EXHIBIT 10.1
AGREEMENT TO EXCHANGE SECURITIES
BETWEEN
BFK FRANCHISE COMPANY, LLC
AND
B2 HEALTH, INC.
INDEX
Page
----
ARTICLE I - EXCHANGE OF SECURITIES ............................ 4
ARTICLE II - REPRESENTATIONS AND WARRANTIES ................... 4
2.0l - Organization ....................................... 4
2.02 - Capital ............................................ 4
2.03 - Directors and Officers ............................. 4
2.04 - Financial Statements ............................... 4
2.05 - Absence of Changes ................................. 5
2.06 - Absence of Undisclosed Liabilities ................. 5
2.07 - Tax Returns ........................................ 5
2.08 - Limited Liability Company Matters................... 5
2.09 - Trade Names and Rights ............................. 5
2.l0 - Contracts and Leases ............................... 5
2.ll - Insurance Policies ................................. 5
2.l2 - Compliance with Laws ............................... 5
2.l3 - Litigation ......................................... 6
2.l4 - Ability to Carry Out Obligations ................... 6
2.l5 - Full Disclosure .................................... 6
2.l6 - Assets ............................................. 6
2.17 - Risk Assessment ....................................
2A - Organization ......................................... 6
2B - Directors and Officers, Compensation; Banks .......... 6
2C - Capital .............................................. 6
2D - Financial Statements ................................. 7
2E - Absence of Changes ................................... 7
2F - Absence of Undisclosed Liabilities ................... 7
2G - Tax Returns .......................................... 7
2H - Corporate Matters .................................... 7
2I - Trade Names and Rights ............................... 7
2J - Contracts and Leases ................................. 8
2K - Insurance Policies ................................... 8
2L - Compliance with Laws ................................. 8
2M - Litigation............................................ 8
2N - Ability to Carry Out Obligations ..................... 8
2O - Full Disclosure....................................... 9
2P - Assets................................................ 9
ARTICLE III - REPRESENTATIONS ................................. 9
ARTICLE IV - OBLIGATIONS BEFORE CLOSING ....................... 9
4.0l - Investigative Rights ............................... 9
4.02 - Conduct of Business ................................ 10
ARTICLE V - CONDITIONS PRECEDENT TO PERFORMANCE BY B2 10
5.0l - Conditions ......................................... 10
5.02 - Accuracy of Representations ........................ 10
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ARTICLE V - CONDITIONS PRECEDENT TO PERFORMANCE BY B2 (cont'd)
5.03 - Performan........................................... 10
5.04 - Absence of Litigation .............................. 10
5.05 - Other ..............................................
ARTICLE VI - CONDITIONS PRECEDENT TO PERFORMANCE BY BFK........ 11
6.0l - Conditions.......................................... 11
6.02 - Accuracy of Representations ........................ 11
6.03 - Performance......................................... 11
6.04 - Absence of Litigation............................... 11
6.05 - Other............................................... 11
ARTICLE VII - CLOSING ......................................... 11
7.0l - Closing ............................................ 11
7.02 - Exchange of Securities ............................. 12
7.03 - Officers and Directors ............................. 12
7.04 - Post Closing Covenants .............................
ARTICLE VIII - REMEDIES ....................................... 12
8.0l - Arbitration ........................................ 12
8.02 - Costs .............................................. 12
8.03 - Termination ........................................ 12
ARTICLE IX - MISCELLANEOUS .................................... 13
9.0l - Captions and Headings .............................. 13
9.02 - No Oral Change ..................................... 13
9.03 - Non-Waiver ......................................... 13
9.04 - Time of Essence .................................... 13
9.05 - Entire Agreement ................................... 13
9.06 - Governing Law ...................................... 13
9.07 - Counterparts ....................................... 13
9.08 - Notices ............................................ 13
9.09 - Binding Effect ..................................... 14
9.l0 - Effect of Closing .................................. 14
9.ll - Mutual Cooperation ................................. 14
9.12 - Expenses............................................ 15
LIST OF SCHEDULES AND EXHIBITS
Schedule 1- Allocation of Shares
Exhibit A - Member List/Options, Warrants and Convertible
Securities (BFK) ...............................
Exhibit B - Managing Members (BFK) .........................
Exhibit C - Financial Statements - Changes in Financial Condition (BFK) ....
Exhibit D - Trademarks, Trade Names and Copyrights (BFK)....
Exhibit E - Material Contracts (BFK)........................
Exhibit F - Insurance Policies (BFK)........................
Exhibit G - Officers, Directors, Bank Accounts, Safe Deposit
Boxes, Powers of Attorney (B2)..................
Exhibit H - Options, Warrants and Convertible Securities (B2) ..............
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Exhibit I - Financial Statements - Changes in Financial
Condition (B2)..................................
Exhibit J - Trademarks, Trade Names and Copyrights (B2) ...................
Exhibit K - Material Contracts (B2) .......................................
Exhibit L- Insurance Policies (B2).........................................
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AGREEMENT TO EXCHANGE SECURITIES
THIS AGREEMENT, made this 1st day of June, 2010, by and between B2 Health,
Inc. ("B2"), BFK Franchise Company, LLC ("BFK"), and the members of BFK, is made
for the purpose of setting forth the terms and conditions upon which B2 will
acquire all of the membership interests of BFK in exchange for shares of B2's
common stock.
In consideration of the mutual promises, covenants, and representations
contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
EXCHANGE OF SECURITIES
1.01 Subject to the terms and conditions of this Agreement, B2 agrees to
issue, and the members of BFK agree to accept, 9,000,000 shares of B2's common
stock (the "Stock") in consideration for all of the issued and outstanding
membership interests of BFK (the "Interests"). The shares of the B2 will be
issued to the members of BFK in accordance with Schedule 1 to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
BFK represents and warrants to B2 that:
2.0l Organization. BFK is a limited liability company duly organized,
validly existing, and in good standing under the laws of Nevada.
2.02 Capital. The list of BFK's members, and the membership interests they
hold in BFK, is attached as Exhibit A. All of the membership interests are
validly issued, fully paid, and non-assessable. At closing, there will be no
outstanding subscriptions, options, rights, warrants, convertible securities, or
other agreements or commitments obligating BFK to issue or to transfer any
additional membership interests.
