U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 333-9809
HEALTH BUILDERS INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 87-0561634
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2077 Elderberry Way, Sandy, Utah 84092
(Address of principal executive offices)
(801) 553-8972
(Issuer's telephone number, including area code)
Check 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 report(s), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
The number of $.001 par value common shares outstanding at June 30, 1999:
2,305,500
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
See attached.
Item 2: Management's Discussion & Analysis or Plan of Operations
On March 31, 1999, the Company discontinued its network marketing
operations. The total revenues generated by the discontinued operations
amounted to $0 for the six months ended June 30, 1999, and $541 for the
year ended December 31, 1998.
The Company currently has no on-going operations. At the present time, the
Company is looking for a different line of business or for a potential
merger or business acquisition. Any such business acquisition with an
operating company will likely be structured as a reverse acquisition in
which a controlling interest in the Company will be acquired by the
successor operation. In such a transaction, the shareholders of the
Company will likely own a minority interest in the combined company after
the acquisition, and present management of the company will likely resign
and be replaced by the principals of the operating company. This type of
transaction will leave the current shareholders with only a small minority
voice in the operating business and their interest may be insufficient to
control any seats of the board of directors or to have any substantial
voice in other corporate transactions.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
(a) None.
(b) None.
(c) See Part I, Item 1 (financial statements) and Item 2
(management's discussion) for financial information and a
narrative discussion regarding use of proceeds.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
The company is in the process of closing the acquisition of MCY Music
World, Inc., a privately held Delaware corporation. The acquisition
will be reported on a Form 8-K to be filed with the Securities and
Exchange Commission.
Item 6. Exhibits and Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Issuer has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Health Builders International, Inc.
Date: August 2, 1999 by: /s/ L. Dee Hall
L. Dee Hall, Secretary
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Unaudited Condensed Balance Sheets, June 30,
1999 and December 31, 1998 1
- Unaudited Condensed Statements of Operations,
for the three and six months ended June 30,
1999 and 1998, and from inception on July 3,
1996 through June 30, 1999 2
- Unaudited Condensed Statements of Cash Flows
for the six months ended June 30, 1999 and
1998, and from inception on July 3, 1996
through June 30, 1999 3
- Notes to Financial Statements 4 - 8
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
1999 1998
___________ ___________
CURRENT ASSETS:
Cash in bank $ - $ 21,138
Cash held in trust 12,169 -
___________ ___________
Total Current Assets 12,169 21,138
___________ ___________
PROPERTY AND EQUIPMENT, net - 566
___________ ___________
OTHER ASSETS:
Organizational costs, net 417 517
___________ ___________
Total Other Assets 417 517
___________ ___________
$ 12,586 $ 22,221
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ - $ 3,810
___________ ___________
Total Current Liabilities - 3,810
___________ ___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
500,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
50,000,000 shares authorized,
2,305,500 shares issued and
outstanding 2,306 2,306
Capital in excess of par value 50,707 50,707
Deficit accumulated during the
development stage (40,427) (34,602)
___________ ___________
Total Stockholders' Equity 12,586 18,411
___________ ___________
$ 12,586 $ 22,221
___________ ___________
NOTE: The balance sheet at December 31, 1998 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-1-
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three For the Six From Inception
Months Ended Months Ended on July 3,
June 30, June 30, 1996 Through
___________________ ___________________ June 30,
1999 1998 1999 1998 1999
_________ _________ _________ _________ _____________
REVENUE $ - $ - $ - $ - $ -
_________ _________ _________ _________ _____________
EXPENSES 3,974 - 3,974 - 3,974
_________ _________ _________ _________ _____________
INCOME (LOSS) FROM
OPERATIONS (3,974) - (3,974) - (3,974)
OTHER INCOME:
Interest 73 - 73 - 73
_________ _________ _________ _________ _____________
LOSS FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES (3,901) - (3,901) - (3,901)
CURRENT TAX EXPENSE - - - - -
DEFERRED TAX EXPENSE - - - - -
_________ _________ _________ _________ _____________
LOSS FROM CONTINUING
OPERATIONS (3,901) - (3,901) - (3,901)
_________ _________ _________ _________ _____________
DISCONTINUED OPERATIONS:
Loss from operations of
discontinued network
marketing operations - (6,899) (1,924) (14,386) (36,526)
Loss on disposal of
network marketing
operations - - - - -
_________ _________ _________ _________ _____________
LOSS FROM DISCONTINUED
OPERATIONS - (6,899) (1,924) (14,386) (36,526)
_________ _________ _________ _________ _____________
NET LOSS $ (3,901) $ (6,899) $ (5,825) $(14,386) $ (40,427)
_________ _________ _________ _________ _____________
LOSS PER COMMON SHARE:
Continuing operations $ (.00) $ - $ (.00) $ - $ (.00)
Discontinued
operations of network
