American Diversified Holdings Inc (ADHC)

[kirsch57]

SECOND QUARTER FY 2012
OTC MARKETS GROUP
American Diversified Holdings Corporation
(A Nevada Company)
QUARTERLY REPORT
As of January 31, 2012
All information in this information and disclosure Statement has been compiled to fulfill the disclosure requirements of rule 15c2-11 (a) promulgated under the Securities and Exchange Act of 1934, as amended. The enumerated captions contained herein correspond to the sequential format set forth in the rule.
No Dealer, salesmen or any other person has been authorized to give any information, or to make any representations, not contained herein in connection with the issuer. Such information or representations, if made, must not be relied upon as having been authorized by the issuer, and:
Delivery of this information file does not any time imply that the information contained herein is correct as of any time subsequent to the date first written above.
The undersigned hereby certifies that the information herein is true and correct to the best of their knowledge and belief.
Date: March 15, 2012
AMERICAN DIVERSIFIED HOLDINGS CORPORATION
By: /s/ Mr. Ernest B. Remo
Name: Mr. Ernest B. Remo
Position: Chairman/CEO
Phone: [phone]
E-mail: [e-mail]
Web-Page: www.americandiversifiedholdings.com
1
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Item 1. The exact name of the issuer and the address of its principal executive offices:
The exact name of the Issuer is American Diversified Holdings Corporation
2658 Del Mar Heights Rd
Suite 315
Del Mar, CA 92014
Phone: [phone]
Fax: [phone]
Item 2. Shares Outstanding 7/31/2010 7/31/2011 1/31/2012
Number of Shares Authorized – Common 1,000,000,000 1,000,000,000 1,000,000,000
Number of Shares Authorized – Pref. Ser. A 200,000 200,000 200,000
Number of Shares Outstanding – Common 232,172,727 960,775,323 980,775,323
Number of Shares Outstanding – Pref. Ser. A 100,000 100,000 100,000
Free Trading Shares – Common 48,064,306 538,131,658 728,131,658
Total Number of Beneficial Shareholders 1129 1098 1027
Total Number of Shareholders of Record 127 138 135
Item 3. Interim Financial Statements
The Company’s interim financial statements are attached at the end of this Quarterly filing as Exhibit A.
CONSOLIDATED FINANCIAL INFORMATION
PAGE
Consolidated Balance Sheets as of January 31, 2012 and January 31, 2011 (unaudited)
6
Consolidated Statements of Operations as of January 31, 2012 and January 31, 2011 (unaudited)
7
Consolidated Statements of Changes in Stockholders’ Deficiency
8
Consolidated Statements of Cash Flows as of January 31, 2012 and January 31, 2011 (unaudited)
11
Notes to the Consolidated Financial Statements
13
Item 4. Management’s discussion and analysis or plan of operation
American Diversified Holdings Corporation has been in the medical field for many years. The Company has decided to use its experience and expertise to enter the mHealth market. mHealth is a term used for the practice of medical and public health, supported by mobile devices. The term is most commonly used in reference to using mobile communication devices, such as mobile phones for health services and information. The mHealth field has emerged as a sub-segment of eHealth, the use of information and communication technology for health services and information. mHealth applications include the use of mobile devices in collecting community and clinical health data, delivery of healthcare information to practitioners, researchers, and patients, real-time monitoring of patient data, and direct provision of care via mobile telemedicine. Within the mHeath space, projects operate with a variety of objectives, including increased access to healthcare and health-related information (particularly for hard-to-reach populations); improved ability to diagnose and track diseases; timelier, more actionable public health information; and expanded access to ongoing medical education and training for health workers.
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As part of its concentrated strategy to focus on the mhealth market, the Company is developing a platform for the Mobile Health Care Market as the medical profession gears up to go electronic not only for medical records but also for direct patient monitoring and information. ADHC’s mHealth Division will Focus on Mobile Health Care Applications for iPhone™, iPad™, Android™ and Other Mobile Devices. ADHC is developing applications for the iPhone, iPad, Android and Other Mobile Devices tailored for specific ailments and protocols to allow medical professionals to monitor patients, get instant feedback and constantly adjust treatments to allow greater flexibility and response time in meeting individual patient needs.
