Registration of Securities by a Small-Business Issuer — Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SB-2 Registration of Securities by a Small-Business 37 184K
Issuer
2: EX-3.(I) Articles of Incorporation/Organization or By-Laws 8 21K
3: EX-3.(II) Articles of Incorporation/Organization or By-Laws 9 22K
4: EX-5 Opinion re: Legality 1 7K
5: EX-23 Consent of Experts or Counsel 1 6K
SB-2 — Registration of Securities by a Small-Business Issuer
Document Table of Contents
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Sport Show Promotions, Inc.,
----------------------------
(Exact name of registrant as specified in its charter)
Nevada 3949 74-3004552
------ ---- ----------
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
2390 Crocus Drive N, Mandan, North Dakota 58554
----------------------------------------- -----
(Address of registrant's principal executive offices) (Zip Code)
(701) 663-1302
--------------
(Registrant's Telephone Number, Including Area Code)
Deron M. Colby
MC Law Group
4100 Newport Place, Suite 660
Newport Beach, California 92660
949.250.8655
Facsimile 949.250.8656
----------------------
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
lease check the following box. [ ]
[Enlarge/Download Table]
CALCULATION OF REGISTRATION FEE
====================================== ======================== ==================== ======================= ===============
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate registration
to be registered registered per share offering price fee
-------------------------------------- ------------------------ -------------------- ----------------------- ---------------
Common Stock, $.001 par value 20,000,000 $0.025 $500,000 $46.00
====================================== ======================== ==================== ======================= ===============
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
1
Preliminary Prospectus
Sport Show Promotions, Inc.,
a Nevada corporation
20,000,000 Shares of Common Stock
We are offering for sale 20,000,000 shares of our common stock in a
self-underwritten offering directly to the public. The purchase price is $0.025
per share. We are offering the shares without any underwriting discounts or
commissions. If all of the shares offered by us are purchased, the proceeds to
us will be $500,000. We may receive less than $500,000 if all of the offered
shares are not purchased.
This is our initial public offering and no public market currently exists for
shares of our common stock. This offering will terminate six months following
the effective date of this registration statement. We have not applied for
listing or quotation on any public market.
--------------------- ------------------ -------------------- --------------
Title of securities Number of offered Offering price Proceeds
to be offered shares per share
--------------------- ------------------ -------------------- --------------
Common Stock 20,000,000 $0.025 $500,000
--------------------- ------------------ -------------------- --------------
See "Risk Factors" on Pages 5 to 10 for factors to be considered before
investing in the shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. We will
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The date of this prospectus is January 25, 2002.
Subject to completion.
2
TABLE OF CONTENTS
Prospectus Summary ...........................................................4
Risk Factors..................................................................5
Forward Looking Statements...................................................10
Use of Proceeds..............................................................10
Determination of Offering Price..............................................11
Dilution.....................................................................11
Selling Security Holders.....................................................12
Plan of Distribution.........................................................12
Legal Proceedings............................................................13
Directors, Executive Officers, Promoters and Control Persons.................13
Security Ownership of Certain Beneficial Owners and Management...............14
Description of Securities....................................................14
Interest of Named Experts and Counsel........................................15
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities...................................................15
Organization Within Last Five Years..........................................15
Description of Business......................................................16
Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................................19
Description of Property......................................................20
Certain Relationships and Related Transactions...............................20
Market for Common Equity and Related Stockholder Matters.....................20
Executive Compensation ......................................................21
Financial Statements.........................................................22
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.....................................................32
Legal Matters................................................................32
Experts......................................................................32
Additional Information.......................................................32
Indemnification of Directors and Officers....................................33
Other Expenses of Issuance and Distribution..................................33
Recent Sales of Unregistered Securities......................................33
Exhibits.....................................................................34
Undertakings.................................................................34
Signatures...................................................................36
Power of Attorney............................................................37
Outside Back Cover Page
Dealer Prospectus Delivery Obligation
Until _______, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be
required to deliver a prospectus. This is in addition to the dealers'
obligations to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
3
Prospectus Summary
------------------
Our Business: Our principal business address is 2390
Crocus Drive N, Mandan, North Dakota, 58554;
our telephone number is (701) 663-1302.
We are a development stage company. Our
planned business activities include the
distribution and sale of hunting and fishing
products and accessories at discounted
prices to customers who attend sport shows.
We anticipate that we will design and
develop a website that will showcase many of
our fishing and hunting products. We also
intend to establish a physical presence at
local and regional sport shows for the
anglers and hunters of the upper Midwest. We
also anticipate that our website will
provide connecting links to other websites,
which will offer customers access to fishing
reports, fishing articles, professional
tips, and hunting information.
Summary financial information: The summary financial information set forth
below is derived from the more detailed
financial statements appearing elsewhere in
this Form SB-2. We have prepared our
financial statements contained in this Form
SB-2 in accordance with generally accepted
accounting principles in the United States.
All information should be considered in
conjunction with our consolidated financial
statements and the notes contained elsewhere
in this Form SB-2.
Income Statement For the period from inception
(June 5, 2001)
to November 30, 2001
$
Revenues 0
Net Income (Loss) (2,820)
Net Income (Loss) Per Share (0.00)
Balance Sheet November 30, 2001
$
Total Assets 4,947
Total Current Liabilities 67
Shareholders' Equity (Deficit) (120)
Our state of organization: We were incorporated in Nevada on June 5,
2001.
Number of shares being offered: We are offering for sale 20,000,000 shares
of our common stock. We will sell the shares
we are registering only to those individuals
who have received a copy of the prospectus.
Number of shares outstanding 2,700,000 shares of our common stock are
after the offering: currently issued and outstanding. If all the
offered shares are sold, 22,700,000 shares
of our common stock will be issued and
outstanding after the offering.
Estimated use of We will receive $500,000 if all of the
proceeds: offered shares are sold. We intend to use
any proceeds from such sale for website
development, inventory, marketing expenses
and for working capital.
4
RISK FACTORS
In addition to the other information in this prospectus, the following risk
factors should be considered carefully in evaluating our business before
purchasing any of our shares of common stock. A purchase of our common stock is
speculative in nature and involves a lot of risks. Any person who cannot afford
the loss of his or her entire purchase price for the offered shares should not
purchase of the offered shares because such a purchase is highly speculative and
involves significant risks. Our business objectives must also be considered
speculative, and we cannot guaranty that we will satisfy those objectives.
Purchasers of the offered shares may not realize any return on their purchase of
the offered shares. Purchasers may lose their investments in us completely.
Risks related to our business:
We may not be able to implement our business strategy unless we raise sufficient
funds in this offering, which could, in turn, prevent us from becoming
profitable.
We are a development stage company. We depend on the proceeds of this offering
in order to implement our business plan. We may not realize sufficient proceeds
from this offering to complete development of our website, or to provide us with
adequate cash flow to fund our planned marketing expenses. Our inability to
raise sufficient funds in this offering may significantly hinder our ability to
complete development of our website. If we fail to raise sufficient funds in
this offering, investors may lose their entire cash investment. If we are unable
to raise sufficient funds in this offering, our ability to generate revenues
will be harmed.
We have a limited operating history upon which an evaluation of our prospects
can be made; therefore, an investment in us should be considered extremely
speculative and should not be made by anyone who is not in a position to lose
their entire investment.
We were incorporated in June 2001. Our lack of operating history makes an
evaluation of our business and prospects very difficult. Our prospects must be
considered speculative, considering the risks, expenses, and difficulties that
are frequently encountered in the establishment of a new business. We cannot be
certain that our business will be successful or that we will generate
significant revenues; therefore, an investment in us must be considered
extremely speculative and should not be made by anyone who is not in a position
to lose their entire investment.
We have incurred a net loss since inception and expect to incur net losses for
the foreseeable future which could cause the value of our common stock to
decrease significantly.
As of November 30, 2001, our losses since our inception on June 5, 2001 were
approximately $2,820. We expect to incur significant operating and capital
expenditures and, as a result, we expect significant net losses in the future.
We will need to generate significant revenues to realize our business objectives
and achieve and maintain profitability. We may not be able to generate
sufficient revenues to achieve profitable operations. Extended periods of losses
would likely decrease the value of our stock and harm our ability to raise
revenues and operate profitably.
We may need to raise additional capital to market our products. Our failure to
raise additional capital will limit any proposed marketing activities.
To market our fishing and hunting related products and accessories, we may be
required to raise funds in addition to the funds we hope to raise in this
offering. We do not know if we will be able to acquire additional financing at
commercially reasonable rates. We anticipate that we will spend significant
funds on the marketing and promotion of our products. Our failure to obtain
additional funds would significantly limit or eliminate our ability to fund our
marketing activities. If we are not able to fund our planned marketing efforts,
our ability to generate interest in our proposed products and services will be
harmed. As a result, our ability to sell our proposed products will be harmed
resulting in a diminished capacity to operate profitably.
5
If we do not expand the markets within which we offer our products and fail to
further develop our website, our business may fail.
Until our website is fully developed and functional, our only potential source
of revenue is selling fishing and hunting related products and accessories at
sport shows attended by outdoor enthusiasts in North Dakota. We intend to sell
our products on our proposed website. We also intend to expand our sales to
customers at sport shows in other midwestern states other than North Dakota.
