Caribbean American Health Resorts, Inc. /vital Health 10QSB 2006 Q2 Quarterly report (small business)

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2006

£ [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934

For the transition period from

Commission File No. 000-15243

CARIBBEAN AMERICAN HEALTH RESORTS,INC/VITAL HEALTH TECHNOLOGIES, INC.

(Exact name of small business issuer as specified in its charter)

Minnesota	41-1618186
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9454 Wilshire Blvd., Suite 600, Beverly Hills, CA 90212

(Address of Principal Executive Offices)

(310) 278-3108

(Issuer's telephone number, including area code)

(Former name, address and fiscal year, if changed since last report)

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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

State the number of shares outstanding of each of the issuer's classes of common equity, as of June 30, 2006: 15,093,793 shares of common stock.

CARIBBEAN AMERICAN HEALTH RESORTS,INC/ VITAL HEALTH TECHNOLOGIES, INC

PART I         FINANCIAL INFORMATION
Item 1	Financial Statements	1
Item 2	Management’s Discussion and Analysis or Plan of Operation	6
Item 3	Controls and Procedures	7
PART II        OTHER INFORMATION
Item 1	Legal Proceedings	8
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	8
Item 3	Defaults upon Senior Securities	8
Item 4	Submission of Matters to a Vote of Security Holders	8
Item 5	Other Information	8
Item 6	Exhibits	8
SIGNATURES		9
CERTIFICATION STATEMENTS

CARIBBEAN AMERICAN HEALTH RESORTS, INC.

(A Development Stage Company)

Condensed Balance Sheet

(Unaudited)

	June 30,
	2006
ASSETS
Current assets
Cash and equivalents	$	300,967
Inventory		7,339
Total current assets		308,306
Equipment, net of accumulated depreciation of $195		2,148
Deposit		2,458
Total assets	$	312,912
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Note payable	$	1,000,000
Advance from stockholder		35,639
Accounts payable		46,940
Accrued expenses		8,654
Accrued interest		299,970
Other current liabilities - line of credit		14,007
Total current liabilities		1,405,210
Commitments and contingencies		-
Shareholders' deficit
Common stock, 50,000,000 shares authorized, $.01 par value,
15,093,793 shares issued and outstanding		150,938
Treasury stock		(13,992	)
Additional paid-in capital		7,328,798
Deficit accumulated during the development stage		(8,558,042	)
Total shareholders' deficit		(1,092,298	)
Total liabilities and shareholders’ deficit	$	312,912

The accompanying notes are an integral part of these condensed financial statements.

1

CARIBBEAN AMERICAN HEALTH RESORTS, INC.

(A Development Stage Company)

Condensed Statements of Operations

(Unaudited)

													Cumulative
													from inception
	Three Months Ended						Six Months Ended						(Sept. 17, 1998)
	June 30,						June 30,						to June 30,
	2006			2005			2006			2005			2006
Revenue	$	8,487		$	11,787		$	14,141		$	33,928		$	95,922
Cost of revenue		3,708			11,031			7,278			21,187			40,400
Gross profit		4,779			756			6,863			12,741			55,522
Operating costs and expenses:
General and administrative		74,989			38,206			113,870			158,124			2,006,552
Loss on settlement of obligations		-			-			-			-			4,509,263
Total operating costs and expenses		74,989			38,206			113,870			158,124			6,515,815
Loss from operations		(70,210	)		(37,450	)		(107,007	)		(145,383	)		(6,460,293	)
Other income (expense):
Interest income		2			3,516			3			7,693			41,060
Interest expense		(32,412	)		(25,041	)		(63,525	)		(50,041	)		(2,134,009	)
		(32,410	)		(21,525	)		(63,522	)		(42,348	)		(2,092,949	)
Loss before provision for income taxes		(102,620	)		(58,975	)		(170,529	)		(187,731	)		(8,553,242	)
Provision for income taxes		-			-			800			-			4,800
Net Loss	$	(102,620	)	$	(58,975	)	$	(171,329	)	$	(187,731	)	$	(8,558,042	)
Basic and diluted net loss per share	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Basic and diluted weighted average number
of common shares outstanding		15,093,793			15,083,793			15,091,749			15,083,793

The accompanying notes are an integral part of these condensed financial statements.

