UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
Annual Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999
Transition Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Commission File Number 0-24778
NATIONAL HEALTH & SAFETY CORPORATION
(Name of small business issuer in its charter)
UTAH 87-0505222
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 GIBRALTAR ROAD, SUITE 107, HORSHAM, PENNSYLVANIA 19044
(Address of principal executive offices) (Zip Code)
Issuer's telephone no.: (215) 682-7114
Securities registered pursuant to Section 12(b) of the Exchange
Act: None
Securities registered pursuant to Section 12(g) of the Exchange
Act: Common
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 No
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and
no disclosure will be contained, to the best of the 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 Form 10-KSB.
State the issuer's revenues for its most recent fiscal year.
$ 80,340
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and ask prices of such stock as
of a specified date within 60 days. $ 5,747,270 (Based on price
of $.125 per share as of April 7, 2000)
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding as of Decmber 31, 1999
Common Stock, $.001 Par Value 59,634,062
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Transitional Small Business Disclosure Format. Yes No
NATIONAL HEALTH & SAFETY CORPORATION
TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business . . . . . . . . . . . . . . . 3
Item 2. Description of Property. . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . 5
Item 4. Submission of Matter to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . 6
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . 6
Item 6. Management's Discussion and Analysis or
Plan of Operation. . . . . . . . . . . . . . . . . . 7
Item 7. Financial Statements . . . . . . . . . . . . . . . . . 10
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . 25
PART III
Item 9. Directors, Executive Officers, Promoters and
Control persons; Compliance with Section 16(a)
of the Exchange Act. . . . . . . . . . . . . . . . . 25
Item 10. Executive Compensation . . . . . . . . . . . . . . . . 27
Item 11. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . 27
Item 12. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . . . 29
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . 30
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 31
PART I
Item 1. Description of Business
National Health & Safety Corporation (the "Company") since
1993 has been engaged in the business of providing health care
products and services to the general public on a discount basis.
On July 1, 1999, the Company voluntarily filed for reorganization
under Chapter 11 of the United States Bankruptcy Code in the Untied
States Bankruptcy Court of the Eastern District of Pennsylvania
(file no. 99-18339). The Company has filed a Disclosure Statement
and a Joint Plan of Reorganization and is preparing to file an
amendment within the next thirty days for consideration by its
creditors and shareholders and for ultimate approval by the
Bankruptcy Court.
The Company's principal executive offices are located at 120
Gibraltar Road, Suite 107, Horsham, Pennsylvania 19044, and its
telephone number is (215) 682-7114.
POWERX Medical Benefits Network
Prior to its filing for reorganization, the Company operated
the POWERX Medical Benefits Network ("POWERX") offering discounts
on a wide range of medical and supplemental benefits to consumers.
The Company also offered medical products and services,
specializing in providing reduced fee access to healthcare and
ancillary providers through POWERX.
Through POWERX, the Company made available directly to the
consumer more than 200,000 different medical products and supplies
at discounts up to 50% below retail. Revenues were generated
primarily from annual sales of POWERX memberships and not through
the use of the card. In 1999, the Company sold POWERX as detailed
below.
POWERX offers its members several products and services at
discount prices. POWERX is marketed primarily to corporations,
unions, associations, chambers of commerce, insurance companies and
other organizations and the memberships are typically paid for by
the individual members, employees and/or policyholders. POWERX is
designed to be a complementary benefit to most standard health
insurance policies and corporate benefits packages.
Sale of POWERX
On October 1, 1999, the bankruptcy court approved an Asset
Purchase Agreement between the Company and MedSmart Healthcare
Network, Inc. ("MedSmart"). Pursuant to this agreement, the
Company transferred to MedSmart all of its POWERX related assets,
including the POWERX name, all POWERX related contracts with
provider networks and broker networks, all POWERX related expenses
and all of the Company's personnel, with the exception of its Chief
Financial Officer, Roger H. Folts.
Under the agreement, MedSmart will pay a royalty to the
Company for each POWERX related card sold or renewed. For the
first twelve month period, a fee minimum of $150,000 will be paid
to the Company. The first payment of $30,000 was paid to the
Company on October 1, 1999 and MedSmart will make successive
payments of $30,000 quarterly. In the event the royalty exceed the
minimum payment, the Company would receive the greater of the two.
From October 1, 2000, all fees to the Company from MedSmart will be
determined as a royalty to the Company on all POWERX card sales and
other POWERX related revenues.
For each new POWERx card (a "New Card") first sold by
MedSmart, it will pay to the Company 10% of the net revenue earned.
MedSmart will have the option to elect to pay a one-time fee of
$2.50 with respect to the sale of the New Card, and in such an
event, no further fees would be payable with respect to the New
Card until it becomes a Renewal Card.
Upon the sale of each renewal POWERx card (a "Renewal Card"),
MedSmart will pay the Company 4% of the net revenue earned.
However, MedSmart will have the option to elect a one-time fee of
$1.00 with respect to the sale of the Renewal Card, and, in such an
event, no further fees would be payable with respect to the Renewal
Card until it is again renewed. If MedSmart elects not to pay the
one-time fee for New Cards or Renewal Cards which are outstanding
at the beginning of a calender quarter, MedSmart will be obligated
to pay the Company an amount equal to 10% and 4%, respectively, of
the net revenues earned with respect to such card during the
calendar quarter.
Upon making its bankruptcy filing and subsequent sale of the
POWERX business to MedSmart, the Company has become primarily a
holding company. All activities related to development of other
products and services have been reduced or eliminated. The Company
has a new management team and the possibility of new ownership, as
proposed in the Joint Plan of Reorganization. Upon Court approval
of the Joint Plan of Reorganization, for which there is no
certainty, the plan calls for an infusion of income producing real
estate and cash assets into the Company in exchange for Company
stock, together with royalty payments from MedSmart based upon
POWERX sales. At such time as the Company begins to realize a
stable level of cash flow, the Company will examine the development
of new business plans directed towards future growth and
development.
