UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended September 30, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
------------ -------------
Commission File Number: 01-28911
NATIONAL HEALTHCARE TECHNOLOGY, INC.
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(Exact name of small business issuer as specified in its charter)
Colorado 91-1869677
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
20700 Ventura Boulevard, #227, Woodland Hills, California 91364
---------------------------------------------------------------
(Address of principal executive offices)
(818) 227-9494
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(Issuer's telephone number)
N/A
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(Former name, former address and former fiscal year, if changed
since last report)
Securities registered pursuant to Section 12(b) of the Act: None.
Name of each exchange on which registered: None.
Securities registered pursuant to Section 12(g) of the Act: Common Stock
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or such
shorter period of that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers to Item 405 of Regulation
S-B contained in this form, and if 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-K. [ ]
State Issuer's Revenues for its most recent fiscal year: $0
The number of shares outstanding of the Company's $.001 Par Value Common Stock,
as of September 30, 2004 were 78,571. The aggregate number of shares of the
voting stock held by non-affiliates on September 30, 2004 was 11,161. The market
value of these shares, computed by reference to the market closing price on
December 31, 2004 was $27,850. For the purposes of the foregoing calculation
only, all directors and executive officers of the registrant have been deemed
affiliates.
DOCUMENTS INCORPORATED BY REFERENCE: None.
PART I
ITEM 1. BUSINESS
A) General
National Healthcare Technology, Inc. (the "Company") was organized February 29,
1996 as "Patriot Holding Corporation" and subsequently changed its name to
"National Healthcare Technology, Inc." on August 26, 1996. Between 1996 and
1999, the Company was unsuccessful in raising sufficient capital to begin and
complete a proposed double-blind study of an intravenous drug called Magkelate.
The Company did raise $1,000,000 which was used to pay its operating expenses
and general and administrative expenses as well as expenses related to starting
the double-blind study. Following its inability to raise capital and needing to
conserve its financial resources, the Company dismissed all of its employees in
early 1999. The developer of Magkelate passed away in the fall of 1999 and the
Magkelate patent has expired. Since 1999, the Company has been substantially
inactive. The Company is in the development stage as defined in Statement of
Financial Accounting Standards No. 7.
The Board of Directors of the Company has elected at this time to attempt to
locate and consummate a merger or business combination with a private entity.
The Company's office is located at 20700 Ventura Blvd. Suite 227, Woodland
Hills, CA 91364.
As of September 30, 2004, the Company had no employees.
Item 2. Properties.
The Company presently shares office space with a related entity and its
attorney. The Company pays $1,500 in rent. The Company anticipates that this
space is sufficient for the near future.
Item 3. Legal Proceedings.
The Company is not a party to any material pending legal proceeding and no such
action by, or to the best of its knowledge, against the Company has been
threatened.
Item 4. Submission of Matters to a Vote of Security Holders
In June, 2004 the shareholders of the Company approved an increase in capital
authorized to 100,000,000 shares of common stock and 10,000,000 shares of
preferred stock. A reverse split of 100-to-1 was also approved and subsequently
implemented.
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters.
The Company's common stock is traded on the OTC Electronic Bulletin Board under
the symbol "NHKT". Quotations in 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 the sale of any particular quantity thereof.
The following table reflects the range of high and low quarterly bid prices for
the fiscal year ended September 30, 2004. This information was provided to the
Company by the National Association of Securities Dealers, Inc. (the "NASD") and
the Internet. These quotations reflect inter-dealer prices, without retail
mark-up or mark-down or commissions. These quotations may not necessarily
reflect actual transactions.
---------------------------------------- ------------------------------------- -------------------------------------
Period High Bid Low Bid
---------------------------------------- ------------------------------------- -------------------------------------
1st Qtr 2004 .50 .01
---------------------------------------- ------------------------------------- -------------------------------------
2nd Qtr 2004 1.60 .01
---------------------------------------- ------------------------------------- -------------------------------------
3rd Qtr 2004 6.00 .01
---------------------------------------- ------------------------------------- -------------------------------------
4th Qtr 2004 .60 .01
---------------------------------------- ------------------------------------- -------------------------------------
As of September 30, 2004, the Company had 78,571 of its common stock issued and
outstanding, of which 11,161 were held by non-affiliates.
