SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act 1934
Check the appropriate box:
[X ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) [ ] Definitive Information Statement
NUGGET EXPLORATION, INC.
------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies.
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form of Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
INFORMATION STATEMENT
OF
NUGGET EXPLORATION, INC.
2051 SPRINGDALE ROAD
CHERRY HILL, NJ 08003
TELEPHONE: 800-204-1902
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
- -------------------------------------------------------------------------------
NOTICE OF SHAREHOLDER CONSENT TO CHANGE THE NAME OF
NUGGET EXPLORATION, INC.
TO
GOHEALTH.MD, INC.
The board of directors of Nugget Exploration, Inc., a Nevada
corporation (the "Company"), is providing this Information Statement to all
shareholders as notification that the holders of a majority of the Company's
outstanding common stock, par value $0.01 ("Common Stock"), voted to change the
Company's name to "GoHealth.MD Inc."
On November 10, 1999, holders of a majority of the Common Stock voted
to amend the Company's Articles of Incorporation to change the Company's name to
GoHealth.MD Inc. Of the 3,799,117 shares issued and outstanding on that date,
shareholders owning 3,102,000 shares, or 82% of the outstanding Common Stock,
voted to approve this name change via written consent taken without a meeting
pursuant to Section 78.320 of the Nevada Revised Statutes.
On December 30, 1999, the Company expects to send this Information
Statement to all shareholders of record as of December 1, 1999. The name change
shall be effective twenty (20) calendar days after this Information Statement is
mailed to the Company's shareholders. The effective date for this corporate
action is expected to be January 20, 2000.
The shareholders who consented to the name change were previously
shareholders of GoHealth.MD Inc., a Delaware corporation ("GoHealth"). These
entities received shares of Common Stock when the Company's wholly owned
subsidiary, Nugget Holding Company, a Delaware corporation ("Newco"), merged
with and into GoHealth, pursuant to a Stock Exchange Agreement and Plan of
Merger ("Agreement"), dated September 30, 1999. GoHealth survived the merger and
became a wholly owned subsidiary of the Company. For more information on the
Agreement, see "Description of Business."
The Company has not conducted any operations for several years. When
the Company, through Newco, merged with GoHealth, its operational focus shifted
to GoHealth's Internet-related marketing services. The Company's board of
directors recommended the name change to GoHealth.MD Inc. to reflect the
Company's focus on GoHealth's operations.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning ownership
of the Common Stock as of December 1, 1999. The table discloses each entity
known to the Company to be the beneficial owner of more than 5 percent of the
Company's common stock. The table also shows the stock holdings of all Company
directors, as well as the shares held by directors and executive officers of the
Company as a group. The notes accompanying the information in the table below
are necessary for a complete understanding of the figures provided.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of
Title of Class of Beneficial Owner Beneficial Ownership Class
<S> <C> <C> <C>
MCOM Management Corporation
Common Stock 350 Fifth Avenue, Suite 5807 300,000 7.3%
New York, NY 10118
Sandra Vernon
Common Stock 2051 Springdale Road 2,000,000 48.8%
Cherry Hill, NJ 08003
EXECUTIVE OFFICERS AND DIRECTORS
William D. Hanna
Common Stock 2051 Springdale Road 500,000 12.2%
Cherry Hill, NJ 08003
Dr. Leonard Vernon
Common Stock 2051 Springdale Road 2,000,000(1) 48.8%
Cherry Hill, NJ 08003
Kevin O'Donnell
Common Stock 2051 Springdale Road 500,000 12.2%
Cherry Hill, NJ 08003
Common Stock Executive Officers and 3,000,000 73.2%
Directors as a Group
</TABLE>
(1) Includes 2,000,000 shares owned by Sandra Vernon, the wife of Dr.
Leonard Vernon. Dr. Vernon disclaims any beneficial ownership of such shares.
CHANGE IN CONTROL
Nugget Exploration, Inc., a Nevada corporation (the "Company"),
underwent a change of control on November 10, 1999, when it issued 3,102,000
shares of its common stock, par value $0.01 ("Common Stock"), to the
shareholders of GoHealth.MD Inc., a Delaware corporation ("GoHealth"), pursuant
to a Stock Exchange Agreement and Plan of Merger ("Agreement"), dated September
30, 1999, between and among the Company, GoHealth and Nugget Holding Company,
2
<PAGE>
a Delaware corporation wholly owned by the Company ("Newco"). Pursuant to the
terms of the Merger Agreement, each of the 3,102,000 outstanding shares of
GoHealth common stock, par value $0.001 (the "GoHealth Stock"), was converted
into and exchanged for one share of Nugget's common stock, par value $0.01 (the
"Company's Common Stock").
