UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SSECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number 000-28059
HEALTHCARE SOFTWARE, INC.
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(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
Nevada 88-0429414
- ------ ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
611 Mulberry Rd., Celebration, FL 34747
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (877)603-4382
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
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NONE
Securities registered under Section 12(g) of the Exchange Act:
Title of each class
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Common Stock, $.0001 par value
Check whether the issuer (a) 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 of the past 90 days. [ X ] Yes
[ ] No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this for 10-KSB [ ]
State issuer's revenues for its most recent fiscal year.
NONE
The Company's stock is not, and has not, been traded or quoted. Therefore,
there is no way to ascertain a market value for the stock.
The number of shares outstanding as of December 31, 1999 was 20,000,000.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
NONE
The following discussion contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ significantly from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and in Item
7, "Management's Discussion and Analysis of Financial Condition."
PART I
Item I DESCRIPTION OF BUSINESS
A. BUSINESS DEVELOPMENT AND SUMMARY
Healthcare Software, Inc., hereinafter referred to as "The Company" or
Healthcare Software, was organized by the filing of articles of incorporation
with the Secretary of State of the State of Nevada on June 17, 1999. The
articles of the Company authorized the issuance of one hundred million
(100,000,000) shares of Common Stock at a par value of $0.0001 per share.
The Company is a developmental stage company with the principal business
objective to provide software for the healthcare industry, specifically
hospitals. The Company intends to develop software for the hospital industry,
targeting the lower tier 40% of hospitals, which, up to this point, could not
afford quality software, according to management. The Company plans to deliver
its software to the hospitals via the Internet, and store hospital information
on the Company's storage equipment, thereby saving hospital's thousands of
dollars in computer storage equipment, initial software purchases, ongoing
training expenditures, and expensive personnel to maintain and control the
software and equipment.
This is the newest in the continued development of the Internet, according to
management. That is, providing software via the Internet. Becoming an "ASP"
(Applications Service Provider) is the untapped frontier and natural progression
for software developers, management contends. With software provided on the
Web, hospitals will be able to update their software products once a month or
once a week instead of once every year and a half. Clients will be charged a
fee to access the programs, based upon usage.
No specific hospitals have signed a contract with the Company as yet, and the
Company anticipates 6 to 9 months until the research phase is completed, and
software is identified and developed in order to begin phase II, when calls to
hospitals will be made and revenues will be expected.
The Company intends to focus on achieving and maintaining profitability, also
ensuring tight financial and systems control by 1) being fully prepared for the
possible onslaught of "hits" to its website, while still providing top quality
customer service, 2) focusing on quality, not quantity, of new staff, 3)
instituting financial/accounting software systems to enable tight cash flow, and
minimizing long-term contractual arrangements with suppliers.
B. PRINCIPAL PRODUCTS AND SERVICES AND PRINCIPAL MARKETS
OVERVIEW
Healthcare Software has the principal objective to become a leading ASP for the
hospital industry. It is planned that hospitals will be able to download
software via the Internet for use in one or all of its departments, use the
software, use the storage capabilities of the Company, and only pay for the time
the hospital uses the software on a monthly fee. Currently, this type of
software used by hospitals is sold outright for tens of thousands of dollars,
requiring additional thousands of dollars for equipment, training and upgrades.
<PAGE>
STRATEGY
The Company plans to have a special focus on the lower tier 40% of hospitals who
could not afford quality software for their many departments, including
Emergency Room, Radiology, Admissions, Surgery, Laboratory, etc. Because of the
intended cost savings of accessing the software via the Internet, these
hospitals may be able to afford multiple-faceted, compatible software in all of
its departments. The hierarchy of the hospital system is set up such that the
hospital administrator must make the decisions regarding tens of thousands of
dollars of expenditures. However, the Company plans to offer its products on a
lower monthly fee basis, allowing certain department heads to make the buying
decisions, according to management. The Company believes this will make the
usage and sale of the Company's product that much easier and faster.
