FORM 10-KSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2002
For the transition period from _________________ to _____________
Commission file number 0-13215
LATINOCARE MANAGEMENT CORPORATION
------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 30-0050402
---------------------- -----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
959 Walnut Avenue, Suite 250, Pasadena, California 91106
--------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(626) 583-1115
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Registrant's telephone number, including area code
Securities registered pursuant to Section 12(B) of the Act:
Name of Each Exchange On
Title of Each Class Which Registered
------------------- ------------------------
COMMON STOCK OTC
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |X|
The aggregate market value of voting stock held by non-affiliates of
the registrant was $126,894 as of December 31, 2002 (computed by reference to
the last sale price of a share of the registrant's Common Stock on that date as
reported by NASDAQ).
There were 14,604,098 shares outstanding of the registrant's Common
Stock as of March 25, 2003.
TABLE OF CONTENTS
10KSB
PART I................................................................... 1
ITEM 1................................................................... 1
ITEM 2................................................................... 3
ITEM 3................................................................... 3
ITEM 4................................................................... 3
PART II.................................................................. 4
ITEM 5................................................................... 4
ITEM 6................................................................... 4
ITEM 7................................................................... 6
ITEM 8................................................................... 24
PART III................................................................. 24
ITEM 9................................................................... 24
ITEM 10.................................................................. 25
ITEM 11.................................................................. 26
ITEM 12.................................................................. 26
ITEM 13.................................................................. 27
PART I
ITEM 1. BUSINESS
GENERAL
Latinocare Management Corporation is a Nevada corporation (the
"Company") formerly known as JNS Marketing, Inc. ("JNS") originally incorporated
in Colorado in July 1983. In October 2001 the Company completed a Share Purchase
Agreement with Latinocare Management Corporation, a California corporation
("LMC"), pursuant to which LMC acquired 3,270,000 of the issued and outstanding
common stock of JNS in exchange for $300,000 and 260,000 newly issued shares of
common stock. Subsequently, LMC and JNS entered into an Agreement and Plan of
Reorganization (the "Reorganization") which resulted in a share exchange between
the shareholders of LMC and JNS. Pursuant to the Reorganization, LMC became a
wholly owned subsidiary of JNS and the shareholders of LMC became the
controlling shareholders of JNS. Prior to its business combination with LMC, JNS
had no tangible assets and insignificant liabilities. Subsequent to the
Reorganization the Company reincorporated in the State of Nevada and changed its
name to Latinocare Management Corporation.
LMC is a Management Services Organization ("MSO") which was engaged in
the business of managing LatinoCare Network Medical Group ("LNMG"), an
Independent Physician Association ("IPA") primarily servicing the growing Latin
American community in the United States, and in particular in California. Due to
a dispute with LNMG, which LMC was unable to resolve, LMC was forced to lay off
its employees and close its business. LNMG also lost its clients and closed its
business. LMC is currently insolvent and may be forced to file for bankruptcy or
dissolve. The Board of Directors and a majority of shareholders recently
authorized the conveyance to Jose J. Gonzalez all of the outstanding the common
stock of LMC (the "Conveyance"). The Board of Directors believes that the
Conveyance will allow the Company's controlling shareholders to sell their stock
to an unaffiliated individual or entity in order to facilitate an acquisition or
business combination with an operating company without the burden of LMC.
-1-
On January 15, 2003, the Company was notified by Cedars-Sinai Medical
Center that it will foreclose on its security interest in certain assets and
stock of LMC under its Loan and Security Agreement with LMC, dated November 30,
1995, and its Stock Pledge Agreement with LMC, dated July 23, 2001
(collectively, the "Cedars Loan Agreements"). LMC is currently in default under
Cedars Loan Agreements, which includes a note for $1,750,000 payable by LMC to
the Cedars Sinai Medical Center. The foreclosure notice stated that the
collateral would be offered for sale at a public auction on February 10, 2003.
The collateral includes 28% of the total issued and outstanding common stock of
LMC. Accordingly, the Conveyance may result in Jose J. Gonzalez owning 72% of
the total issued and outstanding common stock of LMC rather than 100% of its
outstanding stock. After the foreclosure, Cedars Sinai Medical Center or a third
party purchaser at the public auction, if any, would own 28% of the outstanding
common stock of LMC. After the Conveyance, the Company will not own any of the
outstanding common stock of LMC, and, accordingly, will own no assets and will
have accounts payable estimated to be approximately $80,000 to $100,000.
After the Conveyance, the Company will seek to make an acquisition or
enter into a business combination with another operating company that is seeking
to become a publicly traded company. A business combination with a new company
will likely result in substantial dilution to the existing shareholders of the
Company, and possibly result in a significant reverse split of the issued and
outstanding stock of the Company. The majority shareholders of the Company, Jose
J. Gonzalez and the Estate of Dr. Roberto Chiprut (collectively, the "Majority
Shareholders"), who together own approximately 93% of the total issued and
outstanding stock of the Company, may elect to sell substantially all of their
stock to one or more third parties in connection with a business combination
with another company.
In contemplation of a possible business combination with another
company, the Majority Shareholders authorized the Company to amend its Articles
of Incorporation to increase the number of authorized shares of common stock
from 100,000,000 to 200,000,000. The Amendment to the Articles of Incorporation
was approved in February 2003 and is expected to be recorded in March 2003. In
February 2003, the Majority Shareholders also approved the Conveyance, which is
expected to close on or before March 31, 2003. If a business combination is
effected by the Company with another company, the owners of the other company
are expected to assume control of the Company, and to replace Jose J. Gonzalez
as directors of the Company.
