UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g)
of the Securities Exchange Act of 1934
HEALTH EXPRESS USA, INC.
------------------------
(Name of Small Business Issuer in its Charter)
Florida 65-0847995
------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
275 Commercial Blvd., Suite 260
Fort Lauderdale, FL 33308
- ------------------- -----
(Address of Principal Executive (Zip Code)
Offices)
Issuer's Telephone Number:
(954) 776-5401
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
---------------------------------------
(Title of Class)
<PAGE>
PART 1
ITEM 1. DESCRIPTION OF BUSINESS
(a) Business Development
Health Express USA, Inc. ("Health Express" or the "Company"), was
incorporated in Florida on July 2, 1998 to develop, construct and operate
gourmet, fast food restaurants. Since inception, the Company has had no
operations and has conducted no business. It is currently in the development
stage and is in the process of completing construction of its first restaurant,
which is expected to open for business in November 1999.
(b) Business of the Issuer
(1) Principal Products and Services and their Markets.
Management's present focus is the construction of its first restaurant
and satisfying consumer demands and preferences in the healthy and nutritious
fast food arena in the local market. The Company's initial restaurant and all
future restaurants, if any, will operate under the name "Healthy Bites Grill".
The principal products that will be offered by the Company through its
restaurants are gourmet, healthy and nutritious fast food items. These items are
expected to include vegetable (veggie) burgers, mushroom burgers, salads,
smoothies and natural, healthy beverages. The items will be available for
consumption on site or as take-out items purchased in the restaurant or at the
drive-thru.
Under an agreement with Data Central USA, Inc. the Company is
assembling a select group of high profile product lines for its joint marketing
effort. Based in Ocala, Florida, Data Central manages the frequent-dining
programs for multi-unit restaurant chains by providing turnkey electronic
loyalty/frequency solution services. Data Central supplies point-of-sale
hardware, software, plastic magnetic stripe cards and all support material for
the electronic frequent diner programs. Under this program customers have to
spend money in order to accrue points for the loyalty discount program. This
enables Health Express to increase sales and customer loyalty while
simultaneously acquiring and managing a sizable database.
As a restaurant operation designed with the goal to ultimately expand
nationwide, management has focused its attention on gaining an understanding of
consumer demands in healthy foods. Management is currently developing the
restaurant's initial menu selections with the assistance of its menu and food
preparation team comprised of Mr. David Maltrotti, Executive VP of Operations
and Mr. Roy A. Kindberg, General Manager.
<PAGE>
In an effort not to duplicate consumer taste tests already fully
implemented by major players in the health food industry, such as Wild Oats and
WholeFoods, the Company is creating its initial menu based on currently known
consumer preferences and by including new menu items not traditionally found in
fast food restaurants such as complete protein vegi-burgers and grilled
portobella pannini. This is an ongoing process, the results of which will not be
fully known until the Company's first restaurant is opened and consumer surveys
are completed and analyzed. The results of such surveys will play a key role in
the addition, deletion and modification of menu items. Management expects the
expansion of the Company's restaurant operations will require the establishment
of a department dedicated to market survey and testing in order to refine its
menu items in response to internally generated market surveys.
A key element of the Company's business plan is to enter into franchise
agreements with potential and qualified franchisees to open and operate
restaurants under the "Healthy Bites Grill" name. The Company has retained an
experienced franchise consultant to assist in the development and implementation
of this plan. Management believes that the Company has found a niche in the fast
food industry by being the sole providers of healthy food on a fast food format.
It is expected that the franchise agreements will include royalty fees based on
sales volume and require operational and quality control.
Mr. David Maltrotti, Executive VP of Operations will be in charge of
all aspects of restaurant operations, including equipment purchasing decisions
and restaurant layout recommendations. Mr. Maltotti is an experienced
gourmet\conventional chef with a proven track record.
(2) Distribution Methods
It is anticipated that the initial restaurant will serve food prepared
in its on-site kitchen. A warehouse/storage facility is planned to be leased for
short-term distribution items such as ancillary food products and supplies.
Management anticipates that once franchise operations commence, the Company will
operate a drop shipment facility for the distribution of certain menu items that
allow for the pre-preparation and delivery to various franchises within regional
boundaries based on logistical factors such as distance and delivery time.
Thereafter, management anticipates that additional distribution facilities will
be needed if franchise restaurants are opened in different geographic regions of
the country. The Company's initial franchises are expected to be in the South
Florida area.
The Company has received local, regional and nationwide attention with
various write ups in several industry publications such as Restaurant News,
Crittendens Restaurant Chain Report, Sunbelt Food Service Magazine and Natural
Products Industry Provider. The Company has also joined with a major specialty
coffee distributor as well as other food and supplies distributors. The Company
is currently involved in aligning supplier relationships with SYSCO Food
Service, Organica, Cornucopia, United Distributors, Kinfolk, Green Garden, Tree
of Life and Standard Coffee Service of Boca Raton, Florida.
<PAGE>
Management believes that the sight chosen represents the ideal type of
location for the Company's restaurants. It is expected that this model will
serve as the blueprint for future restaurants. Location represents one of the
factors to the success of the Company's restaurants, with other factors being
food related (quality, price, timeliness and convenience) and quality of
service. Management believes that its restaurants will attract the attention of
the local consumer. It is the Company's goal to give the consumer the kinds of
products that it wants and will cause him or her to be a repeat customer.
(3) Status of Publicly Announced New Products or Services
On September 28, 1999, the Company announced the opening of its initial
flagship restaurant for the fall of 1999. This news release to Business Wire
introduced Health Express as a fast food restaurant chain offering healthy food
and announced the opening of its first restaurant for the fall of 1999. As of
today, the Company has begun construction and is planning a grand opening for
the end of November of 1999.
