U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934
For the quarterly period ended September 30, 2007
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For the transition period from
Commission File No. 000-15243
CARIBBEAN AMERICAN HEALTH RESORTS, INC
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1618186
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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 bySection 13 or 15(d) of the Exchange Act during the past 12 months (or for suchshorter 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 [ ]
State the number of shares outstanding of each of the issuer's classes of commonequity, as of September 30, 2007: 15,096,293 shares of common stock.
CARIBBEAN AMERICAN HEALTH RESORTS, INC
| PART I FINANCIAL INFORMATION |
| Item 1 | Financial Statements |
| Item 2 | Management’s Discussion and Analysis or Plan of Operation |
| Item 3 | Controls and Procedures |
| | |
| PART II OTHER INFORMATION |
| Item 1 | Legal Proceedings |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds |
| Item 3 | Defaults upon Senior Securities |
| Item 4 | Submission of Matters to a Vote of Security Holders |
| Item 5 | Other Information |
| Item 6 | |
| | |
| SIGNATURES |
| CERTIFICATION STATEMENTS |
The accompanying notes are an integral part of these condensed financial statements
The accompanying notes are an integral part of these condensed financial statements
Notes to Unaudited Condensed Financial Statements
September 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 change 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 statement sis 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.
CARIBBEAN AMERICAN HEALTH RESORTS, INC.
(A Development Stage Company)
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 nine months ended September 30, 2007 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, 2006.
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 September 30, 2007 and 2006 there were no common stock equivalents.
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.
Three months ended September 30, 2007 and September 30, 2006
The Company generated $50,792 for three months ended September 30, 2007 as compared to $7,811 revenue for the three months period ended September 30, 2006. Cost of Sales for the three months ended September 30, 2007 and 2006 were $5,436 and $6,633 respectively. Consulting fees accounted for the increase in revenue for the nine months ended September 30, 2007.
General and Administrative expenses for the three months ended September 30, 2007were $87,382 as compared to $83,372 in the three month period ended September 30, 2006. The increase of marketing promotion costs and General and Administrative expense account for the increase of the Company for the three months period ended September 30, 2007 over the previous three months period ended September 30, 2006.
The Company had interest expense in the amount of $35,410 for the three months ended September 30, 2007 as compared to the interest expense of $33,789 for the three months ended September 30, 2006. This interest expense is related to the long term debt of $ 1,000,000 borrowed. The increase in interest expenses were due to the bank carrying charges for the nine months ended September 30, 2007.
As result of the foregoing, the company realized a net loss of $77,436 for the three months ended September 30, 2007 as compared to a net loss of $115,982 for the three months period ended September 30, 2006. This reduction in the Company’s net loss for the three months period ended September 30, 2007 over the three months period ended September 30, 2006 was due largely in part to increase revenue.
Nine months ended September 30, 2007 and September 30, 2006
The Company generated $63,342 for the nine months ended September 30, 2007 as compared to $21,952 for the nine months ended September 30, 2006. Cost of sales for the nine months ended September 30, 2007 $11,373 and $13,911 respectfully. The addition of consulting fees caused the changes in revenue and cost of sales in the nine months ended September 30, 2007 as compared to the nine months ended September 30, 2006.
General and Administrative expenses for nine months ended September 30, 2007 was $162,994 as compared to $197,242 for the nine months ended September 30, 2006. Changes in market, promotion and personnel expenses accounted for the above charges in the nine months period ended September 30, 2007.
The Company had interest expenses in the amount of $107,364 for the nine months ended September 30, 2007 as compared to interest expense of $97,314 for nine months ended September 30, 2006. 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 nine months ended September 30, 2007.
As a result of the foregoing, the Company realized a net loss of $218,389 for the nine months period ended September 30, 2006 as compared to a net loss of $286,511 for the nine months period ended September 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
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 OxleyAct of 2002
Exhibit 32.1 Certification pursuant to Section 906 of Sarbanes OxleyAct of 2002
* These items were filed as exhibits to the Company's annual report on Form10-KSB for the year ended December 31, 2000, and are incorporated herein bythis reference.
** These items were filed as exhibits to the Company's annual report on Form10-KSB for the year ended December 31, 2002, and are incorporated herein bythis reference.
*** This item was filed as an exhibit to the Company's annual report on Form10-KSB for the year ended December 31, 2003, and is incorporated herein bythis reference.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrantcaused this report to be signed on its behalf by the undersigned, thereunto dulyauthorized.
Caribbean American Health Resorts, Inc.
Date: November 28, 2007 By: /s/ Halton Martin
Halton Martin, Director,
Chief Financial Officer and
Chief Executive Officer
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