AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 2006
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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NATIONAL HEALTH PARTNERS, INC.
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(Exact Name of Registrant as Specified in its Charter)
INDIANA 04-3786176
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation of Organization)
120 GIBRALTAR ROAD, SUITE 107
HORSHAM, PENNSYLVANIA 19044
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(Address of Principal Executive Offices) (Zip Code)
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INDIVIDUAL CONSULTING AGREEMENTS
(Full Title of the Plan)
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David M. Daniels
Chief Executive Officer
National Health Partners, Inc.
120 Gibraltar Road, Suite 107
Horsham, PA 19044
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(Name and Address of Agent for Service)
(215) 682-7114
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(Telephone Number, Including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount of Maximum Maximum
Title of Each Class of Shares to be Offering Aggregate Amount of
Securities to be Registered Registered (1) Price Per Share (2) Offering Price (2) Registration Fee (2)
- --------------------------- -------------- ------------------- ------------------ --------------------
Common stock 1,180,000 $1.50 $1,770,000 $189.39
Common stock 1,745,000 $1.50 $2,617,500 $280.08
underlying warrants
(1) Represents shares of common stock that may be offered by certain selling
security holders. Pursuant to Rule 416 under the Securities Act, this
registration statement also covers an indeterminate number of additional
shares of common stock issuable with respect to the shares being registered
hereunder by reason of any stock dividend, stock split, recapitalization or
other similar transaction effected without the receipt of consideration
that increases the number of the registrant's outstanding shares of common
stock.
(2) Estimated pursuant to Rule 457(h) under the Securities Act for the purpose
of determining the registration fee.
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EXPLANATORY NOTE
This registration statement registers a total of 2,925,000 shares of
common stock, par value $.001 per share, of National Health Partners, Inc., an
Indiana corporation, that were issued to certain of our consultants under
individual consulting agreements with each consultant or that are issuable upon
the exercise of outstanding warrants that were issued to certain of our
consultants under individual consulting agreements with each consultant.
This registration statement contains two parts:
The first part contains a reoffer prospectus prepared in accordance
with the requirements of Part I of Form S-3 under the Securities Act of 1933, as
amended (the "Securities Act"). Pursuant to General Instruction C of Form S-8,
the reoffer prospectus may be used by certain of our consultants for reofferings
or resales to the public on a continuous or delayed basis of up to 1,180,000
shares of our common stock that were issued under individual consulting
agreements with each consultant.
The second part contains the information required to be included in
Part II of a registration statement on Form S-8 with respect to 1,745,000 shares
of common stock issuable upon the exercise of outstanding warrants that were
issued to certain of our consultants under individual consulting agreements with
each consultant.
REOFFER PROSPECTUS
[LOGO OMITTED]
NATIONAL HEALTH PARTNERS, INC.
1,180,000 shares of common stock
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This prospectus relates to the public resale, from time to time, of an
aggregate of 1,180,000 shares of our common stock by the selling security
holders identified in this prospectus. The shares being registered consist of
shares of our common stock that were issued by us in private placement
transactions to certain of our consultants under individual consulting
agreements with each consultant.
The selling security holders may sell all or a portion of their shares
at a fixed price of $1.50 per share until the shares are listed on the OTC
Bulletin Board, and thereafter through public or private transactions at
prevailing market prices or at privately negotiated prices. We can provide no
assurance that the shares will be approved for listing on the OTC Bulletin Board
or that a public market will develop for the shares.
We will not receive any part of the proceeds from sales of these shares
by the selling security holders.
___________________________
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 2 OF THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is January 30, 2006.
TABLE OF CONTENTS
Page
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National Health Partners, Inc...................................................................................1
Risk Factors....................................................................................................2
Disclosure Regarding Forward-Looking Statements................................................................17
Use of Proceeds................................................................................................18
Determination of Offering Price................................................................................18
Selling Security Holders.......................................................................................18
Plan of Distribution...........................................................................................20
Disclosure of Commission Position on Indemnification for Securities Act Liabilities............................22
Incorporation of Certain Information by Reference..............................................................23
Where You Can Find Additional Information......................................................................24
___________________________
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION PROVIDED IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN
THE DATE ON THE FRONT OF THIS PROSPECTUS.
___________________________
i
NATIONAL HEALTH PARTNERS, INC.
The healthcare industry is in a state of turmoil. Increasing costs have
forced employers to reduce or eliminate available insurance coverage and/or
require employees to contribute heavily to premiums, especially for family
members. As a result, more Americans are being forced to self-insure and pay a
growing portion of the cost of their healthcare.
We are a national healthcare savings organization that provides
affordable healthcare programs to predominantly underserved markets in the
healthcare industry through a national healthcare savings network called
"CARExpress." CARExpress is a network of hospitals, doctors, dentists,
pharmacists and other healthcare providers comprised of an aggregate of over
1,000,000 medical professionals nationwide that have agreed to render their
services and products to CARExpress members at substantially discounted prices.
CARExpress enables a person to engage in point-of-service transactions directly
with these providers and receive discounts from the provider that are similar to
those received by a person employed by a large corporation with hundreds of
thousands of employees.
Our discount health membership programs provide a low-cost,
non-insurance alternative to individuals who are seeking to reduce their
out-of-pocket healthcare costs not covered by insurance or who are unable to
obtain healthcare insurance due to their medical history, age or occupation. For
a monthly fee, our members obtain discounts that are typically between 10% and
50% percent off the retail price of participating healthcare provider products
and services. Acceptance into our health programs is unrestricted, and our
programs may be utilized by the member's entire household. We believe our
commitment to flexibility in product design, systems and operations for a range
of distribution models will contribute directly to our success and help
distinguish us from our competitors.
Our principal executive offices are located at 120 Gibraltar Road,
Suite 107, Horsham, Pennsylvania 19044, and our telephone number is (215)
682-7114. We maintain a Web site at www.carexpresshealth.com. Information
contained on our Web site does not constitute part of this prospectus.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the following risk factors in addition to other
information in this prospectus before purchasing our common stock. The risks and
uncertainties described below are those that we currently deem to be material
and that we believe are specific to our company and our industry. In addition to
these risks, our business may be subject to risks currently unknown to us. If
any of these or other risks actually occurs, our business may be adversely
affected, the trading price of our common stock may decline and you may lose all
or part of your investment.
RISKS ASSOCIATED WITH OUR BUSINESS
WE ARE AN EARLY-STAGE COMPANY WITH AN UNPROVEN BUSINESS MODEL, WHICH MAKES IT
DIFFICULT FOR US TO EVALUATE OUR CURRENT BUSINESS AND FUTURE PROSPECTS.
We entered the health savings industry in 2001 to address the need for
affordable healthcare nationwide. From 2001 to 2004, we engaged in limited
operations due to our lack of available capital. During that time, our employees
performed relatively limited duties and our operations were focused almost
exclusively on building CARExpress. In early 2004, we took a number of steps to
increase our business and generate revenues, including hiring our current Chief
Executive Officer, raising capital through private placements of our equity
securities, and marketing our CARExpress membership programs to the public, and
during 2005, entered into agreements with various marketing companies that are
generating an increasing number of members and sales of our programs. While we
are actively engaged in marketing our CARExpress membership programs to the
public and are experiencing rapid growth in members and sales of our CARExpress
membership programs, we have generated only minimal revenues to date. In
addition, since we have only been offering our CARExpress membership programs
since 2003, we have very limited historical data with respect to sales of our
CARExpress membership cards.
As a result of these factors, the revenue and income potential of our
business is unproven, and we have only a limited operating history upon which to
base an evaluation of our current business and future prospects. Because of our
limited operating history and because the health savings industry is rapidly
evolving, we have limited insight into trends that may emerge and affect our
business. We may make errors in predicting and reacting to relevant business
trends, which could harm our business.
Before purchasing our common stock, you should consider an investment
in our common stock in light of the risks, uncertainties and difficulties
frequently encountered by early-stage companies in new and rapidly evolving
markets such as ours, including those described herein. We may not be able to
successfully address any or all of these risks. Failure to adequately address
such risks could cause our business, financial condition and results of
operations to suffer.
2
WE HAVE A HISTORY OF LOSSES AND EXPECT LOSSES TO CONTINUE INTO THE SECOND
QUARTER OF 2006.
