SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 17, 2003
HEALTH & LEISURE, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 0-15807 31-1190725
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
95 Broadhollow Road, suite 101 Melville New York 11747
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (631) 385-0007
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(Former Name or Former Address, if Changed Since Last Report)
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Item 1. Changes in Control of Registrant.
As of July 15, 2003 Raymond Barton and Timothy Schmidt have
acquired 7,527,668 of Health & Leisure, Inc.'s (the
"Registrant" or the "Company") common stock from former
president and director Robert Feldman together with
2,670,000 shares of common stock issued by the
registrant for a total of 10,197,668 shares or 51% of the
Registrant's total outstanding common stock. Messrs. Barton
and Schmidt have also acquired 3,425,000 shares of the
registrants preferred stock which is convertible into
34,250,000 shares of the Company's common stock. Messrs.
Barton and Schmidt acquired said shares Pursuant to an
Acquisition Agreement and Plan of Merger dated June 13,
2003 (the "Merger Agreement"), by and among the Registrant;
Venture Sum, Inc., a Delaware corporation and a wholly owned
subsidiary of Registrant ("Mergerco"); and Marketshare
Recovery, Inc., a New York corporation, ("MKSR"), Mergerco
merged with and into MKSR, and MKSR became a wholly owned
subsidiary of the Registrant. The merger became effective
June 13, 2003, 2003 (the "Effective Date,") however
closing of the Agreement occured on July 15, 2003.
In accordance with the Agreement, Messrs. Robert
Feldman, Arthur Aaronson, James S. Koroloff, Burton
Schildhouse and Donald S. Franklin resigned as directors
and officers and appointed Ray Barton and Timothy Schmidt
as directors of the Company. Messrs Barton and Schmidt
have assumend the roles of cheif executive officer and
Chief opertaing officer respectively, however Messrs.
Barton and Schmidt will not take office until 10 days
after this Information Statement is mailed or delivered
to all Company stockholders in compliance with Section
14(f) of the Securities Exchange Act of 1934 (the "Exchange
Act") and Rule 14f-1 thereunder.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to an Acquisition Agreement and Plan of Merger
dated June 13, 2003 (the "Merger Agreement"), by and among
the Registrant; Venture Sum, Inc., a Delaware corporation
and a wholly owned subsidiary of Registrant ("Mergerco");
and Marketshare Recovery, Inc., a New York corporation,
("MKSR"), Mergerco merged with and into MKSR, and MKSR
became a wholly owned subsidiary of the Registrant. The
merger became effective June 13, 2003 (the "Effective
Date") and concluded on July 15, 2003. Prior to the date
of the Agreement, there was no relationship between MKSR
or its shareholders and the Registrant or its affiliates,
officers and directors or any of their respective associates.
Marketshare Recovery is a direct marketing company specializing
in marketing of products utilizing direct email on the internet.
The company offers manufacturers, resellers and service
providers a reliable, high-quality resources for business
development, market development, and channel development.
Pursuant to the terms of the Agreement, as of the effective
date under both the Delaware Act and the New York Act (the
"Effective Time"), Mergerco was merged with and into MKSR in
accordance with the applicable provisions of the Delaware Act
and the New York Act, the separate existence of Mergerco
thereupon ceased, and MKSR, as the surviving corporation in
the Merger, shall continue its corporate existence in
accordance with the New York Act. At the Closing, (i) the
100 issued and outstanding shares of MKSR common stock, par value
$.0001 per share (the "MKSR Common Stock"), constituting all of
the issued and outstanding shares of MKSR Common Stock, were
extinguished, and (ii) each share of stock of Mergerco issued and
outstanding was extinguished and in substitution for the full
number of shares of Mergerco held by it, HLLS received 100
shares of MKSR authorized but unissued Common Stock (iii) HLLS
issued to the MKSR shareholders the greater of 10,197,668
shares of common stock of HLLS or that number of shares that shall
result in ownership of fifty-one percent (51%) of the outstanding
shares of common stock of HLLS, and (iv) HLLS issued
3,425,000 shares of its voting convertible noncumulative preferred
stock, par value $.01 per share ("HLLS Preferred Stock") to the
holders of MKSR Common Stock at the exchange rate of 101,976.68
shares of HLLS Common Stock and 34,250 shares of HLLS Preferred
Stock for each share of MKSR Common Stock. The 3,425,000 shares
of Preferred Stock are convertible into 34,250,000 shares of
HLLS Common Stock. 2,670,000 of the HLLS shares of Common Stock
issued to the MKSR Shareholders was from the HLLS'
authorized but unissued shares, and 7,527,668 of the HLLS shares
of Common Stock was contributed to HLLS by Mr. Feldman and
then reissued by HLLS in the Merger.
