FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: August 31, 2000
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to
Commission file number: 000-26553
HEALTHNET INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
COLORADO 98-0206627
(State of Incorporation) (IRS Employer ID No.)
Suite 301-1201 West Pender Street
Vancouver, British Columbia
Canada V6E 2V2
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (604) 669-3573
As of August 31, 2000, the registrant had 10,574,563 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format (check one);
YES NO X
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Part I. FINANCIAL INFORMATION
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Item 1. FINANCIAL STATEMENTS
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(IN UNITED STATES DOLLARS)
AS AT AS AT
August 31, FEBRUARY 29,
2000 2000
$ $
- ---------------------------------------------------------------------------------------------------
ASSETS
CURRENT
Cash and cash equivalents 16,167 50,901
Restricted cash [NOTE 4] 52,815 17,000
Accounts receivable [NOTE 5] 106,508 63,091
Prepaid expenses and deposits [NOTE 6] 27,489 52,698
- ---------------------------------------------------------------------------------------------------
202,979 183,690
Capital assets (net) [NOTE 7] 895,181 781,125
OTHER ASSETS
Goodwill [NOTE 8] 142,700 190,266
- ---------------------------------------------------------------------------------------------------
1,240,860 1,155,081
===================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT
Notes payable [NOTE 11] 3,908,947 --
Accounts payable and accrued liabilities [NOTE 9] 1,152,303 744,839
Amount due for business combination -- 69,022
- ---------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 5,061,250 813,861
LONG-TERM
Notes payable [NOTE 11] -- 2,000,000
Obligation under capital lease [NOTE 10] 20,992 20,155
Commitments [NOTE 12]
SHAREHOLDERS' DEFICIENCY
Share capital
Preferred shares, 50,000,000 authorized, no par value
Common shares, 100,000,000 authorized, no par value,
10,574,563 issued and outstanding [February 29, 2000 - 10,536,251] 147,269 118,535
Additional paid-in capital 39,924 16,631
Deficit accumulated (4,028,575) (1,814,101)
- ---------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY) (3,841,382) (1,678,935)
- ---------------------------------------------------------------------------------------------------
1,240,860 1,155,081
===================================================================================================
SEE ACCOMPANYING NOTES
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF
LOSS AND COMPREHENSIVE LOSS
(IN UNITED STATES DOLLARS)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
AUGUST 31 AUGUST 31
2000 1999 2000 1999
$ $ $ $
- -----------------------------------------------------------------------------------------------------
Web site development revenue 142,419 -- 236,642 --
Software license revenue 8,750 -- 8,750 --
Internet marketing revenue 29,898 -- 29,898 --
Product sales revenue 4,471 -- 7,200 --
Cost of product sales (2,865) -- (4,640) --
- -----------------------------------------------------------------------------------------------------
182,673 -- 277,850 --
- -----------------------------------------------------------------------------------------------------
EXPENSES
Salaries and benefits 567,482 75,660 1,057,335 94,247
Advertising, marketing and promotion 196,726 35,505 452,702 30,976
General and administrative 289,016 44,780 575,707 64,103
Amortization 172,290 41,475 324,920 55,330
Accounting and professional fees 34,644 40,199 74,685 47,762
Foreign exchange 4,573 (1,092) 4,890 310
Loss on writedown of capital assets 2,085 -- 2,085 --
- -----------------------------------------------------------------------------------------------------
1,266,816 236,527 2,492,324 292,728
- -----------------------------------------------------------------------------------------------------
LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD (1,084,143) (236,527) (2,214,474) (292,728)
=====================================================================================================
LOSS PER COMMON SHARE (0.10) (0.02) (0.21) (.03)
=====================================================================================================
Weighted average shares outstanding 10,571,300 10,500,000 10,556,917 10,500,000
=====================================================================================================
SEE ACCOMPANYING NOTES
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF
SHAREHOLDERS' DEFICIENCY
(IN UNITED STATES DOLLARS)
COMMON STOCK ADDITIONAL DEFICIT
--------------------------- PAID-IN ACCUMULATED IN THE
SHARES AMOUNT CAPITAL DEVELOPMENT STAGE
# $ $ $
- -------------------------------------------------------------------------------------------------------
BALANCE, FEBRUARY 29, 2000 10,536,251 118,535 16,631 (1,814,101)
Stock options exercised 38,312 28,734 -- --
Compensatory stock options -- -- 23,293 --
Loss and comprehensive loss for
the 6 months ended August 31, 2000 -- -- -- (2,214,474)
- -------------------------------------------------------------------------------------------------------
BALANCE, AUGUST 31, 2000 10,574,563 147,269 39,924 (4,028,575)
=======================================================================================================