We have experienced net losses in each fiscal quarter since our
inception and as of September 30, 2005, had an accumulated deficit of
approximately $6.6 million. We incurred net losses to common shareholders of
approximately $3.2 million during the nine months ended September 30, 2005,
approximately $2.6 million during the year ended December 31, 2004, and
approximately $267,000 during the year ended December 31, 2003. As a result of
these conditions, the report of our independent accountants issued in connection
with the audit of our financial statements as of and for our fiscal year ended
December 31, 2004 contained a qualification raising a substantial doubt about
our ability to continue as a going concern.
We expect the number of CARExpress members generated each month through
Trident Marketing International, Inc., Hispanic Global LLC and other marketing
representatives that we have or may enter into agreements to increase over the
next 12 months and expect our monthly membership growth over the next six months
to average between 20% and 25%. In addition, we expect our retention rates to
improve over the next 12 months and our cash flows from sales of our CARExpress
membership programs through Trident and Hispanic Global to turn positive during
the first quarter of 2006 as the recurring membership fees from our increasing
membership base overtake the costs associated with obtaining the new members we
are generating. As a result, we expect our net losses to begin to decrease
during the first quarter of 2006, we expect to begin generating net profits by
June 30, 2006, and we expect the quarter ended September 30, 2006 to be the
first fiscal quarter for which we will generate a net profit. We can provide no
assurance that we will generate new members as projected, that our member
retention rates will improve over the next 12 months, that our cash flows from
sales of our CARExpress membership programs will turn positive during the first
quarter of 2006, that we will begin generating net profits from operations
during the second quarter of 2006, or that we will be profitable for our fiscal
quarter ended September 30, 2006. As a result, we can provide you with no
assurance that net losses will not continue beyond the second quarter of 2006.
WE WILL NEED TO RAISE ADDITIONAL FUNDS IN THE FUTURE TO COVER OUR LONG-TERM
CONTRACTUAL OBLIGATIONS, NOTES PAYABLE AND OPERATING EXPENSES, WHICH FUNDS MAY
NOT BE AVAILABLE OR, IF AVAILABLE, MAY NOT BE AVAILABLE ON ACCEPTABLE TERMS.
We have significant long-term contractual obligations that we must
satisfy over the next several years. We have entered into employment agreements
with David M. Daniels, Roger H. Folts and Patricia S. Bathurst, three of our
executive officers, and have entered into office leases for our office space in
Horsham, Pennsylvania and Sarasota, Florida. The following summarizes our
contractual obligations under these agreements and leases as of December 31,
2005:
Contractual
Obligations Total 2006 2007 2008 2009 2010
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Employment Agreements $2,285,342 $573,540 $630,894 $500,722 $531,468 $48,718
Office Leases 710,194 258,553 170,803 108,373 112,708 59,757
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Total $2,995,536 $832,093 $801,697 $609,095 $644,176 $108,475
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3
In addition, we have agreed to pay Alex Soufflas and David A. Taylor, our other
two executive officers, an annualized base salary of $158,400 and $132,000,
respectively, which amounts are not reflected in the table above since we have
not entered into written employment agreements with them. If we are unable to
satisfy these obligations as they come due, our business may be materially and
adversely affected.
We currently have outstanding indebtedness to third parties in the
aggregate principal amount of approximately $210,000, all of which is due within
the next 6 months. This indebtedness consists primarily of promissory notes that
we recently issued in the aggregate principal amount of $180,000, all of which
is due within the next three months. We also expect to incur additional
operating expenses over the next 12 months as we:
o develop new discount healthcare membership programs;
o recruit and hire additional personnel, including customer service and
support staff and marketing representatives;
o leverage and develop relationships with additional preferred provider
organizations ("PPOs") and providers of healthcare services;
o upgrade our operational and financial systems, procedures and controls;
and
o comply with Securities and Exchange Commission ("SEC") reporting
requirements and fulfill the other responsibilities we will have as a
public company.
We may also experience a material decrease in liquidity due to unforeseen
capital requirements or other events and uncertainties.
We believe that our current cash resources will not be sufficient to
sustain our current operations for the next 12 months. As a result, we will need
to raise additional funds during the next 12 months. While we recently obtained
$180,000 through the issuance of promissory notes, we have not made arrangements
to obtain additional financing and we can provide no assurance that additional
financing will be available in an amount or on terms acceptable to us, if at
all. If we cannot raise funds when they are needed or if such funds cannot be
obtained on acceptable terms, we may not be able to pay our costs and expenses
as they are incurred, sell or create new CARExpress membership programs, execute
on our business plan, take advantage of future opportunities or respond to
competitive pressures or unanticipated requirements. This may seriously harm our
business, financial condition and results of operations.
WE MUST DEVELOP AND EXPAND OUR USE OF MARKETING REPRESENTATIVES TO INCREASE
REVENUE AND IMPROVE OUR OPERATING RESULTS.
Our success will depend in large part upon our ability to attract,
retain and motivate the independent marketing representatives who market our
CARExpress membership programs. We will need to expand our existing
relationships and enter into new relationships with marketing representatives in
order to increase our current and future market share and revenue. We compete
with all types of retail products and services companies throughout the United
States for new marketing representatives. We can provide no assurance that we
will be able to maintain and expand our existing relationships or enter into new
relationships, or that any new relationships will be available on commercially
reasonable terms. If we are unable to maintain and expand our existing
relationships or enter into new relationships, we may lose customer
introductions, co-marketing benefits and sales, and our operating results may
suffer.
4
OUR RELIANCE ON MARKETING REPRESENTATIVES COULD RESULT IN REDUCED REVENUE GROWTH
BECAUSE WE HAVE LITTLE CONTROL OVER THEM OR THEIR MARKETING REPRESENTATIVES.
Independent marketing representatives currently account for
substantially all of our revenues. None of these parties is obligated to
continue selling our products or to make any purchases from us. Our ability to
generate increased revenue depends significantly upon the ability and
willingness of our marketing representatives to market and sell our CARExpress
membership programs throughout the United States. If they are unsuccessful in
their efforts or are unwilling or unable to market and sell our CARExpress
membership programs, our operating results may suffer.
We cannot control the level of effort these parties expend or the
extent to which any of them will be successful in marketing and selling our
CARExpress membership programs. Our independent marketing representatives
typically offer and sell our CARExpress membership programs on a part-time
basis, and may engage in other business activities. These marketing
representatives may give higher priority to the products or services of our
competitors, reducing their efforts devoted to marketing our CARExpress
membership programs. We may not be able to prevent these parties from devoting
greater resources to support our competitors' products and reducing or
eliminating their efforts to sell our CARExpress membership programs.
DEVELOPING AND MAINTAINING RELATIONSHIPS WITH PREFERRED PROVIDER ORGANIZATIONS
ARE CRITICAL TO OUR SUCCESS AND THE LOSS OF ANY SUCH RELATIONSHIPS COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS.
As part of our business operations, we must develop and maintain
relationships with preferred provider organizations and other provider networks
within each market area that our services are offered. Developing and
maintaining relationships with healthcare providers within a preferred provider
organization is in part based on professional relationships and the reputation
of our management and marketing personnel. Our preferred provider organization
relationships may be adversely affected by events beyond our control, including
departures of key personnel and alterations in professional relationships. The
loss of a preferred provider organization within a geographic market area may
not be replaced on a timely basis, if at all. The loss of a preferred provider
organization for any reason could have a material adverse effect on our
business, financial condition, and results of operations.
5
WE CURRENTLY RELY HEAVILY ON A SMALL NUMBER OF PREFERRED PROVIDER ORGANIZATIONS,
THE LOSS OF ANY ONE OF WHICH OR THE CHANGE IN OUR RELATIONSHIP WITH ANY ONE OF
WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.
PPONext, International Med-Care, CareMark, Cigna, Optum and Careington
International are the principal preferred provider organizations through which
our members receive savings on healthcare services through our CARExpress
membership programs. The loss of any of these preferred provider organizations
or a disruption of our members' access to any of these preferred provider
organizations could adversely affect our business. While we currently enjoy a
good relationship with each of these preferred provider organizations, we can
provide no assurance that we will continue to have a good relationship with any
of them in the future. Our agreements with these organizations are not
exclusive, so these organizations may choose to partner with one of our
competitors or compete directly with our CARExpress membership programs. In
addition, these agreements may be terminated by either party on between 45 and
180 days' prior written notice. If these organizations choose to partner with
our competitors or compete directly with out CARExpress membership programs, our
business could be adversely affected. In addition, if, for any reason, we should
lose a provider relationship and be unable to promptly replace it with a new
one, we may be unable to offer certain benefits to members, which could have a
negative impact on our sales.