Products and Services:
The Company will be at the forefront of the development of a secure mobile software platform that will aid in the collection, analyzing and presentation of data for the healthcare market. We will also be developing for different vertical markets such as Diabetes, Dementia and Alzheimer’s disease. The iPhone is now responsible for 50 percent worldwide and 55 percent US share of AdMob ads served to smartphones. The Android platform is also seeing significant growth in share of mobile ads served. Planned international introductions of Android devices could result in an uptick in its worldwide share in the next few months. The Company will work with the healthcare industry and healthcare providers to acquire content for the fast growing mobile platforms, the early sales estimates for the iPad have been hovering around 3 million to 4 million units in calendar-year 2010, The more realistic number may be more in the area of 6 million. The Company will have an opportunity to execute a strategy of defining healthcare markets that will require a new secure mobile platform for the collection, analyzing and presentation of data. The Company will be able to evaluate various solutions for the mHealth market and to attack certain medical disciplines that will be using the iPhone, iPad, Android and other mobile platforms. Many large institutions will want to connect using various computer platforms. The Company will develop methods for software communication among the various mobile devices.
On June 17, 2011, the Company announced that it has completed the acquisition of Mississauga, Ontario based cloud computing company Rebel Networks. While the Company announced its acquisition of Rebel Networks in June 2011, the finalization of the transaction did not occur until December 2011. The Company has made all necessary payments to Rebel Networks as per their agreement, and is working to integrate the operations and financial records of Rebel Networks with those of the Company.
Results of Operations
Six months ended January 31, 2012 and January 31, 2011
Sales
There were no sales for the six months ended January 31, 2012 compared to no sales for the six months ended January 31, 2011.
Selling, general and administrative expenses
For six months ended January 31, 2012, selling, general and administrative expenses were $185,667 compared to $387,889 for the six months ended January 31, 2011. The Company attributes this reduction in expense to the elimination of both legal costs and consulting fees associated with the acquisition of Rebel Networks.
Liquidity and Capital Resources
We have financed our operations primarily through cash generated from the sale of our stock and loans to the Company. The accompanying financial statements have been prepared assuming that the Company
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will continue as a going concern. During the six months ended January 31, 2012, the Company suffered net losses of $199,763. As of January 31, 2012, the Company had a working capital and stockholders’ deficiency of ($1,083,025). Historically, the Company has sustained its operations primarily through equity and debt financing. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
In view of these matters, the Company will need to improve its working capital position. The Company plans to overcome the circumstances that impact our ability to remain a going concern through a combination of achieving profitability, raising additional debt and equity financing, and renegotiating existing obligations. There can be no assurance, however, that we will be able to complete any additional debt or equity financing on favorable terms or at all, or that any such financings, if completed, will be adequate to meet our capital requirements. Any additional equity or debt financings could result in substantial dilution to our stockholders. If adequate funds are not available, we will be required to delay, reduce or eliminate some or all of our planned activities. Our inability to fund our capital requirements would have a material adverse effect on the Company. Management believes that the actions presently being taken to revise the Company's operating and financial requirements may provide the opportunity for the Company to continue as a going concern
Item 5. Legal Proceedings
There are no current, past, pending or threatened legal; proceedings or administrative actions either by or against the Company that could have material effect on the Company’s business, financial condition or operations.
Item 6. Defaults on Senior Securities
Not applicable
Item 7. Other Information
On January 13, 2012, the Company announced that its wholly owned and operating subsidiary, Rebel Networks, had reached partnership agreement with a well known major security services provider (MSSP). The partnership agreement will provide Rebel Networks customers with greater online security.
On June 17, 2011, the Company announced that it has completed the acquisition of Mississauga, Ontario based cloud computing company Rebel Networks. While the Company announced its acquisition of Rebel Networks in June 2011, the finalization of the transaction did not occur until December 2011. The Company has made all necessary payments to Rebel Networks as per their agreement, and is working to integrate the operations and financial records of Rebel Networks with those of the Company.
Item 8. Exhibits
Not applicable.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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Item 9. Certifications
I, Ernest B. Remo, certify that:
1.
I have reviewed this Quarterly Report (as of January 31, 2012) of American Diversified Holdings Corporation
2.
Based on my knowledge, this disclosure statement does not contain any untrue statements made, in light of the circumstances under which such statements were made not misleading with respect to the period(s) covered by this disclosure statement; and
3.
Based on my knowledge, the financial statements, and other financial information included or incorporated by reference in this disclosure statement, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for the periods presented in this disclosure statement
The undersigned hereby certifies that the information herein is true and correct to the best of their knowledge and belief.
