SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
AMENDED CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Amended Report Dated September 12, 1996
FINANCIAL FREEDOM ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
Colorado 33-24387- 84-1092599
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(State of Incorporation) (Commission File Number (I.R.S. employer
identification number)
180 N. Woodruff, Idaho Falls, Idaho 83401
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code (208) 529-2111
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IMPACT INCOME INVESTMENTS, INC.
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(Former Name)
[Index to Exhibits is to be found in sequential numbering system on page No. 15]
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 1. Changes in Control of Registrant
A. At a duly called meeting of shareholders of the Registrant, then named
IMAGE Income Investments, Inc., a quorum being present, on June 24, 1996, the
following Resolutions were unanimously adopted:
1. The Acquisition of 100% of the Common and Preferred Stock of
FINANCIAL FREEDOM ENTERPRISES, INC. ("FFE"), with executive offices at 180 N.
Woodruff, Idaho Falls, Idaho 83401, (208) 529-2111, a Nevada corporation, was
ratified, resulting in the Registrant continuing the FFE business started by Ms.
Carol Walker in 1988, which has over 15,000 members subscribing to its seminars
providing written and video programs titled Putting People on the Road to
Financial Freedom - Wake Up American and Return to Prosperity.
2. Changing the corporate name to "FINANCIAL FREEDOM ENTERPRISES,
INC."
3. The par value of the 100,000 authorized Preferred Stock to
5,000,000 Preferred authorized was increased and par value increased to $1.00
per share
4. The Resignation of the Board of Directors was accepted, and
replaced by:
Ronald Zeller
Carol Shelton Walker
Robert A. Needham
Douglas T. Snarr
Robert Ground, Ph.D.
John Rivera (Alternate)
The resumes of these Directors as required for SEC filings are
included hereinafter under Item 5 - Other Events.
B. Application is being made to resume trading on the NASDAQ Bulletin Board
System, and the new trading may be anticipated to re-commence on or about by
August 15, 1996.
C. Under the terms of the May 13, 1996 Acquisition Agreement between
IMPACT, Fusiones y Adquisiciones FYA de San Jose, S.A., a Costa Rica
corporation, and FFE (now the Registrant), IMPACT agreed to acquire 100% of the
Common Stock and Preferred Stock of Financial Freedom in return for issuing
8,500,000 shares of IMPACT's Common Stock and 4,500,000 shares of IMPACT's
Convertible Voting Preferred Stock, convertible into four shares of Common Stock
for each share of Preferred Stock. The Preferred Shares are callable at 120% of
$1.00 par value the first year, decreasing by 5% annually. The Preferred Shares
may be converted at any time. (See Item 2 herein.)
D. Share Ownership
1. The Registrant's stock ownership immediately following the
acquisition is as follows:
<TABLE>
<CAPTION>
No. of No. of % After No. Common
Common Preferred Conversion After Conversion
------ --------- ---------- ----------------
<S> <C> <C> <C> <C>
IMPACT Shareholders 7,100,000 -0- 21.0% 7,100,000
Financial Freedom Shareholders -0- 4,500,000(1) 53.7% 18,000,000
Fusiones, S.A. 8,500,000 25.3% 8,500,000
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Total 100% 33,600,000
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(1) Convertible into 18,000,000 shares of Registrant's Common Stock (four shares of Common
Stock for each Preferred Share).
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2. The shares of Convertible Preferred Stock owned by Registrant's Officers
and Directors is as follows:
Preferred
Name Shares* %
---- ---------- ----
John Rivera 2,256,770 50.2%
Carol A. Walker 2,243,230 49.8%
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Total 4,500,000 100%
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* Convertible into 9,027,080 and 8,972,920 shares of Common Stock, respectively.
3. The following Table represents the ownership of any person or entity
known by Management to be the beneficial owner of five percent (5%), or
1,680,000 shares, or more of the Registrant's Common Voting Stock (assuming
conversion of 4,500,000 shares of Preferred owned by Company Officers into
18,000,000 shares).
No. of %
Name Address Shares Ownership
---- ------- ------ ---------
FYA (1) 8,500,000 25.3%
John Rivera (2) 9,027,080 26.8%
Carol Walker (2) 8,972,920 26.0%
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Total 26,500,000 78.8%
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(1) Fusiones Adquisiciones FYA de San Jose S.A. registered November 24, 1995
under Volume 912, Page 224, Entry 303 of the Mercantile Section of the
Public Registry, of San Jose, Costa Rica. Corporate identification number
is 3-101-176771. Its address is 677 - 33rd Street, San Jose 1000, Costa
Rica.
(2) Company headquarters at 180 N. Woodruff, Idaho Falls, Idaho 83401.
(3) The remaining 7,100,000 shares (11.2%) are owned by IMPACT's shareholders,
none of whom own over 5% of the aggregate.
Item 2. Acquisition or Disposition of Assets
A. On May 3, 1996, Carol A. Walker, the founder in 1988 of Financial
Freedom Enterprises, an Idaho corporation ("FFE/Idaho") in a document captioned
"INTELLECTUAL PROPERTY PURCHASE AGREEMENT, transferred and conveyed to
FFE/Idaho, 100% of Ms. Walker's financial management materials developed by Ms.
