FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the Quarter ended ~~AUGUST~~November 3130, 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 [X ] No [ X]

The number of shares of common stock outstanding as of ~~September~~January 297, ~~2003~~2004 was ~~221~~222,~~386~~632,~~417~~398.

TABLE OF CONTENTS

		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
		CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		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)
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

HEALTHTRAC, INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		Page
		Page
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheet at August 31, 2003 (unaudited) and February 28, 2003		4
	Condensed Consolidated Balance Sheets at November 30, 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 Operations (unaudited) for the three months and nine months ended November 30, 2003 and 2002		5
	Condensed Consolidated Statements of Stockholders Equity		6
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited)		6
	Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended August 31, 2003 and 2002		7
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three and nine months ended November 30, 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			1615
Item 3. Not applicable
Item 4. Controls and Procedures			1918
PART II — OTHER INFORMATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings			1918
Item 2 to 5 – Not applicable
Item 6. Exhibits and reports on Form 8K			2019
SIGNATURES			2120
CERTIFICATIONS			2221

SPECIAL NOTE REGARDING INDEPENDENT ACCOUNTANTS REVIEW

At the time of filing, our independent accountants, KPMG LLP, have not participated in the review of this quarterly report on Form 10-Q for the period ended August 31, 2003, as required under Article 10 of Regulation S-X. We expect KPMG LLP to complete their review by the end of October and we will file an amended 10Q to remove this statement at that time.

INTRODUCTORY NOTE

The Quarterly Report on Form 10-Q 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.

Explanatory Note

On October 24, 2003 the Company entered into an Asset Purchase Agreement with Ultra Communications, Inc., a Delaware Corporation, to sell all assets and current operating liabilities of the Company’s call center segment business. The Company recorded the results of Discontinued Operations through October 23, 2003. As the business sold represented a separate component of the Company, discontinued operations accounting applies. As a result, information in this report separates the results of discontinued operations from continuing operations for all periods presented. As such, readers should be aware that information contained in this report will differ significantly from information contained in reports previously filed by the Company with the Securities and Exchange Commission.

Auditors Review Note

Healthrac is continuing to work with KPMG on its review of the third quarter 10Q and entries associated with the sale of Northstar. On October 24, 2004, we anticipate filing an amended 10Q by the end of the week.

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

					August 31, 2003			February 28, 2003
					November 30, 2003			February 28, 2003
					(Unaudited)			(Restated – note 3)
ASSETS
Current assets:
	Cash and cash equivalents				$	~~109~~66,~~151~~369		$	~~186~~154,~~873~~760
	Accounts receivable, net of allowance of $4,469 (Feb 28, 2003 - $4,469)					232,595			406,095
	Accounts receivable					184,285			242,341
	Inventories					124,~~407~~572			121,435
	Prepaid expenses and deposits					~~134~~125,~~727~~138			~~146~~130,~~263~~280
			Total current assets			600,880			860,666
	Assets of discontinued operations (note 3)					—			353,030
Equipment, net						251,667			169,994
		Total current assets				500,364			977,018
Intellectual property, net of $2,520,343 accumulated amortization (Feb 28, 2003 - $1,915,459)						3,528,475			4,133,359
Equipment and software, net						126,079			28,814
					$	4,381,022		$	5,164,019
Intellectual property, net of $2,822,785 accumulated amortization (Feb 28, 2003 - $1,915,459)						3,226,033			4,133,359
					$	3,852,476		$	5,164,019
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				$	1996,~~386,862~~538		$	1844,~~216,043~~670
	Accrued liabilities					~~697~~734,~~513~~545			714,974
	Deferred revenue					~~209~~274,~~224~~879			328,826
	Current portion of obligations under capital lease					118,~~578~~608			19,470
	Liabilities of discontinued operations (note 3)					~~165~~332,~~000~~550			~~200~~571,~~000~~373
		Total current liabilities	~~Total current liabilities~~			2,~~470~~347,~~177~~120			2,479,313
	Obligations under capital lease					9,344			9,344
	Shareholders’ equity:
		Common shares, no par value (note 4):	~~Common shares, no par value (note 4):~~
				Authorized: 300,000,000 (Feb 28, 2003 – 300,000,000) common shares Issued and outstanding: 220,886,417 (Feb 28, 2003 – 223,104,598)		121,166,364			121,809,921
		Authorized: 300,000,000 (Feb 28, 2003 – 300,000,000) common shares
	Shares to be issued					100,000			100,000
		Issued and outstanding: 222,536,417 (Feb 28, 2003 – 223,104,598)				122,063,671			121,809,921
	Accumulated deficit					(119,364,863	)		(119,234,559	)
	Shares to be issued					—			100,000
		Total shareholders’ equity				1,901,501			2,675,362
	Accumulated deficit					(120,567,659	)		(119,234,559	)
					$	4,381,022		$	5,164,019
		Total shareholders’ equity				1,496,012			2,675,362
					$	3,852,476		$	5,164,019

