-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JGe986WLU6xRktEceTR36MT4fsk5ibWq2Lkg371U1tOSqAiDFqLt3ih3w4VerIQL KkBUZgcceiSq3iycdmF3Bw== 0001144204-04-012115.txt : 20040816 0001144204-04-012115.hdr.sgml : 20040816 20040816152536 ACCESSION NUMBER: 0001144204-04-012115 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Integrated Healthcare Holdings CENTRAL INDEX KEY: 0001051488 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 870412182 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-23511 FILM NUMBER: 04978370 BUSINESS ADDRESS: STREET 1: 9005 COBBLE LANE CITY: SANDY STATE: UT ZIP: 84093 BUSINESS PHONE: 8019420555 MAIL ADDRESS: STREET 1: 9005 COBBLE LANE CITY: SANDY STATE: UT ZIP: 84093 FORMER COMPANY: FORMER CONFORMED NAME: FIRST DELTAVISION INC DATE OF NAME CHANGE: 19971216 10QSB 1 v05786_10qsb.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-QSB (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2004 OR |_| 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: 0-23511 ---------- Integrated Healthcare Holdings, Inc. (Exact name of small business issuer as specified in its charter) Nevada 87-0412182 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 695 Town Center Drive, Suite 260, Costa Mesa, California 92626 (Address of principal executive offices) (Zip Code) (714) 434-9191 (Issuer's telephone number, including area code) First Deltavision, Inc. (Former name, former address and former fiscal year, if changed since last report) ---------- Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| As of August 10, 2004, there were outstanding 19,730,000 shares of the issuer's common stock, par value $0.0001 per share. Transitional Small Business Disclosure Format (Check one): Yes |_|; No |X| The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements Integrated Healthcare Holdings, Inc. FORM 10-QSB Table of Contents - -------------------------------------------------------------------------------- Page Number PART I FINANCIAL INFORMATION Item 1. Financial Statements: 1 Unaudited Condensed Consolidated Balance Sheet as of June 30, 2004 and December 31, 2003 2 Unaudited Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2004 and 2003 3 Unaudited Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2004 and 2003 4 Notes to Unaudited Condensed Consolidated Financial Statements 5-11 Item 2. Management's Discussion and Analysis or Plan of Operation 11 Item 3. Controls and Procedures 13 PART II OTHER INFORMATION 13 Item 1. Legal Proceedings 13 Item 2. Changes in Securities 13 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 15 - -------------------------------------------------------------------------------- -i- PART I. FINANCIAL INFORMATION Item 1. Financial Statements. 1 INTEGRATED HEALTHCARE HOLDINGS, INC. (A Development Stage Company) Unaudited Consolidated Balance Sheet
June 30, December 31, 2004 2003 ----------- ----------- (Unaudited) ASSETS Current assets Cash and cash equivalents $ 18,005 $ 265,000 ----------- ----------- Total current assets 18,005 265,000 Property and equipment: Office equipment 39,546 26,537 Furniture and fixtures 27,347 21,095 ----------- ----------- 66,893 47,632 Accumulated depreciation (5,660) (651) ----------- ----------- 61,233 46,981 Intangible asset, net of accumulated amortization of $32,122 and $6,424 70,668 96,366 Due from shareholders -- 60,000 Deposits 7,794 -- ----------- ----------- Total assets $ 157,700 $ 468,347 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 20,126 $ 15,727 Accrued compensation and benefits 438,080 -- Notes payable to shareholders 60,000 -- Note payable -- 100,000 ----------- ----------- Total current liabilities 518,206 115,727 Commitments and contingencies -- -- Stockholders' equity: Common stock, $0.001 par value; 100,000,000 shares authorized; 19,630,000 and 19,380,000 shares issued and outstanding, respectively 19,580 19,380 Additional paid in capital 800,822 551,021 Deficit accumulated during the development stage (1,180,908) (217,781) ----------- ----------- Total stockholders' equity (360,506) 352,620 ----------- ----------- Total liabilities and stockholders' equity $ 157,700 $ 468,347 =========== ===========
2 INTEGRATED HEALTHCARE HOLDINGS, INC. (A Development Stage Company) Unaudited Consolidated Statement of Operations
Three Months Ended Six Months Ended --------------------------------- ----------------------------------- Cumulative from inception (July 31, 1984) through June June 30, June 30, June 30, June 30, 30, 2004 2004 2003 2004 2003 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) ------------ ------------ ------------ ------------ ------------ Revenue $ -- $ -- $ -- $ -- $ -- General and administrative expenses 1,140,521 430,608 17,818 922,740 19,797 ------------ ------------ ------------ ------------ ------------ Loss from operations before provision for income taxes (1,140,521) (430,608) (17,818) (922,740) (19,797) Provision for income taxes -- -- -- -- -- ------------ ------------ Net loss $ (1,140,521) $ (430,608) $ (17,818) $ (922,740) $ (19,797) ============ ============ ============ ============ ============ ------------ ------------ Basic and diluted net loss per share ($ 0.02) ($ 0.01) ($ 0.05) ($ 0.02) Weighted average shares outstanding 19,590,000 1,342,000 19,510,778 1,342,000
