SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarter ending August 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission File No. 33-1534-D
ASTHMA DISEASE MANAGEMENT, INC.
(Name of Small Business Issuer)
DELAWARE 22-3253496
------------------------------------------------ --------------------------------
(State or other jurisdiction of Incorporation or (IRS Employer Identification No.)
Organization)
1223 Berks Street, Suite 201
Philadelphia, PA 19125
------------------------------------------------- --------------------------------
(Address of principal executive offices) (Zip Code)
(215) 634-4101
---------------------------------------------------
(Issuer's Telephone Number, including Area Code)
Section registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
None None
Securities Registered Pursuant to Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value per share
------------------------------------------------
(Title of Class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 filings requirements for the past 90 days.
YES [X] NO [ ]
On August 31, 2001, Asthma Disease Management, Inc. had outstanding 93,503,508
shares of common stock and 10,000,000 shares of Class A common stock.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ASTHMA DISEASE MANAGEMENT, INC.
UNAUDITED CONDENSED BALANCE SHEETS
AUGUST 31, 2001 AND MAY 31, 2001
August 31, May 31,
2001 2001
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 12,355 $ 10,547
Accounts receivable, net 0 0
Inventory 2,500 2,500
------------ ------------
TOTAL CURRENT ASSETS 14,855 13,047
DEFERRED INCOME TAXES -- --
PROPERTY AND EQUIPMENT, net -- --
------------ ------------
TOTAL ASSETS $ 14,855 $ 13,047
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 324,046 $ 314,396
Payroll taxes payable 661,561 630,203
Accrued contractual settlements 295,509 295,509
Convertible notes payable 466,168 407,227
------------ ------------
TOTAL CURRENT LIABILITIES 1,747,284 1,647,335
============ ============
COMMITMENTS and CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock - Class A, $0.001 par value;
10,000,000 shares authorized, 10,000,000
shares issued and outstanding at
August 31, 2001 and May 31, 2001 10,000 10,000
Common Stock, $0.001 par value; 40,000,000
shares authorized, 93,503,508 shares issued
and outstanding at August 31, 2001 and
May 31, 2001 93,504 93,504
Additional paid-in capital 9,066,398 9,066,398
Accumulated deficit (10,902,331) (10,804,190)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (1,732,429) (1,634,288)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,855 $ 13,047
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED
CONDENSED FINANCIAL STATEMENTS.
2
ASTHMA DISEASE MANAGEMENT, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 2001 AND 2000
2001 2000
------------ ------------
Net revenues $ -- $ 83,399
Cost of revenues -- 87,716
------------ ------------
GROSS PROFIT -- (4,317)
Selling, general and administrative expenses 89,200 241,579
Depreciation and amortization -- --
------------ ------------
INCOME FROM OPERATIONS (89,200) (245,896)
Interest expense 8,941 --
------------ ------------
INCOME BEFORE INCOME TAXES (98,141) (245,896)
Income taxes -- --
------------ ------------
NET INCOME $ (98,141) $ (245,896)
============ ============
NET INCOME PER SHARE - Basic and Diluted $ -- $ --
============ ============
Weighted average common shares outstanding 93,503,508 87,446,090
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED
CONDENSED FINANCIAL STATEMENTS.
3
ASTHMA DISEASE MANAGEMENT, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED AUGUST 31, 2001 AND 2000
2001 2000
---------- ----------
Cash flows from operating activities:
Net income $ (98,141) $(245,896)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation -- --
Decrease (Increase) in accounts receivable, net -- 3,237
Decrease (Increase) in inventory -- --
(Decrease) Increase in accounts payable 9,650 36,971
(Decrease) Increase in payroll taxes payable 31,358 27,498
(Decrease) Increase in contractual settlements -- --
(Decrease) Increase in accrued note interest 8,941 --
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES (48,192) (178,190)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment -- --
--------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of convertible notes payable 50,000 138,000
Issuance of common stock -- --
Issuance of common stock - Cl. A -- 10,000
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 50,000 148,000
--------- ---------
NET INCREASE (DECREASE) IN CASH 1,808 (30,190)
CASH AT BEGINNING OF YEAR 10,547 48,619
--------- ---------
CASH AT END OF YEAR $ 12,355 $ 18,429
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest expense -- --
Cash paid during the year for income taxes -- --
DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock issued on conversion of notes payable -- --
Common stock issued to acquire vehicle -- --
Com. Stk. - Cl. A issued to directors -- $10,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED
CONDENSED FINANCIAL STATEMENTS.