C. DISTRIBUTION METHODS OF THE PRODUCTS OR SERVICES
a) Distribution:
The Company plans to distribute its software products
through the Internet. In doing so, the Company plans to have a secure website
for hospital employees to access the software and information. The Company
believes the website will also provide an audience for other revenue-making
projects, such as banners, affiliate sales and related products.
b) Advertising and Promotion
The Company plans to market its products directly to hospital
department heads through direct sales personnel. Appropriate sales literature
is planned and being developed, as well as video presentations. The Company
believes its marketing plan of offering a free month trial of its software via
the Internet will allow hospitals the opportunity to test its product and
discover its ease of operation.
c) Customer Service
The Company recognizes the need for an effective and responsive
customer service base. Using its planned website, the Company is developing a
customer service strategy to include a help section on the Internet for
immediate response to its customers, as wells as chat rooms for users of its
products on a 24-hour basis.
D. GOVERNMENTAL APPROVAL, REGULATION AND ENVIRONMENTAL COMPLIANCE
Other than general business licensing requirements, management is unaware of any
governmental approval necessary for the Company's operations in the marketing
industry. In addition, management is unaware of existing or probably
governmental regulations on the marketing industry. Management anticipates no
material costs associated with compliance with either federal, state or local
environmental law.
There are no current federal, state or local laws, statutes, or rules regulating
the Internet at this time that would affect the Company. However, if new
enactments were to become effective, depending on the scope and extent of such
laws/regulations, the Company could be directly affected either adversely or
beneficially.
E. EMPLOYEES
As of the current date, the Company has no paid employees. The Company is
dependent on Tom Cochran, President. Mr. Cochran does not plan to spend full
time efforts on the research and development of products, plans, and clients
during the first six months of operation. Once these plans are formulated, the
Company will need to hire full time operational staff as its operations
commence. Mr. Cochran is fully prepared to devote full time efforts at that
time, but there can be no assurance that other full time employment of Mr.
Cochran would not offer a better salary and package to Mr. Cochran and Mr.
Cochran could abandon the Company. The Company's future success also depends on
its ability to attract and retain other qualified personnel, for which
<PAGE>
competition is intense. The loss of Mr. Cochran or the Company's inability to
attract and retain other qualified employees could have material adverse affect
on the Company.
F. COMPETITION
The Company competes with numerous other software companies. Many of these
competitors have substantially greater resources than Healthcare Software. The
Company has identified a niche in the market as it relates to hospital software,
offering its product and updates over the Internet.
G. DEVELOPING AND CHANGING MARKET
The market conditions for selling software is continually evolving and changing.
The Company believes the current conditions will continue favorably for this
type of venture. There can be no assurance that the Company's assessment of the
situation is correct, nor that the products it selects will be accepted by the
clients.
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently pays no rent for its executive offices. Office space is
currently being used at the home of Tom Cochran. This office arrangement is
considered adequate for current and short-term operations of the Company.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not presently a party to any litigation, nor to the knowledge of
management is any litigation threatened against the Company, which would
materially affect the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's shares of Common Stock are not registered with the U.S. Securities
and Exchange Commission under the Securities Act of 1933, as amended
(hereinafter referred to as the "Act"), and certain shares issued pursuant to
Regulation D-504, are "restricted securities."
Since its inception June 17, 1999, the Company has not paid cash dividends on
its Common Stock. It is the present policy of the Company not to pay cash
dividends and to retain future earnings to support the Company's growth. Any
payments of cash dividends in the future will be dependent upon, among other
things, the amount of fund available therefor, the Company's earnings, financial
condition, capital requirements, and other factors which the Board of Directors
deem relevant.
As of December 31, 1999, there were 29 Common Shareholders of record.