Walker for use in the Registrant's eight year seminar history; all intellectual
property rights, including but not limited to trademarks, service marks,
software and copyrights; and existing service/seminar agreements with
third-parties (including with Financial Potential Corporation of Alamosa,
Colorado, who in turn has a subcontractual marketing agreement with National
Marketing Alliance ("NMA"), of the Denver Technical Center in Englewood,
Colorado, a nationwide insurance marketing company with over 25,000 agents). In
consideration for the transfer by Ms. Walker, FFE/Idaho agreed to pay Ms. Walker
the sum of $4,500,000, payable as monthly royalties on a designated dollar cost
for (1) Educational Workbooks; (2) Educational Videos; (3) Blueprint Software;
and (4) per Client Generated by Ms. Walker. Notwithstanding the royalty payment
schedule, the aggregate remaining balance is due and payable in full by May 3,
2006.
B. On May 10, 1996, Fusiones y Adquisiciones FYA de San Jose, S.A., a Costa
Rica corporation ("FYA") through its wholly-owned subsidiary Financial Freedom
Enterprise, Inc., a Nevada corporation ("FFE/Nevada") acquired all of the assets
of FFE/Idaho including all accounts receivable; and client lists from inception,
in return for FFE/Nevada issuing to shareholders of FFE/Idaho 4,500,000 shares
of FFE/Nevada's Series C Convertible Preferred Stock, $1.00 per share par value,
convertible into 18,000,000 shares of Common Stock being four shares of Common
Stock for each share of Preferred Stock. This Series C Preferred Stock is
callable in full or in part, at a premium over the first four years commencing
at 120% of par value, reducing 5% annually thereafter, maturing May 13, 2001.
Item 3. Bankruptcy or Receivership
N.A.
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Item 4. Changes in Registrant's Certifying Accountant
The new auditor is the Registrant's firm of certified public accountants.
Item 5. Other Events
The following is the History and Business of the Registrant's Financial
Freedom Enterprises, Inc., which will be carried forward as contemplated by the
Acquisition Agreement.
Financial Freedom Enterprises, Inc. "Putting People on the Road to
Financial Freedom"; "Financial Freedom - Wake Up America and Return to
Prosperity ... Your Divine Right" has operated the Financial Fitness Centers
since 1988 and has had over 13,000 Associates enrolled in its Financial
Educational Seminars using the Financial Freedom written and video programs to
open up a new world and insight to preserving wealth, creating wealth, and
learning the easy (but usually overlooked by the less financially sophisticated
American), efficient and effective "Money Management" and "Greater Personal and
Financial Freedom." The impressive growth has resulted only from individual
referrals since inception.
The Denver Rocky Mountain News for November 6, 1995, in a full page article
titled "Consumer Debt Out of Control?" stated in part:
"U.S. consumers had a $988.6 billion debt burden as of
August, according to the latest Federal Reserve Board
figures. That's up $119 billion, or nearly 14%, from the
same time last year. Meanwhile, signs are everywhere that
people are having problems paying off those bills: The
American Bankers Association said last month that 3.26% of
all consumer loans, including credit cards, home equity and
auto loans, were at least 30 days past due as of June 30,
the most recent data available. In June 1994, the
delinquency rate was 2.56%."
The Financial Fitness "Associates" learn the techniques for empowering
themselves, with the skills and tools needed for managing their finances wisely.
These stated goals are summarized by:
o Achieving Financial Health - by living on less than what you earn;
o Financial Fitness - by keeping more of what you earn;
o Financial Freedom - by freeing up what you have and will yet earn
by getting out of debt, and, more importantly, staying out;
o Financial Retirement - through "Provident Living" and a "Home
Financial Management System"
The Financial Fitness Centers provide attractive, practical, and easy to
use financial educational tools in text format and over twelve videos,
including:
o Financial Preparedness System
o The Blue Print System for detailed budgeting and Money Management
o The "Say Hello To Success" for effective, efficient telemarketing
and Network Marketing, for establishing productive, financial,
rewarding work habits and Prospecting Methodologies
o The Debt Retirement Program
o The Payment-Acceleration Program
o The Mortgage Cost-Reduction System
The Financial Fitness presentation focuses on techniques businesses can
implement in their human resources programs to assist the individual employee,
with the resulting improvement of an acceleration of the overall productive and
resulting increase in the Company's financial revenues.
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A Profile of Financial Fitness Centers
Financial Freedom Enterprises, Inc. has developed the complete "Financial
Preparedness System" - The blueprint Financial Preparedness System to help
individuals and families discover the freedom and peace of mind that comes from
having achieved financial security. Financial Freedom Enterprises, Inc. is now
building a nationwide, seamless network of Financial Fitness Centers as the
vehicle for providing this most needed service to the public. Their services,
products, and Center support play an integral role in helping The Blueprint
Financial Preparedness System "Deliver its promised reward - making the kind of
financial security we speak of within the reach of all Americans."
The systems and services focus on empowering the individual with the
necessary tools to become financially prepared, so that they can achieve greater
personal freedom for themselves and their families. The professionally trained
representatives, and counselors assist individuals in changing unproductive
monetary habits, and provides the kind of education and training on how best to
utilize these most powerful financial preparedness strategies, in order to
create a positive lifestyle change in their personal and family finances.
