As filed with the Securities and Exchange Commission on March 7, 2005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(INITIAL STATEMENT)
FIT FOR BUSINESS INTERNATIONAL, INC.
NEVADA 8000 20-2008579
(State or jurisdiction of (Primary Standard Industrial I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
10/27 Mayneview St
Milton
Australia
61-7-33673355
Telefax 61-7-33673252
Address and telephone number of principal executive offices)
3155 E. Patrick Lane, Suite 1, Las Vegas, Nevada, 89120-3481
(702)866-2500
Telefax (702)866-2689
(Address of principal place of business or intended principal place of business)
Incorp Services, 3155 E. Patrick Lane, Suite 1, Las Vegas, Nevada, 89120-3481
(Name, address and telephone number of agent for service)
Copies of communications to:
Richard I. Anslow, Esq.
Anslow & Jaclin, LLP
195 Route 9 South, Suite 204
Manalapan, New Jersey 07726
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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If any of the securities registered on this Form are to be offered on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed
maximum Proposed
Title of each offering maximum Amount of
class of securities Amount to price per aggregate registration
to be registered be registered share offering price fee
- ------------------------------------------------------------------------------------------------------
Common shares, par value $.001 (1) 3,000,000 $1.50 $4,500,000 $529.65
- ------------------------------------------------------------------------------------------------------
Common shares, par value $.001 (2) 2,000,000 $0.005 $10,000 $1.18
- ------------------------------------------------------------------------------------------------------
Common shares, par value $.001 (3) 420,000 $0.33 $138,600 $16.31
- ------------------------------------------------------------------------------------------------------
Common shares, par value $.001 (4) 450,000 $0.50 $225,000 $26.49
- ------------------------------------------------------------------------------------------------------
5,870,000 $4,873,600 $573.63
- ------------------------------------------------------------------------------------------------------
(1) Represents shares being sold to the public. The price of $1.50 per
share is being estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(c) of the Securities Act.
(2) Represents shares of common stock issuable in connection with the
conversion of options issued to Fort Street Equity, Inc. The price of
$0.005 per share is being estimated solely for the purpose of
calculating the registration fee pursuant to Rule 457(c) of the
Securities Act and is based on the conversion price of the options.
(3) Represents Selling Security Holder shares being sold to the public.
The price of $0.33 per share is being estimated solely for the purpose
of calculating the registration fee pursuant to Rule 457(c) of the
Securities Act and is based on the value of the promissory notes
converted by the Selling Security Holders for the common shares.
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(4) Represents Selling Security Holder shares being sold to the public.
The price of $0.50 per share is being estimated solely for the purpose
of calculating the registration fee pursuant to Rule 457(c) of the
Securities Act and is based on the value of the promissory notes
converted by the Selling Security Holders for the common shares.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until this Registration
Statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED MARCH 2005
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FIT FOR BUSINESS INTERNATIONAL, INC.
3,000,000 SHARES OF COMMON STOCK
2,000,000 SHARES OF COMMON STOCK ISSUABLE IN CONNECTION WITH
THE CONVERSION OF OUTSTANDING OPTIONS
870,000 SELLING SECURITY HOLDER COMMON SHARES
Fit For Business International, Inc. (the "Company" "we" or "us"), a Nevada
corporation, is offering, on a "best efforts" basis 3,000,000 shares of our
common stock, par value $.001, at $1.50 per share (the "Offering"). The initial
offering period will end twelve (12) months from the date listed in this
prospectus unless it is terminated earlier (the "Initial Offering Period"). This
Offering is being made on a self-underwritten basis by us through our officers
and directors. Since there is no selling commission, all proceeds from the
Offering will go to us.
In addition, our Selling Security Holders are offering to sell up to 870,000
shares of our common stock, and a further 2,000,000 common shares issuable in
connection with the conversion of outstanding options. We will not receive any
proceeds from the sale of any common shares by our selling security holders or
our option holder, Fort Street Equity, Inc. (the selling security holders and
option holder are collectively referred to as "Selling Security Holders").
Currently, we have not established an underwriting arrangement for the sale of
these shares. Our officers and directors will be the only persons that will
conduct the direct public offering. They intend to offer and sell the shares in
the primary offering through their business and personal contacts.
Our shares of common stock are not listed on any recognized exchange.
Immediately after the effectiveness of this registration statement, we intend to
have a registered broker-dealer submit an application for a quotation on the OTC
Bulletin Board.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE, AND INVOLVE A HIGH DEGREE OF RISK
AND SHOULD NOT BE PURCHASED BY ANYONE WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE INFORMATION SET
FORTH UNDER "RISK FACTORS" BEFORE INVESTING IN SUCH SECURITIES.
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 the prospectus. Any representation to the contrary is a
criminal offense.
This registration statement will be amended and completed from time to time, as
necessary.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until this Registration Statement filed with the
Securities and Exchange Commission is declared effective by the Securities and
Exchange Commission. This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
The date of this prospectus is ____, 2005
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Table of Contents
PROSPECTUS SUMMARY............................................................8
RISK FACTORS..................................................................9
USE OF PROCEEDS..............................................................12
DETERMINATION OF OFFERING PRICE..............................................14
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.....................15
EQUITY COMPENSATION PLAN INFORMATION.........................................15
DIVIDENDS....................................................................15
PENNY STOCK CONSIDERATIONS...................................................16
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION....................16
BUSINESS - OUR COMPANY.......................................................20
DESCRIPTION OF PROPERTY......................................................37
LEGAL PROCEEDINGS............................................................37
MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS..................................38
EXECUTIVE COMPENSATION.......................................................40
PRINCIPAL STOCKHOLDERS.......................................................41
DILUTION.....................................................................42
SELLING STOCKHOLDERS.........................................................43
PLAN OF DISTRIBUTION.........................................................45
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............................47
DESCRIPTION OF SECURITIES....................................................48
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE........................................................50
TRANSFER AGENT...............................................................50
EXPERTS......................................................................50
LEGAL MATTERS................................................................50
SIGNATURES...................................................................55
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PROSPECTUS SUMMARY
About Us
We were organized on May 30, 2001, and incorporated in the State of Nevada on
July 31, 2001, under the name Elli Tsab, Inc. We have remained essentially
inactive since incorporation.
We changed our name to Patient Data Corporation on April 7, 2004, and we also
increased our authorized capital to 100,000,000 shares of common stock and
10,000,000 shares of preferred stock, each with a par value of $.001 per share.
On September 14, 2004, we acquired all of the issued and outstanding capital
shares of Fit For Business (Australia) Pty Limited ("Subsidiary"), an Australian
company. As a result, Subsidiary became our wholly owned subsidiary. Subsidiary
delivers services and products to the workplace health and safety industry in
Australia, and is also engaged in a network marketing system promoting the
nutritional and health supplements manufactured by Herbalife International Inc.
In exchange for all of the issued and outstanding shares of Subsidiary, we
issued an aggregate of 15,000,000 of our common shares and 1,000,000 of our
preferred shares to the shareholders of Subsidiary, Mark A. Poulsen and Mark
Poulsen & Associates Pty. Ltd. Mark A. Poulsen and Mark Poulsen & Associates
Pty. Ltd. subsequently transferred some of their common shares to other persons.
On January 13, 2005, we changed our name to Fit For Business International, Inc.
in order to better reflect our new business plan.
Where You Can Find Us
We are located at 3155 E. Patrick Lane, Suite 1, Las Vegas, Nevada, 89120-3481,
USA. Our telephone number is (702)866-2500 and our facsimile number is
(702)866-2689.
Securities Offered By Us
We are offering a maximum amount of 3,000,000 shares of common stock, $.001 par
value, at $1.50 per share. Currently, we have not established an underwriting
arrangement for the sale of these shares. All funds that are received by us in
the offering are available for immediate use. There is no minimum number of
shares that must be sold before we can utilize the proceeds of the offering.
Funds will not be placed in an escrow or similar account until a minimum amount
has been raised. You will be purchasing our shares from us and not our selling
security holders.
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Although we are not presently qualified for public quotation, we intend to
qualify our shares for quotation on the OTC Bulletin Board immediately after the
effectiveness of this registration statement or as soon as possible thereafter.
Application of Proceeds
The proceeds of this offering are to be used by us for the development and
production of multi-media training programs, marketing and promotion literature
and programs, website enhancement, purchase of inventory, customer call center
and computer hardware and software programs to be used to aid our customer
service representatives, and working capital needed to hire additional staff and
accommodate an expected increase in operations.
RISK FACTORS
OUR OPERATION AND FUTURE GROWTH IS HEAVILY DEPENDENT UPON OUR PRESIDENT, MARK A.
POULSEN, OUR SENIOR VICE PRESIDENT, ANTHONY F. HEAD, SANDRA WENDT, OUR VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER AND PRINS RALSTON, OUR SENIOR VICE
PRESIDENT AND CHIEF OPERATIONS OFFICER AND OTHER MANAGEMENT PERSONNEL, AND IF WE
LOSE THE SERVICES OF THESE EMPLOYEES WE WILL BE UNABLE TO DEVELOP OUR BUSINESS.
We believe the efforts of our executive officers and other management personnel
including Mr. Poulsen, Mr. Head, Ms. Wendt and Mr. Ralston are essential to our
operations and growth. The loss of Mr. Poulsen, Mr. Head, Ms. Wendt or Mr.
Ralston could have a material adverse effect on our financial condition, future
success, and ability to sustain operations. We do not carry key person life
insurance on any such individual.
WE HAVE HAD A LIMITED OPERATING HISTORY AND MAY NOT BE ABLE TO CONTINUE TO
SUCCESSFULLY DEVELOP OUR BUSINESS PLAN OR ACHIEVE PROFITABILITY.
We are a development stage company and have a limited operating history. Our
success will depend largely upon our ability to implement our business plan. Our
ability to identify clients will be crucial to our success. Due to our
development stage nature, we do not have consistent cash flow.
SINCE WE DEPEND ON HERBALIFE INTERNATIONAL INC. PRODUCTS AND WE HAVE NO WRITTEN
AGREEMENT FOR SUCH PRODUCTS THE LOSS OF THIS RELATIONSHIP WILL SEVERELY DAMAGE
OUR FUTURE REVENUES AND OPERATIONS.
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Our business plan relies heavily upon Herbalife International Inc. (NYSE:HLF).
We rely upon their products as the core of our programs. We do not have a formal
agreement with Herbalife. Mark A. Poulsen, our principal is an independent
distributor of Herbalife products. Each of our account executives is also an
independent distributor of Herbalife products. If Mark A. Poulsen or any of our
account executives were to lose their relationship with Herbalife, or if any
governmental regulations were to negatively impact Herbalife or its products,
our business could suffer serious negative consequences.
OUR BUSINESS IS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION.
Both our business and the Herbalife products at the core of our programs are
subject to extensive government regulation in various jurisdictions. For
example, we may be subject to regulations pertaining to: (1) program claims and
advertising, including direct claims and advertising by us, as well as claims
and advertising by our account executives, for which we may be held responsible;
(2) our network marketing system; and (3) transfer pricing and similar
regulations that affect the level of taxable income and customs duties.
THE HERBALIFE PRODUCTS AT THE CORE OF OUR PROGRAMS ARE SUBJECT TO EXTENSIVE
GOVERNMENT REGULATION.
The products of Herbalife at the core of our programs are subject to many
regulations. For example, in the United States, the formulation, manufacturing,
packaging, storing, labeling, promotion, advertising, distribution and sale of
our Herbalife products may be subject to regulation by one or more governmental
agencies, including (1) the Food and Drug Administration ("FDA"), (2) the
Federal Trade Commission ("FTC"), (3) the Consumer Program Safety Commission
("CPSC"), (4) the United States Department of Agriculture ("USDA"), (5) the
Environmental Protection Agency ("EPA") and (6) the United States Postal
Service. Our activities also are regulated by various agencies of the states,
localities and other countries in which our programs are distributed and sold.
The FDA, in particular, regulates the formulation, manufacture and labeling of
foods, dietary supplements and over-the-counter ("OTC") drugs, such as those
distributed by us. FDA regulations require our suppliers to meet relevant good
manufacturing practice ("GMP") regulations for the preparation, packing and
storage of foods and OTC drugs. GMPs for dietary supplements have yet to be
promulgated but are expected to be proposed. In some jurisdictions, we may,
prior to commencing operations, be required to obtain approval, licenses or
certification from the relevant governmental health agency. There is no
guarantee that we will be able to secure the necessary approvals in any of our
targeted markets.
WE WILL OPERATE IN A COMPETITIVE INDUSTRY WITH ESTABLISHED COMPANIES THAT CAN
IMPACT OUR MARKET SHARE AND SUCCESS.
We face significant competition from more established companies. We believe our
direct competition in Australia will include: HCG Healthcorp. Group, Healthwise
Australia, Energy Fitness Professionals, and Corporate Relaxation and Wellness.
We will also face competition in other jurisdictions. Such competition will
negatively impact our market share and decrease our revenues.
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SALES BY SELLING SECURITY HOLDERS BELOW THE $1.50 OFFERING PRICE MAY CAUSE OUR
STOCK PRICE TO FALL AND DECREASE DEMAND IN THE PRIMARY OFFERING WHICH MAY
DECREASE THE VALUE OF YOUR INVESTMENT.
Our Selling Security Holders may offer their shares during our offering. All of
our stock owned by the Selling Security Holders will be registered by the
Registration Statement of which this prospectus is a part. The Selling Security
Holders may sell some or all of their shares immediately after they are
registered. In the event that the Selling Security Holders sell some or all of
their shares, which could occur while we are still selling shares directly to
investors in this offering, trading prices for the shares could fall below the
offering price of the shares. In such event we may be unable to sell all of the
shares to investors, which would negatively impact the offering. As a result,
our plan of operations may suffer from inadequate working capital.
YOU MAY NOT BE ABLE TO LIQUIDATE YOUR INVESTMENTS SINCE THERE IS NO ASSURANCE
THAT A PUBLIC MARKET WILL DEVELOP FOR OUR COMMON STOCK OR THAT OUR COMMON STOCK
WILL EVER BE APPROVED FOR TRADING ON A RECOGNIZED STOCK EXCHANGE OR QUOTATION
MEDIUM.
There has been no trading market for the shares and none is anticipated to
develop in the near future. We intend to apply for a quotation on the Over the
Counter Bulletin Board concurrently with the filing of this offering. It is
unlikely that our trading market will develop in the near term, or that if
developed, it will be sustained. In the event the regular public trading market
does not develop, any investment in our stock would be highly illiquid.
Accordingly, an investor in our shares may not be able to sell the shares
readily, if at all.
THIS OFFERING IS BEING SELF-UNDERWRITTEN, AND NO INDEPENDENT DUE DILIGENCE HAS
BEEN UNDERTAKEN.
This offering is being self-underwritten by our officers and directors, and
potential investors should give careful consideration to all aspects of this
offering before any investment is made. In the absence of an underwriter, no due
diligence examination has been performed in conjunction with this offering such
as would have been performed in an underwritten offering.
INVESTORS IN THIS OFFERING WILL BEAR THE MOST RISK OF LOSS EVEN THOUGH OUR
PRESENT OFFICER AND DIRECTOR WILL CONTROL US.
Our present officers and directors own an aggregate of 14,155,000 or 67.82% of
our total issued and outstanding shares (but not including up to 2,000,000
shares issuable upon the exercise of options) and 1,000,000 preferred shares
before the registration and the issuance of additional shares from this
Offering. This controlling interest was acquired at a cost substantially below
the offering price. Further, some of our Selling Security Holders acquired their
shares at a cost of $0.33 and $0.50 per share. Accordingly, purchasers of the
shares offered will bear most of the risk of loss although our control will be
maintained by the existing stock owners by virtue of their percentage of stock
ownership.
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IT IS IMPERATIVE THAT WE PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND THE
FAILURE TO DO SO WILL HAVE A NEGATIVE IMPACT ON OUR BUSINESS.
Our business depends on our intellectual and property law to safeguard our
assets. Our intellectual property consists of: a) computer software and systems
design for our call center, b) trademark of Fit For Business, c) website design
for management information systems (to be completed), d) design for multimedia
training programs (in progress), e) marketing and promotional literature and
materials (ongoing), f) account executive and customer service resources,
customer service representatives compact disc and training manuals, g)
television program pilots and script (initial pilot for thirteen week television
program complete, pilot to be promoted to main television channel in fourteen
days), h) customer and prospects list. Our success in defending our intellectual
property assets and also ensuring that we do not infringe on the intellectual
property rights of others can be an expensive process, and can also have a
significant effect on our business. Our failure to protect our intellectual
property assets, or the infringement on the rights of others could have a
negative material effect on us in that it could result in reduced revenues or
additional expense in our product or marketing costs.
We are introducing a new concept to our business plan that may not be successful
resulting in depletion of our resources Our business plan calls for the
development of a new concept of corporate wellness solutions in which we target
a specific market (i.e., individuals 45 years of age and older). This is to be
introduced in Australia and other markets. There is no assurance that we will be
successful in introducing this concept. The introduction of this concept
consists of the use of our cash reserves which will be depleted if the
introduction of this concept is not successful.
USE OF PROCEEDS
The net proceeds to us from this Offering, after deducting estimated offering
expenses of $300,000, are estimated to be approximately $4,200,000 assuming the
Maximum Offering is sold. We will not receive any proceeds from the sale of
shares by the Selling Security Holders. The following sets forth our use of net
proceeds based on the maximum raise where we net $4,200,000; a raise where we
net $2,500,000 and a raise where we net $1,000,000.
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Use of Proceeds Based on Net Raise of $4,200,000:
Approximate Approximate
Dollar Percentage of
Application of Proceeds Amount Net Proceeds
- ----------------------- ------ ------------
Purchase of Computer Software and Systems $ 350,000 8.3%
Hardware for Call Center
Website Design and Enhancement 260,000 6.2 %
Production - Multi Media Training programs 300,000 7.1 %
Marketing, Promotion Literature and Brand 300,000 7.1%
Campaign Costs
International market development 1,500,000 35.7%
Working Capital (1) 1,490,000 35.4 %
Total.................. $ 4,200,000 100.0%
=========== ======
(1) Represents amounts to be used for working capital and general
corporate purposes, including rent expense, corporate overhead
including salaries, administration and ongoing professional fees.
Use of Proceeds Based on Net Raise of $2,500,000:
Approximate Approximate
Dollar Percentage of
Application of Proceeds Amount Net Proceeds
- ----------------------- ------ ------------
Purchase of Computer Software and Systems $ 250,000 10.0%
Hardware for Call Center
Website Design and Enhancement 160,000 6.4 %
Production - Multi Media Training programs 90,000 3.6 %
Marketing, Promotion Literature and Brand 300,000 12.0%
Campaign Costs
International market development 1,000,000 40.0%
Working Capital (1) 700,000 28.0 %
Total.................. $ 2,500,000 100.0%
=========== ======
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Use of Proceeds Based on Net Raise of $1,000,000:
Approximate Approximate
Dollar Percentage of
Application of Proceeds Amount Net Proceeds
- ----------------------- ------ ------------
Purchase of Computer Software and Systems $ 150,000 15.0%
Hardware for Call Center
Website Design and Enhancement 80,000 8.0 %
Production - Multi Media Training programs 90,000 9.0 %
Marketing, Promotion Literature and Brand 180,000 18.0%
Campaign Costs
International market development 210,000 21.0%
Working Capital (1) 290,000 29.0 %
Total.................. $ 1,000,000 100.0%
=========== ======
The foregoing represents our best estimate of our allocation of the net proceeds
based upon the current state of our business development and management
estimates of current industry conditions. We anticipate, although there can be
no assurance, that the net proceeds from the Maximum Offering will only allow us
to sustain our operations for a period of approximately twelve (12) months. Upon
completion of the Maximum Offering, we believe we will have sufficient financing
to operate our business for approximately eighteen (18) months following the
completion of the Maximum Offering. The net proceeds may be reallocated among
the categories set forth above or otherwise depending upon the state of our
business operations and other factors, many of which are beyond our control.
DETERMINATION OF OFFERING PRICE
The initial public offering price of the shares of our common stock has been
determined arbitrarily by us and does not necessarily bear any relationship to
our book value, assets, past operating results, financial condition or any other
established criteria of value. Although our common stock is not listed on a
public exchange, we will be filing to obtain a quotation on the OTC Bulletin
Board concurrently with the filing of this prospectus. However, there is no
assurance that our common stock, once it becomes publicly quoted or listed, will
trade at market prices in excess of the initial public offering price as prices
for the common stock in any public market which may develop will be determined
by the market and may be influenced by many factors, including the depth and
liquidity of the market for the common stock, investor perception of us, and
general economic and market conditions.
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is not currently traded on any recognized stock exchange. There
is no current public trading market for our shares of common stock. After this
Registration Statement becomes effective, we intend to apply for a quotation on
the OTC Bulletin Board.
As of March 7, 2005, based on our transfer agent records, we had 84 shareholders
holding an aggregate of 20,870,000 shares of our common stock. In addition,
2,000,000 options convertible into 2,000,000 shares of our common stock are held
by Fort Street Equity, Inc.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information as of March 7, 2005, with
respect to compensation plans under which our equity securities are authorized
for issuance:
(a) (b) (c)
-------------------- -------------------- ---------------------
Number of securities
remaining available
Number of securities for future issuance
to be issued upon Weighted-average under equity
exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
warrants and rights warrants and rights reflected in column (a))
-------------------- -------------------- ---------------------
Equity compensation
plans approved by
security holders None
Equity compensation
plans not approved
by security holders None
Total None
DIVIDENDS
We have never paid a cash dividend on our common stock. It is our present policy
to retain earnings, if any, to finance the development and growth of our
business. Accordingly, we do not anticipate that cash dividends will be paid
until our earnings and financial condition justify such dividends. There can be
no assurance that we can achieve such earnings.
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PENNY STOCK CONSIDERATIONS
Trading in our securities is subject to the "penny stock" rules. The SEC has
adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. These rules require that any broker-dealer who recommends
our securities to persons other than prior customers and accredited investors,
must, prior to the sale, make a special written suitability determination for
the purchaser and receive the purchaser's written agreement to execute the
transaction. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated with trading
in the penny stock market. In addition, broker-dealers must disclose commissions
payable to both the broker-dealer and the registered representative and current
quotations for the securities they offer. The additional burdens imposed upon
broker- dealers by such requirements may discourage broker-dealers from
effecting transactions in our securities, which could severely limit their
market price and liquidity of our securities. Broker- dealers who sell penny
stocks to certain types of investors are required to comply with the
Commission's regulations concerning the transfer of penny stocks. These
regulations require broker- dealers to:
o Make a suitability determination prior to selling a penny stock to the
purchaser;
o Receive the purchaser's written consent to the transaction; and
o Provide certain written disclosures to the purchaser.