Future operations (note 1) Commitment and contingencies (~~notes~~note 47) Subsequent ~~and~~event 7(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
			(unaudited)						(unaudited)
Revenue				820,440			817,600			1,663,929			1,846,687
Costs and expenses
	Direct costs			132,726			192,400			354,882			542,699
	Selling, general and administrative			117,780			1,141,969			839,078			2,420,373
	Amortization			312,905			354,501			627,707			705,777
	Write down of equipment			—			397,150			—			397,150
				563,411			2,086,020			1,821,667			4,065,969
Operating income (loss)				257,029			(1,268,420	)		(157,738	)		(2,219,282	)
Other income (expense)
	Forgiveness of debt			24,258			116,420			36,629			116,420
	Loss on disposal of fixed assets			(9,197	)		—			(9,197	)		—
	Miscellaneous			—			(8,365	)		—			450
				15,061			108,055			27,432			116,870
Income (loss) from continuing operations				272,090			(1,160,365	)		(130,306	)		(2,102,412	)
Income (loss) from discontinued operations				—			(15,480	)		—			(19,706	)
Income (loss) for the period			$	272,090		$	(1,175,845	)	$	(130,306	)	$	(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				221,861,713			215,018,640			222,483,156			210,073,299

(Expressed in United States dollars)


		Three Months Ended						Nine Months Ended

		November 30, 2003			November 30, 2002			November 30, 2003			November 30, 2002

					(Restated – note 3)						(Restated – note 3)
		(unaudited)						(unaudited)
Revenue			501,934			480,161			1,539,996			1,760,955
Costs and expenses:
	Direct costs		186,419			29,921			541,301			456,170
	Selling, general and administrative		676,382			337,713			1,593,565			2,219,577
	Amortization		315,042			310,119			926,329			993,370
	Write-down of equipment		—			—			—			397,150

			1,177,843			677,753			3,061,195			4,066,267
Operating loss			(675,909	)		(197,592	)		(1,521,199	)		(2,305,312	)
Other income (expense):
	Forgiveness of debt		28,298			—			64,927			—
	Loss on disposal of fixed assets		—			—			—			—
	Miscellaneous		491			(450	)		491			—

			28,789			(450	)		65,418			—
Loss from continuing operations			(647,120	)		(198,042	)		(1,455,781	)		(2,305,312	)
Income (loss) from discontinued operations (note 3)			122,883			(45,322	)		122,681			(59,958	)

Loss for the period		$	(524,237	)	$	(243,364	)	$	(1,333,100	)	$	(2,365,270	)

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			221,417,186			218,110,190			222,130,417			212,734,705

See accompanying notes

HEALTHTRAC, INC. CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDER~~STOCKHOLDERS’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
	Shares issued for employee compensation ($50,000 cash received from private			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	)		~~(666,000~~—	)		—			—			~~(666,000~~—	)
	Subscription receivable						35153,~~000~~750									35153,~~000~~750
	Shares to be issued for settlement of debt						(12,557	)								(12,557	)
	Shares issued for private placements in previous years			1,650,000			100,000			(100,000	)					—
	Loss for the period			—			—			—			(~~130~~1,~~306~~333,100	)		(~~130~~1,~~306~~333,100	)
Balance, August 31, 2003				220,886,417		$	121,166,364		$	100,000		$	(119,364,865	)	$	1,901,499
Balance, November 30, 2003				222,536,417		$	122,063,671			—		$	(120,567,659	)	$	1,496,010

See accompanying notes

~~HEALTHTRAC, INC.~~ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in United States dollars)

