U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Commission File No. 333-9809
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from to .
Health Builders International, Inc.
(Name of small business issuer in its charter)
Delaware 87-0561634
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2077 Elderberry Way, Sandy, Utah 84092
(Address of principal executive offices) (zip code)
Issuer's telephone number, including area code: (801) 553-8972
Securities registered under Section 12(b) of the Exchange
Act: None
Securities registered under Section 12(g) of the Act: None
Check whether the Issuer (1) 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 Issuer was required to file
such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Check if no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is contained in this form, and no
disclosure will be contained, to the best of the Issuer's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or
any amendment to this Form 10-KSB. [ ]
The Issuer's revenues for its most recent fiscal year. $ 0.00
As of March, 1997, the aggregate market value of voting
stock held by non-affiliates was not determinable because of
the lack of published market quotations. (See Item 5
herein).
The number of shares outstanding of the Issuer's common
stock at December 31, 1996: 2,000,000
<PAGE>
PART I
Item 1. Description of Business
(a) Business Development.
Health Builders International, Inc. (the "Company") was
recently incorporated under the laws of the State of
Delaware on July 3, 1996. In connection with the
organization of the Company, the founding shareholders of
the Company contributed an aggregate of $10,000 cash to
capitalize the Company in exchange for 2,000,000 shares of
Common Stock.
The Company then registered a public offering of its
securities to raise funds with which to commence business
operations. The Company filed with the Securities and
Exchange Commission a registration statement on Form SB-2,
Commission File No. 33-9809, which became effective November
26, 1996. Pursuant thereto the Company is offering to sell,
on a "best efforts - minimum 250,000 shares - maximum
500,000 shares" basis, shares of its common stock to the
public at $.20 per share in an attempt to raise gross
proceeds of between $50,000 to $100,000. The offering has
not been completed as of the date of filing this report.
Proceeds are being escrowed pending receipt of the minimum
offering amount within the stated offering period, which
continues for up to 180 days from the effective date. Upon
completion of the offering, the Company intends to use the
net proceeds from this offering to provide the working
capital necessary to commence business operations.
The Company has not commenced business operations and
is considered a development stage company. To date,
activities have been limited to organizational matters and
the preparation and filing of the registration statement.
The Company has no significant assets, and is totally
dependent upon the successful completion of this offering
and receipt of the proceeds therefrom, of which there is no
assurance, for the ability to commence its proposed business
operations.
(b) Business of Company.
Proposed Business of the Company
The Company was formed for the purpose of engaging in
the business of providing training and other related
services for multi level marketing representatives. The
Company was formed to establish a training and distribution
center for the development of multi-level marketing networks
in the health and nutrition industry, to train and assist
people involved in network marketing for various health and
nutrition companies in recruiting, and also to provide
customized mailing and fax services.
The terms "multi level marketing" and "multi level
marketing networks" refers to the type of marketing plan or
system in which products are purchased from distributors,
consultants or other authorized representatives of the
products, and the purchasers or consumers of such products
are permitted and encouraged to also become marketing
representatives themselves, and solicit and recruit others
to not only purchase the products but become marketing
representatives, thus creating multiple layers or levels of
marketing representatives in a network. This is also
sometimes referred to as "network marketing." "Multi level
marketing organizations" refers to companies, individuals
<PAGE>
and other entities and the networks thereof that are engaged
in marketing products by use of such methods.
The individual members of management of the Company are
all involved in multi level marketing organizations, as
distributors for various companies in the health and
nutrition industry, which market their products through
multi level or network marketing. Based on their experience
with multi level marketing, management believes that a
substantial need exists for training of multi level
marketing representatives or distributors and potential
recruits, to show them how to be more effective in
recruiting others to become consumers and distributors of
the products, and also to provide customized mailing and fax
services to assist marketing representatives to recruit
others on a mass solicitation basis.
Management believes that some of the best companies
within the multi level marketing industry are companies
involved in the health and nutrition industry, taking
advantage of the health wave that is taking place in North
America. Management believes that the multi level marketing
system is ideally suited to marketing health and nutrition
products because sales of such products are strengthened by
ongoing personal contact between retail consumers and
distributors, most if not all of whom are also users of the
products being marketed. The Company's business strategy is
to capitalize on the increasing use of multi-level marketing
by health and nutrition companies, by providing training
services and otherwise assisting people to become
successfully involved in multi-level marketing.
