<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, 1999
-----------------
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)
Delaware 31-1190725
- -------------------------------- ----------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
203 East Broad Street, Columbus, Ohio 43215
- ----------------------------------------- ------------------------
(Address of principal executive office) (Zip Code)
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
----- -----
<PAGE> 2
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]
State Issuer's revenues for its most recent fiscal year. $31,000
-------
The aggregate market value of the Registrant's common stock held by
nonaffiliates as of February 24, 2000, the last date on which a trade occurred,
on the basis of the $0.06 per share sale price on that date, was $275,015.
On March 27, 2000, 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
Page
----
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
STOCK-HOLDER MATTERS 4
ITEM 6. PLAN OF OPERATION 4
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 5
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 5
PART III 7
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 7
ITEM 10. EXECUTIVE COMPENSATION 9
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL 9
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 11
PART IV 12
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES 12
SIGNATURES 17
EXHIBIT INDEX 21
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<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.
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<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 is not
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.
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<PAGE> 6
There will be no combination of any type with companies or individuals
affiliated with officers, directors or principal shareholders or the Company.
Consulting Services
- -------------------
In order to fund ongoing expenses of the Company during the years 1993
through 1999 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 1999.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK-HOLDER MATTERS
The Company's shares of common stock are traded on the over-the-counter
market and are included on the OTC Bulletin Board under the trading symbol HLLS.
However, there has not been any significant trading activity in the Company's
stock and no established public trading market exists. No quotations for the
Company's stock during 1998 and during the first three quarters of 1999 are
available, as reflected in the following table. Set forth for the fourth quarter
of 1999 is the range of high and low bid prices for the shares as reported by
National Quotation Bureau. These quotations reflect interdealer prices without
retail markup, markdown or commission and may not necessarily represent actual
transactions.
Period Bid Prices
------ ----------
1999 High Low
---- ---- ---
First Quarter (not quoted)
Second Quarter (not quoted)
Third Quarter (not quoted)
Fourth Quarter $0.06 $0.06
1998
----
First Quarter (not quoted)
Second Quarter (not quoted)
Third Quarter (not quoted)
Fourth Quarter (not quoted)
Holders of Securities
- ---------------------
As of December 31, 1999, there were approximately 553 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.
Sale of Unregistered Securities
- -------------------------------
The Company has not sold any of its securities during the past three
years.
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.
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<PAGE> 8
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 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. $31,000 was generated
from this activity in 1999, $84,203 was generated from this activity in 1998,
$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 $43,167.71 during 1999, $1,350 (net of
repayment) during 1998, $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. The Company does not presently have any material commitments for capital
expenditures.
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
(a) On February 10, 2000, Harmon & Company, CPA, Inc. ("Harmon &
Company") informed the Company that it has discontinued its business. As a
result, on February 10, 2000, Harmon & Company resigned as the Company's
independent accountants for the fiscal year ended December 31, 1999.
The reports of Harmon & Company on the Company's financial statements
for the past two fiscal years ended December 31, 1998 and 1997 contained no
adverse opinion or disclaimer of opinion and were not qualified as to
uncertainty, audit scope or accounting principle. However, the reports of Harmon
& Company on the Company's financial statements for the past two fiscal years
ended December 31, 1998 and 1997 each contained an explanatory paragraph
describing conditions related to the Company that raised substantial doubt about
the Company's ability to continue as a going concern.
In connection with its audits for the two most recent fiscal years and
through February 14, 2000, there were no disagreements with Harmon & Company on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Harmon & Company, would have caused Harmon & Company to make
reference to the disagreements in its report on the financial statements for
such years.
During the two most recent fiscal years and through February 14, 2000,
no reportable events under Item 304(a)(1)(v) of Regulation S-K occurred.
Specifically, Harmon & Company:
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<PAGE> 9
(A) has not advised the Company that the internal controls
necessary for the Company to develop reliable financial statements do
not exist;
(B) has not advised the Company that information has come to
its attention that has led it to no longer be able to rely on
management's representations or that has made it unwilling to be
associated with the financial statements prepared by management;
(C) has not advised the Company of the need to expand
significantly the scope of its audit or that information has come to
its attention (during the Company's two most recent fiscal years and
through February 14, 2000) that, if further investigated, may
materially impact the fairness or reliability of either a previously
issued audit report or the underlying financial statements or the
financial statements issued or to be issued covering the fiscal period
or periods subsequent to the date of the most recent financial
statements covered by an audit report (including information that may
prevent it from rendering an unqualified audit report on those
financial statements) or cause it to be unwilling to rely on
management's representations or be associated with the Company's
financial statements, and has not advised the Company that, due to its
resignation or for any other reason, it did not expand the scope of its
audit or conduct such further investigation; and
(D) has not advised the Company that information has come to
its attention that, it has concluded, materially impacts the fairness
or reliability of either a previously issued audit report or the
underlying financial statements or the financial statements issued or
to be issued covering the fiscal period or periods subsequent to the
date of the most recent financial statements covered by an audit report
(including information that, unless resolved to its satisfaction, would
prevent it from rendering an unqualified audit report on those
financial statements) and, due to resignation or for any other reason,
the issue has not been resolved to its satisfaction.
On February 21, 2000, a letter from Harmon & Company addressed to the
Securities and Exchange Commission stating that it agrees with the statements
made by the Company in response to Item 304(a) of Regulation S-K was provided to
the Company.
(b) On February 28, 2000, the Company hired Jones, Jensen & Company,
LLC as its new independent accountant.
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<PAGE> 10
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 68 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 operating of
the Company and its subsidiaries. Mr. Feldman is
a licensed pharmacist in the State of Ohio.
Burton Schildhouse 74 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
advertising. He has served as its Chairman from
July 1995 to present.
Arthur Aaronson 51 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 66 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.
