<PAGE> 1
ANNUAL REPORT FOR SMALL BUSINESS ISSUERS SUBJECT
TO THE 1934 ACT REPORTING REQUIREMENTS
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
-----------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ___________
Commission File Number 0-15807
HEALTH & LEISURE, INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in its charter)
<TABLE>
<CAPTION>
Delaware 31-1190725
------------------------------- -----------------------------------
<S> <C>
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
<TABLE>
<CAPTION>
203 East Broad Street, Columbus, Ohio 43215
<S> <C>
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(Address of principal executive office) (Zip Code)
</TABLE>
Issuer's telephone number: (614) 228-2225
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
None None
---- ----
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value per share
---------------------------------------
(Title of class)
Indicate by check mark whether the Issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Issuer
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 Issuer'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. [X]
<PAGE> 2
State Issuer's revenues for its most recent fiscal year. $75,250
-------
There are no recent quotes available for the Registrant's common
stock. Accordingly, the Registrant is unable to determine the aggregate market
value of the voting stock held by nonaffiliates of the Registrant as of any
recent date.
On March 27, 1998, the Issuer had outstanding 17,325,427 shares of
common stock, $0.01 par value, which is the Issuer's only class of common
stock.
<PAGE> 3
TABLE OF CONTENTS
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Page
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<S> <C> <C>
PART I 1
ITEM 1. BUSINESS 1
ITEM 2. PROPERTIES 3
ITEM 3. LEGAL PROCEEDINGS 3
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 3
PART II 4
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS 4
ITEM 6. PLAN OF OPERATION 4
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 5
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
AND FINANCIAL DISCLOSURE 5
PART III 6
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 6
ITEM 10. EXECUTIVE COMPENSATION 8
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 8
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 10
PART IV 11
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
REPORTS ON FORM 8-K 11
SIGNATURES 15
EXHIBIT INDEX 19
</TABLE>
<PAGE> 4
PART I
ITEM 1. BUSINESS
Background
The Company was incorporated on March 13, 1985, under the laws of the
State of Utah with the name Univenture Capital Corp. The Company was organized
to engage in any lawful business and had no specific business plan except the
investigation, analysis, and possible acquisition of business opportunities.
On August 29, 1986, the Company acquired all of the outstanding stock
of Health & Leisure Inc., a Delaware corporation which subsequently changed its
name to Entre Vest, Inc. ("Entre Vest"), in a transaction in which a subsidiary
of the Company merged with and into Entre Vest and the former stockholders of
Entre Vest obtained a controlling interest in the Company. The Company
subsequently changed its own name from Univenture Capital Corp. to Health &
Leisure, Inc. and changed its state of incorporation from Utah to Delaware.
Entre Vest was incorporated on June 6, 1985, under the laws of the State of
Delaware. (The Company and its subsidiaries are referred to herein as the
"Company.")
Heat Pads
In July 1987, the Company began marketing to the general public, in
the United States, disposable chemical heat pads (the "heat pads") as hand and
body warmers. The heat pads were marketed under various names and various
package styles. The heat pads are small spun bonded fabric and paper packets of
various sizes and are able to emit heat for periods ranging between four hours
and twenty hours. The heat produced by a heat pad results from an exothermic
chemical reaction which is triggered by exposing the pad to air upon its
removal from its airtight packaging. The Company focused its marketing efforts
on distribution through various chain retail stores and through medical supply
houses for various heat therapy uses. All of the Company's operations in
connection with importing and distributing the heat pads were conducted through
its wholly-owned Ohio subsidiary, H & L Concepts, Inc. The market for the heat
pads did not develop on a scale anticipated by management, the distribution of
the heat pads did not result in profitable operations and the Company has
discontinued this line of business.
Marketing of AT&T Long Distance Telephone Services
From March 1990 to December 1991, the Company marketed long distance
telephone services of AT&T. Initially, this business was conducted through a
wholly-owned Delaware subsidiary, AmTele, Inc. ("AmTele"). From December 1990
through December 1991, this business was conducted through a joint venture
formed by AmTele and Kaplan Enterprises, Inc., a California corporation
unaffiliated with the Company ("KEI"). The joint venture was formed to provide
needed capital and KEI contributed $400,000 to the joint venture and AmTele
contributed its business operations. To provide its services, the Company
contracted with AT&T to obtain its own private telephone network under AT&T's
Software Defined Network ("SDN") service. SDN uses computer controlled
switching systems to provide its SDN customers with the benefits of a private
telephone network. The Company marketed to its customers the ability of
obtaining AT&T long distance telephone services through the Company's private
SDN network. The benefit to customers of obtaining telephone services through
the Company's network was that customers paid less expensive long distance
telephone rates. The Company was to earn its revenues from discount rebates to
be received from AT&T based on the volume of the Company's customers' long
distance telephone usage.
- 1 -
<PAGE> 5
The Company encountered a number of substantial difficulties in the
operation of its telephone service business including without limitation delays
in processing by AT&T and delays in payment by AT&T. As a result, the Company
received revenues only sporadically and not in sufficient amounts to cover
operating costs. In October 1991, KEI received a larger share of the joint
venture (70%) in exchange for providing additional capital. In February 1992,
AmTele decided to exit the telephone service business and transferred its
partnership interest in the joint venture to KEI in exchange for a full release
of liability and an indemnification. As a result, the Company is no longer in
the business of marketing AT&T long distance telephone services. The Company
has been informed that KEI, after contributing additional funds to the
business, eventually discontinued business operations.
Investigation of New Business Opportunities
Since March 1992, the Company's primary activity has consisted of the
investigation and analysis of a variety of businesses with which the Company
could acquire, merge or otherwise affiliate. If the Company finds an
appropriate business opportunity it will attempt to arrange for a business
combination. It is expected that it would combine with an existing
privately-held company in a merger, consolidation, exchange of its stock for
stock or assets or any other form of combination. Because the Company is a
public company, this would result in the private company becoming part of a
public corporation. Although a number of businesses have been investigated, to
date the Company has not found a business opportunity with which it desires to
combine. The expenses incurred by the Company since January 1992 consist
primarily of travel and telephone expenses incurred by the Company's president
in investigating business opportunities and expenses incurred to comply with
reporting requirements under the Securities Exchange Act of 1934.
Although the Company has considered a number of combination candidates,
it has not decided to proceed with any of them. The Company is currently in
discussions with several prospective combination candidates, however it has not
made the decision to proceed with a combination with any of them at this time,
and there can be no assurance that such a combination will occur.
The Company will not pursue any combination proposal beyond the
preliminary negotiation stage with any combination candidate which does not
furnish the Company with audited financial statements for at least its most
recent fiscal year and unaudited interim financial statements for periods
subsequent to the date of the audited financial statements. In addition, any
combination candidate must be capable of supplying audited financial statements
for prior years as may be required by the Securities Exchange Act of 1934, or
any filing requirements thereunder. Under no circumstances will there be any
combination with any entity where the entity or any of its directors, executive
officers, principal shareholders or general partners:
(a) have been convicted of securities fraud, mail fraud, tax
fraud, embezzlement, bribery or a similar criminal offense
involving misappropriation or theft of funds, or the subject
of a pending investigation or indictment involving any of
those offenses;
(b) have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in
securities, whether as issuer, underwriter, broker, dealer or
investment advisor, or the subject of any pending
investigation or a defendant in any pending lawsuit arising
from or based upon allegations of unlawful transactions in
securities; or
(c) have been a defendant in a civil action which resulted in a
final judgment against it or him awarding damages or
rescission based upon unlawful purchases or sales of
securities.
There will be no combination of any type with companies or individuals
affiliated with officers, directors or principal shareholders or the Company.
- 2 -
<PAGE> 6
Consulting Services
In order to fund ongoing expenses of the Company during the years 1993
through 1997 and to enable the Company to pay liabilities, the Company has
entered into arrangements with pharmaceutical chains pursuant to which the
Company has provided consulting services. These services began in April 1993.
These services are provided on behalf of the Company by its president, who is a
licensed pharmacist. It is not intended that consulting services will be an
ongoing business of the Company. These consulting services are being rendered on
a month-to-month basis. Once the Company completes a combination with a viable
business opportunity, these services will terminate. There can be no assurance
that such services will not be terminated prior to a combination with a business
opportunity.
ITEM 2. PROPERTIES
The Company owns no real property and no significant personal property
and maintains administrative offices at 203 East Broad Street, Columbus, Ohio
43215. It currently leases approximately 150 square feet of office space at
this location and shares a conference room and common reception area. The lease
is an unwritten lease and is on a month-to-month basis with current rental
payments of $210 per month. There are no other material terms of the lease and,
under Ohio law, the lease can be terminated upon 30 days notice from either
party. The Company has no present plans to invest in real estate, real estate
mortgages or in the securities of entities engaged in these lines of business,
although it will consider all viable business opportunities.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company or any of
its subsidiaries are a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders during the fourth
quarter of 1997.
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<PAGE> 7
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's shares of common stock are traded on the
over-the-counter market. However, there has not been any significant trading
activity in the Company's stock, no established public trading market exists,
and no quotations for the Company's stock during 1996 and 1997 are available,
as reflected in the following table.
<TABLE>
<CAPTION>
Period Bid Prices
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<S> <C> <C>
1997
----
First Quarter (not quoted)
Second Quarter (not quoted)
Third Quarter (not quoted)
Fourth Quarter (not quoted)
1996
----
First Quarter (not quoted)
Second Quarter (not quoted)
Third Quarter (not quoted)
Fourth Quarter (not quoted)
</TABLE>
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Holders of Securities
As of December 31, 1997, there were approximately 559 holders of
record of the Company's shares of common stock.
Dividend Policy
No cash dividends have been paid to date on the Company's common
stock. The Company presently intends to retain all of its earnings, if any, to
finance the growth and development of its business and does not expect to pay
any cash dividends in the foreseeable future.
ITEM 6. PLAN OF OPERATION
The Company's primary activity consists of the investigation and
analysis of a variety of businesses with which the Company could acquire, merge
or otherwise affiliate. If the Company finds an appropriate business
opportunity, it will attempt to arrange for a business combination. See Item 1.
The primary expenses in connection with this activity are travel and
telephone expenses incurred to investigate business opportunities and the
salary expense of the Company's president. During 1995, the Company also
incurred additional legal and accounting expenses to bring current and
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<PAGE> 8
complete its reporting requirements under the Securities and Exchange Act of
1934. The Company expects to fund its cash requirements for the next 12 months
in the same manner as it has in the past several years as follows: (a) although
the president's salary accrues, the Company has not actually paid the salary to
the president and does not expect to do so until it receives funding in
connection with a business combination or otherwise; (b) the Company has
generated funds by providing consulting services to pharmaceutical chains.