SEE ACCOMPANYING NOTES
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN UNITED STATES DOLLARS)
FOR THE SIX MONTHS ENDED
AUGUST 31,
2000 1999
$ $ $
- --------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Loss for the period (2,214,474) (303,012)
Adjustment to reconcile loss to net cash used in
operating activities
Amortization 324,920 55,330
Loss on writedown of fixed assets 2,085 --
Share option compensation expense 23,294 --
Changes in current assets and liabilities
Increase in restricted cash (35,815) --
Increase in accounts receivable (43,417) (8,442)
Decrease in prepaid expenses and deposits 25,209 (79,462)
Increase in accounts payable and accrued 338,442 39,053
liabilities
- ---------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES (1,579,756) (296,533)
- ---------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to fixed assets (386,244) (283,870)
- ---------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (386,244) (283,870)
- ---------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase in notes payable 1,908,947
Issuance of share capital for cash 21,482 10,500
Increase in capital leases, net of repayments 837 --
- ---------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 1,931,266 910,500
- ---------------------------------------------------------------------------------------
DECREASE IN CASH DURING THE PERIOD 34,734 330,097
Cash, beginning of period 50,901 --
- ---------------------------------------------------------------------------------------
CASH, END OF PERIOD 16,167 330,097
=======================================================================================
SUPPLEMENTAL INFORMATION
Interest paid 4,877 --
=======================================================================================
SEE ACCOMPANYING NOTES
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
AUGUST 31, 2000
1. Nature of Business
The Company has two business units, ehealthstores and nject. ehealthstores
licenses applicable software, builds and maintains customized e-commerce Web
sites for retailers and health care providers who wish to sell VMS products on
the Internet. The second business unit, nject (formerly Varcom), provides
Internet design, graphic and marketing services for clients. In addition, the
Company's early prototype retail operations (medicinecabinet.com,
medicinecabinet.co.uk) continue to operate as the research and development test
bed and direct sales division.
Healthnet International Inc. is currently capitalizing on four burgeoning global
industries: Health, E-commerce, Web design and Internet marketing. Through its
ehealthstores business unit, Healthnet is a leading provider of comprehensive
turnkey Web solutions and services to "brick & mortar" retailers, clubs and
healthcare associations. By providing established brick & mortar health
retailers with affordable, turnkey Internet sites, eHealthstores effectively
converts these businesses into "click & mortar" hybrids - each with a built-in
regional customer base and brand-name recognition. ehealthstores comprises two
product lines: ehealthstores is our original, comprehensive Web solution, and
ehealthstores express is a streamlined version for customers requiring less
customization.
nject was launched to meet ehealthstores production needs and a growing demand
for Web site design among partners, clients and other companies looking to
expand their business onto the Internet.
Healthnet International Inc. has four wholly owned subsidiaries; Healthnet
U.S.A. Inc., HNI Healthnet (Canada) Inc., Healthnet Europe Limited and nject.
Healthnet U.S.A. Inc. was incorporated on March 8, 1999. It was incorporated in
the state of Nevada and is intended to function as the operating company for the
United States market.
HNI Healthnet (Canada) Inc. was incorporated on May 18, 1999. It was
incorporated in the Province of British Columbia and is intended to function as
the operating company for the Canadian market.
Healthnet Europe Limited was incorporated on January 11, 2000. It was
incorporated in the Island of Guernsey and is intended to function as the
operating company for the European market.
On February 29, 2000, the Company acquired Varcom Internet Communications and
Commerce Solutions Inc. (VARCOM). Varcom subsequently changed its company's name
to Nject in June 2000.
As at August 31, 2000, the Company had a working capital deficit of $4,858,271.
The Company's ability to continue its operations in the near term is uncertain
and is dependent upon its ability to raise additional funds. These financial
statements do not include any adjustments to the amounts and classification of
assets and liabilities that might be necessary should the Company be unable to
raise such additional funds.
Management believes that the additional revenue to be generated from the
increasing number of active "ehealthstore" clients and Web site design
customers, together with additional debt and equity financing, will enable the
Company to continue its operations. Additional debt financing of $264,734 has
been received subsequent to the quarter end and prior to October 27, 2000 and
further immediate debt financing and later equity financing is being planned. In
addition, a private placement of $1,000,000 took place on October 24, 2000, the
proceeds of which will be used to pay down debt and finance operations."
