UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
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Commission file number 000-29171
MED GEN, INC.
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[Exact name of small business issuer as specified in its charter]
Nevada 65-0703559
- ------------------------ -------------------------
(State of incorporation) (IRS Employer
Identification No.)
7284 W. Palmetto Park Road, Suite 207, Boca Raton, FL 33433
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(Address of principal executive offices)
(561) 750-1100
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(Issuer's telephone number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, Par Value $.001 per share
31,136,447 Shares outstanding as of June 30, 2005. The
Company's stock trades on the OTCBB under the symbol "MDGN".
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
INDEX
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - June 30, 2005 (Unaudited)
Statements of Operations - Three months ended June 30, 2005
and 2004 (Unaudited) and Nine Months ended
June 30, 2005 and 2004
Statements of Cash Flows - Nine months ended June 30,
2005 and 2004 (Unaudited).
Notes to Financial Statements (Unaudited).
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Item 3. Controls and Procedures
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
MED GEN, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
3
Med Gen, Inc.
Balance Sheet
June 30, 2005
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 514,805
Accounts receivable 82,209
Inventory 140,846
Other current assets 5,700
------------
Total Current Assets 743,560
------------
Property and Equipment, net 33,595
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Other Assets
Deferred loan costs 164,671
Deposits and other 37,950
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202,621
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$ 979,776
============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities
Accounts payable and accrued expenses $ 61,837
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Total Current Liabilities 61,837
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Convertible debentures 1,440,000
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Stockholders' (Deficit)
Preferred stock, $.001 par value, 5,000,000
shares authorized
Series A 8% cumulative, convertible, 1,500,000
shares authorized -
Undesignated, 3,500,000 shares authorized -
Common stock, $.001 par value, 245,000,000
shares authorized, 31,136,447 shares
issued and outstanding 31,136
Paid in capital 15,098,308
Receivable for common stock (35,000)
Deferred compensation (19,024)
Accumulated (deficit) (15,597,481)
------------
(522,061)
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$ 979,776
============
See accompanying notes to financial statements.
4
Med Gen, Inc.
Statements of Operations
For the Three Months and Nine Months Ended June 30, 2004 and 2005
(Unaudited)
Three Months Nine Months
-------------------------------------------------------------
2004 2005 2004 2005
------------- ------------- ------------- -------------
Net sales $ 232,087 $ 181,034 $ 744,288 $ 664,678
Cost of sales 98,460 99,658 346,649 270,747
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Gross profit 133,627 81,376 397,639 393,931
------------- ------------- ------------- -------------
Operating expenses:
Non cash stock compensation -
selling, general and administrative 279,350 60,000 415,100 365,640
Selling, general and administrative expenses 1,062,432 557,582 1,873,503 1,184,738
------------- ------------- ------------- -------------
1,341,782 617,582 2,288,603 1,550,378
------------- ------------- ------------- -------------
(Loss) from operations (1,208,155) (536,206) (1,890,964) (1,156,447)
------------- ------------- ------------- -------------
Other (income) expense:
Interest expense 39,850 47,111 111,185 56,171
Non cash stock interest expense 37,500 - 50,000 180,000
------------- ------------- ------------- -------------
77,350 47,111 161,185 236,171
------------- ------------- ------------- -------------
(Loss) before income taxes (1,285,505) (583,317) (2,052,149) (1,392,618)
Income taxes - - - -
------------- ------------- ------------- -------------
Net (loss) $ (1,285,505) $ (583,317) $ (2,052,149) $ (1,392,618)
============= ============= ============= =============
Per share information - basic and fully diluted:
Weighted average shares outstanding 15,328,609 30,806,777 8,098,809 29,065,385
============= ============= ============= =============
Net (loss) per share $ (0.08) $ (0.02) $ (0.25) $ (0.05)
============= ============= ============= =============
See accompanying notes to financial statements.
5
Med Gen, Inc.
