Company Quick10K Filing
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Canfield Medical Supply
10-Q 2019-09-30 Quarter: 2019-09-30
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-11-26 Officers, Exhibits
8-K 2019-11-19 Officers
8-K 2019-06-28 Control, Officers, Amend Bylaw
8-K 2019-06-21 Sale of Shares, Control, Exhibits
GBPT Globe Photos 2,138
FSNT Fuse Enterprises 91
HLIX Helix TCS 60
BLXX BLOX 43
CQCQ Makingorg 0
JFKKU 8i Enterprises Acquisition Corp 0
EOSS EOS 0
IGMB Igambit 0
PRVL Prevail Therapeutics 0
CAT9 CAT9 0
CMDS 2019-09-30
Part I&Mdash;Financial Information
Item 1. Financial Statements.
Note 1. Organization, Operations and Summary of Significant Accounting Policies
Note 2. Equipment
Note 3. Line of Credit
Note 4. Related Party Loan
Note 5. Long-Term Debt
Note 6. Common Stock
Note 7. Lease Commitments
Note 8. Going Concern
Note 9. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32x1.htm
EX-32.1 ex32-2.htm

Canfield Medical Supply Earnings 2019-09-30

CMDS 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 cms_10q-093019.htm FORM 10-Q

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2019

 

¨   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _________

 

Commission File No. 000-55114

 

CANFIELD MEDICAL SUPPLY, INC.

(Exact name of registrant as specified in its charter)

 

Colorado   34-1720075
(State or other jurisdiction of incorporation or formation)   (I.R.S. employer identification number)

 

4120 Boardman-Canfield Road, Canfield, Ohio 44406

(Address of principal executive offices) (Zip code)

 

(330) 533-1914

(Registrant's telephone number, including area code) 

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol Name of each exchange on which registered
None    

 

 

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.

x Yes   ¨  No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

x Yes   ¨  No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ¨   Accelerated filer  ¨

Non-accelerated filer    x

 

 

Smaller reporting company  x

Emerging growth company x

 

 

 

 
 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨  Yes   x  No

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ¨  Yes   ¨  No

 

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.  As of November 14, 2019, there were 11,813,200 shares of Common Stock issued and outstanding.

 

 

 

 

 

 
 

CANFIELD MEDICAL SUPPLY, INC.

FORM 10-Q

September 30, 2019

 

TABLE OF CONTENTS

 

PART I.  FINANCIAL INFORMATION   Page
       
Item 1. Condensed Financial Statements (Unaudited)   3
       
    Condensed Balance Sheets (Unaudited)   3
    Condensed Statements of Operations (Unaudited)   4
    Condensed Statements of Stockholders’ Equity (Deficit) (Unaudited)   5
    Condensed Statements of Cash Flows (Unaudited)   6
    Notes to Condensed Financial Statements (Unaudited)   7-12
       
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations   13
       
Item 3. Quantitative and Qualitative Disclosures about Market Risk   15
       
Item 4. Controls and Procedures   15
       
PART II.  OTHER INFORMATION   16
       
Item 1. Legal Proceedings   16
       
Item 1A. Risk Factors   16
       
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   16
       
Item 3. Defaults Upon Senior Securities   16
       
Item 4. Mine Safety Disclosures   16
       
Item 5. Other Information   16
       
Item 6. Exhibits   16
       
  Signatures   17
       

 

 

 

1 
 

 

 

PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements.

 

CANFIELD MEDICAL SUPPLY, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

 

   September 30,  December 31,
ASSETS  2019  2018
       
Current Assets          
Cash  $77,602   $6,980 
Accounts receivable, net   320,465    300,993 
Inventory   35,420    41,695 
Total Current Assets   433,487    349,668 
Other Assets          
Right-of-use asset   24,958    —   
Equipment, net of accumulated depreciation of $100,078 and $92,907   42,341    58,627 
Total Other Assets   67,299    58,627 
         Total Assets  $500,786   $408,295 
           
