35
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 29, 2000
[ ] 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.
(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 90
004
(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
Securities registered pursuant to Section 12(g) of the Act:
Common
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. [ X ] Yes [ ] 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 incorporated by
reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]
The issuer's revenues for its most recent fiscal year were $
-0-
The Company has established market for its common shares.
Therefore, management has valued the 1,341,353 shares held by
non-affiliates as of April 15, 2000 at $133,000 or the aggregate
price paid by such non-affiliates for the shares in the Company's
offering.
The number of shares outstanding of the issuer's common
stock as of April 15, 2000, was 12,841,353 shares of common
stock, $.001 par value per share.
Transitional Small Business Disclosure Format YES [ ]
NO [ X ]
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. On that same date, the Company entered into a Transfer of
Formula Agreement through which it acquired the exclusive rights
to market certain formulas developed by Dr. Elliot Abravanel for
$50,000 in cash and the issuance of an aggregate of 10,000,000
of its common shares. The formulas are further discussed under
"BUSINESS OF THE COMPANY", below. In order to fund the initial
development and marketing of the acquired formulas, from May of
1998 through September 1998, the Company conducted an offering of
its common stock. under the exemption provided for under
Sections 4(2) and 3(b), Regulation D, Rule 504. The Company
sold 1,341,353 shares of its common stock to for gross proceeds
of approximately $133,000 which was allocated to general working
capital.
BUSINESS OF THE COMPANY
Principal Products of the Company and their Markets
The Company's Product Line: Three Nutritional Supplements
All of the Company's nutritional supplement formulas are
designed to assist in the reduction or elimination of various
cravings. The Company currently offers three nutritional
supplements although the Company may choose to change the names
of the products during the development and marketing process as
it has already done in the case of Dr. Abravanel's Special
Formula for Vibrant Health. The three nutritional supplements
are:
Dr. Abravanel's Special Formula for Weight Loss
Dr. Abravanel's Special Formula for Meal Replacement
Dr. Abravanel's Special Formula for Vibrant Health ( which
is now called "Replen 100 for Vibrant Health" )
The following is a description of each of the products:
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.
Dr. Abravanel's Special Formula for Vibrant Health ("Replen
100") is 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.
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%
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%
The Development of the Formulas
The Company has developed its 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
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)
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
The Market for the Company's Products
The Company is attempting 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.
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.
Effect of Governmental Regulations/Need for Governmental Approval
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. Although the Company is not a
multi-level or network marketing company, if it elects to
initiate a referral reward program as part of its marketing
approach, it may fall under laws and regulations governing
network marketing.
Distribution Method of the Company's Products
Other than testing market response to its product line, the
Company has not distributed its products into the market place
during its 1999- 2000 fiscal year. Its current marketing plan
includes: (1) working on its product line concept, (2) studying
various marketing strategies, (3) building relationships with
manufacturers and (4) conducting test marketing. 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
acknowledges, however, that it has been negatively impacted by a
radical decline in profit margins in the industry.
Test Marketing of Replen 100
The Company's ultimate marketing approach will be dependent
on current test marketing of its products. In the latter half of
the Company's fiscal year, it narrowed its product test marketing
to only one of its three market ready products which it renamed
Relen 100 for Vibrant Health ("Replen 100"). The results of the
test marketing have not been as positive as the Company hoped and
it is continuing to test market response to the product in an
effort to generate sufficient interest to begin actual marketing
efforts. The Company test marketing has consisted mainly of
sending free samples of Replen 100 to ??? and analyzing
responses.
Some of the Company's Planned Marketing Approaches
When and if the Company believes its product(s) are ready
for marketing, it intends to use 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. Some of the Company's distribution methods which it hopes
to initiate when and if it believes marketing of its products are
warranted are:
REFERRAL REWARD PROGRAM: The Company may develop a referral
reward program allowing customers to benefit financially by
referring people to the Company's product line. 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.
LICENSING. 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.
DIRECT SALES: The Company will also use a direct sales
approach in its marketing efforts. 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.
Competitive Business Conditions; Position in the Industry;
Methods of Competition
There are many supplement companies competing for market
share. The Company believes, 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.
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.
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.
Dependence on a Few Major Customers
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,
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.
Subsequent Events
On April 25, 2000, the Board of Directors of Dr. Abravanel's
Formulas, Inc. (DABV) approved a Plan of Exchange by which the
Company would acquire 100% of the outstanding stock in Infotopia,
Inc., in exchange for common stock of DABV. The exchange was also
approved by the Board of Directors and shareholders of Infotopia,
Inc. on the same day.
Infotopia was, at that time, presently a wholly-owned subsidiary
of National Boston Medical, Inc. ("NBMX"), a Nevada corporation.
NBMX, as the shareholder of Infotopia, Inc., shall receive a
total of 8,167,387 shares of DABV's common stock for the 100
shares of Infotopia, Inc. common stock that it held, representing
100% of the authorized common stock of Infotopia. The Plan of
Exchange was submitted and approved by the Board of Directors of
Infotopia and to the Board of Directors of NBMX, as shareholders
of the common stock of Infotopia, on the same day.
On April 26, 2000, as a result of the Plan of Exchange, the
Company changed its name to Infotopia, Inc.
On April 25, 2000, the Company accepted the resignation of Dr.
Abravanel as a member of the board of directors and as President
of the Company. Mr. Dan Hoyng was appointed to fill the vacancy
left by Mr. Abravanel's resignation.
On April 25, 2000, the Company also accepted the resignation of
Mr. Mark Delott as a member of the board of the directors and as
an officer of the Company. The remaining board member appointed
Mr. Ernie Zavoral to fill the vacancy left by Mr. Delott.
On April 25, 2000, the Company's Board decided to increase the
Board to three members and appointed Clinton Smith to fill the
vacancy created by the increase to three members.
On April 25, 2000, Mr. Dan Hoyng was appointed as Chief Executive
Officer, Mr. Ernie Zavoral was appointed as President, and Mr.
Marek Lozowicki was appointed as Secretary and Treasurer.
Infotopia recognized early on that the lifeblood of Direct to
Retail marketing is a new product. The key to new products is
the inventor. Infotopia's structure and philosophy is dedicated
to recruiting and supporting new inventors. Utilizing this
philosophy, Infotopia secured the rights to all new products by
Dean Tornabene and Charles Perez they are the co-inventors of
the Bunn and Thigh Sculptor, the Ab Rocker and several other
products that have been utilized in Direct Response to Retail
Marketing. These products have produced over 300 million dollars
in sales during the past four years and continue to produce at a
very high level. Infotopia also signed the highly successful
inventor Cactus Jack Barringer. The June 10, 1999 edition of
Investors business daily states, "to get peoples attention for
his sales pitches, Barringer packages himself. He uses his
"Cactus Jack" character on his products. He speaks loudly and is
dressed in colorful cowboy outfits made by Elvis's tailor to
catch viewer's eyes and ears." Cactus Jack has turned this sales
pitch into over Ten Million in sales of his One Shot Cleaner on
exclusively QVC the past four years. Infotopia will now develop
additional Direct Response marketing methods for Cactus Jack.