Dated this 15th day of March, 2012
AMERICAN DIVERSIFIED HOLDINGS CORPORATION
By: /s/ Mr. Ernest B. Remo
Name: Mr. Ernest B. Remo
Position: Chairman/CEO
Phone: [phone]
E-mail: [e-mail]
Web-Page: www.americandiversifiedholdings.com
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Exhibit A
SUPPLEMENTAL INFORMATION
CONSOLIDATED FINANCIAL INFORMATION
PAGE
Consolidated Balance Sheets as of January 31, 2012 and January 31, 2011 (unaudited)
6
Consolidated Statements of Operations as of January 31, 2012 and January 31, 2011 (unaudited)
7
Consolidated Statements of Changes in Stockholders’ Deficiency
8
Consolidated Statements of Cash Flows as of January 31, 2012 and January 31, 2011 (unaudited)
11
Notes to the Consolidated Financial Statements
13
6
For the Six
For the Six
Months Ended
Months Ended
January 31, 2012
January 31, 2011
Assets
Cash
$ 360
$ 68,948
Note Receivable - PMR
-
-
Stock Receivable
134,403
70,000
Total Assets
$ 134,763
$ 138,948
Liabilities and Shareholders' Deficiency
Accounts Payable
$ 658
$ -
Accrued director fees
375,000
315,000
Accrued legal fees
17,000
17,000
Other current liabilities
-
84,000
Current liabilities of discontinued operations
125,000
125,000
Loan payable to officers
123,304
123,304
Note payable to Officer
576,826
574,592
Total Liabilities
$ 1,217,788
$ 1,238,896
Preferred Stock, $.001 par value, 200,000 shares
authorized; 100,000 shares issued and outstanding
$ -
$ -
Common Stock, $.001 par value, 1,000,000,000 shares
authorized and; 960,775,323 shares and 980,775,323
shares issued and outstanding at July 31, 2011 and
October 31, 2011, respectively.
980,775
967,372
Additional paid in capital
15,785,835
15,314,335
Accumulated Deficit
(17,849,634)
(17,381,655)
Total Shareholders' Deficiency
$ (1,083,025)
$ (1,099,948)
Total Liabilities and Shareholders' Deficiency
$ 134,763
$ 138,948
See accompanying notes to condensed consolidated financial statements.
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INCOME STATEMENT
For the Six
For the Six
Months Ended
Months Ended
January 31, 2012
January 31, 2011
Revenue
$ -
Expenses
Travel
$ 11,700
$ 12,914
Accounting
450
300
Director's Compensation
-
50,000
Accrued Officer's Salaries
-
30,000
Accrued Salaries
30,000
30,000
Financing Fees
-
-
Consulting Fees
102,899
216,745
Legal Fees
-
68,000
General and administration
40,618
(20,070)
Total Expenses
$ 185,667
$ 387,889
Loss from continuing operations
$ (185,667)
$ (387,889)
Other Income (Expenses)
Interest expense
$ (14,096)
$ (14,527)
Forgiveness of debt
Total Other income (Expenses)
$ (14,096)
$ (14,527)
Net Loss
$ (199,763)
$ (402,416)
See accompanying notes to condensed consolidated financial statements.
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SHAREHOLDERS’ EQUITY
Retained
Common Stock
Additional
Earnings
-
Paid-in
(Accumulated
shares
amount
Capital
Deficit)
Total
-
-
-
-
-
Balance, July 31, 2009
146,289,166
$ 146,289
$ 15,309,522
$ (16,547,644)
$ (1,091,833)
=============
=============
=============
=============
=============
Common stock issued
for services and
accrued liabilities
10,200,000
10,200
-
-
10,200
Loan conversion
4,800,000
4,800
-
-
4,800
Net income/(loss) for the
period
-
-
-
(18,361)
(18,361)
Balance October 31, 2009
161,289,166
$ 161,289
$ 15,309,522
$ (16,566,005)
$ (1,095,194)
=============
=============
=============
=============
=============
Common stock issued for services and accrued liabilities
50,000
50
-
-
50.00
Loan conversion
333,556
336
-
-
335.56
Warrant conversion
1,000,000
1,000
(1,000)
-
-
Net income/(loss) for the period
-
-
-
4,563
4,563
Balance January 31, 2010
162,672,722
$ 162,675
$ 15,308,522
$ (16,561,442)
$ (1,090,245)
=============
=============
=============
=============
=============
Common stock issued for services and accrued liabilities
46,000,000
46,000
-
-
46,000
Loan conversion
-
-
-
-
-
Net income/(loss) for the period
-
-
-
(267,342)
(267,342)
Balance, April 30, 2010
208,672,722
$ 208,675
$ 15,308,522
$ (16,828,784)
$ (1,311,587)
=============
=============
=============
=============
=============
Common stock issued for services and accrued liabilities
8,200,000
8,200
32,800
-
41,000
Note conversion
16,000,000
16,000
44,000
-
60,000
Net income/(loss) for the period
-