Statements of Cash Flows
For the Nine Months Ended June 30, 2004 and 2005
(Unaudited)
2004 2005
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Cash flows from operating activities:
Net cash (used in) operating activities $ (1,460,329) $ (963,390)
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Cash flows from investing activities:
Net cash (used in) investing activities - -
------------- ------------
Cash flows from financing activities:
Borrowing (repayment) of related party notes (994,315) (175,000)
Proceeds from option exercise 1,059,173 101,987
Proceeds From convertible debentures 1,915,139 1,337,500
------------- ------------
Net cash provided by financing activities 1,979,997 1,264,487
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Net increase in cash 519,668 301,097
Beginning - cash and cash equivalents 90,791 213,708
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Ending - cash and cash equivalents $ 610,459 $ 514,805
============= ============
See accompanying notes to financial statements.
6
MED GEN, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2005
(UNAUDITED)
(1) Basis Of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles (GAAP) for interim financial information and Item
310(b) of Regulation S-B. They do not include all of the
information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included.
The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full
year. For further information, refer to the financial statements
of the Company as of September 30, 2004, and for the two years
then ended, including notes thereto included in the Company's
Form 10-KSB.
(2) Earnings Per Share
The Company calculates net income (loss) per share as required by
Statement of Financial Accounting Standards (SFAS) 128, "Earnings
per Share." Basic earnings (loss) per share is calculated by
dividing net income (loss) by the weighted average number of
common shares outstanding for the period. Diluted earnings (loss)
per share is calculated by dividing net income (loss) by the
weighted average number of common shares and dilutive common
stock equivalents outstanding. During periods when anti-dilutive
commons stock equivalents are not considered in the computation.
(3) Inventory
Inventory is stated at the lower of cost, determined on a first
in, first out basis, or market value. Inventory consists
principally of finished goods and packaging materials.
(4) Notes Payable - Related Parties
During the period ended March 31, 2005, the Company repaid
$181,000 in notes due to related parties and borrowed an
additional $411,000 from related parties with interest at 8% per
annum. The balance due was $405,000 at March 31, 2005. During
April 2005 the Company repaid the $405,000 balance (see Note 8).
(5) Income Taxes
The Company accounts for income taxes under SFAS 109, "Accounting
for Income Taxes", which requires use of the liability method.
SFAS 109 provides that deferred tax assets and liabilities are
recorded based on the differences between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences.
Deferred tax assets and liabilities at the end of each period are
determined using the currently enacted tax rates applied to
taxable income in the periods in which the deferred tax assets
and liabilities are expected to be settled, or realized.
The Company's deferred tax asset of approximately $2,300,000
resulting from net operating loss carryforwards aggregating
7
approximately $6,700,000 is fully offset by a valuation
allowance. The Company has recorded a valuation allowance to
state its deferred tax assets at estimated net realizable value
due to the uncertainty related to realization of these assets
through future taxable income.
The provision for income taxes differs from the amount computed
by applying the statutory rate of 34% to income before income
taxes due to the effect of the net operating loss. The principal
difference between the accumulated deficit for income tax
purposes and for financial reporting purposes results from non-
cash stock compensation being charged to operations for financial
reporting purposes.
(6) Stockholders' (Deficit)
During October 2004 the Company issued 2,000,000 shares of common
stock to an officer pursuant to the exercise of options granted
in October 2004 at $.10 per share. The fair value of the shares
issued was $.16 per share. The difference between the fair value
and the exercise price of $120,000 has been charged to operations
during the period ended December 31, 2004. In addition, the
Company recorded a receivable for common stock of $200,000 for
the amount due for the shares. During the quarter ended March 31,
2005, the Company reduced the amount receivable for these shares
to the current market price of its Common stock. This reduction
resulted in a charge to operations of $117,640 during the quarter
ended March 31, 2005. This officer remitted an aggregate of
$101,987 to the Company related to the receivable for common
stock during the period from October 1, 2004, through June 30. At
June 30, 2005, $35,000 remained receivable for common stock.
During January through March 2005, the Company issued 2,000,000
shares of common stock to a related party lender described in
Note 4, for future loans to be made to the Company pursuant to a
line of credit. The fair value of these shares of $180,000 was to
be charged to operations as additional interest over the term of
the line of credit. The Company recorded a charge to operations
for the value of the shares as the line of credit was terminated
at March 31, 2005, and the balance of $405,000 was repaid in
April 2005. In addition, the Company issued 200,000 shares of
common stock to a consultant and 1,000,000 shares to a related
party described in Note 4 for services. The fair value of these
shares of $68,000 was charged to operations.