4
ASTHMA DISEASE MANAGEMENT, INC.
NOTE 1- BASIS OF PRESENTATION.
The accompanying financial statements of Asthma Disease Management, Inc.
("ADMI") are unaudited. In the opinion of management, all adjustments (which
include only normal recurring accruals) necessary for a fair presentation of
such financial statements have been included. Interim results are not
necessarily indicative of results of a full year.
The financial statements and notes are presented in accordance with the rules
and regulations of the Securities and Exchange Commission and do not contain
certain information included in ADMI's annual report. Therefore, the interim
statements should be read in conjunction with the financial statements and notes
thereto contained in ADMI's annual report.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
ADMI is a corporation formed under the laws of the State of Delaware with its
principal office in Philadelphia, Pennsylvania. On February 28, 2001, ADMI
closed its clinical laboratory in Berlin, New Jersey and dismissed all of its
employees. ADMI intends to lease new laboratory space in New Jersey once working
capital is raised. ADMI will continue to offer a broad range of testing services
used by Primary Care Physicians in the diagnosis, monitoring and treatment of
asthma and allergy diseases throughout the United States.
Prior to December 3, 1998, ADMI conducted its business under the names of IRT
Holding Corporation, IRT Laboratory, Inc. and IRT Diagnostic, Inc.
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.
CASH. Holdings of highly liquid investments with maturities of three months or
less when purchased are considered to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS. The carrying amounts reported in the
balance sheet for cash, accounts receivable, accounts payable, payroll taxes
payable and convertible notes payable are considered to be representative of
their respective fair values due to their short-term nature.
INVENTORIES. Inventories, consisting primarily of purchased laboratory supplies,
are stated at the lower of cost or market using the first-in, first-out method.
PROPERTY AND EQUIPMENT. Property and equipment are carried at cost. Depreciation
is provided principally on the straight-line method over the estimated useful
lives of the assets. Betterments and large renewals which extend the life of the
asset are capitalized whereas maintenance and repairs and small renewals are
expended as incurred.
REVENUE RECOGNITION. Revenues are recognized on the accrual basis at the time
test results are reported, which approximates when services are provided.
Services are provided to certain patients covered by various third-party payer
programs including the Medicare and Medicaid programs. Billings for services
under third-party payer programs are included in revenues net of allowances for
contractual discounts and allowances for differences between the amounts billed
and estimated program payment amounts. Adjustments to the estimated payment
amounts based on final settlement with the programs are recorded upon settlement
as an adjustment to revenue. In 2001 and 2000, approximately 10% of ADMI's
revenues were derived from tests performed for beneficiaries of Medicare and
Medicaid programs.
5
INCOME TAXES. Income taxes are accounted for utilizing the asset and liability
method. Under this method, deferred income taxes are determined based on the
difference between the financial statement and tax basis of assets and
liabilities using presently enacted tax rates and regulations. Future tax
benefits, such as net operating loss carry-forwards, are recognized to the
extent that realization of such benefits are more likely than not to occur.
CONCENTRATION OF CREDIT RISK. Substantially all of ADMI's accounts receivable
are with companies and physicians in the health care industry and with
individuals for whom tests were performed. However, concentrations of credit
risk are limited due to the number of ADMI's clients as well as their dispersion
across many different geographical regions.