WE CURRENTLY GENERATE ALMOST ALL OF OUR REVENUES THROUGH TRIDENT MARKETING
INTERNATIONAL, INC. AND HISPANIC GLOBAL LLC.
Trident Marketing International, Inc. and Hispanic Global LLC currently
generate almost all of our revenues for us. Although we are attempting to expand
the number of companies selling our CARExpress membership programs, we expect
that a limited number of companies will continue to generate almost all of our
revenues for the foreseeable future. In the event Trident or Hispanic Global
ceases to sell our CARExpress membership programs to prospective members, or if
prospective members do not purchase our CARExpress membership programs through
Trident or Hispanic Global, our business, financial condition and results of
operations could be materially and adversely affected.
BECAUSE WE EXPECT TO DERIVE SUBSTANTIALLY ALL OF OUR FUTURE REVENUES FROM OUR
CAREXPRESS MEMBERSHIP PROGRAMS, ANY FAILURE OF THESE PROGRAMS TO SATISFY
CUSTOMER DEMANDS OR TO ACHIEVE MEANINGFUL MARKET ACCEPTANCE MAY SERIOUSLY HARM
OUR BUSINESS.
Substantially all of our revenues come from fees for our CARExpress
membership programs, which has not gained widespread market acceptance. We
expect our CARExpress membership programs to continue to account for
substantially all of our revenues for the foreseeable future. If, for any
reason, revenues derived from sales of our CARExpress membership programs
decline or do not grow as rapidly as we anticipate, our operating results and
our business may be significantly impaired. If our CARExpress membership
programs fail to meet the needs of our target customers, or if they do not
compare favorably in breadth and price to competing products, our growth may be
limited. We cannot assure you that our CARExpress membership programs will
achieve any meaningful market acceptance. If we cannot develop a market for our
products, or if they develop more slowly than expected, our business, financial
condition and results of operations may suffer.
Our future financial performance will also depend on our ability to
diversify our program offerings by successfully designing, developing and
selling new and unique enhancements to discount healthcare membership programs.
We cannot assure you that we will be successful in achieving market acceptance
of any new programs that we develop. Any failure or delay in diversifying our
existing offering of discount healthcare membership programs could harm our
business, financial condition and results of operations.
6
WE MAY NOT BE ABLE TO DEVELOP ACCEPTABLE NEW DISCOUNT HEALTHCARE MEMBERSHIP
PROGRAMS AT A RATE REQUIRED BY OUR RAPIDLY CHANGING MARKET.
Our future success depends on our ability to develop new discount
healthcare membership programs that keep pace with the rapidly evolving health
savings industry and that address the changing needs of our customers. We may
not be successful in either developing such programs or timely introducing them
to the market. Uncertainties about the timing and nature of changes to
healthcare regulations and the evolution of the health savings industry could
delay our development of new programs or increase the expenses in developing
them. The failure of our future discount healthcare membership programs to
satisfy the needs of our customers may limit or reduce the market for these
programs, result in customer dissatisfaction, and seriously harm our business,
financial condition and results of operations.
WE MAY BECOME SUBJECT TO GOVERNMENT REGULATION MUCH LIKE AN INSURANCE COMPANY,
WHICH MAY HAVE AN ADVERSE EFFECT ON OUR BUSINESS.
We offer and sell our CARExpress membership programs without license by
any federal, state, or local regulatory licensing agency or commission. By
comparison, companies that provide insurance benefits and operate healthcare
management organizations and preferred provider organizations are regulated by
federal and state licensing agencies and commissions and are subject to federal
and state legislation, such as the Health Insurance Portability and
Accountability Act of 1996. These regulations cover operations, including scope
of benefits, rate formula, delivery systems, utilization review procedures,
quality assurance, enrollment requirements, claim payments, marketing and
advertising. Federal and state insurance regulatory agencies and commissions
may, in the future, determine that our CARExpress membership programs are
subject to governmental regulation, which may adversely affect or limit our
future operations. Compliance with these statutes and regulations is costly and
may limit our operations. Statutes and regulations applicable to other
healthcare organizations with which we may contract, such as patient freedom of
choice rights and anti-discrimination rights, may force our healthcare
management organizations and preferred provider organizations to withdraw as our
network providers.
WE MAY NEED TO COMPLY WITH INSURANCE BROKERAGE LAWS IN THE EVENT WE SELL OUR
CAREXPRESS MEMBERSHIP PROGRAMS IN COMBINATION WITH INSURANCE PRODUCTS.
We intend in the future to sell our CARExpress membership programs in
combination with insurance products through National Health Brokerage Group, our
wholly-owned subsidiary. While we have obtained insurance licenses for National
Health Brokerage Group in some states, we have not yet engaged in the sale of
these combined products. The sale of insurance products and licensing of
insurance brokers and agents are subject to regulation and supervision
predominantly by state authorities. While the scope of regulation and form of
supervision may vary from state to state, insurance laws relating to the sale of
insurance products and licensing of insurance brokers and agents are often
7
complex and generally grant broad discretion to supervisory authorities in
adopting regulations. States have broad powers over the granting, renewing and
revoking of licenses and approvals, marketing activities and the receipt of
commissions. In the event we decide to sell CARExpress membership programs in
combination with insurance products in the future through National Health
Brokerage Group, we will need to comply with the insurance brokerage laws and
regulations of each state in which we wish to sell the combined products. Our
failure to comply with the rules and regulations of any of these states may
result in the revocation of our license to sell combined products in that state
and may subject us to fines and penalties.
OUR OPERATIONS MAY BE AFFECTED BY FUTURE CHANGES IN INSURANCE LAWS AND
REGULATIONS.
Our CARExpress membership programs are not regulated as insurance
products, and our marketing representatives are not required to be licensed as
insurance brokers to be able to sell our CARExpress membership programs.
Congress or state legislatures may in the future seek to bring our CARExpress
membership programs and sales activities under the jurisdiction of insurance
regulators through changes to insurance laws and regulations. Should that occur,
we may face material costs of compliance with the new laws and regulations, and
if we cannot comply, we may be prohibited from selling our programs in certain
jurisdictions.
If we become subject to any insurance licensing or regulatory
requirements, whether as a result of changes in insurance laws bringing our
CARExpress membership programs under the jurisdiction of federal and state
insurance agencies or as a result of National Health Brokerage Group becoming
licensed to sell our CARExpress membership programs in combination with
insurance products and engaging in sales of the combined products, our failure
to comply with any such requirements could lead to a revocation, suspension or
loss of licensing status, termination of contracts, and legal and administrative
enforcement actions. In addition, the use of the internet in the marketing and
distribution of our CARExpress membership programs is relatively new and
presents certain regulatory issues, such as whether internet service providers,
gateways or cybermalls are engaged in the solicitation or sale of insurance
policies or otherwise transacting business requiring licensure under the laws of
one or more states. Regulatory requirements are subject to change from time to
time and may become more restrictive in the future, thereby making compliance
more difficult or expensive or otherwise affecting or restricting our ability to
conduct our business as now conducted or proposed to be conducted.
OUR USE OF INDEPENDENT MARKETING REPRESENTATIVES COULD SUBJECT US TO ENFORCEMENT
ACTIONS, PENALTIES AND NEGATIVE PUBLICITY IF ANY SUCH REPRESENTATIVES DO NOT
COMPLY WITH APPLICABLE FEDERAL AND STATE REGULATIONS.
The independent marketing representatives that we utilize, and the
manner by which such marketing representatives recruit additional marketing
representatives to market our CARExpress membership programs and the number of
levels of marketing representatives through which the marketing representative
recruitment process extends, are subject to federal and state laws and
regulations administered by the Federal Trade Commission and various state
agencies. These laws and regulations include securities, franchise investment,
business opportunity, and criminal laws prohibiting the use of "pyramid" or
"endless chain" types of selling organizations. These regulations are generally
directed at ensuring that product and service sales are ultimately made to
consumers (as opposed to other marketing representatives) and that advancement
within the network marketing organization is based on sales of products and
services, rather than on investment in the company or other non-retail sales
related criteria.
