SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
DR. ABRAVANEL'S FORMULAS, INC.
Nevada 95-4685068
----------------------- --------------------------------------
(State of Incorporation) (I.R.S. Employer Identification Number)
124 South Hudson Avenue, Los Angeles, CA 90004
- -------------------------------------------------------------------
Address of (Issuer's principal Executive offices) (Zip code)
Issuer's Telephone Number: (213) 933-0163
Securities to be registered under Section 12(b) of the Act:
None None
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Securities to be registered under Section 12(g) of the Act:
Par $.001 Common
<PAGE>
TABLE OF CONTENTS
Page
ITEM 1. DESCRIPTION OF BUSINESS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
ITEM 3. DESCRIPTION OF PROPERTY
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
ITEM 6. EXECUTIVE COMPENSATION
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
ITEM 8. LEGAL PROCEEDINGS
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
ITEM 10. RECENT SALE OF UNREGISTERED SECURITIES
ITEM 11. DESCRIPTION OF SECURITIES
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
ITEM 13. FINANCIAL STATEMENTS
ITEM 14 CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
ITEM 15. FINANCIAL STATEMENTS AND INDEX
TO EXHIBITS
SIGNATURES
<PAGE> 2
ITEM 1 - DESCRIPTION OF BUSINESS
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.
The Company has elected to file this Form 10-SB/A registration statement
on a voluntary basis in order to become a reporting company under the
Securities Exchange Act of 1934. The primary purpose for this is that the
Company intends to apply for its common stock to be listed for trading on the
OTC Electronic Bulletin Board. Under the current NASD rules, in order to
become listed on OTC Electronic Bulletin Board, a company now must be a
reporting company under the Securities Exchange Act of 1934.
INTRODUCTION AND BACKGROUND
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
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
<PAGE> 3
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
Physiological effects of food carbohydrates.
Jeanes, Hodge ACS
Symposium Series #15 American Chemical Society. (1975)
<PAGE> 4
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:
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:
<PAGE> 5
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%
Potassium 70mg. 2%
Total Carb 0g 0%
Protein 24g 46%
Vit A 35%
<PAGE> 6
Vit C 35%
Calcium 50%
Iron 35%
Vit D 35%
Vit E 35%
Thiamin 35%
Riboflavin 35%
Niacin35%
Vit B6 35%
Folate 35%
Vit B12 35%
Biotin 35%
Pantothenic acid 35%
Phosphorus 35%
Iodine 35%
Magnesium 35%
Zinc 35%
Copper 35%
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.
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
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
<PAGE> 7
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
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.
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
<PAGE> 8
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.
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,
which right Dr. Abravanel exercised in full on August 26, 1998 and Mr. Delott
in full on August 20, 1998.
The Company currently has 2 employees, Dr. Abravanel and Mr. Delott, both
of whom are considered full time.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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
<PAGE> 9
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 has assessed its computerized systems to determine its
ability to correctly identify the Year 2000 and has determined that they will
correctly identify the Year 2000. The Company intends to implement an ongoing
program to review the status of its key suppliers to make sure they are Y2K
compliant. Management does not expect the Year 2000 issue to pose significant
operational or financial problems for the Company.
ITEM 3 - DESCRIPTION OF PROPERTY
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 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of November 1, 1998, the Company had 12,841,353 shares of its Common
Stock issued and outstanding. The following table sets forth, as of November
1, 1998, the beneficial ownership of the Company's Common Stock (i) by the
only persons who are known by the Company to own beneficially more than 5% of
the Company's Common Stock; (ii) by each director of the Company; and (iii)
by all directors and officers as a group.
Name and Amount and
address of nature of
Title of beneficial beneficial Percent of
class Owner owner class
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.
<PAGE> 10
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers. The following Directors and Executive
Officers have served in their respective capacities since the Company was
incorporated. None of the Directors hold similar positions in any reporting
company. The directors named below 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.
Elliot Abravanel, M.D., (age 56) has served as the Company's Chairman of
the Board of Directors and President 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.
ITEM 6 - EXECUTIVE COMPENSATION
The Company has paid no salaries, bonus, options or other compensation to
its officers and directors. A compensation plan will be formulated at such
time as the Company has adequate revenues or capital to pay such compensation.
The Company does not compensate its Directors for their participation as
directors.
ITEM 7 - 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
<PAGE> 11
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 average weekly trading volume of the
Common Stock during the four calendar weeks prior to the filing of the
required Form 144.
ITEM 8 - LEGAL PROCEEDINGS.
The Company is not subject to any legal proceedings. The Company is
unaware of any governmental authority that is contemplating any procedure to
which the Company is a participant.
