As filed with the Securities and Exchange Commission on May 4, 2005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO 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, Inc.
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 $0.50 $1,000,000 $117.70
------------------------------------------------------------------------------------------------------
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
------------------------------------------------------------------------------------------------------
Common shares, par value $.001 (5) 914,000 $0.04 $ 36,560 $ 4.30
Total 6,784,000 $5,900,160 $694.45
------------------------------------------------------------------------------------------------------
(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 the resale of the shares of common stock issuable in
connection with the conversion of options issued to Fort Street
Equity, Inc. 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 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.
(5) Represents Selling Security Holder shares of Fort Street Equity, Inc.
being sold to the public. The price of $0.04 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
consideration paid by Fort Street Equity, Inc. per share.
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 MAY 2005
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FIT FOR BUSINESS INTERNATIONAL, INC.
3,000,000 SHARES OF COMMON STOCK
RESALE OF 2,000,000 SHARES OF COMMON STOCK ISSUABLE IN CONNECTION WITH
THE CONVERSION OF OUTSTANDING OPTIONS
1,784,000 SELLING SECURITY HOLDER COMMON SHARES
Fit For Business International, Inc. is offering, on a "best efforts, self
underwritten, no minimum" basis 3,000,000 shares of our common stock at $1.50
per share. The initial offering period will end twelve (12) months from the date
listed in this prospectus unless it is terminated earlier. This Offering is
being made on a self-underwritten, no minimum basis by us through our officers
and directors. Since there is no selling commission, all proceeds from the
Offering will go to us. In addition, there are no arrangements to place any
proceeds received in an escrow, trust or similar account.
In addition, our Selling Security Holders are offering to sell up to 1,784,000
shares of our common stock, and a further 2,000,000 resale of shares of common
stock issuable in connection with the conversion of outstanding options. We will
not receive any proceeds from the sale of any common shares by our selling
security holders or our option holder, Fort Street Equity, Inc.
Our shares of common stock are not listed on any stock exchange. Immediately
after the effectiveness of this registration statement, we intend to have a
registered broker-dealer submit an application for a quotation on the OTC
Bulletin Board. There is no assurance that our shares of common stock will be
quoted on the OTC Bulletin Board.
The selling stockholders will sell their common stock at the following prices:
(i)$.50 per Share for selling security holders that had a promissory note
conversion of $.50 per share (450,000 shares); (ii) )$.33 per Share for selling
security holders that had a promissory note conversion of $.33 per share
(420,000 shares); (iii) $.50 per Share for selling security holders that had a
conversion price for options of $.50 per share (2,000,000 shares); and (iv) $.04
per Share for selling security holders that had paid consideration of $.04 per
share (914,000) shares. This shall occur until our shares of common stock are
quoted on the OTC Bulletin Board (or any other recognized exchange). Thereafter,
the selling stockholders may sell their shares at prevailing market prices or
privately negotiated prices. Based on this, the purchasers in this offering may
be receiving an illiquid security.
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" ON PAGE 9, 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
Price to public Underwriting Commissions Proceeds to Company
--------------- ------------------------ -------------------
Per Share $1.50 -0- $1.50
Total $4,500,000 -0- $4,500,000
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Table of Contents
PROSPECTUS SUMMARY............................................................8
RISK FACTORS.................................................................10
USE OF PROCEEDS..............................................................16
DETERMINATION OF OFFERING PRICE..............................................20
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.....................20
EQUITY COMPENSATION PLAN INFORMATION.........................................20
DIVIDENDS....................................................................21
PENNY STOCK CONSIDERATIONS...................................................21
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION....................21
BUSINESS - OUR COMPANY.......................................................31
DESCRIPTION OF PROPERTY......................................................46
LEGAL PROCEEDINGS............................................................46
MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS..................................46
EXECUTIVE COMPENSATION.......................................................49
PRINCIPAL STOCKHOLDERS.......................................................51
DILUTION.....................................................................52
SELLING STOCKHOLDERS.........................................................53
PLAN OF DISTRIBUTION.........................................................56
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............................58
DESCRIPTION OF SECURITIES....................................................61
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE........................................................62
TRANSFER AGENT...............................................................62
EXPERTS......................................................................62
LEGAL MATTERS................................................................62
SIGNATURES...................................................................68
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PROSPECTUS SUMMARY
About Us
We were established 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 100% of the issued and outstanding capital
shares of Fit For Business (Australia) Pty Limited ("Subsidiary"), an Australian
company. All Shares of Fit For Business (Australia) Pty Ltd were owned by Mark
A. Poulsen & Mark Poulsen & Associates Pty Ltd. Currently our operations are
conducted through our subsidiary which delivers wellness programs to the
business industry in Australia. One component of our program includes the
provision of 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.
Our auditors have issued a going concern qualification in their opinion letter.
Where You Can Find Us
Our registered United States office is 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. Fit for Business Australia Pty Ltd (our
operations) is located at 10/27 Mayneview Street, Milton, Queensland, 4064
Australia. Our telephone number in Australia is (011) 61 7 33673355 and our
facsimile number is (011) 61 7 33673252.
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.
In addition, there are no arrangements to place any proceeds received in an
escrow, trust or similar account. In addition, our Selling Security Holders are
offering to sell up to 1,784,000 shares of our common stock, and a further
2,000,000 resale of shares of common stock 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 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.
There is no assurance that our shares of common stock will be quoted on the OTC
Bulletin Board.
Summary Financial Information
-----------------------------
As of
As of September 30, December 31,
2004 2003 2004
----------- ----------- -----------
(Audited) (Audited) (Unaudited)
Balance Sheet Items -
Cash and cash equivalent $ 174,919 $ 55 $ 68,528
Total Current Assets 608,082 1,596 455,036
Total Assets $ 669,118 $ 4,286 $ 532,267
Accounts payable and accrued liabilities $ 43,733 $ 167,722 $ 64,291
Loans from related parties 59,595 149,433 1,208
Deferred revenues 494,837 -- 482,337
Total current liabilities(also total liabilities) $ 598,165 $ 317,155 $ 547,836
Stockholders' equity (deficit) $ 70,953 $ (312,869) $ (15,569)
Three Months Ended
Year Ended September 30, December 31,
2004 2003 2004 2003
------------ ------------ ------------ ------------
(Audited) (Audited) (Unaudited) (Unaudited)
Statements of Operations and Comprehensive
(loss) items-
Revenues $ 6,620 $ 247 $ 15,820 $ --
Cost of Goods Sold 741 73 2,266 --
Gross Profit 5,879 174 13,554 --
General and administrative expenses 199,364 14,719 99,304 3,029
Other income (expense) (12,698) -- 322 (1,251)
Net (loss) $ (206,183) $ (14,545) $ (85,428) $ (4,280)
(Loss) per common share-basic and diluted $ (0.03) $ -- $ -- $ --
Weighted Average Number of Common Shares
Outstanding - Basic and Diluted 7,831,739 5,000,000 20,870,000 5,000,000
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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, 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
All material risks have been disclosed in this section.
OUR INDEPENDENT AUDITORS HAVE ISSUED A REPORT WHICH MAY HURT OUR ABILITY TO
RAISE ADDITIONAL FINANCING
The report of our independent auditors on our financial statements for the year
ended September 30, 2004 contains an explanatory paragraph which indicates that
we have recurring losses from operations and our working capital is insufficient
to meet our planned business objectives. The deficit accumulated as of September
30, 2004 was $486,377. This report states that, because of these losses, there
may be a substantial doubt about our ability to continue as a going concern.
This report and the existence of these recurring losses from operations may make
it more difficult for us to raise additional debt or equity financing needed to
run our business and is not viewed favorably by analysts or investors. We urge
potential investors to review this report before making a decision to invest in
us.
OUR OPERATION AND FUTURE GROWTH IS HEAVILY DEPENDENT UPON OUR PRESIDENT, MARK A.
POULSEN, OUR SENIOR VICE PRESIDENT OF SALES, ANTHONY F. HEAD, SANDRA WENDT, OUR
VICE PRESIDENT OF ADMINISTRATION, CHIEF FINANCIAL OFFICER AND PRINCIPAL
ACCOUNTING OFFICER AND PRINS RALSTON, OUR SENIOR VICE PRESIDENT AND CHIEF
OPERATING OFFICER AND OTHER MANAGEMENT PERSONNEL, AND IF WE LOSE THE SERVICES OF
THESE EMPLOYEES WE WILL BE UNABLE TO DEVELOP OUR BUSINESS.
In the event that any of these executives are unable to carry out their services
due to illness, death or if they decide to leave our employ, these events could
have a material adverse effect on our financial condition, future success, and
ability to sustain operations. During our development phase, key officers
formulate and execute the strategy being pursued by us in our operations. We do
not carry key person life insurance on any such individual. The following are
the roles and responsibilities of our executives:
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------------------------------- ------------------- ---------------------------------------------
Title Name Role/Responsibility
------------------------------- ------------------- ---------------------------------------------
President and Chief Mark A Poulsen Chairman of the Board Fit for Business
Executive Officer International Inc.
Managing Director Fit For Business
(Australia) Pty Ltd
Provides the leadership and direction for
the companies strategy and program
structure.
------------------------------- ------------------- ---------------------------------------------
Senior Vice President Anthony F Head Leads & Develops Sales initiatives
of Sales Training of Sales and Customer Service
Staff
Manages key corporate relationships and
accounts
Preparation of Sales Budgets
------------------------------- ------------------- ---------------------------------------------
Vice President of Sandra L Wendt Accounting Officer
Administration, Chief Manages Financial Function
Financial Officer and Oversees personnel & administration
Principal Accounting Officer Preparation of Forecasts & Budgets
------------------------------- ------------------- ---------------------------------------------
Senior Vice President & Prins A Ralston Establish and develop the Fit for
Chief Operating Officer Business personnel, structures, operating
processes and systems in countries which
the company operates in.
Lead and manage the personnel of the
companies.
Manage the financial affairs of the
companies.
Manage the legal and governance affairs
of the companies.
------------------------------- ------------------- ---------------------------------------------
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.
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SINCE MARK POULSEN, OUR OFFICER AND DIRECTOR, OWNS A COMPANY THAT RUNS A
HERBALIFE DISTRIBUTORSHIP THAT INCLUDES A NETWORK OF DISTRIBUTORS THAT RESULTS
IN THE COMPANY RECEVING ADDITIONAL COMMISSIONS AND INCOME FROM HERBALIFE, MARK
POULSEN COULD INFLUENCE THE SOURCING OF THE NUTRITIONAL PRODUCTS REQUIRED FOR
OUR PROGRAMS FROM HIS DISTRIBUTORS TO THE EXCLUSION OF OTHER DISTRIBUTORS AND AS
A SUCH A CONFLICT OF INTEEST CAN ARISE
Mark Poulsen & Associates Pty Ltd is a company which Mark A Poulsen is a
Director of and through which he runs his Herbalife distributorship. Herbalife
runs network marketing systems under Mark Poulsen & Associates Pty Ltd and it
directly receives 5% of income from Herbalife, dependant on the volume of the
nutritional products sold through distributors who have been sponsored by Mark
Poulsen & Associates Pty Ltd.
Currently, Mark Poulsen & Associates Pty Ltd has 21 distributors that it has
sponsored under the Herbalife networking systems that are signed up as
independent FFBI account executives (16) and customer service representatives
(5). As such Mark A. Poulsen should receive some distribution of dividends or
income from Mark A. Poulsen and Associates Pty Ltd that have resulted from
commissions paid to Mark A. Poulsen and Associates Pty Ltd from Herbalife as a
result of nutritional products sold by FFBI's independent account executives and
customers service representatives. This is a conflict of interest and may result
in his allegiance being swayed.
INVESTORS IN THIS OFFERING WILL SUFFER IMMEDIATE DILUTION OF THEIR INVESTMENT OF
$1.33 PER SHARE
Investors in this offering are paying $1.50 per share. If the maximum shares
offered in this offering are sold, our net tangible book value per share will be
$.17 per share. This will result in immediate dilution in your investment of
$1.33.
SINCE WE DEPEND ON HERBALIFE INTERNATIONAL INC. PRODUCTS AND WE HAVE NO WRITTEN
AGREEMENT FOR SUCH PRODUCTS THIS RELATIONSHIP CAN TERMINATE WITHOUT NOTICE AND
CAUSE THE LOSS OF FUTURE REVENUES AND OPERATIONS.