The Blueprint System Advantage
By enrolling onto the Blueprint Financial Preparedness System, with the
help of one of the Financial Fitness Centers' representatives, the clients are
automatically provided the option of four powerful programs; four comprehensive
programs within the Blueprint System itself. Every client's financial
preparedness needs, including those educational needs that help to facilitate
the development of these sound financial preparedness skills, can be met by
taking advantage of that strategy, service, or course that best fits his/her
specific needs. For example:
o Debt-Retirement Program
This program is designed for individuals who are inundated with
bills and creditors, and do not have sufficient cash flow to
service monthly financial obligations. This program, for honorably
discharging all debts, is a positive alternative to bankruptcy.
Financial Fitness Centers assist each individual in:
o Establishing a workable household family budget;
o Education through weekly workshops on how to more effectively
control spending;
o Negotiating reduced payments with creditors;
o Disbursing monthly payments to creditors through our licensed,
bonded client trust account.
o Payment-Acceleration Program
This program is tailored to those busy individuals who would like
to utilize the Financial Fitness payment disbursement services, in
order to free up their time for more productive endeavors. It is
also designed for those individuals who find themselves in
financial inertia, not getting ahead, living paycheck to paycheck.
The Financial Fitness professionally trained staff assists in
providing:
o An established customized budget tailored to individual
specific needs, showing by percentage where your money is
being allocated;
o A personalized program to eliminate all debt, including home
mortgages and car loans, in approximately 1/3 the normal time
period;
o Help in tracking individual spending;
o Monthly accountability sessions with professionally trained
counselors;
o Weekly disbursements of payment obligations through our
licensed, bonded client trust account;
o Monthly spreadsheets accounting by dollar amount and
percentages;
o Personalized quarterly counseling to maximize suggested methods
in attaining personal financial goals.
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o I.R.S. Services
The Financial Fitness IRS Services are multifaceted to enhance
other Financial Freedom Enterprises, Inc. services or to stand
alone as an effective service to taxpayers who are in need of
assistance in dealing with the IRS.
o The IRS Services are available to the debt retirement client
upon enrollment with The Blueprint Financial Preparedness
System, with one of two objectives with the IRS for the
client:
a) Hardship - The client is unable to make payments.
b) Payment arrangements within the client's ability to pay.
o The Offer in Compromise program helps clients settle their
account, assisting non-filers, delinquent taxpayers, and
clients with huge tax burdens that they are unable to pay. The
OIC program, in simple terms, is an offer to the IRS which is
lower than what the debt is. For example, the IRS accepts
$1,000 as payment on a $19,000 debt (actual case). This
program has proven to be extremely successful.
o The IRS Abatement of Penalties is a program which is largely
unknown. Word of mouth helps to inform many potential clients
who are not already aware of this helpful program, due to the
fact that anyone who has paid off an IRS debt (with the last
payment made being less than three years previous) has an
excellent chance to have their penalties abated.
o Educational Training & Workshops Support
Financial Fitness Centers educational training and workshop program
consists of twelve video tape courses, with accompanying workbooks,
and are designed to give management training and support for
developing sound money management skills. These video courses
and/or monthly workshops assist the client in establishing his/her
actual financial goals, helping to set them on the course which
they need to follow if they are to ever achieve greater personal
freedom for themselves. As part of this support there are also the
ongoing counseling sessions which the Center counselors provide.
While the client is establishing his/her financial course, he/she
will often need encouragement and direction, which is actually the
heart of Financial Fitness Centers service.
o Financial Fitness Centers Can Help Everyone
o Debt-Management strategies and mortgage equivalency rate
reduction;
o Increase the client's disposable income by 10% to 20% without
a pay increase;
o Learn specific strategies to pay off all debt, including cars
and home, in approximately one-third the time period, and at an
equivalency rate of 4% to 5%;
o Put an end to paycheck-to-paycheck living, and high interest
payments because of debt;
o Solve all immediate and pressing financial crises;
o Relieve stress and worry associated with financial problems;
o Gain control of personal financial future.
o "Don't Become Another Statistic"
o In this decade, America's $10 Trillion Debt - from the
consumer, corporate and government sectors - doubled the
nation's $5 trillion GNP. Household debt as a percentage of
income after taxes skyrocketed from just over 80 percent in
the 1980s to almost 10 percent in the 1990s.
o A recent USA Today article noted that the rearing of a
single child in America will cost approximately $250,000. The
Centers educate the client on financial strategies to provide
the funds to give clients' children the advantages they'll
need to survive in the 21st century.
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o A college education ranks second among major purchases an
average person will make in his or her lifetime - second only
to purchasing a home. The Financial Fitness services is
developed to show how a client can afford both.
Financial Wellness Subsidiary
Ms. Walker has been working toward the formation of the Financial Wellness
Corporation to offer the Financial Fitness educational materials to Health Care
Providers, inasmuch as recent analysis of the dramatically increasing health
care costs in America shows that the most serious cause of illness in this
country is brought on by stress; and, one of the major causes of stress is the
result of financial pressures. Never before have individuals and families been
under such financial stress. Consumer's debt in the United States now exceeds
the national debt, and the accompanying problems reach into every household.
Ms. Walker has developed the Financial Fitness proprietary product and
services to address these stress related illnesses; and proposes to direct its
marketing efforts to Health Maintenance Organizations, and other organizations
in the Managed Health Care Industry and Insurance Companies.