Infotopia is turning these inventors into the core of its
competitive advantage in the industry. Management feels it has
developed an efficient and responsive corporate structure and
developed a team of quality strategic partners to minimize cost,
create depth of knowledge and grow the profits of the company.
Direct Marketing encompasses commercials, infomercials, print
media, radio and the World Wide Web. All of these can lead to
tremendous retail exposure in stores all across the world.
Infotopia plans to customize a Direct Response approach for each
product. In 1998 over 844 million dollars in television
infomercials were aired. These infomercials helped create over
759 billion in consumer direct marketing sales.
Infotopia has completed three new infomercials, the BodyRocker,
Cactus Jack's One Shot Catch a Lot Fishing System, and Dean
Tornabene's Fat Fighting System. Infotopia is projecting these
new products and additional projected launches in the coming year
to help them achieve their goal of $0.48 per share profit, on
a project 15 million shares outstanding at the end of fiscal
2001, with projected gross sales of $40,858,697.00.
The Company's mission is to produce, market and distribute an
expanding line of high-quality, innovative medical, health, and
fitness and consumer products. Infotopia seeks out products that
deliver superior value, outstanding quality and competitive
prices to best satisfy customer demand. The company markets its
products to consumers and medical professionals through a variety
of marketing channels, including highly effective infomercials,
distributor alliances, and Internet e-commerce. The management
at Infotopia is committed to increasing corporate revenues and
profits and to providing our shareholders with a high growth
investment. The company will continue to actively pursue new
products and beneficial alliances while continuing its phenomenal
growth of revenue and profits.
Infotopia Inc.
Overview
INFOTOPIA Inc. is a Direct to Retail Marketing alternative.
Infotopia's vision is to provide a comprehensive marketing plan
where reality exceeds expectations.
Infotopia is fast becoming a leader in Electronic Retailing,
specializing in Direct Response Television (DRTV). Electronic
Retailing is the use of any electronic media to present products
to the consumer and provide a means of purchasing. There are
four characteristics of electronic retailing:
1. Electronic media includes television, radio and the
Internet.
2. The message contains all information that the consumer needs
to make a buying decision.
3. There is a specific offer made to the consumer.
4. There is an appeal to the consumer to make an immediate
buying decision.
There are Five Steps in developing an effective Electronic
Retailing campaign.
1. Product development is the process of selecting and
positioning a product for an electronic retailing campaign.
2. Production is the creation of the script or copy and the
development of the creative content of the campaign.
3. Media placement is the selection and booking of the actual
airtime for broadcasting the campaign.
4. Telemarketing & Fulfillment, also known as the "back end,"
is the system for receiving calls generated by broadcast
campaigns, filling orders, shipping them and processing returns,
if necessary.
5. Supplemental distribution is the exploitation of other
marketing channels, either while the ER campaign is running or
after the campaign has run its course.
The life-blood of Direct to Retail Marketing is new products.
The key to new products is the inventor. Infotopia's structure
and philosophy is dedicated to recruiting and supporting
inventors.
The extraordinary success of the Backstroker was the result of
trial and error and a fast learning curve on the part of
INFOTOPIA management. "Wisdom comes from experience; experience
comes from making mistakes." Deciding that it is better to learn
from the mistakes of others, INFOTOPIA undertook extensive
research into the electronic retailing industry. INFOTOPIA
analyzed the competition for their strengths and weaknesses.
"Why do some products succeed while others fail?" "Why do some
companies succeed while others fail?" INFOTOPIA learned that the
companies or products that failed all shared some common traits:
1. Lack of new products
2. Inability to attract inventors
3. Poorly designed products
4. Insufficient cost containment
INFOTOPIA realized that the current Direct Marketing paradigms
needed to be challenged and reinvented with the emphasis placed
on the inventor. The inventor is supported by a streamlined
organization that is capable of marshalling the skills and
resources best suited to a particular inventor and product.
Infotopia's streamlined organization provides this new paradigm.
Through strategic industry alliances, INFOTOPIA is able to offer
a broad range of talent and expertise that would be extremely
expensive to offer "in-house."
INFOTOPIA's management has chosen to outsource specialty
functions to companies with experience and expertise in various
areas of "Direct Response to Retail Marketing." Through
outsourcing, INFOTOPIA is able to multiply the company's ability
to recruit inventors, attract new products, and successfully
launch multiple products. Outsourcing offers the following
benefits:
1. Streamlined Organization - Reduced manpower and overhead
2. Streamlined Decision-Making Process - Rapid Market Response
3. Increased Efficiency
4. Improved Cash-flow
5. Improved Profitability
The table below provides a listing of some of INFOTOPIA's current
outsourcing alliances.
<TABLE>
<S> <C>
FUNCTION OUTSOURCE COMPANY
Infomercial Production Frederiksen
Television
Promoseltzer
Media Placement Frederiksen TV
Campaign Management M2 Marketing and Management
Services
Frederiksen Television
Inbound Telemarketing Center West TV
AfterMarket
Fulfillment Center National Distribution
Retail Distribution RDI
Catalog Sales
Store Front
International Distribution Frederiksen Television
</TABLE>
The above list will change depending upon the product and the
specialties needed to best market that product.
INFOTOPIA has established these relationships by instituting more
comprehensive sub-contracting agreements and an advisory board
that meets periodically to review management and marketing
strategies.
Product Line
Infotopia is a product development company that specializes in
the flexible marketing, advertising, and direct response sales of
innovative consumer products. Infotopia has developed or
obtained the marketing rights to several products in growth
industries, including, healthcare, fitness, and recreation.
Independent research projects have shown that these industries
have tremendous marketing and sales potential. INFOTOPIA is
currently direct marketing the Backstroker, which has been highly
successful among consumers and healthcare professionals
throughout the U.S. and abroad. Additional contracts and
agreements have been made with Cactus Jack and Designs by Dean.
Based on the particular product and profit potential, INFOTOPIA
will outsource portions of a product launch or the entire product
to other media production companies.