2.03 Directors and Officers' Compensation; Banks. Exhibit B to this
Agreement contains the names of all the managing members of BFK.
2.04 Financial Statements. Exhibit C to this Agreement contains the
audited financial statements of BFK as of December 31, 2009 and BFK's unaudited
financial statements as of March 31, 2010. The financial statements have been
prepared in accordance with generally accepted accounting principles
consistently followed by BFK throughout the periods indicated and fairly present
the financial position of BFK as of the dates of the balance sheets included in
the financial statements, and the results of its operations for the periods
indicated.
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2.05 Absence of Changes. Since March 31, 2010 there has not been any
change in the financial condition or operations of BFK, other than changes
reflected on Exhibit C or changes in the ordinary course of business, which
changes have not in the aggregate been materially adverse.
2.06 Absence of Undisclosed Liabilities. BFK did not, as of March 31,
2010, have any debt, liability, or obligation of any nature, whether accrued,
absolute, contingent, or otherwise, and whether due or to become due, that is
not reflected on Exhibit C.
2.07 Tax Returns. Within the times and in the manner prescribed by law,
BFK has filed all federal, state and local tax returns required by law and has
paid all taxes, assessments, and penalties due and payable. No federal income
tax returns have been audited by the Internal Revenue Service. The provision for
taxes, if any, reflected in BFK's balance sheet as of March 31, 2010 is adequate
for any and all federal, state, county and local taxes for the period ending on
the date of that balance sheet and for all prior periods, whether or not
disputed. There are no present disputes as to taxes of any nature payable by
BFK.
2.08 Limited Liability Company Matters. The minutes of BFK are a complete
and accurate record of all meetings of the members and/or managers and BFK and
accurately reflect all actions taken at such meetings. The signatures of the
members and/or managers on such minutes are the valid signatures of BFK's
members and/or managers who were duly elected or appointed.
2.09 Trade Names and Rights. Exhibit D attached hereto and made a part
hereof lists all trademarks, trademark registrations or applications, trade
names, service marks, copyrights, copyright registrations or applications which
are owned by BFK. No person other than BFK owns any trademark, trademark
registration or application, service ▇▇▇▇, trade name, copyright, or copyright
registration or application the use of which is necessary or contemplated in
connection with the operation of BFK's business.
2.10 Contracts and Leases. Exhibit E attached hereto and made a part
hereof contains a summary of the provisions of all material contracts, leases,
and other agreements of BFK presently in existence or which have been agreed to
by BFK (whether written or oral). BFK is not in default under of these
agreements or leases. For the purposes of this Agreement, "Material" shall be
any amounts over $10,000.
2.11 Insurance Policies. Exhibit F to this Agreement is a description of
all insurance policies held by BFK concerning its business and properties. All
these policies are in the respective principal amounts set forth in Exhibit F
and are in full force and effect.
2.12 Compliance with Laws. BFK has complied with, and is not in violation
of, applicable federal or local statutes, and regulations affecting its
properties or the operation of its business including but not limited to federal
and state securities laws. BFK does not have any employee benefit plan which is
subject to the provisions of the Employee Retirement Income Security Act of
1974.
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2.13 Litigation. BFK is not a party to any suit, action, arbitration, or
legal, administrative, or other proceeding, or governmental investigation
pending or, to the best knowledge of BFK threatened, against or affecting BFK or
its business, assets, or financial condition. BFK is not in default with respect
to any order, writ, injunction, or decree of any federal, state, local, or
foreign court, department, agency, or instrumentality. BFK is not engaged in any
legal action to recover moneys due to BFK or damages sustained by BFK.
2.14 Ability to Carry Out Obligations. BFK has the right, power, and
authority to enter into, and perform its obligations under, this Agreement. The
execution and delivery of this Agreement by BFK and the performance by BFK of
its obligations hereunder will not cause, constitute, or conflict with or result
in (a) any breach or violation or any of the provisions of or constitute a
default under any license, mortgage, articles of organization, operating
agreement or other agreement to which BFK is a party, or by which it may be
bound, nor will any consents or authorizations of any party other than those
hereto be required; (b) an event that would permit any party to any agreement to
terminate it or to accelerate the maturity of any indebtedness or other
obligation of BFK; or (c) an event that would result in the creation or
imposition or any lien, charge, or encumbrance on any asset of BFK or would
create any obligation for which BFK would be liable, except as contemplated by
this Agreement.
2.15 Full Disclosure. None of the representations and warranties made by
BFK, contains any untrue statement of material fact.
2.16 Assets. BFK has good and marketable title to all of its property.
2.17 Risk Assessment. The members of BFK represent that they are
sophisticated investors and have the requisite knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of an investment in B2. In making the decision to invest in B2 and signing this
Agreement, they have relied on their own knowledge and upon independent
investigations made by them. In addition, they represent that they have been
given the full opportunity and time in which to carry out a "due diligence"
investigation of B2 and anything else related to B2, have received in the course
of such "due diligence" investigation all materials, information, documentation
and answers which they requested and obtained information necessary to verify
the accuracy of the information contained in this Agreement, and were satisfied
with the results of the investigation, and it appears to them suitable for their
objectives and therefore have signed this Agreement.
B2 represents and warrants to BFK and its Members that:
2A. Organization. B2 is a corporation duly organized, validly existing,
and in good standing under the laws of Delaware, has all necessary corporate
powers to own its properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing in
each of the states where its business requires qualification. B2's only
subsidiary is a corporation named Back 2 Health, Ltd., a Colorado corporation.
There are no voting trusts or other agreements or understandings to which B2 is
a party with respect to the holding, voting or disposing of capital stock of B2.
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2B. Directors and Officers, Compensation Banks. Exhibit G to this
Agreement contains: (i) the names and titles of all directors and officers of B2
and all persons, together with their titles whose compensation, and the tasks
for which they receive such compensation, from B2 as of the date of this
Agreement will equal or its expected to equal or exceed, at an annual rate, the
sum of $1,000; (ii) the name and address of each bank with which B2 has an
account or safety deposit box, and the names of all persons who are authorized
to draw thereon or have access thereto; and (iii) the names of all persons who
have a power of attorney from B2 and a summary of the terms thereof.
