Attached files
As
filed with the Securities and Exchange Commission on ___________________,
2009
Registration
No. 333-162293
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment No. 1
to
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
FREE
FOR ALL, INC.
(Name
of small business issuer in its charter)
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Delaware
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5122
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27-058-1246
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(State
or jurisdiction of
incorporation
or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
I.D.
Number)
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303
Lippincott Drive, Suite 320
Marlton,
New Jersey 08053
856-652-2249
(Address
and telephone number of principal executive offices)
303
Lippincott Drive, Suite 320
Marlton,
New Jersey 08053
856-652-2249
(Address
of principal place of business or intended principal place of
business)
Gerard
Ferro, Chief Executive Officer
303
Lippincott Drive, Suite 320
Marlton,
New Jersey 08053
856-652-2249
(Name,
address and telephone number of agent for service)
Copies
to:
Gary
A. Agron, Esquire
5445 DTC
Parkway, Suite 520
Greenwood
Village, CO 80111
(303) 770-7254
(303)
770-7257 (Fax)
Approximate date of
commencement of proposed sale to the public: As soon as practicable after
the effective date of this registration statement.
If
any securities being registered on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act, check the
following box: ý
If
this form is filed to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, 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 effective 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 effective registration statement
for the same offering.
Indicate by check mark whether Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated
filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
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Large
accelerated filer
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Accelerated
filer
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Non-accelerated
filer
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Smaller
reporting company |X|
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CALCULATION
OF REGISTRATION FEE
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Title
of Each Class of
Securities
to be Registered
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Amount
to
Be
Registered
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Proposed
Maximum
Offering
Price
Per
Share
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Proposed
Maximum
Aggregate
Offering
Price
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Amount
of
Registration
Fee
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||||||
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Common
stock, $.001 par value
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2,500,000
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$1.00(1)
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$2,500,000
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$138
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||||||
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Common
stock, underlying warrants
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2,500,000
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$1.00
(2)
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$2,500,000
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$138
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||||||
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Totals
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5,000,000
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$5,000,000
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$276
(3)
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|||||||
(1)
Represents the last price at which the Registrant sold
common stock. Also represents the offering
price.
(2)
Represents the exercise price of the warrants which was
determined to be priced at the same price as the last sale price of the common
stock.
(3) Previously paid.
This
registration statement registers the resale of 2,500,000 shares of common stock
and 2,500,000 shares of common stock underlying warrants held by security
holders of the Registrant. In addition to the number of shares set
forth above, the amount to be registered includes any shares of common stock
issued as a result of stock splits, stock dividends and similar transactions in
accordance with Rule 416.
The
Proposed Maximum Offering Price Per Share and the Proposed Maximum Aggregate
Offering Price in the table above are estimated solely for the purpose of
calculating the registration fee pursuant to Rule 457(c) promulgated under
the Securities Act of 1933.
The
Registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until it shall file a further
amendment which specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this prospectus is
not complete and may be changed. We may not sell these securities
until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell
these securities, and we are not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
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Subject
to completion
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Dated ____________2009
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5,000,000
shares of common stock
FREE FOR ALL,
INC.
This
prospectus covers the resale by our 15 selling stockholders of 2,500,000 shares
of our common stock and 2,500,000 shares underlying common stock purchase
warrants. None of the selling stockholders are officers, directors,
5% or greater stockholders or affiliates. None are broker-dealers,
affiliates of broker-dealers or have a material relationship with
us. The selling stockholders’ names and share amounts are set forth
under “Selling Stockholders and Plan of Distribution” in this
prospectus. The shares will be offered by our selling stockholders
initially at $1.00 per share and then at prevailing market prices or privately
negotiated prices when and if the shares are listed for quotation on the over-the-counter Bulletin Board. The offering
will terminate on the earlier of the date all of the shares are sold or one year
from the date hereof. We will not receive any proceeds from the sale
of shares offered by the selling stockholders. Any proceeds we
receive from the exercise of warrants will be added to our working capital and will be used for operating expenses and advertising and
marketing costs.
There
is no public market for our common stock and it is not quoted or listed on any
exchange.
Investing in our common stock
involves substantial risks. See “Risk Factors” beginning on
page 3.
The
Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or passed upon the adequacy or accuracy
of this prospectus. Any representation to the contrary is a criminal
offense.
The date
of this prospectus
is
, 2009.
TABLE
OF CONTENTS
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About
this Prospectus
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i
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Summary
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1
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Summary
Financial Data
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2
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Risk
Factors
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3
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Forward-Looking
Statements
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6
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Use
of Proceeds
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6
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Management’s
Discussion and Analysis of Financial Conditions and Results of
Operations
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7
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| Conditions and Results of Operations | 10 |
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Business
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14
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Management
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20
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Security
Ownership of Executive Officers, Directors and Beneficial Owners of
Greater than 5% of Our Common Stock
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22
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Selling
Stockholders and Plan of Distribution
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22
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Related
Party and Other Material Transactions
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24
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Description
of Capital Stock
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24
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Shares
Eligible for Future Sale
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25
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Experts
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25
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Legal
Matters
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26
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Where
You Can Find More Information
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26
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Financial
Statements
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F-1
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ABOUT
THIS PROSPECTUS
You
should rely only on the information contained in this prospectus as we have not
authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to
sell these securities in any jurisdiction where such an offer or sale is not
permitted.
SUMMARY
This
summary highlights material information regarding our Company and the offering
contained in this prospectus. However, you should read the entire
prospectus carefully, including the financial information and related notes,
before making an investment decision.
Business
Free For
All, Inc., was organized in May 2009 to provide a menu of discount products and
services featuring a free prescription discount program. On June 30,
2009 we acquired the discount prescription card division (“Division”) of New
Millenium Consultants, LLC (“NMC”), a company
founded by our Chief Executive Officer, and since that time, we have
offered a program to allow individuals to have access to significant discounts
on health care, dental, vision care and prescriptions along with an array of
other products and services, through one customizable program
offering.
We market
our program to to the uninsured and the underinsured through “sponsors” such
as non-profit organizations, affinity groups, physicians’ offices,
hospitals, benefit groups, associations, media outlets and the like. who are
interested in enhancing their customer loyalty. The
consumer saves significantly, we receive between $2.50 and $2.85 per qualifying
prescription transaction and we pay the sponsor (which in some cases is Mr.
Ferro, our Chief Executive Officer) through whom we distribute the card up to
$1.25 per qualifying prescription transaction. Accordingly, our share of the
proceeds from the prescription sales is between $1.25 and $1.60 per
transaction. We also receive 80% of the mark-up of
GetBenefitRelief products. See "Management -- Executive
Compensation."
Our
prescription savings discount card (“RxCut” card) allows prescription drug users
to save money on all types of FDA approved prescription medications. At the time
of purchase, members simply present their card at a participating pharmacy to
receive discounts on brand-name drugs and generic drugs.
The card saves members up to 75% on all medication. There is no fee for
consumers to acquire the RxCut card. Our network currently includes all major
drug chains and most independent pharmacies, totaling over 54,000
pharmacies. Our network of pharmacies is
provided by Paramount Rx, Inc. who receives fees from the pharmacies on any
prescriptions filled by our members. Our agreement with Paramount may be
cancelled by either party on 60 days notice. We previously had an
agreement with Agelity for these services but have since switched to Paramount
for better commission terms. The RxCut card does not require
enrollment information from the participants.
To date the Company has concentrated on
developing the Rxcard and expanding its sponsor base through uniform sponsor
agreements. These agreements pay the sponsor up to $1.25 per qualifying
transaction. FFA has entered into an agreement with Paramount Rx, Inc. who
provides FFA with access to its national pharmacy network, claims processing,
contracted drug pricing and other related services in connection with the
program. FFA is paid a transaction fee of $2.50 per paid program claim up
to 100,000 claims and $2.85 per program claim for claims exceeding 100,000 in a
monthly period.
The Company has an agreement with New
Benefits with which it operates its GetBenefitRelief program. New Benefits
is engaged in the business of the development, design, marketing, sale, and
distribution of discount cost containment programs.
Corporate
Information
We were incorporated in Delaware in May
2009 and in June 2009 we acquired certain assets of NMC, comprised of its
Division and its RxCut card brand name. References to
“us”, “we”, “Free For All” or the “Company” refer to Free For All, Inc.
Our website address is www.FreeForAllInc.com.
Information on our website is not a part of this prospectus.
The
Offering
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Securities
offered by our selling stockholders:
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2,500,000
shares of common stock
2,500,000
shares of common stock underlying
warrants
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Common
stock outstanding prior to
and after the offering(1):
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10,000,000
shares of common stock
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Use
of proceeds:
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We
will not receive any proceeds from the sale of the common
stock. Any proceeds from
the sale of warrants will be added to our working capital and used for operating expenses and advertising and
marketing costs.
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(1)
Excluding 2,500,000 shares issuable upon exercise of common stock purchase
warrants.
-1-
Description
of Selling Stockholders
Through
this prospectus, we are registering for resale 2,500,000 shares of our common
stock and 2,500,000 shares of common stock underlying common stock purchase
warrants (one share and one warrant comprise a “unit”) which we sold to a group
of 15 accredited investors in July 2009 for an aggregate of $250,000, or $.10
per unit.
The names and share amounts of the selling stockholders are set forth under
“Selling Stockholders and Plan of Distribution” in this
prospectus. None of the selling stockholders are officers, directors,
5% or greater stockholders or affiliates of our Company. None are
broker-dealers, affiliated with any broker-dealers or have a material
relationship with us.
SUMMARY
FINANCIAL DATA
The
following summary financial data should be read in conjunction with
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and our along with the Discount Prescription Card Division of
New Millennium Consultants, LLC financial statements and related notes for the
periods indicated below. This financial information is derived from
our along with the Discount Prescription Card Division of New Millennium
Consultants, LLC financial statements contained elsewhere
herein.
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Free
For All, Inc.
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Period
from Inception (May 18, 2009)
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||||
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through September
30, 2009
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Sales
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$ | 122,345 | ||
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Operating
Expenses
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$ | 304,504 | ||
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Net
Loss
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$ | (266,384) | ||
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Net
Loss Per Share
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$ | (.03) | ||
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Weighted
Average Shares Outstanding
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8,938,235 | |||
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Balance
Sheet Data
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||||
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June
30, 2009
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||||
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Current
Assets
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$ | 165,402 | ||
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Total
Assets
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$ | 246,821 | ||
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Total
Liabilities
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$ | 223,183 | ||
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Working
Capital (deficit)
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$ | (40,507 | ) | |
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Stockholders’
Equity
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$ | 23,638 | ||
-2-
RISK
FACTORS
The
shares of common stock offered by this prospectus involve a high degree of risk
and represent a highly speculative investment. You should not
purchase these shares if you cannot afford the loss of your entire
investment. In addition to the other information contained in this
prospectus, you should carefully consider the following risk factors in
evaluating our Company, our business prospects and an investment in our shares
of common stock.
We are an early stage Company and are subject to
all the risks of a start up business, which reduces the likelihood of our
success.
We are an early stage Company and have
generated limited revenue from operations. We are subject to all of
the risks inherent in a start up business. The likelihood of our
success must be considered in light of the problems, expenses, complications,
and delays frequently encountered in connection with an early stage
business.
We have had limited revenue, have
incurred operating losses and have a negligible net worth.
We have had limited revenue and
have been operating at a loss due to start up and marketing costs
associated with developing our products. We will incur additional
operating losses in the future as we continue to execute our business
plan. We have a negligible net worth.
We rely on two benefits providers to provide our
network of pharmacies and our benefits programs. The loss of either would
eliminate our access to our network of pharmacies or our available benefits to
our members.
We rely upon Paramount Rx, Inc. to provide our
network of 54,000 pharmacies and upon New Benefits, Ltd. to provide all
fulfillment under our benefits programs. Either company may cancell our
provision agreement with them on 60 days or less notice. In the event
either company cancells their program with us we would not longer have access to
the pharmacies or the ability to fulfull our benefits programs.
Changes
in healthcare regulation and industry consolidation could reduce our revenue and
any profitability.
The healthcare industry in the U.S. is
highly regulated and is subject to changing political, economic and regulatory
influences. Factors such as changes in reimbursement policies for
healthcare expenses, consolidation in the healthcare industry and general
economic conditions affect the purchasing practices and operation of healthcare
organizations and could adversely affect our revenue and profitability. Federal
and state legislatures are currently considering programs to reform or amend the
U.S. healthcare system at both the federal and state level. These programs may
contain proposals to increase governmental involvement in healthcare or
otherwise change the environment in which healthcare industry providers
operate. We do not know what effect any such proposals would have on
our business. Many healthcare industry participants are consolidating
to create integrated healthcare delivery systems with greater market
power. As the healthcare industry consolidates, competition to
provide products and services to industry participants will become more intense,
which could reduce our revenue and any profitability.
There are significant competitors in
our market and the barriers to entry are minimal ,
which could reduce our revenue and any profitability.
Our competitors in connection with the
distribution of pharmacy discount cards are primarily large Pharmacy Benefit
Managers (“PBMs”) who have funding, marketing, personnel and name recognition
superior to us. There can be no assurance that we can successfully
compete with the PBMs or other competitors. Any such competition could
reduce our revenue and any profitability by requiring us to spend additional
funds on marketing or increase payments to third party sponsors. New competitors could purchase the same network of phaarmacies
and the same benefits fulfullment services that we have with little advance
cost.
Our
auditors have indicated there is substantial doubt about our ablility to
continue as a going concern. Unless we generate profits or raise additional
funds we may be required to limit our operations.
In
their report dated September 10, 2009, our auditors indicated that due to our
losses and negative cash flow from operations there is substantial doubt about
our ability to continue as a going concern. As a result of these losses and
negative cash flows, if we are unable to generate profits or raise additional
funds , we could be required to limit our operations.
-3-
We
will be required to significantly expand our RxCut card user base in order to
generate a profit.
Our revenue is wholly dependent upon
consumers using our RxCut cards. Obtaining consumer users is time
consuming and requires significant outlays by us for marketing. There
can be no assurance that we can obtain sufficient users to realize a
profit.
We
may require additional funding, the absence of which may limit our
operations.
We plan
to expend substantial funds to continue to market and distribute our RxCut cards
and other products. We may require additional funds to achieve
these goals. No assurance can be given that additional financing will
be available or that, if available, it will be available on terms favorable to
us. If adequate funds are not available to satisfy working capital
requirements, we may be required to limit our operations. We expect to require an additional $150,000 of funding to
maintain our operations over the next 12 months.
We depend upon key personnel and additional staff, the loss of
which would adversely affect our operations.
We are dependent upon our management,
including Mr. Ferro, our Chief Executive Officer. The loss of
services of Mr. Ferro or any other key employees could have a material adverse
effect on us. Our success will also depend on our ability to attract
and retain additional highly qualified personnel who will be necessary to
provide marketing and operational support. We do not have written
employment agreements with, or key man life insurance on, any of our executive
officers or directors.
If
we fail to implement and maintain proper and effective internal controls and
disclosure controls and procedures, our ability to produce accurate and timely
financial statements and public reports could be impaired, which could adversely
affect our operating results, our ability to operate our business and investors’
views of us.
We must ensure that we have adequate internal financial and accounting controls
and procedures in place so that we can produce accurate financial statements on
a timely basis. We will be required to spend considerable effort establishing
and maintaining our internal controls, which will be costly and time-consuming
and will need to be re-evaluated frequently. We are in the process of
documenting, reviewing and, if appropriate, improving our internal controls and
procedures in anticipation of being a reporting company and eventually being
subject to Section 404 of the Sarbanes-Oxley Act of 2002, which will require
annual management assessments of the effectiveness of our internal control over
financial reporting. Both we and our independent auditors will
be testing our internal controls in anticipation of being subject to these
Section 404 requirements and, as part of that documentation and testing, may
identify areas for further attention and improvement. We are in the process of
developing disclosure controls and procedures designed to ensure that
information required to be disclosed by us in our public reports and filings is
recorded, processed, summarized and reported within the time periods specified
by applicable SEC rules and forms.
Implementing
any appropriate changes to our internal controls and disclosure controls and
procedures may entail substantial costs to modify our existing financial and
accounting systems and internal policies, take a significant period of time to
complete, and distract our officers, directors and employees from the operation
of our business. These changes may not, however, be effective in establishing or
maintaining the adequacy of our internal controls or disclosure controls, and
any failure to maintain that adequacy, or a consequent inability to produce
accurate financial statements or public reports on a timely basis, could
materially adversely affect our business. Further, investors’ perceptions that
our internal controls or disclosure controls are inadequate or that we are
unable to produce accurate financial statements may seriously affect the price
of our common stock.
-4-
Because
our common stock may be classified as “penny stock,” trading may be limited, and
the share price could decline.
Because our common stock may fall under the
definition of “penny stock,” trading in the common stock, if any, may be limited
because broker-dealers would be required to provide their customers with
disclosure documents prior to allowing them to participate in transactions
involving the common stock. These disclosure requirements are
burdensome to broker-dealers and may discourage them from allowing their
customers to participate in transactions involving the common
stock.
“Penny stocks” are equity securities
with a market price below $5.00 per share other than a security that is
registered on a national exchange, included for quotation on the NASDAQ system
or whose issuer has net tangible assets of more than $2,000,000 and has been in
continuous operation for greater than three years. Issuers who have
been in operation for less than three years must have net tangible assets of at
least $5,000,000.
Rules promulgated by the
Securities and Exchange Commission under Section 15(g) of the Exchange
Act require broker-dealers engaging in transactions in penny stocks, to first
provide to their customers a series of disclosures and documents
including:
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·
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A
standardized risk disclosure document identifying the risks inherent in
investment in penny stocks;
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·
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All
compensation received by the broker-dealer in connection with the
transaction;
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·
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Current
quotation prices and other relevant market data;
and
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·
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Monthly
account statements reflecting the fair market value of the
securities.
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These rules also require that a
broker-dealer obtain financial and other information from a customer, determine
that transactions in penny stocks are suitable for such customer and deliver a
written statement to such customer setting forth the basis for this
determination.
Our
directors and executive officers will continue to exert significant control over
our future direction, which could reduce the sale value of our
Company.
Members of our Board of Directors and
our executive officers and principal stockholders own approximately 63% of our
outstanding common stock. Accordingly, these stockholders, if they
act together, will be able to control all matters requiring approval of our
stockholders, including the election of directors and approval of significant
corporate transactions. This concentration of ownership may delay,
prevent or deter a change in control and could deprive our stockholders of an
opportunity to receive a premium for their common stock as part of a sale of our
assets or exchange value of our equity securities.
-5-
Investors
should not anticipate receiving cash dividends on our common stock.
We have never declared or paid any cash
dividends or distributions on our common stock and intend to retain near term
future earnings, if any, to support our operations and to finance
expansion. Therefore, we do not anticipate paying any cash dividends
on the common stock in the near future.
There
is a reduced probability of a change of control or acquisition of us due to the
possible issuance of additional preferred stock. This reduced
probability could deprive our investors of the opportunity to otherwise sell our
stock in an acquisition of us by others.
Our
Articles of Incorporation authorize our Board of Directors to issue up to
5,000,000 shares of preferred stock, of which no shares have been
issued. Our preferred stock is issuable in one or more series and our
Board of Directors has the power to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, liquidation preferences and the
number of shares constituting any series or designation of such series, without
further vote or action by stockholders. As a result of the existence
of this “blank check” preferred stock, potential acquirers of our Company may
find it more difficult to, or be discouraged from, attempting to effect an
acquisition transaction with, or a change of control of, our Company, thereby
possibly depriving holders of our securities of certain opportunities to sell or
otherwise dispose of such securities at above-market prices pursuant to such
transactions.
FORWARD-LOOKING
STATEMENTS
This
prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations about future
events. These forward-looking statements are subject to risks,
uncertainties and assumptions about us which are discussed in the “Risk Factors”
section above and throughout this prospectus. In light of these
risks, uncertainties and assumptions, any forward-looking events discussed in
this prospectus might not occur.
USE
OF PROCEEDS
We
will not receive any proceeds from the sale of shares of our common stock being
offered by the selling stockholders. Any proceeds from the exercise
of warrants will be added to our working capital and used
per operating expenses and advertising and marketing costs.
-6-
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
Cautionary
Statement Regarding Forward-Looking Statements
We
and our representatives may from time to time make written or oral
forward-looking statements, including statements included in or incorporated by
reference into this prospectus and other filings made with the Securities and
Exchange Commission. These forward-looking statements are based on management’s
views and assumptions and involve risks, uncertainties and other important
factors, some of which may be beyond our control, that could cause actual
results to differ materially from those expressed or implied in the
forward-looking statements. Factors that might cause or contribute to such
differences include, but are not limited to, those discussed in this
Management’s Discussion and Analysis of Financial Condition and Results of
Operations, in this prospectus. Readers should carefully review the risks
described in this and other documents that we may file from time to time with
the Securities and Exchange Commission. The forward-looking statements speak
only as of the date that they are made, however, we are obligated in certain
circumstances to update or revise the disclosures in this prospectus in
accordance with Federal securities laws.
Overview
of the Business
Free For
All, Inc., was organized in May 2009 to provide a menu of discount products and
services featuring a free prescription discount program. On June 30,
2009 we acquired the discount prescription card division (“Division”) of New
Millenium Consultants, LLC (“NMC”) and since that time, we have offered a
program to allow individuals to have access to significant discounts on health
care, dental, vision care and prescriptions along with an array of other
products and services, through one customizable program offering
We market
our program to sponsor interested in distributing our card, such as non-profit
organizations, affinity groups, physicians’ offices, hospitals, benefit groups,
associations, media outlets, etc. who are interested in enhancing their customer
loyalty. The
consumer saves significantly, we receive between $2.50 and
$2.85 per qualifying prescription transaction and we pay the sponsor
through whom we distribute the card up to $1.25 per qualifying prescription
transaction. We also receive 80% of the mark-up at GetBenefitRelief
products. Although we plan to launch GetBenefitRelief
in early 2010, this may not be accomplished .