Employees
As of the date hereof the Company has one full-time employee,
its Chief Financial Officer. In the event its reorganization plan
is approved by the court, the Company will add employees as
necessary.
Industry Segments
No information is presented as to industry segments.
Reference is made to the statements of income contained in the
financial statements included herein for a statement of the
Company's revenues and operating profit (loss) for the past two
fiscal years.
Item 2. Description of Property
The Company currently shares leased office space with MedSmart
Healthcare Network, Inc. in Horsham, Pennsylvania on a month-to-
month basis. The Company exchanges rental payments for accounting
support for MedSmart. Management anticipates that the Company will
occupy these premises until such time as its reorganization is
complete. Thereafter, it will evaluate the need for additional or
alternative facilities.
Item 3. Legal Proceedings
Except as otherwise set forth below, the Company is not a
party to any new material pending legal proceedings and no such
action by, or to the best of its knowledge, against the Company has
been threatened.
On July 1, 1999, the Company voluntarily filed for
reorganization under Chapter 11 of the United States Bankruptcy
Code in the Untied States Bankruptcy Court of the Eastern District
of Pennsylvania (file no. 99-18339). The Company has filed a
Disclosure Statement and a Joint Plan of Reorganization and is
preparing to file an amendment within the next thirty days for
consideration by its creditors and shareholders and for ultimate
approval by the Bankruptcy Court. In addition, on October 1, a
motion was approved by the court to sell all of the assets relating
to the POWERX card.
In January 1999, a writ of execution for money judgment in the
amount of $361,034 was entered against the Company in Bucks County,
Pennsylvania. This judgment was initiated by the Supreme Court of
the State of New York, County of Nassau, in the case titled
Schwartz, Berger and Berger vs. National Health and Safety
Corporation (# 99000212). The action is related to certain
transactions between the Company and Barrett Day Securities which
took place starting in 1993. The Company includes the debt as a
liability in its financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's
Securities Holders during the fourth quarter of the Company's
fiscal year ending December 31, 1999.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's Common Stock is traded in the over-the-counter
market and quotations are published on the OTC Bulletin Board under
the symbol "NHLT", and in the National Quotation Bureau, Inc. "pink
sheets" under National Health & Safety Corporation. Quotations on
the Company's Common Stock set forth below do not constitute a
reliable indication of the price that a holder of the Common Stock
could expect to receive upon a sale of any particular quantity
thereof.
Currently, there is no trading market for the Company's issued
and outstanding Preferred Shares.
The following table sets forth the range of high and low bid
prices of the Common Stock for each calendar quarterly period since
the first quarter of 1998 as reported by the OTC Bulletin Board.
Prices reported represent prices between dealers, do not include
retail markups, markdowns or commissions and do not necessarily
represent actual transactions.
High Low
1998
First Quarter . . . . . . . . . . $ .15 $ .07
Second Quarter. . . . . . . . . . .51 .09
Third Quarter . . . . . . . . . . .28 .11
Fourth Quarter . . . . . . . . . .41 .11
1999
First Quarter . . . . . . . . . . .32 .15
Second Quarter. . . . . . . . . . .52 .12
Third Quarter . . . . . . . . . . .24 .06
Fourth Quarter. . . . . . . . . . .13 .05
As of December 31, 1999 the Company had issued and outstanding
59,634,062 shares of Common Stock and there were approximately 479
shareholders of record, which figure does not take into account
those shareholders whose certificates are held in the name of
broker-dealers.
Holders of the Company's 14,363 shares of Preferred Stock have
limited conversion rights whereby if the Company fails to redeem
any shares of Preferred Stock pursuant to the agreed upon
redemption schedule, then the Preferred Shareholders have a limited
right to convert their Preferred Stock into shares of Common Stock
at the rate of 140 shares of Common Stock for each share of
Preferred Stock. As of the date hereof, none of the shares have
been converted.
Dividend Policy
The Company has not declared or paid cash dividends or made
distributions in the past, and the Company does not anticipate that
it will pay cash dividends or make distributions in the foreseeable
future. The Company currently intends to retain and reinvest future
earnings to finance its operations. Also, holders of the Preferred
Shares are entitled to receive their redemption payments prior to
the Company paying any dividends on its other capital stock.
Item 6. Management's Discussion and Analysis or Plan of Operation
The following information should be read in conjunction with
the consolidated financial statements and notes thereto appearing
elsewhere in this Form 10-KSB.
Recent Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") has issued
SFAS No 132. "Employers' Disclosures about Pensions and other
Postretirement Benefits," which standardizes the disclosure
requirements for pensions and other Postretirement benefits and
requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate
financial analysis. SFAS No. 132 is effective for years beginning
after December 15, 1997 and requires comparative information for
earlier years to be restated, unless such information is not
readily available. Management believes the adoption of this
statement will have no material impact on the Company's financial
statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on
the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Management believes the adoption of this statement
will have no material impact on the Company's financial statements.
Results of Operations
The following table sets forth, for the two most recent fiscal
years ended December 31, 1999 and 1998, the percentage relationship
to total revenues of principal items in the Company's Statement of
Operations. It should be noted that percentages discussed
throughout this analysis are stated on an approximate basis.
Years Ended December 31,
1999 1998
Total revenues . . . . . . . . . . . . . . . . . . 100% 100%
Costs of sales . . . . . . . . . . . . . . . . . . 51 25
Operating expenses . . . . . . . . . . . . . . . . 2916 1357
(Loss) from operations . . . . . . . . . . . . . .(2867) (1282)
Other income (expense) . . . . . . . . . . . . . . 130 (270)
Net (loss) . . . . . . . . . . . . . . . . . . . .(2737) (1552)
For the Year Ended December 31, 1999 Compared to the Year Ended
December 31, 1998
Total revenue of $80,340 for the year ended December 31, 1999
("1999) represents a 51% decrease from total revenue of $165,535
for year ended December 31, 1998 ("1998"). This decrease is ,
primarily attributed to the 24% decrease in POWERX sales in 1999
and a $41,000 royalty revenue from an interim Licensing Agreement
entered into in December 1998. The decrease in sales of the POWERX
Card is attributed to decreased marketing and sale of the unit.