Our business plan relies heavily upon Herbalife International Inc. (NYSE:HLF).
We rely upon their products as the core of our nutritional programs. We do not
have a formal agreement with Herbalife. Mark A. Poulsen, the founder of our
operating subsidiary Fit for Business Australia Pty Ltd., is an independent
distributor of Herbalife products through Mark A. Poulsen and Associates Pty
Ltd.. Each of our account executives may also be an independent distributor of
Herbalife products. If Herbalife were to decide to unilaterally terminate this
relationship, if Mark A. Poulsen and Associates Pty Ltd. 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 revenues and operations would be drastically reduced. In these
circumstances we would need to source new Herbalife distributors and or a new
supplier of nutritional products.
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AS OUR NUTRITIONAL PROGRAMS INVOLVE THE COMPANY SOURCING THE NUTRITIONAL
PRODUCTS FROM EXISTING HERBALIFE DISTRIBUTORS, WE MAY BE IMPACTED BY THE
NEGATIVE CONNOTATIONS ASSOCIATED WITH THE NETWORK MARKETING UNDERTAKEN BY THESE
DISTRIBUTORS WITH THE RESULTING LOSS OF CORPORATE CLIENTS AND SUBSEQUENT LOSS OF
REVENUES
Herbalife International Inc. (NYSE:HLF). distributes its nutritional product
utilizing a network marketing model. This style of marketing has been previously
and incorrectly associated with the outlawed pyramid sales models. Due to this
incorrect association, we may be negatively impacted as potential corporate
clients may be reluctant to be associated with products sourced from network
marketing based distributors. We clearly remunerate our employed and independent
account executives and customer service representatives only on the basis of
retail sales of our programs to our clients, and are not involved in any form of
network marketing, as follows:
------------------------- -------------------------------- --------------------------- ------------------------
Type Salary Commission Bonuses
------------------------- -------------------------------- --------------------------- ------------------------
Employed Account Negotiated dependent on Negotiated dependent on Negotiated dependant
Executives qualifications and experience. sales volumes. on budget and key
performance indicators
being achieved.
------------------------- -------------------------------- --------------------------- ------------------------
Employed Customer Negotiated dependent on NIL Negotiated dependant
Service qualifications and experience. on budget and key
Representatives performance indicators
being achieved.
------------------------- -------------------------------- --------------------------- ------------------------
Independent Account NIL 35% of the retail sale of NIL
Executives the clients serviced.
------------------------- -------------------------------- --------------------------- ------------------------
Independent Customer NIL 35% of the retail sale of NIL
Service Representatives the clients serviced.
------------------------- -------------------------------- --------------------------- ------------------------
OUR BUSINESS, SPECIFICALLY THE HERBALIFE PRODUCTS, IS SUBJECT TO EXTENSIVE
GOVERNMENT REGULATION AND OUR FAILURE TO SECURE GOVERNMENTAL APPROVALS WILL
RESULT IN THE LOSS OF THE PRODUCT AND DECREASED REVENUES AND OPERATIONS.
Both our business, and the Herbalife products, at the core of our nutrition
components 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 or customer
service representatives, for which we may be held responsible; (2) our
distribution system; and (3) transfer pricing and similar regulations that
affect the level of taxable income and customs duties.
13
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 Herbalife 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 for the Herbalife products and we may have to substitute other
approved nutritional products in these markets.
SINCE OUR BUSINESS OPERATIONS ARE PRESENTLY LOCATED IN AUSTRALIA AND SUBJECT TO
THE RULES AND REGULATIONS OF AUSTRALIA, YOU MAY NOT BE FAMILIAR WITH SUCH RULES
AND REGULATIONS AND MAY NOT HAVE THE CAPABILITY TO MAKE AN INFORMED DECISION FOR
YOUR INVESTMENT
Our business operations are based in Australia. Our products and services are
subject to the rules and regulations of Australia. If you are a United States
investor, you may not be knowledgeable of the rules and regulations in
Australia. This may lead to your inability to make an informed decision about an
investment in us.
OUR BUSINESS OPERATIONS ARE TRANSACTED IN THE AUSTRALIAN DOLLAR AND SUBJECT TO
FOREIGN CURRENCY FLUCTUATIONS WHICH CAN DECREASE THE VALUE OF OUR ASSETS
We are an Australian based company. Although the financial information in this
document is presented in United States dollars, we transact our business in the
Australian dollar. Any negative price fluctuations in the Australian dollar to
the United States dollar will have the effect of decreasing the value of our
assets and, in turn, decreasing the value of your investment.
SALES BY SELLING SECURITY HOLDERS BELOW THE $1.50 OFFERING PRICE MAY CAUSE OUR
STOCK PRICE TO FALL AND DECREASE DEMAND IN THE PRIMARY OFFERING WHICH MAY
DECREASE THE VALUE OF YOUR INVESTMENT.
Our Selling Security Holders may offer their shares during our offering. All of
our stock owned by the Selling Security Holders will be registered by the
Registration Statement of which this prospectus is a part. The Selling Security
Holders may sell some or all of their shares immediately after they are
registered. In the event that the Selling Security Holders sell some or all of
their shares, which could occur while we are still selling shares directly to
investors in this offering, trading prices for the shares could fall below the
offering price of the shares and result in the loss of part, or all, of your
investment.
YOU MAY NOT BE ABLE TO LIQUIDATE YOUR INVESTMENTS SINCE THERE IS NO ASSURANCE
THAT A PUBLIC MARKET WILL DEVELOP FOR OUR COMMON STOCK OR THAT OUR COMMON STOCK
WILL EVER BE APPROVED FOR TRADING ON A RECOGNIZED STOCK EXCHANGE OR QUOTATION
MEDIUM.
14
There has been no trading market for the shares and none is anticipated to
develop in the near future. We intend to apply for a quotation on the Over the
Counter Bulletin Board concurrently with the filing of this offering. It is
unlikely that our trading market will develop in the near term, or that if
developed, it will be sustained. In the event the regular public trading market
does not develop, any investment in our stock would be highly illiquid.
Accordingly, an investor in our shares may not be able to sell the shares
readily, if at all.
BEFORE WE OBTAIN A QUOTATION ON THE OTC BULLETIN BOARD, SELLING STOCKHOLDERS
WILL BE FORCED TO SELL THEIR SHARES AT SET PRICES AND WILL BE RECEIVING AN
ILLIQUID SECURITY
The selling stockholders will sell their common stock at the following prices:
(i)$.50 per Share for selling security holders that had a promissory note
conversion of $.50 per share (450,000 shares); (ii) )$.33 per Share for selling
security holders that had a promissory note conversion of $.33 per share
(420,000 shares); and (iii) $.005 per Share for selling security holders that
had a conversion price for options of $.005 per share (2,000,000 shares). This
shall occur until our shares of common stock are quoted on the OTC Bulletin
Board (or any other recognized exchange). Thereafter, the selling stockholders
may sell their shares at prevailing market prices or privately negotiated
prices. Based on this, the purchasers in this offering may be receiving an
illiquid security.
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.
15
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 laws 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., industry, business, government and 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 $100,000, are estimated to be approximately $4,400,000 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 $4,400,000; a raise where we
net $2,700,000; a raise where we net $1,200,000; and a raise where we net
$700,000.
16
Use of Proceeds Based on Net Raise of $4,400,000:
Approximate Approximate
Dollar Percentage of
Application of Proceeds Amount Net Proceeds
----------------------- ----------- -------------
Purchase of Computer Software and Systems $ 350,000 8.0%
Hardware for Call Center (1)
Website Design and Enhancement (2) 260,000 5.9%
Production - Multi Media Training programs (3) 300,000 6.8%
Marketing, Promotion Literature and Brand 300,000 6.8%
Campaign Costs (4)
International market development (5) 1,500,000 34.1%
Working Capital (6) 1,690,000 38.4%
Total.................. $ 4,400,000 100.0%
=========== ======
(1) Further development of our web based management system including the
addition of a call centre module. This item includes the provision of the
required computing hardware to support the developed software.
(2) Development of a web based portal that will include the ability to
undertake online ecommerce transactions.
(3) Conversion of the current paper based training manuals for our Independent
Account Executives and Customer Service Representatives into a self paced
multi-media training kit.
(4) To secure a advertising and brand building agency to assist Fit For
Business in ensuring that its brand building activities deliver measurable
increases in sales.
(5) Undertake the research of the potential market, modify the Fit For Business
processes and systems for the market in question, prepare promotional
documentation in the language of the market and undertake relationship
building visits to the countries
(6) Represents amounts to be used for working capital and general corporate
purposes, including rent expense, corporate overhead including salaries,
administration and ongoing professional fees. The Working capital amount is
required to fund operations ahead of receiving the revenues that will flow
as a consequence of delivery of these services to customers.
17
Prior to revenues from sales being fully able to fund salaries and bonuses,
working capital will be used to fund the following salaries:
-------------------- ------------------- ----------------------------- --------------------- --------------------
Title Name Salary Bonus Term of contract
-------------------- ------------------- ----------------------------- --------------------- --------------------
President and Mark A Poulsen $96,329 Fit For Business Listing bonus Employment
Chief Executive (Australia) Pty Ltd $388,250 contract can be
Officer $192,658 Fit For Business terminated on
International Inc. four months
notice.
-------------------- ------------------- ----------------------------- --------------------- --------------------
Senior Vice Anthony F Head $77,063 On meeting budget Employment
President $11,086 contract can be
of Sales terminated on
four months
notice.
-------------------- ------------------- ----------------------------- --------------------- --------------------
Vice President of Sandra L Wendt $42,385 On meeting budget Employment
Administration, $3,695 contract can be
Chief Financial terminated on
Officer and four months
Principal notice.
Accounting Officer
-------------------- ------------------- ----------------------------- --------------------- --------------------
Senior Vice Prins A Ralston $131,007 On meeting budget Employment
President & Chief $14,782 contract can be
Operating Officer terminated on
four months
notice.
-------------------- ------------------- ----------------------------- --------------------- --------------------
Use of Proceeds Based on Net Raise of $2,700,000:
Approximate Approximate
Dollar Percentage of
Application of Proceeds Amount Net Proceeds
----------------------- ------ ------------
Purchase of Computer Software and Systems $ 250,000 9.3%
Hardware for Call Center
Website Design and Enhancement 160,000 5.5%
Production - Multi Media Training programs 90,000 3.3%
Marketing, Promotion Literature and Brand 300,000 11.1%
Campaign Costs
International market development 1,000,000 37.0%
Working Capital (1) 900,000 33.3%
Total.................. $ 2,700,000 100.0%
=========== ======
For the specific breakdown of each category, see the footnotes above under a Net
Raise of $4,400,000.
18
Use of Proceeds Based on Net Raise of $1,200,000:
Approximate Approximate
Dollar Percentage of
Application of Proceeds Amount Net Proceeds
----------------------- ------ ------------
Purchase of Computer Software and Systems $ 150,000 12.5%
Hardware for Call Center
Website Design and Enhancement 80,000 6.7%
Production - Multi Media Training programs 90,000 7.5%
Marketing, Promotion Literature and Brand 180,000 15.0%
Campaign Costs
International market development 210,000 17.5%
Working Capital (1) 490,000 40.8%
Total.................. $ 1,200,000 100.0%
=========== ======
Use of Proceeds Based on Net Raise of $700,000:
Approximate Approximate
Dollar Percentage of
Application of Proceeds Amount Net Proceeds
----------------------- ------ ------------
Website Design and Enhancement 50,000 7.1%
Marketing, Promotion Literature and Brand 50,000 7.1%
Campaign Costs
International market development 110,000 15.8%
Working Capital (1) 490,000 70.0%
Total.................. $ 700,000 100.0%
=========== ======
For the specific breakdown of each category, see the footnotes above under a Net
Raise of $4,400,000.
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 an Offering raising $1,000,000 will
only allow us to sustain our operations for a period of approximately twelve
(12) months. Upon completion of the Maximum Offering of $4,400,000, we believe
we will have sufficient financing to operate our business for approximately
eighteen (18) months.
19
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. There is no assurance
that our shares of common stock will be quoted on the OTC Bulletin Board. In
addition, 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.
