As filed with the Securities and Exchange Commission on July 9,
1996______________________Registration No. 33-34066
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. 1)
KAYENTA KREATIONS, INC.
(Name of small business issuer in its charter)
Nevada 7336 87-0554463
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
1020 Belmont Avenue, Salt Lake City, Utah 84105
(801) 521-4128
(Address and telephone number of principal executive offices and place of
business)
Michelle Barlow
1020 Belmont Avenue, Salt Lake City, Utah 84105
(801) 521-4128
(Name, address and telephone number of agent for service)
Copies to:
Thomas G. Kimble & Van L. Butler
THOMAS G. KIMBLE & ASSOCIATES
311 South State Street, #440
Salt Lake City, Utah 84111
(801) 531-0066
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this registration statement.
CALCULATION OF REGISTRATION FEE
(previously submitted)
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 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said section 8(a), may determine.
<PAGE>
Kayenta Kreations, Inc.
CROSS-REFERENCE SHEET
Pursuant to Rule 404(a)
Item Number and Heading Heading in Prospectus
1. Front of the Registration Facing Pages; Front Cover Page
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover Pages of Prospectus
3. Summary Information and Risk Prospectus Summary; Risk
Factors Factors
4. Use of Proceeds Use of Proceeds; Business;
Certain Transactions
5. Determination of Offering Price Cover Page; Risk Factors; Plan
of Distribution
6. Dilution Dilution; Comparative Data
7. Selling Security Holders Not applicable
8. Plan of Distribution Front Cover Page; Plan of
Distribution
9. Legal Proceedings Legal Matters
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Shareholders
Beneficial Owners and
Management
12. Description of the Securities Description of Securities
13. Interest of Named Experts and Not applicable
Counsel
14. Disclosure of Commission Certain Transactions
Position on Indemnification for
Securities Act Liabilities... .
15. Organization Within Last Five Certain Transactions
Years
16. Description of Business Business
17. Management's Discussion and Management's Plan of
Analysis or Plan of Operation Operations
18. Description of Property Business
19. Certain Relationships and Certain Transactions
Related Transactions
20. Market for Common Equity and Front Cover Page; Risk
Related Stockholder Matters Factors; Description of
Securities; Shares Eligible
For Future Sale
21. Executive Compensation Management
22. Financial Statements Financial Statements
23. Changes In and Disagreements Not Applicable
with Accountants on Accounting
and Financial Disclosure
<PAGE>
400,000 Shares
KAYENTA KREATIONS, INC.
Common Stock
Kayenta Kreations, Inc. (the "Company"), is offering, on a "best
efforts, minimum-maximum" basis, up to 400,000 shares of its $.001 par value
common stock, (the "Shares") to the public at a price of $.25 per Share.
Prior to this offering, there has been no public market for the Shares. The
Shares will not be listed on an exchange or quoted on the NASDAQ system upon
completion of this offering and there can be no assurance that a market will
develop or, if a market should develop, that it will continue. Any
transactions in the Shares may be subject to rules applicable to penny
stocks. The initial public offering price has been arbitrarily determined
by the Company and bears no relationship to assets, shareholders' equity or
any other recognized criteria of value.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL AND IMMEDIATE
DILUTION AND SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD TO RISK
THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS." (page 5)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Commissions & Proceeds to t
Public(1)(3) Discounts(1)(2) he Company
(2)(3)
Per Share $.25 $.035 $.215
Total Minimum $ 50,000 $ 7,000 $ 43,000
Total Maximum $100,000 $14,000 $ 86,000
(1) The offering price is payable in cash upon subscription. The
offering will be managed by the Company and the Shares will be offered
and sold by the officer of the Company, without any discounts or other
commissions. Licensed NASD Broker-dealers may also participate and
receive a commission of up to 14% of the offering price on sales made
by them. See "Plan of Distribution."
(2) Proceeds to the Company are shown assuming payment of commissions
to licensed NASD broker-dealers with respect to all shares sold, but
before deducting other offering expenses payable by the Company for
legal and accounting fees, printing and other costs estimated at
$12,000.
(3) Proceeds will be deposited no later than noon of the next business day
after receipt into an escrow account with Brighton Bank, 311 South
State Street, Salt Lake City, Utah 84111, pending receipt of
subscriptions for at least $50,000. The offering will close and
proceeds will be disbursed to the Company if subscriptions for all
400,000 Shares have been received within 120 days from the date hereof
(or 150 days if extended by the Company for up to 30 additional days).
If subscriptions for a minimum of 200,000 Shares have not been received
within this period of time, all proceeds will be promptly refunded to
subscribers without interest thereon or deduction therefrom.
Subscribers will have no right to return or use of their funds during
the offering period, which may last up to 150 days.
The Shares are being offered by the Company subject to prior sale,
receipt and acceptance by the Company, approval of certain matters by
counsel, and certain other conditions. The Company reserves the right to
withdraw or cancel such offer and reject any order, in whole or in part.
The date of this Prospectus is , 1996
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the United States Securities and Exchange
Commission (the "Commission") a Registration Statement on Form SB-2, under
the Securities Act of 1933, as amended (the "Securities Act), with respect
to the securities offered hereby. As permitted by the rules and regulations
of the Commission, this Prospectus does not contain all of the information
contained in the Registration Statement. For further information regarding
both the Company and the Securities offered hereby, reference is made to the
Registration Statement, including all exhibits and schedules thereto, which
may be inspected without charge at the public reference facilities of the
Commission's Washington, D.C. office, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies may be obtained from the Washington, D.C. office upon
request and payment of the prescribed fee.
As of the date of this Prospectus, the Company became subject to the
informational requirements of the Securities Exchange Act of 1934, as
amended (The "Exchange Act") and, in accordance therewith, will file reports
and other information with the Commission. Reports and other information
filed by the Company with the Commission pursuant to the informational
requirements of the Exchange Act will be available for inspection and
copying at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices of the Commission: New York Regional Office, 75
Park Place, New York, New York 10007; Chicago Regional Office, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material may be
obtained from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
Copies of the Company's Annual, Quarterly and other Reports which will
be filed by the Company with the Commission commencing with the Quarterly
Report for the first quarter ended after the date of this Prospectus (due 45
days after the end of such quarter) will also be available upon request,
without charge, by writing Kayenta Kreations, Inc., 1020 Belmont Avenue,
Salt Lake City, Utah 84105.
UNTIL [90 DAYS AFTER THE DATE OF THIS PROSPECTUS], ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY STATE
SECURITIES COMMISSION OR OTHER STATE REGULATORY AUTHORITY, AND NO SUCH
REGULATORY AUTHORITY HAS PASSED UPON THE TERMS OF THIS OFFERING OR APPROVED
THE MERITS THEREOF. INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE
COMPANY AND THE TERMS OF THIS OFFERING IN EVALUATING THE MERITS AND RISKS OF
THE OFFERING AND MAKING AN INVESTMENT DECISION.
THIS PROSPECTUS SHOULD BE READ IN ITS ENTIRETY BY ANY PROSPECTIVE INVESTOR
PRIOR TO HIS OR HER INVESTMENT.
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed
information appearing elsewhere in the Prospectus.
The Company
Kayenta Kreations, Inc. (the "Company") was recently incorporated
under the laws of the State of Nevada on December 26, 1995. The
Company has not commenced active business operations and is considered
a development stage company. The Company was formed to engage in the
business of producing and marketing a children's coloring art book
depicting various aspects of life in the southwestern and western
United States, particularly the Great Basin and Colorado Plateau area.
Artwork for the books is being drawn and produced by the President of
the Company, and drawings will feature history, geography, archeology,
pictographs, flora and fauna, heritage, culture and traditions of the
Southwest. In conjunction therewith the Company intends to produce and
market its own coloring pencils as an alternative to crayons.
The Company's mailing address and telephone number of its
principal executive offices are 1020 Belmont Avenue, Salt Lake City,
Utah 84105. (801) 521-4128.
The Offering
Securities 400,000 Shares of Common Stock, $.001
offered par value ("Common Stock") of the
Company. See "Description of
Securities".
Offering Price $.25 Per Share.
Plan of The offering will be managed by the
Distribution Company and the Shares will be offered
and sold by the officer of the Company,
without any discounts or other
commissions. Licensed NASD Broker-
dealers may also participate and receive
commissions of up to 14% of the offering
price on sales made by them. Offering
proceeds will be escrowed pending
completion or termination of the
offering. The offering will terminate
120 days from the date hereof (or 150
days if extended by the Company for an
additional 30 days), and funds held in
escrow will be promptly returned to
subscribers, without interest thereon or
deduction therefrom, unless the offering
is completed on or before that date upon
receipt of subscriptions for at least
the minimum offering amount ($50,000).
See "Plan of Distribution."
Escrow Agent Brighton Bank, 311 South State Street,
Salt Lake City, Utah 84111 will serve as
escrow agent for receipt of the proceeds
from this offering.
Transfer Agent American Registrar & Transfer Co., 10
Exchange Place, Suite 750, P.O. Box
1798, Salt Lake City, Utah 84110, (801)
363-9066, has agreed to serve as
transfer agent and registrar for the
Company's outstanding securities upon
completion of the offering.
Securities The Company is authorized to issue up to
Outstanding 50,000,000 shares of Common Stock and
presently has 800,000 shares of Common
Stock issued and outstanding. Upon
completion of this offering, if all
Shares offered herein are sold,
1,200,000 shares of Common Stock will
then be issued and outstanding;
1,000,000 Shares will be issued and
outstanding if only the minimum number
of Shares offered herein are sold. In
addition, the Company is authorized to
issue up to 5,000,000 shares of
Preferred Stock in one or more series
with such rights and preferences as the
Board of Directors may designate. The
sole Director has not designated any
such series and no preferred shares are
presently issued and outstanding.
