UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (fee required) for the fiscal year ended
May 31, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (no fee required) for the
transition period from May 31, 1999 to May 31, 2000
Commission File Number 000-26875
5 STARLIVING ONLINE INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0814123
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10229 19th Ave SW
Seattle, Washington 98146
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (206) 261-3231
Securities registered pursuant to Section 12(g) of the Act:
Common Shares
<PAGE>
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
The aggregate market value of voting stock held by nonaffiliates
of the registrant is $0 and the number of shares of common stock
outstanding is 8,046,805 as of May 31, 2000.
<PAGE>
PART I
BUSINESS OVERVIEW
[CAPTION]
5 Starliving Online Inc. (web site: 5starliving.com) is a Seattle, WA, based
corporation that provides a fee-based introduction service for buyers and
sellers of luxury goods and services online. 5 Starliving Online Inc.'s
content is focused on the "Affluent" lifestyle, a market that is currently
not being serviced effectively over the Internet. The Company has developed
a community of web sites and support systems that cater to the specific needs
of wealthy consumers and businesses by offering its members information.
5 Starliving Online Inc.'s web sites are designed to provide an unlimited
amount of listings from all over the world. This strategy enables
5starliving.com to capture a significant percentage of market penetration by
providing the first international market presence. As part of its Business to
Business (B2B) corporate strategy, 5 Starliving Online Inc. has created
several strategic alliances within the luxury goods/service sector. The
Company aims to be a recognized leader in this segment by offering its
partners an opportunity to add additional revenue sources through a "Clicks
and Mortar" business model.
The web site affords advertisers who wish to be considered by the wealthy
consumer an opportunity to strategically broadcast their products and
services to a qualified audience. 5starliving.com sells lifestyle, the art
of living and an experience of the best which the world has to offer. The
Company offers the highest levels of client service on a personal and
technical level.
The target market is global. 5starliving.com is going for maximum penetration
of all continents as quickly as possible in order to capture a significant
market share. The company is developing strategic alliances internationally
with key local players.
The number of people using the Internet continues to grow at a pace faster
than any communications medium in the history of humankind. Affluent Internet
users are extremely receptive to a high-end, deluxe goods and services web
site designed to cater to their unique needs. It is this audience which
5starliving.com will address.
5starliving.com has created a solid foundation for future growth. With the
rapid changes taking place in technology, the Company states that it will be
on the look out for new companies, products and mediums which will enhance
the valuation of the company, serve its customers better and create brand
name recognition for "5starliving.com".
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
All of the executive officers of 5 Starliving Online Inc. as of May 31, 2000
are shown below. Each of the executive officers has been continuously
employed by the Company for at least two years and has a term of office
until the 2000 Annual General Meeting.
<TABLE>
Number Number
Of years Of Years
Present In Date of with
Name Position Office Birth Company
-------------- ---------------- --------- -------------- ---------
<S> <C> <C> <C> <C>
Kali Palmer Director 2 years May 21, 1970 3 years
Paul Hayward President
Treasurer
Secretary 2 years May 29, 1949 3 years
<C> <C> <C> <C> <C>
</TABLE>
<PAGE>
PART II
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's common stock trades under the symbol HTHV and is listed on the
following stock exchanges in the United States: NASDAQ - OTC/BB.
The approximate number of shareholders of record and beneficial owners of
the Company's common stock as of May 31, 2000, was estimated to be 100.
<PAGE>
BALANCE SHEETS
[CAPTION]
<TABLE>
<S <C> <C>
May 31, 2000 May 31, 1999
CURRENT ASSETS
Cash $ 44,274 $ 40,178
Related party note
Receivable 12,862 --
Total assets 57,136 40,178
LIABILITIES AND STOCKHOLDERS'
EQUITY DEFICIT
CURRENT LIABILITIES
Related party note payable 154,959 --
Total Liabilities 254,959 --
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, 20,000,000
Shares authorized, $.0001 par value;
No shares issued and outstanding.