					Six Months Ended
				Three Months Ended								Nine Months Ended
					August 31, 2003				August 31, 2002
				November 30, 2003				November 30, 2002				November 30, 2003			November 30, 2002
				(unaudited)	~~(unaudited)~~							(unaudited)
Cash flows from operating activities:
								(Restated – note 3)							(Restated – note 3)
	Income (loss) for the period				$	(130,306	)		$	(2,121,903	)
Cash flows from operating activities:
Items not involving cash
	Loss for the period				(406,467	)			(1,175,845	)		$	(808,863	)	$	(2,121,903	)
			Loss from discontinued operations			—				—
Items not involving cash
			Write down of equipment			9,197				481,663
		Loss from discontinued operations			—				15,480				—			19,491
			Non-cash compensation expense			(666,000	)			80,000
		Write down of equipment and loss on disposal of fixed assets			9,197				397,150				9,197			397,150
			Forgiveness of debt			(63,834	)			(116,420	)
		Non-cash compensation expense			—				—				—			80,000
			Inventory obsolescence provision			—				(30,768	)
		Forgiveness of debt			(24,258	)			—				(36,629	)		—
			Amortization			627,707				731,978
		Inventory obsolescence provision			—				(30,768	)			—			(30,768	)
	Changes in non-cash operating working capital:
		Amortization			312,905				354,501				627,707			705,777
			Accounts receivable			173,500				146,873
	Changes in non-cash operating working capital:
			Prepaid expenses and deposits			11,537				52,519
		Accounts receivable			76,201				8,310				173,500			136,400
		Inventories	~~Inventories~~		4,047	~~(2,972~~	)		21,995	~~38,549~~			(2,972	)		38,005
			Accounts payable			170,819				87,161
		Prepaid expenses and deposits			11,536				21,804				11,536			49,319
			Accrued liabilities			(17,461	)			318,682
		Accounts payable			87,986				294,327				207,448			83,188
			Deferred revenue			(119,602	)			(108,993	)
		Accrued liabilities			(17,251	)			(2,310	)			(17,461	)		316,327
			Deposit			—				53,299
		Deferred revenue			17				(103,645	)			(119,602	)		(108,993	)
	Cash received (used in) continuing operations					(7,415	)			(387,360	)
		Deposit			—				—				—			53,299
	Cash received from (used in) discontinued operations					(35,000	)			—
	Cash received (used in) continuing operations				53,913				(199,001	)			56,418			(382,708	)
						(42,415	)			(387,360	)
	Cash used in discontinued operations				(10,000	)			(12,721	)			(35,000	)		(4,652	)
Investments:
					43,913				(211,722	)			8,861			(387,360	)
	Acquisition of equipment					(26,545	)			(11,575	)
Investments:
Financing:
	Acquisition of equipment				(113,691	)			(4,327	)			(113,691	)		(11,575	)
	Cash received for shares issued					—				207,500
Financing:
	Notes payable					(870	)			33,720
	Cash received for shares issued				—				—				—			207,500
	Repayment of capital lease obligation, net					(7,892	)			(35,024	)
	Notes payable				—				44,999				—			33,720
	Issuance of common shares for cash					—				0
	Repayment of capital lease obligation, net				(6,078	)			(18,886	)			(7,892	)		(35,024	)
	Cash received on shares to be issued					—				15,000
	Issuance of common shares for cash				—				—				—			0
						(8,762	)			221,196
	Cash received for subscriptions receivable				35,000				—				35,000			15,000
Increase (decrease) in cash and cash equivalents						(77,722	)			(177,739	)
					28,922				26,113				27,108			221,196
Increase (decrease) in cash of discontinued operations						—				—
Decrease in cash and cash equivalents					(40,856	)			(189,936	)			(77,722	)		(177,739	)
Cash and cash equivalents at beginning of period						186,873				283,659
Increase (decrease) in cash of discontinued operations					—				4,639				—			31,179
Cash and cash equivalents at end of period					$	109,151			$	105,920
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 6)

See accompanying notes

HEALTHTRAC, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~AUGUST 31~~November 30, 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 ~~income~~losses of $~~272~~524,~~090~~237 and $1,333,100 for the three ~~months~~ and nine month periods ended ~~August~~November 3130, 2003 and has an accumulated deficit of $~~119~~120,~~364~~567,~~863~~659 at ~~August 31~~November 30, 2003. For the nine month period ended ~~August~~ November 3130, 2003, the Company ~~used~~ received $428,~~415~~861 in cash tofrom ~~fund~~ operations, used $26113,~~545~~671 to fund acquisitions of new equipment and received $827,~~762~~108 ~~to fund~~ from financing activities resulting in a decrease in cash of $77,722. As at ~~August~~ November 3130, 2003, the Company has a working capital deficiency of $1,~~869~~846,~~297~~ 756, including cash of $~~109~~66,~~151~~369.

Management projects that the Company will require additional cash and working capital to fund planned operations and capital asset additions for ~~fiscal~~the ~~2004~~next twelve months of approximately $~~500~~600,000. 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~~ realize the carrying value of its assets is dependent on the Company’s ability to to increase its Healthcare business revenues by increasing its customer base and reducing its operating costs so that the Company achieves profitable operations and successfully negotiating concessions with the Company’s trade creditors on amounts owing. Subsequent to November 30, 2003, the Company had a judgment award against itself in the amount of $239,424.31 plus attorney fees and costs (note 7 b(i)). The Company is currently in negotiations with the plaintiff and evaluating its options. To date, subsequent to ~~August~~November 3130, 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~~Significant ofAccounting ~~presentation~~Policies

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, except as it relates to website development detailed below.

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.

Consolidation 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. Website Development The Company capitalizes the cost of website development costs, including customizing new software, significant upgrades and enhancements. Amortization of these costs is provided over three years on a straight line basis. Routine maintenance and operational costs that do not increase functionality are expensed as incurred. 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.

