FORM 10-QSB/A
Amendment No. 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended: March 31, 2003
COMMISSION FILE NUMBER 0-13215
LATINOCARE MANAGEMENT CORPORATION
-------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 30-0050402
-------------- ----------------
(State of Incorporation) (I.R.S. Employer Identification No.)
959 Walnut Avenue, Suite 250, Pasadena, California 91106
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(626) 583-1115
----------------
Registrant's telephone number, including area code
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Name of Each Exchange On
Title of Each Class Which Registered
------------------- ------------------------
COMMON STOCK OTC
-----------
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 |_|
The aggregate market value of voting stock held by non-affiliates of
the registrant was $126,894 as of March 31, 2003 (computed by reference to the
last sale price of a share of the registrant's Common Stock on that date as
reported by the NASDAQ).
There were 14,604,098 shares outstanding of the registrant's Common
Stock as of March 31, 2003.
TABLE OF CONTENTS
Page
----
PART I. - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4
Balance Sheets as of March 31, 2003 (unaudited)
and December 31, 2002.............................................. 4
Statements of Operations for the Three Months ended March 31, 2003
and March 31, 2002................................................. 6
Statement of Stockholders' Deficit for the year ended
December 31, 2002, and for the Three Months ended
March 31, 2003 (unaudited)......................................... 7
Statements of Cash Flow for the Three Months ended
March 31, 2003 and 2002............................................ 8
Notes to Condensed Consolidated Financial Statements (unaudited)... 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...............................................14
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS...................................................15
ITEM 2. CHANGES IN SECURITIES...............................................15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.....................................15
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS..................15
ITEM 5. OTHER INFORMATION....................................................16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................16
SIGNATURES .........................................................17
-2-
ARMANDO C. IBARRA
CERTIFIED PUBLIC ACCOUNTANTS
( A PROFESSIONAL CORPORATION)
Armando C. Ibarra, C.P.A. Members of the
Armando Ibarra, Jr., C.P.A. California Society of
Certified Public Accountants
To the Board of Directors
Latinocare Management Corporation
Long Beach, California
INDEPENDENT ACCOUNTANTS' REPORT
We have reviewed the accompanying consolidated balance sheets of Latinocare
Management Corporation and subsidiary as of March 31, 2003 and March 31, 2002
and the related consolidated statements of operations, changes in stockholders'
deficit, and cash flows for the three months ended March 31, 2003 and 2002, in
accordance with Statements on Standards for Accounting Review Services issued by
the American Institute of Certified Public Accountants. All information included
in these financial statements is the representation of the management of
Latinocare Management Corporation and subsidiary.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any modifications that should be made
to the accompanying financial statements in order for them to be in conformity
with generally accepted accounting principles.
\s\ Armando C. Ibarra, C.P.A. - APC
- -----------------------------------
ARMANDO C. IBARRA, C.P.A. - APC
April 1, 2003
Chula Vista, California
-3-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Balance Sheets
(unaudited)
- --------------------------------------------------------------------------------------------------
ASSETS
March 31, March 31,
2003 2002
-------------------- --------------------
CURRENT ASSETS
Cash $ 100,150 $ 8,873
Accounts receivable - 298
Prepaid expenses - 88,243
-------------------- --------------------
TOTAL CURRENT ASSETS 100,150 97,414
NET PROPERTY & EQUIPMENT - 204,850
OTHER ASSETS
Deposit - 15,478
-------------------- --------------------
TOTAL OTHER ASSETS - 15,478
-------------------- --------------------
TOTAL ASSETS $ 100,150 $ 317,742
==================== ====================
See Accountants' Report and Notes to Consolidated Financial Statements
-4-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Balance Sheets
(unaudited)
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS' DEFICIT
March 31, March 31,
2003 2002
--------------------- ---------------------
CURRENT LIABILITIES
Accounts payable - trade $ 100,150 $ 199,709
Income tax payable - 1,600
Accrued expenses - 153,823
Accrued interest - 72,299
Due to related party - 803,399
Note payable - 1,750,000
--------------------- ---------------------
TOTAL CURRENT LIABILITIES 100,150 2,980,830
--------------------- ---------------------
TOTAL LIABILITIES 100,150 2,980,830
STOCKHOLDERS' DEFICIT
Common stock, (no par value, 50,000,000
shares authorized; 14,604,098 and 14,529,100
shares issued and outstanding as of March 31,
2003 and 2002, respectively) 1,037,652 997,652
Additional paid-in capital 10,000
Retained earnings (1,037,652) (3,670,740)
