UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
(AMENDMENT NO. 1)
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
/x/ Preliminary Information Statement
/ / Confidential, For Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
/ / Definitive Information Statement
KAIRE HOLDINGS INC.
(Name of Registrant As Specified In Charter)
Not Applicable
(Name of Person(s) Filing the Information Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
1
KAIRE HOLDINGS, INC.
8135 Clybourn Ave.
Sun Valley, California 91352
NOTICE OF WRITTEN CONSENT OF SHAREHOLDERS
May 6, 2003
To Shareholders of Kaire Holdings, Inc.:
NOTICE IS HEREBY GIVEN that the following actions will be taken pursuant to
the written consent of a majority of our shareholders, dated March 28, 2003, in
lieu of a special meeting of the shareholders. The following actions will be
effective on or about May 26, 2003:
1. amendment of our certificate of incorporation to provide for a stock
combination (reverse split) of the Common Stock in an exchange ratio
to be approved by the Board, ranging from one newly issued share for
each two outstanding shares of Common Stock to one newly issued share
for each two hundred outstanding shares of Common Stock.
2. the ratification of the appointment of Pohl, McNabola & Berg, LLP as
our independent accountants for the current fiscal year.
This Notice and the attached Information Statement are being circulated to
advise the shareholders of certain actions already approved by written consent
of the shareholders who collectively hold a majority of the voting power of our
common stock. Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934,
as amended, the proposals will not be effective until 20 days after the date
this Information Statement is mailed to the shareholders. Therefore, this Notice
and the attached Information Statement are being sent to you for informational
purposes only.
By Order of the Board of Directors,
/s/ Steven Westlund
---------------
Steven Westlund, Chief Executive
Officer and Director.
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KAIRE HOLDINGS, INC.
8135 Clybourn Ave.
Sun Valley, California 91352
INFORMATION STATEMENT
WRITTEN CONSENT OF SHAREHOLDERS
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is furnished in accordance with the requirements of
Regulation 14C promulgated under the Securities Exchange Act of 1934, as
amended, by KAIRE HOLDINGS INC., a Delaware corporation, in connection with
certain actions to be taken by the written consent by the majority shareholders
of Kaire holdings, dated March 28, 2003.
Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as amended,
the actions will not be effective until 20 days after the date of this
Information Statement is mailed to the shareholders.
THE APPROXIMATE DATE OF MAILING OF THIS INFORMATION STATEMENT IS May 6, 2003.
We anticipate that the actions contemplated by this Information Statement will
be effected on or about the close of business on May 26, 2003.
The actions to be effective twenty days after the mailing of this Information
Statement are as follows:
1. amendment of our certificate of incorporation to provide for a stock
combination (reverse split) of the Common Stock in an exchange ratio
to be approved by the Board, ranging from one newly issued share for
each two outstanding shares of Common Stock to one newly issued share
for each two hundred outstanding shares of Common Stock.
2. the ratification of the appointment of Pohl, McNabola & Berg, LLP as
our independent accountants for the current fiscal year.
Shareholders of record at the close of business on March 28, 2003 are entitled
to notice of the action to be effective on or about May 26, 2003. As of the
record date, our authorized capitalization consisted of 900,000,000 shares of
common stock, par value $0.001 per share, of which 880,484,863 were issued and
outstanding. Each share of our common stock entitles its holder to one vote on
each matter submitted to the shareholders. However, because the shareholders
holding at least a majority of the voting rights of all outstanding shares of
capital stock as of the record date have voted in favor of the foregoing actions
by resolution dated March 28, 2003; and having sufficient voting power to
approve such proposals through their ownership of the capital stock, no other
consents will be solicited in connection with this Information Statement.
Shareholders of record at the close of business on March 28th, 2003 are being
furnished copies of this Information Statement. The principal executive office
of the Company is located at 8135 Clybourn Ave., Sun Valley, California 91352
and the Company's telephone number is (818) 255-4996.
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SHAREHOLDER DISSENTER'S RIGHT OF APPRAISAL
The General Corporate Law of Delaware does not provide for dissenter's rights of
appraisal in connection with the proposed actions.
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS AND NO SHAREHOLDER
MEETING WILL BE HELD TO CONSIDER ANY MATTER WHICH WILL BE DESCRIBED IN THIS
INFORMATION STATEMENT.