Marketing Methods
Management intends to market the proposed products and
services to be provided by the Company primarily to the
distributors and other multi level marketing representatives
in the sales downlines of the multi level marketing
organizations which the members of management are affiliated
with. Based on the number of marketing representatives
currently in all the organizations which the individual
members of management are affiliated with, this represents a
pool of potential trainees and users of the services of the
Company in excess of fifteen thousand people.
The multi level marketing companies engaged in
marketing health and nutrition products in which the members
of management have distributorship organizations or are
otherwise affiliated with include the following
organizations: Body Wise International, Inc., a company in
which Mr. Hall and his wife have a large distributorship
organization with a sales downline comprising approximately
13,000 other distributors, which generates annual revenues
of about $10 million; USANA, Inc., a company in which Mr.
Hatch holds a distributorship organization with annual
revenues of approximately $300,000 and a sales downline
comprising approximately 8,000 other distributors; and
Rexall Showcase, a multi level company in which Mr. Blackley
holds a distributorship with a downline organization
comprising approximately 50 other distributors. There are no
formal or informal arrangements or agreements with Body Wise
International, Inc., USANA, Inc., or Rexall Showcase to
facilitate or complement the Company's business plan. Body
Wise International, Inc. has its own line of twelve health,
nutrition and athletic performance products. USANA, Inc.
distributes its own line of 15-20 products related to
health, nutrition and cosmetics. Rexall Showcase
distributes its own line of over 100 products relating to
health, nutrition, beauty aids, and other over the counter
products.
<PAGE>
Management intends to direct its recruiting efforts on
behalf of the Company toward this group of people, and will
make them aware of the products and services of the Company
through the personal, telephone, mailing and other contacts
that regularly occur in the course of the multi level
marketing conducted through these organizations. Management
will use the opportunity of these contacts to solicit such
persons on behalf of the Company to use the Company's
products and services.
Management believes that this arrangement will be
mutually beneficial to the Company and themselves, in that
the Company will benefit from the pool of potential recruits
to its services, and these organizations will benefit from
any improved marketing effectiveness of its members who use
the Company's training and other services.
Products and Services
An individual may join any one or more of the multi
level marketing organizations sponsored by the members of
management of the Company. This process usually consists of
filling out an application form and paying an initial sign
up fee. The purpose of the application is to create a
written document which will, upon acceptance thereof,
constitute a written contract outlining and defining the
terms of the distributorship arrangement, and also to
provide information for recordkeeping purposes. The initial
fees vary from company to company and are usually intended
to cover the nominal administrative cost of processing the
application as well as the costs of sales kits or other
promotional materials given to the person. Sales kits
typically contain video and audio tape training materials,
brochures and other printed materials with information about
the products being sold, product pricing and ordering
information, order forms, and information on being a sponsor
or distributor. Sometimes fees may also be paid to purchase
initial quantities of product from whatever multi level
marketing company the applicant is going to sponsor or
distribute the products of. Once an individual has joined,
management will solicit such person to take advantage of the
services to be provided by the Company, to help them succeed
in multi level marketing by providing the following
services:
1. The Company has designed direct mail programs for
each of the health and nutrition companies that the
members of management are affiliated with as
distributors. Each new member will be asked to provide
a list of 50 to 100 names of acquaintances that the
Company will mail an information package to. This can
be done with or without using the name of the new
member. The information packages will consist of at
least a cover letter and a brochure, and may also
consist of an audio and/or videotape.
2. The Company will provide a voice mail system that
the individuals receiving the information package will
be asked to respond to. When they call the toll free
number for additional information, they will hear a
recorded message from a successful leader in that
particular company. They will hear information about
the products of that particular company and its
associated multi level marketing program. The message
will help them to understand the potential of true
financial and time freedom that can be realized in the
<PAGE>
multi level marketing program that exists in that
particular company, through becoming a distributor,
sponsoring others as distributors and establishing a
sizeable downline organization of distributors
sponsored by or through them, that will generate
substantial monthly revenues from product sales and pay
the sponsoring distributor a portion of such revenues
as income, typically ranging from 5% to 20% of product
sales. They will then be asked to leave their name and
phone number in order for someone to contact them
personally.
3. The Company will provide a fax on demand service
that will also be made available to the contacts to
receive additional information about the Company.
4. After the initial information package has been sent
and the screening process has taken place, the new
member will then be contacted with the names of
acquaintances who have responded positively and are
seriously interested in the opportunity.
