UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from
__________ to___________
Commission file number
0-5186
OCG TECHNOLOGY, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 13-2643655
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
56 Harrison Street, New Rochelle, New York 10801
(Address of principal executive offices)
(914) 576- 8457
(Issuer's telephone number)
(Former name, address and former fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer(as
defined in Exchange Act Rule 12b-2) Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Shares Outstanding
at May 5, 2005
Common Stock ($.01 par value) 49,901,120
Shares
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
INDEX
PART 1. FINANCIAL INFORMATION PAGE NUMBER
Item 1. Financial Statements
Consolidated Condensed Balance Sheets as of
March 31, 2005 and June 30, 2004 1
Consolidated Condensed Statements of Operations for the
Three and Nine Months Ended March 31, 2005 and 2004 2
Consolidated Condensed Statements of Cash Flow for
the Nine Months Ended March 31, 2005 and 2004 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Item 3. Controls and Procedures 13
PART II - OTHER INFORMATION
Item 2. Changes In Securities 13
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
All items that are not applicable or to which the answer is negative
have been omitted from this report.
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, 2005 June 30, 2004
(UNAUDITED) (AUDITED)
ASSETS
Current Assets:
Cash $32,664 $30,431
Accounts receivable 2,414 570
Inventory 15,127 9,232
Note receivable - 13,477
Interest receivable 11,548 7,702
Other current assets 287 55,320
---------- ----------
Total current assets 62,040 116,732
Property and equipment,
net of accumulated depreciation of 6,354 15,107
Capitalized software costs,
net of accumulated amortization 36,934 47,000
Other assets 4,972 4,972
---------- ----------
Total assets $110,300 $183,811
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 66,591 53,174
Note payable 16,632 7,966
Note payable, other 125,000 -
Notes Payable, shareholder 188,700 188,700
---------- ----------
Total liabilities 396,923 249,840
---------- ----------
Shareholders' equity:
Series C Preferred stock $.10 par value
(200,000 authorized, 200,000 and 163,330
issued & outstanding, respectively) 20,000 16,333
Series E Preferred stock $.10 par value
(100,000 authorized; 33,333 issued and
outstanding) 3,333 3,333
Common stock $.01 par value
(50,000,000 authorized; 49,901,120 and
41,273,613 issued, respectively) 499,011 412,736
Additional paid-in capital 26,468,998 26,468,998
Accumulated deficit (27,085,466) (26,788,944)
Stock subscriptions receivable (130,000) (130,000)
Unrealized loss on marketable securities 0 (32,823)
---------- ----------
(224,123) (3,530)
Less: treasury stock, at cost
(12,500 shares) (62,500) (62,500)
---------- ----------
Total shareholders' equity (286,623) (66,030)
---------- ----------
Total liabilities and shareholders' equity $110,300 $183,810
========== ==========
See accompanying notes to consolidated condensed financial statements
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months
Ended
March 31 March 31
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues $115,529 $75,266 $253,440 $214,853
Less: Cost of sales 59,653 38,242 138,663 99,559
--------- --------- --------- ---------
Gross margin 55,876 37,024 114,777 115,294
--------- --------- --------- ---------
Expenses:
Marketing,
general and administrative 56,905 46,370 163,040 113,835
Depreciation and amortization 6,064 23,010 18,820 62,981
Research and development 51,377 46,901 189,623 136,251
--------- --------- --------- ---------
Total expenses 114,346 116,281 371,483 313,067
--------- --------- --------- ---------
Net loss from operations (58,470) (79,257) (256,706) (197,773)
Gain (loss) from sale of
securities - - (41,300) 6,761
Interest - net 1,282 3,549 3,084 12,357
--------- --------- --------- ---------
Net loss ($57,188) ($75,708) ($294,922) ($178,655)
========= ========= ========= =========
Weighted average number of shares outstanding
during the period 47,743,783 42,363,618 47,743,783 42,363,618
========== ========== ========== ==========
Loss per Common Share -
basic and diluted $(-)* $(-)* $(-)* $(-)*
========== ========== ========== ==========
*Amounts less than ($.005)
See accompanying notes to consolidated condensed financial statements
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended December 31
2005 2004
---------- ----------
Cash flows from operating activities:
Net loss $294,922 ($178,655)
---------- ----------
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 18,820 62,981
Issuance of stock and warrants for services 0 86,000
Loss on sale of securities 41,300 (6,761)
Changes in assets and liabilities
Receivables (5,690) (21,464)
Other current assets 53,332 (69,896)
Inventory (5,895) (3,905)
Accounts payable and accrued expenses 13,417 (20,186)
---------- ----------
Total adjustments 115,284 26,769
---------- ----------
Net cash used in operating activities 179,638 (151,886)
---------- ----------
Cash flows from investing activities:
Proceeds from sale of marketable securities 5,000 132,761
Capitalized software development costs 0 (124,527)
Increase in property and equipment 0 (10,288)
---------- ----------
Net cash provided by investing activities 5,000 (2,054)
---------- ----------
Cash flows from financing activities:
Increase (decrease) in note payable, bank 8,666 (791)
Increase in notes payable 125,000 -
Proceeds from sale of common stock 43,205 44,000
Proceeds from sale of Series C Preferred Stock 0 110,000
---------- ----------
Net cash provided by financing 176,871 153,209
---------- ----------
Net increase (decrease) in cash 2,233 (731)
Cash, beginning of period 30,431 10,832
---------- ----------
Cash, end of period $32,664 $10,101
========== ==========
Non-cash investing and financing activities:
exchange of notes receivable and related
accrued interest for marketable securities $372,300
*Reclassified for comparative purposes
See accompanying notes to consolidated condensed financial statements
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
In the opinion of management, the unaudited consolidated condensed financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary for their fair presentation in conformity with
accounting principles generally accepted in the United States of America
(U.S. GAAP). Certain information and footnote disclosure normally included
in annual financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission regarding interim financial statements. Preparing
financial statements requires management to make estimates and assumptions
that affect the reported amount of assets, liabilities, revenues and
expenses. Actual results and outcomes may differ significantly from
management's estimates and assumptions.