-
-
(150,455)
(150,455)
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Balance, July 31, 2010
232,872,722
$ 232,875
$ 15,385,322
$ (16,979,239)
$ (1,361,042)
=============
=============
=============
=============
=============
Common stock issued for services and accrued liabilities
39,225,000
39,225
353,025
-
392,250
Common stock cancelled
(1,000,000)
(1,000)
(4,000)
-
(5,000)
Net income/(loss) for the period
-
-
-
(436,390)
(436,390)
Balance, October 31, 2010
271,097,722
$ 271,100
$ 15,734,347
$ (17,415,629)
$ (1,410,182)
=============
=============
=============
=============
=============
Common stock issued for services and accrued liabilities
3,000,000
3,000
12,000
-
15,000
Common stock issued
753,974,025
753,972
(492,712)
-
261,260
Common stock returned to Treasury
(60,000,000)
(60,000)
60,000
-
-
Adjustment to agree to Stock Transfer Agent
(700,000)
(700)
700
-
-
Net income/(loss) for the period
-
-
-
33,974
33,974
Balance, January 31, 2011
967,371,747
$ 967,372
$ 15,314,335
$ (17,381,655)
$ (1,099,948)
=============
=============
=============
=============
=============
Common stock issued for services and accrued liabilities
11,000,000
11,000
-
-
11,000
Common stock issued
154,403,576
154,402
-
-
154,402
Common stock returned to Treasury
(200,000,000)
(200,000)
200,000
-
-
Net income/(loss) for the period
-
-
-
(86,227)
(86,227)
Balance, April 30, 2011
932,775,323
$ 932,774
$ 15,514,335
$ (17,467,882)
$ (1,020,774)
=============
=============
=============
=============
=============
Common stock issued for services and accrued liabilities
80,000,000
80,000
-
-
80,000
Common stock issued
48,000,000
48,001
(3,000)
-
45,001
10
Common stock returned to Treasury
(100,000,000)
(100,000)
100,000
-
-
Net income/(loss) for the period
-
-
77,000
-
77,000
Balance, July 31, 2011
960,775,323
$ 960,775
$ 15,688,335
$ (17,649,871)
$ (1,000,762)
=============
=============
=============
=============
=============
Common stock issued for services and accrued liabilities
195,000,000
195,000
(97,500)
-
97,500
Common stock issued
25,000,000
25,000
(15,000)
-
10,000
Common stock returned to Treasury
(200,000,000)
(200,000)
200,000
Net income/(loss) for the period
(161,281)
(161,281)
Balance, October 31, 2011
980,775,323
$ 980,775
$ 15,775,835
$ (17,811,152)
$ (1,054,543)
=============
=============
=============
=============
=============
Common stock issued for services and accrued liabilities
-
-
-
-
-
Common stock issued
-
-
-
-
-
Common stock returned to Treasury
-
-
-
-
-
Investment & Contract for
purchase of business
-
-
10,000
-
10,000
Net income/(loss) for the period
-
-
-
(38,482)
(38,482)
Balance, January 31, 2012
980,775,323
$ 980,775
$ 15,785,835
$ (17,849,634)
$ (1,083,025)
See accompanying notes to condensed consolidated financial statements.
CASH FLOW STATEMENT
For the SixMonths
For the SixMonths
Ended 1/31/12
Ended 1/31/11
Cash flows from operating and activities of discontinued operations
Net loss
(199,763)
(402,416)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities
Accounts Payable
(215)
(214,000)
Current Liabilities
Accrued Expenses
30,000
60,000
Note receivable
7,000
Note payable - Officer
18,930
(12,726)
Net cash (used) provided by operating activities
(151,049)
(562,142)
Cash flows from investing activities of discontinued operation
Purchase of property and equipment
Net cash used in investing activities
Cash flows from financing activities
Stock receivable
-
(40,000)
Common Stock
20,000
734,497
Additional Paid-in-Capital
97,500
(70,987)
Repayments of long-term debt
Net cash provided by (used in) financing activities
117,500
623,510
Net (Decrease) increase in cash
(33,549)
61,368
Cash at beginning of period
33,909
7,580
Cash at end of period
360
68,948
Supplemental disclosure of cash flow information
Cash paid during the year for
Interest
Income taxes
Schedule of Noncash Operating and Investing Transactions
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Common stock issued for investment
361,377,601
143,974,025
Common stock issued for services and accrued liabilities
359,585,556
73,585,556
Common stock issued for conversion of a note and interest payable
to CEO
See accompanying notes to condensed consolidated financial statements.
