<PAGE>
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: May 31, 2000
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to
Commission file number: 000-26553
HEALTHNET INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
COLORADO 98-0206627
(State of Incorporation) (IRS Employer ID No.)
Suite 301-1201 West Pender Street
Vancouver, British Columbia
Canada V6E 2V2
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (604) 669-3573
As of May 31, 2000, the registrant had 10,568,463 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format (check one);
YES NO X
---------- ----------
<PAGE>
Part I. FINANCIAL INFORMATION
-------------------------------
Item 1. FINANCIAL STATEMENTS
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(IN UNITED STATES DOLLARS)
AS AT AS AT
MAY 31, FEBRUARY 29,
2000 2000
$ $
--------------------------------------------------------------------------------------------------
ASSETS
CURRENT
<S> <C> <C>
Cash and cash equivalents 3,046 50,901
Restricted cash [NOTE 4] 33,205 17,000
Accounts receivable [NOTE 5] 68,643 63,091
Prepaid expenses and deposits [NOTE 6] 36,772 52,698
--------------------------------------------------------------------------------------------------
141,666 183,690
Capital assets (net) [NOTE 7] 854,487 781,125
OTHER ASSETS
Goodwill [NOTE 8] 166,483 190,266
--------------------------------------------------------------------------------------------------
1,162,636 1,155,081
==================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT
Notes payable [NOTE 11] 3,152,000 --
Accounts payable and accrued liabilities [NOTE 9] 687,776 744,839
Amount due for business combination 66,410 69,022
--------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 3,906,186 813,861
LONG-TERM
Notes payable [NOTE 11] -- 2,000,000
Obligation under capital lease [NOTE 10] 29,910 20,155
Commitments [NOTE 12]
SHAREHOLDERS' EQUITY (DEFICIENCY)
Share capital
Preferred shares, 50,000,000 authorized, no par value
Common shares, 100,000,000 authorized, no par value,
10,568,463 issued and outstanding [February 29, 2000 - 10,536,251] 142,694 118,535
Additional paid-in capital 28,278 16,631
Deficit accumulated (2,944,432) (1,814,101)
--------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY) (2,773,460) (1,678,935)
--------------------------------------------------------------------------------------------------
1,162,636 1,155,081
==================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF
LOSS AND COMPREHENSIVE LOSS
(IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE THREE MONTHS ENDED INCORPORATION ON
MAY 31 JANUARY 21, 1999 TO
2000 1999 MAY 31, 2000
$ $ $
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial software license revenue 51,500 -- 51,500
Web site development and hosting revenue 42,723 -- 42,723
Product sales revenue 2,729 -- 2,729
Cost of product sales (1,775) -- (1,775)
--------------------------------------------------------------------------------------------------
95,177 -- 95,177
EXPENSES
Salaries and benefits 489,853 18,587 1,088,375
Advertising, marketing and promotion 255,976 -- 639,995
General and administrative 286,691 18,751 655,426
Amortization 152,630 13,855 326,391
Accounting and professional fees 40,041 7,563 181,091
Foreign exchange 317 1,402 10,732
Incorporation costs -- 572 2,441
Loss on writedown of capital assets -- -- 135,158
--------------------------------------------------------------------------------------------------
1,225,508 60,730 3,039,609
--------------------------------------------------------------------------------------------------
LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD (1,130,331) (60,730) (2,944,432)
==================================================================================================
LOSS PER COMMON SHARE (0.11) (0.01)
==================================================================================================
Weighted average shares outstanding 10,557,447 10,500,000
==================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF
SHAREHOLDERS' EQUITY (DEFICIENCY)
(IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL DEFICIT
--------------------------- PAID-IN ACCUMULATED IN THE
SHARES AMOUNT CAPITAL DEVELOPMENT STAGE
# $ $ $
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, FEBRUARY 29, 2000 10,536,251 118,535 16,631 (1,814,101)
Stock options exercised 32,212 24,159 -- --
Compensatory stock options -- -- 11,647 --
Loss and comprehensive loss for
the 3 months ended May 31, 2000 -- -- -- (1,130,331)
-------------------------------------------------------------------------------------------------------
BALANCE, MAY 31, 2000 10,568,463 142,694 28,278 (2,944,432)
=======================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE THREE MONTHS ENDED INCORPORATION ON
MAY 31, JANUARY 21, 1999 TO
2000 1999 MAY 31, 2000
$ $ $
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Loss for the period (1,130,331) (60,730) (2,944,432)