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. There is no assurance that our shares of common stock
will be quoted on the OTC Bulletin Board.
As of April 29, 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 April 29, 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
20
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.
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.
21
Overview
Fit For Business International, Inc. ("FFBI" or the "Company") is a Nevada
corporation in the development stage having a mission to improve the wellness
and productivity of people in the workplace. FFBI provides products and services
for: (i) corporate wellness programs which address business productivity, stress
and absenteeism issues; and (ii) living well programs directed primarily, but
not exclusively, to individuals over 45 years of age.
Fit For Business International, Inc. completed a deemed reverse merger between
FFBI and Fit For Business (Australia) Pty Limited ("FFB Australia") on September
14, 2004. Fit For Business (Australia) Pty Limited was incorporated on December
14, 1998, in the state of Queensland, Australia. After commencing operations in
1998 FFB Australia has developed a quality endorsed business model in use by the
Company.
The Company's business models looks to address the alarming health statistics of
individuals in westernized countries. For example the Australian Institute of
Health and Welfare last year revealed that 60 per cent of Australian adults are
overweight and over 90 per cent have at least one modifiable risk factor for
heart, stroke and vascular disease. These statistics are reflected in the
Australian workforce. Further, the combination of an aging workforce, falling
birth rates and increased demand for workers makes it imperative that
Corporations guide employees in modifying the risk factors that could prevent
them from making a long and productive contribution within the workforce. The
Australian National Audit Office has reported that, many businesses have
recognized the need to intervene by introducing programs that include absence
management techniques such as leave banks and health initiatives such as
influenza injections, gym programs, yoga and stress management.
The Company believes its approach and programs deliver a sustainable improvement
to employees' lives. This is reflected in their increased health, more positive
mental and emotional states, and greater productivity. FFBI achieves this
through education and behavior modification together with nutrition which
provides the body with the requirements to keep it operating optimally without
drastic lifestyle changes.
FFBI offers a range of programs tailored to the needs of business - programs
that improve employees' health and productivity and consequently enable
businesses to improve their profitability. These programs include the provision
of:
a. Preventative inoculations - like influenza and hepatitis;
b. Education and behavior modification - teaching nutrition and what the body
requires to keep it operating optimally without drastic lifestyle changes;
c. Nutritional supplementation - to support and reinforce the behavior
modification (and discourage a return to old habits) while ensuring that
the body keeps getting the essentials during the transition process;
d. Fitness programs - geared to the specific needs of people; and
e. Other OH&S and wellness program components - as required.
22
FFBI backs all programs with friendly fully trained customer service
representatives who use state-of-the-art occupational health and safety web
based information and communications systems to support, record and report on
progress of people on the programs. This ensures ongoing support and
encouragement to both the individual and the corporation.
It would be FFBI analysis that within three to five years, workplace wellness
programs like those being proposed by FFBI will become the norm as businesses
increasingly recognize the benefits of greater productivity, happier employees,
less sickness and absenteeism, and a better profitability.
FFBI's business plan sees it licensing prime distributors in the countries that
it targets. The Licensees will need to be currently very successful business
people with existing networks of account executives and customer service
representatives. Each account executive and customer service representative will
be individually required to contract with FFBI as independent account executives
or customer service representatives. FFBI earns its revenues through the
licensing fees as well as, on average, earning a 15% margin on programs
delivered to individuals. The key to the business model is that corporations
contract with FFBI and pay for the purchase of the programs for their employees.
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 our 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
Our Subsidiary, FFB (Australia) has conducted operations since 1998, and has
generated $25,996 in revenues to date and has total assets of $532,267 as of
December 31, 2004. The programs we hope to be able to sell will be sold to the
various target markets. As of the date of this prospectus, we have secured the
sale of a license in Australia and New Zealand to LR Global Marketing Pty Ltd
and it is anticipated that program sales will commence in the second quarter of
2005. We have been involved in the first quarter in 2005 in inducting the
Licensee, LR Global Marketing Pty Ltd, to the Fit For Business operating systems
and methods. The sale of this license within the Australian and New Zealand
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 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. Management anticipates that we will continue to incur net losses until
we are able to generate revenues from sales of the wellness programs.
23
As of March 31, 2005, we had $7,196 of cash resources. 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 May 2005.
We estimate our business needs a minimum of $185,000 to carry it through from
April to June 2005. We believe the licensee payment due from LR Global Marketing
due on May 31, 2005, will fund these requirements. 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 secure sufficient sales to become
profitable, we may need to secure additional debt or equity funding to support
our marketing and sales strategy.
Should the required funding not be forthcoming from the aforementioned sources,
we may have to explore other avenues of capital formation. 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.
We have estimated that our offering costs will be approximately $100,000. In the
event that we are unable to raise additional monies to assist with the payment
of the offering costs, we intend fund these costs through loans.
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.
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. Following testing and use of the web based management
information systems by our Account Executives and Customer Service
Representatives, changes and additions were identified and we are working with
Insource Pty Ltd to implement these.
2. Continuing to further develop our operating infrastructure, as follows:
24
a. Providing input and direction for further wellness program selection,
features, benefits and design of programs planned to be supplied to our various
target markets. We are researching other like minded Occupational Health and
Safety Organizations to determine whether beneficial alliances could be made
between our organizations to collaborate and improve on our existing program
offerings in Australia.
b. Establishing which market segments are more likely to be willing consumers
of our wellness programs and then developing a marketing approach that is
consistent with their purchasing criteria. Training our sales force in the
marketing approach necessary to consummate sales to these organizations.
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 operations by accomplishing the following milestones:
March 2005:
Computer Software and Systems
-----------------------------
Continue implementation of our web based management system for final product
release to our Account Executives and Customer Service Representatives.
Website Design and Enhancement:
-------------------------------
Upgrade current Australian Fit For Business web site www.fitforbusiness.com.au.
to present better information about our programs that is more consistent with
our current marketing approach.
Marketing, Promotion Literature and Brand:
------------------------------------------
Engage a communications consultant to generate press articles and media
interactions specifically in relation to our target markets.
Speaking Opportunities
----------------------
- Seek out speaking opportunities at business conferences and seminars for the
FFB Senior Executives and these will coincide with a targeted media release on
the topics the Executives are speaking about.
Thought Leadership/ Editorial Opportunities
-------------------------------------------
- Negotiate a regular column or two in leading business management and/or health
magazines.
- Write letters to the Editor responding to articles on issues of business
health and fitness, wherever they appear.
- Write and distribute pro-active media releases on issues relating to workplace
health and fitness.
- Case studies of local customers using FFB products and programs highlighting
the benefits achieved and placed within business and Human Resource Media.
Pilot TV program
----------------
The process of bringing the TV program to fruition has been to initially develop
a program concept which has been shared with a number of potential participants
who would participate as anchor advertisers of the various segments of the TV
program. Following which a 10 minute pilot program has been filmed. The pilot
has been then put in the hands of an advertising agency who has taken it to the
major free to air commercial channels in Australia. The channel that addresses
25
our target markets has indicated that they will air the TV program providing
that we submit an enhanced pilot. As such the timetable for its production is as
follows:
o Engage Field Producer 29 May 2005
o Co Host & Anchor pilot
o Writes Scripts
o Films anchor pieces
o Produce Pilot Episode 13 June 2005
o Re edit existing pilot with field producer and host
o inserting anchor pieces and links
o Submit Pilot along with 5 scripted episode to sales and program
manager at Australian Free to Air TV Network 20 June 2005
The TV program itself will consist of 13 by 30 minute episodes, aimed at an
audience of 45 years and over. The TV program will cover the following topics:
o Health: FFBI will lead in this area using a variety of partner
providers and medical experts, including physical, psychological and
associated medical areas.
o Wellness: FFBI will lead this area using Behavioral scientists,
Occupational Therapists, Nutritionists and dieticians and fitness
experts.
o Lifestyle: The people watching this show have the largest interest in
maintaining lifestyle and the finance to keep it - this will include
such segments as holidays, retreats and spas, recreation and so forth.
o Employment: Recognized recruitment agencies to give informative
information on retaining employment, changing roles or re-entering the
workforce.
o Redundancy: We will be using experts from employee groups, Human
relations management companies and financial planers to assist in this
area. Overcoming the effects of redundancy weigh heavily on not just
the bread winner, but also family relationships causing much stress.
FFBI is currently in the process, together with the advertising agency and TV
channel, in finalizing the enhanced pilot. The enhanced pilot will cost $15,0000
to produce.
Sales:
------
- Identify market segments that are predisposed to purchasing our Programs.
- Identify companies with the purchasing power within that segment.
- Research company leads to ensure they meet an identified set of criteria.
- Approach the identified companies via our account executive with our sales
proposal.
- Win the business
- Initiate the implementation program via our customer service
representatives.
- The above process will take between 1 to 4 months to finalize sales in
small businesses and can take 6 to 12 months to finalize in large
corporations or government departments.
26
- Continually monitor and report to the individuals and corporations
consuming our programs.
- Continuously improve our internal processes and systems and ensure all
account executives and customer sales executives are fully trained in
respect of these improvements.
A further two licenses will be endeavored to be sold in Australia.
Revenues
--------
It is envisaged that $185,000 will be expended in this quarter and no
substantial revenues are expected till the June quarter.
June 2005:
-----------
Computer Software and Systems
-----------------------------
Continue implementation of our web based management system to our Account
Executives and Customer Service Representatives.
Website Design and Enhancement
------------------------------
- Upgrade current Australian Fit For Business web site
www.fitforbusiness.com.au. to present better information about our programs that
is more consistent with our current marketing approach.
Marketing, Promotion Literature and Brand:
------------------------------------------
- Continue Marketing and Brand building via continued press releases,
targeted media interaction and relationship building events such as corporate
breakfasts. Engage a marketing coordinator to coordinate the brand building and
media activities in Australia.
Promotional literature
----------------------
- Brochures
- Update/upgrade existing brochures as necessary
- Newsletters
- Newsletter providing potential customers with useful information and stats
about workplace health and fitness Trade Shows
- Participate in exhibitions and trade shows around both management and
health areas
- Identify industry sectors that have most to benefit from a more proactive
wellness approach and exhibit at trade shows targeting these sectors.
Industry Partnerships
---------------------
- Work with the Business Council of Australia's Employment & Participation
Committee as well as with the Australian Chamber of Commerce and its state-based
subsidiaries like Australian Business Limited.
TV PROGRAM
----------
As part of the marketing program, after acceptance of the enhanced pilot by the
Australian TV network, we will enter into production and advertising contracts
to create and deliver the 13 episode TV program. The TV program will cost Fit
For Business $70,000 with the rest of the costs being self funding via the sale
of advertising to corporations who will be part of the TV program.
International Market Development
--------------------------------
- Research and test Japanese market for compatibility in accepting the
current configuration of our programs.
- Develop marketing approach to sell licenses in Japan.
- Identify potential new licensees in Japan.
- Sell licenses in Japan.
- Recruit Account Executives and Customer Service Representatives in
conjunction with the Licensees in Japan.
- Refine our marketing and sales process in conjunction with the Japanese
Licensee.
- Specify any required changes to our Web presence and our Web Base
Management information systems to accommodate Japanese nuances.
27
Sales
-----
Five fulltime corporate account executives will be employed. The 5 fulltime
corporate account executives will be trained and start to sell our programs to
our target markets. The sales process and length of time taken to finalize sales
will vary depending on the size and nature of the organization that we are
targeting. It is envisaged the first large sales contracts will start coming to
fruition due to activity in the March quarter.
Program Development
-------------------
It is expected in house permanent staff will increase to include a Development
Director. Initiate new product offerings to be included in the Fit For Business
Australian programs identified by our collaborate approach with other
Occupational Health and Safety Providers.
September 2005:
---------------
Computer Software and Systems
-----------------------------
Specify the call centre module that is to be developed as part of the Web based
management information system.
Enhance the Web Based information system to cater for the Japanese market.
Website Design and Enhancement
------------------------------
Specify and implement the ecommerce components of the web presence.
Modify the Web presence to cater for the Japanese market place.
Multi Media Training programs
-----------------------------
Specify the requirements in order to change the paper base training programs for
our account executives and customer service representatives to a Multi Media
base.
