As filed with the Securities and Exchange Commission on September 24, 1996
Registration No. 333-9809
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. 1)
HEALTH BUILDERS INTERNATIONAL, INC.
(Name of small business issuer in its charter)
Delaware (State or other jurisdiction of incorporation or organization)
5960 (Primary Standard Industrial Classification Code Number)
Applied For (I.R.S. Employer Identification No.)
2077 Elderberry Way, Sandy, Utah 84092 (801) 553-8972
(Address and telephone number of principal executive offices and place of
business)
L. Dee Hall, 2077 Elderberry Way, Sandy, Utah 84092 (801) 553-8972
(Name, address and telephone number of agent for service)
Copies to:
Thomas G. Kimble & Van L. Butler
THOMAS G. KIMBLE & ASSOCIATES (801) 531-0066
311 South State Street, Suite 440, Salt Lake City, Utah 84111
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this registration statement.
_______________________________________________________________________________
CALCULATION OF REGISTRATION FEE
(previously submitted)
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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.
PAGE
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250,000 to 500,000 Shares
HEALTH BUILDERS INTERNATIONAL, INC.
Common Stock
Health Builders International, Inc. (the "Company"), is offering, on a
"best efforts, 250,000 shares minimum, 500,000 shares maximum" basis, shares of
its $.001 par value common stock, (the "Shares") to the public at a price of
$.20 per Share. The offering will be managed by the Company and the Shares
will be offered and sold by the officers of the Company, without any discounts
or other commissions. Licensed NASD Broker-dealers may also participate and
receive a commission of up to 14% of the offering price on sales made by them.
As of the date hereof, there are no plans, proposals, arrangements or
understandings with any broker-dealer(s) with respect to participation in the
distribution. Proceeds will be deposited no later than noon of the next
business day after receipt into an escrow account with Brighton Bank, 311 South
State Street, Salt Lake City, Utah 84111, pending receipt of subscriptions for
at least $50,000. If subscriptions for a minimum of 250,000 Shares have not
been received within 120 days from the date hereof (unless extended by the
Company for up to 60 additional days), all proceeds will be promptly refunded
to subscribers without interest thereon or deduction therefrom. Subscribers
will have no right to return or use of their funds during the offering period,
which may last up to 180 days. Officers, directors and current shareholders
may purchase Shares in the offering on the same basis as anyone else, but no
one has made any commitment to purchase all or any portion of the offering in
order to reach the minimum.
Prior to this offering, there has been no public market for the Shares.
The Shares will not be listed on an exchange or quoted on the NASDAQ system
upon completion of this offering and there can be no assurance that a market
will develop or, if a market should develop, that it will continue. The
initial public offering price has been arbitrarily determined by the Company
and bears no relationship to assets, shareholders' equity or any other
recognized criteria of value.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL AND IMMEDIATE
DILUTION AND SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD TO RISK THE
LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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Price to Commissions & Proceeds to
Public(1) Discounts(1)(2) Company (2)
Per Share $.20 $.028 $.172
Total Minimum $ 50,000 $ 7,000 $ 43,000
Total Maximum $ 100,000 $14,000 $ 86,000
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(See notes on following page)
The Shares are being offered by the Company subject to prior sale, receipt
and acceptance by the Company, approval of certain matters by counsel, and
certain other conditions. The Company reserves the right to withdraw or cancel
such offer and reject any order, in whole or in part.
The date of this Prospectus is , 1996
<PAGE>
(1) The offering price is payable in cash upon subscription. See "Plan
of Distribution."
(2) Proceeds to the Company are shown assuming payment of commissions to
licensed NASD broker-dealers with respect to all shares sold, but
before deducting other offering expenses payable by the Company for
legal and accounting fees and printing costs.
AVAILABLE INFORMATION
The Company has filed with the United States Securities and Exchange
Commission (the "Commission") a Registration Statement on Form SB-2, under the
Securities Act of 1933, as amended (the "Securities Act), with respect to the
securities offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information contained
in the Registration Statement. For further information regarding both the
Company and the Securities offered hereby, reference is made to the
Registration Statement, including all exhibits and schedules thereto, which may
be inspected without charge at the public reference facilities of the
Commission's Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C.
20549. Copies may be obtained from the Washington, D.C. office upon request
and payment of the prescribed fee.
As of the date of this Prospectus, the Company became subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(The "Exchange Act") and, in accordance therewith, will file reports and other
information with the Commission. Reports and other information filed by the
Company with the Commission pursuant to the informational requirements of the
Exchange Act will be available for inspection and copying at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: New York Regional Office, 75 Park Place, New York, New York
10007; Chicago Regional Office, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material may be obtained from the public reference
section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
Copies of the Company's Annual, Quarterly and other Reports which will be
filed by the Company with the Commission commencing with the Quarterly Report
for the first quarter ended after the date of this Prospectus (due 45 days
after the end of such quarter) will also be available upon request, without
charge, by writing Health Builders International, Inc., 2077 Elderberry Way,
Sandy, Utah 84092.
UNTIL [90 DAYS AFTER THE DATE OF THIS PROSPECTUS], ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY STATE SECURITIES
COMMISSION OR OTHER STATE REGULATORY AUTHORITY, AND NO SUCH REGULATORY
AUTHORITY HAS PASSED UPON THE TERMS OF THIS OFFERING OR APPROVED THE MERITS
THEREOF. INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE
TERMS OF THIS OFFERING IN EVALUATING THE MERITS AND RISKS OF THE OFFERING AND
MAKING AN INVESTMENT DECISION. THIS PROSPECTUS SHOULD BE READ IN ITS ENTIRETY
BY ANY PROSPECTIVE INVESTOR PRIOR TO HIS OR HER INVESTMENT. <PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed information
appearing elsewhere in the Prospectus.
The Company
Health Builders International, Inc. (the "Company") was recently
incorporated under the laws of the State of Delaware on July 3, 1996. The
Company has not commenced active business operations and is considered a
development stage company. The Company was formed to establish a training and
distribution center for the development of multi-level marketing networks in
the health and nutrition industry, to train and assist people involved in
network marketing for various health and nutrition companies in recruiting, and
also to provide customized mailing and fax services. The Company's business
strategy is to capitalize on the increasing use of multi-level marketing by
health and nutrition companies, by providing training services and otherwise
assisting people to become successfully involved in multi-level marketing. See
"Business."
The Company's mailing address and telephone number of its principal
executive offices are 2077 Elderberry Way, Sandy, Utah 84092. (801) 553-8972.
The Offering
Securities offered
250,000 to 500,000 Shares of Common Stock, $.001 par value ("Common Stock") of
the Company. See "Description of Securities".
Offering Price
$.20 Per Share.
Plan of Distribution
The offering will be managed by the Company and the Shares will be offered and
sold by the officers of the Company, without any discounts or other
commissions. Licensed NASD Broker-dealers may also participate and receive
commissions of up to 14% of the offering price on sales made by them. Offering
proceeds will be escrowed pending completion or termination of the offering.
The offering will terminate 120 days from the date hereof (or 180 days if
extended by the Company for an additional 60 days), and funds held in escrow
will be promptly returned to subscribers, without interest thereon or deduction
therefrom, unless the offering is completed on or before that date upon receipt
of subscriptions for at least the minimum offering amount ($50,000). See "Plan
of Distribution."
Escrow Agent
Brighton Bank, 311 South State Street, Salt Lake City, Utah 84111 will serve as
escrow agent for receipt of the proceeds from this offering.
Transfer Agent
Interwest Transfer Co., Inc., 1981 East 4800 South, Suite 100, P.O. Box 17136,
Salt Lake City, Utah 84117, (801) 272-9294, has agreed to serve as transfer
agent and registrar for the Company's outstanding securities upon completion of
the offering.
Securities Outstanding
The Company is authorized to issue up to 50,000,000 shares of Common Stock and
presently has 2,000,000 shares of Common Stock issued and outstanding. Upon
completion of this offering, if all Shares offered herein are sold, 2,500,000
shares of Common Stock will then be issued and outstanding; 2,250,000 Shares
will be issued and outstanding if only the minimum number of Shares offered
herein are sold. In addition, the Company is authorized to issue up to 500,000
shares of Preferred Stock in one or more series with such rights and
preferences as the Board of Directors may designate. The sole Director has not
designated any such series and no preferred shares are presently issued and
outstanding.
Risk Factors
The Company is a start up company with no operating history; consequently, an
investment in the Company is highly speculative. Investors will suffer
substantial dilution in the book value per share of the Common Stock compared
to the purchase price. In seeking to implement its proposed business, the
Company could incur substantial losses during the development stage, and
require additional funding for which it has no commitments. Management has
other interests which may conflict with the interests of the Company. Until
such time, if ever, that the Company generates sufficient revenue to pay a
salary to management, management will not be employed full time and will only
devote a minimal amount of time to the affairs of the Company. No person
should invest in the Company who cannot afford to risk loss of their entire
investment. See "Risk Factors."