NET INCOME PER SHARE. Net income (loss) per share is computed by dividing net
income (loss) by the weighted average number of common shares outstanding during
the period. Diluted net income (loss) per share is computed by dividing net
income (loss) by the sum of weighted average number of common shares outstanding
during the period plus common stock equivalents. Common stock equivalents are
shares assumed to be issued if ADMI's outstanding stock option was exercised.
However, the effect of the exercise of ADMI's stock option was not included in
the computation of diluted net income (loss) per share as it would have been
anti-dilutive for all periods presented.
COMPREHENSIVE INCOME. Comprehensive income consists only of net income and is
presented in the statements of stockholders' equity.
RECLASSIFICATIONS. Certain reclassifications have been made to prior year
amounts to conform to the classifications used in the current year presentation.
6
NOTE 3 - ACCOUNTS RECEIVABLE, NET.
August 31 May 31,
2001 2001
--------- --------
Gross accounts receivable $ 22,476 $ 25,000
Less: Allowance for doubtful accounts (22,476) (25,000)
-------- --------
$ -- $ --
======== ========
Bad debt expense (recovery) was $(2,524) and $3,228 in 2001 and 2000.
NOTE 4 - INCOME TAXES.
Income tax expense consists of the following:
August 31, May 31,
2001 2001
----------- ----------
Currently payable:
Federal $ -- $ --
State $ -- $ --
Deferred:
Federal $ -- $ --
State $ -- $ --
Deferred tax assets and liabilities consists of the following:
Net operating losses $ 2,593,006 $ 2,326,562
Valuation allowance (2,593,006) (2,326,562)
$ -- $ --
=========== ===========
A valuation allowance is provided to reduce the deferred tax assets to a level
which, more likely than not, will be realized. The netting of deferred assets
and liabilities reflects management's estimate of the amount which will be
realized from future taxable income which can be predicted with reasonable
certainty.
ADMI has net operating losses carry-forward of $10,804,190 for Federal and state
tax purposes that begin to expire in 2003.
NOTE 5 - PROPERTY AND EQUIPMENT.
August 31, May 31,
2001 2001
---------- ---------
Laboratory Equipment $ 236,175 $ 236,175
Office Equipment 123,076 123,076
Furniture and Fixtures 27,362 27,362
Vehicles 15,008 15,008
--------- ---------
401,621 401,621
Accumulated Depreciation (401,621) (401,621)
--------- ---------
Property and Equipment, net $ -- $ --
========= =========
ADMI's lease of its office and clinical laboratory in Berlin, New Jersey was
terminated. During years ended 2001 and 2000, ADMI leased this space on a
month-to-month basis at a cost of $3,450 per month.
7
NOTE 6 - PAYROLL TAXES PAYABLE.
August 31, May 31,
2001 2001
---------- ---------
Federal payroll taxes payable - prior year $ 426,968 $ 300,593
State payroll taxes payable - prior year 199,593 168,329
Federal payroll taxes payable - current year 0 101,000
State payroll taxes payable - current year 0 24,280
Federal payroll taxes payable - former subsidiary 40,000 40,000
--------- ---------
666,561 634,203
Current year payments made (5,000) (4,000)
--------- ---------
$ 661,561 $ 630,203
========= =========
ADMI is significantly in the arrears in making Federal and state payroll tax
payments.
NOTE 7 - ACCRUED CONTRACTUAL SETTLEMENTS.
August 31, May 31,
2001 2001
---------- --------
Termination of employment contracts $150,000 $150,000
Medicaid overpayments due to New Jersey DMAHS 26,509 26,509
Legal costs incurred with Medicaid suit 4,000 4,000
Contract settlements 75,000 75,000
Legal fees associated with contract settlements 40,000 40,000
-------- --------
$295,509 $295,509
======== ========
ADMI is currently being sued in New Jersey Superior Court, Camden County, for
the termination of employment contracts of two former employees. ADMI's legal
counsel has estimated ADMI's probable liability regarding these suits to be
$150,000.
