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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A
(Mark One)
(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
( ) For the transition period from __________ to __________
Commission file number: 000-29822
THEHEALTHCHANNEL.COM, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 33-0728140
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
5000 Birch Street, Suite 4000
Newport Beach, California 92660
(949) 631-8317 - telephone
(949) 631-2544 - facsimile
(Address of principal executive offices)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ---
The issuer had 71,335,051 shares of its $.001 par value Common Stock issued
and outstanding as of March 31, 2000.
Transitional Small Business Disclosure Format (check one)
Yes No X
--- ---
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THEHEALTHCHANNEL.COM, INC.
INDEX
PART I. FINANCIAL INFORMATION
PAGE NO.
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Item 1. Financial Statements
Unaudited Balance Sheet as of March 31, 2000 3
Comparative Unaudited Statements of Operations for 4
the Three Months Ended March 31, 2000, the Three
months Ended March 31, 1999 and for the Period from
September 6, 1996 (Inception) to March 31, 2000
Comparative Unaudited Statements of Cash Flows for 5
the Three Months Ended March 31, 2000, the Three
Months Ended March 31,1999, and for the Period from
September 6, 1996 (Inception) to March 31, 2000
Notes to the Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
(a) Exhibits
(b) Reports on Form 8-K
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Comparative Unaudited Balance Sheet as of March 31, 2000
Comparative Unaudited Statements of Operations for the Three Months
Ended March 31, 2000, the Three months Ended March 31, 1999 and for the
Period from September 6, 1996 (Inception) to March 31, 2000
Comparative Unaudited Statements of Cash Flows for the Three Months
Ended March 31, 2000, the Three Months Ended March 31,1999, and for the
Period from September 6, 1996 (Inception) to March 31, 2000
Notes to the Unaudited Financial Statements
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THEHEALTHCHANNEL.COM, INC.
UNAUDITED BALANCE SHEET - MARCH 31, 2000
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS:
<S> <C> <C>
Cash $ 154,419
Software development costs 25,000
Loan receivable 49,000
Prepaid expenses 78,669
----------
TOTAL CURRENT ASSETS $ 307,088
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 785,549
-----------
$ 1,092,636
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES -
accounts payable and accrued expenses $ 733,716
STOCKHOLDERS' EQUITY:
Common stock; $.001 par value, 110,000,000 shares
authorized, 71,335,051 shares issued and outstanding 70,110
Additional paid in capital 6,660,818
Deficit accumulated during development stage (6,372,007)
----------
Total stockholders' equity 358,920
-----------
$ 1,092,636
===========
</TABLE>
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THEHEALTHCHANNEL.COM, INC.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
3 months ended 3 months ended From inception
March 31, 2000 March 31, 1999 to March 31, 2000
-------------- -------------- -----------------
(unaudited) (unaudited)
<S> <C> <C> <C>
REVENUES $ -- $ -- $ --
COST OF SALES -- -- --
------------ ------------ ------------
GROSS PROFIT -- -- --
OPERATING EXPENSES:
General and administrative 697,631 -- 4,158,359
------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (697,631) -- (4,158,359)
Loss on discontinued operations -- (367,014) (2,114,398)
Loss on disposal of segment -- (99,250) (99,250)
------------ ------------ ------------
TOTAL DISCONTINUED OPERATIONS -- (466,264) (2,213,648)
------------ ------------ ------------
NET LOSS (697,631) (466,264) (6,372,007)
============ ============ ============
NET LOSS PER SHARE, BASIC AND DILUTED (0.01) (0.01)
============ ============
WEIGHTED AVERAGE COMMON EQUIVALENT
SHARES OUTSTANDING 68,978,542 68,978,542
============ ============
</TABLE>
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THEHEALTHCHANNEL.COM, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
For the three For the three
months ended months ended From inception
March 31, 2000 March 31, 1999 to 3/31/2000
-------------- -------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
NET LOSS $ (697,631) $ (466,264) $(6,372,007)
ITEMS RECONCILING NET LOSS TO CASH USED BY OPERATING ACTIVITIES:
Depreciation 81,138 -- 216,368
Loss on disposal of segment -- 99,250 99,250
Loss on discontinued operations -- 367,014 2,114,398
Noncash expenses from stock issuances 83,231 -- 2,694,654
Changes in operating assets and liabilities:
Accounts receivable -- -- 189
Inventory -- -- (10,312)
Software development costs (25,000) -- (25,000)
Prepaid expenses 50,730 -- (57,717)
Other assets -- -- 2,597
Accounts payable and accrued expenses 222,749 -- 755,192
----------- ----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (284,783) -- (582,388)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
