FORM 10-Q/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


x		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTS OF 1934


For the Quarter ended AUGUST 31, 2003		Commission file number: 000-14356

HEALTHTRAC, INC.

(Exact name of Registrant as specified in its charter)


CANADA		91-1353658
(State of incorporation)		(I.R.S. Employer Identification No.)

539 MIDDLEFIELD ROAD, REDWOOD CITY, CALIFORNIA		94063
(Address of principal executive offices)		(Zip Code)

Indicate by check mark whether the Registrant (i) 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 (or for such shorter period that the Registrant was required to file such reports), and (ii) 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 Securities Exchange Act of 1934).

Yes [ ] No [X]

The number of shares of common stock outstanding as of September 29, 2003 was 221,386,417.

TABLE OF CONTENTS


		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATIONS
Exhibit Index
EXHIBIT 99(A)

HEALTHTRAC, INC.

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION		Page

Item 1. Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheet at August 31, 2003 (unaudited) and February 28, 2003		4
	Condensed Consolidated Statements of Operations (unaudited) for the three months and six months ended August 31, 2003 and 2002		5
	Condensed Consolidated Statements of Stockholders Equity		6
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three and six months ended August 31, 2003 and 2002		7
	Notes to Condensed Consolidated Financial Statements (unaudited)		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Not applicable
Item 4. Controls and Procedures			19
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			19
Item 2 to 5 – Not applicable
Item 6. Exhibits and reports on Form 8K			20
SIGNATURES			21
CERTIFICATIONS			22

INTRODUCTORY NOTE

The Quarterly Report on Form 10-Q/A contains certain 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 and the Company intends that certain matters discussed in this report are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by the context of the statement which may include words such as the Company “believes,” “anticipates,” “expects,” “forecasts,” “estimates,” or other words of similar meaning and context. Similarly, statements that describe future plans, objectives, outlooks, targets, models or goals are also deemed forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those forecasted or anticipated as of the date of this report. Certain of such risks and uncertainties are described in close proximity to such statements and elsewhere in this report, including Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Stakeholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements or construe such statements to be a representation by the Company that the objectives or plans of the Company will be achieved. The forward-looking statements included in this report are made only as of the date of this report, and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

ITEM 1.
HEALTHTRAC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in United States dollars)


					August 31, 2003			February 28, 2003

					(Unaudited)
					(Restated - Note 2)
ASSETS
Current assets:
	Cash and cash equivalents				$	109,151		$	186,873
	Accounts receivable, net of allowance of $4,469 (Feb 28, 2003 - $4,469)					232,595			406,095
	Inventories					124,407			121,435
	Prepaid expenses and deposits					134,727			146,263

			Total current assets			600,880			860,666
Equipment, net						251,667			169,994
Intellectual property, net of $2,520,343 accumulated amortization (Feb 28, 2003 - $1,915,459)						3,528,475			4,133,359

					$	4,381,022		$	5,164,019

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				$	1,386,864		$	1,216,043
	Accrued liabilities					697,513			714,974
	Deferred revenue					209,224			328,826
	Current portion of obligations under capital lease					11,578			19,470
	Liabilities of discontinued operations (note 4)					165,000			200,000

			Total current liabilities			2,470,179			2,479,313
	Obligations under capital lease					9,344			9,344
	Shareholders’ equity:
			Common shares, no par value (note 5):
				Authorized: 300,000,000 (Feb 28, 2003 – 300,000,000) common shares Issued and outstanding: 220,886,417 (Feb 28, 2003 – 223,104,598)		121,844,921			121,809,921
	Shares to be issued					100,000			100,000
	Accumulated deficit					(120,043,422	)		(119,234,559	)

		Total shareholders’ equity				1,901,499			2,675,362

					$	4,381,022		$	5,164,019

Future operations (note 1)
Commitment and contingencies (notes 5 and 8)
Subsequent event (note 10)

See accompanying notes

HEALTHTRAC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in United States dollars)


			Three Months Ended						Six Months Ended

			August 31,			August 31,			August 31,			August 31,
			2003			2002			2003			2002
			(Restated - Note 2)						(Restated - Note 2)

			(unaudited)						(unaudited)
Revenue				820,440			817,600			1,663,929			1,846,687
Costs and expenses
	Direct costs			132,726			75,980			354,882			426,249
	Selling, general and administrative			796,337			1,141,969			1,517,635			2,420,373
	Amortization			312,905			354,501			627,707			705,777
	Write down of equipment			—			397,150			—			397,150

				1,241,968			1,969,600			2,500,224			3,949,549
Operating loss				(421,528	)		(1,152,000	)		(836,295	)		(2,102,862	)
Other income (expense)
	Forgiveness of debt			24,258						36,629
	Loss on disposal of fixed assets			(9,197	)		—			(9,197	)		—
	Miscellaneous			—			(8,365	)		—			450

				15,061			(8,365	)		27,432			450
Loss from continuing operations				(406,467	)		(1,160,365	)		(808,863	)		(2,102,412	)
Loss from discontinued operations				—			(15,480	)		—			(19,491	)

Loss for the period			$	(406,467	)	$	(1,175,845	)	$	(808,863	)	$	(2,121,903	)
Basic and diluted Income (loss) per common share (note 2)
		Continuing operations	$	—		$	(0.01	)	$	—		$	(0.01	)
		Discontinued operations	$	—		$	—			—			—

Loss for the period			$	—		$	(0.01	)	$	—		$	(0.01	)

Weighted average number of shares outstanding - basic and diluted				221,861,713			215,018,640			222,483,156			210,073,299

See accompanying notes

HEALTHTRAC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
(Expressed in United States dollars)
(Unaudited)