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
           
Current Liabilities          
Accounts payable and accrued liabilities  $318,185   $331,034 
Line of credit   71,724    66,181 
Due from officer   197,878    —   
Lease liability   24,958    —   
Current portion of long-term debt   3,122    8,241 
Total Current Liabilities   615,867    405,456 
Long-term liabilities          
Long-term debt   2,935    5,498 
Total long-Term Liabilities   2,935    5,498 
          Total Liabilities   618,802    410,954 
           
Stockholders' Equity (Deficit)          
Preferred stock, no par value; 5,000,000 shares authorized; no shares issued and outstanding   —      —   
Common stock, no par value; 100,000,000 shares authorized;          
11,813,200 and 11,477,200  shares issued and outstanding   345,515    245,515 
Accumulated deficit   (463,531)   (248,174)
Total Stockholders' Equity (Deficit)   (118,016)   (2,659)
Total Liabilities and Stockholders' Equity (Deficit)  $500,786   $408,295 

 

The accompanying footnotes are an integral part of these unaudited condensed financial statements.

 

 

2 
 

CANFIELD MEDICAL SUPPLY, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three months  Three months  Nine months  Nine months
   ended  ended  ended  ended
   September 30, 2019  September 30, 2018  September 30, 2019  September 30, 2018
             
Sales (net of returns)  $305,197   $312,988   $752,099   $1,012,377 
Cost of goods sold   143,348    147,911    393,094    465,122 
Gross profit   161,849    165,077    359,005    547,255 
                     
Operating expenses:                    
Salaries and wages   93,070    81,795    274,810    228,955 
Professional fees   38,170    8,695    88,706    48,625 
Depreciation   17,480    14,554    43,210    44,929 
Other selling, general and administrative   65,847    62,242    157,547    142,521 
    214,567    167,286    564,273    465,030 
                     
Income (loss) from operations   (52,718)   (2,208)   (205,268)   82,225 
                     
Other income (expense):                    
Interest income   320    —      352    —   
Interest expense   (2,338)   (1,501)   (6,478)   (3,945)
Gain (Loss) on sale of fixed assets   759    (1,284)   (3,963)   4,442 
    (1,259)   (2,785)   (10,089)   497 
                     
Income (loss) before provision for income taxes   (53,977)   (4,994)   (215,357)   82,722 
Provision for income tax   —      —      —      —   
                     
Net income (loss)  $(53,977)  $(4,994)  $(215,357)  $82,722 
                     
Net income (loss) per share (basic and fully diluted)  $(0.00)  $(0.00)  $(0.02)  $0.01 
                     
Weighted average number of common shares outstanding   11,813,200    11,227,200    11,602,738    11,227,200 

 

 

The accompanying footnotes are an integral part of these unaudited condensed financial statements.

 

 

3 
 

 

 

CANFIELD MEDICAL SUPPLY, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

 

   Common Stock (No Par)  Accumulated  Stockholders'
   Shares  Amount  Deficit  Equity (Deficit)
             
For the nine months ending September 30, 2018                    
                     
Balances at December 31, 2017   11,277,200    243,515   $(316,380)  $(72,865)
Net income (loss) for the period             20,008    20,008 
Balances at March 31, 2018   11,277,200    243,515    (296,372)   (52,857)
Net income (loss) for the period             67,708    67,708 
Balances at June 30, 2018   11,277,200    243,515    (228,664)   14,851 
Sales of common stock   200,000    2,000         2,000 
Net income (loss) for the period   —      —      (4,994)   (4,994)
Balances at September 30, 2018   11,477,200   $245,515   $(233,658)  $11,857 
                     
                     
For the nine months ending September 30, 2019                    
Balances at December 31, 2018   11,477,200   $245,515   $(248,174)  $(2,659)
Net income (loss) for the period   —      —      (54,336)   (54,336)
Balances at March 31, 2019   11,477,200    245,515    (302,510)   (56,995)
Sales of common stock   336,000    100,000    —      100,000 
Net income (loss) for the period   —      —      (107,044)   (107,044)
Balances at June 30, 2019   11,813,200    345,515    (409,554)   (64,039)
Net income (loss) for the period   —      —      (53,977)   (53,977)
Balances at September 30, 2019   11,813,200   $345,515   $(463,531)  $(118,016)

 

 

The accompanying footnotes are an integral part of these unaudited condensed financial statements.

