SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (date of earliest event reported):

July 8, 2016

  

EVENT CARDIO GROUP INC.
(Exact name of registrant as specified in its charter)
 
Nevada   0-52518   20-8051714
(State or other jurisdiction of Incorporation)   (Commission File Number)   (I.R.S. Employer Identification No.)

803-A Barkwood Court

Linthicum, Maryland

 

 

 

21090

             

(Address of principal executive offices)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[ ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[ ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17   CFR 240.14a-12)

 

[ ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[ ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Explanatory Note  

 

This amendment is being filed to include the financial statements of Ambumed, Inc., the acquired company, required by Item 9.01(a) and the pro forma financial information required by 9.01(b).          

 

 
 

Item 9.01 Financial Statements and Exhibits .

(a) Financial Statements of Business Acquired.

 

 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

 

FINANCIAL STATEMENTS

December 31, 2015 and 2014

 

TABLE OF CONTENTS

 

  Page
   
Report of Independent Registered Public Accounting Firm F-1
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders’ Deficit F-4
Statements of Cash Flows F-5
Notes to Financial Statements F- 6

 

 
 

 

Lichter, Yu and Associates, Inc.  

Certified Public Accountants

 

21031 Ventura Blvd., suite 316

Woodland Hills, California 91364

Tel (818)789-0265 Fax (818) 789-3949

 

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

Ambumed, Inc.

 

We have audited the accompanying balance sheets of Ambumed, Inc. (the “Company”) as of December 31, 2015 and 2014, and the related statements of operations, stockholders’ deficit, and cash flows for each of the years ended December 31, 2015 and 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. 

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 financial statements referred to above present fairly, in all material respects, the financial position of Ambumed, Inc. as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the years ended December 31, 2015and 2014, in conformity with U.S. generally accepted accounting principles.

 

/s/ Lichter, Yu & Associates, Inc.

 

Woodland Hills, California

November 18, 2016

 

F-1

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

Balance Sheets

As of December 31, 2015 and 2014

 

ASSETS   2015   2014
               
  CURRENT ASSETS      
    Cash and cash equivalents  $      84,074    $      33,722
    Accounts receivable, net 48,130   29,768
    Prepaid expenses 5,739   3,229
               
      TOTAL CURRENT ASSETS 137,943   66,719
               
  NON-CURRENT ASSETS      
    Fixed assets, net 3,202   3,369
    Due from related party          15,000                  -   
    Other                -      667
               
      TOTAL NON-CURRENT ASSETS 18,202   4,036
             TOTAL ASSETS  $    156,145    $      70,755
               
               
LIABILITIES AND STOCKHOLDERS' DEFICIT      
               
  CURRENT LIABILITIES      
    Accounts payable and accrued expenses  $      81,965    $      32,969
    Loan from stockholder 320,352   320,352
               
      TOTAL NON-CURRENT LIABILITIES 402,317   353,321
  STOCKHOLDERS' DEFICIT      
    Common stock, $1 par value, 100,000 shares authorized,      
        100 shares issued and outstanding              100                100
    Additional paid-in capital 15,900   15,900
    Accumulated deficit (262,172)   (298,566)
      TOTAL STOCKHOLDERS' DEFICIT (246,172)   (282,566)
        TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT  $    156,145    $      70,755

 

The accompanying notes are an integral part of these financial statements

 

F-2

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

Statements of Operations

For the Years Ended December 31, 2015 and 2014

       

         
    2015   2014
                 
Revenues   $ 1,188,522     $ 710,784  
                 
Costs of revenue     918,671       639,562  
                 
     Gross profit     269,851       71,222  
                 
Operating expenses                
General and administrative     145,202       122,303  
Bad debt     26,850       —    
Rent     28,000       20,200  
Professional expenses     17,600       1,948  
Depreciation     3,333       223  
Amortization     667       1,000  
      221,652       145,674  
                 
     NET INCOME / (LOSS)   $ 48,199     $ (74,452 )
                 
Net earnings / (loss) per share                
Basic and Diluted:   $ 481.99     $ (744.52 )
                 
                 
Weighted average number of shares used in computing basic and diluted net loss per share:                
                 
Basic     100       100  
Diluted     100       100  

The accompanying notes are an integral part of these financial statements

 

F-3

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

Statements of Stockholders' Deficit

For the Years Ended December 31, 2015 and 2014

 

  Number of                Total 
  Shares   Common   Additional   Accumulated    Stockholders'
  Outstanding   Stock   Paid-in Capital   Deficit   Deficit
                   
                   
                   
Balance at December 31, 2013 100    $            100    $        15,900    $     (224,114)    $     (208,114)
                   
   Net loss for the year                   -                        -                        -      (74,452)            (74,452)
                   
Balance at December 31, 2014                100                  100   15,900   (298,566)   (282,566)
                   
   Net income for the year                   -                        -                        -      48,199              48,199
                   
   Stockholder distributions                   -                        -                        -               (11,805)            (11,805)
                   
Balance at December 31, 2015                100    $            100    $        15,900    $     (262,172)    $     (246,172)

 

The accompanying notes are an integral part of these financial statements   

 

F-4

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

Statements of Cash Flows

For the Years Ended December 31, 2015 and 2014

 

    2015   2014
CASH FLOWS FROM OPERATING ACTIVITIES                
Net income / (loss) for the year   $ 48,199     $ (74,452 )
Adjustments to reconcile net income / (loss) to                
  net cash provided by / (used in) operating activities                
Provision for doubtful accounts     26,850       —    
Depreciation and amortization     4,000       1,223  
Changes in assets and liabilities:                
Accounts receivable     (45,212 )     (12,174 )
Prepaid expenses     (2,510 )     (3,230 )
Due from related party     (15,000 )     —    
Accounts payable and accrued expenses     48,996       11,926  
      17,124       (2,255 )
                 