Our
prescription savings discount card (“RxCut” card) allow prescription drug users
to save money on all types of FDA approved prescription medications. At the time
of purchase, members simply present their card at a participating pharmacy to
receive substantial discounts on all brand-name and generic drugs. The card
saves members up to 75% on all medication. There is no fee for consumers to
acquire the RxCut card. The Company’s network currently includes all major drug
chains and most independent pharmacies, totaling over 54,000
pharmacies. The RxCut card does not require enrollment information
from the participants.
We are an early stage Company with limited revenue. Our operations
have been primarily devoted to forming the Company, raising funds for its
development, acquiring the RxCut card brand name, initial marketing to
pharmacies and individuals and developing certain proprietary
software.
The Company is focusing on growing marketing
opportunities by expanding its representative base, attending conferences and
trade shows. The Company is also developing software for more efficient
and enhanced reporting of business performance. In addition, the Company
is offering its internal public incentives to market the card to churches,
charity groups, sports teams, newspapers and other media outlets. This
will further develop the Company's branding scope and reach.
The management team is focused on short term
capital needs to ensure the continuation of the business. Short term
financial constraints remain at the forefront of the Company's executives
agenda. As the Company is still in its early stages, there is limited
liquidity and the Company has been focused on continuing operations on limited
capital.
Once the Company has overcome its short term
capital needs the Company will focus on its operating cash flows, minimizing
operating expenses and maintaining a steady gross profit.
-7-
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
USE OF
ESTIMATES
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates. Significant estimates include allowances for doubtful
accounts, accounting for income taxes, and depreciation.
REVENUE AND COST
RECOGNITION
The
Company offers a discounted prescription drug card and other discounted health
and dental service programs.
For the
discount prescription drug cards ("RxCut"), the Company provides the cards to
groups or individuals who further distribute the cards to other
individuals. These cards are used at pharmacies located throughout
the country and provide discounts to the individuals on the prescriptions
purchased. If the individual pays less than the pharmacy usual and customary
price, the Company receives a fixed commission fee from that
transaction. Each month the Company receives payment from its billing
company or pharmacy network for payments they received during that month on
transactions occurring in that month or prior months.
For the
discounted health and dental services, the Company has three different plans
with its GetBenefitRelief program. Individuals enroll in the programs
and pay a monthly or an annual fee for their membership. The Company works with
a discount medical plan organization to provide discounted services to its
members. This revenue will be recognized on a monthly basis over the
term of the memberships.
The
Company recognizes revenues at the time service has been provided to the
customer, the amount due the Company is fixed, and collectability of the related
receivable is reasonably assured.
Revenues
typically result from a commission fee earned per transaction of the discount
prescription card. The Company receives a monthly transaction report
from a third party that details all transactions including those that the
Company earned commissions on. The Company recognizes the revenues
monthly after receipt of the reports for payable
transactions. Payments are received monthly from the third party but
may take thirty to ninety days to collect.
Additional
sources of discount program revenue are recognized as the services are
completed.
-8-
The
Company has not earned any revenue to date; however, with the acquisition of the
Division, anticipates it will begin earning revenues immediately.
SOFTWARE
DEVELOPMENT COSTS
The
Company accounts for its software development costs in accordance with Statement
of Financial Accounting Standards (SFAS) Number 86, Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed. This statement
requires that, once technological feasibility of a developing product has been
established, all subsequent costs incurred in developing that product to a
commercially acceptable level be capitalized and amortized ratably over the
estimated life of the product. Through June 30, 2009, capitalizable costs
incurred have not been significant for any development projects.
The
Company follows Statement of Position (SOP) No. 98-1, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use, which requires
capitalization of certain costs incurred during the development of internal use
software. Through June 30, 2009, capitalizable costs incurred have not been
significant for any development projects.
STOCK
BASED COMPENSATION
The
Company follows SFAS No. 123 (Revised 2004), Share Based Payment (“SFAS
No. 123R”). SFAS No. 123R requires companies to measure and recognize
the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value. Share-based compensation
recognized under the modified-prospective transition method of SFAS
No. 123R includes share-based compensation based on the grant-date fair
value determined in accordance with the original provisions of SFAS
No. 123, Accounting for Stock-Based Compensation, for all share-based
payments granted prior to and not yet vested as of January 1, 2006 and
share-based compensation based on the grant-date fair-value determined in
accordance with SFAS No. 123R for all share-based payments granted after
January 1, 2006. Through June 30, 2009, no stock based awards
have been granted or exercised.
RECENT ACCOUNTING PRONOUNCEMENTS
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No. 133,”
(SFAS “161”) as amended and interpreted, which requires enhanced disclosures
about an entity’s derivative and hedging activities and thereby improves the
transparency of financial reporting. Disclosing the fair values of
derivative instruments and their gains and losses in a tabular format provides a
more complete picture of the location in an entity’s financial statements of
both the derivative positions existing at period end and the effect of using
derivatives during the reporting period. Entities are required to
provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. SFAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. Through June 30, 2009, the
Company did not have any derivative instruments or hedging activities.
Management is aware of the requirements of SFAS 161 and will disclose when
appropriate.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS 162 will provide framework for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. generally accepted accounting principles
(GAAP) for nongovernmental entities. SFAS 162 will be effective 60
days following the Securities and Exchange Commission’s approval of the Public
Company Accounting Oversight Board (“PCAOB”) amendments to AU Section
411. The Company does not expect that the adoption of SFAS 162 will
have a material impact on its financial condition or results of
operations.
-9-
In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – an interpretation of FASB Statement No.
60.” SFAS 163 requires that an insurance enterprise recognize a claim
liability prior to an event of default (insured event) when there is evidence
that credit deterioration has occurred in an insured financial
obligation. This Statement also clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim liabilities.
Those clarifications will increase comparability in financial reporting of
financial guarantee insurance contracts by insurance enterprises. This Statement
requires expanded disclosures about financial guarantee insurance contracts. The
accounting and disclosure requirements of the Statement will improve the quality
of information provided to users of financial statements. SFAS 163 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008. The adoption of SFAS 163 did not have a material
impact on its financial condition or results of operations.
The
Company has adopted all recently issued accounting pronouncements. The adoption
of the accounting pronouncements, including those not yet effective is not
anticipated to have a material effect on the financial position or results of
operations of the Company.
RESULTS
OF OPERATIONS – DISCOUNT PRESCRIPTION CARD DIVISION OF NEW MILLENNIUM
CONSULTANTS, LLC
PERIOD
FROM INCEPTION OF OPERATIONS (FEBRUARY 2, 2008) TO JUNE 30, 2008 COMPARED TO THE
SIX MONTHS ENDED JUNE 30, 2009.
SALES
During
the period from inception of operations (February 2, 2008) to June 30, 2008, we
had revenues of $16 as compared to revenues of $70,289 during the six months
ended June 30, 2009. The reason for the increase in sales is that the
prescription discount card giving rise to sales was in circulation for a minimal
period prior to June 30, 2008.
COST OF GOODS SOLD AND GROSS
PROFIT
Cost
of goods sold, which consists of commissions paid on commission revenue earned
in addition to expenditures for customer service and the printing of discount
cards, were $10 ($4 for related party) for the period from inception of
operations (February 2, 2008) to June 30, 2008, compared to $44,234 ($26,532 for
related party) for the six months ended June 30,
2009. Our overall gross profit percentage was approximately
37% for the six months ended June 30, 2009, compared to a gross profit
percentage of 38% for the period ended June 30, 2008. The reason for
the increase in costs of goods sold is that the prescription discount card
giving rise to sales was not in circulation prior to June 30, 2008 and therefore
no commissions were owed prior to June 30, 2008.
In the period ended June
30, 2009, we recorded 34,021 payable transactions that resulted in revenues of
$68,042 or $2 per transaction. Commissions payable for this period were
$42,526. This revenue for the period of June 30, 2009 was due to the
implementation of our pharmacy network agreement with Agelity. We
anticipate these revenues growing due to our expanding sponsor base.
We believe our increase in sales are expected to continue and
although gross profit will increase, gross profit percentage will remain
constant.
-10-
OPERATING
EXPENSES
Operating expenses totaled $197,058 ($75,000 for related party
consulting) for the six months ended June 30, 2009, compared to $98,916
($37,500 for related party consulting) for the period from inception of
operations (February 2, 2008) to June 30, 2008, an increase of $98,142 or
99%. Salaries increased approximately $34,500 as there were
no employees prior to June 30, 2008. Professional fees increased approximately
$34,600, rent expense increased $6,700, advertising expense increased
approximately $6,000, travel expense increased approximately $4,500, and
telephone expense increased approximately $4,000. The period ended
June 30, 2008 was not a full six month period and there was limited activity
within the Company through that date.
DEPRECIATION
EXPENSE
Depreciation
expense totaled $4,534 for the six months ended June 30, 2009 compared to $1,401
for the period from inception of operations (February 2, 2008) to June 30, 2008,
an increase of $3,133 or 224%. This expense increased between the two
periods is primarily a result of an increase in our investment in computers and
equipment. The period ended June 30, 2008 was not a full six month
period and there was limited activity. Depreciation expense is included in
operating expenses.
LOSS FROM
OPERATIONS
We had a
loss from operations of $171,003 for the six months ended June 30, 2009,
compared to a loss from operations of $98,910 for the period from inception of
operations (February 2, 2008) to June 30, 2008. Our operating losses have
increased $72,093 primarily as a result of the increase in our operating
expenses as described above. The period ended June 30, 2008 was not a full six
month period and there was limited activity.
NET LOSS
We had a
net loss of $172,635 for the six months ended June 30, 2009, compared to $99,542
for the period from inception of operations (February 2, 2008) to June 30, 2008.
There was an increase in the net loss of $73,093, which was a result of an
increase in the loss from operations of $72,093, and an increase in interest
expense of $1,000.
PERIOD
FROM INCEPTION OF OPERATIONS (FEBRUARY 2, 2008) TO DECEMBER 31,
2008.
REVENUES
During
the period from inception of operations (February 2, 2008) to December 31, 2008,
we had revenues of $3,092. The Company’s revenue generating discount
prescription card was not in significant circulation during this
period.
-11-
COST OF GOODS SOLD AND GROSS
LOSS
Cost of goods sold, which consists of commissions paid on
commission revenue earned in addition to expenditures for customer service and
the printing of discount cards, were $4,880 ($190 for related party) for the
period from inception of operations (February 2, 2008) to December 31,
2008. Gross loss was $1,788 for the period ended December 31, 2008
which was a result of costs incurred for printing.
OPERATING
EXPENSES
Operating expenses totaled $268,193 ($112,500 for related party
consulting) for the period from inception of operations (February 2, 2008)
to December 31, 2008. Professional fees were approximately $169,000, mainly for
consulting and legal costs. Salary expense was $22,850; there was only
one employee during the period ended December 31, 2008. Rent expense was $18,500
for this period. The expenses incurred in this period primarily relate to the
development of the discount prescription card and operating expenses related to
the build up of operations.
DEPRECIATION
EXPENSE
Depreciation
expense totaled $4,762 for the period from inception of operations (February 2,
2008) to December 31, 2008. This reflects depreciation on computers
and equipment. Depreciation expense is included in operating
expenses.
LOSS FROM
OPERATIONS
We had a
loss from operations of $269,981 for the period from inception of operations
(February 2, 2008) to December 31, 2008. There was no significant
revenue generated during this period to offset the operating expenses discussed
above.
NET LOSS
We had a
net loss of $272,343 for the period from inception of operations (February 2,
2008) to December 31, 2008.
RESULTS
OF OPERATIONS – FREE FOR ALL, INC.
PERIOD
FROM INCEPTION (MAY 18, 2009) TO JUNE 30, 2009.
REVENUES AND COST
OF GOODS SOLD
During
the period from inception (May 18, 2009) to June 30, 2009, Free for All, Inc.
did not generate any revenues or incur any cost of goods sold. On
June 30, 2009, the Company acquired substantially all assets and certain
liabilities related to the operating discount prescription card division of New
Millennium Consultants, LLC in exchange for 7,500,000 shares of
stock.
OPERATING
EXPENSES
Operating
expenses totaled $23,872 for the period from inception (May 18, 2009) to June
30, 2009. These expenses consist of legal fees.
LOSS FROM
OPERATIONS
We had a
loss from operations of $23,872 for the period from inception (May 18, 2009) to
June 30, 2009. There was no revenue generated during this period to
offset the operating expenses above.
RESULTS
OF OPERATIONS – FREE FOR ALL, INC.
PERIOD
FROM INCEPTION (MAY 18, 2009) TO SEPTEMBER 30, 2009.
SALES
We had
revenues of $122,345 for the period from inception (May 18, 2009) to September
30, 2009. Our operations essentially did not begin until we acquired the
Discount Prescription Card Division of New Millennium Consultants, LLC on June
30, 2009. We did not have any revenues prior to the
acquisition.
COST OF GOODS SOLD AND GROSS
PROFIT
Cost of
goods sold, which consists of commissions paid on commission revenue earned in
addition to expenditures for customer service and the printing of discount
cards, were $82,790 ($50,197 for related party) for the period from inception
(May 18, 2009) to September 30, 2009. We did not have any cost of goods sold
prior to June 30, 2009, which is when we acquired the Discount Prescription Card
Division of New Millennium Consultants, LLC. Our overall gross profit
and gross profit percentage was $39,555 and approximately 32%, respectively, for
the period from inception of operations (May 18, 2009) to September 30,
2009.
In the
period from inception (May 18, 2009) to September 30, 2009, we recorded 60,739
payable transactions that resulted in revenues of $121,478 or $2 per
transaction. Cost of goods sold related to commissions payable for this period
were $75,924. Revenue earned related to the acquisition of the Discount
Prescription Card Division of New Millennium Consultants, LLC on June 30, 2009
and the implementation of the acquired pharmacy network agreement with Agelity.
We anticipate these revenues growing due to our expanding sponsor
base.
We
believe our sales will continue to increase and although gross profit will
increase, gross profit percentage will remain constant.
OPERATING
EXPENSES
Operating
expenses totaled $304,504 ($37,500 for related party consulting) for the period
from inception (May 18, 2009) to September 30, 2009. We incurred
legal fees of $23,872 prior to June 30, 2009. All other expenses were
incurred after June 30, 2009 and consist mainly of legal fees of $39,482,
accounting fees of $78,073, related party consulting fees of $37,500, salary and
related benefits of $64,034, rent expense of $10,820, depreciation expense of
$6,000 and other operating expenses of $44,723. The period ended
September 30, 2009 was not a full nine month period and there was limited
activity within the Company through June 30, 2009. We expect our
operating expenses will continue to increase.
DEPRECIATION
EXPENSE
Depreciation
expense included in operating expenses totaled $6,000 for the period from
inception (May 18, 2009) to September 30, 2009. This expense is primarily a
result of an increase in our investment in computers and equipment as well
assets acquired from the Discount Prescription Card Division of New Millennium
Consultants, LLC on June 30, 2009. We expect depreciation expense to increase as
we further increase our investment in computers and
equipment.
LOSS FROM
OPERATIONS
We had a
loss from operations of $264,949 for the period from inception (May 18, 2009) to
September 30, 2009. Our operating losses are primarily a result of our operating
expenses as described above.
-12-
NET
LOSS
We
had a net loss of $266,384 for the period from inception (May 18, 2009) to
September 30, 2009. Our net loss was primarily a result of our operating
expenses as described above as well as interest expense of approximately $1,400
related to our capital leases. We incurred a net loss of $23,872
prior to June 30, 2009, the remainder of our net loss of $242,512 was incurred
after June 30, 2009.
LIQUIDITY AND CAPITAL RESOURCES
As of
September 30, 2009, we had a total cash balance of $62,896. Our cash flows used
in operating activities for the period from inception (May 18, 2009) to
September 30, 2009 was ($177,223), which was primarily a result of our net loss
of $266,384 and an increase in accounts receivable of $39,111, partially offset
by an increase in our accounts payable and accrued expenses of $103,552 and an
increase in due to related parties of $21,504. Our cash flows used in
investing activities for the period from inception (May 18, 2009) to September
30, 2009 was ($27,003), which is a result of the cash we received in the
acquisition of the Division of $14,245 offset by $41,248 in property and
equipment purchases. Our cash flows from financing activities for the period
from inception of operations (May 18, 2009) to September 30, 2009 was $267,122
which consisted of $250,000 received from the sale of units in a
private placement and a related party payable converted to contributed capital
of $20,000 offset by $2,878 in payments on lease obligations. Overall our cash
increased $62,896 for the period from inception (May 18, 2009) to September 30,
2009.
The
Division’s cash flow from operating activities for the six months ended June 30,
2009 resulted in a deficit of $200,199 compared with a deficit of $45,328 for
the period from inception of operations (February 2, 2008) to June
30, 2008. This increase in the deficit from operating activities of
approximately $154,871 was a result of an increase in operating losses and
higher investments in prepaid expenses, increase in accounts receivable and an
increase in due from related party. The Division’s cash flow
from investing activities for the six months ended June 30, 2009 was a deficit
of $14,245 compared with a deficit of $2,438 for the period from
inception of operations (February 2, 2008) to June 30, 2008, representing less
investment in fixed assets and the cash provided to Free For All, Inc. as part
of their acquisition of the Divsion. The Division’s cash flow from
financing activities for the six months ended June 30, 2009 resulted in a
surplus of $ 81,855 from the contribution of capital of $80,000 less the
repayment of capital lease obligations of $3,115. This was a decrease
from the period of inception of operations (February 2, 2008) to June 30, 2008
as the Division received $300,000 of member contributions during that
period. Overall the Division’s cash decreased by $ 132,559 during the
six months ended June 30, 2009.
As of
December 31, 2008, the Division had a total cash balance of $
132,559. The Division’s cash flow from operating activities resulted
in a deficit of $ 156,712 for the period from inception of operations (February
2, 2008) to December 31, 2008. The deficit from operating activities
was a result of operating loss of $272,343 net of increases in accrued expenses
and amounts due related parties. The Division’s cash flow from
investing activities resulted in deficit of $ 6,993 for the period from
inception of operations (February 2, 2008) to December 31, 2008, representing
the Division’s investment in fixed assets. The Division’s cash flow
from financing activities resulted to a surplus of $ 296,624 for the period from
inception of operations (February 2, 2008) to December 31, 2008 from the
contribution of capital less the repayment of capital lease
obligations. Overall, the Division’s cash increased by $ 132,559
during the period from inception of operations (February 2, 2008) to December
31, 2008
The
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. Free For All, Inc. has incurred a loss since
inception of $266,384 and has not provided any cash flows from operations as of
September 30, 2009 that raise substantial doubt about its ability to continue as
a going concern. These factors, among others, indicate that Free For All, Inc.
may be unable to continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that may be necessary should Free For All, Inc. be
unable to continue as a going concern. Free For All, Inc.’s continuation as a
going concern is contingent upon its ability to obtain additional financing and
to generate revenue and cash flow to meet its obligations on a timely basis.
Management will seek to raise additional funding through equity or debt
financing during the next twelve months. In July 2009 the Company raised
$250,000 by issuing 2,500,000 units. We believe we will be able to conduct
planned operations for four months using currently available resources and we
believe we will need to raise an additional $150,000 to conduct our proposed
operations for at least one year. If the Company can secure short term funding,
the result should provide continuous operations for the foreseeable
future.
-13-
Contractual
Obligations
In July
2009, Free for All, Inc. entered into a lease with an unrelated party for office
space with a term of twenty six months. This lease calls for minimum monthly
rent payments of $1,612 and monthly operating expenses of $2,668, which are
subject to adjustment.
Off-Balance
Sheet Arrangements
We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures, or capital resources that is material to our
investors.
BUSINESS
Business
Summary
We market
the RxCut card to the uninsured and the underinsured through “sponsors” such
as non-profit organizations, affinity groups, physicians’ offices,
hospitals, benefit groups, associations, media outlets and the like who are
interested in enhancing their customer loyalty. The
consumer saves significantly, we receive between $2.00 and $3.00 per qualifying
prescription transaction and we pay the sponsor through whom we distribute the
card up to $1.25 per qualifying prescription transaction. Mr. Ferro, our Chief Executive Officer, is compensated as a
sponsor, rather than through a salary. Total sponsor payments do not
exceed $1.25 per transaction. We also receive 80% of the mark-up of
GetBenefitRelief products. Although we plan to launch
GetBenefitRelief in early 2010, this may not be
accomplished.
Our
prescription savings discount card (“RxCut” card) allow prescription drug users
to save money on all types of approved prescription medications. At the time of
purchase, members simply present their card at a participating pharmacy to
receive substantial discounts on all brand-name and generic drugs. The card
saves members up to 75% on all medication. There is no fee for consumers to
acquire an RxCut card. Our network currently includes all major drug chains and
most independent pharmacies, totaling over 54,000 pharmacies. Our network of pharmacies is provided by Paramount Rx, Inc. who
receives fees from the pharmacies on any prescriptions filled by our
members. Our agreement with Paramount may be cancelled by either party on
60 days notice. We previously had an agreement with Agelity for these
services but have since switched to Paramount for better commission terms.
RxCut card does not require enrollment information from the
participants.
The RxCut
card is available to insured and uninsured individuals. Insured individuals with
limited or excluded prescriptions for lifestyle medications, no prescription
drug coverage or plan maximums can benefit from the low prices secured by the
card. Those with insurance coverage will still save, paying less than their
plan’s co-pay for prescriptions or if their plan has a maximum benefit or no
covered items such as lifestyle medications. Medicare Part D
recipients can also use the card for the front end deductible and donut
hole.
Although the Company
does receive revenue, there are a number of factors that could materially affect
the business. These factors include the loss of a key executive such as
the CEO. The CEO has a long history in the industry and his loss could be
a catastrophic loss for the Company. Also, the loss of the Company's
pharmacy network would have devastating financial results. The Company's
software programs are only in the development stages and could take significant
time before they add value. Although we plan to launch GetBenefitRelief in early 2010 , this may not be
accomplished.
According to an April 2008 article at CNN.com there are
approximately 47 million Americans without medical coverage. Additionally,
the New America Foundation reported in June 2008 a whopping 25 million Americans
with health insurance are "underinsured" or financially vulnerable due to the
high costs of medical care. The Kaiser Commission also reports in March
2008 that there is currently more than 11 million undocumented immigrants
currently in the United States. We
believe the current market potential exceeds 90 million potential users of our
programs in the U.S. These individuals have no access to any type of
healthcare or healthcare discounts. The opportunity exists to help these
consumers purchase their needed health care at significant discounts, thus
narrowing the cost gap. It is our mission to develop products and
services for this specific market.
