<PAGE>

                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                                   (MARK ONE)

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

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

        FOR THE TRANSITION PERIOD FROM ______________ TO _______________

                         COMMISSION FILE NUMBER 0-19499

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

           DELAWARE                              91-1934592
(State or other jurisdiction of    (I.R.S. employer identification no.)
incorporation or organization)

                        2875 N.E. 191ST STREET, SUITE 601
                             AVENTURA, FLORIDA 33180
                    (Address of principal executive offices)

                                 (305) 933-8779
                           (Issuer's Telephone Number)

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

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the last practicable date: Common Stock, $0.001 par value,
4,345,872 outstanding as of August 10, 2000.



<PAGE>


                        HEALTHSTAR CORP. AND SUBSIDIARIES

                 FORM 10-QSB FOR THE QUARTER ENDED JUNE 30, 2000

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION

     Item 1.   Financial Statements

<S>                                                                                                             <C>
               Consolidated Balance Sheet as of June 30, 2000......................................................1

               Consolidated Statements of Operations and Retained Earnings
                   (Deficit) for the Three Months Ended June 30, 2000 and 1999.....................................2

               Consolidated Statements of Cash Flows for the Three
                   Months Ended June 30, 2000 and 1999.............................................................3

               Notes to Unaudited Consolidated Financial Statements................................................4

     Item 2.   Management's Discussion and Analysis of Financial
                   Condition and Results of Operations.............................................................9

PART II - OTHER INFORMATION

     Item 1.   Legal Proceedings...................................................................................13

     Item 2.   Changes in Securities and Use of Proceeds...........................................................13

     Item 3.   Defaults Upon Senior Securities.....................................................................13

     Item 4.   Submission of Matters to a Vote of Security Holders.................................................13

     Item 5.   Other Information...................................................................................13

     Item 6.   Exhibits and Reports on Form 8-K....................................................................14
</TABLE>


<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

                        HEALTHSTAR CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  June 30, 2000
                                   (Unaudited)

                                  ------------





<TABLE>
<CAPTION>
<S>                                                                                                 <C>
ASSETS
    Current assets:
       Cash and cash equivalents                                                                        $ 6,962,558
       Other current assets                                                                                  62,660
                                                                                                     --------------

              Total current assets                                                                        7,025,218

    Property and equipment, net                                                                               2,441
    Other assets, at cost                                                                                    20,000
                                                                                                     --------------
              Total assets                                                                              $ 7,047,659
                                                                                                     ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
       Accounts payable                                                                                $    328,731
       Accrued expenses                                                                                     311,545
       Current portion of long-term debt                                                                    200,000
                                                                                                     --------------
              Total current liabilities                                                                     840,276
                                                                                                     --------------

SHAREHOLDERS' EQUITY
    Common stock, $.001 par value 15,000,000 shares
       authorized, 4,345,872 shares issued and outstanding                                                    4,346
    Additional paid -in- capital                                                                          9,196,428
    Retained earnings (deficit)                                                                          (2,993,391)
                                                                                                     --------------

              Total shareholders' equity                                                                  6,207,383
                                                                                                     --------------

              Total liabilities and shareholders' equity                                                $ 7,047,659
                                                                                                     ==============
</TABLE>






     See accompanying notes to unaudited consolidated financial statements.

                                       -1-


<PAGE>


                        HEALTHSTAR CORP. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                           RETAINED EARNINGS (DEFICIT)
                For the Three Months Ended June 30, 2000 and 1999
                                   (Unaudited)

                                  ------------


<TABLE>
<CAPTION>

                                                                                            Three Months Ended
                                                                                                 June 30,
                                                                                        2000                  1999
                                                                                        ----                  ----
<S>                                                                                <C>                   <C>
REVENUE
    Capitated fees                                                                   $    667,773          $  2,094,986
    Repricing fees                                                                        248,579             1,586,819
    Other fees                                                                             27,298               125,220
                                                                                   --------------         -------------

              Total revenue                                                               943,650             3,807,025
                                                                                   --------------         -------------