The Agreement additionally provided that the Company assume GoHealth's
rights and obligations under all of GoHealth's outstanding stock options and
warrants. All holders of such options and warrants, agreed upon exercise of such
securities, to accept shares of the Company's Common Stock in lieu of GoHealth
stock. In the event all of the GoHealth options and warrants are exercised, the
Company will issue an additional 567,000 shares, which will result in the
Company issuing a total of 3,669,000 shares of Common Stock to GoHealth
stockholders. Prior to the GoHealth transaction, 697,117 shares of Common Stock
were outstanding. Thus, immediately after the issuance, GoHealth stockholders
received 81.2% of the outstanding Common Stock. If all GoHealth options and
warrants are exercised, the GoHealth stockholders will have received 84.0% of
the total number of shares of Common Stock outstanding. All shares issued
pursuant to the Agreement were issued pursuant to exemptions from registration
under the Securities Act of 1933, as amended (the "Act"), including Rule 506
under the Act.
Sandra Vernon, William Hanna, Kevin O'Donnell now own (without regard
to future issuances as a result of the exercise of GoHealth options and
warrants), 48.8%, 12.2% and 12.2% of the Company's Common Stock, respectively,
which provide them with control of the Company. Sandra Vernon is the wife of Dr.
Leonard Vernon, one of the Company's directors and its president. Control of the
Company was assumed from Mr. Kurtz, who at that time beneficially owned 348,709
shares of Common Stock, which represented 50.02% of the outstanding Common Stock
prior to the GoHealth acquisition. Kurtz now owns approximately 57,709 shares of
Common Stock, representing 1.5% of that now outstanding. The Company understands
that subsequent to the Merger Kurtz sold approximately 291,000 shares of Common
Stock to various investors in a private transaction.
In connection with this stock issuance, Dr. Leonard Vernon and William
Hanna were appointed as additional directors. Tyson Schiff then resigned from
his positions as president and director, and Brian Ortega and Marianne Brady
resigned as directors. The directors then appointed Dr. Leonard Vernon as
president and William Hanna as its secretary and treasurer. Neither Mr. Schiff,
Mr. Ortega nor Ms. Brady had any disagreements with the Company at the time of
their respective resignations. This change of control in the Company's
management coincided with a change in control of the ownership of the Company's
capital stock.
The Company knows of no other arrangements which may result in a change
in its control.
DESCRIPTION OF BUSINESS AND RELATED INFORMATION
The Internet related operations of GoHealth.MD Inc. ("GoHealth") now
comprise virtually all of the Company's activities. These activities are
conducted in two arenas. GoHealth sells Internet domain names with the ".MD"
extension, as compared to the more standard domain extensions .com, .org, .net
or .edu, and operates an informational Internet site, Healthmall.com. As used
3
<PAGE>
hereinafter, the term "Company" refers to Nugget Exploration Inc., a Nevada
corporation, and its subsidiaries (including GoHealth) and predecessors, unless
the context indicates otherwise.
.MD DOMAIN NAMES
GoHealth has a strategic partnership with a Florida company, Domain
Name Trust ("DNT"), which has a licensing agreement with the country of Moldova,
a small Eastern European country which was assigned a monopoly over the ".MD"
top-level domain extension by the Internet Assigned Numbers Authority, a United
States government agency, in conjunction with a United Nations organization
known as ISO, or International Organization for Standardization.
A domain name is the equivalent of an address on Internet. Therefore,
every site on the Internet has a domain name identifying it. There are two types
of top-level domains, generic and country code. Generic domains were created for
use by the Internet public, while country code domains were created to be used
by each individual country as they deemed necessary.
In the Domain Name System ("DNS") naming of computers, a hierarchy of
names exists. There are a set of what are called "top-level domain names"
("TLDs"). These are the generic TLDs (EDU, COM, NET, ORG, GOV, MIL, and INT),
and the two letter country codes. Under each TLD may be created a hierarchy of
names. Generally, under the generic TLDs the structure is very flat. That is,
many organizations are registered directly under the TLD, and any further
structure is up to the individual organizations.
Domain Name Trust has been licensed to sell .MD domain extension
registrations by Moldova in Europe, Canada, and other English speaking
countries. The country of Moldova benefits economically from this arrangement,
receiving $35 for each name sold.
The .MD domain names are sold directly from GoHealth's Internet web
site, located at WWW.GOHEALTH.MD. Anyone can access this site and acquire an
available domain with the .MD extension. The site is 'branded,' or
electronically linked, to DNT's site, which maintains record of new .MD domains.
Therefore, every time a person at the GoHealth site registers a .MD domain,
DNT's site recognizes the origin of the sale as GoHealth's, ensuring that
GoHealth receives credit for each and every sale of a .MD domain name generated
through the GoHealth site.
GoHealth itself has acquired the marketing rights to more than 40
domain names that end in the domain extension .MD. Each one of these domain
names have an unlimited marketing potential since they can be specifically
identified by an individual URL. An example of this would be BACKDOC.MD/SMITH.
