UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the year ended December 31, 1998
Commission File No.
IVES HEALTH COMPANY, INC.
(Name of small business issuer in its charter)
Oklahoma
(State or other jurisdiction of incorporation or organization)
73-1430235
(IRS Employer Identification No.)
817 North J.M. Davis Blvd.
Claremore, OK 74017
(918)283-1226
(Address, including zip code and telephone number, including area
code of registrant's executive office)
Securities registered under Section 12(b) of the Exchange Act: none
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act pf 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 [ ] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will 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. [ ]
State Issuer's revenues for its most recent fiscal year. $ 464,582.
State the aggregate market value of the voting common stock held by
non-affiliates, computed by reference to the price at which the common stock was
sold, or the average bid and asked prices of such common stock, as of a
specified date within the past 60 days: September 30, 1999: $ 2,741,942
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of September 30, 1999 there were
10,280,471 shares of the Company's common stock issued and outstanding.
Documents Incorporated by Reference: None
<PAGE>
PART I
Item 1. Description of Business.
Ives Health Company, Inc. (A Development State Company) ( the "Registrant"
or "Company" ) was formed pursuant to an agreement between Maxxon, Inc. and M.
Keith Ives, entered into and made effective December 31, 1997. IVES, (a wholly
owned subsidiary of Maxxon, Inc.) and Maxxon, Inc. agreed to separate. The
separation was accomplished by quasi-reorganization (new "IVES"), a
recapitalization and the issuance of 7,000,000 shares of new IVES common stock
to M. Keith Ives, and 1,700,000 shares of new IVES common shares to Maxxon, Inc.
The new re-organized IVES began operations January 1, 1998 and was re-
incorporated in Oklahoma on February 11, 1998.
The Company is engaged in developing and marketing innovative, safe, high
quality natural medicines and nutritional supplements, which are guaranteed for
potency and purity, include homeopathic medicines, weight loss formulas, natural
remedies, and nutritional supplements. The Company sells to wholesale pharmacy
distributors, various chain pharmacies, and independent retail pharmacies. Three
of the Company's principal distribution alliances are with Albertsons, Winn
Dixie, and Dillons with over a 1000 pharmacy locations, as well as over 700
independent retail pharmacies, distributing IHC's products in 36 states.
The principal suppliers of IHC's raw materials are: International
Formulation and Manufacturing (IFM), Vegi Snack Foods, Inc., Summa Laboratories,
Inc.; Animal Technologies, Inc. and American Labs.
IHC has an exclusive license agreement with Dr. Robert Slayton-Bedeen
relating to certain Technology developed by Dr. Bedeen. A Royalty agreement with
Dr. Bedeen reads as follows: a) Ten percent (10%) of the first $100,000 and five
percent (5%) on the excess over $100,000 of the adjusted sales revenue actually
received by Licensee (gross revenue received from sales of Licensed Products
less 28%) during the first five (5) years of the term of this agreement. b)
Three percent (3%) of the adjusted sales revenue during the second five years.
c) Two percent (2%) of the adjusted sales revenue during the remaining forty
(40) years. On November 30, 1998, the Company purchased for $10,000 and expensed
the cost of the royalty provision that was required under the License Agreement.
The purchase thereby eliminated any royalty payments to the previous owner of
the technology.
IHC's research and development department currently operates as follows:
internal tracking, quality control, test results, product development and other
important data are done internally in conjunction with an outside joint venture
with Albertsons, which is overseen by Dr. Ruth Miller.
The Company had 14 full-time employees at the year ended December 31, 1998
and 14 full-time employees at the third quarter ending September 30, 1999.
Item 2. Description of Property:
The Company owns land and building at 817 North J.M. Davis Blvd.,
Claremore, OK 74017, and all furniture, fixtures, and equipment. The land and
building has a mortgage against it, held by Seven Brothers LLC, balance due at
December 31, 1998 was $164,574. The Company purchased the land (.565 acres) and
building (13,180 sq. ft. ) in July, 1998 for $270,000, the cost of remodeling
was $99,747. The appraised value after remodeling was $462,000. The Company
carries adequate insurance coverage on all property and equipment.
Item 3. Legal Proceedings:
The Company is defendant in lawsuits arising from normal business
activities. Management has reviewed pending litigation with legal counsel and
believes that the action is without merit or that the ultimate liability, if
any, resulting from it will not materially affect the Company's financial
position.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters:
Market Information
The Company received approval on June 30, 1999 from NASD for its common
stock to be traded publicly on the pink sheets. Ives' shares opened at $2.00 and
the low was recorded at $1.00, from July, 1999 through September, 1999.