OPERATING EXPENSES
    Cost of services                                                                       74,813               533,627
    Salaries and wages                                                                    896,377             1,957,559
    General and administrative                                                            555,920             1,078,298
    Depreciation and amortization                                                          56,875               318,158
                                                                                   --------------         -------------

              Total operating expenses                                                  1,583,985             3,887,642
                                                                                   --------------         -------------

(Loss) from operations                                                                   (640,335)              (80,617)

Non-operating income (expense)
    Interest income                                                                        55,057                     0
    Interest expense                                                                      (10,305)              (61,499)
    Net gain (loss) on dispositions of assets                                             (93,105)              114,538
                                                                                   --------------         -------------

(Loss) before income taxes                                                               (688,688)              (27,578)

Income tax expense (benefit)                                                                    0                (9,279)
                                                                                   --------------         -------------

              Net (loss)                                                                 (688,688)              (18,299)

Retained earnings (deficit) at beginning of quarter                                    (2,304,703)              216,703
                                                                                   --------------         -------------

Retained earnings (deficit) at end of quarter                                        $ (2,993,391)         $    198,404
                                                                                   ==============         =============

(Loss) per share - Basic and Diluted                                                 $      (0.16)         $         -
                                                                                   ==============         =============

Weighted average shares outstanding - Basic and Diluted                                 4,345,872             3,819,872
                                                                                   ==============         =============
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.

                                       -2-


<PAGE>


                        HEALTHSTAR CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Three Months Ended June 30, 2000 and 1999
                                   (Unaudited)

                                  ------------



<TABLE>
<CAPTION>

                                                                                            Three Months Ended
                                                                                                 June 30,
                                                                                        2000                  1999
                                                                                        ----                  ----
<S>                                                                                  <C>                  <C>
OPERATING ACTIVITIES
    Net (loss)                                                                       $   (688,688)        $     (18,299)
    Adjustments to reconcile net (loss)
    to net cash (used in) operating activities:
       Depreciation and amortization                                                       56,875               318,158
       Bad debt expense                                                                         0               107,654
       (Gain) loss on dispositions of assets                                               93,105              (114,538)
    Increase (decrease) in cash resulting from changes in operating assets and
    liabilities:
       Trade accounts receivable                                                          133,281              (148,951)
       Other current assets                                                               (33,171)                  446
       Accounts payable                                                                   600,120                18,380
       Accrued expenses                                                                  (380,859)             (419,552)
                                                                                    -------------         -------------

              Net cash (used in) operating activities                                    (219,337)             (256,702)
                                                                                    -------------         -------------

INVESTING ACTIVITIES
    Net proceeds from dispositions of assets                                            8,201,861               114,538
    Purchases of equipment                                                                      0               (27,175)
                                                                                    -------------         -------------

              Net cash provided by investing activities                                 8,201,861                87,363
                                                                                     ------------        --------------

FINANCING ACTIVITIES
    (Increase) in other assets                                                                  0                (1,777)
    Net proceeds from line of credit                                                            0               250,000
    Payments on long-term debt                                                         (1,325,000)             (150,000)
                                                                                    -------------         -------------

              Net cash (used in) provided by financing activities                      (1,325,000)               98,223
                                                                                    -------------         -------------

Net increase (decrease) in cash and cash equivalents                                    6,657,524               (71,116)

Cash and cash equivalents at beginning of quarter                                         305,034                71,936
                                                                                    -------------         -------------

Cash and cash equivalents at end of quarter                                          $  6,962,558         $         820
                                                                                    =============         =============
</TABLE>




     See accompanying notes to unaudited consolidated financial statements.

                                       -3-


<PAGE>


                        HEALTHSTAR CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                                  ------------



Note 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

           A.     Description of the Business

                  Prior to April 28, 2000, HealthStar Corp. (the "Company") was
                  a healthcare management company dedicated to controlling the
                  cost, improving the quality and enhancing the delivery of
                  healthcare services. The Company provided related products and
                  services designed to reduce healthcare costs. The Company
                  marketed and provided programs and services to insurance
                  companies, self-insured businesses for their medical plans,
                  and third parties that administer employee medical plans.
                  These programs and services assisted clients in reducing
                  healthcare costs for group health plans and for workers'
                  compensation coverage and automobile accident injury claims.
                  The Company operated its business in one segment through its
                  two wholly-owned subsidiaries, HealthStar, Inc. ("HealthStar")
                  and National Health Benefits & Casualty Corporation ("NHBC").
                  The Company is a registrant with the Securities and Exchange
                  Commission and its shares are publicly traded on the
                  Over-The-Counter Bulletin Board.

