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, 1997
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, 1998, 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, 1997: 2,305,500
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 offered 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. The offering was completed in
September, 1997, with the sale of 305,500 shares which raised gross
proceeds of $61,100. Upon completion of the offering, the Company
began to use the net proceeds from this offering to provide the
working capital necessary to commence business operations.
The Company only recently commenced business operations and is
still considered a development stage company. To date, activities
have been limited to organizational matters and the preparation and
filing of the registration statement and completion of the public
offering. The Company has no significant assets other than the net
proceeds from the offering, and is totally dependent upon the
proceeds therefrom, for the ability to develop 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, to train and assist people involved
in network marketing for various companies in recruiting, and also
to provide customized mailing and fax services. The Company's
initial focus was in the health and nutrition industry, working
with health and nutrition companies engaged in multi level
marketing, but its focus has since shifted into multi level
marketing in other lines of business such as telecommunications.
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 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 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.
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.
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 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 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.
Government Regulation
The Company's business is directly related to and dependent on
the multi level marketing industry, which is 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. The making of impermissible
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 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 Common Stock of the Company is eligible for trading in the
over-the-counter market and is quoted on the Electronic Bulletin
Board maintained by the National Association of Securities Dealers
("NASD") under the symbol "HBII". Trading did not commence
until December of 1997, on a limited and sporadic basis, at a bid
price quotation of $.25. Such price quotations represent
interdealer prices, without retail markup, markdown or commissions,
and may not represent actual transactions.
(b) Holders.
As of April 9, 1998, there were approximately 55 record
holders of the Company's Common Stock.
(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, and completion of the public offering. The Company has
no other significant assets.
Management's plan of operation for the next twelve months is
to use the offering 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 offering proceeds for the ability to commence
its intended business operations.
There is absolutely no assurance that the Company will be
able, with the proceeds of the offering, to successfully develop
its proposed business. At this time, no assurances can be given
with respect to the length of time after commencement that it will
be necessary to fund operations from proceeds of the offering.
Management believes that the net proceeds from the offering
will provide working capital for one to two years, 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.
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 52 Since inception President, Treasurer & Director
Glen Hatch 61 Since inception Vice President
Robert Blackley 61 Since inception Secretary
These individuals serve as management of the Company. A brief
description of their background and business experience is as
follows:
L. Dee Hall serves 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 serves 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 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 serves 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.
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 Beneficial Percent
Name and Address Title of Class Ownership of Class
L. Dee Hall Common 900,000 shares 39%
2077 Elderberry Way
Sandy, UT 84092
Glen Hatch Common 200,000 shares 9%
263 E. 3900 S.
Salt Lake City, UT
84107
Robert Blackley Common 200,000 shares 9%
263 E. 3900 S.
Salt Lake City, UT
84107
All officers and Common 1,300,000 shares 56%
directors as a
group (3 persons)
Reed Jensen Common 700,000 shares 30%
4348 Butternut Road
Salt Lake City, UT
84124
The foregoing amounts include all shares these persons are
deemed to beneficially own regardless of the form of ownership.
See "Certain Transactions."
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.
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 therefore 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.
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, 1997.
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: April 10, 1998
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: April 10, 1998
L. Dee Hall, President, Treasurer and sole Director
Chief Executive Officer and
Chief Financial Officer
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, 1997 AND 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 Sheets, December 31, 1997 and 1996 2
- Statements of Operations, for the years
ended December 31, 1997 and 1996 and from
inception on July 3, 1996 through December
31, 1997 3
- Statement of Stockholders' Equity, from
inception on July 3, 1996 through
December 31, 1997 4
- Statements of Cash Flows, for the years
ended December 31, 1997 and 1996 and from
inception on July 3, 1996 through December
31, 1997 5
- Notes to Financial Statements 6 - 8
<PAGE>
PRITCHETT, SILER & HARDY, P.C.
430 East 400 South
Salt Lake City, Utah 84111
(801) 328-2727
INDEPENDENT AUDITORS' REPORT
Board of Directors
HEALTH BUILDERS INTERNATIONAL, INC.