			Common Shares

						Assigned			Shares to			Accumulated
			Number			Value			be issued			deficit			Total

Balance, February 28, 2001				127,834,749		$	107,521,482		$	4,705,000		$	(107,156,515	)	$	5,069,967
Shares issued during the year
		Exercise of CCAA warrants		732,433			—			—			—			—
		Issued for acquisition of Sullivan Park		6,500,000			2,210,000			(2,700,000	)		—			(490,000	)
		Shares issued and to be issued for acquisition of Healthtrac		13,212,976			4,492,412			107,588			—			4,600,000
		Issued on acquisition of Med Wire assets		241,935			150,000			—			—			150,000
		Issued on acquisition of specific assets of Healthscape		631,579			240,000			—			—			240,000
		Shares issued for cash received pursuant to private placements		42,985,717			4,744,125			(2,005,000	)		—			2,739,125
		Shares to be issued for settlement of debt		—			—			6,000			—			6,000
		Shares issued for settlement of debt		3,716,090			971,767			—			—			971,767
		Shares issued for services		1,425,777			123,658			—			—			123,658
		Shares issued for employees’ and directors’ compensation		1,018,181			566,000			—			—			566,000
		Shares issued for severance pay		1,000,000			100,000			—			—			100,000
		Shares returned to treasury and cancelled		(265,424	)		—			—			—			—
		Shares to be issued for cash received pursuant to private placements		—			—			640,625			—			640,625
		Share issue costs		—			(24,000	)		—			—			(24,000	)
		Subscription receivable		—			(410,000	)		—			—			(410,000	)
		Loss for the year		—			—			—			(9,916,809	)		(9,916,809	)

Balance, February 28, 2002				199,034,013		$	120,685,444		$	754,213			(117,073,324	)		4,366,333
Shares issued during the year
	For cash pursuant to private placements			20,040,238			859,124			(561,625	)		—			297,499
	Shares to be issued for cash received pursuant to private placements			—			—			15,000			—			15,000
	Shares issued for employee compensation ($50,000 cash received from private placement)			1,000,000			130,000			—			—			130,000
	Subscription receivable			—			(77,500	)		—			—			(77,500	)
	Shares issued for services			1,450,000			45,500			—			—			45,500
	Shares issued and to be issued for acquisition of Healthtrac			431,293			107,588			(107,588	)		—			—
	Shares to be issued for settlement of debt			1,149,054			59,765			—			—			59,765
	Loss for the year			—			—			—			(2,161,235	)		(2,161,235	)

Balance, February 28, 2003				223,104,598			121,809,921			100,000			(119,234,559	)		2,675,362
Shares issued during the period
	Shares returned to treasury and cancelled			(2,218,181	)					—			—
	Subscription receivable						35,000									35,000
	Loss for the period			—			—			—			(808,863	)		(808,863	)
Balance, August 31, 2003 (Restated-Note 2)				220,886,417		$	121,844,921		$	100,000		$	(120,043,422	)	$	1,901,499

See accompanying notes

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States dollars)


			Three Months Ended						Six Months Ended

			August 31, 2003			August 31, 2002			August 31, 2003			August 31, 2002

			(unaudited)						(unaudited)
Cash flows from operating activities:
	Loss for the period			(406,467	)		(1,175,845	)	$	(808,863	)	$	(2,121,903	)
Items not involving cash Loss from discontinued operations				—			15,480			—			19,491
		Write down of equipment and loss on disposal of fixed assets		9,197			397,150			9,197			397,150
		Non-cash compensation expense		—			—			—			80,000
		Forgiveness of debt		(24,258	)		—			(36,629	)		—
		Inventory obsolescence provision		—			(30,768	)		—			(30,768	)
		Amortization		312,905			354,501			627,707			705,777
	Changes in non-cash operating working capital:
		Accounts receivable		76,201			8,310			173,500			136,400
		Inventories		4,047			21,995			(2,972	)		38,005
		Prepaid expenses and deposits		11,536			21,804			11,536			49,319
		Accounts payable		87,986			294,327			207,448			83,188
		Accrued liabilities		(17,251	)		(2,310	)		(17,461	)		316,327
		Deferred revenue		17			(103,645	)		(119,602	)		(108,993	)
		Deposit		—			—			—			53,299

	Cash received (used in) continuing operations			53,913			(199,001	)		43,861			(382,708	)
	Cash used in discontinued operations			(10,000	)		(12,721	)		(35,000	)		(4,652	)
				43,913			(211,722	)		8,861			(387,360	)
Investments:
	Acquisition of equipment			(113,691	)		(4,327	)		(113,691	)		(11,575	)
Financing:
	Cash received for shares issued			—			—			—			207,500
	Notes payable			—			44,999			—			33,720
	Repayment of capital lease obligation, net			(6,078	)		(18,886	)		(7,892	)		(35,024	)
	Issuance of common shares for cash			—			—			—			0
	Cash received for subscriptions receivable			35,000			—			35,000			15,000

				28,922			26,113			27,108			221,196
Decrease in cash and cash equivalents				(40,856	)		(189,936	)		(77,722	)		(177,739	)
Increase (decrease) in cash of discontinued operations				—			4,639			—			31,179
Cash and cash equivalents at beginning of period				150,007			287,129			186,873			248,392

Cash and cash equivalents at end of period			$	109,151		$	101,832		$	109,151		$	101,832

Non-cash transactions and supplemental disclosures (note 7)

See accompanying notes

HEALTHTRAC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2003
(Unaudited)

1. Description of the Company and Summary of Significant Accounting Policies

The Company

Healthtrac Inc. is primarily engaged in providing health management designed to improve the quality of care while reducing overall healthcare costs and the operation of a call center. The Company provides health management services to health plans, self-insured employers and government agencies via programs designed to postpone disease and disability through preventive practices and chronic disease self-management. Healthtrac operates one call center through its subsidiary, NorthNet Telecommunications, Inc., doing business as NorthStar TeleSolutions. It operates two segments: Healthcare and Call center.

