8-K/A 1 t23552.txt AMENDED CURRENT REPORT OF 10/9/01 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (date of earliest event reported): OCTOBER 9, 2001 NEXT GENERATION TECHNOLOGY HOLDINGS, INC. DELAWARE 000-24941 06-1255882 (STATE OF INCORPORATION (COMMISSION (IRS EMPLOYER FILE NUMBER) IDENTIFICATION NUMBER) IDENTIFICATION NO.) 33 CITY CENTRE DRIVE, UNIT 354 MISSISSAUGA, ONTARIO CANADA L5B 2N5 905-306-9671 ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED (1) Financial statements of HealthyConnect.com, Inc. as at December 31, 1999 and 2000 (audited) (2) Financial statements of HealthyConnect.com, Inc. as at September 30, 2001 (unaudited) (B) PRO FORMA FINANCIAL INFORMATION (1) Next Generation Technology Holdings, Inc. pro forma consolidated balance sheet as at September 30, 2001 (unaudited) (2) Next Generation Technology Holdings, Inc. pro forma consolidated statement of income for the nine month period ended September 30, 2001 (unaudited) (3) Next Generation Technology Holdings, Inc. pro forma consolidated statement of income for the year ended December 31, 2000 (unaudited) (C) EXHIBITS None. FINANCIAL STATEMENT INDEX Report of Independent Auditors, BDO Dunwoody LLP Financial Statements of HealthyConnect.com, Inc. as at December 31, 1999 and December 31, 2000 (audited) Financial Statements of HealthyConnect.com, Inc. as at September 30, 2001 (unaudited) Next Generation Technology Holdings, Inc. pro forma consolidated balance sheet as at September 30, 2001 (unaudited) Next Generation Technology Holdings, Inc. pro forma consolidated statement of income for the nine month period ended September 30, 2001 (unaudited) Next Generation Technology Holdings, Inc. pro forma consolidated statement of income for the year ended December 31, 2000 (unaudited) BDO [LOGO] BDO DUNWOODY LLP 4255 Sherwoodtowne Blvd. Chartered Accountants Mississauga, Ontario L4Z 1Y5 and Consultants Telephone: (905) 270-7700 Telefax: (905) 270-7915 ================================================================================ AUDITORS' REPORT -------------------------------------------------------------------------------- TO THE SHAREHOLDERS HEALTHYCONNECT.COM, INC. We have audited the balance sheets of HealthyConnect.com Inc. as at December 31, 2000 and 1999 and the statements of operations, shareholders' equity and cash flows for the year ended December 31, 2000 and the period from inception to December 31, 1999. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at December 31, 1999 and 2000 and the results of its operations and its cash flows for the year ended December 31, 2000 and the period from inception to December 31, 1999 in accordance with generally accepted accounting principles in the United States of America. /S/ BDO DUNWOODY LLP -------------------- Chartered Accountants Mississauga, Ontario December 20, 2001

The accompanying summary of significant accounting policies and notes are an integral part of these financial statements

The accompanying summary of significant accounting policies and notes are an integral part of these financial statements

The accompanying summary of significant accounting policies and notes are an integral part of these financial statements

The accompanying summary of significant accounting policies and notes are an integral part of these financial statements