Thus, a virtually unlimited number of specialists in any given specialty will
have the ability to use the .MD domain name of their particular choice. Other
.MD domain names acquired by GoHealth include www.Ask.md, www.Call911.md,
www.nutrition.md, www.Family.md. The Company believes the ".MD" extension is and
will continue to be a highly desired domain extension in the medical industry
which is more appealing than comparable extensions of ".COM", ".NET", ".ORG" or
".EDU".
4
<PAGE>
HEALTHMALL.COM
GoHealth operates an informational site on the internet located at
www.Healthmall.Com. This site is devoted to providing information related to the
use of herbs, vitamins, as well as an information source for alternative health
care providers such as chiropractors and naturopathic physicians. The site
therefore serves as an information portal for alternative health care and is
very heavily content based. Among the vast quantities of information that can be
garnered on the site is herb and prescription drug interactions. This
information is supplied on the site through a licensing contract with Facts and
Comparisons Corporation, one of the leading sources of information for
pharmacists in the United States.
The site includes a continuously updated news wire feed limited to
health care from PR Newswire, a searchable database through the National Library
of Medicine for published peer review medical journal articles known as "Medline
search," and information on almost 200 herbs, including their pharmacology,
toxicology, and their clinical indications.
Healthmall.com also features one of the largest databases in the United
States of health food stores. This database contains over 5000 health food
stores in the United States and includes their name, address, and phone number.
The database is constantly being updated and expanded.
Databases of alternative health care providers, such as licensed
chiropractors, massage therapists and naturopathic physicians are also contained
on the site. The site contains a database of over 3,000 chiropractors in the
United States. It is the Company's goal to establish an online presence for the
chiropractor by developing a web site as well as an e-mail account. This will
initially be done free-of-charge for six months. Again, at the end of six
months, the chiropractor will have the option of staying online for an annual
fee of $150 or terminate the service. In the event these options prove of
interest to chiropractors, the Company plans to utilize similar option for other
health care practitioners.
The site also offers the following options and services:
SYMPTOMS AND REMEDIES: An extensive database of symptoms,
diseases, and medical conditions that offers viewers the
opportunity to read a short description of the symptom,
disease, or condition, as well as view the associated herbal
remedies and/or prescription medications that are commonly
used to treat that condition.
SHOPPING: A health food/health product "mall" with specialized
stores, shops, and services. The shopping section offers each
store a home page, unlimited product categories, unlimited
product descriptions and/or photos, as well as a secure e-
commerce connection to complete ordering transactions
HEALTH CHAT: A chat room in which people can ask questions or
chat about health-related topics, concerns, and information.
We also offer chat sessions with experts in various fields who
offer advice and lectures, as well as interact with the
Internet community in scheduled question and answer sessions.
The Company is currently gathering data on the purchasing habits of
consumers regarding their vitamin and nutritional supplement purchases. The
Company hopes to use this information in
5
<PAGE>
the future as an information source to develop an e-commerce relationship with
vitamin manufacturers and retailers.
Healthmall.com is targeted to well-educated, technology adopting women
aged 25-54 who are proactive in seeking information to actively maintain their
health and well-being and reactive in addressing health and medical issues.
Healthmall.com's target market is predominantly female, as they are the key
healthcare decision-makers within the household. According to International Data
Corporation, women are expected to represent approximately 51% of on-line users
in 1999, up from 46% in 1998. Healthmall.com believes that women represent an
attractive demographic group for advertisers since they have disproportionate
control over consumer spending in the United States. Industry experts estimate
that women make 75% of the household's healthcare decisions, control 66% of the
health dollars and spend 80% of a household's discretionary income.
OFFICE FACILITIES
The facility for the Company's operation is located at 2051 Springdale
Road, Cherry Hill, New Jersey, which also houses the offices of Able Imaging,
Inc., a wholly owned entity of William D. Hanna, a director of the Company. The
Company does not pay rent to Mr. Hanna for such facilities.
MANAGEMENT'S PLAN OF OPERATION
This Information Statement contains forward-looking statements. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects," and
similar expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause the Company's actual results
to differ materially from those indicated by such forward-looking statements.
The Company's operations are conducted through its wholly owned
subsidiary, GoHealth, which is itself a development stage company. GoHealth
operates an Internet informational site relating to health and medicine and
sells Internet domain names with the ".MD" extension.
Capturing a large physician network (medical doctors, chiropractors,
dentists, podiatrists, osteopaths) to view online advertising in exchange for
the establishment of web sites and hosting services is one of the Company's
primary goals. Such a network would facilitate a synergy between GoHealth's
Internet informational site and .MD domain names. The Company hopes to entice
physicians to utilize its Internet web site design services with one of its
Internet .MD domain extensions. The Company hopes to have advertisers, such as
pharmaceutical companies, underwrite physician's cost of a .MD domain and
website.
