<TABLE>
<S> <C>
As filed with the Securities and Exchange Commission on ________, 2000 Registration No.
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------------
iGOHEALTHY.COM, INC.
---------------------------------
(Exact Name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Colorado 91-2079221 7375
(State or other jurisdiction (IRS Employer (Primary Standard
of incorporation) Identification Number) Industrial Classification Code)
</TABLE>
11693 San Vicente Blvd., Suite 310
Los Angeles, CA 90049
(253) 660-3085
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
Farid E. Tannous, Chief Executive Officer
Bill Glaser, Chief Operating Officer
11693 San Vicente Blvd., Suite 310
Los Angeles, CA 90049
(253) 660-3085
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
David M. Loev, Esq.
Vanderkam & Sanders
440 Louisiana Street, Suite 475
Houston, Texas 77002
(713) 547-8900
Approximate date of commencement of proposed sale to
the public: As soon as practicable after the effective date of
this Registration Statement.
--------------------------------------------------------------------------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
============================================== ================= ================= =================== ===============
Proposed Maximum Proposed Maximum
Offering Aggregate Amount of
Title of Each Class of Amount to be Price Per Share Offering Price Registration
Shares to be Registered Registered Fee (1)(2)
---------------------------------------------- ----------------- ----------------- ------------------- ---------------
<S> <C> <C> <C> <C>
Common Shares ($0.001 par value) 1,000,000 $0.25 (1) $250,000.00 $66.00
============================================== ================= ================= =================== ===============
</TABLE>
(1) There is no current market for the securities.
(2) Estimated solely for the purpose of calculating the registration fee based
on Rule 457(f)(2).
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, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
The information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
<PAGE>
PROSPECTUS Subject to Completion, Dated ____, 2000
iGoHealthy.com
1,000,000 Shares of Common Stock
Offering Price $0.25 per Share
The Registration Statement of which this Prospectus forms a part of
relates to the offer and sale of up to 1,000,000 shares of $0.001 par value
common stock ("Shares" or "Common Stock") of iGoHealthy.com, Inc., a Colorado
corporation (the "Company") at an offering price of $0.25 per share on a "best
efforts" basis (the "Offering") pursuant to the terms of this Prospectus for the
purpose of providing start-up and working capital for the Company. All costs
incurred in the registration of the Shares are being borne by the Company.
iGoHealthy.com, Inc. was originally incorporated as Centurion
Properties Development Corporation in the State of Colorado on June 13, 1996 to
engage in the business of real estate development and management consulting.
However, since inception, the Company has remained dormant and to date has no
operations other than organizational tasks including issuing shares to its
original shareholders, raising initial capital and developing a business plan.
On October 16, 2000, the name of the corporation was changed to iGoHealthy.com,
Inc. in order to pursue the current business plan.
We are developing an Internet-based shopping mall through which
consumers will be able to make purchases from a carefully selected group of
quality retailers that offer health-related merchandise and services most in
demand among online shoppers. We will offer discounts on merchandise purchased
through our web site from our affiliated retailers to those who register as
members of our shopping program. Accumulated discounts, or HealthyBucks, will be
redeemable at the option of each member of our shopping mall for rewards of
cash, gift certificates, or charitable donations. Our web site and related
software are being designed to feature ease of use, privacy and security. In
developing our shopping mall, we intend to capitalize on the extraordinary
growth in consumer shopping online that is currently taking place and is
projected to continue over the next several years.
We have no operations and revenues and limited capital. Prior to the
Offering of the Shares as described herein, there has been no public market for
the Common Stock of the Company and there are no assurances that a public market
will develop following completion of this Offering or that, if any such market
does develop, it will be sustained.
<TABLE>
Underwriting
Discounts Proceeds to
Price to Public (1) and Commissions (2) Issuer (3)
---------------------- ------------------------- ----------------
<S> <C> <C> <C>
Per Share $0.25 $0.00 $0.25
Total Maximum $250,000.00 $0.00 $250,000.00
</TABLE>
(1) Maximum of 1,000,000 Shares may be sold on a "best efforts" basis.
(2) We have chosen not to use an underwriter for the distribution. See "Plan of
Distribution."
(3) The Net Proceeds to the Company is before the payment of certain expenses
in connection with this Offering estimated at $20,000.
Information contained herein is subject to completion or amendment. The
registration statement relating to the securities has been filed with the
Securities and Exchange Commission. The securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
CONTAINED IN THIS PROSPECTUS BEGINNING ON PAGE 9.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
THE SECURITIES DESCRIBED HEREIN ARE OFFERED BY THE COMPANY SUBJECT TO
PRIOR SALE, WITHDRAWAL, CANCELLATION OR MODIFICATION OF THE OFFERING, WITHOUT
NOTICE. IN ADDITION, THE RIGHT IS RESERVED TO CANCEL ANY CONFIRMATION OF SALE
EVEN IF THE PURCHASE PRICE HAS BEEN PAID, IF IN THE OPINION OF THE COMPANY OR
ANY PARTICIPATING BROKER-DEALER, COMPLETION OF SUCH SALE WOULD VIOLATE FEDERAL
OR STATE SECURITIES LAWS OR A RULE OR POLICY OF THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.
FOLLOWING THE COMPLETION OF THIS OFFERING, CERTAIN BROKER-DEALERS MAY
BE THE PRINCIPAL MARKET MAKERS FOR THE SECURITIES OFFERED HEREBY. UNDER THESE
CIRCUMSTANCES, THE MARKET BID AND ASKED PRICES FOR THE SECURITIES MAY BE
SIGNIFICANTLY INFLUENCED BY DECISIONS OF THE MARKET MAKERS TO BUY OR SELL THE
SECURITIES FOR THEIR OWN ACCOUNT. NO ASSURANCE CAN BE GIVEN THAT ANY
MARKETMAKING ACTIVITIES OF THE MARKET MAKERS, IF COMMENCED, WILL BE CONTINUED.
FOR A PERIOD OF AT LEAST ONE YEAR FOLLOWING CLOSING OF THIS OFFERING,
THE COMPANY WILL BE REQUIRED BY THE SECURITIES EXCHANGE ACT OF 1934 TO FILE
PERIODIC REPORTS AND OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE
COMMISSION. SUCH MATERIAL MAY BE INSPECTED AT THE COMMISSION'S PRINCIPAL OFFICES
AT JUDICIARY PLAZA, 450 FIFTH STREET, N.W. WASHINGTON, D.C. 20459 WHERE COPIES
MAY BE OBTAINED ON PAYMENT OF CERTAIN FEES PRESCRIBED BY THE COMMISSION OR AT
ITS WEB SITE HTTP://WWW.SEC.GOV. THE COMPANY WILL FURNISH TO HOLDERS OF ITS
COMMON STOCK ANNUAL REPORTS CONTAINING AUDITED FINANCIAL STATEMENTS EXAMINED AND
REPORTED UPON, AND WITH AN OPINION EXPRESSED BY AN INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANT. THE COMPANY MAY ISSUE OTHER UNAUDITED INTERIM REPORTS TO ITS
SHAREHOLDERS AS IT DEEMS APPROPRIATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OPEN OFFER TO BUY INTO SECURITIES OFFERED HEREBY A STATE IN WHICH, OR TO A
PERSON TRUE, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION CONTAINED
HEREIN SUBSEQUENT TO THE DATE THEREOF. HOWEVER, IF A MATERIAL CHANGE OCCURS,
THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY FOR ALL EXISTING
SHAREHOLDERS, AND FOR ALL PROSPECTIVE INVESTORS WHO HAVE NOT YET BEEN ACCEPTED
AS SHAREHOLDERS IN THE COMPANY.
THIS PROSPECTUS DOES NOT INTENTIONALLY OMIT ANY MATERIAL FACT OR
CONTAIN ANY UNTRUE STATEMENT OF MATERIAL FACT. NO PERSON OR ENTITY HAS BEEN
AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR MAKE A REPRESENTATION,
WARRANTY, COVENANT, OR AGREEMENT WHICH IS NOT EXPRESSLY PROVIDED FOR OR
CONTAINED IN THIS PROSPECTUS; IF GIVEN OR MADE, SUCH INFORMATION,
REPRESENTATION, WARRANTY, COVENANT, OR AGREEMENT MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED.
THE COMPANY IS NOT A REPORTING COMPANY. EACH PERSON WHO RECEIVES A
PROSPECTUS WILL HAVE AN OPPORTUNITY TO MEET WITH REPRESENTATIVES OF
IGOHEALTHY.COM., INC. DURING NORMAL BUSINESS HOURS UPON WRITTEN OR ORAL REQUEST
TO THE COMPANY, IN ORDER TO VERIFY ANY OF THE INFORMATION INCLUDED IN THIS
PROSPECTUS AND TO OBTAIN ADDITIONAL INFORMATION REGARDING IGOHEALTHY.COM, INC.
IN ADDITION, EACH SUCH PERSON WILL BE PROVIDED WITHOUT CHARGE, UPON WRITTEN OR
ORAL REQUEST, A COPY OF ANY OF THE INFORMATION THAT IS INCORPORATED BY REFERENCE
IN THE PROSPECTUS AND THE ADDRESS (INCLUDING TITLE OR DEPARTMENT) AND TELEPHONE
NUMBER TO WHICH SUCH REQUEST IS TO BE DIRECTED.
ALL OFFEREES AND SUBSCRIBERS WILL BE ASKED TO ACKNOWLEDGE IN THE
SUBSCRIPTION AGREEMENT THAT THEY HAVE READ THIS PROSPECTUS CAREFULLY AND
THOROUGHLY, THEY WERE GIVEN THE OPPORTUNITY TO OBTAIN ADDITIONAL INFORMATION;
AND THEY DID SO TO THEIR SATISFACTION.
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations may not
be relied on as having been authorized by the Company. Neither the delivery of
this Prospectus nor any sale made hereunder shall under any circumstances create
an implication that there has been no change in the affairs of the Company since
the date hereof. This Prospectus does not constitute an offer to sell, or
solicitation of any offer to buy, by any person in any jurisdiction in which it
is unlawful for any such person to make such offer or solicitation. Neither the
delivery of this Prospectus nor any offer, solicitation or sale made hereunder,
shall under any circumstances create any implication that the information herein
is correct as of any time subsequent to the date of the Prospectus.
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
PROSPECTUS SUMMARY.......................................................................................7
RISK FACTORS.............................................................................................9
CAPITALIZATION..........................................................................................19
USE OF PROCEEDS.........................................................................................20
DIVIDEND POLICY.........................................................................................20
DETERMINATION OF OFFERING PRICE.........................................................................20
DILUTION................................................................................................20
SELLING SECURITY HOLDERS................................................................................21
PLAN OF DISTRIBUTION....................................................................................21
LEGAL PROCEEDINGS.......................................................................................22
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS............................................22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..........................................23
DESCRIPTION OF CAPITAL STOCK............................................................................24
INTEREST OF NAME EXPERTS AND COUNSEL....................................................................25
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.....................26
ORGANIZATION WITHIN LAST FIVE YEARS.....................................................................26
DESCRIPTION OF BUSINESS.................................................................................26
DESCRIPTION OF PROPERTY.................................................................................41
AVAILABLE INFORMATION...................................................................................41
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................41
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................................................44
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................................................44
EXECUTIVE COMPENSATION..................................................................................45
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE....................45
FINANCIAL STATEMENTS...................................................................................F-1
</TABLE>
6
<PAGE>
PART I. INFORMATION REQUIRED IN THE PROSPECTUS
--------------------------------------------------------------------------------
PROSPECTUS SUMMARY
--------------------------------------------------------------------------------
The following summary highlights certain information found in more
detail elsewhere in this Prospectus. As such, before you decide to buy our
Common Stock, in addition to the following summary, you are urged to read the
entire Prospectus carefully, especially the risks of investing in our Common
Stock as discussed under "Risk Factors." (See "Risk Factors" beginning on page
9).
The Company
iGoHealthy.com, Inc., a Colorado corporation, is a development stage
company in the process of establishing an Internet-based shopping mall for
health-related retailers. Through our shopping mall, web users that register as
our members will be able to make purchases of health-related merchandise and
services from a carefully selected group of quality retailers. Our business is
intended to capitalize on the extraordinary growth in online retailing, which is
currently taking place and projected to continue.
To attract Internet users to become members of our shopping mall and
make purchases through our affiliated retailers, we will offer members rewards,
or discounts, for each purchase made by them through our web site. These rewards
will be expressed as HealthyBucks. Members who shop through our web site will
earn HealthyBucks equal to the dollar amount of any discounts on purchases. We
expect that the amount of HealthyBucks earned by our members on most purchases
made will be between 3% and 15% of the purchase price, excluding sales tax and
handling fees, depending upon the commissions offered to us by our affiliated
retailers. Information relating to member purchases, including the amount of
HealthyBucks earned, will be posted in our members' online accounts. Each
member's account information will be accessible to that member through our web
site and will be protected by security measures that are standard in the
industry. HealthyBucks will be redeemable by members, at their option, in cash,
gift certificates, or charitable donations.
iGoHealthy.com, Inc. was originally incorporated as Centurion
Properties Development Corporation in the State of Colorado on June 13, 1996 to
engage in the business of real estate development and management consulting.
However, since inception, the company has remained dormant and to date has no
operations other than organizational tasks including issuing shares to its
original shareholders, raising initial capital and developing a business plan.
On October 16, 2000, the name of the corporation was changed to iGoHealthy.com,
Inc. in order to pursue the current business plan. Our mailing address is 11693
San Vicente Blvd., Suite 310, Los Angeles, CA 90049, and our telephone number is
(253) 660-3085. We currently maintain a prototype web site at
http://www.iGoHealthy.com. Our commercial web site is currently under
development and should be operational upon the close of this Offering. Nothing
contained on such web site should be construed as a part of this Prospectus.
This Prospectus includes statistical data regarding the Internet
industry. Such data is taken or derived from information published by sources
including Jupiter Communications, LLC, Ziff-Davis Inc., and Forrester Research,
Inc. Although we believe that the data is generally indicative of the matters
reflected therein, the data may be imprecise and investors are cautioned not to
place undue reliance on it.
<TABLE>
The Offering
<S> <C>
Securities Offered............................................ 1,000,000 shares of Common Stock (See
"Description of CAPITAL STOCK" beginning
on page 24.)
Shares of Common Stock Outstanding
Before Offering........................................... 1,710,000
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Shares of Common Stock Outstanding
After Offering (assuming sale of all Shares offered)...... 2,710,000
Use of Proceeds...............................................General corporate purposes including working
capital, marketing and advertising, web site
development, and costs related to this Offering.
(See "USE OF PROCEEDS" beginning on page 20.)
Risk Factors..................................................The securities offered hereby are speculative
and involve a high degree of risk and should
not be purchased by investors who cannot afford
the complete loss of their entire investment. (See
"Risk Factors" beginning on page 9.)
Lack of Market for Company Securities..........................There is currently no market for the
Company's Common Stock; there is no
assurance that any market will develop; if
a market develops for the Company's
securities, it will likely be limited,
sporadic and highly volatile. (See
"MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS" beginning on page 44)
</TABLE>
8
<PAGE>
Summary Financial Information
You should read the summary financial information presented below for
the 10-months ended October 31, 2000, and the financial statements contained
elsewhere for the period from inception on June 13, 1996 to October 31, 2000. We
derived the summary financial information from our audited financial statements
appearing elsewhere in this Prospectus. You should read this summary financial
information in conjunction with our plan of operation, financial statements and
related notes to the financial statements, each appearing elsewhere in this
Prospectus.
<TABLE>
<S> <C>
10-Months ended
October 31, 2000
------------------
STATEMENT OF OPERATIONS DATA:
Revenues..................................................... $ 0
Selling, General and Administrative Expense.................. 19,226
------------
Net Income (Loss)............................................ $ (19,226)
============
BALANCE SHEET DATA:
Cash and Cash Equivalents.................................... $ 29,312
Working Capital (Deficit).................................... 4,312
Total Assets................................................. 54,937
Total Liabilities............................................ 25,000
Stockholders' Equity......................................... $ 29,937
Income (Loss) Per Common Share
Net Income (Loss) per weighted average
common share outstanding................................... $ (0.014)
Weighted average number of shares outstanding.............. 1,401,205
</TABLE>
--------------------------------------------------------------------------------
RISK FACTORS
--------------------------------------------------------------------------------
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A
HIGH DEGREE OF RISK. THEREFORE, EACH PROSPECTIVE INVESTOR SHOULD, PRIOR TO
PURCHASE, CONSIDER VERY CAREFULLY THE FOLLOWING RISK FACTORS, AS WELL AS ALL OF
THE OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS AND THE INFORMATION
CONTAINED IN THE FINANCIAL STATEMENTS, INCLUDING ALL NOTES THERETO.
You should carefully consider the following risk factors and other
information in this Prospectus before deciding to become a holder of our Common
Stock. If any of the following risks actually occurs, our business and financial
results could be negatively affected to a significant extent.
RISKS RELATED TO OUR OPERATIONS
WE HAVE NO OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US.
iGoHealthy.com, Inc. was originally incorporated as Centurion
Properties Development Corporation in the State of Colorado on June 13, 1996 to
engage in the business of real estate development and management consulting.
However, since inception, the company has remained dormant and to date has no
operations other than organizational tasks including issuing shares to its
original shareholders, raising initial capital and developing a business plan.
On October 16, 2000, the name of the corporation was changed to iGoHealthy.com,
Inc. in order to pursue the current business plan. Since we began our current
business through December 8, 2000, we have not generated any revenue. We have
been devoting our efforts to various organizational activities. Our
organizational activities include entering into an arrangement for the
development of our proprietary web site design, raising capital, and preliminary
negotiations with prospective retail affiliates. As a result, we have no
operating history that you can use to evaluate us. Our business must be
considered in light of the risks, expenses, and problems frequently encountered
by companies in the early stages of development, particularly companies, like
ours, in new and rapidly evolving markets such as Internet commerce.
