Filed: January 6, 1998 S.E.C. File No. 333-63063
______________________________________________________________________________
U. S. Securities and Exchange Commission
Washington D.C. 20549
Form SB-1
AMENDMENT NO. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE LIVING CARD COMPANY, INC.
------------------------------------------
(Name of small business issuer in its charter)
Nevada NEVADA 87-058319
- ---------------------- -------------------------- --------------------
(State or jurisdiction (Primary Standard Industrial (I.R.S. Identifi-
of incorporation or Classification Code Number) cation No.)
organization)
1174 East 2700 South, #16, Salt Lake City, Utah 84106; (801) 485-0430
- ---------------------------------------------------------------------------
(Address and telephone number of principal executive offices)
Same as above
--------------------------------------------------------------
(Address of principal place of business or intended principal place of
business)
James C. Lewis, 10 West 100 South,Suite 600 Salt Lake City,84101;(801)530-0447
- ----------------------------------------------------------------------------
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public: as soon as practicable
following effectiveness of the Registration Statement.
If any of the securities being registered on this Form are to be offered
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] .
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] .
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [ ] .
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
--------------------------------
Title of
Each Proposed Proposed
Class of Dollar Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being to be Price Per Offering Registration
Registered Registered Unit Price Fee
- ------------ ---------- ----------- ---------- ---------------
Common Stock $200,000 $.10 $200,000 $100*
*Minimum Fee
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933, as amended, or until the
registration statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
Disclosure alternative used (check one): Alternative 1 [ ]; Alternative 2 [X]
The Exhibit Index is on page 38 .
Please send a copy of communications to:
James C. Lewis, Esq.
Lewis Law Offices
600 Crandall Building
10 West 100 South
Salt Lake City, Utah 84101
(801) 530-0447
<PAGE>
LIVING CARD COMPANY, INC.
1174 East 2700 South, #16, Salt Lake City, Utah 84106
(801) 485-0430
2,000,000 Shares of Common Stock
Price per security (share): $0.10 Per Share
Maximum Number of Securities Offered: 2,000,000 shares
Minimum Number of Securities Offered: 1,400,000 shares
Living Card Company, Inc. (the "Company") is offering a total of
2,000,000 shares of common stock, par value $0.001 per share, at an
offering price of $.10 per share. (See "DESCRIPTION OF SECURITIES.")
INVESTMENT IN SMALL BUSINESSES INVOLVES A HIGH DEGREE OF RISK, AND
INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD
TO LOSE THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" FOR THE RISK FACTORS THAT
MANAGEMENT BELIEVES PRESENT THE MOST SUBSTANTIAL RISKS TO AN INVESTOR IN THIS
OFFERING.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING MERITS AND
RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED OR APPROVED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE,
THESE AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS
OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON
THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR SELLING LITERATURE.
Officers, directors and their affiliates may purchase shares of
common stock in the offering in an aggregate amount of not more than 20% of
all offered shares. Since shares will be offered and sold by the officers and
directors, it is likely that officers, directors and their affiliates will be
able to purchase shares in the offering if they so desire.
____________________________________________________________________________
Offering Price Proceeds
to Public Commissions(1) to Company(2)
_____________________________________________________________________________
Per Share $0.10 $0.00 $0.10
Total(3)
Minimum $140,000 $0.00 $140,000
Maximum $200,000 $0.00 $200,000
The Company anticipates sales to the public will commence on or about__,
1999.
The date of this Prospectus is , 1999.
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(1) The Company plans to offer the Common Stock in this offering through
its officers and directors, who will receive no compensation for such
activities. (See "PLAN OF DISTRIBUTION".)
(2) Before deducting expenses of the offering payable by the Company
estimated at $30,000.
(3) The offering is being conducted on a "1,400,000 share minimum,
2,000,000 share maximum" basis. In the event that the minimum of 1,400,000
shares of Common Stock having a gross subscription price of $140,000 is not
sold within four months of the effective date of this prospectus, all proceeds
raised will be promptly returned to investors, without paying interest and
without deducting any sales commissions or expenses of the offering. All
proceeds from the sale of the shares will be placed in escrow with Brighton
Bank, 311 South State Street, Salt Lake City, Utah, 84111, no later than noon
of the next business day following receipt. Subscribers will not have the
use of their funds, will not earn interest on funds in escrow, and will not be
able to obtain return of funds placed in escrow unless and until the minimum
offering period expires. (See "PLAN OF DISTRIBUTION.") In the event the
minimum number of shares is sold within the offering period, the offering will
continue until five months following the date of this prospectus, all offered
shares are sold, or the offering is terminated by the Company, whichever
occurs first.
The issuer is not a reporting company under the Securities Exchange Act
of 1934, as amended. As a result of this offering, the Company will
become subject to the informational requirements of the Securities Exchange
Act of 1934 (the "Exchange Act") for a period of at least one fiscal year. In
addition, as of the fiscal year ending December 31, 1998, the Company may be
required to register the shares of common stock offered hereunder, under the
Exchange Act, and continue to file quarterly and annual reports.
The Company intends to furnish to its stockholders with annual reports
containing financial statements audited and reported upon by its independent
accounting firm, and such other periodic reports as the Company may determine
to be appropriate or as may be required by law.
Prior to this offering there has been no market for any securities of the
Company, and there is no assurance that any market will exist after the
offering. The public offering price has been arbitrarily determined by the
Company and bears no relationship to the assets or book value of the Company
or any other recognized criteria of value. (See "RISK FACTORS" and "PLAN OF
DISTRIBUTION.")
ALL SUBSCRIBERS' CHECKS SHOULD BE MADE PAYABLE TO "BRIGHTON BANK-- LIVING
CARD COMPANY, INC., ESCROW ACCOUNT."
UNTIL , 1999 (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.
The Shares are offered subject to prior sale and withdrawal or
cancellation of the offering, without notice. Offers to purchase and sales by
the Company are subject to: (a) acceptance by the Company; (b) the sale of the
minimum number of Shares specified herein; (c) the release and delivery to the
Company of the proceeds of this offering; (d) the delivery of the securities;
and (e) the right of the Company to reject any and all offers to purchase.
Changes in the offering which occur after the date hereof, if any, will
necessitate the filing with the Securities and Exchange Commission (the
"Commission") of an amendment to the registration statement of which this
prospectus forms a part (the "Registration Statement") and review and
declaration of effectiveness by the Commission of such amendment. There can
be no assurance that any such amendment will become effective. The Company
does not presently have any plans to change the terms of offering after the
date of effectiveness.
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<PAGE>
NO OFFICER OR DIRECTOR OF THE COMPANY, OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN
THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED ON 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 TO ANY PERSON IN ANY JURISDICTION WHERE SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL.
___________________________________________________________________
INTRODUCTION
___________________________________________________________________
The Living Card Company, Inc. (the "Company"), was organized as a Nevada
corporation on May 8, 1998. Following organization of the Company, John F.
Lund and R. Blair Lund, officers and directors, contributed to the Company all
of their rights to certain self-contained garden greeting cards designed,
created and developed by them over the past two years. On organization of the
Company, a total of 6,000,000 shares of Common Stock was issued to John F.
Lund and R. Blair Lund in consideration of their contribution of the product
line, and $10,000 in cash to the Company. Since the date of incorporation,
John F. Lund, President, has loaned the Company an additional $80,000
to fund the Company's initial operations, which will be repaid from
proceeds of the offering. (See "USE OF PROCEEDS").
The Company is a Salt Lake City based corporation organized for the
purpose of specializing in the creation, development and marketing of unique,
educational and low-cost "garden" greeting cards. Management believes the
Company has a unique line of products which combine greeting card themes with
a variety of plants or flowers in a package which can be shipped by U.S. mail.
The Company plans to compete in the greeting card industry, by attempting to
establish a niche market for its unique products. The Company will offer its
products through the establishment of a broker network throughout the United
States, and through direct sales to various retail markets and outlets. The
Company has initially established a relationship with three such
distributors, who have commenced efforts to distribute the Company's products
in grocery stores, gift stores and other retail outlets. There can be no
assurance the Company will be successful in these efforts. (See"BUSINESS.")
The net proceeds from this offering will be approximately $170,000
if the maximum offering is sold, and approximately $110,000 if only the
minimum offering is sold. Such net proceeds will be used by the Company to
repay indebtedness to the Company's president, to fund product purchases,
to cover general and administrative expenses, and to market and promote
the Company's products. The proceeds from this offering may not be
sufficient to adequately cover the necessary start-up costs of the Company.
(See "USE OF PROCEEDS").
This offering involves significant risks to investors, including those
generally associated with a new venture without any operating history or
history of profitable operations; substantial dilution to investors; the fact
that there is no public market for any of the Company's securities; the
extremely limited capital resources of the Company; the specific risks
attendant the greeting card industry; and other factors. (See "RISK
FACTORS").
This offering involves substantial and immediate dilution in the book
value of the Common Stock from the public offering price per share. (See
"DILUTION").
The Company's offices are located at 1174 East 2700 South, #16, Salt Lake
City, Utah 84106, where its telephone number is (801) 485-0430.
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<PAGE>
_________________________________________________________________________
RISK FACTORS
__________________________________________________________________________
The purchase of the securities offered hereby involves a high degree of
risk. Each prospective investor should consider, in addition to the negative
implications of all material set forth herein, the following specific risks,
particularly in relation to his own financial circumstances and his ability to
suffer the loss of his entire investment.
RISK FACTORS RELATING TO THE COMPANY'S BUSINESS
- ------------------------------------------------
New Business; Extremely Limited Operating History
--------------------------------------------------
The Company was organized in May, 1998, and has only recently commenced
business operations. To date, the Company's activities have been limited to
acquiring the rights to the Living Card products from its officers and
directors, establishing relationships with suppliers, and ordering initial
supplies. The Company is in the development stage in that it has not received
revenues from its planned principal activities. The Company has not been in
business long enough to enable an investor to make an informed judgment as to
its future performance. It can be anticipated that the Company will operate
at a loss for a period of at least several months, until the Company has
established a broker network for the marketing of its products. Therefore,
the Company faces all of the risks inherent in the formation and operation of
a new business, and there can be no assurance that the proposed business of
the Company will be developed successfully or that the Company will be able to
operate profitably.
Need for Additional Financing
-----------------------------
The ability of the Company to implement its business activities is
dependent on obtaining funding through this offering. The net proceeds from
this offering will only be sufficient to fund the Company's operations for a
period of six months, if the entire offering is sold, and four months, if only
the minimum offering is sold. While the Company believes the funds from the
offering will be sufficient to fund initial inventory, to cover certain
general and administrative expenses and marketing costs, and to repay a
portion or all of its debt to its President, for a period of a few months, the
proceeds will be insufficient to cover expanded marketing efforts or to fund
any of these costs thereafter. While management believes the net proceeds
from this offering will be sufficient for the Company to implement its
business plan, the Company will be in need of additional funds thereafter,
unless the Company achieves a positive cash flow from the sale of Living Card
products within a few months from the date of this Prospectus. There can be
no assurance that such profitability will be achieved, and unforeseen
circumstances could occur which could compel the Company to seek additional
funds, particularly if only the minimum offering is sold. Even if the Company
does achieve a positive cash flow within a few months from the date of this
Prospectus, of which there is no assurance, the Company will have very limited
funds available for expanded operations. No assurance can be given that
additional financing will be available if needed, or if available, that it can
be obtained on terms favorable to the Company. The terms of any such
additional financing may result in additional dilution to the Company's
shareholders. In addition, it may be anticipated that the decision to conduct
any future financings will be essentially at the discretion of the board of
directors and the Company's shareholders will not have the right to vote on or
approve any such transactions. (See "USE OF PROCEEDS").