These requirements may restrict the ability of broker-dealers to sell our common
stock and may affect your ability to resell our common stock.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-Looking Statements
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of our results of
operations and financial condition. The discussion should be read in conjunction
with our financial statements and notes thereto appearing in this prospectus.
The following discussion and analysis contains forward-looking statements, which
involve risks and uncertainties. Our actual results may differ significantly
from the results, expectations and plans discussed in these forward- looking
statements.
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General
Fit For Business International, Inc. is a corporation formed in the State of
Nevada in 2001. We are a developmental stage company that is in the process of
implementing our business plan to develop the business of selling wellness
programs to corporations, small to medium size enterprises and individuals. The
programs we hope to be able to sell are designed so that the individuals that
ultimately consume our programs may increase their well being. Our target
markets are corporations, small to medium enterprises and individuals that wish
to enhance their health and well being.
We believe that the effective implementation of our business plan will result in
our position as a provider of wellness programs to the business and our other
target markets significantly improving.
The successful implementation of the business plan will be dependent on our
ability to meet the challenges of developing a management team capable of not
only the development of the various products and programs but also brand
management and the implementation of specific marketing strategies. These
strategies will include the utilization of specific existing distributors
currently in the business of marketing nutritional and wellness programs. As
well, we will be employing our own account executives to offer our services and
programs to ou various target markets.
Additionally, it will be necessary to educate the target market and build
relationships with corporations in order to demonstrate the community and
commercial benefits of the Fit For Business wellness programs.
Results of Operations and Liquidity and Capital Resources
We have conducted our operations since 1998. We have generated $25,996 in
revenues to date and we have accumulated assets of $532,267 as of December 31,
2004. The programs we hope to be able to sell will be sold to the various
groupings. As of the date of this prospectus, we have secured the sale of a
license in Australia and it is anticipated that program sales will commence in
the first quarter of 2005. We have been involved in the last quarter in
inducting the Licensee to the Fit For Business operating systems and methods.
The sale of this license within the Australian market should assist in the
further development of the markets in the region.
During the quarter ended December 31, 2004, we incurred a net loss totaling
$85,428. Our net loss was mainly attributable to increases in general and
administrative expenses. Management anticipates that we will continue to incur
net losses until we are able to generate revenues from sales of the wellness
programs we seek to distribute.
17
As of December 31, 2004, we had $68,528 of cash on hand. Our current cash
resources are not sufficient to satisfy our cash requirements over the next 12
months. Our management believes that we have sufficient funds to continue
operations through the end of April 2005.
We estimate our business needs an additional $185,000 to carry it through from
April to June 2005. However, currently there are no commitments for capital.
Furthermore, the successful implementation of all aspects of the business plan
is subject to our ability to be able to raise additional funds from an offering
of our stock in the future through this prospectus. In order to become
profitable, we may need to secure additional debt or equity funding.
Should the required funding not be forthcoming from the aforementioned sources,
public offerings of equity, or securities convertible into equity may be
necessary. In any event, our investors should assume that any additional funding
will cause substantial dilution to current stockholders. In addition, we may not
be able to raise additional funds on favorable terms, if at all.
Our independent auditor has indicated that there can be no assurance that we
will be able to raise $4.5 million in equity capital through our planned filing
with the SEC and related activities, or be successful in the sale of our
products and services that will generate sufficient revenues to sustain our
operations.
The notes to our financial statements include an explanatory paragraph
expressing substantial doubt about our ability to continue as a going concern.
Among the reasons cited in the notes as raising substantial doubt as to our
ability to continue as a going concern are the following: we have incurred
operating losses since inception, and our working capital is insufficient to
meet our planned business objectives. Our ability to continue as a going concern
is dependent on our ability to further implement our business plan, raise
additional capital and generate revenues. These conditions raise substantial
doubt about our ability to continue as a going concern.
Plan of Operation
During the three month period ended December 31, 2004, we have devoted our
activities to the following:
1. Continuing to enhance and further develop our Web based management
information systems.
2. Continuing to further develop our operating infrastructure, as follows:
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a. Providing input and direction for further wellness program selection,
features, benefits and design of programs planned to be supplied to our various
customer groupings;
b. Establishing appropriate segmented marketing approaches and contact
databases for the planned sale of our programs wellness programs to these
markets;
c. Recruiting and training further account executives and customer service
representatives; and
d. Contacting customers, preparing proposals to them and attempting to
negotiate contracts with them for the delivery of programs.
For the next 12 months our plan of operation calls for
continued focus on developing our plan of operations by accomplishing the
following milestones:
March 2005: All new independent account executives and customer sales executives
trained. Brand awareness and market building activities including TV program in
Australia planned for. Planning completed for opening new country market.
June 2005: Marketing and Brand building activities in Australia being
implemented, including a 13 episode TV program. In house permanent staff
increased to include Development Director with 5 fulltime corporate account
executives. The 5 fulltime corporate account executives trained and starting to
build a sales pipeline. New country market opened in Japan. Planning completed
for new product offerings to be included in the Fit For Business Australian
programs.
September 2005: Agreements signed with additional Australian product supplier
for inclusion with the Fit For Business program offerings. Program
implementation commences in Japan. New Country Market opened in South Korea.
December 2005: New wellness products added to our Australian program offerings.
First sales being generated in Japan. Program implementation commences in South
Korea. A further New Country market being researched.
Because we are a development stage company with no significant operating history
and a poor financial condition, we may be unsuccessful in obtaining financing or
the amount of the financing may be minimal and therefore inadequate to implement
our full plan of operations. We have developed three alternative plans of
operations depending on financing being raised at the $4.5 million, $2.8 million
and $1.3 million. These alternate plans involve a scaling back or staged
implementation of the $4.5 million plan of operations described. In the event
that we do not receive the full, or partial financing, or our financing is
inadequate or if we do not adequately implement an alternative plan of
operations that enables us to conduct operations without having received
adequate financing, we may have to liquidate our business and undertake any or
all of the following actions:
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1. Sell or dispose of our assets;
2. Pay our liabilities in order of priority, if we have available cash to pay
such liabilities;
3. If any cash remains after we satisfy amounts due to our creditors,
distribute any remaining cash to our shareholders in an amount equal to the net
market value of our net assets;
4. File a Certificate of Dissolution with the State of Nevada to dissolve our
corporation and close our business;
5. Make the appropriate filings with the Securities and Exchange Commission so
that we will no longer be required to file periodic and other required reports
with the Securities and Exchange Commission, if, in fact, we are a reporting
company at that time;
and
6. Make the appropriate filings with the National Association of Security
Dealers to affect a de-listing of our common stock, if, in fact, our common
stock is quoted on the Over-the-Counter Bulletin Board at that time.
If we have any liabilities that we are unable to satisfy and we qualify for
protection under the US Bankruptcy Code, we may voluntarily file for
reorganization under Chapter 11 or liquidation under Chapter 7. Our creditors
may also file a Chapter 7 or Chapter 11 bankruptcy action against us. If our
creditors or we file for Chapter 7 or Chapter 11 bankruptcy, our creditors will
take priority over our shareholders. If we fail to file for bankruptcy under
Chapter 7 or Chapter 11 and we have creditors, such creditors may institute
proceedings against us seeking forfeiture of our assets, if any. We do not know
and cannot determine which, if any, of these actions we will be forced to take.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements.
BUSINESS - OUR COMPANY
We were organized on May 30, 2001, and incorporated in the State of Nevada on
July 31, 2001, under the name Elli Tsab, Inc. We have remained essentially
inactive since incorporation except for the issuance of common stock to former
officers and directors for services rendered, and the issuance of options to
purchase common stock for $10,000 in cash as described below.
On May 30, 2001, we issued 5,000,000 shares of our common stock at par value of
$.001 per share to former officers and directors of the Company for services
rendered.
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We changed our name to Patient Data Corporation on April 7, 2004, and we also
increased our authorized capital to 100,000,000 shares of common stock and
10,000,000 shares of preferred stock, each with a par value of $.001 per share.
On July 25, 2004, we issued 2,000,000 options to Fort Street Equity, Inc. (a
Cayman Islands company) to purchase the same number of shares of our common
stock for $10,000 in cash. The option period is through December 31, 2005. The
exercise price of the options is the higher of $0.50 per share or the average
trading price of our common stock over the preceding ten (10) business days
prior to exercise of the options, less a discount of forty (40%) percent.
On September 14, 2004, we acquired all of the issued and outstanding capital
shares of Fit For Business (Australia) Pty Limited ("Subsidiary") an Australian
private company. As a result, Subsidiary became our wholly owned subsidiary.
Subsidiary delivers services and products to the workplace health and safety
industry in Australia, and is also engaged in a network marketing system
promoting the nutritional and health supplements manufactured by Herbalife
International Inc.
In exchange for all of the issued and outstanding shares of Subsidiary, we
issued an aggregate of 15,000,000 of our common shares and 1,000,000 of our
preferred shares to the shareholders of Australia, Mark A. Poulsen and Mark
Poulsen & Associates Pty. Ltd. Mark A. Poulsen and Mark Poulsen & Associates
Pty. Ltd. subsequently transferred some of their common shares to other persons,
as detailed herein.
On January 13, 2005, we changed our name to FIT For Business International, Inc.
in order to better reflect our new business plan.
Our business plan has two major components or programs which involve products
and services for:
(1) "Corporate Wellness;" and
(2) "Living Well."
Market Opportunities
The Fit For Business Programs are currently marketed to two major target
markets:
1. Corporate Wellness Solutions - targeted to small/medium/large
corporations ;
2. Living Well Solutions - targeted primarily to retirement village
groups and individual seniors.
Marketing is conducted via several methods:
1. Targeted media advertising and events;
2. Direct mail;
3. Relationship marketing; and
4. Network marketing.
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CORPORATE WELLNESS SOLUTION PROGRAM
Under this component of the business plan, we are focused on delivering
products and services to make the company workplace healthier. The goal is that
a healthier workplace increases productivity and reduces absenteeism and stress,
and therefore, increases bottom line profits for employers. Our main objective
is to be a market leader in the Corporate Wellness arena.
We have spent the past five years researching additional Corporate
Wellness products and services. As a consequence, we have designed a new
program, the Fit For Business Program, which we believe offers solutions to the
increasing wellness problem throughout corporate Australia. We intend to supply
businesses with a proactive solution to attempt to address their productivity,
stress and absenteeism issues by implementing the ISO9001 quality assured Fit
For Business Program which includes our unique nutritional support component.
Development of this component of our business plan was first established in
December 1998, by Mark A. Poulsen.
Potential corporate customers are identified through a process of
gathering and analyzing business information and data by our marketing and
account executives.
The Corporate Wellness Solution program is then marketed directly to
the target companies ("customers") via the corporate wellness account
executives. The corporate wellness account executives have previous experience
in sales and are trained in the Fit For Business Program methodology on how to
approach potential corporate customers, when information is required by
customers, how to best present the information, and how to close the sale.
We also have a separate training manual, provided on CD to all
Corporate Wellness account executives, which provides detailed training on how
each separate market is to be targeted, as well as detailed information on
follow up, reporting, and other procedures.
Once a corporate customer has agreed to participate in the program, our
Corporate Wellness account executive prepares an agreement, with our assistance,
to be presented to the customer. On signing of the agreement, the individual
employees and staff of the customer are interviewed by our customer service
representative to advise the correct program for their use. The customer is then
invoiced for the full retail value of one (1) month's program for all employees
who will be utilizing the program. Once the funds are received, we retain
fifteen per cent (15%), and the remaining eighty five per cent (85%) goes back
to the customer service representative to order the products from Herbalife and
deliver them to the employees of the customer. The customer service
representative will retain thirty five per cent (35%) of the funds received as
compensation for delivering the services to the customer's employees.
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Each corporate customer's employee receives initially daily and then
weekly follow-up from the fully trained customer service representative to
ensure compliance with the program. This follow-up process ensures that
individual employees obtain positive results, assists them in forming positive
habits, and helps them to stay on the program, which benefits us as well as the
customer.
The customer receives weekly reports from the Corporate Wellness account
executive showing the progress of each individual staff member. The weekly
information is also recorded onto the Web based Fit For Business Customer
Follow-up program. Through the Web based Fit For Business management information
system, we are able to gauge the results achieved by the employees of various
customers as well as our customer service representatives.
LIVING WELL PROGRAM
This component of our business plan is targeted through programs
directed primarily, but not exclusively, to individuals over 45 years of age.
The programs consist of a wide range of nutritional supplements, personal care,
and weight management programs, that promote inner and outer wellness, and a
healthy lifestyle. The products utilized within these programs are manufactured
by Herbalife.
These programs are marketed predominantly through a network marketing
system. Within this system, living well account executives develop their own
living well account executive downline organizations by sponsoring other living
well account executives to do business in any market where we operate; entitling
the sponsors to receive royalty overrides (cash incentives, including
commissions and bonuses) on program sales within their downline organizations.
This system enables our independent Living Well account executives to earn
profits by selling Fit For Business Programs to retail consumers or other Living
Well account executives.
We believe that our network marketing system is ideally suited to this
market segment, because sales of such programs are strengthened by the ongoing
personal contact between the retail consumers of this market segment and Living
Well account executives. Our network marketing system appeals to a broad
cross-section of potential independent Living Well account executives throughout
the world, particularly those seeking to supplement family income with a start
at home business or pursue non-conventional, part-time employment opportunities.
2 (a) Retirement Village Groups
Retirement villages and homes are approached directly by Living Well
account executives who have been trained on how to approach the retirement
villages; what information is required; and how to present it.
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The Living Well account executive then organizes a group presentation
to the village at a suitable time. Once the presentation is complete, each
attendee receives a seniors brochure which includes information on the products
and an order form.
Once the order is placed by the customer directly with us or via the
Living Well account executive, the funds are deposited with us. The Living Well
account executive via a customer service representative places the order and
initiates the customer onto the customer care program. Once the funds are
received, we retain fifteen per cent (15%), and the remaining eighty five per
cent (85%) goes back to the customer service representative to order the
products from Herbalife and deliver them to the customer at the retirement
village. The customer service representative will retain thirty-five percent
(35%) of the funds received as compensation for delivering the services to the
customer at the retirement village.
2 (b) Individual Seniors
The seniors market is driven solely by our nation wide advertising
campaign. We are currently mass marketing the Fit For Business Program in all
the states of Australia. We are using free to air and television Pay programs,
with advertising slots and a sponsorship campaign.
As well as the TV campaign, we are placing ads in the nationally
recognized "Seniors" newspapers and magazines.
We believe this advertising not only generates customer interest, it
also helps create national brand awareness for us.
The Fit For Business national call center receives the customer calls
in response to the advertisements. Their details are taken by the call center
and entered on to the Fit for Business Web Based management information system.
Fit For Business then distributes the leads, via the management information
system, for each State (there are seven states and two territories in
Australia)in Australia to the customer service representatives randomly,
dependent on geographic location. The customer service representative then
follows up each potential new customer as per the customer follow up program.
Once the customer decides to purchase the program, the funds are
deposited into our account. The customer service representative places the order
and initiates the customer onto the customer care program. On receipt of the
funds, we retain fifteen per cent (15%), and the remaining eighty five per cent
(85%) goes back to the customer service representative to order the products
from Herbalife and deliver them to the customer. The customer service
representative will retain thirty-five per cent (35%) of the funds received as
compensation for delivering the services to the customer.
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PRODUCTS AND SERVICES
The Fit For Business Program provides to our customers, and in the case of
corporate customers, to their employees, with a unique nutritional component,
which is manufactured and supplied by Herbalife. Herbalife has been selected as
our nutritional supplement provider because we believe its products are safe,
effective, and have a recognized market presence after twenty-four years in the
market place. We also believe that the Herbalife products are effective for our
customers because of their continuing commitment to enhance their products
through research and development. Further, the products manufactured by
Herbalife have been selected because we believe they provide a flexible,
balanced nutrition program based on the core formulated meal replacement
product, which can be tailored to meet individual needs.
We also supply services to each customer, and to employees of each
corporate customer, via our customer service representatives who provide
individualized program information, education sessions, follow-up/ and coaching.
As well, fact sheets, newsletters, and brochures are provided to our customers
on a regular basis. One of the first processes undertaken by a customer service
representative will be to conduct a customer profile in order to establish the
best nutritional component for each individual customer. Customer service
representatives then follow up with each individual customer on the first,
third, seventh, fourteenth, and twenty-first day of the program, and regularly
thereafter, to ensure each individual customer is receiving the full benefit of
the program.
OUR BUSINESS STRATEGY
Our business strategy is comprised of the following principal elements:
Program Branding and Wellness
Our initiative is to develop the Fit For Business brand and reputation as
a company focused on a complete wellness program and way of life. We seek to
take advantage of current worldwide consumer trends indicating that individuals
are turning more and more to nutritional supplements for weight management,
fitness and age-related health concerns. Customers should know that when they
find their ideal weight using our weight management programs, they can use our
other nutritional programs to promote a healthy lifestyle. To bring this message
across, we plan to undertake a significant advertising, public relations and
branding campaign.
Account Executive Expansion, Retention & Training
To expand our independent account executive base, we are focusing on
implementing programs to ensure account executive retention. Key areas include:
provision of more qualified leads to account executives; enhancing our customer
service capabilities at our call centers; offering greater business-building
opportunities through our web based management information system; creating
business support initiatives and better training and educational materials for
new account executives to guide them through their first eighteen months; and
offering enriched reward and recognition programs. To further support our
account executives, a cross-functional sales team will help provide account
executives with the best marketing, training, sales and information tools to
ensure their success.
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We recognize that in addition to high-quality programs and a proven
account executive compensation plan, the success of our business depends on the
training of our account executives. Extensive training opportunities enable
account executives to not only develop invaluable business-building and
leadership skills, but also to become experts in our programs and offer
customers sound advice on weight management, nutrition, and personal care. By
placing a top priority on training, we will build credibility among our account
executives and be further established in the industry.
FIT FOR BUSINESS PROGRAM OVERVIEW
Our programs include inner nutrition (consisting of weight management
programs and nutritional supplements) and outer nutrition (consisting of
personal care programs). We currently market many programs, exclusive of (1)
variations in program flavors and colors, (2) reformulations of programs to
satisfy regulatory requirements within a particular country and (3) similar
variations of our basic program line. A limited number of our personal care
programs are classified as OTC drugs.
Inner Nutrition
Weight Management Programs. Our weight management programs include the
following products: (1) Formula 1 Protein Mix, a protein powder in three
different flavors designed as a meal replacement. Formula 2 - Vitamin B6
Supplement in a Herbal Base, Formula 3 - Vitamin & Mineral Supplement, Formula 5
- - Vitamin C Supplement in a Herbal Base.
Nutritional Supplements. Our nutritional supplements include a variety of
products, each containing high quality herbs, vitamins, minerals and other
natural ingredients. These products are targeted for specific consumers needs.
For example, we offer Herbalife Tang Kuei Xtra-Cal, Herbalifeline(R),
antioxidants, such as RoseOxTM, in addition to fiber supplements, including
Florafiber and Chitosan. Other signature nutritional programs include
Herbal-Aloe N.R.G and Thermojetics Instant Herbal Beverage in 2 flavors,
original and peach.
Outer Nutrition
Personal Care Programs. We offer a range of personal care programs using
pure and beneficial botanical ingredients in specific formulations to provide
not only cosmetic enhancement, but also outer nutrition for the skin and body,
and youth preservation. Our programs are designed to make individual customers
not only look good, but also feel good. We market most of the Herbalife personal
care product line which are promoted under the brand name Dermajetics(R). This
line consists of skin care products such as: Radiant (R) Daily Skin Booster; The
Skin Survival Kit, consisting of a day and night moisturizer, a deep cleaning
facial mask and a hydrating eye gel; Nature's Mirror(R), consisting of a
cleanser, toner and moisturizer for each of three different skin types; and
several specialty care products, including Skin Activator(R); Other specialty
personal care products available through the programs and supplied by Herbalife
include Herbal Aloe Gel and Lotion, Soothing Spray, Cleansing Bars, and Body
Wash.
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Literature and Promotional Materials
We also sell literature and promotional materials, including sales aids
and informational booklets. In addition, we sell account executive kits at a
worldwide cost of approximately $59.14 per kit (AUS. $80.00), which an
individual must purchase in order to become an account executive. Sales of
account executive kits are not subject to account executive allowances and
royalty overrides. Accordingly, we receive the entire retail sales amount from
the sale of account executive kits.
FIT FOR BUSINESS PROGRAM RETURN AND BUY-BACK POLICIES
Our programs include an individual customer satisfaction guarantee. Under
this guarantee, within 30 days of purchase, any individual customer who is not
satisfied with any Company program for any reason may return it or any unused
portion of the product to the account executive from whom it was purchased for a
full refund from the account executive or credit toward the purchase of another
Company program. If a product is returned to us on a timely basis, account
executives may obtain replacements from us for such returned product. We
maintain a buy-back program pursuant to which we will repurchase programs sold
to an account executive provided that the account executive resigns as a Company
account executive, returns the program in marketable condition within twelve
months of original purchase, and meets specified documentation requirements. We
believe this buy-back policy addresses a number of the regulatory compliance
issues pertaining to network marketing systems.
NETWORK MARKETING SYSTEM
The programs under the "Living Well" component of our business plan are
distributed through a network marketing system. Account executives in this
component of the business plan are independent contractors who purchase products
directly from Herbalife or from other account executives for resale, to retail
consumers or other account executives. We believe that our network marketing
system appeals to a broad cross-section of people worldwide, particularly those
seeking to supplement family income, start a home business, or pursue employment
opportunities other than conventional, full-time employment, and that a majority
of our account executives work on a part-time basis. We encourage our account
executives to use our programs and to communicate their results to their retail
customers.