$75,250 was generated from this activity in 1997, $53,000 was generated from
this activity in 1996 and $59,000 was generated from this activity in 1995. This
consulting is not expected to be an ongoing business of the Company but only a
means to help fund expenses and there can be no assurance that these consulting
services will continue; (c) the Company's president has personally loaned funds
to the Company. He loaned the Company $2,000 during 1997, $15,139 during 1996,
$21,272 during 1995, $36,149 during 1994, $81,057 during 1993, $44,954 during
1992 and $62,320 during 1991. Mr. Feldman, the Company's president, is not
obligated to loan any additional funds to the Company and there can be no
assurance that there will be sufficient funds to meet the Company's cash
requirements. The Company does not anticipate incurring any significant expense
as a result of year 2000 compliance of computer based systems. However, if the
Company consummates a business combination with another entity it is possible
that such entity would have significant expense so that its computer systems can
process data after the year 2000.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required under this Item is contained under the heading
"Independent Auditor's Report" and is included herein as Exhibit 4 and is
hereby incorporated herein by reference.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE
There are no disclosures required under this Item.
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<PAGE> 9
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
Name Age Position and Business Experience Director Since
---- --- -------------------------------- --------------
<S> <C> <C> <C>
Robert M. Feldman 66 Chairman of the Board of Directors, President, 1986
and Chief Executive Officer of the Company.
Since 1984, Mr. Feldman has been involved
with the organization, development, and oper-
ating of the Company and its subsidiaries. Mr.
Feldman is a licensed pharmacist in the State of
Ohio.
Burton Schildhouse 72 Secretary, Treasurer and director of the 1986
Company. From June 1990 to June 1995, Mr.
Schildhouse served as Vice President of the
Greater Columbus Chamber of Commerce. For
more than 25 years, Mr. Schildhouse has been
Chief Executive Officer of Burton Schildhouse
Communications Counsel, Columbus, Ohio, a
firm which provides consulting services to
businesses, institutions, and public agencies on
business and development issues, public affairs,
communications, public relations, and adver-
tising. He has served as its Chairman from July
1995 to present.
Arthur Aaronson 49 Director of the Company. Since 1975, Mr. 1989
Aaronson has been a partner in the law firm of
Aaronson & Aaronson, Los Angeles, California.
James S. Koroloff 64 Director of the Company. From May 1990 to 1990
December 1991, he served as a vice president
of the Company. Since June 1989, Mr.
Koroloff has also been president of Westchester
Capitol Corporation, Toledo, Ohio, a firm which
is engaged in raising venture capital for
businesses. From July 1988 to June 1989,
Mr. Koroloff was vice president of syndications
for United Satellite Associations, Detroit,
Michigan. From January 1985 to July 1988,
Mr. Koroloff was a consultant and later a vice
president of syndication for First Ameri-Cable
Corporation, Columbus, Ohio, a company
engaged in providing cable television services.
Mr. Koroloff's duties with both United Satellite
Associates and First Ameri-Cable Corporation
involved raising capital for the operations of the
companies.
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C> <C> <C>
Donald S. Franklin 68 Director of the Company. From 1991 until 1990
retirement in 1994, Mr. Franklin was the sales
manager for Anderson Glass Company, Colum-
bus, Ohio, a firm engaged in the retail sale of
glass and mirror products. From December
1988 to October 1990, Mr. Franklin was the
operation and sales manager for Safelite
Corporation, Columbus, Ohio, a firm engaged in the
retail sale of automotive and industrial glass.
From 1968 to 1988, Mr. Franklin was
employed by Norman's Auto Glass, Columbus,
Ohio, of which his last position was that of
general manager.
</TABLE>
During 1997, the directors took action by unanimous written consent
without a meeting one time.
The Board has no standing audit, nominating, or compensation
committees, or committees performing similar functions.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who own more than 10% of
a registered class of the Company's equity securities to file statements of
beneficial ownership of the Company's shares of common stock. Based solely on a
review of copies of the forms filed under Section 16(a), if any, and furnished
to the Company, the Company is not aware of any noncompliance with this
requirement by any of its officers, directors or principal shareholders.
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<PAGE> 11
ITEM 10. EXECUTIVE COMPENSATION
Set forth below is the compensation of the Company's Chief Executive
Officer for the years indicated, the only person receiving compensation.
<TABLE>
<CAPTION>
All
Other Securities Other
Name Annual Restricted Underly- LTIP Comp-
and Compen- Stock ing Pay- ensa-
Principal Salary Bonus sation Award(s) Options/ outs tion
Position Year (1) ($) ($)(1) ($) SARs (#) ($) ($)
-------- ---- ------ ------- ------ ------- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert M.
Feldman,
President 1997 $24,000 $0 $0 $0 $0 $0 $0
1996 $24,000 $0 $0 $0 $0 $0 $0
1995 $42,000 $0 $0 $0 $0 $0 $0
</TABLE>
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(1) Salaries have been accrued pursuant to an employment agreement with
H&L Concepts, Inc., a wholly owned subsidiary of the Company. Under
the agreement, Mr. Feldman was entitled to receive an annual salary of
$24,000 in 1995, 1996 and 1997. However, because of the Company's cash
position, Mr. Feldman did not receive any of his salary during these
years. Such salary is reflected as an accrued liability on the
Company's financial statements. The employment agreement also provides
for the use of an automobile and certain other benefits as the Board
may from time to time determine.
Compensation of Directors
No Director of the Company has received any compensation as such, to
date, and there are no plans to compensate Directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information with respect to the
only persons known to the Company to own beneficially more than five percent of
the outstanding shares of Common Stock as of December 31, 1997:
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<PAGE> 12
<TABLE>
<CAPTION>
Amount Beneficially Percent of
Name and Address Owned (1) Class
---------------- ------------------- ----------
<S> <C> <C>
Robert M. Feldman 9,400,000 (2) 54.3%
2720 Sonata Drive
Columbus, OH 43209
Arthur Aaronson 1,250,000 (3) 7.2%
16133 Ventura Blvd.
Encino, CA 91436
Keith Marz 2,506,840 (3) 14.47%
14310 Weddington Street
Sherman Oaks, CA 91401
</TABLE>
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(1) Except as noted, all shares are beneficially owned and the sole voting and
investment power is held by the persons named.
(2) Does not include shares of Common Stock owned by Mr. Feldman's adult
children. Mr. Feldman disclaims any beneficial ownership of such shares of
Common Stock.
(3) Mr. Aaronson and Mr. Marz jointly own 1,000,000 shares of Common Stock in
which they share voting and investment power.
Security Ownership of Management
The following table sets forth certain information with respect to the
number of shares of Common Stock beneficially owned by each director of the
Company, and by all directors and officers of the Company as a group, as of
December 31, 1997:
<TABLE>
<CAPTION>
Amount Beneficially Percent of
Name Owned (1) Class
---- ------------------- ----------
<S> <C> <C>
Robert M. Feldman 9,400,000 (2) 54.3%
Burton Schildhouse 35,000 .2%
Arthur Aaronson 1,250,000 (3) 7.2%
James S. Koroloff 500,000 2.9%
Donald S. Franklin 50,000 (4) .3%
All directors and officers 11,235,000 64.85%
as a group (5 persons)
</TABLE>
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<PAGE> 13
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(1) Except as noted, all shares are beneficially owned and the sole voting and
investment power is held by the persons named.
(2) Does not include shares of Common Stock owned by Mr. Feldman's adult
children. Mr. Feldman disclaims any beneficial ownership of such shares of
Common Stock.
(3) 1,000,000 of the shares owned by Mr. Aaronson are owned jointly with Mr.
Keith Marz.
(4) The shares owned by Mr. Franklin are owned jointly with his spouse.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of the end of 1997, the Company owed Robert M. Feldman $222,754,
exclusive of accrued and unpaid salary and exclusive of interest. Such amount
consisted of (a) monies owed by the Company to Mr. Feldman under a promissory
note dated April 12, 1991, (b) advances by Mr. Feldman to the Company during the
years 1991 through 1997, and (c) accrued interest under such 1991 promissory
note and for such advances through 1997. The aggregate amount owed through 1994
was consolidated into a promissory note from the Company to Mr. Feldman dated
January 18, 1995 in the principal amount of $184,343, with principal and accrued
interest payable over a five year period in equal monthly installments of
principal and interest beginning in February 1996. In February 1996, the date
for the commencement of monthly payments was extended to February 1, 1997. In
February 1997, the date for the commencement of monthly payments was further
extended to February 1, 1998 and in February 1998 the date for Commencement of
monthly payments was further extended to February 1, 1999. Additionally, the
Company executed similar notes in February 1996, February 1997 and February
1998, for amounts advanced during 1995, 1996 and 1997 in the principal amount of
$21,272, $15,139, and $2,000 respectively. In the event of a change in control
of the Company, all principal and accrued interest under the notes is, at Mr.
Feldman's option, immediately due and payable. Generally, a change of control is
defined in the notes to mean (i) when a person or group acquires 20 percent or
more of the Company's outstanding shares; (ii) when, during any period of 24
consecutive months, the individuals who, at the beginning of such period,
constitute the board of directors cease for any reason other than death to
constitute a majority of the board; or (iii) upon the acquisition of the Company
by an outside entity through a transaction requiring shareholder approval.
In 1996, $21,770 was due to a bank from a loan the Company obtained in
1996 in the amount of $26,000. The note bears interest at the bank's lending
rate of prime plus 1%, and is payable in 24 equal monthly installments of
principal and interest of $1,000. The loan is personally guaranteed by Mr.
Feldman. The principal amount due on this loan as of December 31, 1997 was
$11,586.
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<PAGE> 14
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) LISTING OF FINANCIAL STATEMENTS
The following financial statements of the Company are
incorporated by reference in Item 8:
Independent Auditors' Report.
Consolidated Balance Sheets at December 31, 1996 and
1996.
Consolidated Statement of Operations for the Years
Ended December 31, 1997 and 1996, and for the period
March 13, 1985 (Inception) through December 31,
1997.
Consolidated Statements of Shareholders' Equity
Deficiency for the period March 13, 1985 (Inception)
through December 31, 1997.
Consolidated Statements of Cash Flows for the years
ended December 31, 1997 and 1996, and for the period
March 13, 1985 (Inception) through December 31,
1997.
Notes to Consolidated Financial Statements for the
years ended December 31, 1997 and 1996.
(a)(2) LISTING OF FINANCIAL STATEMENT SCHEDULES
Schedules IV, VIII and IX are included following the
signature page. All other Schedules are omitted because the
required information is either represented in the financial
statements or notes thereto, or is not applicable, required
or material.
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<PAGE> 15
(a)(3) LISTING OF EXHIBITS
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
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<S> <C> <C>
1(A) Certificate of Incorporation Annual report on Form 10-K for the year ended
December 31, 1987, filed March 30, 1988 (see
Exhibit 1(A) therein).
1(B) Certificate of Amendment to Annual report on Form 10-K for the year ended
Certificate of Incorporation filed December 31, 1988, filed December 28, 1989 (see
May 2, 1988 Exhibit 1(B) therein).
1(C) Certificate of Amendment to Annual report on Form 10-K for the year ended
Certificate of Incorporation filed December 31, 1990, filed April 15, 1991 (see
September 12, 1990 Exhibit 1(C) therein).
1(D) Bylaws Post-Effective Amendment No. 3 to the 1933 Act
Registration Statement on Form S-18 filed April 27,
1987 (see Exhibit 3(B) therein).