There is no guaranty we will be able to expand our operations, however. We must
expand the markets in which we offer our products and continue to develop our
website to facilitate and promote online sales. In order to operate profitably,
we must also develop other sources of revenue. Demand and market acceptance for
our products is uncertain and may not increase as necessary for our business to
increase or succeed.
If there is a decrease in the purchase of products over the Internet or if our
website fails to attract a sufficient number of visitors, our ability to earn
revenues will be harmed.
The use of the Internet to purchase hunting and fishing related products,
particularly by individuals that have historically relied on traditional methods
of buying such products, requires the acceptance of a new method of shopping for
those goods. We cannot be sure that fishing and hunting enthusiasts will use our
services. If either the Internet generally and, in particular, our website,
fails to develop or develop more slowly than we expect, we may not generate
revenues and our business may fail.
The Internet as an informational and shopping medium is relatively new and
rapidly evolving, and it is uncertain whether the Internet will achieve and
sustain high levels of demand and market acceptance, particularly with respect
to the purchase of products related to fishing and hunting activities. Our
success will depend to a substantial extent on the willingness of consumers to
increase their use of online services as a method to purchase such goods. Our
success will depend upon the acceptance of our online service as a significant
means to market and sell outdoor products. Moreover, our growth will depend on
the extent to which an increasing number of consumers own or have access to
personal computers or other systems that can access the Internet. If e-commerce
or Internet-generated sales of fishing and hunting related products and
accessories does not achieve high levels of demand and market acceptance, our
business may fail.
We will depend on independent suppliers for our hunting and fishing related
accessories and equipment and an interruption in those services coupled with our
inability to arrange for alternate sources of such services will harm our
ability to earn revenues.
We will not manufacture the products we propose to sell, but plan to obtain them
from third parties. Because sales of our hunting and fishing related accessories
and equipment are our only planned source of revenue, we will rely on
independent manufacturers as sources for these products. We anticipate that
several different manufacturers and suppliers will serve as the source of the
products that we plan to sell. In the event that our supplies of these products
are interrupted, we would be required to find other sources, or we would be
unable to continue operations. Our failure to develop other relationships with
manufacturers will significantly affect our ability to generate revenues.
We do not have any written agreements with any suppliers of the products we plan
to sell, and as such, none of these sources of our products that we plan to
carry has any obligation to provide us with these products. These suppliers may
terminate their relationships with us at any time. In the event that these
suppliers terminate their relationships with us, we will not be able to offer
our proposed products until we establish relationships with other such
providers. We cannot guaranty that we will be able to obtain our products from
alternative suppliers. Failure to obtain alternative sources will significantly
hinder our ability to generate revenues.
6
If we fail to anticipate changes in consumer preferences, we may experience
lower sales revenues than we expect on our proposed website.
Our proposed tradeshow booth and proposed website must appeal to a specific
group of consumers, namely, avid hunters and anglers in North Dakota. We may
experience difficulty in predicting preferences with any certainty. Preferences
are also subject to rapid change. Our success will likely depend upon our
ability to anticipate and respond in a timely manner to trends in the types and
breadth of relevant products that will be of interest to outdoor enthusiasts. We
also must operate a website that will serve the needs of hunters and anglers and
sustain interest. If we fail to identify and respond to changes in preference,
visits to our website may decline which would likely lead to a decrease in sales
revenues.
Because hunting and fishing are seasonal activities, our profitability may vary
depending on the weather and the particular season.
Purchases of our proposed products from either sport show displays or from our
proposed website may be highly seasonal and in many instances may be dependent
on weather conditions, which may in turn cause our financial results to vary
from quarter to quarter. Hunting and fishing, along with other outdoor
recreational activities are affected by weather changes, periods of drought or
severe temperatures, rain and snow, and as well as by the seasonal availability
of game and fish. We believe that hunting and fishing activities generally
increase in the warmer months of summer and spring and decrease during the
colder months of winter and fall. We believe that our operating results may
improve during the peak months of fishing and hunting activity. State or
regional regulations governing hunting or fishing seasons will also affect
traffic on our website and the purchase of our proposed products. Additionally,
revenue projections will be difficult given the general unpredictability of
weather. For instance, a particularly harsh winter could discourage even the
most devoted outdoorsman, thus leading to less need for the products we sell. In
addition, a particularly hot summer could discourage outdoor activity as well.
Our website must successfully compete with other sources of hunting and fishing
related goods in order for us to succeed; as a result, if we are not able to
compete with other sources of hunting and fishing products, our ability to earn
revenues will likely be harmed.
The online hunting and fishing related product market is intensely competitive
and we will face direct competition from traditional and other online sources of
these products, including brick and mortar stores which advertise in magazines
and on television programs devoted to outdoors enthusiasts, in addition to
websites which offer similar products. Our competitors will include Big 5
Sporting Goods, Oshman's, Reeds Sporting Goods, Quantum Fishing, and Beaver
Flick Tackle Co., and other specialized or discount sporting goods stores that
promote their goods on the Internet, as well as general shopping sites such as
Yahoo!, Amazonsports.com, and specialized sites, such as Dickssportinggoods.com,
beOutdoors.com, RutandStrut.com, Sportfishtackle.com, and Basspro.com, which are
all other sources of these types of products.
Because technological barriers to entry are extremely low, additional
competitors on the Internet may enter our market. As a result, we must provide
our users with value added products and combinations of products that are
quality-orientated, innovative and cost-competitive. In order to remain
competitive, we may need to promote our products by means of sample give-aways
which could force us to expend additional resources. We will also need to expand
our products and develop unique sources of revenue including updating our
website and finding innovative ways of attracting users to our website. If we
cannot compete with other sources of similar products, our ability to earn
revenues will suffer.
Our internal and hosted network infrastructure could be disrupted, which would
harm our ability to operate and interfere with our ability to earn revenue.
7
We anticipate that we will house all of the data stored on our website on
equipment that we own or that our Internet service provider operates on our
behalf. We have not yet contracted with any Internet service provider for
hosting services and providing bandwidth. A malfunction, interruption or loss of
any of these services to our proposed website could result in damage to or loss
of our users' data and interrupt our services. Our revenues could decline and we
could lose existing or potential subscribers of our services if they are not
able to access their stored data, or if our website does not perform to our
users' satisfaction. Moreover, if first-time users are unable to access our
website because of interference, they may never return and our reputation will
suffer. If existing customers are not able to access our proposed website or
there are prolonged interruptions in our services, even existing customers may
not return to our proposed website. Any network interruptions or problems with
our website could:
o prevent subscribers from accessing data stored on our website;
o reduce the number of new users we register;
o cause subscriber dissatisfaction; or
o damage our reputation.
A technical failure at any Internet service provider we may use may cause our
website to be unavailable to Internet users over an extended period. Moreover,
an outage may result from a failure of certain storage equipment, technical
support provided by a third party supplier, fire, flood, power loss,
telecommunications failure, physical and electronic break-ins, earthquakes or
other similar events. For example, our primary data center will be located in
North Dakota, a region subject to severe weather. Severe cold could shut down
services for an extended period of time. Furthermore, if we employ servers, they
will be vulnerable to computer viruses, physical or electronic break-ins and
similar disruptions. Any substantial disruption could impair our ability to
generate revenues from our website.
The reliability of market data included in this prospectus is uncertain and, as
such, prospective purchasers of shares should not rely heavily on such data in
making an investment decision.
Since we are a new company and operate in a new and rapidly changing market, we
have included market data from industry publications. The reliability of this
data cannot be assured. Market data and information used throughout this
prospectus was obtained from internal company surveys and industry publications.
Industry publications generally state that the information contained in these
publications has been obtained from sources believed to be reliable, but that
its accuracy and completeness is not guaranteed. Although we believe market data
used in this prospectus to be reliable, it has not been independently verified.
Similarly, internal company surveys, which we believe to be reliable, have not
been verified by any independent sources.
If we cannot successfully develop and implement our proposed website, we may not
be able to operate profitably.
We believe that we need a well designed website to operate our business and to
successfully implement our growth strategy. Our proposed systems include
integrated merchandising, point of sale, warehouse and financial systems. We are
in the process developing our website. If we experience problems with the
development and operation of our site, we may incur significant costs and
interruptions to our business, which could harm our ability to operate
profitably. We cannot give assurances that our website will operate successfully
or as planned. Failure to smoothly implement our website and its associated
features could impair our ability to track key customer data, order inventory,
control our costs and could otherwise impair our operations and ability to
generate revenues.
We may be liable for products that we sell. Any claims or adverse judgments
against us may reduce our financial resources or hinder our reputation.
We face an inherent risk of exposure to product liability claims if the use of
our products results in illness or injury. If we do not have adequate insurance
or contractual indemnification, product liability claims could significantly
reduce our financial resources. Manufacturers and distributors of fishing and
hunting related equipment, including rods, reels, hooks and lures, along with
guns, ammunition, decoys, camouflage items and associated products have been
named as defendants in product liability lawsuits from time to time. The
successful assertion or settlement of an uninsured claim, a significant number
of insured claims or a claim exceeding the limits of any insurance coverage that
we may acquire would harm us by adding additional costs to our business and by
diverting the attention of our senior management from the operation of our
business. A significant diversion of funds away from advancing our business
would harm our ability to raise revenue.
