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, 1999
Commission File No. 0-28227
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 [X] 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. $ 469,567.
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: February 14, 2000: $ 2,707,686
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of March 23, 2000, there were
12,846,946 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 Stage Company) ( the "Registrant",
"Company" , "Ives" or "New Ives" ) was formed pursuant to an agreement between
Maxxon, Inc. and M. Keith Ives, entered into and made effective December 31,
1997. Ives Health Company Inc., (a wholly owned subsidiary of Maxxon, Inc.) and
Maxxon, Inc. agreed to separate. The separation was accomplished by a
non-pro-rata split-off of non-monetary assets in accordance with Issue 96-4 of
the Emerging Issues Task Force, 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 stock to
Maxxon, Inc. New Ives began operations January 1, 1998 and was incorporated in
Oklahoma on February 12, 1998.
Prior to August of 1997, Ives Health Company, Inc., was a privately held
company incorporated in the state of Oklahoma in 1993 and was engaged in the
business of selling and distributing homeopathic supplements, weight loss
products, vitamins, and other alternative medicines to the public through retail
grocery stores and other distribution outlets. In August, 1997, the shareholders
of Ives exchanged all of their issued and outstanding shares for Maxxon shares
in a tax free share exchange. As a result, Ives Health Company became a wholly
owned subsidiary of Maxxon. Mr. Keith Ives became a shareholder of Maxxon and
remained President and a director of Ives Health Company. Mr. Ives had never
been the holder of more than 5% of the issues and outstanding stock of Maxxon.
Mr. Ives also became a director of Maxxon. Note: Maxxon, Inc. is a development
stage company in the process of developing a safety syringe. Its stock has been
traded on the OTC Bulletin Board under the symbol, "MXON".
After a short period of time, it became apparent to both Maxxon and Ives
management that the business of Maxxon and Ives apparently did not fit together
as originally believed, that Maxxon was not able to obtain financing for the
Ives operations as expected, and that the management style of Maxxon was
incompatible with the management style of Mr. Ives. The parties determined to
separate. At that time, Ives Health Company, Inc., a wholly owned subsidiary of
Maxxon Inc., changed it's name to SEVI Health Company a wholly owned subsidiary
of Maxxon Inc., in order to free up the name of Ives Health Company, Inc. The
new Ives Health Company was again incorporated as of February 12, 1998. Mr. Ives
became the principal stockholder of that new company. Substantially all of the
assets of the old Ives Health Company which later became a wholly owned
subsidiary of Maxxon, Inc., which later became SEVI Health Company, Inc., a
wholly owned subsidiary of Maxxon, Inc., were transferred into New Ives the
registrant. The assets included inventory, equipment, contract rights,
intellectual property rights, and product specification. The new Ives Health
Company, Inc. commenced a Regulation D, Rule 504 offering in which additional
capital was raised.
The Company is engaged in developing and marketing innovative, safe, high
quality natural medicines and nutritional supplements, which are guaranteed for
potency and purity, including homeopathic medicines, weight loss formulas,
natural remedies, and nutritional supplements. Ives Health Company presently
offers 27 different products as follows: Aches and Pains, Acne, Allergy,
Antacid, Arthritis, Cough & Sore Throat, Energy, Headache, and Sinus are all
homeopathic medicines that provide temporary symptomatic treatment for relief of
aches and pains, acne, allergies, upset stomach, pain in joints, cough and sore
throat, fatigue, head pain due to stress, and runny nose and sinus congestion.
Each of the homeopathic medicines comes in tablet form with 30 tablets in a
bottle and sells for $5.98 per bottle. Step 1 - Beginning Weight Loss sells for
$19.95, Step 2 - Continuing Weight Loss sells for $36.95, and Step 3 -
Maintaining Weight Loss sells for $30.95. Other products are as follows:
L-Chromatine - affects fat metabolism while aiding muscle mass gain - $9.95 for
60 tablets in a bottle, De-Tox - designed to cleanse and purify the body of
toxins - $3.65 for 9 tablets in a bottle, Flora-Plus - provides bacteria and
enzymes which improves digestion - $9.95 for 30 tablets in a bottle, Poly-Pep -
Free form amino acids which help improve nutrient absorption - $9.95 for 30
tablets in a bottle, Orangetic - A high energy performance drink containing a
specific blend of nutrients - $19.95 for 30 day supply in powder form, Arthritis
Formula - Hydrolyzed collagen peptides which feed the joints - $48.00 for a 30
day supply in powder form, Antioxidant - Helps eliminate free radicals and
peroxides in the blood - $11.95 for 60 tablets in a bottle, Cholest-Away - Helps
lower and control cholesterol and triglyceride levels - $21.30 for 60 tablets in
a bottle, Immune 2000 - Boosts immune system function while reducing secondary
infections - $19.85 for 60 tablets in a bottle, Prostate Formula - enhances
overall prostate health - $39.50 for a three month supply, 270 tablets in a
bottle, PMS Formula - Helps build optimum levels of hormonal balancers;
decreases cramping, nausea and headache during menstruation - $10.95 for 15cc
liquid in a bottle, Relaxagent - relieves stress without drowsiness - $15.95 for
90 tablets in a bottle, Trace Minerals - Achieves RDA blood levels of 77 trace
minerals - $11.20 for 120 tablets in a bottle, and VEGI BEARS (original flavor
and sour) - a nutritional snack food - $5.99 for 60 bears in a box..