2 Specimen Stock Certificate Post-Effective Amendment No. 3 to the 1933 Act
Registration Statement on Form S-18 filed
November 12, 1986 (see Exhibit 10(A) therein).
*3(A) Employment Agreement with Post-Effective Amendment No. 1 to the 1933 Act
Robert M. Feldman Registration Statement on From S-18 filed
November 12, 1986 (see Exhibit 10(A) therein).
*3(B) Health & Leisure, Inc. 1986 Annual Report on Form 10-K for the year ended
Incentive Stock Option Plan December 31, 1988, filed December 28, 1989 (see
Exhibit 3(E) therein).
3(C) Promissory Note dated Form 10-K for year ending December 31, 1994, filed
January 18, 1995 from H & L April 14, 1995.
Concepts, Inc. to Robert M.
Feldman
3(D) Amendment dated February 1, Form 10-KSB for year ending December 31, 1995.
1996 to Promissory Note dated
January 18, 1995 from H & L
Concepts, Inc. to Robert M.
Feldman
</TABLE>
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<PAGE> 16
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
------- ---------------------- -------------------------
<S> <C> <C>
3(E) Promissory Note dated Form 10-KSB for year ending December 31, 1995.
February 1, 1996 from H & L
Concepts, Inc. to Robert M.
Feldman
3(F) Amendment dated February 1, Form 10-KSB for year ending December 31, 1996.
1997 to Promissory Note dated
January 18, 1995 from H&L
Concepts, Inc. to Robert M.
Feldman
3(G) Amendment dated February 1, Form 10-KSB for year ending December 31, 1996.
1997 to Promissory Note dated
February 1, 1996 from H&L
Concepts, Inc. to Robert M.
Feldman
3(H) Promissory Note dated Form 10-KSB for year ending December 31, 1996.
February 1, 1997 from H&L
Concepts, Inc. to Robert M.
Feldman
3(I) Amendment dated as of Contained herein.
February 1, 1998 to
Promissory Note dated
January 18, 1995 from H&L
Concepts, Inc. to Robert M. Feldman
3(J) Amendment dated as of Contained herein.
February 1, 1998 to
Promissory Note dated
February 1, 1996 from H&L
Concepts, Inc. to Robert M. Feldman
3(K) Amendment dated as of Contained herein.
February 1, 1998 to
Promissory Note dated
February 1, 1997 from H&L
Concepts, Inc. to Robert M. Feldman
3(L) Promissory Note dated Contained herein.
as of February 1, 1998 from H&L
Concepts, Inc. to Robert M. Feldman
4 Independent Auditor's Report Contained herein.
5 List of Subsidiaries Contained herein.
6 Powers of Attorney Contained herein.
7 Financial Data Schedule Contained herein.
</TABLE>
- -------------------------
*Executive Compensation Plans and Arrangements required to be filed pursuant to
Reg. 601(B)(10) of Regulation S-B.
No other exhibits are required to be filed herewith pursuant to Item 601 of
Regulation S-B.
(b) REPORTS ON FORM 8-K
No Form 8-K's were filed during the fourth quarter of the Company's fiscal
year ended December 31, 1996.
- 13 -
<PAGE> 17
(c) EXHIBITS
The exhibits in response to this portion of Item 13 are
submitted as a separate section of this report following the
signatures.
(d) FINANCIAL STATEMENT SCHEDULES
Schedules IV, VIII, and IX are included following the
signature page. All other schedules are omitted because the
required information is either presented in the financial
statements or notes thereto or is not applicable, required or
material.
- 14 -
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
HEALTH & LEISURE, INC.
Date: March 30, 1998 By/s/ Robert M. Feldman
------------------------------------
Robert M. Feldman, President,
Chief Executive Officer and Chairman
of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert M. Feldman
- ----------------------- President, Chief Executive March 30, 1998
Robert M. Feldman Officer, and Chairman
(Principal Executive Officer)
Burton Schildhouse* Secretary, Treasurer and March 30, 1998
- ---------------------- Director, (Principal Financial
Burton Schildhouse Officer)
Arthur Aaronson* Director March 30, 1998
- ----------------------
Arthur Aaronson
Donald S. Franklin* Director March 30, 1998
- ----------------------
Donald Franklin
James S. Koroloff* Director March 30, 1998
- ----------------------
James Koroloff
</TABLE>
*The undersigned, by signing his name hereto, does sign this document
on behalf of the person indicated above pursuant to a Power of Attorney duly
executed by such person.
By /s/ Robert M. Feldman
---------------------------- March 30, 1998
Robert M. Feldman,
Attorney-in-Fact
- 15 -
<PAGE> 19
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Schedule IV - Indebtedness of and to Related Parties - Not Current
<TABLE>
<CAPTION>
Indebtedness to
Balance at related parties - not current Balance
1997 beginning end of
Name of Person of period Additions Deductions period
-------------- --------- --------- ---------- -------
<S> <C> <C> <C> <C>
Robert M. Feldman, $220,754 $ 7,000(1) $5,000(2) $222,754
President
1996
Name of Person
--------------
Robert M. Feldman, $205,615 $19,139(1) $4,000(2) $220,754
President
1995
Name of Person
--------------
Robert M. Feldman, $184,343 $21,272(1) $ 0(2) $205,615
President
</TABLE>
- --------------------
(1) 1997, 1996, and 1995 additions consist of borrowings of $7,000, $19,139,
and $21,272, respectively.
(2) 1997, 1996, and 1995 deductions consist of principal payments of $5,000,
$4,000, and $0, respectively.
- 16 -
<PAGE> 20
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Schedule VIII - Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Additions
Additions Charged to
Balance at Charged to other Balance at
beginning costs and accounts end of
of period expenses describe period
---------- ---------- ----------- ----------
<S> <C> <C>
1997
----
Description:
Allowance for doubtful
accounts $0 $0
== ==
1996
----
Allowance for doubtful
accounts $0 $0
== ==
</TABLE>
- 17 -
<PAGE> 21
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Schedule IX - Short Term Borrowings
<TABLE>
<CAPTION>
Maximum Average Weighted
Weighted Amount Amount Average
1997 Balance Average Outstanding Outstanding Interest Rate
Category of Aggregate at end of Interest During the During the During the
Short Term Borrowings Period Rate Period Period (1) Period (2)
- --------------------- ------ ---- ------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Notes payable to:
Financial Institution $11,586 10.30% $21,770 $16,337 11.11%
1996
Category of Aggregate
Short Term Borrowings
- ---------------------
Notes payable to:
Financial Institution $21,770 10.30% $28,000 $21,206 13.42%
1995
Category of Aggregate
Short term Borrowings
- ---------------------
Notes payable to:
Financial Institution $14,149 10.85% $20,000 $14,158 8.28%
</TABLE>
- -----------------
(1) The average amount outstanding during the period was computed by dividing
the total period-end outstanding principal balances by 12.
(2) The weighted average interest rate during the period was computed by
dividing the actual interest expense by average period-end short term
borrowings.
(3) In 1993, the payments on the note were changed to $1,000 per month
including interest. In March 1994, April 1995 and April 1996, the Company
renewed the note with an additional $26,000, $4,772 and $18,000,
respectively.
- 18 -
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. If Incorporated by Reference,
Under Reg. S-B Form 10-K Document with which Exhibit
Item 601 Exhibit No. Description of Exhibit was Previously Filed
-------- ----------- ---------------------- --------------------
<S> <C> <C> <C>
(3) 1(A) Certificate of Incorporation Form 10-K Annual Report for the
year ended December 31, 1987,
filed March 30, 1988 (see Exhibit
1(A) therein).
(3) 1(B) Certificate of Amendment to Form 10-K Annual Report for the
Certificate of Incorporation year ended December 31, 1988,
filed May 2, 1988 filed December 28, 1989 (see
Exhibit 1(B) therein).
(3) 1(C) Certificate of Amendment to Form 10-K Annual Report for the
Certificate of Incorporation year ended December 31, 1990,
filed September 12, 1990 filed April 15, 1991 (see Exhibit
1(C) therein).
(3) 1(D) Bylaws Post-Effective Amendment No. 3
to the 1933 Act Registration
Statement on Form S-18 filed
April 27, 1987 (see Exhibit
3(B) therein).
(4) 2 Specimen Stock Certificate Post-Effective Amendment No. 3
to the 1933 Act Registration
Statement on Form S-18 filed
November 12, 1986 (see
Exhibit 10(A) therein).
(10) 3(A) Employment Agreement Post-Effective Amendment No. 1
with Robert M. Feldman to the 1933 Act Registration
Statement on From S-18 filed
November 12, 1986 (see Exhibit
10(A) therein).
(10) 3(B) Health & Leisure, Inc. 1986 Annual Report on Form 10-K for
Incentive Stock Option Plan the year ended December 31,
1988, filed December 28, 1989
(see Exhibit 3(E) therein).
</TABLE>
- 19 -
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit No. If Incorporated by Reference,
Under Reg. S-B Form 10-K Document with which Exhibit
Item 601 Exhibit No. Description of Exhibit was Previously Filed
-------- ----------- ---------------------- --------------------
<S> <C> <C> <C>
(10) 3(C) Promissory Note dated Form 10-K for year ending
January 18, 1995 from December 31, 1994, filed
H & L Concepts, Inc. to April 14, 1995.
Robert M. Feldman
(10) 3(D) Amendment dated Febru- Form 10-KSB for year ending
ary 1, 1996 to Promissory December 31, 1995.
Note dated January 18,
1995 from H & L Concepts,
Inc. to Robert M. Feldman
(10) 3(E) Promissory Note dated Form 10-KSB for year ending
February 1, 1996 from December 31, 1995.
H & L Concepts, Inc. to
Robert M. Feldman
(10) 3(F) Amendment dated Form 10-KSB for year ending
February 1, 1997 to December 31, 1996.
Promissory Note dated
January 18, 1995 from H&L
Concepts, Inc. to Robert M.
Feldman
(10) 3(G) Amendment dated Form 10-KSB for year ending
February 1, 1997 to December 31, 1996.
Promissory Note dated
February 1, 1996 from H&L
Concepts, Inc. to Robert M.
Feldman
(10) 3(H) Promissory Note dated Form 10-KSB for year ending
February 1, 1997 from H&L December 31, 1996.
Concepts, Inc. to Robert M.
Feldman
(10) 3(I) Amendment dated as of February Contained herein.
1, 1998 to Promissory Note dated
January 18, 1995 from H&L
Concepts, Inc. to Robert M.
Feldman
(10) 3(J) Amendment dated as of February Contained herein.
1, 1998 to Promissory Note dated
February 1, 1996 from H&L
Concepts, Inc. to Robert M.
Feldman
(10) 3(K) Amendment dated as of February Contained herein.
1, 1998 to Promissory Note dated
February 1, 1997 from H&L
Concepts, Inc. to Robert M.
Feldman
(10) 3(L) Promissory Note dated Contained herein.
February 1, 1998 from H&L
Concepts, Inc. to Robert M.
Feldman
(23) 4 Independent Auditor's Contained herein.
Report
(21) 5 List of Subsidiaries Contained herein.
(24) 6 Powers of Attorney Contained herein.