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 April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, which amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, to clarify under what circumstances a contract with an initial net investment meets the characteristics of a derivative, to clarify when a derivative contains a financing component, to amend the definition of an underlying to conform it to language in FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, and to amend certain other existing pronouncements. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, and is to be applied prospectively. Implementation of SFAS No. 149 is not expected to have a material effect on the Company’s financial position or results of operations.

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.

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~~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 ~~Company~~accounting ~~determined~~by ~~employee~~a ~~compensation~~vendor ~~cost~~for ~~based~~arrangements onunder 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 ~~value at~~values to separately account for some or all of the ~~grant~~deliverables. ~~date~~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 ~~its~~them ~~stock~~separately. ~~options~~EITF ~~under~~00-21 ~~SFAS~~is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. FASB interpretation No. ~~123~~ 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 ~~net loss~~reported ~~would~~financial ~~have~~results. ~~been~~The ~~increase~~adoption of FIN No. 46 is not expected to impact the ~~pro~~Company’s ~~forma~~consolidated ~~amounts~~financial ~~indicated~~statements ~~below~~on adoption. Stock-based compensation plans The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principle Board (no “APB”) Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations 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 exceeds 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 ~~six~~Company ~~months~~has ~~ended~~elected ~~August 31~~to continue to apply the intrinsic valued-based method of accounting described above, ~~2003~~and ashas noadopted ~~additional~~ the disclosure requirements of SFAS No. 123 for employee stock option grants. ~~and~~Option nogrants ~~outstanding~~to ~~vesting~~non-employees ~~for~~will ~~prior~~be ~~options~~recognized at their fair value as the ~~beginning~~services of are provided and the ~~period):~~ options earned.

	Three months ended		Three months ended			Six months ended			Six months ended
	August 31, 2003		August 31, 2002			August 31, 2003			August 31, 2002
Compensation expense	$	—	$	95,350		$	—		$	95,350
Pro forma income (loss)		272,090		(1,271,195	)		(130,306	)		(2,217,253	)
Pro forma income (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	%

2. 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 convertible securities would be to reduce the loss per share.

3. 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~~Had ~~financial~~the ~~information~~Company determined employee compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, the ~~discontinued~~Company’s ~~operations~~net loss iswould have been increased to the pro forma amounts indicated below (no compensation expense for the three and nine months ended November 30, 2003 as no ~~follows~~additional option grants occurred and there were no unvested outstanding options at the beginning of the period):

		August 31, 2003				February 28, 2003
			Three months ended				Three months ended			Nine months ended			Nine months ended
Accrued liabilities of discontinued operations		$	165,000			$	200,000
			November 30, 2003				November 30, 2002			November 30, 2003			November 30, 2002
Loss for the period, as reported			$	(524,237	)		$	(243,364	)	$	(1,333,100	)	$	(2,365,270	)
Add:
	Employee stock-based compensation expense, as reported			—				—			—			80,000
Deduct:
	Employee stock-based compensation expense (recovery) determined under the fair value method			—				—			—			(149,008	)
	Pro forma loss for the period		$	(524,237	)		$	(243,364	)	$	(1,333,100	)	$	(2,434,278	)
	Pro forma basic and diluted loss per share		$	—			$	—		$	(0.01	)	$	(0.01	)

The ~~Company~~weighted ~~expects~~average tofair ~~settle~~value ~~the~~of ~~remaining~~employee ~~liabilities~~options ~~from~~granted ~~discontinued operations~~during ~~in fiscal 2004. The Company is negotiating~~ the ~~settlements with the~~period ~~intention~~ended ofNovember 30, ~~settling~~2002 atwas ~~less than the recorded amount of~~ $~~150,000~~0.08 ~~However, there~~estimated ~~can~~using bethe noBlack-Scholes option-pricing ~~certainty~~model ~~that~~with ~~this~~the ~~will~~following beweighted ~~achieved.~~average assumptions:

			Three months ended		Three months ended			Six months ended		Six months ended
		Nine months ended
			August 31, 2003		August 31, 2002			August 31, 2003		August 31, 2002
		November 30, 2002
Revenue			$	—	$	(5,916	)	$	—	$	50,304
Risk free interest rate			4.07	%
Expenses
Annual dividends			—
	Direct costs			—		(116,064	)		—		(94,880	)
Expected lives		1.25 years
	Selling and administrative costs			—		32,992			—		54,176
Volatility			119	%
	Amortization			—		13,100			—		26,201
	Write down of equipment			—		84,513			—		84,513
Loss from discontinued operations			$	—	$	8,625		$	—	$	419,706

2. 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.

3. Discontinued operations

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 resulting in a gain on sale of $168,202. 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 currently has no intention on repurchasing the call center business.

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. To January 19, 2004, the Company has not exercised its option to conduct an independent valuation due to its current cash resource limitations.