Net cash provided by / (used in) operating activities     65,323       (76,707 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchase of fixed assets     (3,166 )     —    
                 
Net cash used in investing activities     (3,166 )     —    
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Loan from stockholder     —         65,000  
Distributions to stockholders     (11,805 )     —    
                 
Net cash (used in) / provided by financing activities     (11,805 )     65,000  
                 
NET INCREASE / (DECREASE) IN CASH     50,352       (11,707 )
                 
CASH AT THE BEGINNING OF THE YEAR     33,722       45,429  
                 
CASH AT THE END OF THE YEAR   $ 84,074     $ 33,722  
                 
Supplemental disclosure of cashflow information:                
                 
Interest payments   $ —       $ —    
                 
Income taxes   $ —       $ —    

 

The accompanying notes are an integral part of these financial statements     

 

F-5

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

Notes to Financial Statements

Years Ended December 31, 2015 and 2014

 

Note A – Basis of Presentation and Organization

 

Ambumed, Inc. (‘the Company) was formed in 1986 in Maryland. The Company is doing business under the trade name of National Cardiac Monitoring Center. The Company was formed for the purpose of providing a range of cardiac monitoring services and support for physicians, hospitals, scanning services and home health care agencies and patients. The Company sells cardiac monitoring equipment and provides 24 hour monitoring services to customers, principally in the Mid-Atlantic region. Consequently, the Company’s ability to generate future revenues and collect the amounts due from customers is affected by economic fluctuations in the Mid-Atlantic region

 

On June 30, 2016 the stockholders sold 100% of the Company’s stock to Event Cardio Group, Inc., a publicly traded company.

 

The accompanying financial statements are prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

 

Note B – Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ significantly from those estimates. The estimates underlying the Company’s financial statements relate to, among other things, the accrual for vacation, the allowance for doubtful accounts and the valuation of long-lived assets.

 

Cash and Cash Equivalents

 

For purposes of the statements of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. They are carried at cost, plus accrued interest, which approximates fair value due to the short-term nature of those instruments.

 

Accounts Receivable

 

Accounts receivable from sales of cardiac monitoring equipment and related monitoring services are based upon contracted prices and are carried at original invoice amount less an allowance for doubtful accounts. Accounts receivable potentially subject the company to concentrations of credit risk. Credit is extended based upon management’s evaluation of the customer’s financial condition. Accounts receivable have been reviewed by management and are recorded at the amounts the Company expects to collect on balances outstanding at the time of management’s evaluation.

 

 

F-6

 
 

Allowance for Doubtful Accounts

 

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. F- 6

 

Fixed Assets

 

Fixed assets are carried at cost. Depreciation on fixed assets is provided principally on the straight line method. Estimated useful lives range from 3 to 5 years. Expenditures for major renewals and betterments which extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

 

Leased equipment meeting certain capital lease criteria is capitalized and the present value of the related lease payments is recorded as a liability. Amortization of capitalized lease assets is computed on the straight-line method over the shorter of its useful life or the initial lease term.

 

The components of fixed assets consist of the following as of December 31:

         
      2015       2014  
Automobile   $ 60,876     $ 60,876  
Furniture and fixtures     29,105       28,412  
Computer equipment and software     42,972       40,499  
Leasehold improvements     11,264       11264  
Less: accumulated depreciation and amortization     (141,015 )     (137,682 )
    $ 3,202     $ 3,369  

 

Depreciation and amortization expenses for the years ended December 31, 2015 and 2014 were $4,000 and $1,223, respectively

 

Income Taxes

 

Ambumed, Inc. elected to be taxed under the provisions of Subchapter S since its inception. Accordingly, Ambumed, Inc. will not pay corporate income taxes on its taxable income. Instead, the stockholders are liable for individual income taxes on their proportionate share of the Company’s income. Accordingly, no provision or liability for income taxes has been included in these financial statements.

 

Pursuant to ASC 740, “ Accounting for Uncertainty in Income Taxes ” the accounting for uncertainties in income taxes recognized in an enterprise’s financial statements and prescribes a threshold of more-likely-than-not for recognition and de-recognition of tax positions taken or expected to be taken in a tax return. ASC 740 also provides related guidance on measurement, classification, interest and penalties, and disclosure. The Company is not aware of any uncertain tax positions taken in its US federal, or State tax returns. If the Company incurs any penalties or interest related to its income tax filings, it will elect to include them as a component of operating expenses.

 

Advertising Costs

 

The Company uses only non-direct response advertising. All advertising costs are charged to expense as incurred.

 

Revenue Recognition

 

Revenue is recognized when persuasive evidence of an arrangement exist, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is generally recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.

 

 

F-7

 
 

Costs of Revenue

 

Costs of revenue include payroll and payroll taxes, commissions, supplies and costs of monitors sold during the period.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, most of which are in Mid-Atlantic region. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

 

Risks and Uncertainties

 

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements and rapidly changing customer requirements.

 

Contingencies

 

Loss contingencies, including litigation related contingencies, are included in the Statements of Operations when the Company concludes that a loss is both probable and reasonably estimable. Legal fees related to litigation related matters are expensed as incurred and included in the Statement of Operations under the General and administrative line item. No amount for loss was recorded for the year ended December 31, 2015 or 2014.

