May 4, 2005
Jay Ingram, Esq.
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Fit For Business International, Inc. ("FFB")
Registration Statement on Form SB-2
Filed: March 7, 2005
File No. 333-123176
Dear Mr. Ingram:
We have reviewed your April 6, 2005 letter and have the following responses:
General
- -------
1. We note that your registration statement registers the resale of
up to 2,870,000 shares of common stock by selling shareholders. We
also note that there is currently no market for your common
shares. Given this, please revise your prospectus cover page, the
risk factors section, and the plan of distribution section to
provide that selling security holders will sell at a stated, fixed
price until the securities are quoted on the OTC Bulletin Board
and, thereafter, the selling security holders may sell at
prevailing market prices or privately negotiated prices. See Item
16 of Schedule A to the Securities Act of 1933. Recalculate your
registration fee, if necessary, based upon this offering price.
ANSWER: In Amendment No. 1 to Form SB-2, we have made the requested changes on
the prospectus cover page and plan of distribution, added a risk factor and plan
of distribution. Based on our revisions, there was no need to recalculate the
registration fee.
2. We note the registration of 2,000,000 shares of common stock to be
issued "in connection with the conversion of options issued to
Fort Street Equity." You are reminded that it is the position of
the staff that the securities underlying securities that were sold
privately must also be converted privately pursuant to an
exemption from registration. They are part of the same
transaction. Only the resales of the underlying securities may be
registered by this registration statement and the exercise or
conversion transaction between the selling shareholders and the
company remains private, subject to the limitations of available
exemptions. Please revise disclosure throughout the prospectus
accordingly.
ANSWER: In Amendment No. 1 to Form SB-2, we have made the requested changes to
indicate that FFB is registering the resale of the shares underlying the
conversion of options.
3. Revise your disclosure referencing your intent to have the
company's securities listed on the OTC Bulletin Board to clarify
that there is no assurance that such securities will be listed for
trading on the OTC Bulletin Board.
ANSWER: In Amendment No. 1 to Form SB-2, we have revised our disclosure to
clarify that there is no assurance that FFB's securities will be quoted on the
OTC Bulletin Board.
4. Please provide the disclosure required by Item 510 of Regulation
S-B, Disclosure of Commission Position on Indemnification for
Securities Act Liabilities.
ANSWER: The original filed SB-2 registration statement contained the information
required by this question in Item 24 (Commission's position on indemnification)
and Item 28 (B) (undertaking in the first sentence of Item 512(e)).
Prospectus Cover Page
- ---------------------
5. Please limit your disclosure on the cover page to that information
required by Item 501 of Regulation S-B. For example, consider
removing the reference to the state of incorporation, the par
value of the common stock, and the information contained in the
third paragraph. Since the information in the third paragraph will
be addressed later in the prospectus, you do not need to include
this disclosure on the cover page. Also, please remove all
parenthetically defined terms such as "the Company," "the
Offering," and "the Initial Offering Period." The use of these
defined terms inhibits the readability of the cover page.
ANSWER: In Amendment No. 1 to Form SB-2, we have made revisions to limit our
disclosure on the cover page.
6. Please limit the outside front cover of the prospectus to one
page. Refer to Item 501(a) of Regulation S-B.
ANSWER: In Amendment No. 1 to Form SB-2, we have limited the front cover of the
prospectus to one page.
7. Please disclose the type of offering by the company. For instance,
is this a self underwritten no minimum, minimum-maximum or
all-or-none? Also, please disclose whether there are any minimum
purchase requirements and whether or not there are any
arrangements to place the funds in an escrow, trust or similar
account, as required by Item 501(a)(9)(iii) of Regulation S-B.
ANSWER: In Amendment No. 1 to Form SB-2, we have included language stating that
the offering is a self underwritten, no minimum offering and that there is no
requirement to place any proceeds in escrow.
8. Clarify what you mean when you disclose that the company's shares
"are not listed on any recognized exchange."
ANSWER: In Amendment No. 1 to Form SB-2, we have deleted the word "recognized"
and added the word "stock."
9. Revise your cross-reference to the risk factors section by
including a page number where the risk factors section appears in
the prospectus. See Item 501(a)(5) of Regulation S-B.
ANSWER: In Amendment No. 1 to Form SB-2, we have added a cross reference page
number.
10. Please provide the disclosure required by Item 501(a)(9)(iv) of
Regulation S-B.
ANSWER: In Amendment No. 1 to Form SB-2, we have provided the required
disclosure.
11. We do not understand the following disclosure: "This registration
statement will be amended and completed from time to time, as
necessary." Supplementally advise.
ANSWER: In Amendment No. 1 to Form SB-2, this statement has been deleted.
Inside Front and Outside Back Cover Page
- ----------------------------------------
12. Please provide the dealer prospectus delivery obligation as
required by Item 502(b) of Regulation S-B.
ANSWER: In Amendment No. 1 to Form SB-2, we have provided the dealer prospectus
delivery obligation.
Prospectus Summary
- ------------------
13. Please add summary financial data.
ANSWER: In Amendment No. 1 to Form SB-2, we have added a summary financial data
table.
14. Please add disclosure addressing the company's going concern
qualification.
ANSWER: In Amendment No. 1 to Form SB-2, we have added disclosure regarding the
company's going concern qualification.
About Us
- --------
15. Clarify your disclosure in this section regarding the corporate
history of the registrant. For example, when addressing the
acquisition of all of the issued and outstanding shares of Fit For
Business (Australia) Pty Limited, consider disclosing that Mark A.
Poulsen and Mark Poulsen & Associates Pty. Ltd were, as it
currently appears, 100% owners of Fit For Business (Australia).
Also, in the second paragraph, explain your use of the term
"wholly owned subsidiary" as it relates to the reverse merger.
Revise similar disclosure in the "Business" section. Are your
operations conducted through your subsidiary? If so, please make
this explicit.
ANSWER: In Amendment No. 1 to Form SB-2, we have made the requested disclosures.
Securities Offered By Us
- ------------------------
16. Please add disclosure addressing the nature of the secondary
offerings.
ANSWER: In Amendment No. 1 to Form SB-2, we have added the requested disclosure.
17. Please explain the statement on page 8 that "you will be
purchasing our shares from us and not our selling security
holders." This registration statement includes the resale of the
selling security holders.
ANSWER: This statement has been deleted. This statement was included to disclose
that purchasers of the 1,500,000 shares offered were receiving the shares from
us and not from the shares being offered by the selling security holders.
Risk Factors
- ------------
18. Please add an introductory paragraph that states all "material"
risks are disclosed in this section.
ANSWER: In Amendment No. 1 to Form SB-2, we have added such disclosure.
19. Revise your risk factor subheadings to ensure that your
subheadings clearly reflect the material risk enclosed in the
narrative. For example, the subheading for risk factor 4 merely
states the fact your business is subject to extensive government
regulation. Please revise your subheadings so that they adequately
describe the specific risk that results from the stated fact. To
assist you in this regard, we refer you to " Plain English
Handbook-How to Create Clear SEC Disclosure Documents," issued by
the Office of Investor Education and Assistance, which is
available on our website at www.sec.gov , and the updated version
of Staff Legal Bulletin No. 7, dated June 7, 1999.
ANSWER: In Amendment No.1 to Form SB-2, we have revised the risk factor
headings.
