UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Healthcare Software, Inc.
(Exact name of registrant as specified in its charter)
Commission file number: 000-28059
Nevada 88-0429414
(State of Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No)
611 Mulberry Rd, Celebration, FL 34747
(Address of Principal Executive Office) (Zip Code)
877-603-4382
(Registrant's Telephone Number, Including Area Code)
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 ( )
As of June 30, 2000 registrant had 6,666,666 shares of Common Stock outstanding.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JUNE 30, 2000
WILLIAMS & WEBSTER PS
CERTIFIED PUBLIC ACCOUNTANTS
BANK OF AMERICA FINANCIAL CENTER
W 601 RIVERSIDE, SUITE 1940
SPOKANE, WA 99201
(509) 838-5111
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HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations 3
Statement of Stockholders' Equity 4
Statements 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 sheets of Healthcare Software, Inc. (a
development stage company) as of June 30, 2000 and December 31, 1999, and the
related statements of operations, cash flows, and stockholders' equity for the
six months ended June 30, 2000, the period from June 17, 1999 (inception)
through December 31, 1999 and the period from June 17, 1999 (inception) through
June 30, 2000. 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide 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
June 30, 2000 and December 31, 1999, and the results of its operations and its
cash flows for the six months ended June 30, 2000, the period from June 17, 1999
(inception) through December 31, 1999 and the period from June 17, 1999
(inception) to June 30, 2000, 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
July 21, 2000
<PAGE>
<TABLE>
<CAPTION>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, December 31,
2000 1999
--------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash $ 7 $ 66
--------- ---------
TOTAL CURRENT ASSETS 7 66
--------- ---------
TOTAL ASSETS $ 7 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
Payable to related party $ 6,680 -
--------- ---------
TOTAL LIABILITIES 6,680 -
--------- ---------
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
STOCKHOLDER'S EQUITY
Common stock, 100,000,000 shares authorized,
$.0001 par value; 6,666,666 shares issued and outstanding 667 667
Additional paid-in capital 81,333 81,333
Accumulated deficit (88,673) (81,934)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (6,673) 66
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7 66
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
June 17, 1999 June 17, 1999
For the Six (Inception) (Inception)
Months Ended Through Through
June 30, 2000 December 31, 1999 June 30, 2000
-------------- ------------------- ---------------
<S> <C> <C> <C>
R E V E N U E S $ - $ $ -
-------------- ------------------- ---------------
E X P E N S E S
Bank Charges 59 - 59
Professional services 6,680 81,934 88,614
-------------- ------------------- ---------------
TOTAL OPERATING EXPENSES 6,739 81,934 88,673
-------------- ------------------- ---------------
NET LOSS $ (6,739) $ (81,934) (88,673)
============== =================== ===============
Basic and diluted net loss per common share $ nil $ nil $ nil
============== =================== ===============
Weighted average number of basic and diluted
common stock shares outstanding 6,666,666 6,666,666 6,666,666
============== =================== ===============
</TABLE>
The accompanying notes are an integral 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 JUNE 30, 2000
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 $.003 per share 666,666 $ 67 $ 1,933 $ - $ 2,000
Issuance of common stock to the president
of the Company at $.013 per common share 6,000,000 600 79,400 - 80,000
Loss for the year ending, December 31, 1999 - - - (81,934) (81,934)
--------- -------------- ---------------- ---------------- ------------------
Balance at December 31, 1999 6,666,666 667 81,333 (81,934) 66
Loss for period ended June 30, 2000 - - - (6,739) (6,739)
--------- -------------- ---------------- ---------------- ------------------
Balance at June 30, 2000 6,666,666 $ 667 $ 81,333 $ (88,673) $ (6,673)
========= ============== ================ ================ ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
June 17, 1999 June 17, 1999
For the Six (Inception) (Inception)
Months Ended Through Through
June 30, 2000 December 31, 1999 June 30, 2000
--------------- ------------------- ---------------
<S> <C> <C> <C>
Net loss $ (6,739) $ (81,934) $ (88,673)
Direct payments for professional services by stockholder 6,680 80,000 86,680
--------------- ------------------- ---------------
Net cash used in operating activities (59) (1,934) (1,993)
--------------- ------------------- ---------------
Cash flows from investing activities: - - -
--------------- ------------------- ---------------
Cash flows from financing activities:
Issuance of stock - 2,000 2,000
--------------- ------------------- ---------------
Net cash provided by financing activities - 2,000 2,000
--------------- ------------------- ---------------
Net increase (decrease) in cash (59) 66 7
Cash, beginning of period 66 - -
--------------- ------------------- ---------------
Cash, end of period $ 7 $ 66 $ 7
=============== =================== ===============
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest and income taxes:
Interest $ - $ - $ -
=============== =================== ===============
Income taxes $ - $ - $ -
=============== =================== ===============
NON-CASH INVESTING AND FINANCING ACTIVITIES
Professional services paid directly by stockholder $ 6,680 $ 80,000 $ 86,680
=============== =================== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
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 June
30, 2000, 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 has elected a fiscal year-end of
December 31.
