FORM 10KSB FOR DECEMBER 31, 2002
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-KSB
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 Commission File Number 0-29057
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( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________TO ________________
ALTRIMEGA HEALTH CORPORATION
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(Exact name of registrant as specified in charter)
NEVADA 87-0631750
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(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
4702 OLEANDER DRIVE, SUITE 200, MYRTLE BEACH, SC 29577
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(Address of principal executive offices) (Zip)
Issuer's telephone number, including area code (843) 497-7028
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Securities registered pursuant to section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
NONE NONE
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Securities registered pursuant to section 12 (g) of the Act:
COMMON STOCK, PAR VALUE $0.001 PER SHARE
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(Title of Class)
Check whether the Issuer (1 ) filed all reports required to be filed by
section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes /X/ No / / (2) Yes /X/ No / /
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the 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.
State issuer's revenues for its most recent fiscal year: $ -0-.
State the aggregate market value of the voting stock held by nonaffiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within the past 60 days.
The market value of shares held by nonaffiliates is $177,600 based on the
bid price of $0.005 per share at April 11, 2003.
As of April 11, 2003, the Company had 49,139,950 shares of common stock
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
TABLE OF CONTENTS
PART I.........................................................................1
Forward-Looking Statements...................................................1
Item 1. Description Of Business.............................................1
Item 2. Description Of Properties...........................................5
Item 3. Legal Proceedings...................................................5
Item 4. Submission Of Matters To A Vote Of Securities Holders...............5
PART II........................................................................6
Item 5. Market For Common Equity And Related Stockholder Matters............6
Item 6. Management's Discussion And Analysis Or Plan Of Operation...........6
Item 7. Financial Statements................................................8
Item 8. Changes In And Disagreements With Accountants On Accounting
And Financial Disclosure.....................................................9
PART III.......................................................................9
Item 9. Directors And Executive Officers, Promoters, And Control
Persons; ....................................................................9
Compliance With Section 16(A) Of The Exchange Act............................9
Item 10. Executive Compensation............................................10
Item 11. Security Ownership Of Certain Beneficial Owners And
Management..................................................................10
Item 12. Certain Relationships And Related Transactions....................12
PART IV.......................................................................14
Item 13. Exhibits And Reports On Form 8-K..................................14
Item 14. Controls And Procedures...........................................14
Item 15. Principal Accounting Fees and Services............................15
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.............................A-1
OFFICER'S CERTIFICATE PURSUANT TO SECTION 302................................B-1
OFFICER'S CERTIFICATE PURSUANT TO SECTION 302................................C-1
EXHIBIT 4.01........................................................EXHIBIT 4.01
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PART I
INTRODUCTORY NOTE
FORWARD-LOOKING STATEMENTS
This Form 10-KSB contains "forward-looking statements" relating to
Altrimega Health Corporation ("Altrimega") which represent Altrimega's current
expectations or beliefs including, but not limited to, statements concerning
Altrimega's operations, performance, financial condition and growth. For this
purpose, any statements contained in this Form 10-KSB that are not statements of
historical fact are forward-looking statements. Without limiting the generality
of the foregoing, words such as "may", "anticipation", "intend", "could",
"estimate", or "continue" or the negative or other comparable terminology are
intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, such as credit losses,
dependence on management and key personnel, variability of quarterly results,
and the ability of Altrimega to continue its growth strategy and competition,
certain of which are beyond Altrimega's control. Should one or more of these
risks or uncertainties materialize or should the underlying assumptions prove
incorrect, actual outcomes and results could differ materially from those
indicated in the forward-looking statements.
Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time and it is not
possible for management to predict all of such factors, nor can it assess the
impact of each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
ITEM 1. DESCRIPTION OF BUSINESS
HISTORY AND ORGANIZATION
GENERAL
Altrimega was incorporated under the laws of the State of Nevada on
September 8, 1998 as Mega Health Corporation. On June 23, 1999 the name of the
corporation was changed to Altrimega Health Corporation.
Our initial plan of operation focused on marketing natural medicines and
nutritional supplements. Our management had prior experience and established
relationships with suppliers of various nutrients and we had established a
relationship with a "contract" manufacturer to produce those products. We
attempted to establish a distribution network with various marketing firms with
experience in marketing nutritional supplements, however, these marketing
efforts proved unsuccessful.
We began seeking potential business acquisition or opportunities to enter
in an effort to continue business operations. In July 2001, we entered into a
Plan and Agreement of Merger to acquire all of the issued and outstanding shares
of YellowOnline.com, a California corporation ("YOL"). The transaction
contemplated that upon closing, both the common and preferred shareholders of
YOL would together own no less than eighty four percent (84%) of our then issued
and outstanding shares. This transaction was not completed and was terminated on
November 1, 2001.
On November 9, 2001, our former president and controlling shareholder,
Howard Abrams sold 13,200,000 shares of our common stock owned by him to Rio
Investment Group, LLC, a Delaware limited liability company. The 13,200,000
shares represented approximately 59.9% of our issued and outstanding shares. In
connection with the transaction, Abrams resigned as an officer and director and
Ashley Choate, of Ft. Worth, Texas, was appointed to replace him.
PROPOSED ACQUISITION OF ADVANCED WIRELESS MESSAGING, INC.
On December 11, 2001, we entered into an Exchange Agreement with Advanced
Messaging Wireless, Inc., of Amarillo, Texas ("Advanced"). Advanced is a Texas
corporation and formed in April 2001 as a marketing organization that offers
wireless and communications products to consumers through its retail outlets.
Advanced had entered into a licensing agreement with Nextel Communications to
resell their services in the Southwestern United States. Advanced desired to be
a customer focused communications and information technology company that
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provides a full array of voice, video and data services as well as
communications and technology-related products.
On July 15, 2002, Altrimega terminated the Exchange Agreement with
Advanced due to Advanced's failure to satisfy certain conditions under the
Exchange Agreement.
On July 25, 2002, Altrimega entered into a non-binding letter of intent
with Creative Holdings, Inc., a South Carolina corporation. Pursuant to the
Letter of Intent and upon the consummation of a definitive agreement, Altrimega
would acquire Creative Holdings.
A Merger Agreement was executed on August 15, 2002, between Altrimega,
Altrimega Acquisition Company, a Nevada corporation, Creative Holdings, Inc., a
South Carolina corporation and the shareholders of Creative Holdings, Inc.
