SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended February 28, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from______ to _______
Commission file number: 000-25157
Dr. Abravanel's Formulas, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 95-4685068
- ------------------------------ --------------------------------
(State or other jurisdiction of (IRS employer identification no.)
incorporation)
124 South Hudson Avenue, Los Angeles, CA 90004
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (213) 933-0163
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None None
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Securities registered pursuant to Section 12(g) of the Act:
Common
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Check whether the issuer (1) 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 registrant 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 there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
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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 were $ -0-
The Company has no market for its common shares. Therefore, management
has arbitrarily valued the 1,341,353 shares held by non-affiliates as of May
1, 1999, at $1,341.35 based on the par value of one mill ($0.001) per share.
The number of shares outstanding of the issuer's common stock as of May
1, 1999, was 12,841,353 shares of common stock, $.001 par value per share.
Transitional Small Business Disclosure Format YES [ ] NO [x]
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
BUSINESS DEVELOPMENT
Dr. Abravanel's Formulas, Inc., a Nevada corporation (the "Company") is a
nutritional supplement development and marketing corporation. The Company was
incorporated on April 28, 1998 and is headquartered at 124 South Hudson
Avenue, Los Angeles, CA 90004.
In April of 1998, the Company issued 10,000,000 "unregistered",
"restricted" shares to its founders, Dr. Abravanel and Mark Delott pursuant to
a Technology Transfer Agreement. In consideration for such issuance, the
Company now owns 100% of the rights to all formulas of Dr. Abravanel that the
Company markets as further discussed under "BUSINESS OF THE COMPANY", below
and under Item 12. "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS". On
August 26, 1998, the Company issued 1,500,000 to the same individuals (750,000
each) pursuant to a Compensatory Benefit Plan in accordance with Rule 701 of
the Securities Act of 1933, as amended (the "Act"). In May of 1998 through
September 1998, the Company conducted an offering of its commons stock
pursuant to an exemption from the registration requirements of Section 5 of
the Act, under Section 4(2)and under Section 3(b), Regulation D, Rule 504.
The Company sold 1,341,353 shares of its common stock to 30 investors at
prices ranging from $0.01 to $0.20 per share for gross proceeds of
approximately $133,000 which was allocated to general working capital.
On December 10, 1998, the Company elected to file a Form 10-SB
registration statement on a voluntary basis in order to become a reporting
company under the Securities Exchange Act of 1934. The Company amended its
registration statement on April 8 and April 29, 1999.
BUSINESS OF THE COMPANY
Principal Products of the Company and their Markets
- ---------------------------------------------------
The Company has developed products under the guidance of its Chairman and
President, Elliot Abravanel, MD specifically for the reduction or elimination
of cravings in people. The Company's products are designed to reduce cravings
for sugar, starch, and greasy food. Dr. Abravanel believes that if a person's
cravings are reduced or eliminated, several benefits may result. Furthermore,
by reintroducing certain missing nutrients provided by plant derived colloidal
minerals, amino acids, vitamins, and certain herbs in the right amounts and
proportions, persons with physical or psychological health concerns may
benefit. In layman terms, "Colloidal minerals" are "super" small minerals
that are highly absorbable because they can pass through and into human cells.
Dr. Abravanel also believes it is the lack of these specific nutrients that
give rise to cravings that could result in many physical and psychological
disorders which include the following:
* Weight problems
* Greater susceptibility to stress
* Fatigue
* Mental and physical health problems
* Drug and alcohol dependency
(No scientific studies have been done on the Company's products, and the
Company makes no health claims for disease treatment of any kind.) This
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belief is based upon a large body of work going back about 25 years relating
the effects of nutrients to behavior, particularly to overall brain function
and feeding behavior. These works include the following, all of which were
published and authored by parties unrelated to the Company or its management:
Recent advances in the clinical and biochemical effects of chromium
deficiency.
Anderson RA
Prog Clin Biol Res 1993;380():221-34
Chromium and its relation to carbohydrate metabolism.
Mertz W
Med Clin North Am 1976 Jul;60(4):739-44
Chromium depletion in the pathogenesis of diabetes and atherosclerosis.
Boyle E Jr, Mondschein B, Dash HH
South Med J 1977 Dec;70(12):1449-53
Carbohydrates and human appetite.
Blundell JE, Green S, Burley V
Psychology Department, University of Leeds, UK.
Am J Clin Nutr 1994 Mar;59(3 Suppl):728S-734S
Chromium as an essential nutrient for humans.
Anderson RA
Beltsville Human Nutrition Center, U.S. Department of Agriculture, ARS,
Beltsville, Maryland 20705, USA.
Regul Toxicol Pharmacol 1997 Aug;26(1 Pt 2):S35-41
Safety and efficacy of long-term treatment with ephedrine, caffeine and
an ephedrine/caffeine mixture.
Toubro S, Astrup AV, Breum L, Quaade F
Research Department of Human Nutrition, Royal Veterinary and
Agricultural University, Fredriksberg, Copenhagen, Denmark.
Int J Obes Relat Metab Disord 1993 Feb;17 Suppl 1():S69-72
Dietary influences on the synthesis of neurotransmitters in the brain.
Growdon JH, Wurtman RJ
Nutr Rev 1979 May;37(5):129-36
Control of brain neurotransmitter synthesis by precursor availability
and food consumption. pp. 103-21.
Wurtman RJ, Cohen EL, Fernstrom JD
In: Usdin E, et al., ed. Neuroregulators and psychiatric disorders.
New York, Oxford Univ Press, 1977. WM 100 N494 1976. ;():
Nutrients, neurotransmitter synthesis, and the control of food intake.
Wurtman RJ, Wurtman JJ
Res Publ Assoc Res Nerv Ment Dis 1984;62():77-86
Ways that foods can affect the brain.
Wurtman RJ
Nutr Rev 1986 May;44 Suppl():2-6
Neurotransmitters, control of appetite, and obesity.
Wurtman RJ
Department of Applied Biological Sciences, Massachusetts Institute of
Technology, Cambridge.