 

Earnings per Share

 

Basic earnings per share are calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the fiscal period. Diluted earnings per share are based on the weighted average number of common shares outstanding plus, where applicable, the additional common shares that would have been outstanding related to dilutive share-based awards using the treasury stock method. Dilutive potential common shares include outstanding stock options and unvested restricted stock awards. There were no such outstanding stock options or unvested restricted stock awards as of December 31, 2015 or 2014.

 

Impairment of Long-Lived Assets and Intangible Assets

 

The Company reviews long-lived assets and amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the Company's ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related operations. The amount of impairment loss, if any, is measured as the excess of the carrying value of the asset over the present value of estimated future cash flows, using a discount rate commensurate with the risks involved and based on assumptions representative of market participants. As of December 31, 2015 and 2014, there were no impairment losses of long-lived assets.

 

 

F-8

 
 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

 

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value Measurement.

 

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

 

As of December 31, 2015 and 2014, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.

 

Recently Issued Accounting Pronouncements

In November 2015, FASB issued ASU 2015-17,  Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes . This ASU requires the presentation of all deferred tax assets and liabilities as non-current in the consolidated balance sheet. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016, with early adoption permitted. Management elected to early adopt this new guidance effective for the fourth quarter of fiscal year 2016 in order to simplify the global close processes. Management is currently evaluating this standard.

 

In February 2016, FASB issued ASU 2016-02,  Leases (Topic 842) . FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Certain qualitative and quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. Management is currently evaluating this standard.

 

 

F-9

 
 

In March 2016, FASB issued ASU 2016-08,  Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) . The amendments are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The effective date for this ASU is the same as the effective date for ASU 2014-09. Management is currently evaluating this standard.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. 

Note C – Accounts Receivable

 

The Company refers all accounts greater than 90 days past due to an outside medical collection agency. An allowance for doubtful accounts is established based upon historical collection rates from that outside agency. Accounts receivable and the allowance for doubtful accounts consist of the following as of December 31:

 

    2015   2014
Accounts receivable   $ 74,980     $ 29,768  
Less: Allowance for doubtful accounts     -26,850       ( -- )  
Accounts receivable, net   $ 48,130     $ 29,768  

 

Note D – Due From Related Party

 

The Company has advanced funds to a limited liability company controlled by the owners of the Company. These funds were used to purchase cardiac monitoring equipment. The balance does not bear interest and has no set repayment terms.

 

The amounts outstanding are $15,000 and $0 at December 31, 2015 and 2014, respectively. This amount was repaid in June 2016.

 

Note E –Loan from Stockholder

 

Loan from stockholder consisted of multiple unsecured advances from the Company’s majority stockholder. The balance does not bear interest and has no set repayment terms. As part of the securities purchase agreement dated June 30, 2016, the $320,352 balance of this loan was agreed to be contributed to capital of the Company.

 

Note F –Major Customers

 

The majority of the Company’s revenues are processed through insurance companies. Revenues from insurance companies includes one customer that totaled approximately $397,000 and $195,000 which represent 33% and 27% of the Company’s revenue for the years ended December 31, 2015 and 2014, respectively.

 

Accordingly, if this customers discontinued purchasing services from the Company, the impact would have a material adverse effect on the Company’s liquidity, financial position and results of operation.

 

 

F-10

 
 

Note G – Related Party Transactions

 

The Company conducts its operations in facilities owned by the Company’s majority stockholder. There is no current lease. Rent paid to this majority stockholder was $28,000 and $20,200 for the years ended December 31, 2015 and 2014, respectively.

 

Note H – Subsequent Events

 

Management has evaluated events subsequent through November 18, 2016 for transactions and other events that may require adjustment of and/or disclosure in such financial statements.

 

After the close of business on June 30, 2016, all of the outstanding shares of the Company were acquired by Event Cardio Group, Inc., a publicly traded company. Accordingly, beginning July 1, 2016 the Company will operate as a wholly owned subsidiary of Event Cardio Group, Inc.

 

In connection with the purchase of all outstanding shares of the Company by Event Cardio Group, the former minority stockholder of the Company has entered into a four year employment agreement with the Company. The Agreement employs the former minority stockholder as the Chief Operating Officer (COO) and Executive of the Company. Among other things, the agreement sets the COO salary and bonus structure and provides for equity and related equity options in Event Cardio Group, Inc.

 

On July 14, 2016, Event Cardio Group entered into a lease for 6,000 square feet of office space located in Linthicum, Maryland. The lease is for a five year term, payable in monthly installments of $6,600, plus utilities, taxes and insurance. The Company has provided an unconditional guarantee to the landlord for the first 24 months should Event Cardio Group default under the terms of the lease. The guarantee is limited to $130,000.