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
Name Age Position and Business Experience Director Since
---- --- -------------------------------- --------------
<S> <C> <C> <C>
Mr. Koroloff's duties with both United Satellite
Associates and First Ameri-Cable Corporation
involved raising capital for the operations of
the companies.
Donald S. Franklin 69 Director of the Company. From 1991 until 1990
retirement in 1994, Mr. Franklin was the sales
manager for Anderson Glass Company, Columbus,
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
Normal's Auto Glass, Columbus, Ohio, of which
his last position was that of general manager.
</TABLE>
During 1999, 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.
-8-
<PAGE> 12
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>
Securities
Name Other Under- All
and Annual Restricted lying LTIP Other
Principal Compen- Stock Options/ Pay- Compen-
Position Year Salary Bonus sation(1) Award(s) SARs Outs sation
-------- ---- ------ ----- ------ -------- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert M. 1999 $24,000 $0 $0 $0 $0 $0 $0
Feldman, 1998 $24,000 $0 $0 $0 $0 $0 $0
President 1997 $24,000 $0 $0 $0 $0 $0 $0
</TABLE>
- ----------
(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
1997, 1998 and 1999. 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, 1999:
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<PAGE> 13
Amount Beneficially Percent of
Name and Address Owned(1) Class
- ---------------- -------- -----
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
(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 executive officers of the Company as a group,
as of December 31, 1999:
Amount Beneficially Percent of
Name Owned(1) Class
---- -------- -----
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 .3%
All directors and executive
officers as a group (5 persons) 11,235,000 64.85%
- ----------
(1) Except as noted, all shares are beneficially owned and the sole
voting and investment power is held by the persons named.
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<PAGE> 14
(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 1999, the Company owed Robert M. Feldman $267,271.71,
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 1999, and (c) accrued interest under such 1991 promissory
note and for such advances through 1999. 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, in February 1998 the date for Commencement of
monthly payments was further extended to February 1, 1999, in February 1999 the
date for commencement of monthly payments was further extended to February 1,
2000, and in February 2000 the date for commencement of monthly payments was
further extended to February 1, 2001. Additionally, the Company executed similar
notes in February 1996, February 1997, February 1998, February 1999 and February
2000 for amounts advanced during 1995, 1996, 1997, 1998 and 1999 in the
principal amount of $21,272, $15,139, $2,000, $1,350 and $43,167.71,
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 entire balance of this loan was paid in full
during 1999.
Due to the Company's cash position, the Company's president, Mr.
Feldman, has not received salary due him for several years. The salary has been
accrued on the books of the Company. Mr. Feldman was owed $366,000 of accrued
wages through December 31, 1999.
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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 7:
Independent Auditors' Report.
Consolidated Balance Sheets at December 31, 1999 and
1998.
Consolidated Statement of Operations for the Years
Ended December 31, 1999 and 1998, and for the period
March 13, 1985 (Inception) through December 31, 1999.
Statement of Shareholders' Equity Deficiency for the
period March 13, 1985 (Inception) through December
31, 1999.
Consolidated Statements of Cash Flows for the years
ended December 31, 1999 and 1998, and for the period
March 13, 1985 (Inception) through December 31, 1999.
Notes to Consolidated Financial Statements for the
years ended December 31, 1999 and 1998.
(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> 16
(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
--- ---------------------- -------------------------
<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 Certificate Annual Report on Form 10-K for the year ended
of Incorporation filed May 2, 1988 December 31, 1988 filed December 28, 1989
(see Exhibit 1(B) therein).
1(C) Certificate of Amendment to Certificate Annual Report on Form 10-K for the year ended
of Incorporation filed September 12, 1990 December 31, 1990 filed April 15, 1991 (see 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 Robert M. Post-Effective Amendment No. 1 to the 1933 Act
Feldman Registration Statement on Form S-18 filed November 12,
1986 (see Exhibit 10(A) therein).
3(B) Promissory Note dated January 18, 1995 Form 10-K for year ending December 31, 1994, filed
from H & L Concepts, Inc. to Robert M. April 14, 1995.
Feldman
3(C) Amendment dated February 1, 1996 to Form 10-KSB for year ending December 31, 1995.
Promissory Note dated January 18, 1995
from H & L Concepts, Inc. to Robert W.
Feldman
3(D) Promissory Note date February 1, 1996 Form 10-KSB for year ending December 31, 1995.
from H & L Concepts, Inc. to Robert M.
Feldman
3(E) Amendment dated February 1 1997 to Form 10-KSB for year ending December 31, 1996.
Promissory Note dated January 18, 1995
from H & L Concepts, Inc. to Robert M.
Feldman
3(F) Amendment dated February 1, 1997 to Form 10-KSB for year ending December 31, 1996.
Promissory Note dated February 1, 1996
from H & L Concepts, Inc. to Robert M.
Feldman
</TABLE>
-13-
<PAGE> 17
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
--- ---------------------- -------------------------
<S> <C> <C>
3(G) Promissory Note dated February 1, 1997 Form 10-KSB for year ending December 31, 1996.
from H & L Concepts, Inc. to Robert M.
Feldman
3(H) Amendment dated as of February 1, 1998 Form 10-KSB for year ending December 31, 1997.
to Promissory Note Dated January 18,
1995 from H & L Concepts, Inc. to Robert
M. Feldman
3(I) Amendment dated as of February 1, 1998 Form 10-KSB for year ending December 31, 1997.
to Promissory Note Dated February 1,
1996 from H & L Concepts, Inc. to Robert
M. Feldman
3(J) Amendment dated as of February 1, 1998 Form 10-KSB for year ending December 31, 1997.
to Promissory Note Dated February 1,
1997 from H & L Concepts, Inc. to Robert
M. Feldman
3(K) Promissory Note dated as of February 1, Form 10-KSB for year ending December 31, 1997.