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RISK FACTORS
The securities being offered hereby involve a high degree of risk.
Prospective investors should carefully consider the following risk factors
before investing in the Company.
Risks Inherent in a New Start Up Company
No Operating History. The Company was only recently incorporated, has no
significant assets, no history of operations and is considered to be a
development stage enterprise. There is absolutely no assurance that the
Company will be able, upon completion of this offering, to successfully
implement its proposed business or that it will ever operate profitably.
Dependence Upon Part Time Management/Business and Time Conflicts. As
compared to many other public companies, the Company does not have a depth of
managerial and technical personnel. Management of the Company has only limited
experience with the business proposed to be engaged in by the Company.
Furthermore, the officers of the Company will not be employed full time, at
least initially, and are involved with other businesses and have other
interests which could give rise to conflicts of interest with respect to the
business of and amount of time devoted to the Company. There is no assurance
such conflicts will be resolved favorably to the Company. See "Certain
Transactions - Conflicts of Interest".
Limited Liability of Management. The Company has adopted provisions to
its Articles of Incorporation and Bylaws which limit the liability of Officers
and Directors and provide for indemnification by the Company of Officers and
Directors to the full extent permitted by Delaware corporate law, which
generally provides that officers and directors shall have no personal liability
to a Company or its stockholders for monetary damages for breaches of their
fiduciary duties as officers and directors, except for breaches of their duties
of loyalty, acts or omissions not in good faith or which involve intentional
misconduct or knowing violation of law, acts involving unlawful payment of
dividends or unlawful stock purchases or redemptions, or any transaction from
which an officer or director derives an improper personal benefit. Such
provisions substantially limit the shareholders' ability to hold officers and
directors liable for breaches of fiduciary duty, and may require the Company to
indemnify its officers and directors. See "Certain Transactions - Conflicts of
Interest".
No Dividends. The Company does not currently intend to pay cash dividends
on its Common Stock and does not anticipate paying such dividends at any time
in the foreseeable future. At present, the Company will follow a policy of
retaining all of its earnings, if any, to finance development and expansion of
its business. See "Dividend Policy."
Limited Capital/Need for Additional Capital. The Company presently has no
significant operating capital and is totally dependent upon receipt of the
proceeds of this offering to provide the minimum capital necessary to commence
its proposed business. Upon completion of the offering, the amount of capital
available to the Company will still be extremely limited, especially if only
the minimum amount of the offering is raised. The Company has no commitments
for additional cash funding beyond the proceeds expected to be received from
this offering. In the event that the proceeds from this offering are not
sufficient, the Company may need to seek additional financing from commercial
lenders or other sources, for which it presently has no commitments or
arrangements.
Risks Related to the Nature of the Proposed Business
Benefits to Management. All of the officers are presently involved
personally or through controlled entities in large multi-level marketing
organizations or networks with extensive sales downlines comprising thousands
of people who distribute the health and nutrition products of various companies
engaged in such business. Management intends to recruit people in these
networks as potential trainees and users of the Company's products and
services. Management believes that this arrangement will be mutually
beneficial to the Company and themselves, in that the Company will benefit from
the pool of potential recruits to its services, and these organizations will
benefit from any improved marketing effectiveness of its members who use the
Company's training and other services.
Government Regulation. Although the Company itself will not be engaged
directly in multi level marketing of health and nutrition products for any
company, the multi level marketing and health and nutrition industries are both
subject to extensive regulations relating to, inter alia, product claims and
marketing methods. As part of the process of training and otherwise assisting
others to be effective as multi level marketing representatives, management of
the Company must maintain an awareness of applicable regulatory requirements to
avoid causing a violation of any such requirements.
Risks Related to the Offering
Best Efforts Offering/No Firm Commitment. The Shares are offered by the
Company on a "best efforts, minimum-maximum basis"; there is no underwriter and
no firm commitment from anyone to purchase all or any of the Shares offered.
No assurance can be given that all or any of the Shares will be sold. However,
escrow provisions have been made to insure that if subscriptions for a minimum
of 250,000 Shares are not received within the offering period, plus any
extensions, all funds received will be promptly refunded to subscribers,
without interest thereon or deduction therefrom. During the offering period,
which could last up to 180 days, subscribers will receive no interest on their
funds nor have any use or right to return of the funds.
Continuation of Control by Present Shareholders. Upon completion of this
offering, present shareholders will own a majority of the total outstanding
securities and will have absolute voting control of the Company. Investors in
this offering will have no ability to remove, control or direct such
management. Only one third of the outstanding shares is required to constitute
a quorum at any stockholders' meeting, and action may be taken by a majority of
the voting power present at a meeting, or may be taken without a meeting by
written consent of stockholders holding a majority of the total voting power.
See "Principal Stockholders" and "Description of Securities."
Benefits to Present Stockholders/Disproportionate Risks. The present
stockholders of the Company, paid $10,000 cash for the 2,000,000 shares of the
Company's Common Stock which are presently outstanding. If all 500,000 Shares
offered herein are sold, immediately after completion of the offering, present
stockholders will still own 80% of the then outstanding Common Stock.
Investors in this offering will own the other 20%, for which they will have
paid $100,000 cash. If only the minimum number of Shares offered is sold,
present stockholders will own of 89% the then outstanding Common Stock.
Investors in this offering will own the other 11%, for which they will have
paid $50,000 cash. Thus, the cash contributed to capital of the Company by
investors in this offering is disproportionately greater than the Common Stock
ownership percentage they receive. Present stockholders will benefit from a
greater share of the Company if successful, while investors in this offering
risk a greater loss of cash invested if the Company is not successful. See
"Comparative Data."
Dilution. Investors in this offering will suffer substantial dilution in
the purchase price of the Shares compared to the net tangible book value per
share immediately after the offering. See "Dilution."
Lack of Underwriter Participation. Because the Company has not engaged
the services of an Underwriter with respect to this offering, the independent
due diligence review of the Company, its affairs and financial condition, which
would ordinarily be performed by an underwriter and its legal counsel, has not
been performed with respect to the Company and investors will not have the
benefit of an underwriter's independent due diligence review.
Potential Issuance of Additional Common and Preferred Stock. The Company
is authorized to issue up to 50,000,000 shares of Common Stock, of which only
2,500,000 shares at most will be issued and outstanding upon completion of this
offering. The Board of Directors of the Company will have the ability, without
seeking shareholder approval, to issue additional shares of Common Stock in the
future for such consideration as the Board of Directors may consider
sufficient. The issuance of additional Common Stock in the future will reduce
the proportionate ownership and voting power of the Common Stock offered
hereby. The Company is also authorized to issue up to 500,000 shares of
preferred stock, the rights and preferences of which may be designated in
series by the Board of Directors. Such designations may be made without
shareholder approval. The Board of Directors has not designated any series or
issued any shares of preferred stock. The designation and issuance of series
of preferred stock in the future would create additional securities which would
have dividend and liquidation preferences over the Common Stock offered hereby.
The foregoing provisions may have the effect of delaying, deterring or
preventing a change in control of the Company. See "Description of
Securities."
Shares Eligible for Future Sale. All shares of Common Stock presently
outstanding are restricted securities and/or securities held by affiliates
which are not presently eligible, but may in the future be eligible to sell,
pursuant to Rule 144, in any public market that may develop for the Common
Stock. Future sales by current shareholders could depress the market prices of
the Common Stock in any such market. See "Shares Eligible for Future Sale".
Arbitrary Determination of Offering Price. The public offering price of
the Shares of Common Stock offered hereby was arbitrarily determined by
management of the Company and was set at a level substantially in excess of the
price recently paid by present shareholders for securities of the same class.
The price bears no relationship to the Company's assets, book value, net worth
or other economic or recognized criteria of value. In no event should the
public offering price be regarded as an indicator of any future market price of
the Company's securities.
No Assurance of a Liquid Public Market for Securities. There has been no
public market for the Shares prior to the offering made hereby. The Shares
will not be listed on an exchange or quoted on the NASDAQ system upon
completion of this offering and there can be no assurance any market will
develop for the securities or that if a market does develop, that it will
continue. There can also be no assurance as to the depth or liquidity of any
market for Common Stock or the prices at which holders may be able to sell the
securities. As a result, an investment in the Shares may be totally illiquid
and investors may not be able to liquidate their investment readily or at all
when they need or desire to sell.
Volatility of Stock Prices. In the event a public market does develop for
the Shares, market prices will be influenced by many factors, and will be
subject to significant fluctuation in response to variations in operating
results of the Company and other factors such as investor perceptions of the
Company, supply and demand, interest rates, general economic conditions and
those specific to the industry, international political conditions,
developments with regard to the Company's activities, future financial
condition and management.