                  On December 30, 1999, the Company sold all of the assets of
                  NHBC to Carlmont Capital Group, Inc. and received as
                  consideration $1,500,000 in cash at closing and an earn-out
                  agreement that may provide up to an additional $300,000 in
                  cash, based on cash flows of NHBC, over the 18 months
                  following the closing of the transaction.

                  On April 28, 2000, the Company sold all of the capital stock
                  of HealthStar to Beyond Benefits, Inc. and received
                  consideration of $8,880,000 in cash at closing. The capital
                  stock of HealthStar constituted substantially all of the
                  assets of the Company. As a result of this sale, the Company
                  no longer operates in the managed healthcare industry and
                  currently does not have any ongoing revenue generating
                  operations. See Note 3, "Gains and Losses on Dispositions of
                  Assets," for further details of the sale of HealthStar and its
                  impact on future operations.

           B.     Basis of Presentation

                  The accompanying unaudited consolidated financial statements
                  of HealthStar Corp. and Subsidiaries have been prepared in
                  accordance with generally accepted accounting principles for
                  interim financial information and pursuant to rules and
                  regulations of the Securities and Exchange Commission.
                  Accordingly, they do not include all of the information and
                  notes required by generally accepted accounting principles for
                  a complete financial statement presentation. In the opinion of
                  management, such unaudited interim financial information
                  reflects all adjustments, consisting only of normal recurring
                  adjustments, necessary to present the Company's financial
                  position and results of operations for the periods presented.
                  The results of operations for interim periods are not
                  necessarily indicative of the results to be expected for a
                  full fiscal year. It is suggested that these consolidated
                  financial statements be read in conjunction with the Company's
                  audited consolidated financial statements included in the
                  Company's Annual Report on Form 10-KSB for the year ended
                  March 31, 2000.

                                       -4-


<PAGE>


                        HEALTHSTAR CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                                  ------------



Note 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

           C.     Use of Estimates

                  Management of the Company has made a number of estimates and
                  assumptions relating to the reporting of assets and
                  liabilities and the disclosure of contingent assets and
                  liabilities to prepare these financial statements in
                  conformity with generally accepted accounting principles.

           D.     Principles of Consolidation

                  The consolidated financial statements include the financial
                  statements of the Company and its two wholly-owned
                  subsidiaries. All significant intercompany balances and
                  transactions have been eliminated in consolidation.

           E.     Cash Equivalents

                  The Company considers all highly liquid instruments with
                  original maturities of three months or less to be cash
                  equivalents.

           F.     Earnings (Loss) per Share

                  In accordance with Statement of Financial Accounting Standards
                  No. 128, "Earnings per Share," basic earnings (loss) per share
                  is computed by dividing net income (loss) by the weighted
                  average number of shares of common stock outstanding.

                  Diluted earnings (loss) per share reflects the maximum
                  dilution that would result after giving effect to dilutive
                  stock options and warrants and to the assumed conversion of
                  all dilutive convertible securities and stock. Outstanding
                  options to purchase common shares were not included in the
                  computation of diluted earnings (loss) per share because they
                  were considered anti-dilutive.

           G.     Fair Value of Financial Instruments

                  The fair value of a financial instrument is the amount at
                  which the instrument could be exchanged in a current
                  transaction between willing parties. Management believes that
                  the recorded amounts of current assets and current liabilities
                  approximate fair value because of the short maturity of these
                  instruments.

