UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
Commission File No. 01-28911
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(Exact name of Registrant as specified in its charter)
Colorado, USA 91-1869677
(State of Incorporation) (IRS Employer Identification No.)
21800 Oxnard Street, #440, Woodland Hills, California 91367
(Address of principal executive offices)
Issuer's Telephone Number, (818) 598-8888
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. |_| Yes |_| No
APPLICABLE ONLY TO CORPORATE ISSUERS
State number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at March 31, 2000
Common Stock, $.001 5,575,000 shares
par value Outstanding Securities
Transitional Small Business Disclosure Format (check one): Yes|_| No|X|
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
A financial statement, unaudited and included herein, beginning on page
F-1 (Exhibit 99.0), is incorporated herein by this reference.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
GENERAL
National Healthcare Technology, Inc. (the "Company") was organized
February 29, 1996 as "Patriot Holding Corporation" and subsequently changed its
name to "National Healthcare Technology, Inc." on August 26, 1996. Between 1996
and 1999, the Company was unsuccessful in raising sufficient capital to begin
and complete a proposed double-blind study of an intravenous drug called
Magkelate. The Company did raise $1,000,000 which was used to pay its operating
expenses and general and administrative expenses as well as expenses related to
starting the double-blind study. Following its inability to raise capital and
needing to conserve its financial resources, the Company dismissed all of its
employees in early 1999. The developer of Magkelate passed away in the fall of
1999 and the Magkelate patent has expired. Since 1999, the Company has been
substantially inactive. The Company is in the development stage as defined in
Statement of Financial Accounting Standards No. 7.
When used in this Form 10-QSB, the words "anticipate", "estimate",
"expect", "project" and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions including the possibility that the Company's
proposed plan of operation will fail to generate projected revenues. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected.
LIQUIDITY AND CAPITAL RESOURCES
The Company is in the development stage and since inception has
experienced no significant change in liquidity or capital resources or
stockholders equity other than the receipt of $1,000,000 from an offering
conducted under Rule 504 of Regulation D in 1997. The Company's balance sheet as
of March 31, 2000 reflects limited assets and limited liabilities. Further,
there exists no agreements or understandings with regard to loan agreements by
or with the Officers, Directors, principals,
<PAGE>
affiliates or shareholders of the Company.
During the quarter ended March 31, 2000, the Company received a loan of
$20,000 from Stein's Holdings, Inc., a publicly held company in which two of the
Company's directors are also directors. The Company used the loan proceeds to
pay its outstanding bills. The note is due on June 1, 2000 and the interest rate
for the loan is 12% annually. At the discretion of the lender, the Company may
satisfy the note through the issuance of shares of the Company's common stock.
The Company is continuing to search for suitable merger candidates or other
businesses to become involved in so that it can commence operations and generate
revenues to continue paying its bills.
For the six months ended March 31, 2000, the Company had total assets of
approximately $7,100 compared to total assets of approximately $32,536 for the
six months ended March 31, 1999. The difference in the two periods results from
the Company having used its cash to pay its expenses over the past year while no
new funds were received. For the six months ended March 31, 2000, the Company
had liabilities of approximately $29,000 compared to no liabilities for the same
period during the previous fiscal year. The reason for the differences between
the two periods is that the Company had the cash to pay all of its expenses last
year while this year it is having to borrow money to pay its expenses.
For the six months ended March 31, 2000 and March 31, 1999, the Company
had no revenues. Its expenses for the six months ended March 31, 2000 were
approximately $39,000 while its expenses for the period ended March 31, 1999
were approximately $200,000. The expenses for this year were composed mostly of
professional fees for filing the Company's registration statement on Form 10-SB
and for auditing and office expense. For the period ended March 31, 2000, the
Company was still attempting to commence its double blind study of Magkelate and
the expenses resulted from those efforts along with salaries and other office
expenses.
The Company will attempt to carry out its plan of business and hopes to
enter into a business combination with another entity. The Company cannot
predict to what extent its lack of liquidity and capital resources will hinder
its business plan prior to the consummation of a business combination.
