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 June 30, 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 June 30, 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 June 30, 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, affiliates or
<PAGE>
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 was 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. To date, the Note has not been repaid nor have any shares been issued in
satisfaction of the Note. 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.
During the quarter ended June 30, 2000, the Company sold an obsolete piece
of machinery for $7,577, which machinery the Company had previously written off.
The proceeds from the sale were used to pay the Company's 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 June 30, 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 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.
For the quarter ended June 30, 2000, the Company's revenues were $7,577
and its expenses were $3,096, resulting in net income for the quarter of $4,481
compared to no revenue and expenses of $7,346 for the quarter ended June 30,
1999. For the nine months ended June 30, 2000, the Company had revenue of $7,577
and expenses of $42,767, resulting in a year-to-date loss of ($35,190) or a loss
of $(.01) per share. During the nine months ended June 30, 1999, the Company had
no revenue and expenses totaled $207,818, resulting in a loss of ($207,818) or a
loss of $(.04) per share.
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
<PAGE>
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 need for additional financing is 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.
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.
<PAGE>
Item No. 6 - Exhibits and Reports on Form 8-K
(a) No reports on Form 8-K were filed during the three months ended June
30, 2000.
(b) Exhibits
99 Financial Statements for the periods ended June 30, 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: August 14, 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
JUNE 30, 2000 AND 1999
<PAGE>
TABLE OF CONTENTS
Page No.
--------
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
<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 June 30, 2000 and 1999, and the related statements of
operations, changes in stockholders' equity (deficit) and cash flows for the
nine 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
August 3, 2000
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JUNE 30, 2000 AND 1999
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 423 $ 16,512
Loan receivable, Stein's Holdings, Inc. 2,119 8,678
Prepaid insurance 1,200 0
----------- -----------
TOTAL ASSETS $ 3,742 $ 25,190
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 726 $ 0
Accrued interest 672 0
Note payable 20,000 0
----------- -----------
TOTAL CURRENT LIABILITIES 21,398 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 (1,240,150) (1,197,304)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (17,656) 25,190
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 3,742 $ 25,190
=========== ===========
</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 NINE MONTHS ENDED JUNE 30, 2000 AND 1999 AND
FOR THE PERIOD NOVEMBER 5, 1995 (DATE OF INCEPTION)
THROUGH JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
November 5, 1995 November 5, 1995
(Date of (Date of
Three Months Nine Months Inception) Three Months Nine Months Inception)
Ended Ended Through Ended Ended Through
June 30, June 30, June 30, June 30, June 30, June 30,
2000 2000 2000 1999 1999 1999
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUE, SALE OF ABANDONED
EQUIPMENT $ 7,577 $ 7,577 $ 7,577 $ 0 $ 0 $ 0
DEVELOPMENT COSTS 3,096 42,767 1,246,127 7,346 207,818 1,197,304
----------- ----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) BEFORE
INCOME TAXES 4,481 (35,190) (1,238,550) (7,346) (207,818) (1,197,304)
INCOME TAXES 0 0 1,600 0 0 0
----------- ----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 4,481 $ (35,190) $(1,240,150) $ (7,346) $ (207,818) $(1,197,304)
=========== =========== =========== =========== =========== ===========
NET INCOME (LOSS) PER COMMON
SHARE
Basic and diluted $ (.001) $ (.01) $ (.001) $ (.04)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 5,575,500 5,575,500 5,575,500 5,575,500
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
3
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY(DEFICIT)
FOR THE PERIOD NOVEMBER 5, 1995 (DATE OF INCEPTION)
THROUGH JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Paid in Deficit
Capital Accumulated
Preferred Stock Common Stock in Excess During the
----------------------- ----------------------- of Par Development
Shares Amount Shares Amount Value of Stock Stage
--------- --------- --------- --------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 5, 1995
(DATE OF INCEPTION) 0 $ 0 0 $ 0 $ 0 $ 0
SHARES ISSUED FOR PATENT
RIGHTS 0 0 1,564,150 1,564 0 0
NET (LOSS) FOR THE PERIOD
ENDED SEPTEMBER 30, 1996 0 0 0 0 0 (49,807)
--------- --------- --------- --------- --------- ---------
BALANCE, SEPTEMBER 30, 1996 0 0 1,564,150 1,564 0 (49,807)
SHARES ISSUED TO RELATED
PARTY FOR EQUIPMENT 0 0 685,850 686 54,601 0
SHARES ISSUED TO RELATED
PARTY FOR SERVICES 0 0 2,150,000 2,150 0 0
SALE OF COMMON STOCK,
PURSUANT TO PRIVATE
OFFERING, NET OF OFFERING
COSTS OF $25,617 0 0 61,740 62 272,821 0
CONVERSION OF PROMISSORY
NOTES AND RELATED ACCRUED
INTEREST TO COMMON STOCK
UPON EFFECTIVE DATE OF
PRIVATE OFFERING 0 0 37,260 37 187,263 0
SHARES ISSUED TO RELATED