5. The members of management will then make themselves
available to help the new member contact those who have
expressed an interest, on a 3 way conference call or in
some instances in person, to solicit them to join the
multi level marketing organization downline from the
new member.
6. The members of management will also provide weekly
and monthly training seminars that will help the
members learn how to motivate and work with their
downline organizations (i.e., the distributors
sponsored by or through them) as they are developing.
These will be hands on seminars taught by people who
have actually succeeded financially in the multi level
marketing industry by developing sizeable downline
organizations. The seminars will provide general
information on how to develop motivational skills and
skill in working with people to maintain and motivate a
downline organization. Initially, these seminars will
be held at the Company's address, but may in the future
be scheduled at various other locations.
7. The Company will also provide direct mail services
for any type of promotion that members may want to use
as their organizations mature.
8. Computer profiling, metabolic profiles, fat testing
and support groups will also be made available by or
through the Company.
Management presently intends to charge an annual
membership fee of $49.95 to register and actively use the
training and other services of the Company on an ongoing
basis. The annual fee will be collected each year on the
anniversary date of the client's initial sign up. If a
person is also signing up as a new member of a multi level
marketing organization at the same time, fees ranging from
$40 to $100 approximately, may also be incurred to the multi
level marketing company that the person joins. Other
charges by the Company will be for the mass mailings, fax
and other services provided by the Company, which will be
charged for on an as used basis. Fees will be set in
amounts necessary to recover the actual cost of materials
and postage incurred for such services plus a profit of 10%-
20% to the Company. There will also be additional fees
charged for computer profiling, metabolic profiles and
counseling, fat testing, and ongoing support group
participation for specific health concerns. and weight
management.
<PAGE>
Government Regulation
Although the Company itself will not be engaged
directly in multi level marketing of health and nutrition
products for any company, the Company's business is directly
related to and dependent on both the multi level marketing
and health and nutrition industries, which are both subject
to extensive regulations relating to, inter alia, product
claims and marketing methods. As part of the process of
training and otherwise assisting others to be effective as
multi level marketing representatives, management of the
Company must maintain an awareness of applicable regulatory
requirements to avoid causing a violation of any such
requirements.
Multi Level Marketing. The multi level marketing
system is subject to a number of federal and state
regulations administered by the Federal Trade Commission and
various state agencies as well as regulations in foreign
markets administered by foreign agencies. Regulations
applicable to multi level marketing organizations have a
general purpose of ensuring that solicitation emphasizes
product sales and that product sales are ultimately made to
retail consumers (as opposed to other distributors) who
consume the products, and that advancement within the multi
level marketing structure is based on sales of the products
rather than investments in the organizations or other non-
retail sales related criteria. For instance, in certain
jurisdictions there may be limits on the extent to which
distributors may earn royalties on sales generated by
distributors or consumers who were not directly sponsored by
that distributor. Furthermore, many if not most
jurisdictions have various statutes or regulations
prescribing, proscribing or otherwise regulating various
consumer sales practices. For instance, most states
prohibit so called pyramid schemes, which are generally
defined as sales programs in which payments are made or
other consideration given in exchange for compensation or
the right to receive compensation which is derived primarily
from the introduction and recruiting of other persons into
the program rather than from the sale of goods and services.
In some instances, the emphasis placed in solicitation
efforts and other marketing methods employed by
distributors, including persons the Company trains or
otherwise assists, could influence regulatory determinations
of whether such regulatory requirements have been complied
with.
Product Claims and Advertising. Advertisements and
claims made with respect to products, whether made by a
multi level marketing company itself or by the multi level
marketing distributors, are strictly regulated. With
respect to health and nutrition companies, the products
offered by such companies are generally formulated using
only herbal or other natural ingredients classified by
regulatory agencies such as the Food and Drug Administration
as being safe for consumption without further pre-market
clinical testing. A principal focus of regulations
applicable to such products is to generally prohibit the
making of therapeutic claims. The making of impermissible
therapeutic claims by distributors, including persons the
Company trains or otherwise assists, could result in
reclassification subjecting products to stricter
regulations, or other sanctions.
Employees
The Company presently has no salaried employees, but
upon completion of the offering management anticipates the
need to hire employees, including a full time secretary,
part time Manager and other part time help. The part time
manager will hire and supervise other employees, as needed,
and will design, supervise and be responsible for the
mailings and follow up systems of the Company as well as the
<PAGE>
administrative aspects of day to day operations, including
accounting and recordkeeping functions. The officers of the
Company will not be employed full time initially and will
not receive a regular salary, wage or other cash
compensation for their time, unless and until the Company's
business operations develop to the point where a full time
or other extensive time commitment is required.