Curr Concepts Nutr 1988;16():27-34
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Physiological effects of food carbohydrates.
Jeanes, Hodge ACS
Symposium Series #15 American Chemical Society. (1975)
Aberrant snacking patterns and eating disorders in patients with
obsessive compulsive disorder.
O'Rourke DA, Wurtman JJ, Wurtman RJ, Tsay R, Gleason R, Baer L, Jenike
MA Clinical Research Center, Massachusetts Institute of Technology,
Cambridge. 1975)
However, many studies show that certain vitamin or mineral deficiencies
produce certain negative influences. For example, in respected peer-reviewed
journals, copper deficiencies have been shown to increase hair loss, chromium
deficiency - sugar cravings, and so on. All of the Company's supplemental
formulas provide general benefits which may result in the following:
* Greater energy
* Greater alertness
* Reduced aches and pains
* A feeling of contentment or steadiness
* Reduction or elimination of cravings
Dr. Abravanel believes the Company's products have enormous general appeal
and in most cases are significantly different from other nutritional
supplements on the market because they are:
* Aimed toward reducing or eliminating craving.
* The minerals which are a key ingredient are colloidal and plant derived
vs. metallic or chelated (as in the vast majority of supplements) thus are
believed to be more effectively and readily absorbable by the body. A
'chelate' is a compound having a ring structure that usually contains a metal
ion held by coordinate bonds. A 'chelated mineral' is a metallic mineral bound
in such a structure. Simply put, chelated minerals, because of this bound
nature, becomes more readily absorbable into the cell structure, but not as
efficient as colloidal minerals.
* In most cases, discernable benefits can be noticed by most people in a
short period of time making it more likely that clients will continue their
use.
* Each formula provides necessary amino acids, vitamins, minerals and herbs
(when necessary) for convenient consumption so that one product instead of
several has to be ingested.
* A complementary Men's and Women's herbal formula will be introduced in the
future to provide additional benefits.
The Company's focus is on developing a monthly program versus one-time
orders; and therefore making it easier for the consumer to continue the use of
the Company's products.
All of the Company's supplement formulas are designed to assist in the
reduction or elimination of various cravings. The Company intends to
initially offer the following three formulas; however, the Company may choose
to change the names of the products prior to introducing them into the market
place:
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1. Dr. Abravanel's Special Formula for Weight Loss for those who want to
lose weight. The active ingredients of this product are Ma huang and
Schizandra 25% each with the remaining 50% split in equal quantities among
Magnolia bark, Asarum, Evodia, Scute Gardenia, Phellodendron, Licorice,
Ginger and Jujube.
2. Dr. Abravanel's Special Formula for Vibrant Health, a general formula
providing benefits of greater energy, greater alertness, less aches and pains,
a feeling of contentment or steadiness, designed for those who do not need to
lose weight. This product contains a wide variety of vitamins and minerals
which are set forth below:
Vitamins:
A (water soluble) 5,000 IU
D-3 200 IU
E (d-alpha tocopherol succinate, water soluble) 50 IU
C (ascorbic acid) 100 mg
Folic acid 200 mcg
B-1 (thiamine mononitrate) 15 mg
B-2 (riboflavin) 15 mg
B-3 (niacinamide) 50 mg
B-6 (pyridoxine) 15 mg
B-12 (cyanocobalamin) 50 mcg
Pantothenic acid 15 mg
Biotin 12.5 mcg
Choline bitartrate 50 mg
Citrus biofavonoids 12.5 mg
Inositol 50 mg
Rutin 12.5 mg
Para-aminobenzoic acid 15 mg
Glutamic acid Hcl 12.5 mg
Betaine Hcl 12.5 mg
Minerals:
Calcium (Bone meal) 30 mg
Magnesium (oxide) 10 mg
Iron (fumarate) 10 mg
Manganese (gluconate) 6 mg
Iodine (kelp) 75 mcg
Copper (gluconate) 1 mg
Zinc (gluconate) 5 mg
Phosphorus (Bone meal) 15 mg
These active ingredients are mixed in a base containing kelp, alfalfa,
watercress, parsley and lecithin.
3. Dr. Abravanel's Special Formula for Meal Replacement. A special formula
to replace one meal a day. This formula contains a natural formulation of
plant-derived minerals and other nutrients, designed to reduce cravings for
sweets, starches and greasy foods. Each portion contains two scoops of milk
and egg protein powder (28gm) and supplies the following vitamins and
minerals:
% Daily Value (based on 2000 cal diet)
Cholesterol 5mg 2%
Sodium 35mg 2%
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Potassium 70mg. 2%
Total Carb 0g 0%
Protein 24g 46%
Vit A 35%
Vit C 35%
Calcium 50%
Iron 35%
Vit D 35%
Vit E 35%
Thiamin 35%
Riboflavin 35%
Niacin 35%
Vit B6 35%
Folate 35%
Vit B12 35%
Biotin 35%
Pantothenic acid 35%
Phosphorus 35%
Iodine 35%
Magnesium 35%
Zinc 35%
Copper 35%
Effect of Governmental Regulations/Need for Governmental Approval
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As is the case with almost all herbal, vitamin and mineral formulas, the
Company's products have no government regulation involving their human
consumption and no governmental permits required. However, there are
recommendations as to the amounts that are considered to be in excess for
human consumption. Ma huang, for example, while not directly regulated has
been an herb that must be taken in low dosages as recommended by the FDA. The
Company and its suppliers adhere strictly to all governmental guidelines. The
Company fully discloses all ingredients and usage amounts on its labels.
Distribution Method of the Company's Products
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The Company intends to use a wide range of marketing approaches with a
primary focus on direct response radio commercials, newspaper and magazine
advertisements, Internet and telemarketing sales and seminars with Dr.
Abravanel or one of the Company's representatives. In addition, the Company
may choose to operate Kiosks in high foot traffic areas such as malls.
Television and radio commercials or infomercials may be used as well.
