UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended December 31, 2002.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition period from to
Commission file number:000-26927
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NOVAMED, INC
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(Name of Small Business Issuer in Its Charter)
Nevada 58-2027283
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1403 East 900 South, Salt Lake City, Utah 84105
-----------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(801) 582-9609
--------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of each Exchange on Which Registered
------------------- ------------------------------------------
Common Stock ($0.001 Par Value) None
Check whether the registrant: (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.
Yes X No
------ ----
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and if no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [ ].
The registrants's net sales for the year ended December 31, 2002, were $0.
The aggregate market value of the registrant's common stock, $0.001 par value
(the only class of voting stock), held by non-affiliates was approximately
$54,925 based on the average closing bid and asked prices for the common stock
on March 14, 2003.
At March 14, 2003, the number of shares outstanding of the registrant's common
stock, $0.001 par value (the only class of voting stock), was 1,299,858.
TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business..........................................................3
Item 2. Description of Property..........................................................6
Item 3. Legal Proceedings................................................................6
Item 4. Submission of Matters to a Vote of Security-Holders..............................6
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.........................7
Item 6. Management's Discussion and Analysis or Plan of Operation........................8
Item 7. Financial Statements.............................................................9
Item 8. Changes in and Disagreements With Accountants o
Accounting and
Financial Disclosure...........................................................10
PART III n
Item 9. Directors and Executive Officer.................................................10
Item 10. Executive Compensation..........................................................11
Item 11. Security Ownership of Certain Beneficial Owners and Management..................11
Item 12. Certain Relationships and Related Transactions..................................12
Item 13. Exhibits, List and Reports on Form 8-K..........................................13
Item 14. Controls and Procedures.........................................................13
Signatures.........................................................14
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Corporate History.
As used herein the term Company refers to NovaMed, Inc., its subsidiaries and
predecessors, unless the context indicates otherwise. NovaMed, Inc. was
incorporated in Nevada on November 26, 1996, as Conceptual Technologies, Inc. On
April 9, 1998, the Company changed its name to reflect the acquisition of the
operating subsidiaries of NovaMed Medical Products Incorporated (NMMP), and the
resultant operational focus to the development, manufacture, and sale of mammary
prosthesis devices. The Company developed, manufactured and sold mammary
prosthesis devices outside of North America until such efforts were abandoned in
October of 2000 due to regulatory concerns and questions of adequate funding.
Selection of a Business.
The Company is now considering other business opportunities either through
merger or acquisition that might create value for our shareholders. We have no
day-to-day operations at the present time. Our sole officer and director devotes
limited time and attention to the affairs of the Company. Management has adopted
a conservative policy of seeking opportunities that they consider to be of
exceptional quality. As a result of that policy the Company may have to wait
some time before consummating a suitable transaction. Management recognizes that
the higher the standards it imposes upon itself, the greater may be it's
competitive disadvantages when vying with other acquiring interests or entities.
The Company does not intend to restrict its consideration to any particular
business or industry segment, and the Company may consider, among others,
finance, brokerage, insurance, transportation, communications, research and
development, service, natural resources, manufacturing or high- technology.
However, due to the Company's limited financial resources, the scope and number
of suitable candidate business ventures available is limited, and most likely
the Company will not be able to participate in more than a single business
venture. Accordingly, it is anticipated that the Company will not be able to
diversify, but may be limited to one merger or acquisition. This lack of
diversification will not permit the Company to offset potential losses from one
business opportunity against profits from another.
The decision to participate in a specific business opportunity will be made upon
management's analysis of the quality of the other firm's management and
personnel, the anticipated acceptability of new products or marketing concepts,
the merit of technological changes and numerous other factors which are
difficult, if not impossible, to analyze through the application of any
objective criteria. In many instances, it is anticipated that the historical
operations of a specific venture may not necessarily be indicative of the
potential for the future because of the necessity to substantially shift a
marketing approach, expand operations, change product emphasis, change or
substantially augment management, or make other changes. The Company will be
dependent upon the management of a business opportunity to identify such
problems and to implement, or be primarily responsible for the implementation
of, required changes.
Since the Company may participate in a business opportunity with a newly organized business or with a
3
business which is entering a new phase of growth, it should be emphasized that
the Company may incur risk due to the failure of the target's management to have
proven its abilities or effectiveness, or the failure to establish a market for
the target's products or services, or the failure to realize profits. While the
Company does not intend to rule out its consideration of any particular business
or industry segment, management has determined to focus its principal interest
in evaluating development stage companies in the electronic commerce, high-
technology, communication technologies, information services and biotechnology
industry segments.
We will not acquire or merge with any company for which audited financial
statements cannot be obtained. It may be anticipated that any opportunity in
which the Company participates will present certain risks. Many of these risks
cannot be adequately identified prior to selection of the specific opportunity,
and the Company's shareholders must, therefore, depend on the ability of
management to identify and evaluate such risk. In the case of some of the
opportunities available to the Company, it may be anticipated that the founders
thereof have been unable to develop a going concern or that such business is in
its development stage in that it has not generated significant revenues from its
principal business activities prior to the Company's participation.
Acquisition of Business.
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture,
franchise or licensing agreement with another corporation or entity. It may also
purchase stock or assets of an existing business. On the consummation of a
transaction, it is possible that the present management and shareholders of the
Company will not be in control of the Company. In addition, the Company's sole
officer and director may, as part of the terms of the acquisition transaction,
resign and be replaced by new officers and directors without a vote of the
Company's shareholders.
The Company anticipates that any securities issued in any such reorganization
would be issued in reliance on exemptions from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of this transaction, the Company may agree to register such
securities either at the time the transaction is consummated, under certain
conditions, or at a specified time thereafter. The issuance of substantial
additional securities and their potential sale into any trading market may have
a depressive effect on such market.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so called "tax-free" reorganization under
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code").