Future Operations

These financial statements have been prepared on the going concern basis, which assumes the realization of assets and the settlement of liabilities in the normal course of business. The application of the going concern concept is dependent on the Company’s ability to generate future profitable operations and receive continued financial support from its shareholders and from external financing. The Company recognized losses of $406,467 and $808,863 for the three and six month periods ended August 31, 2003 and has an accumulated deficit of $120,043,422 at August 31, 2003. For the six month period ended August 31, 2003, the Company received $8,861 from operations, used $113,691 to fund acquisitions of new equipment and received $27,108 from financing activities resulting in a decrease in cash of $77,722. As at August 31, 2003, the Company has a working capital deficiency of $1,869,299 including cash of $109,151.

Management projects that the Company will require additional cash and working capital to fund planned operations and capital asset additions for fiscal 2004 of approximately $500,000. For the six month period ended August 31, 2003, the Company has used $112,722 to fund operations, equipment additions and capital lease payments, the total of which has been funded from $35,000 in subscriptions receivable and from $77,722 of cash on hand. Management expects to require $275,000 to fund operations and $25,000 to fund equipment additions and capital lease payments for the remaining six months of the year. In addition, management expects to require $200,000 to pay prior creditor liabilities which management is currently in negotiations with the creditors as to the amounts and terms of the repayments. There can be no assurance that funds from external financings will be available when required on an economical basis to the Company. The ability of the Company to continue as a going concern and realize the carrying value of its assets is dependent on the Company’s creditors willingness to negotiate reasonable settlements of prior period liabilities and willingness to support the Company, the ability of the Company to increase its Healthcare business revenues by increasing its customer base and reducing its operating costs so that the Company achieves profitable operations and on the Company’s ability to raise additional financing through share issuances. To date, subsequent to August 31, 2003, the Company has raised $nil in external financings through common share of private placements. If the Company is unable to obtain sufficient funds for operations, it will be required to reduce operations or divest assets.

These financial statements do not reflect any adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of operations.

Basis of presentation

These unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Except as disclosed in note 17 of the Company’s annual audited consolidated financial statements as at February 28, 2003, these principles do not differ materially from accounting principles generally accepted in Canada.

These consolidated financial statements do not include all disclosures required by accounting principles generally accepted in the United States or required by Canadian generally accepted accounting principles for annual financial statements, and accordingly, these consolidated financial statements should be read in conjunction with the Company’s most recent annual consolidated financial statements. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of these unaudited financial statements have been made. These consolidated financial statements follow the same accounting policies and methods of application used in the Company’s audited annual consolidated financial statements as of and for the year ended February 28, 2003.

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All subsidiaries were acquired from unrelated parties and have been accounted for using the purchase method. Their results of operations have been included from the respective effective dates of acquisition. All significant intercompany balances and transactions have been eliminated.


Canadian subsidiaries		United States subsidiaries

Canadian-American Communications Inc.		Northnet Telecommunications Inc.
Canadian Northstar Transmission Systems Ltd.		eCommerce Solutions inc.
Preferred Telemangement Inc. (“PTI)		Sullivan Park, Inc. (“Sullivan Park”)
Cam-Net Cellular Inc.		Healthtrac Corporation

Use of estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in preparing these financial statements in conformity with accounting principles generally accepted in the United States. Actual results could differ from those estimates. In these consolidated financial statements, significant areas requiring the use of management estimates relate to the determination of collectibility of accounts receivable, the recoverability of equipment and intellectual property and rates for depreciation and amortization.

Recent Accounting Pronouncements

In December 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (‘SFAS No. 148”), which provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS No. 148 is effective for fiscal years ending after December 15, 2002 with earlier application permitted. We have adopted the disclosure provisions of SFAS No. 148 in our consolidated financial statements.

In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosures Requirements for Guarantees, including indirect Guarantees of Indebtedness of Others”, an interpretation of FASB Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34 (“FIN No. 45”). FIN No. 45 clarifies the requirements of SFAS No. 5, “Accounting for Contingencies”, relating to the guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. The disclosure provisions of FIN No. 45 are effective for financial statements of interim or annual period that end after December 15, 2002. The provisions of FIN No. 45 for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002, irrespective of a guarantor’s year-end. The Company has considered the disclosure requirements of FIN No. 45 in the preparation of these financial statements.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150 requires that certain financial instruments issued in the form of shares that are mandatorily redeemable as well as certain other financial instruments be classified as liabilities in the financial statements. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective beginning the Company’s second quarter of 2004. The provisions of this statement are not expected to have a material impact on the Company’s consolidated financial position or results of operations.

In November 2002, FASB issued Emerging Issues Task Force 00-21, “Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”). EITF 00-21 addresses certain aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. In some arrangements, the different revenue-generating activities are sufficiently separable, and there may be sufficient evidence of their fair values to separately account for some or all of the deliverables. In other arrangements, some or all of the deliverables are not independently functional, or there is not sufficient evidence of their fair values to account for them separately. EITF 00-21 is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. We are currently evaluating the impact of this accounting pronouncement on our financial results.

FASB interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN No. 46”), as amended, applies in the first fiscal year or interim period beginning after December 15, 2003 to enterprises that hold a variable interest in variable interest entities created before February 1, 2003.

