863 shares of its $0.001 par
value common stock pursuant to its reverse merger with Medicius,
Inc. whereby each shareholder received three Company shares for
every one Medicius, Inc. share held.
F-10
/25/
CareDecision Corporation
[formerly ATR Search Corporation]
(a Development Stage Company)
Notes
The Company issued 1,725,000 shares of its $0.001 par value
common stock to CareDecision.net, Inc. pursuant to its election
to convert 700,000 shares of the Company's $0.001 par value
preferred stock into common stock.
The Company issued 2,539,574 shares of its $0.001 par value
common stock for cash totaling $200,000.
The Company issued 1,267,963 shares of its $0.001 par value
common stock to an officer of the Company for cash totaling
$40,000.
The Company issued 19,617,737 shares of its $0.001 par value
common stock to various individuals and entities for consulting
services valued at $1,405,732, the fair market value of the
underlying shares on the dates of issuance.
The Company rescinded 1,935,000 shares of its $0.001 par value
common stock into treasury stock at a value of $98,685, the fair
market value of the shares on the date of rescission.
There have been no other issuances of common stock.
Note 9 - Related party transactions
The Company received equipment in the amount of $27,857 from
Keith Berman, a beneficial owner of the Company.
The Company acquired Intellectual Property from CareDecision.net,
Inc, a private stockholder owned corporation that completed
several transactions the Company. As a result of the merger and
the acquired intellectual property, two of the beneficial owners
of CareDecision.net are now beneficial owners of the Company.
Pursuant to the agreement, the Company paid CareDecision.net,
Inc. the sum of $187,500 with 700,000 shares of the Company's
$0.001 par value preferred stock. CareDecision.net, Inc. then
elected to convert its preferred shares into 1,725,000 shares of
the Company's $0.001 par value common stock.
The Company received $40,000 from Keith Berman, a beneficial
owner of the Company, due on December 31, 2003 and accruing
interest at 8% per annum. During the year ended December 31,
2002, Mr. Berman elected to convert the note plus interest into
1,267,963 shares of the Company's $0.001 par value common stock.
Note 10 - Warrants
The Company issued 5,540,795 Class A non-callable warrants to
Medicius, Inc. shareholders pursuant to the merger agreement (see
Note 11 below). Each Class A warrant unit is exercisable into
one share of the Company's $0.001 par value common stock at $0.04
per share plus 0.5 Class C warrants. The Class A warrant units
expire on June 30, 2005.
Note 11 - Reverse acquisitions agreement with Medicius, Inc.
(MED)
On June 21, 2001, the Company entered into an agreement with MED
whereby the Company acquired all of the issued and outstanding
common stock of MED in exchange for 38,043,863 voting shares of
the Company's $0.001 par value common stock. The acquisition was
accounted for using the purchase method of accounting as
applicable to reverse acquisitions because the former
stockholders of the MED controlled the Company's common stock
immediately upon conclusion of the transaction. Under reverse
acquisition accounting, the post-acquisition entity was accounted
for as a recapitalization of MED.
The continuing company has retained December 31 as its fiscal
year end.
F-11
/26/
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
We have had no disagreements with our independent
accountants.
[balance of this page intentionally left blank]
/27/
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The name, age, position and date of appointment of the
Company's directors and executive officers are as follows:
Name Age Position(s) Appointed
--------------- ------- --------------------------------- -------------
Robert L. Cox 43 President, Secretary and Director March of 2001
Keith Berman 49 Treasurer and Director January of 2003
William Lyons 49 Director January of 2003
Robert Jagunich 56 Director January of 2003
Robert L. Cox, President, Secretary and Director - and
founder of ATR Search Corp. (now CareDecision), was the Chief
Executive Officer, President and Director of Tower Realty Trust,
Inc., a publicly traded Real Estate Investment Trust ("REIT").
Prior to holding the positions of CEO and President, since 1995
Mr. Cox served as the Executive Vice President and Chief
Operating Officer of Tower Equities until October of 1997, when
Tower Equities became a public company (Tower Realty Trust,
Inc.). Prior to that, Mr. Cox served as Vice President of
Development and Construction of Tower Equities from March 1987
to March 1995, where his main responsibilities included
supervising all of Tower Equities' development and construction
projects. Mr. Cox is a graduate of Florida State University.
Keith Berman, Treasurer and Director - has over 22 years
experience in healthcare with such companies as Technicon
Corporation and Boehringer-Mannheim Corporation, and in the last
15 years providing healthcare software including intranet and
Internet systems. Mr. Berman was the founder of Cymedix, the
operating division of public Medix Resources, Inc. (MXR). Mr.
Berman received a BA and MBA from Indiana University.
William Lyons, Director - has over 20 years experience in
healthcare endeavors, and for the past fifteen years has
concentrated on medical communications and medical IT. Mr. Lyons,
former President of Cybear, Inc. (CYBA) and an original member
of the management team at AllScripts (MDRX), manages the
company's sales and marketing efforts. Mr. Lyons received a BA
from St. Michael's College and an MBA from Pace University.