WE HAVE NO REVENUES AND EXPECT FUTURE LOSSES.
We expect negative cash flow and operating losses to continue for the
foreseeable future. We expect our operating costs to increase, but because we
have no operating history, we have no meaningful financial historical data to
use as a basis for determining future operating expenses. The principal costs of
expanding our business will include:
* substantial direct and indirect marketing, advertising and promotional
costs;
* costs incurred in connection with hiring staff to meet our anticipated
growth; and
* costs incurred to accommodate changes in technology.
As a result, we expect that it will take some time before we begin
generating net income. If net operating revenue does not grow at the rate we
anticipate, and we are unable to adjust our operating expenses accordingly, then
our business and financial results could be substantially and adversely
affected. We cannot assure you that we will ever achieve or sustain
profitability.
Our anticipated operating expenses are based in part on our
expectations as to future revenue from sales commissions to be paid by our
affiliated retailers on sales generated by our online shopping program, as well
as the anticipated growth in our membership. We cannot assure you that we have
accurately predicted our net revenue, particularly in light of the intense
competition for consumers among online shopping networks and direct retailers.
9
<PAGE>
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE AND IT MAY NOT BE AVAILABLE ON
ACCEPTABLE TERMS.
As of December 8, 2000, we have no revenue and do not expect to
generate any revenues until some time after we commence operations following the
development of our web site. We anticipate that proceeds from this Offering,
together with funds received from our recent private placement offering,
commissions from our affiliated retailers on purchases by our members, and the
proceeds from the financing of our accounts receivable, will satisfy our working
capital requirements for at least the next twelve months. After that, we may
need to raise additional funds in order to finance our operations while we
develop our membership base and relationships with retailers. We cannot assure
you that financing will be available on terms favorable to us, or at all. If
adequate funds are not available on acceptable terms, we may be forced to
curtail or cease our operations. Even if we are able to continue our operations,
the failure to obtain financing could have a substantial adverse effect on our
business and financial results, and we may need to delay full deployment of our
online shopping program.
OUR AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A
GOING CONCERN WHICH ABILITY IS DEPENDENT ON THE NET PROCEEDS OF THIS OFFERING.
Singer Lewak Greenbaum & Goldstein LLP, in their independent auditors'
report, have expressed "substantial doubt" as to our ability to continue as a
going concern based on operating losses we have incurred since inception. Our
financial statements do not include any adjustments that might result from the
outcome of that uncertainty. The going concern qualification is also described
in Note 2 of the notes to our financial statements.
Without the net proceeds from this Offering, our ability to remain in
business will be in jeopardy and therefore, all investors in our Company may
lose their entire investment.
WE CANNOT PREDICT OUR SUCCESS BECAUSE OUR BUSINESS MODEL IS UNPROVEN.
Our success depends on continued growth in the use of the Internet for
the purchase of health-related merchandise and services. Although Internet
commerce has grown substantially and is projected to increase, we cannot be
certain that this growth will continue to increase at the present rate, or at
all. Critical issues concerning the increased use of the Internet, including
security, reliability, cost, ease of access and quality of service, remain
unresolved and are likely to affect further development of electronic commerce
generally, as well as the market for our online shopping mall.
The success of our business will ultimately depend on acceptance of our
online shopping mall by our potential affiliated retailers and by Internet users
generally. Our success will also depend on our ability to compete with other
online retailers, including direct retailers, and aggregators that provide
consumers with electronic links to a network of direct retailers, on the basis
of quality and range of merchandise and membership rewards. As we have not yet
begun operations and have no members and retail affiliates, we cannot reliably
predict the future success of our business and we cannot assure you that we will
be successful in attracting members or securing relationships with affiliated
retailers.
OUR BUSINESS AND BUSINESS PROSPECTS WILL SUFFER SIGNIFICANTLY IF OUR WEB SITE
DESIGN IS NOT COMPLETED ADEQUATELY AND ON TIME.
Fluidesign Studios ("Fluidesign") has been selected to develop the
design of our web site, at www.iGoHealthy.com, which includes the design of all
software required to operate our online shopping mall during the first six
months of operations, as described in this Prospectus. Under our agreement,
Fluidesign is required to complete our web site design in fully operational form
no later than March 31, 2001, provided that work on the web site commences
within 60 days from the date of the agreement (November 30, 2000). The timely
completion and proper performance of our web site is critical to our business
and our ability to attract members and retailers alike. Any failure by
Fluidesign to complete our web site design on time with all features operating
properly will substantially hurt our business and business prospects. Even if
Fluidesign completes our web site design on time, any subsequent system failure
that interrupts its functioning or the functioning of any of its features, or
decreases response time will impair our ability to attract and retain members
and retailers, and disrupt purchasing through our online shopping mall and
consequently reduce our revenues.
10
<PAGE>
SYSTEM DISRUPTIONS COULD HAVE A SUBSTANTIVE NEGATIVE EFFECT ON OUR BUSINESS.
We will use the web site design and related software developed for us
by Fluidesign in substantially all aspects of our online shopping mall,
including all connections to members, retail affiliates and tracking services.
Reliability and efficiency of our system remains untested because our system is
under development. Our agreement with Fluidesign requires Fluidesign to make
adjustments and modifications to our web site for a period of six months after
the web site begins to operate. If, during this six-month period or anytime
thereafter, Fluidesign or another third party is unable to modify our web site
as may be necessary to accommodate increased traffic or increases in the volume
of information processed through our systems from members, retailers and
tracking services, we could experience system disruptions, slow response times,
impaired quality and speed of downloading information and delays in updating
member accounts. Any of these events could have a substantial negative effect on
our business and financial results.
OUR ABILITY TO ATTRACT AND RETAIN MEMBERS DEPENDS ON FACTORS WE CANNOT CONTROL.
Our success will depend, to a great extent, on our ability to attract
and retain members. Our ability to attract and retain members will depend, in
turn, on a number of factors, many of which are beyond our control. These
factors include:
* our ability to attract enough quality health-related retail
affiliates;
* competition from direct retailers and other aggregators and web sites
offering similar merchandise, lower prices, and/or additional rewards;
* the date on which we commence operations, particularly if our web site
design is not fully operational on the expected delivery date;
* the extent to which our web site design, when developed, is easy for
members and prospective members to use and understand;
* our ability to fund advertising and other promotional activities;
* the success of our promotional activities;
* the quality of customer support and services provided to members by
our retail affiliates; o whether our discount percentage on all
purchases remains competitive with the discounts offered by other
online retailers and aggregators; and
* the date by which we commence operations, since prospective members
may make purchases from our competitors during any delay in the start
of our operations.
Because of these and other factors, we cannot accurately predict our
membership growth rate or our future revenues.
OUR ABILITY TO ATTRACT AND RETAIN RETAIL AFFILIATES OFFERING QUALITY MERCHANDISE
COULD HAVE A SIGNIFICANT EFFECT ON OUR BUSINESS AND FINANCIAL RESULTS.
We will be dependent on our affiliated retailers for most of our
revenue and for all product and service fulfillment. We will not sell any
products or services directly to members, as we have no fulfillment operations
or facilities of our own. Instead, we will provide an electronic link from our
members to our retail affiliates. Only our retail affiliates will sell products
or services through our online shopping mall.
11
<PAGE>
Our success depends, to a great extent, on our ability to attract and
retain retailers offering the types of health-related merchandise and services
in demand by online customers. Our ability to attract and retain such retailers
will depend on a number of factors, many of which are beyond our control. These
factors include:
* our ability to attract and retain a significant number of members;
* the amount our members spend;
* competition for retailers from other online aggregators and others;
and
* the ease with which our web site design, when developed, interfaces
with the web sites and software systems of participating retailers,
tracking services and others.
We cannot assure you that we will be able to establish or maintain
relationships with quality retail affiliates. Even if we are able to establish
and maintain these relationships, we cannot assure you that we will be able to
do so on terms favorable to us or in the numbers we need to become profitable.
In addition, our failure to affiliate with a large number of quality online
retailers shortly after we begin operations may result in our members and
prospective members shopping online with our competitors. Our failure to
affiliate with a sufficient number of quality retailers in a timely manner could
have a substantial negative effect on our business and financial results.
Although we plan to monitor the types of products and services our
members and prospective members seek to purchase online and to offer links to
retailers selling these products and services online, we cannot assure you that
our decisions in this regard will be accurate. Our ability to build a
substantial membership base on a timely basis will depend upon the ability of
our affiliated retailers to supply the requested products and services in the
ordinary course of business. If our affiliated retailers fail to meet their
commitments to our members, our business and financial results would be
substantially, adversely affected.
OUR QUARTERLY OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY AND MAY BE
BELOW EXPECTATIONS OF INVESTORS AND ANALYSTS.
Our revenues and expenses, and in particular our quarterly revenues,
expenses and operating results, may fluctuate significantly due to a variety of
factors, many of which are outside of our control. These factors include:
* the seasonal nature of consumer spending;
* the pace at which Internet users become members of our shopping
program;
* the rate at which we enter into affiliate relationships with online
retailers;
* changes in commission rates paid to us by our retail affiliates;
* price competition in electronic commerce;
* capital expenditures and costs related to expanding and improving our
web site design;
* our ability to protect our web site from power loss and
software-related system failures;
* changes in our operating expenses including, in particular, costs of
personnel, marketing, advertising and promotion;
* the introduction of rewards by us or our competitors; and
* economic conditions specific to the Internet and retail industries, as
well as general economic and market conditions.
Because of the potential for significant fluctuations in our quarterly
results, you should not rely on quarter-to-quarter comparisons of our future
results of operations as an indication of subsequent performance.
WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH AS PLANNED.
To manage our anticipated growth, we must:
12
<PAGE>
* implement and continually improve our operational, financial and
management information systems;
* hire, train and retain additional qualified personnel;
* expand and upgrade core technologies; and
* effectively manage relationships with our members, retail affiliates,
their tracking services and other third parties.
Our expansion could place a significant strain on our services and
support operations, sales and administrative personnel, and other resources.
Our web site design, when completed by Fluidesign, may not be adequate
to meet our growth plans, even though our contract with Fluidesign requires them
to provide us with adequate controls and procedures for our operations. This
potential inadequacy could result in our inability to provide our services on a
timely basis and a consequent loss of members and revenues. We cannot assure you
that our systems, procedures or controls will be adequate to support our
operations or services. Nor can we assure you that our management, the members
of which have no experience with an Internet-based, development stage company,
will be capable of fully exploiting the market for our services. Our failure to
manage growth effectively could have a substantial, negative effect on our
business and financial results.
IF WE DO NOT CONTINUALLY UPGRADE OUR TECHNOLOGY, WE MAY NOT BE ABLE TO COMPETE
IN OUR INDUSTRY.
We will need to expand and upgrade our web site on a continuing basis,
as our membership and affiliate programs expand. We are totally dependent on the
services of third parties, such as Fluidesign, to upgrade our technology and
ensure a high level of service and reliability. We cannot assure you that
services of these parties will be available, or adequate for our purposes, when
we need them. Our inability to secure adequate services from these third
parties, when needed, could have a substantial, negative effect on our business
and financial results.
OUR NETWORK MAY BE VULNERABLE TO SECURITY RISKS.
Although our agreement with Fluidesign requires them to include
standard security measures in our web site design, our online system may
nevertheless be vulnerable to unauthorized access, computer viruses and other
disruptions. The web sites of our retail affiliates, their tracking service or
our members may be similarly vulnerable. Internet service providers have in the
past experienced and may experience in the future interruptions in service as a
result of the accidental or intentional actions of Internet users. We have no
control over the security measures that Internet service providers or our retail
affiliates, members, or web site visitors adopt, although we regard the security
measures adopted by online retailers as one factor in deciding whether to
affiliate with them. Unauthorized access could also potentially jeopardize the
security of confidential information, such as member account information stored
in computer systems maintained by us, our retail affiliates or their tracking
services. These events may result in liability to us or harm to our members or
retail affiliates.
Eliminating computer viruses and alleviating other security problems
may require interruptions, delays or cessation of service to our members, which
could have a substantial adverse effect on our business and financial results.
In addition, the threat of these and other security risks may deter prospective
visitors from becoming members or deter members from shopping through our online
mall. These deterrents could have a substantial adverse effect on our business
and financial results.
Our security measures will be designed to prevent any physical or
electronic break-ins and attacks on our facilities and system, and to minimize
the effect of any such event if it were to occur. Any security breach, however,
could result in interruptions, delays or cessation in service which could have a
substantial adverse effect on our business and financial results. Although we
expect to have business interruption insurance covering interruptions of our
operations resulting from physical damage to our property, we will not have data
loss insurance to cover losses from, and recovery and data reconstruction costs
related to, certain security breaches on our web site, if no interruption has
occurred. In addition, in the event of an interruption of our operations, our
business interruption insurance may not be sufficient to cover our expenses
resulting from any such occurrence. This could also damage our reputation and
the value of the iGoHealthy brand name.
13
<PAGE>
OUR SERVICES ARE SUSCEPTIBLE TO DISRUPTIONS DUE TO PHYSICAL CAUSES.
Our systems and operations are also vulnerable to damage or
interruption from fire, flood, power loss, telecommunications failures and
similar events. Any such interruptions or delays at our facilities would have a
substantial adverse effect on our business and financial results. We have no
formal disaster recovery plan, and our business interruption insurance may not
adequately compensate us for losses that may occur. The occurrence of any or all
of these events could also damage our reputation and brand name, thus impairing
our business substantially.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS FOR PRODUCTS SOLD BY AFFILIATED
RETAILERS THROUGH OUR WEB SITE.
Members may sue us if any product sold to them by our affiliated
retailers through our web site fails to perform properly or injures the user.
Liability claims could require us to spend significant time and money in
litigation and/or pay significant damages. As a result, any of these claims,
whether or not valid or successfully prosecuted, could have a substantial,
adverse effect on our business and financial results.
Government Regulation of Products Could Adversely Affect Viability of SELLING
VITAMIN, SUPPLEMENTS AND MINERALS.
In the United States, extensive federal government regulations may
restrict the way participating retailers' sell their dietary supplement
products, resulting in restrictions on these products and content which may
result in significant additional expenses. Also, numerous U.S. governmental
agencies may regulate the manufacture, packaging, labeling, advertising,
promotion, distribution and sale of dietary supplement products. The primary
regulatory agency in the United States for these products is the Food and Drug
Administration (FDA). The laws, regulations and enforcement policies governing
dietary supplement products are relatively new and still evolving and we cannot
predict what enforcement positions the FDA or other governmental agencies may
take with respect to selling and marketing efforts employed by our participating
retailers. In general, the dietary supplement industry has adopted more
aggressive interpretations of these laws than have the relevant regulatory
agencies.
Next, U.S. federal, state and local government regulations may restrict
the products our participating retailers distribute. The U.S. FDA regulates
vitamin, supplements and other health care products under the Federal Food, Drug
and Cosmetic Act and regulations promulgated thereunder. These products are also
subject to regulation by, among other regulatory entities, the Consumer Product
Safety Commission, the U.S. Department of Agriculture, and the Environmental
Protection Agency. Additionally, the U.S. Federal Trade Commission regulates
advertising and other forms of promotion and methods of marketing of these
products under the Federal Trade Commission Act. Also, various state and local
agencies may also regulate the manufacture, labeling and advertising of these
products.
We cannot be certain that our participating retailers comply with laws
and regulations in this area are or will be deemed sufficient by the appropriate
regulatory agencies. Enforcement actions by any of these regulatory agencies can
result in civil and criminal penalties, an injunction to stop or modify certain
selling methods, seizure of their products, adverse publicity or voluntary
recalls and labeling changes. If any governmental agency were to undertake an
enforcement action against our participating retailers, this could cause an
immediate decrease in our revenues, cause us to incur significant additional
expenses and result in a decrease in our stock price.
RISKS RELATED TO THE MARKET FOR ELECTRONIC COMMERCE GENERALLY AND ONLINE
RETAILING IN PARTICULAR
OUR SUCCESS IS DEPENDENT ON THE CONTINUED GROWTH OF ONLINE COMMERCE.
14
<PAGE>
Our future success is substantially dependent upon continued growth in
the use of the Internet to purchase merchandise and services, as well as the
continued reliability of the Internet generally. Use of the Internet as a means
of commerce is at an early stage of development, and demand and market
acceptance for retail marketing over the Internet is uncertain. We will be
dependent on revenue from electronic commerce as our sole source of revenue. We
cannot predict the extent to which consumers will be willing to shift their
purchasing habits from traditional retailers to online retailers. The Internet
may not prove to be a viable commercial marketplace for a number of reasons,
including lack of acceptable security technologies, inconsistent quality of
service, and the lack of cost-effective, high-speed service. The viability of
the Internet could decline as a result of, among other things, delays in the
adoption of standards and protocols to handle increased activity. If Internet
use does not continue to grow or grows more slowly than expected, our business
and financial results may be adversely affected.
WE MAY BE HELD LIABLE FOR ONLINE CONTENT PROVIDED BY THIRD PARTIES.
Although Fluidesign will represent to us that our web site design will
not infringe upon the proprietary rights of others, no assurance can be given
that such infringement claims will not be asserted against us. Such claims and
any resulting litigation may subject iGoHealthy.com to significant liability for
damages, and result in invalidation of our proprietary rights. Claims and
litigation would also be time consuming and expensive to defend, and result in
the diversion of management time and attention, any of which might have a
significant adverse effect on our business and financial results.