Account executives' earnings in the "Living Well" part of the business
plan are derived from several sources. First, account executives may earn
profits by purchasing the Herbalife products at wholesale prices, which are
discounted twenty-five to fifty percent (25% to 50%) from suggested retail
prices, depending on the account executive's level within the network, and
selling our programs to retail customers or to other account executives.
27
To become an account executive, a person must be sponsored by an existing
account executive and purchase an account executive kit. Account executives
contribute significantly to our sales and some key account executives who have
attained the highest levels within our account executive network are responsible
for generating a substantial portion of our sales and for recruiting a
substantial number of our account executives and customer service
representatives.
We also have two compensation and incentive programs designed to motivate
account executives at both the most senior and junior levels within our account
executive network. Members of our management team work closely with account
executives to develop and implement new initiatives and strategies for
increasing sales, and account executive productivity throughout our entire
account executive organization. The distribution of bonuses is based in part
upon each account executives performance as well as participation in
corporate-sponsored training and motivational events. In this manner, we attempt
to involve our most senior account executives in our sales, training,
motivation, and strategic planning efforts. In addition to these programs, we
periodically offer a variety of special promotions related to particular
programs or sales periods, involving special cash bonuses, vacations, and other
awards.
We seek to expand our account executive base in each market by offering
account executives attractive compensation opportunities. We believe our
international sponsorship program provides a significant advantage to our
account executives as compared with account executives in some other network
marketing organizations. This program permits account executives in any country
to sponsor account executives in other countries where we have commenced
operations. Sponsored account executives in this program earn the same level of
royalty overrides and bonuses on sales that they would receive if both account
executives resided in the same country.
GEOGRAPHIC PROFILES AND SALES TRENDS.
At this time, we have account executives working in Australia and New
Zealand. We hope to enter the following markets in 2005, or as soon as possible:
Singapore, Malaysia, Hong Kong, Japan and South Korea.
After entering a new country, we expect an initial period of rapid growth
in sales as new account executives are recruited, followed by a plateau in
sales. We believe that a significant factor affecting these markets has been the
opening of other new markets within the same geographic region or with the same
or similar language or cultural bases, and the corresponding tendency of some
account executives to focus their attention on the business opportunities
provided by new markets instead of developing their established downline
organizations in existing markets. As such when new countries are opened, we
expect the sales in existing markets to shift to newly opened markets, resulting
in a plateau in sales in the existing markets. In determining when and where to
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open new markets, we will continue to seek to minimize the impact on account
executive focus in existing markets and to ensure that adequate account
executive support services and other Company systems are in place to support
growth.
FIT FOR BUSINESS PROGRAM DISTRIBUTION
Our web-based management information system is augmented by a centralized
distribution and telephone ordering system, coupled with convenient storefront
account executive service centers offered by Herbalife. The weight management
programs, nutritional supplements, and personal care programs products are
distributed to foreign markets by Herbalife. After arrival of the programs in a
foreign market, account executives purchase the products from the local
distribution center or the associated sales center. The Herbalife personal care
products are predominantly manufactured in Europe and the United States. The
products manufactured in Europe are shipped to a centralized warehouse facility,
from which delivery by truck, ship or plane to other international markets
occurs. Major distribution warehouses have been automated with handling systems
that provide for inspection of every shipment before it is sent to delivery.
MANAGEMENT INFORMATION, INTERNET AND TELECOMMUNICATION SYSTEMS
In order to facilitate our continued growth and support account executive
activities, we will continually upgrade our web-based management information
systems and supporting internet and telecommunication systems. These systems
will include: (1) local area networks of personal computers, serving our
administrative staff; (2) an international web-based management information and
e-mail system through which our account executives communicate; and (3) an
internet website to provide a variety of online services for account executives.
We will continue to invest in our systems in order to strengthen our operating
platform.
GOVERNMENTAL REGULATION
General. We are affected by extensive laws, governmental regulations,
administrative determinations, court decisions and similar constraints, as
applicable, at the federal, state and local levels, including regulations
pertaining to: (1) program claims and advertising, including direct claims and
advertising by us, as well as claims and advertising by account executives, for
which we may be held responsible; (2) our network marketing system; (3) transfer
pricing and similar regulations that affect the level of taxable income and
customs duties; and (4) taxation of account executives, which in some instances
may impose an obligation on us to collect the taxes and maintain appropriate
records.
Programs. In the United States, the formulation, manufacturing, packaging,
storing, labeling, promotion, advertising, distribution, and sale of our
programs will be subject to regulation by one or more governmental agencies,
including (1) the Food and Drug Administration ("FDA"), (2) the Federal Trade
Commission ("FTC"), (3) the Consumer Program Safety Commission ("CPSC"), (4) the
United States Department of Agriculture ("USDA"), (5) the Environmental
Protection Agency ("EPA") and (6) the United States Postal Service. Our
activities will also be regulated by various agencies of the states, localities
and foreign countries in which our programs are distributed and sold. The FDA,
29
in particular, regulates the formulation, manufacture and labeling of foods,
dietary supplements and OTC drugs, such as those distributed by us. FDA
regulations require our suppliers to meet relevant good manufacturing practice
("GMP") regulations for the preparation, packing and storage of foods and OTC
drugs. GMPs for dietary supplements have yet to be promulgated but are expected
to be proposed.
The 1994 Dietary Supplement Health and Education Act ("DSHEA") revised the
provisions of the Federal Food, Drug and Cosmetic Act ("FFDCA") concerning the
composition and labeling of dietary supplements and, we believe, is generally
favorable to the dietary supplement industry in the United States. The
legislation creates a new statutory class of "dietary supplements." This new
class includes vitamins, minerals, herbs, amino acids, and other dietary
substances for human use to supplement the diet, and the legislation
grandfathers, with some limitations, dietary ingredients that were on the market
before October 15, 1994. A dietary supplement which contains a dietary
ingredient that was not on the market before October 15, 1994, will require
evidence of a history of use or other evidence of safety establishing that it is
reasonably expected to be safe. Manufacturers of dietary supplements that make
specified types of statements on dietary supplements, including some product
performance claims, must have substantiation that the statements are truthful
and not misleading.
The majority of the products included in programs marketed by us are
classified as dietary supplements under the FFDCA. The adoption of new
regulations in the United States or in any of our international markets, or
changes in the interpretation of existing regulations, could have a material
adverse effect on us. In September 1997, the FDA issued regulations governing
the labeling and marketing of dietary supplement programs. The regulations
cover: (1) the identification of dietary supplements and their nutrition and
ingredient labeling; (2) the terminology to be used for nutrient content claims,
health content claims, and statements of nutritional support; (3) labeling
requirements for dietary supplements for which "high potency" and "antioxidant"
claims are made; (4) notification procedures for statements on dietary
supplements; and (5) pre-market notification requirements for new dietary
ingredients in dietary supplements.
In January 2000, the FDA published a final rule which defines the types of
statements that can be made concerning the effect of a dietary supplement on the
structure or function of the body pursuant to the DSHEA. Under the DSHEA,
dietary supplement labeling may bear "structure/function" claims, which are
claims that the products affect the structure or function of the body, without
prior FDA review. They may not, without prior FDA review, bear a claim that they
can prevent, treat, cure, mitigate or diagnose disease (a disease claim). The
new final rule describes how the FDA will distinguish disease claims from
structure/function claims. In February 2001, the FDA issued a notice requesting
comments on the types of information which should be included in guidance on
applying the regulations on statements made for dietary supplements concerning
the effect of a dietary supplement on the structure or function of the body. No
guidance document has been issued to date, and our suppliers will continue to
ensure that our dietary supplement product labeling complies with the
requirements of the "Structure/ Function" final rule, which became effective in
February 2000.
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In addition, in some markets, claims made with respect to weight
management products, nutritional supplements, personal care programs, or other
Company programs may change the regulatory status of the programs. In the United
States, for example, it is possible that the FDA could take the position that
claims made for some of our products place those programs within the scope of an
FDA (OTC drug monograph. OTC monographs prescribe permissible ingredients and
appropriate labeling language, and require the marketer or supplier of the
programs to register and file annual drug listing information with the FDA. A
limited number of the products included in our programs sold by us are labeled
as OTC monograph drugs, and we believe that the products are in compliance with
the applicable monographs. In the event that the FDA asserts that product claims
for other products cause them to fall within the scope of OTC monographs, we
would be required either to comply with the applicable monographs or to change
the claims made in connection with the programs. We cannot be sure that we could
do so effectively, or that any changes would not adversely effect sales and
marketing of an effected program.
Prior to commencing operations and prior to making or permitting sales of
our programs in some international markets, we may be required to obtain an
approval, license or certification from the country's relevant health agency.
Where a formal approval, license or certification is not required, we may seek a
favorable opinion of counsel regarding our compliance with applicable laws.
Prior to entering a new market in which a formal approval, license or
certificate is required, we will work extensively with local authorities in
order to obtain the requisite approvals. The approval process may require us to
present each program and product ingredient to appropriate regulators and, in
some instances, arrange for testing of products by local technicians for
ingredient analysis. The approvals may be conditioned on reformulation of our
products or may be unavailable with respect to some programs or some
ingredients. Product reformulation or the inability to introduce some programs
or ingredients into a particular market may have an adverse effect on sales. We
must also comply with program labeling and packaging regulations that vary from
country to country. Our failure to comply with these regulations can result in
our program being removed from sale in a particular market, either temporarily
or permanently.
In the United States, the FTC, which exercises jurisdiction over the
advertising of our programs, has in the past several years instituted
enforcement actions against several dietary supplement companies for false and
misleading advertising of some of their products. These enforcement actions have
resulted in consent decrees and monetary payments by the companies involved. In
addition, the FTC has increased its scrutiny of the use of testimonials, which
we also utilize. We cannot be sure that the FTC will not question our
advertising or other operations. In November 1998, the FTC issued a guide for
the dietary supplement industry, describing how the FTC applies the law that it
administers to advertisements for dietary supplements. It is unclear whether the
FTC will subject advertisements of this kind, including our advertisements, to
increased surveillance to ensure compliance with the principles set forth in the
guide.
31
In some countries, regulations applicable to the activities of our account
executives also may affect our business because in some countries we may be
responsible for our account executives' conduct. In these countries, regulators
may request or require that we take steps to ensure that our account executives
comply with local regulations. The types of regulated conduct may include: (1)
representations concerning our programs; (2) income representations made by us
and/or account executives; (3) public media advertisements, which in foreign
markets may require prior approval by regulators; and (4) sales of programs in
markets in which the products have not been approved, licensed or certified for
sale.
In some markets, it is possible that improper program claims by account
executives could result in our programs being reviewed or re-reviewed by
regulatory authorities and, as a result, being classified or placed into another
category as to which stricter regulations are applicable. In addition, we might
be required to make labeling changes.
Through our manuals, seminars and other training materials and programs,
we attempt to educate our account executives as to the scope of permissible and
impermissible activities in each market. We also investigate allegations of
account executive misconduct. However, our account executives generally are
independent contractors, and we are unable to monitor directly all of their
activities. As a consequence, we cannot be sure that our account executives
comply with applicable regulations. Misconduct by account executives could have
a material adverse effect on us in a particular market or in general.
We are unable to predict the nature of any future laws, regulations,
interpretations or applications, nor can we predict what effect additional
governmental regulations or administrative orders, when and if promulgated,
would have on our business in the future. They could, however, require: (1) the
reformulation of some products not able to be reformulated; (2) imposition of
additional record keeping requirements; (3) expanded documentation of the
properties of some programs; (4) expanded or different labeling; and (5)
additional scientific substantiation regarding product ingredients, safety or
usefulness.
Any or all of these requirements could have a material adverse effect on
our results of operations and financial condition.
Network Marketing System. Our network marketing system is subject to a
number of regulations. Regulations applicable to network marketing organizations
generally are directed at ensuring that program sales ultimately are made to
consumers, and that advancement with an organization is based on sales of the
organization's programs rather than investments in the organization or other
non-retail sales related criteria.
32
When required by law, we will obtain regulatory approval of our network
marketing system or, when this approval is not required, the favorable opinion
of local counsel as to regulatory compliance. Nevertheless, we remain subject to
the risk that, in one or more market areas, our network marketing system could
be found not to be in compliance with applicable regulations. Failure by us to
comply with these regulations could have a material adverse effect on our
business in a particular market or in general.
We will monitor and respond to regulatory and legal developments,
including those that may affect our network marketing system. An adverse
judicial determination with respect to our network marketing system could have a
material adverse effect on our business. An adverse determination could: (1)
require us to make modifications to our network marketing system, (2) result in
negative publicity, or (3) have a negative impact on account executive morale.
In addition, adverse rulings by courts in any proceedings challenging the
legality of network marketing systems, even in those not involving us directly,
could have a material adverse effect on our operations.
Compliance Procedures. As indicated above, us, programs and our network
marketing system are subject, both directly and indirectly through account
executives' conduct, to numerous regulations. We have instituted formal
regulatory compliance measures by developing a system to identify specific
complaints against account executives and to remedy any violations by account
executives through appropriate sanctions, including warnings, suspensions and,
when necessary, terminations. In our manuals, seminars and other training
programs and materials, we emphasize that account executives are prohibited from
making therapeutic claims.
In order to comply with regulations that apply to both us and our account
executives, we will conduct research into the applicable regulatory framework
prior to entering a new market in order to identify all necessary licenses and
approvals and applicable limitations on our operations in that market.
Typically, we would conduct this research with the assistance of local legal
counsel and other representatives. We also research laws applicable to account
executive operations and revise or alter our account executive manuals and other
training materials and programs to provide account executives with guidelines
for operating a business, marketing and distributing our programs and similar
matters, as required by applicable regulations in each market. We are unable to
monitor our supervisors and account executives effectively to ensure that they
refrain from distributing our programs in countries where we have not commenced
operations.
It is part of our business to anticipate and respond to new and changing
regulations and to make corresponding changes in our operations. Although we
will devote resources to maintaining our compliance with regulatory constraints
in each market, we cannot be sure that (1) we would be found to be in full
compliance with applicable regulations in all markets at any given time, or (2)
the regulatory authorities in one or more markets will not assert, either
retroactively or prospectively or both, that our operations are not in full
compliance. Depending upon the severity of regulatory changes in a particular
market and the changes in our operations that would be necessitated to maintain
compliance, these changes could result in our experiencing a material reduction
in sales in the market or determining to exit the market altogether. We cannot
be sure that this transition would not have an adverse effect on our business
and results of operations either in the short or long term.
33
COMPETITION
We are subject to significant competition for the recruitment of account
executives from other network marketing organizations, including those that
market weight management programs, nutritional supplements, and personal care
programs, as well as other types of products. Some of our competitors are
substantially larger than we are, and have available considerably greater
financial resources than we have. HCG Healthcorp Group, Healthwise Australia,
and Corporate Relaxation and Wellness are direct competitors in Australia. Our
ability to remain competitive depends, in significant part, on our success in
recruiting and retaining account executives through an attractive compensation
plan and other incentives. We believe that our bonus program and other
compensation and incentive programs provide our account executives with
significant earning potential. However, we cannot be sure that our programs for
recruitment and retention of account executives will be successful.
The business of marketing weight management programs, nutritional
supplements, and personal care programs also is highly competitive. This market
segment includes numerous manufacturers including: Omega Trend, USANA, Magnatec
Inc., and other marketers, retailers and physicians that actively compete for
the business of consumers. The market is highly sensitive to the introduction of
new programs or weight management plans, including various prescription drugs
that may rapidly capture a significant share of the market.
RETAIL SALES
"Retail Sales" represent the gross sales amounts reflected on our invoices
by our account executives. We receive the amount reported as "retail sales," and
we monitor the actual retail prices charged for our programs. "Net sales"
represent the actual purchase prices paid to us by our account executives, after
giving effect to account executive profits which total approximately 35% of
suggested retail sales prices; and handling and freight income. Beginning
January 1, 2001, we adopted a new accounting pronouncement in Australia, which
requires handling and freight income charged to account executives to be
included in net sales. We receive our sales price in cash or through credit card
payments upon receipt of orders from account executives. Our use of "retail
sales" in reporting financial and operating data reflects the fundamental role
of "retail sales" in our accounting systems, internal controls and operations,
including the basis upon which account executive bonuses are paid. The retail
sales price of our programs is reflected in account executive invoices as the
price charged to customers together with, in most cases, a deduction for the
corresponding account executive profit. The retail sales price is used by us to
calculate, among other things, bonuses and commissions earned by account
executives. We rely upon "retail sales" data reflected in daily sales reports to
monitor results of operations in each of our markets.
34
The significance of our "net sales" is to reflect, generally, the prices
actually received by us after deducting the basic account executive allowance
and adding the handling and freight fees. The ratio of our "net sales" to
"retail sales" is relatively constant because the account executive allowances
and the handling fee historically represent approximately 35% and 7%,
respectively, of the suggested retail sales prices. Accordingly, factors that
affect "retail sales" generally have a corresponding and proportionate effect on
"net sales." To the extent the ratio of "net sales" to "retail sales" varies
from period to period, these variances have resulted principally from sales of
our account executive kits and other literature and promotional materials.
COSTS
We intend to offer individual customers a variety of programs ranging in
cost from $85.00 (AUS. $115.00) to $210.67 (AUS. $285.00) per individual
program. Each individual program lasts for one (1) month. Therefore, the minimum
cost per individual customer will be approximately $2.83 (AUS. $3.00) per day
with the maximum being $7.02 (AUS. $9.50) per day .
INTERNATIONAL EXPANSION
We plan to expand into the following countries: Hong Kong, Japan and South
Korea.
EMPLOYEES
As of March 7, 2005, we have 4 full-time employees. We have never had a
work stoppage, and no employees are represented under collective bargaining
agreements. We consider our relations with our employees to be good. We have
entered into employment contracts with our employees.
INDEPENDENT ACCOUNT EXECUTIVES AND CUSTOMER SERVICE REPRESENTATIVES
As of March 7, 2005, we have 66 registered independent account executives
and customer services representatives across Australia. The account executives
and customer service representatives are not our agents and have agreed to abide
by our code of conduct and quality assured procedures.
AUSTRALIAN LICENSE AGREEMENT
In August 2004, Subsidiary entered into a non-assignable license agreement with
LR Global Marketing Pty Ltd. ("LR Global"). Pursuant to the license agreement,
LR Global has the right, for a period of ten (10) years, to the use of our logo,
our management information system and other material. LR Global will assist in:
35
identifying new clients for us; and recruiting account executives and customer
service representatives. Under the terms of the license agreement, LR Global is
obligated to pay $500,000 for the grant of the license. LR Global will receive a
five (5%) percent commission directly from Herbalife on the sales of the
Herbalife products generated by LR Global. In connection with the grant of the
license agreement, Mark A. Poulsen transferred 500,000 shares of our common
stock to LR Global.
To date, LR Global has paid the sum of $129,168 (AUS $165.00). LR Global was
required to pay the balance of the amount owing by December 31, 2004. LR Global
was in default of the terms of the License Agreement and by mutual agreement we
have extended, until May 31, 2005, the time in which LR Global is required to
balance owing to us.
FIT FOR BUSINESS IS ISO 9001:2000 CERTIFIED
ISO 9001 provides an internationally recognized formula for running any
operation where quality assurance in the provision of the service is a
requirement. The Company's quality management system puts in place a system
whereby quality has become part of our operation and will continually improve
our services and products.
The implementation of our quality management system was certified to
the Australian/International Standard AS/NZS ISO 9001:2000, and this is the
highest certification that can be awarded for a management system and will
satisfy all government requirements in Australia and internationally.
What makes up our quality management system?
o Quality Policy - The Management's commitment to quality
o Quality Manual - our overall policy and interpretation of
the standard
o Detailed Work Instructions - documented procedures on how to
complete specific task and training
o Job Descriptions - specific tasking to staff members
ensuring responsibility and accountability o Company Forms -
the approved form used within the company
o A procedure for recording and fixing problems
o A regular internal check of the system and processes
o A regular check by independent auditors of the system and
processes
INTELLECTUAL PROPERTY
Our "Fit For Business" logo trademark was registered in Australia on Oct 15,
1999 for a period of ten (10) years. In addition, we have copyrights to numerous
brochures and multi-media productions.
36
Intellectual Property Comments
Computer software and systems design for Design complete - currently using
call centre outsourced solution
Trademark of FFB 10 Years from 1998
Website design for management information Stage 1 nearing completion. To be
systems completed in 14 days.
Design for Multi Media Training programs Much of the design and materials
have been collated.
Marketing and promotional literature and Stage 1 completed but need to
materials undertake rebranding programs and
full market development program.
Account executive and customer services Version 1 complete, Version 2
resources CD's and training manuals being designed.
TV program pilot and script Initial pilotfor 13 week TV
program complete. Pilot to be
promoted to main line TV channel
in 14 days.
Customer and prospects lists Extensive with 450 corporate
clients qualified and ready to be
sold to.
DESCRIPTION OF PROPERTY
The Company does not own any real property. We presently lease office space from
Mark Poulsen & Assoctiates Pty Ltd. ("Associates"). Mark Poulsen is one of our
officers and directors. The premises are located at 10/27 Mayneview Street,
Milton, Australia. Associates lease terminated on November 30, 2004 and is on a
month to month basis. We also lease shared office space from Incorp Services,
Inc., located at 3155 E. Patrick Lane, Suite 1, Las Vegas, Nevada.
LEGAL PROCEEDINGS
Neither our parent company nor our subsidiary, or any of their properties, is a
party to any pending legal proceeding. We are not aware of any contemplated
proceeding by a governmental authority. Also, we do not believe that any
director, officer, or affiliate, any owner of record or beneficially of more
than five per cent (5%) of the outstanding common stock, or security holder, is
a party to any proceeding in which he or she is a party adverse to us or has a
material interest adverse to us.
37
MANAGEMENT,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information about our executive officers and
directors
Name Age Position
- --------------- ---- -------------------------------------------------
Mark A. Poulsen 44 President and Chairman of the Board of Directors
Anthony F. Head 58 Senior Vice President of Sales and Director
Prins Ralston 41 Senior Vice President and Chief Operating Officer
Sandra Wendt 35 Senior Vice President of Administration and Chief
Financial Officer
Mark A. Poulsen is our President and Chairman of the Board of Directors. Mark
started his career as an apprentice carpenter in 1976 in the construction
industry. He soon started his own marketing and distribution company. He has
traveled extensively for Herbalife, training over 850,000 individuals from all
over the world in areas ranging from sales and marketing, promotion,
administration, leadership, life enhancement, and personal development. After 20
years as an independent Herbalife distributor, he could see the market place was
changing and could see a need for not only improving corporate health but a real
answer to the growing overweight and obesity issues. He commenced development of
the Fit For Business concept in 1998. He has spent the last seven years
enhancing the Fit for Business concept and programs while continuing his
involvement with Herbalife.