The Company currently has two products that it is marketing
through infomercial marketing, known in the industry as Direct
Response Television (DRTV). INFOTOPIA is promoting the highly
successful Backstroker Back Massager and the Cactus Jack line of
One-Shot Cleaning System. The company is also readying three new
products by Dean Tornabene for launch in the second quarter of
2000: the Body Rocker, Fat Fighter System and One Shot Catch A
Lot Fishing System. INFOTOPIA is actively pursuing and reviewing
additional products that may lend themselves well to this form of
marketing. (See Chapter 3 - "Product Sourcing")
Proposed Production and Media Schedule
Product: Backstroke Back Massager
1. Brief Description: Provides a chiropractic massage at home
2. Launch Date: October 1999
3. Projected Weekly Media Budget: $50,000
4. Selling Price: $59.90
Product: Dean Tornabene's Fat Fighting System
1. Brief Description: All Natural weight Loss Supplement
2. Launch Date: April 2000
3. Projected Weekly Media Budget: $75,000
4. Selling Price: $34.95
Product: Cactus Jack's One Shot Cleaner
1. Brief Description: A One -Shot cleaning system, over
5,000,000 bullets sold on QVC, one of the best selling cleaners
ever on OVC.
2. Launch Date: June 2000
3. Projected Weekly Media Budget: $75,000
4. Selling Price: $29.95
Product: BodyRocker
1. Brief Description: Revolutionary Full Body Workout Fitness
Machine
2. Launch Date: May 2000
3. Projected Weekly Media Budget: $500,000
4. Selling Price: $399.95
Product: Spud Whiz
1. Brief Description: An appliance, which peels and cleans
eight potatoes, carrots, apples, cucumbers etc. at once.
2. Launch Date: July 2000
3. Projected Weekly Media Budget: $175,000 & ($35,000
shortform)
4. Selling Price: $39.95
Product: Cactus Jack's One Shot Catch a Lot
1. Brief Description: The Lure that thinks it's a tackle box
2. Launch Date: April 2000
3. Projected Weekly Media Budget: $300,000
4. Selling Price: $29.95
5. Product:
Product: 3 in 1 Ladder
1. Brief Description: A ladder that serves as a utility cart
and carrying basket.
2. Launch Date: November 2000
3. Projected Weekly Media Budget: $50,000 (Shortform) &
150,000
4. Selling Price: $49.95
Competitive Advantage
The management of INFOTOPIA believes that the company has a
sustainable competitive advantage in the DRTV industry based on
the structure and products of the Infotopia division.
1. Efficient and responsive corporate structure
2. Focus on the inventor
3. High potential quality products
4. Quality of outsource partners and strategic alliances
Backstroker Back Massager
The Backstroker is a body massager and health care device
designed by a chiropractic physician. The Backstroker provides
valuable muscle stimulation, enhanced circulation, and
therapeutic acupressure throughout the neck, back and torso.
Users benefit from the specially designed massage elements
mounted on a frame that is placed horizontally on the floor. The
elements are placed in a specific pattern, vary in size and
firmness to provide the correct stimulation and acupressure
throughout the entire back. The unit includes an adjustable neck
support roller and video instruction tape.
Backstroker Endorsements
The Backstroker is endorsed by the World Federation of
Chiropractic.
The Backstroker won a Silver Medal Award at INPEX XIII, America's
largest invention trade show, held May 15 - 18, 1997 in
Pittsburgh, Pennsylvania. The INPEX XIII trade show featured
over 1,500 different products and 30 different countries were
represented.
1.1 Market Research
The consumer market for massagers and related products has
consistently grown during the last 20 years. Consumers have
supported the industry by purchasing electric massage wands,
chairs, and manual devices. Furthermore, the overall growth of
the health care and physical fitness industry have complimented
the sales of massage related devices. Industries that provide
products that enhance the body or provide a feeling of well being
have grown significantly due to an increase in consumer demand
for products that enhance the body and level of physical
fitness/appearance.
The growth and improvement of direct response marketing and sales
via infomercials, home shopping networks and commercials has had
a positive impact on the massager industry. Manufacturers and
retailers are utilizing alternative forms of retailing; such as,
television shopping and infomercials, merchandising massagers
with other home comfort items and promoting the products as a
year-round category. Unit sales, estimated at 4.6 million, are
predicted to rise 4 - 10% throughout the entire category. While
sales of body mats, massage chairs, and other higher ticket
massagers are expected to grow 4-5 times faster than the entire
category, which is the fastest growth that the category has
experienced in years.
Currently in the US, more than 60% of all infomercials feature
products from the physical fitness, health care, or body care
industries. These products range from exercise devices to diet
plans and self-improvement programs. Consumers are increasingly
more interested in improving their quality of life by enhancing
physical appearance and overall well being. Manufacturers and
retailers have responded to this surge in interest and demand by
offering more products in these industries at various price
points. Traditionally, consumers had fewer choices in health
care and body care devices; furthermore, the products were
offered at relatively high price points. Prior to the mid 80's,
the products were marketed to high income individuals as
"specialty" or "exclusive" items only distributed in specific
retail stores or catalogs.
According to recent market studies, the Backstroker, retailing at
$59.90 (plus $19.95 shipping and handling), is being marketed at
an ideal price point for back massage units. Traditionally,
consumers have paid as much as $500 for back massage/therapy
products that offer similar benefits as the Backstroker. Back
massage products that provide therapeutic massage and safe spinal
traction are currently being sold at prices of $200 - $500 per
unit. These products are usually sold in exclusive retail stores
and catalogs.
The following chart demonstrates the value and benefits of the
Backstroker as compared to some of the top selling back
therapy/massage products sold internationally. Not only does the
Backstroker outperform the competition; it beats their prices by
hundreds of dollars.
<TABLE>
<S> <C> <C> <C> <C> <C>
PRODUCT PRICE MASSAGE EXERCISE TRACTION FLEXIBIL
ITY
The Back $495. Good Moderate Moderate Minima
System 00 l
Massage Table $229. Good None None None
00
Traction Unit $179. None Minimal Good Moderate
00
Incline Board $169. None None Good None
00
The $59.9 Excelle Excellen Good Excellen
Backstroker 0 nt t t
</TABLE>
Cactus Jack One-Shot Product Line
In September 1999, Infotopia announced the signing of "Cactus
Jack" Barringer to an exclusive marketing and distribution
agreement for all current and future products. Cactus Jack is
truly an `infotainer' whose success on QVC is based on his unique
blending of entertainment and salesmanship. One-Shot Cleaner has
been available on QVC where it is one of their longest running
and most successful cleaning products, with over 5 million units
sold. The Cactus Jack patented process of `Tabletizing' products
removes the non-essential water and fillers and significantly
reduces the cost of packaging and shipping. Cactus Jack
continues to utilize this innovative technology to develop and
launch new products on a regular basis.
Cactus Jack's success has been well chronicled with pictorials
and features in People's Magazine, newspapers and magazines
across the United States. The June 10, 1999 edition of Investor's
Business Daily states, "to get peoples attention for his sales
pitches, Barringer packages himself. He uses his `Cactus Jack'
character on his products. He speaks loudly and is dressed in
colorful cowboy outfits made by Elvis's tailor to catch viewer's
eye and ears."