The adoption of FIN No. 45, SFAS 150 and EITF 00-21 did not have a material impact on the Company’s reported financial results. The adoption of FIN No. 46 is not expected to impact the Company’s consolidated financial statements on adoption.

Stock-based compensation plans

The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principle Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretation to account for its employee stock options plans. Under this method, compensation expense is recorded on the measurement date, which is generally the date of grant, only if the current market price of the underlying stock exceed the exercise price. SFAS No. 123, “Accounting for Stock-Based Compensation”, established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic valued-based method of accounting described above, and has adopted the disclosure requirements of SFAS No. 123 for employee stock option grants. Option grants to non-employees will be recognized at their fair value as the services are provided and the options earned.

Had the Company determined employee compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, the Company’s net loss would have been increase to the pro forma amounts indicated below (no compensation expense for the six months ended August 31, 2003 as no additional option grants occurred and there were no unvested outstanding options at the beginning of the period):


		Three months ended			Three months ended			Six months ended			Six months ended
		August 31, 2003			August 31, 2002			August 31, 2003			August 31, 2002

Loss for the period, as reported		$	(406,467	)	$	(1,175,845	)	$	(808,863	)	$	(2,121,903	)
Add:
	Employee stock-based compensation expense, as reported		—			—			—			80,000
Deduct:
	Employee stock-based compensation expense (recovery) determined under the fair value method		—			26,341			—			(149,008	)
	Proforma loss for the period	$	(406,467	)	$	(1,149,504	)	$	(808,863	)	$	(2,190,911	)
	Proforma basic and diluted loss per share	$	—		$	(0.01	)	$	—		$	(0.01	)

The weighted average fair value of employee options granted during the period ended August 31, 2002 was $0.08 estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:


	Six months ended
	August 31, 2002

Risk free interest rate		4.07	%
Annual dividends		—
Expected lives	1.25 years
Volatility		119	%

The Company has not granted options during the six month period ended August 31, 2003

2. Restatements

The Company has restated its quarterly condensed consolidated financial statements for the three and six month periods ended August 31, 2003. The following sets forth the effect and explanation of these adjustments and reclassifications:


		Three Months Ended			Six Months Ended
		August 31, 2003			August 31, 2003
Income (loss), as previously reported		$	272,090		$	(130,306	)
	Stock-based compensation (a)		(666,000	)		(666,000	)
	Compensation expense (b)		(12,557	)		(12,557	)

Loss for the period, as restated		$	(406,467	)	$	(808,863	)

Income (loss) per common share, basic and diluted, as previously reported		$	—		$	—
Income (loss) per common share, basic and diluted, as restated		$	—		$	—


		August 31, 2003,						August 31, 2003,
		as previously reported			Restatement			as restated
Current assets		$	600,880		$	—		$	600,880
Other assets			3,780,142			—			3,780,142

Total assets		$	4,381,022		$	—		$	4,381,022

Current liabilities		$	2,470,177		$	2		$	2,470,179
Obligations under Capital lease			9,344						9,344
Stockholders’ equity:
	Common shares		121,166,364			666,000	(a)		121,844,921
						12,557	(b)
	Shares to be issued		100,000			—			100,000
	Accumulated deficit		(119,364,863	)		(678,557	)		(120,043,422	)
						(2	)

Total liabilities and stockholders’ equity		$	4,381,022		$	—		$	4,381,022

(a)

Adjustment to eliminate the reversal of prior recognized stock-based compensation related to the Company’s former President. The stock-based compensation was originally recognized upon issuance of 2,018,181 fully vested common shares to settle outstanding wages and benefits and severance obligations of the Company. The 2,018,181 common shares were returned to the Company in the quarter ending August 31, 2003 in exchange for no consideration from the Company

(b)

Adjustment to eliminate prior recognized debit to common shares and record compensation expense in general and administrative expenses.

3. Loss per share

Loss per share has been calculated using the weighted average number of shares outstanding during the period. Diluted loss per share does not differ from basic loss per share as the impact of all outstanding options and warrants would be to reduce the loss per share.

2. Discontinued operations

On February 28, 2002, the Company closed its catalogue sales division. During the third quarter of fiscal 2003, the Company discontinued its PSSP (formerly e-commerce) segment which had been substantially curtailed in fiscal 2002. As a result, the catalogue and PSSP divisions represent discontinued operations to the Company. In accordance with generally accepted accounting principles in the United States, prior year and current year figures have been reclassified in the consolidated financial statements to separately reflect the assets, liabilities, revenues and expenses under discontinued operations accounting.

Summarized financial information for the discontinued operations is as follows:


	August 31, 2003		February 28, 2003

Accrued liabilities of discontinued operations	$	165,000	$	200,000

The Company expects to settle the remaining liabilities from discontinued operations in fiscal 2004. The Company is negotiating the settlements with the intention of settling at less than the recorded amount of $165,000. However, there can be no certainty that this will be achieved.


		Three months ended		Three months ended			Six months ended		Six months ended
		August 31, 2003		August 31, 2002			August 31, 2003		August 31, 2002

Revenue		$	—	$	(5,916	)	$	—	$	50,304
Expenses (Income)
	Direct costs		—		356			—		21,540
	Selling and administrative costs		—		28,015			—		53,961
	Amortization		—		13,100			—		26,201
	Write down of equipment		—		84,513			—		84,513
	Gain on forgiveness of debt				(116,420	)				(116,420	)

Loss from discontinued operations		$	—	$	15,480		$	—	$	19,491

5. Share capital

Authorized

	•		300,000,000 common stock without par value

	•		150,000,000 class A preference stock without par value

	•		150,000,000 class B preference stock without par value

	b.		Commitments to issue common shares

			The Company has committed to issue 13,000,000 shares to former creditors under a reorganization plan. As at August 31, 2003, 10,581,455 (February 28, 2003 — 10,581,455) shares have been issued to creditors leaving an outstanding commitment to issue 2,418,545 (February 28, 2003 — 2,418,545) shares.

	c.		Reduction of common share stated capital

			On August 22, 1996, the shareholders of the Company passed a special resolution to reduce the stated capital of the Company’s common shares by $86,729,000 (CDN $117,535,000). For accounting purposes, the recorded amounts for common shares and deficit have not been adjusted.

	d.		Warrants

	•		On June 4, 2001, the Company issued 65,000 share purchase warrants which expire June 4, 2004. Each warrant entitles the holder to purchase one common share for $0.56. As at August 31, 2003, 65,000 of these warrants were unexercised.