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Note 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Lasik America, Inc. (the "Company") was incorporated in the State of Nevada on March 21, 2001. The Company operates an ophthalmic laser vision correction center in Albuquerque, New Mexico. On August 5, 2004, Lasik America, Inc. consummated its merger with Salus Holding, Inc. On October 26, 2004, the company changed its name to Critical Care, Inc. On May 11, 2006, the Company sold all of its property and equipment to facilitate the Company's migration out of the Lasik business into a dialysis services company.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company had a net loss of ($199,763) for the Quarter ending January 31, 2012, and a working capital and shareholders' deficiency of ($1,083,025) as of January 31, 2012 which raises substantial doubts about its ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainly.
Management believes that actions are presently being taken to revise the Company's operating and financial requirements in order to improve the Company's financial position and operating results. However, given the levels of its cash resources and working capital deficiency at January 31, 2012, anticipated cash to be generated by operations may be insufficient to meet anticipated cash requirements for operations, working capital, and capital expenditures during 2012. Therefore, the Company is seeking additional equity or debt financing, but there can be no assurance that sufficient additional financing will be available.
Financial Instruments
Statement of Financial Accounting Standards No. 107 "Disclosure about Fair Value of Financial Instruments" requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate the value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties other than in a forced sale of liquidation. The carrying amounts reported in the balance sheet for cash, cash overdraft, accounts receivable, accounts payable, accrued liabilities, taxes payable and patient deposits approximate fair value due to the immediate short-term maturity of these financial instruments.
The fair value of the Company's long-term debt approximates the carrying amount based on the current rates offered to the Company for debt of the same remaining maturities with similar collateral requirements.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is calculated on a straight-line basis over the estimated useful lives of the depreciable assets which range from three to five years. As of Jan 31, 2011, the Company has no existing property and equipment.
Revenue Recognition
Revenues were generated by the vision correction procedures performed at the Company's laser center. Follow-up corrective procedures for customer satisfaction, consisting of re-treatment, were performed when necessary. Facility fees were derived from the use of the Company's then equipment by affiliate doctors who paid the Company a standard fee per procedure. The Company recognized revenues when the vision correction procedures were performed. As of April 26, 2006, the Company discontinued the Lasik clinic operation.
Earnings (Loss) Per Share
In 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which specifies the computation, presentation and disclosure requirements for earnings per share for entities with publicly held common stock. SFAS No. 128 supersedes the provisions of APB No. 15, and requires the presentation of basic earnings per share and diluted earnings per share. The Company has adopted the provisions of SFAS No. 128 effective March 21, 2001.
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Basic earnings (loss) per share is calculated by dividing the earnings net (loss) available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share are calculated assuming the issuance of common shares resulting from the exercise of stock options and warrants. Dilutive securities are not included in the calculation of loss per share because their effect would have been anti-dilutive. Accordingly, basic and diluted loss per share is ($.13) for the year ended July 31, 2006 and ($.22) for the year ended July 31, 2005.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.
Stock-Based Compensation
The Company has adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation” ("SFAS No.123"), which establishes a fair value method of accounting for stock-based compensation. The provisions of SFAS No. 123 allow companies to either expense the estimated fair value of stock options or to continue to follow the intrinsic value method set forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", but to disclose the pro forma effect on net loss and net loss per share had the fair value of the stock options been exercised. The Company has elected to continue to account for stock-based compensation plans utilizing the intrinsic value method. Accordingly, compensation cost for stock options is measured as the excess, if any, of the fair market price of the Company's common stock at the date of the grant above the amount an employee must pay to acquire the common stock.
In accordance with SFAS No. 123, with respect to stock-based employee compensation, the value of the stock-based award is determined using the Black-Scholes option pricing model, whereby compensation cost is the fair value of the award as determined by the pricing model at the grant date or other measurement date. The resulting amount is charged to expense on the straight-line method.
In December 2004, the FASB issued FASB Statement No. 123 (revised 2004), "Share-Based Payment" ("FAS 123 (R)"). FAS 123 (R) replaces FASB Statement No, 123, Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees". FAS 123(R) requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. The provisions of this Statement are effective for the First interim or annual reporting period that begins after December 15, 2005. The Company has evaluated the impact of FAS 123(R) and has determined that the adoption of FAS 123(R) does not have a material impact on its financial statement presentation or disclosure of the Company. To date no options to employees or non-employees have resulted in compensation.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has recently issued several Statements of Financial Accounting Standards.