CACTUS JACK
Over six years ago, Jack Barringer was at home with his wife,
Emy, when an Alka-Seltzer ad came on TV. As tablets dissolved to
the accompaniment of the familiar "plop, plop, fizz, fizz"
jingle, an idea bubbled up into Jack's mind. "Why can't we make
a solid cleaner you drop in water?" he said.
With the help of a chemist, Jack created and began manufacturing
CACTUS JACK'S 1-SHOT ALL PURPOSE CLEANER, a bullet-shaped pellet
that turns a quart of water into a cleaning solution for
everything from floors to mirrors, grease to pet stains. One-
Shot followed up with a Car Wash & Wax pellet and a pill-like
laundry "vitamin" to replace detergents, bleaches, fabric
softeners, etc. Last year, Cactus Jack products grossed over $2
million in sales.
INFOTOPIA has an exclusive representation contract with Cactus
Jack's Marketing to coordinate, with the various infomercial
marketing companies, a long-range plan to market the entire line
of Cactus Jack Products via infomercial, e-commerce and
traditional mass market retail.
1.2 Cactus Jack's One Shot Cleaner
Cactus Jack's One-Shot Cleaner is different from all other
cleaners on the market in that it is uniquely designed as a
SOLID, bullet shaped, concentrate, that dissolves in tap water,
much like an Alka-Seltzer tablet. The appeal of Cactus Jack's
products is that they do not ship the water, and the cost savings
are passed on to the consumer. Product is shipped in boxes of 50
bullets. Each bullet makes 32 oz of cleaner.
Comparative Advantages
Cactus Jack's One-Shot products compare favorably with
competitive products on the market. Cactus Jack's multi-purpose
cleaning solution is designed to meet the toughest commercial,
office and home cleaning jobs. One-Shot simplifies household
cleaning by replacing most cleansers now used with a single
product. One-Shot is biodegradable, non-toxic, water soluble,
nonflammable and meets all OSHA requirements for safe cleaning.1
<TABLE>
<S> <C> <C> <C>
TYPE OF CLEANER AVG. SIZE AVG. AVG. COST
(in OZ.) COST PER OZ.
PER
PRODUCT
CACTUS JACK'S 32.0 1.20 3.7
.05
CARPET CLEANER 20.6 4.28 .207
CARPET ODOR REMOVER 24.8 1.77 .071
FABRIC UPHOLSTERY 9.5 3.65 .384
ALUMINUM / STAINLESS 11.0 2.36 .214
BRASS / COPPER 7.3 3.19 .436
CLEANER
OVEN CLEANERS 13.3 3.03 .227
GLASS CLEANERS 29.4 2.39 .81
WOOD CLEANER 13.2 2.85 .215
BATHROOM 21.3 2.54 .119
MULTI PURPOSE 25.0 2.65 .166
FLOOR CLEANERS 18.8 2.25 .135
LAUNDRY STAINS 22.3 2.49 .111
TOILET BOWL 20.1 1.70 .084
KITCHEN CLEANERS 23.1 2.98 .124
AVERAGE 18.5 2.74 .148
</TABLE>
Cactus Jack's One-Shot Laundry Vitamin
One-Shot Laundry Vitamin uniquely and conveniently combines
a cleaner, bleaching agent, fabric softener and water softener
into one tablet and is also enjoying great success on QVC. The
product is based on the same principles of One-Shot Cleaner. The
product is concentrated and tabletized. Cactus Jack's ultra
concentrated laundry vitamins are environmentally safe and non-
toxic. By using these vitamins, you are replacing up to five
products commonly used in the home. They contain vitamins C and
E, aloe vera gel, brighteners, and Papaya, which helps, gets out
sauces, grass and blood. Laundry Vitamins also contain a color
safe bleach and fabric softeners to help reduce static. Water
softeners in this product make One-Shot great for all levels of
water hardness. It can also be used with detergent.
Cactus Jack's One-Shot Car Wash System
Cactus Jack has taken his easy One-Shot cleaning bullets and
created an easy to use kit for cleaning the car. Simply drop one
of the wash bullets into the hose, turn on the water, and spray
your car. It works with any spray nozzle. After your car is
washed, rinse it with the same hose. One bullet will clean a mid-
sized car. Every five washes, put a wax bullet in the hose for
an instant spray-on wax treatment. The kit includes a One-Shot
Clean Screen Washer, instructions, twenty wash bullets and five
wax bullets.
1.3 Cactus Jack's One-Shot Grow-A-Lot Plant Food
Cactus Jack's One-Shot Grow-A-Lot plant food bullets feed plants
in three different ways. The fertilizer bullets can be used as
plant spikes, dissolved in a watering can or spray bottle, or be
used directly in the garden hose with a spray nozzle, feeding
your plants as you water them. One-Shot Grow-a-Lot can be used
as plant food on all flowers, vegetables, trees and houseplants.
It works through root feeding or follier feeding. The plant food
ratio is 15-30-15 (Nitrogen, Phosphorous and Potash). Each
package contains 50 plant food bullets.
1.4 Cactus Jack's One-Shot Catch-a-Lot
The World's Largest Sport!!! There are more fishermen in the
world today than all football, soccer, basketball, golf,
baseball, and other sports combined. Fishing is the only true
world sport. Two thirds of the planet is covered with water and
tens of thousands of lakes, rivers, and streams are found inland
on every continent in the world. Since man first learned to
fish, he has endeavored to construct the perfect bait. Thousands
of gadgets, decoys and lures have been developed all with low,
moderate to excellent success.2
The Problem
There is not one but seven (7) reasons a fish will strike a
lure, and if the fish is not in that particular mood, he will
not strike. This is why you will find the tackle boxes of
fishermen full of dozens and dozens of variations of lures.
Each with its own efforts to achieve one of the seven (7)
action responses necessary to make that big one strike.
The Solution
1. Appearance look like the fish's accepted diet. (what he
is used to feeding on);
2. Action move though the water at a motion acceptable
to the fish;
3. Sound draw attention to itself;
4. Smell different aromas to attract different fish;
5. Taste provide a variety of tastes for different
times of the day, month, and year;
6. Color variations of color to attract fish;
7. Light make sure fish can see the lure, a fish can't
catch what it can't see!!!
Note: The BAIT Bullet included in the kit provides the smell and
taste for the tackle. The Bullet is inserted into the tackle
before adding a colored attachment (shown as #6 in diagram
above). A selection of attachable leaders is provided to allow a
specific action in the water. Each tackle comes with a wide
selection of colors to choose from.