In order to obtain tax-free treatment under the Code, it may be necessary for
the owners of the acquired business to own 80% or more of the voting stock of
the surviving entity. In such event, the shareholders of the Company would
retain less than 20% of the issued and outstanding shares of the surviving
entity, which could result in significant dilution in the equity of such
shareholders.
As part of our investigation, officers and directors of the Company will meet
personally with management and key personnel, may visit and inspect material
facilities, obtain independent analysis or verification of certain information
provided, check reference of management and key personnel, and take
4
other reasonable investigative measures, to the extent of the Company's limited
financial resources and management expertise.
The manner in which each Company participates in an opportunity will depend on
the nature of the opportunity, the respective needs and desires of the Company
and other parties, the management of the opportunity, and the relative
negotiating strength of the Company and such other management. With respect to
any mergers or acquisitions, negotiations with target company management will be
expected to focus on the percentage of the Company that target company
shareholders would acquire in exchange for their shareholdings in the target
company. Depending upon, among other things, the target company's assets and
liabilities, the Company's shareholders will in all likelihood hold a lesser
percentage ownership interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event the Company acquires a target company with substantial assets. Any
merger or acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the Company's
then shareholders.
Operation of Business After Acquisition.
The Company's operation following its merger or acquisition of a business will
be dependent on the nature of the business and the interest acquired. The
Company is unable to determine at this time whether the Company will be in
control of the business or whether present management will be in control of the
Company following the acquisition. It may be expected that the business will
present various challenges that cannot be predicted at the present time.
Government Regulation.
The Company cannot anticipate the government regulations, if any, to which the
Company may be subject until it has acquired an interest in a business. The use
of assets to conduct a business that the Company may acquire could subject it to
environmental, public health and safety, land use, trade, or other governmental
regulations and state or local taxation. In selecting a business in which to
acquire an interest, management will endeavor to ascertain, to the extent of the
limited resources of the Company, the effects of such government regulation on
the prospective business of the Company. In certain circumstances, however, such
as the acquisition of an interest in a new or start-up business activity, it may
not be possible to predict with any degree of accuracy the impact of government
regulation.
Competition.
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business. There is
no assurance that the Company will be successful in obtaining suitable business
opportunities.
Employees.
The Company currently has no employees. Our executive officer devotes as much
time to the affairs of the Company as he deems appropriate. Management of the
Company expects to use consultants, attorneys, and accountants as necessary, and
does not anticipate a need to engage any full-time employees as long as business
needs are being identified and evaluated. The need for employees and
5
their availability will be addressed in connection with a decision concerning
whether or not to acquire or participate in a specific business venture.
Reports to Security Holders.
The Company's annual report will contain audited financial statements. The
Company is not required to deliver an annual report to security holders and will
not voluntarily deliver a copy of the annual report to the security holders. The
Company files all of its required information with the Securities and Exchange
Commission ("SEC").
The public may read and copy any materials that are filed by the Company with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The statements
and forms filed by the Company with the SEC have also been filed electronically
and are available for viewing or copy on the SEC maintained Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The Internet address
for this site can be found at http://www.sec.gov.
Board of Directors Committees
The board of directors has not yet established an audit committee or a
compensation committee. An audit committee typically reviews, acts on and
reports to the board of directors with respect to various auditing and
accounting matters, including the recommendations and performance of independent
auditors, the scope of the annual audits, fees to be paid to the independent
auditors, and internal accounting and financial control policies and procedures.
Certain stock exchanges currently require companies to adopt formal written
charter that establishes an audit committee that specifies the scope of an audit
committee's responsibilities and the means by which it carries out those
responsibilities. In order to be listed on any of these exchanges, we will be
required to establish an audit committee.
The board of directors has not yet established a compensation committee.
Directors currently are not reimbursed for out-of-pocket costs incurred in
attending meetings and no director receives any compensation for services
rendered as a director. It is likely that we will adopt a provision for
compensating directors in the future.
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently maintains its offices at 1403 East 900 South, Salt Lake
City, Utah 84105. The office space is owned by Ruairidh Campbell, our sole
officer, director, and a substantial shareholder of the Company. The Company
pays no rent for the use of this address. The Company does not believe that it
will need to maintain an office at any time in the foreseeable future in order
to carry out the plan of operation described herein.
ITEM 3. LEGAL PROCEEDINGS
The Company is currently not a party to any pending legal proceeding
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
6
No matters were submitted to a vote of security holders during the fourth
quarter of the period covered by this report.
PART II
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE
REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
The Company's common stock is traded on Over the Counter Bulletin Board under
the symbol NOMD.OB.
The table below sets forth the high and low sales prices for the Company's
common stock for each quarter of 2002 and 2001, reflecting a one for fifty
(1:50) reverse split that was implemented on May 7, 2002. The high and low sales
prices for each quarter of 2002 have been adjusted to reflect a one for fifty
(1:50) reverse split that was implemented on May 7, 2002. The quotations below
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions:
Year Quarter Ended High Low
------------- ---- ---
2002 March 31 $0.02 $0.00
----
June 30 $0.12 $0.10
September 30 $0.20 $0.10
December 31 $0.10 $0.10
2001 March 31 $0.06 $0.02
----
June 30 $0.05 $0.01
September $0.02 $0.01
December 31 $0.03 $0.01
Record Holders
As of March 14, 2003, there were approximately 331 shareholders of record
holding a total of 1,299,858 shares of common stock. The holders of the common
stock are entitled to one vote for each share held of record on all matters
submitted to a vote of stockholders. Holders of the common stock have no
preemptive rights and no right to convert their common stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
common stock.