   

 

F-11

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

 

CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

June 30, 2016

 

TABLE OF CONTENTS

 

  Page
   
Unaudited Condensed Balance Sheets F-13
Unaudited Condensed Statements of Operations F-14
Unaudited Condensed Statements of Stockholder’s Equity F-15
Unaudited Condensed  Statements of Cash Flows F-16
Notes to Unaudited Condensed Financial Statements F- 17

 

 

F-12

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

Condensed Balance Sheets

 
               
          June 30, 2016    
ASSETS   (Unaudited)   December 31, 2015
               
  CURRENT ASSETS      
    Cash and cash equivalents  $           96,926    $                     84,074
    Accounts receivable, net 82,607   48,130
    Prepaid expenses 5,194   5,739
               
      TOTAL CURRENT ASSETS 184,727   137,943
               
  NON-CURRENT ASSETS      
    Fixed assets, net 8,627   3,202
    Due from related party                      -                              15,000
               
      TOTAL NON-CURRENT ASSETS 8,627   18,202
             TOTAL ASSETS  $         193,354    $                   156,145
               
               
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)      
               
  CURRENT LIABILITIES      
    Accounts payable and accrued expenses  $           73,976    $                     81,965
    Loan from stockholder                        -   320,352
               
      TOTAL CURRENT LIABILITIES 73,976   402,317
  STOCKHOLDERS' EQUITY (DEFICIT)      
    Common stock, $1 par value, 100,000 shares authorized,      
        100 shares issued and outstanding                   100                                100
    Additional paid-in capital 336,252   15,900
    Accumulated deficit (216,974)   (262,172)
      TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 119,378   (246,172)
        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  $         193,354    $                   156,145

 

The accompanying notes are an integral part of these financial statements     

 

F-13

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

Condensed Statements of Operations

For the Six Months Ended June 30, 2016 and 2015

(Unaudited)

 

    2016   2015
Revenues   $ 897,391     $ 577,637  
Costs of revenue     622,528       379,676  
     Gross profit     274,863       197,961  
Operating expenses                
General and administrative     75,641       47,066  
Bad debt     68,150       26,850  
Rent     16,800       14,000  
Professional expenses     26,820       7,559  
Depreciation     55       1,667  
Amortization     —         334  
      187,466       97,476  
     NET INCOME   $ 87,397     $ 100,485  
Net earnings per share                
Basic and Diluted:   $ 873.97     $ 1,004.85  
Weighted average number of shares used in computing basic and diluted net loss per share:                
Basic     100       100  
Diluted     100       100  

 

The accompanying notes are an integral part of these financial statements     

 

F-14

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

Condensed Statements of Stockholders' Equity (Deficit)

(Unaudited)

                   
  Number of                Total 
  Shares   Common   Additional   Accumulated    Stockholders'
  Outstanding   Stock   Paid-in Capital   Deficit   Equity (Deficit)
                   
                   
                   
Balance at December 31, 2015 100    $            100    $        15,900    $     (262,172)    $     (246,172)
                   
   Net income for the year                   -                        -                        -      87,397              87,397
                   
   Conversion of debt to equity                     -                       -   320,352                       -            320,352
                   
   Stockholder's distributions                   -                        -                        -               (42,199)            (42,199)
                   
Balance at June 30, 2016                100    $            100    $      336,252    $     (216,974)    $      119,378

 

The accompanying notes are an integral part of these financial statements     

 

 

F-15

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

Condensed Statements of Cash Flows

For the Six Months Ended June 30, 2016 and 2015

(Unaudited)

 

    2016   2015
CASH FLOWS FROM OPERATING ACTIVITIES                
Net income for the period   $ 87,397     $ 100,485  
Adjustments to reconcile net income to                
  net cash provided by operating activities                
Provision for doubtful accounts     68,150       26,850  
Depreciation and amortization     55       2,001  
Changes in assets and liabilities:                
Accounts receivable     (102,627 )     (41,801 )
Prepaid expenses     545       3,325  
Due from related party     15,000       —    
Accounts payable and accrued expenses     (7,989 )     9,389  
      (26,866 )     (236 )
Net cash provided by operating activities     60,531       100,249  
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchase of fixed assets     (5,480 )     (1,267 )
Net cash used in investing activities     (5,480 )     (1,267 )
CASH FLOWS FROM FINANCING ACTIVITIES                
Distributions to stockholders     (42,199 )     (9,200 )
Net cash used in financing activities     (42,199 )     (9,200 )
NET INCREASE IN CASH     12,852       89,782  
CASH AT THE BEGINNING OF THE PERIOD     84,074       33,722  
CASH AT THE END OF THE PERIOD   $ 96,926     $ 123,504  
Supplemental disclosure of cashflow information:                
Interest payments   $ —       $ —    
Income taxes   $ —       $ —    
Non- cash investing and financing activities:                
Conversion of debt to equity   $ 320,352     $ —    

 

The accompanying notes are an integral part of these financial statements       

 

F-16

 
 

AMBUMED, INC.

d/b/a NATIONAL CARDIAC MONITORING CENTER

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note A – Basis of Presentation and Organization

 

Ambumed, Inc. (‘the Company) was formed in 1986 in Maryland. The Company is doing business under the trade name of National Cardiac Monitoring Center. The Company was formed for the purpose of providing a range of cardiac monitoring services and support for physicians, hospitals, scanning services and home health care agencies and patients. The Company sells cardiac monitoring equipment and provides 24 hour monitoring services to customers, principally in the Mid-Atlantic region. Consequently, the Company’s ability to generate future revenues and collect the amounts due from customers is affected by economic fluctuations in the Mid-Atlantic region.

 

On June 30, 2016 the stockholders sold 100% of the Company’s stock to Event Cardio Group, Inc., a publicly traded company.

 

These unaudited interim condensed financial statements have been prepared by the Company’s management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in the opinion of management, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted in these unaudited interim condensed financial statements. The results of operations, financial position, and cash flows for the periods presented herein are not necessarily indicative of future financial results. These unaudited interim condensed financial statements should be read in conjunction with the Company’s December 31, 2015 financial statements and notes thereto included in the Company’s Form 8-K filed with the Securities and Exchange Commission (“SEC”). The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

 

Note B – Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ significantly from those estimates. The estimates underlying the Company’s financial statements relate to, among other things, the accrual for vacation, the allowance for doubtful accounts and the valuation of long-lived assets.