--------------------- ---------------------
TOTAL STOCKHOLDERS' DEFICIT - (2,663,088)
--------------------- ---------------------
TOTAL LIABILITIES &
STOCKHOLDERS' DEFICIT $ 100,150 $ 317,742
===================== =====================
See Accountants' Report and Notes to Consolidated Financial Statements
-5-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Statement of Operations
(unaudited)
- -------------------------------------------------------------------------------------------------------
Three Months Ended Three Months Ended
March 31, March 31,
2003 2002
------------------- -------------------
REVENUES
Revenues $ - $ 372,377
------------------- -------------------
TOTAL REVENUES - 372,377
GENERAL & ADMINISTRATIVE EXPENSES 31,833 754,241
------------------- -------------------
OPERATING INCOME (LOSS) (31,833) (381,864)
OTHER INCOME & (EXPENSES)
Depreciation - (13,750)
Interest expense - (26,270)
Interest income - -
County tax - -
TOTAL OTHER INCOME & (EXPENSES) - (40,020)
------------------- -------------------
NET INCOME (LOSS) BEFORE TAXES (31,833) (421,884)
Provision for Income Taxes - 800
------------------- -------------------
NET INCOME (LOSS) $ (31,833) $ (422,684)
=================== ===================
BASIC EARNINGS (LOSS) PER SHARE $ (0.00) $ (0.03)
=================== ===================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 14,604,098 14,529,100
=================== ===================
See Accountants' Report and Notes to Consolidated Financial Statements
-6-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Statement of Changes in Stockholders' Equity
From December 31, 2000 Through March 31, 2003
(Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Common Common Additional Retained
Stock Stock Paid-in Earnings Total
Amount Capital
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000 3,781,455 $ 952,727 $ (960,942) $ (8,215)
Retirement of common stock (3,270,000) -
Issuance of new common stock 13,471,645 -
Stock issued for cash 260,000 26,000 (26,000) -
Stock issued for services rendered 100,000 10,000 10,000
Stock issued to private investors 186,000 8,925 (8,925) -
Transfer of acquiring company's acum. deficit (1,671,685) (1,671,685)
Net loss, December 31, 2001 (580,504) (580,504)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2001 14,529,100 997,652 $ - (3,248,056) (2,250,404)
====================================================================================================================================
Stock issued to private investors 28,000 35,000 35,000
Stock issued for services rendered 46,998 5,000 5,000
Net loss, December 31, 2002 (31,833) (31,833)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2002 14,604,098 $1,037,652 $ - $(3,279,889) $(2,242,237)
====================================================================================================================================
Spin-off of subsidiary 2,274,070 2,274,070
Net loss, March 31, 2003 (31,833) (31,833)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 2003 14,604,098 1,037,652 $ - $(1,037,652) $ $ -
====================================================================================================================================
See Accountants' Report and Notes to Consolidated Financial Statements
-7-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Statements of Cash Flows
(unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended Three Months Ended
March 31, March 31,
2003 2002
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (31,833) $ (422,684)
Depreciation expense - 13,750
(Increase) decrease in other current assets - (38,952)
(Increase) decrease in accounts receivable - 2,624
Increase (decrease) in accounts payable - trade - 3,322
Increase (decrease) in accrued expenses - 46,301
Increase (decrease) in accrued interest - 26,265
------------------ ------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (31,833) (369,374)
CASH FLOWS FROM INVESTING ACTIVITIES
(Acquisition) disposal of equipment - -
------------------ ------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES - -
CASH FLOWS FROM FINANCING ACTIVITIES
Cash generated from spin-off of subsidiary 131,983 -
Related party loan - 365,643
Private placement offering - 10,000
------------------ ------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 131,983 375,643
------------------ ------------------
NET INCREASE (DECREASE) IN CASH 100,150 6,269
CASH AT BEGINNING OF YEAR - 2,604
------------------ ------------------
CASH AT END OF YEAR $ 100,150 $ 8,873
================== ==================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
INCOME TAXES PAID $ - $ 987
================== ==================
INTEREST PAID $ 29 $ -
================== ==================
COMMON STOCK ISSUED FOR SERVICES $ 5,000 $ -
================== ==================
See Accountants' Report and Notes to Consolidated Financial Statements
-8-
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
A. ORGANIZATION:
Latinocare Management Corporation, a Nevada corporation, (the Company) was
incorporated in the State of Nevada on January 22, 2002. The Company, a
management service organization, was in the business of providing management and
administrative services, and had developed a system of operations, management
and marketing for independent practice associations engaged in providing health
care services.