Item 2. Properties
General.
The Company presently has no office facilities but for
the time being will use the home office facilities of Dee
Hall, its President, in Sandy, Utah, on a rent free basis as
its principal place of business. The Company will reimburse
the officers and employees for any additional, out of pocket
expenses reasonably and actually incurred on behalf of the
Company. Management does not intend to seek other office
arrangements immediately upon completion of the offering,
but will seek such arrangements at such time in the future
as the Company's business requires more extensive
facilities, which is not anticipated in the immediate
future. The Company may use a portion of any proceeds of
its offering for such purpose, if and as needed.
Item 3. Legal Proceedings.
The Company is not a party to any material pending
legal proceedings and, to the best of its knowledge, no
action has been threatened by or against the Company.
Item 4. Submission of Matters to a Vote of Security
Holders.
No matter was submitted to a vote of security holders
through the solicitation of proxies or otherwise during the
fourth quarter of the fiscal year covered by this report.
PART II
Item 5. Market for Common Equity and Related Stockholder
Matters.
(a) Market information.
The Company's public offering was not closed as of the
date hereof and the Common Stock of the Company will not be
eligible for trading in the over-the-counter market until
that time.
(b) Holders.
As of March 27, 1997, (prior to close of the public
offering) there were only 4 record holders of the Company's
Common Stock.
<PAGE>
(c) Dividends.
The Company has not previously paid any cash dividends
on common stock and does not anticipate or contemplate
paying dividends on common stock in the foreseeable future.
It is the present intention of management to utilize all
available funds for the development of the Company's
business. The only restrictions that limit the ability to
pay dividends on common equity or that are likely to do so
in the future, are those restrictions imposed by law. Under
Delaware corporate law, no dividends or other distributions
may be made which would render the Company insolvent or
reduce assets to less than the sum of its liabilities plus
the amount needed to satisfy any outstanding liquidation
preferences.
Item 6. Management's Discussion and Analysis or Plan of
Operation.
The Company was incorporated on July 3, 1996. The
Company has not yet generated any revenues from operations
and is considered a development stage company. To date,
activities have been limited to organizational matters, the
preparation and filing of the registration statement to
register a public offering of its securities. The Company
has no significant assets.
Management's plan of operation for the next twelve
months is first to raise funds from the offering. If the
offering is successful, the Company intends to use the
proceeds primarily to acquire office equipment, hire
employees and cover the payroll costs and otherwise provide
operating capital during the start up period of operations
until the Company can begin generating revenues from
operations to thereafter cover ongoing expenses. The
Company is totally dependent upon the successful completion
of this offering and receipt of at least the minimum amount
of proceeds therefrom, of which there is no assurance, for
the ability to commence its intended business operations.
Inasmuch as there is no assurance that the offering
will be successful and that the Company will receive any net
proceeds therefrom, the Company has not entered into any
contractual commitments and will not do so unless and until
the offering is completed. Therefore there is absolutely no
assurance that the Company will be able, with the proceeds
of the offering, to successfully commence proposed business
operations. At this time, no assurances can be given with
respect to the timing of commencement of operations or the
length of time after commencement that it will be necessary
to fund operations from proceeds of the offering.
Depending on the total amount raised in the offering,
management believes that the net proceeds from the offering
will provide working capital for one to two years after
commencement of operations, during which time management
anticipates that the Company will begin generating
sufficient revenues to cover ongoing expenses. However,
there is absolutely no assurance of this. If the Company is
unsuccessful, investors will have lost their money and
management will not attempt to pursue further efforts with
respect to such business, and it is unlikely the Company
would have the financial ability to do so in any event.
Instead management will call a shareholders meeting to
decide whether to liquidate the Company or what direction
the Company will pursue, if any. However, the Company
presently has no plans, commitments or arrangements with
respect to any other potential business venture and there is
no assurance the Company could become involved with any
other business venture, especially any business venture
requiring significant capital.
<PAGE>
Item 7. Financial Statements.
See attached Financial Statements and Schedules.
Item 8. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure.
There are not and have not been any disagreements
between the Company and their accountants on any matter of
accounting principles or practices or financial statement
disclosure.
PART III
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance With Section 16(a) of
the Exchange Act
(a) Identify Directors and Executive Officers.