The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements 3 INTEGRATED HEALTHCARE HOLDINGS, INC. (A Development Stage Enterprise) Unaudited Consolidated Statement of Cash Flows
Six Months Ended Cumulative From Inception (July 31, 1984) Through June June 30, June 30, 30, 2004 2004 2003 (Unaudited) (Unaudited) (Unaudited) ----------- ----------- ----------- Cash flows from operating activities: Net loss $(1,140,521) $ (922,740) $ (19,797) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization expense 37,782 30,707 -- Noncash expense 39,255 -- -- Stock issued for relief of debt 1,000 -- -- Increase (decrease) in accounts payable 10,126 (5,601) 500 Increase in accrued compensation and benefits 438,080 438,080 -- Increase in accounts payable - related parties -- -- 19,297 ----------- ----------- ----------- Net cash used in operating activities (614,278) (459,554) -- ----------- ----------- ----------- Cash flows from investing activities: Purchase of property and equipment (66,892) (19,260) -- Acquisition of Mogel Management Group Inc., net 8,534 8,534 -- ----------- ----------- ----------- Net cash used in investing activities (58,358) (10,726) -- Cash flows from financing activities: Proceeds from issuance of stock 777,356 250,000 -- Repayment of promissory note (100,000) (100,000) -- Advances (to) from shareholders 13,285 73,285 -- ----------- ----------- ----------- Net cash provided by financing activities 690,641 223,285 -- ----------- ----------- ----------- Net increase (decrease) in cash 18,005 (246,995) -- Cash and cash equivalents, beginning of period -- 265,000 -- ----------- ----------- ----------- Cash and cash equivalents, end of period $ 18,005 $ 18,005 $ -- =========== =========== =========== Supplemental cash flow information: Cash paid for interest and income taxes $ -- $ -- $ -- Supplemental Schedule of Noncash Financing Activities: Issuance of a promissory note and common stock in exchange for a letter of indemnification $ 102,790 $ -- $ -- Issuance of promissory notes for acquisition of Mogel Management Group, Inc. $ 60,000 $ 60,000 $ --
4 INTEGRATED HEALTHCARE HOLDINGS, INC. (A Development Stage Company) Condensed Notes to Unaudited Consolidated Financial Statements June 30, 2004 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - Integrated Healthcare Holdings, Inc. ("the Company") was organized under the laws of the State of Utah on July 31, 1984 under the name of Aquachlor Marketing. The Company never engaged in business activities and was suspended for failure to file annual reports and tax returns. In December 1988, all required reports and tax returns were filed and the Company was reinstated by the State of Utah. In December 1988, the Company merged with Aquachlor, Inc., a Nevada corporation incorporated on December 20, 1988. The Nevada corporation became the surviving entity and changed its name to Deltavision, Inc. In March 1997, the Company received a Certificate of Revival from the State of Nevada using the name First Deltavision, Inc. On March 4, 2004, the Company's board of directors changed the Company's name from "First Deltavision, Inc." to "Integrated Healthcare Holdings, Inc.", and the name change became effective on May 18, 2004. Company Operations - The Company has not engaged in any business activities that have produced revenues and, therefore, is considered a development stage company as defined in Statement of Financial Accounting Standards No. 7. The Company seeks to acquire, own, and operate hospitals and surgical services throughout the United States. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of obligations in the normal course of business. The Company generated losses from continuing operations of $922,740 and $1,140,521 during the six months ended June 30, 2004 and from inception (July 31, 1984) through June 30, 2004, respectively. In addition, the Company had negative working capital of $500,201 at June 30, 2004. These factors, among others, raise doubt about the Company's ability to continue as a going concern. The Company has raised a total of $715,000 through stock sales during the twelve months ended June 30, 2004. Management believes the Company has sufficient funds, the ability to raise additional capital, and the ability to reduce administrative expenses to meet its continuing obligations for the foreseeable future. Basis of Presentation - In January 2004, the Company's board of directors changed the Company's fiscal year end from June 30 to December 31. The accompanying financial statements have been audited for the transitional six month period ended December 31, 2003. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2004 and for the six months period then ended have been made. Condensed Financial Statements - The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2004 and 2003 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2003 audited financial statements. The results of operations for the periods ended June 30, 2004 and 2003 are not necessarily indicative of the operating results for the full year. 5 Cash and Cash Equivalents - The Company considers all highly liquid debt investments purchased with a maturity of three months or less to be cash equivalents. Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America required management to make estimates and assumptions that effect the reported amounts of assets and liabilities, the disclosures 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 estimated by management. Stock-Based Compensation - Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation, encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to account for stock-based compensation using the intrinsic value method prescribed in previously issued standards. Accordingly, compensation cost for stock options issued to employees is measured as the excess, if any, of the fair market value of the Company's stock at the date of grant over the amount an employee must pay to acquire the stock. Compensation is charged to expense over the shorter of the service or vesting period. Stock options issued to non-employees are recorded at the fair value of the services received or the fair value of the options issued, whichever is more reliably measurable, and charged to expense over the service period. Fair Value of Financial Instruments - - The Company considers all liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. Short-term investments generally mature between three months and six months from the purchase date. All cash and short-term investments are classified as available for sale and are recorded at market using the specific identification method; unrealized gains and losses are reflected in other comprehensive income. Cost approximates market for all classifications of cash and short-term investments. Net Loss per Common Share - Net loss per share is calculated in accordance with Statement of Financial Accounting Standards No. 128, Earnings Per Share. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that options are included in the calculation of diluted earnings per share, except when their effect would be anti-dilutive. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Impairment of Long-Lived Assets - The Company continually monitors events or changes in circumstances that could indicate that the carrying amount of long-lived assets to be held and used, including intangible assets, may not be recoverable. The determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. When impairment is indicated for a long-lived asset, the amount of impairment loss is the excess of net book value over fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. As of June 30, 2004, the Company has determined that no impairment of its long-lived assets exists. Goodwill and Intangible Assets - On July 20, 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards ("SFAS") 141, Business Combinations, and SFAS 142, Goodwill and Intangible Assets. Under these new standards, all acquisitions subsequent to June 30, 2001 must be accounted for using the purchase method of accounting. The cost of intangible assets with indefinite lives and goodwill are no longer amortized, but are subject to an annual impairment test based upon its fair value. Goodwill and intangible assets principally result from business acquisitions. The Company accounts for business acquisitions by assigning the purchase price to tangible and intangible assets and liabilities. Assets acquired and liabilities assumed are recorded at their fair values; the excess of the purchase price over the net assets acquired is recorded as goodwill. 6 Recently Enacted Accounting Standards - Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," No. 146, "Accounting for Costs Associated with Exit or Disposal Activities", SFAS No. 147, "Acquisitions of Certain Financial Institutions - an Amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9", SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an Amendment of FASB Statement No. 123", SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities", and SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity", were recently issued. SFAS No. 144, 146, 147, 148, 149 and 150 have no current applicability to the Company or their effect on the financial statements would not have been significant. Restatement - The financial statements have been restated for all periods presented to reflect a 4-for-1 forward stock split on April 4, 2002, a 248.399-for-1 reverse stock split on April 23, 1997 and a 5-for-1 forward stock split on December 9, 1988. NOTE 2 - ACQUISITIONS AND RESCISSION OF