HLLS and Marketshare have agreed to contribute the sum of $125,000
to H&L concepts, Inc. a wholly owned subsidiary of HLLS, through
the issuance of a secured promissory note to pay the principal
amount of $125,000 together with interest (the "Promissory Note")
to H&L Concepts, Inc., in accordance with the terms of said note,
(a copy of which is attached hereto as Exhibit A). After
execution of the Promissory Note, Mr. Feldman shall purchase all
of the outstanding shares of stock of H&L concepts, Inc. for
nominal consideration.
MKSR has agree to make payments as follows, for certain professional
incurred by HLLS: four thousand two hundred and fifty, ($4,250 USD)
to the preparing Accountant, one thousand nine hundred and fifty,
($1,950 USD) to the auditor who issues his independent auditors
report and consent and five thousand, ($5,000 USD) to the attorney,
for professional fees associated with said filing and shall
reimburse shareholders one thousand four hundred and fifty dollars,
($1,450 USD) for retainer paid to auditor. Additionally, at the
time of signing of this document, MKSR shall make a payment to
H&L Concpets, Inc. in the amount of $2,800 to cover additional
anticipated expenses.
At the Effective Time, and as a result of the Merger, the
conversion of the shares of MKSR Common Stock into the HLLS Common
Stock and the HLLS Preferred Stock shall occur automatically and
without further act of either HLLS or MKSR and, until appropriate
transfers can be requested following the Effective Time, the
holders of record of each MKSR share so extinguished and converted
shall be deemed to be recorded on the books of HLLS as the holder
of the number of shares of HLLS Common Stock and HLLS Preferred
Stock which he is entitled to receive under this Agreement. Each
person who, as a result of the Merger, holds one or more
certificates which theretofore represented one or more shares of
MKSR that have been extinguished and converted as a result of the
Merger shall surrender each such certificate held by him/her to
HLLS and, within a reasonable time after such surrender, HLLS shall
deliver to such person in exchange therefor one or more
certificates evidencing the HLLS Preferred Stock that such person
is entitled to receive as a result of the Merger.
Business
Marketshare Recovery was incorporated in New York in November 2000.
Marketshare Recovery is a provider of online direct marketing solutions
for enterprises. Our solutions enable corporations to create and deliver
online direct marketing programs that drive revenue, influence behavior
and deepen customer relationships. Our solutions provide customer insight
and powerful program execution through a combination of hosted applications
and technology infrastructure.
Solutions
We provide comprehensive solutions for creating and executing online
direct marketing programs. Our solutions are designed to enable marketers to
build the foundation required to develop online direct marketing programs,
reach new customers, and maximize the value of existing customers. Our solutions
consist of the following offerings:
Campaign Services
Campaign Services provides marketers with an account team to
efficiently execute their online direct marketing programs. Based upon a
marketer's guidance, the Campaign Services team targets, tests and
executes email marketing campaigns. Marketers maintain control and
visibility over the entire process.
Program Services
Program Services provides marketers with an expert team designed to
proactively build and manage their online direct marketing programs around
their email marketing goals. The Program Services team delivers insight,
analysis and management to optimize the value of online customer
relationships.