2C. Capital. The authorized capital stock of B2 consists of 50,000,000
shares of common stock and 10,000,000 shares of preferred stock. Immediately
prior to closing 800,000 shares of common stock will be issued and outstanding.
All of the shares are validly issued, fully paid, and non-assessable. B2 has not
issued any shares, warrants or other convertible securities of preferred stock.
At closing, there will be no outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreements or commitments obligating
B2 to issue or to transfer from treasury any additional shares of its capital
stock of any class except as reflected on Exhibit H.
2D. Financial Statements. Exhibit I to this Agreement contains the
financial statements B2 as of March 31, 2010, and the related statements of
income and retained earnings for the period then ended. The financial statements
have been prepared in accordance with U.S. generally accepted accounting
principles as consistently followed by B2 throughout the periods indicated, and
fairly present the financial position of B2 as of the dates of the balance
sheets included in the financial statements, and the results of its operations
for the periods indicated.
2E. Absence of Changes. Since March 31, 2010, there has not been any
change in the financial condition or operations of B2, except (i) changes in the
ordinary course of business, which changes have not in the aggregate been
materially adverse, and (ii) changes disclosed on Exhibit I, which changes have
not in the aggregate been materially adverse.
2F. Absence of Undisclosed Liabilities. B2 did not as of March 31, 2010
have any debt, liability, or obligation of any nature, whether accrued,
absolute, contingent, or otherwise, and whether due or to become due, that is
not reflected on Exhibit I.
2G. Tax Returns. Within the times and in the manner prescribed by law, B2
has filed all federal, state, and local tax returns required by law and has paid
all taxes, assessments, and penalties due and payable. No federal income tax
returns of B2 have been audited by the Internal Revenue Service. The provision
for taxes, if any, reflected in B2's balance sheet as of March 31, 2010, is
adequate for any and all federal, state, county, and local taxes for the period
ending on the date of that balance sheet and for all prior periods, whether or
not disputed. There are no present disputes as to taxes of any nature payable by
B2.
2H. Corporate Matters. The minutes of B2 are a complete and accurate
record of all meetings of the shareholders and directors of B2 and accurately
8
reflect all actions taken at such meetings. The signatures of the directors
and/or officers on such minutes are the valid signatures of B2's directors
and/or officers who were duly elected or appointed.
2I. Trade Names and Rights. Exhibit J attached hereto and made a part
hereof lists all trademarks, trademark registrations or applications, trade
names, service marks, copyrights, copyright registrations or applications which
are owned by B2. No person, other than B2, will own any trademark, trademark
registration or application, service ▇▇▇▇, trade name, copyright, or copyright
registration or application the use of which is necessary or contemplated in
connection with the operation of the business of B2, as such business is to be
conducted after the closing of this transaction.
2J. Contracts and Leases. Exhibit K attached hereto and made a part hereof
contains a summary of the provisions of all material contracts, leases, and
other agreements of B2 presently in existence or which have been agreed to by B2
(whether written or oral).
2K. Insurance Policies. Exhibit L to this Agreement is a description of
all insurance policies held by B2 concerning its business and properties. All
these policies are in the respective principal amounts set forth in Exhibit L
and are in full force and effect.
2L. Compliance with Laws. B2 has complied with, and is not in violation
of, applicable federal, state, or local statutes, laws, and regulations
affecting its properties or the operation of its business, including but not
limited to federal and state securities laws. B2 does not have any employee
benefit plan which is subject to the provisions of the Employee Retirement
Income Security Act of 1974.
2M. Litigation. B2 is not a party to any suit, action, arbitration, or
legal, administrative, or other proceeding, or governmental investigation
pending or, to the best knowledge of B2 threatened, against or affecting B2 or
its business, assets, or financial condition. B2 is not in default with respect
to any order, writ, injunction, or decree of any federal, state, local, or
foreign court, department, agency, or instrumentality. B2 is not engaged in any
legal action to recover moneys due to it or damages sustained by it.
2N. Ability to Carry Out Obligations. B2 has the right, power, and
authority to enter into, and perform its obligations under, this Agreement. The
execution and delivery of this Agreement by B2 and the performance by B2 of its
obligations hereunder will not cause, constitute, or conflict with or result in
(a) any breach or violation or any of the provisions of or constitute a default
under any license, indenture, mortgage, charter, instrument, articles of
incorporation, by-law, or other agreement or instrument to which B2 is a party,
or by which it may be bound, nor will any consents or authorizations of any
party other than those hereto be required, (b) an event that would permit any
party to any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of B2, or (c) an event that
would result in the creation or imposition or any lien, charge, or encumbrance
on any asset of B2 or would create any obligations for which B2 would be liable,
except as contemplated by this Agreement.
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2O. Full Disclosure. None of representations and warranties made by B2, or
in any certificate or memorandum furnished or to be furnished by B2, or on its
behalf, contains or will contain any untrue statement of material fact, or omit
any material fact the omission of which would be misleading. B2 has disclosed to
BFK all reasonably foreseeable contingencies which, if such contingencies
transpired, would have a material adverse effect on B2.
2P. Assets. B2 has good and marketable title to all of its property.
ARTICLE III
REPRESENTATIONS
Each member of BFK, severally and not jointly, represents to B2 that he
she or it has the right, power, and authority to enter into, and perform his or
her obligations under this Agreement, and that all necessary corporate actions
needed to transfer interests to B2 have been taken. The execution and delivery
of this Agreement by such member and the delivery by such member of his or her
interests in BFK pursuant to Article I will not cause, constitute, or conflict
with or result in any breach or violation or any of the provisions of or
constitute a default under any license, mortgage, or agreement to which he or
she is a party, or by which he or she may be bound, and any consents or
authorizations of any party which are required, have been duly obtained or will
be obtained at or prior to the Closing. Each member of BFK severally and not
jointly, represents and warrants to B2 that the interests of BFK that such
member will deliver at closing will be free of any liens or encumbrances.
Each member of BFK understands that the shares being acquired from B2
represent restricted securities as that term is defined in Rule l44 of the
Securities and Exchange Commission.