marketing operations - (.00) (.00) (.01) (.02)
Disposal of
discontinued network
marketing operations - - - - -
_________ _________ _________ _________ _____________
Loss Per Share $ (.00) $ (.00) $ (.00) $ (.01) $ (.02)
_________ _________ _________ _________ _____________
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-2-
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Six From Inception
Months Ended on July 3,
June 30, 1996 Through
_____________________ June 30,
1999 1998 1998
__________ __________ _______________
Cash Flows Provided by Operating
Activities:
Net loss $ (5,825) $(14,386) $ (40,427)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Loss on disposal of fixed
assets 537 - 537
Depreciation expense 29 38 129
Amortization expense 100 100 583
Changes in assets and
liabilities:
Increase (decrease) in
accounts payable (3,810) 1,699 -
__________ __________ _______________
Net Cash Flows (Used)
by Operating Activities (8,969) (12,549) (39,178)
__________ __________ _______________
Cash Flows Provided by Investing
Activities:
Payment of organization costs - - (1,000)
Certificate of deposit - 20,096 -
Property, plant and equipment - (295) (666)
__________ __________ _______________
Net Cash Provided (Used)
by Investing Activities - 19,801 (1,666)
__________ __________ _______________
Cash Flows Provided by Financing
Activities:
Proceeds from common stock
issuance - - 71,100
Payments for stock offering
costs - - (18,087)
__________ __________ _______________
Net Cash Provided by
Financing Activities - - 53,013
__________ __________ _______________
Net Increase (Decrease) in Cash (8,969) 7,252 12,169
Cash at Beginning of Period 21,138 17,076 -
__________ __________ _______________
Cash at End of Period $ 12,169 $ 24,328 $ 21,169
__________ __________ _______________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period ended June 30, 1998:
None
For the period ended June 30, 1997:
None
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-3-
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Health Builders International, Inc. [a development stage
company] (the Company) was organized under the laws of the State of Delaware
on July 3, 1996. The Company has not yet generated significant revenues from
its planned principal operations and is considered a development stage company
as defined in SFAS No. 7. The Company was formed to engage in the business of
establishing a multi-level marketing network to provide customized mailing and
fax services for various network marketing companies. On March 31, 1999, the
Company discontinued its network marketing operations and is considering other
business opportunities or possible acquisitions. The Company has, at the
present time, not paid any dividends and any dividends that may be paid in the
future will depend upon the financial requirements of the Company and other
relevant factors.
Condensed Financial Statements - The accompanying financial statements have
been prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
June 30, 1999 and for all the periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
unaudited condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
1998 audited financial statements. The results of operations for the periods
ended June 30, 1999 are not necessarily indicative of the operating results
for the full year.
Accounting Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities, the disclosures 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 estimated
by management.
Restatement - The financial statements have been restated for all periods
presented to reflect management's decision to discontinue the company's
network marketing business.
-4-
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of equipment, at cost, less accumulated
depreciation for the periods presented:
June 30, December 31,
1999 1998
___________ ___________
Equipment $ - $ 666
Less Accumulated depreciation - (100)
___________ ___________
$ - $ 566
___________ ___________
Depreciation expenses for the six months ended June 30, 1999 and 1998 were $29
and $38, respectively.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability equal
to the expected future tax benefit/expense of temporary reporting differences
between book and tax accounting methods and any available operating loss or
tax credit carryforwards. At June 30, 1999, the Company has available unused
operating loss carryforwards of approximately $40,000, which may be applied
against future taxable income and which expire in 2011 through 2019.
The amount of and ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the tax laws
in effect, the future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the uncertainty surrounding
the realization of the loss carryforwards the Company has established a
valuation allowance equal to the tax effect of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax assets are approximately $13,600 and
$11,900 as of June 30, 1999 and December 31, 1998, respectively, with an
offsetting valuation allowance at each period end of the same amount resulting
in a change in the valuation allowance of approximately $1,700 for the six
months ended June 30, 1999.
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any compensation to its
officers and directors.
Related Party Compensation - Certain relatives of officers and directors of
the Company were paid a total of $0 and $1,244 in consulting fees during the
six months ended June 30, 1999 and the year ended December 31, 1998,
respectively.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his home as
a mailing address, as needed, at no expense to the Company.
