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As filed with the Securities and Exchange Commission on May 18, 2000
Registration No. ________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - - - - - -
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
J-BIRD MUSIC GROUP, LTD.
(Exact name of registrant as specified in its charter)
Pennsylvania 06-1411727
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
396 Danbury Road
Wilton, Connecticut 06897 06897
(Address of Principal Executive Offices) (Zip Code)
CONSULTING AGREEMENT
BETWEEN REGISTRANT AND
ROBERT ALLEN COOKE
(Full title of the plan)
John J. Barbieri
396 Danbury Road
Wilton, CT 06897
(Name and address, including zip code of agent for service)
(203) 761-9393 Ex. 203
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Offering Registration
to be Registered Registered per Share* Price* Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, Par Value,
$.001 Per Share, Issued
Pursuant to a Consulting
Agreement With Robert Allen
Cooke 1,500,000 $.29 $435,000 $114.84
--------- ---- -------- -------
TOTAL 1,500,000 $.29 $435,000 $114.84
</TABLE>
* Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) on the basis of the average of the low
bid and ask prices of the Common Stock of the Registrant as traded in the
over-the-counter market and reported in the Electronic Bulletin Board of the
National Association of Securities Dealers on May 15, 2000.
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Cross Reference Sheet Showing Location in Reoffer Prospectus of
Information Required by Items of Part I of Form S-3 Included Herein
Under Cover of Form S-8, Pursuant to Rule 404(a)
<TABLE>
<CAPTION>
Form S-3 Item No. and Heading Heading in Prospectus
- ----------------------------- ---------------------
<S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus............................ Outside Front Cover Page
1. Inside Front and Outside Back Cover
Pages of Prospectus........................................ AVAILABLE INFORMATION;
REPORTS TO SHAREHOLDERS;
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE; TABLE OF CONTENTS
2. Summary Information, Risk factors and Ratio of
Earnings to Fixed Charges.................................. Outside Front Cover Page;
THE COMPANY; RISK FACTORS
4. Use of Proceeds............................................. USE OF PROCEEDS
5. Determination of Offering Price............................. Outside Front Cover Page;
PLAN OF DISTRIBUTION
6. Dilution.................................................... Not Applicable
7. Selling Security Holders.................................... SELLING SHAREHOLDER
8. Plan of Distribution........................................ Outside Front Cover Page;
PLAN OF DISTRIBUTION
9. Description of Securities to be Registered.................. DESCRIPTION OF SECURITIES
10. Interests of Named Experts and Counsel...................... EXPERTS; LEGAL OPINIONS
11. Material Changes............................................ THE COMPANY
12. Incorporation of Certain Information
by Reference............................................... INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE
13. Disclosure of Commission Position on
Indemnification For Securities Act
Liabilities................................................ INDEMNIFICATION
</TABLE>
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REOFFER
PROSPECTUS
- --------------------------------------------------------------------------------
EXPLANATORY NOTE
J-Bird Music Group, Ltd. ("Company") has prepared this Registration Statement in
accordance with the requirements of Form S-8 under the Securities Act of 1933,
as amended (the "1933 Act"), to register certain shares of common stock, par
value $0.001 per share, issued to a certain selling shareholder. Under cover of
this Form S-8 is a Reoffer Prospectus the Company prepared in accordance with
Part I of Form S-3 under the 1933 Act. The Reoffer Prospectus may be utilized
for reofferings and resales of up to 1,500,000 shares of Common Stock acquired
by the selling shareholder.
PART I
REOFFER PROSPECTUS
J-BIRD MUSIC GROUP, LTD.
396 DANBURY ROAD
WILTON, CONNECTICUT 06897
(203) 761-9393
1,500,000 SHARES OF COMMON STOCK
The shares of common stock, $0.001 par value per share, of J-Bird Music Group,
Ltd. (the "Company") offered hereby (the "Shares") will be sold from time to
time by Robert Allen Cooke (the "Selling Shareholder"). The Selling Shareholder
acquired the Shares pursuant to a Consulting Agreement for consulting services
that the Selling Shareholder provided and is still providing to the Company.
The sales may occur in transactions on the over-the-counter market maintained by
Nasdaq at prevailing market prices or in negotiated transactions. The Company
will not receive proceeds from any of the sale of the Shares. The Company is
paying for the expenses incurred in registering the Shares.
The Shares are "restricted securities" under the 1933 Act before their sale
under the Reoffer Prospectus. The Reoffer Prospectus has been prepared for the
purpose of registering the Shares under the 1933 Act to allow for future sales
by the Selling Shareholder to the public without restriction. To the knowledge
of the Company, the Selling Shareholder has no arrangement with any brokerage
firm for the sale of the Shares. The Selling Shareholder may be deemed to be an
"underwriter" within the meaning of the 1933 Act. Any commissions received by a
broker or dealer in connection with resales of the Shares may be deemed to be
underwriting commissions or discounts under the 1933 Act.
The Company's common stock is currently traded on the NASDAQ Over-the-Counter
Bulletin Board under the symbol "JBRD".
This investment involves a high degree of risk. Please see "Risk Factors"
beginning on page 9.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS REOFFER PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------------
May 18, 2000
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TABLE OF CONTENTS
Where You Can Find More Information ..........................................2
Incorporated Documents........................................................2
The Company...................................................................4
Risk Factors..................................................................8
Use of Proceeds...............................................................15
Selling Shareholder...........................................................15
Plan of Distribution .........................................................15
Experts.......................................................................16
Legal Opinion.................................................................16
You should only rely on the information incorporated by reference or provided in
this Reoffer Prospectus or any supplement. We have not authorized anyone else to
provide you with different information. The common stock is not being offered in
any state where the offer is not permitted. You should not assume that the
information in this Reoffer Prospectus or any supplement is accurate as of any
date other than the date on the front of this Reoffer Prospectus.
WHERE YOU CAN FIND MORE INFORMATION
The Company is required to file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC") as required by the Securities Exchange Act of 1934, as amended (the
"1934 Act"). You may read and copy any reports, statements or other information
we file at the SEC's Public Reference Rooms at:
450 Fifth Street, N.W., Washington, D.C. 20549;
Seven World Trade Center, 13th Floor, New York, N.Y. 10048
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Rooms. Our filings are also available to the public from commercial
document retrieval services and the SEC website (http://www.sec.gov).
INCORPORATED DOCUMENTS
The SEC allows the Company to "incorporate by reference" information into this
Reoffer Prospectus, which means that the Company can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
Reoffer Prospectus, except for any information superseded by information in this
Reoffer Prospectus.
The Company's Reports on Form 8-K, dated October 28, 1998 and April 25, 2000 are
incorporated herein by reference. The Form 10-SB filed with the Commission on
June 11, 1998 and the amendments thereto filed on September 1, 1998 and December
18, 1998 are incorporated herein by reference. In addition, all documents filed
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or subsequently filed by the Company under Sections 13(a), 13 (c), 14 and 15 (d)
of the 1934 Act, before the termination of this offering, are incorporated by
reference.
The Company will provide without charge to each person to whom a copy of this
Reoffer Prospectus is delivered, upon oral or written request, a copy of any or
all documents incorporated by reference into this Reoffer Prospectus (excluding
exhibits unless the exhibits are specifically incorporated by reference into the
information the Reoffer Prospectus incorporates). Requests should be directed to
the President at the Company's executive offices, located at 396 Danbury Road,
Wilton, Connecticut 06897. The Company's telephone number is (203) 761-9393. The
Company's corporate Web site address is http://www.j-birdrecords.com.