 

 

F-17

 
 

Cash and Cash Equivalents

 

For purposes of the statements of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. They are carried at cost, plus accrued interest, which approximates fair value due to the short-term nature of those instruments.

 

Accounts Receivable

 

Accounts receivable from sales of cardiac monitoring equipment and related monitoring services are based upon contracted prices and are carried at original invoice amount less an allowance for doubtful accounts. Accounts receivable potentially subject the company to concentrations of credit risk. Credit is extended based upon management’s evaluation of the customer’s financial condition. Accounts receivable have been reviewed by management and are recorded at the amounts the Company expects to collect on balances outstanding at the time of management’s evaluation.

 

Allowance for Doubtful Accounts

 

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.

 

Fixed Assets

 

Fixed assets are carried at cost. Depreciation on fixed assets is provided principally on the straight line method. Estimated useful lives range from 3 to 5 years. Expenditures for major renewals and betterments which extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

 

Leased equipment meeting certain capital lease criteria is capitalized and the present value of the related lease payments is recorded as a liability. Amortization of capitalized lease assets is computed on the straight-line method over the shorter of its useful life or the initial lease term.

 

The components of fixed assets consist of the following as of June 30, 2016 and December 31, 2015:

 

     

6/30/16

 
     

12/31/15

 
 
Automobile   $ 60,876     $ 60,876  
Furniture and fixtures     29,105       29,105  
Computer equipment and software     49,719       42,972  
Leasehold improvements     11,264       11,264  
Less: accumulated depreciation and amortization     (142,337 )     (141,015 )
    $ 8,627     $ 3,202  

 

 

F-18

 
 

Depreciation and amortization expenses for the six months ended June 30, 2016 and 2015 were $55 and $2,001, respectively

 

Income Taxes

 

Ambumed, Inc. elected to be taxed under the provisions of Subchapter S since its inception. Accordingly, Ambumed, Inc. will not pay corporate income taxes on its taxable income. Instead, the stockholders are liable for individual income taxes on their proportionate share of the Company’s income. Accordingly, no provision or liability for income taxes has been included in these financial statements.

 

Pursuant to ASC 740, “ Accounting for Uncertainty in Income Taxes ” the accounting for uncertainties in income taxes recognized in an enterprise’s financial statements and prescribes a threshold of more-likely-than-not for recognition and de-recognition of tax positions taken or expected to be taken in a tax return. ASC 740 also provides related guidance on measurement, classification, interest and penalties, and disclosure. The Company is not aware of any uncertain tax positions taken in its US federal, or State tax returns. If the Company incurs any penalties or interest related to its income tax filings, it will elect to include them as a component of operating expenses.

 

Advertising Costs

 

The Company uses only non-direct response advertising. All advertising costs are charged to expense as incurred.

 

Revenue Recognition

 

Revenue is recognized when persuasive evidence of an arrangement exist, delivery has occurred, the fee is fixed or determinable and collectability is probable. Revenue is generally recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.

 

Costs of Revenue

 

Costs of revenue include payroll and payroll taxes, commissions, supplies and costs of monitors sold during the period.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, most of which are in Mid-Atlantic region. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

 

Risks and Uncertainties

 

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements and rapidly changing customer requirements.

 

 

F-19

 
 

Contingencies

 

Loss contingencies, including litigation related contingencies, are included in the Statements of Operations when the Company concludes that a loss is both probable and reasonably estimable. Legal fees related to litigation related matters are expensed as incurred and included in the Statement of Operations under the General and administrative line item. No amount for loss was recorded for the six months ended June 30, 2016 and 2015. 

Earnings per Share

 

Basic earnings per share are calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the fiscal period. Diluted earnings per share are based on the weighted average number of common shares outstanding plus, where applicable, the additional common shares that would have been outstanding related to dilutive share-based awards using the treasury stock method. Dilutive potential common shares include outstanding stock options and unvested restricted stock awards. There were no such outstanding stock options or unvested restricted stock awards as of June 30, 2016 and 2015.

 

Impairment of Long-Lived Assets and Intangible Assets

 

The Company reviews long-lived assets and amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the Company's ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related operations. The amount of impairment loss, if any, is measured as the excess of the carrying value of the asset over the present value of estimated future cash flows, using a discount rate commensurate with the risks involved and based on assumptions representative of market participants. As of June 30, 2016 and December 31, 2015, there were no impairment losses of long-lived assets.

 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

 

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

 

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

 

F-20

 
 

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

 

As of June 30, 2016 and December 31, 2015, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.

Recently Issued Accounting Pronouncements

 

The Company has considered recent accounting pronouncements and believes these recent pronouncements will not have a material effect on the Company’s financial statements.

 

Note C – Accounts Receivable

 

The Company refers all accounts greater than 90 days past due to an outside medical collection agency. An allowance for doubtful accounts is established based upon historical collection rates from that outside agency. Accounts receivable and the allowance for doubtful accounts consist of the following:

    June 30,   December 31,
    2016   2015
Accounts receivable   $ 177,607     $ 74,980  
Less: Allowance for doubtful accounts     (95,000 )     (26,850 )
Accounts receivable, net   $ 82,607     $ 48,130  

 

Note D – Due From Related Party

 

The Company has advanced funds to a limited liability company controlled by the owner of the Company. These funds were used to purchase cardiac monitoring equipment. The balance does not bear interest and has no set repayment terms.

 

The amounts outstanding are $0 and $15,000 at June 30, 2016 and December 31, 2015, respectively.