The Company may also develop a referral reward program. This will allow
customers to benefit financially by referring people to the Company's product
line. The Company is not a multi-level or network marketing Company, however,
it may fall under laws and regulations governing network marketing due to its
reward program. The Company may elect to become a network or multi-level
marketing company in the future. The Company's planned Referral Reward Program
would be a financial incentive or product credit given to customers who refer
new customers to the Company. It is anticipated that the format may include a
one time incentive or possibly continued incentives as the "referred" customer
continues to purchase products. The Company would institute a Referral Reward
Program to increase business. There are, however, several business risks
associated with a Referral Reward program in that the Company will have to
ensure that such a program does not violate either federal and state
regulations. These regulations include such matters as pyramid scheme
statutes, lottery laws, buyers club legislation and referral sales state
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statutes. Prior to commencing a Referral Reward Program, the Company will
retain legal, computer, and accounting experts in this field to make sure that
the program is in compliance with all applicable laws.
The Company will receive revenues from the direct sale of its products.
The Company may elect to license its product line by private label to other
nutrition companies, physicians for in office sales, or network marketing
companies.
The Company expects to work with experts in various advertising and
direct marketing fields to design and develop promotional campaigns.
Initially, the Company intends to contract out 800 or 900 telephone response
sales to respected calling centers as well as using reputable fulfillment
houses for delivery of the Company's products to its customers.
The Company is in the final stages of product development of its initial
line of supplements. The Company expects to have its initial products
developed and ready for market in early 1999.
The Company intends to participate in the North American nutritional
supplement industry, specifically marketing products developed by Elliot
Abravanel, M.D. The nutritional supplement industry is vast. The US vitamin,
supplement and mineral product sales exceeded $6.5 billion in 1996 according
to Packaged Facts (New York, NY). In addition, the natural products industry
sales totaled $11.5 billion in 1996. There is a consumer trend toward taking
control of one's health through natural means such as vitamin, mineral, and
herbal supplements.
At the present time, the industry is highly fragmented, with more than
800 companies making or marketing brand name or private-label products. A
growing trend in private label supplements is the combination of multi-
vitamins with herbal supplements which is similar to what the Company intends
to do. Health and natural foods stores are the main sales outlets for products
like the Company's. However, mass market activity such as direct or multi-
level sales have been increasing, followed by mass merchandisers and drug
stores. Most large vitamin companies provide several different selections of
vitamins, mineral and herbal supplements. Prices and quality also vary from
company to company.
Management believes that the Company's products are beneficial in that
most people can easily notice the results, especially the reduction or
elimination of various cravings and improved sense of well-being. The primary
focus of the Company's business plan is to bring these impact products to
market and introduce new life-enhancing products as they are developed.
The nutritional supplement industry appears to be growing at a healthy
rate. Management therefore believes that there are significant opportunities
available in the market for its products.
There are many supplement companies competing for market share.
However, large business potential exists for well-organized, properly managed,
and adequately capitalized companies. Because of the unique features of Dr.
Abravanel's formulas and the fact that he, a medical doctor, represents the
products, the Company believes it can achieve revenue and profit objectives to
become successful.
While the Company has not commenced operations, management has prepared
the product line concept, studied various marketing strategies, and built
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relationships with manufacturers. In developing the Company's planned
entrance into the market place, the Company believes that Dr. Abravanel
contributes a significant degree of in-depth industry experience, knowledge,
reputation, credibility and a network of industry contacts and relationships.
Source and Availability of Raw Materials/Principal Suppliers
- ------------------------------------------------------------
The vitamins and minerals which comprise Dr. Abravanel's formulas are readily
available from a multitude of sources. In addition, there are numerous
manufacturers with the capability of manufacturing the products to the
Company's specifications some of which the Company has already developed
certain relationships with. Some of the principal suppliers which the Company
has available to it are companies such as Rockland Corporation headquartered
in Omaha City, Nebraska, and Clark Corporation of Utah.
Competition
- -----------
The Company will compete with many other companies in the nutrition
supplement industry, most of which are better financed and which have more
experience than that of the Company. Most of these companies have greater
capital, and a bigger loyal customer base than the Company. And while the
Company's formulas are distinct, they are not necessarily unique. Other
companies have vitamin, mineral and amino acid combinations And are in a
better position to compete in the market place. There can be no assurance
that the consumer will accept the Company's products in the scale needed to
achieve profitably. Revenues realized from the sale of products are largely a
function of connecting with the consumer through advertising campaigns. There
is no assurance these campaigns will be successful. It is not possible to
predict accurately the effect that any of these competitive factors may have
on the success of the Company's business.
Dependence on a Few Major Customers
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Management does not believe that the Company will be dependent on a few
major customers.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements.
- -------------------------------------------------------------------------
The Company has no current intellectual property protection and has no
pending application of property protection. Management believes that any
property protection such as patents, licenses, copyrights, etc. are not
appropriate since many competing products contain various ingredients that are
in the Company's product line.
Agreements with Dr. Abravanel & Mr. Delott
- ------------------------------------------
On April 28, 1998, the Company entered into a Transfer of Formula
Agreement by which the Company owns 100% of the rights of all formulas it
markets. These do not include, however, formulas that Dr. Abravanel has
developed that the Company does not market. Nor does this agreement prohibit
Dr. Abravanel from distributing his current and his future formulas that the
Company does not own through other venues if he so desires. In exchange for
granting worldwide ownership rights of the formulas to the Company, Dr.
Abravanel and Mr. Delott each received 5,000,000 shares of the Company's
common stock. The Agreement also provided that Dr. Abravanel and Mr. Delott
are to receive a payment totaling $50,000 and that they each had the right to
purchase an additional 750,000 shares of common stock at $.001 per share,
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which right Dr. Abravanel exercised in full on August 26, 1998 and Mr. Delott
in full on August 20, 1998.
Number of Employees
- -------------------
The Company currently has 2 employees, Dr. Abravanel and Mr. Delott, both
of whom are considered full time.
ITEM 2. DESCRIPTION OF PROPERTIES.