1998 from H & L Concepts, Inc. to Robert
M. Feldman
3(L) Amendment dated as of February 1, 1999 Form 10-KSB for year ending December 31, 1998.
to Promissory Note Dated January 18,
1995 from H & L Concepts, Inc. to Robert
M. Feldman
3(M) Amendment dated as of February 1, 1999 Form 10-KSB for year ending December 31, 1998.
to Promissory Note Dated February 1,
1996 from H & L Concepts, Inc. to Robert
M. Feldman
3(N) Amendment dated as of February 1, 1999 Form 10-KSB for year ending December 31, 1998.
to Promissory Note Dated February 1,
1997 from H & L Concepts, Inc. to Robert
M. Feldman
3(O) Amendment dated as of February 1, 1999 Form 10-KSB for year ending December 31, 1998.
to Promissory Note Dated February 1,
1998 from H & L Concepts, Inc. to Robert
M. Feldman
</TABLE>
-14
<PAGE> 18
<TABLE>
<CAPTION>
If Incorporated by Reference,
Exhibit Document with which Exhibit was
No. Description of Exhibit Previously Filed with SEC
--- ---------------------- -------------------------
<S> <C> <C>
3(P) Promissory Note dated as of February 1, Form 10-KSB for year ending December 31, 1998.
1999 from H & L Concepts, Inc. to Robert
M. Feldman
3(Q) Amendment dated as of February 1, 2000 Contained herein.
to Promissory Note Dated January 18,
1995 from H & L Concepts, Inc. to Robert
M. Feldman
3(R) Amendment dated as of February 1, 2000 Contained herein.
to Promissory Note Dated February 1,
1996 from H & L Concepts, Inc. to Robert
M. Feldman
3(S) Amendment dated as of February 1, 2000 Contained herein.
to Promissory Note Dated February 1,
1997 from H & L Concepts, Inc. to Robert
M. Feldman
3(T) Amendment dated as of February 1, 2000 Contained herein.
to Promissory Note Dated February 1,
1998 from H & L Concepts, Inc. to Robert
M. Feldman
3(U) Amendment dated as of February 1, 2000 Contained herein.
to Promissory Note Dated February 1,
1999 from H & L Concepts, Inc. to Robert
M. Feldman
3(V) Promissory Note dated as of February 1, Contained herein.
2000 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.
-15-
<PAGE> 19
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, 1999.
(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 is 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.
[Remainder of page intentionally left blank]
-16-
<PAGE> 20
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 27, 2000 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 Officer, and March 27, 2000
- ------------------------------------
Robert M. Feldman Chairman (Principal Executive Officer)
/s/ Burton Schildhouse* Secretary, Treasurer and Director, March 27, 2000
- ------------------------------------
Burton Schildhouse* (Principal Financial Officer)
/s/ Arthur Aaronson* Director March 27, 2000
- ------------------------------------
Arthur Aaronson*
/s/ Donald S. Franklin* Director March 27, 2000
- ------------------------------------
Donald S. Franklin*
/s/ James S. Koroloff* Director March 27, 2000
- ------------------------------------
James S. 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.
<TABLE>
<S> <C>
By /s/ Robert M. Feldman March 27, 2000
------------------------------
Robert M. Feldman,
Attorney-in-Fact
</TABLE>
-17-
<PAGE> 21
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Schedule IV - Indebtedness of and to Related Parties - Not Current
<TABLE>
<CAPTION>
Indebtedness of
related parties - not current
Balance at Balance
1999 beginning end of
Name of Person of period Additions Deductions period
-------------- --------- --------- ---------- ------
<S> <C> <C> <C> <C>
Robert M. Feldman, $224,104 $43,167.71(1) $ 0 (2) $267,271.71
President
Balance at Balance
1998 beginning end of
Name of Person of period Additions Deductions period
-------------- --------- --------- ---------- ------
Robert M. Feldman, $222,754 $ 9,850(1) $8,500(2) $224,104
President
1997
Name of Person
Robert M. Feldman, $220,754 $7,000(1) $5,000(2) $222,754
President
</TABLE>
- -------------------------
(1) 1999, 1998, and 1997 additions consist of borrowings of
$43,167.71, $9,850, and $7,000, respectively.
(2) 1999, 1998, and 1997 deductions consist of principal payments of
$0, $8,500, and $5,000, 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 30, 1988 (see
Exhibit 1(A) therein)
(3) 1(B) Certificate of Amendment to Certificate Form 10-K Annual Report for the
of Incorporation filed May 2, 1988 year ended December 31, 1988,
filed December 28, 1989 (see
Exhibit 1(B) therein)
(3) 1(C) Certificate of Amendment to Certificate Form 10-K Annual Report for the
of Incorporation filed September 12, 1990 year ended December 31, 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
November 12, 1986 (see Exhibit
10(A) 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 with Robert M. Post-Effective Amendment No. 1 to
Feldman the 1933 Act Registration
Statement on Form S-18 filed
November 12, 1986 (see Exhibit
10(A) therein)
(10) 3(B) Promissory Note dated January 18, 1995 Form 10-K for year ending December
from H & L Concepts, Inc. to Robert M. 31, 1994, filed April 4, 1995
Feldman
(10) 3(C) Amendment dated February 1, 1996 to Form 10-KSB for year ending
Promissory Note dated January 18, 1995 December 31, 1995
from H & L Concepts, Inc. to Robert M.
Feldman
(10) 3(D) Promissory Note dated February 1, 1996 Form 10-KSB for year ending
from H & L Concepts, Inc. to Robert M. December 31, 1995
Feldman
</TABLE>
-21-
<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(E) Amendment dated February 1, 1997 to Form 10-KSB for year ending
Promissory Note dated January 18, 1995 December 31, 1996
from H & L Concepts, Inc. to Robert M.