The Financial Wellness program will be presented through Interactive
Multi-Media, CD-ROM electronic technology. Ms. Walker and her staff have spent
many years developing and working with automation techniques offered by
companies such as IBM, Microsoft, Lotus, Novell, and Apple to develop systems
that take advantage of interactive multimedia. Automation products such as
CD-ROMs, personal computers, networking, video conferencing, multimedia, and
other advanced automation capabilities will play a major role in delivering and
supporting these products and services.
The End User Corporate Market Overview - HMOs and insurance companies are
promoting wellness programs to potential and existing clients because of
competitive pressures. The products promoted by Financial Wellness are meant to
complement the internal wellness solution because many companies have
implemented some form of a wellness program internally. The advantage of
Financial Wellness is the unique contribution it can bring to wellness programs
by providing financial education and money management skills heretofore
unavailable as a stress reducing program. The products promoted by Financial
Wellness are designed to enhance the existing company wellness program and are
offered directly to the client company either by Financial Wellness or its
partners. Financial Wellness will also provide customized systems that will be
offered by the health care providers under a licensing arrangement with
Financial Wellness. These products and services will be used to enhance existing
wellness programs.
Also, with the present trends associated with health care reform, many
health care providers are attempting to provide additional services to
differentiate them from the public perception of huge, uncaring, bureaucratic
organizations. In the past few years, it has become fashionable to show how many
health care providers are not concerned with the individual and are more
concerned with the dollar. Additional services and products offered to their
clientele can change this perception. Further, new and exciting programs can be
promoted by the health care provider to differentiate them from their various
competitors. Providing financial education and training is a giant leap forward
from previous wellness programs which places Financial Wellness on the cutting
edge as a provider of financial education through multimedia.
Marketing Plans
Management has executed a Marketing and Advertising Agreement with two
prominent national advertising firms, FMS Direct, a Direct Response Television
marketing production; and a retail representation firm, Mack Media Specialties,
collectively FMS Direct, a recognized leader in the Infomercial industry and
"Specialists in TV Direct Marketing," to create and produce a High Impact,
Result Oriented 30 minute TV Infomercial and Direct Response Print and TV
Commercials, to be shown in various television media outlets through Mack Media
Specialties, providing on-going marketing support in all phases of the execution
of the program. The Infomercial will present the Financial Fitness products in
an interesting, persuasive, entertaining format which calls for immediate viewer
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response directly to an 800 number telemarketing operator, who will record order
information, along with other detailed consumer demographics data for subsequent
marketing.
Other targeted markets include home shopping channels, wholesale clubs,
universities, and various retail outlets, including foreign distribution (with a
targeted market of 75 million Americans believed to desperately need
"Stress-Free Debt Reduction"). Management's pro-forma estimate is for generating
potential sales of $11 Million annually in the first year of full operations.
Summary of the Financial Fitness Stress-Free Debt Reduction Marketing
o Infomercials, through Interactive Media (cable, network TV and
satellite), including DRTV, Home Shopping Channels, Computer
Services (CompuServe, Genie, Prodigy, etc.) interactive cable.
o Direct Mail and Print directed to "Affinity Groups"; e.g., large
corporations, universities, fraternities and sororities, and
multi-level marketing and mail order catalogues companies, providing
special discount earnings through volume purchasing power.
The Test Marketing
In February 1995, Ms. Walker's $75,000 "Test Marketing" production was
aired on a major television channel in New York City and Atlanta, Georgia.
Rodney Buscher, President of Los Angeles-based FMS Direct (the "father" of
Infomercials and author of the definitive treatise on Infomercials) had produced
two 60-second and two 120-second "spots." The response was an amazing 10,000
callers requesting the Financial Fitness materials. Mr. Buscher told Ms. Walker
that the response was far larger than any of his previous 229 Infomercials,
concluding that his previous Infomercials had been geared to a "Specific Product
or Service," and concluded that the Financial Fitness market was so broad,
encompassing all demographic areas; and, therefore was without limitation,
leading Mr. Buscher to believe that Ms. Walker's projections of $11 Million in
first year sales based on her historical experience was from $1 Million to $2
Million short of what his experience indicated to be reasonably anticipated.
However, because this is such a new marketing strategy for Financial Fitness,
there can be no assurance of what response might actually result when the airing
was in other demographic markets.
Franchise Marketing In 1997
By January 1997, Financial Fitness will launch its nationwide Franchise
Marketing with the filing of the Franchisor Offering Circular with the Federal
Trade Commission and the Attorney General's Office in each of the states where
the Company is doing business, and those states anticipated to be Nationwide in
a reasonably short time after the Infomercials have been aired in other
demographic/geographic areas.
Based on Ms. Walker's discussions with the producer of the Infomercials,
Rodney Buscher, it is anticipated that Franchise Fees of $6,000,000 can be
generated in the first twelve months. Although there can be no assurance, the
meetings with Franchise Stores International confirmed that 400 Franchises at
$15,000 each could be reasonably anticipated.
Caveat: All financial projections are inherently unreliable inasmuch as
they are predicted on projections of future financial, social, economic and
political events; some, if not many, will not occur as predicted, and some may
not occur at all.