<PAGE>
Item 5 continued
Sales of Common Stock during 1998:
----------------------------------
At date of incorporation , February 11, 1998, 50,000,000 shares were
authorized of which 7,000,000 were issued to M. Keith Ives and 1,700,000 were
issued to Maxxon. Inc. During 1998 the Company has been involved in a continuous
offering of its common stock pursuant to SEC Regulation D, Rule 504. That rule
was amended effective April 7, 1999. Pursuant to that Rule, generally an issuer
may raise up to $1,000,000 through the sale of its securities in any 12 month
period of time without federal registration. As of December 31, 1998, the
Company had raised $418,193 at $0.80 per share equating to 547,649 shares from
the 504 offering. The Company also issued 330,000 shares of stock to employees
for services rendered. The total shares issued and outstanding at December 31,
1998 was 9,577,650 shares.
Common Stock Subject to Options or Warrants:
--------------------------------------------
None.
Holders:
--------
As of September 30, 1999, the Company had 126 shareholders of record.
Cash Dividends:
---------------
The Company has not paid any cash dividends on its Common Stock and does
not foresee that such dividends will be paid in the near future.
Item 6. Management's Discussion and Analysis or Plan of Operation:
Plan of Operations:
-------------------
There is no assurance that material expenses will not be incurred that
could jeopardize the stability of the Company nor that shareholders or future
shareholders will have or make available sufficient funds to cover such material
expenses. However, it is the belief of the Company, that the following summary
of the Company should occur.
The overall goal of the management team is to develop IHC in to a major
player in the arena of natural health products. Objectives leading to that goal
include being structured and professional organization of integrity, thus
maintaining strong relationships with suppliers and customers. Marketing goals
include having products in 15,000 pharmacies in the U.S. By the year 2001, where
as 30% being independent pharmacies and 70% regional and national chains, i.e.
Albertsons, Winn-Dixie, Wal-Mart, Walgreens, K-Mart, Eckerds, etc.
The Company's products can generally be grouped into five categories:
Homeopathic medicines (pure medicines), Weight Management, Natural Remedies,
Nutritional food supplements, and Health and Beauty Aids. IHC will continue to
implement the same positive marketing strategy that brought the Company to this
point. It will sell the bulk of its product through wholesale distributors and
play off the success of its current wholesalers -- and generate business with
new wholesalers. Also IHC will continue to seek regional and national chain
pharmacies. Other strategies include attending more pharmacy trade shows,
getting endorsements from strategic pharmacy, physician, and health insurance
providers (by conducting our innovative validation testing), hiring more direct
sales representatives, and increasing regional advertising while expanding to a
national advertising campaign. Our greatest need is advertising dollars in order
to create more consumer awareness and demand (mass over time).
The Company's powders, capsules, tablets and liquids in bulk are produced
by International Formulation & Manufacturing, Inc. of San Diego, California,
Summa RX Laboratories, Inc. in Mineral Wells, Texas, Animal Technologies, Inc.
in Tyler, Texas, and American Labs, Inc. Of Omaha, Nebraska. All of the
preceding companies are FDA registered drug companies. All final packaging, i.e.
(shrink-wrapping, UPC coding, expiration dating, and quality control, etc.) is
performed by IHC in Claremore, Oklahoma. Future products will be handled on the
same basis. The long-term goal of IHC is to manufacture products from start to
finish.
The Company's primary distribution focus is through regional and national
chain pharmacies. We are currently distributing through Mays, Drug Warehouse,
Price Mart, Horizon, Pamida and The Medicine Shoppes (these are regional
chains). National chains currently selling our products on a regional basis are
Albertsons (2700 national locations) and Winn-Dixie (1200 national locations).
Wal-Mart , Walgreens, K-Mart, and Eckerds are our next targeted chains. IHC has
established a strong alliance with wholesale distributors who sell to
independent pharmacies and continued growth with these distributors is another
reason for IHC achieving nationwide distribution. IHC's most noted strengths
with their wholesalers are product quality, a strong in-store marketing package,
high profit margins for both the wholesaler and the retail pharmacy, product and
alternative medicine education, validation testing and the best promotional
incentives and profit margins in the industry.
<PAGE>
Item 7. Financial Statements:
IVES HEALTH COMPANY, INC.
(A DEVELOPMENT STAGE COMPANY)
DECEMBER 31, 1998
CONTENTS
--------
Independent Auditor's Report 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operation 3
Statement of Shareholders' Equity 4
Statement of Cash Flows 5
NOTES TO FINANCIAL STATEMENTS 6-12
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of Ives Health Company, Inc.:
We have audited the balance sheet of Ives Health Company, Inc., (A Development
Stage Company), an Oklahoma Corporation, as of December 31, 1998 and the related
statement of operation, shareholders' equity and cash flows from January 1, 1998
(inception) to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ives Health Company, Inc., (A
Development Stage Company), as of December 31, 1998 and the results of its
operations and its cash flows from January 1, 1998 (inception) to December 31,
1998 in conformity with generally accepted accounting principles.