Dividends
The Company has not declared any cash dividends since inception and does not
anticipate paying any dividends in the foreseeable future. The payment of
dividends is within the discretion of the board of directors and will depend on
the Company's earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company's
ability to pay dividends on its common stock other than those generally imposed
by applicable state law.
7
Recent Sales of Unregistered Securities
On November 18, 2002, the Company issued 420,000 shares of common stock to
Ruairidh Campbell valued at $0.10 a share in consideration for services rendered
in 2001 and 2002 as president of the Company, pursuant to section 4(2) of the
Securities Act in a private transaction that did not include a public offering.
The Company issued the shares to Mr. Campbell as part of a plan to reduce or
eliminate amounts due to creditors. Mr. Campbell's services had not been
compensated and therefore the decision was taken to settle all obligations to
Mr. Campbell as of the period ended September 30, 2002.
On November 18, 2002 the Company issued 10,000 shares of common stock to Adam
Kredovski valued at $0.10 a share in consideration of services rendered to the
Company in 2001, pursuant to section 4(2) of the Securities Act in a private
transaction that did not include a public offering. The Company issued the
shares to Mr. Kredovski as part of a plan to reduce or eliminate amounts due to
creditors. Mr. Kredovski's services had not been compensated and therefore the
decision was taken to settle all obligations to Mr. Kredovksi.
ITEM 6 MANAGEMENTS PLAN OF OPERATION
Plan of Operations
The Company's plan of operation for the coming year, as discussed above, is to
identify and acquire a favorable business opportunity. The Company does not plan
to limit its options to any particular industry, but will evaluate each
opportunity on its merits. Management believes that the Company has sufficient
resources to meet the anticipated needs of the Company's operations through at
least the calendar year ending December 31, 2003. However, there can be no
assurances to that effect, as the Company has no revenues and the Company's need
for capital may change dramatically if it acquires an interest in a business
opportunity during that period. Further, the Company has no plans to raise
additional capital through private placements or public registration of its
securities until a merger or acquisition candidate is identified.
The Company projects that if no acquisition candidate is found for the Company
within the next twelve months its operating requirements will not exceed $5,000.
Further, the Company's president, Ruairidh Campbell will provide his expertise
in preparing the necessary documentation to keep the Company current with its
reporting requirements with the SEC and those costs will accrue on the Company's
balance sheet.
Nonetheless, the Company has not yet entered into any agreement, nor does it
have any commitment or understanding to enter into or become engaged in any
transaction, as of the date of this filing. Any decision to participate in a
specific business opportunity will be made based upon a Company analysis of the
merits of the prospective business based on objective criteria.
Going Concern
The Company's audit expressed substantial doubt as to the Company's ability to
continue as a going concern as a result of reoccurring losses, lack of revenue
generating activities and an accumulated deficit of $6,425,892 as of December
31, 2002. The Company's ability to continue as a going concern is subject to the
ability of the Company to realize a profit and /or obtain funding from outside
sources.
8
Management's plan to address the Company's ability to continue as a going
concern, includes: (1) obtaining funding from private placement sources; (2)
obtaining additional funding from the sale of the Company's securities; (3)
establishing revenues from a suitable business opportunity; (4) obtaining loans
and grants from various financial institutions where possible. Although
management believes that it will be able to obtain the necessary funding to
allow the Company to remain a going concern through the methods discussed above,
there can be no assurances that such methods will prove successful.
ITEM 7. FINANCIAL STATEMENTS
The Company's financial statements for the fiscal year ended December 31, 2002
are attached hereto as pages F-1 through F-15.
9
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Consolidated Financial Statements
December 31, 2002 and 2001
10
NOVAMED, INC. (A DEVELOPMENT STAGE COMPANY)
Index to Consolidated Financial Statements
Page
Independent auditors' report F-2
Consolidated balance sheet F-3
Consolidated statement of operations F-4
Consolidated statement of stockholders' equity (deficit) F-5
Consolidated statement of cash flows F-6
Notes to consolidated financial statements F-7
1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
and Stockholders of
NovaMed, Inc.
We have audited the accompanying consolidated balance sheet of NovaMed, Inc. (a
development stage company), as of December 31, 2002, and the related
consolidated statements of operations, stockholders' equity (deficit), and cash
flows for the two years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
NovaMed, Inc. (a development stage company), as of December 31, 2002, and the
results of their consolidated operations and their cash flows for the two years
then ended, in conformity with accounting principles generally accepted in the
United States.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has a working capital deficit, a
stockholders' deficit, and has incurred losses from operations since inception.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters also are described in
Note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
TANNER + CO.
