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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Six Months Ended June 30, 2001
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CAPITAL DEVELOPMENT GROUP, INC.
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(Exact name of registrant as specified in its charter)
OREGON 93-1113777
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(State or other jurisdiction (IRS Employer Identification
of incorporation or No.)
organization)
4333 Orange Street, Suite 3600 Riverside, CA 92501-3839
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(Address of principal administrative (City, State, Zip Code)
offices)
(909) 276-0873
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(Registrants telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 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, June 30, 2001
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Common Stock, $.0001 par value 10,163,935
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Financial Statements are included as part of this document at the end of the
document.
Item 2. Management Discussion and Analysis or Plan of Operation
Disclosure regarding forward-looking statements.
This filing includes "forward-looking statements" as that term is defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are
based on management's beliefs and assumptions based on currently available
information. All statements other than statements of historical fact regarding
our financial position, business strategy and management's plans and objectives
for future operations are forward-looking statements. Although the Company
believes that management's expectations as reflected in forward-looking
statements are reasonable, we can give no assurance that those expectations will
prove to be correct. Forward-looking statements are subject to various risks and
uncertainties that may cause our actual results to differ materially and
adversely from our expectations as indicated in the forward-looking statements.
Many of these risks and uncertainties are disclosed in our recent filings with
the Securities and Exchange Commission, including those set forth below and
those disclosed in our quarterly report on Form 10-QSB for the quarter ended
June 30, 2001. You should be aware that these factors are not an exhaustive
list, and you should not assume these are the only factors that may cause our
actual results to differ from our expectations.
(a) Plan of Operation
The Company has tried for over 12 months to obtain long term financing to help
execute its business plan. The collapsing financial markets have dried up almost
all of the available capital. The losses investors incurred over the past 12 to
15 months have devastated the capital markets drying up financing opportunities
for many start up and early stage companies.
In recent months our president, Mike Vahl, has satisfied our cash requirements
by lending funds to us in exchange for demand promissory notes. The company
plans to start marketing IntraMed's Software Package, The Patient Tracking
Wizard ("PTW") in mid 2001. IntraMed has spent much of 2000 making enhancements
to the software and feels that with the help of its current customers, the
software is ready for to be marketed on a national basis. The company will
entertain ways to raise the necessary capital necessary to market the PTW.
However, the difficulties listed above in Section (a) will have to be overcome.
The PTW is perfectly tailored for the Workers Compensation market. The Internet
accessibility is designed for case managers located remotely from their
corporate headquarters or offices. The case managers can access the software
from anyplace that they can access the Internet. This provides great flexibility
for the case managers as well
as the Workers Compensation Insurance Carriers. The PTW can also function
efficiently in both a physicians office setting or a medical clinic setting.
(b) Management's Discussion and Analysis of Financial Condition and Results
of Operations
Currently the Company has very little capital. As described below, the Company
can continue indefinitely as its operational subsidiary is running on a
break-even or better basis. Last year we had sold in excess of $200,000 of
convertible notes and were starting to execute our business plan. However,
obtaining additional funding was always part of the plan. With the downturn in
the business cycle, the capital markets where we were seeking the additional
funding dried up. The Company is still seeking additional financing. With
additional financing, the Company believes that it still can execute its
business plan. However, as discussed above, the short term prospects for
additional financing look remote.
The Company currently owns 2 wholly owned subsidiaries; IntraMed Corporation and
Healthsource Financial Advisors. The current outlook for the Company and its
subsidiaries is as follows:
Capital Development Group, Inc.: Currently has little to no revenue. The Company
derives its income from profits of its subsidiaries. The main expenses of the
Company are management fees from its President, Michael Vahl, and the costs of
maintaining the public shell. There is a possibility that the Company might sell
a software license for it Administrator 1 package. The Company is not marketing
this package, however if this opportunity occurs the Company will evaluate the
market to see if future license sales are possible.
IntraMed Corporation: Currently running on a break-even mode. We currently have
3 customers and have 1 programmer who works part-time on an as needed basis. He
only works when the company can use his services on a billable basis. Our
part-time programmer is also an instructor in Computer Programming at the local
community college. He intends to have his classes work on projects that will
help upgrade and expand capabilities of the Patient Tracking Wizard ("PTW").
This work can be done with little or no cost to IntraMed. Healthcare Financial
Advisors: Currently not operating. Was shut down December 31, 2000.
IntraMed is in a "break-even" mode. Its revenues slightly exceed its expenses.