The medical industry does not utilize advertising on the Internet as
much as many other industries. However, the Company hopes to alter this lack of
advertising with its .MD domain extensions, which in the Company's opinion,
allow for easy recognition of a physician's web site. Physicians interested in
the .MD domain extensions will be offered discount packages to encourage them to
assist the Company's informational site. The presence of physicians
participating on
6
<PAGE>
GoHealth's Healthmall.com site is expected to establish a significant potential
for advertising revenue.
".MD" DOMAIN NAMES
GoHealth.MD currently owns and operates a web site for the sale of .MD
domain names. The Company believes that its use of the domain name .MD carries
significant marketability and that medical specialists that perform elective
procedures, such as plastic or cosmetic surgeon have been increasing their
spending on advertising revenues as evidenced by viewing the yellow page book in
the United States or major regional magazines.
.MD is a top level domain (TLD), comparable in functionality to other
top level domains, such as COM, .NET, or .ORG. However, while the other TLDs are
generic and only convey an affiliation or ownership structure, the .MD domains
have independent meaning related to the medical field.
In addition to offering .MD domain names, the Company offers physician
web sites, as well as hosting of these web sites on its own server which is
included in the domain name purchase price. The web site is basically a
templated web site that has been designed by World Wide Web Communications of
Cherry Hill, New Jersey. In addition, GoHealth sells customized web sites, which
are also prepared by World Wide Web Communications of Cherry Hill, New Jersey.
Hosting of web sites sold in conjunction with .MD domain names are provided by
Domain Name Trust, as more fully discussed in "Description of Business and
Related Information."
The limited marketing of the .MD domain names and GoHealth's related
Internet services which has occurred has consisted of advertising in medical
journals, direct mail to physicians, as well as a point of presence at various
medical conventions.
HEALTHMALL.COM
By developing Healthmall.com into the leading Internet resource
dedicated to the use of herbs, vitamins, as well as an information source for
alternative health care providers such as chiropractors and naturopathic
physicians. GoHealth believes it will be able to generate substantial
advertising revenues. The Company has entered into, and intends to continue to
enter into new distribution and business relationships with entities that have
significant reach on the Internet and are in similar fields, such as pharmacy
chains, Internet access providers and portals, as well as other traditional
media to build the Healthmall.com brand and drive traffic to the site.
Familiarity of the domain, or address, of a web site containing health
and medical information is a competitive advantage as many consumers may desire
to avoid searching for an unknown web site. The Company believes its web site
has a familiar, easy to remember domain. Internet-related marketing and
advertising revenues are tied directly to the amount of 'hits' a site receives,
or times the site is visited. In the event the Company is able to generate a
greater viewing market, it expects to generate higher advertising and marketing
revenues.
7
<PAGE>
The Company is at varying stages of establishing links with web sites
possessing easy to remember domains. Since launching the site, Healthmall.com
has developed advertising relationships with the following companies:
Onhealth.com, Dr. Koop.com, Pharmor.com, Natraflex, The Simple Truth.com,
Vivacity.com, Nature's Source's, Permalean, Nutriceutical Technology
Corporation, Northeast Health Institute and Nourishing Foods, Inc. Many of these
advertising contracts have been brought to the site via an agreement with Burst!
Media. Although it is hoped that the familiarity of the web site addresses will
generate user traffic alone, the Company is attempting to expand the sponsors on
its various sites and improve the content of its sites.
Healthmall.com is attempting to reach independent health food stores at
this time to offer them an online presence and to increase GoHealth's database
of retail natural food stores. While GNC and Great Earth possess the largest
market segments, and Mother Nature.com is an Internet- based superstore that
offers nutritional products, the remainder of the market is comprised of
approximately 8,000 small, independent retailers with no uniformity. There is no
ongoing consolidation of independent health food stores in the United States and
the independents are facing increasing competition from the chains, such as GNC
and Great Earth, as well as online chains, such as Vitamins.com and
Vitaminshop.com.
If even a small portion of these approximately 8,000 these small,
independent health food retailers can be combined and linked at an Internet site
such as Healthmall.com, the Company believes they will have the opportunity to
compete with the superstores on a national level. GoHealth is attempting to
achieve this through a free offer that allows the independent health food store
to get a free web site and free online shopping cart for six months. Such
technical services are being provided to GoHealth through World Wide Web
Communications of Cherry Hill, New Jersey. Following the six-month trial period,
if the independent health food store wishes to remain online, there is a cost of
$20 per month. This presence would allow the independent retailer the
opportunity to advertise their business on a national level, as well as to their
existing customers and prospective customers in their own community.