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.
<PAGE>
Item 1. Continued
During 1999 Ives announced a new product called Immune 2000. All rights to
this product were purchased from Dr. Robert Slayton Bedeen in July of 1999 as
part of the Quantum Resources acquisition. Immune 2000 is a product that
resulted from 10 years of research and development. It has been tested on AIDS
patients and significantly increased their immune system function while reducing
secondary infections, offering them a better quality of life.
The principal suppliers of Ives' raw materials are: International
Formulation and Manufacturing (IFM), Vegi Snack Foods, Inc., Summa Laboratories,
Inc.; Animal Technologies, Inc. and American Labs.
Ives primary distribution focus is through regional and national chain
pharmacies. Ives is 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), Dillons and Winn-Dixie (1200 plus national
locations). Walgreens, K-Mart, and Eckerds are our next three targeted chains.
Walgreens, K-Mart, and Eckerds have expressed interest in Ives products. While
there are no distributor agreements with these companies at this time, Ives
anticipates that such agreements will be entered into with each company in the
near future. Discussions are continuing with these companies as well as Krogers,
CVS, Brookshire, Publix, and Randalls, and Ives expects to execute agreements in
the late 1st quarter or early 2nd quarter, 2000, with many of these chains..
Ives estimates that 70% of our distribution will be through large grocery and
pharmaceutical chain stores.
Ives is dependent at this time upon product sales to 3 large grocery and
pharmaceutical chains, Albertsons, Winn Dixie and Dillons, which have 318
stores, 707 stores and 71 stores, respectively, currently purchasing Ives
products. As the number of customers increases, the dependence of Ives upon
these chains will decrease. Ives anticipates that the growth of the acceptance
of its products will result in the addition of other large grocery and/or
pharmaceutical chains as customers.
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.
The purpose of the license agreement with Dr. Bedeen was to obtain all
rights to formulations (including the rights to manufacture, distribute and
sell) that Dr. Bedeen had developed with respect to products named, Immune 2000,
T-factor and a revolutionary burn creme. This agreement has not been significant
to Ives Health Company in the past. This agreement will be a significant part of
Ives year 2000 expansion. The aforementioned products will be the primary
products sold in the new Hospital and Doctor Direct Division of Ives which is
scheduled to be created in the spring of 2000.
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. Through December 31, 1999
Ives has spent an estimate of $50,000, which includes R & D employee's wages.
The Company had 14 full-time employees at the year ended December 31, 1998
and 14 full-time employees as of December 31, 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. The balance due
at December 31, 1998 was $164,574. The balance due on the building mortgage as
of December 31, 1999, was $154,305. 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. The
Ives building at 817 North J.M. Davis Blvd. in Claremore, OK, is used mostly for
packaging, storage and shipping of Ives products and a lesser part of the
building houses the corporate offices of the company. The equipment located in
the building is limited to computers, a labeling machine, two packaging machines
and a forklift.
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 earnings, cash
flows or financial position.
<PAGE>
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' hopes to be listed on the
NASD's Over-The-Counter Bulletin Board in the near future. The trading symbol
for Ives common stock is IVEH. Quotations on the OTC Bulletin Board and pink
sheets reflect bid and ask quotations, may reflect inter-dealer prices, without
retail markup, mark-down or commission, and may not represent actual
transactions. The opening price for Ives' common stock was $2.00/share and
trading has ranged from $0.03/share to $2.00/share in the pink sheets.
Sales of Common Stock during 1998:
----------------------------------
At date of incorporation , February 12, 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.
From April 20, 1998 through December 31, 1998 the Company sold 877,650
shares of common stock to various purchasers pursuant to Rule 504 of Regulation
D and Section 4 (2) of the Securities Act of 1933. The 552,650 shares issued
under the 504 offering to individual investors were sold at an average purchase
price of $0.72 per share. The 305,000 restricted shares issued to employees and
officers, and 20,000 restricted shares issued to Summa Laboratories for the
purchase of rights to product formulas were issued at par value at an average
price of $0.001 per share. The stock certificates for Summa Laboratories were
prepared in 1998, but the terms of the agreement were not completed until 1999
when the Summa formula investment was recorded at a fair market value of $0.80
per share. The total shares issued and outstanding at Dec. 31, 1998-, was
9,577,650 shares.
Sales of Common Stock during 1999:
----------------------------------
From January 1, 1999 through December 31, 1999 the Company sold 400,736
shares of common stock to various purchasers pursuant to Rule 504 of Regulation
D and Section 4 (2) of the Securities Act of 1933. The average purchase price
was $0.72 per share which includes commissions, fees and expenses.
During 1999 the Company issued 2,868,560 common shares to various
employees, officers and directors pursuant to Rule 504 of Regulation D and
Section 4 (2) of the Securities Act of 1933. These shares were issued to
employees and officers for services rendered and were issued at an average price
of $0.05 per share.
Common Stock Subject to Options or Warrants:
--------------------------------------------
None.