	•		On July 16, 2001, the Company issued 20,000 share purchase warrants which expired July 16, 2003. Each warrant entitled the holder to purchase one common share for $0.40. As at expiration, 20,000 of these warrants were unexercised.

	•		On August 3, 2001, the Company issued 50,000 share purchase warrants to a former employee in place of 45,000 options previously granted to that employee. The warrants expired on August 3, 2003. Each warrant entitled the holder to purchase one common share for $0.24. As at expiration, 50,000 of these warrants were unexercised.

	e.		Stock options

			The Company has a stock option plan, which allows the Company, at the discretion of the Board of Directors, to issue options to employees, directors and consultants to purchase common shares of the Company. Stock purchase options are granted having exercise prices based on the market price at the date of grant. The stock options expire at various dates ranging from July 28, 2010 to November 5, 2011. The stock options vest in accordance with each individual stock option agreement.

			The following summarizes changes in stock options since February 28, 2003:


	August 31, 2003

			Weighted average
	Shares		exercise price

Outstanding, beginning of year		260,000	$	0.15
Granted		—		—
Forfeited		—		—

Outstanding, end of period		260,000	$	0.15

The Company has the following stock purchase options outstanding and vested at August 31, 2003:


	Number		Price		Expiry

Employees		60,000	$	0.15	July 28, 2010
Director		200,000		0.15	November 5, 2011

Total		260,000	$	0.15

	f.		Issuance of shares for non-monetary consideration

			Shares issued for employee and director compensation, to third parties for services rendered, for settlement of debt and for the acquisition of assets or businesses are recorded based upon the market trading value of the shares at the date of the related agreements to issue the shares.

6. Segmented information

The Company has two operating segments – a healthcare division (Healthtrac Corp.) and a call center division (Northnet Telecommunications, Inc.). The segments are located in the United States. Segmented information for the six months ended August 31, 2003 with comparative figures for August 31, 2002 are as follows:


	Healthcare			Call Center
August 31, 2003	segment			segment			Total

Gross revenue	$	1,038,063		$	625,866		$	1,663,929
Corporate		—			—			—

	$	1,038,063		$	625,866		$	1,663,929

Segment income (loss)	$	(576,666	)	$	(10,202	)	$	(586,868	)
Corporate		—			—			(221,995	)

Income (loss) for the period	$	(576,666	)	$	(10,202	)	$	(808,863	)

Segment assets	$	4,049,836		$	275,914		$	4,325,750
Assets of discontinued operations		—			—			—
Corporate assets		—			—			55,272

Total assets	$	4,049,836		$	275,914		$	4,381,022

Amortization expense
Capital assets	$	6,403		$	16,420		$	22,823
Intellectual property		604,884			—			604,884
Corporate assets		—			—			—

	$	611,287		$	16,420		$	627,707


	Healthcare			Call Center
August 31, 2002	segment			segment		Total

Gross revenue	$	1,280,378		$	565,890	$	1,846,600
Corporate		—			—		—

	$	1,280,797		$	565,890	$	1,846,687

Segment income (loss)	$	(685,015	)	$	4,856	$	(680,159	)
Corporate		—			—		(1,422,253	)

Income (loss) for the period	$	(685,015	)	$	4,856	$	(2,102,412	)

Segment assets	$	5,159,382		$	273,521	$	5,432,903
Assets of discontinued operations		—			—		103,493
Corporate assets		—			—		127,972

Total assets	$	5,159,382		$	273,521	$	5,664,368

Equipment additions:
Equipment	$	5,385		$	5,075	$	10,460
Corporate		—			—		1,115

	$	5,385		$	5,075	$	11,575

Amortization expense:
Capital assets	$	10,141		$	22,526	$	32,667
Intellectual property		604,884			—		604,884
Corporate assets		—			—		68,226

	$	615,025		$	22,526	$	705,777


		Six Months ended		Six Months ended
		August 31, 2003		August 31, 2002

Call center service		$	625,866	$	565,890
Healthcare:
	Book sales		205,128		333,193
	Programs revenue		832,935		947,604

		$	1,663,929	$	1,846,687

Segmented information for the three months ended August 31, 2003 with comparisons for August 31, 2002 are as follows:


	Healthcare			Call Center
August 31, 2003	segment			segment			Total

Gross revenue	$	474,904		$	345,536		$	820,440
Corporate		—			—			—

	$	474,904		$	345,536		$	820,440

Segment income (loss)	$	(264,954	)	$	(17,373	)	$	(282,327	)
Corporate		—			—			(124,140	)

Income (loss) for the period	$	(264,954	)	$	(17,373	)	$	(406,467	)

Amortization expense:
Capital assets	$	3,202		$	7,262		$	10,464
Intellectual property		302,441			—			302,441
Corporate assets		—			—			—

