SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
APRIL 7, 2003
Date of Report
OCTOBER 10, 2002
(Date of Earliest Event Reported)
FULLCIRCLE REGISTRY, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA 333-51918 87-0653761
(State or other jurisdiction Commission File Number (IRS Employer
of incorporation) I.D. No.)
500 WEST JEFFERSON STREET, PNC PLAZA, SUITE 2310
LOUISVILLE, KY 40202
(Address of Principal Executive Offices)
502-540-5112
Registrant's Telephone Number
NOT APPLICABLE
(Former Name or Former Address if changed Since Last Report)
ITEM 7. FINANCIAL STATEMENTS
(a) Financial Statements of Businesses Acquired, Paradigm Solutions Group,
LLC.
(b) Pro Forma Financial Information.
EXHIBITS:
EXHIBIT NUMBER TITLE LOCATION
99.0 Certification of Chief Executive Officer Pursuant to Section Attached
906 of the Sarbanes-Oxley Act of 2002
99.1 Certification of Chief Financial Officer Pursuant to Section Attached
906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
FULLCIRCLE REGISTRY, INC.
/s/James A. Reskin
-----------------------
James A. Reskin
Chief Executive Officer
Date: April 4, 2003
/s/George Harman
------------------
George Harman
Chief Financial Officer
Date: April 7, 2003
2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James A. Reskin, the Chief Executive Officer of FullCircle Registry, Inc.
(the "Company"), certify that:
1. I have reviewed this current report on Form 8-K of the Company;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
/s/James A. Reskin
--------------------------
James A. Reskin
Chief Executive Officer
April 4, 2003
3
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, George Harman, the Chief Financial Officer of FullCircle Registry, Inc. (the
"Company"), certify that:
1. I have reviewed this current report on Form 8-K of the Company;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
report (the "Evaluation Date"); and
c) presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
/s/George Harman
------------------------
George Harman
Chief Financial Officer
April 7, 2003
4
FORM 8-K/A
FULLCIRCLE REGISTRY, INC.
INDEX
Page
PART (A) FINANCIAL STATEMENTS OF PARADIGM SOLUTIONS GROUP, LLC
Independent Auditor's Report 6
Balance Sheet - October 10, 2002 7
Statement of Operations and Members Capital from inception on May 21,
2002 through October 10, 2002 8
Statement of Cash Flows from inception on May 21, 2002 through October
10, 2002 9
Notes to the Financial Statements 10
PART (B) PROFORMA CONSOLIDATED FINANCIAL STATEMENTS, FULLCIRCLE REGISTRY, INC.
Proforma Consolidated Balance Sheet 12
Proforma Statement of Operations 14
Notes to Proforma Consolidated Financial Statements 15
5
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Members
of Paradigm Solutions Group, LLC:
We have audited the accompanying balance sheet of Paradigm Solutions Group, LLC
as of October 10, 2002 and the related statements of operations and members
capital and cash flows from inception on May 21, 2002 through October 10,
2002. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Paradigm Solutions Group, LLC
as of October 10, 2002 and the results of its operations and cash flows for the
period from inception on May 21, 2002 through October 10, 2002 in conformity
with generally accepted accounting principles in the United States of America.
/s/Chisholm & Associates
- ----------------------------
North Salt Lake, Utah
March 13, 2003
6
PARADIGM SOLUTIONS GROUP, LLC
Balance Sheet
ASSETS
------
October 10,
2002
------------
Current Assets
Cash . . . . . . . . . . . . . . . . . . . . $ 2,363
Accounts receivable (net of allowance of $0) 3,661
------------
Total Current Assets . . . . . . . . . . . . . 6,024
------------
Other Assets
Product Development/Operating Rights . . . . 196,250
------------
Total Assets . . . . . . . . . . . . . . . $ 202,274
============
LIABILITIES AND MEMBERS' CAPITAL
----------------------------------------
Current Liabilities
Accounts Payable . . . . . . . . . . . . . . $ 4,838
Accrued Expenses . . . . . . . . . . . . . . 10,370
Deferred Revenue . . . . . . . . . . . . . . 8,305
------------
Total Current Liabilities. . . . . . . . . . . 23,513
------------
Total Liabilities. . . . . . . . . . . . . 23,513
------------
Members' Capital . . . . . . . . . . . . . . . 178,250
Retained Earnings. . . . . . . . . . . . . . 511
------------
Total Members' Capital . . . . . . . . . . . . 178,761
------------
Total Liabilities and Members' Capital . . $ 202,274
============
The Accompanying Notes are an Integral Part of these Financial Statements
7
PARADIGM SOLUTIONS GROUP, LLC
Statement of Operations and Members Capital
From inception
on May 21, 2002
to October 10,
2002
----------------
Revenues . . . . . . . . . . . . $ 9,573
Operating Expenses
General & Administrative . . . 9,062
----------------
Total Operating Expenses . . 9,062
----------------
Operating Income (Loss). . . . . 511
----------------