In May 2005, the FASB issued SFAS 154 that establishes new standards on accounting for changes in accounting principles. Pursuant to the new rules, all such changes must be accounted for by retrospective application to the financial statements of prior periods unless it is impracticable to do so. SFAS No. 154 completely replaces Accounting Principles Bulletin (APB) Opinion 20 and SFAS 3, though it carries forward the guidance in those pronouncements with respect to accounting for changes in estimates, changes in the reporting entity, and the correction of errors made in fiscal years beginning after December 15, 2005.
The Company does not expect that the adoption of this pronouncement will have a material effect on the Company's financial position or results of operations.
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NOTE 2 PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of July 31, 2007 and 2008:
Medical equipment
Assets obtained through capital lease obligation Leasehold improvements
Office equipment, furniture and fixtures
Less accumulated depreciation
Net property and equipment
Depreciation expense for the years ended July 31, 2006
And 2007, were $53,003 and $0, respectively
As of May 11, 2006, all the assets have been sold as part of the discontinued operation. The property and equipment was sold for $159,500 resulting in a gain of $15,442
2007 2008
$0 $0
$0 $0
NOTE 3 LONG-TERM DEBT
Long-term debt consists of the following as of Jan 31, 2011 and 2010:
Jan. 31, 2012 2011
Loans made to the Company by the CEO,
Ernest Remo $576,826 $574,592
Long Term Note in exchange for future
consulting services $0 $0
Long Term Note due former officer $123,304 $123,304
NOTE 4 COMMITMENTS AND CONTINGENCIES
Delinquent Payroll and Gross Receipts Taxes
The Company was delinquent on employment taxes payable to the Internal Revenue Service and on gross receipts taxes payable to the State of New Mexico. On April 26, 2006 the Company discontinued operations of the Lasik clinic and on May 11, 2006 the property and equipment were sold for $119,500. These proceeds were paid directly to the State of New Mexico. As of July 31, 2007 there were no unpaid liabilities on these taxes.
Litigation
On March 31, 2003, a former employee of the Company filed a complaint that she was fired as an employee in spite of an employment contract that she had with the Company. The Company has responded to the complaint stating that she violated her contract through non-performance and dishonesty. On February 9, 2005, the complaint was settled in favor of the employee. The Company was obligated to pay $1,000 per month beginning March 1, 2005 for the sum of $13,500, and to issue $10,000 worth of restricted stock (100,000 shares) at 10 cents based on a share value date February 20, 2005. On July 28, 2006 the Company issued the 60,000 shares of stock in full settlement of the liability.
On June 23, 2006, the Company made a claim settlement agreement in favor of the former CEO to transfer to the Company all of its right, title and interest in its ownership of 950,000 shares of Lasik common stock in return for 3,000,000 shares of Critical Care common stock. The shares were valued at the fair market value of $0.17 per share. In addition, the Company executed a promissory note in favor of the former CEO in the amount of $140,000 in satisfaction of repayment of loans, interest earned and attorneys' fees incurred to date. This liability is currently in litigation in which the Company believes that because of certain factors which have come to light regarding the circumstances leading up to this settlement, there will be no liability to the Company.
NOTE 5 BUSINESS COMBINATIONS
On August 5, 2004, the Company consummated its merger with Salus Holding, Inc. ("Salus"). Pursuant to the merger agreement, the shareholders of Salus have been issued 2,000,000 shares of common stock of the Company. The sole shareholder of Salus, Homeland Security Technology, Inc. was issued 2,000,000 shares of Critical's Common Stock that approximated 43.7 percent of the outstanding shares of Critical calculated on a fully diluted basis at the date of issuance.
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Salus was the sole shareholder in Icon Salus S.r.L, a company formed under the laws of Italy ("Icon Salus"). Salus was constructing a dialysis facility in Amaseno, Italy. Following the Company's acquisition of Salus, the Company experienced difficulties in the development of the Amaseno Clinic and was unable to obtain the requisite permits and licenses from the Italian government, provincial and local. Thus on October 31, 2004, the Company abandoned the development of the Amaseno Clinic and recorded $360,000 loss on this investment.
On October 28, 2004, the Company entered into an agreement to purchase certain rights to acquire a group of five dialysis clinics from Icon Veneto srl ("Icon Veneto55), an Italian company, pursuant to a rights purchase agreement. The rights purchased consist of a binding letter of intent assigned to the Company pursuant to the agreement.