ARTICLE IV
OBLIGATIONS BEFORE CLOSING
4.0l Investigative Rights. From the date of this Agreement until the date
of closing, each party shall provide to the other party, and such other party's
counsel, accountants, auditors, and other authorized representatives, full
access during normal business hours to all of each party's properties, books,
contracts, commitments, records and correspondence and communications with
regulatory agencies for the purpose of examining the same. Each party shall
furnish the other party with all information concerning each party's affairs as
the other party may reasonably request.
4.02 Conduct of Business. Prior to the closing, and except as contemplated
by this Agreement, each party shall conduct its business in the normal course,
and shall not sell, pledge, or assign any assets, without the prior written
approval of the other party, except in the regular course of business. Except as
contemplated by this Agreement, neither party to this Agreement shall issue or
sell any shares, stock, options or other securities, amend its Articles of
Association, Articles of Incorporation or By-laws, declare dividends, redeem or
sell stock or other securities, incur additional or newly-funded material
liabilities, acquire or dispose of fixed assets, change senior management,
10
change employment terms, enter into any material or long-term contract,
guarantee obligations of any third party, settle or discharge any balance sheet
receivable for less than its stated amount, pay more on any liability than its
stated amount, or enter into any other transaction other than in the regular
course of business, or enter into any agreement or take any action that is
likely to cause any of the representations and warranties of such party under
this Agreement not to be true and correct as of the Closing, or that is likely
to affect the Closing. However, and notwithstanding any provision in this
Agreement to the contrary, BFK hereby assents and permits B2 to raise further
financing in any manner including by way of a bridge loan provided in exchange
for the issuance of B2's securities.
ARTICLE V
CONDITIONS PRECEDENT TO PERFORMANCE BY B2
5.01 Conditions. B2's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article V. B2 may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by B2 of any other condition of or any of B2's other
rights or remedies, at law or in equity, if BFK shall be in default of any of
its representations, warranties, or covenants under this agreement.
5.02 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by BFK in this Agreement or in any
written statement that shall be delivered to B2 by BFK under this Agreement
shall be true on and as of the Closing Date as though made at those times.
5.03 Performance. BFK shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the closing. BFK shall have
obtained all necessary consents and approvals necessary to consummate the
transactions contemplated hereby.
5.04 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this agreement or to its consummation, shall have been
instituted or threatened on or before the Closing.
5.05 Other. In addition to the other provisions of this Article V, B2's
obligations hereunder shall be subject to the satisfaction, at or before the
Closing, of the following:
o The liabilities of BFK will not exceed $30,000.
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ARTICLE VI
CONDITIONS PRECEDENT TO PERFORMANCE BY BFK
6.01 Conditions. BFK and its Members' obligations hereunder shall be
subject to the satisfaction, at or before the Closing, of the conditions set
forth in this Article VI. BFK may waive any or all of these conditions in whole
or in part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by BFK of any other condition of or any of
BFK's other rights or remedies, at law or in equity, if B2 shall be in default
of any of its representations, warranties, or covenants under this agreement.
6.02 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by B2 in this Agreement or in any
written statement that shall be delivered to BFK by B2 under this Agreement
shall be true on and as of the Closing Date as though made at those times.
6.03 Performance. B2 shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the closing. B2 shall have
obtained all necessary consents and approvals necessary to consummate the
transactions contemplated hereby.
6.04 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this agreement or to its consummation, shall have been
instituted or threatened on or before the closing.
6.05 Other. In addition to the other provisions of this Article VI, BFK's
and its Members' obligations hereunder shall be subject to the satisfaction, at
or before the Closing, of the following:
o The liabilities of B2 will not exceed $25,000.
ARTICLE VII
CLOSING
7.0l Closing. The closing of this transaction shall be held at such location
as the parties may agree. Unless the closing of this transaction takes place
before May 31, 2010, then either party may terminate this Agreement without
liability to the other party, except as otherwise provided in Section 9.12,
excluding claims for breaches of obligations by any party hereto prior to such
termination.
7.02 Exchange of Securities. On the Closing Date, each interest of BFK
will be exchanged for fully paid and non-assessable shares of B2 in accordance
with Schedule 1 to this Agreement.
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7.03 Officer and Directors. At the closing of this Agreement B2 will cause
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇'▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇ to be appointed as directors of
B2. Following such appointment, all present officers and directors of B2 will
resign.
7.04 Post Closing Covenants. Promptly after the closing B2 will sell its
subsidiary to a person designated by Capcom for $100. After the closing, B2 will
purchase 160,000 shares of the common stock of Health Logistics, Inc. These
shares will be transferred to a trust, the trustee of which will be independent
of the management of B2. When all federal and state securities requirements have
been met, these shares will be distributed to those persons holding shares of B2
on June 10, 2010. The shares will be distributed on the basis of one share of
Health Logistics, for every five shares of B2 held by such persons.
ARTICLE VIII
REMEDIES
8.01 Arbitration. Any dispute in any way involving this Agreement will
be settled through binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association in St. Augustine,
Florida.
8.02 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorney's fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or they may be
entitled.
8.03 Termination. In addition to the other remedies, B2 or BFK may on or
prior to the Closing Date terminate this Agreement, without liability to the
other party:
(i) If any bona fide action or proceeding shall be pending against B2 or
BFK on the Closing Date that could result in an unfavorable judgment, decree, or
order that would prevent or make unlawful the carrying out of this Agreement or
if any agency of the federal or of any state or national government shall have
objected at or before the Closing Date to this acquisition or to any other
action required by or in connection with this Agreement;
(ii) If the legality and sufficiency of all steps taken and to be taken by
each party in carrying out this Agreement shall not have been approved by the
respective party's counsel, which approval shall not be unreasonably withheld.
(iii) If a party breaches any representation, warranty, covenant or
obligation of such party set forth herein and such breach is not corrected
within ten days of receiving written notice from the other party of such breach.
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ARTICLE IX
MISCELLANEOUS
9.01 Captions and Headings. The Article and paragraph headings throughout
this Agreement are for convenience and reference only, and shall in no way be
deemed to define, limit, or add to the meaning of any provision of this
Agreement.
9.02 No Oral Change. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged orally, but only by an agreement in
writing signed by all parties hereto.