-14-
Unique
Technology
We believe that our medication pricing
and pharmacy locator web technology are unique in our
industry. Our systems allow us, within seconds, to return
to our members a list of local pharmacies with the specific price of several
medications at each of those locations, organized by the lowest price first, and
all fully integrated with mapping functionality. We have also developed
unique pill splitting and manufacturer coupon search engine
capabilities. We seek to continue to innovate and build industry
leading cutting edge technology platforms with a goal of simplifying the
administration of healthcare.
The
Market
In recent years the U.S. has
experienced increasing health care costs, prescription drug prices and the
number of uninsured individuals. We believe this trend will continue
due to the aging population and inflation. According to a Business Week report on
executive health published in June 2008:
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·
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In
2007, only 60 percent of working-age Americans were provided health
coverage by their employer (compared to 69 percent of Americans with
health coverage in 2000).
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|
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·
|
75
million Americans are uninsured or
underinsured.
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|
|
·
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Over
37 million illegal immigrants do not have access to any
coverage.
|
|
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·
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45
million do not have any health
insurance.
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·
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Of
the 45 million uninsured, about 80 percent are employed or live in working
families.
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According to a Kaiser report, in 2006
per capita United States prescription spending amounted to approximately $725
per person and by 2016 we estimate that this will double to
$1,450. With the 75 million uninsured or underinsured Americans and
37 million illegal immigrants needing prescription medications we estimate over
$74 billion annual gap today that needs to be covered. By 2016, we believe that
coverage gap will exceed $140 billion.
RxCut
Card
Our primary product is the RxCut
card. The RxCut card allows for discounts at the pharmacy counter and
also offers an array of custom savings programs. The RxCut card
offers a network of retail pharmacies nationwide together with a maintenance
medication mail order pharmacy program designed to lower out-of-pocket
prescription drug costs and increase participant savings. The RxCut card is
provided at no cost through groups and sponsors identified by the
Company.
Get
Benefit Relief Program
Our GetBenefitRelief program, which we
expect to launch in early 2010 will offer
on a monthly subscription basis (ranging from $9.95 to $39.95 monthly) a
customizable deeply discounted array of products and services with an initial
concentration around select health benefits. Although we expect to launch in early 2010, this may not be
accomplished. All of the benefits
described below are provided to us by New Benefits, Ltd. We pay for such
benefits on an individual member and benefits basis and mark up our cost to our
member. The agreement with New Benefits may be cancelled by either pary on
30 days notice. We expect the benefits programs to
include:
Health Benefits
Alternative
Medicine: Members are expected to save 10% to 30% on services and
treatments from a national network of more than 16,000 providers including
acupuncturists, massage therapists, nutritional counselors, naturopaths, and
meditation and relaxation technique practitioners and exercise specialists such
as Yoga and Pilates instructors, Tai Chai and Personal
Trainers.
-15-
Chiropractic Care: Free
initial consultations, 50% discounts on diagnostic services, including x-rays
performed on-site if necessary and 30% off treatments and other services.
Members will have access to more than 3,000 participating providers
nationwide.
Counseling Services: 24-hour
free phone counseling services and referrals to local counselors and other
resources. When face-to-face counseling is deemed necessary,
referrals are available to a network of 27,000 providers who offer 20% to 35%
off the normal billed charges.
Dental Care: Members are
expected to save 30% to 50% on dental procedures at more than 61,000
participating providers nationwide. They also will save on specialty
care such as orthodontics and periodontics, where available.
Doctors Online: 24-hour
access to a confidential web-based preventive-medicine oriented program that
provides its members direct access to a variety of licensed, board-certified
physicians who will respond to concerns through e-mail within 24
hours.
Family Consultation
Services: Members will receive a comprehensive telephone consultation
with a qualified counselor who will discuss the different options available to
meet the needs for child care, elder care and care for people with disabilities.
The counselor will assess the situation and the special needs required and
provide referrals using a database of over 750,000 providers.
Hearing Aids: Members will
receive a free hearing screening and 15% savings on over 70 models of hearing
aids at 1,300 Beltone locations nationwide.
Long-Term/Elder
Care: Members are expected to save 4% to 30% at 5,500 providers for
home health care or assisted living facilities. Members can also
access a website featuring skill sheets, condition research, caregiver advice,
resource finder and individual member reports. This benefit will also
offer discounted geriatric care management services.
Medical Records
Storage: 24-hour fast secure access to essential information,
including complete medical records, drug and allergy information, insurance
information and more, available to authorized medical personnel in the event of
a medical emergency.
Nurse Hotline: 24-hour
access to quick, sound medical information, advice and education from a staff of
registered nurses.
Patient Advocacy: Patient
advocacy representatives confirm participating physician visit, dental and
chiropractic locations will recognize the plans and understand how to properly
bill members, ensuring members enjoy a positive experience while utilizing these
services. *Patient Advocacy will not be available in
California.
Pet Care Savings
Program: The Pet Care Savings Program is designed to save money on
pet care. With the Pet Care Savings Program there is a 25% discount on all
medical procedures at our network veterinarians, plus savings from 10% to 30% on
pet products and services at participating merchants. The Pet Care Savings
Program also includes a free pet ID tag and confidential 24-hour pet location
service in the event of a lost pet.
-16-
Neighborhood Pharmacy: The
neighborhood pharmacy program seeks to assure the lowest price on most
short-term, prescription drugs at more than 48,000 pharmacies
nationwide. Members are expected to save from 10% to 60% off the
retail price of most brand name and generic medications.
Mail Order Prescription
Plan: Members will save an average of 10% below AARP pricing (The
American Association of Retired Persons) when purchasing long-term, maintenance
medications prescribed to treat on-going ailments such as arthritis, heart
disease and high cholesterol.
Phone-A-DocTM: Phone-A-Doc
is a national network of board eligible, primary care physicians who specialize
in telemedicine. Members can access a physician within 3 hours of
their incoming call for a flat fee of $35. Each doctor diagnoses the
problem and if necessary phone in a prescription to the member’s pharmacy of
choice. Phone-A-Doc is available 24 hours a day, 7 days a week and
365 days a year.
Physician Visit/Hospital Referral
Network: Members will save 10% to 30% at over 285,000 participating
physician offices and ancillary medical facilities, including hospitals,
throughout the U.S. Hospital visit will not be available in
Maryland.
Travel Assistance: Emergency
Medical Evacuation service and 15 additional benefits in the event of an
accident or serious illness when traveling over 100 miles away from home,
anywhere in the world. Travel Assistance will not be available to
Florida or Washington residents.
Vision Care: Members save
20% to 60% off retail prices on prescription eyewear and 10% to 30% off retail
prices of eye exams (in many areas) and surgical procedures, including LASIK,
where available.
VIP Health and
Wellness: Vitamins: Members receive 10% discounts for vitamins,
nutritional supplements, low-carb and personal care products. Members also
receive 15% off of the average retail price on most diabetic monitoring
supplies, including brand name glucose meters, lancets, insulin, syringes and
more. Members may reorder individual testing supplies and choose from
over 200 brand name diabetes testing supplies. All orders are shipped
to the Member’s home at no charge.
Lifestyle
Benefits
Financial Help
Line: Financial Help Line will offer access to experienced, certified
and objective financial counselors, financial planning tools and an extensive
library of articles.
Financial
Wellness: Financial Wellness will offer access to Certified Credit
Counselors who can offer advice on a variety of financial
issues. This program is designed to help the Members reduce their
debt and educate them in how to best handle their funds in the
future.
Fitness Advantage: The
Fitness Advantage Program is expected to assure low prices at over 7,000
participating health and fitness facilities. Members will receive a one-week
introductory trial membership certificate, free of charge. This allows Members
to try several participating clubs for one week each, giving them the
opportunity to truly experience the club and its facilities.
Identity Theft
Protection: Identity Theft Protection will help protect Members’
identity by providing comprehensive personalized prevention and recovery
services.
-17-
Legal Services: Members will
receive nine free services and discounts on eight commonly used legal
services. An hourly rate of $75.00 and a 10% discount on all
contingency fees is expected.
Generic
Wholesale Site
As an additional revenue center, we
intend to develop in the near future a generic wholesale component to our
website that will take orders from consumers for generic drugs priced below
wholesale and the local pharmacies. The e-Commerce component of this
site has been in alpha development and we are in discussion with a fulfillment
house to handle delivery and customer service.
RxCut
Manufacturer Coupons
Recently, web users have been offered
pharmaceutical company drug discounts. Sites such as MyRxCoupon.com,
OptimizeRx.com, InternetDrugCoupons.com and
ReducePrescriptionCosts.com send consumers directly to the
manufacturers’ page for that product. There are over 220 such offers
covered under these programs. We have begun discussions with
pharmaceutical manufacturers in an attempt to create a fulfillment program
significantly different from current offerings. The content from
those coupon sites would be an added bonus for RxCut consumers. The current
sites receive revenue from ads placed on their site. Our model is
expected to receive payment, from manufacturers, for each coupon
used.
Marketing
Strategy
Our primary marketing objective is to
create a memorable, strongly branded name and logo that elevates our RxCut card
beyond a category generic. Our product is a national product and is
available to anyone. The product is relevant to a broad spectrum of uninsured
age and life style groups from young adults, college students, families with
children, seniors and ethnic groups. Our marketing efforts will focus
on distributing our RxCut card through direct contacts with:
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·
|
Associations,
including charitable organizations
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|
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·
|
Government(
local and state)
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|
|
·
|
Chambers
of Commerce
|
|
|
·
|
Direct
Marketing Organizations
|
|
|
·
|
Insurance
Brokers and Consultants
|
|
|
·
|
TV
and Radio Stations
|
|
|
·
|
Chambers
of Commerce
|
|
|
·
|
Insurance
Companies
|
|
|
·
|
Banks
and Savings and Loans
|
|
|
·
|
Professional
Employer Organizations
|
|
|
·
|
Franchises
|
|
|
·
|
Religious
Organizations
|
|
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·
|
Companies
with large amounts of part time
workers
|
|
|
·
|
Companies
with large amounts of unskilled
labor
|
These entities will, in turn, offer the
RxCut card to their members, employees, consultants, agents and
affiliates.
-18-
Competition
Our competitors in connection with the
distribution of pharmacy discount cards are primarily large Pharmacy Benefit
Managers (“PBMs”) who have funding, marketing, personnel and name recognition
superior to us. While we believe we offer a superior program, simpler
enrollment and improved benefits, there can be no assurance that we can
successfully compete with the PBMs or other current and future
competitors. The current competitive landscape is fractured and unfocused,
with PBMs and other competitors targeting discounted
pharmaceuticals. Principal competition factors include cost to
acquire the discount card, benefits coverage, enrollment requirements and ease
of use.
Our competitors include:
Together Rx Access, which offers a
pharmacy discount card sponsored by many of the major pharmaceutical
companies. Its discounts are less than ours and its website is income
restricted and contains limited products. It has a Spanish
version of its website for Latin Americans.
YourRxCard is our closest direct
competitor and its site also supports Spanish speaking users. It does
not however have any of the other additional benefits provided by us beyond the
discount card and does not have a national presence other than through the web
site.
Lilly Medicare Answers Card is a senior
age restricted card for consumers who are on Medicare.
We believe the competitive advantages
of our RxCut card are:
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|
·
|
Unlimited
use
|
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|
·
|
All
prescription drugs discounted
|
|
|
·
|
Major-pharmacy
mail order service
|
|
|
·
|
24-hour
help desk
|
|
|
·
|
No
waiting periods
|
|
|
·
|
No
claim forms to file
|
|
|
·
|
No
medical exams, no exclusions for pre-existing
conditions
|
|
|
·
|
No
enrollment requirements or
restrictions
|
Employees
We have
eight full-time employees and two part-time employees.
Our
Offices
Our offices are
located at 303 Lippincott Drive, Suite 320, Marlton, New Jersey 08053 and
consist of 2668 square feet which are leased to us for $4,279.92 per month on a 26 month lease which
commenced in August 2009 .
-19-
MANAGEMENT
Executive
Officers and Directors
|
Name
|
Age
|
Position
|
Officer/Director Since
|
|
Gerard
Ferro
|
49
|
Chairman
of the Board of Directors, Chief Executive Officer and Chief Financial
Officer
|
2009
|
|
Gavin
Lentz
|
46
|
Director
|
2009
|
|
Eric
Shugarts
|
29
|
Chief
Information Officer and Director
|
2009
|
Mr. Ferro founded us and has
acted as our Chairman and Chief Executive Officer since inception. He
is an inventor, author, and entrepreneur who has over 28 years of experience in
health care, health care technology and pharmaceutical plan
management. Mr. Ferro was the Founder, Chairman and Chief Executive
Officer of SUNRx, Inc. from 2001 until late 2007. SUNRx appeared three times on
the Inc 500 list, including a number five placement, which ranks the
nation’s fastest-growing private companies. SUNRx also had three
consecutive top 20 finishes on PricewaterhouseCoopers’ Entrepreneur Hot 100
including a #3 ranking. Prior to founding SUNRx, Mr. Ferro served starting
in 1990 as Co-founder and Chief Executive Officer of SIMCARE, Inc. (a medical
Preferred Provider network, utilization review and management company), and its
two subsidiaries: Professional Administrative Services (a Third Party
Administrator—“TPA”) and Benefit Specialist, Inc. (a benefits consulting firm),
founded in 1988. The companies were sold to Blue Cross Blue Shield in 1996. In
addition, Mr. Ferro spent 14 years operating a broad spectrum of businesses
specializing in benefit consulting, claims management administration technology,
and managed care network development. He also served from 1993 to 1995 on the
TPA Advisory Board and has served as an expert witness on health care
fraud. Mr. Ferro’s accomplishments
include: introduction of the first TPA to pioneer
and develop imaging technology and artificial intelligence in health
care claims administration in the early 1990’s; architect of a large managed
care system in New Jersey; three time recipient of the Pennsylvania General
Agent and Managers Association General Manager of the Year Award; two time
recipient of the Philadelphia Association of Life Underwriters, Norman Rowley
Award; and Recipient of the Re-insurers’ Most Advanced Technology and
TPA of the year awards. He graduated from St. Joseph’s University
with a B.A. degree.
Mr. Lentz has been the
President and Managing Partner of Bochetto & Lentz, P.C., a Pennsylvania
based civil litigation law firm since 1994. He graduated from Ursinus
College with a B.A. degree and the Dickinson School of Law with a J.D.
degree.
Mr. Shugarts joined us in
2009 as our Chief Technology Officer and a director. He has
over 10 years of information technology, PBM and management experience,
including employment with SUNRx (2006 – 2008), Lime Systems (2000 – 2006) and
Omnient Corporation (1999 – 2000). While employed by these
companies, he was in charge of research, pricing and purchasing hardware
and software based on specific identified needs. Mr. Shugarts has hands-on
experience with enterprise application development, business process analysis,
enterprise-wide network design and software implementation, client/server
solutions design, systems and database integration and migration, reporting and
analytics, database engineering and modeling, and software engineering and
development on multiple platforms. Mr. Shugarts is responsible for
managing our information technology and the daily operations of our software,
hardware and networks. He also acts as our lead engineer for our
software and technology development projects.
-20-
Term
of Office
Directors are elected to hold office
until the next annual meeting of Unitholders and until their successors are
elected and qualified. Annual meetings of the Unitholders, for the
selection of directors to succeed those whose terms expire, are held at such
time each year as designated by the Board of Directors. Officers of
the Company are elected by the Board of Directors, which is required to consider
that subject at its first meeting after every annual meeting of
stockholders. Each officer holds office until his successor is
elected and qualified or until his earlier resignation or removal.
Executive
Compensation
We do not pay Mr. Ferro a salary, but
he receives a commission of up to $1.25 for each prescription filled under our
programs, through whom we distribute Rx Cards. Mr.
Ferro has received $19,751.25 in commissions to date. We do not
have employment agreements with any executive officer, director or
employee. No executive officer receives compensation in excess
of $100,000 annually, except Mr. Shugarts who is paid a salary of $150,000
annually.
We do not carry key person life
insurance on any of our executive officers or key employees’ lives.
Director
Independence
None of our directors are independent as defined
in Item 407(a)(1) of Regulation S-K or as defined by any securities
exchange or inter-dealer quotation system.
Director
Compensation
Currently, our directors do not receive
compensation for board meetings attended.
Board
Committee
We do not have Board
committees.
Equity
Incentive Plan
We do not have an equity incentive or
similar plan but may develop such a plan in the future.
Liability
and Indemnification of Officers and Directors
Our Certificate of Incorporation
provide that liability of directors to us for monetary damages is eliminated to
the full extent provided by Delaware law. Under Delaware law, a
director is not personally liable to us or our stockholders for monetary damages
for breach of fiduciary duty as a director except for liability (i) for any
breach of the director’s duty of loyalty to us or our stockholders;
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; (iii) for authorizing the
unlawful payment of a dividend or other distribution on our capital stock or the
unlawful purchases of our capital stock; (iv) a violation of Delaware law with
respect to conflicts of interest by directors; or (v) for any transaction
from which the director derived any improper personal benefit.
The
effect of this provision in our Certificate of Incorporation is to eliminate our
rights and our stockholders’ rights (through stockholders’ derivative suits) to
recover monetary damages from a director for breach of the fiduciary duty of
care as a director (including any breach resulting from negligent or grossly
negligent behavior) except in the situations described in clauses
(i) through (v) above. This provision does not limit or
eliminate our rights or the rights of our security holders to seek non-monetary
relief, such as an injunction or rescission, in the event of a breach of a
director’s duty of care or any liability for violation of the federal securities
laws.
Insofar as indemnification for
liabilities arising under the Act may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable.
-21-
SECURITY OWNERSHIP OF EXECUTIVE
OFFICERS, DIRECTORS AND
BENEFICIAL
OWNERS OF GREATER THAN 5% OF OUR COMMON STOCK
As
of the date of this prospectus, there are 10,000,000 shares of common stock
outstanding. The following table sets forth certain information
regarding the beneficial ownership of the outstanding shares as of the date of
this prospectus by (i) each person who is known by us to own beneficially
more than 5% of our outstanding common stock; (ii) each of our executive
officers and directors; and (iii) all of our executive officers and
directors as a group. Except as otherwise indicated, each such person
has investment and voting power with respect to such shares, subject to
community property laws where applicable. The address of our
executive officers and directors is in care of us at 303 Lippincott Drive, Suite
320, Marlton, New Jersey 08053.
|
Name of Beneficial Owner
|
Shares
Beneficially Owned
|
Percentage
Beneficially Owned
|
|
Gerard
Ferro
|
4,045,000
|
40.5%
|
|
Allen
Spivak
|
500,000
|
5.0%
|
|
Adam
Spivak
|
500,000
|
5.0%
|
|
Gavin
Lentz
|
250,000
|
2.5%
|
|
Eric
Shugarts
|
1,000,000
|
10.0%
|
|
All
officers and directors as a group (three persons)
|
5,295,000
|
53.0%
|
SELLING
STOCKHOLDERS AND PLAN OF DISTRIBUTION
We
have outstanding 10,000,000 shares of
common stock. We are registering by this prospectus an aggregate of
2,500,000 shares of common stock and 2,500,000 shares of common stock underlying
warrants, which we issued to 15 individuals. The following table sets
forth the names of the selling stockholders, the number of shares of our common
stock and warrants held by each selling stockholder and certain other
information. The selling stockholders listed below are offering for sale all
shares listed following their names. None of the selling stockholders
is required to sell any of their shares at any time.
The shares may be offered from time to
time by the selling stockholders. Since the selling stockholders may
sell all or part of the shares of common stock offered in this prospectus, we
cannot estimate the number of shares of our common stock that will be held by
the selling stockholders upon termination of this offering.
None of our selling stockholders are
officers, directors, 5% or greater stockholders or affiliates of our Company.
None are broker-dealers, affiliates of broker-dealers or have a material
relationship with us.
-22-
|
Name of Stockholder
|
Shares
of Common Stock Owned
|
Percentage
of Outstanding Common
Stock Owned
|
Shares
of Common Stock
Offered
for Sale
|
Shares
of Common Stock Underlying Warrants
Offered for Sale
|
Percentage
of Common Stock Owned After
Sale
|
|
Brian
Clark
|
300,000
|
3.0%
|
300,000
|
300,000
|
-0-
|
|
Joseph
Clark
|
300,000
|
3.0%
|
300,000
|
300,000
|
-0-
|
|
Jim
Condon
|
50,000
|
.5%
|
50,000
|
50,000
|
-0-
|
|
John
Hradek
|
100,000
|
1.0%
|
100,000
|
100,000
|
-0-
|
|
Sherry
Hunt
|
50,000
|
.5%
|
50,000
|
50,000
|
-0-
|
|
Steve
Hyle
|
50,000
|
.5%
|
50,000
|
50,000
|
-0-
|
|
Tom
McCoy
|
50,000
|
.5%
|
50,000
|
50,000
|
-0-
|
|
Ann
McGonigle
|
350,000
|
3.5%
|
350,000
|
350,000
|
-0-
|
|
Jim
McGonigle
|
450,000
|
4.5%
|
450,000
|
450,000
|
-0-
|
|
Patty
McGonigle
|
350,000
|
3.5%
|
350,000
|
350,000
|
-0-
|
|
Richard
Meltz
|
50,000
|
.5%
|
50,000
|
50,000
|
-0-
|
|
Coleen
Nedbalski
|
100,000
|
1.0%
|
100,000
|
100,000
|
-0-
|
|
Erin
Salone
|
50,000
|
.5%
|
50,000
|
50,000
|
-0-
|
|
Dave
Steck
|
100,000
|
1.0%
|
100,000
|
100,000
|
-0-
|
|
Eileen
Wells
|
150,000
|
1.5%
|
150,000
|
150,000
|
-0-
|
|
TOTALS
|
2,500,000
|
25.0%
|
2,500,000
|
2,500,000
|
In the
event that we permit or cause this prospectus to lapse, the selling stockholders
may only sell shares of our common stock pursuant to Rule 144 under the
Securities Act of 1933. The selling stockholders will have the sole
and absolute discretion not to accept any purchase offer or make any sale of
these shares of our common stock if they deem the purchase price to be
unsatisfactory at any particular time.