The Company's office is currently located at the home of Dr. Abravanel,
who does not charge the Company for rent. The Company intends to open an
office when it commences operations and has sufficient revenues to pay rent.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceedings, and, to the
best of its knowledge, no such action by or against the Company has been
threatened. The Company is not aware of any governmental authority that is
contemplating any procedure to which the Company is a participant. None of
the Company's officers, directors, or beneficial owners of 5% or more of the
Company's outstanding securities, is a party to proceedings adverse to the
Company nor do any of the foregoing individuals have a material interest in
proceeding adverse to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the year ended February 28, 1999, no matter was submitted to a
vote of security holders.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
MARKET INFORMATION
To date there is no public trading market for the Company's securities.
The Company intends to apply for inclusion of its common stock on the NASD
Over-the-Counter Electronic Bulletin Board (NASD OTC Bulletin Board).
However, there can be no assurances that an active trading market will
develop, even if the securities are accepted for quotation. Quotations on the
NASD OTC Bulletin Board reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
HOLDERS
There are 32 shareholders of record of the Company's common stock as of
the date of this Report.
DIVIDENDS
No dividends have been paid by the Company since inception. The Company
intends to retain earnings, if any, to finance the development and expansion
of its business. Future dividend policy will be subject to the discretion of
the Board of Directors and will be contingent upon future earnings, if any,
the Company's financial condition, capital requirements, general business
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conditions and other factors. Therefore, there can be no assurance that any
dividends of any kind will ever be paid.
The Company's registrar and transfer agent is Alpha Tech Stock Transfer
Company located at 4505 South Wasatch Blvd., Suite 205A, Salt Lake City, Utah,
84124.
RECENT SALES OF UNREGISTERED SECURITIES
There have been no recent sales of unregistered securities other than
those previously reported on in the Company's Registration Statement on Form
10-SB filed on December 10, 1999 and amended on April 8 and April 29, 1999.
(See "Item 13. EXHIBITS AND REPORTS ON FORM 8-K".)
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion provides information which management believes
is relevant to an assessment and understanding of the Company's plan of
operation. The discussion should be read in conjunction with the consolidated
financial statements and notes thereto.
The Company was incorporated in the state of Nevada on April 28, 1998 and
is not currently operational. The Company's principal activities to date have
been the signing of the Technology Transfer Agreement with Dr. Abravanel and
Mr. Delott, and the raising of capital through the sale of shares of the
Company's common stock. To date the Company has issued a total of 12,841,353
shares and received approximately $135,000.
The Company believes that it has sufficient funds to commence its
operations and that its current capital should enable the Company to operate
for one year. The Company believes that in order to achieve its business goals
that it will have to raise additional working capital within the next 12
months.
Through February 28, 1999, the Company has not spent any money for
product development and research. The Company does not intend to do any
further significant product research at the present time or in the near
future. Therefore, no costs are directly borne to the Company's customers. The
Company also does not intend to purchase or sell any plant or equipment and
does not expect any significant changes in the number of employees.
The Company will require additional working capital in the future and
intends to raise capital by various means such as additional equity offerings,
debt offering or through licensing arrangements. The Company currently has no
commitments for further financing and there is no assurance that sufficient
financing may be available. In the event the Company is unable to raise
additional capital, it will prioritize its current capital for the following
uses: (1) overall corporate obligations to vendors and creditors; (2)
inventory purchases; (3) marketing costs; and (4) fulfillment of sales costs.
YEAR 2000
The Company is currently addressing a universal situation commonly
referred to as the "Year 2000 Problem." or the "Y2K Problem" The Year 2000
Problem relates to the inability of certain computer software programs to
properly recognize and process date-sensitive information relative to the
year 2000 and beyond. The Company's internal computer operating system
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utilizes Microsoft's Windows 98 which is Y2K compliant. In addition, all
current software used by the Company is Y2K compliant. As such, the Company
did not incur any material expenses to become Y2K compliant. As the Company
adds software to its system, it will first check with the manufacturer of
that software to ensure that the software being added is also Y2K compliant.
The Company will not add any software to its operating system without first
making sure from the manufacturer that is it Y2K compliant.
Because, as is the case with almost all companies, the Company's
year 2000 compliance is in part, dependent upon certain of its suppliers and
vendors being Y2K compliant, the Company intends to communicate with all its
suppliers and to determine whether they are in fact Y2K compliant. If they
are not, the Company will seek other suppliers for its products and look for
other vendors to distribute its products. Because there are a vast number of
companies which can supply the ingredients for the Company's products, and
who can process and out source the Company's orders, the Company does not
anticipate that it will have a Y2K problem getting the ingredients which it
needs to manufacture its products or filling and delivering orders for the
Company's products. In the event the Company has to use alternative sources
for its ingredients, the Company believes that it will be on the same terms
and expenses. The Company believes that this is the case with its vendors.
Because the Company believes that there are a plentiful number of suppliers
and vendors for the Company's products, the Company does not believe that it
will incur any additional costs with respect to Y2K. Also, because of this,
the Company has made no Y2K contingency plans with respect to obtaining
alternative suppliers for the ingredients for its products or alternative
distributors to distribute its products. If the Company's beliefs are wrong,
this will have a material adverse impact on the Company's business.
FORWARD-LOOKING STATEMENTS
When used in this Form 10-KSB, in filings by the Company with the
Securities and Exchange Commission (the "SEC"), in the Company's press
releases or other public or stockholder communications, or in oral statements
made with the approval of an authorized executive officer of the Company, the
words or phrases "would be," "will allow," "intends to," "will likely result,"
"are expected to," "will continue," "is anticipated," "estimate," "project,"
or similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
The Company cautions readers not to place undue reliance on any forward
looking statements, which speak only as of the date made, are based on certain
assumptions and expectations which may or may not be valid or actually occur,
and which involve various risks and uncertainties. The Company's actual
results for future periods could differ materially from those anticipated or
projected.
Unless otherwise required by applicable law, the Company does not
undertake, and specifically disclaims any obligation, to update any forward-
looking statements to reflect occurrences, developments, unanticipated events
or circumstances after the date of such statement.