 

Note E –Loan from Stockholder

 

Loan from stockholder consisted of multiple unsecured advances from the Company’s majority stockholder. The balance does not bear interest and has no set repayment terms. As part of the securities purchase agreement dated June 30, 2016, the $320,352 balance of this loan was agreed to be contributed to capital of the Company.

 

Note F –Major Customers

 

The majority of the Company’s revenues are processed through insurance companies. Revenues from insurance companies includes one customer that totaled approximately $232,000 and $210,000 which represent 26% and 36% of the Company’s revenue for the six months ended June 30, 2016 and 2015, respectively.

 

Accordingly, if this customers discontinued purchasing services from the Company, the impact would have a material adverse effect on the Company’s liquidity, financial position and results of operation.

 

Note G – Related Party Transactions

 

The Company conducts its operations in facilities owned by one of the Company’s major shareholders. There is no current lease. Rent paid to this stockholder was $16,800 and $14,000 for the six months ended June 30, 2016 and 2015, respectively.

 

 

F-21

 
 

Note H – Subsequent Events

 

Management has evaluated events subsequent through November 18, 2016 for transactions and other events that may require adjustment of and/or disclosure in such financial statements.

 

After the close of business on June 30, 2016, all of the outstanding shares of the Company were acquired by Event Cardio Group, Inc., a publicly traded company. Accordingly, beginning July 1, 2016 the Company will operate as a wholly owned subsidiary of Event Cardio Group, Inc.

 

In connection with the purchase of all outstanding shares of the Company by Event Cardio Group, the former minority stockholder of the Company has entered into a four year employment agreement with the Company. The Agreement employs the former minority stockholder as the Chief Operating Officer (COO) and Executive of the Company. Among other things, the agreement sets the COO salary and bonus structure and provides for equity and related equity options in Event Cardio Group, Inc.

 

On July 14, 2016, Event Cardio Group entered into a lease for 6,000 square feet of office space located in Linthicum, Maryland. The lease is for a five year term, payable in monthly installments of $6,600, plus utilities, taxes and insurance. The Company has provided an unconditional guarantee to the landlord for the first 24 months should Event Cardio Group default under the terms of the lease. The guarantee is limited to $130,000.

 

 

F-22

 
 

(b) Pro forma financial information.

 

  EVENT CARDIO GROUP, INC.

  UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

  MAY 31, 2016

                         

      Historical            
      'May 31, 2016   June 30, 2016            
        Event Cardio Group, Inc.    Ambumed, Inc.    Combined Historical     Pro forma Adjustments    Combined Pro Forma 
  CURRENT ASSETS                    
  Cash and cash equivalents    $                 71,248    $                      96,926    $          168,174       1  $       (600,000)    $        (431,826)
  Accounts receivables                              -    #                          82,607                  82,607                      82,607
  Prepaid expenses                     387,382                              5,194                392,576                    392,576
  TOTAL CURRENT ASSETS                     458,630                          184,727                643,357                      43,357
                       
  NON-CURRENT ASSETS                    
  Investment in subsidiary                   1          1,300,200                          -   
                      2        (1,300,200)    
  Investment in Medpac Asia Pacific Unit Trust                     206,332                                    -                   206,332                    206,332
  Prepaid expenses - non current portion                     245,278                                    -                   245,278                    245,278
  Property and equipment, net                            305                              8,627                    8,932                        8,932
  Deposit on equipment purchase                     250,000                                    -                   250,000                    250,000
  Financing costs, net                       88,071                                    -                     88,071                      88,071
  Goodwill, net                              -                                       -                            -          2          1,180,822             1,180,822
  TOTAL NON-CURRENT ASSETS                     789,986                              8,627                798,613                 1,979,435
  TOTAL ASSETS    $            1,248,616    $                    193,354    $       1,441,970        $       2,022,792
                         
  CURRENT LIABILITIES                    
  Accounts payable and accrued expenses    $               425,658    $                      73,976    $          499,634        $          499,634
  Other payable                              -                                       -                            -          1             600,000                600,000
  Due to related parties                       41,708                                    -                     41,708                      41,708
  TOTAL CURRENT LIABILITIES                     467,366                            73,976                541,342                 1,141,342
                       
  NON-CURRENT LIABILITIES                    
  Convertible note payables- related parties                  1,258,053                                    -                1,258,053                 1,258,053
  TOTAL LIABILITIES                  1,725,419                            73,976             1,799,395                 2,399,395

 

 

F-23

 
 

  STOCKHOLDERS' DEFICIT                    
  Common stock                     135,894                                 100                135,994       1                 2,000    
                      2                  (100)                137,894
  Additional paid in capital                  4,272,653                          336,252             4,608,905       1               98,200    
                            (336,252)             4,370,853
  Equity Instruments to be issued                       56,451                                    -                     56,451                      56,451
  Subscription receivable                   (324,427)                                    -                 (324,427)                  (324,427)
  Accumulated other comprehensive income                     336,600                                    -                   336,600                    336,600
  Accumulated deficit                (4,953,974)                         (216,974)           (5,170,948)       2             216,974           (4,953,974)
  TOTAL STOCKHOLDERS' DEFICIT                   (476,803)                          119,378              (357,425)                    (376,603)
                       
  TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT    $            1,248,616    $                    193,354    $       1,441,970          $       2,022,792

 

                         
  Pro Forma Adjustments                      
                         
#1 Investment in subsidiary                  1,300,200                    
  Cash                              600,000              
  Other payable                              600,000              
  Common stock                                    2,000              
  Additional paid in capital                                98,200              
                         
  To record investment for Ambumed, Inc..  Payment of cash of $600,000, payable of balance $600,000 on the first anniversary of acquisition and issuance of 2,000,000 shares at $0.0501 per share
                           
#2 Investment in subsidiary                             1,300,200                
  Accumulated deficit                              216,974              
  Common stock                            100                  
  Additional paid in capital                     336,252                  
  Goodwill                  1,180,822                  
  To eliminate the investment in Ambumed and to record the goodwill.                  