Pursuant to the Merger Agreement, Creative Holdings would be merged with and
into Acquisition Co., which would be the surviving corporation and continue its
corporate existence under the laws of the State of Nevada as a wholly-owned
subsidiary of Altrimega.
In consideration of the merger, Altrimega would issue a total of
320,000,000 shares of common stock of Altrimega to the shareholders of Creative
Holdings in exchange for all of the common stock of Creative Holdings.
On September 2, 2002, Altrimega, Creative Holdings and the shareholders of
Creative Holdings amended the Merger Agreement and restructured the merger into
a stock exchange transaction, whereby Creative Holdings would become a
wholly-owned subsidiary of Altrimega.
Pursuant to the Share Exchange Agreement, effective as of August 15, 2002
by and among Altrimega, Creative Holdings and the shareholders of Creative
Holdings, the shareholders would exchange with, and deliver to, Altrimega 100%
of the issued and outstanding capital stock of Creative Holdings in exchange for
20,000,000 shares of common stock of Altrimega and 1,000,000 shares of Series A
Convertible Preferred Stock of Altrimega. Each share of Series A Convertible
Preferred Stock will be convertible into 300 shares of common stock of
Altrimega.
The merger was completed on October 17, 2002. At that time, Creative
Holdings became a wholly owned subsidiary of Altrimega. Ultimately, after
certain shares were cancelled, the former shareholders of Creative Holdings
received 13,619,950 shares of Altrimega's common stock.
Further, Altrimega is obligated to seek shareholder approval to increase
its authorized capital stock to 800,000,000 shares of common stock.
Creative Holdings is a real estate holding company. Creative Holdings held
options on a number of real estate projects located in the greater Myrtle Beach,
S.C. area and in Charlotte, N.C. The following sets forth projects Creative
Holdings is either involved in or pursuing:
(1) The Barefoot Resort and Golf Community in N. Myrtle Beach, S.C.
Creative Holdings entered into a letter of understanding dated October 17,
2002 to purchase undeveloped land within the resort community that consists of
approximately fifteen neighborhoods of single family homes and multi unit
apartment buildings, constructed and marketed primarily by Centex. The community
is built around four world class golf courses designed by golf notables, Davis
Love III, Pete Dye, Greg Norman and Tom Fazio. Creative Holdings did not
ultimately purchase this property mainly due to the seller's inability to close.
On January 20, 2003 and February 10, 2003, Altrimega signed letters of
intent to enter into joint ventures to purchase two land tracts within the
Barefoot Resort. One tract, adjoining the Dye Course clubhouse has plans for
Creative Holdings to own and develop a 50% interest in a 150 unit interval
ownership condominium project. The second tract is a 9 acre site adjoining the
marina on the Atlantic Coastal Waterway, where Creative Holdings planned to own
and develop a 50% interest in a marina villa project to consist of town home
style residences overlooking the marina and waterway. The remaining 50% of each
project was to be held by the original developer of the Barefoot Resort and Golf
Community. Due to certain conditions that were not met by the seller, Creative
Holdings has not gone forward with these projects to date. Creative Holdings is
still considering these projects, assuming all of the conditions can be
satisfied.
(2) Sea Garden town home community in N. Myrtle Beach, S.C.
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Altrimega has exercised Creative Holdings' option and acquired an 80%
interest in Sea Garden Funding, LLC, the owner and developer of the remaining 59
units in a 175 unit, 2 bedroom, 2 bath town home community approximately 3
blocks from the Atlantic shoreline. Sea Garden Funding purchased the real
property from Sea Garden, LLC on October 21, 2002 for the payment of $210,000
and the assumption of $1,071,344.66 in mortgages on the real property held by
Horry County State Bank. The development consists of buildings that have either
4 or 5 units per building. The remaining 20% interest in Sea Garden Funding,
LLC, is owned by an unaffiliated party. The community currently consists of 116
sold units.
(3) A 15-acre site in Charlotte, N.C with development plans for a town
home community consisting of 122 three bedroom units.
Altrimega held an option to purchase 100% of this property, which expired
on May 15, 2003. Altrimega is still considering this project even though
Altrimega's option rights have expired.
(4) A prime commercial site in Myrtle Beach, S.C. with development plans
to build a multi-story office building.
Altrimega has entered into a letter of intent dated November 15, 2002 with
Office Developers, LLC, to purchase this property and is currently performing
due diligence on this project. Upon final contract, the Company will release
pro-forma information on the site.
(5) Acquisition of 25% of the Billings Group, LLC
Altrimega has entered into a letter of intent dated September 20, 2002
with The Billings Group, LLC, to acquire a 25% interest in The Billings Group,
which is a real estate brokerage firm that markets hotel and other commercial
real estate on a national basis.
COMPETITION
There are a number of interval ownership and town home communities in the
greater Myrtle Beach, S.C. and greater Charlotte, N.C. areas. Altrimega's
projects and proposed projects in these areas are typically priced in the medium
to upper ranges of current market pricing. Both areas are now and have in the
recent past enjoyed vibrant growth of population which management believes has
created demand for new housing. If these growth trends continue, there should be
adequate demand for the Company's units for sale in the Sea Garden project, and
in relation to other new properties of similar design and pricing in the markets
in which we plan to participate.
EMPLOYEES
As of the date hereof, we have only one employee, our President and Chief
Executive Officer, John W. Gandy. Altrimega has an employment agreement with Mr.
Gandy, starting in 2003, which provides for an annual salary of $100,000 with a
5% increase each year to a maximum of $125,000, if Altrimega had a profit in the
previous year.
RISKS RELATED TO OUR BUSINESS
WE ARE SUBJECT TO VARIOUS RISKS THAT MAY MATERIALLY HARM OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. YOU SHOULD CAREFULLY CONSIDER THE
RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS FILING
BEFORE DECIDING TO PURCHASE OUR COMMON STOCK. IF ANY OF THESE RISKS OR
UNCERTAINTIES ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR OPERATING
RESULTS COULD BE MATERIALLY HARMED. IN THAT CASE, THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE.
ALTRIMEGA HAS HISTORICALLY LOST MONEY AND LOSSES MAY CONTINUE IN THE FUTURE
Since our inception we have not been profitable and have lost money on
both a cash and non-cash basis. For the year ended December 31, 2002, we lost
$494,507 and we had no revenues for fiscal year 2002. Our accumulated deficit
was $494,507 as at the end of December 31, 2002. Future losses are likely to
occur, as we are dependent on spending money to evaluate and pursue real estate
projects. No assurances can be given that we will be successful in reaching or
maintaining profitable operations. Accordingly, we may continue to experience
liquidity and cash flow problems.