20. In the first risk factor, disclose the circumstances under which
the stated risk could materialize. For example, describe the
circumstances under which the company will lose these key
personnel. Also, explain why these persons are "essential" to your
operations and growth. What are the roles and responsibilities of
these individuals?
ANSWER: In Amendment No.1 to Form SB-2, we have revised the first risk factor
accordingly.
21. Please avoid generic conclusion you reach in many of your risk
factors that the risk could negatively impact or have an adverse
effect on your business or your business could suffer negative
consequences. Instead, replace this language with specific
disclosure of how your business and operations would be affected.
ANSWER: In Amendment No.1 to Form SB-2, we have revised certain risk factors
accordingly.
22. Consider combining the fourth and fifth risk factor, as they both
focus on the governmental regulations regarding your business and
Herbalife.
ANSWER: In Amendment No.1 to Form SB-2, we have combined the fourth and fifth
risk factor.
23. Please remove risk factors six and nine, as they are generic
risks.
ANSWER: In Amendment No.1 to Form SB-2, we have removed risk factors six and
nine.
24. Please add risk factors discussing dilution to investors in this
offering, risks associated with doing business in a foreign
country, currency fluctuations, and the going concern raised by
the independent auditors.
ANSWER: In Amendment No.1 to Form SB-2, we have added risk factors as follows:
dilution to investors in this offering, risks associated with doing business in
a foreign country, currency fluctuations, and the going concern raised by the
independent auditors.
Use of Proceeds
- ---------------
25. To the extent practicable, please provide more specific disclosure
regarding the allocation of the use of proceeds. For each
enumerated use, add disclosure discussing the items that comprise
each use. We specifically refer you to the Multi Media Training
Programs; Marketing, Promotion Literature and Brand Campaign
Costs; International Market Development. Currently, the disclosure
is vague. Also, provide more specificity concerning the amount
allocated to working capital.
ANSWER: In Amendment No.1 to Form SB-2, we have added specific disclosure
regarding the allocation of the use of proceeds.
26. We note your statement that the "[t]he 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." Be advised that
you may change the use of proceeds provided such reservation is
due to certain contingencies that are specifically discussed and
the alternatives to such use are indicated. Refer to Instruction 7
to Item 504 of Regulation S-K for guidance. Please revise your
disclosure accordingly.
ANSWER: In Amendment No.1 to Form SB-2, we have deleted this sentence.
27. Please discuss the allocation of proceeds if you raise less than
$1 million.
ANSWER: In Amendment No.1 to Form SB-2, we have added a section on a net raise
of $700,000.
28. State whether any of the proceeds will be used to compensate
officers and directors. We note the reference to allocation of
working capital to salaries. If so, please name the officer or
director and state the amount so allocated.
ANSWER: In Amendment No.1 to Form SB-2, we have added information on the
compensation to officers and directors.
29. Reconcile the disclosure regarding how long the maximum offering
will sustain your business. You refer in this section to both 12
and 18 months.
ANSWER: In Amendment No.1 to Form SB-2, we have added language stating that the
maximum offering of $4,400,000 will sustain FFB for 18 months. We also have
language stating that a raise of $1,000,000 will sustain FFB for 12 months.
Management's Discussion and Analysis
General
30. The disclosure in the last sentence of the first paragraph is
repetitive. Revise as appropriate.
ANSWER: In Amendment No.1 to Form SB-2, we have deleted this sentence.
31. The disclosure in the second paragraph is confusing. For example,
we do not understand that statement that you "believe that the
effect implementation of our business plan will result in our
position as a provider of wellness programs to the business..."
Please revise.
ANSWER: In Amendment No.1 to Form SB-2, we have revised the disclosure in the
second paragraph.
Results of Operations and Liquidity and Capital Resources
- ---------------------------------------------------------
32. Please explain the statement that you have conducted operations
since 1998 when your business was not incorporated until 2001.
Please include disclosure required by Item 101(a) of Regulation
S-B regarding all predecessors.
ANSWER: In Amendment No.1 to Form SB-2, we have revised this paragraph to state
that our subsidiary has conducted operations since 1998.
33. Given your current cash position, explain how you intend to pay
the costs associated with this offering which you estimate to be
$300,000, especially since there is no minimum and you may be able
to raise only nominal funds from this offering.
ANSWER: In Amendment No.1 to Form SB-2, we have explained how we intend to pay
the costs associated with the offering.
34. On page 17, clarify your use of the term "groupings."
ANSWER: In Amendment No.1 to Form SB-2, we have deleted the word "groupings" and
inserted the words "target markets."
35. Please disclose the cash on hand as of the most recent practicable
date.
ANSWER: In Amendment No.1 to Form SB-2, we have disclosed current cash on hand
for FFB.
36. Please clarify the reference to commencing product sales in the
first quarter of 2005. The first quarter of your fiscal year has
already been completed.
ANSWER: In Amendment No.1 to Form SB-2, we have revised to state that product
sales will commence in the second quarter of 2005.
37. Revise to describe the nature and terms of the license that you
sold in Australia. Tell us supplementally if the license discussed
in this disclosure is the same as the one with LR Global, as
disclosed in the notes to the financial statements.
ANSWER: In Amendment No.1 to Form SB-2, we have further described the nature and
terms of the license. The license is the LR Global license.
38. We note the disclosure that "program sales will commence in the
first quarter of 2005." Please provide us with supplemental
response explaining your basis for anticipating first quarter
revenues or revise to eliminate this disclosure.
ANSWER: In Amendment No.1 to Form SB-2, we have revised this statement to
indicate that program sales will commence in the second quarter of 2005.
39. Revise to disclose the reason for the increases in general and
administrative expenses during the December 31, 2004 quarter.
ANSWER: General and administrative expenses increased during the quarter ended
December 31, 2004, due to additional expenses incurred pertaining to payroll and
related payroll taxes, advertising and promotion, Australian accounting and
consulting fees, recruiting/personnel search fees, training and development, and
travel and lodging.
40. You state that your business needs and additional $185,000 to
carry it through from April to June 2005. Revise to disclose
whether the $185,000 cash requirement is on top of the $382, 250
that is due to you by LR Global by May 31, 2005. Disclose the due
date of the accounts receivable in MD&A.
ANSWER: In Amendment No.1 to Form SB-2, we have revised the document to include
answers to the above questions.
41. You state, "[i]n order to become profitable, we may need to secure
additional debt or equity funding." Please revise to clarify how
additional debt or equity funding will improve your profitability.
ANSWER: In Amendment No.1 to Form SB-2, we have revised to add the words "to
secure sufficient sales to" before profitable and "to support our marketing and
sales strategy."
42. You state that if you do not receive funding from this stock
offering, "public offerings of equity" will be necessary. Revise
to disclose if you have a plan to file another registration
statement and if not, clarify the meaning of the disclosure.
ANSWER: In Amendment No.1 to Form SB-2, we have revised the document to add the
words "capital raising" in lieu of "public offerings of equity." At this time,
FFB has no plans to file another registration statement immediately after this
registration statement unless required by a funding source.