Interim results are not necessarily indicative of results for a full year.
The unaudited information included in this Form 10-QSB should be read in
conjunction with the audited financial statements and notes for the year
ended June 30, 2004.
During the six months ended December 31, 2004, the Company, contributed
three of its inactive subsidiaries to PrimeCare Systems, Inc. ("PSI"), one
of the Company's wholly owned subsidiaries. Optronic Labs, Inc.,
Mooney-Edwards Enterprises, Inc. and CIG Technologies, Inc., were
contributed in accordance with its commitments under an agreement and plan
of reorganization. The Company has valued the subsidiaries on its books at
their net book value, zero. PSI also received certain other assets and
liabilities from the Company. Since the liabilities exceeded the assets, the
transaction resulted in PSI's a reduction of Paid in capital in the amount
of $184,289 and has no effect on these financial statements since they are
consolidated and all intercompany transactions are eliminated on
consolidation.
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A SUMMARY OF INCREASES (DECREASES) IN THE ITEMS INCLUDED IN
THE CONSOLIDATED STATEMENTS OF LOSS IS SHOWN BELOW:
General
The following discussion and analysis should be read in conjunction with the
Consolidated Condensed Financial Statements and Notes thereto appearing
elsewhere herein. The following discussion contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934 and the Company
intends that such forward-looking statements be subject to the safe harbors
created thereby. These forward-looking statements include predictions,
estimates and other statements that involve a number of risks and
uncertainties. While this outlook represents the Company's current judgment
on the future direction of the business, such risks and uncertainties could
cause actual results to differ materially from any future performance
suggested herein.
The Company has experienced recurring losses from operations and has relied
on its parent company to fund its operations. If necessary, the Company
intends to provide additional working capital through the sale of equity
interests in the Company. The Company has been able to obtain working
capital from its parent company from the sale of equity interests in the
parent company, there can be no assurances that the Company will succeed in
its efforts to sell equity interests, which creates a doubt about its
ability to continue as a going concern.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company has suffered recurring
losses from operations and has a net capital deficiency that raises
substantial doubt about its ability to continue as a going concern.
Management's plans 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.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of
operations following are based upon our condensed consolidated financial
statements, which have been prepared in accordance with generally accepted
accounting principles of the United States of America. The preparation of
these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses,
and related disclosure of contingent assets and liabilities. We believe that
the estimates, assumptions and judgments involved in the accounting policies
described below have the greatest potential impact on our financial
statements, so we consider these to be our critical accounting policies.
Because of the uncertainty inherent in these matters, actual results could
differ from the estimates we use in applying the critical accounting
policies. Within the context of these critical accounting policies, we are
not currently aware of any reasonably likely events or circumstances that
would result in materially different amounts being reported.
Capitalized Software Costs
Capitalized software costs are amortized over the estimated useful life.
Changes in circumstances, such as technological advances or shortfalls in
marketing estimates, can result in differences between the actual and
estimated useful life. In that case, we re-estimate the value and useful
life of this long-lived asset and make the necessary adjustments to reflect
the asset at its proper estimated value and amortize it over the remaining
estimated useful life. Periodically, and when conditions dictate, we
reevaluate the recoverability of the carrying value and useful life of this
long-lived asset and make the necessary adjustments to reflect the asset at
its proper estimated value and amortize it over the remaining estimated
useful life.
The Company had a write off of $239,964 and $187,819 of capitalized software
costs during the years ended June 30, 2004 and June 30, 2003, respectively,
in compliance with the Company's policy relating to reevaluating the value
and useful life of this long-lived asset.