8
Our auditors have described our ability to continue operations as a "going
concern." Investors may lose all of their investment if we are unable to
continue operations.
We hope to obtain revenues from products we plan to sell, but there is no
guarantee we will be able to generate sufficient revenues in the manner we
project. We also hope to raise sufficient funds through this offering to pay
certain development and marketing costs. If we are not able to raise sufficient
funds from this offering or if we are unable to generate sufficient sales and
profits, we may seek to raise additional funds to meet our working capital needs
principally through loans. However, we cannot guaranty that we will be able to
obtain sufficient additional funds when needed, or that such funds, if
available, will be obtainable on terms satisfactory to us. As a result, our
auditors believe that substantial doubt exists about our ability to continue
operations.
Because our officers and directors do not devote their full business time to our
business, we may not be able to implement our business plan and our business may
fail.
Our officers and directors currently do not work full time on our business, but
anticipate devoting significantly more hours if we begin generating significant
revenues. Currently, our officers are full-time employees at the Tesoro Refinery
located in Mandan, North Dakota. As such, they each are only able to devote
approximately 10 hours per week on our business activities. We cannot guaranty
that our officers or directors will be able to devote sufficient amounts of
their business time to enable us to implement our business plan. If our officers
or directors do not devote a sufficient amount of their business time to the
management of our business, then our business may fail.
Risks related to this offering:
Depending on the number of shares sold in this offering, our officers, directors
and principal security holders could own a significant percentage of our
outstanding shares of common stock, allowing these shareholders to control
matters requiring approval of our shareholders.
Our directors, officers and principal security holders beneficially own
approximately 92.59% of our outstanding shares of common stock prior to the sale
of any of the offered shares. The more offered shares that are sold, the lower
percentage ownership. Depending on the number of offered shares sold, our
officers, directors and principal shareholders could continue to own a large
percentage of our total issued and outstanding stock. See the ownership chart on
page 14 of this prospectus for more detail. Such concentrated control of the
company may adversely affect the price of our common stock. Our principal
security holders may be able to control matters requiring approval by our
security holders, including the election of directors. Such concentrated control
may also make it difficult for our shareholders to receive a premium for their
shares of our common stock in the event we merge with a third party or enter
into different transactions which require shareholder approval. In addition,
certain provisions of Nevada law could have the effect of making it more
difficult or more expensive for a third party to acquire, or of discouraging a
third party from attempting to acquire, control of us.
Because we will be subject to the "penny stock" rules, the level of trading
activity in our stock may be reduced, which may make it difficult for investors
in our common stock to sell their shares.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks, like shares of our common stock, generally are equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on Nasdaq. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, broker-dealers who sell these securities to persons other than
established customers and "accredited investors" must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Consequently,
these requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security subject to the penny
stock rules, and investors in our common stock may find it difficult to sell
their shares.
9
We arbitrarily determined the offering price of the shares of common stock.
Therefore, investors may lose all or part of their investment if the offering
price is higher than the current market value of the offered shares.
The offering price of the shares of our common stock has been determined
primarily by our capital requirements and has no relationship to any established
criteria of value, such as book value or earnings per share. Additionally,
because we have no significant operating history and have not generated any
significant revenues to date, the price of the shares of common stock is not
based on past earnings, nor is the price of the shares indicative of current
market value for the assets we own. Investors could lose all or a part of their
investment if the offering price has been arbitrarily set too high. Even if a
public trading market develops for our common stock, the shares may not attain
market values commensurate with the offering price.
We lack a public market for shares of our common stock, which may make it
difficult for investors to sell their shares.
There is no public market for shares of our common stock. We cannot guaranty
that an active public market will develop or be sustained. Therefore, investors
may not be able to find purchasers for their shares of our common stock. Should
there develop a significant market for our shares, the market price for those
shares may be significantly affected by such factors as our financial results
and introduction of new products and services. Factors such as announcements of
new or enhanced services by us or our competitors and quarter-to-quarter
variations in our results of operations, as well as market conditions in our
sector may have a significant impact on the market price of our shares. Further,
the stock market has experienced extreme volatility that has particularly
affected the market prices of stock of many companies and that often has been
unrelated or disproportionate to the operating performance of those companies.
We may not realize sufficient proceeds from this offering to implement our
business plan because we are offering shares in a direct public offering, rather
then using the experience of a broker-dealer.
We are offering shares in a self-underwritten offering directly to the public.
No individual, firm, or corporation has agreed to purchase any of the offered
shares. We cannot guaranty that any or all of the shares will be sold. We do not
plan to use a broker-dealer, even though a broker-dealer may have more
experience, resources or contacts to more effectively sell shares. A delay in
the sale of the shares in this offering could cause us a similar delay in
implementing our business plan.
Forward Looking Statements
--------------------------
Information in this prospectus contains "forward looking statements" which can
be identified by the use of forward-looking words such as "believes",
"estimates", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", "will", or "should" or other variations or similar
words. No assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to those
forward-looking statements, including certain risks and uncertainties that could
cause actual results to vary materially from the future results anticipated by
those forward-looking statements. Among the key factors that have a direct
bearing on our results of operations are the effects of various governmental
regulations, the fluctuation of our direct costs and the costs and effectiveness
of our operating strategy. Other factors could also cause actual results to vary
materially from the future results anticipated by those forward-looking
statements.
Use of Proceeds
---------------
We will receive up to $500,000 if all of the shares of common stock offered by
us at $0.025 per share are purchased. We cannot guaranty that we will sell any
or all of the shares we are offering for sale. We estimate that our proceeds
will be used in the following manner:
10
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============================= ======================== ================== ================== ====================================
Offered Shares Sold Offering Proceeds Approximate Total Net Principal Uses of Net Proceeds
Offering Expenses Offering Proceeds
----------------------------- ------------------------ ------------------ ------------------ ------------------------------------
Website Development, Inventory,
5,000,000 shares (25%) $125,000 $16,196 $108,804 Marketing Expenses Working Capital
----------------------------- ------------------------ ------------------ ------------------ ------------------------------------
Website Development, Inventory,
10,000,000 shares (50%) $250,000 $16,196 $233,804 Marketing Expenses Working Capital
----------------------------- ------------------------ ------------------ ------------------ ------------------------------------
Website Development, Inventory,
15,000,000 shares (75%) $375,000 $16,196 $358,804 Marketing Expenses Working Capital
----------------------------- ------------------------ ------------------ ------------------ ------------------------------------
Website Development, Inventory,
20,000,000 shares (100%) $500,000 $16,196 $483,804 Marketing Expenses Working Capital
============================= ======================== ================== ================== ====================================
The order of priority for the uses of proceeds is as follows: website
development, marketing expenses, inventory and working capital. Working capital
will be used to pay general administrative expenses including legal expenses and
accounting expenses for the next twelve months. Those expenses may increase if
we are able to increase the level of our operations and marketing activities.
Marketing expenses include costs associated with in person marketing
presentations to potential customers, including travel and entertainment
expenses. Marketing expenses also include development, preparation and printing
of marketing materials, such as brochures and catalogs.
Determination of Offering Price
-------------------------------
Factors Used to Determine Share Price. The offering price of the 20,000,000
shares of common stock being offered by us has been determined primarily by our
capital requirements and has no relationship to any established criteria of
value, such as book value or earnings per share. Additionally, because we have
no significant operating history and have not generated any revenues to date,
the price of the shares of common stock is not based on past earnings, nor is
the price of the shares indicative of current market value for the assets we
own. No valuation or appraisal has been prepared for our business and potential
business expansion.
Dilution
--------
We intend to sell 20,000,000 shares of our common stock being registered by this
registration statement. The following table sets forth the number of shares of
common stock purchased from us, the total consideration paid and the price per
share. The table assumes all 20,000,000 shares of common stock will be sold.
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======================== ========================================= ====================================== ==================
Shares Issued Total Consideration Price
Per Share
----------------------------------------- ------------------------------------- ------------------
Number Percent Amount Percent
------------------------ ---------------------- ------------------ ------------------- ------------------ ------------------
Founding Shareholders 2,700,000 Shares 11.89% $2,700 00.54% $0.001
------------------------ ---------------------- ------------------ ------------------- ------------------ ------------------
Purchasers of Shares 20,000,000 Shares 88.11% $500,000 99.46% $0.025
======================== ====================== ================== =================== ================== ==================
Total 22,700,000 Shares 100% $502,700 100%
======================== ====================== ================== =================== ================== ==================
11
The following table sets forth the difference between the offering price of the
shares of our common stock being offered by us, the net tangible book value per
share, and the net tangible book value per share after giving effect to the
offering by us, assuming that all of the shares of the common stock offered by
us are sold. Net tangible book value per share represents the amount of total
tangible assets less total liabilities divided by the number of shares
outstanding as of November 30, 2001.