Feldman
(10) 3(F) Amendment dated February 1, 1997 to Form 10-KSB for year ending
Promissory Note dated February 1, 1996 December 31, 1996
from H & L Concepts, Inc. to Robert M.
Feldman
(10) 3(G) Promissory Note dated February 1, 1997 Form 10-KSB for year ending
from H & L Concepts, Inc. to Robert M. December 31, 1996
Feldman
(10) 3(H) Amendment dated as of February 1, 1998 Form 10-KSB for year ending
to Promissory Note dated January 18, December 31, 1997
1995 from H & L Concepts, Inc. to Robert
M. Feldman
</TABLE>
-22-
<PAGE> 24
<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(I) Amendment dated as of February 1, 1998 Form 10-KSB for year ending
to Promissory Note dated February 1, December 31, 1997
1996 from H & L Concepts, Inc. to Robert
M. Feldman
(10) 3(J) Amendment dated as of February 1, 1998 Form 10-KSB for year ending
to Promissory Note dated February 1, December 31, 1997
1997 from H & L Concepts, Inc. to Robert
M. Feldman
(10) 3(K) Promissory Note dated February 1, 1998 Form 10-KSB for year ending
from H & L Concepts, Inc. to Robert M. December 31, 1997
Feldman
(10) 3(L) Amendment dated as of February 1, 1999 Form 10-KSB for year ending
to Promissory Note Dated January 18, December 31, 1998
1995 from H & L Concepts, Inc. to Robert
M. Feldman
(10) 3(M) Amendment dated as of February 1, 1999 Form 10-KSB for year ending
to Promissory Note Dated February 1, December 31, 1998
1996 from H & L Concepts, Inc. to Robert
M. Feldman
(10) 3(N) Amendment dated as of February 1, 1999 Form 10-KSB for year ending
to Promissory Note Dated February 1, December 31, 1998
1997 from H & L Concepts, Inc. to Robert
M. Feldman
(10) 3(O) Amendment dated as of February 1, 1999 Form 10-KSB for year ending
to Promissory Note Dated February 1, December 31, 1998
1998 from H & L Concepts, Inc. to Robert
M. Feldman
(10) 3(P) Promissory Note dated as of February 1, Form 10-KSB for year ending
1999 from H & L Concepts, Inc. to Robert December 31, 1998
M. Feldman
(10) 3(Q) Amendment dated as of February 1, 2000 Contained herein.
to Promissory Note Dated January 18,
1995 from H & L Concepts, Inc. to Robert
M. Feldman
(10) 3(R) Amendment dated as of February 1, 2000 Contained herein.
to Promissory Note Dated February 1,
1996 from H & L Concepts, Inc. to Robert
M. Feldman
</TABLE>
-23-
<PAGE> 25
<TABLE>
<S> <C> <C> <C> <C>
(10) 3(S) Amendment dated as of February 1, 2000 Contained herein.
to Promissory Note Dated February 1,
1997 from H & L Concepts, Inc. to Robert
M. Feldman
(10) 3(T) Amendment dated as of February 1, 2000 Contained herein.
to Promissory Note Dated February 1,
1998 from H & L Concepts, Inc. to Robert
M. Feldman
(10) 3(U) Amendment dated as of February 1, 2000 Contained herein.
to Promissory Note Dated February 1,
1999 from H & L Concepts, Inc. to Robert
M. Feldman
(10) 3(V) Promissory Note dated as of February 1, Contained herein.
2000 from H & L Concepts, Inc. to Robert
M. Feldman
(23) 4 Independent Auditor's Report Contained herein.
(21) 5 List of Subsidiaries Contained herein
(24) 6 Powers of Attorney Contained herein
(27) 7 Financial Data Schedule Contained herein
</TABLE>
[Remainder of page intentionally left blank.]
-24-
<PAGE> 1
Exhibit 10.3(Q)
EXHIBIT 10.3(Q)
AMENDMENT DATED AS OF FEBRUARY 1, 2000
TO PROMISSORY NOTE DATED JANUARY 18, 1995
FROM H & L CONCEPTS, INC. TO
ROBERT M. FELDMAN
-25-
<PAGE> 2
AMENDMENT OF COGNOVIT PROMISSORY NOTE
The undersigned hereby agree to modify the Cognovit Promissory Note
dated January 18, 1995, from H & L Concepts, 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, 2001, with interest accrued through
December 31, 2000 being added to principal.
All other terms of the note shall remain in full force and effect as
written.
February 1, 2000 /s/Robert M. Feldman
-------------------------------------
ROBERT M. FELDMAN
H & L CONCEPTS, INC., Maker
By /s/Burton Schildhouse
----------------------------------
HEALTH & LEISURE, INC.,
Guarantor
By /s/Burton Schildhouse
----------------------------------
-26-
<PAGE> 1
Exhibit 10.3(R)
EXHIBIT 10.3(R)
AMENDMENT DATED AS OF FEBRUARY 1, 2000
TO PROMISSORY NOTE DATED FEBRUARY 1, 1996
FROM H & L CONCEPTS, INC. TO
ROBERT M. FELDMAN
-27-
<PAGE> 2
AMENDMENT OF COGNOVIT PROMISSORY NOTE
The undersigned hereby agree to modify the Cognovit Promissory Note
dated February 1, 1996, from H & L Concepts, 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, 2001, with interest accrued through
December 31, 2000 being added to principal.
All other terms of the note shall remain in full force and effect as
written.