ITEM 7. FINANCIAL STATEMENTS
The following financial statements are included herewith.
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BALMER AND NELSON
CERTIFIED PUBLIC ACCOUNTANT
P.O. BOX 360
FAIRFIELD, IOWA 52556
515-472-4773
Independent Auditor's Report
Dr. Abravanel's Formulas, Inc.
(A Development State Company)
Los Angeles, CA
We have audited the accompanying balance sheet of Dr. Abravanel's Formulas
Inc. (a development stage company) as of February 28, 1999, and the related
statements of shareholders' equity, operations and cash flows for the period
from April 28, 1998 (period of inception) to February 28, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position if Dr. Abravanel's Formulas,
Inc. (a development stage company) as of February 28, 1999 and the results of
its operations and its cash flows for the period April 28, 1998 (period of
inception) through February 28, 1999 in conformity with generally accepting
accounting principles.
/s/ Balmer and Nelson
Balmer and Nelson
Certified Public Accountants
March 5, 1999
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Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
Balance Sheet
February 28, 1999
ASSETS
Current Assets
Cash $ 43,707
Inventory (note 1) 12,790
-----------
Total current assets 56,497
Deferred taxes, net (notes 1 and 4) 5,610
-----------
Total assets $ 62,107
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Contract payable (notes 2 and 5) $ 19,475
-----------
Total current liabilities 19,475
Shareholders' equity (note 3)
Common stock, $.001 par, authorized 40,000,000
shares; 12,841,353 shares issued and outstanding 12,841
Additional paid-in capital - common stock 132,018
Special distribution (notes 2 and 5) (60,000)
Common stock offering costs (21,123)
Preferred stock, $.001 par, authorized 10,000,000
shares; 0 shares issued and outstanding -
Deficit accumulated during the development stage (21,104)
------------
Total shareholders' equity 42,632
------------
Total liabilities and shareholders' equity $ 62,107
============
See accompanying notes to financial statements.
14
<PAGE>
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
Statement of Operations
For the Eleven Month Period Ended February 28, 1999
and the Period from Inception (April 28, 1998) to February 28, 1999
Eleven Month Period from Inception
Period Ended (April 28, 1998) to
February 28,1999 February 28, 1999
---------------- ---------------------
Sales $ - $ -
Cost of sales - -
---------------- ---------------------
Gross profit - -
---------------- ---------------------
Costs and expenses:
General and administrative 26,714 26,714
---------------- ---------------------
Total costs and expenses 26,714 26,714
---------------- ---------------------
Net loss before income taxes (26,714) (26,714)
Income tax benefit attributable
to continuing operations (note 4) 5,610 5,610
---------------- ---------------------
Net loss $ (21,104) $ (21,104)
================ ====================
Net loss before income taxes per
share (note 1) $ (.01) $ (.01)
Net loss per share (note 1) $ (.01) $ (.01)
Weighted average common shares
(in thousands) (note 1) 10,374 10,374
================ ===================
See accompanying notes to financial statements.
15
<PAGE>
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
Statement of Shareholders' Equity
For the Eleven Month Period Ended February 28, 1999
and the Period from Inception (April 28, 1998) to February 28, 1999
Period from
Eleven Month Inception
Period Ended (April 28, 1998) to
February 28, 1999 February 28,1999
----------------- -------------------
Beginning balance $ - $ -
Issuance of common stock:
10,000,000 shares on 4/28/98 10,000 10,000
(issued as partial consideration
for product formulas; valued at
stock par value)
25,000 shares on 6/15/98 250 250
53,500 shares on 6/15/98 8,025 8,025
100,000 shares on 7/10/98 15,000 10,000
10,000 shares on 7/16/98 100 100
40,000 shares on 7/16/98 6,000 6,000
135,000 shares on 7/23/98 1,350 1,350
233,461 shares on 7/23/98 35,019 35,019
27,500 shares on 7/30/98 275 275
33,500 shares on 7/30/98 5,025 5,025
25,000 shares on 8/18/98 250 250
81,667 shares on 8/18/98 12,250 12,250
750,000 shares on 8/20/98 750 750
60,600 shares on 8/21/98 9,090 9,090
100,000 shares on 8/21/98 1,000 1,000
137,500 shares on 8/25/98 1,375 1,375
173,000 shares on 8/25/98 25,950 25,950
750,000 shares on 8/26/98 750 750
40,000 shares on 8/31/98 400 400
10,000 shares on 9/04/98 1,500 1,500
55,625 shares on 9/18/98 10,500 10,500
Special distribution (60,000) (60,000)
Common stock offering costs (21,123) (21,123)
Net loss (21,104) (21,104)
----------------- -------------------
Balance at February 28, 1999 $ 42,632 $ 42,632
================= ===================
See accompanying notes to financial statements.
16
<PAGE>
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Eleven Month Period Ended February 28, 1999
and the Period from Inception (April 28, 1998) to February 28, 1999
Period from
Eleven Month Inception
Period Ended (April 28, 1998) to
February 28, 1999 February 28, 1999
----------------- ------------------
Cash flow from operating activities
Net loss $ (21,104) $ (21,104)
Adjustments to reconcile net income
to net cash used in operating
activities:
Increase in deferred taxes (5,610) (5,610)
Changes in assets and liabilities:
Inventory (12,790) (12,790)
----------------- ------------------
Net cash used by operations (39,504) (39,504)
Cash flows from financing activities
Issuance of common stock 134,859 134,859
Common stock offering costs (21,123) (21,123)
Payment of special distribution (30,525) (30,525)
----------------- ------------------
Net increase in cash 83,211 83,211
Cash at beginning of period - -
----------------- ------------------
Cash at end of period $ 43,707 $ 43,707
================= ==================
See accompanying notes to financial statements.
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Eleven Month Period Ended February 28, 1999
and the Period from Inception (April, 28, 1998) to February 28, 1999
Supplemental cash flow disclosures;
Interest paid $ 0 $ 0
==== ====
Income taxes paid $ 0 $ 0
==== ====
Non cash transactions:
On April 28, 1998, 10,000,000 shares of common stock were issued
as payment for product formulas valued at $10,000.