	$	305,643		$	7,262		$	312,905


	Healthcare			Call Center
August 31, 2002	segment			segment			Total

Gross revenue	$	526,378		$	291,222		$	817,600
Corporate		—			—			—

	$	526,378		$	291,222		$	817,600

Segment income (loss)	$	(308,710	)	$	(423	)	$	(309,133	)
Corporate		—			—			(851,232	)

Income (loss) for the period	$	(308,710	)	$	(423	)	$	(1,160,365	)
Amortization expense:
Capital assets	$	4,422		$	13,524		$	17,946
Intellectual property		302,442			—			302,442
Corporate assets		—			—			34,113

	$	306,378		$	13,524		$	354,600

7. Non-cash transactions and supplemental disclosures


		Three Months ended		Three Months ended		Six Months ended		Six Months Ended
		August 31, 2003		August 31, 2002		August 31, 2003		August 31, 2002

Supplemental disclosures:
	Interest paid		1,508		—	$	3,163	$	17,739
	Taxes paid		—		—		—		—
Issuance of shares for:
	Settlement of debt		—		—		—		57,163
	Employee and director compensation		—		—		—		—
	Additions to capital assets financed by capital leases		—		42,481		—		42,481

8.		Commitment and contingencies

a.		The Company is committed to annual office and equipment rental payments for the next four fiscal years as follows:


2004	$	239,300
2005		220,911
2006		224,308
2007		118,195

	$	802,714

Legal proceedings:

	(i)		Rolling Meadows Premises

			The Company moved its PSSP operations from Rolling Meadows, Illinois to the Greenwood, Indiana offices during 2002. A complaint was filed for rent and damages in the amount of $859,512. The Company’s position on this proceeding is that the building has been sublet and deny that they owe the Plaintiff any money. The outcome of this complaint is currently uncertain.

	(ii)		Other Litigation

			The Company is involved in other legal proceedings and claims arising in the ordinary course of business including claims for outstanding payments for goods and services received and taxation claims. The Company does not believe that any liabilities related to the proceedings to which it is a party are likely to be, individually, or in the aggregate, material to the Company’s consolidated financial statements. The Company has accrued for any amounts it considers likely in the consolidated financial statements.

Comparative figures

Certain prior year figures have been reclassified to conform to the current year’s financial statement classification.

10.

Subsequent events

On October 24, 2003, the Company entered into an Asset Purchase Agreement (“Purchase Agreement”) with Ultra Communications, Inc., a Delaware corporation (“Ultra”). In accordance with the Purchase Agreement, Ultra acquired all Assets and current operating liabilities of the Call Center segment, all held by NorthNet Telecommunications, Inc. (“NorthStar”), a wholly owned subsidiary of the Company. Ultra is solely owned by Josh Thackery, NorthStar’s current President.

NorthStar was acquired by the Company in 2001. Since its acquisition, NorthStar has been an underperforming assets, unable to provide Healthtrac with ongoing income distributions. In addition, the sale of the call center business continues the Company’s ongoing effort to focus on the healthcare segment.

Under the terms of the agreement, Ultra will pay the Company $250,000 cash for the call center business’s assets and current operating liabilities at closing. The sale price was derived using a fair market analysis based on a multiple times operating results. The sale agreement further stipulates that for the first eight months after the sale, the Company will have the option to repurchase the assets sold for the original sale price plus interest based on a rate of 15% per annum.

The Company can, for eight months following the payment of the purchase price, at its option, conduct an independent fair market valuation of the assets sold. If the fair market value exceeds the original purchase price by greater than $10,000 Ultra can either pay the fair value discrepancy within 60 days to the Company or sell the assets back at the original purchase price plus accrued interest.

ITEM 2.
HEALTHTRAC, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management’s discussion and analysis of certain significant factors, which have affected the consolidated results of operations, and the consolidated financial position of the Company during the periods included in the accompanying condensed consolidated financial statements. This discussion should be read in conjunction with the related condensed consolidated financial statements and associated notes.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. The Company believes that the following are some of the more critical judgment areas in the application of its accounting policies that currently affect its consolidated financial condition and results of operations.

Revenue Recognition

Healthcare division

Service fees for the evaluation of health assessment questionnaires and the development and monitoring of health education plans are initially deferred and recognized as services are provided and the revenues earned. Sales of publications and written materials are recognized upon shipment, at which time title is transferred to the customer. Royalty revenue from licensing of the Company’s software is recognized in accordance with the provisions of SOP 97-2 “Software Revenue Recognition”, as amended.

Call Center division

The Call Center provides transaction processing, centralized billing, customer and technical support, order entry, order fulfillment, bill collection, help desk services and dispatch functions. Revenue is recognized based on monthly per customer transactions for standard services in accordance with contractual arrangements.

Accounts Receivable

The Company is required to estimate the collectibility of its trade receivables and unbilled costs and fees. A considerable amount of judgment is required in assessing the ultimate realization of these receivables including the current credit-worthiness of each customer. Significant changes in required reserves may occur in the future depending on future market conditions.

Inventory

The Company is required to state its inventories at the lower of cost or market. In assessing the ultimate realization of inventories, the Company is required to exercise judgment in its assessment of future demand requirements and compare that with the current or committed inventory levels. It is possible that changes in required inventory reserves may continue to occur in the future due to market conditions.

Intellectual property

The Company’s management has estimated the useful life of the intellectual property that was acquired through the acquisition of Healthtrac in fiscal 2002 as being five years. We have yet to realize net income from this acquisition and may not be able to realize these assets in the normal course of operations over the next five years. In estimating the fair value of intellectual property, our Company’s management estimates their value at the segment level. Management has reviewed recent sales transactions in the Healthcare business and believes that the fair value of this asset is higher than the net book value. The fair value will be impacted by general economic conditions, demand for the segment’s services and other factors. To the extent that the fair value is reduced in future periods, we may be required to record an impairment charge against the carrying value of the intellectual property.