RESULTS OF OPERATIONS
During the period from November 5, 1989 (inception) through March 31,
2000, the Company engaged in limited operations and attempted to initiate its
double blind study of its drug, Magkelate. The Company received no revenues
during this period. The capital raised was expended for general office and
<PAGE>
administrative expenses and the proposed double-blind study of Magkelate, which
double-blind study the Company was unable to start due to lack of capital.
During the quarter ended March 31, 2000, the Company borrowed $20,000 at 12%
from a company in which two of its directors, Messrs. Smith and Einhorn, are
also directors. The Company used the loan proceeds to pay its outstanding bills.
The Company anticipates that until a business combination is completed
with an acquisition candidate, it will not generate revenues and may operate at
a loss after completing a business combination, depending upon the performance
of the acquired business.
The Company will attempt to carry out its business plan as discussed
above. The Company cannot predict to what extent its lack of liquidity and
capital resources will hinder its business plan prior to the consummation of a
business combination.
NEED FOR ADDITIONAL FINANCING
The Company's existing capital is not be sufficient to meet the Company's
cash needs, including the costs of compliance with the continuing reporting
requirements of the Securities Exchange Act of 1934, as amended. Once a business
combination is completed, the Company's needs for additional financing are
likely to increase substantially.
No commitments to provide additional funds have been made by management or
other stockholders. Accordingly, there can be no assurance that any funds will
be available to the Company to allow it to cover its expenses. The loan of
$20,000 that the Company received during the quarter ended March 31, 2000 was
used to pay the Company's expenses, with most of the proceeds being used to pay
the costs of registering the Company under the 1934 Act and the Company's
compliance with the reporting requirements of the 1934 Act.
The Company might seek to compensate providers of services by issuances of
stock in lieu of cash.
PART II
Item No. 1 - Legal Proceedings
Not Applicable.
Item No. 2 - Changes in Securities
Not Applicable.
<PAGE>
Item No. 3 - Defaults upon Senior Securities
Not applicable.
Item No. 4 - Submission of Matter to a vote of Securities Holders
Not applicable.
Item No. 5 - Other Information
Not applicable.
Item No. 6 - Exhibits and Reports on Form 8-K
(a) No reports on Form 8-K were filed during the three months ended
March 31, 2000.
(b) Exhibits
99 Financial Statements for the periods ended March 31, 2000 and 1999
27 Financial Data Schedule
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
NATIONAL HEALTHCARE TECHNOLOGY, INC.
Date: May 11, 2000
By /s/ James Smith
------------------------------------------
James Smith, CEO
By /s/Toni A. Hussain
------------------------------------------
Toni A. Hussain, Secretary/Treasurer
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page No.
--------
<S> <C>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT ......................................... 1
FINANCIAL STATEMENTS
Balance Sheets........................................................... 2
Statements of Operations................................................. 3
Statement of Changes in Stockholders' Equity (Deficit).................... 4 - 5
Statements of Cash Flows................................................. 6 - 7
Notes to Financial Statements............................................ 8 - 11
</TABLE>
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholders
National Healthcare Technology, Inc.
Woodland Hills, California
We have reviewed the accompanying balance sheets of National Healthcare
Technology, Inc. as of March 31, 2000 and 1999, and the related statements of
operations, changes in stockholders' equity (deficit) and cash flows for the six
months then ended, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants. All information included in these financial statements is the
representation of the management of National Healthcare Technology, Inc.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
Moffitt & Company, P.C.