During January 2005 the Company filed a Form SB-2 registration
statement covering the 8,000,000 common shares described in Note
7 and 2,200,000 of the common shares described above. The
registration statement was amended through June 2005 to include
an aggregate of 206,428,758 common shares including the shares
isuable pursuant to the conversion of the convertible debentures
and exercise of warrants issued as described in Note 8.
During April 2005 the Company increased its authorized shares to
250,000,000 of which 5,000,000 are preferred shares and
245,000,000 are common shares.
During May 2005 the Company issued 1,000,000 shares of common
stock to an affiliate for consulting services and charged the
fair value of the shares of $60,000 to operations.
Stock-based Compensation
During October 2004 the Company issued 2,000,000 options to
purchase shares of common stock to an officer. Compensation costs
charged to operations aggregated $120,000 for these options.
SFAS 123 requires the Company to provide proforma information
regarding net income and earnings per share as if compensation
cost for the Company's stock option plans had been determined in
8
accordance with the fair value based method prescribed in SFAS
123. The fair value of the option grants is estimated on the date
of grant utilizing the Black-Scholes option pricing model with
the following weighted average assumptions for grants during the
period ended June 30, 2005: expected life of options of 5 years,
expected volatility of 121%, risk-free interest rate of 3% and no
dividend yield. The weighted average fair value at the date of
grant for options granted during the period ended June 30, 2005,
approximated $.14 per option. These results may not be
representative of those to be expected in future years.
Under the provisions of SFAS 123, the Company's net income (loss)
and earnings (loss) per share would have been reduced (increased)
to the proforma amounts indicated below:
Net (loss)
As reported $(1,392,618)
Proforma $(1,552,618)
Basic and diluted (loss) per share
As reported $(.05)
Proforma $(.05)
A summary of stock option activity is as follows:
Weighted Weighted
Number average average
of exercise fair
shares price value
------ ----- -----
Balance at
September 30, 2004 934,112
Granted 2,000,000 $1.23 $1.23
Exercised/Forfeited (2,750,260) $1.23 $1.23
----------
Balance at
June 30, 2005 183,852
==========
The following table summarizes information about fixed-price
stock options at June 30, 2005:
Outstanding Exercisable
Weighted Weighted Weighted-
Average Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
------ ----------- ---- ----- ----------- -----
$1.01 31,852 2.0 years $1.01 31,852 $1.01
$1.25 100,000 5.0 years $1.25 100,000 $1.25
$1.31 52,000 5.0 years $1.31 52,000 $1.31
------- -------
183,852 183,852
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(7) Commitments, Concentrations and Contingencies
During the period ended June 30, 2005, the Company derived 46%,
15% and 10% of its total sales from three customers. At June 30,
2005, $49,946 is due from these customers.
9
During May 2003 Global Healthcare Laboratories, Inc. (Global)
made a claim against the Company for breach of contract under a
master license agreement. Management contended that Global
committed fraud and multiple breaches of the master license
agreement and that the claim was without merit. The matter was re-
filed for the third time by the plaintiffs after two prior
dismissals by the Federal courts for failure to state a cause of
action. On August 31, 2004, a verdict was rendered in favor of
the plaintiffs and they were awarded a judgment in the sum of
$2,501,191. The Company initially intended to appeal the verdict,
however on December 3, 2004, the Company and Global settled the
matter as follows:
The Company would make cash payments to Global aggregating
$200,000 through March 1, 2005, and would issue to Global an
aggregate of 8,000,000 shares of common stock. The shares to be
issued were valued at their fair market value of $1,120,000. The
Company has recorded an accrual of $200,000 for the cash payments
due and a stock subscription of $1,120,000 for the common shares
issuable at September 30, 2004. The Company has agreed to file a
registration statement covering an aggregate of 10,200,000 shares
of common stock on or before January 15, 2005, and should it not
due so an additional 500,000 shares of common stock would have
been due to Global. The Company believes that it has complied
with the filing requirement. Global will be required to execute
proxies giving the voting rights of the shares issuable to an
officer of the Company. The Company made payments aggregating
$200,000 to Global.
