<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12 (b) or (g) of the Securities Exchange Act of 1934
TRUE HEALTH, INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in its charter)
Utah 75-2263732
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
5 Tansey Circle, Dallas, Texas 75149
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (972) 644-1200
--------------
Securities to be registered pursuant to Section 12(b) of the Act: None.
Securities to be registered pursuant to Section 12(g) of the act:
Common Stock, Par Value $0.001 Per Share
----------------------------------------
(Title of Class)
<PAGE>
FORM 10-SB
TRUE HEALTH, INC.
TABLE OF CONTENTS
PART I
Item 1. Description of Business.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 3. Description of Property.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Item 5. Directors and Executive Officers, Promoters and Control Persons.
Item 6. Executive Compensation.
Item 7. Certain Relationships and Related Transactions.
Item 8. Description of Securities.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
Item 2. Legal Proceedings.
Item 3. Changes in and Disagreements with Accountants.
Item 4. Recent Sales of Unregistered Securities.
Item 5. Indemnification of Directors and Officers.
PART F/S
Item 1. Financial Statements.
PART III
Item 1. Index to Exhibits.
Item 2. Description of Exhibits.
SIGNATURES
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Pro-tech Investment was organized under the laws of the State of Utah on August
27, 1975. The name was changed to Petroleum Resources Corporation on April 20,
1981. The name changed to Borexco, Incorporated on January 22, 1985. The name
was changed to True Health, Incorporated on February 17, 1986.
True Health, Incorporated is a publicly held corporation based in Dallas, Texas
and formed in February of 1986. Some experienced multi-level marketers and
businessmen who understand and apply certain basic business axioms founded it:
First, market a unique product or service that helps people improve their
quality of life. Second, market a product or service upon which a broad sector
of the public will concentrate. Third, particularly in the early stages of any
company, keep it simple. Start with a good product; diversify as demand for
well-tested related products rises in the marketplace.
True Health, Incorporated is a direct sales company and as such relies on a
multi-level distributor organization to carry the bulk of the marketing of its
unique product line. This "network" marketing organization strives for a balance
between its wholesale and retail sales.
Currently, True Health, Incorporated offers a single product called `True
Health' which comes in a couplet presentation: 1) a nutritional supplement
containing a safe, full spectrum, balanced slate of vitamins, minerals, amino
acids and fiber uniquely combined into a powder form, which when mixed with
water produces a tasty nutritional drink. And 2) oil based essential fatty acid
capsules containing Gamma linolenic acid (GLA), Eicosapentaenoic acid (EPA) and
Vitamin E. These components of essential fatty acids, often referred to as
omega-chain fatty acids, are now believed by many medical research groups to
help regenerate the human body's immune system through refortification of
prostaglandins.
EMPLOYEES
At fiscal year end, True Health, Inc. had three part time employees. Richard
Stokley, President, devotes such time as is necessary to the Company's affairs.
Ann Stokley handles office affairs and accounting. Richard Stokley, Jr.
handles manufacturing and is in charge of shipping product. Earl Milton also
does part time accounting. For years 1997, 1998 and 1999, Richard Stokley, Ann
Stokley and Earl Milton contributed their services and were not paid a salary.
In previous years they were paid by salary or issuance of common stock.
Richard Stokley, Jr. was issued 200,000 shares of stock in 1999 for services.
<PAGE>
TRADEMARK
The company holds a trademark on the name TRUE HEALTH, INC. and accompanying
logo.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Selected Financial Data
<TABLE>
<CAPTION>
Fiscal Years Ended December 31,
---------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total assets $ 12,777 11,562 12,798 7,776 2,919
Long term debt -0- -0- -0- -0- -0-
Preferred stock -0- -0- -0- -0- -0-
Net revenue 35,849 42,928 68,621 79,137 79, 445
Net income(loss) 5,567 (28,669) 25,001 (45,550) (6,897)
Income(loss) 0.00009 (0.00045) 0.00039 (0.00074) (0.00011)
per share
</TABLE>
During the five year period ended December 31, 1999 there were no changes in
accounting methods.