See accompanying notes to financial statements.
17
<PAGE>
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
Notes to Financial Statements
Note 1 - Nature of business and summary of significant accounting
policies
Nature of business - Dr. Abravanel's Formulas, Inc. was incorporated on
April 28, 1998 in the state of Nevada. The Company was formed as a
nutritional supplement development and marketing corporation. The Company has
developed products specifically for the reduction or elimination of cravings
in people.
As a development stage company, management's efforts have been in product
development and marketing strategies.
Inventories - Inventories, which at February 28, 1999, consisted primarily of
production supplies, are stated at the lower of cost or market determined on
the first-in, first-out (fifo) basis.
Intangibles - Start-up costs, research and development costs and formula costs
are charged to expense in the period incurred.
Income Taxes - The Company accounts for income taxes under the provisions of
SFAS No. 109, Accounting for Income Taxes (SFAS No. 109). Under the asset and
liability method of SFAS No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual amounts could differ from those
estimates.
Per share information - Per share information has been computed using the
weighted average number of common shares outstanding during the period.
Note 2 - Contract payable
Effective on April 28, 1998, the Company entered into an agreement to purchase
specific existing nutritional formulations as well as the non-exclusive use of
formulas to be developed in the future.
In exchange for the formulas the Company agreed to give 10,000,000 shares of
common stock, with a par value of $10,000, and $50,000 in cash. The stock was
issued on April 28, 1998, and the cash was paid in installments of $30,525 in
1998, and the remainder of $19,475 will be paid on or after September 15,
1998, at a time which is at the discretion of the Company's board of
directors.
18
<PAGE>
Note 3 - Shareholders' equity
Voting rights and powers - Common stock shall be entitled to cast thereon one
(1) vote in person or by proxy for each share of the common stock standing in
his name.
Dividends and distributions -
a) Cash dividends - subject to the rights of holders of preferred
stock, holders of common stock shall be entitled to receive such
cash dividends as may be declared thereon by the board of directors
from time to time out of assets or funds of the Corporation legally
available therefor;
b) Other dividends and distributions - The board of directors may
issue shares of the common stock in the form of a distribution
or distributions pursuant to a stock dividend or split-up of the
shares of the common stock;
c) Other rights - Except as otherwise required by the Nevada Revised
Statutes and as may otherwise be provided in these Amended Articles
of Incorporation, each share of the common stock shall have
identical powers, preferences and rights, including rights in
liquidation;
Preferred stock - The powers, preferences, rights, qualifications, terms,
limitations and restrictions pertaining to the preferred stock, or any series
thereof, shall be such as may be fixed, from time to time, by the board of
directors in its sole discretion, authority to do so being hereby expressly
vested in bush board.
Transfer restrictions - No sale, offer to sell, or transfer of any common
stock issued shall be made unless a registration statement under the Federal
Securities Act of 1933, as amended with respect to such shares is then in
effect or an exemption from the registration requirements of said act is then
in fact applicable to said shares. In addition, all common stock issued at
$.01 (500,000 shares) may not be sold, offered for sale, or transferred unless
approved and authorized in writing by the Company's board of directors.
Note 4 - Income taxes
As of February 28, 1999 the Company has available net operating loss
carryforwards of approximately $26,700. These carryforwards will expire in
the year 2014. As of February 28, 1999, the Company recognized a deferred tax
asset amounting to $5,610 from its loss carryovers.
Total deferred tax assets $ 5,610
(from net operating loss carryovers)
Less valuation allowance -
---------
Deferred tax assets, net $ 5,610
=========
Total deferred tax liabilities $ -
=========
19
<PAGE>
Deferred Deferred
tax Valuation tax
assets allowance assets (net)
---------- ---------- -------------
Beginning balance $ - $ - $ -
Current tax (expense) benefit 5,610 - 5,610
Current adjustment in valuation
allowance - - -
---------- ---------- -------------
Balance at February 28, 1999 $ 5,610 $ - $ 5,610
========== ========== =============
Statutory tax on pre-tax income from continuing
operations $ -
Deferred tax expense or (benefit) 5,610
Current adjustment in valuation allowance -
---------
Income tax expense (benefit) attributable
to continuing operations $( 5,610)
=========
Note 5 - Related party transactions
On April 28, 1998 the Company purchased certain nutritional formulations from
Elliot D. Abravanel, MD and Mark Delott, the only officers and directors of
the Company for $50,000 and 10,000,000 shares of common stock.
Note 6 - Contingencies
The Company is dependent on Dr. Elliot Abravanel for the development and
marketing of the Company's product line.
Note 7 - Private placement memorandum and filings with the SEC
As of February 28, 1999, 831,353 shares of common stock have been issued
through the Company's private placement offering. The Company intends filing
with the NASD for listing of its shares on the over the counter (OTC)
Electronic Bulleting Board. In preparation for this, the Company filed with
the SEC on December 10, 1998 and this filing became effective February 8,
1999. The only step remaining in this process is a clearance of comments and
questions from the SEC.
Note 8 - Subsequent events
The Company anticipates the need for additional capital to launch its product
line. Management may elect to sell additional equity, debt or enter into
partnerships to fund its financial needs. Currently, the Company has
developed its first product "Replen 100 for Vibrant Health" and has a limited
inventory of this product.
20
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information concerning each of the directors
and executive officers of the Company as of the date hereof:
Name Age Position Held & Since
- -------------------------------- ------ --------------------------
Elliot Abravanel MD 56 Chairman of the Board of
Directors, President, Chief
Executive Officer
Since Inception
Mark Delott 48 Secretary/Treasurer, Vice-
President and Director
Since Inception
None of the Directors hold similar positions in any reporting company.
The directors named above will serve until the next annual meeting of the
Company's stockholders. Thereafter, directors will be elected for one-year
terms at the annual stockholders' meeting.
