FORM 10-SB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under section 12(b) or (g) of the Securities Exchange Act of 1934
Commission File Number: 0-30180
FRESH BREATH INDUSTRIES, INC.
(Name of small business issuer in its charter)
NEVADA 88-0404404
(States of other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
# 7-2316 27th Ave. N.E., Calgary, Alberta Canada T2E7A7
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (403) 259-6838
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
to be so registered each class is to be registered
N/A N/A
Securities registered under Section 12 (g) of the Exchange Act:
Common stock, par value $.001 per share
(Title of class)
(Title of class)
At December 31, 1998, the aggregate market value of
the voting stock held by non affiliates is undeterminabl
e and is considered to be 0.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of December 31, 1998, the registrants had 7,800,000 shares
of common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference
and the part of the form 10-KSB (e.g., part I, part II, etc.) into
which the document is incorporated: (1) Any annual report to security
holders; (2) any proxy or other information statement; and (3) Any
prospectus filed pursuant to rule 424 (b) or (c ) under the Securities
Act of 1933: None
FRESH BREATH INDUSTRIES, INC.
FORM 10 - SB
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. Description of Business . . . . . . . . . . . . . . . . . . .
ITEM 2. Management's Discussion and Analysis or Plan of Operation . . . .
ITEM 3. Description of Property . . . . . . . . . . . . . . . . . . . . .
ITEM 4. Security Ownership of Certain Beneficial Owners and Management
ITEM 5. Directors, Executive Officers, Promoters and Control Persons . . . .
ITEM 6. Executive Compensation . . . . . . . . . . . . . . . . . . . . . .
ITEM 7. Certain Relationships and Related Transactions . . . . . .
ITEM 8. Description of Securities. . . . . . . . . . . . . . . . . . . . . .
PART II
ITEM 1. Market Price of and Dividends on Registrant's Common Equity and
Other Shareholder Matters . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 2. Legaasset purchase
During the month of December 1998, the Company sold 4,250,000 shares for
$0.01 , the gross proceeds were $42,500 of which $5,515 was received
subsequent to December 31, 1998. The offering under the provisions
of Regulation D, Rule 504 of the Securities Act of 1934, as amended
(the "Act"). The proceeds were used for working capital.
Prior to June 30, 1999 the Company sold an additional 186,000 shares
for $46,500 pursuant to Regulation D, Rule 504 of the Securities Act
of 1934, as amended. The Company issued 662,000 in lieu of debt.
The Company also issued 100,000 shares of stock in lieu of a $13,500.00
debt. These funds were also used for working capital.
Products
Breath Freshener: Cigar-Gone, a sugarless, all natural chewable gel-cap
breath freshener, considered one of the accessories, is being successfully
mato engaged in the marketing of cigars and cigar related products. As
a start up enterprise the Company had no significant business operations
in 1998.
The Company has entered into various agreements with related companies
to acquire the distribution rights of breath freshening products and
cigars and cigar accessories. The Company entered into asset purchase
agreements; (1) on October 16, 1998, the exclusive Canadian distribution
rights to Irvine Breath Products and Gel Cap Breath Freshener products
for $135,590 which consisted of $130,950 note and 500,000 shares of common
stock, (2) on October 21, 1998, bought for the sum of $130,000 the product
line cigar gone, Coffee Gone and other breath related products, and (3) on
October 25, 1998, the Company bought for the sum of $50,000 and 100,000
shares of common stock the product lines and promotional materials of J&D
Cigar Company, Ltd. On April 21, 1999 100,000 shares were issued to Irvine
Breath Products for the cancellation of a $13,500.00 debt. 502,000 shares
were issued to Irvine June 30, 1999 in lieu of debt of $125,500. J&D Cigar
160,000 shares in lieu of debt of $40,000.00 to complete the accessories in
the United States and through its divisions in Canada.
Production
The breath freshener products will be initially manufactured in two
locations (1) Irvine Breath Products of Irvine, California (2) REON,
San Diego, California. REON has also contracted to package, warehouse,
ship and distribute the product in a percentage basis.
The Company has a line of cigar humidors manufactured for it
in Alberta, Canada and the accessories are handled on a manufacturers
representative basis for sale wholesale.