One manner by which the Company hopes to differentiate the
Healthmall.com site from other sources of health and Wellness information is by
continuing to focus on the alternative medicine. While other sites only devote
portions of their content to this type of alternative medicine, we intend to
predominantly focus on the use of herbs, vitamins, and alternative health care
providers such as chiropractors and naturopathic physicians.
To further differentiate Healthmall.com from other Internet health
sites, it allows consumers to obtain information on specific diseases or
conditions and allergy information and participate in relevant discussion
groups, among other things. Healthmall.com provides updated health-related news
articles from around the world are received every 20 minutes via PR Newswire.
This feature always includes a cover story on the Healthmall.com home page, as
well as hundreds of additional news articles accessible from Healthmall.com's
home page, located at www.healthmall.com.
The Company will continue to seek distribution agreements with leading
search engine and portal companies, as well as with major Internet access
providers. Distribution agreements serve to build the brand and drive
significant traffic to the Healthmall.com web site. By increasing its brand
exposure and traffic through significant distribution agreements, Healthmall.com
will seek to become the most effective means of advertising alternative health
care products on the Internet.
8
<PAGE>
Current distribution relationships include:
THE GOTO.COM SEARCH ENGINE. This search engine is basically an
auction-type search engine that allows individual web sites to bid for
a position in the search engine. Healthmall.com has almost 300 search
terms which appear on the first page of the search engine.
THE YAHOO SEARCH ENGINE. Healthmall.com also has rankings that permit
direct traffic to our site from the YAHOO search engine.
THE ALTA VISTA SEARCH ENGINE. Healthmall.com not only also has rankings
that permit direct traffic to our site from the ALTA VISTA search
engine, but the Company has search engine positioning with REAL NAMES.
This permits us to purchase various names that will appear first on
ALTA VISTA search engines.
The licensing arrangement with Facts and Comparison Corporation,
referred to in "Description of Business and Related Information" above, which
allows medication information to appear directly on Healthmall.com identifies a
common goal of Healthmall.com. Very few of the several informational options
found on Healthmall.com are cobranded, or require transfer to a site removed
from Healthmall.com. Therefore, with a few minor exceptions, a visitor to
Healthmall.com remains on Healthmall.com's pages. This retained viewing is
perceived by the Company to be a competitive advantage in its attempt to
generate advertising revenues.
TECHNOLOGY AND SYSTEMS
The Company's Web site is made available with the latest Internet
hardware and software technologies. Exodus IT-class co-location facilities
provide the Company with a secure, high availability and high bandwidth space
for its servers. This includes redundant OC-3 and OC-12 backbone connections to
the Internet, uninterruptible power supplies with diesel generator backup, all
housed in a copper-lined, earthquake-proof building. Direct connections via
"T-1" and DSL lines allow the main office to connect seamlessly and reliably to
the servers and the Internet. A farm of Intergraph IS-8000 and IS80
mission-critical servers are housed behind a redundant F5 Big/IP switcher for
complete software and hardware fault tolerance and load leveling. These servers
run Microsoft Windows NT Enterprise Server with Internet Information Server 4.0,
Active Server Pages with a proprietary page caching system and publishing tools
for Web page hosting and production management. The resulting performance in
preliminary tests shows dominance over other competitive sites. All
advertisement hosting and reporting is handled through NetGravity Ad Server, a
powerful ad management and forecasting toolset.
The Web site's Personal Health Tracker and Search features utilize
Microsoft SiteServer tools and technologies. This provides the customized Web
crawling, user profile management, nightly process runs and e-mail support that
the Personal Health Tracker requires.
Microsoft SQL Server databases are heavily used for all content,
process management and tracking needs. Offsite backups occur regularly
throughout the day to protect against a total system failure.
9
<PAGE>
The Company believes the site has been built from the ground up as a
very stable, scalable, and high performance solution for Healthmall.com's
current and future needs.
COMPETITION
Since the Internet's commercialization in the mid-1990's, the number of
Web sites on the Internet competing for consumers' attention and spending has
proliferated with no substantial barriers to entry, and the Company expects that
competition will continue to intensify. The Company competes, directly and
indirectly, for users, distributors, advertisers and content providers. The
Company believes that the principal competitive factors in attracting and
retaining users is the depth, breadth and timeliness of content, the ability to
offer compelling and relevant content and brand recognition. Other important
factors in attracting and retaining users include ease of use, service quality
and cost. The Company is competing in the Internet industry with a number of
other companies, including larger entities who possess greater financial
resources.
ONLINE COMPETITORS
There is significant interest in health-related content among online
consumers. Demographic factors and the growth of online audiences suggest that
the popularity of this content will continue to increase. Similarly, major
health advertisers are showing increased levels of interest in the Internet.