Revenue Recognition
Revenue is recognized when the earning process is complete and the risks and
rewards of ownership have transferred to the customer, which is generally
considered to have occurred upon shipment of the product. Sales of
inventoried products are recorded on a gross revenue basis and sales of
non-inventoried products are recorded on a net revenue basis.
The Company has four sources of income: (1) sale of inventoried merchandise
on its Web sites; (2) commissions received from vendors who link to our Web
sites; (3) advertising fees; and (4) software license fees.
Sale of inventoried merchandise.
This revenue stream, which is the Company's primary source of income, is
reported on a gross basis in compliance with EITF 99-19, because we purchase
the merchandise from the source we select; are at risk for the purchaser's
credit; and we ship the merchandise. We report the gross sales price as
revenue and expense the cost of the merchandise and the shipping costs as
cost of sales. The Company is almost always paid by credit card at the time
of purchase and occasionally by check. Sales are booked when the merchandise
is shipped. The merchandise is not shipped until the credit is approved.
Commissions received from vendors
The Company acts as a commissioned broker by displaying vendors' products on
the Company's Web sites. When a consumer indicates a desire to purchase an
item, the order is collected through the Web site and processed by the third
party seller. The Company receives a commission on such sale after it is
consummated. When the Company is paid, it reports the commissions on a net
basis in compliance with EITF 99-19. The Company reports commissions this
way because: (a) it does not have any direct costs; (b) it does not purchase
the product sold; and (c) it does not have any credit risk on the sale, and
it does not handle or ship the product when sold. The Company notifies the
seller of an interested buyer and it receives a commission check from the
seller upon the consummation of a sale. At that time we report the revenue
on a net basis.
Advertising fees
The Company receives fees for placing advertisements on its Web sites. At
the end of the month the Company sends an invoice to the advertiser and
enters it on its books as income from advertising fees.
Software license fees
Although at the present time the Company does not have any income from
software license fees, in the past and in the event such income resumes, the
Company will account for software license fees in accordance with SOP 97-2.
Revenues are recognized when all of the following criteria are met: (a)
persuasive evidence of an arrangement exists; (b) delivery has occurred; (c)
the vendor's fee is fixed or determinable; and (d) collectiblity is
probable.
All licenses are evidenced by a written contract. License fees are either
annual fees, generally payable quarterly in advance, or are based on uses,
which are purchased before use. The license fee includes updates to the
software, but only during the term of the license. The software contains
considerable medical information and the Company keeps this medical content
reasonably current. The Company does not sell the software or any updates
separately and therefore, has not established VSOE. The Company recognizes
income ratably over the license term.
Results of Operations
Total revenues increased $40,263 and $38,587 for the three and nine months
ended March 31, 2005, as compared to the same period for 2004, primarily due
to the increase in merchandise sales. Cost of sales increased $21,411 and
$39,104 for the three and nine months ended March 31, 2005 as compared to
the same period for 2004. The Company's revenues for the nine months ended
March 31, 2005, consisted of: $239,462 from the sale of merchandise (an
increase of $76,499 for the same period in 2004); $15,652 from commissions
(a decrease of $4,258 for the same period in 2004); and $76 from advertising
fees (a decrease of $31,904 over the same period in 2004).
Marketing, general and administrative expenses increased $20,058 and
$49,206for the three months and nine ended March 31, 2005, as compared to
the same periods for 2004. The increase was primarily as a result of an
increase in sales and marketing expenses.
Amortization of capitalized software costs decreased approximately$17,000
and $44,000 for the three and nine months ended March 31, 2005, and research
and development (previously, other product costs) increased $4,476 and
$53,372 for the three and nine months ended March 31, 2005, as compared to
the same period for 2004, as a result of a reduction in the amount charged
to Capitalized Software Costs. During the years ended June 30, 2004, and
June 30, 2003, the Company had write offs of $239,964 and $187,819 of
capitalized software costs, respectively, in compliance with the Company's
policy relating to reevaluating the value and useful life of this long-lived
asset.
Liquidity and Capital Resources
At March 31, 2005, the Company had a current ratio of .16 to 1 compared to
..69 to 1 as of December 31, 2004. The net loss for the Nine months ended
March 31, 2004, was $294,922 compared to $178,655 for the same period of
2004. The increased loss was largely due to the write off of capitalized
software cost discussed above plus the loss on the sale of securities. The
Company has experienced recurring losses from operations and has been unable
to provide sufficient working capital from operations and has relied
significantly on the sale of equity interests in the Company, and the
exercise of warrants and loans from shareholders to fund its operations.
Cash on hand, inventory and receivables were $61,753 at March 31, 2005.