Robert Jagunich, Director - has as a director of Cymedix
Corporation, the operating entity of Medix Resources, Inc.
(AMEX:MXR), from April 1996 through December 1997. Mr. Jagunich
has 27 years of experience in the medical systems and device
industry. Recently, he has held the position of President at
new Abilities Systems, a privately-held manufacturer of advanced
electronic systems used in rehabilitation. He also consults to
companies such as Johnson and Johnson and has served as a senior
executive in such publicly-held companies as Laserscope and
Acuson. He received his B.S., M.S. and M.B.A. from the
University of Michigan.
/28/
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of
the Company's equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company.
Officers, directors and greater than ten-percent stockholders are
required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms they file. To the Company's knowledge,
based solely on review of the copies of such reports furnished to
the Company and written representations that no other reports
were required during the fiscal year ended December 31, 2002, its
officers, directors and greater than ten percent beneficial
owners complied with all Section 16(a) filing requirements.
ITEM 10. EXECUTIVE COMPENSATION.
The following table discloses compensation paid during the
fiscal year ended December 31, 2002 to (i) the Company's Chief
Executive Officer, and (ii) individual(s) who were the only
executive officers, other than the Chief Executive Officer,
serving as executive officers at the end of 2002 whose total
salary and bonus exceeded $100,000 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
ANNUAL
COMPENSATION ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION
POSITION YEAR ($) ($) ($)
-------- ---- --- --- ---
Robert L. Cox 2002 30,000 0 0
President, CEO 2001 100,000 0 0
STOCK OPTIONS GRANTED IN LAST FISCAL YEAR
During the fiscal years ended December 31, 2002 and 2001, we
did not grant any options to our Chief Executive Officer. During
fiscal 2002 and 2001, our Chief Executive Officer did not
exercise any options.
EMPLOYMENT AGREEMENTS
No such agreement(s) exists between any executive and the Company.
COMPENSATION OF DIRECTORS
Our only directors are the current executive officers that
are already drawing salaries for the management of our Company.
They are reimbursed for reasonable expenses incurred in
connection with attendance at meetings of the Board and of
Committees of the Board; however, they do not receive any
additional compensation for their services as directors.
Accordingly, it may be necessary for us to compensate newly
appointed directors in order to attract a quality governance
team. At this time the Company has not identified any specific
individuals or candidates nor has it entered into any
negotiations or activities in this regard.
/29/
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information as of
December 31, 2002 with respect to the beneficial ownership of the
Company's Common Stock by: (i) all persons known by the Company
to be beneficial owners of more than 5% of the Company's Common
Stock, (ii) each director and Named Executive Officer, and (iii)
by all executive officers and directors as a group. Based on
75,364,137 shares outstanding as of December 31, 2002, 5% of the
Company's Common Stock is 3,768,207 shares.
COMMON STOCK
------------
Shares Percentage of
Name and Address Beneficially Owned Shares Outstanding
------------------------- ------------------ ------------------
Anfel Trading1 4,206,531 5.58%
505 Park Avenue
New York, NY 10022
Keith Berman2 6,383,325 8.47%
1623 Elmsford
Westlake, CA 91361
Robert L. Cox 1,123,861 1.49%
16 Wood Hollow Lane
Fort Salonga, NY 11768
Cede & Co.3 20,508,927 27.21%
PO Box 222 Bowling Green Station
New York, NY 10274
Robert Jagunich 1,465,000 1.94%
765 Christine Drive
Palo A lot, CA 94303
William Lyons 2,792,224 3.70%
617 Joshhue Court
Naperville, IL 60540
------------------ ------------------
Total ownership by our 11,764,410 15.60%
officers and directors
(four individuals)
Footnotes
1. The principal executive officer of Anfel Trading is Jackie Bronner.
2. Certificate number 1329 in the amount of 848,768 shares and
certificate number 1395 in the amount of 1,267,963 shares of the
Company's common stock were transferred to a non-related
individual on October 16, 2002, however, these certificates were
lost in transit and were not recovered until March 2003.
Therefore, Mr. Berman's holdings as reflected on the Company's
December 31, 2002 certified shareholder list is overstated by a
total of 2,116,731 shares.
3. Cede & Co. is a clearing company. Of the 35 individuals that have
their securities on deposit, none own a position of more than 5% of
the Common Stock of the Company.
/30/
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On May 5, 2001, the Company executed a promissory note with
Robert Cox, the president of the Company, in the amount of
$50,000.
On May 24, 2001, the Company issued 150,000 shares of its
$0.001 par value common stock to Mary Lou Cox, mother of Robert
Cox, the Company's president, for consulting services valued at
$15,000.
On January 15, 2002, Medicius loaned an officer a total of
$15,000 which is due in one year at an interest rate of 8% per
annum. At the close of the merger this note was assumed by the
Company.