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THE COMPANY
General
The Company was incorporated in the State of Pennsylvania on June 7,
1991. The Company is presently authorized by its Articles of Incorporation to
issue 25,000,000 shares of $0.001 par value of common stock, of which 26,713,295
shares were outstanding as of May 8, 2000.
There is presently pending pursuant to the written consent of a
majority of the shareholders of the Company and the approval of the Board of
Directors an amendment to the Articles of Incorporation increasing the
authorized shares of common stock to 50,000,000 shares with the same par value.
It is anticipated that this action will become effective within 10 days of
receipt by the non-consenting shareholders of a written notice of this action.
The notice was sent to the non-consenting shareholders on April 6, 2000. The
effective date of the Amendment is on or about April 17, 2000.
The Company was formerly known as Caltron, Inc. The name was changed on
October 8, 1997 upon acquiring J-Bird Records, Inc., the first World Wide Web
Recording Label(TM). Prior to acquiring J-Bird Records, Inc., the Company was in
the business of developing and producing electron beam sterilization and ozone
production equipment. Upon management's decision to realign its business by
acquiring J-Bird Records, Inc., it sold its interests in these businesses, with
the exception of a five percent (5%) equity interest in Feild Technologies, LLC
("FTL") 4,480,000 shares of common stock of the Company were exchanged with the
shareholders of J-Bird Records, Inc. pursuant to an Agreement with the Company
on a one for one basis. J-Bird Records, Inc., is a wholly owned subsidiary of
the Company.
The Company raised additional capital in private placements not
involving a public offering in accordance with Section 4(2) of the 1933 Act.
These transactions were with purchasers who in the opinion of the Company were
either accredited investors within the meaning of Rule 501(a) of Regulation D
promulgated under the 1933 Act or sophisticated by virtue of business background
and knowledge of the Company through existing relationships giving them access
to business and financial information on the Company. These transactions
resulted in approximately $2,886,000 in gross proceeds.
Background
J-Bird Records, Inc. ("J-Bird") is the first World Wide Web Recording
Label (TM) was officially launched on November 1, 1996 to market, distribute and
sell music via a new medium-the Internet. At its Website, located at
http://www.j-birdrecords.com, the Company attracts and signs recording artists
through its on-line office and promotes, markets and sells their recordings
through its on-line record store.
The Company's Website provides a comprehensive entertainment and
information resource enabling users to search and sample music and artist
information interactively through sound and graphics, including on-line "sound
stations" for each artist and the J-Bird on-line "radio station". When an artist
signs a recording contract with the Company, such artist's music is posted on
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the Company's Website in digital form for downloading using either Real Audio
(TM) or Shockwave (TM) "plug-ins". The Website contains a webpage for each of
the Company's artists. Users who are interested in the music they sample may
purchase it immediately on-line. Users can also obtain information on specific
artists and related concert tours, music events and other promotions and read
recent articles on the favorite J-Bird artists. J-Bird designs, produces and
distributes CD's on-line and in the traditions retail chains around the country.
Artists, either new or established, who want more control over the production
and distribution of their music, select and contract with J-Bird. J-Bird and the
artists then share in the proceeds of the CD sales. By giving tens of millions
of Internet users worldwide access to the music of these artists, J-Bird fills a
niche not addressed by radio, music videos, and traditional music retailers.
Each new artist who executes a Recording Contract with J-Bird is
required to produce one compilation of music for J-Bird during the three-year
term of the contract. Pursuant to the Recording Contract J-Bird has the
exclusive rights, in perpetuity, to manufacture, advertise, sell and distribute
such compilation. In return, the artist receives a 12% royalty on the sales of
all CDs produced. If the artist enters into a recording contract with another
record label during the three-year term, J-Bird will receive a royalty of 2% of
all sales for the first album produced by the artist with the new record label.
The contract further requires the artist to purchase either 250 CDs for $1,000
or 1,000 CDs for $2,250, which the artist is entitled to sell for $10 each.
J-Bird currently has 278 artists in its catalogue.
J-Bird has chosen the Internet as its primary marketing vehicle because
the Internet provides a low-cost method of providing, displaying and selling
different styles and genres of music to a worldwide audience. The Internet also
allows J-Bird to target sales to the largest music-buying population, the 15 to
24 age group, which also represents the highest concentration of Internet users.
J-Bird's Website offers content-rich-music genre sites for rock, pop,
alternative, country, urban, rap, jazz, gospel, classical -and world music,
through the combination of audio, graphics, and text. J-Bird's genre and artist
web pages allow users to target music and information based on personal
interests. J-Bird -believes that this approach provides a stimulating and
entertaining on-line environment which establishes a community atmosphere and
promotes consumer-driven product sales. J-Bird believes that the Company's
business will greatly benefit from the growth of the Internet.
The Company believes that on-line sales of recorded music will
compliment the traditional retail channel and will expand overall music sales.
because of the on-line medium's ability to capitalize on the ongoing shift in
demographics of music buyers; to reach a growing international consumer market
and to offer the consumer easier access to a broad range of titles. J-Bird also
believes that the ability to gather and process data resulting from customer
purchases and usage will facilitate targeted promotional efforts in the highly
segmented recorded music market. The Internet also provides access to
international markets for recorded music which are growing faster than the U.S.
market.
In addition, the Company gathers important information about
demographics and consumer preferences from users of its Website. This
information permits the Company to target subsequent promotions to a particular
customer group or geographic area. The Company believes that this practice will
enable the Company to market its artists in an efficient, cost-effective manner
by targeting the most likely buyers for such artists music. In the future, the
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Company expects to promote its artists through the use of its radio station and
on-line "chat-rooms" intended to spark interest in a particular music genre or
artist. The Company believes that its strategy of interactive sales on the
Internet combined with targeted promotions will enable it to build a loyal
customer base.
Traditional record companies typically incur high promotional and other
costs in the distribution of their music, providing a strong disincentive to
siqn unproven bands. J-Bird's low-cost approach of relying upon listeners'
interests, which has already attracted over 250 new artists to the J-Bird label,
will continue to do so, and will allow the Company to compete on a cost
effective basis with other record companies. The Company feels that the use of
its interactive Website, its on-line radio station, and its targeted
advertising, .promotion and distribution, creates a new medium for the music
industry that permits it to reach music buyers throughout the world and that as
the potential to shift the way music is marketed to consumers.
In November 1997, J-Bird was approached Navarre Corporation ("Navarre")
with respect to a distribution arrangement. J-Bird entered into a three-year
exclusive retail distribution Agreement with Navarre. Navarre, one of the
leading independent distributors of music and interactive software, distributes
to retail accounts throughout the nation, including, Tower Records, The
Musicland Group which includes Media Play, Sam Goody, Musicland and on-cue)"
Blockbuster, Best Buy, Wherehouse, Camelot, Hmv, Borders and Circuit City as
well as all the leading One Stops. Under the Agreement, Navarre distributes
J-Bird products nationally through its retail distribution relationships, and
the Company receives a percentage of each product sold.
In May 1998, the Company entered into a Download Agreement with AT&T
Corp. Under the agreement the Company granted AT&T a license to use tracks of
music produced by artists, under contract with the Company, encode the tracks
for delivery over the internet using AT&T's Ila2b'v media player, and promote
the music tracks on AT&T's a2b music website. AT&T also made available through
the Company's website the a2b media player for consumers to download so that
they could retrieve and play encoded tracks. Consumers are charged an average
price of $1.99 for each track retrieved, which is paid by credit card to AT&T.