During the periods covered by these financial statements the
Company issued shares of common stock and subordinated debentures
without registration under the Securities Act of 1933. Although
the Company believes that the sales did not involve a public
offering of its securities and that the Company did comply with
the "safe harbor" exemptions from registration, if such
exemptions were found not to apply, this could have a material
impact on the Company's financial position and results of
operations. In addition, the Company issued shares of common
stock pursuant to Form S-8 registration statements and pursuant
to Regulation S. The Company believes that it complied with the
requirements of Form S-8 and Regulation S in regard to these
issuances, however if it were determined that the Company did not
comply with these provisions this could have a material impact on
the Company's financial position and results of operations.
During January 2005 and effective February 16, 2005, the Company
entered into a professional services agreement with an entity
acting as an independent contractor to distribute its products in
the United States. As compensation the Company agreed to pay a
commission of the greater of 5% of invoiced shipments or $105,000
for the year ended December 31, 2005 and $144,000 for each of the
years ended December 31, 2006 and 2007. The agreement may be
terminated by either party for any reason within 6 months of the
date of the agreement. Thereafter the Company may terminate the
agreement with 6 months notice.
During January 2005 the Company entered into a one year
consulting agreement with an entity to assist the Company with
its business plan and introduce the Company to potential
investors. Should the Company decide to enter into a funding
transaction as a result of an introduction by the consultant the
consultant shall designate a registered broker Dealer to complete
the transaction. The consultant shall receive a cash fee of 10%
of the funds procured and warrants to purchase common stock equal
to 10% of the total shares issued for a period of 5 years at 105%
of the price at which the shares are sold. The shares underlying
the warrants are subject to certain registration rights.
(8) Notes Payable
On March 31, 2005, the Company executed an agreement with NIR
Group, a New York-based investor group. The basic terms of the
agreement were as follows:
10
A. 1,540,000 8% Callable Secured Convertible Debenture due
three years from the date of issuance. The investment will be
made in three tranches, the first in the amount of $740,000 upon
signing of the agreement; the second in the amount of $400,000
upon the filing of a registration statement; and the third in the
amount of $400,000 upon the effectiveness of the registration
statement. The first payment in the amount of $740,000 less fees
associated with the debenture of $75,000 and additional payments
of $700,000 less fees associated with the debenture of $27,500
have been received by the Company. The $102,500 in fees will be
charged to operations over the term of the debenture. The balance
of the funds was utilized to pay off the existing Secured Lender
in the sum of $405,000 plus accrued interest and the remaining
amount will be used for an advertising campaign and general
corporate obligations. An officer also agreed to pledge his
common stock during the period that the note is outstanding.
B. Interest at the rate of 8% per annum payable quarterly with 8
months payable in a lump sum at the close of the second tranche
and 8 months payable in a lump sum at the close of the third
tranche. The interest rate resets to 0% for any month in which
the price of the stock is 125% of the Initial Market Price
(approximately $.05) for each trading day during that month.
C. The Debenture is immediately convertible into shares of common
stock at any time during the term. The conversion price will be
equal to 40% of the lesser of $.09 and the average of the lowest
intra-day trading prices during the 20 trading days immediately
prior to the conversion.
D. At the Company's option, in any month in which the current
stock price is below the Initial Market Price, the Company can
pay outstanding principal and interest due for that month and no
conversions can be made for that month.
E. The holder of the Debenture will also receive 1,540,000
warrants to purchase one share of common stock at an exercise
price of $.085. The fair value of $.05 per warrant will be
charged to operations as interest expense over the term of the
Debenture. Through June 2005 the Company has recorded $72,000
related to the value of the warrants as deferred loan costs and
amortization of $9,829 as additional interest on the debentures.
F. The Company will undertake to file a Registration Statement
covering all of the underlying common stock issuable under the
Debenture and the Warrants (see Note 6).
(9) Basis of Reporting
The Company's financial statements are presented on a going
concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The
Company has experienced a significant loss from operations
including the settlement of certain litigation. For the period
ended June 30, 2005, the Company incurred a net loss of
$1,392,618 and has an accumulated deficit of $15,597,481 at June
30, 2005.
The Company's ability to continue as a going concern is
contingent upon its ability to secure additional financing,
increase ownership equity and attain profitable operations. In
addition, the Company's ability to continue as a going concern
must be considered in light of the problems, expenses and
complications frequently encountered in established markets and
the competitive environment in which the Company operates.