Since 2000, Mark has spent the last 5 years building and developing Fit For
Business (Australia) Pty Ltd, while still maintaining his Herbalife retail
business (Mark Poulsen & Associates Pty Ltd). As Managing Director, his duties
include recruiting and building sales networks in approximately 35 countries.
Anthony (Tony) F. Head is our Senior Vice President of Sales and Director. Tony
graduated from Monford Sales Personnel Melbourne, he has also completed various
courses in Selling & Sales. He has studied Marketing, Lithographic Arts and
Computer Technology. Tony started his career in advertising, but soon realized
that his vocation was in sales. Commencing his sales career with Cadbury
38
Confectionary in 1978, he moved through the chain of management to taking on
career paths inside the organization included marketing and administration
roles. Tony moved into the Direct Selling Industry in 1984 working for Shaklee
Australia, a large vitamin supplement and cosmetic company. He was responsible
for the coordination of Regional Sales Leaders. He then joined Mary Kay
Cosmetics from 1986 to 1993 as their Sales Development Director, responsible for
recruitment, motivation and education of consultants, presentations, new product
launches and public relations. He then joined Herbalife International Inc. as
their Director of Communications and Sales for Pacific Rim. Over the next 6
years he was responsible for sales of Herbalife products in: Taiwan, Thailand,
Philippines, Indonesia, Japan, South Korea, and Australia.
Tony Head worked for Herbalife International from 1993 to January 1999. His
position was Director of Communications and Sales for the Pacific Rim. His main
responsibilities were liaison with Herbalife Distributors, Event Coordination
and Reporting. In 2001, he started working for Fit For Business Australia (Pty)
Ltd on a consulting basis. He has helped build and train the sales team, prepare
presentations and event coordination.
Prins Ralston is our Vice President and Chief Operating Officer. Mr. Ralston
holds the degrees of : Bachelor of Business Computing, Bachelor of Business
Accounting, Bachelor of Laws and Master of Laws. Mr. Ralston is a Certified
Practicing Accountant in Australia. Mr. Ralston is a Fellow of the Australian
Society of Certified Public Accountants, Australian Institute of Company
Directors and the Australian Computer Society. Mr Ralston is also an admitted
Barrister and Solicitor of the Supreme courts of the Northern Territory and
Queensland, in Australia.
Mr. Ralston was the General Counsel and Company Secretary of Ingeus Limited
(Public unlisted Company in Australia) and its group of companies (which
included companies in Australia, the United Kingdom and France) from 2001 to
2004. Mr. Ralston was a National Partner of the Australian legal firm Clayton
Utz from 1999 to 2001. In 2001, he resigned as the Managing Director of an
Australian Stock Exchange Listed company, Nexus Limited (Australian Stock
Exchange: NXS).
Mr. Ralston has a significant industry profile being the Chairman of
Publications of the UNESCO based International Federation of Information
Processing (IFIP) as well as having been Vice President of IFIP and a past
President of the Australian Computer Society and the South East Asian Computer
Confederation.
Sandra Wendt is our Senior Vice President of Administration and Chief Financial
Officer. Sandra graduated from high school in 1978, and immediately began
working in a stockbroker's office, working her way up to international
settlements and accounts department. She then worked in office management for a
real estate office, managing their office, and rentals list, dealing with trust
accounts and leases. She then moved into the Superannuation Industry, working
her way up from Accounts, to Senior Administrator of their in-house Employer
Superannuation Fund, and was responsible for over 200 employers and 4,000
employees. Sandra was then promoted to oversee this position as Assistant
39
Manager with over 25 staff under supervsion. She started working for Mark A.
Poulsen and Associates Pty Ltd. in 1996; with duties in office management,
training and accounting. She attended courses in Web Development and data base
design and management, and has used both these skills to her advantage, she has
developed business planning, cash flow reporting, budgeting and forecasting,
cash management and client liaison skills. She has developed accounting
procedures and is responsible for the financial control of several privately
owned companies. She has the task of budget forecasting as well as account
management on a daily basis. She has also developed and implemented the IS0 9000
and maintains this as the Quality Manager of the Company.
EXECUTIVE COMPENSATION
The following table sets forth information concerning annual and long-term
compensation, on an annualized basis for the last three fiscal years, for our
Chief Executive Officer and for each of our other executive officers (the "Named
Executive Officers") whose compensation on an annualized basis is anticipated to
exceed $100,000 during fiscal 2005.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
RESTRICTED SECURITIES
NAME AND PRINCIPAL FISCAL ANNUAL STOCK UNDERLYING OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS (NO. OF SHARES) COMPENSATION
- -------- ---- ------ ----- ------------ ------ -------------- ------------
1. Mark Poulsen 2004 (1) $ 0 0 0 0 0 $
2003 (1) $ 0 0 0 0 0 $
2. Tony Head 2004 (1) $ 0 0 0 0 0 $
2004 (1) $ 0 0 0 0 0 $
3. Prins Ralston 2004 (1) $ 0 0 0 0 0 $
2004 (1) $ 0 0 0 0 0 $
4. Sandra Wendt 2004 (1) $ 0 0 0 0 0 $
2004 (1) $ 0 0 0 0 0 $
Compensation of Directors
Our directors will not receive compensation for services provided as a member of
our Board of Directors or any committee thereof, but directors may be reimbursed
for certain expenses incurrred in connection with attendance at Board and
committee meetings.
Executive Compensation
We presently have entered into the following employment agreements with our
management personnel to retain their services:
We entered into an employment agreement with Mark A. Poulsen to serve as our
President and Chief Executive Officer. Under the terms of the agreement, Mr.
Poulsen will be compensated at the annual rate of approximately $291,125 for
services. He will also be paid 5 percent of the value of each country or
geographic-area license sold. In addition, on December 1, 2004, the Board of
Directors awarded a bonus of approximately $388,250 to be paid to Mr. Poulsen
within 30 days after the listing of our common stock on the over-the-counter
bulletin board.
We entered into an employment agreement with Prins Ralston to serve as our
Senior Vice President and Chief Operating Officer. Under the terms of the
agreement, Mr. Ralston will be compensated at the annual rate of approximately
$132,000, plus benefits and bonus. In addition, Mr. Ralston will be granted
options to purchase 30,000 shares of our common stock under an option plan, when
and if established. We will also be obligated to pay a recruiting fee for the
placement of Mr. Ralston to Hudson Global Resources amounting to approximately
$21,100.
40
We entered into an employment agreement with Anthony F. Head to serve as our
Senior Vice President of Sales. Mr. Head is also our Director. Under the terms
of the agreement, Mr. Head will be compensated at the annual rate of
approximately $77,600, plus benefits and bonus. He will also be paid 5 percent
of the value of each country or geographic-area license sold.
We entered into an employment agreement with Sandra Wendt to serve as our Vice
President and Chief Financial Officer. Under the terms of the agreement, Ms.
Wendt will be compensated at the annual rate of approximately $42,700, plus
benefits and bonus.
STOCK OPTIONS
To date, we have not granted any stock options to our directors or officers.
Pursuant to an employment agreement, Prins Ralston is entitled to 30,000 shares
of our stock, which shares have not yet been issued. On July 25, 2004 we issued
2,000,000 options to purchase common shares to Fort Street Equity Inc. in
consideration for $10,000 or $0.005 per option. The options grant Fort Street
Equity Inc. the right to purchase 2,000,000 common shares of our stock at the
greater of the market price, as determined under the agreement, less a discount
of 40%, or $0.50 per share. The options expire on December 31, 2005.
We have not issued any stock options to any officers, directors or staff.
PRINCIPAL STOCKHOLDERS
To the knowledge of our directors and executive officers, the following are the
only persons beneficially owning, directly or indirectly, or exercising control
or direction over more than 5% of voting rights attached to the shares of our
common stock both prior to the Offering and after giving effect to the Offering
and the exercise of the options being registered in this Registration Statement:
Amount and Nature
Name and Address of Beneficial Percent of
of Beneficial Owner Ownership(1) Class (4)(5)
- -----------------------------------------------------------------------------
Mark A. Poulsen (1) 13,780,000 66.03%
10/27 Mayneview Street
Milton, Queensland, Australia
Anthony F. Head (2) 275,000 1.32%
18 Ti Tree Grove
Mornington, Victoria, Australia
Sandra Wendt 100,000 0.48%
30 Cambridge Crescent
Forest Lake, Queensland, Australia
Prins Ralston 0 0
10/27 Mayneview Street
Milton, Queensland, Australia
Fort Street Equity, Inc. (3) 1,126,500 5.40%
Box 866
George Town, Grand Cayman Islands
Executive Officers and 14,155,000 67.82%
Directors as a Group
(4 Persons)
(1) Includes 10,700,000 shares issued to Kamaneal Investments Pty Ltd as trustee
for Mark Poulsen Family Trust;1,540,000 issued to Mark Poulsen; 1,540,000 issued
to Karen Poulsen.
(2) Includes 25,000 shares held by Brenda Head, Anthony Head's wife.
41
(3) Mitchell Stough is the principal of Fort Street Equity, Inc. Fort Street
owns 914,000 shares and Kellie Stough, Mitchell's wife, owns 112,500 shares.
(4) Based on 20,870,000 shares of common stock issued and outstanding as of
March 7, 2005.
(5) Excludes 1,000,000 Series "A" Preferred Shares held by Mark A. Poulsen, each
preferred share having the right to 50 votes in annual or special meeting of
shareholders.
DILUTION
As of September 30, 2004, we had a pro forma net tangible book value of
approximately $215,709, or $0.01 per share of common stock outstanding, after
giving effect to the assumed exercise of 2,000,000 options held by Fort Street
Equity, Inc. to acquire a like number of shares of our common stock. Net
tangible book value equals our tangible net worth (total tangible assets less
total liabilities) divided by the number of shares of our common stock
outstanding. After giving effect to the sale by us of 3,000,000 shares of our
common stock in this Offering at the initial offering price of $1.50 per share,
after deducting the estimated Offering expenses (of which $53,100 of related
expenses have been paid prior to September 30, 2004), our pro forma net tangible
book value as of September 30, 2004, would have been approximately $4,415,709 or
$0.17 per share. This represents an immediate increase in pro forma net tangible
book value of $0.16 per share to current stockholders and an immediate dilution
of $1.33 or 88.7 % per share to new investors. The following table illustrates
the per share dilution:
42
The following table summarizes, immediately prior to the Offering, the
difference between existing stockholders and investors in the Offering with
respect to the number and percentage of shares of Common Stock purchased from
the Company, the amount and percentage of consideration paid and the average
price paid per share of Common Stock, before the deduction of Offering expenses:
Assumed initial public offering price per share(1) $ 1.50
Pro forma net tangible book value before the Offering $ 0.01
Increase attributable to new investors 0.16
---------
Pro forma net tangible book value after the Offering 0.17
---------
Dilution per share to new investors $ 1.33
=========
----------------------------------------------------------------
(1) Represents the initial public offering price per share of Common Stock,
before deducting Offering expenses payable by the Company.
The foregoing table reflects the exercise of 2,000,000 options held by Fort
Street Equity, Inc. to purchase a like number of shares of our common stock at
an assumed purchase price of $0.05 per share.
Shares Purchased Total Consideration
------------------------ ------------------------ Average Price
Number Percent Amount Percent Per Share
---------- ---------- ---------- ---------- -------------
Existing stockholders 22,870,000 88% $ 120,870 3% $ 0.01
New Investors 3,000,000 12% 4,500,000 97% $ 1.50
---------- ---------- ---------- ----------
Total 25,870,000 100% $4,620,870 100%
========== ========== ========== ==========
SELLING STOCKHOLDERS
Of the 5,870,000 of our common shares to be covered by this prospectus, a
maximum of 3,000,000 shares are being offered by us and the remaining 870,000 by
our Selling Security Holders and a further 2,000,000 shares are offered in
connection with the conversion of outstanding options. The following table sets
forth the name of each Selling Security Holder, the number of shares of common
stock beneficially owned by the Selling Security Holders as of March 7, 2005,
and the number of shares being offered by each Selling Security Holder.
43
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Name of Selling Stockholder Shares of Percent of Shares of Common Number of Percent of Shares
Common Stock Common Stock to be sold Shares owned after
Owned Prior to Shares in the Offering owned after Offering (3)
the Offering Owned Prior the Offering
to the
Offering (1)
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Junay Pty Ltd Trustee for (KL
Notaras Family Trust) (4) 95,000 * 95,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Mushroom Systems International 15000 * 15,000 0 0
Pty Ltd
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Dean Harrison Family Trust (5) 30000 * 30,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Jaroluin Pty Ltd 30000 * 30,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Leigh Troy 30000 * 30,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Kendal Robinson 15000 * 15,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Mark Hoey 120000 * 120,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
GL Ray Enterprises 15000 * 150,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Roan Lee 30000 * 30,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
The Credence Superannuation 60000 * 60,000 0 0
Fund (6)
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Vexa Superannuation Fund (7) 20000 * 20,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Boyana & Dragan Aralica 10000 * 10,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Heather Kraus 10000 * 10,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Wibcara Pty Ltd As Trustee For 10000 * 10,000 0 0
Kraus Superannuation Fund (8)
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Maria Corry 20000 * 20,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Clifford Henkel 20000 * 20,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Helen Hughes 40000 * 40,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Linda Wild 70000 * 70,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Ann Maree Wood 10000 * 10,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Walter Puawai McDermott 20000 * 20,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Zainon Binte Ismail 10000 * 10,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
James & Joan Stewart as
Trustees of the R Stewart Pty
Ltd Superannuation Fund (9) 40000 * 40,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Maxwell Spackman 10000 * 10,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Benjamin David Spackman 20000 * 20,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Lily Lee Lee Lee 20000 * 20,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Roslina Binte Mohamed Sa'ad 20000 * 20,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Robert E. & Valda J. Bradley 20000 * 20,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Donald Howell Wild 50,000 * 50,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Denise Linsley-Hayles 10000 * 10,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Wayne Jobson 40000 * 40,000 0 0
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Fort Street Equity, Inc. (2) 914,000 4.4% 2,000,000 914,000 3.53%
- --------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
* - Less than 1%
(1) Assumes all of the shares of common stock offered in this prospectus
are sold and no other shares of common stock are sold during the
offering period. The percentage of shares is based on 20,870,000
shares issued and outstanding as of March 7, 2005, 2005.
(2) Fort Street Equity, Inc. owns 2,000,000 options which may be converted
into 2,000,000 shares of our common stock. Up to 2,000,000 of such
options are being registered in this prospectus and are not included
in the amount of shares owned prior to the offering. Mitchell
Stough is the beneficial owner.
(3) Based on 25,870,000 shares issued and outstanding including the
2,000,000 options held by Fort Street Equity, Inc. and the 3,000,000
shares to be offered hereunder.
(4) The beneficial owners are John Kriedemann and Kathleen Notaras.
(5) The beneficial owner is Dean Harrison.
(6) The beneficial owners are Mark and Beverly Sullivan.
(7) The beneficial owners are Larisa Markiza Olszewaka and Nicole Louise
Lawrence.
(8) The beneficial owners are Peter and Heather Kraus.
(9) The beneficial owners are James and Joan Stewart.
Shares Eligible for Future Sale
As of March 7, 2005 there are no shares of common stock currently issued and
outstanding which are freely tradable without restrictions under the Securities
Act. In general, under Rule 144 as currently in effect, any of our affiliates
44
and any person (or persons whose sales are aggregated) who has beneficially
owned his or her restricted shares for at least one year, is entitled to sell in
the open market within any three-month period a number of shares of common stock
that does not exceed the greater of (i) 1% of our then outstanding shares of
common stock, or (ii) the average weekly trading volume in our common stock
during the four calendar weeks preceding such sale. Sales under Rule 144 also
are subject to certain limitations on manner of sale, notice requirements, and
the availability of current public information about us. Our non-affiliates, who
have held their restricted shares for two years are entitled to all their shares
under Rule 144 without regard to any of the above limitations, provided they
have not been affiliates for the three months preceding such sale.
Shares held by shareholders who were promoters or affiliates of the blank check
company even after a merger with us, may not be sold in reliance on Rule 144.
We are not quoted on the Over-the-Counter Bulletin Board. Following this
offering, no predictions can be made of the effect, if any, of future public
sales of restricted securities or the availability of restricted securities for
sale in the public market. Moreover, we cannot predict the number of shares of
our common stock that may be sold in the future pursuant to Rule 144 because
such sales will depend on, among other factors, the market price of our common
stock and the individual circumstances of the holders thereof. The availability
for sale of substantial amounts of our common stock under rule 144 could
adversely affect prevailing market prices for our securities.
PLAN OF DISTRIBUTION
The offering of a maximum of 3,000,000 of our common shares is being made on a
self- underwritten basis by us through our officers and directors who will not
be paid any commission or other compensation and without the use of securities
brokers.
Currently, we have not established an underwriting arrangement for the sale of
these shares. Our officers and directors will be the only persons that will
conduct the direct public offering. They intend to offer and sell the shares in
the primary offering through their business and personal contacts. There is a
possibility that no proceeds will be raised or that if any proceeds are raised,
they may not be sufficient to cover the cost of the offering.
Our officers and directors are the only persons that plan to sell our shares of
common stock. None of them are registered broker-dealers. They intend to claim
reliance on Exchange Act Rule 3a4-1 which provides an exemption from the
broker-dealer registration requirements of the Exchange Act for persons
associated with an issuer. Specifically, each of them (i) at the time of sale,
will not be subject to a statutory disqualification as that term is defined in
section 3(a)39 of the Securities Act; (ii) will not be compensated in connection
with his participation in the offering by payment of commissions or other
remuneration; at the time of participation in the sale of shares, he will not be
an associated person of a broker or a dealer; (iv) pursuant to Rule
3a4-1(a)(4)(ii), each of them will meet all of the following requirements: at
45
the end of the offering, they will perform substantial duties for us, other than
in connection with transactions in securities; each of them was not a broker or
dealer, or an associated person of a broker or dealer within the last 12 months;
and each of them has not participated in, or does not intend to participate in,
selling an offering of securities for any issuer more than once every 12 months
other than in reliance on paragraph(a)(4)(i) or (iii) of Rule 3a4-1.
Our Selling Security Holders may offer their shares during our offering. The
Selling Security Holders may sell some or all of their shares immediately after
they are registered. There is no restriction on the Selling Security Holders to
address the negative effect on the price of your shares due to the concurrent
primary and secondary offering. In the event that the Selling Security Holders
sell some or all of their shares, which could occur while we are still selling
shares directly to investors in this offering, trading prices for the shares
could fall below the offering price of the shares. In such event, we may be
unable to sell all of the shares to investors, which would negatively impact the
offering. As a result, our planned operations may suffer from inadequate working
capital.
The selling option holder shares may be sold or distributed from time to time by
the selling optionholder or by pledges, donees or transferees of, or successors
in interest to, the selling optionholder, directly to one or more purchasers
(including pledges) or through brokers, dealers or underwriters who may act
solely as agents or may acquire shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices, which may be changed. The
distribution of the shares may be effected in one or more of the following
methods:
o ordinary brokers transactions, which may include long or short sales,
o transactions involving cross or block trades on any securities or
market where our common stock is trading,
o purchases by brokers, dealers or underwriters as principal and resale
by such purchasers for their own accounts pursuant to this prospectus,
"at the market" to or through market makers or into an existing market
for the common stock,
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents,
o through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or
o any combination of the foregoing, or by any other legally available
means.
In addition, the selling stockholders may enter into hedging transactions with
broker-dealers who may engage in short sales, if short sales were permitted, of
shares in the course of hedging the positions they assume with the selling
stockholders. The selling stockholders may also enter into option or other
transactions with broker-dealers that require the delivery by such
broker-dealers of the shares, which shares may be resold thereafter pursuant to
this prospectus.
46
Brokers, dealers, underwriters or agents participating in the distribution of
the shares may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders and/or the purchasers of shares for
whom such broker-dealers may act as agent or to whom they may sell as principal,
or both (which compensation as to a particular broker-dealer may be in excess of
customary commissions). The selling stockholders and any broker-dealers acting
in connection with the sale of the shares hereunder may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act of 1933,
and any commissions received by them and any profit realized by them on the
resale of shares as principals may be deemed underwriting compensation under the
Securities Act of 1933. Neither the selling stockholders nor we can presently
estimate the amount of such compensation. We know of no existing arrangements
between the selling stockholders and any other stockholder, broker, dealer,
underwriter or agent relating to the sale or distribution of the shares.
We will not receive any proceeds from the sale of the shares of the Selling
Security Holders pursuant to this prospectus. We have agreed to bear the
expenses of the registration of the shares, including legal and accounting fees,
and such expenses are estimated to be approximately $300,000.