Customer Acquisition
Customer acquisition is a full service marketing offering that enables
clients to cost-effectively reach new prospects and drive online revenue by
converting prospects into customers. Marketshare Recovery helps clients achieve
superior results by providing access to a rich base of prospect sources,
negotiating exceptional rates and optimizing campaigns to reach the highest
value customers. Our Customer Acquisition clients receive full-service
program management, including strategic media plan development, comprehensive
testing and results analysis.
Professional Services
Professional services can be utilized by clients to enhance marketing
programs and improve results. Marketshare Recovery offers clients services to
fulfill online direct marketing needs in each of the following categories:
Strategy, Analysis, Data Management, Solutions Engineering, Web Development,
Creative and Design and Media Planning.
Sales and Marketing
We sell our products and services in the United States through a sales
and marketing organization that consisted of 9 employees as of June 30, 2003.
These employees are primarily located at our headquarters in Melville,
New York.
Clients
Our clients consist of a diverse group of companies operating in many
industries primarily throughout the United States, principally e-commerce
oriented businesses.
Competition
The market for online direct marketing services is highly competitive
and rapidly evolving and experiences rapid technological change. We expect
competition to increase significantly in the future because of the attention
the Internet has received as a means of advertising and direct marketing and
because there are limited barriers to entry into our market.
We believe that the factors on which we successfully compete include:
- Credibility of clients and their willingness to act as references.
- Quality of online direct marketing services.
- Technology-enhanced service offerings.
- Sophistication and reliability of technology.
- Speed of implementation of online direct marketing campaigns.
- Cost-effective online direct marketing solutions.
- Measurable results.
Although we believe that our solutions currently compete favorably as
to each of these factors, our market is relatively new and is evolving rapidly.
We may not be able to maintain our competitive position against current and
potential competitors.
Our principal competitors include providers of online direct marketing
solutions such as DoubleClick, Responsys, Cheetahmail, CMGI's Yesmail
(through its recent acquisition of Post Communications), eDialog, Digital Ipact
and Clickaction, as well as the in-house information technology departments of
our existing and prospective clients.
In addition, we expect competition to persist and intensify in the
future, which could harm our ability to increase sales and maintain our
prices. In the future, we may experience competition from Internet service
providers,advertising and direct marketing agencies and other large established
businesses possessing large, existing customer bases, substantial financial
resources and established distribution channels and could develop, market
or resell a number of online direct marketing solutions. These potential
competitors may also choose to enter, or have already entered, the market
for online direct marketing by acquiring one of our existing competitors or
by forming strategic alliances with a competitor.
Many of these potential competitors have broad distribution channels
and they may bundle competing products or services. As a result of future
competition, the demand for our services could substantially decline. Any of
these occurrences could harm our ability to compete effectively.
Government Regulation
Legislation has been enacted in several states restricting the sending
of unsolicited commercial email. The federal government, foreign governments
and several other states are considering, or have considered, similar
legislation. Although the provisions of these current and contemplated laws
vary, they generally limit or prohibit both the transmission of unsolicited
commercial emails and the use of forged or fraudulent routing and header
information. Some states, including California, require that unsolicited
commercial emails include opt-out instructions and that senders of such
emails honor any opt-out requests. We believe that our current suite of
services are not affected by such legislation because the list management
practices that we espouse to our clients are intended to prevent the sending
of unsolicited commercial email. We cannot assure you that future legislation
or the application of existing legislation will not harm our business.
Seasonality
The traditional direct marketing industry has typically generated
lower revenue during the summer months and higher revenue during the calendar
year-end months. We believe our business is affected by similar revenue
fluctuations, but we are unable to isolate and predict the magnitude of
these effects.
Employees
As of June 30, 2003, we had a total of 9 full-time employees. Our
future performance depends upon the continued service of our existing
personnel. Our future success also depends on our continuing ability to
attract, train and retain highly qualified technical, sales and managerial
personnel. None of our employees is represented by a labor union. We have
not experienced any work stoppages and consider our relations with our
employees to be good.