Common stock, 80,000,000 shares
Authorized, $.0001 par value;
8,046,805 shares and 4,250,000
shares issued and outstanding,
respectively 805 425
Additional paid-in capital 59,575 59,575
Deficit accumulated during the
Developmental stage (158,203) (19,822)
Total Stockholders' Equity
(Deficit) (97,823) 40,178
Total Liabilities and
Stockholders' Equity (Deficit) $57,136 40,178
<C> <C> <C>
</TABLE>
<PAGE>
STATEMENTS OF OPERATIONS
[CAPTION]
<TABLE>
<S> <C> <C> <C>
For the year From June 8/98 From June 8/98
Ended (inception) to (inception) to
May 31, 2000 May 31, 1999 May 31, 2000
EXPENSES
Salaries $ 16,000 $ 14,229 $ 30,229
Consulting 48,631 - 48,631
Filing Fees 2,881 3,005 5,886
Legal and professional 47,692 2,000 49,692
Office Expense 16,805 88 16,893
Transfer Agent 1,875 500 2,375
TOTAL EXPENSES $ 133,884 $ 19,822 $ 153,706
LOSS FROM OPERATIONS (133,884) (19,822) (153,706)
OTHER INCOME (EXPENSE)
Interest Income 363 -- 363
Interest Expense (4,959) -- (4,959)
Miscellaneous Income 99 -- 99
TOTAL OTHER INCOME (4,497) -- (4,497)
LOSS BEFORE INCOME TAXES (138,381) (19,822) (158,203)
INCOME TAXES -- -- --
NET LOSS $(138,381) $ (19,822) $(158,203)
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED $ (0.02) $ (0.01) $ (0.04)
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES
OUTST. BASIC/DILUTED 6,135,824 3,008,334 4,402,232
<C> <C> <C> <C>
</TABLE>
<PAGE>
MANAGEMENT'S REPORT
The Company has devoted all of its efforts in the past 12 months to refining
its branding strategy and database program. It is currently developing an
Internet marketing strategy for 2000-2001.
<PAGE>
<TABLE>
5 STARLIVING ONLINE INC.'S STATEMENT OF CASH FLOWS
<CAPTION>
------------------------------------------------------------------------------
Year ended Year ended From June 8/98
May 31, 2000 May 31/99 May 31, 2000
-------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Loss (138,381) (19,822) (158,203)
Increase in notes rec. (12,500) -- (12,500)
Payment of expenses from
Issuance of stock 380 -- 380
Net cash (used) in
operating activities (150,501) (19,822) (157,823)
CASH FLOWS FROM INVESTING
ACTIVITIES -- -- --
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from note payable 150,000 -- 150,000
Proceeds from sale of
Common stock -- 60,000 60,000
Net cash provided by
Financing activities 150,000 60,000 210,000
Change in cash (501) 40,178 52,177
Cash, begin. of period 40,178 -- --
Cash, end of period $ 39,677 $ 40,178 $ 52,177
Supplemental disclosures:
Interest paid -- -- --
Income taxes paid -- -- --
Non-cash transactions:
Issuance of common stock for
Consulting services $ 380 -- $ 380
<C> <C> <C> <C>
</TABLE>
<PAGE>
<TABLE>
5 STARLIVING ONLINE INC. STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Deficit Total
No. of Add Paid- Acc. during Shareholder
Shares Amount in Capital dev. stage Equity
-------------------------------------------------------------------------------
Issuance of common
stock for cash at
$.0025 per share 40,000 4 $ 96 -- 100
Issuance of common stock
From sale of private
Placement for cash at
$.0025 per share
3,960,000 396 9,504 -- 9,900
Issuance of common stock
From sale of private
Placement for cash at
$.20 per share
250,000 25 49,975 -- 50,000
Loss for period ending
May 31, 1999
-- -- -- (19,822) (19,822)
Balance, May 31/99
4,250,000 425 59,575 (19,822) (40,178)
Issuance of common stock
For services at $.001
Per share
3,796,805 380 -- -- 380
Loss for year ending
May 31, 2000 -- -- -- (138,381) (138,381)
Balance (deficit),
May 31, 2000 8,046,805 805 59,575 (158,203) (97,823)
------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ORGANIZATION AND DESCRIPTION OF BUSINESS
5 STARLIVING ONLINE, INC., formerly HiTech Investment, Inc., (hereinafter
"the Company"), was incorporated on June 8, 1998 under the laws of the State
of Delaware for the purpose of pursuing certain high technology opportunities
and alliances and to assist in the establishment and development of an
internet electronic commerce venture. The Company is implementing the
consumer, industrial and business to business purchasing network whereby
companies will be able to introduce their products for sale via the website.