During the nine months ended March 31, 2005, the Company raised $43,205
through the sale of Common stock. The Company also raised $5,000 from the
sale of marketable securities and received advances in the amount of
$125,000 as part of the plan of reorganization discussed below. As of
March 2005, the Company has $130,000 of demand notes receivable related to
the purchase of the Company's common stock through the exercise of warrants.
Although, in the past, the Company's principal means of overcoming its cash
shortfalls from operations was from the sale of the Company's stock, loans
and the exercise of warrants, there can be no assurances that the Company
will succeed in its efforts in the future
Marketable securities
The Company had advanced funds totaling $334,500, plus accrued interest at
7% per annum, pursuant to a grid note, dated February 4, 2002 (the "Note").
In consideration for these advances, the Company received warrants to
purchase common stock of the borrower, exercisable over a period of three
years from the date of issuance, at a price of $0.25 per share. The Company
received a security interest in accounts receivable of the borrower
anticipated to be generated under certain sales contracts which provide for
borrower to install and maintain the health care system for certain
countries. On October 10, 2003, the Company agreed to accept 3,709,230
restricted (unregistered) shares of the borrower's common stock, par value
$0.0001 per share, (the "Stock") in full payment of the Note ($334,500 of
principal, plus $36,423 of accrued interest, for the total amount of
$370,923). The market value on October 10, 2003, of the Stock received was
$704,753. During the year ended June 30, 2004, the Company realized $162,761
from the sale of 3,260,000 shares, which resulted in a loss of
$163,239.During the six months ending December 31, 2004, the Company sold
the balance of the shares for $5,000, realizing an additional loss of $41,300.
Plan of reorganization and change of control
On March 16, 2005, OCG Technology, Inc. ("OCGT"), entered into an agreement
and plan of reorganization with Centerstaging Musical Productions, Inc. and
its stockholders. Pursuant to the terms of the agreement, OCGT will acquire
all of the issued and outstanding capital stock of Centerstaging Musical
Productions, Inc. in exchange for the issuance of shares of OCGT's Series F
Preferred stock. Upon the closing of the share exchange, Centerstaging
Musical Productions, Inc. will become a wholly-owned subsidiary of OCGT.
The transaction will result in a change of control of OCGT, whereby
approximately 96% of OCGT's outstanding shares will be owned by persons who
were previously stockholders of Centerstaging Musical Productions, Inc.
OCGT will change its corporate name to Centerstaging Musical Productions,
Inc.
Centerstaging Musical Productions, Inc., is engaged in the business of
providing studio and equipment rental and performing production services to
musicians and production companies nationwide on both a short-term and
long-term basis. CMPI has more than 50 employees, with locations in
Burbank, California, and Bensalem, Pennsylvania (30 miles from Philadelphia).
As a condition of the agreement with Centerstaging, it was agreed that 100%
of the shares of PrimeCare Systems, Inc., owned by OCG Technology, Inc.,
would be distributed to those stockholders of OCG Technology, Inc., prior to
the closing of the agreement. The outstanding shares of PrimeCare Systems,
Inc. were forward split to accommodate the distribution and, accordingly, an
aggregate of 69,901,120 shares of PrimeCare Systems, Inc. common stock will
be issued to the stockholders of record on March 22, 2005 (the "Record
Date") on the basis of one share of PrimeCare's common stock for each share
of OCG Technology, Inc. common stock owned at the Record Date. PrimeCare
Systems, Inc. has filed a registration statement in order to facilitate the
distribution (spin-off). Only those stockholders who owned OCGT shares on
March 22, 2005 are entitled to receive shares in connection with the spin-
off. Those persons that received shares pursuant to the agreement or
acquired their shares after March 22, 2005, will not be eligible for the
spin-off. Following the spin-off, there will be 69,901,120 shares of
PrimeCare Systems, Inc. common stock outstanding.
The agreement with Centerstaging also provides that, OCGT shall cause
PrimeCare Systems, Inc. to offer, as of the Record Date, to each holder on
such date of options, warrants or other rights to subscribe for or purchase
OCGT common stock (" OCGT Stock Rights"), in exchange therefor, an option,
warrant or similar right to subscribe for or purchase an equivalent number
of shares of stock of PrimeCare Systems, Inc. on substantially the same
terms and conditions as those contained in such corresponding OCGT Stock
Rights (the "Exchange Offer"). The Exchange Offer shall occur as of, and
shall be conditioned upon, the closing of the agreement. As of the Record
Date, the OCGT Stock Rights issued were warrants (the "Warrants") to
purchase 18,836,262 shares of OCGT common stock, exercisable at prices
ranging between $.02 and $.25 per share. PrimeCare Systems, Inc. has
offered each and every holder of a Warrant, a warrant to purchase one share
of PrimeCare Systems, Inc. common stock for each Warrant held, in exchange
for and cancellation of the Warrants held. As a result, PrimeCare Systems,
Inc. may have as many 18,836,262 Warrants issued to purchase its common
stock at prices ranging between $.02 and $.25 per share. These Warrants are
not being included for registration in this Registration Statement.