ITEM 9 - MARKET FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
To date there is no public trading market for the Company's securities.
The Company intends to apply for inclusion of the Common Shares on the Over
the Counter Electronic 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 OTC Bulletin Board reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may
not represent actual transactions.
Currently, 12,000,000 shares are subject to the resale restrictions of
Rule 144. Rule 144 also permits, under certain circumstances, the sale of
securities without any quantity limitation by a person who is not an affiliate
of the Company and who has satisfied a two-year holding period. Holders of the
Company's Common Stock are entitled to dividends when, as and if declared by
the Board of Directors out of funds legally available therefore. The Company
does not anticipate the declaration or payment of any dividends in the
foreseeable future.
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 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.
ITEM 10 - RECENT SALES OF UNREGISTERED SECURITIES
In a series of transactions between April 1998 and September 1998, the
Company issued common stock in several transactions.
Pursuant to the Technology Transfer Agreement, on April 28, 1998, the
Company issued 10,000,000 shares of "restricted" securities to Dr. Abravanel
and Mark Delott as that term is defined in Rule 144. These shares were issued
pursuant to Section 4(2) of the Act. In consideration of the issuance of these
shares, the Company now owns 100% of the rights of all formulas of Dr.
Abravanel that the Company markets. In addition, on August 26,
<PAGE> 12
1998, the Company issued Dr. Abravanel and Mark Delott 1,500,000 shares of
common stock pursuant to Rule 701 for $.001 per share (750,000 shares each).
Between May and September 1998, the Company sold 1,341,353 Shares of its
$.001 par value Common Stock at prices ranging from $0.01 - $0.20 per Common
Share for an aggregate of approximately $133,000 to 30 investors. These
investors purchased such securities pursuant to an exemption from registration
pursuant to Section 4(2) of the Securities Act of 1933 and Regulation D, Rule
504 as promulgated thereunder (the "Private Offering"). There were no
underwriters involved in the Private Offering and no commissions were paid nor
discounts given to any individual. All purchasers executed a Subscription
Agreement indicating they have such knowledge and experience in financial and
business matters that either alone or with a purchasers representative, they
are capable of evaluating the merits and risks of the investment. No
purchasers used a purchaser representative. None of the Company's Officers,
Directors or affiliates participated in the aforesaid sale of securities. The
shares in the Rule 504 offering were sold to the following:
Name of Shareholder Number of Shares Purchased
Amazing Family Trust 15,000
Rodgers Badgett 264,120
Charles Espy 100,000
William Hurlin 61,000
Jai Ram Corporation 30,000
Robert Johnson 50,000
David Kosene 33,127
Charlie Lieb 78,500
Eric Littman 35,000
Meta Group 136,500
Robert Rein 110,600
Gary Spitz 10,000
William Salerno 73,125
Jack Don Abravanel 25,000
Peter Berney 50,000
Isabel J. Cantera 5,000
Lane Cole 7,000
Susan Colin 100,000
Robin Costa 10,000
Walter DeVasier 7,000
Barbara Hedman 10,000
Harris E. Kaplan 6,667
Klemons Family L.P. 21,214
Jayne Littman 10,000
Adam Rein 10,000
Rachel Rein 10,000
Rebecca Simon 10,000
Jialian Wei 25,000
Jiazhen Wei 25,000
Guibao Xu 25,000
<PAGE> 13
No underwriters were involved in any of the offerings and all current
offerings of the Company's securities have been completed. The Company used
the proceeds from the offerings for general working capital.
ITEM 11- DESCRIPTION OF SECURITIES
The Company is authorized to issue up to 40,000,000 shares of Common
Stock, par value $.001 per share and 10,000,000 shares of preferred stock,
$.001 par value. Holders of Common Shares are entitled to one vote per Common
Share on all matters to be voted on by Shareholders. The Common Shares do not
have cumulative voting rights. Therefore, holders of a majority of the Common
Shares can elect all the members of the Board of Directors. A majority vote
is also sufficient for most other actions requiring the vote or concurrence of
Shareholders. The Company's Officers and Directors as a group (two persons)
own directly approximately 89.56% of the Issuer's capital stock. As such,
these individuals will be in a position to constitute a majority of the
Shareholders at any vote of shareholders including the election of Directors.
All Shares are entitled to share equally in dividends when and if
declared by the Board of Directors out of funds legally available therefore.