The accompanying summary of significant accounting policies and notes are an integral part of these financial statements ================================================================================ HEALTHYCONNECT.COM INC. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DECEMBER 31, 2000 AND 1999 (UNAUDITED SEPTEMBER 30, 2001 AND 2000) -------------------------------------------------------------------------------- ORGANIZATION AND DESCRIPTION OF BUSINESS HealthyConnect.com Inc. (the "Company or HealthyConnect") was incorporated in the State of Delaware on November 3, 1999. HealthyConnect is a web management information technology company with proprietary software and web architecture engineering capabilities. HealthyConnect software products include WebKit, a web enabling hospital-based software, Professional Health Monitor, a physician office management software and Clinic@Home, a consumer health management software. GENERAL The financial statements are expressed in United States dollars and are prepared in accordance with U.S. generally accepted accounting principles. USE OF ESTIMATES Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. INTERIM FINANCIAL STATEMENTS The interim financial statements are unaudited and have been prepared by management using significant accounting policies as disclosed in these financial statements and in management's opinion have been properly prepared using judgment within reasonable limits of materiality. CAPITAL ASSETS Capital assets are recorded at cost and are amortized on a straight-line basis over their estimated useful lives as follows: Computer equipment - 2 years Furniture - 2 years Leasehold improvements - 2 years SOFTWARE ASSETS Software assets consisting mainly of assets acquired through the Harmonie transaction (Note 3) are recorded at cost and are amortized on a straight-line basis over their estimated useful life of 24 months. ================================================================================ HEALTHYCONNECT.COM INC. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DECEMBER 31, 2000 AND 1999 (UNAUDITED SEPTEMBER 30, 2001 AND 2000) -------------------------------------------------------------------------------- REVENUE RECOGNITION The Company's significant revenues are generated from licensing, implementation and maintenance and support related to its software applications. The Company uses the following criteria for revenue recognition: Licensing fees are recognized at the time of acceptance of the software by the client. Service fees are recognized as services are provided. Maintenance and support revenue is recognized on a straight-line basis over the term of the contract, the balance being deferred. RESEARCH AND DEVELOPMENT Research and development costs relating to the continuing development of existing software products is expensed as incurred. INCOME TAXES The Company accounts for income taxes under the asset and liability method. Under this method, future income tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial reporting and tax bases of assets and liabilities and available loss carryforwards. A valuation allowance is established to reduce tax assets if it is more likely than not that all or some portions of such tax assets will not be realized. ================================================================================ HEALTHYCONNECT.COM INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (UNAUDITED SEPTEMBER 30, 2001 AND 2000) -------------------------------------------------------------------------------- 1. DUE TO/FROM SHAREHOLDER At December 31, 1999, amounts due from shareholder represent $12,000 due from Med-Emerg International Inc. The receivable is due on demand and is non-interest bearing. On June 10, 2000, the Company borrowed $175,000 U.S. from a strategic partner, TravelbyUs.com. On June 21, 2000, 1,200,000 common shares were issued to TravelbyUs.com as compensation over and above the interest charge. At December 31, 2000, the note payable is due on demand and bears interest at 6% per annum. At September 30, 2001, the note payable to TravelbyUs.com is $54,400. The note payable is due on demand and bears interest at 6% per annum.