The transfer agent for the common stock is Florida Atlantic Stock Transfer, 7130
Nob Hill Road, Tamarac, Florida 33321.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion should be read in conjunction with, and is qualified in
its entirety by the Financial Statements section included below.
<PAGE>
With the exception of historical matters, the matters discussed herein are
forward looking statements that involve risks and uncertainties. Forward looking
statements include, but are not limited to, statements concerning anticipated
trends in revenues and net income, the date of introduction or completion of the
Company's products, projections concerning operations and available cash flow.
The Company's actual results could differ materially from the results discussed
in such forward looking statements. The following discussion of the Company's
financial condition and results of operations should be read in conjunction with
the Company's financial statements and the related notes thereto appearing
elsewhere herein.
A. OVERVIEW
(1) The Company, since raising its initial capital, has concentrated on
researching and developing software products for the hospital industry. The
Company is formulating its plans for introduction of its planned products on the
Internet, as well as its marketing strategies. The Company has also identified
potential employees for the development of its products, and continued service.
During the initial phase of researching and developing, the Company
anticipates the need for additional capital for equipment, personnel, and
offices. Its current office at the home of its President, 611 Mulberry Rd.,
Celebration, FL 34747, is being used free of charge and should be adequate for
the next few months, as research and plans are formulated.
On July 24, 1999, the Company completed an offering of 20,000,000
shares of the Common Stock of the Company to approximately 28 unaffiliated
shareholders. This offering was made in reliance upon an exemption from the
registration provisions of Section 4(2) of the Securities Act of 1933 (the
"Act"), as amended, pursuant to Regulation D, Rule 504 of the Act. As of the
date of this filing, the Company has approximately 20,000,000 shares of its
$0.0001 par value common voting stock issued and outstanding which are held by
29 shareholders of record. Management fully anticipates that the proceeds from
the sale will be sufficient to provide for the Company's capital needs for the
next approximately six (6) to twelve (12) months, during its research stage of
development.
In addition, management of the Company believes the needs for additional
capital going forward will be derived somewhat from internal revenues and
earnings generated from the sale of its products and services. If the Company is
unable to begin to generate revenues from its anticipated products, management
believes the Company will need to raise additional funds to meet its cash
requirements.
The Company believes that its initial revenues will be primarily dependent
upon the number of hospitals it can attract, the quality of its software, the
professionalism of its customer service plan, and the profit margins on the
products it offers. Realization of significant sales of the Company's products
and services during the next fiscal year ending December 31, 2000 is vital to
its plan of operations. To that end, realization of developing quality hospital
software and selling its products to the target market is paramount to its plan.
(2) No engineering, management or similar report has been prepared or
provided for external use by the Company in connection with the offer of its
securities to the public.
(3) Management believes that the Company's future growth and success will be
largely dependent on its ability to obtain clients to use its products, to
attract a stable sales force, to develop quality software, to market and
advertise effectively and efficiently, and its choice of profitable products.
The Company has yet to incur any research and development costs from
July 15, 1999, to present, and the Company does not expect to incur any
significant research amid development expenses during the next fiscal year
ending December 31, 2000.
(4) The Company expects to purchase regular office equipment, i.e., desks,
calculators, computers within the next 12 months. The Company also intends to
purchase/lease adequate computer equipment for storage and information
dissemination via the Internet for its products and services. The Company does
not have any facilities or equipment to sell at this time.
<PAGE>
(5) Management anticipates that it will hire and add 5 full time employees
over the next twelve (12) months, as well as a sales force which will be paid on
a commission-only basis. Employees will not be added during Phase I, the
research period. Employees will be added as revenues permit.
(6) From inception in June, 1999 through present, the Company has devoted a
majority of its time on research and development. During this time, the Company
incurred start up costs of $80,000 which has been paid by Tom Cochran,
individually. This cost included all start up costs of attorney, filing fees,
and accountants, as well as advisory and consulting services. This $80,000
start up costs is borne solely by Tom Cochran, and is part of his contribution
to the Company, for which he has received 18,000,000 shares in the Company,
constituting a 90% controlling position.
