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, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 02-27569
HEALTH EXPRESS USA, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer)
Florida 65-0847995
- -------------------------------- ---------------------------------
(State or other jurisdiction of IRS Employer Identification Number
incorporation or organization
275 Commercial Blvd., Suite 260 Fort Lauderdale, Florida 33308
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(Address of principal executive offices)
(954) 776-5401
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Registrant's telephone number
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.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as to the latest practicable date.
Class Outstanding shares at May 8, 2000
- ----------- ---------------------------------
Common Stock 6,087,922
<PAGE>
PART 1: FINANCIAL INFORMATION
Item 1: Financial Statements
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
March 31, 2000 (unaudited) and December 31, 1999
March 31, December 31,
2000 1999
------------- ---------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 159,442 $ 70,553
Prepaid expenses and other 7,280 7,950
-------------- ---------------
TOTAL CURRENT ASSETS 166,722 78,503
PROPERTY AND EQUIPMENT 331,714 256,243
DEPOSITS 4,648 4,350
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TOTAL $ 503,084 $ 339,096
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 28,310 $ 47,161
Current portion of capital lease obligation 3,884 3,884
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TOTAL CURRENT LIABILITIES 32,194 51,045
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LONG TERM PORTION - Capital lease obligation 15,174 15,174
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STOCKHOLDERS ' EQUITY
Preferred stock, $0.01 par value;10,000,000 shares authorized
zero shares issued and outstanding
Common stock, $0.001 par value; 50,000,000 shares authorized
6,087,922 and 5,640,627 issued and outstanding at March 31, 2000
and December 31, 1999 respectively. 6,088 5,640
Additional paid-in capital 5,301,899 4,955,484
Deficit accumulated during the development stage (4,852,271) (4,688,247)
-------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 455,716 272,877
-------------- ---------------
TOTAL $ 503,084 $ 339,096
============== ===============
See notes to consolidated financial statements
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
AND FOR THE PERIOD JULY 2, 1998 (INCEPTION) THROUGH MARCH 31, 2000
Three months Three months July 2, 1998
Ended Ended (inception) to
March 31, 2000 March 31, 1999 March 31, 2000
------------------- ------------------- -------------------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
EXPENSES
Compensation 54,749 3,579 4,511,668
Office expense 4,239 2,400 96,407
Advertising 18,731 17,328 75,822
General and Administrative 37,811 31,369 83,214
Professional fees 14,893 2,749 36,051
Other operating expenses 9,469 4,475 21,125
Contract labor 24,132 400 27,984
------------------ ------------------- -------------------
TOTAL EXPENSES 164,024 62,300 4,852,271
------------------ ------------------- -------------------
LOSS BEFORE PROVISION FOR INCOME TAXES (164,024) (62,300) (4,852,271)
PROVISION FOR INCOME TAXES - - -
------------------ ------------------- -------------------
NET LOSS $ (164,024) $ (62,300) $ (4,852,271)
================== =================== ===================
LOSS PER COMMON SHARE:
Basis and diluted $ (0.03) $ (0.01)
================== ===================
Weighted average common shares outstanding 5,788,383 4,346,207
================== ===================
See notes to consolidated financial statements
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
AND FOR THE PERIOD JULY 2, 1998 (Inception) TO MARCH 31, 2000
Three months Three months July 2, 1998
Ended Ended (inception) to
March 31, 2000 March 31, 1999 March 31, 2000
------------------ ------------------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (164,024) (62,300) $ (4,852,271)
Adjustments to reconcile net loss to net cash used in
operating activities
Common stock issued for services 50,125 - 71,917
Issuance of stock options 4,875 - 4,364,692
Changes in certain assets and liabilities
Prepaid expenses and other 670 (5,311) (7,280)
Accounts payable (18,851) - 28,310
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NET CASH USED IN OPERATING ACTIVITIES (127,205) (67,611) (394,632)
--------------- ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (71,108) (20,000) (306,629)
Changes in other assets (298) (4,350) (4,648)
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NET CASH USED IN INVESTING ACTIVITIES (71,406) (24,350) (311,277)
--------------- ------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on capital lease obligation - - (1,664)
Net proceeds from issuance of common stock 287,500 70,234 867,015
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NET CASH PROVIDED BY FINANCING ACTIVITIES 287,500 70,234 865,351
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NET INCREASE (DECREASE) IN CASH 88,889 (21,727) 159,442
CASH AND CASH EQUIVALENTS, Beginning of the year 70,553 78,495 -
--------------- ------------- --------------
CASH AND CASH EQUIVALENTS, End of the year $ 159,442 56,768 $ 159,442
=============== ============= ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ - $ - $ -
=============== ============= ==============
Cash paid during the period for income taxes $ - $ - $ -
=============== ============= ==============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES
During the period ended March 31, 2000 the Company acquired $
4,363 of property and equipment in exchange for 1,745 shares
of common stock, valued at $ 2.50 per share, which in the
opinion of management represents the fair value of the
equipment.