payments to acqure property and equipment (28,263) -- (54,081)
----------- ----------- -----------
NET CASH PROVIDED BY (USE FOR) INVESTING ACTIVITIES (28,263) -- (54,081)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for asset transfer -- -- (26,329)
Cash transferred out -- (22,551) (22,551)
Stock subscription receivable 25,000 -- --
Loans receivable (28,000) -- (49,000)
Proceeds from private placement offering 378,228 -- 888,768
-- -- --
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 375,228 (22,551) 790,888
----------- ----------- -----------
NET INCREASE IN CASH 62,182 (22,551) 154,419
CASH, beginning of period 92,237 22,551 --
----------- ----------- -----------
CASH, end of period $ 154,419 $ -- $ 154,419
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Noncash compensation from stock issuances $ 83,231 $ -- $ 2,777,885
=========== =========== ===========
</TABLE>
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THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL:
With headquarters in Newport Beach, California, thehealthchannel.com
(formerly Innovative Tracking Solutions Corporation or "IVTX") is a
comprehensive health information Internet portal that offers a
one-step access point for consumers and professionals who want to
explore a broad array of health topics. The portal currently indexes
other Internet health and health-related sites, has direct links with
online health-care information service centers and provides detailed
coverage of medical conditions. Consumers may access a global library
of health-care information while searching for products and services.
The site offers a complete Internet portal for state-of-the-art
continuing medical education for professionals.
The Company was incorporated under the laws of the state of Delaware
on September 4, 1996.
BUSINESS ACTIVITY:
In early 1999, IVTX management determined that the "public" status of
IVTX was detrimental to IVTX' operations due to the time and expense
burdens of being a public company. IVTX management then decided to
take the operations of IVTX "private" by transferring all IVTX assets
and liabilities to a newly formed private company and selling the
public shell to a suitable company, preferably in the healthcare
industry. On April 13, 1999, IVTX obtained written approval of 64.4%
of the total voting stock of IVTX, voting "for" taking the operations
of IVTX private and selling the public shell to a suitable company.
On April 14, 1999, IVTX transferred all of its assets and liabilities
based on majority stockholder approval to a newly formed private
company, Innovative Tracking Solutions Corporation, a private Nevada
corporation, incorporated on March 29, 1999. Innovative Tracking
Solutions Corporation was formed by IVTX management specifically for
the purpose of taking the operations of IVTX private. The former IVTX
officers and directors, Dianna Cleveland, Lee Namisniak and Lou Weiss
are the officers and directors of Innovative Tracking Solutions
Corporation, the private company. The consideration for the transfer
of assets was the assumption of all IVTX's liabilities by the newly
formed private company. As a result of this transfer of assets and
liabilities and the disposal of the segment of business on April 14,
1999 (which is unrelated to the present business of
thehealthchannel.com), the Company has recorded a loss on discontinued
operations of $367,014 and a loss on disposal of a segment of $99,250
for the year ended December 31, 1999.
In June 1999, IVTX was introduced to thehealthchannel.com, a
consumer-based health Internet web site
(http://www.thehealthchannel.com). On July 28, 1999, IVTX, pursuant to
its bylaws and general Delaware corporate law, acquired a certain
asset of Biologix International, Ltd., a Delaware corporation
("Biologix") consisting of thehealthchannel.com web site and its
related technology in exchange for the controlling interest in IVTX.
In connection with this change of control, IVTX's name was changed to
thethealthchannel.com, Inc. on July 28, 1999. The acquisition closed
on July 28, 1999.
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THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
PROPERTY AND EQUIPMENT:
Property and equipment are stated at cost. Expenditures for
maintenance and repairs are charged to earnings as incurred, whereas,
additions, renewals, and betterments are capitalized. When property
and equipment are retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the respective accounts,
and any gain or loss is included in operations. Depreciation is
computed using the straight-line method over the estimated useful
lives of the related assets.
DEVELOPMENT STAGE ENTERPRISE:
The Company is a development stage company as defined in Statement of
Financial Accounting Standards No. 7, "Accounting and Reporting by
Development Stage Enterprises." The Company is devoting substantially
all of its present efforts to establish a new business, which is
unrelated to the business of Innovative Tracking Solutions Corporation
("IVTX"), and its planned principal operations have not yet commenced.