(4) Competitive Business Conditions
The Company has competition from existing fast food chains offering
conventional fast food. However none offer the type of products that the Company
is specializing in. In fact, the major competitors are the ones that offer the
type of fast food that the health conscious American consumer is now avoiding.
Additionally, management anticipates that it may have competition from
established health food stores and small single proprietary health food
restaurants. There are no direct competitors in the area of healthy fast food.
Management believes that the Company can develop name identification with
specific menu items offered in the healthy gourmet fast food industry, which is
expected to enable the Company to compete in its niche market. Management
believes, although no assurances can be given, that the Company has a
competitive edge which is based on a combination of consumer demands for a
reasonably priced healthy meal served in less time and with consistently good
taste. Competitors in the health food market such as Wild Oats and Whole Foods
which are operating in Fort Lauderdale are currently successful but do not offer
fast food service with convenient drive-thru.
(5) Dependence on Major Customers
The Company, as a fast food restaurant, is not dependent on any major
customers but will seek to gain the patronage of the local consumers within a
strategic location. The current sight for the initial restaurant represents what
management perceives as an ideal location for a flagship operation. It is
centrally located in a business and medical community within a few mile radius
of two popular health clubs, a karate center and apartment and residential
areas.
<PAGE>
It is also on a busy thoroughfare which links a major highway and the
ocean with substantial traffic flow of business people, tourists and local
residents. The mission of the Company is to ensure repeat business and customer
loyalty by providing a high quality nutritious and delicious meal at a
reasonable price in relatively short time and within pleasant surroundings.
(6) Intellectual Property
The Company has filed a trademark application for a federally
registered trademark for the name "Healthy Bites Grill" which is intended to be
used as the name for all restaurants. The approval is pending. Confidentiality
agreements will be required from all production personnel on the Healthy Bites
Grill recipes.
(7) Governmental Approval
At the present time there is no government approval required for the
Company's principal products or services. Restaurant operations are generally
subject to local, county and state restaurant operation, health, sanitation and
quality guidelines. The Company's operations are also subject to standard
hospitality, food safety and sanitation guidelines.
(8) Governmental Approval, Regulation and Environmental Compliance
The Company is and will be subject, both directly and indirectly, to
various laws and regulations relating to its business, including city and county
occupational licenses and health and sanitation inspections. At the present
time, management believes that it is in material compliance with all applicable
ordinances, rules and regulations, however, new rules, ordinances and
regulations may be enacted in the future which may require compliance by the
Company in the future. The Company anticipates that it will have no material
costs associated with compliance with current federal, state and local
environmental laws.
(9) Research and Development
The Company has retained the services of independent contractors to
conduct market surveys and similar studies. Management does not anticipate that
it will conduct any research and development in the foreseeable future.
(10) Employees and Facilities
As of September 24, 1999, the Company had four (4) full-time and two
(2) part-time employees. The Company also employs independent contractors and
other temporary employees. None of the Company's employees is represented by a
labor union, and the Company considers its employee relations to be good.
<PAGE>
The Company expects the number of employees to grow significantly over
the next twelve months once its initial restaurant opens and it commences
operations. The Company believes that its future success will depend in part on
its continued ability to attract, hire and retain qualified personnel.
The Company expects growth by both franchising and direct ownership in
various locations. Each restaurant is expected to require approximately twelve
employees. Reporting is expected to be highly centralized and the accounting and
management report functions will require a minimum amount of skilled
professionals
The Company's first restaurant operation will be in leased space
located at 1538 East Commercial Blvd, Fort Lauderdale, Florida. See Item 3.
Description of Property. The Company's executive offices are at 275 Commercial
Boulevard, Suite 260, Fort Lauderdale, Florida. The Company believes that
additional space will be required as its business expands and that it will be
able to obtain suitable space as needed. The Company does not own any real
estate.
(c) Reports to Security Holders
Prior to filing this Form 10-SB, the Company has not been required to
deliver annual reports. To the extent that the Company is required to deliver
annual reports to security holders through its status as a reporting company,
the Company shall deliver annual reports. Also, to the extent the Company is
required to deliver annual reports by the rules or regulations of any exchange
upon which the Company's shares are traded, the Company shall deliver annual
reports. If the Company is not required to deliver annual reports, the Company
will not go to the expense of producing and delivering such reports. If the
Company is required to deliver annual reports, they will contain audited
financial statements as required.
Prior to the filing of this Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Once the Company becomes a
reporting company, management anticipates that Forms 3, 4, 5, 10-KSB, 10-QSB,
8-K and Schedules 13D along with appropriate proxy materials will have to be
filed as they come due. If the Company issues additional shares, the Company may
file additional registration statements for those shares.
The public may read and copy materials the Company files with the
Securities and Exchange Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission. The Internet
address of the Commission's site is (http://www.sec.gov).
<PAGE>
(d) Year 2000 Disclosure
The Company does not anticipate any problem in dealing with computer
entries in the year 2000 or thereafter, with any computers currently used at its
facilities. All of the Company's computer systems are new and have been Year
2000 compliant since their acquisition. The Company keeps current with all
updates and revisions with all software the Company currently uses. It is
anticipated that the software updates reflect required revisions to accommodate
transactions in the Year 2000 and thereafter. Nonetheless, management recognizes
the problems that may arise in connection with the Year 2000 issue.