In part, our business involves supplying information to Internet users,
members and retail affiliates via the Internet. Accordingly, we face the same
types of risks that apply to all businesses that publish or distribute
information, such as potential liability for defamation, libel, invasion of
privacy, copyright or trademark infringement and similar claims. A number of
third parties have claimed that they hold patents covering various forms of
online transactions or online technologies. In addition, our liability insurance
may not cover potential patent or copyright infringement claims and may not
adequately indemnify us for any liability that may be imposed.
WE DEPEND ON KEY PERSONNEL AND WILL REQUIRE ADDITIONAL SKILLED EMPLOYEES TO
EXECUTE OUR GROWTH PLANS.
Our potential for success depends significantly on our two executive
officers, our Chief Executive Officer, Farid E. Tannous, and Chief Operating
Officer, Bill Glaser. We do not carry key-man life insurance on either
executive, and do not have employment agreements that would assure us of their
services for a stated period of time. Given the early stage of our development
and our plans for rapid expansion, the loss of the services of either executive
or the services of any other key employees we may hire in the future would have
a substantial, adverse effect on our business. We believe that our future
success will depend in large part on our ability to attract and retain highly
skilled technical, marketing and management personnel. If we are unable to hire
the necessary personnel, the development of our business would likely be delayed
or prevented. Competition for these highly-skilled employees is intense. As a
result, we cannot assure you that we will be successful in retaining our key
personnel or in attracting and retaining the personnel we require for expansion.
WE FACE SIGNIFICANT COMPETITION IN THE ONLINE RETAILING INDUSTRY.
The market for health-related retail goods and services provided via
the Internet is new and rapidly evolving. Competition for online consumers is
intense and expected to increase significantly. We believe that the principal
competitive factors for companies seeking to develop Internet shopping malls
are:
* number of members;
* functionality;
* quality of merchandise and retailers;
* discounts and rewards;
* brand recognition;
* member loyalty; o broad demographic focus; and
* open access for visitors.
15
<PAGE>
We could also face competition from all offline and online retailers,
including direct retailers, aggregators, web directories, search engines,
content sites, commercial online service providers, sites maintained by Internet
service providers, traditional media companies and other entities that engage in
electronic commerce by developing their own networks of retail affiliates and
members or acquiring one of our competitors. We cannot assure you that our
competitors and potential competitors will not develop electronic commerce
networks that are equal or superior to ours or that will achieve greater market
acceptance.
Nearly all of our existing and potential competitors have longer
operating histories, greater experience in online retailing, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than we do. Because of their greater
resources, our competitors are able to undertake more extensive marketing
campaigns for their brands and services, and make more attractive offers to
potential employees, retail affiliates, and others.
Our competitors may experience greater growth in online traffic than we
do, making their online retail programs more attractive to our retail
affiliates, some of whom might sever or decide not to renew their relationships
with us. We cannot assure you that we will be able to compete successfully
against our current or future competitors or that our business and financial
results will not suffer from competition.
WE ARE HEAVILY DEPENDENT ON OUR PROPRIETARY TECHNOLOGY AND THE DEVELOPMENT OF
OUR BRAND NAME.
We regard the technology being developed by Fluidesign as proprietary
to iGoHealthy.com, and we will attempt to protect it by relying on trademark,
service mark and trade secret laws and other methods. We also intend to enter
into confidentiality agreements with our employees and consultants. Despite
these precautions, third parties may be able to copy or otherwise use our
proprietary information without authorization or develop similar technology
independently. We cannot assure you that the steps we take have prevented or
will prevent misappropriation or infringement of our proprietary information.
The web site design being developed for us may incorporate certain
software licensed by us from third parties. As our business matures and we
enhance our technology, we may require licenses for additional technology. We
cannot assure you that technology licenses from third parties will be available
to iGoHealthy.com on commercially reasonable terms or at all. Our inability to
obtain any of these technology licenses could result in delays or reductions in
the introduction of new services or adversely affect the performance of our
existing program until equivalent technology is identified, licensed and
integrated.
In addition, we believe that establishing and maintaining the
iGoHealthy brand name will be critical to attracting members and retail
affiliates and expanding traffic at our web site. Brand recognition is
particularly important given the low barriers to entry into online retailing and
the growing number of retail networks, shopping malls and direct retailers. If
visitors to our web site, members and retailers do not perceive our service to
be of high quality, or if we alter or modify our brand image, introduce new
services or enter into new business ventures that are not favorably received by
such parties, the value of our brand name could be diluted, thereby decreasing
the attractiveness of our online shopping mall.
We intend to register our service marks, iGoHealthy and HealthyBucks,
with the United States Patent and Trademark Office.
RISKS RELATED TO THE OFFERING
Best Efforts No Minimum Offering.
The Shares offered hereby will be sold on a "best efforts" basis. Thus,
we cannot assure that all or any of the Shares offered will be sold. We are not
required to receive any minimum amount of subscriptions before accepting such
subscriptions for investment in the Company. Accordingly, investors whose
subscriptions are accepted first run the additional risk that we may not raise
all of the funds we are seeking in this Offering which could materially and
adversely affect our ability to finance the Company's business plan.
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<PAGE>
We INTEND TO applY to be listed on the NASD OTC Electronic Bulletin Board, which
can be a volatile market.
We intend to apply to have our Common Stock quoted on the OTC
Electronic Bulletin Board, a NASD sponsored and operated quotation system for
equity securities. It is a more limited trading market than the NASDAQ SmallCap
Market, and timely, accurate quotations of the price of our Common Stock may not
always be available. You may expect trading volume to be low in such a market.
Consequently, the activity of only a few shares may affect the market and may
result in wide swings in price and in volume.
Once our Common Stock is listed on the NASD OTC Bulletin Board, it will
be subject to the requirements of Rule 15(g)9, promulgated under the Securities
Exchange Act as long as the price of our Common Stock is below $5.00 per share.
Under such rule, broker-dealers who recommend low-priced securities to persons
other than established customers and accredited investors must satisfy special
sales practice requirements, including a requirement that they make an
individualized written suitability determination for the purchaser and receive
the purchaser's consent prior to the transaction. The Securities Enforcement
Remedies and Penny Stock Reform Act of 1990 also requires additional disclosure
in connection with any trades involving a stock defined as a penny stock.
Generally, the Commission defines a penny stock as any equity security not
traded on an exchange or quoted on NASDAQ that has a market price of less than
$5.00 per share. The required penny stock disclosures include the delivery,
prior to any transaction, of a disclosure schedule explaining the penny stock
market and the risks associated with it. Such requirements could severely limit
the market liquidity of the securities and the ability of purchasers to sell
their securities in the secondary market.
The stock market has experienced significant price and volume
fluctuations, and the market prices of technology companies, particularly
Internet-related companies, have been highly volatile. Investors may not be able
to sell their shares at or above the then current, OTCBB price. In addition, our
results of operations during future fiscal periods might fail to meet the
expectations of stock market analysts and investors. This failure could lead the
market price of our Common Stock to decline.
There is no assurance that a public market for our common stock will develop.
There has been no public market for our Common Stock. We cannot predict
the extent to which investor interest in our Common Stock will lead to the
development of a trading market or how liquid that market might become. Without
an active public trading market, you may not be able to liquidate your
investment without considerable delay, if at all. If a market does develop, the
price for our Common Stock may be highly volatile and may bear no relationship
to our actual financial condition or results of operations. Factors we discuss
in this Prospectus, including the many factors associated with an investment in
us, may have a significant impact on the market price of our Common Stock.
Our public trading market, if and when it develops, will likely be highly
volatile.
Prior to this Offering, there has been no public market for our Common
Stock. If a public trading market does develop, the market price of our Common
Stock could fluctuate substantially due to:
* quarterly fluctuations in operating results;
* announcements of new products or product enhancements by us or our
competitors;
* technological innovations by us or our competitors;
* general market conditions or market conditions specific to our or our
customers' industries; or
* changes in earnings estimates or recommendations by analysts.
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<PAGE>
Stock prices of Internet-related companies have been highly volatile.
In the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has at times been instituted
against that company. If we become subject to securities litigation, we could
incur substantial costs and experience a diversion of management's attention and
resources.
CONTROL OF THE COMPANY
Prior to the Offering, our Common Stock is beneficially owned
approximately 82%, in aggregate, by Farid E. Tannous, our President, Treasurer
and Chief Executive Officer, and Bill Glaser, our Secretary and Chief Operating
Officer. Immediately upon completion of this Offering, assuming the sale of
1,000,000 shares of Common Stock offered hereby, the outstanding Common Stock
will be beneficially owned approximately 52%, in aggregate, by Messrs. Tannous
and Glaser. These persons will hold an aggregate of approximately 52% of the
outstanding voting power of the Company immediately upon completion of this
Offering. As a result, upon completion of this Offering, Messrs. Tannous and
Glaser will be able to:
* elect, or defeat the election of, the Company's directors;
* amend or prevent amendment of the Company's Articles of Incorporation,
as amended, or By Laws; or
* effect or prevent a merger, sale of assets or other corporate
transaction.
Our stockholders, for so long as they hold less than 50% of the
outstanding voting power of the Company, will not be able to control the outcome
of such transactions. The extent of ownership by Messrs. Tannous and Glaser may
have the effect of preventing a change in control of the Company or discouraging
a potential acquirer from making a tender offer or otherwise attempting to
obtain control of the Company, which in turn could have an adverse effect on the
market price of the Common Stock.
Future issuances of our common stock could dilute current shareholders and
adversely affect the market if it develops.
We have the authority to issue up to 50,000,000 shares of Common Stock
and to issue options and warrants to purchase shares of our Common Stock without
stockholder approval. These future issuances could be at values substantially
below the price paid for our Common Stock by our current shareholders.
Future sales of our common stock could adversely affect the market.
Future sales of our Common Stock into the market may also depress the
market price of our Common Stock if one develops in the future. To date, we have
issued only Common Stock. Sales of these shares of our Common Stock or the
market's perception that these sales could occur may cause the market price of
our Common Stock to fall. These sales also might make it more difficult for us
to sell equity or equity related securities in the future at a time and price
that we deem appropriate or to use equity as consideration for future
acquisitions.
Future sales of preferred stock could also adversely affect the market for our
common stock; ANTITAKEOVER EFFECT
We have the authority to issue up to 5,000,000 shares of preferred
stock without shareholder approval. The issuance of preferred stock by our Board
of Directors could adversely affect the rights of the holders of our Common
Stock. An issuance of preferred stock could result in a class of outstanding
securities that would have preferences with respect to voting rights and
dividends and in liquidation over the Common Stock and could, upon conversion or
otherwise, have all of the rights of our Common Stock. Our Board of Directors'
authority to issue preferred stock could discourage potential takeover attempts
or could delay or prevent a change in control through merger, tender offer,
proxy contest or otherwise by making these attempts more difficult or costly to
achieve.
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<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Risk Factors," "Plan of Operation,"
"Business," and elsewhere in this Prospectus constitute forward-looking
statements. These statements involve known and unknown risks, uncertainties, and
other factors that may cause our or our industry's results, levels of activity,
performance, or achievements to be significantly different from any future
results, levels of activity, performance, or achievements expressed or implied
by such forward-looking statements. Such factors include, among others, those
listed under "Risk Factors" and elsewhere in this Prospectus.
In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "potential," or "continue"
or the negative of such terms or other comparable terminology.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
events, levels of activity, performance, or achievements. We do not assume
responsibility for the accuracy and completeness of the forward-looking
statements. We do not intend to update any of the forward-looking statements
after the date of this Prospectus to conform them to actual results.
--------------------------------------------------------------------------------
CAPITALIZATION
--------------------------------------------------------------------------------
The following table presents the actual capitalization of
iGoHealthy.com at October 31, 2000 and on a pro forma basis to give effect to
this Offering, assuming the sale of all Shares offered hereby, as if such
transaction had occurred on October 31, 2000. You should read this table in
conjunction with our financial statements and the related notes thereto, and the
other financial information included elsewhere in this Prospectus.
<TABLE>
As of October 31, 2000
----------------------------
Actual Pro forma
---------- ------------
<S> <C> <C>
Note Payable/Advances.............................. $ 25,000 $ 25,000
Shareholders' equity:
--------------------
Preferred stock, par value $0.001 per share
5,000,000 shares authorized; no shares
issued and outstanding........................ $ 0 $ 0
Common stock, par value $0.001 per share
50,000,000 shares authorized; 1,710,000 shares,
2,710,000 shares issued and outstanding, respectively 1,710 2,710
Paid-in capital........................................... 48,853 297,853
Accumulated deficit....................................... (20,626) (20,626)
---------- ----------
Total shareholders' equity................................$ 29,937 $ 277,227
Total capitalization......................................$ 54,937 $ 302,227
========== ==========
</TABLE>
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USE OF PROCEEDS
--------------------------------------------------------------------------------
The gross proceeds to iGoHealthy.com from the sale of 1,000,000 shares
of Common Stock, assuming the sale of all Shares offered hereby, at an assumed
initial public Offering price of $0.25 per share are estimated to be $250,000.
The following table presents the use of proceeds from this Offering:
Description Amount Percent
--------------------------- ----------- ----------
Working capital 115,000 46.00%
Marketing/advertising costs 65,000 26.00%
Web site development costs 50,000 20.00%
Offering costs 20,000 8.00%
----------- ----------
Total $250,000 100.0%
The foregoing represents our present intentions and best estimate with
respect to the allocations of the proceeds of this Offering based upon our
present plans and business conditions. However, no assurances can be given that
unforeseen events or changed business or industry conditions will not result in
the application of the proceeds of this Offering in a manner other than as
described herein. Consequently, future events, including changes in our business
plans, research and development results and economic, competitive or industry
conditions, may make shifts in the allocation of funds necessary or desirable.
--------------------------------------------------------------------------------
DIVIDEND POLICY
--------------------------------------------------------------------------------
To date, we have not declared or paid any dividends on our outstanding
Shares. We currently do not anticipate paying any cash dividends in the
foreseeable future on our Common Stock, when issued pursuant to this Offering.
Although we intend to retain our earnings to finance our operations and future
growth, our Board of Directors will have discretion to declare and pay dividends
in the future. Payment of dividends in the future will depend upon our earnings,
capital requirements and other factors, which our Board of Directors may deem
relevant.
--------------------------------------------------------------------------------
DETERMINATION OF OFFERING PRICE
--------------------------------------------------------------------------------
Prior to this Offering, there has been no trading market for the shares
of Common Stock offered. Consequently, the initial public Offering price of the
shares of Common Stock was arbitrarily determined. The factors considered in
determining the Offering price were our financial condition and prospects, our
limited operating history and the general condition of the securities market.
The Offering price is not an indication of and is not based upon the actual
value of iGoHealthy.com. The Offering price bears no relationship to the book
value, assets or earnings of iGoHealthy.com or any other recognized criteria of
value. The Offering price should not be regarded as an indicator of the future
market price of the securities.
--------------------------------------------------------------------------------
DILUTION
--------------------------------------------------------------------------------
Purchasers of the Shares may experience immediate and substantial
dilution in the value of the Common Stock. Dilution represents the difference
between the price per share paid by the purchasers in the Offering and the net
tangible book value per share. Net tangible book value per share represents the
net tangible assets of the Company (total assets less total liabilities),
divided by the number of shares of Common Stock outstanding upon closing of the
Offering. As of October 31, 2000, the net tangible book value of the Company was
$29,937, or $0.02 per Share. Giving effect to the sale by the Company of all
offered Shares at the public offering price, net of estimated offering costs,
the pro forma net tangible book value of the Company would be $259,937, or $0.10
per Share, which would represent an immediate increase of $0.08 in net tangible
book value per Share. Consequently, the purchasers of the Shares offered hereby
will sustain an immediate decrease in the value of their Shares (i.e., the
difference between the purchase price of $.25 and the pro forma net tangible
book value per Share) after the Offering of $0.15 per Share, or 58.7%.
20
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<TABLE>
<S> <C> <C>
The following table illustrates the pro forma per share dilution:
Offering price per Share $0.25
Net tangible book value per Share before Offering $0.02
Increase per Share attributed to purchase of stock by investors $0.08
Pro forma net tangible book value per Share after Offering $0.10
--------
Dilution per Share to new investors $0.15
=====
</TABLE>
The future issuance of all or part of the remaining authorized Common
Stock may result in substantial dilution in the percentage of the Company's
Common Stock held by our then existing shareholders, including purchasers of the
Shares offered herein. Moreover, any Common Stock issued in the future may be
valued on an arbitrary basis by the Company. The issuance of the Company's
Shares for future services or acquisitions or other corporate actions may have
the effect of diluting the value of the Shares held by investors, and might have
an adverse effect on any trading market, should a trading market develop for the
Company's Common Stock. (See "DESCRIPTION OF BUSINESS" beginning on page 26.)
In the future, we may issue options, warrants, or additional stock in
connection with our efforts to expand our business. As a result, shareholders
could face dilution from the issuance of these securities.
--------------------------------------------------------------------------------
SELLING SECURITY HOLDERS
--------------------------------------------------------------------------------
There are no selling security holders.
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PLAN OF DISTRIBUTION
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We will sell a maximum of 1,000,000 shares of iGoHealthy.com's Common
Stock, $0.001 par value per share, to the public on a "best efforts" basis. The
minimum purchase required of an investor is $5,000, although management may, at
their sole discretion, accept a lower amount. There can be no assurance that any
of these Shares will be sold. This is not an underwritten Offering. The gross
proceeds to us will be $250,000 if all the Shares offered herein are sold - no
commissions or other fees will be paid, directly or indirectly, to any person or
firm in connection with solicitation of sales of the Shares. (See "Use of
Proceeds" beginning on page 20). No public market currently exists for shares of
iGoHealthy.com's Common Stock. We intend to apply to have our Shares traded on
the NASD OTC Bulletin Board as soon as practicable and upon our Registration
Statement becoming effective.