8
The compensation structure of a network marketing organization is very
complex. Compliance with all of the applicable regulations and laws is uncertain
because of the evolving interpretations of existing laws and regulations, and
the enactment of new laws and regulations pertaining in general to network
marketing organizations and product and service distribution. Accordingly, there
is the risk that the network marketing organizations that we use may be found to
not comply with applicable laws and regulations. Such a finding could:
o result in an enforcement action and imposition of a penalty against us
or the network marketing organization;
o require the network marketing organization to modify its marketing
representative network system;
o result in negative publicity to us or the network marketing
organization; or
o have a negative affect on the morale and loyalty of the marketing
representatives in the network marketing organization.
Any of these consequences could have a material adverse effect on our business,
financial condition and results of operations.
OUR SYSTEMS MAY BE VULNERABLE TO SECURITY RISKS OR SERVICE DISRUPTIONS THAT
COULD HARM OUR BUSINESS.
Although we have taken measures to secure our systems against security
risks and other causes of disruption of electronic services, our servers are
vulnerable to physical or electronic break-ins and service disruptions, which
could lead to interruptions, delays, loss of data or the inability to process
customer requests. Such events could be very expensive to remedy, could damage
our reputation and could discourage existing and potential customers from using
our products. Any such events could substantially harm our business, results of
operations and financial condition.
OUR CONTINUED GROWTH COULD STRAIN OUR PERSONNEL AND INFRASTRUCTURE RESOURCES,
AND IF WE ARE UNABLE TO IMPLEMENT APPROPRIATE CONTROLS AND PROCEDURES TO MANAGE
OUR GROWTH, WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR BUSINESS PLAN.
We are beginning to experience rapid growth in our operations, which is
placing, and will continue to place, a significant strain on our management,
administrative, operational and financial infrastructure. Our future success
will depend in part upon the ability of our senior management to manage growth
effectively. This will require us to hire and train additional personnel to
manage our expanding operations. In addition, we will be required to continue to
improve our operational, financial and management controls and our reporting
systems and procedures. If we fail to successfully manage our growth, we may be
unable to execute upon our business plan.
9
WE FACE INCREASING COMPETITION FROM MORE ESTABLISHED COMPANIES THAT HAVE
SIGNIFICANTLY GREATER RESOURCES THAN WE DO, WHICH MAY PLACE PRESSURE ON OUR
PRICING AND WHICH COULD PREVENT US FROM INCREASING REVENUE OR ATTAINING
PROFITABILITY.
The health savings industry is rapidly evolving and competition for
members is becoming increasingly intense. Our CARExpress membership programs are
similar to or directly in competition with products and services offered by our
direct competitors. Some of our healthcare providers may provide, either
directly or through third parties, programs that directly compete with our
programs. If discount healthcare membership products and services become
standard features of healthcare companies, the demand for our CARExpress
membership programs may decrease. In addition, the preferred provider
organizations and provider networks that we use may decide to develop or sell
competing products instead of our CARExpress membership programs. Moreover, even
if our CARExpress membership programs provide a greater breadth of products and
services and greater price discounts than programs offered by other companies
operating in the health savings industry, potential customers might accept this
limited functionality in lieu of purchasing our CARExpress membership programs
due to their lack of familiarity with our programs.
Some of our competitors enjoy substantial competitive advantages, such
as:
o programs that are functionally similar or superior to our membership
programs;
o established reputations relating to membership programs;
o greater name recognition and larger marketing budgets and resources;
o established marketing relationships and access to larger customer
bases; and
o substantially greater financial, personal and other resources.
We compete with numerous well-established companies that design and
implement membership programs. Our current principal competitors include
companies that offer healthcare products and services through membership
programs much like our CARExpress membership programs, as well as insurance
companies, preferred provider organization networks and other organizations that
offer health benefit programs to their customers. Some of our competitors may be
companies that have programs that are functionally similar or superior to our
health membership programs. Most of our competitors possess substantially
greater financial, marketing, personnel and other resources than us.
We can provide no assurance that our current or future competitors will
not:
o provide healthcare benefit programs comparable or superior to our
programs at lower membership prices;
o adapt more quickly to evolving healthcare industry trends or changing
industry requirements;
o respond more quickly and effectively to new or changing opportunities,
technologies, standards or customer requirements;
10
o increase their emphasis on programs similar to ours to more effectively
compete with us; or
o successfully recruit independent marketing representatives by offering
more attractive sales commissions.
For these and other reasons, we may not be able to compete successfully against
our current and future competitors. Increased competition may result in price
reductions, reduced gross margins, and loss of market share, any of which could
have a material, adverse effect on our business, financial condition and results
of operations.
OUR FAILURE TO ADEQUATELY PROTECT OUR CAREXPRESS BRAND AND OTHER INTELLECTUAL
PROPERTY COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS.
Intellectual property is important to our success. We generally rely
upon confidentiality procedures and contractual provisions to protect our
CARExpress brand and our other intellectual property, and we intend to apply for
legal protection for certain of our intellectual property in the future. Any
such legal protection we obtain may be challenged by others or invalidated
through administrative process or litigation. Furthermore, legal standards
relating to the validity, enforceability and scope of protection of intellectual
property rights are uncertain, and adequate legal protection of our intellectual
property may not be available to us in every country in which we intend to sell
our products. The laws of some foreign countries may not be as protective of
intellectual property rights as United States laws, and their mechanisms for
enforcement of intellectual property rights may be inadequate. As a result, our
means of protecting our proprietary technology and brands may be inadequate.
Furthermore, despite our efforts, we may be unable to prevent third parties from
infringing upon or misappropriating our intellectual property. Any such
infringement or misappropriation could have a material adverse effect on our
business, financial condition and results of operations.
IF WE ACQUIRE ANY HEALTHCARE COMPANIES OR PRODUCTS IN THE FUTURE, SUCH COMPANIES
AND PRODUCTS COULD PROVE DIFFICULT TO INTEGRATE, DISRUPT OUR BUSINESS, DILUTE
STOCKHOLDER VALUE AND ADVERSELY AFFECT OUR OPERATING RESULTS.
We may acquire or make investments in complementary healthcare
companies, businesses, assets, products and services in the future. We have not
made any such acquisitions or investments to date, and therefore, our ability to
make acquisitions or investments is unproven. Acquisitions and investments
involve numerous risks, including:
o difficulties in integrating operations, technologies, services and
personnel;
o the diversion of financial and management resources from existing
operations;
o the risk of entering new markets;
o the potential loss of key employees; and
o the inability to generate sufficient revenue to offset acquisition or
investment costs.
In addition, if we finance any acquisitions by issuing convertible debt
or equity securities, our existing stockholders may be diluted which could
affect the market price of our stock. As a result, if we fail to properly
evaluate and execute any acquisitions or investments, our business and prospects
may be seriously harmed.
11
WE ARE DEPENDENT ON OUR MANAGEMENT TEAM, AND THE LOSS OF ANY KEY MEMBER OF THIS
TEAM MAY PREVENT US FROM IMPLEMENTING OUR BUSINESS PLAN IN A TIMELY MANNER.
Our success depends largely upon the continued services of our
executive officers and other key management and development personnel. While we
have entered into employment agreements with David M. Daniels, Roger H. Folts
and Patricia S. Bathurst, they may terminate their employment with us at any
time without penalty. Since we have not entered into employment agreements with
Alex Soufflas or David A. Taylor, they may also terminate their employment with
us at any time without penalty. We do not maintain key person life insurance
policies on any of our employees. The loss of one or more of our key employees
could seriously harm our business, financial condition or results of operations.
In such an event we may be unable to recruit personnel to replace these
individuals in a timely manner, or at all, on acceptable terms.
BECAUSE COMPETITION FOR OUR TARGET EMPLOYEES IS INTENSE, WE MAY NOT BE ABLE TO
ATTRACT AND RETAIN THE HIGHLY-SKILLED EMPLOYEES THAT WE NEED TO SUPPORT OUR
PLANNED GROWTH.
To execute our growth plan, we must attract and retain highly-qualified
personnel. We need to hire additional personnel in virtually all operational
areas, including selling and marketing, research and development, operations and
technical support, customer service and administration. Competition for these
personnel remains intense, especially for individuals with high levels of
experience in designing and developing health savings programs. We may not be
successful in attracting and retaining qualified personnel. Many of the
companies with which we compete for experienced personnel have greater resources
than we have. If we fail to attract new personnel or retain and motivate our
current personnel, our business and future growth prospects could be severely
harmed.