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. In other words,
date-sensitive software may recognize a date using A00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of operations, including, among others, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities. The Company does not believe that it has material exposure
to the Year 2000 issue with respect to its own information systems since its
existing systems correctly define the year 2000. The Company intends to survey
its major vendors to determine the extent to which their computer systems
(insofar as they relate to the Company's business) are Year 2000 compliant. The
Company is currently unable to predict the extent to which the Year 2000 issue
will affect its vendors, or the extent to which it would be vulnerable to the
vendor's failure to remediate any Year 2000 issues on a timely basis. The
failure of a major vendor subject to the Year 2000 to convert its systems on a
timely basis or a conversion that is incompatible with the Company's systems
could have an adverse effect on the Company. In addition, in a worst case
scenario, if the Company's vendor's computer systems do not contain the
necessary software updates to be Year 2000 compliant, a multitude of problems
could occur which may include, among others, lost orders, supplies not shipped
or shipped to incorrect addresses and credit card purchases incorrectly credited
or debited. As a result, the Company's operations could be adversely affected
which could result in lost business, which may have a material adverse effect on
its business and its financial condition
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OR PLAN OF OPERATION
Plan of Operation
The Company's plan of operations has been developed using a step by
step approach, with each phase of the plan closely monitored and implemented
prior to implementation of the next phase of the plan. The phases can be divided
as follows:
<PAGE>
1. Completion of construction phase
2. Initial restaurant opening and operation
3. Preparation of franchise circulars and agreements
4. Local franchising efforts
Management expects that the total cost for its initial flagship
restaurant will be approximately $250,000. The Company has raised approximately
$ 525,000 from the sale of securities. After opening the initial restaurant, the
Company will seek to commence the sale of restaurant franchises. It is expected
that there will be a franchise fee of $ 15,000 to $ 20,000 and royalties payable
to the Company of between 6% and 8% of gross sales
The Company's plan is to operate one Company owned restaurant in 1999.
For the year 2000, the Company plans to open and operate one additional Company
restaurant and have agreements for 3 to 5 franchise restaurants. For year 2001,
the Company is planning to own additional two restaurants with 5 to 10 new
franchises. The Company plans to grow conservatively through cash flow from
operations and franchise revenues.
As of June 30, 1999 the Company had cash on hand of approximately $
180,328. Expenditures for restaurant equipment totaled $ 15,700. The balance of
restaurant equipment purchasing will be approximately $ 59,500.
From time to time the Company may evaluate potential acquisitions
involving complementary businesses, content, products or technologies. The
Company has no present agreements or understanding with respect to any such
acquisition. The Company's future capital requirements will depend on many
factors, including growth of the Company's restaurant business, the success of
its franchising operations, economic conditions and other factors including the
results of future operations.
The Company currently has four (4) full time employees. Management
expects to hire approximately 12 additional people for the operations of its
initial restaurant as follows:
No. of Employees Department Job Descriptions.
2 Management General Manager and
Assistant
2 Production Food Preparation
3 Line Food Preparation
5 Cashiers Cashier/Customer
Service
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY
On January 25, 1999 the Company entered into a five-year lease with
three renewal options of three years each for the location of its flagship
restaurant comprised of 3,129 square feet at a rate of $12.50 per square foot.
The current monthly rent is $3,250 with scheduled annual increases. The leased
property is located at 1538 E. Commercial Boulevard, Fort Lauderdale, Florida,
which is a major east-west thoroughfare in the northeast section of the city.
The location is adjacent to or near sprawling businesses, medical centers and
hospitals. The restaurant is easily accessible by several major thoroughfares
including Interstate 95 and US 1. The Company has received approval for final
city and county building permits to begin construction September 1999. The
opening of the first restaurant is scheduled for November 1999.
The current lease contains provisions for hazard, liability and flood
insurance, which, in the opinion of management, are adequate for coverage from
potential property damage. In addition, the Company will acquire additional
coverage under an umbrella policy to cover potential liability arising from
restaurant operations. Employee worker compensation coverage is mandatory and
covered under separate policy.
The Company's executive offices are located at 275 Commercial
Boulevard, Suite 260, Fort Lauderdale, Florida. It leases 1,000 square feet at a
monthly rental rate of $ 500 on a month to month basis. Management believes that
it will be able to obtain suitable space as needed and has the physical ability
to acquire additional office space at its current location. The Company leases
its office space and does not own any real estate. The Company is not in the
business of investing in real estate or real estate mortgages.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
<PAGE>
(a) 5% Shareholders.
The following information sets forth certain information as of
September 24, 1999 about each person who is known to the Company to be the
beneficial owner of more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership(1) of Class(2)
- -------------- ------------------- -------------------------- -----------
<S> <C> <C> <C>
Common Douglas Baker 2,097,000 38%
5206 NW 28 St.
Margate, Fla. 33063
Common Marco D'Alonzo 2,220,000 41%
3557 Dunes Vista Dr.
Pompano Beach, Fla. 33068
</TABLE>
(b) Security Ownership of Management:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership(1) of Class (2)
- -------------- -------------------- -------------------------- ------------
<S> <C> <C> <C>
Common Douglas Baker 2,097,000 38%
5206 NW 28 St.
Margate, FL 33063
Common Marco D'Alonzo 2,220,000 41%
3557 Dunes Vista Dr.
Pompano Beach, FL 33068
Common David Maltrotti 10,000 *
4501 W.Atlantic Blvd., #1510
Coconut Creek, Fl. 33066
</TABLE>
- ----------------
* Less than 1 %.
(1) Messrs. D'Alonzo and Baker have options to purchase 1,780,000 and 1,903,000
shares, respectively, of common stock at an exercise price of $0.35 per share.
The Board of Directors granted these options on June 14, 1999.
(2) All percentages are calculated based upon 5,476,817 shares issued and
outstanding as of the date of September 24, 1999
(c) Changes in Control:
There is no arrangement, which may result in a change of control.