Adjustment to reconcile loss to net cash used in
operating activities
Amortization 152,630 13,855 326,391
Loss on disposal of fixed assets 135,158
Share option compensation expense 11,647 -- 28,278
Accrued interest on notes payable 35,979 -- 78,457
Changes in current assets and liabilities
Increase in restricted cash (16,205) -- (33,205)
Increase in accounts receivable (5,552) (7,229) (29,010)
Increase in prepaid expenses and deposits 15,926 (4,826) (37,553)
Increase in accounts payable and accrued (1,574) 9,493 279,688
liabilities
----------------------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES (937,480) (49,437) (2,196,228)
-----------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to fixed assets (277,911) (258,627) (1,001,931)
Cash acquired from business combination 19,806
----------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (277,911) (258,627) (982,125)
----------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase in notes payable 1,152,000 500,000 3,152,000
Issuance of share capital for cash 24,159 -- 43,190
Principal repayments under capital lease obligations (8,623) -- (13,791)
---------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 1,167,536 500,000 3,181,399
---------------------------------------------------------------------------------------------------
INCREASE IN CASH DURING THE PERIOD (47,855) 191,936 3,046
Cash, beginning of period 50,901 9,157 --
---------------------------------------------------------------------------------------------------
CASH, END OF PERIOD 3,046 201,093 3,046
===================================================================================================
SUPPLEMENTAL INFORMATION
Interest paid 2,695 -- 4,825
===================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
May 31, 2000
1. NATURE OF BUSINESS
Healthnet International Inc. (the "Company") was incorporated on January 21,
1999 in the State of Colorado.
The Company is an online retailer of complementary medicine products, commonly
known as the VSM (vitamins, supplements, minerals) sector. The Company's online
stores, medicinecabinet.com and medicinecabinet.co.uk, offer broad selection,
informative content, easy-to-use navigation and search capabilities, a high
level of customer service, competitive pricing and personalized merchandising
and recommendations. Last year, the Company diversified its activities, adding a
second product line called eHealthstores. This is a complete web site package
targeted at traditional retailers who wish to establish a comprehensive web
presence but lack the resources to build an in-house infrastructure. By
sub-licensing its existing technologies and integrating customer features unique
to each client, and then hosting and maintaining each client web site,
ehealthstores effectively enables independent and regional retailers to offer
Internet services including ecommerce which were previously available to much
bigger organizations.
Healthnet International Inc. has three wholly owned subsidiaries; Healthnet
U.S.A. Inc., HNI Healthnet (Canada) Inc. and Healthnet Europe Limited.
Healthnet U.S.A. Inc. was incorporated on March 8, 1999. It was incorporated in
the State of Nevada and is intended to function as the operating company for the
United States market.
HNI Healthnet (Canada) Inc. was incorporated on May 18, 1999. It was
incorporated in the Province of British Columbia and is intended to function as
the operating company for the Canadian market.
Healthnet Europe Limited was incorporated on January 11, 2000. It was
incorporated in the Island of Guernsey and is intended to function as the
operating company for the European market.
On February 29, 2000, the Company acquired Varcom Internet Communications
and Commerce Solutions Inc. (VARCOM). The company provides web site design
and development services. VARCOM subsequently changed its company's name
to Nject in June 2000.
2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended May 31, 2000
are not necessarily indicative of the results that may be expected for the year
ended February 28, 2001.
The balance sheet at February 29,2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant Company and Subsidiaries' annual
report on Form 10-K for the year ended February 29,2000
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
3. SIGNIFICANT NEW ACCOUNTING POLICIES
Revenue recognition
Initial software license fees relating to web site development are recognized as
revenue when the web site becomes operational. Before the revenues are
recognized, deposits from licensees are recorded as liabilities.
Website design and development fees are billed and recognized as revenue in
accordance with the percentage of completion method. Web hosting revenue is
recognized over the period the services are provided.
Product sales revenue is recognized when the product is shipped.