The Company had sales of $35,849 in 1999, a decrease of $7,079 from 1998. This
decrease is primarily attributable to the fact that True Health, Inc. focused
its efforts on certain efficacy tests that were to be performed using the
Company's products. The tests had not reached completion in 1999. Selling,
general, and administrative expenses also decreased to $33,011 in 1999, from
$61,900 in 1998. This decrease in selling, general, and administrative expenses
is due to the related decrease in sales efforts. True Health, Inc. reported net
income of $5,567 in 1999, an increase from a net loss of $28,669 in 1998. The
increase is primarily due to an other income item of $10,000 relating to the
cancellation of shares in 1999.
The Company had total assets of $12,777 in 1999, with no significant investment
in property and equipment, as compared to $11,562 in 1998. The Company had
current liabilities of $78,444 in 1999, and a working capital deficit of
approximately $66,000 in both 1999 and 1998.
The Company has developed three new formulas, and expects to begin marketing its
new products in the year 2000. The Company expects that cash requirements for
operations will be provided by seeking investment capital and the sale of stock.
However, there can be no assurance that these activities will, in fact, provide
the necessary working capital for operations.
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY.
None.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table set forth, as of December 31, 1999, the stock ownership of
each Person known by the Company to be the beneficial owner of five percent or
more of the Company's common stock. Unless otherwise indicated, each person has
beneficial voting and investment power with respect to the shares owned.
Name/Address of Beneficial Owner Number of Shares Percentage of Total
Richard M. Stokley 13,900,600 22.9
5 Tansey Circle
Mesquite, Texas 75149
Earl D. Milton 4,367,220 7.2
3795 Waldorf
Dallas, Texas 75229
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The name, titles and term of the executive officers and members of the Board of
Directors:
Richard M. Stokley, President, Vice-President and Director. Age 66. Term ends
7/2000. Earl D. Milton, Secretary, Treasurer and Director. Age 75. Term ends
7/2000. Donnelly E. McMillen, Director. Age 77. Term ends 7/2000.
RICHARD M. STOKLEY - Chairman and CEO.
Mr. Stokley has over thirty years experience in Multi-level companies including
being in the top ten for the United States and Canada in Personal Group Volume
for Amway and the number one distributor in Pennyrich. He has been involved in
Real Estate investment, development and construction as well as manufacturing.
Mr. Stokley was instrumental in the formation of True Health, Inc., and was the
paramount force in making True Health a public company. According to Mr.
Stokley, "Public companies provide protection for distributors. It allows for
distributors to become stockholders, and by so doing, distributors can
participate in the growth and direction of the firm."
<PAGE>
Mr. Stokley directs and manages the day-to-day operations of the company. He and
his wife, Ann, live in Dallas. They have five children and ten grandchildren.
EARL D. MILTON - Secretary/Treasurer and Vice President of
Administration
Mr. Milton holds degrees in Finance and Accounting from Centenary College,
Shreveport. He, also, has done post graduate work in finance at New York
University. Mr. Milton has served as financial consultant to numerous
companies in Texas and Louisiana; supervised a $50 million investment fund; was
Vice President for a securities firm; and was a securities analyst on Wall
Street.
Earl and his wife, Betty, live in Dallas and have two children and three
grandchildren.
DONNELLY E. McMILLEN - Director
Don E. McMillen graduated cum laude with an LL.B. from Southern Law University,
Memphis State University. He served with the U.S. Navy and Merchant Marines in
both the Atlantic and Pacific theaters during World War II. Mr. McMillen's
business background includes Commercial Credit Corporation as a financial
analyst, and Westinghouse Electric Corporation as Regional Financial Manager. He
is also in private businesses, such as real estate, insurance, oil and gas, plus
manufacturing and selling a patented system for portion and inventory control of
beverages. Mr. McMillen said of True Health, "I've known the management and
products of the company and I'm impressed with the research and testing that has
been executed over the past seven years in the formulation process to bring the
consumer the very finest nutritional supplement possible."
ITEM 6. EXECUTIVE COMPENSATION.
No executive of the company was paid during 1999, or 1998. Prior to this time
executives were paid by issuance of common stock or salary.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
At December 31,1999, certain shareholders had advanced the Company $70,414, of
which the entire amount is currently due. The Company and the
shareholder/creditors have stipulated the amount of $3,000 as accrued interest
owing on the balance.