In recent months our president, Mike Vahl, has satisfied our cash requirements
by lending funds to us in exchange for demand promissory notes. The company will
have to raise funds either from Mr. Vahl, existing shareholders or seek outside
funding.
On June 29, 2001 the Company agreed to purchase MedTel Centers, Inc. in a stock
for stock transaction to make MedTel Centers, Inc. a wholly owned subsidiary of
Capital Development Group, Inc. On July 3, 2001, the Company and MedTel Centers,
Inc decided that the acquisition was not in the best interest of all parties and
agreed to rescind the transaction. MedTel Centers, Inc. was compensated 120,000
shares of the Company's restricted common stock as compensation.
Mr. Vahl, CDG's current president, has indicated a willingness to continue to
loan money to CDG until we become operational and profitable, but he is under no
obligation to do so, and he may therefore withdraw his lending commitment and
demand payment of outstanding debts at any time.
However, a number of uncertainties may have an effect on our business, financial
conditions and operations, and those effects may be material and adverse. These
uncertainties include the following.
We will require additional funding to commence operations.
We currently have no substantial cash reserves and have accumulated significant
liabilities. If we do not receive additional capital during 2001, we will be
unable to implement our business plan and we will not generate revenues
sufficient to satisfy our existing liabilities. One result of such an event is
that our stock price would decrease materially and could become valueless.
We may be unable to continue borrowing money from Mr. Vahl and he may call our
outstanding obligations.
We recently have met our current expenses by borrowing money from our
controlling shareholder, Mr. Mike Vahl, in exchange for demand promissory notes.
We anticipate continuing to fund our necessary expenses by borrowing additional
funds from these individuals until we begin to generate revenues sufficient to
satisfy our current obligations. However, Mr. Vahl is not subject to a binding
obligation to lend additional funds to CDG, and there can be no assurance that
he will continue to do so. If we fail to obtain the necessary capital by
borrowing money from this individual or from other sources, our business,
financial condition and operation will be affected materially and adversely.
Additionally, we owe substantial sums of money to Mr. Vahl, under terms that
require payment on demand. If he should demand repayment of all or a portion of
the loans before we generate sufficient revenues to fund these payments, such a
demand would have a material adverse effect on our business, operations and
financial condition.
We are entering into a market that currently is experiencing significant
competition.
The market for medical billing services and related entities currently is served
by a substantial number of businesses, including both medical practice
management companies and billing and collection services. Many entities with
which we will compete are substantially better funded and have gathered
significant market share. Moreover, some of these enterprises have significant
cash reserves and can better fund shortfalls in collections that might have a
more pronounced impact on companies such as ours. Some of these companies also
have greater experience and/or more efficient collection methods than we might
develop. If we fail to compete effectively with businesses that provide similar
services, our business operations and financial condition will be affected
materially and adversely.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No legal proceedings have occurred or are occurring in this quarter.
ITEM 2. CHANGES OF SECURITIES
During the current quarter, the Company issued 120,000 shares of common stock in
connection with the rescission of the acquisition of MedTel, Inc.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No defaults have occurred this quarter.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following matters were submitted to the shareholders on August 13, 2001:
1. The Election of the Board of Directors.
2. To transfer the assets and liabilities of CDG into a new corporation
with all of the existing shareholders owning a pro rata share of the
new company.
3. To perform a reverse split in a ratio of 1:7 of the companies common
stock.
4. To acquire the American Senior Golf Association.
5. To amend the Articles of Incorporation to increase the authorized
number of shares to fifty million (50,000,000).
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Capital Development Group, Inc.
By: /s/ Michael P. Vahl, President
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April 15, 2002
ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholders
Capital Development Group, Inc. and Subsidiaries
We have reviewed the consolidated condensed balance sheet of Capital Development
Group, Inc. and Subsidiaries (collectively referred to as the "Company") as of
June 30, 2001, the related consolidated interim statements of operations for the
three and six-month periods ended June 30, 2001 and 2000, and the related
consolidated interim statement of cash flows for the six-month periods ended
June 30, 2001 and 2000. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public Accountants. A review
of interim financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the aforementioned condensed consolidated financial statements in
order for them to be in conformity with accounting principles generally accepted
in the United States.
