-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I4v/ET4h45Xn2yLEPIM9XzSycOYB3brru99+9a/n1Rns1G7+EcRWg+XUDXKsZpWP 3ut8Oyd1n8YeXb/yqrMC+w== 0001004878-10-000122.txt : 20100708 0001004878-10-000122.hdr.sgml : 20100708 20100707184044 ACCESSION NUMBER: 0001004878-10-000122 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20100702 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Changes in Control of Registrant ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Change in Shell Company Status ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20100708 DATE AS OF CHANGE: 20100707 FILER: COMPANY DATA: COMPANY CONFORMED NAME: B2 HEALTH, INC. CENTRAL INDEX KEY: 0001394638 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 204456503 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-52883 FILM NUMBER: 10942842 BUSINESS ADDRESS: STREET 1: 7750 N. UNION BLVD STREET 2: SUITE 201 CITY: COLORADO SPRINGS STATE: CO ZIP: 80920 BUSINESS PHONE: 719-226-1544 MAIL ADDRESS: STREET 1: 7750 N. UNION BLVD STREET 2: SUITE 201 CITY: COLORADO SPRINGS STATE: CO ZIP: 80920 8-K 1 form8kjuly10.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): July 2, 2010 B2 HEALTH, INC. ---------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 333-145999 20-4456503 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File No.) (IRS Employer of incorporation) Identification No.) 701 Market Street St. Augustine, FL 32095 --------------------------------------------------- (Address of principal executive offices, including Zip Code) Registrant's telephone number, including area code: (904) 825-0873 7750 North Union Blvd., #201 Colorado Springs, CO 80920 ------------------------------------------------ (Former name or former address if changed since last report) Item 1.01 Entry Into a Material Definitive Agreement ACQUISITION OF BFK FRANCHISE COMPANY, LLC The Company was formed in March 2006 to design, manufacture and sell chiropractic tables and beds. The Company generated only limited revenue and essentially abandoned its business plan in March 2008. On July 2, 2010 the Company acquired BFK Franchise Company, LLC, a StateplaceNevada limited liability company formed in May 2009, for 9,000,000 shares of the Company's common stock. Between the date of its formation (May 19, 2009) and July 2, 2010 (the date of its acquisition by the Company), BFK sold membership units to the persons listed above. BFK, which received $50,000 for the sale of the membership units, relied upon the exemption provided by Section 4(2) of the Securities Act of 1933 in connection with the sale of the membership units. The persons that acquired the membership units were sophisticated investors and were fully informed, prior to their acquisition of the membership units, as to the business and financial condition of BFK. BUSINESS OF BFK BFK, which conducts business under the trade name, BRICKS 4 KIDS(R), offers programs designed to teach principles of engineering, architecture and physics to children ages 3-12+ using LEGO(R) bricks. BFK provides classes (both in school and after school), special events programs and day camps that are designed to enhance and enrich the traditional school curriculum, trigger young children's lively imaginations and build self-confidence. BFK's programs foster creativity and provide a unique atmosphere for students to develop problem solving and critical thinking skills by designing and building machines, catapults, pyramids, race cars, buildings and numerous other systems and devices using LEGO(R) bricks. Lego Bricks LEGO(R) is a line of construction toys manufactured by the Lego Group, a privately held company based in Billund, Denmark. The flagship product, Lego, consists of colorful interlocking plastic bricks and an accompanying array of gears, minifigures and various other parts. Lego bricks can be assembled and connected in many ways to construct such objects as vehicles, buildings, and even working robots. Anything constructed can then be taken apart, and the pieces used to make other objects. The toys were originally designed in the 1940s in Europe and have achieved an international appeal, with an extensive subculture that supports Lego movies, games, video games, competitions, and four Lego themed amusement parks. Lego pieces of all varieties are a part of a universal system. Despite variation in the design and purpose of individual pieces over the years, each remains compatible in some way with existing pieces. Lego bricks from 1958 still interlock with those made in 2010, and Lego sets for young children are compatible with those made for teenagers. 