RISKS ASSOCIATED WITH OUR INDUSTRY
THE HEALTH SAVINGS INDUSTRY IS RAPIDLY EVOLVING, AND IF WE ARE NOT SUCCESSFUL IN
PROMOTING THE BENEFITS OF OUR CAREXPRESS MEMBERSHIP PROGRAMS AND OUR CAREXPRESS
BRAND, OUR GROWTH MAY BE LIMITED.
Based on our experience with consumers, we believe that many consumers
are not familiar with the health savings industry and the benefits provided by
discount healthcare membership programs. In addition, there may be a
time-limited opportunity to achieve and maintain a significant share of the
market for healthcare membership programs due in part to the rapidly evolving
nature of the health savings industry and the substantial resources available to
our existing and potential competitors. If employers do not recognize or
acknowledge these problems, then the market for our CARExpress membership
programs may develop more slowly than we expect, which could adversely affect
our operating results.
12
Developing and maintaining awareness of our CARExpress brand is
critical to achieving widespread acceptance of our existing and future
CARExpress membership programs. Furthermore, we believe that the importance of
brand recognition will increase as competition in our market develops.
Successful promotion of our CARExpress brand will depend largely on the
effectiveness of our marketing efforts and on our ability to develop reliable
and useful CARExpress membership programs at competitive prices. If we fail to
successfully promote our CARExpress brand, or if our expenses to promote and
maintain our CARExpress brand are greater than anticipated, our financial
condition and results of operations could suffer.
THE SUCCESS OF OUR BUSINESS DEPENDS UPON THE CONTINUED GROWTH AND ACCEPTANCE OF
HEALTH MEMBERSHIP PROGRAMS AS A SUITABLE ALTERNATIVE OR SUPPLEMENT TO
TRADITIONAL HEALTH INSURANCE.
Expansion in the sales of our CARExpress membership programs depends on
the acceptance of health membership programs as a suitable alternative or
supplement to traditional health insurance. Health membership programs could
lose their viability as an alternative to health insurance due to changes in
healthcare laws and regulations, an inadequate number of healthcare providers
participating in the programs, customer dissatisfaction with the method of
making payments and receiving discounts, and new alternative healthcare
solutions. If healthcare membership programs do not gain widespread market
acceptance, the demand for our CARExpress membership programs could be
significantly reduced, which could have a material adverse effect on our
business, financial condition and results of operations.
EVOLVING REGULATION OF THE HEALTH SAVINGS INDUSTRY MAY AFFECT US ADVERSELY.
As the health savings industry continues to evolve, increasing
regulation by federal, state or foreign agencies becomes more likely. The
delivery of discount health care products and services is subject to federal,
state and local regulation, including the prohibition of business corporations
from providing medical care, the fraud and abuse provisions of the Medicare and
Medicaid statutes, state laws that prohibit referral fees and fee splitting, and
regulations applicable to insurance companies and organizations that provide
healthcare services. Compliance with changes in applicable regulations could
materially increase the associated operating costs. Non-compliance with these
laws and regulations could cause us to become the subject of a variety of
enforcement or private actions, subject us or our management personnel to fines
or various forms of civil or criminal prosecution, and result in negative
publicity potentially damaging our reputation, network relationships, client
relationships and the relationship with program members, representatives and
consumers in general. Our failure to comply with current, as well as newly
enacted or adopted federal and state regulations, could have a material adverse
effect upon our business, financial condition and results of operations.
RISKS ASSOCIATED WITH OUR STOCK
FUTURE SALES OF OUR COMMON STOCK MAY CAUSE OUR STOCK PRICE TO DECLINE.
The sale of a large number of shares of our common stock available for
sale in the market after this offering, or the belief that such sales could
occur, could cause a drop in the market price of our common stock. We currently
have 17,054,200 shares of common stock outstanding, all of which are "restricted
securities" as that term is defined in Rule 144 of the Securities Act. We are
registering 1,180,000 of these restricted shares in this offering. We are also
registering an additional 1,745,000 shares of common stock underlying currently
outstanding warrants. The shares registered in this offering will be freely
tradable without restriction or further registration under the Securities Act,
unless the shares are purchased by our affiliates.
13
Immediately after the effectiveness of the registration statement of
which this prospectus is a part, 6,625,125 shares of our outstanding shares of
common stock will be freely tradable without restriction or further registration
under the Securities Act, unless the shares are purchased by our affiliates. The
remaining 10,429,075 shares of common stock outstanding after the effectiveness
of the registration statement will continue to be restricted securities.
None of our directors, executive officers and other stockholders are
subject to lock-up agreements or market stand-off provisions that limit their
ability to sell common stock.
WE INTEND TO ATTEMPT TO RAISE ADDITIONAL FUNDS IN THE FUTURE, AND SUCH
ADDITIONAL FUNDING MAY BE DILUTIVE TO STOCKHOLDERS OR IMPOSE OPERATIONAL
RESTRICTIONS.
We intend to raise additional capital in the future to help fund our
operations through sales of shares of our common stock or securities convertible
into shares of our common stock, as well as issuances of debt. Such additional
financing may be dilutive to our stockholders, and debt financing, if available,
may involve restrictive covenants which may limit our operating flexibility. If
additional capital is raised through the issuances of shares of our common stock
or securities convertible into shares of our common stock, the percentage
ownership of existing stockholders will be reduced. These stockholders may
experience additional dilution in net book value per share and any additional
equity securities may have rights, preferences and privileges senior to those of
the holders of our common stock.
WE HAVE ISSUED A SIGNIFICANT NUMBER OF SECURITIES TO ADVISORS AND CONSULTANTS TO
THE COMPANY AND MAY ISSUE ADDITIONAL SECURITIES TO ADVISORS AND CONSULTANTS TO
THE COMPANY IN THE FUTURE.
We issued 350,000 shares of our common stock to consultants and
advisors in 2004 as compensation for services rendered, and issued 2,587,000
shares of our common stock, options exercisable into 400,000 shares of our
common stock and warrants exercisable into 3,099,000 shares of our common stock
to consultants and advisors in 2005 as compensation for services rendered. We
may issue additional shares of our common stock or securities convertible or
exercisable into shares of our common stock to advisors, consultants or other
business partners in the future as compensation for services rendered or to be
rendered. The issuance of additional securities to such persons will result in
dilution to existing stockholders since the percentage ownership of such
stockholders will be reduced.
THE OFFERING PRICE OF THE SHARES OF OUR COMMON STOCK OFFERED HEREBY MAY NOT BEAR
ANY RELATION TO THE ACTUAL TRADING PRICE OF OUR COMMON STOCK.
The selling security holders may sell all or a portion of their shares
of common stock at a fixed price of $1.50 per share until the shares are listed
on the OTC Bulletin Board, and thereafter through public or private transactions
14
at prevailing market prices or at privately negotiated prices. The average cost
of the shares of common stock being sold by the selling security holders hereby
is approximately $.40 per share. The offering price of the shares offered hereby
does not necessarily bear any relation to our assets, book value, financial
condition or other established valuation criteria. Accordingly, the offering
price of the shares may not be indicative of the actual value of our common
stock or the prices that may prevail at any time or from time to time in the
event a public market for our common stock develops. We can provide you with no
assurance that a public market for our common stock will develop and continue or
that our common stock will ever trade at a price at or higher than the offering
price in this offering.
THE MARKET PRICE OF OUR COMMON STOCK IS LIKELY TO BE HIGHLY VOLATILE AND SUBJECT
TO WIDE FLUCTUATIONS.
The market price of our common stock is likely to be highly volatile
and could be subject to wide fluctuations in response to a number of factors
that are beyond our control, including:
o announcements of new programs or services by our competitors;
o demand for our CARExpress membership programs, including fluctuations
in license renewals; and
o fluctuations in revenue from the network marketing organizations that
we use.
In addition, the market price of our common stock could be subject to
wide fluctuations in response to:
o quarterly variations in our revenues and operating expenses;
o announcements of new programs or services by us; and
o our ability to accommodate the future growth in our operations.