COMPETITION
The Company's business was subject to intense competition. The health
care industry is highly fragmented, with many companies performing the services
formerly performed by the Company. Many of these competitors have limited
operations, but several industry participants are comparable in size to or
larger than the Company, have greater financial and managerial resources than
the Company, and greater name recognition than the Company. If the Company is
able to facilitate an acquisition or business combination with an operating
company, the Company will be subject to intense competition in the industry in
which the operating company competes.
-2-
GOVERNMENT REGULATION
The Company was subject to various federal, state, and local laws
affecting medical services businesses. The Federal Trade Commission and
equivalent state agencies regulate advertising and representations made by
businesses in the sale of their products, which apply to the Company. The
Company was also subject to government laws and regulations governing health,
safety, working conditions, employee relations, wrongful termination, wages,
taxes and other matters applicable to businesses in general. If the Company is
able to facilitate an acquisition or business combination with an operating
company, the Company will be subject to the various federal, state, and local
laws affecting the operating company.
EMPLOYEES
LMC currently has currently has approximately one full time employee
who is the sole officer and director of the Company. The Company does not have
an employment agreement or collective bargaining agreement with its employee,
although it may enter into employment agreements in the future.
SEASONALITY
The Company does not yet know whether or not its new business, if any,
will be substantially affected by seasonality.
TRADEMARKS
The Company has not been issued any registered trademarks for its
"Latinocare Management" trade name. The Company does not plan to file trademark
and tradename applications with the United States Office of Patents and
Trademarks for its proposed tradenames and trademarks.
ITEM 2. PROPERTIES
The Company currently utilizes office space, on a rent free basis, made
available to it by a business associate of the President of the Company. There
can be no assurance that this arrangement will continue. The Company is
currently seeking to enter into a business combination with an operating company
which would likely have its own office space.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
-3-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock trades on the NASD OTC Bulletin Board Market
under the symbol "LCMC." The range of high and low bid quotations for each
fiscal quarter within the last two fiscal years was as follows:
2002 HIGH LOW
---- ---- ---
First quarter......................$1.25 $0.75
Second quarter.....................$0.75 $0.12
Third quarter......................$0.12 $0.12
Fourth quarter.....................$0.12 $0.12
2001 HIGH LOW
---- ---- ---
First quarter......................$0.75 $0.25
Second quarter.....................$0 $0
Third quarter......................$1.25 $0.375
Fourth quarter.....................$2.50 $0.75
---------------------------
The above quotations reflect inter-dealer prices, without retail
markup, mark-down, or commission and may not necessarily represent actual
transactions.
As of December 31, 2002, there were approximately 145 record holders of
the Company's common stock, not including shares held in "street name" in
brokerage accounts which is unknown. As of December 31, 2002, there were
approximately 14,604,098 shares of common stock outstanding.
The Company has not declared or paid any cash dividends on its common
stock and does not anticipate paying dividends for the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
CAUTIONARY STATEMENTS
This Form 10-KSB contains financial projections, synergy estimates and
other "forward-looking statements," as that term is used in federal securities
laws, about Latinocare Management Corporation's financial condition, results of
operations and business. These statements include, among others: statements
concerning the Company's prospects for entering into a business combination with
another operating company, the potential for revenues and expenses of an
operating company that may be acquired by the Company, and any statements of the
Company's expectations, beliefs, future plans and strategies, anticipated
developments and other matters that are not historical facts. These statements
may be made expressly in this Form 10-KSB. You can find many of these statements
by looking for words such as "believes," "expects," "anticipates," "estimates,"
-4-
or similar expressions used in this Form 10-KSB. These forward-looking
statements are subject to numerous assumptions, risks and uncertainties that may
cause the Company's actual results to be materially different from any future
results expressed or implied by the Company in those statements. The most
important facts that could prevent the Company from achieving its stated goals
include, but are not limited to, the following:
(a) inability of the Company to acquire an operating company;
(b) volatility or decline of the Company's stock price;
(c) potential fluctuation in quarterly results, if the Company is
able to acquire an operating company;
(d) failure of an operating company acquired by the Company, if
any, to earn revenues or profits, or to operate as a viable or
successful business;
(e) inadequate capital and barriers to raising the additional
capital or to obtaining the financing needed to implement its
business plans;
(f) inadequate capital to continue business;
(g) changes in demand for the Company's products and services;
(h) rapid and significant changes in markets;
(i) litigation with or legal claims and allegations by outside
parties;
(j) insufficient revenues to cover operating costs.
Because the statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the
forward-looking statements. The Company cautions you not to place undue reliance
on the statements, which speak only as of the date of this Form 10-KSB. The
cautionary statements contained or referred to in this section should be
considered in connection with any subsequent written or oral forward-looking
statements that the Company or persons acting on its behalf may issue. The
Company does not undertake any obligation to review or confirm analysts'
expectations or estimates or to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after the date of
this Form 10-KSB or to reflect the occurrence of unanticipated events.
GENERAL
The Company is a holding company with no assets other than the stock of
LMC. LMC closed its business and entirely ceased operations on November 1, 2002.
Consequently, the Company has no business operations by itself or as a
consolidated entity with LMC. LMC is expected to declare bankruptcy or dissolve
in 2003. All information in the following paragraphs relates to the period from
January 1, 2002 to November 1, 2002 because operations ceased on November 1,
2002.
-5-
RESULTS OF OPERATIONS FOR FISCAL YEAR ENDED DECEMBER 31, 2002 COMPARED TO FISCAL
YEAR ENDED DECEMBER 2001
Total revenue for the twelve month period ending December 31, 2002
increased by $393,282 to $2,718,164 from $2,324,882 in the prior year.
General and administrative expenses increased by $101,095 during the
twelve months ended December 31, 2002 to $2,896,575 from $2,795,480 in the prior
year. Expense related to depreciation was $60,864 for the twelve months ended
December 31, 2002 as compared to $27,872 for the prior year and interest expense
was $118,657 for the twelve months ended December 31, 2002 as compared to
$73,090.