-5-
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - EARNINGS (LOSS) PER SHARE
The following data show the amounts used in computing earnings (loss) per
share and the effect on income and the weighted average number of shares of
dilutive potential common stock for the three and six months ended June 30,
1999 and 1998, and from inception on July 3, 1996 through June 30, 1999:
For the Three For the Six From Inception
Months Ended Months Ended on July 3,
June 30, June 30, 1996 Through
___________________ ___________________ June 30,
1999 1998 1999 1998 1999
_________ _________ _________ _________ _____________
Income (loss) from
continuing operations
applicable to common
stock (numerator) $ (3,901) $ - $ (3,901) $ - $ (3,901)
_________ _________ _________ _________ _____________
Gain (loss) from
operations of
discontinued network
marketing operation
(numerator) $ - $ (6,899) $ (1,924) $(14,386) $ (36,526)
_________ _________ _________ _________ _____________
Gain (loss) from
disposition of
discontinued network
marketing operations
(numerator) $ - $ - $ - $ - $ -
_________ _________ _________ _________ _____________
Weighted average number
of common shares
outstanding used in
earnings per share
during the period
(denominator) 2,305,500 2,305,500 2,305,500 2,305,500 2,185,057
_________ _________ _________ _________ _____________
Dilutive earnings per share were not presented, as the Company had no common
equivalent shares for all periods presented that would effect the computation
of diluted earnings (loss) per share.
NOTE 6 - DISCONTINUED OPERATIONS
On March 31, 1999, the Company discontinued its network marketing operations.
The total revenues generated by the discontinued operations amounted to $0 for
the six months ended June 30, 1999 and $541 for the year ended December 31,
1998.
The Company currently has no on-going operations. At the present time, the
Company is looking for a different line of business or for a potential merger
or business acquisition. Any such business acquisition with an operating
company will likely be structured as a reverse acquisition in which a
controlling interest in the Company will be acquired by the successor
operation. In such a transaction, the shareholders of the Company will likely
own a minority interest in the combined company after the acquisition, and
present management of the company will likely resign and be replaced by the
principals of the operating company. This type of transaction will leave the
current shareholders with only a small minority voice in the operating
business and their interest may be insufficient to control any seats of the
board of directors or to have any substantial voice in other corporate
transactions.
-6-
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - DISCONTINUED OPERATIONS [Continued]
The following is a summary of assets of discontinued operations, at cost, less
accumulated depreciation:
June 30, December 31,
1999 1998
___________ ___________
Equipment $ - $ 666
Less Accumulated depreciation - (100)
___________ ___________
$ - $ 566
___________ ___________
Depreciation expenses for the six months ended June 30, 1999 and 1998 were $29
and $38, respectively.
During the quarter ended March 31, 1999, property and equipment, consisting
primarily of a VCR machine and a fax machine, was abandoned. Loss on the
disposal of the equipment amounted to $537.
The following is a condensed proforma statement of operations that reflects
what the presentation would have been for the periods presented without the
reclassifications required by "discontinued operations" accounting principles:
For the Six From Inception
Months Ended on July 3,
June 30, 1996 Through
_______________________ June 30,
1999 1998 1999
___________ ___________ ______________
Revenue $ - $ 476 $ 541
Expense (5,510) (15,501) (41,830)
Other income (expense) (315) 639 862
___________ ___________ ______________
Net loss $ (5,825) $ (14,386) $ (40,427)
___________ ___________ ______________
Loss per share $ (.00) $ (.01) $ (.02)
___________ ___________ ______________
Net Assets of the Company from discontinued operations consisted of the
following and have been reclassified in the accompanying financial statements:
June 30, December 31,
1999 1998
___________ ___________
Property and equipment, net $ - $ 566
___________ ___________
Net assets of discontinued operations $ - $ 566
___________ ___________
-7-
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - SUBSEQUENT EVENTS
Letter of Intent - The Company has entered into a letter of intent wherein the
Company would acquire all the issued and outstanding shares of common stock of
MCY Music World Corporation, a Delaware corporation, in a stock-for-stock
exchange. The Company proposes to issue approximately 50,000,000 shares of
restricted post-split common stock in the exchange. In the event the
acquisition is completed, the current shareholders of the Company would only
own approximately 8% of the combined enterprise after the exchange. The
current officers and directors of the Company would resign and the
shareholders of MCY Music World Corporation would gain control (approximately
90%) of the Company. Ultimate consummation of the acquisition is subject to
various terms including the signing of a Definitive Agreement.
-8-