Manufacturer of Gel-Caps Packaging, Sales and Distribution
Irvine Breath Products REON
7700 Irvine Center Suite 510 1177 Knoxville Street
Irvine, California 92718 San Diego, California 92110
Marketing
Cigar smoking has always been an integral part of North American culture
with a phenomenal surge in popularity in the last few year. In the last
two years cigar sales have increased 43% from 1994 to 1995 and even larger
increased experienced from 1996 to 1997. Over 240 million cigars were sold
in the USA in 1995 and over 300 million sold in 1996. By 1997, cigars were
being sold in a variety of locations including grocery, drug and convenience
stores. Total cigars sold in 1997 were over 350 million. Cigar have
increased 18% from 1994 to 1995 with an equal increase in 1996. Overall
the accessory industry exploded in 1997 with an increase of 23%.
Hollywood and sports celebrities of both genders have now adopted the
cigar as a symbol of success and fashion in the 90's. Cigar bars and
emporiums have sprung up across the United States and Canada at an
amazing rate. Cigar friendly restaurants are now becoming the norm.
The "Stogie" once a bastion of the rich American male has now become
a true phenomenon for men and women across wide spectrums of North
American society. Dropping into the local cigar emporium to enjoy a
night of fine cigars, to tran or simply to be part of the cigar culture
in now considered a very fashionable thing to do.
Cigar products took off in 1995 and kept up an even faster pace
through 1996 and 1997. Overall cigar sales are being sparked by
the popularity of premium hand made cigars. while sales of premium
cigars jumped 65% in 1996, they still account for just 6.4% of all
cigars sold in the United States. It is estimated that there are 10
million cigar smokers in the United States, many of them being occasional
smokers. Less than 4% are women and they tend to smoke the premium cigars
. The highest concentration i 40 year old category. However, more men in
their mid-20's are taking to the phenomena. Reasons for the resurgence
points to the fact that cigars have recaptured their traditional image
of success, achievement and celebration.
The current popularity of cigars can be seen in the birth of several
Cigar magazines. Although only a few years old the magazine "Cigar
Aficionado" has risen from 40,000 circulation to 440,000 paid circulation.
An estimated two million read this bible of the cigar business, which
gained its popularity by using big name stars on the cover. "Smoke" is
the newest magazine to hit the cigar market and already boasts of a paid
circulation of over 160,000 copies in less than one year.
Cigars, cigar accessories, and breath fresheners are generally sold on an
indirect basis, e.g., through jobbers and wholesalers to the retail outlets.
Some are sold in a direct basis to national accounts Cigar Gone are now
being distributed and marketed by several wholesalers and in over 10,000
different retail outlets including 7-Eleven, Circle K and AM/PM stores.
Competition
Breath Assure is the market leader for gel-cap breath cleansers.
It has approximately $40,000,000 in sales (1996) world wide, and
is in 30 35 countries. Breath Assure is mostly known for its single
action gel-cap formula that is swallowed and takes up to 30 minutes
to take effect. Although Breath Assure is a very good product it does
not work instantly, thus the consumer has to wait 30 minutes before
the product takes effect. Quite often the individual does not want
to wait for this length of time befo
ng the relief of fresh breath.
Breath Assure is relatively unchallenged in its dominance of the market
place; being a premium product at a premium price. Fresh Breath, Inc.,
is able to beat Breath Assure's pricing and still maintain good profit
margins. As it stands now Breath Assure sells at retail up to $7.95 for
50 gel-caps. Cigar Gone sells at retail for $5.95 for 50 gel-caps. It
allows Fresh Breath, Inc., to sell a premium product at a more reasonable
price to the consumer. This trend will also continue with " " Gone product.
To be able to effectively combat Breath Assure and other similar
products that will undoubtedly be coming onto the market place,
Fresh Breath, Inc., must establish a very aggressive marketing and
advertising campaign. Cigar Gone and Coffee Gone are presently in
approximately in ten thousand (10,000) accounts across North America
and is expected to be in a minimum of 30,000 stores across North American
by the end of 1999. Although Fresh Breath, Inc., has been very successful
in marketing its products to distributors throughout North America we have
not had the opportunity to market the products directly to the consumer,
with the exception of a few cigar trade magazines. We are looking forward
to creating this product awareness in the near future.
Research and Development
The Company has not allocated funds for conducting research
and development, however, with
minimum funds the Company and its affiliates have developed four
(4) additional niche breath products. Garlic Gone, Coffee Gone
, Alcohol Gone in gel-caps and a line of flavor sprays.