Holders:
--------
As of March 23, 2000, the Company had 127 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. Plan of Operation:
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 into a major
player in the arena of natural health products. Objectives leading to that goal
include being a 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. Of
these 15,000 pharmacies, 30% are expected to be independent pharmacies and 70%
are expected to be regional and national chains, i.e. Albertsons, Winn-Dixie,
Wal-Mart, Walgreens, K-Mart, Eckerds, etc.
<PAGE>
Item 6 continued
As of January 31, 2000, Ives products are sold in 146 independent
pharmacies and 1096 chain pharmacies (318 Albertsons, 707 Winn Dixies, and 71
Dillons) for a total of 1242 pharmacy locations that carry our products. There
are 2400 additional Albertsons stores that Ives has the opportunity to sell
products to. It is Ives plan to sell products nationwide by selling to as many
chain pharmacies as possible by the end of the year 2000. Most stores that carry
Ives products vend our entire product line. Ives has no exclusive arrangements
for the wholesale distribution of our products.
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.
Management of Ives believes that Ives is a leader in the industry in
promotional incentives and profit margins for its products. In the July 1999
issue of Pharmacy Today Magazine it was stated that the average margins on
over-the-counter pharmaceutical products is 23% and the average margins on
prescription drugs is 7-11% with a total average margin for pharmaceuticals of
17%. Ives Health Company products boast an average margin of 38% which is far
above our competitors. The average incentive by other pharmaceutical companies
to wholesalers and brokers is 3%. Ives give a 5-8% commission to wholesalers and
brokers.
Management believes that to achieve its objectives , the Company should
seek additional funding of $750,000, whether it be through long-term debt or
additional sales of stock or both. The funds will be used for company expansion,
which will include the following: increasing inventory, significantly increasing
advertising expenses, creating a multi-level marketing division where private
label products will be sold to consumers directly over the internet, creating a
hospital and doctor direct division where the products purchased from Dr. Bedeen
and Quantum Resources will be sold directly to hospitals and doctors offices,
creating an international sales division where products will be sold abroad and
retirement of existing debt. Management also believes that the 4th quarter 1999
refocus on large chain pharmacy sales should significantly increase sales of the
company which combined with the above company expansion will result in projected
gross sales of $2 million for the year 2000 with positive net earnings.
Due to the refocus on large chain pharmacy sales in the 4th quarter of
1999, company financial conditions had significantly improved by December 31,
1999. As of January 31, 2000, Ives Health Company was posting positive
operational cash flow. Ives is presently providing working capital from the sale
of inventory; however, is seeking to borrow additional working capital which
will be used to implement the aforementioned company expansion.
<PAGE>
Item 7. Financial Statements
Ives Health Company, Inc.
-------------------------
(A Development Stage Company)
-----------------------------
December 31, 1999 and 1998
--------------------------
CONTENTS
--------
Independent Auditor's Report 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations 3
Statements of Cash Flows 4
Statements of Shareholders' Equity 5
NOTES TO FINANCIAL STATEMENTS 6-12
<PAGE>
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,
1999 and 1998 and the related statements of operation, shareholders' equity
and cash flows from January 1, 1998 (inception) to December 31, 1999. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our 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 evaluat ing the
overall financial statement presentation. We believe that our audits
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, 1999 and 1998 and
the results of its operations and its cash flows for the years ending
December 31, 1999 and 1998 and from January 1, 1998 (inception) to December
31, 1999 in conformity with generally accepted accounting principles.
HENDERSON SUTTON & CO., P.C.
/s/ HENDERSON SUTTON & CO., P.C.
--------------------------------
Certified Public Accountants
Tulsa, Oklahoma
March 15, 2000
1
<PAGE>
Item 7. Financial Statements continued:
IVES HEALTH COMPANY, INC.