Sandy, Utah
We have audited the accompanying balance sheets of Health
Builders International, Inc. [a development stage company] at
December 31, 1997 and 1996, and the related statements of
operations, stockholders' equity and cash flows for the years
ended December 31, 1997 and 1996 and for the period from
inception on July 3, 1996 through December 31, 1997. 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 audits 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 audits provide 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, 1997 and
1996, and the results of its operations and its cash flows for
the years ended December 31, 1997 and 1996 and for the period
from inception through December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ Pritchett, Siler & Hardy, P.C.
February 20, 1998
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
December 31,
___________________________
1997 1996
____________ ____________
CURRENT ASSETS:
Cash in bank $ 17,076 $ 2,603
Certificate of deposit - held to maturity 20,096 -
____________ ____________
Total Current Assets 37,172 2,603
____________ ____________
PROPERTY AND EQUIPMENT, net 368 -
____________ ____________
OTHER ASSETS:
Organizational costs, net 717 917
Deferred stock offering costs - 6,370
____________ ____________
Total Other Assets 717 7,287
____________ ____________
$ 38,257 $ 9,890
____________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,298 $ 69
____________ ____________
Total Current Liabilities 1,298 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,
2,305,500 and 2,000,000 shares
issued and outstanding in 1997 and 1996 2,306 2,000
Capital in excess of par value 50,706 8,000
Deficit accumulated during the
development stage (16,053) (179)
____________ ____________
Total Stockholders' Equity 36,959 9,821
____________ ____________
$ 38,257 $ 9,890
____________ ____________
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
STATEMENT OF OPERATIONS
From Inception
For the Year Ended on July 3,1996
December 31, 1996 Through
______________________ December 31,
1997 1996 1997
__________ __________ ___________
REVENUE $ - $ - $ -
__________ __________ ___________
EXPENSES:
General and administrative 16,027 179 16,206
__________ __________ ___________
INCOME (LOSS) FROM OPERTAIONS (16,027) (179) (16,206)
OTHER INCOME:
Interest 153 - 153
__________ __________ ___________
LOSS BEFORE INCOME TAXES (15,874) (179) (16,053)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
__________ __________ ___________
NET LOSS $ (15,874) $ (179) $ (16,053)
__________ __________ ___________
LOSS PER COMMON SHARE $ (.01) $ (.00) $ (.01)
__________ __________ ___________
The accompanying notes are an integral part of these financial statements.
-3-
<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, 1997
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)
Issuance of
305,500 shares
common stock for
cash, September
15, 1997 at $.20
per share, net
of $18,088 in
offering costs - - 305,500 306 42,706 -
Net loss for the
year ended
December 31, 1997 - - - - - (15,874)
__________ _________ ___________ _________ __________ ___________
BALANCE, December
31, 1997 - $ - 2,305,500 $ 2,306 $ 50,706 $ (16,053)
__________ _________ ___________ _________ __________ ___________
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
STATEMENT OF CASH FLOWS
From Inception
For the Year Ended on July 3,
December 31, 1996 Through
___________________________ December 31,
1997 1996 1997
_____________ _____________ ______________
Cash Flows from Operating Activities:
Net loss $ (15,874) $ (179) $ (16,053)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation expense 3 - 3
Amortization expense 200 83 283
Changes in assets and liabilities:
Increase in accounts payable 1,229 69 1,298
_____________ _____________ ______________
Net Cash (Used) by Operating
Activities (14,442) (27) (14,469)
_____________ _____________ ______________
Cash Flows from Investing Activities:
Payments for organization costs - (1,000) (1,000)
Certificate of deposit (20,096) - (20,096)
Property, plant and equipment (371) - (371)
_____________ _____________ ______________
Net Cash (Used) by Investing
Activities (20,467) (1,000) (21,467)
_____________ _____________ ______________
Cash Flows from Financing Activities:
Proceeds from common stock
issuance 61,100 10,000 71,100
Payment of stock offering
costs (11,718) (6,370) (18,088)
_____________ _____________ ______________
Net Cash Provided by
Financing Activities 49,382 3,630 53,012
_____________ _____________ ______________
Net Increase in Cash 14,473 2,603 17,076
Cash at Beginning of Period 2,603 - -
_____________ _____________ ______________
Cash at End of Period $ 17,076 $ 2,603 $ 17,076
_____________ _____________ ______________
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 Year Ended December 31, 1997
None
For the Year Ended December 31, 1996
None
The accompanying notes are an integral part of this financial statement.