It is anticipated that the Company will not pay cash dividends on its Shares
in the foreseeable future. In the event of liquidation or dissolution of the
Company, whether voluntary or involuntary, holders of the Shares are entitled
to share equally in all assets of the Company legally available for
distribution to Shareholders. The holders of Shares have no preemptive or
other subscription rights to acquire authorized but unissued capital stock of
the Company, and there are no conversion rights or redemption or sinking fund
provisions with respect to such Shares. All of the outstanding Shares of the
Company are fully paid and non assessable.
ITEM 12 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Seven of the Company's Amended and Restated Articles of
Incorporation provide for the indemnification of Directors in that Directors
of this Corporation shall not be personally liable for monetary damages to the
corporation or any other person for any statement, vote, decision or failure
to act, regarding corporate management or policy, by a director unless the
director breached or failed to perform his duties as Director. Such
indemnification is available to any person who was or is a party to any
proceeding (other than an action by, or in the right of, the corporation), by
reason of the fact that he or she is or was a Director, officer, employee or
agent of the corporation or is or was serving at the request of the
corporation.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer 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.
ITEM 13. FINANCIAL STATEMENTS
Index to Financial Statements
- -----------------------------
Independent Auditor's Report
Balance Sheet
Statement of Shareholders' Equity
Statement of Operations
Statement of Cash Flows
Notes to Financial Statements
<PAGE> 14
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. Abravanels' 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
<PAGE> 15
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.
<PAGE> 16
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.
<PAGE> 17
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.
<PAGE> 18
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.
<PAGE> 19
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.
<PAGE> 20
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.
<PAGE> 21
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.
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.
<PAGE> 22
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 $ -
=========
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.
<PAGE> 23
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.
<PAGE> 24
ITEM 14 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has never had any disagreements with its accountants.
ITEM EXHIBITS
Index to Exhibits
3(i)* Articles of Incorporation, as amended
3(ii)* By-Laws
10(i)* Technology Transfer Agreement and Agreement for Future Formulas
dated April 28, 1998.
10(ii) Dr. Abravanel's Formula's Inc. Rule 701 Compensatory Benefit Plan,
dated April 28, 1998
23 Consent of Auditor
27 Financial Data Schedule
* Filed as part of the Company's initial Form 10-SB General Registration
Statement on December 10, 1998.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
DR. ABRAVANEL'S FORMULAS, INC
(Registrant)
By: /s/Elliot Abravanel, M.D.
- -----------------------------
Elliot Abravanel, M.D., President
Date: February 7, 1999
Exhibit 10.ii
Dr. Abravanel's Formulas, Inc.
Rule 701
Compensatory Benefit Plan
April 28, 1998
In accordance with the provisions of Rule 701 under the Securities Act of
1933, as consideration for services rendered in connection with the formation
of the corporation and for his agreement to serve as President and Chairman of
the Board of the Company without compensation for the period from April 28,
1998 to April 30, 1999, Dr. Abravanel's Formulas, Inc. hereby agrees to sell to
Elliot Abravanel, M.D., and Elliot Abravanel, M.D. hereby agrees to purchase
from the Company, 750,000 shares of common stock of Dr. Abravanel's Formulas,
Inc. at $0.001 per share, or an aggregate purchase price of $750.
/s/ Elliot Abravanel /s/ Mark A. Delott
- ------------------------- ------------------------
Elliot Abravanel, M.D. Mark A. Delott, Vice-President
In accordance with the provisions of Rule 701 under the Securities Act of
1933, as consideration for services rendered in connection with the formation
of the corporation and for his agreement to serve as Vice President and a
member of the Board of Directors of the Company without compensation for the
period from April 28, 1998 to April 30, 1999, Dr. Abravanel's Formulas, Inc.
hereby agrees to sell Mark A. Delott, and Mark A. Delott hereby agrees to
purchase from the Company, 750,000 shares of common stock of Dr. Abravanel's
Formulas, Inc. at $0.001 per share, or an aggregate purchase price of $750.
Dr. Abravanel's Formulas, Inc.
/s/ Elliot Abravanel /s/ Mark A. Delott
- ------------------------- ------------------------
Elliot Abravanel, M.D., President Mark A. Delott
Exhibit 23
BALMER AND NELSON
CERTIFIED PUBLIC ACCOUNTANT
P.O. BOX 360
FAIRFIELD, IOWA 52556
515-472-4773
INDEPENDENT AUDITORS' CONSENT
March 23, 1999
Board of Directors
Dr. Abravanel's Formulas, Inc.
124 South Hudson Avenue
Los Angeles, CA 90004
We consent to the use in this Registration Statement of Dr. Abravanel's
Formulas, Inc. on Form SB-10 of our report dated February 28, 1999.
/s/ Balmer and Nelson
- ---------------------
Balmer & Nelson
Fairfield, IA 52556
<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>