 

 

 

4 
 

 

CANFIELD MEDICAL SUPPLY, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Nine months ended  Nine months ended
   September 30, 2019  September 30, 2018
Cash Flows From Operating Activities:          
Net income (loss)  $(215,357)  $82,722 
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:          
(Gain) Loss on sale of fixed assets   3,963    (4,442)
Depreciation   43,210    44,929 
Bad debt expense   15,101    —   
Changes in operating assets and liabilities:          
Increase in accounts receivable   (34,573)   (116,638)
Decrease in inventory   6,275    7,765 
Increase (decrease) in accounts payable and accrued liabilities   (12,849)   39,053 
     Net cash provided by (used for) operating activities   (194,230)   53,389 
           
Cash Flows From Investing Activities:          
Proceeds from sale of fixed assets   2,538    7,359 
Purchase of fixed assets   (33,425)   (44,889)
     Net cash (used for) investing activities   (30,887)   (37,530)
           
Cash Flows From Financing Activities:          
Net borrowings (repayments) under line-of-credit agreements   5,543    (5,395)
Proceeds from officer   197,878    —   
Payments on long-term debt   (7,682)   (8,705)
Proceeds from sales of common stock   100,000    2,000 
       Net cash provided by (used in) financing activities   295,739    (12,100)
           
Net Increase in Cash   70,622    3,759 
Cash At The Beginning Of The Period   6,980    17,921 
           
Cash At The End Of The Period  $77,602   $21,680 
           
Schedule of Non-Cash Investing and Financing Activities           
Lease liability and right-of-use-asset  $43,677      
           
Supplemental Disclosure          
Cash paid for interest  $(6,478)  $(3,946)
Cash paid for income taxes  $—     $—   
           

 

The accompanying footnotes are an integral part of these unaudited condensed financial statements.

 

 

5 
 

 

CANFIELD MEDICAL SUPPLY, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

 

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Canfield Medical Supply, Inc. (the “Company”), was incorporated in the State of Ohio on September 3, 1992, and changed domicile to Colorado on April 18, 2012. The Company is in the business of home health services, primarily the selling of durable medical equipment and medical supplies to the public, nursing homes, hospitals and other end users.

 

Effective June 21, 2019 WesBev LLC, a Nevada limited liability company ("WesBev"), acquired 8,000,000 shares of common stock from Michael J. West, a founder, director and former principal shareholder of the Company, consisting of approximately 69.7% of the issued and outstanding shares of the Company at the time of the purchase. As part of his agreement with WesBev, Mr. West undertook to appoint or cause the appointment of up to three persons nominated by WesBev to the board of directors of the Company. Effective June 21, 2019 the Company sold 336,000 shares of common stock to WesBev for $100,000. Following these stock purchases, WesBev beneficially owns 8,336,000 shares, or approximately 71% of the issued and outstanding shares of the Company, and may be deemed to be in control of the Company.

 

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the nine months ended September 30, 2019 and 2018 have been made.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2018 audited financial statements. The results of operations for the periods ended September 30, 2019 and 2018 are not necessarily indicative of the operating results for the full year.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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.

 

Cash and cash equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents.

 

6 
 

 

 

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

 

Accounts receivable

 

The majority of the Company’s revenues are received from Medicare, Medicaid, and private insurance companies. As such, the Company records revenues at allowable amounts, net of estimated allowances and discounts based on contracted prices and historical collection rates. The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. The Company wrote off bad debts of $15,101 and $0 for the nine months ended September 30, 2019 and 2018, respectively. At September 30, 2019 and December 31, 2018, the Company has determined that no allowance for doubtful accounts is necessary.

 

Property and equipment

 

Property and equipment are recorded at cost and depreciated under straight line methods over each item's estimated useful life.

 

Inventory

 

The Company carries inventory of durable medical equipment and medical supplies for resale.  Inventory is accounted for on a first–in first-out basis.