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
1999 1998
----------- -----------
Current Assets
Cash $ 3,165 $ 24,787
Accounts Receivable 78,704 8,853
Less Allowance For Doubtful Accounts (10,000) --
Inventories 153,970 156,819
Prepaid expenses 110,952 --
Loans to officers 5,000 --
----------- -----------
Total Current Assets 341,791 190,459
----------- -----------
Property and Equipment
Property, Plant & Equipment 491,180 445,586
Less Accumulated Depreciation 62,097 21,136
----------- -----------
Net Property and Equipment 429,083 424,450
----------- -----------
Other Assets
Goodwill-net 284,700 306,600
Deposits 600 900
Marketing design program-net 13,849 31,778
Investments 39,825 34,055
----------- -----------
Total Other Assets 338,974 373,333
----------- -----------
TOTAL ASSETS $ 1,109,848 $ 988,242
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 252,847 $ 179,940
Payroll & sales taxes payable 22,924 11,092
Accrued Expenses 11,283 22,998
Note payable to officer 121,137 41,752
Current Portion of Long Term Debt 151,434 272,219
----------- -----------
Current Liabilities 559,625 528,000
----------- -----------
Long-Term Liabilities
Notes Payable 681,758 556,904
Less current portion long-ter debt (151,434) 272,219
----------- -----------
Total Long-term Liabilitie 530,324 284,685
----------- -----------
Total Liabilities 1,089,949 812,685
----------- -----------
Shareholders' Equity
Common Stock (Par $.001) 12,847 9,578
12,846,946 and 9,577,650 outstanding at
December 31, 1999 and 1998 respectively
Additional Paid in Capital 1,100,040 668,725
Retained earnings (1,092,988) (502,746)
----------- -----------
Total Shareholder's Equity 19,899 175,556
----------- -----------
TOTAL LIABILITIES & SHAREHOLDER'S EQUITY $ 1,109,848 $ 988,242
----------- -----------
(The accompanying notes are an integral part of these Financial Statements)
2
<PAGE>
Item 7. Financial Statements continued:
IVES HEALTH COMPANY, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
JANUARY 1, 1998
(INCEPTION)
REVENUES TO DECEMBER 31, 1999 1999 1998
-------------------- ------------ ------------
<S> <C> <C> <C>
Sales $ 864,421 $ 469,567 $ 394,854
Cost of Sales 522,565 330,526 192,039
------------ ------------ ------------
Gross Profit 341,856 139,041 202,815
------------ ------------ ------------
OPERATING EXPENSES
Selling Expenses 525,979 196,830 329,149
General & Administrative Expenses 856,256 532,563 323,693
Depreciation & Amortization 105,222 77,694 27,528
Interest & Factoring Expense 97,387 72,196 25,191
------------ ------------ ------------
Total Operating Expenses 1,584,844 879,283 705,561
------------ ------------ ------------
NET OPERATING LOSS (1,242,988) (740,242) (502,746)
Gain On Contract Default 150,000 150,000 --
Income Tax Expense -- -- --
------------ ------------ ------------
NET LOSS $ (1,092,988) $ (590,242) $ (502,746)
------------ ------------ ------------
Weighted Average of Shares Outstanding 10,146,618 9,034,076
------------ ------------
Net Loss Per Share $ (.058) $ (.056)
============ ============
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
3
<PAGE>
Item 7 Financial Statements (Continued)
IVES HEALTH COMPANY, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
JANUARY 1, 1998
(INCEPTION)
TO DECEMBER 31, 1999 1999 1998
-------------------- ----------- -----------
Cash Flows From Operating Activities
<S> <C> <C> <C>
Net loss from operations $(1,092,988) $ (590,242) $ (502,746)
Depreciation 50,529 40,961 9,568
Amortization 62,738 36,641 26,097
Stock Issued for services 151,436 151,436 --
(Increase) decrease in accounts receivable (68,704) (59,851) (8,853)
(Increase) decrease in inventories (153,971) 2,848 (156,819)
(Increase) decrease in prepaid expenses (110,951) (110,951) --
Increase(decrease) in accounts payable 244,234 72,908 171,326
Increase (decrease) in accrued payroll taxes 22,924 11,832 11,092
Increase (decrease) in accrued expenses 11,282 (11,716) 22,998
----------- ----------- -----------
Net Cash Provided (Used) by Operating Activities (883,471) (456,134) (427,337)
----------- ----------- -----------
Cash Flows From Investing Activities
Loans to Officers (5,000) (5,000) --
Property Plant and Equipment (479,612) (45,594) (434,018)
Deposits (600) 300 (900)
Investments (22,557) 13,418 (35,975)
Other Assets (34,055) -- (34,055)
----------- ----------- -----------
Net Cash Provided (Used) by Investing Activities (541,824) (36,876) (504,948)
----------- ----------- -----------
Cash Flows From Financing Activities
Notes payable to Officers 45,898 4,147 41,751
Long term debt 756,758 199,854 556,904
Sale of Common Stock for Cash, 625,804 267,387 358,417
Net of offering cost
----------- ----------- -----------
Net Cash Provided (Used) by Financing Activities 1,428,460 471,388 957,072
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 3,165 (21,622) 24,787
CASH AT BEGINNING OF YEAR 24,787 24,787 --
CASH AT END OF YEAR $ 27,952 $ 3,165 $ 24,787
=========== =========== ===========
Non-cash financing & investing activities:
Stock issued for product formulas $ 16,000 $ 16,000 $ --
=========== =========== ===========
</TABLE>
(The accompanying notes are an integral part of these Financial Statements)
4
<PAGE>
Item 7. Financial Statements continued:
IVES HEALTH COMPANY, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Deficit
Price Common Stock During the
Per ------------ Paid-in Development
Share Shares Amount Capital Stage
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1998 $ -- -- $ -- $ -- $ --
Shares Issued in Conjunction With .001 8,700,000 8,700 6,000 --
The Maxxon/Ives Split-Off Transaction
To Record Goodwill 328,500 --
Shares Issued Under 504 Offering .72 552,650 553 39 --
Shares Issued to Employees & Officers .001 305,000 305 (305) --
Shares Issued for Summa License .001 20,000 20 (20) --
Less Offering Cost (64,112) --
Net Loss For the Year (502,746)
---------------------------------------------------------------
BALANCE DECEMBER 31, 1998 9,577,650 9,578 668,725 (502,746)
---------------------------------------------------------------
Shares Issued to Employees & Officers .05 2,868,560 2,858 148,578 --
for Services
Shares Issued Under 504 Offering .72 400,736 411 289,847
Shares Issued for Summa License .80 16,000
Less Offering Cost (23,110)
Net Loss For The Year (590,242)
---------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999 12,846,946 $12,847 $1,100,040 $(1,092,988)
---------------------------------------------------------------
</TABLE>
(The Accompanying notes are an integral part of these Financial Statements)
5
<PAGE>
Item 7. Financial Statements continued:
IVES HEALTH COMPANY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 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.