ACQUISITION On April 9, 2002, the Company entered into a share exchange agreement with KyoMedix Corporation ("KyoMedix"). The agreement called for the Company to issue 15,166,550 shares of common stock to the shareholders of KyoMedix for all of the issued and outstanding shares of common stock of KyoMedix. The agreement also called for the repurchase and cancellation of 746,592 shares of common stock for a $250,000 note payable and effecting a 4-for-1 forward stock split. The $250,000 note payable was due 90 days from signing and was secured by 13,916,000 shares of common stock of the Company. Any unpaid portion of the note was to accrue interest at 10% per annum after the 90-day term. The agreement also called for the resignation of the Company's officers and directors, the adoption of the 2002 Stock Plan of KyoMedix, changing the name of the Company to KyoMedix, Inc. and the grant of similar options to replace the options previously granted by KyoMedix. The acquisition closed April 9, 2002; however, subsequently, former and current shareholders of the Company sued to rescind the merger claiming that certain conditions of the agreement were not satisfied. On November 11, 2002, the Company signed a Compromise and Settlement Agreement and the Company cancelled the 15,166,550 shares of common stock that had been issued to the shareholders of KyoMedix. As part of the rescission agreement, the Company reissued 746,592 shares of common stock to the previous shareholder and the $250,000 note payable was voided. As part of the rescission agreement, the Company's former officers and directors were re-appointed, the adoption of the 2002 Stock Plan of KyoMedix was voided and options granted to KyoMedix option holders were cancelled. The financial statements have been restated to reflect the acquisition as having been rescinded. On January 1, 2004, the Company entered into a Securities Purchase Agreement and Plan of Reorganization with Mogel Management Group, Inc. ("MMG"), an entity with certain common ownership with the Company, and the shareholders of MMG. The Company purchased all of the issued and outstanding stock of MMG, 48 million shares, in exchange for the issuance of three promissory notes to the stockholders of MMG, Inc. with a total face value of $60,000. The fair value of the tangible assets acquired in excess of liabilities assumed amounted to $15,000, which resulted in goodwill of $45,000. During the three months ended June 30, 2004, the Company recorded an impairment charge of $45,000 related to the goodwill from the MMG, Inc. acquisition. The notes bear interest at 6% per annum and are due and payable on December 31, 2004. MMG was organized under the laws of the State of Nevada on October 2, 2003 and has not engaged in any business activities that have produced any revenues and, therefore, is considered a development stage company as defined in Statement of Financial Accounting Standards No. 7. 7 NOTE 3 - COMMON STOCK The Company issued 91,452 shares of stock upon incorporation for $57,576. During the year ended June 30, 1989, the Company issued 96,640 shares of common stock for $1,200. During 1996, the Company issued 611,908 shares of common stock for consulting fees valued at $38,000 (or $.25 per share) resulting in a change in control of the Company. During the year ended June 30, 1998, the Company issued 142,000 shares of common stock for services rendered. Total proceeds amounted to $1,255 (or $.04 per share). The Company previously reported the issuance as 140,000 shares of common stock. The financial statements have been restated for the years ended June 30, 1999 and 1998 to reflect the issuance of an additional 2,000 shares of common stock related to services previously rendered. In January 2000, the board of directors approved a compensation agreement that included the issuance of a total of 400,000 shares of common stock to two shareholders, 200,000 to each, for services rendered which were valued at $1,000. The shares were issued in August 2000 for $.0025 per share. In November 2003, the board of directors approved the issuance of 16,128,000 shares of common stock to three individuals ("the Purchasers") for $100,000, pursuant to a certain Stock Purchase Agreement. In connection with this stock sale, the Company issued a promissory note for $100,000 to the former president and director of the Company and 450,000 shares of common stock to the former president and director of the Company, and a shareholder, in exchange for a certain letter of indemnification. The letter of indemnification holds the Company and the Purchasers harmless from and against any and all liabilities of any type or nature, whatsoever, of the Company that existed prior to the closing of the Stock Purchase Agreement, including fees of legal counsel for the Company in connection with the completion of the Stock Purchase Agreement and the promissory note due to the former president and director of the Company. In