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
(a) Directors and Executive Officers
As of September 24, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows:
<TABLE>
<CAPTION>
Name Age Position Period Served as Director
- ---- --- -------- -------------------------
<S> <C> <C> <C>
Douglas Baker 36 Director, President and Chief July 2, 1998 to date
Executive Officer
Marco D'Alonzo 33 Director, Secretary and Chief July 2, 1998 to date
Operating Officer
David Maltrotti 39 Executive Vice President Feb. 3, 1999 to date
</TABLE>
- -------------------------
* The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed by the Board of Directors and serve at the pleasure of
the Board and subject to employment agreements, if any, approved and ratified by
the Board.
(b) Business Experience
Douglas Baker has more than 10 years sales experience in the
competitive financial services industry. He has been actively involved in the
financial public relations industry since 1994. Mr. Baker has owned and operated
several successful businesses. He has been a licensed stockbroker, 220 insurance
agent and mortgage broker. From 1994 to 1998 he was the owner of First Equity
Group, a financial public relations company. From 1992 to 1993 he was an
insurance manager with Aachen Insurance Company. From 1986 to 1991, he was a
stock broker of various brokerage firms in South Florida.
Marco D'Alonzo is experienced in all aspects of corporate, financial
and business affairs. He has owned and operated a succession of financial
businesses of varying type throughout the course of his career. From 1994
to1998, he was an owner of First Equity Group, with Douglas Baker, financial
public relations company. From 1986 to 1991, he was a stock broker in various
brokerage firms in South Florida.
<PAGE>
David Maltrotti has a long track record with various South Florida
gourmet establishments as a chef in charge of designing healthy menus. His 25
years experience includes management positions in the area of restaurant design
and operational implementation. From 1998 to 1999, he was Executive Chief for
the North Broward Hospital District located in Fort Lauderdale, Florida. From
1995 to1998 he was Executive Chef for Natural Food Markets of South Florida.
From 1989 to1995 he was Executive Chef for Whole Earth Market located in Boca
Raton, Florida.
The Company currently does not have any employees expected to make a
significant contribution to the business. The Company has engaged a consultant
for their future franchise operations. The Company has also engaged a
professional marketing firm for their local and national campaign. The Company,
however, expects that some individuals who are currently working on a consulting
basis may be retained as full time employees at the operational/managerial level
in the future. The Company is currently reviewing several portfolios in order to
add key personnel at the executive/directorship level.
c) Directors of Other Reporting Companies:
None of the Company's executive officers or directors is a director of
any company that files reports with the Securities and Exchange Commission.
(d) Employees:
The Company currently has four full time employees. Mr. D'Alonzo and
Mr. Baker, the principal shareholders and officers and directors of the Company
have not yet formulated a formal compensation plan. Mr. Dave Maltrotti is under
an employment agreement with no stated monetary compensation package. Mr.
Maltrotti has been issued 10,000 shares of restricted common stock as part of an
incentive package.
(e) Family Relationships:
There are no family relationships between the directors, executive
officers or any other person who may be selected as a director or executive
officer of the Company.
(f) Involvement in Certain Legal Proceedings:
None of the officers, directors, promoters or control persons of the
Company have been involved in the past five (5) years in any of the following:
<PAGE>
(1) Any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior
to that time;
(2) Any conviction in a criminal proceedings or being subject to a
pending criminal proceeding (excluding traffic violations and
other minor offenses);
(3) Being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, or any Court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in
any type of business, securities or banking activities; or
(4) Being found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities laws
or commodities law, and the judgment has not been reversed,
suspended, or vacated.
ITEM 6. EXECUTIVE COMPENSATION
The Company did not compensate management in the year ended December
31, 1998. The Company has compensated Messrs. D'Alonzo and Baker $ 7,576 each in
1999. They have also each been granted certain stock options as additional
monetary compensation in 1999. Mr. Maltrotti has received compensation in the
amount of $ 15,170 and shares of common stock through an employment agreement.
None of the Company's executive officers earned more than $100,000 during the
years ended December 31, 1998.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
--------- ------------
Annual Compensation Awards Payouts
------------------- ------ -------
Name and Principal Position Year Salary Bonus Annual Restricted Under- LTIP Other
--------------------------- ---- ------ ----- Comp- Stock lying Payouts Comp-
ensation Awards Options ------ ensation
-------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Douglas Baker President, CEO 1998 None None None None None None None
and Director 1997 None None None None None None None
1996 None None None None None None None
Marco D'Alonzo, Secretary, CEO 1998 None None None None None None None
and Director 1997 None None None None None None None
1996 None None None None None None None
David Maltrotti, Executive 1998 None None None None None None None
Vice Pesident 1997 None None None None None None None
1996 None None None None None None None
</TABLE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's Common Stock, except as
disclosed in the following paragraphs:
On June 14, 1999 the Company's Board of Directors granted options to
each of Mr. D'Alonzo and Baker to purchase 2,000,000 shares of common stock each
at a purchase price of $.035 per share. The options are exercisable in whole or
in part at any time until the earlier to occur of (i) the exercise of all
options; (ii) he is no longer employed by the Company; and (iii) the expiration
of ten years from the date of grant.
Mr. David Maltrotti, Executive Vice President of Operations, is
employed under a three year employment agreement. He received 10,000 share upon
the execution of the agreement dated February 3, 1999. Under the agreement, he
will receive 10,000 shares upon the opening of each Company owned restaurant.
