As filed with the Securities and Exchange Commission on August 10, 2007

Registration Statement No. 333-144396

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

Amendment No. 1

to

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

 

 

 

 

 

300 Sixth Avenue

Pittsburgh, Pennsylvania 15222

(412) 288-4600

(Address, including zip code, and telephone number,

including area code, of registrants’ principal executive offices)

 

 

 

 

Mark L. Weintrub

Senior Vice President and Chief Legal Officer

General Nutrition Centers, Inc.

300 Sixth Avenue

Pittsburgh, Pennsylvania 15222

(412) 288-4600

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

 

 

 

 

With a copy to:

Michael A. Woronoff

Proskauer Rose LLP

2049 Century Park East, Suite 3200

Los Angeles, California 90067

(310) 557-2900

 

 

 

 

Approximate date of commencement of proposed sale to the public:   As soon as practicable after this Registration Statement becomes effective.

 

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.   o

 

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o

 

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant files a further amendment that specifically states that this Registration Statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement becomes effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), determines.

 

 

 

 

 

 

 

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any person to provide you with any information or represent anything not contained in this prospectus, and, if given or made, any such other information or representation should not be relied upon as having been authorized by us. We are not making an offer to sell the Exchange Notes in any jurisdiction where an offer or sale is not permitted.

 

 

This prospectus contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. Forward-looking statements may relate to our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, and other information that is not historical information. Discussions containing such forward-looking statements may be found in Items 1, 2, 3, 7 and 7A hereof, as well as within this prospectus generally. In addition, when used in this prospectus, the words “subject to,” “believe,” “anticipate,” “plan,” “expect,” “intend,” “estimate,” “project,” “may,” “will,” “should,” “can,” or the negative thereof, or variations thereon, or similar expressions, or discussions of strategy, are intended to identify forward-looking statements, which are inherently uncertain.

 

All forward-looking statements, including, without limitation, our examination of historical operating trends, are based upon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations and beliefs, but we may not realize our expectations and our beliefs may not prove correct. Actual results could differ materially from those described or implied by such forward-looking statements. Factors that may materially affect such forward-looking statements include, among others:

 

 

Consequently, such forward-looking statements should be regarded solely as our current plans, estimates and beliefs. You should not place undue reliance on forward-looking statements. We cannot guarantee future results, events, levels of activity, performance or achievements. We do not undertake and specifically decline any obligation to update, republish or revise forward-looking statements to reflect future events or circumstances or to reflect the occurrences of unanticipated events.

 

Throughout this prospectus, we use market data and industry forecasts and projections that we have obtained from market research, publicly available information, and industry publications. The industry forecasts and projections are based on industry surveys and the preparers’ experience in the industry, and we cannot give you any assurance that any of the projected results will be achieved.

 

We own or have rights to trademarks or trade names that we use in conjunction with the operation of our business. Our service marks and trademarks include the GNC ^® name. Each trademark, trade name, or service mark of any other company appearing in this prospectus belongs to its holder. Use or display by us of other parties’ trademarks, trade names, or service marks is not intended to and does not imply a relationship with, or endorsement or sponsorship by us of, the owner of the trademark, trade name, or service mark.

 

The contents of our website, www.gnc.com, are not a part of this prospectus.

 

SUMMARY

	•	introduced a single national pricing structure in order to improve our customer value perception;
	•	developed and executed a national, more diversified marketing program focused on reinforcing GNC’s brand name;
	•	overhauled our field organization and store programs to improve our customer shopping experience;
	•	focused our merchandising and marketing initiatives on driving increased traffic to our store locations;
	•	improved our supply chain and inventory management, resulting in better in-stock levels;
	•	reinvigorated our proprietary new product development activities;
	•	revitalized our vendor relationships, including their new product development activities and our exclusive or first-to-market access to new products;
	•	realigned our franchise system with our corporate strategies and re-acquired or closed unprofitable or non-compliant franchised stores;
	•	reduced our overhead cost structure; and
	•	launched www.gnc.com.

The Exchange Offers		We are offering to exchange the Exchange Notes, which have been registered under the Securities Act, for the Outstanding Notes, which have not been registered under the Securities Act. We issued the Outstanding Notes on March 16, 2007.
		In order to exchange your Outstanding Notes, you must promptly tender them before the expiration date (as described herein). All Outstanding Notes that are validly tendered and not validly withdrawn will be exchanged. We will issue the Exchange Notes on or promptly after the expiration date.
		You may only exchange Outstanding Notes with a minimum denomination of $2,000 or an integral multiple of $1,000 in excess thereof.
Registration Rights Agreements		We sold the Outstanding Notes on March 16, 2007 to J.P. Morgan Securities Inc., Goldman, Sachs & Co., Lehman Brothers Inc. and other initial purchasers. Simultaneously with that sale, we signed registration rights agreements with the initial purchasers relating to the Outstanding Notes that require us to conduct these exchange offers.
		You have the right under the registration rights agreements to exchange your Outstanding Notes for Exchange Notes. The exchange offers are intended to satisfy such right. After the exchange offers are complete, you will no longer be entitled to any exchange or registration rights with respect to your Outstanding Notes.
		For a description of the procedures for tendering Outstanding Notes, see the section “The Exchange Offers” under the heading “Procedures for Tendering Outstanding Notes.”
Expiration Date		Each exchange offer will expire at 5:00 p.m., New York City time, on          , 2007, unless we extend it. In that case, the expiration date will be the latest date and time to which we extend the applicable exchange offer. See the section “The Exchange Offers” under the heading “Expiration Date; Extensions; Amendments.” We do not currently intend to extend the expiration date.
Conditions to the Exchange Offers		The exchange offers are subject to conditions that we may waive in our sole discretion. The exchange offers are not conditioned upon any minimum principal amount of Outstanding Notes being tendered for exchange. See the section “The Exchange Offers” under the heading “Conditions to the Exchange Offers.”

Issuer		General Nutrition Centers, Inc.
Securities Offered		We are offering to exchange $300 million aggregate principal amount of Senior Floating Rate Toggle Notes due 2014 and $110 million aggregate principal amount of 10.75% Senior Subordinated Notes due 2015.
Maturity		The Exchange Senior Notes will mature on March 15, 2014 and the Exchange Senior Subordinated Notes will mature on March 15, 2015.
Interest Payment Dates		March 15 and September 15 of each year, commencing on September 15, 2007. Interest will accrue from March 16, 2007.
Interest		We may elect to pay interest on the Exchange Senior Notes entirely in cash, entirely by increasing the principal amount of the Notes or issuing new Notes (“PIK interest”), or on 50% of the outstanding principal amount of the Exchange Senior Notes in cash and on 50% of the outstanding principal amount of the Exchange Senior Notes by increasing the principal amount of the Exchange Senior Notes or by issuing new Notes (“partial PIK interest”). Cash interest on the Exchange Senior Notes will accrue at six-month LIBOR plus 4.5% per annum, and PIK interest, if any, will accrue at six-month LIBOR plus 5.25% per annum. If we elect to pay PIK interest or partial PIK interest, we will increase the principal amount of the Exchange Senior Notes or issue new Exchange Senior Notes in an aggregate principal amount equal to the amount of PIK interest for the applicable interest payment period (rounded up to the nearest $1,000) to holders of the Notes on the relevant record date.
		The Exchange Senior Notes will be treated as having been issued with original issue discount for U.S. federal income tax purposes.
		The Exchange Senior Subordinated Notes will accrue interest at 10.75% per annum.
		Interest on the Exchange Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months.
Guarantees		The Exchange Notes will be guaranteed on an unsecured senior basis by each of our existing and future U.S. Subsidiaries (as defined under “Description of Exchange Senior Notes” and “Description of Exchange Senior Subordinated Notes”). If we fail to make payments on the Exchange Notes, the guarantors must make them instead.

 

You should carefully consider the following risk factors and all other information contained in this prospectus before deciding to tender your Outstanding Notes in the exchange offers. The following risks comprise all the material risks of which we are aware; however, these risks and uncertainties may not be the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also adversely affect our business or financial performance. The following risks could materially harm our business, financial condition, future results, and cash flow. If that occurs, you could lose all or part of your investment.

 

Risks Related to the Notes

 

Our substantial debt could adversely affect our results of operations and financial condition and otherwise adversely impact our operating income and growth prospects.

 

As of March 31, 2007, our total debt was approximately $1,092.7 million, and we had an additional $50.6 million available for borrowing on a secured basis under our $60.0 million Senior Credit Facility after giving effect to the use of $9.4 million of the revolving credit facility to secure letters of credit. The majority of the debt under our Senior Credit Facility bears interest at variable rates. We are subject to additional interest expense if these rates increase significantly, which could also reduce our ability to borrow additional funds.