2 Bricks, beams, axles, gears, mini figures, and all other parts in the Lego system are manufactured to an exacting degree of precision. When snapped together, pieces must have just the right amount of strength and flexibility mixed together to stick together. They must stay together until pulled apart. They cannot be too easy to pull apart, or the resulting constructions would be unstable; they also cannot be too difficult to pull apart, since the disassembly of one creation in order to build another is part of the Lego appeal. Since it began producing plastic bricks, the Lego Group has released thousands of sets themed around a variety of topics including town and city, space, robots, pirates, Lego Trains, Racers, Vikings, , Bionicle, dinosaurs, holiday locations, scuba diving and undersea exploration, the wild west, the Arctic, airports and miners. The Lego range has expanded to encompass accessory motors, gears, lights, sensors, and cameras designed to be used with Lego components. Motors, battery packs, lights and switches are sold under the name Power Functions. The Technics line utilizes newer types of interlocking connections that are still compatible with the older brick type connections. The Technics line can often be motorized with Power Functions. Lego initiated a robotics line of toys called "Mindstorms" in 1998, and has continued to expand and update this range ever since. The product originated from a programmable brick developed at the MIT Media Lab and the name is taken from a paper written by a computer scientist and educator who developed the educational theory of constructionism, and whose research was at times funded by the Lego Group. The programmable Lego brick which is at the heart of these robotics sets has undergone several updates and redesigns, with the latest being called the 'NXT' brick, and sold under the brand name of Lego Mindstorms NXT 2.0 or 1.5. The set includes sensors that detect touch, light, sound and ultrasonic waves, with several others being sold separately, including an RFID reader. The intelligent brick can be programmed using software available for both Windows and Mac computers, and is downloaded onto the brick via Bluetooth. Current Programs Offered by BFK - ------------------------------- In-school field trips. One-hour classes during school hours. Classes are correlated to the science for a particular grade level. Teacher guides, student worksheets, and step-by-step instruction are provided. Recommended fees: $5-$8 per student. After-school classes. One hour, one day a week class held after school. Recommended fees: $10-$15 per class per child, minimum commitment is usually 4 classes. Pre-school classes. Classes can be held in pre-schools for children of pre-school ages. Recommended fees; $5-$7 per child. Classes for home-schooled children. Classes can be held in the home of one of the parents of a home-schooled child. Recommended fees: $8-$10 per child. 3 Camps. Normally 3 hours per day for 5 days. Camps can take place at schools or at other child-related venues. Children use Lego(R) bricks to explore various science and math concepts while working in an open, friendly environment. The material covered each session varies depending on students' ages, experience, and skill level. A new project is built each week. Architectural concepts are taught while assembling buildings, castles and other structures. Instructional content includes concepts of friction, gravity and torque, scale, gears, axles and beams. The curriculum can include the construction of a scaled model of the children's school or the school mascot. The children work and play with programmable LEGO(R) bricks along with electric motors, sensors, system bricks, and LEGO(R) Technic pieces (i.e. gears, axles, and beams). Recommended fees: $125-$150/child. Children go home with a small Lego(R) project (cost about $5/child) Birthday Parties. In the home of the birthday child. Recommended fees: $150 per party up to 10 children. If over 10 children the fee is $10/child. Special Events. Activities with Lego(R) bricks can be held in various locations including church centers, lodges, child-related venues, private schools, pre-schools, etc. Program can include parents, grandparents and all children in the family. Recommended fees: $5 per family. Operating Units - --------------- BFK operates through Corporate Creativity Centers and franchisees. A Corporate Creativity Center is a store-front location, owned and operated by BFK, where BFK coordinates in school field trips, after school classes, parties, camps and other programs - as well as the retail sales of LEGO(R) merchandise. As of June 30, 2010 BFK had: o One Corporate Creativity Center in Florida; o Eleven franchises in eight states and one foreign country; Franchise Program - ----------------- A franchisee pays a one-time, non-refundable franchise fee of $22,000 upon the execution of the franchise agreement and is required to pay BFK a royalty of 7% of the