43. Please provide the disclosure required by Item 303(b) of
Regulation S-B regarding your results of operations. The
Management's Discussion and Analysis ("MD&A") section is one of
the most critical aspects of Form SB-2. As such, we ask that you
revise this section to discuss the events, trends, and
uncertainties that management views as most critical to the
company's revenues, financial position, liquidity, plan of
operations and results of operations. In an effort to assist you
in this regard, please refer to the Commission Guidance Regarding
Management's Discussion and Analysis of Financial Condition and
Results of Operations, Release Nos. 33-8350 (December 19, 2003) at
http://www.sec.gov/rules/interp/33-8350.htm. This guidance is
intended to elicit more meaningful disclosure in MD&A in a number
of areas, including the overall presentation and focus of MD&A,
with general emphasis on the discussion and analysis of known
trends, demands, commitments, events and uncertainties, and
specific guidance on disclosures about liquidity, capital
resources and critical accounting.
ANSWER: In Amendment No.1 to Form SB-2, we have revised the MD&A substantially
to attempt to comply with Item 303(b) of regulation S-B.
Plan of Operation
- -----------------
44. The disclosure contained on pages 18 and 19 regarding the
company's activities for the past three months is vague. Please
provide more specific disclosure as it related to the following
concepts:
a. "continuing to enhance and further develop our Web based
management information systems;"
b. "Providing input and direction for further wellness program
selection, features, benefits and design of programs
planned to be supplied to our various customer groupings;"
and
c. Establishing appropriate segmented marketing approaches and
contact databases for the planned sale of our programs
wellness programs to these markets."
ANSWER: In Amendment No.1 to Form SB-2, we have provided more specific
disclosure as requested.
45. Given your limited operating history and generation of revenues,
the company is required to provide a detailed plan of operation
for the next 12 months. Substantially revise this section to
discuss with greater specificity the steps you intend to take in
furtherance of your plan of operation. Please provide a potential
investor with comprehensive disclosure of the direction in which
you plan to take your company in the next twelve months of
operation. Given that there is so little context to your
discussion of your operations, please revise your disclosure so
that a potential investor may clearly understand the concept of
your business and how you intend to commence and sustain
meaningful operations. You should provide as much background as
necessary while ensuring that your disclosure is not repetitive of
information appearing elsewhere in the prospectus. You should
focus your discussion in monthly or quarterly increments and
discuss the steps necessary for, the costs associated with, and
projected time frames for achieving sustained first revenues.
Currently, you identify several specific milestones; however, your
disclosure is vague and does not provide an investor with vital
information that he or she needs to evaluate the methods by which
you intend to achieve your stated objectives. We may have
additional comment after reviewing your revised disclosure.
ANSWER: In Amendment No.1 to Form SB-2, we have provided the required
disclosure.
46. Please update to disclose whether you have any material
commitments for capital expenditures as required by Item
303(b)(iii) of Regulation S-B.
ANSWER: In Amendment No.1 to Form SB-2, we have updated our disclosure
accordingly.
47. Explain how you intend to develop "brand awareness" and how you
intend to commence "market building activities." In addition to
the referenced TV program, what are "market building activities"
and what are the costs associated with them?
ANSWER: In Amendment No.1 to Form SB-2, we have responded to your request.
48. Disclose the costs associated with your 13 episode TV program and
specifically explain how you intend to bring this program to
fruition. Clarify the nature of the program and the amount of
funds that will be necessary to pay for it. Are there any
agreements in place with respect to the production of the program?
If so, disclose the material terms of the agreement and file the
agreements as material exhibits.
ANSWER: In Amendment No.1 to Form SB-2, we have disclosed the costs associated
with the TV program and how FFB intends to bring it to fruition. There are no
material agreements to be filed as exhibits.
49. On page 19, explain your use of the term "sales pipeline."
ANSWER: In Amendment No.1 to Form SB-2, we have deleted the term "sales
pipeline."
50. Describe all of steps and costs associated with opening "new
country markets."
ANSWER: In Amendment No.1 to Form SB-2, we have described in detail the steps
and costs (are identified as application of the proceeds of raising capital)
associated with opening new markets.
Business
- --------
51. Throughout the Business section, you discuss "customer service
representatives" and "account executives". Revise to clarify the
differences between the two positions. If the positions are one in
the same, please clarify this in the document.
ANSWER: In Amendment No.1 to Form SB-2, we have added a section explain the
difference between customer service representatives and account executives.
52. Explain the issuance of shares to "former officers and directors"
on May 30, 2001 the date the company was incorporated.
ANSWER: In Amendment No.1 to Form SB-2, we have added language that the founders
received shares for incorporation services and as founders.
53. Please disclose the state and date of incorporation for Fit For
Business (Australia) Pty Limited.
ANSWER: In Amendment No.1 to Form SB-2, we have disclosed the state (Queensland
in Australia) and date of incorporation.
54. Disclose the material terms of the exchange agreement. Discuss
whether any finders' fees were paid or whether any other
consideration was paid, directly or indirectly.
ANSWER: In Amendment No.1 to Form SB-2, we have disclosed the material terms of
the exchange agreement. Please note that most of the material terms of the
agreement were previously included. We added two additional items: Mark Poulsen
was named director and the company changed its name to its present name.
55. Please disclose the activities that Fort Street Equity, Inc. has
performed for the company in connection with this registration
statement.
ANSWER: In Amendment No.1 to Form SB-2, we have added language regarding Fort
Street Equity's consulting activities for us.
56. We do not fully understand the nature of your business and it is
not clear what activities the corporate entity undertakes since it
appears that the account representatives and customer service
representatives are the individuals who market and distribute
Herbalife products. It further appears that the account executives
and customer service representatives are obligated to provide the
company with a portion of the earnings generated from the sale of
the Herbalife products. To this extent, we ask that you thoroughly
revise your disclosure in this section and throughout your
registration statement to clarify the current status of your
operations and your proposed business operations. Your current
description of your business and the services the company provides
is vague and difficult to comprehend. Clearly disclose the
business activities the company engages in, the precise activities
your company will, in the future, engage in and describe and
explain the precise relationship between account executives and
the company. We may have further comment after reviewing your
revised disclosure.
ANSWER: In Amendment No.1 to Form SB-2, we have thoroughly revised FFB's
business plan.
57. Describe the company"s precise relationship with Herbalife
International, Inc. Is Herbalife aware of the company"s business?
Does Herbalife permit such a network marketing system? If so,
describe any restrictions that Herbalife imposes on your
operations or those of your account executives and customer
service representatives. Please substantiate your responses.
ANSWER: In Amendment No.1 to Form SB-2, we have added a paragraph describing
FFB's relationship with Herbalife.
58. You refer to account executives and customer service
representatives. Specifically disclose the difference, if any,
between these two roles. Also, describe how the precise
relationship between the company and the account executives and
customer service representatives. Clear disclosure of how these
individuals impact your operations is required. Also, disclose
whether any of your officers and directors are account executives
or customer service representatives. We may have further comment.
ANSWER: In Amendment No.1 to Form SB-2, we have provided a description of the
differences between account executives and customer service representatives. We
have also stated that none of FFB's officers and directors are either account
executives or customer service representatives.
59. Disclose whether or not the company maintains an internet site.
ANSWER: In Amendment No.1 to Form SB-2, we have disclosed FFB's internet site.
Corporate Wellness Solution Program
- -----------------------------------
60. Explain the reference to "ISO9001 quality assured" program when
first mentioned.
ANSWER: In Amendment No.1 to Form SB-2, we have added a separate section
describing the above.