(27) 7 Financial Data Schedule Contained herein.
</TABLE>
- 20 -
<PAGE> 1
EXHIBIT 1 (A)
CERTIFICATE OF INCORPORATION
OF
HEALTH & LEISURE, INC.
AS AMENDED
Incorporated herein by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1987, filed March 30, 1988
(see Exhibit 1(A) therein).
- 21 -
<PAGE> 1
EXHIBIT 1(B)
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
HEALTH & LEISURE, INC.
FILED MAY 2, 1988
Incorporated herein by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1988, filed December 28,
1989 (see Exhibit 1(B) therein).
- 22 -
<PAGE> 1
EXHIBIT 1(C)
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
Incorporated herein by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1990, filed April 15, 1991
(see Exhibit 1(C) therein).
- 23 -
<PAGE> 1
EXHIBIT 1(D)
BYLAWS
OF
HEALTH & LEISURE, INC.
Incorporated herein by reference to the Registrant's Post-Effective
Amendment No. 3 to the 1933 Act Registration Statement on Form S-18,
filed April 27, 1987 (see Exhibit 3(B) therein).
- 24 -
<PAGE> 1
EXHIBIT 2
SPECIMEN STOCK CERTIFICATE
OF
HEALTH & LEISURE, INC.
Incorporated herein by reference to the Registrant's Post-Effective
Amendment No. 3 to the 1933 Act Registration Statement on Form S-18,
filed April 27, 1987 (see Exhibit 4 therein).
- 25 -
<PAGE> 1
EXHIBIT 3(A)
EMPLOYMENT AGREEMENT
WITH ROBERT M. FELDMAN
Incorporated herein by reference to the Registrant's Post-Effective
Amendment No. 1 to the 1933 Act Registration Statement on Form S-18,
filed November 12, 1986 (see Exhibit 10(A) therein).
- 26 -
<PAGE> 1
EXHIBIT 3(B)
HEALTH & LEISURE, INC.
1986 INCENTIVE STOCK OPTION PLAN
Incorporated herein by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1988 filed December 28, 1989
(see Exhibit 3(E) therein).
- 27 -
<PAGE> 1
EXHIBIT 3(C)
PROMISSORY NOTE DATED JANUARY 18, 1995
FROM H&L CONCEPTS, INC.
TO
ROBERT M. FELDMAN
Incorporated herein by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994.
- 28 -
<PAGE> 1
EXHIBIT 3(D)
AMENDMENT DATED FEBRUARY 1, 1996 TO PROMISSORY NOTE
DATED JANUARY 18, 1995 FROM
H & L CONCEPTS, INC.
TO
ROBERT M. FELDMAN
Incorporated herein by reference to the Registrant's Annual Report on
Form 10-KSB for the year ended December 31, 1995.
- 29 -
<PAGE> 1
EXHIBIT 3(E)
PROMISSORY NOTE DATED FEBRUARY 1, 1996
FROM
H & L CONCEPTS, INC.
TO
ROBERT M. FELDMAN
Incorporated herein by reference to the Registrant's Annual Report on
Form 10-KSB for the year ended December 31, 1995.
- 30 -
<PAGE> 1
Exhibit 3(I)
Amendment dated as of February 1, 1998
to Promissory Note dated January 18, 1995
from H & L Concepts, Inc. to
Robert M. Feldman
<PAGE> 2
AMENDMENT OF PROMISSORY NOTE
The undersigned hereby agree to modify the promissory note dated
January 18, 1995 from Health & Leisure, Inc. to Robert M. Feldman, a copy of
which is attached hereto, to extend the date for the commencement of payment of
principal and interest to February 1, 1999, with interest accrued through
December 31, 1998 being added to principal.
All other terms of the note shall remain in full force and effect as
written.
February 1, 1998 /s/Robert M. Feldman
---------------------
ROBERT M. FELDMAN
H & L CONCEPTS, INC., Maker
By /s/Burton Schildhouse
---------------------
HEALTH & LEISURE, INC., Guarantor
By /s/Burton Schildhouse
------------------------------
<PAGE> 1
Exhibit 3(J)
Amendment dated as of February 1, 1998
to Promissory Note dated February 1, 1996
from H & L Concepts, Inc. to
Robert M. Feldman
<PAGE> 2
AMENDMENT OF PROMISSORY NOTE
The undersigned hereby agree to modify the promissory note dated
February 1, 1996 from Health & Leisure, Inc. to Robert M. Feldman, a copy of
which is attached hereto, to extend the date for the commencement of payment of
principal and interest to February 1, 1999, with interest accrued through
December 31, 1998 being added to principal.
All other terms of the note shall remain in full force and effect as
written.
February 1, 1998 /s/Robert M. Feldman
---------------------
ROBERT M. FELDMAN
H & L CONCEPTS, INC., Maker
By /s/Burton Schildhouse
---------------------
HEALTH & LEISURE, INC., Guarantor
By /s/Burton Schildhouse
------------------------------
<PAGE> 1
Exhibit 3(K)
Amendment dated as of February 1, 1998
to Promissory Note dated February 1, 1997
from H & L Concepts, Inc. to
Robert M. Feldman
<PAGE> 2
AMENDMENT OF PROMISSORY NOTE
The undersigned hereby agree to modify the promissory note dated
February 1, 1997 from Health & Leisure, Inc. to Robert M. Feldman, a copy of
which is attached hereto, to extend the date for the commencement of payment of
principal and interest to February 1, 1999, with interest accrued through
December 31, 1998 being added to principal.
All other terms of the note shall remain in full force and effect as
written.
February 1, 1998 /s/Robert M. Feldman
---------------------
ROBERT M. FELDMAN
H & L CONCEPTS, INC., Maker
By /s/Burton Schildhouse
---------------------
HEALTH & LEISURE, INC., Guarantor
By /s/Burton Schildhouse
------------------------------
<PAGE> 1
Exhibit 3(L)
Promissory Note dated February 1, 1998
from H & L Concepts, Inc. to
Robert M. Feldman
<PAGE> 2
COGNOVIT PROMISSORY NOTE
$2,000 February 1, 1998
FOR VALUE RECEIVED, H & L Concepts, Inc., an Ohio corporation, whose
address is 203 East Broad Street, Columbus, Ohio 43215 ("Maker"), promises to
pay to the order of Robert M. Feldman, an individual, whose address is 2720
Sonata Drive, Columbus, Ohio 43209 ("Payee"), the principal sum of Two Thousand
Dollars ($2,000) with interest thereon at the rate of 5.93% per annum. The
principal sum, plus accrued interest, is due and payable in 60 equal monthly
installments of principal and interest beginning February 1, 1999, with interest
accrued through December 31, 1998 being added to principal. The first payment
shall be due and payable February 1, 1999 and payments shall continue on the
first day of each month thereafter until all principal and accrued interest is
paid in full. All or any portion of the principal and accrued interest may be
prepaid at any time without penalty. All prepayments shall be applied first to
accrued interest and then to principal in inverse order of maturity.
Notwithstanding the foregoing to the contrary, in the event of a change in
control of Health & Leisure, Inc., a Delaware corporation, or in the event of a
change in control of the Maker, at the option of the holder of this note, all
principal and accrued interest under this note shall become and be immediately
due and payable. For purposes of this note, a change in control is defined to
mean:
(i) When any "person" as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act, but excluding the Company and any
subsidiary and any employee benefit plan sponsored or maintained by
the Company or any subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act, as amended
from time to time) of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding
securities; or
(ii) When, during any period of 24 consecutive months, the
individuals who, at the beginning of such period, constitute the Board
of Directors (the "Incumbent Directors") cease for any reason other
than death to constitute at least a majority thereof; provided,
however, that a director who was not a director at the beginning of
such 24-month period shall be deemed to have satisfied such 24-month
requirement (and be an Incumbent Director) if such director was
elected by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors either actually (because they were directors at the
beginning of such 24-month period) or by prior operation of this
subparagraph (ii); or
(iii) Upon the occurrence of a transaction requiring
stockholder approval for the acquisition of the Company by an entity
other than the Company or a subsidiary through purchase of assets,
purchase of stock, by merger or otherwise.
All payments under this Note shall be payable at Payee's address
indicated above or at such other address as any holder of this Note may from
time to time designate in writing to Maker.
Upon default in payment of any installment within 10 days after the
same is due, this Note shall, at the option of the holder hereof, bear interest
thereafter at the rate of 12% per annum, and the entire principal hereof then
remaining unpaid, together with all accrued interest, shall at said holder's
option, become immediately due and payable without any notice or demand.
<PAGE> 3
All persons now or hereafter liable for the payment of the principal
or interest due on this Note, or any part thereof, do hereby expressly waive
presentment for payment, notice of dishonor, protest and notice of protest and
agree that the time for the payment of this Note may be extended without
releasing or otherwise affecting their liability on this Note.
Each right, power or privilege specified or referred to in this Note
or in any related writing is in addition to any other rights, powers and
privileges that Payee may otherwise have or require by operation of law, by
other contract or otherwise. No course of dealing in respect of, nor any
omission or delay in the exercise of, any right, power, or privilege by Payee
or the holder hereof shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any further or other exercise thereof or of
any other, as each right, power or privilege may be exercised independently or
concurrently with others and as often and in such order as the holder may deem
expedient. No waiver or consent granted by the holder in respect of this Note
or any related writing shall be binding upon the holder unless specifically
granted in writing, which writing shall be strictly construed. Each right,
power or privilege granted to the holder in this Note or in any related writing
is for the benefit of and exercisable by each subsequent holder, if any, of
this Note, and all provisions of this Note shall be binding upon Maker, its
successors and assigns, including each subsequent holder, if any, of this Note.
Maker hereof and the undersigned guarantor, each irrevocably
authorizes any attorney at law to appear for it in any court in Franklin
County, Ohio, with or without process, at any time after the above indebtedness
becomes due, to waive the issuance and service of process, to admit the
maturity and nonpayment of the indebtedness and to confess judgment against
Maker and/or such guarantor in favor of the holder of this Note for the amount
then appearing due, together with costs of suit, and thereupon to release all
errors and waive all right of second trial, appeal, and stay of execution. The
foregoing warrant of attorney shall survive any judgment. Should any judgment
be vacated for any reason, the foregoing warrant of attorney may thereafter be
utilized for obtaining additional judgment or judgments.
Maker has executed and delivered this Note in the City of Columbus,
Franklin County, Ohio, as of February 1, 1998.
H & L CONCEPTS, INC.
By /s/ Burton Schildhouse
-----------------------------
Burton Schildhouse, Secretary
WARNING -- BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE (SECTION 2323.13, O.R.C.).
[Signatures continued on following page.]
<PAGE> 4
Payment guaranteed by:
HEALTH & LEISURE, INC.
Dated as of February 1, 1998
By /s/ Burton Schildhouse
-----------------------------
Burton Schildhouse, Secretary
WARNING -- BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE (SECTION 2323.13, O.R.C.).
<PAGE> 1
EXHIBIT 5
LIST OF SUBSIDIARIES
OF
HEALTH & LEISURE, INC.