RISK FACTORS
BECAUSE OF OUR LIMITED OPERATING HISTORY AND THE EMERGING NATURE OF THE
EMARKETING INDUSTRY, ANY PREDICTIONS ABOUT OUR FUTURE REVENUES AND EXPENSES
MAY NOT BE AS ACCURATE AS THEY WOULD BE IF WE HAD A LONGER BUSINESS HISTORY,
AND WE CANNOT DETERMINE TRENDS THAT MAY AFFECT OUR BUSINESS.
We were incorporated in November 2000 and first recorded revenue in
2001. Our limited operating history makes financial forecasting and
evaluation of our business difficult. Since we have limited financial data, any
predictions about our future revenues and expenses may not be as accurate as
they would be if we had a longer business history. Because of the emerging
nature of the emarketing industry, we cannot determine trends that may emerge
in our market or affect our business. The revenue and income potential of the
emarketing industry, and our business, are unproven.
OUR OPERATING RESULTS HAVE VARIED SIGNIFICANTLY IN THE PAST AND ARE LIKELY
TO VARY SIGNIFICANTLY FROM PERIOD TO PERIOD, AND OUR STOCK PRICE MAY DECLINE IF
WE FAIL TO MEET THE EXPECTATIONS OF ANALYSTS AND INVESTORS.
Our operating results have varied significantly in the past and are
likely to vary significantly from period to period. As a result, our operating
results are difficult to predict and may not meet the expectations of securities
analysts or investors. If this occurs, the price of our common stock would
likely decline.
SEASONAL TRENDS MAY CAUSE OUR QUARTERLY OPERATING RESULTS TO FLUCTUATE,
WHICH MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.
The traditional direct marketing industry has typically generated lower
revenues during the summer months and higher revenues during the calendar
year-end months. We believe our business may be affected by similar revenue
fluctuations, but our limited operating history is insufficient to predict
the existence or magnitude of these effects. If we do experience these effects,
analysts and investors may not be able to predict our quarterly or annual
operating results, and if we fail to meet expectations of analysts and
investors, our stock price could decline.
IF BUSINESSES AND CONSUMERS FAIL TO ACCEPT EMARKETING AS A MEANS TO ATTRACT
NEW CUSTOMERS, DEMAND FOR OUR SERVICES MAY NOT DEVELOP AND THE PRICE OF OUR
COMMON STOCK WOULD DECLINE.
The market for emarketing is new and rapidly evolving, and our business
will be harmed if sufficient demand for our services does not develop. Our
current and planned services are very different from the traditional methods
that many of our clients have historically used to attract new customers and
maintain customer relationships. Demand for emarketing, including our
services, may not materialize for several reasons, including:
- Businesses that have already invested substantial resources in other
methods of marketing and communications may be reluctant to adopt new
marketing strategies and methods.
- Consumers and businesses may choose not to accept emarketing
messages.
- Businesses may elect not to engage in emarketing because consumers
may confuse permission-based email services with unsolicited commercial
email.
- The effectiveness of direct marketing through the use of emails may
diminish significantly if the volume of direct marketing email
saturates consumers.
COMPETITION IN THE EMARKETING INDUSTRY IS INTENSE AND, IF WE ARE UNABLE TO
COMPETE EFFECTIVELY, THE DEMAND FOR, OR THE PRICES OF, OUR SERVICES MAY
DECLINE.
The market for emarketing is intensely competitive, rapidly evolving
and experiences rapid technological change. We expect the intensity of
competition to increase significantly in the future because of the attention
the internet has received as a medium for advertising and direct marketing
and because there are no significant barriers to entry into our market.
Intense competition may result in price reductions, reduced sales, gross
margins and operating margins, and loss of market share.
Our principal competitors include:
- Providers of emarketing solutions such as @Once, Acxiom and its
affiliate Bigfoot, Exactis.com, Kana Communications, L-Soft,
Media Synergy, MessageMedia, Digital Impact, CoolSavings,
NetCreations, Responsys.com and YesMail.com.
- The in-house information technology departments of our existing and
prospective clients.