Risk Factors The Company is a start up company with
no operating history and no revenues
from operations to date; consequently,
an investment in the Company is highly
speculative. The Shares will not be
listed on an exchange or quoted on the
NASDAQ system upon completion of this
offering. Investors will suffer
substantial dilution in the book value
per share of the Common Stock compared
to the purchase price. In seeking to
implement its proposed business, the
Company could incur substantial losses
during the development stage, and
require additional funding for which it
has no commitments. Management has
other interests which may conflict with
the interests of the Company. Until
such time, if ever, that the Company
generates sufficient revenue to pay a
salary to management, management will
not be employed full time and will only
devote a minimal amount of time to the
affairs of the Company. No person
should invest in the Company who cannot
afford to risk loss of their entire
investment. See "Risk Factors."
<PAGE>
RISK FACTORS
The securities being offered hereby involve a high degree of risk.
Prospective investors should carefully consider the following risk factors
before investing in the Company.
Risks Inherent in a New Start Up Company
No Operating History. The Company was only recently incorporated, has
no significant assets, no history of operations and is considered to be a
development stage enterprise. There is absolutely no assurance that the
Company will be able, upon completion of this offering, to successfully
implement its proposed business or that it will ever operate profitably.
Dependence Upon One Part Time Officer/Director; Business and Time
Conflicts. The President is the sole officer/director of the Company; as
compared to many other public companies, the Company does not have a depth
of managerial and technical personnel. Management of the Company has only
limited experience with the business proposed to be engaged in by the
Company. Furthermore, the President of the Company will not be employed
full time, is expected to devote only approximately 20% of her time to the
Company, at least initially, and is involved with other businesses and has
other interests which could give rise to conflicts of interest with respect
to the business of and amount of time devoted to the Company. There is no
assurance such conflicts will be resolved favorably to the Company. See
"Certain Transactions - Conflicts of Interest".
Limited Liability of Management. The Company has adopted provisions to
its Articles of Incorporation and Bylaws which limit the liability of
Officers and Directors and provide for indemnification by the Company of
Officers and Directors to the full extent permitted by Nevada corporate law,
which generally provides that officers and directors shall have no personal
liability to a Company or its stockholders for monetary damages for breaches
of their fiduciary duties as officers and directors, except for breaches of
their duties of loyalty, acts or omissions not in good faith or which
involve intentional misconduct or knowing violation of law, acts involving
unlawful payment of dividends or unlawful stock purchases or redemptions, or
any transaction from which an officer or director derives an improper
personal benefit. Such provisions substantially limit the shareholders'
ability to hold officers and directors liable for breaches of fiduciary
duty, and may require the Company to indemnify its officers and directors.
See "Certain Transactions - Conflicts of Interest".
No Dividends. The Company does not currently intend to pay cash
dividends on its Common Stock and does not anticipate paying such dividends
at any time in the foreseeable future. At present, the Company will follow
a policy of retaining all of its earnings, if any, to finance development
and expansion of its business. See "Dividend Policy."
Limited Capital/Need for Additional Capital. The Company presently has
no significant operating capital and is totally dependent upon receipt of
the proceeds of this offering to provide the minimum capital necessary to
commence its proposed business. Upon completion of the offering, the amount
of capital available to the Company will still be extremely limited,
especially if only the minimum amount of the offering is raised. The
Company has no commitments for additional cash funding beyond the proceeds
expected to be received from this offering. In the event that the proceeds
from this offering are not sufficient, the Company may need to seek
additional financing from commercial lenders or other sources, for which it
presently has no commitments or arrangements.
Risks Related to the Nature of the Proposed Business
Competition. The tourist industry in general and the particular
business the Company proposes to engage in of marketing tourist oriented
coloring art books as souvenirs is very specialized and highly competitive.
Most of the Company's competitors have substantially greater financial and
personnel resources than the Company. See "Business-Competition."
New Product Risks. The Company's proposed business of marketing
specialty coloring art books marketed principally toward tourists involves
new, as yet unproven products which have no established market share or
demand. The Company has not conducted any formal marketing surveys, and
there is no assurance of feasibility or that such products will be favorably
received by consumers. The Company's business will be subject to all the
risks associated with introduction of new products.
Risks Related to the Offering
Best Efforts Offering/No Firm Commitment. The Shares are offered by
the Company on a "best efforts, minimum-maximum basis"; there is no
underwriter and no firm commitment from anyone to purchase all or any of the
Shares offered. No assurance can be given that all or any of the Shares
will be sold. However, escrow provisions have been made to insure that if
subscriptions for a minimum of 200,000 Shares are not received within the
offering period, plus any extensions, all funds received will be promptly
refunded to subscribers, without interest thereon or deduction therefrom.
During the offering period, which could last up to 150 days, subscribers
will receive no interest on their funds nor have any use or right to return
of the funds.
Continuation of Control by Present Shareholders. Upon completion of
this offering, present shareholders will own a majority (between 66.7% and
80%, depending on the amount sold in the offering) of the total outstanding
securities and will have absolute voting control of the Company. Investors
in this offering will have no ability to remove, control or direct
management. Only one third of the outstanding shares is required to
constitute a quorum at any stockholders' meeting, and action may be taken by
a majority of the voting power present at a meeting, or may be taken without
a meeting by written consent of stockholders holding a majority of the total
voting power. See "Principal Stockholders" and "Description of Securities."
Immediate, Substantial Dilution to Investors. Investors in this
offering will suffer immediate, substantial dilution in the purchase price
of the Shares compared to the net tangible book value per share immediately
after the offering. Depending on the amount sold in the offering, such
dilution will be somewhere between 72% and 84%, approximately, of the
purchase price. See "Dilution."
Lack of Underwriter Participation/No Independent Due Diligence Review.
Because the Company has not engaged the services of an Underwriter with
respect to this offering, the independent due diligence review of the
Company, its affairs and financial condition, which would ordinarily be
performed by an underwriter and its legal counsel, has not been performed
with respect to the Company and investors will not have the benefit of an
underwriter's independent due diligence review.
Benefits to Present Stockholders/Disproportionate Risks. The present
stockholders of the Company, paid $8,000 cash for the 800,000 shares of the
Company's Common Stock which are presently outstanding. If all 400,000
Shares offered herein are sold, immediately after completion of the
offering, present stockholders will still own two thirds of the then
outstanding Common Stock. Investors in this offering will own the other
third, for which they will have paid $100,000 cash. If only the minimum
number of Shares offered is sold, present stockholders will own 80% of the
then outstanding Common Stock. Investors in this offering will own the
other 20%, for which they will have paid $50,000 cash. Thus, the cash
contributed to capital of the Company by investors in this offering is
disproportionately greater than the Common Stock ownership percentage they
receive. Present stockholders will benefit from a greater share of the
Company if successful, while investors in this offering risk a greater loss
of cash invested if the Company is not successful. See "Comparative Data."
Substantial Management Discretion in Use of Proceeds. The proceeds of
this offering are not specifically allocated and management will have
substantial, broad discretion in the allocation and use of proceeds from
this offering. Investors will not have the benefit of knowing, at the time
of their investment, exactly how the funds invested by them will be used by
the Company.
Potential Issuance of Additional Common and Preferred Stock. The
Company is authorized to issue up to 50,000,000 shares of Common Stock, of
which only 1,200,000 shares at most will be issued and outstanding upon
completion of this offering. The Board of Directors of the Company will
have the ability, without seeking shareholder approval, to issue additional
shares of Common Stock in the future for such consideration as the Board of
Directors may consider sufficient. The issuance of additional Common Stock
in the future will reduce the proportionate ownership and voting power of
the Common Stock offered hereby. The Company is also authorized to issue up
to 5,000,000 shares of preferred stock, the rights and preferences of which
may be designated in series by the Board of Directors. Such designations
may be made without shareholder approval. The Board of Directors has not
designated any series or issued any shares of preferred stock. The
designation and issuance of series of preferred stock in the future would
create additional securities which would have dividend and liquidation
preferences over the Common Stock offered hereby. See "Description of
Securities."
Shares Eligible for Future Sale. All shares of Common Stock presently
outstanding are restricted securities and/or securities held by affiliates
which are not presently eligible, but may in the future be eligible to sell,
pursuant to Rule 144, in any public market that may develop for the Common
Stock. Future sales by current shareholders could depress the market prices
of the Common Stock in any such market. See "Shares Eligible for Future
Sale".
Arbitrary Determination of Offering Price. The public offering price
of the Shares of Common Stock offered hereby was arbitrarily determined by
management of the Company and was set at a level substantially in excess of
the price recently paid by present shareholders for securities of the same
class. The price bears no relationship to the Company's assets, book value,
net worth or other economic or recognized criteria of value. In no event
should the public offering price be regarded as an indicator of any future
market price of the Company's securities.
No Assurance of a Liquid Public Market for Securities. There has been
no public market for the Shares prior to the offering made hereby. The
Shares will not be listed on an exchange or quoted on the NASDAQ system upon
completion of this offering and there can be no assurance any market will
develop for the securities or that if a market does develop, that it will
continue. There can also be no assurance as to the depth or liquidity of
any market for Common Stock or the prices at which holders may be able to
sell the securities. As a result, an investment in the Shares may be
totally illiquid and investors may not be able to liquidate their investment
readily or at all when they need or desire to sell.