We have informed the Selling Security Holders that certain anti-manipulative
rules contained in Regulation M under the Securities Exchange Act of 1934 may
apply to their sales in the market and have furnished the selling stockholders
with a copy of such rules and have informed them of the need for delivery of
copies of this prospectus. The selling stockholders may also use Rule 144 under
the Securities Act of 1933 to sell the shares if they meet the criteria and
conform to the requirements of such rule.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 14, 2004, we acquired all of the issued and outstanding shares of
Subsidiary from Mark A. Poulsen and Mark Poulsen & Associates Pty Ltd.in
exchange for 15,000,000 shares of our common stock and 1,000,000 shares of our
restricted Series "A" preferred shares which were issued to Mark A. Poulsen and
to Mark Pouslen & Associates Pty Ltd. Mark A. Poulsen subsequently transferred
the following common shares:
Sandra Wendt (employee) 100,000
Brenda Head (employee) 25,000
Jim Cooper (employee) 25,000
Wayne Hoskin (former director) 15,000
Tony Head & Associates Pty Ltd. (director) 250,000
Andrew Flannigan (former employee) 30,000
Evan Kalaitzis (independent contractor) 10,000
Total 455,000
47
In addition, Mark A.Poulsen transferred shares to the following persons and
corporations:
------------------------------------ -----------------------------
Donald Howell Wild 40,000
------------------------------------ -----------------------------
LR Global Marketing Pty. Ltd. 500,000
------------------------------------ -----------------------------
Kellie Stough 112,500
------------------------------------ -----------------------------
Louise Murray 112,500
------------------------------------ -----------------------------
------------------------------------ -----------------------------
Total
------------------------------------ -----------------------------
On August 25, 2004, Fit For Business (Australia) Pty Limited entered into a
License Agreement (the "Agreement") with LR Global Marketing Pty Ltd. ("LR
Global"), an Australian Corporation acting as trustee for Fit For Business
Australia/New Zealand Trust (the "trust"). The beneficiaries of the trust are
Laraine Richardson and Dianne Waghorne. The beneficiaries are not related to the
Company, or to Australia, or to its officers and directors except as described
herein. Under the terms of the Agreement, LR Global has been granted a
non-assignable license to represent Fit For Business (Australia) Pty Limited
within Australia for a term of ten (10) years in consideration for the payment
of a licensing fee in the amount of USD $500,000. Pursuant to the terms of the
Agreement, LR Global may use the Company's logo and other materials for the
purpose of generating new customers for the Company and for recruiting Account
Executives and Customer Service Representatives. Subsequent to the share
exchange transaction of Sept 14, 2004, Mark A. Poulsen transferred 500,000
common shares to LR Global. To date, LR Global has paid USD $121,968 and we have
agreed to extend until May 31, 2005 the deadline for the payment of the balance
of the amount owing to us.
Mitchell Stough is the principal of Fort Street Equity Inc. ("Fort Street").
Fort Street entered into an option agreement with us and has the option to
purchase up to 2,000,000 shares of our common stock. In addition, Kellie Stough,
the spouse of Mitchell Stough, holds 112,500 shares of our common stock. The
shares were transferred to Kellie Stough by Mark Poulsen in consideration for
consulting services by Mitchell Stough provided to Subsidiary. In addition, Fort
Street Equity Inc. holds 914,000 common shares, and Mitchell Stough holds a
further 750,000 shares.
Mark A. Poulsen also transferred 40,000 shares to Mr. Donald Wild. Mr. Wild has
assisted Subsidiary in raising capital and has also purchased convertible
promissory notes ($10,000).
We presently lease office space from Mark Poulsen & Associates Pty Ltd. Mr.
Poulsen is one of our officers and directors.
DESCRIPTION OF SECURITIES
The following is a summary description of our capital stock and certain
provisions of our certificate of incorporation and by-laws, copies of which have
been incorporated by reference as exhibits to the registration statement of
which this prospectus forms a part. The following discussion is qualified in its
entirety by reference to such exhibits.
48
Common Stock
We are presently authorized to issue 100,000,000 shares of $.001 par value
common stock. At March 7, 2005, we had 20,870,000 shares of common stock
outstanding. The holders of our common stock are entitled to equal dividends and
distributions when, as, and if declared by the Board of Directors from funds
legally available therefore. No holder of any shares of common stock has a
preemptive right to subscribe for any of our securities, nor are any common
shares subject to redemption or convertible into other of our securities, except
for outstanding options described above. Upon liquidation, dissolution or
winding up, and after payment of creditors and preferred stockholders, if any,
the assets will be divided pro-rata on a share-for-share basis among the holders
of the shares of common stock. All shares of common stock now outstanding are
fully paid, validly issued and non- assessable. Each share of common stock is
entitled to one vote with respect to the election of any director or any other
matter upon which shareholders are required or permitted to vote. Holders of our
common stock do not have cumulative voting rights, so the holders of more than
50% of the combined shares voting for the election of directors may elect all of
the directors if they choose to do so, and, in that event, the holders of the
remaining shares will not be able to elect any members to the Board of
Directors.
Preferred Stock
We are authorized to issue up to 10,000,000 shares of $.001 par value preferred
stock. As at March 7, 2005, we have issued 1,000,000 preferred shares to Mark
Poulsen. Each of the preferred shares carry no dividend rights, no liquidation
rights, no pre-emptive rights, no conversion rights and no redemption rights but
carry 50 votes in general and special meetings. The remaining 9,000,000
preferred shares have not been issued. Under our Certificate of Incorporation,
the Board of Directors will have the power, without further action by the
holders of the common stock, to designate the relative rights and preferences of
the preferred stock, and to issue the preferred stock in one or more series as
designated by the Board of Directors. The designation of rights and preferences
could include preferences as to liquidation, redemption and conversion rights,
voting rights, dividends or other preferences, any of which may be dilutive of
the interest of the holders of the common stock or the preferred stock of any
other series. The issuance of preferred stock may have the effect of delaying or
preventing a change in control of our company without further shareholder action
and may adversely affect the rights and powers, including voting rights, of the
holders of common stock. In certain circumstances, the issuance of preferred
stock could depress the market price of the common stock.
Options
On July 25, 2004, we issued a total of 2,000,000 options to Fort Street Equity,
Inc., which options we are registering under this prospectus. Each option
provides the option holder the right to purchase one share of our common stock
at the greater of:
49
(1) a 40% discount from the average closing bid price of our common stock
on a public exchange during the 10 trading days immediately prior to the
exercise of the option or
(2) $0.50 per share. The options can be exercised at any time until
December 31, 2005. To date, no options have been exercised.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
During the two most recent fiscal years and the three month interim period
subsequent to September 30, 2004, there have been no disagreements with Davis
Accounting Group P.C., our independent auditor, on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
TRANSFER AGENT
The Transfer Agent and Registrar for our common stock is NW Securities Transfer
Agent and Registrar Inc., 14780 SW, Osprey Drive, Suite 240, Beaverton Oregon,
97009.
EXPERTS
The financial statements included in this prospectus have been audited by Davis
Accounting Group, P.C., independent auditors, as stated in their report
appearing herein and elsewhere in the registration statement (which report
expresses an unqualified opinion and includes an explanatory paragraph referring
to our recurring losses from operations which raise substantial doubt about our
ability to continue as a going concern), and have been so included in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
LEGAL MATTERS
The validity of our common shares offered will be passed upon for us by Anslow &
Jaclin, LLP, Manalapan, New Jersey 07726.
50
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
Financial Statements-
Balance Sheet as of December 31, 2004 (Unaudited).........................F-2
Statements of Operations and Comprehensive (Loss) for the Three-month
Periods Ended December 31, 2004, and 2003, and Cumulative from
Inception (Unaudited) ..................................................F-3
Statements of Cash Flows for the Three-month Periods Ended December 31,
2004, and 2003, and Cumulative from Inception (Unaudited) ..............F-4
Notes to Financial Statements for the Periods
Ended December 31, 2004, and 2003 (Unaudited)...........................F-6
F-1
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET (NOTE 2)
AS OF DECEMBER 31, 2004
(Unaudited)
ASSETS
------
2004
---------
Current Assets:
Cash and cash equivalent $ 68,528
Accounts receivable-
License fee 382,250
Related party - Mark Poulsen & Associates Pty. Ltd. 1,605
Other 730
Inventory 1,923
---------
Total current assets 455,036
---------
Property and Equipment:
Office and computer equipment 1,856
Web site development costs 5,071
---------
6,927
Less - Accumulated depreciation and amortization (4,427)
---------
2,500
Software development in progress 21,520
---------
Net property and equipment 24,020
---------
Other Assets:
Trademark 234
Less - Accumulated amortization (123)
Deferred offering costs 53,100
---------
Total other assets 53,211
---------
Total Assets $ 532,267
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable - trade $ 34,161
Accrued liabilities 30,130
Loans from related parties 1,208
Deferred revenue - License fee 438,612
---------
Total current liabilities 504,111
---------
Total liabilities 504,111
---------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, par value $.001 per share; 10,000,000 shares
authorized; 1,000,000 shares issued and outstanding 1,000
Common stock, par value $.001, 100,000,000 shares
authorized; 20,870,000 shares issued and outstanding 20,870
Additional paid-in capital 603,327
Accumulated other comprehensive (loss) (25,276)
(Deficit) accumulated during the development stage (571,765)
---------
Total stockholders' equity 28,156
---------
Total Liabilities and Stockholders' Equity $ 532,267
=========
The accompanying notes to financial statements
are an integral part of this balance sheet
F-2
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) (NOTE 2)
FOR THE THREE-MONTH PERIODS ENDED
DECEMBER 31, 2004, AND 2003, AND CUMULATIVE FROM INCEPTION
(DECEMBER 14, 1998) THROUGH DECEMBER 31, 2004
Three Months Ended
December 31, Cumulative
---------------------------- From
2004 2003 Inception
------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
Revenues:
Revenues from sales and license fees $ 15,820 $ -- $ 25,996
------------ ------------ ------------
Total revenues 15,820 -- 25,996
------------ ------------ ------------
Cost of Goods Sold:
Cost of goods sold 2,266 -- 6,726
------------ ------------ ------------
Gross Profit (Loss) 13,554 -- 19,270
------------ ------------ ------------
Expenses:
General and administrative 99,304 3,029 578,659
------------ ------------ ------------
Total general and administrative expenses 99,304 3,029 578,659
------------ ------------ ------------
(Loss) from Operations (85,750) (3,029) (559,389)
------------ ------------ ------------
Other Income (Expense) 322 (1,251) (12,376)
Provision for income taxes -- -- --
------------ ------------ ------------
Net (Loss) $ (85,428) $ (4,280) $ (571,765)
------------ ------------ ------------
Comprehensive (Loss):
Australian currency translation (8,306) (39,987) (25,276)
------------ ------------ ------------
Total Comprehensive (Loss) $ (93,734) $ (44,267) $ (597,041)
============ ============ ============
(Loss) Per Common Share:
(Loss) per common share - Basic and Diluted $ (0.004) $ (52.840)
============ ============
Weighted Average Number of Common Shares
Outstanding - Basic and Diluted 20,870,000 81
============ ============
The accompanying notes to financial statements
are an integral part of this statement.
F-3
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (NOTE 2)
FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 2004, AND 2003,
AND CUMULATIVE FROM INCEPTION (DECEMBER 14, 1998)
THROUGH DECEMBER 31, 2004
Three Months Ended
December 31, Cumulative
-------------------------- From
2004 2003 Inception
----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
Operating Activities:
Net (loss) $ (85,428) $ (4,280) $ (571,765)
Adjustments to reconcile net (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 863 593 4,550
Write-off of deferred offering costs -- -- 77,000
Employee compensation paid by issued shares -- 31,300 220,000
Consulting services paid by issued shares -- -- 20,000
Interest on promissory notes converted to equity -- 1,309 12,646
Changes in net assets and liabilities-
Accounts receivable 47,320 (163) 117,020
Inventory 940 -- (1,923)
Accounts payable - trade 31,724 -- 34,161
Accrued liabilities and other (11,166) -- (17,824)
Deferred revenue (11,363) -- (15,933)
----------- ----------- -----------
Net Cash Provided by (Used in) Operating Activities (27,110) 28,759 (122,068)
----------- ----------- -----------
Investing Activities:
Purchases of computer and office equipment (1,642) -- (1,856)
Payment for Australian trademark -- -- (234)
Expenditures for web site development costs (412) (468) (5,071)
Expenditures for software development in progress (15,004) -- (21,520)
----------- ----------- -----------
Net Cash (Used in) Investing Activities (17,058) (468) (28,681)
----------- ----------- -----------
Financing Activities:
Proceeds from the issuance of convertible notes -- 105,000 365,000
Checks in excess of bank balance -- (420) --
Stock options issued for cash -- -- 10,000
Net (payments to) loans from related parties (59,992) (12,808) (397)
Loan from former director -- 12,742 --
Payment of deferred offering costs -- (100,000) (130,100)
Proceeds from the issuance of capital stock -- -- 50
----------- ----------- -----------
Net Cash Provided by (Used in) Financing Activities (59,992) 4,514 244,553
----------- ----------- -----------
Effect of Exchange Rate Changes on Cash (2,231) (32,799) (25,276)
----------- ----------- -----------
Net Increase (Decrease) in Cash (106,391) 6 68,528
Cash - Beginning of Period 174,919 55 --
----------- ----------- -----------
Cash - End of Period $ 68,528 $ 61 $ 68,528
=========== =========== ===========
The accompanying notes to financial statements
are an integral part of this statement.
F-4
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (NOTE 2)
FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 2004, AND 2003,
AND CUMULATIVE FROM INCEPTION (DECEMBER 14, 1998)
THROUGH DECEMBER 31, 2004
(Unaudited)
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ -- $ -- $ --
=========== =========== ===========
Income taxes $ -- $ -- $ --
=========== =========== ===========
Supplemental Information of Noncash Investing and Financing Activities:
On September 14, 2004, the Company entered into an Exchange Agreement with
FFB Australia whereby FFBI acquired all of the issued and outstanding
capital stock of FFB Australia (81 shares) in exchange for 15,000,000
shares of common stock and 1,000,000 shares of preferred stock of the
Company. As a result of the Exchange Agreement, the stockholders of FFB
Australia control FFBI, and FFB Australia has been deemed to have effected
a reverse merger for financial reporting purposes. The deemed reverse
merger has been recorded as a recapitalization of the Company, with the net
assets of FFBI and FFB Australia brought forward at their historical bases.
On Sepmber 20, 2004, the Company issued 420,000 shares of common stock with
value of $140,000 in connection with the conversion of certain Notes and
accrued interest.
On September 29, 2004, the Company issued 450,000 shares of common stock
with a value of $225,000 in connection with the conversion of the remainder
of the Notes and accrued interest.
On September 14, 2004, accrued employee compensation of $220,000 was
satisfied with the issuance 440,000 shares of common stock provided
personnally by an officer and director of the Company.
On September 14, 2004, an advance to the Company of $7,500 by a former
director was satisfied with the issuance of 15,000 shares of common stock
provided personally by an officer and director of the Company.
On September 14, 2004, accrued consulting services of $20,000 was satisfied
with the issuance of 40,000 shares of common stock provided personally by
an officer and director of the Company.
The accompanying notes to financial statements
are an integral part of this statement.
F-5
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
(1) Summary of Significant Accounting Policies
Basis of Presentation and Organization
Fit For Business International, Inc. ("FFBI" or the "Company") is a Nevada
corporation in the development stage of providing products and services for: (i)
corporate wellness programs which address business productivity, stress and
absenteeism issues; (ii) living well programs directed primarily, but not
exclusively, to individuals over 45 years of age; and, (iii) nutritional
supplements manufactured and supplied by Herbalife International Inc.
("Herbalife"). The accompanying financial statements of FFBI were prepared from
the accounts of the Company under the accrual basis of accounting in United
States dollars. In addition, the accompanying financial statements reflect the
completion of a deemed reverse merger between FFBI and Fit For Business
(Australia) Pty Limited ("FFB Australia"), which was effected on September 14,
2004.
Prior to the completion of the deemed reverse merger, FFBI was a dormant
corporation with no assets or operations (essentially since its organization on
May 30, 2001, and incorporation on July 31, 2001). The Company was originally
incorporated under the name of Elli Tsab, Inc. On April 7, 2004, the name of the
Company was changed to Patient Data Corporation. On January 13, 2005, the name
of the Company was again changed to Fit For Business International, Inc. in
order to better reflect the current business plan.
FFB Australia was organized as an Australian private company on December 14,
1998, and subsequently began certain marketing studies and corporate awareness
programs to obtain customers for its products and services. In October 2003, FFB
Australia initiated a capital formation activity through the private placement
of certain convertible promissory notes which provided, through September 14,
2004, proceeds of $365,000. Subsequent to the completion of the deemed reverse
merger, the liability associated with the convertible promissory notes was
assumed by the Company. Thereafter, all of the promissory notes were converted
into shares of common stock of FFBI.
In addition, in November 2003, FFB Australia commenced a capital formation
activity to effect a deemed reverse merger with a corporation validly organized
in the United States for the purpose of completing a Registration Statement on
Form SB-2 with the Securities and Exchange Commission ("SEC"), and raising
capital from the issuance of common stock in the public markets of up to $4.5
million. The initial capital formation activity through a deemed reverse merger
and the issuance of common stock was unsuccessful. Subsequently, FFB Australia
completed a deemed reverse merger with the Company, and FFBI is currently
undertaking a second capital formation activity of the same type.
Prior to September 14, 2004, FFB Australia, aside from the capital formation and
marketing activities described above, incurred other development stage operating
costs and expenses related to its organization as an entity, receipt of a
trademark in Australia for the name and related logo of Fit For Business,
F-6
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
formation of a management team, accounting and tax preparation fees, consulting
fees, travel, and other general and administrative expenses. For additional
information relating to the development stage activities of the Company, see
Note 2.
Given that FFB Australia is considered to have acquired FFBI by a deemed reverse
merger through an Exchange Agreement (see Note 4), and its stockholders
currently have voting control of FFBI, the accompanying financial statements and
related disclosures in the notes to financial statements present the financial
position as of December 31, 2004, and the operations for the three-month periods
ended December 31, 2004, and 2003, and from the period from the inception date
(December 14, 1998) through December 31, 2004, of FFB Australia under the name
of FFBI. The deemed reverse merger has been recorded as a recapitalization of
the Company, with the net assets of FFB Australia and FFBI brought forward at
their historical bases. The costs associated with the reverse merger have been
expensed as incurred.
Cash and Cash Equivalents
For purposes of reporting within the statement of cash flows, the Company
considers all cash on hand, cash accounts not subject to withdrawal restrictions
or penalties, and all highly liquid debt instruments purchased with a maturity
of three months or less to be cash and cash equivalents.
Revenue Recognition
The Company is in the development stage and has yet to realize significant
revenues from planned operations. However, the Company is in the business of
providing products and services for corporate and living well programs, as well
as from the sale of nutritional products manufactured and supplied by Herbalife.
After the commencement of planned operations, revenues will be realized from
such products and services at the time of completion of each transaction or
related contract service. Revenues will also be realized from licensing
activities related to various countries and geographic regions, which entitle
licensees to recruit representatives for the Company, and market and promote its
products and services over the term and under the conditions of each specific
license.
Internal Web Site Development Costs
Under Emerging Issues Taskforce Statement 00-2, Accounting for Web Site
Development Costs ("EITF 00-2"), costs and expenses incurred during the planning
and operating stages of the Company's web site are expensed as incurred. Under
EITF 00-2, costs incurred in the web site application and infrastructure
development stages are capitalized by the Company and amortized to expense over
the web site's estimated useful life or period of benefit. As of December 31 30,
2004, FFBI had capitalized $5,071 related to its web site development.
F-7
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
Costs of Computer Software Developed or Obtained for Internal Use
Under Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use ("SOP 98-1"), the Company capitalizes
external direct costs of materials and services consumed in developing or
obtained internal-use computer software; payroll and payroll-related costs for
employees who are directly associated with and who devote time to the
internal-use computer software project; and, interest costs related to loans
incurred for the development of internal-use software. As of December 31, 2004,
the Company had capitalized $21,520 for projects related to the development of
internal-use software.
Costs of Computer Software to be Sold or Otherwise Marketed
Under Statement of Financial Accounting Standards No. 86, Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed ("SFAS
86"), the Company capitalizes costs associated with the development of certain
training software products held for sale when technological feasibility is
established. Capitalized computer software costs of products held for sale are
amortized over the useful life of the products from the software release date.
As of December 31, 2004, the Company had not undertaken any projects related to
the development of software products held for sale or to be otherwise marketed.
Trademark
The Company obtained a trademark from the government of Australia effective
October 15, 1999. The trademark covers the name "Fit For Business" and the logo
of the Company. The cost of obtaining the trademark has been capitalized by the
Company, and is being amortized over a period of ten years.
Advertising Costs
Advertising costs are charged to operations when incurred, except for television
or magazine advertisements, which are charged to expense when the advertising
first takes place. For the periods ended December 31, 2004, and 2003,
advertising expense amounted to $15,110 and $0, respectively.
Property and Equipment
The components of property and equipment are stated at cost. Property and
equipment costs are depreciated or amortized for financial reporting purposes
over the useful lives of the related assets by the straight-line method. Useful
lives utilized by the Company for calculating depreciation or amortization are
as follows:
F-8
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
Computer and office equipment 5 years
Internal web site development costs 3 years
Upon disposition of an asset, its cost and related accumulated depreciation or
amortization are removed from the accounts, and any resulting gain or loss is
recognized.
Impairment of Long-Lived Assets
Under Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of
("SFAS 121"), the Company evaluates the recoverability of long-lived assets and
the related estimated remaining lives at each balance sheet date. The Company
records an impairment or change in useful life whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable or the
useful life has changed.
Loss Per Common Share
Basic loss per share is computed by dividing the net loss attributable to the
common stockholders by the weighted average number of shares of common stock
outstanding during the period. Fully diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive.
Deferred Offering Costs
The Company defers as other assets the direct incremental costs of raising
capital until such time as the offering is completed. At the time of the
completion of the offering, the costs are charged against the capital raised.
Should the offering be terminated, deferred offering costs are charged to
operations during the period in which the offering is terminated (see Note 4).
Comprehensive Income (Loss)
The Company presents comprehensive income (loss) in accordance with Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
130"). SFAS 130 states that all items that are required to be recognized under
accounting standards as components of comprehensive income (loss) be reported in
the financial statements. For the periods ended December 31, 2004, and 2003, the
only components of comprehensive income (loss) were the net (loss) for the
periods, and the foreign currency translation adjustments.
F-9
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
Income Taxes
The Company accounts for income taxes pursuant to SFAS No. 109, Accounting for
Income Taxes ("SFAS 109"). Under SFAS 109, deferred tax assets and liabilities
are determined based on temporary differences between the bases of certain
assets and liabilities for income tax and financial reporting purposes. The
deferred tax assets and liabilities are classified according to the financial
statement classification of the assets and liabilities generating the
differences.
The Company maintains a valuation allowance with respect to deferred tax assets.
The Company establishes a valuation allowance based upon potential likelihood of
realizing the deferred tax asset and taking into consideration the Company's
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the Federal tax laws.
Changes in circumstances, such as the Company generating taxable income, could
cause a change in judgment about the realizability of the related deferred tax
asset. Any change in the valuation allowance will be included in income in the
year of the change in estimate.
Foreign Currency Translation
The Company accounts for foreign currency translation pursuant to SFAS No. 52,
Foreign Currency Translation ("SFAS 52"). The Company's functional currency is
the Australian dollar. All assets and liabilities are translated into United
States dollars using the current exchange rate at the end of each fiscal year.