HENDERSON SUTTON & CO., P.C.
/s/ HENDERSON SUTTON & CO., P.C.
- --------------------------------
Certified Public Accountants
November 4, 1999
<PAGE>
Item 7. Financial Statements continued:
Ives Health Company, Inc.
(A Development Stage Company)
Balance Sheet
December 31, 1998
ASSETS
Current Assets
Cash $ 24,787
Accounts Receivable 8,853
Inventories 156,819
----------
190,459
----------
Property and Equipment
Property, Plant & Equipment 445,586
Less Accumulated Depreciation 21,136
----------
424,450
----------
Other Assets
Investments 34,601
Other Assets 32,131
----------
66,733
----------
Total Assets $ 681,642
----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 191,032
Accrued Expenses 14,382
Current Portion of Long Term Debt 126,155
----------
331,569
----------
Long-Term Liabilities
Notes Payable 556,904
Note Payable - Shareholder 43,387
----------
600,291
Less Current Portion of Long Term Debt 126,155
----------
Total Liabilities 805,705
----------
Shareholders' Equity
Common Stock, 50,000,000 shares authorized,
Par value $.001, 9,577,650 shares issued
and outstanding 9,578
Additional Paid in Capital 347,206
Deficit Accumulated during the development stage (480,846)
----------
(124,063)
----------
Total Liabilities and Shareholders' Equity $ 681,642
----------
(The accompanying notes are an integral part of these Financial Statements)
<PAGE>
Item 7. Financial Statements continued:
Ives Health Company, Inc.
(A Development Stage Company)
Statement of Operations
For the Year Ended December 31, 1998
REVENUES
Sales Revenue $ 464,582
----------
Total Sales Revenue 464,582
----------
Cost of Sales
Cost of Sales 198,546
Selling Expense 239,721
----------
Total Cost of Sales 438,267
----------
Net Sales 26,314
EXPENSES
Operating Expenses
General & Admin. Expense 269,816
----------
Total Operating Expenses 269,816
----------
Other Expenses
Non-operating Expense 237,345
----------
Total Other Expenses 237,345
----------
Total Expenses 507,161
----------
NET LOSS $ (480,846)
----------
Net Loss per Share $ (0.05)
----------
(The accompanying notes are an integral part of these Financial Statements)
<PAGE>
Item 7. Financial Statements continued:
Ives Health Company, Inc.
(A Development Stage Company)
Statement Cash Flows
For the Year ended December 31, 1998
Cash Flows From Operating Activities
Cash received from customers $ 516,284
Cash paid for operating goods (284,842)
Cash paid to employees (367,723)
Cash paid for other goods and services (188,955)
Interest paid, net of amount capitalized (25,191)
----------
Net Cash Provided (Used) by Operating Activities (350,426)
----------
Cash Flows From Investing Activities
Plant & equipment purchases (254,892)
Cash Paid for Other Investments (35,975)
Cash Paid for Marketing Design (34,601)
----------
Net Cash Provided (Used) by Investing Activities (325,468)
----------
Cash Flows From Financing Activities
Proceeds from short-term debt --
Repayment of short-term debt --
Proceeds from Issuance of Common Stock 344,959
Proceeds from long-term debt 483,543
Repayment of long-term debt (135,069)
----------
Net Cash Provided (Used) by Financing Activities 693,433
----------
NET INCREASE (DECREASE) IN CASH 17,538
CASH AT BEGINNING OF YEAR 7,249
----------
CASH AT END OF YEAR $ 24,787
----------
Reconciliation of Net Income (Loss) to Net Cash
Provided (Used) by Operating Activities
Net income (loss) $ (480,846)
Adjustments to reconcile net income (loss) to net
Cash provided (used) by operating activities
Depreciation 9,568
Amortization of intangible assets 4,836
(Increase) decrease in accounts receivable 51,702
(Increase) decrease in prepaid assets 27,806
(Increase) decrease inventories (86,295)
(Increase) decrease in Other Assets 3,380
Increase (decrease) in accounts payable 115,658
Increase (decrease) in other accrued liabilities 3,765
----------
Total adjustments 130,420
----------
Net Cash Provided (Used) by Operating Activities $ (350,426)
----------
(The accompanying notes are an integral part of these Financial Statements)
<PAGE>
Item 7. Financial Statements continued:
Ives Health Company, Inc.