Marketing, Promotion Literature and Brand:
------------------------------------------
Continue Marketing and Brand building via continued press releases, targeted
media interaction and relationship building events.
Awards Program
--------------
Recognize businesses that operate corporate health and awareness programs,
particularly those which achieve outstanding productivity improvements or
reductions in absenteeism. Partner with Australian State and Federal Governments
to recognize public sector employers who achieve in this area.
Commence Marketing and Brand building activities in Japan in which we identify
corporations within market segments that are predisposed to purchasing our
programs and then sell to them.
International Market Development
--------------------------------
Continue with the preparation to commence business in Japan by the December
quarter.
- Research and test South Korean market for compatibility in accepting the
current configuration of our programs.
- Develop marketing approach to sell licenses in South Korea.
- Identify potential new licensees in South Korea. Sell licenses in South
Korea.
- Recruit Account Executives and Customer Service Representatives in
conjunction with the Licensees in South Korea.
- Refine our marketing and sales process in conjunction with the South Korean
Licensees.
- Specify any required changes to our Web presence and our Web Base
Management information systems to accommodate South Korean nuances.
28
Program Development
-------------------
Initiate new product offerings to be included in the Fit For Business Japanese
programs identified by our collaborate approach with other Occupational Health
and Safety Providers.
Sales
-----
Sales revenue in Australian is expected to be established with consistent
program sales to medium to large corporations and government.
December 2005:
--------------
Computer Software and Systems
-----------------------------
Develop and implement the call centre module that is part of the Web based
management information system.
Enhance the Web Based information system to cater for the South Korean market.
Website Design and Enhancement
------------------------------
Modify the Web presence to cater for the South Korean market place.
Multi Media Training programs
-----------------------------
Roll out and implement the multi media based training programs for our account
executives and customer service representatives.
Marketing, Promotion Literature and Brand:
------------------------------------------
Continue Marketing and Brand building via continued press releases, targeted
media interaction and relationship building events.
Commence Marketing and Brand building activities in South Korea in which we
identify corporations within market segments that are predisposed to purchasing
our programs and then sell to them.
International Market Development
--------------------------------
- Commence business in Japan.
- Research and test North American market for compatibility in accepting the
current configuration of our programs.
- Develop marketing approach to sell licenses into North America.
- Identify potential new licensees in North America. Sell licenses in North
America.
- Recruit Account Executives and Customer Service Representatives in
conjunction with the Licensees in North America.
- Refine our marketing and sales process in conjunction with the North
American Licensees.
- Specify any required changes to our Web presence and our Web Base
Management information systems to accommodate North American nuances.
Program Development
-------------------
Initiate new product offerings to be included in the Fit For Business South
Korean programs identified by our collaborate approach with other Occupational
Health and Safety Providers.
29
Sales
-----
Sales revenue in Australian is expected to be established with consistent
program sales and first Japanese sales commencing.
Since 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 four alternative plans of
operations depending on financing being raised at the $4.4 million, $2.7 million
and $1.2 million and $700,000. These alternate plans involve a scaling back or
staged implementation of the $4.4 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:
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.
Material commitments for capital expenditure: We have no material commitments
for capital expenditures.
30
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
incorporation services Rendered and as founders of the company.
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.
Fort Street Equity Inc. has provided FFBI with consulting services that have
included the following:
o Assisted with identifying a potential reverse merger candidate and
evaluated their business plan for potential success they have
o Assisted with identifying appropriate legal counsel and financial
auditors
o Assisted with identification and introductions to other professionals
who have assisted with the preparation of the prospectus
On September 14, 2004, we entered into an exchange agreement and acquired 100%
of the issued and outstanding capital shares of Fit For Business (Australia) Pty
Limited ("Subsidiary"), an Australian company. Fit For Business (Australia) Pty
Limited was incorporated on December 14, 1998 in the State of Queensland,
Australia. All Shares of Fit For Business (Australia) Pty Limited were owned by
Mark A Poulsen and Mark Poulsen & Associates Pty Ltd. Our operations are
conducted through our subsidiary which delivers services and products to the
workplace health and safety industry in Australia, and is also engaged in
distributing and 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. In addition, the exchange agreement included the following
terms: (1) Mark Poulsen would be elected as the only director; (2) the company
would change its name to "Fit for Business International Inc."
On January 13, 2005, we changed our name to FIT For Business International, Inc.
in order to better reflect our new business plan.
Our web site is located at www.fitforbusiness.com.au
31
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; and
3. Relationship marketing
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. The company believes
its approach and programs deliver a sustainable improvement to employees' lives.
This is reflected in their increased health, more positive mental and emotional
states, and greater productivity. FFBI achieves this through education and
behavior modification together with nutrition which provides the body with the
requirements to keep it operating optimally without drastic lifestyle changes.
Our approach to tackling the wellness issues faced by corporations employees is
to initially concentrate on the nutrition of employees and replace bad eating
habits with goods ones. FFBI assists the employee to aim to undertake this
behavior modification within the first 21 days, usually the length of time taken
to break a habit.
Following which FFBI can introduce other wellness components of the corporations
choice, through FFBI, and our partner providers or through working with
providers of the corporations choice - but always monitored and followed up
through our web based information system and customer service representatives.
32
FFBI delivers an initial Corporate wellness program that includes:
o Profiling of the business including the physical requirements of the
major roles within the work place
o Introductory seminar on the aims and goals of the FFBI program and on
what good nutrition entails
o A profile of all individual employees on the program and referral to
appropriate medical/service providers
o Nutrition program including menu planning
o Non-intrusive follow-up/coaching of all individuals at the 1, 3, 7,
14, 28 days and then monthly
o Actively working with employees to monitor and report on progress
o Providing ongoing educational material (as agreed) via electronic or
hardcopy means
The balanced nutritional program provided by FFBI and for which the products are
supplied by Herbalife can consist of:
o Formula 1 - protein, vitamins, minerals, herbs and dietary fibre
o Formula 2 - B6 supplement in herbal base
o Formula 3 - Vitamin and Mineral supplement
o Formula 5 - Vitamin C Supplement in a Herbal Base
Plus we can provide other targeted products from Herbalife such as:
o Florafibre, Natures Raw Guarana, Chitosan, Lifeline - Omega 3,
Xtra-Cal, RoseOx (antioxidant), Tang Kuei, Protein powder and so on.
FFBI offers a variety of nutritional programs which includes the above services
and appropriate products, ranging in price from $85.00 (AUS. $115.00) to $210.67
(AUS. $285.00) per individual employee. Each individual nutritional program,
includes nutritional products and services to last for one (1) month.
The benefits for corporations undertaking the FFBI programs can include:
o that employees feel better about themselves and have more energy;
o reduced absenteeism rates;
o reduced staff turnover;
o improved productivity; and
o reduced health services costs
The benefits for individuals undertaking the FFBI programs can include:
o Reducing the chance of excess unpaid sick leave;
o Improving health which may reduce the cost of personal health/medical
expenses;
o Savings on the costs of meals;
o Having more energy and stamina to meet the demands of work and life in
general; and
o Having the program costs totally paid for by the employer.
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.
33
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 three (3) month's program for all
employees who will be utilizing the program. For example in the case of a
nutritional program, once the funds are received from the corporation, we retain
fifteen per cent (15%), 35% goes back to the customer service representative for
compensation and the remaining 50% also goes back to the customer service
representative to order the products from the product supplier and deliver them
to the employees of the corporation.
Each corporate customer's employee receives follow-up at the 1, 3, 7,
14, 28 days and then monthly 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 initially weekly, and then monthly, reports from
the Corporate Wellness account executive showing the progress of each individual
staff member. This 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.
CORPORATE WELLNESS SOLUTION PROGRAM
The following table indicates the roles played by the various parties
in the FFB business model.
34
---------------------------- ---------------------- ------------------------ ------------------------
FFBI Staff Licensees Account Customer
Executives services
representatives
---------------------------- ---------------------- ------------------------ ------------------------
o Develops programs for o Provides an o Researches o Contacts each
the market place existing and potential employee of
proven group of customers who are corporations
o Puts in place strategic Account corporations joining the
relationships with executives and program
product providers customer o Builds
service relationships o Conducts he
o Undertakes the Brand representatives with corporations Customer Profile
and market building to ascertain
activities o Generates sales o Does correct
leads for their presentations to program
o Provides all of the Account corporations and for the employee
marketing and executive finalizes sales
promotional collateral o Orders the
o Assists the o Once sales products from
o Generates sales leads account process is Product Supplier
for the account executives complete
executives finalize sales allocates o Delivers
customer services Products and
o Builds relationships o Monitors representatives initiates
with the larger performance of to corporations customer onto the
customer and assist the account to service their program
the account executives executives and employees who are
close sales with Customer on FFBI programs o Performs
these organizations services followup as per
representatives o Monitors customer customer care
o Undertake induction and service program on 3rd,
training of licensees, o For the sale of representatives 7th, 14th, 28th day
Account executives and nutritional to ensure and
customer services products the services quality monthly
representatives licensee as is maintained thereafter
independent
o Monitors performance of Herbalife o Ensures that o CSR receives
the account executives distributors corporations 35% compensation
and Customer services receives income renew their from the retail
representatives from Herbalife contract with sales of programs
dependant on FFBI to the
o Maintain business model the volume of corporations
sales their o It is intended employees
o Provision of web network that the Account
presence organization is Executive service o No FFBI
distributing at least 50 officers or
o Provision of Web based employees of directors are
information systems o FFBI intend to corporations and customer service
establish a as such will representatives
o Maintain systems and compensation receive 35%
process plan comprising compensation of o For
options and the retail sales nutritional
o Finalizes proposal and cash bonuses to these products the
contracts with which will be employees customer service
customers dependant on representative if
total sales o For nutritional they are an
o Maintain ISO9001:2000 volumes of FFBI products independent
Quality certification programs the Herbalife
through their Account Executive distributors also
o FFB retains 15% of the distribution if they are an receives income
retail cost of the group. independent from Herbalife
contracted programs for Herbalife International
the provision of the o No FFBI distributors also dependant on the
above services. officers or receives income volume of sales
directors are from their network
licensees Herbalife organization is
International distributing
dependant on the
volume of
sales
their network
organization is
distributing
o No FFBI officers
or directors are
Account
Executives
---------------------------- ---------------------- ------------------------ ------------------------
35
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 currently utilized within the living well
programs are manufactured by Herbalife.
These programs are marketed predominantly through presentations to
retirement resorts and villages. Independent Living Well account executives earn
income by:
o selling Fit For Business Programs to retail consumers; and receiving cash
incentives, including commissions and bonuses from Herbalife on program
sales within their distributor network organizations.
Our customer service approach 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. The FFBI program 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.
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, and the remaining 50% is remitted to
Herbalife to pay for the nutritional products.
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.
36
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 and the remaining 50%
is remitted to Herbalife to pay for the products.
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.
FFBI does not directly have any relationship with Herbalife International Inc.
There is no contractual relationship between Herbalife International and FFBI.
However Herbalife International Inc are aware of the FFBI business model and
presentations have been made to the Board of Directors of Herbalife
International Inc in November 2003. FFBI is in regular contact with Herbalife
Australia to ensure that product supply can be assured to FFBI corporate
clients. Mark A Poulsen the President and Chief Executive Officer of FFBI is a
Herbalife distributor. Also currently the licensees that are being chosen by
FFBI to distribute FFBI programs are Herbalife distributors with significant
network distributor organizations currently distributing Herbalife products.
Herbalife International Inc. utilizes a network marketing model to distribute
their products to the domestic market place. Herbalife distributors are
independent business people and are not restricted in pursuing any other
business or employment opportunities. Some of the Account Executives that the
licensees will choose to distribute the FFBI programs may also be existing
Herbalife distributors, as will the customers service representatives. It is a
requirement that the customer service representatives who are placing orders for
nutritional products with Herbalife be registered Herbalife distributors.
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. Each corporations
contracted program will be of variable length and will generally be renewed on
an annual basis. The nutritional products supplied by Herbalife are packaged to
last an individual one month in duration. Customer service representatives
follow up with each individual employee on the first, third, seventh,
fourteenth, and twenty-eight day of the program, during the month and monthly
thereafter, to ensure each individual employee is taking the program correctly
and is receiving the full benefit of the program.