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 call center, 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:


	November 30, 2003		February 28, 2003

Assets:
Cash	$		$	32,113
Accounts receivable				163,754
Prepaid expenses				15,983
Capital assets, net				141,180

Assets of discontinued operations	$	0	$	353,030

Liabilities:
Accounts payable	$	87,550		371,373
Accrued liabilities		245,000		200,000

Liabilities of discontinued operations	$	332,550	$	571,373

The Company expects to settle the remaining liabilities from discontinued operations in fiscal 2004 and fiscal 2005. The Company is negotiating the settlements with the intention of settling at less than the recorded amount of $332,550. However, there can be no certainty that this will be achieved.


		Three months ended			Three months ended			Nine months ended			Nine months ended
		November 30, 2003			November 30, 2002			November 30, 2003			November 30, 2002

Revenue		$	215,196		$	299,849		$	848,749		$	916,043
Expenses (income)
	Direct costs		—			—			—			21,540
	Selling and administrative costs		280,851			292,494			888,990			884,964
	Amortization		4,502			(2,343	)		20,922			46,384
	Write down of equipment		—			55,020			9,197			139,533
	Gain on forgiveness of debt		(24,838	)		—			(24,838	)		(116,420	)

Income (loss) before gain		$	(45,319	)	$	(45,322	)	$	(45,522	)	$	(59,958	)
Gain on disposal of asset			168,202			—			168,202			—

Income (loss) from discontinued operations		$	122,883		$	(45,322	)	$	122,680		$	(59,958	)

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~~November 3130, 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~~November 3130, 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, as previously reported		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:

	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:


	November 30, 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 November 30, 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.

5. 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	)	$	(2,355	)	$	(574,311	)
Corporate		—			—			444,005
Income (loss) for the period	$	(576,666	)	$	(2,355	)	$	(130,306	)
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	$	1,280,797		$	565,890	$	1,846,687
Corporate		—			—		—
	$	1,280,797		$	565,890	$	1,846,687
Segment income (loss)	$	(685,015	)	$	4,856	$	(680,159	)
Corporate		—			—		(1,422,256	)
Income (loss) for the period	$	(685,015	)	$	4,856	$	(2,102,415	)
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

		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

			The Company has one operating segment – a healthcare division (Healthtrac Corp.) upon the disposal of its call center segment on October 24, 2003 (note 2). The healthcare segment is located in the United States.

			Within the healthcare segment revenues, the four largest customers accounted for 80% (fiscal year 2002 - 80%) of total sales for the nine month period ended November 30, 2003; with two of those customers accounting for 61% (fiscal year 2002 - 68%) of segment revenues.


		Nine months ended		Nine months ended
		November 30, 2003		November 30, 2002

Healthcare segment:
	Book sales	$	309,500	$	368,753
	Programs revenue		1,230,496		1,392,202

		$	1,539,996	$	1,760,955

Non-cash transactions and supplemental disclosures

		August 31, 2003		August 31, 2002
		Three months ended				Three months ended		Nine months ended		Nine months ended
Supplemental disclosures:
		November 30, 2003				November 30, 2002		November 30, 2003		November 30, 2002
	Interest paid	$	3,163	$	17,739
Supplementary disclosures:
	Taxes paid		—		—
	Interest paid				1,508		—		3,163		17,739
Issuance of shares for:
	Taxes paid				—		—		—		—
	Settlement of debt		—		57,163
Issuance of shares for:
	Employee and director compensation				80,000
	Settlement of debt				—		—		—		57,163
	Additions to capital assets financed by capital leases				~~42,481~~—		42,481		—		42,481
	Acquisition of MedWire		—		—

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

2004	$	~~239~~247,~~300~~172
2005		~~220~~291,~~911~~755
2006		224,308
2007		118,195
	$	802,714

During the quarter ended November 30, 2003, the Company vacated leased premises located at 539 Middlefield Road. The Company has accrued the estimated future net costs of lease obligation of approximately $78,000 in the accounts and is currently negotiating payment terms with the landlord. The Company signed a new one year office space sublease agreement on November 1, 2003. Total remaining obligation under the lease for the period February 2004 through October 31, 2004 is $70,844.

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.
			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. After the close of the quarter, the courts entered a favorable ruling for the plaintiff in the amount of $239,424.31 plus attorney fees and costs. The Company has accrued $230,000 at November 30, 2003 pursuant to this ruling in accrued liabilities on the consolidated balance sheet. The company is currently in negotiation with the plaintiff and evaluating its options.
	(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.
			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 to incur in the consolidated financial statements.

Comparative figures

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

1516

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.

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. The Company recorded the results to Discontinued Operations through October 23, 2003. Information in this report separates the results of Discontinued Operations from Continuing Operations for all periods presented. As such, readers should be aware that information contained in this report will differ significantly from information contained in reports previously filled by the Company with the Securities Exchange Commission.