Salt Lake City, Utah
March 4, 2003
F-2
Consolidated Balance Sheet
December 31, 2002
Assets
Current assets:
Cash $ 9,145
Total assets $ 9,145
Liabilities and Stockholders Deficit
Current Liabilities
Note payable $ 20,000
Accounts payable 89,850
Total current liabilities 109,850
Commitments and contingencies -
Stockholders deficit:
Common stock, $.001 par value, 50,000,000 shares
Authorized; 1,299,858 shares issued and outstanding 1,300
Additional paid-in capital 6,323,887
Accumulated deficit 6,440,940)
Equity accumulated during development stage 15,048
Total stockholdersdeficit: (100,705)
Total liabilities and stockholders deficit $ 9,145
F-3
NOVAMED, INC
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statement of Operations
Years Ended December 31
2002 2001
Net sales $ - $ -
Costs and expenses
General and administrative 38,890 566,959
Write down of inventory - 129,204
38,890 696,163
Loss from operations (38,890) (696,163)
Gain on sale of subsidiary - 225,000
Gain on disposition of assets 47,151 -
Other income 6,787 3,099
Interest expense - (7,500)
Income (loss) before income taxes 15,048 (475,564)
Income tax (expense) benefit - -
Net income (loss) $ 15,048 $ (475,564)
Earnings (loss) per common share
Basic and diluted .02 (.55)
Weighted average common shares
Basic and diluted 979,000 870,000
F-4
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statement of Stockholders Equity (Deficit)
Equity
Years Ended December 31, 2002 and 2001 Accumulated
Additional Stock During
Common stock Paid-in Subscription Accumulated Development
Shares Amount Capital Receivable Deficit Stage Total
Balance at January 2, 2001 869,858 $ 870 $ 6,711,327 $ (692,510) $ (5,965,376) $ - $ 54,311
Services exchanged for
Subscriptions receivable - - - 262,500 - - 262,500
Write-off of subscription
Receivables - - (430,010) 430,010 - - -
Net loss _ _ (475,564) (475,564)
Balance at December
31, 2001 869,858 870 6,281,317 - (6,440,940) _ (158,753)
Common stock issued
For services 430,000 430 42,570 - - - 43,000
Net Income - - - - - 15,048 15,048
Balance at December
31, 2002 1,299,858 $ 1,300 $ 6,323,687 $ - $ (6,440,940) $ 15,048 $ (100,705)
F-5
Consolidated Statement of Cash Flows
Years Ended December 31,
2002 2001
Cash flows from operating activities:
Net income (loss) $ 15,048 $ (475,564)
Adjustments to reconcile net income (loss) to net cash
Used in operating activities:
Depreciation 4,481 17,924
Gain on disposal of assets (47,151) -
Gain on settlement of accrued interest (6,761) -
Stock issued to related party for services 36,000
Stock subscriptions satisfied for services - 262,500
Gain on sale of subsidiary - 225,000)
Write down of inventory - 129,204
(Increase) decrease in:
Receivables 15,000 -
(Decrease) increase in:
Accounts payable and accrued liabilities (17,506) 79,191
Net cash used in operating activities (889) (211,745)
Cash flows from investing activities
Proceeds from the sale of subsidiary - 10,000
Net cash provided by investing activities - 10,000
Cash flows from financing activities
Proceeds from convertible debentures - 200,000
Net cash provided by financing activities - 200,000
Net decrease in cash (889) (1,745)
Cash, beginning of year 10,034 11,779
Cash, end of year $ 9,145 $ 10,034
F-6
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 2002 and 2001
1. Organization The consolidated financial statements consist of NovaMed, Inc.
and (formerly Conceptual Technologies, Inc.) and its wholly owned
Presentation subsidiaries.
The Company was formerly engaged primarily in the
development, manufacture and sale of hydrogel and
saline filled breast implant products. Due to an
inability to obtain funding or generate sufficient
revenues, the Company made the decision to abandon
the breast implant business during 2002. The
Company's remaining inventory and property and
equipment were sold in exchange for the assumption of
certain liabilities and the Company began the process
of seeking other business opportunities. During 2002,
the Company did not generate any revenues and is
considered a development stage company subsequent to
January 1, 2002. Cumulative amounts since the
inception of the development stage have not been
presented in the statement of operations or the
statement of cash flows because such amounts were the
same as those presented for the year ended December
31, 2002. The Company has, at the present time, not
paid any dividends and any dividends that may be paid
in the future will depend upon the financial
requirements of the Company and other relevant
factors.
During 2002, the Company's common stock was reverse
split with a 50 to 1 ratio. The shares of common
stock, par value of common stock, and additional
paid-in capital have been retroactively restated to
reflect the reverse stock split.
2. Going At December 31, 2002 the Company had a working capital deficit, a
Concern deficit in stockholders' equity, and has incurred losses from operations
since inception as well as negative cash flow from
operations. These conditions raise substantial doubt
about the ability of the Company to continue as a
going concern. The financial statements do not
include any adjustments that might result from the
outcome of this uncertainty.
See accompanying notes to consolidated financial statements
F-7
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
F-8
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
2.Going
Concern The Company's ability to continue as a going concern is subject to
Continued obtaining necessary funding from outside sources. The Company
intends to begin seeking a potential merger partner
and cash infusion through a reverse acquisition
transaction. There can be no assurance that the
Company will be successful in these efforts.
3. Significant Principles of Consolidation
The consolidated financial statements include the accounts of the
Accounting Company, and its wholly-owned subsidiaries. All significant
Policies intercompany balances and transactions have been eliminated.
Cash Equivalents
For purposes of the statement of cash flows, cash
includes all cash and investments with original
maturities to the Company of three months or less.
Inventories
Inventories were recorded at the lower of cost or
market, cost being determined on a first-in,
first-out (FIFO) method. During the year ended
December 31, 2001 the Company determined that
$129,204 its inventory was impaired based on the
inability of the Company to sell its products and
based on a default of license agreement ( See note
10). In 2002, the Company sold all remaining
inventory in exchange for the assumption of certain
liabilities.
Property and Equipment
Property and equipment are recorded at cost, less
accumulated depreciation. Depreciation and
amortization on property and equipment is determined
using the straight-line method over the estimated
useful lives of the assets which is approximately 4
years. Expenditures for maintenance and repairs are
expensed when incurred and betterments are
capitalized. Gains and losses on sale of property and
equipment are reflected in operations. In 2002, the
Company sold all property and equipment in exchange
for the assumption of certain liabilities.
F-9
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Continued
3. Significant
Accounting
Policies
ContinuedRevenue Recognition
Revenue is recognized when a valid purchase order has been received, product has
been shipped, the selling price is fixed or determinable, and collectibility is
reasonably assured.
Income Taxes
Deferred taxes are computed using the asset and
liability method. Under the asset and liability
method, deferred tax assets and liabilities are
recognized for future tax consequences attributable
to differences between the financial statement
carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in
which those temporary differences are expected to be
recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is
recognized in income in the period that includes the
enactment date. Deferred tax assets are not
recognized unless it is more likely than not that the
asset will be realized in future years.