In addition, the stock market has experienced significant price and
volume fluctuations that have particularly affected the market price of the
stock of many early-stage companies and that often have been unrelated or
disproportionate to the operating performance of these companies. Market
fluctuations such as these may seriously harm the market price of our common
stock. Further, securities class action suits have been filed against companies
following periods of market volatility in the price of their securities. If such
an action is instituted against us, we may incur substantial costs and a
diversion of management attention and resources, which would seriously harm our
business, financial condition and results of operations.
OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY, AND THESE FLUCTUATIONS MAY
CAUSE OUR STOCK PRICE TO FALL.
Our operating results will likely vary in the future primarily as the
result of fluctuations in our billings, revenues and operating expenses. We
expect to incur additional operating expenses in the future as we expand our
selling and marketing activities, develop new discount healthcare membership
programs, hire additional personnel and comply with SEC reporting requirements.
If our results of operations do not meet the expectations of current or
potential investors, the price of our common stock may decline.
15
OUR SHARES OF COMMON STOCK ARE NOT LISTED ON ANY NATIONAL SECURITIES EXCHANGE OR
ESTABLISHED ELECTRONIC TRADING SYSTEM.
Our shares of common stock do not currently trade on a national
securities exchange or any other established electronic trading system. We have
submitted an application to the OTC Bulletin Board to list our shares of common
stock for trading. We can provide no assurance, however, that such application
will be accepted by the OTC Bulletin Board or that our shares of common stock
will be approved for trading on the OTC Bulletin Board. The failure of our
shares to be approved for trading on the OTC Bulletin Board will have the effect
of limiting the trading activity of our common stock and reducing the liquidity
of an investment in our common stock.
APPLICABLE SEC RULES GOVERNING THE TRADING OF "PENNY STOCKS" MAY LIMIT THE
TRADING AND LIQUIDITY OF OUR COMMON STOCK WHICH MAY AFFECT THE TRADING PRICE OF
OUR COMMON STOCK.
In the event our shares of common stock are not listed on a national
securities exchange, an electronic trading system, or the pink sheets, our
common stock will very likely be considered a "penny stock" as defined under
Rule 3a51-1 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and will be subject to SEC rules and regulations that impose limitations
upon the manner in which our shares can be publicly traded. These regulations
require the delivery, prior to any transaction involving a penny stock, of a
disclosure schedule explaining the penny stock market and the associated risks.
Under these regulations, certain brokers who recommend such securities to
persons other than established customers or certain accredited investors must
make a special written suitability determination regarding such a purchaser and
receive such purchaser's written agreement to a transaction prior to sale. These
regulations may have the effect of limiting the trading activity of our common
stock and reducing the liquidity of an investment in our common stock.
IF OUR EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS CHOOSE TO ACT
TOGETHER, THEY MAY BE ABLE TO CONTROL OUR MANAGEMENT AND OPERATIONS, WHICH MAY
PREVENT US FROM TAKING ACTIONS THAT MAY BE FAVORABLE TO YOU.
Our executive officers, directors and principal stockholders, and their
respective affiliates, beneficially own approximately 56.5% of our outstanding
common stock. These stockholders, acting together, have the ability to exert
substantial influence over all matters requiring approval by our stockholders,
including the election and removal of directors and any proposed merger,
consolidation or sale of all or substantially all of our assets. In addition,
they could dictate the management of our business and affairs. This
concentration of ownership could have the effect of delaying, deferring or
preventing a change in control of us or impeding a merger or consolidation,
takeover or other business combination that could be favorable to you.
16
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. All statements
other than statements of historical facts included or incorporated by reference
in this prospectus, including, without limitation, statements regarding our
future financial position, business strategy, budgets, projected revenues,
projected costs and plans and objective of management for future operations, are
forward-looking statements. In addition, forward-looking statements generally
can be identified by the use of forward-looking terminology such as "may,"
"will," "expects," "intends," "plans," "projects," "estimates," "anticipates,"
or "believes" or the negative thereof or any variation thereon or similar
terminology or expressions.
These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from results proposed in
such statements. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from our expectations include, but are not
limited to:
o our ability to fund future growth and implement our business strategy;
o demand for and acceptance of our CARExpress membership programs;
o our dependence on a small number of preferred provider organizations
and other provider networks for healthcare providers;
o our dependence upon Trident Marketing International, Inc. and Hispanic
Global LLC for substantially all of our revenue;
o our ability to develop and expand the market for our CARExpress
membership programs;
o our ability to market our CARExpress membership programs;
o growth and market acceptance of the health savings industry;
o competition in the health savings industry and our markets;
o our ability to attract and retain qualified personnel and marketing
representatives;
o legislative or regulatory changes in the healthcare industry;
o the condition of the securities and capital markets;
o general economic and business conditions, either nationally or
internationally or in the jurisdictions in which we are doing business;
and statements of assumption underlying any of the foregoing, as well as any
other factors set forth under the caption "Risk Factors" on page 2 of this
prospectus.
All subsequent written and oral forward-looking statements attributable
to us, or persons acting on our behalf, are expressly qualified in their
entirety by the foregoing. Except as required by law, we assume no duty to
update or revise our forward-looking statements based on changes in internal
estimates or expectations or otherwise.
17
USE OF PROCEEDS
We will not receive any proceeds from the sale of our shares of common
stock by the selling security holders.
DETERMINATION OF OFFERING PRICE
The selling security holders may sell all or a portion of their shares
of common stock at a fixed price of $1.50 per share until the shares are listed
on the OTC Bulletin Board, and thereafter through public or private transactions
at prevailing market prices or at privately negotiated prices. In determining
the initial public offering price for the shares, the material factors that we
considered are as follows:
o Our business potential and prospects;
o The industry in which we operate;
o Our management;
o Our relative cash requirements;
o Our capital structure;
o Current market conditions;
o The price paid by investors for shares of our common stock in our
private offerings in 2004 and 2005; and
o The price we believe a purchaser will be willing to pay for shares of
our common stock when the shares are listed on the OTC Bulletin Board.
The offering price of the shares offered hereby does not necessarily
bear any relation to our assets, book value, financial condition or other
established valuation criteria. Accordingly, the offering price of the shares
may not be indicative of the actual value of our common stock or the prices that
may prevail at any time or from time to time in the event a public market for
our common stock develops. We can provide you with no assurance that a public
market for our common stock will develop and continue or that our common stock
will ever trade at a price at or higher than the offering price in this
offering.
SELLING SECURITY HOLDERS
The selling security holders identified in the following table are
offering for resale 1,180,000 shares of our common stock. All of the shares of
common stock were previously issued to the selling security holders in private
placement transactions.
The following table sets forth as of January 25, 2006:
o The name of each selling security holder and any material relationship
between us and such selling security holder based upon information
currently available to us;
o The number of shares owned beneficially by each selling security holder
before the offering;
18
o The percentage ownership of each selling security holder prior to the
offering;
o The number of shares offered hereunder by each selling security holder;
o The number of shares owned beneficially by each selling security holder
after the offering; and
o The percentage ownership of each selling security holder after the
offering.
The information presented in this table has been calculated based on
the assumption that all shares offered hereby will be sold and that no other
shares of our common stock will be acquired or disposed of by the selling
security holder prior to the termination of this offering. The beneficial
ownership set forth below has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Except as indicated by footnote, and subject to applicable community property
laws, we believe that the beneficial owners of the common stock listed below
have sole voting power and investments power with respect to their shares.
Beneficial Ownership of Beneficial Ownership of
Selling Security Holders Selling Security Holders
Prior to the Offering After the Offering
----------------------------- -------------------------------
Number of
Shares Offered
Name of Selling Security Holder Number Percent Hereby Number Percent
- ------------------------------- ------ ------- ------ ------ -------
Ben Giese (1) 927,000 5.4% 75,000 852,000 5.0%
Jose Luis Lozano (2) 1,800,000 10.6% 600,000 1,200,000 7.0%
Rene Ortega, Jr. (3) 470,000 2.8% 15,000 455,000 2.7%
Peter Rosner (4) 100,000 * 100,000 -0- *
Ernst Schoenbaechler (5) 600,000 3.5% 87,500 512,500 3.0%
Hans Schulte (6) 150,000 * 50,000 100,000 *
Keith Shelly (7) 815,000 4.8% 150,000 665,000 3.9%
Stuart Tiplitsky (8) 247,700 1.5% 12,500 235,200 1.4%
Michael Verhunce (9) 360,000 2.1% 90,000 270,000 1.6%
* Represents less than one percent (1%) of our shares outstanding.