amount received from the operation of the franchise. The franchisee is granted an exclusive territory and a license to use the "Bricks 4 Kidz(R)" name and trademarks in the franchised territory. The franchisee is required to conform to certain standards of business practices. Each franchise is run as an independent business and, as such, is responsible its operation, including employment of adequate staff. Franchisees are permitted to assign their franchise provided that BFK receives advance notice of the proposed assignment, the transferee assumes the 4 obligations under the franchise agreement, the transferee meets certain conditions and qualifications, and BFK receives a $5000 transfer fee. The term of the franchise is for ten years. BFK has the right to terminate any franchisee in the event of the franchisee's bankruptcy, a default under the franchise agreement, or other events. The franchisee has the right to renew the franchise for an additional ten years if, at the time of renewal, the franchisee is in good standing and pays a renewal fee in the amount of $5000. In addition to the $22,000 franchise fee, a franchisee is advised that an additional investment of between $8,000 and $23,000 will be required for such things as equipment and supplies, insurance, marketing and working capital during the start-up phase of the business. Competition - ----------- To the best of BFK's knowledge, there are no companies franchising a model similar to that of Bricks 4 Kidz(R). However, Play-Well Teknologies, with offices in San Anselmeo and Pleasanton, California, offers after-school classes, camps and birthday parties using Lego(R) bricks. Vision Education and Media offers after school classes using Lego(R) bricks in its office in CityplaceNew York City, StateNY. In addition, several other small businesses around the country offer after-school classes and vacation camps using Lego(R) bricks. These classes camps are typically held in elementary schools, middle schools and community colleges. Government Regulation - --------------------- The offer and sale of franchises, and the operations of franchises in some respects, are regulated by the Federal Trade Commission and some state governments. In 1979 the Federal Trade Commission promulgated what became known as the FTC Franchise Rule. The FTC Franchise Rule requires detailed disclosure of a wide variety of information as a condition to selling a franchise, but the rule does not regulate the franchise relationship or require any filing or registration on the part of a franchisor. The FTC Franchise Rule requires that the franchisor provide a disclosure statement or prospectus to each prospective buyer prior to execution of a contract or payment of money relating to the franchise relationship. However, the FTC Franchise Rule is narrow and does not preempt state law, which often is stricter than the FTC Franchise Rule. As such, numerous states require franchise disclosure documents to be registered with the state authorities, and numerous states regulate the franchise relationship itself. California, Florida, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Texas, Utah, Virginia, Washington and Wisconsin all have franchise statues and regulations which typically require a franchisor to file or register its offering with the state government and to provide all prospective franchisees with the disclosure document. 5 In these so called "registration states", state regulatory agencies review the franchisor's registration application, the franchise disclosure document, the proposed franchise agreement and any other agreements franchisees must sign. State regulators also review the financial condition of the franchisor, the background of the franchisor's executives and sales agents and provisions regarding the rights and remedies of the franchisor and the franchise as provided in the franchise agreement. These state agencies can deny registration if they believe that the sale of the franchise would be deceptive in any way. Numerous other states have laws regulating various facets of the relationship between the franchisee and franchisor. These "relationship laws" typically regulate franchisors' ability to terminate or refuse renewal of a franchise, contain provisions requiring that a franchisor have "good cause" before terminating or refusing to renew a franchise and may also address other issues such as the right of a deceased franchisee's heirs to continue the franchise after the original investor's death. Some laws require a franchisor to buy back excess inventory from the franchisee in the even of termination. Some state laws make it illegal for a franchisor to demand a general release from a franchisee as a condition of renewing or entering into a new agreement. Under the FTC Franchise