(A Development Stage Company)
Statement of Changes in Shareholders' Equity
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
DEFICIT
PRICE ADDITIONAL DURING THE
PER COMMON STOCK PAID-IN DEVELOPMENT
SHARE SHARES AMOUNT CAPITAL STAGE
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 8,700,000 $ 8,700 $ 6,000 $ (272,050)
-------------------------------------------------------------------
Reorganization and Recapitalization of Ives (272,050) 272,050
ISSUANCE OF COMMON STOCK FOR :
- ------------------------------
Cash 0.773 877,650 878 677,368
OTHER TRANSACTIONS AFFECTING EQUITY
- -----------------------------------
Offering Costs (64,112)
Net Income at December 31, 1998 (480,846)
-------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998 9,577,650 $ 9,578 $ 347,206 $ (480,846)
-------------------------------------------------------------------
</TABLE>
(The Accompanying notes are an integral part of these Financial Statements)
Ives Health Company, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Ives Health Company, Inc.
(the "Company") is presented to assist in understanding the Company's financial
Statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the presentation of the financial
statements.
<PAGE>
Item 7. Financial Statements continued:
ORGANIZATION
Ives Health Company, Inc. ("IVES" or the "Company") was formed pursuant to an
agreement between Maxxon, Inc. and M. Keith Ives, entered into and made
effective December 31, 1997. IVES, (a wholly owned subsidiary of Maxxon, Inc.)
And Maxxon, Inc. agreed to separate. The separation was accomplished by
quasi-reorganization (new "IVES"), a recapitalization and the issuance of
7,000,000 shares of new Ives common stock to M. Keith Ives, and 1,700,000 shares
of new Ives common shares to Maxxon, Inc. The new re-organized IVES began
operations January 1, 1998 and was re-incorporated in Oklahoma on February 11,
1998.
Ives Health Company, Inc. (A Development Stage Company) is engaged in developing
and marketing innovative, safe, high quality natural non-prescription medicines
and nutritional supplements. IVES products, which are guaranteed for potency and
purity, include natural medicines, herbal formulas, vitamins, minerals and
homeopathic medicines. The Company wholesales the products to local pharmacies.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid assets with maturities of three months
or less to be cash equivalents.
INVENTORY
Inventory consists primarily of bulk product that will be packaged into
capsules, bottled, and packaged for distribution to customers. Inventory is
stated at the lower of cost or market value using the first-in, first-out
method. Obsolete products are written off in the year they are determined to be
obsolete.
FISCAL YEAR END
The Company's fiscal year ends on December 31.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. All material property and equipment
additions are capitalized and depreciated on a straight-line basis over the
estimated useful life of the asset.
USE OF 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 and contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
INCOME TAXES
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which requires the measurement
of deferred tax assets for deductible temporary differences and operating loss
carry-forwards, and of deferred tax liabilities for taxable temporary
differences. Measurement of current and deferred tax liabilities and assets is
based on provisions of enacted tax law. The effects of future changes in tax
laws or rates are not included in the measurement. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable for the period and the
change during the period in deferred tax assets and liabilities.
EARNINGS PER SHARE
Earnings per share are computed based on the weighted average number of common
shares outstanding during the periods presented, including, if dilutive, shares
issuable under the stock issuable under the stock option plans and warrants.
<PAGE>
Item 7. Financial Statements continued:
REVENUE RECOGNITION
Revenue is recognized monthly based upon the terms of the sale. The Company
issues credit to customers on a discount basis of 2% if paid within ten days of
the invoice or the full balance due within thirty days of the invoice.
Management uses the direct write-off method of recognizing bad debts.
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of the major classes of property and equipment:
ESTIMATED
USEFUL LIFE
-----------
Building 30 years $249,347
Building Improvements 30 years 100,400
Land -- 20,000
Equipment 5-7 years 65,171
Furniture 5-7 years 10,668
--------
445,586
Accumulated Depreciation 21,136
--------
Property and equipment (net) $424,450
--------
NOTE 3 - INTANGIBLES
LICENSING AGREEMENT, NET
------------------------
On August 24, 1998, the Company entered into a License Agreement to the
rights to certain technology known as (1) the T-Factor Immune System
Optimizer and (2) The Burn Treatment Therapy. The rights to the technology
were acquired for Future development of the technology for the consumer
market. The rights to the License, which included a royalty provision to
the seller and extends through August 24, 2049, were acquired for
approximately $25,000. The cost related to The license and rights were
capitalized and is being amortized over five years.
On November 30, 1998, the company purchased for $10,000 and expensed the
cost of the royalty provision that was required under the License
Agreement. The purchase thereby eliminated any royalty payments to the
previous owner of the technology.