In addition, we expect competition to persist and intensify in the
future, which could harm our ability to increase sales and maintain our
prices. In the future, we may experience competition from Internet service
providers,advertising and direct marketing agencies and other large established
businesses such as America Online, DoubleClick, Microsoft, IBM, AT&T, Yahoo!,
ADVO and the Interpublic Group of Companies. Each of these companies possess
large, existing customer bases, substantial financial resources and established
distribution channels and could develop, market or resell a number of emarketing
solutions. These potential competitors may also choose to enter the market for
emarketing by acquiring one of our existing competitors or by forming strategic
alliances with these competitors. Any of these occurrences could harm our
ability to compete effectively.
RAPID TECHNOLOGICAL CHANGES COULD CAUSE OUR SERVICES TO BECOME OBSOLETE AND
UNMARKETABLE OR REQUIRE US TO REDESIGN OUR SERVICES, WHICH COULD BE COSTLY
AND TIME-CONSUMING.
The market for emarketing services is characterized by rapid
technological change. Our services could become obsolete and unmarketable if
we are unable to adapt our services to these new technologies. For example,
the emergence of new media formats such as streaming video and audio may
require us to adapt our services to remain competitive which could be costly
and time-consuming.
IF WE DO NOT ATTRACT AND RETAIN ADDITIONAL HIGHLY-SKILLED PERSONNEL WE MAY
BE UNABLE TO EXECUTE OUR BUSINESS STRATEGY.
Our business depends on the continued technological innovation of our
core services and our ability to provide comprehensive emarketing expertise.
If we fail to identify, attract, retain and motivate these highly
skilled personnel, we may be unable to successfully introduce new services
or otherwise implement our business strategy. We plan to significantly expand
our operations, and we will need to hire additional personnel as our business
grows. In particular, we have experienced difficulties in hiring highly skilled
technical and client services personnel due to significant competition for
experienced personnel in our market.
WE RELY ON THE SERVICES OF OUR FOUNDERS AND OTHER KEY PERSONNEL, WHOSE
KNOWLEDGE OF OUR BUSINESS AND TECHNICAL EXPERTISE WOULD BE EXTREMELY
DIFFICULT TO REPLACE.
Our future success depends to a significant degree on the skills,
experience and efforts of our senior management. In particular, we depend
upon the continued services of Raymond Barton, our Chief Executive Officer,
Chief Technology Officer and co-founder and Timothy Schmidt, our Cheif
Financial Officer and co-founder, whose vision for our company, knowledge
of our business and technical expertise would be extremely difficult to
replace. In addition, we have not obtained life insurance benefiting
Marketshare Recovery on any of our key employees. If any of our key
employees left or was seriously injured and unable to work and we were
unable to find a qualified replacement, the level of services we are able to
provide could decline or we may be otherwise unable to execute our business
strategy.
IF WE FAIL TO EXECUTE OUR STRATEGY TO EXPAND INTO NEW MARKETS, THE MARKET
FOR OUR SERVICES AND OUR POTENTIAL REVENUE WILL BE LIMITED.
The majority of our emarketing clients to date have been online
business-to-consumer retailers. We intend to expand our presence among
clients in other consumer markets, in markets where the customers are
businesses rather than consumers, and in international markets. If this
strategy fails, the market for our services and our potential revenue
will be limited. We have limited experience in these markets and may
encounter obstacles which we have not anticipated.
IF WE FAIL TO INTRODUCE NEW SERVICES, SUCH AS OUR RECENTLY-INTRODUCED EMAIL
EXCHANGE NETWORK, OUR REVENUES MAY NOT INCREASE.
Part of our strategy is to increase our revenues by introducing new
services. If we fail to introduce new services our revenues may not
increase. If any of our new service offerings are not accepted by our
clients, our revenues may be lower.
IF WE ARE UNABLE TO ENHANCE OUR SERVICES AND ADD CLIENT SERVICES PERSONNEL
TO HANDLE INCREASED EMAIL VOLUME AND CONSUMER RESPONSES, WE MAY BE UNABLE TO
ADEQUATELY RESPOND TO OUR CLIENTS' DEMANDS FOR EMARKETING SERVICES AND MAY
LOSE MARKET SHARE.