Conduct of the Offering
Our President and Secretary, Farid E. Tannous and Bill Glaser,
respectively, shall distribute Prospectuses related to the Offering. We estimate
that they will jointly distribute approximately 100 to 125 Prospectuses, limited
to acquaintances, friends and business associates.
Mr. Tannous and Mr. Glaser shall conduct the offering of the Shares.
Although they are each considered an "associated person" as that term is defined
in Rule 3a4-1 under the Securities Exchange Act, they will not be deemed to be a
broker.
21
<PAGE>
As of the date of the Prospectus, we have not retained a broker to sell
the Shares. In the event we retain a broker who may be deemed an underwriter, we
will file an amendment to the registration statement with the Commission.
However, we have no present intention of using a broker.
Method of Subscribing
Each person desiring to subscribe to the Shares must complete, execute,
acknowledge, and deliver to the Company a Subscription Agreement, which will
contain, among other provisions, representations as to the investor's
qualifications to purchase the Common Stock and his ability to evaluate and bear
the risk of an investment in the Company. By executing the Subscription
Agreement, the subscriber is agreeing that if the Subscription Agreement is
accepted by the Company, such subscriber will be a shareholder in
iGoHealthy.com.
Promptly upon receipt of subscription documents by us, we will make a
determination as to whether a prospective investor will be accepted as a
shareholder in the Company. Subscribers must pay $0.25 per Share in cash, wire
transfer, or by check, bank draft or postal express money order payable in
United States dollars to "iGoHealthy.com, Inc." We may reject a subscriber's
Subscription Agreement for any reason. Subscriptions will be rejected for
failure to conform to the requirements of this Prospectus (such as failure to
follow the proper subscription procedure), insufficient documentation, over
subscription to the Company, or such other reasons that we determine to be in
the best interest of the Company. If a subscription is rejected, in whole or in
part, the subscription funds, or portion thereof, will be promptly returned to
the prospective investor without interest by depositing a check (payable to said
investor) in the amount of said funds in the United States mail, certified
returned-receipt requested. Subscriptions may not be revoked, cancelled, or
terminated by the subscriber, except as provided herein.
Opportunity to Make Inquiries
iGoHealthy.com will make available to each offeree, prior to any sale
of the Shares, the opportunity to ask questions and receive answers from us
concerning any aspect of the investment and to obtain any additional information
contained in this Prospectus, to the extent that the Company possesses such
information or can acquire it without unreasonable effort or expense.
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LEGAL PROCEEDINGS
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We are not a party to any pending legal proceeding or litigation and
none of our property is the subject of a pending legal proceeding. Further, the
Officer and Director knows of no legal proceedings against us or our property
contemplated by any person, entity or governmental authority.
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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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The following table sets forth the name, age and position of each
Director and Executive Officer of iGoHealthy.com. There are no other persons
which can be classified as a promoter or controlling person of the Company. The
Officers and Directors of the Company are as follows:
<TABLE>
<S> <C> <C>
Name Age Title
---------------- ---- --------
Farid E. Tannous 34 Chief Executive Officer, President, Treasurer and Director
Bill Glaser 34 Chief Operating Officer, Secretary and Director
</TABLE>
Farid E. Tannous has served as President, Treasurer, and a Director of
the Company since its inception on June 13, 1996. He functions as the Chief
Executive Officer of the Company. Currently, he is employed at DIRECTV, Inc.
where he is involved in various capacities including valuing, structuring, and
executing strategic investments and relationships with "new media" enterprises.
From December 1999 and prior to joining DIRECTV, a wholly-owned subsidiary of
Hughes Electronics Corporation, Mr. Tannous was with the corporate treasury
organization of Hughes where he assisted in conducting valuations and
effectuating financing transactions for the company's satellite and network
communication units. From February 1996 to May 1999, Mr. Tannous served as
Treasurer and Chief Financial Officer of a gaming and lodging concern with
operations in Colorado. In addition to overseeing the company's finance and
accounting operations, he was accountable for all corporate finance, treasury,
and cash management activities. From June 1994 to February 1996, as Managing
Director of his consulting firm, Mr. Tannous consulted to several start-up
ventures in various industries including food, retail, wireless
telecommunications, and Internet-related e-commerce. During this time, he was
instrumental in developing business plans, generating pro-forma financials,
advising on business strategy and capital structure, and arranging venture
financing through private placements and public offerings. Mr. Tannous received
an MBA in finance and accounting from the University of Chicago Graduate School
of Business. He also holds a Masters and Bachelors degree in Electrical
Engineering from the University of Southern California.
22
<PAGE>
Bill Glaser has served as Chief Operating Officer, Secretary and a
Director of the Company since October 2000. Mr. Glaser is also founder of
HealthyUSA, Inc., a start-up venture established in July 1999 for the purpose of
operating an online resource for health-conscious living. From July 1994 to May
2000, Mr. Glaser founded and served as the Chief Executive Officer of
Zenterprise, Inc., a comprehensive strategic and management-consulting firm
which focused primarily on business strategy, marketing, and management
consulting services for both public and private companies. During this time, he
assisted several companies achieve multi-million dollar gains in sales through
the development and implementation of successful business and marketing
strategies in diverse market sectors. From September 1991 to July 1994, Mr.
Glaser was a registered principal of a regional stock brokerage firm where he
gained diverse experience in finance, management, marketing, sales, and public
company relations. Previously, he was a registered representative at Drexel,
Burnham, Lambert and Smith Barney. Mr. Glaser has drawn on this experience to
build a successful track record as an entrepreneur. Mr. Glaser holds a Bachelors
degree in finance and economics from the Ithaca College - School of Business.
Directors are elected annually and hold office until the annual meeting
of the shareholders of the Company and until their successors are elected and
qualified. Officers will hold their positions at the pleasure of the Board of
Directors, absent any employment agreement. There are no family relationships
among the Company's Officers and Directors. Officers and Directors of the
Company may receive compensation as determined by the Company from time to time
by vote of the Board of Directors. Such compensation might be in the form of
stock options. Directors may be reimbursed by the Company for expenses incurred
in attending meetings of the Board of Directors.
Board of Directors Committees
The Board of Directors has not yet established an audit committee or a
compensation committee. An audit committee typically reviews, acts on, and
reports to the Board of Directors with respect to various auditing and
accounting matters, including the recommendations and performance of independent
auditors, the scope of the annual audits, fees to be paid to the independent
auditors, and internal accounting and financial control policies and procedures.
Certain stock exchanges currently require companies to adopt formal written
charter that establishes an audit committee that specifies the scope of an audit
committees responsibilities and the means by which it carries out those
responsibilities. In order to be listed on any of these exchanges, we will be
required to establish an audit committee.
The Board of Directors have not yet established a compensation
committee. Directors currently are not reimbursed for out-of-pocket costs
incurred in attending meetings and no Director receives any compensation for
services rendered as a Director. It is likely that we will adopt a provision for
compensating Directors in the future.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------
The following table sets forth certain information regarding the
beneficial ownership of all shares of iGoHealthy.com's Common Stock prior to the
Offering, and after the Offering of such Shares by (i) each person who owns of
record beneficially more than five percent of the outstanding shares of Common
Stock, (ii) each Director of the Company, (iii) each named Executive Officer,
and (iv) all Directors and Officers as a group.
23
<PAGE>
<TABLE>
Beneficially Owned Beneficially Owned
Prior to Offering After Offering
Name and Address of ----------------------- --------------------------
Beneficial Owner (1)(2) Shares Percent Shares Percent
---------------------------------- ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Farid E. Tannous
11693 San Vicente Blvd., Suite 310 700,000 40.9% 700,000 25.8%
Los Angeles, CA 90049
Bill Glaser
11693 San Vicente Blvd., Suite 310 700,000 40.9% 700,000 25.8%
Los Angeles, CA 90049
All the officers and directors as 1,400,000 81.9% 1,400,000 51.7%
a group (2 persons)
</TABLE>
(1) The business address of each individual listed is the same as the Company's
address.
(2) Each person has sole voting and investment power with respect to the Shares
shown.
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DESCRIPTION OF CAPITAL STOCK
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The following description of our capital stock is a summary of the
material terms of our capital stock. This summary is subject to and qualified in
its entirety by iGoHealthy.com's Articles of Incorporation, as amended, and
Bylaws, and by the applicable provisions of Colorado law.
Common Stock
The Company is authorized to issue up to 50,000,000 shares of Common
Stock having a par value of $0.001 per share, of which 1,710,000 Shares are
issued and outstanding. The holders of shares of Common Stock of iGoHealthy.com
do not have cumulative voting rights in connection with the election of the
Board of Directors, which means that the holders of more than 50% of such
outstanding Shares, voting for the election of Directors, can elect all of the
Directors to be elected, if they so choose, and, in such event, the holders of
the remaining Shares will not be able to elect any of iGoHealthy.com's
Directors. Each holder of Common Stock is entitled to one vote for each share
owned of record on all matters voted for by security holders. There are no
options, warrants or other instruments convertible into Shares outstanding.
The holders of shares of Common Stock are entitled to dividends, out of
funds legally available therefor, when and as declared by the Board of
Directors. The Board of Directors has never declared a dividend and does not
anticipate declaring a dividend in the future. In the event of liquidation,
dissolution or winding up of the affairs of our business holders are entitled to
receive, ratably, the net assets of iGoHealthy.com available to shareholders
after payment of all creditors.
All of the issued and outstanding shares of Common Stock, and the
Common Stock to be issued upon the completion of this Offering, will be duly
authorized, validly issued, fully paid, and non-assessable. To the extent that
additional shares of the Company's Common Stock are issued, the relative
interests of existing shareholders may be diluted.
Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of preferred
stock having a par value of $0.001 per share, of which no shares are issued and
outstanding. The company has no present plans to issue preferred stock. The
issuance of such preferred stock could adversely affect the rights of the
holders of Common Stock and, therefore, reduce the value of the Common Stock.
24
<PAGE>
Admission to Quotation to NASD OTC Bulletin Board
The Company intends to apply for quotation of the Shares on the NASD
OTC Bulletin Board. The over-the-counter market differs from national and
regional stock exchanges in that it (1) is not cited in a single location but
operates through communication of bids, offers and confirmations between
broker-dealers and (2) securities admitted to quotation are offered by one or
more broker-dealers rather than the "specialist" common to stock exchanges. To
qualify for quotation on the NASD OTC Bulletin Board, an equity security must
have one registered broker-dealer, known as the market maker, willing to list
bid or sale quotations and to sponsor such a Company listing.
Shares Eligible for Future Sale
Upon the completion of this Offering, we will have 2,710,000 shares of
Common Stock outstanding, assuming the issuance of all of the Shares of Common
Stock offered in this Prospectus. Of these Shares, 1,000,000 shares sold in this
Offering will be freely tradable without restriction or further registration
under the Securities Act. The remaining 1,710,000 shares of Common Stock
outstanding may generally only be sold in compliance with the limitations of
Rule 144 described below.
Sales of Restricted Shares
Of the 2,710,000 shares of Common Stock outstanding upon completion of
this Offering, 1,400,000 shares of Common Stock are deemed restricted shares
under Rule 144 and will not be eligible for resale until 90 days following the
completion of this Offering. The remaining 310,000 shares of Common Stock are
restricted shares under Rule 144 and will not be eligible for resale until
October 2001.
In general, under Rule 144 of the Securities Act as currently in
effect, beginning 90 days after this Offering, a person (or persons whose shares
are aggregated) who has beneficially owned restricted shares for at least one
year, including a person who may be deemed an affiliate, is entitled to sell
within any three-month period a number of shares of Common Stock that does not
exceed the greater of 1% of the then-outstanding shares of our Common Stock
(approximately 27,100 shares after giving effect to this Offering) and the
average weekly trading volume of our Common Stock during the four calendar weeks
preceding such sale. Sales under Rule 144 of the Securities Act are subject to
certain restrictions relating to manner of sale, notice and the availability of
current public information about us. A person who is not our affiliate at any
time during the 90 days preceding a sale, and who has beneficially owned shares
for at least two years, would be entitled to sell such shares immediately
following this Offering without regard to the volume limitations, manner of sale
provisions or notice or other requirements of Rule 144 of the Securities Act.
However, the transfer agent may require an opinion of counsel that a proposed
sale of shares comes within the terms of Rule 144 of the Securities Act prior to
effecting a transfer of such shares.
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INTEREST OF NAME EXPERTS AND COUNSEL
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No "Expert" or "Counsel" (as defined by Item 509 of Regulation S-B
promulgated pursuant to the Securities Act of 1933) whose services were used in
the preparation of this Form SB-2 was hired on a contingent basis or will
receive a direct or indirect interest in the Company.
Legal Matters
The validity of the shares of Common Stock offered hereby will be
passed upon for iGoHealthy.com by Vanderkam & Sanders.
25
<PAGE>
Experts
The financial statements of the Company as of October 31, 2000 included
in this Prospectus have been audited by Singer Lewak Greenbaum & Goldstein LLP,
our independent auditors, as stated in their report appearing herein and have
been so included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
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DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
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iGoHealthy.com's Articles of Incorporation, as amended, provide that it
will indemnify its Officers and Directors to the full extent permitted by
Colorado state law. Specifically, our directors will not be personally liable
for monetary damages for breach of fiduciary duty as directors, except for (i)
any breach of the duty of loyalty to us or our stockholders, (ii) acts or
omissions not in good faith or that involved intentional misconduct or a knowing
violation of law, (iii) dividends or other distributions of corporate assets
that are in contravention of certain statutory or contractual restrictions, (iv)
violations of certain laws, or (v) any transaction from which the director
derives an improper personal benefit.
iGoHealthy.com's Bylaws provide that it will indemnify and hold
harmless each person who was, is or is threatened to be made a party to or is
otherwise involved in any threatened proceedings by reason of the fact that he
or she is or was a Director or Officer of iGoHealthy.com or is or was serving at
the request of iGoHealthy.com as a Director, Officer, partner, trustee,
employee, or agent of another entity, against all losses, claims, damages,
liabilities and expenses actually and reasonably incurred or suffered in
connection with such proceeding.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") 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.
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ORGANIZATION WITHIN LAST FIVE YEARS
--------------------------------------------------------------------------------
See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" beginning on page
44.
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DESCRIPTION OF BUSINESS
--------------------------------------------------------------------------------
iGoHealthy.com, Inc. was originally incorporated as Centurion
Properties Development Corporation in the State of Colorado on June 13, 1996 to
engage in the business of real estate development and management consulting.
However, since inception, the company has remained dormant and to date has no
operations other than organizational tasks including issuing Shares to its
original shareholders, raising initial capital and developing a business plan.
On October 16, 2000, the name of the corporation was changed to iGoHealthy.com,
Inc. in order to pursue the current business plan. We are developing an
Internet-based shopping mall through which consumers will be able to make
purchases from a carefully selected group of quality retailers that offer
health-related products and services most in demand among online shoppers. We
will offer discounts on merchandise purchased through our web site from our
affiliated retailers to those who register as members of our shopping program.
Accumulated discounts, or HealthyBucks, will be redeemable at the option of each
member of our shopping mall for rewards of cash, gift certificates, or
charitable donations. Our web site and related software are being designed to
feature ease of use, privacy and security. In developing our shopping mall, we
intend to capitalize on the extraordinary growth in consumer shopping online
that is currently taking place and is projected to continue over the next
several years.
26
<PAGE>
Growth of the Internet and E-Commerce
The Internet has emerged as a significant interactive medium for
worldwide communication, instant access to information and e-commerce.
International Data Corporation estimates that the number of Internet users
worldwide will increase from more than 212 million at the end of 1999 to more
than 510 million by the end of 2003. The unique characteristics of the Internet
have created a number of advantages for online retailers and have dramatically
affected the manner in which companies market and sell goods and services. In
contrast to traditional brick and mortar retailers, the Internet allows online
retailers to offer a broad and evolving selection of merchandise to consumers
worldwide, while enabling consumers to shop at their convenience without leaving
their homes or offices.
Increasing numbers of consumers are engaging in e-commerce as online
retailers take advantage of technological improvements associated with the
Internet that allow the integration of product information, intelligent product
recommendations and near real-time customer service. This integration enables
online consumers to easily search for product information and make informed
purchase decisions. International Data Corporation estimates that the number of
customers making purchases on the Internet will grow from 48 million in 1999 to
183 million in 2003.
Retailer Advertising and Marketing - Online
The Internet has also become a compelling medium for advertisers.
Online retailers can obtain demographic and behavioral data about customers in
real time, increasing opportunities for targeted marketing and personalized
services that improve the conversion of shoppers to buyers at the point of sale.
The Internet allows advertisers to cost effectively interact with specific
customer groups to determine the effectiveness of targeted advertising
campaigns. These methods generally are not economically viable using traditional
media.
The market for online consumers is highly competitive. As a result,
many online retailers have relied on relatively expensive advertising and
marketing budgets to compete for customers. A substantial portion of a
retailer's advertising and marketing budget may be allotted to offline
advertising through print media and television, or to online tenancy fees paid
to one or more portals. Tenancy fees, which may cost as much as millions of
dollars, are payable by retailers over the life of the tenancy, whether or not
the tenancy actually generates revenue for the retailer. Tenancy relationships
may have certain drawbacks for retailers. The web sites of certain portals, for
example, may feature advertisements for competitors of a tenant-retailer, or
portals may offer competing products directly.