See notes to consolidated financial statements
</TABLE>
4
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(unaudited)
Basis of Presentation
The accompanying consolidated condensed unaudited financial statements of Health
Express USA, Inc., and its wholly-owned subsidiary, Healthy Bites Grill, Inc.,
(the"Company"), have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Item 310(b) of Regulation S-B. The disclosures in the notes to
the financial statements have been prepared in accordance with the instructions
set forth under Item 310(b), Interim Financial Statements, of Regulation S-B.
The requirements set forth under Item 310(b) require that footnotes and other
disclosures should be provided as needed for the fair presentation of the
financial statements and to ensure that the financial statements are not
misleading. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The requirements of Item 310(b) also require disclosure of
material subsequent events and material contingencies notwithstanding disclosure
in the annual financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included and
there are no material subsequent events or material contingencies that require
disclosure herewith. The financial statements as of and for the periods ended
March 31, 2000 and 1999 as well as the period July 2, 1998 (date of inception)
through March 31, 2000 are unaudited. The financial statements for the period
ended March 31, 2000 have been reviewed by an independent public accountant
pursuant to Item 310(b) of Regulation S-B and following applicable standards for
conducting such reviews, and report of the accountant is included as part of
this filing.
The results of operation for the interim periods presented are not necessarily
indicative of the results of operations to be expected for the fiscal year.
Certain information for 1999 has been reclassified to conform to the 2000
presentation. The accompanying consolidated financial statements should be read
in conjunction with the financial statements and footnotes included in the
Company's Form 10-KSB filed for the year ended December 31, 1999.
5
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations.
Introduction - Forward Looking Statements
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995(the "Reform Act"), Health Express USA, Inc.
("Health Express" or the "Company") is hereby providing cautionary statements
identifying important factors that could cause the Company's actual results to
differ materially from those projected in forward-looking statements made
herein. Any statements that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions of future events or performance are not
statements of historical facts and may be forward-looking. These forward-looking
statements are based largely on the Company's expectations and are subject to a
number of risks and uncertainties, including but not limited to, economic,
competitive, regulatory, growth strategies, available financing and other
factors discussed elsewhere in this report and in documents filed by the Company
with the Securities and Exchange Commission ("SEC"). Many of these factors are
beyond the Company's control. Actual results could differ materially from the
forward-looking statements made. In light of these risks and uncertainties,
there can be no assurance that the results anticipated in the forward-looking
information contained in this report will, in fact, occur.
Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time and it is not
possible for management to predict all of such factors, nor can it assess the
impact of each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
Plan of Operations
Health Express USA, Inc. (the "Company") was incorporated in Florida on
July 2, 1998 to develop, construct and operate healthy gourmet fast food
restaurants. The Company's first phase of its plans of operation is to complete
construction of the initial flagship restaurant in Fort Lauderdale, Florida.
Upon operating profitably its first restaurant, the Company plans to expand
conservatively through franchising efforts as well as other Company owned
restaurants.