The Company provided this service through a former subsidiary, Latinocare
Management Corporation. Latinocare Management Corporation dba Latino Health Care
was founded and incorporated on February 23, 1995 as a California for-profit
Stock Corporation. Its sole purpose, when originally organized, was to manage
all operations of Latinocare Network Medical Group (IPA), a related company that
had common shareholders who influence the activities of both entities.
Latinocare Management Corporation (LMC) acquired JNS Marketing, Inc. (JNS) in
November 2001 purchasing 3,270,000 or approximately 86% of the issued and
outstanding common stock of JNS Marketing, Inc. in exchange for $300,000. There
was a delay in the planned acquisition date due to negotiation of the
acquisition cost which resulted in the issuance of an additional 260,000 new
shares of common stock of the Company as part of the purchase price. The
3,270,000 shares of common stock were subsequently retired and cancelled. The
members of the Board of Directors of the Company before the purchase were
replaced with the members of Latinocare Management Corporation's Board of
Directors. LMC and JNS entered into an Agreement and Plan of Reorganization,
which resulted in a share exchange between shareholders of the two companies,
whereby LMC became a wholly owned subsidiary of the Company. JNS was renamed as
Latinocare Management Corporation, reincorporated in the State of Nevada on
January 2002, and is referred to as the Company.
Since the death of Dr. Roberto Chiprut the business relation between the Company
and Latinocare Network Medical Group (LNMG) had deteriorated to the point where
they cannot work together. Thus, the Company spun off the subsidiary to its
shareholders on a pro-rata basis and ceased operations. The Company is in the
process of seeking other business operations.
NATURE OF OPERATIONS:
The Company, a management service organization, was in the business of providing
management and administrative services, and had developed a system of
operations, management and marketing for independent practice associations
engaged in providing health care services.
The Company targeted and successfully reached four primary groups: health plans,
hospitals, health service recipients and physicians with significant focus on
the Latin market.
Latinocare Network Medical Group, Inc., an Independent Physician Association
(IPA), was incorporated on September 30, 1994, as a licensed medical group able
to accept physician services risk from third-party payers and self-insured
employers. The IPA was organized for the purpose of meeting the comprehensive
health care needs of the Latino population and the lack of access to quality
health care services available to the Latino community.
In November 1995, the Company entered into a twenty-five (25) year Management
Services Agreement with Latinocare Network Medical Group, Inc. to provide all
management and administrative support, allowing the IPA to focus efforts on
physician network development. The Company acted as the exclusive agent to the
IPA with regards to seeking, negotiating, renewing, and executive managed care
contracts. In the first quarter of 2003 the spin off of the subsidiary was
completed and this current financial statements reflect only the operations,
assets, liabilities and equity of the Company.
-9-
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ACCOUNTING METHOD:
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31, year-end.
B. BASIS OF CONSOLIDATION:
The consolidated financial statements include the accounts of the Company and
its subsidiary. Inter-company accounts and transactions have been eliminated in
the consolidated financial statements.
C. CASH AND CASH EQUIVALENTS:
The Company considers all money market funds and highly liquid debt instruments
with maturity dates of three months or less when purchased to be cash
equivalents.
D. 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
E. REVENUE RECOGNITION AND DEFERRED REVENUE:
Revenues from professional services, primarily from management fees, were
recognized on an accrual basis of accounting as services are performed or the
amounts earned (in compliance with SOP 00-2), based on a percentage of
capitation revenues received by the IPA, which is a related party.
F. ACCOUNTS RECEIVABLE:
The Company does not have any accounts receivable as of March 31, 2003. Thus, no
allowance for doubtful accounts was required. When accounts became
uncollectible, they were charged to operations when that determination was made.
G. PREPAID PRIVATE PLACEMENT COSTS:
Specific incremental costs directly attributable to proposed or actual offering
of securities were deferred and to be charged against the gross proceeds of the
offering. However, as of December 31, 2002 the amount that was previously
accrued was expensed to the appropriate accounts.