Affiliate relationships, on the other hand, involve a form of marketing
based on revenue sharing between a retailer and other web site owners known as
affiliates. When an affiliate relationship is established, the affiliate's web
site is linked electronically to the web site of a retailer. When prospective
customers visit the affiliate's web site, they may choose to be linked to, and
then may make purchases at, the retailer's web site. The retailer then pays the
affiliate a commission, which ordinarily equals a percentage of the amount of
the purchases made. Such purchases are referred to as sales generated by the
affiliate for the retailer. Affiliate relationships function as a form of both
marketing and advertising because affiliates may post, on their web sites,
information about the retailers and their products in a manner designed to
entice visitors to hyperlink from the affiliate's web site to those of the
retailers for shopping. In contrast to tenancy fees, commissions are payable by
retailers to their affiliates only on revenues generated by the affiliate
relationship.
Because of their low cost relative to tenancy fees and other forms of
advertising, affiliate relationships have become commonplace on the Internet and
are sometimes used in conjunction with other online marketing tools. Amazon.com,
for example, is not only a direct retailer but also has approximately 230,000
affiliate relationships. Certain prospective retail affiliates currently have
non-U.S. customers. If these retailers enter into affiliate relationships with
us, their customers may purchase goods and services through our online shopping
mall.
27
<PAGE>
The Health Product Market
Healthcare is one of the largest sectors of the U.S. economy,
representing approximately 14% of the gross domestic product or over $1.0
trillion in annual spending. Furthermore, the purchase of health products is
typically less sensitive to fluctuations in the economy because people place a
high priority on their health and well being. This sector is expected to become
even more important to the U.S. economy as people live longer and healthier
lives. The U.S. Bureau of Census expects the population over the age of 45 to
increase from 94 million in 1999 to 118 million by 2010. As a result, the market
for health products is expected to grow dramatically. Forrester estimates that
e-commerce transactions over the Internet for health products will grow from
$440 million in 1999 to $11.0 billion in 2003. Health product categories in the
consumer health product market include the following:
* Medicine Chest - over-the-counter medicine products such as
allergy and sinus products, cough and cold remedies, digestive
aids, pain and fever relief products, sleep aids and stimulants
and smoking cessation products;
* Face and Body Care - health and beauty aids such as bath and skin
care products, eye and ear care, feminine hygiene, foot care, hair
care, oral care, sex and contraception products, shaving products
and deodorants;
* Vision Care - contact lenses, contact lens products and
prescription and non-prescription eyewear;
* Nutrition and Wellness - supplements used to promote health and
well being such as vitamins, minerals, herbs, homeopathic remedies
and wellness teas;
* Baby - consumable and durable baby products such as diapers,
wipes, infant formulas, strollers, car seats and nursing supplies;
* Healthy Environment - products used primarily in the home to
improve air quality, comfort or the overall environment such as
products for allergy sufferers, air purifiers and humidifiers,
water filters and ergonomic supplies and furniture;
* Home Healthcare - typically special-use or hard-to-find products
designed for use in the home by people with particular assisted
living and healthcare needs such as crutches, wheelchairs, shower
rails, convalescent bathroom aids, walkers, canes, electric
scooters and ergonomic supports;
* Cosmetics - products that promote personal beauty such as makeup,
fragrances and other high-end beauty products;
* Diet and Fitness - weight loss and weight management products,
sports nutrition products, personal fitness equipment and
accessories of all kinds, as well as products people consume to
promote their overall health;
* Medical Supplies - medical diagnostic kits such as home pregnancy
tests and HIV tests, and medical supplies such as glucose strips
for diabetics; and
* Pharmacy - prescription medications for both chronic and acute
conditions.
28
<PAGE>
Internet Retail Channels
Retailers
In order to meet this growing demand, both the number of retailers and
the variety of goods and services they offer have grown substantially. The
primary types of online retailers may be referred to as direct retailers. Direct
retailers are companies that sell merchandise from their own web sites directly
to consumers. These retailers include companies with established brand names,
such as MotherNature.com and VitaminShoppe.com, and new entrants, whose brand
names have yet to be established. Direct retailers include those that sell
merchandise or services only on the Internet, such as More.com, as well as
retailers that sell online and offline, such as CVS.com (CVS Pharmacy).
Aggregators
Aggregators, such as iGoHealthy.com, do not sell merchandise directly
to consumers. Instead, aggregators provide consumers access to a network of
direct retailers. Aggregators offer access to their network through their own
web sites. These web sites are linked electronically to the web sites of the
direct retailers in an aggregator's network. Aggregators do not carry inventory
or take orders from their members. Instead, their members place orders with the
direct retailers participating in the network, and it is the participating
retailers that carry inventory, process purchase orders and ship goods to the
aggregators' members.
The primary types of aggregators include:
1) Internet Malls - which offer access to direct retailers, but may
lack a recognized brand name of their own. Internet malls include
ShopNow.com and Shops.com, which is maintained by Mall.com, Inc.;
2) Portals - which are Internet companies that typically have
powerful brand names and exceptionally large numbers of online
customers. Portals include such well-known web sites as America
On-Line, Yahoo! and Microsoft Network. Because of the sheer size
of each portal's user base, portals are typically able to command
multi-year tenancy fees from retailers. Tenancy fees are fees
payable by online retailers to owners of other web sites, such as
portals and Internet malls, that electronically link their web
sites to that of the retailer. These fees are payable whether or
not any sales are generated as a result of the linking of the web
sites;
3) Affiliate Malls - such as iGoHealthy.com, which are Internet malls
that set up revenue sharing arrangements with each direct retailer
participating in their online shopping malls. Some affiliate malls
offer rewards to consumers for purchases made or for completing
surveys. Affiliate malls, like Internet malls, may lack recognized
brand names or offer a limited variety of merchandise. Examples of
affiliate malls are MyPoints.com and ClickRewards; and
4) Charity Malls - which are affiliate malls that pass on a portion
of their commission revenues to charities.
The Online Shopping Mall Market Opportunity - Health Products
Health products are ideally suited for e-commerce, and consumers can
enjoy numerous benefits by purchasing these products over the Internet. Those
particular attributes of health products and the health product market that make
the Internet an ideal mechanism for their purchase include:
* Wide Variety of Products for a Wide Variety of Health Needs. Due
to shelf space limitations, traditional health product retailers
typically carry only a small fraction of these products. In
contrast, online retailers do not face these same space
limitations. The addition of new products to an online store and
to the online retailer's distribution network is much less costly
than it is for traditional brick and mortar retailers. As a
result, consumers are more likely to find the products they need
in stock at an online store.
29
<PAGE>
* Recurring Product Purchases. Many health products are consumable
necessities that require frequent repurchase by customers. Online
health product retailers can use technology to track a customer's
frequent and recurring purchases of consumable items and can
customize product offerings to support the repeat purchasing
habits of customers.
* Rapidly Changing Product Requirements. Health product needs of
consumers may vary for many reasons and can fluctuate by season
or geography. Health product manufacturers continuously seek new
ways to gain an advantage over their competitors to meet these
needs. Traditional brick and mortar health product retailers are
typically less able to change the format of their stores to meet
changes in supply and demand, and due to geographic limitations
they cannot easily span large geographic areas. The limited space
available in a traditional brick and mortar retail store
constrains merchandising flexibility. In addition, traditional
brick and mortar retailers must make significant investments in
inventory that may become outdated. Online health product
retailers can easily overcome these limitations by providing a
single location where customers can purchase all their health
products and changing their web sites to meet the evolving
demands of customers and manufacturers.
* Information Intensive Nature of Health Products. Health products
generally are information intensive, as the government and
consumers require a great deal of information regarding each
product's use, potential side effects and ingredients.
Historically, healthcare information has been tightly controlled
or difficult to access or locate. More recently, consumers and
healthcare professionals have begun to openly debate the
attributes and benefits of different health products, placing
more information demands on health product retailers. Traditional
brick and mortar retailers face challenges in hiring, training
and maintaining knowledgeable sales staff. The Internet has
enabled consumers to gain more control over their own care by
providing easier access to health product information and
improving communication between people with similar health issues
and interests. Online health product retailers have the ability
to provide consumers with a trusted source for healthcare
information and can personalize this information to each
customer's unique interests. In addition, online health product
retailers' sales staffs can more easily communicate with a larger
number of customers using the Internet.
* Consumer Privacy Requirements. Many health product purchases can
make a customer uncomfortable because they can reveal very
personal information about the purchaser. Customers may be
unwilling to ask store employees questions regarding these
products to avoid embarrassment. As a result, the customer may
purchase the incorrect product or avoid purchasing the product
altogether. The Internet allows web users to shop privately for
personal products and ask questions about these products without
embarrassment.
While some online retailers offer health products, we believe that none
has fully met the broad needs of consumers. In particular, we believe that
consumers are seeking a centralized, trusted online location where they can find
a variety of quality health product retailers, including those which sell hard
to find or specialized health products. We believe consumers want a health
"super-mall" that provides a shopping environment that is electronically
personalized to their unique health product needs and that encourages them to
make repeated visits and enables them to quickly make recurring health product
purchases.
BUSINESS STRATEGY
iGoHealthy.com's goal is to become a leading online shopping mall
featuring health-related goods and services of quality retailers. We will
continually evaluate other business opportunities that may be available to us,
whether in the form of assets acquisitions, business combinations or
diversifying into new lines of business. We intend to achieve our goal by:
1) Offering Merchandise and Services of Leading Health-Related
Retailers. We intend to offer the goods and services of a leading
retailer in each category of health-related products most in
demand by online shoppers. By leading retailers, we mean
retailers with well-respected brand names. Initially, such
retailers will participate in our online mall through affiliate
relationships. Based on preliminary discussions with many
retailers, we believe that we can secure sufficient participation
by them to effect our business strategy.
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2) Offering Health and Fitness Products Most In Demand. We intend to
affiliate with retailers offering the types of health-related
merchandise which are most commonly purchased online and known as
core products. Currently, core products include vitamin and
mineral supplements, over-the-counter medicine products, health
and beauty aids, cosmetics, and diet and fitness supplies.
3) Breadth and Depth in Product Offerings. In addition to core
products, we intend to affiliate with retailers offering as many
types of products and as great a variety within each product
category as possible.
4) Offering Substantial Rewards Program to Members. We believe that
in order to be successful, our online mall must offer substantial
benefits to the online consumer as compared to the benefits of
buying online from other aggregators or direct retailers. In order
to achieve this, we intend to offer the following benefits:
a. Rewards/Discounts. Under our rewards program, we will offer
discounts directly to consumers on most items available
through our shopping mall. Initially, we expect to offer
discounts between 3% and 15% on most purchases made through us
from affiliated retailers, depending upon the commissions
offered to us by our affiliated retailers. With respect to
retailers that pay comparatively low commission rates but sell
core products, we may pass along to the consumer a discount
equal to the full amount of the commission we receive. We
believe that our discount percentage will be competitive.
b. Member Accounts & Redemption Options. Under our rewards
program, each member will have a iGoHealthy.com account, and
discounts earned by that member will be credited to the
member's account in the form of HealthyBucks. Members will
have the option of redeeming their HealthyBucks in cash, gift
certificates, or charitable donations.
5) Continually Investing in Web Site Infrastructure. We intend to
invest in our web site infrastructure on a continuing basis as
needed for upgrades, incorporating new features, and keeping pace
with developments in Internet technology.
6) Providing Functional Web Site Navigation. We strive to improve our
customers' shopping experience by designing our web site
navigation to guide the customers to easily and quickly find the
products or services among the broad selection of retailers in our
shopping mall. We plan to have the following inter-related
navigation tools and information features on our web site:
a. Shopping Lists - a tool that enables customers to retrieve a
list, or multiple lists, of their previous purchases made at
respective retailers. Customers can personalize their shopping
lists, and respective retailers, by editing and adding
products, and they can re-visit specific retailers, re-order
previously purchased items, or add a particular item to their
shopping cart in a single click.
b. Shortcuts - a list of the most popular health product
categories that allows the customer to go immediately to the
specific product page at the respective retailer's web site.
c. Search - a shopping friendly tool, with links to related
products, topics and retailers in our shopping mall, as
opposed to a research tool.
d. My Wallet - the personal shopping information of individual
customers is securely stored in My Wallet. The information
required to checkout at most retailers is an e-mail address, a
password, a billing and shipping address and a valid credit
card number. All of this information is maintained in a secure
format and remains available for a customer's future access.
Customers are given the option to indicate the name by which
they would like to be greeted and their desire to receive
occasional promotional information and health newsletters.
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e. The Resource Corner - customers can use our Resource Corner to
access information that enables them to make a more informed
purchase decision. The Resource Corner allows members to
navigate the site from a conditions or health concerns
perspective, which is usually unavailable in traditional brick
and mortar stores. The Resource Corner contains:
* Health Kiosk - centers that organize products and
information together around particular conditions or
demographics; and
* Buying Advisor - links to category-based articles that
offer brand-agnostic, in-depth consumer information
regarding product ingredients, efficacy and use to support
purchase decisions.
f. Content Services - we plan to offer a variety of content
services free to anyone who visits our online mall. This
content includes alphabetical listings of various medical
conditions, herbs and vitamins with links to related products
offered by participating retailers on our web site. We will
also offer a daily newsletter which contains information on
special offerings at any of our retailers.
7) Adopting Features that Attract and Retain Customers. In order to
promote shopping through iGoHealthy.com, we intend to incorporate
certain features in our online shopping mall in addition to
offering our member rewards program, discounts, retailer
promotions, and interesting content and resources. In order to do
so, we have included the following requirements in the design
specifications for our web site:
a. Ease of Use. The web site should be easy for consumers to
use and understand. We intend to affiliate only with those
retailers whose web sites are also easy to use.
b. Quick Access Time. Given that one of the main reasons
consumers shop online is to save time, all information on
our web site should be quickly accessible.
c. Frequent Updates. Our web site is to be updated frequently
to provide timely information concerning members' accounts,
additional products and services offered, newly added
retailers, and special rewards.
d. Security and Privacy. Information provided by consumers to
iGoHealthy.com should have a level of security from
outsiders which meets industry standards. We will not make
information provided to us by consumers available to third
parties without the consumers' prior authorization.
8) Adopting Features that Attract and Retain Quality Retailers.
After careful consideration of the needs of online retailers, we
plan to include the following features in our online mall:
a. Exclusivity. We will grant each participating retailer the
opportunity to be promoted on an exclusive basis by us at
our web site in the affiliate's main product category.
Retailers offering competitive products will not be
permitted to sell through iGoHealthy.com or to purchase
advertising space at our web site.
b. Size of Customer Base. By using the member rewards program,
HealthyBucks, and providing a quality online shopping
experience to consumers, we believe we will develop a
substantial customer base which will benefit participating
retailers.
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c. Discounts Offered by Us, Not Retailers. Retailers will not
have to offer or keep track of rebates or discounts, as all
rewards will be offered and managed by iGoHealthy.com.
Because we will keep track of discounts earned and provide
all rewards, retailers will not appear to be undercutting
themselves by participating in our online mall.
d. Comparatively Inexpensive Advertising. Tenancy fees, which
are charged by portals and certain other web site owners,
are payable by retailers regardless of the amount of
business generated by the tenancy. In order to participate
in our online mall, on the other hand, retailers need only
pay commissions on sales we generate for them.
The features of our business strategy described above will be
implemented during the first stage of our operations. Once our customer base and
revenues are substantial, we intend to enhance our online shopping program by
taking the following steps:
1) Advertising Online and Offline. We intend to advertise online and
through other media in order to build our brand name and further
increase our membership and revenues.
2) Providing Enhanced Discounts. As our customer base and revenues grow,
we will consider offering enhanced discounts and rewards.
3) Forming Strategic Alliances. We intend to enter into strategic
alliances with providers of online services beneficial to our
customers.
4) Sponsoring Special Promotions. We intend to sponsor special promotions
for both members and non-members.
It is unlikely that we will be able to implement these potential
enhancements to our online shopping program unless we secure substantial funds
subsequent to this Offering.
Community
We plan to build an active community dedicated to educating consumers
about healthy living and natural products. We will develop interactive tools for
the site in order to provide a fulfilling shopping experience and to build a
sense of community among our members. We will provide a news clipping service
and several forums, including forums on herbs, weight control, natural pet care
and women's health which enable consumers to ask and respond to each other's
questions. Future plans include the introduction of additional forums, medical
advice sessions hosted by members of a health advisory board, health quizzes and
customer testimonials.
Membership Accounts - Registration
When a prospective customer visits our web site, www.iGoHealthy.com,
the customer should find a clear, user friendly display identifying the
participating retailers along with instructions for registering as one of our
members. At the time of registration, a user name and password will be
established for each member and an account will be opened in the member's name.
To be eligible to receive rewards, each member will be required to input his
user name and password when visiting our web site. This information will make it
possible to track each member's purchases, discounts accrued and rewards earned
and claimed. After inputting his or her user name and password, a member will be
able to make purchases from participating retailers, check his account, select
rewards, review his or her detailed account history, and view all other
information available at our web site.
We intend to make available to members an array of additional
information at our web site. This information will include: a description of the
rules and regulations of our member rewards program; member account history;
instructions for redeeming rewards; any other promotional programs; general
information about iGoHealthy.com; and descriptions of our participating
retailers.
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Shopping Through iGoHealthy.com
Once a consumer registers as a member of iGoHealthy.com, we will keep
records of all transactions between the member and our participating retailers.
Each time a member makes a purchase through iGoHealthy.com's web site, the
following information will be entered in the member's account:
* identity of purchasing member;
* date of purchase;
* dollar amount of purchase;
* retailer from whom purchased; and
* order/tracking number
Member accounts will also show the dollar amount of all discounts
accrued. This dollar amount will be reflected in the member's account as
HealthyBucks. The discount on any given purchase will equal a percentage of the
purchase price, exclusive of taxes and shipping and handling charges. If, for
example, a member were to purchase an item for $100, and the applicable discount
were 5%, then the member's account would reflect $5.00 in HealthyBucks.