3. SOFTWARE ASSETS On June 19, 2000, the Company purchased all of the outstanding shares of Harmonie Group, Inc. (Boston, Massachusetts) ("Harmonie"), a provider of hospital based web enabled patient information management software. The Company purchased the securities of Harmonie in exchange for 2,633,546 HealthyConnect.com, Inc. common shares. The transaction has been accounted for using the purchase method of accounting. Upon completion the Company and Harmonie were merged. Net assets of Harmonie were nominal and the purchase price of $1,755,697, plus acquisition costs of $238,705, were allocated to the software asset. In addition, a conditional stock exchange agreement was entered into by Med-Emerg International Inc., whereby if the Company has not completed an underwritten public offering within fourteen months of the Harmonie closing (Note 3), the former Harmonie shareholders have the option of exchanging their HealthyConnect.com, Inc. shares for Med-Emerg International Inc. common shares. In August, 2001, three of the former Harmonie shareholders exchanged 1,744,706 of their shares. As a result of this transaction, the Company issued 3,199,866 shares to Med-Emerg International Inc. ================================================================================ HEALTHYCONNECT.COM INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (UNAUDITED SEPTEMBER 30, 2001 AND 2000) -------------------------------------------------------------------------------- 3. SOFTWARE ASSETS (continued) PRO FORMA RESULTS OF OPERATIONS (UNAUDITED) Had the acquisition occurred effective January 1, 2000 and January 1, 1999, the pro forma results of operations would have been as follows: 2000 1999 ---------------- ------------- Revenue $ 284,886 $ 606,019 Net income (loss) 384,143 (521,110) -------------------------------------------------------------------------------- 4. RELATED PARTY TRANSACTIONS Included in accounts payable is $45,000 (September 30, 2001) due to shareholders as compensation for services rendered. -------------------------------------------------------------------------------- 5. NOTE PAYABLE The Company borrowed $325,000 from Next Generation Technology Holdings, Inc. during 2001. The note payable bears interest at 10% and is secured by accounts receivable. The note payable is due by December 31, 2001. If the note is not paid in full by December 31, 2001, Next Generation Technology Holdings, Inc. will be issued shares of the company equal to 25% of the aggregate number of shares of the Company's common stock outstanding as at that date (Note 8). -------------------------------------------------------------------------------- 6. SHARE CAPITAL Authorized: 44,000,000 common shares, par value $.001 (1999 - 19,000,000) EQUITY TRANSACTIONS Additional detail pertaining to certain of the Company's equity transactions is as follows: As described in Note 1 to the financial statements, the Company issued 1,200,000 shares to TravelbyUs.com as additional consideration for a loan. These shares, accounted for as a financing fee, have been recorded at an assigned value of $0.67 per share. ================================================================================ HEALTHYCONNECT.COM INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (UNAUDITED SEPTEMBER 30, 2001 AND 2000) -------------------------------------------------------------------------------- 6. SHARE CAPITAL (continued) The Company completed a private placement receiving $550,000 in cash over a six month period with four non-related investors. In accordance with the share subscription agreement investors were entitled to price per share protection and certain warrants. In September 2001 the investors agreed to surrender their price protection rights and all outstanding warrants. In aggregate, the Company issued over a period of 13 months, 5,202,662 to these investors in three tranches of 433,928, 2,032,994 and 2,736,040 respectively. The shares issued as consideration for price protection and the surrender of warrants have been accounted for at the par value of $.001 per share. During the period March 2001 until the completion of the purchase of the Company by Next Generation Technology Holdings, Inc., the financial condition of the Company was deteriorating and unstable. To induce certain key employees to continue to provide services to the Company, employees were issued retention incentive awards aggregating 9,165,000 shares. These shares have been accounted for at 6 cents per share. This accounting allocation reflects the underlying per share amount attributable to the shares of Next Generation Technology Holdings, Inc. received by these employees in the merger transaction. At the time of the share issuances the Company had not identified Next Generation Technology Holdings, Inc. as a potential merger candidate. As consideration for identifying the successful merger candidate, a consultant was issued 5,000,000 shares of the Company at an assigned value of 6 cents per share, reflecting the underlying per share amount attributable to the shares of Next Generation Technology Holdings, Inc. received by the consultant in the merger transaction. The Company issued 246,692 shares, as financing fees to its investment advisors in conjunction with the previously noted private placement. These shares have been accounted for at the par value of .001 cents per share. The Company issued 2,736,040 shares to shareholders pursuant to cancellation of warrants issued on private placement. These shares were accounted for at the par value of $.001 per share. In conjunction with the settlement of intercompany amounts due to Med-Emerg International Inc., the Company issued 2,899,909 shares at an assigned value of 6 cents per share. As the Company required the consent of Med-Emerg International Inc. to complete its transaction with Next Generation Technology Holdings, Inc. the Company issued an additional 3,199,866 shares to Med-Emerg International Inc. to compensate the controlling shareholder for its issuance of debt and equity to certain former Harmonie shareholders, who did not wish to receive non-registered shares of Next Generation Technology Holdings, Inc. ================================================================================ HEALTHYCONNECT.COM INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (UNAUDITED SEPTEMBER 30, 2001 AND 2000) -------------------------------------------------------------------------------- 6. SHARE CAPITAL (continued) WARRANTS Details of warrants outstanding are as follows: EXERCISE PRICE SHARES PER SHARE Outstanding - December 31, 1999 -- $ -- Issued - August 17, 2000 433,928 0.6913 ------------ ----------- Outstanding - December 31, 2000 433,928 0.6913 ========== =========== Outstanding - December 31, 2000 433,928 $ 0.6913 Issued - January 10, 2001 3,812,516 0.2229 Cancelled - January 10, 2001 (433,928) 0.6913 Cancelled - September 18, 2001 (3,812,516) 0.2229 ------------ -- ============ On January 10, 2001 pursuant to the share issuance, the Company cancelled 433,928 warrants issued August 17, 2000 and issued 3,812,516 new warrants. On September 18, 2001, as consideration of the termination of the shareholder agreement and the surrendering of all warrants, the investors received an additional 2,736,040 shares. -------------------------------------------------------------------------------- 7. MERGER TRANSACTION On October 9, 2001 the shareholders of HealthyConnect.com, Inc. completed the sale of 100% of the Company's outstanding shares in exchange for 4,500,000 shares of common stock of Next Generation Technology Holdings, Inc. Contemporaneously with the completion of this transaction, Next Generation Technology Holdings, Inc. assumed management and operating responsibility for HealthyConnect.com. Inc. The Board of Next Generation Technology Holdings, Inc. advanced additional working capital funds of approximately $275,000 to assist HealthyConnect.com, Inc. in meeting its short-term obligations and immediately implemented a reorganization plan including settlement negotiations with creditors of HealthyConnect.com, Inc. As of December 20, 2001 the Company has entered into several settlement agreements and a settlement proposal. Management believes that Next Generation Technology Holdings, Inc. will continue to support the working capital requirements of HealthyConnect.com, Inc. for the next twelve-month period. ================================================================================ HEALTHYCONNECT.COM INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (UNAUDITED SEPTEMBER 30, 2001 AND 2000) -------------------------------------------------------------------------------- 8. SEGMENTED INFORMATION The Company operates in one industry segment. All the Company's revenue are earned in the United States for the period ended September 30, 2001, the year ended December 31, 2000 and period ended December 31, 1999. Capital assets held in the United States and Canada were $4,110 and $3,392 at September 30, 2001. No capital assets were held at December 31, 2000 and 1999. Software assets are all held in the United States at September 30, 2001, December 31, 2000 and 1999. -------------------------------------------------------------------------------- 9. INCOME TAXES The Company has losses for income tax purposes as at December 31, 2000, the benefit of which would result in a deferred tax assets of $153,000, which would be offset by a valuation adjustment of $153,000. As the Company has not yet filed corporate tax returns, the amount of losses available for tax purposes could be different. -------------------------------------------------------------------------------- 10. COMMITMENTS The Company is committed to lease obligations over the next five years as follows: 2001 $ 199,505 2002 149,686 2003 146,916 2004 102,882 2005 95,754 --------------- $ 694,743 =============== NEXT GENERATION TECHNOLOGY HOLDINGS, INC. PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The accompanying pro forma financial statements have been prepared to show the effects of the October 9, 2001 acquisition of HealthyConnect.com Inc. The pro forma information is based upon the aggregate merger consideration being $2,655,000.00. The merger consideration consisted of the issuance of approximately 4,500,000 shares of Common Stock of Next Generation Technology Holdings, Inc. ("NGTH") in exchange for all of the common stock of HealthyConnect.com Inc. ("HealthyConnect"). The merger entity will continue as HealthyConnect, Inc. The acquisition is accounted for as a purchase. The pro forma consolidated balance sheet as at September 30, 2001 is based on historical balance sheets of Next Generation Technology Holdings, Inc. and HealthyConnect.com Inc. and assumes the acquisition took place as at that date. The pro forma consolidated statements of income for the year ended December 31, 2000 and period ended September 30, 2001, are based on historical statements of income of Next Generation Technology Holdings, Inc. and HealthyConnect.com Inc. and assumes the acquisition took place on January 1, 2000. The pro forma consolidated financial statements may not be indicative of the actual events of the acquisition. In particular, the pro forma consolidated financial statements are based on management's current estimate of the allocation of the purchase price, the actual allocation of which may differ. The accompanying consolidated pro forma financial statements should be read in connection with the historical financial statements of Next Generation Technology Holdings, Inc. and HealthyConnect.com Inc.