B. SEGMENT DATA
There were no revenues from sales since its inception June 17, 1999. Because
there was no revenue, no table showing percentage breakdown of revenue by
business segment or products/service line is included.
C. RESULTS OF OPERATIONS
There were no revenues from sales up to the date of this filing. Since its
inception, June 17, 1999, the Company has formed the Company's organization to
pursue its business strategy.
a) Pre-Operating Expenses. Pre-Operating expenses were not necessary, as all
costs for the Company's legal organization, legal expenses. and financial audits
are included in the start of costs of $80,000, already paid in full by Tom
Cochran, individually.
b) Revenues. The Company is a development state enterprise as defined in SFAS
#7, and has yet to generate any revenues. The Company is devoting substantially
all of its present efforts to: (1) develop materials and products to attract
hospitals, (2) develop plans of operations (sales strategies, customer service,
e-commerce), and (3) obtain sufficient capital to commence full operations.
Impact of Year 2000 Issue
The Company has not experienced any adverse effect of Year 2000 issues on its
systems or operations, or the systems or operations of its customers and trade
suppliers.
D. LIQUIDITY AND CAPITAL RESOURCES
As of the date of this filing, the Company has $66 on hand or in the bank. Until
such time as the Company sets forth and implements its business plan, there will
he no need for additional capital, since Tom Cochran is contributing his time
and expenses at no cost during that time. Although the complete strategic
business plan has not yet been fully researched and put together, management, at
present, foresees the possibility of the need to raise about $500,000 in
additional capital to fully enter the revenue stage of its plan.
The receipt of funds from Private Placement Offerings and loans obtained through
private sources by the Company are a possibility to fund the Company until
revenues can be achieved. Since inception, the Company has financed its cash
flow requirements though issuance of common stock and through contributions from
Tom Cochran. As the Company expands its activities, it may continue to
experience net negative cash flows from operations, pending receipt of sales
revenues. Additionally the Company may be required to obtain additional
financing to fund operations through Common Stock offerings and bank borrowings,
to the extent available, or to obtain additional financing to the extent
necessary to augment its working capital.
<PAGE>
Over the next twelve months, the Company intends to initiate its revenues by
contracting with hospitals in the Untied States for use of its software products
via the Internet. However, the Company will continue the research and
development of clients/products and in-depth plans. The Company believes that
existing capital and anticipated funds from operations will be sufficient to
sustain operations and planned expansion in the next three (3) to six (6)
months. However, the need for additional capital after that time may be
necessary. Consequently, the Company may seek additional financing in order to
sustain operations. There can be no assurance such additional funds will be
available or that, if available, such additional funds will be on terms
acceptable to the Company. In either case, the financing could have negative
impact on the financial conditions of the Company and its Shareholders.
The Company anticipates that it will incur operating losses in the next twelve
months. The Company's lack of operating history makes predictions of future
operating results difficult to ascertain. The Company's prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets. Such risks for the Company
include, but are not limited to, an evolving and unpredictable business model
and the management of growth. To address these risks, the Company must, among
other things, obtain a customer base, implement and successfully execute its
business and marketing strategy, continue to develop its software products,
provide superior customer services and order fulfillment, respond to competitive
developments, and attract, retain and motivate qualified personnel. There can be
no assurance that the Company will be successful in addressing such risks, and
the failure to do so can have a material adverse effect on the Company's
business prospects, financial condition and results of operations.
Initial financing is only to provide funds to prove the business be necessary to
provide software to the hospital industry via the Internet. The Company hopes to
enter into additional funding arrangements through strategic partnerships,
merger, equity offering or debt offering. Nothing has been secured as of this
time.
E. RISKS ASSOCIATED WITH OPERATIONS
The Company's long-term success is partially predicated on the marketability of
its hospital software products and the strength of its sales force.