                                       -5-


<PAGE>


                        HEALTHSTAR CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                                  ------------



Note 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

           H.     Revenue Recognition

                  The Company provided its customers with access to a network of
                  healthcare providers which included physicians, acute care
                  hospitals and ancillary providers such as outpatient surgery
                  centers and home healthcare agencies. These providers
                  contractually agreed with the Company to provide healthcare
                  services to the Company's customers at a discount from billed
                  charges. The Company generated revenue from its customer base
                  by charging network access fees. The Company entered into
                  contracts with its customers and charged network access fees
                  using either of two methods. Customers could choose to pay a
                  capitated fee, which is a fixed, monthly fee per eligible
                  subscriber. Initial enrollment figures were based on estimates
                  provided by the customer. Actual enrollment figures were
                  subsequently provided by the customer and updated periodically
                  at intervals ranging from monthly to semi-annually. Capitated
                  revenue was recognized on a monthly basis when customers were
                  billed using the most current enrollment figures available.
                  Adjustments were made when new enrollment figures were
                  submitted by the customer. The other method under which
                  customers could have elected to pay the Company for network
                  access was called a repricing fee. Under this method, the
                  Company received a percentage of the dollar amount of the
                  discount granted by the healthcare provider for services
                  rendered to an enrolled subscriber. The Company's percentage
                  of the dollar amount of the discount was determined by
                  contract and varied from customer to customer. Repricing fees
                  were recognized as revenue when the Company processed the
                  medical claim, calculated the discount and notified the
                  customer of the amount due.

           I.     Cost of Services

                  The major components of cost of services consists of
                  utilization review, case management, external marketing
                  commissions, and costs associated with electronic transmission
                  of customers' healthcare claims.

           J.     Property and Equipment

                  Property and equipment are stated at cost, net of accumulated
                  depreciation. Depreciation is calculated using the
                  straight-line method over the estimated useful lives of the
                  assets, which approximates three years for equipment to seven
                  years for furniture and fixtures. Computer software is
                  amortized over three to five years.

           K.     Income Taxes

                  The Company accounts for income taxes under the asset and
                  liability method. Deferred tax assets and liabilities are
                  recognized for the future tax consequences attributable to
                  differences between the financial statement carrying amounts
                  of existing assets and liabilities and their respective tax
                  bases and operating loss and tax credit carryforwards.
                  Deferred tax assets and liabilities are measured using enacted
                  tax rates expected to apply to taxable income in the years in
                  which those temporary differences are expected to be recovered
                  or settled. The effect on deferred tax assets and liabilities
                  of a change in tax rates is recognized in income in the period
                  that includes the enactment date.

                                       -6-


<PAGE>


                        HEALTHSTAR CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                                  ------------



Note 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

           K.     Income Taxes (Continued)

                  A valuation allowance must be established to reduce deferred
                  income tax benefits if it is more likely than not that a
                  portion of the deferred income tax benefits will not be
                  realized. It is management's opinion that the entire deferred
                  tax benefit may not be recognized in future years. Therefore,
                  a valuation allowance equal to the deferred tax benefit has
                  been established for the portion of the net operating loss
                  carryforward and other deferred tax assets which may not be
                  recognized in future years.

           L.     Impairment of Long-Lived Assets

                  Management reviews the possible impairment of long-lived
                  assets and certain identifiable intangible assets whenever
                  events or changes in circumstances indicate that the carrying
                  amount of an asset may not be recoverable. Recoverability of
                  assets to be held and used is measured by a comparison of the
                  carrying amount of an asset to future net undiscounted cash
                  flows expected to be generated by the asset. If such assets
                  are considered to be impaired, the impairment to be recognized
                  is measured by the amount by which the carrying amount of the
                  assets exceed the fair value of the assets measured using
                  quoted market prices when available or the present value of
                  estimated expected future cash flows using a discount rate
                  commensurate with the risks involved. In measuring impairment,
                  assets are grouped at the lowest level for which there are
                  identifiable cash flows that are largely independent of the
                  cash flows of other groups of assets.

           M.     Stock Based Compensation

                  The Company applies Statement of Financial Accounting
                  Standards No. 123, "Accounting for Stock-Based Compensation"
                  (SFAS No. 123), which permits entities to recognize as expense
                  over the vesting period the fair value of all stock-based
                  awards on the date of grant. Alternatively, SFAS No. 123 also
                  allows entities to continue to apply the provisions of APB
                  Opinion No. 25 and provide pro forma net earnings and pro
                  forma earnings per share disclosures for employee stock option
                  grants made in 1995 and future years as if the
                  fair-value-based method defined in SFAS No. 123 had been
                  applied. The Company has elected to continue to apply the
                  provisions of APB Opinion No. 25 and provide the pro forma
                  disclosure required by SFAS No. 123. In accordance with APB
                  Opinion No. 25, compensation expense is recorded on the date
                  an option is granted only if the current market price of the
                  underlying stock exceeds the exercise price.