------------------------------------------------------------ ------------------
Offering Price $0.025 per share
------------------------------------------------------------ ------------------
Net tangible book value at November 30, 2001 $0.00 per share
------------------------------------------------------------ ------------------
Net tangible book value after giving effect to the offering $0.022 per share
------------------------------------------------------------ ------------------
Per Share Dilution to New Investors $0.003 per share
------------------------------------------------------------ ------------------
Percent Dilution to New Investors 12%
------------------------------------------------------------ ------------------
Selling Security Holders
------------------------
There are no selling security holders in this offering.
Plan of Distribution
--------------------
We are offering for sale 20,000,000 shares of our common stock in a
self-underwritten offering directly to the public. We have not conducted any
discussions or negotiations for the sale of all or any portion of those
20,000,000 shares of our common stock. There is no minimum number of shares that
must be purchased by each prospective purchaser. The maximum number of shares we
will sell is 20,000,000. We will not pay any commissions or other fees, directly
or indirectly to any person or firm in connection with solicitation of sales of
the common stock. There are no minimum proceeds required to be sold for this
offering.
Clay Koenig, our president, treasurer and one of our directors, will participate
in the offer and sale of our shares of common stock, and rely on the safe harbor
from broker-dealer registration set out in Rule 3a4-1 under the Securities
Exchange Act of 1934. Although Mr. Koenig is an associated person of the company
as that term is defined in Rule 3a4-l under the Exchange Act, he is deemed not
to be a broker for the following reasons:
o Mr. Koenig is not subject to a statutory disqualification as that term
is defined in Section 3(a)(39) of the Exchange Act at the time of his
participation in the sale of our securities.
o Mr. Koenig will not be compensated for his participation in the sale
of company securities by the payment of commissions or other
remuneration based either directly or indirectly on transactions in
securities.
o Mr. Koenig is not an associated person of a broker or dealer at the
time of participation in the sale of company securities.
Mr. Koenig will restrict his participation to the following activities:
o Preparing any written communication or delivering any communication
through the mails or other means that does not involve oral
solicitation by the President of a potential purchaser;
o Responding to inquiries of potential purchasers in communications
initiated by the potential purchasers, provided, however, that the
content of responses are limited to information contained in this
registration statement and any amendments filed hereto filed under the
Securities Act or other offering document; and
o Performing ministerial and clerical work involved in effecting any
transaction.
We have not retained a broker for the sale of securities being offered. In the
event we retain a broker who may be deemed an underwriter, we will file an
amendment to the registration statement.
The shares of common stock we are offering have not been registered for sale
under the securities laws of any state as of the date of this prospectus. We
intend to register or qualify the offered shares in the following state: North
Dakota.
12
To comply with the qualification provisions in North Dakota, the proceeds from
the sale of those shares in North Dakota will be deposited in an interest
bearing escrow account with an impoundment agent. The impoundment agent will be
a financial institution located in the State of North Dakota. The North Dakota
Securities Commission will execute the impoundment agreement if and when our
offer of securities is registered within that state. As such, we will not have
access to the use of funds so raised, if and until the requirements of the North
Dakota Securities Commission are met.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any
person engaged in a distribution of the shares of our common stock offered by
this prospectus may not simultaneously engage in market making activities with
respect to our common stock during the applicable "cooling off" periods prior to
the beginning of such distribution.
Legal Proceedings
-----------------
There are no legal actions pending against us nor are any legal actions
contemplated by us at this time.
Directors, Executive Officers, Promoters and Control Persons
------------------------------------------------------------
Our directors and principal executive officers are as specified on the following
table:
==================== =============== ==========================================
Name Age Position
-------------------- --------------- ------------------------------------------
Clay Koenig 40 president, treasurer and a director
-------------------- --------------- ------------------------------------------
Franklin Buchholz 36 vice president, secretary and a director
-------------------- --------------- ------------------------------------------
Chad Renner 29 director
===================================== =============== =========================
Clay Koenig, 40. Mr. Koenig has been our president, treasurer, and director
since our inception. Mr. Koenig is responsible for the management of our
day-to-day operations. Since 1989, Mr. Koenig has been employed by Tesoro
Petroleum Refinery, formerly the B.P. Amoco Refinery, of Mandan, North Dakota.
Mr. Koenig is an outside asset operator for the refinery, where he is
responsible for maintenance and dependability of refinery process equipment. Mr.
Koenig, who has participated in local walleye fishing tournaments since 1989,
has earned three First Place wins and seven Top 10 finishes. As such, he brings
his expertise and enthusiasm for the outdoors, particularly fishing, to our
operations, and has knowledge of sport fishing equipment and products. Mr.
Koenig will serve as our buyer and marketing executive for fishing tackle and
accessories. Mr. Koenig is not an officer or director of any other company.
Franklin L. Buchholz, 36. Mr. Buchholz has been our vice president, secretary,
and director since our inception. Since 1991, Mr. Franklin has been employed by
Tesoro Petroleum Refinery, formerly the B.P. Amoco Refinery, of Mandan, North
Dakota as an optimization board operator. Mr. Buchholz's duties include
operating a computerized control board, which oversees the flow of oil products
in various stages of refinement throughout the refinery. During the mid 1980's
Mr. Buchholz worked at Dave Cooks Sporting Goods selling outdoor sports
equipment, including fishing tackle and supplies. Over the years, Mr. Buchholz's
enthusiasm for the outdoors, in general, and fishing, in particular, have given
him insight into the fishing industry. Mr. Buchholz is not an officer or
director of any other company.
Chad Renner, 29, has been a one of our directors since inception. From September
2000 to the present, Mr. Renner has worked as a sales representative for Eide
Ford of Bismarck, North Dakota; his responsibilities include the retail sale of
vehicles and customer service. Mr. Renner is an avid outdoorsman and sportsman,
whose activities include wresting and fishing. Mr. Renner graduated from Oregon
State University in 1996 with a degree in Liberal Arts. In 1997 he was the
strength coach for Oregon State University's wrestling team. In 1998, Mr. Renner
moved to Atlanta, Georgia and was the head assistant coach for the Georgia State
wrestling team. In 1999-2000, he was the assistant coach for the University of
Tennessee Chattanooga wrestling team. Mr. Renner is not an officer or director
on any other company.
13
There is no family relationship between any of our officers and directors. There
are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining any of our officers or directors from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or of theft or of any felony.
Nor are any of the officers or directors of any corporation or entity affiliated
with us so enjoined.
Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of January 25, 2002, by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
[Enlarge/Download Table]
Title of Class Name and Address of Amount and Nature of Percent of Class Percent of Percent of Percent of
Beneficial Owner Beneficial Owner if no shares are Class if Class if Class if
sold 20,000,000 10,000,000 5,000,000
shares are shares are shares are
sold sold sold
--------------- ------------------------- ----------------------- ------------------ --------------- ----------------- -------------
Common Stock Clay Koenig 1,000,000 shares,
2390 Crocus Dr. N president, treasurer, 37.04% 4.41% 7.87% 12.99%
Mandan, North Dakota, director
58554
Common Stock Franklin Buchholz 1,000,000 shares,
1841 Woodmoor Pl. vice president, 37.04% 4.41% 7.87% 12.99%
Bismarck, North Dakota, secretary, director
58501
Common Stock Chad Renner 500,000 shares,
3014 Homestead Dr. director 18.52% 2.20% 3.94% 6.49%
Bismarck, North Dakota,
58503
Common Stock All directors and named
executive officers as a 2,500,000 shares 92.59% 11.01% 19.69% 32.47%
group
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.
Description of Securities
-------------------------
We are authorized to issue 25,000,000 shares of $.001 par value common stock and
10,000,000 shares of $.001 par value preferred stock. As of January 25, 2002, a
total of 2,700,000 shares of our common stock were issued and outstanding, and
no shares of our preferred stock were issued or outstanding.
14
Each shareholder of our common stock is entitled to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
our common stock are entitled to one vote for each share of record on all
matters to be voted on by shareholders. The holders of our common stock are
entitled to receive dividends when, as and if declared by our Board of Directors
from funds legally available for that purpose. Cash dividends are at the sole
discretion of our Board of Directors. In the event of our liquidation,
dissolution or winding up, the holders of common stock are entitled to share
ratably in all assets remaining available for distribution to them after payment
of our liabilities and after provision has been made for each class of stock, if
any, having any preference in relation to our common stock. Holders of shares of
our common stock have no conversion, preemptive or other subscription rights,
and there are no redemption provisions applicable to our common stock.
Dividend Policy. We have never declared or paid a cash dividend on our capital
stock. We do not expect to pay cash dividends on our common stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at the discretion
of our board of directors and subject to any restrictions that may be imposed by
our lenders.
Interest of Named Experts and Counsel
-------------------------------------
No "expert" or our "counsel" was hired on a contingent basis, or will receive a
direct or indirect interest in us, or was a promoter, underwriter, voting
trustee, director, officer, or employee of the company, at any time prior to the
filing of this registration statement.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
------------------------------------------------------------------------
Article Twelfth of our Articles of Incorporation provides, among other things,
that our officers and directors shall not be personally liable to us or our
shareholders for monetary damages for breach of fiduciary duty as an officer or
a director, except for liability:
o Acts or omissions which involve intentional misconduct, fraud or
knowing violation of the law; or
o The payment of dividends in violation of Section 78.300 of the Nevada
Revised Statutes.