February 1, 2000 /s/Robert M. Feldman
-------------------------------------
ROBERT M. FELDMAN
H & L CONCEPTS, INC., Maker
By /s/Burton Schildhouse
----------------------------------
HEALTH & LEISURE, INC.,
Guarantor
By /s/Burton Schildhouse
----------------------------------
-28-
<PAGE> 1
Exhibit 10.3(S)
EXHIBIT 10.3(S)
AMENDMENT DATED AS OF FEBRUARY 1, 2000
TO PROMISSORY NOTE DATED FEBRUARY 1, 1997
FROM H & L CONCEPTS, INC. TO
ROBERT M. FELDMAN
-29-
<PAGE> 2
AMENDMENT OF COGNOVIT PROMISSORY NOTE
The undersigned hereby agree to modify the Cognovit Promissory Note
dated February 1, 1997, from H & L Concepts, 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, 2001, with interest accrued through
December 31, 2000 being added to principal.
All other terms of the note shall remain in full force and effect as
written.
February 1, 2000 /s/Robert M. Feldman
-------------------------------
ROBERT M. FELDMAN
H & L CONCEPTS, INC., Maker
By /s/Burton Schildhouse
-------------------------------
HEALTH & LEISURE, INC.,
Guarantor
By /s/Burton Schildhouse
-------------------------------
-30-
<PAGE> 1
Exhibit 3(T)
EXHIBIT 10.3(T)
AMENDMENT DATED AS OF FEBRUARY 1, 2000
TO PROMISSORY NOTE DATED FEBRUARY 1, 1998
FROM H & L CONCEPTS, INC. TO ROBERT M. FELDMAN
-31-
<PAGE> 2
AMENDMENT OF COGNOVIT PROMISSORY NOTE
The undersigned hereby agree to modify the Cognovit Promissory Note
dated February 1, 1998 from H & L Concepts, 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, 2001, with interest accrued through
December 31, 2000 being added to principal.
All other terms of the note shall remain in full force and effect as
written.
February 1, 2000 /s/Robert M. Feldman
------------------------------
ROBERT M. FELDMAN
H & L CONCEPTS, INC., Maker
By /s/Burton Schildhouse
------------------------------
HEALTH & LEISURE, INC.,
Guarantor
By /s/Burton Schildhouse
------------------------------
-32-
<PAGE> 1
EXHIBIT 10.3(U)
AMENDMENT DATED AS OF FEBRUARY 1, 2000
TO PROMISSORY NOTE DATED FEBRUARY 1, 1999
FROM H & L CONCEPTS, INC. TO ROBERT M. FELDMAN
-33-
<PAGE> 2
AMENDMENT OF COGNOVIT PROMISSORY NOTE
The undersigned hereby agree to modify the Cognovit Promissory Note
dated February 1, 1999 from H & L Concepts, 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, 2001, with interest accrued through
December 31, 2000 being added to principal.
All other terms of the note shall remain in full force and effect as
written.
February 1, 2000 /s/Robert M. Feldman
------------------------------
ROBERT M. FELDMAN
H & L CONCEPTS, INC., Maker
By /s/Burton Schildhouse
------------------------------
HEALTH & LEISURE, INC.,
Guarantor
By /s/Burton Schildhouse
------------------------------
-34-
<PAGE> 1
EXHIBIT 10.3(V)
PROMISSORY NOTE DATED FEBRUARY 1, 2000
FROM H & L CONCEPTS, INC. TO
ROBERT M. FELDMAN
-35-
<PAGE> 2
COGNOVIT PROMISSORY NOTE
$43,167.71 February 1, 2000
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 Forty-Three
Thousand One Hundred Sixty-Seven and 71/100 Dollars ($43,167.71) with interest
thereon at the rate of 6.37% per annum. The principal sum, plus accrued
interest, is due and payable in 60 equal monthly installments of principal and
interest beginning February 1, 2001, with interest accrued through December 31,
2000 being added to principal. The first payment shall be due and payable
February 1, 2001 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
-36-
<PAGE> 3
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.
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
-37-
<PAGE> 4
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, 2000.
[Signatures continued on following page.]
-38-
<PAGE> 5
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.)
Payment guaranteed by:
HEALTH & LEISURE, INC.
Dated as of February 1, 2000 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.).
-39-
<PAGE> 1
EXHIBIT 21
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.