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ALTRIMEGA WILL MOST LIKELY NEED TO RAISE ADDITIONAL CAPITAL OR DEBT FUNDING TO
SUSTAIN OPERATIONS
Unless Altrimega can become profitable with the existing sources of funds,
Altrimega will require additional capital to sustain operations and may need
access to additional capital or additional debt financing to grow. In addition,
to the extent that we have a working capital deficit and cannot offset the
deficit we may have to raise capital to repay the deficit and provide more
working capital to permit growth in revenues. We cannot assure you that
financing whether from external sources or related parties will be available if
needed or on favorable terms. Our inability to obtain adequate financing will
result in the need to reduce the pace of business operations. Any of these
events could be materially harmful to our business and may result in a lower
stock price.
WE HAVE BEEN THE SUBJECT OF A GOING CONCERN OPINION FROM DECEMBER 31, 2002 FROM
OUR INDEPENDENT AUDITORS, WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE
OPERATIONS UNLESS WE CAN BECOME PROFITABLE OR OBTAIN ADDITIONAL FUNDING
Our independent auditors have added an explanatory paragraph to their
audit opinions issued in connection with our financial statements for the year
ended December 31, 2002, which states that the financial statements raise
substantial doubt as to Altrimega' ability to continue as a going concern. Our
ability to make operations profitable or obtain additional funding will
determine our ability to continue as a going concern. Our financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
WE ARE SUBJECT TO A WORKING CAPITAL DEFICIT, WHICH MEANS THAT OUR CURRENT ASSETS
ON DECEMBER 31, 2002 WERE NOT SUFFICIENT TO SATISFY OUR CURRENT LIABILITIES
We had a working capital deficit of $352,204 at December 31, 2002, which
means that our current liabilities as of that date exceeded our current assets
on December 31, 2002 by $352,204. Current assets are assets that are expected to
be converted to cash within one year and, therefore, may be used to pay current
liabilities as they become due. Our working capital deficit means that our
current assets on December 31, 2002 were not sufficient to satisfy all of our
current liabilities on that date. If our ongoing operations do not begin to
provide sufficient profitability to offset the working capital deficit we may
have to raise capital or debt to fund the deficit.
OUR COMMON STOCK MAY BE AFFECTED BY LIMITED TRADING VOLUME AND MAY FLUCTUATE
SIGNIFICANTLY
There has been a limited public market for our common stock and there can
be no assurance that a more active trading market for our common stock will
develop. An absence of an active trading market could adversely affect our
shareholders' ability to sell our common stock in short time periods, or
possibly at all. Our common stock has experienced, and is likely to experience
in the future, significant price and volume fluctuations, which could adversely
affect the market price of our common stock without regard to our operating
performance. In addition, we believe that factors such as changes in the overall
economy or the condition of the financial markets could cause the price of our
common stock to fluctuate substantially. These fluctuations may also cause short
sellers to enter the market from time to time in the belief that Altrimega will
have poor results in the future. We cannot predict the actions of market
participants and, therefore, can offer no assurances that the market for our
stock will be stable or appreciate over time.
OUR COMMON STOCK IS DEEMED TO BE "PENNY STOCK," WHICH MAY MAKE IT MORE DIFFICULT
FOR INVESTORS TO SELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS
Our common stock is deemed to be "penny stock" as that term is defined in
Rule 3a51-1 promulgated under the Securities Exchange Act of 1934. These
requirements may reduce the potential market for our common stock by reducing
the number of potential investors. This may make it more difficult for investors
in our common stock to sell shares to third parties or to otherwise dispose of
them. This could cause our stock price to decline. Penny stocks are stock:
o With a price of less than $5.00 per share;
o That are not traded on a "recognized" national exchange;
o Whose prices are not quoted on the NASDAQ automated quotation system
(NASDAQ listed stock must still have a price of not less than $5.00
per share); or
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o In issuers with net tangible assets less than $2.0 million (if the
issuer has been in continuous operation for at least three years) or
$10.0 million (if in continuous operation for less than three
years), or with average revenues of less than $6.0 million for the
last three years.
Broker/dealers dealing in penny stocks are required to provide potential
investors with a document disclosing the risks of penny stocks. Moreover,
broker/dealers are required to determine whether an investment in a penny stock
is a suitable investment for a prospective investor.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT OR IMPOSSIBLE TO EVALUATE OUR
PERFORMANCE AND MAKE PREDICTIONS ABOUT OUR FUTURE
Altrimega has only acquired one real estate project, the Sea Garden
project, and did not have revenues for fiscal year 2002. Based on this limited
history with real estate projects, it is difficult or impossible for us to
evaluate our operational and financial performance, or to make accurate
predictions about our future performance.
ITEM 2. DESCRIPTION OF PROPERTIES
Altrimega owns an 80% share of Sea Garden Funding, LLC. The operating
agreement that governs the rights of the members of Sea Garden Funding, LLC,
Creative Holdings, with an 80% interest and an unaffiliated party with the
remaining 20% interest, was entered into on October 10, 2002. Sea Garden Funding
owns the remaining units under construction and sites for future construction
within the Sea Garden Town Home community in N. Myrtle Beach, S.C. Sea Garden
consists of 116 sold units and 59 units to be constructed by the developer, Sea
Garden Funding, LLC. Horry County State Bank holds a mortgage on this Property.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters have been submitted to a vote of our shareholders during the
fiscal year ended December 31, 2002. However, the Exchange Agreement with
Creative Holdings, Inc. requires us to obtain, through a majority written
consent of our stockholders, approval of an increased capitalization to 800
million shares and name change.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our Common Stock has been quoted on the NASD's OTC Bulletin Board since
November 1, 2000. Prior to such date management is not aware of the quotation or
trading of the Common Stock through any other medium. The table below sets
forth, for the respective periods indicated, the prices for our common stock in
the over-the-counter market as reported by the NASD's OTC Bulletin Board.
The bid prices represent inter-dealer quotations, without adjustments for
retail mark-ups, mark-downs or commissions and may not necessarily represent
actual transactions.
