HEALTHBRIDGE, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and six months ended June 30, 2006 and 2005 and Cumulative Amounts
Three months ended June 30, Six months ended June 30, Cumulative
2006 2005 2006 2005 Amounts
--------------- --------------- ---------------- ------------- ----------------
General and administrative expenses $ 520,766 $ 63,772 $ 619,572 $ 117,023 $ 3,945,841
Loss from operations (520,766) (63,772) (619,572) (117,023) (3,945,841)
Other income (expense):
Interest expense 1,212,034) (7,907) (1,277,367) (15,956) (1,618,504)
Interest income 119,227 412 191,380 517 223,558
--------------- --------------- ---------------- ------------- ----------------
Loss before provision for income taxes
and discontinued operations 1,613,572) (71,267) (1,705,558) (132,462) (5,340,786)
Provision for income taxes - - - - -
--------------- --------------- ---------------- ------------- ----------------
Loss before discontinued operations (1,613,572) (71,267) (1,705,558) (132,462) (5,340,786)
Gain (loss) from discontinued operations, net of tax - (259,659) - (259,659) (3,407,279)
--------------- --------------- ---------------- ------------- ----------------
Net loss before cumulative effect
of accounting change (1,613,572) (330,926) (1,705,558) (392,121) (8,748,065)
Cumulative effect of accounting change, net of tax - - - - (102,500)
--------------- --------------- ---------------- ------------- ----------------
Net loss (1,613,572) (330,926) (1,705,558) (392,121) (8,850,565)
=============== =============== ================ ============= ================
=============== =============== ================ ============= ================
Other Comprehensive Income
Foreign currency translation adjustment (3,095) 5,265 754 9,190 15,124
--------------- --------------- ---------------- ------------- ----------------
Net Comprehensive Income (Loss) $ (1,616,667) $ (325,661) $ (1,704,804) $ (382,931) $ (8,835,441)
=============== =============== ================ ============= ================
Loss per share from Continuing Operations basic/diluted $ (0.09) $ (0.01) $ (0.10) $ (0.02)
=============== =============== ================ =============
Net Loss per common share - basic and diluted $ (0.09) $ (0.04) $ (0.10) $ (0.05)
=============== =============== ================ =============
Weighted average common shares -
Basic and diluted 17,485,400 7,870,500 16,985,900 7,400,900
=============== =============== ================ =============
The accompanying notes are an integral part of these financial statements.
FA-3
HEALTHBRIDGE, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three and six months ended June 30, 2006 and 2005 and Cumulative Amounts
Three months ended June 30, Six months ended June 30, Cumulative
2006 2005 2006 2005 Amounts
-------------- ------------- -------------- ----------- -------------
Cash flows from operating activities:
$
Net loss $ (1,613,572) (330,926) $ (1,705,558) $ (392,121) $ (8,850,565)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock and stock option compensation expense 1,625,755 - 1,625,755 - 3,215,619
Depreciation and amortization - 10,302 1,019 20,545 152,757
Discontinued operations - 262,890 - 262,890 2,542,150
Gain on write-off of liabilities - - - - (96,270)
(Increase) decrease in:
Accounts receivable and prepaid expenses (124,152) 2,785 (182,977) - (194,074)
Increase (decrease) in:
Accounts payable (28,044) 11,003 (94,027) 22,374 525,079
Accrued expenses 36,154 7,127 101,471 14,386 394,698
Related party payables 11,097 (6,230) 25,000 (11,325) 138,812
-------------- ------------- -------------- ----------- -------------
Net cash used in operating activities (92,762) (43,049) (229,317) (83,251) (2,171,795)
-------------- ------------- -------------- ----------- -------------
Cash flows from investing activities:
Proceeds paid for promissory notes Receivable (1,036,756) - (2,169,076) - (5,244,076)
Acquisition of intangible assets - - - - (150,398)
Acquisition of property and equipment - - - - (3,740)
-------------- ------------- -------------- ----------- -------------
Net cash used in investing activities (1,036,756) - (2,169,076) - (5,398,214)
-------------- ------------- -------------- ----------- -------------
Cash flows from financing activities:
Proceeds from notes payable - - - - 692,999
Issuance of common stock - 50,000 - 125,000 3,081,233
Common stock subscriptions 7,253,220 - 7,253,220 - 7,253,220