THIRD PARTY MARKETING AGREEMENTS
History of Growth by Personal Referrals
After an eight-year history of growth, serving over 15,000 individuals
participating in the Company's financial seminars and utilizing the Company's
printed and video learning materials, all by word-of-mouth personal referrals,
in 1996 the Company adopted an aggressive national marketing plan, resulting in
the following:
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Financial Potential Corporation
The Company has a joint venture agreement with Financial Potential
Corporation ("FPC") of Alamosa, Colorado (a company offering the following
synergistic financial educational materials) whereby the Company supplies FPC
its products and services. Since 1990, FPC has been primarily in the business of
manufacturing and marketing of a product called the Debt SolutionSM. The
company, upon signing a national marketing contract with National Marketing
Alliance ("NMA") (January, 1996) has entered into an expansion program. Products
and services to be added to the company's portfolio throughout 1996 are:
o Financial Education
o Life, Annuity, Disability
o Employee Leasing and related products and services
o Mortgage Financing
o Consumer Financing
o International Advanced Markets
o Specialized Financial Services
National Marketing Alliance
In February 1996, the Company commenced offering its products and services
to the National Marketing Alliance ("NMA") of the Denver Technological Center in
Englewood, Colorado, through Financial Potential Corporation marketing agreement
with NMA with 25,000 licensed life insurance agents, writing over $25 million in
annualized premiums (representing $4 billion face amount insurance) in all 50
states and U.S. off-shore countries. The NMA agents utilize the Company's
products, particularly the Debt Retirement and Payment Acceleration financial
educational materials as a method to enhance the life insurance sales by showing
clients how to organize their financial affairs to save funds in excess of the
annual life insurance premium. NMA guarantees the Company a minimum of 1,000 new
clients monthly to maintain NMA's contractual commitment to the Company. See
Pro- Forma Financial Projections in the section preceding the Company's audited
financial statements for an analysis of the anticipated Company revenues under
this NMA agreement.
OMEGA Tax Consultants
OMEGA is a tax consulting firm in Columbus, Ohio with 1,000 clients
throughout the State of Ohio and anticipates being able to expand to 5,000
clients with the introduction of the Company's Pay Excel Program (although the
Company makes no representations as to the number of OMEGA clients who will
utilize the Company's programs).
Garden State Consumer Credit Counseling
Garden States operates in New York and New Jersey assisting "Crises" debtor
clients, serving over 7,500 clients, represents to the Company that they receive
over 25,000 telephone inquiries annually for assistance of the kind provided by
the Company through its Debt Retirement and Payment Acceleration program, where
the Company receives $120.00 per client set-up fee and $100.00 monthly (that is
shared 50% - 50% with the vendor).
Manuel Ramos Hispanic Assistance Program
Mr. Ramos, a widely acclaimed host to Hispanic Radio and Television
stations in southern California and Arizona, with outreach to Hispanic
populations throughout the U.S. (a $20 million Hispanic potential market), is
finalizing, by September 30, 1996, a Spanish language version of the Company's
Debt Free Retirement and Debt Management programs. Carol Walker and Mr. Ramos
inaugurated the program in late August 1996, with a target of 1,000 clients per
month by the late fall 1996.
Texas Christian Church Organizations
Company Management has introduced its Debt programs to a number of
Christian Church Groups, commencing in the Spring of 1996 in Dallas, Texas. The
Company is completing the text and video of financial independence based on
Biblical scriptures. When these supplemental Biblical materials are developed in
text and
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video format in the Fall of 1996, the Company's modest anticipation is
approximately 400 new clients monthly as the number of participating churches
expands from the current nine in the Dallas, Texas area.
In addition, with the marketing expertise of Financial Potential
Corporation, and the Company's other new joint venture partners, an aggressive
solicitation program is commencing to secure the recommendation of the Company's
programs by local, area and national real estate, insurance and mortgage brokers
and agents.
Resumes of Directors
Ronald Zeller, Chairman (63) is a Senior Consultant with Mark Kamin
Associates, a firm conducting nationwide seminars in Motivation, Training and
Developing, and has spent his entire life as an innovative educator. Mr. Zeller
is President of Zeller & Zeller Consulting (1996-present), was a consultant for
Kamin and Associates (1995); and Founder and CEO of Primequal International
(1992-1994), all focusing on educational enhancement programs. Mr. Zeller holds
both a B.S. and an M.S. Degree from Brigham Young University.
Carol Shelton Walker, founder, President and CEO of Financial Fitness
Centers, is a nationally acclaimed author and motivational speaker. Her popular
book, published in 1977 How to Succeed in Business Without Being a Man was the
first in the nation to prove to women they could break the "glass ceiling."
After ten years of founding and managing two multi-million dollar real estate
and insurance businesses in Salt Lake City, Utah, Ms. Walker commenced
developing the materials that are used in the Financial Fitness Centers. Ms.
Walker has been the recipient of numerous local and national awards, including
the 1990 National Outstanding Business Woman of the Year, awarded by the
Institute for Constitutional Education (in Washington, DC); the 1989-90 Award
for Excellence in Consumer Education from the Money School in Boston; and a
Nominee for the 1994 Horatio Alger Award; and has been listed in Who's Who in
American Businesswomen for several years. She has been awarded a B.A. Degree
(Finance) from George Wythe College. Ms. Walker has been named "Honorary
Citizen" by the Mayors of 21 cities across America, including New York City,
Washington, New Orleans and Denver. Her awards are almost too numerous to list
in this prospectus. However, some of the other more prestigious include the
National Sales Achievement and National Quality Awards from the National
Association of Life Underwriters. Her articles have been published in leading
trade, money and women's magazines; and, she is a frequent guest speaker for
radio, television and educational seminars nationwide.