Tobacco accessory sales have increased 188% in food stores, 192%
in drug stores and 292% with mass merchandisers.
Patents and Trademarks
All cigar products handled have trademark protected by their
manufacturers. To the issuers knowledge none of the accessory
items handled are patented.
Employees
Presently, the Company has 2 employees. Management intends to hire
additional employees in the United States and Canada only as needed
and as funds are available. In such cases compensation to management
and employees will be consistent with prevailing wages for service
rendered. The Company also will use contract services that will
preclude the necessity of hiring for packaging and processing.
Facilities
The Company has a statutory office at 1905 South Eastern Avenue, Las
Vegas, Nevada and sales office in Calgary, Alberta, Canada, Vancouver,
B.C., Canada and sales and product office in Irvine and San Diego,
California. The Company will maintain a headquarter office in Vancouver
at 510 Burrard St., Suite 910 in the mid quarter of 1999.
Legal
The Company is not a party to any material pending legal proceedings
and no such action by, or to the best of its knowledge, against the
Company has been threatened.
ITEM 2. Management's Discussion and Analysis or Plan of Operation
Overview
The Company became incorporated in September 1998. The Company
began operations by consolidating a distribution operation and
acquiring various rights and licenses. Although, the Company did
not realize revenues as of the date hereof, management anticipates
sales to start by the end of first quarter or early in the second
quarter of 1999.
The Company's current capital was provided by the founders of the
Company and by two private placements for sale of common stock.
Management believes that the Company's cash requirement can be
satisfied with existing capital for ninety days, if sales are
sufficient to handle current operating costs. Management anticipates
the Company will require further capital of approximately $400,000
within the next Ninety days in order to properly facilitate production
and distribution channels. This additional cap
ted to come from sales of products in inventory or already ordered,
however, if initial marketing is delayed or revenues are not adequate
to satisfy its capital needs, the Company will have to
explore other alternatives for funding.
In the event, outside funding is necessary, the Company will
investigate the possibility of interim financing, either debt
or equity, to provide capital. Although, management has not
made any arrangements or definitive agreements, the Company
would consider private funding or the private placements of
its securities and/or a public offering. If the Company experiences
a substantial delay in marketing revenues and is unable to secure
public financing from the sale of its securities or from private lenders
ation of the Company as a going concern would be seriously jeopardized.
Most of the research and development of the Breath Fresheners additional
products has been completed. Management does not intend to consider new
products until such time as revenues are realized from the sale of the
existing products and lines of cigars and accessories. All of the present
lines have an established line of distribution, therefore, no immediate
funds have to be expended in that area. Management would consider products
that would fit in their distribution channel, but are manufactured by o
The Company has an inventory of 1700 units with wholesale value of
approximately $36,000.00 that was transferred in the acquisitions.
Management does not anticipate hiring additional employees until
recruited by sales and that is further dependent on the Company
having sufficient capital.
Net Operating Loss
The Company has accumulated approximately $37,026 of net operating
loss carryforwards as of December 31, 1998, which may be offset
against taxable income and income taxes in future years. The use
of these losses to reduce income taxes will depend on the generation
of sufficient taxable income prior to the expiration of the net
operating loss carryforwards. The carryforwards expire in the year
2013. In the event of certain changes in control of the Company, there
will be an annual limitation on the amou
rating loss carryforwards which can be used. No tax benefit has been
reported in the financial statements for the year ended December 31,
1998 or the four month ended March 31, 1998.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standard ("SFAS") No. 128, "Earnings Per
Share" and Statement of Financial Accounting Standards No. 129
"Disclosures of Information About an Entity's Capital Structure."
SFAS No. 128 provides a different method of calculating earnings
per share than is currently used in accordance with Accounting
Principles Board Opinion No. 15, "Earnings Per Share." SFAS No.
128 provides for the calculation of "Basic" and "Dilutive" e
hare. Basic earnings per share includes no dilution and is computed
by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution of securities that
could share in the earnings of an entity, similar to fully diluted
earnings per share. SFAS no. 129 establishes standards for disclosing
information about an entity's capital structure. SFAS no. 128 and SFAS
no. 129 are effective for tements issued for periods ending after
December 15, 1997. Their implementation is not expected to have a
material effect on the financial statements.