Revenues and expenses are translated using the average exchange rates prevailing
throughout the year. Translation adjustments are included in other comprehensive
income (loss) for the period. Certain transactions of the Company are
denominated in United States dollars. Translation gains or losses related to
such transactions are recognized for each reporting period in the related
statement of operations and comprehensive income (loss).
Fair Value of Financial Instruments
The Company estimates the fair value of financial instruments using the
available market information and valuation methods. Considerable judgment is
required in estimating fair value. Accordingly, the estimates of fair value may
not be indicative of the amounts the Company could realize in a current market
exchange. As of December 31, 2004, the Company did not have any financial
instruments requiring the estimate of fair value.
F-10
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
Stock-Based Compensation
The Company uses the fair value method to account for non-employee stock-based
compensation in accordance with SFAS No. 123, Accounting for Stock-Based
Compensation, and FASB Emerging Issues Task Force, or EITF, Issue No. 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services. Under the fair
value method, all transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the
fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable.
Concentrations of Risk
The Company has adopted SFAS No. 105, Disclosure of Information About Financial
Instruments with Off-Balance Sheet Risk and Financial Instruments with
Concentration of Credit Risk ("SFAS 105"). Under SFAS 105, the Company is
required to disclose any significant off-balance sheet risks and credit risk
concentrations.
As of December 31, 2004, the Company had a material off-balance sheet risk with
regards to its dependence upon Herbalife as its sole source of supply for the
purchase of nutritional supplements related to its planned wellness programs.
Fiscal Year End of the Company
The fiscal year end of the Company is June 30 of each year.
Estimates
The financial statements are prepared on the basis of accounting principles
generally accepted in the United States. The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of December 31, 2004, and expenses for the periods ended December
31, 2004, and 2003. Actual results could differ from those estimates made by
management.
(2) Development Stage Activities and Going Concern
The Company is in the development stage of providing products and services for
corporate business wellness programs; living well programs directed primarily,
but not exclusively, to individuals over 45 years of age; and, nutritional
supplements manufactured and supplied by Herbalife. As of December 31, 2004, and
subsequent thereto, FFBI had completed organization and reverse merger
transactions, initial marketing and corporate awareness programs designed to
F-11
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
obtain customers for its products and services, the receipt of a trademark in
Australia for the name "Fit For Business", formation of a management team, and
other activities related to capital formation and initial operations. Management
of the Company is pursuing various sources of equity financing, and plans to
raise approximately $4.5 million through a best efforts self-underwritten public
offering of its common stock. The public offering and sale of common stock by
officers and directors of the Company will be conducted subsequent to the filing
and approval of a Registration Statement on Form SB-2 with the SEC. The proceeds
from the public offering will be used by the Company for the development and
production of multi-media training programs, marketing and promotional
literature and programs, web site enhancement, purchase of inventory, customer
call center and computer hardware and software programs to be used to aid the
Company's customer service representatives, and working capital required to hire
additional staff and provide for an expected increase in operations.
While management of the Company believes that the Company will be successful in
its capital formation and operating activities, there can be no assurance that
the Company will be able to raise $4.5 million in equity capital through its
planned filing with the SEC and related activities, or be successful in the sale
of its products and services that will generate sufficient revenues to sustain
the operations of the Company.
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States, which contemplate
continuation of the Company as a going concern. The Company has incurred
operating losses since inception, and the working capital of the Company is
insufficient to meet its planned business objectives. These and other factors
raise substantial doubt about the Company's ability to continue as a going
concern. The accompanying financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
(3) Convertible Debt
In November 2003, FFBI began a capital formation activity through the private
placement of up to 200 unsecured convertible promissory notes (the "Note" or
"Notes"). Under the terms of the private placement subscription agreement, the
minimum unit participation was one unit per Note valued at $5,000. Multiple
units could be acquired under the terms of a single Note. The Notes issued for
the units stated a maturity date of November 30, 2004, and provided for an
interest rate of ten percent (10%) per annum, payable upon redemption. None of
the Notes were issued to officers, directors, or employees of FFBI.
The Notes were convertible into 10,000 shares of common stock per unit at any
time prior to maturity at the option of the note holder, or, if called by FFBI,
then automatically in the event of a public offering of shares. No value was
associated with the conversion feature of the Notes. FFBI structured an
F-12
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
incentive program with the first eleven subscribers to the private placement for
the Notes, and provided an additional 1/2 unit of value for each unit
subscribed. As such, as of September 14, 2004, FFBI had received and recorded
proceeds of $365,000 under the private placement in exchange for the Notes with
87 units for the calculation of conversion into common stock (870,000 shares of
common stock), and accrued interest in the amount of $12,646. The liability for
the Notes was assumed by the Company as a result of the Exchange Agreement.
On September 20, 2004, the Company, pursuant to a planned public offering of its
common stock, called and converted Notes with a unit value of 42 units into
420,000 shares of common stock. The transaction was valued at $0.33 per share of
common stock for a total of $140,000. Further, on September 29, 2004, the
remaining Notes with a unit value of 45 units were called and converted by the
Company into 450,000 shares of common stock. The transaction was valued at $0.50
per share of common stock for a total of $225,000. The value of the conversion
transactions in excess of the par value of the common stock issued, including
accrued interest, has been presented as additional paid-in capital in the
accompanying statement of stockholders' equity for the period ended December 31,
2004.
(4) Common Stock Transactions and Capital Formation
Issuance of Common Stock
On May 30, 2001, the Company issued 5,000,000 shares of its common stock to
former officers and directors of the Company for services rendered. The value of
the services rendered was $5,000.
Stock Option Agreement
On July 25, 2004, the Company issued 2,000,000 options to Fort Street Equity,
Inc. (see below) to purchase the same number of shares of its common stock for
$10,000 in cash. The option period is through December 31, 2005. The exercise
price of the options is the higher of $0.50 per share or the average trading
price of the Company's common stock over the preceding ten business days prior
to exercise of the options, less a discount of 40 percent.
Stock Exchange Agreement
On September 14, 2004, the Company entered into a Share Exchange Agreement (the
"Exchange Agreement") with FFB Australia, whereby FFBI acquired all of the
issued and outstanding capital stock of FFB Australia (81 shares) in exchange
for 15,000,000 shares of common stock and 1,000,000 shares of preferred stock of
the Company. Both the common stock and preferred stock of FFBI have a par value
of $.001. The shares of preferred stock are non-participating, but each share is
entitled to fifty (50) votes in a general meeting of the stockholders. As a
F-13
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
result of the Exchange Agreement, the stockholders of FFB Australia control
FFBI, and FFB Australia has been deemed to have effected a reverse merger for
financial reporting purposes as of the date of the Exchange Agreement. The
deemed reverse merger has been recorded as a recapitalization of the Company,
with the net assets of FFBI and FFB Australia brought forward at their
historical bases.
Conversion of Notes
On September 20, 2004, the Company issued 420,000 shares of its common stock
with a value of $140,000 in connection with the conversion of certain Notes and
accrued interest (see Note 3).
On September 29, 2004, the Company issued 450,000 shares of its common stock
with a value of $225,000 in connection with the conversion of the remainder of
the Notes and accrued interest (see Note 3).
Other Transactions
From the common stock issued to Mark A. Poulsen, President and Chief Executive
Officer of the Company, under the Exchange Agreement, L.R. Global received
500,000 shares of common stock (see Note 8). Mr. Poulsen also issued shares of
common stock that he received from the Exchange Agreement to satisfy the
liabilities of the Company assumed by FFBI related to the compensation of six
individuals (see Note 9). FFBI recognized the satisfaction of such liabilities
by Mr. Poulsen as additional paid-in capital.
The Company also owed Wayne Hoskin, a former director of the Company, the amount
of $7,500 as of September 14, 2004. The obligation resulted from a loan made to
the Company. Mr. Hoskin agreed to accept 15,000 shares of common stock of FFBI
in full satisfaction of this obligation. From the common stock issued to Mark A.
Poulsen, President and Chief Executive Officer of the Company, under the
Exchange Agreement, Mr. Hoskin received 15,000 shares of common stock valued at
$7,500. FFBI recognized the satisfaction of this liability by Mr. Poulsen as
additional paid-in capital.
The Company also owed Donald Howell Wilde, a former note holder and current
stockholder of the Company, the amount of $20,000 for services rendered related
to the private placement of Notes (see Note 3). From the common stock issued to
Mark A. Poulsen, President and Chief Executive Officer of the Company, under the
Exchange Agreement, on September 14, 2004, Mr. Wilde received 40,000 shares of
common stock valued at $20,000. FFBI recognized the satisfaction of this
liability by Mr. Poulsen as additional paid-in capital.
F-14
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
Capital Formation Activity
On November 10, 2003, FFBI entered into an agreement with Fort Street Equity,
Inc. ("Fort Street"), a Cayman Islands company, whereby Fort Street would assist
FFBI with the following: (i) the identification of a corporation validly
organized in the United States with which the Company could realize a deemed
reverse merger; and (ii) the completion and filing of a Registration Statement
on Form SB-2 with the SEC for the purpose of raising capital from the issuance
of common stock in the public markets of up to $4.5 million.
FFBI paid Fort Street two deposits against fees and costs amounting to $130,100.
The initial capital formation activity conducted by FFBI and Fort Street was not
successful due to the fact that the organization and completion of a deemed
reverse merger with a validly organized corporation in the United States could
not be effected. Further, as a result of the uncompleted deemed reverse merger,
FFBI expensed $77,000 of the amount paid to Fort Street as unsuccessful offering
costs. FFBI and Fort Street initiated a second capital formation activity that
resulted in the Exchange Agreement as described above, and the current activity
to file a Registration Statement on Form SB-2 with the SEC. As of December 31,
2004, the Company had remaining $53,100 of deferred offering costs which were
comprised of legal and accounting fees paid, and other professional and filing
fees to be incurred to complete the Form SB-2 registration process.
(5) Income Taxes
The provision (benefit) for income taxes for the periods ended December 31,
2004, and 2003, was as follows (using a 34 percent effective Federal income tax
rate):
2004 2003
--------- ---------
Current Tax Provision:
Federal-
Taxable income $ -- $ --
--------- ---------
Total current tax provision $ -- $ --
========= =========
Deferred Tax Provision:
Federal-
Loss carryforwards 29,050 1,455
Change in valuation allowance (29,050) (1,455)
--------- ---------
Total deferred tax provision $ -- $ --
========= =========
The Company had deferred income tax assets as of December 31, 2004, as follows:
2004
---------
Loss carryforwards $ 194,400
Less - Valuation allowance (194,400)
---------
Total net deferred tax assets $ --
=========
F-15
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
As of December 31, 2004, the Company had net operating loss carryforwards for
income tax reporting purposes of approximately $571,800 that may be offset
against future taxable income. Current tax laws limit the amount of loss
available to be offset against future taxable income when a substantial change
in ownership occurs or a change in the nature of the business. Therefore, the
amount available to offset future taxable income may be limited. No tax benefit
has been reported in the financial statements for the realization of loss
carryforwards, as the Company believes there is high probability that the
carryforwards will not be utilized in the foreseeable future. Accordingly, the
potential tax benefits of the loss carryforwards are offset by a valuation
allowance of the same amount.
(6) Related Party Transactions
Mark Poulsen & Associates Pty. Ltd. is an Australian private entity and
stockholder of the Company. It is wholly owned by Mark A. Poulsen, President and
Chief Executive Officer of the Company. As of December 31, 2004, the Company was
owed $1,605 by this entity.
Kamaneal Investments Pty. Ltd. is an Australian private company and stockholder
of the Company owned by Mark A. Poulsen, President and Chief Executive Officer
of the Company, and Karen Poulsen, his wife. The purpose of this company is to
hold investments for Mr. and Mrs. Poulsen. As of December 31, 2004, the Company
owed $827 to this entity for advances.
As of December 31, 2004, the Company owed $381 to Mark A. and Karen Poulsen for
expenses incurred on behalf of the Company. Mr. Poulsen is the President and
Chief Executive Officer of the Company.
Donald Howell Wilde, a former note holder and current stockholder of the Company
(see Note 3), is the father of Linda Wilde, also a former note holder and
current stockholder of the Company. In addition, Mr. Wilde is the father of
Laraine Richardson, a principal in the Company of L.R. Global Marketing Pty.
Ltd., which entity entered into a License Agreement with the Company on August
24, 2004 (see Note 8). Mr. Wilde also assisted the Company with the private
placement of the Notes by marketing the placement, and was responsible for the
subscription agreements of several note holders. Mr. Wilde's services were
valued at $20,000. The liability to Mr. Wilde was satisfied by the transfer of
40,000 shares of common stock of FFBI directly to him from the shares received
from the Exchange Agreement by Mark A. Poulsen, President and Chief Executive
Officer of the Company, at a value of $.50 per share. FFBI credited paid-in
capital for the value of the accrued liability satisfied by Mr. Poulsen.
As described in Note 3, the Company completed a private placement of Notes to
thirty individuals and entities with proceeds amounting to $365,000, and
subsequently converted the Notes to 870,000 shares of common stock of FFBI. Of
the thirty individuals and entities that subscribed to the private placement
F-16
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
offering of Notes, twelve parties are considered both account executives (part
of the independent marketing group of the Company) and independent Herbalife
distributors, and six of the parties are only independent Herbalife
distributors. Mark A. Poulsen, President and Chief Executive Officer of the
Company, is also an independent Herbalife distributor.
(7) Recent Accounting Pronouncements
In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51 ("FIN 46"). The FASB
issued a revised FIN 46 in December 2003, which modified and clarified various
aspects of the original interpretations. A Variable Interest Entity ("VIE") is
created when (i) the equity investment at risk is not sufficient to permit the
entity to finance its activities without additional subordinated financial
support from other parties or (ii) equity holders either (a) lack direct or
indirect ability to make decisions about the entity, (b) are not obligated to
absorb expected losses of the entity or (c) do not have the right to receive
expected residual returns of the entity if they occur. If an entity is deemed to
be a VIE, pursuant to FIN 46, an enterprise that absorbs a majority of the
expected losses of the VIE is considered the primary beneficiary and must
consolidate the VIE. For VIE's created before January 31, 2003, FIN 46 was
deferred to the end of the first interim or annual period ending after March 15,
2004. The adoption of FIN 46 did not have a material impact on the financial
position or results of operations of the Company.
In May 2003, the FASB issued Statement of Financial Accounting Standard No. 150,
Accounting for Certain Financial Instruments With Characteristics of Both
Liabilities and Equity, ("SFAS 150"). This standard requires issuers to classify
as liabilities the following three types of freestanding financial instruments:
(1) mandatory redeemable financial instruments, (2) obligations to repurchase
the issuer's equity shares by transferring assets; and (3) certain obligations
to issue a variable number of shares. The adoption of SFAS 150 did not have a
material impact on the financial position or results of operations of the
Company.
In December 2003, the SEC issued Staff Accounting Bulletin No. 104 ("SAB 104"),
Revenue Recognition, which supersedes SAB 101, Revenue Recognition in Financial
Statements. SAB 104's primary purpose is to rescind the accounting guidance
contained in SAB 101 related to multiple element revenue arrangements,
superseded as a result of the issuance of EITF 00-21. The Company adopted the
provisions of SAB 104, and it did not have a material impact on the financial
position or results of operations of the Company.
(8) License Agreement
On August 24, 2004, the Company entered into a non-assignable license agreement
(the "License Agreement) with L.R. Global Marketing Pty. Ltd. ("L.R. Global").
Pursuant to the License Agreement, L.R. Global has the right or license, for a
period of ten years, to use of the Company's logo, management information
system, and other material. L.R. Global will assist in identifying new clients
F-17
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
for the Company, and recruiting account executive and customer service
representatives. Under the terms of the License Agreement, L.R. Global was
obligated to pay the Company $500,000 on or before December 31, 2004, for the
grant of the license. As of December 31, 2004, L.R. Global had only paid
$117,750 toward the fee for the license, and was in default under the License
Agreement. On January 14, 2005, the Company and L.R. Global entered into an
extension agreement whereby the terms of the License Agreement for payment of
the remaining amount of the $500,000 license fee were extended to May 31, 2005.
The Company recognized $11,363 of income related to the License Agreement in the
accompanying statement of operations and comprehensive (loss) for the period
ended December 31, 2004.
(9) Commitments and Contingencies
For each fiscal year since inception, the Company has recognized as compensation
expense the ongoing contribution of time and effort of six individuals, two of
which, currently serve as officers of the Company. Such individuals have
provided their time and effort without formal compensation by the Company which
in certain instances dates back to 1998. For the period ended December 31, 2003,
the Company recorded compensation expense amounting to $31,300. Through
September 14, 2004, the total liability for employee compensation amounted to
$220,000. This obligation was satisfied by the transfer of 440,000 shares of
common stock of FFBI directly to the individuals from the shares received from
the Exchange Agreement by Mark A. Poulsen, President and Chief Executive Officer
of the Company, at a value of $.50 per share. FFBI credited paid-in capital for
the value of the accrued compensation satisfied by Mr. Poulsen.
On September 21, 2004, the Company entered into a contract with Insource Pty.
Ltd. for software services pertaining to the development of certain computerized
systems for customer service, administration, and information reporting
purposes. The contract price for the software development services amounted to
approximately $30,500.
The following transactions were dated November 29, 2004, or as otherwise
indicated:
The Company entered into an employment agreement with Mark A. Poulsen to serve
as its President and Chief Executive Officer. Under the terms of the agreement,
Mr. Poulsen will be compensated at the annual rate of approximately $291,125 for
services to FFBI. He will also be paid 5 percent of the value of each country or
geographic-area license sold. In addition, on December 1, 2004, the Board of
Directors of FFBI awarded a bonus of approximately $388,250 to be paid to Mr.
Poulsen within 30 days after the listing of the common stock of FFBI on the
over-the-counter bulletin board of the NASD.
F-18
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
The Company entered into an employment agreement with Prins Ralston to serve as
its Senior Vice President and Chief Operating Officer. Under the terms of the
agreement, Mr. Ralston will be compensated at the annual rate of approximately
$132,000, plus benefits and bonus. In addition, Mr. Ralston will be granted
options to purchase 30,000 shares of common stock of FFBI under an option plan,
when and if established. The Company will also be obligated to pay a recruiting
fee for the placement of Mr. Ralston to Hudson Global Resources amounting to
approximately $21,100.
The Company entered into an employment agreement with Anthony F. Head to serve
as its Senior Vice President of Sales. Mr. Head is also a Director of the
Company. Under the terms of the agreement, Mr. Head will be compensated at the
annual rate of approximately $77,600, plus benefits and bonus. He will also be
paid 5 percent of the value of each country or geographic-area license sold.
The Company entered into an employment agreement with Sandra Wendt to serve as
its Vice President and Chief Financial Officer. Under the terms of the
agreement, Ms. Wendt will be compensated at the annual rate of approximately
$42,700, plus benefits and bonus.
F-19
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, AND 2003
Report of Independent Auditors..............................................F-21
Financial Statements-
Balance Sheets as of September 30, 2004, and 2003........................F-22
Statements of Operations and Comprehensive (Loss) for the Years
Ended September 30, 2004, and 2003, and Cumulative from Inception .....F-23
Statements of Stockholders' Equity for the Periods from
Inception through September 30, 2004...................................F-24
Statements of Cash Flows for the Years
Ended September 30, 2004, and 2003, and Cumulative from Inception .....F-25
Notes to Financial Statements for the Years
Ended September 30, 2004, and 2003 ....................................F-27
F-20
REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Board of Directors of Fit For Business International,
Inc.:
We have audited the accompanying balance sheets of Fit For Business
International, Inc., a Nevada corporation in the development stage, as of
September 30, 2004, and 2003, and the related statements of operations and
comprehensive (loss), stockholders' equity, and cash flows for the periods then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Fit For Business International,
Inc. as of September 30, 2004, and 2003, and the results of its operations and
its cash flows for the periods then ended, in conformity with accounting
principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is in the development stage, is conducting its
capital formation activities, has incurred operating losses since inception, and
its working capital is insufficient to meet planned business objectives. These
and other factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans regarding these matters are also
described in Note 2 to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Respectfully submitted,
/s/ Davis Accounting Group P.C.
Cedar City, Utah,
February 17, 2005.
F-21
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS (NOTE 2)
AS OF SEPTEMBER, 2004, AND 2003
ASSETS
------
2004 2003
--------- ---------
Current Assets:
Cash and cash equivalent $ 174,919 $ 55
Accounts Receivable-
License fee 429,570
Other 730 1,541
Inventory 2,863 --
--------- ---------
Total current assets 608,082 1,596
--------- ---------
Property and Equipment:
Office and computer equipment 214 --
Web site development costs 4,659 4,404
--------- ---------
4,873 4,404
Less - Accumulated depreciation and amortization (3,559) (1,835)
--------- ---------
1,314 2,569
Software development in progress 6,516 --
--------- ---------
Net property and equipment 7,830 2,569
--------- ---------
Other Assets:
Trademark 215 203
Less - Accumulated amortization (109) (82)
Deferred offering costs 53,100 --
--------- ---------
Total other assets 53,206 121
--------- ---------
Total Assets $ 669,118 $ 4,286
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Checks in excess of bank balance $ -- $ 1,327
Accounts payable - trade 2,437 --
Accrued liabilities 41,296 --
Accrued compensation -- 166,395
Loans from related parties 59,595 149,433
Deferred revenue - License fee 449,975 --
--------- ---------
Total current liabilities 553,303 317,155
--------- ---------
Total liabilities 553,303 317,155
--------- ---------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, par value $.001 per share; 10,000,000 shares
authorized; 1,000,000 shares issued and outstanding in 2004 1,000 --
Common stock, par value $.001, 100,000,000 shares
authorized; 20,870,000 shares issued and outstanding in 2004 20,870 --
Capital stock, 81 shares authorized, issued and outstanding in 2003 -- 50
Additional paid-in capital 603,327 --
Accumulated other comprehensive (loss) (23,045) (32,765)
(Deficit) accumulated during the development stage (486,337) (280,154)
--------- ---------
Total stockholders' equity 115,815 (312,869)
--------- ---------
Total Liabilities and Stockholders' Equity $ 669,118 $ 4,286
========= =========
The accompanying notes to financial statements
are an integral part of this balance sheet.