Earnings Per Share
The computation of basic earnings per common share is
based on the weighted average number of shares
outstanding during each year.
The computation of diluted earnings per common share
is based on the weighted average number of shares
outstanding during the year plus the common stock
equivalents, which would arise from the exercise of
stock options and warrants outstanding using the
treasury stock method and the average market price
per share during the year. There were no outstanding
options to purchase stock at December 31, 2001 or
December 31, 2002.
Concentration of Credit Risk
The Company maintains its cash in bank deposit
accounts, which at times, may exceed federally
insured limits. The Company has not experienced any
losses in such account and believes it is not exposed
to any significant credit risk on cash and cash
equivalents.
F-10
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Continued
3. Significant
Accounting
Policies
Continued
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the 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 periods. Actual results could differ from those estimates.
Reclassifications
Certain amounts in the 2001 financial statements have
been reclassified to conform with the current year
presentation.
4. Note The Company has a note payable of $20,000 due to an entity, which is
Payable unsecured, non-interest bearing, and due on demand.
5. Related Party The Company incurred consulting expenses of $24,000 per year to an
Transactions Officer of the Company for the years ended December 31, 2002 and
2001. These expenses were paid through the issuance of 420,000
shares of common stock.
6. Income Taxes The provision for income taxes is
different than amounts which would be provided by
applying the statutory federal income tax rate to
loss before the provision for income taxes for the
following reasons:
Years Ended
December 31,
2002 2001
Federal income tax
Continued (provision) benefit at
statutory rate $ (5,000) $ 161,000
Change in valuation allowance 5,000 (161,000)
$ - $ -
F-11
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
F-12
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Continued
6. Income Taxes
Deferred tax assets (liabilities) are comprised of the following:
Net operating loss carryforward
$ 1,512,000
Valuation allowance
$ (1,512,000)
$ -
A valuation allowance has been established for the
net deferred tax asset due to the uncertainty of the
Company's ability to realize such asset.
At December 31, 2002, the Company has a net operating
loss carryforward available to offset future taxable
income of approximately $4,400,000, which begins to
expire in 2010. The amount of net operating loss
carryforward that can be used in any one year will be
limited by the applicable tax laws which are in
effect at the time such carryforward can be utilized.
The change in ownership of the Company may reduce the
amount of loss allowable.
7. Supplemental During the year ended December 31, 2002:
Cash Flow
Information The Company
equipment with a net
book value of $28,590 for the buyer's assumption of $75,741 in
accounts payable and accrued liabilities. The Company
recorded a gain of $47,151 in connection with this transaction.
The Company
common stock as
payment for services rendered in the amount
of $43,000, $7,000 of which was included in
accounts payable at December 31, 2001.
F-13
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY) Notes to
Consolidated Financial Statements Continued
During the year ended December 31, 2001 the
Company determined that $430,010 of its
stock subscriptions receivable were
uncollectible and determined not to cancel
the related issued shares. Accordingly
$430,010 has been off-set to additional
paid-in-capital.
F-14
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Continued
7. Supplemental
Cash Flow
Information
Continued
During the year ended December 31, 2001 the Company sold to an
individual a wholly-owned subsidiary which was formed in 2001. The
Company had no cost basis in the subsidiary and sold the subsidiary for
a gain of $225,000 as follows:
Cash $ 10,000
Notes receivable 15,000
Assignment of convertible debentures 200,000
Gain on sale of minority interest $ 225,000
During the years ended December 31, 2002 and
2001, the Company paid interest of $0 and
$800, respectively. The Company did not pay
any income taxes in 2002 or 2001.
8. Stock During the year ended December 31, 1999 the Company
Options established a stock option plan (the Plan), which allowed a
and maximum of 1,315,000 options be granted to purchase
Warrants common stock at prices generally not less than the fair market
value of common stock at the date of grant.
Under the Plan, grants of options may be
made to selected officers, employees and
non-employees without regard to any
performance measures. The options may be
immediately exercisable or may vest over
time as determined by the Board of
Directors. As of December 31, 2002, there
were no options or warrants to purchase
common stock outstanding. No options were
granted during 2002.
F-15
9. Gain on NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Settlement Notes to Consolidated Financial Statements
of Debt Continued
and
Disposal of During the year ended December 31, 2002 the Company
exchanged all property and equipment in exchange for the
Property buyer's assumption of $75,741 in accounts payable and
and accrued liabilities. The difference between the debt assumed
Equipment and the net book value of the assets of $47,151 resulted in a
gain on disposition of assets.
F-16
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Continued
10. Commitments
and
Contingencies
Royalty Agreement
The Company had a license agreement which assigned the intellectual
property, technology and patent rights used in and around manufacturing
breast implants. The term of this license was perpetual and allowed for
the worldwide exclusive rights to manufacture and market the product.
As part of this agreement, the Company agreed to pay a royalty equal to
5% of net revenue of the product and a minimum royalty payment of
$21,000 for each six month period beginning May 1, 2001. During the
year-ended December 31, 2001 the Company was in default of the
agreement for failing to remit minimum royalty payments as required by
the agreement and the Company's rights to the technology were
terminated. The termination of these rights prohibits sales of the
Company's traditional product, which accounts for substantially all
product sales in 2000 and preceding years. During the years ended
December 31, 2002 and 2001, the Company had royalty expense relating to
this agreement of approximately $0 and $53,000, respectively.