PERIOD ENDED DECEMBER 31, 2002 HIGH BID LOW BID
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First Quarter $ 0.44 $ 0.03
Second Quarter $ 0.10 $ 0.03
Third Quarter $ 0.08 $ 0.02
Fourth Quarter $ 0.05 $ 0.02
At April 10, 2003, our Common Stock was quoted on the OTC Bulletin Board
at a bid and asked price of $0.005 and $0.008, respectively. Since our
inception, we have not paid any dividends on our Common Stock, and we do not
anticipate that we will pay dividends in the foreseeable future. At December 31,
2002, we had approximately 83 shareholders of record based on information
provided by our transfer agent Interwest Transfer Company, 1981 East 4800 South,
Suite 100, Salt Lake City, Utah 84117; Tel: (801) 272-9294.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLAN
The following table sets forth the securities that have been authorized
under equity compensation plans as of December 31, 2002.
NUMBER OF
SECURITIES
REMAINING
AVAILABLE
NUMBER FOR FUTURE
SECURITIES WEIGHTED- ISSUANCE
TO BE AVERAGE UNDER EQUITY
ISSUED UPON EXERCISE COMPENSATION
EXERCISE OF PRICE OF PLANS
OUTSTANDING OUTSTANDING (EXCLUDING
OPTIONS, OPTIONS, SECURITIES
WARRANTS WARRANTS REFLECTED IN
AND RIGHTS AND RIGHTS COLUMN (A))
------------ ---------- -------------
(A) (B) (C)
------------------------------------- ------------ ---------- -------------
Equity compensation plans approved by 0 -- 0
security holders
Equity compensation plans not approved
by security holders 0 -- 0
TOTAL 0 -- 0
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATION
Altrimega has entered the real estate development business with its merger
with Creative Holdings, Inc. of Myrtle Beach, S.C. Altrimega will strive to
locate, evaluate and proceed to finance and develop multiple projects located
primarily in the Myrtle Beach, S.C. area and the Carolinas area of the United
States. Management believes that these areas provide the population growth
necessary to achieve profits from new construction projects. For the last three
years, Horry County, South Carolina has been one of the top three fastest
growing counties in the United States. In 1997, Horry County showed a population
of only 180,000. Based on current projections and the 2000 census data, the
county will have a permanent population of 500,000 by next year. The principal
industries of the area are tourism related. Myrtle Beach is considered a
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drive-in market, where tourists will drive their cars rather than fly to the
destination. The tourism industry in Myrtle Beach has developed three seasons,
spring golf, summer beach vacations and fall golf. The spring and fall golf
seasons bring approximately 150,000 visitors per week to play on the areas over
100 golf courses. The summer vacation season brings in approximately 400,000 per
week. The average tourist stay is one week.
Altrimega's business strategy includes a focus on interval ownership
properties that cater to this major tourism industry. As well, we intend to
develop projects in the medium price ranges for the areas permanent service
industry population.
Management will attempt to seek out low-risk projects that do not require
large financing commitments. In addition, we have gone out of Horry County for
one proposed project to Charlotte, N.C. and will continue to evaluate projects
throughout the Carolinas in high growth areas.
RESULTS OF OPERATIONS
We are a development stage company and have had limited operations during
the fiscal year ended December 31, 2002. Since our inception (September 8,
1998), we have generated net losses of $494,507 and we have had limited
operating capital. As a result, the report of our auditor contains a going
concern qualification, which states that Altrimega will need additional capital
for its future planned activities and to service its debt which raises
substantial concern about our ability to continue as a going concern. Our
continuation as a going concern is dependent on our ability to meet our
obligations and obtain additional debt or equity financing required until our
current and proposed real estate projects are under way and generating earnings.
Until such time as these projects are generating earnings, we have taken the
following steps to revise our operating and financial requirements in an effort
to enable us to continue in existence:
o We have reduced administrative expenses to a minimum by
consolidating management responsibilities to our president and chief
executive officer.
o We intend to seek either equity or further debt funding.
o We will attempt to obtain the professional services of third-parties
through favorable financing arrangements or payment by the issuance
of our common stock.
We believe that the foregoing plan will enable us to generate sufficient
funds to continue its operations for the next twelve months.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2001, we had assets of $1,444,671 and liabilities of
$1,761,875, a difference of $(317,204). Additionally, our current assets equal
$1,409,671 and our current liabilities equal $1,761,875, creating a working
capital deficit of $352,204. We also had a net loss of $494,507 for the year
ended December 31, 2002 and had $47,053 in cash and an accumulated deficit of
$494,507 on December 31, 2002. For the next 12 months we anticipate that we will
need $300,000 to continue to fund basic operations, in addition to funding
necessary to acquire an develop real estate projects.
We had limited operations and no income during the fiscal year ended
December 31, 2002. Our shortfall in working capital has been met through
advances from our president, John Gandy, and other shareholders who have
advanced funds to pay expenses incurred by the Company from time to time. At no
time during the fiscal year 2002 did these short term loans exceed $60,000.
We anticipate that we will require significant capital to maintain our
corporate viability and execute our plan to develop real estate projects. We
anticipate necessary funds will most likely be provided by our existing
shareholders, our officers and directors and outside investors. We will require
significant loan guarantees to acquire properties for development and to
complete construction on Creative Holdings' planned projects. We will be
required to pledge equity in the Company to induce individuals, officers or
directors or other shareholders to guarantee our loans when necessary.
Altrimega's financial statements have been prepared on a going concern
basis that contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business. Management
recognizes that Altrimega must generate additional resources to enable it to
continue operations. Management is planning to obtain additional capital
principally through the sale of equity and debt securities. The realization of
assets and satisfaction of liabilities in the normal course of business is
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dependent upon Altrimega obtaining additional equity or debt capital and
ultimately obtaining profitable operations. However, no assurances can be given
that Altrimega will be successful in these activities. Should any of these
events not occur, the accompanying consolidated financial statements will be
materially affected.
Altrimega is at present meeting its current obligations from its monthly
cash flows from investor capital and loans from related parties. However, due to
insufficient cash generated from operations, Altrimega currently does not
internally generated cash sufficient to pay all of its incurred expenses and
other liabilities. As a result, Altrimega is dependent on investor capital and
loans to meet its expenses and obligations. Although investor funds and related
party loans have allowed Altrimega to meet its obligations in the recent past,
there can be no assurances that Altrimega's present methods of generating cash
flow will be sufficient to meet future obligations.
Cash from operating activities was $47,053 for the year ended December 31,
2002. The cash from operations was mainly from an increase in accounts payable
of $1,439,656 and notes payable of $210,000. There was no cash used or obtained
from investing or financing activities during fiscal year 2002.