The accompanying consolidated interim financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has an
accumulated deficit of approximately $6,200,000 since inception. As discussed in
Note 9 to the consolidated interim financial statements, a significant amount of
additional capital will be necessary for the Company to maintain and increase
operations. Management's plans regarding these matters are also described in
Note 9. The accompanying consolidated interim financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Squar, Milner, Reehl & Williamson, LLP
April 10, 2002
Newport Beach, California
Capital Development Group, Inc. and Subsidiaries
Consolidated Condensed Balance Sheet
June 30, 2001 (unaudited)
ASSETS
Current Assets
Cash $ 10,082
Accounts receivable 38,544
Other current assets 2,023
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50,649
Furniture and Equipment, net 17,512
Intangible Assets, net 303,430
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$ 371,591
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities $ 142,072
Due to related parties 385,295
Convertible notes payable 304,029
Notes payable 81,875
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913,271
Deferred Tax Liability, net 78,216
Commitments and Contingencies
Stockholders' Deficit
Convertible Series A preferred stock;
$0.0001 par value; 300,000 shares
authorized; 157,867 shares issued
and outstanding 16
Common stock; $0.0001 par value;
30,000,000 shares authorized;
10,163,935 shares issued and outstanding 1,017
Additional paid-in capital 5,620,102
Accumulated deficit (6,241,031)
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(619,896)
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$ 371,591
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The accompanying notes are an integral part of these financial statements.
Capital Development Group, Inc. and Subsidiaries
Consolidated Condensed Statements of Operations
For the Three and Six-month Periods Ended June 30, 2001 and 2000
(unaudited)
For the Three- For the Three- For the Six- For the Six-
month period month period month period month period
ended June 30, ended June 30, ended June 30, ended June 30,
2001 2000 2001 2000
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Revenues $ 15,905 $ 10,099 $ 73,505 $ 10,099
Operating Expenses
Management fees 42,250 47,642 83,750 64,842
Depreciation and amortization 29,581 60,753 61,235 60,753
Payroll expenses 5,370 61,118 69,954 61,118
Other 75,058 68,717 103,571 75,304
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152,259 238,230 318,510 262,017
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Loss from operations (136,354) (228,131) (245,005) (251,918)
Other Expenses
Interest expense 14,936 13,579 25,407 13,579
Stock promotion expenses - 1,353,000 - 1,353,000
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14,936 1,366,579 25,407 1,366,579
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Net Loss $ (151,290) $ (1,594,710) $ (270,412) $ (1,618,497)
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Basic and Diluted Loss Per Share $ (0.01) $ (0.19) $ (0.03) $ (0.21)
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Weighted Average Number of Common
Shares Outstanding 10,163,935 8,470,155 10,163,935 7,778,723
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The accompanying notes are an integral part of these financial statements.
Capital Development Group, Inc. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
For the Six-month Periods Ended June 30, 2001 and 2000
(unaudited)
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2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (270,412) $ (1,618,497)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization expense 63,608 60,703
Issuance of warrants for services - 353,000
Issuance of common stock for services - 1,012,500
Interest expense 19,875 12,716
Changes in operating assets and liabilities:
Accounts receivable (24,941) (18,470)
Other current assets 1,600 4,441
Accounts payable and accrued liabilities (29,137) (39,789)
Due to related parties 189,699 146,915
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Net cash used in operating activities (49,708) (86,481)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment - (11,638)
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Net cash used in investing activities - (11,638)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable 40,000 210,000
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Net cash provided by financing activities 40,000 210,000
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NET (DECREASE) INCREASE IN CASH (9,708) 111,881
CASH - beginning of period 19,790 -
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CASH - end of period $ 10,082 $ 111,881
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See accompanying notes to consolidated financial statements for non-cash
investing and financing activities.
The accompanying notes are an integral part of these financial statements.
Capital Development Group, Inc. and Subsidiaries
Notes to Consolidated Condensed Financial Statements
June 30, 2001
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business
Capital Development Group, Inc. (the "Company") was incorporated in Oregon on
May 19, 1993. Prior to the acquisitions of IntraMed Corporation and HealthSource
Financial Advisors, LLC, (see Acquisitions of Subsidiaries discussed below) the
Company primarily engaged in the business of purchasing healthcare receivables
from hospitals and other healthcare institutions at a discount and administering
the collection process of such receivables. As of June 30, 2001, the Company has
redirected its efforts and has become primarily focused on the operations of the
newly acquired subsidiaries.
Interim Financial Statements
The accompanying consolidated condensed financial statements include the
accounts of the Company and its wholly owned subsidiaries; all material
intercompany account balances have been eliminated in consolidation. The
information furnished has been prepared in accordance with generally accepted
accounting principles for interim financial reporting, the instructions to Form
10-Q, and Rule 10-01 of Regulation S-X. Accordingly, certain information and
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted. In
the opinion of management, all adjustments considered necessary for the fair
presentation of the Company's consolidated financial position, results of
operations and cash flows have been included and are only of a normal recurring
nature. The results of operations for the quarter ended June 30, 2001 are not
necessarily indicative of the results of operations for the year ending December
31, 2001.