The selling stockholders may also sell
these shares of our common stock directly to market makers and/or broker-dealers
acting as agents for their customers. These broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders and/or the purchasers of these shares of our common
stock for whom such broker-dealers may act as agents. As to a
particular broker-dealer, this compensation might be in excess of customary
commissions. Market makers and block purchasers purchasing these
shares of our common stock may do so for their own account and at their own
risk. It is possible that a selling stockholder will attempt to sell
shares of our common stock in block transactions to market makers or other
purchasers at a price per share which may be below the prevailing market price
of our common stock. There can be no assurance that all or any of
these shares of our common stock offered hereby will be issued to, or sold by,
the selling stockholders. Upon effecting the sale of any of these
shares of our common stock offered under this prospectus, the selling
stockholders and any brokers, dealers or agents, hereby, may be deemed
“underwriters” as that term is defined under the Securities Act of 1933 or the
Securities Exchange Act of 1934, or the rules and regulations
thereunder.
Alternatively, the selling stockholders
may sell all or any part of the shares of our common stock offered hereby
through an underwriter. No selling stockholder has entered into any
agreement with a prospective underwriter, and there is no assurance that any
such agreement will be entered into. If a selling stockholder enters
into an agreement or agreements with an underwriter, then the relevant details
will be set forth in a supplement or revision to this prospectus.
-23-
The selling stockholders and any other
persons participating in the sale or distribution of these shares of our common
stock will be subject to applicable provisions of the Securities Exchange Act of
1934 and the rules and regulations thereunder including, without limitation,
Regulation M. These provisions may restrict activities of, and
limit the timing of purchases and sales of any of these shares of our common
stock by, the selling stockholders. Furthermore, pursuant to
Regulation M, a person engaged in a distribution of securities is
prohibited from bidding for, purchasing or attempting to induce any person to
bid for or purchase our securities for a period beginning five business days
prior to the date of this prospectus until such person is no longer a selling
stockholder. These regulations may affect the marketability of these
shares of our common stock.
We
will pay substantially all of the expenses incident to the registration and
offering of our common stock, other than commissions or discounts of
underwriters, broker-dealers or agents.
RELATED
PARTY AND OTHER MATERIAL TRANSACTIONS
We pay
Mr. Ferro a sponsor commission of up to $1.25 for each qualifying
prescription filled using our Rx Card. We pay to a company wholly owned by Mr. Shugart a
$12,500 per month consulting fee for Mr. Shugart's services. Total fees
paid were $0 in 2008 and $37,500 through September 30, 2009.
DESCRIPTION
OF CAPITAL STOCK
In June 2009 we issued 7,500,000 shares of our
common stock to acquire the discount prescription card division of New
Millennium Consultants, LLC ("NMC"). NMC was founded by Mr. Ferro (our
Chief Executive Officer and director) and he received 4,045,000 of the shares
issued. Messrs. Shugarts and Lentz, our other two directors received
1,000,000 shares and 250,000 shares respectively. We believe the
transaction was fair and reasonable and consistent with what we would be
required to pay to an non-affiliated third party. We did not seek or
receive a fairness opinion in connection with the
transaction.
For any transaction reportable under Item 404 of Regulation S-K,
our Board of Directors, on June 30, 2009, passed a corporate resolution allowing
only non-interested directors to vote upon and approve any transaction
regardless of size, involving a director holding any direct or indirect interest
in the transaction. In each case, such transaction cannot be approved
unless it is determined to be fair and reasonable and at least as fair as could
have been obtained by an unrelated party.
Common
Stock
We are authorized to issue up to 45,000,000 shares of $0.0001 par value common
stock. Currently, there are 10,000,000 shares of common stock
outstanding. The holders of common stock are entitled to one vote per
share on all matters submitted to a vote of stockholders, including the election
of directors. There is no right to cumulate votes in the election of
directors. The holders of common stock are entitled to any dividends
that may be declared by the Board of Directors out of funds legally available
therefore subject to the prior rights of holders of preferred stock and any
contractual restrictions we have against the payment of dividends on common
stock. In the event of our liquidation or dissolution, holders of
common stock are entitled to share ratably in all assets remaining after payment
of liabilities and the liquidation preferences of any outstanding shares of
preferred stock. Holders of common stock have no preemptive rights
and have no right to convert their common stock into any other
securities.
Preferred
Stock
We
are authorized to issue up to 5,000,000 shares of $0.0001 par value preferred
stock in one or more series with such designations, voting powers, if any,
preferences and relative, participating, optional or other special rights, and
such qualifications, limitations and restrictions, as are determined by
resolution of our Board of Directors. The issuance of preferred stock
may have the effect of delaying, deferring or preventing a change in control of
our Company without further action by stockholders and could adversely affect
the rights and powers, including voting rights, of the holders of common
stock. In certain circumstances, the issuance of preferred stock
could depress the market price of the common stock. No shares of preferred stock
have been issued.
-24-
Common
Stock Purchase Warrants
We have outstanding common stock
purchase warrants (the underlying shares of which we are registering hereby) to
purchase up to 2,500,000 shares of our common stock at $1.00 per share at any
time until December 31, 2010.
Dividends
We
do not intend to pay dividends on our capital stock in the foreseeable
future.
Transfer
Agent
Corporate
Stock Transfer is our transfer agent and warrant agent.
SHARES ELIGIBLE FOR FUTURE
SALE
We
have 10,000,000 shares of common stock outstanding, of which 2,500,000 shares of
common stock are being registered hereby. The remaining 7,500,000
shares are restricted shares but are eligible for sale under Rule 144
promulgated under the Securities Act of 1933, as amended, at any time after
December 31, 2009.
In general, under Rule 144 as modified on February 15, 2008, a person who
owns shares that were purchased from us, or any affiliate, at least six months
previously and who is not an officer, director or 10% or greater stockholder of
our Company (a “non-affiliate”), is entitled to sell all or any portion of such
shares under Rule 144 so long as we have filed all required SEC reports and
continue to do so while the shares are offered for sale. After one
year from purchase, the shares may be sold by a non-affiliate regardless of
whether we have filed all required SEC reports. Our affiliates may
also sell their shares under Rule 144 after they have been held for six months
or more in an amount not to exceed:
|
|
·
|
1%
of the then outstanding shares of our common stock;
or
|
|
|
·
|
The
average weekly trading volume of our common stock during the four calendar
weeks preceding the date on which notice of the sale is filed with the
SEC.
|
Future sales of restricted common stock
under Rule 144 or otherwise or of the shares which we are registering under
this prospectus could negatively impact the market price of our common
stock. We are unable to estimate the number of shares that may be
sold in the future by our existing stockholders or the effect, if any, that
sales of shares by such stockholders will have on the market price of our common
stock prevailing from time to time. Sales of substantial amounts of
our common stock by existing stockholders could adversely affect prevailing
market prices.
EXPERTS
Our audited financial statements
included in this prospectus and the financial statements of the Discount
Prescription Card Division of New Millenium Consultants, LLC, all for the
periods indicated therein, have been included in reliance on the reports of AJ.
Robbins, P.C., an independent registered public accounting firm, given on the
authority of this firm as experts in accounting and
auditing.
-25-
LEGAL MATTERS
The
validity of the common stock offered hereby will be passed upon for us by the
Law Office of Gary A. Agron, Greenwood Village, Colorado.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the Securities and Exchange Commission a registration statement
on Form
S-1 under
the Securities Act of 1933 with respect to the common stock offered by this
prospectus. This prospectus does not contain all of the information
set forth in the registration statement and the exhibits to the registration
statement. For further information with respect to our Company and
our common stock offered hereby, reference is made to the registration statement
and the exhibits filed as part of the registration statement. We are
also required to file periodic reports with the Securities and Exchange
Commission, including quarterly reports, annual reports which include our
audited financial statements and proxy statements, and we provide our annual
reports, including audited financial statements and proxy statements, to our
stockholders. The registration statement, including exhibits thereto,
and all of our periodic reports may be inspected without charge at the
Securities and Exchange Commission’s principal office in Washington, DC, and
copies of all or any part thereof may be obtained from the Public Reference
Section of the Securities and Exchange Commission, 100 F Street, NE, Washington,
DC 20549. You may obtain additional information regarding the
operation of the Public Reference Section by calling the Securities and Exchange
Commission at 1-800-SEC-0330. The Securities and Exchange Commission
also maintains a website which provides online access to reports, proxy and
information statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission at the address:
http://www.sec.gov.
-26-
FREE
FOR ALL, INC.
INDEX
TO FINANCIAL STATEMENTS
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-2
|
|
FINANCIAL
STATEMENTS
|
|
|
BALANCE
SHEET AS OF JUNE 30, 2009
|
F-3
|
|
STATEMENT
OF OPERATIONS FOR THE PERIOD FROM INCEPTION (MAY 18, 2009) TO JUNE 30,
2009
|
F-4
|
|
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD FROM INCEPTION (MAY 18,
2009) TO JUNE 30, 2009
|
F-5
|
|
STATEMENT
OF CASH FLOWS FOR THE PERIOD FROM INCEPTION (MAY 18, 2009) TO JUNE 30,
2009
|
F-6
|
|
NOTES
TO FINANCIAL STATEMENTS
|
F-7
|
F-1
AJ.
ROBBINS, PC
216
SIXTEENTH STREET
SUITE
600
DENVER,
COLORADO 80202
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders
Free
For All, Inc.
Marlton,
New Jersey
We
have audited the accompanying balance sheet of Free For All, Inc. ("the
Company") as of June 30, 2009, and the related statement of operations,
stockholders’ equity, and cash flows for the period from inception (May 18,
2009) through June 30, 2009. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Free For All, Inc. as of June 30,
2009, and the results of its operations and its cash flows for the period from
inception (May 18, 2009) through June 30, 2009 in conformity with accounting
principles generally accepted in the United States of America.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred a loss since inception of $23,872
and has experienced negative cash flows from operations as of June 30, 2009 that
raise substantial doubt about its ability to continue as a going concern.
Management’s plans in regard to these matters are also described in Note
1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ AJ.
ROBBINS,
P.C.
AJ.
ROBBINS, P.C.
CERTIFIED
PUBLIC ACCOUNTANTS
Denver,
Colorado
September
10, 2009
F-2
|
Free
For All, Inc.
|
||||
|
BALANCE
SHEET
|
||||
|
June
30, 2009
|
||||
|
ASSETS
|
||||
|
CURRENT
ASSETS
|
||||
|
Cash
and Cash Equivalents
|
$ | 14,245 | ||
|
Accounts
Receivable, Net
|
56,419 | |||
|
Prepaid
Expenses and Other Current Assets
|
12,752 | |||
|
Total
Current Assets
|
83,416 | |||
|
PROPERTY
AND EQUIPMENT, Net
|
37,610 | |||
|
Total
Assets
|
$ | 121,026 | ||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
|
CURRENT
LIABILITIES
|
||||
|
Accounts
Payable - Trade
|
$ | 14,139 | ||
|
Accrued
Expenses
|
18,859 | |||
|
Due
to Related Parties
|
38,816 | |||
|
Capital
Lease Obligations, Current Portion
|
12,338 | |||
|
Total
Current Liabilities
|
84,152 | |||
|
CAPITAL
LEASE OBLIGATIONS, NET OF CURRENT PORTION
|
20,724 | |||
|
Total
Liabilities
|
104,876 | |||
|
COMMITMENTS
AND CONTINGENCIES
|
||||
|
STOCKHOLDERS'
EQUITY
|
||||
|
Preferred
stock: $0.0001 par, 5,000,000 shares authorized,
|
- | |||
|
-0-
shares issued and outstanding
|
||||
|
Common
stock: $0.0001 par, 45,000,000 shares authorized,
|
||||
|
7,500,000
shares issued and outstanding
|
750 | |||
|
Additional
paid in capital
|
39,272 | |||
|
Accumulated
deficit
|
(23,872 | ) | ||
|
Total
Stockholders' Equity
|
16,150 | |||
|
Total
Liabilities and Stockholders' Equity
|
$ | 121,026 | ||
The
accompanying notes are an integral part of these financial
statements
F-3
|
Free
For All, Inc
|
||||
|
STATEMENT
OF OPERATIONS
|
||||
|
Period
From Inception (May 18, 2009) to June 30, 2009
|
||||
|
SALES
|
$ | - | ||
|
OPERATING
EXPENSES
|
23,872 | |||
|
NET
LOSS
|
$ | (23,872 | ) | |
|
LOSS
PER SHARE, BASIC AND DILUTED:
|
||||
|
NET
LOSS
|
$ | * | ||
|
WEIGHTED-AVERAGE
SHARES COMMON SHARES
|
||||
|
OUTSTANDING,
BASIC AND DILUTED
|
7,500,000 | |||
* Less than (0.01)
The
accompanying notes are an integral part of these financial
statements
F-4
FREE
FOR ALL, INC.
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY
PERIOD
FROM INCEPTION (MAY 18, 2009) TO JUNE 30, 2009
|
Additional
|
Total
|
||||||||||||||||||
|
Common
Stock
|
Paid-In
|
Accumulated
|
Stockholders'
|
||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
|||||||||||||||
|
BALANCE,
INCEPTION (MAY 18, 2009)
|
- | $ | - | $ | - | $ | - | $ | - | ||||||||||
|
Net
Loss
|
- | - | - | (23,872 | ) | (23,872 | ) | ||||||||||||
|
Stock
Issued for Acquisition of the Discount Prescription
|
|||||||||||||||||||
|
Card
Division of New Millennium Consultants, LLC
|
7,500,000 | 750 | 39,272 | - | 40,022 | ||||||||||||||
|
BALANCE,
JUNE 30, 2009
|
7,500,000 | $ | 750 | $ | 39,272 | $ | (23,872 | ) | $ | 16,150 | |||||||||
The
accompanying notes are an integral part of these financial
statements
F-5
FREE
FOR ALL, INC.
STATEMENT
OF CASH FLOWS
PERIOD
FROM INCEPTION (MAY 18, 2009) TO JUNE 30, 2009
|
CASH
FLOWS (TO) FROM OPERATING ACTIVITIES
|
||||
|
Net
Loss
|
$ | (23,872 | ) | |
|
Adjustments
to Reconcile Net Loss to
|
||||
|
Net
Cash Provided by Operating Activities:
|
||||
|
Related
Party Payable Converted to Contributed Capital
|
20,000 | |||
|
Increase
in Current Liabilities:
|
||||
|
Accounts
Payable
|
3,872 | |||
|
Net
Cash Provided by Operating Activities
|
- | |||
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||
|
Cash
Received in Acquisition
|
14,245 | |||
|
Net
Cash Provided by Investing Activities
|
14,245 | |||
|
NET
INCREASE IN CASH
|
14,245 | |||
|
Cash
and Cash Equivalents- Beginning of Period
|
- | |||
|
CASH
AND CASH EQUIVALENTS- END OF PERIOD
|
$ | 14,245 | ||
|
NonCash
Investing and Financing Activities
|
||||
|
Net
Assets Acquired from New Millennium Consultants, LLC
|
||||
|
in
Exchange for 7,500,000 Shares of Common Stock
|
$ | 40,022 | ||
|
Supplementary
Cash Flow Information
|
||||
|
Cash
Paid for Interest
|
$ | - | ||
The
accompanying notes are an integral part of these financial
statements
F-6
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
1 NATURE
OF BUSINESS
|
Nature of
Business
Free for
All, Inc. (the "Company"), was incorporated under the laws of the State of
Delaware on May 18, 2009. The Company was formed to develop, market, license and
distribute discount prescription cards and related discounted healthcare
services. The Company provides a menu of discount products featuring a free
prescription discount program.
On June
30, 2009, the Company acquired substantially all assets and certain liabilities
related to the discount prescription card division of New Millennium
Consultants, LLC (“Division”) in exchange for 7,500,000 shares of stock. The
transaction has been treated as a recapitalization of the
Division. See Note 9.
Going Concern and
Management's Plans
These
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The Company has incurred a loss since
inception of $23,872 and has not provided any cash flows from operations as
of June 30, 2009 that raise substantial doubt about its ability to continue
as a going concern. These factors, among others, indicate that the Company may
be unable to continue as a going concern for a reasonable period of time. These
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that may be necessary should the Company be unable
to continue as a going concern. The Company's continuation as a going
concern is contingent upon its ability to obtain additional financing, and to
generate revenue and cash flow to meet its obligations on a timely
basis. Management will seek to raise additional funding through
equity financing during the next twelve months.
|
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Use of
Estimates
The
preparation of financial
statements in conformity with accounting principles generally
accepted in the United States of America to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Significant estimates include
allowances for doubtful accounts, accounting for income taxes, and
depreciation.
Cash and Cash
Equivalents
The
Company considers all highly liquid investments purchased with original
maturities of three months or less at the date of purchase to be cash
equivalents.
Fair Value of Financial
Instruments
Cash,
receivables, accounts payable, accrued liabilities, due to related parties and
capital lease obligations are carried at amounts which reasonably approximate
their fair value due to the short-term nature of these amounts or due to
variable rates of interest which are consistent with current market
rates.
F-7
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit
Risk
Substantially
all cash is deposited in one financial institution. At times, amounts on deposit
may be in excess of the FDIC insurance limit. The Company has not experienced a
loss in such accounts.
The
Company was assigned all rights to revenues earned under an agreement with a
third party. The third party has entered into agreements with
pharmacies whereby it receives commissions from them for card holders using
discount prescription cards. The Company will earn its commissions
from the third party who collects from the pharmacies. The Company
has no revenues to date; however, beginning after June 30, 2009, substantially
all revenue earned will be from this third party.
Accounts
Receivable
Accounts
receivable consist of commissions earned that have not been received at the
balance sheet date. Trade receivables are not collateralized. The
Company generally grants credit terms to most customers ranging from 30 to 90
days. The Company
uses the allowance method to account for uncollectible accounts receivable. The
allowance is sufficient to cover both current and anticipated future losses.
Uncollectible amounts are charged against the allowance account. As of June 30,
2009 the Company has recorded an allowance of $1,845, which relates to a
receivable acquired from the Division. The Company routinely assesses the
financial strength of its customers as part of its consideration of accounts
receivable collectibility by performing credit evaluations of
customers.
Property and
Equipment
Property
and equipment is stated at depreciated cost. The estimated useful lives of the
assets are as follows:
Equipment
5 Years
Computers
3 Years
Major
additions and improvements are capitalized, while replacements, maintenance and
repairs, which do not improve or extend the life of the respective assets, are
expensed as incurred.
Revenue
Recognition
The
Company offers a discount prescription drug card and other discount health and
dental service programs
For the
discount prescription drug cards ("RxCut"), the Company provides the cards to
groups or individuals who further distribute the cards to other
individuals. These cards are used at pharmacies located throughout
the country and provide discounts to the individuals on the prescriptions
purchased. If the individual pays less than the pharmacy usual and customary
price, the Company receives a fixed commission fee from that
transaction. Each month the Company receives payment from its billing
company or pharmacy network for payments they received during that month on
transactions occurring in that month or prior months.
F-8
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
(continued)
For the
discounted health and dental services, the Company has three different plans
with its GetBenefitRelief program. Individuals enroll in the programs
and pay a monthly or an annual fee for their membership. The Company works with
a discount medical plan organization to provide discounted services to its
members. This revenue will be recognized on a monthly basis over the
term of the memberships.
The
Company recognizes revenues at the time service has been provided to the
customer, the amount due the Company is fixed, and collectability of the related
receivable is reasonably assured.
Revenues
typically result from a commission fee earned per transaction of the discount
prescription card. The Company receives a monthly transaction report
from a third party that details all transactions including those that the
Company earned commissions on. The Company recognizes the revenues
monthly after receipt of the reports for payable
transactions. Payments are received monthly from the third party but
may take thirty to ninety days to collect.
Additional sources of discount program
revenue are recognized as the services are completed.
The
Company has not earned any revenue to date; however, with the acquisition of the
Division, anticipates it will begin earning revenues immediately.
Cost of
Sales
Cost of
sales consists mainly of commissions paid to stockholders or third party sponsors who are credited for generating the
use of the discount prescription card. The
amount each sponsor may receive varies between $.10
and $1.25 per qualifying transaction per individual, with the Company
paying a total of $1.25 per
qualifying transaction . Additional sources of Costs of
Sales include expenditures for customer service and the printing of discount
cards.
Advertising
Costs
Advertising
costs are charged to expense as they are incurred. There was no
advertising expense for the period from inception (May 18, 2009) to June 30,
2009.
Income
Taxes
In
accordance with SFAS 109, Accounting for Income Taxes, the Company accounts for
Income taxes under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax basis and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
The
Company has adopted FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes - an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48
clarifies the
F-9
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
(Continued)
accounting
for uncertainty in income taxes recognized in companies’ financial statements in
accordance with FASB Statement No. 109, Accounting for Income Taxes. As a
result, the Company applies a more-likely-than-not recognition threshold for all
tax uncertainties. FIN 48 only only allows the recognition of those tax benefits
that have a greater than fifty percent likelihood of being sustained upon
examination by the taxing authorities. As a result of implementing FIN 48, the
Company’s management has reviewed the Company’s tax positions and determined
there were no outstanding, or retroactive tax positions with less than a 50%
likelihood of being sustained upon examination by the taxing authorities,
therefore the implementation of this standard has not had a material affect on
the Company.
The
Company does not have any unrecognized tax benefits for the period ended June
30, 2009 which if recognized would affect the Company’s effective income tax
rate.
The
Company’s policy is to recognize interest and penalties related to income tax
issues as components of income tax expense. The Company did not recognize or
incur any accrual for interest and penalties relating to income taxes for the
period ended June 30, 2009.
Software Development
Costs
The
Company accounts for its software development costs in accordance with Statement
of Financial Accounting Standards (SFAS) Number 86, Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed. This statement
requires that, once technological feasibility of a developing product has been
established, all subsequent costs incurred in developing that product to a
commercially acceptable level be capitalized and amortized ratably over the
estimated life of the product. Through June 30, 2009, capitalizable costs
incurred have not been significant for any development projects.
The
Company follows Statement of Position (SOP) No. 98-1, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use, which requires
capitalization of certain costs incurred during the development of internal use
software. Through June 30, 2009, capitalizable costs incurred have not been
significant for any development projects.