The agreement with Centerstaging also provides that Centerstaging Musical
Productions, Inc. will advance up to $175,000 to OCG Technology, Inc. and
pay PrimeCare Systems, Inc. $25,000 at the closing.
Following the effectiveness of this registration statement, PrimeCare
Systems, Inc. will become a reporting company under the Securities Exchange
Act of 1934, as amended. This will make information concerning PrimeCare
Systems, Inc. more readily available to the public. PrimeCare Systems, Inc.
expects to conclude the spin-off immediately following the effectiveness of
this registration statement.
Products Overview.
Fitness Web Site:
The Company's primary source of revenues are derived from the operation of
the "shopping cart" on the fitness and wellness Web site known as
www.DeniseAustin.com where it is the exclusive seller of Denise Austin
videos and DVDs. The fitness and wellness Web site features Denise Austin,
a nationally known fitness expert who has had a daily fitness show on
television for over 15 years, the Company promotes and markets a variety of
Denise Austin products on the Web site. Visitors and fans are able to shop
online for their favorite Denise Austin signature exercise videos, books,
equipment, gear, and private label apparel and nutraceuticals (when
available), as well as sign up for her monthly news letter, enjoy fitness
tips, exercises, motivation messages, and some of her favorite healthy recipes.
Competition: Although there are a number of fitness TV shows, Denise
Austin's Daily Workout is reputed to be the number one fitness show on
television with over four million viewers each weekday morning.
PrimeCare(TM) Patient Management System, Version 9
PrimeCare(TM) Patient Management System, Version 9 ("PrimeCareTM Version 9")
is a complete, ground-up redesign and re-write of the Company's initial EMR,
the PrimeCareTM Patient Management System ("PCPMS"). The overall system
architecture has been changed; the supporting data base structures have been
enhanced; the client interface has been redesigned to more accurately
reflect the operational needs of the end-users, and user installation has
been greatly simplified.
PrimeCareTM Version 9 is a user friendly, patient management system that is
patient, physician and staff, interactive. PrimeCareTM Version 9: (i)
creates an electronic medical record documenting the patient physician
encounter; (ii) is compatible with practice management and billing systems,
EMR and CPR systems; (iii) is Health Insurance Portability Accountability
Act ("HIPAA") compliant; (iv) is designed for use in ambulatory clinics,
group and individual practices; (v) uses an authoritative and comprehensive
knowledge database of approximately 280 symptom and problem oriented patient
Questionnaires for diagnostic and follow-up office visits; (vi)
collectively contains over 100,000 complaint and disease state questions,
over 2,000 diagnoses, over 675 physician reference articles, over 300
patient education articles; (vii) allows the staff to schedule the
appropriate Questionnaire and enter the vital signs; (viii) interacts
directly with the patient by having the patient select the answers that
apply to their problem from the Questionnaire; (ix) does not require the
patient to have computer or typing skills; (x) enables the physician to
obtain their patients' detailed History of Present Illness ("HPI") by
having the patient answer the Questionnaires without requiring physician or
staff time; (xi) allows the physician to interact directly with PrimeCareTM
Version 9 to select and document the normal and abnormal physical findings,
assessments, tests, prescriptions and treatment plan for the patient; (xii)
provides automatic (real time) calculation of HCFA's Evaluation and
Management ("E&M") code, with a full audit trail, used for determining the
reimbursement level by Medicare and other third party payers for the office
visit; (xiii) virtually eliminates dictation and transcription costs;
(xiv) reduces risk of malpractice liability due to errors of omission and
"failure to consider"; (xv) permits patients to answer Questionnaires at
their own speed (xvi) creates significant clinical and patient databases
for outcomes research.
When the patient arrives at the doctor's office, a designated staff member
selects the appropriate Questionnaire based upon the patient's chief
complaint and/or symptom and enters the patient's vital signs. The patient
is then seated at a computer and answers complaint-specific questions by
using either the keyboard number keys or mouse to indicate answers that
apply to him or her. No typing or computer skills are required. When the
patient has completed the Questionnaire, PrimeCareTM Version 9 creates a
Preliminary Report (the "Report") for the physician to review before
examining the patient. The Report contains the patient's current problems,
medications and allergies, and the patient's detailed HPI that includes all
of positive and significant negative subjective responses, vital signs and
an alphabetical list of the diagnostic possibilities with the patient's
responses repeated that support, or give rise, to each diagnostic
possibility. By freeing up the time physicians would normally have to spend
asking patient history questions and recording responses, PrimeCareTM
Version 9 permits physicians to see more patients and to spend more quality
time with each patient. PrimeCareTM Version 9 is also easy for physicians
to understand and use. The same simple key stroke or mouse click process
allows the physician or appropriate staff member to select and document the:
physical findings (normal and abnormal), assessment, tests, treatment plan,
prescribed medications, and patient education materials to be distributed
and to schedule follow-up visits. The physician or appropriate staff member
can also type a comment that expands upon: an answer selected by the patient
in the Questionnaire, a physical finding, an assessment, a treatment plan, a
prescription, or about any subject that may be appropriate. At the
conclusion of the encounter a final summary report of the visit that
includes, the patient's HPI, physical findings, assessment, tests,
prescriptions, treatment plan, patient educational materials and the
scheduled follow-up visit, are stored electronically in the patient's file,
and can be printed for the patient.