Rule, the FTC has the authority to seek civil penalties against a franchisor for violations of the FTC Franchise Rule. Each of the "registration states" has similar authority to seek penalties for violations of their requirements. Violations may include the offer or sale of an unregistered franchise, failing to timely provide the disclosure document to a prospective franchisee or making misrepresentations in the franchise disclosure documents. Additionally, officers of the franchisor may have personal liability if they had knowledge of or participated in the violations. Individuals cannot sue a franchisor for a violation of the FTC Franchise Rule. However, most of the pre-sale disclosure states grant a private right of action for violation of the state statue and have remedies that typically include damages, rescission of the franchise agreement and attorneys' fees. General - ------- BFK executive offices are located at 701 Market Street, Suite 105B, St. Augustine, FL. BFK leases this space at a rate of $400 per month until June 30, 2010. As of June 30, 2010 BFK employed three persons on a full time basis. BFK's website is www.bricks4kidz.com. LEGO(R) is a registered trademark of the LEGO(R) Group of companies which do not sponsor, authorize or endorse BFK's programs or its website. MANAGEMENT - ---------- Following the acquisition of BFK, John Quam resigned as an officer and director and the following persons were then appointed as the new management of the Company: 6 Name Age Position ---- --- -------- Brian Pappas 59 President, Principal Financial Officer, Principal Accounting Officer, Secretary and a Director Michelle Cote 40 Founder and a Director Dan O'Donnell 40 Vice President of Operations and a Director Jeff Pappas 56 Vice President of New Business Development The Company's directors serve until the next annual meeting of the Company's shareholders and until their successors have been duly elected and qualified. The Company's officers serve at the discretion of the Company's directors. The Company does not compensate any person for acting as a director. Information concerning the Company's new management follows: Brian Pappas has been an officer and Managing Member of BFK since May 2009. Between 1981 and 1998 Brian Pappas owned and operated (with his brother Jeff), Together Development Corporation, which sold franchises under the trade name "Together Dating Service." Mr. Pappas and his brother grew Together Development Corporation from 12 franchises to over 175 franchises which were located throughout the US, Canada, England, Netherlands and Germany. After Mr. Pappas sold Together Development Corporation in 1998 he opened Skater Paradise, Inc, which operated a chain of indoor skate parks in Massachusetts. After selling Skater Paradise, Inc in 2004 Mr. Pappas, until April, 2009, provided consulting services, and in some instances acted as the franchise development director for Zen Massage Center, Gourmet, Shape up Sisters, Digicom Specialties, The Online Outpost, and Auction-It-Today. In the spring of 2009, Mr. Pappas met with Michelle Cote, the founder of Bricks 4 Kidz, and together they formed BFK in May 2009. Between 1981 and 1998 Mr. Pappas also co-owned and operated two advertising agencies, Cushing & Pappas and The Thought Process. Mr. Pappas graduated from Colgate University in 1973 with a Bachelor of Arts degree in mathematics and music. Dan O'Donnell has been an officer and Vice President of Operations of BFK since April 15, 2010. Between October 2009 and his association with BFK, Mr. O'Donnell developed the Franchise Marketing Tool (FMT) for BFK, which is an essential component of the Bricks 4 Kidz franchise model. Between May 2000 and October 2009 Mr. O'Donnell was the Director of Franchise Operations for The Whole Child Learning Company, a franchisor of children's educational services, where he was responsible for the oversight of all daily operational activities, franchisee training and ongoing franchisee support. Mr. O'Donnell began his career in 1994 when he developed and launched a computer education program for children called Computer Kids Unlimited in Pittsburgh. Mr. O'Donnell attended the University of Pittsburgh at Titusville August 1987 to May 1988 and Richard Bland College August 1988 to May 1990 where he studied Business Administration. Jeff Pappas has been an officer and Vice President of New Business Development of BFK since April 15, 2010. Between 2007 and 2010, Mr. Pappas was the President/Managing Director for Bottom Line Group, a firm that provided consulting services to middle market food and beverage clients in the areas of 7 corporate finance, corporate strategy, human resources, equity analysis, startup management, and intellectual property. Between 2003 and 2006 Mr. Pappas was a partner