As of September 30, 2004, the Company estimates there are in excess of 100
"holders of record" of its common stock which figure does not take into account
those shareholders whose certificates are held in the name of broker-dealers.
Recent Sales of Unregistered Securities
None.
Dividend Policy
The Company has not declared nor 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, if any, to finance and expand its
operations.
Item 6. Management's Discussion and Analysis or Plan of Operation.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
When used in this Form 10-KSB, the words "anticipated", "estimate", "expect",
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks, uncertainties and assumptions
including the possibility that the Company's will fail to generate projected
revenues. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated or projected.
The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Form 10-KSB.
LIQUIDITY AND CAPITAL RESOURCES
The Company is in the development stage and since inception has experienced no
significant change in liquidity or capital resources or stockholders equity
other than the receipt of $1,000,000 from an offering conducted under Rule 504
of Regulation D in 1997. The Company's balance sheet as of September 30, 2003
reflects no assets and considerable liabilities. Further, there exists no
agreement or understanding with regard to loan agreements by or with the
Officers, Directors, principals, affiliates or shareholders of the Company.
The Company is continuing to search for suitable merger candidates or other
businesses to become involved in so that it can commence operations and generate
revenues to continue paying its bills.
The Company will attempt to carry out its plan of business and hopes to enter
into a business combination with another entity. The Company cannot predict to
what extent its lack of liquidity and capital resources will hinder its business
plan prior to the consummation of a business combination.
RESULTS OF OPERATIONS
During the period from November 5, 1989 (inception) through September 30, 2004,
the Company engaged in limited operations and attempted to initiate its double
blind study of its drug, Magkelate. The Company received no revenues during this
period with the exception of $9,500 received from the sale of certain assets
which had previously been written off. The capital raised was expended for
general office and administrative expenses and the proposed double-blind study
of Magkelate, which double-blind study the Company was unable to start due to
lack of capital.
The Company anticipates that until a business combination is completed with an
acquisition candidate, it will not generate revenue and may operate at a loss
after completing a business combination, depending upon the performance of the
acquired business.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
The following discussion of the financial condition, changes in financial
condition and results of operations of the Company for the fiscal years ended
September 30, 2004 and September 30, 2003 should be read in conjunction with the
financial statements of the Company and related notes included therein.
The Company was incorporated on November 5, 1995 as "Patriot Holding
Corporation". On August 26, 1996, the Company amended its Articles of
Incorporation to change its name to "National Healthcare Technology, Inc." At
the same time, the Company entered into agreements to acquire certain assets in
exchange for the issuance of common stock. Additional shares were issued in 2001
and 2002 to satisfy certain indebtedness of the Company.
Other than the issuances mentioned above, the Company financed its activities
through the distribution of equity capital, including a private placement of
100,000 units which raised $1,000,000 in 1997. The Company used these proceeds
to commence its operations, to pay salaries, to pay general and administrative
expenses and any other expenses. These proceeds financed the Company's starting
of its double-blind study which was subsequently abandoned.
The Company has engaged in negotiations with other companies interested in being
acquired by the Company but to date, none of these have been successfully
completed. The Company intends to continue seeking out potential merger
candidates but presently has no potential acquisition candidates with whom it is
discussing a business combination.
The Company will attempt to carry out its business plan as discussed above. The
Company cannot predict to what extent its lack of liquidity and capital
resources will hinder its business plan prior to the consummation of a business
combination.
NEED FOR ADDITIONAL FINANCING
The Company's existing capital is not be sufficient to meet the Company's cash
needs, including the costs of compliance with the continuing reporting
requirements of the Securities Exchange Act of 1934, as amended. Once a business
combination is completed, the Company's need for additional financing is likely
to increase substantially.
No commitments to provide additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that any funds will be
available to the Company to allow it to cover its expenses.
The Company might seek to compensate providers of services by issuances of stock
in lieu of cash.
For the years ended September 30, 2004 and 2003, the Company had no revenue. For
the year ended September 30, 2004, the Company had expenses of approximately
$35,310 compared to expenses of approximately $37,000 at September 30, 2003. The
Company's expenses consisted primarily of general and administrative expenses.
The Company recorded other income of approximately $18,000 for the year ended
September 30, 2003 which resulted from the cancellation of a previous merger
which was ultimately unsuccessful and for which the Company had received a
deposit of $52,000, which the Company retained. After this allowing for this
other income and a provision for income taxes, the Company had a net loss of
($19,835) or ($.25) per shares of common stock for the year ended September 30,
2003 compared to a net loss of ($35,310) or ($.45) per share of common stock for
the year ended September 30, 2004.