The flagship restaurant began operations on April 10, 2000 and the Company
is currently undergoing the second phase of its plan, which focuses on
operations, and includes promotion, operational efficiency and menu development.
Management expects to report sales figures for the second quarter of 2000.
Liquidity and Capital Resources
The Company has cash available to satisfy short-term working capital
requirements. The need for additional cash is also dependent upon the cash flow
from restaurant operations. Management is expecting restaurant operations to
reach a cash flow break-even point within the next 30 days, primarily as a
result of a local advertising campaign. An official grand opening has been
scheduled for May 11, 2000. With a combination of heavy local promotion, the
recent introduction of a take out menu and the development of a repeat customer
base, management expects restaurant operations to provide a positive cash flow.
The Company currently has no debt outside of normal and recurring accounts
payable resulting from restaurant operations.
6
<PAGE>
While Management projects that cash flow from restaurant operations will be
sufficient to meet the Company's working capital requirements, additional funds
may be necessary to finance the development of franchise operations in South
Florida and a commissary facility to support and service them. To raise
additional funds the Company may seek additional financing through the sale of
its securities. The Company's directors also may provide additional funds by
exercising their options. The Company may also seek alternative sources of
financing, including more conventional sources such as bank loans and credit
lines or loans from the Company's officers. However, no assurances can be given
that the Company will be able to meet its needs through the sale of securities
or otherwise.
From time to time the Company may evaluate potential acquisitions involving
complementary businesses, content, products or technologies. The Company has no
present agreements or understanding with respect to such acquisition. The
Company's future capital requirements will depend on many factors, including
growth of the Company's restaurant business, the success of its franchising
operations, economic conditions and other factors including results of future
operations.
7
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
Health Express USA, Inc.
We have reviewed the accompanying consolidated balance sheet of Health Express
USA, Inc. (the "Company") as of March 31, 2000, and the related consolidated
statements of operations and cash flows for the three month period then ended.
These financial statements are the responsibility of the management of the
Company.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted 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 March 31, 2000 financial statements for them to be
in conformity with generally accepted accounting principles.
/s/ Ahearn Jasco + Company, P.A.
- -----------------------------------
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
May 10, 2000
8
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities
During the period ending March 31, 2000 the Company sold securities without
registering the securities under the Securities Act.
(a) The date, title and amount of securities sold.
No. of
Date Title Shares Price Proceeds
---- ----- ------ ----- --------
3/25/2000 Common Stock 80,500 $1.50 $ 120,750
3/31/2000 Common Stock 40,000 $1.50 $ 60,000
------ ---------
Total 120,500 $ 180,750
======= =========
(b) The Securities were sold to accredited individuals under Rule 506 of
Regulation D.
(c) Total offering price $ 195,000, representing 130,000 shares at $ 1.50.
(d) Securities were sold under Rule 506 of Regulation D.
(e) None
Item 6. Exhibits and Reports on Form 8-K
The following exhibit is included herein:
Exhibit 27 - Financial Data Schedule Article 5 included for Electronic Data
Gathering Analysis, and Retrieval (EDGAR) purposes only. This
Schedule contains summary financial information extracted from
the consolidated balance sheets and consolidated statements of
operations of the Company as of and for the three months ended
March 31, 2000 and is qualified in its entirety by reference
to such financial statements.
9
<PAGE>
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.
HEALTH EXPRESS USA, INC.
------------------------
(Registrant)
5/15/2000 /s/ Douglas Baker
- -------------------------- ------------------------------
Date Douglas Baker, President
5/15/2000 /s/ Bruno Sartori
- -------------------------- -------------------------------
Date Bruno Sartori, Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 159,442
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,928
<PP&E> 331,714
<DEPRECIATION> 0
<TOTAL-ASSETS> 503,084
<CURRENT-LIABILITIES> 47,368
<BONDS> 0
0
0
<COMMON> 5,307,987
<OTHER-SE> (4,852,271)
<TOTAL-LIABILITY-AND-EQUITY> 503,084
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 164,024
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 164,024
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (164,024)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
