-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BYvCBN+hGmxFddC8rSMnITpnkegLtiKjXuBntsJZsj9gvx5O+ikLSAcLhfS7dg6E QQTXPqzJqD4NESY3g18KwA== 0000073779-05-000007.txt : 20050518 0000073779-05-000007.hdr.sgml : 20050518 20050518140727 ACCESSION NUMBER: 0000073779-05-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050518 DATE AS OF CHANGE: 20050518 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OCG TECHNOLOGY INC CENTRAL INDEX KEY: 0000073779 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 132643655 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-05186 FILM NUMBER: 05841192 BUSINESS ADDRESS: STREET 1: 56 HARRISON ST STREET 2: SUITE 501 CITY: NEW ROCHELLE STATE: NY ZIP: 10801 BUSINESS PHONE: 914-576-8457 MAIL ADDRESS: STREET 1: 56 HARRISON ST STREET 2: SUITE 501 CITY: NEW ROCHELLE STATE: NY ZIP: 10801 FORMER COMPANY: FORMER CONFORMED NAME: OCG TECHNOLOGIES INC DATE OF NAME CHANGE: 19851217 FORMER COMPANY: FORMER CONFORMED NAME: DATA DISPLAY SYSTEMS INC DATE OF NAME CHANGE: 19730422 10QSB 1 ocg_q.txt FORM 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to___________ Commission file number 0-5186 OCG TECHNOLOGY, INC. (Exact name of small business issuer as specified in its charter) DELAWARE 13-2643655 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 56 Harrison Street, New Rochelle, New York 10801 (Address of principal executive offices) (914) 576- 8457 (Issuer's telephone number) (Former name, address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate by check mark whether the registrant is an accelerated filer(as defined in Exchange Act Rule 12b-2) Yes [ ] No [X] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Class Shares Outstanding at May 5, 2005 Common Stock ($.01 par value) 49,901,120 Shares OCG TECHNOLOGY, INC. AND SUBSIDIARIES INDEX PART 1. FINANCIAL INFORMATION PAGE NUMBER Item 1. Financial Statements Consolidated Condensed Balance Sheets as of March 31, 2005 and June 30, 2004 1 Consolidated Condensed Statements of Operations for the Three and Nine Months Ended March 31, 2005 and 2004 2 Consolidated Condensed Statements of Cash Flow for the Nine Months Ended March 31, 2005 and 2004 3 Notes to Consolidated Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Item 3. Controls and Procedures 13 PART II - OTHER INFORMATION Item 2. Changes In Securities 13 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 All items that are not applicable or to which the answer is negative have been omitted from this report. OCG TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS March 31, 2005 June 30, 2004 (UNAUDITED) (AUDITED) ASSETS Current Assets: Cash $32,664 $30,431 Accounts receivable 2,414 570 Inventory 15,127 9,232 Note receivable - 13,477 Interest receivable 11,548 7,702 Other current assets 287 55,320 ---------- ---------- Total current assets 62,040 116,732 Property and equipment, net of accumulated depreciation of 6,354 15,107 Capitalized software costs, net of accumulated amortization 36,934 47,000 Other assets 4,972 4,972 ---------- ---------- Total assets $110,300 $183,811 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses 66,591 53,174 Note payable 16,632 7,966 Note payable, other 125,000 - Notes Payable, shareholder 188,700 188,700 ---------- ---------- Total liabilities 396,923 249,840 ---------- ---------- Shareholders' equity: Series C Preferred stock $.10 par value (200,000 authorized, 200,000 and 163,330 issued & outstanding, respectively) 20,000 16,333 Series E Preferred stock $.10 par value (100,000 authorized; 33,333 issued and outstanding) 3,333 3,333 Common stock $.01 par value (50,000,000 authorized; 49,901,120 and 41,273,613 issued, respectively) 499,011 412,736 Additional paid-in capital 26,468,998 26,468,998 Accumulated deficit (27,085,466) (26,788,944) Stock subscriptions receivable (130,000) (130,000) Unrealized loss on marketable securities 0 (32,823) ---------- ---------- (224,123) (3,530) Less: treasury stock, at cost (12,500 shares) (62,500) (62,500) ---------- ---------- Total shareholders' equity (286,623) (66,030) ---------- ---------- Total liabilities and shareholders' equity $110,300 $183,810 ========== ========== See accompanying notes to consolidated condensed financial statements OCG TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended March 31 March 31 2005 2004 2005 2004 --------- --------- --------- --------- Revenues $115,529 $75,266 $253,440 $214,853 Less: Cost of sales 59,653 38,242 138,663 99,559 --------- --------- --------- --------- Gross margin 55,876 37,024 114,777 115,294 --------- --------- --------- --------- Expenses: Marketing, general and administrative 56,905 46,370 163,040 113,835 Depreciation and amortization 6,064 23,010 18,820 62,981 Research and development 51,377 46,901 189,623 136,251 --------- --------- --------- --------- Total expenses 114,346 116,281 371,483 313,067 --------- --------- --------- --------- Net loss from operations (58,470) (79,257) (256,706) (197,773) Gain (loss) from sale of securities - - (41,300) 6,761 Interest - net 1,282 3,549 3,084 12,357 --------- --------- --------- --------- Net loss ($57,188) ($75,708) ($294,922) ($178,655) ========= ========= ========= ========= Weighted average number of shares outstanding during the period 47,743,783 42,363,618 47,743,783 42,363,618 ========== ========== ========== ========== Loss per Common Share - basic and diluted $(-)* $(-)* $(-)* $(-)* ========== ========== ========== ========== *Amounts less than ($.005) See accompanying notes to consolidated condensed financial statements OCG TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended December 31 2005 2004 ---------- ---------- Cash flows from operating activities: Net loss $294,922 ($178,655) ---------- ---------- Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 18,820 62,981 Issuance of stock and warrants for services 0 86,000 Loss on sale of securities 41,300 (6,761) Changes in assets and liabilities Receivables (5,690) (21,464) Other current assets 