Proceeds of Offering To Be Used in Substantial Part to Repay
Debt to Officer
------------------------
The Company's President, John Lund, has loaned to the Company a total of
$85,000 as of the date of this Prospectus, in addition to capital
contributions of $10,000 made to the Company by Mr. Lund and Blair Lund,
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<PAGE>
Secretary/Treasurer. The Company and Mr. Lund have agreed that this
indebtedness will be repaid, without interest, from the proceeds of this
offering. If only the minimum offering is sold, a substantial majority of
the net proceeds will be used for the repayment of such indebtedness.
(See "USE OF PROCEEDS").
Dependence on Management and Key Employee
-----------------------------------------
The Company will be particularly dependent on John F. Lund, President,
and Blair Lund, Secretary/Treasurer, in the development and management of the
business of the Company. John Lund will devote substantially all of his time
to the affairs of the Company. Blair Lund will devote a substantial portion
of his time to the Company's business, but has other business interests which
will require a portion of his time. While these individuals have a varied
business background, neither one of them has extensive experience in the
particular business the Company is undertaking. In addition to these
individuals, the Company's success will depend, in large part, on the efforts
of Craig M. Weston, vice president of marketing, in developing and
implementing the Company's marketing plan. The Company has not obtained
keyman insurance on the lives of any of these individuals, and does not intend
to do so in the foreseeable future. The loss of the services of any one of
these individuals could have a substantial detrimental impact on the Company.
(See "MANAGEMENT").
No Assurance of Market Acceptance of Product Line
-------------------------------------------------
The Company has not conducted any formal independent research or market
study to ascertain whether, and to what extent, its products will be accepted
by consumers. The Company's business is being undertaken solely on
management's evaluation that the Company has a very unique product which will
be attractive to consumers in the greeting card market. There can be no
assurance that the Company's products will be well received in the
marketplace, or that the Company will be able to create, through its marketing
efforts, a demand for its products. (See "BUSINESS").
New Product Introduction
--------------------------
The Company's success is dependent upon its ability to design and deliver
new products, and to successfully introduce the Company's products into the
marketplace. Demand and market acceptance of new products are subject to
substantial uncertainty. Achieving market acceptance for the Company's
products may require substantial marketing and other efforts and the
expenditure of significant funds to create product appeal and acceptance. As
indicated throughout this Prospectus, the Company has very limited funding for
such purposes. There can be no assurance the Company will be successful in
these efforts. The failure of any of the Company's products to gain market
acceptance could adversely affect the image of the Company and demand for
other products.
Competition
-----------
Competition in the greeting card industry is intense. The Company will
be competing with traditional greeting companies such as Hallmark Cards and
American Greetings, which are extremely large and financially healthy
companies, have a substantial market share and brand name recognition, and
easy access to marketing outlets and capital and capital markets. Many of
these companies are able to frequently able to update and expand product lines
and introduce new products, and to diversify product offerings. Because of
the uniqueness and relative permanency of its products, as compared to
traditional greeting cards, the Company believes there is a good possibility
that it will be able to initially capture the new "niche" market for garden-
style greeting cards. However, there can be no assurance that other companies
with substantially greater financial, creative and marketing resources, and
proven histories, will not effectively compete in this market. (See
"BUSINESS: Competition").
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Dependence on Suppliers
-----------------------
The Company will utilize certain raw materials and supplies, including
plastics products, packaging, seed envelopes and seeds, peat moss cubes and
miscellaneous items provided by various suppliers. In addition, the Company
will rely on a Salt Lake City-based firm for its assembly, warehousing and
shipping. The Company does not expect to have any long-term purchase
contracts with any of its suppliers. Alternative sources exist for each of
the materials used in the Company's products, and for such assembly,
warehousing and shipping services. Nonetheless, the Company cannot give any
assurance that supply or service relationships with alternative sources can be
established or that such relationships could provide timely and sufficient
quantity or quality of materials. In addition, the Company may incur
additional costs and business delays and interruptions, in sourcing supplies
and materials from alternative sources. (See "BUSINESS: Suppliers").
Dependence on Distributors/Brokers
----------------------------------
The Company's principal plan for distributing its Living Card products,
is through the establishment of a network of brokers or distributors
throughout the United States, which are involved in, or associated with, the
greeting card business. The Company has entered into agreements with
three (3) distributors covering the Utah, Florida, Oklahoma, Texas and New
Mexico areas, who have made initial distributions of the Company's product to
various retail operations. Although the Company has identified a number
of brokerage firms in various market regions throughout the country, and
conducted initial discussions with many of these firms regarding a distributor
relationship, no other brokerage agreements or arrangements have been entered
into as of the date of this Prospectus. The Company's ability to effectively
market and distribute its products will depend, in large part, on the
Company's ability to establish an effective and experienced network of
brokers. There can be no assurance the Company will be successful in these
efforts, or, if successful, that the brokers will be successful in
distributing the Company's products. (See "BUSINESS: Marketing").
GENERAL RISKS RELATING TO INVESTMENT
- ------------------------------------
"Best Efforts" Offering
-----------------------
The Shares of Common Stock are offered on a "best efforts" basis, and no
individual, firm, or corporation has agreed to purchase any of the offered
Shares. No assurance can be given that any or all of the Units will be sold.
Provisions have been made to deposit in escrow the funds received from the
purchase of Shares, and in the event $140,000 is not received within
four months of the effective date of this prospectus, proceeds so collected
will be promptly refunded to investors without paying interest and without
deducting sales commissions or expenses. During this escrow period,
subscribers will not have use of or derive benefits from their escrowed funds.
(See "PLAN OF DISTRIBUTION.")
No Public Market for the Company's Securities
---------------------------------------------
At the present time, there is no public market for the Company's
securities. There can be no assurance that a public market for the Company's
Common Stock will develop following the offering. As a result, purchasers of
the Common Stock offered hereby may not be able to liquidate their investment
readily, if at all.
(See "PLAN OF DISTRIBUTION.")
No Underwriter
--------------
The Company has not engaged the services of an underwriter with respect
to this offering and, as a result, the due diligence review of the Company and
its affairs which would customarily be performed by an underwriter and its
legal counsel has not been performed with respect to the Company or this
offering. In
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addition, the management of the offering by the Company rather than by an
underwriter is likely to increase the risk that no market for the Company's
securities will develop following the offering. (See "PLAN OF DISTRIBUTION".)
Dependence on Successful Completion of Offering
------------------------------------------------
The Company is dependent on successful completion of this offering to
implement its proposed business plan. Furthermore, if the offering is
unsuccessful, it is likely that present shareholders of the Company will lose
their entire investment since the company will have little or no working
capital after paying certain expenses associated with this offering.
Disproportionate Risks
-----------------------
On sale of all Shares offered hereby (assuming allocation of the public
offering price solely to the Common Stock), present shareholders would own
75% of the then outstanding shares of the Company, for which they would
have paid $20,000 , and a contribution of the products designed and
developed by management, or approximately 9.1% of the then invested
capital of the Company (not including the intangible value of the products
contributed to the Company), and the persons purchasing Shares of Common Stock
in this offering would then own 25% of the then outstanding shares, for
which they will have paid $200,000 or approximately 90.9% of the
then invested capital. If only the minimum number of Shares is sold, existing
shareholders would own approximately 81.1% of the stock outstanding for
which they would have paid approximately 12.5% of the total capital
invested, as compared to public shareholders who would own approximately
18.9% of the stock outstanding for which they would have paid
$140,000 or approximately 87.5% of the total capital invested.
Consequently, purchasers in this offering will bear a disproportionately
greater risk investing in the Company than its present shareholders. (See
"COMPARATIVE DATA.")
Substantial and Immediate Dilution to Public
-------------------------------------------
Persons purchasing Shares in this offering will suffer a substantial and
immediate dilution to the net tangible book value of their shares below the
public offering price. Giving effect to the sale of all offered Shares, the
Company would have a net tangible book value of approximately of $0.015 per
share so that persons purchasing Shares in the offering would suffer an
immediate dilution of $0.085 per share or 85% from the offering price of $.10
per Share. Giving effect to the sale of the minimum number of Shares, the net
tangible book value of the Company would be approximately $0.008 per
share or a similar dilution to the public investors of $.092 per share
or 92% of the public offering price. (See "DILUTION.")
Lack of Revenues and Dividends
------------------------------
The Company has had no earnings and cannot predict when, if ever, it will
realize any material revenue or realize a profit from any operations it may
subsequently undertake. The Company has paid no dividends and does not
propose to do so in the foreseeable future.
Arbitrary Offering Price
------------------------
The offering price of the Shares of Common Stock does not bear any
relationship to the assets, book value, or net worth of the Company or any
other generally accepted criteria of value, and should not be considered to be
an indication of the actual value of the Company. The offering price of the
Shares has been arbitrarily determined by the Company. (See "PLAN OF
DISTRIBUTION.")
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Broker-Dealer Sales of Company's Securities
-------------------------------------------
The securities in this offering are subject to "penny stock" regulations
promulgated by the Securities & Exchange Commission which may have an adverse
impact on the ability of purchasers in this offering to sell shares in the
secondary market. Rule 15g-9 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which will apply to the Company's securities,
imposes additional sales practice requirements on broker-dealers who sell
"penny stocks" to persons other than established customers, including the
requirement that such broker-dealer firms make an individualized suitability
determination for a purchaser and receive the purchaser's written agreement
prior to the transaction. In addition, the Securities Enforcement Remedies
and Penny Stock Reform Act of 1990, imposes additional disclosure requirements
on a broker prior to effecting a transaction in a "penny stock," including the
requirement that the broker-dealer deliver to the prospective customer, a
standardized risk disclosure document, which discloses information regarding
penny stocks and the risks inherent in the penny stock market. Moreover,
Rules 15g-4 and 15g-5 of the Exchange Act impose a number of additional
requirements on broker-dealers effecting transactions in penny stocks,
including the requirements that: a broker-dealer provide a customer with
current bid and offer quotations for the penny stock prior to effecting any
transaction; the broker-dealer disclose the aggregate amount of any
compensation received by it and its salespeople in any penny stock
transaction; and the broker provide monthly account statements showing the
market value of each penny stock held in the customer's account.
Consequently, these rules may have an adverse impact on the market liquidity
of the Company's common stock, and may negatively affect the ability of
broker-dealers to sell the Company's securities and the ability of purchasers
in the offering to sell the common stock in the secondary market.
Possible Sale of Common Stock Pursuant to Rule 144
--------------------------------------------------
All of the Company's 6,000,000 shares of Common Stock presently
outstanding are "restricted securities" within the meaning of the Securities
Act of 1933. As such, in the event a public market for the Common Stock
develops in the future, a portion of such stock may be sold as early as May,
1999, in reliance on Rule 144 adopted under the Securities Act, if certain
specific requirements are met. Investors should be aware that sales under
Rule 144 may have a depressive effect on the price of the Company's stock in
any market which may develop. (See "DESCRIPTION OF SECURITIES.")