At September 30, 2004, shareholders' deficit was ($170,949) compared to a
shareholders' deficit of ($135,639) at September 30, 2003. This increase in
shareholders' deficit is due primarily to the Company's lack of revenues to pay
its expenses at the present time.
Liquidity and Capital Resources
At September 30, 2004, the Company had negative working capital of approximately
($171,000) consisting of no assets and current liabilities of approximately
$171,000. At September 30, 2003, the Company had negative working capital of
approximately ($136,000) consisting of no assets and current liabilities of
approximately $136,000.
The Company's current liabilities at September 30, 2004 were composed of
accounts payable due to a shareholder of approximately $125,000 and trade
payables of approximately $46,000.
Effect of Inflation
Inflation did not have any significant effect on the operations of the Company
during the year ended September 30, 2004. Further, inflation is not expected to
have any significant effect on future operations of the Company.
Item 7. Financial Statements.
Financial statements are audited and included herein beginning on Exhibit 1,
page 1 and are incorporated herein by this reference.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There were no disagreements with accountants on accounting and financial
disclosure during the relevant period.
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
Identification of Directors and Executive Officers of the Company
The following table sets forth the names and ages of all directors and executive
officers of the Company and all persons nominated or chosen to become a
director, indicating all positions and offices with the Company held by each
such person and the period during which he has served as a director:
The principal executive officers and directors of the Company are as follows:
Name Positions Held and Tenure
---- -------------------------
Charles Smith President, CFO and Director since January, 2002
Dr. Sadegh Salmassi Director since January, 2004
Steven Onoue Director and Secretary since September 1, 2002
The Directors named above will serve until the next annual meeting of the
Company's stockholders. Thereafter, Directors will be elected for one-year terms
at the annual stockholders' meeting. Officers will hold their positions at the
pleasure of the Board of Directors, absent any employment agreement, of which
none currently exist or is contemplated. There is no arrangement or
understanding between the Directors and Officers of the Company and any other
person pursuant to which any Director or Officer was or is to be selected as a
Director or Officer of the Company.
There is no family relationship between or among any Officer and Director.
The Directors and Officers of the Company will devote their time to the
Company's affairs on an "as needed" basis. As a result, the actual amount of
time which each will devote to the Company's affairs is unknown and is likely to
vary substantially from month to month.
The Company has no audit or compensation committee.
Business Experience. The following is a brief account of the business experience
during at the least the last five years of the directors and executive officers,
indicating their principal occupations and employment during that period, and
the names and principal businesses of the organizations in which such
occupations and employment were carried out.
CHARLES SMITH. Mr. Smith graduated from Boston University, Boston, Massachusetts
in 1979 and since that time has been a Certified Public Accountant involved in
all phases of business, including the audit of companies and tax matters. He is
a consultant to various companies ranging from an art distribution company to a
junior resource company which is developing a gold property in Mexico. Mr. Smith
has significant experience in accounting and securities matters.
Mr. Smith's business affiliations during the last five years are as follows:
Chairman of Dynacap Group, Ltd., a consulting and management firm from 1992 to
the present; a sole practitioner as a certified public accountant from 1983 to
the present; sole officer and director of MC Cambridge, Inc., a financial
consulting firm from 1997 to the present; sole officer and director of Asset
Servicing Corp., a leasing company, from 1998 to the present; and chief
financial officer of Electrical Generation Technology Corp. from 2000 to the
present.
Mr. Smith is presently CEO, CFO and director of Crown Partners, Inc. and CFO and
director of Micro Bio-Medical Waste Systems, Inc., companies which trade on the
OTC Electronic Bulletin Board under the symbols "CRWP" and "MBWS". Crown
Partners, Inc. is a shareholder of the Company.
SADEGH SALMASSI, M.D. Dr. Salmassi is a family physician in Delano, California
whewre he has practiced for more than 20 years. Dr. Salmassi received his
medical degree from the Pahlavi University School of Medicine in 1973 and
completed his residency at the University of Illinois. Dr. Salmassi is a Board
Certified Pathologist and is Board Certified in the area of General Practice. He
is a Fellow of the American College of Pathologists and a Fellow of the American
Academy of Family Physicians. He has written numerous articles for medical
publications.