Stock-Based
Compensation
The
Company follows SFAS No. 123 (Revised 2004), Share Based Payment (“SFAS
No. 123R”). SFAS No. 123R requires companies to measure and recognize
the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value. Share-based compensation
recognized under the modified-prospective transition method of SFAS
No. 123R includes share-based compensation based on the grant-date fair
value determined in accordance with the original provisions of SFAS
No. 123, Accounting for Stock-Based Compensation, for all share-based
payments granted prior to and not yet vested as of January 1, 2006 and
share-based compensation based on the grant-date fair-value determined in
accordance with SFAS No. 123R for all share-based payments granted after
January 1, 2006. Through June 30, 2009, no stock based awards
have been granted or exercised.
F-10
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Loss Per Common
Share
Statement
of Financial Accounting Standards No. 128, Earnings Per Share, (“SFAS
128”) provides for the calculation of “Basic” and “Diluted” earnings per
share. Basic loss per common share includes no dilution and is computed by
dividing net loss available to common shareholders by the weighted average
number of common shares outstanding during the period. Diluted loss
per share consists of the weighted average number of common shares outstanding
plus the dilutive effects of options and warrants calculated using the treasury
stock method. In loss periods, dilutive common equivalent shares are
excluded as the effect would be anti-dilutive. There were no
potentially dilutive securities as of June 30, 2009.
Recently Issued Accounting
Pronouncements
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No. 133,”
(SFAS “161”) as amended and interpreted, which requires enhanced disclosures
about an entity’s derivative and hedging activities and thereby improves the
transparency of financial reporting. Disclosing the fair values of
derivative instruments and their gains and losses in a tabular format provides a
more complete picture of the location in an entity’s financial statements of
both the derivative positions existing at period end and the effect of using
derivatives during the reporting period. Entities are required to
provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. SFAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. Through June 30, 2009, the
Company did not have any derivative instruments or hedging activities.
Management is aware of the requirements of SFAS 161 and will disclose when
appropriate.
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS 162 will provide framework for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. generally accepted accounting principles
(GAAP) for nongovernmental entities. SFAS 162 will be effective 60
days following the Securities and Exchange Commission’s approval of the Public
Company Accounting Oversight Board (“PCAOB”) amendments to AU Section
411. The Company does not expect that the adoption of SFAS 162 will
have a material impact on its financial condition or results of
operations.
In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – an interpretation of FASB Statement No.
60.” SFAS 163 requires that an insurance enterprise recognize a claim
liability prior to an event of default (insured event) when there is evidence
that credit deterioration has occurred in an insured financial
obligation. This Statement also clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim
liabilities. Those clarifications will increase comparability in financial
reporting of financial guarantee insurance contracts by insurance enterprises.
This Statement requires expanded disclosures about financial guarantee insurance
contracts.
F-11
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting
Pronouncements (Continued)
The
accounting and disclosure requirements of the Statement will improve the quality
of information provided to users of financial statements. SFAS 163 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008. The adoption of SFAS 163 did not have a material
impact on its financial condition or results of operations.
The
Company has adopted all recently issued accounting
pronouncements. The adoption of the accounting pronouncements,
including those not yet effective, is not anticipated to have a material effect
on the financial position or results of operations of the Company.
|
NOTE
3 PROPERTY
AND EQUIPMENT
|
Property
and equipment consists of the following at June 30, 2009:
|
Equipment
|
$ | 6,993 | ||
|
Computers
|
39,913 | |||
|
Total
|
46,906 | |||
|
Less:
Accumulated Depreciation
|
9,296 | |||
|
Net
Property and Equipment
|
$ | 37,610 |
The
Company did not have any depreciation expense through June 30, 2009 as the
assets were acquired on June 30, 2009. See Note 9.
|
NOTE
4 CAPITAL
LEASES
|
The
Company leases computers under various noncancelable capital leases. Computers
held under these leases, which are included in property and equipment, consist
of the following at June 30, 2009:
|
Computers
|
$ | 39,913 | ||
|
Less:
Accumulated Depreciation
|
8,037 | |||
|
Computers
under Lease, Net
|
$ | 31,876 |
F-12
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
As of
June 30, 2009, future minimum lease payments are as follows:
|
Twelve Months Ending June
30,
|
Amount
|
|||
|
2010
|
$ | 17,376 | ||
|
2011
|
15,853 | |||
|
2012
|
8,232 | |||
|
Total
Minimum Payments
|
41,461 | |||
|
Less:
Amounts Representing Interest
|
8,399 | |||
|
Present
Value of Net Minimum Lease Payments
|
33,062 | |||
|
Less:
Current Portion
|
12,338 | |||
|
Capital
Lease Obligations, Net of Current Portion
|
$ | 20,724 | ||
|
NOTE
5 RELATED
PARTY TRANSACTIONS
|
Certain
transaction commissions are payable to stockholders. Total amounts
due to stockholders at June 30, 2009 were approximately $39,000 which consisted
primarily of amounts due to the Company's Chief Executive Officer for
commissions payable on revenue transactions and amounts due for reimbursable
expenses, in addition to approximately $4,000 due to the Law firm of one of the
Company's directors. Total commission expense to related
party was $0 for the period from inception (May 18, 2009) to June 30,
2009.
The Company leases its office space from its
Chief Executive Officer on a month to month basis. Related party expense
was $0 for the period from inception on May 18, 2009 to June 30, 2009.
The Company incurred approximately $3,000 of
legal expenses to the Law Firm of one of the Company's directors during the
period from inception (May 18, 2009) to June 30, 2009. As of June 30, 2009
the Company owed $3,873 to this related party.
The Company pays $12,500 a month for consulting to a Company
wholly owned by a stockholder and Officer of the Company. The Company
did not pay any amounts to this related party during the period of inception
(May 18, 2009) to June 30, 2009.
NOTE
6
COMMITMENTS AND CONTINGENCIES
From time
to time, in the normal course of business, the Company is subject to routine
litigation incidental to its business. Although there can be no assurances as to
the ultimate disposition of any such matters, it is the opinion of management,
based upon the information available at this time, that there are no matters,
individually or in the aggregate, that will have a material adverse effect on
the results of operations and financial condition of the Company.
The
Company has entered into commission agreements with certain stockholders and
third parties who are credited for generating the use of the discount
prescription card. These agreements are vested lifetime agreements
that fix the commission to be paid per billable transaction.
|
NOTE
7 STOCKHOLDERS'
EQUITY
|
The
Company is authorized to issue up to 5,000,000 shares of $0.0001 par value
preferred stock. To date, no shares have been issued or are
outstanding.
The
Company is authorized to issue up to 45,000,000 shares of $0.0001 par value
common stock. The Company issued 7,500,000 shares of common stock to
acquire the operating discount prescription card division of New Millennium, LLC
on June 30, 2009. See Note 9.
On June
30, 2009, the Company offered for sale up to 2,500,000 units of its securities
through a private placement, each unit consisting of one share of $.001 par
value common stock and one common stock purchase warrant to purchase an
additional share at $1.00 per share, at a purchase price of $.10 per unit or up
to an aggregate purchase price of $250,000. Subsequent to June 30, 2009 the
Company sold all units under the private placement and issued 2,500,000 units
for cash proceeds of $250,000.
F-13
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
8
INCOME TAXES
|
A
reconciliation of income tax expense at statutory federal and state income tax
rates is as follows for the period of inception (May 18, 2009) to June
30:
|
Computed
Expected Tax Benefit
|
$ | 9,600 | ||
|
Increase
in Valuation Allowance
|
(9,600 | ) | ||
|
Total
|
$ | - |
The
components of deferred income tax assets and liabilities are as
follows:
|
Deferred
Tax Assets:
|
||||
|
Allowance
for Doubtful Accounts
|
$ | 700 | ||
|
Accrued
Expenses not Currently Deductible
|
10,300 | |||
|
Net
Operating Loss Carryforwards
|
9,600 | |||
|
Gross
Deferred Tax Assets
|
20,600 | |||
|
Deferred
Tax Liabilities:
|
||||
|
Depreciation
|
(8,000 | ) | ||
|
Net
Deferred Tax Assets
|
12,600 | |||
|
Valuation
Allowance
|
(12,600 | ) | ||
|
Total
|
$ | - | ||
As a
result of the net loss incurred since inception and because the likelihood of
being able to utilize these losses is not presently determinable, the Company
has recorded a valuation allowance to fully reserve its net deferred tax
asset.
The
components of deferred income tax expense (benefit) are as follows:
|
Net
Operating Loss Carryforward
|
$ | (9,600 | ) | |
|
Less:
Valuation Allowance
|
9,600 | |||
|
Total
Income Tax Expense (Benefit)
|
$ | - |
As of
June 30, 2009, the Company has accumulated net operating loss carryforwards of
approximately $24,000. However, utilization of these net operating loss
carryforwards is significantly dependent on the Company’s ability to
generate future taxable income which is uncertain. The Company is not currently
able to ascertain the amount of tax benefit that will be realized in future
periods, if any. These amounts expire in 2029 if not utilized
sooner.
F-14
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
9 ASSET
ACQUISITION
|
On June
30, 2009, the Company acquired substantially all assets and certain liabilities
related to the discount prescription card division of New Millennium
Consultants, LLC in exchange for 7,500,000 shares of stock and the forgiveness
of $20,000 in amounts owed to the Division, which has been recorded as
contributed capital. The assigned assets and liabilities are as
follows:
|
Cash
and Cash Equivalents
|
$ | 14,245 | ||
|
Accounts
Receivable
|
56,419 | |||
|
Prepaid
Expenses and Other Current Assets
|
12,752 | |||
|
Property
and Equipment
|
37,610 | |||
|
Total
Assets Acquired
|
121,026 | |||
|
Accounts
Payable and Accrued Expenses
|
67,942 | |||
|
Capital
Lease Obligations
|
33,062 | |||
|
Total
Liabilities Acquired
|
101,004 | |||
|
Net
Assets Acquired
|
$ | 20,022 |
The
acquisition is being accounted for as a recapitalization of the
division.
|
NOTE
10 SUBSEQUENT
EVENTS
|
In July
2009, the Company entered into a lease with an unrelated party for office space
with a term of twenty six months. This lease calls for minimum
monthly rent payments of $1,612 and monthly operating expenses of $2,668, and a
security deposit of $8,560.
F-15
FREE
FOR ALL, INC.
INDEX
TO FINANCIAL STATEMENTS
|
FINANCIAL
STATEMENTS
|
|
|
BALANCE
SHEET AS OF SEPTEMBER 30, 2009 (Unaudited)
|
F-17
|
|
STATEMENT
OF OPERATIONS FOR THE PERIOD FROM INCEPTION (MAY 18, 2009) TO SEPTEMBER
30, 2009 (Unaudited)
|
F-18
|
|
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD FROM INCEPTION (MAY 18,
2009) TO SEPTEMBER 30, 2009 (Unaudited)
|
F-19
|
|
STATEMENT
OF CASH FLOWS FOR THE PERIOD FROM INCEPTION (MAY 18, 2009) TO SEPTEMBER
30, 2009 (Unaudited)
|
F-20
|
|
NOTES
TO FINANCIAL STATEMENTS (Unaudited)
|
F-21
|
F-16
|
Free
For All, Inc.
|
||||
|
BALANCE
SHEET
|
||||
|
SEPTEMBER
30, 2009
|
||||
|
(Unaudited)
|
||||
|
ASSETS
|
||||
|
CURRENT
ASSETS
|
||||
|
Cash
and Cash Equivalents
|
$ | 62,896 | ||
|
Accounts
Receivable, Net
|
95,530 | |||
|
Prepaid
Expenses and other current assets
|
6,976 | |||
|
Total
Current Assets
|
165,402 | |||
|
PROPERTY
AND EQUIPMENT, Net
|
72,859 | |||
|
DEPOSITS
|
8,560 | |||
|
|
||||
|
Total
Assets
|
$ | 246,821 | ||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
|
CURRENT
LIABILITIES
|
||||
|
Accounts
Payable - Trade
|
$ | 30,059 | ||
|
Accrued
Expenses
|
102,620 | |||
|
Due
to Related Parties
|
60,320 | |||
|
Capital
Lease Obligations, Current Portion
|
12,910 | |||
|
Total
Current Liabilities
|
205,909 | |||
|
CAPITAL
LEASE OBLIGATIONS, NET OF CURRENT PORTION
|
17,274 | |||
|
Total
Liabilities
|
223,183 | |||
|
STOCKHOLDERS'
EQUITY
|
||||
|
Preferred
stock: $0.0001 par, 5,000,000 shares authorized,
|
||||
|
-0-
shares issued and outstanding
|
- | |||
|
Common
stock: $0.0001 par, 45,000,000 shares authorized,
|
||||
|
10,000,000
shares issued and outstanding
|
1,000 | |||
|
Additional
paid in capital
|
289,022 | |||
|
Accumulated
deficit
|
(266,384 | ) | ||
|
Total
Stockholders' Equity
|
23,638 | |||
|
Total
Liabilities and Stockholders' Equity
|
$ | 246,821 | ||
The
accompanying notes are an integral part of these financial
statements
F-17
|
Free
For All, Inc
|
||||
|
STATEMENT
OF OPERATIONS
|
||||
|
Period
From Inception (May 18, 2009) to September 30, 2009
|
||||
|
(Unaudited)
|
||||
|
SALES
|
$ | 122,345 | ||
|
COST
OF SALES:
|
||||
|
Related
party commissions
|
50,197 | |||
|
Cost
of sales
|
32,593 | |||
|
Total
Cost of Sales
|
82,790 | |||
|
GROSS
PROFIT
|
39,555 | |||
|
OPERATING
EXPENSES:
|
||||
|
Related
party consulting
|
37,500 | |||
|
Operating
expenses
|
267,004 | |||
|
Total
Operating Expenses
|
304,504 | |||
|
(LOSS)
FROM OPERATIONS
|
(264,949 | ) | ||
|
INTEREST
EXPENSE
|
1,435 | |||
|
NET
(LOSS)
|
$ | (266,384 | ) | |
|
LOSS
PER SHARE, BASIC AND DILUTED:
|
||||
|
NET
LOSS
|
$ | (0.03 | ) | |
|
WEIGHTED-AVERAGE
SHARES COMMON SHARES
|
||||
|
OUTSTANDING,
BASIC AND DILUTED
|
8,938,235 | |||
The
accompanying notes are an integral part of these financial
statements
F-18
FREE
FOR ALL, INC.
STATEMENTS
OF CHANGES IN STOCKHOLDERS’ EQUITY
PERIOD
FROM INCEPTION (MAY 18, 2009) TO SEPTEMBER 30, 2009
(Unaudited)
|
Additional
|
Total
|
|||||||||||||||||||
|
Common
Stock
|
Paid
In
|
Accumulated
|
Stockholders'
|
|||||||||||||||||
|
Shares
|
$ |
Capital
|
Deficit
|
Equity
|
||||||||||||||||
|
BALANCE,
INCEPTION (MAY 18, 2009)
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
|
Net
Loss
|
- | - | - | (266,384 | ) | (266,384 | ) | |||||||||||||
|
Stock
Issued for Acquisition of the Discount Prescription
|
||||||||||||||||||||
|
Card
Division of New Millennium Consultants, LLC
|
7,500,000 | 750 | 39,272 | - | 40,022 | |||||||||||||||
|
Stock
Issued From the Sale of Units
|
2,500,000 | 250 | 249,750 | - | 250,000 | |||||||||||||||
|
BALANCE,
SEPTEMBER 30, 2009
|
10,000,000 | $ | 1,000 | $ | 289,022 | $ | (266,384 | ) | $ | 23,638 | ||||||||||
The
accompanying notes are an integral part of these financial
statements
F-19
FREE
FOR ALL, INC.
STATEMENT
OF CASH FLOWS
PERIOD
FROM INCEPTION (MAY 18, 2009) TO SEPTEMBER 30, 2009
(Unaudited)
|
CASH
FLOWS (TO) FROM OPERATING ACTIVITIES
|
||||
|
Net
Loss
|
$ | (266,384 | ) | |
|
Adjustments
to Reconcile Net Loss to
|
||||
|
Net
Cash Used in Operating Activities:
|
||||
|
Depreciation
|
6,000 | |||
|
Changes
in operating assets and liabilities:
|
||||
|
Accounts
Receivable
|
(39,111 | ) | ||
|
Prepaid
Expenses
|
5,776 | |||
|
Deposits
|
(8,560 | ) | ||
|
Accounts
Payable - Trade
|
19,791 | |||
|
Accrued
Expenses
|
83,761 | |||
|
Due
to Related Parties
|
21,504 | |||
|
Net
Cash Used in Operating Activities
|
(177,223 | ) | ||
|
CASH
FLOWS (TO) FROM INVESTING ACTIVITIES
|
||||
|
Cash
Received in Acquisition
|
14,245 | |||
|
Purchase
of Property and Equipment
|
(41,248 | ) | ||
|
Net
Cash Used in Investing Activities
|
(27,003 | ) | ||
|
CASH
FLOWS (TO) FROM FINANCING ACTIVITIES
|
||||
|
Payments
on Capital Lease Obligations
|
(2,878 | ) | ||
|
Proceeds
from Sale of Units
|
250,000 | |||
|
Related
Party Payable Converted to Contributed Capital
|
20,000 | |||
|
Net
Cash Provided by Financing Activities
|
267,122 | |||
|
NET
INCREASE IN CASH
|
62,896 | |||
|
Cash
and Cash Equivalents- Beginning of Period
|
- | |||
|
CASH
AND CASH EQUIVALENTS- END OF PERIOD
|
$ | 62,896 | ||
|
NonCash
Investing and Financing Activities
|
||||
|
Net
Assets Acquired from New Millennium Consultants,
LLC
|
||||
|
in
Exchange for 7,500,000 Shares of Common Stock
|
$ | 40,022 | ||
|
Supplementary
Cash Flow Information
|
||||
|
Cash
Paid for Interest
|
$ | 1,467 | ||
The
accompanying notes are an integral part of these financial
statements
F-20
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
1
|
NATURE
OF BUSINESS
|
Nature of
Business
Free for
All, Inc. (the “Company”), was incorporated under the laws of the State of
Delaware on May 18, 2009. The Company was formed to develop, market, license and
distribute discount prescription cards and related discounted healthcare
services. The Company provides a menu of discount products featuring a free
prescription discount program.
On June
30, 2009, the Company acquired substantially all assets and certain liabilities
related to the discount prescription card division of New Millennium
Consultants, LLC (“Division”) in exchange for 7,500,000 shares of stock. The
transaction has been treated as a recapitalization of the
Division. See Note 9.
Basis of
Presentation
The
unaudited financial statements have been prepared by Free For All, Inc. (the
"Company"), in accordance with generally accepted accounting principles for
interim financial information and with Regulation S-X as promulgated by the
Securities and Exchange Commission ("SEC"). Accordingly, these
financial statements do not include all of the disclosures required by generally
accepted accounting principles in the United States of America for complete
financial statements. These unaudited interim financial statements
should be read in conjunction with the audited financial statements and the
notes thereto included on Form S-1 for the period ended June 30,
2009. In the opinion of management, the unaudited interim financial
statements furnished here include all adjustments, all of which are of a normal
recurring nature, necessary for a fair statement of the result for the interim
period presented. In the opinion of management, the interim financial
statements include all adjustments that are necessary in order to make the
financial statements not misleading. The results of the period from
inception (May 18, 2009) through September 30, 2009, are not necessarily
indicative of the results to be expected for the period from inception (May 18,
2009) to December 31, 2009.
Going Concern and
Management's Plans
These
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The Company has incurred a loss since inception
of $266,384 and has not provided any cash flows from operations as of September
30, 2009. These factors, among others, indicate that the Company may be unable
to continue as a going concern for a reasonable period of time. These financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classification of
liabilities that may be necessary should the Company be unable to continue as a
going concern. The Company's continuation as a going concern is
contingent upon its ability to obtain additional financing, and to generate
revenue and cash flow to meet its obligations on a timely
basis. Management will seek to raise additional funding through
equity financing during the next twelve months.
F-21
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
2
|
SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
|
Use of
Estimates
The
preparation of financial
statements in conformity with accounting principles generally
accepted in the United States of America to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Significant estimates include
allowances for doubtful accounts, accounting for income taxes, and
depreciation.
Cash and Cash
Equivalents
The
Company considers all highly liquid investments purchased with original
maturities of three months or less at the date of purchase to be cash
equivalents.
Fair Value of Financial
Instruments
Cash,
receivables, accounts payable, accrued expenses, due to related parties and
capital lease obligations are carried at amounts which reasonably approximate
their fair value due to the short-term nature of these amounts or due to
variable rates of interest which are consistent with current market
rates.
Concentration of Credit
Risk
Substantially
all cash is deposited in one financial institution. At times, amounts on deposit
may be in excess of the FDIC insurance limit. The Company has not experienced a
loss in such accounts.
The
Company was assigned all rights to revenues earned under an agreement with a
third party. The third party has entered into agreements with
pharmacies whereby it receives commissions from them for card holders using
discount prescription cards. The Company earns its commissions from
the third party who collects from the pharmacies. Substantially all
revenue earned is from this third party. Subsequent to the quarter
ended September 30, 2009 the Company entered into an agreement with a new third
party and terminated its agreement with the prior third party. See
Note 10.
Accounts
Receivable
Accounts
receivable consist of commissions earned that have not been received at the
balance sheet date. Trade receivables are not collateralized. The
Company generally grants credit terms to most customers ranging from 30 to 90
days. The Company
uses the allowance method to account for uncollectible accounts receivable. The
allowance is sufficient to cover both current and anticipated future losses.
Uncollectible amounts are charged against the allowance account. As of September
30, 2009, the Company wrote off $2,108 related to a receivable acquired from the
Division, of which $264 was expensed during the period from inception (May 18,
2009) to September 30, 2009. All other accounts receivable are
considered fully collectible by management, and accordingly, no allowance is
deemed necessary. The Company routinely assesses the financial
strength of its customers as part of its consideration of accounts receivable
collectability by performing credit evaluations of
customers.