The following table sets forth the directors and
executive officers of the Company, their ages, term served
and all offices and positions with the Company. A director
is elected for a period of one year and thereafter serves
until his or her successor is duly elected by the
stockholders and qualifies. Officers and other employees
serve at the will of the Board of Directors.
Name of Director Age Term Served Positions with Company
L. Dee Hall 51 Since inception President, Treasurer &
Director
Glen Hatch 60 Since inception Vice President
Robert Blackley 60 Since inception Secretary
These individuals will serve as management of the
Company. A brief description of their background and
business experience is as follows:
L. Dee Hall will serve as President, Treasurer and
Director of the Company. He and his wife have been involved
in network marketing for the past eight years, and have
built multi-level marketing organizations in NuSkin
International, Brite Music (Dee was National Sales Manager
for Brite) and Body Wise International. They currently have
a sales downline for over 13,000 people in Body Wise and Dee
is a member of the Body Wise Executive Leadership Council.
Their organization generated over $500,000 in revenues last
year.
Glen Hatch will serve as Vice President of the Company.
He has been involved in direct sales for over 20 years and
has established many successful sales organizations. He is
currently the President of Camper World, Inc. Camper World
is a membership organization that owns and maintains
<PAGE>
numerous RV campground sites in the Western U.S. that are
available for use by members. He also has a large marketing
organization in USANA, INC. and is a member of the USANA top
ten (i.e. one of the top ten distributors in the entire
USANA multi level marketing network, which has in excess of
100,000 distributors).
Robert Blackley will serve as Secretary of the Company.
He and his wife have built successful marketing
organizations in NuSkin International, Santa Rosa Gold,
Accelerated Financial and Body Wise, and have also been
involved in real estate development for over ten years.
They are currently directors in Rexall Showcase.
The directors hold no directorships in any other
companies subject to the reporting requirements of the
Securities Exchange Act of 1934.
(b) Identify Significant Employees.
None other than the person previously identified.
(c) Family Relationships.
None
(d) Involvement in Certain Legal Proceedings.
Except as described hereinabove, no present officer or
director of the Company; 1) has had any petition filed,
within the past five years, in Federal Bankruptcy or state
insolvency proceedings on such person's behalf or on behalf
of any entity of which such person was an officer or general
partner within two years of filing; or 2) has been convicted
in a criminal proceeding within the past five years or is
currently a named subject of a pending criminal proceeding;
or 3) has been the subject, within the past five years, of
any order, judgment, decree or finding (not subsequently
reversed, suspended or vacated) of any court or regulatory
authority involving violation of securities or commodities
laws, or barring, suspending, enjoining or limiting any
activity relating to securities, commodities or other
business practice.
Compliance with Section 16(a) of the Exchange Act
The Issuer is not subject to the provisions of Section
16(a).
Item 10. Executive Compensation.
The Company was only recently incorporated, has not yet
commenced planned operations and has not paid any
compensation to its executive officers or director to date.
Proposed Compensation. The officers of the Company
will not be employed full time initially and will not
receive a regular salary, wage or other cash compensation
for their time, unless and until the Company's business
operations develop to the point where a full time or other
extensive time commitment is required. The officers will be
entitled to reimbursement of any out of pocket expenses
reasonably and actually incurred on behalf of the Company.
<PAGE>
Compensation of Directors
None
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
The Company has not entered into any contracts or
arrangements with any named executive officer which would
provide such individual with a form of compensation
resulting from such individual's resignation, retirement or
any other termination of such executive officer's employment
with the Company or its subsidiary, or from a change-in-
control of the Company or a change in the named executive
officer's responsibilities following a change-in-control.
Item 11. Security Ownership of Certain Beneficial Owners
and Management.
The following table sets forth certain information with
respect to the beneficial ownership of the Company's common
stock by each director of the Company, each beneficial owner
of more than five percent (5%) of said securities, and all
directors and executive officers of the Company as a group:
Amount and
Nature of Percent
Title of Beneficial of % After
Name and Address Class Ownership Class Offering
L. Dee Hall Common 900,000 shares 45% 36%
2077 Elderberry Way
Sandy, UT 84092
Glen Hatch Common 200,000 shares 10% 8%
263 E. 3900 S.
Salt Lake City, UT
84107
Robert Blackley Common 200,000 shares 10% 8%
263 E. 3900 S.
Salt Lake City, UT
84107
All officers and Common 1,300,000 shares 65% 52%
directors as a
group (3 persons)
Reed Jensen Common 700,000 shares 35% 28%
4348 Butternut Road
Salt Lake City, UT
84124
Prior to the sale of any Shares in the offering, these
individuals are the only shareholders of the Company. After
offering percentages are calculated assuming sale of all
Shares in the offering. The foregoing amounts include all
shares these persons are deemed to beneficially own
regardless of the form of ownership. See "Certain
Transactions."