 

 

F-24

 
 

 

  EVENT CARDIO GROUP, INC.

  UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT

  For the Nine Month Period Ended May 31, 2016

                   

    Historical            
    'May 31, 2016   June 30, 2016            
      Event Cardio Group, Inc.    Ambumed, Inc.   Combined Historical    Pro forma Adjustments    Combined Pro Forma 
                     
  Revenue, net  $                           -       $                   897,391    $                897,391          $             897,391
  Cost of sales                                 -                         622,528                      622,528                       622,528
                     
  Gross profit                                 -                         274,863                      274,863                       274,863
                     
  Operating expenses:                  
  General and administration expenses                  1,032,018                                     -                   1,032,018                    1,032,018
  Research & development - related party                     640,332                                     -                      640,332                       640,332
  Research & development - other                     116,079                         187,466                      303,545                       303,545
  Total operating expenses                  1,788,429                         187,466                   1,975,895                    1,975,895
                     
  Income (loss) from operations                 (1,788,429)                           87,397                 (1,701,032)                  (1,701,032)
                     
  Other expense                  
  Interest expense - related parties                       68,019                                   -                           68,019                         68,019
  Interest expense - other                       13,080                                   -                           13,080                         13,080
  Amortization - loan costs                     103,859                                     -                      103,859                       103,859
  Total other expense                     184,958                                     -                      184,958                       184,958
                     
  Net (loss) income                  (1,973,387)                           87,397                 (1,885,990)                  (1,885,990)
                     
  Other Comprehensive income                  
  Foreign currency translation adjustment                     233,168                                     -                      233,168                       233,168
                     
  Comprehensive (loss) income   $             (1,740,219)    $                     87,397    $           (1,652,822)        $        (1,652,822)
                     
  Earnings per share:                  
  Basic  $                      (0.01)        $                    (0.01)        $                 (0.01)
                     
  Diluted  $                      (0.01)        $                    (0.01)        $                 (0.01)
                     
  Weighted average number of shares outstanding:                  
  Basic              122,500,433       122,500,433 1         2,000,000   124,500,433
                         
  Diluted              122,500,433       122,500,433 1         2,000,000   124,500,433

 

 

F-25

 
 

  Pro Forma Adjustments                  
                     
#1 To effect shares issued upon acquisition                  
  The Company did not include potentially dilutive shares issued or outstanding as the effect of those shares would have resulted in an anti dilution.    

 

F-26

 
 

  EVENT CARDIO GROUP, INC.

  UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT

  For the Year Ended August 31, 2015

                     

    Historical            
    Aug 31, 2015   Dec 31, 2015            
      Event Cardio Group, Inc.    Ambumed, Inc.   Combined Historical    Pro forma Adjustments    Combined Pro Forma 
                     
  Revenue, net  $                           -       $                1,188,522    $             1,188,522                          -       $          1,188,522
  Cost of sales                                 -                         918,671                      918,671                       918,671
                     
  Gross profit                                 -                         269,851                      269,851                       269,851
                     
  Operating expenses:                  
  General and administration expenses                  1,185,356                         221,652                   1,407,008                    1,407,008
  Research & development - related party                     952,188                                     -                      952,188                       952,188
  Research & development - other                     270,633                                     -                      270,633                       270,633
  Total operating expenses                  2,408,177                         221,652                   2,629,829                    2,629,829
                     
  Income (loss) from operations                 (2,408,177)                           48,199                 (2,359,978)                  (2,359,978)
                     
  Other expense                  
  Interest expense - related parties                       71,104                                   -                           71,104                         71,104
  Interest expense - other                       14,000                                   -                           14,000                         14,000
  Total other expense                       85,104                                     -                        85,104                         85,104
                     
  Net (loss) income                  (2,493,281)                           48,199                 (2,445,082)                  (2,445,082)
                     
  Other Comprehensive income                  
  Foreign currency translation adjustment                       98,433                                     -                        98,433                         98,433
                     
  Comprehensive (loss) income   $             (2,394,848)    $                     48,199    $           (2,346,649)        $        (2,346,649)
                     
  Earnings per share:                  
  Basic  $                      (0.03)    $                             -       $                    (0.02)        $                 (0.02)
                     
  Diluted  $                      (0.03)    $                             -       $                    (0.02)        $                 (0.02)
                     
  Weighted average number of shares outstanding:                  
  Basic                95,254,771                                     -   95,254,771 1         2,000,000   97,254,771
                       
                     
  Diluted                95,254,771                                   -      95,254,771 1         2,000,000   97,254,771

 

 

F-27

 
 

 

  Pro Forma Adjustments                  
                     
#1 To effect shares issued upon reorganization                  
  The Company did not include potentially dilutive shares issued or outstanding as the effect of those shares would have resulted in an anti dilutive.    