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, a
non-pro-rata split-off of non-monetary assets in accordance with Issue 96-4 of
the Emerging Issues Task Force, 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 IVES began operations January 1, 1998
and was incorporated in Oklahoma on February 12, 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 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.
<PAGE>
Item 7. Financial Statements continued:
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 (Loss) per Share
- -------------------------
The Company computes net income per share in accordance with SFAS No. 128,
"Earnings per Share" and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under
provision of SFAS No. 128 and SAB 98 basic net income (loss) per share is
calculated by dividing net income (loss) available to common stockholders for
the period by the weighted average shares of common stock of the Company
outstanding during the period. Diluted net income per share is computed by
dividing the net income for the period by the weighted average number of common
and common equivalent shares outstanding during the period. The calculation of
fully diluted income (loss) per share of common stock assumes the dilutive
effect of stock options outstanding.
Segment Information
- -------------------
Effective January 1, 1998, the Company adopted the provisions of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." The
Company identifies its operating segments based on business activities,
management responsibility and geographical location. During the years ended
December 31, 1999 and 1998, the Company operated in the single business segment
engaged in developing and marketing selected healthcare products.
New Accounting Standards
- ------------------------
The Company adopted SFAS No. 130, "Reporting Comprehensive Income" and SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information"
during 1998. The Company had no comprehensive income items during 1999 and 1998.
Therefore, net loss equals comprehensive income. The Company operates in only
one business segment. The company adopted SFAS No. 133, "Accounting for
Derivative Investments and Hedging Activities" during 1999. As of December 31,
1999, the Company did not engage in hedging activities or other transactions
involving derivatives.
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 allowance method of recognizing bad debts. A provision for
doubtful accounts was not required at December 31, 1999 and 1998 of $10,000 and
$0, respectively.
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of the major classes of property and equipment:
Estimated
Useful Life 1999 1998
----------- ---- ----
Building 30 years $249,347 $249,347
Building Improvements 30 years 100,400 100,400
Land -- 20,000 20,000
Equipment 5-7 years 68,387 65,171
Furniture 5-7 year 11,075 10,668
Master Dies 5 years 4,355 --
Vehicles 3 years 37,616 --
--------- -------- --------
491,180 445,586
Accumulated Depreciation 62,097 21,136
-------- --------
Property and equipment (net) $429,083 $424,450
-------- --------
<PAGE>
Item 7. Financial Statements continued:
NOTE 3 - OTHER ASSETS
GOODWILL
--------
Effective December 31, 1997 M. Keith Ives exchanged 275,360 shares of
Maxxon Inc. common shares valued at $1.01 per share (using the average of
the last five trading days in 1997) for 7,000,000 common shares of the
Company's stock. Maxxon retained 1,700,000 shares of the newly formed Ives
Health Company, Inc. After the issuance of the 8,700,000 common shares, M.
Keith Ives owned 80.5% of the outstanding shares and Maxxon owned 19.5% of
the outstanding shares. The exchange was accounted for as a purchase using
the fair market value of the Maxxon common stock as consideration for 80.5%
of the newly formed company. The transaction was a non-pro-rata split-off
of certain non-monetary assets, whereby Maxxon exchanged assets for a
non-controlling interest in a new entity. The transaction was recorded in
accordance with the Emerging Issues Task Force Issues # 96-4 and #89-7.
Goodwill in the amount of $328,500 was recorded with a resulting credit to
Paid-in Capital. The Goodwill is being amortized over its estimated useful
life of fifteen years.
INVESTMENT IN LICENSING AND OPTION TO PURCHASE AGREEMENTS
---------------------------------------------------------
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 July 30, 1999, 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.
In January 1998, Ives Health Company paid $10,000 for the option to
purchase VEGI-Snack Foods, Inc., where Ives had the exclusive right to sell
VEGI BEARS and related products and retained the right to purchase
VEGI-Snack Foods, Inc. until the end of 1999. The option to purchase
VEGI-Snack Foods expired at the end of 1999 and the $10,000 investment made
to secure this purchase option was written off during 1999..
Investments 1999 1998
----------- ---- ----
Veggie Snack Foods $ -- $ 10,000
Quantum License 34,602 24,602
Summa Formulas 16,000 --
-------- --------
Total Investments $ 50,602 $ 34,602
Accumulated Amortization (10,777) (547)
-------- --------
$ 39,825 $ 34,055
Marketing Design Program
------------------------
During 1998, the Company incurred $35,975 in costs related to the
development of a marketing design program. During 1999 the program was
curtailed and the cost and related accounts payable were reduced by
$13,418. The remaining costs are expected to benefit the Company over the
five-year amortization period.
1999 1998
---- ----
Marketing design $ 22,557 $ 35,975
Accumulated amortization (8,708) (4,197)
-------- --------
Net capitalized $ 13,849 $ 31,788
<PAGE>
Item 7. Financial Statements continued:
NOTE 4 - NOTES PAYABLE-OFFICERS
During 1998 M. Keith Ives and JoEtta Hughes, officers of the Company loaned
the Company funds to cover 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 $81,711 to reduce the note balances.