Dr. Salmassi is presently an officer and director of Crown Partners, Inc. and
director of Micro Bio-Medical Waste Systems, Inc., companies which trade on the
OTC Electronic Bulletin Board under the symbols "CRWP" and "MBWS". Crown
Partners, Inc. is a shareholder of the Company.
STEVEN ONOUE. Mr. Onoue has been employed as vice president and manager of
Sanitec(TM) Services of Hawaii, Inc., wholly-owned subsidiary of Micro
Bio-Medical Waste Systems, Inc. since 2000. Prior to that, Mr. Onoue was the
president of Cathay Trading Company in Honolulu, Hawaii which traded in hard
commodities and acted as a consultant to many construction and renovation
projects.
Mr. Onoue is presently an officer and director of Crown Partners, Inc. and
director of Micro Bio-Medical Waste Systems, Inc., companies which trade on the
OTC Electronic Bulletin Board under the symbols "CRWP" and "MBWS". Crown
Partners, Inc. is a shareholder of the Company.
CONFLICTS OF INTEREST
The officers and directors will devote only a small portion of their time to the
affairs of the Company, estimated to be no more than approximately 5 hours per
month. There will be occasions when the time requirements of the Company's
business conflict with the demands of their other business and investment
activities. Such conflicts may require that the Company attempt to employ
additional personnel. There is no assurance that the services of such persons
will be available or that they can be obtained upon terms favorable to the
Company. The sole officer and inside director works for the Company on a
full-time basis.
There is no procedure in place which would allow the Officers and Directors to
resolve potential conflicts in an arms-length fashion. Accordingly, they will be
required to use their discretion to resolve them in a manner which they consider
appropriate.
The Company's officers and directors may actively negotiate or otherwise consent
to the purchase of apportion of their common stock as a condition to, or in
connection with, a proposed merger or acquisition transaction. It is anticipated
that a substantial premium over the initial cost of such shares may be paid by
the purchaser in connection with any sale of shares by the Company's officers
and directors which is made as a condition to, or in connection with, a proposed
merger or acquisition transaction. The fact that a substantial premium may be
paid to the Company's officers and directors to acquire their shares creates a
potential conflict of interest for them in satisfying their fiduciary duties to
the Company and its other shareholders. Even though such a sale could result in
a substantial profit to them, they would be legally required to make the
decision based upon the best interests of the Company and the Company's other
shareholders, rather than their own pecuniary benefit.
Identification of Certain Significant Employees. The Company does not employ any
persons who are make or are expected to make significant contributions to the
business of the Company.
Item 10. Executive Compensation.
During fiscal 2004, and as of the date of the filing of this report, none of the
Company's officers were paid any compensation by the Company.
Compensation of Directors
The Company adopted an Incentive Stock Option Plan for non-employee directors on
October 1, 1998. The Company has not awarded any options under this Plan, No
director receives or accrues any compensation for his services as a director,
including committee participation and/or special assignments.
Directors are entitled to reimbursement for reasonable travel and other
out-of-pocket expenses incurred in connection with attendance at meeting of the
Board of Directors.
The Company has no material bonus or profit-sharing plans pursuant to which cash
or non-cash compensation is or may be paid to the Company's directors or
executive officers except as described above.
The Company has no compensatory plan or arrangements, including payments to be
received from the Company, with respect to any executive officer or director,
where such plan or arrangement would result in any compensation or remuneration
being paid resulting from the resignation, retirement or any other termination
of such executive officer's employment or from a change-in-control of the
Company or a change in such executive officer's responsibilities following a
change-in-control and the amount, including all periodic payments or
installments where the value of such compensation or remuneration exceeds
$100,000 per executive officer.
During the last completed fiscal year, no funds were set aside or accrued by the
Company to provide pension, retirement or similar benefits for Directors or
Executive Officers.
The Company has no written employment agreements.
Compensation Pursuant to Plans. Other than disclosed above, the Company has no
plan pursuant to which cash or non-cash compensation was paid or distributed
during the last fiscal year, or is proposed to be paid or distributed in the
future, to the individuals and group described in this item.
Compensation of Directors. Directors of the Company are entitled to reasonable
reimbursement for their travel expenses in attending meetings of the Board of
Directors.