Volatility of Stock Prices. In the event a public market does develop
for the Shares, market prices will be influenced by many factors, and will
be subject to significant fluctuation in response to variations in operating
results of the Company and other factors such as investor perceptions of the
Company, supply and demand, interest rates, general economic conditions and
those specific to the industry, international political conditions,
developments with regard to the Company's activities, future financial
condition and management.
Applicability of Penny Stock Risk Disclosure Requirements. The
securities of the Company will be considered a "penny stock" as that term is
defined in rules promulgated under the Exchange Act. Under these rules,
broker-dealers participating in transactions in penny stocks must first
deliver a risk disclosure document which describes the risks associated with
penny stocks, the broker-dealer's duties, the customer's rights and
remedies, and certain market and other information, and make a suitability
determination approving the customer for penny stock transactions based on
the customer's financial situation, investment experience and objectives.
Broker-dealers must also disclose these restrictions in writing to the
customer, obtain the specific written consent of the customer, and provide
monthly account statements to the customer. With these restrictions, the
likely effect of designation as a penny stock will be to decrease the
willingness of broker-dealers to make a market, to decrease the liquidity of
the stock and increase the transaction cost of sales and purchases as
compared to other securities not so designated. See "Plan of Distribution."
DILUTION
Dilution is the difference between the public offering price of $.25
per share for the Common Stock offered herein, and the net tangible book
value per share of the Common Stock immediately after its purchase. The
Company's net tangible book value per share is calculated by subtracting the
Company's total liabilities from its total assets less any intangible
assets, and then dividing by the number of shares then outstanding.
The net tangible book value of the Company prior to the offering, based
on the March 31, 1996 financial statements, was $7,238.00 or approximately
$.01 per common share. Prior to selling any shares in this offering, the
Company has 800,000 shares of Common Stock outstanding.
If all Shares offered herein are sold, the Company will have 1,200,000
Shares outstanding upon completion of the offering. The post offering pro
forma net tangible book value of the Company, which gives effect to receipt
of the net proceeds from the offering (assuming payment of a sales
commission on all shares sold) and issuance of the additional Shares of
Common Stock in the offering, but does not take into consideration any other
changes in the net tangible book value of the Company after March 31, 1996,
will be $81,238.00 or $.07 per share, approximately. This would result in
dilution to investors in this offering of $.18 per share, or 72% from the
public offering price of $.25 per share. Net tangible book value per share
would increase to the benefit of present stockholders from $.01 prior to the
offering to $.07 after the offering, or an increase of $.06 per share
attributable to purchase of the Shares by investors in this offering.
If only the minimum number of Shares is sold, the Company will have
1,000,000 Shares outstanding upon completion of the offering. The post
offering pro forma net tangible book value of the Company will be $38,238.00
or approximately $.04 per share. This would result in dilution to investors
in this offering of $.21 per share, or 84% from the public offering price of
$.25 per share. Net tangible book value per share would increase to the
benefit of present stockholders from $.01 prior to the offering to $.04
after the offering, or an increase of $.03 per share attributable to the
purchase of the Shares by investors in this offering.
The following table sets forth the estimated net tangible book value
("NTBV") per share after the offering and the dilution to persons purchasing
Shares based on the foregoing minimum and maximum offering assumptions.
Minimum Maximum
Public offering price/share $.25 $.25
NTBV/share prior to offering $.01 $.01
Increase attributable to new investors .03 .06
Post offering pro forma NTBV/share .04 .07
Dilution to new investors in this offering $.21 $.18
COMPARATIVE DATA
The following charts illustrate the pro forma proportionate ownership
in the Company, upon completion of the offering under alternative minimum
and maximum offering assumptions, of present stockholders and of investors
in this offering, compared to the relative amounts paid and contributed to
capital of the Company by present stockholders and by investors in this
offering, assuming no changes in net tangible book value other than those
resulting from the offering.
MINIMUM Shares Owned Percent Cash Paid Percent Price/share
OFFERING
Present 800,000 80% $ 8,000 13.8% $0.01
Shareholders
New 200,000 20% $ 50,000 86.2% $0.25
Investors
MAXIMUM Shares Owned Percent Cash Paid Percent Price/share
OFFERING
Present 800,000 66.67% $ 8,000 7% $0.01
Shareholders
New 400,000 33.33% $100,000 93% $0.25
Investors
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 400,000 Shares
offered hereby at a public offering price of $.25 per Share will vary
depending upon the total number of Shares sold and the amount of any
commissions paid to licensed NASD broker-dealers in connection with such
sales. Regardless of the amount of any commissions paid, the Company also
expects to incur other offering expenses estimated at $12,000 for legal,
accounting, printing and other costs in connection with the offering. The
following table sets forth gross and net proceeds, alternatively under the
minimum and maximum offering, assuming that commissions are paid with
respect to all sales, and management's present estimate of the allocation
and prioritization of net proceeds expected to be received from this
offering. Actual receipts and expenditures may vary from these estimates.
Pending use, the Company will invest the net proceeds in investment-grade,
short-term, interest bearing securities.
Minimum Maximum
Offering Offering
Gross Proceeds $ 50,000 $100,000
Commissions (1) 7,000 14,000
Other Offering Expenses (2) 12,000 12,000
NET OFFERING PROCEEDS $ 31,000 $ 74,000
Purchase of equipment (3) $ 8,300 $ 8,300
Purchase of Inventory (4) 10,000 10,000
Initial Operating Expenses & Working 12,700 55,700
Capital (5)
TOTAL $ 31,000 $ 74,000
(1) The foregoing amount assumes payment of sales commissions with respect
to all Shares sold. The Company will pay a commission of up to 14% of
the offering price to any licensed NASD Broker-dealers who participate
in the offering, but only with respect to sales made by them. To the
extent that sales are made by the officer of the Company without the
payment of any sales commission or discount, the amount allocated above
for the payment of commissions will be reallocated and used as
additional working capital for the Company's operations.
(2) Regardless of the number of Shares sold in the offering and the amount
of any commissions paid, the Company will incur other offering expenses
for legal and accounting fees and costs, printing and transfer agent
costs, filing fees, etc.
(3) The Company intends to use a portion of the proceeds of this offering
to purchase certain computer, fax, printing and photocopying equipment
that will enable it to handle printing and other reproduction on a
limited basis in house. Larger scale printing requirements will still
be sent to professional printing establishments on a contract basis.
The foregoing amount represents management's estimate of the cost of a
computer system, scanning software, fax machine, laser printer and
photocopy machine which the Company plans to acquire.
(4) The Company intends to use a portion of the proceeds of this offering
for printing an initial production run of approximately 10,000 copies
of the first edition of the coloring art books, to provide an initial
inventory which the Company will attempt to market. The foregoing
amount represents management's estimate of such printing costs.
(5) The Company will use a portion of the proceeds to provide general
working capital to meet other operating expenses during the start up
period of operations until such time that the Company is able to
generate revenues from operations to cover such expenses. These
expenses include general and administrative expenses, sales and
marketing expenses, and all other expenses not categorized above.
MANAGEMENT'S PLAN OF OPERATION
The following discussion and analysis should be read in conjunction
with the Company's consolidated financial statements and the notes
associated with them contained elsewhere in this prospectus.
Plan of Operations.
The Company was only recently incorporated on December 26, 1995. The
Company has not commenced planned principal operations and is considered a
development stage company. The Company has no significant assets, no active
business operations nor any results therefrom. To date, activities have
been limited to organizational matters and the preparation and filing of the
registration statement of which this prospectus is a part.
Management's plan of operation for the next twelve months is first to
raise funds from this offering. If the offering is successful, the Company
intends to use the proceeds primarily to complete artwork and pay for the
costs of an initial printing of approximately 10,000 copies of a specialty
children's coloring art book, which the Company will then attempt to market.
The Company will also use offering proceeds to make initial equipment
purchases and other capital expenditures for a computer system, a digitized
scanner software program, a plain paper laser fax machine, a laser printer
and a photocopy machine. A portion of the proceeds will also be used to
provide initial working capital for the operation of the Company's proposed
business. The Company is totally dependent upon the successful completion
of this offering and receipt of at least the minimum amount of proceeds
therefrom, of which there is no assurance, for the ability to commence its
intended business operations.
Inasmuch as there is no assurance that this offering will be successful
and that the Company will receive any net proceeds therefrom, the Company
has not entered into any contractual commitments for printing and/or
marketing of the coloring art books, and will not do so unless and until the
offering is completed. Therefore there is absolutely no assurance that the
Company will be able, with the proceeds of this offering, to enter into
suitable arrangements for printing and marketing. At this time, no
assurances can be given with respect to the timing of commencement of
operations or the length of time after commencement that it will be
necessary to fund operations from proceeds of this offering. If the
marketing of the initial printing of books is successful, management intends
for the foreseeable future to reinvest the revenues derived therefrom for
additional printings and editions of the coloring art books, and for
development and marketing costs relating to a line of colored pencils which
the Company also intends to eventually market.
Management believes that the minimum net proceeds of this offering will
be sufficient to make an initial printing of approximately 10,000 copies and
to begin marketing the coloring art books, after which time management
anticipates that the Company will begin generating revenues from sales to
cover ongoing expenses. However, there is absolutely no assurance of this.
If the initial marketing of the coloring art books is unsuccessful,
investors will have lost their money and management will not attempt to
pursue further marketing efforts with respect to such product, and it is
unlikely the Company would have the financial ability to do so in any event.
Instead management will call a shareholders meeting to decide whether to
liquidate the Company or what direction the Company will pursue, if any.
However, the Company presently has no plans, commitments or arrangements
with respect to any other potential business venture and there is no
assurance the Company could become involved with any other business venture,
especially any business venture requiring significant capital.