9.03 Non-Waiver. Except as otherwise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against whom
such waiver is charged; and (i) the failure of any party to insist in any one or
more cases upon the performance of any of the provisions, covenants, or
conditions of this Agreement or to exercise any option herein contained shall
not be construed as a waiver or relinquishment for the future of any such
provisions, convenants, or conditions, (ii) the acceptance of performance of
anything required by this Agreement to be performed with knowledge of the breach
or failure of a covenant, condition, or provision hereof shall not be deemed a
waiver of such breach or failure, and (iii) no waiver by any party of one breach
by another party shall be construed as a waiver with respect to any other or
subsequent breach.
9.04 Time of Essence. Time is of the essence of this Agreement and of each
and every provision hereof.
9.05 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements,
understandings and the letters of intent between the parties.
9.06 Governing Law. This Agreement and its application shall be
governed by the laws of Delaware.
9.07 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.08 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
14
BFK Franchise Company, LLC
--------------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
B2 Health, Inc.
---------------
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇., # ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
9.09 Binding Effect. This Agreement shall inure to and be binding upon and
be enforceable against the respective successors of each of the parties to this
Agreement. No party may assign or transfer any of its rights or obligations
hereunder, without the prior written consent of the other parties hereto.
Nothing in this Agreement, express or implied, shall give to any person other
than the parties hereto any benefit or any legal or equitable right, remedy or
claim under this Agreement.
9.10 Effect of Closing. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, shall survive the
closing of this Agreement and shall remain in effect for a period of twelve
months thereafter. In the event there is any material misrepresentation or
warranty of any party to this Agreement, then B2 (if such misrepresentation is
made by BFK or the BFK members) or the members of BFK ( if such
misrepresentation is made by B2) may recind this Agreement during the 90 day
period following the closing of this Agreement.
9.11 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other and
further documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein. Neither party will
intentionally take any action, or omit to take any action, which will cause a
breach of such party's obligations pursuant to this Agreement.
9.12 Expenses. Each of the parties hereto agrees to pay all of its own
expenses (including without limitation, attorneys' and accountants' fees)
incurred in connection with this Agreement, the transactions contemplated herein
and negotiations leading to the same and the preparations made for carrying the
same into effect. Each of the parties expressly represents and warrants that no
finder or broker has been involved in this transaction and each party agrees to
indemnify and hold the other party harmless from any commission, fee or claim of
any person, firm or corporation employed or retained by such party (or claiming
to be employed or retained by such party) to bring about or represent such party
in the transactions contemplated by this Agreement.
15
AGREED TO AND ACCEPTED as of the date first above written.
B2 HEALTH, INC.
By /s/ ▇▇▇▇ ▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇, President
BFK FRANCHISE COMPANY, LLC
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
MEMBERS OF BFK FRANCHISE COMPANY, LLC
FRANVENTURES, LLC
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Managing Member
MC LOGIC, LLC
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Managing Member
FISHING 4 FUNDS, LLC
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - ▇▇▇▇▇▇
------------------------------------
Managing Member
EQUITY TRUST COMPANY, as Custodian for
▇▇▇▇ ▇▇▇▇ ▇▇▇
By /s/ ▇▇▇▇ ▇▇▇▇
-----------------------------
Authorized Officer
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
16
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ LIVING TRUST
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Trustee
RH TRUST
By /s/ Cinnamon Wing
-----------------------------
Trustee
BFK DENVER
By /s/ Cinnamon Wing
-----------------------------
Authorized Officer
CAMBRIDGE ENERGY PARTNERS
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Managing Partner
QUEENSTOWN TRUST
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Trustee
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ O'Dell
--------------------------------
▇▇▇▇ O'Dell
/s/ ▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
17
/s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇
CAPCOM LTD.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, President
ENERGY CAPITAL, LLC
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Managing Member
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇ ▇'▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇'▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇
18
Schedule 1
Allocation of Shares of Common Stock
Membership Shares of B2 Health
Interests Common Stock to be
BFK Member in BFK received by B2 Member
---------- ----------- ---------------------
FranVentures, LLC 43.34 2,599,000 *
MC Logic, LLC 30 1,800,000
Fishing 4 Funds, LLC 5 300,000
▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ 3 180,000
Equity Trust Company,
Custodian, FBO ▇▇▇▇ ▇▇▇▇
▇▇▇ #15350 5.35 321,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ 5 300,000
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ Living Trust 5 300,000
RH Trust 6.165 370,000 *
BFK Denver 5 300,000
Cambridge Energy Partners 5 300,000
Queenstown Trust 5.415 325,000 *
▇▇▇▇▇▇▇ ▇▇▇▇▇ 1.25 75,000
▇▇▇▇ O'Dell 2.5 150,000
▇▇▇ ▇▇▇▇▇▇ 1.25 75,000
▇▇▇▇ ▇▇▇▇▇▇ 0.83 50,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1.67 100,000
▇▇▇▇ ▇▇▇▇▇▇ 1.67 100,000
Capcom Ltd. 5.825 350,000 *
19
Energy Capital, LLC 5.825 350,000 *
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 4.25 255,000
------------
8,600,000
▇▇▇ ▇'▇▇▇▇▇▇▇ 1.67 100,000 *
▇▇▇▇▇ ▇▇▇▇▇▇▇ 1.67 100,000 *
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1.25 75,000 *
▇▇▇▇ ▇▇▇▇▇▇ 2.09 125,000 *
-----------
9,000,000
* Membership interest increased/decreased as a result of assignment of
membership interests.