 

Our substantial debt could have important consequences on our financial condition. For example, it could:

 

 

For additional information regarding the interest rates and maturity dates of our existing debt, see “Management Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

 

Despite our current significant level of debt, we may still be able to incur additional debt, which could increase the risks described above, adversely affect our financial health, or prevent us from fulfilling our obligations under the Exchange Senior Notes and the Exchange Senior Subordinated Notes.

 

We and our subsidiaries may be able to incur additional debt in the future, including secured debt. Although the Senior Credit Facility and the indentures governing the Exchange Senior Notes and the Exchange Senior Subordinated Notes contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions. If additional debt is added to our current level of debt, the risks described above would increase.

We require a significant amount of cash to service our debt. Our ability to generate cash depends on many factors beyond our control and, as a result, we may not be able to make payments on our debt obligations.

 

We may be unable to generate sufficient cash flow from operations, to realize anticipated cost savings and operating improvements on schedule or at all, or to obtain future borrowings under our credit facilities or otherwise in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs. In addition, because we conduct our operations through our operating subsidiaries, we depend on those entities for dividends and other payments to generate the funds necessary to meet our financial obligations, including payments on our debt. Under certain circumstances, legal and contractual restrictions, as well as the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain cash from our subsidiaries. If we do not have sufficient liquidity, we may need to refinance or restructure all or a portion of our debt on or before maturity, sell assets, or borrow more money. We may not be able to do so on terms satisfactory to us or at all.

 

If we are unable to meet our obligations with respect to our debt, we could be forced to restructure or refinance our debt, seek equity financing, or sell assets. If we are unable to restructure, refinance, or sell assets in a timely manner or on terms satisfactory to us, it could significantly and adversely affect our financial condition, the value of the Exchange Senior Notes and the Exchange Senior Subordinated Notes, and our ability to make any required cash payments under the Exchange Senior Notes and the Exchange Senior Subordinated Notes, causing us to default under our obligations. As of March 31, 2007, substantially all of our debt was subject to acceleration clauses. A default on any of our debt obligations could trigger these acceleration clauses and cause those and our other obligations to become immediately due and payable. Upon an acceleration of any of our debt, we may not be able to make payments under our debt.

 

The Exchange Senior Notes and related guarantees will be effectively subordinated to all of our and the guarantors’ secured debt.

 

The Exchange Senior Notes and the related guarantees will be general unsecured obligations. As of March 31, 2007, we and our subsidiaries had an aggregate of $685.7 million of secured indebtedness, secured by liens on substantially all of our assets and the assets of the guarantors. An additional $50.6 million (excluding $9.4 million of letters of credit) would have been available for borrowing on a senior secured basis. In the event that our secured creditors exercise their rights with respect to the pledged assets, the proceeds of the liquidation of those assets will first be applied to repay obligations secured by their liens and then to repay other secured indebtedness before any unsecured indebtedness, including the Exchange Senior Notes, is repaid. Holders of the Exchange Senior Notes will participate ratably in our remaining assets with all holders of our unsecured indebtedness deemed to be of the same class as the Exchange Senior Notes, and potentially with all of our other general creditors, based upon the respective amounts owed to each holder or creditor. In any of the foregoing events, we cannot assure you that there will be sufficient assets to pay amounts due on the Exchange Senior Notes. As a result, holders of Exchange Senior Notes may receive less, ratably, than holders of secured indebtedness. In addition, we and the guarantors may incur additional secured indebtedness in the future. Depending on the amount of our future secured indebtedness, including borrowings under our Senior Credit Facility, the availability of our assets to satisfy our payment obligations on the Exchange Senior Notes may be further limited.

 

The Exchange Senior Subordinated Notes and related guarantees will be junior to all of our outstanding senior debt.

 

Your right to receive payments on the Exchange Senior Subordinated Notes will be junior to all of our outstanding senior indebtedness and possibly all of our future borrowings. Further, the guarantees of the Exchange Senior Subordinated Notes will be junior to all of our guarantors’ outstanding senior indebtedness (including their guarantees of the Exchange Senior Notes or the Senior Credit Facility) and possibly to all of their future borrowings.

 

The Exchange Senior Subordinated Notes and the related guarantees will rank behind all of our and the guarantors’ outstanding senior indebtedness (other than trade payables) and all of our and their future borrowings (other than trade payables), except any future indebtedness that expressly provides that it ranks equal with, or subordinated in right of payment to, the Exchange Senior Subordinated Notes and the guarantees. As a result, upon

any distribution to our creditors or the creditors of the guarantors in a bankruptcy, liquidation, or reorganization or similar proceeding relating to us or the guarantors or our or their property, the holders of our senior indebtedness and of the guarantors’ senior indebtedness will be entitled to be paid in full before any payment may be made with respect to the Notes or the guarantees thereof.

 

In addition, all payments on the Exchange Senior Subordinated Notes and the guarantees thereof will be blocked in the event of a payment default on senior indebtedness and may be blocked for up to 179 of 365 consecutive days in the event of certain non-payment defaults on senior indebtedness.

 

In the event of a bankruptcy, liquidation, or reorganization or similar proceeding relating to us or the guarantors, holders of the Exchange Senior Subordinated Notes will participate with trade creditors and all other holders of our and the guarantors’ subordinated indebtedness in the assets remaining after we and the guarantors have paid all of our senior indebtedness in full. However, because the indenture governing the Exchange Senior Notes will require that amounts otherwise payable to holders of the Exchange Senior Subordinated Notes in a bankruptcy or similar proceeding be paid to holders of senior indebtedness instead, holders of the Exchange Senior Subordinated Notes may receive less, ratably, than holders of trade payables in any such proceeding. In any of these cases, we and the guarantors may not have sufficient funds to pay all of our creditors, and holders of Notes may receive less, ratably, than the holders of our senior indebtedness.

 

As of March 31, 2007, the Exchange Senior Subordinated Notes and the guarantees were subordinated to $685.7 million of senior and secured indebtedness and approximately $50.6 million of additional senior indebtedness would have been available for borrowing under our Senior Credit Facility. We will be permitted to borrow substantial additional indebtedness, including senior indebtedness, in the future under the terms of the Senior Subordinated Notes Indenture.

 

Because the Exchange Notes will be structurally subordinated to the debt of our non-guarantor subsidiaries, your right to receive payments on the Exchange Notes could be adversely affected if any of our non-guarantor subsidiaries declare bankruptcy, liquidate, or reorganize.

 

Holders of the Exchange Notes will not have any claim as creditors of our subsidiaries that are not guarantors of the Exchange Notes. None of our foreign subsidiaries or future immaterial subsidiaries will guarantee the Exchange Notes. The Exchange Notes will be structurally subordinated to any existing and future preferred stock, indebtedness, and other liabilities, including trade payables, of any of our subsidiaries that do not guarantee the Exchange Notes. This is so even if such obligations do not constitute senior indebtedness. In addition, the indenture will, subject to limitations, permit our non-guarantor subsidiaries to incur additional indebtedness and will not contain any limitation on the amount of other liabilities that may be incurred by these subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of the non-guarantor subsidiaries, holders of preferred stock, indebtedness, and other liabilities will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to us. In addition, the ability of the non-guarantor subsidiaries to pay dividends or distributions to us is subject to applicable local laws, tax laws, and other restrictions. During the three months ended March 31, 2007, our non-guarantor subsidiaries accounted for less than 6% of our revenues and, as of March 31, 2007, less than 2% of our total assets.

 

Under certain circumstances, a court could cancel the Exchange Notes or the related guarantees of our subsidiaries. The subsidiary guarantees may not be enforceable. In that event, you would cease to be our or our guarantors’ creditor and likely would have no source to recover amounts due under the Exchange Notes.

 

Our issuance of the Exchange Notes and the issuance of the related guarantees by certain of our subsidiaries may be subject to review under federal or state fraudulent transfer law. If we become a debtor in a case under the United States Bankruptcy Code or encounter other financial difficulty, a court might avoid (that is, cancel) our obligations under the Exchange Notes. The court might do so if it found that, when we issued the Notes, and applied the proceeds therefrom as described under “Use of Proceeds,” (a) we received less than reasonably equivalent value or fair consideration, and (b) we either (i) were or were rendered insolvent, (ii) were left with inadequate capital to conduct our business, or (iii) believed or reasonably should have believed that we would incur debts beyond our

ability to pay. The court might also avoid the Exchange Notes, without regard to factors (a) and (b), if it found that we issued the Exchange Notes with actual intent to hinder, delay, or defraud our creditors.