Termination of Employment and Change of Control Arrangement. Except as noted
herein, the Company has no compensatory plan or arrangements, including payments
to be received from the Company, with respect to any individual names above from
the latest or next preceding fiscal year, if such plan or arrangement results or
will result from the resignation, retirement or any other termination of such
individual's employment with the Company, or from a change in control of the
Company or a change in the individual's responsibilities following a change in
control.
Section 16(a) Beneficial Ownership Reporting Compliance. During the year ended
September 30, 2004, the following persons were officers, directors and more than
ten-percent shareholders of the Company's common stock:
Name Position Filed Reports
---- -------- -------------
Charles Smith Director, CEO, CFO No
Dr. Sadegh Salmassi Director No
Steven Onoue Director,Secretary No
Crown Partners, Inc. Shareholder Yes
Phoenix Capital Corp. Shareholder Yes
Estate of Ivan Tiholiz Shareholder No
Item 11. Security Ownership of Certain Beneficial Owners and Management.
There were 78,550 shares of the Company's common stock issued and outstanding on
September 30, 2004. The following tabulates holdings of shares of the Company by
each person who, subject to the above, at the date of this Report, holds or
record or is known by Management to own beneficially more than five percent (5%)
of the Common Shares of the Company and, in addition, by all directors and
officers of the Company individually and as a group.
---------------------------------------- -------------------------------------- --------------------------------------
NAME AND ADDRESS NUMBER OF SHARES OWNED BENEFICIALLY PERCENT OF SHARES OWNED
---------------------------------------- -------------------------------------- --------------------------------------
ESTATE OF IVAN TIHOLIZ 19,500 24.82%
14860 ROSCOE BLVD
VAN NUYS CA 91402
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CROWN PARTNERS, INC. 22,800 29.02%
20700 VENTURA BLVD.
WOODLAND HILLS CA 91364
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PHOENIX CONSULTING SERVICES 21,300 27.11
20700 VENTURA BLVD.
WOODLAND HILLS CA 91364
---------------------------------------- -------------------------------------- --------------------------------------
CHARLES SMITH * (1) 22,800 29.02&
20700 VENTURA BLVD.
WOODLAND HILLS CA 91364
---------------------------------------- -------------------------------------- --------------------------------------
DR. SADEGH SALMASSI* (1) 22,800 29.02%
20700 VENTURA BLVD.
WOODLAND HILLS CA 91364
---------------------------------------- -------------------------------------- --------------------------------------
STEVEN ONOUE * (1) 22,800 29.02%
20700 VENTURA BLVD.
WOODLAND HILLS CA 91364
---------------------------------------- -------------------------------------- --------------------------------------
ALL DIRECTORS AND EXECUTIVE OFFICERS 22,800 29.02%
AS A GROUP (THREE PERSONS)
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
* DENOTES OFFICER OR DIRECTOR
(1) INCLUDES 2,280,000 SHARES OWNED BY CROWN PARTNERS, INC., A COMPANY IN WHICH
MESSRS. SMITH, SALMASSI AND ONOUE SERVE AS OFFICERS AND DIRECTORS. MESSRS.
SMITH, SALMASSI AND ONOUE DISCLAIM ANY BENEFICIAL INTEREST IN THE SHARES OWNED
BY CROWN PARTNERS, INC.
Changes in Control. There are no arrangements known to the Company, including
any pledge by any person of securities of the Company, the operation of which
may at a subsequent date result in a change of control of the Company.
Item 12. Certain Relationships and Related Transactions.
The Company shares office space with its attorney and with a shareholder of the
Company, both of whom have loaned the Company money to funds its operations for
the past four years. The Company is obligated to pay $1,500 per month in rent
which it has been unable to pay during the past several years.
Item 13. Exhibits and Reports on Form 8-K.
(a) Financial Statements and Schedules
The following financial statements and schedules are filed as part of this
report:
Independent Auditors' Report dated January 19, 2005
Balance Sheet for the Fiscal Year Ended September 30, 2004
Statement of Operations for the Fiscal Years Ended September 30, 2004 and 2003
Statement of Stockholders' Equity (Deficit)
Statements of Cash Flows
Notes to Financial Statements
List of Exhibits
The following exhibits are filed with this report.
Financial Statements.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
National Healthcare Technology, Inc.