If we are unable to expand capacity to keep pace with our clients'
demands, we may lose market share. The volume of emails we are sending has
grown significantly and we expect this volume to continue to grow. We will
need to enhance our services to handle both any increased email volume and
the increased level of response from consumers that are generated by this
volume. In addition, as we seek to grow our base of clients, we must add
client services personnel to handle the increased volume of emails and
campaigns. If we are unable to add client services personnel, the level
of services we are able to provide our clients could decline.
IF THE DELIVERY OF OUR EMAILS IS LIMITED OR BLOCKED, THEN OUR CLIENTS MAY
DISCONTINUE THEIR USE OF OUR SERVICES.
Our business model relies on our ability to deliver emails over the
internet through internet service providers and to recipients in major
corporations. In particular, a significant percentage of our emails are sent
to recipients who use America Online. We do not have, and we are not required
to have, an agreement with America Online to deliver emails to their customers.
America Online uses a proprietary set of technologies to handle and deliver
email and the value of our services will be reduced if we are unable to
provide emails compatible with these technologies. In addition, America Online
and other internet service providers are able to block unwanted messages to
their users. If these companies limit or halt the delivery of our emails,
or if we fail to deliver emails in such a way as to be compatible with these
companies' email handling technologies, then our clients may discontinue their
use of our services.
OUR FACILITIES AND SYSTEMS ARE VULNERABLE TO NATURAL DISASTERS AND OTHER
UNEXPECTED EVENTS, AND ANY OF THESE EVENTS COULD RESULT IN AN INTERRUPTION
OF OUR ABILITY TO EXECUTE OUR CLIENT'S EMARKETING CAMPAIGNS.
We depend on the efficient and uninterrupted operations of our data
center and hardware systems. Our data center and hardware systems is located in
Long Island, New York. Our data center and hardware systems are also vulnerable
to damage from fire, floods, power loss, telecommunications failures, and
similar events. If any of these events result in damage to our data center or
systems, we may be unable to execute our clients' emarketing campaigns until
the damage is repaired, and may accordingly lose clients and revenues. In
addition, we may incur substantial costs in repairing any damage.
OUR DATA CENTER IS LOCATED AT FACILITIES PROVIDED BY A THIRD PARTY, AND IF
THIS PARTY IS UNABLE TO ADEQUATELY PROTECT OUR DATA CENTER, OUR REPUTATION
MAY BE HARMED AND WE MAY LOSE CLIENTS.
Our data center, which is critical to our ongoing operations, is
located at facilities provided by a third party. Our operations depend on
this party's ability to protect our data center from damage or interruption
from human error, break-ins, sabotage, computer viruses, intentional acts of
vandalism and similar events. If this party is unable to adequately protect
our data center andinformation is lost or our ability to deliver our services
is interrupted, our reputation may be harmed and we may lose clients.
OUR OPERATING RESULTS WOULD SUFFER IF WE WERE FORCED TO DEFEND AGAINST A
PROTRACTED INFRINGEMENT CLAIM OR IF A THIRD PARTY WERE AWARDED SIGNIFICANT
DAMAGES.
There is a substantial risk of litigation regarding intellectual
property rights in our industry. A successful claim of technology infringement
against us and our failure or inability to license the infringed or similar
technology could harm our business.
We expect that our technologies may experience an increase in
third-party infringement claims as the number of our competitors grows. In
addition, we believe that many of our competitors have filed or intend to
file patent applications covering aspects of their technology that they may
claim our intellectual property infringes. We cannot be certain that third
parties will not make a claim of infringement against us relating to our
technology. Any claims, with or without merit, could:
- Be time-consuming and costly to defend.
- Divert management's attention and resources.
- Cause delays in delivering services.
- Require the payment of monetary damages which may be tripled if the
infringement is found to be willful.
- Result in an injunction which would prohibit us from offering a
particular service.
- Require us to enter into royalty or licensing agreements which, if
required, may not be available on acceptable terms.