G. ADVERTISING EXPENSES:
All advertising expenses are expensed as incurred.
-10-
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. PROPERTY, EQUIPMENT, AND RELATED DEPRECIATION:
Property and equipment are stated at cost. Maintenance, repairs and minor
renewals and betterment's are expensed; major improvements are capitalized.
Depreciation of property and equipment is provided for using the straight-line
method over the estimated useful lives of the assets as follows:
Estimated
Useful Lives
---------------------
Leasehold improvements Life of lease
Computer, equipment and office furniture 5 - 10 years
Upon retirement, sale, or other disposition of property and equipment, the costs
and accumulated depreciation are eliminated from the accounts, and any resulting
gain or loss is included in operations.
K. INCOME TAXES
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred income taxes are recognized for
the tax consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.
NOTE 3. GOING CONCERN
The Company spun off its subsidiary in the first quarter of 2003. As of March
31, 2003 the Company no longer has operations. The Company also had negative
working capital and stockholders deficit at March 31, 2003. Management is
currently planning a reverse merger with another company. These financial
statements have been prepared as if the Company will consummate the merger it is
currently negotiating and that operations will commence. Or in the alternative,
or in addition to, that adequate equity financing will be obtained.
-11-
NOTE 4. PROPERTY & EQUIPMENT
Property is stated at cost. Additions, renovations, and improvements are
capitalized. Maintenance and repairs, which do not extend asset lives, are
expensed as incurred. Depreciation is provided on a straight-line basis over the
estimated useful lives ranging from 27.5 years for commercial rental properties,
5 years for tenant improvements, and 5 - 7 years on furniture and equipment.
March 31, March 31,
2003 2002
------------- ------------
Computers and software 171,013
Furniture, fixtures 83,786
and office equipment
Leasehold improvements 77,157
-------------- ------------
-0- $331,956
Accumulated depreciation (127,106)
-------------- ------------
NET PROPERTY AND EQUIPMENT $ -0- $204,850
============== ============
Depreciation expense for the three months ended March 31, 2003 and 2002 was $
- -0- and $13,750, respectively.
The Company periodically evaluated the net realizable value of long-lived
assets, including property and equipment, relying on a number of factors
including operating results, business plans, and economic projections and
anticipated future cash flows. As of March 31, 2003 all fixed assets remained
with subsidiary and the Company has no other fixed assets.
NOTE 5. NOTE PAYABLE
The notes payable is all current and comprised of the following amount as of
March 31, 2002:
Cedars Sinai Medical Center, due July 18, 2002
With interest at 6.0% Per annum $ 1,750,000
===========
This note was secured, in the event of breach by the Company, allowing Cedars
Sinai Medical Center the sole recourse of repossessing that portion, if any, of
its shareholdings (28% of the outstanding shares) of the Company pursuant to the
following provisions:
a. For the first seven hundred and fifty thousand dollars ($750,000)
repaid by the Company, recourse shareholdings shall be reduced from
twenty-eight percent (28%) of the issued and outstanding shares to not
less than twenty percent (20%) of the issued and outstanding shares, or
the portion thereof;
b. For the next one million dollars ($1,000,000) repaid by the Company,
recourse shareholdings shall be reduced to twenty percent (20) of the
issued and outstanding shares to zero percent (0%) of such issued and
outstanding shares, or the portion thereof.
If this note is not paid when due, the Company shall pay all costs of
collections, including attorney's fees and costs and all expenses incurred on
account of collection, whether or not suit is filed.
As of March 31, 2003, no payments were made by the Company or any collection
actions commenced by Cedars Sinai Medical Center. All rights and remedies of
Cedars Sinai Medical Center in connection with the existing defaults were hereby
reserved, the lender agreed to forbear from exercising its rights and remedies
until July 23,
-12-
NOTE 5. NOTE PAYABLE (CONTINUED)
2003. Cedars Sinai Medical Center had not demanded a conversion of its note and
management believes that it will probably not do so. This note also remained
with the subsidiary and the Company should not be liable for its repayment.
NOTE 6. EMPLOYEE SAVINGS PLAN
On August 1, 2000 the Company adopted a 401(K) Profit Sharing Plan and Trust for
the benefit of its employees and beneficiaries. Eligible employees may
contribute a portion of pretax annual compensation within specified limits. A
discretionary matching contribution will be provided by the employer that may or
may not be limited to net profit.