Under the Agreement, AT&T is entitled to retain the first $2,000 from music
track purchases, and all subsequent purchases are divided equally between the
Company and AT&T.
In February 1999, the Company entered into a Web Events and Windows
Media Technology Promotion Agreement with Microsoft Corporation. Under this
Agreement, the Company is entitled to promote and make available the Windows
Media Player through its website and distribute music tracks formatted for the
Windows Media Player. Microsoft will make available through its "Webevents"
website a site link to the Company's website and a content summary of the music
products available at the company.
Competition
The Company competes for artists and recordings to distribute with
national and regional recording and distributing companies, which has a
competitive edge over the Company by virtue of their stronger management,
promotional and financial resources. The Company's strategy is to sign artists
who are unable to obtain recording contracts with a larger recording companies
6
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and acquire distributing rights to recordings that management believes will
appeal to consumers interested in particular music genres. The recording
products offered by the Company compete for consumers who have a wide selection
of music choices within the same music genres offered by the Company. The
Company also competes with other businesses that offer and sells recordings
through the Internet. The Company will compete for consumer dollars on the basis
of the types of music it selects for distribution and the marketing of its music
selections through the Internet.
J-Bird competes in the distribution and sale of recorded music directly
with established record label companies and with other music producers and
distributors, including Polygram, Time Warner, EMI, Columbia and Phillips ' In
November, J-Bird was approached by Navarre Corporation ("Navarre"). J-Bird
entered into a three-year exclusive retail distribution Agreement with Navarre.
Navarre, one of the leading independent distributors of music and interactive
software, distributes to retail accounts throughout the nation, including, Tower
Records, The Musicland Group (which includes Media Play, Sam Goody, Musicland
and OnCue), Blockbuster, Best Buy, Wherehouse, Camelot, HMV, Borders and Circuit
City as well as all the leading One Stops. Under the Agreement, Navarre will
distribute J-Bird products nationally through its retail distribution
relationships.
Catalog Evaluation
The J-Bird catalog of 300 artists is evaluated using common music
industry standards. The formula is as follows:
3 years gross sales less returns x ten (10) = Catalog Evaluation
$388,100 x 10= J-Bird Catalog Evaluation of $3,881,000
Jbirdmusic.com
Jbirdmusic.com, the newly formed subsidiary for the Company, has been
designed to function as a complete promotional Internet site. This site will be
the entryway into the already existing e-commerce site and store at J-Bird
Records as well as a promotional vehicle for other independent labels seeking
effective internet promotion and other artists and repertoire requirements.
Jbirdmusic.com, though its relationship with MediaX, is developing a
promotional web site that will become an entryway into the J-Bird e-commerce
store, J-Bird artist tour dates, J-Bird download station, J-Bird artist
relations, J-Bird contests, J-Bird newsletters and J-Bird Investors relations.
These are all currently existing tools that are functional at the web site. The
mission for Jbirdmusic.com will be to desegregate these tools into a cohesive
site dedicated to marketing and promotion. Additional promotional sites will be
developed as alliances are formed with other independent labels.
Other Transactions
On April 22, 1997, the Company entered into an Option Agreement with
Feild Technologies, LLC ("FTL"), a company based in Bangor, Maine. Under this
agreement, the Company assigned seven domestic and foreign valve patents held by
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the Company to FTL for a 5% equity position in FTL. In the event the Company
does not receive distributions of at least $100,000 on or before December 31,
2000, it shall be entitled to increase its interest in FTL from 5% to 10%, and
the other members' interests in FTL shall be reduced on a basis proportionate to
their relative interests.
Government Regulations
Management of the Company is not aware of any significant governmental
regulations on the operations of its business.
Properties
The Company's principal place of business is an office located at 396
Danbury Road, Wilton Connecticut, 06897. The office facility consists of
approximately 1,800 square feet leased pursuant to a thirty-six month lease
expiring in July 2000 for a monthly lease payment of $2,637.00.
The Company has option to purchase the office facility which is a
condominium unit in which case it will receive a credit toward the purchase
price equal one-half of the rent paid over the term of the lease. The Company
also has as an option to renew the lease if it wishes to do so instead of
purchasing the office unit.
RISK FACTORS
In this section we highlight some of the risks associated with the
Company's business and operations. Prospective investors should carefully
consider the following risk factors when evaluating an investment in the common
stock offered by this Re-offer Prospectus.
Forward-Looking Statements and Associated Risks. Management believes
the information contained in this Prospectus contains "forward-looking
statements" which can be identified by the use of forward-looking terminology
such as "believes", "expects", "may", "should" or "anticipates" or the negative
thereof or other variations thereon or comparable terminology or by discussions
of strategy. No assurance can be given that the future results covered by the
forward-looking statements will be achieved. The following Risk Factors include,
among other things, cautionary statements with respect to certain
forward-looking statements, including statements of certain risks and
uncertainties that could cause actual results to vary materially from the future
results referred to in such forward-looking statements.
1. Development Stage Company. No Assurance as to Future Profitable
Operations. Because it is in the development stage and has had no significant
operations to date, the Company cannot predict with any certainty the future
success or failure of its operations. The Company's business, is subject to all
of the risks inherent in the establishment of new businesses and there is no
assurance that the Company will generate net income or successfully expand its
operations in the future. Moreover, as a new enterprise, it is likely to remain
subject to risks and occurrences which management is unable to predict with any
degree of certainty, and for which it is unable to fully prepare. The likelihood
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of the success of the Company must be considered in light of the problems,
expenses, difficulties, complications and delays frequently encountered in
connection with the commencement of a new business and the competitive
environment in which the Company will operate. Because of the Company's very
limited business history, there is little evidence for investors to analyze in
order to make an informed judgment as to the merits of an investment in the
Company. Any such investment should therefore be considered high risk investment
in an unseasoned start-up company with the possibility of the loss of the entire
investment.
2. Need for Substantial Additional Capital. The Company remains in
need of substantial financing from sources other than operations in order to
cover its overhead and to maintain and expand its operations. To date, the
Company has been able to meet its outside financing requirements, as described
above (see "The Company - General").
The Company expects these same funding sources, which were started in
November of 1996, together with anticipated cash flow from conventional asset
based debt financing against receivables will continue to provide sufficient
capital to cover overhead and maintain and expand its operations.
Absent adequate revenues from operations during the phase-in period of
commercial operations, the Company will remain dependent on the outside sources
described above to meet its requirements and to continue operation. While the
Company believes it will be successful in continuing to obtain sufficient
financing from such sources, there can be no assurance with any certainty that
this will in fact, be the case and the failure to do so would have a material
adverse effect on the Company's ability to continue to operate. The Company's
more long term future capital requirements will depend upon numerous factors,
including the amount of revenues generated from operations, the cost of the
Company's sales and marketing activities, none of which can be predicted with
certainty.
While management does not believe that it will be the case, prospective
investors in the Company should note that if all of the above described internal
and external sources for financing should fail to be sufficient, the Company
could be required to reduce its operations, seek an acquisition partner or sell
securities on terms that may be highly dilutive or other wise disadvantageous.