IF ANY OF THE THIRD PARTY TECHNOLOGIES WE USE BECOME UNAVAILABLE TO US, WE
WILL NOT BE ABLE TO OPERATE OUR BUSINESS UNTIL EQUIVALENT TECHNOLOGY CAN BE
OBTAINED.
We are highly dependent on technologies we license which enable us to
send email through the internet and allow us to offer a variety of targeted
marketing capabilities. Our market is evolving, and we may need to license
additional technologies to remain competitive. However, we may not be able
to license these technologies on commercially reasonable terms or at all.
Our inability to obtain any of these licenses could delay the development
of our services until equivalent technology can be identified, licensed or
developed and integrated.
IF WE ARE UNABLE TO SAFEGUARD THE CONFIDENTIAL INFORMATION IN OUR DATA
WAREHOUSE, OUR REPUTATION MAY BE HARMED AND WE MAY BE EXPOSED TO LIABILITY.
We currently retain highly confidential customer information in a
secure data warehouse. We cannot assure you, however, that we will be able to
prevent unauthorized individuals from gaining access to this data warehouse.
If any compromise or breach of security were to occur, it could harm our
reputation and expose us to possible liability. Any unauthorized access to
our servers could result in the misappropriation of confidential customer
information or cause interruptions in our services. It is also possible that
one of our employees could attempt to misuse confidential customer information,
exposing us to liability. In addition, our reputation may be harmed if we
lose customer information maintained in our data warehouse due to systems
interruptions or other reasons.
ACTIVITIES OF OUR CLIENTS COULD DAMAGE OUR REPUTATION OR GIVE RISE TO LEGAL
CLAIMS AGAINST US.
Our clients' promotion of their products and services may not comply
with federal, state and local laws. We cannot predict whether our role in
facilitating these marketing activities would expose us to liability under
these laws. Any claims made against us could be costly and time-consuming
to defend. If we are exposed to this kind of liability, we could be
required to pay substantial fines or penalties, redesign our business
methods, discontinue some of our services or otherwise expend resources to
avoid liability.
Our services involve the transmission of information through the
internet. Our services could be used to transmit harmful applications, negative
messages, unauthorized reproduction of copyrighted material, inaccurate data or
computer viruses to end-users in the course of delivery. Any transmission of
this kind could damage our reputation or could give rise to legal claims
against us. We could spend a significant amount of time and money defending
against these legal claims.
NEW REGULATION OF AND UNCERTAINTIES REGARDING THE APPLICATION OF EXISTING
LAWS AND REGULATIONS TO, EMARKETING AND THE INTERNET, COULD PROHIBIT, LIMIT OR
INCREASE THE COST OF OUR BUSINESS.
Legislation has recently been enacted in several states restricting the
sending of unsolicited commercial email. We cannot assure you that existing
or future legislation regarding commercial email will not harm our business.
The federal government and several other states are considering, or have
considered, similar legislation. These provisions generally limit or prohibit
both the transmission of unsolicited commercial emails and the use of forged or
fraudulent routing and header information. Some states, including
California, require that unsolicited emails include opt-out instructions and
that senders of these emails honor any opt-out requests.
Our business could be negatively impacted by new laws or regulations
applicable to emarketing or the internet, the application of existing laws
and regulations to emarketing or the internet or the application of
new laws and regulations to our business as we expand into new
jurisdictions. There is a growing body of laws and regulations applicable
to access to or commerce on the internet. Moreover, the applicability to
the internet of existing laws is uncertain and may take years to resolve.
Due to the increasing popularity and use of the internet, it is likely that
additional laws and regulations will be adopted covering issues such as
privacy, pricing, content, copyrights,distribution, taxation antitrust,
characteristics and quality of services and consumer protection. The
adoption of any additional laws or regulations may impair the growth of
the internet or emarketing, which could, in turn, decrease the demand
for our services and prohibit, limit or increase our cost of doing business.