PrimeCareTM Version 9: standardizes the patient record; assures consistency
in patient care; creates a patient database for clinical and outcomes
research; supports utilization review and quality assurance audits; improves
the quality of care; increases efficiency and productivity of the
physician's practice; automatically generates a problem list; incorporates
patient care algorithms and clinical practice guidelines; permits, with
appropriate security controls, both local and remote, on-line electronic
retrieval of patient records and hard copy print outs; enables rapid access
to important patient data for clinical care; contains and provides patient
education materials about disease, disease management, tests and
medications; and provides physician reference materials.
PrimeCareTM Version 9's overall system architecture has been redesigned away
from a local network based two-tier client-server application, used in the
prior version of the PCPMS, to incorporate a robust three-tier
client-provider-relational database management system ("RDBMS") application,
designed for geographically separated tiers. The client (end-user) tier of
PrimeCareTM Version 9 is designed to connect with the middle or provider
(server) tier via internet communications. The provider and data base tiers
are designed to support multiple, distinct clients simultaneously. The
client application has been designed to allow easy internalization and
localization.
Supporting data bases have been redesigned to remove unnecessary
redundancies, including a major redesign of the patient/physician encounter
questionnaire. Also, provisions have been added for support of an unlimited
number of alternative languages. Currently, language support is offered in,
or being developed for, English, Spanish, French, and Simplified Chinese.
PrimeCare(TM) Version 9 continues to be a Windows(TM) application.
Although the client tier will run on Windows 95 or any later Windows desktop
operating system, it performs best when hosted on Windows 2000, Windows NT,
or Windows XP. The server (provider tier) and data base tiers of
PrimeCare(TM) Patient Management System, Version 9 should be hosted on
redundant Windows 2000 or Windows XP servers with appropriate backup, and
standby support.
The three-tier architecture of PrimeCareTM Version 9 provides many
advantages, including easy client installation; reduced on-site support
requirements; enhanced data security; and maximum flexibility. PrimeCareTM
Version 9's reduced installation and maintenance costs and its flexibility
enables it to be adapted to a wide variety of health care organizational
uses, including national and local health care systems, military
organizations, correctional facilities, HMOs, hospitals with outpatient
services, clinics, group practices and solo practitioners.
As a three-tier application, PrimeCareTM Version 9, requires only that the
client tier application be installed at the end-user location. This system
architecture greatly simplifies both user installation and system
maintenance. Although the client (end-user) tier uses the internet to
communicate with the provider and data base tiers, it is not a browser-based
application, thereby eliminating the many compatibility and security issues
involved in supporting multiple browser configurations. The PrimeCareTM
Version 9 client is a specially written front-end application, designed to
be downloaded by the client via a web connection, and then installed at the
client's location using normal Windows installation procedures.
The system is designed to support multiple reimbursement models, including
free demo, no-charge use, sponsored use, flat fee, periodic (monthly /
annual) fee, activity based fees, and option-based fees.
Competition:
The Company has not identified any competitive patient management system
which embodies all the features of the PrimeCareTM System, in particular the
complaint specific, interactive Questionnaires completed by the patient and
the report generated by the patient's responses. The Company believes that
it has the only in-office patient management system and Web sites that
enable physicians to obtain the patient's detailed History of Present
Illness by having the patient answer problem-specific HPI Questionnaires on
a PC in the office or via the Internet. However, other companies market
systems which may have some of the features of the PrimeCareTM System and
some companies market medical office products which perform different
functions than those performed by the PrimeCareTM System. To date, market
penetration by both the Company and its competitors has been limited.
PrimeCareTM Patient Management System ("PCPMS")
The PCPMS was the Company's initial EMR offering. The Company has
discontinued marketing the PCPMS
Code ComplierTM:
The Company has also developed Code ComplierTM an application software
program that was designed to be used in conjunction with The Company's
PrimeCareTM and PrimeCareOnTheWeb.comTM. As each item of information is
entered into and collected by PrimeCareTM during the patient encounter, the
CodeComplierTM organizes the data in the proper classification and using the
1997 HCFA guidelines, automatically calculates HCFA's Evaluation and
Management code level, with full audit trail, used for determining the
reimbursement level by Medicare and other third party payors for the
History, Physical Findings and Decision Making sections the office visit.