The Company is in the development stage and as of June 30, 2000 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 $88,673 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
JUNE 30, 2000
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.
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 and weighting them by
the amount of time that they were outstanding. Diluted loss per share is the
same as basic loss per share, as the inclusion of common stock equivalents would
be anti-dilutive.
Derivative Instruments
-----------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This new standard establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It
requires that an entity recognizes all derivatives as either assets or
liabilities in the balance sheet and measures those instruments at fair value
per share as there are no common stock equivalents to be included in the
calculation.
At June 30, 2000, the Company has not engaged in any transactions that would be
considered derivative instruments or hedging activities.
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.
Use of Estimates
------------------
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
7
<PAGE>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
NOTE 3 - PROPERTY AND EQUIPMENT
At June 30, 2000 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 4-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 6,666,666 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
June 30, 2000.
During the first quarter 2000, a reverse 3:1 stock split occurred. The common
stock has been restated in balance sheet, statement of stockholders' equity, and
notes to the financial statements to reflect the reverse stock split.
8
<PAGE>
HEALTHCARE SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 4-COMMON STOCK (CONTINUED)
The president and director of the Company, Tom Cochran, owns 90% of the
outstanding common stock.
NOTE 5-RELATED PARTY
The Company issued 666,666 shares of common stock to companies under the control
of its key business consultant, J. Thomas Howard LTD., at $.003.
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.
During the quarter ended, June 30, 2000, the president of the Company paid
expenses in the amount of $6,680.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Some of the statements contained in this Form 10-QSB discuss future
expectations, contain projections of results of operations or financial
condition or state other "forward-looking" information. These statements are
subject to known and unknown risks, uncertainties, and other factors that could
cause the actual results to differ materially from those contemplated by the
statements. The forward-looking information is based on various factors and is
derived using numerous assumptions. Important factors that may cause actually
results to differ from projections include, for example:\
- the success or failure of management's efforts to implement their
business strategy
- the Company's ability to rise sufficient capital to meet
operating requirements
- the Company's ability to compete with major established companies
- the Company's ability to attract and retain employees
- the Company's ability to keep its website operational and manage
the site
- federal, state or local governmental regulations
- seasonal effects on revenue for the products its markets
- the success of the Company's marketing campaigns
- the amount and timing of operating costs and capital expenditures
relating to maintaining and expanding the business, operations and
infrastructure of the company
- the Company's ability to upgrade and develop its systems and
infrastructure to accommodate growth
- the Company's ability to attract new personnel in a timely and
effective manner
- the Company's ability to retain key employees in its
- business the timing, cost and availability of advertising in
traditional media and on other websites and online services
- consumer trends and popularity of the products to be sold
- the level of use of the Internet and online services
- general economic conditions
GENERAL
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.
10
<PAGE>
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.
PLAN OF OPERATIONS
The Company has been in the development stage since its inception and has
not generated any revenues from operations. However, the Company anticipates
that expenses will continue to increase during 2000 with the development of its
website and the acquisition of contracts with hospitals. Additional capital
will be necessary to expand operations or continue current operations. The
Company has financed its growth primarily from the sale of common stock. The
Company's sources of external and internal financing are limited, and it is not
expected that its internal source of liquidity will improve until net cash is
provided by operating activities, and, until such time, it will rely upon
external sources for liquidity. The Company has not established any lines of
credit or other significant financing arrangement with any third-party lenders.
There can be no assurance that the Company will be able to obtain financing on
reasonable terms, if at all. Until the Company is able to develop, construct
and operate its website, and until the Company contracts with hospitals, and
derive revenues there from, the Company will continue to use cash obtained from
outside sources for its operations and development of its business.
In the future, the Company may be required to seek debt or equity financing
(public or private), curtail operations, or otherwise bring cash flows in
balance if it approaches a condition of cash insufficiency. The Company
anticipates a need for additional capital, and is working on a SB-2 registration
offering towards that end. There is no assurance that the Company will be
successful in any such effort.
11
<PAGE>
PART II
Pursuant to the Instructions to Part II of the Form 10-QSB, Items 1, 2, 3, 4,
and 5 are omitted.
ITEM 6 EXHIBITS AND REPORTS
a) Exhibit 27.1 Financial Data Schedule
12
<PAGE>
SIGNATURE PAGE
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the undersigned, thereunto duly authorized.
Healthcare Software, Inc.
Date: August 3, 2000 /S/ Thomas Cochran
---------------- ---------------------------
Thomas Cochran, President
13
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