20
EXHIBIT A
Name Membership Units
---- ----------------
FranVentures, LLC 43.34
MC Logic, LLC 30
Fishing 4 Funds, LLC 5
▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ 3
Equity Trust Company, Custodian, FBO ▇▇▇▇ ▇▇▇▇
▇▇▇ #15350 5.35
▇▇▇▇▇▇ ▇▇▇▇▇▇ 5
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ Living Trust 5
RH Trust 6.165
BFK Denver 5
Cambridge Energy 5
Queenstown Trust 5.415
▇▇▇▇▇▇▇ ▇▇▇▇▇ 1.25
▇▇▇▇ O'Dell 2.5
▇▇▇ ▇▇▇▇▇▇ 1.25
▇▇▇▇ ▇▇▇▇▇▇ 0.83
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1.67
▇▇▇▇ ▇▇▇▇▇▇ 1.67
Capcom Ltd. 5.825
Energy Capital 5.825
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 4.25
▇▇▇ ▇'▇▇▇▇▇▇▇ 1.67
▇▇▇▇▇ ▇▇▇▇▇▇▇ 1.67
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1.25
▇▇▇▇ ▇▇▇▇▇▇ 2.09
21
EXHIBIT B
Managing Member:
FranVentures, LLC
22
EXHIBIT C
Financial statements of BFK Franchise Company, LLC
23
BFK FRANCHISE COMPANY, LLC
DECEMBER 31, 2009
TABLE OF CONTENTS
Page
----
Independent Auditor's Report
Balance Sheet 1
Statement of Income and Members' Equity 2
Statement of Cash Flows 3
Notes to Financial Statements 4-5
Consent of Independent Certified Public Accountants 6
▇▇▇▇▇▇▇ & CO., INC.
CERTIFIED PUBLIC ACCOUNTANTS
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Managing Members of
BFK Franchise Company, LLC
We have audited the accompanying balance sheet of BFK Franchise Company, LLC as
of December 31, 2009, and the related statements of income and member's equity,
and cash flows for the period from May 19, 2009 (inception) to December 31,
2009. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the placecountry-regionUnited States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above presents fairly, in
all material respects, the financial position of BFK Franchise Company, LLC as
of December 31, 2009, and the results of its operations and its cash flows for
the period from May 19, 2009 (inception) to December 31, 2009 in conformity with
accounting principles generally accepted in the United States of America.
April 23, 2010
BFK FRANCHISE COMPANY, LLC
BALANCE SHEET
DECEMBER 31, 2009
ASSETS
CURRENT ASSETS
Cash $ 33,907
Accounts receivable 29,000
Note receivable - related party 500
Security deposit 200
---------------------
Total current assets 63,607
---------------------
Total assets $ 63,607
=====================
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 9,269
Note payable - related party 650
---------------------
Total current liabilities 9,919
MEMBERS' EQUITY 53,688
---------------------
Total liabilities and members' equity $ 63,607
=====================
2
BFK FRANCHISE COMPANY, LLC
STATEMENT OF INCOME AND MEMBERS' EQUITY
FOR THE PERIOD FROM MAY 19, 2009 (INCEPTION) TO DECEMBER 31, 2009
REVENUES $ 127,984
OPERATING EXPENSES
Commissions 31,572
Advertising and promotion 30,061
Consulting 24,657
Training 10,510
Office expenses 10,058
Travel and entertainment 7,200
Legal and professional 3,220
Rent 2,973
Taxes and licenses 1,765
Miscellaneous 1,555
Equipment rental 725
-------------
Total operating expenses 124,296
-------------
NET INCOME 3,688
MEMBERS' EQUITY, beginning of period -
MEMBERS' CONTRIBUTION 50,000
-------------
MEMBERS' EQUITY, end of period $ 53,688
=============
3
BFK FRANCHISE COMPANY, LLC
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MAY 19, 2009 (INCEPTION) TO DECEMBER 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,688
Adjustment to reconcile net income to net cash
used by operations:
Increase in:
Accounts receivable (29,000)
Note receivable (500)
Security deposit (200)
Increase in:
Accounts payable 9,269
-------------
Net cash used by operating activities (16,743)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Member contribution 50,000
Note payable 650
-------------
Net cash provided by financing activities 50,650
-------------
NET INCREASE IN CASH 33,907
CASH, beginning of period -
-------------
CASH, end of period $ 33,907
=============
4
BFK FRANCHISE COMPANY, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies of BFK Franchise Company, LLC is
presented to assist in the understanding of the Company's financial statements.
The financial statements and notes are representations of the Company's
management, who is responsible for their integrity and objectivity.
Organization - BFK Franchise Company, LLC was organized in Nevada on May 19,
2009. The Company is engaged in the business of selling Bricks 4 Kidz franchise
rights within a defined exclusive territory that provide project-based programs
to teach principles and methods of engineering to children ages 3 to13, using
LEGO bricks. The company is located in St. Augustine, Florida.
Pursuant to the Operating Agreement, ▇▇▇▇ Ventures, LLC is the managing member.
All profits and losses shall be apportioned among the members as follows (except
as required by Section 704 of the Code):
Franventures,
LLC 46.65%
Mc Logic, LLC 30.00%
Equity Trust Company, FBO, ▇▇▇▇ ▇▇▇▇ ▇▇▇ 8.35%
Fishing 4 Funds, LLC 5.00%
▇▇▇▇▇▇ ▇▇▇▇▇▇ 5.00%
Entrust Administration Services, Inc., FBO ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ 5.00%
------------
100.00%
============
Use of estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Cash and cash equivalents - For purposes of the statement of cash flows, the
Company considers all short-term securities purchased with a maturity of three
months or less to be cash equivalents. There were no cash equivalents at
December 31, 2009.
Income taxes - The Company files its income tax returns as a partnership for
Federal and State income tax purposes. As such, the Company does not pay income
taxes, as any income or loss will be included in the tax returns of the
individual members. Accordingly, no provision or liability for income taxes has
been made in the accompanying financial statements.
NOTE 2 - LEASE COMMITMENT
The Company entered into a lease agreement for its office space, which commenced
on June 1, 2009 and expires on May 31, 2010. The Company leases its office space
for $400 per month. The security deposit is $200.
5
Future minimum facilities lease payments under the operating lease are as
follows:
Year ended December 31,
-----------------------
2010 $ 1,000
=========
NOTE 3 - RELATED PARTY TRANSACTIONS
Managing member, Franventures, LLC, was paid a total of $22,500 in 2009 for
consulting services. Pursuant to the operating agreement, Franventures, LLC will
be paid an initial monthly retainer of $2,500. This monthly retainer will
increase as the number of operating franchises increases. Member, Mc Logic, LLC,
was paid a total of $10,450 in 2009 for Franchising training.
A note receivable from Fishing 4 Funds, LLC, in the amount of $500 is expected
to be received on or before December 31, 2010, at the interest rate of 5% per
annum.