For the twelve months ended December 31, 2002, the Company's
consolidated net loss was $379,203 as compared to a consolidated net loss of
$580,504 for the twelve months ended December 31, 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Company had consolidated net cash of $(105,980) at December 31,
2002 as compared to net cash of $2,604 as of December 31, 2001. The Company had
a net working capital deficit (i.e. the difference between current assets and
current liabilities) of $2,589,607 at December 31, 2002 as compared to a working
capital deficit of $2,250,404 at December 31, 2001. Cash flow provided by
operating activities was $2,112 during the twelve months ended December 31, 2002
as compared to $(438,090) during the twelve months ended December 31, 2001. Cash
provided by investing activities was $0 during the twelve months ended December
31, 2002 as compared to $(341,933) during the twelve months ended December 31,
2001. Cash provided by financing activities decreased from $717,095 during the
twelve months ended December 31, 2001 to $(108,584) during the twelve months
ended December 31, 2002. There is no assurance that the Company will have
sufficient capital to acquire a new business or, if a new business is acquired,
sufficient capital to finance its growth and business operations, or that such
capital will be available on terms that are favorable to the Company or at all.
ITEM 7. FINANCIAL STATEMENTS LATINOCARE MANAGEMENT CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
Independent Auditors Report............................................. 8
Consolidated balance sheets at December 31, 2002 and December 31, 2001 .. 9-10
Consolidated statements of operations from the years ended
December 31, 2002, and 2001............................................ 11
Consolidated statements of changes in stockholders' equity
for the years ended December 31, 2002 and 2001......................... 12
Consolidated statements of cash flow for the years ended
December 31, 2002 and 2001.............................................. 13-14
Notes to Financial Statements............................................ 15-23
-6-
LATINOCARE MANAGEMENT CORPORATION
(Formerly JNS Marketing, Inc.)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
CONTENTS
PAGE
Report of Independent Public Accountants................................ 8
Consolidated Balance Sheets............................................. 9-10
Consolidated Statement of Operations and Deficit........................ 11
Consolidated Statement of Changes in Shareholders'
Equity (Deficit)....................................................... 12
Consolidated Statement of Cash Flows ................................... 13-14
Notes to Consolidated Financial Statements ............................. 15-23
-7-
ARMANDO C. IBARRA
CERTIFIED PUBLIC ACCOUNTANTS
(A PROFESSIONAL CORPORATION)
Armando C. Ibarra, C.P.A. Members of the
Armando Ibarra, Jr., C.P.A. California Society of
Certified Public Accountants
To the Board of Directors
Latinocare Management Corporation
Long Beach, California
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of Latinocare
Management Corporation (formerly JNS Marketing, Inc.) and its subsidiary as of
December 31, 2002 and the related consolidated statements of operations, changes
to shareholders' equity and cash flows for the year ended December 31, 2002.
These consolidated 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. The financial statements of the Company as of and
for the year ended December 31, 2001, were audited by other auditors whose
report dated May 14, 2001, expressed an unqualified opinion on those matters
except for a going concern disclosure.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Latinocare Management Corporation and its subsidiary as of December 31, 2002,
and the consolidated results of their operations and its cash flows for the year
ended December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America.
The consolidated financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2, the Company
has ceased operations as of year end and is currently seeking other business
ventures. This raises substantial doubt about its ability to continue as a going
concern. Management's plan in regard to this matter are also described in Note
2. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/Armando C. Ibarra, C.P.A. - APC
----------------------------------
ARMANDO C. IBARRA, C.P.A. - APC
March 19, 2003
San Diego, California
350 E Street, Chula Vista, CA 91910
Tel: (619) 422-1348 Fax: (619) 422-1465
-8-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Balance Sheets
--------------------------------------------------------------------------------
ASSETS
Year Ended Year Ended
December 31, December 31,
2002 2001
-------------------- -----------------
CURRENT ASSETS
Cash $ (105,980) $ 2,604
Accounts receivable - 2,922
Employee loans 1,000 -
Prepaid expenses 779 49,291
-------------------- -----------------
TOTAL CURRENT ASSETS (104,201) 54,817
NET PROPERTY & EQUIPMENT 157,736 218,600
OTHER ASSETS
Deposit - 15,478
-------------------- ------------------
TOTAL OTHER ASSETS - 15,478
-------------------- ------------------
TOTAL ASSETS $ 53,535 $ 288,895
==================== ==================
See Auditors' Report and Notes to Consolidated Financial Statements
-9-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Balance Sheets
--------------------------------------------------------------------------------
LIABILITIES & STOCKHOLDERS' DEFICIT
Year Ended Year Ended
December 31, December 31,
2002 2001
------------ ---------------
CURRENT LIABILITIES
Accounts payable - trade $ 398,814 $ 196,387
Income tax payable 1,600 1,600
Employee benefits payable 5,603 -
Accrued expenses 144,210 107,522
Credit cards payable 4,821 -
Loans from officers 187,000 437,756
------------- --------------
TOTAL CURRENT LIABILITIES 742,048 743,265
LONG-TERM LIABILITIES
Note payable 1,750,000 1,750,000
Accrued interest 151,094 46,034
------------- --------------
TOTAL LONG-TERM LIABILITIES 1,901,094 1,796,034
------------- --------------
TOTAL LIABILITIES $ 2,643,142 $ 2,539,299
STOCKHOLDERS' DEFICIT
Common stock, (no par value, 50,000,000
shares authorized; 14,604,098 and
14,529,100 shares issued and outstanding
as of December 31, 2002 and
2001, respectively) 1,037,652 997,652
Retained earnings (3,627,259) (3,248,056)
------------- --------------
TOTAL STOCKHOLDERS' DEFICIT (2,589,607) (2,250,404)
------------- --------------
TOTAL LIABILITIES &