The Company maintains offices in Seattle, Washington, and in Vancouver,
British Columbia. The Company's fiscal year end is May 31.
On April 9, 1999 the Company amended its articles of incorporation to reflect
the name change to 5 Starliving Online, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in
understanding the Company's financial statements. The financial statements
and notes are representations of the Company's management, which is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting.
Use of Estimates
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and expenses. Such
estimates primarily relate to unsettled transactions and events as of the
date of the financial statements. Accordingly, upon settlement, actual
results may differ from estimated amounts.
Development Stage Activities
The Company has been in the development stage since its formation in June of
1998 and has not yet realized any revenues from its planned operations. It
is primarily engaged in the pursuit of high technology opportunities and
alliances for the establishment and development of an internet electronic
commerce venture.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less
to be cash equivalents.
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Derivative Instruments
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This standard establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments, the
Company has not engaged in any transactions that would be considered
derivative instruments or hedging activities.
Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued a statement
titled "Accounting for Impairment of Long-lived Assets." In complying with
this standard, the Company reviews its long-lived assets quarterly to
determine if any events or changes in circumstances have transpired which
indicate that the carrying value of its assets may not be recoverable. The
Company determines impairment by comparing the undiscounted future cash flows
estimated to be generated by its assets to their respective carrying amounts.
The Company does not believe any adjustments are needed to the carrying value
of its assets at May 31, 2000.
Compensated Absences
As the Company is still in the development stage, it currently does not have
a policy regarding accruals of compensated absences. The Company intends to
expense these costs as incurred.
Provision for Taxes
At May 31, 2000, the Company had net operating losses of approximately
$155,000 since its inception. No provision for taxes or tax benefit has been
reported in the financial statements, as there is not a measurable means of
assessing future profits or losses.
Basic and Diluted Loss Per Share
Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number
of shares was calculated by taking the number of shares outstanding and
weighting them by the amount of time that they were outstanding. Basic and
diluted loss per share was the same, as there were no common stock
equivalents outstanding.
Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Going Concern (continued)
As shown in the accompanying financial statements, the Company incurred a
net loss of $138,381 for the year ended May 31, 2000 and had no sales. The
future of the Company is dependent upon its ability to obtain financing and
upon future profitable operations from the commercial success of its internet
electronic commerce venture. Management has plans to seek additional capital
through a private placement of its common stock. The financial statements do
not include any adjustments relating to the recoverability and classification
of recorded assets, or the amounts and classification of liabilities that
might be necessary in the event the Company cannot continue in existence.
NOTE 3 - COMMON STOCK
During the period from June 8, 1998 (inception) to May 31, 1999, 4,250,000
shares of common stock were sold, (4,000,000 at $.0025 per share, and
250,000 at $.20 per share), under Regulation D, Rule 504.
On November 30, 1999, the Company entered into a management agreement which
provided specific services to the Company in exchange for 3,750,000 shares of
the Company's common stock. These shares are restricted by Rule 144 of the
Securities Act of 1933 and are restricted as to public transfer for a minimum
period of one year. Of the total shares issued, 3,750,000 shares were issued
to officers and directors of the Company.
On February 29, 2000, the Company entered into a consulting agreement that
provided specific services to the Company in exchange for 35,693 shares of
the Company's common stock. These shares are restricted by Rule 144 of the
Securities Act of 1933 and are restricted as to public transfer for a minimum
period of one year.
On March 31, 2000, the Company entered into a purchase agreement in exchange
for 11,112 shares of the Company's common stock. These shares are restricted
by Rule 144 of the Securities Act of 1933 and are restricted as to public
transfer for a minimum period of one year. Subsequently, the agreement was
not finalized and it is management's intent to reacquire the shares issued.
NOTE 4 - PREFERRED STOCK
The Company's preferred stock has not been issued. The Company is authorized
to issue 20,000,000 shares of $0.0001 par value preferred stock, which
contains no voting privileges and is not entitled to accrued dividends or
conversion into shares of the Company's common stock.
NOTE 5 - STOCK OPTIONS
In November 1999, the Company adopted a Stock Option Incentive Plan
("November 1999 Plan"). The plan allows management to grant up to 800,000
shares of common stock at its discretion.