PARTY FOR VEHICLE, UPON
EFFECTIVE DATE OF PRIVATE
OFFERING 0 0 1,000 1 4,999 0
NET (LOSS) FOR THE YEAR
ENDED SEPTEMBER 30, 1997 0 0 0 0 0 (300,410)
--------- --------- --------- --------- --------- ---------
BALANCE, SEPTEMBER 30, 1997 0 0 4,500,000 4,500 519,684 (350,217)
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
4
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
FOR THE PERIOD NOVEMBER 5, 1995 (DATE OF INCEPTION)
THROUGH JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Paid in Deficit
Capital Accumulated
Preferred Stock Common Stock in Excess During the
-------------------------- ------------------------- of Par Development
Shares Amount Shares Amount Value of Stock Stage
---------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
WARRANTS EXERCISED, NET
OF $17,440 COSTS 0 $ 0 1,000,000 $ 1,000 $ 481,560 $ 0
SHARES ISSUED FOR SERVICES 0 0 1,000 1 4,999 0
SHARES ISSUED FOR SERVICES 0 0 49,000 49 146,951 0
NET (LOSS) FOR THE YEAR
ENDED SEPTEMBER 30, 1998 0 0 0 0 0 (639,269)
BALANCE, SEPTEMBER 30, 1998 0 0 5,550,000 5,550 1,153,194 (989,486)
SHARES ISSUED FOR SERVICES 0 0 25,500 25 63,725 0
NET (LOSS) FOR THE NINE
MONTHS ENDED JUNE 30, 1999 0 0 0 0 0 (207,818)
BALANCE, JUNE 30, 1999 0 0 5,575,500 5,575 1,216,919 (1,197,304)
NET (LOSS) FOR THE THREE
MONTHS ENDED
SEPTEMBER 30, 1999 0 0 0 0 0 (7,656)
BALANCE, SEPTEMBER 30, 1999 0 0 5,575,500 5,575 1,216,919 (1,204,960)
NET (LOSS) FOR THE NINE
MONTHS ENDED
JUNE 30, 2000 0 0 0 0 0 (35,190)
---------- ----------- --------- ----------- ----------- -----------
BALANCE, JUNE 30, 2000 0 $ 0 5,575,500 $ 5,575 $ 1,216,919 $(1,240,150)
========== =========== ========= =========== =========== ===========
</TABLE>
See Accompanying Notes and Independent Accountants' Review Report.
5
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2000 AND 1999 AND
FOR THE PERIOD NOVEMBER 5, 1995 (DATE OF INCEPTION)
THROUGH JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
November 5, 1995
Nine (Date of
Nine Months Months Inception)
Ended Ended Through
June 30, June 30, June 30,
2000 1999 2000
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (35,190) $ (207,818) $(1,240,150)
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)
Changes in operating assets and liabilities:
Prepaid insurance (1,200) 0 (1,200)
Accounts payable 726 (4,962) (16,813)
California franchise tax payable (800) 0 0
Accrued liabilities 672 (475) 10,336
----------- ----------- -----------
NET CASH FLOWS (USED) BY
OPERATING ACTIVITIES (35,792) (83,905) (874,763)
----------- ----------- -----------
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 6,559 0 6,559
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 26,559 0 957,000
----------- ----------- -----------
</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 NINE MONTHS ENDED JUNE 30, 2000 AND 1999 AND
FOR THE PERIOD NOVEMBER 5, 1995 (DATE OF INCEPTION)
THROUGH JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
November 5, 1995
Nine (Date of
Nine Months Months Inception)
Ended Ended Through
June 30, June 30, June 30,
2000 1999 2000
----------- ---------- ------------
<S> <C> <C> <C>
NET INCREASE (DECREASE) IN CASH $ (9,233) $ (124,084) $ 423
CASH BALANCE, BEGINNING OF PERIOD 9,656 140,596 0
----------- ---------- ------------
CASH BALANCE, END OF PERIOD $ 423 $ 16,512 $ 423
=========== ========== ============
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
JUNE 30, 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
JUNE 30, 2000 AND 1999
(UNAUDITED)
NOTE 2 INCOME TAXES
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
(Loss) from operations before income taxes $ (35,190) $(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
--------- ---------
Temporary differences and carryfowards that give
use to deferred tax assets and liabilities included
the following:
</TABLE>
Deferred Tax Asset
2000 1999
-------- --------
Net operating loss $489,000 $482,000
Valuation allowance 489,000 482,000
-------- --------
Total deferred taxes $ 0 $ 0
======== ========
As discussed in note 8, 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
JUNE 30, 2000 AND 1999
(UNAUDITED)
NOTE 2 INCOME TAXES (CONTINUED)
2000 1999
-------- --------
Balance, beginning of period $475,000 $390,000
Addition to allowance for nine months ended
June 30, 2000 and 1999 14,000 82,000
-------- --------
Balance, end of period $489,000 $472,000
======== ========
NOTE 3 TAX CARRYFORWARD
The company has the following tax carryforwards at June 30, 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
-------------
$ 1,227,825
=============
Future changes in ownership may limit the ability of the company to
utilize its net operating loss carryforwards.
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 nine months ended June 30,
2000 and 1999 was $11,748.
See Accompanying Notes and Independent Accountants' Review Report.
10
<PAGE>
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(UNAUDITED)
NOTE 6 INTEREST EXPENSE
Interest expense for the nine months ended June 30, 2000 and 1999 was $672
and $0 respectively.
NOTE 7 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 8 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
$1,240,150 since 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 9 PREFERRED STOCK
No rights or preferences have been assigned to the preferred stock.
See Accompanying Notes and Independent Accountants' Review Report.
11
<PAGE>
NOTE 10 UNAUDITED FINANCIAL INFORMATION
The accompanying financial information as of June 30, 2000 and 1999 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.
12