These financial statements should be read in conjunction with the Company's
audited December 31, 2000 consolidated financial statements included in Form
10-KSB filed on May 22, 2001.
Proposed Acquisitions
On April 11, 2001, the Company entered into a non-binding letter of intent
agreement to acquire all of the outstanding common stock of MedTel Centers, Inc.
("MedTel"), a company engaged primarily in the business of network management of
medical facilities and physicians. On July 3, 2001, the Company and MedTel
decided that the acquisition was not in the best interest of all parties and
agreed to rescind the transaction. The Company issued MedTel 120,000 shares of
the restricted common stock as compensation for such rescission.
On July 30, 2001, the Company entered into a non-binding letter of intent
agreement to acquire all of the outstanding common stock of American Senior Golf
Association, Inc. ("ASGA"), a company engaged primarily in the business of
hosting golf tournaments for
senior citizens, from World Quest, Inc., which owns all the outstanding shares
of ASGA. According to the terms of the agreement, the Company will initiate a
reverse stock split such that all of the Company's current stockholders will
own, in total, 2,222,000 shares of the Company's common stock, issue 15,978,000
shares of restricted common stock to the stockholders of ASGA and the surviving
entity will then execute an anti-dilution agreement limiting the total
additional shares to be issued over the subsequent 12 months to 2,000,000 shares
of common stock, such that ASGA then owned 100% of the company. The acquisition
is intended to qualify as a tax-free transaction under Section 368 (a)(1)(B) of
the 1986 Internal Revenue Code, as amended. Through its former stockholders,
ASGA is deemed the acquirer for accounting purposes because of (a) its majority
ownership of the Company, (b) its representation on the Company's board of
directors, and (c) executive management positions held by former officers of
ASGA. Such agreement is subject to stockholder approval. Subsequent to quarter
end, the Company and the ASGA decided the acquisition was not in the best
interest of all parties and agreed to rescind the transaction.
Acquisitions of Subsidiaries
On April 29, 2000, the Company acquired 100% of IntraMed Corporation
("IntraMed") in exchange for the Company's common stock. IntraMed is a developer
of an Internet based referrals, scheduling, billings and claims processing
software for the health care industry.
On May 31, 2000, the Company acquired 100% of HealthSource Financial Advisors,
LLC, ("HFA") in exchange for the Company's common stock and preferred stock. HFA
is a provider of healthcare consulting services. As of December 31, 2000,
management of the Company had ceased operations of HFA and determined that the
assets of HFA were at no value and committed to abandon such operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies of the Company presented below is
designed to assist the reader in understanding the Company's consolidated
condensed financial statements. Such financial statements and these notes are
the representations of Company management, which is responsible for their
integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States ("GAAP") in all material
respects, and have been consistently applied in preparing the accompanying
consolidated condensed financial statements.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the
accounts of the Company and those of its wholly-owned subsidiaries IntraMed and
HFA (collectively hereinafter referred to as the "Company"). The operations of
the subsidiaries are included in the accompanying consolidated condensed
statements of operations for the quarter ended June 30, 2001. The operations of
the subsidiaries acquired on April 29, 2000 and May 31, 2000 are included in the
accompanying consolidated condensed statements of operations from such dated
through June 30, 2000. All significant intercompany balances and transactions
have been eliminated in consolidation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Intangible Assets
Intangible assets, consisting of completed technology, customer relationships,
and goodwill, are amortized using the straight-line method over their estimated
useful lives of three years.
Income Taxes
Using the liability method required by Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes," the estimated tax
effects of temporary differences between financial and income tax reporting are
recorded in the period in which the events occur. Such differences between the
financial and tax bases of assets and liabilities result in future tax
deductions or taxable income.
Based on management's best estimate of taxable income in the foreseeable future,
it is more likely than not that some portion of deferred income tax assets, due
mostly to net operating loss carryforwards, may not be realized. As such,
management has provided 100% allowances against the deferred tax asset and
deferred tax benefit as of June 30, 2001 and December 31, 2000.
Loss per Common Share
Loss per common share is based on the weighted average number of shares of
common stock and common stock equivalents outstanding during the year in
accordance with Statement of Financial Accounting Standards No.
128, "Earnings per Share."
Securities that could potentially dilute basic loss per share (prior to their
conversion, exercise or redemption) were not included in the
diluted-loss-per-share computation because their effect is anti-dilutive.
