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, 2001
( ) 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
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(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
900 WILSHIRE BOULEVARD, SUITE 500, LOS ANGELES, CALIFORNIA 90017
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(Address of Principal Executive Offices)
(213) 627-8878
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(Registrant's telephone number, including area code)
N/A
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(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, 2001, InterCare.com-dx, Inc., Registrant had 12,230,902
shares of its no par value common stock outstanding. There is currently no
public market for this stock.
Page 1 of 16 sequentially numbered pages
Form 10-Q
Second Quarter 2001
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Intercare.com-dx, Inc.
INDEX
PAGE
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PART I. FINANCIAL INFORMATION
Balance Sheets - June 30, 2001 3
Statements of Operations for the Three Months
ended June 30, 2001 4
Statement of Cash Flows for the Three Months
ended June 30, 2001 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
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INTERCARE.COM-DX, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
Balance Sheet As At June 30,
2001 2000
====== ======
ASSETS
Current assets
Cash $ 5,512 $ 1,232
Accounts Receivable (Note 1 ) 1,385,850 -
Less: Allow for Doubtful Accounts 0 -
Inventories 302,211 83,339
Prepaid Expenses (50) 11,770
--------- ------
Total Current Assets.. . . . . . . . . . . . . . . . 1,693,523 96,271
--------- ------
Property, Plant, and Equipment
Net Accumulated Depreciation (Note 1). . . . . . 9,070 11,406
Other Assets
Cash Advance 500 -
Deferred Public Offering Costs 34,836 13,000
---------- --------
Total Assets 1,737,929 120,677
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts Payable (Note 1) . . . . . . . . . . . . . 1,514,302 161,171
--------- --------
Total Current Liabilities . . . . . . . 1,514,302 161,171
--------- --------
Long term liabilities . . . . . .. . . . . 13,500 0
--------- --------
Total Liabilities . . . . . . . . . . . 1,527,802 161,171
--------- --------
Liabilities and Stockholders' Equity
Stockholders' Equity
Common stock (100,000,000 shares authorized
no par value ; 12,230,902 shares issued and
Outstanding) (Note 2) . . . . . . . . . . . . . 650,628 650,628
Retained Earnings (187,099) (554,292)
Accumulated Deficit (253,402) (136,829)
---------- ----------
Total Stockholders' Equity . . . . . . . 210,127 (40,494)
---------- ---------
Total Liabilities & Equity. . . . . . . . . . . . $ 1,737,929 $120,677
========== =========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
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INTERCARE.COM-DX, INC.
Consolidated Statement - Unaudited
STATEMENT OF OPERATIONS
For the Six Months ended June 30,
2001 2000
====== =====
Revenues . . . . . . . . $ 334,199 $ 0
Less: Cost of Revenues . (126,897) 0
--------- -------
Gross Margin . 207,302 0
Operating Expense. . . . 462,321 137,765
Other Income and Expense 1,617 (936)
---------- --------
Net Income . . $ (253,402) $(136,829)
========= ========
Weighted average number of shares 12,230,902 11,000,000
$ (0.02) $ (0.000)
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
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INTERCARE.COM-DX, INC.