Pursuant to the rights purchase agreement the Company issued to Icon Veneto 100,000 shares of preferred stock of the Company. The preferred stock was convertible into 10,000,000 shares of common stock of the Company. The five dialysis clinics which are the subject of the rights purchase agreement had established revenues of over Euro 4,000,000 (US$5,250,000). On February 1, 2005, the Company and Icon Veneto entered into a settlement agreement whereby the rights purchase agreement was terminated void ab initio, as if it never existed, as a result of a dispute between Icon Veneto and the Company with respect to representations of Icon Veneto with respect to the rights. Consequently, the Company Preferred Stock issued to Icon Veneto was cancelled.
On June 17, 2011, the Company announced that it has completed the acquisition of Mississauga, Ontario based cloud computing company Rebel Networks. While the Company announced its acquisition of Rebel Networks in June 2011, the finalization of the transaction did not occur until December 2011. The Company has made all necessary payments to Rebel Networks as per their agreement, and is working to integrate the operations and financial records of Rebel Networks with those of the Company and anticipates having this integration completed in time for its next quarterly filing.
NOTE 6 SHAREHOLDERS' EQUITY
On October 10, 2005, the Company issued 2,000,000 shares of common stock to the Chief Executive Officer of the Company having a fair value of $160,000, in payment for director fees for services provided to the Company.
On January 25, 2006, the Board authorized the increase of the Company's authorized common stock from 25,000,000 shares to 100,000,000 shares.
On March 23, 2006, the Company issued 450,000 shares of common stock to Directors of the Company having a fair value of $108,000, in payment for being board members of the Company.
On March 23, 2006, the Company issued 350,000 shares of common stock having a fair value of $84,000, in payment for legal services provided to the Company.
On March 23, 2006, the Company issued 50,000 shares of common stock having a fair value of $12,000, in payment for consulting services provided to the Company.
On March 23, 2006, the Company issued 6,600,000 shares of common stock in conversion to the unpaid Directors1 fee from the period starting November 1, 2004 to January 31, 2006 representing fifteen (15) months of continuous service to the Company. 17
On April 7, 2006, the Company issued 7,271,263 shares of common stock to the Chief Executive Officer of the Company in conversion for a note originally valued at $363,563.
On July 28, 2006, the Company issued 60,000 shares of common stock to a former employee in full settlement of the claim.
On July 31, 2006, the Company authorized to issue 1,000,000 shares of common stock to a consultant of the Company having a fair value of $170,000 for consulting services provided for the Company. The value of this transaction is included within stock payable.
On July 31, 2006, the Company authorized to issue 100,000 shares of common stock to a consultant of the Company having a fair value of $17,000 for investment banking services provided for the Company. The value of this transaction is included within stock payable.
On July 31, 2006, the Company authorized to issue 100,000 shares of common stock having a fair value of $17,000 in payment for legal services provided for the Company. The value of this transaction is included within stock payable.
On July 31, 2006, the Company authorized to issue 100,000 shares of common stock having a fair value of $17,000 in payment for director's services provided for the Company. The value of this transaction is included within stock payable.
On Jan 27, 2009 the Company authorized to issue 4,800,000 shares of common stock having a fair value of $120,000 in payment for Note Conversion provided for the Company. The value of this transaction is included within stock payable.
On August 1, 2009 the Company authorized to issue 10,000,000 shares of common stock having a fair value of $100,000 in payment for marketing services provided for the Company. The value of this transaction is included within stock payable.
On September 10, 2009 the Company authorized to issue 100,000 shares of common stock having a fair value of $4,300 in payment for a joint venture agreement. The value of this transaction is included within stock payable.
On October 13, 2009 the Company authorized to issue 100,000 shares of common stock having a fair value of $19,000 in payment for consulting services. The value of this transaction is included within stock payable.
On November 4, 2010 the Company issued 87,000,000 shares of common stock to Emry Capital Group,Inc. for a financing for which the Company received a down payment of $25,000 and a balance due of $70,000 when the financing is completed. On December 21, 2010 the Company issued 3,000,000 shares of common stock to GP Iris LLC at a value of $15,000 for Investment Banking advice. On December 21, 2010 the Company issued 3,000,000 shares of common stock to Howard McEldowney at a value of $15,000 for Advisory Board Director fees. On January 7, 2011 the Company issued 25,974,025 common shares to TJ Management for $73,260.
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On January 7, 2011 the Company issued 28,000,000 shares to E-Lionheart Associates LLC for $83,000.