BUSINESS
History of the Company
Kayenta Kreations, Inc. (the "Company") was recently incorporated under
the laws of the State of Nevada on December 26, 1995. The Company has not
commenced business operations and is considered a development stage company.
To date, activities have been limited to organizational matters and the
preparation and filing of the registration statement of which this
prospectus is a part. In connection with the organization of the Company,
the founding shareholders of the Company contributed an aggregate of $8,000
cash to capitalize the Company in exchange for 800,000 shares of Common
Stock. The Company has no significant assets, and is totally dependent upon
the successful completion of this offering and receipt of the proceeds
therefrom, of which there is no assurance, for the ability to commence its
proposed business operations. If less than the maximum offering proceeds
are received, the Company may be required to substantially reduce or
eliminate certain of its development activities, limit its operations
significantly, or otherwise modify its business strategy.
Proposed Business of the Company
The Company was formed for the purpose of engaging in the business of
producing and marketing specialty children's coloring art books and art
coloring pencils. The Company intends to raise capital through a public
offering of its securities and use the funds derived therefrom primarily to
pay for the costs of an initial printing of approximately 10,000 copies of a
coloring art book, which the Company will then attempt to market.
The Company plans to create specialty children's coloring art books
that depict various aspects of Southwestern and Western heritage, traditions
and culture of the United States. Drawings will characterize various
features and aspects of the Colorado Plateau and its history, recreation,
geography, archeology, pictographs, flora and fauna. It is anticipated that
different editions of the coloring art book will eventually be produced and
distributed throughout the Colorado Plateau and Great Basin area. The
different editions will be tailored to specific events or areas within the
Colorado Plateau and Great Basin and will feature drawings that depict such
events or some aspects of the heritage, culture and traditions that
represent the uniqueness of a particular area.
For instance, an example of an edition featuring a specific event would
be a coloring art book with drawings depicting the Annual Easter Jeep Safari
held in Moab, Utah, which has been featured in demonstration copies which
were used by the President in initial, informal marketing surveys, and may
also be featured in future, regular production editions. This event brings
over 5,000 participants and visitors from several states in the U.S.
The Jeep Safari is just one of forty-five organized 4x4 events held
throughout the United States. Families with children of all ages attend
these events and contribute to the large numbers of participants. Other
editions will feature places and events such as the Glen Canyon National
Recreation Area (Lake Powell), Grand Canyon National Park and other national
and state parks in Utah, Arizona, Colorado and New Mexico. Each area
featured offers different and distinctive scenic attractions and
recreational activities, including water sports, river running, hiking and
mountain biking. The Southwestern U.S. is also rich in Native American
cultural influences, and other editions will feature items associated with
those cultures, including basket weaving, pottery, and ancient petroglyphs,
pictographs and rock art.
In conjunction with marketing coloring art books, the Company plans to
create and market its own specialized assortment of good quality art
coloring pencils. The pencil assortment will feature colors and shades
specially selected by management to match the colors and shades of soils,
rocks, plants, animals and other items commonly seen in the desert
Southwest. The pencils will be marketed using the Company's own color names
as an alternative to crayons, which can be quite messy and are subject to
melting, particularly in the hot summer temperatures of the desert.
Marketing, Distribution and Advertising Strategies
Management of the Company believes that with the dramatic increases
seen in recent years in the numbers of tourists and other visitors coming to
national and state parks and other tourist attractions in the Southwestern
U.S., particularly in the area of the Colorado Plateau, increased
opportunities are presented to market as souvenirs, a variety of products
which feature the distinctive places and events which attract people to
these destinations and/or have themes associated with such destinations. In
addtition to the usual products marketed as souvenirs, management believes
that a potential market exists for a specialty children's coloring art book
which depicts items, places and events in or associated with the
Southwestern U.S. However, the Company has not conducted any formal
marketing surveys and there is no assurance of any market interest or demand
for such a product.
Management intends to pursue marketing efforts in at least two
different areas. Since the coloring books will feature drawings depicting
certain special or distinctive events that occur in different places in the
Southwestern U.S., management intends, wherever possible, to attend such
events. Management is aware of several special events that occur during the
Spring, Summer, and Fall throughout Utah, Arizona and Colorado, including
biking events, 4x4 events, river running expeditions, etc. During some of
these events, booths are offered to potential vendors for a nominal fee.
Management of the Company will be responsible to contact the organizers of
such special events to obtain booth space or otherwise acquire rights of
distribution during such events, and intends to market the products on a
retail basis to the participants and others attending such events.
Management also intends to contact directly in person or by mail or
telephone solicitation the owners and other proprietors of existing retail
establishments in various locations throughout the Southwest to market the
products on a wholesale basis. Wholesale buyers would include those
businesses located in tourist destinations including airports, scenic and
recreation areas, towns and cities nearby and surrounding national and state
parks and other destination points of interest. Examples of potential
buyers would include tourist and souvenir shops, specialty shops, grocery
stores, toy stores, drug stores, hotel and motel shops and tourist
information locations, as well as any art specialty shops.
In addition to the regular size editions of the coloring art book, the
Company will offer a smaller version of the coloring book to hotels, motels,
restaurants, conventions, expedition outfitters and other businesses that
may wish to offer such books on a complimentary basis to their regular
patrons. Wholesale buyers of both the regular size and complimentary
versions of the coloring books will have the option of ordering their own
customized edition of the books or purchasing an existing edition of general
interest or an edition more particularly fitted to a given locale with
drawings depicting local items, events and places of interest.
The Company intends to prepare flyers and brochures advertising its
products, which will be distributed by mail and dropped off in direct
contacts. Management will also prepare demonstration copies of the books
for use in direct contacts. Management anticipates that distribution of the
Company's products will be handled through mail order or by direct delivery
for the most part. Management intends to have printed on each copy of any
edition or version of the books, ordering information and/or forms, and
possibly a toll free 800 number for convenience in ordering. Inasmuch as the
Company's products will be targeted mainly toward tourist traffic,
management anticipates that the seasonality of the business will coincide
with the tourist season in the Colorado Plateau area, which basically begins
in March or April and continues into October or November, with its peak
during the summer months.
Competition
The proposed business of the Company is very specialized and there is
no assurance of market interest or demand. The tourist industry in general
and the marketing of souvenirs and other specialty items of interest to
tourists is highly competitive and most of the Company's competitors have
substantially greater financial and personnel resources than the Company.
Management is aware of limited numbers of tourist oriented coloring books or
similar specialty items, but is not aware of anyone marketing a coloring art
book exactly like the Company intends to market.
Physical Facilities and Employees
The Company presently has no office facilities but for the time being
will use the home office facilities of Ms. Michelle Barlow, its President,
in Salt Lake City, Utah, on a rent free basis as its principal place of
business. Management does not intend to seek other office arrangements
immediately upon completion of the offering, but will seek such arrangements
at such time in the future as the Company's business requires more extensive
facilities, which is not anticipated in the immediate future. The Company
may use a portion of the proceeds of this offering for such purpose, if and
as needed.
The Company presently has no salaried employees, and does not presently
anticipate the need to hire employees upon completion of the offering. The
sole officer of the Company will not be employed full time initially and
will not receive a regular salary, wage or other cash compensation for her
time, unless and until the Company's business operations develop to the
point where a full time or other extensive time commitment is required.
MANAGEMENT
Executive Officers, Directors and Significant Employees
The following table sets forth the sole director and executive officer
of the Company, her age, and all offices and positions with the Company. A
director is elected for a period of one year and thereafter serves until his
or her successor is duly elected by the stockholders and qualifies.
Officers and other employees serve at the will of the Board of Directors.
Term Served As Positions
Name of Director Age Director/Officer With Company
Michelle Barlow 33 Since inception President &
Secretary/Treasurer
This individual will serve as management of the Company. A brief
description of her background and business experience is as follows:
Michelle Barlow will serve as President, Secretary/Treasurer and
Director of the Company. Ms. Barlow has completed two years of college
coursework majoring in accounting and business and is currently attending
college at Salt Lake Community College, on a part time basis in order to
complete an accounting degree. Ms. Barlow owned and operated Plants by
Design, a business engaged in interior landscaping, from 1986 to 1989. From
1989 to 1995, she was employed at the University of Utah as an
Administrative Assistant, where she was involved in various bookkeeping and
accounting procedures, including payroll, general ledger, year end tax
return preparation and submitting financial reports, as well as writing
governmental proposals and securing grants and private funds for research.
Ms. Barlow also has operating experience in various computer software
programs for both Macintosh and IBM PC compatible systems. Because of her
personal interests, she has travelled in and studied as a hobby the geology
of the Colorado Plateau and also its plant and animal life, culture and
traditions.
Ms. Barlow holds no directorships in any other company subject to the
reporting requirements of the Securities Exchange Act of 1934.
Executive Compensation
The Company was only recently incorporated, has not yet commenced
planned operations and has not paid any compensation to its executive
officer or director to date.
Proposed Compensation. The sole officer/director will be entitled to
reimbursement of any out of pocket expenses reasonably and actually incurred
on behalf of the Company. Initially, it is anticipated that the officer
will only devote a portion (up to approximately 20%) of her time to the
affairs of the Company. She will not be employed full time and will not
receive a regular salary, wage or other cash compensation for her time,
unless and until the Company's business operations develop to the point
where a full time or other extensive time commitment is required. The
Company presently has no formal employment agreements or other arrangements
or understandings with the officer regarding the commitment of time or the
payment of salaries or other compensation. However, the officer is prepared
to devote such time as may be necessary to the development of the Company's
business. The amounts of compensation and other terms of any full time
employment arrangements with Ms. Barlow would be determined if and when such
arrangements become necessary.