A member will be entitled to redeem HealthyBucks after the member's
account reaches the minimum amount of $10 in HealthyBucks, which such minimum
amount will be subject to adjustment, upward or downward, by us from time to
time at our discretion. Each member will have the option to continue accruing
HealthyBucks before redeeming them for rewards. HealthyBucks will be redeemable
by each member, for any of the following rewards, at the member's option: cash;
gift certificates; or charitable donations to be made in the member's name.
HealthyBucks will be redeemable at any time after the member's accrued
HealthyBucks have equaled or exceeded the specified minimum amount for a period
of at least 45 consecutive days. Any member who chooses to use HealthyBucks to
make a charitable donation will be able to select from a list of charities
participating in our rewards program. We are not now, and will not be,
affiliated with any of these charities. In contrast to charitable donations made
by certain charity malls, each charitable donation made under our rewards
program will constitute a charitable donation made by the member, rather than
iGoHealthy.com. We will arrange for members to receive documentation required
for income tax purposes in electronic form.
Based on our research, we believe that our rewards program, including
our discount percentage, is competitive with the rewards available from other
online shopping malls. It is our intention to monitor the discounts offered by
our competitors on a continuing basis so that we can, if feasible, keep our
discount rate at a competitive level. We intend to enhance our rewards program
as our customer base and revenues grow.
Tracking Member Information
To ensure that all members receive the proper discounts on a timely
basis and that we receive the correct amount of commissions due to us from our
participating retailers, we will need to receive certain information as to each
purchase made by a member through iGoHealthy.com. In some cases, iGoHealthy.com
will obtain this information directly from some of the participating retailers.
Instead of keeping track of such information themselves, other online retailers
contract with third party service providers to track and report such
information. In either case, the information may not be available to us for up
to five days after a purchase is completed. A purchase is completed when the
member's credit card is charged or some other form of payment is accepted by the
retailer or the retailer confirms shipment of the merchandise. Because the speed
with which we will be able to credit our members with discounts will depend, in
part, on the payment policies of our affiliated retailers, we plan to display
the payment policies of our affiliated retailers on our web site.
In order for us to receive all required information concerning member
purchases on a daily basis, the software developed for our web site must be able
to communicate with the web sites of our participating retailers and their
tracking services. We do not expect to incur any costs of communicating online
with retailers or tracking services other than the development costs of the
related web site software.
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With respect to the exchange by a member of merchandise purchased
through our online shopping mall, we expect to pass along to the member the same
exchange policy as the relevant affiliated retailer then has in effect with
respect to the merchandise in question. Accordingly, we do not expect exchanges
of merchandise to have any effect on our reporting system, the commissions paid
to us from our affiliated retailers, or the HealthyBucks earned by our members
in connection with the relevant purchases. With respect to a refund requested by
a member making a purchase through our web site, the member's account will be
debited by an amount of HealthyBucks equal to the HealthyBucks earned on the
initial purchase for which the refund is requested. Redemption of HealthyBucks
for cash, gift certificates and charitable donations will not be effected until
the relevant member's accrued HealthyBucks have exceeded the requisite minimum
amount for a period of at least 45 consecutive days.
SOURCES OF REVENUE
Commissions
During the first stage of our operations, our revenues will be derived
primarily from commissions paid by participating retailers. Commissions will be
payable to us only if a member links from our web site to that of a
participating retailer and completes a purchase while at the retailer's web
site. If a member makes a purchase after going to a participating retailer's web
site directly, without having been linked to that web site from our web site, we
will not be entitled to receive a commission.
Not all online retailers have the same commission structure. Some
retailers pay affiliates a single commission rate on all sales generated by the
affiliate, regardless of the total amount of such sales. Other online retailers
pay commissions on a sliding scale, with the rates increasing in accordance with
the dollar amount of sales generated by the affiliate relationship.
MotherNature.com, for example, currently pays commissions ranging from 12%, for
single sales generated by an affiliate during any month, to 20%, for monthly
sales generated in excess of $25,000. With the different commission structures
in mind, we estimate that average commissions payable to iGoHealthy.com by its
affiliated retailers will initially be 7.5% of the amount of member purchases,
excluding sales tax and shipping and handling charges. Our estimates are based
on our review of the commission rates currently available from online retailers,
the exclusive opportunity we will provide to each of our affiliated retailers to
be promoted by us in its main product category, and the average number and
average dollar amount of purchases that we expect each member to make from
affiliated retailers. Our income derived from commissions will be net of the
"discount" to be credited by us to members on most purchases.
Future Sources of Revenue
1) Tenancy/Placement Fees. Tenancy or placement fees are fees payable
by online retailers to the owners of other web sites, such as
Internet shopping malls, that electronically link their web sites
to the web site of the retailer. Whereas commissions are payable
by online retailers only on sales generated by an affiliate,
tenancy fees are payable whether or not any sales are generated as
a result of the linking of the web sites. Tenancy fees are less
common than affiliate commissions. Only the web sites that have
the greatest amount of Internet traffic are able to command
substantial tenancy fees. iGoHealthy.com will not be able to
charge tenancy fees unless and until we establish a large and
loyal membership base. We cannot assure you that we can accomplish
this quickly, if at all, following commencement of our operations.
2) Advertising Revenue. Currently, the most prevalent form of
advertising on the Internet is the use of banner ads. Banner ads
take the form of a small window dedicated to the advertiser at the
web site of another party. At the window, a message or other
advertisement is displayed for visitors to the web site. In
exchange for the right to place an advertisement at the dedicated
window, the advertiser pays a fee to the web site owner. Fees
payable for banner ads are based either on the number of
impressions, that is, the number of visitors to the web site that
view the ad, or the number of visitors that click on the banner
ad, thus connecting to another web site, typically a web site of
the advertiser. We do not expect to collect revenue for banner ads
during the first stage of our operations, as we will not have a
large enough customer base. We may provide free banner ads to
online retailers that enter into affiliate relationships with us
upon commencement of our operations, as a means of rewarding
retailers that participate in our Internet shopping mall from the
outset.
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3) Sales of Compiled Information. We may in the future use for our
own purposes or sell to third parties compiled information
including in many instances personal information obtained from our
members upon their authorization. If, however, a large number of
our members instruct us that we cannot transfer or sell their
information to third parties, our ability to generate revenues
from such sales will be significantly curtailed. Further, personal
information of users is restricted in many domestic and foreign
jurisdictions, including the European Union, with which the United
States government is currently negotiating a data privacy accord
to permit information sharing across borders.
Prototype Web Site Software and Development
On September 5, 2000, iGoHealthy.com, Inc. entered into a Contract for
Services Agreement with Stephen Davis ("Webmaster") for the design and
development of a prototype web site (the "Beta Site Agreement") to be located at
Internet URL www.iGoHealthy.com. This Agreement provides for Webmaster to design
a prototype web site (the "Beta Site"), in order to demonstrate the
"look-and-feel" of the planned commercial web site. Webmaster has extensive
experience providing development and consulting services for computer systems
and related software. He has experience in developing web sites using graphics
and database technologies for businesses in a variety of industries, including
telecommunications, biotechnology, financial services and manufacturing.
The Beta Site Agreement requires Webmaster to develop a web site that
will link iGoHealthy.com's web site to the web sites of our affiliated
retailers, be easy to use, and quickly load on any commercially available
Internet browser. At this time, the Agreement requires Webmaster to deliver a
simulation of the HealthyBucks member rewards program.
We will be the sole owner of the Beta Site design and all related
graphic art, HTML code, and any other software developed for us by Webmaster. We
have agreed to compensate Webmaster for the design and development of our Beta
Site in a combination of cash and securities. The Beta Site Agreement requires
that the Beta Site design and related software be completed and operational no
later than six months from the date of the Agreement (November 30, 2000).
Commercial Web Site Software and Development
On November 30, 2000 we entered into a Web Site Development and
Services Agreement with Fluidesign (the "Fluidesign Agreement"). This agreement
provides for Fluidesign to design our commercial web site and related software,
including system architecture. Fluidesign is a company that specializes in
providing development and consulting services for computer systems and related
software. Fluidesign 's professional staff has substantial experience in
developing computer systems using database technologies for businesses in a
variety of industries, including telecommunications, biotechnology, financial
services and manufacturing. Fluidesign has its principal offices located in
Santa Monica, California. Except pursuant to the relationship described in this
Prospectus, we are not in any manner affiliated with Fluidesign.
The Fluidesign Agreement requires Fluidesign to develop a web site that
will link iGoHealthy.com's web site to the web sites of our affiliated
retailers, be easy for members to use, and quickly load on any commercially
available Internet browser. Under the Fluidesign Agreement, "easy to use"
encompasses ease in:
* linking to iGoHealthy.com's affiliated retailers;
* accessing information about each of our affiliated retailers;
* accessing information summarizing our rewards program; and
* accessing member account information, including purchasing history and
redemption options.
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The Fluidesign Agreement also requires Fluidesign to deliver a software
system that credits HealthyBucks, or discounts, to each member's account, after
that member makes a purchase from any of our affiliated retailers. For this to
be accomplished, our software design is required to have the capacity to
incorporate detailed information provided by our affiliated retailers or their
tracking services.
We will be the sole owner of the web site design and all related
software developed for us by Fluidesign. The Fluidesign Agreement requires
Fluidesign to commence work on the web site development no later that 60 days
from the date the Fluidesign Agreement is executed, November 30, 2000, and
further requires that the web site design and related software be completed and
operational no later than March 31, 2001.
MARKETING
iGoHealthy.com's Chief Executive Officer and Chief Operating Officer
currently handle all of our marketing activities. During the initial phase of
our operations, we will select participating retailers based on a number of
criteria. The most important of these criteria are the value of the retailer's
brand name, the quality and price of each retailer's merchandise, the commission
structure offered by each retailer to prospective affiliates, and the quality of
the retailer's web site and policies concerning customer service, merchandise
returns and privacy and security.
We intend to attract online retailers on the basis of free advertising,
the opportunity to be promoted by us exclusively in the retailer's main product
category, and the fact that we will offer and manage all discounts and rewards
to consumers. At the same time, we will market our online shopping program to
prospective members through the quality of our web site, the quality of our
rewards program, and special promotions.
Once we have a substantial number of members generating a significant
amount of revenues to participating retailers, we expect to retain our retail
affiliates and attract new affiliates based on the size of our membership and
the revenues our members generate. We expect to retain existing members and
attract new ones based on ease and security of use of our online services and
rewards program, special promotions, and the expanded number of products
available for purchase from quality retailers.
COMPETITION
Although relatively new and rapidly evolving, retailing through the
Internet is intensely competitive. Competition for members and purchasers is not
only intense, but expected to increase significantly in the future. At the same
time, barriers to entry are low, if not insubstantial. We will compete not only
with direct retailers, but with all types of aggregators as well.
We believe that the principal competitive factors for companies seeking
to create online shopping malls utilizing affiliate relationships are:
* a large membership base;
* web site functionality;
* brand recognition for the mall and its affiliated retailers;
* member loyalty; and
* open access for visitors.
We will compete for customers and members not only with other online
shopping malls, but also with portals and, to some extent, direct retailers. We
may also face competition in the future from Web directories, search engines,
content sites, commercial online service providers, sites maintained by Internet
service providers, traditional media companies and other entities that attempt
to or establish online shopping malls by developing their own communities or
acquiring malls of a competitor.
In contrast to iGoHealthy.com, our competitors have longer operating
histories in the Internet marketplace, greater name recognition, larger customer
bases and significantly greater financial, technical and marketing resources
than we do. Our competitors are able to undertake more extensive marketing
campaigns for their brands and services and make more attractive offers to
potential employees, affiliated retailers, and third-party content providers. We
cannot assure you that we will be able to compete successfully against our
competitors either upon commencement of our operations or thereafter or that our
competition will not have a material adverse effect on our business prospects,
results of operations and financial condition.
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Government Regulation
Regulation of the Internet
We are not currently subject to direct regulation by any government
agency, other than regulations applicable to businesses generally or directly
applicable to electronic commerce. Although there are few laws and regulations
at the present time applicable to commerce on the Internet, as the Internet
becomes increasingly popular, it is possible that a number of laws and
regulations may be adopted with respect to the Internet. These laws and
regulations, if adopted, may cover issues such as user privacy, freedom of
expression, pricing, content and quality of products and services, taxation,
advertising, intellectual property rights and security of information. Continued
growth of electronic commerce may also prompt calls for more stringent consumer
protection laws. Several states have proposed legislation to limit the uses of
personal user information gathered online or require online services to
establish privacy policies. While the Federal Trade Commission has also
initiated action against at least one online service regarding the manner in
which personal information is collected from users and provided to third
parties, we have adopted a policy against providing personal information
regarding our members to third parties without members' prior authorization. The
adoption of such consumer protection laws could create uncertainty in Internet
usage and reduce the use of our online shopping program.
A number of legislative proposals have been made at the federal, state
and local level, and by foreign governments, that would impose additional taxes
on the sale of goods and services over the Internet, and certain states have
taken measures to tax Internet related activities. Although Congress recently
placed a three-year moratorium on new state and local taxes on Internet access
or on discriminatory taxes on electronic commerce, existing state or local laws
were expressly excepted from this moratorium. Further, once this moratorium is
lifted, some type of federal and/or state taxes may be imposed upon Internet
commerce. Such legislation or other attempts at regulating commerce over the
Internet may substantially impair the growth of commerce on the Internet and as
a result, adversely affect our opportunity to derive financial benefit from such
activities.
The feature of our rewards program that allows members to apply
discounts accrued in their accounts to charitable donations may subject us to
the laws and regulations of several states governing the solicitation of
charitable contributions. We do not believe that compliance with such laws and
regulations will have a material, adverse effect upon our business or financial
results.
Vitamins, Minerals and Supplements
The manufacturing, processing, formulating, packaging, labeling and
advertising of the products that our affiliates distribute are or may be subject
to regulation by one or more U. S. federal agencies, including the Food and Drug
Administration, the Federal Trade Commission, the United States Department of
Agriculture and the Environmental Protection Agency. These activities also may
be regulated by various agencies of the states and counties in which consumers
reside.
The Food and Drug Administration, in particular, regulates the
formulation, manufacture, labeling and distribution of foods, including dietary
supplements, cosmetics and over-the-counter or homeopathic drugs. Under the
Federal Food, Drug, and Cosmetic Act, the Food and Drug Administration may
undertake enforcement actions against companies marketing unapproved drugs, or
"adulterated" or "misbranded" products. The remedies available to the Food and
Drug Administration include: criminal prosecution; an injunction to stop the
sale of a company's products; seizure of products; adverse publicity; and
"voluntary" recalls and labeling changes.
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Food and Drug Administration regulations require that certain
informational labeling be presented in a prescribed manner on all foods, drugs,
dietary supplements and cosmetics. Specifically, the Food, Drug, and Cosmetic
Act requires that food, including dietary supplements, drugs and cosmetics, not
be "misbranded." A product may be deemed an unapproved drug and "misbranded" if
it bears improper claims or improper labeling. The Food and Drug Administration
has indicated that promotional statements made about dietary supplements on a
company's web site may constitute "labeling" for purposes of compliance with the
provisions of the Food, Drug, and Cosmetic Act. A manufacturer or distributor of
dietary supplements must notify the Food and Drug Administration when it markets
a product with labeling claims that the product has an effect on the structure
or function of the body. Noncompliance with the Food, Drug, and Cosmetic Act,
and recently enacted amendments to that Act discussed below, could result in
enforcement action by the Food and Drug Administration.
The Food, Drug, and Cosmetic Act has been amended several times with
respect to dietary supplements, most recently by the Nutrition Labeling and
Education Act of 1990 and the Dietary Supplement Health and Education Act of
1994. The Dietary Supplement Health and Education Act created a new statutory
framework governing the definition, regulation and labeling of dietary
supplements. With respect to definition, the Dietary Supplement Health and
Education Act created a new class of dietary supplements, consisting of
vitamins, minerals, herbs, amino acids and other dietary substances for human
use to supplement the diet, as well as concentrates, metabolites, extracts or
combinations of such dietary ingredients. Generally, under the Dietary
Supplement Health and Education Act, dietary ingredients that were on the market
before October 15, 1994 may be sold without Food and Drug Administration pre
approval and without notifying the Food and Drug Administration. In contrast, a
new dietary ingredient, i.e., one not on the market before October 15, 1994,
requires proof that it has been used as an article of food without being
chemically altered or evidence of a history of use or other evidence of safety
establishing that it is reasonably expected to be safe. Retailers, in addition
to dietary supplement manufacturers, are responsible for ensuring that the
products they market for sale comply with these regulations. Noncompliance could
result in enforcement action by the Food and Drug Administration, an injunction
prohibiting the sale of products deemed to be noncompliant, the seizure of such
products and criminal prosecution.
The Food and Drug Administration has indicated that claims or
statements made on a company's web site about dietary supplements may constitute
"labeling" and thus be subject to regulation by the Food and Drug
Administration. With respect to labeling, the Dietary Supplement Health and
Education Act amends, for dietary supplements, the Nutrition Labeling and
Education Act by providing that "statements of nutritional support," also
referred to as "structure/function claims," may be used in dietary supplement
labeling without Food and Drug Administration pre-approval, provided certain
requirements are met. These statements may describe how particular dietary
ingredients affect the structure or function of the body, or the mechanism of
action by which a dietary ingredient may affect body structure or function, but
may not state a drug claim, i.e., a claim that a dietary supplement will
diagnose, mitigate, treat, cure or prevent a disease. A company making a
"statement of nutritional support" must possess substantiating evidence for the
statement, disclose on the label that the Food and Drug Administration has not
reviewed the statement and that the product is not intended for use for a
disease and notify the Food and Drug Administration of the statement within 30
days after its initial use. It is possible that the statements presented in
connection with product descriptions on participating retailers' web sites may
be determined by the Food and Drug Administration to be drug claims rather than
acceptable statements of nutritional support. In addition, some of our
participating retailers may incorporate objectionable statements directly in
their product names or on their products' labels, or otherwise fail to comply
with applicable manufacturing, labeling and registration requirements for
over-the-counter or homeopathic drugs or dietary supplements. As a result, the
participating retailer may have to remove objectionable statements or products
from its site or modify these statements, or product names or labels, in order
to comply with Food and Drug Administration regulations. Such changes could
interfere with our marketing efforts and could cause a material adverse effect
to our financial results.