The Financial Accounting Standards Board has also issued SFAS No. 131, No.
130, "Reporting Comprehensive Income" and SFAS no. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 130
establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income
is defined to include all changes in equity except those resulting from
investments by owners and distributors to owners. Among other disclosures,
SFAS no. 13
at all items that are required to be recognized under current accounting
standards as components of comprehensive income be reported in a financial
statement that displays with the same prominence as other financial
statements. SFAS no. 131 supersedes SFAS no. 14 "Financial Reporting
for Segments of a Business Enterprise." SFAS no. 131 establishes standards
on the way that public companies report financial information abut
operating segments in annual financial statements and requires reporting
of selecte
inancial statements issued to the public. It also establishes standards
for disclosure regarding products and services, geographic areas and
major customer. SFAS no. 131 defines operating segments as components
of a company about which separate financial information is available
that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.
SFAS 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information
for earlier years to be restated. Because of the recent issuance of the
standard, management has been unable to fully evaluate the impact, if any
the standard may have on future financial statement disclosures. Results
of operations and financial position, however, will be unaffected by
implementation of the standard.
Inflation
In the opinion of management, inflation will not have a material
effect on the operations of the Company.
Risk Factors and Cautionary Statements
This Registration Statement contains certain forward-looking statements.
The Company wishes to advise readers that actual results may differ
substantially from such forward-looking statements. Forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those expressed in or implied by
the statements, including, but not limited to, the following: the
ability of the Company to meet its cash and working capital needs,
the ability of the Company to suc
ket its product, and other risks detailed in the Company's periodic
report filings with the Securities and Exchange Commission.
ITEM 3. Description of Property
The information required by this Item 3, Description of
Property, is set forth in Item 1, Description of Business,
of this Form 10-SB/A.
ITEM 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, to the best of the
Company's knowledge, as of March 31, 1999, with respect to each
person known by the Company to own beneficially more than 5% of
the outstanding Common Stock, each director and all directors and
officers as a group.
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership of Class (1)
Kenneth Trociuk* 1,000,000 12.5%
Ste. 910-510 Burrard St.
Vancouver, B.C., Canada
V6C 3A8
Jeff Walter* 1,050,000 13.5%
139 Sackville Dr. S.W
Calgary, Albert, Canada
T2W 0W4
Frank Baroudi* 275,000 3.5%
1177 Knoxville St.
San Diego, CA 92110
Catherine Edwards* 900,000 11%
40 Hymar Place
Vernon, B.C., Canada
V1B 2X5
Doug McPhee* 50,000 .006%
#3 Sierra Vista Circle
Calgary, Alberta, Canada
T2W 0W4
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership of Class (1)
Ken Ochetti* 275,000 4%
1101 Buckingham-Unit D
Costa Mesa, CA 92126
*Management As A Group 3,550,000 45%
Mounier Sallman 450,000 5.6%
1860 Crois Salvador
Brossard, Quebec
V4X 1V2
Peter Shield 400,000 5%
1757 N. 40th Avenue
Vancouver, B.C. Canada
V6M 1W3
* Director and/or Officer
(1) Based upon 8,748,000 shares of Common Stock outstanding on June 30, 1999.
ITEM 5. Directors, Executive Officers, Promoters and Control Persons
Executive Officers and Directors
The executive officers and directors of the Company are as follows:
Name Age Position
Kenneth Trociuk Chief Executive Officer/Director
Jeffery Walters President/Director
Catherine Edwards Secretary/Treasuer/Director
Frank Baroudi Vice President/Director
Douglas McPhee Director
Ken Ochetti Director
All directors hold office until the next annual meeting of stockholders
and until their successors have been duly elected and qualified. Directors
will be elected at the annual meetings to serve for one year terms. There
are no agreements with respect to the election of directors. The Company
has not compensated its directors for service on the Board of Directors
or any committee thereof. Any non-employee director of the Company shall
be reimbursed for expenses incurred for attendance at meetings of th
rectors and any committee of the Board of Directors. The Executive
Committee of the Board of Directors, to the extent permitted under
Nevada law, consists of the two directors and exercises all of the
power and authority of the Board of Directors in the management of
the business and affairs of the Company between meetings of the Board
of Directors. Each executive officer is appointed by and serves at
the discretion of the Board of Directors.