ADMI has entered into a Stipulation of Dismissal with the New Jersey Division of
Medical Assistance and Health Services (Medicaid) to repay $26,509 in alleged
over billing of laboratory tests in 1995. The legal costs incurred in defense of
these allegations were $4,000.
ADMI has settled certain contractual disputes. One such settlement requires ADMI
to pay $75,000 eighteen months after the settlement date. Other disputes were
settled between the parties for no amounts due.
NOTE 8 - CONVERTIBLE NOTES PAYABLE.
August 31, May 31,
2001 2001
---------- --------
One-year, 15%, convertible notes issued August
through November 1998 $ 15,000 $ 17,000
Six-month, prime rate from 7.50% to 9.5%,
convertible notes issued during 2001 year 415,682 365,682
Accrued interest on notes 35,485 26,545
-------- --------
$466,168 $407,227
======== ========
During 2001, ADMI redeemed a $2,000 note for cash. No other notes were converted
or redeemed.
8
During 2000, upon maturity of the notes, ADMI issued stock with a fair market
value of $610,227 to note holders in lieu of cash redemptions. Total debt
converted to equity was $224,600 with a debt conversion cost of $385,627.
Three members of the Board of Directors have contributed cash and hold
convertible notes payable to them in the following amounts: $127,500, $31,500
and $10,000, respectively. Accrued interest on all notes held by these member of
the Board of Directors totals $11,445 at August 31, 2001 and $8,561 at May 31,
2001.
NOTE 9 - SHARES OUTSTANDING.
On August 29, 2000, ADMI filed a complaint in the Delaware Chancery Court
against certain former officers, directors and employees of ADMI. The court
action is captioned ASTHMA DISEASE MANAGEMENT, INC., RICHARD ANDERSON, A. J.
HENLEY, PAUL A. DANDRIDGE, JAMES O'CONNOR, RAYMOND H. MILEY, III, PLAINTIFFS V.
GEORGE YOUNG, RICHARD A. MANINI, JOHN C. DAVID, LOIS M. BUTLER, JANE B.
MACINTYRE AND LEWIS L. PERELMUTTER, DEFENDANTS, Civil Action No. 18267-NC. The
complaint alleges among other things, that former officers, directors and
employees engaged in unlawful issuances of stock and other breaches of fiduciary
duties. The complaint alleges that the defendants caused ADMI to unlawfully
issue up to 53 million unauthorized shares of common stock. The complaint seeks
declaratory relief, injunctive relief and damages. On July 27, 2001, ADMI filed
a current report on Form 8-K announcing the settlement of the Delaware Chancery
Court litigation with respect to George H. Young, Richard A. Manini and Lewis L.
Perelmutter. The litigation is still pending with respect to the other
defendants.
ADMI's Certificate of Incorporation provides for the issuance of up to
10,000,000 shares of Class A common stock. The Class A common stock is
non-equity but is entitled to four votes per share. On August 29, 2000,
2,000,000 shares of Class A common stock were issued to each current member of
ADMI's Board of Directors.
NOTE 10 - RELATED PARTY TRANSACTION.
In August, 2001, the Board of Directors canceled a stock option which was
granted to a member of the Board of Directors on June 15, 1999. The grant gave
the member of the Board of Directors the option to purchase ten million shares
of common stock at a price of $0.001 per share. No part of the stock option was
ever exercised.
NOTE 11 - SPECIAL CHARGES-YEAR ENDED MAY 31, 2001.
(1) During the second quarter ending November 30, 1999, ADMI recognized special
charges consisting of the following:
Debt conversion expense $385,627
This expense was incurred to have note holders convert to common stock upon
maturity of notes payable to note holders. (See Note 8)
(2) At May 31, 2000, after review by the new management team put in place on May
19, 2000, ADMI recognized special charges consisting of the following:
Contractual settlements (See Note 7) 180,509
Write off of receivable from litigation 500,000
Write off of aged accounts receivable 75,131
Write off of unidentifiable assets 23,354
----------
$1,164,621
==========
New management, with the advice of legal counsel, has assessed these disputes to
be probable liabilities of ADMI and has recorded these estimates of liability on
the books of ADMI.