MATTERS SET FORTH IN THE WRITTEN CONSENTS
The Written Consents contain:
(i) A Resolution dated March 28, 2003, to amend the Certificate of
Incorporation in order to provide for a stock combination (reverse split) of the
Common Stock in an exchange ratio to be approved by the Board, ranging from one
newly issued share for each two outstanding shares of Common Stock to one newly
issued share for each two hundred outstanding shares of Common Stock and
ratification of the appointment of Pohl, McNabola & Berg, LLP as our independent
accountants for the current fiscal year.
Shareholders representing 52.0% of the votes of the currently issued and
outstanding shares of Common Stock have executed the Written Consents, thereby
ensuring the stock combination. See "Other Information Regarding The Company -
Security Ownership of Certain Beneficial Owners and Management."
Set forth below is a table of the stockholders who have executed the Written
Consents and, to the best of the Company's knowledge, the number of shares of
Common Stock beneficially owned by such stockholders as of March 28, 2003:
COMMON SHR'S VOTES/SHR. COMMON VOTES % OF TOTAL VOTES
- ------------------------------ ------------------------ --------------------------------
Total Common Issued and
Outstanding
Votes Possible 1 880,484,683 100.00%
Votes by Written Consent for
Reverse Split
Beneficial Owner
- ------------------------------------------------------------------------------------------
Steven Westlund 4,000,000 1 4,000,000 .4%
George R. Lefevre 55,000,000 1 55,000,000 6.2%
Scott Absher 55,000,000 1 55,000,000 6.2%
Richard D. Mckinley
(ENTR Shares) 250,000,000 1 250,000,000 28.4%
Randy Jones 8,666,666 1 8,666,666 1.0%
Jay Isco 2,000,000 1 2,000,000 .2%
Owen Naccarato 57,666,666 1 57,666,666 6.5%
Joseph Maleki 3,500,000 1 3,500,000 .4%
Mike Isco 12,500,000 1 12,500,000 1.4%
Stash Trust 10,333,333 1 10,333,333 1.2%
----------- ----------- -----
Total 458,666,665 1 458,666,665 52.0%
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VOTE REQUIRED
Counterpart copies of the Written Consents evidencing a majority of the
outstanding shares of Common Stock, must be received by the Company within sixty
days of the earliest dated consent delivered by the Company in order to
effectuate the matters set forth therein. As of March 28, 2003 (the dates of the
Written Consents), 880,484,863 shares of Common Stock were issued and
outstanding with votes of 880,484,683 votes thus, Stockholders representing no
less than 440,242,432 votes from Common Stock, were required to execute the
Written Consents to effect the matter set forth therein. As discussed under
"Matters Set Forth in the Written Consents," shareholders owning approximately
454,666,665 votes, or 52.0% of the votes of Common Stock, have executed the
Written Consents and delivered them to the Company as required by law within the
60 day period, thereby ensuring the stock combination.
PURPOSES OF THE REVERSE SPLIT
One purpose of the Reverse Split would be to provide enough shares for the
conversion of our outstanding convertible debt. As of the date of this proxy
there are not enough authorized shares available to convert our outstanding
convertible debt. A reverse split would reduce the number of the shares
outstanding which would allow for the conversion of our convertible debt.
Another purpose of the Reverse Split would be to increase the market price of
our Common Stock which would facilitate the conversion of the outstanding
convertible notes because with a higher stock price, fewer shares would be
required to retire the outstanding convertible debt. Another purpose of the
Reverse Split would be to improve the usefulness of our Common Stock as a means
to raise financing and as a possible currency for acquisitions and other
transactions which could be achieved with an increase in the stock price. There
are no anti-dilution protections for the debt holders. The Common Stock traded
on The NASDAQ OTC:BB at market prices ranging from approximately $0.0021 to
approximately $0.28 from July 1, 2001 through December 31, 2002 and was recently
as low as $0.0003 per share. This price range has reduced the possibilities of
using the Common Stock or instruments convertible or exercisable into Common
Stock in order to raise financing to support the Company's operations and to
increase the Company's net worth and as consideration for potential
acquisitions.
THERE CAN BE NO ASSURANCE, HOWEVER, THAT, EVEN AFTER CONSUMMATING THE REVERSE
SPLIT, THE COMPANY WILL BE ABLE TO MAINTAIN ITS MARKET PRICE PER SHARE AND THUS
UTILIZE ITS COMMON STOCK IN ORDER TO EFFECTUATE FINANCING OR ACQUISITION
TRANSACTIONS.