 

Revenue recognition

 

It is the Company’s policy that revenues from product sales is recognized in accordance with ASC 606 "Revenue Recognition."  Five basic steps must be followed before revenue can be recognized; (1) Identifying the contract(s) with a customer that creates enforceable rights and obligations; (2) Identifying the performance obligations in the contract, such as promising to transfer goods or services to a customer; (3) Determining the transaction price, meaning the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer; (4) Allocating the transaction price to the performance obligations in the contract, which requires the company to allocate the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or services promised in the contract; and (5) Recognizing revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer.  The amount of revenue recognized is the amount allocated to the satisfied performance obligation.  For sales of our Company products, a purchase arrangement is evidenced by a written order, with delivery considered as made after physical customer acceptance. Although rare, defective products may be returned, with other return issues considered on a case by case basis. Services such as periodic scheduled deliveries are contracted in writing, and generally billed monthly. Any service revenue earned by the Company for services such as safety and set up consulting or claims processing is recorded after the service is performed. Rental of durable home medical equipment is evidenced by written contract, with revenue recognized when rent is earned.

 

Advertising costs

 

Advertising costs are expensed as incurred. The Company had advertising costs during the nine months ended September 30, 2019 and 2018 of $7,860 and $13,386, respectively.

 

 

 

 

7 
 

CANFIELD MEDICAL SUPPLY, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

 

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

 

Income tax

 

The Company accounts for income taxes pursuant to ASC 740. Under ASC 740, deferred taxes are provided for using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are

recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. 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. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Net income (loss) per share

 

The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's convertible debt or preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.

 

There were no potentially dilutive debt or equity instruments issued or outstanding during the nine months ended September 30, 2019 or 2018.

 

Financial Instruments

 

The carrying value of the Company’s financial instruments, as reported in the accompanying balance sheets, approximates fair value.

 

Concentrations

 

Financial instruments that potentially subject the Company to concentrations of credit risk include cash and cash equivalents. The Company places its cash and cash equivalents at well-known financial institutions, where at times, such balances may exceed FDIC insurance limits.

 

The Company receives a significant amount of its revenues in reimbursements from Medicare and Medicaid thru competitive bidding processes. There is no guarantee that the Company will be selected as a winning contract supplier under future bidding rounds.

 

Long-Lived Assets

 

In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment.

 

 

 

8 
 

 

CANFIELD MEDICAL SUPPLY, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

 

 

NOTE 1.  ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

 

If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.

 

Products and services, geographic areas and major customers

 

The Company’s business of medical supply sales constitutes one operating segment. All revenues each year were domestic and to external customers.

 

Leases

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases (Topic 842),” a new lease standard requiring lessees to recognize lease assets and lease liabilities for most leases classified as operating leases under previous U.S. GAAP. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset (“ROU” asset) representing its right to use the underlying asset for the lease term. The guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company has adopted this standard effective January 1, 2019. The Company elected the optional transition method that permits adoption of the new standard prospectively, as of the effective date, without adjusting comparative periods presented. See Note 6 for disclosure required by ASC 842.

 

NOTE 2.  EQUIPMENT

 

Fixed assets are comprised of office equipment, vehicles, and the wheelchair and hospital bed rental pool, which consists of wheelchairs and hospital beds rented to customers over the shorter of the 13-month rental period mandated by Medicaid and Medicare, or the period over which the customer requires use of the wheelchair or hospital bed. At the end of the use period, the wheelchair or hospital bed is transferred to the customer. Depreciation is computed over the estimated useful life of the assets, ranging from 13 months to 7 years, on the straight-line basis. Depreciation expense for the nine months ended September 30, 2019 and 2018 was $43,210 and $44,929, respectively. Accumulated depreciation totaled $100,078 and $92,907 at September 30, 2019 and December 31, 2018, respectively.

 

NOTE 3.  LINE OF CREDIT

 

At September 30, 2019 and December 31, 2018, the Company owed a bank $71,724 and $66,181, respectively, under a revolving line of credit. The line of credit is secured by all Company assets, is capped at $100,000, is due on demand, and bears interest at variable rates approximating 7% on average. Interest expense under the note totaled $4,202 and $3,256 during the nine months ended September 30, 2019 and 2018, respectively.  During the nine months ended September 30, 2019 and 2018, the Company made net borrowings and (principal payments) of $5,543 and ($5,395), respectively.

