10QSB 1 caredecision10qsb.htm



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-QSB


(Mark One)

 

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

For the quarterly period ended: September 30, 2004

 

Or

 

[  ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

  

For the transition period from ____________ to _____________

 

Commission File Number: 000-33187

 

CareDecision Corporation

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

 

Nevada

(State or other jurisdiction of incorporation or organization)

91-2105842

(I.R.S. Employer Identification No.)

  

2660 Townsgate Road, Westlake Village, Suite 300, CA 91361

(Address of principal executive offices)

  

(805) 446-1973
(Issuer's telephone number)

 

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

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]


APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]


APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: 224,906,421




1








CareDecision Corporation

(a Development Stage Company)

Table of Contents

 

Page

PART I - FINANCIAL INFORMATION

 
  

Item 1. Financial Statements

3

  

Consolidated Balance Sheet September 30, 2004 (unaudited)

4

  

Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2004 and 2003 (unaudited) and For the Period July 6, 2000 (Inception) to September 30, 2004 (unaudited)

5

  

Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2004 and 2003 (unaudited) and For the Period July 6, 2000 (Inception) to September 30, 2004 (unaudited)

6

  

Notes to Financial Statements

7

  

Item 2. Management's Discussion and Analysis or Plan of Operation

10

  

Item 3. Controls and Procedures

16

  

PART II - OTHER INFORMATION

 
  

Item 6(a). Exhibits

17

  

Item 6(b). Reports Filed on Form 8-K

17

  

SIGNATURES

18



2








Part I - Financial Information


Item 1. Financial Statements


CareDecision Corporation

(a Development Stage Company)


Consolidated Balance Sheet

as of

September 30, 2004 (unaudited)


and


Consolidated Statements of Operations

for the Three and Nine Months Ended

September 30, 2004 (unaudited) and 2003 (unaudited),

and For the Period

July 6, 2000 (Inception) to September 30, 2004 (unaudited)


and


Consolidated Statements of Cash Flows

for the Nine Months Ended

September 30, 2004 (unaudited) and 2003 (unaudited),

and For the Period

July 6, 2000 (Inception) to September 30, 2004 (unaudited)



3










CareDecision Corporation

(a Development Stage Company)

Consolidated Balance Sheet

(unaudited)


Assets

September 30,

 

2004

Current assets:

  

Cash and equivalents

$

558,185

Accounts receivable, net

 

50,407

Inventory

 

59,685

Note receivable

 

-

Total current assets

 

668,277

   

Fixed assets, net

 

314,073

   

Other

 

-

   
 

$

982,350

   

Liabilities and Stockholders’ Equity

  
   

Current liabilities:

  

Accounts payable

$

50,000

Note payable to shareholder

 

10,497

Notes payable

 

-

Total current liabilities

 

60,497

   

Long-term debt

 

700,088

Convertible notes – related party

 

531

   
  

761,116

   

Stockholders’ equity:

  

Preferred stock, $0.001 par value, 5,000,000 shares

  

authorized, 207,526 shares issued and outstanding

 

208

Common stock, $0.001 par value, 1,200,000,000 shares

  

authorized, 224,906,421 issued and outstanding

 

224,906

Additional paid-in capital

 

9,107,921

(Deficit) accumulated during development stage

 

(9,111,800)

  

221,234

   
 

$

982,350


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



4








CareDecision Corporation

(a Development Stage Company)

Consolidated Statements of Operations

(unaudited)


 

July 6, 2000

 

For the three months ended

 

For the nine months ended

 

(Inception) to

 

September 30,

 

September 30,

 

September 30,

 

2004

 

2003

 

2004

 

2003

 

2004

          
          

Revenue

$         51,670

 

$        22,848

 

$     181,108

 

$        24,698

 

$            207,251

          

Expenses:

         

Hardware costs

69,874

 

-

 

89,969

 

-

 

89,969

Network and infrastructure

25,764

 

-

 

95,462

 

-

 

95,462

General and administrative expenses

44,020

 

35,556

 

185,338

 

119,545

 

363,224

Payroll expense

100,066

 

48,415

 

265,011

 

171,209

 

664,842

Stock-based compensation

33,600

 

-

 

33,600

 

-

 

33,600

for employee benefits

         

Professional fees

36,459

 

11,465

 

330,314

 

54,693

 

564,588

Stock-based compensation

410,850

 

152,750

 

1,399,369

 

508,750

 

4,477,648

for consulting fees

         

Software development

33,332

 

-

 

119,640

 

3,950

 

309,611

Stock-based compensation

21,600

 

-

 

21,600

 

-

 

21,600

for software development

         