Applicability of Penny Stock Risk Disclosure Requirements. The securities
of the Company will be considered a "penny stock" as that term is defined in
rules promulgated under the Exchange Act. Under these rules, broker-dealers
participating in transactions in penny stocks must first deliver a risk
disclosure document which describes the risks associated with penny stocks, the
broker-dealer's duties, the customer's rights and remedies, and certain market
and other information, and make a suitability determination approving the
customer for penny stock transactions based on the customer's financial
situation, investment experience and objectives. Broker-dealers must provide
the customer with current inside bid and offer quotations for the penny stock,
and information relating to the compensation to the broker-dealers and their
associated salespersons. The bid and offer quotations and the broker-dealer
and associated salesperson compensation information must be given to the
customer orally or in writing prior to effecting transactions and must be given
to the customer in writing prior to or concurrently with the customer's
confirmation. Broker-dealers must also disclose these restrictions in writing
to the customer, obtain the specific written consent of the customer, and
provide monthly account statements to the customer. With these restrictions,
the likely effect of designation as a penny stock will be to decrease the
willingness of broker-dealers to make a market, to decrease the liquidity of
the stock and increase the transaction cost of sales and purchases as compared
to other securities not so designated. See "Plan of Distribution."
DILUTION
Dilution is the difference between the public offering price of $.20 per
share for the Common Stock offered herein, and the net tangible book value per
share of the Common Stock immediately after its purchase. The Company's net
tangible book value per share is calculated by subtracting the Company's total
liabilities from its total assets less any intangible assets, and then dividing
by the number of shares then outstanding.
The net tangible book value of the Company prior to the offering, based on
the July 17, 1996 date of inception financial statements, was $9,000 or
approximately $.005 per common share. Prior to selling any shares in this
offering, the Company has 2,000,000 shares of Common Stock outstanding.
If all Shares offered herein are sold, the Company will have 2,500,000
shares outstanding upon completion of the offering. The post offering pro
forma net tangible book value of the Company, which gives effect to receipt of
the net proceeds from the offering (assuming payment of a sales commission on
all shares sold) and issuance of the additional Shares of Common Stock in the
offering, but does not take into consideration any other changes in the net
tangible book value of the Company after July 17, 1996, will be $83,000 or
approximately $.033 per share. This would result in dilution to investors in
this offering of $.167 per share, or 83.5% from the public offering price of
$.20 per share. Net tangible book value per share would increase to the
benefit of present stockholders from $.005 prior to the offering to $.033 after
the offering, or an increase of $.028 per share attributable to purchase of the
Shares by investors in this offering.
If only the minimum number of Shares is sold, the Company will have
2,250,000 Shares outstanding upon completion of the offering. The post
offering pro forma net tangible book value of the Company will be $40,000 or
approximately $.018 per share. This would result in dilution to investors in
this offering of $.182 per share, or 91% from the public offering price of $.20
per share. Net tangible book value per share would increase to the benefit of
present stockholders from $.005 prior to the offering to $.018 after the
offering, or an increase of $.013 per share attributable to the purchase of the
Shares by investors in this offering.
The following table sets forth the estimated net tangible book value
("NTBV") per share after the offering and the dilution to persons purchasing
Shares based on the foregoing minimum and maximum offering assumptions.
Minimum Maximum
Public offering price/share $.20 $.20
NTBV/share prior to offering $.005 $.005
Increase attributable to new investors .013 .028
----- -----
Post offering pro forma NTBV/share .018 .033
---- ----
Dilution $.182 $.167
COMPARATIVE DATA
The following charts illustrate the pro forma proportionate ownership in
the Company, upon completion of the offering under alternative minimum and
maximum offering assumptions, of present stockholders and of investors in this
offering, compared to the relative amounts paid and contributed to capital of
the Company by present stockholders and by investors in this offering, assuming
no changes in net tangible book value other than those resulting from the
offering.
MINIMUM OFFERING Shares Owned Percent Cash Paid Percent Per share
Present Shareholders 2,000,000 89% $ 10,000 16.7% $0.005
New Investors 250,000 11% $ 50,000 83.3% $0.20
MAXIMUM OFFERING Shares Owned Percent Cash Paid Percent Per share
Present Shareholders 2,000,000 80% $ 10,000 9% $0.005
New Investors 500,000 20% $100,000 91% $0.20
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 250,000 to 500,000
Shares offered hereby at a public offering price of $.20 per Share will vary
depending upon the total number of Shares sold and the amount of any
commissions paid to licensed NASD broker-dealers in connection with such sales.
Regardless of the amount of any commissions paid, the Company also expects to
incur other offering expenses estimated at $12,000 for legal, accounting,
printing and other costs in connection with the offering. The following table
sets forth gross and net proceeds, alternatively under the minimum and maximum
offering, assuming that commissions are paid with respect to all sales, and
management's present estimate of the allocation and prioritization of net
proceeds expected to be received from this offering. Actual receipts and
expenditures may vary from these estimates. Pending use, the Company will
invest the net proceeds in investment-grade, short-term, interest bearing
securities.
Minimum Offering Maximum Offering
Gross Proceeds $ 50,000 $100,000
Commissions (1) 7,000 14,000
Other Offering Expenses (2) 12,000 12,000
NET OFFERING PROCEEDS $ 31,000 $ 74,000
Compensation (3) $ 18,000 $ 36,000
Office Equipment (4) 2,000 2,000
Operating Expenses & Working Capital (5) 11,000 36,000
TOTAL $ 31,000 $ 74,000
(1) The foregoing amount assumes payment of sales commissions with respect to
all Shares sold. The Company will pay a commission of up to 14% of the
offering price to any licensed NASD Broker-dealers who participate in the
offering, but only with respect to sales made by them. To the extent that
sales are made by the officers of the Company without the payment of any
sales commission or discount, the amount allocated above for the payment
of commissions will be reallocated and used as additional working capital
for the Company's operations.
(2) Regardless of the number of Shares sold in the offering and the amount of
any commissions paid, the Company will incur other offering expenses for
legal and accounting fees and costs, printing and transfer agent costs,
filing fees, etc.
(3) Although management will not receive any regular salary or wage initially,
the Company intends to hire a full time secretary, a part time manager and
other part time help, and anticipates incurring approximately $1,500 per
month in payroll costs. The amount allocated would cover such expenses
for approximately one to two years, depending on the total amount raised
in the offering.
(4) The Company intends to acquire various office equipment, including copy,
fax and postage and other machines.
(5) The Company anticipates incurring approximately $1,000 to $1,250 per month
in operating expenses for phone, postage, advertising, travel and office
supplies.
MANAGEMENT'S PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with
the Company's consolidated financial statements and the notes associated with
them contained elsewhere in this prospectus.
Plan of Operations.
The Company was only recently incorporated on July 3, 1996. The Company
has not commenced planned principal operations and is considered a development
stage company. The Company has no significant assets, no active business
operations nor any results therefrom. To date, activities have been limited to
organizational matters and the preparation and filing of the registration
statement of which this prospectus is a part.
Management's plan of operation for the next twelve months is first to
raise funds from this offering. If the offering is successful, the Company
intends to use the proceeds primarily to acquire office equipment, hire
employees and cover the payroll costs and otherwise provide operating capital
during the start up period of operations until the Company can begin generating
revenues from operations to thereafter cover ongoing expenses. The Company is
totally dependent upon the successful completion of this offering and receipt
of at least the minimum amount of proceeds therefrom, of which there is no
assurance, for the ability to commence its intended business operations.
Inasmuch as there is no assurance that this offering will be successful
and that the Company will receive any net proceeds therefrom, the Company has
not entered into any contractual commitments and will not do so unless and
until the offering is completed. Therefore there is absolutely no assurance
that the Company will be able, with the proceeds of this offering, to
successfully commence proposed business operations. At this time, no
assurances can be given with respect to the timing of commencement of
operations or the length of time after commencement that it will be necessary
to fund operations from proceeds of this offering.
Depending on the total amount raised in the offering, management believes
that the net proceeds from the offering will provide working capital for one to
two years after commencement of operations, during which time management
anticipates that the Company will begin generating sufficient revenues to cover
ongoing expenses. However, there is absolutely no assurance of this. If the
Company is unsuccessful, investors will have lost their money and management
will not attempt to pursue further efforts with respect to such business, and
it is unlikely the Company would have the financial ability to do so in any
event. Instead management will call a shareholders meeting to decide whether
to liquidate the Company or what direction the Company will pursue, if any.
However, the Company presently has no plans, commitments or arrangements with
respect to any other potential business venture and there is no assurance the
Company could become involved with any other business venture, especially any
business venture requiring significant capital.