STOCKHOLDERS' DEFICIT $ 53,535 $ 288,895
============= ==============
See Auditors' Report and Notes to Consolidated Financial Statements
-10-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Statement of Operations
--------------------------------------------------------------------------------
Year Ended Year Ended
December 31, December 31,
2002 2001
------------------- -------------------
REVENUES
Revenues $ 2,718,164 2,324,882
------------------- -------------------
TOTAL REVENUES 2,718,164 2,324,882
GENERAL & ADMINISTRATIVE EXPENSES 2,896,575 2,795,480
------------------- -------------------
OPERATING INCOME (LOSS) (178,411) (470,598)
OTHER INCOME & (EXPENSES)
Depreciation (60,864) (27,872)
Interest expense (118,657) (73,090)
Loss on assets abandoned - (8,144)
Interest income 11 -
County tax (20,482) -
------------------- -------------------
TOTAL OTHER INCOME & (EXPENSES) (199,992) (109,106)
------------------- -------------------
NET INCOME (LOSS) BEFORE TAXES (378,403) (579,704)
Provision for Income Taxes 800 800
------------------- -------------------
NET INCOME (LOSS) $ (379,203) (580,504)
=================== ===================
BASIC EARNINGS (LOSS) PER SHARE $ (0.03) (0.04)
=================== ===================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 14,529,305 14,529,100
=================== ===================
See Auditors' Report and Notes to Consolidated Financial Statements
-11-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Statement of Changes in Stockholders' Equity
From December 31, 2000 through December 31, 2002
-------------------------------------------------------------------------------------------------------------------------------
Common Common Additional Retained
Stock Stock Paid-in Earnings Total
Amount Capital
-------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000 3,781,455 $ 952,727 $ (960,942) $ (8,215)
Retirement of common stock (3,270,000) -
Issuance of new common stock 13,471,645 -
Stock issued for cash 260,000 26,000 (26,000) -
Stock issued for services rendered 100,000 10,000 10,000
Stock issued to private investors 186,000 8,925 (8,925) -
Transfer of acquiring company's acum. deficit (1,671,685) (1,671,685)
Net loss, December 31, 2001 (580,504) (580,504)
-------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2001 14,529,100 997,652 - (3,248,056) (2,250,404)
===============================================================================================================================
Stock issued to private investors 28,000 35,000 35,000
Stock issued for services rendered 46,998 5,000 5,000
Net loss, December 31, 2002 (379,203) (379,203)
-------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2002 14,604,098 $1,037,652 $ - $(3,627,259) $(2,589,607)
===============================================================================================================================
See Auditors' Report and Notes to Consolidated Financial Statements
-12-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Statements of Cash Flows
---------------------------------------------------------------------------------------------------------
Year Ended Year Ended
December 31, December 31,
2002 2001
------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (379,203) $ (580,504)
Depreciation expense 60,864 27,872
Loss on abandonment of assets - 8,144
(Increase) decrease in accounts receivable 2,922 10,277
(Increase) decrease in employee loans (1,000) -
(Increase) decrease in income tax - 800
(Increase) decrease in prepaid expenses 48,512 (46,896)
(Increase) decrease in deposits 15,478 10,039
Increase (decrease) in accounts payable - trade 202,427 82,307
Increase (decrease) in employee benefits payable 5,603 -
Increase (decrease) in accrued expenses 36,688 39,871
Increase (decrease) in credit cards payable 4,821 -
Stock issued for services rendered 5,000 10,000
------------------ -----------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2,112 (438,090)
CASH FLOWS FROM INVESTING ACTIVITIES
(Acquisition) disposal of equipment - (341,933)
------------------ -----------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES - (341,933)
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 35,000 -
Loans from officers (250,756) 634,882
Accrued interest 105,060 (154,435)
Conversion of debt into equity - 227,723
Private placement offering - 8,925
------------------ -----------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (110,696) 717,095
------------------ -----------------
NET INCREASE (DECREASE) IN CASH (108,584) (62,928)
CASH AT BEGINNING OF YEAR 2,604 65,532
------------------ -----------------
CASH AT END OF YEAR $ (105,980) $ 2,604
================== =================
See Auditors' Report and Notes to Consolidated Financial Statements
-13-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------
Year Ended Year Ended
December 31, December 31,
2002 2001
------------- --------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Income Taxes Paid $ - $ -
============= ==============
Interest Paid $ 29 $ -
============= ==============
Common Stock Issued for Services $ 5,000 $ -
============= ==============
Conversion of Debt to Equity $ - $ 1,040,183
============= ==============
Accrued Interest On Debt to Equity Conversion $ - $ 27,254
============= ==============
Conversion of Equity to Debt $ - $ 1,750,000
============= ==============
Accrued Interest On the Equity to
the Debt Conversion $ - $ 46,034
============= ==============
See Auditors' Report and Notes to Consolidated Financial Statements
-14-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Notes to the Consolidated Financial Statements
as of December 31, 2002
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
A. ORGANIZATION:
Latinocare Management Corporation, a Nevada corporation, (the Company) was
incorporated in the State of Nevada on January 22, 2002. The Company, a
management service organization, is in the business of providing management and
administrative services, and has developed a system of operations, management
and marketing for independent practice associations engaged in providing health
care services.
Latinocare Management Corporation dba Latino Health Care was founded and
incorporated on February 23, 1995 as a California for-profit stock corporation.
Its sole purpose, when originally organized, was to manage all operations of
Latinocare Network Medical Group (IPA), a related company that had common
shareholders who influence the activities of both entities.