December 2003, the Company issued 1,460,000 shares of its common stock at $0.25 per share for cash proceeds of $365,000. In January 2004, the Company issued an additional 200,000 shares of its common stock at $0.25 per share for cash proceeds of $50,000. During the three months ended March 31, 2004, the Company issued 350,000 shares of its common stock at $0.25 and $1.00 per share for net cash proceeds of $200,000. During the three months ended June 30, 2004 the Company issued an additional 50,000 shares of its common stock at $1.00 per share for net cash proceeds of $50,000. Stock Splits - On December 9, 1988, the Company effected a 5-for-1 forward stock split. On April 23, 1997, the Company effected a 248.399-for-1 reverse stock split. On April 4, 2002, the Company effected a 4-for-1 forward stock split. The financial statements for all periods presented have been restated to reflect these stock splits. 8 NOTE 4 - NOTE PAYABLE In connection with the Company's sale of 16,128,000 shares of its common stock in November 2003, the Company issued a promissory note to the former president and director of the Company in the amount of $100,000. The Company received a letter of indemnification which holds the Company and the Purchasers harmless from and against any and all liabilities of any type or nature, whatsoever, of the Company that existed prior to the closing of the Stock Purchase Agreement, including fees of legal counsel for the Company in connection with the completion of the Stock Purchase Agreement and the promissory note due to the former president and director of the Company. The promissory note dated November 18, 2003 has a term of 90 days and bears interest at 10% per annum. The Company repaid the promissory note in full on February 18, 2004. NOTE 5 - INTANGIBLE ASSET In connection with the Company's stock sale of 16,128,000 shares of its common stock in November 2003, the Company issued a promissory note of $100,000 and 450,000 shares of its common stock in exchange for a letter of indemnification from the Company's former President and shareholder. The 450,000 shares of common stock were valued by the Company at $0.0062 per share. The letter of indemnification holds the Company and the Purchasers harmless from and against any and all liabilities of any type or nature, whatsoever, of the Company that existed prior to the closing of the Stock Purchase Agreement, including fees of legal counsel for the Company in connection with the completion of the Stock Purchase Agreement and the promissory note due to the former president and director of the Company. The Company has recorded the letter of indemnification as an intangible asset of $102,790 based on the total fair market value of the promissory note and common stock issued. The Company is amortizing the intangible asset using the straight-line method over the enforceable life of the letter of indemnification of two years. During the six months ended June 30, 2004 and 2003, the Company incurred amortization expense of $25,698 and nil, respectively. NOTE 6 - INCOME TAXES The Company has not made a provision for income taxes because of its financial statement and tax losses since its inception on July 31, 1984. A valuation allowance has been used to offset the recognition of any deferred tax assets related to net operating loss carryforwards due to the uncertainty of future realization. The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" which requires the liability approach for the effect of income taxes. At June 30, 2004 and December 31, 2003, the Company had unused operating loss carryforwards of approximately $1,030,000 and $108,000, respectively, which may be applied against future taxable income in various years through 2023. If certain substantial changes in the Company's ownership should occur, there could be an annual limitation on the amount of net operating loss carryforwards which can be utilized. The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company and other future events, the effects of which cannot be determined. Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect of the loss carryforwards, therefore, no deferred tax asset has been recognized for the loss carryforwards. The net deferred federal and state tax assets were approximately $444,000 and $41,000 at June 30, 2004 and December 31, 2003, respectively, with an offsetting valuation allowance of the same amount resulting in a change in the valuation allowance of approximately $403,000 during the six months ended June 30, 2004. 9 NOTE 7 - RELATED PARTY TRANSACTIONS Due to/from Shareholders and Officers - During the six months ended June 30, 2004 and 2003, the Company's President paid expenses on behalf of the Company totaling nil and $1,676, respectively. At June 30, 2004 and December 31, 2003, the total amount due to the Company's president was nil and $38,031, respectively. At June 30, 2004 and December 31, 2003, the total amount due from the Company's officers and majority shareholders was nil and $60,000, respectively. The amounts due from shareholders and officers bear no interest and are due when funds are available. NOTE 8 - LOSS PER SHARE The following data show the amounts used in computing loss per share for the periods presented:
Three Months Ended Six Months Ended -------------------------------- ------------------------------------ June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003 ------------ ------------ ------------ ------------ (Unaudited) (Unaudited) Loss from continuing operations available to common shareholders (numerator) $ (430,608) $ (17,818) $ (922,740) $ (19,797) Weighted average number of common shares used in loss per share during the period (denominator) 19,590,000 1,342,000 19,510,778 1,342,000
Dilutive loss per share was not presented, as the Company had no common equivalent shares for all periods presented that would effect the computation of diluted loss per share. NOTE 9 - COMMITMENTS AND CONTINGENCIES Contingencies - In the ordinary course of business, the Company is subject to legal proceedings and claims. The Company is not currently aware of any legal proceedings or claims that the Company believes are likely to have a material adverse effect on the Company's financial position and results of operations. Commitments - The Company leases its operating facility under an operating lease agreement. The Company's facility lease expires in January 2006. Future minimum lease payments under the non-cancelable lease agreement as of June 30, 2004 are: 10 June 30, -------- 2005 $ 51,960 2006 30,310 --------------- $ 82,270 --------------- NOTE 10 - SUBSEQUENT EVENT In July 2004, the Company issued 100,000 shares of its common stock at $0.50 per share for net cash proceeds of $50,000. 11 Introduction As used in this report, the terms "we", "us", "our", "the Company" or "Integrated Healthcare Holdings" mean Integrated Healthcare Holdings, Inc., unless otherwise indicated. In the first quarter of 2004, the Board of Directors and shareholders of the Company approved a change in the Company's name to "Integrated Healthcare Holdings, Inc." from "First Deltavision, Inc." to better reflect our planned operations. The name change became effective on May 18, 2004. This Quarterly Report on Form 10-QSB contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks discussed under the caption "Risk Factors" in our Transition Report on Form 10-K filed on April 15, 2004, that may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Item 2. Management's Discussion and Analysis or Plan of Operation. Our plan of operation over the next 12 months is to acquire hospitals and healthcare facilities by targeting hospitals that are financially distressed and underperforming and whose owners are seeking to sell or lease their operations. We intend to finance our acquisitions through a combination of cash raised through equity offerings and borrowings, and stock issued by the Company. Our strategy also includes the possibility of partnering with one or more external real estate investors to help fund the real estate component of acquisitions. Under such an arrangement, the real estate investor would acquire and manage the real estate assets which typically are acquired along with a facility. The investor may self-finance the real estate acquisition or bring in outside investors in a tax-advantaged structure such as a real estate investment trust or "REIT". Management feels that partnering with an external real estate investor may allow us to undertake acquisitions that we could not otherwise finance, and to focus on management's core skills in hospital and healthcare management. We have identified a number of hospitals and healthcare facilities as potential acquisition targets. We are currently exploring, among other things, the possible acquisition of one or more of the hospital assets that are being divested by Tenet Healthcare Corporation. As of the date of this report, we have no agreements relating to acquisitions. During the three months ended June 30, 2004, the Company earned no revenues. Over the next twelve months we will require additional cash financing, whether or not we complete an acquisition of a healthcare facility. The Company generated losses from continuing operations of $430,608 during the three months ended June 30, 2004. In addition, the Company had negative working capital of $500,201 at June 30, 2004. If we do not acquire a facility, we estimate that we can satisfy our cash requirements for approximately two months following the date of this report, after which we will need to raise additional funds. If we acquire a facility, we expect to seek additional financing in connection with the acquisition. There are no assurances that we will be able to obtain funds required for our continued operations. In such event that we do not raise sufficient funds, we may be forced to scale down or cease our operations. 