During 1999, the Company occupied approximately 500 square feet of office space
under a month to month lease with a company owned by the president of True
Health, Inc. that
<PAGE>
requires monthly rentals of approximately $300. Rent expense charged to
operations was $3,600 and $3,185 (1998).
Also during 1999, the company issued common stock to the son of the Company's
President for services rendered. A total of 200,000 shares valued at $.025 per
share, or $5,000, were issued.
During 1999, a shareholder returned a total of 1,000,000 shares of common stock
which had been issued in 1994 for services rendered. The shares were canceled.
The transaction was recorded at the par value of the shares issued, or $10,000,
and was credited to other income.
ITEM 8. DESCRIPTION OF SECURITIES.
The par or stated value of the security: $0.01
PART II
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The table below sets forth the high and low bid price of the common stock
through December 31, 1999, as reported by the National Quotation Bureau. Such
over-the -counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commissions, and may not necessarily represent actual
transactions.
Fiscal Year Ending December 31, 1998 High Low
1/st/ Quarter $.01 $.01
2/nd/ Quarter $.01 $.01
3/rd/ Quarter $.005 $.002
4/th/ Quarter $.002 $.002
Fiscal Year Ending December 31, 1999
1/st/ Quarter $.002 $.002
2/nd/ Quarter $.02 $.002
3/rd/ Quarter $.03 $.003
4/th/ Quarter $.03 $.002
STOCKHOLDERS
As of December 31, 1999, the Company had 1,045 shareholders of record.
<PAGE>
DIVIDENDS
The Company has never paid dividends.
ITEM 2. LEGAL PROCEEDINGS.
None.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED STOCK.
None.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The corporation shall indemnify any Director or Officer, or former Director
or Officer of the corporation or any person who may have served at its
request as a Director or Officer or another corporation in which it owns
shares of capital stock, or of which it is a creditor, against reasonable
expenses, including attorney's fees, actually and necessarily incurred by
him in connection with the defense of any civil, criminal or administrative
action, suit or proceeding in which he is made a party or with which he is
threatened by reason of being or having been or because of any act as such
Director or Officer, within the course of his duties or employment, except
in relation to matters as to which he shall be adjudged in such action,
suit or proceeding to be liable for negligence or misconduct in the
performance of his duties. The corporation may also reimburse any Director
or Officer for the reasonable costs of settlement of any such action, suit
or proceeding, if it shall be found by a majority of a committee composed
of the Directors not involved in the matter in controversy, whether or not
a quorum, that it was to the interests of the corporation that such
settlement be made and that such Director or Officer was not guilty of
negligence or misconduct. The right of indemnification herein provided
shall extend to the estate, executor, administrator, guardian and
conservator of any deceased or former Director or Officer or person who
himself would have been entitled to indemnification. Such rights of
indemnification and reimbursement shall not be deemed exclusive of any
Other rights to which such Director or Officer may be entitled under any
statute, agreement, vote of shareholders, or otherwise.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
----------------------------------------
(Registrant)
Date: April 13, 2000 By: /s/ Richard M. Stokley
---------------- ------------------------------------
(Signature)
Richard M. Stokley
President
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
REQUIRED BY ITEM 1
A. Financial statements
--------------------
Report of independent certified public accountants
Balance sheets, December 31, 1999 and 1998
Statements of income (loss) for the years ended
December 31, 1999 and 1998
Statements of stockholders' deficit for the years ended
December 31, 1999 and 1998
Statements of cash flows for the years ended
December 31, 1999 and 1998
Notes to financial statements
B. Financial statement schedules
-----------------------------
Schedules are omitted because of the absence of the conditions under which they
are required, or because the information required by such omitted schedule is
contained in the financial statements or the notes thereto.
<PAGE>
[LETTERHEAD OF BATEMAN & CO., INC., P.C.]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To The Board of Directors and Stockholders
True Health, Inc.