F-22
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and
Equipment
Property
and equipment is stated at depreciated cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets as
follows:
|
Equipment
|
5
Years
|
|
Computers
|
3
Years
|
|
Leasehold
Improvements
|
Life
of the Lease
|
Major
additions and improvements are capitalized, while replacements, maintenance and
repairs, which do not improve or extend the life of the respective assets, are
expensed as incurred.
Revenue
Recognition
The
Company offers a discounted prescription drug card and other discounted health
and dental service programs.
For
the discount prescription drug cards ("RxCut"), the Company provides the cards
to groups or individuals who further distribute the cards to other
individuals. These cards are used at pharmacies located throughout
the country and provide discounts to the individuals on the prescriptions
purchased. If the individual pays less than the pharmacy usual and customary
price, the Company receives a fixed commission fee from that
transaction. Each month the Company receives payment from its billing
company or pharmacy network for payments they received during that month on
transactions occurring in that month or prior months.
For
the discounted health and dental services, the Company has three different plans
with its GetBenefitRelief program. Individuals enroll in the programs
and pay a monthly or an annual fee for their membership. The Company works with
a discount medical plan organization to provide discounted services to its
members. This revenue will be recognized on a monthly basis over the
term of the memberships.
The
Company recognizes revenues at the time service has been provided to the
customer, the amount due the Company is fixed, and collectability of the related
receivable is reasonably assured.
Revenues
typically result from a commission fee earned per transaction of the discount
prescription card. The Company receives a monthly transaction report
from a third party that details all transactions including those that the
Company earned commissions on. The Company recognizes the revenues monthly after
receipt of the reports for payable transactions. Payments are received monthly
from the third party but may take thirty to ninety days to
collect.
Additional sources
of discount program revenue are recognized as the services are
completed.
F-23
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cost of
Sales
Cost of
sales consists mainly of commissions paid to stockholders or third party
sponsors who are credited for generating the use of the discount prescription
card. The amount each sponsor may receive varies between $0.10 and
$1.25 per individual, with the Company paying a total of $1.25 per qualifying
transaction. Additional sources of Cost of Sales include expenditures
for customer service and the printing of discount cards.
Advertising
Costs
Advertising
costs are charged to expense as they are incurred. Advertising expense for the
period from inception (May 18, 2009) to September 30, 2009 was
$732.
Income
Taxes
In
accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109,
"Accounting for Income Taxes" (codified in FASB ASC Topic 740), the Company
accounts for Income taxes under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
The
Company has adopted Financial Accounting Standards Board (“FASB”) Interpretation
No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109" ("FIN 48") (codified in FASB ASC Topic 740). FIN 48 clarifies
the accounting for uncertainty in income taxes recognized in companies’
financial statements.
As a
result, the Company applies a more-likely-than-not recognition threshold for all
tax uncertainties. FIN 48 only allows the recognition of those tax benefits that
have a greater than fifty percent likelihood of being sustained upon examination
by the taxing authorities. As a result of implementing FIN 48, the Company’s
management has reviewed the Company’s tax positions and determined there were no
outstanding, or retroactive tax positions with less than a 50% likelihood of
being sustained upon examination by the taxing authorities, therefore the
implementation of this standard has not had a material affect on the
Company.
The
Company does not have any unrecognized tax benefits for the period ended
September 30, 2009 which if recognized would affect the Company’s effective
income tax rate.
F-24
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
(Continued)
The
Company’s policy is to recognize interest and penalties related to income tax
issues as components of income tax expense. The Company did not recognize or
incur any accrual for interest and penalties relating to income taxes for the
period ended September 30, 2009.
Software Development
Costs
The
Company accounts for its software development costs in accordance with SFAS No.
86 (codified in FASB ASC Topic 985), "Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed". This requires that, once
technological feasibility of a developing product has been established, all
subsequent costs incurred in developing that product to a commercially
acceptable level be capitalized and amortized ratably over the estimated life of
the product. Through September 30, 2009, capitalizable costs incurred have not
been significant for any development projects.
The
Company follows Statement of Position (“SOP”) No. 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use" (codified in
FASB ASC Topic 350), which requires capitalization of certain costs incurred
during the development of internal use software. Through September 30, 2009,
capitalizable costs incurred have not been significant for any development
projects.
Stock-Based
Compensation
The
Company accounts for its stock-based compensation in accordance with SFAS No.
123R, "Share Based Payment, an Amendment of FASB Statement No. 123" (codified in
FASB ASC Topic 718). SFAS No. 123R requires companies to measure and
recognize the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value. Share-based compensation
recognized under the modified-prospective transition method of SFAS
No. 123R includes share-based compensation based on the grant-date fair
value determined in accordance with the original provisions of SFAS
No. 123, Accounting for Stock-Based Compensation, for all share-based
payments granted prior to and not yet vested as of January 1, 2006 and
share-based compensation based on the grant-date fair-value determined in
accordance with SFAS No. 123R for all share-based payments granted after
January 1, 2006. The Company recognizes in the statement of operations
the grant-date fair value of stock options and other equity-based compensation
issued to employees and non-employees. Through September 30, 2009, no stock
based awards have been granted or exercised.
F-25
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Loss Per Common
Share
The
Company follows SFAS No. 123 (Revised 2004), Share Based Payment (“SFAS
No. 123R”). SFAS No. 128, Earnings Per Share
(codified in FASB ASC Topic 260), provides for the calculation of “Basic” and
“Diluted” earnings per share. Basic loss per common share includes no
dilution and is computed by dividing net loss available to common shareholders
by the weighted average number of common shares outstanding during the
period. Diluted loss per share consists of the weighted average
number of common shares outstanding plus the dilutive effects of options and
warrants calculated using the treasury stock method. In loss periods,
dilutive common equivalent shares are excluded as the effect would be
anti-dilutive. However, these dilutive securities could potentially dilute
earnings per share in the future. As of September 30, 2009, the Company
had 2,500,000 potentially dilutive securities. See Note 7.
Recently Issued Accounting
Pronouncements
On July
1, 2009, the Company adopted Accounting Standards Update (“ASU”) No.
2009-01, Topic 105 - "Generally Accepted Accounting Principles - amendments
based on SFAS No. 168, The FASB Accounting Standards Codification™ and the
Hierarchy of Generally Accepted Accounting Principles" (“ASU No.
2009-01”). ASU No. 2009-01 re-defines authoritative US GAAP for
nongovernmental entities to be only comprised of the FASB Accounting Standards
Codification™ (“Codification”) and, for SEC registrants, guidance issued by the
SEC. The Codification is a reorganization and compilation of all
then-existing authoritative US GAAP for nongovernmental entities, except for
guidance issued by the SEC. The Codification is amended to effect
non-SEC changes to authoritative US GAAP. Adoption of ASU No. 2009-01
only changed the referencing convention of US GAAP in Notes to the
Financial Statements.
In April
2009, the FASB issued FSP No. SFAS 157-4, "Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly" (“FSP
No. SFAS 157-4”). FSP No. SFAS 157-4, which is codified in
FASB ASC Topics 820-10-35-51 and 820-10-50-2, provides additional guidance for
estimating fair value and emphasizes that even if there has been a significant
decrease in the volume and level of activity for the asset or liability and
regardless of the valuation technique(s) used, the objective of a fair value
measurement remains the same. This FSP had no material impact on the Company’s
financial position, results of operations or cash flows.
F-26
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting
Pronouncements (Continued)
In
April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2,
"Recognition and Presentation of Other-Than-Temporary Impairments", which is
codified in FASB ASC Topic 320-10. This FSP modifies the requirements for
recognizing other-than-temporarily impaired debt securities and changes the
existing impairment model for such securities. The FSP also requires additional
disclosures for both annual and interim periods with respect to both debt and
equity securities. Under the FSP, impairment of debt securities will be
considered other-than-temporary if an entity (1) intends to sell the
security, (2) more likely than not will be required to sell the security
before recovering its cost, or (3) does not expect to recover the
security’s entire amortized cost basis (even if the entity does not intend to
sell). The FSP further indicates that, depending on which of the above
factor(s) causes the impairment to be considered other-than-temporary,
(1) the entire shortfall of the security’s fair value versus its amortized
cost basis or (2) only the credit loss portion would be recognized in
earnings while the remaining shortfall (if any) would be recorded in other
comprehensive income. This FSP requires entities to initially apply the
provisions of the standard to previously other-than-temporarily impaired debt
securities existing as of the date of initial adoption by making a
cumulative-effect adjustment to the opening balance of retained earnings in the
period of adoption.
The cumulative-effect adjustment potentially reclassifies the noncredit portion
of a previously other-than-temporarily impaired debt security held as of the
date of initial adoption from retained earnings to accumulated other
comprehensive income. This FSP had no material impact on the Company’s financial
position, results of operations or cash flows.
In
April 2009, the FASB issued FSP No. SFAS 107-1 and APB 28-1, "Interim
Disclosures about Fair Value of Financial Instruments”, which is codified in
FASB ASC Topic 825-10-50. This FSP essentially expands the disclosure
about fair value of financial instruments that were previously required only
annually to also be required for interim period reporting. In addition, the FSP
requires certain additional disclosures regarding the methods and significant
assumptions used to estimate the fair value of financial instruments. These
additional disclosures are required beginning with the quarter ending
June 30, 2009. The adoption of this FSP did not have an impact on the
Company’s financial position, results of operations or cash
flows.
In May
2009, the FASB issued SFAS No. 165, "Subsequent Events", codified in FASB ASC
Topic 855-10-05, which provides guidance to establish general standards of
accounting for and disclosures of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. SFAS
No. 165 also requires entities to disclose the date through which subsequent
events were evaluated as well as the rationale for why that date was selected.
SFAS No. 165 is effective for interim and annual periods ending after June 15,
2009, and accordingly, the Company adopted this pronouncement during the second
quarter of 2009. SFAS No. 165 requires that public entities evaluate subsequent
events through the date that the financial statements are issued. The Company
has evaluated subsequent events through December 31,
2009.
F-27
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting
Pronouncements (Continued)
In June
2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial
Assets — an amendment of FASB Statement No. 140", codified as FASB
ASC Topic 860, which requires entities to provide more information
regarding sales of securitized financial assets and similar transactions,
particularly if the entity has continuing exposure to the risks related to
transferred financial assets. SFAS No. 166 eliminates the concept of a
“qualifying special-purpose entity,” changes the requirements for derecognizing
financial assets and requires additional disclosures. SFAS No. 166 is
effective for fiscal years beginning after November 15, 2009. The Company does
not believe the adoption of SFAS No. 166 will have an impact on its financial
condition, results of operations or cash flows.
In June
2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No.
46(R)", codified as FASB ASC Topic 810-10, which modifies how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. SFAS
No. 167 clarifies that the determination of whether a company is required to
consolidate an entity is based on, among other things, an entity’s purpose
and design and a company’s ability to direct the activities of the entity that
most significantly impact the entity’s economic performance. SFAS No. 167
requires an ongoing reassessment of whether a company is the primary beneficiary
of a variable interest entity. SFAS No. 167 also requires additional
disclosures about a company’s involvement in variable interest entities and any
significant changes in risk exposure due to that involvement. SFAS No. 167
is effective for fiscal years beginning after November 15, 2009. The Company
does not believe the adoption of SFAS No. 167 will have an impact on its
financial condition, results of operations or cash flows.
The
Company has adopted all recently issued accounting
pronouncements. The adoption of the accounting pronouncements,
including those not yet effective, is not anticipated to have a material effect
on the financial position or results of operations of the
Company.
|
NOTE 3
|
PROPERTY
AND EQUIPMENT
|
Property
and equipment consists of the following at September 30,
2009:
| Equipment | $ | 29,543 | ||
| Leasehold Improvements | 18,699 | |||
| Computers | 39,913 | |||
| Total | 88,155 | |||
| Less: Accumulated Depreciation | 15,296 | |||
| Net Property and Equipment | $ | 72,859 |
Depreciation
expense was $6,000 for the period from inception to September 30, 2009. Certain
property and equipment was acquired through an asset acquisition. See Note
9.
F-28
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
4
|
CAPITAL
LEASES
|
The
Company leases computers under various noncancelable capital leases. Computers
held under these leases, which are included in property and equipment consist of
the following at September 30, 2009:
|
Computers
|
$ | 39,913 | ||
|
Less:
Accumulated Depreciation
|
12,607 | |||
|
Computers
under Lease, Net
|
$ | 27,306 |
As
of September 30, 2009, future minimum lease payments are as
follows:
|
Twelve
Months Ending September 30,
|
Amount
|
|||
|
2010
|
$ | 17,378 | ||
|
2011
|
13,566 | |||
|
2012
|
6,173 | |||
|
Total
Minimum Payments
|
37,117 | |||
|
Less:
Amounts Representing Interest
|
6,933 | |||
|
Present
Value of Net Minimum Lease Payments
|
30,184 | |||
|
Less:
Current Portion
|
12,910 | |||
|
Capital
Lease Obligations, Net of Current Portion
|
$ | 17,274 | ||
Interest
expense on capital lease obligations for the period from inception (May 18,
2009) through September 30, 2009 was $1,467.
|
NOTE
5
|
RELATED
PARTY TRANSACTIONS
|
Certain
transaction commissions are payable to stockholders. Total amounts
due to stockholders at September 30, 2009 were approximately $60,000 which
consisted primarily of amounts due to the Company's Chief Executive Officer for
commissions payable on revenue transactions of $55,239 and amounts due for
reimbursable expenses of $5,081. Total commission expense to related party was
approximately $50,000 for the period from inception (May 18, 2009) through
September 30, 2009.
Prior
to August 17, 2009, the Company leased office space from the Company’s Chief
Executive Officer on a month to month basis. Related party rent expense was
$4,400 for the period from inception (May 18, 2009) through September 30,
2009.
The
Company incurred approximately $6,300 of legal expenses to the Law firm of one
of the Company's directors during the period from inception (May 18, 2009)
through September 30, 2009. No amounts are owed to this firm at September 30,
2009.
The
Company pays $12,500 a month for consulting to a Company wholly owned by a
stockholder and Officer of the Company. The Company incurred expenses
and made payments of $37,500 to this related party during the period of
inception (May 18, 2009) to September 30, 2009. No amounts were owed
to this related party as of September 30, 2009.
F-29
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
|
NOTE 6
|
COMMITMENTS
AND CONTINGENCIES
|
From
time to time, in the normal course of business, the Company is subject to
routine litigation incidental to its business. Although there can be no
assurances as to the ultimate disposition of any such matters, it is the opinion
of management, based upon the information available at this time, that there are
no matters, individually or in the aggregate, that will have a material adverse
effect on the results of operations and financial condition of the
Company.
The
Company has entered into commission agreements with certain stockholders and
third parties who are credited for generating the use of the discount
prescription card. These agreements are vested lifetime agreements
that fix the commission to be paid per billable transaction.
On
August 17, 2009, the Company entered into a twenty six month operating lease for
office space. This lease calls for minimum monthly rent payments of $1,612 and
monthly operating expenses of $2,668.
As
of September 30, 2009, future minimum lease payments are as
follows:
|
Year
Ending September 30,
|
Amount
|
|||
|
2010
|
$ | 17,731 | ||
|
2011
|
19,344 | |||
|
2012
|
1,612 | |||
|
Total
|
$ | 38,687 | ||
Rent
expense was $10,820 for the period from inception (May 18, 2009) to September
30, 2009, of which $4,400 was for the Company's Chief Executive Officer under
the Company's previous month to month lease, of which $2,400 is still due as of
September 30, 2009.
|
NOTE 7
|
STOCKHOLDERS'
EQUITY
|
The
Company is authorized to issue up to 5,000,000 shares of $0.0001 par value
preferred stock. To date, no shares have been issued or are
outstanding.
The
Company is authorized to issue up to 45,000,000 shares of $0.0001 par value
common stock. The Company issued 7,500,000 shares of common stock to
acquire the operating discount prescription card division of New Millennium, LLC
on June 30, 2009. See Note 9.
F-30
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
7
|
STOCKHOLDERS'
EQUITY (CONTINUED)
|
On
June 30, 2009, the Company offered for sale up to 2,500,000 units of its
securities through a private placement, each unit consisting of one share of
$.0001 par value common stock and one common stock purchase warrant to purchase
an additional share at $1.00 per share, at a purchase price of $.10 per unit or
up to an aggregate purchase price of $250,000. In July 2009, the Company sold
all units under the private placement and issued 2,500,000 units for cash
proceeds of $250,000. The fair value of the warrants was determined to be
insignificant using the Black-Scholes pricing model with the following
assumptions: expected life of 1.5 years, a risk free interest rate of 0.8%, a
dividend yield of 0% and volatility of 100%.
|
NOTE
8
|
INCOME
TAXES
|
A
reconciliation of income tax expense at statutory federal and state income tax
rates is as follows for the period of inception (May 18, 2009) to September 30,
2009:
|
Computed
Expected Tax Benefit
|
$ | 101,000 | ||
|
Increase
in Valuation Allowance
|
(101,000 | ) | ||
|
Total
|
$ | - |
The
components of deferred income tax assets and liabilities are as
follows:
|
Deferred
Tax Assets:
|
||||
|
Accrued
Expenses not Currently Deductible
|
$ | 22,000 | ||
|
Net
Operating Loss Carryforwards
|
101,000 | |||
|
Gross
Deferred Tax Assets
|
123,000 | |||
|
Deferred
Tax Liabilities:
|
||||
|
Depreciation
|
(15,000 | ) | ||
|
Net
Deferred Tax Assets
|
108,000 | |||
|
Valuation
Allowance
|
(108,000 | ) | ||
|
Total
|
$ | - | ||
As
a result of the net loss incurred since inception and because the likelihood of
being able to utilize these losses is not presently determinable, the Company
has recorded a valuation allowance to fully reserve its net deferred tax
asset.
The
components of deferred income tax expense (benefit) are as
follows:
|
Net
Operating Loss Carryforward and Other
|
$ | 108,000 | ||
|
Less:
Valuation Allowance
|
(108,000 | ) | ||
|
Total
Income Tax Expense (Benefit)
|
$ | - |
As
of September 30, 2009, the Company has accumulated net operating loss
carryforwards of approximately $253,000. However, utilization of these net
operating loss carryforwards is significantly dependent on the Company’s ability
to generate future taxable income which is uncertain. The Company is not
currently able to ascertain the amount of tax benefit that will be realized in
future periods, if any. These amounts expire in 2029 if not utilized
sooner.
F-31
FREE
FOR ALL, INC.
NOTES
TO FINANCIAL STATEMENTS
|
NOTE 9
|
ASSET
ACQUISITION
|
On
June 30, 2009, the Company acquired substantially all assets and certain
liabilities related to the discount prescription card division of New Millennium
Consultants, LLC in exchange for 7,500,000 shares of stock and the forgiveness
of $20,000 in amounts owed the Division, which has been recorded as contributed
capital. The assigned assets and liabilities are as follows:
|
Cash
and Cash Equivalents
|
$ | 14,245 | ||
|
Accounts
Receivable
|
56,419 | |||
|
Prepaid
Expenses and Other Current Assets
|
12,752 | |||
|
Property
and Equipment
|
37,610 | |||
|
Total
Assets Acquired
|
121,026 | |||
|
Accounts
Payable and Accrued Expenses
|
67,942 | |||
|
Capital
Lease Obligations
|
33,062 | |||
|
Total
Liabilities Acquired
|
101,004 | |||
|
Net
Assets Acquired
|
$ | 20,022 |
The
acquisition is being accounted for as a recapitalization of the
division.
|
NOTE
10
|
SUBSEQUENT
EVENTS
|
The
Company has evaluated events and transactions that occurred between October 1,
2009 and December 31, 2009, which is the date the financial statements were
issued for possible disclosure or recognition in the financial statements. The
Company has determined that the following events and transactions required
disclosure in the footnotes to the financial statements.
In
November 2009, the Company entered into an agreement with a new third party that
provides the revenue stream to the Company. This third party has
contracts with pharmacies whereby they receive a fixed amount for each
qualifying transaction. We distribute the cards to groups of
individuals and we receive commissions from this third party for all qualifying
transactions. We changed to this new third party to obtain more
favorable commission terms. Going forward, substantially all revenue earned will
be from this third party.
F-32
FREE
FOR ALL, INC.
UNAUDITED
PROFORMA FINANCIAL INFORMATION
EXPLANATORY
HEADNOTE
INTRODUCTION
The following unaudited proforma financial statements give effect to the acquisition of the Discount Prescription Card Division (the Division) of New Millennium Consultants, LLC (NMC) by Free For All, Inc. (the Company) and is based on the estimates and assumptions set forth herein and in the notes to such statements. This proforma information has been prepared utilizing the historical financial statements and notes thereto, which are incorporated by reference herein. The proforma financial data does not purport to be indicative of the results which actually would have been obtained had the acquisition been effected on the date indicated or the results which may be obtained in the future.
Revenues
typically result from a commission fee earned per transaction of the discount
prescription card. The Company receives a monthly transaction report from a
third party that details all transactions including those that the Company
earned commissions on. The Company recognizes revenue monthly after receipt of
the reports for payable transactions. Payments are received monthly from the
third party but may take thirty to ninety days to collect.
The
proforma statement of operations for the nine months ended September 30, 2009,
includes the operating results of the Company for the period from inception (May
18, 2009) to September 30, 2009 and the operating results of the Division for
the period January 1, 2009 to June 30, 2009. The proforma statement of
operations for the period ended December 31, 2008 consists of the operating
results of the Division.
ACQUISITION
On June 30, 2009, the Company acquired substantially all of the assets and liabilities related to the Discount Prescription Card Division of NMC in exchange for 7,500,000 shares of stock and the forgiveness of $20,000 in amounts owed to the Division. The acquired assets and liabilities are as follows:
|
Cash
|
$ | 14,245 | ||
|
Accounts
Receivable
|
56,419 | |||
|
Prepaids
and Other Current Assets
|
12,752 | |||
|
Fixed
Assets
|
37,610 | |||
|
Total
Assets Acquired
|
121,026 | |||
|
Accounts
Payable and Accruals
|
67,942 | |||
|
Capital
Lease Obligations
|
33,062 | |||
|
Total
Liabilities Acquired
|
101,004 | |||
|
Net
Assets Acquired
|
$ | 20,022 |
F-33
FREE
FOR ALL, INC.