Cost of sales (as a percentage of total revenue) increased from
25% for 1998 to 51% in 1999. Actual cost of sales was virtually
unchanged in 1999 when compared to 1998.
Operating expenses for 1999 increased 4% when compared with
the same period for 1998, primarily from the (7%) increase in
general and administrative expenses. This increase was attributed
to the 102% increase in consulting expenses due to legal expense
accrual for the Company's bankruptcy, and the realization of a
$706,574 accrual related to the Company's bankruptcy filing. The
increase in operating expenses was partially offset by the 34%
decrease in rent expense due to the reduction of office facilities,
the 25% decrease in salaries and wages due to the reduction of
personnel, and the 90% decrease in marketing and advertising
expenses due to discontinuing sales activities.
Net other income in 1999 was $104,708, primarily from the
$142,697 gain realized on the sale of Company assets. In 1998, the
Company had a net other expense of $446,659, primarily due to
$113,097 interest expense from increased borrowing and a legal
settlement of $328,547.
Net Operating Losses
The Company has accumulated approximately $10,700,000 of net
operating loss carryforwards as of December 31, 1999, which may be
offset against taxable income and income taxes in future years.
The use of these losses to reduce future income taxes will depend
on the generation of sufficient taxable income prior to the
expiration of the net operating loss carryforwards. The
carry-forwards expire in the year 2018. In the event of certain
changes in control of the Company, there will be an annual
limitation on the amount of net operating loss carryforwards which
can be used. No tax benefit has been reported in the financial
statements for the year ended December 31, 1999 because the Company
believes the carryforward may expire unused. Accordingly, the
potential tax benefits of the loss carryforward is offset by a
valuation allowance of the same amount.
Liquidity and Capital Resources
Historically, the Company's working capital needs have been
satisfied primarily through its financing activities including
private loans and raising capital through the sale of securities.
Working capital at December 31, 1999 was a negative $4,601,252
compared to a negative $3,164,296 at December 31, 1998. Net cash
used in operating activities was $692,504 in 1999 compared to
$1,287,480 in 1998. This decrease in net cash used in 1999 was due
primarily to the decrease in net loss, the increase in expenses
paid with common stock, and increases in accounts payable and
accrued expenses. The Company also realized $662,313 from
financing activities in 1999 compared to $1,283,300 in 1988,
primarily due to the 79% decrease in proceeds from the issuance of
common stock in 1999.
The Company's ability to meet its working capital needs during
fiscal 2000 will depend primarily on the acceptance by the court of
the reorganization plan. The continuation of the Company as a
going concern is directly dependent upon acceptance of the plan and
the ability to obtain additional future financing. If MedSmart is
successful in the development, marketing and sale of POWERx cards
and related products, the Company would receive a royalty from
POWERx sales.
As of December 31, 1999, the Company had total assets of
$196,521 and total stockholders' deficiency of $4,550,348, compared
to December 31, 1998 at which time the Company had total assets of
$93,872 and total stockholders' deficiency of $3,410,617.
Inflation
In the opinion of management, inflation has not had a material
effect on the operations of the Company.
Year 2000
Year 2000 issues may arise if computer programs have been
written using two digits (rather than four) to define the
applicable year. In such case, programs that have time-sensitive
logic may recognize a date using "00" as the year 1900 rather than
the year 2000, which could result in miscalculations or system
failures.
The Company has completed its assessment of the Year 2000
issue and believes that any costs of addressing the issue will not
have a material adverse impact on the Company's financial position.
To date, the Company has not experienced any problems related to
the Year 2000 issue and has not incurred any associated costs.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. The Company wishes to advise readers that
actual results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in or implied by the statements, including,
but not limited to, the following: the ability of the Company to
continue as a viable concern given its filing of bankruptcy in
1999, and other risks detailed in the Company's periodic report
filings with the Securities and Exchange Commission.
Item 7. Financial Statements
The Company's financial statements as of and for the fiscal
years ended December 31, 1999 and 1998 have all been examined to
the extent indicated in their report by Jones, Jensen and Company,
independent certified accountants, and have been prepared in
accordance with generally accepted accounted principles and
pursuant to Regulation S-B as promulgated by the Securities and
Exchange Commission. The aforementioned financial statements are
included herein in response to Item 7 of this Form 10-KSB.
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
INDEPENDENT AUDITORS' REPORT
Board of Directors
National Health & Safety Corporation
(A Development Stage Company)
Warminster, Pennsylvania
We have audited the accompanying balance sheet of National Health &
Safety Corporation (a development stage company) as of December 31, 1999
and the related statements of operations, stockholders' deficiency and
cash flows for the years ended December 31, 1999 and 1998 and from the
inception of the development stage on January 1, 1999 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 audits.
We conducted our audits 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 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 National
Health & Safety Corporation (a development stage company) as of December
31, 1999 and the results of its operations and its cash flows for the
years ended December 31, 1999 and 1998 and from the inception of the
development stage on January 1, 1999 through December 31, 1999, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a gong concern. As discussed in Notes 1 and
4, on July 1, 1999, the Company filed a Voluntary Petition for Relief
under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Eastern District of Pennsylvania. The
filing was made necessary by a lack of sufficient liquidity. The Company
has experienced recurring net losses. Additionally, as of December 31,
1999, the Company had a stockholders' deficit of $4,550,348. These
matters raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans in regard to these matters are
partially described in Notes 1 and 4. The accompanying financial
statements do not include any adjustment relating to the recoverability
and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be
unable to continue as a going concern.