Dallas, Texas
We have audited the accompanying balance sheets of True Health, Inc. as of
December 31, 1999 and 1998 and the related statements of income (loss),
stockholders' deficit, and cash flows for the years then ended. 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 True Health, Inc. as of
December 31, 1999 and 1998, and the results of its operations and cash flows for
the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8 to the
financial statements, the Company has suffered recurring losses from operations
and has a working capital deficiency that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to those
matters are also described in Note 8. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Bateman & Co., Inc., P.C.
Houston, Texas
April 4, 2000
Member
INTERNATIONAL ASSOCIATION OF PRACTISING ACCOUNTANTS
Offices in Principal Cities Around The World
<PAGE>
TRUE HEALTH, INC.
Balance Sheets
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 2,085 $ 67
Accounts receivable, trade 438 342
Inventory 9,229 9,323
------------- -------------
Total current assets 11,752 9,732
------------- -------------
Office and computer equipment, net of
accumulated depreciation of $1,110 and $305 1,025 1,830
------------- -------------
$ 12,777 $ 11,562
============= =============
LIABILITIES
Current liabilities:
Short term note payable $ 90 $ 1,147
Accounts payable and accrued expenses 7,940 5,507
Due to related parties 70,414 71,142
------------- -------------
Total current liabilities 78,444 77,796
------------- -------------
Commitments and contingencies - -
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.01 par value, 100,000,000 shares authorized
60,609,774 and 61,409,774 shares issued and outstanding $ 606,098 $ 614,098
Capital in excess of par value 277,621 274,621
Accumulated deficit (949,386) (954,953)
------------- -------------
Total stockholders' equity (deficit) (65,667) (66,234)
------------- -------------
$ 12,777 $ 11,562
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
TRUE HEALTH, INC.
Statements of Income (Loss)
For The Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
------------ ---------------
<S> <C> <C>
Sales $ 35,849 $ 42,928
Cost of sales 6,858 9,555
------------ ---------------
Gross profit 28,991 33,373
------------ ---------------
Selling, general, and administrative expenses:
Salaries and sales commissions 8,987 36,107
Research and development 258 23
Depreciation 805 305
Advertising and promotion 4,101 6,192
Other 18,860 19,273
------------ ---------------
Total selling, general, and administrative expenses 33,011 61,900
------------ ---------------
Loss from operations (4,020) (28,527)
------------ ---------------
Other income (expense):
Other income 10,000 693
Interest expense (413) (835)
------------ ---------------
Total other income (expense) 9,587 (142)
------------ ---------------
Income (loss) before taxes on income 5,567 (28,669)
Provision (credit) for taxes on income - -
------------ ---------------
Net income (loss) $ 5,567 $ (28,669)
============ ===============
Income (Loss) per common share, basic $ 0.00009 $ (0.00045)
============ ===============
Weighted average number of shares outstanding 61,328,130 63,790,585
============ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
TRUE HEALTH, INC.
Statements of Stockholders' Deficit
For The Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional
Common Stock Paid In Accumulated
---------------------------------
Shares Amount Capital Deficit Total
--------------- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1997 61,409,774 $ 614,098 $ 244,621 $ (926,284) $ (67,565)
Services contributed for which no
stock was issued - - 30,000 30,000
Net (loss) - - - (28,669) (28,669)
--------------- --------------- -------------- -------------- --------------
Balances, December 31, 1998 61,409,774 $ 614,098 $ 274,621 $ (954,953) $ (66,234)
Return and cancellation of shares
issued in prior years for services (1,000,000) (10,000) - - (10,000)
Stock issued for services 200,000 2,000 3,000 - 5,000
Net income - - - 5,567 5,567
--------------- --------------- -------------- -------------- --------------
Balances, December 31, 1999 60,609,774 $ 606,098 $ 277,621 $ (949,386) $ (65,667)
=============== =============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
TRUE HEALTH, INC.