Scottsdale, Arizona
April 30, 2000
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
MARCH 31, 2000 AND 1999
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 275 $ 23,858
Loan receivable, Stein's Holdings, Inc. 5,299 8,678
Prepaid insurance 1,600 0
----------- -----------
TOTAL ASSETS $ 7,174 $ 32,536
=========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 9,239 $ 0
Accrued interest 72 0
Note payable 20,000 0
----------- -----------
TOTAL CURRENT LIABILITIES 29,311 0
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.01 par value
500,000 shares authorized
-0- shares issued and outstanding 0 0
Common stock, $.001 per share
25,000,000 shares authorized
5,575,500 shares issued and outstanding 5,575 5,575
Paid in capital in excess of par value of stock 1,216,919 1,216,919
Deficit accumulated during the development stage (1,244,631) (1,189,958)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (22,137) 32,536
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 7,174 $ 32,536
=========== ===========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
2
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
COMPARATIVE STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999 AND
FOR THE PERIOD NOVEMBER 5, 1995 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
(UNAUDITED)
November 5, 1995
Six (Date of
Six Months Months Inception)
Ended Ended Through
March 31, March 31, March 31,
2000 1999 2000
----------- ----------- -----------
REVENUE $ 0 $ 0 $ 0
DEVELOPMENT COSTS 39,671 200,472 1,243,031
----------- ----------- -----------
NET (LOSS) BEFORE INCOME TAXES (39,671) (200,472) (1,243,031)
INCOME TAXES 0 0 1,600
----------- ----------- -----------
NET (LOSS) $ (39,671) $ (200,472) $(1,244,631)
=========== =========== ===========
NET (LOSS) PER COMMON SHARE
Basic and diluted $ (.01) $ (.03)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic and diluted 5,575,500 5,575,500
=========== ===========
See Accompanying Notes and Independent Accountants' Review Report.
3
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD NOVEMBER 5, 1995 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
(UNAUDITED)
Preferred Stock Common Stock
----------------------- -----------------------
Shares Amount Shares Amount
---------- ---------- ---------- ----------
BALANCE, NOVEMBER 5, 1995
(DATE OF INCEPTION) 0 $ 0 0 $ 0
SHARES ISSUED FOR PATENT
RIGHTS 0 0 1,564,150 1,564
NET (LOSS) FOR THE PERIOD
ENDED SEPTEMBER 30, 1996 0 0 0 0
---------- ---------- ---------- ----------
BALANCE, SEPTEMBER 30, 1996 0 0 1,564,150 1,564
SHARES ISSUED TO RELATED
PARTY FOR EQUIPMENT 0 0 685,850 686
SHARES ISSUED TO RELATED
PARTY FOR SERVICES 0 0 2,150,000 2,150
SALE OF COMMON STOCK,
PURSUANT TO PRIVATE
OFFERING, NET OF OFFERING
COSTS OF $25,617 0 0 61,740 62
CONVERSION OF PROMISSORY
NOTES AND RELATED ACCRUED
INTEREST TO COMMON STOCK
UPON EFFECTIVE DATE OF
PRIVATE OFFERING 0 0 37,260 37
SHARES ISSUED TO RELATED
PARTY FOR VEHICLE, UPON
EFFECTIVE DATE OF PRIVATE
OFFERING 0 0 1,000 1
NET (LOSS) FOR THE YEAR
ENDED SEPTEMBER 30, 1997 0 0 0 0
---------- ---------- ---------- ----------
BALANCE, SEPTEMBER 30, 1997 0 0 4,500,000 4,500
<PAGE>
Paid in Deficit
Capital Accumulated
in Excess During the
of Par Development
Value of Stock Stage
-------------- ------------
BALANCE, NOVEMBER 5, 1995
(DATE OF INCEPTION) $ 0 $ 0
SHARES ISSUED FOR PATENT
RIGHTS 0 0
NET (LOSS) FOR THE PERIOD
ENDED SEPTEMBER 30, 1996 0 (49,807)
-------------- ------------
BALANCE, SEPTEMBER 30, 1996 0 (49,807)
SHARES ISSUED TO RELATED
PARTY FOR EQUIPMENT 54,601 0
SHARES ISSUED TO RELATED
PARTY FOR SERVICES 0 0
SALE OF COMMON STOCK,
PURSUANT TO PRIVATE
OFFERING, NET OF OFFERING
COSTS OF $25,617 272,821 0
CONVERSION OF PROMISSORY
NOTES AND RELATED ACCRUED
INTEREST TO COMMON STOCK
UPON EFFECTIVE DATE OF
PRIVATE OFFERING 187,263 0
SHARES ISSUED TO RELATED
PARTY FOR VEHICLE, UPON
EFFECTIVE DATE OF PRIVATE
OFFERING 4,999 0
NET (LOSS) FOR THE YEAR
ENDED SEPTEMBER 30, 1997 0 (300,410)
-------------- ------------
BALANCE, SEPTEMBER 30, 1997 519,684 (350,217)
See Accompanying Notes and Independent Accountants' Review Report.