____________________________________________________________________________
DILUTION
____________________________________________________________________________
As of September 30, 1998 , the net tangible book value (total
tangible assets less total liabilities) of the Company was ($47,774), or a
deficit of approximately $.008 per share. The following table sets forth
the dilution to persons purchasing Shares in this offering without taking into
account any changes in the net tangible book value of the Company after
September 30, 1998 , except the sale of the minimum and maximum number
of Shares offered at the public offering price and receipt of the net proceeds
therefrom.
Assuming Minimum Assuming Maximum
Shares Sold Shares Sold
---------------- ----------------
Public offering price
per share(1) $.100 $.100
Net tangible book value
before offering(2) ($0.008) ($0.008)
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Increase attributable to
purchase of Shares by
new investors $0.015 $0.023
Pro forma net tangible book
value after offering(2)(3)(4) $0.008 $0.015
Dilution per share to new
investors $0.092 $0.085
_______________________________________
(1) Offering price per share before deduction of offering expenses and
commissions.
(2) Determined by dividing the number of shares of Common Stock
outstanding into the net tangible book value of the Company.
(3) After deduction of offering expenses estimated at $30,000.
(4) These figures do not take into account any events after September
30, 1998, including the loan by the Company's president of additional
funds to the Company, and the contribution by the President and
Secretary of an additional $10,000 in equity. A substantial
portion of such borrowed funds have been used by the Company for
the purchase of materials and inventory. (See "BUSINESS" and "INTEREST
OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS").
__________________________________________________________________________
COMPARATIVE DATA
_________________________________________________________________________
The following chart illustrates percentage ownership in the Company held
by the present shareholders and by the public investors in this offering and
sets forth a comparison of the amounts paid by the present shareholders and by
the public investors.
Total Total Average
Shares Purchased Consideration(1) Price Per
Number % Amount % Share*
--------- ---- -------- ---- ----------
Present Shareholders
- --------------------
Minimum Offering 6,000,000 81.1 $ 20,000 12.50 $ .0017
Maximum Offering 6,000,000 75.0 $ 20,000 9.09 .0017
New Investors
- -------------
Minimum Offering 1,400,000 18.9 $ 140,000 87.50 .100
Maximum Offering 2,000,000 25.0 $ 200,000 90.91 .100
________________________
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*The price per share of the present shareholders considers only
the cash contribution by such shareholders, and does not take into account
other contributions by such shareholders, including the contribution of the
products of the Company, and services contributed.
___________________________________________________________________________
USE OF PROCEEDS
__________________________________________________________________________
The net proceeds to be received by the Company from the sale of all
2,000,000 shares of common stock are estimated at approximately
$170,000 , if the entire offering is sold, after deducting expenses of
this offering. If only the minimum offering is sold, the Company will receive
net proceeds of approximately $110,000 , after deduction of such
offering expenses.
The Company proposes to use the net proceeds from this offering in the
following general amounts and order of priority:
Assuming Assuming
Minimum Maximum
Shares Shares
Item Sold(1) Sold(1)
------- ----------- ------------
1. General and administrative expenses,
telephone, reproduction, and general
office costs (2)(3) $ 8,000 $ 15,000
2. Repayment of Indebtedness to Officer
and Director(4) 60,000 85,000
3. Marketing and Promotional Costs(5) 12,000 20,000
4. Management Compensation (6) 15,000 25,000>/R>
5. Materials, Supplies-Product Costs (7) 15,000
25,000
--------- --------
TOTAL $ 110,000 $170,000
(1) The foregoing expenditures represent estimates based on the Company's
present intentions for the Company's first six months of operations. None of
the items set forth in the above table is a firm commitment by the Company.
(2) The Company contemplates that these costs will increase proportionately
if more than the minimum offering is sold, in order to cover additional
general and administrative costs necessary as a result of expanded operations.
(3) The Company's current overhead is limited to telephone, telefax,
reproduction, mailing and other miscellaneous expenses.
(4) The Company's President, John F. Lund, has loaned to the Company the sum
of $85,000 , which has been used to fund the Company's start-up
operations, and to purchase materials for Living Card products. If
-10-
<PAGE>
the maximum offering is sold, he will be repaid in full, without interest,
from the net proceeds of the offering. If only the minimum offering is sold,
Mr. Lund has agreed to accept a $60,000 payment from the net proceeds,
and to be repaid on the balance, without interest, at such time as the Company
has sufficient funds from operations or from another future financing. (See
"INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS").
(5) Represents amounts for travel to establish a distributor network; the
preparation and production of promotional materials; and other general
marketing and promotional activities. (See "BUSINESS: Marketing").
(6) See "DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES AND PARTIES:
Remuneration of Officers and Directors").
(7) Represents amounts to be utilized to purchase materials for products.
Does not include amounts previously expended by the Company for materials.
The net proceeds from this offering will fund the Company's operations
for period of only six (6) months. If only the minimum offering is sold, the
net proceeds may fund the Company for an even shorter period. Therefore,
within a few months from the completion of the offering, the Company will
either need to be operating profitably so as to fund its operations from cash
flow, or be required to seek additional debt or equity capital. In
addition, financial circumstances could occur which could compel the Company
to seek additional funds even sooner. Moreover, the Company will need
additional capital should it decide to significantly expand operations. There
is no assurance that additional funds will be available when needed, or if
available, on terms favorable to the Company.
The Company does not intend to become an investment company under the
Investment Company Act of 1940 and, therefore, may be limited in the temporary
investments it can make with the proceeds of this offering. To the extent
that the net proceeds of this offering are not utilized immediately, they will
be invested in money market accounts, savings deposits, short-term obligations
of the United States government, or other temporary interest bearing
investments in commercial financial institutions.
________________________________________________________________________
BUSINESS
__________________________________________________________________________
GENERAL
- -------
The Living Card Company (the "Company") is a Nevada Corporation organized
for the purpose of specializing in creative, educational, and low-cost
"garden" greeting cards. Upon organization in May, 1998, the Company acquired
from John F. Lund and R. Blair Lund, officers and directors, all of the rights
to certain "garden greeting cards" designed and developed over the past two
years. The Company is conducting this offering to provide it with funding to
further develop and market its products.
The Company's products were created as a result of the belief by
management that a substantial "niche" market exists in the greeting card
industry, for unique products. The Company's products, or "Living Cards," are
self-contained gardens, designed as relatively low-cost and unique greeting
cards. Management believes its Living Cards offer an affordable alternative
to traditional greeting card and gift products by providing a combination of a
conventional greeting card with a variety of plants or flowers which are
packaged for shipping by U.S. mail.
The Company has completed the development of its initial product line,
and has established relationships with suppliers of the various materials
comprising the Living Card products. The Company has established a
relationship with a Salt Lake City packaging firm, which will provide the
Company with packaging, warehousing and distribution services. As of the
date of this prospectus, the Company has entered into a distribution
relationship with three brokers in the industry, covering the states of Utah,
Florida, Texas, New Mexico and Oklahoma. These firms have begun efforts to
place the Company's products in grocery stores, gift stores and other retail
operations. Over the next few weeks, the Company will seek to establish a
distributor network with additional brokerage firms involved in the greeting
card industry throughout the country. The Company has also undertaken
efforts to market its products through various retail markets, including
convenience stores, fundraising activities, gift and specialty stores and
direct sales through a toll-free number. To date, the Company has not
generated any significant revenue. There can be no assurance the Company will
be successful in any of these efforts.
The Company is a newly organized corporation, and has no history of
operations.
PLAN OF OPERATIONS
- ------------------
The Company has completed the development of its initial product line,
and has produced an inventory of its products. The Company plans to
devote its efforts in the next twelve months, to establishing a sales network,
marketing and promoting its products for the purpose of establishing the
Company's products in the marketplace, and maintaining, to the extent the
Company's funds allow, the production of its products to meet anticipated
demand. Over the past few weeks, the Company has established a distributor
relationship with three distributors involved in brokering products in this
industry. As soon as reasonably practicable following this offering, the
Company plans to enter into additional distributor arrangements with carefully
selected brokers in the industry, in different regions of the country. At
the same time, the Company will continue with efforts to directly market its
products to other retail markets. To the extent the Company's funds allow,
the Company will design and develop new living card products, to meet
different special events or niche markets.
If the maximum offering is completed, the Company believes it will have
sufficient funding to satisfy the Company's cash requirements for the next six
(6) months. If only the minimum offering is sold, the Company may need to
seek additional debt or equity capital to meet its cash requirements, unless
net revenue from sales of products generates sufficient capital. There can be
no absolutely no assurance that revenue from operations will provide the
Company with funds sufficient to meet the Company's cash requirements.
INDUSTRY AND MARKET OVERVIEW
- ----------------------------
According to The Greeting Card Association in its most recent industry
research, the greeting card industry currently generates approximately
$7,000,000,000 in annual sales, and has been expanding at the rate of
approximately 6% per year for the past 8 years. The Company believes that
"niche" markets within the industry have driven much of this growth, as many
consumers appear to want alternatives to the traditional disposable card. The
Company and its management believe that because of the consumers' desire for
unique alternatives, the Company may be able to enjoy at least a temporary
competitive advantage by offering what they believe to be the first producer
of garden-style cards - the Living Card.
Although the Company has not conducted any formal market studies or
analyses of the greeting card industry in undertaking its business, management
believes a few trends are apparent. First, the type and range of greeting
cards have expanded considerably over the past several years as new
technologies have created new methods of presenting greeting card information.
Consequently, management believes that alternatives to traditional greeting
cards have, in large part, driven the industry's growth in recent years, and
card producers have sought smaller, untapped niche markets for profit
potential. Secondly, the greeting card industry in general has enjoyed nearly
twenty consecutive years of growth, notwithstanding a number of business
cycles during such period, and it appears that it will continue to grow. The
greeting card industry does not appear to be impacted as significantly by
general economic conditions as many other industries, due to the relatively
modest cost of greeting cards, the opportunity in the industry to diversify in
range and non-seasonality, and other factors. Thirdly, greeting cards have
both pre-planned and impulse purchases, thereby creating numerous unique
marketing opportunities.
-12-
<PAGE>
Due to the factors described above, management believes that the greeting
card industry offers potential for both the large-scale card producers, and
the smaller, niche market producers like the Company. The Company believes it
has an opportunity to address both the traditional seasonal and holiday
markets with an emphasis on the uniqueness of its products, and to expand into
alternative, non-seasonal niche markets.
PRODUCTS
- ---------
Each "Living Card" in the Company's product line has been designed to
provide the buyer with an alternative to the typically short-lived personal
greeting card, which is generally disposed of shortly after the event which it
commemorates (e.g., Christmas, birthdays, Valentine's Day). Each "Living
Card" is designed as a small garden, which will grow with minimal care. The
Living Cards are self-contained gardens, designed to be relatively low cost,
educational and entertaining cards. The Living Cards are packaged for low-
cost shipping via U.S. mail.
The Company has initially created eight styles of cards for a variety of
themes and holiday occasions, as follows:
1. The Original Pop-Up Garden
2. My Very First Garden
3. Mom's Magic Herb Garden
4. Mom's Magic Tea Garden
5. Happy Birthday
6. Thinking of You
7. Get Well Soon
8. Missing You
Additional Living Card garden products, covering a variety of additional
holiday events or themes, are in design, and will be introduced into the
market as the Company's financial situation and operating and marketing
results dictate. All aspects of the cards, including the peat, box, plastic
containers, and seeds, are adaptable to additional holidays, themes, corporate
logos, educational needs, and events.