From time to time, Altrimega may evaluate potential acquisitions involving
complementary businesses, content, products or technologies. Altrimega has no
present agreements or understanding with respect to any such acquisition.
Altrimega's future capital requirements will depend on many factors, including
an increase in Altrimega's real estate projects, and other factors including the
results of future operations.
ITEM 7. FINANCIAL STATEMENTS
Our financial statements are included following the signature page to this
form 10-KSB.
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SELLERS & ANDERSEN L.L.C. 941 East 3300 South, Suite 202
Certified Public Accountants and Salt Lake City, Utah 84106
Business Consultants Telephone:..801-486-0096
Member SEC Practice Section of the AICPA Fax: ......801-486-0098
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Altrimega Health Corporation
Myrtle Beach, S.C.
We have audited the accompanying balance sheet of Altrimega Health
Corporation and Subsidiaries (development stage company) at December 31, 2002
and the statements of operations and cash flows for the period July 3, 2002
(date of inception of the subsidiary) to December 31, 2002 and the statement of
stockholders' equity for the period September 8, 1998 (date of inception of the
parent) to December 31, 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 audits.
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 balance
sheet is free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall balance sheet
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 Altrimega Health Corporation
and Subsidiaries at December 31, 2002, and the statements of operations, and
cash flows for the period July 3, 2002 (date of inception of the subsidiary) to
December 31, 2002 and the statement of stockholders' equity for the period
September 8, 1998 (date of inception of the parent) to December 31, 2002, in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company will need additional
working capital for its future planned activity and to service its debt, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 6. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Salt Lake City, Utah /S/ SELLERS & ANDERSEN, L.L.C.
April 15, 2003
F-1
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002
ASSETS
CURRENT ASSETS
Cash $ 47,053
Inventory - real estate - residential units for sale - at cost 1,356,218
Prepaid expenses 6,400
------------
Total Current Assets $ 1,409,671
DEPOSITS 35,000
------------
$ 1,444,671
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - secured by residential units for sale $ 1,439,656
Accounts payable - related parties 250,000
Accounts payable 72,219
------------
Total Current Liabilities $ 1,761,875
------------
MINORITY INTEREST DEFICIENCY (3,141)
------------
STOCKHOLDERS' DEFICIENCY
Preferred stock
10,000,000 shares authorized at $0.001 par
value; 1,000,000 outstanding 1,000
Common stock
50,000,000 shares authorized at $0.001 par
value; 46,139,950 shares issued and outstanding 46,140
Capital in excess of par value 133,304
Deficit accumulated during the development stage (494,507)
------------
Total Stockholders' Deficiency (314,063)
------------
$ 1,444,671
The accompanying notes are an integral part of these financial statements.
F-2
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD JULY 3, 2002 (DATE OF INCEPTION OF SUBSIDIARY)
TO DECEMBER 31, 2002
REVENUES $ --
----------
EXPENSES
Consultants 460,000
Administrative 37,648
NET LOSS - before minority interest (497,648)
LESS MINORITY INTEREST 3,141
----------
NET LOSS (494,507)
==========
NET LOSS PER COMMON SHARE
Basic $ (.01)
----------
Diluted $ --
----------
AVERAGE OUTSTANDING SHARES (stated in 1,000's)
Basic 41,807
----------
Diluted 341,807
----------
The accompanying notes are an integral part of these financial statements.
F-3
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD SEPTEMBER 8, 1998 (DATE OF INCEPTION OF PARENT)
TO DECEMBER 31, 2002
PREFERRED STOCK COMMON STOCK CAPITAL IN
-------------------- --------------------- EXCESS OF ACCUMULATED
SHARES AMOUNT SHARES AMOUNT PAR VALUE DEFICIT
---------- --------- ----------- ---------- ---------------- -----------------
Balance September 8,
1998 (date of inception) - - $ - $ - $ -
Issuance of common stock
for cash at $.00025 -
September 8, 1998 18,000,000 18,000 (13,500) -
Net operating loss for
the period September
8, 1998 to December 31, 1998 - - - -
Issuance of common stock
for cash at $.02 -
October 15, 1999 1,000,000 1,000 19,000 -
Issuance of common stock
for cash at $.022 -
November 1, 1999 1,000,000 1,000 21,000 -
Net operating loss for
the year ended
December 31, 1999 - - - (39,583)
Issuance of common stock
for cash at $.025 -
January through April 2000 2,020,000 2,020 48,480 -
Net operating loss for
the year ended December
31, 2000 - - - (62,218)
Contributions to capital
- expenses - - 4,492 -
Contributions to capital
- forgiveness of debt - - 37,663 -
Net operating loss for
the year ended
December 31, 2001 - - - (37,354)
Contribution to capital
- expenses - - 27,330 -
Issuance of stock for
acquisition of all stock
of Creative Holdings, Inc. 1,000,000 1,000 13,619,950 13,620 (210,661) 139,155
Issuance of common stock
for services at $.02 -
Sept & Oct 2002 7,500,000 7,500 142,500 -
Issuance of common stock
for services at $.02 3,000,000 3,000 57,000 -
Net operating loss for
the period July 3,
2002 to December 31, 2002
---------- --------- ----------- ---------- ---------------- -----------------
Balance December 31, 2002 1,000,000 1,000 46,139,950 $ 46,140 $ 133,304 $ (494,507)
========== ========= =========== ========== ================ =================
The accompanying notes are an integral part of these financial statements.
F-4
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD JULY 3, 2002 (DATE OF INCEPTION OF SUBSIDIARY)
TO DECEMBER 31, 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash
provided by operating activities $ (494,507)
Changes in
Inventory (1,356,218)
Advance deposits (35,000)
Prepaid commissions (6,400)
Accounts payable 292,663
Short term notes payable 1,439,656
Issuance of common stock for expenses 210,000
Minority interest (3,141)
--------------
Net Cash from Operations 47,053
--------------
CASH FLOWS FROM INVESTING ACTIVITIES -
--------------
CASH FLOWS FROM FINANCING ACTIVITIES -
--------------
Net Increase (decrease) in Cash 47,053
Cash at Beginning of Period -
--------------
Cash at End of Period $ 47,053
==============
NON CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES
Issuance of 10,500,000 common shares for expenses - 2002 210,000
--------------
Contributions to capital - Forgiveness of debt - related Party $ 37,663
--------------
The accompanying notes are an integral part of these financial statements.