The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these financial statements ================================================================================ NEXT GENERATION TECHNOLOGY HOLDINGS, INC. NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) DECEMBER 31, 2000 AND DECEMBER 31, 1999 -------------------------------------------------------------------------------- Note A - The pro forma adjustments to the consolidated balance sheet are as follows: (1) To reflect the acquisition of HealthyConnect.com Inc. for the issuance of 4,500,000 non-registered shares of Next Generation Technology Holdings, Inc. valued at $.59 per share and to allocate the purchase price of $2,655,000 as follows: Components of purchase price: Par value of the 4,500,000 shares issued at $.01 equals $ 45,000 Excess of par value of the 4,500,000 shares issued at $.58 equals 2,610,000 ---------------- Total purchase price $ 2,655,000 ---------------- Allocation of purchase price: Current assets $ 230,276 Current liabilities (1,106,455) Software assets 747,901 Capital assets 7,502 ---------------- Shareholders' deficiency (120,778) Purchase price 2,655,000 ---------------- The excess has been allocated to goodwill pending the final determination of fair value of tangible and intangible assets acquired $ 2,775,778 ---------------- (2) To reflect the issuance of share capital for the acquisition of HealthyConnect.com Inc., NGTH will issue 900,000 shares valued at $.59 per share ($531,000) and pay a fee of $120,000 to an existing shareholder. 4,500,000 common shares and 900,000 shares to be issued in regards to an anti-dilution agreement of Next Generation Technology Holdings, Inc. for a total issuance of 5,400,000 common shares. (3) Elimination of the note payable by HealthyConnect.com Inc. to Next Generation Technology Holdings, Inc. $ 325,000 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 thereunto duly authorized. Dated: December 26, 2001 NEXT GENERATION TECHNOLOGY HOLDINGS, INC. By: /s/ CARL PAHAPILL --------------------------------------- Name: Carl Pahapill Title: President and Chief Executive Officer

NEXT GENERATION TECHNOLOGY HOLDINGS INC 8-K/A