Contingencies

The Company is involved in legal proceedings as disclosed in note 8 in the consolidated financial statements. The Company has recorded its best estimate of any costs associated with these legal proceedings. The accrual for these types of costs is subject to considerable uncertainty and actual results may differ from the amounts accrued.

Going Concern

Our ability to continue as a going concern and to realize the carrying value of our assets is dependent on our ability to obtain additional financing to fund future operations and on our ability to translate our growth into profitable operations. The outcome of these matters cannot be predicted with any certainty at this time. Accordingly, our consolidated financial statements contain note disclosures describing the circumstances that led there to be doubt over our ability to continue as a going concern that states that the Company has a working capital deficiency of $1,869,299 at August 31, 2003 and the Company has suffered recurring losses from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements have been prepared without any adjustments that would be necessary if we become unable to continue as a going concern and were therefore required to realize upon our assets and discharge our liabilities in other than the normal course of operations.

RESULTS OF OPERATIONS
(Unaudited)
(Expressed in United States dollars)


			Three Months Ended August 31,						Six Months Ended August 31,

			2003			2002			2003			2002

Revenues
	Healthcare		$	474,904		$	526,378		$	1,038,063		$	1,280,797
	Call center			345,536			291,222			625,866			565,890
	Corporate			—			—			—			—

		Total revenues	$	820,440		$	817,600		$	1,663,929		$	1,846,687

Operating loss
	Healthcare		$	(264,954	)	$	(308,710	)	$	(576,666	)	$	(685,015	)
	Call center			(17,373	)		(423	)		(10,202	)		4,856
	Corporate			(124,140	)		(851,232	)		(221,995	)		(1,422,253	)
	Discontinued Operations						(15,480	)		—			(19,491	)

Total loss			$	406,467		$	(1,175,845	)	$	(808,863	)	$	(2,121,903	)

REVENUES
On a consolidated basis, revenues from continuing operations for the six months ended August 31, 2003 decreased by 10% to $1,663,929 from the same period in the prior year. The decrease was primarily the result of a one time book order of $271,000 in the prior year in the Healthcare segment which was not repeated in the current period. Call Center revenue is 11% higher in the current period compared to the same period in fiscal 2003 due to an increase in customer transactions as a result of cable outages associated with the summer storms on the east coast.

On a consolidated basis, revenues from continuing operations for the three months ended August 31, 2003 remained constant. Healthcare revenues decrease of 9% was offset by a 19% increase in Call Center revenues. Healthcare revenue decrease was primarily driven by cyclical fluctuations due to timing of participant questionnaire mailings. The increase in call center revenues is due to the cable outages described above.

OPERATING LOSS

On a consolidated basis, the operating loss decreased 62% for the six months ended August 31, 2003. The reduced operating loss is the result of cost containment initiatives in the healthcare and corporate business segments and a write-down of equipment of $397,150 which occurred during the three months ended August 31, 2002 which was not repeated in 2003. The operating loss from corporate operations decreased by 84% to $221,995.

On a consolidated basis, the operating loss decreased 65% for the three months ended August 31, 2003. The reduced operating loss is the result of cost containment initiatives in the healthcare and corporate business segments and a write-down of equipment of $397,150 which occurred during the three months ended August 31, 2002.

DIRECT COSTS

Direct costs consist primarily of the cost of books sold for the healthcare segment. The decrease in direct costs from $426,249 to $354,882 for the six months ended August 31, 2003 is a result of lower book sales in the current period compared for the first two quarters in fiscal 2003.

Direct costs increased from $75,980 to $132,726 during the three months ended August 31, 2003 in comparison to the prior year quarter.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses consist primarily of personnel-related expenses, professional fees, rent and utilities. Selling, general and administrative expenses for the six months ended August 31, 2003 were $1,517,635 or 91% of revenues as compared to $2,420,373 or 131% of revenues for the six months ended August 31, 2002. Selling, general and administrative expenses for the three months ended August 31, 2003 were $796,337 or 97% of revenues as compared to $1,141,969 or 140% of revenues for the three months ended August 31, 2002. The decreases for the three and six months periods reflected the overall reduction in expenses in the healthcare and corporate business segments, as a result of a decrease in staff and lower outside services expenses.

AMORTIZATION

Amortization consists of depreciation on equipment and amortization of the intellectual property. The decrease from $705,777 to $627,707 for the six months ended August 31, 2003 and the decrease from $354,501 to $312,905 for the three months ended August is due to lower depreciation as certain equipment was written off in fiscal 2003 as described below.

WRITE-DOWN OF EQUIPMENT

During the three months ended August 31, 2002 the Company wrote-down equipment by $397,150, consisting of assets acquired on acquisition of Healthscape and Medwire. The Company determined that these assets were no longer of use to the company and abandoned them.

DISCONTINUED OPERATIONS

The Company discontinued its PSSP segment in fiscal 2003 the loss from discontinued operations for the three and six month periods represents the loss incurred on wind-up of the operations in fiscal 2003.

SUBSEQUENT EVENTS

Subsequent to quarter end the Company sold its call center operations for cash proceeds of $250,000. See Note 10 to the consolidated financial statements for further information. The Company intends to use the proceeds to fund current operations and settle outstanding liabilities.

LIQUIDITY AND CAPITAL RESOURCES

As at August 31, 2003, the company had a net working capital deficiency of $1,869,299, equipment with a book value of $251,667, intellectual property with a book value of $3,528,475 and obligations under long-term capital leases of $9,344 and a net equity of $1,901,499.

