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, 1998 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.
$541
As of April 9, 1999, 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, 1998: 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. The following sets
forth high and low bid price quotations for each calendar quarter
that trading occurred during the last two fiscal years. Such
price quotations represent interdealer prices, without retail
markup, markdown or commissions, and may not represent actual
transactions.
Quarter Ended High Low
December 31, 1997 .25 .25
March 31, 1998 .25 .25
June 30, 1998 .25 .25
September 30, 1998 .28 .25
December 31, 1998 .28 .25
(b) Holders.
As of April 9, 1999, there were approximately 30 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 53 Since President, Treasurer &
inception Director
Glen Hatch 62 Since Vice President
inception
Robert Blackley 62 Since Secretary
inception
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:
Title of Amount and Percent
Name and Address Class Nature of of
Beneficial Class
Ownership
L. Dee Hall Common 900,000 39%
2077 Elderberry Way shares
Sandy, UT 84092
Glen Hatch Common 200,000 9%
263 E. 3900 S. shares
Salt Lake City, UT
84107
Robert Blackley Common 200,000 9%
263 E. 3900 S. shares
Salt Lake City, UT
84107
All officers and Common 1,300,000 56%
directors as a shares
group (3 persons)
Reed Jensen Common 700,000 30%
4348 Butternut Road shares
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, 1998.
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 9, 1999
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 9, 1999
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, 1998 and 1997
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, 1998 and 1997 2
- Statements of Operations, for the years ended
December 31, 1998 and 1997 and from inception
on July 3, 1996 through December 31, 1998 3
- Statement of Stockholders' Equity, from
inception on July 3, 1996 through
December 31, 1998 4
- Statements of Cash Flows, for the years ended
December 31, 1998 and 1997 and from inception
on July 3, 1996 through December 31, 1998 5
- Notes to Financial Statements 6 - 9
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, 1998 and
1997, and the related statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1998 and 1997 and for the period from
inception on July 3, 1996 through December 31, 1998. 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, 1998 and 1997, and the results of its operations and
its cash flows for the years ended December 31, 1998 and 1997 and for the
period from inception through December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ Pritchett, Siler & Hardy, P.C.
February 26, 1999
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
BALANCE SHEETS
ASSETS
December 31,
__________________________
1998 1997
____________ ____________
CURRENT ASSETS:
Cash in bank $ 21,138 $ 17,076
Certificate of deposit
- held to maturity - 20,096
____________ ____________
Total Current Assets 21,138 37,172
____________ ____________
PROPERTY AND EQUIPMENT, net 566 368
____________ ____________
OTHER ASSETS:
Organizational costs, net 517 717
____________ ____________
517 717
____________ ____________
$ 22,221 $ 38,257
____________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,810 $ 1,298
____________ ____________
Total Current Liabilities 3,810 1,298
____________ ____________
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 2,305,500 shares
issued and outstanding in 1998
and 1997 2,306 2,306
Capital in excess of par value 50,707 50,707
Deficit accumulated during the
development stage (34,602) (16,054)
____________ ____________
Total Stockholders' Equity 18,411 36,959
____________ ____________
$ 22,221 $ 38,257
____________ ____________
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
From Inception on
For the Year Ended July 3, 1996
December 31, Through
_____________________ December 31,
1998 1997 1998
__________ __________ ___________
REVENUE $ 541 $ - $ 541
__________ __________ ___________
EXPENSES:
General and administrative 20,113 16,028 36,320
__________ __________ ___________
INCOME (LOSS) FROM OPERATIONS (19,572) (16,028) (35,779)
OTHER INCOME:
Interest 1,024 153 1,177
__________ __________ ___________
LOSS BEFORE INCOME TAXES (18,548) (15,875) (34,602)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
__________ __________ ___________
NET LOSS $ (18,548) $(15,875) $ (34,602)
__________ __________ ___________
LOSS PER COMMON SHARE $ (.01) $ (.01) $ (.02)
__________ __________ ___________
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, 1998
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 42,707 -
Net loss for the
year ended
December 31, 1997 - - - - - (15,875)
________ _____ _________ ______ ___________ _____________
BALANCE,
December 31, 1997 - - 2,305,500 2,306 50,707 (16,054)
Net loss for the
year ended
December 31, 1998 - - - - - (18,548)
________ _____ _________ ______ ___________ _____________
BALANCE,
December 31, 1998 - $ - 2,305,500 $ 2,306 $ 50,707 $ (34,602)
________ _____ _________ ______ ___________ _____________
The accompanying notes are an integral part of this financial statement.