Operating Lease
The Company's wholly owned subsidiary
NovaMed Medical Products Manufacturing,
Inc., leased a facility under a non-
cancelable operating lease which expires
January 2004. Rental expense incurred under
this lease for the years ended December 31,
2002 and 2001 totaled approximately $0 and
$80,000, respectively. At December 31, 2001
the Company was in default of its lease
payments and had been evicted from the
facility. Under the lease obligation the
Company may be liable for future minimum
lease payments for the residue of the stated
term less the fair rental value of the
leased facility taking into account the time
and expenses necessary for the leaser, to
re-let the facility. Minimum lease payments
for which the Company was potentially
obligated according to the agreement at
December 31, 2001 for this operating lease
is as follows:
Year Amount
2002 $ 62,000
2003 62,000
2004 5,200
Total future minimum lease payments $ 129,200
F-17
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Continued
F-18
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Continued
10. Commitments
and
Contingencies
Continued
Litigation
The Company may become or is subject to investigations, claims or
lawsuits ensuing out of the conduct of its business, including those
related to product safety and health, product liability, commercial
transactions, etc. The Company is currently not aware of any such
items, which it believes could have a material adverse effect on its
financial position.
11. Fair The Company's financial instruments consist of cash,
Value of payables, and a note payable. The carrying amount of cash
Financial and payables approximates fair value because of the short-
Instrument term nature of these items.
s
12. Recent In April 2002, the Financial Accounting Standards Board
Accounting (FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 145, "Rescission of FASB Statements No. 4, 44,
Pronounce- and 64, Amendment of FASB Statement No. 13, and
ments Technical Corrections." This statement requires the
classification of gains or losses from the
extinguishments of debt to meet the criteria
of Accounting Principles Board Opinion No.
30 before they can be classified as
extraordinary in the income statement. As a
result, companies that use debt
extinguishment as part of their risk
management cannot classify the gain or loss
from that extinguishment as extraordinary.
The statement also requires sale-leaseback
accounting for certain lease modifications
that have economic effects similar to
sale-leaseback transactions. The Company
does not expect the adoption of SFAS No. 145
to have a material impact on its financial
position or future operations.
F-19
NOVAMED, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
Continued
12. Recent
Accounting
Pronounce-
ments
Continued
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This standard, which is
effective for exit or disposal activities initiated after December 31,
2002, provides new guidance on the recognition, measurement and
reporting of costs associated with these activities. The standard
requires companies to recognize cost associated with exit or disposal
activities when they are incurred rather than at the date the company
commits to an exit or disposal plan. The adoption of SFAS No. 146 by
the Company is not expected to have a material impact on the Company's
financial position or future operations.
In December 2002, the FASB issued SFAS No.
148 "Accounting for Stock-Based
Compensation--Transition and Disclosure--an
amendment of FASB Statement No. 123," which
is effective for all fiscal years ending
after December 15, 2002. SFAS No. 148
provides alternative methods of transition
for a voluntary change to the fair value
based method of accounting for stock-based
employee compensation under SFAS No. 123
from the intrinsic value based method of
accounting prescribed by Accounting
Principles Board Opinion No. 25. SFAS 128
also changes the disclosure requirements of
SFAS 123, requiring a more prominent
disclosure of the pro- forma effect of the
fair value based method of accounting for
stock-based compensation. The adoption of
SFAS No. 148 by the Company did not have a
material impact on the Company's financial
position or operations.
F-20
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS O
ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes in accountants or disagreements between the Company and
its accountants.
PART III N
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND
CONTROL
PERSONS
The officers and directors of the Company as of December 31, 2002 are as
follows:
Name Age Position
Ruairidh Campbell 39 president, chief financial officer and director
Mr. Campbell was appointed as an officer and director of the Company in April of
1995. He estimates that he will spend approximately 10 percent of his time,
approximately 5 hours per week, on the Company's business during the next 12
months. He also has significant responsibilities with other companies, as
detailed in the following paragraph. He will serve until an annual meeting of
the Company's shareholders and his successor is elected and qualified.
Thereafter, directors will be elected for one-year terms at the annual
shareholders meeting. Officers will hold their positions at the pleasure of the
board of directors, absent any employment agreement.
Mr. Campbell graduated from the University of Texas at Austin with a Bachelor of
Arts in History and then from the University of Utah College of Law with a Juris
Doctorate with an emphasis in corporate law, including securities and taxation.
Over the past five years he has been an officer and director of several public
companies: InvestNet, Inc. a mineral resource exploration company from February
2000 to present (president, chief financial officer, director), Montana Mining
Corp. a mineral resource exploration company from December 1999 to present
(president, chief financial officer, director), Allied Resources Inc., an oil
and gas development company from 1998 to present (president, chief financial
officer, director), EnterNet, Inc.) an internet vitamin retailer from February
2000 to July 2001 (president, chief financial officer, director) and Bren-Mar
Minerals, Ltd. a mineral resource development company from 1995 to May 2001
(president, chief financial officer, director).
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company, the
Company is aware of three entities who during the transitional period ended
December 31, 2002 were directors, officers, or beneficial owners of more than
ten percent of the common stock of the Company, and who failed to file, on a
timely basis, reports required by Section 16(a) of the Securities Exchange Act
of 1934.
Novamedical Vertstrieb GmbH failed to file a Form 3 or Form 5 despite being the beneficial owner
of in excess of 10% of the Company's common stock. Graeco II, Ltd. failed to file a Form 3 or
10
Form 5 despite being the beneficial owner of in excess of 10% of the Company's
common stock. AAB Corporation failed to file a Form 3 or Form 5 despite being
the beneficial owner of in excess of 10% of the Company's common stock.