 

Similarly, if one of our subsidiaries who guarantees the Exchange Notes becomes a debtor in a case under the Bankruptcy Code or encounters other financial difficulty, a court might cancel its guarantee if it found that when the subsidiary issued its guarantee (or in some jurisdictions, when payments became due under the guarantee), factors (a) and (b) above applied to the subsidiary, or if it found that the subsidiary issued its guarantee with actual intent to hinder, delay, or defraud its creditors.

 

A court would likely find that neither we nor any subsidiary guarantor received reasonably equivalent value or fair consideration for incurring our obligations under the Exchange Notes and related guarantees unless we or the subsidiary guarantor benefited directly or indirectly from the Exchange Notes’ issuance.

 

The test for determining solvency for purposes of the foregoing will vary depending on the law of the jurisdiction being applied. In general, a court would consider an entity insolvent either if the sum of its existing debts exceeds the fair value of all its property, or if its assets’ present fair saleable value is less than the amount required to pay the probable liability on its existing debts as they become due. For this analysis, “debts” includes contingent and unliquidated debts.

 

The indentures limit the liability of each subsidiary guarantor on its guarantee to the maximum amount that the subsidiary can incur without risk that the guarantee will be subject to avoidance as a fraudulent transfer. This limitation may not protect the guarantees from fraudulent transfer attack and even if it does, the remaining amount due and collectible under the guarantees may not be sufficient to pay the Exchange Notes when due.

 

If a court avoided our obligations under the Exchange Notes and the obligations of all the subsidiary guarantors under their guarantees, you would cease to be our creditors or creditors of the guarantors and likely have no source from which to recover amounts due under the Exchange Notes.

 

Even if the guarantee of a subsidiary guarantor is not avoided as a fraudulent transfer, a court may subordinate the guarantee to that subsidiary guarantor’s other debt. In that event, the guarantees would be structurally subordinated to all the subsidiary guarantor’s other debt.

 

We may not have the ability to raise the funds necessary to finance the change of control offer required by the indentures, which could cause us to default on our debt obligations, including the Exchange Senior Notes and the Exchange Senior Subordinated Notes.

 

Upon certain “change of control” events, as that term is defined in the indentures governing the Exchange Senior Notes and the Exchange Senior Subordinated Notes, we will be required to make an offer to repurchase all or any part of each holder’s Exchange Notes at a price equal to 101% of the principal thereof, plus accrued interest to the date of repurchase. Because we do not have access to the cash flow of our subsidiaries, we will likely not have sufficient funds available at the time of any change of control event to repurchase all tendered Exchange Notes pursuant to this requirement. Our failure to offer to repurchase Exchange Notes or to repurchase Notes tendered following a change of control would result in a default under the indentures. Accordingly, prior to repurchasing the Exchange Notes upon a change of control event, we must refinance all of our outstanding indebtedness. We may be unable to refinance all of our outstanding indebtedness on terms acceptable to us or at all. If we were unable to refinance all such indebtedness, we would remain effectively prohibited from offering to repurchase the Exchange Notes.

 

In addition, our ability to repurchase the Exchange Notes in cash may be limited by the terms of other agreements relating to our debt outstanding at the time, including our Senior Credit Facility, which restricts our ability to purchase the Exchange Notes for cash until the debt under our Senior Credit Facility is paid in full. Our failure to make or consummate the change of control offer or pay the change of control purchase price when due would constitute an event of default under the indentures and would give the trustee and the holders of the Exchange Notes the rights described in “Description of Exchange Senior Notes — Defaults” and “Description of Exchange Senior Subordinated Notes — Defaults.”

In addition, our failure to make or consummate the change of control offer or pay the change of control purchase price when due may also be an event of default under the Senior Credit Facility and our other indebtedness, even if the change of control itself would not cause a default. These events may permit the lenders under the Senior Credit Facility and our other indebtedness to accelerate the debt outstanding thereunder and, if such debt is not paid, to enforce security interests in the collateral securing such debt, thereby limiting our ability to raise cash to purchase the Exchange Notes, and reducing the practical benefit of the offer to purchase provisions to the holders of the Exchange Notes.

 

Restrictions in the agreements governing our existing indebtedness may prevent us from taking actions that we believe would be in the best interest of our business.

 

The agreements governing our existing indebtedness contain customary restrictions on us or our subsidiaries, including covenants that restrict us or our subsidiaries, as the case may be, from:

 

 

Our ability to comply with these covenants and other provisions of the Senior Credit Facility and the indentures governing the Exchange Senior Notes and the Exchange Senior Subordinated Notes may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments, or other events beyond our control. The breach of any of these covenants could result in a default under our debt, which could cause those and other obligations to become immediately due and payable. If any of our debt is accelerated, we may not be able to repay it.

 

The Senior Credit Facility also requires that we meet specified financial ratios, including, but not limited to, fixed charge coverage and maximum total leverage ratios. These restrictions may prevent us from taking actions that we believe would be in the best interest of our business and may make it difficult for us to successfully execute our business strategy or effectively compete with companies that are not similarly restricted.

 

U.S. persons will be required to pay U.S. federal income tax on accrual of original issue discount on the Exchange Senior Notes even if we do not pay cash interest.

 

None of the interest payments on the Exchange Senior Notes will be qualified stated interest for U.S. federal income tax purposes, even if we never exercise the option to pay PIK interest, because the Notes provide us with the option to pay cash interest or PIK interest for any interest payment period. Consequently, the Notes will be treated as issued with original issue discount for U.S. federal income tax purposes, and U.S. Holders (as defined in “Material United States Federal Income Tax and Estate Tax Consequences”) of Exchange Senior Notes will be required to include the original issue discount in gross income on a constant yield to maturity basis, regardless of whether interest is paid currently in cash. See “Material United States Federal Income Tax and Estate Tax Consequences — U.S. Holders — Original Issue Discount.”

 

Risks Relating to the Exchange Offers

 

Your Outstanding Notes will not be accepted for exchange if you fail to follow the exchange offer procedures.

 

We will not accept your Outstanding Notes for exchange if you do not follow the exchange offer procedures. We will issue registered Notes as part of the exchange offers only after a timely receipt of your Outstanding Notes, a

properly completed and duly executed letter of transmittal and all other required documents. If we do not receive your Outstanding Notes, letter of transmittal and other required documents by the time of expiration of the applicable exchange offer, we will not accept your Outstanding Notes for exchange. We are under no duty to give notification of defects or irregularities with respect to the tenders of Outstanding Notes for exchange. If there are defects or irregularities with respect to your tender of Outstanding Notes, we will not accept your Outstanding Notes for exchange.

 

If you do not exchange your Outstanding Notes, there will be restrictions on your ability to resell your Outstanding Notes.

 

Following the exchange offers, Outstanding Notes that you do not tender or that we do not accept will be subject to transfer restrictions. Absent registration, any untendered Outstanding Notes may therefore be offered or sold only in transactions that are not subject to, or that are exempt from, the registration requirements of the Securities Act and applicable state securities laws.

 

There is no established trading market for the Exchange Notes and an actual trading market for the Exchange Notes may not develop.

 

The Exchange Notes are a new issue of securities with no existing trading market. We do not intend to apply for listing or quotation of the Exchange Notes on any securities exchange or stock market, although we expect that the Exchange Notes will be eligible for trading in The PORTAL ^sm Market. Although the initial purchasers have informed us that they currently intend to make a market in the Exchange Notes, they are not obligated to do so and their market-making may be discontinued at any time without notice. Accordingly, we cannot assure you that the Exchange Notes will become liquid on any trading market, or, in the case of non-tendering holders of Exchange Notes, that there will be a trading market for the Exchange Notes, or if there is such a market, that the Exchange Notes will be liquid on it, following the exchange offers. In addition, market-making activity may be limited during the pendency of an exchange offers.

 

The liquidity of and trading market for the Exchange Notes, may be adversely affected by the number of holders of the Exchange Notes, our operating performance and financial condition, prevailing interest rates and general declines in the market for similar securities. A decline of this sort may adversely affect the trading markets for the Exchange Notes and their liquidity independently of our prospects or financial performance.

 

Risks Relating to Our Business and Industry

 

We operate in a highly competitive industry. Our failure to compete effectively could adversely affect our market share, revenues, and growth prospects.