(1) The registered shares consist of shares of our common stock that were
acquired in June 2005 in exchange for marketing and advisory services.
(2) The registered shares consist of shares of our common stock that were
acquired in May 2005 in exchange for marketing and advisory services.
(3) The registered shares consist of shares of our common stock that were
acquired in June 2005 in exchange for marketing and advisory services.
(4) The registered shares consist of shares of our common stock that were
acquired in February 2004 in exchange for consulting and advisory services.
(5) The registered shares consist of shares of our common stock that were
acquired in June 2005 in exchange for marketing and advisory services.
(6) The registered shares consist of shares of our common stock that were
acquired in June 2005 in exchange for marketing and advisory services.
19
(7) The registered shares consist of shares of our common stock that were
acquired in June 2005 in exchange for marketing and advisory services. Mr.
Shelly served as one of our directors from February 13, 2005 until June 1, 2005.
(8) The registered shares consist of shares of our common stock that were
acquired in June 2005 in exchange for marketing and advisory services.
(9) The registered shares consist of shares of our common stock that were
acquired in June 2005 in exchange for marketing and advisory services.
PLAN OF DISTRIBUTION
We are registering all of the shares of common stock offered by this
prospectus on behalf of the selling security holders. The selling security
holders may sell any or all of the shares, subject to federal and state
securities law, but are under no obligation to do so. The selling security
holders will act independently of us in making decisions with respect to the
timing, manner and size of each sale of the common stock covered hereby.
The selling security holders, or their pledges, donees, transferees or
any of their other successors-in-interest, may sell all or a portion of the
common stock offered hereby from time to time in one or more transactions
directly or through one or more underwriters, brokers, dealers or agents at a
fixed price of $1.50 per share until the shares are listed on the OTC Bulletin
Board. Thereafter, the shares may be sold at fixed prices, at market prices
prevailing at the time of the sale, at varying prices determined at the time of
sale, or at privately negotiated prices. These sales may be effected in any one
or more of the following methods:
o cross trades or block trades in which the broker or dealer so engaged
will attempt to sell the shares as agent, but may position and resell a
portion of the block as principal to facilitate the transaction;
o purchases by a broker, dealer or underwriter as principal and resale by
such broker, dealer or underwriter for its own account pursuant to this
prospectus;
o an exchange distribution in accordance with the rules of any stock
exchange on which the securities may be listed;
o ordinary brokerage transactions and transactions in which the broker
solicits purchases;
o privately negotiated transactions;
o short sales;
o through the writing of options, swaps or other derivatives on the
securities, regardless of whether the options, swaps or derivatives are
listed on an exchange;
o through the distribution of the securities by any selling security
holder to its partners, members or stockholders;
o any combinations of any of these methods of sale; and
o any other manner permitted by law.
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The selling security holders may also sell shares under Rule 144 of the
Securities Act, if available, rather than under this prospectus.
The selling security holders may sell their shares to or through
underwriters, brokers, dealers or agents, in which event the underwriters,
brokers, dealers or agents may receive discounts, concessions, commissions or
other fees from the selling security holders, or discounts, concessions,
commissions or other fees from purchasers of the shares of common stock for whom
they may act as agent or to whom they may sell as principal. These discounts,
concessions, commissions or fees as to particular underwriters, brokers, dealers
or agents may be in excess of those customary in the types of transactions
involved.
The selling security holders may also enter into hedging transactions
with brokers or dealers that may in turn engage in short sales of the common
stock in the course of hedging in positions they assume. The selling security
holders may also sell shares of common stock short and deliver shares of our
common stock covered by this prospectus to close out short positions and loan or
pledge shares of our common stock to brokers or dealers that in turn may sell
such shares.
The selling security holders may additionally pledge, hypothecate or
grant a security interest in some or all of the shares of our common stock owned
by them and, if such holders default in the performance of their secured
obligations, the pledges or secured parties may offer and sell the shares of our
common stock from time to time under this prospectus or any amendment to this
prospectus, if necessary, to include the pledge, transferee or other successors
in interest as selling security holders under this prospectus. The selling
security holders may also transfer or donate their shares of our common stock in
other circumstances, in which case the transferees, donees, pledges or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The selling security holders and any underwriters, brokers, dealers or
agents that participate in the distribution of the shares offered hereby may be
deemed "underwriters" within the meaning of the Securities Act. In that event,
any discounts, concessions, commissions or fees received by them and any profit
on the resale of the shares sold by them may be deemed to be underwriting
discounts or commissions under the Securities Act.
The selling security holders and any other person participating in the
distribution of the shares of our common stock being offered hereby will be
subject to applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder, including, without limitation, Regulation M.
These regulations may limit the timing of purchases and sales of any of the
shares of our common stock by the selling security holders and may restrict the
ability of any person engaged in the distribution of the shares to engage in
market-making activities with respect to our common stock.
We will not receive any proceeds from the sale of the shares of our
common stock registered hereby. We will pay all expenses incurred in connection
with this registration of the shares of our common stock under the Securities
Act, including registration and filing fees, fees an expenses of compliance with
securities or blue sky laws, listing fees, printing and engraving expenses,
messenger and delivery expenses, and fees and disbursements of our counsel,
accountants and other persons retained by us, but excluding commissions and
discounts incurred by the selling security holders in connection with the resale
of such shares.
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We cannot assure you that the selling security holders will sell all or
any portion of the securities offered hereby.
DISCLOSURE OF COMMISSION POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Indiana Business Corporation Law (the "IBCL") provides that an
Indiana corporation may indemnify an individual made a party to a proceeding
because the individual is or was a director against liability incurred in the
proceeding provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his conduct was unlawful. Unless limited by its articles of
incorporation, an Indiana corporation must indemnify a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which the director was a party because the director is or was a director of the
corporation against reasonable expenses incurred by the director in connection
with the proceeding. Our articles of incorporation do not limit our obligations
to so indemnify our directors.
The IBCL also provides that, unless the corporation's articles of
incorporation provide otherwise: (i) an officer of an Indiana corporation,
whether or not a director, is entitled to mandatory indemnification and is
entitled to apply for court-ordered indemnification to the same extent as a
director; (ii) the corporation may indemnify and advance expenses to an officer,
employee or agent of the corporation, whether or not a director, to the same
extent as to a director; and (iii) the corporation may also indemnify and
advance expenses to an officer, employee or agent, whether or not a director, to
the extent, consistent with public policy, it is permitted to do so by its
articles of incorporation, bylaws, general or specific action of its board of
directors, or contract. Our articles of incorporation do not limit our ability
to so indemnify our officers.
We are authorized to enter into indemnification agreements with our
directors, officers, employees and agents, and those serving at the request of
the corporation as a director, officer, employee or agent of another corporation
or enterprise, which may, in some cases, be broader than the specific
indemnification provisions set forth in the IBCL. In addition, we are authorized
to purchase and maintain insurance on behalf of these persons to indemnify them
for expenses and liabilities incurred by them by reason of their being or having
been such a director, officer, employee or agent, regardless of whether we have
the power to indemnify such persons against such expenses and liabilities under
our articles of incorporation, our bylaws, the IBCL, or otherwise. We have not
entered into any such agreements or obtained such insurance.
The limitation of liability and indemnification provisions of the IBCL
may discourage stockholders from bringing a lawsuit against our directors for
breach of their fiduciary duty of care. These provisions may also reduce the
likelihood of derivative litigation against our directors, officers, employees
and agents, and those serving at the request of the corporation as a director,
officer, employee or agent of another corporation or enterprise, even though an
action, if successful, might benefit us and our stockholders. The price of our
shares may be adversely affected to the extent we pay the costs of settlement
and damage awards against such persons pursuant to these indemnification
provisions.
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We believe that the limitation of liability, indemnification and
insurance provisions of the IBCL are useful to attract and retain qualified
officers, directors, employees and agents. No material litigation or proceeding
involving any of our officers, directors, employees or agents is currently
pending for which indemnification or advancement of expenses is being sought.
The effect of these indemnification provisions is to authorize
indemnification for liabilities arising under the Securities Act and the
Exchange Act. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our officers, directors and controlling
persons pursuant to our articles of incorporation, our bylaws, the IBCL or
otherwise, we have been advised that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus
the information that we file with the SEC, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference into this prospectus is an important part
of this prospectus.