53,332 (69,896) Inventory (5,895) (3,905) Accounts payable and accrued expenses 13,417 (20,186) ---------- ---------- Total adjustments 115,284 26,769 ---------- ---------- Net cash used in operating activities 179,638 (151,886) ---------- ---------- Cash flows from investing activities: Proceeds from sale of marketable securities 5,000 132,761 Capitalized software development costs 0 (124,527) Increase in property and equipment 0 (10,288) ---------- ---------- Net cash provided by investing activities 5,000 (2,054) ---------- ---------- Cash flows from financing activities: Increase (decrease) in note payable, bank 8,666 (791) Increase in notes payable 125,000 - Proceeds from sale of common stock 43,205 44,000 Proceeds from sale of Series C Preferred Stock 0 110,000 ---------- ---------- Net cash provided by financing 176,871 153,209 ---------- ---------- Net increase (decrease) in cash 2,233 (731) Cash, beginning of period 30,431 10,832 ---------- ---------- Cash, end of period $32,664 $10,101 ========== ========== Non-cash investing and financing activities: exchange of notes receivable and related accrued interest for marketable securities $372,300 *Reclassified for comparative purposes See accompanying notes to consolidated condensed financial statements OCG TECHNOLOGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION In the opinion of management, the unaudited consolidated condensed financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). Certain information and footnote disclosure normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial statements. Preparing financial statements requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses. Actual results and outcomes may differ significantly from management's estimates and assumptions. Interim results are not necessarily indicative of results for a full year. The unaudited information included in this Form 10-QSB should be read in conjunction with the audited financial statements and notes for the year ended June 30, 2004. During the six months ended December 31, 2004, the Company, contributed three of its inactive subsidiaries to PrimeCare Systems, Inc. ("PSI"), one of the Company's wholly owned subsidiaries. Optronic Labs, Inc., Mooney-Edwards Enterprises, Inc. and CIG Technologies, Inc., were contributed in accordance with its commitments under an agreement and plan of reorganization. The Company has valued the subsidiaries on its books at their net book value, zero. PSI also received certain other assets and liabilities from the Company. Since the liabilities exceeded the assets, the transaction resulted in PSI's a reduction of Paid in capital in the amount of $184,289 and has no effect on these financial statements since they are consolidated and all intercompany transactions are eliminated on consolidation. OCG TECHNOLOGY, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A SUMMARY OF INCREASES (DECREASES) IN THE ITEMS INCLUDED IN THE CONSOLIDATED STATEMENTS OF LOSS IS SHOWN BELOW: General The following discussion and analysis should be read in conjunction with the Consolidated Condensed Financial Statements and Notes thereto appearing elsewhere herein. The following discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements include predictions, estimates and other statements that involve a number of risks and uncertainties. While this outlook represents the Company's current judgment on the future direction of the business, such risks and uncertainties could cause actual results to differ materially from any future performance suggested herein. The Company has experienced recurring losses from operations and has relied on its parent company to fund its operations. If necessary, the Company intends to provide additional working capital through the sale of equity interests in the Company. The Company has been able to obtain working capital from its parent company from the sale of equity interests in the parent company, there can be no assurances that the Company will succeed in its efforts to sell equity interests, which creates a doubt about its ability to continue as a going concern. 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 financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations following are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles of the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported. Capitalized Software Costs Capitalized software costs are amortized over the estimated useful life. Changes in circumstances, such as technological advances or shortfalls in marketing estimates, can result in differences between the actual and estimated useful life. In that case, we re-estimate the value and useful life of this long-lived asset and make the necessary adjustments to reflect the asset at its proper estimated value and amortize it over the remaining estimated useful life. Periodically, and when conditions dictate, we reevaluate the recoverability of the carrying value and useful life of this long-lived asset and make the necessary adjustments to reflect the asset at its proper estimated value and amortize it over the remaining estimated useful life. The Company had a write off of $239,964 and $187,819 of capitalized software costs during the years ended June 30, 2004 and June 30, 2003, respectively, in compliance with the Company's policy relating to reevaluating the value and useful life of this long-lived asset. Revenue Recognition Revenue is recognized when the earning process is complete and the risks and rewards of ownership have transferred to the customer, which is generally considered to have occurred upon shipment of the product. Sales of inventoried products are recorded on a gross revenue basis and sales of non-inventoried products are recorded on a net revenue basis. The Company has four sources of income: (1) sale of inventoried merchandise on its Web sites; (2) commissions received from vendors who link to our Web sites; (3) advertising fees; and (4) software