 

The U.S. nutritional supplements retail industry is large and highly fragmented. Participants include specialty retailers, supermarkets, drugstores, mass merchants, multi-level marketing organizations, on-line merchants, mail-order companies, and a variety of other smaller participants. We believe that the market is also highly sensitive to the introduction of new products, including various prescription drugs, which may rapidly capture a significant share of the market. In the United States, we also compete for sales with heavily advertised national brands manufactured by large pharmaceutical and food companies, as well as other retailers. In addition, as some products become more mainstream, we experience increased competition for those products as more participants enter the market. For example, when the trend in favor of low-carbohydrate products developed, we experienced increased competition for our diet products from supermarkets, drug stores, mass merchants, and other food companies, which adversely affected sales of our diet products. Our international competitors include large international pharmacy chains, major international supermarket chains, and other large U.S.-based companies with international operations. Our wholesale and manufacturing operations compete with other wholesalers and manufacturers of third-party nutritional supplements. We may not be able to compete effectively and our attempt to do so may require us to reduce our prices, which may result in lower margins. Failure to effectively compete could adversely affect our market share, revenues, and growth prospects.

Unfavorable publicity or consumer perception of our products and any similar products distributed by other companies could cause fluctuations in our operating results and could have a material adverse effect on our reputation, the demand for our products, and our ability to generate revenues.

 

We are highly dependent upon consumer perception of the safety and quality of our products, as well as similar products distributed by other companies. Consumer perception of products can be significantly influenced by scientific research or findings, national media attention, and other publicity about product use. A product may be received favorably, resulting in high sales associated with that product that may not be sustainable as consumer preferences change. Future scientific research or publicity could be unfavorable to our industry or any of our particular products and may not be consistent with earlier favorable research or publicity. A future research report or publicity that is perceived by our consumers as less favorable or that questions earlier research or publicity could have a material adverse effect on our ability to generate revenues. For example, sales of some of our VMHS products, such as St. John’s Wort, Sam-e, and Melatonin, and more recently sales of Vitamin E, were initially strong, but we believe decreased substantially as a result of negative publicity. As a result of the above factors, our operations may fluctuate significantly from quarter to quarter, which may impair our ability to make payments when due on our debt. Period-to-period comparisons of our results should not be relied upon as a measure of our future performance. Adverse publicity in the form of published scientific research or otherwise, whether or not accurate, that associates consumption of our products or any other similar products with illness or other adverse effects, that questions the benefits of our or similar products, or that claims that such products are ineffective could have a material adverse effect on our reputation, the demand for our products, and our ability to generate revenues.

 

Our failure to appropriately respond to changing consumer preferences and demand for new products could significantly harm our customer relationships and product sales.

 

Our business is particularly subject to changing consumer trends and preferences, especially with respect to our diet products. For example, the recent trend in favor of low-carbohydrate diets was not as dependent on diet products as many other dietary programs, which caused and may continue to cause a significant reduction in sales in our diet category. Our continued success depends in part on our ability to anticipate and respond to these changes, and we may not be able to respond in a timely or commercially appropriate manner to these changes. If we are unable to do so, our customer relationships and product sales could be harmed significantly.

 

Furthermore, the nutritional supplement industry is characterized by rapid and frequent changes in demand for products and new product introductions. Our failure to accurately predict these trends could negatively impact consumer opinion of our stores as a source for the latest products. This could harm our customer relationships and cause losses to our market share. The success of our new product offerings depends upon a number of factors, including our ability to:

 

 

If we do not introduce new products or make enhancements to meet the changing needs of our customers in a timely manner, some of our products could become obsolete, which could have a material adverse effect on our revenues and operating results.

 

We depend on the services of key executives and changes in our management team could affect our business strategy and adversely impact our performance and results of operations.

 

Some of our senior executives are important to our success because they have been instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel, identifying

opportunities and arranging necessary financing. Losing the services of any of these individuals could adversely affect our business until a suitable replacement could be found. We believe that they could not quickly be replaced with executives of equal experience and capabilities. Many of our executives are not bound by employment agreements with us, nor do we maintain key person life insurance policies on any of our executives. See “Management — Executive Compensation.”

 

In the last two years, we have experienced significant management changes. In December 2004, our then Chief Executive Officer resigned. In 2005, six of our then executive officers resigned at different times, including our former Chief Executive Officer, who served in that position for approximately five months. In November 2005, our board of directors appointed Joseph Fortunato, then our Chief Operating Officer, as our Chief Executive Officer. Some of these changes were the result of the officer’s personal decision to pursue other opportunities. The remaining changes were instituted by us as part of strategic initiatives executed in 2005. Effective April 17, 2006, our Chief Operating Officer resigned to become a senior officer of Linens ’n Things, Inc. Until March 2007, following completion of the March 2007 Merger, he continued to serve as Merchandising Counselor. In April 2006, we appointed a new Chief Merchandising Officer, who resigned effective April 28, 2006, because of disagreements about the direction of our merchandising efforts. Our Executive Chairman of the Board, Robert J. DiNicola resigned immediately prior to the closing of the March 2007 Merger. In addition, Susan Trimbo resigned effective as of March 31, 2007 as our Senior Vice President of Scientific Affairs, and Steven Nelson resigned, effective as of May 11, 2007, as our Senior Vice President of Marketing. We will continue to enhance our management team as necessary to strengthen our business for future growth. Although we do not anticipate additional significant management changes, these and other changes in management could result in changes to, or impact the execution of, our business strategy. Any such changes could be significant and could have a negative impact on our performance and results of operations. In addition, if we are unable to successfully transition members of management into their new positions, management resources could be constrained.

 

Compliance with new and existing governmental regulations could increase our costs significantly and adversely affect our results of operations.

 

The processing, formulation, manufacturing, packaging, labeling, advertising, and distribution of our products are subject to federal laws and regulation by one or more federal agencies, including the Food and Drug Administration, or FDA, the Federal Trade Commission, or FTC, the Consumer Product Safety Commission, the United States Department of Agriculture, and the United States Environmental Protection Agency. These activities are also regulated by various state, local, and international laws and agencies of the states and localities in which our products are sold. Government regulations may prevent or delay the introduction, or require the reformulation, of our products, which could result in lost revenues and increased costs to us. For instance, the FDA regulates, among other things, the composition, safety, labeling, and marketing of dietary supplements (including vitamins, minerals, herbs, and other dietary ingredients for human use). The FDA may not accept the evidence of safety for any new dietary ingredient that we may wish to market, may determine that a particular dietary supplement or ingredient presents an unacceptable health risk, and may determine that a particular claim or statement of nutritional value that we use to support the marketing of a dietary supplement is an impermissible drug claim, is not substantiated, or is an unauthorized version of a “health claim.” See “Business — Government Regulations — Product Regulation.” Any of these actions could prevent us from marketing particular dietary supplement products or making certain claims or statements of nutritional support for them. The FDA could also require us to remove a particular product from the market. For example, in April 2004, the FDA banned the sale of products containing ephedra. Sale of products containing ephedra amounted to approximately $35.2 million, or 3.3%, of our retail sales in 2003 and approximately $182.9 million, or 17.1%, of our retail sales in 2002. Any future recall or removal would result in additional costs to us, including lost revenues from any additional products that we are required to remove from the market, any of which could be material. Any product recalls or removals could also lead to liability, substantial costs, and reduced growth prospects.

 

Additional or more stringent regulations of dietary supplements and other products have been considered from time to time. These developments could require reformulation of some products to meet new standards, recalls or discontinuance of some products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of some products, additional or different labeling, additional scientific

substantiation, adverse event reporting, or other new requirements. Any of these developments could increase our costs significantly. For example, the Dietary Supplement and Nonprescription Drug Consumer Protection Act (S3546) which was passed by Congress in December 2006, imposes significant new regulatory requirements on dietary supplements including reporting of “serious adverse events” to FDA and recordkeeping requirements. Although regulatory requirements created by the new legislation will not become mandatory until December 2007, this new legislation could raise our costs and negatively impact our business. In June 2007 the FDA adopted final regulations on Good Manufacturing Practices in manufacturing, packaging, and holding dietary ingredients and dietary supplements, which will apply to the products we manufacture. These regulations require dietary supplements to be prepared, packaged, and held in compliance with certain rules. Although we will have until June 2008 to comply with these new regulations, they could raise our costs and negatively impact our business. Additionally, our third-party suppliers or vendors may not be able to comply with the new rules without incurring substantial additional expenses. If our third-party suppliers or vendors are not able to timely comply with the new rules, we may experience increased costs or delays in obtaining certain raw materials and third-party products. Also, the FDA has announced that it plans to publish a guidance governing the notification of new dietary ingredients in 2007. Although FDA guidance is not mandatory, it is a strong indication of the FDA’s current views on the topic discussed in the guidance, including its position on enforcement. Depending on its recommendations, particularly those relating to animal or human testing, such guidance could also raise our costs and negatively impact our business. We may not be able to comply with the new rules without incurring additional expenses, which could be significant. See “Business — Government Regulation — Product Regulation” for additional information.