None of the officers and/or directors of the Company are officers or
directors of any other publicly traded corporation, nor have any of
the affiliates or promoters of the Company filed any bankruptcy petition,
been convicted in or been the subject of any pending criminal proceedings,
or the subject or any order, judgment, or decree involving the violation of
any state or federal securities laws within the past five years.
The directors will initially devote their time to the Company's affairs
on an "as needed" basis, the exact amount of which is undetermined at this
time. Jeff Walters approximately to hours per week to the Company's
business. If the Company begins to generate revenues, the Company's
Secretary/Treasurer, Catherine Edwards, will devote approximately20 to
30 hours a week primarily as the Company's Controller persons are
prepared to increase the time they devote to the Company should such
a need arise. P
re are no other persons whose activities are material to the
Company's operations other than the Company's corporate counsel.
The business experience of each of the persons listed above during the
past five years is as follows:
Kenneth Trociuk, age 44, is the president and CEO of three companies,
Kenrich Mining (V.S.E.),and Blue Gold. He has a Business Diploma in
Administration, Economics and Advertising. As a co-owner of Canadian
Oilfield Directory until 1996, and Sales manager for Parklane Publications
for five years, Mr. Trociuk brings valued marketing experience to the
company. Mr. Trociuk is an avid super-pro quarter mile drag racer.
Frank Baroudi, age 42, has a Masters in Electrical Engineering
and another Masters in Computer Science from the University of
Southern California. He worked for United Telecommunications
as a software consultant for one year after which he went to Xerox
for five years working briefly in technical support for CAD-CAM
design workstations and then, moved into technical sales. He was
then recruited by AST Research to head up their sales and marketing
operations in Sydney, Australia where he brought sales fro
$600k/mo. within six months. Mr. Baroudi started REON of San Diego,
California in 1987 with his wife. They have made REON a multi-million
dollar housewares importation, distribution and manufacturing operation.
Mr. Baroudi has invented a few items including the Incredible Soda
Machine which has sold 7.5 million units through stores such as K Mart
and Wal Mart. REON also manufactures and distributes products for the
cigar industry at two manufacturing facilities in Mexico. Mr. Baroudi
and REON will be
onsible for manufacturing, marketing, sales and distribution.
Catherine Edwards, age 39, has worked in the medical profession for ten
years, and more recently manages commercial real estate. She has run her
own business for the past 10 years. First a cattle ranch, and then a
retail wholesale business which she is currently operating. She has been
involved in financing for public companies. Ms. Edwards is a director of
Thorlow Resources, and is currently serving her sixth year on the board of
a non-profit society. Ms. Edwards has a College Business Diploma and a
cience degree form the University of British Columbia.
Jeffrey Walters, age 34, has an extensive and varied business background.
He is the founder and owner of several businesses in Canada. He has been
an entrepreneur throughout his career with over seven years experience in
the tobacco and liquor industry. Mr. Walters brings his varied experience
along with several designations to Fresh Breath Inc. Mr. Walters was born
in Calgary, Alberta where he completed high school and attended the
University of Calgary. He is the owner of several retail and wholesal
in the province of Alberta. Jeff will manage all aspects of the breath
freshener and cigar business.
Ken Ochetti, age 49, is President and Founder of Irvine Breath Products
and has been an entrepreneur for most of his career. He has started many
companies including Octus Sports which merchandised and produced calendars,
videos, CD ROM's for the National Football League. He also founded Peer
Records and Video which was a national distribution company for the music
industry with 3,500 accounts and was the District Manager for a chain of
convenience stores in Southern California. He attended Arizona State
here he studied Business Administration and Communication. Ken will
have a contract with the new public company to continue to market and
sell the breath freshener lines and make referrals to the cigar entity.
He will also become a director once the new company acquires Irvine
Breath Products.
ITEM 6. Executive Compensation
The Company does not have a bonus, profit sharing, or deferred
compensation plan for the benefit of its employees, officers or
directors. Since the Company's inception, it has not paid any
salaries or other compensation to its officers, directors or employees.
Further, the Company has not entered into an employment agreement with
any of its officers, directors or any other persons and no such agreements
are anticipated in the immediate future.
ITEM 7. Certain Relationships and Related Transactions
The Company has entered into various agreements with related companies
to purchase the distribution rights of breath freshening products.