license fees. Sale of inventoried merchandise. This revenue stream, which is the Company's primary source of income, is reported on a gross basis in compliance with EITF 99-19, because we purchase the merchandise from the source we select; are at risk for the purchaser's credit; and we ship the merchandise. We report the gross sales price as revenue and expense the cost of the merchandise and the shipping costs as cost of sales. The Company is almost always paid by credit card at the time of purchase and occasionally by check. Sales are booked when the merchandise is shipped. The merchandise is not shipped until the credit is approved. Commissions received from vendors The Company acts as a commissioned broker by displaying vendors' products on the Company's Web sites. When a consumer indicates a desire to purchase an item, the order is collected through the Web site and processed by the third party seller. The Company receives a commission on such sale after it is consummated. When the Company is paid, it reports the commissions on a net basis in compliance with EITF 99-19. The Company reports commissions this way because: (a) it does not have any direct costs; (b) it does not purchase the product sold; and (c) it does not have any credit risk on the sale, and it does not handle or ship the product when sold. The Company notifies the seller of an interested buyer and it receives a commission check from the seller upon the consummation of a sale. At that time we report the revenue on a net basis. Advertising fees The Company receives fees for placing advertisements on its Web sites. At the end of the month the Company sends an invoice to the advertiser and enters it on its books as income from advertising fees. Software license fees Although at the present time the Company does not have any income from software license fees, in the past and in the event such income resumes, the Company will account for software license fees in accordance with SOP 97-2. Revenues are recognized when all of the following criteria are met: (a) persuasive evidence of an arrangement exists; (b) delivery has occurred; (c) the vendor's fee is fixed or determinable; and (d) collectiblity is probable. All licenses are evidenced by a written contract. License fees are either annual fees, generally payable quarterly in advance, or are based on uses, which are purchased before use. The license fee includes updates to the software, but only during the term of the license. The software contains considerable medical information and the Company keeps this medical content reasonably current. The Company does not sell the software or any updates separately and therefore, has not established VSOE. The Company recognizes income ratably over the license term. Results of Operations Total revenues increased $40,263 and $38,587 for the three and nine months ended March 31, 2005, as compared to the same period for 2004, primarily due to the increase in merchandise sales. Cost of sales increased $21,411 and $39,104 for the three and nine months ended March 31, 2005 as compared to the same period for 2004. The Company's revenues for the nine months ended March 31, 2005, consisted of: $239,462 from the sale of merchandise (an increase of $76,499 for the same period in 2004); $15,652 from commissions (a decrease of $4,258 for the same period in 2004); and $76 from advertising fees (a decrease of $31,904 over the same period in 2004). Marketing, general and administrative expenses increased $20,058 and $49,206for the three months and nine ended March 31, 2005, as compared to the same periods for 2004. The increase was primarily as a result of an increase in sales and marketing expenses. Amortization of capitalized software costs decreased approximately$17,000 and $44,000 for the three and nine months ended March 31, 2005, and research and development (previously, other product costs) increased $4,476 and $53,372 for the three and nine months ended March 31, 2005, as compared to the same period for 2004, as a result of a reduction in the amount charged to Capitalized Software Costs. During the years ended June 30, 2004, and June 30, 2003, the Company had write offs of $239,964 and $187,819 of capitalized software costs, respectively, in compliance with the Company's policy relating to reevaluating the value and useful life of this long-lived asset. Liquidity and Capital Resources At March 31, 2005, the Company had a current ratio of .16 to 1 compared to ..69 to 1 as of December 31, 2004. The net loss for the Nine months ended March 31, 2004, was $294,922 compared to $178,655 for the same period of 2004. The increased loss was largely due to the write off of capitalized software cost discussed above plus the loss on the sale of securities. The Company has experienced recurring losses from operations and has been unable to provide sufficient working capital from operations and has relied significantly on the sale of equity interests in the Company, and the exercise of warrants and loans from shareholders to fund its operations. Cash on hand, inventory and receivables were $61,753 at March 31, 2005. During the nine months ended March 31, 2005, the Company raised $43,205 through the sale of Common stock. The Company also raised $5,000 from the sale of marketable securities and received advances in the amount of $125,000 as part of the plan of reorganization discussed below. As of March 2005, the Company has $130,000 of demand notes receivable related to the purchase of the Company's common stock through the exercise of warrants. Although, in the past, the Company's principal means of overcoming its cash shortfalls from operations was from the sale of the Company's stock, loans and the exercise of warrants, there can be no assurances that the Company will succeed in its efforts in the future Marketable securities The Company had advanced funds totaling $334,500, plus accrued interest at 7% per annum, pursuant to a grid note, dated February 4, 2002 (the "Note"). In consideration for these advances, the Company received warrants to purchase common stock of the borrower, exercisable over a period of three years from the date of issuance, at a price of $0.25 per share. The Company received a security interest in accounts receivable of the borrower anticipated to be generated under certain sales contracts which provide for borrower to install and maintain the health care system for certain countries. On October 10, 2003, the Company agreed to accept 3,709,230 restricted (unregistered) shares of the borrower's common stock, par value $0.0001 per share, (the "Stock") in full payment of the Note ($334,500 of principal, plus $36,423 of accrued interest, for the total amount of $370,923). The market value on October 10, 2003, of the Stock received was $704,753. During the year ended June 30, 2004, the Company realized $162,761 from the sale of 3,260,000 shares, which resulted in a loss of $163,239.During the six months ending December 31, 2004, the Company sold the balance of the shares for $5,000, realizing an additional loss of $41,300. Plan of reorganization and change of control On March 16, 2005, OCG Technology, Inc. ("OCGT"), entered into an agreement and plan of reorganization with Centerstaging Musical Productions, Inc. and its stockholders. Pursuant to the terms of the agreement, OCGT will acquire all of the issued and outstanding capital stock of Centerstaging Musical Productions, Inc. in exchange for the issuance of shares of OCGT's Series F Preferred stock. Upon the closing of the share exchange, Centerstaging Musical Productions, Inc. will become a wholly-owned subsidiary of OCGT. The transaction will result in a change of control of OCGT, whereby approximately 96% of OCGT's outstanding shares will be owned by persons who were previously stockholders of Centerstaging Musical Productions, Inc. OCGT will change its corporate name to Centerstaging Musical Productions, Inc. Centerstaging Musical Productions, Inc., is engaged in the business of providing studio and equipment rental and performing production services to musicians and production companies nationwide on both a short-term and long-term basis. CMPI has more than 50 employees, with locations in Burbank, California, and Bensalem, Pennsylvania (30 miles from Philadelphia). As a condition of the agreement with Centerstaging, it was agreed that 100% of the shares of PrimeCare Systems, Inc., owned by OCG Technology, Inc., would be distributed to those stockholders of OCG Technology, Inc., prior to the closing of the agreement. The outstanding shares of PrimeCare Systems, Inc. were forward split to accommodate the distribution and, accordingly, an aggregate of 69,901,120 shares of PrimeCare Systems, Inc. common stock will be issued to the stockholders of record on March 22, 2005 (the "Record Date") on the basis of one share of PrimeCare's common stock for each share of OCG Technology, Inc. common stock owned at the Record Date. PrimeCare Systems, Inc. has filed a registration statement in order to facilitate the distribution (spin-off). Only those stockholders who owned OCGT shares on March 22, 2005 are entitled to receive shares in connection with the spin- off. Those persons that received shares pursuant to the agreement or acquired their shares after March 22, 2005, will not be eligible for the spin-off. Following the spin-off, there will be 69,901,120 shares of PrimeCare Systems, Inc. common stock outstanding. The agreement with Centerstaging also provides that, OCGT shall cause PrimeCare Systems, Inc. to offer, as of the Record Date, to each holder on such date of options, warrants or other rights to subscribe for or purchase OCGT common stock (" OCGT Stock Rights"), in exchange therefor, an option, warrant or similar right to subscribe for or purchase an equivalent number of shares of stock of PrimeCare Systems, Inc. on substantially the same terms and conditions as those contained in such corresponding OCGT Stock Rights (the "Exchange Offer"). The Exchange Offer shall occur as of, and shall be conditioned upon, the closing of the agreement. As of the Record Date, the OCGT Stock Rights issued were warrants (the "Warrants") to purchase 18,836,262 shares of OCGT common stock, exercisable at prices ranging between $.02 and $.25 per share. PrimeCare Systems, Inc. has offered each and every holder of a Warrant, a warrant to purchase one share of PrimeCare Systems, Inc. common stock for each Warrant held, in exchange for and cancellation of the Warrants held. As a result, PrimeCare Systems, Inc. may have as many 18,836,262 Warrants issued to purchase its common stock at prices ranging between $.02 and $.25 per share. These Warrants are not being included for registration in this Registration Statement. The agreement with Centerstaging also provides that Centerstaging Musical Productions, Inc. will advance up to $175,000 to OCG Technology, Inc. and pay PrimeCare Systems, Inc. $25,000 at the closing. Following the effectiveness of this registration statement, PrimeCare Systems, Inc. will become a reporting company under the Securities Exchange Act of 1934, as amended. This will make information concerning PrimeCare Systems, Inc. more readily available to the public. PrimeCare Systems, Inc. expects to conclude the spin-off immediately following the effectiveness of this registration statement. Products Overview. Fitness Web Site: The Company's primary source of revenues are derived from the operation of the "shopping cart" on the fitness and wellness Web site known as www.DeniseAustin.com where it is the exclusive seller of Denise Austin videos and DVDs. The fitness and wellness Web site features Denise Austin, a nationally known fitness expert who has had a daily fitness show on television for over 15 years, the Company promotes and markets a variety of Denise Austin products on the Web site. Visitors and fans are able to shop online for their favorite Denise Austin signature exercise