Commissions paid to raise convertible debentures (75,000) - (75,000) - (116,673)
Proceeds from convertible debentures - - - - 3,654,173
Payments on notes payable - - - - (194,048)
-------------- ------------- -------------- ----------- -------------
Net cash provided by financing activities 7,178,220 50,000 7,178,220 125,000 14,370,904
-------------- ------------- -------------- ----------- -------------
Change in accumulated other comprehensive income (3,095) 5,265 754 9,190 15,124
-------------- ------------- -------------- ----------- -------------
Net increase (decrease) in cash 6,045,606 12,216 4,780,580 50,939 6,816,018
Cash, beginning of period 770,412 76,009 2,035,438 37,286 -
-------------- ------------- -------------- ----------- -------------
Cash, end of period $ 6,816,018 $ 88,225 $ 6,816,018 $ 88,225 $ 6,816,018
============== ============= ============== =========== =============
The accompanying notes are an integral part of these financial statements
FA-4
HEALTHBRIDGE, INC. AND SUBSIDIARIES(A Development Stage Company)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2006(Unaudited)
Note 1 — Organization and Summary of Significant Accounting Policies
Organization
The consolidated financial statements consist of Healthbridge, Inc. (“Healthbridge”) and its wholly owned subsidiary, Healthbridge AG (collectively “the Company”). Healthbridge was organized on February 17, 1993 (date of inception) under the laws of the State of Texas. Healthbridge AG was formed as a German subsidiary during 2002.
On January 25, 2002, the Company acquired certain patents related to the infectious medical waste sterilization and disposal technologies developed in Germany. The Company’s operations consisted primarily of (1) developing a marketing strategy, (2) pursuing and assembling a management team, and (3) obtaining sufficient working capital through loans from shareholders and debt and equity financing. During the fourth quarter of 2005, the Company decided to discontinue all operations connected to the Valides® Modular Infectious Waste Disposal System and the Medides System due to the unsatisfactory level of revenue generated to date.
On November 21, 2005, the Company executed a letter of intent to acquire Providence Exploration, LLC (“Providence”), as a wholly owned subsidiary in a stock for ownership exchange. On April 10, 2006 the Company executed a Securities Exchange Agreement, whereby the Company intends to issue 4,286,330 shares of common stock in exchange for 100% of the issued and outstanding membership units of Providence and a Note Exchange Agreement, whereby the Company intends to issue 12,213,670 shares of common stock to the holders of certain outstanding promissory notes issued by Providence in exchange for the promissory notes, subject to shareholder approval. The closing is further conditioned upon the Company’s commitment to loan Providence up to $5,000,000, and the concurrent closing of the Securities Exchange Agreement and the Note Exchange Agreement.
Providence is in involved in exploration activities for the recovery of oil and gas from the Marble Falls and Barnett Shale formations in the Fort Worth basin and from the Ellenburger carbonate, Strawn carbonate and Pennsylvanian-Wolfcamp sandstone reservoirs in Val Verde County. The Fort Worth basin prospects include approximately 7,374 acres of oil and gas leases and the Val Verde County prospects include approximately 12,832 acres of oil and gas leases. Providence has a 90% working interest and its joint venture operating partner, Harding Company, has a 10% working interest in the Fort Worth basin projects. On the Val Verde County leases Providence has an 82.5% working interest and Harding has a 5% working interest. Providence also owns and operates one drilling rig and two well service rigs based in Young County, Texas.
As of June 30, 2006, the Company was in the process of completing a private placement of up to $10,000,000 in equity to fund the exploration and development of Providence’s leased properties.
The Company is considered a development stage company as defined in SFAS No. 7.
Principles of Consolidation
The consolidated financial statements include the accounts of Healthbridge, Inc. and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated.
FA-5
HEALTHBRIDGE, INC. AND SUBSIDIARIES(A Development Stage Company)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2006 (Unaudited)