There are no employer contributions to the plan for the three months ended March
31, 2003 and 2002.
NOTE 7. STOCK OPTION PLAN
On January 31, 2002, the Board of Directors of the Company unanimously approved,
and the shareholders ratified, the adoption of the 2002 Stock Option Plan. The
Stock Option Plan consists of 1,200,000 stock options for directors, executive
officers and key employees to purchase shares of the Company's Common Stock. As
of March 31, 2003 the plan had not been implemented.
NOTE 8. INCOME TAXES
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryfowards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
At December 31, 2002 the Company has significant operating losses carryfoward.
The tax benefits resulting from these losses have been estimated to be $672,600.
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that deductible temporary differences and carryforward
are expected to be available to reduce taxable income. In accordance with SFAS
109 paragraph 24 the Company has deemed that a valuation allowance is required
for the total benefit. Thus, no income tax benefit was included in the financial
statements for the year. The increase in operating loss carry-forward will
expire twenty years from the date the loss was incurred.
NOTE 9. SUBSEQUENT EVENTS
The Company entered into an agreement to spin off the subsidiary, Latinocare
Management Corporation (a California corporation) (LMCC) to the stockholders on
a pro-rata basis. LMCC will keep all assets, most of the liabilities, and all of
the operations as they exist at the time the agreement was finalized. This will
leave the Company, Latinocare Management Corporation (a Nevada corporation)
without any significant assets, liabilities or operations. Basically, this
transaction will leave both companies as they were before they merged.
The shareholders of the Company are also in the process of transferring
ownership and control of this public shell.
-13-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
CAUTIONARY STATEMENTS
This Form 10-QSB contains financial projections, synergy estimates and
other "forward-looking statements" as that term is used in federal securities
laws about Latinocare Management Corporation's financial condition, results of
operations and business. These statements include, among others: statements
concerning the benefits that the Company expects will result from its business
activities and certain transactions the Company has completed, such as the
potential for increased revenues, decreased expenses and avoided expenditures;
and statements of the Company's expectations, beliefs, future plans and
strategies, anticipated developments and other matters that are not historical
facts. These statements may be made expressly in this Form 10-QSB. You can find
many of these statements by looking for words such as "believes," "expects,"
"anticipates," "estimates," or similar expressions used in this Form 10-QSB.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause the Company's actual results to be materially
different from any future results expressed or implied by the Company in those
statements. The most important facts that could prevent the Company from
achieving its stated goals include, but are not limited to, the following:
(a) inability of the Company to acquire an operating company;
(b) volatility or decline of the Company's stock price;
(c) potential fluctuation in quarterly results, if the Company is
able to acquire an operating company;
(d) failure of an operating company acquired by the Company, if
any, to earn revenues or profits, or to operate as a viable or
successful business;
(e) inadequate capital and barriers to raising the additional
capital or to obtaining the financing needed to implement its
business plans;
(f) inadequate capital to continue business;
(g) changes in demand for the Company's products and services;
(h) rapid and significant changes in markets;
(i) litigation with or legal claims and allegations by outside
parties;
(j) insufficient revenues to cover operating costs.
Because the statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the
forward-looking statements. The Company cautions you not to place undue reliance
on the statements, which speak only as of the date of this Form 10-QSB. The
cautionary statements contained or referred to in this section should be
considered in connection with any subsequent written or oral forward-looking
statements that the Company or persons acting on its behalf may issue. The
Company does not undertake any obligation to review or confirm analysts'
expectations or estimates or to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after the date of
this Form 10-QSB or to reflect the occurrence of unanticipated events.
-14-
GENERAL
The Company is a holding company with no assets other than the stock of
LMC. LMC closed its business and entirely ceased operations on November 1, 2002.
Consequently, the Company has no business operations by itself or as a
consolidated entity with LMC. LMC is expected to declare bankruptcy or dissolve
in 2003. All information in the following paragraphs relates to the period from
January 1, 2002 to November 1, 2002 because operations ceased on November 1,
2002.
RESULTS OF OPERATIONS FOR FISCAL QUARTER ENDED MARCH 31, 2003 COMPARED TO FISCAL
QUARTER ENDED MARCH 31, 2002
Total revenue for the three month period ending March 31, 2003
decreased to $0 from $372,377 in the prior comparable fiscal quarter.