Jones, Jensen & Company
Salt Lake City, Utah
January 18, 2000
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Balance Sheet
ASSETS
December 31,
1999
CURRENT ASSETS
Cash $ 3,145
Accounts receivable, net of allowance for doubtful
accounts of $8,200 (Note 1) 24,472
Note receivable - related party (Note 3) 120,000
Total Current Assets 147,617
OTHER ASSETS
Restricted cash (Note 2) 50,904
Total Other Assets 50,904
TOTAL ASSETS $ 198,521
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses - post petition $ 141,918
Post petition notes payable - related party (Note 4) 221,200
Prepetition accruals (Note 5) 4,385,751
Total Current Liabilities 4,748,869
STOCKHOLDERS' DEFICIENCY
Preferred stock; $0.001 par value; 5,000,000 shares
authorized; 14,363 shares issued and outstanding 14
Common stock; $0.001 par value, 100,000,000 shares
authorized; 59,634,062 shares issued and outstanding 59,634
Additional paid-in capital 9,564,513
Accumulated deficit (11,975,773)
Deficit accumulated during the development stage (2,198,736)
Total Stockholders' Deficiency (4,550,348)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 198,521
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Statements of Operations
From the
Inception of the
Development
Stage on
January 1,
For the Years Ended 1999 Through
December 31, December 31,
1999 1998 1999
REVENUE
Sales - operations $ 80,340 $ 124,535 $ 80,340
Royalty revenue - 41,000 -
Total Revenue 80,340 165,535 80,340
COST OF SALES 41,045 41,709 41,045
Gross Profit 39,295 123,826 39,295
EXPENSES
Rent 99,424 150,470 99,424
Depreciation and amortization 2,078 8,908 2,078
General and administrative 2,241,237 2,086,123 2,241,237
Total Expenses 2,342,739 2,245,501 2,342,739
LOSS FROM OPERATIONS (2,303,444) (2,121,675) (2,303,444)
OTHER INCOME (EXPENSE)
Gain on sale of assets 142,697 - 142,697
Legal settlement - (328,547) -
Bad debt expense (2,388) (5,015) (2,388)
Interest expense (35,601) (113,097) (35,601)
Total Other Income (Expense) 104,708 (446,659) 104,708
NET LOSS $ (2,198,736) $ (2,568,334) $ (2,198,736)
BASIC LOSS PER SHARE (Note 1) $ (0.04) $ (0.06)
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Statements of Stockholders' Deficiency
Additional Stock
Preferred Common Paid-in Subscriptions Accumulated
Stock Stock Capital Receivable Deficit
Balance, December 31, 1997 14 $ 34,241 $ 7,392,394 $ (700,000) $ (9,407,439)
Issuance of common stock in
payment of debt - 4,960 440,040 - -
Issuance of common stock for
services rendered - 1,195 202,305 - -
Issuance of common stock
for cash - 12,059 952,448 - -
Cancellation of stock
subscription receivable - - (474,500) 700,000 -
Net (loss) for the year
ended December 31, 1998 - - - - (2,568,334)
Balance, December 31, 1998 14 52,455 8,512,687 - (11,975,773)
Issuance of common stock
in payment of debt - 3,095 211,905 - -
Issuance of common stock
for services rendered - 1,640 220,165 - -
Issuance of common stock
for cash - 2,444 199,756 - -
Options issued below market
price - - 420,000 - -
Net loss for the year ended
December 31, 1999 - - - - (2,198,736)
Balance, December 31, 1999 14 $ 59,634 $ 9,564,513 $ - $(14,174,509)
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Statements of Cash Flows
From the
Inception of the
Development
Stage on
January 1,
For the Years Ended 1999 Through
December 31, December 31,
1999 1998 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (2,198,736) $ (2,568,334) $ (2,198,736)
Adjustments to reconcile net (loss)
to net cash (used) by operating
activities:
Depreciation and amortization 2,078 8,908 2,078
Amortization of prepaid advertising - 500,000 -
Expenses paid with common stock 641,805 203,500 641,805
Loss of subscription receivable - 225,500 -
Gain on sale of assets (142,697) - (142,697)
Changes in operating assets and
liabilities:
(Increase) in restricted cash (50,904) - (50,904)
(Increase) decrease in accounts
receivable 6,385 1,061 6,385
(Increase) decrease in royalties
receivable 41,000 (41,000) 41,000
Decrease in deposits 9,298 - 9,298
Increase (decrease) in accounts
payable 133,791 (41,758) 133,791
Increase (decrease) in accrued
expenses 865,476 424,643 865,476
Net Cash (Used) by Operating
Activities (692,504) (1,287,480) (692,504)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets 30,000 - 30,000
Net Cash Provided by Investing
Activities 30,000 - 30,000
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans payable, individuals - 374,793 -
Proceeds from loans payable, stockholder 48,000 - 48,000
Proceeds from notes payable - related
party 469,113 - 469,113
Repayment of loans payable (57,000) (56,000) (57,000)
Proceeds from issuance of common stock 202,200 964,507 202,200
Net Cash Provided by Financing
Activities 662,313 1,283,300 662,313
INCREASE (DECREASE) IN CASH (191) (4,180) (191)
NET CASH, BEGINNING OF YEAR 3,336 7,516 3,336
NET CASH, END OF YEAR $ 3,145 $ 3,336 $ 3,145
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Statements of Cash Flows (Continued)
From the
Inception of the
Development
Stage on
January 1,
For the Years Ended 1999 Through
December 31, December 31,
1999 1998 1999
CASH PAID DURING THE YEAR FOR:
Interest $ 16,597 $ 28,023 $ 16,597
Income taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Issuance of common stock in
payment of debt $ 215,000 $ 445,000 $ 215,000
Issuance of common stock for services $ 221,805 $ 203,500 $ 221,805
Options issued below market value $ 420,000 $ - $ 420,000
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS OPERATIONS
a. Nature of Organization
The Company was incorporated on March 23, 1989. The Company's
principal business activities consist of providing medical
cost containment services to both institutional and consumer
markets. The Company performs on-going credit evaluations of
its customers' financial condition and generally requires no
collateral.
On March 22, 1993 the Company entered into a merger with State
Policeman Annual Magazine, Inc. (State), whereby each share of
the Company's common and preferred stock was exchanged for one
share of State's common and preferred stock. State is a
Company which was organized under the laws of the State of
Utah on May 14, 1983. Pursuant to the merger agreement, State
amended its Articles of Incorporation to change its name to
National Health & Safety Corporation. The Company entered the
development stage on January 1, 1999 per SFAS No. 7 because of
the bankruptcy proceedings and the sale of the Company's
assets.