Statements of Cash Flows
For The Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 5,567 $ (28,669)
Adjustments to reconcile net income to cash provided (used) by operating
activities:
Depreciation 805 305
Decrease (increase) in accounts receivable (96) (28)
Decrease (increase) in inventory 94 2,551
Increase (decrease) in accounts payable and accrued expenses 2,433 (2,289)
Services contributed for which no stock was issued - 30,000
Stock issued for services 5,000 -
Return and cancellation of shares issued in prior years
for services (10,000) -
-------------- --------------
Net cash provided (used) by operating activities 3,803 1,870
-------------- --------------
Cash flows from investing activities:
-------------- --------------
Net cash provided (used) by investing activities - -
-------------- --------------
Cash flows from financing activities:
Repayments to related parties (728) (1,425)
Repayments of short term notes payable (1,057) (988)
-------------- --------------
Net cash provided (used) by financing activities (1,785) (2,413)
-------------- --------------
Net increase (decrease) in cash and cash equivalents 2,018 (543)
Cash and cash equivalents:
Beginning of year 67 610
-------------- --------------
End of year $ 2,085 $ 67
============== ==============
Supplemental cash flow disclosures:
Cash paid for interest $ 413 $ 835
Cash paid for income taxes - -
Non-cash financing and investing activities:
Return of stock issued in prior years for services (10,000) -
Stock issued for services 5,000 -
Services contributed for which no shares were issued - 30,000
Acquisition of office and computer equipment by issuance of
short term note payable - 2,135
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
TRUE HEALTH, INC.
Notes To Financial Statements
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
Note 1 - Organization and summary of significant accounting policies: Following
is a summary of the Company's organization and significant accounting policies:
Nature of operations and basis of presentation - The Company is a Utah
corporation engaged in the marketing of nutrition supplement/meal
replacement products under the brand name True Health. Substantially
all of its revenues are derived from these products. The products are
distributed from the Company's facilities in Texas to customers
throughout the world. The accompanying financial statements have been
prepared on the basis of generally accepted accounting principles.
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 disclosure of 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.
Revenue and expense recognition - The Company follows the accrual
method of accounting. Revenues are recognized when the goods are
shipped and expenses are recognized when incurred.
Cash and cash equivalents - Cash and cash equivalents include all
highly liquid investments with an original maturity of three months or
less.
Inventory - Inventories are stated at the lower of cost or market, with
cost determined using the first-in first-out (FIFO) method.
Income taxes - Deferred income taxes are reported for timing
differences between items of income or expense reported in the
financial statements and those reported for income tax purposes. The
Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes,
which requires the use of the asset/liability method of accounting for
income taxes. Deferred income tax assets and liabilities are recognized
for the future tax effects that will result from differences between
the income tax and financial statement basis of assets and liabilities,
and for loss and credit carryforwards. Deferred tax assets and
liabilities are measured using currently enacted tax rates expected to
be in effect when the differences are used for tax purposes, but
deferred tax assets are recognized only when future realization is more
likely than not. Provisions for currently payable income taxes are
computed on the current year's income taxable for federal and state
income tax reporting purposes.
<PAGE>
TRUE HEALTH, INC.
Notes To Financial Statements
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
Earnings (loss) per share - Earnings (loss) per share is computed on
the weighted average number of shares outstanding during the year, in
accordance with FASB Statement Number 128, Earnings Per Share.
Advertising - The Company expenses advertising costs as incurred.
Advertising expenses approximated $4,100 (1999) and $6,200 (1998).
Fair value of financial instruments and derivative financial
instruments - The Company has adopted Statement of Financial Accounting
Standards number 119, Disclosure About Derivative Financial Instruments
and Fair Value of Financial Instruments. The carrying amounts of cash,
accounts payable and accrued expenses, and due to related parties
approximate fair value because of the short maturity of these items.
These fair value estimates are subjective in nature and involve
uncertainties and matters of significant judgment, and, therefore,
cannot be determined with precision. Changes in assumptions could
significantly affect these estimates. At December 31, 1999 and 1998,
the Company had no derivative financial instruments.
Note 2 - Regulatory agency matters:
Various agencies of the U.S. government have broad powers over manufacturers and
sellers of foodstuffs and drugs under various Federal and state statutes and
regulations. Such powers may be exercised by the authorities in instances of
noncompliance, and under certain circumstances may include extreme measures,
including the destruction of inventory, monetary fines, issuing of cease and
desist orders, or even closing of a noncomplying enterprise. In 1991, the
Company entered into a formal agreement with the Federal Trade Commission under
which the Company agreed not to make, directly or by implication, any oral or
written statement or representation that its products can cure or cause HIV
disease to be cured, go into remission, become HIV negative, or be alleviated.