ITEM 10. EXECUTIVE COMPENSATION
The following table provides summary information for the years 2002, 2001 and
2000 concerning cash and non-cash compensation paid or accrued by the Company to
or on behalf of president and the only other employee to receive compensation in
excess of $100,000.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
--------------------------------------------------------
Awards Payouts
Name and Principal Restricted Securities All Other
Position Other Annual Stock Underlying Compensation
Salary Bonus Compensation Award(s) Options LTIP ($)
Year ($) ($) ($) ($) SARs payouts
(#) ($)
------------------------ -------- ---------- --------- ----------------- -------------- -------------- ----------- ---------------
Ruairidh Campbell, 2002 - - - 420,000 - - -
President, Chief 2001 24,000 - - - - - -
Financial Officer and 2000 67,000 - - 2,000,000* 30,000** - -
Director
------------------------ -------- ---------- --------- ----------------- -------------- -------------- ----------- ---------------
* The shares issued to Mr. Campbell were issued prior to the 1 for 50 (1:50)
reverse split that was implemented on May 7, 2002. ** The share options granted
to Mr. Campbell at $0.45 a share expired unexercised in March of 2001.
Compensation of Directors
The Company's director is not currently compensated for his service as a
director of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND
MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the stock of the Company as of March 14, 2003, by each shareholder
who is known by the Company to beneficially own more than 5% of the outstanding
common stock, by each director, and by all executive officers and directors as a
group.
Title of Class Name and Address of Amount and nature of Percent of Class
Beneficial Ownership Beneficial Ownership
------------------- ----------------------------------- ------------------------------------- -----------------------
Common Ruairidh Campbell 463,000 35.6%
Stock 600 Westwood Terrace Legal
Austin, Texas 78746
Common Dr. Aydin Dogan* 164,900 12.7%
Stock 3 Heinestrasse D-40789 Legal and Beneficial
Monheim, Germany
11
11
Common Novamedical Vertstrieb 139,000 10.7%
Stock GmbH, 3 Heinestrasse D- Legal
40789 Monheim, Germany
Common Dr. Robert Ersek** 178,618 13.7%
Stock 630 West 34th Street #201 Legal and Beneficial
Austin, Texas 78705
Common Graeco II, Ltd. 177,400 13.6%
Stock 630 West 34th Street #201 Legal
Austin, Texas 78705
Common AAB Corporation 175,000 13.5%
Stock 5009 White Bear Lake Legal
Minnesota 55110
Common All Executive Officers and 463,000 35.6%
Stock Directors as a Group
* The 164,900 shares held by Dr. Aydin Dogan include 139,000 shares held by Novamedical Verstrieb GmbH, a
corporation owned by Dr. Dogan.
** The 178,618 shares held by Dr. Robert Ersek include 177,400 shares held by Greaeco2, Ltd., a corporation owned by
Dr. Ersek.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 18, 2002, the Company issued 420,000 shares of common stock to
Ruairidh Campbell valued at $0.10 a share in consideration for services rendered
in 2001 and 2002 as president of the Company, pursuant to section 4(2) of the
Securities Act in a private transaction that did not include a public offering.
The Company issued the shares to Mr. Campbell as part of a plan to reduce or
eliminate amounts due to creditors. Mr. Campbell's services had not been
compensated and therefore the decision was taken to settle all obligations to
Mr. Campbell as of the period ended September 30, 2002.
On December 31, 2000, the Company issued 6,400,000 (pre-reverse split) shares of
common stock to Dr. Aydin Dogan pursuant to an agreement for accord and
satisfaction, for consulting services rendered in connection with his management
of Novamedical Products GmbH and loans provided to the Company, pursuant to the
exemptions provided by Regulation S of the Securities Act in a private
transaction that did not include a public offering. Amounts due to Dr. Dogan
under a consulting agreement with Novamedical Products GmbH and loans made to
the Company were settled. The Company chose to issue the shares to Dr. Dogan in
order satisfy his claims for compensation for services and loans made. Further,
the Company canceled a promissory note due to the Company by Dr. Dogan.
On December 31, 2000, the Company issued 1,020,000 (pre-reverse split) shares of
common stock to Dr. Aydin Dogan for debt settlement services in connection with
the sale of Novamedical Products GmbH, rendered pursuant to the exemptions
provided by Regulation S of the Securities Act in a private transaction that did
not include a public offering. The share issuance to Dr. Dogan was part of a
stock purchase and sale agreement pursuant to the terms of which the Company was
to issue 1,350,000 shares to be used to settle the claims of creditors of
Novamedical Products GmbH. The Company issued 330,000 (pre-reverse split) shares
to creditors directly and 1,022,000 (pre-reverse split) shares to Dr. Dogan for
his use in settling creditors.
12
12
On December 29, 2000, the Company issued 8,750,000 (pre-reverse split) shares of
common stock to AAB Corporation for inducement to enter into a new license
agreement with the Company, settlement of royalty debts and pre-payment on
royalties, pursuant to section 4(2) of the Securities Act in a private
transaction that did not include a public offering. The share issuance to AAB
Corporation induced it to enter into a new licence agreement with the Company
executed on even date that enables the Company to utilize certain patented
technology in the manufacture of its products.
On December 29, 2000, the Company issued 8,750,000 (pre-reverse split) shares of
common stock to Greaco II, Ltd. for inducement to enter into a new license
agreement with the Company, settlement of royalty debts and pre-payment on
royalties, pursuant to section 4(2) of the Securities Act in a private
transaction that did not include a public offering. The share issuance to Greaco
II, Ltd. induced it to enter into a new licence agreement with the Company
executed on even date that enables the Company to utilize certain patented
technology in the manufacture of its products.
On December 26, 2000, the Company issued 2,000,000 (pre-reverse split) shares of
common stock to Ruairidh Campbell in consideration for services rendered in 2000
as president of the Company, pursuant to section 4(2) of the Securities Act in a
private transaction that did not include a public offering. The Company issued
the shares to Mr. Campbell as part of a plan to reduce or eliminate amounts due
to creditors. Mr. Campbell's services had not been adequately compensated and
therefore the decision was taken to settle all obligations to Mr. Campbell as of
year-end 2000.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibits required to be attached by Item 601
--------
of Regulation S-B are listed in
the Index to Exhibits beginning on page 15 of this Form 10-KSB,
which is incorporated herein by reference.