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
AUGUST 31, 2000
2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended August 31, 2000
are not necessarily indicative of the results that may be expected for the year
ended February 28, 2001.
The balance sheet at February 29,2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant Company and Subsidiaries' annual
report on Form 10-KSB for the year ended February 29, 2000.
3. SIGNIFICANT NEW ACCOUNTING POLICIES
Revenue recognition
Initial fees relating to web site development are recognized as revenue when the
web site becomes operational. Before the revenues are recognized, deposits from
licensees are recorded as liabilities.
Website design and development fees are billed and recognized as revenue in
accordance with the percentage of completion method. Web hosting revenue and
software licence fees are recognized over the period the services are provided.
Product sales revenue is recognized when the product is shipped.
Recent accounting pronouncements
The United States Securities and Exchange Commission has issued Staff Accounting
Bulletin 101 "Revenue Recognition in Financial Statements" (SAB 101).
Application of this pronouncement has been deferred until December 1, 2000. The
Company has not yet determined the impact of SAB 101 on its consolidated
financial statements and its revenue recognition policies.
4. RESTRICTED CASH
August 31, February 29,
2000 2000
$ $
- --------------------------------------------------------------------------------
Term deposits 52,815 17,000
- --------------------------------------------------------------------------------
52,815 17,000
================================================================================
The above term deposits are held by Canadian Western Bank and Canadian Imperial
Bank of Commerce as security for computer leases [note 10].
5. ACCOUNTS RECEIVABLE
August 31, February 29,
2000 2000
$ $
- --------------------------------------------------------------------------------
Amounts due from trade customers 55,391 38,456
Other -- 9,475
GST receivable 51,117 15,160
Less: allowance for bad debts -- --
- --------------------------------------------------------------------------------
106,508 63,091
================================================================================
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
AUGUST 31, 2000
6. PREPAID EXPENSES AND DEPOSITS
Prepaid expenses and deposits comprise:
August 31, February 29,
2000 2000
$ $
- --------------------------------------------------------------------------------
Equipment lease deposits 3,131 1,582
Deposits paid to suppliers on portions of work
completed 3,552 6,337
Deposits held by merchant bank 16,400 16,400
Other -- 10,185
Prepaid expenses 4,406 18,194
- --------------------------------------------------------------------------------
27,489 52,698
================================================================================
The Company has obtained a merchant account with a bank in the United States for
credit card processing. Under the conditions of the merchant agreement, the
Company is required to provide the bank with a security deposit. The deposit
will be held until the merchant account is cancelled and bears interest of 5.5%
per annum.
7. CAPITAL ASSETS
Capital assets are recorded at cost less accumulated depreciation and comprise:
ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
$ $ $
- ---------------------------------------------------------------------------------------------------
August 31, 2000
Computer hardware and equipment 207,895 18,976 188,919
Computer hardware under capital leases 129,122 13,973 115,149
Furniture and fixtures 116,508 7,460 109,048
Computer software 798,708 321,643 477,065
Domain name 10,000 5,000 5,000
- ---------------------------------------------------------------------------------------------------
1,262,233 367,052 895,181
===================================================================================================
February 29, 2000
Computer hardware and equipment 111,516 3,892 107,624
Computer hardware under capital leases 49,165 2,654 46,511
Furniture and fixtures 75,172 2,598 72,574
Computer software 630,136 83,220 546,916
Domain name 10,000 2,500 7,500
- ---------------------------------------------------------------------------------------------------
875,989 94,864 781,125
===================================================================================================
8. GOODWILL
August 31, February 29,
2000 2000
$ $
- ---------------------------------------------------------------------------------------------------
Goodwill (net of accumulated amortization of $47,566
as at August 31, 2000) 142,700 190,266
- ---------------------------------------------------------------------------------------------------
142,700 190,266
===================================================================================================
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
AUGUST 31, 2000
9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities comprise:
August 31, February 29,
2000 2000
$ $
- ---------------------------------------------------------------------------------------------------
Trade payable 805,866 310,912
Interest payable [NOTE 11] 122,588 42,478
Accrued expenses 181,713 60,000
Accrued expenses for capital asset purchases -- 307,547
Current obligations under capital lease [NOTE 10] 35,340 23,902
Deposits for incomplete development work 6,796 --
- ---------------------------------------------------------------------------------------------------
1,152,303 744,839
===================================================================================================
10. CAPITAL LEASE OBLIGATIONS
At August 31, 2000, the Company had entered into capital lease for equipment.