BUSINESS
History of the Company
Health Builders International, Inc. (the "Company") was recently
incorporated under the laws of the State of Delaware on July 3, 1996. The
Company has not commenced business operations and is considered a development
stage company. To date, activities have been limited to organizational matters
and the preparation and filing of the registration statement of which this
prospectus is a part. In connection with the organization of the Company, the
founding shareholders of the Company contributed an aggregate of $10,000 cash
to capitalize the Company in exchange for 2,000,000 shares of Common Stock.
The Company has no significant assets, and is totally dependent upon the
successful completion of this offering and receipt of the proceeds therefrom,
of which there is no assurance, for the ability to commence its proposed
business operations.
Proposed Business of the Company
The Company was formed for the purpose of engaging in the business of
providing training and other related services for multi level marketing
representatives. The Company was formed to establish a training and
distribution center for the development of multi-level marketing networks in
the health and nutrition industry, to train and assist people involved in
network marketing for various health and nutrition companies in recruiting, and
also to provide customized mailing and fax services.
The terms "multi level marketing" and "multi level marketing networks"
refers to the type of marketing plan or system in which products are purchased
from distributors, consultants or other authorized representatives of the
products, and the purchasers or consumers of such products are permitted and
encouraged to also become marketing representatives themselves, and solicit and
recruit others to not only purchase the products but become marketing
representatives, thus creating multiple layers or levels of marketing
representatives in a network. This is also sometimes referred to as "network
marketing." "Multi level marketing organizations" refers to companies,
individuals and other entities and the networks thereof that are engaged in
marketing products by use of such methods.
The individual members of management of the Company are all involved in
multi level marketing organizations, as distributors for various companies in
the health and nutrition industry, which market their products through multi
level or network marketing. Based on their experience with multi level
marketing, management believes that a substantial need exists for training of
multi level marketing representatives or distributors and potential recruits,
to show them how to be more effective in recruiting others to become consumers
and distributors of the products, and also to provide customized mailing and
fax services to assist marketing representatives to recruit others on a mass
solicitation basis.
Management believes that some of the best companies within the multi level
marketing industry are companies involved in the health and nutrition industry,
taking advantage of the health wave that is taking place in North America.
Management believes that the multi level marketing system is ideally suited to
marketing health and nutrition products because sales of such products are
strengthened by ongoing personal contact between retail consumers and
distributors, most if not all of whom are also users of the products being
marketed. The Company's business strategy is to capitalize on the increasing
use of multi-level marketing by health and nutrition companies, by providing
training services and otherwise assisting people to become successfully
involved in multi-level marketing.
Marketing Methods
Management intends to market the proposed products and services to be
provided by the Company primarily to the distributors and other multi level
marketing representatives in the sales downlines of the multi level marketing
organizations which the members of management are affiliated with. Based on
the number of marketing representatives currently in all the organizations
which the individual members of management are affiliated with, this represents
a pool of potential trainees and users of the services of the Company in excess
of fifteen thousand people.
The multi level marketing companies engaged in marketing health and
nutrition products in which the members of management have distributorship
organizations or are otherwise affiliated with include the following
organizations: Body Wise International, Inc., a company in which Mr. Hall and
his wife have a large distributorship organization with a sales downline
comprising approximately 13,000 other distributors, which generates annual
revenues of about $10 million; USANA, Inc., a company in which Mr. Hatch holds
a distributorship organization with annual revenues of approximately $300,000
and a sales downline comprising approximately 8,000 other distributors; and
Rexall Showcase, a multi level company in which Mr. Blackley holds a
distributorship with a downline organization comprising approximately 50 other
distributors. There are no formal or informal arrangements or agreements with
Body Wise International, Inc., USANA, Inc., or Rexall Showcase to facilitate or
complement the Company's business plan.
Management intends to direct its recruiting efforts on behalf of the
Company toward this group of people, and will make them aware of the products
and services of the Company through the personal, telephone, mailing and other
contacts that regularly occur in the course of the multi level marketing
conducted through these organizations. Management will use the opportunity of
these contacts to solicit such persons on behalf of the Company to use the
Company's products and services.
Management believes that this arrangement will be mutually beneficial to
the Company and themselves, in that the Company will benefit from the pool of
potential recruits to its services, and these organizations will benefit from
any improved marketing effectiveness of its members who use the Company's
training and other services.
Products and Services
An individual may join any one or more of the multi level marketing
organizations sponsored by the members of management of the Company. This
process usually consists of filling out an application form and paying an
initial sign up fee. The initial fees vary from company to company and are
usually intended to cover the administrative cost of processing the application
and the costs of sales kits or other promotional materials given to the person.
Sometimes fees may also be paid to purchase initial quantities of product.
Once an individual has joined, management will solicit such person to take
advantage of the services to be provided by the Company, to help them succeed
in multi level marketing by providing the following services:
1. The Company has designed direct mail programs for each of the health
and nutrition companies that the members of management are affiliated with
as distributors. Each new member will be asked to provide a list of 50 to
100 names of acquaintances that the Company will mail an information
package to. This can be done with or without using the name of the new
member.
2. The Company will provide a voice mail system that the individuals
receiving the information package will asked be to respond to. When they
call the toll free number for additional information, they will hear a
recorded message from a successful leader in that particular company. The
message will help them to understand the potential of true financial and
time freedom that can be realized in the multi level marketing program
that exists in that particular company, through becoming a distributor,
sponsoring others as distributors and establishing a sizeable downline
organization of distributors sponsored by or through them, that will
generate substantial monthly revenues from product sales and pay the
sponsoring distributor a portion of such revenues as income. They will
then be asked to leave their name and phone number in order for someone to
contact them personally.
3. The Company will provide a fax on demand service that will also be
made available to the contacts to receive additional information about the
Company.
4. After the initial information package has been sent and the screening
process has taken place, the new member will then be contacted with the
names of acquaintances who have responded positively and are seriously
interested in the opportunity.
5. The members of management will then make themselves available to help
the new member contact those who have expressed an interest, on a 3 way
conference call or in some instances in person, to solicit them to join
the multi level marketing organization downline from the new member.
6. The members of management will also provide weekly and monthly
training seminars that will help the members learn how to motivate and
work with their downline organizations (i.e., the distributors sponsored
by or through them) as they are developing. These will be hands on
seminars taught by people who have actually succeeded financially in the
multi level marketing industry by developing sizeable downline
organizations.
7. The Company will also provide direct mail services for any type of
promotion that members may want to use as their organizations mature.
8. Computer profiling, metabolic profiles, fat testing and support groups
will also be made available by or through the Company.
Management presently intends to charge an annual membership fee of $49.95
to register and actively use the training and other services of the Company on
an ongoing basis. The annual fee will be collected each year on the
anniversary date of the client's initial sign up. If a person is also signing
up as a new member of a multi level marketing organization at the same time,
fees may also be incurred to the multi level marketing company that the person
joins. Other charges by the Company will be for the mass mailings, fax and
other services provided by the Company, which will be charged for on an as used
basis. Fees will be set in amounts necessary to recover the actual cost of
materials and postage incurred for such services plus a profit of 10%-20% to
the Company. There will also be additional fees charged for computer
profiling, metabolic profiles and counseling, fat testing, and ongoing support
group participation for specific health concerns. and weight management.
Government Regulation.
Although the Company itself will not be engaged directly in multi level
marketing of health and nutrition products for any company, the Company's
business is directly related to and dependent on both the multi level marketing
and health and nutrition industries, which are both subject to extensive
regulations relating to, inter alia, product claims and marketing methods. As
part of the process of training and otherwise assisting others to be effective
as multi level marketing representatives, management of the Company must
maintain an awareness of applicable regulatory requirements to avoid causing a
violation of any such requirements.
Multi Level Marketing. The multi level marketing system is subject to a
number of federal and state regulations administered by the Federal Trade
Commission and various state agencies as well as regulations in foreign markets
administered by foreign agencies. Regulations applicable to multi level
marketing organizations have a general purpose of ensuring that solicitation
emphasizes product sales and that product sales are ultimately made to retail
consumers (as opposed to other distributors) who consume the products, and that
advancement within the multi level marketing structure is based on sales of the
products rather than investments in the organizations or other non-retail sales
related criteria. For instance, in certain jurisdictions there may be limits
on the extent to which distributors may earn royalties on sales generated by
distributors or consumers who were not directly sponsored by that distributor.
Furthermore, many if not most jurisdictions have various statutes or
regulations prescribing, proscribing or otherwise regulating various consumer
sales practices. For instance, most states prohibit so called pyramid schemes,
which are generally defined as sales programs in which payments are made or
other consideration given in exchange for compensation or the right to receive
compensation which is derived primarily from the introduction and recruiting of
other persons into the program rather than from the sale of goods and services.
In some instances, the emphasis placed in solicitation efforts and other
marketing methods employed by distributors, including persons the Company
trains or otherwise assists, could influence regulatory determinations of
whether such regulatory requirements have been complied with.