3. History of Losses an Accumulated Deficit. The Company has
experienced operating losses in each fiscal period since commencing operations
in 1991. As of December 31, 1999, the Company had a deficit accumulated since
formation in the aggregate approximate amount of $8,193,630, of which
approximately $3,764,724 was accumulated in the 1998 fiscal year and
approximately $2,147,065 was accumulated in the 1999 fiscal year. The Company
expects to incur additional operating losses throughout at least the end of the
fiscal quarter ending March 31, 2000 and possibly thereafter (see, above, Risk
Factor No.1 "Development Stage Company: No Assurance as to Future Profitable
Operations"). Since its inception, the Company has generated extremely limited
revenues from operations.
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4. Limited Operating History. The Company acquired J-Bird in October
of 1997 for implementing its business opportunities. The Company has limited
operating history, revenues from operations, or assets. The Company faces all of
the risks of a new business and the special risks inherent in the investigation,
acquisition or involvement in a new business opportunity. The Company must be
regarded as a new or "start-up" venture with all of the unforeseen cost,
expenses, problems and difficulties to which such ventures are subject.
5. No Assurance of Success or Profitability. There is no assurance
that the Company will generate revenue or profits, or that the market price of
the Company's common stock will be increased thereby.
6. Going Concern Assumption. The Company's independent auditors'
report on the Company's financial statements for the years ended December 31,
1998 and 1999 contain an explanatory paragraph indicating that, the Company's
uncertainty as to its productivity and its ability to raise sufficient capital
raise substantial doubt about its ability to continue as a going concern. In
addition the Company had an accumulated deficit of $8,193,630 as of December 31,
1999. The Company will require substantial additional funds in the future, and
there can be no assurance that any independent auditor's report on the Company's
future financial statements will not include a similar explanatory paragraph if
the Company is unable to raise sufficient funds or generate sufficient cash from
operations to cover the cost of its operations. The existence of the explanatory
paragraph may naturally adversely affect the Company's relationship with
prospective suppliers and artists, and therefore could have a material adverse
effect on the Company's business, financial condition and results of operations
7. Conflicts of Interests. Certain conflicts of interest exist between
the Company and its officers and directors. Many of them have other business
interests to which they devote attention and they may be expected to do so
although management time should be devoted to the business of the Company.
Conflicts of interest may arise that can be resolved only through exercise of
such judgement as is consistent with their fiduciary duties to the company.
8. Uncertainty of Acceptance of On-line Market as Medium for Sales and
Distribution of Music. The On-Line Medium is relatively new and untried
marketing channel. There can be no assurance that the public or the artists for
that matter will accept and use the Internet as a viable alternative to the
established marketing and distribution channels already in existence. While the
Company believes music via the Internet may eventually be profitable and result
in purchases, it is not able to estimate with any assurance the potential
Internet music market. There can be no assurance that sufficient market
penetration can be achieved in order to be profitable
9. Dilution from Issuance of Shares for Services. To date, the Company
has had very limited revenues from operations. Accordingly, the bulk of its cash
assets have been, and may continue to be, utilized to cover the expenses
associated with the development of its business and products. Given the
foregoing, the Company regularly pays certain of its financial obligations by
issuing restricted shares of its common stock, at a discount, in lieu of cash.
The discounts at which such shares were issued was generally, but not always,
set at 85% of the average market price of the stock, as traded in the
over-the-counter market and quoted in the OTC Bulletin Board. Such discounts
10
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were either negotiated at arms length with third parties or determined
arbitrarily by the Company, in which cases they bore no relationship to the
Company's assets, earnings, book value or other such criteria of value. Such
issuances have, and may continue to, result in substantial dilution to the
Company's existing shareholders.
From May of 1995 through March 2000, the Company has issued a total of
1,770,000 shares, constituting approximately 7.08% of the issued and outstanding
shares of the Company in lieu of cash compensation and expense reimbursement due
under employment and consulting agreements with its executive officers,
employees, and corporate counsel and in additional compensation by way of
directors shares and stock bonuses. In addition, during that period, the Company
issued 1,742,000 shares, constituting approximately 7.0% of the issued and
outstanding common stock of the Company to affiliated an non-affiliated
consultants and subcontractors for consulting services of various obligations to
its officers, counsel, and outside vendors, the Company will, to the extent
possible, continue to issue shares of its common stock at negotiated or
arbitrary discounts. Finally, the Company has issued 410,000 shares of common
stock in lieu of cash payments of vendor invoices and to artists pursuant to
contracts.
10. Possible Depressive Effect on Price of Securities of Future Sales
of Common Stock. The resale of approximately 15,417,161 common shares of the
Company, issued and outstanding as of March 31, 2000, which approximately
6,463,161 can currently be resold pursuant to Rule 144 of the 1933 Act. The sale
or other disposition of much of these currently outstanding shares of common
stock is restricted by the 1933 Act. Unless such sales are registered, these
shares may only be sold incompliance with Rule 144 promulgated under the 1933
Act or some other exemption from registration thereunder. Rule 144 provides,
among other matters, that if certain information concerning the operating and
financial affairs of the Company is publicly available, persons who have held
restricted securities for a period of one year may thereafter sell in each
subsequent three month period up to that number of such shares equal to one
percent of the Company's total issued and outstanding common stock. The sale or
availability for sale of substantial amounts of common stock in the public
market after this offering being made by this Registration Statement could
adversely affect the prevailing market price for the Company's common stock and
could impair the Company's ability to raise additional capital through the sale
of its equity securities.
11. Possible Voting Control by Management: Possible Depressive Effect
on Market Prices. As of March 19, 2000, the Company's officers and directors
were the beneficial owners of an aggregate of 7,411,000 (excluding options held
by John J. Barbieri for 1 million shares), constituting of approximately 34.2%
of the Company's outstanding common stock. The Company intends to hold an annual
meeting of its shareholders prior to the end of the current calendar year.
12. Limited Public Market: Company Not Eligible for Inclusion on
NASDAQ. To date there has been only a limited and sporadic public market for the
Company's common stock. There can be no assurance that an active and reliable
public-market will develop or, if developed, that such market will be sustained.
Purchasers of shares of common stock of the Company may, therefore, have
difficulty in reselling such shares. As a result, investors may find it
impossible to liquidate their investment in the Company should they desire to do
so. The Company's common stock is currently traded in the over-the-counter
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market and quoted on the OTC Bulletin Board. The Company intends to apply to
have its common stock approved for quotation on the Nasdaq SmallCap Market at
such time, in the future, that it meets the requirements for inclusion. As at
the date hereof, however, the Company is not eligible for inclusion in NASDAQ or
for listing on any national stock exchange All companies applying and authorized
for NASDAQ are required to have not less than $4,000,000 in net tangible assets,
a public float with a market value for not less than five million dollars, and a
minimum bid of price of $4.00 per share. At the present time, the Company is
unable to state when, if ever, it will meet the Nasdaq application standards.