The receivable from litigation was determined by new management to be a remote
possibility and thus should no longer be recognized as an asset of ADMI.
9
The write off of receivables was after evaluation of the possibility of
collection of old accounts by new management.
The write off of unidentifiable assets was after an assessment of all assets by
new management.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
ADMI believes that it is in compliance in all material respects with all
statues, regulations and other requirements applicable to its clinical
laboratory operations. The clinical laboratory testing industry is, however,
subject to extensive regulation, and many of these statues and regulations have
not been interpreted by the courts. There can be no assurance therefore that
applicable statues and regulations might not be interpreted or applied by a
prosecutorial, regulatory or judicial authority in a manner that would adversely
affect ADMI. Potential sanctions for violations of these statues and regulations
include significant fines and the loss of various licenses, certificates and
authorizations.
END OF FINANCIAL STATEMENTS
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
Except for historical information contained herein, the matters discussed in
this ITEM 2 and elsewhere in this Quarterly Report on Form 10-QSB are
forward-looking statements (within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended) that are subject to certain risks and uncertainties that could cause
ADMI's actual results to differ materially from those set forth in such
forward-looking statements. Should one or more risks and uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
could vary materially from those described herein.
ADMI's Financial Statements and Notes are presented in accordance with the rules
and regulations of the Securities and Exchange Commission and do not contain
certain information included in ADMI's annual report. Therefore the interim
statements should be read in conjunction with the financial statements and notes
contained in ADMI's annual report.
The following discussion should be read in conjunction with, and is qualified in
its entirety by, ADMI's Financial Statements and Notes thereto appearing
elsewhere herein. Historical results are not necessarily indicative of trends in
operating results for any future period.
ANALYSIS OF FINANCIAL CONDITION
Quarter ended August 31. In thousands (except for per share data)
RESULTS OF OPERATIONS
The results of operations with prior periods are not comparable. On February 28,
2001, ADMI closed its clinical laboratory in Berlin, New Jersey and dismissed
all of its employees. ADMI intends to lease new laboratory space in New Jersey
once working capital is raised. ADMI will continue to offer a broad range of
testing services used by Primary Care Physicians in the diagnosis, monitoring
and treatment of asthma and allergy diseases throughout the United States.
During the quarter ended August 31, 2001, selling, general and administrative
expenses consisted primarily of $51,000 in professional and legal fees, $36,358
in accrued payroll taxes, interest and penalties and $1,842 in other expenses.
Please see ADMI's annual report on Form 10-KSB for more information.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On May 5, 2000, the Securities and Exchange Commission (the "SEC") commenced a
formal investigation looking into activities of ADMI, certain former officers
and directors of ADMI, and others, concerning, among other things, possible
unlawful issuances of ADMI's common stock. Thereafter, the SEC temporarily
suspended the over-the-counter trading of the common stock of ADMI. The
temporary suspension was effective on May 8, 2000 and terminated on May 19,
2000. The suspension occurred, according to the SEC, because questions were
raised about the accuracy and adequacy of the publicly disseminated information
concerning, among other things, the status and extent of ADMI's business
operations. The temporary suspension ended on May 19, 2000, but the SEC is
continuing its investigation of ADMI, certain of its former officers and
directors and others.
On August 29, 2000, ADMI filed a complaint in the Delaware Chancery Court
against certain former officers, directors and employees of ADMI. The court
action is captioned ASTHMA DISEASE MANAGEMENT, INC., RICHARD ANDERSON, A. J.
HENLEY, PAUL A. DANDRIDGE, JAMES O'CONNOR, RAYMOND H. MILEY, III, PLAINTIFFS V.