Accordingly, our directors may not be liable to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless the act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders. Article V of our
Bylaws provides for, under certain circumstances, the indemnification of our
officers and directors.
Indemnification Agreements. We anticipate we will enter into indemnification
agreements with each of our executive officers. We will agree to indemnify each
such person for all expenses and liabilities, including criminal monetary
judgments, penalties and fines, incurred by such person in connection with any
criminal or civil action brought or threatened against such person by reason of
such person being or having been our officer or director or employee. In order
to be entitled to indemnification by us, such person must have acted in good
faith and in a manner such person believed to be in our best interests. With
respect to criminal actions, such person must have had no reasonable cause to
believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in that act and is, therefore, unenforceable.
Organization Within Last Five Years
-----------------------------------
Transactions with Promoters. In June 2001, we issued 1,000,000 shares of our
common stock to Clay Koenig, our president, treasurer and one of our directors,
1,000,000 shares of our common stock to Franklin Buchholz, our vice president,
secretary and one of our directors, and 500,000 shares of our common stock to
Chad Renner. These shares were in exchange for services valued at a combined
total of $2,500.
15
Description of Business
-----------------------
Our Background. We were incorporated in Nevada on June 5, 2001.
Our Business. We are a development stage company. Prior to establishing our
proposed website, our principal business activities will include the
distribution and sale of hunting and fishing products at discounted prices to
customers who attend sport shows. We anticipate that we will design and develop
a website that will showcase fishing and hunting products. We also intend to
establish a physical presence at local and regional sport shows attended by
anglers and hunters of the upper Midwest. We also anticipate that our website
will provide connecting links to other websites which offer customers access to
fishing reports, fishing articles, pro tips, and hunting information. For
example, we have already agreed to provide Internet shopping cart services to
Fishingbuddy.com, an outdoor-related website. This website features fishing and
hunting information and a unique product showcase.
Our Products. We intend to market a wide range of fishing and hunting products
manufactured by third party suppliers. We also anticipate offering these types
of products for sale in pre-packaged kits, in combinations and quantities that
we believe will be popular with anglers and hunting enthusiasts. We plan to
offer these products at discounted prices. Some of the products that we
anticipate will be part of our product line include the following:
--------------------------------- ----------------------------------------------
Supplier Product
--------------------------------- ----------------------------------------------
Hagens, Inc. Terminal tackle components, available in bulk
quantities
--------------------------------- ----------------------------------------------
Plano Molding Compartment tackle boxes, which we anticipate
using to create variety kits
--------------------------------- ----------------------------------------------
Scenic Rod and Tackle Jigs, jigging spoons, and metal cut products
such as trolling and casting spoons
--------------------------------- ----------------------------------------------
Gopher Tackle Manufacturing Co. Various original creations and baits for the
bass market
--------------------------------- ----------------------------------------------
We do not have any written agreements with the aforementioned suppliers nor have
any substantive negotiations taken place. We anticipate that substantive
negotiations will take place as soon as we are able to raise sufficient working
capital. We also intend to continually seek new product suppliers, based on the
wholesale pricing that would be available to us. We intend to compete on price
and provide a full array of hunting and angling related products and
accessories.
We believe that hunting and angling enthusiasts often have favorite products
that they routinely purchase. We will strive to provide those enthusiasts with
competitive prices. We also believe our prospective customers would be
interested in purchasing some products in combination with related goods and
accessories. Additionally, we believe these sports enthusiasts are frequently in
search of new and improved methods, equipment, and locations to increase their
odds of success. If we are not capable of providing visitors to our website with
such information, we plan to establish links to other websites which can provide
such information.
Our Industry. We believe that outdoor activities, especially fishing and
hunting, have become a priority with individuals who enjoy spending time
outdoors with friends and family. According to the 1996 National Fishing,
Hunting, and Wildlife-Associated Recreation Survey, almost 40 million persons
fished and hunted in 1996. That survey also explained that there was $72 billion
spent on food, lodging, transportation, equipment, and other expenses related to
fishing and hunting. We believe that a company that provides quality products at
reasonable prices will be positioned to profit in the hunting and fishing
accessories marketplace. We plan to provide quality products at reasonable
prices.
Also, we believe that the Internet has substantial market potential as a sales
medium for our proposed products. For example, according to BizRate's first
quarter 2000 Consumer Online(TM) Report, Internet retail sales in the first
quarter of 2000 increased by 12 percent over the prior quarter, and actual
orders increased by 6 percent.
Further, we expect the sport show environment to be a potentially profitable
venue for generating sales. We believe that sport shows are well attended by
both vendors and consumers. We believe that sports shows allow vendors to save
time in selling products to a targeted audience while enabling consumers to see
and touch a broad selection of products and displays, gather information about
new products, make purchases at a discount, socialize with like-minded
enthusiasts, and attend a variety of seminars and hands-on demonstrations all in
one location. We believe that we can capitalize on the popularity of sports
shows to sell our proposed products.
16
Our Target Markets and Marketing Strategy. We will primarily market our products
to individuals who are fishing and hunting enthusiasts. Specifically, we plan to
promote our products and attract consumers and businesses through our proposed
website. We also intend to establish tradeshow booths at local sports shows.
We intend to initially market our products in the sport show environment because
we believe sport shows allow product manufacturers, industry professionals,
sport enthusiasts, and vendors of fishing and hunting products to meet in one
physical location. In addition, we believe that sport show sponsors typically
spend significant funds and time promoting and advertising upcoming shows. Those
expenditures of funds and time could potentially generate large attendance
numbers at the shows. Such shows typically last for three to four days. Our
marketing initiatives will include:
o utilizing direct response print advertisements placed primarily in
sport show programs;
o links to related websites;
o advertising by television, radio, banners, affiliated marketing and
direct mail; and
o establishing a presence at sport show events for fishing and hunting
enthusiasts.
Also, because we believe a large portion of our revenues will come from our
proposed website, we expect to base our marketing strategy on programs designed
to show profitability as quickly as possible to build credibility with
customers, advertisers and trade show promoters. We believe that one of the ways
to do that is to maximize our proposed website's effectiveness by ensuring the
materials and products attract our "ideal visitor," that is, the person who will
become a repeat customer over a period of time. We believe that these
individuals will be hunters and anglers looking for quality merchandise at
discounted prices.
Our Tradeshow Booth. We plan to sell our products and packaged product kits
using a portable tradeshow booth that can be used at area sport shows, beginning
with shows in the Bismarck-Mandan region of North Dakota. We expect to use the
booth to showcase our products, provide information and assistance to outdoors
enthusiasts attending such sport shows. We expect to contract with a trade show
booth firm to provide us with a state-of-the-art mobile booth that will be
easily transportable to area shows. We plan to have the booth constructed to
serve several customers simultaneously, feature a designated area for special
give-aways and promotions designed to attract customers to the booth. We expect
that these promotions will feature fishing or hunting hands-on activity for
customers, uniforms for the marketing staff, and drawings sponsored by product
manufacturers. We anticipate generating a portion of our revenues from booth
sales at area shows. We have not yet entered into a contract for the
construction of our proposed booth.
Our Proposed Website. We anticipate that our website will be developed by the
webmaster and computer staff we intend to hire. We intend to design a website
which provides prospective customers with a complete listing of our available
products, as well as pages dedicated to relevant topics of interest to people
who engage in angling and hunting activities. Specifically, we plan to feature
product information, 24-hour product ordering capability, including credit card
purchases. Our proposed website will also allow customers to check the status of
their orders. We also plan to design our website to feature articles and tips,
fishing reports and hunting information, along with links to related websites of
interest to our customers. After the website is operational, we hope to expand
the scope of our Internet presence. We hope to achieve such expansion by
registering with major search engines with the goal of placing our website at
the top of search results. This typically requires pre-funding with certain
search engines. We do not currently have adequate financial resources to conduct
such registration.
17
Our Intellectual Property. We do not presently own any domain names, copyrights,
patents, trademarks, licenses, concessions or royalties. Our success may depend
in part upon our ability to promote our brand name and to preserve our trade
secrets, obtain and maintain patent protection for our technologies, products
and processes, and operate without infringing upon the proprietary rights of
other parties. However, we may rely on certain proprietary technologies, trade
secrets, and know-how that are not patentable. Although we may take action to
protect our unpatented trade secrets and our proprietary information, in part,
by the use of confidentiality agreements with our employees, consultants and
certain of our contractors, we cannot guaranty that:
o these agreements will not be breached;
o we would have adequate remedies for any breach; or
o our proprietary trade secrets and know-how will not otherwise become
known or be independently developed or discovered by competitors.
We cannot guaranty that our actions will be sufficient to prevent imitation or
duplication of either our products or services by others or prevent others from
claiming violations of their trade secrets and proprietary rights. Competition.
The market for hunting and fishing accessories and equipment is highly
fragmented and competitive. In order to compete effectively in this industry, a
company must provide a wide range of quality services and products at a
reasonable cost. We will seek to distinguish ourselves by offering personalized
tips and information to new and experienced outdoors enthusiasts, along with a
wide array of products and equipment. We anticipate we will compete with
traditional "brick and mortar" providers of outdoors and sports products. Also,
once our website is operational, we will compete with other Internet-based
companies and businesses that have developed and are in the process of
developing competing websites. We cannot guaranty that other websites or
functionally similar services have not been developed or are not in development.