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CARIBBEAN AMERICAN HEALTH RESORTS, INC.

(A Development Stage Company)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

							Cumulative
							from inception
	Six Months Ended						(Sept. 17, 1998)
	June 30,						to June 30,
	2006			2005			2006
Cash flows from Operating activities
Net loss	$	(171,329	)	$	(187,731	)	$	(8,558,042	)
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation		195			-			195
Loss on settlement of debt obligation		-			-			4,509,263
Issuance of common stock for services		1,001			-			101,001
Issuance of common stock for interest		-			-			1,496,880
Changes in operating assets and liabilities
Decrease (increase) in inventory		1,968			(6,036	)		(7,339	)
Decrease (increase) in current other assets		4,408			-			-
Decrease (increase) in other assets		(2,458	)		-			(2,458	)
Increase (decrease) in accounts payable		21,946			7,232			46,940
Increase (decrease) in accrued expenses		(13,760	)		(15,775	)		10,928
Increase (decrease) in accrued interest		62,144			50,000			299,970
Net cash from operating activities		(95,885	)		(152,310	)		(2,102,662	)
Cash flows from investing activities:
Purchase of equipment		(2,343	)		-			(2,343	)
Net cash from investing activities		(2,343	)		-			(2,343	)
Cash flows from financing activities:
Proceeds from advances from line of credit		-			-			483,117
Advances (repayments) from related party		(95,044	)		55,608			35,638
Proceeds from (repayments of) investment payable		-			-			86,800
Issuance of preferred stock		-			-			452,232
Issuance of common stock		-			-			348,185
Proceeds from notes payable		-			-			1,000,000
Net cash from financing activities		(95,044	)		55,608			2,405,972
Net (decrease) increase in cash		(193,272	)		(96,702	)		300,967
Cash, beginning of period		494,239			653,813			-
Cash, end of period	$	300,967		$	557,111		$	300,967
Supplemental cash flow information
Interest paid	$	1,201		$	131		$	367,645
Income taxes paid	$	-		$	800		$	5,600
Non-cash investing and financing activities
Common stock issued for debt	$	-		$	-		$	296,661

The accompanying notes are an integral part of these condensed financial statements.

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CARIBBEAN AMERICAN HEALTH RESORTS, INC.

(A Development Stage Company)

Notes to Unaudited Condensed Financial Statements

June 30, 2006

1.       Organization and summary of significant accounting policies

Organization and line of business

Caribbean American Health Resorts, Inc., formerly Vital Health Technologies, Inc., (the “Public Company” or the “Company”) was incorporated on April 11, 1960.  On March 10, 2003, the Public Company consummated an Agreement and Plan of Reorganization to acquire all of the outstanding capital stock of Caribbean American Health Resorts, Inc. (“CAHR”) a closely held private company, in an exchange for 9,786,295 shares of the Public Company’s common stock (“CAHR transaction”).  Prior to the CAHR transaction, the Public Company sold off its remaining assets and operations and had 3,741,250 shares of common stock issued and outstanding.  Following the transaction, the Public Company changed its name from Vital Health Technologies, Inc. to Caribbean American Health Resorts, Inc. and had 13,527,545 shares of common stock issued and outstanding.

The accounting treatment of the CAHR transaction was determined by the following:

1.   The Public Company was a non-operating public company (having no operations or assets);

2.   The shareholders of CAHR became the controlling shareholders of the combined company; and

3.   The management and operations of the combine company continue to be those of CAHR.

For accounting purposes, the CAHR transaction is considered to be a capital transaction in substance, rather than a business combination.  The result of the CAHR transaction is treated, in the accompanying financial statements as equivalent to the issuance of shares by a private company (CAHR) for the non-monetary assets of a non-operational public company (Public Company), accompanied by a recapitalization.  The accounting for the CAHR transaction is similar to that resulting from a reverse acquisition.  Accordingly, the historical financial information of the accompanying financial statements is that of CAHR.  All shares included in the Statement of Stockholder’s Equity have been presented as if the acquisition had occurred at the date of inception, September 17, 1998, of CAHR.

The shares of the Public Company outstanding prior to the merger (3,741,250) have been shown as a recapitalization of CAHR as of March 10, 2003.