The agreement also grants Mr. Maltrotti options to acquire 200,000 shares of the
Company's common stock. Option are exercisable at prices pursuant to the
following schedule:
First Year: 50,000 options - exercise price $ .75 per share
Second Year: 50,000 option - exercise price $ 1.00 per share
Third Year: 50,000 option - exercise price $ 1.25 per share
Fourth Year: 50,000 option - exercise price $ 1.50 per share
The options are exercisable in whole or in part at any time until the earlier to
occur of (I) the exercise of all options: (ii) he is no longer employed by the
Company; and (iii) the expiration of three years from the date of the grant.
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES
The Company's Articles of Incorporation authorizes the issuance of
50,000,000 shares of Common Stock, $.001 par value per share. Holders of shares
of Common Stock are entitled to one vote for each share on all matters to be
voted on by the stockholders. Holders of shares of Common Stock are entitled to
share ratably in dividends, if any, as may be declared from time to time by the
Board of Directors in its discretion from funds legally available therefor. In
the event of a liquidation, dissolution or winding up of the Company, the
holders of shares of Common Stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. Holders of Common Stock have
no preemptive or other subscription rights, and there are no conversion rights
or redemption or sinking fund provisions with respect to such shares. All of the
shares of Common Stock issued and outstanding are fully paid and non-assessable.
The Company has authorized the issuance of 10,000,000 shares of
preferred stock, $.01 par value per share of which no shares are currently
issued and outstanding. The Company does not plan to offer the preferred stock
to the public.
PART II.
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
Market Information:
The Company's Common Stock currently trades on the Over-The-Counter
Bulletin Board (OTC:BB) under the trading symbol "HEXS". As of January 1999
the Company began trading on the NASD Bulletin Board. Since such time, there has
been a limited trading market for the Company's Common Stock.
The following table sets forth the highest and lowest bid prices for
the Common Stock for each calendar quarter and subsequent interim period since
the Common Stock commenced actual trading, as reported by the National Quotation
Bureau, and represent interdealer quotations, without retail markup, markdown or
commission and may not be reflective of actual transactions:
High Bid Low Bid
-------- -------
Fiscal 1999
- -----------
First Quarter 1.59 .13
Second Quarter 1.72 .75
Third Quarter through
September 24, 1999 3.75 1.38
<PAGE>
There can be no assurance that an active public market for the Common
Stock will develop or be sustained. In addition, the shares of Common Stock are
subject to various governmental or regulatory body rules, which affect the
liquidity of the shares.
Holders:
There were approximately 35 holders of record of the Company's Common
Stock as of September 24, 1999.
Dividends:
The Company has never paid cash dividends on its Common Stock and does
not intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to, and none of the Company's property is
subject to any pending or threatened legal, governmental, administrative or
judicial proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have been no changes in or disagreements with the Company's
independent auditors.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In September 1998, the Company sold 200,000 units at $ 0.10 per unit to
residents in the states of Florida and Delaware in a private placement offering.
Each unit consisted of one share of common stock and seven common stock purchase
warrants. Each Warrant entitled the holder to purchase one share of common stock
of the Company at a purchase price of $ 0.70 per share. The Warrants will expire
November 1, 1999. As of such date, warrants to purchase 632,467 shares of common
stock were exercised, which together with the sale of all units, resulted in
total gross proceeds to the Company of $ 415,430. The offering was conducted in
reliance on an exemption from registration under Rule 504 of Regulation D of the
Securities Act of 1933, as amended (the "Securities Act").
<PAGE>
All certificates representing the shares of common stock comprising the
units and the shares issued upon exercise of the warrants prior to April 7, 1999
do not bear a restrictive legend restricting transferability under the
Securities Act. All shares of common stock issued upon exercise of warrants
subsequent to April 7, 1999 bear a restrictive legend restricting
transferability under the Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0850 of the Florida Business Corporation Act (the "FBCA")
allows the Company to indemnify any person who was or is a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the Company, by reason of the fact that such person is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
liability incurred in connection with such proceeding, including any appeal
thereof, if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the Company, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contende or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in,
or not opposed to, the best interests of the Company or, with respect to any
criminal action or proceeding, such person had reasonable cause to believe that
his or her conduct was unlawful.
Section 607.0850 of the FBCA also allows the Company to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed proceeding by or in the right of the Company to
procure a judgment in the Company's favor by reason of the fact that such person
is or was a director, officer, employee or agent of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Company. Indemnification shall not be made for any claim, issue
or matter as to which such a person has been adjudged by a court of competent
jurisdiction determining, after exhaustion of all appeals therefrom, to be
liable to the Company or for amount paid in settlement to the Company, unless
and only to the extent that, the court in which the proceeding was brought, or
any other court of competent jurisdiction, determines upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
<PAGE>
Section 607.0850 of the FBCA also provides that to the extent that a
director, officer, employee or agent of the Company has been successful on the
merits or otherwise in defense of any proceeding referred to in the paragraphs
above, or in defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses actually and reasonably incurred by him or her in
connection therewith.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. The Company's Articles of Incorporation provide
for similar indemnification as provided by the FBCA.
PART F/S
FINANCIAL STATEMENTS June 30, 1999
Accountant's Report F-1
Financial Statements
Balance Sheet F-2
Statement of Operations F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6-8
AUDITED FINANCIAL STATEMENTS December 31, 1998
Accountant's Report F-9
Financial Statements
Balance Sheet F-10
Statement of Operations F-11
Statement of Stockholders' Equity F-12
Statement of Cash Flows F-13
Notes to Financial Statements F-14-17
PART III.