 

 

9 
 

 

CANFIELD MEDICAL SUPPLY, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

 

 

NOTE 4. RELATED PARTY LOAN

 

On June 21, 2019, the Company entered into a short-term loan with Michael West, a former officer of the company.  The loan has a one-year term and bears interest at a rate of 2.5% per annum.  There are no mandatory payments, interest shall accrue and all outstanding principal and interest is due at maturity.  As of September 30, 2019 the loan has a balance of $197,878.

 

NOTE 5.  LONG-TERM DEBT

 

Long-term debt consists of the following vehicle loans, which are collateralized by their underlying vehicles with net carrying values exceeding the outstanding loan amounts:

 

   September 30,
2019
  December 31,
2018
       
3.53% installment note payable $352 monthly,  including    interest, through July 2019  $0   $2,782 
           
3.79% installment note payable $299 monthly, including          
interest, through July 2021   6,057    8,532 
           
2.99% installment note payable $350 monthly, including interest, through August 2019   0    2,425 
Total   6,057    13,739 
Less principal due within one year   (3,122)   (8,241)
           
     TOTAL LONG-TERM DEBT  $2,935   $5,498 

 

 

10 
 

 

 

CANFIELD MEDICAL SUPPLY, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

 

 

NOTE 6.  COMMON STOCK

 

In June 2019, the Company received net proceeds of $100,000 from the sale of 336,000 shares of no-par value common stock at $0.298 per share.

 

NOTE 7.  LEASE COMMITMENTS

 

The Company rents office space under a non-cancellable lease through September 2020 with monthly payments of approximately $2,292. Pursuant to ASC 842, an operating lease right-of-use (“ROU”) asset and liability were recognized at January 1, 2019 based on the present value of lease payments over the remaining lease term. The ROU asset represents the Company’s right to use the underlying office space asset for the lease term, and the lease liability represents the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The operating lease ROU asset includes any lease payments made and excludes lease incentives. The Company recognized $20,700 in lease expense during the nine months ended September 30, 2019.

 

Remaining lease term at September 30, 2019 (in years)       1. 0
Discount rate                     5 %

 

 
   Nine  Months Ended September 30, 2019
Operating lease expense  $20,700 
Cash paid for amounts included in measurement of lease liability  $20,700 
      

 

The supplemental balance sheet information related to leases for the period is as follows:

 

 Right-of-Use Asset    
 ROU Asset, January 1, 2019  $43,677 
 Amortization of ROU Asset   (18,719)
 ROU Asset, September 30, 2019  $24,958 
      

 

Maturities of the Company’s lease liabilities are as follows:

 

 Year Ending  Payments
 2019   $6,876 
 2020    20,628 
 Total lease payments    27,504 
 Less: Imputed interest/present value discount    (2,546)
 Present value of lease liability at September 30, 2019   $24,958 

 

 

 

 

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CANFIELD MEDICAL SUPPLY, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

 

 

NOTE 8.  GOING CONCERN

 

The Company has suffered losses from operations and has working capital and stockholders’ equity deficits. In all likelihood, the Company will be required to make significant future expenditures in connection with marketing efforts along with general administrative expenses. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

Following the change in control of the Company on June 21, 2019; WesBev LLC, the majority shareholder, has indicated that it will seek to transition the Company into a different line of business which may offer greater revenue growth and increased shareholder values than those which may be available from the historic and current operations of the Company. No assurance can be given that any transaction may result from these efforts or if consummated that any such transaction may prove successful. 

The Company has entered into a non-binding letter of intent with Splash Beverage Group, Inc., an innovative beverage company that markets naturally flavored tequilas under the “Salt” brand as well as performance drinks, under the “TapouT” brand, containing a proprietary blend of essential vitamins, minerals and electrolytes.

Pursuant to the letter of intent, the Company will acquire all issued and outstanding shares of Splash resulting in Splash becoming a wholly-owned subsidiary of the Company. Upon completion of the acquisition shareholders of Splash are expected to own about 85% of the Company. The Company expects to implement a reverse stock split in a range of not less than 1 for 3 nor more than 1 for 3.5 shares. Closing of the acquisition will be subject to customary closing conditions that include but are not limited to negotiation and execution of definitive transaction documents, obtaining needed shareholder consents and regulatory approvals and satisfactory completion of business, technical and legal due diligence as well as to the satisfaction of other pre-closing terms and conditions. No assurance can be given that the execution of the non-binding letter of intent by the parties will result in a closing or completion of the proposed transaction.