On October 16, 1998, the Company bought for the sum of $135,590 which
consists of $130,590 and 500,000 shares of its Common Stock equaling
$5,000, the exclusive Canadian distribution rights to Irvine Breath
Products and Gel Cap Breath Freshener product-lines. On October 21,
1998, the Company
bought for the sum of $130,000 the product-line called Cigar Gone,
Coffee Gone and other breath-related products. October 25, 1998,
the Company bought for the sum of $50,000 and 100,000 shares of its
Common Stock, the product-line rights which include the assets,
exclusive distributor rights, and promotional materials of J&D Cigar
Company, Ltd.
The Company's officers and directors are subject to the doctrine of
corporate opportunities only insofar as it applies to business
opportunities in which the Company has indicated an interest,
either through its proposed business plan or by way of an express
statement of interest contained in the Company's minutes. If
directors are presented with business opportunities that may
conflict with business interests identified by the Company,
such opportunities must be promptly disclosed to the Board of
Directo
vailable to the Company. In the event the Board shall reject an
opportunity so presented and only in that event, any of the Company's
officers and directors may avail themselves of such an opportunity.
Every effort will be made to resolve any conflicts that may arise in
favor of the Company. There can be no assurance, however, that these
efforts will be successful.
ITEM 8. Description of Securities
Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock,
par value $.001 per share, of which 7,800,000 shares were issued and
outstanding as of December 31, 1998 and 8,748,000 as of June 30, 1999
respectively. All shares of Common Stock have equal rights and privileges
with respect to voting, liquidation and dividend rights. Each share of
Common Stock entitles the holder thereof to (i) one non-cumulative vote
for each share held of record on all matters submitted to a vote of the
stockholder
articipate equally and to receive any and all such dividends as may be
declared by the Board of Directors out of funds legally available
therefor; and (iii) to participate pro rata in any distribution of
assets available for distribution upon liquidation of the Company.
Stockholders of the Company have no preemptive rights to acquire additional
shares of Common Stock or any other securities. The Common Stock is not
subject to redemption and carries no subscription or conversion rights.
All outstanding s
paid and non-assessable.
PART II
ITEM 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters
Prior to the filing of this registration statement, no shares of the
Company's Common Stock have been registered with the Securities and
Exchange Commission (the "Commission") or any state securities agency
of authority. The Company's Common Stock is eligible to be traded in
the over-the-counter market upon the filing of this Form 10SB and the
clearings and comments thereto by the Commission.
The ability of an individual shareholder to trade their shares in a
particular state may be subject to various rules and regulations of
that state. A number of states require that an issuer's securities
be registered in their state or appropriately exempted from registration
before the securities are permitted to trade in that state. Presently,
the Company has no plans to register its securities in any particular state.
Further, most likely the Company's shares will be subject to the
provisions of Secti
Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets
forth certain requirements for transactions in penny stocks and rule
15g-9(d)(1) incorporates the definition of penny stock as that used in
Rule 3a51-1 of the d that used in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security
that has a market price less than $5.00 per share, subject to certain
exception. Rule 3a51-1 provides that any equity security is considered
to be a penny stock unless that security is: registered and traded on a
national securities exchange meeting specified criteria set by the
Commission; authorized for quotation on the NASDAQ stock Market; issued
by a registered investment company; excluded from the definition on the
basis of price
00 per share) or the issuer's net tangible assets; or exempted from
the definition by the Commission. If the Company's shares are deemed
to be a penny stock, trading in the shares will be subject to additional
sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited investors,
generally persons with assets in excess of $1,000,000 or annual income
exceeding $200,000, or $300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make a
special suitability determination for the purchase of such security and
must have received the purchaser's written consent to the transaction prior
to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the first
transaction, of a risk disclosure document relating to the penny stock
market. A broker-dealer also must disclose the commissions payable to
both the b
and the registered representative, and current quotations for the
securities. Finally, monthly statements must be sent disclosing
recent price information for the penny stocks held in the account
and information on the limited market in penny stocks. Consequently,
these rules may restrict the ability of broker-dealers to trade and/or
maintain a market in the Company's Common Stock and may affect the ability
of shareholders to sell their shares.
As of December 31, 1998 and June 30, 1999 there were 21 and 26 holders
respectfully of record of the Company's Common Stock. Because the Company
does not presently trade, no trading history is presented herein.