It totally eliminates the time and effort which would otherwise be required
by the physician or office personnel to complete this task. CodeComplierTM
takes the guess work out of E&M and third party payer compliance.
CodeComplier is an integral part of PrimeCareTM Version 9.
PrimeCareOnTheWeb.com (the "PCW Site"):
The PCW Site is a unique physician and patient interactive Site that: (i)
uses PrimeCare's unique Questionnaires for diagnostic and follow-up office
visits, physician reference articles, patient education material,
CodeComplierTM for real time calculation of E&M code and the scheduler
portion of PrimeCareTM; (ii) enables physicians to obtain their patient's
detailed HPI by having the patient answer Questionnaires via the Internet
without requiring physician time; (iii) saves the physician and staff the
time required to obtain the HPI, thus allowing them to give more attention
to each patient and/or see more patients; (iv) produces an extremely
comprehensive HPI that includes all of the "yes" answers, pertinent
negatives and a list of the diagnostic possibilities with the answers
repeated that support each diagnostic consideration; (v) is HIPAA
compliant; (vi) protects all Internet communication and the confidentiality
rights of every user through a unique user ID and password per Questionnaire
to be answered and secure digital certificates from VeriSignTM, (vii)
encrypts all data for storage; (viii) enables creating a significant data
base for outcomes research; and (ix) automatically provides registered
physicians individual Web sites on YourOwnDoctorTM.com.
YourOwnDoctor.com (the "YOD Site"):
The YOD Site is a web community created, owned, operated and maintained by
the Company that: (i) provides free individual Web sites for physicians,
physician groups, and other health care providers that register for
PrimeCareOnTheWebTM; (ii) enables physicians to promote their services
through displaying credentials, including photos of each physician and staff
in the office, listing specialities, office hours, directions, maps, phone
numbers, e-mail addresses, and accepted insurance plans; (iii) provides
useful links to other medical sites; (iv) provides a direct link from
physician site to PCW that enables patient to access appropriate
Questionnaire and complete; (v) provides direct link to YourOwnHealth.comTM
for use by patients.
YourOwnHealth.com (the "YOH Site"):
The YOH Site is a unique, free online health and wellness site designed to
empower health care consumers to be better prepared for their next visit to
the doctor. The YOH Site offers: (1) the "Medical Interview" that: (i)
enables visitors to securely and anonymously select and complete from
approximately 110 of the 280 Questionnaires contained in PrimeCareTM Version
9 and PCPMS; (ii) generates and makes available to the visitor a detailed
HPI report based upon their responses; (iii) permits the visitor to answer
the Questionnaires in either English or Spanish; (iv) encrypts all medical
data and uses digital certificates from VeriSignTM for Internet
communication; (v) provides banner links to the YOD Site and
www.DeniseAustin.com. (2) "YourOwnHealthTM Notebook": (i) is a secure
depository for storage of personal and family medical data for Registered
Members; (ii) can be accessed only through the use of registered IDs and
Passwords; (iii) encrypts all medical data and uses digital certificates
from VeriSignTM for Internet communication; (iv) provides a convenient way
to keep track of personal health issues such as allergies, immunizations,
medications and others that can be kept and edited on designated lists; (v)
allows the Member to save their completed HPI Questionnaire reports and to
add personal notes and reminders to the record. (3) "YourOwnHealthTM
Reference" provides extensive health care consumer education material
relating to diseases, disease management, medical procedures and
prescription and common over the counter medications, including drug
interaction.
The Market:
The Company's domestic and international markets for: (a) the PrimeCareTM
Version 9, the PCW, YOH and the YOD Sites are ambulatory/outpatient medical
facilities, such as, primary care physicians, medical clinics, group
practices, health maintenance organizations, health care insurance companies
and in general, health care providers other than those providing care to
patients confined to hospital beds; and (b) the YOH Site is for the use of
the general public.
Revenue Sources and Marketing Strategy:
During the fiscal year ended June 30, 2002, the PrimeCareTM System was
selected to be part of a major international health care information
management program, anticipated to be installed in a number of countries as
their health care system. To date these contracts have not materialized and
the Company does not believe they will materialize.
The need for new approaches in health care delivery is critical.
PrimeCare(TM) Version 9 is a software system that provides for the creation
of new health care insurance products to meet the needs of millions of
uninsured Americans at a cost that they can afford. It will enable the
insurer to reduce the cost of care for current enrollees and introduce new
cost-effective products while maintaining the quality of care.
Licensing Fees:
The Company believes that the increased awareness of PrimeCare(TM) Version 9
will enhance the Company's ability to obtain additional contracts and annual
licensing fees from large fixed population groups, which includes, but is
not limited to, other countries, labor unions, medical insurance companies,
HMOs, military forces and correctional facilities.