37
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.
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.
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. This kit
includes:
o FFBI Letterhead (25 copies)
o FFBI Corporate Brochures (6 copies)
o FFBI Nutritional Brochures (Herbalife) 6 copies
o FFBI Corporate Folders (6 copies)
o CD Rom containing all training and proforma documents
o Certificate of Registration of Account Executive or Customer Service
Representative
o Living Well program posters (5 copies)
o Living well pamphlets (100 copies)
o Corporate Employee Implementation Brochures (20 copies)
o Web Based Management system Access codes and instructions
o FFBI email address details
Sales of account executive kits are not subject to account executive allowances
and cash incentives, including commissions and bonuses. Accordingly, we receive
the entire retail sales amount from the sale of account executive kits.
38
FIT FOR BUSINESS PROGRAM RETURN AND BUY-BACK POLICIES
Our programs include an individual customer employee satisfaction guarantee.
Under this guarantee, within 30 days of purchase, any individual employee who is
not satisfied with any FFBI program for any reason may return it or any unused
portion of any nutritional product to the account executive or customer service
representative from whom it was purchased for a full refund.
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:
Japan South Korea and North America, followed by Singapore, and Hong Kong,.
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. In any new country market we initially expect to target corporations that
are favorably disposed to purchasing the FFBI programs which will result in the
rapid growth in sales. However subsequent marketing efforts to corporations that
are not as favorably disposed to our products, will require greater efforts and
time to finalize sales and hence the plateauing of sales growth in this phase of
the marketing cycle.
We believe that a significant factor affecting these sales trends will be the
opening of other new country markets within the same geographic region or with
the same or similar language or cultural bases. 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. This will be
caused by existing account executive in existing markets viewing the prospect of
being able to market to favorably disposed corporations in the new country
markets as being a relatively easier sales proposition than pursuing less
favorably disposed corporations in existing markets.
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
system and supporting internet and telecommunication systems. These systems will
include:
(1) local area networks of personal computers, serving our administrative staff;
(2) an internet website to provide a variety of online services for account
executives, customer service representatives, and potential corporate clients.
(3) an international web-based integrated customer management systems, combining
online and standalone features, to allow Fit For Business and its employees,
account executives, customer service representatives and licensees to record,
track and report relevant customer information.
1. Calendar & Appointment Functionality
2. Corporate Profile - including goals
3. Individual Employee Profile - Including Goals of going on program
4. Employee Follow-up module
a. Including call scripts to collect & record information on how
employee is performing on program, this includes physical,
behaviors, and feelings, measurements on the 1st, 3rd, 7th, 14th
28th, and then monthly
5. Product order and reorder - automated
a. Interface to Herbalife Ordering procedures/system
6. Reporting system
a. To Individual employee for encouragement to show how they are
performing against the goals they set
b. To the corporation at the aggregate level
i. No individual information to privacy reasons
7. Licensee, Account Executive and Customer Service Representative
management
a. Ensure all customers are being followed up
b. Orders are being placed in a timely manner
c. Contract renewals are followed up
39
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 distribution 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. While there have been no program sales to date by FFBI in the
United States it is our intention by December 2005 to commence investigating the
North American market place. If our investigations of the north American market
prove to be fruitful it is our intension that we would commence program sales in
2006 in the United States.
In the United States and other markets we intend to operate in , the
formulation, manufacturing, packaging, storing, labeling, promotion,
advertising, distribution of the Herbalife nutritional products will be subject
to regulation by one or more governmental agencies, but these regulations will
need to be complied with by Herbalife - prior to receipt and distribution by
FFBI Account Executives and customer service representatives.
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 advertising, 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.
40
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 advertising and labeling changes.
Through our manuals, seminars and other training materials and programs,
we attempt to educate our account executives and customer service
representatives 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.
41
Compliance Procedures. 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.
COMPETITION
We are subject to significant competition for the recruitment of account
executives from 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.
42
SALES
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 customers , after giving effect to
account executive or customer service representative compensation which total
approximately 35% of suggested retail sales prices; 50% product cost including
handling and freight charges. Beginning We receive our sales price in cash,
check, direct debit or through credit card payments upon execution of contract
with corporations 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 is used by us to calculate,
among other things, bonuses and commissions earned by licensees and account
executives. We rely upon "retail sales" data reflected in daily sales reports to
monitor results of operations in each of our markets.
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.
INTERNATIONAL EXPANSION
We plan to expand into the following countries: Japan, South Korea and
North America.
EMPLOYEES
As of March 7, 2005, we had in total 5 employees of which 4 were 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. The code of conduct
covers topics such as:
RULE 1 Representative Conduct
o Standard of Conduct
o Undesirable selling practices
o Maintaining reputation and image of the company
o Reporting violations of rules of conduct
o Prohibits enticement
o Comply with the rules of conduct of Herbalife when selling nutritional
products
43
RULE 2 Responsibilities of a Representative
o Ensure Service delivery and customer support
o Ensure Product Supply
o Ensure Delivery of Training
RULE 3 Selling Practices For Fit For Business products
o Relationship building
o Prohibits hard sell
o Directions for use of Programs
o Product Claims
o Misrepresentation of Programs or Product Registration
o Use of claims and testimonial guidelines
RULE 4 Use of Company Names, Trademarks and Logos
o Use of Company Names Trademarks and Logo
o Business Cards, Stationery, Letterheads, Deposit Books
Rule 5 Advertising and Promotion
o Approved Advertising and Promotional Material
RULE 7 Receipt of Funds
o Receipt of funds
RULE 8 Violation of rules for non-Fit For Business produced sales aids or
materials
o Violation of rules for non-Fit For Business produced sales aids or
materials
o Indemnify Fit For Business
ENFORCEMENT PROCEDURES INTRODUCTION
o Complaint Procedure
o Suspension Of A Representative
o Termination Or Deletion Of A Representative
o Procedures For Appeal Enforcement procedures
o Suspension of privileges
o Suspension of earnings
o Temporary or permanent suspension
o Termination or deletion of the representative
Our quality assured procedures cover topics such as:
MANAGEMENT COMMITMENT
o Quality Policy
o Organization & Responsibility
o Quality System & Planning
o Training
CONTINUOUS IMPROVEMENT
o Corrective & Preventive Action
o Management Review
o Internal Audits
o Analysis of Data
SALES
o Contract Review
OPERATIONS
o Operational Control
o Handling, Storage, Packaging, Preservation & Delivery
QUALITY CONTROL
o Measurement, analysis & improvement
o Monitoring and Measurement of process
o Monitoring and Measurement of product
o Control of Nonconformance's
PURCHASING
o Purchasing Process
o Verification of Purchased Product
o Evaluation of Subcontractors/Suppliers
DOCUMENTATION
o General
o Control of Records
44
AUSTRALIAN AND NEW ZEALAND LICENSE AGREEMENT
In August 2004, Subsidiary entered into a non-assignable license agreement with
LR Global Marketing Pty Ltd. ("LR Global"). The principals of LR Global
Marketing Pty Ltd are Laraine Richardson and Dianne Waghorne. The principals of
LR Global Marketing Pty Ltd. are not related to the Company, or to Australia, or
to its officers and directors except as described herein. Pursuant to the
license agreement, LR Global has the right, for a period of ten (10) years, to
the use of our logo, our web based management information system, marketing and
promotional literature, processes, systems, intellectual property and attend
FFBI events for the purpose of generating new customers for the Company and for
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 as an independent Herbalife
distributor receives a five (5%) percent commission directly from Herbalife on
the sales of the Herbalife products generated by LR Global as part of any FFBI
program sales. The 5% commission is a standard commission paid by Herbalife to
independent distributors such as LR Global. FFBI has no influence, or agreement,
as to what commissions LR Global Pty Ltd will receive from Herbalife. This is a
matter entirely determined independently through LR Global Pty Ltd independent
distributor agreement with Herbalife. 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
The International Organization for Standardization (ISO) is a worldwide
federation of national standards bodies from some 100 countries, one from each
country. ISO's work results in international agreements which are published as
International Standards. ISO 9001:2000 provides an internationally recognized
formula for running any operation where quality assurance in the provision of
the service is a requirement. The requirements of the ISO 9001:2000 standard are
organized into the following five sections:
o Quality Management System
o Management Responsibility
o Resource Management
o Product Realization
o Measurement, analysis and improvement
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.
45
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
PATENTS OR TRADEMARKS OR LICENCES
FFBI's "Fit For Business" logo was trademarked and registered in Australia on
Oct 15, 1999 for a period of ten (10) years.
FFBI does not have any other trademarks, patents or licenses.
DESCRIPTION OF PROPERTY
The Company does not own any real property. We presently lease office space from
Mark Poulsen & Associates 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 pay approximately 90% of the costs associated with
Associates lease. This is approximately $1,383 per month. We also have an
agreement with Incorp Services, Inc., located at 3155 E. Patrick Lane, Suite 1,
Las Vegas, Nevada. This agreement provides us with a "virtual office program."
The "virtual office program" provides us with registered agent services in
Nevada (since we are a Nevada corporation) and use of certain facilities such as
conference rooms and receipt of mail. We do not operate our business from this
location. We will pay approximately $1,495 per year for the "virtual office
program."
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.
MANAGEMENT,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth current information about our executive officers
and directors
Name Age Position
--------------- ---- --------------------------------------------------
Mark A. Poulsen 44 President, Chief Executive Officer 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, Chief
Financial Officer and Principal Accounting Officer
46
The following table summarizes the information about our executive officers and
Directors previous roles for the last five years.
Date of Date of
Name Title/Relationship Commencement Cessation Company
--------------- ----------------------- ------------ ----------- --------------------
Mark A Poulsen Director December- Mark Poulsen &
1989 Ongoing Associates Pty Ltd
Managing Director December- Fit For Business
1998 Ongoing (Australia) Pty Ltd
President, Chief
Executive Officer January- Ongoing Fit For Business
& Chairman of the 2005 International, Inc.
Board of Directors
Personal Assistant September- December- Mark Poulsen &
and Chief 1996 1998 Associates Pty Ltd
Financial Officer
Chief Financial December- Ongoing Fit For Business
Officer 1998 (Australia) Pty Ltd
Sandra Wendt Vice President of
Administration, January- Ongoing Fit For Business
Chief 2005 International,Inc.
Financial Officer
and Principal
Accounting Officer
Anthony Head Sales Director July 2001 Ongoing Fit For Business
Senior Vice (Australia) Pty Ltd
President of Sales January- Ongoing Fit For Business
& Director 2005 International, Inc.
Prins Ralston Managing Director December- July 2001 Nexus Energy Limited.
1993
Partner July 1999 February- Clayton Utz Solicitors
2001 and Lawyers
Group General Counsel November- November- Ingeus Limited.
and Company Secretary 2001 2004
Senior Vice President January- Ongoing Fit For Business
and Chief Operating 2005 (Austrlaia) Pty Ltd &
Fit For Business
International, Inc.
47
Mark A. Poulsen is our President, Chief Executive Officer 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 Mark Poulsen & Associates Pty Ltd, on December 6, 1989, distributing
Herbalife products. 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
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 Senior 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 recruitment company - Clements Recruitment Pty Ltd, corporate health
and occupational health and rehabilitation provider - Inergise Australia Pty
Ltd, outsourced government unemployment services provider - Work Directions
Australia, UK , France and training provider- Invisage Australia Pty Ltd)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 Energy Limited (Australian
Stock Exchange: NXS). Mr Ralston was a Director of Nexus Energy Limited from
1993 to 2001.
48
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, Chief Financial
Officer and Principal Accounting 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
Manager with over 25 staff under supervision. 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 (managing cash flow,
budgets, income and expense reports and financial and tax reporting) for
Kamaneal Investments Pty Ltd and Mark Poulsen & Associates Pty Ltd.. 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 :2000 system and maintains this
as the Quality Manager of the Company.
PROMOTERS
Jason Farrell and Dawn Farrell were our founders and, therefore, are deemed to
be our promoters.