Woodland Hills, California
We have audited the accompanying balance sheet of National Healthcare
Technology, Inc. (a Development Stage Company) as of September 30, 2004, and the
related statements of operations, stockholders' deficit, and cash flows for each
of the two years then ended and for the period from November 5, 1995 (inception)
through September 30, 2004. 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 audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Healthcare Technology,
Inc. as of September 30, 2004, and the results of its operations and its cash
flows for each of the two years then ended and for the period from November 5,
1995 (inception) through September 30, 2004, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has incurred losses through September 30, 2004
totaling $1,416,243 and at September 30, 2004 had a capital deficit of $170,949.
The Company will require additional working capital to develop its business
until the Company either (1) achieves a level of revenues adequate to generate
sufficient cash flows from operations; or (2) obtains additional financing
necessary to support its working capital requirements. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to this matter are also described in Note 2. The
accompanying financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
Lopez, Blevins, Bork & Associates, LLP
Houston, Texas
January 19, 2005
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
September 30, 2004
ASSETS $ -
===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable:
Trade $ 46,417
Crown Partners', Inc. 124,532
---------------
Total current liabilities 170,949
---------------
Commitments and contingencies
STOCKHOLDERS' DEFICIT:
Preferred stock, $.01 par value, 10,000,000 shares authorized,
none issued and outstanding -
Common stock, $.001 par value, 100,000,000 shares
authorized, 78,571 shares issued and outstanding 79
Additional paid in capital 1,245,215
Deficit accumulated during the development stage (1,416,243)
---------------
Total Stockholders' Deficit (170,949)
---------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ -
===============
See accompanying summary of accounting policies and notes to financial
statements.
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Inception through
For the years ended September 30, September 30,
2004 2003 2004
---------------- ---------------- --------------------
Revenue $ - $ - $ 9,578
Expenses:
Development costs - - 1,264,236
General and administrative 35,310 37,339 175,088
-------------- -------------- -------------------
35,310 37,339 1,439,324
-------------- -------------- -------------------
Loss before income taxes ( 35,310) (37,339) (1,429,746)
Other income - 18,303 18,303
Provision for income taxes - (800) (4,800)
Net loss $ (35,310) $ (19,385) $ (1,416,243)
============== ============== ===================
Net loss per share:
Basic and diluted $ (0.45) $ (0.25)
============== ==============
Weighted average shares outstanding:
Basic and diluted 78,571 78,571
============== ==============
See accompanying summary of accounting policies and notes to financial
statements.
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Period from November 5, 1995 (Inception) through September 30, 2004
Deficit
accumulated
Additional during the Total
Common Stock paid in development stage stockholders'
Share Amount capital deficit
---------- ------------ -------------- ---------------- -----------------
Issuance of common stock for
patent rights 15,658 $ 15 $ 1,549 - $ 1,564
Common shares issued to related
party for equipment 6,859 7 55,280 - 55,287
Common shares issued for services 21,500 22 2,128 - 2,150
Sale of common stock, net 617 1 272,882 - 272,883
Issuance of common stock for
conversion of promissory note
372 - 187,300 - 187,300
Common shares issued to related
party for vehicle 10 - 5,000 - 5,000
Common stock issued for exercise
of warrants 10,000 10 482,550 - 482,560
Common shares issued for services 755 1 215,749 - 215,750
Common stock issued for
conversion of promissory note 22,800 23 22,777 - 22,800
Deficit accumulated in
development stage - - - (1,361,098) (1,361,098)
---------- ------------ -------------- ---------------- -----------------
Balance,
September 30, 2002 78,571 79 1,245,215 (1,361,098) (115,804)
Net loss - - - (19,835) (19,835)
---------- ------------ -------------- ---------------- -----------------
Balance,
September 30, 2003 78,571 79 1,245,215 (1,380,933) (135,639)
Net loss - - - (35,310) (35,310)
---------- ------------ -------------- ---------------- -----------------
Balance,
September 30, 2004 78,571 $ 79 $ 1,245,215 $ (1,416,243) $ (170,949)
========== ============ ============== ================ =================
See accompanying summary of accounting policies and notes to financial
statements.