Each Living Card is packaged in a pop-up box (shippable package),
six inches square and approximately one inch deep, containing bio-soil
peat cubes, which is the peat source for the plants or flowers; a plastic
container (rectangular-shaped); and seed packets containing a variety of
flowering and foliage seeds.
The products come with simple instructions which describe a basic four-
step process for growing the "Living Card." If the instructions are followed,
the Living Cards are guaranteed to germinate within three to five days and to
continue to grow for approximately six months. Seed stamps are date-stamped
with a three-year shelf-life; peat cubes actually improve with age and have no
shelf life.
The Company purchases the materials and supplies used in its products,
including plastics products, packaging, seed envelopes and seeds, peat moss
cubes and miscellaneous items, from various suppliers. Except for the
Company's supplier of peat cubes, located in Hasselfors, Switzerland, and its
supplier of seeds, located in Cambridge, New York, all of these suppliers are
located in the Salt Lake City area. In addition, the Company uses the
services of a Salt Lake City based firm for assembly, warehousing and shipping
of the Company's products. The Company does not currently have, and does not
expect to have, any long-term purchase contracts with any of its suppliers or
providers. Alternative sources exist for each of the materials used in the
Company's products, and for such assembly, warehousing and shipping services.
However, the Company cannot give any assurance that supply or service
relationships with alternative sources can be established or that such
relationships would provide timely and sufficient quantity or quality of
materials or services. In addition, the Company may incur additional costs
and business delays and interruptions, if an existing relationship with a
supplier were to terminate, for whatever reason, and sourcing supplies and
materials from alternative sources became necessary.
-13-
<PAGE>
MARKETING
- ---------
According to statistics from the Greeting Card Association, in 1996 about
7,400,000,000 greeting cards were purchased by Americans, resulting in
approximately $6,850,000,000 in sales. While cards may range in price from
$0.50 to $10, the average price is around $2. About half of all cards sold
are seasonal purchases, and the remaining one-half are everyday cards which
include both alternative and non-occasion cards. Approximately 85% to 90% of
card purchases are made by women, with the typical purchaser being a middle-
aged woman. However, these customer demographics have been changing in recent
years to reflect a greater proportion of other groups.
While the Company has not conducted its own market study or research
pertaining to the greeting card industry, management believes a number of
trends exist which potentially create an opportunity for the Company in the
"niche" market in which it will compete. Based on historical data over the
past twenty years, the overall greeting card market will continue to grow, and
will be driven to some extent by the "alternative card" market - or the
consumer's need for something different than the traditional greeting card.
Management believes that the market for non-seasonal or non-event greeting
cards will continue to grow, as more product alternatives become readily
available for "impulse" purchases, and as a larger segment of the consumer
market (i.e., males, the younger population) captures a larger market share.
While the Company anticipates that the greeting card market will continue
its recent rate of steady growth, although there is no guarantee of this
continuing growth. Historically card producers have expanded into two main
areas, by focusing on traditional holiday themes, and by expanding into niche
markets. Market analyses suggest that much of the recent growth in card sales
has been in the niche areas. The Company plans to exploit both these areas in
offering a unique and more permanent greeting card.
Greeting cards can be both pre-planned and impulse purchases. Typical
pre-planned purchases are for Christmas, Mother's Day, Father's Day, Easter
and St. Valentine's Day, among others. However, there is also a strong market
for "get well" and condolence cards, etc., which by their very nature cannot
be pre-planned. The Company hopes to offer an attractive alternative to the
disposable cards with its product by appealing to both the pre-planned and
impulse purchasers with differently themed cards.
-Distributor Network-
Over the past few months, the Company has entered into a distributor
arrangement with three firms, which have commenced efforts on behalf of the
Company to distribute the Company's products in Utah, Florida, Oklahoma, Texas
and New Mexico. These firms are in the process of placing the Company's
products in grocery chains, gift stores and other retail operations.
Management considers it too early to assess the results of the efforts by
these distributors, or to assess the appeal of the Company's products. The
distributor arrangement with each of these distributors provides for
commission of 5% of the wholesale invoice price, excluding freight.
The Company plans to establish an extensive broker network to market
Living Cards throughout the United States. The Company plans to carefully
select brokers with experience and contacts in the greeting card industry.
Management believes this marketing approach offers a number of advantages in
launching the Company's product line. First, because brokerage firms will
already have working relationships with retailers with retailers throughout
their markets, Living Card products may be quickly and relatively
inexpensively introduced to current accounts while new accounts are
cultivated. Secondly, each brokerage account will be selected by the Company
to have an in-house merchandising department allowing it to monitor Living
Card product sales in each retail outlet, thus providing sales information,
allowing the Company to assess broker and product success, and enabling the
Company to more accurately control production and inventory and respond to
customer preferences and demand. Thirdly, by utilizing brokers and
distributors to market Company products, the Company will have less overhead
and utilize less management and marketing resources, and will be better able
to focus on production, product development and quality control. Finally,
management believes that the use of a
-14-
<PAGE>
broker network affords the Company considerable flexibility in its marketing
strategy, because the Company will be able to engage firms on renewable 30-day
contracts based on performance.
The Company has identified six initial market regions in the western
United States which will be the initial market areas the Company offers its
products. Firms with substantial experience in the greeting card industry
have been identified as prospective brokers for the Company's products, and
discussions are underway with a number of these firms. The Company plans to
offer each of these firms renewable 30-day contracts, to allow for quick
response if sales do not meet expectations.
There can be no assurance that the Company will be successful in its
efforts to establish a network or broker representatives, as described.
Moreover, even if a network is established, there can be no assurance that the
brokers involved will be motivated or successful in selling the Company's
products.
-Retail Markets-
In addition to the broker network described above, the Company plans to
target several different channels through which its products can be sold. A
few of the markets the Company intends to develop are described below:
-- Grocery Stores. Management believes that grocery stores may offer the
most successful approach because of their high traffic volume and numerous
product display locations. Several areas in the grocery store are believed to
be suitable for placement of the products, including the front-end
merchandising area (next to the cash register) for impulse purchases; the
traditional greeting card section; the "power-panel" merchandising sections at
the end of shopping aisles; seasonal/promotional sections; and the general
merchandise sections--perhaps next to gift or gardening sections.
-- Convenience Stores. Convenience stores may prove to be attractive
marketing venues for three principal reasons. First, the industry is
constantly looking for new and unique products with high profit margins.
Secondly, the convenience store consumer is oftentimes an impulse buyer.
Thirdly, there are over 90,000 convenience stores in the United States.
-- Gift Stores/Specialty Stores. The Company believes its products fit
into this "niche" market. Some examples of this market include American
Greeting Card stores, Michael's, copy store outlets, and the like.
-- Direct Sales. Each Living Card box has a toll-free number customers
may use for direct orders. Phone orders will be handled by customer service
during business hours and/or by Alert Communications, an answering service
with which the Company has contracted, on a 24 hour basis. When orders are
received, customer information is entered into the Company's database and
orders are mailed within five (5) business days. The Company eventually plans
to use the database records for catalog mailings and new product
introductions.
-- Fundraising Activities. Numerous organizations seek unique items for
their fundraising activities. Management believes the Company's products are
particularly suitable to this market, because of their unique nature,
affordability, and the ability to adapt the products to the needs of a
particular organization.
-Future Marketing Plans-
The Company is exploring a number of additional marketing strategies
which it will implement in the future, a few of which are described below:
-- Modified Plastic Molds. The Company may acquire or develop a number
of different plastic molds for a variety of container shapes, to reflect
specific holidays or events or common greeting card themes. (e.g., pumpkins
for Halloween; hearts for Valentine's Day, etc. Additionally, modified
plastic containers can be used
-15-
<PAGE>
as "start-up" gardens, after which plants can be transplanted into existing
gardens.
-- Education. The Company is reviewing a number of different strategies
to offer the products into the educational market. The Company's products may
be used to introduce young children to plant growth and/or gardening.
-- Corporate Opportunities. Living Card products may be designed to
serve as promotional material for corporations or large enterprises, designing
the plastic container to display company logos, colors and/or specific
messages or themes.
-- Gardening. Living Card products may be used to enhance home gardens.
Living Cards may be modified to accommodate larger plants such as tomatoes,
and sold with garden-specific seeds.
-- International sales. Greeting cards are popular throughout the world,
and international markets offer considerable opportunity for future sales.
There is no assurance whatever that the Company will be successful in
entering into any of the markets described above. Due to the Company's
extremely limited resources, the Company will not be able to pursue many of
these markets simultaneously without substantial additional capital.
-Pricing and Profit-
The Company's products will be uniformly priced, which management
believes is the most effective way to sell low-cost consumer products. In
pricing products uniformly, management believes consumers will choose between
products rather than prices, which will translate into greater purchasing
ease. The Company will attempt to price its products so as to achieve a gross
product margin of 40% or more.
COMPETITION
- -----------
The business in which the Company will compete is intensely competitive.
The Company will be competing with large companies in the industry, such as
Hallmark Cards and American Greetings, which have established reputations,
name recognition and market share, and the ability to update and expand
product lines. Most, if not all, of the companies with which the Company will
compete, have significantly greater management, marketing, and creative and
financial resources.
Management believes that the larger, established greeting card companies
do not enjoy the same advantage in the "niche" markets in the industry, due to
their traditional approach to the market. While the Company realizes that it
is in a significant disadvantage in the marketplace due to its limited
resources and experience, the Company believes it will be able to compete in
the industry because of the uniqueness of its product line.
EMPLOYEES
- ---------
The Company presently employs its officers and directors, and certain
clerical staff on an "as needed" basis. As the Company's business grows, the
Company anticipates that it will need to employ additional salaried clerical
staff, and sales personnel, who will be paid based on sales.
OFFICES
- -------
The Company presently utilizes approximately 1,000 square feet of
office space and related equipment and resources, including computers,
printers, typewriters, desk, conference table and cabinets, owned by
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<PAGE>
its Secretary/Treasurer. The Company believes that this office space and
related equipment is adequate for its foreseeable needs. As soon as Company
revenue allows, which is expected to be within three months following the
offering, the Company will pay a reasonable rental rate, estimated at between
$400 to $500 per month.
_____________________________________________________________________________
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
_____________________________________________________________________________
The following table sets forth, as of the date of this prospectus, the
aggregate number of shares of Common Stock of the Company owned of record or
beneficially by each person who owned of record, or is known by the Company to
own beneficially, more than 5% of the Company's Common Stock, and the name and
shareholdings of each officer and director and all officers and directors as a
group:
Percent
---------------------
Name and Address of 5% Number of After Offering (2)
Shareholders, Officers Shares Before ----------------------
and Directors Owned(1) Offering Minimum Maximum
- ----------------------- --------- --------- ----------- -----------
PRINCIPAL SHAREHOLDERS:
John F. Lund 3,000,000 50.0 40.5 37.5
R. Blair Lund 3,000,000 50.0 40.5 37.5
OFFICERS AND DIRECTORS:
John F. Lund --------- See above --------
R. Blair Lund --------- See above --------
All officers and directors
as a group (2 persons) 6,000,000 100.0 81.0 75.0
____________________________
(1) All shares are held beneficially and of record, and each record
shareholder has sole voting, investment, and dispositive power.
(2) R. Blair Lund is the father of John Lund.