On July 1, 1999, National Health and Safety Corporation (the
"Debtor") filed a petition for relief under Chapter 11 of the
federal bankruptcy laws in the United states bankruptcy Court
for the Eastern District of Pennsylvania, Case No.:99-18339.
Under Chapter 11, certain claims against the Debtor in
existence prior to the filing of the petitions for relief
under the federal bankruptcy laws are stayed while the Debtor
continues business operations as debtor-in-possession. These
claims are reported in the December 31, 1999 balance sheet as
"prepetition accruals" in the amount of $4,385,751. Claims
secured against the Debtor's assets ("secured claims") also
are stayed, although the holders of such claims have the right
to move the Court for relief from the stay. Secured claims
amounted to $1,513,941 at December 31, 1999.
The Company entered the development stage on January 1, 1999
per SFAS No. 7.
b. Accounts Receivable
Accounts receivable are shown net of an allowance for doubtful
accounts of $8,200. Bad debts are written off in the period
in which they are deemed uncollectible. Any bad debts
subsequently recovered are recorded as income in the financial
statements in the period during which they are recovered.
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Property and Equipment
Property and equipment are stated at cost. Depreciation is
provided using accelerated and straight-line methods, over the
estimated useful life of each class of asset as follows:
Furniture and fixtures 7 years
Office equipment 7 years
Computers 5 years
Expenditures for repairs, maintenance and minor renewals are
charged against income as incurred and expenditures for major
renewals and betterment are capitalized. The cost and
accumulated depreciation of assets sold or retired are removed
from the respective accounts with any gain or loss on disposal
reflected in income. Depreciation expense was $2,078 and
$8,908 for the years ended December 31, 1999 and 1998,
respectively. All of the property and equipment was sold in
July 1999 (Note 3).
d. Basic Loss per Share of Common Stock
For the Year Ended
December 31, 1999
Loss Shares Per Share
(Numerator) (Denominator) Amount
Net loss $ (2,198,736) 57,734,638 $ (0.04)
For the Year Ended
December 31, 1998
Loss Shares Per Share
(Numerator) (Denominator) Amount
Net loss $ (2,568,334) 41,190,018 $ (0.06)
Basic loss per common share has been calculated based on the
weighted average number of shares of common stock outstanding
during the period.
e. Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less to be cash equivalents.
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Provision for Taxes
At December 31, 1999, the Company had net operating loss
carryforwards of approximately $10,700,000 that may be offset
against future taxable income through 2018. No tax benefit
has been reported in the financial statements, because the
Company believes the carryforwards may expire unused.
Accordingly, the potential tax benefits of the loss
carryforwards are offset by a valuation allowance of the same
amount.
g. Reclassification
Certain December 31, 1998 balances have been reclassified to
conform with the December 31, 1999 financial statement
presentation.
h. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
i. Revenue Recognition
The Company has not emerged from the reorganization and has
not yet established operations. A revenue recognition policy
will be established when planned principal operations
commence.
j. Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities,
measured at fair market value. Gains or losses resulting from
changes in the values of those derivatives would be accounted
for depending on the use of the derivative and whether it
qualifies for hedge accounting. The key criterion for hedge
accounting is that the hedging relationship must be highly
effective in achieving offsetting changes in fair value or
cash flows. SFAS No. 133 is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. Management
believes the adoption of this statement will have no material
impact on the Company's financial statements.
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
k. Bankruptcy Accounting
Since the Chapter 11 bankruptcy filing, the Company has
applied the provisions in Statement of Portion (SOP) 90-7
"Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code." SOP 90-7 does not change the application of
generally accepted accounting principles in the preparation of
financial statements. However, it does require that the
financial statements for periods including and subsequent to
filing the Chapter 11 petition distinguish transactions and
events that are directly associated with the reorganization
from the ongoing operations of the business.
NOTE 2 - RESTRICTED CASH
Pursuant to the bankruptcy proceedings, the Company has three
cash accounts which have been attached by creditors or
allocated for certain debt payments totaling $50,904 at
December 31, 1999. This cash is being presented as restricted
cash because the Company does not have full access to these
three accounts.
NOTE 3 - NOTE RECEIVABLE - RELATED PARTY
In October 1999, the Company sold the assets of the Company
which related to the PowerX Medical Benefits Network for
$150,000. This sale resulted in a gain on the sale of assets
of $142,697. The Company received $30,000 on the date the
agreement was signed and is to receive four (4) quarterly
payments of $30,000 commencing January 15, 2000. The amounts
are non-interest bearing and an interest rate has not been
imputed because of the short-term nature of the receivable.
NOTE 4 - GOING CONCERN
These statements are presented on the basis that the Company
is a going concern. Going concern contemplates the
realization of assets and the satisfaction of liabilities in
the normal course of business over a reasonable length of
time. The continuation of the Company as a going concern is
dependent upon the success of the future operations and
obtaining additional financing.
Pursuant to bankruptcy court approval, the Company's POWERx
line was sold to MedSmart on October 1, 1999. The costs of
the necessary overhead and costs of ongoing POWERx operations
have been assumed by MedSmart, including the personnel costs
necessary to continue POWERx operations. Under the sale
agreement to MedSmart, the Company received $30,000 and will
receive another $30,000 per quarter for four quarters
beginning January 15, 2000 in certain minimum payments and, in
addition, has retained a right to certain revenues from the
sale of POWERx cards.
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 4 - GOING CONCERN (Continued)
Upon the sale of each new POWERx card (a "New Card") first
sold by MedSmart, MedSmart shall pay to the Company 10% of the
net revenue earned. However, MedSmart shall have the option
to elect to pay a one-time fee of $2.50 with respect to the
sale of the New Card, and in such an event, no further fees
would be payable with respect to the New Card until it becomes
a Renewal Card as defined below.