ITEM 1. Index to Exhibits
The following exhibits are filed with this Form 10-SB:
Assigned Number Description
- --------------- -----------
(2) Articles of Incorporation,as amended*
(3)(ii) By-laws*
(10) Lease between Health Express USA, Inc. and Saul
Strachman*
(27) Financial Data Schedule
- ----------------------------------
* To be filed by amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: October 4, 999. HEALTH EXPRESS USA, INC.
By: /s/ Douglas Baker
-----------------
Douglas Baker
President
<PAGE>
HEALTH EXPRESS USA, INC.
FINANCIAL STATEMENTS
Table of Contents
Page No.
--------
FINANCIAL STATEMENTS June 30, 1999
Accountant's Report F-1
Financial Statements
Balance Sheet F-2
Statement of Operations F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6-8
AUDITED FINANCIAL STATEMENTS December 31, 1998
Accountant's Report F-9
Financial Statements
Balance Sheet F-10
Statement of Operations F-11
Statement of Stockholders' Equity F-12
Statement of Cash Flows F-13
Notes to Financial Statements F-14-17
<PAGE>
HEALTH EXPRESS USA, INC.
FINANCIAL STATEMENTS
June 30, 1999
<PAGE>
Sartori CPA, P.A.
Accounting & Consulting
275 Commercial Boulevard, Suite 260 Phone (954) 351-1154
Lauderdale by the Sea, Florida 33308 Fax (954) 351-7760
- --------------------------------------------------------------------------------
To the Board of Directors and Stockholders
Health Express USA, Inc.
Fort Lauderdale, Florida
I have compiled the accompanying balance sheet of Health Express USA, Inc. (a
Florida development stage company) as of June 30, 1999 and the related
statements of operations, stockholders' equity, and cash flows for the six
months then ended, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them
I am not independent with respect to Health Express USA, Inc..
/s/ Sartori CPA, P.A.
- --------------------
Sartori CPA, P.A.
August 12, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
BALANCE SHEET
June 30, 1999
ASSETS
<S> <C>
Current Assets
Cash $ 180,328
Deposit on construction 17,500
Prepaid Rent 4,245
------------
Total Current Assets 202,073
------------
Fixed Assets
Restaurant equipment 15,243
Office equipment 500
Sign 229
------------
Total Fixed Assets 15,972
------------
Other Assets
Prepaid Rent 5,305
Deposits 4,350
------------
Total Other Assets 9,655
------------
TOTAL ASSETS $ 227,700
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to shareholders $ 1,000
Notes payable 3,000
------------
Total Current Liabilities 4,000
------------
STOCKHOLDERS' EQUITY
Common Stock,$0.001 par value, 50,000,000 shares
authorized, 5,012,633 shares issued and outstanding 5,013
Additional Paid-In Capital 356,349
Accumulated Deficit (137,662)
------------
223,700
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 227,700
============
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
<S> <C>
Expenses
Accounting fees $ 2,798
Advertising and promotion 41,809
Advertising-Web site 300
Architect fees 700
Auto expense 1,391
Bank charges 131
Compensatory restricted stock 14
Contract labor 9,452
Delivery expense 621
Equipment removal 300
Fax service 462
Fed ex expense 119
Insurance-health 4,160
Insurance-liability 369
Legal 2,627
Licenses and taxes 185
Lodging 2,557
Meals 3,759
Miscellaneous 83
Moving expenses 670
Office expense 2,935
Office supplies 5,785
Office water 119
Officers commissions 5,426
Outside services 2,820
Payroll expense-salaries 11,660
Payroll expense-taxes 1,137
Postage meter 4,404
Rent-restaurant 13,089
Rent-warehouse 495
S & P listing fees 3,975
Software expense 205
Telephone 6,683
Trademark expense 639
Uniforms 95
Utilities-FPL 237
Utilities-waste/water 161
------------
Total Expenses 132,372
------------
Net Loss $ (132,372)
------------
Accumulated Deficit - Beginning of Year (5,290)
------------
Accumulated Deficit - End of Period $ (137,662)
============
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the six months ended June 30, 1999
Additional
$0.001 Paid-In
Shares Par Value Capital Deficit Total
------ --------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance December 31, 1998 4,311,000 $4,311 $83,409 ($5,290) $82,430
Unrestricted stock
Issuance of 116,333 shares
at $ 0.70 per share 116,333 116 81,317 - 81,433
Restricted Stock
Issuance of 254,800 shares
at $ 0.35 per share 254,800 255 88,925 - 89,180
Restricted stock
Issuance of 317,000 shares
at $ 0.35 per share 317,000 317 110,633 - 110,950
Restricted stock
Issuance of 13,500 shares
at par for compensation - non cash 13,500 14 14
Deferred offering costs (7,935) (7,935)
Net Loss - - (132,372) (132,372)
--------------------------------------------------------------------------
Balance June 30, 1999 5,012,633 $5,013 $356,349 ($137,662) $223,700
==========================================================================
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
STATEMENT OF CASH FLOWS
For the six months ended June 30, 1999
<S> <C>
OPERATING ACTIVITIES
Net Loss $ (132,372)
Adjustments to reconcile net loss to net
cash used by operating activities
Changes in assets and liabilities
Increase in deposits (21,850)
Increase in prepaid expenses (9,550)
Decrease in offering costs 7,935
------------
Net cash utilized by operating activities (155,837)
INVESTING ACTIVITIES
Purchase of fixed assets (15,972)
------------
Net cash utilized by investing activities (15,972)
FINANCING ACTIVITIES
Net proceeds from issuance of common stock 281,563
Issuance of common stock for compensation-non cash 14
Increase in offering costs (7,935)
------------
Net cash provided by financing activities 273,642
Net increase in cash and cash equivalents $ 101,833
------------
Cash - Beginning of Period 78,495
------------
Cash - End of Period $ 180,328
============
</TABLE>
F-5
<PAGE>
HEALTH EXPRESS USA, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
1. Summary of Significant Accounting Policies:
General
Health Express USA, Inc. (the Company) is a Florida corporation, formed on
July 2, 1998. The Company is engaged in raising capital for a gourmet,
fast-food health and nutrition restaurant. The financial statements and
notes are the representations of the Company's management, who is
responsible for their integrity and objectivity. The accounting policies of
the Company are in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Income Taxes
Deferred income taxes are provided for temporary differences between the
basis of the Company's assets and liabilities for financial reporting and
income taxes under the provisions of Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes".