CERTAIN TRANSACTIONS
In connection with the organization of the Company, its founding
shareholders paid an aggregate of $8,000 cash to purchase 800,000 shares of
Common Stock of the Company. Upon incorporation, $5,000 was initially
contributed in exchange for 500,000 shares of Common Stock. Subsequently in
March of 1996, an additional $3,000 was contributed in exchange for 300,000
shares of Common Stock. See "Principal Shareholders."
It is contemplated that the Company may enter into certain transactions
with officers, directors or affiliates of the Company which may involve
conflicts of interest in that they will not be arms' length transactions.
These transactions include the following:
The Company presently has no office facilities but for the time being
will use as its business address the home of Ms. Michelle Barlow on a rent
free basis, until such time as the business operations of the Company may
require more extensive facilities and the Company has the financial ability
to rent commercial office space. There is presently no formal written
agreement for the use of such facilities, and no assurance that such
facilities will be available to the Company on such a basis for any specific
length of time.
The Company has no formal written employment agreement or other
contracts with its President, and there is no assurance that the services
and facilities to be provided by Ms. Barlow will be available for any
specific length of time in the future. Ms. Barlow anticipates initially
devoting up to approximately 10% of her time to the affairs of the Company.
If and when the business operations of the Company increase and a more
extensive time commitment is needed, Ms. Barlow is prepared to devote more
time to the Company, in the event that becomes necessary. The amounts of
compensation and other terms of any full time employment arrangements with
Ms. Barlow would be determined if and when such arrangements become
necessary.
Conflicts of Interest
In addition to the conflicts of interest that are inherent in the
foregoing transactions, conflicts of interest may also arise from the fact
that the President and director of the Company will not be employed full
time and will have other activities and business interests, to which she
will also devote time and attention. Inasmuch as the President will not
receive any regular salary or wage from the Company, at least initially,
these other activities include other employment or business activities to
obtain her livelihood, as well as schooling activities, inasmuch as the
President is still continuing to pursue her educational goals. These other
activities could give rise to a conflict with respect to certain operations
of the Company, particularly with respect to the amount of time management
devotes to the Company and to these other activities.
A director of the Company owes fiduciary duties to the Company which
may conflict with these other interests. The Company has not entered into
any non compete, confidentiality or similar agreements with the director.
The fiduciary duties that directors owe to a Company include the duty not to
withhold from the Company, or appropriate, any corporate opportunity which
the Company may be able to exploit, the duty not to use for their personal
benefit or the benefit of any other individual or entity any information not
generally known which they acquire through their association with the
Company, and in short, the duty to deal fairly with the Company. The
Company's current director intends to submit to the Company any potential
business she becomes aware of which may constitute a corporate opportunity
to the Company. The Company's policy is that all transactions between the
Company and any affiliates be on terms no less favorable to the Company than
could be obtained from unaffiliated parties.
Indemnification
The general corporation law of Nevada permits provisions in the
articles, by-laws or resolutions approved by shareholders which limit
liability of directors and officers for breach of fiduciary duty to certain
specified circumstances, namely, breaches of their duties of loyalty, acts
or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, acts involving unlawful payment of dividends or
unlawful stock purchases or redemptions, or any transaction from which a
director or officer derives an improper personal benefit. The Company's by-
laws indemnify its officers and directors to the full extent permitted by
Nevada law. The by-laws with these exceptions eliminate any personal
liability of an officer or director to the Company or its shareholders for
monetary damages for the breach of fiduciary duty and therefore an officer
or director cannot be held liable for damages to the Company or its
shareholders for gross negligence or lack of due care in carrying out his or
her fiduciary duties. The Company's Articles provide for indemnification to
the full extent permitted under law which includes all liability, damages
and costs or expenses arising from or in connection with service for,
employment by, or other affiliation with the Company to the maximum extent
and under all circumstances permitted by law. Nevada law permits
indemnification if a director or officer acts in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation. A director or officer must be indemnified as to any matter in
which he or she successfully defends himself or herself. Indemnification is
prohibited as to any matter in which the director or officer is adjudged
liable to the corporation. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers,
and controlling persons of the Company pursuant to the foregoing provisions
or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock with respect to each
director of the Company, each person known to the Company to be the
beneficial owner of more than five percent (5%) of said securities, and all
directors and executive officers of the Company as a group:
Title of Amount and Nature of Percent of % After
Name and Address Class Beneficial Ownership Class Offering
Michelle Barlow Common 250,000 shares 31.25% 25%
1020 Belmont Ave.
Salt Lake City, UT
84105
Common 275,000 shares 34.38% 27.5%
Eslie Barlow
1354 S. 1000 W.
Salt Lake City, UT
84104 Common 275,000 shares 34.38% 27.5%
Lynn Dixon
311 S. State, #460
Salt Lake City, UT Common 250,000 shares 31.25% 25%
84111
All officers and
directors as a group
(1 person)
Prior to the sale of any Shares in this offering, these individuals are
the only shareholders of the Company. The foregoing amounts include all
shares these persons are deemed to beneficially own regardless of the form
of ownership. See "Certain Transactions."
DESCRIPTION OF SECURITIES
The following statements are qualified in their entirety by reference
to the detailed provisions of the Company's Articles of Incorporation and
Bylaws, copies of which will be furnished to an investor upon written
request. The Shares registered pursuant to the registration statement of
which this prospectus is a part are shares of Common Stock, all of the same
class and entitled to the same rights and privileges as all other shares of
Common Stock.
Common Stock
The Company is presently authorized to issue 50,000,000 shares of $.001
par value Common Stock. The holders of common stock, including the Shares
offered hereby, are entitled to equal dividends and distributions, per
share, with respect to the common stock when, as and if declared by the
Board of Directors from funds legally available therefor. No holder of any
shares of common stock has a pre-emptive right to subscribe for any securi
ties of the Company nor are any common shares subject to redemption or
convertible into other securities of the Company. Upon liquidation,
dissolution or winding up of the Company, and after payment of creditors and
preferred stockholders, if any, the assets will be divided pro-rata on a
share-for-share basis among the holders of the shares of common stock. All
shares of common stock now outstanding are fully paid, validly issued and
non-assessable. Each share of common stock is entitled to one vote with
respect to the election of any director or any other matter upon which
shareholders are required or permitted to vote. Holders of the Company's
common stock do not have cumulative voting rights, so that the holders of
more than 50% of the combined shares voting for the election of directors
may elect all of the directors, if they choose to do so and, in that event,
the holders of the remaining shares will not be able to elect any members to
the Board of Directors.
The Company has reserved from its authorized but unissued shares a
sufficient number of shares of Common Stock for issuance of the Shares
offered hereby. The shares of Common Stock issuable on completion of the
offering will be, when issued in accordance with the terms of the offering,
fully paid and non-assessable.
During the pendency of the offering, subscribers will have no rights as
stockholders of the Company until the offering has been completed and the
Shares have been issued to them.
Preferred Stock
The Company is also presently authorized to issue 5,000,000 shares of
$.001 par value Preferred Stock. Under the Company's Articles of
Incorporation, as amended, the Board of Directors has the power, without
further action by the holders of the Common Stock, to designate the relative
rights and preferences of the preferred stock, and issue the preferred stock
in such one or more series as designated by the Board of Directors. The
designation of rights and preferences could include preferences as to
liquidation, redemption and conversion rights, voting rights, dividends or
other preferences, any of which may be dilutive of the interest of the
holders of the Common Stock or the Preferred Stock of any other series. The
issuance of Preferred Stock may have the effect of delaying or preventing a
change in control of the Company without further shareholder action and may
adversely effect the rights and powers, including voting rights, of the
holders of Common Stock. In certain circumstances, the issuance of
preferred stock could depress the market price of the Common Stock. The
Board of Directors effects a designation of each series of Preferred Stock
by filing with the Nevada Secretary of State a Certificate of Designation
defining the rights and preferences of each such series. Documents so filed
are matters of public record and may be examined in accordance with
procedures of the Nevada Secretary of State, or copies thereof may be
obtained from the Company.
Transfer Agent
American Registrar & Transfer Co., 10 Exchange Place, Suite 750, P.O.
Box 1798, Salt Lake City, Utah 84110, (801) 363-9066, has agreed to serve as
transfer agent and registrar for the Company's outstanding securities upon
completion of the offering.
Dividend Policy
The Company has not previously paid any cash dividends on Common Stock
and does not anticipate or contemplate paying dividends on Common Stock in
the foreseeable future. It is the present intention of management to
utilize all available funds for the development of the Company's business.
There is no assurance that the Company will ever have excess funds available
for the payment of dividends. The only legal restrictions that limit the
ability to pay dividends on common equity or that are likely to do so in the
future, are those restrictions imposed by State laws. Under Nevada
corporate law, no dividends or other distributions may be made which would
render the Company insolvent or reduce assets to less than the sum of its
liabilities plus the amount needed to satisfy any outstanding liquidation
preferences.
SHARES ELIGIBLE FOR FUTURE SALE
All 800,000 shares of Common Stock currently outstanding are
"restricted securities," as that term is defined under Rule 144 promulgated
under the Securities Act of 1933, as amended, in that such shares were
issued and sold by the Company without registration, in private transactions
not involving a public offering, and/or are securities held by affiliates.