F-5
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on September
8, 1998 with the name of Mega International Health Corporation with authorized
common stock of 50,000,000 shares with a par value of $0.001 and preferred stock
of 10,000,000 shares with a par value of $0.001. The terms of the preferred
includes conversion rights, at the option of stockholder, of 300 shares of
common stock for each share of preferred. On June 23, 1999 the name was changed
to Altrimega Health Corporation.
The Company was organized for the purpose of marketing nutritional products and
during the year 2000 became inactive. During November 2002 the Company changed
its purpose to the development and sale of real estate by the acquisition of a
residential real estate development company.
The Company is in the development stage.
On March 5, 2001 the Company completed a forward stock split of four shares for
each outstanding share. This report has been prepared showing after stock split
shares from inception.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHODS
The Company recognizes income and expenses based on the accrual method of
accounting.
DIVIDEND POLICY
The Company has not adopted a policy regarding payment of dividends.
INCOME TAXES
On December 31, 2002 the Company had a net operating loss carryforward of
$678,136. The tax benefit of approximately $203,441 from the loss carry forward
has been fully offset by a valuation reserve because the use of the future tax
benefit is doubtful, since the Company has not been able to project a reliable
net operating profit. The loss carryover will expire in 2022.
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share amounts are computed based on the weighted
average number of share actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if the share had been issued on the
exercise of the preferred share rights unless the exercise becomes anti-dilutive
and then only the basic per share amounts are shown in the report.
F-6
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARES
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments are considered by management to be
their estimated fair values.
FINANCIAL AND CONCENTRATION RISK
The Company does not have any concentration or related financial credit risk.
REVENUE RECOGNITION
Revenue is recognized on the sale and transfer of title to the residential
units.
STATEMENT OF CASH FLOWS
For the purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less to the cash
equivalents.
ADVERTISING AND MARKET DEVELOPMENT
The Company expenses advertising and market development costs as incurred.
PRINCIPALS OF CONSOLIDATION
The consolidated financial statements shown in this report excludes the
historical operating information of the parent before September 30, 2002, and
includes the operating information of the subsidiary, Creative Holdings, Inc.,
from July 3, 2002 (date of inception of the subsidiary), and the operating
information of Sea Garden Funding, LLC from November 2002 ( the date of the
purchase of 80% of the LLC) to December 31, 2002.
All intercompany transactions have been eliminated.
ESTIMATES AND ASSUMPTIONS
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
F-7
ALTRIMEGA HEALTH CORPORATION AND SUBSIDIARES
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The adoption of this standard had no impact on the total stockholder's equity.
OTHER RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect that the adoption of other recent accounting
pronouncements to have any material impact on its financial statements.
3. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
Officers-directors, and their controlled entities, have acquired 36% of the
outstanding stock of the Company, after the conversion of the preferred shares
to common share (note 1), and have accounts payable due them of $150,000.
The Company has an employment agreement with an officer, starting in 2003, which
provides for an annual salary of $100,000 with a 5% increase each year to a
maximum of $125,000, provided the Company had a profit in the previous year.
4. CAPITAL STOCK
During 2002, the Company issued 10,500,000 restricted common shares at $.02 for
services, and the stock issued for the acquisition of the subsidiary outlined in
note 5.
In the first quarter of 2003, 2,000,000 common shares of The Company were issued
as payment of $40,000 of the accounts payable
5. ACQUISITION OF SUBSIDIARIES
On September 30, 2002, the Company acquired all of the outstanding stock of
Creative Holdings, Inc. (subsidiary), by a stock for stock exchange in which the
former stockholders of Creative received 13,619,950 common shares and 1,000,000
preferred shares of the Company, and after the conversion of the preferred
shares of the Company, and after the conversion of preferred shares to common
shares, (note 1) represented 90.6% of the outstanding stock of the company. For
reporting purposes, the acquisition was treated as an acquisition of the Company
by Creative Holdings, Inc. (reverse acquisition) and a recapitalization of
Creative Holdings, Inc. The historical financial statements prior to September
30, 2002 are those of Creative Holdings, Inc. Creative Holdings, Inc. has no
significant assets and therefore no goodwill was recognized from the
acquisition. Creative Holdings, Inc. was organized on July 3, 2002 in the state
of South Carolina.
During November 2002, the Company acquired 80% of Sea Garden Funding, LLC by the
assumption of certain liabilities. Sea Garden Funding, LLC was organized in the
state of South Carolina on November 12, 2002 for the purposes of the development
and sale of residential real estate.
6. GOING CONCERN
The Company will need additional working capital for its future planned activity
and to service its debt and continuation of the Company as a going concern is
dependent upon sufficient working capital. To be successful in that effort the
management of the Company has developed a strategy which it believes will
accomplish this objective through additional contribution to capital by related
parties by payment of expenses, additional short term loans, and equity funding,
which will enable to Company to operate for the coming year.
F-8
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
We have had no disagreements with our certified public accountants with
respect to accounting practices or procedures of financial disclosure.
F-9
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
GENERAL
The following table sets forth certain information regarding the current
directors and executive officers of the Company:
POSITION(S)
NAME AGE WITH THE COMPANY DIRECTOR SINCE
---------------------- ----------- ----------------------- -------------------
John W. Gandy 49 President, C.E.O. and September 2002
Director
Ron Hendrix 58 Secretary and Director December 2002
John Smith III 41 Director December 2002
There are no family relationships among any of the directors or executive
officers of the Company. None of the Company's directors or executive officers
is a director of any company that files reports with the SEC. None of the
Company's directors have been involved in any bankruptcy or criminal proceeding
(excluding traffic an other minor offenses), nor has been enjoined from engaging
in any business.
The following information is furnished for each of the executive officers
and directors of the Company:
JOHN W. GANDY serves as our President and Chief Executive Officer and is
the chairman of our board of directors starting in September 2002. Mr. Gandy
graduated from Wofford College in 1976 and received a Masters of Business
Administration degree from Wake Forest University. Mr. Gandy has worked on
numerous real estate development projects in the Carolinas including resort golf
course and ocean front developments. Mr. Gandy became a partner in the
accounting firm of Hendrix & Gandy in September 2000. Prior to that, Mr. Gandy
was a partner in the accounting firm of Rabon, Hendrix Gandy & Grimball,
starting in 1999. During 1996 through 1999, Mr. Gandy consulted with various
business entities. Mr. Gandy is a Certified Public Accountant with over twenty
years experience and is currently also a partner in the firm Hendrix and Gandy.