During 1998, the Company incurred $35,975 in costs related to the
development of a marketing design program. The costs are expected to
benefit the Company Over the five-year amortization period.
Technology License $ 24,601
Marketing design 35,975
--------
Total 60,576
--------
Accumulated amortization (4,744)
--------
Net capitalized $ 55,832
--------
NOTE 4 - NOTES PAYABLE-OFFICERS
During 1998 M. Keith Ives and JoEtta Hughes, officers of the Company loaned
the Company funds to cover certain operating expenses. The notes accrue
interest at a Rate of 10% per year and are payable on demand. During 1998
payments were made to the officer in the amount of $81,196 to reduce the
note balances. As of December 31, 1998, there remained a balance due JoEtta
Hughes of $43,387.
<PAGE>
Item 7. Financial Statements continued:
Note 5 - Notes Payable - Bank
NationsBank, N.A.
Note dated June 17, 1998 bearing interest @ 9%, due $ 48,611
in sixty monthly installments of $1,097, principle and
interest through June 2, 2003. Note is secured by
inventory and equipment, a security agreement with
William D. Elliott, a shareholder and by a personal
guarantee of M. Keith Ives, an officer and major
shareholder of the Company. Certain personal assets of
Mr. Ives also collateralize the note.
Seven Brothers, LLC
Interest @ 8.5%, due in one hundred twenty monthly 165,659
installments of $1,888, principle and interest, through
August 1, 2008. Note is secured by land and building.
Interest $ 45% calculated according to the actuarial
30,000 Method, principle and interest due December 20,
1998.
Dr. Bedeen - Balance due on technology purchase. 9,600
State Bank & Trust, N.A.
Interest @ Wall Street Prime plus 1.5%, currently 103,034
9.25%, due January 25, 1999. This note was
subsequently combined with the $20,000 note due
State Bank & Trust, N.A. April 25, 1999 and is now
payable in thirty-six monthly installment of $3,800,
principle and interest, through May 25, 2002. Note
is secured by personal stock and an annuity owned
by M. Keith Ives. M. Keith Ives personally
guarantees the note.
Interest @ Wall Street Prime plus 1.5%, currently 20,000
9.25%, payable monthly with principle due January
25, 1999. The note was renewed January 25, 1999 and
on April 25, 1999 combined with the $103,034 note
due State Bank & Trust, N.A. and is now due based on
the terms described on the $103,034 note. M. Keith Ives
personally guarantees the note.
Local America Bank
Interest @ 9.99%, in monthly installments of 20,000
approximately $1,200 monthly through June 15, 2000,
personally guaranteed by M. Keith Ives and secured
by personal automobiles.
Dr. Craft
Interest @ 10%, renewable annually. 160,000
----------
$ 556,904
----------
<PAGE>
Item 7. Financial Statements continued:
Maturities of long-term debt, subsequent to the refinancing through the
report date is as follows for the next five years:
1999 $126,155
2000 191,257
2001 44,886
2002 49,418
2003 32,970
Thereafter 112,218
--------
Total $556,904
--------
NOTE 6 - INCOME TAXES
The Company has incurred net operating losses since inception and has a
loss carry-forward of approximately $480,846 at December 31, 1998, expiring
in years beginning 2013. Deferred tax assets have not been recorded for
future reduction in income taxes that may result from the net operating
loss carry-forward. The deferred tax assets and liabilities are as follows
at December 31:
Net operating loss carry-forward $ 480,846
Depreciation 8,252
Total 489,098
Less valuation allowance (489,098)
---------
Net Deferred Tax Liability $ --
---------
Deferred taxes reflect a combined federal and state tax rate of
approximately 40%. For financial reporting purposes, a valuation allowance
of $489,098 has been established in accordance with the provisions of FASB
Statement No. 109, "Accounting for Income Taxes". The Company will
continually review the adequacy of the valuation allowance and will
recognize these benefits only as assessment indicates that it is more
likely than not that the benefits will be realized.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is defendant in lawsuits arising from normal business
activities. Management has reviewed pending litigation with legal counsel
and believes that the action is without merit or that the ultimate
liability, if any, resulting from it will not materially affect the
Company's financial position.
NOTE 8 - COMMON STOCK AND ADDITIONAL PAID-IN-CAPITAL
In February 1998, the Company issued 8,700,000 shares of common stock in
accordance with The quasi-reorganization and separation agreement as
discussed in Note 1. Maxxon, Inc. was issued 1,700,000 shares and M. Keith
Ives and founders were issued 7,000,000 shares.
During the year 1998, 877,650 shares of the Company's common shares were
issued under SEC Regulation , D., rule 504. The stock was issued for $0.80
per share.