videos, books, equipment, gear, and private label apparel and nutraceuticals (when available), as well as sign up for her monthly news letter, enjoy fitness tips, exercises, motivation messages, and some of her favorite healthy recipes. Competition: Although there are a number of fitness TV shows, Denise Austin's Daily Workout is reputed to be the number one fitness show on television with over four million viewers each weekday morning. PrimeCare(TM) Patient Management System, Version 9 PrimeCare(TM) Patient Management System, Version 9 ("PrimeCareTM Version 9") is a complete, ground-up redesign and re-write of the Company's initial EMR, the PrimeCareTM Patient Management System ("PCPMS"). The overall system architecture has been changed; the supporting data base structures have been enhanced; the client interface has been redesigned to more accurately reflect the operational needs of the end-users, and user installation has been greatly simplified. PrimeCareTM Version 9 is a user friendly, patient management system that is patient, physician and staff, interactive. PrimeCareTM Version 9: (i) creates an electronic medical record documenting the patient physician encounter; (ii) is compatible with practice management and billing systems, EMR and CPR systems; (iii) is Health Insurance Portability Accountability Act ("HIPAA") compliant; (iv) is designed for use in ambulatory clinics, group and individual practices; (v) uses an authoritative and comprehensive knowledge database of approximately 280 symptom and problem oriented patient Questionnaires for diagnostic and follow-up office visits; (vi) collectively contains over 100,000 complaint and disease state questions, over 2,000 diagnoses, over 675 physician reference articles, over 300 patient education articles; (vii) allows the staff to schedule the appropriate Questionnaire and enter the vital signs; (viii) interacts directly with the patient by having the patient select the answers that apply to their problem from the Questionnaire; (ix) does not require the patient to have computer or typing skills; (x) enables the physician to obtain their patients' detailed History of Present Illness ("HPI") by having the patient answer the Questionnaires without requiring physician or staff time; (xi) allows the physician to interact directly with PrimeCareTM Version 9 to select and document the normal and abnormal physical findings, assessments, tests, prescriptions and treatment plan for the patient; (xii) provides automatic (real time) calculation of HCFA's Evaluation and Management ("E&M") code, with a full audit trail, used for determining the reimbursement level by Medicare and other third party payers for the office visit; (xiii) virtually eliminates dictation and transcription costs; (xiv) reduces risk of malpractice liability due to errors of omission and "failure to consider"; (xv) permits patients to answer Questionnaires at their own speed (xvi) creates significant clinical and patient databases for outcomes research. When the patient arrives at the doctor's office, a designated staff member selects the appropriate Questionnaire based upon the patient's chief complaint and/or symptom and enters the patient's vital signs. The patient is then seated at a computer and answers complaint-specific questions by using either the keyboard number keys or mouse to indicate answers that apply to him or her. No typing or computer skills are required. When the patient has completed the Questionnaire, PrimeCareTM Version 9 creates a Preliminary Report (the "Report") for the physician to review before examining the patient. The Report contains the patient's current problems, medications and allergies, and the patient's detailed HPI that includes all of positive and significant negative subjective responses, vital signs and an alphabetical list of the diagnostic possibilities with the patient's responses repeated that support, or give rise, to each diagnostic possibility. By freeing up the time physicians would normally have to spend asking patient history questions and recording responses, PrimeCareTM Version 9 permits physicians to see more patients and to spend more quality time with each patient. PrimeCareTM Version 9 is also easy for physicians to understand and use. The same simple key stroke or mouse click process allows the physician or appropriate staff member to select and document the: physical findings (normal and abnormal), assessment, tests, treatment plan, prescribed medications, and patient education materials to be distributed and to schedule follow-up visits. The physician or appropriate staff member can also type a comment that expands upon: an answer selected by the patient in the Questionnaire, a physical finding, an assessment, a treatment plan, a prescription, or about any subject that may be appropriate. At the conclusion of the encounter a final summary report of the visit that includes, the patient's HPI, physical findings, assessment, tests, prescriptions, treatment plan, patient educational materials and the scheduled follow-up visit, are stored electronically in the patient's file, and can be printed for the patient. PrimeCareTM Version 9: standardizes the patient record; assures consistency in patient care; creates a patient database for clinical and outcomes research; supports utilization review and quality assurance audits; improves the quality of care; increases efficiency and productivity of the physician's practice; automatically generates a problem list; incorporates patient care algorithms and clinical practice guidelines; permits, with appropriate security controls, both local and remote, on-line electronic retrieval of patient records and hard copy print outs; enables rapid access to important patient data for clinical care; contains and provides patient education materials about disease, disease management, tests and medications; and provides physician reference materials. PrimeCareTM Version 9's overall system architecture has been