Each Bullet Provides the Following Materials
<TABLE>
<S> <C>
MATERIAL FUNCTION
Minnow Dehydrated
Blood Optical and Odor Intensifier
Blue Cheese Concentrated blue cheese flavor
Worms Dried fresh
Toads Concentrated dehydrated Toads
Flour Material binding aid
Mica Natural mineral to give off glitter
and shimmer optical elusion to
attract fish
Special Effervescing Give direction of origin to drawing
base fish to lure
</TABLE>
Key Features
1. Meets all OSHA Requirements
2. Non-Toxic
3. Bio Degradable
4. Non-Flammable
5. 5 Active Ingredients
6. Authorized by USDA for Use in Federally Inspected Meat and
Poultry Facilities
Marketing Plan
Dan Hoyng stated, "INFOTOPIA's addition of the existing and
future Cactus Jack product line should provide great profit
potential for our shareholders while providing a brand image with
which to relate our success."
One-Shot Cleaner and Laundry Vitamin will debut in an infomercial
beginning in October 1999. National Boston Medical expects
monthly revenues to quickly exceed $1 million per month on this
product segment alone. In addition, National Boston Medical has
planned a series of new infomercials to begin production on new
and innovative products by Cactus Jack in the next twenty-four
months. Cactus Jack One-Shot Cleaning system is currently airing
on QVC with Cactus Jack Barringer presenting the product. The
infomercial is slated for airing beginning in October 1999. The
One-Shot Fishing Lure infomercial is schedule to begin in the
first quarter of 2000. The remaining Cactus Jack products will
be marketed as upsells - impulse products offered along with the
primary product.
Dean Tornabene
Background
For over fifteen years, Dean Tornabene has pioneered the
philosophy of "balance through herbs and nutrition." A former Mr.
America, renowned celebrity nutritionist and inventor, Dean has
the knowledge and practical experience to be considered an
authority on health and nutrition. His national television
programs on health and nutrition and his magazine columns are
followed by millions of people. As the inventor of the Fat
Fighting Systemr, Metasystemr, Bun and Thigh Sculptorr, Ab
Rockerr and numerous fitness and lifestyle products, Dean's name
appears on his products as a symbol of quality, confidence and
authenticity. Major Fortune 500 companies have consulted with
Dean, and he has been instrumental in the development of the
technology used in their health and fitness products.3
1.5 Tornabene and Infotopia
Infotopia has signed an exclusive sales and marketing agreement
with Dean Tornabene and Charles Perez to produce a minimum of 12
new infomercial products for the next four years and the right of
first refusal on all new inventions.
Dean Tornabene and Charles Perez are the co-inventors of the Bunn
and Thigh Sculptor, the Ab Rocker and several other inventions
that have been utilized in Direct Response to Retail Marketing.
These inventions have produced over 300 million dollars in sales
during the past four years and continue to produce at a very high
level.
Dean and Charles have ready for market, a new piece of fitness
equipment presently called the ``Body Rocker.'' Dean states, ``I
believe that the Body Rocker is the greatest fitness invention
since the barbell and will revolutionize personal home fitness
equipment.'' Production on an infomercial has already begun by
Script to Screen Productions, a leader in the production of
quality infomercials, and is scheduled for release in the first
quarter of 2000.
Daniel Hoyng, CEO of Infotopia states, ``An opportunity to land
inventors of the quality of Dean and Charles is part of the
Infotopia strategy to provide an exclusive home to inventors of
previously successful infomercial products. The Body Rocker has
the potential in an eighteen-month period to match the revenue of
all of Dean and Charles previous products combined. The signing
of Dean and Charles should clearly indicate to our shareholders
and competitors that we are in the Direct Response to Retail
segment to stay and intend to become a new industry leader.''
1.6 Upcoming Products by Dean
Body Rocker
The Body Rocker has enormous marketing potential. The Body
Rocker is a "total body" fitness machine that will provide a no-
impact workout at all fitness levels. The BODY ROCKER is
designed to have mass appeal for beginners through serious
fitness enthusiasts. Sales are projected in excess of 1 million
units.
in 1 Ladder
The 3-in-1 Ladder is a new conceptual ladder that
encompasses a 3-step ladder, a hand truck and a cart with a
basket all built into one unit. There has been a very high level
of interest in building a brand on this product, with additional
versions to follow. The 3-in-1 Ladder is scheduled for media
testing in February 2000 and a full infomercial launch in June
2000.
Dean Tornabene Fat Fighting System
Dean Tornabene is a recognized expert in the field of
nutrition. The Fat Fighting System is an all-natural dietary
supplement that safely and effectively enhances the body's
ability to burn off calories and unwanted fat. The product is
scheduled for launch in November 1999 with a weekly media budget
of approximately $175,000 and a selling price of $49.95.
Promoseltzer has been chosen for the production and West TV for
the telemarketing.
Outsourcing and Strategic Alliances
Frederiksen Television
Founded in 1991 by Lee Frederiksen, Ph.D., and President. The
company is a leading innovator and pioneer in Electronic
Retailing, especially Direct Response Television Marketing
(DRTV). The company has expertise in Product Development, Media
Creation and Production, Media Placement, Campaign Management,
Distribution.
M2 Marketing and Management Services
M2 Marketing and Management Services ties it all together. M2
functions as the Direct Response Television (DRTV) quarterback.
M2 coordinates the logistics of inbound telemarketing response,
fulfillment house (credit card or check processing), out-bound
telemarketing response and media response evaluation.
Infotopia and the World Wide Web
Infotopia's marketing strategy includes offering consumers and
medical professionals access to the Company's product line via an
Internet based Electronic Store. With the popularity and rapid
acceptance of Internet based marketing and sales, international
businesses of all kinds are turning to Internet based electronic
commerce to increase business sales volume and profitability.
The World Wide Web offers Infotopia a unique opportunity to
advance new products more expeditiously and for a lower start-up
cost than previous product launches.
Internet commerce is growing more rapidly than any other segment
of the world economy and is expected to account for over $1.2
trillion in sales by the year 2002. According to Nielsen Media
Research, the results of the April 1999 Internet Demographic
Survey reveals that the number of Internet users in North America
has now reached 92 million -- 55 million of whom shop online.
Today, nearly half of North American consumers use the Internet.
Consumers use it to communicate, to learn, to shop and to buy.
This rapid growth is propelling traditional companies to
transform themselves by using the Internet and is creating a
tidal wave of e-commerce.4 This growth and acceptance of e-
commerce compels INFOTOPIA to take advantage of this rapidly
growing and accepted technology.