In addition, the Dietary Supplement Health and Education Act allows the
dissemination of "third party literature" in connection with the sale of dietary
supplements to consumers at retail if the publication meets statutory
requirements. Under the Dietary Supplement Health and Education Act, "third
party literature" may be distributed if, among other things, it is not false or
misleading, no particular manufacturer or brand of dietary supplement is
promoted, a balanced view of available scientific information on the subject
matter is presented and there is physical separation from dietary supplements in
stores. The extent to which this provision may be used by online retailers is
not yet clear, and we cannot provide an assurance to you that all pieces of
"third party literature" that may be disseminated in connection with the
products sold by our participating retailers will be determined to be lawful by
the Food and Drug Administration. Any such failure could render the involved
product an unapproved drug or a "misbranded" product, potentially subjecting
them to enforcement action by the Food and Drug Administration, and could
require the removal of the noncompliant literature from the participating
retailer's web site or the modification of their selling methods, thus
interfering with our continued marketing of that retailer and causing a material
adverse effect to our financial results. Given the fact that the Dietary
Supplement Health and Education Act was enacted only five years ago, the Food
and Drug Administration's regulatory policy and enforcement positions on certain
aspects of the new law are still evolving. Moreover, ongoing and future
litigation between dietary supplement companies and the Food and Drug
Administration will likely further refine the legal interpretations of the
Dietary Supplement Health and Education Act. As a result, the regulatory status
of certain types of dietary supplement products, as well as the nature and
extent of permissible claims will remain unclear for the foreseeable future. Two
areas in particular that pose potential regulatory risk are the limits on claims
implying some benefit or relationship with a disease or related condition and
the application of the physical separation requirement for "third party
literature" as applied to Internet sales.
In addition to the regulatory scheme under the Food, Drug and Cosmetic
Act, the advertising and promotion of dietary supplements, foods,
over-the-counter drugs and cosmetics is subject to scrutiny by the Federal Trade
Commission. The Federal Trade Commission Act prohibits "unfair or deceptive"
advertising or marketing practices, and the Federal Trade Commission has pursued
numerous food and dietary supplement manufacturers and retailers for deceptive
advertising or failure to substantiate promotional claims, including, in many
instances, claims made via the Internet. The Federal Trade Commission has the
power to seek administrative or judicial relief prohibiting a wide variety of
claims, to enjoin future advertising, to seek redress or restitution payments
and to seek a consent order and seek monetary penalties for the violation of a
consent order. In general, existing laws and regulations apply fully to
transactions and other activity on the Internet. The Federal Trade Commission is
in the process of reviewing its policies regarding the applicability of its
rules and its consumer protection guides to the Internet and other electronic
media. The Federal Trade Commission has already undertaken a new monitoring and
enforcement initiative, "Operation Cure-All," targeting allegedly false health
claims for products and treatments offered for sale on the Internet. Many states
impose their own labeling or safety requirements that differ from or add to
existing federal requirements.
39
<PAGE>
We cannot predict the nature of any future U.S. laws, regulations,
interpretations or applications, nor can we determine what effect additional
governmental regulations or administrative orders, when and if promulgated,
would have on our business in the future. Although the regulation of dietary
supplements is less restrictive than that of drugs and food additives, we can
make no assurance that the current statutory scheme and regulations applicable
to dietary supplements will remain less restrictive. Further, we can make no
assurance that, under existing laws and regulations, or if more stringent
statutes are enacted, regulations are promulgated or enforcement policies are
adopted, our participating retailers are or will be in compliance with these
existing or new statutes, regulations or enforcement policies. Any laws,
regulations, enforcement policies, interpretations or applications applicable to
our participating retailers' business could require the reformulation of certain
products to meet new standards, the recall or discontinuance of certain products
not capable of reformulation, additional record keeping, expanded documentation
of the properties of certain products, expanded or different labeling or
scientific substantiation, all of which could have a material adverse effect on
our financial results.
Employees
We are a development stage company and currently have no employees.
Management plans to use independent consultants and attorneys, rather than
in-house counsel, to prepare the reports necessary to keep the Company current
in its Exchange Act reporting. Management further plans to use independent
accountants, rather than hire an in-house accountant, to prepare its financial
statements for inclusion in its Exchange Act reports, as well as for dealing
with all accounting matters. Management's criteria for choosing such independent
consultants, attorneys, and accountants will include the following guidelines:
they should have at least five years of experience in consulting, law practice,
or accounting, respectively, and should have previous experience preparing
reports and financial statements for small public companies. Management
currently anticipates that such outside advisors will be hired for approximately
one year, though extensions may be necessary if the Company's operations cannot
justify hiring full-time, in-house staff for these functions. We may hire
marketing employees based on the projected size of the market and expect to base
the compensation on what is necessary to hire and retain qualified sales
employees.
40
<PAGE>
--------------------------------------------------------------------------------
DESCRIPTION OF PROPERTY
--------------------------------------------------------------------------------
Facilities
We currently utilize office space in the house of our Chief Operating
Officer for which the Company does not pay any rent. Our mailing address is
11693 San Vicente Blvd., Suite 310, Los Angeles, CA 90049 and our phone number
is (253) 660-3085. We intend to obtain limited office space, from where we will
conduct our operations and implement our current business plan, upon the closing
of this Offering.
Intellectual Property Rights
Under the terms of the Beta Site Agreement, we will own the Beta Site
design and all related graphic art, HTML code, and any other software developed
for us by Webmaster for our prototype online shopping mall. Under the terms of
the Fluidesign Agreement, we will own the web site design and related software
being developed by Fluidesign for our online shopping mall.
We intend to register our service marks, iGoHealthy and HealthyBucks,
with the United States Patent and Trademark Office.
--------------------------------------------------------------------------------
AVAILABLE INFORMATION
--------------------------------------------------------------------------------
iGoHealthy.com has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form SB-2 (the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus does not contain all the information contained in the
Registration Statement. For further information regarding iGoHealthy.com 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. Each statement contained
in this Prospectus with respect to a document filed as an exhibit to the
Registration Statement is qualified by reference to the exhibit for its complete
terms and conditions.
iGoHealthy.com, Inc. will be subject to the informational requirements of
the Securities Exchange Act of 1934 ("Exchange Act") and in accordance therewith
will file reports and other information with the Commission. Reports, proxy
statements and other information filed by us can be inspected and copied on the
Commission's home page on the World Wide Web at http://www.sec.gov or at the
public reference facilities of the Commission, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as the following Regional Offices:
7 World Trade Center, Suite 1300, New York, N.Y. 10048; and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois. 60661-2511. Such material
can also be inspected at the New York, Boston, Midwest, Pacific and Philadelphia
Stock Exchanges. Copies can be obtained from the Commission by mail at
prescribed rates. Request should be directed to the Commission's Public
Reference Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549.
41
<PAGE>
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the financial
statements and accompanying notes and the other financial information appearing
elsewhere in this Prospectus. The financial information presented is for the
period June 13, 1996 (inception) to October 31, 2000. Our fiscal year end is
December 31.
Overview
We are a development stage company, which is establishing an online,
incentive-based shopping mall of health-related retailers. Consumers who become
our members will be able to access our shopping mall through our web site,
www.iGoHealthy.com. Our online shopping mall will offer our members access to a
broad range of retailers offering quality health-related merchandise and
services. Members will be able to earn discounts in the form of HealthyBucks on
most purchases they make through our online shopping program. Our web site is
currently under development and will not be accessible to potential members
through the Internet until the Offering described in this Prospectus is
completed.
We began to execute on the current business plan on August 1, 2000 and
recorded a name change on October 16, 2000, but we have not yet begun operating
our shopping mall. We expect to launch our web site and become operational upon
closing of the Offering described in this Prospectus. Since the inception of our
current business plan, we have been engaged primarily in planning our
operations, establishing a prototype web site, negotiating agreements with
prospective retail affiliates and capital raising activities. We have no
operating revenue to date and do not expect to be able to generate revenue until
the commercial launch of our web site.
During the next twelve months, we expect to take the following steps in
connection with the development of our business and the implementation of our
plan of operations:
* complete technical development of our web site and the design of the
web site user interface;
* develop and maintain relationships with affiliated retailers;
* add any additional functionality to our web site that may be warranted
in order to remain competitive;
* generate traffic to our web site through marketing and promotional
activities;
* hire and train additional staff, including marketing staff,
administrative personnel and technical developers; and
* identify new facilities for our business, if necessary.
Each of these steps present significant risks with respect to our
ability to implement our plan of operations which are discussed in the "Risk
Factors" section of this Prospectus. You should carefully review these risks
prior to participating in the Offering.
We have a limited operating history on which you can base an evaluation
of our business and prospects. Our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stage of development, particularly companies in new and rapidly evolving
markets such as private equity markets. iGoHealthy.com will encounter various
risks in implementing and executing its business strategy. We cannot assure you
that we will be successful in addressing such risks, and the failure to do so
could have a material adverse effect on our business, prospects, financial
condition and results of operations.
Results of Operations
For the 10-months ended October 31, 2000, we recorded an operating loss
of $(19,226). This lack of profitability is largely attributable to general and
administrative expenses associated with a start up venture. We did not generate
any revenues during this period. Net loss per share of Common Stock was
approximately $(0.01) for the 10-months ended October 31, 2000. We expect to
continue to operate at a loss through fiscal 2001. Further, there can be no
assurance that we will ever achieve profitability or that a stream of revenue
can be generated and sustained in the future.
42
<PAGE>
Capital Resources and Liquidity
At October 31, 2000, we had current assets of $29,312 and total assets
of $54,937. These assets consist of cash on hand of $29,312 and $25,625 for
work-in-process related to the web site design and development. Net
stockholders' equity in iGoHealthy.com was $29,937 at October 31, 2000. We
remain in the development stage and, since inception, have experienced no
significant change in liquidity, capital resources or shareholders' equity.
Cash flow provided from the issuance of Common Stock was $37,500 for
the period ended October 31, 2000. On October 27, 2000 we received an aggregate
total of $37,500 from five accredited investors in connection with closing on a
private placement of securities exempt from registration under Rule 506 under
Regulation D of the Securities Act, as amended. The proceeds from this Offering
will used for the prototype web site development, purchase of a computer and
office equipment, and working capital purposes, including general and
administrative expenses.
Cash Requirements and Additional Funding
As of December 8, 2000, our principal commitments consisted of our
agreement with Stephen Davis, our prototype web site designer; Fluidesign, our
commercial web site design and development company; and HealthyUSA, Inc., in
connection with the sale and assignment of the Company's domain name, as
described below under the heading "Certain Relationships and Related
Transactions" beginning on page 44, and our liability for the legal fees of our
counsel in connection with this Offering. Although we have no material
commitments for capital expenditures, we anticipate a substantial increase in
our capital expenditures consistent with anticipated growth in operations,
infrastructure and personnel. Additionally, we will continue to evaluate
expanding our sales and marketing programs. Our capital requirements will depend
on many factors, including:
* the rate of market acceptance of our online shopping program;
* the amount of expenditures that will be needed for marketing and
promoting our shopping program and our brand name;
* the costs required to maintain and upgrade our technology; and
* potential changes in economic, regulatory or competitive conditions of
our planned business.
However, there is no assurance that the company will be successful in
any such effort.
Internally generated cash flows from our operations have been and
continue to be insufficient for the Company's cash needs. It is expected that we
will generate cash flows from operations in the foreseeable future, but we
cannot provide assurance as to the period of time that any such cash flows will
be sufficient to cover our cash requirements. We have historically relied upon
financing provided by our Officers and Directors to supplement our operations.
We will most likely rely on external financing to supplement our operations.
Our current cash forecasts for the Company indicate that there will be
negative cash flow from operations for the foreseeable future. We believe that
capital already contributed in addition to proceeds from this Offering will be
sufficient to meet our anticipated needs for working capital, capital
expenditures and business development for the next twelve months. In the future,
we may be required to seek additional capital by selling debt or equity
securities, curtailing operations, selling assets, or otherwise be required to
bring cash flows in balance when it approaches a condition of cash
insufficiency. The sale of additional equity securities, if accomplished, may
result in dilution to our shareholders. We cannot assure you, however, that
financing will be available in amounts or on terms acceptable to us, or at all.
Expected Purchases of Capital Equipment
Our significant equipment purchases are limited to computer hardware.
Computer equipment will be required for the development of our web site and
thereafter, for operation of our web site. Within the next twelve months, we
expect to purchase up to $10,000 worth of additional computers to operate our
web site. We will also purchase personal computers, at a cost of $1,200 per
unit, for each additional employee we hire during this period.
43
<PAGE>
--------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------
In June, 1996 Mr. Tannous and Mr.Glaser were each issued 700,000 shares
of our Common Stock in consideration for an aggregate amount of $1,400 cash.
We currently utilize office space in the house of our Chief Operating
Officer for which the Company does not pay any rent. In addition, Messrs.
Tannous and Glaser both provided management services to the Company without
consideration being paid from the Company. Related to these services,
iGoHealthy.com, Inc. has recorded operating expenses of $10,413, which represent
the fair market value of these services.
On September 5, 2000 we entered into a Contract for Services agreement
(the "Beta Site Agreement") with Stephen Davis ("Webmaster"). Upon execution of
the Beta Site Agreement, Mr. Glaser advanced to the Company $5,000 which was
paid to Webmaster as a down payment. On October 3, 2000, Mr. Glaser advanced to
the Company an additional $6,000 which was also paid to Webmaster as a progress
payment pursuant to the terms of the Beta Site Agreement. On October 25, 2000,
Mr. Tannous advanced the Company the sum of $4,000 which was paid to Webmaster
as a second progress payment for work completed. These advances, totaling
$15,000, were repaid by the Company on November 1, 2000.
On October 13, 2000, we entered into a retainer agreement with the Law
Offices of Naser J. Khoury for the purpose of having all documents in connection
with the private placement prepared. Upon executing the retainer agreement, a
down payment of $1,000 was advanced to the Company by Mr. Tannous. On October
20, 2000, Mr. Tannous advanced an additional $4,000 to the Company which was
used to pay the outstanding balance on the retainer. These advances, totaling
$5,000, were repaid by the Company on November 1, 2000.
As partial consideration for legal services rendered, Naser J. Khoury
was issued 3,000 shares of our Common Stock. Naser J. Khoury is the cousin of
our President, Farid E. Tannous.
On October 28, 2000, David E. Tannous, CPA, was retained for the
purpose of preparing and filing with the Internal Revenue Service the Company's
tax returns for the past four years. As consideration for services rendered,
David E. Tannous was paid $2,600 and issued 2,000 shares of our Common Stock.
David E. Tannous is the brother of our President, Farid E. Tannous.
On October 30, 2000 we entered into an agreement with HealthyUSA, Inc.
to purchase the Internet domain name, iGoHealthy.com. This Agreement provides
for HealthyUSA to sell and assign all rights and title to the domain name to the
Company for the purchase price of $10,000.00, as mutually agreed upon by both
parties, based upon review of an appraisal report dated October 30, 2000
prepared by GreatDomains.com, Inc., an independent appraiser. In connection with
the purchase of the domain name, the Company issued a promissory note in the
amount of $10,000.00 to HealthyUSA, Inc., interest rate of six (6%) percent, and
maturity date of April 30, 2001, subject to terms and conditions set forth
therein. On November 10, 2000, pursuant to the terms of the Agreement, the
Company made a partial payment of $2,000 to HealthyUSA, leaving a balance of
$8,000 outstanding under the Promissory Note. Bill Glaser is the President and
Chief Executive Officer of HealthyUSA, Inc.
--------------------------------------------------------------------------------
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------------------
No established public trading market exists for iGoHealthy.com's Common
Stock. We have no Common Stock subject to outstanding purchase options or
warrants. We have no securities convertible into Common Stock. Except for this
Offering, there is no Common Stock that is being, or has been publicly proposed
to be, publicly offered.
44
<PAGE>
As of December 8, 2000, there were 1,710,000 shares of Common Stock
outstanding, held by ten shareholders of record.
--------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------
No Officer or Director has received any remuneration from us. Although
there is no current plan in existence, it is possible that we will adopt a plan
to pay or accrue compensation to our Officers and Directors for services related
to the implementation of our business plan. The Officers and Directors will not
receive any compensation from funds, if any, raised in this Offering. We have no
stock option, retirement, incentive, defined benefit, actuarial, pension or
profit-sharing programs for the benefit of Directors, Officers or other
employees, but the Board of Directors may recommend adoption of one or more such
programs in the future. We have no employment contract or compensatory plan or
arrangement with any executive Officer of iGoHealthy.com. The Directors
currently do not receive any cash compensation for their services as members of
the Board of Directors. There is no compensation committee, and no compensation
policies have been adopted.
--------------------------------------------------------------------------------
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
--------------------------------------------------------------------------------
Since our inception, there have been no changes in accountants nor have
there been any disagreements with our current accountants regarding any matter
of account principles or practices, financial statement disclosure, or auditing
scope or procedure.