Recent Accounting Pronouncements
For the quarter ended March 31, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"), as amended. Since the Company does not presently
engage in activities covered by SFAS 133, there was no significant effect on the
Company's June 30, 2001 consolidated condensed financial statements.
In July 2001, the Financial Accounting Standards Board issued Statements No.
141, "Business Combinations" ("SFAS 141") and No. 142 "Goodwill and Other
Intangible Assets" ("SFAS 142"). SFAS 141 is effective for fiscal years
beginning after June 30, 2001 and requires that all business combinations be
accounted for by a single method, the purchase method. SFAS 142 is effective for
fiscal years beginning after December 15, 2001 and provides that all existing
and newly acquired goodwill and intangible assets will no longer be amortized
but will be tested for impairment annually and written down only when impaired.
Management has not determined whether the requirements of such pronouncements
will have a significant impact on the Company's future financial statements.
Reclassifications
Certain amounts in the June 30, 2000 financial statements have been reclassified
to conform to their June 30, 2001 presentation.
3. NOTES PAYABLE
In August 2000, the Company issued a note payable totaling $75,000, bearing
interest at 10% per annum, with principal and accrued interest due on December
20, 2000 and subordinated by all current and future obligations of the Company.
The note payable is in default and the Company is in negotiations to renew such
note.
4. RELATED PARTY TRANSACTIONS
The Company's President/CEO, who is also approximately a 50% stockholder,
provides management services for a fee and is also reimbursed for expenses
incurred on behalf of the Company. In total, management fees and expenses
incurred by the President/CEO on behalf of the Company totaled approximately
$42,000 and $46,000 for the quarters ended June 30, 2001 and 2000, respectively.
During the quarter ended June 30, 2001, the President/CEO also advanced to the
Company approximately $30,000 in cash that was used for short-term working
capital. At June 30, 2001 and 2000, the Company owed approximately $260,000 and
$82,000, respectively to its President/CEO. These payables/advances are
non-interest bearing and due on demand.
5. CONVERTIBLE NOTES PAYABLE
Subsequent to June 30, 2001, all noteholders have agreed to convert such
outstanding notes payable into restricted common stock at $0.15 per common
share. In total, the Company issued approximately 1,800,000 shares of restricted
common stock to satisfy such notes payable.
6. CONVERTIBLE SERIES A PREFERRED STOCK
The Company's convertible Series A preferred stock is convertible into common
stock at a ratio of 20:1, and the holder may convert 1/3 of their Series A
preferred stock on December 31, 2001 and 2/3 on December 31, 2002. No shares of
preferred stock have been converted as of June 30, 2001.
7. SEC FILINGS
The Company did not file a Form 8-K in connection with either of the
acquisitions discussed above. Such filings are required under the 1934 Act of
the Securities and Exchange Commission ("SEC"). The Company did disclose such
acquisitions in its quarterly reports filed for the quarterly periods ended June
30, 2000 and September 30, 2000 and in its annual report on Form 10-KSB filed
with the SEC on May 22, 2001.
8. PREVIOUSLY FILED JUNE 30, 2001 FORM 10-QSB
The Company's June 30, 2001 Form 10-QSB filed on August 20, 2001 includes
consolidated condensed financial statements for June 30, 2001 that were not
reviewed by the Company's independent certified public accountants as required
by Rule 10-01(d) of Regulation S-X. The Company's June 30, 2001 consolidated
condensed financial statements included herein have been reviewed in accordance
with professional standards as described in the preceding sentence, and,
accordingly, the Company is filing this Form 10-QSB/A. Such review resulted in
adjustments to the previously unreviewed June 30, 2001 consolidated condensed
financial statements.
In addition, this 10-QSB/A filing, as amended, should be read in conjunction
with the Company's December 31, 2000 Form 10-KSB, as filed on May 22, 2001.
9. GOING CONCERN AND LIQUIDITY CONSIDERATIONS
The Company has not generated significant revenue or any profit from operations.
Such factors indicate that the Company may be unable to continue as a going
concern for a reasonable period of time. Management is in discussions with
potential investors to pursue additional capital infusions into the Company,
which management believes are necessary until such time that revenues achieve
profitability levels.
The condensed consolidated financial statements do not include any adjustments
relating to the recoverability of assets that might be necessary should the
Company be unable to continue as a going concern. The Company's continuation as
a going concern is dependent upon its ability to generate sufficient revenue and
related cash flow to meet its obligations on a timely basis and/or to obtain
additional financing or equity infusions as may be required.