A note payable to Franventures, LLC in the amount of $650 is due on or before
December 31, 2010, at the interest rate of 5% per annum.
6
BFK FRANCHISE CO., LLC
MARCH 31, 2010
INTERIM FINANCIAL STATEMENTS
(Unaudited)
BFK Franchise Co., LLC
(A Development Stage Company)
BALANCE SHEETS
March 31, December 31,
2010 2009
-------- ------------
Unaudited) ASSETS
Current assets
Cash $ 32,703 $ 33,907
Accounts receivable 29,000 29,000
Note receivable - related party 500 500
Security deposit 200 200
------------ ------------
Total current assets 62,403 63,607
------------ ------------
Total Assets $ 62,403 $ 63,607
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 9,927 $ 9,269
Note payable - related party 650 650
------------ ------------
Total current liabilities 10,577 9,919
------------ ------------
Total Liabilities 10,577 9,919
------------ ------------
Members' Equity
Members' equity 50,000 50,000
Accumulated earnings 1,826 3,688
------------ ------------
Total Stockholders' Equity 51,826 53,688
------------ ------------
Total Liabilities and Stockholders' Equity $ 62,403 $ 63,607
============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
1
BFK Franchise Co., LLC
(A Development Stage Company)
STATEMENT OF INCOME AND MEMBERS' EQUITY
(Unaudited)
Three Month
Period Ended
March, 31, 2010
---------------
Sales (net refunds of $5,000) $ 88,000
-------------
Operating expenses:
Advertising and promotion 16,021
Commissions 32,550
Consulting 9,238
Franchise expenses 3,313
Office 3,145
Professional fees 2,590
Rent 1,775
Training 11,182
Travel and entertainment 10,049
-------------
Total operating expenses 89,863
-------------
Income (loss) from operations (1,863)
-------------
Other income - interest 1
-------------
Net income (loss) $ (1,862)
Members' equity December 31, 2009 53,688
-------------
Members' Equity March 31, 2010 $ 51,826
=============
The accompanying notes are an integral part of the consolidated financial
statements.
2
BFK Franchise Co., LLC
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
Three Month
Period Ended
March, 31, 2010
---------------
Cash Flows From Operating Activities:
Net income (loss) during the development stage $ (1,862)
Adjustments to reconcile net loss to net cash provided by (used for) operating
activities:
Increase in Accounts payable 658
---------------
Net cash provided by (used for) operating activities (1,204)
---------------
Cash Flows from Investing Activities:
Purchase furniture & fixtures
Net cash provided by (used for) investing activities -
---------------
Cash Flows from Financing Activities: -
Net cash provided by (used for) financing activities -
---------------
Net Increase (Decrease) in cash (1,204)
Cash at the beginning of the period 33,907
---------------
Cash at the end of the period $ 32,703
===============
Schedule Of Non-Cash Investing And Financing Activities
-------------------------------------------------------
None
The accompanying notes are an integral part of the consolidated financial
statements.
3
EXHIBIT D
Trademarks, Trade Names and Copyrights
Bricks 4 Kidz
EXHIBIT E
Material Contracts
Franchise Agreements with various franchisees
Independent Contractor Agreement with MC Logic, LLC
EXHIBIT F
Insurance Policies
None
35
EXHIBIT G
Officers and Directors
----------------------
Name Position
---- --------
▇▇▇▇ ▇▇▇▇ President and a Director
Bank Accounts
-------------
None
Safe Deposit Boxes
------------------
None
Powers of Attorney
------------------
None
36
EXHIBIT H
Options, warrants and convertible securities:
None
37
EXHIBIT I
Financial Statements of B2Health, Ltd.
38
B2 HEALTH, INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Quarter Ended March 31, 2010
B2 Health, Inc.
(A Development Stage Company)
Consolidated Financial Statements
(Unaudited)
TABLE OF CONTENTS
Page
----
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheets 1
Consolidated statements of operation 2-3
Consolidated statements of cash flows 4
Notes to consolidated financial statements 5-6
B2 HEALTH, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
September 30, March 31,
2009 2010
------------- ---------
ASSETS
Current assets
Cash $ 174 $ 750
Inventory 3,412 3,412
Marketable securities 12,603 120
---------- ----------
Total current assets 16,189 4,282
---------- ----------
Total Assets $ 16,189 $ 4,282
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 4,816 $ 10,945
Note payable - related party 13,875 16,175
Accrued interest payable 1,307 1,307
---------- ----------
Total current liabilities 19,998 28,427
---------- ----------
Total Liabilities $ 19,998 $ 28,427
========== ==========
Stockholders' Equity
Preferred stock, $.0001 par value;
10,000,000 shares authorized; none issued
and outstanding -- --
Common stock, $.0001 par value;
50,000,000 shares authorized;
775,500 shares issued and 713,000 shares
outstanding 78 78
Additional paid in capital 272,060 272,060
Treasury stock at cost (62,500 shares) (25,000) (25,000)
Deficit accumulated during the development stage (270,799) (289,048)
Accumulated other comprehensive income (loss) 19,852 17,765
---------- ----------
Total Stockholders' Equity (3,809) (24,145)
---------- ----------
Total Liabilities and Stockholders' Equity $ 16,189 $ 4,282
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
B2 HEALTH, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Three Months
Ended Ended
Mar. 31, 2009 Mar. 31, 2010
------------- -------------
Sale $ -- $ --
Cost of goods sold -- --
------------- -------------
Gross profit -- --
------------- -------------
Operating expenses:
General and administrative 11,895 18,942
------------- -------------
11,895 18,942
11,895 18,942
------------- -------------
Other operating income:
Previously written off receivables 7,450 3,300
------------- -------------
Gain (loss) from operations (4,445) (15,642)
------------- -------------
Other income (expense):
Interest expense (1,082) --
Interest and dividend income 112 --
Realized gain (loss) on securities (52,682) 1,000
------------- -------------
(53,652) 1,000
------------- -------------
Income (loss) before provision for income taxes (58,097) (14,642)
Provision for income tax -- --
------------- -------------
Net income (loss) $ (58,097) $ (14,642)
Other comprehensive income (loss) - net of tax
Unrealized gain (loss) on securities 16,232 (3,168)
------------- -------------
Comprehensive income (loss) $ (41,865) $ (11,474)
============= =============
Net income (loss) per share
(Basic and fully diluted) $ (0.06) $ (0.01)
============= =============
Weighted average number of
common shares outstanding 713,000 713,000
============= =============
The accompanying notes are an integral part of this report
B2 HEALTH, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