12 Currently there are four full time employees of the Company. We do not expect any material changes in the number of employees over the next 12 months, unless we are successful in acquiring a healthcare facility, in which case our employment base will increase significantly. As of the June 30, 2004, the Company had no off-balance sheet arrangements, as defined by Securities and Exchange Commission Regulation S-B Item 303(c). Item 3. Controls and Procedures. The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 15d-15(e). The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company's desired disclosure control objectives. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company's certifying officers have concluded that the Company's disclosure controls and procedures are effective in reaching that level of assurance. As of the end of the period of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation. PART II. OTHER INFORMATION. Item 1. Legal proceedings We are not a party to any legal proceedings. Item 2. Changes in Securities. None. 13 Item 3. Defaults upon senior securities. None. Item 4. Submission of matters to a vote of security holders None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit ------- Number Description ------ ----------- 10.1 Employment Agreement with Bruce Mogel, dated January 1, 2004, incorporated herein by reference from Exhibit 10.1 to the Company's Transition Report on Form 10-K filed with the Commission on April 15, 2004. 10.2 Employment Agreement with Larry B. Anderson, dated January 1, 2004, incorporated herein by reference from Exhibit 10.2 to the Company's Transition Report on Form 10-K filed with the Commission on April 15, 2004. 10.3 Employment Agreement with James T. Ligon, dated January 1, 2004, incorporated herein by reference from Exhibit 10.3 to the Company's Transition Report on Form 10-K filed with the Commission on April 15, 2004. 10.4 Securities Purchase Agreement by and among Integrated Healthcare Holdings, Inc., Mogel Management Group, Inc., and the stockholders of Management Group, Inc., dated as of January 1, 2004, incorporated herein by reference from Exhibit Number 2.1 to the Company's Current Report on Form 8-K filed with the Commission on January 16, 2004. 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K. None. 14 SIGNATURE In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INTEGRATED HEALTHCARE HOLDINGS, INC. Dated: August 13, 2004 By: /s/ James Ligon ------------------------------------- James Ligon Chief Financial Officer and Secretary (Principal Financial Officer) 15 EX-31.1 2 v05786_ex31-1.txt EXHIBIT 31.1 CERTIFICATION PURSUANT TO RULE 13a-14 AND 15d-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Bruce Mogel, Chief Executive Officer of Integrated Healthcare Holdings, Inc., certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of Integrated Healthcare Holdings, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated, or caused such disclosure controls and procedure to be designed under our supervision, subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Dated: August 13, 2004 By: /s/ Bruce Mogel ----------------------- Bruce Mogel Chief Executive Officer EX-31.2 3 v05786_ex31-2.txt EXHIBIT 31.2 CERTIFICATION PURSUANT TO RULE 13a-14 AND 15d-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, James Ligon, Chief Financial Officer of Integrated Healthcare Holdings, Inc., certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of Integrated Healthcare Holdings, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated, or caused such disclosure controls and procedure to be designed under our supervision, subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Dated: August 13, 2004 By: /s/ James Ligon ----------------------------- James Ligon Chief Financial Officer EX-32.1 4 v05786_ex32-1.txt EXHIBIT 32.1 CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Integrated Healthcare Holdings, Inc. (the "Company") on Form 10-QSB for the quarter ended June 30, 2004, as filed with the Securities and Exchange Commission (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company at the dates and for the period indicated. This Certificate has not been, and shall not be deemed, "filed" with the Securities and Exchange Commission. Dated: August 13, 2004 By: /s/ Bruce Mogel Bruce Mogel Chief Executive Officer ----------------------- EX-32.2 5 v05786_ex32-2.txt EXHIBIT 32.2 CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Integrated Healthcare Holdings, Inc. (the "Company") on Form 10-QSB for the quarter ended June 30, 2004, as filed with the Securities and Exchange Commission (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company at the dates and for the period indicated. This Certificate has not been, and shall not be deemed, "filed" with the Securities and Exchange Commission. Dated: August 13, 2004 By: /s/ James Ligon ----------------------- James Ligon Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----