In 1998, the Company issued Perry Ives and JoEtta Hughes, officers and
directors of the company, 275,000 shares of Ives common stock in exchange
for $270,415 of notes owed by the Company to the two officers.
<PAGE>
Item 7. Financial Statements continued:
NOTE 8 - CONTINUED
On April 20, 1998, the Company completed a private offering for 1,000,000
shares of common stock at $0.80 per share. As of December 31, 1998, 877,650
shares have been issued.
NOTE 9 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 1998, officer loaned the Company
$125,000 to cover certain operating expenses. During 1998, the Company
repaid a total of $81,613. The remaining note payable-officer balance of
$43,387 accrues interest at a rate of 10% per year.
NOTE 10 - EARNING PER SHARE
The following table reconciles the number of common shares outstanding as
shown on the Balance Sheet with the weighted average common shares
outstanding as shown on the Statement of Operations for the year ended
December 31, 1998.
Common shares outstanding 9,577,650
Effect of using weighted average common
And Common equivalent shares outstanding 595,712
---------
Weighted average common shares outstanding 8,981,938
---------
NOTE 11 - SUBSEQUENT EVENTS
Prior to the report certain Notes Payable-bank were re-financed in
accordance with the terms as described in note five of Notes to Financial
Statements.
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure:
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
Directors are elected for one-year terms or until the next annual meeting
of shareholders and until their successors are dully elected and qualified.
Officers serve at the discretion of the Board of Directors. Only one Director is
not an employee of the Company and only devotes time necessary for the meetings.
The Directors and Officers of the Registrant as of the date of this report
are as follows:
Name Age Position
---------------------------------------------------------------------------
M. Keith Ives 42 President and Director
Perry Ives 35 Vice-president and Director
JoEtta Hughes 43 Secretary, Treasurer and Director
Jim Jones 60 Director, Member
---------------------------------------------------------------------------
<PAGE>
Item 9. Directors, Executive Officers, Promoters and Control Persons Continued:
(a) Identify directors and executive officers.
(1) - (4) Names, ages, positions, offices, business experience.
A) M. Keith Ives, age 42, is President, CEO and Director at IHC. After
college Mr. Ives went to work for McKesson Drug Co. Ad a territory sales manager
where he gained expertise in sales, pharmacology, marketing, business
management, and business consulting. After seven years with McKesson Drug Co.
Mr. Ives decided to start his own pharmaceutical company for two primary reasons
( to specialize in natural preventive health products and to find products which
would help improve the quality of life for his wife who had contracted Multiple
Sclerosis). To accomplish this goal, he bought an insurance agency to gain
experience in personnel management, sales management, and knowledge about the
insurance industry and their role on the pharmaceutical industry.
Simultaneously, he became a distributor for a direct marketing company to gain
the knowledge necessary in applying direct marketing to his future
pharmaceutical business. Mr. Ives then started hi pharmaceutical company and has
been the driving force to realizing his goals. RESPONSIBILITIES - Mr. Ives
oversees the day to day operations, coordinates closely with Fred Oberloh,
National Sales Manager, on company promotions and sales, makes direct sales
calls, conducts ride-alongs with wholesale/broker representatives to secure new
business, attends local, regional and national trade shows, promotes the
company's growth and vision to the pharmaceutical industry, via alternative
medicine seminars both live & televised, and conducts the business of securing
funds for IHC's growth. Mr. Ives has been recognized by his employers, peers,
and his customers for his outstanding achievements in sales, service, consulting
and management. These achievements include: #1 in annual multi-million dollar
sales volume seven of ten years before starting IHC, Mr. Ives and the sales
people he managed were always in the top 5% of sales producers for their
respective companies.
B) JoEtta Hughes, age 43, is Secretary/Treasurer, COO/CFO and Director at
IHC. Ms. Hughes has comprehensive experience in accounting, the pharmaceutical
industry, warehouse and personnel management and has worked for McKesson Drug
Co. And a division of Cooper and Lybrand accounting firm. She graduated
valedictorian from Bryan Institute in computer programming and accounting. She
is currently is Membership Chairman of Claremore Business and Professional
Woman's Organization, which reinforces her skills. Her background makes her a
valuable asset to IHC.
RESPONSIBILITIES - Ms. Hughes conducts all of the in-house financial business
for IHC and works closely with IHC's CPA, E. Carolyn Tolman. While her main
duties are financially related, she contributes a great deal to the day to day
operations, customer service, data entry, secretarial duties, and consulting
with M. Keith Ives in running the company. In order for IHC to be successful Mr.
Ives felt he must have Ms. Hughes on board to draw from her expertise in the
pharmaceutical and accounting fields. She has been instrumental in applying her
abilities in keeping the company functioning.