4
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
FOR THE PERIOD NOVEMBER 5, 1995 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
----------------------- -----------------------
Shares Amount Shares Amount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
WARRANTS EXERCISED, NET
OF $17,440 COSTS 0 $ 0 1,000,000 $ 1,000
SHARES ISSUED FOR SERVICES 0 0 1,000 1
SHARES ISSUED FOR SERVICES 0 0 49,000 49
NET (LOSS) FOR THE YEAR
ENDED SEPTEMBER 30, 1998 0 0 0 0
---------- ---------- ---------- ----------
BALANCE, SEPTEMBER 30, 1998 0 0 5,550,000 5,550
SHARES ISSUED FOR SERVICES 0 0 25,500 25
NET (LOSS) FOR THE SIX MONTHS
ENDED MARCH 31, 1999 0 0 0 0
---------- ---------- ---------- ----------
BALANCE, MARCH 31, 1999 0 0 5,575,500 5,575
NET (LOSS) FOR THE SIX
MONTHS ENDED
SEPTEMBER 30, 1999 0 0 0 0
---------- ---------- ---------- ----------
BALANCE, SEPTEMBER 30, 1999 0 0 5,575,500 5,575
NET (LOSS) FOR THE SIX
MONTHS ENDED
MARCH 31, 2000 0 0 0 0
---------- ---------- ---------- ----------
BALANCE, MARCH 31, 2000 0 $ 0 5,575,500 $ 5,575
========== ========== ========== ==========
</TABLE>
<PAGE>
Paid in Deficit
Capital Accumulated
in Excess During the
of Par Development
Value of Stock Stage
-------------- -------------
WARRANTS EXERCISED, NET
OF $17,440 COSTS $ 481,560 $ 0
SHARES ISSUED FOR SERVICES 4,999 0
SHARES ISSUED FOR SERVICES
146,951 0
NET (LOSS) FOR THE YEAR
ENDED SEPTEMBER 30, 1998 0 (639,269)
------------ -----------
BALANCE, SEPTEMBER 30, 1998 1,153,194 (989,486)
SHARES ISSUED FOR SERVICES 63,725 0
NET (LOSS) FOR THE SIX MONTHS
ENDED MARCH 31, 1999 0 (200,472)
------------ -----------
BALANCE, MARCH 31, 1999
1,216,919 (1,189,958)
NET (LOSS) FOR THE SIX
MONTHS ENDED
SEPTEMBER 30, 1999
0 (15,002)
BALANCE, SEPTEMBER 30, 1999 ------------ -----------
NET (LOSS) FOR THE SIX 1,216,919 (1,204,960)
MONTHS ENDED
MARCH 31, 2000
BALANCE, MARCH 31, 2000 0 (39,671)
------------ -----------
$ 1,216,919 $(1,244,631)
============ ===========
See Accompanying Notes and Independent Accountants' Review Report.