_____________________________________________________________________________
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES AND PARTIES
____________________________________________________________________________
OFFICERS AND DIRECTORS
- ----------------------
The following table sets forth the names, age, and position of each
director and executive officer of the Company.
Name Age Position and Office Held
------------- --------- ---------------------------
John F. Lund 41 President and Director
R. Blair Lund 71 Secretary/Treasurer and Director
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Each of the above individuals, became an officer and director of the
Company in connection with its organization. The term of office of each
officer and director is one year and until his successor is elected and
qualified.
BIOGRAPHICAL INFORMATION
- ------------------------
Set forth below is biographical information for each of the Company's
officers and directors. No person other than the Company's officers and
directors will perform any management functions for the Company.
John F. Lund has been involved in developing the products for Living
Card Company for the past two years. He founded Vertical Gardens, a unique
garden products firm located in Salt Lake City, Utah of which he served as
president from 1993 to 1996. While with Vertical Gardens, Mr. Lund was
responsible for design and product development; marketing; and all accounting
and financial matters. For a period of approximately eleven years prior to
his position with Vertical Gardens, Mr. Lund was employed by BSD Medical
Corporation, a medical electronics firm, as purchasing manager. From 1978 to
1982, Mr. Lund was employed as regional manager of Evans Specialty Company, a
specialty hardware and fastener firm, where he was responsible for managing
the company's regional office and warehouse, including overseeing inventory
management and control, training, accounting, scheduling, marketing, and
public and customer relations. From 1977 to 1978, Mr. Lund was the owner and
operator of Amex Systems Corporation, a building products company. Through
his various employment positions over the years, Mr. Lund has developed a
broad range of experience in product development, marketing, management,
procurement, and finance. Mr. Lund attended the University of Utah from 1975
through 1978, where he took courses in business management, marketing and
finance before leaving prior to receiving a degree, to pursue private business
concerns.
R. Blair Lund is the father of John F. Lund. For the past several years,
Mr. Lund has been involved in a number of private business ventures. Since
1992, he has served as Secretary/Treasurer of Material Processing, Inc., a
publicly held corporation engaged in soil sterilization and environmental
clean up activities. For a period of approximately 26 years through 1978, Mr.
Lund was involved in the consumer finance industry. He was an officer,
director and founder of Industrial Credit, Inc., a Utah thrift and loan and
finance company. From 1976 to 1978, he served as an officer and director of
Western States Thrift and Loan, a Utah thrift and loan. Mr. Lund has been
self-employed over the past several years as a consultant for several small
manufacturing firms. From approximately 1972 to 1974, he served as president
of the Utah Consumer Finance Association. From 1947 to 1951, Mr. Lund
attended the University of Utah and the University of Colorado, Boulder, where
he took courses in banking and finance.
REMUNERATION OF OFFICERS AND DIRECTORS
- --------------------------------------
There are no employment agreements between the Company and any member of
management, and it is not anticipated that any employment agreements will be
entered into during at least the first year of operations following the
offering. During the first twelve months of operations following the
offering, the Company will pay to John F. Lund and R. Blair Lund, salaries of
$3,000 and $1,500 per month, respectively. Blair Lund has agreed, however, to
forego a salary during the first six months following the offering, in the
event only the minimum offering is sold.
There are no agreements or arrangement, express or implied, between any
officer or director and the Company, regarding any other form of compensation,
including stock options, warrants, employments incentives, or the like.
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<PAGE>
SIGNIFICANT EMPLOYEE
- --------------------
Except for its officers and directors, the Company's only significant
employee is Craig Weston, vice president of marketing. Management believes
Mr. Weston's efforts will be significant in the development of the Company's
marketing plans.
Craig M. Weston has focused most of his professional career in marketing
and sales. From August 1997 until he began employment with the Company in
June, 1998, Mr. Weston was employed by Excellent Foods, Inc., a food
distributor, as national sales manager. In this position, Mr. Weston was
responsible for all aspects of sales for the Foodservice/Convenience store
market segments, including division pricing and profitability. From 1996
until his position with Excellent Foods, Inc., he served as national sales
manager for Modern Health Strategies, a supplier of health supplements, where
assisted in product development and implementation, an helped to establish a
marketing plan, and new markets, for the company in convenience stores, retail
outlets and other markets. From 1993 to 1996, Mr. Weston was employed by
Harmony Foods, as national sales manager of foodservice/C-Store division. In
this position, Mr. Weston originated and helped launch a convenience store
program, created a training program for brokers and sales staff, and helped
recruit and manage 5 regional sales managers and support personnel.
SIGNIFICANT PARTIES
- -------------------
Set forth below are the names and business and residential addresses, as
applicable, for the following "significant parties" as required under Item 2
of Form SB-1:
(1) Officers and Directors - John F. Lund
a) Business Address:
1174 East 2700 South, #16
Salt Lake City, Utah 84106
b) Residence Address:
7326 NuTree Drive
Salt Lake City, Utah 84121
R. Blair Lund
a) Business Address:
1174 East 2700 South, #16
Salt Lake City, Utah 84106
b) Residence Address:
2199 Pheasant Way
Salt Lake City, Utah 84121
(2) Record owners and beneficial owners of 5 percent or more of any
class of the Company's securities: See "SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN SECURITYHOLDERS."
(3) Promoters - None, except for officers and directors.
(4) Affiliates of the Company - None, except for officers and directors.
(5) Counsel to the issuer - James C. Lewis, Lewis Law Offices, 600
Crandall Building, 10 West 100 South, Salt Lake City, Utah, 84101.
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_____________________________________________________________________________
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
____________________________________________________________________________
PURCHASE OF STOCK AT ORGANIZATION AND CAPITAL CONTRIBUTIONS
- ---------------------------------------------------------------
In connection with organizing the Company, John Lund, President and a
director, and Blair Lund, Secretary and a director, and the father of John
Lund, contributed all of the rights to the Living Card products, and paid an
aggregate of $10,000 in cash, in exchange for the issuance of a total of
3,000,000 shares each of the Common Stock of the Company. These transactions
were not the result of arm's length negotiation.
All of the shares of Common Stock presently issued and outstanding are
"restricted securities" as that term is defined under the Securities Act and,
as such, may not be sold in the absence of registration under the Securities
Act or the availability of an exemption therefrom. Under current law, such
shares could not be sold for a period of at least one year from the date on
which they are purchased, and then only under limited circumstances. (See
"DESCRIPTION OF SECURITIES.")
In November, 1998, John Lund and Blair Lund contributed an additional
$10,000 in equity capital to the Company. This contribution has been treated
as additional paid in capital and will not be repaid from the offering.
LOANS FROM PRESIDENT
- --------------------
From the date of organization of the Company, John F. Lund, President,
has loaned to the Company a total of $85,000 in cash, to fund Company
operations. A substantial portion of these funds have been used to
purchase materials and packaging for Living Card products. The Company will
repay this indebtedness, without interest, to Mr. Lund if the entire offering
is sold. If less than the entire offering is sold, Mr. Lund will be paid from
available funds, and the balance of the indebtedness to him will be repaid,
without interest, at such time as the Company has funds available from
operations or an additional financing in the future.
____________________________________________________________________________
DESCRIPTION OF SECURITIES
__________________________________________________________________________
GENERAL
- -------
The Company is authorized to issue 25,000,000 shares, consisting of
20,000,000 shares of Common Stock, par value $0.001 per share, of which
6,000,000 shares are issued and outstanding, and 5,000,000 shares of preferred
stock, par value $0.01 (the "Preferred Stock"), of which no shares have been
issued.
COMMON STOCK
- ------------
Holders of Common Stock are entitled to one vote per share on each matter
submitted to a vote at any meeting of shareholders. Shares of Common Stock do
not carry cumulative voting rights and, therefore, holders of a majority of
the outstanding shares of Common Stock will be able to elect the entire board
of directors, and, if they do so, minority shareholders would not be able to
elect any members to the board of directors. The Company's board of directors
has authority, without action by the Company's shareholders, to issue all or
any portion of the authorized but unissued shares of Common Stock, which would
reduce the percentage ownership in
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<PAGE>
the Company of its shareholders and which may dilute the book value of the
Common Stock.
Shareholders of the Company have no pre-emptive rights to acquire
additional shares of Common Stock. The Common Stock is not subject to
redemption and carries no subscription or conversion rights. In the event of
liquidation of the Company, the shares of Common Stock are entitled to share
equally in corporate assets after satisfaction of all liabilities. The shares
of Common Stock, when issued, will be fully paid and non-assessable.
Holders of Common Stock are entitled to receive such dividends as the
board of directors may from time to time declare out of funds legally
available for the payment of dividends. The Company has not paid dividends on
its Common Stock and does not anticipate that it will pay dividends in the
foreseeable future.
PREFERRED STOCK AND PREFERENCE STOCK
- ------------------------------------
The Company's board of directors has authority, without action by the
shareholders, to issue all or any portion of the authorized but unissued
Preferred Stock and/or Preference Stock in one or more series and to determine
the voting rights, preferences as to dividends and liquidation, conversion
rights, and other rights of such series. The Preferred Stock and Preference
Stock, if and when issued, may carry rights superior to those of the Common
Stock.
The Company does not have any plans to issue any shares of preferred
stock. However, the Company considers it desirable to have a class or more of
preferred stock to provide it with greater flexibility in the future in the
event that the Company elects to undertake an additional financing, and in
meeting corporate needs which may arise. If opportunities arise that would
make it desirable to issue Preferred or Preference Stock through either public
offerings or private placements, the provision for these classes of stock in
the Company's certificate of incorporation would avoid the possible delay and
expense of a shareholder's meeting, except as may be required by law or
regulatory authorities. Issuance of the Preferred or Preference Stock would
result, however, in a series of securities outstanding that may have certain
preferences with respect to dividends, liquidation, redemption, and other
matters over the Common Stock which would result in dilution of the income per
share and net book value of the Common Stock. Issuance of additional Common
Stock pursuant to any conversion right which may be attached to the Preferred
or Preference Stock may also result in the dilution of the net income per
share and net book value of the Common Stock. The specific terms of any
series of Preferred or Preference Stock will depend primarily on market
conditions, terms of a proposed acquisition or financing, and other factors
existing at the time of issuance. Therefore, it is not possible at this time
to determine the respects in which a particular series of Preferred or
Preference Stock will be superior to the Company's Common Stock. The board of
directors does not have any specific plan for the issuance of Preferred or
Preference Stock at the present time and does not intend to issue any such
stock on terms which it deems are not in the best interests of the Company and
its shareholders.
RESALE OF OUTSTANDING SHARES
- ----------------------------
All 6,000,000 shares of the Common Stock presently issued and outstanding
are "restricted securities" as that term is defined in Rule 144 adopted under
the Securities Act. Rule 144 provides, in essence, that as long as there is
publicly available current information about the Company, a person holding
restricted securities for a period of at least one year may sell in each 90-
day period, provided he is not part of a group acting in concert, an amount
equal to the greater of the average weekly trading volume of the stock during
the four calendar weeks preceding the sale or 1% of the Company's outstanding
Common Stock. Consequently, in May, 1999, shares of Common Stock currently
issued and outstanding will have been held for one year within the meaning of
Rule 144 and may be eligible for resale in accordance with such volume
restrictions. In addition, in May, 2000, all 6,000,000 shares now issued and
outstanding will be eligible for resale without regard to such restrictions if
the holders of such shares are not then affiliates of the Company and have not
been so for three months prior to such sale. The Company and management
contemplate that John Lund and Blair Lund, officers and directors and holders
of the outstanding shares of the Company, will continue to be affiliates of
the Company over the next
-21-
<PAGE>
several years, and will be, therefore, subject to the restrictions described
above. Sales under Rule 144 or otherwise may, in the future, have a
depressive effect on the price of the Company's Common Stock in any market
which may develop.