 

Our failure to comply with FTC regulations and existing consent decrees imposed on us by the FTC could result in substantial monetary penalties and could adversely affect our operating results.

 

The FTC exercises jurisdiction over the advertising of dietary supplements and has instituted numerous enforcement actions against dietary supplement companies, including us, for failure to have adequate substantiation for claims made in advertising or for the use of false or misleading advertising claims. As a result of these enforcement actions, we are currently subject to three consent decrees that limit our ability to make certain claims with respect to our products and required us to pay civil penalties and other amounts in the aggregate amount of $3.0 million. See “Business — Government Regulation — Product Regulation.” Failure by us or our franchisees to comply with the consent decrees and applicable regulations could occur from time to time. Violations of these orders could result in substantial monetary penalties, which could have a material adverse effect on our financial condition or results of operations.

 

We may incur material product liability claims, which could increase our costs and adversely affect our reputation, revenues, and operating income.

 

As a retailer, distributor, and manufacturer of products designed for human consumption, we are subject to product liability claims if the use of our products is alleged to have resulted in injury. Our products consist of vitamins, minerals, herbs, and other ingredients that are classified as foods or dietary supplements and are not subject to pre-market regulatory approval in the United States. Our products could contain contaminated substances, and some of our products contain ingredients that do not have long histories of human consumption. Previously unknown adverse reactions resulting from human consumption of these ingredients could occur. In addition, third-party manufacturers produce many of the products we sell. As a distributor of products manufactured by third parties, we may also be liable for various product liability claims for products we do not manufacture. We have been and may be subject to various product liability claims, including, among others, that our products include inadequate instructions for use or inadequate warnings concerning possible side effects and interactions with other substances. For example, as of March 31, 2007, we have been named as a defendant in 92 pending cases involving the sale of products that contain ephedra. See “Business — Legal Proceedings.” Any product liability claim against us could result in increased costs and could adversely affect our reputation with our customers, which in turn could adversely affect our revenues and operating income. All claims to date have been tendered to the third-party manufacturer or to our insurer, and we have incurred no expense to date with respect to litigation involving ephedra products. Furthermore, we are entitled to indemnification by Numico for losses arising from claims related to products containing ephedra sold before December 5, 2003. All of the pending cases relate to products sold before that time.

Our operations are subject to environmental and health and safety laws and regulations that may increase our cost of operations or expose us to environmental liabilities.

 

Our operations are subject to environmental and health and safety laws and regulations, and some of our operations require environmental permits and controls to prevent and limit pollution of the environment. We could incur significant costs as a result of violations of, or liabilities under, environmental laws and regulations, or to maintain compliance with such environmental laws, regulations, or permit requirements.

 

Because we rely on our manufacturing operations to produce nearly all of the proprietary products we sell, disruptions in our manufacturing system or losses of manufacturing certifications could adversely affect our sales and customer relationships.

 

Our manufacturing operations produced approximately 33% of the products we sold for the three months ended March 31, 2007 and approximately 34% for the year ended December 31, 2006. Other than powders and liquids, nearly all of our proprietary products are produced in our manufacturing facility located in Greenville, South Carolina. As of March 31, 2007, no one vendor supplied more than 10% of our raw materials. In the event any of our third-party suppliers or vendors were to become unable or unwilling to continue to provide raw materials in the required volumes and quality levels or in a timely manner, we would be required to identify and obtain acceptable replacement supply sources. If we are unable to obtain alternative supply sources, our business could be adversely affected. Any significant disruption in our operations at our Greenville, South Carolina facility for any reason, including regulatory requirements or the loss of certifications, power interruptions, fires, hurricanes, war, or other force majeure, could disrupt our supply of products, adversely affecting our sales and customer relationships.

 

If we fail to protect our brand name, competitors may adopt trade names that dilute the value of our brand name.

 

We have invested significant resources to promote our GNC brand name in order to obtain the public recognition that we have today. However, we may be unable or unwilling to strictly enforce our trademark in each jurisdiction in which we do business. In addition, because of the differences in foreign trademark laws concerning proprietary rights, our trademark may not receive the same degree of protection in foreign countries as it does in the United States. Also, we may not always be able to successfully enforce our trademark against competitors or against challenges by others. For example, a third party is currently challenging our right to register in the United States certain marks that incorporate our “GNC Live Well” trademark. This third party initiated proceedings in the United Stated Patent and Trademark Office to cancel four registrations for our “GNC Live Well” mark. Subsequently, we permitted three of these registrations to lapse and the Patent and Trademark Office has cancelled the fourth registration. Other third parties are also challenging our “GNC Live Well” trademark in foreign jurisdictions. Our failure to successfully protect our trademark could diminish the value and effectiveness of our past and future marketing efforts and could cause customer confusion. This could in turn adversely affect our revenues and profitability.

 

Intellectual property litigation and infringement claims against us could cause us to incur significant expenses or prevent us from manufacturing, selling, or using some aspect of our products, which could adversely affect our revenues and market share.

 

We are currently and may in the future be subject to intellectual property litigation and infringement claims, which could cause us to incur significant expenses or prevent us from manufacturing, selling, or using some aspect of our products. Claims of intellectual property infringement also may require us to enter into costly royalty or license agreements. However, we may be unable to obtain royalty or license agreements on terms acceptable to us or at all. Claims that our technology or products infringe on intellectual property rights could be costly and would divert the attention of management and key personnel, which in turn could adversely affect our revenues and profitability.

A substantial amount of our revenues are generated from our franchisees, and our revenues could decrease significantly if our franchisees do not conduct their operations profitably or if we fail to attract new franchisees.

 

As of March 31, 2007 and December 31, 2006 approximately 34%, and as of December 31, 2005 approximately 35%, of our retail locations were operated by franchisees. Our franchise operations generated approximately 15.0% of our revenues for the three months ended March 31, 2007 and approximately 15.6% of our revenues for the three months ended March 31, 2006 and the year ended December 31, 2006, and approximately 16.1% of our revenues for the year ended December 31, 2005. Our revenues from franchised stores depend on the franchisees’ ability to operate their stores profitably and adhere to our franchise standards. The closing of unprofitable franchised stores or the failure of franchisees to comply with our policies could adversely affect our reputation and could reduce the amount of our franchise revenues. These factors could have a material adverse effect on our revenues and operating income.

 

If we are unable to attract new franchisees or to convince existing franchisees to open additional stores, any growth in royalties from franchised stores will depend solely upon increases in revenues at existing franchised stores, which could be minimal. In addition, our ability to open additional franchised locations is limited by the territorial restrictions in our existing franchise agreements as well as our ability to identify additional markets in the United States and other countries that are not currently saturated with the products we offer. If we are unable to open additional franchised locations, we will have to sustain additional growth internally by attracting new and repeat customers to our existing locations.

 

Economic, political, and other risks associated with our international operations could adversely affect our revenues and international growth prospects.

 

As of March 31, 2007, we had 139 company-owned Canadian stores and 1,001 international franchised stores in 48 international markets. We derived 8.5% of our revenues for the three months ended March 31, 2007 and 8.7% of our revenues for the year ended December 31, 2006 from our international operations. As part of our business strategy, we intend to expand our international franchise presence. Our international operations are subject to a number of risks inherent to operating in foreign countries, and any expansion of our international operations will increase the effects of these risks. These risks include, among others:

 

 

Any of these risks could have a material adverse effect on our international operations and our growth strategy.

 

Franchise regulations could limit our ability to terminate or replace under-performing franchises, which could adversely impact franchise revenues.

 

Our franchise activities are subject to federal, state, and international laws regulating the offer and sale of franchises and the governance of our franchise relationships. These laws impose registration, extensive disclosure requirements, and bonding requirements on the offer and sale of franchises. In some jurisdictions, the laws relating

to the governance of our franchise relationship impose fair dealing standards during the term of the franchise relationship and limitations on our ability to terminate or refuse to renew a franchise. We may, therefore, be required to retain an under-performing franchise and may be unable to replace the franchisee, which could adversely impact franchise revenues. In addition, we cannot predict the nature and effect of any future legislation or regulation on our franchise operations.

 

We are not insured for a significant portion of our claims exposure, which could materially and adversely affect our operating income and profitability.