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~~segment

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~~segment

The Call Center, ~~provides~~which was disposed of on October 24, 2003 (note 3), 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~~17

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.

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 during the 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 7 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~~846,~~297~~756 at ~~August~~November 3130, 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,
			Three Months Ended November 30,						Nine Months Ended November 30,
			2003			2002			2003			2002
Revenues
	Healthcare		$	~~474~~501,~~904~~934		$	~~526~~480,~~378~~161		$	1,~~038~~539,~~063~~996		$	1,~~280~~760,~~797~~955
	Call center			345,536			291,222			625,866			565,890
	Corporate			—			—			—			—
		Total revenues	$	~~820~~501,~~440~~934		$	~~817~~480,~~600~~161		$	1,~~663~~539,~~929~~996		$	1,~~846~~760,~~687~~955
Operating Income (Loss)
Loss for the period
	Healthcare		$	(~~264~~486,~~954~~319	)	$	(~~308~~187,~~710~~074	)	$	(~~576~~1,~~666~~062,984	)	$	(~~685~~872,~~015~~089	)
	Call center			(4,816	)		(423	)		2,355			4,856
	Corporate			(160,800	)		(10,970	)		(382,795	)		(1,433,223	)
	Corporate			541,860			(851,232	)		444,005			(1,422,256	)
	Discontinued Operations			122,883			(45,322	)		122,681			(59,958	)
	Discontinued Operations			—			—			—			—
Total loss			$	(524,237	)	$	(243,364	)	$	(1,331,100	)	$	(2,365,270	)
Total operating income (loss)			$	272,090		$	(1,160,365	)	$	(130,306	)	$	(2,102,415	)

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.

~~OPERATING~~On ~~INCOME~~a ~~AND~~consolidated ~~LOSS~~basis, revenues from continuing operations for the nine months ended November 30, 2003 decreased by 12% to $1,539,996 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 offset by a smaller book order of $141,250 in the current year period. For the three months ended November 30, 2003, revenues increased by 5% due primarily to strong book sales in the quarter versus the same period in the prior year.

~~On a consolidated basis, the operating loss decreased 94% for the six months~~18 ~~ended August 31, 2003. The reduced operating loss is the result of cost~~ containment initiatives in the healthcare and corporate business segments coupled with the cancellation of previously issued shares for compensation for a former executive resulting in an offset to expenses of $666,000.

NET LOSS

On a consolidated basis, the operating loss decreased 34% for the nine months ended November 30, 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 second quarter ended August 31, 2002. The operating loss from corporate operations decreased by 73% to $382,795.

On a consolidated basis, the operating loss increased 242% for the three months ended November 30, 2003. The increased operating loss is the result of increased spending on information technology development initiatives within the healthcare segment and expenses recognized in association with the vacancy of leased building space in Redwood City.

DIRECT COSTS

Direct costs consist primarily of the cost of participant materials and books sold ~~for~~and utilized by the healthcare segment. The ~~decrease~~increase in direct costs from $~~542~~456,~~699~~170 to $~~354~~541,~~882~~301 for the nine months ended November 30, 2003 is a result of ~~lower~~ ~~book~~incremental ~~sales~~program inmaterial purchases the current period compared ~~for~~to the first three ~~two~~ quarters in fiscal 2003.

Direct costs, increased from $29,921 to $186,419 during the three months ended November 30, 2003 in comparison to the prior year quarter. This increase was primarily driven by a large book sale in the current period that did not occur in the same period in fiscal 2003.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses consist primarily of personnel-related expenses, professional fees, and rent and utilities. Selling, general and administrative expenses for the ~~six~~nine months ended ~~August~~November 3130, 2003 were $~~839~~1,~~078~~593,565 or 50100% of revenues as compared to $2,~~420~~219,~~373~~577 or ~~131~~126% of ~~revenues~~ revenues for the ~~six~~nine months ended ~~August~~November 3130, 2002. The decrease 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.

Selling, general and administrative expenses for the three months ended November 30, 2003 were $676,382 or 135% of revenues as compared to $337,713 or 70% of revenues for the three months ended November 30, 2002. The increase in current quarter spending was primarily associated with increased spending on information technology development and recorded liabilities associated with former leased office space.

AMORTIZATION

Amortization consists of depreciation on equipment and amortization of the intellectual property. The decrease from $~~354~~993,~~501~~370 to $~~312~~926,~~905~~329 for the nine months ended November 30, 2003 is due to lower depreciation as certain equipment was written off in fiscal ~~2004~~2003. The increase from $310,119 to $315,042 for the three months ended November 30, 2003 is primarily associated with the amortization of software development initiatives in the prior quarter.