The Reverse Split will not change the proportionate equity interests of the
Company's stockholders at the time of the split, nor will the respective voting
rights and other rights of stockholders be altered, except for possible
immaterial changes due to rounding up to eliminate fractional shares. However,
upon the issuance of shares for the conversion of the outstanding convertible
debt or for fund raising or for acquisitions, the shareholders would most likely
experience dilution plus a decrease in the market price of the stock. The
Common Stock issued pursuant to the Reverse Split will remain fully paid and
non-assessable. The Company will continue to be subject to the
periodic reporting requirements of the Securities Exchange Act of 1934, as
amended.
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CERTAIN EFFECTS OF THE REVERSE SPLIT
The following table illustrates the principal effects of the Reverse Split to
the 880,484,863 shares of Common Stock outstanding as of March 31, 2003:
COMMON SHARES:
- --------------
PRIOR TO AFTER 1 FOR 2 AFTER 1 FOR 200
NUMBER OF SHARES REVERSE REVERSE REVERSE
STOCK SPLIT STOCK SPLIT STOCK SPLIT
Common Stock:
Authorized 900,000,000 900,000,000 900,000,000
Outstanding (1) 880,484,863 440,242,312 4,402,424
Available for Future
Issuance 19,515,137 459,757,688 895,597,576
Less Conversion of Convertible
Debentures (1,829,720,833)(2) (914,860,416)(3) (91,486,041)(4)
Available for Future
Issuance (1,810,235,696) (455,102,728) 804,111,535
(1) Gives effect to the Reverse Split, excluding New Shares to be issued in
lieu of fractional shares. Stockholders should recognize that, if the
Reverse Split is effectuated, they will own a fewer number of shares than
they presently own (a number equal to the number of shares owned
immediately prior to the filing of the amendment regarding the Reverse
Split divided by the Exchange Number, as adjusted to include New Shares to
be issued in lieu of fractional shares).
While the Company expects that a Reverse Split will result in an increase
in the market price of the Common Stock, there can be no assurance that the
Reverse Split will increase the market price of the Common Stock by a
multiple equal to the Exchange Number or result in a permanent increase in
the market price (which is dependent upon many factors, including the
Company's performance and prospects). Also, should the market price of the
Company's Common Stock decline after the Reverse Split, the percentage
decline may be greater than would be the case in the absence of the Reverse
Split.
The possibility exists that liquidity in the market price of the Common
Stock could be adversely affected by the reduced number of shares that
would be outstanding after the Reverse Split. In addition, the Reverse
Split will increase the number of stockholders of the Company who own
odd-lots (less than 100 shares). Stockholders who hold odd-lots typically
will experience an increase in the cost of selling their shares, as well as
greater difficulty in effecting such sales. Consequently, there can be no
assurance that the Reverse Split will achieve the desired results that have
been outlined above.
The large number of shares underlying the convertible debentures are
available for future sale and the sale of these shares may depress the
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market price of our common stock and may cause substantial dilution to our
existing stockholders.
Furthermore, the number of shares of common stock issuable upon conversion
of the convertible debentures may increase if the market price of our stock
declines and the sale of the increased number of shares may further
adversely affect the market price of our common stock. The issuance of
shares upon conversion of the convertible debentures will also cause
immediate and substantial dilution to our existing stockholders.
The convertible debentures are held by three different parties of which two
are affiliated. The affiliated parties are contractually limited to hold in
the aggregate less than 4.9% of our outstanding shares. The third party is
contractually limited to hold less than 4.9% of our outstanding shares.
(2) Assuming $878,266 of 8% Convertible Debentures converted at eighty
percent (80%) of stock price of $0.0006 (i.e. $0.00048)as of May 6, 2003.
(3) Assuming $878,266 of 8% Convertible Debentures converted at eighty
percent (80%) of stock price of $0.0012 (1.e. $0.00096). Note that the
stock price of $0.0012 is the correct mathematical calculation of the post
split stock price, however a stock price generally decreases after a
reverse split is effectuated. See footnote one above.
(4) Assuming $878,266 of 8% Convertible Debentures converted at eighty
percent (80%) of stock price of $0.12 (i.e. $0.0096). Note that the stock
price of $0.12 is the correct mathematical calculation of the post split
stock price, however a stock price generally decreases after a reverse
split is effectuated. See footnote one above.
Stockholders should also recognize that, as indicated in the foregoing table,
there would be an increase in the number of shares, which the Company will be
able to issue from authorized but un-issued shares of Common Stock for
transaction other than debt reduction. As a result of any issuance of shares,
the equity of holders of outstanding shares may be diluted.
Kaire has not made any plan, commitment, arrangement, understanding or
agreement, written or oral, regarding any issuance of common stock subsequent to
the reverse stock split.