The following is biographical information on each of the Company's
officer's and directors:
Elliot Abravanel, M.D., (age 56) has served as the Company's Chairman of
the Board of Directors, President, and Chief Executive Officer since it
inception. For over the last 10 years, Dr. Abravanel has served in the
following capacities: (1) From April 1998 to the present, he has been the
founder and president of Dr. Abravanel's Formulas, Inc., a vitamin and
nutritional company which creates formulas for the promotion of health; (2)
From 1985 to the present, he has been the co-founder of Body Type Services,
Inc., a mail order business for disseminating the philosophy of body types for
weigh control; (3) From 1983 to the present, Founder and president of Skinny
Schools Medical Centers, Inc., a nutrition oriented chain of weight control
clinics; and (4) from 1992 to the present, co-founder and director of AmerAsia
Trading Company, which is a trading company created to take advantage of the
worldwide opportunities of trading between the United States and China.
Mark Delott (age 48) has served as a director, vice president, secretary
and treasurer of the Company since its inception. From 1991 to the present,
Mr. Delott has served as a private consultant raising venture capital for
several companies. Mr. Delott served as vice president of Golden Sky Ventures
from 1994 to 1996 and as vice president of finance and a director of Infinicom
International, Inc. from 1992 to 1994. Mr. Delott was also chairman of Arklow
Associates, Inc., n/k/a Ultimate Cigar Company from 1996 to 1997.
21
SIGNIFICANT EMPLOYEES
There are no individuals other than officers and directors expected to
make a significant contribution to the Company's business.
FAMILIAL RELATIONSHIPS
There are no familial relationships between any of the Company's
executive officers and directors.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Except as indicated below and or hereinbefore, to the knowledge of
Management, during the past five years, no present or former director,
executive officer, or person nominated to become a director or executive
officer of the Company:
(1) Filed a petition under federal bankruptcy laws or any state
insolvency law, now had a receiver, fiscal agent or similar officer appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an
executive officer at or within two years before the time of such filing;
(2) Was convicted in a criminal proceeding or named subject of a
pending criminal proceeding (excluding traffic violations and other minor
offences);
(3) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him or her from or
otherwise limiting his involvement in any type of business, securities or
banking activities;
(4) Was found by a court of competent jurisdiction in a civil
action, by the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated any federal or state securities law, and
the judgment in such civil action or finding by the Securities and Exchange
Commission has not been subsequently reversed, suspended , or vacated.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth certain information as to the Company's
Chief Executive Officer and each of the Company's officers and directors who
have received compensation for the 11 months ended February 28, 1999. As of
the date hereof neither of the Company's executive officers have received any
compensation.
22
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------------------------------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted Other
and Compensa- Stock Underlying LTIP Compensa-
Principal sation Award Options/ Payouts tion
Position Year Salary($) Bonus($) ($) ($) SAR's(#) ($) ($)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Elliot Abravanel,MD. 1998-9 0 0 0 0 0 0 **
Chairman of the Board
of Directors, President
and Chief Executive
Officer
Mark Delott 1998-9 0 0 0 0 0 0 **
Director, Secretary/
Treasurer, Vice-
President **
- -----------------------------------------------------------------------------------------------
</TABLE>
** In lieu of compensation for services performed on behalf of the Company
since its inception, Dr. Abravanel and Mr. Delott participated in a Rule 701
Compensatory Benefit Plan whereby each of those individuals was allowed to
purchase 750,000 shares of the Company's common stock at par value or $0.001
per share ($750). The foregoing individuals entered into the Rule 701
Compensatory Benefit Plan in April of 1998 although the shares were not
actually purchased until August of 1998.
COMPENSATION OF DIRECTORS
No cash fees or other consideration was paid to directors of the Company
for service on the Board during the year ended February 28, 1999 or through
the date of this Report.
EMPLOYMENT CONTRACTS/TERMINATION OF EMPLOYMENT/CHANGE-IN-CONTROL ARRANGEMENTS
The Company has no employment contracts in effect with any of the members
of its Board of Directors or its executive officers nor are there any
agreements or understandings with such persons regarding termination of
employment or change-in control arrangements.
SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE
Section 16(a)of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who beneficially own more
than 10% of the Company's common stock to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange
Commission. Such persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms filed by such persons.
Based solely on the Company's review of such forms furnished to the
Company and representations from certain reporting persons, management
believes that all filing requirements applicable to the Company's executive
officers, directors and more than 10% stockholders were complied as of the
date hereof, except that each of the executive officers and directors filed
their Form 3 "Initial Statement of Beneficial Ownership" on a delinquent
23
<PAGE>
basis, such forms being due on or before February 18, 1999 (ten (10) days
after the effective date of the Company's Form 10SB General Registration
Statement, February 8, 1999). The Company received copies of the Form 3's for
Elliot Abravanel and Mark Delott on May 5, 1999.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Nevada law authorizes, and the Company's Bylaws and Certificate of
Incorporation provide for, indemnification of the Company's directors and
officers against claims, liabilities, amounts paid in settlement and expenses
in a variety of circumstances. Indemnification for liabilities arising under
the Act may be permitted for directors, officers and controlling persons of
the Company pursuant to the foregoing or otherwise. However, 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.
STOCK OPTIONS AND WARRANTS
There are no outstanding stock options or warrants.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following tables sets forth certain information with respect to the
beneficial ownership of the common stock of the Company as of February 28,
1999 for: (i) each person who is known by the Company to beneficially own more
than 5 percent of the Company's common stock, (ii) each of the Company's
directors, (iii) each of the Company's Named Executive Officers (defined
below), and (iv) all directors and executive officers as a group. As of
February 28, 1999, the Company had 12,841,353 shares of common stock
outstanding.