The future payments are:
$
- ---------------------------------------------------------------------------------------------------
Six months ended, February 28, 2001 19,952
Year ended, 2002 39,904
Year ended, 2003 4,818
- ---------------------------------------------------------------------------------------------------
Total minimum lease payments 64,674
Less amounts representing interest at rates varying from 11% to 20% 7,702
- ---------------------------------------------------------------------------------------------------
Present value of minimum lease payments 56,972
Current portion of capital lease obligations 35,340
- ---------------------------------------------------------------------------------------------------
Long-term portion of capital lease obligations 20,992
===================================================================================================
Two of the equipment leases require the Company to pledge term deposits for a
total of $52,815 [note 4]. The term deposits will be returned upon the expiry of
the lease and are non-interest bearing.
HEALTHNET INTERNATIONAL INC.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
AUGUST 31, 2000
11. NOTES PAYABLE
Notes payable comprise and are due to:
August 31, February 29,
RATE OF 2000 2000
DUE DATE INTEREST $ $
- ---------------------------------------------------------------------------------------------------
Notes payable May 31, 2001 5% 3,908,947 2,000,000
===================================================================================================
The notes payable are unsecured. During the period, the Company incurred $44,131
of interest which is due within the next twelve months. Management believes the
fair value of the note approximates its carrying value.
>From September 1, 2000 to October 6, 2000, the Company received a further
$264,734 in the form of promissory notes. Interest is payable at 5% per annum
and the interest is repayable on May 31, 2001.
12. COMMITMENTS
[i] At August 31, 2000, the Company has entered into commitments
for leases of premises. The future payments are:
$
- -------------------------------------------------------------------------
Six months ended February 28 2001 41,987
Year ended 2002 88,487
Year ended 2003 15,148
- -------------------------------------------------------------------------
145,622
=========================================================================
Rent expense for the quarter ended August 31, 2000 was $35,693.
[ii] The Company has signed an agreement with a company which
publishes and distributes a health related database. The
agreement allows the Company and its customers to use the
database. The Company is committed to pay a further $40,000 in
the next year in connection with this agreement.
[iii] The Company has entered into an agreement with a company which
provides marketing services to the Company. The Company is
committed to paying the greater of $2,000 per month or 2% of
monthly net sales generated through marketing services
provided to the Company.
[iv] The Company has entered into an investor relations agreement
with a company which provides internet marketing and
information services. The Company is committed to paying
$4,000 per month starting June 2000 for a period of six
months.
[v] The Company acquired Nject (formerly known as VARCOM) on
February 29, 2000. There is contingent consideration
associated with this acquisition:
[a] If Nject achieves sales of greater than $550,000 but less than
$760,000 in the current fiscal year, the Company will be
obligated to pay a further $70,000 of consideration via the
issuance of common shares.
[b] If Nject achieves sales of greater than $760,000 but less than
$1,030,000 in the current fiscal year, the Company will be
obligated to pay a further $240,000 of consideration via the
issuance of $210,000 of common shares as well as $30,000 in
cash.
[c] If Nject achieves sales of greater than $1,030,000 in the
current fiscal year, the Company will be obligated to pay a
further $340,000 of consideration via the issuance of $310,000
of common shares as well as $30,000 in cash.
Item 2. MANAGEMENT DISCUSSION AND ANALYSIS
(All figures are in US dollars)
FORWARD LOOKING INFORMATION
Healthnet International Inc. (the "Company" or "Healthnet") cautions readers
that certain important factors may affect the Company's actual results and could
cause such results to differ materially from any forward-looking statements that
may be deemed to have been made in this Form 10-QSB, or that is otherwise made
by or on behalf of the Company. Such factors include, among others, the
speculative nature of the industry in which the Company operates, technology
failures, environmental or government regulations, availability of financing,
force majeure events, and other risk factors as described from time to time in
the Company's filings with the Securities and Exchange Commission. Many of these
factors are beyond the Company's ability to control or predict. For this
purpose, any statements contained in the registration statement that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the generality of the foregoing, words such as "may", "expect",
believe", "anticipate", "intend", "could", "estimate" or "continue" or the
negative or other variations of comparable terminology, are intended to identify
forward-looking statements. The Company disclaims any intent or obligation to
update its forward-looking statements, whether as a result of receiving new
information, the occurrence of future events, or otherwise.
General
- -------
The Company's current plan of operation is to derive revenues from its two
business units: ehealthstores and nject. Revenue streams will continue to be
generated through software licensing, website development services, royalties
from the sale of natural products on licensee sites, revenue from the sale of
natural products through medicinecabinet sites, advertising and sponsorships on
licensee Web sites, and Internet marketing services.
During the period, we completed and launched 5 ehealthstores, including
gnc.co.uk for GNC the world's largest vitamin retailer. To date, the
ehealthstores network now comprises 7 Web sites representing over 60 brick &
mortar retailer businesses. These websites are complete e-commerce websites with
extensive health information and content, and full customer support. The Company
is in active discussion to license additional Web sites in the current fiscal
year.
Based on customer demand, ehealthstores express was launched during the period
to supplement the existing ehealthstores product with a version providing less
customization, at a lower price point.
It is anticipated that the Internet will continue to become a more effective
medium and that the market opportunities for the Company are expected to
continue to expand. This tremendous growth is expected to also attract many
potential new competitors. In order to maintain sales growth, the Company
intends to expand the content and to improve the services on its Internet web
site, employ additional staff at a moderate level to cope with its expansion, as
well as researching and developing other projects that are expected to utilize
its existing facilities and expertise.
RESULTS OF OPERATIONS
- ---------------------
During the quarter the Company generated modest revenues. License agreements
were signed with several natural products retailers which generated one-time web
site development revenues. Once all of these sites are launched and marketed,
which is anticipated to begin in the next quarter, these web sites are intended
to generate recurring e-commerce (product sales), advertising and marketing
services revenues. The company intends to enter into similar license agreements
over the next few years, which is expected to generate recurring e-commerce
revenues. The Company cautions readers that the future magnitude of these
revenue streams is uncertain due to the fact that both Healthnet and the
Internet itself are in their early stages at this time.
Losses for the second fiscal quarter ended August 31, 2000 amounted to
$1,084,143. Expenses during the period increased to $1,266,816 from $1,225,508
in the prior quarter as the Company continued development of several licensees'
websites, the launch of the eHealthstores Express product line, and employed the
corresponding human resources required. The Company anticipates that this
development will require moderate increases in staff levels, technology, office
space and marketing expenditures in future periods.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company secured $756,947 US through debt financing during the Quarter and
$4,575 from the issuance of common shares under the Company's stock option plan.
Cash flow used in operations for the three months ended August 31, 2000 was
$642,276. It is expected that revenues from natural product sales should
commence shortly after the launch of the online stores in the next fiscal
quarter, and that further license revenues will be generated in the foreseeable
future. No assurance can be given that revenues from sales will initially meet
expenses and as such, the Company may finance operations through existing and
additional debt financing from arm's length private lenders until such time as
revenues from sales meet or exceed expenses. In addition, the Company may
consider raising additional equity financing through the sale of common stock of
the Company through private placements to sophisticated investors. The
combination of expected revenues and additional debt and/or equity financing is
intended to provide the Company with sufficient operating capital for a period
of approximately two years.
The $109,333 used in investing activities consisted primarily of computer
technologies.
Net cash on hand at August 31, 2000 decreased to $16,167 from $50,901 at
February 29, 2000. Subsequent to the quarter end, to October 6, 2000, the
Company received a further $264,734 in debt financing.
OUTLOOK
The Company believes it is still too early to forecast revenue from our online
sales operation with accuracy given the early stages of the project, the
expansive growth rate of new licensees, and the infancy of e-commerce. In the
quarter, Healthnet successfully launched five more ehealthstores licensee sites:
pro body Inc., Forces of Nature, GNC-UK, Life's Vigor, and NewsGurus.com. These
stores join Supersup.com and Healthstore.com as active "ehealthstores"
licensees, and members of the co-branded ehealthstores network. Management is
confident and optimistic about Healthnet's business model.
Our new "ehealthstores Express" product was also launched in the final days of
the quarter, and resulted in the signing of 15 letters of intent in the month of
August. Management is confident that this rate of new client acquisition will
continue for the next several quarters, and will eventually lead to
profitability early into the next fiscal year. Healthnet's ability to expand
revenue increases with each new client that joins the network, as the Company
generates revenue from licensing, marketing services, advertising, and margin
share of online sales. Healthnet's Web solutions are fast becoming the industry
standard by which our competition measures itself.
Part II - OTHER INFORMATION
- -----------------------------
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Description
-------------- ---------------
27 Financial Data Schedule
(b) There are no reports on Form 8-K that were filed for the quarter.
SIGNATURES
Pursuant to the requirements 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.
HEALTHNET INTERNATIONAL INC.
(Registrant)
Date: October 25, 2000 /s/ GRANT JOHNSON
------------------------------------
Grant R. Johnson
President and CEO
Date: October 25, 2000 /s/ RAY HARRIS
------------------------------------
Ray Harris
Acting Chief Financial Officer