RON HENDRIX serves as our Chief Financial Officer and is a member of our
board of directors since December 2002. Mr. Hendrix is a certified public
accountant with over 25 years experience in real estate, accommodations and
recreation accounting and consulting. He is a partner in the firm of Hendrix &
Gandy located in Myrtle Beach, S.C., starting in September 2000. Prior to that
Mr. Hendrix was a partner in the accounting firm of Rabon, Hendrix, Gandy &
Grimball, starting in 1999. Prior to that, Mr. Hendrix was a partner in the
accounting firm of Hendrix, King & Godbold for over ten years. Mr. Hendrix is a
graduate of Coastal Carolina University.
JOHN F. SMITH III serves on our board of directors. Mr. Smith is the sole
owner of Strategic Marketing, an advertising and market positioning consultant
firm in the Myrtle Beach area since prior to 1997. Strategic Marketing
represents golf course operators, hotels, entertainment facilities and
restaurants in the Carolinas. Mr. Smith is a graduate of Coastal Carolina
University.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Our common stock is registered under Section 12(g) of the Exchange Act and
in connection therewith, directors, officers, and beneficial owners of more than
10% of our common stock ("Reporting Persons") are required to file on a timely
basis certain reports under Section 16 of the Exchange Act as to their
beneficial ownership of our common stock. We believe that under the SEC's rules
for reporting of securities transactions by Reporting Persons, all required
reports for its fiscal year ended December 31, 2002 were timely filed.
9
ITEM 10. EXECUTIVE COMPENSATION
CASH COMPENSATION
There was no cash compensation paid to any of our directors or executive
officers during the fiscal years ended December 31, 2002, 2001, and 2000.
EMPLOYMENT AGREEMENTS
Altrimega has an employment agreement with John Gandy, starting in 2003,
which provides for an annual salary of $100,000 with a 5% increase each year to
a maximum of $125,000, if the Company had a profit in the previous year.
BONUSES AND DEFERRED COMPENSATION
None.
COMPENSATION PURSUANT TO PLANS
None.
PENSION TABLE
None.
OTHER COMPENSATION
None.
COMPENSATION OF DIRECTORS
None.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENT
We have no compensatory plans or arrangements, including payments to be
received from us, with respect to any persons which would in any way result in
payments to any person because of his resignation, retirement, or other
termination of such person's employment by us, or any change in our control, or
a change in the person's responsibilities following a changing in our control.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:
The following table sets forth as of April 8, 2003, the name, address and
the number of shares of our common stock held of record or beneficially by each
person who was known by us to own beneficially, more than 5% of our 49,139,950
issued and outstanding shares of common stock. In addition, the table sets forth
the name and shareholdings of each director and of all officers and directors as
a group.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENTAGE OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
--------------------- ---------------------------- ------------- --------------
Common Rio Investment Group, LLC 6,200,000 12.62%
25 Greystone Manor
Lewes, Delaware 19958-9776
10
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENTAGE OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
--------------------- ---------------------------- ------------- --------------
Common Great West, LLC 4,879,750 9.93%
1960 Stickney Point Road
Sarasota, FL 34231
Preferred Great West, LLC 250,647 25.06%
Preferred Quickstep, LLC 250,647 25.06%
2033 Main Street
Sarasota, FL 34237
SECURITY OWNERSHIP OF MANAGEMENT OF ALTRIMEGA
AMOUNT AND
NATURE OF
NAME AND POSITION BENEFICIAL PERCENTAGE OF
TITLE OF CLASS OF OFFICER AND/OR DIRECTOR OWNERSHIP(1) CLASS(2)
--------------------- ---------------------------- ------------- --------------
Common
John W. Gandy,
President, C.E.O. and
Director 2,554,750 5.20%
Hendrix & Gandy* 21,000 0.04%
Chicora Beach Holiday** 59,300 0.12%
Wofford Capital*** 202,500 0.41%
Gandy Associates^ 1,250,000 2.54%
Gandy Family Investments" 2,500,000 5.09%
Preferred
John W. Gandy 62,730 6.27%
Hendrix & Gandy 1,055 0.11%
Chicora Beach Holiday** 21,094 2.11%
Wofford Capital*** 10,125 1.10%
Gandy Associates^ 62,500 6.25%
Gandy Family Investments^^ 125,000 12.50%
Common
Ron Hendrix, C.F.O., 1,668,250 3.39%
Secretary Hendrix & Gandy* 21,000 0.04%
Preferred
Ron Hendrix 125,000 12.50%
Hendrix & Gandy* 21,000 2.1%
11
SECURITY OWNERSHIP OF MANAGEMENT OF ALTRIMEGA (CONT.)
AMOUNT AND
NATURE OF
NAME AND POSITION BENEFICIAL PERCENTAGE OF
TITLE OF CLASS OF OFFICER AND/OR DIRECTOR OWNERSHIP(1) CLASS(2)
--------------------- ---------------------------- ------------- --------------
Common John Smith III 348,400 0.71%
Preferred Director 17,422 1.74%
Common All Officers and Directors
as a Group (3 persons) 4,592,400 9.34%
Other Beneficial Ownership(3) 1,422,969 2.90%
------------- --------------
Total Beneficial Ownership 6,015,369 12.24%
============= ==============
Preferred All Officers and Directors
as a Group (3 persons) 313,785 31.38%
Other Beneficial Ownership(3) 75,500 7.55%
------------- --------------
Total Beneficial Ownership 389,285 38.92%
============= ==============
(1) Beneficial ownership is determined in accordance within the rules of the
Commission and generally includes voting of investment power with respect
to securities. Shares of common stock subject to securities exercisable or
convertible into shares of common stock that are currently exercisable or
convertible within 60 days of April 8, 2003 are deemed to be beneficially
owned by the person holding such preferred shares for the purpose of
computing the percentage of ownership of such persons, but are not treated
as outstanding for the purpose of computing the percentage ownership of
any other person.
(2) The percentage calculation has been rounded to the nearest one-hundredth
of a percent.
(3) Ownership percentage based on officers and directors' percentage ownership
of entity, as set forth below.
* Hendrix & Gandy is owned 50% by John W. Gandy and 50% by Ron Hendrix.
** Chicora Beach Holiday is owned 25% by John W. Gandy.
*** Wofford Capital is owned 16.66% by John W. Gandy.
^ Gandy Associates is owned 50% by John W. Gandy.
^^ Gandy Family Investments is owned 30% by John W. Gandy.