Latinocare Management Corporation (LMC) acquired JNS Marketing, Inc. (JNS) in
November 2001 purchasing 3,270,000 or approximately 86% of the issued and
outstanding common stock of JNS Marketing, Inc. in exchange for $300,000. There
was a delay in the planned acquisition date due to negotiation of the
acquisition cost which resulted in the issuance of an additional 260,000 new
shares of common stock of the Company as part of the purchase price. The
3,270,000 shares common stock were subsequently retired and cancelled. The
members of the Board of Directors of the Company before the purchase were
replaced with the members of Latinocare Management Corporation's Board of
Directors. LMC and JNS entered into an Agreement and Plan of Reorganization
which resulted in a share exchange between shareholders of the two companies,
whereby LMC became a wholly owned subsidiary of the Company. JNS was renamed as
Latinocare Management Corporation, reincorporated in the State of Nevada on
January 2002, and is referred to as the Company.
Since the death of Dr. Roberto Chiprut the business relation between the Company
and Latinocare Network Medical Group (LNMG) have deteriorated to the point where
they cannot work together. Thus, the Company has ceased operations and is in the
process of seeking other business operations.
NATURE OF OPERATIONS:
The Company, a management service organization, was in the business of providing
management and administrative services, and had developed a system of
operations, management and marketing for independent practice associations
engaged in providing health care services.
The Company targeted and successfully reached four primary groups: health plans,
hospitals, health service recipients and physicians with significant focus on
the Latin market.
-15-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Notes to the Consolidated Financial Statements
as of December 31, 2002
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS (CONTINUED)
Latinocare Network Medical Group, Inc., an Independent Physician Association
(IPA), was incorporated on September 30, 1994, as a licensed medical group able
to accept physician services risk from third-party payers and self-insured
employers. The IPA was organized for the purpose of meeting the comprehensive
health care needs of the Latino population and the lack of access to quality
health care services available to the Latino community. The IPA has a network of
private practicing physicians who provide quality health care services that are
accessible, friendly, affordable, and culturally sensitive. It offers a wide
range of comprehensive health care programs and services to keep its members and
families healthy and productive.
In November 1995, the Company entered into a twenty-five (25) year Management
Services Agreement with Latinocare Network Medical Group, Inc. to provide all
management and administrative support, allowing the IPA to focus efforts on
physician network development. These services include, among others; clerical
and billing services, claims settlement and collections, accounting, financial
and cash flow management, marketing and general administrative services
(collectively, "Management Services"). The Company acted as the exclusive agent
to the IPA with regards to seeking, negotiating, renewing, and executive managed
care contracts.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ACCOUNTING METHOD:
-----------------
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31, year end.
B. BASIS OF CONSOLIDATION:
----------------------
The consolidated financial statements include the accounts of the Company and
its subsidiary. Inter-company accounts and transactions have been eliminated in
the consolidated financial statements.
C. CASH AND CASH EQUIVALENTS:
-------------------------
The Company considers all money market funds and highly liquid debt instruments
with maturates of three months or less when purchased to be cash equivalents.
-16-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Notes to the Consolidated Financial Statements
as of December 31, 2002
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. 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.
E. REVENUE RECOGNITION AND DEFERRED REVENUE:
----------------------------------------
Revenues from professional services, primarily from management fees, were
recognized on an accrual basis of accounting as services are performed or the
amounts earned (in compliance with SOP 00-2), based on a percentage of
capitation revenues received by the IPA, which is a related party.
The IPA had managed care contracts with various Health Maintenance Organizations
(HMOs) to provide medical services to subscribing members. Under these
agreements, the IPA received monthly capitation payments based on the number of
each HMO's subscribing members whether or not a member requests services to be
performed by the IPA. The Company receives 16% of all IPA collections.
Revenues were also generated from risk pool settlements. Revenues from risk pool
settlements (cash received) are surpluses distributed by the IPA from the HMO.
Based on the fact that the relationship between the Company and the IPA
deteriorated, all receivables and income accruals relating to the IPA have been
written-off as of December 31, 2002. When, and if, these amounts are collected
they will be recognized as income at that time.
F. ACCOUNTS RECEIVABLE:
-------------------
The Company does not have any accounts receivable as of December 31, 2002. Thus,
no allowance for doubtful accounts was required. When accounts became
uncollectible, they were charged to operations when that determination was made.
-17-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Notes to the Consolidated Financial Statements
as of December 31, 2002
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. PREPAID PRIVATE PLACEMENT COSTS:
-------------------------------
Specific incremental costs directly attributable to proposed or actual offering
of securities were deferred and to be charged against the gross proceeds of the
offering. However, as of December 31, 2002 the amount that was previously
accrued was expensed to the appropriate accounts.
H. PROPERTY, EQUIPMENT, AND RELATED DEPRECIATION:
---------------------------------------------
Property and equipment are stated at cost. Maintenance, repairs and minor
renewals and betterment's are expensed; major improvements are capitalized.
Depreciation of property and equipment is provided for using the straight-line
method over the estimated useful lives of the assets as follows:
Estimated
Useful Lives
---------------------
Leasehold improvements Life of lease
Computer, equipment and office furniture 5 - 10 years
Upon retirement, sale, or other disposition of property and equipment, the costs
and accumulated depreciation are eliminated from the accounts, and any resulting
gain or loss is included in operations.
I. ADVERTISING EXPENSES:
--------------------
All advertising expenses are expensed as incurred
J. CONCENTRATION OF CREDIT RISK
----------------------------
The Company maintains credit with various financial institutions. Management
performed periodic evaluations of the relative credit standing of the financial
institutions. The Company never sustained any material credit losses for the
instruments. The carrying values reflected in the balance sheets at December 31,
2002 reasonably approximate the fair values of cash, accounts payable, and
credit obligations. In making such assessment, the Company, has utilized
discounted cash flow analysis, estimated, and quoted market prices as
appropriate in accordance with paragraph 9 of SFAS 107.