Robert A. Needham (41) has over 15 years as a senior executive in
management, sales and marketing, currently President of Spectrum Advanced
Markets, Inc. (1993-present), the founder and an executive officer of eight
companies involved in strategic marketing, including First American Capital
Corporation (1990 to 1993); and First American Marketing Corporation, dba
Associated Independent Agencies, from which he resigned as Vice President and
National Sales Director in 1993 to move to Birmingham, Alabama to return to
private practice as an insurance wholesaler/agency recruiter and marketing
consultant. He served the U.S. Air Force ("With Distinction") as an Asset
Trajectory Design Analyst for the Mission Launch team of the Space Shuttle
Program while on assignment with the National Aeronautics and Space
Administration (NASA). Mr. Needham holds a B.S. Degree from Troy State
University in Mathematics and Computer Science; and is to be awarded a J.D.
(Law) Degree in December 1996 from the Birmingham School of Law.
Douglas T. Snarr (61) is co-founder and C.E.O. of SNARR Advertising, dba
"Pocket-It-Organizers," an innovative, first of its kind, pocket-sized time
management and daily planner to compete in this multi-billion dollar industry
(1991-present). In his youth, Mr. Snarr formed Snarr Advertising, which he built
into one of the nation's largest outdoor/billboard advertising companies, with
Time Magazine reporting, "That by 1965 Snarr Advertising boasted assets of $3.5
million." The 1965 Highway Beautification Act required all billboards on federal
land to be removed by July 1970 (representing 70% of Snarr's 1600 billboards in
13 Western states). Doug Snarr commenced a five year campaign of lobbying to
provide states to implement the Act by compensating the billboard companies and
he had the support of every major news and business magazine. He then embarked
on an eight-year career of giving inspirational seminars for motivational and
positive thinking, career and personal improvement until he resigned, sold his
company, and became a Mormon Missionary in Alaska for three years, returning to
found Snarr Communications for the purpose of producing and presenting
educational workshops and motivational programs known as "The American Renewal
Series." Doug Snarr was eulogized in the national press, where he was favorably
compared with the kings of positive thinking speakers, Norman Vincent Peale and
Zig Ziglar, and where Snarr was being referred to in the press as "One of
today's most charismatic orators." Building up to having over 500 Affiliates for
educational and motivational seminars, utilizing the latest electronic
-10-
<PAGE>
video and motion picture screen reproductions, resulted in a satellite
distribution network known as "SATELLITE NETWORK AFFILIATES," which was sold to
Merv Adelson, CEO of Lorimar Telepictures, the nation's largest supplier of
television programming.
Robert Ground, Ph.D. (75) Mr. Ground is an Award-Winning Director and
member of Hollywood's Directors Guild of America for more than 30 years, having
produced and directed feature films in the U.S. and Europe. He holds extensive
patents in agricultural chemistry and photographic chemistry, high quality
automotive load-ac. batteries for under-industrialized countries, the developer
with Sylvania Electric for the continuous spectrum fluorescent tube used in
plant growth; and is the author of several best-selling specialty scientific
books, including the basic manual of hydroponics, Food For Tomorrow's World. Mr.
Ground is also the recipient of the Congressional Award for Literature. From
1993-1996 he was President and CEO of the Company's predecessor, IMPACT Income
and Investments, Inc. He writes a weekly column for a 500,000 circulation
newspaper in Tempe, Arizona (the "Arizona Senior Citizen"), is Associate Editor
for Cambridge Books, Inc. and is under contract through December 1997 with
Dannyfilm, Rome, Italy. He holds a B.S. Degree from the University of Western
Maryland and a Ph.D. Degree from Brantridge College, Cambridge University
(England).
Alternative Director: John Rivera, Vice President of Administration, holds
a Ph.D. in Education Administration/Public Policy from San Diego University and
a M.A. in Guidance and Counseling from the University of New Mexico. He has
fifteen years combined experience as an administrator, consultant, instructor,
counselor, and Department Chair with San Diego Community College District. Dr.
Rivera has held several executive administration positions; as well as with the
San Diego city administration. Known as a highly motivational speaker, he has
been a guest lecturer at San Diego State University Graduate Counseling Program,
La Jolla Center for Exploration and Development of Human Potential, and National
Hispanic School Board Members Association. The many awards received by Dr.
Rivera include: American Council on Education (A.C.E.) Fellow, E.D.P.A.
Fellowship Award from the U.S. Office of Education and is listed in Who's Who
Among Hispanic Americans.
Gene Walker (65), Vice President, was an executive scientist for the
Lockheed Martin Corporation, and for Westinghouse Nuclear (1990-1995). Mr.
Walker served as President of Financial Freedom Enterprises of Idaho, the
Company's predecessor. He is Carol Walker's husband. He holds a B.S. Degree from
Utah State University.
Douglas Hathaway (30), Secretary-Treasurer since mid-1996, has held a
series of middle management positions (primarily with American Microsystems,
Inc.) since graduation from Idaho State University with a B.A. (Finance) and an
MBA Degree.