As of December 31, 1998, there remained a balance due JoEtta Hughes of
$41,752. During 1999 certain officers & shareholders of the company
advanced $270,487 to the company to cover certain operating expenses.
During the year at total of $191,101 was paid on these notes leaving a
balance due of $121,137 at December 31, 1999.
<TABLE>
<CAPTION>
NOTE 5 - NOTES PAYABLE 1999 1998
NationsBank, N.A
<S> <C> <C>
Note dated June 17, 1998 bearing interest @ 9%, due $ 39,613 $ 48,660
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 $154,305 $165,840
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
Paid during 1999.
State Bank & Trust, N.A
Interest @ Wall Street Prime plus 1.5%, currently -- $102,804
9.25%, due January 25, 1999.
Paid with financing from Armstrong Bank. This note
was secured by personal stock and an annuity
owned by M. Keith Ives. Mr. Ives also personally
Guaranteed the note.
State Bank & Trust, N.A
Interest @ Wall Street Prime plus 1.5%, currently -- $ 20,000
9.25%, payable monthly with principle due January
25, 1999. The note was retired with proceeds from
the Armstrong Bank financing. Mr. Ives personally
guaranteed this 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. Paid during 1999.
<PAGE>
Item 7. Financial Statements continued:
NOTE 5 - NOTES PAYABLE (CONTINUED) 1999 1998
Dr. Craft Loan Agreement
Dr. Craft advanced Ives $160,000 under an agreement -- $160,000
to provide additional funding. Dr. Craft defaulted on
agreement and under terms of agreement $160,000 was
retained by Ives and booked as gain on contract default.
Armstrong Bank
Interest @ 9.30%. Originated July 9, 1999 $121,382 --
Personally guaranteed by Dr. Bill Elliot (shareholder)
and M. Keith Ives.
Armstrong Bank
Interest @ 8.75%. Originated July 9, 1999. $273,849 --
Personally guaranteed by Dr. Bill Elliot (shareholder)
and M. Keith Ives.
Armstrong Bank
Interest @ 9.50 %. Originated June 18, 1999 $ 42,379 --
Personally guaranteed by Dr. Bill Elliot (shareholder)
and M. Keith Ives.
State Bank
Interest @ 10.12%. Originated September 24, 1999 $ 19,755 --
Personally guaranteed by M. Keith Ives.
Ford Motor Credit
Interest @ 8.90%. Originated August 3, 1999. Loans $ 30,476 --
to purchase three automobiles. Secured
by three 1998 Ford Taurus automobiles. Monthly
payment equals $1075.
TOTAL NOTES PAYABLE $681,759 $556,904
-------- --------
Less current maturities: $151,434 $272,219
-------- --------
Long-term Debt $530,325 $284,685
======== ========
</TABLE>
Maturities of long-term debt is as follows for the next five years:
2000 $ 151,434
2001 116,760
2002 122,215
2003 107,204
2004 105,682
Thereafter 78,464
---------
Total $ 681,759
---------
<PAGE>
Item 7. Financial Statements continued:
NOTE 6 - INCOME TAXES
The Company has incurred net operating losses since inception and has a
loss carry-forward of approximately $1,093,000 at December 31, 1999,
expiring in years beginning 2014. 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 31,1999:
1999 1998
----------- ---------
Net operating loss carry-forward $ 1,092,988 $ 502,746
Depreciation 16,480 8,252
----------- ---------
Total 1,076,508 510,998
Less valuation allowance (1,076,508) (510,998)
----------- ---------
Net Deferred Tax Liability $ 0 $ 0
----------- ---------
Deferred taxes reflect a combined federal and state tax rate of
approximately 40%. For financial reporting purposes, a valuation allowance
equal to the deferred tax asset 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 have a material adverse
affect on the Company's earnings, cash flows or financial position.
NOTE 8 - COMMON STOCK AND ADDITIONAL PAID-IN-CAPITAL
In February 11, 1998, the Company issued 7,000,000 shares of common stock
to M. Keith Ives and 1,700,000 common shares to Maxxon, Inc., in accordance
with the separation agreement between M. Keith Ives and Maxxon, Inc.. The
shares were issued in a tax free exchange under the terms of the agreement.
From April 20, 1998 through December 31, 1998 the Company sold 877,650
shares of common stock to various purchasers pursuant to Rule 504 of
Regulation D and Section 4 (2) of the Securities Act of 1933. The 552,650
shares issued under the 504 offering to individual investors were sold at
an average purchase price of $0.72 per share. The 305,000 restricted shares
issued to employees and officers, and 20,000 restricted shares issued to
Summa Laboratories for the purchase of rights to product formulas were
issued at par value at an average price of $0.001 per share. The stock
certificates for Summa Laboratories were prepared in 1998, but the terms of
the agreement were not completed until 1999 when the Summa formula
investment was recorded at a fair market value of $0.80 per share.
From January 1, 1999 through December 31, 1999 the Company sold 400,736
shares of common stock to various purchasers pursuant to Rule 504 of
Regulation D and Section 4 (2) of the Securities Act of 1933. The average
purchase price was $0.72 per share which includes commissions, fees and
expenses.
