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Financials
I am frequently asked two important questions:
- Why does American HealthChoice not file with the SEC?
- Why is American HealthChoice unaudited?
The answers are that (1) there is nothing to file and (2) there is not yet enough money for an audit. First, please understand that we cannot file with the SEC any financial information that is not audited. Once a company becomes a fully reporting audited company, that company can never report without being audited. We have reviewed this issue in detail and recently received a quote for a new and complete audit. At this time, it is cost prohibitive as the cost was in excess of $100,000. I would rather put that money to work for the investors by increasing revenues and profits first, and then conducting a $100,000 audit once there is ample cash. That day will happen. But, I do not anticipate that happening in the next six (6) months.
We will, however, continue to release unaudited financials as we have in the past. And, we are working feverishly to grow your investment.
- We have been running the company very conservatively and "lean" the last twelve (12) months.
- I, as your CEO, have not taken a salary.
- I have hired additional accounting staff and, within 4-6 weeks, they should be able to catch up and release our financials.
- From a cash flow basis, we are current on our payables and will probably remain that way as long as I do not take a salary.
- We have paid down debts, brought our accounts payables current and eliminated a $100,000 factoring debt.
- There remains due $50,000 in taxes to the IRS from about a year ago. We are retiring this debt monthly.
- We are cash flow positive.
- The debt we have with La Jolla is being paid back in cash and in stock. (I believe we are paying $150,000 in cash and $150,000 in stock.They are allowed to convert $10,000 per month in stock at a 15% discount to the market.
- It is my belief that they are selling into the market regardless of the price per share.
- We are approximately 50% completed with this conversion - a painful process for all of us - and, if we had more cash, we would pay them and stop the dilution.
- I have asked to meet with them and will request that they cease the conversions.
- I believe the conversions are responsible for the dramatic downturn in the price per share.
- With regards to questions about Insider selling, Insiders cannot sell shares in a company such as ours unless the company is fully reporting.
Additional Financial Information
American HealthChoice is in dispute regarding an amount of money billed to us by our previous auditors, LG & T. One of our accounting employees was commingling company funds with his own on a regular basis. During 2004, 2005 and 2006, millions of dollars were deposited into this employee's account and, within a few days, transferred back to the company. I am unsure why he did this. The company's financials were a mess. I had to bring in our auditors, LG&T, to reconcile the financials. It was very costly. I refused to pay them for their work since the expense occurred, and the commingling went unnoticed, due to their negligence. Our comptroller stated to me, “I delivered the auditors the information each year on a silver platter, with a bow around it, so that they could find it. If they had in fact done their job, they would have found it." I have put them on notice and believe we have a legitimate legal claim against them. It appears, at this time, that the employee responsible for commingling has replaced any monies misappropriated. But, these actions have created an accounting nightmare.
OmniBody Scan
We have sold and delivered four (4) systems and we have several others sales opportunities in various stages. We have sold the distribution rights to the OBS camera in Texas and we are finalizing similar deals in Arkansas and Tennessee. I expect executed sales agreements within the next two weeks. We are also negotiating distribution rights in other states and countries, including India and China. Each distribution agreement requires a minimum number of cameras to be sold annually.
I believe the OmniBody Scan is the future of our company. It is a technology that is needed and it will save lives.
Texas Infrared law suit
The Court started a jury trial this week but it has been delayed through no fault of our own. We have requested the earliest date to begin again and hope this will be within 30 days. We are confident in our position and the outcome.
Clinics
The base of our operation still involves clinic operations and, historically, this is where our cash flow has come. We look forward to a dramatic increase in sales of the OmniBody Scan and, eventually, revenue from the OBS will exceed revenue from the clinics. Our affiliate clinic revenue has fallen off the last 18 months. We have recently initiated an aggressive collection effort against these clinics, have revamped the program, signed up some new clinics and have installed new procedures to ensure that we get paid in a more timely manner.
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