Although such restricted and affiliate securities are not presently
tradeable in any public market which may develop for the Common Stock, such
securities may in the future be publicly sold into any such market, if such
a market should develop, in accordance with the provisions of Rule 144. In
general, under Rule 144 as currently in effect, a nonaffiliated person (or
group of persons whose share are aggregated), can sell restricted
securities, and affiliates of the Company can sell restricted and other
securities, in amounts that do not exceed within any three-month period, the
greater of 1% of the total number of outstanding shares of the same class,
or (if the Stock becomes quoted on NASDAQ or a stock exchange), the reported
average weekly trading volume during the four calendar weeks preceding the
sale; provided, that at least two years have elapsed since the restricted
securities being sold were acquired from the Company or any affiliate of the
Company, and provided further that certain other conditions are also
satisfied. If at least three years have elapsed since restricted securities
were acquired from the Company or an affiliate of the Company, a person who
has not been an affiliate of the Company for at least three months is
entitled to sell such restricted shares under Rule 144 without regard to any
limitations on the amount.
PLAN OF DISTRIBUTION
The Company is offering up to 400,000 Shares of its $.001 par value
Common Stock to the public on a "best efforts, 200,000 shares minimum,
400,000 shares maximum" basis, at a price of $.25 per share. The offering
will be managed by the Company without an underwriter. The Company may
enter into agreements with securities broker-dealers who are members of the
National Association of Securities Dealers, Inc. (NASD), whereby these
broker-dealers will be involved in the sale of the Shares and will be paid a
commission by the Company of up to 14% of the offering price of the Shares
sold by them, as agreed to between the Company and the broker. In addition,
the Shares will be offered and sold by the officer of the Company, who will
receive no sales commissions or other compensation in connection with the
offering, except for reimbursement of expenses actually incurred on behalf
of the Company in connection with such activities. This will be deemed to
be a "parallel distribution" and will not involve any reallocations between
NASD members and non-members. The Company will not compensate any of its
officers or directors for sale of securities hereunder but may pay a finders
fee (not to exceed 14%) to other persons who introduce investors, where no
sales commission is paid and such payment is permitted under applicable
state law.
There is no assurance that all or any of the Shares will be sold. If
the Company fails to receive subscriptions for a minimum of 200,000 Shares
within 120 days from the date of this Prospectus (or 150 days if extended by
the Company), the offering will be terminated and any subscription payments
received will be promptly refunded within 5 days to subcribers, without any
deduction therefrom or any interest thereon. If subscriptions for at least
the minimum amount are received within such period, funds will not be
returned to investors and the Company may continue the offering until such
period expires or subscriptions for all 400,000 Shares have been received,
whichever occurs first.
Method of Subscribing
Persons may subscribe by filling in and signing the subscription
agreement and delivering the same to the Company. The subscription price
must be paid in cash, wire transfer, cashier's check, bank draft or postal
or express money order payable in United States dollars to be held in Escrow
until the subscriptions for at least 200,000 Shares have been a accepted by
the Company. Certificates representing the Common Stock subscribed for
hereunder will be issued as soon as practicable after completion of the
Offering.
All subscription payments should be made payable to Brighton Bank as
Escrow Agent for the Company. The Company and any participating broker-
dealers will mail or otherwise forward all subcription payments received, by
noon of the next business day following receipt, to Brighton Bank at 311
South State Street, Salt Lake City, Utah 84111 for deposit into the escrow
account being maintained by Brighton Bank as escrow agent for the Company,
pending receipt of subscriptions for at least a minimum of 200,000 Shares or
expiration of the offering period, whichever occurs first. Subcription
payments will only be disbursed from the escrow account to the Company if at
least 200,000 Shares are sold, or if not sold, for the purpose of refunding
subscription payments to the subscribers. Subscribers will have no right to
return or use of their funds during the offering period, which may last up
to 150 days.
LEGAL MATTERS
To the knowledge of management, there is no material litigation pending
or threatened against the Company. The validity of the issuance of the
Shares offered hereby will be passed upon for the Company by Thomas G.
Kimble & Associates, Salt Lake City, Utah.
EXPERTS
The consolidated financial statements of Kayenta Kreations, Inc. as of
December 31, 1995, included in this Prospectus have been examined by David
T. Thomson P.C. independent certified public accountant, as indicated in the
report with respect thereto, and are included herein in reliance on such
report given upon the authority of that firm as an expert in accounting and
auditing.
<PAGE>
KAYENTA KREATIONS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
AND
FROM INCEPTION (DECEMBER 26, 1995) TO DECEMBER 31, 1995
WITH
INDEPENDENT AUDITOR'S REPORT
<PAGE>
KAYENTA KREATIONS, INC.
(A Development Stage Company)
CONTENTS
PAGE
Independent Auditor's Report 1
Balance Sheet, March 31, 1996 (Unaudited) and
December 31, 1995 2
Statement of Operations, for the three months ended
March 31, 1996 Unaudited) and from Inception
December 26, 1995) to December 31, 1995 3
Statement of Stockholders' Equity, for the three
months ended March 31, 1996 Unaudited) and from
Inception December 26, 1995) to December 31, 1995 4
Statement of Cash Flows, for the three months ended
March 31, 1996 (Unaudited) and from Inception
December 26, 1995) to December 31, 1995 5
Notes to Financial Statements 6-7
<PAGE>
Independent Auditor's Report
Board of Director
KAYENTA KREATIONS, INC.
Salt Lake City, Utah
I have audited the accompanying balance sheet of Kayenta Kreations, Inc. (a
development stage company) as of December 31, 1995 and the related
statements of operations, stockholders' equity and cash flows from inception
(December 26, 1995) to December 31, 1995. These financial statements are
the responsibility of the Company's management. My responsibility is to
express an opinion on the financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kayenta Kreations (a
development stage company) as of December 31, 1995 and the results of its
operations and its cash flows from inception (December 26, 1995) to December
31, 1995 in conformity with generally accepted accounting principles.
Salt Lake City, Utah
February 26, 1996
<PAGE>
KAYENTA KREATIONS, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
March 31, December 31,
1996 1995
(Unaudited)
CURRENT ASSETS
Cash in bank $ 6,988 $ 4,000
Deferred offering costs 250 250
Total Current Assets 7,238 4,250
OTHER ASSETS
Organization costs, less amortization of 710 748
$40 and $2
Total Other Assets 710 748
TOTAL ASSETS $ 7,948 $ 4,998
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ - $ -
STOCKHOLDERS' EQUITY
Preferred stock; $.001 par value, 5,000,000
shares authorized, no shares issued and
outstanding - -
Common stock; $.001 par value, 50,000,000
shares authorized, 800,000 and 500,000
shares issued and outstanding respectively 800 500
Capital in excess of par value 7,200 4,500
Earnings (deficit) accumulated during the (52) (2)
development stage
Total Stockholders' Equity 7,948 4,998
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,948 $ 4,998
<PAGE>
KAYENTA KREATIONS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the From
Three Months Inception Cumulative
Ended (December 26, During the
1995)
March 31, to Development
1996 December 31, Stage
1995
(Unaudited) (Unaudited)
REVENUE
Interest $ 21 $ - $ 21
EXPENSES
Amortization 38 2 40
Bank charges 33 - 33
71 2 73
NET INCOME (LOSS) $ (50) $ (2) $ (52)
EARNINGS (LOSS) PER SHARE $ (0.00) $ (0.00) $ (0.00)
KAYENTA KREATIONS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Earnings
(Loss)
Accumul-
ated
Capital During
in the
Common Excess Develop-
Stock of ment
Shares Amount Par Stage
Value
BALANCE, December 26, 1995(Inc) - $ - $ - $ -
Shares issued to initial
stockholders
for cash December 26, 1995
at $.01 per share 500,000 500 4,500 -
Net income (loss) from June 21,1995
inception) to December 31,1995 - - - (2)
BALANCE, December 31, 1995 500,000 500 4,500 (2)
Additional shares issued to initial
stockholders for cash March 6,
1996
(Unaudited) 300,000 300 2,700 -
Net income (loss) for the three
months
ended March 31,1996(Unaudited) - - - (50)
BALANCE,March 31,1996 Unaudited) 800,000 $ 800 $7,200 $ (52)
KAYENTA KREATIONS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the From
Three Inception Cumulative
Months
Ended (December During the
26, 1995)
March 31, to Development
1996 December Stage
31, 1995
(Unaudited (Unaudited)
)
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES
Cash paid for organization costs $ - $(750) $ (750)
Cash from interest 21 - 21
Cash paid for bank charges (33) - (33)
Net Cash use by Operating (12) (750) (762)
Activities
CASH FLOWS FROM INVESTING ACTIVITIES - - -
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 3,000 5,000 8,000
Deferred offering costs - (250) (250)
Net Cash Provided By Financing 3,000 4,750 7,750
Activities
NET INCREASE (DECREASE) IN CASH 2,988 4,000 6,988
CASH - BEGINNING OF PERIOD 4,000 - -
CASH - END OF PERIOD $6,988 $4,000 $ 6,988
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED (USED) BY OPERATING
ACTIVITIES
NET INCOME (LOSS) $ (50) $ (2) $ (52)
Adjustments to reconcile net income
loss)to net cash provided (used)
by operating activities
Amortization of
organization costs 38 2 40
Change in assets and
liabilities
Organization costs - (750) (750)
Total 38 (748) (710)
Adjustments
NETCASH PROVIDED(USED)BY $(12) $ (750) $ (762)
OPERATING ACTIVITIES
<PAGE>
KAYENTA KREATIONS, INC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the State
of Nevada on December 26, 1995, and has elected a fiscal year end of
December 31st. The Company was formed to engage in the business of
producing and marketing a children's coloring art book depicting
various aspects of life in the Southwestern and Western United States.
The Company has not commenced planned principle operations and is
considered a development stage Company as defined in SFAS No 7. The
Company, has at the present time, not paid any dividends and any
dividends that may be paid in the future will depend upon the financial
requirement of the Company and other relevant factors.