and Director for Acceleron Group, LLC, an agency similar to Bottom Line Group. Mr. Pappas received his Bachelor of Arts degree from Denison University (Granville, Ohio) in 1976. Michelle Cote co-founded BFK in May 2009 and founded Bricks 4 Kidz in June, 2008. In her capacity as "founder", Ms. Cote advises BFK in the areas of creative development and new programs. Ms. Cote developed the Bricks 4 Kidz concept and since early 2008 has been operating after-school classes, camps and birthday parties using LEGO(R) bricks. Between 2005 and 2008 Ms. Cote was a free lance architectural draftsman. Prior to that time Ms. Cote worked for an architectural firm in St. Augustine, FL. Ms. Cote received her B.A. degree from Flagler College in St. Augustine in 1991 with a major in Spanish/Latin American studies and graduated Cum Laude. The Company's directors are not independent directors as that term is defined in section 803 of the listing standards of the NYSE AMEX. No director is a "financial expert" as that term is defined in the regulations of the Securities and Exchange Commission. Between the date of its formation (May 19, 2009) and May 31, 2010 BFK paid Brian Pappas, its Chief Executive Officer, $80,000 in the form of a salary and commissions on franchise sales. No executive officer of BFK received compensation in excess of $100,000 during this period. The following shows the amounts the Company expects to pay to its officers during the twelve months ending June 30, 2011 and the amount of time these persons expect to devote to the Company. % of time Projected to be devoted to Name Compensation (1) Company's business ---- ---------------- ------------------ Brian Pappas $10k/month 100% Michelle Cote $ 5k/month 50% Dan O'Donnell $ 8K/month 100% Jeff Pappas $ 8k/month 100% (1) Amounts do not include commissions on franchise sales or bonuses. Bonuses will be awarded in the discretion of the Company's directors. Michelle Cote, an officer and director of the Company, owns and operates a Corporate Learning Center which covers St. Johns County, FL. As Ms. Cote was one of BFK's founders, Ms. Cote did not pay BFK any fees, and does not pay BFK any royalties, with respect to this Corporate Learning Center. 8 PRINCIPAL SHAREHOLDERS - ---------------------- The following table shows the ownership, following the acquisition of BFK, of those persons owning beneficially 5% or more of the Company's common stock and the number and percentage of outstanding shares owned by each of the Company's directors and officers and by all officers and directors as a group. Unless otherwise indicated, each owner has sole voting and investment power over their shares of common stock. Shares % of Outstanding Name Owned Shares ---- ----- ---------------- Brian Pappas 2,599,000 (1) 26.5% Michele Cote 1,800,000 (2) 18.4% Dan O'Donnell 100,000 1% Jeff Pappas 125,000 1.3% Equity Trust Company, Custodian for Mark Shaw IRA 321,000 3.3% (All officers and directors as a group 4 persons) 4,624,000 47.2% (1) Shares are held of record by FranVentures, LLC, a limited liability company managed by Mr. Pappas. (2) Shares are held of record by MC Logic, LLC, a limited liability company controlled by Mr. Cote. DESCRIPTION OF SECURITIES - ------------------------- Common Stock - ------------ The Company is authorized to issue 50,000,000 shares of common stock. Holders of the Company's common stock are each entitled to cast one vote for each share held of record on all matters presented to the shareholders. Cumulative voting is not allowed; hence, the holders of a majority of the Company's outstanding common shares can elect all directors. Holders of the Company's common stock are entitled to receive such dividends as may be declared by the Company's Board of Directors out of funds legally available and, in the event of liquidation, to share pro rata in any distribution of the Company's assets after payment of liabilities. The Company's Board of Directors is not obligated to declare a dividend. It is not anticipated that dividends will be paid in the foreseeable future. Holders of the Company's common stock do not have preemptive rights to subscribe to additional shares if issued. There are no conversion, redemption, sinking fund or similar provisions regarding the common stock. All outstanding shares of common stock are fully paid and nonassessable. 