<TABLE>
<CAPTION>
SECURITY OWNERSHIP OF OFFICERS AND DIRECTORS
- --------------------------------------------
Amount and
Title Nature of Percent(1)
of Principal Shareholders Beneficial of Class as
Class Name, Address & Position Ownership Current Date
- ----------- ------------------------- ------------ -------------
<S> <C> <C> <C>
Common Elliot Abravanel 5,750,000(1) 44.78%
124 South Hudson Avenue
Los Angles, CA 90004
Common Mark Delott 5,750,000(1) 44.78%
1946 Mansion Drive
Fairfield, IA 52556
- ---------------------------------------
All officers and
directors as a
group (2 persons) 11,500,000 89.56%
- -------------------------------------------------------------------------------
(1) All the shares are owned directly by Mr. Abravanel and Mr. Delott and
they are the Company's sole officers and directors.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
SECURITY OWNERSHIP OF OWNERS OF 5% OR MORE OF THE COMPANY'S OUTSTANDING SHARES
- -----------------------------------------------------------------------------
Amount and
Title Nature of Percent
of Principal Shareholders Beneficial of Class as
Class Name, Address & Position Ownership Current Date
- ----------- ------------------------- ------------ -------------
<S> <C> <C> <C>
Common Elliot Abravanel(1) 5,750,000 44.78%
124 South Hudson Avenue
Los Angles, CA 90004
Common Mark Delott(1) 5,750,000 44.78%
1946 Mansion Drive
Fairfield, IA 52556
- ----------------------------------------------------------------------------------
(1) Also an officer and director
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On April 28, 1998, the Company entered into a Transfer of Formula
Agreement pursuant to which the Company now owns 100% of the rights of all
formulas it markets. These do not include, however, formulas that Dr.
Abravanel has developed that the Company does not market. Nor does this
agreement prohibit Dr. Abravanel from distributing his current and his future
formulas that the Company does not own through other venues if he so desires.
In exchange for granting worldwide ownership rights of the formulas to the
Company, Dr. Abravanel and Mr. Delott each received 5,000,000 shares of the
Company's common stock (10,000,000 shares in total). The Agreement further
granted them the right to each purchase an additional 750,000 shares of common
stock at $.001 per share, which right they have exercised (1,500,000 shares
total). The Agreement also provides that Dr. Abravanel and Mr. Delott will
receive a payment totaling $50,000. The amount of stock issued under the
Transfer of Formulas Agreement was arbitrarily based at the time of the
Company's inception and not in relation to any costs borne by Dr. Abravanel or
Mr. Delott, which was none. Instead, the amount was based upon what
Management perceived was the amount of time involved in developing the
formulas and the amount of time which will be necessary to devote to the
Company to have it become operational.
The 1,5000,000 shares were issued pursuant to Rule 701 of the Securities
Act of 1933, as amended (the "Act"). Shares issued pursuant to Rule 701, may
become unrestricted 90 days after the effective date of the Form 10-SB
registration statement. These shares were issued pursuant to the Company's
Compensatory Plan dated April 28, 1999. The principal features of the plan
allowed Dr. Abravanel and Mr. Delott to purchase shares at "par" in connection
with the formation of the corporation and for their agreement to serve as
members of the Board of Directors and Officers of the Company. Dr. Abravanel
and Mr. Delott each were permitted, and did, purchase 750,000 shares each at a
price of $.001 per share ($750). However, such shares are subject to the
resale limitations of Rule 144 as promulgated under the Act. Rule 144
provides, in essence, that an officer or director of the Company holding
unrestricted Common Stock may sell such securities during any three-month
period, subject to certain exceptions, in amounts equal to the greater of one
percent (1%) of the number of the Company's Common Stock outstanding or the
25
<PAGE>
average weekly trading volume of the Common Stock during the four calendar
weeks prior to the filing of the required Form 144.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
The following exhibits are filed as part of this Form 10-KSB for the
Company's year ended February 28, 1999
(i)
Exhibit Exhibit Where Incorporated
No. Description(1) In this Report
- ---- ----------- -------------------
Registration Statement on Form 10-SB filed Parts I and II
December 10, 1998 and amended on April 8
and April 29, 1999(2)
(ii)
Exhibit Exhibit
No. Description
- ------- -------------------------
3.1.1(3) Articles of Incorporation(3)
3.2.1(3) Bylaws and Amendments thereto(3)
10(i)(3) Technology Transfer Agreement and Agreement for Future Formulas
dated April 28, 1998.(3)
10(ii)(4) Dr. Abravanel's Formula's Inc. Rule 701 Compensatory Benefit
Plan, dated April 28, 1998 (4)
27 Financial Data Schedule
(1) Summaries of all exhibits contained within this Report are modified in
their entirety by reference to these Exhibits
(2) These documents and related exhibits have been previously filed with the
Securities and Exchange Commission.
(3) Previously filed as part of the Company's initial Registration
Statements on 10-SB Registration, filed on July 14, 1998.
(4) Previously file as part of the Company's amended Registration Statement
on Form 10-SB, filed on April 8, 1999.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the fourth quarter
ended February 28, 1999.
26
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DR. ABRAVANEL'S FORMULAS, INC.
(Registrant)
By: /s/ Elliot Abravanel
------------------------
Date: May 7, 1999 Elliot Abravanel, M.D.
President
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 on
the dates indicated.
Signature Title Date
--------- -------- -------
/s/ Elliot Abravanel President, Chief Executive May 7, 1999
- -------------------------- Officer and Director (Principal
Elliot Abravanel Executive Officer)
Chairman of the Board of Directors
/s/ Mark Delott Director May 7, 1999
- ----------------------- Secretary/Treasurer
Mark Delott Vice-President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED FEBRUARY 28, 1999,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> APR-28-1998
<PERIOD-END> FEB-28-1999
<CASH> 43,707
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 12,790
<CURRENT-ASSETS> 56,497
<PP&E> 5,610
<DEPRECIATION> 0
<TOTAL-ASSETS> 62,107
<CURRENT-LIABILITIES> 19,475
<BONDS> 0
0
0
<COMMON> 12,841
<OTHER-SE> 29,791
<TOTAL-LIABILITY-AND-EQUITY> 62,107
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 26,714
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (26,714)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 5,610
<CHANGES> 0
<NET-INCOME> (21,104)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