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
President 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 SECURITIES
RESTRICTED UNDERLYING
NAME AND PRINCIPAL FISCAL ANNUAL STOCK OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS (NO. OF SHARES) COMPENSATION
-------- ---- ------ ----- ------------ ------ -------------- ------------
1. Mark Poulsen 2004 $288,986 0 $288,986 0 0
2003 $ 0 0 0 0 0
2. Tony Head 2004 $ 77,063 0 $ 77,063 0 0
2004 $ 0 0 0 0 0
3. Prins Ralston 2004 $131,007 0 $131,007 0 0
2004 $ 0 0 0 0 0
4. Sandra Wendt 2004 $ 42,385 0 $ 42,385 0 0
2004 $ 0 0 0 0 0
49
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 incurred in connection with attendance at Board and
committee meetings.
Employment Agreements
We presently have entered into the following employment agreements with our
management personnel to retain their services. The employment agreements were
all entered into on November 29, 2004. However, all of the employees commenced
their work for us in 2005. Therefore, no salaries accrued prior to January 2005:
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 $289,986 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. This bonus
was awarded on the basis that Mr. Poulsen would not have drawn a salary from the
inception of him founding the Fit for Business Australia Pty Ltd. in December
1998. Mr. Poulsen's employment agreement does not contemplate the payment of any
other bonuses.
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 $131,007. He
shall receive an annual bonus of $14,782 if we meet our budget each fiscal year.
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. Mr. Ralston
services were acquired through one of the largest recruiting companies in
Australia and the world, Hudson Global Resources, who have office world wide.
Hudson Global Resources undertook a extensive global search and advertising
campaign to generate a short list of candidates, from which Mr. Ralston was
selected following an exhaustive series of tests and interviews. We will be
obligated to pay a recruiting fee for the placement of Mr. Ralston to Hudson
Global Resources amounting to approximately $21,100. Mr. Ralston has no
affiliation with Hudson Global Resources other than that he was placed at Ingeus
Limited, his previous employer, by them.
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
$77,063. He shall receive an annual bonus of $11,086 if we meet our budget each
fiscal year. 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 of Administration, Chief Financial Officer and Principal Accounting
Officer. Under the terms of the agreement, Ms. Wendt will be compensated at the
annual rate of $42,385. She shall receive an annual bonus of $3,695 if we meet
our budget each fiscal year.
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.
50
PRINCIPAL STOCKHOLDERS
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:
Name and Address Amount and Nature Percent of Percent
of Beneficial Owner of Beneficial Class (4)(5) of Class
Ownership including
Preferred
Shares(6)
--------------------------------------------------------------------------------
Mark A. Poulsen 13,780,000(1) 66.03% 89.99%
10/27 Mayneview Street
Milton, Queensland, Australia
Anthony F. Head 275,000(2) 1.32% 0.39%
18 Ti Tree Grove
Mornington, Victoria, Australia
Sandra Wendt 100,000 0.48% 0.14%
30 Cambridge Crescent
Forest Lake, Queensland, Australia
Prins Ralston 0 0 0
10/27 Mayneview Street
Milton, Queensland, Australia
Fort Street Equity, Inc. 1,776,500(3) 8.51% 2.51%
Box 866
George Town, Grand Cayman Islands
Executive Officers and 14,155,000 67.82% 90.52%
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.
(3) Mitchell Stough is the principal of Fort Street Equity, Inc. Fort Street
owns 914,000 shares, Mitchell Stough owns 750,000 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 April 30, 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.
(6) Based on 70,870,000 shares of common stock issued and outstanding as of
April 30, 2005 assuming Mr. Poulsen's 1,000,000 Series "A" Preferred Shares have
been converted into 50,000,000 common shares.
51
DILUTION
As of December 31, 2004, the Company had a pro forma net tangible book value of
approximately $984,431, or $0.04 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 Common Stock. Net tangible
book value equals the tangible net worth of the Company (total tangible assets
less total liabilities) divided by the number of shares of Common Stock
outstanding. After giving effect to the sale by the Company of shares of Common
Stock at various levels of proceeds as presented 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 December
31, 2004), the pro forma net tangible book value of the Company and amount per
share as of December 31, 2004, would have been approximately as presented in the
table below. The following table shows the immediate increase in pro forma net
tangible book value to current stockholders and an immediate dilution to new
investors. The following table illustrates the per share dilution at various
levels of proceeds from the Offering:
Assumed Net Proceeds Raised Under Offering
-------------------------------------------------
$4,400,000 $2,700,000 $1,200,000 $ 700,000
---------- ---------- ---------- ----------
Assumed initial public offering price per share (1) $ 1.50 $ 1.50 $ 1.50 $ 1.50
---------- ---------- ---------- ----------
Pro forma net tangible book value before the Offering 0.04 0.04 0.04 0.04
Increase attributable to new investors 0.17 0.11 0.05 0.03
---------- ---------- ---------- ----------
Pro forma net tangible book value after the Offering 0.21 0.15 0.09 0.07
---------- ---------- ---------- ----------
Dilution per share to new investors $ 1.29 $ 1.35 $ 1.41 $ 1.43
========== ========== ========== ==========
----------------------------------------------------
(1) Represents the initial public offering price per
share of Common Stock before deducting Offering
expenses payable by the Company.
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:
[See table on next page].
52
Assumed Net Proceeds Raised Under Offering
-----------------------------------------------------
$ 4,400,000 $ 2,700,000 $ 1,200,000 $ 700,000
----------- ----------- ----------- -----------
Shares Purchased:
Existing stockholders 22,870,000 22,870,000 22,870,000 22,870,000
New Investors 3,000,000 1,866,667 866,667 533,333
----------- ----------- ----------- -----------
Totals 25,870,000 24,736,667 23,736,667 23,403,333
=========== =========== =========== ===========
Percentage:
Existing Stockholders 88% 92% 96% 98%
New Investors 12% 8% 4% 2%
----------- ----------- ----------- -----------
Totals 100% 100% 100% 100%
=========== =========== =========== ===========
Total Consideration:
Existing stockholders $ 1,020,870 $ 1,020,870 $ 1,020,870 $ 1,020,870
New Investors 4,500,000 2,800,000 1,300,000 800,000
----------- ----------- ----------- -----------
Totals $ 5,520,870 $ 3,820,870 $ 2,320,870 $ 1,820,870
=========== =========== =========== ===========
Percentage:
Existing Stockholders 18% 27% 44% 56%
New Investors 82% 73% 56% 44%
----------- ----------- ----------- -----------
Totals 100% 100% 100% 100%
=========== =========== =========== ===========
Average Price Per Share:
Existing Stockholders $ 0.04 $ 0.04 $ 0.04 $ 0.04
New Investors 1.50 1.50 1.50 1.50
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 Common Stock at an
assumed purchase price of $0.50 per share.
SELLING STOCKHOLDERS
We are registering 1,784,000 shares of our common stock by our selling security
holders and a further 2,000,000 shares of our common stock are offered in
connection with the conversion of outstanding options based on the resale of the
shares issued in the conversion. 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 April 29, 2005, and the number of shares
being offered by each Selling Security Holder. None of the selling security
holders listed below are broker-dealers or affiliates of broker-dealers.
53
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
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 15,000 * 15,000 0 0
Pty Ltd (10)
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Dean Harrison Family Trust (5) 30,000 * 30,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Jaroluin Pty Ltd (11) 30,000 * 30,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Leigh Troy 30,000 * 30,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Kendal Robinson 15,000 * 15,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Mark Hoey 120,000 * 120,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
GL Ray Enterprises (12) 15,000 * 150,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Roan Lee 30,000 * 30,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
The Credence Superannuation 60,000 * 60,000 0 0
Fund (6)
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Vexa Superannuation Fund (7) 20,000 * 20,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Boyana & Dragan Aralica 10,000 * 10,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Heather Kraus 10,000 * 10,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Wibcara Pty Ltd As Trustee For 10,000 * 10,000 0 0
Kraus Superannuation Fund (8)
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Maria Corry 20,000 * 20,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Clifford Henkel 20,000 * 20,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Helen Hughes 40,000 * 40,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Linda Wild 70,000 * 70,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Ann Maree Wood 10,000 * 10,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Walter Puawai McDermott 20,000 * 20,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Zainon Binte Ismail 10,000 * 10,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
James & Joan Stewart as
Trustees of the R Stewart Pty
Ltd Superannuation Fund (9) 40,000 * 40,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Maxwell Spackman 10,000 * 10,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Benjamin David Spackman 20,000 * 20,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Lily Lee Lee Lee 20,000 * 20,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Roslina Binte Mohamed Sa'ad 20,000 * 20,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Robert E. & Valda J. Bradley 20,000 * 20,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Donald Howell Wild 50,000 * 50,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Denise Linsley-Hayles 10,000 * 10,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Wayne Jobson 40,000 * 40,000 0 0
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
Fort Street Equity, Inc. (2) 1,776,500 8.51% 2,914,000 862,500 3.33%
--------------------------------- ----------------- ------------- -------------------- ------------- ---------------------
54
* - 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 April 29, 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. Fort Street Equity, Inc. holds 914,000
shares; Mitchell Stough owns 750,000 shares and Kellie Stough,
Mitchell's wife owns 112,500 shares.
(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 who have voting and investment control are John
Kriedemann and Kathleen Notaras.
(5) The beneficial owner who has voting and investment control is Dean
Harrison.
(6) The beneficial owners who have voting and investment control are Mark
and Beverly Sullivan.
(7) The beneficial owners who have voting and investment control are
Larisa Markiza Olszewaka and Nicole Louise Lawrence.
(8) The beneficial owners who have voting and investment control are Peter
and Heather Kraus.
(9) The beneficial owners who have voting and investment control are James
and Joan Stewart.
(10) The beneficial owner who has voting and investment control is Warrick
Prince.
(11) The beneficial owner who has voting and investment control is Inez
Hanson.
(12) The beneficial owner who has voting and investment control is Graham
Ray.
Shares Eligible for Future Sale
As of April 29, 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
55
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 Mark Poulsen and Prins Ralston, our
officers and director 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. Messrs. Poulsen and Ralston 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.
Messrs. Poulsen and Ralston are the only persons that plan to sell our shares of
common stock. They are not 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; (iii) at the time of
participation, will not be an associated person of a broker or dealer; and (iv)
pursuant to Rule 3a4-1(a)(4)(ii), each of them will meet all of the following
requirements: at
56
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 stockholders will sell their common stock at the following prices:
(i)$.50 per Share for selling security holders that had a promissory note
conversion of $.50 per share (450,000 shares); (ii) )$.33 per Share for selling
security holders that had a promissory note conversion of $.33 per share
(420,000 shares); and (iii) $.005 per Share for selling security holders that
had a conversion price for options of $.005 per share (2,000,000 shares). This
shall occur until our shares of common stock are quoted on the OTC Bulletin
Board (or any other recognized exchange). Thereafter, the selling stockholders
may sell their shares at prevailing market prices or privately negotiated
prices. Based on this, the purchasers in this offering may be receiving an
illiquid security.
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.
57
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 $100,000.
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
Series "A" preferred stock which were issued to Mark A. Poulsen and to Mark
Poulsen & Associates Pty Ltd. Mark A. Poulsen subsequently transferred the
following common shares in reliance on the exemption from registration provided
by Section 4(2) of the Securities Act of 1933:
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
58
In addition, Mark A. Poulsen transferred shares to the following persons and
Corporations in reliance on the exemption from registration provided by Section
4(2) of the Securities Act of 1933:
------------------------------------ -----------------------------
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 principals of LR Global Marketing
Pty Ltd are Laraine Richardson and Dianne Waghorne, and the beneficiaries of the
trust are Laraine Richardson and Dianne Waghorne. The principals of LR Global
Marketing Pty Ltd. and the beneficiaries of the trust being the same persons 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 and New Zealand 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 our
web based management information system, marketing and promotional literature,
processes, systems, intellectual property and attend FFBI events, 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.
59
Mark Poulsen & Associates Pty Ltd is a company which Mark A Poulsen is a
Director of and through which he runs his Herbalife distributorship. Herbalife
runs a network marketing system. Mark Poulsen & Associates Pty Ltd directly
receives 5% commission from Herbalife, dependant on the volume of the
nutritional products sold through distributors who have been sponsored by Mark
Poulsen & Associates Pty Ltd directly or indirectly through distributors in his
network.