-41-
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITOR'S REPORT
OF
HEALTH & LEISURE, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
-40-
<PAGE> 2
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
<PAGE> 3
C O N T E N T S
Independent Auditors' Report........................................... 3
Consolidated Balance Sheet............................................. 5
Consolidated Statements of Operations.................................. 6
Consolidated Statements of Stockholders' Equity (Deficit).............. 7
Consolidated Statements of Cash Flows..................................10
Notes to the Consolidated Financial Statements.........................12
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors
Health & Leisure, Inc. and Subsidiaries
(A Development Stage Company)
Columbus, Ohio
We have audited the accompanying consolidated balance sheet of Health & Leisure,
Inc. and Subsidiaries (a development stage company) as of December 31, 1999, and
the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the year ended December 31, 1999 and from inception
on March 13, 1985 through December 31, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated 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 consolidated financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Health
& Leisure, Inc. and Subsidiaries (a development stage company) as of December
31, 1999 and the consolidated results of their operations and their cash flows
for the year ended December 31, 1999 and from inception on March 13, 1985
through December 31, 1999 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 4 to the
consolidated financial statements, the Company has had limited operations and
limited capital which together raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also discussed in Note 4. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
March 28, 2000
3
<PAGE> 5
Independent Auditor's Report
To The Board of Directors of
Health & Leisure, Inc. and Subsidiaries
We have audited the accompanying statement of operations, cash flow,
and stockholders' equity of Health & Leisure, Inc. and Subsidiaries as of
December 31, 1998. 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 1998 financial statements referred to above present
fairly, in all material respects, the financial position of Health & Leisure,
Inc. and Subsidiaries as of December 31, 1998 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 20, 1999
4
<PAGE> 6
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheet
ASSETS
------
<TABLE>
<CAPTION>
December 31,
1999
-----------------
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,050
-----------------
Total Current Assets 1,050
-----------------
TOTAL ASSETS $ 1,050
=================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 59,454
Accrued wages (Note 3) 366,000
Note payable - related party (Note 2) 267,272
Accrued interest payable - related party (Note 2) 98,974
-----------------
Total Current Liabilities 791,700
-----------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock; 10,000,000 shares authorized of $0.01
par value, no shares outstanding -
Common stock; 20,000,000 shares authorized of $0.01
par value, 17,325,427 shares issued and outstanding 173,254
Additional paid-in capital 1,213,236
Deficit accumulated during the development stage (2,177,140)
-----------------
Total Stockholders' Equity (Deficit) (790,650)
-----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,050
=================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 7
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
<TABLE>
<CAPTION>
From
For the Inception on
Years Ended March 13,
December 31, 1985 Through
------------------------------------ December 31,
1999 1998 1999
---------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Product sales $ - $ - $ 297,667
Consulting revenue 31,000 84,203 550,061
----------------- ----------------- ------------------
Total Revenue 31,000 84,203 847,728
----------------- ----------------- ------------------
OPERATING EXPENSES
Cost of goods sold - - 402,961
Officer salaries 24,000 24,000 572,750
General and administrative 17,324 15,889 930,424
Legal and accounting 18,553 13,682 563,727
Travel 59,160 53,378 489,514
Bad debts - - 38,500
Depreciation and amortization - - 48,216
----------------- ----------------- ------------------
Total Expenses 119,037 106,949 3,046,092
----------------- ----------------- ------------------
LOSS FROM OPERATIONS (88,037) (22,746) (2,198,364)
----------------- ----------------- ------------------
OTHER INCOME (EXPENSE)
Interest income - - 18,111
Interest expense (13,739) (13,535) (182,538)
Gain on sale of marketable securities - - 19,590
Other income (expense) - 722 (1,227)
----------------- ----------------- ------------------
Total Other Income (Expense) (13,739) (12,813) (146,064)
----------------- ----------------- ------------------
LOSS BEFORE EXTRAORDINARY ITEM (101,776) (35,559) (2,344,428)
----------------- ----------------- ------------------
EXTRAORDINARY ITEM - GAIN ON EXTINGUISHMENT
OF DEBT - - 167,288
----------------- ----------------- ------------------
NET LOSS $ (101,776) $ (35,559) $ (2,177,140)
================= ================= ==================
BASIC LOSS PER SHARE $ (0.01) $ (0.00)
================= =================
WEIGHTED AVERAGE SHARES OUTSTANDING 17,325,427 17,325,427
================= =================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 8
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
Shares Amount Capital Stage
----------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Balance at inception on
March 13, 1985 - $ - $ - $ -
Proceeds from initial issuance
of common stock on March 13,
1985 at $0.02 per share 300,000 3,000 3,000 -
Retroactive effect of
recapitalization 7,700,000 77,000 (3,000) (27,049)
Net loss for the period ended
December 31, 1985 - - - (96,722)
--------- --------- --------- ---------
Balance, December 31, 1985 8,000,000 80,000 - (123,771)
Common shares issued for
cash at $0.10 per share 1,000,000 10,000 90,000 -
Proceeds from exercise of
Series A Warrants at $0.99
per share 625,427 6,254 614,661 -
Stock offering costs - - (25,610) -
Net loss for the year ended
December 31, 1986 - - - (230,969)
--------- --------- --------- ---------
Balance, December 31, 1986 9,625,427 96,254 679,051 (354,740)
Proceeds from exercise of
options at $0.01 per share 140,000 1,400 (550) -
Proceeds from exercise of
Series A Warrants at $1.00
per share 10,000 100 9,900 -
Common shares issued
pursuant to finders fee
agreement at $0.01 per share 200,000 2,000 - -
Cost incurred in obtaining
working capital - - (25,580) -
Net loss for the year ended
December 31, 1987 - - - (374,614)
--------- --------- --------- ---------
Balance, December 31, 1987 9,975,427 $ 99,754 $ 662,821 $(729,354)
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE> 9
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
------------------------------ Paid-In Development
Shares Amount Capital Stage
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1987 9,975,427 $ 99,754 $ 662,821 $ (729,354)
Dividend - 498,771 shares
of Entrepreneur, Inc. - - - (14,689)
Net loss for the year ended
December 31, 1988 - - - (242,711)
----------- ----------- ----------- -----------
Balance, December 31, 1988 9,975,427 99,754 662,821 (986,754)
Common stock issued in lieu
of debt at $0.06 per share 2,000,000 20,000 100,000 -
Common stock issued for cash
at $0.07 per share 1,500,000 15,000 95,000 -