As of December 31, 1998 and June 30, 1999, the Company had issued and
outstanding 7,800,000 and 7,986,000 shares respectfully. Of this total,
3,550,000 shares were issued in private transactions in the third and
fourth quarter of 1998. These 3,550,000 shares are deemed "restricted
securities" as defined by the Act and certificates representing such
shares bear an appropriate restrictive legend. The remaining 4,250,000
shares were issue in December 1998 following the Company's offering
pursuant to Regula
504 of the Act. An additional 186,000 shares were issued, pursuant to
Rule 504 in March of 1999. These 4,436,000 shares do not bear a
restrictive legend.
Of the Company's total shares outstanding, 4,436,000 shares may be
sold, transferred or otherwise traded in the public market, should
one develop, unless held by an affiliate or controlling shareholder
of the Company. Of these 4,428,000 shares, the Company has identified
no shares as being held by affiliates of the Company.
The 3,550,000 shares considered restricted securities are held presently
by affiliates and/or controlling shareholders of the Company. These
shares may be sold pursuant to Rule 144 in the future, subject to the
volume and other limitations set forth under Rule 144. In general, under
Rule 144 as currently in effect, a person (or persons whose shares are
aggregated) who has beneficially owned restricted shares of the Company
for at least one year, including any person who may be deemed to be an
"affiliate
any (as the term "affiliate" is defined under the Act), is entitled to
sell, within any three-month period, an amount of shares that does not
exceed the greater of (i) the average weekly trading volume in the
Company's Common Stock, as reported through the automated quotation
system of a registered securities association, during the four calendar
weeks preceding such sale or (ii) 1% of the shares then outstanding. A
person who is not deemed to be an "affiliate" of the Company and has not
been an affiliate
recent three months, and who has held restricted shares for a least two
years would be entitled to sell such shares without regard to the resale
limitations of Rule 144.
Generally, the shares of restricted stock may not be sold or otherwise
transferred unless first registered under the Act or unless there is an
appropriate exemption from registration available.
Dividend Policy
The Company has not declared or paid cash dividends or made
distributions in the past, and the Company does not anticipate
that it will pay cash dividends or make distributions in the
foreseeable future. The Company currently intends to retain and
invest future earnings to finance its operations.
ITEM 2. Legal Proceedings
There are presently no material pending legal proceedings to which the
Company or any of its subsidiaries in a party or to which any of its
property is subject and, to the best of its knowledge, no such actions
against the Company are contemplated or threatened.
ITEM 3. Changes in and Disagreements with Accountants
There have been no changes in or disagreements with accountants.
ITEM 4. Recent Sales of Unregistered Securities
On December 31, 1998 and March 31, 1999, the Company completed an
offering of its Common Stock pursuant to the provisions of Regulation
D, Rule 504 of the Act. Under the offerings, the Company sold 4,250,000
share to 15 people for $42,500 in December 1999 and 186,000 shares for
$46,500 in March 1999. This offering was not registered under the Act,
or registered or qualified under the securities laws of any state. All
purchasers of the shares reside outside the United States. The offering
of the shares
eliance upon the limited offering exemption from registration with the
Securities and Exchange Commission as set forth in Rule 504 of Regulation
D.
Each purchaser was required to complete and sign a written subscription
Agreement representing that they had read the Disclosure Statement and
that the offering was subject to various risks. Pursuant to Rule 504(b)
(1) of Regulation D, the provisions of Rule 502(c) and (d) shall not apply
to offers and sales made under Rule 504. Generally, Rule 502(d) provides
that: "exempt as provided in Rule 504(b)(1), securities acquired in a
transaction under Regulation D shall have the status of securities acquired
ion under Section 4(2) of the Act and cannot be resold without registration
under the Act or an exemption therefrom . . . ."
Because the Company's intent and good faith belief was that the offering
qualified under Rule 504(b)(1) of Regulation D, purchasers of the Company's
Common Stock may be permitted to resell their shares without registration
under the Act pursuant to Rule 502(d). As such, certificates representing
these shares do not bear any restrictive legends.
The Company also issued 100,000 shares, of its Common Stock, to two
individual related parties in the asset acquisition of J&D Cigar on
October 25, 1998 and 500,000 shares to one individual related party
for the acquisition of the exclusive distribution rights for Canada
of Irvine Breath Products and Gel Caps breath freshener product lines
on October 16, 1998. With respect to the issuance of the 600,000 shares,
the holders would be affiliates.