9 Preferred Stock - --------------- The Company is authorized to issue 10,000,000 shares of preferred stock. Shares of preferred stock may be issued from time to time in one or more series as may be determined by the Company's Board of Directors. The voting powers and preferences, the relative rights of each such series and the qualifications, limitations and restrictions of each series will be established by the Board of Directors. The Company's directors may issue preferred stock with multiple votes per share and dividend rights which would have priority over any dividends paid with respect to the holders of the Company's common stock. The issuance of preferred stock with these rights may make the removal of management difficult, even if the removal would be considered beneficial to shareholders generally, and will have the effect of limiting shareholder participation in transactions such as mergers or tender offers if these transactions are not favored by the Company's management. As of April 30, 2010, the Company had not issued any shares of preferred stock. Transfer Agent - -------------- Corporate Stock Transfer 3200 Cherry Creek Drive South, Suite 430 Denver, Colorado 80209 Phone: 303-282-4800 Fax: 303-282-5800 INDEMNIFICATION - --------------- The Company's Bylaws authorize indemnification of a director, officer, employee or agent against expenses incurred by him in connection with any action, suit, or proceeding to which he is named a party by reason of his having acted or served in such capacity, except for liabilities arising from his own misconduct or negligence in performance of his duty. In addition, even a director, officer, employee, or agent found liable for misconduct or negligence in the performance of his duty may obtain such indemnification if, in view of all the circumstances in the case, a court of competent jurisdiction determines such person is fairly and reasonably entitled to indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to the Company's directors, officers, or controlling persons pursuant to these provisions, the Company has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is therefore unenforceable. Item 2.01 Completion of Acquisition or Disposition of Assets See Item 1.01 of this report. 10 Item 3.02 Unregistered Sales of Equity Securities See Item 1.01 of this report. The shares issued in connection with the acquisition of BFK were restricted securities, as that term is defined in Rule 144 of the Securities and Exchange Commission. The Company relied upon the exemption provided by Section 4(2) of the Securities Act of 1933 with respect to the issuance of these shares. The persons who acquired these shares were all provided with information concerning the Company prior to the acquisition of their shares. The certificates representing the shares will bear legends stating that the shares may not be offered, sold or transferred other than pursuant to an effective registration statement under the Securities Act of 1933 or pursuant to an applicable exemption from registration. No commissions were paid in connection with this transaction. Item 5.01 Changes in Control of Registrant See Item 1.01 of this report. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers See Item 1.01 of this report. Item 5.06 Change in Shell Company Status See Item 1.01 of this report. Item 9.01 Financial Statements and Exhibits (a) Financial Statements of BFK Franchise Company, LLC (b) Pro Forma Financial Statements (c) Exhibits Number Description ------ ------------ 10.1 Agreement relating to the acquisition of BFK Franchise Company, LLC 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: July 7, 2010 B2 HEALTH, INC. By: /s/ Brian Pappas ---------------------------- Brian Pappas, President 12 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 LENNING & CO., INC. CERTIFIED PUBLIC ACCOUNTANTS 18377 Beach Blvd., Ste. 211 Huntington Beach, CA 92648 (714) 893-0646 Fax (714) 596-7152 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, Fran 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, Mark Shaw IRA 8.35% Fishing 4 Funds, LLC 5.00% Starla Hersey 5.00% Entrust Administration Services, Inc., FBO Henry James Tabeling IRA 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 BFK Franchise Company, LLC Notes to Unaudited Financial Statements Three Months Ended March 31, 2010 Note 1 - Unaudited Financial Information - ---------------------------------------- The unaudited financial information included for the three month interim period ended March 31, 2010 was derived from the Company's books and records without audit. However, such information reflects all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to reflect properly the results of the interim period presented. The results of operations for the three month period ended March 31, 2010 are not necessarily indicative of the results expected for the fiscal year ended December 31, 2010. Note 2 - Financial Statements - ----------------------------- For a complete set of footnotes, reference is made to the Company's financial statements for the year ended December 31, 2009 which are filed with this report. 