RECENT SALES OF UNREGISTERED SECURITIES
As a result of the share exchange agreement with Creative Holdings,
Altrimega issued the former stockholders of Creative Holdings 13,619,950 shares
of common stock and 1,000,000 shares of series A convertible preferred stock.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Except as indicated below, and for the periods indicated, there were no
material transactions, or series of similar transactions, since the beginning of
the Company's last fiscal year, or any currently proposed transactions, or
series of similar transactions, to which we were or are a party, in which the
amount involved exceeds $60,000, and in which any director or executive officer,
or any security holder who is known by us to own of record or beneficially more
than 5% of any class of our common stock, or any member of the immediate family
of any of the foregoing persons, has an interest.
In 2002, Altrimega has accounts payable totaling $150,000 to officers -
directors, or their affiliate entitles for services rendered.
INDEBTEDNESS OF MANAGEMENT
There were no material transactions, or series of similar transactions,
since the beginning of our last fiscal year, or any currently proposed
transactions, or series of similar transactions, to which we were or are a
party, in which the amount involved exceeds $60,000 and in which any director or
executive officer, or any security holder who is known to us to own of record or
12
beneficially more than 5% of any class of our common stock, or any member of the
immediate family of any of the foregoing persons, has an interest.
TRANSACTIONS WITH PROMOTERS
There have no material transactions between us and our promoters or
founders.
13
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS. The following financial statements are
included in this report:
TITLE OF DOCUMENT PAGE
Report of Sellers & Andersen, LLC F-1
Balance Sheet as of December 31, 2002 F-2
Statements of Operations for the period July 3, 2002 (date of F-3
inception) to December 31, 2002
Statements of Changes in Stockholders' Equity for the period
September 8 1998 (Date of Inception) to December 31, 2002 F-4
Statements of Cash Flows for the period July 3, 2002 (date of F-5
inception) to December 31, 2002
Notes to Financial Statements F-6
(A)(2) FINANCIAL STATEMENT SCHEDULES. The following financial statement
schedules are included as part of this report:
None.
(A)(3) EXHIBITS. The following exhibits are included as part of this
report:
SEC REFERENCE
EXHIBIT NUMBER NUMBER TITLE OF DOCUMENT LOCATION
--------------- -------------- -------------------------- -------------------
2.01 2 SHARE EXCHANGE AGREEMENT Incorporated by
among Altrimega Health reference*
Corporation, Creative
Holdings, Inc. and the
Shareholders of
Creative Holdings,
Inc., dated as of
September 2, 2002
4.01 4 CERTIFICATE OF Provided herewith
DESIGNATION, as of
September 30, 2002
* SEE the Company's report on Form 8-K, dated October 2, 2002.
(B) REPORTS ON FORM 8-K. During the last quarter of the fiscal year
ended December 31, 2002, we filed current reports on Form 8-K with the
Commission reporting that:
October 4 , 2002 Altrimega filed Amendment No. 1 to Form 8-K/A, reporting
that under Item 2, the Merger Agreement with Creative
Holdings, Inc. was amended to a Share Exchange Agreement
November 13, 2002 Altrimega filed a Form 8-K, reporting that under Item
2, Altrimega had acquired real property through the
acquisition of Sea Garden Funding, LLC
ITEM 14. CONTROLS AND PROCEDURES
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES:
Within 90 days prior to the date of this Report, we carried out an
evaluation, under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective in timely alerting
them to material information required to be included in our periodic reports
14
that are filed with the Securities and Exchange Commission. It should be noted
that the design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote. In addition, we reviewed our
internal controls, and there have been no significant changes in our internal
controls or in other factors that could significantly affect those controls
subsequent to the date of their last valuation.
(B) CHANGES IN INTERNAL CONTROLS:
There were no significant changes in the Altrimega's internal controls or
in other factors that could significantly affect these controls during the
quarter covered by this report or from the end of the reporting period to the
date of this Form 10-KSB.
ITEM 15. PRINCIPAL ACCOUNTING FEES AND SERVICES
Altrimega incurred the following principal accounting fees for the year
ended December 31, 2002:
AUDIT FEES. The aggregate fees billed for professional services rendered
was $10,000 for the audits of the Altrimega's annual financial statements for
the fiscal years ended December 31, 2002, and the reviews of the financial
statements included in Altrimega's annual and quarterly reports for those fiscal
years.
AUDIT-RELATED FEES. No fees were billed in either of the last two fiscal
years for assurance and related services by the principal accountant.
TAX FEES. No fees were billed in either of the last two fiscal years for
tax compliance, tax advice of tax planning.
ALL OTHER FEES. No other fees were billed during the two fiscal years.
Altrimega's Board of Directors took into consideration whether the
provision of the services described above was for fiscal year 2002 and will be
for fiscal year 2003 compatible with maintaining the independence of Altrimega's
outside principal accountants.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
May 20, 2003 ALTRIMEGA HEALTH CORPORATION
By: /S/ JOHN GANDY
--------------------------------
John Gandy,
Chief Executive Officer and
Director
By: /S/ RON HENDRIX
--------------------------------
Ron Hendrix,
Chief Financial Officer and
Secretary
16
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Altrimega Health Corporation (the
"Company") on Form 10-KSB for the year ended December 31, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), each of
the undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operation of the
Company.
Date: May 20, 2003 By: /S/ JOHN GANDY
---------------------------------
John Gandy
Chief Executive Officer
By: /S/ RON HENDRIX
---------------------------------
Ron Hendrix
Chief Financial Officer
A-1
OFFICER'S CERTIFICATE
PURSUANT TO SECTION 302
CERTIFICATION
I, John Gandy, certify that:
1. I have reviewed this annual report on Form 10-KSB of Altrimega
Health 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
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 Registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to 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 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 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 Registrant's ability to
record, process, summarize and report financial data and have
identified for 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 Registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in
this annual 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.
Date: May 20, 2003 By: /S/ JOHN GANDY
--------------------------------------
John Gandy
Chief Executive Officer
B-1
OFFICER'S CERTIFICATE
PURSUANT TO SECTION 302
CERTIFICATION
I, Ron Hendrix, certify that:
1. I have reviewed this annual report on Form 10-KSB of Altrimega
Health 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
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 Registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to 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 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 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 Registrant's ability to
record, process, summarize and report financial data and have
identified for 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 Registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in
this annual 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.
Date: May 20, 2003 By: /S/ RON HENDRIX
-----------------
Ron Hendrix
Chief Financial Officer
C-1