Currently, Mark Poulsen & Associates Pty Ltd has 21 distributors that it has
sponsored under the Herbalife networking systems that are signed up as
independent FFBI account executives (16) and customer service representatives
(5). As such Mark A. Poulsen should receive some distribution of dividends or
income from Mark A. Poulsen and Associates Pty Ltd that have resulted from
commissions paid to Mark A. Poulsen and Associates Pty Ltd from Herbalife as a
result of nutritional products sold by FFBI's independent account executives and
customers service representatives. This is a conflict of interest and may result
in his allegiance being swayed.
Mark Poulsen & Associates Pty. Ltd. is an Australian private entity and a
shareholder. It is wholly owned by Mark A. Poulsen, our 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, our President and Chairman, and Karen
Poulsen, his wife. The purpose of this company is to hold investments for Mr.
and Mrs. Poulsen. As of December 31, 2004, we owed $827 to this entity for
advances.
As of December 31, 2004, we owed $381 to Mark A. and Karen Poulsen for expenses
incurred on behalf of us. Mr. Poulsen is our President and Chairman.
Donald Howell Wild, a former note holder and current stockholder, is the uncle
of Linda Wild, also a former note holder and current stockholder. In addition,
Mr. Wild is the father of Laraine Richardson, a principal in L.R. Global
Marketing Pty. Ltd., which entity entered into a License Agreement us on August
24, 2004. Mr. Wild also assisted us with the private placement of the notes by
marketing the placement, and was responsible for the subscription agreements of
several note holders. Mr. Wild's services were valued at $20,000. The liability
to Mr. Wild was satisfied by the transfer of 40,000 shares of our common stock
directly to him from the shares received from the Exchange Agreement by Mark A.
Poulsen, at a value of $.50 per share. We credited paid-in capital for the value
of the accrued liability satisfied by Mr. Poulsen.
We completed a private placement of promissory notes to thirty individuals and
entities with proceeds equaled $365,000, and subsequently converted the
promissory notes to 870,000 shares of our common stock. Of the thirty
individuals and entities that subscribed to the private placement offering,
twelve parties are considered both account executives (part of our independent
marketing group) and independent Herbalife distributors, and six of the parties
are only independent Herbalife distributors. Mark A. Poulsen is also an
independent Herbalife distributor.
CONFLICT OF INTEREST
The Board of FFBI adopted a conflict of interest policy on January 4, 2005.
Under the policy, a conflict that has been noted is that:
Mark Poulsen & Associates Pty Ltd is a company which Mark A Poulsen is a
Director of and through which he run his Herbalife distributorship. Herbalife
runs network marketing systems under Mark Poulsen & Associates Pty Ltd and it
directly receives 5% of income from Herbalife, dependant on the volume of the
nutritional products sold through distributors who have been sponsored by Mark
Poulsen & Associates Pty Ltd.
Currently, Mark Poulsen &
Associates Pty Ltd has 21
distributors that it has sponsored under the Herbalife networking systems that
are also independent FFBI account executives (16) and customer service
representatives (5). As such Mark A. Poulsen should receive some distribution of
dividends or income from Mark A. Poulsen and Associates Pty Ltd that have
resulted from commissions paid to Mark A. Poulsen and Associates Pty Ltd from
Herbalife as a result of nutritional products sold by FFBI's independent account
executives and customers service representatives.
60
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.
Common Stock
We are presently authorized to issue 100,000,000 shares of $.001 par value
common stock. As of April 29, 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. 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 of April 29, 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:
(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.
61
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.
62
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' (DEFICIT)
---------------------------------------
Current Liabilities:
Accounts payable - trade $ 34,161
Accrued liabilities 30,130
Loans from related parties 1,208
Deferred revenue - License fee 482,337
---------
Total current liabilities 547,836
---------
Total liabilities 547,836
---------
Commitments and Contingencies
Stockholders' (Deficit):
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 per share; 100,000,000 shares
authorized; 20,870,000 shares issued and outstanding 20,870
Additional paid-in capital 603,327
Accumulated other comprehensive (loss) (69,001)
(Deficit) accumulated during the development stage (571,765)
---------
Total stockholders' (deficit) (15,569)
---------
Total Liabilities and Stockholders' (Deficit) $ 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
3 Months Ended
December 31, Cumulative
---------------------------- From
2004 2003 Inception
------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
Revenues:
Revenues from sales and license fee ($12,500 from
related party license fee in 2004) $ 15,820 $ -- $ 25,996
------------ ------------ ------------
Total revenues 15,820 -- 25,996
------------ ------------ ------------
Cost of Goods Sold:
Cost of goods sold 2,266 -- 6,726
------------ ------------ ------------
Gross Profit 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 (1,094) (32,799) (69,001)
------------ ------------ ------------
Total Comprehensive (Loss) $ (86,522) $ (37,079) $ (640,766)
============ ============ ============
(Loss) Per Common Share:
(Loss) per common share - Basic and Diluted $ (0.00) $ (0.00)
============ ============
Weighted Average Number of Common Shares
Outstanding - Basic and Diluted 20,870,000 5,000,000
============ ============
The accompanying notes to financial statements are
an integral part of this balance sheet.
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 and other services paid by issued shares -- -- 25,000
Interest on promissory notes converted to equity -- -- 12,647
Changes in net assets and liabilities-
Accounts receivable 47,320 (163) 117,020
Inventory 940 -- (1,923)
Accounts payable - trade 31,724 -- 34,161
Other accrued liabilities (11,166) -- 30,130
Deferred revenue - License fee (12,500) -- (17,663)
----------- ----------- -----------
Net Cash Provided by (Used in) Operating Activities (28,247) 27,450 (70,843)
----------- ----------- -----------
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 related parties (59,992) (11,499) (397)
Loan from former director paid by issued shares -- 12,742 (7,500)
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) 5,823 237,053
----------- ----------- -----------
Effect of Exchange Rate Changes on Cash (1,094) (32,799) (69,001)
----------- ----------- -----------
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 balance sheet.
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 Disclosures 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 a 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 by the issuance 440,000 shares of common stock provided
personally 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 by 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 were satisfied
by 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-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
F-6
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
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 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.
Unaudited Interim Financial Statements
The interim financial statements as of December 31, 2004, and for the three
months ended December 31, 2004, and 2003, are unaudited. However, in the opinion
of management, the interim financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
Company's financial position as of December 31, 2004, and the results of its
operations for the three months ended December 31, 2004, and 2003, and cash
flows for the three months ended December 31, 2004, and 2003. These results are
not necessarily indicative of the results expected for the fiscal year ending
June 30, 2005. The accompanying financial statements and notes thereto do not
reflect all disclosures required under accounting principles generally accepted
in the United States. Refer to the Company's audited financial statements
contained in Form SB-2/A for the period ended September 30, 2004, for additional
information, including significant accounting policies.
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.
Accounts Receivable
Accounts receivable consist of amounts due from a license agreement, employees
and related parties, and value added tax refunds. The Company establishes an
allowance for doubtful accounts in amounts sufficient to absorb potential losses
on accounts receivable. As of December 31, 2004, no allowance for doubtful
accounts was deemed necessary. While management uses the best information
F-7
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
available upon which to base estimates, future adjustments to the allowance may
be necessary if economic conditions differ substantially from the assumptions
used for the purpose of analysis.
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 product sale, and
as services are rendered.
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. Such revenues will be realized 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,
2004, FFBI had capitalized $5,071 related to its web site development.
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
F-8
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
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:
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.
F-9
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
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.
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 the 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.
F-10
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
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.
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
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.
F-11
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
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
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
F-12
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
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
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 $12,647. 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 balance sheet as of December 31, 2004.
F-13
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
(4) Common Stock Transactions and Capital Formation
Issuance of Common Stock
On May 30, 2001, FFBI 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. This transaction, along with the accumulated
(deficit) of FFBI, made up the components of the reverse merger related to the
recapitalization of FFBI common stock.
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
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).
F-14
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
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 Wild, 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. Wild 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
F-15
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
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 $ --
==========
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. The net operating loss carryforwards expire in
the years 2021-2024. 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.
F-16
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
(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 for a non-interest bearing, open-term advance made.
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 non-interest bearing, open-term working capital
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 Wild, a former note holder and current stockholder of the Company
(see Note 3), is the uncle of Linda Wild, also a former note holder and current
stockholder of the Company. In addition, Mr. Wild 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. Wild 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. Wild's services were valued at $20,000.
The liability to Mr. Wild 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
F-17
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
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 within Australia and New Zealand. 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 $12,500 of income related to the License
Agreement in the accompanying statement of operations and comprehensive (loss)
for the period ended December 31, 2004.
F-18
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004, AND 2003
(Unaudited)
(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, and the estimated duration of the contract term was 14
weeks. Further, under the terms of the contract, a down payment of $3,500 was to
be made, followed by weekly progress payments of approximately $1,930. The
Company has classified the costs incurred through December 31, 2004, amounting
to $21,520, as "Software development in progress" in the accompanying balance
sheet.
The Company entered into a lease arrangement with Mark Poulsen & Associates Pty.
Ltd. for office space which expired on November 30, 2004. The lease arrangement
is currently on a month-to-month basis. On February 1, 2005, the Company also
entered into a registered agent arrangement with Incorp. Services, Inc. whereby
Incorp. agreed to act as the registered agent for the State of Nevada, and to
provide certain virtual office, office facility use, and administrative services
to the Company for a fee of $1,495 per year.
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 $289,000 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-19
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
$131,000, 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 employment of Mr. Ralston to Hudson Global Resources, an executive
personnel placement firm, 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 $77,000, 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 of Administration and Chief Financial Officer. Under the
terms of the agreement, Ms. Wendt will be compensated at the annual rate of
approximately $42,400, plus benefits and bonus.
F-20
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, AND 2003
Report of Independent Auditors..............................................F-22
Financial Statements-
Balance Sheets as of September 30, 2004, and 2003........................F-23
Statements of Operations and Comprehensive (Loss) for the Years
Ended September 30, 2004, and 2003, and Cumulative from Inception .....F-24
Statements of Stockholders' Equity for the Periods from
Inception through September 30, 2004...................................F-25
Statements of Cash Flows for the Years
Ended September 30, 2004, and 2003, and Cumulative from Inception......F-26
Notes to Financial Statements for the Years
Ended September 30, 2004, and 2003.....................................F-28
F-21
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-22
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 494,837 --
--------- ---------
Total current liabilities 598,165 317,155
--------- ---------
Total liabilities 598,165 317,155
--------- ---------
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 per share; 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) (67,907) (32,765)
(Deficit) accumulated during the development stage (486,337) (280,154)
--------- ---------
Total stockholders' equity 70,953 (312,869)
--------- ---------
Total Liabilities and Stockholders' Equity $ 669,118 $ 4,286
========= =========
The accompanying notes to financial statements
are an integral part of these balance sheets.
F-23
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 ($5,163 from related party license fee in 2004) $ 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 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 (Expense) (12,698) -- (12,698)
Provision for income taxes -- -- --
Net (Loss) $ (206,183) $ (14,545) $ (486,337)
----------- ----------- -----------
Comprehensive (Loss):
Australian currency translation (35,142) (23,114) (67,907)
----------- ----------- -----------
Total Comprehensive (Loss) $ (241,325) $ (37,659) $ (554,244)
=========== =========== ===========
(Loss) Per Common Share:
(Loss) per common share - Basic and Diluted $ (0.03) $ (0.00)
=========== ===========
Weighted Average Number of Common Shares
Outstanding - Basic and Diluted 7,831,739 5,000,000
=========== ===========
The accompanying notes to financial statements
are an integral part of these balance sheets.
F-24
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
----------------------- ----------------------- ------------------------
Description 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
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 -
reverse merger -- -- 5,000,000 5,000 -- --
Stock options issued for cash -- -- -- -- -- --
Employee compensation paid by issued shares -- -- -- -- -- --
Advance to Company paid by issued shares -- -- -- -- -- --
Consulting services paid by issued shares -- -- -- -- -- --
Promissory notes converted 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)
Preferred and common stock issued for
deemed reverse merger with FFB Australia (15,950) -- -- --
Recapitalization of FFBI common stock -
reverse merger (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 -- -- 7,500
Consulting services paid by issued shares 20,000 -- -- 20,000
Promissory notes converted to common stock 376,777 -- -- 377,647
Australian currency translation -- (35,142) -- (35,142)
Net (loss) for the period -- -- (206,183) (206,183)
---------- ------------- ----------- -----------
Balance - September 30, 2004 $ 603,327 $ (67,907) $ (486,337) $ 70,953
========== ============= =========== ===========
The accompanying notes to financial statements
are an integral part of these balance sheets.