C) Perry Ives, age 35, is Vice President, Director of Marketing and
Advertising and Director at IHC. Mr. Ives has 13 years experience in employee
relations and day to day operations as maintenance supervisor for apartment
management firms. He has years of experience in sales, management, operations,
accounting, marketing and advertising before coming to IHC. He draws from these
experiences to develop a well-rounded approach on handling the efficient
operations of the day to day business to assist IHC's growth for the past five
years. RESPONSIBILITIES - Director of Marketing and Advertising while overseeing
the day to day operations and product production. Mr. Ives primary function is
designing and implementing in-house sales and marketing materials, creating ad
slicks, and supporting the efforts of JoEtta Hughes in accounting and computer
work. Mr. Ives has demonstrated his diversified abilities in the daily
operations of IHC and has proven to be capable of exceeding every challenge that
the company has thrown his way. He has been instrumental in performing work the
company would have had to out source, thus assisting the company's efforts to
control costs.
D) Jim Jones, age 60, is a member of the board. Mr. Jones is IHC's
insurance agent and consultant.
(b) Identify Significant Employees.
1) Tony Fauver, age 44, is Director/Production & Quality Control at IHC. Mr
Fauver has 17 years experience in warehouse management, production, and quality
control and has been employed with IHC since May of 1997. He has been an
extremely valuable addition to our staff. RESPONSIBILITIES - Mr. Fauver oversees
production and quality control while ordering all raw materials, negotiating
contracts with pharmaceutical ingredient suppliers, packaging companies,
shipping companies and quality control laboratories.
<PAGE>
Item 9. (b) Identify Significant Employees continued:
2) Fred Oberloh, age 40, is National Sales Manager at IHC. Mr. Oberloh has
been in the pharmaceutical industry for over 20 years as a Regional Sales
Manager with Pittman Moore Drug Company. Fred has been another welcomed addition
to our management team and started with IHC in January, 1999. His strengths are
a work ethic, which is beyond reproach and his attention to detail.
RESPONSIBILITIES - Managing local, regional and national chain accounts at both
the Corporate and Pharmacy levels. Overseeing the sales and service function for
three Sales Representatives, creating, initiating and implementing sales
promotions & bonus buys while informing IHC accounts on these promotions.
3) Margaret Salmans, age 30, Director of Research and Development at IHC.
Ms. Salmans has been with IHC since April, 1999, and is an accomplished data
entry and appointment coordinator, who has assumed her position in R & D
prematurely. She has done an exemplary job in conducting our product validation
testing program while coordinating with Dr. Ruth Miller, D.O., whom we have
sub-contracted with to validate our products effectiveness and safety.
RESPONSIBILITIES - Managing the R & D department and staff, conducting the
product validation testing, recording the results of product testing, and
providing those results to the proper institutions.
(c) Family Relationships.
M. Keith Ives, President, JoEtta Hughes, COO/CFO and Perry Ives, Vice
President are siblings.
(d) Involvement in certain legal proceedings.
NONE
Item 10. Executive Compensation.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
M. Keith Ives, 1998 $64,124.97 NONE
Pres.,CEO
- --------------------------------------------------------------------------------
JoEtta Hughes, 1998 $33,594.68 175,000 shares,
Sec/Trea, COO\CFO restricted stock
12/31/1998
- --------------------------------------------------------------------------------
Perry Ives, V.Pres, 1998 $27,408.70 100,000 shares,
Mrkt. Dir. restricted stock
12/31/1998
- --------------------------------------------------------------------------------
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table lists the beneficial ownership of the Company's voting
securities by each person known by the Company to be the beneficial owner of
more than 5% of such securities, as well as by all directors and officers of the
issuer. Unless otherwise indicated, the shareholders listed possess sole voting
and investment power with respect to the shares shown:
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
continued:
<TABLE>
<CAPTION>
Title of Class Name and Address of Beneficial Owner Amount and Nature
Of Beneficial Owner % of Class
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common M. Keith Ives, Officer/Director 6,439,260 63.0 %
22972 Woodridge Dr., Claremore, OK 74017
- --------------------------------------------------------------------------------------------------------
Common Maxxon, Inc., Beneficial Owner 1,700,000 16.5 %
8908 S. Yale Ave, Ste 409, Tulsa, OK 74137
- --------------------------------------------------------------------------------------------------------
Common Bill Elliott, Beneficial Owner 181,241 1.8 %
Route 1, Box 156, Tahlequah, OK 74464
- --------------------------------------------------------------------------------------------------------
Common Pat Storms, Beneficial Owner 349,975 3.4 %
15849 Sheffield Rd., Siloam Springs, AR 72761
- --------------------------------------------------------------------------------------------------------
Common JoEtta Hughes, Officer/Director 336,000 3.3 %
Claremore, OK 74017
- --------------------------------------------------------------------------------------------------------
Common Perry Ives, Office/Director 129,800 1.3 %
316-A S. Choctaw, Claremore, OK 74017
- --------------------------------------------------------------------------------------------------------
Common Jim Jones, Director 5,000 N/A
6937 E 97th St. South, Tulsa, OK 74133
- --------------------------------------------------------------------------------------------------------
Common All Officers and Directors as a group (4 persons) 6,907,060 67.2 %
- --------------------------------------------------------------------------------------------------------
</TABLE>
Item 12. Certain Relationships and Related Transactions.