 

We have procured insurance independently for the following areas: (1) general liability; (2) product liability; (3) directors and officers liability; (4) property insurance; (5) workers’ compensation insurance; and (6) various other areas. We are self-insured for other areas, including: (1) medical benefits; (2) workers’ compensation coverage in New York, with a stop loss of $250,000; (3) physical damage to our tractors, trailers, and fleet vehicles for field personnel use; and (4) physical damages that may occur at company-owned stores. We are not insured for some property and casualty risks due to the frequency and severity of a loss, the cost of insurance, and the overall risk analysis. In addition, we carry product liability insurance coverage that requires us to pay deductibles/retentions with primary and excess liability coverage above the deductible/retention amount. Because of our deductibles and self-insured retention amounts, we have significant exposure to fluctuations in the number and severity of claims. We currently maintain product liability insurance with a retention of $1.0 million per claim with an aggregate cap on retained loss of $10.0 million. As a result, our insurance and claims expense could increase in the future. Alternatively, we could raise our deductibles/retentions, which would increase our already significant exposure to expense from claims. If any claim exceeds our coverage, we would bear the excess expense, in addition to our other self-insured amounts. If the frequency or severity of claims or our expenses increase, our operating income and profitability could be materially adversely affected. See the section “Business — Legal Proceedings.”

 

The controlling stockholders of our Parent may take actions that conflict with the interests of other stockholders and investors. This control may have the effect of delaying or preventing changes of control or changes in management.

 

Affiliates of Ares Management LLC and Teachers’ Private Capital and certain of our directors and members of our management indirectly beneficially own substantially all of the outstanding equity of our Parent and, as a result, have the indirect power to elect our directors, to appoint members of management, and to approve all actions requiring the approval of the holders of our common stock, including adopting amendments to our certificate of incorporation and approving mergers, acquisitions, or sales of all or substantially all of our assets. The interests of our ultimate controlling stockholders might conflict with the interests of other stockholders or the holders of our debt. Our ultimate controlling stockholders also may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to the holders of our debt.

 

Purpose and Effect of the Exchange Offers

 

We have entered into registration rights agreements with the initial purchasers of the Outstanding Notes in which we agreed, under certain circumstances, to use our commercially reasonable efforts to file a registration statement relating to offers to exchange the Outstanding Notes for Exchange Notes, thereafter to cause the registration statement to become effective under the Securities Act no later than 210 days following the closing date of the issuance of the Outstanding Notes and to complete the exchange offers no later than the 30th day following the effective date. The Exchange Notes will have terms identical in all material respects to the Outstanding Notes, except that the Exchange Notes will not contain terms with respect to transfer restrictions, registration rights and additional interest for failure to observe certain obligations in the registration rights agreements. The Outstanding Notes were issued on March 16, 2007.

 

Under the circumstances set forth below, we will use our commercially reasonable efforts to cause the SEC to declare effective a shelf registration statement with respect to the resale of the Outstanding Notes within the time periods specified in the registration rights agreement and keep the registration statement effective for up to two years after its effective date. These circumstances include:

 

 

 

Under the registration rights agreements, if we fail to file the registration statement, cause it to be declared effective and complete the applicable exchange offer (other than in the event we file a shelf registration statement) or the shelf registration statement, if required thereby, is not declared effective (each a “registration default”), in each case by the deadlines set forth above (each a “target date”), the interest rate on the Outstanding Notes will be increased by (x) 0.25% per annum for the first 90-day period immediately following the target date and (y) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case, until the applicable registration default is cured, up to a maximum of 1.00% per annum of additional interest. A copy of each registration rights agreement has been filed as an exhibit to the registration statement of which this prospectus is a part.

 

If you wish to exchange your Outstanding Notes for Exchange Notes in the exchange offers, you will be required to make the following written representations:

 

 

Each broker-dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes, where the broker-dealer acquired the Outstanding Notes as a result of market-making activities or other trading

activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. Please see “Plan of Distribution.”

 

Resale of Exchange Notes

 

Based on interpretations by the SEC staff set forth in no-action letters issued to third parties, we believe that you may resell or otherwise transfer Exchange Notes issued in the exchange offers without complying with the registration and prospectus delivery provisions of the Securities Act, if:

 

 

If you are our affiliate or an affiliate of any guarantor, or are engaging in, or intend to engage in, or have any arrangement or understanding with any person to participate in, a distribution of the Exchange Notes, or are not acquiring the Exchange Notes in the ordinary course of your business:

 

 

This prospectus may be used for an offer to resell, resale or other transfer of Exchange Notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the Outstanding Notes as a result of market-making activities or other trading activities may participate in the exchange offers. Each broker-dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes, where such Outstanding Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the Exchange Notes. Please see “Plan of Distribution” for more details regarding the transfer of Exchange Notes.

 

Terms of the Exchange Offers

 

On the terms and subject to the conditions set forth in this prospectus and in the accompanying letters of transmittal, We will accept for exchange in the applicable exchange offer any Outstanding Notes that are validly tendered and not validly withdrawn prior to the applicable expiration date. Outstanding Notes may only be tendered with a minimum denomination of $2,000 or an integral multiple of $1,000 in excess thereof. We will issue the principal amount of Exchange Notes in exchange for the principal amount of Outstanding Notes surrendered in the applicable exchange offer.

 

The form and terms of the Exchange Notes will be identical in all material respects to the form and terms of the Outstanding Notes, except that the Exchange Notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not provide for any additional interest upon our failure to fulfill our obligations under the registration rights agreement to complete the exchange offer, or file, and cause to be effective, a shelf registration statement, if required thereby, within the specified time period. The Exchange Notes will evidence the same debt as the Outstanding Notes. The Exchange Senior Notes and the Exchange Senior Subordinated Notes will be issued under, and entitled to the benefits of, the same indentures that authorized the issuance of the Outstanding Senior Notes and the Outstanding Senior Subordinated Notes. For a description of the indentures, see “Description of Exchange Senior Notes” and “Description of Exchange Senior Subordinated Notes.”

The exchange offers are not conditioned upon any minimum aggregate principal amount of Outstanding Notes being tendered for exchange.

 

This prospectus and the letters of transmittal are being sent to all registered holders of Outstanding Notes. There will be no fixed record date for determining registered holders of Outstanding Notes entitled to participate in the exchange offers. We intend to conduct the exchange offers in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC. Outstanding Notes that are not tendered for exchange in the exchange offers will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits such holders have under the indenture relating to such holders’ series of Outstanding Notes and the applicable registration rights agreement, except we will not have any further obligation to you to provide for the registration of the Outstanding Notes under such registration rights agreement.

 

We will be deemed to have accepted for exchange properly tendered Outstanding Notes when we have given oral or written notice of the acceptance to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the Exchange Notes from us and delivering Exchange Notes to holders. Subject to the terms of the registration rights agreement, we expressly reserve the right to amend or terminate the applicable exchange offer and to refuse to accept the occurrence of any of the conditions specified below under “— Conditions to the Exchange Offers.”

 

If you tender your Outstanding Notes in the exchange offers, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the applicable letter of transmittal, transfer taxes with respect to the exchange of Outstanding Notes. We will pay all charges and expenses, other than certain applicable taxes described below in connection with the exchange offers. It is important that you read “— Fees and Expenses” below for more details regarding fees and expenses incurred in the exchange offers.

 

Expiration Date; Extensions, Amendments

 

As used in this prospectus, the term “expiration date” means 5:00 p.m., New York City time, on          , 2007. However, if we, in our sole discretion, extend the period of time for which the applicable exchange offer is open, the term “expiration date” will mean the latest time and date to which we shall have extended the expiration of such exchange offer.

 

To extend the period of time during which an exchange offer is open, we will notify the exchange agent of any extension by oral or written notice, followed by notification by press release or other public announcement to the registered holders of the Outstanding Notes no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

 

We reserve the right, in our sole discretion:

 

 

provided that we will at all times comply with applicable securities laws, including our obligation to issue the Exchange Notes or return the Outstanding Notes deposited by or on behalf of security holders promptly after expiration or withdrawal of the exchange offers.

 

Any delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice to the registered holders of the Outstanding Notes. If we amend an exchange offer in a manner that we determine to constitute a material change, we will promptly disclose the amendment in a manner reasonably calculated to inform the holders of applicable Outstanding Notes of that amendment.

 

Conditions to the Exchange Offers

 

Despite any other term of the exchange offers, we will not be required to accept for exchange, or to issue Exchange Notes in exchange for, any Outstanding Notes and we may terminate or amend any of the exchange offers as provided in this prospectus prior to the expiration date if in our reasonable judgment:

 

 

In addition, we will not be obligated to accept for exchange the Outstanding Notes of any holder that has not made to us:

 

 

We expressly reserve the right at any time or at various times to extend the period of time during which the exchange offers are open. Consequently, we may delay acceptance of any Outstanding Notes by giving oral or written notice of such extension to their holders. We will return any Outstanding Notes that we do not accept for exchange for any reason without expense to their tendering holder promptly after the expiration or termination of the applicable exchange offer.