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
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
Consulting and other services paid by issued shares 20,000 -- 25,000
Interest on promissory notes converted to equity 12,647 -- 12,647
Changes in net assets and liabilities-
Accounts receivable 71,241 (831) 69,700
Inventory (2,863) -- (2,863)
Accounts payable - trade 2,437 (4,030) 2,437
Other accrued liabilities 41,296 -- 41,296
Deferred revenue - License fee (5,163) -- (5,163)
---------- ---------- ----------
Net Cash Provided by (Used in) Operating Activities 65,648 22,424 (42,615)
---------- ---------- ----------
Investing Activities:
Purchases of property and equipment (214) -- (214)
Payment for Australian trademark -- -- (215)
Expenditures for web site development costs -- (3,664) (4,659)
Expenditures for software development in progress (6,516) -- (6,516)
---------- ---------- ----------
Net Cash (Used in) Investing Activities (6,730) (3,664) (11,604)
---------- ---------- ----------
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 (84,985) (9,731) 59,595
Loans from former director paid by issued shares (7,500) 12,742 (7,500)
Payment of deferred offering costs (130,100) -- (130,100)
Proceeds from the issuance of capital stock -- -- 50
---------- ---------- ----------
Net Cash Provided by Financing Activities 151,088 4,338 297,045
---------- ---------- ----------
Effect of Exchange Rate Changes on Cash (35,142) (23,114) (67,907)
---------- ---------- ----------
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 these balance sheets.
F-26
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 Disclosures 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 a 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 by the issuance 440,000 shares of common stock provided
personally 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 by 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 were
satisfied by 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 these balance sheets.
F-27
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
F-28
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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,
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.
Accounts Receivable
Accounts receivable consist of amounts due from a license agreement, employees
and related parties, and value added tax refunds. The Company establishes an
allowance for doubtful accounts in amounts sufficient to absorb potential losses
on accounts receivable. As of September 30, 2004, and 2003, no allowance for
doubtful accounts was deemed necessary. While management uses the best
information available upon which to base estimates, future adjustments to the
allowance may be necessary if economic conditions differ substantially from the
assumptions used for the purpose of analysis.
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 product sale, and
as services are rendered.
F-29
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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. Such revenues will be realized ratably 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.
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.
F-30
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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
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. The weighted average number of shares outstanding for the period ended
September 30, 2003, and the basic and diluted loss per share amount for that
period have been retroactively restated for the deemed reverse merger between
FFBI and FFB Australia.
F-31
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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.
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 the 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
F-32
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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.
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
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
F-33
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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,
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 (including amendments)
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.
F-34
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
(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.
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 $12,647. 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, FFBI issued 5,000,000 shares of its common stock to former
officers and directors for services rendered. The value of the services rendered
was $5,000. This transaction, along with the accumulated (deficit) of FFBI, are
presented as components of a reverse merger under the caption "Recapitalization
of FFBI common stock" in the accompany statements of stockholders' equity.
F-35
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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 per share. 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.
F-36
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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 Wild, 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. Wild 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):
F-37
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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 $ -- $ --
========== ==========
The Company had deferred income tax assets as of September 30, 2004, and 2003,
as follows:
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. The
net operating loss carryforwards expire in the years 2021-2024. 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, for
non-interest bearing, open-term working capital advances.
F-38
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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, respectively, for non-interest
bearing, open-term working capital advances.
In July 2004, FFBI paid to a former officer and director the amount of $10,000
for services rendered. This transaction, along with the value of the common
stock of FFBI, are presented as components of a reverse merger under the caption
"Recapitalization of FFBI common stock" in the accompany statements of
stockholders' equity.
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 Wild, a former note holder and current stockholder of the Company
(see Note 3), is the uncle of Linda Wild, also a former note holder and current
stockholder of the Company. In addition, Mr. Wild 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. Wild 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. Wild'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. Wild 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, Founder and Chief Executive Officer of
the Company, is also an independent Herbalife distributor.
F-39
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
(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 within Australia and New Zealand. 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
F-40
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
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 $5,163 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.
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, and the estimated duration of the contract term was 14
weeks. Further, under the terms of the contract, a down payment of $3,500 was to
be made, followed by weekly progress payments of approximately $1,930. The
Company has classified the costs incurred through September 30, 2004, amounting
to $6,516, as "Software development in progress" in the accompanying balance
sheets.
The Company entered into a lease arrangement with Mark Poulsen & Associates Pty.
Ltd. for office space which expired on November 30, 2004. The lease arrangement
is currently on a month-to-month basis. On February 1, 2005, the Company also
entered into a registered agent arrangement with Incorp. Services, Inc. whereby
Incorp. agreed to act as the registered agent for the State of Nevada, and to
provide certain virtual office, office facility use, and administrative services
to the Company for an annual fee of $1,495 per year.
F-41
FIT FOR BUSINESS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2004, and 2003
(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 $289,000 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
$131,000, 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 employment of Mr. Ralston to Hudson Global Resources, an executive
personnel placement firm, 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 $77,000, 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 of Administration and Chief Financial Officer. Under the
terms of the agreement, Ms. Wendt will be compensated at the annual rate of
approximately $42,400, plus benefits and bonus.
F-42
FIT FOR BUSINESS INTERNATIONAL, INC.
3,000,000 SHARES OF COMMON STOCK
RESALE OF 2,000,000 SHARES OF COMMON STOCK ISSUABLE IN CONNECTION WITH
THE CONVERSION OF OUTSTANDING OPTIONS
1,784,000 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.
63
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 $ 694
Legal fees and expenses (1) $ 50,000
Accounting fees and expenses (1) $ 25,000
Blue Sky Fees(1) $ 12,500
Miscellaneous Administrative Costs (1) $ 4,931
Printing Costs (1) $ 7,500
---------
Total(1) $ 100,000
(1) Estimated.
Item 26. Recent Sales of Unregistered Securities.
On September 14, 2004, we entered into an Exchange Agreement with Fit For
Business (Australia) Pty Limited (our "Subsidiary") whereby we acquired all of
the issued and outstanding capital stock of the Subsidiary (81 shares) in
exchange for 15,000,000 shares of common stock and 1,000,000 shares of preferred
stock issued to Mark A. Poulsen and to Mark Poulsen & Associates Pty. Ltd.
On September 14, 2004, accrued employee compensation of $220,000 was satisfied
with the issuance of 440,000 shares of common stock provided personally by Mark
A. Poulsen, our officer and director.
On September 14, 2004, an advance to us of $7,500 by a former director was
satisfied with the issuance of 15,000 shares of common stock provided personally
by Mark A. Poulsen, our officer and director.
On September 14, 2004, accrued consulting services of $20,000 were satisfied
with the issuance of 40,000 shares of common stock provided personally by Mark
A. Poulsen, our officer and director.
In November 2003, our Subsidiary 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 our officers, directors, or
employees.
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 the
Subsidiary, then automatically in the event of a public offering of shares. No
value was associated with the conversion feature of the Notes. The Subsidiary
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, the Subsidiary 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 $12,647.
The liability for the Notes was assumed by us as a result of the Exchange
Agreement.
All of the above issuances were issued in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933. The
offering was 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 parties 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.
64
On September 20, 2004, pursuant to a planned public offering of common stock, we
called and converted Notes with a unit value of 42 units into 420,000 shares of
our common stock. The transaction was valued at $0.33 per share of common stock
for a total of $140,000. The shares were issued to the following:
Investor Shares Consideration Per Share Value
--------------------------------------------------------------------------------
Junay Pty Ltd Trustee for
KL Notaras Family Trust 75,000 $25,000 $0.33
Mushroom Systems International
Pty Ltd. 15,000 $ 5,000 $0.33
Jaroulin Pty Ltd. 30,000 $10,000 $0.33
Dean Harrison Family Trust 30,000 $10,000 $0.33
Leigh Troy 30,000 $10,000 $0.33
Kendal Robinson 15,000 $ 5,000 $0.33
Mark Hoey 120,000 $40,000 $0.33
GL Ray Enterprises 15,000 $ 5,000 $0.33
Roan Lee 30,000 $10,000 $0.33
The Credence Superannuation Fund 60,000 $20,000 $0.33
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, the above-referenced
parties 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.
Further, on September 29, 2004, the remaining Notes with a unit value of 45
units were called and converted by us into 450,000 shares of our common stock.
The transaction was valued at $0.50 per share of common stock for a total of
$225,000. The shares were issued to the following:
Per Share
Investor Shares Consideration Value
----------------------------------------------------------------------
Vexa Superannuation Fund 20,000 $10,000 $0.50
Junay Pty Ltd Trustee for
KL Notaras Family Trust 20,000 $10,000 $0.50
Maria Corry 20,000 $10,000 $0.50
Boyana & Dragan Aralica 10,000 $ 5,000 $0.50
Heather Kraus 10,000 $ 5,000 $0.50
Wibcara Pty Ltd. Trustee for
Kraus Superannuation Fund 10,000 $ 5,000 $0.50
Clifford Henkel 20,000 $10,000 $0.50
Helen Hughes 40,000 $20,000 $0.50
Robert E. and Valda J. Bradley 20,000 $10,000 $0.50
Donald Howell Wild 10,000 $ 5,000 $0.50
Maxwell Spackman 10,000 $ 5,000 $0.50
Benjamin David Spackman 20,000 $10,000 $0.50
Lily Lee Lee Lee 20,000 $10,000 $0.50
Roslina Binte Mohamed Sa'ad 20,000 $10,000 $0.50
Zainon Binte Ismail 10,000 $ 5,000 $0.50
James and Joan Stewart as
Trustees of the R Stewart
Pty Ltd Superannuation Fund 40,000 $20,000 $0.50
Ann Maree Wood 10,000 $ 5,000 $0.50
Walter Puawai McDermott 20,000 $10,000 $0.50
Linda Wild 70,000 $35,000 $0.50
Denise Linsley-Hayles 10,000 $ 5,000 $0.50
Wayne Jobson 40,000 $20,000 $0.50
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, the above-referenced
parties 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.
65
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 (1)
3.1(a) Amendments to Certificate of Incorporation
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 (1)
10.2 Stock Option Agreement dated July 25, 2004 between us and Fort Street
Equity, Inc. (subscription agreement) (1)
10.3 License Agreement with L.R. Global Marketing Pty Ltd. and Extension
Agreement
10.4 Employment Agreement - Mark Poulsen (1)
10.5 Employment Agreement - Anthony Head (1)
10.6 Employment Agreement - Prins Ralston (1)
10.7 Employment Agreement - Sandra Wendt (1)
10.8 Agreement with Insource Pty Ltd. (1)
21.1 Subsidiaries (1)
23.1 Consent of Davis Accounting Group, P.C., independent auditors.
24.1 Power of Attorney (included on signature page of Registration Statement)
(1) Originally submitted with Form SB-2 registration statement on March 7, 2005
(SEC File No. 333-123176).
66
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.
67
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 3rd day of May, 2005.
FIT FOR BUSINESS INTERNATIONAL, INC.
BY: /s/ Mark A. Poulsen
--------------------------------------
Mark A. Poulsen
Chief Executive Officer, President 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.
--------------------------- ------------------------------ ---------------------
SIGNATURE TITLE DATE
--------------------------- ------------------------------ ---------------------
/s/ Mark A. Poulsen Chief Executive Officer, May 4, 2005
----------------------- President and Chairman of
Mark A. Poulsen the Board of Directors
--------------------------- ------------------------------ ---------------------
/s/ Sandra Wendt Senior Vice President of May 4, 2005
----------------------- Administration, Chief
Sandra Wendt Financial Officer and
Principal Accounting Officer
--------------------------- ------------------------------ ---------------------
/s/ Prins Ralston Senior Vice President and May 4, 2005
----------------------- Chief Operating Officer
Prins Ralston
--------------------------- ------------------------------ ---------------------
/s/ Anthony F. Head Senior Vice President of May 4, 2005
----------------------- Sales and Director
Anthony F. Head
--------------------------- ------------------------------ ---------------------
68