Although the formal agreement remained in effect at December 31, 1999,
management believes it is in compliance with its provisions. In addition, the
Company has entered into an agreement with a major university under which
clinical studies of the Company's products will be made; however, there is no
assurance such studies can be successfully completed, or if completed, will
result in findings favorable to the Company.
<PAGE>
TRUE HEALTH, INC.
Notes To Financial Statements
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
Note 3 - Inventories and research activities: Inventories consisted of the
following:
<TABLE>
<CAPTION>
December 31
1999 1998
--------------------------------
<S> <C> <C>
Raw Materials $ 3,307 $ 3,255
Finished product held for sale 1,242 1,352
Finished product held for use in research activities 4,680 4,716
--------------------------------
$ 9,229 $ 9,323
================================
</TABLE>
During 1996, the Company entered into an agreement with a major university
whereby certain efficacy tests will be performed using the Company's products.
The tests are intended to determine the effectiveness of the products in
maintaining or restoring health in AIDs patients. Under the agreement, the
Company is to provide its products without charge. It is expected that the tests
will be completed within the next few years and will consume the finished
product of $4,680 referred to above. There is no assurance that the results of
the tests will be favorable.
Note 4 - Accounts payable and accrued expenses: Details of accounts payable and
accrued expenses are as follows:
<TABLE>
<CAPTION>
December 31
1999 1998
--------------------------------
<S> <C> <C>
Accounts payable, trade $ 4,304 $ 2,146
Commissions payable 492 196
Taxes accrued and withheld 144 165
Accrued interest payable 3,000 3,000
--------------------------------
Total $ 7,940 $ 5,507
================================
</TABLE>
Note 5 - Related party transactions:
At December 31, 1999, certain shareholders had advanced the Company $70,414, of
which the entire amount is currently due. The Company and the
shareholder/creditors have stipulated the amount of $3,000 as accrued interest
owing on the balance.
During 1999, the Company occupied approximately 500 square feet of office space
under a month-to-month lease with a company owned by the president of True
Health, Inc. that requires monthly rentals of approximately $300. Rent expense
charged to operations was $3,600 and $3,185 (1998).
Also during 1999, the company issued common stock to the son of the Company's
President for services rendered. A total of 200,000 shares valued at $.025 per
share, or $5,000, were issued.
<PAGE>
TRUE HEALTH, INC.
Notes To Financial Statements
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
During 1999, a shareholder returned 1,000,000 shares of common stock which had
been issued in 1994 for services rendered. The shares were canceled. The
transaction was recorded at the par value of the shares issued, or $10,000, and
was credited to other income.
Note 6 - Federal income tax:
The Company follows Statement of Financial Accounting Standards number 109 (SFAS
109), Accounting for Income Taxes. Deferred income taxes reflect the net effect
of (a) temporary difference between carrying amounts of assets and liabilities
for financial purposes and the amounts used for income tax reporting purposes,
and (b) net operating loss carryforwards. No provision for currently refundable
Federal income tax has been made in the accompanying statements of loss as no
recoverable taxes were paid previously. Similarly, no deferred tax asset
attributable to the net operating loss carryforward has been recognized, as it
is not likely to be realized.
The current provision for refundable Federal income tax consists of the
following:
<TABLE>
<CAPTION>
1999 1998
-----------------------------
<S> <C> <C>
Provision (Credit) for Federal income tax attributable to:
Current operations at expected rate of 34% $ 1,900 ($9,700)
Nondeductible expenses 2,500 11,100
-----------------------------
4,400 1,400
Nontaxable income (3,400) -
Benefit of net operating loss carryover (1,000) -
Limitation due to absence of prior year taxable income - (1,400)
-----------------------------
Net provision (credit) $ - $ -
=============================
</TABLE>
The cumulative tax effect at the expected rate of 34% of significant items
comprising the Company's net deferred tax amounts as of December 31, 1999 and
1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
-----------------------------
<S> <C> <C>
Deferred tax asset attributable to:
Net operating loss carryover $301,900 $ 292,700
Less, Valuation allowance (301,900) (292,700)
-----------------------------
Net deferred tax asset $ - $ -
=============================
</TABLE>
The Company has net operating loss carryforwards which expire as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
Expires in:
2001 $ 88,394 $ 90,130
2002 171,871 171,871
</TABLE>
<PAGE>
TRUE HEALTH, INC.