-5-
<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 yet
generated revenues from its 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 multi-level marketing network to provide customized mailing and
fax services for various network marketing companies. The
Company is also attempting to form its own network marketing
organization within the communications industry. 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.
Amortization expense for the years ended December 31, 1997 and
1996 was $200 and $83 respectively.
Certificate of Deposit - The Company accounts for investments
in debt and equity securities in accordance with Statement of
Financial Accounting Standard (SFAS) 115, "Accounting for
certain Investments in Debt and Equity Securities,". Under
SFAS 115 the Company's certificate of deposit (a debt
security) has been classified as held-to-maturity and is
recorded at amortized cost. Held-to-maturity securities
represent those securities that the Company has both the
positive intent and ability to hold until maturity (See Note
2).
Depreciation Methods - The cost of property and equipment is
being depreciated using the straight-line method over the
estimated useful lives of the related assets of five and seven
years.
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 required
management to make estimates and assumptions that effect the
reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimated by management.
-6-
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - CERTIFICATE OF DEPOSIT
Certificates of deposit are carried at amortized cost and
consisted of the following investment at December 31, 1997:
Maturity Purchase Amortized Maturity
Date Acquired Date Value Cost Value
_______________ _______ _____________ ___________ ____________
11/24/97 5/24/98 $ 20,000 $ 20,096 $ 20,475
_____________ ___________ ____________
$ 20,000 $ 20,096 $ 20,475
_____________ ___________ ____________
NOTE 3 - PROPERTY AND EQUIPMENT
The following is a summary of equipment, at cost, less
accumulated depreciation:
December 31,
____________________
1997 1996
_________ _________
Equipment $ 371 $ -
Less Accumulated
depreciation 3 -
_________ _________
$ 368 $ -
_________ _________
Depreciation expense for the years ended December 31, 1997 and
1996 was $3 and $0 respectively.
NOTE 4 - CAPITAL STOCK
Common Stock - During August 1997 the Company issued 305,500
shares of common stock in a public offering. The offering was
made pursuant to a registration statement on Form SB-2 which was
filed with the Securities and Exchange Commission. The offering
price of $.20 per share was arbitrarily determined by the
Company. The total proceeds of the offering amounted to $61,100.
Offering costs of $18,088 were offset against the proceeds as a
reduction to capital in excess of par value.
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, 1997 and 1996.
-7-
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - 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, the Company has
available unused operating loss carryforwards of approximately
$16,000, which may be applied against future taxable income and
which expire in 2011 through 2012.
The amount of and ultimate realization of the benefits from the
operating loss carryforwards for income tax purposes is
dependent, in part, upon the tax laws in effect, the future
earnings of the Company, and other future events, the effects of
which cannot be determined. Because of the uncertainty
surrounding the realization of the loss carryforwards the Company
has established a valuation allowance equal to the tax effect of
the loss carryforwards and, therefore, no deferred tax asset has
been recognized for the loss carryforwards. The net deferred tax
assets are approximately $5,400 and $100 as of December 31, 1997
and 1996, respectively, with an offsetting valuation allowance at
each year end of the same amount resulting in a change in the
valuation allowance of approximately $5,300 during 1997.
NOTE 6 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any
compensation to its officers and directors.
Related Party Compensation - Certain relatives of officers and
directors of the Company were paid a total of $3,923 in
consulting fees during 1997.
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 7 - 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.
-8-
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 17,076
<SECURITIES> 20,096
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 37,172
<PP&E> 371
<DEPRECIATION> 3
<TOTAL-ASSETS> 38,257
<CURRENT-LIABILITIES> 1,298
<BONDS> 0
0
0
<COMMON> 2,306
<OTHER-SE> 34,653
<TOTAL-LIABILITY-AND-EQUITY> 38,257
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,027
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (15,874)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,874)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,874)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