2. Related Party Transactions
As described in note 3, the Company is indebted to stockholders in the
amount of $ 1,000. The loans carry no interest rate and are due on demand.
The Company is also indebted to a corporation owned by the majority
stockholders, in the amount of $ 3,000. The loan carries no interest and is
payable on demand (note 4).
3. Notes Payable - Shareholders
As of June 30, 1999 notes payable to shareholders consisted of the
following:
Due to majority shareholder, dated August 7, 1998. The note
is due on demand and carries no interest rate. $ 500
Due to majority shareholder, dated August 7, 1998. The note
is due on demand and carries no interest rate. 500
--------
Total notes payable to shareholders $ 1,000
========
F-6
<PAGE>
HEALTH EXPRESS USA, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
4. Notes payable
As of June 30, 1999 notes payable consisted of the following:
Due to corporation owned by majority shareholders. The note
is dated August 31, 1998, is due on demand and carries
no interest. $ 3,000
========
5. Stockholders' Equity
On June 10, 1999 the Company, through corporate resolution, provided for an
increase in its capital stock from 15,000,000 shares to 50,000,000
authorized shares of common stock having a par value of $0.001 per share
and 10,000,000 shares of "blank check" preferred stock. As of June 30, 1999
the Company has issued 5,012,633 shares of common stock. No preferred stock
has been issued.
<TABLE>
<CAPTION>
0.001 Paid-in
Shares Par Value Capital
------ --------- -------
<S> <C> <C> <C>
Unrestricted Stock 407,333 $ 407 $ 164,726
- ------------------ ---------- ---------- ----------
Restricted Stock
- ----------------
Other Shareholders 254,800 255 88,925
Corporate Officers 4,317,000 4,317 110,633
Compensatory-non cash 33,500 34
---------- ---------- ----------
Total Restricted Stock 4,605,300 4,606 199,558
---------- ---------- ----------
Less: Offering Costs (7,935)
----------
Total 5,012,633 $ 5,013 $ 356,349
========== ========== ==========
</TABLE>
F-7
<PAGE>
HEALTH EXPRESS USA, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
6. Lease Commitments
The Company is obligated under a lease agreement on its restaurant location.
The rental expense for the period ending June 30, 1999 is $ 13,089. The
lease is for a five year year period ending December 31, 2003. The future
minimum rental commitments are as follows:
1999 $ 25,470 (six months)
2000 52,212
2001 53,484
2002 60,480
2003 63,660
F-8
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
AUDITED FINANCIAL STATEMENTS
December 31, 1998
<PAGE>
Sartori CPA, P.A.
Accounting & Consulting
275 Commercial Boulevard, Suite 260 Phone (954) 351-1154
Lauderdale by the Sea, Florida 33308 Fax (954) 351-7760
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Health Express USA, Inc.
Fort Lauderdale, Florida
I have audited the accompanying balance sheet of Health Express USA, Inc. (a
Florida development stage company) as of December 31, 1998 and the related
statement of operations, stockholders' equity, and cash flows for the period
July 2, 1998 (inception) to December 31, 1998. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan 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. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Health Express USA, Inc. as of
December 31, 1998 and the results of its operations and cash flows for the
initial period then ended in conformity with generally accepted accounting
principles.
/s/ Sartori CPA, P.A.
- --------------------
Sartori CPA, P.A.
May 21, 1999
F-9
<PAGE>
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
ASSETS
<S> <C>
Cash $ 78,495
Deferred offering costs 7,935
------------
TOTAL ASSETS $ 86,430
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable to shareholders $ 1,000
Notes payable 3,000
------------
4,000
------------
STOCKHOLDERS' EQUITY
Common Stock,$0.001 par value, 15,000,000 shares
authorized, 4,311,000 shares issued and outstanding 4,311
Additional Paid-In Capital 83,409
Deficit Accumulated During the Development Stage (5,290)
------------
82,430
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 86,430
============
</TABLE>
See accompanying notes and accountant's report
F-10
<PAGE>
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from July 2, 1998 (Inception) to December 31, 1998
Expenses
<S> <C>
Officer's Compensation $ 1,500
Bank fees 109
Accounting 1,000
Licenses 89
Office expense 1,342
Contract labor 1,250
------------
Net Loss $ 5,290
============
</TABLE>
See accompanying notes and accountant's report
F-11
<PAGE>
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Period from July 2, 1998 (Inception) to December 31, 1998
Additional
$0.001 Paid-In
Shares Par Value Capital Deficit Total
------ --------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance July 2, 1998 - - - -
Unrestricted stock
Issuance of 200,000 shares
at $ 0.10 per share 200,000 $200 $19,800 - $20,000
Unrestricted stock
Issuance of 91,000 shares
at $ 0.70 per shares 91,000 91 63,609 - 63,700
Restricted stock
Issuance of 20,000 shares
for offering costs at par value 20,000 20 - - 20
Restricted stock
Issuance of 4,000,000 shares at par
to officers and directors 4,000,000 4,000 - - 4000
Net Loss (Development Stage) - - (5,290) (5,290)
-----------------------------------------------------------------
Balance December 31, 1998 4,311,000 $4,311 $83,409 ($5,290) $82,430
=================================================================
</TABLE>
See accompanying notes and accountant's report
F-12
<PAGE>
<TABLE>
<CAPTION>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from July 2, 1998 (Inception) to December 31, 1998
<S> <C>
Cash flows from operating activities
Net Loss $ (5,290)
------------
Net cash used by operating activities (5,290)
------------
Cash flows from investing activities
Increase in deferred offering costs (7,935)
------------
Net cash used by investing activities (7,935)
------------
Cash flows from financing activities
New borrowings - notes payable to shareholders 1,000
New borrowing - note payable 3,000
Net proceeds from issuance of common stock 87,700
Issuance of common stock for offering costs - non cash 20
------------
Net cash provided by financing activities 91,720
------------
Net Increase in Cash $ 78,495
============
</TABLE>
See accompanying notes and accountant's report
F-13
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
1. Summary of Significant Accounting Policies:
General
Health Express USA, Inc. (the Company) is a Florida corporation, formed on
July 2, 1998. The Company is a development stage enterprise engaged in
raising capital for a gourmet, fast-food health and nutrition restaurant.