The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions or related parties.  Management believes that actions presently being taken provide the opportunity for the Company to continue as a going concern.

 

NOTE 9.  SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through the date these financial statements were issued and determined that there are no reportable subsequent events.

 

 

 

 

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis should be read in conjunction with the Condensed Financial Statements (unaudited) and Notes to Condensed Financial Statements (unaudited) filed herewith.

 

BUSINESS OVERVIEW

 

We provide services to the rehabilitation market, which consists primarily of home medical equipment and supplies.  More than 50% of our revenues are derived from the sale and rental of durable home medical equipment including such items as wheeled walkers, manual and power wheelchairs, hospital beds, ramps, bedside commodes, and miscellaneous bathroom equipment.  The balance of our revenue is from the sale of various home medical supplies including diabetic testing, incontinence, ostomy, wound care, and catheter care.  Our emphasis is on helping patients with mobility related limitations, but our overall business is aimed at helping patients remain in their homes instead of having to go to hospitals, rehab centers and other similar facilities.  Most of the equipment and supplies that we sell are prescribed by a physician as part of an overall care plan.

 

Effective June 21, 2019 WesBev LLC, a Nevada limited liability company ("WesBev"), acquired 8,000,000 shares of common stock from Michael J. West, a founder, director and former principal shareholder of the Company, consisting of approximately 69.7% of the issued and outstanding shares of the Company at the time of the purchase. As part of his agreement with WesBev, Mr. West undertook to appoint or cause the appointment of up to three persons nominated by WesBev to the board of directors of the Company. Effective June 21, 2019 the Company sold 336,000 shares of common stock to WesBev for $100,000. Following these stock purchases WesBev beneficially owns 8,336,000 shares, or approximately 71% of the issued and outstanding shares of the Company, and may be deemed to be in control of the Company. On June 28, 2019, the Company’s board of directors (the “Board”) amended the registrant’s bylaws to expand the number of members of the Board from three persons to five persons.

 

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 AS COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2018.

 

Revenues for the three months ended September 30, 2019 were $305,197 as compared to revenues of $312,988 for the three months ended September 30, 2018.  The $7,791 decrease in sales is due to a decrease in our complex rehab powerchair and wheelchairs sold. Cost of goods sold for the three months ended September 30, 2019 were $143,348 as compared to cost of goods sold for the three months ended September 30, 2018 of $147,911.  The $4,563 decrease in cost of goods sold for the three-month period ended September 30, 2019 is primarily due to our decreased sales, and as our sales decreased, our cost for those sales correspondingly decreased. Our gross profit for the three months ended September 30, 2019 was $161,849, as compared to gross profit of $165,077 for the three-month period ended September 30, 2018, which is a decrease of $3,228 and is due to our decreased revenues during the period.

 

Operating expenses for the three months ended September 30, 2019 were $214,567 as compared to $167,286 for the three months ended September 30, 2018. The $47,282 increase in our operating expenses was primarily a result of an $11,275 increase in our salaries and wages, as well as a $29,475 increase in our professional fees related to the change in control. The net loss for the three months ended September 30, 2019 was $53,977 as compared to a net loss of $4,994 for the three months ended September 30, 2018. The increase in our net loss is due to our decrease in revenue coupled with our increase in operating expenses during the period.

 

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RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AS COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2018.

 

Revenues for the nine months ended September 30, 2019 were $752,099 as compared to revenues of $1,012,377 for the nine months ended September 30, 2018.  The $260,278 decrease in sales is due to a decrease in our complex rehab powerchair and wheelchairs sold. Cost of goods sold for the nine months ended September 30, 2019 were $393,094 as compared to cost of goods sold for the nine months ended September 30, 2018 of $465,122.  The $72,028 decrease in cost of goods sold for the nine-month period ended September 30, 2019 is primarily due to our decreased sales, and as our sales decreased, our cost for those sales correspondingly decreased. Our gross profit for the nine months ended September 30, 2019 was $359,005, as compared to gross profit of $547,255 for the nine-month period ended September 30, 2018, which is a decrease of $188,250, and is due to our decreased revenues during the period.