Upon the sale of each renewal POWERx card (a "Renewal Card"),
MedSmart shall pay the Company 4% of the net revenue earned.
However, MedSmart shall have the option to elect a one-time
fee of $1.00 with respect to the sale of the Renewal Card,
and, in such an event, no further fees would be payable with
respect to the Renewal Card until it is again renewed.
In the event MedSmart does not elect to pay the one-time fee
for New Cards or Renewal Cards which are outstanding at the
beginning of a Calender Quarter, MedSmart will be obligated to
pay the Company an amount equal to 10% and 4%, respectively,
of the net revenues earned with respect to such card during
the calendar quarter.
If MedSmart is successful in the development, marketing and
sale of POWERx cards and related products, the revenue stream
received by the Company could exceed $400,000 per year.
However, POWERx is still in development and there is no
guarantee that such eventuality will occur.
After confirmation of the plan and cash flow has stabilized,
the Company intends: (1) to return to the business of selling
new medical equipment and supplies, both domestically and
overseas, to private and governmental buyers; (2) to develop
and market new technologies, including several promising new
medical technologies with substantial U.S. and worldwide
markets; and (3) to develop specialized health insurance
products. Management expects that it will require up to three
years or more for these new business activities to generate an
operating profit. The Company may elect to achieve some of
these objectives by merger or acquisition. The Company will
consider acquiring other companies, on a selective basis, if
they are profitable, have competent management in place, and
have significant potential for profitability.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Through its negotiations with co-Plan Proponents, the Company
has negotiated an arrangement whereby approximately $2,800,000
in new tangible assets will be infused into the Company that
generate positive cash flows to fund new investments by the
reorganized Company. The tangible assets consist of cash
(approximately $1,705,000 after estimated allowed deductions)
and real estate (a Houston office complex valued at
$1,046,000). Because the co-Proponents are not retaining a
lien on the assets of the Company, these assets would also be
available to pay unsecured creditors in the event of
liquidation of the Company. In exchange for such new capital
infusion, the co-Plan Proponents will receive newly issued
stock consisting approximately 73% of the outstanding equity
capital ownership of the reorganized Company. At the date of
this audit report, no agreement has been finalized.
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 5 - COMMITMENTS AND CONTINGENCIES (Continued)
The Company leases its office facility under a noncancelable
operating lease which expired in January 2000. Currently, the
Company leases office space from a related party on a month-
to-month basis.
Rent expense amounted to $99,424 and $128,209 for the years
ended December 31, 1999 and 1998, respectively.
The Company has entered into a five year employment agreement
with its president and chief executive officer, and five year
employment agreements with its vice-president and chief
financial officer and its vice-president of marketing. Under
the terms of the agreements, the Company will pay minimum
annual compensation of $352,000 for the year ended December
31, 1999. At December 31, 1999, total deferred income for
these three individuals was $980,665. This amount is included
in accrued expenses. During 1999, the President and Chief
Executive Officer, Vice President and Vice President of
Marketing left the Company in connection with the sale of its
PowerX line, and these agreements were terminated.
The Company settled certain litigation involving alleged
improper use of a medical card benefit program. Under terms
of the settlement, both parties agreed to dismiss the claims
against each other, and agree to enter into a commission
agreement whereby the Company pays a commission of 3.5% of
sales, such commission to aggregate $400,000 over the life of
the agreement; the Company will pay at a minimum, an annual
commission of $30,000. At December 31, 1999, the settlement
owed was $285,000 and has been classified as a prepetition
liability.
The Company issued shares to certain individuals in connection
with a private placement. The Company has agreed to not
dilute these shareholders below 5.3% of the outstanding shares
of the Company by allowing them to purchase the shares for the
par value amount, until the Company raises $2,000,000 through
a public offering of its common stock.
The Company has agreed to repurchase stock issued to an
individual in a private placement. The individual purchased
5,000 shares of the Company's common stock for $25,000. The
Company has committed to repurchasing the stock for the same
amount, contingent upon the success of future stock
placements. Additionally, the Company received $25,000 from
an individual. A judgment has been issued against the Company
to repay the $25,000. This was completed in 1999.
During 1995, several stock subscription agreements were
canceled. Of the shares canceled, certificates representing
4,000,000 shares have not been returned to the Company,
however, these certificates are legended so that they cannot
be traded.
NATIONAL HEALTH & SAFETY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 6 - PREFERRED STOCK
In 1992, the Company entered into a stock exchange agreement
with certain shareholders, whereby such stockholders agreed to
exchange certain of their shares of the pre-split common stock
of the Company and certain other rights for 14,363 authorized
shares of a new class of redeemable preferred stock. The
stock is redeemable at $41.78 per share (aggregate -
$600,086), payable as follows:
Upon closing of a private placement issue $ 50,011
Upon closing of secondary public offering 50,011
One year after closing of a secondary public offering 150,074
Two years after closing of a secondary public offering 174,975
Three years after closing of a secondary public offering 175,015
NOTE 7 - OPTIONS AND WARRANTS
The Company has the following outstanding warrants:
Number Expiration
Issued Purchase Price Date
487,500 Lessor of $1.50 or 75% of current price 12/31/00
131,665 Lessor of $2.13 or 75% of current price 12/31/00
250,000 $0.25 per share 04/01/01
200,000 $0.25 per share 04/01/01
The Company has the following outstanding stock options:
Stock Options Issued:
Bowers Folts Bathcrest Total
6/6/95 @ $0.17 6/6/2010 2,000,000 500,000 500,000 3,000,000
4/30/96 @ $0.17 4/30/2011 2,000,000 500,000 500,000 3,000,000
2/20/98 @ $0.07 2/20/2013 2,800,000 1,000,000 1,000,000 4,800,000
10,800,000
NOTE 8 - REORGANIZATION ITEMS
Although the Chapter 11 bankruptcy filing raises substantial
doubt about the Company's ability to continue as a going
concern, the accompanying financial statements have been
prepared on a going concern basis. This basis contemplates
the continuity of operating realization of assets, and
discharge of liabilities in the ordinary course of business.