All losses accumulated since inception of thehealthchannel.com (Note
1) have been considered as part of the Company's development stage
activities. The operations of IVTX in 1999 are presented as
discontinued operations as a result of the transfer of its assets and
liabilities to a private company (Note 1).
NET LOSS PER SHARE:
The Company has adopted Statement of Financial Accounting Standard No.
128, Earnings per Share ("SFAS No. 128"), which is effective for
annual and interim financial statements issued for periods ending
after December 15, 1997. Net loss per share has been computed using
the weighted average number of shares outstanding. Common stock
equivalents have been excluded since their inclusion would reduce loss
per share.
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THEHEALTHCHANNEL.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000
(2) STOCKHOLDERS' EQUITY:
In September 1999, the Company initiated a Rule 506, Regulation D private
placement of 2,191,528 restricted shares of the Company's common stock from
shares available from the forward stock split and 2,191,528 warrants to
purchase restricted shares of the Company's' common stock with an exercise
price of $0.75, for total net proceeds of $888,768, of which 378,228
relates to the first quarter of the year 2000. The shares issued and the
shares issuable upon exercise of the warrants have piggyback registration
rights in the event the Company files a Registration Statement with the
Securities and Exchange Commission. The warrants vest immediately and
expire two years from the date of issuance. This private placement offering
is still in process.
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PART I - FINANCIAL INFORMATION CONTINUED
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE COMPANY
thehealthchannel.com, Inc., formerly known as Innovative Tracking Solutions
Corporation (the "Company") was incorporated in Delaware on September 6, 1996.
It operates a consumer-based health supersite (http://www.thehealthchannel.com).
On April 16, 1999, the Company transferred all of its assets and
liabilities based on majority stockholder approval to a newly formed private
company. The Company's plan of operations following the transfer of assets and
liabilities was to seek and complete a merger or acquisition transaction with a
small or medium-sized enterprise which desired to become or remain a public
corporation.
On July 28, 1999, the Company was successful in finding an appropriate
acquisition candidate and, pursuant to its bylaws and general Delaware corporate
law, the Company acquired certain assets of Biologix International, Ltd.,
consisting primarily of thehealthchannel.com website and related technology in
exchange for the controlling interests of the Company. Restricted common shares,
representing the majority controlling interests held by the directors of the
Company, were transferred.
In connection with this change of control, the Company's name was changed
to thehealthchannel.com, Inc. on July 28, 1999. The Acquisition closed on July
28, 1999 (the "Acquisition").
With headquarters at 5000 Birch Street, Suite 4000, Newport Beach,
California, thehealthchannel.com is a comprehensive health information Internet
portal that offers a one-step access point for consumers and professionals who
want to explore a broad array of health topics. Consumers may access a global
library of health-care information while searching for products and services.
The site offers a complete Internet portal for state-of-the-art continuing
medical education for professionals.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000.
REVENUE
The Company is a development stage company and had no revenues for
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the three months ended March 31, 2000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company expended approximately $300,000 in professional services
related to web site maintenance & development.
LOSS FROM OPERATIONS
The Company incurred a loss from operations of $697,631 for the three
months ended March 31, 2000. The operations of Innovative Tracking Solutions
Corporation, prior to the acquisition of thehealthchannel.com web site in 1999
(the "IVTX Operations") are presented as discontinued operations as a result of
the transfer of its assets and liabilities to a private company. The IVTX
Operations are not related to the operation of thehealthchannel.com business
going forward.
NET LOSS
The Company had a net loss of $697,631 or $(0.01) per share.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has primarily funded its capital
requirements through private equity infusions. The Company is currently
conducting a private offering to accredited investors only, of units, each
unit consisting of one share of the Company's Common Stock and one Warrant
exercisable for a term of two years (the "Units"). The Company is offering
the Units at 30% discount on its stock at the closing price on the day of
purchase with the same exercise price on the Warrants. The Company is
attempting to raise a maximum of $5,000,000 under this private offering. From
the inception of this private placement in September 1999 through March 31,
2000, the Company raised $886,768 through this private placement. This
private offering is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Act") pursuant to Section 4(2) of
the Act.