-18-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Notes to the Consolidated Financial Statements
as of December 31, 2002
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
K. INCOME TAXES
------------
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred income taxes are recognized for
the tax consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.
NOTE 3. GOING CONCERN
The Company's cash and available credit are not sufficient to support operations
for the next year. A net loss of $3,248,056 was incurred from inception through
December 31, 2001. For the twelve months ended December 31, 2002, the Company
had a net loss of $379,203. The Company also had negative working capital and
stockholders deficit at December 31, 2002.
Management's plan is to either form an alliance with another IPA or completely
cease operations and sell off the public company (the "shell'). These
consolidated financial statements have been prepared as if the Company will
continue operations and on the basis that adequate equity financing will be
obtained.
NOTE 4. PRIVATE PLACEMENT MEMORANDUM
The Private Placement Memorandum issued on March 1, 2001 in connection with the
Company's offer of sale of its common stock ended on October 29, 2001 with total
gross receipts of $231,700. On November 30, 2001, a new Private Placement
Memorandum was issued for qualified investors in connection with the Company's
offer of sale of its common stock with total gross receipts of $28,000.
All prepaid private placement costs, consisting of printing, mailing and
consulting fees have been charged against gross proceeds or expensed as of
December 31, 2002.
-19-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Notes to the Consolidated Financial Statements
as of December 31, 2002
NOTE 5. PROPERTY & EQUIPMENT
Property is stated at cost. Additions, renovations, and improvements are
capitalized. Maintenance and repairs, which do not extend asset lives, are
expensed as incurred. Depreciation is provided on a straight-line basis over the
estimated useful lives ranging from 27.5 years for commercial rental properties,
5 years for tenant improvements, and 5 - 7 years on furniture and equipment.
December 31, December 31,
2002 2001
------------------------ ---------------------
Computers and software 319,107 204,058
Furniture, fixtures 124,750 83,785
and office equipment
Leasehold improvements 80,669 77,157
------------------------ ---------------------
524,526 $ 365,000
Accumulated depreciation (366,790) (146,400)
------------------------ ---------------------
NET PROPERTY AND EQUIPMENT $157,736 $ 218,600
======================== =====================
Depreciation expense for the years ended December 31, 2002 and 2001 was $60,864
and $27,820, respectively.
The Company periodically evaluated the net realizable value of long-lived
assets, including property and equipment, relying on a number of factors
including operating results, business plans, economic projections and
anticipated future cash flows. As of December 31, 2002 no adjustment was made
for the fact that the Company may completely cease operations.
NOTE 6. NOTE PAYABLE
The notes payable is all current and comprised of the following amount as of
December 31, 2002:
Cedars Sinai Medical Center, due July 18, 2002
With Interest At 6.0% Per Annum $ 1,750,000
===========
This note is completely past due as of December 31, 2002. This note is secured,
in the event of breach by the Company, allowing Cedars Sinai Medical Center the
sole recourse of repossessing that portion, if any, of its shareholdings (28% of
the outstanding shares) of the Company pursuant to the following provision:
-20-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Notes to the Consolidated Financial Statements
as of December 31, 2002
NOTE 6. NOTE PAYABLE (CONTINUED)
a. For the first seven hundred and fifty thousand dollars
($750,000) repaid by the Company, recourse shareholdings shall
be reduced from twenty-eight percent (28%) of the issued and
outstanding shares to not less than twenty percent (20%) of
the issued and outstanding shares, or the portion thereof;
b. For the next one million dollars ($1,000,000) repaid by the
Company, recourse shareholdings shall be reduced to twenty
percent (20) of the issued and outstanding shares to zero
percent (0%) of such issued and outstanding shares, or the
portion thereof.
If this note is not paid when due, the Company shall pay all costs of
collections, including attorney's fees and costs and all expenses incurred on
account of collection, whether or not suit is filed.
As of December 31, 2002, no payments were made by the Company nor any
collections actions commenced by Cedars Sinai Medical Center. All rights and
remedies of Cedars Sinai Medical Center in connection with the existing defaults
were hereby reserved, the lender agreed to forbear from exercising its rights
and remedies until July 23, 2003. Cedars Sinai Medical Center had not demanded a
conversion of its note and management believes that it will probably not do so.
NOTE 7. ADVERTISING
Advertising expense consists of the following:
December 31, 2002 December 31, 2001
----------------- -----------------
TOTAL $3,934 $25,773
================= =================
NOTE 8. EMPLOYEE SAVINGS PLAN
On August 1, 2000 the Company adopted a 401(K) Profit Sharing Plan and Trust for
the benefit of its employees and beneficiaries. Eligible employees may
contribute a portion of pretax annual compensation within specified limits. A
discretionary matching contribution will be provided by the employer which may
or may not be limited to accumulated net profit.
There are no employer contributions to the plan for the years ended December 31
2002 and 2001.
-21-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Notes to the Consolidated Financial Statements
as of December 31, 2002
NOTE 9. INCOME TAXES
Income taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryfowards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
At December 31, 2002 the Company has significant operating losses carryfoward.
The tax benefits resulting from these losses have been estimated as follows:
December 31, 2002
--------------------------
Beg. Retained Earnings $ (3,248,056)
Net operating loss for Year (379,203)
--------------------------
Ending Retained Earnings (3,627,259)
--------------------------
Income Tax Benefit $ 1,088,178
==========================
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that deductible temporary differences and carryforward
are expected to be available to reduce taxable income. In accordance with SFAS
109 paragraph 24 the Company has deemed that a valuation allowance is required
for the total benefit. Thus, no income tax benefit was included in the financial
statements for the year. The increase in operating loss carry-forward will
expire twenty years from the date the loss was incurred.