61. We note your statement that you intend to supply businesses with a
proactive solution to attempt to address their productivity,
stress and absenteeism issues..." Please elaborate.
ANSWER: In Amendment No.1 to Form SB-2, we have deleted this phrase.
Living Well Program
- -------------------
62. Please elaborate on your use of the term "royalty overrides."
ANSWER: In Amendment No.1 to Form SB-2, we have deleted the term "royalty
overrides."
63. Please revise to clarify how the "account executive downline
organizations" work. You state that sponsors receive royalty
overrides. Disclose who these sponsors are. Revise to disclose how
the sponsors receive these royalty overrides. Revise this
paragraph in its entirety.
ANSWER: In Amendment No.1 to Form SB-2, we have revised this paragraph in its
entirety.
Products and Services
- ---------------------
64. You state that customer service representatives follow-up with
individual customers in the first, third, seventh, fourteenth and
twenty-first day of the program and regularly thereafter." In
"Costs" on page 35, you state that each individual program lasts
for one month. Clarify in this section the length of all programs.
If the program length is particular to each contract, please
disclose this. Also consider disclosing the average length of each
contract, if relevant.
ANSWER: In Amendment No.1 to Form SB-2, we have discussed the term of the
contract and clarified that customer service representatives follow up on the
1st, 3rd, 7th, 14th and 28th day of each month.
Fit For Business Program Return and Buy-Back Policies
- -----------------------------------------------------
65. Please disclose the "specified documentation requirements"
referenced on page 27. Also, explain why you believe your buy-back
policy "addresses a number of the regulatory compliance issues
pertaining to network marketing systems."
ANSWER: In Amendment No.1 to Form SB-2, we have deleted this language.
Network Marketing System
- ------------------------
66. We note that you offer a structured work force whereby account
executives must be sponsored by existing account executives.
Please add disclosure to discuss in detail this aspect of your
business. Provide substantial detail regarding the payment
structure of these transactions and provide examples as necessary.
Disclose the amount and percent of revenues to date that are
attributed to this aspect of your business. Also, a pyramid sales
structure may be considered a security or inherently fraudulent
under federal law. See Release no. 33-9387 (November 1971). In
addition, these sales structures may be illegal under state law.
Supplementally, with a view to disclosure in your prospectus,
please address whether your sales structure involves a security
under federal law or is illegal under federal or state law or
under Australian law. We may have further comment.
ANSWER: In Amendment No. 1 to Form SB-2, FFB's business plan has been revised to
indicate that FFB does not have a "pyramid sales structure." FFB also intends to
submit a supplemental response to you regarding this.
67. What are the contents of an "account executive kit" referenced on
page 28?
ANSWER: In Amendment No.1 to Form SB-2, we have described the contents of FFB's
account executive kit.
68. Further elaborate on your "international sponsorship program" and
explain why you believe it "provides a significant advantage to
our account executives as compared with account executives in some
other network marketing organizations."
ANSWER: In Amendment No.1 to Form SB-2, we have deleted any reference to FFB's
"international sponsorship program."
Geographic Profiles and Sales Trends
- ------------------------------------
69. On page 28, explain why you expect "an initial period of rapid
growth in sales" as you enter new countries. Also provide a
reasonable basis for your assertion.
ANSWER: In Amendment No.1 to Form SB-2, we have provided an explanation for this
statement.
70. Please provide a basis for the following assertion: "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." Also, explain your use of the term "downline
organizations."
ANSWER: In Amendment No.1 to Form SB-2, we have provided a basis for the
above-stated assertion.
Fit For Business Program Distribution
- -------------------------------------
71. Please expand your disclosure regarding your web-based management
information system. What does it entail and how does it impact
your operations?
ANSWER: In Amendment No.1 to Form SB-2, we have expanded the disclosure
regarding "web-based management information system."
Governmental Regulation
- -----------------------
72. We note the discussion of the US regulation of your business.
Please indicate whether any of your business or intended business
will occur in the United States. Discuss whether you have
generated any revenues from sales in the United States.
ANSWER: In Amendment No.1 to Form SB-2, we have revised our disclosure to
indicate that, to date, FFB has not undertaken any business in the United States
but intends to explore the United States marketplace by the end of 2005.
Therefore, FFB has not generated any revenues from sales in the United States.
73. A significant portion of the disclosure in this section is
boilerplate and does not sufficiently capture how your company's
operations are impacted by the myriad governmental regulations
that you are subject to. Revise your disclosure to provide
specific information about how each facet of your company is
affected by existing or probable governmental regulations. See
Item 101(a)(8) of Regulation S-B. Also, discuss the laws of the
jurisdiction(s) where you conduct or plan to conduct your
business.
ANSWER: In Amendment No.1 to Form SB-2, we have revised the disclosure
significantly to address the above issue.
Retail Sales
- ------------
74. You state that "retail sales represent the gross sales amounts
reflected on your invoices by our account executives." A few
sentences later in the paragraph, you state that "[t]he retail
sales price of our programs is reflected in account executive
invoices as the prices charged to customers together with, in most
cases, a deduction for the corresponding account executive
profit." Please reconcile these statements and revise the
disclosure accordingly.
ANSWER: In Amendment No.1 to Form SB-2, we have reconciled the statements and
revised the disclosure accordingly.
75. In multiple areas of the Business section, you state that the
company retains 15% of gross receipts while 85% of the proceeds go
to the customer service representative which includes the customer
service representative compensation of 35% of gross receipts.
However, in the "Retail Sales" section, you state that net sales
represents the actual purchase price paid to the company by the
account executive after account executive profits which total
approximately 35% of the retail sale prices (an freight and
handling). Please revise the disclosures to clarify how the retail
sales receipts are distributed to the various people and entities
involved in the sales process. Also, ensure consistent disclosure
throughout the document with respect to this matter.
ANSWER: In Amendment No.1 to Form SB-2, we have revised the disclosures and
reviewed the document for consistency regarding this.
76. Revise to clarify the disclosure that states, "[b]eginning 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." Tell us supplementally
the specific accounting standard referred to in this statement and
whether the Australian accounting pronouncement is in accordance
with U.S. GAAP.
ANSWER: In Amendment No.1 to Form SB-2, we have deleted the above statement.
Costs
- -----
77. Please expand your disclosure to specifically discuss what the
benefits, products, and services a customer receives if he or she
purchases a particular program.
ANSWER: In Amendment No.1 to Form SB-2, we have revised this section to discuss
what the benefits, products, and services a customer receives if he or she
purchases a particular program.
Employees
- ---------
78. Please disclose the total number of employees, as well as the
number of full time employees. See Item 101(b)(12) of Regulation
S-B.
ANSWER: In Amendment No.1 to Form SB-2, we have disclosed the number of
employees, including full time employees.
79. Disclose the positions and responsibilities of each of your four
employees. Also, disclose all material terms of the employment
agreements and file the agreements as material exhibits.
ANSWER: In Amendment No.1 to Form SB-2, we have disclosed the positions and
responsibilities of the employees in different parts of the document. We have
already filed the employment agreements as exhibits in the initial filing.
Independent Accountant Executives and Customer Service Representatives
- ----------------------------------------------------------------------
80. Expand your disclosure about your "code of conduct and quality
assured procedures."
ANSWER: In Amendment No.1 to Form SB-2, we have expanded the disclosure as
requested.