(b) Reports on Form 8-K. The Company filed no Form 8K's
-------------------
during the last quarter of the
period covered by this Form 10-KSB.
ITEM 14. CONTROLS AND PROCEDURES
The Company's president acts both as the Company's chief executive officer and
chief financial officer ("Certifying Officer") and is responsible for
establishing and maintaining disclosure controls and procedures for the Company.
The Certifying Officer has concluded (based on his evaluation of these controls
and procedures as of a date within 90 days of the filing of this report) that
the design and operation of the Company's disclosure controls and procedures (as
defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) are
effective. No significant changes were made in the Company's internal controls
or in other factors that could significantly affect those controls subsequent to
the date of the evaluation, including any corrective actions with regard to
slight deficiencies and material weaknesses. Due to the Certifying Officer's
dual role as chief executive officer and chief financial officer, the Company
has no segregation of duties related to internal controls.
13
13
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 14th day of March, 2003
NovaMed, Inc.
/s/ Ruairidh Campbell
---------------------------------------------------------------------
Ruairidh Campbell, President/CFO and Director
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
/s/ Ruairidh Campbell Director March 14th , 2003
------------------------------
Ruairidh Campbell
14
CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Ruairidh Campbell, president and chief financial officer of NovaMed, Inc. certify that:
1. I have reviewed this annual report on Form 10-KSB of NovaMed, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to me by others within those entities, particularly during the
period in which this annual report is being prepared; b) Evaluated the
effectiveness of the registrant's disclosure controls and procedures as of a
date within 90 days prior to the filing date of this annual report (the
"Evaluation Date"); and c) Presented in this annual report my conclusions about
the effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions): a) All significant deficiencies in the
design or operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses in
internal controls; and b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and
6. 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 my most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 14, 2003
/s/ Ruairidh Campbell
Ruairidh Campbell, president and chief financial officer
15
Index to Exhibits
EXHIBIT PAGE
NO. NO. DESCRIPTION
3(i) * Articles of Incorporation of the Company formally known as Conceptual Technologies,
Inc. a Nevada corporation dated November 26, 1996 (incorporated herein by reference
from Exhibit No. 2(i) to the Company's Form 10SB12G/A as filed with the SEC on
November 29, 1999).
3(ii) * Bylaws of the Company adopted on November 12, 1996 (incorporated herein by
reference from Exhibit 2(iv) of the Company's Form 10SB12G/A as filed with the SEC
on November 29, 1999).
3(iii) * Certificate of Amendment of the Articles of Incorporation of the Company filed on
August 29, 1997 effecting a 1-for-14 reverse split and rounding each fractional share to
one whole share (incorporated herein by reference from Exhibit 2(ii) of the Companys
Form 10SB12G/A as filed with the SEC on November 29, 1999).
3(iv) * Certificate of Amendment of the Articles of Incorporation of the Company changing the
name from Conceptual Technologies, Inc. to NovaMed, Inc. (incorporated herein by
reference from Exhibit 2(iii) of the Companys Form 10SB12G/A as filed with the
SEC on November 29, 1999).
Material Contracts
10(i) * The Companys Stock Option Plan dated March 2, 2000, reserving a maximum of
1,315,000 (pre-reverse split) shares of common stock to provide incentives to officers,
directors and key employees (incorporated herein by reference to the Companys S-8
registration statement filed with the SEC on March 2, 2000).
10(ii) * Agreement for the Issuance, Sale and Purchase of NovaMed Common Stock between the
Company and AAB Corp. and Greaco II, Ltd. dated December 29, 2000 for the issuance
of a combined total of 17,500,000 (pre-reverse split) shares to the Inventors as a means to
induce them to enter into a new license agreement, settle debt owed on royalties and pre-
pay royalty payments (incorporated herein by reference to the Companys Form 10-KSB
filed with the SEC on May 21, 2001).
10(iii) * Agreement for Accord and Satisfaction between the Company and Dr. Aydin Dogan
dated December 31, 2000 for the issuance of 6,400,000 (pre-reverse split) shares to settle
obligations Dr. Dogan had against the Company and settle obligations the Company had
against Dr. Dogan pursuant to a promissory note (incorporated herein by reference to the
Companys Form 10-KSB filed with the SEC on May 21, 2001).
10(iv) * Stock Purchase and Sale Agreement between the Company and Dr. Aydin Dogan dated
December 31, 2000 to effect the sale of Novamedical Products GmbH to Dr. Dogan, the
terms of which included the issuance of 1,350,000 shares of common stock to settle
creditors of Novamedical Products GmbH (incorporated herein by reference to the
Companys Form 10-KSB filed with the SEC on May 21, 2001).
10(v) * Stock Sale Agreement between the Company and John Olson dated December 17, 2001
to effect the sale of the Companys interest in a former subsidiary (incorporated herein by
reference to the Companys Form 8-K filed with the SEC on March 4, 2002).
99.1 18 Certification Pursuant to 18 U.S.C. Section 1350, Section 906 of the
Sarbanes-Oxley Act of 2002.
* Incorporated by reference from previous filings of the Company.
17
EXHIBIT 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of the NovaMed, Inc. ("Company") on Form
10-KSB for the period ending December 31, 2002 as filed with the Commission on
the date hereof, I, Ruairidh Campbell, president and chief financial officer of
the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to
section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) This 10-KSB complies with the requirements of section 13 (a) or 15 (d) of the Securities
Exchange Act; and
(2) The financial information contained in this Form 10-KSB fairly presents, in
all material respects, the financial condition and result of operations of the
Company.
/s/ Ruairidh Campbell
Ruairidh Campbell, President and Chief Financial Officer
18
18