           N.     Comprehensive Income

                  Statement of Financial Accounting Standards No. 130,
                  "Reporting Comprehensive Income" (SFAS No. 130), established
                  standards for reporting and displaying comprehensive income
                  and its components in a full set of general-purpose financial
                  statements. Comprehensive income (loss) was the same as net
                  income (loss) for all periods presented.

                                       -7-


<PAGE>


                        HEALTHSTAR CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

                                  ------------



Note 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

           O.     Segment Reporting

                  Until April 28, 2000, the Company had one operating business
                  segment, healthcare cost containment, which involved the
                  marketing and provision of programs and services to insurance
                  companies, self-insurance businesses for their medical plans
                  and third parties who administer employee medical plans.

Note  2.   DEBT

           Debt consists of an unsecured note payable to the previous owner of
           HealthStar in the amount of $200,000. Interest is payable monthly at
           8%.

Note 3.    GAINS AND LOSSES ON DISPOSITIONS OF ASSETS

           On April 28, 2000, the Company completed the sale of the stock of its
           wholly owned subsidiary, HealthStar, Inc. to Beyond Benefits, Inc.
           The Company received $8,880,000 in cash at closing and used
           $1,325,000 to repay the outstanding principal balance of the Harris
           Bank term loan. This sale, which constituted the sale of
           substantially all the assets of the Company, was approved by the
           shareholders of the Company on April 25, 2000. The sale resulted in a
           pre-tax loss of $93,105 primarily as a result of additional
           transaction costs incurred during April 2000. HealthStar, Inc.
           incurred a pre-tax loss from operations of $173,748 during April
           2000. Following this sale, the Company no longer operates in the
           managed healthcare industry and currently does not have any ongoing
           revenue generating operations. The Company intends to utilize the
           remaining net proceeds from the sale to acquire an Internet business
           or other business or businesses.

           On June 7, 1999, the Company sold its First American Vision Services
           program for cash consideration of $125,000 to an immediate family
           member of a former officer of the Company, which resulted in a
           pre-tax gain of $114,538. The vision program accounted for
           approximately $14,000 in revenue during the quarter ended June 30,
           1999.

                                       -8-


<PAGE>


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:

           This document includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements other
than statements of historical fact included in this document, including, without
limitation, the statements under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Liquidity and Sources of
Capital" regarding the Company's strategies, plans, objectives, expectations,
and future operating results are forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable at this time, it can give no assurance that such
expectations will prove to have been correct. Actual results could differ
materially based upon a number of factors including, but not limited to, history
of losses, leverage and debt service, competition, no dividends, limited public
market and liquidity, shares eligible for future sale, delays in or failure to
identify and consummate a suitable acquisition, realization of the earn-out
provision related to cash flows of NHBC for the 18 months following the December
1999 sale of NHBC's assets to Carlmont Capital Group, Inc. and other risks
detailed from time to time in the Company's Securities and Exchange Commission
filings.

           Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the unaudited
financial statements and footnotes for the three months ended June 30, 2000
contained herein and the audited financial statements and footnotes for the
year ended March 31, 2000 contained in the Company's Form 10-KSB filed with
the Securities and Exchange Commission on June 29, 2000.

RECENT DEVELOPMENTS

           On April 28, 2000, the Company sold all of the issued and outstanding
stock of its wholly owned subsidiary HealthStar, Inc. ("HSI") to Beyond
Benefits, Inc., a Long Beach, California based managed healthcare company. The
sale was made pursuant to a Stock Purchase Agreement dated September 23, 1999,
as amended, by and among the Company, HealthStar, Inc., and Beyond Benefits,
Inc. The Company received $8,880,000 in cash at closing, of which, $1,325,000
was used to repay the entire amount outstanding under the Company's Term Loan
and Credit Facility with Harris Trust and Savings Bank ("Harris Bank"). As a
result of the completion of this transaction, the Company is no longer engaged
in the managed healthcare business and currently has no revenue generating
operations. The Company intends to utilize the remaining proceeds from this sale
to acquire an internet-related business or businesses or other business or
businesses.