<PAGE>
Item 12. Certain Relationships and Related Transactions.
The Company has entered into certain transactions with
officers, directors or affiliates of the Company which
include the following:
In connection with the organization of the Company, its
founding shareholders paid an aggregate of $10,000 cash to
purchase 2,000,000 shares of Common Stock of the Company.
See "Principal Shareholders."
It is contemplated that the Company may enter into
certain transactions with officers, directors or affiliates
of the Company which may involve conflicts of interest in
that they will not be arms' length transactions. These
transactions include the following:
The Company presently has no office facilities but for
the time being will use as its business address the home of
Dee Hall on a rent free basis, until such time as the
business operations of the Company may require more
extensive facilities and the Company has the financial
ability to rent commercial office space. There is presently
no formal written agreement for the use of such facilities,
and no assurance that such facilities will be available to
the Company on such a basis for any specific length of time.
The Company has no formal written employment agreement
or other contracts with its officers, and there is no
assurance that the services to be provided by them, and
facilities to be provided by Mr. Hall, will be available for
any specific length of time in the future. Mr. Hall
anticipates initially devoting up to approximately 20% of
his time to the affairs of the Company, and the other
officers intend to devote approximately 5% of their time to
the Company. If and when the business operations of the
Company increase and a more extensive time commitment is
needed, Mr. Hall and the other officers are prepared to
devote more time to the Company, in the event that becomes
necessary. The amounts of compensation and other terms of
any full time employment arrangements with the Company would
be determined if and when such arrangements become
necessary.
All of the officers are presently involved personally
or through controlled entities in large multi-level
marketing organizations or networks with extensive sales
downlines comprising thousands of people who distribute the
health and nutrition products of various companies engaged
in such business. See "Business - Marketing Methods."
Management intends to recruit people in these networks as
potential trainees and users of the Company's products and
services. Management believes that this arrangement will be
mutually beneficial to the Company and themselves, in that
the Company will benefit from the pool of potential recruits
to its services, and these organizations will benefit from
any improved marketing effectiveness of its members who use
the Company's training and other services.
<PAGE>
Conflicts of Interest
Other than as described herein the Company is not
expected to have significant further dealings with
affiliates. However, if there are such dealings the parties
will attempt to deal on terms competitive in the market and
on the same terms that either party would deal with an
unrelated third person. Presently no officer or director of
the Company has any transactions which they contemplate
entering into with the Company, aside from the matters
described herein.
Management will attempt to resolve any conflicts of
interest that may arise in favor of the Company. Failure to
do so could result in fiduciary liability to management.
Indemnification and Limitation of Liability
The general corporation law of Delaware permits
provisions in the articles, by-laws or resolutions approved
by shareholders which limit liability of directors and
officers for breach of fiduciary duty to certain specified
circumstances, namely, breaches of their duties of loyalty,
acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, acts
involving unlawful payment of dividends or unlawful stock
purchases or redemptions, or any transaction from which a
director or officer derives an improper personal benefit.
The Company's by-laws indemnify its officers and directors
to the full extent permitted by Delaware law. The by-laws
with these exceptions eliminate any personal liability of an
officer or director to the Company or its shareholders for
monetary damages for the breach of fiduciary duty and there
fore an officer or director cannot be held liable for
damages to the Company or its shareholders for gross
negligence or lack of due care in carrying out his or her
fiduciary duties. The Company's Articles provide for
indemnification to the full extent permitted under law which
includes all liability, damages and costs or expenses
arising from or in connection with service for, employment
by, or other affiliation with the Company to the maximum
extent and under all circumstances permitted by law.