UNAUDITED
PROFORMA STATEMENT OF OPERATIONS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
|
Discount
|
||||||||||||||||||||
|
Prescription
Card
|
Free
for All, Inc.
|
|||||||||||||||||||
|
Division
|
Discount
|
Period
From
|
Proforma
Nine
|
|||||||||||||||||
|
For
the Six
|
Prescription
Card
|
Inception
|
Months
Ended
|
|||||||||||||||||
|
Months
Ended
|
Division
|
(May
18, 2009)
|
Free
for All, Inc.
|
September
30,
|
||||||||||||||||
|
June
30,
|
Proforma
|
to
September 30,
|
Proforma
|
2009
|
||||||||||||||||
|
2009
|
Adjustments
|
2009
|
Adjustments
|
(Unaudited)
|
||||||||||||||||
|
SALES
|
$ | 70,289 | $ | - | $ | 122,345 | $ | - | $ | 192,634 | ||||||||||
|
COST
OF SALES:
|
||||||||||||||||||||
|
Related
party commissions
|
26,532 | - | 50,197 | - | 76,729 | |||||||||||||||
|
Cost
of sales
|
17,702 | - | 32,593 | - | 50,295 | |||||||||||||||
|
Total
Cost of Sales
|
44,234 | - | 82,790 | - | 127,024 | |||||||||||||||
|
GROSS
PROFIT
|
26,055 | - | 39,555 | - | 65,610 | |||||||||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Related
party consulting
|
75,000 | - | 37,500 | - | 112,500 | |||||||||||||||
|
Operating
expenses
|
122,058 | - | 267,004 | - | 389,062 | |||||||||||||||
|
Total
Operating Expenses
|
197,058 | - | 304,504 | - | 501,562 | |||||||||||||||
|
(LOSS)
FROM OPERATIONS
|
(171,003 | ) | - | (264,949 | ) | - | (435,952 | ) | ||||||||||||
|
INTEREST
EXPENSE
|
(1,632 | ) | - | (1,435 | ) | - | (3,067 | ) | ||||||||||||
|
NET
(LOSS)
|
$ | (172,635 | ) | $ | - | $ | (266,384 | ) | $ | - | $ | (439,019 | ) | |||||||
See
accompanying Headnote and Notes to Proforma Financial
Statements.
F-34
FREE
FOR ALL, INC.
UNAUDITED
PROFORMA STATEMENT OF OPERATIONS
FOR
THE PERIOD ENDED DECEMBER 31, 2008
|
Discount
|
||||||||||||
|
Prescription
Card
|
||||||||||||
|
Division
|
Discount
|
Proforma
|
||||||||||
|
For
the
|
Prescription
Card
|
Period
Ended
|
||||||||||
|
Period
Ended
|
Division
|
December
31,
|
||||||||||
|
December
31,
|
Proforma
|
2008
|
||||||||||
|
2008
|
Adjustments
|
(Unaudited)
|
||||||||||
|
SALES
|
$ | 3,092 | $ | - | $ | 3,092 | ||||||
|
COST
OF SALES:
|
||||||||||||
|
Related
party commissions
|
190 | - | 190 | |||||||||
|
Cost
of sales
|
4,690 | - | 4,690 | |||||||||
|
Total
Cost of Sales
|
4,880 | - | 4,880 | |||||||||
|
GROSS
(LOSS)
|
(1,788 | ) | - | (1,788 | ) | |||||||
|
OPERATING
EXPENSES:
|
||||||||||||
|
Related
party consulting
|
112,500 | - | 112,500 | |||||||||
|
Operating
expenses
|
155,693 | - | 155,693 | |||||||||
|
Total
Operating Expenses
|
268,193 | - | 268,193 | |||||||||
|
(LOSS)
FROM OPERATIONS
|
(269,981 | ) | - | (269,981 | ) | |||||||
|
INTEREST
EXPENSE
|
(2,362 | ) | - | (2,362 | ) | |||||||
|
NET
(LOSS)
|
$ | (272,343 | ) | $ | - | $ | (272,343 | ) | ||||
See
accompanying Headnote and Notes to Proforma Financial
Statements.
F-35
FREE
FOR ALL, INC.
NOTES
TO UNAUDITED PROFORMA FINANCIAL STATEMENTS
|
NOTE 1
|
PROFORMA
ADJUSTMENTS
|
The
adjustments relating to the statements of operations are computed assuming the
acquisition of the Division was completed at the beginning of the periods
presented.
F-36
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
INDEX
TO FINANCIAL STATEMENTS
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-38
|
|
FINANCIAL
STATEMENTS
|
|
|
BALANCE
SHEETS AS OF JUNE 30, 2009 (UNAUDITED) AND DECEMBER 31,
2008
|
F-39
|
|
STATEMENTS
OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2009, (UNAUDITED), FOR THE
PERIOD FROM INCEPTION OF OPERATIONS (FEBRUARY 2, 2008) TO JUNE 30, 2008
(UNAUDITED) AND FOR THE PERIOD FROM INCEPTION OF OPERATIONS (FEBRUARY 2,
2008) TO DECEMBER 31, 2008
|
F-40
|
|
STATEMENTS
OF CHANGES IN DIVISION EQUITY FOR THE PERIOD FROM INCEPTION OF OPERATIONS
(FEBRUARY 2, 2008) TO DECEMBER 31, 2008 AND FOR THE SIX MONTHS ENDED JUNE
30, 2009 (UNAUDITED)
|
F-41
|
|
STATEMENTS
OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2009, (UNAUDITED), FOR THE
PERIOD FROM INCEPTION OF OPERATIONS (FEBRUARY 2, 2008) TO JUNE 30, 2008
(UNAUDITED) AND FOR THE PERIOD FROM INCEPTION OF OPERATIONS (FEBRUARY 2,
2008) TO DECEMBER 31, 2008
|
F-42
|
|
NOTES
TO FINANCIAL STATEMENTS
|
F-43
|
F-37
AJ.
ROBBINS, P.C.
CERTIFIED
PUBLIC ACCOUNTANTS
216
SIXTEENTH STREET
SUITE
600
DENVER,
COLORADO 80202
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Members
New
Millennium Consultants, LLC
Marlton,
New Jersey
We
have audited the accompanying balance sheet of the Discount Prescription Card
Division ("the Division") of New Millennium Consultants, LLC ("the
Company") as of December 31, 2008, and the related statements of operations,
division equity, and cash flows for the period from inception of
operations (February 2, 2008) through December 31, 2008. These
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Discount Prescription Card
Division ("the Division") of New Millennium Consultants, LLC ("the
Company") as of December 31, 2008, and the results of its operations and its
cash flows for the period from inception of operations (February 2, 2008)
through December 31, 2008 in conformity with accounting principles generally
accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Division
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Division has incurred a loss since inception (February 2, 2008),
and for the year ended December 31, 2008 has experienced negative cash flows
from operations that raise substantial doubt about its ability to continue as a
going concern. Management’s plans in regard to these matters are also described
in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ AJ.
ROBBINS, P.C.
AJ.
ROBBINS, P.C.
CERTIFIED
PUBLIC ACCOUNTANTS
Denver,
Colorado
September
10, 2009
F-38
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
BALANCE
SHEETS
|
June
30,
|
||||||||
|
2009
|
December
31,
|
|||||||
|
(Unaudited)
|
2008
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
and Cash Equivalents
|
$ | - | $ | 132,559 | ||||
|
Accounts
Receivable, Net
|
- | 670 | ||||||
|
Total
Current Assets
|
- | 133,229 | ||||||
|
PROPERTY
AND EQUIPMENT, Net
|
- | 23,245 | ||||||
|
Total
Assets
|
$ | - | $ | 156,474 | ||||
|
LIABILITIES
AND DIVISION EQUITY
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
Payable - Trade
|
$ | - | $ | 2,804 | ||||
|
Accrued
Expenses
|
- | 1,151 | ||||||
|
Due
to Related Parties
|
- | 107,584 | ||||||
|
Capital
Lease Obligations, Current Portion
|
- | 6,523 | ||||||
|
Total
Current Liabilities
|
- | 118,062 | ||||||
|
CAPITAL
LEASE OBLIGATIONS, NET OF CURRENT PORTION
|
- | 10,755 | ||||||
|
Total
Liabilities
|
- | 128,817 | ||||||
|
COMMITMENTS
AND CONTINGENCIES
|
||||||||
|
DIVISION
EQUITY
|
- | 27,657 | ||||||
|
Total
Liabilities and Division Equity
|
$ | - | $ | 156,474 | ||||
The
accompanying notes are an integral part of these financial
statements.
F-39
|
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
|
||||||||||||
|
STATEMENTS
OF OPERATIONS
|
||||||||||||
|
Period
From
|
Period
From
|
|||||||||||
|
Inception
of
|
Inception
of
|
|||||||||||
|
For
the Six
|
Operations
|
Operations
|
||||||||||
|
Months
Ended
|
(February
2,
|
(February
2,
|
||||||||||
|
June
30,
|
2008)
to June 30,
|
2008)
to
|
||||||||||
|
2009
|
2008
|
December
31,
|
||||||||||
|
(Unaudited)
|
(Unaudited)
|
2008
|
||||||||||
|
SALES
|
$ | 70,289 | $ | 16 | $ | 3,092 | ||||||
|
COST
OF SALES
|
||||||||||||
| Related party commissions | 26,532 | 4 | 190 | |||||||||
| Cost of sales | 17,702 | 6 | 4,690 | |||||||||
| Total Cost of Sales | 44,234 | 10 | 4,880 | |||||||||
|
GROSS
PROFIT (LOSS)
|
26,055 | 6 | (1,788 | ) | ||||||||
|
OPERATING
EXPENSES
|
||||||||||||
| Related party consulting | 75,000 | 37,500 | 112,500 | |||||||||
| Operating expenses | 122,058 | 61,416 | 155,693 | |||||||||
| Total Operating Expenses | 197,058 | 98,916 | 268,193 | |||||||||
|
(LOSS)
FROM OPERATIONS
|
(171,003 | ) | (98,910 | ) | (269,981 | ) | ||||||
|
INTEREST
EXPENSE
|
(1,632 | ) | (632 | ) | (2,362 | ) | ||||||
|
NET
(LOSS)
|
$ | (172,635 | ) | $ | (99,542 | ) | $ | (272,343 | ) | |||
The
accompanying notes are an integral part of these financial
statements.
F-40
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
STATEMENTS
OF CHANGES IN DIVISION EQUITY
PERIOD
FROM INCEPTION OF OPERATIONS (FEBRUARY 2, 2008)
TO
DECEMBER 31, 2008 AND FOR THE SIX MONTHS ENDED JUNE 30, 2009
(UNAUDITED)
|
Total
|
||||||||||||
|
Division
|
Accumulated
|
Division
|
||||||||||
|
Capital
|
Deficit
|
Equity
|
||||||||||
|
BALANCE,
INCEPTION (FEBRUARY 2, 2008)
|
$ | - | $ | - | $ | - | ||||||
|
Members'
Contributions
|
300,000 | - | 300,000 | |||||||||
|
Net
(Loss)
|
- | (272,343 | ) | (272,343 | ) | |||||||
|
BALANCE,
DECEMBER 31, 2008
|
300,000 | (272,343 | ) | 27,657 | ||||||||
|
Members'
Contributions
|
85,000 | - | 85,000 | |||||||||
|
Liability
Converted to Member Interest
|
100,000 | - | 100,000 | |||||||||
|
Net
(Loss)
|
- | (172,635 | ) | (172,635 | ) | |||||||
|
Assignment
to Free for All, Inc.
|
(485,000 | ) | 444,978 | (40,022 | ) | |||||||
|
BALANCE,
JUNE 30, 2009
|
$ | - | $ | - | $ | - | ||||||
The
accompanying notes are an integral part of these financial
statements.
F-41
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
STATEMENTS
OF CASH FLOWS
|
Period
From
|
Period
From
|
|||||||||||
|
Inception
of
|
Inception
of
|
|||||||||||
|
For
the Six
|
Operations
|
Operations
|
||||||||||
|
Months
Ended
|
(February
2,
|
(February
2,
|
||||||||||
|
June
30,
|
2008)
to June 30,
|
2008)
to
|
||||||||||
|
2009
|
2008
|
December
31,
|
||||||||||
|
(Unaudited)
|
(Unaudited)
|
2008
|
||||||||||
|
CASH
FLOWS (TO) FROM OPERATING ACTIVITIES
|
||||||||||||
|
Net
Loss
|
$ | (172,635 | ) | $ | (99,542 | ) | $ | (272,343 | ) | |||
|
Adjustments
to Reconcile Net Loss to
|
||||||||||||
|
Net
Cash Used by Operating Activities:
|
||||||||||||
|
Depreciation
|
4,534 | 1,401 | 4,762 | |||||||||
|
Bad
Debt Expense
|
- | - | 1,845 | |||||||||
|
(Increase)
in Current Assets:
|
||||||||||||
|
Trade
Accounts Receivable
|
(55,749 | ) | (16 | ) | (2,515 | ) | ||||||
|
Prepaid
Expenses and Other Current Assets
|
(12,752 | ) | - | - | ||||||||
|
Due
From Related Party
|
(20,000 | ) | - | - | ||||||||
|
Increase
in Current Liabilities:
|
||||||||||||
|
Accounts
Payable - Trade
|
11,335 | 5,512 | 2,804 | |||||||||
|
Accrued
Liabilities
|
17,708 | 2,006 | 1,151 | |||||||||
|
Due
to Related Party
|
27,360 | 45,311 | 107,584 | |||||||||
|
Net
Cash Used in Operating Activities
|
(200,199 | ) | (45,328 | ) | (156,712 | ) | ||||||
|
CASH
FLOWS (TO) FROM INVESTING ACTIVITIES
|
||||||||||||
|
Cash
Provided to Free For All, Inc. in Acquisition
|
(14,245 | ) | - | - | ||||||||
|
Purchase
of Equipment
|
- | (2,438 | ) | (6,993 | ) | |||||||
|
Net
Cash Used in Investing Activities
|
(14,245 | ) | (2,438 | ) | (6,993 | ) | ||||||
|
CASH
FLOWS (TO) FROM FINANCING ACTIVITIES
|
||||||||||||
|
Payments
on Capital Lease Obligations
|
(3,115 | ) | (892 | ) | (3,736 | ) | ||||||
|
Members'
Contributions
|
85,000 | 300,000 | 300,000 | |||||||||
|
Net
Cash Provided by Financing Activities
|
81,885 | 299,108 | 296,264 | |||||||||
|
NET
INCREASE (DECREASE) IN CASH
|
(132,559 | ) | 251,342 | 132,559 | ||||||||
|
Cash
and Cash Equivalents- Beginning of Period
|
132,559 | - | - | |||||||||
|
CASH
AND CASH EQUIVALENTS- END OF PERIOD
|
$ | - | $ | 251,342 | $ | 132,559 | ||||||
|
NONCASH
INVESTING AND FINANCING ACTIVITIES
|
||||||||||||
|
Equipment
Acquired Under Capital Lease Agreement
|
$ | 18,899 | $ | 21,014 | $ | 21,014 | ||||||
|
Liability
Converted to Member Interest
|
$ | 100,000 | $ | - | $ | - | ||||||
|
Net
Assets Transferred to Free for All, Inc.
|
$ | 40,022 | $ | - | $ | - | ||||||
|
SUPPLEMENTARY
CASH FLOW INFORMATION
|
||||||||||||
|
Cash
Paid for Interest
|
$ | 1,632 | $ | 632 | $ | 2,362 | ||||||
F-42
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
1
|
NATURE
OF BUSINESS
|
Nature of
Business
New
Millennium Consultants, LLC (the "Company") Discount Prescription Card Division
("Division"), a New Jersey limited liability company, began operations in
February 2008. The Company was formed to develop, market, license and
distribute discount prescription cards and related discounted healthcare
services. The Company, through its Division, provides a menu of
discount products featuring a free prescription discount program.
On
June 30, 2009, the Company assigned all of its assets and certain liabilities
related to its Discount Prescription Card operating Division to Free for All,
Inc. in exchange for 7,500,000 shares of stock which were distributed in
accordance with the agreement. The transaction has been treated as a
recapitalization of the Division. See Note 7.
Going
Concern and Management's Plans
These
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The Division has incurred a loss since inception
(February 2, 2008) and for the year ended December 31, 2008 the Division
sustained a net loss of $272,343. These factors, among others, indicate that the
Division may be unable to continue as a going concern for a reasonable period of
time. These financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that may be necessary should the Division be
unable to continue as a going concern. The Division's continuation as a
going concern is contingent upon its ability to obtain additional financing, and
to generate revenue and cash flow to meet its obligations on a timely
basis.
The
Company has transferred the Division to Free For All, Inc. Free For All,
Inc. will seek to raise additional funding through equity financing during the
next twelve months.
|
NOTE
2
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Use of
Estimates
The
preparation of financial
statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates. Significant estimates include allowances for doubtful
accounts, accounting for income taxes, and depreciation.
Cash and Cash
Equivalents
The
Division considers all highly liquid investments purchased with original
maturities of three months or less at the date of purchase to be cash
equivalents.
F-43
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial
Instruments
Cash,
receivables, accounts payable, accrued liabilities, due to related parties and
capital lease obligations are carried at amounts which reasonably approximate
their fair value due to the short-term nature of these amounts or due to
variable rates of interest which are consistent with current market
rates.
Concentration of Credit
Risk
Substantially
all cash is deposited in one financial institution. At times, amounts on deposit
may be in excess of the FDIC insurance limit. The Division has not experienced a
loss in such accounts.
The
Division was assigned all rights to revenues earned under an agreement with a
third party. The third party has entered into agreements with
pharmacies whereby it receives commissions from them for card
holders using discounted prescription cards. The Division earns
its commissions from the third party who collects from the
pharmacies. To date, over 97% of the Division's revenues have been
earned from this customer.
Accounts
Receivable
The
Division uses the allowance method to account for uncollectible accounts
receivable. Uncollectible amounts are charged against the allowance account.
Management estimated an allowance of $1,845 based upon prior experience with
customers and analysis of individual trade accounts at December 31, 2008.
Management has determined that the allowance is sufficient to cover both current
and anticipated future losses on the related accounts. During the
period from inception to June 30, 2008 as well as for the six months ended June
30, 2009, there were no charges for uncollectable amounts.
Property and
Equipment
Property
and equipment is stated at depreciated cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets as
follows:
Equipment
5 Years
Computers
3 Years
Major
additions and improvements are capitalized, while replacements, maintenance and
repairs, which do not improve or extend the life of the respective assets, are
expensed as incurred.
Revenue
Recognition
The
Division offers a discount prescription drug card and other discount health and
dental service programs.
For the
discount prescription drug cards ("RxCut"), the Division provides the cards to
groups or individuals who further distribute the cards to other
individuals. These cards are used at pharmacies located throughout
the country and provide discounts to the individuals on the prescriptions
purchased. If the individual pays less than the pharmacy usual and customary
price, the Company receives a fixed commission fee from that
transaction. Each month the Company receives payment from its billing
company or pharmacy network for payments they received during that month on
transactions occurring in that month or prior months.
For the
discounted health and dental services, the Company has three different plans
with its GET Benefit Relief program. Individuals enroll in the
programs and pay a monthly or an annual fee for their membership. The Company
works with a discount medical plan organization to provide discounted services
to its members. The Company has not earned any revenue from its GET
Benefit Relief program to date; however, it was not launched until
2009.
Revenues
typically result from a commission fee earned per transaction of the discount
prescription card. The Division receives a monthly transaction report
from a third party that details all transactions including those that the
Division earned commissions on. The Division recognizes the revenues
monthly after receipt of the reports for payable
transactions. Payments are received monthly from the third party but
may take thirty to ninety days to collect.
The
Company has earned other revenues related to set up fees and
referrals. The amounts earned have been minimal and these fees are no
longer being charged.
Additional
sources of discount program revenue are recognized as the services are
completed.
F-44
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cost of
Sales
Cost
of sales consists of commissions paid on commission revenue earned in addition
to expenditures for customer service and the printing of discount
cards. The amount each sponsor may receive varies
between $.10 and $1.25 per qualifying transaction per individual,
with the Division paying a total of $1.25 per qualifying
transaction. Additional sources of Costs of Sales include
expenditures for customer service and the printing of discount
cards.
Advertising
Costs
Advertising
costs are charged to expense as they are incurred. Advertising
expense was $227 for the year ended December 31, 2008; and $-0- and $6,000 for
the period of inception through June 30, 2008 (unaudited), and for the six
months ended June 30, 2009 (unaudited), respectively.
F-45
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income
Taxes
The
Division does not incur income taxes; its earnings are included in the personal
income of its members and taxed depending on their personal tax situations.
Accordingly, the financial statements do not reflect a provision for income
taxes. The Division has elected to defer application of FASB Interpretation No.
48, Accounting for Uncertainty in Income Taxes. The Division follows Financial
Accounting Standard No. 5, Accounting for Contingencies, for evaluating
uncertain tax positions.
Software Development
Costs
The
Division accounts for its software development costs in accordance with
Statement of Financial Accounting Standards (SFAS) Number 86, Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. This
statement requires that, once technological feasibility of a developing product
has been established, all subsequent costs incurred in developing that product
to a commercially acceptable level be capitalized and amortized ratably over the
estimated life of the product. Through June 30, 2009, capitalizable costs
incurred have not been significant for any development projects. Accordingly,
the Division has charged all related costs to expense in the periods
incurred.
The
Division follows Statement of Position (SOP) No. 98-1, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use, which requires
capitalization of certain costs incurred during the development of internal use
software. Through June 30, 2009, capitalizable costs incurred have not been
significant for any development projects. Accordingly, the Division has charged
all related costs to expense in the periods incurred.
Stock-Based
Compensation
The
Division adopted SFAS No. 123 (Revised 2004), Share Based Payment (“SFAS
No. 123R”), under the modified-prospective transition method on February 2,
2008. SFAS No. 123R requires companies to measure and recognize the cost of
employee services received in exchange for an award of equity instruments based
on the grant-date fair value. Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes
share-based compensation based on the grant-date fair value determined in
accordance with the original provisions of SFAS No. 123, Accounting for
Stock-Based Compensation, for all share-based payments granted prior to and not
yet vested as of January 1, 2006 and share-based compensation based on the
grant-date fair-value determined in accordance with SFAS No. 123R for all
share-based payments granted after January 1, 2006. Through June
30, 2009, no stock based awards have been granted or exercised.