Through September, 1999, the Company has had various relationships which
resulted in shares of stock being issued for consulting or services rendered.
<TABLE>
<CAPTION>
Title of Class Name of Beneficial Owner Nature of Beneficial Amount of Beneficial
Ownership Ownership
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common ICMS, Inc. Bill Shepard, President Consulting 2,500
2761 E. Skelly Drive, # 700, Tulsa, OK 74105
- ------------------------------------------------------------------------------------------------------------------------
Common Joyce Bliss Legal 2,000
800 W Downing , Tahlequah, OK 74464
- ------------------------------------------------------------------------------------------------------------------------
Common Bill Elliott Financial Consulting 127,366
Route 1, Box 156, Tahlequah, OK 74464
- ------------------------------------------------------------------------------------------------------------------------
Common Russell Barber Legal 1322
P O Box 518, Poteau, OK 74953
- ------------------------------------------------------------------------------------------------------------------------
Common S.B. Stock USA, Inc. Elliott Pierson, President T.V. Commercial 4,375
5050 N. 8th St., Suite 12, Phoenix, AZ 85014 Compensation
- ------------------------------------------------------------------------------------------------------------------------
Common Nasri Barakat Sales Consulting 7,000
106 Summit Road, Tahlequah, OK 74464
- ------------------------------------------------------------------------------------------------------------------------
Common Mark Hubbard Financial Consulting 50,000
708 Maria, Springdale, AR 72762
- ------------------------------------------------------------------------------------------------------------------------
Common Pat Storms Sales / Marketing 48,000
15849 Sheffield RD., Siloam Springs, AR 72761
- ------------------------------------------------------------------------------------------------------------------------
Common William O. Scaife Sales / Marketing 27,000
10426 Innisbrook Dr. , Jacksonville, FL 32222
- ------------------------------------------------------------------------------------------------------------------------
Common Wallace W. Hayes Sales / Marketing 7,000
10426 Innisbrook Dr., Jacksonville FL 3222
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Item 13. Exhibits and Reports on Form 8-K:
NONE
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, there unto
duly authorized.
IVES HEALTH COMPANY, INC.
/s/ JOETTA HUGHES
------------------------------------------
By: JoEtta Hughes, Secretary and Treasurer
Date: November 11, 1999
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints JoEtta Hughes and/or M. Keith
Ives, his or her true and lawful attorneys-in-fact and agents, to sign any or
all amendments to this Report on Form 10-KSB, and to file the same with all
exhibits thereto and other and documents in connection therewith, with the
Securities and Exchange Commission, granting unto the attorney-in-fact agent
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person hereby ratifying
and confirming that said attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Exchange Act of 1934, this Report on
Form 10-KSB has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
- --------------------------------------------------------------------------------
/s/ M. KEITH IVES President and Director November 4, 1999
- ---------------------
M. Keith Ives
/s/ PERRY IVES Vice-President and Director November 4, 1999
- ---------------------
Perry Ives
/s/ JOETTA HUGHES Secretary, Treasurer and Director November 4, 1999
- ---------------------
JoEtta Hughes
/s/ JIM JONES Director November 4, 1999
- ---------------------
Jim Jones
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 24,787
<SECURITIES> 66,733
<RECEIVABLES> 8,853
<ALLOWANCES> 0
<INVENTORY> 156,819
<CURRENT-ASSETS> 190,459
<PP&E> 445,586
<DEPRECIATION> 21,136
<TOTAL-ASSETS> 681,642
<CURRENT-LIABILITIES> 331,569
<BONDS> 0
0
0
<COMMON> 9,578
<OTHER-SE> (133,640)
<TOTAL-LIABILITY-AND-EQUITY> 681,642
<SALES> 464,582
<TOTAL-REVENUES> 464,582
<CGS> 438,267
<TOTAL-COSTS> 269,816
<OTHER-EXPENSES> 212,154
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,191
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (480,846)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