The statements also present the assets of the Company at
historical cost, and the current intention that they will be
realized as a going concern and in the normal course of
business. A plan of reorganization could materially change
the amounts currently disclosed in the financial statements.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the
Exchange Act
The director and executive officers of the Company and their
ages are as follows:
Name Age Position
James R. Kennard . . . . . . . 64 Chief Executive Officer and
Director
Eugene M. Rothchild. . . . . . 68 President and Director
R. Dennis Bowers, Ph.D. . . . 58 Director
Roger H. Folts . . . . . . . . 61 Secretary/Treasurer and
Chief Financial Officer
All directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and
qualified. There are no agreements with respect to the election of
directors. The Company has not compensated its directors for
service on the Board of Directors or any committee thereof, but
directors are reimbursed for expenses incurred for attendance at
meetings of the Board of Directors and any committee of the Board
of Directors. Officers are appointed annually by the Board of
Directors and each executive officer serves at the discretion of
the Board of Directors. The Company does not have any standing
committees.
None of the officers and/or directors of the Company are
officers or directors of any other publicly traded corporation, nor
have any of the directors and/or officers, nor have any of the
affiliates or promoters of the Company filed any bankruptcy
petition, been convicted in or been the subject of any pending
criminal proceedings, or the subject or any order, judgment, or
decree involving the violation of any state or federal securities
laws within the past five years.
The business experience of each of the persons listed above
during the past five years is as follows:
James R. Kennard became a director of the Company in 1999 and
was appointed Chief Executive Officer on January 17, 2000. Mr.
Kennard has over forty years of business experience in the
aerospace, computer and medical equipment industries. He retired
in 1988 from Transicoil, Inc., where he was C.O.B, C.E.O and
President. Since his retirement, Mr. Kennard been active in
business planning and consulting projects. He is presently the
majority shareholder and President of Fore Seasons Golf, Inc., a
golf practice facility in Pennsylvania. He received his initial
education with General Electric's Apprentice Toolmaker program,
affiliated with Purdue University, in the 1950's and continued with
a four year manufacturing management program and advanced
manufacturing management program, also with General Electric.
Mr. Kennard has also completed a series of programs with the
American Management Association and has completed the "Presidents
Course" as a member of their President's Association in 1985.
Eugene M. Rothchild became a director of the Company in July
1999 and was appointed and was named President of the Company on
January 17, 2000. Mr. Rothchild received a BBA Degree from the
University of Cincinnati in 1954 and earned his Juris Doctor degree
from the University of Cincinnati, College of Law, in 1956.
Mr. Rothchild served as a U.S. Air Force Judge Advocate on active
duty from 1958 to 1960 and was an attorney for the National Labor
Relations Board from 1964 to 1969. From 1969 to the present, he
has practiced law in the Cincinnati, Ohio area specializing in
estate, business and negligence law.
R. Dennis Bowers, Ph.D., was President and Chief Executive
Officer of the Company from March 1993 to January 2000. Dr. Bowers
was the founder of NHSC-Pennsylvania in 1989 and since that date
has been involved in developing the business of NHSC-Pennsylvania
and now the Company. Also, from 1985 to the present, Dr. Bowers
has been the President and majority stockholder of Horizon
Development Group, Inc., a marketing company located in
southeastern Pennsylvania and which has entered into certain
marketing contracts with the Company. From 1983 to 1984, Dr.
Bowers was President and C.E.O of The Phoenix Companies, Inc., a
Pennsylvania corporation that developed certain software and
information systems for Mid-Atlantic Health Information
Corporation. From 1976 to 1983, Dr. Bowers was the group director
of the health care services division of IMS America, Ltd., a market
research and health care research firm located in Ambler,
Pennsylvania. From 1973 to 1976, Dr. Bowers was President of
Adapt, Inc., a medical and mental health service provider located
in Des Moines, Iowa. Dr. Bowers earned a B.S. Degree in journalism
from the University of Kansas in 1964, a Masters Degree in Divinity
from Drew University in 1967, and a Ph.D in Organizational
Development from Boston University in 1977.
Roger H. Folts has been the Company's Chief Financial Officer
and Treasurer since March 1993, was appointed corporate Secretary
in January 2000. He also served as a director until 1998. Mr.
Folts first joined NHSC-Pennsylvania at its inception in 1989 and
has served as Vice President and Chief Financial Officer since
November, 1991. Also from 1989 to the present, Mr. Folts has been
an adjunct professor at the Philadelphia College of Textiles and
Science teaching business policy and marketing courses. From 1990
to 1992, Mr. Folts was the owner and operator of Delval Recharge,
Inc., located in Southhampton, Pennsylvania, a company involved in
servicing laser printers and copiers, and from 1987 to 1990, Mr.
Folts operated Roger H. Folts & Associates, which presented
management seminars and which was located in Southhampton,
Pennsylvania. Mr. Folts earned a B.A. Degree in mathematics from
Harvard University in 1960, and a M.B.A. from the University of
Chicago in 1966.
Item 10. Executive Compensation
The Company has not had a bonus, profit sharing, or deferred
compensation plan for the benefit of its employees, officers or
directors.
The following table sets forth a summary of all cash and non-
cash compensation actually paid (and not deferred) by the Company
for services rendered to the Company for the years ended
December 31, 1997, 1998 and 1999 with respect to the Company's
Chief Executive Officer. No executive officer of the Company has
earned a salary greater than $100,000 annually for any of the
periods depicted.