H & L Concepts, Inc., an Ohio corporation
Amtele, Inc., a Delaware corporation
Venture Sum, Inc. a Delaware corporation
- 40 -
<PAGE> 1
EXHIBIT 4
INDEPENDENT AUDITOR'S REPORT
OF
HEALTH & LEISURE, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED
DECEMBER 31, 1997 AND 1996
- 39 -
<PAGE> 2
INDEX
INDEPENDENT AUDITORS' REPORT PAGE 2
CONSOLIDATED BALANCE SHEET PAGE 3
CONSOLIDATED STATEMENTS OF OPERATIONS PAGE 4
CONSOLIDATED STATEMENTS OF CASH FLOWS PAGE 5
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY PAGE 6
NOTES TO THE FINANCIAL STATEMENTS PAGE 7
PAGE 1
<PAGE> 3
INDEPENDENT AUDITOR'S REPORT
TO THE BOARD OF DIRECTORS OF
HEALTH & LEISURE, INC. AND SUBSIDIARIES
WE HAVE AUDITED THE ACCOMPANYING BALANCE SHEETS OF HEALTH & LEISURE,
INC. AND SUBSIDIARIES AS OF DECEMBER 31, 1997 AND 1996 AND THE RELATED
STATEMENTS OF OPERATIONS, CASH FLOW, AND STOCKHOLDERS' EQUITY FOR THE YEARS THEN
ENDED. THESE FINANCIAL STATEMENTS ARE THE RESPONSIBILITY OF THE MANAGEMENT OF
HEALTH & LEISURE, INC. OUR RESPONSIBILITY IS TO EXPRESS AN OPINION ON THESE
FINANCIAL STATEMENTS BASED ON OUR AUDIT.
WE HAVE 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 STATEMENTS ARE FREE OF MATERIAL
MISSTATEMENTS. 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 1997 AND 1996 FINANCIAL STATEMENTS REFERRED TO
ABOVE PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF HEALTH
& LEISURE, INC. AND SUBSIDIARIES AS OF DECEMBER 31, 1997 AND 1996 AND THE
RESULTS OF ITS OPERATIONS AND ITS CASH FLOWS FOR THE YEARS THEN ENDED IN
CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED
ASSUMING THAT THE COMPANY WILL CONTINUE AS A GOING CONCERN. AS DISCUSSED IN NOTE
A, THE COMPANY HAS EXPERIENCED SIGNIFICANT RECURRING LOSSES AND HAS A NET
STOCKHOLDERS' DEFICIT THAT RAISE SUBSTANTIAL DOUBT ABOUT ITS ABILITY TO CONTINUE
AS A GOING CONCERN. SUBSTANTIALLY ALL OF THE OUTSTANDING DEBT, AND THE REVENUE
AND EXPENSE ACTIVITY OF THE BUSINESS ARE RELATED PARTY TRANSACTIONS. THE
CONSOLIDATED FINANCIAL STATEMENTS DO NOT INCLUDE ANY ADJUSTMENTS THAT MIGHT
RESULT FROM THE OUTCOME OF THIS UNCERTAINTY.
- ------------------------------
HARMON & COMPANY, CPA, INC.
MARCH 10, 1998
PAGE 2
<PAGE> 4
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ASSETS 12/31/97 12/31/96
------ -------- --------
<S> <C> <C>
CURRENT ASSETS
- --------------
CASH $ 281 $ (414)
----------- -----------
TOTAL CURRENT ASSETS 281 (414)
----------- -----------
PROPERTY & EQUIPMENT
- --------------------
BUILDINGS & OTHER DEPRECIABLE ASSETS 1,893 1,893
LESS ACCUMULATED DEPRECIATION AND AMORTIZATION (1,893) (1,893)
-----------
TOTAL PROPERTY & EQUIPMENT 0 0
----------- -----------
TOTAL ASSETS $ 281 $ (414)
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
- -------------------
ACCOUNTS PAYABLE 27,642 $ 21,246
ACCRUED INTEREST - OFFICER 73,615 58,635
ACCRUED OFFICER WAGES 318,000 294,000
CURRENT PORTION OF LONG TERM DEBT 10,080 12,000
----------- -----------
TOTAL CURRENT LIABILITIES 429,337 385,881
----------- -----------
LONG TERM LIABILITIES
- ---------------------
LONG TERM DEBT LESS CURRENT PORTION:
OFFICER 222,754 220,754
BANK 1,506 9,770
----------- -----------
TOTAL LONG TERM LIABILITIES 224,260 230,524
----------- -----------
SHAREHOLDERS' EQUITY
- --------------------
PREFERRED STOCK, $.01 PAR VALUE: AUTHORIZED - 10,000,000 SHARES
ISSUED AND OUTSTANDING - NONE 1997 AND 1996 0 0
COMMON STOCK, $.01 PAR VALUE: AUTHORIZED - 20,000,000 SHARES
ISSUED AND OUTSTANDING - 17,325,427 SHARES 1997 AND 1996 173,254 173,254
ADDITIONAL PAID-IN-CAPITAL 1,213,236 1,213,236
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (2,039,807) (2,003,309)
-----------
TOTAL SHAREHOLDERS' EQUITY (653,316) (616,819)
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 281 $ (414)
=========== ===========
</TABLE>
THE FINANCIAL STATEMENT NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
PAGE 3
<PAGE> 5
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR YEARS ENDED DECEMBER 31, 1997, 1996 AND THE
PERIOD FROM MARCH 13, 1985 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1997
<TABLE>
<CAPTION>
CUMULATIVE
DURING
DEVELOPMENT
STAGE 12/31/97 12/31/96
----- -------- --------
<S> <C> <C> <C>
INCOME:
- -------
PRODUCT SALES $ 297,667 $ 0
CONSULTING REVENUE 434,858 75,250 53,000
----------- ----------- -----------
TOTAL INCOME 732,525 75,250 53,000
----------- ----------- -----------
COSTS OF GOODS SOLD 402,961 0 0
----------- ----------- -----------
GROSS PROFIT 329,564 75,250 53,000
----------- ----------- -----------
OPERATING EXPENSES:
- -------------------
OFFICER SALARIES 524,750 24,000 24,000
ADMINISTRATIVE AND GENERAL 846,885 27,619 34,553
LEGAL & ACCOUNTING 531,492 5,974 10,635
TRAVEL 376,975 34,837 28,236
DEPRECIATION & AMORTIZATION 48,216 0 0
BAD DEBTS 38,500 0 0
----------- ----------- -----------
TOTAL EXPENSES 2,366,818 92,430 97,424
----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (2,037,254) (17,180) (44,424)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
- -----------------------
INTEREST INCOME 18,111 0 0
INTEREST EXPENSE (155,264) (19,319) (18,941)
GAIN ON SALE OF MARKETABLE SECU 19,590 0 0
OTHER INCOME (EXPENSE) (1,949) 0 0
----------- ----------- -----------
TOTAL OTHER INCOME (EXPENSE) (119,512) (19,319) (18,941)
----------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (2,156,766) (36,499) (63,365)
----------- -----------
EXTRAORDINARY ITEM - GAIN ON EXTINGUISHMENT
OF DEBT 167,288 0 0
----------- ----------- -----------
NET INCOME (LOSS) $(1,989,478) $ (36,499) $ (63,365)
=========== =========== ===========
LOSS PER COMMON SHARE:
LOSS BEFORE EXTRAORDINARY ITEM (0.11) (0.00) (0.00)
EXTRAORDINARY ITEM 0.01 NIL NIL
----------- ----------- -----------
NET LOSS PER COMMON SHARE (0.10) (0.00) (0.00)
=========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING
DURING THE PERIOD 13,915,779 17,325,427 17,325,427
NOTE - THE DEVELOPMENT STAGE REPRESENTS THE PERIOD
MARCH 13, 1985 THROUGH DECEMBER 31,1997.
</TABLE>
THE FINANCIAL STATEMENT NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
PAGE 4
<PAGE> 6
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR YEARS ENDED DECEMBER 31, 1997, 1996 AND THE
PERIOD FROM MARCH 13, 1985 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1997
<TABLE>
<CAPTION>
CUMULATIVE
DURING
DEVELOPMENT
STAGE 12/31/97 12/31/96
----- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
NET INCOME (LOSS) $(1,989,478) $(36,449) $(63,365)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
---------------------------------------------
PROVIDED (USED) BY OPERATING ACTIVITIES:
----------------------------------------
PROVISION FOR LOSSES ON ACC 31,000 0 0
DEPRECIATION AND AMORTIZA 48,216 0 0
DEFERRED CHARGE WRITEOFF 5,876 0 0
OTHER NON CASH ITEMS (4,520) 0 0
COMMON STOCK ISSUED FOR F 2,000 0 0
EXTRAORDINARY ITEM - EXTING (167,288) 0 0
GAIN ON SALE OF MARKETABLE (19,590) 0 0
PAYROLL AND INTEREST EXPENSE RECORDED AS
NOTE PAYABLE TO OFFICER 163,275 0 0
COMMON STOCK ISSUED FOR 195,000
CHANGES IN OPERATING ASSETS AND LIABILITIES:
--------------------------------------------
DECREASE (INCREASE) IN ACC (31,000) 0 0
DECREASE (INCREASE) IN INVE 0 0 0
DEFERRED UNDERWRITING COST (5,876) 0 0
DECREASE (INCREASE) IN PRE (8,592) 0 0
DECREASE (INCREASE) IN ORG (46,012) 0 0
INCREASE (DECREASE) IN ACC 112,559 6,398 (1,488)
INCREASE (DECREASE) IN ACC 458,241 38,981 38,500
INCREASE (DECREASE) IN DEFE 0 0 0
----------- -------- --------
TOTAL ADJUSTMENTS TO NET INCOME 733,289 45,378 37,012
----------- -------- --------
CASH PROVIDED BY OPERATING ACTIVITIES (1,256,189) 8,879 (26,353)
----------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
OFFERING COSTS FOR ENTREPRENEUR, I (5,059) 0 0
PURCHASE OF FURNITURE AND FIXTURE (1,893) 0 0
PROCEEDS OF SALES OF MARKETABLE 48,180 0 0
----------- -------- --------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES 41,228 0 0
----------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
NEW BORROWINGS - BANK 388,051 0 18,000
NEW BORROWING - SHAREHOLDER 173,411 7,000 19,139
DEBT REDUCTION:
OFFICERS (149,300) (5,000) (4,000)
BANK (137,185) (10,184) (10,378)
PROCEEDS FROM SALE OF COMMON 301,850 0 0
PROCEEDS FROM EXERCISE OF SERIES 630,915 0 0
PROCEEDS FROM DONATED CAPITAL 7,500 0 0
----------- -------- --------
CASH PROVIDED (USED) BY FINANCING ACTIVITIES 1,215,242 (8,184) 22,761
----------- -------- --------
NET INCREASE (DECREASE) IN CASH $ 281 $ 695 $ (3,592)
----------- -------- --------
CASH, BEGINNING OF PERIOD $ 0 $ (414) $ 3,178
----------- -------- --------
CASH, END OF PERIOD $ 281 $ 281 $ (414)
=========== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE YEAR FOR INTEREST $ 54,996 $ 3,669 $ 4,442
=========== ======== ========