Caribbean American Health Resorts, Inc. (a development stage company) plans to develop world class health resorts in the Caribbean Island of Barbados.  The health and longevity facilities will provide five star luxury accommodations, reconstructive and elective surgery.  Programs will include detox, rehab, spa and weight reduction, along with holistic health and longevity and a full range of traditional spa services.  Caribbean American Health Resorts will also distribute a variety of herbal-based vitamins and dietary supplements.

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CARIBBEAN AMERICAN HEALTH RESORTS, INC.

(A Development Stage Company)

Notes to Unaudited Condensed Financial Statements

June 30, 2006

1.           Organization and summary of significant accounting policies (continued)

Development Stage Company

The Company is a development stage company as defined in Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises." The Company is devoting substantially all of its present efforts to establish a new business, and its planned principal operations have not yet commenced.  The Company has not generated any material revenues throughout its history. The Company's ability to continue in business is dependent upon obtaining sufficient financing or attaining future profitable operations.

Interim periods

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB and Article 10 of Regulation S-B.  Accordingly, they do not include all of the information and required by generally accepted accounting principles generally accepted in the United States of America for annual financial statements.  In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.  Operating results for the six months ended June 30, 2006 are not necessarily indicative of results for any future period.  These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-KSB for the year ended December 31, 2005.

2.       Net loss per common share

Net loss per common share is calculated in accordance with Statement of Financial Accounting Standards No. 128 (“SFAS 128”).  Basic net loss per share is based upon the weighted average number of common shares outstanding.  Diluted loss per share is based upon the assumption that all dilutive convertible shares and stock options were converted or exercised.  Dilution is computed by applying the treasury stock method.  Under this method, options are assumed to be exercised at the beginning of the period (or 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.  For the periods ended June 30, 2006 and 2005 there were no common stock equivalents.

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Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward-Looking Statement Notice

When used in this report, the words "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect the Company's future plans of operations, business strategy, operating results, and financial position. Persons reviewing this report are cautioned that any forward-looking statements are not guaranteed of future performance and are subject to risks and uncertainties and those actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed under the headings "Item 2 Description of Business", "Item 6. Management's Discussion and Analysis or Plan of Operation" and also include general economic factors and conditions that may directly or indirectly impact the Company's financial condition or results of operations.

BUSINESS STRATEGY

Caribbean American Health Resorts’ objective is to maximize its profitability by providing quality health products, high quality spa treatment and elective/reconstructive surgical services as well as distributing a variety of herbal based vitamins and dietary supplements.  The key elements of the strategy are:

·Establish a World-Class Health Resort

CAHR  has identified prime property, on the island of Barbados, on which it intends to build a world-class health resort that will cater to the spa treatment, constructive/elective surgical and other alternative medical needs of athletes, musicians, actors, entertainment artists and business executives through out the world.  The company will combine the ideal climate on the island of Barbados with the expertise of leading surgeons and physicians from the United States to deliver high quality health services to these targeted clients in the comfort of a luxury resort. The Barbados Medical Council has recently approved the license for the surgeons to operate on the island.

·Market the products and services aggressively to target Customers

CAHR will market its health services aggressively to business executive, sports and entertainment clients worldwide as well as targeted Caribbean population.  In January 2005, CAHR launched a new herbal product line. The line consists of a variety of herbal based vitamins and dietary supplements. The multi-vitamins are claimed to be manufactured from the finest pharmaceutical–grade nutrients and based on the latest scientific research.

·Implement a Discipline Financial Strategy

CAHR‘s financial strategy will be focused on maximizing profitability and minimizing financial risks.  To this end, the company will focus on achieving the right balance between equity and debt in the capital structure to ensure that CAHR  maintains adequate financial flexibility to adjust successfully to changes in the market place.  The company believes that a disciplined financial approach will also enable us to capitalize on opportunistic expansion opportunities throughout the Caribbean.

·Liquidity and Capital resources

The company expects that its cash and cash generated from operations will be insufficient to meet its operating cash needs. The company will continue to rely on Mr. Martin and other shareholders for working capital support for the company. The company will attempt to raise capital for its acquisitions and development through a private placement or rights offering of the company‘s common stock. There can be no assurance that the company will be able to raise the required amount of capital to successfully complete its plan.