TRANSFER AND WARRANT AGENT
- --------------------------
The transfer agent for the Company's securities is Interwest Transfer
Company, Inc., 1981 East Murray-Holladay Road, Holladay, Utah 84117.
____________________________________________________________________________
PLAN OF DISTRIBUTION
___________________________________________________________________________
The Company is offering its Common Stock to the public on a "best
efforts, 1,400,000 Share Minimum 2,000,000 Share Maximum"
basis. There can be no assurance that any of the Shares will be sold. If the
Company fails to sell at least 1,400,000 Shares within the offering
period (four months from the date of this prospectus), the offering will be
terminated and subscription payments will be promptly refunded in full to
subscribers, without paying interest or deducting expenses. If the minimum
number of Shares is sold within the specified period, the offering will
continue until five months following the date of this prospectus, all offered
Shares are sold, or terminated by the Company, whichever occurs first.
All subscription payments should be made payable to "Brighton Bank--
Living Card Company, Inc. Escrow Account." The Company will deposit
subscription payments no later than noon of the next business day following
receipt in the escrow account maintained by Brighton Bank, 311 South State
Street, Salt Lake City, Utah 84111, as escrow agent, pending the sale of at
least 1,400,000 Shares within the specified period. Such subscription
payments will only be released from the escrow account if the minimum number
of Shares is sold or for the purpose of refunding subscription payments to the
subscribers. Subscribers will not have the use or right to return of such
funds during the escrow period, which may last as long as four months.
The Shares of Common Stock in this offering will be offered and sold by
the officers and directors of the Company who will receive no compensation
therefor, except reimbursement of expenses actually incurred in connection
with such activities. The Company has no plans, proposals, arrangements or
understandings with any potential sales agent with respect to participating in
the distribution of the Company's Securities. If the Company later decides to
seek the participation of any potential sales agent, the registration
statement of which this prospectus is a part, will be appropriately amended to
identify such persons.
There are no formal arrangements between the issuer and its officers and
directors pursuant to which Shares in the offering will be reserved for sale
to person(s) designated by such officers and directors or their affiliates.
However, officers and directors of the Company, and their affiliates, may
purchase Shares in the offering in an aggregate amount of not more than 20% of
all offered Shares. Since Shares may be offered and sold by officers and
directors, it is likely that officers, directors, or their affiliates desiring
to purchase shares in the offering will be able to do so.
Since the Company is not utilizing the services of an underwriter for the
offer and sale of the shares in this offering, the independent "due
diligence" review of the Company, and its affairs and financial condition
which is usually performed by the underwriter has not been performed with
respect to the Company or this offering. In addition, since the offering is
not being underwritten by a broker-dealer which would ordinarily be expected
to publish quotations for and make a market in the offered securities
following the offering, no assurance can be given that any market for the
Company's securities will develop following the offering or, that if such a
-22-
<PAGE>
market should develop, it will be maintained. The Company has not had any
discussions with any broker-dealer firms regarding the possibility of making a
market in the Company's securities following the offering.
Prior to this offering, there has been no established market for the
securities of the Company. Until __________, 1999 (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 and with respect to their
unsold allotments or subscriptions. The initial public offering price of
the Shares has been arbitrarily determined by the Company and bear no
relationship to the book value of the Company, earnings, or any other
recognized criteria of value.
_____________________________________________________________________________
LEGAL PROCEEDINGS
____________________________________________________________________________
The Company is not a party to any pending legal proceedings, or
governmental agency proceedings, and no such action by or, to the best of its
knowledge, against the Company has been threatened.
____________________________________________________________________________
EXPERTS
____________________________________________________________________________
The Company has not engaged any expert or attorney on a contingent basis,
nor is any expert or attorney to receive a direct or indirect interest in the
Company. In addition, no expert or attorney is, or was, a promoter,
underwriter, voting trustee, director, officer, or employee of the Company.
Lewis Law Offices, 10 West 100 South, #600, Salt Lake City, Utah 84101,
counsel to the Company, will render an opinion that the Common Stock being
offered hereby, when issued, will be fully paid and non-assessable under the
Nevada Revised Statutes.
The financial statements included in this Prospectus, to the
extent and for the periods indicated in its report, has been included
herein and in the Registration Statement in reliance on the report of Jones,
Jensen & Associates, the Company's independent certified public accountants,
given on the authority of such firm as experts in accounting and auditing.
____________________________________________________________________________
INDEMNIFICATION OF OFFICERS AND DIRECTORS
___________________________________________________________________________
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "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.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company 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 of 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.
______________________________________________________________________________
FURTHER INFORMATION
______________________________________________________________________________
The Company has filed with the Securities and Exchange Commission
("Commission") , a Registration Statement on Form SB-1, SEC File No.
333-63063 , under the Securities Act with respect to the securities
offered by this prospectus. This prospectus omits certain information
contained in the Registration Statement. For further information, reference
is made to the Registration Statement and to the exhibits and other schedules
filed therewith. Statements contained in this prospectus as to the contents
of any contract or other document referred to are not necessarily complete,
and where such contract or other document is an exhibit to the Registration
Statement, each such statement is deemed to be qualified and amplified in all
respects by the provisions of the exhibit. Copies of the complete
Registration Statement, including exhibits may be examined at the office of
the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, or copies may be obtained from this office on payment of the
usual fees for reproduction. In addition, the Commission maintains a web
site (address: http.//www.sec.gov), that contains reports, proxy and
information statements and other information regarding issuers, including the
Company, that file electronically with the Commission.
-24-
<PAGE>
________________________________________________________________________
PART F/S
________________________________________________________________________
<Letterhead of
Jones, Jensen & Company, LLC
Certified Public Accountants and Consultants>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Stockholders of
Living Card Company, Inc.
(A Development Stage Company)
Salt Lake City, Utah
The accompanying balance sheet as of September 30, 1998 and the related
statements of operations, stockholders' equity (deficit), and cash flows for
the three months ended September 30, 1998 and from inception on May 8, 1998
through September 30, 1998 were not audited by us and, accordingly, we do not
express an opinion on them.
The accompanying balance sheet as of June 30, 1998 was audited by us and we
expressed an unqualified opinion on it in our report dated July 15, 1998.
/s/ Jones Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
November 30, 1998
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
Telephone (801) 328-4408
Facsimile (801) 328-4461
<PAGE> 25
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
-------
September 30, June 30,
1998 1998
----------------- ---------------
(Unaudited)
CURRENT ASSETS
Cash $ 5,821 $ 26,586
Accounts receivable 9,481 -
Inventory 39,416 -
---------------- ---------------
Total Current Assets 54,718 26,586
---------------- ---------------
TOTAL ASSETS $ 54,718 $ 26,586
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 22,492 $ 3,400
Note payable - related party (Note 4) 80,000 25,000
---------------- ----------------
Total Current Liabilities 102,492 28,400
---------------- ----------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: $0.01 par value,
5,000,000 shares authorized,
no shares issued and outstanding - -
Common stock: $0.001 par value,
20,000,000 shares authorized;
6,000,000 shares issued and
outstanding 6,000 6,000
Additional paid-in capital 4,006 4,006
Deficit accumulated during the
development stage (57,780) (11,820)
----------------- ---------------
Total Stockholders' Equity
(Deficit) (47,774) ( 1,814)
----------------- ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 54,718 $ 26,586
================= ===============
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 26
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
From
For the Inception on
Three Months May 8,
Ended 1998 Through
September 30, September 30,
1998 1998
--------------- ---------------
REVENUES $ 10,995 $ 10,995
EXPENSES 56,955 68,775
--------------- ---------------
NET LOSS $ (45,960) $ (57,780)
=============== ===============
NET LOSS PER SHARE OF
COMMON STOCK $ (0.00) $ (0.00)
=============== ===============
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 27
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception on May 8, 1998 through September 30, 1998
Deficit
Accumulated
Common Stock Additional During the
-------------------- Paid-in Development
Shares Amount Capital Stage
----------- ------- ---------- ------------
Balance at inception on
May 8, 1998 - $ - $ - $ -
Issuance of 6,000,000 shares
of common stock for cash at
approximately $0.001 per
share 6,000,000 6,000 (1,000) -
Contributed capital - - 5,006 -
Net loss from inception on
May 8, 1998 through
June 30, 1998 - - - (11,820)
------------ ------- ---------- -------------
Balance, June 30, 1998 6,000,000 6,000 4,006 (11,820)
Net loss from July 1, 1998
through September 30, 1998
(unaudited) - - - (45,960)
------------ ------- ---------- -------------
Balance, September 30, 1998
(unaudited) 6,000,000 $ 6,000 $ 4,006 $ (57,780)
============ ======= ========== =============
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 29
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
For the Inception on
Three Months May 8,
Ended 1998 Through
September 30, September 30,
1998 1998
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (45,960) $ (57,780)
Adjustments to reconcile net loss
in operating activities:
Increase in accounts payable 19,092 22,492
(Increase) in accounts receivable (9,481) (9,481)
(Increase) in inventory (39,416) (39,416)
------------- --------------
Net Cash Used by Operating
Activities (75,765) (84,185)
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES - -
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Note payable 60,000 85,000
Payment on note payable - related party (5,000) (5,000)
Common stock issued for cash - 5,000
Additional capital contributed - 5,006
------------- --------------
Net Cash Provided by Financing
Activities 55,000 90,006
------------- ---------------
NET INCREASE (DECREASE) IN CASH (20,765) 5,821
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 26,586 -
------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,821 $ 5,821
============= ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ - $ -
Income taxes paid $ - $ -
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 30
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 1998 (Unaudited) and June 30, 1998
NOTE 1 - NATURE OF ORGANIZATION
The financial statements presented are those of Living Card Company, Inc. (a
development stage company) (the Company). The company was organized under the
laws of the State of Nevada on May 8, 1998. The Company was organized to
manufacture, merchandise, sell and distribute at wholesale and retail, a
specialized line of greeting cards and other related products.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The financial statements are prepared using the accrual method of accounting.
The Company has elected a June 30, year end.
b. Provision for Taxes
At September 30, 1998, the Company had net operating loss carryforwards of
approximately $58,000 that may be offset against future taxable income from
the year 1998 through 2013. No tax benefit has been reported in the financial
statements because the Company believes that there is a 50% chance or greater
the net operating loss carryforwards will expire unused, therefore, the
potential tax benefits of the loss carryforwards are offset by a valuation
allowance of the same amount.
c. 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.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
e. Basic Loss Per Share
The computation of basic loss per share of common stock is based on the
weighted average number of shares outstanding during the period of the
financial statements.
f. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the adjustments
which, in the opinion of management, are necessary for a fair presentation.
Such adjustments are of a normal recurring nature.
8
<PAGE> 31
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 1998 (Unaudited) and June 30, 1998
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does note have significant operations to date,
nor does it have an established source of revenues sufficient to allow it to
continue as a going concern. It is the intent of the Company to complete an
offering of its common stock, see Note 6.
NOTE 4 - NOTE PAYABLE
The Company signed a note to a related party during 1998. The note is payable
on demand and carries no interest, it is unsecured. Interest will be imputed
at 10% per annum.