OTHER INFORMATION REGARDING THE COMPANY
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information known to the Company
with respect to the beneficial ownership of the Company's common stock as of
March 31, 2003 by (i) each person who is known by the Company to own
beneficially more than 5% of the Company's common stock, (ii) each of the
Company's directors and executive officers, and (iii) all officers and directors
of the Company as a group. Except as otherwise listed below, the address of
each person is c/o KAIRE HOLDINGS INC., 8135 Clybourn Ave., Sun Valley,
California 91352.
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- --------------------------------------------------------------------------------
Name and Address Shares Beneficially Owned Percent of
Class (1)
Steven R. Westlund 4,000,000(2) 0.4%
8135 Clybourn Ave.
Sun Valley, CA 91352
- --------------------------------------------------------------------------------
(1) Except as pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with respect
to all shares of common stock beneficially owned. The total number
of issued and outstanding shares of 880,484,863 and the total number
of shares owned by each person is calculated as of March 28, 2003.
BOARD COMMITTEES
The Board of Directors does not currently maintain an Audit Committee
or a Compensation Committee, but plans to appoint an Audit Committee and a
Compensation Committee in the near future. During the fiscal year ended December
31, 2002, the Board of Directors held one meeting.
COMPENSATION OF DIRECTORS
The Company's Directors are not currently compensated for attendance at Board of
Directors meetings.
EXECUTIVE COMPENSATION
The following table lists the names and ages of the executive officers
and directors of the Company and the Subsidiary. The directors were elected on
February 28, 2002 and will continue to serve until the next annual shareholders
meeting or until their successors are elected and qualified. All officers serve
at the discretion of the Board of Directors.
Name Age Position With the Company
- --------------- --- ------------------------------------
Steven Westlund 57 Chief Executive Officer and Chairman
Steve Westlund: On April 1, 2000, Mr. Westlund signed a three-year employment
- --------------
agreement (attached hereto as Exhibit 10.36). The contract calls for Mr.
Westlund to be paid a base salary of $8,333.33 per month for the first year of
the term. Mr. Westlund's base salary shall increase 15 % per year for the
second year and third years, respectively, per the agreement.
Although Mr. Westlund's Employment Agreement states that his salary is to be
$8,333.33 per month, his actual pay has been $ 2,900.00 per month. Mr. Westlund
is entitled to be paid the balance of his monthly compensation in either cash or
equity.
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SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------- ---------------------- -------
NAME AND RESTRICTED SECURITIES
PRINCIPAL OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) AWARD(S) OPTIONS(#) PAYOUTS COMPENSATION
- ------------------- ---- ------ ----- --------------- ---------- ----------- ------- ------------
Steven Westlund 2002 $35,000 0 0 0 0 0 0
2001 $25,750 0 0 0 0 0 0
2000 $0 0 0 0 0 0 0
OPTIONS GRANTED IN LAST FISCAL YEAR
No options to purchase Common Stock of the Company have been granted to the
Company's executive officers.
FISCAL YEAR-END OPTION EXERCISES AND OPTION VALUES
No options to purchase Common Stock of the Company have been granted to the
Company's executive officers.
EMPLOYEE COMPENSATION
We do not yet have a compensation committee that approves or offers
recommendations on compensation for our employees.
LEGAL PROCEEDINGS
Patent Claim
- ------------
An individual filed a complaint against us alleging breach of contract and fraud
and related business torts related to certain patents that the plaintiff
transferred to us. We believe that the plaintiff's claims are without merit.
Although we reached a tentative settlement in this matter, the Plaintiff has
failed to execute the settlement and the case was dismissed.
Department of Health Services - Medi-Cal Action Against Classic Care Pharmacy
- -----------------------------------------------------------------------------
On April 17, 2002 the Department of Health Services ("DHS") notified the
management of Classic Care Pharmacy that the Medi-Cal Program intended to
withhold 100% of payments and temporarily suspend and deactivate the Classic
Care Pharmacy Medi-Cal provider number.
The Department of Health Services ("DHS") took this action after having reviewed
the prescriptions on record at Classic Care Pharmacy. The DHS stated that they
had reviewed thirty-two prescriptions, and that two of the ten prescribing
physicians had denied treating the patients and writing the prescriptions. The
DHS cited Classic Care Pharmacy for violations of CCR, Title 22, Sec.51476.1,
(a) and 51476.1(a)(2), which states that written prescriptions must contain the
name of the prescribing physician and their provider number. Based on its
findings the DHS and the Medical Program concluded that Classic Care Pharmacy
might have intentionally committed fraud.