 

F-28

 
 

 

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

On June 30, 2016, Event Cardio Group, Inc. (the ‘‘Company,’’ ‘‘we,’’ ‘‘our’’ or ‘‘us’’) completed the acquisition of Ambumed, Inc. The accompanying unaudited pro forma condensed consolidated combined balance sheet as of May 31, 2016 presents our historical financial position combined with Ambumed, Inc. as if the acquisition and the financing for the acquisition had occurred on May 31, 2016. The accompanying unaudited pro forma condensed consolidated combined statements of operations for the nine months ended May 31, 2016 and the year ended December 31, 2015 present the combined results of our operations with Ambumed, Inc. as if the acquisition and the financing for the acquisition had occurred on September 1, 2015. The historical unaudited pro forma condensed consolidated financial information includes adjustments that are directly attributable to the acquisition, factually supportable and with respect to the statement of operations are expected to have a continuing effect on our combined results. The unaudited pro forma condensed consolidated combined financial information does not reflect the costs of any integration activities or benefits that may result from realization of future cost savings from operating efficiencies, or any revenue, tax, or other synergies that may result from the acquisition. The unaudited pro forma condensed consolidated combined financial information and related notes are being provided for illustrative purposes only and are not necessarily indicative of what our financial position or results of operations actually would have been had we completed the acquisition at the dates indicated nor are they necessarily indicative of the combined company’s future financial position or operating results of the combined company.

 

The accompanying unaudited pro forma condensed consolidated combined financial information and related notes should be read in conjunction with our audited consolidated financial statements for the year ended August 31, 2015 and our unaudited condensed consolidated financial statements as of and for the nine months ended May 31, 2016 and Ambumed, Inc. audited financial statements as of and for the year ended December 31, 2015 and Ambumed, Inc. unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2016.

 

We prepared the unaudited pro forma condensed consolidated combined financial information pursuant to Regulation S-X Article 11. Accordingly, our cost to acquire Ambumed, Inc. of approximately $1.3 million has been allocated to the assets acquired and liabilities assumed according to their estimated fair values at the date of acquisition. Any excess of the purchase price over the estimated fair value of the net assets acquired has been recorded as goodwill. The preliminary estimates of fair values are reflected in the accompanying unaudited pro forma condensed consolidated combined financial information. The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. The final valuation will be based on the actual fair values of assets acquired and liabilities assumed at the acquisition date. Although the final determination may result in asset and liability fair values that are different than the preliminary estimates of these amounts included herein, it is not expected that those differences will be material to an understanding of the impact of this transaction to our financial results.

 

Note 1 — Basis of presentation

 

The unaudited pro forma condensed combined financial statements are based on Event Cardio Group, Inc. and its subsidiaries’ and Ambumed, Inc.’s historical consolidated financial statements as adjusted to give effect to the acquisition of Ambumed, Inc.

 

 

F-29

 
 

Accounting Periods Presented

 

Ambumed’s historical fiscal year ended on December 31 and, for purposes of the unaudited pro forma condensed combined financial information, its historical results have been aligned to more closely conform to the Company’s August 31 fiscal year end as explained below.

 

The unaudited pro forma condensed combined balance sheet as of May 31, 2016 is presented as if the Ambumed acquisition had occurred on May 31, 2016, and due to different fiscal period ends, combines the historical balance sheet of the Company at May 31, 2016 and the historical balance sheet of Ambumed at June 30, 2016.

 

The unaudited pro forma condensed combined statements of operations of the Company and Ambumed for the nine months ended May 31, 2016 and year ended August 31, 2015 are presented as if the Ambumed acquisition had taken place on September 1, 2015. Due to different fiscal period ends, the pro forma statement of operations for the nine months ended May 31, 2016 combines the historical results of the Company for the nine months ended May 31, 2016 and the historical results of Ambumed for the six months ended June 30, 2016.

 

The pro forma statement of operations of the Company and Ambumed for the year ended August 31, 2015, due to different fiscal period ends, combines the historical results of the Company for the year ended August 31, 2015 and the historical results of Ambumed for the year ended December 31, 2015.

 

Note 2 — Preliminary purchase price allocation

 

On May 31 2016, Event Cardio Group, Inc. acquired Ambumed, Inc. for total consideration of approximately $1.3 million. The unaudited pro forma condensed combined financial information includes various assumptions, including those related to the preliminary purchase price allocation of the assets acquired and liabilities assumed of Ambumed Inc. based on management’s best estimates of fair value. The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities. Accordingly, the pro forma adjustments are preliminary and have been made solely for illustrative purposes.

 

The following table shows the preliminary allocation of the purchase price for Ambumed, Inc. to the acquired identifiable assets, liabilities assumed and pro forma goodwill:

 

Purchase price allocation    
     
Total purchase price   $ 1,300,200  
         
Cash and cash equivalents     96,926  
Accounts receivable     82,607  
Prepaid expense     5,194  
Property & equipment, net     8,627  
Total identifiable assets     193,354  
         
Accounts payable and accrued expenses     (73,976 )
         
Net assets acquired     119,378  
         
Total proforma goodwill   $ 1,180,822  

 

 

F-30

 
 

Note 3 — Pro forma adjustments

 

The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:

 

Adjustments to the pro forma condensed combined balance sheet

 

(1) Reflects the investment in subsidiary and the payment of purchase price.

 

(2) Reflects the preliminary estimate of goodwill, which represents the excess of the purchase price over the fair value of Ambumed, Inc. identifiable assets acquired and liabilities assumed as shown in Note 2.

 

 

F-31

 
 

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 hereunto duly authorized.

 

Dated: November 23, 2016

 

  EVENT CARDIO GROUP INC.  
       
  By: /s/ Gary Blom  
    Gary Blom  
    Chief Executive Officer  

 

 

 

F-32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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