           On December 30, 1999, the Company sold the assets of its wholly owned
subsidiary National Health Benefits & Casualty Corporation ("NHBC") to Carlmont
Capital Group, Inc. ("Carlmont"), a privately held company based in Chula Vista,
California. This sale was made pursuant to the terms of an Asset Purchase
Agreement dated December 28, 1999, by and among the Company, NHBC and Carlmont.
The Company received $1,500,000 in cash at closing and an earnout agreement that
may provide up to an additional $300,000 in cash, based on the actual cash flows
of NHBC during the 18 month period after closing.

                                       -9-


<PAGE>


RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999

           As a result of the completion of the sale of HSI to Beyond Benefits
on April 28, 2000 and the completion of the sale of the assets of NHBC to
Carlmont on December 30, 1999, the Company is no longer engaged in the managed
healthcare business and has no revenue generating operations. It should be noted
that the operating results for the three months ended June 30, 2000 only include
the operating results of HSI for the first 28 days of the month of April 2000,
and do not include any operating results for NHBC. Conversely, the Company's
operating results for the three months ended June 30, 1999 include the operating
results for both HSI and NHBC for the entire period.

REVENUE

           Prior to the sale of its two wholly-owned subsidiaries HSI and NHBC,
the Company derived the majority of its revenue from fees paid by its customers
for access to the Company's PPO network of contracted healthcare providers.
These providers contractually agreed with the Company to provide healthcare
services to the Company's customers at a discount from billed charges. The
Company's customer base consisted of a variety of payors of medical claims such
as insurance companies, third-party administrators and self-insured employers.
The Company entered into contracts with its customers and charged network access
fees using either of two methods. Customers could choose to pay a capitated fee,
which is a fixed, monthly fee per eligible subscriber. The other method that
customers could elect to choose to pay the Company for network access is called
a repricing fee. Under this method, the Company received a percentage of the
dollar amount of the discount granted by the healthcare provider for services
rendered to an enrolled subscriber. The Company's percentage of the dollar
amount of the discount was determined by contract and varied from customer to
customer.

           Total revenue for the three months ended June 30, 2000 was $943,650
versus $3,807,025 for the three months ended June 30, 1999. Total revenue in the
current quarter is equal to the total revenue for HSI for the 28-day period in
April 2000, prior to the Company's sale of HSI, which was consummated on April
28, 2000. Total revenue for the three months ended June 30, 1999 was $3,150,373
for HSI and $656,652 for NHBC. In addition to the effects of the sales of NHBC
and HSI, revenue decreased during the current quarter, when compared to the same
period of the previous year, due to the loss of significant customers of HSI
which occurred late in fiscal 2000. After April 28, 2000, the Company no longer
has any revenue generating operations.

OPERATING EXPENSES

           Cost of services includes the cost of outsourcing the medical case
management and utilization review functions, commissions paid to outside
brokers, fees paid to other PPO networks for access to healthcare providers
which are not directly contracted with the Company, the cost of electronic
claims processing and the cost of printing provider directories. Cost of
services was $74,813 in the current quarter versus $533,627 for the comparable
period last year. Cost of services in the current quarter is equal to the cost
of services for HSI for the 28-day period in April 2000. Cost of services for
the three months ended June 30, 1999 was $348,439 for HSI and $185,188 for NHBC.
For HSI, cost of services as a percentage of revenue decreased to 7.9% from
11.0%. The primary reason for this decrease was lower costs related to the
outsourcing of the medical case management and utilization review functions.