Unless the Company is able to increase its net worth and market valuation
substantially, either through the accumulation of surplus out of earned income
of successful capital raising financing activities, it will never be able to
meet the eligibility requirements of NASDAQ. Moreover, even if the Company meets
the minimum requirements to apply for inclusion in The Nasdaq SmallCap Market,
there can be no assurance, that approval will be received or, if received, that
the Company will meet the requirements for continued listing on the Nasdaq
SmallCap Market. Further, Nasdaq reserves the right to with draw or terminate a
listing on the Nasdaq Small Cap at any time and for any reason in its
discretion. If the Company is unable to obtain or to maintain a listing on the
on the Nasdaq SmallCap Market, quotations, if any, for "bid" and "asked" prices
of the common stock would be available only on the OTC Bulletin Board where the
common stock is currently quoted or in the "pink sheets" published by the
National Quotation Bureau, Inc. This can result in an investor's finding it more
difficult to dispose of or to obtain accurate quotations of prices for the
common stock than would be the case if the common stock were quoted on the
Nasdaq SmallCap Market. Irrespective of whether or not the common stock is
included in the Nasdaq SmallCap system, there is no assurance that the public
market for the common stock will become more active or liquid in the future. In
that regard, prospective purchasers should consider that this offering is being
made without the underwriting arrangements typically found in a public offering
of securities. Such arrangements generally provide for the issuer of the
securities to sell the securities to an underwriter which, in turn, sells the
securities to its customers and other members of the pubic at a fixed offering
price, with the result that the underwriter has a continuing interest in the
market for such securities following the offering. In order to qualify for
listing on a national stock exchange, similar minimum criteria respecting, among
other things, the Company's net worth and/or income from operation must be met.
Accordingly, market transactions in the Company's common stock are
subject to the "Penny Stock Rules" of the Securities and 1934 Act of 1934, which
are discussed in more detail, below, under "Risk Factor No. 13 "Regulation of
Penny Stocks". These rules could make it difficult to trade the common stock of
the Company because compliance with them can delay and/or preclude certain
trading transactions. This could have an adverse effects on the ability of an
investor to sell any shares of the Company's common stock.
13. Regulation of Penny Stocks. As discussed above, at the present
time, the Company's common stock is not listed on The Nasdaq Small Cap Stock
market or on any stock exchange. Although dealer prices for the Company's common
stock are listed on the OTC Bulletin Board, trading has been sporadic and
limited since such quotations first appeared on or about June 8, 1995.
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The Securities Enforcement and Penny Stock Reform Act of 1990 requires
special disclosure relating to the market for penny stocks in connection with
trades in any stock defined as a "penny stock" Commission regulations generally
define a penny stock to be an equity security that has a market price of less
than $5.00 per share and is not listed on The Nasdaq SmallCap Stock Market or a
major stock exchange. These regulations subject all broker-dealer transactions
involving such securities to the special "Penny Stock Rules" set forth in Rule
15g-9 of the Securities 1934 Act of 1934 (the "34 Act"). It may be necessary for
the Selling Shareholders and the Underlying Share Selling Shareholders to
utilize the services of broker-dealers who are members of the NASD. The current
market price of the Company's Common Stock is substantially less than $5.
Accordingly, any broker-dealer sales of the shares being registered hereunder,
as Stock Rules. These Rules affect the ability of broker-dealers to sell the
Company's securities and also may affect the ability of purchasers in this
offering to sell their shares in the secondary market, if such a market should
ever develop.
The Penny Stock Rules also impose special sales practice requirements
on broker-dealers who sell such securities to persons other than their
established customers or "Accredited Investors". Among other things, the Penny
Stock Rules require that a broker-dealer make a special suitability
determination respecting the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. In addition, the Penny Stock
Rules require that a broker-dealer deliver, prior to any transaction, a
disclosure schedule prepared in accordance with the requirements of the
Commission relating t the penny stock market. Disclosure also has to be made
about commissions payable to both the broker-dealer and the registered
representative and the current quotations for the securities. Finally, monthly
statements have to be sent to ally holder of such penny stocks disclosing recent
rice information for the penny stock held in the account and information on the
limited market in penny stocks. Accordingly, for so long as the Penny Stock
Rules are applicable to the Company's common stock, it may be difficult to trade
such stock because compliance with such Rules can delay and/or preclude certain
trading transactions. This could have an adverse effect on the liquidity and/or
price of the Company's common stock.
Shareholders should be aware that, according to Securities and Exchange
Commission release No. 34-329093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
(v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
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14. Dependence on Key Personnel. The Company believes that it's success
depends to a significant extent on the efforts and abilities of certain of its
senior management, in particular those of John J. Berbieri, President and Chief
Executive Officer. The loss of this person could have a material adverse affect
on the Company's business, prospects, operating results and financial condition.
The Company has entered into an employment agreement. The Company does not
presently have key man life insurance policies and does not intend to obtain any
unless required to do so under future financing arrangements. There can be no
assurance that such policies will be available to the Company on commercially
reasonable terms. if at all. Additionally, the ability of the Company to realize
obligations to the Company and a capable successor is not found on a timely
basis. There can however be no assurance that, in such event, the Company will
be able to locate and retain a capable successor to any member of its senior
management.
15. Lack of Continuity in Management. The Company does not have an
employment agreement with any of its officers and directors, and as a result,
there is no assurance that they will continue to manage the Company in the
future.
16. Indemnification of Officers and Directors. The Company's By-Laws
provide for the indemnification of its directors, officers, employees, and
agents, under certain circumstances, against attorney's fees and other expenses
incurred by them in any litigation to which they become a party arising from
their association with or activities on behalf of the Company. The Company will
also bear the expenses of such litigation for any of its directors, officers,
employees, or agents, upon such person's promise to repay the Company therefore
if it is ultimately determined that any such person shall not have been entitled
to indemnification. This indemnification policy could result in substantial
expenditures by the Company which it will be unable to recoup.
17. Dependence Upon Outside Advisors. To supplement the business
experience of its officers and directors, the Company may be required to employ
accountants, technical expert, appraiser, attorneys opr other consultants or
advisors. the selection of any such advisors wil be made by the Company's
President without any input from stockholders. Furthermore, it is anticipated
that such persons may be engaged on a "as needed" basis without a continuing
fiduciary or other obligation to the Company. In the event the President of the
Company considers it necessary to hire outside advisors, they may elect to hire
persons who are affiliates, if they are able to provide the required services.
18. Competition. The Company competes for artists and recordings to
distribute with national and regional recording and distributing companies,
which have a competitive edge over the Company by virtue of their stronger
management, promotional, and financial resources. The Company competes in the
distribution and sale of recorded music with established record label companies
and with other music producers and distributors including Polygram, Time Warner,
EMI, Columbia and Phillips. The Company's strategy is to sign artists who are
unable to obtain recording contracts with larger recordings that management
believes will appeal to consumers interested in particular music genres. The
recording products offered by the Company compete for consumers who have a wide
selection of music choices within the same music genres offered by the Company.
The Company also competes with other businesses that offer and sell recordings
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through the Internet. The Company will compete for consumer dollars on the basis
of the types of music it selects for distribution and the marketing of its music
selections through the Internet.
19. No Dividends and None Anticipated. The Company has not paid any
cash dividends, nor does it contemplate or anticipate paying any dividends upon
its Common Stock in the foreseeable future.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholder.
SELLING SHAREHOLDER
All the shares of common stock (the "Shares") being offered hereunder
by Robert Allen Cooke were acquired by him pursuant to the terms of a Consulting
Agreement dated as of February 1, 2000 (the "Consulting Agreement") which is an
individually negotiated written compensation agreement pursuant to which the
selling shareholder is rendering or has rendered bona fide services not in
connection with the offer or sale of securities in a capital raising
transaction. For the purposes of this Reoffer Prospectus, all of the shares
being registered hereunder are "restricted shares" insofar as they were issued
to an individual consultant of the Company under the Consulting Agreement
pursuant to a Securities Act exemption prior to their inclusion in a
registration statement on Form S-8, of which this Reoffer Prospectus is a part.