The financial statements and notes are the representations of the Company's
management, who is responsible for their integrity and objectivity. The
accounting policies of the Company are in accordance with generally accepted
accounting principles and conform to the standards applicable to development
stage companies. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
Income Taxes
Deferred income taxes are provided for temporary differences between the
basis of the Company's assets and liabilities for financial reporting and
income taxes under the provisions of Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes".
2. Deferred Offering Costs
Deferred offering costs to be incurred represent costs deferred pending
completion of a proposed public offering. At the time the offering is
completed, such costs will be netted against the proceeds received. Should
the offering be unsuccessful, these costs will be expenses. Deferred
offering costs include stock compensation paid to legal counsel. As of
December 31, 1998 all of the Units representing shares have been issued and
the offering is closed. Warrants remain outstanding as described in Note 6.
3. Related Party Transactions
As described in note 5, the Company is indebted to stockholders in the
amount of $ 1,000. The loans carry no interest rate and are due on demand.
The Company is also indebted to a corporation owned by the majority
stockholders, in the amount of $ 3,000. The loan carries no interest and is
payable on demand (note 6).
F-14
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
4. Related Party Agreements
On July 15, 1998 the Company entered into an Attorney Fee Agreement which
includes as compensation the issuance of 20,000 shares at par value toward
offering costs.
5. Notes Payable - Shareholders
As of August 31, 1998 notes payable to shareholders consisted of the
following:
Due to majority shareholder, dated August 7, 1998. The note
is due on demand and carries no interest rate. $ 500
Due to majority shareholder, dated August 7, 1998. The note
is due on demand and carries no interest rate. 500
---------
Total notes payable to shareholders $ 1,000
=========
6. Notes payable
As of December 31, 1998 notes payable consisted of the following:
Due to corporation owned by majority shareholders. The note
is dated August 31, 1998, is due on demand and carries
no interest. $ 3,000
=========
F-15
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
6. Stockholders' Equity
The Company is authorized to issue 15,000,000 shares of common stock having
a par value of $0.001 per share. As of December 31, 1998 the Company has
issued 4,311,000 shares to its shareholders.
<TABLE>
<CAPTION>
0.001 Paid-in
Shares Par Value Capital
------ --------- -------
<S> <C> <C> <C>
Unrestricted Stock 291,000 $ 291 $ 83,409
- ------------------ --------- --------- ---------
Restricted Stock
- ----------------
Corporate Officers 4,000,000 4,000
Legal counsel-non cash 20,000 20
--------- ---------
Total Restricted Stock 4,020,000 4,020
--------- ---------
Total 4,311,000 $ 4,311 $ 83,409
========= ========= =========
</TABLE>
The value of the shares issued to the legal counsel is included in deferred
offering costs No monetary consideration has been paid for these shares.
Unrestricted stock represents the issuance of 200,000 Units, each unit
consisting of one share of Common Stock at a price of $0.10 with Warrants
which entitle the record owner to purchase seven (7) shares of Common Stock
at $ 0.70 per share. Total common stock to be issued through the exercise
of the warrants is 1,600,000. As of December 31, 1998 the Company has
issued all of its Units at $0.10 per unit and 91,000 shares have been
issued through the exercise of warrants. The warrants will expire August
31, 1999
<TABLE>
<CAPTION>
$0.001 Paid-in
Price Par Value Capital
----- --------- -------
<S> <C> <C> <C>
Issuance of 200,000 shares $0.10 $ 200 $ 19,800
Warrants for 91,000 shares $0.70 91 63,609
------- ------- ----------
Total 291,000 shares $ 291 $ 83,409
======= ==========
</TABLE>
F-16
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
7. Commitments
The Company is conducting a proposed offering subject to the Securities and
Exchange Commission Regulation D "Private Offering". This offering is in
reliance on the exemption from registration under Regulation D of the
Securities Act of 1933, Rule 504.
8. Subsequent Events
As of January 1999 the Company has began trading on the NASD Bulletin
Board.
F-17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Jun-30-1999
<CASH> 180,328
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,400
<PP&E> 15,972
<DEPRECIATION> 0
<TOTAL-ASSETS> 227,700
<CURRENT-LIABILITIES> 4,000
<BONDS> 0
0
0
<COMMON> 361,362
<OTHER-SE> (137,662)
<TOTAL-LIABILITY-AND-EQUITY> 227,700
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 132,372
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (132,372)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (132,372)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
