10QSB/A 1 int10qsb602.txt 10QBS FOR 2ND QUARTER 2002 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-QSB ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2002 ( ) 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: 333-57780 INTERCARE.COM-DX,INC. ---------------------- (Exact Name of Registrant as Specified in its Charter) CALIFORNIA 95-4304537 ------------------------------- ------------------------ (State of Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 900 WILSHIRE BOULEVARD, SUITE 500, LOS ANGELES, CALIFORNIA 90017 ---------------------------------------------------------------- (Address of Principal Executive Offices) (213) 627-8878 ---------------------------------------------------------------- (Registrant's telephone number, including area code) N/A ---------------------------------------------------------------- (Former name, former address and formal fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and, (2) has been subject to such filing requirements for the past 90 days. Yes ( X ) No ( ) As of June 30, 2002, InterCare.com-dx, Inc., Registrant had 12,242,792 shares of its no par value common stock outstanding. There is currently no public market for this stock. Page 1 of 13 sequentially numbered pages Form 10-QSB Second Quarter 2002 1 Intercare.com-dx, Inc. INDEX PAGE ---- PART I. FINANCIAL INFORMATION Balance Sheets - June 30, 2002 3 Statements of Operations for the six Months ended June 30, 2002 4 Statement of Cash Flows for the Three Months ended June 30, 2002 5 Notes to Financial Statements 6-8 Company Overview 9 Management's Discussion and Analysis of Financial Condition and Results of Operations 10-12 PART II OTHER INFORMATION Additional Information 12 Signature 12 2 INTERCARE.COM-DX, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)
Balance Sheet As At June 30, 2002 2001 ====== ====== ASSETS Current assets Cash $ 4,936 $ 5,512 Accounts Receivable (Note 1 ) 1,385,850 1,385,850 Less: Allow for Doubtful Accounts 0 0 Inventories 52,211 302,211 Prepaid Expenses 0 (50) --------- ------ Total Current Assets.. . . . . . . . . . . . 1,442,997 1,693,523 --------- ------ Property, Plant, and Equipment Net Accumulated Depreciation (Note 1). . . . . . 0 9,070 Other Assets Cash Advance 500 500 Deferred Public Offering Costs 65,332 34,836 ---------- -------- Total Assets 1,508,829 1,737,929 ========== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts Payable (Note 1) . . . . . . . . . . . 1,259,986 1,514,302 --------- -------- Total Current Liabilities . . . . . . . 1,259,986 1,514,302 --------- -------- Long term liabilities . . . . . .. . . . . 26,500 13,500 --------- -------- Total Liabilities . . . . . . . . . . 1,286,486 1,527,802 --------- -------- Liabilities and Stockholders' Equity Stockholders' Equity Common stock (100,000,000 shares authorized no par value ; 12,230,902 shares issued and Outstanding as of June 30, 2001 and 12,242,972 As of June 30, 2002) (Note 2) . . . . . . . . . . 710,078 650,628 Accumulated Deficit (487,735) (440,501) ---------- ---------- Total Stockholders' Equity . . . . . . . 222,343 210,127 ---------- --------- Total Liabilities & Equity. . . . . . . . . . . $ 1,508,829 $1,737,929 ========== =========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS 3 INTERCARE.COM-DX, INC. Consolidated Statement - Unaudited STATEMENT OF OPERATIONS
For the Six Months ended June 30, 2002 2001 ====== ===== Revenues . . . . . . . . $ 0 $ 334,199 Less: Cost of Revenues . 16,438 (126,897) ------ ------- Gross Margin . (16,438) 207,302 Operating Expense. . . . (66) 462,321 Other Income and Expense 364,637 1,617 ---------- -------- Net Income . . $ 348,133 $(253,402) ========= ======== Weighted average number of shares 11,621,396 12,230,902 Weighted average earnings per share $ (0.0) $ (0.0)
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS 4 INTERCARE.COM-DX, INC. STATEMENT OF CASH FLOW UNAUDITED
For the Three Months ended June 30, 2002 2001 ==== ==== CASH FLOWS FROM OPERATING ACTIVITIES Net Income (loss). . . . . . . . . . . . . . . $ 348,133 $(253,402) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation Expense 2,986 (Increase) Decrease in Accounts receivables . . . . . . . . . . . . . 3,834 Inventories. . . . . . . . . . . . . . . . . . (235,540) Prepaid Expenses . . . . . . . . . . . . . . 50 Increase(Decrease) in Accounts Payables. . . . . . . . . . . . . . . 495,012 -------- -------- NETCASH USED IN OPERATING ACTIVITIES . . . . . . . . 348,133 12,940 CASH FLOW FROM INVESTING ACTIVITIES Deferred Public Offering . . . . . . . . . . . - - Acquisition of Fixed Assets. . . . . . . . . . (2,411) --------- --------- NET CASH USED IN INVESTING ACTIVITES . . . . . . . . (2,411) CASH FLOW FROM FINANCING ACTIVITIES Loan From MH . . . . . . . . . . . . . . . . 5,000 13,500 Repayment of debt . . . . . . . . . . . . . . . (351,524) (21,836) Proceeds from long term debt. . . . . . . . . . 358 -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . (351,524) (7,978) Increase (Decrease) in cash . . . . . . . . . . 