Prior to the offering he has owned 1,750,000 shares of common stock of
the Company and will own 250,000 shares thereof after the offering or .00935% of
the other Company's issued and outstanding common stock after completion of the
offering. The foregoing excludes 200,000 shares held by the Cooke Family Trust
to which the Selling Shareholder does not have any beneficial interest and
disclaims any beneficial ownership of the shares held by the Trust and also
excludes 200,000 shares held by Diane Pelletier acquired prior to her marriage
to Mr. Cooke who disclaims any beneficial ownership of the shares so acquired by
her.
PLAN OF DISTRIBUTION
The Selling Shareholder has not offered or sold any shares of the
Company's Common Stock pursuant to a registration statement on Form S-8 within
the three-month period preceding the date hereof. The number of shares offered
hereunder by the Selling Shareholder, represents approximately 4.07% of the
total number of shares, of the Company's common stock presently issued and
outstanding. The Selling Shareholder may sell all or part of the shares, from
time to time, in the OTC Bulletin Board, or in such other public market for the
Company's common stock as may develop, at market prices then pertaining. In
connection therewith the Selling shareholder may utilize the services of
broker-dealers, none of whom will act as underwriters with respect to sales of
the Shares. The names of any such brokers-dealers, who have not yet been
identified, will be set forth in a supplement to this Prospectus, to the extent
required.
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EXPERTS
The financial statements and schedules of the Company and its
subsidiaries included in the Company's Annual Report on Form 10-KSB, for the
fiscal year ended December 31, 1999, have been examined by, Caracansi Ramey &
Associates, LLC., Certified Public Accountants, and such financial statements
and schedules are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing.
Also the Company's financial statements and schedules for the fiscal
year ended December 31, 1998 have been examined by Schnitzer & Kondub, P.C.,
Certified Public Accountants, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing.
LEGAL OPINION
The legality of the Shares offered hereby has been passed upon for the
Company by H. Melville Hicks, Jr., 551 Fifth Avenue, Suite 1625, New York, New
York 10176 its corporate and securities counsel.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents are incorporated by reference in this
registration statement:
(a) General Form For Registration of Securities of Small Business Issuer on
Form 10-SB and all Exhibits thereto filed pursuant to Section 12 (g) of
the Exchanges Act of 1934, as amended (the "1934 Act").
(b) Registrant's Annual Report on Form 10-KSB and all Exhibits thereto for
the fiscal years ended December 31, 1998 and December 31, 1999, filed
pursuant to Section 15(d) of the 1934 Act.
(c) Registrant's quarterly reports on Forms 10-QSB for the fiscal quarters
ended September 30, 1998, March 31, 1999, June 30, 1999 and September
30, 1999 filed pursuant to Section 15(d) of the 1934 Act.
(d) Registrant's Current Reports on Form 8-K dated October 28, 1999 and
filed with the Commission on November 15, 1999 and dated April 25, 2000
and filed with the Commission on April 26, 2000.
All documents filed by the Registrant pursuant to Section 13(a), 13(c),
14, and 15(d) of the 1933 Act and Sections 13(a), 13(c), and 14 of the 1934 Act
after the date of this registration statement and prior to the filing of a
post-effective amendment to this registration statement which indicates that all
securities offered hereunder have been sold, or which registers all securities
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then remaining unsold under this registration statement, shall be deemed to be
incorporated by reference in this registration statement and to be a part hereof
from the date of filing of such documents.
Item 4. Description of Securities
The authorized capital stock of the Company consists of twenty five
million (25,000,000) shares of common stock, par value $.001 per share. As at
March 15, 2000 there were twenty four million five hundred seventy eight
thousand two hundred and ninety five (24,578,295) shares of Common Stock issued
and outstanding. All shares of stock may be issued for such consideration and
have full voting powers. The number of shares of stock of any class or series
within any class, so set forth in such resolution or resolutions may be
increased (but not above the total number of authorized shares) or decreased
(but not below the number of shares thereof then outstanding) by further
resolution or resolution adopted by the Company's board of directors pursuant to
authority vested in the Company's Certificate of Incorporation. There is
presently pending an amendment to the Articles of Incorporation authorized by a
majority of the shareholders and a resolution of the Board of Directors to
increase the number of shares from 25,000,000 to 50,000,000 shares of common
stock par value $.001 per share.
The Company's Board of Directors may determine the times when, the term
under which and the consideration for which the Company shall issue, dispose of
or receive subscriptions for its shares, including treasury shares, or acquire
its own shares. The consideration from the issuance of the shares shall be paid
in full before their issuance and shall not be less than the par value per
share. Upon payment of such consideration, such shares shall be deemed to be
fully paid and nonassessable by the Company.
The holders of shares of Common Stock are entitled to dividends when
and as declared by the Board of Directors from funds legally available therefore
and, upon liquidation, are entitled to share pro rata in any distribution to
shareholders. Holders of the Common Stock have one non-cumulative vote for each
share hold. There are no pre-emtive, conversion or redemption privileges, no
sinking fund provisions, with respect to the Common Stock.
Stockholders are entitled to one vote of each share of Common Stock
held of record on matters submitted to a vote of stockholders. The Common Stock
does not have cumulative voting rights., As a result, the holders of more than
50% of the shares of Common Stock voting for the election of directors can elect
all of the directors if they choose to do so, and, in such event, the holders of
the remaining shares of Common Stock will not be able to elect any person or
person to the board of directors of the Company.
Item 5. Interest of Named Experts and Counsel
Neither Caracansi Ramey & Associates, LLC., Certified Public
Accountants, Schnitzer & Kondub, P.C., Certified Public Accountants nor H.
Melville Hicks, Jr. respectively auditor, former auditor and counsel to the
Company have any beneficial interest in the common stock of the Company.
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Item 6. Indemnification of Directors and Officers.
The By-laws of the Company provide that a director or officer of the
Company will not be personally liable to the Company or its shareholders for
monetary damages for acts or conduct of said officer or director performed for
or on behalf of the Company, except for liability arising out of his own
negligence or willful misconduct.
The Company is entitled under its By-laws to purchase and maintain
insurance on behalf of any director or officer against any liability asserted
against him and incurred by him in any capacity.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers, and controlling persons of that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by registrant of expenses incurred 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 Company 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.
Except to the extent herein above set forth, there is no charter
provision, by-law, contract, arrangement or statute pursuant to which any
director or officer of the Company is indemnified in any manner against any
liability which he may incur in his capacity as such.
Item 7. Exemption From Registration Claimed
The Shares were issued for advising and consulting services rendered or
to be rendered. This sale was made in reliance on the exemption from
registration requirements of the 1933 Act contained in Section 4(2) thereof
covering transactions not involving any public offering or not involving any
"offer" or "sales".
Item 8. Exhibits
The exhibits filed as a part of this Report or incorporated herein by
reference are as follows:
Exhibit No. Item
4.2 Consulting Agreement dated as of February 1, 2000 between Registrant
and Robert Allen Cooke.
5.2 Opinion of H. Melville Hicks, Jr. Esq., regarding the legality of the
securities being registered under this Registration Statement.
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Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers of sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the 1933 Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (a) (1) (i) and (a) (1) (ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Company
pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered
therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act , each filing of the Registrant's
annual report pursuant to section 13(a) or section 15 (d) of the 1934 Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the 1934 Act that is incorporated by reference in
the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wilton, Connecticut on the 17th day of May 2000.
J-BIRD MUSIC GROUP, LTD.
By s/ John J. Barbieri
John J. Barbieri
President
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.