</TABLE>
THE FINANCIAL STATEMENT NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
PAGE 5
<PAGE> 7
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 13, 1985 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1997
<TABLE>
<CAPTION>
DEFICIT
CUMULATIVE
COMMON STOCK ADDITIONAL DURING TOTAL
------------ PAID-IN DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT CAPITAL STAGE EQUITY
------ ------ ------- ----- ------
<S> <C> <C> <C> <C> <C>
PROCEEDS FROM INITIAL ISSUANCE OF COMMON STOCK
ON MARCH 13, 1985 300,000 $ 3,000 $ 3,000 $ 6,000
RETROACTIVE EFFECT OF RECAPITALIZATION 7,700,000 77,000 (3,000) (27,049) 46,951
---------------------------------------------------------------------
BALANCES AT MARCH 13, 1985 (THE DATE OF INCEPTION)
AS RESTATED 8,000,000 80,000 0 (27,049) 52,951
NET LOSS FOR THE PERIOD (96,722) (96,722)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1985 8,000,000 80,000 0 (123,771) (43,771)
---------------------------------------------------------------------
COMMON SHARES ISSUED, NET OF RELATED COSTS OF $25,610 1,000,000 10,000 64,390 74,390
PROCEEDS FROM EXERCISE OF SERIES A WARRANTS 625,427 6,254 614,661 620,915
NET LOSS FOR THE YEAR (230,969) (230,969)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1986 9,625,427 96,254 679,051 (354,740) 420,565
---------------------------------------------------------------------
PROCEEDS FROM EXERCISE OF OPTIONS 140,000 1,400 (550) 850
PROCEEDS FROM EXERCISE OF SERIES A WARRANTS 10,000 100 9,900 10,000
COMMON SHARES ISSUED PURSUANT TO FINDERS FEE AGREEMENT 200,000 2,000 2,000
COSTS INCURRED IN OBTAINING WORKING CAPITAL (25,580) (25,580)
NET LOSS FOR THE YEAR (374,614) (374,614)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1987 9,975,427 99,754 662,821 (729,354) 33,221
---------------------------------------------------------------------
DIVIDEND - 498,771 SHARES OF ENTREPRENEUR, INC. (14,689) (14,689)
NET LOSS FOR THE YEAR (242,711) (242,711)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1988 9,975,427 99,754 662,821 (986,754) (224,179)
---------------------------------------------------------------------
DEBT CONVERSION 2,000,000 20,000 100,000 120,000
COMMON SHARES ISSUED 1,500,000 15,000 95,000 110,000
CONTRIBUTION OF CAPITAL 106,415 106,415
NET LOSS FOR THE YEAR (156,153) (156,153)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1989 13,475,427 134,754 964,236 (1,142,907) (43,917)
---------------------------------------------------------------------
COMMON SHARES ISSUED 3,850,000 38,500 241,500 280,000
NET LOSS FOR THE YEAR (490,642) (490,642)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1990 17,325,427 173,254 1,205,736 (1,633,549) (254,559)
---------------------------------------------------------------------
NET LOSS FOR THE YEAR (22,323) (22,323)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1991 17,325,427 173,254 1,205,736 (1,655,872) (276,882)
---------------------------------------------------------------------
NET LOSS FOR THE YEAR (78,322) (78,322)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1992 17,325,427 173,254 1,205,736 (1,734,194) (355,204)
---------------------------------------------------------------------
DONATED CAPITAL 7,500 7,500
NET LOSS FOR THE YEAR (85,884) (85,884)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1993 17,325,427 173,254 1,213,236 (1,820,078) (433,588)
---------------------------------------------------------------------
NET LOSS FOR THE YEAR (61,810) (61,810)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1994 17,325,427 173,254 1,213,236 (1,881,888) (495,398)
---------------------------------------------------------------------
NET LOSS FOR THE YEAR (58,056) (58,056)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1995 17,325,427 173,254 1,213,236 (1,939,944) (553,454)
---------------------------------------------------------------------
NET LOSS FOR THE YEAR (63,365) (63,365)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1996 17,325,427 $173,254 $1,213,236 $(2,003,309) $(616,819)
=====================================================================
NET LOSS FOR THE YEAR (36,499) (36,499)
---------------------------------------------------------------------
BALANCE - DECEMBER 31, 1996 17,325,427 $173,254 $1,213,236 $(2,039,808) $(653,318)
=====================================================================
</TABLE>
THE FINANCIAL STATEMENT NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
PAGE 6
<PAGE> 8
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE FOLLOWING ACCOUNTING PRINCIPLES AND PRACTICES OF HEALTH & LEISURE,
INC. AND SUBSIDIARIES (THE COMPANY) ARE SET FORTH TO FACILITATE THE
UNDERSTANDING OF DATA PRESENTED IN THE CONSOLIDATED FINANCIAL STATEMENTS.
1. BUSINESS PURPOSE
THE COMPANY WAS FOUNDED FOR THE PRINCIPAL PURPOSE OF MARKETING A
DISPOSABLE PAD THAT PRODUCES HEAT INSTANTANEOUSLY BY EXOTHERMIC REACTION. THE
MARKETS FOR THIS PRODUCT INCLUDE MEDICAL, HEALTH, SPORTS AND LEISURE FIELDS. THE
MARKET FOR THE HEAT PADS HAS NOT DEVELOPED ON A SCALE ANTICIPATED BY MANAGEMENT
AND THE SALE OF THE HEAT PADS HAS NOT RESULTED IN PROFITABLE OPERATIONS. THE
COMPANY IS NO LONGER ACTIVELY MARKETING THE HEAT PADS.
BEGINNING MARCH, 1990, THROUGH DECEMBER, 1991, THE COMPANY MARKETED A
LONG DISTANCE TELEPHONE SERVICE OF AMERICAN TELEPHONE & TELEGRAPH, INC. (AT&T)
KNOWN AS ITS SOFTWARE DEFINED NETWORK (SDN) SERVICE TO PRIMARILY SMALL AND
MID-SIZED COMPANIES LOCATED THROUGHOUT THE UNITED STATES. ON DECEMBER 28, 1990,
THE COMPANY BEGAN CONDUCTING ITS TELECOMMUNICATIONS BUSINESS THROUGH A 50%
INTEREST IN TELEPHONY WORLDWIDE ENTERPRISE (TWE), A PARTNERSHIP. IN 1991, THE
COMPANY RECORDED A LOSS FROM TWE OF $19,861. IN 1992, TWE CEASED ALL BUSINESS
ACTIVITY, NO LOSSES WERE RECORDED FOR 1992. THE COMPANY DIVESTED ITSELF OF THE
PARTNERSHIP IN 1991 INCLUDING ALL INTEREST IN THE PARTNERSHIP AND ALL
LIABILITIES THEREFROM. AS A RESULT OF THE TWE PARTNERSHIP THE COMPANY RECORDED
CONSULTING REVENUE IN THE AMOUNT OF $12,667 AND $38,000 IN 1991 AND 1992,
RESPECTIVELY.
DURING 1991, THE COMPANY DISCONTINUED ALL BUSINESS ACTIVITIES WITH
RESPECT TO THE HEAT PADS AND THE SDN SERVICE AND HAS BEEN SEEKING A COMPANY WITH
WHICH TO EFFECT A BUSINESS COMBINATION.
IN 1993, THE COMPANY BEGAN PROVIDING CONSULTING SERVICES TO
PHARMACEUTICAL COMPANIES. THE COMPANY'S PRESIDENT, WHO IS A REGISTERED
PHARMACIST, ARRANGED FOR THESE SERVICES TO HELP MEET ONGOING EXPENSES. THE
COMPANY DOES NOT CONSIDER CONSULTING TO BE ITS PRIMARY ON-GOING BUSINESS
OPERATION AND EXPECTS SUCH SERVICES TO CEASE IN 1998.
2. PRINCIPLES OF CONSOLIDATION
THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE ACCOUNTS OF HEALTH &
LEISURE, INC. AND ITS SUBSIDIARIES, ALL OF WHICH ARE WHOLLY-OWNED. SIGNIFICANT
INTERCOMPANY ACCOUNTS AND TRANSACTIONS HAVE BEEN ELIMINATED.
3. DEVELOPMENT STAGE OF OPERATIONS
THE COMPANY IS A DEVELOPMENT STAGE COMPANY BECAUSE IT DID NOT GENERATE
SIGNIFICANT ONGOING REVENUE FROM THE SALES OF HEAT PADS AND, WITH RESPECT TO SDN
SERVICE, HAS DEVOTED SUBSTANTIALLY ALL OF ITS EFFORTS TOWARD ESTABLISHING ITS
BUSINESS WITHOUT GENERATING SIGNIFICANT REVENUE THEREFROM. ALTHOUGH THE COMPANY
IS NO LONGER ACTIVELY PURSUING THE HEAT PAD MARKET NOR THE SDN SERVICE, IT STILL
IS CONSIDERED A DEVELOPMENT STAGE COMPANY IN THAT IT IS ACTIVELY SEEKING A
VIABLE ALTERNATIVE.
PAGE 7
<PAGE> 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS HEALTH & LEISURE, INC.
4. GOING CONCERN ACCOUNTING BASIS
THE ACCOMPANYING FINANCIAL STATEMENTS HAVE BEEN PREPARED ON A GOING
CONCERN BASIS, WHICH CONTEMPLATES THE REALIZATION OF ASSETS AND THE SATISFACTION
OF LIABILITIES IN THE NORMAL COURSE OF BUSINESS. ALTHOUGH THE COMPANY HAD
$653,597 AND $616,405 WORTH OF LIABILITIES IN 1997 AND 1996, RESPECTIVELY, AND
ASSETS OF $281 AND $(414) IN 1997 AND 1996, RESPECTIVELY, $614,369 AND $573,389
OF LIABILITIES WERE PAYABLE TO AN OFFICER OF THE COMPANY IN 1997 AND 1996,
RESPECTIVELY.
5. PER SHARE AMOUNTS
NET LOSS PER COMMON SHARE IS COMPUTED BASED ON THE WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING FOR EACH PERIOD. SHARES ISSUABLE UPON
EXERCISE OF OPTIONS ARE NOT INCLUDED IN THE COMPUTATION SINCE THEIR EFFECT WOULD
BE ANTIDILUTIVE.
6. INVENTORIES
INVENTORIES ARE STATED AT THE LOWER OF COST (DETERMINED ON A FIRST-IN,
FIRST-OUT BASIS) OR MARKET, AND INCLUDE PREPACKAGED HEAT PADS. INVENTORY WAS
WRITTEN-OFF IN TOTAL IN 1992 IN THE AMOUNT OF $2,000. THE COMPANY HAD NO
INVENTORY AT DECEMBER 31, 1997 AND 1996.
7. PROPERTY & EQUIPMENT
FURNITURE AND FIXTURES ARE RECORDED AT COST. DEPRECIATION IS PROVIDED
USING THE STRAIGHT-LINE METHOD OVER AN ESTIMATED USEFUL LIFE OF FIVE YEARS. AS
OF 1991, THESE ASSETS WERE FULLY DEPRECIATED.