Its principal competition consists of entities within the software industry
which are well established. The Company's ability to compete against these more
established and more financially stable companies is premised upon the Company's
ability to initiate and fulfill its development plans.
Another uncertainty is the dependence on key personnel familiar with the
control, administration, development, and training of the sales force and
software developers. The loss of Tom Cochran, President, could have an adverse
effect on its continued operations.
Although research in the Company indicates that the Internet will continue with
little, if any regulation, and will continue to become a viable marketing tool,
there can be no assurances that the Internet will prove to be a profitable
outlay for the Company in its business plans.
While the Company's plan is being researched and developed thoroughly, there is
no assurance the plan will be accepted in or by the marketplace, nor, that if it
is accepted, that demand will be sufficient to make the Company profitable. The
Company cannot project with certainty the outcome of its operations, and there
are no assurances that the Company will operate profitably in either the near or
long term.
Local, national, and international economic conditions may have a substantial
adverse affect on the efforts of the Company. The Company cannot guarantee
against the possible eventuality of any potential adverse economic conditions.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements follow Item 13 of this report.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
NONE
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following table sets forth the names, positions with the Company and ages of
the executive officers and directors of the Company. Directors will be elected
at the Company's annual meeting of shareholders and serve for one year or until
their successors are elected and qualify. Officers are elected by the Board, and
their terms of office are, except to the extent governed by employment contract,
at the discretion of the Board.
Name Age Title
- ---- --- -----
Tom Cochran 47 President, Chairman
Duties, Responsibilities and Experience
Tom Cochran, President, Chairman
Tom Cochran attended DuPage University in Chicago, Illinois. From 1970 to
1976, Mr. Cochran managed, trained and supervised personnel in the competitive
photo field, as well as became a top producing sales representative. He gained
vast experience in administration, human resources, finances, and management.
In 1981, he broadened his horizons as owner of PC S International, moving his
operations to Honolulu, HI. At PCS, he brought the photo industry to a new
level of profits and distribution. In 1983, he expanded his sales and
administration efforts to begin Cochran International, Inc., a company
specializing in sales of products in Australia, New Zealand and Europe.
His Hospital Administration Software Solutions subsidiary earned $10 million
its first year, with 150 employees. During his six years in the healthcare
software industry, he has had strong influence in product development, sales,
marketing and management. He has made key sales calls and gained contracts with
top government officials overseas.
Mr. Cochran is not an officer or director of a publicly traded company at this
time.
Notable achievements in his career and personal life include:
- - Personally increased operational efficiencies at his overseas subsidiaries
by more than 68% during a 24-month period
- - Doubled the size of his parent company each and every year for eight
consecutive years.
- - Ranked in the top 5% of students.
- - Awarded the coveted Ad Altari Dei Award as a Boy Scout, which is only
given to five scouts in each state.
- - Active member of the Make A Wish Foundation through its local arm, Give
Kids The World.
Compliance with Section 16(a) of the Exchange Act.
Section 16(a) of the Securities Exchange Act of 1934 requires executive officers
and directors, and persons who beneficially own more than 10% of any class of
the Registrant's equity securities to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Executive officers, directors and beneficial owners of more than 10% of
any class of the Registrant's equity securities are required by SEC regulations
to furnish the Registrant with copies of all Section 16(a) forms they file.
<PAGE>
Based solely on a review of the copies of such forms furnished to the Registrant
during or with respect to fiscal 1999, and certain written representations from
executive officers and directors, the Registrant is aware that each such
reporting persons inadvertently failed to file a Form 3 at the time the
Registrant became registered under Section 12 of such act (January 17, 2000).
Such forms are now in the process of being prepared and filed.
ITEM 10. EXECUTIVE COMPENSATION.
Tom Cochran has not received, nor is he projected to receive, any compensation
for his services, including his capacities as Chairman and President other than
the issuance of the Company's Common Stock as set forth in Item 4 above.