The Infotopia website can be accessed at
http://www.Infotopiainc.com. The website provides two important
services. The first is informational, providing consumers and
potential investors with an Overview of the Company, Customer
Service, Investor Relations, the latest Company News and Press
Releases. The second function is marketing and sales. Each of
the Company's divisions and product lines are available through
the website. Consumers and medical professionals are able to
order INFOTOPIA products direct from the Company Store. On-line
sales are accomplished utilizing the latest security and
encryption technologies to ensure that customer transactions and
information are kept secure and confidential.
Infotopia benefits from the ability to personalize and retain a
repeat customer base, identify seasonal inventory requirements
and identify customer preferences. This individualized customer
service approach is consistent with Infotopia's commitment to
excellence in customer service.
Board of Directors and Key Management
The INFOTOPIA Board of Directors and Key Management are made up
of a broad spectrum of professionals with extensive experience in
their respective fields of business management, marketing,
finance, medicine and law. The Key Management personnel are the
Presidents of the INFOTOPIA business divisions, who also serve as
Directors.
Ernie Zavoral, President and Director. Mr. Zavoral brings to
National Boston over 20 years of marketing and managerial
experience. After attending Grove City College, Mr. Zavoral
spent 15 years as a marketer and project manager for companies
providing environmental solutions. His highly developed
communication, presentation and management skills led him to
enter the product development field, where he was responsible for
bringing new and innovative products from the drawing-board to
retail success. Mr. Zavoral is credited for developing "Why-Tie
Shoelaces" and positioning that product to be a national success,
with Wal-Mart as a primary customer. As General Manager of
Infotopia, Mr. Zavoral is responsible for developing and
marketing health related products, such as INFOTOPIA's highly
acclaimed Backstroker, through television infomercials.
Daniel Hoyng, Chairman of the Board and Chief Executive Officer.
Mr. Hoyng is an accomplished sales executive. His expertise in
the medical services was gained from his successful leadership as
a corporate executive for an international healthcare services
firm specializing in long-term care. Mr. Hoyng has a management
and sales professional background with more than a decade of
management experience. He most recently served as the vice-
president of marketing and sales for Companion Radio, where he
instituted the development of a sales force and launch of the
product to the long-term care industry. Previously, Mr. Hoyng
excelled as a Division Director for Healthcare Services Group,
Inc., a company specializing in housekeeping and laundry services
to the long-term care industry. Prior to his work with
Healthcare, Mr. Hoyng served as a Sales Manager and then General
Manager for ARA/Cory Refreshment Services. He was awarded his
Bachelors in Communications Degree from Saint Joseph's College
and has completed Masters level work on a Master's of Religion
from the Athenaeum of Ohio
Marek Lozowicki, Secretary and Treasurer. Mr. Lozowicki is
responsible for implementing and maintaining information and
communication systems (voice and data) database management and
electronic commerce. Prior to this, between July 1997 and October
1997, he worked for Medical Marketing Group as a Systems Manager.
His responsibilities included installing, configuring and
maintaining the company computer network and other information
systems (voice and data). Between March 1996 and October 1997,
Portraits International, Inc. employed Mr. Lozowicki as their
Northeast Region Manager. There he oversaw all aspects of the
photography contract assignments and associated obligations
including retail and school sectors. He was involved in the
implementation of new digital previewing systems in the premium
glamour sector utilized by chain stores such as Bloomingdales.
Other responsibilities included ongoing hiring, training and
overseeing the department staff of over fifteen employees,
equipment and material inventory control, quality assurance and
the customer satisfaction assurance program. During his last
months of employment, he also worked for Medical Marketing Group.
Prior to Portraits International, Inc., between August 1992 and
March 1996, he worked for APP, Inc. as a photography manager for
the Northeast region. His responsibilities were similar to those
at Portraits International, Inc.
Clinton Smith, Esquire, Director. Mr. Smith received his degree
from Morehouse College of Atlanta, GA where he studied History
and Business. He received his Juris Doctorate from Tulane
University School of Law, New Orleans, LA where he was Merit
Scholar, the 1987 Merit Award Recipient for the Law League of LA
and was received the Maurice Hirsch Award. Mr. Smith is a member
of the Louisiana Bar and is co-owner and General Partner of Roby
& Smith, a full service law firm with a concentration in
litigation. Mr. Smith is also a partner in the law firm of Bryan
& Jupiter whose practice focuses on education/school law,
commercial law, workers' compensation and tort defense.
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 29, 2000, 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
Although the Company received its approval for listing on
the NASD Over-the-Counter Bulletin Board under the symbol "DRAV"
???, the Company has not yet commenced a trading so there is
established trading market for the Company's securities.
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 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 sales of unregistered securities since
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.
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.
Results of Operations
The Company, which incorporated in the State of Nevada on
April 28, 1998, primarily as a nutritional supplement development
and marketing corporation, has not yet commenced substantive
operations. Since inception, the Company raised approximately
$133,000 through an offering of its common stock made pursuant to
the exemption from the registration requirements as provided for
under Section 3(b), Regulation D, Rule 504. It also issued
10,000,000 shares to its founders, Mark Delott and Elliot
Abravanel, M.D., pursuant to a technology transfer agreement
which granted the Company 100% of the rights to existing formulas
developed by Dr. Elliot Abravanel M.D., and non-exclusive use of
formulas to be developed in the future. The Company's business
purpose is that of marketing certain products developed by Dr.
Abravanel specifically for the reduction or elimination of
cravings for sugar, starch and greasy food, as well as
supplements for general well being.
The Company has expended the majority of the funds raised in
its offering on purchase of the formulas, offering costs and
general administrative expenses since inception. The Company
currently has approximately $ 2,838 in cash to satisfy is cash
requirements over the next 12 months, and $11,745 worth of
inventory of its products, which will likely be insufficient for
it to fund even its minimal operating requirements at its
existing level for the next twelve months.
In early 1999 the Company narrowed its initial product focus
to three products:
Dr. Abravanel's Special Formula for Weight Loss
Dr. Abravanel's
Special Formula
for Vibrant
Health
Dr. Abravanel's Special Formula for Meal Replacement
During the its first fiscal quarter, the Company completed
development and limited production of one of the above three
products: Dr. Abravanel's Special Formula for Vibrant Health".
The Company has named the product "Replen 100 for Vibrant Health"
("Replen 100"). The Company has a limited inventory of this
product. Since the beginning of its first fiscal quarter, the
Company's efforts in marketing have mostly been conducted by
Management and limited to testing the market place in a limited
manner as to market acceptance of its product, Replen 100.