During the first two quarters of fiscal 2004, we received $8,861 in cash from operations compared to using $387,360 in cash for the first half of fiscal 2003. $27,108 was obtained from financing activities and the Company utilized $113,691 for new computer equipment and software additions for a net decrease in cash of $77,722. Cash at August 31, 2003 was $109,151.

We have historically funded operations through the issuance of common shares. We expect the need to fund our working capital deficit, future operations and investments through the issuance of common shares and from operations. Subsequent to August 31, 2003, there have not been any sales of common shares. There can be no assurance that we will be able to generate proceeds from the sale of common shares during the balance of fiscal 2004.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The Chief Executive Officer and Chief Financial Officer of the Company have concluded, based on their evaluation as of the date within 90 days prior to the date of the filing of this quarterly report on Form 10-Q, the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 and 15d-14. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective in ensuring that all material information required to be filed in this quarterly report have been made known to them, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls

There have been no significant changes in internal controls, or in other factors that could significantly affect internal controls subsequent to the date the Chief Executive Officer and Chief Financial Officer completed their evaluation.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company moved its PSSP (formerly e-commerce) operations from Rolling Meadows, Illinois to the Greenwood, Indiana offices during 2002. A complaint was filed for rent and damages in the amount of $859,512. The Company’s position on this proceeding is that the building has been sublet and denies that they owe the Plaintiff any money. The outcome of this complaint is currently uncertain.

The Company is involved in other legal proceedings and claims arising in the ordinary course of business including claims for outstanding payments for goods and services received and taxation claims. The Company does not believe than any liabilities related to the proceedings to which its is a party are likely to be, individually or in the aggregate, material to the Company’s consolidated financial condition, operations or cash flows. The Company has accrued for any amounts it considers likely in the consolidated financial statements.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits


	EXHIBIT
	NUMBER	DESCRIPTION

(The following exhibits are incorporated by reference into this Form 10-Q from reports previously filed by with the Securities and Exchange Commission)
	3.1	Certificate of continuance, dated January 11, 1991
	3.2	Certificate of Amendment, dated June 14, 1995
	3.3	Certificate of Amendment, dated September 14, 1995
	3.4	Certificate of Amendment, dated December 22, 1995
	3.5	Certificate of Amendment, dated March 23, 1999
	3.6	Certificate of Amendment, dated May 31, 1999
	3.7	Certificate of Amendment, dated July 18, 1997
	3.8	By-laws

21 Subsidiaries
	21.1	Canadian-American Communications Inc.
	21.2	Canadian Northstar Transmission Systems Ltd.
	21.3	Preferred Telemanagement Inc. (formerly Suncom Telemanagement Inc.)
	21.4	CAM-NET Cellular Inc. (formerly Direct Advantage, Inc. and Invoice Reduction Services, Inc.
	21.5	NorthNet Telecommunications Inc. (d.b.a. NorthStar Telesolutions)
	21.6	eCommerce Solutions Inc. (d.b.a. Professional Services and Software Products group)
	21.7	Healthtrac Corporation

(The following exhibits are attached to this report)

Other
	99(a)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Edward Sharpless, President, Chief Executive Officer and Tony Z. DiCostanzo, Chief Financial Officer.

(b)		Reports on Form 8-K

		None

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 thereto duly authorized.


Dated: November 25, 2003

	HEALTHTRAC, INC.

	By:	/s/ Edward W. Sharpless

		Chief Executive Officer

CERTIFICATIONS

I, Edward W. Sharpless, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of Healthtrac, Inc.;

2.		Based on my knowledge, this 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 quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this 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 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 we 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 quarterly report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)		presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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 function):

	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 any material weaknesses 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

The registrant’s other certifying officers and I have indicated in this quarterly report whether or not 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: November 25, 2003

	HEALTHTRAC, INC.

	By:	/s/ Edward W. Sharpless

		President and Chief Executive Officer

CERTIFICATIONS

I, Tony Z. DiCostanzo, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of Healthtrac, Inc.;

2.		Based on my knowledge, this 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 quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this 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 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 we 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 quarterly report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)		presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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 any material weaknesses 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


Dated: November 25, 2003

	HEALTHTRAC, INC.

	By:	/s/ Tony Z. DiCostanzo

		Chief Financial Officer

Exhibit Index


	EXHIBIT
	NUMBER	DESCRIPTION

(The following exhibits are incorporated by reference into this Form 10-Q from reports previously filed by with the Securities and Exchange Commission)
	3.1	Certificate of continuance, dated January 11, 1991
	3.2	Certificate of Amendment, dated June 14, 1995
	3.3	Certificate of Amendment, dated September 14, 1995
	3.4	Certificate of Amendment, dated December 22, 1995
	3.5	Certificate of Amendment, dated March 23, 1999
	3.6	Certificate of Amendment, dated May 31, 1999
	3.7	Certificate of Amendment, dated July 18, 1997
	3.8	By-laws

21 Subsidiaries
	21.1	Canadian-American Communications Inc.
	21.2	Canadian Northstar Transmission Systems Ltd.
	21.3	Preferred Telemanagement Inc. (formerly Suncom Telemanagement Inc.)
	21.4	CAM-NET Cellular Inc. (formerly Direct Advantage, Inc. and Invoice Reduction Services, Inc.
	21.5	NorthNet Telecommunications Inc. (d.b.a. NorthStar Telesolutions)
	21.6	eCommerce Solutions Inc. (d.b.a. Professional Services and Software Products group)
	21.7	Healthtrac Corporation

(The following exhibits are attached to this report)

Other
	99(a)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — Edward Sharpless, President, Chief Executive Officer and Tony Z. DiCostanzo, Chief Financial Officer.

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HEALTHTRAC INC 10-Q/A