redesigned away from a local network based two-tier client-server application, used in the prior version of the PCPMS, to incorporate a robust three-tier client-provider-relational database management system ("RDBMS") application, designed for geographically separated tiers. The client (end-user) tier of PrimeCareTM Version 9 is designed to connect with the middle or provider (server) tier via internet communications. The provider and data base tiers are designed to support multiple, distinct clients simultaneously. The client application has been designed to allow easy internalization and localization. Supporting data bases have been redesigned to remove unnecessary redundancies, including a major redesign of the patient/physician encounter questionnaire. Also, provisions have been added for support of an unlimited number of alternative languages. Currently, language support is offered in, or being developed for, English, Spanish, French, and Simplified Chinese. PrimeCare(TM) Version 9 continues to be a Windows(TM) application. Although the client tier will run on Windows 95 or any later Windows desktop operating system, it performs best when hosted on Windows 2000, Windows NT, or Windows XP. The server (provider tier) and data base tiers of PrimeCare(TM) Patient Management System, Version 9 should be hosted on redundant Windows 2000 or Windows XP servers with appropriate backup, and standby support. The three-tier architecture of PrimeCareTM Version 9 provides many advantages, including easy client installation; reduced on-site support requirements; enhanced data security; and maximum flexibility. PrimeCareTM Version 9's reduced installation and maintenance costs and its flexibility enables it to be adapted to a wide variety of health care organizational uses, including national and local health care systems, military organizations, correctional facilities, HMOs, hospitals with outpatient services, clinics, group practices and solo practitioners. As a three-tier application, PrimeCareTM Version 9, requires only that the client tier application be installed at the end-user location. This system architecture greatly simplifies both user installation and system maintenance. Although the client (end-user) tier uses the internet to communicate with the provider and data base tiers, it is not a browser-based application, thereby eliminating the many compatibility and security issues involved in supporting multiple browser configurations. The PrimeCareTM Version 9 client is a specially written front-end application, designed to be downloaded by the client via a web connection, and then installed at the client's location using normal Windows installation procedures. The system is designed to support multiple reimbursement models, including free demo, no-charge use, sponsored use, flat fee, periodic (monthly / annual) fee, activity based fees, and option-based fees. Competition: The Company has not identified any competitive patient management system which embodies all the features of the PrimeCareTM System, in particular the complaint specific, interactive Questionnaires completed by the patient and the report generated by the patient's responses. The Company believes that it has the only in-office patient management system and Web sites that enable physicians to obtain the patient's detailed History of Present Illness by having the patient answer problem-specific HPI Questionnaires on a PC in the office or via the Internet. However, other companies market systems which may have some of the features of the PrimeCareTM System and some companies market medical office products which perform different functions than those performed by the PrimeCareTM System. To date, market penetration by both the Company and its competitors has been limited. PrimeCareTM Patient Management System ("PCPMS") The PCPMS was the Company's initial EMR offering. The Company has discontinued marketing the PCPMS Code ComplierTM: The Company has also developed Code ComplierTM an application software program that was designed to be used in conjunction with The Company's PrimeCareTM and PrimeCareOnTheWeb.comTM. As each item of information is entered into and collected by PrimeCareTM during the patient encounter, the CodeComplierTM organizes the data in the proper classification and using the 1997 HCFA guidelines, automatically calculates HCFA's Evaluation and Management code level, with full audit trail, used for determining the reimbursement level by Medicare and other third party payors for the History, Physical Findings and Decision Making sections the office visit. It totally eliminates the time and effort which would otherwise be required by the physician or office personnel to complete this task. CodeComplierTM takes the guess work out of E&M and third party payer compliance. CodeComplier is an integral part of PrimeCareTM Version 9. PrimeCareOnTheWeb.com (the "PCW Site"): The PCW Site is a unique physician and patient interactive Site that: (i) uses PrimeCare's unique Questionnaires for diagnostic and follow-up office visits, physician reference articles, patient education material, CodeComplierTM for real time calculation of E&M code and the scheduler portion of PrimeCareTM; (ii) enables physicians to obtain their patient's detailed HPI by having the patient answer Questionnaires via the Internet without requiring physician time; (iii) saves the physician and staff the time required to obtain the HPI, thus allowing them to give more attention to each patient and/or see more patients; (iv) produces an extremely comprehensive HPI that includes all of the "yes" answers, pertinent negatives and a list of the diagnostic possibilities with the answers repeated that support each diagnostic consideration; (v) is HIPAA compliant; (vi) protects all Internet communication and the confidentiality rights of every user through a unique user ID and password per Questionnaire to be answered and secure digital certificates from VeriSignTM, (vii) encrypts