The Company is pursuing financing for its operations and seeking
additional investments. In addition, the Company is seeking to
expand its revenue base by adding new customers and increasing
its advertising. Failure to secure such financing or to raise
additional equity capital and to expand its revenue base may
result in the Company depleting its available funds and not being
able pay its obligations.
11
The financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the
Company to continue as a going concern.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------
Three months ended June 30, 2005 Compared with three months
ended June 30, 2004 and Nine Months ended June 30,2005
compared with Nine months ended June 30,2004
- --------------------------------------------------
GENERAL
- -------
The Company is now headquartered at 7284 W. Palmetto Park Rd., Suite
207, Boca Raton, Florida 33433 since January 1,2004. It does not
foresee any need to further expand its 2200 sq. ft. corporate
facility. The Company has elected to outsource the manufacturing
of all its products at this time.
Results of Operations
- ---------------------
For the 2004 third fiscal quarter ended June 30, 2005, Sales
decreased 22.0% to $181,034 from $232,087. This decrease was
primarily caused by Eckerd's drugstores merger with CVS. CVS
ceased ordering Snorenz at the end of December 2004. The Company
has attempted to re-open this account by presenting the product
to the category buyer and the decision by CVS is still pending.
The Company is hopeful that a positive decision for its product
lines will occur by October 1, 2005. Also affecting Sales were
the overall consumer demand for the products in this category
"Cough and Cold" which showed a sharp decline. This overall
category decline has resulted in Walgreen's no longer carrying
the product lines as well.
For the Nine months ended June 30, 2005 sales decreased 11.70% to
$664,678 from $744,288, for the nine months ending June 30, 2004.
The decrease is attributable to a decline in overall customer
demand and the loss of several accounts as described above.
Gross profit for the third quarter was $81,376 versus $133,627
for the year ago quarter, a decrease of 39.1%. The decrease was
due to lower sales. The gross profit margin was 45.0% during the
quarter ended June 30, 2005, as compared to 57.6% during the
quarter ended June 30, 2004. This decrease resulted from lower
sales as cost of sales on a quarter comparison where virtually
unchanged.
For the nine months ended June 30, 2005 Gross profit was $393,931
versus $397,639 for the nine months ending June 30, 2004, a
decrease of 0.9%. The gross profit margin was 59.3% during the
quarter ended June 30, 2005, as compared to 53.4% during the
quarter ended June 30, 2004. This increase resulted from
increased wholesale prices and the shipping of previously
manufactured inventory.
13
Operating expenses (selling, general and administrative
expenses)for the 2005 quarter decreased to $557,582 from
$1,062,432, a decrease of 47.5%. The large decrease is due
to several factors including, decreased legal fees, consultants
fees and overall operating costs.
Operating expenses for the nine months decreased from $1,873,503 to
$1,184,738, a decrease of 36.8%. The decrease for the nine months
is attributable to the Company's continued cost cutting program;
also, the Company has bought remnant advertising time and saved
significant amounts in order to effectively advertise the
products on a reduced operating budget. The Company is also waiting
until the Fall of 2005 to advertise the products in conjunction
with new accounts ordering and placing the products on the shelves.
Operating loss for the 2005 period was $536,206 as opposed to a
loss of $1,208,155 in the prior year's quarter. The loss was
substantially lower because of lower SGA and cost cutting
measures by management.
Operating loss for the Nine months was $1,156,447 as compared
to $1,890,964 for the nine months a year ago. The loss was
substantially lower because of lower SGA and cost cutting
measures by management.
Interest expense increased from $39,850 in the year ago quarter
to $47,111 for this quarter. Interest expense for the
nine month period decreased from $111,185 to $56,171. The decrease
is directly attributable to less borrowings by the Company.
For the second fiscal quarter the company reported a loss of
$0.02 per share versus a loss of $0.08 per share in the year ago
quarter.
For the third quarter nine month comparison the Company lost $0.05
cents as compared to a loss of $0.25 in the year ago quarter.
Liquidity and Capital Resources
- -------------------------------
Cash on hand at June 30, 2005 was $514,805 and the Company had
working capital of $681,723 at June 30, 2005.
Net cash used in operating activities was $963,390 during the
nine months ended June 30, 2005.
Net cash used in investing activities was $-0- during the nine
months ended June 30, 2005.