Some key operators of health-related sites on the Internet today include:
o DIVISIONS OR AFFILIATES OF PRINT PUBLISHERS; including Healthy Ideas
(Rodale Press), PHYS (Conde Nast), Thrive (owned by Oxygen Media),
MediConsult, Dr. Koop and HealthScout (a service of RX Remedy, Inc., a
market research firm.)
o VENTURES OF ONLINE SERVICE FIRMS; including Better Health (iVillage)
and Thrive (owned by Oxygen Media), Medscape and WebMD.
o PUBLIC SECTOR AND INSTITUTIONAL SITES; including the National institute
of Health, Mayo Clinic, InteliHealth and university sites. While these
sites compete for viewer time and attention, they do not typically
compete for advertising or transactional revenues.
o PORTALS/SEARCH ENGINES; principally the proprietary health-related
content presented to subscribers to America Online, MSN.com, Yahoo!,
Excite, etc.
o INTERNET SITES OTHER THAN HEALTH-RELATED SITES; including general
interest sites, such as news sites and search engines, which often host
some health-related content in the context of other editorial
materials.
FINANCIAL STATEMENTS
Please see Pages F-1 through F-? which follow this Annual Report.
NOTE: SUCH STATEMENTS WILL BE COMPLETED AND INSERTED PRIOR TO THE
MAILING OF THE DEFINITIVE INFORMATION STATEMENT TO THE COMPANY'S
SHAREHOLDERS.
10
<PAGE>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
As the Company will hereafter be focused on the operations of GoHealth,
it has retained the services of GoHealth's independent certified public
accountant, Samuel Klein & Co., as of December 1, 1999, for all of the Company's
needs. Jones, Jensen & Company, the Company's previous accountant ("Jones,
Jensen"), was dismissed by the Company's board of directors on December 1, 1999,
in connection with the Merger of GoHealth. This dismissal was unrelated to
Jones, Jensen's competence, practices and procedures. Jones, Jensen's financial
statement reports did not contain any adverse opinion, disclaimer of opinion, or
modified opinion.
Jones, Jensen has informed the Company that it will provide the SEC a
letter containing its position with the foregoing statements regarding the
Company's change in certifying accountant.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors, Executive Officers and Control Persons
Name Age Position(s) and Office(s)
--------------------------------------------------------------------------
Dr. Leonard F. Vernon 44 President, Treasurer and Director
William D. Hanna 54 Director
Kevin O'Donnell 51 Secretary
DR. LEONARD F. VERNON, the founder GoHealth, became the Company's
president, treasurer and a director on November 10, 1999. Dr. Vernon has managed
and/or overseen the operation of a successful private practice, as well as the
development of a private company that became a publicly traded NASDAQ
corporation. Dr. Vernon is 44 years old and has maintained a private practice of
chiropractic for over 20 years. He was licensed by the New Jersey State Board of
Medical Examiners for the Practice of Chiropractic in New Jersey. He is
additionally licensed to practice chiropractic in the State of Delaware and the
Commonwealth of Pennsylvania.
WILLIAM D. HANNA became a director of the Company on November 10, 1999.
Mr. Hanna attended Philadelphia Community College and has extensive experience
in real estate and site development. Previous to his retirement more than five
years ago, Mr. Hanna worked for 20 years in the construction industry as a steel
erector and owner of his own business. In the past five years, Mr. Hanna has
served as the chief executive officer of a durable medical equipment company and
has also been a co-owner of a provider of discounted health care services to the
general public.
KEVIN O'DONNELL became a director of the Company on November 10, 1999.
Mr. O'Donnell is a 1976 graduate of Rutgers University (B.A. Political Science).
From 1978 to 1996, he was employed by Burlington Industries as an operations
manager and then as Northeast Regional Sales and Marketing Manager. In 1990,
11
<PAGE>
Mr. O'Donnell became the Director of Operations for Imaging Management
Associates, Inc. In this position, he oversaw the project development, start-up,
and operation of seven outpatient diagnostic imaging centers. He has extensive
experience in personnel recruitment, employee benefit programs, supplier/vendor
networks, and contract negotiation. He also has marketing and product
development experience in the managed care and private practice physician
sectors of the healthcare marketplace.
During the last fiscal year, the Company held only one board of
directors meeting, on June 9, 1999. All directors attended such meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Neither the Company's current directors nor Sandra Vernon have
filed required Forms 3 as of December 20, 1999. However, such forms are expected
to be filed on December 21, 1999.
Based solely upon the Company's review of Forms 3, 4 and 5 and
amendments thereto furnished to the registrant under Rule 16a-3(a) during the
fiscal year preceding the filing of this Form 10-KSB, the Company is not aware
of any other person who was a director, officer, or beneficial owner of more
than ten percent of the Company's Common Stock and who failed to file reports
required by Section 16(a) of the Securities Exchange Act of 1934 in a timely
manner.