NOTE 5 - PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or more
series as may from time to time be determined by the board of directors. Each
series shall be distinctly designated. All shares of any one series of the
Preferred stock shall be alike in every particular, except that there may be
different dates from which dividends thereon, if any, shall be cumulative, if
made cumulative. The powers, preferences, participating, optional and other
rights of each such series and the qualifications, limitations, or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding.
NOTE 6 - PROPOSED STOCK OFFERING
The Company is proposing to file a form SB-1 by which it will offer to the
public $100,000 to $150,000 worth of its common stock. The terms of the
offering are to be determined. The costs incurred in connection with the
offering will be capitalized and charged to the proceeds of the offering upon
its successful completion.
9
<PAGE> 32
_______________________________________________________________________
TABLE OF CONTENTS
[outside back cover]
SECTION PAGE
- -------- ------
INTRODUCTION 3
RISK FACTORS 4 LIVING CARD COMPANY
DILUTION 8
COMPARATIVE DATA 9
USE OF PROCEEDS 10
BUSINESS 11
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN SECURITYHOLDERS 17
DIRECTORS, EXECUTIVE OFFICERS AND
SIGNIFICANT EMPLOYEES AND PARTIES 17
INTEREST OF MANAGEMENT AND
OTHERS IN CERTAIN TRANSACTIONS 20 2,000,000 Shares
DESCRIPTION OF SECURITIES 20
PLAN OF DISTRIBUTION 22
LEGAL PROCEEDINGS 23
EXPERTS 23
INDEMNIFICATION OF OFFICERS
AND DIRECTORS 23
FURTHER INFORMATION 24
No person has been authorized in
connection with this offering to
give any information or to make
any representations other than as
contained in this prospectus and,
if given or made, such informa-
tion or representation must not
be relied on as having been auth-
orized by the Company. This pro-
spectus does not constitute an
offer to sell or the solicitation
of an offer to buy any securities
covered by this prospectus in any
state or other jurisdiction to
any person to whom it is unlawful
to make such offer or solicita-
tion in such state or jurisdiction. ___________________, 1999
Until ___________, 1999 (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 and with respect to their unsold
allotments or subscriptions.
-33-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS
__________________________________________________________________________
Section 78.7502 of the Nevada Revised Statutes provides in relevant part
as follows:
1. 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,
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 a 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, the corporation shall indemnify him
against expenses, including attorneys' fees, actually and reasonably incurred
by him in connection with the defense.
The Company's articles of incorporation do not contain a specific
indemnification provision for its officers, directors and employees. However,
Article V of the Company's articles of incorporation provides that an officer
and director of the Company does not have any personal liability to the
Corporation or its shareholders for breach of fiduciary duty as a director or
officer, except for damages for breach of fiduciary duty resulting from (a)
acts or omissions which involve intentional misconduct, fraud, or a knowing
violation of law; or (b) the payment of dividends in violation of section
78.300 of the Nevada Revised Statutes as amended from time to time.
Accordingly, the Company intends to limit the liability of its officers and
directors to the full extent allowed under
-34-
<PAGE>
Nevada corporate law.
Insofar as indemnification by the Company for liabilities arising under
the Securities Act may be permitted to officers and directors of the Company
the Company is aware that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by an officer or director in the
successful defense of any action, suit, or proceeding) is asserted by such
officer or director in connection with the securities being registered hereby,
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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue. (See "ITEM 26. UNDERTAKINGS.")
______________________________________________________________________________
ITEM 2. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
_____________________________________________________________________________
The following table sets forth an itemized estimate of expenses to be
incurred in connection with the sale and distribution of the securities being
registered, other than discounts and commissions:
1. SEC filing fee $ 100
2. Auditing fees 1,500
3. Legal fees 20,000
4. Blue Sky fees and expenses (including coun- 2,000
sel fees)
5. Transfer agent's fees 2,000
6. Printing, including registration statement 4,000
and prospectus
7. Miscellaneous costs and expenses 400 >/R>
------
TOTAL $ 30,000
========
Except for the SEC filing fees, all of the foregoing items are
estimates.
____________________________________________________________________________
ITEM 3. UNDERTAKINGS
____________________________________________________________________________
POST-EFFECTIVE AMENDMENTS [Regulation S-B, Item 512(a)]
- ------------------------------------------------------
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any fact 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; and
(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
-35-
<PAGE>
Statement, including (but not limited to) addition or deletion of a managing
underwriter.
(2) That, for the purpose of determining any liability under the
Securities 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.
INDEMNIFICATION [Regulation S-B, Item 512(b)]
Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities
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
Securities Act and will be governed by the final adjudication of such issue.
__________________________________________________________________________
ITEM 4. UNREGISTERED SECURITIES ISSUED OR SOLD WITHIN ONE YEAR
____________________________________________________________________________
The Company sold 6,000,000 shares of its Common Stock to John Lund and
Blair Lund, officers
and directors in connection with organization of
the Company. The Common Stock was sold for cash at an aggregate price of
$10,000, and no commissions or discounts were paid or given in connection
therewith. See prospectus under the caption, "INTRODUCTION" and "CERTAIN
TRANSACTIONS: Purchase of Stock at Organization," which is incorporated
herein by reference.
The Common Stock was issued in the transactions described above in
reliance on the exemption from registration and the prospectus delivery
requirements of the Securities Act provided in Section 4(2) thereof and
applicable exemptions thereunder. The two persons who purchased
Common Stock of the Company in these transactions were officers and directors,
and are sophisticated and experienced investors. The Company's
Secretary/Treasurer is an accredited investor within the meaning of the
Securities Act. Both purchasers were aware at the time of their purchase of
all material information concerning the Company's proposed business and
financial affairs at the time of the transactions and were, in fact, in
possession of all pertinent information regarding the Company. These two
individuals were instrumental in organizing the Company and creating all such
information. Both of these individuals executed an investment letter in
connection with his purchase of shares of the Company, whereby each of them
acknowledged that he was obtaining "restricted securities" as defined in Rule
144 under the Securities Act; that such shares cannot be transferred without
appropriate registration or exemption therefrom; that they must bear the
economic risk of the investment for an indefinite period of time; that they
would not sell the securities without registration or exemption therefrom; and
that the Company would restrict the transfer of the securities in accordance
with such representations. Each person agreed that any certificate
representing such shares would be stamped with the usual legend restricting
the transfer of such shares. Each certificate representing such shares bears
a legend prohibiting the sale of such shares pursuant to Rule 144 until one
year after the purchase of such shares and full payment therefor.
-36-
<PAGE>
__________________________________________________________________________
ITEM 5. INDEX TO EXHIBITS
____________________________________________________________________________
Copies of the following documents are included as exhibits to this
Registration Statement pursuant to Item Part III of Form I-A and Item 6 of
Part II.
Exhibit SEC
No. Reference No. Title of Document Location
- ------- ------------- ------------------ ---------
2 2 Articles and Bylaws
-------------------
2.01 2 Articles of Incorporation Initial Filing
2.02 2 Bylaws Initial Filing
4 4 Subscription Agreement Initial Filing
----------------------
6 6 Material Contracts
------------------
6.01 6 Distribution Agreement This Filing
(Impact Sales)
6.02 6 Distribution Agreement This Filing
(James Hartley)
6.03 6 Distribution Agreement This Filing
(Greere & Associates)
9 9 Escrow Agreement This Filing
----------------
11 11 Opinion Regarding Legality
--------------------------
11.01 11 Opinion and Consent of Counsel This Filing
Re Legality of Shares
23 23 Consents
--------
Consent of Jones, Jensen & Co. This Filing
-37-
<PAGE>
_____________________________________________________________________________
SIGNATURES
____________________________________________________________________________
In accordance with 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-1 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of Salt Lake, State of Utah, on December 29, 1998.
REGISTRANT:
By /s/ John F. Lund
--------------------------------------------
John F. Lund, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and on the dates stated.
/s/ John F. Lund
------------------------------------------
John F. Lund, President, Principal Executive
Officer, Director
DATE: 12/29/98
-------------------
/s/ R. Blair Lund
----------------------------------------------
R. Blair Lund, Secretary/Treasurer, Principal
Financial and Accounting Officer and Director
DATE: 12/29/98
--------------------------------
-39
<PAGE>
Date Filed: January 6, 1999 SEC File No. ###-##-####
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM SB-1 REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE LIVING CARD COMPANY
-39-
Exhibit 6.01
[Letterhead of The Living Card Company
P.O. Box 520478 - 1174 East 2700 South, Suite 16
Salt Lake City, Utah 84152-0478
Phone 1-801-485-0430 - Fax 801-485-9876
1-800-434-GROW]
BROKER AGREEMENT
-----------------
AGREEMENT made as of 10/07/98, between The Living Card Company, a Nevada
Corporation (hereinafter "LCC") and Impact Sales, Inc. (hereinafter "Broker"),
1. Effective 10/07/98, 1998, LCC hereby appoints Broker, located in 5939
Tradition Lane as exclusive representative for the sale of all products
manufactured by LCC (hereinafter "products") in the Utah marketing area (the
"Territory"), with the exception of any LCC designated in-house accounts.
2. LCC shall pay Broker a commission on products sold to LCC designated
accounts by-Broker within the Territory equal to a total of Five Percent (5%)
of the net amount of the invoice, excluding freight. (Brokerage wilt be paid
on new F.O.B. LCC plant pricing).
Any variation from standard brokerage rates are listed below by account.
Upon paid invoices commissions shall become payable upon the 20th of each
month for all sales of the previous mouth. Any commission paid on products
which are returned, credited and/or unpaid shall be subsequently debited
against any commission amount due Broker.
3. Broker is to quote only such prices, terms and conditions as LCC shall
designate.
4. Broker shall give LCC prompt notice of any knowledge which affects the
credit standing of any account and shall render such reasonable assistance as
LCC may from time to time request in the collection of indebtedness owed by
accounts to LCC for products.
5. This agreement is not assignable in whole or in any part by Broker.
6. This agreement may be terminated by either party with a 30 day written
notification.
Signed this 07 day of October 1998.
---- ---------
Signed by /s/R.PA Title Exec. Vice President
---------- ---------------------
LCC Representative /s/ Craig Weston Title Vice President Sales
---------------- --------------------
Exhibit 6.02
[Letterhead of The Living Card Company
P.O. Box 520478 - 1174 East 2700 South, Suite 16
Salt Lake City, Utah 84152-0478
Phone 1-801-485-0430 - Fax 801-485-9876
1-800-434-GROW]
Broker Agreement
------------------
AGREEMENT made as of 10/02/98 , between The Living Card Company, a Nevada
Corporation (hereinafter "LCC") and Jams Hartley (hereinafter "Broker").
1. Effective 10/02/98, 1998 LCC hereby appoints Broker, located at 1522 Main
Sail #3 as exchange representative for the sale of all products manufactured
by LCC (hereinafter "products") in the marketing area (the "Territory"), with
the exception of any LCC designated in-how accounts.
2. LCC shall pay Broker a commission an products sold to LCC designated
accounts by Broker within the Territory equal to a total of Five Percent (5%)
of the net amount of the invoice, excluding freight (Brokerage will be paid on
new F.O.B. LCC plant pricing).
Any variation from standard brokerage rates arc listed below by account.