Australian License Agreement
- ----------------------------
81. Please expand your disclosure regarding the purpose of the license
agreement with LR Global Marketing Pty Ltd. Also, explain how the
license agreement impacts your operations, financial and
otherwise, and identify the principals behind this entity. In the
"Certain Relationships and Related Transactions" section, you
disclose that LR Global Marketing acts as trustee for Fit for
Business Australia/New Zealand Trust. Who are the principals
behind LR Global? Please explain.
ANSWER: In Amendment No.1 to Form SB-2, we have expanded the disclosure about
the license agreement with LR Global Marketing Pty Ltd.
82. You disclose that LR Global has the right to use your logo, your
management information system, and "other material." Explain
"other material."
ANSWER: In Amendment No.1 to Form SB-2, we have deleted the words "other
material" and expanded on what the licensee receives.
83. Please substantiate your disclosure that "LR Global will receive a
five (5%) percent commission directly from Herbalife on the sales
of the Herbalife products generated by "LR Global." Has Herbalife
agreed to this commission?
ANSWER: In Amendment No.1 to Form SB-2, we have substantiated the requested
disclosure and stated that Herbalife has agreed to the commission.
84. Please disclose whether there is any relationship between LR
Global and your company, its officers, directors or affiliates.
ANSWER: In Amendment No.1 to Form SB-2, we have included the requested
disclosure. Other than Mr. Poulsen's transfer of shares, there is no
relationship.
Intellectual Property
- ---------------------
85. Please elaborate on your disclosure regarding patents, trademarks,
licenses, etc. Have you obtained intellectual property rights for
your technology? If so, please identify the patents, trademarks,
licenses, etc., discuss the information they cover, and please
disclose their duration. To the extent intellectual property
rights have not been obtained, disclose the costs associated with
obtaining the rights. Also, for each item for which you are
seeking intellectual property, specifically disclose how the item
fits within your business concept and how it impacts your
operations. Your current disclosure is very general in nature. See
Item 101(b)(7) of Regulation S-B.
ANSWER: In Amendment No.1 to Form SB-2, we have revised the disclosure to
indicate that FFB has only one trademark and no other intellectual property.
Description of Property
- -----------------------
86. Please disclose the costs associated with your leasing of office
space from Mark Poulsen & Associates Pty Ltd. and from Incorp.
Services.
ANSWER: In Amendment No.1 to Form SB-2, we have disclosed the costs associated
with the lease of office space from Mark Poulsen & Associates Pty Ltd. And our
"virtual office program" from Incorp. Services.
Directors, Executive Officers, Promoters, and Control Persons
- -------------------------------------------------------------
87. Please clarify whether the company has a Chief Executive Officer.
On page 40, you identify Mr. Poulson as the CEO. In the table,
however, you name him as the company's President and chairman of
the Board. Advise or revise your disclosure as appropriate.
ANSWER: In Amendment No.1 to Form SB-2, we have changed the initial paragraph of
the Executive Compensation section to state "President" and delete "Chief
Executive Officer."
88. With respect to Mr. Poulsen's experience, you disclose that he
"started his own marketing and distribution company." Name the
company and provide more specific disclosure about its marketing
and distribution. For example, what did the company market and
distribute? Was it Herbalife products?
ANSWER: In Amendment No.1 to Form SB-2, we have named the company Mark Poulsen &
Associates Pty Ltd. and stated that the company distributed herbalife products.
89. Please disclose each person's term of office as a director and the
period during which the person has served. See Item 401(a)(3) of
Regulation S-B.
ANSWER: In Amendment No.1 to Form SB-2, we have disclosed the directors term and
the period that each director has served. Specifically Messrs. Poulsen and Head,
our directors, commenced their terms in January 2005.
90. For the last five years or for any longer period of time that you
voluntarily cover, present the following for each member of
management:
- the title of each position held;
- the duties of each position if not clear from the
title;
- the beginning and ending dates by month and year of
each position;
- the name of the entity with whom the position was
held; and
- the activities of the entity.
ANSWER: In Amendment No.1 to Form SB-2, we have disclosed the requested
information.
91. With respect to Mr. Ralston's experience, please describe the
business nature of Ingeus Limited.
ANSWER: In Amendment No.1 to Form SB-2, we have described the business nature of
Ingeus Limited.
92. With respect to Ms. Wendt's experience, identify the privately
owned companies for which she is responsible for the "financial
control." Also, explain your use of this term.
ANSWER: In Amendment No.1 to Form SB-2, we have identified the privately owned
companies for which she is responsible for the "financial control."
93. Please name all promoters of the company. Refer to the definition
of "promoter" in Rule 405 of Regulation C.
ANSWER: In Amendment No.1 to Form SB-2, we have listed FFB's promoters.
94. Please discuss the potential conflicts of interest with
management. Discuss whether the company has adopted a policy
regarding conflicts of interest. Consider adding a risk factor.
ANSWER: In Amendment No.1 to Form SB-2, we have discussed the potential
conflicts of interest in the "Certain Relationships and Related Transactions"
section. We have also added a risk factor regarding this conflict of interest.
Executive Compensation
- ----------------------
95. We note reference to footnote (1) in the tabular presentation yet
there is no corresponding textual information. Revise or advise.
ANSWER: In Amendment No.1 to Form SB-2, we have removed the reference to
footnote (1).
Executive Compensation
- ----------------------
96. Explain to us why the information contained in this section is not
included in the Summary Compensation Table. If these arrangements
were entered into after the last fiscal year, please disclose the
date.
ANSWER: In Amendment No.1 to Form SB-2, we have deleted the second title
"Executive Compensation" and added the title "Employment Agreements." All
employment agreements were entered into on November 29, 2004. However, the
employees did not commence work until January 2005 . Therefore, no compensation
accrued in prior fiscal years.
97. Explain the company's basis for awarding Mr. Poulsen a $388, 250
bonus to be paid with 30 days after the listing of the company's
common stock on the over-the-counter bulletin.
ANSWER: In Amendment No.1 to Form SB-2, we have included FFB's basis for
rewarding Mr. Poulsen the $388,250 bonus.
98. Does Mr. Poulsen's employment agreement contemplate benefits or
other bonuses? If so, please describe.
ANSWER: In Amendment No.1 to Form SB-2, we have stated that Mr. Poulsen's
employment agreement does not contemplate any other bonuses.
99. Please describe the "benefits and bonus" that are a part of
Messrs. Ralston's and Head's employment agreements.
ANSWER: In Amendment No.1 to Form SB-2, we have revised this section to include
the specific bonuses received by Messrs. Ralson and Head, respectively.
100. Explain why the company will be obligated to pay a recruiting fee
for the placement of Mr. Ralston to Hudson Global Resources? What
is the business nature of Hudson Global Resources and what is the
nature of Mr. Ralston's potential affiliation with the company.
ANSWER: In Amendment No.1 to Form SB-2, we have revised this section to include
an explanation regarding the payment of a recruiting fee to Mr. Ralston. In
addition, we have disclosed the business nature of Hudson Global Resources and
Mr. Ralston's non-affiliation with it.
Principal Stockholders
- ----------------------
101. We note the following statement: "[t]o the knowledge of our
officers and directors...." Explain to us why you are qualifying
the disclosure in such a manner.
ANSWER: In Amendment No.1 to Form SB-2, we have revised this section to delete
this statement.