EXECUTIVE COMPENSATION
The following tables describe the compensation of the persons who have
served as the Company's chief executive officer for the last three fiscal years
and since May 31, 1999. No compensation in excess of $100,000 was awarded to,
earned by, or paid to any executive officer or director of the Company during
the years ended May 31, 1999, 1998 or 1997, or has been since May 31, 1999.
Annual Compensation
Name and Fiscal Other Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
- ------------------------ ------- ----------- -------- ----------------
Dr. Leonard Vernon, 1999 -0-(1) -0- -0-
President
Tyson Schiff, 1999 -0- $500(2) -0-
President
Mary C. MacGuire, 1998 -0- -0- -0-
President
John W. MacGuire, 1997 -0- -0- -0-
President
Long Term Compensation
<TABLE>
<CAPTION>
Awards Payouts
Restricted Securities LTIP All Other
Name and Principal Fiscal Stock Underlying Payouts Compensation
Position Year Award(s)($) Options/SARs(#) ($) ($)
- ----------------------- ------- ----------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Dr. Leonard Vernon, 1999 -0- -0- -0-
President
Tyson Schiff, 1999 -0- -0- -0- -0-
President
Mary C. MacGuire, 1998 -0- -0- -0- -0-
President
John W. MacGuire, 1997 -0- -0- -0- -0-
President
</TABLE>
(1) Dr. Leonard Vernon has never received compensation from GoHealth or
the Company for his services. However, in the event the Company's revenues
exceed $1,000,000, Dr. Vernon will receive an annual salary of approximately
$145,000.
(2) In October 1998, Tyson Schiff received a $500 bonus for serving as
the Company's president and director since July 1996, and for agreeing to
continue to serve as a director and the president of the Company.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company is currently traded through the NASD
Over-the-Counter Bulletin Board ("OTC-BB") under the symbol NUGT, although very
limited trading has occurred over the past several years.
The table set forth below lists the range of high and low bids of the
Company's Common Stock for each fiscal quarter for the last two fiscal years.
The prices in the table reflect inter-dealer prices, without retail markup,
markdown or commission and may not represent actual transactions.
Note that the Company's 2000 fiscal year ends May 31, 2000.
FISCAL YEAR QUARTER HIGH LOW
1998 First $0.02 $0.005
Second $0.02 $0.005
Third $0.02 $0.001
Fourth $0.02 $0.005
12
<PAGE>
1999 First $0.02 $0.001
Second $6.00 $0.062
Third $7.00 $0.062
Fourth $5.062 $0.062
2000 First $4.125 $1.375
Second $5.25 $2.00
Third (*) $5.812 $5.00
* This is only a partial fiscal quarter as the third quarter of 2000
began on December 1, 1999 and ends on February 29, 2000. The prices listed in
this quarter are therefore high and low bids between December 1, 1999 through
December 15, 1999.
SHARES
As of December 1, 1999, approximately 4,099,603 shares of the Company's
Common Stock, par value $0.01, outstanding.
SHAREHOLDERS
As of December 1, 1999, there were approximately 622 holders of record
of the Company's Common Stock.
The Company has not declared any cash dividends for the last two fiscal
years. The Company does not anticipate declaring any cash dividends in the near
future. There are no restrictions that limit the Company's ability to pay
dividends, other than those generally imposed by applicable state law. The
future payment of dividends, if any, on the Common Stock is within the
discretion of the board of directors and will depend on the Company's earnings,
capital requirements, financial condition, and other relevant factors. The
Company does not anticipate the payment of future dividends.
On October 21, 1998, the National Association of Securities Dealers,
Inc. ("NASDAQ") stock permitted trading of the Company's shares on the basis of
the reverse split of the Company's outstanding common stock in the amount of
1-for-310 and a reduction in the Company's class of authorized common stock to
5,000,000 shares. The par value did not change for $0.01 per share.
REVERSE STOCK SPLITS
The Company's Board of Directors and the holders of a majority of the
outstanding common stock approved a reverse split on October 7, 1998, effective
October 19,1998, whereby each 310 shares was converted into one share and all
fractional shares were rounded up. The board of directors authorized the stock
split because they believed that the number of issued and outstanding shares of
common stock was disproportionately large given the Corporation's absence of
revenue, net income and net worth. Immediately after the reverse split, the
Company had approximately 97,177 total shares of its $0.01 common stock issued
and outstanding.
13
<PAGE>
Simultaneous with the 1-for-310 reverse stock split of the outstanding
shares of Common Stock, on October 7, 1998, the holders of a majority of the
then outstanding Common Stock and all of the Board of Directors 1-for-10 reverse
stock split of the number of shares of Common Stock authorized for issuance.
Pursuant to this reverse stock split, the number of shares of Common Stock
authorized for issuance decreased from 50,000,000 to 5,000,000, although the
total capitalization of the Company and the intrinsic value of each
shareholders' investment did not change significantly when the reverse stock
split took effect.