Upon paid invoices commissions shall become payable upon the 20th of each
month for all sacs of the previous month. Any commission paid on products
which are returned, credited and/or unpaid shall be subsequently debited
against any commission amount due Broker.
3. Broker is to quote only such prices, terms and conditions as LCC shall
designate.
4. Broker shall give LCC prompt notice of any knowledge which affects the
credit standing of any account and shall render such assistance as LCC may
from time to time request in the collection of indebtedness owed by accounts
to LCC for products.
5. This agreement is not assignable in whole of in any part by Broker.
6. This agreement may be terminated by either party with a 30 day written
notification.
Signed this 02 day of October, 1998.
---- --------
Signed by /s/ Jim Hartley Title Broker
------------------ -----------
LCC Representative Craig M. Weston Title Vice President Sales
--------------- --------------------
Exhibit 6.03
[Letterhead of The Living Card Company
P.O. Box 520478 - 1174 East 2700 South, Suite 16
Salt Lake City, Utah 84152-0478
Phone 1-800-434-GROW - Fax 801-485-9876]
Broker Agreement
----------------
AGREEMENT made as of 04 June 1998, between The Living Card Company, a Nevada
Corporation (hereinafter "LLC") and Greere & Associates (hereinafter
"Broker").
1. Effective 04 June 1998, LCC hereby appoints Broker, located at 500
Grapevine Hwy Ste 3 as exclusive representative for the sale of all products
manufactured by LCC (hereinafter "products") in the OK/TX/NM marketing area
(the "Territory"), with the exception of any LCC designated in-house accounts.
2. LCC shall pay Broker a commission on products sold to LCC designated
accounts by Broker within the Territory equal to a total of Five Percent (5%)
of the net mount of the invoice, excluding freight. (Brokerage will be paid on
new F.O.B. LCC plant pricing).
Any variation from standard brokerage rates are listed below by account.
Upon paid invoices commissions shall became payable upon the 20th of each
month for all sales of the previous mouth. Any commission paid on products
which are returned, credited and/or unpaid shall be subsequently debited
against any commission amount due Broker.
3. Broker is to quote only such prices, terms and conditions as LCC shall
designate.
4. Broker shall give LCC prompt notice of any knowledge which affects the
credit standing of any account and shall render such assistance as LCC may
from time to time request in the collection of indebtedness owed by accounts
to LCC for products.
5. This agreement is not assignable in whole or in any part by Broker.
6. This agreement may be terminated by either party with a 30 day written
notification.
Signed this 04 day of June, 1998.
---- -----
Signed by /s/ signature illegible Title Owner
------------------------ -------
LCC Representative /s/ Craig M. Weston Title VP of Sales
------------------- -----------
Exhibit 9
PROCEEDS ESCROW AGREEMENT
THIS PROCEEDS ESCROW AGREEMENT (this "Agreement") is made and entered
into this day of , 1998, by and between THE LIVING CARD
COMPANY, a Nevada corporation (the "Company"), and BRIGHTON BANK, a National
banking corporation (the "Escrow Agent").
Premises
---------
The Company proposes to offer for sale to the general public in certain
states a total of Shares of common stock (the "Common Stock"),
par value $0.001, at an offering price of $0.10 per Share in accordance with
the registration provisions of the Securities Act of 1933, as amended, and
pursuant to a registration statement on form SB-1 (the "Registration
Statement") on file with the Securities and Exchange Commission. The Company
agrees herein to offer for sale the Common Stock in accordance with the terms
of the prospectus contained in the Registration Statement. In accordance with
the terms of the Registration Statement, the Company desires to provide for
the escrow of the gross subscription payments for Common Stock until the
amount, as set forth below, has been received.
Agreement
----------
NOW, THEREFORE, the parties hereto agree as follows:
1. Until termination of this Agreement, all funds collected by the
Company or any officer or representative of the Company from subscriptions for
the purchase of Common Stock in the subject offering shall be deposited
promptly with the Escrow Agent, but in any event no later than noon of the
next business day following receipt.
2. Concurrently with transmitting funds to the Escrow Agent, the
Company shall also deliver to the Escrow Agent a schedule setting forth the
name and address of each subscriber whose funds are included in such
transmittal, the number of Shares subscribed for, and the dollar amount paid.
All funds so deposited shall remain the property of the subscriber and shall
not be subject to any lien or charges by the Escrow Agent, or judgments or
creditors' claims against the Company until released to it in the manner
hereinafter provided.
3. If at any time prior to the expiration of the minimum offering
period, as specified in paragraph 4, $140,000 has been deposited pursuant to
this Agreement, the Escrow Agent shall confirm the receipt of such funds to
the Company.
4. If, within four (4) months after the effective date of the
Registration Statement the Company and its agents have not deposited $140,000
in good funds with the Escrow Agent, the Escrow Agent shall so notify the
Company and shall promptly transmit to those investors who subscribed for the
purchase of Shares the amount of money each such investor so paid. The Escrow
Agent shall furnish to the Company an accounting for the refund in full to all
subscribers.
5. If at any time prior to the termination of this escrow the Escrow
Agent is advised by the Securities and Exchange Commission that a stop order
has been issued with respect to the Registration Statement, the Escrow Agent
shall thereon return all funds to the respective subscribers.
6. It is understood and agreed that the duties of the Escrow Agent are
entirely ministerial, being limited to receiving monies from the Company and
its agents and holding and disbursing such monies in accordance with this
Agreement.
<PAGE>
7. The Escrow Agent is not a party to, and is not bound by, any
agreement between the Company and any other party which may be evidenced by or
arise out of the foregoing instructions.
8. The Escrow Agent acts hereunder as a depository only, and is not
responsible or liable in any manner whatsoever for the sufficiency,
correctness, genuineness, or validity of any instrument deposited with it, or
with respect to the form or execution of the same, or the identity, authority,
or rights of any person executing or depositing the same.
9. The Escrow Agent shall not be required to take or be bound by
notice of any default of any person or to take any action with respect to such
default involving any expense or liability, unless notice in writing is given
to an officer of the Escrow Agent of such default by the undersigned or any of
them, and unless it is indemnified in a manner satisfactory to it against any
expense or liability arising therefrom.
10. The Escrow Agent shall not be liable for acting on any notice,
request, waiver, consent, receipt, or other paper or document believed by the
Escrow Agent to be genuine and to have been signed by the proper party or
parties.
11. The Escrow Agent shall not be liable for any error of judgment or
for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may do or refrain from doing
in connection herewith, except its own willful misconduct.
12. The Escrow Agent shall not be answerable for the default or
misconduct of any agent, attorney, or employee appointed by it if such agent,
attorney, or employee shall have been selected with reasonable care.
13. The Escrow Agent may consult with legal counsel in the event of
any dispute or question as to the consideration of the foregoing instructions
or the Escrow Agent's duties hereunder, and the Escrow Agent shall incur no
liability and shall be fully protected in acting in accordance with the
opinion and instructions of such counsel.
14. In the event of any disagreement between the undersigned or any of
them, the person or persons named in the foregoing instructions, and/or any
other person, resulting in adverse claims and/or demands being made in
connection with or for any papers, money, or property involved herein or
affected hereby, the Escrow Agent shall be entitled at its option to refuse to
comply with any such claim, or demand so long as such disagreement shall
continue and, in so refusing, the Escrow Agent shall not be or become liable
to the undersigned or any of them or to any person named in the foregoing
instructions for the failure or refusal to comply with such conflicting or
adverse demands, and the Escrow Agent shall be entitled to continue to so
refrain and refuse to so act until:
(a) the rights of adverse claimants have been finally adjudicated
in a court assuming and having jurisdiction of the parties and the money,
papers, and property involved herein or affected hereby; and/or
(b) all differences shall have been adjusted by agreement and the
Escrow Agent shall have been notified thereof in writing signed by all of the
persons interested.
2
<PAGE>
15. The fee of the Escrow Agent is $ , receipt of which is
hereby acknowledged. In addition, if a minimum of $140,000 is not received in
escrow within the escrow period and the Escrow Agent is required to return
funds to investors as provided in section 4, the Escrow Agent shall receive a
fee of $ per check for such service. The fee agreed on for services
rendered hereunder is intended as full compensation for the Escrow Agent's
services as contemplated by this Agreement; however, in the event that the
conditions of this Agreement are not fulfilled, the Escrow Agent renders any
material service not contemplated by this Agreement, there is any assignment
of interest in the subject matter of this Agreement, there is any material
modification hereof, any material controversy arises hereunder, or the Escrow
Agent is made a party to or justifiably intervenes in any litigation
pertaining to this Agreement or the subject matter hereof, the Escrow Agent
shall be reasonably compensated for such extraordinary expenses, including
reasonable attorneys' fees, occasioned by any delay, controversy, litigation,
or event and the same may be recoverable only from the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers, as of the date first
above written.
THE LIVING CARD COMPANY
By
-----------------------------
Duly Authorized Officer
Brighton Bank hereby acknowledges receipt of this Agreement and agrees to
act in accordance with said Agreement and on the terms and conditions above
set forth this day of __________, 1998.
BRIGHTON BANK
By
--------------------------------
Duly Authorized Officer
3
EXHIBIT 11.01
<Letterhead of
Lewis Law Offices
600 Crandall Building
10 West 100 South
Salt Lake City, Utah 84101
Telephone (801) 530-0447
Facsimile (801) 364-8279>
January 4, 1999
The Board of Directors
The Living Card Company
1174 East 2700 South, #16
Salt Lake City, Utah 84106
Re: The Living Card Company
Gentlemen:
We have been retained by The Living Card Company (the "Company") in
connection with the Registration Statement on Form SB-1 filed by the Company
with the Securities and Exchange Commission (the "Registration Statement")
relating to 1,500,000 shares of Common Stock (the "Common Stock"). You have
requested that we render an opinion as to whether the Common Stock to be
issued upon the terms set forth in the Registration Statement will be validly
issued, fully paid and non-assessable.
In connection with this agreement we have examined the following:
1. Articles of Incorporation of the Company;
2. The Registration Statement, as amended;
3. The Bylaws of the Company; and
4. Unanimous consents of the board of directors.
We have examined such other corporate records and documents and have made
such other examinations as we deemed relevant.
Based upon the above examination, we are of the opinion that the Common
Stock to be issued pursuant to the Registration Statement, are validly
authorized and, when issued in accordance with the terms set forth therein,
will be validly issued, fully paid, and non-assessable.
<PAGE>
The Board of Directors
The Living Card Company
January 4, 1999
Page 2
We hereby consent to being named in the Prospectus included in the
Registration Statement as having rendered the foregoing opinion and as having
represented the Company in connection with the Registration Statement.
Sincerely yours,
/s/James C. Lewis
LEWIS LAW OFFICES
Exhibit 23
<Letterhead of
Jones, Jensen & Company, LLC
Certified Public Accountants and Consultants>
CONSENT OF INDEPENDENT AUDITORS'
----------------------------------
Board of Directors
Living Card Company, Inc.
Salt Lake City, Utah
We hereby consent to the use in this Registration Statement of Living
Card Company , Inc. on Form SB-1, of our reports dated July 15, 1998 and
November 20, 1998, on the audited financial statements of Living Card
Company, Inc. as of June 30, 1998, and the unaudited financial statements
as of September 30, 1998, which are part of this Registration Statement,
and to all references to our firm included in this Registration
Statement.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
December 29, 1998
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
Telephone (801) 328-4408
Facsimile (801) 328-4461