During the first three quarters of its current fiscal year, the
Company randomly distributed free samples to a variety of
individuals and received input about the product's results from
these persons. During the Company's third quarter, Management
determined, based on its sampling, that further refinements of
the Replen 100 are needed since most of the test market subjects
did not express an interest in ordering the product. While the
antecdotal results are somewhat favorable, the Company must
reevaluate the initial product, Replen 100, prior to resuming its
test marketing or prior to any substantive marketing campaign. In
addition, Management's analysis of the industry continues to
indicate that profit margins in the industry have radically
declined. This could result in reduced profit margins to the
Company's products, if and when marketed, in order to remain
competitive. Management, therefore, has determined that while
the efficacy of Replen 100 is sound, the impact of the results of
the test market subjects is not readily apparent.
During the Company's fourth quarter, Management began
working on redeveloping its product ingredients for Replen 100.
In connection therewith, the Company began looking for additional
funding although there we re no plans for research and
development of any other products at that time. . The Company
does not have any lease payments or salaries to pay at this time;
nor does it have any plans for any substantive expenditures on
property or equipment or hiring paid personnel.
Comparison Fiscal Year 2000 - Fiscal Year 1999
The Company currently has $15,108 in assets which are
comprised of approximately $2,800 in cash, and approximately
$11,700 in samples and supplies.. The Company has no liabilities
General administrative expenses during the fiscal year ended
February of 2000 were $8,307 as opposed to over $26,000 in the
fiscal year ended February of 1999. The reduction in this
fiscal year was due mostly to a significant payment ($19,000)
made under the Technology Transfer Agreement during the first
quarter of 1999 with no similar expenditures in the current
fiscal year. The Company has spent approximately $1,045 during
this fiscal year on samples of its Replen 100 with no comparable
expense in 1999.
Plan of Operation
The cash available to the Company will not be sufficient to
cover general administrative expenses for 12 months although the
Company has sufficient inventory if it decides to continue to
provide free samples and solicit product interest as well as
anecdotal evidence to determine Replen 100's effectiveness and
market acceptance. 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. Such capital may be raised
through private placements of its common equity, debt financing,
bank loans, or through licensing or joint ventures with other
companies. There are no current commitments for financing, and
there is no assurance that such financing will be available when
needed, or that if the Company succeeds in raising additional
funds, that the same will be sufficient for its business
purposes. 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.
During this year's fourth quarter, Management investigated
the availability of capital from a variety of sources including
investment bankers and private investors, as well as potential
joint venture partners. Subsequent to its year ended February
29, 2000, the Company entered into an agreement with Dipavali
Capital Corporation to provide services related to raising
capital and corporate growth and expansion. The agreement was
entered into on a best efforts basis. On April 18, the Company
was notified by Dipavali that it had focused its capital raising
efforts on venture groups but was unsuccessful at that date on
locating any funding sources. The Company realizes it may be
forced to redefine its business goals in order to maximize
shareholder value in the event further capital cannot be easily
obtained.
Year 2000
The Company recently addressed 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 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 nor did it experience any Y2K problems. 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 is dependent upon
certain of its suppliers and vendors being Y2K compliant. To
date, the Company has experienced no problems with its vendors
regarding Y2K problems.
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.
Board of Directors and Stockholders
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
Los Angeles, CA
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Dr. Abravanel's
Formulas, Inc. ( A Development Stage Company) as of February 29,
2000, and the related statements of operations, shareholder's
equity and cash flows for the year ended February 29, 2000. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on this
financial statement based on our audit. The financial statements
of Dr. Abravanel's Formulas, Inc. from inception on April 28,
1998 to February 28, 1999, were audited by other auditors whose
report dated March 5, 1999, expressed an unqualified opinion.
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 of the financial statements provides a reasonable basis for
our opinion. In our opinion, based on our audit, the financial
statements referred to above present fairly, in all material
respects, the financial position of Dr. Abravanel's Formulas,
Inc. as of February 29, 2000, and the results of its operations,
shareholder's equity and cash flows for the year ended February
29, 2000, in conformity with generally accepted accounting
principles.
/s/ Randy Simpson CPA PC
Randy Simpson, CPA, P.C.
A Professional Corporation
April 20, 2000
Sandy, Utah
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
BALANCE SHEET
ASSETS
<TABLE>
<S> <C>
February 29,
200
0
Current Assets
Cash $ 2,838
Officer receivable 525
Samples and supplies 11,745
Total current assets 15,108
Other Assets
Deferred taxes receivable 9,810
Valuation allowance - Deferred taxes (9,810)
Total other assets -
Total Assets $ 15,108
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C>
Current liabilities:
Accounts payable and accrued liabilities $ -
Total current liabilities -
Shareholders' equity (note 3)
Common Stock, $.001 Par Value
authorized 40,000,000 share; 12,841,353
shares issued and outstanding 12,841
Paid in Capital 38,333
Accumulated deficit (36,066)
Total Equity 15,108
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 15,108
</TABLE>
See accompanying notes to financial statements.
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Year Ended February 29, 2000
and the Period from Inception (April 28, 1998) to February 29,
2000
<TABLE>
<S> <C> <C> <C>
Period from Period from
Inception Inception
Year Ended (April 28, 1998) (April 28,
to 1998) to
February 29, February 28, February 29,
2000 1999 2000
Sales $ - $ -
Cost of sales - -
Gross profit - -
Costs and Expenses:
General administrative 8,307 26,714 22,231
Sample costs/product 1,045 - 13,835
Total Expenses 9,352 26,714 36,066
Net Loss (9,352) (36,066)
Income Tax Provision:
Deferred tax benefit (4,200) (5,610) -
Income tax benefit - 9,810 - -
reversal - allowance
Total income tax 5,610 (5,610) -
expense (benefit)
Net Loss $ (14,962) $ (21,104) $ (36,066)
Net loss before income
taxes per share
(note 1 ) $ (0.01) $ (0.01)
Net loss per share $ (0.01) $ (0.01)
(note 1)
Weighted average common
shares
(in thousands) 12,841 10,374
(note1)
</TABLE>
See accompanying notes to financial statements.
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
STATEMENT OF SHAREHOLDER'S EQUITY
For the Year Ended February 29, 2000
and the Period from Inception (April 28, 1998) to February 29,
2000
<TABLE>
<S> <C> <C>
Twelve Month Period from
Inception
Period Ended (April 28, 1998)
to
February 29,2000 February 29, 2000
Beginning Balance 62,107 -
Issuance of common stock:
10,000,000 shares on 4/28/98
(issued as
partial consideration for
product
formulas; valued at stock par 10,000
value)
25,000 shares on 6/15/98 250
53,500 shares on 6/15/98 8,025
100,000 shares on 7/10/98 15,000
10,000 shares on 7/16/98 100
40,000 shares on 7/16/98 6,000
135,000 shares on 7/23/98 1,350
233,461 shares on 7/23/98 35,019
27,500 shares on 7/30/98 275
33,500 shares on 7/30/98 5,025
25,000 shares on 8/18/98 250
81,667 shares on 8/18 98 12,250
750,000 shares on 8/20/98 750
60,600 shares on 8/21/98 9,090
100,000 shares on 8/21/98 1,000
137,500 shares on 8/25/98 1,375
173,000 shares on 8/25/98 25,950
750,000 shares on 8/26/98 750
40,000 shares on 8/31/98 400
10,000 shares on 9/4/98 1,500
55,625 shares on 9/18/98 10,500
Special distribution (19,475) (60,000)
Common stock offering costs (12,562) (33,685)
Net loss (14,962) (36,066)
Balance at February 29, 2000 15,108 15,108
</TABLE>
See accompanying notes to financial statements.
