As filed with the Securities and Exchange Commission on November 4, 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. 2)
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)
87-0561634 (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>
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 and no
limits have been imposed in this regard, 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."
<PAGE>
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 has experience as described
herein (see "Business" and "Management") with respect to the type of business
proposed to be engaged in by the Company, but will not be employed full time.
The officers initially anticipate devoting only 10-20% of their time,
approximately, to the Company, 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."
Purchases by Affiliates. Officers, directors and current shareholders,
which includes all promoters and affiliates of the Company, may purchase
Shares in the Offering and no limits have been imposed in this regard, but no
one, including such affiliates, has made any commitment, nor indicated they
intend, to do so. Purchases by affiliates, if any, may include purchases made
in order to reach the minimum offering amount, thereby enabling the offering
to close notwithstanding the fact that all the Shares would not be sold to
unaffiliated purchasers. Any Shares purchased by affiliates would be subject
to certain restrictions on resale.
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, which
were purchased by founding shareholders in July, 1996 for $10,000 or $.005 per
share. The Company is now offering up to 500,000 shares at $.20 per share.
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. Body Wise International, Inc. has
its own line of twelve health, nutrition and athletic performance products.
USANA, Inc. distributes its own line of 15-20 products related to health,
nutrition and cosmetics. Rexall Showcase distributes its own line of over 100
products relating to health, nutrition, beauty aids, and other over the
counter products.
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 purpose of the application is to create a written
document which will, upon acceptance thereof, constitute a written contract
outlining and defining the terms of the distributorship arrangement, and also
to provide information for recordkeeping purposes. The initial fees vary from
company to company and are usually intended to cover the nominal
administrative cost of processing the application as well as the costs of
sales kits or other promotional materials given to the person. Sales kits
typically contain video and audio tape training materials, brochures and other
printed materials with information about the products being sold, product
pricing and ordering information, order forms, and information on being a
sponsor or distributor. Sometimes fees may also be paid to purchase initial
quantities of product from whatever multi level marketing company the
applicant is going to sponsor or distribute the products of. 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. The information packages will consist of at least a
cover letter and a brochure, and may also consist of an audio and/or
videotape.
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. They will hear information about the products of that
particular company and its associated multi level marketing program.
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,
typically ranging from 5% to 20% of product sales. 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. The seminars will provide general information on how to
develop motivational skills and skill in working with people to maintain
and motivate a downline organization. Initially, these seminars will be
held at the Company's address, but may in the future be scheduled at
various other locations.
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 ranging from $40 to $100 approximately, 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.
Camper World is a membership organization that owns and maintains numerous RV
campground sites in the Western U.S. that are available for use by members.
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, which has in excess of 100,000 distributors).
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.
There are presently no plans, proposals, arrangements or understandings with
any potential sales agent with respect to participating in the distribution of
the Shares. If the Company enters into any agreements with broker-dealers, it
intends to amend the registration statement to update this prospectus and
identify the broker-dealers that become involved in the selling effort. 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
<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
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.
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 November 4th , 1996.
HEALTH BUILDERS INTERNATIONAL, INC.
By: /s/ L. Dee Hall
President (Chief Executive and Financial Officer)
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: November 4th , 1996
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
amendment No. 2 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
November 4, 1996