Recent accounting pronouncements
The United States Securities and Exchange Commission has issued Staff Accounting
Bulletin 101 "Revenue Recognition in Financial Statements" (SAB 101).
Application of this pronouncement has been deferred until October 1, 2000. The
Company has not yet determined the impact of SAB 101 on its consolidated
financial statements and its revenue recognition policies.
4. RESTRICTED CASH
May 31, February 29,
2000 2000
$ $
--------------------------------------------------------------------------------
Term deposits 33,205 17,000
--------------------------------------------------------------------------------
33,205 17,000
================================================================================
The above term deposits are held by Canadian Western Bank and Canadian Imperial
Bank of Commerce as securities for computer leases [note 10].
5. ACCOUNTS RECEIVABLE
May 31, February 29,
2000 2000
$ $
--------------------------------------------------------------------------------
Amounts due from trade customers 15,356 38,456
Other 18,783 9,475
GST receivable 34,504 15,160
Less: allowance for bad debts -- --
--------------------------------------------------------------------------------
68,643 63,091
================================================================================
6. PREPAID EXPENSES AND DEPOSITS
Prepaid expenses and deposits comprise:
May 31, February 29,
2000 2000
$ $
--------------------------------------------------------------------------------
Equipment lease deposits 3,131 1,582
Deposits paid to suppliers on portions of work
completed -- 6,337
Deposits held by merchant bank 16,400 16,400
Other 8,363 10,185
Prepaid expenses 8,878 18,194
--------------------------------------------------------------------------------
36,772 52,698
================================================================================
The Company has obtained a merchant account with a bank in the United States for
credit card processing. Under the conditions of the merchant agreement, the
Company is required to provide the bank with a security deposit. The deposit
will be held until the merchant account is cancelled and bears interest of 5.5%
per annum.
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
May 31, 2000
7. CAPITAL ASSETS
Capital assets are recorded at cost less accumulated depreciation and comprise:
<TABLE>
<CAPTION>
ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
$ $ $
---------------------------------------------------------------------------------------------------
May 31, 2000
<S> <C> <C> <C>
Computer hardware and equipment 110,138 18,976 91,162
Computer hardware under capital leases 85,698 11,892 73,806
Furniture and fixtures 83,654 7,285 76,369
Computer software 788,709 181,809 606,900
Domain name 10,000 3,750 6,250
---------------------------------------------------------------------------------------------------
1,078,199 223,712 854,487
===================================================================================================
February 29, 2000
Computer hardware and equipment 111,516 3,892 107,624
Computer hardware under capital leases 49,165 2,654 46,511
Furniture and fixtures 75,172 2,598 72,574
Computer software 630,136 83,220 546,916
Domain name 10,000 2,500 7,500
---------------------------------------------------------------------------------------------------
875,989 94,864 781,125
===================================================================================================
</TABLE>
8. GOODWILL
<TABLE>
<CAPTION>
May 31, February 29,
2000 2000
$ $
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Goodwill (net of accumulated amortization of $23,783
as at May 31, 2000) 166,483 190,266
---------------------------------------------------------------------------------------------------
166,483 190,266
===================================================================================================
</TABLE>
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
May 31, 2000
9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities comprise:
<TABLE>
<CAPTION>
May 31, February 29,
2000 2000
$ $
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Trade payable 326,640 310,912
Interest payable [NOTE 11] 78,457 42,478
Due to database supplier [NOTE 12 (ii)] 40,000 60,000
Accrued expenses for capital asset purchases 204,435 307,547
Current obligations under capital lease [NOTE 10] 38,244 23,902
---------------------------------------------------------------------------------------------------
687,776 744,839
===================================================================================================
</TABLE>
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
May 31, 2000
10. CAPITAL LEASE OBLIGATIONS
At May 31, 2000, the Company had entered into capital lease for equipment. The
future payments are:
<TABLE>
<CAPTION>
$
---------------------------------------------------------------------------------------------------
<S> <C>
Nine months ended, February 28, 2001 34,434
Year ended, 2002 39,904
Year ended, 2003 4,818
---------------------------------------------------------------------------------------------------
Total minimum lease payments 79,156
Less amounts representing interest at rates varying from 11% to 20% 11,002
---------------------------------------------------------------------------------------------------
Present value of minimum lease payments 68,154
Current portion of capital lease obligations 38,244
---------------------------------------------------------------------------------------------------
Long-term portion of capital lease obligations 29,910
===================================================================================================
</TABLE>
Two of the equipment leases require the Company to pledge term deposits for a
total of $33,205 [note 4]. The term deposits will be returned upon the expiry of
the lease and are non-interest bearing.