The Company relied on the exemption from registration under the Act
provided by Sections 4(2) and 4(6) of the Act in the issuance of the
total of 3,350,000 share issued in the fourth quarter of 1998 said
3,550,000 being all the restricted share issued.
ITEM 5. Indemnification of Directors and Officers
As permitted by the provisions of the Nevada Revised Statutes (the "NRS"),
the Company has the power to indemnify any person made a party to an
action, suit or proceeding by reason of the fact that they are or were
a director, officer, employee or agent of the Company, against expenses,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by them in connection with any such action, suit or proceeding if
they acted in good faith and in a manner which they reasonably believed to
b
opposed to, the best interest of the Company and, in any criminal action or
proceeding, they had no reasonable cause to believe their conduct was
unlawful. Termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the person
did not act in good faith and in a manner which they reasonably believed
to be in or not opposed to the best interests of the Company, and, in any
crimina
roceeding, they had no reasonable cause to believe their conduct
was unlawful.
The Company must indemnify a director, officer, employee or agent of
the Company who is successful, on the merits or otherwise, in the defense
of any action, suit or proceeding, or in defense of any claim, issue, or
matter in the proceeding, to which they are a party because they are or
were a director, officer employee or agent of the Company against expenses
actually and reasonably incurred by them in connection with the defense.
The Company may provide to pay the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding as
the expenses are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf
of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that they are not entitled
to be indemnified by the Company.
The NRS also permits a corporation to purchase and maintain liability
insurance or make other financial arrangements on behalf of any person
who is or was a director, officer, employee or agent of the Company, 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 for any liability asserted against them and liability
and expenses incurred by them in their capacity as a director, officer,
gent, or arising out of their status as such, whether or not the Company
has the authority to indemnify them against such liability and expenses.
Presently, the Company does not carry such insurance.
Transfer Agent
The Company has designated Holladay Stock Transfer, Inc., 2939 North
67th Place, Scottsdale, Arizona 85251, as its transfer agent.
PART F / S
The Company's financial statements for the fiscal year ended December 31,
1998 and March 31, 1999 have been examined to the extent indicated in their
reports by Jones, Jensen & Company, independent certified public
accountants, and have been prepared in accordance with generally accepted
accounting principles and pursuant to Regulation S-B as promulgated by the
Securities and Exchange Commission and are included herein in response to
Item 15 of this Form 10-SB.
PART III
ITEM 1. Index to Exhibits
The following exhibits are filed with this Registration Statement.
Exhibit Number Exhibit Name
3.1 Article of Incorporation
3.2 By-Laws of Registrant
10.1 Acquisition Agreements
27. Financial Data Schedule
2. Description of Exhibits
10.1(a) October 16, 1998 - Canadian Distribution Agreement
(b) October 21, 1998 - Product Line Acquisitions
Cigar Gone and other related products
(c) October 25, 1998, Product Line Rights
Inventory and other assets of J&D Cigar Company, Ltd.
SIGNATURES
In accordance with Section 12 of the Securities and Exchange
Act of 1934, the registrant caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly organized.
FRESH BREATH INDUSTRIES, INC.
(Registrant)
Date: _______________ 1999 By:____________________________________
Kenneth Trociuk
President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1998 JUN-30-1999
<CASH> 39,673 10,859
<SECURITIES> 0 0
<RECEIVABLES> 0 19,697
<ALLOWANCES> 0 0
<INVENTORY> 0 24,591
<CURRENT-ASSETS> 0 55,147
<PP&E> 0 8,475
<DEPRECIATION> 0 737
<TOTAL-ASSETS> 347,231 310,344
<CURRENT-LIABILITIES> 311,772 138,164
<BONDS> 0 0
0 0
0 0
<COMMON> 7,800 8,748
<OTHER-SE> 27,659 163,432
<TOTAL-LIABILITY-AND-EQUITY> 347,231 310,344
<SALES> 0 11,726
<TOTAL-REVENUES> 0 11,726
<CGS> 0 7,373
<TOTAL-COSTS> (7,026) 102,006
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (37,026) (97,653)
<EPS-BASIC> (.01) (.01)
<EPS-DILUTED> (.01) (.01)
</TABLE>