Should the Company become profitable and produce commensurate cash flows from
operations and/or through the sale of strategic investments, there may be some
level of compensation paid to him. However, this will be subject to approval by
the Company's Board of Directors. It is the responsibility of the Company's
Officers and its Board of Directors to determine the timing of any remuneration
for key personnel. Such determination and timing thereof will be based upon such
factors as positive cash flow to include equity sales, operating cash flows,
capital requirements, and a positive cash flow balance in excess of $12,500 per
month. At the time cash flow reaches this point, and appears to be sustainable,
the Officers and Board of Directors will again readdress the compensation of its
key personnel and set forth a more formal and complete plan for remuneration in
line with operations of the Company. At present, the Company's management cannot
accurately estimate the point when revenues and operating cash flows will be
sufficient enough to implement this compensation plan, nor are they able to
estimate the exact amount of compensation at this time.
There are no annuity, pension, or retirement benefits proposed to be paid of
Officers, Directors, or employees of the Company in the event of retirement at
normal date pursuant to any presently existing plan provided or contributed to
by the Company, or any of its subsidiaries, if any.
KEY OFFICER EMPLOYMENT AGREEMENTS
No employment contracts have been negotiated or signed as yet. However, the
Company plans on having all key employees and officers sign a detailed
employment contract as appropriate.
COMPENSATION OF DIRECTORS
All directors will be reimbursed for expenses incurred in attending Board or
committee meetings.
STOCK OPTION PLAN AND NON-EMPLOYEE DIRECTORS' PLAN
No stock option plan has been set forth, and no non-employee directors' plan has
been instituted. The Company may decide, at a later date, and reserves the right
to, initiate these plans as deemed necessary by the Board.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information as of December 31, 1999, with
respect to the beneficial ownership of Common Stock by (i) each person who to
the knowledge of the Company, beneficially owned or had the right to acquire
more than 5% of the Outstanding Common Stock, (ii) each director of the Company
and (iii) all executive offices and directors of the Company as a group.
Name of Beneficial Owner (I) Number Percent
of Shares of Class (2)
Tom Cochran 18,000,000 90%
611 Mulberry Rd
Celebration, FL 34747
All Directors & Officers as a Group 18,000,000
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or shared
investment power with respect to a security (i.e., the power to dispose of, or
to direct the disposition of, a security). In addition, for purposes of this
table, a person is deemed, as of any date, top have "beneficial ownership" of
any security that such person has the right to acquire within 60 days after such
date.
(2) Figures are rounded to the nearest percentage.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Business Consultants. The Company has relied on J. Thomas Howard, LTD as key
business consultants while in its development stage. J. Thomas Howard, LTD has
provided the assistance in preparing the Company to become a reporting company.
For this assistance, the Company has issued 1,000,000 shares of Common Stock at
$.001 per share to companies under control by J. Thomas Howard, LTD.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
Not applicable.
Part F/S
<PAGE>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1999
WILLIAMS & WEBSTER PS
CERTIFIED PUBLIC ACCOUNTANTS
SEAFIRST FINANCIAL CENTER
W 601 RIVERSIDE, SUITE 1940
SPOKANE, WA 99201
(509) 838-5111
<PAGE>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
NOTES TO FINANCIAL STATEMENTS 6
<PAGE>
Board of Directors
Healthcare Software, Inc.
611 Mulberry Rd.
Celebration, Florida 34747
Independent Auditor's Report
We have audited the accompanying balance sheet of Healthcare Software, Inc. (a
development stage company) as of December 31, 1999 and the related statements of
operations, cash flows, and stockholders' equity for the period from June 17,
1999 (inception) through December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Healthcare Software, Inc. as of
December 31, 1999, and the results of its operations and its cash flows for the
period from June 17, 1999 (inception) to December 31, 1999, in conformity with
generally accepted accounting principles.