F-46
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
NOTES
TO FINANCIAL STATEMENTS
NOTE
2 SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting
Pronouncements
In
March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No. 133,”
(SFAS “161”) as amended and interpreted, which requires enhanced disclosures
about an entity’s derivative and hedging activities and thereby improves the
transparency of financial reporting. Disclosing the fair values of
derivative instruments and their gains and losses in a tabular format provides a
more complete picture of the location in an entity’s financial statements of
both the derivative positions existing at period end and the effect of using
derivatives during the reporting period. Entities are required to
provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. SFAS No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. Through June 30, 2009, the
Division did not have any derivative instruments or hedging
activities. Management is aware of the requirements of SFAS 161 and
will disclose when appropriate.
In
May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS 162 will provide framework for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. generally accepted accounting principles
(GAAP) for nongovernmental entities. SFAS 162 will be effective 60
days following the Securities and Exchange Commission’s approval of the Public
Company Accounting Oversight Board (“PCAOB”) amendments to AU Section
411. The Division does not expect that the adoption of SFAS 162 will
have a material impact on its financial condition or results of
operations.
In
May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – an interpretation of FASB Statement No.
60.” SFAS 163 requires that an insurance enterprise recognize a claim
liability prior to an event of default (insured event) when there is evidence
that credit deterioration has occurred in an insured financial
obligation. This Statement also clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim liabilities.
Those clarifications will increase comparability in financial reporting of
financial guarantee insurance contracts by insurance enterprises. This Statement
requires expanded disclosures about financial guarantee insurance contracts. The
accounting and disclosure requirements of the Statement will improve the quality
of information provided to users of financial statements. SFAS 163 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008. The adoption of SFAS 163 did not have a material
impact on its financial condition or results of operations.
The
Company has adopted all recently issued accounting
pronouncements. The adoption of the accounting pronouncements,
including those not yet effective, is not anticipated to have a material effect
on the financial position or results of operations of the Company.
F-47
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
3
|
PROPERTY
AND EQUIPMENT
|
Property
and equipment consists of the following at December 31, 2008:
|
Equipment
|
$ | 6,993 | ||
|
Computers
|
21,014 | |||
|
Total
|
28,007 | |||
|
Less:
Accumulated Depreciation
|
4,762 | |||
|
Net
Property and Equipment
|
$ | 23,245 |
The
Company assigned all of its assets and certain liabilities related to its
operating division to Free for All, Inc as of June 30, 2009; accordingly the
Company has removed Property and Equipment assets as of June 30, 2009
(unaudited). See Note 7.
Depreciation
expense was $4,762 for the year ended December 31, 2008; and $1,401 and $4,534
for the period of inception through June 30, 2008 (unaudited), and for the six
months ended June 30, 2009 (unaudited), respectively.
|
NOTE
4
|
CAPITAL
LEASES
|
The
Division leases certain computers under various noncancelable capital leases
expiring through 2011. Computers held under these leases, which is included in
property and equipment, consists of the following at December 31,
2008:
|
Computers
|
$ | 21,014 | ||
|
Less:
Accumulated Depreciation
|
(4,203 | ) | ||
|
Computers
under Lease, Net
|
$ | 16,811 |
As
of December 31, 2008, future minimum lease payments are as follows:
|
Year Ending December 31,
|
Amount
|
|||
|
2009
|
$ | 9,148 | ||
|
2010
|
9,148 | |||
|
2011
|
3,049 | |||
|
Total
Minimum Payments
|
21,345 | |||
|
Less:
Amounts Representing Interest
|
4,067 | |||
|
Present
Value of Net Minimum Lease Payments
|
17,278 | |||
|
Less:
Current Portion
|
6,523 | |||
|
Capital
Lease Obligations, Net of Current Portion
|
$ | 10,755 | ||
The
Company assigned all of its assets and certain liabilities related to its
operating Division to Free for All, Inc as of June 30, 2009; accordingly the
Division has removed Capital Lease Liabilities as of June 30, 2009
(unaudited). See Note 7.
Interest
expense on capital lease obligations for the year ended December 31, 2008 was
$2,362; and $632 and $1,460 for the period of inception through June 30, 2008
(unaudited), and for the six months ended June 30, 2009 (unaudited),
respectively.
F-48
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
5
|
RELATED
PARTY TRANSACTIONS
|
The
Division leases office space from a member on a month-to-month
basis. Related party rent expense for the six months ended June 30,
2009 (unaudited), the period from inception (February 2, 2008) to June 30, 2008
(unaudited) and the year ended December 31, 2008 was $13,200, $6,500 and
$18,500, respectively.
Certain
commissions are payable to a member. Total commissions expense to
related parties for the six months ended June 30, 2009 (unaudited), period from
inception (February 2, 2008) to June 30, 2008 (unaudited) and the year ended
December 31, 2008 was approximately $25,000, $4 and $180,
respectively.
During
2008, the Division incurred $100,000 of expenses related to certain consulting
services provided by the Division's currently acting Chief Information Officer
and Director. In 2009, this amount was converted into a 10% interest
in the Company for the provider. Additionally, a consulting firm
wholly owned by the Officer received $12,500 during the year ended December 31,
2008, and $87,500 during the six months ended June 30, 2009 (unaudited) for
services performed.
Total
amounts due to related parties at December 31, 2008 were approximately $107,600
which consisted primarily of amounts due to the Chief Information Officer for
consulting services in addition to amounts due to the Company's Chief Executive
Officer for commissions payable on revenue transactions and amounts due for
reimbursable expenses.
The
Law firm of one of the Company's directors received $8,292 during the year ended
December 31, 2008; and $-0- and $4,563 for the period of inception through June
30, 2008 (unaudited), and for the six months ended June 30, 2009 (unaudited),
respectively, for services provided.
|
NOTE
6
|
COMMITMENTS
AND CONTINGENCIES
|
From
time to time, in the normal course of business, the Division is subject to
routine litigation incidental to its business. Although there can be no
assurances as to the ultimate disposition of any such matters, it is the opinion
of management, based upon the information available at this time, that there are
no matters, individually or in the aggregate, that will have a material adverse
effect on the results of operations and financial condition of the
Division.
F-49
DISCOUNT
PRESCRIPTION CARD DIVISION OF
NEW
MILLENNIUM CONSULTANTS, LLC
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
7
|
ASSIGNMENT
TO FREE FOR ALL, INC.
|
On
June 30, 2009, the Company assigned all of its assets and certain liabilities
related to its Discount Prescription Card operating Division to Free for All,
Inc. in exchange for 7,500,000 shares of stock which were distributed in
accordance with the agreement and the forgiveness of $20,000 in amounts owed to
the Division. The assigned assets and liabilities are as
follows:
|
Cash
and Cash Equivalents
|
$ | 14,245 | ||
|
Accounts
Receivable
|
56,419 | |||
|
Prepaid
Expenses and Other Current Assets
|
12,752 | |||
|
Property
and Equipment
|
37,610 | |||
|
Total
Assets Assigned
|
121,026 | |||
|
Accounts
Payable and Accruals
|
67,942 | |||
|
Capital
Lease Obligations
|
33,062 | |||
|
Total
Liabilities Assigned
|
101,004 | |||
|
Net
Assets Assigned
|
$ | 20,022 |
F-50
FREE
FOR ALL, INC.
UNAUDITED
PROFORMA FINANCIAL INFORMATION
EXPLANATORY
HEADNOTE
INTRODUCTION
The
following unaudited proforma financial statements give effect to
the acquisition of the Discount Prescription Card Division (the Division)
of New Millennium Consultants, LLC (NMC) by Free For All, Inc. (the Company) and
is based on the estimates and assumptions set forth herein and in the notes
to such statements. This proforma information has been prepared utilizing
the historical financial statements and notes thereto, which are
incorporated by reference herein. The proforma financial data does not
purport to be indicative of the results which actually
would have been obtained had the acquisition been effected on the
date indicated or the results which may be obtained in the
future.
Revenues
typically result from a commission fee earned per transaction of the discount
prescription card. The Company receives a monthly transaction report
from a third party that details all transactions including those that the
Company earned commissions on. The Company recognizes the revenues
monthly after receipt of the reports for payable
transactions. Payments are received monthly from the third party but
may take thirty to ninety days to collect.
The
proforma statement of operations for the six months ended June 30,
2009, includes the operating results of the Company for the period from
inception (May 18, 2009) to June 30, 2009 and the operating results of the
Division for the period January 1, 2009 to June 30, 2009. The proforma
statement of operations for the period ended December 31, 2008
consists of the operating results of the Division.
ACQUISITION
On
June 30, 2009, the Company acquired substantially all of the assets
and liabilities related to the Discount Prescription Card Division of NMC. in
exchange for 7,500,000 shares of stock and the forgiveness of $20,000 in amounts
owed to the Division. The acquired assets and liabilities are as
follows:
|
Cash
|
$ | 14,245 | ||
|
Accounts
Receivable
|
56,419 | |||
|
Prepaids
and Other Current Assets
|
12,752 | |||
|
Fixed
Assets
|
37,610 | |||
|
Total
Assets Acquired
|
121,026 | |||
|
Accounts
Payable and Accruals
|
67,942 | |||
|
Capital
Lease Obligations
|
33,062 | |||
|
Total
Liabilities Acquired
|
101,004 | |||
|
Net
Assets Acquired
|
$ | 20,022 |
F-51
FREE
FOR ALL, INC.
UNAUDITED
PROFORMA STATEMENT OF OPERATIONS
FOR
THE SIX MONTHS ENDED JUNE 30, 2009
|
Discount
|
||||||||||||||||||||
|
Prescription
Card
|
Free
for All, Inc.
|
|||||||||||||||||||
|
Division
|
Discount
|
Period
From
|
Proforma
Six
|
|||||||||||||||||
|
For
the Six
|
Prescription
Card
|
Inception
|
Months
Ended
|
|||||||||||||||||
|
Months
Ended
|
Division
|
(May
18,
|
Free
for All, Inc.
|
June
30,
|
||||||||||||||||
|
June
30,
|
Proforma
|
2009)
to June 30,
|
Proforma
|
2009
|
||||||||||||||||
|
2009
|
Adjustments
|
2009
|
Adjustments
|
(Unaudited)
|
||||||||||||||||
|
SALES
|
$ | 70,289 | $ | - | $ | - | $ | - | $ | 70,289 | ||||||||||
|
COST
OF SALES
|
||||||||||||||||||||
| Related party commissions | 26,532 | - | - | - | 26,532 | |||||||||||||||
| Cost of sales | 17,702 | - | - | - | 17,702 | |||||||||||||||
| Total Cost of Sales | 44,234 | - | - | - | 44,234 | |||||||||||||||
|
GROSS
PROFIT
|
26,055 | - | - | - | 26,055 | |||||||||||||||
|
OPERATING
EXPENSES
|
||||||||||||||||||||
| Related party consulting | 75,000 | - | - | - | 75,000 | |||||||||||||||
| Operating expenses | 122,058 | - | - | - | 122,058 | |||||||||||||||
| Total Operating Expenses | 197,058 | - | - | - | 197,058 | |||||||||||||||
|
(LOSS)
FROM OPERATIONS
|
(171,003 | ) | - | (23,872 | ) | - | (194,875 | ) | ||||||||||||
|
INTEREST
EXPENSE
|
(1,632 | ) | - | - | - | (1,632 | ) | |||||||||||||
|
NET
(LOSS)
|
$ | (172,635 | ) | $ | - | $ | (23,872 | ) | $ | - | $ | (196,507 | ) | |||||||
See
accompanying Headnote and Notes to Proforma Financial
Statements.
F-52
FREE
FOR ALL, INC.
UNAUDITED
PROFORMA STATEMENT OF OPERATIONS
FOR
THE PERIOD ENDED DECEMBER 31, 2008
|
Discount
|
||||||||||||
|
Prescription
Card
|
||||||||||||
|
Division
|
Discount
|
Proforma
|
||||||||||
|
For
the
|
Prescription
Card
|
Period
Ended
|
||||||||||
|
Period
Ended
|
Division
|
December
31,
|
||||||||||
|
December
31,
|
Proforma
|
2008
|
||||||||||
|
2008
|
Adjustments
|
(Unaudited)
|
||||||||||
|
SALES
|
$ | 3,092 | $ | - | $ | 3,092 | ||||||
|
COST
OF SALES
|
||||||||||||
| Related party commissions | 190 | - | 190 | |||||||||
| Cost of sales | 4,690 | - | 4,690 | |||||||||
| Total Cost of Sales | 4,880 | - | 4,880 | |||||||||
|
GROSS
(LOSS)
|
(1,788 | ) | - | (1,788 | ) | |||||||
|
OPERATING
EXPENSES
|
||||||||||||
| Related party consulting | 112,500 | - | 112,500 | |||||||||
| Operatiing expenses | 155,693 | - | 155,693 | |||||||||
| Total Operating Expenses | 268,193 | - | 268,193 | |||||||||
|
(LOSS)
FROM OPERATIONS
|
(269,981 | ) | - | (269,981 | ) | |||||||
|
INTEREST
EXPENSE
|
(2,362 | ) | - | (2,362 | ) | |||||||
|
NET
(LOSS)
|
$ | (272,343 | ) | $ | - | $ | (272,343 | ) | ||||
See
accompanying Headnote and Notes to Proforma Financial
Statements.
F-53
FREE
FOR ALL, INC.
NOTES
TO UNAUDITED PROFORMA FINANCIAL STATEMENTS
|
NOTE
1
|
PROFORMA
ADJUSTMENTS
|
The
adjustments relating to the statements of operations are computed assuming the
acquisition of the Division was completed at the beginning of the
periods presented.
F-54
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF
ISSUANCE AND DISTRIBUTION (1)
|
SEC
Registration Fees
|
$ | 276 | |||
|
Blue
Sky Filing Fees
|
$ | 1,000 | |||
|
Blue
Sky Legal Fees
|
$ | 2,000 | |||
|
Printing
Expenses
|
$ | 3,000 | |||
|
Legal
Fees
|
$ | 40,000 | |||
|
Accounting
Fees
|
$ | 10,000 | |||
|
Transfer
Agent Fees
|
$ | 2,000 | |||
|
Miscellaneous
Expenses
|
$ | 1848 | |||
|
Total
|
$ | 60,124 |
(2)
|
(1)
All expenses, except the SEC registration fee, are estimated.
(2) All
expenses of the offering (excluding brokerage commissions) will be borne by
the
Registrant and not the selling stockholders.
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our
Certificate of Incorporation provide that liability of directors to us for
monetary damages is eliminated to the full extent provided by Delaware
law. Under Delaware law, a director is not personally liable to us or
our stockholders for monetary damages for breach of fiduciary duty as a director
except for liability (i) for any breach of the director’s duty of loyalty
to us or our stockholders; (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law;
(iii) for authorizing the unlawful payment of a dividend or other
distribution on our capital stock or the unlawful purchases of our capital
stock; (iv) a violation of Delaware law with respect to conflicts of interest by
directors; or (v) for any transaction from which the director derived any
improper personal benefit.
The
effect of this provision in our Certificate of Incorporation is to eliminate our
rights and our stockholders’ rights (through stockholders’ derivative suits) to
recover monetary damages from a director for breach of the fiduciary duty of
care as a director (including any breach resulting from negligent or grossly
negligent behavior) except in the situations described in clauses
(i) through (v) above. This provision does not limit or
eliminate our rights or the rights of our security holders to seek non-monetary
relief, such as an injunction or rescission, in the event of a breach of a
director’s duty of care or any liability for violation of the federal securities
laws.
Insofar as indemnification for
liabilities arising under the Act may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable.
-27-
In
the last three years, we have issued the following unregistered
securities:
(i)
In June 2009 we issued 7,500,000 shares in exchange for certain assets of NMC
to the following individuals who were interest holders in
NMC.
|
Name
|
Number of Shares Issued
|
|||
|
Gerard
Ferro
|
4,045,000 | |||
|
Eric
Shugarts
|
1,000,000 | |||
|
Gavin
P. Lentz
|
250,000 | |||
|
Louis
Bove
|
250,000 | |||
|
Allen
Spivak
|
500,000 | |||
|
Adam
Spivak
|
500,000 | |||
|
George
Bochetto
|
300,000 | |||
|
Mike
Ryan
|
150,000 | |||
|
Scott
Ballanger
|
75,000 | |||
|
Deanne
Katsaros
|
30,000 | |||
|
Brian
Clark
|
100,000 | |||
|
Joseph
Clark
|
100,000 | |||
|
Patricia
McGonigle
|
100,000 | |||
|
Coleen
Nedblaski
|
35,000 | |||
|
Coleen
Nedblaski (custodian for Haley Nedblaski, a minor)
|
32,500 | |||
|
Coleen
Nedblaski (custodian for Cara Nedblaski, a minor)
|
32,500 | |||
|
TOTAL:
|
7,500,000 | |||
(ii) In
July 2009, we sold 2,500,000 units, each unit comprised of one share of common
stock and one warrant exercisable at $1.00 per warrant based upon a purchase
price of $.10 per unit.
| Name |
Number
of Shares Issued
|
Number
of Warrants Issued
|
||
|
Brian
Clark
|
300,000 | 300,000 | ||
|
Joe
Clark
|
300,000 | 300,000 | ||
|
Jim
Condon
|
50,000 | 50,000 | ||
|
John
Hradek
|
100,000 | 100,000 | ||
|
Sherry
Hunt
|
50,000 | 50,000 | ||
|
Steve
Hyle
|
50,000 | 50,000 | ||
|
Tom
McCoy
|
50,000 | 50,000 | ||
|
Ann
McGonigle
|
350,000 | 350,000 | ||
|
Jim
McGonigle
|
450,000 | 450,000 | ||
|
Patty
McGonigle
|
350,000 | 350,000 | ||
|
Richard
Meltz
|
50,000 | 50,000 | ||
|
Coleen
Nedbalski
|
100,000 | 100,000 | ||
|
Erin
Salone
|
50,000 | 50,000 | ||
|
Dave
Steck
|
100,000 | 100,000 | ||
|
Eileen
Wells
|
150,000 | 150,000 | ||
| TOTAL: | 2,500,000 | 2,500,000 |
-28-
The securities issuances described in
items (i) and (ii) above were made in reliance upon the exemption provided in
Section 4(2) of the Securities Act. These issuances were to a limited
number of investors, all of whom had a prior relationship with us and executed
subscription agreements acknowledging they were familiar with our business
operations, had made similar investments in the past, understood the risks
associated with the investment, and were taking the shares for investment and
not for distribution. All such securities were marked with the customary
restrictive legend prohibiting transfer except under certain
circumstances.
ITEM
16. EXHIBIT INDEX
| Number | Exhibit |
|
3.1
|
Certificate
of Incorporation, as amended, of Registrant
|
|
3.2
|
Bylaws
of Registrant
|
|
5.2
|
Opinion
of Gary A. Agron
|
|
10.1
|
Lippincott
lease
|
|
10.2
|
Asset
Exchange Agreement
|
|
10.3
|
Sponsor
Agreement with Mr. Ferro
|
| 10.5 | Prescription Drug Discount Card Agreement between Paramount Rx Inc. and Free For All, Inc. |
| 10.6 | New Benefits Sales and Service Agreement |
|
23.2
|
Consent
of Gary A. Agron (see 5.1 above)
|
| 23.3 |
Consent
of AJ. Robbins, P.C., independent registered public accounting
firm
|
ITEM
17. UNDERTAKINGS
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933;
ii. To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with
Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 12% change in the maximum aggregate offering price set
forth in the “Calculation of registration Fee” table in the effective
registration statements; and
iii. To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
-29-
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) 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
small business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer 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 small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director or controlling person in connection with the securities being
registered, the small business issuer 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 of 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.
(5) That,
for the purpose of determining liability under the securities Act of 1933 to any
purchaser:
(i) Pursuant to Rule 430B:
(A) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to
be part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
(B)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430B relating to
an offering made pursuant to Rule 415(a)(1)9i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act of
1933 shall be deemed to be part of and included in the registration statement as
of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in the
offering described in the prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an underwriter, such
date shall be deemed to
be a new effective date of the registration statement relating to the securities
in the registration statement to which that prospectus relates, and the offering
of such securities at that time shall be deemed to be the initial bona fide offering
thereof. Provided,
however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective date,
supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such effective date; or
-30-
(6) That,
for the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the
securities:
The
undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
-31-
SIGNATURES
Pursuant
to the requirements of the Securities Act, as amended, the Registrant has caused
this Registration Statement on Form S-1 to be signed on its behalf by the
undersigned, thereunto duly authorized in Marlton, New Jersey on __________,
2009.
|
FREE
FOR ALL, INC.
|
|
|
By:
|
/s/ Gerard Ferro
Gerard
Ferro
Chief
Executive Officer
|
Pursuant to the requirements of the
Securities Act, as amended, this Registration Statement has been signed below by
the following persons on __________, 2009.
|
Signature
|
Title
|
|
/s/ Gerard Ferro.
Gerard Ferro
|
Chairman
of the Board of Directors, Chief Executive Officer, Chief Financial
Officer (Principal Accounting Officer)
|
|
/s/ Eric Shugarts
|
Chief
Information Officer
|
|
Eric
Shugarts
|
|
|
/s/ Gavin Lentz
|
Director
|
|
Gavin
Lentz
|
-32-
EXHIBIT
INDEX
| Number | Exhibit |
|
3.1
|
Certificate
of Incorporation, as amended, of Registrant
|
|
3.2
|
Bylaws
of Registrant
|
|
5.2
|
Opinion
of Gary A. Agron
|
|
10.1
|
Lippincott
lease
|
|
10.2
|
Asset
Exchange Agreement
|
|
10.3
|
Sponsor
Agreement with Mr. Ferro
|
| 10.5 | Prescription Drug Discount Card Agreement between Paramount Rx Inc. and Free For All, Inc. |
| 10.6 | New Benefits Sales and Service Agreement |
|
23.2
|
Consent
of Gary A. Agron (see 5.1 above)
|
| 23.3 |
Consent
of AJ. Robbins, P.C., independent registered public accounting
firm
|
-33-