 

Operating expenses for the nine months ended September 30, 2019 were $564,273 as compared to $465,030 for the nine months ended September 30, 2018. The $99,243 increase in our operating expenses was a result of a $45,855 increase in our salaries and wages because the Company hired a new employee in September 2018, a $40,081 increase in our professional fees due to additional legal fees incurred in connection with the change in control, and a $15,026 increase in our general and administrative fees. The net loss for the nine months ended September 30, 2019 was $215,357 as compared to a net income of $82,722 for the nine months ended September 30, 2018. The change in net income to net loss is due to the decrease in revenue coupled with the increase in operating expenses during the period.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of September 30, 2019, we had total assets of $500,786, and as of December 31, 2018, we had total assets of $408,295.

 

Net cash used for operating activities during the nine months ended September 30, 2019 was ($194,230) as compared to net cash provided by operating activities for the nine months ended September 30, 2018 of $53,389. The primary reasons for the change in cash provided by operating activities was the decrease in revenue and the change from a net income of $82,722 to a net loss of $215,357, which was a result of a significant decrease in accounts receivable.

 

Net cash used for investing activities during the nine months ended September 30, 2019 was ($30,887). In comparison, during the nine months ended September 30, 2018, net cash used for investing activities was ($37,530). We had $2,538 of proceeds from the sale of fixed assets during the nine-month period ended September 30, 2019, as compared to $7,359 of proceeds from the sale of fixed assets during the nine month period ended September 30, 2018. Additionally, we had $33,425 used for the purchase of fixed assets during the nine-month period ended September 30, 2019, as compared to $44,889 used for the purchase of fixed assets during the nine month period ended September 30, 2018.

 

Net cash provided by financing activities during the nine months ended September 30, 2019 was $295,739 as compared to ($12,100) used for financing activities for the nine-month period ended September 30, 2018.  During the nine months ended September 30, 2019, the Company received $197,878 from an officer, as well as $100,000 in proceeds from a sale of common stock.

 

 

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CONTRACTUAL OBLIGATIONS

 

None.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk. 

 

Not applicable.

 

Item 4.  Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures.

 

We maintain disclosure controls and procedures (as defined in Rule 13a-l5(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Our management, under the supervision and with the participation of our CEO and Chief Financial Officer ("CFO"), has evaluated the effectiveness of our disclosure controls and procedures as defined in SEC Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based on such evaluation, management identified deficiencies that were determined to be a material weakness.

 

Changes in Internal Control over Financial Reporting.

 

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

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PART II – OTHER INFORMATION

 

Item 1.    Legal Proceedings.

 

None.

 

Item 1A.  Risk Factors.

 

Not applicable.

 

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

 

Effective June 21, 2019 the Company sold 336,000 shares of common stock (the “Shares”) to WesBev LLC, a Nevada limited liability company and our largest shareholder, for $100,000. No finder’s or placement agent fees were paid or incurred by the Company in connection with this private transaction. The Company agreed to sell the Shares in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws. 

 

Item 3.    Defaults Upon Senior Securities.

 

None.

 

Item 4.    Mine Safety Disclosures.

 

Not applicable.

 

Item 5.    Other Information.

 

None.

 

Item 6.    Exhibits.

 

(a)  Exhibits required by Item 601 of Regulation S-K.

 

ExhibitsDescription

 

31.1Certification of CEO and Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically

 

31.2Certification of CFO and Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) - Filed herewith electronically

 

32.1Certification of CEO and Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically

 

32.2Certification of CFO and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith electronically

 

101XBRL Exhibits

 

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    CANFIELD MEDICAL SUPPLY, INC.
     
     
Date:  November 14, 2019 By: /s/ Heather Kearns
   

Heather Kerns, CEO

(Principal Executive Officer)

     
     
Date:  November 14, 2019 By: /s/ Heather Kearns
   

Heather Kearns, CFO

(Principal Financial Officer and Principal Accounting Officer)

 

 

 

 

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