As discussed in Note 2, the Company has been in the development stage since its
inception and has no revenues. The Company's continued viability is dependent
upon the Company's ability to meet its future financing requirements and the
success of future operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans regarding
those matters are described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
April 5, 2000
<PAGE>
<TABLE>
<CAPTION>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1999
A S S E T S
<S> <C>
CURRENT ASSETS
Cash $ 66
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TOTAL CURRENT ASSETS 66
-------------------
TOTAL ASSETS $ 66
===================
L I A B I L I T I E S & S T O C K H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES $ -
-------------------
TOTAL LIABILITIES -
-------------------
COMMITMENTS AND CONTINGENCIES -
-------------------
STOCKHOLDER'S EQUITY
Common stock, 100,000,000 shares authorized,
$.0001 par value; 20,000,000 shares issued and outstanding 2,000
Additional paid-in capital 80,000
Accumulated deficit (81,934)
-------------------
TOTAL STOCKHOLDERS' EQUITY 66
-------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 66
===================
</TABLE>
The accompanying notes are an intergral part of these financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
June 17, 1999
(Inception)
Through
December 31, 1999
---------------------
<S> <C>
R E V E N U E S -
-------------------
E X P E N S E S
Professional services 81,934
-------------------
TOTAL OPERATING EXPENSES 81,934
-------------------
NET LOSS (81,934)
===================
Basic and diluted net loss per common share $ NIL
===================
Weighted average number of basic and diluted
common stock shares outstanding 20,000,000
===================
</TABLE>
The accompanying notes are an intergral part of these financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD JUNE 17, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999
Common Stock
----------------------- Total
Number Additional Accumulated Stockholders'
of Shares Amount Paid-in Capital Deficit Equity
---------- ----------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock in June 1999
for cash at an average of $.001 per share 2,000,000 $ 200 $ 1,800 $ - $2,000
Issuance of common stock to the president
of the Company at $.004 per common share 18,000,000 1,800 78,200 - 80,000
Loss for period ending,December 31, 1999 - - - (81,934) (81,934)
---------- ----------- --------------- ------------- -------------
Balance at December 31, 1999 20,000,000 $ 2,000 $ 80,000 $ (81,934) 66
========== =========== =============== ============= =============
</TABLE>
The accompanying notes are an intergral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD JUNE 17, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999
<S> <C>
Cash flows from operating activities:
Net loss $ (81,934)
Direct payments for professional services by stockholder 80,000
-------------------
Net cash used in operating activities (1,934)
-------------------
Cash flows from investing activities: -
-------------------
Cash flows from financing activities:
Issuance of stock 2,000
-------------------
Net cash provided by financing activities 2,000
-------------------
Net increase in cash 66
Cash, beginning of period -
-------------------
Cash, end of period $ 66
===================
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest and income taxes:
Interest $ -
===================
Income taxes $ -
===================
NON-CASH INVESTING AND FINANCING ACTIVITIES
Professional services paid directly by stockholder $ 80,000
===================
</TABLE>
The accompanying notes are an intergral part of these financial statements.
5
<PAGE>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Healthcare Software, Inc., (hereinafter "the Company"), was incorporated in June
1999 under the laws of the State of Nevada primarily for the purpose of
providing quality software for the hospital industry via the internet. At
December 31, 1999, the Company is operating from the residence of the Company's
president, in Celebration, Florida. The Company is expected to secure separate
office space in the near future.
The Company is in the development stage and as of December 31, 1999 had not
realized any significant revenues from its planned operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Healthcare Software, Inc. is
presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management
which is responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Development Stage Activities
- ------------------------------
The Company has been in the development stage since its formation on June 17,
1999. It is primarily engaged in development and marketing of healthcare
software.
Going Concern
- --------------
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.