Contribution of capital - - 106,415 -
Net loss for the year ended
December 31, 1989 - - - (156,153)
----------- ----------- ----------- -----------
Balance, December 31, 1989 13,475,427 134,754 964,236 (1,142,907)
Common stock issued for cash
at $0.07 per share 3,850,000 38,500 241,500 -
Net loss for the year ended
December 31, 1990 - - - (490,642)
----------- ----------- ----------- -----------
Balance, December 31, 1990 17,325,427 173,254 1,205,736 (1,633,549)
Net loss for the year ended
December 31, 1991 - - - (22,323)
----------- ----------- ----------- -----------
Balance, December 31, 1991 17,325,427 173,254 1,205,736 (1,655,872)
Net loss for the year ended
December 31, 1992 - - - (78,322)
----------- ----------- ----------- -----------
Balance, December 31, 1992 17,325,427 173,254 1,205,736 (1,734,194)
Contributed capital - - 7,500 -
Net loss for the year ended
December 31, 1993 - - - (85,881)
----------- ----------- ----------- -----------
Balance, December 31, 1993 17,325,427 $ 173,254 $ 1,213,236 $(1,820,075)
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE> 10
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
----------------------------- Paid-In Development
Shares Amount Capital Stage
--------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1993 17,325,427 $ 173,254 $ 1,213,236 $(1,820,075)
Net loss for the year ended
December 31, 1994 - - - (61,810)
----------- ----------- ----------- -----------
Balance, December 31, 1994 17,325,427 173,254 1,213,236 (1,881,885)
Net loss for the year ended
December 31, 1995 - - - (58,056)
----------- ----------- ----------- -----------
Balance, December 31, 1995 17,325,427 173,254 1,213,236 (1,939,941)
Net loss for the year ended
December 31, 1996 - - - (63,365)
----------- ----------- ----------- -----------
Balance, December 31, 1996 17,325,427 173,254 1,213,236 (2,003,306)
Net loss for the year ended
December 31, 1997 - - - (36,499)
----------- ----------- ----------- -----------
Balance, December 31, 1997 17,325,427 173,254 1,213,236 (2,039,805)
Net loss for the year ended
December 31, 1998 - - - (35,559)
----------- ----------- ----------- -----------
Balance, December 31, 1998 17,325,427 173,254 1,213,236 (2,075,364)
Net loss for the year ended
December 31, 1999 - - - (101,776)
----------- ----------- ----------- -----------
Balance, December 31, 1999 17,325,427 $ 173,254 $ 1,213,236 $(2,177,140)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
9
<PAGE> 11
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
From
For the Inception on
Years Ended March 13,
December 31, 1985 Through
---------------------------------- December 31,
1999 1998 1999
-------------- -------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (101,776) $ (35,559) $ (2,177,140)
Adjustments to reconcile net (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization - - 48,216
Bad debt expense - - 38,500
Extraordinary item - extinguishment of debt - - (167,288)
Gain on sale of marketable securities - - (19,590)
Expenses recorded as note payable to officer - - 163,275
Common stock issued for services rendered - - 197,000
Other non-cash items - - (4,520)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable - - (31,000)
(Increase) decrease in other assets - - (11,778)
Increase (decrease) in accounts payable 25,705 6,108 144,373
Increase (decrease) in accrued expenses 36,638 36,721 531,600
----------------- ----------------- ------------------
Net Cash Provided (Used) by Operating Activities (39,433) 7,270 (1,288,352)
----------------- ----------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Offering costs for Entrepreneur, Inc. - - (5,059)
Purchase of furniture and fixtures - - (1,893)
Proceeds of sales of marketable securities - - 48,180
----------------- ----------------- ------------------
Net Cash Provided (Used) by Investing Activities - - 41,228
----------------- ----------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of warrants - - 630,915
Cash receipts from note payable - - 388,051
Cash receipts from note payable - shareholder 66,739 9,850 250,000
Payments on note payable - shareholder (27,691) (8,500) (185,491)
Payments on note payable - (7,466) (144,651)
Proceeds from sale of common stock - - 301,850
Proceeds from donated capital - - 7,500
----------------- ----------------- ------------------
Net Cash Provided (Used) by Financing Activities $ 39,048 $ (6,116) $ 1,248,174
----------------- ----------------- ------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
10
<PAGE> 12
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
From
For the Inception on
Years Ended March 13,
December 31, 1985 Through
----------------------- December 31,
1999 1998 1999
-------- ------- --------
NET INCREASE (DECREASE) IN CASH $ (385) $ 1,154 $ 1,050
CASH, BEGINNING OF PERIOD 1,435 281 -
------- ------- -------
CASH, END OF PERIOD $ 1,050 $ 1,435 $ 1,050
======= ======= =======
SUPPLEMENT CASH FLOW INFORMATION
Interest paid $ 1,101 $ 814 $56,911
Income tax $ - $ - $ -
The accompanying notes are an integral part of these consolidated financial
statements.
11
<PAGE> 13
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The consolidated financial statements presented are those of
Health & Leisure, Inc. (Health ) and its wholly-owned
subsidiaries, H & L Concepts, Inc. (H & L), Amtele, Inc. (Amtele),
and Venture Sum, Inc. (Venture). Collectively, they are referred
to herein as the "Company."
Health & Leisure, Inc. was incorporated on March 13, 1985, under
the laws of the State of Utah as Univenture Capital Corporation
(Univenture). On August 29, 1986, Univenture issued 7,700,000
shares of common stock to stockholders of Health and 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. Univernture 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 June, 1985, the Company formed H & L Concepts, Inc., an Ohio
corporation, for the purpose of engaging in any lawful act or
activity for which corporations may be. H & L Concepts, Inc. is a
wholly-owned subsidiary of the Company.
In 1990, the Company formed Amtele, Inc., a wholly-owned Delaware
subsidiary, for the purpose of marketing telecommunication
services. Amtele, Inc. has had no operations since 1992.
In 1990, the Company formed 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 which
would result in the combined entity being a public corporation.
Venture Sum, Inc. has had no operations since 1992.
Health & Leisure, Inc. was incorporated primarily for the 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 heat pads has not resulted in profitable
operations. The Company is no longer actively marketing heat pads.
12
<PAGE> 14
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
a. Organization (Continued)
From 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
Worldwide Enterprise (TWE), a partnership. In 1991, the Company
recorded a loss from TWE of$19,861. In 1992, TWE ceased all
business activity. 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 and 1992, the Company discontinued all business
activities with respect to the heat pads and the SDN service, and
since that time has been seeking a company with which to effect a
business combination.
In 1993, the Company began providing consulting services for
pharmaceutical companies. The Company's president, who is a
registered pharmacist, arranged for these services to help meet
on-going expenses. The Company does not consider consulting to be
its primary on-going business operation and expects such services
to cease in 2000.