Product Claims and Advertising. Advertisements and claims made with
respect to products, whether made by a multi level marketing company itself or
by the multi level marketing distributors, are strictly regulated. With
respect to health and nutrition companies, the products offered by such
companies are generally formulated using only herbal or other natural
ingredients classified by regulatory agencies such as the Food and Drug
Administration as being safe for consumption without further pre-market
clinical testing. A principal focus of regulations applicable to such products
is to generally prohibit the making of therapeutic claims. The making of
impermissible therapeutic claims by distributors, including persons the Company
trains or otherwise assists, could result in reclassification subjecting
products to stricter regulations, or other sanctions.
Physical Facilities and Employees
The Company presently has no office facilities but for the time being will
use the home office facilities of Dee Hall, its President, in Sandy, Utah, on a
rent free basis as its principal place of business. The Company will reimburse
the officers and employees for any additional, out of pocket expenses
reasonably and actually incurred on behalf of the Company. Management does not
intend to seek other office arrangements immediately upon completion of the
offering, but will seek such arrangements at such time in the future as the
Company's business requires more extensive facilities, which is not anticipated
in the immediate future. The Company may use a portion of the proceeds of this
offering for such purpose, if and as needed.
The Company presently has no salaried employees, but upon completion of
the offering management anticipates the need to hire employees, including a
full time secretary, part time Manager and other part time help. The part time
manager will hire and supervise other employees, as needed, and will design,
supervise and be responsible for the mailings and follow up systems of the
Company as well as the administrative aspects of day to day operations,
including accounting and recordkeeping functions. The officers of the Company
will not be employed full time initially and will not receive a regular salary,
wage or other cash compensation for their time, unless and until the Company's
business operations develop to the point where a full time or other extensive
time commitment is required.
MANAGEMENT
Executive Officers, Directors and Significant Employees
The following table sets forth the directors and executive officers of the
Company, their ages, term served and all offices and positions with the
Company. A director is elected for a period of one year and thereafter serves
until his or her successor is duly elected by the stockholders and qualifies.
Officers and other employees serve at the will of the Board of Directors.
Name of Director Age Term Served Positions with Company
L. Dee Hall 51 Since inception President, Treasurer & Director
Glen Hatch 60 Since inception Vice President
Robert Blackley 60 Since inception Secretary
These individuals will serve as management of the Company. A brief
description of their background and business experience is as follows:
L. Dee Hall will serve as President, Treasurer and Director of the
Company. He and his wife have been involved in network marketing for the past
eight years, and have built multi-level marketing organizations in NuSkin
International, Brite Music (Dee was National Sales Manager for Brite) and Body
Wise International. They currently have a sales downline for over 13,000
people in Body Wise and Dee is a member of the Body Wise Executive Leadership
Council. Their organization generated over $500,000 in revenues last year.
Glen Hatch will serve as Vice President of the Company. He has been
involved in direct sales for over 20 years and has established many successful
sales organizations. He is currently the President of Camper World, Inc. He
also has a large marketing organization in USANA, INC. and is a member of the
USANA top ten (i.e. one of the top ten distributors in the entire USANA multi
level marketing network).
Robert Blackley will serve as Secretary of the Company. He and his wife
have built successful marketing organizations in NuSkin International, Santa
Rosa Gold, Accelerated Financial and Body Wise, and have also been involved in
real estate development for over ten years. They are currently directors in
Rexall Showcase.
The directors hold no directorships in any other companies subject to the
reporting requirements of the Securities Exchange Act of 1934.
Executive Compensation
The Company was only recently incorporated, has not yet commenced planned
operations and has not paid any compensation to its executive officers or
director to date.
Proposed Compensation. The officers of the Company will not be employed
full time initially and will not receive a regular salary, wage or other cash
compensation for their time, unless and until the Company's business operations
develop to the point where a full time or other extensive time commitment is
required. The officers will be entitled to reimbursement of any out of pocket
expenses reasonably and actually incurred on behalf of the Company.
CERTAIN TRANSACTIONS
In connection with the organization of the Company, its founding
shareholders paid an aggregate of $10,000 cash to purchase 2,000,000 shares of
Common Stock of the Company. See "Principal Shareholders."
It is contemplated that the Company may enter into certain transactions
with officers, directors or affiliates of the Company which may involve
conflicts of interest in that they will not be arms' length transactions.
These transactions include the following:
The Company presently has no office facilities but for the time being will
use as its business address the home of Dee Hall on a rent free basis, until
such time as the business operations of the Company may require more extensive
facilities and the Company has the financial ability to rent commercial office
space. There is presently no formal written agreement for the use of such
facilities, and no assurance that such facilities will be available to the
Company on such a basis for any specific length of time.
The Company has no formal written employment agreement or other contracts
with its officers, and there is no assurance that the services to be provided
by them, and facilities to be provided by Mr. Hall, will be available for any
specific length of time in the future. Mr. Hall anticipates initially devoting
up to approximately 20% of his time to the affairs of the Company, and the
other officers intend to devote approximately 5% of their time to the Company.
If and when the business operations of the Company increase and a more
extensive time commitment is needed, Mr. Hall and the other officers are
prepared to devote more time to the Company, in the event that becomes
necessary. The amounts of compensation and other terms of any full time
employment arrangements with the Company would be determined if and when such
arrangements become necessary.
All of the officers are presently involved personally or through
controlled entities in large multi-level marketing organizations or networks
with extensive sales downlines comprising thousands of people who distribute
the health and nutrition products of various companies engaged in such
business. See "Business - Marketing Methods." Management intends to recruit
people in these networks as potential trainees and users of the Company's
products and services. Management believes that this arrangement will be
mutually beneficial to the Company and themselves, in that the Company will
benefit from the pool of potential recruits to its services, and these
organizations will benefit from any improved marketing effectiveness of its
members who use the Company's training and other services.
Conflicts of Interest
Other than as described herein the Company is not expected to have
significant further dealings with affiliates. However, if there are such
dealings the parties will attempt to deal on terms competitive in the market
and on the same terms that either party would deal with an unrelated third
person. Presently no officer or director of the Company has any transactions
which they contemplate entering into with the Company, aside from the matters
described herein.
Management will attempt to resolve any conflicts of interest that may
arise in favor of the Company. Failure to do so could result in fiduciary
liability to management.
Indemnification and Limitation of Liability
The general corporation law of Delaware permits provisions in the
articles, by-laws or resolutions approved by shareholders which limit liability
of directors and officers for breach of fiduciary duty to certain specified
circumstances, namely, breaches of their duties of loyalty, acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of law, acts involving unlawful payment of dividends or unlawful stock
purchases or redemptions, or any transaction from which a director or officer
derives an improper personal benefit. The Company's by-laws indemnify its
officers and directors to the full extent permitted by Delaware law. The
by-laws with these exceptions eliminate any personal liability of an officer or
director to the Company or its shareholders for monetary damages for the breach
of fiduciary duty and therefore an officer or director cannot be held liable
for damages to the Company or its shareholders for gross negligence or lack of
due care in carrying out his or her fiduciary duties. The Company's Articles
provide for indemnification to the full extent permitted under law which
includes all liability, damages and costs or expenses arising from or in
connection with service for, employment by, or other affiliation with the
Company to the maximum extent and under all circumstances permitted by law.
Delaware law permits indemnification if a director or officer acts in good
faith in a manner reasonably believed to be in, or not opposed to, the best
interests of the corporation. A director or officer must be indemnified as to
any matter in which he or she successfully defends himself or herself.
Indemnification is prohibited as to any matter in which the director or officer
is adjudged liable to the corporation. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers, and controlling persons of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock with respect to each
director of the Company, each person known to the Company to be the beneficial
owner of more than five percent (5%) of said securities, and all directors and
executive officers of the Company as a group:
Title Amount and Nature of Percent % After
Name and Address of Class Beneficial Ownership of Class Offering
L. Dee Hall Common 900,000 shares 45% 36%
2077 Elderberry Way
Sandy, UT 84092
Glen Hatch Common 200,000 shares 10% 8%
263 E. 3900 S.
Salt Lake City, UT 84107
Robert Blackley Common 200,000 shares 10% 8%
263 E. 3900 S.
Salt Lake City, UT 84107
All officers and directors Common 1,300,000 shares 65% 52%
as a group (3 persons)
Reed Jensen Common 700,000 shares 35% 28%
4348 Butternut Road
Salt Lake City, UT 84124
Prior to the sale of any Shares in this offering, these individuals are
the only shareholders of the Company. After offering percentages are
calculated assuming sale of all Shares in this offering. The foregoing amounts
include all shares these persons are deemed to beneficially own regardless of
the form of ownership. See "Certain Transactions."