Impairment loss on operating assets

-

 

-

 

278,428

 

-

 

1,279,198

Depreciation

19,842

 

80,622

 

77,787

 

246,274

 

255,684

Total expenses

795,407

 

328,808

 

2,896,518

 

1,104,421

 

8,155,426

          

Net operating (loss)

(743,737)

 

(305,960)

 

(2,715,410)

 

(1,079,723)

 

(7,948,175)

Other income (expense):

         

(Loss) on debt settlement

-

 

(25,000)

 

(377,136)

 

(62,094)

 

(480,155)

Interest income

1,200

 

-

 

2,204

 

561

 

4,995

Financing costs

-

 

-

 

(408,255)

 

-

 

(408,255)

Interest (expense)

(21,000)

 

(12,754)

 

(74,301)

 

(35,558)

 

(280,210)

          

Net (loss)

$     (763,537)

 

$    (343,714)

 

$(3,572,898)

 

$ (1,176,814)

 

$        (9,111,800)

          

Weighted average number of

         

common shares outstanding –

         

basic and fully diluted

216,394,551

 

100,990,475

 

183,469,542

 

92,711,681

  
          

Net (loss) per share – basic and fully diluted

$           (0.00)

 

$          (0.00)

 

$         (0.02)

 

$          (0.01)

  



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



5










CareDecision Corporation

(a Development Stage Company)

Consolidated Statements of Cash Flows

(unaudited)


 

July 6, 2000

 

For the nine months ended

  

(inception) to

 

September 30,

  

September 30,

  

2004

  

2003

  

2004

         

Cash flows from operating activities

        

Net (loss)

$

(3,572,898)

 

$

(1,176,814)

 

$

(9,111,800)

Adjustment to reconcile net (loss) to

        

net cash (used) by operating activities:

        

Stock-based compensation for employee benefits

 

33,600

  

-

  

33,600

Stock-based compensation for consulting fees

 

1,399,369

  

508,750

  

4,498,510

Stock-based compensation for professional fees

 

293,855

  

-

  

293,855

Stock-based compensation for software development

 

21,600

  

-

  

21,600

Stock-based compensation for financing costs

 

423,977

  

-

  

423,977

Warrants issued for interest expense

 

-

  

-

  

112,800

Loss on impairment of operating assets

 

278,428

  

-

  

1,279,198

Loss on debt settlement

 

377,136

  

62,094

  

480,155

Depreciation

 

77,787

  

246,274

  

255,684

Changes in operating assets/liabilities

        

(Increase) decrease in accounts receivable

 

(50,407)

  

5,376

  

(50,407)

Increase in notes receivable

 

-

  

(34,248)

  

-

(Increase) in inventory

 

(59,685)

  

-

  

(59,685)

Increase in accounts payable

 

50,000

  

-

  

50,000

Increase in accrued interest related to long-term debts

 

-

  

3,095

  

-

(Decrease) in other liabilities

 

(2,180)

  

-

  

-

Net cash (used) by operating activities

 

(729,418)

  

(385,473)

  

(1,772,513)

         

Cash flows from financing activities

        

Convertible notes – related party

 

(13,869)

  

50,000

  

(13,869)

Proceeds from long-term debt

 

721,088

  

25,000

  

1,246,088

Proceeds from note payable to shareholder

 

35,334

  

130,606

  

132,302

Payments on note payable to shareholder

 

(109,623)

  

(22,237)

  

(154,534)

Issuance of common stock

 

625,400

  

135,350

  

1,120,711

Net cash provided by financing activities

 

1,258,330

  

318,719

  

2,330,698

         

Net increase in cash

 

528,912

  

(66,754)

  

558,185

Cash – beginning

 

29,273

  

111,101

  

-

Cash – ending

$

558,185

 

$

44,347

 

$

558,185

         

Supplemental disclosures:

        

Interest paid

$

-

 

$

-

 

$

-

Income taxes paid

$

-

 

$

-

 

$

-

         

Non-cash transactions:

        

Number of common shares issued for stock-based compensation

 

94,210,500

  

26,309,748

  

144,987,985

Number of warrants issued for interest expense

 

10,000,000

  

-

  

34,000,000

Number of common shares issued for settlement

 

6,510,000

  

741,875

  

8,251,875

Number of common shares issued to acquire software

 

800,000

  

2,500,000

  

3,300,000

Number of common shares issued for accounts payable

 

2,000,000

  

-

  

2,000,000

Number of common shares issued as dividend

 

-

  

-

  

6,469,161

Number of stock options issued as compensation

 

-

  

-

  

19,750,000

Number of common shares issued for conversion of debt to eq