Malcolm D. Crawford, Esq. (66) is a practicing attorney specializing in
Corporate Securities and Financial Law nationwide, with offices in Denver,
Colorado. He is a former member of the faculties of, Colorado University,
Albertus Magnus College, and Yale University (Economics); the Universities of
Denver and San Francisco (Law); He received two Appointments as Financial
Attache and Assistant to the Ambassador at the United State Embassies in London,
England and Paris, France. He has degrees from: Western Kentucky University
("Highest Distinction"), Colorado University (Cum Laude/Finance), the
Harvard-Tufts/Fletcher School of International Law and Diplomacy (M.A.), and
Yale Law School (J.D.).
-11-
<PAGE>
PRO-FORMA FINANCIAL PROJECTIONS
Caveat: All financial projections are inherently unreliable inasmuch as they are
predicted on projections of future financial, social, economic and political
events; some, if not many, will not occur as predicted, and some may not occur
at all.
<TABLE>
<CAPTION>
GROWTH ASSUMPTIONS 1996 1997 1998 1999
<S> <C> <C> <C> <C>
Existing Offices 15 30 45 60
New Debt Retirement Clients 300 10,800 16,200 21,600
New Payment Acceleration Clients 100 10,800 16,200 21,600
Total DR Clients 3,300 14,100 30,300 51,900
Total PA Clients 2,200 13,000 29,200 50,800
Clients Completed or Defaulted (60) (3,240) (4,860) (6,480)
Total Clients 5,440 23,860 54,640 96,220
INCOME - Services
Enrollments DR $36,000 $1,296,000 $1,944,000 $2,592,000
Enrollments PA 12,000 1,296,000 1,944,000 2,592,000
Total DR Trust Payments 1,650,000 7,050,000 15,150,000 25,950,000
DR Fee Monthly Income 165,000 705,000 1,515,000 2,595,000
PA Fee Monthly Income 220,000 1,300,000 2,920,000 5,080,000
Franchise Income 225,000 225,000 225,000 225,000
Seminar & Training 19,860 79,161 79,181 79,161
SUB TOTAL 677,860 4,901,161 8,627,181 13,163,161
INCOME - Product Sales
Blueprint $16,320 $71,580 $163,920 $288,660
Course Materials & Books 25,200 50,400 50,400 50,400
Video Sales 101,400 551,400 551,400 551,400
SUB TOTAL 142,920 673,380 765,720 890,460
EXPENSES - Marketing
DR Monthly Marketing Costs - Residuals $41,250 $176,250 $378,750 $648,750
PA Monthly Marketing Costs - Residuals 110,000 650,000 1,460,000 2,540,000
Other Marketing Expenses 20,160 40,320 40,320 40,320
Franchise Expenses 148,500 148,500 148,500 148,500
Advertising Expenses 27,114 196,046 345,087 526,526
SUB TOTAL 347,024 1,211,116 2,372,657 3,904,096
EXPENSES - Office
Officer and Director Salary $127,200 $219,300 $373,200 $581,100
Administration 15,000 25,000 25,000 25,000
Number of Employees - Operations 6 33 73 127
Payroll - Operations 99,000 585,000 1,314,000 2,286,000
Other Office Expenses 40,800 178,950 409,800 721,650
SUB TOTAL 282,000 1,008,250 2,122,000 3,613,750
NET CASH FLOW
Total Income $820,780 $5,574,541 $9,392,901 $14,053,621
Total Expense (629,024) (2,219,366) (4,494,657) (7,517,846)
NET INCOME (LOSS)* $191,756 $3,355,175 $4,898,244 $ 6,535,775
======== ========== ========== ===========
- -------
*These financial projections are calculated prior to an evaluation of revenues arising from either: (i) Sale of
Franchises; and (ii) Revenues resulting from Infomercials.
-12-
</TABLE>
<PAGE>
ASSUMPTIONS USED IN PROJECTING FUTURE FINANCIAL RESULTS
Advertising Expense (as a percentage of income from services)...........4.00%
New Centers Added Annually................................................15
Annual Number New Debt Retirement Clients per Center.....................360
Annual Number New Payment Acceleration Clients per Center................360
Clients Completed or Defaulted (as a percentage of new clients)...........15%
Debt Retirement Program "Income Analysis"
Average Monthly Payment to Clients...................................$500
Fee Received (as a percentage of Monthly payments to Creditors)....... 10%
Enrollment Fee.......................................................$120
"Payment Acceleration Program" Income
Enrollment Fee.......................................................$120
Monthly Fee..........................................................$100
(Less 50% payment to sales agent)
Number of Employees - 1 per clients ==>.................................400
Average Operations cost per employee (p/r including tax liability)...$18,000
All Officers' Aggregate Yearly Salaries.............................$100,000
Aggregate Officers' Salary Increase per 1,000 Clients.................$5,000
Overhead Expenses per 1,000 Clients...................................$7,500
Franchise Fee........................................................$15,000
Franchise Expense as percentage of fee = 66%
OTHER NOTES
o Debt Retirement clients are "Crisis" clients. Payment Acceleration clients
are NOT crisis clients.
o A "Center" is a trained satellite organization that has a license agreement
to sell the Company's services and products.
o The above figures show a "franchise" and a "center." For the purposes of
this projection they are considered the same as both are client providers.
o The Company in both the Debt Retirement and Payment Acceleration programs
helps individuals to set-up and maintain workable budgets. Some people will
complete the Program and some (@ 15%) terminate prior to reaching the goals
the Company's program had established for each client. This complete/default
rate has been tracked in the Debt Retirement program at 15% (management
believes that the Payment Acceleration program will have the same rate).