On January 15, 2002, the Company received $40,000 from Keith
Berman, a beneficial owner of the Company, which was due on
December 31, 2003 and accrues interest at 8% per annum. The
principal and accrued interest were convertible at a rate of
$0.10 per share. During September 2002, Mr. Berman converted his
$40,000 loan plus interest into 1,267,963 shares of the Company's
$0.001 par value common stock.
During 2002, the Company received equipment in the amount of
$27,857 from Keith Berman, a beneficial owner of the Company.
The Company acquired Intellectual Property from
CareDecision.net, Inc, a private stockholder owned corporation
that completed several transactions with the Company. As a
result of the merger and the acquired intellectual property, two
of the beneficial owners of CareDecision.net are now beneficial
owners of the Company. Pursuant to the agreement, the Company
paid CareDecision.net, Inc. the sum of $187,500 with 700,000
shares of the Company's $0.001 par value preferred stock.
CareDecision.net, Inc. then elected to convert its preferred
shares into 1,725,000 shares of the Company's $0.001 par value
common stock.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
A list of exhibits required to be filed as part of this Annual
Report is set forth in the Index to Exhibits, which immediately
precedes such exhibits and is incorporated herein by reference.
(b) Reports on Form 8-K
The Company has not filed any reports on Form 8-K during the
last quarter of the period covered by this Report.
/31/
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CAREDECISION CORPORATION
Date: April 24, 2003
--------------
By: /s/ Robert Cox
--------------
Robert Cox,
President/CEO, Secretary and Director
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
Date: April 24, 2003
--------------
By: /s/ Robert Cox
--------------
Robert Cox,
President/CEO, Secretary and Director (Principal Executive Officer)
Date: April 24, 2003
--------------
By: /s/ Keith Berman
----------------
Keith Berman,
Treasurer/CFO and Director
/32/
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert Cox, Chairman of the Board, President, Secretary and
Chief Executive Officer of CareDecision Corporation (the
"Registrant"), certify that:
1. I have reviewed this Annual Report on Form 10-KSB of the
Registrant;
2. Based on my knowledge, this Annual Report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this Annual
Report;
3. Based on my knowledge, the financial statements, and other
financial information included in this Annual Report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for,
the periods presented in this Annual Report;
4. As the Registrant's certifying officer, I am responsible for
establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
Registrant and I have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including any
consolidated subsidiary, is made known to me by others within
those entities, particularly during the period in which this
Annual Report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Annual Report (the "Evaluation Date"); and
c) presented in this Annual Report, the Registrant's conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;
5. As the Registrant's certifying officer, I have disclosed,
based on our most recent evaluation, to the Registrant's auditors
and the audit committee of Registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
/33/
6. As the Registrant's certifying officer, I have indicated in
this Annual Report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
Dated: April 24, 2003
/s/ Robert Cox
-----------------------------
Robert Cox
CEO, President, Secretary and
Chairman of the Board
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Keith Berman, Treasurer and CFO of CareDecision Corporation
(the "Registrant"), certify that:
1. I have reviewed this Annual Report on Form 10-KSB of the
Registrant;
2. Based on my knowledge, this Annual Report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this Annual
Report;
3. Based on my knowledge, the financial statements, and other
financial information included in this Annual Report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for,
the periods presented in this Annual Report;
4. The Registrant's other certifying officer and me are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the Registrant and we have:
a) designed such disclosure controls and procedures
to ensure that material information relating to
the Registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this Annual Report is being prepared;
b) evaluated the effectiveness of the Registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
Annual Report (the "Evaluation Date"); and
c) presented in this Annual Report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
/34/
5. The Registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
Registrant's auditors and the audit committee of Registrant's
board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the Registrant's ability to record, process,
summarize and report financial data and have identified
for the Registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the Registrant's internal controls; and
6.The Registrant's other certifying officer and I have
indicated in this Annual Report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Dated: April 24, 2003
/s/ Keith Berman
-----------------
Keith Berman
Treasurer and CFO
/35/
INDEX TO EXHIBITS
Exhibit Name and/or Identification of Exhibit
Number
3 Articles of Incorporation & By-Laws
(a) Articles of Incorporation of the Company filed
March 2, 2001. Incorporated by reference to the
exhibits to the Company's General Form For Registration
Of Securities Of Small Business Issuers on Form 10-SB,
previously filed with the Commission.
(b) Amended Articles of Incorporation of the Company
filed May 9, 2001. Incorporated by reference to the
exhibits to the Company's General Form For Registration
Of Securities Of Small Business Issuers on Form 10-SB,
previously filed with the Commission.
(c) Amended Articles of Incorporation of the Company
filed August 2, 2002. Incorporated by reference to the
exhibits to the Company's December 31, 2002 Form 10-KSB
previously filed with the Commission.
(d) By-Laws of the Company adopted March 16, 2001.
Incorporated by reference to the exhibits to the
Company's General Form For Registration Of Securities
Of Small Business Issuers on Form 10-SB, previously
filed with the Commission.
99.1 Certification under Section 906 of the Sarbanes-Oxley Act
(18 U.S.C. SECTION 1350)
/36/