102. The substance of Footnote 1 does not appear to correspond. Please
revise your disclosure as appropriate. We refer you to the
placement of the footnote in column 2.
ANSWER: In Amendment No.1 to Form SB-2, we have revised this section so that the
footnotes correspond.
103. We note that Kamaneal Investments Pty. Ltd. owns 10.7 million
shares of common stock, or 51.2% of the outstanding common stock.
Please disclose whether Kamaneal Investments is a parent of the
company, as defined in Rule 405 of Regulation C. If so, please
supplementally advise the availability of the small business forms
to the issuer. We refer you to Item 10(a)(1) of Regulation S-B.
ANSWER: Kamaneal Invetsments Pty. Ltd. is a parent company as defined in Rule
405 of Regulation C. However, the availability of the small business forms to
issuer is acceptable. Kamaneal Investments Pty. Ltd. is a private Australian
company that acts a corporate trustee for the Mark Poulsen Family Trust. The
beneficiaries of the trust are currently Mark and Karen Poulsen. The only assets
owned on behalf of the trust are the shares and a rental property. The rental
income from the property is approximately AUD$35,000 per annum.
104. Include disclosure in this section regarding Mr. Poulsen's
ownership of 1 million shares of preferred stock and the voting
rights in connection with these shares.
ANSWER: In Amendment No.1 to Form SB-2, we have revised this section to include
a column on the effect of Mr. Poulsen's converting his preferred shares to
common shares. The document already contained disclosure on the ownership of
preferred stock and the voting rights for such stock.
Dilution
- --------
105. Please update the disclosure as of the most recent financial
statements.
ANSWER: The disclosures included in the Dilution information have been updated
to reflect the most recent financial statements.
106. Please provide the dilution information as various levels of
proceeds received in this offering.
ANSWER: The dilution information has been revised and presented at the various
levels of proceeds described in the offering.
107. In the Dilution section, we note that you assume a $0.05 exercise
price per share for the 2,000,000 options issued to Fort Street
Equity. However in the Note 4 to the financial statements, you
state that the exercise price of these options is to be at least
$0.50 per share. Please reconcile the two disclosures and revise
the document accordingly.
ANSWER: The dilution information has been revised to reflect a price of $0.50
per share, as disclosed in Note 4 to the audited financial statements.
Selling Shareholders
- --------------------
108. Please reconcile the amount being registered for the resale by
selling shareholders as listed in the table with the disclosure on
the cover page.
ANSWER: In Amendment No. 1 to Form SB-2, we have reconciled the amount of shares
being registered for resale by the selling shareholders.
109. Disclose whether or not any of the selling shareholders are
broker-dealers or affiliates of broker-dealers. Specifically tell
us about Fort Street Equity, Inc.
ANSWER: In Amendment No. 1 to Form SB-2, we have stated that none of the selling
shareholders are broker-dealers or affiliates of broker-dealers. FFB has
confirmed that Fort Street Equity, Inc. is not a broker-dealer or an affiliate
of a broker-dealer.
110. For all selling shareholders that are not natural persons, please
identify the individual with voting or investment control.
ANSWER: In Amendment No. 1 to Form SB-2, for selling shareholders that are not
natural persons, we have identified the individual(s) who have voting and
investment control.
111. Please disclose how you propose to reflect any changes in selling
security holders.
ANSWER: There is only one change in the selling security holders. Specifically,
Fort Street Equity, Inc. held 914,00 shares prior to the filing of the initial
SB-2 registration statement. We are now registering such shares and changing the
SB-2 registration statement accordingly. FFB does not intend to make any other
changes in selling security holders at this time.
Description of Securities
- -------------------------
Common Stock
- ------------
112. We note the statement that "all shares of common stock now
outstanding are fully paid, validly issued and non-assessable."
Please describe the basis for your assertion given that counsel's
opinion only pertains to the shares covered by this registration
statement or remove.
ANSWER: In Amendment No. 1 to Form SB-2, we have removed this statement.
Plan of Distribution
- --------------------
113. Please name each officer and director who will be selling the
shares for the company and state how they comply with the safe
harbor of Rule 3a4-1.
ANSWER: In Amendment No. 1 to Form SB-2, we have stated that Messrs. Poulsen and
Ralston will be the officers and directors selling shares. The document
previously included language regarding their compliance with the Rule 3a4-1
compliance. We have made revisions to such language.
Certain Relationships and Related Transactions
- ----------------------------------------------
114. Please disclose the exemption relied upon in transferring the
shares from Mr. Poulsen to the individuals in the table on pages
47 and 48.
ANSWER: In Amendment No. 1 to Form SB-2, we have disclosed the exemption relied
upon in Mr. Poulsen's transfer of shares.
115. We note the loans from related parties in the financial
statements. Please disclose in this section.
ANSWER: In Amendment No. 1 to Form SB-2, we have disclosed the loans from
related parties as described in the financial statements.
Financial Statements
- --------------------
Reverse Merger
- --------------
116. Immediately following a reverse merger, the balance of common
stock should consist of the total of the par value of the shares
issued by the accounting acquiree as consideration for the merger
plus the par value of the accounting acquiree's common stock that
was outstanding prior to the merger, assuming no other stock
transactions occurred in conjunction with the merger. The balance
of Additional Paid-in Capital should consist of the amounts in
excess of par value of the transactions described above plus the
transfer of the accounting acquiree's accumulated deficit and the
transfer of the balances of the accounting acquirer's common stock
and additional paid-in capital accounts plus or minus a balancing
adjustment, as necessary. The accumulated deficit of the
accounting acquirer should be brought forward and that of the
accounting acquiree should be eliminated. Please revise your
financial statements accordingly.
ANSWER: The information required to properly present a reverse merger
transaction, as described in your comment, has been included in the Statements
of Stockholders' Equity and in the notes to financial statements. FFB Australia
is the Accounting Acquirer, where its accumulated deficit has been brought
forward in the financial statements under the caption "(Deficit) Accumulated
During the Development Stage" in the accompanying Statements of Stockholders'
Equity. FFBI is the US parent shell that issued the shares for the acquisition
of FFB Australia. The information presented in the Statements of Stockholders'
Equity shows the issuance of preferred and common stock in the reverse merger,
and the recapitalization of the outstanding stock, and the elimination of the
accumulated deficit of the US shell and capital stock of the Accounting Acquirer
(FFB Australia) to paid-in capital, as required.
117. We note that your Loss per Common Share as of September 30, 2004
and 2003 is 0.03 and 179.6, respectively. Reverse mergers should
be recorded when they are effected and must be retroactively
reflected for the earlier Balance Sheets presented. Please revise
your financial statements accordingly.
ANSWER: The outstanding common stock for the period ended September 30, 2003,
has been retroactively adjusted to address a Statement of Operations presented
before the reverse merger date.
Statement of Operations
- -----------------------
118. Basic and diluted net loss per share should be rounded to the
nearest cent in order not to imply a greater degree of precision
than exists. Please revise the Statement of Operations.
ANSWER: Basic and diluted earnings per share in the Statements of Operations
have been revised to present only two decimal places.
Stockholders' Equity
- --------------------
119. Revise the Statement of Stockholders' Equity to reclassify $7,500
shown as (Deficit) Accumulated during Development Stage to
Additional Paid-in Capital and delete the $7,500 shown as (Aus)
Capital Stock.