1,609 2,551 CASH AT BEGINNING OF PERIOD. . . . . . . . . . . . . 3,327 2,961 ----------- ---------- CASH AT END OF PERIOD. . . . . . . . . . . . . . . . $ 4,936 $ 5,512 =========== ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS 5 Notes to the Financial Statements Note 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES InterCare.com-dx, Inc. formerly known as Inter-Care Diagnostics, Inc., is organized in the State of California to pursue bio-medical software development, as well as Internet based healthcare transactions, contents and programs development. The Company was originally incorporated in 1991 for the purpose of operating a medical diagnostics laboratory and engaging in various medical services to clients. On June 30, 2001, the company discontinued its sale of Medmaster software at the request of Meridian Holings, Inc., and instead embarked upon a joint development effort with Meridian Holdings, Inc., for a new replacement software known as ICE(tm)(InterCare Clinical Explorer), that is scheduled to be released in the third quarter of 2002, pending completion of the beta testing. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Account Receivable The Company recognizes account receivable to the extent that revenues have been earned, and collections are reasonably assured. Inventory Inventories consists of purchased computer and software products, stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method of valuation. Property and Equipment Property and equipment is recorded at cost. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments are capitalized. When items of property are sold or retired, the related cost and accumulated depreciation is removed from the accounts and any resultant gain or loss is included in the results of operation. Capital assets are depreciated by the straight-line method over estimated useful lives of the related assets, normally five (5) to seven (7) years. Property and equipment consists of the following as of June 30, 2002 and 2001:
2002 2001 ===== ===== Computer Hardware & Software $68,264 $68,770 Less: Accumulated Depreciation 68,264 59,700 ------- ------- $ - $11,406 ======== =======
Advertising The company has the policy of expensing advertising costs as incurred 6 Stock-based Compensation Non Employee Stock-based compensation plans are recorded at fair value measurement criteria as described in SFAS 123, "Accounting for Stock-Based Compensation", and EITF 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services" Employee Stock-based compensation plans are accounted for, using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock issued to Employees". Under this method, compensation cost is recognized based on the excess of the fair value at the grant dates for awards under those plans, as determined by the Company's officers and directors. Recognition of Revenues. Revenues from sale of software are recorded upon delivery and installation of software at customer sites. The company provides a limited amount of post-contract customer support (PCS) at no additional charge Pursuant to SOP 97-2, the value of the PCS component of any sale is estimated based on vendor specific evidence of fair value (i.e. catalogue price). Revenues in respect of the value of the PCS, are recognized as earned ratably over the PCS period (generally 90 days). The company provides software implementation and professional services for all its enterprise software sold to its clients on a contractual basis. Professional services are billed on either an hourly rate or flat rate basis, and revenues recognized ratably over the service period, or upon completion of related services. Reimbursable expenses incurred on behalf of the customer are billed to the customer, and credited against the applicable expense. The customer has the option to purchase an implementation services from the Company. Revenues from implementation services contracts are deferred and recognized as earned as services are performed in contracts with hourly billing terms; and as related services are performed or expiration of the terms of the contract in flat rate contracts. The customer has the option to purchase a maintenance contract from the Company. Revenues from maintenance component are deferred and brought recognized income ratably over the maintenance service period. Currently, there are no such contracts in existence. The Company's proposed maintenance charges as based on vendor specific evidence of fair value. Software Development Cost Software development costs are charged to current operations Fair Value of Financial Instruments and Concentration of Credit Risk. The carrying amounts of cash, receivables, prepaid banner advertisements fees by Meridian Holdings, Inc. (affiliated company), accounts payables and accrued liabilities approximates fair value because of the immediate or short-term maturity of these financial instruments. Deferred Costs Related To Proposed Public Offering. Costs incurred in connection with the proposed public offering of common stock have been deferred and will be charged against capital if the offering is successful or against operations if it is unsuccessful. 7 The estimated expenses of this offering in connection with the issuance and distribution of the securities being registered, all of which are to be paid by the Registrant, excluding commissions and fees payable to the Escrow Agent and broker/dealers are as follows:
Registration Fee $ 6,600.00 Legal Fees and Expenses 42,233.59 Accounting Fees and Expenses 5,750.00 Printing 7,077.00 Miscellaneous Expenses 3,671.00 --------- Total $65,331.59 ==========
Basic and Diluted Net Loss Per Common Share. In accordance with SFAS No. 128, "Computation of Earnings Per Share," basic Earnings/(loss) per share is computed by dividing the net earnings available to Common stockholders for the period by the weighted average number of common shares outstanding during the period. For purposes of computing the weighted average number of shares, all stock issued with regards to the founding of the Company is considered to be "cheap stock" as defined in SEC Staff Accounting Bulletin 4D and is therefore counted as outstanding for the entire period. Common equivalent shares, consisting of incremental common shares issuable upon the exercise of stock options and warrants are excluded from diluted earnings per share calculation if their effect is anti-dilutive. Note 2. RELATED PARTY TRANSACTIONS Mr. Russ Lyon recently waived his rights to exercise said option during the first quarter of 2001, in lieu of 200,000 shares of the registrant at zero par value, to be issued upon the effectiveness of the registrants registration statement. The shares will be issued pro-rata to the two years of the employment agreement. The Company recorded an extra-ordinary income of $350,000, due to the sell of its intellectual property rights to the source code and proto-type software commonly know as ICE(tm) to Meridian Holdings, Inc, an affiliated Company, with approximately 33% equity interest in the registrant, in exchange for long term debt reduction and prepayment for software document cost. The source code and the prototype software sold to Meridian Holdings, Inc., will be utilized to develop a replacement software program for the MedMaster product, which will satisfy the needs of our current and future customers. 8 InterCare.com-dx, Inc. Business Overview InterCare.com-dx, Inc., ("InterCare") formerly known as Inter-Care Diagnostics, Inc., is organized in the State of California. We are an innovative software products company specializing in state-of-the-art enterprise solutions for the healthcare IT market. The Company developed the Mirage Systems Multimedia Biofeedback software program in 1994. This is a cross-platform program available in both Microsoft Windows 3.X including windows 95;98 and Apple Macintosh platforms. This software became the first United States FDA approved software program for neuromuscular re-education and biofeedback training. The Company also has four other software products in the market including the "Body Pain Trigger Points Program", one of our best selling software products, with over 20,000 copies sold. The Company intends to convert all its software programs to run in all the popular operating systems available, including but not limited to Microsoft Windows, Macintosh and Linux or Unix operating systems. The company is currently developing the next generation of clinical documentation, practice management and data acquisition software program, with multi-tasking, multi-lingual and full multi-media implementation. This soon to be released software application, will replace MedMaster product line, which has been pulled from the market by the registrant at the request of Meridian Holdings, Inc., our affiliated company. The Ice(tm) software which will be is currently under-going Beta testing, will be released during the third Quarter of 2002, assuming no further program-bugs were identified that will materially impact the usability of the application by our cutstomers. Properties The Company's corporate offices are located at 900 Wilshire Boulevard, Suite 500, Los Angeles, California 90017. The Company is sharing an office space with Meridian Holdings, Inc., an affiliated Company, whereby the Company is required to pay 1/5 of the monthly rent of $4,791.00. Other property and equipment are stated at cost. Acquisitions having a useful life in excess of one (1) year are capitalized. Repairs and maintenance are expensed in the year incurred. Capital assets are depreciated by the straight-line method over estimated useful lives of the related assets. Legal Proceedings The Company knows of no litigation pending, threatened or contemplated, or unsatisfied judgments against it, or any proceedings in which the Company is a party. The Company knows of no legal actions pending or threatened or judgment entered against any