During 1999 the Company issued 2,868,560 to various employees, officers and
directors pursuant to Rule 504 of Regulation D and Section 4 (2) of the
Securities Act of 1933. These shares were issued to employees, officers and
directors for services rendered and were issued at an average price of
$0.05 per share.
<PAGE>
Item 7. Financial Statements continued:
NOTE 9 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 1998, officers loaned the Company
$91,044 to cover certain operating expenses. During 1998, the Company
repaid a total of $81,711. The remaining note payable-officer balance of
$41,752 accrues interest at a rate of 10% per year. During 1999 certain
officers & shareholders of the company advanced $270,487 to the company to
cover certain operating expenses. During the year a total of $191,101 was
paid on these notes leaving a balance due of $121,137 at December 31, 1999.
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, 1999 and 1998.
1999 1998
---- ----
Common shares outstanding 12,846,946 9,577,650
Effect of using weighted average common
And Common equivalent shares outstanding 2,700,328 543,574
---------- ---------
Weighted average common shares outstanding 10,146,618 9,034,076
---------- ---------
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
Michael Harrison 45 CEO and Director
Perry Ives 36 Vice-president and Director
JoEtta Hughes 43 CFO and Director
Tony Fauver 44 Production and QC Mgr. And Director
Jim Jones 68 Director, Member
---------------------------------------------------------------------------
(a) Identify directors and executive officers.
(1) - (4) Names, ages, positions, offices, business experience.
A) M. Keith Ives, age 42, is President, of Ives Health Company. Mr. Ives,
upon graduating from college, went to work for McKesson Drug Co. as 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 a pharmaceutical company and has
been the driving force to realizing his goals. Mr. Ives' perseverance has led
this company to its present position and with proper funding, IHC will become a
leader in the growing preventive health care industry.
<PAGE>
Item 9. Directors, Executive Officers, Promoters and Control Persons
Continued:
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) Michael Harrison, age 45, was hired as CEO of Ives Health Company on
December 27, 1999. Mr. Harrison managed the largest oil operation in the state
of Kansas from 1987-1991. Applied operation management skills which resulted in
net earnings increased from 14 million dollars in 1987 to 31 million dollars in
1991. Successfully performed duties a financial consultant for the corporate
financial planning and analysis department of OXY USA from 1991-1993.
Co-instructor of an in-house business decision making school. Evaluated 106 oil
companies for possible acquisition during 1992. Managed divestment of $5 million
of company properties at auction during 1992. Acquired the world renown
Hasty-Bake Barbecue Grill Company in 1993. Successfully marketed and operated
company resulting in doubling of sales and significant increase in earnings.
Developed marketing strategy and revitalized dealer network. Reestablished and
redesigned many old products. Sold majority interest in company to minority
partner in 1996. Divestiture resulted in a profit of five times the original
cash investment in the company. Acquired 100% of RPC Company an industrial
powder coating operation in 1996. Secured bank and SBA financing for acquisition
and subsequent expansion involving buyout of competition. Tripled revenues and
earnings of company in three years. Increased net value of company ten times the
original investment by November 1999.
RESPONSIBILITIES - Mr. Harrison is responsible for the daily operations and
administration of the company. He is the company's primary deal maker with
respect to future acquisitions and financing. Mr. Harrison is also responsible
for all future performance predictions of the company as well as a liaison with
the SEC on corporate filing matters. Mr. Harrison works very closely with Mr.
Keith Ives in the planning and future direction of the company and with respect
to targeted sales efforts. Mr. Harrison has been instrumental in attaining
continuing education (CE) certification status for Ives Health Company with
local and national pharmacy boards. By utilizing CE certification, Ives Health
Company can better inform pharmacists about the generalities of Ives products
and at the same time award the pharmacists with local or national continuing
education credits.
C) JoEtta Hughes, age 43, is CFO of Ives Health Company. 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 Vice
President of the local chapter of Business and Professional Woman's Federation
as well as state Membership Chair. She sits on the advisory boards for Rogers
University and OSU.
RESPONSIBILITIES - Ms. Hughes conducts all of the in-house financial business
for IHC and works closely with IHC's CPA. 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.
D) Perry Ives, age 36, Vice President, of Ives Health Company has 13 years
experience in employee relations and day to day operations as maintenance
supervisor for apartment management firms. He graduated high school in
Stillwater, OK and received his Associates Degree in Computerized Accounting at
Condie College in California with a 3.99 GPA. Perry is responsible for producing
our television and radio commercials, and our newspaper advertisements. He is
presently developing a CD ROM that will be used as an educational marketing
tool. Perry's diversified abilities and his knowledge of daily operations of IHC
have proven to be a valuable asset to the company.
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.
E) Tony Fauver, age 44, is the Director/Production & Quality Control and
has 17 years experience in warehouse management, production, and quality
control. Mr. Fauver has been employed with IHC since May of 1997. Born and
raised in Edwardsville, Illinois. Tony received his training in the United
States Army. His experience as a General Manager of a manufacturing company,
plus his experience in sales and purchasing has made him a valuable asset to
Ives Health Company, Inc. His knowledge of general management principles is
synonymous with Ives Health Company's high standards for the production of our
all natural products and weight management program.