all data for storage; (viii) enables creating a significant data base for outcomes research; and (ix) automatically provides registered physicians individual Web sites on YourOwnDoctorTM.com. YourOwnDoctor.com (the "YOD Site"): The YOD Site is a web community created, owned, operated and maintained by the Company that: (i) provides free individual Web sites for physicians, physician groups, and other health care providers that register for PrimeCareOnTheWebTM; (ii) enables physicians to promote their services through displaying credentials, including photos of each physician and staff in the office, listing specialities, office hours, directions, maps, phone numbers, e-mail addresses, and accepted insurance plans; (iii) provides useful links to other medical sites; (iv) provides a direct link from physician site to PCW that enables patient to access appropriate Questionnaire and complete; (v) provides direct link to YourOwnHealth.comTM for use by patients. YourOwnHealth.com (the "YOH Site"): The YOH Site is a unique, free online health and wellness site designed to empower health care consumers to be better prepared for their next visit to the doctor. The YOH Site offers: (1) the "Medical Interview" that: (i) enables visitors to securely and anonymously select and complete from approximately 110 of the 280 Questionnaires contained in PrimeCareTM Version 9 and PCPMS; (ii) generates and makes available to the visitor a detailed HPI report based upon their responses; (iii) permits the visitor to answer the Questionnaires in either English or Spanish; (iv) encrypts all medical data and uses digital certificates from VeriSignTM for Internet communication; (v) provides banner links to the YOD Site and www.DeniseAustin.com. (2) "YourOwnHealthTM Notebook": (i) is a secure depository for storage of personal and family medical data for Registered Members; (ii) can be accessed only through the use of registered IDs and Passwords; (iii) encrypts all medical data and uses digital certificates from VeriSignTM for Internet communication; (iv) provides a convenient way to keep track of personal health issues such as allergies, immunizations, medications and others that can be kept and edited on designated lists; (v) allows the Member to save their completed HPI Questionnaire reports and to add personal notes and reminders to the record. (3) "YourOwnHealthTM Reference" provides extensive health care consumer education material relating to diseases, disease management, medical procedures and prescription and common over the counter medications, including drug interaction. The Market: The Company's domestic and international markets for: (a) the PrimeCareTM Version 9, the PCW, YOH and the YOD Sites are ambulatory/outpatient medical facilities, such as, primary care physicians, medical clinics, group practices, health maintenance organizations, health care insurance companies and in general, health care providers other than those providing care to patients confined to hospital beds; and (b) the YOH Site is for the use of the general public. Revenue Sources and Marketing Strategy: During the fiscal year ended June 30, 2002, the PrimeCareTM System was selected to be part of a major international health care information management program, anticipated to be installed in a number of countries as their health care system. To date these contracts have not materialized and the Company does not believe they will materialize. The need for new approaches in health care delivery is critical. PrimeCare(TM) Version 9 is a software system that provides for the creation of new health care insurance products to meet the needs of millions of uninsured Americans at a cost that they can afford. It will enable the insurer to reduce the cost of care for current enrollees and introduce new cost-effective products while maintaining the quality of care. Licensing Fees: The Company believes that the increased awareness of PrimeCare(TM) Version 9 will enhance the Company's ability to obtain additional contracts and annual licensing fees from large fixed population groups, which includes, but is not limited to, other countries, labor unions, medical insurance companies, HMOs, military forces and correctional facilities. Advertising Fees: Advertising revenues are dependant upon the number of visitors that use the Company's Web sites. The Company believes that the use of PrimeCare(TM) Version 9 by licensees will increase awareness and use of the Company's Web sites and thus result in increased advertising fees. Outcomes Research. Potentially, the Company could receive fees or grants for conducting outcomes research for pharmaceutical companies, teaching hospitals, governmental agencies and philanthropic organizations. The Company anonymizes, encrypts and stores the data from both the completed diagnostic and follow-up Questionnaires. This ever-growing medical database can be analyzed in various ways to determine the effectiveness of treatment plans, medications, etc. The Company has entered into an agreement with Hackensack University Medical Center ("HUMC"). The agreement provides for the use of the Company's Web sites by HUMC's medical services organization ("MSO"), North Jersey Medical Management Services, L.L.C. This MSO has over 1,000 physicians. HUMC, and its Physicians Hospital Organization, have created www.HUMCMD.net, a complete Physician/Patient Internet Service Provider ("ISP") providing top quality Internet connectivity to members of its physician network, plus access to key internal HUMC applications. The HUMCMD site has both a "Physician Portal" and "Patient Portal". The site currently contains the Company's PCW Site and YOH Site. The Company's advertising revenues are dependent upon HUMC's marketing efforts to its Staff Physicians and patients. Fitness Web Site: The Company's primary source of revenues are derived from the operation of the "shopping cart" on the fitness and wellness Web site known as www.DeniseAustin.com where