Net income per Share - The computation of net income <loss> per share
of common stock is based on the weighted average number of shares
outstanding during the period presented.
Organization Costs - The Company will amortize its organization
costs, which reflect amounts expended to organize the Company, over
sixty (60) months using the straight-line method.
Income Taxes - Due to no income at December 31, 1995 no provision for
income taxes has been made. There are no deferred income taxes
resulting from income and expense items being reported for financial
accounting and tax reporting purposes in different periods.
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash
equivalents. At December 31, 1995 the Company did not have non-cash
investing and financing activities.
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 of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
KAYENTA KREATIONS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Unaudited Interim Information - In the opinion of management, the
unaudited financial statements reflect all adjustments, consisting only
of normal adjustments, necessary to present fairly, the financial
position of the Company at March 31,1996 and the results of operations
and cash flows for the three months then ended. The results of
operations and cash flows for the three months ended March 31, 1996
should not necessarily be taken as indicative of the results of
operations and cash flows for the entire year ended December 31, 1996.
NOTE 2 - COMMON STOCK TRANSACTIONS
The Company was formed through the issuance of 800,000 shares of common
stock for $8,000.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company is using the home of its President as its office on a rent
free basis. As of December 31, 1995 no compensation has been paid or
accrued to any officers or directors of the Corporation.
NOTE 4 - PROPOSED OFFERING OF COMMON STOCK
The Company is filing a registration statement through which it
proposes to issue a minimum of 200,000 shares to a maximum of 400,000
shares of the Company's common stock to the public at $.25 per share
for a total of $50,000 (minimum) to $100,000 (maximum). The offering
will be managed by the Company and the shares will be offered and sold
by the officer of the Company, without any discounts or other
commission. Licensed NASD Broker-dealers may also participate and
receive commissions of up to 14% of the offering price on sales made by
them. Direct costs of the offering are estimated to be a maximum of
$14,000.Offering proceeds will be excrowed pending completion or
termination of the offering. The offering will terminate 120 days from
the date of the offering circular or 150 days if extended 30 days by
the Company. Funds held in escrow will be promptly returned to
subscribers without interest, unless the offering is completed on or
before the termination date.
NOTE 5 - INCOME TAXES
At December 31, 1995 the Company had a net federal operating loss (NOL)
of $2 which can be carried forward to offset operating income. The NOL
will expire at the end of the year 2010. A valuation allowance of $.30
has been established for those tax credits which are not expected to be
realized.
No dealer, salesman or other person
is authorized to give any
information or to make any
representations other that those
contained in this Prospectus in
connection with the offer made
hereby. If given or made, such
information or representations must
not be relied upon as having been
authorized by the Company. This
Prospectus does not constitute an
offer to sell or a solicitation of
an offer to buy any of the
securities covered hereby in any
jurisdiction or to any person to
whom it is unlawful to make such
offer or solicitation in such
jurisdiction. Neither the delivery
of this Prospectus nor any sale
made hereunder shall, in any
circumstances, create any
implication that there has been no
change in the affairs of the
Company since the date hereof.
TABLE OF
CONTENTS
Page
AVAILABLE INFORMATION 2
PROSPECTUS SUMMARY 3
RISK FACTORS 5
DILUTION 8
COMPARATIVE DATA 9
USE OF PROCEEDS 10
MANAGEMENT'S PLAN OF
OPERATION 11
BUSINESS 12
MANAGEMENT 15
CERTAIN TRANSACTIONS 16
PRINCIPAL SHAREHOLDERS 17
DESCRIPTION OF SECURITIES 18
SHARES ELIGIBLE FOR FUTURE
SALE 20
PLAN OF DISTRIBUTION 20
LEGAL MATTERS 21
EXPERTS 21
FINANCIAL STATEMENTS F-1
KAYENTA KREATIONS, INC.
400,000 Shares
Common Stock
PROSPECTUS
, 1996
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
The statutes, charter provisions, bylaws, contracts or other arrangements
under which controlling persons, directors or officers of the registrant are
insured or indemnified in any manner against any liability which they may
incur in such capacity are as follows:
(a) Section 78.751 of the Nevada Business Corporation Act provides that
each corporation shall have the following powers:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action, suit
or proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding, he
had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement
of the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction, determines upon application that in
view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense
of any claim, issue or matter therein, he must be indemnified by the
corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a
court or advanced pursuant to subsection 5, must be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders, by independent
legal counsel, in a written opinion; or
(d) If a quorum consisting of directors who were not parties to
the act, suit or proceeding cannot be obtained, by independent legal counsel
in a written opinion.
5. The certificate or articles of incorporation, the bylaws or an
agreement made by the corporation may provide that the expenses of officers
and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or officer to
repay the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the corporation.
The provisions of this subsection do not affect any rights to advancement of
expenses to which corporate personnel other than director of officers may be
entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
certificate or articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action
in his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection 2 or for the advancement of expenses made pursuant to subsection
5, may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors
and administrators of such a person."
(b) The registrant's Articles of Incorporation limit liability of its
Officers and Directors to the full extent permitted by the Nevada Business
Corporation Act.
ITEM 25. Other Expenses of Issuance and Distribution*
The following table sets forth all estimated costs and expenses, other than
underwriting discounts, commissions and expense allowances, payable by the
registrant in connection with the maximum offering for the securities
included in this registration statement:
Amount
SEC registration fee $ 100.00
Blue sky fees and expenses 1,000.00
Printing and shipping expenses 300.00
Legal fees and expenses 10,000.00
Accounting fees and expenses 500.00
Transfer and Miscellaneous expenses 100.00
-----------
Total $ 12,000.00
* All expenses are estimated except the Commission filing fee.
ITEM 26. Recent Sales of Unregistered Securities
In connection with the organization of the Company, its founding
shareholders paid an aggregate of $8,000 cash to purchase 800,000 shares of
Common Stock of the Company. Upon incorporation, $5,000 was initially
contributed in exchange for 500,000 shares of Common Stock. Subsequently in
March of 1996, an additional $3,000 was contributed in exchange for 300,000
shares of Common Stock. These transactions were not registered under the
Securities Act of 1933 (the "Act") in reliance on exemptions from
registration in Sections 3(b) and 4(2) of the Act, and Regulation D
promulgated thereunder. Securities with an aggregate offering price of only
$8,000 were offered and sold to persons with a pre-existing relationship
with the Issuer. The securities are subject to the resale provisions of
Rule 144 and may not be sold or transferred without registration except in
accordance with Rule 144 and will bear such a legend.
ITEM 27. Exhibits Index
SEC Exhibit Exhibit No.
Table No. Document Or Location
1 Form of Dealer Agreement 1.1 (previously filed)
3,4 Articles of Incorporation 3.1,4.1 (previously filed)
3,4 By-Laws 3.3,4.3 (previously filed)
4 Common Stock Specimen Certificate 4.4 (previously filed)
5,24 Opinion & Consent of Counsel 5.1,24.1 (previously filed)
20 Subscription Agreement 20
23 Consent of Accountants 23
27 Financial Data Schedule 27
ITEM 28. Undertakings
The registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a post-
effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) Include any additional or changed material information on the plan
of distribution; and
(iii)Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
Registration Statement.
(2) For determining any liability under the Securities Act, treat each post-
effective amendment as a new Registration Statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant 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, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Salt
Lake, State of Utah, on July 1, 1996.
KAYENTA KREATIONS, INC.
By: /s/ Michelle Barlow
Michelle Barlow
President (Chief Executive and Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signatures Title Date
/s/ Michelle Barlow President & Director (Chief July 1, 1996
Michelle Barlow Executive and Financial Officer)
SUBSCRIPTION AGREEMENT
KAYENTA KREATIONS, INC.
1020 Belmont Avenue
Salt Lake City, Utah 84105
THIS SUBSCRIPTION AGREEMENT made this day of
, 1996, by and between Kayenta Kreations, Inc., a Nevada corporation (the
"Issuer" or "Company"), and (the "Subscriber"), who,
for and in consideration of the mutual promises and covenants set forth
herein, do hereto agree as follows:
1. Subscription. The Subscriber hereby subscribes for
shares, at a price of $.25 per Share, and herewith tenders a subscription to
the Issuer in the amount of Dollars ($
) which the Subscriber has tendered herewith as payment for the Shares.
This Subscription Agreement ("Subscription") is an irrevocable offer by the
Subscriber to subscribe for the securities offered by the Issuer, and,
subject to the terms hereof, shall become a contract for the sale of said
securities upon the acceptance thereof by the Issuer.
2. Acceptance. This Subscription Agreement is made subject to the
Issuer's discretionary right to accept or reject the subscription herein,
and the Subscriber will be notified upon closing of the offering (the
"Acceptance Date") whether the subscription has been accepted. If the
Issuer shall for any reason reject this subscription, the Subscription will
be refunded in full, without interest, and this Subscription Agreement shall
be null, void and of no effect. Acceptance of this subscription by the
Issuer will be evidenced by the execution hereof by an officer of the
Issuer.
3. Subscriber Representations. The Subscriber hereby represents and
warrants that:
(a) The Subscriber's representations in this Agreement and the
information contained in the Subscriber's Purchaser Questionnaire are
complete and accurate to the best of the Subscriber's knowledge, and the
Company and any sales agent may rely upon them. The Subscriber will notify
the Company and any such agent immediately if any material change occurs in
any of this information before the sale of the Shares.
(b) The Subscriber is either an "accredited investor" as defined
under Rule 501 of Regulation D or, in the alternative, the Subscriber,
either alone or in conjunction with the Subscriber's purchaser
representative(s) if any, has such knowledge and experience in financial and
business matters as to be able to evaluate the merits and risks of an
investment herein.