On February 8, 2011 the Company issued 30,000,000 shares to Cardona Solutions and 10,000,000 shares to RES Holdings $25,000.
On February 8 The Company issued 1,000,000 shares to Donald Nussbaum at a value of $1000 for consulting.
On February 8, 2011 the Company issued 5,000,000 shares to Nathan Perlmutter at a value of $5000 for consulting.
On February 10, 2011 the Company issued 44,403,576 shares to Far Niente for $20,000.
On February 10, 2011 the Company issued 5,000,000 shares to Carrier Alliance Group valued at $5000 for consulting.
On April 26, 2011 the Company issued 70,000,000 shares to E-Lionheart for $50,000
On September 20, 2011 the Company issued 75,000,000 shares to PMR and Associates valued at $37,500 for consulting
On September 28, 2011, the Company issued 50,000,000 shares to Cardona Solutions Group valued at $25,000 for consulting.
On September 28, 2011 the Company issued 50,000,000 shares to Bellaero, Inc. valued at $25,000 for consulting.
On September 28, 2011 the Company issued 20,000,000 shares to Steve Jaloza value at $10,000 for consulting.
On October 5, 2011 the Company issued 25,000,000 shares to Fairhills Capital for $10,000
NOTE 7 TROUBLED DEBT RESTRUCTURING
The Company had a loan secured by the Excimer laser equipment. This laser was included in the sale of assets on May 11, 2006. The loan had an original face value of $200,000. The interest rate of the loan was 8% per annum and the maturity date was on February 1, 2007. The loan was rewritten to become unsecured. The equipment was sold for $40,000 and the sale in 2006 was $160,000. This restructuring facilitated the migration out of the lasik business and into a medical services company.
The Company recorded the amount of $510,000 troubled debt restructuring expenses for the issuance of the 3,000,000 shares of the Company's common stock to a former officer pursuant to the settlement agreement made on June 23, 2006. The shares were valued at the fair market value of $0.17 per share. The value of this transaction is included within stock payable. See Notes 4 and 5.
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The Company has a marketing agreement, which was amended with respect to increasing the engagement period, in place that requires payment to a third party. The Company is working with the third party to alleviate this debt. This debt is accounted for in the $330,000 accrued marketing and directors’ fees.
NOTE 8 RELATED PARTY TRANSACTIONS
On December 31, 2005, the Company issued a Note Payable to the Chief Executive Officer for $363,563 plus 5% interest in exchange for expenses of the Company that were paid by the officer. The note was converted into common stock on April 7, 2006.
During the fiscal year ended July 31, 2006, the Chief Executive Officer loaned the Company $43,805 in the form of payments made on behalf of the Company. Unpaid interest of the loan as of July 31, 2006 was $799 which was included in the current liabilities of discontinued operation.
NOTE 9 STOCK WARRANTS
During the period ended July 31, 2002, the Company issued 125,000 warrants to an existing shareholder. The warrants granted the shareholder the right to purchase, for $7.20, an additional share of common stock for each common share currently owned by the shareholder and expired on July 31, 2006. The value of warrants at the time of issuance was nominal since there was no active market for either the stock or the warrants. As of July 31, 2006, all of the warrants remained outstanding.
NOTE 10 MATERIAL EVENTS
On September 11, 2006, the Company issued 850,000 shares of common, stock having a fair value of $51,000 in payment for services pursuant to S-8 filing.
On September 12, 2006, the Company issued 150,000 shares of common stock having a fair value of $9,000 in payment for services pursuant to S-8 filing.
On September 12, 2006, the Company issued 1,800,000 shares of common stock to the CEO of the company having a value of $108,000 in payment for director fees.
On September 18, 2006, the Company issued 1,000,000 shares of common stock for the purchase of Body Mass Solutions, Inc. valued at $65,000.
On September 18, 2006, the Company issued 2,000,000 shares of common stock to a
consultant of the Company having a fair market value of $130,000 for investment banking services provided for the Company.
On September 28, 2006, the Company issued 3,000,000 shares of common stock having a fair value of $510,000 in favor of the former CEO pursuant to the claim settlement agreement.
On September 28, 2006, the Company issued 666,667 shares of common stock to a creditor of the Company having a fair market value of $133,016 in payment of financing fees pursuant to the executed promissory note.
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On December 1, 2006 The Company issued a 2 year convertible note to Brad van Siclen in the amount of $1,000,000.00 with an annual coupon of 10%. This Note is convertible into 4,000,000 shares of the Company's common stock.