We incorporate by reference into this prospectus the documents listed
below and any future filings made by us with the SEC under Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, until the filing of a post-effective
amendment that indicates that all securities offered hereby have been sold or
that deregisters all securities then remaining unsold:
(a) Our prospectus filed with the SEC pursuant to Rule 424(b)(3) of the
Securities Act on January 27, 2006, which relates to our Registration Statement
on Form SB-2, File No. 333-126315.
(b) The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on January 17, 2006, including any
amendments or reports filed for the purpose of updating such description.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this prospectus to the extent that a statement contained
herein or in any other subsequently filed document that also is incorporated or
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this prospectus.
We will provide to each person, including any beneficial owner of our
securities, to whom this prospectus is delivered, upon the written or oral
request of such person, a copy of any or all of the documents referred to above
that have been or may be incorporated by reference into this prospectus but not
delivered with this prospectus. You may make such requests at no cost to you by
writing or telephoning us at the following address or number:
23
National Health Partners, Inc.
120 Gibraltar Road, Suite 107
Horsham, Pennsylvania 19044
Attention: Chief Financial Officer
(215) 682-7114
You should rely only on the information contained in this prospectus or
any supplement to this prospectus, or incorporated by reference into this
prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus or any supplement to this prospectus is accurate as of any date other
than the date on the front of those documents.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC") under
the Securities Exchange Act of 1934, as amended. You may read and copy any
report, statement or other information that we file with the SEC at the SEC's
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may
obtain further information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the
public at the SEC's Web site at http://www.sec.gov, as well as our Web site at
http://www.carexpresshealth.com. Information contained on our Web site does not
constitute part of this prospectus.
This prospectus is part of a registration statement that we filed with
the SEC. This prospectus and any accompanying prospectus supplement do not
contain all of the information included in the registration statement, and
certain statements contained in this prospectus and any accompanying prospectus
supplement about the provisions or contents of any contract, agreement or any
other document referred to herein are not necessarily complete. For each of
these contracts, agreements or documents filed as an exhibit to the registration
statement, we refer you to the actual exhibit for a more complete description of
the matters involved. In addition, we have omitted certain parts of the
registration statement in accordance with the rules and regulations of the SEC.
To obtain all of the information that we filed with the SEC in connection
herewith, we refer you to the registration statement, including its exhibits and
schedules. You should assume that the information contained in this prospectus
and any accompanying prospectus supplement is accurate only as of the date
appearing on the front of the prospectus or prospectus supplement, respectively.
24
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
We are subject to the informational and reporting requirements of
Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith file reports, proxy statements
and other information with the Securities and Exchange Commission (the "SEC").
The following documents that we heretofore filed with the SEC pursuant to the
Exchange Act are incorporated herein by reference:
(a) Our prospectus filed with the SEC pursuant to Rule 424(b)(3) of the
Securities Act of 1933, as amended (the "Securities Act") on January 27, 2006,
which relates to our Registration Statement on Form SB-2, File No. 333-126315.
(b) The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on January 17, 2006, including any
amendments or reports filed for the purpose of updating such description.
All documents that we subsequently file with the SEC pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment that indicates that all securities offered hereby
have been sold or that deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this registration statement and to
be part hereof from the date of the filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for the purposes of this
registration statement to the extent that a statement contained herein or in any
other subsequently filed document that also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this registration statement.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Indiana Business Corporation Law (the "IBCL") provides that an
Indiana corporation may indemnify an individual made a party to a proceeding
because the individual is or was a director against liability incurred in the
proceeding provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his conduct was unlawful. Unless limited by its articles of
incorporation, an Indiana corporation must indemnify a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which the director was a party because the director is or was a director of the
corporation against reasonable expenses incurred by the director in connection
with the proceeding. Our articles of incorporation do not limit our obligations
to so indemnify our directors.
II-1
The IBCL also provides that, unless the corporation's articles of
incorporation provide otherwise: (i) an officer of an Indiana corporation,
whether or not a director, is entitled to mandatory indemnification and is
entitled to apply for court-ordered indemnification to the same extent as a
director; (ii) the corporation may indemnify and advance expenses to an officer,
employee or agent of the corporation, whether or not a director, to the same
extent as to a director; and (iii) the corporation may also indemnify and
advance expenses to an officer, employee or agent, whether or not a director, to
the extent, consistent with public policy, it is permitted to do so by its
articles of incorporation, bylaws, general or specific action of its board of
directors, or contract. Our articles of incorporation do not limit our ability
to so indemnify our officers.
We are authorized to enter into indemnification agreements with our
directors, officers, employees and agents, and those serving at the request of
the corporation as a director, officer, employee or agent of another corporation
or enterprise, which may, in some cases, be broader than the specific
indemnification provisions set forth in the IBCL. In addition, we are authorized
to purchase and maintain insurance on behalf of these persons to indemnify them
for expenses and liabilities incurred by them by reason of their being or having
been such a director, officer, employee or agent, regardless of whether we have
the power to indemnify such persons against such expenses and liabilities under
our articles of incorporation, our bylaws, the IBCL, or otherwise. We have not
entered into any such agreements or obtained such insurance.
Reference is made to Item 9 for our undertakings with respect to
indemnification of liabilities arising under the Securities Act of 1933, as
amended.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The issuances of the shares of common stock being offered under the
reoffer prospectus were exempt from registration under the Securities Act in
reliance upon Section 4(2) of the Securities Act as transactions not involving
any public offering.
II-2
ITEM 8. EXHIBITS.
The following exhibits are filed as part of this registration
statement:
Exhibit No. Exhibit
----------- -------
5.1 Opinion of Carson Boxberger LLP
10.1 Form of Class A Warrant issued by the Company to consultants
and advisors in June 2005 (Incorporated by reference to
Exhibit 10.25 to the Registration Statement on Form SB-2,
File No. 333-126315, initially filed with the Securities and
Exchange Commission on June 30, 2005, as amended (the
"Registration Statement")
10.2 Form of Class B Warrant issued by the Company to consultants
and advisors in June 2005 (Incorporated by reference to
Exhibit 10.26 to the Registration Statement)
10.3 Form of Class C Warrant issued by the Company to consultants
and advisors in June 2005 (Incorporated by reference to
Exhibit 10.27 to the Registration Statement)
23.1 Consent of H J & Associates, LLC
23.2 Consent of Carson Boxberger LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page)
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to:
1. file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act");
(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) include any additional or changed material information
on the plan of distribution.
II-3
2. for determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering thereof.
3. file a post-effective amendment to remove from registration any of
the securities being registered that remain unsold at the end of the offering.
4. for determining liability of the undersigned small business issuer
under the Securities Act to any purchaser in the initial distribution of the
securities, the undersigned small business issuer undertakes that in a primary
offering of securities of the undersigned small business issuer pursuant to this
registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned small
business issuer will be a seller to the purchaser and will be considered to
offer or sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus of the undersigned
small business issuer relating to the offering required to be filed pursuant to
Rule 424 (ss.230.424 of this chapter);
(ii) any free writing prospectus relating to the offering prepared
by or on behalf of the undersigned small business issuer or used or referred to
by the undersigned small business issuer;
(iii) the portion of any other free writing prospectus relating to
the offering containing material information about the undersigned small
business issuer or its securities provided by or on behalf of the undersigned
small business issuer; and
(iv) any other communication that is an offer in the offering made
by the undersigned small business issuer to the purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Horsham, Commonwealth of Pennsylvania, on the 30th
day of January, 2006.
NATIONAL HEALTH PARTNERS, INC.
By: /s/ David M. Daniels
--------------------------------------------
David M. Daniels
Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned
individuals constitutes and appoints David M. Daniels, Roger H. Folts and Alex
Soufflas, or any of them, his true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, for him in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and all documents in connection therewith, with the
SEC, granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in or about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their,
his or her substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
date indicated:
Signature Title Date
- --------- ----- ----
/s/ David M. Daniels Chief Executive Officer and January 30, 2006
- ------------------------ Chairman of the Board
David M. Daniels (Principal Executive Officer)
/s/ Roger H. Folts Chief Financial Officer January 30, 2006
- ------------------------ (Principal Financial and
Roger H. Folts Accounting Officer)
EXHIBIT INDEX
Exhibit No. Exhibit
----------- -------
5.1 Opinion of Carson Boxberger LLP
23.1 Consent of H J & Associates, LLC
23.2 Consent of Carson Boxberger LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page)