Signature Title Date
--------- ----- ----
s/ John J. Barbieri President May 17, 2000
John J. Barbieri
s/ Hope D. Trowbridge Secretary, Treasurer May 17, 2000
Hope D. Trowbridge
Majority of the Board of Directors:
s/ John J. Barbieri Director May 17 2000
John J. Barbieri
s/ Hope D. Trowbridge Director May 17, 2000
Hope D. Trowbridge
s/ Asa L. Fish Director May 17, 2000
Asa L. Fish
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INDEX TO EXHIBITS
Exhibit Number Description of Documents
4.2 Consulting Agreement dated as of February 1, 2000 between
Registrant and Robert Allen Cooke
5.2 Opinion of H. Melville Hicks, Jr., Esq., regarding the
legality of the securities being registered under this
Registration Statement.
24.1 Consent of Caracansi Ramey & Associates, LLC., Certified
Public Accountants Independent Auditors for the Company.
24.2 Consent of Schnitzer & Kondub, P.C., Certified Public
Accountants, Independent Auditors of the Registrant's 1998
financial statements.
24.3 Consent of H. Melville Hicks, Jr., Esq., counsel for the
Company (set forth in the opinion of counsel included as
Exhibit 5.2).
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EXHIBIT 4.2
CONSULTING AGREEMENT DATED AS OF FEBRUARY 1, 2000
BETWEEN THE COMPANY AND ROBERT ALLEN COOKE
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CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") dated as of the 1st day of
February, 2000 by and between Robert Allen Cooke ("Consultant") and J-Bird Music
Group, Ltd., a Pennsylvania corporation (the "Company").
WHEREAS, the Company, through its subsidiaries markets, distributes and
sells music on the internet.
WHEREAS, Consultant provides a variety of business, marketing and
financial consulting services to clients such as the Company; and
WHEREAS. the Company and Consultant desire to enter into this Agreement
to reflect the services to be provided by Consultant to the Company in
connection with the operation of its internet music sales business.
NOW THEREFORE, the Company and Consultant agree as follows:
1. Services: Consultant shall provide to the Company consulting
services in connection with the operation of the Company's business as follows:
financial planning, product development, promotion and sales, strategic
alliances, acquisitions or mergers with other business entities (collectively,
the "Services"). The services may supplement functions that are performed by
Company employees and are not in lieu of the Services of such employees.
2. Provision of Services by Consultant's Affiliates: Consultant may
cause certain of the Services to be provided by "Affiliates" (as hereinafter
defined). That the Services may be provided by Affiliates and their personnel
shall not increase the "Service Fee" (as hereinafter defined) and Consultant
shall remain liable for the performance of its Services by its Affiliates as if
Consultant performed such Services directly. "Affiliate" shall mean as to any
person or entity, any other person or entity that directly or indirectly
controls, or is under common control with, or is controlled by, such person or
entity.
3. Service Fee: Consultant shall receive payment for the Services,
rendered by it during the term hereof in the form of 1,500,000 shares (the
"Shares") of restricted common stock of the Company to be delivered on or before
February 29, 2000. The Shares shall be restricted but Consultant may register of
said Shares on Form S-8 or any appropriate filing form at consultant's expense
at any time pursuant to the Securities Act of 1933, as amended, or in the
alternative register said Shares when and if the Company files its next
registration statement at the expense of the Company. Consultant shall not be
obligated in any way or under any circumstances to advance funds for the costs
or expenses of the Company's operations or obligations. Consultant shall be
responsible for all of its out of pocket expenses incurred in performing its
services hereunder, except for travel expenses incurred in the performance of
its duties hereunder, provided it obtains the prior written consent of the
Company.
4. Standard of Care: Consultant shall provide the Services during the
term of this Agreement in a diligent, careful and vigilant manner. The Services
are to be of quality not less than that of services generally performed by
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Consultant's employees for the benefit of Consultant. Consultant shall make
available to the Company the full benefit of the judgement, experience and
advice of Consultant's employees.
5. Personnel: Consultant shall employ personnel of Consultant or its
Affiliates as may be necessary in order for Consultant to perform the Services.
Such employment shall be at the expense of Consultant.
6. Term: a) The Company engages the services of the Consultant and the
Consultant accepts such engagement upon the terms and conditions herein set
forth for a term commencing February 1, 2000 and terminating on December 31,
2000 ("Termination Date").
b) Unless otherwise mutually agreed upon in writing, any continuance of
Consultant's services after the Termination Date of this Agreement shall
constitute an engagement at will and may be terminated at any time by either
party upon the delivery of written notice thereof to the other party. Any such
continuing services by the Consultant shall be upon the terms and conditions as
set forth herein except as to the service fee and the payment thereof which will
have to be mutually agreed upon between the parties.
7. Indemnity: a) The Company shall indemnify and hold Consultant free
and harmless from any loss, cost expense, damage, or injury that Consultant may
suffer as a result of their performance or failure of performance of any of the
Company's obligations under this Agreement.
b) Consultant shall indemnify and hold the Company free and harmless
from any loss, cost, expense, damage, or injury that the Company may suffer as a
result of the performance or failure of performance of any of Consultant's
obligations under this Agreement.
8. Confidentiality: Consultant acknowledges and agrees that this
Agreement creates a confidential relationship between Consultant and the Company
during the term of this Agreement and further agrees as follows:
a) Confidential Information shall mean: any information, materials,
agreements and documents regarding the business and operations of the Company,
including but not limited to financial statements and supporting data, business
plans, forecasts and projections, and information concerning concepts, current
and proposed products and product lines, advertising, promotion, customers,
suppliers, licenses, affiliates, distributors, contractors, employees and
management, which may be provided, in writing or orally, by the Company to the
Consultant in the course of the discussions or dealings between the parties. The
term "Confidential Information," however, does not include information (i) which
is generally available to the public through no wrongful act of the Consultant
receiving Confidential Information, (ii) which is already lawfully in the
possession of the Consultant and not subject to an existing agreement of
confidentiality between the parties or (iii) which is received from a third
party without restriction and without breach of this Agreement.
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b) Consultant recognizes and acknowledges that in the course of the
discussions and negotiations relating to this Agreement, it may obtain
Confidential Information pertaining to the other Company. Consultant recognizes
that such information of the other is unavailable to others and that the
disclosure thereof to persons not authorized by the Company to receive such
information would seriously and adversely affect the business and operations of
the Company. Consultant therefore, covenants and agrees: (i) to keep the
Confidential Information of the Company strictly confidential and secret and to
hold all such information now possessed or hereafter obtained by it in a
fiduciary capacity solely for the benefit of the Company; (ii) to not use any
Confidential Information for any purpose except for the purpose of evaluating
the Company or for dissuasions with the Company regarding the Company, and not
for the purpose of any competitive advantage; (iii) not to disclose to others
any such Confidential Information except as provided herein; and (iv) to use its
best efforts and exercise utmost diligence to protect and safeguard the
confidentiality and secrecy of all such Confidential Information.
c) (i) Dissemination of the Confidential Information by the Consultant
shall be limited to those employees and other representatives or agents of the
Consultant those duties justify their need to know such information. All
employees of the Consultant who have access to the Confidential Information of
the Company shall be informed regarding the nature of the Confidential
Information and the obligation under this Agreement and shall be directed to use
the Confidential Information solely for purposes of the discussions referred to
above. In addition, prior to giving any or agent access to the other Company's
Confidential Information, the Company shall inform each such person of the
nature of the Confidential Information and of the obligations under this
Agreement. Each representative or agent of Consultant shall also be informed
that by accepting such access, he or she thereby agrees to be bound by all of
the provisions of this Agreement. By allowing any such access, the Consultant
agrees to be and remain jointly and severally liable for any disclosure by any
such representative or agent which is not in accordance with this Agreement.