Delaware law permits indemnification if a director or
officer acts in good faith in a manner reasonably believed
to be in, or not opposed to, the best interests of the
corporation. A director or officer must be indemnified as
to any matter in which he or she successfully defends
himself or herself. Indemnification is prohibited as to any
matter in which the director or officer is adjudged liable
to the corporation. Insofar as indemnification for
liabilities arising under the Securities Act may be
permitted to directors, officers, and controlling persons of
the Company pursuant to the foregoing provisions or
otherwise, the Company has been advised that in the opinion
of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
Except as disclosed in this item, in notes to the
financial statements or elsewhere in this report, the
Company is not aware of any indebtedness or other
transaction in which the amount involved exceeds $60,000
between the Company and any officer, director, nominee for
director, or 5% or greater beneficial owner of the Company
or an immediate family member of such person; nor is the
Company aware of any relationship in which a director or
nominee for director of the Company was also an officer,
director, nominee for director, greater than 10% equity
owner, partner, or member of any firm or other entity which
received from or paid the Company, for property or services,
amounts exceeding 5% of the gross annual revenues or total
assets of the Company or such other firm or entity.
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits to this report are all documents
previously filed which are incorporated herein as exhibits
to this report by reference to registration statements and
other reports previously filed by the Company pursuant to
the Securities Act of 1933 and the Securities Exchange Act
of 1934.
(b) Reports on Form 8-K have not been filed during the
last quarter of the fiscal year ended December 31, 1996.
<PAGE>
SIGNATURES
In accordance with Section 12 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HEALTH BUILDERS INTERNATIONAL, INC.
By: /s/ L. Dee Hall Date: March 28, 1997
L. Dee Hall, President, Treasurer and sole Director
Chief Executive Officer and
Chief Financial Officer
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the
registrant and in the capacities and the dates indicated.
By: /s/ L. Dee Hall Date: March 28, 1997
L. Dee Hall, President, Treasurer and sole Director
Chief Executive Officer and
Chief Financial Officer
<PAGE>
Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Exchange Act by Non
Reporting Issuers
No annual report or proxy statement has been sent to
security holders.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
DECEMBER 31, 1996
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
CONTENTS
PAGE
_ Independent Auditors' Report 1
_ Balance Sheet, December 31, 1996 2
_ Statement of Operations, from inception
on July 3, 1996 through December 31, 1996 3
_ Statement of Stockholders' Equity,
from inception on July 3, 1996 through
December 31, 1996 4
_ Statement of Cash Flows, from inception
on July 3, 1996 through December 31, 1996 5
_ Notes to Financial Statements 6 - 7
<PAGE>
PRITCHETT, SILER & HARDY, P.C.
430 EAST 400 SOUTH
SALT LAKE CITY, UTAH 84111
INDEPENDENT AUDITORS' REPORT
Board of Directors
HEALTH BUILDERS INTERNATIONAL, INC.
Sandy, Utah
We have audited the accompanying balance sheet of Health Builders
International, Inc. [a development stage company] at December 31,
1996, and the related statements of operations, stockholders'
equity and cash flows from inception on July 3, 1996 through
December 31, 1996. 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 audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about 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. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements audited by us present
fairly, in all material respects, the financial position of
Health Builders International, Inc. as of December 31, 1996, and
the results of its operations and its cash flows for the period
from inception through December 31, 1996, in conformity with
generally accepted accounting principles.
/S/ PRITCHETT, SILER & HARDY, P.C.
March 13, 1997
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
December 31,
1996
_____________
CURRENT ASSETS:
Cash in bank $ 2,603
___________
OTHER ASSETS:
Organizational costs, net 917
Deferred stock offering costs 6,370
___________
Total Other Assets $ 7,287
___________
$ 9,890
___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 69
___________
Total Current Liabilities 69
___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
500,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
50,000,000 shares authorized,
2,000,000 shares issued and
outstanding 2,000
Capital in excess of par value 8,000
Deficit accumulated during the
development stage (179)
___________
Total Stockholders' Equity 9,821
___________
$ 9,890
___________
The accompanying notes are an integral part of this financial statement.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
STATEMENT OF OPERATIONS
From Inception
on July 3,
1996 Through
December 31, 1996
_________________
REVENUE $ -
_____________
EXPENSES:
General and administrative 179
_____________
LOSS BEFORE INCOME TAXES (179)
CURRENT TAX EXPENSE -
DEFERRED TAX EXPENSE -
_____________
NET LOSS $ (179)
_____________
LOSS PER COMMON SHARE $ (.00)
_____________
The accompanying notes are an integral part of this financial statement.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON JULY 3, 1996
THROUGH DECEMBER 31, 1996
Deficit
Accumulated
Preferred Stock Common Stock Capital in During the
______________________________________ Excess of Development
Shares Amount Shares Amount Par Value Stage
_______________________________________________________________
BALANCE,