At March 31. 2000, the Company had outstanding current liabilities of
$733,716 consisting mainly of accounts payable $148,750, accrued professional
fees of approximately $440,000, and accrued officers' salaries of $96,000. All
officers of the Company have agreed to defer their compensation until such time
as the Company has the financial ability to pay compensation. The Company
anticipates satisfying its current liabilities in the ordinary course of
business from revenues and accounts receivable.
The Company does not believe that inflation has had a significant impact on
its operations since inception of the Company.
FUTURE PLAN OF OPERATION
The Company's overall plan of operations for the next 12 months include
significant website development in three primary areas: a) Broaden overall
content offerings in the areas of general health content and delivery of health
goods and services, b) Deliver a number of "deep vertical" products in specific
health topics, c) Implement the business to business revenue generating products
covering a number of health areas including some unique products not currently
in the marketplace. The Company's strategic plan and infrastructure are now
complete. Implementation of the plan will now occur over the next 12 months.
The Company can satisfy its cash requirements for a period of approximately
4-6 months. The Company will then need to raise additional funds.
The Company is currently conducting product research and development in the
areas of general
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health content, broadening and strengthening its health information delivery, as
well as conducting research and development in the areas of premier health
product offerings (deep verticals). In addition the Company will continue to
develop its business to business goods and services products.
The Company recently purchased (through the inclusion of its new operations
center lease) the necessary infrastructure to grow the Company and reduce its
operational costs by bringing a majority of its software development in house.
The necessary resources and equipment are now attained.
The Company expects to add approximately 5-10 new employees in the next
fiscal year.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company's Form 10-KSB filed on March 21, 2000 discloses that the
Company has been named as a cross-defendant in a cross-complaint filed by
Michael Grandon in an action pending in the Superior Court State of
California for the County of San Francisco, Case No. 307364. This action was
initiated by Biologix International, Ltd. against Michael Grandon on October
22, 1999 alleging causes of action against Michael Grandon relating to the
actions and conduct of Mr. Grandon while an officer and director of Biologix
International, Ltd. thehealthchannel.com is named as a cross-defendant in
the cross-complaint of Michael Grandon in a cause of action for breach of
contract based upon an alleged employment agreement between Michael Grandon
and Biologix International Ltd. Mr. Grandon claims that this alleged
employment agreement is the responsibility of thehealthchannel.com based upon
thehealthchannel.com's purchase of the internet related assets of Biologix
International Ltd. The management is not aware of any material developments
in this proceeding during the first three months of 2000.
The other two cases disclosed by the Company's Form 10-KSB this year
(the threatened litigation against the Company by Sandra Redding and Marshall
Redding, and the threatened litigation against the Company by Fields, Israel
& Benning) have both been settled.
To the knowledge of management, there is no other material litigation
pending or threatened against the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2000, the Company issued 973,736
shares and 973,736 warrants sold in a private offering, raising $378,228. No
underwriters were utilized and no commissions were paid. This private offering
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act") pursuant to Section 4(2) of the Act and Rule 506 of
Regulation D.
On January 4, 2000, the Company issued 82,899 shares as payment for legal
services rendered to the Company in 1999.
On January 21, 2000, the Company issued 160,000 shares in settlement of
debt incurred for web development and internet hosting services incurred in
1999.
On February 2, 2000, the Company issued 10,510 shares as compensation for
the preparation of a business plan.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
10.1 Healthcompass Services Agreement between thehealthchannel.com,
Inc. and HealthMagic, Inc., dated February 16, 2000*
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10.2 Content License Agreement between Integrative Medicine
Communications, Inc. and thehealthchannel.com, dated March 24,
2000*
10.3 LIVEware5, Inc. Agreement for Services between Liveware5, Inc.
and thehealthchannel.com, Inc., dated March 24, 2000*
27.1 Financial Data Schedule*
* Filed with 10-QSB on May 22, 2000.
(b) REPORTS ON FORM 8-K:
On January 4, 2000, the Company filed a report on Form 8-K disclosing the
termination of the Roger G. Castro, C.P.A., Oxnard, California as its principal
accountant as of July 28, 1999, in connection with the change of control of the
Registrant reported on the Registrant's Form 8-K, dated August 12, 1999 and Form
8-K/A, dated October 12, 1999.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
THEHEALTHCHANNEL.COM, INC.
Date: May 31, 2000 /s/ Donald Shea
------------------------------
Donald Shea, President
Date: May 31, 2000 /s/ Thomas Lonergan
------------------------------
Thomas Lonergan, Chief Operating Officer,
Vice President, Secretary, and Chief
Financial Officer
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