 

We expressly reserve the right to amend or terminate any exchange offer and to reject for exchange any Outstanding Notes not previously accepted for exchange, upon the occurrence of any of the conditions of the exchange offers specified above. We will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the Outstanding Notes as promptly as practicable. In the case of any extension, such notice will be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

 

These conditions are for our sole benefit and we may assert them regardless of the circumstances that may give rise to them or waive them in whole or in part at any or at various times prior to the expiration date in our sole discretion. If we fail at any time to exercise any of the foregoing rights, this failure will not constitute a waiver of such right. Each such right will be deemed an ongoing right that we may assert at any time or at various times prior to the expiration date.

 

In addition, we will not accept for exchange any Outstanding Notes tendered, and will not issue Exchange Notes in exchange for any such Outstanding Notes, if at such time any stop order is threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indentures under the Trust Indenture Act of 1939 (the “TIA”).

Procedures for Tendering Outstanding Notes

 

To tender your Outstanding Notes in the applicable exchange offer, you must comply with either of the following:

 

 

In addition, either:

 

 

Your tender, if not withdrawn prior to the expiration date, constitutes an agreement between us and you upon the terms and subject to the conditions described in this prospectus and in the applicable letter of transmittal.

 

The method of delivery of Outstanding Notes, letters of transmittal, and all other required documents to the exchange agent is at your election and risk. We recommend that instead of delivery by mail, you use an overnight or hand delivery service, properly insured. In all cases, you should allow sufficient time to assure timely delivery to the exchange agent before the expiration date. You should not send letters of transmittal or certificates representing Outstanding Notes to us. You may request that your broker, dealer, commercial bank, trust company or nominee effect the above transactions for you.

 

If you are a beneficial owner whose Outstanding Notes are registered in the name of a broker, dealer, commercial bank, trust company, or other nominee and you wish to tender your Outstanding Notes, you should promptly contact the registered holder and instruct the registered holder to tender on your behalf. If you wish to tender the Outstanding Notes yourself, you must, prior to completing and executing the applicable letter of transmittal and delivering your Outstanding Notes, either:

 

 

The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date.

 

Signatures on the applicable letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or another “eligible guarantor institution” within the meaning of Rule 17A(d)-15 under the Exchange Act unless the Outstanding Notes surrendered for exchange are tendered:

 

 

If the applicable letter of transmittal is signed by a person other than the registered holder of any Outstanding Notes listed on the Outstanding Notes, such Outstanding Notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder’s name

appears on the Outstanding Notes and an eligible guarantor institution must guarantee the signature on the bond power.

 

If the applicable letter of transmittal or any certificates representing Outstanding Notes, or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, those persons should also indicate when signing and, unless waived by us, they should also submit evidence satisfactory to us of their authority to so act.

 

The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s Automated Tender Offer Program to tender. Participants in the program may, instead of physically completing and signing the applicable letter of transmittal and delivering it to the exchange agent, electronically transmit their acceptance of the exchange by causing DTC to transfer the Outstanding Notes to the exchange agent in accordance with DTC’s Automated Tender Offer Program procedures for transfer. DTC will then send an agent’s message to the exchange agent. The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, which states that:

 

 

DTC is referred to herein as a “book-entry transfer facility.”

 

Acceptance of Exchange Notes

 

In all cases, we will promptly after expiration of the exchange offers issue Exchange Notes for Outstanding Notes that we have accepted for exchange under the applicable exchange offer only after the exchange agent timely receives:

 

 

By tendering Outstanding Notes pursuant to the applicable exchange offer, you will represent to us that, among other things:

 

 

In addition, each broker-dealer that is to receive Exchange Notes for its own account in exchange for Outstanding Notes must represent that such Outstanding Notes were acquired by that broker-dealer as a result of market-making activities or other trading activities and must acknowledge that it will deliver a prospectus that meets the requirements of the Securities Act in connection with any resale of the Exchange Notes. The applicable letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. See “Plan of Distribution.”

 

We will interpret the terms and conditions of the exchange offers, including the letters of transmittal and the instructions to the letters of transmittal, and will resolve all questions as to the validity, form, eligibility, including time of receipt, and acceptance of Outstanding Notes tendered for exchange. Our determinations in this regard will

be final and binding on all parties. We reserve the absolute right to reject any and all tenders of any particular Outstanding Notes not properly tendered or to not accept any particular Outstanding Notes if the acceptance might, in our or our counsel’s judgment, be unlawful. We also reserve the absolute right to waive any defects or irregularities as to any particular Outstanding Notes prior to the expiration date.

 

Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes for exchange must be cured within such reasonable period of time as we determine. Neither we, the exchange agent, nor any other person will be under any duty to give notification of any defect or irregularity with respect to any tender of Outstanding Notes for exchange, nor will any of them incur any liability for any failure to give notification. Any Outstanding Notes received by the exchange agent that are not properly tendered and as to which the irregularities have not been cured or waived will be returned by the exchange agent to the tendering holder, unless otherwise provided in the applicable letter of transmittal, promptly after the expiration date.

 

Book-Entry Delivery Procedures

 

Promptly after the date of this prospectus, the exchange agent will establish an account with respect to the Outstanding Notes at DTC and, as the book-entry transfer facility, for purposes of the exchange offers. Any financial institution that is a participant in the book-entry transfer facility’s system may make book-entry delivery of the Outstanding Notes by causing the book-entry transfer facility to transfer those Outstanding Notes into the exchange agent’s account at the facility in accordance with the facility’s procedures for such transfer. To be timely, book-entry delivery of Outstanding Notes requires receipt of a confirmation of a book-entry transfer, a “book-entry confirmation,” prior to the expiration date. In addition, although delivery of Outstanding Notes may be effected through book-entry transfer into the exchange agent’s account at the book-entry transfer facility, the applicable letter of transmittal or a manually signed facsimile thereof, together with any required signature guarantees and any other required documents, or an “agent’s message,” as defined below, in connection with a book-entry transfer, must, in any case, be delivered or transmitted to and received by the exchange agent at its address set forth on the cover page of the applicable letter of transmittal prior to the expiration date to receive Exchange Notes for tendered Outstanding Notes, or the guaranteed delivery procedure described below must be complied with. Tender will not be deemed made until such documents are received by the exchange agent. Delivery of documents to the book-entry transfer facility does not constitute delivery to the exchange agent.

 

Holders of Outstanding Notes who are unable to deliver confirmation of the book-entry tender of their Outstanding Notes into the exchange agent’s account at the book-entry transfer facility or all other documents required by the applicable letter of transmittal to the exchange agent on or prior to the expiration date must tender their Outstanding Notes according to the guaranteed delivery procedures described below.

 

Guaranteed Delivery Procedures

 

If you wish to tender your Outstanding Notes but your Outstanding Notes are not immediately available or you cannot deliver your Outstanding Notes, the applicable letter of transmittal or any other required documents to the exchange agent or comply with the procedures under DTC’s Automatic Tender Offer Program in the case of Outstanding Notes, prior to the expiration date, you may still tender if:

 

 

 

Upon request, the exchange agent will send to you a notice of guaranteed delivery if you wish to tender your Outstanding Notes according to the guaranteed delivery procedures.

 

Withdrawal Rights

 

Except as otherwise provided in this prospectus, you may withdraw your tender of Outstanding Notes at any time prior to 12:00 midnight, New York City time, on the expiration date.

 

For a withdrawal to be effective:

 

 

Any notice of withdrawal must:

 

 

If certificates for Outstanding Notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, you must also submit:

 

 

If Outstanding Notes have been tendered pursuant to the procedures for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn Outstanding Notes and otherwise comply with the procedures of the facility. We will determine all questions as to the validity, form, and eligibility, including time of receipt of notices of withdrawal and our determination will be final and binding on all parties. Any Outstanding Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offers. Any Outstanding Notes that have been tendered for exchange but that are not exchanged for any reason will be promptly returned to their holder, without cost to the holder, or, in the case of book-entry transfer, the Outstanding Notes will be promptly credited to an account at the book-entry transfer facility, promptly after withdrawal or termination of the applicable exchange offer. Properly withdrawn Outstanding Notes may be retendered by following the procedures described under “— Procedures for Tendering Outstanding Notes” above at any time on or prior to the expiration date.

 

prospectus or of the letters of transmittal, and requests for notices of guaranteed delivery to the exchange agent addressed as follows:

 

 

If you deliver the letter of transmittal to an address other than the one set forth above or transmit instructions via facsimile other than the one set forth above, that delivery or those instructions will not be effective.