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Classic Care management retained outside counsel shortly after receiving the DHS
notice to review the Department of Health Services findings. After reviewing the
supporting DHS material, outside counsel informed Classic Care management that
it believed the facts presented by the DHS were inaccurate and that its position
was unfounded. Classic Care management and its principle shareholders obtained
written affidavits from most of the physicians whose prescriptions had been
reviewed by the DHS confirming that they had treated the patients and did
prescribe the medications.
On April 29, 2002, outside counsel contacted the DHS to discuss its findings and
present the documentation supporting their position. DHS informed outside
counsel that they would have to follow the standard appeal process, which
normally requires two or more months to complete. Classic Care Pharmacy
instructed outside counsel to seek an ex parte temporary restraining order
against the DHS for their failure to show cause regarding their actions. On May
8, 2002, in the Superior Court for the state of California, the Court granted
Classic Care's ex parte request issuing a preliminary injunction against the DHS
and reinstated Classic Care Pharmacy's medical provider number. The Court set
May 24, 2002 as the date for the DHS to show cause. On May 24, 2002, the DHS was
still not prepared to show cause. The court granted a 30-day extension.
The Classic Care, Inc and Classic Care Pharmacy administrative appeal failed.
Once the appeal took place the Superior court could no longer uphold our lack
for due process claim and the DHS canceled Classic Care Pharmacy's medical
provider number. The justice department has not taken any further action
against Classic Care Pharmacy.
Except as otherwise specifically indicated above, we believe that we do not have
any material liability for any lawsuits, settlements, judgments, or fees of
defense counsel which have not been paid or accrued as of December 31, 2002.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 29, 2003 Steven Westlund was issued a promissory note by Effective
Health for $2,500 for funds to the company. The note was due in thirty days.
The note is still outstanding.
On December 16, 2002 Steven Westlund was issued a promissory note by Effective
Health for $8,500 for funds to the company. The note was due in thirty days.
The note is still outstanding.
THE APPOINTMENT OF POHL, MCNABOLA & BERG AS AUDITORS FOR KAIRE HOLDINGS INC.
The Board of Directors of the Company has selected Pohl, McNabola, Berg &
Company LLP, to audit the consolidated financial statements of the Company and
its subsidiaries for the fiscal year ending December 31, 2003. Pohl, McNabola,
Berg & Company LLP has served in this capacity since December 31, 1998.
OTHER MATTERS
The Board of Directors of the Company is not aware that any matter other than
those described in this Information Statement is to be presented for the consent
of the shareholders.
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ADDITIONAL INFORMATION
We are subject to the informational requirements of the Securities Exchange Act
of 1934 and in accordance with the requirements thereof, file reports, proxy
statements and other information with the Securities and Exchange Commission
("SEC"). Copies of these reports, proxy statements and other information can be
obtained at the SEC's public reference facilities at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C., 20549. Additionally, these filings may
be viewed at the SEC's website at http://www.sec.gov and at Kaire Holdings
------------------
website at http://kaireholdingsinc.com.
---------------------------
DISTRIBUTION OF INFORMATION STATEMENT
The cost of distributing this Information Statement has been borne by us and
certain shareholders that consented to the action taken herein. The distribution
will be made by mail.
Pursuant to the requirements of the Exchange Act of 1934, as amended, the
Registrant has duly caused this Information Statement to be signed on its behalf
by the undersigned hereunto authorized.
By Order of the Board of Directors
/s/ Steven Westlund
---------------
Steven Westlund, Chief Executive
Officer and Chairman
May 6, 2003
Sun Valley, California
11
EXHIBIT A
KAIRE HOLDINGS INC.
NOTICE PUSUANT TO SECTION 228 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
TO: ALL STOCKHOLDERS
1. PLEASE TAKE NOTICE THAT Stockholders owning at least a majority of the
outstanding stock of Kaire Holdings Inc., by written consent dated March 28,
2003 have duly adopted the following resolution:
"a resolution approving an amendment to the Corporation's Certificate of
Incorporation, as amended, to provide for a stock combination (reverse split) of
the Common Stock in an exchange ratio to be approved by the Board, ranging from
one newly issued share for each two outstanding shares of Common Stock to one
newly issued share for each two hundred outstanding shares of Common Stock and
the approval of Pohl, McNabola, Berg & Company LLP, to audit the consolidated
financial statements of the Company and its subsidiaries for the fiscal year
ending December 31, 2003 .
DATE: May 6, 2003
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