The Company has limited operations, assets and liabilities.
Accordingly, the Company is dependent upon management and/or
significant shareholders to provide sufficient working capital to
preserve the integrity of the corporate entity during this phase.
It is the intent of management and significant shareholders to
provide sufficient working capital necessary to support and
preserve the integrity of the corporate entity.
b. Accounting Method
The Company's consolidated financial statements are prepared using
the accrual method of accounting. The Company has elected a
December 31 year-end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments
with maturities of three months or less at the time of
acquisition.
13
<PAGE> 15
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
d. Basic Net Loss Per Share
The computation of basic net loss per share of common stock is
based on the weighted average number of shares outstanding during
the period of financial statements.
For the Year Ended
December 31, 1999
-------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------- -------------
$ (101,776) 17,325,427 $ (0.01)
============ =========== ==========
For the Year Ended
December 31, 1999
-------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------- -------------
$ (35,559) 17,325,427 $ (0.00)
============ =========== ==========
e. Provision for Taxes
At December 31, 1999, the Company had net operating loss
carryforwards of approximately $2,100,000 that may be offset
against future taxable income through 2019. No tax benefit has
been reported in the consolidated financial statements, because
the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax
benefits of the loss carryforwards are offset by a valuation
amount of the same amount.
f. Additional Accounting Policies
Additional accounting policies will be established once planned
principal operations commence.
g. 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.
14
<PAGE> 16
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
h. Revenue Recognition
The Company has no significant source of ongoing revenues. Revenue
recognition policies will be determined when principal operations
commence.
i. 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 have been
eliminated.
NOTE 2 - NOTE PAYABLE - RELATED PARTY
In order to meet its cash flow needs, the Company has repeatedly
borrowed from one of its principal directors. This note functions
similar to a revolving line of credit in that it has no specific
pay back terms. Interest accrues on this note at a rate of 6% per
annum. The total principal amount due on the note at December 31,
1999 was $267,272. Unpaid interest at December 31, 1999 totaled
$98,974. Because the note has no specific terms, the entire
balance including unpaid interest has been classified as a current
liability at December 31, 1999.
NOTE 3 - ACCRUED WAGES
During the year ended December 31, 1999, the Company accrued an
additional $24,000 in wages payable to its president. As of
December 31, 1999, the Company has recorded total accrued wages
payable to its president of $366,000.
NOTE 4 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company
does not have significant cash or other material assets, nor does
it have an established source of revenues sufficient to cover its
operating costs and to allow it to continue as a going concern. It
is the intent of the Company to seek after a merger with an
existing operating company. Until this occurs, shareholders of the
Company have committed to meeting the Company's operating
expenses.
15
<PAGE> 17
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 5 - PREFERRED AND COMMON STOCK
During 1986, a total of 2,000,000 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, 625,427 Series A warrants were exercised at
$1.00 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, $0.001 par value to 20,000,000 shares,
$0.01 par value.
The Company authorized 10,000,000 shares of preferred stock, $0.01
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, 1999.
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 $0.10 per share based on the fair market value of the
shares, established by previous sales to unrelated parties.
16
<PAGE> 18
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 5 - PREFERRED AND COMMON STOCK (Continued)
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.
17
<PAGE> 19
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 5 - PREFERRED AND COMMON STOCK (Continued)
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.
17
<PAGE> 1
EXHIBIT 24
POWERS OF ATTORNEY
-42-
<PAGE> 2
POWER OF ATTORNEY
FOR ANNUAL REPORT 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 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, 1999, 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 24, 2000.
/s/ Burton Schildhouse Secretary, Treasurer and Director
- ---------------------------- ---------------------------------
Signature Position(s) with the Company
Burton Schildhouse
- ----------------------------
Print or Type Name
-43-
<PAGE> 3
POWER OF ATTORNEY
FOR ANNUAL REPORT 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 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, 1999, 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 28, 2000.
/s/Arthur Aaronson Director
- ---------------------------- ----------------------------------
Signature Position(s) with the Company
Arthur Aaronson
- ----------------------------
Print or Type Name
-44-
<PAGE> 4
POWER OF ATTORNEY
FOR ANNUAL REPORT 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 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, 1999, 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 28, 2000.
/s/James S. Koroloff Director
- ------------------------------------ -----------------------------
Signature Position(s) with the Company
James S. Koroloff
- -----------------------------------
Print or Type Name
-45-
<PAGE> 5
POWER OF ATTORNEY
FOR ANNUAL REPORT 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 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, 1999, 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 22, 2000.
/s/ Donald S. Franklin Director
- ------------------------------------ ------------------------------
Signature Position(s) with the Company
Donald S. Franklin
- -----------------------------------
Print or Type Name
-46-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 1,050 1,435
<SECURITIES> 0 0
<RECEIVABLES> 0 0
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<CURRENT-ASSETS> 1,050 1,435
<PP&E> 1,893 1,893
<DEPRECIATION> (1,893) (1,893)
<TOTAL-ASSETS> 1,050 1,435
<CURRENT-LIABILITIES> 791,700 466,205
<BONDS> 0 224,104
0 0
0 0
<COMMON> 173,254 173,254
<OTHER-SE> 0 (862,129)
<TOTAL-LIABILITY-AND-EQUITY> 1,050 1,435
<SALES> 0 0
<TOTAL-REVENUES> 31,000 84,925
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 119,037 120,484
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<INTEREST-EXPENSE> 13,739 0
<INCOME-PRETAX> (101,776) (35,559)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 (35,559)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (101,776) (35,559)
<EPS-BASIC> (0.01) (0.001)
<EPS-DILUTED> (0.01) (0.001)
</TABLE>