                                      -10-


<PAGE>


           Salaries and wages includes all employee compensation, payroll taxes,
health insurance, other employee benefits, and temporary labor. Also included in
this category are the commissions paid to in-house sales and marketing
personnel. Salaries and wages were $896,377 for the three months ended June 30,
2000 compared to $1,957,559 in the comparable period last year. In the current
quarter, salaries and wages were $688,345 at HSI for the 28-day period versus
$1,754,638 for the three months ended June 30, 1999. As a percentage of HSI's
revenue, salaries and wages for HSI increased to 72.9% in the current quarter
from 55.7% in the comparable period last year. The increase in the level of
salaries and wages during the 28-day period was attributable to the hiring of
temporary labor to process a backlog of claims. The remaining salaries and wages
expense for the quarter ended June 30, 2000 of $208,032 was related to the
compensation of the Company's two executive officers. Of this amount, $150,000
represents a bonus for the Company's Vice President and Chief Financial Officer,
which was earned in connection with the closing of the sale of HSI.

           General and administrative expenses include all other operating
expenses, such as telecommunications, office supplies, postage, travel and
entertainment, professional fees, bad debt expense, insurance, rent and
utilities. General and administrative expenses were $555,920 for the three
months ended June 30, 2000 versus $1,078,298 for the comparable period last
year. In the current quarter, general and administrative expenses were
$298,604 for HSI for the 28-day period versus $894,288 for the three months
ended June 30, 1999. As a percentage of HSI's revenue, general and
administrative expenses for HSI increased to 31.6% in the current quarter
from 28.4% in the comparable period last year. The remaining general and
administrative expenses of $257,316 are primarily related to professional
fees, including legal and accounting fees, consulting fees related to the
Company's investigation of possible acquisition candidates and other general
overhead items such as travel and insurance.

           Depreciation and amortization was $56,875 for the three months ended
June 30, 2000 versus $318,158 for the three months ended June 30, 1999. The
overall decrease in depreciation and amortization expense was primarily due to a
decrease in fixed assets and goodwill as a result of the sales of HSI and NHBC.

NON-OPERATING INCOME (EXPENSE)

           Interest income for the three months ended June 30, 2000 was $55,057.
Interest income was generated from the investment of the net proceeds from the
sale of HSI into a money market account that currently yields 5.5%. The Company
did not have any interest income in the comparable period last year.

           Interest  expense for the three months ended June 30, 2000 was
$10,305 versus $61,499 in the comparable period last year. The decrease is the
result of the payoff of the remaining $1,325,000 owed to Harris Bank from the
proceeds of the sale of HSI on April 28, 2000.

           The Company recorded a pretax loss of $93,105 on the sale of HSI
during the current quarter. The Company recorded a pretax gain of $114,538 on
the sale of the assets of its vision program, which occurred in the quarter
ended June 30, 1999.

INCOME TAX EXPENSE

           The Company  recorded no income tax expense in the current  quarter
due to the level of operating losses incurred. A tax benefit of $9,279 was
recorded in the comparable period last year.


                                      -11-


<PAGE>


NET LOSS

           The Company incurred a net loss of $688,688 for the three months
ended June 30, 2000 compared to a net loss of $18,299 for the three months ended
June 30, 1999. Components of the net loss in the current quarter are net
interest income of $44,752, a net loss from the operations of HSI of $173,748,
the loss on the sale of HSI of $93,105 and corporate overhead expenses of
$466,587.

LIQUIDITY AND CAPITAL RESOURCES

           On April 28, 2000, in connection with the sale of HSI to Beyond
Benefits, the Company received $8,880,000 in cash at the closing of the sale.
The Company incurred $595,491 in transaction costs related to the sale. The
Company used $1,325,000 of the cash proceeds to repay the entire principal
balance on its term loan owed to Harris Bank. The remaining proceeds were
invested in a money market account which currently yields 5.5%.

           At June 30, 2000, the Company had cash and cash equivalents of
$6,962,558 and total liabilities of $840,276. Included in total liabilities is a
$200,000 note payable to the former owner of HSI. The remaining liabilities
include costs related to the sale of HSI and general corporate overhead items.

           As of April 28, 2000, the Company no longer has any revenue
generating operations. The Company's only source of cash is interest income
generated from the investment of the remaining proceeds from the sale of HSI in
a money market account. The Company will continue to invest substantially all of
its cash in a money market account until such time that it is needed in
connection with the Company's plan to acquire a business or businesses. There
can be no assurance that the Company will be able to consummate an acquisition
of a business or businesses in accordance with the Company's current business
plan or in a timely manner.