The provision for income taxes consists of the following:
December 31, December 31,
2002 2001
------------------------- ---------------------
Federal $ 0 $ 0
State 800 800
------------------------- ---------------------
TOTAL $800 $ 800
========================= =====================
NOTE 10. STOCK OPTION PLAN
On January 31, 2002, the Board of Directors of the Company unanimously approved,
and the shareholders ratified, the adoption of the 2002 Stock Option Plan. The
Stock Option Plan consists of 1,200,000 stock options for directors, executive
officers and key employees to purchase shares of the Company's Common Stock. As
of December 31, 2002 the plan had not been implemented.
-22-
LATINOCARE MANAGEMENT CORPORATION
(A Nevada Corporation)
Notes to the Consolidated Financial Statements
as of December 31, 2002
NOTE 11. COMMITMENTS
The Company entered into various operating leases for equipment and occupied a
facility under a long-term lease agreement expiring in March 31, 2010 with an
option to cancel or extend after five (5) years. Future minimum lease payments
under the non-cancelable leases for the remaining years are as follows:
Period Ended
December 31, Office Space Equipment Total
---------------------- -------------------- --------------------
2003 250,620 70,716 321,336
2004 250,620 70,716 321,336
2005 187,965 70,716 321,336
2006 70,716 70,716
Thereafter 70,716 70,716
---------------------- -------------------- --------------------
Total $ 689,205 $353,580 $ 1,105,440
====================== ==================== ====================
NOTE 12. SIGNIFICANT MANAGEMENT INVESTMENT
The current management and directors as a group beneficially owns approximately
77% of the total shares issued and outstanding. By virtue of such stock
ownership, the current management and directors as a group generally exercise
control over the affairs of the Company.
NOTE 13. SUBSEQUENT EVENTS
The Company entered into an agreement to spin off the subsidiary, Latinocare
Management Corporation (a California corporation) (LMCC) to the stockholders on
a pro-rata basis. LMCC will keep all assets, most of the liabilities, and all of
the operations as they exist at the time the agreement is finalized. This will
leave the Company, Latinocare Management Corporation (a Nevada corporation)
without any significant assets, liabilities or operations. Basically, this
transaction will leave both companies as they were before they merged.
The shareholders of the Company are also in the process of transferring
ownership and control of this public shell.
-23-
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
In February 2002, the Company engaged Oppenheim & Ostrick to prepare
the Company's financial statements for transition of the Company's fiscal year
end to December 31 and for the fiscal year ending December 31, 2001. The Company
terminated its engagement with Michael B. Johnson & Company. The Company had no
disagreements with Michael B. Johnson & Company on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
In November 2002, the Company engaged Robert Pacheco, C.P.A. to prepare
the Company's financial statements for the fiscal year ending December 31, 2002.
The Company terminated its engagement with Oppenheim & Ostrick in October 2002.
The Company had no disagreements with Oppenheim & Ostrick on any matter of
accounting principals or practices, financial statement disclosure, or auditing
scope or procedure.
In February 2003, the Company engaged Armando Ibarra, C.P.A. to prepare
the Company's financial statements for the fiscal year ending December 31, 2002.
The Company terminated its engagement with Robert Pacheco, C.P.A. in February
2003. The Company had no disagreements with Robert Pacheco, C.P.A. on any matter
of accounting principals or practices, financial statement disclosure, or
auditing scope or procedure.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF EXCHANGE ACT
The following table lists the executive officers and directors of the
Company as of March 25, 2003:
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Jose J. Gonzalez 56 President, Chief Executive Officer,
Chief Financial Officer, Secretary,
and Chairman
JOSE J. GONZALEZ, age 56, has been the Chairman of the Board of
Directors, President, Chief Executive Officer, and Secretary of the Company
since October 2001 and the Chief Financial Officer of the Company effective
December 2002. He has been the President and Chief Executive Officer of
Latinocare Management Corporation, a California corporation and wholly owned
subsidiary of the Company, since its inception in February 1995. Mr. Gonzalez
has more than 30 years of experience in the health care industry, including
hospital administration, group and Independent Physician's Association
development, managing community clinics in Los Angeles and Orange County, and
managed care contracting. From December 1984 to July 1987, he was President and
Chief Executive Officer of Universal Medi-Co., which contracted with group
practices to provide management and support services. In November 1983, he
started the White Memorial Medical Group, a hospital based group practice. Mr.
Gonzalez is currently a member of the Public Policy Committee for the California
Association of Physicians Organizations, as well as a member of the Advisory
-24-
Board of the California Department of Managed Health Care, an appointment he
received from Governor Gray Davis. Mr. Gonzalez received a Bachelor of Arts
Degree in Language and Communications from California State University, Long
Beach in 1970 and a Masters Degree in Public Administration, Health Care
Management from Pepperdine University in 1973.
ITEM 10. EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
Directors receive no cash compensation for their services to the
Company as directors, but are reimbursed for expenses actually incurred in
connection with attending meetings of the Board of Directors.
EXECUTIVE OFFICER COMPENSATION
The annual compensation for the executive officers of the Company has
not yet been determined, but is expected to be established by a resolution of
the Company's Board of Directors in the near future. The following table and
notes set forth the annual cash compensation paid to Jose Gonzalez, the
President, Chief Executive Officer, Chief Financial Officer, and Secretary of
the Company, by the Subsidiary during its fiscal years ended December 31, 2002,
2001, 2000, and 1999, respectively. No other executive officer received
compensation in excess of $100,000 in any such year.