Summary Compensation Table
Other All
Annual Other
Name and Compen- Compen-
Principal Position Year Salary Bonus sation sation
R. Dennis Bowers, 1997 $81,033 $ -0- $1,779 $ -0-
President, C.E.O. 1998 85,800 -0- 2,163 -0-
1999 74,096 -0- 3,750 -0-
Employment Agreements
In accordance with the Join Plan of Reorganization filed by
the Company in conjunction with its bankruptcy, all employment
agreements have been canceled.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information, to the best
knowledge of the Company as of December 31, 1999, with respect to
each person known by the Company to own beneficially more than 5%
of the Company's outstanding Common Stock, each director of the
Company and all directors and officers of the Company as a group.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership(1) of Class(2)
James R. Kennard* 75,380 0.1%
1053 Buckeye Lane
Greentown, PA 18426
Eugene M. Rothchild* 835,000(3) 1.4%
14 Woodcreek Drive
Cincinnati, OH 45241
R. Dennis Bowers, Ph.D.* 8,731,600(4) 14.6%
P.O. Box 94
Lahaska, PA 18966
Roger H. Folts* 2,253,500(5) 3.7%
19 Foxcroft Drive
Doylestown, PA 18901
Barton Peck/Rose Peck Trust 6,460,043 10.8%
7746 North Berwyn Avenue
Glendale, WI 53209
Joseph Hirschberg 5,190,000 8.7%
10110 N. Lee Court
Mequon, WI 53092
All directors and executive 11,895,480(6) 17.4%
officers as a group
(4 persons in group)
* Director and/or executive officer
Note: Unless otherwise indicated in the footnotes below, the
Company has been advised that each person above has sole
voting power over the shares indicated above.
(1) Share amounts include, where indicated, Common Stock issuable
upon the exercise of certain stock options held by the
Company's directors and executive officers at the exercise
prices of $.07 and $.17 per share which are exercisable within
sixty days.
(2) Based upon 59,634,062 shares of Common Stock outstanding on
December 31, 1999, but does not include shares of Common Stock
issuable upon conversion of Preferred Stock. Percentage
ownership is calculated separately for each person on the
basis of the actual number of outstanding shares as of
December 31, 1999 and assumes the exercise of certain stock
options held by such person (but not by anyone else)
exercisable within sixty days.
(3) Includes 60,000 shares held indirectly in an IRA custodial
account for Mr. Rothchild's wife.
(4) Includes 45,000 shares in each of the following names; Nelda
S. Bowers, wife of Dr. Bowers, and their children, C. Devon
Bowers, Sarah G. Bowers and K. Shanon Bowers. Also includes
6,800,000 shares which may be acquired by Mr. Bowers pursuant
to the exercise of certain stock options.
(5) Includes 3,000 shares owned by Barbara Folts, wife of Roger
Folts, but does not include 10,000 shares owned by Mr. Folts'
two adult children and their spouses as to which Mr. Folts
disclaims any beneficial ownership. Also includes 2,000,000
shares which may be acquired by Mr. Folts pursuant to the
exercise of certain stock options.
(6) Includes 8,800,000 shares which may be acquired by the
directors and executive officers pursuant to exercise of
certain stock options.
Item 12. Certain Relationships and Related Transactions
During the Company's last two fiscal years, there have been no
transactions between the Company and any officer, director, nominee
for election as director, or any shareholder owning greater than
five percent (5%) of the Company's outstanding shares, nor any
member of the above referenced individuals' immediate family,
except as set forth below.
In October 1999, the Company sold to MedSmart Healthcare
Network, Inc., the assets of the Company which related to the
PowerX Medical Benefits Network for $150,000. The Company received
$30,000 on the date the agreement was signed and is to receive four
quarterly payments of $30,000 each, commencing January 15, 2000.
The amounts are non-interest bearing and an interest rate has not
been imputed because of the short-term nature of the receivable.
The Company's former President and current director, subsequently
became employed by MedSmart.
In May 1999, R.D. Bowers Associates, a company solely owned
and controlled by Mr. Bowers, transferred to the Company ownership
of an exclusive licensing agreement between R.D. Bowers Associates
and Longport Technologies. In July 1999, following the Company's
filing for Chapter 11, funds were no longer available to continue
the licensing agreement and it was allowed to lapse. The Company
has no further involvement with either Longport Technologies or
R.D. Bowers Associates.
During 1999, Mr. Bowers exercised certain stock purchase
options to acquire 1,200,000 shares of the Company's common stock.
The options were exercisable at $.07 per share and the Company
realized total proceeds of $84,000, which was used for working
capital.
PART V
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
* Articles of Incorporation filed as Exhibit to
Form 10-SB.
* By-Laws filed as Exhibit to Form 10-SB.
27 Financial Data Schedule
- - - - -
* Exhibits so marked have heretofore been filed with the
Securities and Exchange Commission as part of the filing
indicated and are incorporated herein by reference.
(b) No report on Form 8-K was filed for the three month period
ended December 31, 1999.
SIGNATURES
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.
NATIONAL HEALTH & SAFETY CORPORATION
BY: /S/ Eugene M. Rothchild
Eugene Rothchild,
President
Dated: April 14, 2000
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.
Signature Title Date
President and Director April 14, 2000
/S/ Eugene M. Rothchild
Eugene Rothchild
Chief Executive Officer April 14, 2000
/S/ James R. Kennard and Director
James R. Kennard
Secretary/Treasurer April 14, 2000
/S/ Roger H. Folts and Chief Financial Officer
Roger H. Folts (Principal Accounting Officer)
April 14, 2000
/S/ R. Dennis Bowers Director
R. Dennis Bowers
<TABLE> <S> <C>
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<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE NATIONAL HEALTH & SAFETY CORPORATION
FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 31,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> DEC-31-1999
<CASH> 3,145
<SECURITIES> 0
<RECEIVABLES> 152,672
<ALLOWANCES> 8,200
<INVENTORY> 0
<CURRENT-ASSETS> 147,617
<PP&E> 0
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<TOTAL-ASSETS> 198,521
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<COMMON> 59,634
<OTHER-SE> 9,564,513
<TOTAL-LIABILITY-AND-EQUITY> 198,521
<SALES> 80,340
<TOTAL-REVENUES> 80,340
<CGS> 41,045
<TOTAL-COSTS> 2,342,739
<OTHER-EXPENSES> 2,388
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<INTEREST-EXPENSE> 35,601
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<INCOME-CONTINUING> (2,198,736)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,198,736)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