F-22
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) (NOTE 2)
FOR THE YEARS ENDED SEPTEMBER 30, 2004, AND 2003,
AND CUMULATIVE FROM INCEPTION (DECEMBER 14, 1998)
THROUGH SEPTEMBER 30, 2004
Cumulative
From
2004 2003 Inception
----------- ----------- -----------
Revenues:
Revenues $ 6,620 $ 247 $ 10,176
----------- ----------- -----------
Total revenues 6,620 247 10,176
----------- ----------- -----------
Cost of Goods Sold:
Cost of goods sold 741 73 4,460
----------- ----------- -----------
Gross Profit (Loss) 5,879 174 5,716
----------- ----------- -----------
Expenses:
General and administrative 199,364 14,719 479,355
----------- ----------- -----------
Total general and administrative expenses 199,364 14,719 479,355
----------- ----------- -----------
(Loss) from Operations (193,485) (14,545) (473,639)
----------- ----------- -----------
Other Income (Expense) (12,698) -- (12,698)
Provision for income taxes -- -- --
----------- ----------- -----------
Net (Loss) $ (206,183) $ (14,545) $ (486,337)
----------- ----------- -----------
Comprehensive (Loss):
Australian currency translation 9,720 (23,114) (23,045)
----------- ----------- -----------
Total Comprehensive (Loss) $ (196,463) $ (37,659) $ (509,382)
=========== =========== ===========
(Loss) Per Common Share:
(Loss) per common share - Basic and Diluted $ (0.026) $ (179.57)
=========== ===========
Weighted Average Number of Common Shares
Outstanding - Basic and Diluted 7,831,739 81
=========== ===========
The accompanying notes to financial statements
are an integral part of this balance sheet.
F-23
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (NOTE 2)
FOR THE PERIODS FROM INCEPTION (DECEMBER 14, 1998)
THROUGH SEPTEMBER 30, 2004
Preferred Stock Common stock (Aus) Capital Stock
----------------------- ----------------------- -----------------------
Shares Amount Shares Amount Shares Amount
---------- ---------- ---------- ---------- ---------- ----------
Balance - December 14, 1998 -- $ -- -- $ -- -- $ --
Issuance of capital stock for cash -- -- -- -- 81 50
Australian currency translation -- -- -- -- -- --
Net (loss) for the period -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance - June 30, 1999 -- -- -- -- 81 50
Australian currency translation -- -- -- -- -- --
Net (loss) for the period -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance - June 30, 2000 -- -- -- -- 81 50
Australian currency translation -- -- -- -- -- --
Net (loss) for the period -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance - June 30, 2001 -- -- -- -- 81 50
Australian currency translation -- -- -- -- -- --
Net (loss) for the period -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance - June 30, 2002 -- -- -- -- 81 50
Australian currency translation -- -- -- -- -- --
Net (loss) for the period -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance - June 30, 2003 -- -- -- -- 81 50
Australian currency translation -- -- -- -- -- --
Net (loss) for the period -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance - September 30, 2003 -- -- -- -- 81 50
Australian currency translation -- -- -- -- -- --
Net (loss) for the period -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance - June 30, 2004 -- -- -- -- 81 50
Preferred and common stock issued for
deemed reverse merger with FFB Australia 1,000,000 1,000 15,000,000 15,000 (81) (50)
Recapitalization of FFBI common stock -- -- 5,000,000 5,000 -- --
Stock options issued for cash -- -- -- -- -- --
Employee compensation paid by issued shares -- -- -- -- -- --
Advance to Company paid by issued shares -- -- -- -- -- 7,500
Consulting services paid by issued shares -- -- -- -- -- --
Promissory notes coverted to common stock -- -- 870,000 870 -- --
Australian currency translation -- -- -- -- -- --
Net (loss) for the period -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Balance - September 30, 2004 1,000,000 $ 1,000 20,870,000 $ 20,870 -- $ --
========== ========== ========== ========== ========== ==========
(Deficit)
Accumulated Accumulated
Additional Other During the
Paid-in Comprehensive Development
Capital (Loss) Stage Totals
---------- ---------- ---------- ----------
Balance - December 14, 1998 $ -- $ -- $ -- $ --
Issuance of capital stock for cash -- -- -- 50
Australian currency translation -- 317 -- 317
Net (loss) for the period -- -- (17,408) (17,408)
---------- ---------- ---------- ----------
Balance - June 30, 1999 -- 317 (17,408) (17,041)
Australian currency translation -- (5,540) -- (5,540)
Net (loss) for the period -- -- (134,603) (134,603)
---------- ---------- ---------- ----------
Balance - June 30, 2000 -- (5,223) (152,011) (157,184)
Australian currency translation -- (17,493) -- (17,493)
Net (loss) for the period -- -- (48,816) (48,816)
---------- ---------- ---------- ----------
Balance - June 30, 2001 -- (22,716) (200,827) (223,493)
Australian currency translation -- 34,298 -- 34,298
Net (loss) for the period -- -- (39,919) (39,919)
---------- ---------- ---------- ----------
Balance - June 30, 2002 -- 11,582 (240,746) (229,114)
Australian currency translation -- (45,564) -- (45,564)
Net (loss) for the period -- -- (24,196) (24,196)
---------- ---------- ---------- ----------
Balance - June 30, 2003 -- (33,982) (264,942) (298,874)
Australian currency translation -- 1,217 -- 1,217
Net (loss) for the period -- -- (15,212) (15,212)
---------- ---------- ---------- ----------
Balance - September 30, 2003 -- (32,765) (280,154) (312,869)
Australian currency translation -- (7,205) -- (7,205)
Net (loss) for the period -- -- (115,925) (115,925)
---------- ---------- ---------- ----------
Balance - June 30, 2004 -- (39,970) (396,079) (435,999)
Preferred and common stock issued for
deemed reverse merger with FFB Australia (15,950) -- -- --
Recapitalization of FFBI common stock (15,000) -- -- (10,000)
Stock options issued for cash 10,000 -- -- 10,000
Employee compensation paid by issued shares 220,000 -- -- 220,000
Advance to Company paid by issued shares -- -- 7,500
Consulting services paid by issued shares 20,000 -- -- 20,000
Promissory notes coverted to common stock 376,777 -- -- 377,647
Australian currency translation -- 16,925 -- 16,925
Net (loss) for the period -- -- (90,258) (90,258)
---------- ---------- ---------- ----------
Balance - September 30, 2004 $ 603,327 $ (23,045) $ (486,337) $ 115,815
========== ========== ========== ==========
The accompanying notes to financial statements
are an integral part of this balance sheet.
F-24
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (NOTE 2)
FOR THE YEARS ENDED SEPTEMBER 30, 2004, AND 2003, AND
CUMULATIVE FROM INCEPTION (DECEMBER 14, 1998)
THROUGH SEPTEMBER 30, 2004
Cumulative
From
2004 2003 Inception
--------- --------- ---------
Operating Activities:
Net (loss) $(206,183) $ (14,545) $(486,337)
Adjustments to reconcile net (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 1,631 1,346 3,668
Write-off of deferred offering costs 77,000 -- 77,000
Employee compensation paid by issued shares 53,605 40,484 220,000
Net foreign exchange (gain) realized (1,895) (30,223) (4,594)
Consulting services paid by issued shares 20,000 -- 20,000
Changes in net assets and liabilities-
Accounts receivable 71,241 (831) 71,241
Inventory (2,863) -- (2,863)
Accounts payable - trade 2,437 (4,030) 2,437
Other accrued liabilities 8,770 -- 8,770
Deferred revenue (4,570) -- (4,570)
--------- --------- ---------
Net Cash Provided by (Used in) Operating Activities 19,173 (7,799) (95,248)
--------- --------- ---------
Investing Activities:
Purchases of property and equipment (214) -- (214)
Payment for Australian trademark -- -- (199)
Expenditures for web site development costs -- (3,664) (4,404)
Expenditures for software development in progress (6,516) -- (6,516)
--------- --------- ---------
Net Cash (Used in) Investing Activities (6,730) (3,664) (11,333)
--------- --------- ---------
Financing Activities:
Proceeds from the issuance of convertible notes 365,000 -- 365,000
Checks in excess of bank balance (1,327) 1,327 --
Stock options issued for cash 10,000 -- 10,000
Net (payments to) loans from related parties (90,872) 33,234 59,595
Payment of deferred offering costs (130,100) -- (130,100)
Proceeds from the issuance of capital stock -- -- 50
--------- --------- ---------
Net Cash Provided by Financing Activities 152,701 34,561 304,545
--------- --------- ---------
Effect of Exchange Rate Changes on Cash 9,720 (23,114) (23,045)
--------- --------- ---------
Net Increase (Decrease) in Cash 174,864 (16) 174,919
Cash - Beginning of Period 55 71 --
--------- --------- ---------
Cash - End of Period $ 174,919 $ 55 $ 174,919
========= ========= =========
The accompanying notes to financial statements
are an integral part of this balance sheet.
F-25
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (NOTE 2)
FOR THE YEARS ENDED SEPTEMBER 30, 2004, AND 2003, AND
CUMULATIVE FROM INCEPTION (DECEMBER 14, 1998)
THROUGH SEPTEMBER 30, 2004 (CONTINUED)
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ -- $ -- $ --
========= ========= =========
Income taxes $ -- $ -- $ --
========= ========= =========
Supplemental Information of Noncash Investing and Financing Activities:
On September 14, 2004, the Company entered into an Exchange Agreement with
FFB Australia whereby FFBI acquired all of the issued and outstanding
capital stock of FFB Australia (81 shares) in exchange for 15,000,000
shares of common stock and 1,000,000 shares of preferred stock of the
Company. As a result of the Exchange Agreement, the stockholders of FFB
Australia control FFBI, and FFB Australia has been deemed to have effected
a reverse merger for financial reporting purposes. The deemed reverse
merger has been recorded as a recapitalization of the Company, with the net
assets of FFBI and FFB Australia brought forward at their historical bases.
On September 20, 2004, the Company issued 420,000 shares of common stock
with value of $140,000 in connection with the conversion of certain Notes
and accrued interest.
On September 29, 2004, the Company issued 450,000 shares of common stock
with a value of $225,000 in connection with the conversion of the remainder
of the Notes and accrued interest.
On September 14, 2004, accrued employee compensation of $220,000 was
satisfied with the issuance 440,000 shares of common stock provided
personnally by an officer and director of the Company.
On September 14, 2004, an advance to the Company of $7,500 by a former
director was satisfied with the issuance of 15,000 shares of common stock
provided personally by an officer and director of the Company.
On September 14, 2004, accrued consulting services of $20,000 was satisfied
with the issuance of 40,000 shares of common stock provided personally by
an officer and director of the Company.
The accompanying notes to financial statements
are an integral part of this balance sheet.
F-26
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
(1) Summary of Significant Accounting Policies
Basis of Presentation and Organization
Fit For Business International, Inc. ("FFBI" or the "Company") is a Nevada
corporation in the development stage of providing products and services for: (i)
corporate wellness programs which address business productivity, stress and
absenteeism issues; (ii) living well programs directed primarily, but not
exclusively, to individuals over 45 years of age; and, (iii) nutritional
supplements manufactured and supplied by Herbalife International Inc.
("Herbalife"). The accompanying financial statements of FFBI were prepared from
the accounts of the Company under the accrual basis of accounting in United
States dollars. In addition, the accompanying financial statements reflect the
completion of a deemed reverse merger between FFBI and Fit For Business
(Australia) Pty Limited ("FFB Australia"), which was effected on September 14,
2004.
Prior to the completion of the deemed reverse merger, FFBI was a dormant
corporation with no assets or operations (essentially since its organization on
May 30, 2001, and incorporation on July 31, 2001). The Company was originally
incorporated under the name of Elli Tsab, Inc. On April 7, 2004, the name of the
Company was changed to Patient Data Corporation. On January 13, 2005, the name
of the Company was again changed to Fit For Business International, Inc. in
order to better reflect the current business plan.
FFB Australia was organized as an Australian private company on December 14,
1998, and subsequently began certain marketing studies and corporate awareness
programs to obtain customers for its products and services. In October 2003, FFB
Australia initiated a capital formation activity through the private placement
of certain convertible promissory notes which provided, through September 14,
2004, proceeds of $365,000. Subsequent to the completion of the deemed reverse
merger, the liability associated with the convertible promissory notes was
assumed by the Company. Thereafter, all of the promissory notes were converted
into shares of common stock of FFBI.
In addition, in November 2003, FFB Australia commenced a capital formation
activity to effect a deemed reverse merger with a corporation validly organized
in the United States for the purpose of completing a Registration Statement on
Form SB-2 with the Securities and Exchange Commission ("SEC"), and raising
capital from the issuance of common stock in the public markets of up to $4.5
million. The initial capital formation activity through a deemed reverse merger
and the issuance of common stock was unsuccessful. Subsequently, FFB Australia
completed a deemed reverse merger with the Company, and FFBI is currently
undertaking a second capital formation activity of the same type.
Prior to September 14, 2004, FFB Australia, aside from the capital formation and
marketing activities described above, incurred other development stage operating
costs and expenses related to its organization as an entity, receipt of a
F-27
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
trademark in Australia for the name and related logo of Fit For Business,
formation of a management team, accounting and tax preparation fees, consulting
fees, travel, and other general and administrative expenses. For additional
information relating to the development stage activities of the Company, see
Note 2.
Given that FFB Australia is considered to have acquired FFBI by a deemed reverse
merger through an Exchange Agreement (see Note 4), and its stockholders
currently have voting control of FFBI, the accompanying financial statements and
related disclosures in the notes to financial statements present the financial
position as of September 30, 2004, and 2003, and the operations for the periods
then ended, and from the period from the inception date (December 14, 1998)
through September 30, 2004, of FFB Australia under the name of FFBI. The deemed
reverse merger has been recorded as a recapitalization of the Company, with the
net assets of FFB Australia and FFBI brought forward at their historical bases.
The costs associated with the reverse merger have been expensed as incurred.
Cash and Cash Equivalents
For purposes of reporting within the statement of cash flows, the Company
considers all cash on hand, cash accounts not subject to withdrawal restrictions
or penalties, and all highly liquid debt instruments purchased with a maturity
of three months or less to be cash and cash equivalents.
Revenue Recognition
The Company is in the development stage and has yet to realize significant
revenues from planned operations. However, the Company is in the business of
providing products and services for corporate and living well programs, as well
as from the sale of nutritional products manufactured and supplied by Herbalife.
After the commencement of planned operations, revenues will be realized from
such products and services at the time of completion of each transaction or
related contract service. Revenues will also be realized from licensing
activities related to various countries and geographic regions, which entitle
licensees to recruit representatives for the Company, and market and promote its
products and services over the term and under the conditions of each specific
license.
Internal Web Site Development Costs
Under Emerging Issues Taskforce Statement 00-2, Accounting for Web Site
Development Costs ("EITF 00-2"), costs and expenses incurred during the planning
and operating stages of the Company's web site are expensed as incurred. Under
EITF 00-2, costs incurred in the web site application and infrastructure
development stages are capitalized by the Company and amortized to expense over
the web site's estimated useful life or period of benefit. As of September 30,
2004, and 2003, FFBI had capitalized $4,659 and $4,404, respectively, related to
its web site development.
F-28
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
Costs of Computer Software Developed or Obtained for Internal Use
Under Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use ("SOP 98-1"), the Company capitalizes
external direct costs of materials and services consumed in developing or
obtained internal-use computer software; payroll and payroll-related costs for
employees who are directly associated with and who devote time to the
internal-use computer software project; and, interest costs related to loans
incurred for the development of internal-use software. As of September 30, 2004,
and 2003, the Company had capitalized $6,516 and $0, respectively, for projects
related to the development of internal-use software.
Costs of Computer Software to be Sold or Otherwise Marketed
Under Statement of Financial Accounting Standards No. 86, Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed ("SFAS
86"), the Company capitalizes costs associated with the development of certain
training software products held for sale when technological feasibility is
established. Capitalized computer software costs of products held for sale are
amortized over the useful life of the products from the software release date.
As of September 30, 2004, and 2003, the Company had not undertaken any projects
related to the development of software products held for sale or to be otherwise
marketed.
Trademark
The Company obtained a trademark from the government of Australia effective
October 15, 1999. The trademark covers the name "Fit For Business" and the logo
of the Company. The cost of obtaining the trademark has been capitalized by the
Company, and is being amortized over a period of ten years.
Advertising Costs
Advertising costs are charged to operations when incurred, except for television
or magazine advertisements, which are charged to expense when the advertising
first takes place. For the years ended September 30, 2004, and 2003, advertising
expense amounted to $11,616 and $458, respectively.
Property and Equipment
The components of property and equipment are stated at cost. Property and
equipment costs are depreciated or amortized for financial reporting purposes
over the useful lives of the related assets by the straight-line method. Useful
F-29
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
lives utilized by the Company for calculating depreciation or amortization are
as follows:
Computer and office equipment 5 years
Internal web site development costs 3 years
Upon disposition of an asset, its cost and related accumulated depreciation or
amortization are removed from the accounts, and any resulting gain or loss is
recognized.
Impairment of Long-Lived Assets
Under Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of
("SFAS 121"), the Company evaluates the recoverability of long-lived assets and
the related estimated remaining lives at each balance sheet date. The Company
records an impairment or change in useful life whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable or the
useful life has changed.
Loss Per Common Share
Basic loss per share is computed by dividing the net loss attributable to the
common stockholders by the weighted average number of shares of common stock
outstanding during the period. Fully diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive.
Deferred Offering Costs
The Company defers as other assets the direct incremental costs of raising
capital until such time as the offering is completed. At the time of the
completion of the offering, the costs are charged against the capital raised.
Should the offering be terminated, deferred offering costs are charged to
operations during the period in which the offering is terminated (see Note 4).
Comprehensive Income (Loss)
The Company presents comprehensive income (loss) in accordance with Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
130"). SFAS 130 states that all items that are required to be recognized under
accounting standards as components of comprehensive income (loss) be reported in
the financial statements. For the periods ended September 30, 2004, and 2003,
the only components of comprehensive income (loss) were the net (loss) for the
periods, and the foreign currency translation adjustments.
F-30
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
Income Taxes
The Company accounts for income taxes pursuant to SFAS No. 109, Accounting for
Income Taxes ("SFAS 109"). Under SFAS 109, deferred tax assets and liabilities
are determined based on temporary differences between the bases of certain
assets and liabilities for income tax and financial reporting purposes. The
deferred tax assets and liabilities are classified according to the financial
statement classification of the assets and liabilities generating the
differences.
The Company maintains a valuation allowance with respect to deferred tax assets.
The Company establishes a valuation allowance based upon potential likelihood of
realizing the deferred tax asset and taking into consideration the Company's
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the Federal tax laws.
Changes in circumstances, such as the Company generating taxable income, could
cause a change in judgment about the realizability of the related deferred tax
asset. Any change in the valuation allowance will be included in income in the
year of the change in estimate.
Foreign Currency Translation
The Company accounts for foreign currency translation pursuant to SFAS No. 52,
Foreign Currency Translation ("SFAS 52"). The Company's functional currency is
the Australian dollar. All assets and liabilities are translated into United
States dollars using the current exchange rate at the end of each fiscal year.
Revenues and expenses are translated using the average exchange rates prevailing
throughout the year. Translation adjustments are included in other comprehensive
income (loss) for the period. Certain transactions of the Company are
denominated in United States dollars. Translation gains or losses related to
such transactions are recognized for each reporting period in the related
statement of operations and comprehensive income (loss).
Fair Value of Financial Instruments
The Company estimates the fair value of financial instruments using the
available market information and valuation methods. Considerable judgment is
required in estimating fair value. Accordingly, the estimates of fair value may
not be indicative of the amounts the Company could realize in a current market
exchange. As of September 30, 2004, and 2003, the Company did not have any
financial instruments requiring the estimate of fair value.
F-31
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
Stock-Based Compensation
The Company uses the fair value method to account for non-employee stock-based
compensation in accordance with SFAS No. 123, Accounting for Stock-Based
Compensation, and FASB Emerging Issues Task Force, or EITF, Issue No. 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services. Under the fair
value method, all transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the
fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable.
Concentrations of Risk
The Company has adopted SFAS No. 105, Disclosure of Information About Financial
Instruments with Off-Balance Sheet Risk and Financial Instruments with
Concentration of Credit Risk ("SFAS 105"). Under SFAS 105, the Company is
required to disclose any significant off-balance sheet risks and credit risk
concentrations.
As of September 30, 2004, and 2003, the Company had a material off-balance sheet
risk with regards to its dependence upon Herbalife as its sole source of supply
for the purchase of nutritional supplements related to its planned wellness
programs.
Fiscal Year End of the Company
The fiscal year end of the Company is June 30 of each year.
Estimates
The financial statements are prepared on the basis of accounting principles
generally accepted in the United States. The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of September 30, 2004, and 2003, and expenses for the periods
then ended. Actual results could differ from those estimates made by management.
(2) Development Stage Activities and Going Concern
The Company is in the development stage of providing products and services for
corporate business wellness programs; living well programs directed primarily,
but not exclusively, to individuals over 45 years of age; and, nutritional
supplements manufactured and supplied by Herbalife. As of September 30, 2004,
F-32
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
and subsequent thereto, FFBI had completed organization and reverse merger
transactions, initial marketing and corporate awareness programs designed to
obtain customers for its products and services, the receipt of a trademark in
Australia for the name "Fit For Business", formation of a management team, and
other activities related to capital formation and initial operations. Management
of the Company is pursuing various sources of equity financing, and plans to
raise approximately $4.5 million through a best efforts self-underwritten public
offering of its common stock. The public offering and sale of common stock by
officers and directors of the Company will be conducted subsequent to the filing
and approval of a Registration Statement on Form SB-2 with the SEC. The proceeds
from the public offering will be used by the Company for the development and
production of multi-media training programs, marketing and promotional
literature and programs, web site enhancement, purchase of inventory, customer
call center and computer hardware and software programs to be used to aid the
Company's customer service representatives, and working capital required to hire
additional staff and provide for an expected increase in operations.
While management of the Company believes that the Company will be successful in
its capital formation and operating activities, there can be no assurance that
the Company will be able to raise $4.5 million in equity capital through its
planned filing with the SEC and related activities, or be successful in the sale
of its products and services that will generate sufficient revenues to sustain
the operations of the Company.