In November 1999, management granted options from the November 1999 plan for
390,000 shares of common stock to Mola Investments Ltd. ("Mola") for
strategic advisory and introduction services. These options are available
for exercise at the sole discretion of Mola.
In February 2000, the Company adopted a second Stock Option Incentive Plan
("February 2000 Plan"). This plan allows the Company to distribute up to
3,500 shares of common stock at the discretion of the board of directors.
In March 2000, management granted options from the November 1999 Plan for
110,000 shares of common stock to Eileen Hayward for notes payable. These
options are available for exercise at the sole discretion of Ms. Hayward.
See Note 6.
<PAGE>
SUMMARY OF STOCK OPTIONS
Following is a summary of the stock options for the years ended May 31, 1999
and 2000.
Number of Shares Weighted Average Ex. Price
Options outstanding and
exercisable at 5-31-1999 -- --
Outstanding at 6-1-1999 -- --
Granted 503,500 0.2753
Exercised -- --
Forfeited -- --
Outstanding at 5-31-2000 503,500 0.2753
Options exercisable
at 5-31-2000 503,500 0.2753
Weighted average fair value
of options granted during the
fiscal year ended May 31/00 ---------
$ 0.2753
<PAGE>
NOTE 6 - RELATED PARTIES
The Company occupies office space provided by Paul Hayward, the president of
the Company at no charge. The value of this space is not considered
materially significant for financial reporting purposes.
In March 2000, the Company adopted a stock option plan for shares exercisable
by Ms. Eileen Hayward for a $150,000 note payable. Ms. Hayward is the mother
of Paul Hayward, the Company's president. See Note 8.
In February 2000, the Company lent $12,500 to director Kali Palmer.
See Note 7.
NOTE 7 - NOTES RECEIVABLE
In February 2000, the Company lent $12,500 to Kali Palmer, a director of
the Company. This uncollateralized note is due on February 15, 2001 with
an annual interest rate of 10%. At May 31, 2000, $362 of interest was
accrued to the note receivable.
NOTE 8 - NOTES PAYABLE
In February 2000, the Company borrowed $150,000 from Eileen Hayward,
a related party. This uncollateralized note is due on February 1, 2001,
with an annual interest rate of 10%. At May 31, 2000, $4,959 of interest
expense was accrued to the note payable.
NOTE 9 - YEAR 2000 ISSUES
Like other companies, 5 Starliving Online, Inc. could be adversely affected
if the computer systems the Company, its suppliers or customers use do not
properly process and calculate date-related information and data from the
period surrounding and including January 1, 2000. This is commonly known
as the "Year 2000" issue. Additionally, this issue could impact
non-computer systems and devices such as production equipment and
elevators, etc.
Board of Directors
5 Starliving Online, Inc.
Seattle, WA
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of 5 Starliving Online, Inc.
(a development stage enterprise), as of May 31, 2000 and 1999 and the
related statements of operations, stockholders' equity (deficit) and cash
flows for the year ended May 31, 2000, the period from June 8, 1998
(inception) to May 31, 1999, and the period June 8, 1998 (inception) to
May 31, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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
situation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of 5 Starliving Online, Inc.
as of May 31, 2000 and 1999, and the results of its operations and its cash
flows for the year ended May 31, 2000, the period from June 8, 1998
(inception) to May 31, 1999, and the period June 8, 1998 (inception)
to May 31, 2000, in conformity with generally accepted accounting principles.
As discussed in Note 2, the Company has been in the development stage since
its inception on June 8, 1998. Realization of a major portion of the assets
is dependent upon the Company's ability to meet its future financing
requirements, and the success of future operations. Management's plans
regarding those matters also are described in Note 2. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
July 10, 2000
5 STARLIVING ONLINE INC.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly cause this report to be signed on its behalf by
the undersigned thereunto duly authorized.
5 STARLIVING ONLINE INC
By: /s/ Paul Hayward
Chief Executive Officer
Date: May 31, 2000
5 STARLIVING ONLINE INC
10612 Aqua Way South
Seattle, WA, U.S.A. 98168
May 31, 2000
Securities and Exchange Commission Washington, D.C. 20549
Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
transmitting herewith the attached Form 10-K.
Sincerely,
5 STARLIVING ONLINE INC
Paul Hayward
CEO