INTERNET-RELATED STOCK PRICES ARE ESPECIALLY VOLATILE AND THIS VOLATILITY
MAY DEPRESS OUR STOCK PRICE.
The stock market and specifically the stock prices of internet-related
companies have been very volatile. Because we are an internet-related
company, we expect our stock price to be similarly volatile. As a result
of this volatility, the market price of our common stock could significantly
decrease. This volatility is often not related to the operating performance
of the companies and may accordingly reduce the price of our common stock
without regard to our operating performance.
NEW MANAGEMENT
--------------------------------
The following table sets forth the names and ages of the
incoming director and executive officer of the Company.
Name Age Position(s)
------------- --- -----------------------------------
Ray Barton 32 Cheif Executive Officer, Cheif Technology Officer
President, and Chairman of the Board
Timothy Schmidt 33 Cheif Financial Officer and Director
Ray Barton
During the last five years, Mr. Barton has been a principal at
Market Share Recovery, Inc. an Internet Direct Marketing firm,
which specializes in acquisition and resale of user demographic data
and targeted e-mail marketing where, Mr. Barton's duties include
managing the day to day operations of the business, marketing and
managing the Company's growth. Mr. Barton also serves as Chairman
of the Board of Directors, Chief Operating Officer and Chief
Technology officer of Jade Entertainment group, Inc. an online
specialty search engine. Prior thereto Mr. Barton was a stock
broker at Meyers Pollock Robbins, and at Continental Broker Dealers
where he served as a retail broker. Mr. Barton also served as,
Business Development Manager with PcQuote, Inc. and was in charge
of developing business contacts and negotiating joint ventures.
Prior to that Mr. Barton served as Executive Vice President of
Financialweb.com, where his responsibilities included managing the
production of online content. Mr. Barton served as the CEO/President
of Thinkersgroup, Inc. a mobile wireless software developer, where
he developed the Company's business plan, assembled a management
team and oversaw day to day operations.
Timothy Schmidt
During the last five years, Mr. Schmidt has been a principal
at Market Share Recovery, Inc. an Internet Direct Marketing firm,
which specializes in acquisition and resale of user demographic
data, and targeted e-mail marketing where, Mr. Schmidt's duties
include overseeing operations, accounting, human resources, and
administration. Mr. Schmidt also serves as president of Jade
Entertainment Group, Inc. a specialty search engine, which
under Mr. Schmidt successfully filed a registration statement
with the SEC and conducted an initial public offering. Prior
to that Mr. Schmidt served as Chief Operating Officer for
thinkersgroup.com, a wireless a developer of wireless software
applications where he where he managed company operations,
administration and human resources.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Pursuant to Item 7(a)(4), financial statements of Marketshare
Recovery, Inc. will be filed by amendment to this Form 8-K
on or before September 17, 2003.
(b) Pro Forma Financial Information.
Pursuant to Item 7(b)(2), pro forma financial information concerning
the Venture Sum's acquisition of Marketshare Recovery, Inc., as
described in Item 2 of this Form 8-K, will be filed by amendment to
this Form 8-K on or before September 17, 2003.
(c) Exhibits
99.1 Acquisition Agreement and Plan of Merger by and among Venture
Sum, Inc. a wholly owned subidiary of Health & Leisure, Inc.
and Marketshare Recovery, Inc. dated June 13, 2003.
99.2 Form of Promissory Note dated June 13, 2003
99.3 Limited Lock-Up and Pledge Letter Agreement
99.4 Preferred Stock Designation.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HEALTH & LEISURE, INC.
Date: July 17, 2003 By: /s/ Ray Barton
-------------------------------------
Ray Barton
President, Chief Executive Officer and
Chief Financial Officer
EXHIBIT INDEX
99.1 Acquisition Agreement and Plan of Merger by and among Venture
Sum, Inc. a wholly owned subidiary of Health & Leisure, Inc.
and Marketshare Recovery, Inc. dated June 13, 2003.
99.2 Form of Promissory Note dated June 13, 2003
99.3 Limited Lock-Up and Pledge Letter Agreement
99.4 Preferred Stock Designation.