Annual Compensation Long-term
Compensation
Awards
------
Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary(1) Bonus Compensation Options Compensation
--------------------------- ---- --------- ----- ------------ ------------- ------------
Jose J. Gonzalez 2002 $144,000 - 0 - - 0 - - 0 - - 0 -
President, Chief Executive
Officer, Chief Financial
Officer, and Secretary
2001 $144,000 - 0 - - 0 - - 0 - - 0 -
2000 - 0 - - 0 - - 0 - - 0 - $144,000(2)
1999 - 0 - - 0 - - 0 - - 0 - $144,000(2)
----------------
(1) During LMC's fiscal year 2001, Mr. Joseph Luevanos, the former Chief
Financial Officer of the Company and the Subsidiary, received an annual
salary from LMC of $168,000. Mr. Luevanos submitted his resignation as
a director and Chief Financial Officer of the Company in January 2003,
effective as of July 1, 2002.
(2) Prior to 2001, Mr. Jose J. Gonzalez received consulting fees from the
Company.
-25-
EMPLOYMENT AGREEMENTS
The Company has not entered into any employment agreements with its
executive officers to date. The Company may enter into employment agreements
with them in the future.
STOCK OPTION PLAN
On January 31, 2002, the Board of Directors of the Company adopted the
2002 Stock Option Plan for Directors, Executive Officers, Employees and Key
Consultants of the Company (the "2002 Plan"). The 2002 Plan was ratified by the
shareholders of the Company at the Company's annual meeting of the shareholders
held on February 28, 2002. The 2002 Plan authorizes the grant of up to 1,500,000
options to purchase up to 1,500,000 shares of common stock. To date, no stock
options have been granted under the 2002 Plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the names and addresses of the executive officers
and directors of the Company and all persons known by the Company to
beneficially own 5% of more of the issued and outstanding common stock of the
Company.
Number of Shares Beneficially Percentage
Name, Title, and Address Owned(2) Ownership
--------------------------------------------------------------------------------------------------------------
Jose J. Gonzalez(1) 6,904,218 47.2%
President, Chief Executive Officer, Chief
Financial Officer, Secretary, and Chairman..
959 Walnut Avenue, Suite 250
Pasadena, California 91106
Yuval Chiprut............................... 6,567,427 44.9%
959 Walnut Avenue, Suite 250
Pasadena, California 91106
All current executive officers as a group... 6,904,218 47.2%
All current directors who are not executive
officers as a group...................... 0 0%
-------------------------
(1) Mr. Jose J. Gonzalez is the Chairman of the Board, Chief Executive
Officer, President, and Secretary of the Company.
(2) The principal shareholders plan to sell 13,401,645 of their shares of
the Company's common stock to one or more unaffiliated purchasers.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to a share purchase agreement dated March 17, 2003, Mr. Jose
J. Gonzales has agreed to purchase all of the shares of Latinocare Management
Corporation, a California corporation, owned by the Company. Mr. Gonzalez is
also the Chairman, Chief Executive Officer, President, Chief Financial Officer,
and Secretary of the Company.
-26-
The Company's controlling shareholders are planning to sell a total of
13,401,645 shares of the Company's common stock for a total purchase price of
$190,000 to one or more persons in contemplation of a business combination with
an operating company. Pursuant to the share purchase agreement, Mr. Jose J.
Gonzalez will be responsible for paying all accounts payable of the Company.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT NO. DESCRIPTION
---------- -----------
3.1 Articles of Incorporation (3)
3.2 Bylaws (3)
4.1 Specimen Certificate for Common Stock (3)
4.2 Non-Qualified Employee Stock Option Plan (1)
10.1 Agreement and Plan of Merger between JNS Marketing, Inc., a
Colorado Corporation, and Latinocare Management Corporation, a
Nevada Corporation, for the reincorporation and name change
(1)
10.2 Agreement and Plan of Reorganization between JNS Marketing,
Inc. a Colorado Corporation, and Latinocare Management
Corporation, a California Corporation, for the business
combination (2)
10.3 Management Agreement between Latinocare Management
Corporation, a Colorado Corporation, and Latinocare Network
Medical Group, an Independent Physician Association (3)
10.4 Promissory Note Payable to Cedars-Sinai Medical Center, dated
July 23, 2001 (3)
99.1 Section 906 Certification
----------------------------
(1) Incorporated by reference from the exhibits included in the Company's
Proxy Statement filed with the Securities and Exchange Commission for
the Annual Meeting of the Shareholders of the Company held on February
28, 2002.
(2) Incorporated by reference from the exhibits included with the Company's
prior Report on Form 8-K filed with the Securities and Exchange
Commission, dated November 1, 2001.
(3) Incorporated by reference from the exhibits included with the Company's
prior Report on Form 10-KSB filed with the Securities and Exchange
Commission, dated March 31, 2002.
(b) The following is a list of Current Reports on Form 8-K filed by the Company
during and subsequent to the last quarter of the fiscal year ended December 31,
2002.
Report on Form 8-K dated February 5, 2003, relating to the resignation of Joseph
Luevanos as a director and Chief Financial Officer of the Company, effective
July 1, 2002, and the relocation of the Company's corporate offices.
Report on Form 8-K dated February 20, 2003, relating to changes in the Company's
certifying accountant.
-27-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: March 25, 2003 LATINOCARE MANAGEMENT CORPORATION
By: \s\ Jose J. Gonzalez
--------------------------------------
Jose J. Gonzalez, Chairman of the Board,
Chief Executive Officer, and President
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: \s\ Jose J. Gonzalez Dated: March 25, 2003
--------------------------------------
Jose J. Gonzalez, Chairman of the Board,
Chief Executive Officer, and President
-28-
CERTIFICATIONS
I, Jose J. Gonzalez, certify that:
1. I have reviewed this annual report on Form 10-K of Latinocare Management
Corporation;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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 annual 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 annual
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
functions):
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
-29-
6. The registrant's other certifying officers and I have indicated in this
annual report whether 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.
Date: March 25, 2003
/s/ Jose J. Gonzalez
-----------------------------------------------------
Jose J. Gonzalez, Chief Executive Officer, President,
and Chief Financial Officer
(Principal Executive Officer/Principal Financial Officer)
-30-