STATEMENT OF CASH FLOW
UNAUDITED
For the Three Months ended June 30,
2001 2000
==== ====
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss). . . . . . . . . . . . . . . $ (253,402) $(136,829)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation Expense 2,986 -
(Increase) Decrease in
Accounts receivables . . . . . . . . . . . . . 3,834 132
Inventories. . . . . . . . . . . . . . . . . . (235,540) -
Prepaid Expenses . . . . . . . . . . . . . . . 50 -
Increase(Decrease) in
Accounts Payables. . . . . . . . . . . . . . . 495,012 161,219
-------- --------
NETCASH USED IN OPERATING ACTIVITIES . . . . . . . . 12,940 24,521
CASH FLOW FROM INVESTING ACTIVITIES
Deferred Public Offering . . . . . . . . . . . - (13,000)
Acquisition of Fixed Assets. . . . . . . . . . (2,411) (11,153)
--------- ---------
NET CASH USED IN INVESTING ACTIVITES . . . . . . . . (2,411) (24,153)
CASH FLOW FROM FINANCING ACTIVITIES
Loan From MH . . . . . . . . . . . . . . . . 13,500 -
Repayment of debt . . . . . . . . . . . . . . . (21,836) -
Proceeds from long term debt. . . . . . . . . . 358 -
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . (7,978) 0
Increase (Decrease) in cash . . . . . . . . . . 2,551 368
CASH AT BEGINNING OF PERIOD. . . . . . . . . . . . . 2,961 864
----------- ----------
CASH AT END OF PERIOD. . . . . . . . . . . . . . . . $ 5,512 $ 1,231
=========== ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
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The accompanying notes are an integral part of this statement.
InterCare.com-dx, Inc.
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, 2000, the Company signed a master value added reseller agreement
with Meridian Holdings, Inc., the parent company, to sell and support the
now discontinued MedMaster suite of software technology. Significant terms
of this agreement are that Intercare will sell, support, implement the
MedMaster Suite of software programs, in exchange for 40% of net sales
proceeds, and 60% of recurrent revenue from software support and
implementation.
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, 2001 and
2000:
2001 2000
===== =====
Computer Hardware & Software $68,770 $68.120
Less: Accumulated Depreciation 59,700 56,714
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$ 9,070 $11,406
======== =======
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Advertising
The company has the policy of expensing advertising costs as incurred. There
were no advertising costs charged to expense for the quarter ended June 30,
2001.
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. (the parent company), accounts payables and accrued
liabilities approximates fair value because of the immediate or short-term
maturity of these financial instruments.
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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.
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 19,580.00
Accounting Fees and Expenses 2,000.00
Printing 3,785.00
Miscellaneous Expenses 2,871.00
---------
Total $34,836.00
==========
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.
NOTE 3. SUBSEQUENT EVENTS
Software Developers Agreement with QRS Diagnostics, LLC.
On June 26, 2001, the registrant entered into a software developers
agreement with QRS Diagnostics, LLC, a Minnesota Corporation. Under the terms of
the agreement, QRS grants a non-exclusive, non-transferable license to the
registrant to use the Software Developers Kit (SDK) delivered under this
Agreement in accordance with the terms and conditions herein, which includes
interfacing the software into the registrant next generation of clinical
documentation and data acquisition software program known as ICE (InterCare
Clinical Explorer). All copies of the SDK shall be the sole and exclusive
property of QRS.
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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 parent company, due to on going legal dispute regarding the
rights to ownership of clear title between Lockheed Martin and the estate of
Sirius Computerized Technology of Israel.
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.
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LACK OF A PRESENT MARKET FOR SECURITIES
The Common Stock is currently not listed or trading in any exchange at this
Time
MARKET FOR COMMON STOCK
The Company intends to begin trading its common stock in the NASDAQ Small Cap
Market, upon completing its current public offering of its common stock, as well
as meeting the minimum listing requirements. There can be no assurance that the
Company's common stock will be listed, or trade in such market at all. If the
Company is unable to trade in such market, it may apply to trade on the OTC
Bulletin Board administered by the National Association of Security Dealers.
SELECTED FINANCIAL DATA
The Company had no revenues from operations in the quarter ended June 30, 2001,
this compares moderately with the comparable period in 2000. The entire quarter
was devoted (in conjunction with its parent company, Meridian Holdings, Inc.
(MEHO)) to developing and testing its new family of software. The Company is
nearing completion of the first phase and anticipates to begin licensing in the
third quarter of 2001.
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 plan. The
SB2 registration statement filed by the registrant in order to raise up to
$25,000,000 was declared effective initially or January 29, 2001 by the United
States Securities and Exchange Commission. An amended SB2 filed subsequent to
that was declared effective as of April 3, 2001. As of this writing, the
offering is on going and there is no assurance that the registrant will be able
to raise all the funds required or any fund at all. If unable to raise the
$500,000 minimum through this offering, the registrant may not be able to break
escrow, and will therefore cancel the offering. This will seriously impact the
liquidity of the registrant.
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
amount of our license revenues for any fiscal year being recognized in our
fourth fiscal quarter. As a result, our first quarter revenues can be less than
those of the preceding quarter.
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In some cases, the products will be sold on a consignment basis, in which case,
we only get paid by the vendor after the vendor sells the product.
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. We will depend on the commercial success of our product suite, which
has not yet been shipped. We have generated substantially all of our revenues
from licenses and services related to current and prior versions of our product
suite.
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., our parent company, due to on going legal dispute regarding the
rights to ownership of clear title between Lockheed Martin and the estate of
Sirius Computerized Technology of Israel.
For six months period ended June 30,2001, the registrant generated approximately
$334,199 in total revenue, as oppose to the $0 revenue for comparable period
in 2000.
The increase in revenue was due to sale of software license as well as revenue
generated from software implementation and maintenance services.
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, 2001.
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, 2001
was $158,299, compared to $0 during the comparable period in 2000. For the
year-to-date general administrative expenses, the Company had incurred $285,196
compared to $137,090 in the comparable period in 2000. The increase in
operating expense is due to the additional operating costs of
increased personnel requirement, consultant fees, as well as research
and further development of the MedMaster software program as a value added
reseller, and most recently, due to development of new family of software. Of
the $285,196 expense in 2001, $157,000 was spent on research and development.
Approximately $55,000 was spent on salary to employees, $19,580 for the efforts
in the initial public offering and the remaining balance was for facilities
and general corporate purposes.
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The Company anticipates future increases in general and administrative expenses
as it embarks on aggressive product development, sales and marketing with its
associated increase in personnel costs and legal and accounting expenses related
to the public offering of its common stock.
OPERATING LOSS
As a result of the factors described above, Company expects further increases in
operating expenses for the year 2001, 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.
NET LOSS
The Company had a net loss of $(253,402) or (0.002) per share for the
year-to-date ended June 30, 2001, compared with net loss of $136,829 in the
comparable period in 2000. The increase in net loss was due to increased
operating expense as described above.
PLAN OF OPERATIONS
A registration statement filed by the Company for the purpose of raising up to
$25,000,000, was approved by United States Securities and Exchange Commission on
January 29, 2001. The offering prospectus was amended on March 27, 2001, in
which the number of shares authorized for sale was increased from 2,500,000 to
5,000,000, and the offering price was decreased from $10 per share to $5
per share. The later was declared effective as of April 3rd, 2001.
The Company intends to use part of the funds raised during this offering for
product launching and general corporate purposes. If adequate funds are not
available or not available on acceptable terms, we may be unable to fund our
expansion, successfully promote our brand name, take advantage of acquisition
opportunities, develop or enhance services or respond to competitive pressures,
any of which could have a material adverse effect on our business, financial
condition and results 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. There is no assurance that such advertisement campaign
will yield any dividend.
PART II - OTHER INFORMATION
ADDITIONAL INFORMATION
On June 26, 2001, the registrant entered into a software developers
agreement with QRS Diagnostics, LLC, a Minnesota Corporation. Under the terms of
the agreement, QRS grants a non-exclusive, non-transferable license to the
registrant to use the Software Developers Kit (SDK) delivered under this
Agreement in accordance with the terms and conditions herein, which includes
interfacing the software into the registrant next generation of clinical
documentation and data acquisition software program known as ICE (InterCare
Clinical Explorer). All copies of the SDK shall be the sole and exclusive
property of QRS.
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.
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INTERCARE.COM-DX, INC.
DATE: August 13, 2001
By: /s/ Philip Falese
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Philip Falese
Chief Financial Officer
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