DESCRIPTION OF SECURITIES
The following statements are qualified in their entirety by reference to
the detailed provisions of the Company's Articles of Incorporation and Bylaws,
copies of which will be furnished to an investor upon written request. The
Shares registered pursuant to the registration statement of which this
prospectus is a part are shares of Common Stock, all of the same class and
entitled to the same rights and privileges as all other shares of Common Stock.
Common Stock
The Company is presently authorized to issue 50,000,000 shares of $.001
par value Common Stock. The holders of common stock, including the Shares
offered hereby, are entitled to equal dividends and distributions, per share,
with respect to the common stock when, as and if declared by the Board of
Directors from funds legally available therefor. No holder of any shares of
common stock has a pre-emptive right to subscribe for any securities of the
Company nor are any common shares subject to redemption or convertible into
other securities of the Company. Upon liquidation, dissolution or winding up
of the Company, and after payment of creditors and preferred stockholders, if
any, the assets will be divided pro-rata on a share-for-share basis among the
holders of the shares of common stock. All shares of common stock now
outstanding are fully paid, validly issued and non-assessable. Each share of
common stock is entitled to one vote with respect to the election of any
director or any other matter upon which shareholders are required or permitted
to vote. Holders of the Company's common stock do not have cumulative voting
rights, so that 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.
The Company has reserved from its authorized but unissued shares a
sufficient number of shares of Common Stock for issuance of the Shares offered
hereby. The shares of Common Stock issuable on completion of the offering will
be, when issued in accordance with the terms of the offering, fully paid and
non-assessable. During the pendency of the offering, subscribers will have no
rights as stockholders of the Company until the offering has been completed and
the Shares have been issued to them.
Preferred Stock
The Company is also presently authorized to issue 500,000 shares of $.001
par value Preferred Stock. Under the Company's Articles of Incorporation, as
amended, the Board of Directors has the power, without further action by the
holders of the Common Stock, to designate the relative rights and preferences
of the preferred stock, and issue the preferred stock in such 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 the Company without
further shareholder action and may adversely effect 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. The Board of Directors effects a designation of each
series of Preferred Stock by filing with the Delaware Secretary of State a
Certificate of Designation defining the rights and preferences of each such
series. Documents so filed are matters of public record and may be examined in
accordance with procedures of the Delaware Secretary of State, or copies
thereof may be obtained from the Company.
Transfer Agent
Interwest Transfer Co., Inc. 1981 East 4800 South, Suite 100, P.O. Box
17136, Salt Lake City, Utah 84117, (801) 272-9294, has agreed to serve as
transfer agent and registrar for the Company's outstanding securities upon
completion of the offering.
Dividend Policy
The Company has not previously paid any cash dividends on Common Stock and
does not anticipate or contemplate paying dividends on Common Stock in the
foreseeable future. It is the present intention of management to utilize all
available funds for the development of the Company's business. There is no
assurance that the Company will ever have excess funds available for the
payment of dividends. The only legal restrictions that limit the ability to
pay dividends on common equity or that are likely to do so in the future, are
those restrictions imposed by State laws. Under Delaware corporate law, no
dividends or other distributions may be made which would render the Company
insolvent or reduce assets to less than the sum of its liabilities plus the
amount needed to satisfy any outstanding liquidation preferences.
SHARES ELIGIBLE FOR FUTURE SALE
All 2,000,000 shares of Common Stock currently outstanding are "restricted
securities," as that term is defined under Rule 144 promulgated under the
Securities Act of 1933, as amended, in that such shares were issued and sold by
the Company without registration, in private transactions not involving a
public offering, and/or are securities held by affiliates. Although such
restricted and affiliate securities are not presently tradeable in any public
market which may develop for the Common Stock, such securities may in the
future be publicly sold into any such market, if such a market should develop,
in accordance with the provisions of Rule 144. In general, under Rule 144 as
currently in effect, a nonaffiliated person (or group of persons whose share
are aggregated), can sell restricted securities, and affiliates of the Company
can sell restricted and other securities, in amounts that do not exceed within
any three-month period, the greater of 1% of the total number of outstanding
shares of the same class, or (if the Stock becomes quoted on NASDAQ or a stock
exchange), the reported average weekly trading volume during the four calendar
weeks preceding the sale; provided, that at least two years have elapsed since
the restricted securities being sold were acquired from the Company or any
affiliate of the Company, and provided further that certain other conditions
are also satisfied. If at least three years have elapsed since restricted
securities were acquired from the Company or an affiliate of the Company, a
person who has not been an affiliate of the Company for at least three months
is entitled to sell such restricted shares under Rule 144 without regard to any
limitations on the amount.
PLAN OF DISTRIBUTION
The Company is offering up to 500,000 Shares of its $.001 par value Common
Stock to the public on a "best efforts, 250,000 shares minimum, 500,000 shares
maximum" basis, at a price of $.20 per share. The offering will be managed by
the Company without an underwriter. The Company may enter into agreements with
securities broker-dealers who are members of the National Association of
Securities Dealers, Inc. (NASD), whereby these broker-dealers will be involved
in the sale of the Shares and will be paid a commission by the Company of up to
14% of the offering price of the Shares sold by them. In addition, the Shares
will be offered and sold by the officers of the Company, who will receive no
sales commissions or other compensation in connection with the offering, except
for reimbursement of expenses actually incurred on behalf of the Company in
connection with such activities. This will not involve any reallocations
between NASD members and non-members. The Company will not compensate its
officers for sale of securities hereunder but may pay a finders fee to other
persons who introduce investors, where no sales commission is paid and such
payment is permitted under applicable state law. Any such fees paid to finders
will be in set amounts to be negotiated but will not exceed the amount of
commission that could have been paid. Any sales made by officers or anyone
associated with the Company will comply with the provisions of Rule 3a4-1
promulgated by the Securities and Exchange Commission, in that no person
associated with the Company and involved in the offer or sale of securities is
or will be an associated person of a broker or dealer or subject to any
statutory disqualification as defined in Section 3(a)(39) of the Securities
Act, nor will any such person be compensated in connection with his
participation in the offering. Each such person will perform substantial duties
for the Company otherwise than in connection with the offering and/or will
limit his participation in the offering to distributing this prospectus or
other written communication (the content of which will be approved by an
officer or director of the Company) by mail or other means that does not
involve oral solicitation, responding to inquiries of prospective purchasers
with information contained herein and performing ministerial and clerical work
involved in effecting sales transactions.
There is no assurance that all or any of the Shares will be sold. If the
Company fails to receive subscriptions for a minimum of 250,000 Shares within
120 days from the date of this Prospectus (or 180 days if extended by the
Company), the offering will be terminated and any subscription payments
received will be promptly refunded within 5 days to subscribers, without any
deduction therefrom or any interest thereon. If subscriptions for at least the
minimum amount are received within such period, funds will not be returned to
investors and the Company may continue the offering until such periods expires
or subscriptions for all 500,000 Shares have been received, whichever occurs
first. All subscription payments should be made payable to Brighton Bank as
Escrow Agent for the Company. The Company and any participating broker-dealers
will mail or otherwise forward all subscription payments received, by noon of
the next business day following receipt, to Brighton Bank at 311 South State
Street, Salt Lake City, Utah 84111 for deposit into the escrow account being
maintained by Brighton Bank as escrow agent for the Company, pending receipt of
subscriptions for at least a minimum of 250,000 Shares or expiration of the
offering period, whichever occurs first. Subscription payments will only be
disbursed from the escrow account to the Company if at least 250,000 Shares are
sold, or if not sold, for the purpose of refunding subscription payments to the
subscribers. Subscribers will have no right to return or use of their funds
during the offering period, which may last up to 180 days.
LEGAL MATTERS
To the knowledge of management, there is no material litigation pending or
threatened against the Company. The validity of the issuance of the Shares
offered hereby will be passed upon for the Company by Thomas G. Kimble &
Associates, Salt Lake City, Utah.
EXPERTS
The consolidated financial statements of Health Builders International,
Inc. as of July 3, 1996, included in this Prospectus have been examined by
Pritchett, Siler & Hardy, independent certified public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance on such report given upon the authority of that firm as experts in
accounting and auditing.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
JULY 17, 1996
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
CONTENTS
PAGE
_ Independent Auditors' Report 1
_ Balance Sheet, July 17, 1996 2
_ Statement of Operations, from inception
on July 3, 1996 through July 17, 1996 3
_ Statement of Stockholders' Equity,
from inception on July 3, 1996 through
July 17, 1996 4
_ Statement of Cash Flows, from inception
on July 3, 1996 through July 17, 1996 5
_ Notes to Financial Statements 6 - 7
<PAGE>
PRITCHETT, SILER & HARDY, P.C.
430 EAST 400 SOUTH
SALT LAKE CITY, UTAH 84111
(801) 328-2727
INDEPENDENT AUDITORS' REPORT
Board of Directors
HEALTH BUILDERS INTERNATIONAL, INC.