-4-
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
From Inception on
For the Year Ended July 3, 1996
December 31, Through
____________________ December 31,
1998 1997 1998
_________ _________ ________________
Cash Flows from Operating Activities:
Net loss $(18,548) $(15,875) $(34,602)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation expense 96 3 99
Amortization expense 200 200 483
Changes in assets and
liabilities:
Increase in accounts
payable 2,513 1,230 3,812
_________ _________ ________________
Net Cash (Used) by
Operating Activities (15,739) (14,442) (30,208)
_________ _________ ________________
Cash Flows from Investing Activities:
Payments for organization
costs - - (1,000)
Certificate of deposit, net 20,096 (20,096) -
Property, plant and equipment (295) (371) (666)
_________ _________ ________________
Net Cash (Used) by
Investing Activities 19,801 (20,467) (1,666)
_________ _________ ________________
Cash Flows from Financing Activities:
Proceeds from common stock
issuance - 61,100 71,100
Payment of stock offering
costs - (11,718) (18,088)
_________ _________ ________________
Net Cash Provided by
Financing Activities - 49,382 53,012
_________ _________ ________________
Net Increase in Cash 4,062 14,473 21,138
Cash at Beginning of Period 17,076 2,603 -
_________ _________ ________________
Cash at End of Period $ 21,138 $ 17,076 $ 21,138
_________ _________ ________________
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, 1998
None
For the Year Ended December 31, 1997
None
The accompanying notes are an integral part of these financial statements.
-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 significant
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, 1998 and 1997 was $200 and $200 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.
Recently Enacted Accounting Standards - SFAS No. 130, "Reporting Comprehensive
Income", SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" SFAS No. 132, "Employer's Disclosure about Pensions and
Other Postretirement Benefits", SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" and SFAS No.134, "Accounting for Mortgage-
Backed Securities." were recently issued. SFAS No. 130, 131, 132, 133 and 134
have no current applicability to the Company or their effect on the financial
statements would not have been significant.
-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:
Purchase Amortized Maturity
Date Acquired Maturity Date Value Cost Value
_____________ _____________ ________ ___________ ________
11/24/97 5/24/98 $20,000 $20,096 $20,475
________ ___________ ________
$20,000 $20,096 $20,475
________ ___________ ________
At the maturity date the certificate of deposit was redeemed. At December
31, 1998 the Company was not holding any certificates of deposit.
NOTE 3 - PROPERTY AND EQUIPMENT
The following is a summary of equipment, at cost, less accumulated
depreciation:
December 31,
___________________
1998 1997
_________ _________
Equipment $ 665 $ 371
Less Accumulated
Depreciation (99) (3)
_________ _________
$ 566 $ 368
_________ _________
Depreciation expense for the years ended December 31, 1998 and 1997 was $96
and $3 respectively.
NOTE 4 - CAPITAL STOCK
Common Stock - During September 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, 1998 and 1997.
-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, 1998, the Company has available
unused operating loss carryforwards of approximately $35,000, which may be
applied against future taxable income and which expire in 2012 through 2013.
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 $11,900 and
$5,400 as of December 31, 1998 and 1997, respectively, with an offsetting
valuation allowance at each year end of the same amount resulting in a change
in the valuation allowance of approximately $6,500 during 1998.
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 $1,244 and $3,923 in consulting fees during
1998 and 1997 respectively.
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>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - EARNINGS (LOSS) PER SHARE
The following data show the amounts used in computing income (loss) per share
and the effect on income and the weighted average number of shares of dilutive
potential common stock for the years ended December 31, 1998 and December 31,
1997 and from inception on July 3, 1996 through December 31, 1998:
For the From Inception
Year Ended on July 3,
December 31, 1990 Through
_______________________ December 31,
1998 1997 1998
__________ __________ ____________
Income (loss) available to
common stockholders used
in income (loss) per share $ (18,548) $ (15,875) $ (34,602)
__________ __________ ____________
Weighted average number of
common shares outstanding
used in earnings per share
during the period 2,305,500 2,089,558 2,160,754
__________ __________ ____________
Dilutive earnings per share was not presented, as the Company had no common
equivalent shares for all periods presented that would effect the computation
of diluted earnings (loss) per share.
-9-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from financial statements for the year ended December 31, 1998,
and is qualified in its entirety by reference to such fiancial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 21,138
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,138
<PP&E> 665
<DEPRECIATION> 99
<TOTAL-ASSETS> 22,221
<CURRENT-LIABILITIES> 3,810
<BONDS> 0
0
0
<COMMON> 2,306
<OTHER-SE> 16,105
<TOTAL-LIABILITY-AND-EQUITY> 22,221
<SALES> 541
<TOTAL-REVENUES> 541
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,113
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (18,548)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,548)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,548)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