ANSWER: The Statement of Stockholders' Equity has been revised to correct the
presentation of $7,500 as a contribution to paid-in capital, as needed.
120. In "Business-Our Company" and Note 4-Issuance of Common Stock, you
state that on May 30, 2001 you issued 5,000,000 shares of common
stock for services rendered. We do not see this transaction on the
Statement of Stockholder Equity during the year ended June 30,
2001. Please update the Statement or revise the disclosure to
clarify why this transaction is not accounted for on the
Statement. Also, explain to us supplementally the nature of the
5,000,000 shares you have described on the Statement as
Recapitalization of FFBI common stock. We could not find any
explanation for this transaction in the notes to the financial
statements. Tell us if there is a relationship between the
5,000,000 shares that you state were issued on May 9, 2001 with
the shares you show as a recapitalization of FFBI common stock for
the period ended September 30, 2004.
ANSWER: The issuance of 5,000,000 shares of common stock for services rendered
by former officers and directors was transacted by FFBI, the US Shell company,
on May 30, 2001, at par value. This transaction is not presented separately in
the Statement of Stockholders' Equity as it was effected before the reverse date
of September 14, 2004, but is included in the caption "Recapitalization of FFBI
Common Stock" as part of the reverse merger transaction. Mention of this
transaction in the notes to financial statements is for comprehensive disclosure
purposes.
Note 1-Summary of Significant Accounting Policies
- -------------------------------------------------
Revenue Recognition
- -------------------
121. You state you recognize revenue from products and services "at the
time of completion of each transaction or related contract
service." This statement does not appear to be in compliance with
SAB 104. Please review your accounting policy in conjunction with
the Staff Accounting Bulletin and modify your disclosure
accordingly.
ANSWER: The accounting policy for "Revenue Recognition" has been modified in the
notes to financial statements to address the completion of each product sale and
the provision of services in accordance with SAB 104.
122. Revise to disclose your accounting policy for recognizing
licensing revenues.
ANSWER: The accounting policy for "Revenue Recognition" has been modified to
describe in a separate paragraph the policy for recognition of license revenues.
Concentrations of Risk
- ----------------------
123. SFAS 105 has been superseded by SFAS 133 and various other
Statements of Financial Accounting Standards. Please revise your
disclosure accordingly.
ANSWER: The disclosure of "Concentrations of Risk" has been modified to
eliminate the reference to SFAS 105.
Fiscal Year End
- ---------------
124. You have presented audited annual Balance Sheets, Statements of
Operations and Statements of Cash Flows as of September 30.
However, you state that your fiscal year-end is June 30. Please
explain to us why your fiscal year-end is June 30 if you are
presenting audited annual financial information as of September 30
and revise your disclosure as necessary. Also, update the
Statement of Stockholder's Equity to provide year end balances of
September 30, 2004 so that it presents year-end financial
information that is consistent with the other financial
statements.
ANSWER: The financial statements of the Company have been audited for the
periods ended June 30, 2004, and 2003, and September 30, 2004, and 2003. The
Company specifically extended the audit period through September 30, 2004, and
2003 (beyond the disclosed year end), for the purpose of addressing under audit
the significant transaction elements related to the reverse merger, conversion
of promissory notes to equity, and the conversion of trade and other debt to
paid-in capital through the assignment of common stock by an officer and
director of the Company. The management of the Company understands that such
presentation is a departure from paragraph 310 of Regulation S-B, but is of the
opinion that such departure is appropriate given the materiality of the
transactions to the overall financial position of the Company.
Accounts Receivable
- -------------------
125. Revise to provide the company's accounting policy on accounts
receivable and allowances.
ANSWER: The Company's accounting policy for accounts receivable and the
allowance for doubtful accounts have been included in Note 1 to the Financial
Statements.
Note 3-Convertible Debt
- -----------------------
126. Tell us supplementally why you believe there is no beneficial
conversion feature related to the conversion feature of the notes.
ANSWER: Under the term sheet for the issuance of the Promissory Notes, two
specific conversion clauses, or times at which conversion of the Notes into
common stock could be effected were provided. The first was at any time prior to
maturity at the option of the Note holder, and the second, automatically
convertible as determined by the Company in the event that a public offering of
common stock was undertaken. In both instances, the conversion price was valued
at $0.50 per share of common stock (each Note value was $5,000 and convertible
into 10,000 shares of common stock for a value of $0.50 per share of common
stock). The value of the common stock to be derived upon conversion of the Notes
issued was compared to various common stock transactions of the Company at the
commitment dates of the Notes, and it was determined that Note holders were not
"in-the-money" at such dates. As such, no "intrinsic value" or beneficial
conversion feature could be measured.
Note 5-Income Taxes
- -------------------
127. Revise to disclose the expiration dates for the net operating loss
carryforwards as required by SFAS 109.
ANSWER: The expiration dates of the net operating loss carryforwards have been
included in Note 5, as requested.
Note 6-Related Party Transactions
- ---------------------------------
128. Revise to disclose the nature of the transaction that gave rise to
the amounts owed to Mark Poulsen & Associates Pty. Ltd. Also,
disclose in the notes to the financial statements terms and manner
of settlement of the amounts owed. If there is no due date for the
amounts owed, please disclose this. Refer to SFAS 57.
ANSWER: Additional disclosure has been provided regarding the nature of the
amounts owed to Mark Poulsen & Associates Pty. Ltd. and other parties.
Specifically, the advances to the Company were for working capital, and the
amounts are non-interest bearing and have no term for repayment.
Note 8-License Agreement
- ------------------------
129. With respect to the LR Global agreement, you state that the amount
of income recognized during the period ended September 30, 2004
was $4,570. This implies that there should be $495,430 in deferred
revenue since the total obligation due to the company is $500,000.
Please tell us supplementally why the Balance Sheet reflects only
$449,975 in deferred revenue, and update the notes to the
financial statements as necessary. Tell us supplementally how you
determine the amount of revenue to recognize in each period and
provide us supplementally with your calculations for the $4,570
and $11,363 in revenue recognized for the periods ending September
30, 2004 and December 31, 2004, respectively. Also, please
identify any related party revenues as such on the face of the
Statements of Operations.
ANSWER: With regards to the license agreement with L.R. Global, the initial
amount of the obligation due to the Company was $500,000. The deferred revenues
and realization of such related to the license agreement were not denominated in
United States dollars. The translation difference from Australian dollars caused
the differences in the realization of revenues for the periods. These amounts
have now been corrected in the balance sheets to $5,163 and $12,500,
respectively, to reflect the realization of revenues from the balance sheet into
income in United States dollars over the term of the License Agreement. The
pro-rated amount of revenue from August 24, 2004 (date of the License Agreement)
through September 30, 2004, amounted to $5,163, or slightly less than 1 percent
of the ten-year term of the License. The amount of revenues realized for the
three months ended December 31, 2004, amounted to one calendar quarter of the
ten-year term of the License Agreement, or $12,500. Captions in the Statements
of Operations have been amended to show related party revenues in parenthesis.
Note 9-Commitments and Contingencies
- ------------------------------------
130. In "Description of Property," we note the leased shared office
space in Las Vegas, Nevada. Revise to update the notes to the
financial statements in accordance with SFAS 13.