Sandy, Utah
We have audited the accompanying balance sheet of Health Builders
International, Inc. [a development stage company] at July 17, 1996, and the
related statements of operations, stockholders' equity and cash flows from
inception on July 3, 1996 through July 17, 1996. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of Health Builders International,
Inc. as of July 17, 1996, and the results of its operations and its cash
flows for the period from inception through July 17, 1996, in conformity
with generally accepted accounting principles.
/s/ PRITCHETT, SILER & HARDY, P.C.
PRITCHETT, SILER & HARDY, P.C.
July 23, 1996
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
July 17,
1996
_____________
CURRENT ASSETS:
Cash in bank $ 9,000
ORGANIZATION COSTS, net 1,000
___________
$ 10,000
___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ -
___________
Total Current Liabilities -
___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
500,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
50,000,000 shares authorized,
2,000,000 shares issued and
outstanding 2,000
Capital in excess of par value 8,000
Deficit accumulated during the
development stage -
___________
Total Stockholders' Equity 10,000
___________
$ 10,000
___________
The accompanying notes are an integral part of this financial statement.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
STATEMENT OF OPERATIONS
From Inception
on July 3,
1996 Through
July 17, 1996
_________________
REVENUE $ -
_____________
EXPENSES -
_____________
LOSS BEFORE INCOME TAXES -
CURRENT TAX EXPENSE -
DEFERRED TAX EXPENSE -
_____________
NET LOSS $ -
_____________
LOSS PER COMMON SHARE $ (.00)
_____________
The accompanying notes are an integral part of this financial statement.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON JULY 3, 1996
THROUGH JULY 17, 1996
Deficit
Accumulated
Preferred Stock Common Stock Capital in During the
________________ ______________ Excess of Development
Shares Amount Shares Amount Par Value Stage
________ _______ ________ ______ __________ ____________
BALANCE, July 3, 1996 - $ - - $ - $ - $ -
Issuance of 2,000,000
shares common stock
for cash, July 17,
1996 at $.005 per
share - - 2,000,000 2,000 8,000 -
Net loss for the
period ended
July 17, 1996 - - - - - -
_______ ___________ _______ _______ _________ ___________
BALANCE, July 17, 1996 - $- 2,000,000 $2,000 $8,000 $ -
_______ ___________ _______ _______ _________ ___________
The accompanying notes are an integral part of this financial statement.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
STATEMENT OF CASH FLOWS
From Inception
on July 3,
1996 Through
July 17, 1996
__________________
Cash Flows to Operating
Activities:
Net loss $ -
Adjustments to reconcile net
loss to net cash used by
operating activities:
Non-cash expenses -
________________
Net Cash Flows to Operating
Activities -
________________
Cash Flows to Investing Activities -
Payments for organization costs (1,000)
________________
Net Cash to Investing Activities (1,000)
________________
Cash Flows from Financing
Activities:
Proceeds from common stock issuance 10,000
________________
Net Cash from Financing
Activities 10,000
________________
Net Cash Flow Activity 9,000
Cash at Beginning of Period -
________________
Cash at End of Period $ 9,000
________________
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ -
Income taxes $ -
Supplemental schedule of Noncash Investing and Financing
Activities:
For the period ended July 17, 1996:
None
The accompanying notes are an integral part of this financial statement.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the State of
Delaware on July 3, 1996. The Company has not commenced planned principal
operations and is considered a development stage company as defined in
SFAS No. 7. The Company is planning to engage in the business of
establishing a training and distribution center for the development of
multi-level marketing networks in the health and nutrition industry, to
train and assist people involved in network marketing for various health
and nutrition companies in recruiting, and also to provide customized
mailing and fax services. The Company has, at the present time, not paid
any dividends and any dividends that may be paid in the future will depend
upon the financial requirements of the Company and other relevant factors.
Organization Costs - The Company is amortizing its organization costs,
which reflect amounts expended to organize the Company, over sixty [60]
months using the straight line method.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented.
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid debt investments purchased with a
maturity of three months or less to be cash equivalents.
NOTE 2 - CAPITAL STOCK
Common Stock - During July, 1996, in connection with its organization, the
Company issued 2,000,000 shares of its previously authorized, but unissued
common stock. Total proceeds from the sale of stock amounted to $10,000
(or $.005 per share).
Preferred Stock - The Company has authorized 500,000 shares of preferred
stock, $.001 par value, with such rights, preferences and designations and
to be issued in such series as determined by the Board of Directors. No
shares are issued and outstanding at July 17, 1996.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes".
FASB 109 requires the Company to provide a net deferred tax asset/liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards. At July 17, 1996 there were
no material deferred tax assets or liabilities, current or deferred tax
expense, or net operating loss carryforwards.
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any compensation to its
officers and directors.
<PAGE>
HEALTH BUILDERS INTERNATIONAL, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his home
as a mailing address, as needed, at no expense to the Company.
NOTE 5 - DEVELOPMENT STAGE COMPANY
The Company was formed with a very specific business plan. However, the
possibility exists that the Company could expend virtually all of its
working capital in a relatively short time period and may not be successful
in establishing on-going profitable operations.
NOTE 6 - SUBSEQUENT EVENTS
Proposed Public Offering of Common Stock - The Company is proposing to
make a public offering of 500,000 shares of its previously authorized but
unissued common stock. The Company plans to file with the United States
Securities and Exchange Commission a registration statement on Form SB-2
under the Securities Act of 1933. An offering price of $.20 per share has
arbitrarily been determined by the Company. The offering will be managed
by the Company without any underwriter. The shares will be offered and
sold by an officer of the Company, who will receive no sales commissions
or other compensation in connection with the offering, except for
reimbursement of expenses actually incurred on behalf of the Company in
connection with the offering. The Company has not incurred any stock
offering costs as of July 17, 1996, but any such costs will be netted
against the proceeds of the proposed public stock offering.
<PAGE>
[OUTSIDE BACK COVER PAGE BEGINS HERE]
No dealer, salesman or other person is authorized to give any information or to
make any representations other that those contained in this Prospectus in
connection with the offer made hereby. If given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities covered hereby in any
jurisdiction or to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, in any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof.
TABLE OF CONTENTS Page
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
COMPARATIVE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
MANAGEMENT'S PLAN OF OPERATION . . . . . . . . . . . . . . . . . . . . . . . 11
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . 19
SHARES ELIGIBLE FOR FUTURE SALE. . . . . . . . . . . . . . . . . . . . . . . 20
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . .See Index
HEALTH BUILDERS
INTERNATIONAL, INC.
250,000 to 500,000 Shares
Common Stock
PROSPECTUS
, 1996
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
The statutes, charter provisions, bylaws, contracts or other
arrangements under which controlling persons, directors or
officers of the issuer are insured or indemnified in any manner
against any liability which they may incur in such capacity are
as follows:
1. Section 145 of the Delaware General Corporation Law provides
that each corporation shall have the following powers:
(a) A corporation may indemnify any person who was or is a party
or is threatened to be made party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, (other than an action by or in
the right of the corporation) by reason of the fact that he is or
was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself create a presumption that the
person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests
of the corporation, and that, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged liable to the
corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of
a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
subsections (a) and (b) of this section, or in defense of any
claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in subsections
(a) and (b) of this section. Such determination shall be made
(1) by majority vote of directors who were not parties to such
action, suit or proceeding, even though less than a quorum, or
(2) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (3)
by the stockholders;
(e) Expenses (including attorneys' fees) incurred by an officer
or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay the amount if it shall
ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section.
Such expenses (including attorneys' fees) incurred by other
employees and agents may be paid upon such terms and conditions,
if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by,
or granted pursuant to, other subsections of this section shall
not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be
entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under this
section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had the power and
authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had
continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving
at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director,
officer employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted
in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of the employee
benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to
in this section.
(j) The indemnification and advancement of expenses provided by,
or granted pursuant to this section shall, unless otherwise
provided when authorized or ratified, continues as to a person
who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and
administrators of such a person.
2. The Issuer's Articles of Incorporation limit liability of its
Officers and Directors to the full extent permitted by the
Delaware General Corporation Law. The bylaws provide for
indemnification in accordance with the foregoing statutory
provisions.
ITEM 25. Other Expenses of Issuance and Distribution*
The following table sets forth all estimated costs and expenses,
other than underwriting discounts, commissions and expense
allowances, payable by the issuer in connection with the maximum
offering for the securities included in this registration
statement:
Amount
SEC registration fee $ 100.00
Blue sky fees and expenses 1,000.00
Printing and shipping expenses 300.00
Legal fees and expenses 10,000.00
Accounting fees and expenses 500.00
Transfer and Miscellaneous expenses 100.00
-----------
Total $ 12,000.00
* All expenses are estimated except the Commission filing fee.