F) Jim Jones, age 68, is currently a member of Ives Health Company's Board
of Directors. Mr. Jones was a successful insurance agent before his retirement
in 1992. Although he considers himself retired, he still acts as Ives Health
Company's independent insurance agent. Throughout his career, he has sat on the
Board of Directors for banks, insurance cos., & several corps.
<PAGE>
Item 9. (b) Identify Significant Employees
1) Fred Oberloh, age 50, 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.
(c) Family Relationships.
M. Keith Ives, President, JoEtta Hughes, CFO and Perry Ives, Vice President
are siblings.
Item 10. Executive Compensation.
SUMMARY COMPENSATION TABLE
As of Dec., 31, 1999
Executive/ Annual Stock
Position Year Salary Bonus
- --------------------------------------------------------------------------------
M. Keith Ives, 2000 $72,000 To be determined by
President performance of Co.
- --------------------------------------------------------------------------------
Michael Harrison, 2000 $70,000 To be determined by
CEO performance of Co.
- --------------------------------------------------------------------------------
JoEtta Hughes, 2000 $60,000 To be determined by
CFO performance of Co.
- --------------------------------------------------------------------------------
Perry Ives, 2000 $36,000 To be determined by
Vice President performance of Co.
- --------------------------------------------------------------------------------
(In addition to the above, executives of the Company receive insurance
benefits.)
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following shareholders own of record more than 5% and/or includes
security ownership of management personnel as of December 31, 1999 of
12,846,946:
<TABLE>
<CAPTION>
Title of Class Name and Address of Beneficial Owner Amount and Nature
Of Beneficial Owner % of Class
- ------------------------------------------------------------------------------------------------
As of December 31,
1999
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common M. Keith Ives, Officer/Director 8,439,260 65.7%
22972 Woodridge Dr., Claremore, OK 74017
- ------------------------------------------------------------------------------------------------
Common Maxxon, Inc., Beneficial Owner 1,700,000 13.2%
8908 S. Yale Ave, Ste 409, Tulsa, OK 74137
- ------------------------------------------------------------------------------------------------
Common Bill Elliott, Beneficial Owner 150,187 1.2%
Route 1, Box 156, Tahlequah, OK 7446
- ------------------------------------------------------------------------------------------------
Common Pat Storms, Beneficial Owner 349,975 2.7%
15849 Sheffield Rd., Siloam Springs, AR 72761
- ------------------------------------------------------------------------------------------------
Common JoEtta Hughes, Officer/Director 549,984 4.3%
Claremore, OK 74017
- ------------------------------------------------------------------------------------------------
Common Perry Ives, Officer/Director 329,800 2.6%
316-A S. Choctaw, Claremore, OK 74017
- ------------------------------------------------------------------------------------------------
Common Tony Fauver/Director 80,000 0.6%
Claremore, OK 74017
- ------------------------------------------------------------------------------------------------
Common Jim Jones, Director 2,000 N/A
6937 E 97th St. South, Tulsa, OK 74133
- ------------------------------------------------------------------------------------------------
Common All Officers and Directors as a group (4 persons) 9,401,044 73.2%
- ------------------------------------------------------------------------------------------------
</TABLE>
Note: Maxxon is a company with over 12,000,000 shares of common stock
issued and outstanding at December 31, 1999. Ives does not know who the
principal shareholders are. Mr. Gifford Mabee is the President, but Ives does
not know who other officers are. Maxxon filed a form 10-SB on December 22, 1999.
Information regarding Maxxon can be found from that filing.
<PAGE>
Item 12. Certain Relationships and Related Transactions:
Through December 31, 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 1,322
P O Box 518, Poteau, OK 74953
- --------------------------------------------------------------------------------------------------------------------
Common S.B. Stock USA, Inc. Elliott Pierson, Preside 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 32222
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Additional Related Party Transactions are as follows:
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 officers in the amount of $81,711 to reduce the note balances. As of
December 31, 1998, there remained a balance due to JoEtta Hughes of $41,752.
During 1999 certain officers and shareholders of the company advanced $270,487
to the company to cover operating expenses. During 1999 a total of $191,101 was
paid on these notes leaving a balance of $121,137 at December 31, 1999.
Item 13. Exhibits and Reports on Form 8-K:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IVES HEALTH COMPANY, INC.
Date: March 29, 2000 /s/ Michael Harrison
--------------------
By: Michael Harrison, Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Michael Harrison and/or M. Keith
Ives, his true and lawful attorneys-in-fact and agents, to sign any or all
amendments to this Report on Form 10-SB, 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 March 29, 2000
- ------------------------
M. Keith Ives
/s/ MICHAEL HARRISON CEO and Director March 29, 2000
- ------------------------
Michael Harrison
/s/ PERRY IVES Vice-President and Director March 29, 2000
- ------------------------
Perry Ives
/s/ JOETTA HUGHES Secretary, Treasurer and Director March 29, 2000
- ------------------------
JoEtta Hughes
/s/ TONY FAUVER Prod. & QC Mgr. and Directo March 29, 2000
- ------------------------
Tony Fauver
/s/ JIM JONES Director March 29, 2000
- ------------------------
Jim Jones