(ii) In the event that the Consultant is required or becomes legally
compelled to disclose any of the Confidential Information of the Company or that
discussions or negotiations are taking place between the parties, the Consultant
agrees that it will furnish only that portion of such Confidential Information
and other information which it is legally required to disclose, and shall use
its best efforts to obligate any person or entity to whom or which such
Confidential Information is furnished to maintain the confidentiality thereof.
(iii) Promptly upon any request by the Company, the Consultant shall
return to the Company all written material furnished to the Consultant by or on
behalf of the Company pursuant hereto including, without limitation all
financial statements, memoranda, notes, records and/or any other documents
whatsoever, and the Consultant will not retain any copies, extracts or other
reproduction of same, in whole or in part. All documents, notes, memoranda and
other writings whatsoever prepared by or for the Company based on the
Confidential Information shall be destroyed and the Consultant will certify in
writing to the Company that such destruction has occurred.
d) In the event of a breach or threatened breach by the Consultant any
of the obligations herein contained the Consultant acknowledges that the Company
will not have adequate remedy at law and shall be entitled to seek equitable and
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injunctive relief to restrain violation of the provisions hereof. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedies
available to it from such breach or threatened breach, including the recovery of
damages.
Miscellaneous:
a) No Waivers. No failure or delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
future exercise thereof or the exercise of any other right, power or privilege.
b) No Assignment. Neither party to this Agreement may assign its rights
or obligations hereunder without the written consent of the other party hereto.
c) Amendments. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure from the terms of any provisions to this Agreement
shall be made in writing, signed by the parties hereto, and shall be effective
only in the specific instance and for the specify purpose of which made or
given.
d) Notices. All notices, demands, statements and communications
required or desired to be made hereunder shall be in writing and shall be hand
delivered or sent by responsible overnight carrier or registered or certified
mail, return receipt requested, of intended for the Company, addressed to the
Company at:
J-Bird Music Group, Ltd.
396 Danbury Road
Wilton, CT 06897
Attention: John J,. Barbieri, President
and if intended for Consultant, addressed to Consultant:
Robert Allen Cooke
PO Box 609
Narragansett, RI 02882
The date of the giving of any such notice shall be the date of its
receipt by its recipient.
e) Captions. The captions of this Agreement are inserted only for the
purpose of convenient reference and do not define, limit or prescribe the scope
or intent of this Agreement or any part hereof.
f) Governing Law. This Agreement shall be governed, and construed in
accordance with, the laws of the State of Rhode Island except that body of law
relating to choice of law.
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g) Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
h) Entire Agreement. This Agreement integrates all the terms and
conditions mentioned herein or incidental hereto and supercedes all oral
negotiations and proper writings in respect to the subject matter hereof. In the
event of any conflict between the terms, conditions and provisions of this
Agreement and any such agreement, document or instrument, the terms, conditions
and provisions of this Agreement shall prevail.
9. Relationship: The relationship between the Company and the
Consultant created by this Agreement is that of independent contractor and
nothing herein shall be construed as creating a relationship of employer or
employee or principal or agent between the parties. Consultant agrees that it
shall neither act nor make any representation that it is authorized to act as an
agent or officer of the Company.
10. Counterparts This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
s/: Robert Allen Cooke
----------------------
Robert Allen Cooke
J-Bird Music Group, Ltd.
s/: John. J. Barbieri
------------------------
Title: President
27
<PAGE>
EXHIBIT 5.2
OPINION OF
H. MELVILLE HICKS, JR., ESQ.
<PAGE>
H. MELVILLE HICKS, JR.
Attorney and Counselor at Law
551 Fifth Avenue, Suite 1625
New York, New York 10176
(212) 655-5944
Fax (212) 655-5943
May __, 2000
J-Bird Music Group, Ltd.
396 Danbury Road
Wilton, CT 06897
Ladies and Gentlemen:
You have requested my opinion as counsel for the J-Bird Music Group,
Ltd., a Pennsylvania corporation (the "Registrant"), in connection with the
registration under the 1933 Act of 1933, as amended, and the Rules and
Regulations promulgated thereunder, and the public offering by the selling
shareholder (the "Selling Shareholder") named in the Registrant's Registration
Statement on Form S-8, to be filed with the Securities and Exchange Commission
on or about May , 2000 (the "Registration Statement"), of an aggregate of
1,500,000 shares of Common Stock of the Registrant, $.001 par value, per share,
currently issued and outstanding in the name of the Selling Shareholder (the
"Shares").
I have examined the Registration Statement in the form to be filed with
the Securities and Exchange Commission, the Certificate of Incorporation of the
Registrant as certified by the Secretary of State of the State of Pennsylvania,
the Bylaws and the minute books of the Registrant as a basis for the opinion
hereafter expressed.
In addition to the above, I have also examined such other documents and
records and have made such further investigations as I have deemed necessary for
the purpose of rendering the opinion set forth in this letter. In making such
examination, I have assumed the genuineness of all signatures, the authenticity
of all documents submitted to me as originals and the conformity of authentic
originals of all documents submitted to me as certified or photostat copies. As
to various questions of fact material to this opinion. I have relied upon
statements of officers of the Registrant.
Based on the foregoing examination, it is my opinion, and I so advise,
that the 1,500,000 Shares currently are, and upon sale in the manner described
in the Registration Statement will be, legally issued, fully paid and
nonassessable.
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This opinion is furnished solely for use in connection with the
issuance of the Shares pursuant to the Registration Statement.
I consent to the filing of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
s/ H. Melville Hicks, Jr.
H. Melville Hicks, Jr.
30
<PAGE>
EXHIBIT 24.1
CONSENT OF CARACANSI RAMEY & ASSOCIATES, LLC.
Certified Public Accountants
------------------
<PAGE>
Caracansi Ramey & Associates, LLC
CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Auditors
We consent to the incorporation by reference in this Registration
Statement of J-Bird Music Group, Ltd Corporation on Form S-8 of our report dated
March 29, 2000 appearing in the incorporated by reference Annual Report on Form
10-KSB of The J-Bird Music Group, Ltd for the year ended December 31, 1999.
s/ Caracansi Ramey & Associates, LLC
------------------------------------
Caracansi Ramey & Associates, LLC
Certified Public Accountants
May 11, 2000
77 North Street
Danbury, Connecticut 06180
Tel: 203-794-9187
Fax: 203-790-1566
32
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EXHIBIT 24.2
CONSENT OF SCHNITZER & KONDUB, P.C.
Certified Public Accountants
------------------
<PAGE>
Schnitzer & Kondub, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Auditors
We consent to the incorporation by reference in this Registration Statement of
J-Bird Music Group, Ltd Corporation on Form S-8 of our report dated April 7,
1999, appearing in the incorporated by reference Annual Report on Form 10-KSB of
The J-Bird Music Group, Ltd for the year ended December 31, 1998.
s/ Schnitzer & Kondub, P.C.
----------------------------
Schnitzer & Kondub, P.C.
Certified Public Accountants
May 15, 2000
Harrison, New York
550 Mamaroneck Avenue, Harrison, New York 10528
Tel: 914-698-6500
Fax 914-698-1700
34