Shareholders should be aware that as a general rule stock combinations
and reverse splits do not increase or decrease the intrinsic value of a
stockholder's investment. Except for holders of a small number of shares who
receive a full share in exchange for a fractional share, the number of shares
resulting from a reverse split generally leaves shareholders with approximately
the same proportionate ownership as before the reverse split. However, when the
authorized number of shares are not split, or are split in a smaller ratio than
outstanding shares are split, existing shareholders own a smaller percentage of
the total number of shares which can be issued. This results in the Company
having the ability to issue relatively more shares than prior to the splits, and
therefore possibly dilute the ownership of existing shareholders in a manner
greater than existed prior to the split.
The reverse stock split may leave shareholders with one or more "odd
lots" of the Common Stock, i.e., stock in amounts of less than 100 shares. These
shares may be more difficult to sell than shares in lots of 100 because the
commission on such sales may be greater than the proceeds.
The Company believes that shareholders will generally not realize any
gain or loss for federal income tax purposes as a result of the reverse stock
split. However, shareholders should consult their personal tax advisors
regarding the tax effect, including the effect under state tax laws, of the
reverse stock split.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Leonard Vernon, GoHealth's founder and the Company's president and
director, is the husband of Sandra Vernon, the Company's largest shareholder.
Dr. Leonard Vernon has a previous disciplinary action by the New Jersey
State Board of Medical Examiners in which he was given an 18-month suspension of
his license, 30 days of which were to be active with a monetary penalty of
$3000. Dr. Vernon failed to perform the required community service and pay the
fine and the suspension was imposed for a full 18 months. This disciplinary
action was a result of misinformation supplied to the New Jersey Board of
Medical Examiners in 1983. Dr. Vernon currently possesses an unrestricted
license to practice chiropractic in the State of New Jersey as well and the
Commonwealth of Pennsylvania and State of Delaware and there is no pending
disciplinary action against him in any of the states in which he is licensed.
Dr. Vernon has no SEC violations and has never been sanctioned or disciplined by
any other regulatory committee.
Ken Kurtz currently owns less than 5% of the Company's outstanding
Common Stock. Prior to the GoHealth merger, however, Kurtz owned in excess of
50% of the Common Stock. Kurtz received 400,000 shares pursuant to a November
30, 1998 consulting agreement with the Company
14
<PAGE>
("November Consulting Agreement") whereby Kurtz agreed to assist the Company in
preparing employment agreements, contracts and other filings required by the
Commission as well as all other necessary state and Federal regulatory bodies,
locating independent auditor and attorney for the Company.
On June 22, 1998, and in consideration for the assistance of Park
Street and a cash infusion to the Company by Park Street of $15,100, the Company
issued 15,100,000 restricted shares of common stock (the "Shares") to a designee
of Park Street -- First Avenue, Ltd., a limited partnership organized under the
laws of the State of Utah. Ken Kurtz, being a general partner of First Avenue,
Ltd. and the president of Park Street, indirectly controls the shares. The
October 7, 1998 stock split reduced this quantity to First Avenue's current
ownership of 48,709 shares. See "Market for Common Equity & Related Shareholder
Matters" for more information on the reverse stock split.
According to a Financial Consulting Agreement between Company and Park
Street Investments, Inc. executed on March 5, 1998 ("March Consulting
Agreement"), Park Street assisted the Company with its administration and
recapitalization. Park Street also agreed to actively pursue and negotiate a
merger or business combination with a third party on behalf of the Company.
GoHealth was introduced to the Company through the efforts of Kurtz and Park
Street. Park Street paid all costs associated with these responsibilities
through the GoHealth merger.
UNDERTAKING REGARDING FORM 10-KSB
The Company hereby undertakes to provide without charge to each person
solicited with this proxy statement, on the written request of any such person,
a copy of its annual report on Form 10- KSB including the financial statements
and the financial statement schedules, required to be filed with the Securities
and Exchange Commission pursuant to Rule 13a-1 under the Act for the fiscal year
ended May 31, 1999.
This written request should be addressed to the Company at its
headquarters at 2051 Springdale Road, Cherry Hill, New Jersey 08003.
SIGNATURE
By order of the board of directors,
/s/ Dr. Leonard Vernon
- ----------------------------------
Dr. Leonard Vernon, President
Cherry Hill, New Jersey
December 17, 1999
15
<PAGE>
APPENDIX I
TO PROXY STATEMENT OF
NUGGET EXPLORATION INC.
AUDITED FINANCIAL STATEMENTS
NUMBERED F-1 TO F-?
FINANCIAL STATEMENTS
Note: Such statements will be completed and inserted here prior to the
mailing of the definitive Information Statement to the Company's shareholders.
16