5
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999 AND
FOR THE PERIOD NOVEMBER 5, 1995 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
November 5, 1995
Six (Date of
Six Months Months Inception)
Ended Ended Through
March 31, March 31, March 31,
2000 1999 2000
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (39,671) $ (200,472) $(1,244,631)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Depreciation and amortization 0 0 22,977
Common stock issued as payment for
interest expense 0 0 12,300
Common stock issued for services 0 63,750 217,900
Loss on abandoned assets 0 65,100 120,387
Sale of assets 0 500 (500)
Increases (decreases) in:
Prepaid insurance (1,600) 0 (1,600)
Accounts payable 9,239 (4,962) (8,300)
California franchise tax payable (800) 0 0
Accrued liabilities 72 (775) 9,736
----------- ----------- -----------
NET CASH FLOWS (USED) BY
OPERATING ACTIVITIES (32,760) (76,859) (871,731)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment 0 (40,179) (87,314)
Proceeds from sale of equipment 0 0 5,500
----------- ----------- -----------
NET CASH FLOWS (USED) BY INVESTING
ACTIVITIES 0 (40,179) (81,814)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loan receivable 3,379 0 3,379
Proceeds from notes payable 20,000 0 215,000
Repayments on notes payable 0 0 (20,000)
Proceeds from issuance of common stock and
subscriptions 0 0 798,500
Payments on offering costs 0 0 (43,059)
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 23,379 0 953,820
----------- ----------- -----------
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
6
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999 AND
FOR THE PERIOD NOVEMBER 5, 1995 (DATE OF INCEPTION)
THROUGH MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
November 5, 1995
Six (Date of
Six Months Months Inception)
Ended Ended Through
March 31, March 31, March 31,
2000 1999 2000
--------- --------- ---------
<S> <C> <C> <C>
NET INCREASE (DECREASE) IN CASH $ (9,381) $(117,038) $ 275
CASH BALANCE, BEGINNING OF PERIOD 9,656 140,596 0
--------- --------- ---------
CASH BALANCE, END OF PERIOD $ 275 $ 23,558 $ 275
========= ========= =========
SUPPLEMENTARY DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 0 $ 0 $ 55
========= ========= =========
Taxes $ 0 $ 0 $ 0
========= ========= =========
NON CASH INVESTING AND FINANCING
ACTIVITIES
Common stock issued for notes payable $ 0 $ 0 $ 175,000
========= ========= =========
Common stock issued for patent rights $ 0 $ 0 $ 1,562
========= ========= =========
Common stock issued for equipment $ 0 $ 0 $ 60,287
========= ========= =========
Common stock issued for services and
directors' fees $ 0 $ 0 $ 215,750
========= ========= =========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
7
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
National Healthcare Technology, Inc. was organized on November 5,
1995, under the laws of the State of Colorado for the purpose of
developing, manufacturing and marketing an intravenous drug and
several high technology products for use in the medical industry. In
1999, the company abandoned all of its development programs and is
pursuing new areas to develop.
Accounting Estimates
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported revenues and expenses.
Actual results could vary from the estimates that were used.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the company considers
all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
Income Taxes
Provisions for income taxes are based on taxes payable or refundable
for the current year and deferred taxes on temporary differences
between the amount of taxable income and pretax financial income and
between the tax bases of assets and liabilities and their reported
amounts in the financial statements. Deferred tax assets and
liabilities are included in the financial statements at currently
enacted income tax rates applicable to the period in which the
deferred tax assets and liabilities are expected to be realized or
settled as prescribed in FASB Statement No. 109, Accounting for
Income Taxes. As changes in tax laws or rate are enacted, deferred
tax assets and liabilities are adjusted through the provision for
income taxes.
Net Earnings Per Share
The company adopted Statement of Financial Accounting Standards No.
128 that requires the reporting of both basic and diluted earnings
per share. Basic earnings per share is computed by dividing net
income available to common shareowners by the weighted average
number of common shares outstanding for the period. Diluted earnings
per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised
or converted into common stock. In accordance with FASB 128, any
anti-dilutive effects on net loss per share are excluded.
See Accompanying Notes and Independent Accountants' Review Report.