General and administrative expenses decreased by $722,408 during the
three months ended March 31, 2003 to $31,833 from $754,241 in the prior
comparable fiscal quarter. Expense related to depreciation was $0 for the three
months ended March 31, 2003 as compared to $13,750 for the prior comparable
fiscal quarter. Interest expense was $0 for the three months ended March 31,
2003 as compared to $26,270 for the comparable quarter in 2002.
For the three months ended March 31, 2003, the Company's consolidated
net loss was $31,833 as compared to a consolidated net loss of $422,684 for the
three months ended March 31, 2002.
LIQUIDITY AND CAPITAL RESOURCES
The Company had consolidated net cash of $100,150 at March 31, 2003 as
compared to net cash of $8,873 at March 31, 2002. The Company had a net working
capital deficit (i.e. the difference between current assets and current
liabilities) of $0 at March 31, 2003 as compared to a working capital deficit of
$2,883,416 at March 31, 2002. Cash flow provided by operating activities was
$(31,833) during the three months ended March 31, 2003 as compared to $(369,374)
during the three months ended March 31, 2002. Cash provided by investing
activities was $0 during the three months ended March 31, 2003 as compared to $0
during the three months ended March 31, 2002. Cash provided by financing
activities decreased from $375,643 during the three months ended March 31, 2002
to $131,983 during the three months ended March 31, 2003. There is no assurance
that the Company will have sufficient capital to acquire a new business or, if a
new business is acquired, sufficient capital to finance its growth and business
operations, or that such capital will be available on terms that are favorable
to the Company or at all.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
On or about February 7, 2003, the holders of a majority of the issued
and outstanding voting stock of the Company submitted their consents, to be
effective as of March 17, 2003, authorizing the conveyance to Jose J. Gonzalez
of all of the outstanding shares of common stock of Latinocare Management
Corporation, a California corporation (the "Subsidiary"), owned by the Company
(the "Conveyance") in consideration for one dollar and Jose J. Gonzalez's
assumption of the management responsibilities for the possible bankruptcy and
dissolution of the Subsidiary. The Company does not own any shares in the
Subsidiary as of the completion of the Conveyance.
-15-
On or about February 11, 2003, the holders of a majority of the issued
and outstanding voting stock of the Company submitted their consents, to be
effective on or before March 31, 2003, authorizing the officers and directors of
the Company to amend the Company's Articles of Incorporation to increase the
number of authorized of shares of the Company's common stock to 200,000,000, par
value $0.001 per share.
On or about March 26, 2003, the holders of a majority of the issued and
outstanding voting stock of the Company submitted their consents, to be
effective on or before May 2, 2003, authorizing the officers and directors of
the Company to amend the Company's Articles of Incorporation to change the
Company's name from Latinocare Management Corporation to a name to be selected
by the board of directors by duly authorized resolution, subject to the board
approval, signing, and closing of a reorganization agreement with an operating
company within the next ninety (90) days.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
EXHIBIT NO. DESCRIPTION
----------- -----------
99.1 Section 906 Certification
(b) The following is a list of Current Reports on Form 8-K filed by the
Company during the fiscal quarter for the period ended March 31, 2003.
Report on Form 8-K dated February 20, 2003, relating to changes in the Company's
certifying accountant.
-16-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: April 1, 2003 LATINOCARE MANAGEMENT CORPORATION
BY: \s\ Jose J. Gonzalez
-----------------------------------
JOSE J. GONZALEZ, CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER, AND PRESIDENT
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
BY: \s\ Jose J. Gonzalez Dated: April 1, 2003
--------------------------------------
JOSE J. GONZALEZ, CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER, AND PRESIDENT
-17-
CERTIFICATIONS
I, Jose J. Gonzalez, certify that:
1. I have reviewed this quarterly report on Form 10QSB of Latinocare Management
Corporation;
2. Based on my knowledge, this quarterly 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 quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officers and I 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 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 quarterly 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 quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers 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
functions):
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 officers and I have indicated in this
quarterly report whether 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.
Date: April 1, 2003
/s/ Jose J. Gonzalez
-------------------------------------------------------
JOSE J. GONZALEZ, CHIEF EXECUTIVE OFFICER, PRESIDENT,
AND CHIEF FINANCIAL OFFICER
(PRINCIPAL EXECUTIVE OFFICER/PRINCIPAL FINANCIAL OFFICER)
-18-