March 8,
2006
Six Months Six Months (Inception)
Ended Ended Through
Mar. 31, Mar. 31, Mar. 31, 2009 2010
2010
------------ ----------- -----------
Sales $ 15,871 $ - $ 95,614
Cost of goods sold 12,653 - 87,037
------------ ------------ ------------
Gross profit 3,218 - 8,577
------------ ------------ ------------
Operating expenses:
General and administrative 25,916 24,112 255,382
------------ ------------ ------------
25,916 24,112 255,382
------------ ------------ ------------
Gain (loss) from operations (22,698) (24,112) (246,805)
------------ ------------ ------------
Other operating income:
Previously written off receivables 7,450 3,300 12,450
------------ ------------ ------------
Gain (loss) from operations (15,248) (20,812) (234,355)
------------ ------------ ------------
Other income (expense):
Interest expense (1,082) - (4,139)
Interest and dividend income 968 - 3,806
Realized gain (loss) on securities (59,796) 2,563 (54,360)
------------ ------------ ------------
Total other income (expense) (59,910) 2,563 (54,693)
------------ ------------ ------------
Income (loss) before provision
for income taxes (75,158) (18,249) (289,048)
Provision for income tax - - -
------------ ------------ ------------
Net income (loss) $ (75,158) $ (18,249) $ (289,048)
Other comprehensive income
(loss) - net of tax
Unrealized gain (loss) on
securities 3,315 (2,087) 17,765
------------ ------------ ------------
Comprehensive income (loss) $ (71,843) $ (20,336) $ (271,283)
============ ============ ============
Net income (loss) per share
(Basic and fully diluted) $ (0.10) $ (0.03)
============ ============
Weighted average number of common
shares outstanding 713,000 713,000
============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
B2 HEALTH, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
March 8,
2006
Six Months Six Months (Inception)
Ended Ended Through
Mar. 31, Mar. 31, Mar. 31, 2009 2010
2010
------------ ----------- -----------
Cash Flows From Operating
Activities:
Net income (loss) during the
development stage $ (75,158) $ (18,249) $ (289,048)
Adjustments to reconcile net loss to net cash provided by (used for) operating
activities:
Compensatory stock issuances 10,500
Accounts receivable (14,171) - -
Inventory (3,412)
Accounts payable (1,435) 6,129 10,945
Accrued interest payable 1,307
Realized (gains) loss on
sale of securities 59,796 - 56,923
------------ ------------ ------------
Net cash provided by (used for)
operating activities (30,968) (12,120) (212,785)
------------ ------------ ------------
Cash Flows From Investing
Activities:
Deferred offering costs (65,862)
Securities - purchases (871,636) - (1,387,608)
Securities - sales 799,564 10,396 1,348,330
Treasury stock purchase - - (25,000)
------------ ------------ ------------
Net cash provided by (used for)
investing activities (72,072) 10,396 (130,140)
------------ ------------ ------------
Cash Flows From Financing
Activities:
Notes payable - borrowings 17,750 2,300 44,475
Note payable - payments (28,300)
Sales of common stock 327,500
------------ ------------ ------------
Net cash provided by (used for)
financing activities 17,750 2,300 343,675
------------ ------------ ------------
Net Increase (Decrease) In Cash (85,290) 576 750
Cash at the Beginning of the Period 85,842 174 -
------------ ------------ ------------
Cash at the End of the Period $ 552 $ 750 $ 750
============ ============ =============
Schedule Of Non-Cash Investing And Financing Activities
-------------------------------------------------------
None
Supplemental Disclosure
-----------------------
Cash paid for interest $ 1,082 $ - $ -
Cash paid for income taxes $ - $ - $ -
The accompanying notes are an integral part of the consolidated financial
statements
B2 HEALTH, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
B2 Health, Inc. (the "Company"), was incorporated in the State of Delaware on
March 8, 2006. The Company plans to design and manufacture specialized
chiropractic tables. The Company is currently in the development stage and has
no significant operations to date.
Basis of Presentation
---------------------
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-Q and do not include all of the information and
disclosures required by generally accepted accounting principles for complete
financial statements. All adjustments which are, in the opinion of management,
necessary for a fair presentation of the results of operations for the interim
periods have been made and are of a recurring nature unless otherwise disclosed
herein. The results of operations for such interim periods are not necessarily
indicative of operations for a full year.
Fiscal year
-----------
The Company has chosen September 30 as a year end.
Principles of consolidation
---------------------------
The accompanying consolidated financial statements include the accounts of B2
Health, Inc. and its wholly owned subsidiary. All intercompany accounts and
transactions have been eliminated in consolidation.
Cash and cash equivalents
-------------------------
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
Accounts receivable
-------------------
The Company reviews accounts receivable periodically for collectability and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary. At March 31, 2010 the Company had no balance in its allowance
for doubtful accounts.
Property and equipment
----------------------
Property and equipment are recorded at cost and depreciated under straight line
or accelerated methods over each item's estimated useful life.
B2 HEALTH, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
Revenue recognition
-------------------
Revenue is recognized on an accrual basis as earned under contract terms.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect 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.
Income tax
----------
The Company accounts for income taxes under ASC 740. Pursuant to ASC 740
deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss carry
forwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
Net income (loss) per share
---------------------------
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.
Financial Instruments
---------------------
The carrying value of the Company's financial instruments, including cash and
cash equivalents and accrued payables, as reported in the accompanying balance
sheet, approximates fair value.
Marketable Securities
---------------------
Marketable securities are classified as available-for-sale and are presented in
the balance sheets at fair market value. Gains and losses are determined using
the specific identification method.
EXHIBIT J
Trademarks, Trade Names and Copyrights
None
EXHIBIT K
Material Contracts
None
EXHIBIT L
Insurance Policies
None