~~ACCOUNTS~~WRITE-DOWN ~~RECEIVABLE~~OF EQUIPMENT

~~Accounts~~During ~~receivable~~the atnine ~~August~~months ended November 3130, ~~2003~~2002 ~~decreased~~the byCompany ~~approximately~~wrote-down ~~$173,500 to~~equipment ~~$232,595~~by ~~as compared with~~ $~~406~~397,~~095 at February 28, 2003~~150. This ~~decrease~~write ~~was~~down ~~due to~~occurred ~~increased~~in ~~collection activities at~~ the ~~healthcare~~second ~~and~~quarter ~~call~~ending ~~center business~~August 31, ~~segments~~2002.

~~INVENTORIES~~19

Inventories consist of various publications and written materials for the healthcare segment. Inventory levels remained materially unchanged as a result of inventory usage offset by new inventory purchases.

LIQUIDITY AND CAPITAL RESOURCES

As at August 31, 2003, the company had a net working capital deficiency of $1,869,297, capital assets with a book value of $251,667, intellectual property with a book value of $3,528,475 and obligations under capital leases of $9,344 resulting in a net equity of $1,901,501.

During the first two quarters of fiscal 2004, we used $42,415 in cash to fund operations compared to $387,360 in the first half of fiscal 2003. $8,762 was utilized to fund financing activities which consisted primarily of payments for capital lease obligations. The company utilized $26,545 for new computer asset additions for a net decrease in cash of $77,722. Cash at August 31, 2003 was $109,151.

We estimate our cash requirements for capital asset additions and for operations for fiscal 2004 to be less than $500,000. These funds are expected to be obtained through external financing and cash flow from operations. There can be no assurance that funds from external financings will be available when required on an economical basis. We will continue to search for appropriate acquisitions to compliment our existing operations. Where possible, we will pay for acquisitions through the issuance of our common shares.

LIQUIDITY AND CAPITAL RESOURCES

As at November 30, 2003, the company had a net working capital deficiency of $1,846,756, capital assets with a book value of $126,079, intellectual property with a book value of $3,226,033, obligations under long-term capital leases of $9,344 and a net equity of $1,496,010.

During the first three 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 November 30, 2003 was $66,369.

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 November 30, 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 or successfully negotiate concessions with the Company’s trade creditors on amounts owing. Subsequent to November 30, 2003, the Company had a judgment aware against itself in the amount of $239,424.31 plus legal fees (note 7 b(i)). The Company is currently in negotiations with the plaintiff and evaluating its options.

Management projects that the Company will require additional cash and working capital to fund planned operations and capital asset additions for the next twelve months of approximately $600,000. 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 ability to increase its Healthcare business revenues by increasing its customer base and reducing its operating costs so that the Company achieves profitable operations and successfully negotiating concessions with the Company’s trade creditors on amounts owing. Subsequent to November 30, 2003, the Company had a judgment award against itself in the amount of $239,424.31 plus attorney fees and costs (note 7 b(i)). The Company is currently in negotiations with the plaintiff and evaluating its options. To date, subsequent to November 30, 2003, the Company has raised $nil in external financings through common share private placements. If the Company is unable to obtain sufficient funds for operations, it will be required to reduce operations or divest assets.

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~~ deny that they owe the Plaintiff any money. ~~The~~After ~~outcome~~the close of the quarter, the courts entered a favorable ruling for the plaintiff in the amount of $239,424.31 plus attorney fees and costs. The Company has accrued $230,000 at November 30, 2003 pursuant to this ~~complaint~~ruling in accrued liabilities on the consolidated balance sheet. The company is currently ~~uncertain~~in negotiation with the plaintiff and evaluating its options.

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.