Notes To Financial Statements
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
2003 74,056 74,056
2004 259,025 259,025
2005 61,471 61,471
2006 25,648 25,648
2007 64,466 64,466
2008 13,221 13,221
2009 52,159 52,159
2010 5,398 5,398
2011 43,550 43,550
2012 - -
2013 28,669 28,669
--------------------------------
Total $ 887,928 $ 889,664
================================
</TABLE>
Note 7 - Other income:
Included in other income are the following:
<TABLE>
<CAPTION>
1999 1998
--------------------------------
<S> <C> <C>
Return and cancellation of shares
issued in prior years for services $ 10,000 $ -
Other - 693
--------------------------------
Total $ 10,000 $ 693
================================
</TABLE>
Note 8 - Going concern:
The Company has experienced losses in eight of the previous ten years. Losses
amount to more than $940,000 on a cumulative basis. At December 31, 1999,
current liabilities exceeded current assets by approximately $66,000, resulting
in a working capital deficiency; there is also a capital deficit of the same
approximate amount. Management is currently investigating alternative marketing
strategies, methods, and markets, and is seeking additional outside financing
and/or equity investors, but there is no assurance that management's efforts in
this regard will be successful. Moreover, substantially all revenues are derived
from a single product or line of products, creating a concentration of business;
should the Company be unable for any reason to continue sales of the products,
it would have a severe impact on the Company's business. All of the above
factors create substantial doubt about the Company's ability to continue as a
going concern.
<PAGE>
TRUE HEALTH, INC.
Notes To Financial Statements
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
Note 9 - Year 2000 issue:
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
entity, including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
Note 10 - New accounting pronouncements:
The Financial Accounting Standards Board has issued several new accounting
pronouncements which may affect the Company in future years.
FASB Statement Number 130, Reporting Comprehensive Income, became effective for
fiscal years beginning after December 15, 1997, and establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements. This Statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. The Company had no comprehensive income other than
net income during the last two fiscal years.
FASB Statement Number 131, Disclosures about Segments of an Enterprise and
Related Information, became effective for fiscal years beginning after December
15, 1997, and establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. As the Company has only one business
segment, the pronouncement had no material effect during the current year.
FASB Statement Number 132, Employers' Disclosures about Pensions and Other
Postretirement Benefits, became effective for fiscal years beginning after
December 15, 1997, and revises employers' disclosures about pension and other
postretirement benefit plans. It does not change the measurement or recognition
of those plans. It standardizes the disclosure requirements for pensions and
other postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis, and eliminates certain disclosures.
Since the Company has no pension or postretirement benefit plans, the
pronouncement had no effect in the current year.
<PAGE>
TRUE HEALTH, INC.
Notes To Financial Statements
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
FASB Statement Number 133, Accounting for Derivative Instruments and Hedging
Activities, becomes effective for fiscal years beginning after June 15, 1999,
and establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. The
Company does not believe this pronouncement will have a material effect on its
financial statements in the near future.
FASB Statement Number 134, Accounting for Mortgage-Backed Securities Retained
after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise, becomes effective for fiscal years beginning after December 15,
1998. It is not expected to apply to the Company.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<PERIOD-START> JAN-01-1999
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,085
<SECURITIES> 0
<RECEIVABLES> 438
<ALLOWANCES> 0
<INVENTORY> 9,229
<CURRENT-ASSETS> 11,752
<PP&E> 2,135
<DEPRECIATION> 1,110
<TOTAL-ASSETS> 12,777
<CURRENT-LIABILITIES> 78,444
<BONDS> 0
0
0
<COMMON> 606,098
<OTHER-SE> (671,765)
<TOTAL-LIABILITY-AND-EQUITY> 12,777
<SALES> 35,849
<TOTAL-REVENUES> 35,849
<CGS> 6,858
<TOTAL-COSTS> 6,858
<OTHER-EXPENSES> 33,011
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 413
<INCOME-PRETAX> 5,567
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,567
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,567
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