           The Company's principal use of cash will be the payment of general
corporate overhead items including the payment of salaries to its two employees,
both of whom are executive officers of the Company. The Company will also use
cash to execute its plan to acquire a business or businesses. These costs may
include the compensation of consultants, attorneys and other professionals whose
services are required in connection with effecting an acquisition.

           To the extent the Company continues to hold its cash in a money
market account, the net effect of reductions in interest rates, the advent of
inflation, an increase in corporate overhead and the passage of time--or a
combination of two or more of these factors--could result in a reduction of the
Company's cash or its purchasing power, which, in turn, could adversely affect
the Company's prospects and financial condition.

                                      -12-


<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

           Not applicable.

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS

           None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

           None.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

           The annual meeting of shareholders of the Company was held on April
           25, 2000 for the purpose of (i) electing directors of the Company,
           and (ii) approving the adoption of a resolution authorizing the Stock
           Purchase Agreement dated September 23, 1999, as amended, between the
           Company, HealthStar, Inc. and Beyond Benefits, Inc. pursuant to which
           the Company proposed to sell all of the outstanding stock of
           HealthStar, Inc. to Beyond Benefits, Inc. Proxies for the meeting
           were solicited pursuant to Regulation 14A of the Securities Exchange
           Act of 1934 and there was no solicitation in opposition.

           (A) The following directors were elected by the following vote:

<TABLE>
<CAPTION>

                                                 FOR                     AGAINST
                                                 ---                     -------

               <S>                              <C>                        <C>
                Edward M. Chism                 4,052,242                  842
                Isidor Buholzer, Jr.            4,052,242                  842
                Michael D. Flax                 4,052,242                  842
                David J. Lewis                  4,052,242                  842
                Luis A. Queral                  4,052,242                  842
</TABLE>


           (B)    The proposal to approve the adoption of the resolution
                  authorizing the Stock Purchase Agreement dated September 23,
                  1999, as amended, between the Company, HealthStar, Inc. and
                  Beyond Benefits, Inc.

<TABLE>
<CAPTION>
                         FOR                     AGAINST                   ABSTAIN
                         ---                     -------                   -------

                     <S>                        <C>                        <C>
                      2,271,459                  13,587                     3,233
</TABLE>


ITEM 5.    OTHER INFORMATION

           None.

                                      -13-


<PAGE>


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (A)    EXHIBITS

                  Exhibit 27.1 Financial Data Schedule.

           (B)    REPORTS ON FORM 8-K

                  A report on Form 8-K (Item 5) was filed with the Securities
                  and Exchange Commission on May 3, 2000 announcing that at the
                  Annual Meeting the holders of a majority of the outstanding
                  shares of Common Stock of the Company approved and adopted a
                  resolution authorizing the Stock Purchase Agreement dated as
                  of September 23, 1999, as amended, between the Company,
                  HealthStar Inc. ("HSI") and Beyond Benefits, Inc. ("BBI"),
                  pursuant to which the Company agreed to sell all of the
                  outstanding stock of HSI, the only operating subsidiary of the
                  Company, to BBI for $8,880,000. The sale of the HSI stock by
                  the Company to BBI was consummated on April 28, 2000. As a
                  result of the sale of the HSI stock to BBI, the Company is no
                  longer engaged in the health care management industry.

                  A report on Form 8-K (Item 4) was filed with the Securities
                  and Exchange Commission on May 17, 2000 relating to the
                  engagement of Arthur F. Bell, Jr. & Associates, L.L.C. as the
                  successor accounting firm to KPMG.





























                                      -14-


<PAGE>


                                   SIGNATURES

           Pursuant to the  requirements of the Securities  Exchange Act of
1934, the registrant has duly caused this report on Form 10-QSB to be signed on
its behalf by the undersigned thereunto duly authorized, this 10th day of
August, 2000.

                               HEALTHSTAR CORP.

                               By: /s/ Steven A. Marcus
                                  ---------------------------------------------
                                   Steven A. Marcus
                                   Vice President and Chief Financial Officer
                                   (Principal Financial and Accounting Officer)

                                      -15-