1921

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

	EXHIBIT	~~EXHIBIT~~
	NUMBER	~~NUMBER~~	~~DESCRIPTION~~	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
		2(i)		Asset Purchase Agreement, dated October 23, 2003, by and between the Company and Ultra Communications, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed on September 28, 2003).
		3.2	Certificate of Amendment, dated June 14, 1995
		3.1		Certificate of continuance, dated January 11, 1991
		3.3	Certificate of Amendment, dated September 14, 1995
		3.2		Certificate of Amendment, dated June 14, 1995
		3.4	Certificate of Amendment, dated December 22, 1995
		3.3		Certificate of Amendment, dated September 14, 1995
		3.5	Certificate of Amendment, dated March 23, 1999
		3.4		Certificate of Amendment, dated December 22, 1995
		3.6	Certificate of Amendment, dated May 31, 1999
		3.5		Certificate of Amendment, dated March 23, 1999
		3.7	Certificate of Amendment, dated July 18, 1997
		3.6		Certificate of Amendment, dated May 31, 1999
		3.8	By-laws
		3.7		Certificate of Amendment, dated July 18, 1997
21 Subsidiaries
		3.8		By-laws
		21.1	Canadian-American Communications Inc.
10 Material Contracts
		21.2	Canadian Northstar Transmission Systems Ltd.
		10.1		Lease agreement between Healthtrac, Inc. and Encore LLC dated October 1,
		21.3	Preferred Telemanagement Inc. (formerly Suncom Telemanagement Inc.)
21 Subsidiaries
		21.4	CAM-NET Cellular Inc. (formerly Direct Advantage, Inc. and Invoice Reduction Services, Inc.
		21.1		Canadian-American Communications Inc.
		21.5	NorthNet Telecommunications Inc. (d.b.a. NorthStar Telesolutions)
		21.2		Canadian Northstar Transmission Systems Ltd.
		21.6	eCommerce Solutions Inc. (d.b.a. Professional Services and Software Products group)
		21.3		Preferred Telemanagement Inc. (formerly Suncom Telemanagement Inc.)
		21.7	Healthtrac Corporation
		21.4		CAM-NET Cellular Inc. (formerly Direct Advantage, Inc. and Invoice Reduction Services, Inc.
(The following exhibits are attached to this report)
		21.5		NorthNet Telecommunications Inc. (d.b.a. NorthStar Telesolutions)
Other
		21.6		eCommerce Solutions Inc. (d.b.a. Professional Services and Software Products group)
		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.
		21.7		Healthtrac Corporation
(The following exhibits are attached to this report)
Other
		31.1 - 32.1		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~~

20Current report on Form 8-K, furnished October 2, 2003. Current report on Form 8-K, furnished October 3, 2003. Current report on Form 8-K, furnished October 28, 2003.

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: October 20, 2003
	HEALTHTRAC, INC.
	By:	/s/ Edward W. Sharpless
		Chief Executive Officer

Dated: January 20, 2004

21 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;

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 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

6. 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: October 20, 2003
	HEALTHTRAC, INC.
	By:	/s/ Edward W. Sharpless
		President and Chief Executive Officer

CERTIFICATIONS

I, Tony Z. DiCostanzo, certify that:

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

Dated: October 20, 2003
	HEALTHTRAC, INC.
	By:	/s/ Tony Z. DiCostanzo
		Chief Financial Officer

Exhibit Index

	EXHIBIT	~~EXHIBIT~~
	NUMBER	~~NUMBER~~	~~DESCRIPTION~~	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
		2(i)		Asset Purchase Agreement, dated October 23, 2003, by and between the Company and Ultra Communications, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed on September 28, 2003).
		3.2	Certificate of Amendment, dated June 14, 1995
		3.1		Certificate of continuance, dated January 11, 1991
		3.3	Certificate of Amendment, dated September 14, 1995
		3.2		Certificate of Amendment, dated June 14, 1995
		3.4	Certificate of Amendment, dated December 22, 1995
		3.3		Certificate of Amendment, dated September 14, 1995
		3.5	Certificate of Amendment, dated March 23, 1999
		3.4		Certificate of Amendment, dated December 22, 1995
		3.6	Certificate of Amendment, dated May 31, 1999
		3.5		Certificate of Amendment, dated March 23, 1999
		3.7	Certificate of Amendment, dated July 18, 1997
		3.6		Certificate of Amendment, dated May 31, 1999
		3.8	By-laws
		3.7		Certificate of Amendment, dated July 18, 1997
21 Subsidiaries
		3.8		By-laws
		21.1	Canadian-American Communications Inc.
10 Material Contracts
		21.2	Canadian Northstar Transmission Systems Ltd.
		10.1		Lease agreement between Healthtrac, Inc. and Encore LLC dated October 1,
		21.3	Preferred Telemanagement Inc. (formerly Suncom Telemanagement Inc.)
21 Subsidiaries
		21.4	CAM-NET Cellular Inc. (formerly Direct Advantage, Inc. and Invoice Reduction Services, Inc.
		21.1		Canadian-American Communications Inc.
		21.5	NorthNet Telecommunications Inc. (d.b.a. NorthStar Telesolutions)
		21.2		Canadian Northstar Transmission Systems Ltd.
		21.6	eCommerce Solutions Inc. (d.b.a. Professional Services and Software Products group)
		21.3		Preferred Telemanagement Inc. (formerly Suncom Telemanagement Inc.)
		21.7	Healthtrac Corporation
		21.4		CAM-NET Cellular Inc. (formerly Direct Advantage, Inc. and Invoice Reduction Services, Inc.
(The following exhibits are attached to this report)
		21.5		NorthNet Telecommunications Inc. (d.b.a. NorthStar Telesolutions)
Other
		21.6		eCommerce Solutions Inc. (d.b.a. Professional Services and Software Products group)
		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.
		21.7		Healthtrac Corporation
(The following exhibits are attached to this report)
Other
		31.1 - 32.1		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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Filing Compare · HEALTHTRAC INC