4 PRO FORMA FINANCIAL STATEMENTS B2 Health, Inc. and BFK Franchise Co., LLC PRO FORMA CONSOLIDATED BALANCE SHEET December 31, 2009 B2 BFK Adjustments Consolidated Health, Inc. Franchise (See Notes) Balance - ------------------------------------------------------------------------------------ ASSETS Current assets Cash $ 121 $ 33,907 $ - $ 34,028 Accounts receivable - 29,000 29,000 Note receivable - related party - 500 500 Inventory 3,412 3,412 Marketable securities 4,901 4,901 Security deposit 200 200 --------- --------- --------- --------- Total current assets 8,434 63,607 - 72,041 --------- --------- --------- --------- Total Assets $ 8,434 $ 63,607 $ - $ 72,041 ========= ========= ========= ========= LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 5,923 $ 9,269 $ - $ 15,192 Related party payables 13,875 650 14,525 Interest payable 1,307 1,307 --------- --------- --------- --------- Total current liabilities 21,105 9,919 - 31,024 --------- --------- --------- --------- Total Liabilities 21,105 9,919 - 31,024 --------- --------- --------- --------- Stockholders' Equity Preferred stock, $.10 par value; 1,000,000 shares authorized; none issued and outstanding - - - Common stock, $.001 par value; 50,000,000 shares authorized; 775,500 shares issued and 713,000 outstanding 78 78 Members' equity 50,000 (50,000) A Additional paid in capital 272,060 50,000 A 322,060 Treasury stock at cost (25,000) (25,000) Accumulated earnings (deficit) (274,406) 3,688 (270,718) Accumulated other comprehensive income 14,597 - 14,597 --------- --------- --------- --------- Total Stockholders' Equity (12,671) 53,688 - 41,017 Total Liabilities and Stockholders' Equity $ 8,434 $ 63,607 $ - $ 72,041 ========== ========= ========= =========
1 B2 Health, Inc. and BFK Franchise Co., LLC PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS BFK Franchise May 19, 2009 B2 Health, Inc. (inception) Year ended through December 31, December 31, Adjustments Consolidated 2009 2009 (See Notes) Balance -------------------------------------------------------------- Sales $ - $ 127,984 $ - $ 127,984 Cost of goods sold - - - - ----------- ----------- ----------- ----------- Gross profit - 127,984 - 127,984 Operating expenses: General and administrative 53,351 124,296 - 177,647 Other operating income Collection of previously written off receivables 9,150 - - 9,150 ----------- ----------- ----------- ----------- Income (loss) from operations (44,201) 3,688 - Other income (expense): Interest Expense (1,880) - - (1,880) Interest & Dvidend income 76 - - 76 Realized gain (loss) on securities (51,659) - - (51,659) ----------- ----------- ----------- ----------- Total other income (expenses) (53,463) - - (53,463) Income (loss) before provision for income taxes (97,664) 3,688 - (93,976) Provision for income tax - - - - ----------- ----------- ----------- ----------- Net income (loss) (97,664) 3,688 - (93,976) Other comprehensive income (loss) net of tax Unrealized gain (loss) on securities 27,514 - - 27,514 Comprehensive income (loss) $ (70,150) $ 3,688 - $ (66,462) =========== =========== =========== =========== Net income (loss) per share (Basic and fully diluted) $ (0.09) $ 0.00 $ 0.00 $ (0.09) =========== =========== =========== =========== Weighted average number of common shares outstanding 775,500 - - 775,500 =========== =========== =========== ===========
2 B2 Health, Inc. (A Development Stage Company) NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS December 31, 2009 Basis of Presentation The following pro forma consolidated balance sheet as of December 31, 2009 and pro forma consolidated statement of operations for the year then ended between B2 Health, Inc. and BFK Franchise Company, LLC are presented to show what effects the reverse acquisition of B2 Health, Inc. and BFK Franchise Company, LLC might have had on historical financial information had the transaction taken place on an earlier date. The pro forma consolidated financial statements are derived from the historical financial statements of B2 Health, Inc. by BFK Franchise Company, LLC and assume that for balance sheet purposes the transaction took place on December 31, 2009, and for statement of operations purposes May 19, 2009 (inception of BFK Franchise Company, LLC) and January 1, 2009 through December 31, 2009 for B2 Health, Inc. should be read in conjunction with the historical financial information. The pro forma consolidated financial statements are not necessarily indicative of the result that would have been attained had the transaction actually taken place earlier. Pro Forma Adjustments Pro forma adjustments from the pro forma consolidated financial statements are referenced below. (A) Adjustment to restate common stock to that of B2Health, Inc. 3 EX-10 2 form8kjuly10ex101.txt EXHIBIT 10.1 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 2 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) .............. 