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States, which contemplate
continuation of the Company as a going concern. The Company has incurred
operating losses since inception, and the working capital of the Company is
insufficient to meet its planned business objectives. These and other factors
raise substantial doubt about the Company's ability to continue as a going
concern. The accompanying financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
(3) Convertible Debt
In November 2003, FFBI began a capital formation activity through the private
placement of up to 200 unsecured convertible promissory notes (the "Note" or
"Notes"). Under the terms of the private placement subscription agreement, the
minimum unit participation was one unit per Note valued at $5,000. Multiple
units could be acquired under the terms of a single Note. The Notes issued for
the units stated a maturity date of November 30, 2004, and provided for an
interest rate of ten percent (10%) per annum, payable upon redemption. None of
the Notes was issued to officers, directors, or employees of FFBI.
F-33
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
The Notes were convertible into 10,000 shares of common stock per unit at any
time prior to maturity at the option of the note holder, or, if called by FFBI,
then automatically in the event of a public offering of shares. No value was
associated with the conversion feature of the Notes. FFBI structured an
incentive program with the first eleven subscribers to the private placement for
the Notes, and provided an additional 1/2 unit of value for each unit
subscribed. As such, as of September 14, 2004, FFBI had received and recorded
proceeds of $365,000 under the private placement in exchange for the Notes with
87 units for the calculation of conversion into common stock (870,000 shares of
common stock), and accrued interest in the amount of $12,646. The liability for
the Notes was assumed by the Company as a result of the Exchange Agreement.
On September 20, 2004, the Company, pursuant to a planned public offering of its
common stock, called and converted Notes with a unit value of 42 units into
420,000 shares of common stock. The transaction was valued at $0.33 per share of
common stock for a total of $140,000. Further, on September 29, 2004, the
remaining Notes with a unit value of 45 units were called and converted by the
Company into 450,000 shares of common stock. The transaction was valued at $0.50
per share of common stock for a total of $225,000. The value of the conversion
transactions in excess of the par value of the common stock issued, including
accrued interest, has been presented as additional paid-in capital in the
accompanying statement of stockholders' equity for the period ended September
30, 2004.
(4) Common Stock Transactions and Capital Formation
Issuance of Common Stock
On May 30, 2001, the Company issued 5,000,000 shares of its common stock to
former officers and directors of the Company for services rendered. The value of
the services rendered was $5,000.
Stock Option Agreement
On July 25, 2004, the Company issued 2,000,000 options to Fort Street Equity,
Inc. (see below) to purchase the same number of shares of its common stock for
$10,000 in cash. The option period is through December 31, 2005. The exercise
price of the options is the higher of $0.50 per share or the average trading
price of the Company's common stock over the preceding ten business days prior
to exercise of the options, less a discount of 40 percent.
F-34
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
Stock Exchange Agreement
On September 14, 2004, the Company entered into a Share Exchange Agreement (the
"Exchange Agreement") with FFB Australia, whereby FFBI acquired all of the
issued and outstanding capital stock of FFB Australia (81 shares) in exchange
for 15,000,000 shares of common stock and 1,000,000 shares of preferred stock of
the Company. Both the common stock and preferred stock of FFBI have a par value
of $.001. The shares of preferred stock are non-participating, but each share is
entitled to fifty (50) votes in a general meeting of the stockholders. As a
result of the Exchange Agreement, the stockholders of FFB Australia control
FFBI, and FFB Australia has been deemed to have effected a reverse merger for
financial reporting purposes as of the date of the Exchange Agreement. The
deemed reverse merger has been recorded as a recapitalization of the Company,
with the net assets of FFBI and FFB Australia brought forward at their
historical bases.
Conversion of Notes
On September 20, 2004, the Company issued 420,000 shares of its common stock
with a value of $140,000 in connection with the conversion of certain Notes and
accrued interest (see Note 3).
On September 29, 2004, the Company issued 450,000 shares of its common stock
with a value of $225,000 in connection with the conversion of the remainder of
the Notes and accrued interest (see Note 3).
Other Transactions
From the common stock issued to Mark A. Poulsen, President and Chief Executive
Officer of the Company, under the Exchange Agreement, L.R. Global received
500,000 shares of common stock (see Note 8). Mr. Poulsen also issued shares of
common stock that he received from the Exchange Agreement to satisfy the
liabilities of the Company assumed by FFBI related to the compensation of six
individuals (see Note 9). FFBI recognized the satisfaction of such liabilities
by Mr. Poulsen as additional paid-in capital.
The Company also owed Wayne Hoskin, a former director of the Company, the amount
of $7,500 as of September 14, 2004. The obligation resulted from a loan made to
the Company. Mr. Hoskin agreed to accept 15,000 shares of common stock of FFBI
in full satisfaction of this obligation. From the common stock issued to Mark A.
Poulsen, President and Chief Executive Officer of the Company, under the
Exchange Agreement, Mr. Hoskin received 15,000 shares of common stock valued at
$7,500. FFBI recognized the satisfaction of this liability by Mr. Poulsen as
additional paid-in capital.
The Company also owed Donald Howell Wilde, a former note holder and current
stockholder of the Company, the amount of $20,000 for services rendered related
to the private placement of Notes (see Note 3). From the common stock issued to
F-35
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
Mark A. Poulsen, President and Chief Executive Officer of the Company, under the
Exchange Agreement, on September 14, 2004, Mr. Wilde received 40,000 shares of
common stock valued at $20,000. FFBI recognized the satisfaction of this
liability by Mr. Poulsen as additional paid-in capital.
Capital Formation Activity
On November 10, 2003, FFBI entered into an agreement with Fort Street Equity,
Inc. ("Fort Street"), a Cayman Islands company, whereby Fort Street would assist
FFBI with the following: (i) the identification of a corporation validly
organized in the United States with which the Company could realize a deemed
reverse merger; and (ii) the completion and filing of a Registration Statement
on Form SB-2 with the SEC for the purpose of raising capital from the issuance
of common stock in the public markets of up to $4.5 million.
FFBI paid Fort Street two deposits against fees and costs amounting to $130,100.
The initial capital formation activity conducted by FFBI and Fort Street was not
successful due to the fact that the organization and completion of a deemed
reverse merger with a validly organized corporation in the United States could
not be effected. Further, as a result of the uncompleted deemed reverse merger,
FFBI expensed $77,000 of the amount paid to Fort Street as unsuccessful offering
costs. FFBI and Fort Street initiated a second capital formation activity that
resulted in the Exchange Agreement as described above, and the current activity
to file a Registration Statement on Form SB-2 with the SEC. As of September 30,
2004, the Company had remaining $53,100 of deferred offering costs which were
comprised of legal and accounting fees paid, and other professional and filing
fees to be incurred to complete the Form SB-2 registration process.
(5) Income Taxes
The provision (benefit) for income taxes for the periods ended September 30,
2004, and 2003, was as follows (using a 34 percent effective Federal income tax
rate):
2004 2003
--------- ---------
Current Tax Provision:
Federal-
Taxable income $ -- $ --
--------- ---------
Total current tax provision $ -- $ --
========= =========
Deferred Tax Provision:
Federal-
Loss carryforwards 70,100 4,950
Change in valuation allowance (70,100) (4,950)
--------- ---------
Total deferred tax provision $ -- $ --
========= =========
F-36
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
The Company had deferred income tax assets as of September 30, 2004, and 2003,
as follows:
2004
---------
Loss carryforwards $ 70,100 $ 4,950
Less - Valuation allowance (70,100) (4,950)
--------- ---------
Total net deferred tax assets $ -- $ --
========= =========
As of September 30, 2004, and 2003, the Company had net operating loss
carry-forwards for income tax reporting purposes of approximately $471,800, and
$279,500, respectively, that may be offset against future taxable income.
Current tax laws limit the amount of loss available to be offset against future
taxable income when a substantial change in ownership occurs or a change in the
nature of the business. Therefore, the amount available to offset future taxable
income may be limited. No tax benefit has been reported in the financial
statements for the realization of loss carryforwards, as the Company believes
there is high probability that the carryforwards will not be utilized in the
foreseeable future. Accordingly, the potential tax benefits of the loss
carryforwards are offset by a valuation allowance of the same amount.
(6) Related Party Transactions
Mark Poulsen & Associates Pty. Ltd. is an Australian private entity and
stockholder of the Company. It is wholly owned by Mark A. Poulsen, President and
Chief Executive Officer of the Company. As of September 30, 2004, and 2003, the
Company owed $58,485, and $133,578 to this entity, respectively.
Kamaneal Investments Pty. Ltd. is an Australian private company and stockholder
of the Company owned by Mark A. Poulsen, President and Chief Executive Officer
of the Company, and Karen Poulsen, his wife. The purpose of this company is to
hold investments for Mr. and Mrs. Poulsen. As of September 30, 2004, and 2003,
the Company owed $760 and $4,005 to this entity for advances, respectively.
In July 2004, the Company paid to a former officer and director the amount of
$10,000 for services rendered.
As of September 30, 2004, and 2003, the Company owed $350 and $331, respectively
to Mark A. and Karen Poulsen for expenses incurred on behalf of the Company. Mr.
Poulsen is the President and Chief Executive Officer of the Company.
Donald Howell Wilde, a former note holder and current stockholder of the Company
(see Note 3), is the father of Linda Wilde, also a former note holder and
current stockholder of the Company. In addition, Mr. Wilde is the father of
Laraine Richardson, a principal in the Company of L.R. Global Marketing Pty.
F-37
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
Ltd., which entity entered into a License Agreement with the Company on August
24, 2004 (see Note 8). Mr. Wilde also assisted the Company with the private
placement of the Notes by marketing the placement, and was responsible for the
subscription agreements of several note holders. Mr. Wilde's services were
valued at $20,000, and such expense was included in the accompanying statement
of operations and comprehensive (loss) for the period ended September 30, 2004.
The liability to Mr. Wilde was satisfied by the transfer of 40,000 shares of
common stock of FFBI directly to him from the shares received from the Exchange
Agreement by Mark A. Poulsen, President and Chief Executive Officer of the
Company, at a value of $.50 per share. FFBI credited paid-in capital for the
value of the accrued liability satisfied by Mr. Poulsen.
As described in Note 3, the Company completed a private placement of Notes to
thirty individuals and entities with proceeds amounting to $365,000, and
subsequently converted the Notes to 870,000 shares of common stock of FFBI. Of
the thirty individuals and entities that subscribed to the private placement
offering of Notes, twelve parties are considered both account executives (part
of the independent marketing group of the Company) and independent Herbalife
distributors, and six of the parties are only independent Herbalife
distributors. Mark A. Poulsen, President and Chief Executive Officer of the
Company, is also an independent Herbalife distributor.
(7) Recent Accounting Pronouncements
In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51 ("FIN 46"). The FASB
issued a revised FIN 46 in December 2003, which modified and clarified various
aspects of the original interpretations. A Variable Interest Entity ("VIE") is
created when (i) the equity investment at risk is not sufficient to permit the
entity to finance its activities without additional subordinated financial
support from other parties or (ii) equity holders either (a) lack direct or
indirect ability to make decisions about the entity, (b) are not obligated to
absorb expected losses of the entity or (c) do not have the right to receive
expected residual returns of the entity if they occur. If an entity is deemed to
be a VIE, pursuant to FIN 46, an enterprise that absorbs a majority of the
expected losses of the VIE is considered the primary beneficiary and must
consolidate the VIE. For VIE's created before January 31, 2003, FIN 46 was
deferred to the end of the first interim or annual period ending after March 15,
2004. The adoption of FIN 46 did not have a material impact on the financial
position or results of operations of the Company.
In May 2003, the FASB issued Statement of Financial Accounting Standard No. 150,
Accounting for Certain Financial Instruments With Characteristics of Both
Liabilities and Equity, ("SFAS 150"). This standard requires issuers to classify
as liabilities the following three types of freestanding financial instruments:
(1) mandatory redeemable financial instruments, (2) obligations to repurchase
F-38
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
the issuer's equity shares by transferring assets; and (3) certain obligations
to issue a variable number of shares. The adoption of SFAS 150 did not have a
material impact on the financial position or results of operations of the
Company.
In December 2003, the SEC issued Staff Accounting Bulletin No. 104 ("SAB 104"),
Revenue Recognition, which supersedes SAB 101, Revenue Recognition in Financial
Statements. SAB 104's primary purpose is to rescind the accounting guidance
contained in SAB 101 related to multiple element revenue arrangements,
superseded as a result of the issuance of EITF 00-21. The Company adopted the
provisions of SAB 104, and it did not have a material impact on the financial
position or results of operations of the Company.
(8) License Agreement
On August 24, 2004, the Company entered into a non-assignable license agreement
(the "License Agreement) with L.R. Global Marketing Pty. Ltd. ("L.R. Global").
Pursuant to the License Agreement, L.R. Global has the right or license, for a
period of ten years, to use of the Company's logo, management information
system, and other material. L.R. Global will assist in identifying new clients
for the Company, and recruiting account executive and customer service
representatives. Under the terms of the License Agreement, L.R. Global was
obligated to pay the Company $500,000 on or before December 31, 2004, for the
grant of the license. As of December 31, 2004, L.R. Global had only paid
$117,750 toward the fee for the license, and was in default under the License
Agreement. On January 14, 2005, the Company and L.R. Global entered into an
extension agreement whereby the terms of the License Agreement for payment of
the remaining amount of the $500,000 license fee were extended to May 31, 2005.
The Company recognized $4,570 of income related to the License Agreement in the
accompanying statement of operations and comprehensive (loss) for the period
ended September 30, 2004.
(9) Commitments and Contingencies
For each fiscal year since inception, the Company has recognized as compensation
expense the ongoing contribution of time and effort of six individuals, two of
which, currently serve as officers of the Company. Such individuals have
provided their time and effort without formal compensation by the Company which
in certain instances dates back to 1998. For the years ended September 30, 2004,
and 2003, the Company recorded compensation expense amounting to $53,605 and
$40,259, respectively. Through September 14, 2004, the total liability for
employee compensation amounted to $220,000. This obligation was satisfied by the
transfer of 440,000 shares of common stock of FFBI directly to the individuals
from the shares received from the Exchange Agreement by Mark A. Poulsen,
President and Chief Executive Officer of the Company, at a value of $.50 per
share. FFBI credited paid-in capital for the value of the accrued compensation
satisfied by Mr. Poulsen.
F-39
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
On September 21, 2004, the Company entered into a contract with Insource Pty.
Ltd. for software services pertaining to the development of certain computerized
systems for customer service, administration, and information reporting
purposes. The contract price for the software development services amounted to
approximately $30,500.
(10) Subsequent Events
The following transactions were dated November 29, 2004, or as otherwise
indicated:
The Company entered into an employment agreement with Mark A. Poulsen to serve
as its President and Chief Executive Officer. Under the terms of the agreement,
Mr. Poulsen will be compensated at the annual rate of approximately $291,125 for
services to FFBI. He will also be paid 5 percent of the value of each country or
geographic-area license sold. In addition, on December 1, 2004, the Board of
Directors of FFBI awarded a bonus of approximately $388,250 to be paid to Mr.
Poulsen within 30 days after the listing of the common stock of FFBI on the
over-the-counter bulletin board of the NASD.
The Company entered into an employment agreement with Prins Ralston to serve as
its Senior Vice President and Chief Operating Officer. Under the terms of the
agreement, Mr. Ralston will be compensated at the annual rate of approximately
$132,000, plus benefits and bonus. In addition, Mr. Ralston will be granted
options to purchase 30,000 shares of common stock of FFBI under an option plan,
when and if established. The Company will also be obligated to pay a recruiting
fee for the placement of Mr. Ralston to Hudson Global Resources amounting to
approximately $21,100.
The Company entered into an employment agreement with Anthony F. Head to serve
as its Senior Vice President of Sales. Mr. Head is also a Director of the
Company. Under the terms of the agreement, Mr. Head will be compensated at the
annual rate of approximately $77,600, plus benefits and bonus. He will also be
paid 5 percent of the value of each country or geographic-area license sold.
The Company entered into an employment agreement with Sandra Wendt to serve as
its Vice President and Chief Financial Officer. Under the terms of the
agreement, Ms. Wendt will be compensated at the annual rate of approximately
$42,700, plus benefits and bonus.
F-40
FIT FOR BUSINESS INTERNATIONAL, INC.
3,000,000 SHARES OF COMMON STOCK
2,000,000 SHARES OF COMMON STOCK ISSUABLE IN CONNECTION WITH
THE CONVERSION OF OUTSTANDING OPTIONS
870,000 SELLING SECURITY HOLDER COMMON SHARES
PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON
STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Our Certificate of Incorporation and By-laws provide that we shall indemnify to
the fullest extent permitted by Nevada law any person whom we may indemnify
thereunder, including our directors, officers, employees and agents. Such
indemnification (other than as ordered by a court) shall be made by us only upon
a determination that indemnification is proper in the circumstances because the
individual met the applicable standard of conduct i.e., such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to our
best interest. Advances for such indemnification may be made pending such
determination. Such determination shall be made by a majority vote of a quorum
consisting of disinterested directors, or by independent legal counsel or by the
stockholders. In addition, our Certificate of Incorporation provides for the
elimination, to the extent permitted by Nevada, of personal liability of our
directors and our stockholders for monetary damages for breach of fiduciary duty
as directors.
We have agreed to indemnify each of our directors and certain officers against
certain liabilities, including liabilities under the Securities Act of 1933.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the provisions described above, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than our payment of expenses
incurred or paid by our director, officer or controlling person 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, we will, unless in the opinion of our 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.
51
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with the issuance and
distribution of the securities being registered hereby. All such expenses will
be borne by the registrant; none shall be borne by any selling stockholders.
Securities and Exchange
Commission registration fee $ 574
Legal fees and expenses (1) $ 50,000
Accounting fees and expenses (1) $ 25,000
Miscellaneous fees(1) $ 224,426
---------
Total (1) $ 300,000
(1) Estimated.
Item 26. Recent Sales of Unregistered Securities.
On September 14, 2004, we issued a total of 15,000,000 shares of our common
stock to the Mark A. Poulsen and to Mark Poulsen & Associates Pty Ltd. and a
further 1,000,000 shares of our restricted preferred shares were issued to Mark
Poulsen, our officer and director, in consideration for all of the issued and
outstanding stock of Subsidiary.
On September 20, 2004, we issued 420,000 shares of common capital stock for the
conversion of certain unsecured convertible promissory notes issued by
Subsidiary to eleven (11) separate note holders. The stock issued was valued at
$0.33 per share.
On September 29, 2004, we issued 450,000 shares of common capital stock for the
conversion of certain unsecured convertible promissory notes issued by
Subsidiary to twenty one (21) separate note holders. The stock issued was valued
at $0.50 per share.
52
Our shares were issued in reliance on the exemption from registration provided
by Section 4(2) of the Securities Act of 1933. The offerings were not a "public
offering" as defined in Section 4(2) due to the insubstantial number of persons
involved in the deal, size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we sold a high number
of shares to a high number of investors. In addition, both entities had the
necessary investment intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that such shares are
restricted pursuant to Rule 144 of the 1933 Securities Act. These restrictions
ensure that these shares would not be immediately redistributed into the market
and therefore not be part of a "public offering." Based on an analysis of the
above factors, we have met the requirements to qualify for exemption under
Section 4(2) of the Securities Act of 1933 for the above transaction.
Item 27. Exhibits.
3.1. Certificate of Incorporation and Amendments
3.2 Bylaws
5.1 Opinion and Consent of Anslow & Jaclin, LLP
10.1 Exchange Agreement dated September 5th, 2004 between us and Fit For
Business (Australia) Pty Limited
10.2 Stock Option Agreement dated July 25, 2004 between us and Fort Street
Equity, Inc. (subscription agreement)
10.3 License Agreement with L.R. Global Marketing Pty Ltd. and Extension
Agreement
10.4 Employment Agreement - Mark Poulsen
10.5 Employment Agreement - Anthony Head
10.6 Employment Agreement - Prins Ralston
10.7 Employment Agreement - Sandra Wendt
10.8 Agreement with Insource Pty Ltd.
21.1 Subsidiaries
23.1 Consent of Davis Accounting Group, P.C., independent auditors.
24.1 Power of Attorney (included on signature page of Registration Statement)
53
Item 28. Undertakings.
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, 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;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth 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) 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 Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% 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 material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(B) Undertaking Required by Regulation S-B, Item 512(e).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or controlling persons 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 of 1933 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 that 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 of 1933 and will be
governed by the final adjudication of such issue.
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(C) Undertaking Required by Regulation S-B, Item 512(f)
The undersigned Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Milton, Country of
Australia, on the 7th day of March, 2005.
FIT FOR BUSINESS INTERNATIONAL, INC.
BY: /s/ Mark A. Poulsen
----------------------------------
Mark A. Poulsen
Chief Executive Officer and
Chairman of the Board of Directors
POWER OF ATTORNEY
The undersigned directors and officers of Fit For Business International Inc.
hereby constitute and appoint Mark A. Poulsen, with full power to act without
others and with full power of substitution and re-substitution, our true and
lawful attorneys-in-fact with full power to execute in our name and behalf in
the capacities indicated below any and all amendments (including post-effective
amendments and amendments thereto) to this registration statement under the
Securities Act of 1933 and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission
and hereby ratify and confirm each and every act and thing that such attorney-
in-fact, or his substitutes, shall lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
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- --------------------------- ------------------------------ ---------------------
SIGNATURE TITLE DATE
- --------------------------- ------------------------------ ---------------------
/s/ Mark A. Poulsen Chief Executive Officer, March 7, 2005
- ----------------------- President and Chairman of
Mark A. Poulsen the Board of Directors
- --------------------------- ------------------------------ ---------------------
/s/ Sandra Wendt Senior Vice President of March 7, 2005
- ----------------------- Administration and Chief
Sandra Wendt Financial Officer
- --------------------------- ------------------------------ ---------------------
/s/ Prins Ralston Senior Vice President and March 7, 2005
- ----------------------- Chief Operating Officer
Prins Ralston
- --------------------------- ------------------------------ ---------------------
/s/ Anthony F. Head Senior Vice President of March 7, 2005
- ----------------------- Sales and Director
Anthony F. Head
- --------------------------- ------------------------------ ---------------------
55