officer or director of the Company in his capacity as such. There has been to date no petition under the bankruptcy act or any state insolvency law filed by or against the Company or its officers, directors or other key personnel. RISKS ASSOCIATED WITH MANAGING GROWTH The Company's anticipated level of growth, should it occur, will challenge the Company's management and its sales and marketing, customer support, research and development and finance and administrative operations. The Company's future performance will depend in part on its ability to manage any such growth, should it occur, and to adapt its operational and financial control systems, if necessary, to respond to changes resulting from any such growth. There can be no assurance that the Company will be able to successfully manage any future growth or to adapt its systems to manage such growth, if any, and its failure to do so would have a material adverse effect on the Company's business, financial condition and results of operations. 9 MARKET FOR COMMON STOCK No market exists for the Company's Common Stock at the present time. An application has been filed by our Market Makers to NASD, to begin trading of our Common Stock on the OTCBB. We plan to list our common stock on the Bulletin Board Exchange(SM) or BBX, a listed market place, with qualitative listing standards but with no minimum share price, income, or asset requirements therefore allowing entrance to a wide array of listings. According to NASD, companies trading on the BBX will be differentiated from those over-the-counter in that their market symbol will begin with a the letters "XB", and unlike the current OTCBB issuers will be allowed to choose their own three-letter market symbol. In addition the BBX will have an electronic trading system to allow order negotiation and automatic execution. The current OTCBB will be phased out in 2003 according to NASD, and in its place will be the BBX. There can be no assurance that we will meet the listing requirements of BBX exchange when such listing requirements becomes available. SELECTED FINANCIAL DATA The Company had no revenues from operations in the quarter ended June 30, 2002, this compares moderately with the comparable period in 2001. The entire quarter was devoted (in conjunction with its affiliated company, Meridian Holdings, Inc.(MEHO) to developing and testing its new family of software. The Company is nearing completion of the beta testing phase and anticipates to begin licensing in the third quarter of 2002. The selected financial data set forth above should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements notes thereto. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our financial statements and notes, as well as the other information included elsewhere in this prospectus. Our discussion contains forward-looking statements that involve risks and uncertainties, including those referring to the period of time the Company's existing capital resources will meet the Company's future capital needs, the Company's future operating results, the market acceptance of the services of the Company, the Company's efforts to establish and the development of new services, and the Company's planned investment in the marketing of its current services and research and development with regard to future endeavors. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including: domestic and global economic patterns and trends. LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY Long-term cash requirements, other than normal operating expenses, are anticipated for the continued development of the Company's business plans. The Company will need to raise additional funds from investors in order to complete these business plans. If we need additional capital to fund our operations, there can be no assurance that such additional capital can be obtained or, if obtained, that it will be on terms acceptable to us. The incurring or assumption of additional indebtedness could result in the issuance of additional equity and/or debt which could have a dilutive effect on current shareholders and a significant impact on our operations. RESULTS OF OPERATIONS We have experienced, and expect to continue to experience, seasonality in our license revenues and results of operations, with a disproportionately greater 10 amount of our license revenues for any fiscal year being recognized in our fourth fiscal quarter. Our product is still not officially released, all our operational efforts a currently concentrated in completion of the development, debugging and system level testing prior to official release of ICE(tm), the next generation of an inpatient/out patient clinical documentation and decision support software. Furthermore, our quarterly revenues could be significantly affected based on how applicable accounting standards are amended or interpreted over time. Due to these and other factors, we believe that period-to-period comparisons of our results of operations are