14
Net cash provided by financing activities was $1,264,487 during the
nine months ended June 30, 2005, which consisted of $101,987 from
the proceeds from the sale of management options and $175,000 of
repayment of the original credit facility and $1,337,500 from the
convertible debenture.
The Company has affected a 5% price increase for all of its products.
The Company has also eliminated one-time burdens of legal,
computer and other non-recurring expenses. The Company has
sufficient cash resources, receivables and cash flow to provide
for all general corporate operations in the foreseeable future.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
Our discussion of results of operations and financial condition
relies on our consolidated financial statements that are prepared
based on certain critical accounting policies that require
management to make judgments and estimates that are subject to
varying degrees of uncertainty. We believe that investors need to
be aware of these policies and how they impact our financial
reporting to gain a more complete understanding of our financial
statements as a whole, as well as our related discussion and
analysis presented herein. While we believe that these
accounting policies are grounded on sound measurement criteria,
actual future events can and often do result in outcomes that can
be materially different from these estimates or forecasts. The
accounting policies and related risks described in the notes to
our financial statements for the year ended September 30, 2004
are those that depend most heavily on these judgments and estimates.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
- -----------------------------------------
Recently issued accounting pronouncements and their effect on us
are discussed in the notes to the financial statements in our
September 30, 2004 audited financial statements.
FORWARD LOOKING STATEMENTS
- --------------------------
When used throughout in this form 10QSB filing, the words "believe",
"should", "would", and similar expressions that are not historical
are intended to identify forward-looking statements that involve
risks and uncertainties. Such statements include, without limitation,
expectations with respect to the results for the next fiscal
year, the Company's beliefs and its views about the long term
future of the industry and the Company, its suppliers or its
strategic business partners. In addition to factors that may be
described in the Company's other Securities and Exchange
Commission ("SEC") filings, unforeseen circumstances or events
could cause the Company's financial performance to differ
materially from that expressed in any forward-looking statements
made by, or on behalf of, the Company. The Company does not
undertake any responsibility to update the forward-looking
statements contained in this Form 10QSB filing.
Item 3. Controls & Procedures
As required by Rule 13a-15 under the Exchange Act, as of the
date of the filing of this report , the Company carried out an
evaluation of the effectiveness of the design and operation of
the Company's disclosure controls and procedures. This
evaluation was carried out under the supervision and with the
participation of the Company's management, including the
Company's President, Chief Executive Officer and Chief Financial
Officer. Based upon that evaluation, the Company's President,
Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures are
effective. There have been no significant changes in the
Company's internal controls or in other factors, which could
significantly affect internal controls subsequent to the date the
Company carried out its evaluation.
Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required
to be disclosed in Company reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in Company reports
filed under the Exchange Act is accumulated and communicated to
management, including the Company's Chief Executive Officer and
Chief Financial Officer as appropriate, to allow timely decisions
regarding required disclosure.
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in
the Company's Exchange Acts reports is recorded, processed and
summarized and is reported within the time periods specified in
the SEC's rules and forms, and that such information is
accumulated and communicated to the Company's management,
including its Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding
required disclosure. In designing and evaluating the disclosure
control procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired
control objectives, and management necessarily was required to
apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
15
PART II
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Item 1. LEGAL PROCEEDINGS
All legal proceedings disclosed in the prior filings have
been settled by the Company. The terms of the settlement
were disclosed on From 8-K as filed on December 12, 2004.
Item 2. CHANGE IN SECURITIES
Not Applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 21st, 2005 the Company filed its Definitive
Proxy Statement requesting an increase of the authorized shares
from 50,000,000 to 250,000,000. The results of the proxy vote
which was scheduled for May 22, 2005 were extended to June 22nd,
2005. The results were that the amendment passed by a majority
vote of the shareholders
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 31.1 Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002,
promulgated under the Securities Exchange Act of 1934,
as amended
31.2 Certification of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002,
promulgated under the Securities Exchange Act of 1934,
as amended
32.1 Certification of Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, as adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, as adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
- -------------------------------------------------------------------
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Med Gen, Inc.
(Registrant)
Date: July 27, 2005
By: /s/Paul B. Kravitz
--------------------------
Paul B. Kravitz
Chief Executive Officer
16