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the years ended Inception through
September 30, September 30,
2004 2003 2004
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Cash flows from operating activities:
Net loss $ (35,310) $ (19,835) $ (1,416,243)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization - - 22,977
Common stock for interest expense - - 12,900
Common stock issued for services - - 217,900
Loss on abandoned assets - - 111,612
Gain on sale of assets - - (500)
Changes in assets and liabilities:
Accounts payable 35,310 38,139 170,949
Deposit on merger - (18,304) -
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Net cash used in operating activities - - (880,405)
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Cash flows from investing activities:
Purchase of property and equipment - - (87,314)
Proceeds from sale of equipment - - 15,078
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Net cash used in investing activities - - (72,236)
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Cash flows from financing activities:
Proceeds from note payable - - 217,200
Payments on notes payable - - (20,000)
Proceeds from sale of common stock, net - - 755,441
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Net cash provided by financing activities - - 952,641
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Net decrease in cash - - -
Cash, beg. of period - - -
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Cash, end of period $ - $ - $ -
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Supplemental information:
Income taxes paid $ - $ - $ 2,400
Interest paid $ - $ - $ 55
Supplemental non-cash transactions:
Common stock issued for notes $ - $ - $ 197,800
Common stock for patent rights $ - $ - $ 1,564
Common stock for equipment $ - $ - $ 60,287
See accompanying summary of accounting policies and notes to financial
statements.
NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
Nature of business. On November 5, 1995 National Healthcare Technology, Inc.
("National") was incorporated in Colorado. National currently has no operations
and in accordance with SFAS #7, is considered a development stage company.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the balance sheet. Actual results could differ from
those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash and all highly liquid financial
instruments with purchased maturities of three months or less.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset
and liability method, deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of assets
and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that,
based on available evidence, are not expected to be realized.
Basic Loss Per Share
Basic loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period.
Recent Accounting Pronouncements
National does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the National's results of
operations, financial position or cash flow.
NOTE 2 - FINANCIAL CONDITION AND GOING CONCERN
For the years ended September 30, 2004 and 2003 National incurred losses
totaling $35,310 and $19,835 and at September 30, 2004 had a capital deficit of
$170,949. Because of these losses, National will require additional working
capital to develop business operations.
National is also identifying merger and/or acquisition candidates. As of January
19, 2005, no acquisition or merger agreements have been closed. These conditions
raise substantial doubt about National's ability to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might be necessary should National be unable
to continue as a going concern.
NOTE 3 - INCOME TAXES
National has not yet realized income as of the date of this report, no provision
for income taxes has been made. At September 30, 2004 a deferred tax asset has
not been recorded due to National's lack of operations to provide income to use
the net operating loss carryover of $1,416,000 that expires in years 2011
through 2024.
NOTE 4 - STOCK OPTION PLAN
National adopted the National Healthcare Technology, Inc. 1998 stock option
plan. The board of directors is required to designate a committee of at least 3
directors to administer the plan. The committee has the power to designate
participants, determine number of shares, terms and conditions of options and
administer the plan. The plan terminates on September 30, 2008.
No options have been granted as of January 19 2005.
NOTE 5 - RELATED PARTY TRANSACTIONS
National leases office space from Crown Partners', Inc., a related entity, on a
month to month basis for $1,500 per month. Rent expense was $18,000 for the
years ended September 30, 2004 and 2003, respectively.
National owes Crown Partners', Inc. $124,532 as of September 30, 2004.
NOTE 6 - EQUITY
The preferred stock is convertible at 10 shares for 1 common share of common
stock.
In June 2004, National filed Schedule 14C proposing an increase in common shares
authorized from 25,000,000 to 100,000,000, an increase in preferred shares
authorized from 500,000 to 10,000,000.
In June 2004, National Healthcare declared a reverse stock split effected in the
form of a 1 for 100 common shares for each issued and outstanding common share
of National Healthcare such that there will be a total of 78,571 common shares
issued and outstanding upon completion of the stock split. Accordingly, all
references to number of common shares and per share data in the accompanying
financial statements have been adjusted to reflect the stock split on a
retroactive basis.
(b) There were no Reports filed on Form 8-K during the fourth quarter of the
Company's fiscal year ended September 30, 2004.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
January 19, 2005 NATIONAL HEALTHCARE TECHNOLOGY, INC.
/s/ Charles Smith
Charles Smith, CEO, CFO and Director
January 19, 2005 /s/ Sadegh Salmassi
Dr. Sadegh Salmassi, Director
January 19, 2005 /s/ Steven Onoue
Steven Onoue, Director, Secretary