July 3,
1996 - $ - - $ - $ - $ -
Issuance
of 2,000,000
shares common
stock for cash,
July 17, 1996
at $.005 per
share - - 2,000,000 2,000 8,000 -
Net loss for
the period
ended December
31, 1996 - - - - - (179)
_______________________________________________________________
BALANCE,
December
31, 1996 - $ - 2,000,000 $2,000 $8,000 $ (179)
_______________________________________________________________
The accompanying notes are an integral part of this financial statement.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
STATEMENT OF CASH FLOWS
From Inception
on July 3,
1996 Through
December 31, 1996
__________________
Cash Flows from Operating Activities:
Net loss $ (179)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Amortization expense 83
Increase in accounts payable 69
________________
Net Cash Flows to Operating
Activities (27)
________________
Cash Flows from Investing Activities -
Payments for organization costs (1,000)
________________
Net Cash to Investing Activities (1,000)
________________
Cash Flows from Financing Activities:
Proceeds from common stock issuance 10,000
Payment of stock offering costs (6,370)
________________
Net Cash from Financing
Activities 3,630
________________
Net Increase in Cash 2,603
Cash at Beginning of Period -
________________
Cash at End of Period $ 2,603
________________
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ -
Income taxes $ -
Supplemental schedule of Noncash Investing and Financing
Activities:
For the period ended December 31, 1996:
None
The accompanying notes are an integral part of this financial statement.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the
State of Delaware on July 3, 1996. The Company has not commenced
planned principal operations and is considered a development
stage company as defined in SFAS No. 7. The Company is planning
to engage in the business of establishing a training and
distribution center for the development of multi-level marketing
networks in the health and nutrition industry, to train and
assist people involved in network marketing for various health
and nutrition companies in recruiting, and also to provide
customized mailing and fax services. The Company has, at the
present time, not paid any dividends and any dividends that may
be paid in the future will depend upon the financial requirements
of the Company and other relevant factors.
Organization Costs - The Company is amortizing its organization
costs, which reflect amounts expended to organize the Company,
over sixty [60] months using the straight line method.
Loss Per Share - The computation of loss per share is based on
the weighted average number of shares outstanding during the
period presented.
Statement of Cash Flows - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses
during the reported period. Actual results could differ from
those estimated.
NOTE 2 - CAPITAL STOCK
Common Stock - During July, 1996, in connection with its
organization, the Company issued 2,000,000 shares of its
previously authorized, but unissued common stock. Total proceeds
from the sale of stock amounted to $10,000 (or $.005 per share).
Preferred Stock - The Company has authorized 500,000 shares of
preferred stock, $.001 par value, with such rights, preferences
and designations and to be issued in such series as determined by
the Board of Directors. No shares are issued and outstanding at
December 31, 1996.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". FASB 109 requires the Company to provide a
net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book
and tax accounting methods and any available operating loss or
tax credit carryforwards. At December 31, 1996 there were no
material deferred tax assets or liabilities, current or deferred
tax expense, or net operating loss carryforwards.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any
compensation to its officers and directors.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his home as a mailing address, as needed, at no
expense to the Company.
NOTE 5 - DEVELOPMENT STAGE COMPANY
The Company was formed with a very specific business plan.
However, the possibility exists that the Company could expend
virtually all of its working capital in a relatively short time
period and may not be successful in establishing on-going
profitable operations.
NOTE 6 - SUBSEQUENT EVENTS
Proposed Public Offering of Common Stock - The Company is
proposing to make a public offering of 500,000 shares of its
previously authorized but unissued common stock. The Company has
filed a registration statement on Form SB-2 with the United
States Securities and Exchange Commission in accordance with the
Securities Act of 1933 as amended. An offering price of $.20 per
share has arbitrarily been determined by the Company. The
offering will be managed by the Company without any underwriter.
The shares will be offered and sold by an officer of the Company,
who will receive no sales commissions or other compensation in
connection with the offering, except for reimbursement of
expenses actually incurred on behalf of the Company in connection
with the offering. The Company has incurred stock offering costs
of $6,370 as of December 31, 1996, but any such costs will be
deferred and netted against the proceeds of the proposed public
stock offering.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-03-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,603
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,603
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,890
<CURRENT-LIABILITIES> 69
<BONDS> 0
0
0
<COMMON> 2,000
<OTHER-SE> 7,821
<TOTAL-LIABILITY-AND-EQUITY> 9,890
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (179)
<INCOME-TAX> 0
<INCOME-CONTINUING> (179)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (179)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