(c) The Subscriber is able to bear the economic risk of an
investment in the securities for an indefinite period of time, can afford to
risk the loss of the entire investment in the securities, and will, after
making an investment in the securities, have sufficient means of providing
for his current needs and possible future contingencies. Additionally, the
Subscriber's overall commitment to investments which are not readily
marketable is not disproportionate to his net worth and this Subscription
will not cause such overall commitment to become excessive.
(d) The securities subscribed for herein will not be sold by the
Subscriber without registration under applicable securities acts or a proper
exemption from such registration. Further, the Subscriber shall, in the
event any of the securities subscribed for herein are to be sold without
registration, supply the Issuer with a satisfactory opinion of counsel, if
requested, that an exemption from such registration is available. In any
event, the Subscriber agrees not to transfer or resell any part of the
securities subscribed for herein to any person within six (6) months after
the termination of this offering.
(e) The Subscriber understands and acknowledges that although the
securities are being offered and sold in reliance upon an exemption from
registration under Rule 504 of Regulation D promulgated under the Securities
Act of 1933 (the "Act"), and are therefore not subject to the limitations on
resale pursuant to Rule 502(d) of Regulation D, the securities subscribed
for herein are nonetheless being acquired for the Subscriber's own account
and risk, for investment purposes, and not on behalf of any other person or
with a view to, or for resale in connection with, any distribution thereof
within the meaning of the Act, unless the resale or other transfer of the
securities has been registered under the Act, or, in the opinion of counsel
satisfactory to the Issuer, if requested, is exempt from registration under
the Act. The Subscriber is aware that although there are no legal
restrictions on the transferability of the securities, there is presently no
public market for the seurities and no assurance of a future public market
for the securities, and, accordingly, it is unlikely that the Subscriber
will be readily able to liquidate an investment in the securities quickly in
the event of an emergency. The Subscriber understands that even though the
Issuer is granting certain registration rights with respect to the
securities subscribed for herein, there is no assurance that such
registration will occur at all or at a time when the subscriber wants or
needs to sell the securities.
(f) The Subscriber hereby agrees that he does not have the right
to cancel this Subscription Agreement, which shall survive the death,
disability, or the cessation of existence as a legal entity, of the
Subscriber. Further, the Subscriber agrees that he does not have the right,
and will not attempt, to transfer his interest herein.
(g) The Subscriber has had access to any and all information
concerning the Issuer which the Subscriber and the Subscriber's financial,
tax and legal advisors required or considered necessary to make a proper
evaluation of this investment. In making the decision to purchase the
securities herein subscribed for, the Subscriber and his advisers have
relied solely upon their own independent investigations, and fully
understand that there are no guarantees, assurances or promises in
connection with any investment hereunder and understand that the particular
tax consequences arising from this investment in the Issuer will depend upon
the individual circumstances. The Subscriber further understands that no
opinion is being given as to any securities matters involving the Offering.
(h) The Subscriber shall indemnify and hold the Issuer harmless
from all costs and expenses, including reasonable attorney's fees, incurred
by the Issuer as a result of a breach hereof by the Subscriber. Further,
all of the representations and warranties of the Subscriber contained herein
and all information furnished by the Subscriber to the Issuer are true,
correct and complete in all respects, and the Subscriber agrees to notify
the Issuer immediately of any change in any representation, warranty or
other information set forth herein.
(i) The Subscriber has been given the unrestricted opportunity to
ask questions of, and receive answers from, the Issuer, or persons acting on
its behalf, concerning the terms and conditions of, and all other matters
relating to the offering, and has been given the unrestricted opportunity to
obtain such additional information with respect to the offering as he has
desired, including, but not limited to, any additional information necessary
to verify the accuracy of the information set forth in the attached
documentation. The undersigned has carefully read all material identified
as being attached hereto and has no further questions with respect thereto.
(j) The Subscriber knows that the securities subscribed for
herein are offered and sold pursuant to exemptions from registration and the
Securities Act of 1933, and state securities law based, in part, on these
warranties and representatives, which are the very essence of this
Subscription Agreement, and constitute a material part of the bargained-for
consideration without which this Agreement would not have been executed.
(k) By reason of the Subscriber's business or financial
experience or the business or financial experience of professional advisors
who are unaffiliated with and who are not compensated by the Company or any
affiliate or selling agent of the Company, directly or indirectly, the
Subscriber has the capacity to protect his own interest in connection with
this transaction or has a pre-existing personal or business relationship
with the Company or one or more of its officers, directors or controlling
persons consisting of personal or business contacts of a nature and duration
such as would enable a reasonably prudent purchaser to be aware of the
character, business acumen and general business and financial circumstances
of such person with whom such relationship exists.
(l) This Agreement when fully executed and delivered by the
Company will constitute a valid and legally binding obligation of the
Subscriber, enforceable in accordance with its terms. The Subscriber, if it
is a partnership, joint venture, corporation, trust or other entity, was not
formed or organized for the specific purpose of acquiring the Shares. The
purchase of the Shares by the Subscriber, if it is an entity investor, is a
permissible investment in accordance with the Subscriber's Articles of
Incorporation, by-laws, partnership agreement, declaration of trust or other
similar charter document, and has been duly approved by all requisite action
by the entity's owners, directors, officers or other authorized managers.
The person signing this document and all documents necessary to consummate
the purchase of the Shares has all requisite authority to sign such
documents on behalf of the Subscriber, if it is an entity investor.
(m) In connection with this offering the Subscriber has received
certain confidential information from the Company which the Subscriber has
reviewed and is familiar with the contents of. The Subscriber has not
duplicated or distributed this information to anyone other than his
Purchaser Representative or other personal advisors, and will not do so in
the future.
(n) The Shares offered hereby were not offered to the Subscriber
by way of general solicitation or general advertising and at no time was the
Subscriber presented with or solicited by means of any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio or
television advertisement.
4. Governing Law. This Subscription shall be governed by the laws of
the State of Colorado.
5. Entire Agreement. This Subscription Agreement together with the
other documents executed contemporaneously herewith, constitute the entire
agreement between the parties with respect to the matters covered thereby,
and may only be amended by a writing executed by all parties hereto.
6. Survival of Representations. The representations, warranties,
acknowledgments and agreements made by the Subscriber shall survive the
acceptance of this Subscription and run in favor or, and for the benefit of,
the Issuer.
7. Power of Attorney of Spouse. If the Subscriber is a married
person, the Subscriber agrees to cause the Subscriber's spouse to execute
this Agreement at the space provided for that spouse's signature immediately
following the signature of the Subscriber, and by such signature hereto said
spouse certifies that said spouse is the spouse of the person who signed
this Agreement, that said spouse has read and approves the provisions hereof
and hereby consents and agrees to this Agreement and agrees to be bound by
and accepts such provisions of this Agreement in lieu of all other interests
said spouse may have in the Company, whether such interests be community
property or otherwise. Said spouse grants to the Subscriber irrevocable
power of attorney to represent said spouse in all matters connected with the
Company to the end that, in all cases, the Company may rely on any approval,
direction, vote or action taken by the Subscriber, as said spouse's attorney-
in-fact. Such power of attorney is, and shall be deemed to be, coupled with
an interest so that the authority granted hereby may continue during the
entire period of the Company and regardless of the death or incapacity of
the spouse granting the same. Said spouse further agrees to execute,
acknowledge and deliver such other and further instruments and documents as
may be required to evidence such power of attorney.
8. Waiver. No waiver or modification of any of the terms of this
Agreement shall be valid unless in writing. No waiver of a breach of, or
default under, any provision hereof shall be deemed a waiver of such
provision or of any subsequent breach or default of the same or similar
nature or of any other provision or condition of this Agreement.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10. Notices. Except as otherwise required in this Agreement, any
notice required or permitted under this Agreement shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit
with the United States Post Office, by registered or certified mail, postage
prepaid, addressed to the last known address of the party.
11. Non-Assignability. The obligations of the Subscriber hereunder
shall not be delegated or assigned to any other party without the prior
written consent of the Company.
12. Expenses. Each party shall pay all of its costs and expenses that
it incurs with respect to the negotiation, execution and delivery of this
Agreement.
13. Form of Ownership. Please indicate the form of ownership that the
Subscriber desires for the Shares:
Individual
Joint Tenants with Right of Survivorship
Tenants in Common
Community Property
Trust
Corporation
Partnership
Other:
INDIVIDUAL(S) SIGN HERE: SUBSCRIBER:
(Signature)
(Print Name)
(Address)
Social Security No.:
Number of Shares Subscribed
for Purchase:
SPOUSE OF SUBSCRIBER:
(Signature)
ORGANIZATIONS SIGN HERE: SUBSCRIBER:
(Print Name of Organization)
By:
ACCEPTED:
Kayenta Kreations, Inc. (Print Name and Title)
(Address)
By:
Michelle Barlow, President Federal ID No.:
Number of Shares Subscribed
Date: for Purchase:
CONSENT OF INDEPENDENT ACCOUNTANT
To the Board of Directors
Kayenta Kreations, Inc.
I have issued my report dated February 26, 1996, accompanying the financial
statements of Kayenta Kreations, Inc., included in the Registration
Statement Form SB-2 and the related Prospectus (the Registration Statement).
I consent to the use of my report, as stated above in the Registration
Statement. I also consent to the use of my name in the statements with
respect to me as appearing under the heading "Experts" in the Registration
Statement.
/s/ David T. Thomson, P.C.
June 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 4000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4250
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4998
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 500
<OTHER-SE> 4500
<TOTAL-LIABILITY-AND-EQUITY> 4998
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