8. ORGANIZATION COSTS
ORGANIZATION COSTS ARE AMORTIZED USING THE STRAIGHT-LINE METHOD OVER
FIVE YEARS. THESE COSTS WERE FULLY AMORTIZED AS OF 1991.
NOTE B - DEVELOPMENT STAGE AND GOING CONCERN
THE COMPANY HAS EXPERIENCED NET LOSSES OF $36,499 AND $63,366 FOR YEARS
1997, AND 1996, RESPECTIVELY, AND AS OF DECEMBER 31, 1997 AND 1996 HAS A
STOCKHOLDERS' DEFICIT OF $653,316 AND $616,819, RESPECTIVELY. THESE FACTORS,
AMONG OTHERS, MAY INDICATE THE COMPANY WILL BE UNABLE TO CONTINUE AS A GOING
CONCERN. THE COMPANY'S CONTINUATION AS A GOING CONCERN DEPENDS UPON ITS ABILITY
TO GENERATE SUFFICIENT CASH FLOW TO CONDUCT ITS OPERATIONS AND ITS ABILITY TO
OBTAIN ADDITIONAL SOURCES OF CAPITAL AND FINANCING. THE ACCOMPANYING
CONSOLIDATED FINANCIAL STATEMENTS DO NOT INCLUDE ANY ADJUSTMENTS THAT MIGHT
RESULT FROM THE OUTCOME OF THIS UNCERTAINTY.
IN 1991, MANAGEMENT PLANNED TO MITIGATE THE EFFECT OF THE ABOVE
CONDITIONS THROUGH THE EXPANSION OF ITS SDN SERVICE. THROUGH THE FORMATION OF A
JOINT VENTURE GENERAL PARTNERSHIP, THE COMPANY RECEIVED FINANCING FOR THE
BUSINESS. THROUGH THE JOINT VENTURE, THE COMPANY EXPECTED TO OBTAIN REVENUES
BASED ON THE VOLUME OF USAGE BILLED TO AND COLLECTED FROM THE SDN CUSTOMERS.
PAGE 8
<PAGE> 10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS HEALTH & LEISURE, INC.
AT&T DELAYED BILLING THE GENERAL PARTNERSHIP'S SDN CUSTOMERS, WHICH RESULTED IN
SUBSTANTIAL CASH REQUIREMENT PROBLEMS FOR THE COMPANY. AS A RESULT, THE SDN
PROJECT WAS ABANDONED IN 1992.
MANAGEMENT IS CURRENTLY SEEKING ALTERNATE SOURCES OF FINANCING AMONG
WHICH IS THE SEARCH FOR A COMPANY WITH WHICH TO COMBINE OPERATIONS.
NOTE C - BUSINESS COMBINATION
THE COMPANY WAS INCORPORATED ON MARCH 13, 1985 UNDER THE LAWS OF THE
STATE OF UTAH WITH THE NAME OF UNIVENTURE CAPITAL CORPORATION. ON AUGUST 29,
1986, UNIVENTURE CAPITAL CORPORATION (UNIVENTURE) ISSUED 7,700,000 SHARES OF
COMMON STOCK TO STOCKHOLDERS OF HEALTH & LEISURE, INC., A DELAWARE CORPORATION,
(WHICH SUBSEQUENTLY CHANGED ITS NAME TO ENTRE VEST, INC.) FOR ALL THE
OUTSTANDING STOCK OF HEALTH & LEISURE, INC. THIS TRANSACTION WAS TREATED AS A
RECAPITALIZATION OF HEALTH & LEISURE, INC. AND THE FINANCIAL STATEMENTS OF BOTH
COMPANIES WERE COMBINED TO REFLECT THIS TRANSACTION RETROACTIVELY TO MARCH 13,
1985 (DATE OF INCEPTION). PRIOR TO THIS TRANSACTION, RESULTS OF OPERATIONS FROM
JANUARY 1, 1986 THROUGH AUGUST 29, 1986 INCLUDED LOSSES OF $13,000 AND $77,000
FOR UNIVENTURE AND HEALTH & LEISURE, INC., RESPECTIVELY. UNIVENTURE HAD
PREVIOUSLY REPORTED NO INCOME OR EXPENSE FOR THE PERIOD ENDED DECEMBER 31, 1985.
UNIVENTURE HAS SINCE CHANGED ITS NAME TO HEALTH & LEISURE, INC.
IN 1987, THE COMPANY FORMED ENTREPRENEUR, INC., A WHOLLY-OWNED
SUBSIDIARY, AS A PUBLIC CORPORATION, WITH NO INITIAL OPERATIONS OF ITS OWN, FOR
THE PURPOSE OF SEARCHING FOR AND COMBINING WITH AN EXISTING PRIVATELY-HELD
COMPANY IN A FORM WHICH WOULD RESULT IN THE COMBINED ENTITY BEING A PUBLIC
CORPORATION. IN 1988, THE COMPANY DISTRIBUTED ALL SHARES IN A DIVIDEND OF
498,771 SHARES OF COMMON STOCK AND 498,771 CLASS A COMMON STOCK WARRANTS TO
EXISTING STOCKHOLDERS.
IN 1990, THE COMPANY FORMED AMTELE, INC., A WHOLLY-OWNED DELAWARE
SUBSIDIARY, FOR THE PURPOSE OF MARKETING AT&T'S SDN SERVICE, AND VENTURE SUM,
INC., A WHOLLY-OWNED DELAWARE SUBSIDIARY, FOR THE PURPOSE OF SEARCHING FOR AND
COMBINING WITH AN EXISTING PRIVATELY-HELD COMPANY IN A FORM OF WHICH WOULD
RESULT IN THE COMBINED ENTITY BEING A PUBLIC CORPORATION.
NOTE D - INVENTORIES
DURING 1990, THE COMPANY REDUCED THE CARRYING AMOUNT OF INVENTORIES BY
APPROXIMATELY $47,000 TO RECORD THE DECREASED MARKET VALUE OF THE HEAT PADS
(NOTE B). IN 1992, THE COMPANY CEASED MARKETING THE HEAT PADS AND WROTE-OFF THE
REMAINING $2,000 IN INVENTORY TO COST OF SALES.
(NOTE A)
NOTE E - NOTES PAYABLE AND LONG-TERM DEBT
DURING 1988, THE COMPANY OBTAINED A $100,000 TERM LOAN FROM A BANK,
PAYABLE IN MONTHLY INSTALLMENTS OF $2,778, PLUS INTEREST AT PRIME PLUS 2% DUE
MARCH, 1991. THE NOTE WAS COLLATERALIZED BY ACCOUNTS RECEIVABLE AND INVENTORY
AND PERSONALLY GUARANTEED BY THE COMPANY'S PRESIDENT. DURING 1989, THE LOAN WAS
CHANGED TO A DEMAND NOTE, WITH NO OTHER CHANGES TO ITS TERMS. DURING 1990, THE
LOAN WAS CHANGED TO A PRIME (10% AS OF DECEMBER 31, 1990) PLUS 1% NOTE DUE IN
MONTHLY INSTALLMENTS OF $1,000 PLUS INTEREST THROUGH APRIL, 1994. IN 1993, THE
PAYMENTS ON THE NOTE WERE CHANGED TO $1,000 PER MONTH INCLUDING INTEREST. IN
MARCH, 1994 THE COMPANY RENEWED THE NOTE WITH AN ADDITIONAL $26,000 BORROWING.
AN ADDITIONAL BORROWING OF $4,772 AND $18,000 WAS MADE IN APRIL, 1995 AND APRIL,
1996, RESPECTIVELY. THE COMPANY DID NOT BORROW ANY ADDITIONAL FUNDS IN 1997.
PAGE 9
<PAGE> 11
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS HEALTH & LEISURE, INC.
THE COMPANY HAS AN UNSECURED NOTE PAYABLE DUE TO THE PRESIDENT WITH
INTEREST ACCRUED AT THE APPLICABLE FEDERAL RATE. PRINCIPAL AND INTEREST WERE
ORIGINALLY DUE JANUARY 31, 1992 BUT THE NOTE HAS SUBSEQUENTLY BEEN RENEWED.
PAYMENTS ARE TO BEGIN IN 1999. (NOTE G).
IN 1988, THE COMPANY REACHED AN AGREEMENT WITH THE PRESIDENT WHEREBY
$150,538 DUE HIM WAS FORGIVEN BY HIM AS OF DECEMBER 31, 1988. THE REMAINING
BALANCE DUE THE PRESIDENT IS MAINTAINED UNDER THE TERMS OF THE NOTE DESCRIBED
ABOVE.
LONG-TERM DEBT CONSISTS OF THE FOLLOWING AS OF DECEMBER 31, 1997 AND
1996:
1997 1996
---- ----
NOTE PAYABLE TO OFFICER $ 222,754 220,754
NOTE PAYABLE TO BANK 11,568 21,770
------- -------
234,322 242,524
LESS CURRENT PORTION 10,080 12,000
------- -------
$ 224,242 230,524
======= =======
THE AGGREGATE MATURITIES OF LONG-TERM DEBT FOR THE FIVE YEARS ENDING
DECEMBER 31, 2001 FOLLOWS:
1997 $ 9,770
1998 1,506
1999 37,126
2000 37,126
2001 37,126
------
$122,654
NOTE F - PREFERRED AND COMMON STOCK
DURING 1986, A TOTAL OF 20,000,000 SERIES A AND SERIES B WARRANTS WERE
ISSUED IN REGISTERED FORM. THEY WERE TRADEABLE SEPARATELY IN THE
OVER-THE-COUNTER MARKET. EACH WARRANT EVIDENCED THE RIGHT TO PURCHASE ONE SHARE
OF COMMON STOCK.
DURING 1987 AND 1986, 100,000 AND 6,254,270 SERIES A WARRANTS WERE
EXERCISED, RESPECTIVELY, AT $.10 PER SHARE. NO WARRANTS WERE EXERCISED DURING
1988, AND ALL REMAINING WARRANTS EXPIRED IN 1988.
THE COMPANY ISSUED 200,000 SHARES OF COMMON STOCK AS A FINDER'S FEE
DURING 1987. THE FINDER'S FEE WAS VALUED AT $2,000 BASED UPON THE PAR VALUE OF
THE STOCK.
ON MAY 2, 1988, THE COMPANY EFFECTED A ONE-FOR-TEN REVERSE STOCK SPLIT.
THE COMMON STOCK OUTSTANDING AT THAT DATE WAS REDUCED FROM 99,754,275 TO
9,975,427 AND THE AUTHORIZED COMMON STOCK CHANGED FROM 200,000,000 SHARES, $.001
PAR VALUE TO 20,000,000 SHARES, $.01 PAR VALUE.
THE COMPANY AUTHORIZED 10,000,000 SHARES OF PREFERRED STOCK, $.01 PAR
VALUE, PURSUANT TO AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
FILED MAY 2, 1988. THE AMENDED CERTIFICATE PERMITS THE BOARD OF DIRECTORS TO
ISSUE ONE OR MORE SERIES OF THE PREFERRED STOCK ON TERMS AND CONDITIONS APPROVED
BY THE BOARD OF DIRECTORS WITHOUT FURTHER ACTION BY THE STOCKHOLDERS. NO SHARES
OF PREFERRED STOCK WERE ISSUED AS OF DECEMBER 31, 1997, 1996 NOR 1995.