Additionally, many of these Internet-based competitors have greater financial
and other resources, and more experience in research and development, than we
have. In marketing our products, we will likely compete with national and
international manufacturers and retailers of hunting and fishing equipment and
accessories, many of which operate websites similar to ours. Some of these are
Reeds Sporting Goods, Quantum Fishing, and Beaver Flick Tackle Co. We will also
compete with sporting goods retailers such as Big 5, Oshman's, and other
specialized or discount sporting goods stores as well as other independent and
exhibitors at sport shows. We will also compete with other general merchandise
and specialty retailers, in addition to Internet retailers, such as Yahoo!,
Amazonsports.com, and specialized sites, such as Dickssportinggoods.com,
beOutdoors.com, RutandStrut.com, Sportfishtackle.com, and Basspro.com.
Many of our competitors have greater financial resources than we have, enabling
them to finance acquisition and development opportunities, pay higher prices for
the same opportunities or develop and support their own operations. In addition,
many of these companies can offer services not provided by us. Many may also
have greater name recognition. Our larger competitors may have the luxury of
sacrificing profitability in order to capture a greater portion of the market
for health and fitness products and equipment. They may also be in a position to
pay higher prices than we would for the same expansion and development
opportunities. Consequently, we may encounter significant competition in our
efforts to achieve our internal and external growth objectives.
Government Regulation. We are subject to federal, state and local laws and
regulations applied to businesses, such as payroll taxes on the state and
federal levels. In general, our angling related product sales activities are not
subject to licensing or other regulatory requirements, though purchasers of our
products may be required to obtain hunting or fishing licenses or permits.
Also, online commerce is new and rapidly changing, and federal and state
regulations relating to the Internet and online commerce are relatively new and
evolving. Due to the increasing popularity of the Internet, it is possible that
laws and regulations may be enacted to address issues such as user privacy,
pricing, content, copyrights, distribution, antitrust matters and the quality of
products and services. The adoption of these laws or regulations could reduce
the rate of growth of the Internet, which could potentially decrease the usage
of our website and could otherwise harm our business. In addition, the
applicability to the Internet of existing laws governing issues such as property
ownership, copyrights and other intellectual property issues, libel, obscenity
and personal privacy is uncertain. Most of these laws were adopted prior to the
advent of the Internet and do not contemplate or address the unique issues of
the Internet. New laws applicable to the Internet may impose substantial burdens
on companies conducting online commerce. In addition, the growth and development
of online commerce may prompt calls for more stringent consumer protection laws
in the United States and abroad.
18
Taxing authorities in a number of states are currently reviewing the appropriate
tax treatment of companies engaged in Internet commerce. New state tax
regulations may subject us to additional state sales, use and income taxes. The
adoption of any of these laws or regulations may decrease the growth of Internet
usage or the acceptance of Internet commerce which could, in turn, decrease the
demand for our memberships or web-based advertising, increase operating costs
and otherwise harm our business, results of operations and financial condition.
To date, we have not spent significant resources on lobbying or related
government affairs issues, but we may need to do so in the future.
We might also be subject to regulation not specifically related to the Internet,
such as laws affecting the telecommunications industry. For example, several
telecommunications carriers have asked the FCC to regulate transmissions over
the Internet. Due to the increasing use of the Internet and the burden it has
placed on the telecommunications infrastructure, telephone carriers have
requested the FCC to regulate Internet and online service providers and to
impose access fees on those providers. If the FCC imposes access fees, the costs
of using the Internet could increase dramatically. In this event, our margins
could be negatively impacted.
Our Research and Development. We are not currently conducting any research and
development activities, other than the development of our proposed website. We
do not anticipate conducting any research or development activities in the near
future.
Employees. As of January 25, 2002, we had no employees, other than our officers.
We anticipate that we will not hire any additional employees in the next six
months unless we generate significant revenues.
Facilities. Our executive, administrative and operating offices are located at
2390 Crocus Dr. N., Mandan, N.D. 58554. We do not own our offices. Clay Koenig,
our president, treasurer and one of our directors, currently provides office
space to us at no charge. We do not have a written lease or sublease agreement
and Clay Koenig does not expect to be paid or reimbursed for providing office
facilities. We believe that our current facilities are adequate for our current
needs and that additional suitable space will be available on acceptable terms
as required. We do not own any real estate.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
---------------------------------------------------------------------------
Liquidity and Capital Resources. We had cash of $4,947 as at November 30, 2001.
We believe that our available cash is sufficient to pay our day-to-day
expenditures until April 2002. For our initial operating capital, we borrowed
$5,000 from an unrelated party. On October 11, 2001, we executed a promissory
note for that amount, which bears annual interest of 10%. The principal and
annual interest are payable in full no later than October 11, 2003.
Results of Operations. We have not yet realized any revenue from operations. Our
expenses as of November 30, 2001 of approximately $2,820 consisted of consulting
services, interest expense and operating expenses.
Our Plan of Operation for the Next Twelve Months. To implement our business plan
during the next twelve months, we will need to establish our corporate
headquarters and hire additional staff, so that we can begin marketing and
selling our products and product combination kits in the Bismarck region of
North Dakota. We will also need to complete the development of our website so
that we can establish an Internet presence. We anticipate that we will use the
funds raised in this offering and revenues generated to fund marketing
activities, website development and for working capital. Our failure to market
and promote our services will harm our business and future financial
performance. If we are unable to expand our operations within the next twelve
months, we will likely fail to generate revenues.
We had cash of $4,947 at November 30, 2001. In the opinion of management,
available funds will satisfy our working capital requirements through the April
2002. Our forecast for the period for which our financial resources will be
adequate to support our operations involves risks and uncertainties and actual
results could fail as a result of a number of factors. We anticipate that we may
need to raise additional capital to expand our operations in addition to the
funds raised in this offering, although we have not made any efforts to obtain
additional capital. Such additional capital may be raised through public or
private financing as well as borrowings and other sources. We cannot guaranty
that additional funding will be available on favorable terms, if at all. If
adequate funds are not available, then we may not be able to expand our
operations.
19
We are not currently conducting any research and development activities, other
than the development of our proposed website. We anticipate that we will spend
additional funds on the development of our website in the near future. In the
event that we expand our customer base, then we may need to hire additional
employees or independent contractors.
Description of Property
-----------------------
Property held by us. As of the date specified in the following table, we held
the following property:
========================================== =========================
Property November 30, 2001
------------------------------------------ -------------------------
Cash $4,947
========================================== =========================
Our facilities. Our executive, administrative and operating offices are located
at 2390 Crocus Dr. N, Mandan, North Dakota 58554. Clay Koenig, our president,
treasurer and one of our directors, currently provides office space to us at no
charge. We do not have a written lease or sublease agreement with Mr. Koenig and
we do not believe that Mr. Koenig expects to be paid or reimbursed for providing
office facilities.
Certain Relationships and Related Transactions
----------------------------------------------
Clay Koenig, our president, treasurer and one of our directors, currently
provides office space to us at no charge. Mr. Koenig does not expect to be paid
or reimbursed for providing office facilities. We do not have a written lease or
sublease agreement with Mr. Koenig. However, we anticipate that Mr. Koenig will
continue to provide office space to us at no charge.
With regard to any future related party transaction, we plan to fully disclose
any and all related party transactions, including, but not limited to, the
following:
o disclose such transactions in prospectuses where required;
o disclose in any and all filings with the Securities and Exchange
Commission, where required;
o obtain disinterested directors' consent; and
o obtain shareholder consent where required.
In addition, all future material affiliated transactions and loans will be made
or entered into on terms that are no less favorable to us that those that can be
obtained from unaffiliated third parties.
Market for Common Equity and Related Stockholder Matters
--------------------------------------------------------
Reports to Security Holders. Our securities are not listed for trading on any
exchange or quotation service; therefore, we are not required to comply with the
timely disclosure policies of any exchange or quotation service. The
requirements to which we would be subject if our securities were so listed
typically include the timely disclosure of a material change or fact with
respect to our affairs and the making of required filings. Although we are not
required to deliver an annual report to security holders, we intend to provide
an annual report to our security holders, which will include audited financial
statements.
When and if we become a reporting company with the Securities and Exchange
Commission, the public may read and copy any materials filed with the Securities
and Exchange Commission at the Securities and Exchange Commission's Public
Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may
also obtain information on the operation of the Public Reference Room by calling
the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of that
site is http://www.sec.gov.
As of January 25, 2002, there were five record holders of our common stock.
There are no outstanding shares of our common stock which can be sold pursuant
to Rule 144. There are no outstanding options or warrants to purchase, or
securities convertible into, shares of our common stock. There are no
outstanding shares of our common stock that we have agreed to register under the
Securities Act of 1933 for sale by security holders.
20
There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.