Advertising Fees:
Advertising revenues are dependant upon the number of visitors that use the
Company's Web sites. The Company believes that the use of PrimeCare(TM)
Version 9 by licensees will increase awareness and use of the Company's Web
sites and thus result in increased advertising fees.
Outcomes Research.
Potentially, the Company could receive fees or grants for conducting
outcomes research for pharmaceutical companies, teaching hospitals,
governmental agencies and philanthropic organizations. The Company
anonymizes, encrypts and stores the data from both the completed diagnostic
and follow-up Questionnaires. This ever-growing medical database can be
analyzed in various ways to determine the effectiveness of treatment plans,
medications, etc.
The Company has entered into an agreement with Hackensack University Medical
Center ("HUMC"). The agreement provides for the use of the Company's Web
sites by HUMC's medical services organization ("MSO"), North Jersey Medical
Management Services, L.L.C. This MSO has over 1,000 physicians. HUMC, and
its Physicians Hospital Organization, have created www.HUMCMD.net, a
complete Physician/Patient Internet Service Provider ("ISP") providing top
quality Internet connectivity to members of its physician network, plus
access to key internal HUMC applications.
The HUMCMD site has both a "Physician Portal" and "Patient Portal". The site
currently contains the Company's PCW Site and YOH Site. The Company's
advertising revenues are dependent upon HUMC's marketing efforts to its
Staff Physicians and patients.
Fitness Web Site:
The Company's primary source of revenues are derived from the operation of
the "shopping cart" on the fitness and wellness Web site known as
www.DeniseAustin.com where it is the exclusive seller of Denise Austin
videos and DVDs. The fitness and wellness Web site features Denise Austin,
a nationally known fitness expert who has had a daily fitness show on
television for over 15 years, the Company promotes and markets a variety of
Denise Austin products on the Web site. Visitors and fans are able to shop
online for their favorite Denise Austin signature exercise videos, books,
equipment, gear, and private label apparel and nutraceuticals (when
available), as well as sign up for her monthly news letter, enjoy fitness
tips, exercises, motivation messages, and some of her favorite healthy recipes.
Competition: Although there are a number of fitness TV shows, Denise
Austin's Daily Workout is reputed to be the number one fitness show on
television with over four million viewers each weekday morning.
The Company believes that it could obtain sufficient working capital from
operations through marketing PrimeCareTM Version 9 and its other Internet
products.
Currently, the Company has lines of credit with RBC Centura Bank for a
maximum of borrowing of $20,000 and has no material commitments for capital
expenditures outstanding.
PART II - OTHER INFORMATION
Item 2. Changes In Securities
During the nine months ended March 31, 2005 an aggregate of 4,320,539 shares
of the Company's common stock were sold for $43,205.39 or $0.01 per share
plus warrants to purchase 4,320,539 shares at $0.02 per share. The financial
statements include recognition of an additional $215,033 related to these
stock transactions, characterized as paid in capital and interest expense.
No shares of common stock are reserved for the exercise of the warrants.
Exercise of the warrants is contingent upon the shareholders approving an
increase in the authorized common stock to at least 100,000,000 shares.
In consummating the above described private placements, the Company relied
upon the exemptions from registration provided by Sections 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"), and Rule 506
promulgated thereunder based upon: representations from the investor that
he, she or it, (a) met one of the categories of accredited investor set
forth in Rule 501, (b) was acquiring the securities for his, her or its own
account and not with a view towards further distribution and (c) had such
sufficient knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks connected with the applicable
investment, and the fact that (a) no general solicitation of the securities
was made by the Company, (b) the securities issued were "restricted
securities" as that term is defined under Rule 144 promulgated under the
Securities Act, (c) the Company placed appropriate restrictive legends on
the certificates representing the securities regarding the restricted nature
of these securities and (d) prior to the completion of each transaction,
each investor was informed in writing of the restricted nature of the
securities, provided with all information regarding the Company as required
under Rule 502 of Regulation D and was given the opportunity to ask
questions of and receive additional information from the Company regarding
its financial condition and operations.
Item 6. Exhibits and Reports on Form 8-K
(a) 31.1 Certification pursuant to Rule 13a-14 AND 15d-14
of the Securities Exchange act of 1934, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley act of 2002
32.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
act of 2002
(b) Reports on Form 8-K
A Form 8-K was filed on October 20, 2004 and a Form 8-K was filed
on November 12, 2004, both relating to the change in the Company's
independent auditors.
A Form 8-K was filed on March 22, 2005,and amended on April 12,
2005 relating the Agreement and Plan of reorganization and change
of control more fully discussed above.
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned duly authorized.
OCG TECHNOLOGY, INC.
BY /s/Edward C. Levine
EDWARD C. LEVINE,
PRESIDENT
(CHIEF FINANCIAL OFFICER)
DATED: May 14, 2005