3 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)......................................... 4 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. 5 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 mark, 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. 6 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. 7 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 mark, 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. 9 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. 11 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. 12 7.03 Officer and Directors. At the closing of this Agreement B2 will cause Brian Pappas, Dan O'Donnell and Michelle Cote 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. 13 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 -------------------------- 701 Market St., Suite 105B St. Augustine, FL 32095 B2 Health, Inc. --------------- 7750 N. Union Blvd., # 201 Colorado Springs, CO 80920 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/ John Quam ----------------------------- John Quam, President BFK FRANCHISE COMPANY, LLC By /s/ Brian Pappas ----------------------------- Brian Pappas MEMBERS OF BFK FRANCHISE COMPANY, LLC FRANVENTURES, LLC By /s/ Brian Pappas ----------------------------- Managing Member MC LOGIC, LLC By /s/ Michelle Cote ------------------------------- Managing Member FISHING 4 FUNDS, LLC By /s/ Starla Redding - Hersey ------------------------------------ Managing Member EQUITY TRUST COMPANY, as Custodian for MARK SHAW IRA By /s/ Mark Shaw ----------------------------- Authorized Officer /s/ Starla Hersey ----------------------------- Starla Hersey 16 TABELING-KAISER LIVING TRUST By /s/ Henry Tabeling ----------------------------- Trustee RH TRUST By /s/ Cinnamon Wing ----------------------------- Trustee BFK DENVER By /s/ Cinnamon Wing ----------------------------- Authorized Officer CAMBRIDGE ENERGY PARTNERS By /s/ John Barton ----------------------------- Managing Partner QUEENSTOWN TRUST By /s/ John Barton ----------------------------- Trustee /s/ Bradley Barta -------------------------------- Bradley Barta /s/ William O'Dell -------------------------------- Bill O'Dell /s/ Dan Murphy -------------------------------- Dan Murphy /s/ Drew Murphy -------------------------------- Drew Murphy /s/ Steve Menscher -------------------------------- Steve Menscher 17 /s/ Rick Wilber -------------------------------- Rick Wilber CAPCOM LTD. By /s/ Kevin Curtis ----------------------------- Kevin Curtis, President ENERGY CAPITAL, LLC By /s/ John Barton ----------------------------- Managing Member /s/ Benjamin Barton -------------------------------- Benjamin Barton /s/ Dan O'Donnell -------------------------------- Dan O'Donnell /s/ Craig Pfeffer -------------------------------- Craig Pfeffer /s/ Sheri Williams -------------------------------- Sheri Williams /s/ Jeff Pappas -------------------------------- Jeff Pappas /s/ Mark Shaw -------------------------------- Mark Shaw /s/ Dale Shaw -------------------------------- Dale Shaw 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 Mark and Dale Shaw 3 180,000 Equity Trust Company, Custodian, FBO Mark Shaw IRA #15350 5.35 321,000 Starla Hersey 5 300,000 Tabeling-Kaiser 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 * Bradley Barta 1.25 75,000 Bill O'Dell 2.5 150,000 Dan Murphy 1.25 75,000 Drew Murphy 0.83 50,000 Steve Menscher 1.67 100,000 Rick Wilber 1.67 100,000 Capcom Ltd. 5.825 350,000 * 19 Energy Capital, LLC 5.825 350,000 * Benjamin Barton 4.25 255,000 ------------ 8,600,000 Dan O'Donnell 1.67 100,000 * Craig Pfeffer 1.67 100,000 * Sheri Williams 1.25 75,000 * Jeff Pappas 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 Mark and Dale Shaw 3 Equity Trust Company, Custodian, FBO Mark Shaw IRA #15350 5.35 Starla Hersey 5 Tabeling-Kaiser Living Trust 5 RH Trust 6.165 BFK Denver 5 Cambridge Energy 5 Queenstown Trust 5.415 Bradley Barta 1.25 Bill O'Dell 2.5 Dan Murphy 1.25 Drew Murphy 0.83 Steve Menscher 1.67 Rick Wilber 1.67 Capcom Ltd. 5.825 Energy Capital 5.825 Benjamin Barton 4.25 Dan O'Donnell 1.67 Craig Pfeffer 1.67 Sheri Williams 1.25 Jeff Pappas 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 LENNING & CO., INC. CERTIFIED PUBLIC ACCOUNTANTS 18377 Beach Blvd., Ste. 211 Huntington Beach, CA 92648 (714) 893-0646 Fax (714) 596-7152 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, Fran 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, Mark Shaw IRA 8.35% Fishing 4 Funds, LLC 5.00% Starla Hersey 5.00% Entrust Administration Services, Inc., FBO Henry James Tabeling IRA 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 ---- -------- John Quam 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 -----END PRIVACY-ENHANCED MESSAGE-----