 

Fees and Expenses

 

The registration rights agreements provide that we will bear all expenses in connection with the performance of our obligations relating to the registration of the Exchange Notes and the conduct of the exchange offers. These expenses include registration and filing fees, accounting and legal fees and printing costs, among others. We will pay the exchange agent reasonable and customary fees for its services and reasonable out-of-pocket expenses. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for customary mailing and handling expenses incurred by them in forwarding this prospectus and related documents to their clients that are holders of Outstanding Notes and for handling or tendering for such clients.

 

We have not retained any dealer-manager in connection with the exchange offers and will not pay any fee or commission to any broker, dealer, nominee or other person, other than the exchange agent, for soliciting tenders of Outstanding Notes pursuant to the exchange offers.

 

Accounting Treatment

 

We will record the Exchange Notes in our accounting records at the same carrying value as the Outstanding Notes, which is the aggregate principal amount as reflected in our accounting records on the date of exchanges. Accordingly, we will not recognize any gain or loss for accounting purposes upon the consummation of the exchange offers. We will record the costs of the exchange offers as incurred.

 

Transfer Taxes

 

We will pay all transfer taxes, if any, applicable to the exchanges of Outstanding Notes under the exchange offers. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:

 

 

If satisfactory evidence of payment of such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed to that tendering holder.

 

Holders who tender their Outstanding Notes for exchange will not be required to pay any transfer taxes. However, holders who instruct us to register Exchange Notes in the name of, or request that Outstanding Notes not tendered or not accepted in the exchange offers be returned to, a person other than the registered tendering holder will be required to pay any applicable transfer tax.

Consequences of Failure to Exchange

 

If you do not exchange your Outstanding Notes for Exchange Notes under the exchange offers, your Outstanding Notes will remain subject to the restrictions on transfer of such Outstanding Notes:

 

 

In general, you may not offer or sell your Outstanding Notes unless they are registered under the Securities Act or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the Outstanding Notes under the Securities Act.

 

Other

 

Participating in the exchange offers is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take.

 

We may in the future seek to acquire untendered Outstanding Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any Outstanding Notes that are not tendered in the exchange offers or to file a registration statement to permit resales of any untendered Outstanding Notes.

USE OF PROCEEDS

 

The exchange offers are intended to satisfy our obligations under the registration rights agreements. We will not receive any cash proceeds from the issuance of the Exchange Notes.

 

We used the net proceeds from the offering of the Outstanding Notes, together with borrowings under the new Senior Credit Facility, to finance a portion of the March 2007 Merger. We contributed the debt proceeds, after payment of fees and expenses, to a newly formed, wholly owned subsidiary, which then loaned such net proceeds to GNC Parent Corporation. GNC Parent Corporation used those proceeds, together with the equity contributions, to pay the merger consideration, and pay fees and expenses related to the March 2007 Merger.

CAPITALIZATION

 

The following table sets forth our capitalization as of March 31, 2007 and should be read in conjunction with “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and their notes included in this prospectus.

 

 

The unaudited pro forma consolidated statements of operations for the year ended December 31, 2006 and the three months ended March 31, 2007 give effect to the March 2007 Merger as if they had occurred as of January 1, 2006. Because the merger was consummated on March 16, 2007, the effects of the merger are already reflected in the March 31, 2007 unaudited balance sheet included elsewhere in this prospectus. Therefore, a pro forma balance sheet as of March 31, 2007 is not presented.

 

The unaudited pro forma consolidated financial data are based on currently available information and certain assumptions that we believe to be reasonable under the circumstances. They are not necessarily indicative of our financial position or results of operations that would have occurred had the March 2007 Merger, taken place on the date indicated, nor are they necessarily indicative of future results. In accordance with SEC Staff Accounting Bulletin Topic 5J, the unaudited pro forma consolidated financial data have been prepared giving effect to the merger that is part of the March 2007 Merger, which was accounted for as a purchase in accordance with SFAS No. 141, “Business Combinations.” Under purchase accounting, the total acquisition consideration will be allocated to our assets and liabilities based upon management’s preliminary estimates of fair value. The pro forma adjustments reflect our preliminary estimates of the purchase price allocation, which are expected to change upon finalization of appraisals and other valuation studies that we will arrange to obtain after the closing of the March 2007 Merger. The final allocation of the acquisition consideration will be based upon, among other things, management’s consideration of various resources including a final valuation analysis prepared by an independent valuation firm. Any adjustments based on that final allocation may change these preliminary allocations of the acquisition consideration, which could affect the fair value assigned to the assets and liabilities and could differ materially from the unaudited pro forma consolidated financial data presented in this prospectus.

 

The unaudited pro forma consolidated statements of operations do not present the effect of non-recurring charges resulting from the March 2007 Merger as a result of the redemption premiums of $39.5 million related to the redemption of the existing debt, write-off of deferred financing fees of $13.9 million related to the existing debt, discretionary payments of $9.2 million, success bonus payments of $1.9 million and employer payroll taxes related to these payments of approximately $1.0 million. Apollo management termination fee of $7.5 million, advisor fees of $25.0 million, and the effect of expense related to the purchase accounting adjustment to inventory of $14.0 million.

 

The unaudited pro forma consolidated financial data are presented for informational purposes only and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical consolidated financial statements and accompanying notes included in this prospectus.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The selected consolidated financial data presented below as of and for the years ended December 31, 2006, 2005 and 2004 are derived from our audited consolidated financial statements and their notes included in this prospectus. The selected consolidated financial data presented below and for the 27 days ended December 31, 2003 and the period ended December 4, 2003 and as of and for the year ended December 31, 2002 are derived from our audited consolidated financial statements and their notes, which are not included in this prospectus. The selected consolidated financial data as of and for the period from January 1, 2003 to December 4, 2003 and data as of and for the years ended December 31, 2002 and 2001 represent the periods during which General Nutrition Companies, Inc. was owned by Numico.

 

The selected consolidated financial data presented below as of March 31, 2007, for the sixteen days ended March 31, 2007, for the period ended March 15, 2007, and for the three months ended March 31, 2006 are derived from our unaudited consolidated financial statements and the related notes included in this prospectus, and the consolidated financial data as of March 31, 2006 is derived from our unaudited consolidated financial statements and their notes not included in this prospectus, and include, in the opinion of management, all adjustments necessary for a fair statement of our financial position and operating results for those periods and as of those dates. Our results for interim periods are not necessarily indicative of our results for a full year’s operations.

 

On December 5, 2003, we acquired 100% of the outstanding equity interests of General Nutrition Companies, Inc. from Numico in a business combination accounted for under the purchase method of accounting. As a result, the financial data presented for 2003 include a predecessor period from January 1, 2003 through December 4, 2003 and a successor period from December 5, 2003 through December 31, 2003. The selected consolidated financial data for the period from January 1, 2003 to December 4, 2003 represent the period in 2003 that General Nutrition Companies, Inc. was owned by Numico. The selected consolidated financial data for the 27 days ended December 31, 2003 represent the period of operations in 2003 after the Numico acquisition.

 

As a result of the Numico acquisition, the consolidated statements of operations for the successor periods include the following: interest and amortization expense resulting from the December 2003 Senior Credit Facility and issuance of senior subordinated notes in December 2003 and senior notes in January 2005; amortization of intangible assets related to the Numico acquisition; and management fees that did not exist prior to the Numico acquisition. Further, as a result of purchase accounting, the fair values of our assets on the date of the Numico acquisition became their new cost basis. Results of operations for the successor periods are affected by the new cost basis of these assets.

 

On February 8, 2007, our parent corporation entered into an Agreement and Plan of Merger with GNC Acquisition Inc. and its parent company, GNC Acquisition Holdings Inc., pursuant to which GNC Acquisition Inc. agreed to merge with and into GNC Parent Corporation, and as a result GNC Parent Corporation would continue as the surviving corporation and a wholly owned subsidiary of GNC Acquisition Holdings Inc. (the “Merger”). This Merger was accounted for under the purchase method of accounting. As a result, the financial data presented as of March 31, 2007, and for the sixteen days ended March 31, 2007 represent a second successor period of operations.

 

As a result of the Merger, the consolidated statement of operations for the second successor period includes the following: interest and amortization expense resulting from the issuance of the Senior Floating Rate Toggle Notes and the 10.75% Senior Subordinated Notes; and amortization of intangible assets related to the Merger. Further, as a result of purchase accounting, the fair values of our assets on the date of the Merger became their new cost basis. Results of operations for the second successor period are affected by the new cost basis of these assets.

 

You should read the following financial information together with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and their related notes.