--------------------------------------------------------------------------------
FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The Financial Statements required by Item 310 of Regulation S-B are
stated in United States Dollars (US$) and are prepared in accordance with United
States Generally Accepted Accounting Principles. The following Financial
Statements pertaining to iGoHealthy.com, Inc. are filed as part of this
Prospectus:
45
<PAGE>
iGOHEALTHY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
October 31, 2000
-------------------------------------------------------------------------------
Page
------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-2
FINANCIAL STATEMENTS
Balance Sheet F-3
Statements of Operations F-4
Statements of Stockholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
iGoHealthy.com, Inc.
We have audited the accompanying balance sheet of iGoHealthy.com, Inc. (a
development stage company) as of October 31, 2000, and the related statements of
operations, stockholders' equity, and cash flows for the 10 months then ended,
and for the period from June 13, 1996 (inception) to October 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of iGoHealthy.com, Inc. as of
October 31, 2000, and the results of its operations and its cash flows for the
10 months then ended, and for the period from June 13, 1996 (inception) to
October 31, 2000 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, during the 10 months ended October 31, 2000, the Company
incurred a net loss of $19,226, it had negative cash flows from operations of
$8,188, and it had an accumulated deficit of $20,626. These factors, as
discussed in Note 2 to the financial statements, raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Singer Lewak Greenbaum & Goldstein LLP
--------------------------------------------
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
November 22, 2000
F-2
<PAGE>
<TABLE>
iGOHEALTHY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
October 31, 2000
-----------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Current assets
Cash $ 29,312
------------------
Total current assets 29,312
Work-in-process 25,625
------------------
Total assets $ 54,937
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Advances from officers $ 15,000
Note payable - related party 10,000
------------------
Total current liabilities 25,000
------------------
Stockholders' equity
Preferred stock, $0.001 par value
5,000,000 shares authorized
no shares issued and outstanding -
Common stock, $0.001 par value
50,000,000 shares authorized
1,710,000 shares issued and outstanding 1,710
Additional paid-in capital 48,853
Deficit accumulated during the development stage (20,626)
------------------
Total stockholders' equity 29,937
------------------
Total liabilities and stockholders' equity $ 54,937
==================
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-3
<PAGE>
<TABLE>
iGOHEALTHY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the 10 Months Ended October 31, 2000 and
-------------------------------------------------------------------------------------------------------------------
for the Period from June 13, 1996 (Inception) to October 31, 2000
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the
Period from
For the June 13,
10 Months 1996
Ended (Inception) to
October 31, October 31,
2000 2000
------------- ----------------
Operating expenses $ 19,226 $ 20,626
------------ -----------
Net loss $ (19,226) $ (20,626)
=========== ==========
Basic and diluted
Loss per common share $ (0.014) $ (0.015)
=========== ==========
Weighted-average common shares outstanding 1,401,205 1,400,283
============ ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-4
<PAGE>
<TABLE>
iGOHEALTHY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from June 13, 1996 (Inception) to October 31, 2000
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Deficit
Accumulated
Additional during the
Common Stock Paid-In Development
---------------------------------
Shares Amount Capital Stage Total
--------------- --------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Balance, June 13, 1996
(inception) - $ - $ - $ - $ -
Issuance of common
stock to founders
for cash 1,400,000 1,400 (1,400) -
--------------- --------------- ---------------- --------------- ----------------
Balance, December 31,
1996, 1997, 1998,
and 1999 1,400,000 1,400 - (1,400) -
Issuance of common
stock for web site
development costs 5,000 5 620 625
Issuance of common
stock for services
rendered 5,000 5 620 625
Issuance of common
stock for cash 300,000 300 37,200 37,500
Services provided
by officers 10,413 10,413
Net loss (19,226)
--------------- --------------- ---------------- --------------- --------
(19,226)
Balance, October 31,
2000 1,710,000 $ 1,710 $ 48,853 $ (20,626) $ 29,937
-============== =============== ================ ============== =========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-5
<PAGE>
<TABLE>
iGOHEALTHY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the 10 Months Ended October 31, 2000 and
-------------------------------------------------------------------------------------------------------------------
for the Period from June 13, 1996 (Inception) to October 31, 2000
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the
Period from
For the June 13,
10 Months 1996
Ended (Inception) to
October 31, October 31,
2000 2000
------------- -------------
Cash flows from operating activities
Net loss $ (19,226) $ (20,626)
Adjustments to reconcile net loss to net cash
used in operating activities
Services provided by officers 10,413 10,413
Issuance of common stock for services rendered 625 2,025
------------- ------------
Net cash used in operating activities (8,188) (8,188)
------------ -----------
Cash flows from financing activities
Cash received for common stock 37,500 37,500
Payments to officers (5,588) (5,588)
Proceeds from officers 5,588 5,588
------------- ------------
Net cash provided by financing activities 37,500 37,500
------------- ------------
Net increase in cash 29,312 29,312
Cash, beginning of period - -
------------- ------------
Cash, end of period $ 29,312 $ 29,312
============= ============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-6
<PAGE>
iGOHEALTHY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND LINE OF BUSINESS
iGoHealthy.com, Inc., a Colorado corporation, is a development stage
company in the process of developing an Internet-based shopping mall
for health-related retailers. Through its shopping mall, web users that
register as its members will be able to make purchases of
health-related merchandise and services from a carefully selected group
of quality retailers. Management intends to capitalize on the
extraordinary growth of online retailing, which is projected to
continue expansion. The Company was founded on June 13, 1996 as
Centurion Properties Development Corporation and was initially
capitalized with $1,400 in cash, which was used to pay organization
costs. The Company remained dormant until October 16, 2000 when its
name was changed to iGoHealthy.com and it began developing its current
business plan. The Company has had no significant business activity to
date.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles which contemplate
continuation of the Company as a going concern. During the 10 months
ended October 31, 2000, the Company incurred a net loss of $19,226, it
had negative cash flows from operations of $8,188, and it had an
accumulated deficit of $20,626. These factors raise substantial doubt
about the Company's ability to continue as a going concern.
Recovery of the Company's assets is dependent upon future events, the
outcome of which is indeterminable. Successful completion of the
Company's development program and its transition to the attainment of
profitable operations is dependent upon the Company achieving a level
of sales adequate to support the Company's cost structure. In addition,
realization of a major portion of the assets in the accompanying
balance sheet is dependent upon the Company's ability to meet its
financing requirements and the success of its plans to sell products.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts
and classification of liabilities that might be necessary should the
Company be unable to continue in existence.
In order to alleviate substantial concern about its ability to continue
as a going concern, management plans to raise additional equity capital
and continue to develop its products.
Start-Up Costs
Start-up costs include legal and professional fees. In accordance with
Statement of Position 98-5, "Costs of Start-Up Activities," these costs
have been expensed as incurred.
Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with original maturities of three
months or less to be cash equivalents.
Work-in-Process
Work-in-process consists of costs incurred to implement the Company's
web site. The Company has not recorded depreciation as its web site has
not yet been placed into service.
Expenditures for maintenance and repairs are charged to operations as
incurred while renewals and betterments are capitalized. Gains or
losses on the sale of property and equipment will be reflected in the
statement of operations if they occur.
F-7
<PAGE>
iGOHEALTHY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Advertising Costs
Advertising costs will be expensed as incurred. The Company has not yet
incurred any advertising costs.
Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
Loss per Share
During the 10 months ended October 31, 2000, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share." Basic loss per share is computed by dividing the loss
available to common stockholders by the weighted-average number of
common shares outstanding. Diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the
additional common shares were dilutive. Because the Company has
incurred net losses, basic and diluted loss per share are the same.
Income Taxes
The Company uses the asset and liability method of accounting for
income taxes. The asset and liability method accounts for deferred
income taxes by applying enacted statutory rates in effect for periods
in which the difference between the book value and the tax bases of
assets and liabilities are scheduled to reverse. The resulting deferred
tax asset or liability is adjusted to reflect changes in tax laws or
rates. Because the Company is in the development stage and has incurred
a loss from operations, no benefit is realized for the tax effect of
the net operating loss carry-forward due to the uncertainty of its
realization.
Comprehensive Income
For the 10 months ended October 31, 2000, the Company adopted SFAS No.
130, "Reporting Comprehensive Income." This statement establishes
standards for reporting comprehensive income and its components in a
financial statement. Comprehensive income as defined includes all
changes in equity (net assets) during a period from non-owner sources.
Examples of items to be included in comprehensive income, which are
excluded from net income, include foreign currency translation
adjustments and unrealized gains and losses on available-for-sale
securities. Comprehensive income is not presented in the Company's
financial statements since the Company did not have any of the items of
comprehensive income in any period presented.
Recently Issued Accounting Pronouncements
In December 1999, the Securities and Exchange Commission staff released
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition," to
provide guidance on the recognition, presentation, and disclosure of
revenue in financial statements. Changes in accounting to apply the
guidance in SAB No. 101 may be accounted for as a change in accounting
principle effective January 1, 2000. Management has not yet determined
the complete impact of SAB No. 101 on the Company; however, management
does expect that application of SAB No. 101 will have a material effect
on the Company's revenue recognition and results of operations.
F-8
<PAGE>
iGOHEALTHY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements (Continued)
-----------------------------------------
In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting
for Certain Transactions Involving Stock Compensation," (an
Interpretation of Accounting Principles Bulletin Opinion No. 25 ("APB
25")) ("FIN 44"). FIN 44 provides guidance on the application of APB
25, particularly as it relates to options. The effective date of FIN 44
is July 1, 2000, and the Company has adopted FIN 44 as of that date.
In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Instruments and Certain Hedging Activities." This statement is not
applicable to the Company.
In June 2000, the FASB issued SFAS No. 139, "Rescission of FASB
Statement No. 53 and Amendments to Statements No. 63, 89, and 121."
This statement is not applicable to the Company.
In September 2000, the FASB issued SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities, a replacement of FASB Statement No. 125." This statement
is not applicable to the Company.
NOTE 3 - CASH
The Company maintains cash deposits at a bank based in New York.
Deposits at the bank are insured by the Federal Deposit Insurance
Corporation up to $100,000. As of October 31, 2000, the Company did not
have any uninsured cash.
NOTE 4 - NOTE PAYABLE
During the 10 months ended October 31, 2000, the Company purchased an
Internet domain name that was financed through a note payable from a
related party bearing a fixed interest rate of 6%, due at the earlier
of the Company's initial public offering or April 30, 2001.
NOTE 5 - STOCKHOLDERS' EQUITY
During June 1996, the Company issued 1,400,000 shares of common stock
to the Company's founders in exchange for cash.
In connection with a private placement in October 2000, the Company
sold 300,000 shares at $0.125 per share for total gross proceeds of
$37,500. The Company paid no commissions or fees in connection with the
private placement.
In September 2000, the Company entered into a consulting agreement with
a web site designer in order to design and implement a prototype web
site for the Company. As of October 31, 2000, the Company has paid
$15,000 and issued 5,000 shares of common stock to this designer. The
stock was valued at $625, which has been capitalized as
work-in-process.
In October 2000, the Company issued 3,000 shares of common stock to a
law firm in exchange for services rendered valued at $375.
In October 2000, the Company issued 2,000 shares of common stock for
financial services valued at $250.
F-9
<PAGE>
iGOHEALTHY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
--------------------------------------------------------------------------------
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company utilizes office space in the house of its Chief Operating
Officer. The Company does not pay any rent for such office space. In
addition, certain officers provided management services for the Company
without consideration being paid from the Company. Related to these
services, the Company has recorded operating expenses of $10,413, which
represent the fair market value of these services.
At October 31, 2000, the Company owed $15,000 to officers of the
Company. This amount due does not accrue interest and is presented as
"advances to officers" on the accompanying balance sheet.
NOTE 7 - INCOME TAXES
Significant components of the Company's deferred tax assets and
liabilities for income taxes consisted of the following at October 31,
2000:
Deferred tax assets
Operating losses $ 8,250
Valuation allowance 8,250
-------------
Net deferred tax assets $ -
=============
The federal operating loss carry-forward at October 31, 2000 was
$20,626. This operating loss was incurred during an interim period and
may not reflect true net operating losses at the taxable year-end.
NOTE 8 - YEAR 2000 ISSUE
The Company has completed a comprehensive review of its computer
systems to identify the systems that could be affected by ongoing Year
2000 problems. Upgrades to systems judged critical to business
operations have been successfully installed. To date, no significant
costs have been incurred in the Company's systems related to the Year
2000.
Based on the review of the computer systems, management believes all
action necessary to prevent significant additional problems has been
taken. While the Company has taken steps to communicate with outside
suppliers, it cannot guarantee that the suppliers have all taken the
necessary steps to prevent any service interruption that may affect the
Company.
F-10
<PAGE>
PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Information on this item is set forth in Prospectus under the heading
"Disclosure of Commission Position on Indemnification for Securities Act
Liabilities."
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
Registration Statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
<TABLE>
Description Amount to be Paid
------------ -----------------
<S> <C>
Filing Fee - Securities and Exchange Commission $ 66
Attorney's fees and expenses 10,000
Standard & Poor's listing fees 4,000
Accountant's fees and expenses 2,500
Transfer agent's and registrar fees and expenses 1,500
Printing and engraving expenses 1,000
Miscellaneous expenses 934
----------
Total $ 20,000
==========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of
iGoHealthy.com securities without registration since its formation. No such
sales involved the use of an underwriter and no commissions were paid in
connection with the sale of any securities.
In June, 1996, the Company issued 700,000 shares of Common Stock to
Bill Glaser and 700,000 shares of Common Stock to Farid E. Tannous in connection
with the formation of the Company for an aggregate amount of $1,400 in cash
consideration. We believe that these transactions were exempt from registration
pursuant to Section 4(2) of the Securities Act as the recipients had sufficient
knowledge and experience in financial and business matters that they were able
to evaluate the merits and risks of an investment in the Company, and since the
transactions were non-recurring and privately negotiated.
On October 17, 2000, iGoHealthy.com issued an aggregate total 10,000
shares of Common Stock to three individuals, two of which are related to Farid
E. Tannous, as partial payment, in addition to cash, for services rendered.
David E. Tannous is the brother, and Naser J. Khoury is the cousin, of our
President, Farid E. Tannous. The Company believes that the transaction was
exempt from registration pursuant to Section 4(2) of the Securities Act as
transactions by an Issuer not involving a public offering.
On October 30, 2000, iGoHealthy.com issued a total 300,000 shares of
Common Stock to five accredited investors in consideration for an aggregate
amount of $37,500 in gross proceeds in connection with closing on a private
placement of securities exempt from registration under Rule 506 under Regulation
D promulgated under the United States Securities Act of 1933, as amended.
48
<PAGE>
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
(a) Exhibits
<S> <C>
Exhibit
No. Description of Exhibit
3.1* Articles of Incorporation
3.2* By-laws
3.3* Amendment to the Articles of Incorporation of iGoHealthy.com
4.1* Specimen of Common Stock Certificate
4.2* Form of Stock Subscription Agreement
4.3* Form of Private Placement Subscription Agreement
4.3.1* Private Placement Subscription Agreement signature page for Harbinder Singh Branch
4.3.2* Private Placement Subscription Agreement signature page for Kenneth Arthur Butterfield
4.3.3* Private Placement Subscription Agreement signature page for Patrick Moriarity
4.3.4* Private Placement Subscription Agreement signature page for Patrick Moriarity, Jr.
4.3.5* Private Placement Subscription Agreement signature page for Eilish Levene
5.1* Opinion Letter issued by Vanderkam & Sanders
10.1* Contract for Services Agreement between Stephen Davis and iGoHealthy.com, Inc.
10.2* Domain Name Sale and Assignment Agreement between HealthyUSA, Inc. and iGoHealthy.com, Inc.
10.3* Promissory Note between HealthyUSA, Inc. and iGoHealthy.com, Inc.
10.4* Web Site Development and Services Agreement between Fluidesign and iGoHealthy.com, Inc.
23.1* Consent of Singer Lewak Greenbaum & Goldstein LLP, Certified Public Accountants
23.2* Consent of Counsel (See Exhibit 5.1)
27.1* Financial Data Schedule
</TABLE>
* Filed herewith
ITEM 28. UNDERTAKINGS
The undersigned registrant hereby undertakes:
1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement:
a) To include any Prospectus required by section 10(a)(3) of the
Securities Act;
b) To reflect in the prospects any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement; and
c) To include any additional or changed material information on the
plan of distribution.
2) For determining liability under the Securities Act, treat each
post-effective amendment that contains a form of Prospectus as a new
Registration Statement for the securities offered in the Registration
Statement, and the Offering of such securities at the time as the
initial bona fide offering of those securities.
3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the Offering.
4) For determining liability under the Securities Act, treat the
information omitted from the form of Prospectus filed as part of the
Registration Statement pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act as part of this Registration Statement as of
the time the Commission declared it effective.
5) Insofar as indemnification for liabilities arising under the
Securities Act 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 Securities 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 of 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 Securities Act and
will be governed by the final adjudication of such issue.
49
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
iGoHealthy.com, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and has duly caused this
Registration Statement on Form SB-2 to be signed on its behalf by the
undersigned, hereunto duly authorized, in the city of Los Angeles, California on
the December 8, 2000.
iGOHEALTHY.COM, INC.
By: /s/ Farid E. Tannous
---------------------
Farid E. Tannous
Chief Executive Officer, President,
Treasurer, and Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- -------- ----------
/s/ Farid E. Tannous Chief Executive Officer,
________________________ President, Treasurer, and Director December 8, 2000
Farid E. Tannous
/s/ Bill Glaser Chief Operating Officer,
________________________ Secretary, and Director December 8, 2000
Bill Glaser
50