Other Income (Expense)
Interest Expense. . . . . . . -
----------------
Total Other Income (Expense) -
----------------
Net Income (Loss). . . . . . . . $ 511
Members Capital
Beginning Balance . . . . . -
Contribution from members . 178,250
----------------
Total Members Capital. . . . . . $ 178,761
================
The Accompanying Notes are an Integral Part of these Financial Statements
8
PARADIGM SOLUTIONS GROUP, LLC
Statement of Cash Flows
From inception
on May 21, 2002
to October 10,
2002
-----------------
Cash Flows from Operating Activities
Net Income (Loss). . . . . . . . . . . . . . . . . . . . . . . . $ 511
Adjustments to Reconcile Net Loss to Net Cash
Provided by Operations:
Change in Assets and Liabilities
(Increase) in account receivable. . . . . . . . . . . . . . . (3,661)
Increase in Deferred Revenues . . . . . . . . . . . . . . . . 8,305
Increase (Decrease) in Accounts Payable and Accrued Expenses. 15,208
-----------------
Net Cash Provided(Used) by Operating Activities. . . . . . . . . 20,363
-----------------
Cash Flows from Investing Activities
Purchase of Capitalized Development Costs. . . . . . . . . . . . (18,000)
-----------------
Net Cash Provided (Used) by Investing Activities . . . . . . . . (18,000)
-----------------
Net Cash Provided(Used) by Financing Activities. . . . . . . . . -
-----------------
Increase (Decrease) in Cash. . . . . . . . . . . . . . . . . . . . 2,363
-----------------
Cash and Cash Equivalents at Beginning of Period . . . . . . . . . -
-----------------
Cash and Cash Equivalents at End of Period . . . . . . . . . . . . $ 2,363
=================
Cash Paid For:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -
=================
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . $ -
=================
The Accompanying Notes are an Integral Part of these Financial Statements
9
PARADIGM SOLUTIONS GROUP, LLC
Notes to the Financial Statements
October 10, 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Paradigm Solutions Group,
LLC (The Company). The Company was organized as a limited liability company
on May 21, 2002 in the State of Delaware for the purpose of promoting the
Healtier Plan, a medical reimbursement plan providing employers the
opportunity to take advantage of IRS qualified medical deductions from
gross payroll.
b. Recognition of Revenue / Deferred Revenues
The Company recognizes income and expense on the accrual basis of
accounting. Revenue is recorded as monthly services are performed. Up front
set-up fees and prepaid service fees are deferred until the set-up of the
client files are complete or the monthly services are completed.
c. Provision for Income Taxes
Paradigm Solutions Group, LLC is taxes as a partnership for federal and
state income taxes under the provisions of the Internal Revenue Code. Under
those provisions, the Company does not pay income taxes on its taxable
income, instead, the members are liable for individual income taxes on
their respective shares of the Company's net operating income in their
individual income tax returns.
d. Cash and Cash Equivalents
The company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
e. Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes.
Management believes that the estimates used in preparing the financial
statements are reasonable and prudent; however, actual results could differ
from these estimates.
NOTE 2 - RELATED PARTY TRANSACTIONS
On July 1, 2002, the Company entered into a management agreement with The
Redwood Group LLC wherein the Company will manage the medical reimbursement
plan for Redwood clients. The officers and members of the Company are also
the
10
PARADIGM SOLUTIONS GROUP, LLC
Notes to the Financial Statements
October 10, 2002
NOTE 2 -RELATED PARTY TRANSACTIONS (Continued)
officers and members of Redwood. The company has a balance due Redwood for
expenses paid on behalf of the Company in the amount of $10,010 at October
10, 2002.
All costs associated with the development of the Healthier Plan were
originally paid by Redwood, transferred to the members that organized the
Company, and then transferred to the Company.
NOTE 3 - PRODUCT DEVELOPMENT/OPERATING RIGHTS
During 2002, the Company received all right to market the Healthier Plan.
The costs incurred for legal and software development have been
capitalized. These costs were transferred from the members of the Company
upon organization, and will be amortized beginning in 2003. Predecessor
Cost was used in the valuation and capitalization of the product
development and operating rights.
NOTE 4 - SUBSEQUENT EVENTS
On October 11, 2002, the members of the Company exchanged their memberships
for 6,000,000 shares of common stock of Full Circle Registry, Inc., a
public Delaware corporation. The Company became a wholly owned subsidiary
of Full Circle pursuant to the acquisition agreement and began reporting on
a consolidated basis with them.
11
FULLCIRCLE REGISTRY, INC.