Penny stock regulation. Shares of our common stock will probably be subject to
rules adopted by the Securities and Exchange Commission that regulate
broker-dealer practices in connection with transactions in "penny stocks". Penny
stocks are generally equity securities with a price of less than $5.00, except
for securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in those securities is provided by the exchange or
system. The penny stock rules require a broker-dealer, prior to a transaction in
a penny stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:
o a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer and
of the rights and remedies available to the customer with respect to
violation to such duties or other requirements of securities' laws;
o a brief, clear, narrative description of a dealer market, including
"bid" and "ask" prices for penny stocks and the significance of the
spread between the "bid" and "ask" price;
o a toll-free telephone number for inquiries on disciplinary actions;
o definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
o such other information and is in such form, including language, type,
size and format, as the Securities and Exchange Commission shall
require by rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
o monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. Holders of shares of our common stock may have difficulty selling
those shares because our common stock will probably be subject to the penny
stock rules.
Executive Compensation
----------------------
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our
president and our other executive officers during the year ending December 31,
2002. Our Board of Directors may adopt an incentive stock option plan for our
executive officers which would result in additional compensation.
[Enlarge/Download Table]
============================================= ========== ============ ============= ====================== =====================
Name and Principal Position Year Annual Bonus ($) Other Annual All Other
Salary ($) Compensation ($) Compensation
--------------------------------------------- ---------- ------------ ------------- ---------------------- ---------------------
Clay Koenig - president, treasurer 2002 None None None None
--------------------------------------------- ---------- ------------ ------------- ---------------------- ---------------------
Franklin Buchholz - vice president, 2002 None None None None
secretary
============================================= ========== ============ ============= ====================== =====================
Compensation of Directors. Our directors who are also our employees receive no
extra compensation for their service on our Board of Directors.
Compensation of Officers. As of January 25, 2002, our officers have not received
any compensation for their services provided to us. We anticipate that our
officers will not receive any compensation for their services unless we generate
significant revenues.
Employment Contracts. We anticipate that we will enter into employment
agreements with Clay Koenig, our president and treasurer, and Franklin Buchholz,
our vice president and secretary, although we do not know the terms of those
proposed agreements.
21
Financial Statements
--------------------
SPORT SHOW PROMOTIONS, INC.
November 30, 2001
Clyde Bailey, P.C.
Certified Public Accountant
10924 Vance Jackson #404
San Antonio, Texas 78230
22
CLYDE BAILEY P.C.
------------------------------------------------------------------------------
Certified Public Accountant
10924 Vance Jackson #404
San Antonio, Texas 78230
(210) 699-1287(ofc.)
(888) 699-1287 (210) 691-2911 (fax)
Member:
American Institute of CPA's
Texas Society of CPA's
Board of Directors
Sport Show Promotions, Inc.
INDEPENDENT AUDITOR'S REPORT
----------------------------
I have audited the accompanying balance sheet of Sport Show Promotions, Inc.
("Company") as of November 30, 2001 and the related statement of operations,
statement of stockholders' equity, and the statement of cash flows from (date of
inception) June 5, 2001 to November 30, 2001. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these statements based on my audit.
I conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting all of its present
efforts in securing and establishing a new business, and its planned principal
operations have not commenced, and, accordingly, no revenue has been derived
during the organizational period.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of November 30, 2001
and the results of its operations and its cash flows for the period from (date
of inception) June 5, 2001 to November 30, 2001 in conformity with accounting
principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has limited operations
currently and suffered recurring losses from operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
This is further explained in the notes to financial statements.
Clyde Bailey P.C.
San Antonio, Texas
December 27, 2001
23
Sport Show Promotions, Inc.
(A Development Stage Enterprise)
Balance Sheet
As of November 30, 2001
[Enlarge/Download Table]
A S S E T S
-----------
Current Assets
--------------
Cash $ 4,947
------------------
Total Current Assets 4,947
Total Assets $ 4,947
==================
L I A B I L I T I E S
---------------------
Current Liabilities
-------------------
Accrued Interest 67
------------------
Total Current Liabilities 67
------------------
Long-Term Liabilities
---------------------
Note Payable 5,000
------------------
Total Long-Term Liabilities 5,000
------------------
Total Liabilities 5,067
Commitments and Contingencies -
S T O C K H O L D E R S ' E Q U I T Y
-------------------------------------
Preferred Stock -
Common Stock 2,700
Additional Paid-in-Capital -
Accumulated Deficit (2,820)
------------------
Total Stockholders' Equity (Deficit) (120)
------------------
Total Liabilities and Stockholders' Equity $ 4,947
==================
The accompanying notes are integral part of consolidated financial statements.
24
Sport Show Promotions, Inc.
(A Development Stage Enterprise)
Statement of Operations
-----------------
From 06/05/01
(Inception)
to November 30
-----------------
2001
-----------------
Revenues:
---------
Revenues $ -
-----------------
Total Revenues $ -
Expenses:
---------
Consulting Services 2,700
Interest Expense 67
Operating Expenses 53
-----------------
Total Expenses 2,820
Net Income (Loss) from Operations $ (2,820)
Provision for Income Taxes:
---------------------------
Income Tax Benefit -
-----------------
Net Income (Loss) $ (2,820)
=================
Basic and Diluted Loss Per Common Share (0.00)
-----------------
Weighted Average number of Common Shares 2,700,000
used in per share calculations =================
The accompanying notes are integral part of consolidated financial statements.
25
Sport Show Promotions, Inc.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
[Enlarge/Download Table]
$0.001 Paid-In Accumulated Stockholders'
Shares Par Value Capital Deficit Equity
-------------- -------------- ------------- -------------- -------------
Balance, June 5, 2001(Inception) - $ - $ - $ - $ -
Stock Issuance for Services 2,700,000 2,700 - 2,700
Net Income (Loss) (2,820) (2,820)
-------------- -------------- ------------- -------------- -------------
Balance, November 30, 2001 2,700,000 2,700 - (2,820) (120)
============================================================================
The accompanying notes are integral part of consolidated financial statements.
26
Sport Show Promotions, Inc.
(A Development Stage Enterprise)
Statement of Cash Flows
---------------------
From 06/05/01
(Inception)
to November 30
---------------------
2001
---------------------
Cash Flows from Operating Activities:
Net Income (Loss) $ (2,820)
Changes in operating assets and liabilities:
Accrued Interest 67
Stock Issued for Services 2,700
---------------------
Total Adjustments 2,767
---------------------
Net Cash (Used in) Provided From Operating Activities $ (53)
Cash Flows from Investing Activities:
Capital Expenditures -
---------------------
Net Cash Used in Investing Activities $ -
---------------------
Cash Flows from Financing Activities:
Note Payable 5,000
Common Stock -
---------------------
Net Cash Provided for Financing Activities $ 5,000
---------------------
Net Increase (Decrease) in Cash $ 4,947
Cash Balance, Begin Period -
---------------------
Cash Balance, End Period $ 4,947
=====================
Supplemental Disclosures:
Cash Paid for interest $ -
Cash Paid for income taxes $ -
Stock Issued for Services 2,700,000
The accompanying notes are integral part of consolidated financial statements.
27
Sport Show Promotions, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
---------------------------------------------------
Organization
------------
Sport Show Promotions, Inc. ("the Company") was incorporated under the laws of
the State of Nevada on June 5, 2001 for the purpose to promote and carry on any
lawful business for which a corporation may be incorporated under the laws of
the State of Nevada. The company has a total of 35,000,000 authorized shares
with a par value of $.001 per share with 10,000,000 shares designated as
preferred shares and the balance as common shares. The Company has 2,700,000
common shares issued and outstanding as of November 30, 2001 and no preferred
shares issued as of November 30, 2001. The fiscal year end will be June 30.
Development Stage Enterprise
----------------------------
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting all of its present
efforts in securing and establishing a new business, and its planned principal
operations have not commenced, and, accordingly, no revenue has been derived
during the organizational period.
Federal Income Tax
------------------
The Company has adopted the provisions of Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes. The Company accounts for income
taxes pursuant to the provisions of the Financial Accounting Standards Board
Statement No. 109, "Accounting for Income Taxes", which requires an asset and
liability approach to calculating deferred income taxes. The asset and liability
approach requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax basis of assets and liabilities.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure on
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
28
Sport Show Promotions, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (con't
Accounting Method
----------------------------------------------------------
The Company's financial statements are prepared using the accrual method of
accounting. Revenues are recognized when earned and expenses when incurred.
Fixed assets are stated at cost. Depreciation and amortization using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes.
Earnings per Common Share
-------------------------
The Company adopted Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," which simplifies the computation of earnings per share requiring the
restatement of all prior periods.
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year.
Diluted earnings per share are computed on the basis of the weighted average
number of common shares and dilutive securities outstanding. Dilutive securities
having an anti-dilutive effect on diluted earnings per share are excluded from
the calculation.
Comprehensive Income
--------------------
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No.130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.
29
Sport Show Promotions, Inc.
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies (con't
Segments of an Enterprise and Related Information
----------------------------------------------------------
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information, supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS 131 defines
operating segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company has evaluated this SFAS and does not believe it is
applicable at this time.