it is the exclusive seller of Denise Austin videos and DVDs. The fitness and wellness Web site features Denise Austin, a nationally known fitness expert who has had a daily fitness show on television for over 15 years, the Company promotes and markets a variety of Denise Austin products on the Web site. Visitors and fans are able to shop online for their favorite Denise Austin signature exercise videos, books, equipment, gear, and private label apparel and nutraceuticals (when available), as well as sign up for her monthly news letter, enjoy fitness tips, exercises, motivation messages, and some of her favorite healthy recipes. Competition: Although there are a number of fitness TV shows, Denise Austin's Daily Workout is reputed to be the number one fitness show on television with over four million viewers each weekday morning. The Company believes that it could obtain sufficient working capital from operations through marketing PrimeCareTM Version 9 and its other Internet products. Currently, the Company has lines of credit with RBC Centura Bank for a maximum of borrowing of $20,000 and has no material commitments for capital expenditures outstanding. PART II - OTHER INFORMATION Item 2. Changes In Securities During the nine months ended March 31, 2005 an aggregate of 4,320,539 shares of the Company's common stock were sold for $43,205.39 or $0.01 per share plus warrants to purchase 4,320,539 shares at $0.02 per share. The financial statements include recognition of an additional $215,033 related to these stock transactions, characterized as paid in capital and interest expense. No shares of common stock are reserved for the exercise of the warrants. Exercise of the warrants is contingent upon the shareholders approving an increase in the authorized common stock to at least 100,000,000 shares. In consummating the above described private placements, the Company relied upon the exemptions from registration provided by Sections 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506 promulgated thereunder based upon: representations from the investor that he, she or it, (a) met one of the categories of accredited investor set forth in Rule 501, (b) was acquiring the securities for his, her or its own account and not with a view towards further distribution and (c) had such sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks connected with the applicable investment, and the fact that (a) no general solicitation of the securities was made by the Company, (b) the securities issued were "restricted securities" as that term is defined under Rule 144 promulgated under the Securities Act, (c) the Company placed appropriate restrictive legends on the certificates representing the securities regarding the restricted nature of these securities and (d) prior to the completion of each transaction, each investor was informed in writing of the restricted nature of the securities, provided with all information regarding the Company as required under Rule 502 of Regulation D and was given the opportunity to ask questions of and receive additional information from the Company regarding its financial condition and operations. Item 6. Exhibits and Reports on Form 8-K (a) 31.1 Certification pursuant to Rule 13a-14 AND 15d-14 of the Securities Exchange act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley act of 2002 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002 (b) Reports on Form 8-K A Form 8-K was filed on October 20, 2004 and a Form 8-K was filed on November 12, 2004, both relating to the change in the Company's independent auditors. A Form 8-K was filed on March 22, 2005,and amended on April 12, 2005 relating the Agreement and Plan of reorganization and change of control more fully discussed above. SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized. OCG TECHNOLOGY, INC. BY /s/Edward C. Levine EDWARD C. LEVINE, PRESIDENT (CHIEF FINANCIAL OFFICER) DATED: May 14, 2005 EX-31 2 ex31_1.txt EXHIBIT 31.1 Exhibit 31.1 CERTIFICATION PURSUANT TO RULE 13a-14a or Rule 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-0XLEY ACT OF 2002 I, Edward C. Levine, President/Chief Financial Officer of the Registrant, OCG Technology, Inc. hereby certify that: 1) I have reviewed this quarterly Form 10-QSB for the period ending March 31, 2005 of OCG Technology, Inc.; 2) Based on my knowledge, this quarterly 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 quarterly report; 3) Based on my knowledge, the financial statements, and other financial information included in this 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 quarterly report; 4) I am solely responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d- 15(f)) for the Registrant and I have: a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report was prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting procedures; c) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and d) disclosed in this quarterly report any change in the Registrant's internal control over financial reporting that occurred during the period ending March 31, 2005 that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5) I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: May 14, 2005 By: /s/ Edward C. Levine --------------------------------------------------- Edward C. Levine, President/Chief Financial Officer EX-32 3 ex32_1.txt EXHIBIT 32.1 Exhibit 32.1 CERTIFICATION PURSUANT TO RULE 13a -14(b) or RULE 15d-14(b) AND SECTION 1350 OF TITLE 18, OF THE UNITED STATES CODE (18 U.S.C. 1350) AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of OCG Technology, Inc., (the "Company") on Form 10QSB for the period ending March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward C. Levine, 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) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. By: /s/ Edward C. Levine --------------------------------- Edward C. Levine, President/Chief Financial Officer May 14, 2005 -----END PRIVACY-ENHANCED MESSAGE-----