11. NOTES PAYABLE
Notes payable comprise and are due to:
<TABLE>
<CAPTION>
May 31, February 29,
RATE OF 2000 2000
DUE DATE INTEREST $ $
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes payable May 31, 2001 5% 3,152,000 2,000,000
===================================================================================================
</TABLE>
The notes payable are unsecured. During the period, the Company incurred $35,979
of interest which is due within the next twelve months. Management believes the
fair value of the note approximates its carrying value.
>From June 1, 2000 to June 29, 2000, the Company received a further $224,250 in
the form of promissory notes. Interest is payable at 5% per annum and the
interest is repayable on May 31, 2001.
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
May 31, 2000
12. COMMITMENTS
[i] At May 31, 2000, the Company has entered into commitments for
leases of premises. The future payments are:
$
-------------------------------------------------------------------------
Nine months ended February 28 2001 64,068
Year ended 2002 88,487
Year ended 2003 15,148
-------------------------------------------------------------------------
167,703
=========================================================================
Rent expense for the quarter ended May 31, 2000 was $35,693.
[ii] The Company has signed an agreement with a company which
publishes and distributes a health related database. The
agreement allows the Company and its customers to use the
database. The Company is committed to pay a further $40,000 in
the next year in connection with this agreement.
<PAGE>
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
May 31, 2000
12. COMMITMENTS (CONT'D.)
[iii] The Company has a one year agreement expiring in September
2000 with an Internet Service Provider (ISP) based in the
United Kingdom to jointly develop usage on co-branded web
pages. The Company is committed to paying $8,000 per month.
Furthermore, the Company is required to remit to the ISP, 20%
of all revenues generated by traffic originating from the ISP
up to a fixed and variable total of $16,000 per month. Once
the $16,000 threshold is met, the fixed monthly payment
($8,000) is reduced by $0.80 for every $1.60 in sales over
$40,000 per month.
[iv] The Company has entered into an agreement with a company to
receive public relations counsel for $10,000 cash per month.
[v] The Company has entered into an agreement with a company which
provides marketing services to the Company. The Company is
committed to paying the greater of $2,000 per month or 2% of
monthly net sales generated through marketing services
provided to the Company.
[vi] The Company has entered into an investor relations agreement
with a company which provides internet marketing and
information services. The Company is committed to paying
$4,000 per month starting June 2000 for a period of six
months.
[vii] The Company acquired Nject (formerly known as VARCOM) on
February 29, 2000. There is contingent consideration
associated with this acquisition.
[i] If VARCOM achieves sales of greater than $550,000 but less
than $760,000 in the next year, the Company will be obligated
to pay a further $70,000 of consideration via the issuance of
common shares.
[ii] If VARCOM achieves sales of greater than $760,000 but less
than $1,030,000 in the next year, the Company will be
obligated to pay a further $240,000 of consideration via the
issuance of $210,000 of common shares as well as $30,000 in
cash.
[iii] If VARCOM achieves sales of greater than $1,030,000 in the
next year, the Company will be obligated to pay a further
$340,000 of consideration via the issuance of $310,000 of
common shares as well as $30,000 in cash.
<PAGE>
Item 2. MANAGEMENT DISCUSSION AND ANALYSIS
(All figures are in US dollars)
FORWARD LOOKING INFORMATION
Healthnet International Inc. (the "Company" or "Healthnet") cautions readers
that certain important factors may affect the Company's actual results and could
cause such results to differ materially from any forward-looking statements that
may be deemed to have been made in this Form 10-QSB, or that is otherwise made
by or on behalf of the Company. Such factors include, among others, the
speculative nature of the industry in which the Company operates, technology
failures, environmental or government regulations, availability of financing,
force majeure events, and other risk factors as described from time to time in
the Company's filings with the Securities and Exchange Commission. Many of these
factors are beyond the Company's ability to control or predict. For this
purpose, any statements contained in the registration statement that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the generality of the foregoing, words such as "may", "expect",
believe", "anticipate", "intend", "could", "estimate" or "continue" or the
negative or other variations of comparable terminology, are intended to identify
forward-looking statements. The Company disclaims any intent or obligation to
update its forward-looking statements, whether as a result of receiving new
information, the occurrence of future events, or otherwise.