not meaningful and should not be relied upon as indicators of our future performance. It is possible that in some future periods our results of operations may be below the expectations of public market analysts and investors. If this occurs, the price of our common stock may decline. REVENUES The company is currently developing the next generation of clinical documentation, practice management and data acquisition software program, with multi-tasking, multi-lingual and full multi-media implementation. This soon to be released software application, will replace MedMaster product line, which has been pulled from the market by the applicant at the request of Meridian Holdings, Inc., an affiliated company. For six months period ended June 30,2002, the registrant generated approximately $0.00 in total revenue, as oppose to $334,199 revenue for comparable period in 2001. This decrease in revenue is due to the withdrawal of MedMaster software from the market. A replacement software program known as ICE(tm) is expected to be released during the of third quarter 2002. SALES AND MARKETING The registrant is focusing all its resources in research and development of the next generation of software applications and utility tools for the healthcare industry, as a result no sales or marketing expenses were incurred during the three month period ended June 30, 2002. PRODUCT AND CONTENT DEVELOPMENT Software products and Internet content development expenses is anticipated to increase significantly during the next coming year, due to website redesign and other Internet initiative launch costs, consisting primarily of personnel and consulting costs. The Company projects to spend over $1,250,000 during the next 12 months to fund project and content development. This is contingent upon the Company's ability to raise funds from investors. GENERAL AND ADMINISTRATIVE General and administrative expenses for the second quarter ended June 30, 2002 was $1,609 compared to $158,299 during the comparable period in 2001. For the year-to-date general administrative expenses, the Company had incurred $16,438 compared to $285,196 in the comparable period in 2001. Decrease in administrative expense is due to a waiver by Meridian Holdings, Inc. of future payments for administrative services by the registrant to offset amounts previously paid for MedMaster Software maintenance and enhancement to Corsys Group (Israel) Limited, a wholly owned subsidiary of Meridian Holdings, Inc., that was not delivered in the amount of $325,000, due to the abandonment of Medmaster Software by Meridian Holdings, Inc., following a Georgia (Altanta USA) Court decision in 2001 to award the said asset to Lockheed Martin Owego, New York, one of Sirius Computerised Technology (Israel), Limited creditors. The Company anticipates future increases in general and administrative expenses as it embarks on aggressive product development, sales and marketing. 11 OPERATING LOSS As a result of the factors described above, Company expects further increases in operating expenses for the year 2002, assuming additional funding is raised from this offering to be used in financing future operating costs. There is no guarantee that the Company will be able to raise additional funds to finance all the anticipated operating costs. In absence of such funds being available, the Company may not be able to operate, and this could have a material impact in the overall execution of the Company's business plan. Extra Ordinary Income The Company recorded an extra-ordinary income of $350,000, due to the sell of its intellectual property rights to the source code and proto-type software commonly know as ICE(tm) to Meridian Holdings, Inc, an affiliated Company, with approximately 33% equity interest in the registrant, in exchange for long term debt reduction and prepayment for software document cost. The source code and the prototype software sold to Meridian Holdings, Inc., will be utilized to develop a replacement software program for the MedMaster product, which willsatisfy the needs of our current and future customers. Net Income The Company had a net income of $ 348,133 for six months ended June 30, 2002, compared with net loss of $253,402 in the comparable period in 2001. The increase in net income was due to the extra-ordinary income described above. PLAN OF OPERATIONS The Company is also planning to embark on an advertisement campaign over the next several months in news media, consumer and healthcare journals of all its products and services upon release of the Ice(tm) software during the third quarter of 2002, assuming successful completion of the beta testing. There is no assurance that such advertisement campaign will yield any dividend. PART II - OTHER INFORMATION None SIGNATURES Pursuant to the requirements of Section 12 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. INTERCARE.COM-DX, INC. DATE: August 13, 2002 By: /s/ Russ Lyon ------------------- Russ Lyon President/Chief technology Officer 12