As shown in the accompanying financial statements, the Company has incurred a
net loss of $81,934 and has generated no revenues since inception. The Company,
being a developmental stage enterprise, is currently putting technology in place
which will, if successful, mitigate these factors which raise substantial doubt
about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts and classification of
liabilities that might be necessary in the event the Company cannot continue in
existence.
Management has established plans designed to increase the sales of the Company's
products. Management intends to seek new capital from new equity securities
issuances that will provide funds needed to increase liquidity, fund internal
growth and fully implement its business plan.
6
<PAGE>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and Cash Equivalents
- ----------------------------
The Company has only a demand deposit account. It does not have cash
equivalents at this time.
Accounting Method
- ------------------
The Company's financial statements are prepared using the accrual method of
accounting. Healthcare Software, Inc.'s year-end is December 31.
Basic and Diluted Loss Per share
- -------------------------------------
The Company has adopted Statement of Financial Accounting Standards Statement
(SFAS) No. 128, Earnings Per Share. Basic earnings per share is computed using
the weighted average number of common shares outstanding. Diluted net loss per
share is the same as basic net loss per share as there are no common stock
equivalents to be included in the calculation.
Income Taxes
- -------------
No provision for taxes or tax benefit has been reported in the financial
statements, as there is not a measurable means of assessing future profits or
losses.
Year 2000 Issues
- ------------------
Like other companies, Healthcare Software, Inc. could be adversely affected if
the computer systems the Company, its suppliers or customers use do not properly
process and calculate date-related information and data from the period
surrounding and including January 1, 2000. This is commonly known as the "Year
2000" issue. Additionally, this issue could impact non-computer systems and
devices such as production equipment and elevators, etc. At this time, the
Company does not have any evidence of problems associated with the year 2000
issue.
The Company has not purchased any software or hardware. When the Company does
purchase software and hardware, it will determine at that time if there could be
any adverse effects to the Company's operations regarding Year 2000 issues.
Management also believes that Year 2000 issues should not adversely affect the
ability of its clients and customers to conduct business with the Company. Any
costs associated with Year 2000 compliance will be expensed when incurred.
Impaired Asset Policy
- -----------------------
The Company expects to review any long-lived assets quarterly to determine if
any events or changes in circumstances have transpired which indicate that the
carrying value of its assets may not be recoverable in accordance with standards
in SFAS No. 121.
7
<PAGE>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 3 - PROPERTY AND EQUIPMENT
At December 31, 1999 the Company did not own any property or equipment. When
the Company does acquire property and equipment it expects to implement a policy
to determine impairment by comparing the undiscounted future cash flows
estimated to be generated by those assets to their respective carrying amounts.
NOTE 5 - COMMON STOCK
Upon incorporation, the Company authorized the issuance of 100,000,000 shares of
common stock at a par value of $0.0001 per share of which 20,000,000 shares are
outstanding. Holders of shares of common stock are entitled to one vote for
each share on all matters to be voted on by the stockholders, but have no
cumulative voting rights. Holders of shares of common stock are entitled to
share ratably in dividends, if any, as may be declared by the Board of Directors
in its discretion, from funds legally available therefor. The Company has not
authorized any preferred stock, convertible stock, warrants or options as of
December 31, 1999.
The president and director of the Company, Tom Cochran, owns 90% of the
outstanding common stock.
NOTE 6 - RELATED PARTY
The Company issued 1,000,000 shares of common stock to companies under the
control of its key business consultant, J. Thomas Howard LTD., at $.001.
The Company issued stock to the president in exchange for expenses paid by the
president in the amount of $80,000. This was paid directly to J. Thomas Howard
LTD. to provide services related to the initial registration of the Company
under the Securities Act of 1934.
8
<PAGE>
SIGNATURE PAGE
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HEALTHCARE SOFTWARE, INC.
By /S/ Tom Cochran, President
4/12/00
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /S/ Tom Cochran, President, Secretary, Treasurer, Director
4/12/00
<PAGE>