8
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
(UNAUDITED)
NOTE 2 INCOME TAXES
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
(Loss) from operations before income taxes $ (39,671) $(200,472)
--------- ---------
The provision for income taxes is estimated as follows:
Currently payable $ 0 $ 0
--------- ---------
Deferred payable $ 0 $ 0
--------- ---------
A reconciliation of the provision for income taxes compared
with the amounts at the U.S. Federal statutory rate was as
follows:
Tax (refund) at U.S. Federal statutory income
tax rate $ 0 $ 0
--------- ---------
Deferred income tax assets and liabilities reflect the impact
of temporary differences between amounts of assets and
liabilities for financial reporting purposes and the basis
of such assets and liabilities as measured by tax laws.
The net deferred tax asset is $ 0 $ 0
--------- ---------
The net deferred liability is $ 0 $ 0
--------- ---------
</TABLE>
Temporary differences and carryfowards that give use to deferred tax assets and
liabilities included the following:
Deferred Tax Asset
-------------------
2000 1999
-------- --------
Net operating loss $490,000 $482,000
Valuation allowance 490,000 482,000
-------- --------
Total deferred taxes $ 0 $ 0
======== ========
As discussed in note 7, there is doubt about the company's ability to continue
as a going concern. Consequently, the company must maintain a 100% valuation
allowance for the deferred tax asset as there is doubt that the company will
generate profits which will be absorbed by the tax differences. A reconciliation
of the valuation allowance is as follows:
See Accompanying Notes and Independent Accountants' Review Report.
9
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
(UNAUDITED)
NOTE 2 INCOME TAXES (CONTINUED)
2000 1999
-------- --------
Balance, beginning of period $475,000 $390,000
Addition to allowance for six months ended
March 31, 2000 and 1999 15,000 79,000
-------- --------
Balance, end of period $490,000 $469,000
======== ========
NOTE 3 TAX CARRYFORWARD
The company has the following tax carryforwards at March 31, 2000:
Expiration
Year Ended Amount Date
------------------- -------------- --------------
September 30, 2000 $ 39,671 $ 2020
September 30, 1999 215,474 2019
September 30, 1998 614,265 2018
September 30, 1997 279,456 2012
September 30, 1996 78,959 2011
--------------
$ 1,227,82
==============
NOTE 4 NOTE PAYABLE
On March 20, 2000, the company received a $20,000 unsecured loan from
Stein's Holdings, Inc. The loan bears interest at 12% and is due on June
1, 2000.
In the event, the note and accrued interest are not paid when due, then
Stein's Holdings, Inc. may elect to have the company issue shares of its
common stock (restricted) at a price to be agreed upon by both companies.
NOTE 5 RENT
The company rents its facilities on a month to month basis from an
affiliated company. The rent expense for the six months ended March 31,
2000 and 1999 was $8,782.
See Accompanying Notes and Independent Accountants' Review Report.
10
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
(UNAUDITED)
NOTE 6 STOCK OPTION PLAN
The company adopted the National Healthcare Technology, Inc. 1998 stock
option plan. The board of directors is required to designate a committee
of not less then three directors to administer the plan. The committee has
the power to:
A. Designate participants
B. Determine the number of shares to be covered by options
C. Determine the terms and conditions of any options
D. Administer the plan
The maximum number of shares that may be issued under the option plan is
5,000,000. In addition, no participant shall be granted more than 500,000
shares in any one fiscal year.
The company did not grant any options during the current years.
The option plan terminates on September 30, 2000.
NOTE 7 GOING CONCERN
These financial statements are presented on the basis that the company is
a going concern. Going concern contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business over a
reasonable length of time. The company has incurred development losses of
$1,244,631 from inception. In addition, the company has abandoned all
development activities. These factors raise doubt as to the company's
ability to continue as a going concern.
NOTE 8 PREFERRED STOCK
No rights or preferences have been assigned to the preferred stock.
NOTE 9 UNAUDITED FINANCIAL INFORMATION
The accompanying financial information as of March 31, 2000 and 19999 is
unaudited. In managements opinion, such information includes all normal
recurring entries necessary to make the financial information not
misleading.
See Accompanying Notes and Independent Accountants' Review Report.
11
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