General
-------
The Company's current plan of operation is to derive its revenues from the sale
of health related products via the Internet. Additional revenues are expected to
be generated through software licensing, website development services, major
sponsorships on the Company's websites, and internet marketing services. The
Company launched a portion of its website, www.medicinecabinet.com, on September
13, 1999, providing health related information to viewers, including an
encyclopedia, an on-line health magazine and other interactive aspects for
members. On February 2, 2000, the Company announced that it had licensed its
website technology to Seattle Super Supplements, a retail chain of stores in the
Seattle area. The website was substantially completed and revenues were
generated through software licensing fees in April 2000. This prototype license
is comprised of a complete e-commerce website with extensive health information
and content, and full customer support. The Company intends to license several
more websites in the current fiscal year.
It is anticipated that the Internet will continue to become a more effective
medium and that the market opportunities for the Company are expected to
continue to expand. This tremendous growth is expected to also attract many
potential new competitors. In order to maintain sales growth, the Company
intends to expand the content and to improve the services on its Internet web
site, employ additional staff at a moderate level to cope with its expansion, as
well as researching and developing other projects that are expected to utilize
its existing facilities and expertise.
RESULTS OF OPERATIONS
---------------------
During the quarter the Company began generating revenues which were
insubstantial as at May 31, 2000. License agreements were signed with several
natural products retailers which generated one-time web site development
revenues. Once these sites are launched and marketed, which is anticipated to
take place in the next quarter, these web sites are intended to generate
recurring e-commerce (product sales) revenues. The company intends to enter into
similar license agreements over the next few years, which will also generate
recurring e-commerce revenues. As product sales begin to represent a greater
proportion of gross revenues, the Company expects its gross margins to be
reduced. The Company cautions readers that the future magnitude of these revenue
streams is uncertain due to the fact that both Healthnet and the Internet itself
are in their early stages at this time.
Losses for the first fiscal quarter ended May 31, 2000 amounted to $1,130,331.
Expenses during the period increased to $1,225,508 from $897,324 in the prior
quarter as a result of continued development of the Company's websites, the
launch of the eHealthstores product line, the addition of Varcom Internet
Communications and Commerce Solutions Inc. and the corresponding human resources
required. The Company anticipates that this development will continue to require
moderate increases in staff levels, technology, office space and marketing
expenditures.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company secured approximately $1,152,000 US through debt financing during
the Quarter and $24,159 from the issuance of common shares under the Company's
stock option plan. Cash flow used in operations for the three months ended May
31, 2000 was $937,480. It is expected that revenues from natural product sales
should commence shortly after the launch of the online stores in the next fiscal
quarter, and that further license revenues will be generated in the foreseeable
future. No assurance can be given that revenues from sales will initially meet
expenses and as such, the Company may finance operations through existing and
additional debt financing from arm's length private lenders until such time as
revenues from sales meet or exceed expenses. In addition, the Company may
consider raising additional equity financing through the sale of common stock of
the Company through private placements to sophisticated investors. The
combination of expected revenues and additional debt and/or equity financing is
intended to provide the Company with sufficient operating capital for a period
of approximately two years.
The $277,912 used in investing activities consisted primarily of computer
technologies.
Net cash on hand at May 31, 2000 decreased to $3,046 from $50,901 at February
29, 2000. Subsequent to the quarter end, to June 30, 2000, the Company received
a further $224,250 in debt financing.
<PAGE>
Part II - OTHER INFORMATION
-----------------------------
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Description
-------------- ---------------
27 Financial Data Schedule
(b) There are no reports on Form 8-K that were filed for the quarter.
SIGNATURES
Pursuant to 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.
HEALTHNET INTERNATIONAL INC.
(Registrant)
Date: July 11, 2000 /s/ GRANT JOHNSON
------------------------------------
Grant R. Johnson
President and CEO
Date: July 11, 2000 /s/ JOSEPH HARKINS
------------------------------------
Joseph Harkins
Chief Financial Officer