Proforma Consolidated Balance Sheet
Paradigm
FullCircle Solutions Proforma
Registry Group, LLC Proforma Consolidated
Balance Balance Adjustments Balance
9/30/02 9/30/02 DR CR 9/30/02
----------------- ------------- -------------- -------------- --------------
(unaudited) (unaudited) (unaudited)
ASSETS
Current Assets
Cash and Cash Equivalents . . . . . . $ 112,055 $ 2,363 $ 114,418
Accounts Receivable, Net. . . . . . . - 3,661 3,661
----------------- ------------- -------------- -------------- --------------
Total Current Assets. . . . . . . . . 112,055 6,024 118,079
Property and Equipment, Net . . . . . 167,665 - 167,665
Other Assets
Product Development/Operating Rights. - 196,250 196,250
Goodwill. . . . . . . . . . . . . . . 4,341,239 4,341,239
Investments - Available for Sale. . . 142,500 - 142,500
Prepaid Expenses. . . . . . . . . . . 60,483 - 60,483
Deposits. . . . . . . . . . . . . . . 1,717 - 1,717
----------------- ------------- -------------- -------------- --------------
Total Other Assets. . . . . . . . . . 204,700 196,250 4,742,189
================= ============= ==============
Total Assets. . . . . . . . . . . . . $ 484,420 $ 202,274 $5,027,933
================= ============= ==============
12
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable & Accrued Expenses. . . . $ 227,843 $ 15,208 $243,051
Line of Credit . . . . . . . . . . . . . . 35,000 - 35,000
Deferred Revenue . . . . . . . . . . . . . - 8,305 8,305
Current Portion of Long-Term Debt. . . . . 1,003,951 - 1,003,951
------------- -------- ------------
Total Current Liabilities. . . . . . . . . 1,266,794 23,513 1,290,307
------------- -------- ------------
Long-Term Liabilities
Convertible Bonds. . . . . . . . . . . . . 341,850 - 341,850
Notes Payable. . . . . . . . . . . . . . . - - 500,000 500,000
Notes Payable- Related Party . . . . . . . 662,101 662,101
Less: Current Portion of Long-Term Debt. . (1,003,951) - (1,003,951)
------------- -------- ------------
Total Long-Term Liabilities. . . . . . . . - - 500,000
------------- -------- ------------
Stockholders' Equity
Preferred Stock, Authorized 5,000,000
Shares, $.001 Par Value, Issued and
Outstanding . . . . . . . . . . . . . . . 211 - 211
Common Stock, Authorized 50,000,000
Shares, $.001 Par Value, 20,230,000 Shares
Issued and Outstanding . . . . . . . . . . 14,230 - 6,000 20,230
Additional Paid in Capital . . . . . . . . 2,016,555 - 4,014,000 6,030,555
Members Capital. . . . . . . . . . . . . . - 178,761 178,761 -
Retained Earnings. . . . . . . . . . . . . (2,813,370) - (2,813,370)
------------- -------- ------------
Total Stockholders Equity. . . . . . . . . (782,374) 178,761 3,237,626
------------- -------- ------------
Total Liabilities and Stockholders Equity. $ 484,420 $202,274 $ 5,027,933
============= ======== =============
13
FULLCIRCLE REGISTRY, INC.
Proforma Statement of Operations
Paradigm Solutions
Full Circle Registry Group, LLC Proforma
For January 1, 2002 For May 21, 2002 Proforma Consolidated
through through Adjustments Balance
September 30, 2002 September 30, 2002 DR CR September 30, 2002
-------------------- -------------------- ------------ --- -------------------
(unaudited) (unaudited) (unaudited)
Revenues . . . . . . . . . . . . . $ 7,453 $ 9,573 $ 17,026
-------------------- -------------------- ------------
Cost of Goods Sold . . . . . . . . 2,039 - 2,039
-------------------- -------------------- ------------
Gross Profit (Loss). . . . . . . . 5,414 9,573 14,987
Operating Expenses
Selling, General & Administrative. 1,562,732 9,062 1,571,794
-------------------- -------------------- ------------
Total Operating Expenses . . . . . (1,562,732) (9,062) 1,571,794
-------------------- -------------------- ------------
Income (Loss) from Operations. . (1,557,318) 511 (1,556,807)
Other Income (Expense) . . . . . . (111,601) - (111,601)
-------------------- -------------------- ------------
Net (Loss) . . . . . . . . . . . . $ (1,668,919) $ 511 $(1,668,408)
==================== ==================== ==============
14
FULLCIRCLE REGISTRY, INC.
Notes to Pro Forma Consolidated Financial Statements
September 30, 2002
NOTE 1 - Summary of Transaction
On October 10, 2002, the Company issued 6,000,000 shares of common stock
valued at $4,020,000 and a note payable for $500,000 for all of the outstanding
shares of Paradigm Solutions Group, LLC (Paradigm), a Delaware Limited Liability
Company. As such, Paradigm became a wholly owned subsidiary of the CompanyThis
transaction is accounted for on the purchase method of accounting using
generally accepted accounting principles. Goodwill was recorded of $4,341,239
upon acquisition.
NOTE 2 - Management Assumptions
The pro forma consolidated balance sheet and statements of operations
assumes that the entities were together as of September 30, 2002.
The pro forma consolidated balance sheet assumes the issuance of the
6,000,000 shares of stock, the recognition of goodwill and the elimination of
the members' capital of Paradigm.
There are no proforma adjustments for the statement of operations.
15