Dr. Abravanel's Formulas, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Year Ended February 29, 2000
And the Period from Inception (April 28, 1998) to February 29,
2000
<TABLE>
<S> <C> <C> <C>
Year Ended Period from Period from
February 29, Inception Inception
2000 (April 28, (April 28,
1998) to 1998) to
February 29, February 29,
2000 2000
Cash Flows used in Operating
Activities:
Net loss $ (14,962) $ (21,140) $ (36,066)
Adjustments to reconcile net
loss to net cash used in
operating
activities :
Valuation allowance to 5,610 (5,610) -
eliminate deferred tax asset
Net cash used by operating (9,352) (26,750) (36,066)
activities
Changes in Assets and
Liabilities:
Advance to officer (525) (525)
Increase (decrease) in prepaid 1,045 (12,790) (11,745)
supplies
Net cash used by operations (8,832) (12,790) (48,336)
Cash Flows from Financing
Activities:
Issuance of common stock - 134,859 134,859
Common stock offering costs (12,562) (21,123) (33,685)
Return of capital to founders (19,475) (30,525) (50,000)
Net cash (used) from financing (32,037) 83,211 51,174
activities
Net (decrease) increase in cash (40,869) 83,211 2,838
Cash, at Beginning of Period 43,707 - -
Cash, at End of Period $ 2,838 $ 43,707 $ 2,838
Supplemental Cash Flow
Disclosures:
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
Non Cash Transactions:
On April 28, 1998, 10,000,000
shares of common stock
were issued to founders for $ 10,000
formulas contributed to the
Company.
</TABLE>
See accompanying notes to financial statements.
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.
Basis of presentation - The financial statements have been
prepared in conformity with generally accepted accounting
principals.
Inventories - Inventories, which at February 29,2000, 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 the 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 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 $19,475
in March 1999.
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 thereof;
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 the 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 29, 2000, the company has available net operating
loss carryforwards of approximately $39,000. These carryforwards
will expire in the years 2014 and 2015. As of February 29, 2000,
the Company recognized a deferred tax asset amounting to $8,260
from its loss carryovers.
Note 5 - Contingencies
The Company is dependent on Dr. Elliot Abravanel for the
development and marketing of the Company's product line.
Note 6 - Private placement memorandum and filings with the SEC
As of February 29, 2000, 1,341,353 shares of common stock have
been issued through the Company's private placement offerings.
The Company has applied for and received the CUSIP number for the
or the Company's publicly traded shares. The Company, through its
sponsoring market maker Equitrade Securities, Inc., filed Form
211 on July 21, 1999, for listing its shares on the OTC
Electronic Bulletin Board. The Company has received two sets of
comments from OTC Bulletin Board examiners and responded to them.
The Company filed with SEC on December 10, 1998, and this filing
became effective February 8, 1999. The SEC has notified the
Company that all questions and comments have been cleared.
Note 7 - Equity Funding
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.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
The Company's former accountant, Balmer and Nelson
resigned on April 14, 2000; the Company engaged a new accountant
on that same date: Randy R. Simpson, C.P.A. P.C.. The change in
accountants was reported in a Report on 8K which was filed with
the Securities and Exchange Commission on April 19, 2000. There
were no disagreements with the Company's former accountants which
would require further disclosure under this Item. 8
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 57 Chairman of the Board of
Directors,
President, Chief
Executive Officer.
Since Inception
Mark Delott 49 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 57) 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 49) 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.
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 and its year ended February 29,
2000. As of the date hereof neither of the Company's executive
officers have received any compensation.
Annual Compensation
Long Term Compensation
----------------------------- ------
-------------------------
Awards Payouts
---------
---------- ---------
Securities All
Re-
Underlying Othernsa-
Name and stricted
Options & LTIP Compensa-
Position Year Salary Bonus Other Awards
SAR's Payouts tion
--------------------------------------------------------------------
---------------------------------
[S] [C] [C] [C] [C] [C]
[C] [C] [C]
Elliot Abravanel 2000 -0- -0- -0- -0-
-0- -0- -0-
1999 -0- -0- ** -0-
-0- -0- -0-
1998 -0- -0- -0- -0-
-0- -0- -0-
Mark Delott 2000 -0- -0- -0- -0-
-0- -0- -0-
1999 -0- -0- ** -0-
-0- -0- -0-
1998 -0- -0- -0- -0-
-0- -0- -0-
** 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, 2000 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.
To the best knowledge and belief of the Company there were
no other transactions effected by the foregoing individuals which
would have required the filing of a Form 4 of Form 5 with the
Securities and Exchange Commission during the Company's fiscal
year ended February 29, 2000.
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.
Security Ownership of Officers and Directors
Title Nature of Percent(1)
of Principal Shareholders Beneficial of Class as
Class Name, Address & Position Ownership Current
Date
----------- ------------------------- ------------ -----------
--
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.
24
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
----------- ------------------------- ------------ -----------
--
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
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(1) Also an officer and director
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
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, 2000
(i)
Exhibit Exhibit Where
Incorporated
No. Description(1) In this
Report
---- ----------- -------
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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
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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
(2) 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.
(5) Filed herewith.
(6) Filed as an Exhibit to Form 8-K dated April 14, 2000
and filed with the SEC on April 19,2000
(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. The Company filed a
report on 8-K subsequent to the quarter ended on April 19, 2000
regarding the resignation of Balmer and Nelson as its independent
accountant, and the engagement of Randy R. Simpson, C.P.A., P.C.
as its new independent accountant.
On May 12, 2000, the Company filed a Form 8-K regarding the
merger with Infotopia, Inc.
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
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
/s/ Elliot Abravanel President,
Chief Executive
-------------------------------- Officer and Director
(Principal
Elliot Abravanel Executive Officer)
Chairman of the Board of
Directors
/s/ Mark Delott Director
--------------------------------- Secretary/Treasurer
Mark Delott Vice-President
_______________________________
1 http://www.w1-shot.com/cost.html
2 http://www.1-shotproducts.com/catch_alot_lure.html
3 http://www.fatfighting.com/aboutdean.htm
4 Neilson Research Group April 1999 E-Commerce Survey