ANSWER: Note 9 to the financial statements has been amended to add a paragraph
that discusses the month-to-month lease agreement for office space with Mark
Poulsen & Associates Pty. Ltd., and the registered agent agreement for virtual
office services and facility rental with Incorp. Services, Inc. in the State of
Nevada. Neither of these agreements represents a long-term operating lease
arrangement for the Company.
131. With respect to the Insource Pty. Ltd. software services
agreement, revise the disclosure to state the due date and
accounting treatment for the $30,500 contract price and the
duration of the agreement with the company.
ANSWER: Note 9 to the financial statements has been amended to disclose the term
of the contract with Insource Pty. Ltd. of approximately 14 weeks. In addition,
weekly payment terms of contract amounts have also been disclosed.
132. In the interim financial statements, you state that for the period
ending December 31, 2003 the company recorded compensation expense
amounting to state that for the years ended September 30, 2004 and
2003, the company recorded compensation expense amounting to $53,
605 and $40, 259, 58% of the compensation expense for the entire
12 month period was recorded. Please supplementally explain to us
when compensation expense is recorded in the Statement of
Operations and the reason for the fluctuations in the various
periods reported.
ANSWER: The accrual of the compensation expense for services rendered began in
1999 with only three individuals. Additional individuals were added to the
accrual schedule over the remaining years up to September 14, 2004, at higher
individual income levels (the last individual added was on August 1, 2004, and
$15,000 was accrued for this individual between August 1, 2004, and September
14, 2004). The accrual amounts per period are as follows:
Period ended 09/30/99 $ 10,384
Period ended 09/30/00 35,234
Period ended 09/30/01 40,259
Period ended 09/30/02 40,259
Period ended 09/30/03 40,259
Period ended 09/14/04 53,605
----------
Totals $ 220,000
----------
Interim Financial Statements
- ----------------------------
133. Accumulated other comprehensive (loss) does not roll forward
properly from September 30, 2004 to December 31, 2004. Please
reconcile or explain.
ANSWER: Accumulated other comprehensive (loss) from September 30, 2004, through
December 31, 2004, has been corrected in the interim financial statements.
134. Revise the interim financial statements and notes thereto to
conform to the requested changes to the annual financial
statements as applicable.
ANSWER: All comments applicable to the interim financial statements as a result
of changes to and modifications of the financial statements as of September 30,
2004, have been addressed and changes have been made in such statements.
135. Disclose in a note to the interim financial statements, the
assertion of management that is required by Instruction 2 to Item
310(b) of Regulation S-B.
ANSWER: The disclosure of management regarding unaudited interim financial
statements has been included in the notes for financial statements for the
interim period ended December 31, 2004.
General
- -------
136. Please note the updating requirements of Item 310(g) of Regulation
S-B.
ANSWER: Amendment No. 1 to Form SB-2 includes financial statements as of
December 31, 2004. The financial statements are timely until May 15, 2005. The
requirements of Item 310(g) of Regulation S-B have been noted, and financial
statements for the period ended March 31, 2005, will be presented, if required,
in the next amended filing of the Company.
137. A currently dated consent of the independent public accountant
should be provided in all amendments to the registration
statement.
ANSWER: In Amendment No. 1 to Form SB-2, we have included a currently dated
consent of FFB's independent public accountant.
Part II-Information Not Required in Prospectus
- ----------------------------------------------
Other Expenses of Issuance and Distribution
- -------------------------------------------
138. We note that you have estimated $224,426 in miscellaneous fees.
Specifically describe the fees that constitute "miscellaneous
fees."
ANSWER: In Amendment No. 1 to Form SB-2, we have described the fees that
constitute "miscellaneous fees."
139. We note that you have not included any estimated expenses for
printing costs. Supplementally advise us why there are no printing
costs associated with the offering. We may have further comment.
ANSWER: In Amendment No. 1 to Form SB-2, we have added printing costs.
Recent Sales of Unregistered Securities
- ---------------------------------------
140. We note that on September 20, 2004, the company issued 420,000
shares of common stock in connection with the conversion of
certain unsecured convertible promissory notes. Please disclose
the exemption from registration relied upon for the issuance of
the underlying convertible debentures. We may have further
comment.
ANSWER: In Amendment No. 1 to Form SB-2, we have disclosed the exemption that
was relied upon for the issuance of the underlying convertible debenture.
141. We note that on September 29, 2004, the company issued 450,000
shares of common stock in connection with the conversion of
certain unsecured convertible promissory notes. Please disclose
the exemption from registration relied upon for the issuance of
the underlying convertible debentures. We may have further
comment.
ANSWER: In Amendment No. 1 to Form SB-2, we have disclosed the exemption that
was relied upon for the issuance of the underlying convertible debenture.
142. Refer to page F-5 and tell us why you have not included in this
section the issuance of shares that took place on September 14,
2004.
ANSWER: In Amendment No. 1 to Form SB-2, additional information has been
included in Item 26 pertaining to common stock transactions.
143. Refer to page F-12 and tell us why you have not included in this
section the issuance of the convertible securities described on
page F-12.
ANSWER: In Amendment No. 1 to Form SB-2, additional information has been
included in Item 26 pertaining to the conversion of promissory notes to common
stock.
144. Please address the financial sophistication of the purchasers in
the transactions for which you claim the exemption from
registration contained in section 4(2) of the Securities Act.
ANSWER: In Amendment No. 1 to Form SB-2, we have disclosed the financial
sophistication of the purchasers.
145. Please disclose recent sales of unregistered securities issued by
any predecessors of our business for the past three years.
ANSWER: FFB has no predecessor. All issuances in the last 3 years of FFB have
been disclosed. FFB does not consider Fit for Business Australia Pty Ltd. to be
a predecessor.
Exhibits
- --------
Exhibit 3.1
- -----------
146. Please file the complete copy of the articles if incorporation as
amended.
ANSWER: In Amendment No. 1 to Form SB-2, we have included 2 amendments to the
articles of incorporation.
Exhibit 3.2
- -----------
147. Tell us why you have provided the by-laws of an entity called
Lunettes, Et Al, Inc. and file the bylaws for your company.
ANSWER: This was a mistake. In Amendment No. 1 to Form SB-2, we have provided
the Bylaws for FFB.
Exhibit 5.1
- -----------
148. Please revise the legality opinion to opine on the shares that
cover the primary offering.
ANSWER: The legal opinion previously submitted opines on the 3,000,000 shares
that cover the primary offering. We are also required to opine on the other
shares in the offering. Please advise us what your issue is regarding the
opinion.
Exhibit 10.3
- ------------
149. Please file an executed copy of the license agreement with LR
Global Marketing Pty. Ltd.
ANSWER: In Amendment No. 1 to Form SB-2, we have revised Exhibit 10.3 to include
a conformed signature copy.
Undertakings
- ------------
150. Tell us your basis for including the undertaking provided in Item
512(f) of Regulation S-B.
ANSWER: In Amendment No. 1 to Form SB-2, this undertaking has been deleted.
Signatures
- ----------
151. Please have the principal accounting officer sign in this
capacity. See Instructions to Signatures, Form SB-2.
ANSWER: In Amendment No. 1 to Form SB-2, we have added the principal accounting
officer title to Sandra Wendt. Her signature line indicates this. In addition,
the document has been reconciled to indicate this.
Very truly yours,
ANSLOW & JACLIN, LLP
BY: s/s Anslow & Jaclin, LLP
ANSLOW & JACLIN, LLP