GEORGE YOUNG, RICHARD A. MANINI, JOHN C. DAVID, LOIS M. BUTLER, JANE B.
MACINTYRE AND LEWIS L. PERELMUTTER, DEFENDANTS, Civil Action No. 18267-NC. The
complaint alleges among other things, that former officers, directors and
employees of ADMI engaged in unlawful
11
issuances of stock and other breaches of fiduciary duties. The complaint
alleges that the defendants caused ADMI to unlawfully issue up to 53 million
unauthorized shares of common stock. The complaint seeks declaratory relief,
injunctive relief and damages. On July 27, 2001, ADMI filed a current report
on Form 8-K announcing the settlement of the Delaware Chancery Court
litigation with respect to George H. Young, Richard A. Manini and Lewis L.
Perelmutter. Messrs. Young and Manini claim that they are entitled to
additional shares of ADMI common stock and funds. Pursuant to the terms of
the settlement, ADMI and Messrs. Young and Manini agreed to allow an
independent, mutually agreed upon person to act as an arbitrator to review
the parties' respective claims, and make a final binding determination
regarding the amount of additional shares of common stock and funds, if any,
to which Messrs. Young and Manini are entitled. The possible outcome of the
arbitration cannot be determined at this time. The litigation is still
pending with respect to the other defendants.
ADMI is a defendant in an employment contract lawsuit pending in the Superior
Court of New Jersey, Camden County. The court action is captioned SCHOLFIELD &
LEFEBVRE V. IRT HOLDINGS, ET AL., Docket No. CAM-L-3557-98. The plaintiffs are
claiming damages of approximately $291,000. This amount does not include stock
issued to the plaintiffs that was cancelled. The case was originally scheduled
for trial on September 19, 2000, but was postponed. The case has not gone to
trial and is still pending.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
A. Exhibits: None.
B. Reports on Form 8K.
On July 27, 2001, ADMI filed a current report on Form 8-K announcing the
settlement of litigation between ADMI and George H. Young and Richard A. Manini.
ADMI also announced that it moved its principal executive offices to
Philadelphia, Pennsylvania.
On September 6, 2001 ADMI filed a current report on Form 8-K announcing that on
August 27, 2001, Ciro E. Adams, CPA ("Adams") resigned as the independent
auditor of ADMI. Adams was engaged as independent auditor for ADMI in July 2000.
No report provided by Adams during his engagement by ADMI contained an adverse
opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope, or accounting principles, other than Adam's audit
report dated August 21, 2000, of the balance sheet dated May 31, 2000, and the
related statements of operations, cash flows and changes in stockholders'
equity, which was modified as to the uncertainty of ADMI to continue as a going
concern.
During the term of Adams' engagement by ADMI, there were no disagreements with
Adams on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreement, if not resolved
to the satisfaction of Adams would have caused Adams to make reference to the
subject matter of the disagreement in connection with Adams' report other than
the following:
12
1. The failure of ADMI to disclose the suspension of the operation of
its on-site clinical laboratory;
2. Restrictions regarding the scope of the audit; and
3. The failure of ADMI to have its Form 10-QSB for the quarter ended
February 28, 2001 reviewed by an independent auditor, and its failure to
disclose such failure.
On August 30, 2001, the Board of Directors of ADMI and Adams discussed and
resolved their disagreements and Adams was re-engaged as ADMI's independent
auditor to audit ADMI's financial statements as of and for the year ended May
31, 2001 to review ADMI's interim reports.
The re-engagement of Adams was approved by the Board of Directors of ADMI. The
independent auditor's report prepared by Adams in connection with the audit of
ADMI's financial statements for the year ended May 31, 2001 expresses doubt
about ADMI's ability to continue as a going concern.
C. Other business: None.
Signatures:
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: October 15, 2001 ASTHMA DISEASE MANAGEMENT, INC.
By: /s/ James O'Connor
-------------------------------
James O'Connor, Chairman of the
Board of Directors, and
Secretary/Treasurer
13