Item 6. Resignation of Registrant's Directors
Resignation of old Directors as a condition of the Acquisition Agreement
referred to in Item 1.
-13-
<PAGE>
Item 7. Financial Statements - Proforma Financial Statements and Exhibits
A. The financial statements for Financial Freedom Enterprises, Inc. are
included herein.
B. The Exhibits attached as Appendix A are filed in response to Item 601 of
Regulation 8-K.
Item 8. Changes in Fiscal Year
None
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized:
FINANCIAL FREEDOM ENTERPRISES, INC.
Date: September 12, 1996
/S/ CAROL WALKER
--------------------------------------
Carol Walker, President
-14-
<PAGE>
APPENDIX TO FORM 8-K FOR FINANCIAL FREEDOM ENTERPRISES, INC.
Index to Exhibits
(2) Acquisition Agreements
(2)(a) Articles of Merger
(2)(b) Articles of Amendment
-15-
FILED COPY
ARTICLES AND PLAN OF MERGER
(Pursuant to CRS 7-111-105) (Stamped
961119426 C $60.00
SECRETARY OF STATE
09-11-96 15:35)
IMPACT Income Investment, Inc. ("IMPACT"), a Colorado Corporation, at a
shareholder meeting held on June 24, 1996 following a June 7, 1996 statutory
notice of its shareholders setting forth the proposed merger with Financial
Freedom Enterprises, Inc., an Idaho Corporation for the plan of Merger, merged
with and into IMPACT, the surviving corporation. The Plan of Merger provided for
the following:
1. The number of votes cast for the plan by the IMPACT shareholders of its
Common Stock was unanimous and sufficient for approval. The Plan of Merger was
previously approved by the Board of Directors of each of the constituent
corporation; and, by the shareholders of Financial Freedom Enterprises, Inc. (in
accordance with Idaho law).
2. The Articles of Incorporation of the surviving corporation were
authorized to be Amended as follows:
A. The name of the surviving corporation was changed to Financial
Freedom Enterprises, Inc.
B. The authorized number of Preferred Stock of the surviving
corporation was increased to 5,000,000 shares and the Par Value was
increased to $1.00 per share.
4. The resignation of the Board of Directors of IMPACT was accepted and the
following members of the Board of Directors were elected:
a. Ronald Zeller
b. Carol A. Walker
c. Robert A. Needham
d. Douglas T. Snarr
e. Robert Ground
f. John Rivera (alternate)
5. New stock certificates were authorized to be issued to the Preferred and
Common Stockholders of Financial Freedom Enterprises, Inc., as approved by the
Board of Directors of IMPACT on June 3, 1996 and as set forth in the Plan of
Merger and to the IMPACT shareholders in the same amounts held by each IMPACT
shareholder as of June 24, 1996 date of the shareholders' meeting.
The acquisition and merger is to become effective as of June 24, 1996 or as
provided in the Colorado Revised Statutes.
APPROVED, ACCEPTED AND RATIFIED:
IMPACT INCOME INVESTMENTS, INC.
By: /S/ ROBERT GROUND By: /S/ JEROME MARKS
------------------------------- ---------------------------
Robert Ground, President Jerome Marks, Secretary
FINANCIAL FREEDOM ENTERPRISES, INC.
By: /S/ CAROL WALKER By: /S/ DOUGLAS HATHAWAY
------------------------------- --------------------------
Carol Walker, President Douglas Hathaway, Secretary
MAIL TO:
Colorado Secretary of State
Corporations Office
1560 Broadway, Suite 200
Denver, Colorado 80202
(303)894-2251
ARTICLES OF AMENDMENT (Stamped 961119427 C $25.00
to the SECRETARY OF STATE
ARTICLES OF INCORPORATION 09-11-96 15:36)
FILED COPY
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendments to its
Articles of Incorporation:
FIRST: The name of the corporation is (note 1) IMPACT Income Investments,
Inc.
SECOND: The following amendment to the Articles of Incorporation was
adopted on June 24, 1996, as prescribed by the Colorado Corporation Code, in the
manner marked with an X below:
Such amendment was adopted by the Board of directors where no shares
- ----- have been issued.
X Such amendment was adopted by a vote of shareholders. The number of
- ----- shares voted for the amendment was sufficient for approval.
Article I. "NAME" was amended to read:
"The name of this corporation shall be
FINANCIAL FREEDOM ENTERPRISES, INC.
THIRD: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows:
N.A.
FOURTH: The manner in which such amendment effects a change in the amount
of stated capital, and the amount of stated capital as changed by such amendment
are as follows: Article IV, "CAPITAL STOCK" was amended to increase the par
value of the 100,000,000 shares of Voting Preferred Stock to $1.00 per share.
FINANCIAL FREEDOM ENTERPRISES, INC.
----------------------------------(Note 1)
By: /S/ CAROL A. WALKER
--------------------------------------
Its President
and /S/ DOUGLAS HATHAWAY (Note 2)
--------------------------------------
Its Secretary
--------------------------------------
Its Director (Note 3)
NOTES: 1. Exact corporate name of corporation adopting the Articles of
of Amendments. (If this is a change of name amendment the name
before this amendment is filed)
2. Signatures and titles of officers signing for the corporation.
3. Where no shares have been issued, signature of a director.