PAGE 10
<PAGE> 12
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS HEALTH & LEISURE, INC.
IN 1989, THE COMPANY ENTERED INTO AN AGREEMENT WITH ITS PRESIDENT TO
DISCHARGE INDEBTEDNESS AGGREGATING $120,000 IN EXCHANGE FOR 2,000,000 SHARES OF
THE COMPANY'S COMMON STOCK. THIS TRANSACTION WAS RECORDED AS A CAPITAL
CONTRIBUTION BY THE COMPANY'S PRESIDENT WHICH INCREASED COMMON STOCK AND
ADDITIONAL PAID-IN CAPITAL BY $120,000 IN 1989.
IN 1989, THE COMPANY SOLD 1,000,000 SHARES OF COMMON STOCK FOR $60,000
TO A DIRECTOR OF THE COMPANY AND SIGNED SUBSCRIPTION AGREEMENTS TO ISSUE 500,000
SHARES OF COMMON STOCK FOR $50,000, WHICH WAS RECEIVED IN JANUARY, 1990. DURING
1989, THE PRESIDENT INDIVIDUALLY ENTERED INTO AGREEMENTS WITH TWO CREDITORS
WHEREBY HE TRANSFERRED CERTAIN PERSONAL ASSETS IN FULL SETTLEMENT OF THE AMOUNTS
DUE THE CREDITORS IN THE AGGREGATE OF $91,415. THESE SETTLEMENT AGREEMENTS HAVE
BEEN TREATED AS A CAPITAL CONTRIBUTION BY THE COMPANY'S PRESIDENT. DURING 1989,
THE PRESIDENT CONTRIBUTED $15,000 OF MARKETABLE SECURITIES TO THE COMPANY.
ON MAY 25, 1990, THE COMPANY ISSUED 1,000,000 SHARES OF COMMON STOCK TO
A VICE PRESIDENT OF THE COMPANY AS A SIGNING BONUS IN CONSIDERATION FOR HIS
ACCEPTANCE OF THE POSITION. THE SHARES WERE RECORDED AT $.10 PER SHARE BASED ON
THE FAIR MARKET VALUE OF THE SHARES, ESTABLISHED BY A PREVIOUS SALE TO UNRELATED
PARTIES.
ON JUNE 1, 1990, THE STOCKHOLDERS OF THE COMPANY AUTHORIZED AN
ADDITIONAL 10,000,000 SHARES OF COMMON STOCK FOR THE COMPANY.
DURING 1990, THE COMPANY ISSUED 2,000,000 SHARES OF COMMON STOCK TO
CONSULTANTS OF THE COMPANY (RECORDED AS COMPENSATION AT THE CONTRACTUALLY STATED
FAIR VALUE OF THE SERVICES PERFORMED) AND 850,000 SHARES PURSUANT TO STOCK
SUBSCRIPTION AGREEMENTS.
NOTE G - RELATED PARTY TRANSACTIONS
WAGES WERE ACCRUED FOR THE PRESIDENT AT $2,000 PER MONTH IN 1997 AND
1996. THE PRESIDENT HAS ALSO PERSONALLY PAID CERTAIN EXPENSES FOR THE COMPANY
INCREASING THE NOTE PAYABLE TO THE PRESIDENT TO $222,754 AND $220,754 IN 1997
AND 1996, RESPECTIVELY, ACCRUING INTEREST AT THE APPLICABLE FEDERAL RATE WITH
PAYMENTS TO BEGIN IN 1999.
NOTE H - INCOME TAXES
AS A RESULT OF CONSOLIDATED OPERATING LOSSES, NO PROVISION FOR INCOME
TAXES WAS NECESSARY. AS OF DECEMBER 31, 1997, THE COMPANY HAS NET OPERATING LOSS
CARRYFORWARDS OF APPROXIMATELY $1,400,000 AVAILABLE TO REDUCE FUTURE TAXABLE
INCOME EXPIRING IN 2002 THROUGH 2012. ULTIMATE UTILIZATION OF THE NET OPERATING
LOSS CARRYFORWARDS WILL BE SUBJECT TO LIMITATION AND THE EXISTENCE OF FUTURE
TAXABLE INCOME.
NOTE I - SIGNIFICANT CUSTOMERS
THE COMPANY, WHILE IN THE DEVELOPMENT STAGE, HAS HAD LIMITED
DISTRIBUTION OF THE HEAT PADS AND, THEREFORE, A LIMITED NUMBER OF CUSTOMERS. AS
SUCH, SUBSTANTIALLY ALL OF ITS TOTAL SALES DURING THE FOUR YEARS ENDED DECEMBER
31, 1993 HAD BEEN TO SIX CUSTOMERS. SINCE THEN, CONSULTING INCOME HAS BEEN
DERIVED FROM ONLY TWO SOURCES.
PAGE 11
<PAGE> 13
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS HEALTH & LEISURE, INC.
NOTE J - COMMITMENTS AND CONTINGENCIES
THE COMPANY LEASES OFFICE SPACE ON A MONTH-TO-MONTH BASIS. RENT EXPENSE
WAS $2,520 IN 1997 AND 1996. RENT IS $210 PER MONTH. IN 1992, THE COMPANY
ENTERED INTO AN OPERATING LEASE FOR AN AUTOMOBILE WHICH REQUIRED MONTHLY
PAYMENTS OF $279 UNTIL SEPTEMBER, 1995. IN SEPTEMBER 1995, A NEW OPERATING LEASE
FOR A VEHICLE WAS ENTERED INTO WHICH REQUIRES MONTHLY PAYMENTS OF $352 UNTIL
AUGUST, 1998. AUTO LEASE EXPENSE WAS $4,220 AND $4,220 IN 1997 AND 1996,
RESPECTIVELY.
NOTE K - OTHER
THE COMPANY CURRENTLY HAS THREE (3) WHOLLY-OWNED SUBSIDIARIES. THERE
HAS BEEN ESSENTIALLY NO ACTIVITY IN THESE SUBSIDIARIES IN 1992 THROUGH 1997.
AMTELE, INC. (AMTELE), A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY WAS ORGANIZED TO
CONTRACT WITH AT&T FOR THE TWE PARTNERSHIP JOINT VENTURE. ALL ACTIVITY IN AMTELE
CEASED IN 1991.
THE COMPANY CONTINUES TO OPERATE ON A VERY LIMITED BASIS WITH THE ONLY
ACTIVITY BEING THAT OF THE COMPANY'S PRESIDENT ACTIVELY SEEKING A COMPANY WITH
WHICH TO EFFECT A BUSINESS COMBINATION AND THE PHARMACEUTICAL CONSULTING. IN
THIS PROCESS, HE HAS INCURRED TRAVEL EXPENSES THROUGH DECEMBER 31, 1997.
PAGE 12
<PAGE> 1
EXHIBIT 6
POWERS OF ATTORNEY
- 41 -
<PAGE> 2
POWER OF ATTORNEY
FOR ANNUAL REPORTS ON FORM 10-KSB
The undersigned, a director or officer of Health & Leisure, Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Robert M.
Feldman, my true and lawful attorney-in-fact and agent, with full power to act,
for me and in my name, place, and stead, in my capacity as director or officer
of the Company, to execute the Company's Form 10-KSB on Form 10-K Annual Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
Company's fiscal year ended December 31, 1997, and any and all amendments
thereto, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as I might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, may lawfully do or cause to be done by virtue hereof.
The undersigned has executed and delivered this Power of Attorney on
March 30, 1998.
/s/ Burton Schildhouse Secretary, Treasurer and Director
- ---------------------- ---------------------------------
Signature Position(s) with the Company
Burton Schildhouse
- ------------------
Print or Type Name
<PAGE> 3
POWER OF ATTORNEY
FOR ANNUAL REPORTS ON FORM 10-KSB
The undersigned, a director or officer of Health & Leisure, Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Robert M.
Feldman, my true and lawful attorney-in-fact and agent, with full power to act,
for me and in my name, place, and stead, in my capacity as director or officer
of the Company, to execute the Company's Form 10-KSB on Form 10-K Annual Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
Company's fiscal year ended December 31, 1997, and any and all amendments
thereto, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as I might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, may lawfully do or cause to be done by virtue hereof.
The undersigned has executed and delivered this Power of Attorney as of
March 30, 1998.
- ---------------
/s/Arthur Aaronson Director
- ------------------ ----------------------------
Signature Position(s) with the Company
Arthur Aaronson
- ------------------
Print or Type Name
<PAGE> 4
POWER OF ATTORNEY
FOR ANNUAL REPORTS ON FORM 10-KSB
The undersigned, a director or officer of Health & Leisure, Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Robert M.
Feldman, my true and lawful attorney-in-fact and agent, with full power to act,
for me and in my name, place, and stead, in my capacity as director or officer
of the Company, to execute the Company's Form 10-KSB on Form 10-K Annual Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
Company's fiscal year ended December 31, 1997, and any and all amendments
thereto, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as I might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, may lawfully do or cause to be done by virtue hereof.
The undersigned has executed and delivered this Power of Attorney as of
March 30, 1998.
- ---------------
/s/James S. Koroloff Director
- -------------------- ----------------------------
Signature Position(s) with the Company
James S. Koroloff
- ------------------
Print or Type Name
<PAGE> 5
POWER OF ATTORNEY
FOR ANNUAL REPORTS ON FORM 10-KSB
The undersigned, a director or officer of Health & Leisure, Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Robert M.
Feldman, my true and lawful attorney-in-fact and agent, with full power to act,
for me and in my name, place, and stead, in my capacity as director or officer
of the Company, to execute the Company's Form 10-KSB on Form 10-K Annual Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
Company's fiscal year ended December 31, 1997, and any and all amendments
thereto, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as I might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, may lawfully do or cause to be done by virtue hereof.
The undersigned has executed and delivered this Power of Attorney on
March 30, 1998.
/s/ Donald S. Franklin Director
- ---------------------- ----------------------------
Signature Position(s) with the Company
Donald S. Franklin
- ------------------
Print or Type Name
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF HEALTH & LEISURE, INC. AND ITS SUBSIDIARIES AS OF DECEMBER 31, 1997 AND
1996, AND FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERNCE
TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 281 (414)
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 281 (414)
<PP&E> 1,893 1,893
<DEPRECIATION> 1,893 1,893
<TOTAL-ASSETS> 281 (414)
<CURRENT-LIABILITIES> 429,337 385,881
<BONDS> 224,260 230,524
0 0
0 0
<COMMON> 173,254 173,254
<OTHER-SE> (826,571) (790,073)
<TOTAL-LIABILITY-AND-EQUITY> 281 (414)
<SALES> 0 0
<TOTAL-REVENUES> 75,250 53,000
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 111,749 116,365
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (36,499) (63,365)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (36,499) (63,365)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (36,499) (63,365)
<EPS-PRIMARY> (0.002) (0.004)
<EPS-DILUTED> (0.002) (0.004)
</TABLE>