Goodwill and Other Intangible Assets
------------------------------------
In July 2001, the Financial Accounting Standards Board issued Statements of
Financial Standards ("SFAS") No. 141, "Business Combinations" and No. 142,
"Goodwill and Other Intangible Assets". SFAS No. 141 established accounting and
reporting standards for business combinations and eliminates the
pooling-of-interests method of accounting for combinations for those
combinations initiated after July 1, 2001. SFAS No, 141 also includes new
criteria to recognize intangible assets separately from goodwill. SFAS No. 142
establishes the accounting and reporting standards from goodwill and intangible
lives. Goodwill and intangibles with indefinite lives will no longer be
amortized, but, alternatively will be reviewed periodically for indicators of
impairment. Separate intangible assets that are not deemed to have an indefinite
life will continue to be amortized over their useful lives. The Company does not
anticipate that the adoption of SFAS No. 141 and SFAS No. 142 will have a
significant effect on its results of operations or financial position.
Note 2 - Common Stock
---------------------
A total of 2,700,000 shares of common stock were issued at the organization of
the Company. The stock was issued for services performed for the Company by its
founders and the stock was valued at $2,700 because the Company has not started
its operations and the stock is not trading. The Company has not issued any of
its preferred stock as of November 30, 2001.
30
Sport Show Promotions, Inc.
Notes to Financial Statements
Note 3 - Related Parties
--------------------------
The Company neither owns nor leases any real or personal property. An officer of
the corporation provides office services without charge. Such costs are
immaterial to the financial statements and accordingly, have not been reflected
therein. The officers and directors of the Company are involved in other
business activities and may in the future become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
Note 4 - Income Taxes
---------------------
Deferred income taxes arise from temporary differences resulting from the
Company's subsidiary utilizing the cash basis of accounting for tax purposes and
the accrual basis for financial reporting purposes. Deferred taxes are
classified as current or non-current, depending on the classification of the
assets and liabilities to which they relate. Deferred taxes arising from timing
differences that are not related to an asset or liability are classified as
current or non- current depending on the periods in which the timing differences
are expected to reverse. The Company's previous principal temporary differences
relate to revenue and expenses accrued for financial purposes, which are not
taxable for financial reporting purposes. The Company's material temporary
differences consist of bad debt expense recorded in the financial statements
that is not deductible for tax purposes and differences in the depreciation
expense calculated for financial statement purposes and tax purposes.
Note 5 - Going Concern
------------------------
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other material
assets, nor does it have an established source of revenues sufficient to cover
its operating costs and to allow it to continue as a going concern. These
factors raise substantial doubt about the Company's ability to continue as a
going concern.
Note 6 - Note Payable
---------------------
An unrelated individual has loaned the Company $5,000 as operating capital. The
note is dated October 11, 2001 and calls for an interest rate of 10% and matures
on October 11, 2003. Interest will be accrued at the rate of 10% per annum on
the outstanding principle until the note is paid in full. A total of $67 in
interest has been accrued as of November 30, 2001.
Note 7 - Subsequent Events
--------------------------
There were no other material subsequent events that have occurred since the
balance sheet date that warrants disclosure in these financial statements.
31
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
--------------------------------------------------------------------------
In or around September 2001, our Board of Directors appointed Clyde Bailey P.C.,
independent accountant, to audit our financials statements from June 5, 2001,
our date of formation, through November 30, 2001.
There have been no disagreements with our accountant since our formation
required to be disclosed pursuant to Item 304 of Regulation S-B.
Legal Matters
-------------
The validity of the issuance of the shares of common stock we are offering has
been passed upon by the law firm of MC Law Group, located in Newport Beach,
California.
Experts
-------
Our financial statements for the period from June 5, 2001, our date of
formation, through November 30, 2001, appearing in this prospectus which is part
of a registration statement have been audited by Clyde Bailey P.C., independent
accountant, and are included in reliance upon such reports given upon the
authority of Clyde Bailey P.C. as experts in accounting and auditing.
Additional Information
----------------------
We have filed a registration statement on Form SB-2 with the Securities and
Exchange Commission pursuant to the Securities Act of 1933. This prospectus does
not contain all of the information set forth in the registration statement and
the exhibits and schedules to the registration statement. For further
information regarding us and our common stock offered hereby, reference is made
to the registration statement and the exhibits and schedules filed as a part of
the registration statement.
32
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
-----------------------------------------
Article Twelfth of our Articles of Incorporation provides, among other things,
that our officers and directors shall not be personally liable to us or our
shareholders for monetary damages for breach of fiduciary duty as an officer or
a director, except for liability:
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; or
o for unlawful payments of dividends or unlawful stock purchase or
redemption by us.
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless the act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
Other Expenses of Issuance and Distribution
-------------------------------------------
We will pay all expenses in connection with the registration and sale of our
common stock. The estimated expenses of issuance and distribution are set forth
below.
======================================== ==================== ===============
Registration Fees Approximately $46.00
---------------------------------------- -------------------- ---------------
Transfer Agent Fees Approximately $650.00
---------------------------------------- -------------------- ---------------
Costs of Printing and Engraving Approximately $500.00
---------------------------------------- -------------------- ---------------
Legal Fees Approximately $10,000.00
---------------------------------------- -------------------- ---------------
Accounting Fees Approximately $5,000.00
======================================== ==================== ===============
Recent Sales of Unregistered Securities
---------------------------------------
There have been no sales of unregistered securities within the last three years,
which would be required to be disclosed pursuant to Item 701 of Regulation S-B,
except for the following:
In June 2001, we issued 1,000,000 shares of our common stock to Clay Koenig our
president, treasurer and one of our directors, for founders' services valued at
$1,000, and 1,000,000 shares of our common stock to Franklin Buchholz, our vice
president, secretary and one of our directors, for founders' services valued at
$1,000, and 500,000 shares of our common stock to Chad Renner, one of our
directors, for founders' services valued at $500. Additionally, we issued
100,000 shares of our common stock to Todd Wetsch for services valued at $100
and 100,000 shares of our common stock to Brian Taix, also for services valued
at $100. Those services included formulation of our business plan and other
activities related to our incorporation. The shares were issued in a transaction
which we believe satisfies the requirements of that certain exemption from the
registration and prospectus delivery requirements of the Securities Act of 1933,
which exemption is specified by the provisions of Section 4(2) of the Securities
Act of 1933, as amended.
33
Exhibits
--------
Copies of the following documents are filed with this registration
statement, Form SB-2, as exhibits:
Exhibit No.
-----------
1. Underwriting Agreement (not applicable)
3.1 Articles of Incorporation
3.2 Bylaws
5. Opinion Re: Legality
8. Opinion Re: Tax Matters (not applicable)
11. Statement Re: Computation of Per Share Earnings*
15. Letter on unaudited interim financial information (not applicable)
23.1 Consent of Auditors
23.2 Consent of Counsel**
* Included in Financial Statements
** Included in Exhibit 5
Undertakings
------------
A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities, other than the payment by us of expenses incurred or paid by
our director, officer or controlling person in the successful defense of any
action, suit or proceeding, is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
B. We hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
34
(ii) To specify in the prospectus any facts or events
arising after the effective date of the registration
statement, or most recent post-effective amendment
thereof, which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered, if the total dollar value of
securities offered would not exceed that which was
registered, and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule
424(b), Section 230.424(b) of Regulation S-B if, in
the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any additional or changed material
information with respect to the plan of distribution
not previously disclosed in the registration
statement or any material change to such information
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
35
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
we certify that we have reasonable grounds to believe that we meet all of the
requirements of filing on Form SB-2 and authorized this registration statement
to be signed on our behalf by the undersigned, in the city of Mandan, State of
North Dakota, on January 25, 2002.
Sport Show Promotions, Inc.,
a Nevada corporation
/s/ Clay Koenig
--------------------------------------------
Clay Koenig
principal executive officer
president, treasurer, director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
/s/ Clay Koenig January 25, 2002
--------------------------------------------
Clay Koenig
principal executive officer
president, treasurer, director
/s/ Franklin Buchholz January 25, 2002
--------------------------------------------
Franklin Buchholz
principal financial officer
vice president, secretary, director
/s/ Chad Renner January 25, 2002
--------------------------------------------
Chad Renner
director
36
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and hereby
authorizes Clay Koenig with the full power of substitution, as attorney-in-fact,
to sign in such person's behalf, individually and in each capacity stated below,
and to file any amendments, including post-effective amendments to this
Registration Statement.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
Sport Show Promotion, Inc.
/s/ Clay Koenig January 25, 2002
--------------------------------------------
Clay Koenig
principal executive officer
president, treasurer, director
/s/ Franklin Buchholz January 25, 2002
--------------------------------------------
Franklin Buchholz
principal financial officer
vice president, secretary, director
/s/ Chad Renner January 25, 2002
--------------------------------------------
Chad Renner
director
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘SB-2’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 10/11/03 | | 19 | | 31 | | | None on these Dates |
| | 12/31/02 | | 21 |
| Filed on: | | 1/28/02 |
| | 1/25/02 | | 2 | | 37 |
| | 12/27/01 | | 23 |
| | 11/30/01 | | 4 | | 32 |
| | 10/11/01 | | 19 | | 31 |
| | 7/1/01 | | 30 |
| | 6/5/01 | | 4 | | 32 |
| List all Filings |
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Filing Submission 0001137091-02-000065 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
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