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Three months ended June 30, 2006 and June 30, 2005

The Company generated $8,487 for three months ended June 30, 2006 as compared to $22,141 revenue for the same period June 2005. Cost of Sales for the three months ended June 30, 2006 and 2005 were $3,708 and $10,156 respectively. Introduction of new herbal products accounted for the change in revenue and changes in cost of sales for the three months ended June 30, 2006.

General and Administrative expenses for the three months ended June 30, 2006 was $74,989 as compared to $38,206 in the same period of 2005. Additional personnel, marketing and promotion caused an increase in General and Administrative expenses for the three months ended June 30, 2006

The Company had interest expense in the amount of $32,412 for the three months ended June 30, 2006 as compared to the interest expense of $25,041 for the three months ended June 30, 2005. This interest expense is related to the long term debt of $ 1,000,000 borrowed. Interest expense increased due to the bank carrying charges.

As result of the foregoing, the company realized a net loss of $102,620 for the three months ended June 30, 2006 as compared to a net loss of $58,975 for the same period 2005.

The increase of the net loss for the company for the three month period ending June 30, 2006 over the previous three month period ending June 30, 2005 was due to an increase in marketing and promotion costs. The company has realized a net loss of $171,329 for the six month period ended June 30, 2006 as compared to a net loss of $187,731 for the same six month period ended June 30, 2005. However, an increase in revenue accounts for the overall reduction in a total net loss for the period six months ended June 30, 2006 over the six month period ended June 30, 2005

Six months ended June 30, 2006 and June 30, 2005

The company generated $14,141 for the six months ended June 30, 2006 as compared to $33,928 for the six months ended June 30, 2005. Cost of sales for the six months ended June 30, 2006 $7,278 and $21,187 respectfully. The introduction of new herbal product line caused the changes in revenue and cost of sales in the six months ended June 30, 2006 as compared to the six months ended June 30, 2005.

General and Administrative expenses for six months ended June 30, 2006 was $113,870 as compared to $158,124 for the six months ended June 30, 2005. Changes in market, promotion and personnel expenses accounted for the above charges in the six months period ended June 30, 2006.

The Company had interest expenses in the amount of $63,525 for the six months ended June 30, 2006 as compared to interest expense of $50,041 for six months ended June 30, 2005. Most of the expense is related to a long term debt of $1,000,000 borrowed. Bank carrying charges accounts for the increase in the six months ended June 30, 2006.

OFF-BALANCE SHEET ARRANGEMENTS

The company has no off-balance sheet arrangements that have or are reasonably likely to have current or future effect  on the company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or capital resources.

Item 3.                      CONTROLS AND PROCEDURES

The Company's Chief Executive Officer/Chief Financial Officer has conducted an evaluation of the Company's disclosure controls and procedures as of June 30, 2006.  Based on their evaluation, the Company's Chief Executive Officer/Chief Financial Officer has concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the applicable Securities and Exchange Commission rules and forms.  There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of the most recent evaluation of these controls by the Company's Chief Executive Officer/Chief Financial Officer.  No significant deficiencies or material the company weaknesses in the Company's internal controls were identified therefore no corrective actions were taken.

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PART II - OTHER INFORMATION

Item 1.              Legal Proceedings

The Company is not a party to or the subject of any pending legal proceeding or any contemplated proceeding of a governmental authority

Item 2.              Sale of Equity Securities and Use of Proceeds

None

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

(a)      Exhibits required by Item 601 of Regulation S-B

Exhibit   3.1	Articles of Incorporation.*
Exhibit   3.2	Bylaws.*
Exhibit   4.1	Agreement and Plan of Share Exchange.**
Exhibit   14	Code of Ethics.***
Exhibit  31.1	Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002
Exhibit  32.1	Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002

*    These items were filed as exhibits to the Company's annual report on Form 10-KSB for the year ended December 31, 2000, and are incorporated herein by this reference.

**   These items were filed as exhibits to the Company's annual report on Form 10-KSB for the year ended December 31, 2002, and are incorporated herein by this reference.

***  This item was filed as an exhibit to the Company's annual report on Form 10-KSB for the year ended December 31, 2003, and is incorporated herein by this reference.

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SIGNATURES

        In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Vital Health Technologies, Inc.
Date: January 8, 2008	By:  /s/  Halton Martin
	Halton Martin, Director,
	Chief Financial Officer and
	Chief Executive Officer

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