ITEM 26. Recent Sales of Unregistered Securities
In connection with the organization of the Company, its founding
shareholders paid an aggregate of $10,000 cash to purchase
2,000,000 shares of Common Stock of the Company. These
transactions were not registered under the Securities Act of 1933
(the "Act") in reliance on the exemption from registration in
Section 4(2) of the Act. The securities were offered and sold
without any general solicitation to persons affiliated with the
Issuer as founding shareholders, are subject to the resale
provisions of Rule 144 and may not be sold or transferred without
registration except in accordance with Rule 144. Certificates
representing the securities will bear such a legend.
ITEM 27. Exhibits Index (exhibits previously filed are marked *)
SEC No. Document Exhibit No.
1 Form of Dealer Agreement 1.1
3 Articles of Incorporation* 3.1
3 By-Laws* 3.3
4 Common Stock Specimen Certificate* 4.1
5,24 Opinion & Consent of Counsel* 5.1 & 24.1
23 Consent of Accountants 23.1
27 Financial Data Schedule* 27.1
ITEM 28. Undertakings
The issuer hereby undertakes that it will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this Registration
Statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) Include any additional or changed material information on
the plan of distribution; and
(iii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement.
(2) For determining any liability under the Securities Act,
treat each post-effective amendment as a new Registration
Statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the issuer certifies that it has reasonable grounds to
believe that it meets all of the requirements of filing on Form
SB-2 and authorized this Registration Statement to be signed on
its behalf by the undersigned, in the City of Salt Lake , State
of Utah, on September 19th , 1996.
HEALTH BUILDERS INTERNATIONAL, INC.
By: /s/ L. Dee Hall
President (Chief Executive and Financial Officer)
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints Thomas G. Kimble
or Van L. Butler, the undersigned's true and lawful attorney-in-
fact and agent with full power of substitution and
resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this
Registration Statement, and to file the same with all exhibits
thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-
in-fact and agent, full power and authority to do and perform
each and every act and thing, requisite and necessary to be done
in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his
substitutes, may lawfully do or cause to be done by virtue
hereof.
In accordance with the requirements of the Securities Act of
1933, this Registration Statement was signed by the following
persons in the capacities and on the dates indicated.
Signature: /s/ L. Dee Hall
Title: President & Director (Chief Executive and Financial
Officer)
Date: September 19th , 1996
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
amendment No. 1 to the Registration Statement on Form SB-2 for Health
Builders International, Inc., of our report dated July 23, 1996, relating
to the July 17, 1996 financial statements of Health Builders
International, Inc, Inc., which appears in such Prospectus. We also
consent to the reference to us under the heading "Experts".
/s/ PRITCHETT, SILER & HARDY, P.C.
PRITCHETT, SILER & HARDY, P.C.
Salt Lake City, Utah
September 23, 1996
Health Builders International, Inc.
2077 Elderberry Way
Sandy, Utah 84092
(801) 553-8972
Name of Broker~
Street Address~
City, State, Zipcode~
Re: Selling Agreement
Gentelmen:
As the Issuer named in the enclosed Registration Statement
filed with the Securities and Exchange Commission on Form SB-2, we
are proposing to offer for sale and sell on a best efforts basis,
a minimum of 250,000 and a maximum of 500,000 shares of common
stock (the "Shares") to the public, in certain states. The Shares
and the terms upon which they are being offered for sale are more
fully described in the enclosed Prospectus included in the
Registration Statement.
The Issuer is offering to certain dealers who are members of
the National Association of Securities Dealers, Inc., the
opportunity to participate in the sale of part of the Shares. The
offering price is $.20 per Share. We agree to pay you a commission
of [up to 14%] of the offering price of $.20 per Share on all
Shares which you sell. This commission shall be paid by the Issuer
to the Broker-Dealer within 15 days of the closing of the offering,
subject to receipt of good funds by the Issuer from the Broker-
Dealer. We understand that you are a member of the National
Association of Securities Dealers, Inc., and on the basis of such
understanding, invite you to become a Participating Dealer (such
dealers who shall agree to sell Shares hereunder being hereinafter
referred to as "Participating Dealers") to distribute the Shares.
We hereby agree with you as follows:
1. You and we agree to abide by the rules and regulations
that are now or hereafter become applicable to transactions
hereunder, including but not limited to the Rules of Fair Practice
of the National Association of Securities Dealers, Inc., the
applicable requirements of the Securities Act of 1933 and the
Securities Exchange Act of 1934 and the Rules and Regulations of
the Securities and Exchange Commission, and any applicable State
securities laws.
2. We hereby offer you the opportunity to sell the Shares
subject to the terms and condition hereof. You may participate in
the sale of the Shares by signing and returning to us the duplicate
copy of this agreement enclosed herewith. All sales hereunder are
strictly subject to our confirmation, and we reserve the right in
our uncontrolled and sole discretion to reject any subscription in
whole or in part, to make allotments and to close the subscription
books at any time without notice.
3. The Shares are to be offered to the public by us as the
Issuer and by you as a Participating dealer at the price of $.20
per Share, in accordance with the terms hereof and in the
Registration Statement and Prospectus enclosed, only in those
states or other jurisdictions which we have advised you the offer
and sale is registered or otherwise qualified and in which you are
registered as a broker-dealer or are otherwise licensed to make
such offer and sale. The Shares shall not be offered or sold by you
below or above such price. This offering is made subject to the
issuance and delivery of the Shares, acceptance by us, the approval
of legal matters by counsel and the terms and conditions as set
forth herein, in the Registration Statement and in the Prospectus
describing such Shares.
4. As the Issuer, we shall have full authority to take such
action as we may deem advisable in respect to all matters
pertaining to the offering of the Shares. Neither you nor any
other person is authorized by the Issuer to give any information or
make any representations other than those contained in the
Prospectus in connection with the sale of the Shares. Neither you
nor any other Participating Dealer is authorized to act as agent
for the Issuer when offering the Shares or otherwise but rather
will act as an independent contractor and will be subject to the
terms and conditions as provided herein.
5. If any dealer that has sold Shares pursuant hereto
violates any provision of this agreement we shall have the right to
repurchase such Shares from the purchasers thereof. If we elect to
repurchase such Shares, such repurchase shall be made at the full
offering price less the concession initially paid to such Dealer.
6. Payment for all shares should be to the Issuer at the
address set forth above accompanied by duly completed and executed
subscription documents.
7. We reserve the right in our discretion without notice to
you to suspend the sales or withdraw the offering of Shares
entirely or to modify or cancel this agreement (which shall be
construed in accordance with the laws of the State of Delaware).
8. No obligation on our part not expressed herein shall be
implied or inferred herefrom. We shall have full authority to take
such action as we may deem advisable in respect to all matters
pertaining to this offering. Nothing herein will be deemed to
constitute the Dealers as an association or as partners with the
Issuer or each other, but you will be responsible for your shares
as to any liability or expense based upon any claim to the
contrary, and you further agree to indemnify the Issuer for any
liability suffered by it (including a reasonable attorney's fee) as
a result of your violation of applicable laws in connection with
your sale of any of the Shares or a violation of the terms of this
agreement. We shall not be under any liability for or in respect
of the value, validity or form of the securities or the delivery of
the certificates for the shares or the performance by anyone of any
agreement on its part or the qualification of the securities for
sale under the laws of any jurisdiction or for or in respect of any
matter connected with this agreement except for lack of good faith
and for obligations expressly assumed by us in this agreement. The
foregoing provisions shall not be deemed a waiver of compliance
with or any liability imposed under the Securities Act of 1933 or
the Rules and Regulations of the Securities and Exchange Commission
promulgated thereunder.
9. Additional copies of the Prospectus and Subscription
Documents will be supplied in limited quantities upon request at no
expense to you.
10. Any notice to you will be considered duly given if mailed
or telegraphed to you at your address as indicated herein unless we
have received your written notification of an address change.
11. This agreement will terminate when we have determined
that the offering of the Shares has been completed, and we agree to
promptly provide telegraphic notice of such termination to you.
However, if not terminated by prior notice, this agreement shall
automatically terminate at the end of the offering period in
accordance with the provisions of the Prospectus.
12. Please confirm your agreement hereto by signing and
returning the duplicate copy of this agreement enclosed herewith to
the Issuer.
Very truly yours,
Health Builders International, Inc.
Dated: By
L. Dee Hall, President
The undersigned hereby desires to sell the Shares in
accordance with the terms and conditions stated in the foregoing
letter agreement. We hereby acknowledge receipt of a copy of the
Registration Statement and Prospectus in connection with the
Offering of the securities of the Company. We further state that
in agreement to use our best efforts to sell the Shares we have
relied upon such documents and upon no other statement whatsoever,
written or oral. We confirm that we are members in good standing
of the National Association of Securities Dealers, Inc.
NAME OF BROKER~
Dated: By:
