U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
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, 2003
[ ] 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
VITAL HEALTH TECHNOLOGIES, 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)
855 Village Center Drive, North Oaks, MN 55127
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 preceding 12 months (or for
such shorter period that the issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of August 8, 2003: 3,741,250 shares of common stock.
Transitional Small Business Format: Yes [ ] No [X]
FORM 10-QSB
VITAL HEALTH TECHNOLOGIES, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION 3
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis of Financial Condition
and Plan of Operation 7
Item 3 Controls and Procedures
PART II. OTHER INFORMATION 8
Item 6 Exhibits and Reports on Form 8-K
8
SIGNATURES
9
CERTIFICATION STATEMENTS
Item 1. Financial Information
VITAL HEALTH TECHNOLOGIES, INC
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 2003 2002
------ --------------------- ------------------
Current assets:
Cash $ 39,886 $ 11,019
Prepaid expenses - 235
Accounts receivable 87,077 -
--------------------- ------------------
Total current assets 126,963 11,254
Other assets: 16,663 -
--------------------- ------------------
Total assets $ 143,626 $ 11,254
===================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 7,694 $ 16,105
Notes payable - 97,500
--------------------- ------------------
Total current liabilities 7,694 113,605
Long term liabilities 305,940 -
Total Liabilities 313,634 113,605
--------------------- ------------------
Stockholders' equity:
Undesignated stock: 5,000,000 shares authorized
none issued and outstanding - -
Common stock $.01 par value; 50,000,000 shares authorized;
shares issued and outstanding 3,741,250 in 2003 and
3,741,250 in 2002 37,413 37,413
Paid-in capital 12,085,674 12,125,310
Subscription receivable (6,660) (110,000)
Accumulated deficit (11,793,637) (11,793,637)
Deficit accumulated during the development stage (500,492) (361,437)
--------------------- ------------------
Total stockholders' equity (177,702) (102,351)
--------------------- ------------------
Total liabilities and stockholders' equity $ 143,626 $ 11,254
===================== ==================
VITAL HEALTH TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended Six Months Ended Reentrance to development
June 30, June 30, stage to
2003 2002 2003 2002 June 30, 2003
----------- ----------- ----------- ----------- -------------
Revenues $ -- $ -- $ -- $ -- $ 96,361
Cost of sales -- -- -- -- (38)
General and administrative expenses (40,596) (10,380) (78,368) (52,197) (865,859)
Interest expense (56,123) (2,567) (56,123) (5,294) (158,266)
Other income (expense) -- -- -- -- (7,404)
Debt forgiveness -- -- -- -- 435,243
Income tax expense -- -- -- -- (529)
----------- ----------- ----------- ----------- -----------
Net incomTotalsother income (96,719) (12,947) (134,491) (57,491) (500,492)
Other comprehensive income -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Comprehensive income (loss) $ (96,719) $ (12,947) $ (134,491) $ (57,491) $ (500,492)
=========== =========== =========== =========== ===========
Basic earnings (loss) per share $ (0.03) $ (0.00) $ (0.04) $ (0.05) $ (0.13)
=========== =========== =========== =========== ===========
Weighted average number of shares
outstanding 3,741,250 2,801,727 3,741,250 1,232,193 3,741,250
=========== =========== =========== =========== ===========
VITAL HEALTH TECHNOLOGIES, INC
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Six months ended From reentrance to
June 30, development stage to
2003 2002 June 30, 2003
----------- ------------ ----------------
Cash flows from operating activities:
Net income (loss) $ (96,719) $ (57,491) $(500,492)
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Debt forgiveness (88,920) -- (524,163)
Indebtedness incurred for services and storage -- -- 400,000
Implied compensation under SABS-T -- 10,000 130,000
Stock issued for services -- 23,100 23,100
Warrents issued for consulting services -- -- 2,012
Depreciation -- 726 2,672
Valuation allowance -- (726) 6,878
Inventory -- -- 38
Accounts receivable (87,077) -- (87,077)
Organization expenses (16,663) -- (16,663)
Prepaid expenses 235 -- 235
Accounts payable and other current liabilities (8,411) 2,124 (3,104)
--------- --------- ---------
Net cash (used in) operating activities (297,555) (22,267) (566,564)
--------- --------- ---------
Cash flows used for investing activities:
-- -- --
--------- --------- ---------
Net cash provided by (used in) investing activities -- -- --
--------- --------- ---------
Cash flows from financing activities:
Stock proceeds 14,641 50,000 144,255
Decrease (increase) in subscriptions receivable 103,340 -- (6,660)
Issuance of convertible notes payable -- 10,000 167,038
Principal payments (15,000) (15,000)
Increase in long term debt 208,441 -- 305,940
--------- --------- ---------
Net cash provided by (used in) financing activities 326,422 45,000 595,573
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 28,867 22,733 29,009
Cash and cash equivalents at beginning of year 11,019 1,379 10,877
--------- --------- ---------
Cash and cash equivalents at end of year $ 39,886 $ 24,112 $ 39,886
========= ========= =========
Supplemental disclosure of cash flow information:
Interest paid $ 56,123 $ -- $ 56,123
========= ========= =========
Income taxes paid $ -- $ -- $ 1,081
========= ========= =========
NOTES TO FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB 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. Consolidated financial statements have been prepared due to the
combination of Vital Health Technologies, Inc. and Caribbean American Health
Resorts, Inc. Operating results for the three-month period ended June 30, 2003
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2003. For further information, refer to the financial
statements and footnotes thereto included in the Company's Form 10-KSB for the
year ended December 31, 2002.
Nature of Business
The Company was incorporated on April 1, 1960, under the laws of the State
of Minnesota. On September 26, 2000, the Company changed its name to Vital
Health Technologies, Inc. Formerly the Company was known as Vital Heart Systems,
Inc.
The Company has focused its efforts on the design and marketing of a
non-invasive, stress-free coronary artery disease (CAD) detection device called
a Variance Cardiograph.
From 1993 to 1998 the Company struggled with a variety of financial
difficulties, which limited operations. Since 1998 through March 2003 the
Company has worked with a Minnesota finance and business development firm,
Aurora Capital Management, LLC and its affiliates in an effort to revitalize the
Company.
In March 2003, the Company executed and entered into a Share Exchange
Agreement (the "Exchange Agreement"), with Caribbean American Health Resorts,
Inc. Pursuant to the Exchange Agreement, on the closing date, the Company will
acquire all of the issued and outstanding equity interests of Caribbean American
Health Resorts,Inc. As consideration for the shares Caribbean American Health
Resorts, Inc, the Company will issue 8,109,709 shares of its common stock to the
shareholders of Caribbean American Health Resorts, Inc. Subsequent to the
closing of this transaction, and a concurrent transaction whereby certain
shareholders of the Company are selling 1,640,709 common shares, the remaining
stockholders of the Company shall retain 250,000 shares, or 2 1/2% of the issued
and outstanding common stock of the Company on an anti-dilutive basis (only for
90 days after the closing). As part of this transaction, certain existing
shareholders of the Company shall form a separate entity for the sole purpose of
purchasing the heart screening technology of the Company in exchange for
returning to the Company 1,850,000 shares of Company common stock presently held
by such shareholders.
The Company's common stock currently trades on the NASD's OTC Bulletin
Board exchange under the ticker symbol CAHR.
Development Stage Company
The Company has devoted the majority of its efforts to: maintenance of the
corporate status; settlement of liabilities; technology development and the
search for a viable method of operations and/or merger candidate.
Since 1998 the Company has been fully dependent on Aurora and its
affiliates for the maintenance of its corporate status and to provide all
managerial assistance and working capital support for the Company.
In 2001 the Company successfully developed a new prototype for its Variance
Cardiograph heart disease testing device that shortens the test time from the
original 45-minute version to 10-minutes, while at the same time reducing the
cost of manufacturing significantly. The Company completed field-testing and has
systems installed at two locations in the St. Paul/Minneapolis area for
evaluation purposes.
The Company holds and maintains a patent on its Variance Cardiography
technology that was issued in 1993.
On January 30, 2002 the Company entered into an agreement with a Texas
based finance and consulting firm, Focus Tech Investments, Inc. (FTI) where FTI
will provide periodic financing and will seek out potential merger/acquisition
candidates for the Company. The original agreement with FTI was to expire on
August 30, 2002. The Company and FTI have agreed to an extension for an
additional 180 days as the Company is having discussions with candidates FTI has
introduced.
On April 23, 2002 the Company entered into a stock purchase agreement with
Templar Comptier, Ltd whereas the Company sold 1,146,250 shares of its common
stock for $350,000. Templar Comptier has paid $50,000 in cash for 146,250 shares
that have been delivered and the Company holds a 180-day note for $300,000 with
the remaining 1,000,000 shares being held as collateral against the note.
The Company utilized the proceeds for ongoing administrative costs, debt
payment and to finance merger/acquisition expenses. The Company filed an SB-2
registration with the SEC for the shares issued to Templar Comptier, Ltd. and
386,224 shares that were previously issued to shareholders of Vital Health
Technologies.
In March 2003, the Company executed and entered into a Share Exchange
Agreement (the "Exchange Agreement"), with Caribbean American Health Resorts,
Inc. Pursuant to the Exchange Agreement, on the closing date, the Company will
acquire all of the issued and outstanding equity interests of Caribbean American
Health Resorts,Inc. As consideration for the shares Caribbean American Health
Resorts, Inc, the Company will issue 8,109,709 shares of its common stock to the
shareholders of Caribbean American Health Resorts, Inc. Subsequent to the
closing of this transaction, and a concurrent transaction whereby certain
shareholders of the Company are selling 1,640,709 common shares, the remaining
stockholders of the Company shall retain 250,000 shares, or 2 1/2% of the issued
and outstanding common stock of the Company on an anti-dilutive basis (only for
90 days after the closing). As part of this transaction, certain existing
shareholders of the Company shall form a separate entity for the sole purpose of
purchasing the heart screening technology of the Company in exchange for
returning to the Company 1,850,000 shares of Company common stock presently held
by such shareholders.
Item 2. Management's Discussion and Analysis of Financial Condition and Plan of
Operation
Three Months Ended June 30, 2003 and June 30, 2002
We generated no revenue for the three months ended June 30, 2003, as
compared to no revenue for the three months ended June 30,2002. Cost of sales
for the three months ended June 30, 2003 and 2002were $0 and $0, respectively.
General and administrative expenses for the three months ended June 30,2003
were $40,596 as compared to $10,380 in the same period of 2002.
We had interest expense in the amount of $56,123 for the three months ended
June 30,2003, as compared to $2,567 interest expense for the three months ended
June 30, 2002.
As a result of the foregoing, we realized a net loss of $96,719 for the
three months ended June 30,2003, as compared to a net loss of $12,947 for the
same period in 2002.
Liquidity and Capital Resources
At June 30, 2003, we had a working capital of $39,886, as compared to a
working capital $11,019 at December 31, 2002. The change is primarily due to the
merger with Caribbean American Health Resorts,Inc.
Plan for the next 12 months.
Our plan for the next 12 months is to handle the administrative and
reporting requirements of a public company. .The Company also plans to acquire
two hotel properties on the island of Barbados. The properties will be developed
into condominiums. It is expected that these condominiums will be sold to
doctors and surgeons who will perform surgical procedures and other alternative
medical treatmnets to their clients on the island. The Company is expected to
enter into an agreement in principle to lease a surgical facilty on the island
to perform the various cosmetic and reconstructive surgical procedures.
Item 3. Controls and Procedures
Within the 90 days prior to the date of this Form 10-QSB, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon that evaluation, the Company's Chief Executive Officer/Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company required to be included in the Company's periodic SEC
filings. There have been no significant changes in the Company's internal
controls or in other factors, which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.
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 within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 regarding events, conditions, and financial trends that may affect our
future plans of operations, business strategy, operating results, and financial
position. Persons reviewing this report are cautioned that any forward-looking
statements are not guarantees of future performance and are subject to risks and
uncertainties and that actual results may differ materially from those included
within the forward-looking statements as a result of various factors. Such
factors are discussed above and also include general economic factors and
conditions that may directly or indirectly impact our financial condition or
results of operations.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-B
99.1 Certification of Chief Executive Officer
(b) Reports on Form 8-K.
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: September 5, 2003 By: /s/ Halton Martin
=================================
Halton Martin, Director,
Principal Financial Officer and
Principal Executive Officer
8
CERTIFICATION OF
PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
I, Halton Martin, Principal Executive Officer, certify that:
1. I have reviewed this amended quarterly report on Form 10-QSB of Vital
Health Technologies, Inc.
2. Based on my knowledge, this amended quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this amended quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
amended quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this amended
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date with 90 days prior to the filing date of
this amended quarterly report (the "Evaluation Date"); and
c) presented in this amended quarterly report our conclusions about
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors and material weakness in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: September 5, 2003
/s/ Halton Martin
==========================================
Halton Martin, Principal Executive Officer
CERTIFICATION OF
PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
I, Halton Martin, Principal Finanical Officer, certify that:
1. I have reviewed this amended quarterly report on Form 10-QSB of Vital
Health Technologies, Inc.
2. Based on my knowledge, this amended quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this amended quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
amended quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this amended
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date with 90 days prior to the filing date of
this amended quarterly report (the "Evaluation Date"); and
c) presented in this amended quarterly report our conclusions about
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors and material weakness in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: September 5, 2003
/s/ Halton Martin
==========================================
Halton Martin, Principal Financial Officer